KaosInc

FWYL

[Julien Bittel, CFA @BittelJulien]

I wanted to give everyone something meaningful, a gift…

This comes from Global Macro Investor (GMI) and a deep, long-running body of research developed by @RaoulGMI and myself.

Many of you already know The Everything Code, which is our framework for understanding the macro landscape and why major central banks are debasing their currencies to manage aging demographics and overwhelming debt loads.

I call this a gift because these four charts, while only scratching the surface of The Everything Code, give you the big-picture context you actually need in moments like this.

They stop you from getting lost in every Bitcoin pullback and explain why Raoul and I never panic, even when, to borrow one of his expressions, everyone’s acting like monkeys throwing poo at each other.

Once you understand The Everything Code, you stop trading short-term noise and expand your time horizon. You cannot unsee it.

The starting point is what we call The Magic Formula:

GDP growth = population growth + productivity growth + debt growth.

Population growth and productivity growth have been falling for decades. Debt growth is the only thing filling the gap.

The private sector has been deleveraging since 2008, mainly households, but debt levels are still around 120% of GDP. The public sector sits at roughly the same level.

Here’s the problem…

If the government is running debt at 100% of GDP and the private sector is sitting on another 100%, and for simple math we call rates 2% even though they are really closer to 4%, then the entire 2% trend growth of the economy is being consumed by servicing private-sector debts. That is a completely unproductive use of GDP. And then there’s the issue of public-sector debts. There’s just not enough organic growth to service the existing debt load.

To understand why this dynamic persists, you need demographics.

Birth rates peaked in the late 1950s and have been declining ever since. This shows up about sixteen years later in the labor force participation rate as each generation enters the workforce (chart 1).

That means the labor force participation rate is not going to rise any time soon. It is set to keep drifting lower. This is a structural problem.

Aging populations, falling birth rates, and rapidly expanding automation make the backdrop even more deflationary. AI and robotics are replacing humans at scale, and we are only at the beginning. This reinforces the need for ongoing stimulus to keep the system functioning.

With weak population growth and sluggish productivity, the only way to keep GDP expanding is through debt.

Now here’s where it gets interesting…

Government debt growth is completely offsetting the demographic decline and policymakers know exactly what they are doing (chart 2).

And what happens next?

All debt growth in excess of GDP gets monetized (chart 3).

Basically, since 2008, magic money has effectively been paying the interest. Governments issue new debt to cover old interest, and once rates fall enough, central banks absorb it onto their balance sheets.

So to wrap this up, demographics drive the decline in the labor force. Governments offset that decline with more debt. That debt eventually gets monetized through quantitative easing (QE) style operations, not always directly by the Fed, but through the coordinated ecosystem of the Fed, the Treasury, and the banking system. And the bottom line is that there’s still a massive wall of interest that needs to be monetized, far more than GDP can ever cover. Liquidity is literally the only game in town.

And what thrives in a world of perpetual debasement? Bitcoin (chart 4).

I know this correction has been painful, but it’s all part of the journey. These periods feel brutal in the moment, then they fade and the trend resumes. This too shall pass…

To quote Walter White from Breaking Bad, later echoed by @LynAldenContact, nothing stops this train.

MOAR COWBELL (liquidity) = number go up over time. Zoom out and be more bullish…

[Raoul Pal @RaoulGMI]

Updated GMI BTC/M2 chart:

Nothing seems unusual here but please do not expect all wiggles to match or all timing points to be exact, it's the overall contextualization that matters the most... and yes, alts bleed more than BTC in corrections.

[Raoul Pal @RaoulGMI]

Keeps trucking along, doing its debasement thing... if 89% of all BTC's price action is explained by Global Liquidity then by definition almost all "news" and "narrative" is noise. Enjoy your weekend...

[KaosInc @Shiru589]

@fomomofosol Oh shit, I gotta go bid Rico... gonna be the next Rico!

[KaosInc @Shiru589]

@Vex_web3 $TP that 4-ply floor still holding

[KaosInc @Shiru589]

@fomomofosol Just picked up some Believe Wif Hat $BEU. Feeling super bullish.

[Mr. Man @MrManXRP]

I’ve been trying to tell you to watch for the end of May into June and July.

The imagery from Trump Jr. with the dam breaking…

Melania, it’ll all be different by June.

Trump, I’m going to make the stock market and crypto go UP!

You better not FAFO and see what happens. I’d recommend having your exit strategy, and learn how to mitigate taxes.

I’m not a financial advisor, and this is not financial advice.

[Raoul Pal @RaoulGMI]

🍌🍌🍌🍌

[Michael Saylor @saylor]

Kids Get Bitcoin

[Raoul Pal @RaoulGMI]

I think BTC dominance topped today. There are daily, weekly and monthly DeMark tops in place and the top is well below 2021 top and that was below the 2017 top.

If that plays out, it is the hallmark of the next phase of the Banana Zone. Let's see...

[RPC @RPCMage]

Narrative is everything

$LORE makes it simple.

@lore_vision

[Raoul Pal @RaoulGMI]

Everyone needs and wants a weaker dollar to service their dollar debts. No one wants it to move too fast ( it blows up VAR) but they need it lower over next 12 months. This is the purest form of global liquidity and is the largest driver of global M2 currently. The US knows this too and is a key part of trade negotiations, especially with China

[EKKO.Trade @EKKOPlatform]

We'd just like to say, a huge thank you to all our community/holders/investors. We pushed a new deployment to https://t.co/18UIhUEZjF, you'll be able to gain information on the EKKO V2 launch.

Make sure you check it out! ⚡

$EKKO

[EKKO.Trade @EKKOPlatform]

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[EKKO.Trade @EKKOPlatform]

Want to learn more about our ecosystem?

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Join our telegram to stay updated as we migrate to QuickNode and continue building EKKO V2 - https://t.co/UNuPppfU0N

[SlothDude⭕️ @LiveLikeSloths]

What use does my $EKKO holdings have?
People keep asking this question and since the answer is out here announced by the devs i ll do my part to share it with you.

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You can find more info about the Ekko project on their
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Join on discord: https://t.co/w0hAbHCQeT
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[Nic Peterson - Wolf Pup #0 @PeterNicson]

Process returns vs Outcome returns

If you are writing a blog and your first blog post gets 100 comments, that's a net of 100 comments over baseline.

Your second post gets 110 comments, only 10 over baseline.

Your third gets 111 comments, 6 comments over baseline 👇

[. @MattyDubsHair]

The risk to the casinos was never that a gambler would win big.

It was that the tiger would attack Roy.

The risk to USDC wasn’t that it’s reserves were in risky investments.

It’s that it’s cash was in a risky bank.

[The Guardian Academy @TheGuardianAcad]

Have you done you crypto tax yet? Or is the thought of it giving you too much anxiety?

If you need help sorting through the overwhelm - @MattyDubsHair will be sharing his process to make crypto tax easy

🗓️Wed Feb 22nd at 4pm Pacific
✅All TGA members and Wolf Pup NFT holders