Western Standard - HANNAFORD： In Trump's America, the New World of Bitcoin Imperialism

00:00:00.000 Good evening, Western Standard viewers, and welcome to Hannaford, a weekly politics show.

00:00:21.840 I'm Nigel Hannaford. It is Thursday, January the 23rd, and my guest today is Peter Piovich,

00:00:29.440 a Calgary-based Senior Portfolio Manager at Wellington Altus, Private Wealth Canada.

00:00:34.880 You've been here before. Welcome back to the show, Peter.

00:00:38.020 Nigel, pleasure to be back on your show again. It should be fun.

00:00:41.260 I think we're going to talk about Bitcoin. I think it's going to be great.

00:00:45.520 Yes.

00:00:45.840 That is, in a moment, we are going to be talking about what President Trump might be doing with Bitcoin,

00:00:51.200 which could change a lot of things for a lot of people if he does it.

00:00:55.160 First, though, a word from our sponsors.

00:00:56.880 This episode of Hannaford is sponsored by New World Precious Metals, based right here in Calgary.

00:01:03.800 Years of inflationary money printing and rising debt have decimated the savings of the average Canadian.

00:01:09.640 Gold and silver are the only currencies that have held their value for thousands of years.

00:01:15.100 Last year saw 30% gains.

00:01:18.620 New World Precious Metals offers unique platforms to help protect and grow your hard-earned wealth with gold and silver.

00:01:24.940 Check them out at newworldpm.com. Peter, let's just say that we all know this much about Bitcoin,

00:01:35.880 that although the price has been all over the place for years, the trend has been going which

00:01:41.720 way? Up. Up. Right. And there's a finite supply of Bitcoin, so that's likely to go on? Finite

00:01:50.060 supply it's fixed to 21 million bitcoin and we're not even quite there yet in terms of actual

00:01:55.580 issuance now peter you're telling me that while president trump is making headlines about

00:02:02.700 increasing defense spending and reasserting the binary nature of sex over here off the table 0.79

00:02:10.940 he is quietly creating a u.s strategic bitcoin reserve that sounds like a really big deal

00:02:17.980 They have an oil reserve. They have a gold reserve. What could a Bitcoin reserve do for them?

00:02:23.780 Okay, that is true. So this is still in the very early stages. So nothing has happened just yet,

00:02:30.680 but a lot has been talked about this. So President Donald Trump is proposing to create a strategic

00:02:36.640 Bitcoin reserve with the US government to essentially manage their altering fiscal

00:02:45.840 situation and their rising levels of debt, which currently stands just over $36 trillion.

00:02:54.060 There's actually an act that's being floated through Congress right now. It was floated by

00:03:00.640 Senator Cynthia Loomis, I believe her name was. It's called the Bitcoin Act. And the Bitcoin Act

00:03:07.760 is proposing for the US government to buy 1 million Bitcoin, not $1 million of Bitcoin,

00:03:14.240 but actually 1 million Bitcoin. That's a lot. Over the next five years, to act as a strategic reserve,

00:03:22.080 not that dissimilar from, say, the strategic reserve for gold, for oil, and actually other

00:03:28.800 commodities, palladium, and I believe there's maybe about 27 different commodities that the

00:03:34.320 US government does keep as a reserve. Now, if there is a finite supply of Bitcoin,

00:03:40.000 how much does a million bitcoin represent of that total a very large amount and the 21 million is

00:03:49.460 actually a bit deceiving because of that 21 million um you know the bulk of it is actually

00:03:55.120 not traded it's just simply being held uh by who knows who strategic investors satoshi nakamoto

00:04:01.780 uh who knows and it's just simply not being transacted and a significant chunk of it has

00:04:07.140 actually been lost meaning it's there exists but uh whoever owned it has lost their keys you know

00:04:14.820 essentially to their money um and uh so the actual amount that's available for purchase is a lot less

00:04:21.100 than 21 million bitcoin so if they're planning on buying 1 million bitcoin out of uh a tradable

00:04:28.780 float that you know we're not really quite sure what it is but it's a lot less than 21 million

00:04:32.700 that's a that's a tall order I see yeah now Bitcoin I think in the world of cryptocurrency

00:04:39.980 it is the fact that there's a finite supply which makes Bitcoin more desirable than some of the

00:04:48.020 other brands yeah it's one of the things it's not the only thing that makes Bitcoin unique

00:04:52.500 but it's certainly a big one if you think of it this way you know you know we we perceive value

00:04:58.840 with dollars Canadian dollars US dollars and so forth but we can always print more dollars and

