From Obesity Culture to Capital Controls, Bitcoin May Become the Savior of America's Trade Imbalance.

Author: Arthur Hayes

It turns out that the pro-obesity pop diva Lizzo has much in common with the economic imbalances of American imperialism. Don't get me wrong; whether you find the curves of an obese body beautiful is irrelevant. However, the metabolic disorders caused by obesity may sometimes appear beautiful, but they are always deadly. Similarly, the American economy benefits certain individuals more than others, but ultimately, severe social discord can lead to revolution.

The waistlines and economic conditions of Americans have not always been so distorted. In the mid-20th century, Americans were not obese, and the economy was not severely imbalanced. But over time, the problems gradually spread.

The food system has been hijacked by Big Ag, which has created false nutritional guidelines to promote processed, tasty, lab-made foods that, while delicious, lack nutrition. As Americans have become increasingly obese, chronic diseases have risen, and the consumption of nutritionally void foods has surged. Big Pharma seized the opportunity to develop a plethora of drugs that treat symptoms rather than the root causes of metabolic diseases like diabetes. The government has been unwilling to curb the influence of corporations controlling the food supply chain, so the narrative has shifted to "body positivity"/"big is beautiful," telling morbidly obese individuals that it is not the corrupt system feeding them junk food that is to blame, but rather they should be proud of their "rolls." The system glorifies stars like Lizzo, who is undoubtedly a talented singer, but promotes a lifestyle that inevitably leads to preventable, early, painful, and prescription-drug-filled deaths. Lizzo represents the status quo of obesity, which is highly profitable for a small group of corporate killers.

The American economy has been hijacked by money printing. Before the establishment of the Federal Reserve System in 1913, financial panics would occur when credit expansion outpaced cash flow support. Bad companies, and even some good ones, would go bankrupt, resetting the economy. Credit would be wiped out, and the system would rejuvenate. However, since the birth of the "Jekyll Island monster," every credit bubble has been met with massive money printing, and the imbalance in the American economy has never truly receded since the Great Depression of the 1930s. This is the fundamental reason for the severe imbalance of American imperialist trade and financial capital, rather than tariff rates. While the status quo has brought inequality, despair, and addiction issues to those without financial assets, it has provided unprecedented wealth to a select few who own stocks, bonds, and real estate.

Not everything is hopeless; better changes are possible, but they can be achieved through difficult or simple means.

For decades, pharmacological charlatans have been peddling miracle cures that can "melt" fat. Remember Fen-Phen? No drug has truly been effective, leaving only complex, unpopular, expensive, and unprofitable solutions available. Going to the gym, eliminating cheap processed foods from the diet, and consuming expensive organic fresh produce are complex methods to combat obesity. But even these methods are not sufficient, as once you fall into obesity, your physiology adjusts hunger and metabolism to ensure you remain obese. Some scientists suggest it may take up to seven years to change the body's metabolism to support a slimmer you. Until Denmark introduced the "easy button."

GLP-1 agonists are a class of drugs developed for diabetes treatment that have been shown to reduce cravings for food and addictive substances like alcohol and nicotine. Popular drugs like Ozempic, Wegovy, and Monjaro can lead to significant weight loss in a short period after use. Currently, these drugs have proven to be safe enough that some believe many formerly obese individuals may take them for life. Thanks to modern medicine, as long as you can afford it, obesity can be easily addressed through injections or pills. Even Lizzo ultimately decided not to die from preventable metabolic diseases and chose to use this miraculous weight-loss drug. Well done! However, she may not be invited to campaign for Kamala Harris in 2028… but who cares? ;)

There are painful and painless solutions to address America's trade imbalance. For American politicians, implementing policies that cause pain or discomfort to middle voters is a surefire way to ensure they are voted out of office. The Trump administration previously attempted difficult and painful options but quickly realized that middle voters could not accept higher-priced American goods that might only appear a decade later. They also could not tolerate the inconvenience of empty shelves until American manufacturers could produce the various goods that China once supplied. This dissatisfaction was communicated to Congress members and senators, particularly in Republican districts, prompting the Trump team to retreat and now seek another way to achieve the same rebalancing. From the recently announced initiative to reduce tariffs on U.S.-China trade to about 10% within 90 days, the retreat from maximizing tariffs is underway.

