Peter St Onge | Bitcoin & The Economic Bubble | EP 124
Aug 31, 2023
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Guest Peter St Onge, an economist at the Heritage Foundation and a former MBA professor, discusses topics such as Austrian economics, the economic situation in China, the consequences of rising interest rates on housing affordability, and the hope and optimism provided by Bitcoin amidst money printing policies.
Bitcoin is gaining traction as a lifeboat for those seeking financial security amidst inflation and lack of trust in traditional fiat currencies.
China's escalating debt and economic challenges pose global consequences, including cheap exports, halted resource purchases, and potential financial contagion.
The conflicting objectives of central banks and fiscal policies create tension, with the interplay greatly influencing the trajectory of the economy in the coming years.
Deep dives
Bitcoin as a Solution for Young People
The podcast highlights the growing consensus among young people, especially those on the libertarian side, that hard money, specifically Bitcoin, is the solution to the current economic challenges. Given the inflation rates and the lack of trust in traditional fiat currencies, Bitcoin is gaining traction as a lifeboat for those seeking financial security. The hope is that Bitcoin can provide an alternative system that offers stability and protects against the volatile and debt-ridden fiat currencies.
China's Economic Challenges
The podcast discusses the challenges faced by the Chinese economy, including high debt levels, overcapacity in industries, and state control. China's economic statistics are often unreliable, making it difficult to assess the true state of the economy. Moreover, the crackdown on dissent and censorship create an unpredictable environment. The country's escalating debt, if not addressed, could lead to a significant crisis with global consequences. The potential impact includes a flood of cheap Chinese exports, a halt in resource purchases from developing countries, and potential financial contagion affecting global markets.
The Clash between Monetary and Fiscal Policies
The podcast explores the conflicting objectives of central banks, like the Federal Reserve, and fiscal policies. While central banks aim to tighten monetary policy to combat inflation, governments continue with deficit spending and expansionary fiscal policies. This discrepancy creates tension and undermines the effectiveness of either approach. The Federal Reserve's ability to reign in money creation has temporarily reduced inflation, but the potential for another recession or increased government spending could derail this trend. The interplay between monetary and fiscal policies will greatly influence the trajectory of the economy in the coming years.
Mixed signals on labor market and inflation
The podcast discusses the current state of the labor market, highlighting the impact of the pandemic on the workforce. It mentions that many people dropped out of the labor force permanently during COVID-19, leading to job shortages. Additionally, the official unemployment numbers only count people who are actively looking for a job, overlooking those who aren't. The podcast also touches on the topic of inflation and the Federal Reserve's response to it. It mentions the stimulus packages and monetary policies implemented during the pandemic and how they initially aimed to create inflation. However, when inflation did start to rise, the narrative shifted to labeling it as transitory, causing panic and a change in monetary policy. The podcast explains that the Federal Reserve's focus on backward-looking data can be concerning, as their statistical adjustments may not accurately reflect the current economic situation.
De-dollarization and the rise of alternative currencies
The podcast explores the concept of de-dollarization and its implications. It mentions China's effort to bribe countries to exit the US dollar and the US's weaponization of the dollar, such as seizing Russian central bank dollars. These actions have raised concerns among developing countries and incentivized them to seek alternative currencies. The podcast also discusses the possibility of an independent gold-backed currency, like a BRICS currency, challenging the dominance of the US dollar. It highlights the potential strength of such a currency as a store of value and its potential to end fiat currency. While the podcast acknowledges the potential for Bitcoin as a neutral and apolitical alternative, it suggests that widespread adoption may still be a long way off due to government skepticism and lack of understanding.
Sam Callahan speaks with Peter St Onge. He makes daily videos on Economics and Freedom. He is an Economist at the Heritage Foundation a Fellow at the Mises Institute and a former MBA professor.
Timestamps: 00:00:00 “Swan Signal” Intro 00:01:19 Introducing Peter 00:02:29 Becoming Apart of the “Mises Institute” 00:05:27 Being Introduced to Austrian Economics 00:09:04 Learning and Educating Others about Bitcoin 00:13:00 Views on China’s Economy 00:20:36 Spillover Effects of China’s Economy Failing 00:23:02 Jackson Hole, the Debt Bubble, and Powell’s Hawkish Behavior 00:26:52 Thoughts on the Labor Market 00:33:50 Austrian Vs. Kenysian 00:36:38 Mortgage Rates and the Housing-Crisis 00:41:05 “Bitcoin is Hope” 00:45:04 How Today’s Economy Mirrors 1970s 00:51:05 BRICS Expansion 01:00:44 How to Connect with Peter 01:01:07 “Swan Signal” Outro
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