WBD702 Audio Transcription

How Central Banks Broke Money with Matthew Mežinskis

Release date: Monday 28th August

Note: the following is a transcription of my interview with Matthew Mežinskis. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Matthew Mežinskis is the creator of the Crypto Voices podcast and Porkopolis Economics website. In this interview, we discuss the concept of base money, a comparison of global currency valuations (including Bitcoin), COVID-19’s impact on the monetary base, limitations of the current monetary system, government debt, inflation, political problems, and the need for change.

“It’s the good people that are suffering, the bad people are never going to comply with you anyway, so you’re not accomplishing anything. I do think the Bitcoin will help to change that.”

— Matthew Mežinskis

Interview Transcription

Peter McCormack: But yeah, I lost my passport in Ibiza, so I had to go and get a rushed one yesterday, and it's only going to come -- so are we recording, Danny?

Danny Knowles: We're recording.  He lost it at DC-10!

Peter McCormack: I didn't lose it at DC-10!  I lost it at Ushuaia.  No, it's actually -- oh, it's so annoying.  So, I hired a car with the kids to go and have a trip around the island, and I put my passport in the glove box and then put the car into the valet to park at the hotel.  And in the morning, I was like, "Shit, where's my passport?  Oh, it's in the car", so I went to the car, I got the car back and it wasn't there.  I was like, you know when you're like, "Oh, where did I leave it?"  So, you start tracking your day like, "Did I leave it at the restaurant?" so I phoned the restaurant; "Did I leave it at Café del Mar?" called them, nobody there.  I was like, "Crap, well I've got a fly in 24 hours".  So, I just cancelled it, booked a new one at the consulate and the next day picked up my temporary passport.  

Then I get a phone call from the hotel said, "Oh, have you lost your passport?" and I was like, "Yeah", they're like, "Oh, it's here at reception" I was like, "Okay, how did you get it?" and they're like, "Oh, we don't know".  I was like, "How do you not know how you got it?  How do you get my passport and then call me a day later?"  And they're like, "Do you want it?" I was like, "No, it's no use, can you shred it?"  And then I had to fly back, I landed at midnight, I had to go down to Tesco at 1:00 in the morning and get photos done, wake my accountant up to get them countersigned.  I don't know if you have to do that where you are.  But here you have to have like a person of standing in the community say, "I certify this is a true likeness of Peter McCormack".  Then I had to get up at 6:00 in the morning to drive to Peterborough, which is an hour away, to have the appointment.  And then the passport should take a week, so it should be here next Saturday.

So, I can't fly to Riga on the Friday.  If it comes on the Saturday, I can only get the late flight to Riga to be there on the Sunday to then fly to Australia on the Monday.

Matthew Mežinskis: That's tough, man, that's tough.  It's a good high-signal conference, but as I said, I won't be there either this year and I'm disappointed.  But everybody that will be there will thoroughly enjoy it.  But I'm a little bit worried about your delayed finding of that passport at the hotel.  People, you know, it's trading hands.

Peter McCormack: Yeah, I know.  So, my son was like, in fairness, he was saying, "Dad, did you drop it from the car to the thing?"  I was like, no, I knew I'd left it in the glove box.  I think the valet has parked it -- because what happens with the car hires, people don't usually want them in the morning.  So I think he's done a sweep, found it and handed it into reception, and they've not called it in. 

Danny Knowles: What you need to know, Matthew, is it's never Peter's fault.

Peter McCormack: It is never my fault.  I never lose anything anyway, so I wouldn't know how --

Matthew Mežinskis: You've got to work it out that way, man, I mean it's good for the psyche, right, just to keep talking forward!

Peter McCormack: Speaking of conferences, we've kind of confirmed the date of ours.  I've got to speak to the venue on Monday, but it's going to be 12 April in Bedford.  I think it's going to be called -- should we say what we think it's going to be called?  Is that bad Danny, just to be on the show and say, "We think it might be called this"?

Danny Knowles: No, say it.

Peter McCormack: So, we think it's going to be called Cheat Code and we think it's going to be 12 April in Bedford, full-day conference.  Can I say anyone's confirmed; should we hold that back, Danny? 

Danny Knowles: I think we hold that back for now.  We've got some good guests confirmed though. 

Matthew Mežinskis: What about football matches?  Do they overlap? 

Peter McCormack: Yeah.  So, what we're doing is party Thursday, Friday full-day conference, and the second day of the conference, rather than a conference, it's going to be like a barbecue, a football match, and then a pub.  And obviously, Mr Matthew Mežinskis, we would absolutely love it if you would join us in Bedford and speak at our conference and come for the football.

Matthew Mežinskis: Oh, excellent.  I love it, man.  Confirmed, yes.  Fantastic.

Peter McCormack: Yeah, so we did one last year.  We timed it for our last home game.  We had 150 people come to Bedford.  We had, who did we have there?  We had Jeff Booth and James Lavish and Lawrence Lepard, it worked really well, and so we kind of want to do the same again next year but expand it; more people, more football, more beer!

Matthew Mežinskis: Well, I have yet to see a match and that was on the bucket list for sure.

Peter McCormack: Well, it'll be interesting.  Look, if it's a good season for us then it'll be an important game.  It could be a title decider or a title winning one.  It's right at the end of the season, so it'll be our last home game, so fingers crossed.  But it'd be great to have you, I mean, you've been over to Bedford, but to have you over for some football.  But also on the conference side, we want to do things a bit different.  I've been to a lot of conferences now and I can't describe any of them.  Prague was brilliant, Riga's always brilliant, Miami was brilliant, but they're kind of all similar.  They're kind of like a lot of the same people, same conversations, so we're going to just try and do something a little bit different.  We don't want Bitcoin in the name, on purpose.  We don't want a big room of sponsored booths and stuff like that bullshit.  We want to be -- you know what it's like at a conference, right?  I think the conferences are really about meeting up with your friends and having a good time.

Matthew Mežinskis: Yeah.

Peter McCormack: And then introducing people in.  So, we just want to make it just more of that and less of the corporate shit.

Matthew Mežinskis: Yeah, absolutely.  That's a great idea.  And you're taking the town to new heights, so I'd love to be a part of it.

Peter McCormack: Well, we might have the mayor of Bedford there as well, fingers crossed.  So, we'd love to have you there.  Put him down, Danny, sign him up. 

Matthew Mežinskis: Thank you. 

Peter McCormack: Matthew Mežinskis --

Matthew Mežinskis: You're in, love it.

Peter McCormack: -- we'll teach the people of Bedford about base money.

Matthew Mežinskis: There you go, that's what we're going to talk about today.  I hope the listeners are ready.  And viewers, should have said this before, it'd be better if you could watch, better if you'd watch this one on the YouTube feed, or I don't know if you guys are putting the Spotify video feeds out yet.

Danny Knowles: Not yet, but it's on our list.  We're going to be doing that.

Matthew Mežinskis: Yeah, that's a nice thing.  It's funny, I've been doing it too, and for some of these videos that are better with -- you can still learn a lot from the audio content, but it's just better if you'd follow along with video.  And still the majority are on Apple podcasts, it's pretty funny, even though the Spotify video feed comes out.

Peter McCormack: We've had it before with like Root and Preston, where people have got slides, and some people go afterwards and they go into the show notes and go and watch it afterwards.  Some seem to just get through without seeing them.  I think always the best thing is just to try and explain the chart anyway, and if I think you skipped something, I'll put my hand up and say, "Matthew, explain that again".  I guess we've got questions, but it sounds like you've got stuff you want to just talk about and dive right into. 

Matthew Mežinskis: Yeah, I told Danny we've got some charts locked and loaded.  I think we can pivot around those for this episode and keep it simple, so it's a good old base money to start. 

Peter McCormack: Well, you are the base money king.  We always get new listeners, or some haven't maybe heard you before, just do the TL;DR on base money and then we'll get into it.

Matthew Mežinskis: Yeah, absolutely.  So, it's all about comparison, right?  And that's what we're all trying to figure out, what Bitcoin is going to compare to in the world.  You can compare it to stocks, real estate, golf courses, whatever you want.  The valuation of Bitcoin is $500 billion equivalent right now, but what does that really mean?  It's actually been six years, six full years that I've been doing these reports, well, five full years I should say, on the basic money of the world.  And when I say basic money, that's actually a term, economic term, base money, monetary base.  And so, that is actually the central bank money, that's the money that central banks print.  And since they have the monopoly on the money, Bitcoin is about money.  If you want to try to get the most apples to apples comparison in the fiat world, it's going to be that.  And I can answer many more questions about how a bank deposit filters in there. 

Actually, I wanted to ask you, Peter, because you remember our show from April, you said you were going to rewatch it because we had so many valuable terms and things we discussed.  I assume you rewatched it.

Peter McCormack: Matthew, I don't remember last week.  I've just been to Ibiza for five days!

Matthew Mežinskis: Well, this is why we do this, right, this is why we do these updates.  So it's good to refresh.

Peter McCormack: It's for me, it's not for anybody else!

