The Treasury Secretary's Dilemma
The newly appointed U.S. Treasury Secretary, Bessent, brings experience from working with George Soros in breaking sovereign currency pegs. His core mission? Selling bonds to finance government operations amid economic turbulence.
Why bonds underperform:
- U.S. debt supply surged 80% since 2017 (Peterson Institute data)
- Nasdaq outperformed bonds by 80% over the same period
- Gold and Bitcoin delivered even starker contrasts, with BTC eclipsing bond returns entirely
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America's Debt Crisis and Inflation
The Deficit Spiral
- 2025 fiscal year spending already exceeds 2024's record deficit
- Political resistance makes meaningful spending cuts unlikely
- Nominal GDP growth must outpace interest costs—requiring massive credit injection
Inflation as Policy Tool
"Financial repression" becomes inevitable when:
- Governments monetize debt
- Banks extend "QE for the poor" via business lending
- Currency devaluation accelerates
Bitcoin emerges as the ultimate hedge against this engineered inflation.
Three Catalysts for $1M Bitcoin
1. Capital Controls & Tariffs
- Shift from visible tariffs to stealth capital restrictions
- Potential tax penalties on foreign bondholders
- Forces domestic monetization of debt
2. Bank Leverage Exemptions
- SLR (Supplementary Leverage Ratio) waivers allow infinite Treasury buying
- Jamie Dimon actively lobbying for this change
- Could unlock $900B+ in bank-driven demand
3. GSE Liquidity Bombs
Freeing Fannie Mae/Freddie Mac could:
- Leverage implicit government guarantees 33:1
- Inject $5T into mortgage markets
- Create parallel liquidity to COVID-era stimuli
The Math Behind $1M BTC
Projected monetary expansion (2024-2028):
- Bank credit expansion: $3T
- Bond monetization: $900B
- GSE reactivation: $5T
Total: ~$9T (2x COVID stimulus)
Price implications:
- COVID's $4T stimulus drove 10x BTC appreciation
- Scarcer supply + larger money flow = parabolic move
- Marginal buyers (ETFs, corporations) accelerate price discovery
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FAQ: Bitcoin's Million-Dollar Journey
Q: How does inflation specifically help governments?
A: It erodes real debt burdens while maintaining nominal obligations—a hidden tax on savers.
Q: Why focus on bank leverage ratios?
A: SLR exemptions let banks print profits risk-free by arbitraging low deposit rates vs. bond yields.
Q: What's the timeline for $1M BTC?
A: Hayes projects 2028 based on monetary expansion trajectories, but black swan events could accelerate this.
Q: How do stablecoins factor in?
A: Banks may issue zero-interest "orange stablecoins" to capture Treasury yield spreads under SLR waivers.
Q: What's the biggest risk to this thesis?
A: Political will reversing course on debt monetization—though current trends make this unlikely.
Conclusion: The Inevitability of Hard Money
As governments choose inflation over austerity, Bitcoin's fixed supply becomes its ultimate virtue. This isn't speculation—it's mathematical certainty based on monetary expansion trajectories. The only question is how quickly markets price in these realities.
"It's not about predicting the future—it's about reading the balance sheets." — Arthur Hayes