The Peter McCormack Show

The Breaking of the Global Economy with Nik Bhatia - WBD713


Listen Later

Nik Bhatia is the founder of ‘The Bitcoin Layer’ & author of ‘Layered Money’. This interview delves into Nik's work in the Bitcoin industry and his background in trading interest rates. We discuss the impact of low-interest rates on the economy, the relationship between inflation and interest rates, and the impact of central bank actions on markets. The conversation expands to include global recessions, the Chinese economy, and the future of Bitcoin.

- - - -

The unprecedented period of low-interest rates that followed the 2008-09 financial crisis was deemed a golden opportunity for those leveraging debt. However, this environment hid many significant dangers. Chief among them was the encouragement of irrational investments. The problem comes, as we have seen, when this period of low interest ends. A reasonable cost of capital provides a check on such behaviour.

Interest rates are influenced by both the market and central banks, with central banks often lagging behind market movements. When the central bank raises rates, they are adjusting the target rates for various lending markets. There is therefore an interplay between central bank actions and market forces in determining interest rates. In addition, there is feedback as investors anticipate interest rate hikes and adjust their investments accordingly.

As we have seen, central banks have used interest rates to temper inflation. This is a crude tool and can risk tipping economies into recession. Purchasing Managers' Indexes (PMIs) can be used to analyse economic activity at the nation-state level; the PMIs in Europe are all in contractionary territory, indicating a deteriorating economy. The issue is, that in our globalised economy, such problems leak into other economies, such as China.

The underlying issue in such a situation is the significant risks associated with the traditional financial instruments of the fiat economy. Financial institutions' liabilities are approaching concerning levels. The problem is that such liabilities are essentially infinite. This is why Bitcoin’s value tends to rise when central banks implement easing measures, as many can see the eventual unwinding of the fiat system. The question is how close are we to this unwinding?

-

Show notes: https://www.whatbitcoindid.com/podcast/the-breaking-of-the-global-economy

This episode’s sponsors: Iris Energy - Bitcoin Mining. Done Sustainably Bitcasino - The Future of Gaming is here Ledger - State of the art Bitcoin hardware wallet Wasabi Wallet - Privacy by default Unchained - Secure your bitcoin with confidence OrangePillApp - Stack Friends Who Stack Sats

...more
View all episodesView all episodes
Download on the App Store

The Peter McCormack ShowBy Peter McCormack

  • 4.8
  • 4.8
  • 4.8
  • 4.8
  • 4.8

4.8

2,137 ratings


More shows like The Peter McCormack Show

View all
TFTC: A Bitcoin Podcast by Marty Bent

TFTC: A Bitcoin Podcast

758 Listeners

Bitcoin Audible by Guy Swann

Bitcoin Audible

429 Listeners

The Bitcoin Standard Podcast by Dr. Saifedean Ammous

The Bitcoin Standard Podcast

426 Listeners

Stephan Livera Podcast by Stephan Livera

Stephan Livera Podcast

417 Listeners

The Pomp Podcast by Anthony Pompliano

The Pomp Podcast

1,832 Listeners

What Bitcoin Did by Danny Knowles

What Bitcoin Did

226 Listeners

The Wolf Of All Streets by Scott Melker

The Wolf Of All Streets

224 Listeners

Swan Signal Live - A Bitcoin Show by Swan Bitcoin

Swan Signal Live - A Bitcoin Show

184 Listeners

The Bitcoin Matrix by Cedric Youngelman

The Bitcoin Matrix

86 Listeners

The "What is Money?" Show by Robert Breedlove

The "What is Money?" Show

666 Listeners

Coin Stories by Natalie Brunell

Coin Stories

400 Listeners

Simply Bitcoin by Simply Bitcoin

Simply Bitcoin

82 Listeners

Rabbit Hole Recap by ODELL and Marty Bent

Rabbit Hole Recap

120 Listeners

THE Bitcoin Podcast by Walker America

THE Bitcoin Podcast

32 Listeners

The Jack Mallers Show by Jack Mallers

The Jack Mallers Show

97 Listeners