The Breakdown

The complete week's shows in one convenient episode Monday | Economic Freedom in the World After Capital, feat. Albert Wenger Tuesday | Lessons from the Financial History of Pandemics, feat. Jamie Catherwood Wednesday | Why a Strong Dollar Is Bad for the US and Bad for the World, feat. Lyn Alden Thursday | ‘Dismantle the Euro to Save Europe’ Feat. Tuomas Malinen Friday | The Shadow of Satoshi’s Ghost: Why Bitcoin Mythology Matters

On Wednesday, a batch of coins mined just a month after bitcoin’s birth were moved. It was the first time since August 2017 that any bitcoin from early 2009 had been transferred, and the action set Bitcoin Twitter on fire. While a number of bitcoin archaeologists quickly and persuasively argued the tokens were almost assuredly not mined by bitcoin creator Satoshi Nakamoto, it was a moment that reinforced the living history in the bitcoin ecosystem.  In this episode, NLW looks at what makes the Satoshi mythology powerful:  Genuine technical innovation and problem solving that had stymied some brilliant minds for decades Incredible instincts around narrative and human psychology, as reflected in the “Chancellor on the Brink” message embedded in the Genesis Block and the ceremony around the halving The incredible contrariness of a creator withdrawing in a world where entrepreneurs are lionized like no one else in society And while the battles within the bitcoin community around interpretation may look more like the early history of religions than like a business ecosystem, NLW argues that fervor is a key part of what de-risks bitcoin, even for investors who don’t at all care about the mythology.   

The European Union and the euro are part of the most ambitious political and economic experiment of the 21st century. The COVID-19 crisis, however, has exacerbated growing questions of political will and political legitimacy and led some to wonder if the eurozone can survive.  Tuomas Malinen is the CEO of GnS Economics, a macroeconomic advisory firm, and Adj. Professor of Economics at the University of Helsinki. In this interview, he and NLW discuss: Why the European debt crisis was actually a “morally corrupt bank recapitalization project” Why negative interest rates and quantitative easing made the European banking sector particularly weak even before the pandemic  Why the German Constitutional Court’s battle with the European Central Bank has major implications for the entire euro system Why European leaders are pushing for deeper integration when citizens want more lightweight integration Why European nations would be more likely to support one another in bilateral arrangements rather than through forced solidarity  Why the only way to save the European Union might be to let the euro fade away 

The dollar has a unique role in the world due to its reserve currency status. For many years that status has created incredible opportunities for the U.S. Increasingly, however, some are wondering if the global standard has outlived its usefulness - not only for the world but for the U.S., too.  In this illuminating conversation, one of FinTwit’s brightest minds, Lyn Alden, shares her perspective on: Why we’re at the end of a strong dollar cycle Why the Federal Reserve is terrified of the global dollar shortage The difference in creditor vs. debtor nations The concept of the Triffin dilemma  Why Japan has been able to print money without seeing rampant inflation  Why we have inflationary and deflationary forces competing to influence the U.S. economy  Why debt is going to matter more than ever  What alternatives to the USD system might look like

Jamie Catherwood works at O’Shaughnessy Asset Management, a quantitative long-equity investment firm. More importantly, however, he is the finance history guy on Twitter. His “Financial History: Sunday Reads” curation pieces and longer form articles on his site Investor Amnesia have become required reading for anyone who wants the historical context for current financial issues.  On this episode of The Breakdown, Jamie and NLW discuss: Financial lessons from previous pandemics, including the 14th century bubonic plague; an 1892 Cholera outbreak in Hamburg, Germany; and, of course, 1918  Strange parallels between 1918’s Spanish flu and the currentcCoronavirus crisis, including an increase in the price of oranges  The concept of “Minsky Moments, a key inflection point in bubbles where over-exuberant markets become unwound extremely quickly 

