Podcast

Gary Brode: Inflation Is Designed to Crush You

Gary Brode spent a month in El Salvador testing Bitcoin as currency, talking to locals about Bukele, and building the macro case that inflation is a wealth-transfer machine Congress runs deliberately. Here's what he found.

Marty BentMarty Bent
13 min read
Gary Brode and Marty Bent on the TFTC podcast set against a Lightning Network payment screen and El Salvador flag
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Gary Brode is an investor and macro analyst who travels full-time and publishes research from wherever he lands. He just got back from a month in El Salvador, and he came on to talk about what he actually saw there, not what the legacy press has been telling you. We covered the Lightning Network working in daily life, Bukele's transformation of the country, the Fed's real (very limited) role in inflation, and why the policies being sold as fixes for wealth inequality are the exact policies producing it.

I've been saying for years that the fiat system is in terminal decay. Gary gave me the intellectual scaffolding to say it more precisely. The Fed is a red herring. Congress is running the inflation engine, both parties, all the time, with no intention of stopping. And the people loudest about wealth inequality are defending the policies that guarantee it keeps getting worse.

By the end of the conversation I was back where I always land: saving in Bitcoin for the long term is the best way to weather this storm. Gary's a month of on-the-ground Lightning payments in, and he agrees.

Key takeaways

  • The Fed controls the overnight rate and nothing else. Gary tracked two years of Fed cuts starting September 2024 and watched the 10-year and 30-year yields rise anyway. The bond market is pricing future inflation correctly and ignoring Powell entirely.
  • Inflation is Congress's doing, not the Fed's. Both parties overspend by trillions a year. None of it goes to infrastructure that creates value. The money supply expands regardless of who's in office, and as Lyn Alden has said for years: nothing stops this train.
  • Inflation is a wealth-transfer mechanism, not a weather event. It benefits people who own homes, Bitcoin, gold, and hard assets. It destroys people spending 90% of their income on food and fuel. The "anti-inequality" policies produce maximum inequality.
  • The Cloward-Piven strategy is written doctrine, not conspiracy. Two sociologists in the 1960s published a plan to overload the welfare system, crash it, and replace it with a federal guaranteed income. We're getting close.
  • Bitcoin works as currency in daily life, right now. Gary spent a month using Lightning in El Salvador across six or seven apps. Instant settlement, 1.25% total fees on River, no $5 credit card minimums, no $8 ATM fees. He details it all in his white paper.
  • El Salvador is a blueprint, not a fluke. A country of roughly 7 million people went from the murder capital of the world to one of the safest in the Western Hemisphere in two to three years. The economic feedback loop, succeed and get robbed, so don't succeed, is broken. Foreign investment is pouring in.

The Fed Doesn't Control What You Think It Controls

People keep looking at the Federal Reserve to fix inflation. I get why, it's what everyone's been told to watch. But Gary laid out the case as plainly as I've heard it: the Fed controls the overnight rate. That's it. If Morgan Stanley pays 25 basis points more on overnight deposits at the Fed, your mortgage doesn't move.

The transmission mechanism that used to connect the overnight rate to the rest of the yield curve, it's broken. Gary's argument is that it broke under the weight of the debt load. With what he estimates at close to $40 trillion on-balance sheet and another $200 trillion-plus of off-balance sheet obligations, there's no world where the Fed tweaking the overnight rate meaningfully affects what you pay on a 30-year fixed.

The proof is in the data. Gary wrote in the summer of 2024 that the Powell Fed was going to cut and it wouldn't matter. He was right. By his reckoning, the Fed cut roughly 200 basis points starting in September 2024. Over that same period, the yield on the 10-year Treasury rose. The yield on the 30-year rose. The Fed was cutting and borrowing rates went up, because the bond market was correctly pricing future inflation. It didn't wait for Powell's guidance.

Then the Warsh Fed hiked, and Gary checked the 10-year from the start of that week to the morning we recorded: up one basis point, 0.01%. The bond market's verdict was essentially: doesn't matter, we don't care what the Fed is doing.

