Transcript: Matt Dines: The Offshore Dollar Is Being Dismantled

Matt Dines [0:07] You've had a dynamic where money's become freer than free. Let me talk about a Fed just gone nuts. All, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin.

Marty Bent [0:31] If you're not paying attention, you probably should be. Probably should be.

Matt Dines [0:34] Probably should be.

Marty Bent [0:36] Matthew Dines, it's a never-ending game, sir.

Matt Dines [0:41] Yeah, that's correct. There's always a tomorrow.

Marty Bent [0:45] There's always a tomorrow, but there's also a yesterday and last week. And it seems like over the last week, things have been heating up. I had to text you. over the weekend and get you on because I need the Matt Dines lens on what's happening right now.

Matt Dines [1:01] Well, that's good. I try to put it all together in terms of not just Bitcoin, but the waters in which it swims. So that includes geopolitics, the dollar, treasuries, all of the above. So yeah, happy to be back.

Marty Bent [1:14] Well, Mindprint Hash, you and Cameron have been doing an incredible job with that. I'm sure you've picked up on it, but John Arnold is your biggest fan.

Matt Dines [1:22] Thank you. Yeah, John's awesome. We have a little back-thread chat going discussing these things. So yeah, it's fun. But yeah, we're just trying to figure out the world as everybody else. We have our framework. Don't get too religious in terms of just base-level, what would you call them, hard beliefs. Be willing to update your priors as the facts come in. Yeah, I think ultimately, just try to, number one, understand the players involved, what are their incentives, all of that, but then don't get too wedded to your core convictions. And there's only really a couple of them in the Mindprint Hash framework. Number one, everybody's chasing their own book of business, their profit incentives, all of that.

Matt Dines [1:22] Number two, we're moving towards a monetary transition. So it might look a little bit unlike or different than what everybody expected in the 2010s, The 2021 peak QE printing cycle, the dominant narrative in the Bitcoin community was they're just going to print forever. We just try to read the facts, understand what's going on, and update, and don't get too religious, and be willing to kill your heroes from time to time.

Marty Bent [2:42] And so where do you think we should start? I mean, obviously we're starting in Res Media here because things have been developing. We've had multiple conversations. describing the setup and the potential incentives behind the scene. But obviously in the last week, we've had, I would say, at least 3 things on the Treasury front that are drawing people's attention. Obviously the increase of the buyback limit from $2 trillion to— excuse me, $2 billion to $4 billion. We had dissent come out yesterday morning, or rumors Sources said that he's willing to save the bond market at all costs, up to $1 trillion in the TGA, where the rumors are that he could plug into that. And then this morning, Wall Street Journal AI-generated op-ed from Stanley Druckenmiller. Is that kayfabe, him calling out Ascent with these moves? What is happening right now?

Matt Dines [3:45] All right. So just understanding track record, right, and history here. Bessent and Stan Druckenmiller go way back, as does Kevin Warsh in this circle. So these are people who, who know each other very deeply. Right. We'll just start with the Stan Druckenmiller WSJ op-ed this morning. It was actually yesterday. As we're recording this. Maybe not the best place to start, but we'll just choose that as our beachhead. And that narrative of beachhead, we'll bring it up later because I think we're going to touch on it, the Operation Economic Outcast. All right. But to start that, the WSJ article, this is one of those things where when it enters what used to be called FinTwit, I don't know what it is on X now, FinX. It doesn't sound as—

Marty Bent [4:34] Still FinTwit.

Matt Dines [4:35] Still into it. All right, cool. So when we see the discussion of the Druckenmiller op-ed, it's immediately pushed into like— what's the word? Like, it's like Perez Hilton type of journalism. Yeah, yeah. It's like this guy's attacking this guy. C. and New York. If you read what Stan Druckenmiller's op-ed, whether it was AI-generated or not, or assisted. What stuck out to me was several times, and this is where the lede was buried, he is calling for a long-term solution to the debt and fiscal problem, which in his assessment, and I would actually agree with this, it's the entitlements problem. These public schemes are not economic as currently structured.

Matt Dines [4:35] Doesn't mean that with reform they can't be extended in their longevity, but the way these systems work right now, that they are fundamentally unsustainable. And I think that's something as we go into every election cycle, no politician can win on that campaign. It's going to be something that's built up over time. And maybe I'll get into a little bit of that. I don't know if the TFTC audience cares about entitlement reform.

Marty Bent [5:53] I do.

Matt Dines [5:54] Deep dive. Sorry.

Marty Bent [5:55] And I would push back. I would say Trump getting elected last year, a lot of what he was running on was austerity, right?

Matt Dines [6:01] Oh, 100%, but it's different austerity. It's getting rid of fraud, waste, abuse. People love Social Security. The other thing too, when we talk about CPI and Bitcoin, CPI is understated. Where the rubber meets the road on CPI, the biggest impact it actually has economically is the cost of living adjustments. So if you think about it, it's your monthly paycheck that you're grandparents get from the Social Security Administration, or similar with Medicare costs, what they'll reimburse doctors for, et cetera. So that's really the rubber meets the road on the CPI. And what Stan Druckenmiller got at in his letter is, hey, you can't just rely on these gimmicks coming in with a liquidity support feature like buybacks.

Matt Dines [6:01] I'll get into the weeds on that in a second. But he's saying you can't mask the symptoms of the disease Ultimately, if you keep giving yourself painkillers to treat, let's say, cancer or something, it's like the cancer's going to rear its head. So what you're actually doing is you're masking the ability of society to get the signal it needs with higher interest rates to tell you something actually needs to be done here and addressed. Now, I'll get on my soapbox a little bit, and this may be Correct or incorrect, but you see things like the labor force participation rate in decline, right? I think it's down to 60% to 65%.

Matt Dines [6:01] That was one of the big narrative takeaways from the latest jobs report, the decline in the labor force participation rate. You've seen an exit of adult males from the workforce, all that stuff. Part of what's going on, in my opinion, the design of our entitlements programs. I don't even know if that's a good word for it, just Social Security, Medicare, et cetera. Over the long run, like we're almost 100 years into the Social Security pension scheme, call it 50 years into Medicare, Medicaid, the LBJ programs. It's very generous, right? To vest your full benefits on Social Security or Medicare, you need 40 quarters or 10 years of payroll contributions, right?

Matt Dines [6:01] And so you see, pretty much everybody can game their participation in the workforce for 40 quarters, right? You just stack those up. It's not that difficult to build up to that full benefit. And what you end up with over time is there's a lot of the population who are just producers. They're going to work for a 45, 50-year career regardless, right? Like the dad in Zoolander, he's like, I'm going to die in the coal mine. I don't care. This is me. I'm not going to shortchange it or shortchange the rest of society. But the incentive of the system is like, hey, I'm going to put in, get my 40 quarters.

Matt Dines [6:01] Some of it might be taking non-full-time work or just I'll take a lax cush job really with the intent just to accrue those quarters I need to get when I'm 65, a full pension. monthly pension or a full ride on government-subsidized healthcare over 100 years, right? The entropy coming through the design of the scheme just builds up. And that's what you get today where so much of that long-run non-economic design builds up into into debt. And so what Stan Druckenmiller is actually getting to, he's like, no, no, no, no, no. We need to get to the point where we can treat the disease. 75% or 6%, it's just like, let it happen.

Matt Dines [6:01] Let the public see that signal because otherwise, the voters are not going to acknowledge the crux of the problem. And What he was telling Scott Bessent there in the public forum, he could just as easily pick up the phone and call him. They've probably had dinner at least a few times in the last year would be my guess, or who knows? They've seen each other, right? They're long-term colleagues, probably friends as well. I don't think there's any animosity there. But what Stan Druckenmiller said publicly, basically, instead of privately, is he told Scott Bessent, if you keep If you think you're going to support long-term Treasury yields through this buyback mechanism or other short-term Band-Aids, you're just going to have to keep loading that, keep loading that.

Matt Dines [6:01] And eventually, the market will, I mean, just override that defenses. And we're going to have to come to an acknowledgement or some solution to this problem in the long term. So why not Rip the Band-Aid off right now, was kind of the Stan Druckenmiller approach. Now, then I have an approach what Scott Bessen is actually doing with these buybacks. We can get into that, but we can just put a pin in that topic. C. and New York in this season by putting one more voice of controversy or something like that around this thing going on. But yeah, that's kind of how I viewed what Druckenmiller's op-ed kind of was getting at.