Matthew Mežinskis: Yeah.  So, this is actually a survey of all the top 50 central banks in the world.  And I'm kind of proud of this because you won't see this in the IMF report, BIS, Bank for International Settlements, all these international institutions, they just don't do it.  Whether they don't want to show you or don't know how or haven't done it, the survey, I don't know, but we've done it here.  And what you're looking at here is basically a 50-year chart, as is typical with a lot of things in the economy, stocks, whatever.  It's pretty calm throughout the first few decades.  And then, especially after the Global Financial Crisis, things kind of go haywire, rise very quickly. 

So, this is the total base money.  And you see after COVID -- well, actually, when I started to do these, the base money in the world was about $20 trillion equivalent, $20 trillion.  And COVID pumped in another $10 trillion, so you see that bump here.  The COVID stimulus took it to about $30.5 trillion by end of 2021, start of 2022.  And then as has been, these interest rate hikes, as they always say, trying to get back to a normal type of economy, normalising the economy, raising these interest rates and things like the SVB collapse and a lot of these banking collapses earlier this year, you will see a drop in liquidity, the monetary base, the central bank's print, and as a result of that, that's what you're seeing. 

In fact, this is not a result, this is the main motor, this is the transmission mechanism, this is the main engine of why you would have higher rates, so on and so forth.  So, you see a big drop and they've cut out as of June, so this is a quarterly update here as of June, they took out about $3 trillion from that COVID high.  So, you see $27.5 trillion equivalent. 

Peter McCormack: How do they take that out?

Matthew Mežinskis: By keystrokes, by computer strokes, really.  That's how it works.  Everything is digital.  There is a physical cash component, I should be very clear, and we will talk about that, I've got a chart about that.  You know, everybody likes to talk about CBDC, but I always remind people CBPC, Central Bank Physical Currency, is an important component.  So, of this roughly $30 trillion, $20 trillion is digital, that's what's called the bank reserves, we'll talk about it; and $10 trillion, or $9 trillion actually, is that physical cash, that cash money that most of us actually know and love, because it's the best way to buy Bitcoin, you know, sterling, bucks, dollars, euros, yen; the coins, the notes, the physical cash that central banks have monopolised. 

It didn't always used to be that way in the past.  You'd have free banking systems without central banks, you'd have private banks issuing notes, but they have over the last hundred years specifically taken over all of the issuance of those physical notes.  So basically, a third of this number that you're seeing is physical and two-thirds is digital.  And the big swings, like the biggest swing here, is a reduction in the bank reserve portion or the digital portion of banks' balance sheets.

Peter McCormack: Does that matter?  Like, what does that mean?

Matthew Mežinskis: Yeah, so it definitely matters.  The act of this reduction causes interest rates to rise.  So, you know over the last two years, we've had a gradual increase of interest rates all around the world.  That's what's caused those banking crises with people that were unprepared, revaluation of their bond portfolio, so on and so forth.  That is all caused at the core by this amount, okay?  And it might not seem a big amount because you can hear numbers like, you know, global equities are $300 trillion and real estate is more, whatever it might be, massive amounts -- global equities are probably less than that, maybe $100 trillion, something like that -- but massive amounts of liquidity, and here you only see a number like $30 trillion.  But this is the core, this is absolutely the core of the systems, just because these are the institutions, the central banks that have the monopoly.  They're in charge of the money.

So, when they remove something like $3 trillion, and actually removed a little bit more.  You see they were on track to remove $3.5 trillion here at the end of 2022.  And then when that interesting SVB collapse happened at the start of this year, they pumped a little bit back in, but that's not all.  Remember, this is worldwide, this is not just the Fed, so it's not all related to that, but it's now removed about $3 trillion.  So, it definitely matters.  And so when you see things like rising interest rates, you need to first think, or understand, that it's not like they put into a computer, we want interest rates to be that.  What they're doing actually is that they are shrinking their own balance sheet, the balance sheet of the central bank, and thus all the other banks that are connected to them underneath them also have to shrink their balance sheet all around the world.  So, it's a coordinated effort.

Peter McCormack: But why shrink the balance sheet if that means interest rates will go up; is it just to stem inflation? 

Matthew Mežinskis: Primarily, primarily. 

Peter McCormack: So, to stem inflation they first shrink the balance sheet to require the increase in the interest rate? 

Matthew Mežinskis: Which actually causes the increase in the interest rate, because they are actually selling the bonds that they owned, they're removing them from their own balance sheet.  We don't have to go through the technicalities of that, but basically they are removing what's called the bank reserve liquidity.  And so if they are removing the bank reserve of liquidity from those banks, banks cannot make as many loans, credit becomes more scarce, more valuable, and interest rates go up.  So, it is literally a sort of action and then response.  And the action, the thing that causes the interest rates to go up, that's a very important thing, is this reduction in bank reserves.  And this is just how the system works. 

I like to ask the questions you're asking as well, of my podcast guests, explain some of the more intricacies.  But I've studied this a long time, and no matter what they say, quarter to quarter, month to month, or week to week in different meetings around the world, they're always printing.  And we'll learn some of that actually today when I go through some of these charts, they're always printing overall.  It's just a question of are they printing a little bit more or a little bit less?  And I think that's the key thing.  But we can go forward here.  Yeah, sorry, go ahead.

Peter McCormack: Well, I'm going to end up jumping around a bit because things come to mind and this might be quite the leap, but I will get you to bring it back to where you were going with this.  But you're following what's happening in Argentina right?

Matthew Mežinskis: Yeah.

Peter McCormack: Yeah, so Milei, the libertarian candidate who is now the front runner in the elections, in the primaries, I think he's surprised, because I was out there and a lot of people thought, "No, he wouldn't have the legs for it, he's only managed to capture some of the youth", but he's a front runner, he's the favourite to win the elections now.  One of his key mandates is he wants to end their central bank, which is quite a thing to actually do.  I mean we've heard people talk about Ron Paul's talk about ending the Fed, a lot of libertarians talk about ending the central banks and God knows how you do it and the process of unwinding a central bank.  A lot of your work is indirectly or directly, you might say, very critical of central banks, but do you think about ending these kind of central banks; do you think how a country would, could, what it would mean? 

Matthew Mežinskis: Yeah, I certainly wish him luck in that endeavour, but that's all I would say there.  I wish him luck and I wouldn't want to be the one doing it.  I think it'd be very difficult and again I'm not defending the existence of them, but there are so many things leveraged to these institutions.  I mean, it's the whole economy basically, so it's a full reset of the economy.  You know Murray Rothbard, the economist, hardcore Austrian economist that a lot of Austrians like, he said in the early 1990s, there was actually a bunch of economists from my part of the world, Lithuania, free market economists, who were going around the US and trying to figure out what to do after the collapse of the Soviet Union. 

That was a pretty interesting time because there were relatively decent-sized economies that were starting from scratch, like completely white sheet of paper, ending from the communist system, what were we going to do?  And there's actually a video of him on YouTube where he says, "Well, these Lithuanians are coming around and they're not going to have a central bank.  We convinced them not to have a central bank", and it's a great message, it's a great view.  But at the end of the day, the Lithuanians ended up establishing a central bank because I am sure, I don't know, but I'm sure in the background, all the international institutions that corralled around them to say, "Okay, if you want to be a part of this, if you want to do this trade, that trade, if you want to maybe get this little support here, you've got to have this institution", and so they did.  It definitely is a global, systemic thing right now.

So, if you are a country like El Salvador, who wants to sort of make waves, or a country like Argentina in this case, which has just had so many problems, like they've gone through five or six currencies in the last 50 years alone, just like Brazil, I wish them luck.  But I find it very difficult in the way that the system is just so global; it is global and they really do push you.  Now there's plenty of things how that could change, this multipolar world, and maybe they'd get closer to other countries that are a little bit larger, this BRICS country, so on and so forth, but --

Peter McCormack: Well, I think one of the ways they'll do it, they've talked about, is dollarising.  So, they don't have an Argentinian central bank, but they will still be holding to the Fed.

Matthew Mežinskis: Yeah, and is that going to be so much better?  There are a lot of people that really think that is the way to go, just going to dollar standard.  But as we know, at the end of the day, even our very prescient Federal Reserve central bankers are still just a group of people that are trying to plan an economy, which is just unplannable, as Friedrich Hayek has always said, and as I'm a big fan of.  So, I am not holding my breath when someone says that they're going to do something like that.  Yeah, in Argentina's case, if they could dollarise, maybe it's something a little bit different.  But it's a huge economy, and if they're going to dollarise and just hinge their hopes on, again, the Federal Reserve, I think you're probably going to have problems at home as well.  We've got to worry about our pension funds, what happens if US inflation doesn't match our inflation, so on and so forth.  So, it's a very difficult thing to change the establishment like that, and that's why I think, as also Friedrich Hayek says, we do it in that roundabout way, which is why we like Bitcoin so much. 

So, I don't know if these are such illuminating statements for you, but that's generally what I've seen.  I don't think this stuff is going to change without a big outside catalyst, which is usually how things change anyway, right?

Peter McCormack: Yeah.  So, maybe ending central banks is through the option to exit via Bitcoin.

Matthew Mežinskis: I think so.  And I mean, if the next best thing is what Argentina is doing, first of all, I don't think that the global central banking elite would agree with this, but if it's like, "Okay, you can end your bank, but just dollarise", that's not going to be good for the dollar, but you're going to have a lot of local blowback at some point as well, so I don't necessarily see that route as anything promising.