A successful general can retreat from a flawed strategy and still achieve victory.

Another politically acceptable and simple method to rebalance U.S. trade is to attack the capital account surplus through various forms of capital controls. These capital controls would act as a tax on foreigners purchasing and holding U.S. financial assets. If foreigners stop buying U.S. financial assets due to high taxes, they must also cease selling cheap goods to the U.S. If foreigners continue to sell cheap goods and buy assets, then tax revenues can be returned to middle voters through stimulus checks or reduced income tax refunds. In this way, Trump could claim he is striking against those evil foreigners and bringing lower taxes to the American public. This strategy could win midterm and presidential elections while achieving the goal of reducing the influx of cheap foreign goods into the U.S. consumer market and bringing manufacturing back.

The ultimate consequence of Trump shifting from pursuing difficult trade problem solutions to simple solutions is that foreign capital will slowly, then suddenly, flee the U.S. stock, bond, and real estate markets. Subsequently, the dollar will decline relative to the currencies of surplus countries. The issue for the U.S., specifically for Treasury Secretary Bessent (nicknamed "BBC"—Big Bessent Cock), is that if foreigners turn from net buyers to sellers, who will finance the exponentially growing pile of U.S. debt? The issue for the governments and corporations of surplus countries is that if they continue to maintain surpluses, where will their surpluses "store"? The answer for the former is money printing, and the answer for the latter is buying gold and Bitcoin.

The core of this article will focus on the mathematical identity of trade, how capital controls work—the "boiling frog theory," how these taxes affect capital flows from surplus countries, how Bessent finances the U.S. debt market through both overt and covert money printing, and why Bitcoin will be the best-performing asset during this global monetary transformation.

Trade Accounting Identity and Geopolitical Issues

Let’s illustrate the relationship between the trade account and the capital account through a satirical example.

It is now 2025, and Trump's election has restored the right for little boys to play with action figures. Mattel is re-releasing the "He-Man" doll equipped with an AR-15 plastic rifle. Toxic masculinity is back, baby… and the doll's spokesperson is Andrew Tate! Mattel needs to quickly produce one million dolls at the lowest cost. With the American manufacturing base nearly nonexistent, Mattel must purchase the dolls from factories in China.

Mr. Zhou owns a company in Guangdong Province that manufactures cheap plastic dolls. He agrees to Mattel's terms, one of which is payment in U.S. dollars. Mattel pays Mr. Zhou, and a month later, the dolls arrive. Wow, that was fast!

Mr. Zhou's profit margin is only 1%. The competition in the Chinese market is fierce. Due to the large order volume, he earned a total of $1 billion from orders from Mattel and other similar companies.

Mr. Zhou must decide how to handle these dollars. He does not want to exchange the dollars for renminbi to bring back to China because the renminbi has no productive use, government and corporate bond interest rates are low, and bank deposits earn almost no interest.

Mr. Zhou dislikes all the anti-China rhetoric; he felt unwelcome the last time he was in the U.S. His daughter attends UCLA, and she received disdain for driving the latest convertible Rolls Royce while American civilians can only take the subway (ahem, I mean Uber) to class. Although U.S. Treasury yields are among the highest for government bonds globally, he prefers not to purchase these bonds. Mr. Zhou has a good impression of Japan; Japanese government bond yields are much higher than before. He asks a banker to help him purchase Japanese government bonds (JGB). The banker tells him that the Japanese government does not want foreigners to buy their bonds in large quantities because it would push up the yen's exchange rate, and they want to maintain export competitiveness. If Mr. Zhou sells dollars for yen to buy JGBs, the yen will appreciate.

The JGB market is one of the few markets that can absorb his surplus, but Japan does not want foreigners to push up their currency value. Mr. Zhou accepts reality and reluctantly uses his dollar export earnings to purchase U.S. Treasury bonds.

What impact does this have on the U.S. trade and capital accounts?