Marty Bent [11:44] Yeah. I mean, let's get to the percent. Why did he feel the need to increase the buybacks again, $2 to $4 billion in nominal terms? Really not that much, but I mean, I think the market took it as a signal like, okay, here's the first domino to fall. Maybe we're getting towards implicit. It seems like many people took that as implicit yield curve control. At least the beginnings of it. And then you quickly have the weekend happen, yields revert back to where they were or close to where they were before Treasury Secretary Bessent made the announcement of the increased buybacks. And then he came out with that message yesterday morning where the sources are saying, I don't know if it's been confirmed whether or not he actually said this, but whether or not he said it, the market's taking it as if he said it. And so what Put ourselves in Scott Bessent's mind now. Why is he doing what he's doing?

Matt Dines [12:37] Yeah. So now you have to take Druckenmiller, like, yeah, he's right, put him on the shelf. Now you get into the geopolitical swim lane and what's going on. This is where you bring in Canada, the episode last week, the developments, let's say, on a deterioration front in the US-Canada trade relationship, which is also a de facto financial interconnection as well. But this is where you get into Bessent and what he's actually doing here with this buyback step-up. So the program has been running since 2024, right? It's 2 years old, buying the off-the-run, lower coupon, coupon Treasury bonds, right? So a 10, 20, 30-year would be the primary focus of what's going on front and center that Scott Bessen's talking about, raising from $2 billion to $4 billion.

Matt Dines [12:37] But the buyback program, it's every coupon bond for the off-the-run liquidity support. What does this mean? Just to start with, the distribution pipelines for these Treasury auctions, right? You go through the primary dealers, and then each one of those has a customer book of business where they take auction demand, who's going to buy at this auction. And then every quarter, let's say for a treasury bond like the 10-year, you'll just hold the monthly auction and then you'll distribute it into those pipelines and find a balance sheet for the bonds. We'll get into the quarterly schedules. You do, for a 10-year, you actually hold 3 separate auctions for 1 CUSIP or 1 bond issuance.

Matt Dines [12:37] You do the The initial auction, and then you do 2 reopenings where you just keep adding on to the existing debt, and then you start another one the next quarter. Reason? Concentrates capacity into one treasury bond issue. Okay. Yeah, you brought up this tweet. And what you end up getting is all of that Debt packaged into one QSIP, and then all of that liquidity can take the same fungible form. So the buys and sells in the future are going to be tapping into a deeper pool than you would if you just had a new treasury issued every month. All right. So over time, we're doing a new QSIP for the 10-year every quarter.

Matt Dines [12:37] Over time, those old QSIPs, they just become— it's like a a 2001 Ford F-150, right? You got a new model every year. The old models, they trade on the secondary lots with Carvana, CarMax, et cetera. What this is saying, we've got all these old Treasury bonds. It's like your secondary market is getting gummed up, is technically what's happening as we've moved from these old 2008, and on era of low coupon bonds when we were in a Bernanke, Yellen, Powell chaired Fed version of policy. We've moved on to— we're out of the 2010s, right? And that's pretty clear. But those old Ford F-150s that are now gumming up the lot, customers have gone to their dealer and said, hey, I want to trade in my old F-150.

Matt Dines [12:37] Those are all sitting on the lots. So now the manufacturer, this would be like Ford, the equivalent here would be US Treasury. They say, we're going to come in and provide that liquidity support. We're not going to buy them off you on a market price, but we'll be a backbid. And when I say backbid, I mean you set your yield at a level that you want to defend, And it's on your dealers, right? Same thing as a Ford dealer. You got a primary dealer bank. They say, all right, we want to sell these bonds back to you, Treasury, at this price. So when we say there's going to be an increase from 2-bill to 4-bill, think of that as it's a backbid, right?

Matt Dines [12:37] And Scott Bessen is saying, hey, we're going to buy up to this much quantity, If you need to sell this old inventory to make way for the new inventory, we'll do that. Now, interestingly, the signal is in when this starts, right? So I talked about those auction reopenings. He specifically mentioned September 9th as the start date. What day is that? That's the next reopening auction for the US 10-year. So what's going on here, we know there's going to be upward pressure on the long end of yield curves. This has been kind of out there and publicly admitted by central banks, really starting with, for me, the first signal was in the ECB's financial stability review document published in May 2025, where they acknowledged there's going to be a sharp and abrupt repricing in euro-denominated is what their focus were, but they were talking about all G7 or the post-World War II coalition sovereign debt markets.

Matt Dines [12:37] They're telling you the writing's on the wall, long-term yields up. But what Scott Bessen is saying is like, okay, well, now as we go into these monthly reauctions, what he's announcing here with this $2 billion to $4 billion upsize for the back bid, is basically like a protective guardrail on the downside saying that, all right, as we try to do this rotation process, the new bonds have to absorb capacity from balance sheets of both primary dealers, but also their investment funds and other clients, but it's mostly investment funds. So Treasury's saying, we'll be a liquidity backstop here. We'll set the floor as this kind of rotation model swap out from the from the customer's 2020 Ford F-150.

Matt Dines [12:37] Let's just be honest, they're junkers. 25%. Customers don't want that thing. So like, get me out of this, get me in the new 2027 F-150. That's really what Bescent is operating here with this buyback program. Now, all the discussion on X about this is overly focused. It's like, is this QE? Is this not QE? What I'm trying to understand and map to is what's actually reality here? What's going on from a mechanical perspective and then why? And then you bridge that into all the volatility we saw last week. Where does it take place? It really hit in that intermediate window where the 47th administration, after multiple rounds— this started on Liberation Day.

Matt Dines [12:37] If you go back, this administration has been running an offensive operation since April 2nd, with the tariff announcement in the Rose Garden. And we've just been building up steam from there, is how I view it in my framework. But the Canada relationship, the USMCA, all of that, that's been touch and go and actually deteriorating for this entire process. And it's escalated In 2026. All right. So you start with the tariffs like February, the week before Epic Fury commenced, the Supreme Court on February 20th issued that ruling 6 to 3 that, that overruled the administration's constitutionality or ability to collect tariffs under the IEPA. Right. Which was like it was a much more— it was a much more of a straightforward tool within the administration's tariff policy toolkit on specific Acts of Congress that have given them the constitutional, like vested power to or what you call declare and collect these tariffs.

Matt Dines [12:37] Supreme Court overruled on Feb 20. Hey, you can't do these IEPA. Not going to stand. So we say okay, all right. We do epic fury. All of that, you know, goes goes on. In June, President Trump signaled. that he wanted to strike a new trade deal or renegotiate terms with the USMCA, which implemented into law in 2018 in the first Trump administration. It had all these kind of scheduled checkpoints in the deal. And the way it worked right now, or the way it worked is we had a basically an option, if you will, like in sports, if you follow this, you got player options on contracts or team options, who can buy the player's year, et cetera.

Matt Dines [12:37] Similar thing here. We had a window and it was in July where the US would either need to announce an intent to abide by the existing agreement or withdraw, which puts it— it makes it a year-to-year deal. So instead of being a long-term deal, now we're saying with Canada, it's like, well, we're going to go year to year here. All right. And then you get in after that. Well, also on that arm, if I'm trying to read this poker table and I'm not one of the handful of people who are involved in the negotiations in the boardroom, reading that from the outside, if this administration is saying, all right, that deal we negotiated with you in 2018, we had the option It's not eject from the deal, but not re-up for another long-term, whatever it is, 10 years.

Matt Dines [12:37] We want to go year to year, renegotiate. That to me reads as a signal where you like your bargaining position that you've moved into between 2018 and 2026. A lot of facts on the ground have changed since 2018, right? But, you know, the, the signal we have or the information we're dealing with here, you see that the White House now, now opts to renegotiate. Tells me, all else equal, you'd be like, all right, they feel something different about their poker hand. They like their, their positioning in this to ask for, ask for more out of the economic pie. All right. So that opens up the process now where we, the administration, starts to use another package of tools, right?

Matt Dines [12:37] Standing acts of Congress that give it the legal power to apply tariffs on product imports into its country. And that's where you get into the Section 338, which I don't want to, you know, dive too deep on details here, but it's It's the power derives from the 1930s Tariff Act, which is a Hoover administration level tool, which is like that was the last whatever turning right where we're in between World War One, World War Two. So that kind of tells you where we are, that the executive is now using these tools that were last used in these type of eras. So July, I forget the exact date, but mid-July.

Matt Dines [12:37] the White House announces an intent to apply tariffs selectively on alcohol, dairy, and motor vehicles imports from Canada. And that kicked off a 30-day grace period before those collections went into effect, which would've been 12:01 AM Wednesday Eastern time last week. And so what happened, notice Wednesday was the day where the Bessent headline came out, hey, we're going to come in with this back bid. We're going to think about it as defenses. You're going to defend your yield curve from a sell-off, from an attack going into the next Treasury auction. Wednesday was the day where Bessent goes out and says, hey, we're going to add, instead of 2 lines of defense on that front, we're going to put in 4, is effectively how I'd view it.