00:05:03.480 we print more dollars every single day so if you think about it if if something is not scarce and

00:05:09.520 more of it's being created every single day you know what is its true value over time and as we

00:05:16.360 all know it tends to depreciate and it does and the depreciation mechanism we call inflation

00:05:21.340 well that's one way to look at it is inflation is partly the depreciation that we all experience on

00:05:27.680 our dollars. With Bitcoin, you cannot create any more Bitcoin. There's only 21 million ever to be

00:05:33.500 minted. That's it. Can't create any more. So if somebody holds Bitcoin or a government holds

00:05:40.280 Bitcoin as a strategic reserve, the propensity for that to go up in value over time far exceeds

00:05:49.340 the propensity of an asset that can be replicated to go up over time. And that's one of the reasons

00:05:55.700 why they want it as a reserve. So they already have some Bitcoin, I believe. So have they been

00:06:04.280 out there buying it? No. How do you get Bitcoin? I don't know the exact number, but I believe it's

00:06:09.880 around $20 billion worth of Bitcoin they already have. And it's not just the US government. Other

00:06:15.580 countries around the world also have it. It's typically obtained through seizures. So it'd be

00:06:21.900 drug dealers, could be people who haven't paid their taxes, perhaps, you know, it's hard to say

00:06:26.940 where they got it or from whom they got it from, but they have been collecting it over the years.

00:06:31.840 So you're telling me that organized crime is coming to the assistance of U.S. national debt?

00:06:38.420 I suppose they're donating some of their proceeds of crime to the government, yes.

00:06:43.940 All right.

00:06:44.380 In a joking manner.

00:06:45.580 Of course.

00:06:46.940 So, okay, so the Americans are going to pursue Bitcoin.

00:06:51.220 Bitcoin is a unique commodity you can expect that it will I think based on what you said

00:06:57.220 a reasonable person would expect it to go up in in price and it is a commodity it has been deemed

00:07:02.840 to be a commodity by the SEC and and the so it's going to appreciate we believe how what is the

00:07:13.640 grand plan then how does this why are they doing this why do they say they could buy more gold they

00:07:18.920 to hold more oil. There's a number of things they could do. So why Bitcoin?

00:07:23.520 So let's kind of walk through this.

00:07:25.660 A little bit of history coming here, I think.

00:07:28.240 We could get into the history for sure, but let's look at maybe the mechanics first of it.

00:07:32.440 So think of it this way. If you think of the U.S. having $36 trillion in debt,

00:07:36.920 that sounds like just a massive number, doesn't it?

00:07:39.720 Yes.

00:07:40.260 Yeah. So, you know, if one were to say compared to, let's say, a house purchase even.

00:07:46.000 So if you have a house that's, say, worth a million dollars and, say, somebody had to borrow a million dollars to buy that house, most people consider that fairly risky because the house does not have to drop much at all or, you know, for that borrower to be underwater, where effectively the value of their asset is less than the value of their loan.

00:08:10.960 And that puts the loan into some obvious financial peril.

00:08:14.280 Well, conversely, somebody who owns a million-dollar house, but they only have a $100,000 mortgage, that doesn't seem like such a big deal.

00:08:22.240 I mean, at the end of the day, the million-dollar asset, $100,000 mortgage, worst case, sell the house, pay off the mortgage, there's no problem.

00:08:30.740 So the thinking is similar on this account.

00:08:33.240 So if you have this $36 trillion debt, and if you have little reserves or reserves backing that debt that are not necessarily growing all that fast, then you have this growing, growing, growing debt, but the reserves are not growing commensurate with the debt.

00:08:51.460 So that puts them in a worse and worse fiscal position.

00:08:55.760 But what if those reserves were something like a Bitcoin?

00:08:59.040 And what if that Bitcoin were to grow greatly over the next 10, 20, 30 years?

00:09:06.140 And what if that Bitcoin were to grow at the same rate of growth of the debt, such that

00:09:11.760 the reserve is growing commensurate with the debt?

00:09:15.120 And if that happens, then all of a sudden, the debt doesn't seem so bad.

00:09:19.340 Or even better, what if the Bitcoin actually were to grow faster than the debt and you have this faster growing reserve asset versus a slower growing debt?

00:09:30.240 Theoretically, at some point, it's possible that the value of that reserve could even match the value of the debt, which would render it nothing, essentially.

00:09:41.980 So that's why they're doing it.

00:09:44.220 They're doing it as a means to make their debt level not look so big.

00:09:49.340 Can this work?

00:09:52.340 It can. However, there are tremendous obstacles and conflict, if you want to call it, in making this happen.

