Federal Net Outlays Explained

On this episode of Crazy Wisdom, Stewart Alsop sits down with Terrence Yang to explore the US economy through the lens of federal net outlays, inflation, and growth, moving into China–US economic and military dynamics, the role of the dollar as a reserve currency, and how China’s industrial and open-source AI strategies intersect with US innovation; they also get into Bitcoin’s governance, Bitcoin Core maintainers, and what long-term digital scarcity means for money, security, and decentralization. To learn more about Terrence’s work, you can find him on LinkedIn.

Check out this GPT we trained on the conversation

Timestamps

00:00 Stewart and Terrence open with the US economy, federal net outlays, and why confidence matters more than doom narratives.
05:00 They compare debt-to-GDP, discuss budget surpluses, and how the US once grew out of large debt after WWII.
10:00 Terrence explains recurring revenue vs. one-time income, taxes, tariffs, and why sustainable growth is essential.
15:00 Conversation turns to China’s strategy, industrial buildup, rare earths, and provincial debt vs. national positioning.
20:00 They explore military power, aircraft carriers, nuclear subs, and how hard power supports reserve currency status.
25:00 Discussion of AI competition among Google, OpenAI, Claude, and China’s push for open-source standards.
30:00 Terrence raises concerns about open-source trust, model weights, and parallels with Bitcoin Core governance.
35:00 They examine maintainers, consensus rules, and how decentralization actually works in practice.
40:00 Terrence highlights Bitcoin as digital gold, its limits as money, and why volatility shapes adoption.
45:00 They close on unit of account, long-term holding strategies, and risks of panic selling during cycles.

Key Insights

1. Federal net outlays reveal the real fiscal picture. Terrence Yang emphasizes that looking only at debt-to-GDP misses the deeper issue: the U.S. has run negative net outlays—more cash going out than coming in—for decades. He argues that sustainable recurring revenue, not one-time windfalls or asset sales, is what ultimately stabilizes a nation’s finances.
2. Confidence is an economic force of its own. Terrence warns that cultural pessimism can damage the U.S. more than high debt. Drawing parallels to Japan’s post-1990 stagnation, he notes that when people stop taking risks, innovation slows and economies ossify. The U.S. thrives on risk-taking, immigration, and entrepreneurial experimentation—and needs to preserve that spirit.
3. Inflation and growth are locked in a difficult balance. The conversation explores how current inflation remains above target while growth feels sluggish, creating a quasi-stagflation environment. Terrence questions whether the Federal Reserve should remain tied to a 2% target or adapt to new conditions, particularly when jobs and productivity remain uneven.
4. China’s economic strategy is broad, deliberate, and deeply practical. From inviting Western VCs in the 1990s to absorbing semiconductor know-how and refining rare earth materials, China built an industrial base that now rivals or surpasses U.S. manufacturing in many domains. Yet its provincial and real-estate debt highlight structural weaknesses beneath the surface.
5. The U.S. dollar’s dominance rests on military and institutional power. Terrence argues that reserve-currency status persists because the U.S. guarantees open trade routes and global security. Even countries with weak currencies prefer the dollar in black markets. Competitors like BRICS may want an alternative system, but replacing the dollar requires decades, not years.
6. Open-source AI is becoming a geopolitical tool. China’s strategy of flooding the world with strong, free, open-source models mirrors Linux’s global influence. Terrence notes that trust and transparency matter, since open-source code still requires knowledgeable maintainers who can verify safety, intentions, and alignment. This dynamic is now a competitive front in the AI race.
7. Bitcoin governance is both decentralized and fragile. Terrence explains that Bitcoin Core has very few maintainers and relies on a culture of trust, review, and distributed accountability. While Bitcoin works well as long-term “digital gold,” improvements are incremental, and the small number of developers poses systemic risks. He stresses that understanding governance—not just price—is crucial for anyone serious about Bitcoin’s future.