Peter McCormack: Okay, all right.  Sorry to interrupt, I'll let you carry on.

Matthew Mežinskis: No, any time.  I mean, this is all fun for me.  So, we have this big line basically, you know, you're under $200 billion, $150 billion, 50 years ago, and it's true, not all of the central banks I have data back then, and that's all accounted for in the growth rates and everything.  It's not like I'm -- it's all accounted for.  But regardless, the trend is there.  We have something like $200 billion, $150 billion, 50 years ago; now, $27 trillion.  It's still a big number.  And like I said, we're still $7 trillion higher than we were in January 2020.  So, they're always printing, all right?  They're always printing to the end of the day. 

But if you want to see the makeup of this, I'll just build it out for you.  So, we have British pounds, this is a little less than 5%.  And then the next big four, we have the Japanese yen in red there, it's about 20%; Chinese yuan, 20%; the euro, another 20%; and the dollar, another 20%, roughly, give or take.  And then, a little bit less than 40% each if you looked at all of them, because the last, I guess it's 18% or so, is right there, the rest of the world.  So, the rest of the world in that light blue, it's only about 18% of the pie.  So, 82%, 83% is the top five currencies.  You can really see how this Pareto distribution works when it comes to this stuff.  And the Argentinian peso, yes.  Even using black market rates, in fact, because you've got to put all this stuff in dollars, right?  So, this is all in dollars.  Even using black market rates, it's included in that light blue. 

So, yeah, there's a lot of worthless currencies, even in the top 50.  And when it comes to really the size of currencies that would move markets, it's the dollar, euro, yen, yuan, and then the British pound is a very distant fifth.

Peter McCormack: Hey, we'll take it.

Matthew Mežinskis: And that's how it looks.  Yeah, but you're in the top five.

Peter McCormack: Yeah, we're happy in the top five.  The correlation, is it a case of the dollar moves and everyone follows; or is it a case of global markets are just so correlated themselves that everything's correlated because of that; or is it a case of everyone's looking at each other and when someone reacts, everyone reacts; why is everything so correlated?

Matthew Mežinskis: Yeah, I think it's actually more the last example that you said.  It's kind of like when someone reacts, particularly at the dollar, everyone reacts.  I wouldn't necessarily say it's the dollar driving everything, right?  I mean, obviously China's been a story for 20 years and, yes, they have a lot of trade in dollars and they have a lot of assets in dollars, but they have also a lot of assets in euros and yen on the Chinese balance sheet.  So, it's an interesting question, but I would say, of course, and this is a question that's obviously coming up with the Ukraine war and many things, it's like, are we moving into a multipolar world?  Maybe.  But I would say it's more of like, there is some reaction here from a big player, and then usually everybody else follows. 

But you don't really see, other than maybe Switzerland sometimes, or some countries, you don't really see people move in a different direction than what's happening here.  I mean, just look at COVID, everybody increased.  It wasn't just the dollar, even though the dollar did a big jump, right?  And the monetary base, it was something like $3 trillion, $3.5 trillion, right, before COVID.  And then at the top, the monetary base went up to $6 trillion, so almost double, in fact.  Everybody else was increasing as well.  So, that's it. 

So, the point is, if you look at this, yes, I love the memes about infinity over 21 million, all those things about Bitcoin.  But, even if you want to compare Bitcoin to a stock or to a bond or to real estate, you've got to understand that that's just a relative comparison of value.  It's not a native like-for-like monetary unit.  That is actually what we're looking at here.  This is really the core of the monetary system.  I'm happy to present this to you, and I do it every quarter as well on my website and things, just because no one seems to talk about it, no one reports on it.  I think it's very interesting.  But whether they want to tell us or not, this is the core of the system and this is the value.  And so, if you want to know where Bitcoin stands, actually in ranking of these 50 currencies, it is number eight, which is pretty wild, okay.  You only have the Swiss franc and the Indian rupee after that.  Oh, sorry, yeah, that's right.  I counted right, so it's number eight, Bitcoin is number eight, which is pretty wild.

Peter McCormack: It kind of looks like a Ponzi, it's clucking like a Ponzi!

Matthew Mežinskis: Yeah, I mean it's just a legalised system of money that they've kind of corralled everybody to be on.  And like I said, Murray Rothbard was talking about Lithuanians not having a central bank 30 years ago; it didn't happen.  Let's see with Argentina; I'm not holding my breath.  It's a very, very powerful scheme.  And even whether you're a socialist country, communist country, or capitalist country, everybody is operating on that. 

I always talk about free banking as well.  We don't have to do the big tirade.  We did a big sidebar on that, which I liked that discussion, a lot of people liked it last time, last April.  But it's important to know as well that there are many monetary systems in the past that did not have this.  So, Scotland, Canada, Sweden, some more relatively famous examples, but really all around the world, like even in China, there were parts of the world that was more developed economies and they didn't have central banks.  And of course, a really modern central bank really only occurred -- the Bank of England was really the first modern one.  The Swedes had the first one, but the Bank of England's the first modern one, the 1600s.  And from there, it just grew. 

So, we had a very Bitcoin-like decentralised global trade, global economy, but basically it's just even a free banking system has lost out to this sort of centralised, I could use words like cartel or cabal, I try to use them not to be too bombastic there, but it's just a centralised system that we live under, and we have to do it, we have to pay our taxes, we have to have our passports, like I said, to go places, this is just how they do it.  But the only escape hatch there, as far as I can tell, is like gold, silver, or Bitcoin.  And Bitcoin is, as we know, a much better way to transact than those other units.  But there's no other way if you want to talk about getting out of this kind of a system.

Peter McCormack: Well, you say a cartel; historical is, "A coalition or a cooperative arrangement between political parties intended to promote a mutual interest".  I don't think you're being hyperbolic saying cartel, it is a cartel because they take from us, well they take from one hand with the taxation and they take from the other hand with inflation.  I think it was debunked that Lenin said it, but wasn't it that, "The way to crush the bourgeoisie is to grind them between the millstone of taxation and inflation"?  I don't think he actually did say it, they attribute it to him, but I think that's actually the place we are in right now. 

Like I know in the UK, they cannot raise taxes any higher.  They're struggling.  They're doing it in weird fucking ways, like we've got this Ultra Low Emission Zone in the UK, where they're tracking your car and if you've got the wrong type of car, you have to pay a levy to drive your car around London; which, by the way, is quite interesting.  Most of those cameras are getting destroyed by people in the public.  

Matthew Mežinskis: Wow!

Peter McCormack: Yeah.  They've raised corporation tax now again, so that's gone up; they can't really raise income tax, so they're screwed on the tax side; but now they're hitting us with inflation.  And so, we have people trapped in that very confined space between taxation and inflation.  It's crushing the middle class. 

Matthew Mežinskis: Yeah, 100%.  And, it's true of all quotes, by the way, a lot of quotes get attributed to people that they didn't actually say; I've learned that.  Actually, I do put a lot of quotes in some of these videos that I make, and I've heard a couple of stories say that as well, so it's just kind of a funny thing, but it is so true, isn't it?  And I think that if you think about the grand scheme of, okay, people like to refer fondly to like the Renaissance or medieval Italy that is trade and The New World in America.  Of course, there was a lot of violence and stuff that was happening there, but people like to refer fondly to that.  But let's just assume that that was a very decentralised, free-trade world in the 1500s, 1600s, 1700s. 

It is a tendency, and it's absolutely happened, that even if you have very free, you know, United States breaking away from Great Britain, 13 colonies, these United States, very decentralised themselves, limited federal government, which of course that has centralised as well, and they're fighting that today; but everywhere around the world, free banking has lost out.  So, this is why I'm not a defender of free banking till the end, that's why I like Bitcoin, is because even though the free banking systems of the past were very decentralised, a lot of free trade, they grew economies, Adam Smith said it was fantastic that we had this free fractional-reserve banking system, where we could increase our economy well outside the scope that the UK, I should say the UK, Great Britain, England did to the south of them 200-plus years ago, they were able to do that in a very free, decentralised way, using leverage, using all of your financial tools. 

But at the end of the day, it comes down to four currencies, it's unbelievable, that make up 80%-plus percent of the pie, five currencies.  And we've got to have a solution to that because it does seem to be an undeniable tenet of human nature that we're going to centralise.  Even if we talk about the most free societies 200 years ago, I mean now we've got Trump and Biden, like that's your choice, that's your centralised choice in the next two years; it's just insane!  So, it's the same message that you guys talk about a lot, I'm sure, on your show, but you've got to have an alternative.  You've got to have an escape hatch to that.  And I don't really follow the day-to-day, but yeah.

Peter McCormack: Well, I was talking to Danny about, I was listening to a Joe Rogan show with Dave Smith this week.  It's well worth checking out, and I can timestamp it, about one hour, ten minutes is worth going into, because I reached out to Stephan Livera and I pushed it to him, because Dave Smith is very critical of big government, big state, you know, the darker underside of the government.  He gets into money, gets into theft, he talks about, you know, this Rich Men North of Richmond song that came out, which to me is like there's a lot of these conversations now happening in the podcast world, and there's a lot of these conversations happening in let's say the up-and-coming presidential candidates, your RFKs, your Vivek Ramaswamys.  