00:10:00.340 First of all, with any action by any government, there always seems to be winners and losers in that.

00:10:06.340 And this is really no different.

00:10:08.340 um certainly um you know holders of cryptocurrencies bitcoin um you know um you know um you know people

00:10:16.100 who are involved in their businesses in the crypto sphere if you want to call it that could benefit

00:10:20.260 tremendously the u.s government could benefit tremendously uh however uh there might there may

00:10:25.540 be entities that might be serious losers in in this in this endeavor um and we don't even know

00:10:32.180 fully who that may be because we haven't fully hashed all this this out but but for instance

00:10:38.500 it is possible that certain commercial banks may be opposed to this as it may hurt certain

00:10:45.220 significant parts of their business it's also likely possible that if this were to work

00:10:50.500 this may put other countries who are not doing it in in some state of disadvantage versus the u.s

00:10:58.180 which could create tensions on that side too as well so there's a lot and of course because

00:11:04.100 of all that this may not pass congress it may not pass the appropriate legal channels

00:11:09.300 like i said there's there's legislation that's being floated around right now which may or may

00:11:13.780 not pass so those would be some of the primary obstacles it's a fascinating prospect the

00:11:21.140 I cannot imagine why an American legislator of either party, unless they were deeply embedded

00:11:31.300 in private interests outside, wouldn't want this to work in the way that you have described it.

00:11:40.460 Apart from the fact that Senator so-and-so might actually be getting his campaign contributions

00:11:47.140 from an affected party, which we all understand how that works.

00:11:51.140 are there any other solid reasons why this might not be a good idea

00:11:58.100 on touching your first point um you know when you look at the biden administration

00:12:02.980 um they were vehemently opposed to this uh they went through great links actually to

00:12:08.580 to not only suppress the price of bitcoin uh bitcoin's a cent over their term uh but they

00:12:15.620 They even went through the links of essentially, and this is now coming out in the news slowly, going after, you know, owners of businesses or CEOs of companies that were involved in cryptocurrencies and basically trying to make life very difficult for them.

00:12:32.160 which may include things like debanking them, you know, audits, so to speak, with the intent to, you know, possibly dissuade them from going down certain paths.

00:12:46.380 So so for whatever reason, whatever the reasons may be, the Biden administration was very much against the proliferation of.

00:12:54.760 Well, that actually is a point I don't want to skate over. They could have been against it for ideological reasons or for reasons of self-interest. But what else could it be?

00:13:09.140 Well, I mean, it could be something simple. You know, I painted a possible picture here of something that may seem nefarious. It may have not been nefarious. It could be something as simple as a lack of understanding. I mean, let's face it, cryptocurrencies, blockchain, Bitcoin, it's complicated.

00:13:26.400 And for someone to truly understand this, they have to really immerse themselves and read books, learn a lot, and in people's busy schedules, and that includes the schedules of senators and congresspeople.

00:13:42.440 They may have just not done that.

00:13:44.100 So it literally could be as simple as Bitcoin is a crackpot idea.

00:13:49.200 It doesn't belong in government or in the U.S. financial system.

00:13:56.400 move on to the next thing good good yeah but obviously trump has totally seized with the

00:14:03.040 idea i believe that he and melania have issued their own uh uh bitcoin what's what do you hear

00:14:11.120 about that uh not too much i have no involvement nor do i want to in any of these uh meme coins as

00:14:19.440 as they're called meme coins meme meme meme um i mean literally these are uh the this is uh

00:14:27.680 these are highly speculative assets that have uh very little to no use case scenario um that are

00:14:35.360 there essentially uh to speculate on and uh but it's and it's almost actually too bad because i

00:14:42.000 I think the news surrounding those meme coins probably takes away from people's eyeballs to focus on something that's a little more constructive

00:14:52.620 and save learning about blockchain technology in general and some of the more secure cryptocurrency assets like Bitcoin.

00:15:01.340 You talk about meme coins, that one with the dog.

00:15:06.140 Everybody knew about the dog.

00:15:09.080 When the dog died, it was a headline.

00:15:10.780 That's right.