U.S. Trade Account:

$1 billion deficit

Mr. Zhou's bank account:

$1 billion cash

Purchase

$1 billion U.S. Treasury bonds

Because these surpluses did not return to China, Japan, or elsewhere, but were reinvested in U.S. Treasury bonds:

U.S. Capital Account:

$1 billion surplus

The moral of this story is that if no other country is willing to allow its currency to appreciate, a trade account deficit will lead to a capital account surplus. This is the current situation: aside from the U.S., no market is large enough or willing to absorb the global trade imbalance. This is why, despite the U.S. issuing trillions of dollars in debt each year to finance the government, the dollar remains strong. By the way, many years ago, China asked Japan if it could purchase JGBs, and Japan said no, unless you let us buy Chinese government bonds (CGB). China said no, you cannot buy CGBs. Thus, both countries continued to funnel surplus capital into U.S. financial assets. In the current global trade landscape, any discussion of the renminbi, yen, or euro replacing the dollar as the global reserve currency is nonsense unless China, Japan, or the EU is willing to open their capital accounts and their financial markets are large enough to absorb the income from surplus countries.

Next, Trump issues an order that the U.S. must restore manufacturing and reduce the trade account deficit. The tool he currently chooses is tariffs. Let’s analyze why tariffs do not work from a political perspective.

Mattel sells cheap dolls to little boys. The parents of middle-class boys are broke. The average American family does not have $1,000 in emergency savings. Therefore, if the price of a He-Man doll rises from $10 to $20, little Jonny has nothing to play with. Under a no-tariff regime, Mattel could sell dolls produced cheaply in China for $10. But now Trump has imposed a 100% tariff on goods from China. Mr. Zhou cannot absorb the tariff cost, so he passes the cost onto Mattel. Mattel passes the cost onto consumers because its profit margin is only 10%. Chinese goods may be cheap, but the cost of marketing toys through TikTok, Instagram, and Google AdWords is high due to the low conversion rates.

The price of the doll jumps to $20. This is too expensive for most families, and they choose not to buy it. Jonny is a spoiled little brat who doesn't understand why his parents won't buy him his favorite gun-holding doll. His parents work tirelessly driving Uber and delivering DoorDash, barely making ends meet, and now their child is throwing a tantrum because Trump made toys more expensive. Will the parents vote for the Republicans or Democrats in the next election? … Before the election, they might first diagnose their child with ADHD and shove a bunch of prescription drugs down his throat to shut him up. The Democrats' new agenda is based on making toys and other goods cheap again by restoring "free trade" policies, allowing China to dump cheap goods into the U.S. market. The Democrats say that all educated, high-IQ economists agree that "free trade" can bring cheap goods to America and maintain the nation's way of life; the subtext is that Trump and his advisors are a bunch of uneducated fools. If this is the case, I believe the Democrats will make a comeback in the 2026 midterm elections.

Can Mr. Zhou avoid tariffs by moving doll production from China to countries with lower tariffs? Of course.

Since the early 2000s, Mr. Zhou has become very wealthy, and he has started investing in factories in Mexico, Vietnam, Thailand, and other places. Mr. Zhou began producing He-Man dolls in these locations and then shipping them to the U.S. With effective tariffs lowered, he can sell the dolls for $12 instead of $20. Parents can afford the extra $2 to keep their child quiet, avoiding the premature reliance on prescription drugs.

Because Trump did not propose a uniform tariff across all markets but rather scattered bilateral agreements, savvy manufacturers like Mr. Zhou will be able to find a way to enter the U.S. with lower tariffs. The Trump team knows this, but for geopolitical reasons—such as whether a country has U.S. military bases, whether it sells critical goods to the U.S., or whether it sends young people to fight alongside the U.S.—the Trump team is reluctant to impose high tariffs on allied economies, lest they decide to stop playing with the U.S. as the world police. Without a uniform tariff on all countries, there will always be one or more countries acting as transshipment arbitrage points. For example, allowing China to obtain advanced semiconductors and AI chips from TSMC and Nvidia will enable Chinese goods or manufactured products ultimately owned by Chinese citizens to avoid the extremely high tariffs faced when shipped directly from China to the U.S.