Matt Dines [12:37] And the other thing there too, the White House gave a 3-day extension that extended that process to 12:01 AM. It was technically Saturday morning Eastern for a renegotiated deal to come through with Canada. That lapsed, and now we are where we are with the US-Canada process. And it's It's gotten to a very weird place, which is maybe where Carney intended to take it all along. And we can get into that thread, pull that one apart. But that whole 3-day window here, that's my point, Wednesday, Thursday, Friday, where we saw all of that market action happen, think about what was going on in the background. The big story was the US-Canada trade relationship, but it's also a financial story as well.

Matt Dines [12:37] So you think about this system, this transition in the dollar away from the offshore dollar towards the next thing. We don't need to go deep into it here. Go listen in our other podcast conversations where we've talked about that. C. as the center of its universe. And this whole situation in Canada, it's just another chapter. It's another flavor of the story of that process taking out. And that's where, in my opinion, you saw the market panic. And the Bitcoin candle is where we get into that. When I see that candle on the chart, yes, it's a break of the First wave. First wave we saw of the bear trend.

Matt Dines [12:37] If you're just looking at the technicals, you've got a very well-defined downward channel there that's just liquidity taking from Bitcoin, but also your treasury companies, all of that. And then you see the jump out of that channel on Wednesday and Thursday aggressively. It's a What was it?

Marty Bent [27:29] I think it was like a 5-sigma move.

Matt Dines [27:32] 5-sigma, yeah. But in terms of percent move, yeah, it was like what? 15%?

Marty Bent [27:37] 25%.

Matt Dines [27:38] It was massive. That's panic buying. So then you think about, all right, where is that coming from? Kind of the story we went with on FinTwit was, oh, this is the QE, this is the money printing. Everybody's just— we're gearing up for another cycle. Yeah, I'd argue, I'll go through the signposts. It looks like we're in, in terms of the global liquidity cycle, something similar to 2019 as we're working towards that bottoming event. So the initial reaction from a lot of the plebs, the retail accounts is like, yeah, smash buy. But in my opinion, the accounts that actually matter in size, your large family offices, your your big balance sheets that are tied to these geopolitical events and connected that I'm talking about, like central banks, hedge funds, et cetera.

Matt Dines [27:38] The central banks aren't going to buy Bitcoin. Their liquidity panic would show up in, say, a bid for gold, which we saw starting in early August after the intervention. That first week of August, we saw gold take off, and then Bitcoin followed in that window where the train came off the rails with the US-Canada relationship. The way I view that Bitcoin candle, yeah, to me, that reads like panic.

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Matt Dines [31:12] And then you get into what's going on in this old dollar system and the moves being made there. And that's where we get into what we saw yesterday at this Bessent press conference with Operation Economic Outcast. C. who's a big fan of— was it Big Boy and Andre 3000, Stankonia, Bombs Over Baghdad? That's dating me to 2000 era. Chappelle Show sketch. They bring in the president of Stankonia. But when I see that Operation Economic Outcast, and notice he used the term, this is the economic D-Day. I think we overuse that without thinking about what it was. D-Day was a beachhead invasion of Nazi Germany or the Third Reich, Making the inroads into continental Europe, we take the beachhead, but it wasn't the end, right?

Matt Dines [31:12] The the amount of time between D-Day and V-E Day, right? When you you know you corner Hitler in the bunker and you get the the famous scene from what's the the tweet meme everybody down the downfall movie scene that everybody memes over, which provides some you know. gallows humor, you know, from time to time. Right, right.

Marty Bent [32:39] Yeah. The—

Matt Dines [32:40] so D-Day itself was that primary invasion, right? Eisenhower, all that. You take the beachhead, but the key is it represented a phase of World War II where we've moved beyond just doing, you know, hand-to-hand combat against, you know, on the— defense perimeter. It represented really the first attempt on the European front of World War II of taking that beachhead literally at Normandy, and then working interior and disrupting the supply chains, the logistics, which the flip side of that, the flip side of trade in goods and services is your financial system, right? Because money is the other side of every transaction, you're disrupting the monetary flows.

Matt Dines [32:40] And then ultimately, Patton, et cetera, grind down their opposition in Europe. There's an interesting thread there, Montgomery versus Patton in Europe and who could get to Berlin fastest. Save that one for another day. We don't have the time. But think about that. When Bessent says this is economic D-Day, what I view that as, what he's telling us is this is the What this is is the actual invasion of a beachhead. Iran is your Normandy here, and then from there you're going up the interior. Now, what does that represent? Another headline we got Sunday night: we had a senior official in Peshawar, the Iranian. I believe his title is like it's president is his actual office.

Matt Dines [32:40] It's you know whatever president prime minister. We know their their governance structure, right? The ultimate power and authority rolls up to this ayatollah, right? This religious cleric. Poleszczyn holds the presidential office. It's not like the US Constitution's executive, like vested power in the president where this is an open argument, right? How much power actually accrues to the unitary executive, right? We're going to find out. These are open-ended questions. And from time to time, George Washington, Abraham Lincoln, FDR, etc. It's like, well, we— it extends as far as it needs to, right, for the constitutional order to maintain itself. All right. My point here, we get a senior administration official from the Iranian president openly admitting that there is a— I call it a criminal operation that may or may not be actually Yeah, I was trying to like make sure we're like being careful with our words here.

Matt Dines [32:40] But what the admission was was that there is a— call it a distribution ring that's absorbed politicians, right? , as beneficiaries. That oil was being exported into other countries, mainly China. And basically what you're doing here is you're taking that low subsidized price, you know, ringleaders of this operation, which I think criminal would probably be an accurate term, but not proven out in there, you know, all the right courts of law. So alleged, let's just call it that. And basically trafficked into China and what you're doing. So Iran's oil industry has been nationalized. I think it's the National Iranian Oil Company or something like that.

Matt Dines [32:40] It's but they've they've nationalized producer their producer, which is you know if you read The Prize by Daniel Yergin, you'll get into this history. Like it starts with you know UK Anglo Persian. developing their, their oil and energy production industry. UK Parliament even becomes a shareholder at some point. It goes to like, it's a long history here. Like, speaking of the Real Housewives analogy, like these people have been dating for a long time. There's a lot of baggage there and it's not even like themselves. Like their grandparents were dating, they were off and on. I don't know. There's just a lot of baggage and history behind this whole relationship.

Matt Dines [32:40] But anyway, you've got an unsanctioned, unlicensed selling of this low-price subsidized oil. Let's say it's like a buck a gallon. They sell that into China at below-market rates. What would it be? I don't know. If WTI is $80, who knows? Maybe they sell it for $50. But it's, it's, it's all, all of that profit is just captured by this scheme, which what you're actually stealing from is the national, nationalized, like the public oil company. Right. So that comes out Sunday night. That's huge in my read of the situation. And then you get an administration official like, I hope this guy's security is top notch because there's going to be a lot of people who don't like him shedding light on the kind of internal— Not just Iranians.

Matt Dines [32:40] Yeah, exactly. Because, okay, this is where we get into Economic D-Day and the press conference yesterday, or Operation Economic Outcast. Right. We'll see which term sticks here as, you know, the market bakes this in. The kind of the Easter egg in that press conference was Bessent was quoted as saying there will be a major financial institution sanctioned. I think he said by the end of the week. So the shoe's going to drop here. And if you're just trying to put the puzzle pieces together, because like I said before, I don't have a contact in the small room where these negotiations take place. So you got to read this from the outside and then the sources you do have to understand what's going on.

Matt Dines [32:40] But starting from the fact that there is an illegal sales operation, you call it a scandal, right? Of of the subsidized Iranian oil meant for the domestic market. The next thing you would do with that is sanction the bank involved, and this is where you'll see on X everybody's like, "Oh, it's gonna be Canadian," or you know something like that. It's like your eye is like all over this hot button thing. It's like kids soccer, right? Like. Running to right where the soccer ball is. It's like, guys, you're missing the opposite wing. It's wide open if we could just make the crossing pass. The banks who were facilitating those transactions are the like in my mind that's the most likely for these sanctions.

Matt Dines [32:40] That's where all right we don't need to go too deep into this, but you've got a bank called the Bank of Kunlun. I believe it's called in China operating in the Xinjiang province, and this is where if you start to. look back on the last 10 years and these little threads that, that have been opened up in the media, like, where is this one going? I know this is going to show up in the plot at some point later. Uh, Xinjiang is the region where the Uyghurs, uh, live. If you think about China as, you know, we view them as a monolith, right, from like externally, but kind of like the US, we have different regions.