Congress Is the Real Inflation Engine, Both Parties

The proper definition of inflation is an expansion of the money supply. That's Gary's framing, and it's the right one. And what we have is a government that's overspending by trillions of dollars a year, not on infrastructure that creates value, but on, as Gary put it, waste, theft, graft, and fraud.

The hospice Medicare fraud angle is a perfect example. All you had to do was spin up an LLC, get a PO box, claim you're providing hospice services, and pull tens of millions from Medicare. That's our money. And when people started pointing it out, half the country got angry at the people doing the pointing, not at the people doing the stealing.

Molotov cocktails at Tesla dealerships while billions were being systematically looted. That's where we are.

Lyn Alden has been saying for years: nothing stops this train. Congress will overspend. The money supply will expand. Inflation will continue. Both parties do this. Nobody is talking seriously about cutting spending. The financialization of the economy doesn't produce stuff, it produces more claims on the same shrinking pie.

Gary was explicit that this isn't a partisan issue. Both sides run the same playbook, spend money that doesn't exist, and let the inflation tax fall on everyone who can least afford it.

Inflation Is a Wealth-Transfer Machine, Not a Weather Event

This is the part that makes my blood boil, and Gary said it as cleanly as anyone I've talked to: the policies being sold as solutions to wealth inequality are the exact policies producing it.

Inflation is great if you own a home, own Bitcoin, own gold, own hard assets. It is catastrophic if you're spending 90% of your income on food and fuel and don't have disposable income.

The elderly on fixed incomes get destroyed. Working people get destroyed. The wealthy float up with the asset prices their hard assets produce.

Gary was honest about his own position: he owns Bitcoin, gold, silver, energy, and real estate. He benefits from inflation. He said clearly he doesn't want it. He'd rather make money identifying great companies at cheap prices.

But given the situation, he's going to own hard assets and benefit from them.

I called taxes a humiliation ritual on tape, and I meant it. When you look at your tax bill every year and then watch where the money goes, it's overt theft dressed up in paperwork.

The Cloward-Piven angle is where I think a lot of people miss the full picture. Gary brought it up, and I looked it up live. Richard Cloward and Frances Fox Piven, writing in The Nation in 1966, urged activists to register every person eligible for welfare benefits onto the system all at once. The goal: overload local government budgets and agency capacities, create a fiscal and political crisis, and force the federal government to step in and replace local welfare with a federal guaranteed income. They said this out loud. It's written doctrine.

And when you look at the incentive structures being defended by the people who call you heartless for noticing the fraud, we're getting close.

Healthcare costs are one of the places where inflation crushes ordinary people the hardest. My family has been on CrowdHealth for five years now, literally this month, and the savings versus traditional health insurance as a family of five have been real. Use code TFTC at joincrowdhealth.com.

El Salvador, What Happens When Crime Is Actually Eliminated

Gary spent a month in El Salvador and talked to taxi drivers, hotel workers, waiters, family business owners, people with money, people without. He wanted to see the Bitcoin adoption with his own eyes. What he found on the safety transformation was as striking as the Lightning Network payments.

By his account, El Salvador had roughly three dozen people killed per day at the peak. Gang extortion was systematic. If you succeeded at anything, ran a business, drove a nice car, you got robbed. The incentive to produce went negative. Every year, fewer people had a reason to build something and more had a reason to join a gang.

He told the story of a guy who had worked at a business for ten years and just didn't show up one day. Someone asked where he was. The answer: Jorge was killed over the weekend. Flat. Nobody cared. That's how cheap life had become.

Now Bukele's critics, even the ones who use the word dictator and have constitutional concerns, acknowledge that life is dramatically better. Gary estimates 75 to 90% of the people he spoke with said their lives are vastly improved, kids going to school, businesses starting, foreign investment flooding in, construction everywhere. The people with concerns said: I don't mind the way he's using power, I'm worried the next guy uses this as an example.

The Lee Kuan Yew comparison is apt. Singapore went from a poor backwater port city to a first-world nation with first-world amenities under someone who was, by any honest accounting, a dictator. The quality of life for ordinary Singaporeans transformed.

I've reread Hans-Hermann Hoppe's Democracy, The God That Failed this year. It raises the monarchy question seriously, and I'm not going to hedge on that. If the outcomes in El Salvador, test scores up, murder rate down, foreign investment up, ordinary people saying their lives are better, are what this produces, then the Western obsession with procedural democracy over actual results needs to be interrogated.