Ultimately, tariffs cannot achieve the goal of significantly reducing the U.S. trade deficit. The American public will not wait five to ten years and continue voting for the Republicans until manufacturing returns to the shelves with cheap, abundant goods. Moreover, if the trade deficit does not significantly shrink within the next twelve months, Trump will look foolish because his policies have brought inflation in goods to impoverished people without any apparent benefits.

To reiterate, the problem is not with the tariffs themselves, but rather that for tariffs to be truly effective, every country must face the same rate. There should be no exceptions. There should only be one tariff rate, accept it. Clearly, this will not work for not only "evil" China but also for steadfast allies like Japan and Germany. It is absurd to expect Japan to continue to contain China and Russia from a naval perspective while hosting tens of thousands of dirty American soldiers at around 120 military bases, all while its manufacturing is stifled by tariffs.

This is why the 90-day pause will become permanent.

Taxes, baby

If attacking the trade account deficit poses problems for domestic political and geopolitical reasons, what about focusing on the capital account surplus? Is there a way to prevent people from accumulating U.S. financial assets? Yes, for the wealthy who glorify free markets, this method is dirty and despicable… it is called capital controls. Specifically, I am not saying that the U.S. will prohibit or strictly limit foreign ownership of financial assets like most countries globally, but rather tax foreign holdings. Foreigners will be allowed to own the majority of U.S. financial assets at any scale, but their value will be taxed at a certain rate continuously. These tax revenues will be returned to American civilians through lower income taxes and other government subsidies to ensure their support. The result is that foreigners continue to generate surpluses by selling goods to the U.S. and face taxes; they reduce exports to the U.S. to avoid taxation or purchase non-national financial assets like gold or Bitcoin.

There are various ways to tax foreign capital, but for simplicity, let’s assume a tax rate of 2% on the value of all foreign capital annually. I am primarily focusing on foreign portfolio assets, namely liquid stocks, bonds, and real estate. I am not talking about illiquid assets like factories owned by foreign car manufacturers in Ohio.

The total amount of foreign portfolio assets is approximately $33 trillion. Let’s assume prices remain constant and no capital leaves due to taxation, and calculate the annual revenue.

(Here, a table should be inserted showing the tax revenue calculated at a 2% rate on $33 trillion, approximately $660 billion.)

I emphasize the last line because in 2022, the bottom 90% of U.S. taxpayers paid about $600 billion in income taxes. Therefore, by imposing a 2% foreign capital tax on stocks, bonds, and real estate, Trump could exempt the vast majority of voters from income tax. This is the most successful political strategy I have ever seen.

Let’s compare the effectiveness of this policy with tariffs from two aspects.

Ability to collect:

The U.S. Treasury has complete control over the banking system and financial markets. They may not know exactly who owns what, but they know whether it is an American entity or a foreign entity. Therefore, it is easy for financial institutions or municipal authorities to levy this tax only on non-American entities that own stocks, bonds, and real estate.

For tariffs, it is difficult to accurately know the origin of each product or where value is added in the supply chain. This is why it is easy to cheat.

Uniform tax rate:

The tax is designed to help eliminate net capital account surpluses. There should only be one tax rate. If foreigners do not want to pay taxes, they should not purchase U.S. financial assets. They can take their export income back home to invest. This will not necessarily stop exporters from selling cheap goods to the U.S., so the impact on the quantity of trade goods will not be immediately apparent.

While capital controls can generate tax revenue to lower income taxes, does this help bring manufacturing back to the U.S.?

Assuming exporters do not want to pay a 2% tax annually to hold U.S. financial assets. They believe there are better investment opportunities domestically, considering the after-tax net expected returns. They sell their assets and receive dollars. Then they sell the dollars and exchange them for their domestic currency. The net effect is a weaker dollar and an appreciation of surplus country currencies. Ultimately, after many years, the dollar will significantly weaken, and currencies from surplus countries like the yen will appreciate significantly. By then, goods produced in Japan will be priced much higher in dollars when sold in the U.S., even without tariffs. That is the point.