Matt Dines [32:40] They're culturally different, uh, economically different, all of that. Xinjiang is the interior portion of the modern Chinese state's borders, and it butts up, I believe it intersects with Iran. So it's cross-border oil trade. And so you're looking at this bank, this Bank of Kunlun, it's an important bank to the people involved in this trade. So if you know this operation or it's part of your book of business and you're making money off of this oil scandal, you'll know that bank. It's important to you, but to us, Western followers, you guys are like, who is this? It's not even close to in your neck of the woods.

Matt Dines [32:40] So that's what I'm watching for here as this Iran story plays out. And as time goes on, it's starting to more and more look to me like— so if you think about Iran moving towards, like we saw with Venezuela, it's very clearly like we're cutting relationships between supply and demand for commodities, but chief among them, energy. Venezuela, Iran, and Half One were the key steps in that big picture plan. And when, and when we hear other analysts, right, you hear them talk about, oh, the Iran thing, this administration just shot themselves in the foot. I think this goes way beyond the administration. These are part of like the wargaming exercises which have been in the works and, you know, gone through update cycles, wargamed out, you know, starting as soon as the books closed on World War II.

Matt Dines [32:40] Like, we're probably planning, uh, what do we do as the, you know, once we get back go from peacetime to wartime again. So my point is all of this stuff has been war-gamed out extensively. You don't know all the different branches in the lattice tree, your own decision tree, what you can influence there. We're in chaos mode right now. It's definitely wartime. The signal on that is when we change the name on the front of the building from the Department of Defense to Department of War. But yeah, if you think about what's the next phase now, it's like, all right, first step, we reconfigured all the Western Hemisphere relationships with oil production, primarily in Venezuela.

Matt Dines [32:40] We've gotten on good terms with Argentina. There's massive movements and elections in South America as far as which end of the economic spectrum that they want to tilt to, and then which sphere of influence they'll lean into for probably the rest of the 21st century. But then now when you start to hear economic D-Day, you're like, oh, now this is the beachhead operation. It doesn't mean we're going to send— how many soldiers were on D-Day? 10,000? A lot, right? It doesn't mean we're going to send the ducks, all of those amphibious vehicles to land troops. It's like, no, this is going to be financial. This is going to come through the financial channels.

Matt Dines [32:40] And so you're going after the enemy's logistics, economy, but ultimately what's actually being absorbed here is financial sphere is how I would describe what's happening. So then now we get back into the Treasury auctions, right? The thing with Canada that A trade deal that fell apart. Now we're tariffing each other. View that in light of the same way that you saw a panic, like there's a rush into gold when Putin finally invades Ukraine. We shot up at $2,000. It failed that test back in 2022, retraced a little bit, and then had to make its run at $2,000. Once it broke through, it just ran, right?

Matt Dines [32:40] I view this as it's that same phenomenon where there's a panic into those collateral assets like gold, Bitcoin, similar to what we saw in 2022. The timing goes a little bit differently because gold is kind of the chosen blessed collateral in the existing central bank architecture. Bitcoin is for the upstart, the new internet, you call it? Decentralized economy, whatever you want to call it. It's the new thing where the public sector— sorry, the private sector, households, businesses are the primary leads of adoption. But that sign we just saw, you could say really it's been all of August, but in that heated event last week between the US and Canada, that was a strong signal there.

Matt Dines [32:40] Now, is this the end of the bear market?

Marty Bent [45:11] I don't know.

Matt Dines [45:11] We'll have to wait and see. From my point of view, in the big picture, the underlying situation, this open-heart surgery that's being conducted on the entire global economy, the financial system, the trade routes, those relationships that have really locked in and been established starting with World War II, that process is not yet finished. Like I said, that 11 months between D-Day and VE Day. There's probably a lot of time left in between, so we're just going to have to wait and see. The way I view it is we're kind of in that brackish water territory between freshwater and saltwater. You're like, what are you here? It's like, I don't know. It's its own special thing, but that's where we find ourselves right now. So yeah, everything's been interesting. You said this is my Super Bowl, right, at the beginning. It's just really Week 100 of an infinite game season is kind of how I describe it.

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Marty Bent [48:46] 2 questions related to everything you just said, or 2 parts of what you just said. Canada, where in your mind, where do you think the administration is trying to pressure them to get to? What position, what concessions they want to make? And then second, this Iranian official ringing the alarm bell on Sunday, is that like a black swan that really fucks things up for China and others that are on the other side of the US trying to negotiate and rejigger things on the back end?

Matt Dines [49:20] Yeah. So the Canada question, Canada itself is an interesting union. It's different. And I don't spend my time— I'm not from inside the Canadian system, so I don't have the level 100 out of 100 type of expertise on their own structure. But it's not the same as the US where the states come together, they form the federal union, power derives from the states, all of that. What I do know and what I have kind of studied about Canada, this modern country of Canada derives from— I think it's actually an act of UK Parliament. It's the British North America Act. And it's like right after the American Civil War.

Matt Dines [49:20] But it is a different beast, let's just say that, from a governance structure. It's not as cohesively and compactly held together as the US constitutional structure. And if you want to spend a deeper podcast on it, bring in other people, Matt Arad or someone like that who'd get into the weeds. But my point here, you see what is Trump's point of view? Where is he pressuring them? there is definitely some cultural pushback between the— not just between the French elements, right? Montreal, Quebec, all of that, and the kind of the French culture. Because you got to remember, these are formed out of the colonies, right?

Matt Dines [49:20] The North American colonies. Same way that in the US there's a distinct French culture in Louisiana, right? Same thing at the mouth of the St. Lawrence River, Montreal, all of that. Quebec has that element. So they're patching on a legacy kind of French cultural colony with the leftovers of the American Revolution who wanted to stay loyal to the British. They packed those things together, merged them in one collective whole. It's just been a back and forth process for 150 years since. But then on top of that, you've got a culturally distinct identity in the interior provinces like Calgary, Alberta, right? They've got their own— I mean, it's kind of an independence movement there.

Matt Dines [49:20] It's real. They're on the ground. They're strong. They're trying to push for their own kind of economic sovereignty. And then you've got British Columbia and Vancouver, which are pseudo-aligned. They're a lot more like the— if you think about the traditional US East Coast, West Coast split, the connection between Toronto, right, as like your center of, call it like British cultural antecedents. And then on the West Coast as well, very similar to the New York, DC, plus San Francisco type of combination in the US. But Politically, I think you see Trump or the the White House, the administration—they're pushing in on those existing kind of what you call them fissures in the Canadian whole, right?

Matt Dines [49:20] Pressing on the Alberta movement when it becomes and when there's an opening there, but also this week with with the Quebec situation, situation France, etc. There is stuff in the kind of the response to how things shook out. The the boilerplate language in the agreement that was stated, I think, by the Canadian side to be the hangup and why they didn't get a deal done. There were things in there about French language. So you see the White House tapping into those existing, what do you call them, fissures, fractions, whatever, at their own Thanksgiving dinner table. Canadians have their own Thanksgiving too, right? So yeah, that's how I would view how the administration is playing this for now.

Matt Dines [49:20] And then you're going to have to let your economies and your financial systems sort out now that these tariffs have gone into effect, like 50% on US imports of Canadian alcohol, dairy, motor vehicles. We're just going to have to see— supply chains are going to have to reconfigure, realign, et cetera. And then Canada's been slapping their own 50% tariffs on the US for its exports, but there's a total difference in relationships, right? US is 12 times the size and the trade relationship between US and Canada is much more significant to Canada's side of the table versus what it represents to the US side. It's going to hurt both, but right now we're in that marking-to-market phase.

Matt Dines [49:20] And this is where— so when Bescent saw that this was going to happen, the response was like, oh, we're going to increase our backbid size on the Treasury auctions as this process works through the sovereign debt markets. So that's how I would characterize that story. Now, the second one was a question on— was it China?

Marty Bent [54:26] Yeah. The Iranian official black swan that's completely messing things up for People on the other side of the US throughout all these various war games.

Matt Dines [54:37] So when we use the term black swan, I think Taleb, he defines it as things that people viewed as improbable or things that would never occur prior to them happening. And then after they happen, everybody is like, yeah, that was inevitable the whole time, that type of thing. But then they're big, they're shock disruptors to to a system. Was Iran the black swan? I guess, yeah, you would arguably say like this was the thing that was sitting there all along. Like it was your, it was your, your like wedge issue, your plot device for 20, 30 years, right? As you know, it was in the original Bush II Axis of Evil. We're talking about, um, what's the name, uh, Mahmoud Ahmadinejad on, you know, the South Park movie and all of that.