I think there's this kind of wider understanding now, or growing wider understanding, that something's wrong, something is severely wrong.  And the only place it hasn't seemed to permeate is the actual elites, into the mainstream media and the main presidential or political Candidates.  But he said the main issue here is because, you know, Dave Smith was very good with this, he said, "You have to accept there will always be elites, accept that every society will have elites.  But it's important that the elites give us something back", but they're not giving us anything back, there's nothing being given back now.  All people are going is they're going from crisis to crisis to crisis and ever since the Financial Crisis of 2008, have had their money stolen from them.  And he's essentially talking about, I think he's kind of identifying that Rich Men North of Richmond as almost it's kind of a revolution. 

I think we're going to see an awful lot of this, whether it's people in the UK smashing down these Ultra Low Emission Zone cameras, whether it's someone writing a song, or it's a political candidate going on a podcast, there's a groundswell that I feel that I haven't felt in the previous six years of doing this podcast.  I've felt bitcoiners think about it, but I feel like the people outside of Bitcoin are having these conversations just without saying Bitcoin, but it's almost exactly the same conversation.

Matthew Mežinskis: Yeah, I think you're right.  And I'm not sure where that will lead, because if you look at COVID, I mean there was still a groundswell there, in certain countries, that we're kind of limiting our freedoms for some of these things, some of these lockdowns are a bit draconian, so on and so forth, if you really need that regulation here, this or that.  But that took a lot of time to sort itself out and you didn't really have a revolution.  I mean, China kept themselves locked down for an extra, what, at least a year, two years total, I mean after everybody else.  So, it takes time.  And I've said this a lot, right?  I mean, if you were a gold bug in the 1970s, you would have thought that you'd made it, because the gold standard ended, gold started to be freely traded again, and by 1980, gold was $850 an ounce for about two seconds on the world markets.  You would think you're a genius, you would have thought it's just game on for the gold standard and returning to sovereignty. 

But it didn't.  I mean, they pushed on whole new amounts of leverage around the system; interest rates went from basically 20% to where they are now at 0%.  Now they're trying to stem some of this just undeniable monetary and price inflation that they've created.  But I do not know when that groundswell pops, or what's the word, right?  I don't know when it explodes to a real revolution.  I'm not saying I even necessarily would want that, but I certainly agree that we're not getting anything for what they're giving us, and something probably needs to change.  So, it would certainly be nice if it was more of a calm change of things, but it doesn't seem like history really works that way. 

Peter McCormack: Yeah, I don't know, I'm a little bit more optimistic.  But I think the reason I'm optimistic is I think we are -- I've been critical of Elon Musk, but one of the things he is doing well is he is championing more independent media voices, which is moving the Overton window.  He's doing that through his platform.  I don't even care what his incentives are, he is doing that.  It's Trump going on Tucker on X, rather than joining the presidential debate on mainstream media.  That's a strong signal.  And I think for me, the most important point is just to destroy all credibility, I mean they'll do it themselves, of the mainstream media.  Just get rid of that, because I think that is what is polluting the minds of so many people. 

Matthew Mežinskis: Yeah, I agree with you.  That's a positive change and we've got to keep moving in that direction.  Another thing, back to the monetary stuff, which is interesting, is the banking.  I've noticed in the UK over the last couple of months, there's really been a hubbub about closing accounts.  I saw you had Nigel Farage on. 

Peter McCormack: Yeah. 

Matthew Mežinskis: What did he say, 4 million accounts were closed?  Was that his estimate?

Peter McCormack: No, it was 1 million, wasn't it, Danny?

Danny Knowles: Yeah, I think it was a million.

Matthew Mežinskis: Okay, that's still a big number. 

Peter McCormack: I don't even know if that's accounts or account holders because I've had one, two, three, essentially five accounts closed on me from three different banks over the last three, four years.

Matthew Mežinskis: Yeah.  I've had the same, and that's a combination because I'm a US citizen and a bitcoiner, but it's definitely not just a UK thing.  And I'm interested to see how that will change.  I mean, if it doesn't change, we still have Bitcoin, so it's great; it's not great, but it's fine.  But yeah, the problem is, again, it's not the free banking system, it's not banks working with individuals around the world, it's just draconian legislation.  And are they able to change it, roll it back?  I'm not sure.

Peter McCormack: I'm totally with you on that.  Again, just as a business operator, I have accounts for all of my businesses, and there's a couple of things that I could highlight.  One is the difficulty of opening a bank account.  It is hard.  The amount of documentation you have to send is actually insane.  You know, back and forth to my accountant and I need this, I need that, etc.  But also, once you've got the bank account open, the amount of information you have to supply to transact.  Now, there's certain things like sending money from person to person, you have to put their name and their account details in, and then it will tell you if it's a match, which in itself you think, "Oh, that's cool, it stops me making a mistake", but really it's like, "Oh, they know the exact detail from person to person, from bank to bank", so that banks are sharing that information.  

But on the business side of things is when I'm getting an invoice paid.  You might have an invoice that's tens of thousands of pounds.  I have to sometimes send the contract.  The bank is saying to me, "I want a copy of the invoice, I want a copy of the contract", so they want to see the contract I've got with the company.  That's like, "Hold on a second.  Why is the bank being the person that is reviewing the contract to see if this is a legal relationship?"

Matthew Mežinskis: Yeah, it's a bigger discussion but I do think there has to be a -- I mean, I have to I have to believe that Bitcoin will play a role in this sort of escape as well, because it's just getting so insane, you know.  It's the same; you're talking about tax evasion or terrorism, or whatever you're talking about, I mean it's the good people that are suffering.  The bad people are never going to comply with you anyway, they're not going to do your instructions your rules anyway.  The bad people will not stay on the phone with you for two hours to see if you can send a stupid £1,000 payment.  The bad people will not be the ones doing that.  So, you're not accomplishing anything.  And that's what has to change.  And I do think that if Bitcoin -- well, I do think that Bitcoin will help to change that eventually.

Peter McCormack: It already does.  Look, I can send an invoice to one of my sponsors, right, and they can go to pay, and then the bank can send me an email saying to put this transaction through, I need a copy of the invoice, the contract, and we have to go through this hullabaloo, and it takes a few days; or I send them a Bitcoin address and I get paid.  And that's happened, that happens already.  It makes much more sense. 

Matthew Mežinskis: Yeah, the question is when, like you said, the non-bitcoiners get into that.  When are the non-bitcoiners going to start doing that?

Peter McCormack: Well, you just need a more stable Bitcoin.  They're just not going to do it because I can't then hold it all in Bitcoin, because if the price of Bitcoin drops 10% because something happens with Binance, or whatever, that affects the cash flow of the business.  So, yeah, Bitcoin solves one bit but not the other. 

Danny Knowles: You either need more stable Bitcoin or more draconian rules.  Either way, it's going to make people use Bitcoin.  So for example, here in Australia, CommBank, which is probably the biggest bank in Australia, have limited payments if you want to try and buy Bitcoin on an exchange, or whatever.  But they're also trying to implement an idea where you have a carbon footprint for every transaction that you make.  So, if you buy a flight, it's obviously a high carbon transaction or whatever.  And as soon as they start trying to stop you from buying meat or buying a flight to go and see your family, then you'll see people change.  So, I think the draconian rules can also force people to Bitcoin. 

Matthew Mežinskis: Yeah, that's a great point, I totally agree. 

Peter McCormack: Better media, better political leaders, then just break it down.  Honestly, I've gone back and forth on libertarianism for four or five, maybe six years, and Stephan Livera, God bless him, he has stuck with me.  He must constantly think, "Fucking hell, Pete, how many times do I have to tell you this?"  And I keep coming back and going, "Yeah, but what about this scenario?  But what about that scenario?"  Honestly, for six years I've done it.  And slowly but surely, I become a little bit more libertarian, a little bit more.  I was literally doing it the other day to him.  

But Dave Smith, in that conversation with Joe Rogan, I'm going to say it again, it's from about one hour ten in, he's got me.  He's got me to the point I'm like, "Right, I'm going to read everything that Ron Paul's ever written, I'm going to watch every Ron Paul speech, I need to understand this", because I just say we need better political leaders, there's no one to fucking vote for in the UK, who am I going to vote for?  Rishi Sunak?  No.  Keir Starmer?  No.  So, I need an alternative, and so that's what I think we need.  We need alternatives, better alternatives.

Matthew Mežinskis: Well, I agree with you there.  I have a little bit of pushback too because I love Austrianism, I love libertarianism, I love a lot of the theory.  But still, when it comes to the practicality of people's lives, we don't have to go into this whole thing, but you know, the Ukraine war, you know where I stand on that, being here in Eastern Europe.  I disagree with obviously a lot of libertarians, whether it's the whole body politic of libertarians, I'm not sure, but it just comes down to me.  And again, this is just a comment, I'm not saying we have to pull this thread, we have done this on prior episodes; but the US, actually I have a chart of it I was going to show you.  