Goods produced in the U.S. become cheap, while foreign goods become expensive over time. This process may take decades. But it doesn’t matter because American voters will benefit regardless. Foreign capital will either stay, pay taxes, and the revenue will be used to exempt the vast majority of voters from income tax; or foreign capital will leave, U.S. manufacturing will grow, hire more people, pay higher wages, and the vast majority of voters will have better-paying jobs. But either way, the shelves will not be empty immediately, and inflation in goods will not soar.

Four on the floor

I am a global macro DJ. I take other people's ideas and remix them with my own language and style. Standard kick drums, snares, claps, and off-beat hats, with a bit of syncopation and swing, create a dynamic rhythm that exists in every house track. My drum lines pulse with the pressing of the "money printing button." I hope to layer interesting bass lines, harmonies, and effects in written text, ultimately achieving a Solomun-style interesting breakdown, punctuated by shocking drops.

I say this to emphasize that the idea of using capital controls rather than tariffs to narrow the U.S. trade and capital account imbalances is not novel, nor is it my original thought. During the negotiations of the Bretton Woods system on how to construct the post-war global economy, economist Maynard Keynes advocated for levying "usage fees" on surplus country capital reinvested in deficit country capital markets to balance trade and capital flows. Recently, Stephen Miran discussed in an article published by Hudson Bay Capital titled "User's Guide to Restructuring the Global Trade System" the idea of forcing a rebalancing of capital flows by imposing certain fees on foreign ownership and trading of U.S. financial assets. Another influential macro analyst, who requested anonymity, has published several articles over the past twelve months outlining his belief that capital controls are necessary and that America's allies must pay for it. Michael Pettis speculated in a recent webinar that tariffs would not significantly reduce the U.S. trade deficit and capital account surplus, concluding that the government realizes that capital controls are the only way to truly change the flows.

I mention these names to demonstrate that financial think tanks like Bessent's are advocating for capital controls rather than tariffs. Our advantage as investors is to observe in real-time how the hardline tariff faction, led by Commerce Secretary Howard Lutnick, is promoting the execution of plans to reduce U.S. imbalances, and he currently has Trump's trust. It seems the internal struggle has ended, as the tariff policy quickly shifted after the financial market crash in early April. The capital control faction led by Bessent is now in play.

The picture of capital controls' effectiveness that I paint is as optimistic as the investment reports shown by our favorite faux-vegetarian scammer white boy Sam Bankman-Fried to a group of gullible investors regarding FTX/Alameda finances. Implementing capital controls in the American imperialist financial market could have severe consequences. My predictions about how financial elites and policymakers will respond to the consequences of capital controls lead me to believe that the legal price of Bitcoin will accelerate upward from now on. This is the core of my "boiling frog theory." Due to the negative impact of capital controls on U.S. financial assets, they will be gradually implemented. Global financial markets will slowly accept U.S. capital controls as normal rather than heretical ideas. Like a frog in boiling water, it will not realize it is about to be cooked as the water temperature slowly rises.

The Great Collapse That Has Not Happened

Foreigners obtain dollars by selling goods to Americans and must reinvest these dollars in the U.S. stock, bond, and real estate markets. Here are some charts that show the excellent performance of the U.S. financial markets as foreign capital flows in.

The chart below is the basis of my analysis. If you are a country issuing reserve currency, you must open your capital account; trade deficits will lead to capital account surpluses.

(Here, a chart should be inserted showing the relationship between trade deficits and capital account surpluses from 2002 to early 2025, as China joined the WTO in 2002, and early January 2025 was the peak of the optimistic sentiment of "Trump will fix the world.")

The MSCI U.S. Index (white) has outperformed the MSCI World Index (gold) by 148% since 2022: American stock market exceptionalism.

The total amount of tradable U.S. Treasury bonds (gold) has risen by 1000%, but the yield on 10-year Treasury bonds has slightly decreased: American bond market exceptionalism.

The U.S. labor force population aged 15-64 (gold) has only grown by 14%, but the Case-Shiller National Home Price Index (white) has risen by 177%: American real estate market exceptionalism.

This is quite astonishing, as the data includes the 2008 global financial crisis.