Albert Wenger is a partner at Union Square Ventures as well as a prolific thinker and writer. His “World After Capital” is an evolving digital book project that looks at a set of megatrend shifts as the world moves between economic paradigms from the Industrial Age to the Knowledge Age.  In this wide-ranging conversation, he and NLW discuss:  Why attention is at the center of the new Knowledge Age Why markets can’t price crucial needs such as pandemic preparedness Why the new era will be defined by three categories of freedoms: economic freedom, information freedom and psychological freedom Why universal basic income has an important role to play in economic freedom How UBI could avoid political capture  Why technology is inherently deflationary  Why real estate, education and health care should be much cheaper than they are Why community currencies could be a key innovation from the current crisis 

The complete week's shows in one convenient file  Monday | The Great Monetary Inflation: Paul Tudor Jones' Complete Case For Bitcoin Tuesday | How We Future Now - Live With Kathleen Breitman, Caitlin Long and More Wednesday | A Coming Reckoning: Why The Fed Can't Outspend Deflation, feat. Jeff Booth Thursday | Surveying The Carnage: Movies, Sports, and Education in Crisis Friday | The Great Inflation Escape: Where Bitcoin Fits In the New Monetary Order [Money Reimagined Pt. 3]

Niall Ferguson has called this moment an “age of experimentation” when it comes to currencies. One of the unique features of this moment is the experiments are not limited to the traditional actors. It is not just nation-states trying to elevate their currencies in the face of the global dominance of the dollar, but non-sovereign monies born of decentralized networks that are plausible contenders in this game of currency thrones.  Bitcoin was a byproduct of the last financial crisis. This connection was immortalized in the message embedded in the genesis block: “Jan 03/2009 Chancellor on the brink of a second bailout for banks.”  More than a decade on, in our new financial crisis, the size, scale and implications of that bank bailout seem positively quaint in comparison.  This episode looks at where bitcoin and other permissionless, non-state cryptocurrencies fit in the battle for the future of money.  It starts with a look at the bitcoin narrative in the wake of the market crash. With the most significant stock market correlation of its life, did bitcoin’s digital gold narrative evaporate alongside the S&P 500? From there, we move to an asset that has been massively in demand since the beginning of the crisis: USD stablecoins. We explore whether this is simply an affirmation of the supremacy of the dollar or represents a more disruptive force in the global monetary order. We conclude with a look at the relevance of bitcoin on the other side of the crisis. As the market moves from deflationary to inflationary, there are many who will be looking to hard assets and sound money as a cure. In that context, bitcoin could thrive. 

  This is the second in a series of episodes on how the economic crisis is challenging and transforming different industries. NLW looks at: Movies Direct releases are already making more than box office counterparts AMC is on the verge of bankruptcy (or buyout by Amazon)  Production is on hold and even when it resumes, likely to have strict rules on how it is carried out Sports Depending on your study, between 61% and 72% of people surveyed say they’re unlikely to go to live sporting events even after lockdowns are lifted Colleges losing $18B+ in sports related revenue  eSports alternatives surging - with conversations on Twitter up 71% Advertising Industry took 8 years to recover from Great Financial Crisis Ad spending already down massively in March/April - down 38% in digital, 41% on TV, 45% on Radio, 51% on outdoor.  Education Of public schools, only 22% are offering any live instruction  Before crisis, college debt had increased 107% between 2009-2019 Since the 80s, cost to attend college had grown 8x the growth in wages  Estimates of 15% fewer enrollments and $23B in lost revenue

Two powerful and diametrically opposed forces are shaping the economy.  On the one hand is inflationary economic policy, which keeps the price of assets like real estate and stocks rising ever higher, but at the expense of savings as the value of currency depreciates.  On the other is technology-wrought deflation. As technology increases its capacity exponentially, it causes everything it touches to be less expensive.  Jeff Booth is the author of “The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future.” In this conversation, he and NLW discuss: How today’s system came to be designed  Why policy makers are terrified of deflation  Why inflationary policy punishes savers and forces them into riskier markets  How policy that prioritizes asset holders over savers has significantly exacerbated inequality  Why each dollar of debt is producing less real economic growth than ever before  Why proposed “solutions” like MMT and UBI paper over the root causes of the problem