The IMF has confirmed that El Salvador's Bitcoin reserve grew through private donations, not public funds. The story there is more complex and more interesting than what you've been told.

Bitcoin Is Currency, Demonstrated, Not Theoretical

Gary spent a month testing Bitcoin as currency in El Salvador. Not theorizing about it. Actually using it. He went through six or seven apps and documented it all in his white paper, which we're linking in the show notes.

The core finding: Lightning is better, easier, faster, and safer than using a credit card. He'd go into a restaurant, ask if he could pay in Bitcoin, they'd point to a QR code on the wall, he'd open River, put in the amount, hit send, and the merchant's phone would ping instantly. Done. Muchas gracias. Nobody tried to cheat him. Nobody had to show him the screen. The transfer was instantaneous.

The fee structure matters a lot for who this benefits most. On River, Gary's total fees for purchases came to 1.25%. Wealthy people with premium credit cards are getting 3 to 5% back using traditional banking, for them, Bitcoin payments right now cost more.

But for people getting hit with $8 ATM fees on $100 withdrawals, or getting charged just to have a checking account, 1.25% is a lifeline. The underbanked are paying far more than that to access their own money.

The bottle of water problem is a perfect microcosm. A bottle of water in El Salvador runs 60 to 75 cents. No merchant is taking a credit card for under $5. If your smallest ATM bill is a $20 and the corner store doesn't have $19 in change, you're walking away thirsty.

Lightning solves that exactly.

Strike had a product Gary liked, but to buy Bitcoin on their platform you either paid a 2% debit card fee or waited 17 days for the Bitcoin to release. He sent them an email; they said use us regularly and the hold time drops. He was there for two weeks. That doesn't work.

Cash App's UX for first-time users was, in his assessment, horrendous, confusing in ways that don't show up if you're already familiar with it.

The UX gaps are real. But the underlying protocol works. And it's not just El Salvador anymore. I was in Birmingham, Alabama earlier this summer, wandered into a coffee shop, Square Terminal, paid in Bitcoin. It's happening.

How to Actually Protect Yourself

Gary owns Bitcoin, gold, silver, energy, and real estate. Not because he wants to, but because the situation requires it. He'd rather generate alpha by finding great companies at cheap prices. But in a world where you can't save in dollars, euros, British pounds, or yen without watching your purchasing power erode every month, you have to own hard assets.

The Bitcoin supply picture Gary laid out: roughly 90% of all Bitcoin that will ever exist has already been mined. About 20 million are in existence, against a hard cap of 21 million. By his estimate, 3 to 4 million have been irretrievably lost, which means the real effective supply ends up around 17 to 18 million.

That last million gets mined over the next 140 to 150 years or so. Meanwhile, M2 is up roughly 5% in the last 12 months by Gary's reckoning, and that's just the on-balance sheet expansion.

Every fiat currency in history has collapsed the same way, overexpansion, debt, guns, butter, bread, and circuses. The people deciding they could fund everything by reducing the value of the currency. That's not a prediction; it's the historical record. We're in the early stages of the same movie.

Gary bought more Bitcoin when it dropped from $64,000 to $15,000 in 2022. When it came back down into the 70s this cycle, he bought more again. The 50%-ish drawdown this cycle is, as he put it, an easy one compared to the 75 to 90% crashes in previous cycles.

Bitcoiners don't panic out. You hold and you stack.

I've been reading Adam Fergusson's When Money Dies, and the section on how every paperboy and busboy in Weimar Germany became a stock speculator hits differently right now. I've been watching people build agentic trading systems for prediction markets and sports betting just to try to stay afloat financially.

Unless you're a top 0.1% trader, you're going to lose that money. The desperation speculation is what bad money produces. Bitcoin is the alternative to the whole sick game.

Gary's portfolio is loaded up on energy and uranium. His thesis: if you want zero-carbon reliable baseload power at scale, there is no other answer. The worldwide nuclear renaissance is coming because the math forces it.