This is the US federal debt all the way back to the entirety.  If you look at the beginning here, $70 billion, and they actually put it down to zero with Andrew Jackson, who was also not very good at the Indians.  But again, libertarians kind of ignore some of this grey area, I don't, I think it's a bad grey area.  But you have here $70 billion, $80 billion that the United States had at their revolutionary times.  I think a naïve libertarian view is that, "Oh, we're just this sovereign nation, one people under God, or one sovereign people with 13 individual states under God.  We did it all ourselves, we we're so unique.  The empire is really bad now, and we need to bring it back, but we're unique people, Founding Fathers".  

These people that fought their way out of British colonialism, had help from the French, the Dutch, and the Spanish.  And when they finished, they had debt owed to the French, the Dutch, and the Spanish.  More French soldiers died during Yorktown, there were more French ships in Yorktown.  These are just facts that, look, this is why I'm so pro on helping Ukraine, you need to help every nation when they're fighting for freedom.  Now, I'm not saying like explode federal deficits and forget all the principles, not saying that at all.  I'm just saying that it is it is so not black and white when it comes to some of these issues.  And I do fear that, unfortunately, Dave Smith is that way when it comes to the Ukraine war.  I don't fear, I know that he is that way.  But I mean, it's just not black and white like that. 

The United States is not some divine entity.  They had help from other nations in their independence.  And now they're buddies with the UK anyway, so what do you know about what you say about that?

Peter McCormack: Yeah, but I can agree with you on that point and disagree with Dave Smith and agree that you should help Ukraine and recognise they've been invaded, what, twice now in the last eight years and have had large parts of their land stolen from them.

Matthew Mežinskis: This is where all the listeners drop off.

Peter McCormack: Yeah, they're like, "Fuck, you've gone back into Ukraine/Russia again!"  No, look, I can disagree with Dave on that, but just agree with him on like the general principles of these…  I mean, he was saying the US Government is the largest institution the world has ever known.  It's the new Russia. 

Matthew Mežinskis: Sure, absolutely the largest collector as well of revenue, absolutely.  And spender. 

Peter McCormack: And spender, largest over-spender.  But it takes me back to my very, very first interview with Erik Voorhees.  God knows what episode number it is, Danny probably knows.  No, actually it was my second interview with Erik Voorhees.  We sat down in Denver Colorado and I talked to him because I was always like, "Yeah, you libertarians sound great, but really?  You're going to have a big red button, switch all this off, how's that going to work?"  He said, "No, I don't want that".  He said, "The government grows every year", he said, "How about we just shrink just 1%, let's just get smaller", and I think this is where I've gone back and forth with Stephan and I think he struggles with me and I struggle with him, because I kind of want…

Look, put another thing in there.  Nic Carter said to me, "The problem with libertarianism is, for it to be successful, it requires the accumulation of power, which is antithetical to being libertarian".  What I like the idea of is that maybe a traditional party, and in the UK it would suit the Conservatives, is that the Conservatives go back to Conservative values and also become maybe a little bit libertarian, in that they have a principal idea of smaller government, much smaller government, much less interference, much more free markets, much less bureaucracy.  Just focus on that, because that's something you can get behind.  It's a tangible difference that you can get behind and vote for and say, "Okay, so you're going to make government smaller, you're going to interfere with my business less, I'm going to pay less tax, I can vote for that".

Matthew Mežinskis: I'm all for it, Peter, I'm all for it.  But look at this.  This is again 250, 260 years, 250 years of federal debt right here, okay?  Let's just zoom in to this latter part of the 20th century.  Let's even take out the central bank stuff, this is just the debt.  It was a big deal in the United States when Bill Clinton balanced the budget in the 1990s.  He did it for a couple of years at the end of the 1990s, it was a big deal.  He rode it all the way through the end of his term, Democrats rode it.  Unfortunately, it didn't help -- not unfortunately, I should say; unfortunately for Al Gore, it didn't help him win, but it's just a big deal.  They balanced Congress, you know, divided Congress, balanced budget, all that stuff, and he still doesn't stop talking about it. 

This is his period right here of a balanced budget.  A balanced budget means there's no net increase in the federal debt, no net increase.  That's all a balanced budget means.  It means you have not spent more than you've taken in with taxes.  There's his balanced budget.  Since then, Baby Bush, Iraq wars, GFC, Bush and Obama, Trump, Biden, all the rest, COVID.  I agree with the statement that Erik made, I agree with it.  But again, this is why I think we are all practically looking at Bitcoin as a reasonable alternative, because no matter how much we talk about reasonable, choice-driven, alternative politicians getting in, I mean it's just the same and the same.  And it's even worse if you look at banana republics.  If you look at Argentina, it's even worse, these figures.  I mean how do you think it's going to happen?  Everything that you've just been saying, I agree with in principle; how do you think it's actually going to happen?  Or if it's going to happen, it's going to be Bill Clinton for three years, hopefully without the sex scandals.

Peter McCormack: Yeah!  Well, look, I might be being a little bit utopian thinking, but me and Danny were talking about it.

Matthew Mežinskis: No, I get it, I'm just I'm playing devil's advocate here. 

Peter McCormack: No, it's good, because also it just drives the kind of content I want to make, like these scratch and itch, these make me think, it makes me think, "Right, I think I want to call Natalie Smolenski and talk to her about this idea, because I like talking to her about that.  I want to call Matthew Mežinskis and talk about…"  But Dave Smith said, because Rogan said to him, "How?  All right, this is fine, but how?" and he said, "Look, there's an antidote you can see and it's at the top of the mountain, but we've got to figure out how to get to the top of the mountain".  He said, "I don't have all the answers.  I know it's going to be hard".  But he says, "It's there.  We just need to crush all these agencies", and whatever.  But he said, "We need to go back to the Bill of Rights and the Constitution". 

Me and Danny, we had a conversation about this the other morning, right, Danny?  I was like, "Well, the Constitution has these things called Amendments; can you not re-establish the Constitution?  Could you not put in there new Amendments, now understand where the Constitution failed or where government failed, in terms of size and spend, and can you not have Amendments in there to cover for something?  Can you not have provisions in there for government expenditure as a percentage of receipts, or something?"  I mean, look, I don't know.  Maybe I'm being fucking naïve here.  And then, additionally to that, you talk about Bitcoin as the alternative.  Maybe a more realistic thing is, we see it as an exit, and that will grow over time as more people do.  We've seen DeSantis, we've seen Vivek Ramaswamy, we've seen RFK all talk about Bitcoin now because they know it's a voting bloc.  Maybe this will force the type of politician who has to think like that.  So, that's what the change might be.  I don't know.

Matthew Mežinskis: I want to just say it for the listener because I didn't say it before, you're about $5.6 trillion in debt by the end of Clinton's famous balanced budget a few years, and now $32.6 trillion national debt limit suspended indefinitely by Biden at the moment.  I hear you, I've just thrown it back to the numbers. 

Peter McCormack: All right, fuck me, buy Bitcoin!

Matthew Mežinskis: Buy Bitcoin!  Yeah, this is the beauty -- you know the term, by the way, of what this is?  Let's go to this one, let's go to the next one here.  This is base money again, okay, same chart, I've just taken away the differences between the countries, same chart.  The term of this money supply, besides being monetary base, base money, is called "outside money", okay?  Gold and silver is also outside money; why?  Because it's outside the system.  And that's the beauty about Bitcoin.  People might not understand it when they're talking about it all the time, making nice, you know, waxing and waning philosophically on your show, but Bitcoin is outside, literally from an economic term, it's outside the banking system, it's outside the financial system. 

So, that's why we look at this money supply as well, because even though you might think of the central bank as sort of the core inside it, it still acts differently, it behaves differently, it's outside money.  So, that's another reason, and that's why Bitcoin is comparable to it.  It's outside money and that's where there's a lot of good things, as we know, have been happening and will continue to happen.  So, anyway, just a little bit of point on outside money. 

So, here we have outside money again.  You can look at the trailing 12-month change in this over the years.  It's here, okay, we don't have to analyse this.  And again, this is trying to talk around this for the listeners.  You see big, big jumps here actually during Y2K; base money jumped 32% year-on-year.  And then that year after, it was basically flat.  Those were the most extremes that you had basically at all in the last 50 years, until you get to the Global Financial Crisis.

Danny Knowles: Why did it jump so much at Y2K?

Matthew Mežinskis: Yeah, that's a famous thing actually, because people were freaking out about the Y2K bug and everything.  So, they took cash out.  Central banks had to print much more cash, literally physical cash, than they had before because people were freaking out about Y2K.  There's these crazy libertarians like Gary North.  He was a crazy one.  I like him actually, I like some of his writings, but he's also kind of crazy.  He's passed away now.  He buried a tractor during Y2K.  I mean, maybe even more than a tractor, I mean it was like an excavator.  I mean, people do crazy things when they're really scared and libertarians are kind of at the bleeding edge of that.  But anyway…!  So, Y2K showed us real extreme swings, let's say, can you see that?  On a percentage basis, 32% higher globally, and then the year later, it's basically flat. 