Marty Bent [55:28] Well, I'm not talking about like just Iran War generally. I'm talking about this official coming out and Oh, is that the black swan? Blowing the lid on the oil trades with likely China. Because there was another— because there was a headline to our Truth Social post that Trump sent out that was basically like, oh yeah, we're just— we're 10 million barrels a day are going to the strait. We're just sending the ships at night. There was that intermixed in the headlines. of the last week as well.

Matt Dines [55:59] So the oil or the energy exports through the Persian Gulf, they're majority consumed by Southeast Asia. So I think if you're making this story and the bigger thing is about the interaction between the US and its economic order or coalition it's building out, I call that one Pax Silica. I think the best encompassing term, all the supply chains that go into Yeah, the kind of economic bloc that the US is framing for its vision of the 21st century build-out, the AI development, all of that. Think about the Persian Gulf and the actual tankers not making it out of the Strait of Hormuz. Those were mostly going to the Southeast Asian markets.

Matt Dines [55:59] We've already seen in the Q2 data, this was an Anas Elhaji post 3 or 4 weeks ago at this point, as we got the second quarter energy consumption data, you see it hitting China, it's Japan, Thailand, Pakistan, Sri Lanka, everybody. Those economies, they're like down. As kind of TFTC audience will know, energy is your base level input for pretty much all economic activity. So that's your base layer collateral in the system. If you pull the energy out or you shrink consumption by, let's say, 10%, number one, you could have, in China's case, buildup of strategic reserves, which you rely on for exactly this case. But still, that's finite.

Matt Dines [55:59] What you're doing is you're pulling economic growth and activity trade away from that regional sphere, which translates into the financial system, right? Because that's the counterpart of every transaction that doesn't take place. That's missing credit expansion in the financial system. And then you think about how are credit-based financial systems, purely fiat credit-based financial systems, kind of structured as their Achilles heel. It's like when you pull away growth, that's when that's when your Jenga tower starts to wobble. And so you start to see other headlines. I'll just go through key events that I'm watching that didn't get much coverage. I think 2 weeks ago, the PBOC did its first mid-month liquidity injection into its repo markets domestically.

Matt Dines [55:59] That's a sign of that growth that's been removed from the system or the headwind if you will, kind of materializing in the money market. So the central bank, PBOC, has to come in and do a liquidity injection similar to where the US was, or New York-based repo markets were in September, October of 2019. Now, they haven't reached that scale, but you're seeing— PBOC has had these standing liquidity operations. I think they announced they started spinning them up in June. But if you think about zooming out, big picture, where we are in this process, everybody's waiting for the big print, right? These central banks, which no longer kind of agree to each other, the old offshore dollar system that kind of connected them all together, and we were just going to keep creating more and more dollar debt until the system couldn't bear anymore, we're past that point now.

Matt Dines [55:59] So now you're seeing these other players kind of make do with reality, right? So you're seeing that repo market support from the PBOC. You saw another headline in June where Banxico, Mexico's central bank, spun up their own repo market emergency liquidity facility. It hasn't been used yet, but as this broad operation that you would say is, at the end of the day, it's been war-gamed out several times and you're decision treeing, red team, blue teaming all of this, and identifying what you're going to press on or how you would react given an enemy's response. I'd say that's kind of what we're looking at here. So when you're watching for— yeah, the repo markets too, you're seeing reserves.

Matt Dines [55:59] There's a need here too for the US with the Treasury curve. We're waiting on Scott Bessent to start terming out debt, to add on or upsize the longer-term coupon bond auction sizes to take pressure off of the front end of the yield curve. And right now, we're in— this is that brackish state. It's like, yeah, we're eventually going to need to shift out and increase long-term Treasury supply, hence the upward pressure on interest rates across all Western government sovereign yield curves that we've seen since really Epic Fury began. This has been a year of yields rising. across most of the world, right? Everybody except for China, and then maybe Switzerland is still trying to maintain a ZIRP type of strategy.

Matt Dines [55:59] But I would say, yeah, if there's a black swan, it's like, well, the thing was there all along. Our intelligence analysts, both military intelligence as well as you would say the more profiteering-based intelligence arms like I don't know, CIA, MI6, Mossad, those, um, they were always aware, like they had to have had the, the understanding on the ground that there was this oil running scheme going on between Iran and Xinjiang, hence 10 years of the buildup on this, uh, Uyghur issue, right? Um, and so yeah, it was there all along, but now we're— it's now that we're in D-Day, we're going to press on that.

Matt Dines [55:59] And then if D-Day is successful, what it means is you're integrating, you're burrowing in, you've got your beachhead, you've set up your defenses so they can't run you back into the sea, and you're going to then push into the supply chains, trade, all of that, and then ultimately into the financial system as well. So it's integration. And then that just shows the big picture going on here.

Marty Bent [1:02:19] Yeah.

Matt Dines [1:02:22] Bitcoiners are well aware of this at this point. I think what we didn't have is a good roadmap of how we actually get there. Up until 2022, the dominant narrative of how this plays out is old system will collapse and we're going to have a crypto anarchist, whatever scheme. I don't know that that's going to play out that way as the dominant voices in the space were telling us is how they saw this playing out, nor do I know that that's the ideal way, the optimal way, because if we just keep pushing on this existing system and let all of that massive amount of dollar debt, most of it offshore, collapse upon itself, we lose the constitutional order in the United States.

Matt Dines [1:02:22] And this vision of your own self-sovereignty sounds good in theory, but there's no social patchwork or cohesion around you. So it's a world of violence. You don't have a constitutional order. I don't think it looks as bright of a future for your children as we might naively suggest.

Marty Bent [1:03:33] You just buy a cabin in the woods. You just buy a cabin in the woods and you bunker out and wait like 30 years. You raise your kids and then society fixes itself.

Matt Dines [1:03:41] Ted Kaczynski has entered the chat. I don't think that guy had the answers. Yeah, that's it. I mean, if you want to retreat to the woods, and there was part of that, right? As Rome was collapsing, right? And the 100 AD, that's like it got sacked, right? And what you saw, that means you— go ahead.

Marty Bent [1:04:04] Yeah, the Benedict monks go out and they create their own villages and these parallel societies.

Matt Dines [1:04:09] Yeah, the cities collapse. People just retreat to the mountains. You don't have You can't economically integrate. It's not a great world for building a business or conducting trade. It really is a downgrade in kind of your standard of living. And I mean, this is true. Through trade, we all accomplish more, right? If we can cooperate, figure out a way to economically cooperate with each other on a money that is a level playing field and you can defend, and the monetary structure allows you to maintain the political order. That's the strategy I think that is the winner and where we leave it better than we found it.

Matt Dines [1:04:09] So I don't try to be a fanboy or like, Scott Bessent's my hero, whatever. I just try to look at these things, see what's going on, what they mean, how they develop. There's very clearly What would you call it? Just a renegotiation of all these large global businesses. The 2 largest businesses in the world, it's not Nvidia, it's not Microsoft or Apple. 2 largest businesses in the world are the global monetary franchise, or now they're just regional monetary franchises, or starting to be, And then the global trade franchise or regional trade franchises. So that's who I try to watch, understand. And then yeah, you see those trends playing on top of that, the build-out of AI, all of that, the technologists becoming more and more important, getting their seat at the table as the old kind of economic monopolies start to fray.

Matt Dines [1:04:09] But yeah, that's how I see it. So was the oil scheme in Iran a black swan? We knew it was there all along, And once we, once we conducted all the steps in the order of operations that the war plans kind of teased out as, hey, this is the way to actually accomplish our objectives here, you knock out the defenses, IRGC capabilities, oil middlemen in Iraq who are same way exporting gray market, black market Iranian oil. Sanction the, the bank, the Iranian banks and crypto exchanges, and then the, the external banks, financial institutions, crypto exchanges who are business like, like what do you call it?

Matt Dines [1:04:09] I want to say business, but just serving those client relationships and doing business with those internal Iran factions like you knock out all of those. And then as those steps are checked off the project list, I think now you go for your D-Day is what it looks like is on the cards. So yeah, one way or the other, this will be interesting in the rest of Q3, Q4, as it always is. But that's where I see this. And then Bitcoin is— I'd say we're in that middle ground. We're in the brackish waters. Is the bear market over? Are we into the bull market? TBD. The way I view this, so start with the landmark legislation that would get the US government, like our existing constitutional order.