00:15:11.080 world so but Elon Musk in a way that kind of shows how easy it is to lose the track

00:15:17.800 on on this whole thing and the track if I am fully appreciating what you're saying

00:15:23.720 is that bitcoin has and I'm not a I'm not a paid spokesman for bitcoin I don't I don't

00:15:29.240 I don't get commission I just I'm trying to understand here bitcoin because it's a

00:15:33.640 finite supply and especially if it is adopted by the US as a standard yes

00:15:41.080 is going to appreciate substantially that would be others may or may not correct i'd be very much

00:15:48.900 in agreement with you on that um and um and it's not just that it's finite supply it's also

00:15:54.200 decentralized uh decentralized meaning that um nobody owns it nobody controls it um it's it's

00:16:01.840 its record is updated every 10 minutes on the blockchain uh and you know you know basically

00:16:07.980 millions of computers around the world every 10 minutes have to agree um on on on bitcoin's

00:16:14.060 integrity so uh it's so makes it highly secure very difficult well so far it's never been hacked

00:16:19.520 like some some say it's impossible to be hacked although i hate to use that word impossible

00:16:23.980 um but um uh it's it's got it's got properties very unique properties that make it scarce

00:16:31.000 highly secure um a very good store of value uh which which would give it properties to actually

00:16:37.680 be a reserve currency if some if people were to take a stronger look at it so about 10 15 years

00:16:45.120 ago judy and i were back east we were working in ottawa as you've as you know and uh decided to do

00:16:50.800 a side trip into new england and we ended up at breton woods okay yeah i didn't really know what

00:16:57.920 to expect but i i said judy this is where they this is where they did the big deal that set up

00:17:04.960 the dollar for decades 1944 yes so we've got to go and have a look and sure enough when you go in

00:17:11.840 there there are various mementos and memorabilia and things under glass and black and white

00:17:17.440 photographs of roosevelt and churchill and so you know it it this is this is now a museum isn't it

00:17:26.480 this isn't this doesn't represent the start of what we're what we're into now what happened no

00:17:31.680 So I didn't know you went there, actually. That's that's pretty interesting. I've never been there.

00:17:35.440 Just, you know, just the sacred ground. Yeah, I'd actually I'd like to go.

00:17:40.080 So just, you know, just a quick little history lesson on this. So the the old gold standard was

00:17:46.080 established at Bretton Woods in 1944, where there was convertibility of the US dollar into gold at

00:17:53.360 a partial level, not a full level. But that that that gave the US dollar strength and stability

00:17:58.960 through the late 40s 50s 60s but then obviously Vietnam War happened monetary inflation happened

00:18:07.680 which you know essentially created instability and the notion that maybe there wasn't quite

00:18:13.840 enough gold backing all the money that was actually being created so to that effect

00:18:20.160 some countries got upset Charles de Gaulle of France famously got upset and in August of 1971

00:18:26.160 sailed a warship you know over to new york harbor and basically uh asked for all his gold back

00:18:32.320 and did they give it to him no yeah and then a week or two later basically nixon uh you know

00:18:38.640 came on tv and suspended the convertibility of gold sorry of the dollars uh into gold uh ending

00:18:45.920 uh that that past agreement uh which then created more initial instability uh but then also created

00:18:53.440 opportunities for essentially unfettered access to capital that was not constrained by a physical

00:18:59.900 asset. A lot of people would say that was a good thing. You know, in many ways that it was. I mean,

00:19:04.400 there's a lot of people that say it was a bad thing. And there's but the reality of it is,

00:19:07.400 and this is speaking as someone who was born in Eastern Europe. I mean, in Eastern Europe,

00:19:12.080 if you wanted to build something, make something, say a bridge, say, for example, I mean, you have

00:19:16.980 to go find the money to get it. It just you're not able to just necessarily print it or borrow

00:19:22.020 it you have to find it and then go build that bridge you know not so in the western world we

00:19:28.080 noticed that when we moved to Canada was you know you needed to build a bridge well

00:19:32.780 issue bonds you know print the money and build the bridge and so we were able to do things that

00:19:40.680 were previously not possible because we unconstrained the dollar from from gold it also

00:19:49.000 created inflation though so that was a problem um a lot of boom and bust cycles so um and that

00:19:56.520 was a problem so what uh nixon and kissinger then uh shortly thereafter uh was they created a deal

00:20:03.400 with the saudi arabians in 1974 uh creating what is now known as the what was what was known as

00:20:09.000 the petrodollar and that's simply a mechanism where you know if uh anybody in the world wanted

00:20:14.600 to buy oil from OPEC they first had to buy U.S. dollars and those U.S. dollars were used to buy

00:20:21.240 oil which created demand for U.S. dollars and then OPEC would receive those U.S. dollars for

00:20:28.600 exported oil and then they would take those U.S. dollars and recycle them back into the U.S. Treasury

00:20:34.600 system by buying U.S. Treasury bonds. Hence completing the loop of money creation sent

00:20:42.360 overseas back into treasury bonds supporting uh the issuance of us dollar yet but but uh like all

00:20:50.920 good things and it was a good thing in many respects um all good things come to an end um

00:20:57.400 and the saudi arabians just last year uh decided not to renew the petrodollar agreement and there

00:21:04.200 was good reason for that actually because it was already falling apart um you know for years and

00:21:09.000 and years again you only buy oil dollars but in the last few years you know you

00:21:17.040 start buying oil with RMB or gold because other countries like China for

00:21:22.740 example just said you know what we're not having this and we're gonna be able

00:21:26.100 to sell oil in RMB so it was it was falling apart anyways but the Saudis 1.00

00:21:33.120 that end it, which now creates a problem in terms of who buys the U.S. debt.

