The Breakdown

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.