About Gary Brode

Gary Brode is an investor and macro analyst who travels full-time and publishes research on markets, Bitcoin, energy, and global economic conditions. He recently spent a month in El Salvador conducting on-the-ground research into Bitcoin adoption and published a white paper on the experience, examining whether Bitcoin functions as a currency in daily life. His investment focus includes hard assets, Bitcoin, gold, silver, energy, and uranium, as inflation hedges in a world of persistent currency debasement. He is a recurring guest on TFTC.

Sources mentioned

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Timestamps

  • 0:07 - Intro: Bitcoin wins in a fiat race to the bottom
  • 3:41 - World Cup visitors and what foreigners actually found in America
  • 5:41 - New house, new neighborhood
  • 7:15 - El Salvador: from murder capital to safest country in years
  • 19:17 - Bukele critics concede: life is better
  • 22:05 - The AI oligopoly, regulatory capture, and effective altruism
  • 33:17 - OpenAI as a zero, the open-weight threat, and the Intel trade
  • 39:49 - GPU-to-CPU shift and the agentic economy
  • 42:47 - Energy, uranium, and the nuclear renaissance
  • 51:27 - Congress, Medicare fraud, and where the money actually goes
  • 52:49 - Cloward-Piven, taxes as a humiliation ritual, and the wealth-transfer machine
  • 54:55 - Why inflation harms the poor and benefits hard-asset owners
  • 1:07:25 - Lightning Network UX: River, Strike, Cash App, and the bottle of water problem
  • 1:14:56 - Debt, reflexivity, and why desperate speculation fails
  • 1:16:14 - Saving in Bitcoin for the long term

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Frequently Asked Questions

No, not in any meaningful way in the current environment. The Fed controls the overnight rate, what banks pay on reserves deposited at the Fed. Mortgage rates are priced off the 10-year Treasury, which is set by the bond market, not by Powell.

Gary tracked two years of Fed cuts starting in September 2024 and watched long-term yields rise over the same period. The bond market was pricing future inflation correctly and ignoring the Fed entirely.

Richard Cloward and Frances Fox Piven published "The Weight of the Poor" in The Nation in 1966. The strategy was to register every welfare-eligible person onto the system simultaneously, overloading local government budgets and creating a fiscal crisis that would force the federal government to implement a guaranteed annual income. It's not a conspiracy theory, it's written doctrine. When you understand it, the incentive structure behind defending wasteful government spending starts to make more sense.

Because the poor spend the vast majority of their income on food, fuel, and housing, things that get more expensive as the money supply expands. Wealthy people own homes, Bitcoin, gold, and hard assets that rise with inflation. The poor don't own those things. So inflation is effectively a tax that punishes the people who can least afford it and rewards people who were already ahead.

Yes, Gary did it for a month and documented it in detail. Lightning payments at restaurants, convenience stores, and other merchants were instant. He'd scan a QR code on the wall, enter the amount in his River app, and the merchant's phone would confirm the payment immediately. The infrastructure is real and it works, with the biggest friction points being in certain wallet UX experiences, particularly for first-time users.

Gary's total fees using River for purchases in El Salvador came to 1.25%. Wealthy users with premium credit cards typically earn 3 to 5% back, making Lightning payments a relative cost for them currently. But for underbanked users paying $8 ATM fees, per-transaction bank charges, or monthly checking account fees, 1.25% is dramatically cheaper than what the legacy system charges them to access their own money.

By Gary's figures, roughly 90% of all Bitcoin that will ever exist has already been mined. About 20 million are currently in existence, with one more million to go to reach the 21 million hard cap. He estimates 3 to 4 million coins have been irretrievably lost, leaving an effective circulating supply of around 17 to 18 million. That final million will be mined over approximately the next 140 to 150 years based on the halving schedule.

In my view, yes, and Gary agrees. You cannot save in dollars, euros, British pounds, or yen without watching your purchasing power erode month after month. Every fiat currency in history has followed the same path: overexpansion, debt, collapse.

Bitcoin has a fixed supply, no government can inflate it, and roughly 90% of it is already in existence. The volatility is real, but the alternative, slowly losing value in a savings account, is a guaranteed loss. Saving in Bitcoin for the long term is the best way to weather what's coming.

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