00:21:40.900 And Bitcoin may be part of the solution.

00:21:44.080 Yeah, no, it could be.

00:21:45.980 So that's kind of part two.

00:21:47.360 So part one was the Bitcoin Act, which proposes to create a reserve on Bitcoin.

00:21:53.780 Part two is actually the Loomis-Gillibrand Payment Stablecoin Act, which is also being

00:21:59.520 floated through Congress right now.

00:22:02.220 And that, the idea of that is all stable coins that are based in U.S. dollars, I'll explain what a stable coin is in a minute, must now keep their dollar reserves in U.S. treasury bonds.

00:22:19.200 So what's a stable coin?

00:22:20.680 So a stable coin is, like, say you wanted to start buying Bitcoin and you open up an account that's, say, one of the major Bitcoin brokers like Coinbase, you would, you maybe send them some money.

00:22:32.220 whatever amount of money you'd like to send them you send it to them so where does that money

00:22:35.500 initially go because it doesn't buy bitcoin immediately it only buys bitcoin once you decide

00:22:40.060 to buy bitcoin or any other cryptocurrency uh initially it goes into something called a stable

00:22:45.180 coin which is just simply us dollars it's simply a cryptocurrency that holds nothing but us dollars

00:22:50.540 think of like a money market fund almost um historically those stable coins uh were just

00:22:55.980 took those dollars and put them on deposit at banks commercial banks around the united states

00:23:00.700 But now they're being potentially directed that they must buy U.S. Treasury bonds.

00:23:06.860 And as Bitcoin grows in value, stablecoin market grows in value.

00:23:11.460 And currently it's about $200 billion in size, but it can grow much, much, much bigger.

00:23:17.160 So conceivably, if you have a situation where, say, Bitcoin grows to some very large market capitalization, stablecoins could grow to a trillion, two trillion, ten trillion.

00:23:27.920 who knows what the limits are and they would be buying treasury bonds with all that money

00:23:34.160 essentially replacing the demand uh that we previously had from the petrodollar

00:23:42.400 and giving the u.s a perpetual buyer of their newly issued debt that's the plan will it work

00:23:51.600 peter we're just about out of time and that's a good note to go out on with one last question yes

00:23:57.280 i know you i know you like gold what are you telling your investors about this yeah so um

00:24:04.640 again everything that we talked about today is all things that are being proposed it's still

00:24:08.480 highly speculative at this point in time because we don't know for sure what's going to happen but

00:24:12.400 it's certainly ideas that are being floated around that we see them in these acts that have been

00:24:16.560 produced um so for for investors uh and again every investor uh has different risk tolerance

00:24:22.800 they have different goals so this does not apply to everybody but let's just say you're a typical

00:24:27.520 investor with a you know medium risk tolerance and above so you can tolerate some risk at least

00:24:34.320 so you know a well-rounded portfolio that has growth equities inside them that invest in

00:24:42.640 innovation so companies that are investing in innovation and productivity growth mixed with

00:24:47.840 With gold, I know your sponsor today, you know, was a gold company.

00:24:53.640 Absolutely.

00:24:55.240 You know, we are firm believers that portfolios should hedge the risk in their equity portfolio with holdings in gold, but also some Bitcoin.

00:25:04.660 It was well, because if this goes through, if this happens, probably going to want to own some Bitcoin.

00:25:11.360 Just it's just a thought.

00:25:13.000 And then for liquidity and just rounding out a portfolio purposes, have some, have a liquidity sleeve where you have some cash and or government bonds or fixed income securities, just in case there's a rainy day coming up.

00:25:27.120 Sounds like great advice from Wellington Alters.

00:25:29.960 Always a pleasure, Peter.

00:25:31.240 Thank you so much for coming in to see us.

00:25:33.800 Thanks, Nigel.

00:25:34.540 For the Western Standard, I'm Nigel Hannaford.

00:25:43.000 Thank you.

Western Standard - January 24, 2025

HANNAFORD： In Trump's America, the New World of Bitcoin Imperialism

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