If foreign capital is taxed, marginally they will decide that investing in the U.S. is not good, then mathematically, stock, bond, and real estate prices must fall. There are several reasons for this. If the stock market falls, capital gains tax revenues decrease, and these taxes are a marginal revenue driver for the government. If bond prices fall, yields rise, and government interest expenses increase because it must continue issuing new bonds to finance the massive deficit and roll over $36 trillion of existing debt. If housing prices fall, the middle and wealthy baby boomer Americans who own most of the real estate will see their net worth collapse just when they need that wealth to fund decades of retirement. These individuals will vote to oust the ruling Republicans in the November 2026 midterm elections.

American imperialism relies on foreign capital, and if foreign capital leaves due to capital controls, it will result in bad news for the economy and a bear market. What can politicians, the Federal Reserve, and the Treasury do to replace foreign capital and maintain the financial markets?

Remember that four-on-the-floor kick drum, the money printing button. You all know what the answer is. The same answer as always. If foreigners no longer provide dollars, the government will provide them through the printing press.

Here are the policies that the Federal Reserve, the Treasury, and Republican lawmakers will implement to replace foreign capital:

Federal Reserve:

• Stop quantitative tightening (QT) on mortgage-backed securities (MBS) and Treasury bonds.
• Restart quantitative easing (QE) for MBS and Treasury bonds.
• Exempt MBS and Treasury bonds from the supplementary leverage ratio (SLR).

Treasury:

• Increase the scale of Treasury bond repurchases each quarter.
• Continue to issue a large amount of short-term Treasury bonds (1-year maturity) instead of long-term bonds (>10 years maturity).

Republican lawmakers:

• End the conservatorship of Fannie Mae and Freddie Mac.

Imagine the Treasury and Republican lawmakers following Trump's orders without any brainpower, but why would the Federal Reserve do what Trump asks? That question is misplaced. The Federal Reserve has already been doing what Trump and Bessent have requested behind the scenes. Look at this wonderful example pointed out by Luke Gromen:

(Here, a chart should be inserted showing how the Federal Reserve supports the Treasury by adjusting its balance sheet.)

The Federal Reserve is reducing its balance sheet. However, it has the authority to decide how to operate, especially since the policy goal is a net reduction, not an even reduction of all maturing bonds. Yellen and now Bessent need to finance the government's massive pile of stinky debt. Foreigners and the U.S. private sector like to buy short-term Treasury bonds because they are short-term bonds with yields, serving as a high-yield cash alternative to low-yield bank deposits. But no one wants long-term (10 years or more) Treasury bonds. To help Yellen and Bessent finance the government, the Federal Reserve has done them a favor by conducting QE for 10-year bonds. Powell, while criticizing the government deficit as a problem, hypocritically accommodates this spending by running the printing press to push down 10-year yields to politically acceptable low levels.

Given that Powell is already conducting invisible Treasury bond QE, he will also agree to the requests of the BBC and powerful commercial banks (like JPMorgan CEO Jamie Dimon) to stop QT, restart QE, and grant SLR exemptions. I don't care how stubborn Powell sounds in his press conference when calling for Trump to ease monetary conditions. Powell is firmly seated in the chair of capitulation, and he won't leave. Now pass the lubricant.

These measures will provide money printing through various channels to replace the foreign capital that leaves due to capital controls and will push up the prices of stocks, bonds, and real estate in the following ways:

• Bond prices will rise, and yields will collapse. The Federal Reserve will buy bonds due to QE policy. Banks will buy bonds because they can operate with unlimited leverage and will get ahead of the Federal Reserve's purchases.

• The stock market overall will rise due to a lower discount rate for future earnings; certain sectors will benefit more. Manufacturing companies will benefit the most as credit costs decrease and availability increases. This is a direct result of the decline in government bond yields and banks having more balance sheet capacity for loans to the real economy.

• Housing prices will rise because mortgage rates will decline. The Federal Reserve's purchase of MBS will lower mortgage rates. As Fannie Mae and Freddie Mac return to the loan underwriting business using implicit government guarantees, the available credit volume will increase.

Do not expect these policies to be implemented overnight. This is a multi-year process, but it must happen; otherwise, the U.S. financial markets will collapse. Given that politicians cannot cope with the financial crisis a week after liberation day, they will always press the money printing button in some way.