If I say flat, that's no increase, that's the low end extreme.  That's something to keep in mind about, do they ever decrease the money supply, even though they say they want to normalise things or bring things back in line, so on and so forth.  Then of course, during the GFC, you got up again towards 40% year-on-year twice, in 2009 and 2011.  And then COVID.  COVID got up again to 40% year-on-year.  And the interesting thing is, if I were to smooth this out, okay, just put one line, one number, where I can give you guys one number, how much does the money supply, the base money supply increase year-on-year?  It's this number, and that number is 13% per year compounded.  That means 1% per month, because actually compound is even stronger.  So, 1% a month does not mean 12% a year; it's actually closer to 13%.  It's the power of compounding, we don't have to go through that whole lesson, but it's 1% per month.  It's a massive increase.  And yeah, it can be way above, way below.  It's never negative.  It's never, except interestingly, the start of this year, they really tried to pull it back a lot.  Just interesting, happened to be some banking crises because of that.

Danny Knowles: That's the first time on record that it's ever been negative?

Matthew Mežinskis: Yeah, the only time is slightly, you see it's like a negative 0.0 there in my charts there in December 2000, one full year after Y2K, right, after December 1999.  Other than that, it did go a little bit negative in 2019.  Again, they had the big repo crisis, they had a lot of hiccups there, where they started to print again.  But just twice, other than Y2K, twice in the last 50 years, it's been negative for a couple months.  So, I think that is a very interesting thing to think about.  When you think about all of their speeches, all of their lectures, all of their just constant, just telling you, "We are going to normalise, we're going to do the right thing".  By and large, the base money supply increases 13% per year.  And by the way, that's a doubling less than every six years.

Peter McCormack: Can you track inflation to that, if inflation is always a monetary phenomenon?

Matthew Mežinskis: Correct, and I agree with that statement.  That's Milton Friedman's statement, I very much agree with it.  I have not done each country's -- this is something I will work on eventually, but you've got to start looking at the bank money, the broader money that's increasing, then you got to look at prices.  I'm actually not a big fan of prices, even though I like tracking all these money supplies, I'm not a big fan of prices because, as John Williams, the famous economist from ShadowStats, has said, he's written many reports on this; in his opinion, what they say price inflation is, is at least 50% understating, or in other words, actual prices are at least double, in his opinion.  So, if they're saying 2%, it means 4%.  That's actually happening. 

Can anybody prove this?  I think price inflation is a very rigged game, personally.  I know there's a lot of different matrices.  I think it's very good that people try to get a handle on it, but I have not delved into it.  But of course you can.  I mean, of course you can, right?  I mean intuitively, of course we can understand that price inflation's a result of this.  But the key to understand here, of Bitcoin's 21 million coins and what that compares to, is again, remember I said I would square this, right?  $250 billion in base money 50 years ago.  Let's sort all that out, do all the calculations.  What does it mean when we say we have $27 trillion today, even if that's down $3 trillion from a couple years ago, it's still 13% per year compounded.  It's a massive number.  That's a massive number and that's what they do.  I mean, these are the hard facts.  Unlike a price inflation number, this comes from the central bank balance sheet.  I can't get any more hard here than going to the Bitcoin blockchain and finding a number.  This is from the source.

Peter McCormack: A couple of interesting points on inflation as well is, I think it was Eric Weinstein, Danny, where we were sat with him and he said, "Well, the thing about inflation is completely subjective as well.  It all comes down to what you spend money on and what your outgoings are.  So, it can be completely --"

Matthew Mežinskis: Yeah, and to be specific, you mean price inflation?

Peter McCormack: Yeah.  The way inflation is, like when you see a CPI number, it's fine, you see that's the CPI number but inflation to you might be very different, depending on what you're spending your money on, etc.  But even more importantly, there was a very good article written by Avik Roy's FREOPP talking about inflation.  Danny, let's make sure we put that in the show notes.  I shared that with Dylan LeClair recently online.  I think it's such an important article, everyone should read it, because it's the compound effects that inflation have on the poor.  It's well worth understanding and I saw it first-hand in Argentina. 

So for example, in Argentina you have 150% ludicrous inflation.  If you're middle upper class, you have access to all the tools to avoid this.  You can get paid in dollars, or you can easily transfer to dollars, you can get digital dollars, or even one thing you can get, the middle class can get that the poor can't get, they get credit cards, right, and they buy everything on their credit cards, and then they pay their bill at the end of the month, and it's 7% cheaper, or 10% cheaper, whatever it is.  So, there's all these tools that the wealthy have access to, which compounds the problem for the poorest.

Matthew Mežinskis: Absolutely.  Absolutely agree with that.

Peter McCormack: And so inflation is bad, but really it is a tool that is much more corrosive to the poorest in society.

Matthew Mežinskis: Yeah.  Let's see if I can show you that in picture terms here.  This is one more, all right.  So, this is still on base money, but now we're only looking at that physical cash.  CBPC, Central Bank Physical Currency, remember I told you that was a third of the total, roughly; it's $9 trillion.  Here's global population, 50 years ago, we were about 3.6 billion people on the planet, now 8 billion.  The UN says over 8 billion, but World Bank doesn't quite yet, so 8 billion, okay?  That's a doubling every 50 years, which in percentage terms is 1.5%.  Okay, so that percentage on the right-hand axis there, 1.5%. 

Now let's look at world CBPC.  This is basically a subset of what I just showed you in the prior charts.  This is central bank money that we know and understand in our wallets, right, or in safes, or under mattresses, or in grocery store tills, inflating away physically under the printing press, dollars, euros, yen, everything, okay?  $9 trillion equivalent, okay?  And notice here, in COVID, we all were trying to get digital.  Everybody said, what was the narrative, "CBDC, we got to do digital.  Literally, physical money is dirty, you're going to get viruses from physical money".  What was the reality?  What were they saying versus what were they doing?  The reality was they printed $2 trillion more equivalent in COVID times globally.  It's a global figure.  The US dollar actually is about $2 trillion of this, $2.2 trillion, I think.  $2.2 trillion is the dollar, but euros, yen, yuan, all the other. 

So actually, physical cash increases too.  And the growth rate of physical cash now, let me show that, 10.5%.  It's actually not as high as the 13% I showed you before because the reserves are like, I don't know, 14%, 15%.  So, physical cash is less than the base money.  But what's the difference of 10.5 divided by 1.5?  7X.  So, here we can do a very simple calculation to understand that physical cash, the supply of money in the in the world that most people use, you're talking about billions of people, the poorest of the poor use it mostly when they can't get bank accounts, physical cash, grows seven times faster than people on the planet, the demand.  That to me, you cannot be more -- I would like to know what some Harvard economist says of this; how does this not cause price inflation? 

All right, the demand, the people, grow at 1.5% per year.  That rate is slowing, by the way, it was maybe 2%.  If we showed this line 40 years ago, it'd be 2%, now it's only 1.5%.  That rate's slowing.  Physical cash is also slowing, but not as much.  Seven times faster.  Physical cash grows seven times faster than we do as people.  So, I think that's a good one to illustrate the dangers of central bank money. 

Peter McCormack: Is there a chart that accounts for purchasing power of that money? 

Matthew Mežinskis: Yeah, again, I haven't got to it, Peter.  I mean, you're talking price inflation, purchasing power.  I try to stick with the stocks, you know what I mean?  I try to stick with the simple things that most people, even if they can't understand it, they should understand it, and if they don't know where it is, I'll find it because it's reported.  I just think that there's a lot of ambiguity with that purchasing power.  I could run numbers, we could talk about it, but I just don't do it.  So, that's my little high horse of that.  Maybe I will in the future, I just haven't decided.  So, there you go, seven times faster, cash versus people. 

Let's not go too long on this, but I showed this last April, and now it's just updated through June.  Still growing, okay, these are all the various money supplies, there's a lot on this chart.  But again, lower left-hand corner, very small; upper right-hand corner, very big.  The US money supply is roughly $38.5 trillion at the moment.  And 50 years ago, $300 billion.  So, massive, massive increase.  Again, this is all money.  Okay, so we have the central bank money I just showed you is in the dark.  It is in the dark pictures here.  I don't know if I want to go through all the different layers of the money supplier, but I just wanted to show you, even if you're talking about central bank money, which is in blue, okay, versus bank money, all right, or inside money, it's called, you know, money in NatWest accounts, Chase accounts, Bank of America accounts, wherever you are in the world.  That is in the green, okay?  Those demand deposits that you think about a lot are in the darkest green, it's this one I'm highlighting.  The darkest green, demand deposits. 

But then you've got other things, you've got time deposits, money market funds, repurchase agreements, lots of other money supplies.  Those are in the lighter greens.  They're all growing as well.  So, again, they're talking about normalising, they're talking about shrinking the money supply, raising interest rates.  It's still quite high, even if there's a slight, slight dip over the last couple months, let's say maybe $500 billion worth of a dip, it's still massive.  So, that's just the point there with this one.  We did some deep dives on repos in the last show.  I can even guide the listener for that one if they want to go back.  I thought it was hopefully helpful.

Peter McCormack: Danny will explain the repo rate! 

Danny Knowles: I could see you smiling and I knew you were going to say that.  I can absolutely not explain that. 

Peter McCormack: Danny, tell Matthew what we talked about pre-show. 

Danny Knowles: That we always ask you the same questions and we still don't know the answers!

Matthew Mežinskis: This is what I said before!  Peter, you said you were going to go through it and re-listen!  No, it's good, guys, this is great.  I think we need to keep refreshing for everybody.

