#611 Why Bitcoin Will Be The Next Global Reserve Currency
7/22/2021 · 49 min · transcript via mlx
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Key topics
— Credit markets as leading indicators of financial distress: bonds and credit default swaps signal trouble before equity markets recognize it.
— Bitcoin as default insurance on nation states: valued via credit default swap spreads on G20 countries, with an intrinsic value over $150,000 per coin today.
— Canada as first potential G7 default: wider CDS spreads than peer nations despite misleading AAA credit rating from S&P.
— Energy and Bitcoin mining synergy: flare gas capture and underutilized power generation can profitably mine Bitcoin while stabilizing electrical grids.
— Grassroots adoption in Central America: El Salvador and Guatemala merchants and developers are building real-world Bitcoin payment infrastructure.
— Personal portfolio allocation: Yale research suggests 6–8% Bitcoin allocation in traditional 60/40 portfolios reduces risk and increases returns.
Market & price signals
— Foss values Bitcoin at over $150,000 per coin based on credit default swap analysis of G20 sovereign defaults, yet notes it trades around $30,000—calling it "stupid cheap." He projects Bitcoin could reach $2 million or higher if it captures 5% of the $900 trillion in global financial assets and becomes the de facto reserve asset. He emphasizes the math is binary: fiat currency debasement is mathematically certain due to total global debt being four times global GDP, making Bitcoin asymmetrically underpriced.
Actionable insights
— Move off zero Bitcoin allocation: Foss recommends all investors, regardless of risk tolerance, own at least 5% in Bitcoin rather than zero, citing probability analysis favors the upside asymmetry versus continued fiat debasement.
— Access Bitcoin across multiple vehicles: Consider cold storage wallets for security, smartphone wallets for transaction experience, and tax-advantaged Bitcoin ETFs (Canadian tax-sheltered accounts offer 50-cent dollars) to optimize holding strategy.
— Study credit markets and sovereign risk: Ignore equity analyst recommendations and credit rating agencies like S&P; watch CDS spreads and credit default swap premiums to spot deteriorating nation-state solvency before mainstream recognition.
Episode sponsorships
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