Will they leave?

Before concluding the predictions on Bitcoin prices, a major question must be asked: Will foreign capital leave? If so, are there any signs today to confirm this assertion?

My hypothesis is that the rapid appreciation of certain Asian export countries' currencies (like Taiwan and South Korea) in recent weeks indicates that capital flows are reversing. This supports the belief that capital controls are imminent, and sharp market participants are withdrawing in advance. Furthermore, the finance ministers responsible for monetary policy are allowing their currencies to appreciate without intervention. They do this because Trump's message to allies is that you must pay. If Taiwan and South Korea want U.S. military support, they have no choice.

(Here, a chart should be inserted showing the appreciation trends of the Korean won (USDKRW) and the New Taiwan dollar (USDTWD) against the U.S. dollar.)

Many sovereign and private foreign capital pools are running similar arbitrage trades. If Asian private capital flows are reversing, they must also unwind. Therefore, even before there is a clear plan for the scale and scope of U.S. capital controls, foreigners holding U.S. assets and having liabilities in their domestic currencies must start selling stocks, bonds, and real estate and buy back their domestic reporting currencies.

Ultimately, it will be the slow but unstoppable rise in 10-year Treasury yields that forces the Federal Reserve, the Treasury, and politicians to implement some or all of the aforementioned money printing measures. As capital flows back in, yields will rise. Due to the massive leverage embedded in the system, the yield trigger point for financial dysfunction lies between 4.5% and 5% on 10-year Treasury bonds. As yields rise, bond market volatility will increase, which we can observe through the MOVE index. Remember, when that index exceeds 140, policy action is immediate and guaranteed. Therefore, even if rising yields pose resistance to a stock market rebound, Bitcoin will see through this weakness, focusing on the eventual acceleration of money printing.

Lifeboat

As the divorce between the U.S. and China slowly progresses, global financial markets will head towards Balkanization. Nationalist monetary policies will require capital controls, and this prescription will be implemented globally, including in the U.S. No matter who you are, your capital may not be able to invest in the highest-yielding, lowest-risk assets in the legal financial system. In the past, gold was the only liquid link between different financial systems, but now, Saint Satoshi has bestowed upon the faithful—Bitcoin!

As long as there is the internet, you can exchange fiat currency for Bitcoin. Even if central trading platforms are banned or banks are prohibited from processing Bitcoin-related transactions, you can still exchange fiat currency for Bitcoin. I am confident in this because that is how things operate in China. Since 2017, China has effectively banned central trading platforms from operating central limit order books. However, if private individuals want to transfer fiat currency within the banking system in exchange for Bitcoin outside the banking system, the state cannot stop them. China's over-the-counter (OTC) Bitcoin market remains highly liquid. Even China has not banned private ownership of Bitcoin because it knows that would be counterproductive and impossible. For you European paupers, your governments practice communism that is even less efficient than China's, so don't expect the European Central Bank (ECB) to learn this lesson without trying. Therefore, take your money out now! Listen to my speech at the crypto finance conference earlier this year to understand why capital controls will come to the EU.

The biggest question is whether the Trump team will try to sink the global capital lifeboat of gold and Bitcoin? I say no, because he and his aides believe that the post-1971 system, with U.S. Treasury bonds as the global reserve asset, has not benefited the part of America that put them in power. They believe that the financialization of America has led to a decline in military preparedness, manufacturing strength, and social harmony. To correct this, gold and/or Bitcoin will be elevated as neutral global reserve assets. Sovereign imbalances will be smoothed by gold, while private imbalances will be addressed by Bitcoin.

We know that the Trump team has a positive attitude towards gold because they exempted gold from tariffs from the start. We know that the Trump team has a positive attitude towards Bitcoin because of the changes initiated by various regulatory agencies. I believe these changes may not be the fair expansion of Bitcoin needed within American imperialism, but you cannot deny that removing the alphabet agency enforcers is a significant step forward.

Now that we know the total amount of foreign portfolio assets is $33 trillion, the next question is how much capital will leave the U.S. and enter Bitcoin, depending on how quickly you want to draw conclusions.