Peter McCormack: We must have had Lyn Alden explain to us the reverse repo, or overnight repo, or fucking Fed repo rates, honestly 10 to 20 times; I still can't tell you!  All I know is that when it's high, it's not a good thing.  That's all I know!

Matthew Mežinskis: Repurchase agreements are Treasury securities that trade like cash, that's all you've got to think about.  They're Treasury securities that trade like cash. 

Peter McCormack: You got that, Danny? 

Matthew Mežinskis: They're leveraged up, there's a loan attached to them, there's an interest rate attached to them, they add to leverage in the system, but at the end of the day you're trading around Treasury securities, and they're going on different entities' balance sheets and it's going to help them make trades or lever up or go short or go long.  They're Treasury securities that trade like cash, unlike a Treasury bond that just sits in an account and collects interest.  So, it's a portion -- I'd say repos are probably, actually I think I have the number; $4 trillion, $4 trillion outside of the Fed; inside the Fed, $2.6 trillion. 

So, $6 trillion, $7 trillion of repurchase agreements, that means actively traded Treasury securities, $6 trillion, $7 trillion.  And as we saw in the national debt, Treasury securities are $32 trillion.  It's actually not the total of that, it's not all Treasury securities, there's some agency, but regardless.  Let's say $6 trillion, $7 trillion are repos versus $32 trillion is the total debt.  And there's even more US debt, which is outside of this number, which includes Social Security, Medicare, Medicaid, the untouchables.  That's even outside of this number.  But as you can see, it's a lot of numbers, it's pretty crazy.  But roughly, just think of repos as an entity's trying to get something done, they're trading their Treasury security around cash and using it in leverage operations.

Peter McCormack: So, they're borrowing it for collateral?

Matthew Mežinskis: That's one reason, if not the only reason.

Peter McCormack: Okay.

Matthew Mežinskis: Yes.

Peter McCormack: Okay.

Matthew Mežinskis: So, the point is, this is a big money supply.  This is US only.  Remember, here we were at the globe, dear viewer, if you're looking at that $30 trillion base money here.  Now, if we go back to the US, you're only seeing base money of bank reserves, $3.2 trillion plus M0, $2.2 trillion.  You're getting $5.5 trillion roughly of US base money, $5.5 trillion.  So, there you can see the differences.  But then, you know, this just shows you how big the money supply can get, can lever up, based on this base money.  And Bitcoin is not comparable to this, by the way.  One more point to make to this to this chart. 

What's in green is a Coinbase account, a Kraken account, a Gemini account.  They are institutions, fiduciaries that are managing your stuff.  So, even if you have Bitcoin and you log into the account, you see on your screen, "I have point 1 Bitcoin right there", you see it on your computer screen.  In reality, as we know, not your keys, not your coins.  You don't have the Bitcoin.  The institution has the Bitcoin for you, and in return, they have a claim to you, and they're going to lever up that claim.  They're going to make money, they're going to invest, they're going to maybe run liquidity spreads, all these sorts of things, they're going to short-long.  So, this is just the way that the economy levers up.  I'm not saying I agree with it.  I certainly don't agree with the centralised nature of it.  But that's to understand, this is why Bitcoin does not compare to a bank account. 

I know people to say and run crazy numbers, $100 trillion, or whatever, Bitcoin is going to be there.  This is why I stick to the $30 trillion of base money to understand.  It's because at the end of the day, we're still going to have institutions, we're still going to have people that are going to manage your money or manage other things.  I'm not saying it needs to be that way or I want it to be that way, I'm just saying fiduciaries are in the system.  And in the United States' case, the US base money is say roughly $5 trillion.  It's actually closer to $8 trillion if you look at all the Fed liabilities, but that's a whole other thing.  There's the reverse repo agreement that the Fed holds, which we don't want to talk about!  But they're saying there's $8 trillion of central bank money in the United States. 

Okay, $8 trillion, which includes the reverse repo facility, $5.5 trillion of monetary base.  $8 trillion of the United States central bank money, $38 trillion total money, subtract $8 trillion from it, so $30 trillion of bank money.  So, there's your ratio.  That's how it works in the United States, basically roughly $30 trillion in banking liabilities that just banks have with their customers of any sort.  There's money market fund, time deposit, savings deposit, demand deposit.  And the central bank themselves have about a liability of $8 trillion.  So, that's the ratio, that's the split, that's just what you need to think about.  But Bitcoin is only comparable to the central bank. 

All right, let's just do some fun ones, maybe to finish it here.  Fellas, this is Bitcoin price.  I like to do some trendlines as well.  This looks a little bit daunting.  Again, dear listener, we have some trendlines here, we have some percentile curves.  You can find this stuff on my YouTube channel, by the way, if you're curious to learn more.  But this is the Bitcoin price chart everybody knows and loves as of maybe a day or two ago.  And I have a trendline here.  So, unlike some other trendlines, who go off of different things like Bitcoin's money supply and tend to try to predict things here, this thing would just go over time.  Okay, there's basic trendlines you can do.  You can do a linear trendline, logarithmic, exponential, or power; four basic trendlines. 

This is the power trendline.  It's the best fitting for Bitcoin, 95% R2.  If I zoom in here, we can see that the trendline itself, it looks it fits pretty well, right?  There's a black line that just runs through the price, and we can extend it out, it looks it fits pretty well.  But the price right now is under the trendline, okay?  And then we have these bands, which are also a part of the analysis.  What's in between the blue bands is basically where the price will hit two-thirds of the time.  It's a one standard deviation (1σ) move.  What's within the red is 95% of the time, 2σ move.  So, anytime the price is going to be at the extreme of these bands, it's kind of an interesting event, okay? 

So, let's just zoom in, let's talk about what happened last year, FTX bankruptcy.  Apparently they didn't have any Bitcoin as opposed to Mt. Gox or Bitfinex, which I have earlier in the charts, they actually had Bitcoin.  Anyway, Bitcoin price during the FTX bankruptcy actually dipped below 1σ move.  Okay, so the price was about -- the actual trendline was about $40,000 at the time.  The price was only $16,000, and a 1σ down move was $20,000.  So, we even got below that here, you see that; the blue?  Let me take off the top so you know exactly what I'm talking about.  See these down σ, 1σ and 2σ downs.  So, we hit 1σ down, and then we started to bump along 2σ, interestingly, according to this trendline.  At the end of last year, end of the start of this year, then we bounced back above, got back up to, the price was $30,000 or so for many, many months.  It's down below now to $26,000, so we're below now the 1σ move, but we're not below the 2σ. 

So, it's just a guide, I'm not a trader, but I just like to draw on some of these trendlines.  This is very, in my opinion, much more scientific, interesting than some other people will hype up other types of trendlines.  This is just very simple.  There's actually an old thread from Bitcoin Talk, this user, Trololo was his name, he's very famous.  He started doing these trendlines in Excel.  I got my inspiration from there.  But I put this on my website for many years and YouTube channel.  But so we're well below trend is an interesting thing.  But we're not at where we were at the end of last year, which was a very rare era, actually. 

What was happening last year was a 95% percentile move.  So, 95% of the observations had not occurred at those extremes at the end of last year.  But now we're still kind of rare.  We're out of a two-thirds move with this little dip down.  So, I think that's something to think about. 

Peter McCormack: Can you go forward and show us where we will be April 2024? 

Matthew Mežinskis: Absolutely. 

Peter McCormack: I'm just thinking, it's about the halving, right?

Matthew Mežinskis: Yeah, that's absolutely right. $70,000 for the listeners.  It predicts out to about $70,000, $72,000, $73,000 is the trendline.

Peter McCormack: And then, the last two peak cycles have been, what, May 2017 and March 21?

Danny Knowles: December 2017 and...

Peter McCormack: What's that peak there?

Matthew Mežinskis: You mean the price peaks?

Peter McCormack: Yeah, that one there. 

Matthew Mežinskis: Yeah, December 2017 and March 2021.  Yeah, there was a double top actually, March and November.

Peter McCormack: I was just thinking, there's that Rational Root chart, which is the spiral chart, where those peaks and troughs correlate really well.  And so I'm just wondering, isn't it every four years minus three months or something?

Matthew Mežinskis: Could be.  I don't know the exact cadence there.  But the point of these percentiles, which I like, is you can see that they're rare events, right?  I mean, the 2σ move, which means 95% of the time it doesn't happen.  Okay, it's a 5-percentile event.  They only happened way back here in 2013, 2017, kissed it, and then that didn't even occur, based on this trendline, that didn't even occur in 2021.  Those were only 1σ moves then, so very rare.

Peter McCormack: Do you think there's any argument the reason it happened in 2021 is because of the amount of leverage in the system, the amount of broken -- look, so we had BlockFi, we had Three Arrows, we had the Grayscale Trust, we had Terra LUNA.  There was just so much selling power --

Matthew Mežinskis: And FTX.

Peter McCormack: Yeah, and FTX, because there was so much fuckery in the system that there was just so much selling power at a good time.  Basically, massive amounts of Bitcoin was being sold into a positive market.