Matt Dines [1:04:09] How do we maintain that? And then port that onto our monetary structure. We start with these things like, well, number one, get rid of Biden. Vote that power faction out of office because their plan was to go with the CBDC route. We've ejected those people from control of the system. I mean, at this point, with the DSA, the Democratic Socialists of America, I think is their acronym, it looks like they're starting to take control of the Democrat Party, the DNCE, the establishment, your Chuck Schumers, your Elizabeth Warrens. I mean, you could almost place Elizabeth Warren in the DSA almost. It looks like those people are being moved, they're being transitioned out.

Marty Bent [1:08:19] Same.

Matt Dines [1:08:20] Yeah. And so I'm sorry to tell you this, voters, but I don't think they're going to give you the Bitcoin standard or the porting of the American constitutional structure, the experiment of people being the government at the end of the day. We have a unique thing on our hands, a very prized and valuable thing, in my opinion. It's been tampered with for 250 years, but I still think that that thing itself is worth preserving and should be. But my point here is I don't think Hunter Biden is actually going to be your steward of Bitcoin and said thing. So my point here, when you're looking at these actions in New York and DC and which way is the United States leaning?

Matt Dines [1:08:20] Is it integrating Bitcoin into its monetary base layer? You look at the playbook, just Biden, that whole camp, the path to the CBDC, which we were on under that administration. We put in the new administration in January 2025. First order is just revoke, stop work on examining the legal roadmap and steps to get the US onto a CBDC. You see the order of operations here. You get Genius Act, you figure out how do we integrate the stablecoin dollar, how do we regulate it so that we can transition this offshore dollar to the stablecoin dollar system. Where we're kind of stuck at right now, I mean, you could say clarity, but that's pseudo-relevant.

Marty Bent [1:10:03] Well, that's what I want to bring up because everything we discussed earlier, what's happening in parallel to the CFTC, the SEC, the OCC, And the executive, or I mean, they sit under the executive, but Trump as well coming out and saying, we're not waiting for Clarity Act. We're going to start issuing these charters. We're going to—

Matt Dines [1:10:20] That was also Wednesday last week, right? Regulation crypto assets in that 3-day window. Okay, go ahead.

Marty Bent [1:10:27] No, it just seems clear to me that they have this plan and they're like, we're not waiting for clarity. We're just going to start writing rules.

Matt Dines [1:10:34] So I think clarity is one of those where we had to call an audible because it looks to me— so we got Genius done June 2025. Along with one big beautiful bill, those are the 2 meaningful pieces of legislation to come out of this Congress. From what it sounds to me or seems to me, so Clarity passed the House is my understanding. It is hung up in the Senate. It does not have the votes to get whatever, to make it to the executive's desk from this Congress, right? So when you see that special meeting on Wednesday, what I would view that as is that's your audible. And you say, all right guys, we didn't, for whatever reason, we couldn't get the 50 votes plus J.D. Vance's tiebreaker to get clarity signed into law with this Congress. There's people rotating off. Mitch McConnell will exit stage left here at some point.

Marty Bent [1:11:33] Rest in peace. He's probably dead.

Matt Dines [1:11:35] Like, I— dude, I don't know, but that, that video of him just sitting on the Senate floor for 9 hours, that's insane. Yeah, I don't think, um— I have one kid when we go on road trips, uh, who just like— we can go on a 5-hour drive, we're like, hey, who needs to stop here? And one of them is like, don't need to. Every time I was like, you need to go, like, just go to the restroom, just, just empty. Like, he's just got the whale bladder is what we call it. But anyway, yeah, 9 hours for for a, uh, how old is Mitch McConnell? 85. Like, he's up there.

Marty Bent [1:12:05] He's dead. I think he's dead.

Matt Dines [1:12:06] Yeah, I mean, yeah, he could be sitting in a pair of Depends, uh, for 9 hours, but there's no way you can sit that long without needing a restroom break, food, water. That's insane. That's elder abuse is what it comes down to if he was alive. Like, that's just— I don't know, it's just insane. It's kind of like that video or the pictures we saw of, uh, Dianne Feinstein rolled out onto the, uh, The Senate floor when this was like a few years ago, right?

Marty Bent [1:12:33] Where late-stage dementia.

Matt Dines [1:12:35] It was like it was like you look at how she looked and it's like this is a person who should be like you know with her family, you know going out, you know the right way. And they do like the way they treat people. It's just insane, like to to put them through that. And and granted, Diane Diane Feinstein.

Marty Bent [1:12:53] Part of the what else did they sign me?

Matt Dines [1:12:54] Exactly. So it's part of her deal. So you can't feel too guilty. about it, but it's just insane all the way around. Then you juxtapose that with COVID era, you couldn't go in and see grandma if she's going to die in the hospital, so she has to die alone. It's like, what are we doing, guys? All right, get off the soapbox there. But yeah, so to get on the acts of Congress, yeah, clarity looks to me like it's stalled out. It's going to be tough. There's going to have to be some horse trading negotiations if Thune is going to put it up for vote on September 15th, I think, as he promised.

Matt Dines [1:12:54] Or allegedly kind of. I don't know if he promised. He made the statement like, "Oh, we'll put it in. " Oh, and if they don't get it now, it's like, "Yeah, we got the election. " What what clarity really gives us, in my opinion. So, all right. This tokenization of securities, kind of the backend settlement, the DTC, National Securities Clearing Corporation, all the backend infrastructure. for settlement, they all know that they're going to have to shrink the settlement time for trades. The liquidity is going to move towards whatever venues can offer that real-time settlement. We know the closest thing you can get to final real-time settlement, right?

Matt Dines [1:12:54] It's Bitcoin. We'll cut to the chase here. That's where this all leads, in my opinion, if you just map out the big picture. But you look at the tokenized securities, there's already all this stuff trading. A lot of it is tokenized stretch and all these wild, harebrained leverage schemes, junior stretch, 10x, whatever, senior. It's like, all right guys, come on. But no, there's also tokenized equity shares like Micron. There's massive trading. And then if you look at the charts of market cap of the tokenized securities. You're a VC, right? It looks like, oh, this is a durable and strong trend. So this is the thing.

Matt Dines [1:12:54] So the market cap and the liquidity is going to port onto this new structure, right? We say tokenized securities, but at the end of the day, it's just going to be securities. They're just going to take a new form instead of 100 years ago, your share certificate in Disney or whatever, would be the physical certificate that they sent you and grandpa or great-grandpa would put in his safe. And then to trade it, he might, oh, I'm going to sell with my broker, whatever, in St. Louis, call the phone. It's like, all right, we'll do the share. All right, now we got to bring in your share certificate, all of this.

Matt Dines [1:12:54] You saw this with paper bonds as well. And as of a few years ago, you could still get paper bonds trading. And so we went over from the real physical thing, like the bearer instruments, to a credit-based settlement of a thing where you got the DTC as the master ledger, the exchanges sit on top of that, the brokers sit on top of that as an inner layer. And then your record of Disney stock ownership now is an IOU with your broker-dealer. And then the real IOU is pointing to the DTC layer. So you got this middleman. This whole thing of tokenization, now we're we're getting rid of that.

Matt Dines [1:12:54] Instead of the digital representation of the thing being these credit-based liability kind of relationships, we've got a way now. Satoshi showed us, oh, now we can make it back to the real thing in the digital realm. I was actually just looking at Roche this week, just Pax Silica, important companies. Roche, a Switzerland-based pharmaceutical company, probably well-run, one of the best in class of that sector. And we're on a Bitcoin podcast, best in class in the pharma industry is still probably a 4-letter household name. But anyway, I looked at their share ledger and it was something like a meaningful number of their shares are still in the form of these vault instruments, like the paper certificates.

Matt Dines [1:12:54] So it's like, all right, that's an interesting little nugget there. But yeah, so where this is moving, all of your security settlement, they're moving towards this 24/7 liquid rails. Wall Street knows this, right? April or May, you were seeing headlines, hey, we need to be ready for T+0 settlement by whatever X years. We've got these pilot projects that are coming out as we move towards that milestone. This is going fast.

Marty Bent [1:17:33] Mm-hmm.

Matt Dines [1:17:34] In 2022, I want to say it was, it's like just yesterday in my lived experience, essentially, corporate bonds still traded T+2. So if I traded whatever, an Apple bond today, we wouldn't settle with it. It's Tuesday, August 25th. We wouldn't settle our transaction until Thursday, August 27th. That shrunk down to T+1. So you got a 50% reduction. But now you're going to look to move— Treasury market is still T+1, corporate bonds T+1, equities, I want to say final settlement T+1. We're going to shrink that again. So this is where you get into CLARITY Act. As we know that process is going to happen, if New York wants to maintain itself as the largest and most liquid capital market in the world, we've got to get something like Well, there has to be a piece of legislation for who is going to regulate it, but also then which parties are going to capture the share of that economic pie.

