 Will Bitcoin be worth a million dollars by mid-June? Balaji Srinivasan made a public bet that it would against a pseudonymous Twitter user called James Medlock, who identifies as a tax enthusiast and hyperinflation doubter. I'll let Srinivasan explain in this clip from our recent livestream. The point was to bring attention to the stealth financial crisis that, at the time that I tweeted this, that had not been acknowledged as such, so we're in like, and we're in a base of high inflation and unlike 2008, the US dollar is no longer too big to fail. Economist and monetary and banking expert Lawrence H. White doubts that Bitcoin will replace the dollar, but he does think that the banking system is much shakier than public officials like Fed Chair Jerome Powell are letting on. Our banking system is sound and resilient with strong capital and liquidity. We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound. No, I think I'm on Balaji's side when it comes to the soundness of the banking system or lack of soundness of the US banking system and I think he's doing a real service by drawing attention to what's been going on. White says that because the Fed kept interest rates low and injected cash into the banks even after the nation came out of pandemic lockdown, we got hammered by inflation. So the central bank quickly hiked rates in response, leaving America's banks holding a lot of government bonds that were suddenly worth less than they paid for them. A lot less. See those bars? Those are the losses FDIC insured banks would experience if they were forced to sell. When they did stress tests last year of the largest banks, they simulated what would happen to their net worth if interest rates rose from zero to two percent and that's as high as they went. And at two percent SBB would have been okay. If they had, you know, tested for three percent, four percent, where are we now, four and three-quarter percent interest rates, they would have seen a lot more trouble than the regulators wanted to see. So there has been a failure to look deeply enough. And now to stop more bank runs like the one that brought down Silicon Valley Bank, the Fed created a new program to guarantee banks more cash to meet their obligations. JPMorgan analysts estimate it could inject up to two trillion dollars, though it could also be a mere four hundred sixty billion, according to more conservative estimates. And so the Bitcoinization thesis or the hyperbicronization is that as the U.S. economy just gets worse and worse and more unpredictable, people will seek a safe haven, not in money market funds and big banks, which are in my view a trap in this cycle in a way that they were not in 2008. I agree that Bitcoin is a vital check on a government's power to endlessly devalue its currency, as well as against a total surveillance state. I don't know if Srinivasan's hyperbiccoinization thesis is right. What I do know is this isn't sustainable. Those red and green lines are the inflation and interest rates. The interest rate is supposed to drive down the inflation rate. But the big problem is that blue line on top, that is our thirty one point four trillion dollar problem, the national debt. It's reached terrifying levels, having surpassed annual gross domestic product with no end in sight. And one thing you don't want when you have a lot of debt are really high interest rates. Investment analyst Lynn Alden explained the conundrum in another recent conversation. The current environment we find ourselves in the 2020s in many ways is more similar to 1940s, which is the vast majority of the money creation and the inflation was not because of excessive bank lending. I mean bank lending levels are pretty normal. And almost all of it was from unusually large fiscal deficit that we've not seen since World War Two as a percentage of GDP. Because you had over 100% debt to GDP, it was very hard to raise rates. And so instead they just kept rates low, despite high inflation. And anyone holding dollars bonds and things like that really got devalued on an ongoing basis. And so I think that unfortunately the 2020s are kind of shaping up in that direction. The Fed can continue to hike interest rates and create more money to keep the bank solvent. That's not a long term solution. The debt will eventually crush the economy. Srinivasan thinks Bitcoin is the way out. White thinks it's a return to gold backed money. Both agree that the government's unrestrained money creation left America and the world in a precarious position. It's really just like the failure of central planning, you know, just in a totally different way than communism or whatever. It's just another just central planning, complete face plant, where they all make the same mistake at the same time because all the, you know, innovation or concurrence or whatever is being leached out of the system. And Srinivasan worries that this central planning will only get worse as the government moves further to quash the threat by instituting a central bank digital currency. And so every dollar can be tracked in the ecosystem. It's more programmable. It's like, it was like a suite, you know, where it's got a hook in the bait. And the hook is total surveillance, total control, ability to freeze accounts, drain accounts. So will Balaji win his million dollar Bitcoin bet? I'm not so sure about that 90 day timeline. And after talking to him, I don't think he is either. Do you actually believe Bitcoin's going to a million dollars or is it really just to draw, is it like a, you know, drawing attention to this problem that you've laid out? I think Bitcoin will eventually go to a million dollars. But I do think he's raised an important question for us all to ponder. What do you do when you can't trust your government to keep your harder and money sound secure and at least somewhat private? Part of that answer is you take steps to do it yourself. That might mean hedging with Bitcoin or gold or your investment of choice. It might mean keeping your data and communications safe by opting into privacy-centric tools. I think we're headed into a more decentralized and individualized world, whether politicians and central bankers like it or not. Bitcoin is a very powerful tool to protect against abuses of both the dollar and the renminbi for essentially American dissidents and Chinese dissidents if you want to put it that way. It can't be inflated. It can't be seized. You can also, by the way, use the private keys with something like Nostra to get you free speech, right? At the end of the Soviet Union, you know, the blue G is where the symbol of like freedom and prosperity. That's what Bitcoin is. It's a global symbol of freedom and prosperity. You're free person if you can have Bitcoin and you can move it around. Hey, if you'd like to watch my full conversation with Balaji Srinivasan and Laurence H White, you can click right here. Or if you want to watch another clip from that conversation, you can click right here.