Matthew Mežinskis: Yeah, your guess is as good as mine there.  I definitely enjoy, as we were talking before the show, Danny, Checkmate and Glassnode, the research that those guys do.  You can see a lot of that pressure.  But I just think if you simply look at price, which is --

Peter McCormack: Hold on, I just want to see what they stole from us.  Can you go to that June peak in 2021?  They stole $150,000 from us.

Matthew Mežinskis: So, yeah, March, April, it was $60,000 and then it went back down to $30,000, $40,000 in between the second top, which was in November, and it's back $67,000, $68,000. 

Peter McCormack: But we could have been more like $175,000 if we'd have that 2σ, you call it a 2σ up?

Matthew Mežinskis: Yeah, 2σ up would have been $175,000.

Peter McCormack: So, I still would have won my bet against HODL, Danny, even on that.  What's my bet with HODL for, is it --

Danny Knowles: It's $1 million Bitcoin by 2027.

Peter McCormack: Yes!

Matthew Mežinskis: Let's check it out.  You're not going to get there if you are -- you on that side? 

Peter McCormack: No, I'm under.

Matthew Mežinskis: Okay, then I think you're going to be all right.  Well, of course, those are 2σ.  Actually, let's put this 2σ.

Peter McCormack: Yeah, I want to see the 2σ moves.

Matthew Mežinskis: Okay, so end-2027, the curve, the trendline is $260,000, $250,000, $260,000, end-2027.  1σ up, $570,000; 2σ up, okay, that's your risk, $1.7 million.  And by the way, I go out to 2030, and it's $600,000 is just the regular curve. 

Peter McCormack: By the way, I'm happy to lose that bet!

Matthew Mežinskis: Yeah, I can imagine. 

Peter McCormack: If Bitcoin hits $1.7 million, I will lose that bet, but Real Bedford will get a new football stadium, I don't give a fuck!

Matthew Mežinskis: So, this is a nice way to look at it, I think.

Peter McCormack: Can I bookmark this chart; can I get this online?

Matthew Mežinskis: This is all local, but Danny, I can send you links to my YouTube where I discuss this stuff.

Danny Knowles: Cool.

Peter McCormack: I want this chart locally.

Matthew Mežinskis: As of right now, I got to do everything -- yeah.  As of right now, it's all local.  We could talk about if I can try to get it on your computer, but it might take some programming. 

Peter McCormack: No, I think someone needs to be able to subscribe and have this chart, and I think this chart here itself, this is a more rational version. 

Matthew Mežinskis: It's a fun one.

Peter McCormack: Well, it's better than Plan₿'s, it's better than the rainbow, like all those charts.  I think this would be something people would look at a lot. 

Matthew Mežinskis: Yeah, I mean because it actually is scientific in some way. 

Peter McCormack: Yeah, what do you think, Danny?  I think people would just use this as their standard.

Danny Knowles: Yeah, 100%. 

Peter McCormack: What stops you making this digital?

Matthew Mežinskis: This one would be easier because most of the data is very easy to get from someone like Coin Metrics, or something.  It'd be harder for the other ones, which is a lot of manual input.  But that's a long story, it's a long story, listeners don't want to hear it.  I don't have an answer for it at the moment.  Maybe every quarter you're going to be asking me that, but I don't have an answer at the moment.

Peter McCormack: Dude, I think you're leaving so much money on the table in not giving people subscriptions to this.

Matthew Mežinskis: Let's see about it, let's see.  So, this is all-time trendline.  One more interesting one I want to show you, though, is the difference of course, as I didn't mention mine by name, but you did.  You know, other charts, like stock-to-flow, so on and so forth, those are just static, no demand taken into -- and just putting it on there, assuming that the price is going to match this, so on and so forth.  This is a very simple one-variable model.  Anybody can calculate it, anybody can use it.  It's standard statistics.  But the reason that it works is because it moves with the price, right?  If the price is below, right now you see the price has been below for the last two years, as we know, that has been pulling down all of the lines, but it pulls down the black lines.  And as we go above it, once we do, it will pull it back up. 

But an interesting question is, would you to see the progression of how those go?  And I have that for you, I already have the answer for you.  Click on the start here.  But so here's the all-time trendline again.  What if we just looked at the crazy days, like the start when Bitcoin was getting a price.  I start this from Bitcoin Pizza Day, by the way, and there's some very early thin pricing data.  But then, once you get to 2011, 2012, you're okay.  Let's look at 2010's trendline, and how did that look?  Quite different.  If you only use data from 2010 and then project out, you would get this, and this is massive.  We're already at $5 million Bitcoin in 2017. 

Peter McCormack: We'd be billionaires! 

Matthew Mežinskis: We would be at $1.2 billion, you're not reading this wrong; $1.2 billion Bitcoin, that's a 2010 trendline.  Take it out to 2030; $128 billion!

Peter McCormack: Woohoo!

Matthew Mežinskis: So, you've got to love that trendline.  That's the 2010 trendline, okay?  But this is the better way to look at it.  As time goes on, we adjust our models and things change.  Let's go all the way up to 2016.  Now this is very interesting.  I don't have 2011, 2012, whatever.  2011's also quite extreme.  But let me just tell you, 2010 is the highest, there's nothing higher than 2010, it's the best one.  But as you add more years, it comes down.  So, let's go to 2016 now.  And you have the all-time trend in black.  Let's put 2016 on.  Did you see it?

Peter McCormack: Yeah, it matches.

Matthew Mežinskis: Did you see where it fell?

Peter McCormack: Yeah.

Matthew Mežinskis: It's almost the same.  Let's zoom in now.  We got to take out 2010, I think.  It's almost the same as the current.  And now as we're zoomed in, I'm going to add more, and tell me what you think of this.  2017, 2018, 2019, 2020, 2021, 2022.  

Peter McCormack: Yeah, so basically you have enough data to be statistically significant? 

Matthew Mežinskis: Not even that.  That, I think, would be the case even many years ago.  You know, it definitely is something that that works and Bitcoin has followed it.  But yes, the trendline goes down.  But it's actually not even at the lowest.  2016 was the lowest trendline we've ever posted.  2020 was also quite low.  We just pulled below that all time.  You see the 2020 trendline, it's $57,813 should be the price, whereas our all time is $56,000.  So we just, in the last couple of months, pulled below the 2020.  But still, we're not at the lowest.  That's the 2016 trendline.  We're very close.  2016 trendline projects $55,600.  We're at $56,700.  Maybe we'll post a new all-time low trendline this year. 

But the point is, these things bounce around, and really, in the last seven years, we haven't deviated far from that at all.  It's incredibly strong, in my opinion.  So, if you go back to this one, it starts to make sense, if you can understand how sort of stable that black line is.  And then here, you can literally see it, how it worked out.  They all just start stacking on top of each other.  So, I think that's a very good sign for Bitcoin.  Yes, we can have rough days, we can have 2σ down months and weeks where we go way, way below the current trend, and we're still below the current trend on a 1σ down move.  But this is the perspective, this is why I like this, you know, the big picture stuff.  This is, I think, the perspective that viewers and listeners should take.

Peter McCormack: Man, you're going to get this digital, I'm telling you, Matthew.  If this is out there and people can access it, they'll be sharing it constantly, you'll have a million followers on Twitter, you'll be doing deals for, I don't know, brain pills and mattresses, and you'll be rich and famous.  We'll be talking about PlanM!

Matthew Mežinskis: Maybe there's a marketing fellow that can help me out, I don't know, we'll see.

Peter McCormack: I know a thing or two about marketing.  Danny, help me out here, come on.

Matthew Mežinskis: Especially if you just post that 2010 chart, then you'll be really famous!

Peter McCormack: Yeah!

Danny Knowles: Well, it's all posted already, but yeah, I just started doing YouTube videos this year, and I can tell you it's growing, but it's all right.  I'm happy with everything that's happening.

Peter McCormack: As soon as people can access a URL with this on, they're going to share it constantly, it's going to have Porkopolis Economics up there, and then you're going to have people subscribing, you're going to get paid for your work.  Or, if you don't want to do it, I'll do it, and I'll give you a cut!

Matthew Mežinskis: We'll leave it open.  I don't want to bore the listener with the details, but all I can say is, it's been a grind even getting all this stuff together in this sort of animated way this year, but it's available.  I'm doing videos a lot about this stuff, so definitely you can check it out.  Porkopolis Economics on YouTube or Crypto Voices Podcast on Spotify, Apple Podcasts, everywhere else. 

Peter McCormack: We will put it all in the show notes.  Danny, I haven't looked at my notes once. 

Danny Knowles: No, but it's been great. 

Peter McCormack: Matt, love this, absolutely love this.  This is amazing.  Right, is there anything else you wanted to cover? 

Matthew Mežinskis: No, fellas, it's always a pleasure.  I enjoy speaking with you both anytime.  So, thanks a lot for having me on. 

Peter McCormack: In summary, everything is fucked, buy Bitcoin, and look at the charts, it will all make sense.  Matthew Maths is working, big picture, patience, amazing.  Well listen, look, we'll pin this out, we're going to get you to Bedford next year for our conference, you're going to present all this, hopefully, or something else, we definitely won't talk about the war, and yeah, amazing, I fucking love this stuff, yeah.  All right, Matthew, love you, man, thank you. 

Matthew Mežinskis: Appreciate it, guys, thank you.  Likewise, thanks a lot, guys.