Matt Dines [1:17:34] And that's where you get into clarity, where the hangup actually is, in my opinion, is which firms, which businesses, which power factions are going to get what share of said pie. So that's clarity that's hung up. The thing that we actually as Bitcoiners should have our eyes on is the ARMA, the American Reserve Monetization Act. Because if you want to get a Treasury who is leaning into Bitcoin as a reserve asset, which if you look at Scott Bessent, you can see the indications that this is where he wants to move it, as well as statements from Trump. There's a laundry list now of breadcrumbs saying this is where they want to go.

Matt Dines [1:17:34] We have to get kind of the legal authority from Congress to do so. And this is where, all right, the ARMA was introduced, I want to say May or June.

Marty Bent [1:19:36] Mm-hmm.

Matt Dines [1:19:36] It had something like 18 co-sponsors. So there's a meaningful contingent who wants this, but it doesn't have the 215 votes right now to get that into law. So if you want to If you want to take this whole process, we talked about it, like the elephant in the room, which ultimately amounts to integrating Bitcoin into the new US dollar framework, we've got work to do this November, I guess is the short way to put it. But I think, yeah, that piece of legislation, the mechanics, all of that, there's only so much you can do without an act of Congress to lock in and write that authority into stone.

Matt Dines [1:19:36] Other than that, this play that was made on Wednesday with regulation crypto assets. Remember at the beginning of this administration, staff letter, was it 321 or so? I forget the numbers, but essentially it was the treatment of digital assets held in custody by a US-regulated financial institution. They had to hold a massive amount of capital for Say your bank wanted to custody Bitcoin for you, similar to the way Unchained did, they would've had to hold a massive amount of—

Marty Bent [1:20:51] An equal amount of dollars or treasuries.

Matt Dines [1:20:53] Which was insane. Yeah. I mean, it had a risk weighting of 1,000% or something that would just— it was actually prohibitive. It was a blocker to the US financial industry from moving in and building business on, you could say, the crypto rails. But this is a Bitcoin podcast. We know that's all bullshit, right? It's Bitcoin is the prize. So that was set up as a roadblock to prevent the US financial institution from taking— or the US financial industry from taking market share in this global competition. It's the hill to take. But the same way, I think it was Staff Accounting Bulletin 123 or something like that. I think it was 123 or 322.

Marty Bent [1:21:36] No, it was 21 and 22. So they rescinded 21. And created '22.

Matt Dines [1:21:41] Okay. Yeah. So it would've been 3/21, I want to say. Okay. Either way, show notes, we'll clean that up. I think if you've been following this story for 5 years, you'll know what I'm talking about. I just forget the numeral identifier on that one part, the senior moment. I just turned 40, so getting up there. But my point here is with regulation crypto assets, that is not law of the land. It's accounting procedure. It's book of business. As soon as if we had a replacement to another executive who was not friendly to said policies, they can just rescind those with a stroke of a pen and all of that goes away.

Matt Dines [1:21:41] So yeah, there's a lot of work to be done. Nothing is certain here. And that's where I said we're in that that brackish water in between the freshwater and saltwater. A lot of outcomes are going to hinge on what happens between today and let's say the next 6 to 12 months. Other point here, we kind of know in the Easter eggs that Scott Bessen has buried, right? 1 million Bitcoin has been the target goal that's been always thrown out as the objective for the US Treasury acquiring for its Bitcoin supply. I don't see a world where it wants to bid those in an upward market where price is getting away from it.

Matt Dines [1:21:41] So we'll see. I mean, is it going to acquire those? I mean, right now it sits on what, 100,000, 200,000 coins, something like that ballpark. It probably doesn't work for the Treasury to get to a million coins and acquire Bitcoin in size in a bull market where price is running away from it. So we'll just have to wait and see is kind of what I'm saying.

Marty Bent [1:23:39] Yeah. It's SAB 121 and SAB 122, just to clarify that.

Matt Dines [1:23:43] All right. Awesome. I knew it went— it was like a 121, but then I thought it was in order, 321. But yeah, good. Thanks for pulling that.

Marty Bent [1:23:55] I mean, the other thing I brought up the tweet earlier, but I'm not going to bring it up, so just read it. The US is mining banks at the fastest pace in 20 years and crypto is leading it. The OCC approved 22 bank charters in Trump's first 19 months, more than the previous 5 years combined.

Matt Dines [1:24:09] All right. That's an interesting development as well. Yeah, we didn't get into this, but think about what we're seeing with the sports ownership. At this point, it's like a targeted operation. There was an Ian Fleming quote. It's like, once it's happenstance, twice is, uh, is, is—

Marty Bent [1:24:26] Are you talking about the 49ers owner?

Matt Dines [1:24:27] Yeah, yeah, I will. We'll get into that in a second. Twice is coincidence. 3 times, that's enemy action, right? So first we see, um, I want to say the first one, it was either Mark Walter or the Ishbia family with the Phoenix Suns. Mark Walter, everybody knows this one's getting all the coverage, right? Guggenheim, the insurance companies, like we're just going to see where that one connects. Like below the surface, I don't think we have the full kind of public market disclosures of like, hey, where was that capital coming from? Is it cross-border? What's going on here? We're going to find out. The Ishbia family and United Wholesale Mortgage, that one's interesting, right? You had the earnings call for Q2 back in, I want to say late July, early August.

Marty Bent [1:25:14] Yeah. He basically margin loaned his stock and the stock's down 80%.

Matt Dines [1:25:19] Well, on the earnings call, it was down like 50% on the day. They had to announce, hey, we're discontinuing the dividend. We needed a liquidity injection from our partners at Oaktree, which is 100% owned by Brookfield, which is, if you think about it, it's kind of the Canadian power faction's kind of national champion of private capital markets.

Marty Bent [1:25:43] Right.

Matt Dines [1:25:45] Blackstone, Apollo, kind of the US behemoths in the space. What United Wholesale Mortgage was, this is interesting, they held the leading market share of the US wholesale mortgage industry. And the way they did it was aggressive pricing. So if you think about it, what's been revealed after the fact, so this Oaktree comes in for the— I don't know if emergency is an accurate word for it, but it was very much so needed financing. I just want to make sure I'm being careful with words. 5 billion into this entity, which it's not making economic sense at this point in time. We're in a different world than the ZIRP QE era where cost of funding is cheap, right?

Matt Dines [1:25:45] But you get the bailout rescue, the majority of the package. I want to say the Ishbia family put in $150 mil, and then everything, and then that's subordinate to all of the capital that Oaktree, which is 100% wholly owned subsidiary of Brookfield. They're injecting liquidity into this thing to keep it up and running. But you think about that, the one thing all of these stories have in common, right? Well, number one, they're sports franchises like trophy assets, but there's a tax benefit to those things for once you accrue a significant amount of wealth, and say Steve Ballmer is one of these owners who has followed on this trend, also heavily tied.

Matt Dines [1:25:45] If you've made a large nest egg or nut from this offshore dollar scheme, and then you need to minimize your tax bill, these trophy sports franchises actually have a very favorable treatment. You can depreciate them. You can depreciate the acquisition cost over, let's say, 15 or 20 years. even though they're long-lived assets, like it doesn't make any sense. They're saying, oh, we got player contracts or stadiums and you depreciate those and that gives you a tax shield to lower or deduct your positive earnings on. And then when you go to bequeath it to your heirs after you pass away and it goes through the trust process, all of that, your children get a step up in basis.

Matt Dines [1:25:45] So it's really a— besides like the posh lifestyle and, you know, front page and what's the Paris Hilton kind of journalism, that outlet, whatever.

Marty Bent [1:28:40] People magazine.

Matt Dines [1:28:40] People mag— like all that bullcrap. Like it gets access to that type of exposure, wealth-seeking and luxury lifestyle exposure, all that crap. It's a tax asset, right? And so what if you look at these ownership groups, like the things they have in common? Mark Walter, you know, at the helm of Guggenheim Partners, which is an asset manager, but it's connected in with, you know, insurance companies. And that's actually the wedge here. The federal investigators are coming in and examining, hey, this looks like a related party loan. which you can technically do, but only to a certain degree, and those transactions are going to be much more heavily scrutinized.

Matt Dines [1:28:40] That's what's coming in, the federal regulators to bust that up. But then the same thing with the Ishbia family, they're tied in with mortgages. And then the de Bartolo family, they made their money in real estate development. They merged with the Simon Property Group in, I want to say, 1996. And they do a lot of business. Brookfield is a huge operator of shopping malls or commercial real estate in the United States. When a tenant— there is a track record for the firm that, you know, or the kind of the Simon Property Group that is also a mall operator when they shared tenant base, right? Like Express or, you know, shopping mall kind of tenants, right?