What if 10% ($3.3 trillion) of assets flee to Bitcoin in the coming years? At current market prices, the Bitcoin held on trading platforms is about $300 billion. If 10 times that capital tries to squeeze into the market, the price increase will far exceed 10 times. Because the final price is determined by the marginal. Of course, if the price skyrockets to $1 million, long-term holders will come out to sell Bitcoin for fiat currency, but this will trigger an epic short squeeze as these portfolio assets migrate to Bitcoin.

Bitcoin is the superior tool for transferring capital in the global financial Balkanization because it is a digital bearer asset. Storing and transferring wealth does not require intermediaries. While gold has a 10,000-year history as a stateless capital, it can only travel in paper form in digital form. This means that you must trust financial intermediaries to store your physical gold, and then you trade digital receipts. These intermediaries will be constrained by financial regulations aimed at isolating capital domestically to support nationalist industrial policies. Therefore, unless you are a state or quasi-state actor, gold as a physical bearer asset does not move fast enough to play a role in the global digital economy. Bitcoin is the perfect and only lifeboat for global capital leaving the U.S. and elsewhere.

Additional bull market firepower will come from the actual default of the U.S. on its massive pile of stinky debt. A $1,000 face value bond will receive $1,000 at maturity, nominally you will get back your principal. But the energy units that $1,000 will buy in the future will decrease. The U.S. began to seriously default on Treasury bonds after the 2008 global financial crisis when they decided to print their way out of trouble. But the speed of defaults has surged after the COVID-19 pandemic. As the Trump team revives the U.S. economy by depreciating Treasury bonds relative to hard currencies like gold and Bitcoin, this trend will accelerate again. This is the true revelation of the liberation day tariff farce. Nominal growth will surge due to onshoring of businesses; however, high single-digit nominal GDP growth will not match the high single-digit yields of Treasury bonds or bank deposits. This inflation will be reflected in the future prices of gold and Bitcoin, just as it has in the past.

(Here, a chart should be inserted showing the performance of long-term U.S. Treasury bond ETF TLT priced in gold (gold) and Bitcoin (red), indexed to 100 since 2009. Since 2021, Treasury bonds have lost 64% and 84% of their value against gold and Bitcoin, respectively.)

The return of foreign capital and the depreciation of the massive stock of U.S. Treasury bonds will be two catalysts driving Bitcoin to reach $1 million by 2028. I say 2028 because that is the next U.S. presidential election, and who knows which politician will win and what policies they will implement. Perhaps through some divine intervention, the American public will be ready to accept the monetary hangover from a century of profligacy and eliminate the bad debts that have destroyed their society. Maybe, I wouldn't bet on it, but maybe. Therefore, now is the time to go all in while the Sun King favors Bitcoin.

Trading Strategy

On a macro level, as the CIO of Maelstrom, I have completed my work. I reduced risk and raised fiat currency at the end of January. Then, from the end of March to early April, I gradually replenished the market. During the financial market crash a week after liberation day, we went all in long on crypto assets. Now it is time to decide which quality altcoins can outperform Bitcoin in the next phase of the bull market.

I believe this time the market will reward altcoins that have real users, pay real money for products or services, and return part of the profits to token holders. Two standout projects are $PENDLE and $ETHFI, which Maelstrom bought at the lows. Pendle will dominate crypto fixed income trading, which I see as the biggest untapped opportunity in the crypto capital markets. Ether.fi will become the American Express of the crypto world, a prototype crypto financial institution serving wealthy holders. I will comment further on these altcoins in upcoming articles.

While I believe Bitcoin will reach $1 million, that does not mean there are no opportunities to take tactical short positions. Capital controls and money printing are imminent, but the road there is bumpy. The Trump team is not fully supportive of capital controls, so those who believe Trump should steer the empire in a different direction will likely re-emerge. Trump has no fixed ideology; he responds to constraints and twists and turns to achieve his goals. Therefore, the trend is your friend until it is not.

Article link: https://www.hellobtc.com/kp/du/05/5853.html

Source: https://cryptohayes.medium.com/fatty-fatty-boom-boom-52e47a03f487

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