Matt Dines [1:28:40] That—

Marty Bent [1:30:09] Five Below.

Matt Dines [1:30:10] Yeah. Over the hot tub. Oh God, what's that Lexner company?

Marty Bent [1:30:18] Victoria's Secret.

Matt Dines [1:30:19] There you go. Interesting, right? I don't want to sound too much like Whitney Webb here, but at some degree, you see the connections. It's like, okay. But whenever these tenants that are occupying their properties, as we've seen this trend, like, all right, Amazon's going to kill shopping malls. Like, okay, yeah, we know. When they need to come in and do emergency rescue financing for, let's say, an Express or Bonobos or something like that. They partner with each other on these bailouts. So there's business relationships. Let's just say that. There's a public record of transactions and financing similar to what we just saw with the United Wholesale Mortgage, ultimately connected up to Brookfield.

Matt Dines [1:30:19] Who was the chairman of Brookfield before he kind of was promoted, or I don't know if it's a lateral hire, to the Prime Minister of Canada in some interesting circumstances, right? It's Mark Carney, former Bank of England governor, former Bank of Canada governor. So I don't know, if you just zoom out, it's like, all right, that's the actual important thing going on. As I look at it, it's like, oh, there's a prize at the middle of the table in the boardroom that these power factions and capital factions are fighting over. One of those prizes, because it's all trade franchises and financial franchises, but the— specific trade franchise and financial franchise between the US and Canada, that's one of the infinite topics of discussion up for renegotiation.

Matt Dines [1:30:19] And so you're starting to see this all play out. So the sports franchises, all of these headlines, I mean, it's just interesting when Jed York shows up on the front page of the paper for what took place in the middle of nowhere, Ohio.

Marty Bent [1:32:07] Right.

Matt Dines [1:32:07] You're like, interesting. All right. But yeah, I don't know. That's how I see it. As always, follow the core trend. Over the long term, you see this transition away from the offshore dollar. That value is leaving the offshore dollar system. We are trying to run the Indiana Jones kind of bait and switch to move the dollar off of this old thing that we We are the ones executing the teardown, the dismantling. It starts with sulfur and it works forwards from there. So it's like when I say we, New York and DC are running the— they're controlling the action here. They're trying to port it in with the stablecoin dollar.

Matt Dines [1:32:07] And in the meantime, these power factions are just duking it out with each other for who's going to get the bigger share of pie in this new world. And I guess from your standpoint as a pleb, your job is to not get shaken out, stay on top of your skis, don't get run over when things like cold card or BIP 110 happens. But then also on the other side of that, don't— keep your center of gravity on top of your footing when this green candle shows up and you don't want to be on the wrong side. of like your balance, right? Off balance if and when the next move is just more volatility.

Matt Dines [1:32:07] Because the way I see it, yeah, you like that big green candle. It's a great run, but you also just stay humble, stack sats, I guess, to put the famous Matt Odell saying out there.

Marty Bent [1:33:51] Yeah. It's so wild. I did not connect the sports franchise shenanigans with all this, but it makes total sense.

Matt Dines [1:33:59] When you see 3 of them, it's It's like, what's going on here?

Marty Bent [1:34:04] For Mark Walters specifically, I mean, the one insurer that was like a related party owned the rights to the LA Dodgers TV contract. And it's like, what?

Matt Dines [1:34:13] Yeah.

Marty Bent [1:34:14] Were they holding that as a long-duration asset?

Matt Dines [1:34:17] I haven't dove in. That's where Nick Nemeth would probably be your better— okay, he goes into the exact assets on the relationships. I don't invest in those bonds, so I'm not focusing my time analyzing. So back in the 2010s, you had things like the Root Sports deal or all the TV rights for the regional MLB franchises packaged up and they were in a high-yield bond offering. I stayed away from that one. And you've seen those default or go into distress. So you've got underlying secular problems. But yeah, I didn't go into the the deep interconnections between Dodgers Tickets LLC and all of that. But those were marked as unrelated party transactions.

Matt Dines [1:34:17] And what we're seeing is the regulatory scrutiny going in there and I guess cleaning house. And the way I view that is you're forcing these key nodes in the system, and Mark Walter's not a senior node. He's not a Mark Carney. node. He's an important node, however. But when I see the transaction, who did he sell to? Joshua Kushner, Bob Iger. It's like, okay, well, that tells me maybe someone crossed the line from one side of the negotiation table to the other.

Marty Bent [1:35:40] Yeah. It happened so quick and it's like, oh, Josh Kushner owns—

Matt Dines [1:35:45] Exactly. Also heavily involved in the financing of the AI build-out. If you go to business schools right now, like MBA programs, where do they want to land for a VC deal? It's like everybody's like, Thrive. I want to go to Thrive Capital. It's like, yeah, the hottest job placement for that field. But anyway, my point there is like, all right, you're trying to analyze individual CUSIPs from day to day. That's what I do. But just to understand the big picture backdrop setting, understand the long-term trend, right? So don't buy the the Root Sports or the Diamond Sports offering in 2015. It's like, yeah, that one's not going to get you there. Those bonds aren't going to make it to maturity, stuff like that. So yeah, everything I've described in the last hour and a half, it's just kind of my latest update on kind of the big picture. Understand the conditions of the high seas that you're trying to navigate. So I don't know. Any last thoughts or follow-up questions?

Marty Bent [1:36:48] No, I want to give you your time back. I guess the last thought based off what you said, again, D-Day has the beachheads being set. There's going to be time between D-Day and VE-Day. Could last a couple years, could happen quickly, who knows? But I think what you're alluding to is Bitcoin is, as all this is going on, it's probably going to still be relatively under the radar. Yes, the price may go up, but when it comes to full-on integration, that might be further down the road, closer to VE Day than D-Day.

Matt Dines [1:37:26] Yeah. Well, I think we need the legislative framework to get there, to get us to the promised land, which could take— I mean, if we're lucky, we make forward progress this midterm election, we get a more favorable Congress, then we could see something like the ARMA passed into law. Now, if Congress is not there, then we got to wait till 2028. And that becomes an opportunity where it's not just Congress that's up for election, it's the executive. So we could take a significant step back. I know as much as everybody rightfully wants to criticize this administration for a handful of things, and number one among them would probably be communication, Number 2 might be the apparent look of self-dealing or profiting off of these big picture developments.

Matt Dines [1:37:26] But there is a scenario, there is a path between— in 2026 and 2028 where the Bitcoin progress or integration onto the US constitutional order gives back some forward progress. And right now, I don't know who to tell you to go vote for or anything like that. I would just say, as you're voting for a congressperson, hey, it'd be great to call the candidates, listen to their campaign teams, get them on the record. Do you support something like the ARMA or Bitcoin integration into the US Treasury? All of that would be forward progress. But yeah, I don't know who to tell Tell you to this side or this side.

Matt Dines [1:37:26] There's no hero here is what I'm saying. Like, and eventually, you know, if Scott Bessent does the wrong thing or something like that, it's like, yeah, I have, I have, I have no qualms whatsoever killing my heroes if I need to. But I just will say this. I don't think, I don't think Hunter Biden— you're seeing this like there is very clearly a campaign on Twitter like to, to shame all the podcasters letting him do this rehabilitation tour.

Marty Bent [1:39:31] Absolutely.

Matt Dines [1:39:33] But yeah, I don't think Hunter Biden is your answer, fellow Bitcoiners. I'll just say that.

Marty Bent [1:39:39] Neither is Gavin Newsom.

Matt Dines [1:39:40] Neither is Gavin Newsom. I would double stamp that as well. All right. I think that's good for now.

Marty Bent [1:39:48] This is good for now. I'll keep annoying you as things progress and we get into week 110, week 120, week 200. And this ongoing forever game. Fascinating.

Matt Dines [1:40:02] Definitely is. Yeah. It's definitely a more complex picture than we all thought in 2020 and 2021. But the cool thing is Bitcoin matters here. And that's very clear. It's not front and center yet, but I think as we continue to take positive momentum, that'll become abundantly clear.

Marty Bent [1:40:25] Cool. Beware, freaks. Beware. Peace and love. Thank you for listening to this episode of TFTC. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there. Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can leave a rating, On the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes a day early and ad-free, make sure you download the Fountain podcasting app. You can go to fountain.fm to find that. $5 a month gets you every episode a day early, ad-free. Helps the show, gives you incredible value. So please consider subscribing via Fountain as well. Thank you for your time, and until next time.

Marty Bent [1:41:19] Okay.