Casper Hauser retweeted
Great question
When a bank issues a loan, it does not loan out deposits. It creates new money as a credit entry
You sign a loan agreement & it becomes an asset for the bank
Bank credits your account & the new deposit becomes new money in circulation
Banks are credit creators rather than intermediaries
Bank-created money is created with interest
Because the interest is not created in the money supply, the system requires perpetual growth, constant new debt or defaults
This is why the private credit system is inherently inflationary & extractive over time
Governments do not create new money to spend directly
They instead issue bonds purchased by banks, pension funds, foreign governments, or the central bank
This is government borrowing which is printing by selling promises
Government-issued money is also interest-bearing, which means it has the same inflationary dynamic as private bank credit creation
Tax serve 3 functions in a fiat system
1 Prevent inflation from excess government spending. If governments printed unlimited money, it would raise spending power without increasing production & create inflation. Taxes remove money from circulation, acting as a drain on the system
2 Give the currency value. If the government requires taxes to be paid in its currency, that alone creates demand
3 Redistribute and fund services. Funding services are not the main monetary reason, that’s the political justification. The monetary purpose is inflation control & currency demand
Governments spend money into the economy & taxes destroy part of that money to keep the system alive
This is the part people misunderstand the most
If new money is printed but does not create new goods, new services, new infrastructure or new real output, then you get more money chasing the same amount of goods, which raises prices
Examples:
Money printing for bailouts, war spending not tied to productive output, stimulus without corresponding output growth, interest-bearing credit expansion for consumption
This type of money requires taxation to remove excess money & prevent inflation
If new money is issued to create new productive output, the money supply increases in proportion to real wealth
Examples:
Building infrastructure, funding energy projects, paying workers to produce real goods & services or capital investments with measurable output
If production rises faster than money supply, no inflation occurs
In such cases, taxation is not required to offset the issuance, because real-world value backs the currency expansion
After the Weimar hyperinflation & Great Depression, Germany introduced Mefo Bills in 1934
It was a government-created promissory note issued to construction & industrial companies
They were not backed by gold, not borrowed from banks, backed by future labor & productive output & used to fund public work
Money was issued only when workers produced output
Idle labor was turned into productive labor
Factories, infrastructure & goods increased alongside the money supply
The credit carried no compounding interest & money was created only to mobilize productive capacity, not consumption or speculation
When money creation matches real productivity, inflation does not occur
Germany reduced unemployment from 30% to 0% in a few years without runaway inflation
Inflation problems emerged later only when issuance shifted to unproductive military expansion
Today’s system is a public–private hybrid
Banks create most money via credit, charge interest & expand the money supply
Governments issue bonds purchased by banks & central banks, borrow the currency they themselves issue & tax to control inflation created by both government & private banks
The government effectively outsourced money creation to private banks & then taxes you to stabilize the system for banks profit
They socialize the losses & privatize the gains.
It’s a ponzi scheme & you pay taxes to service the interest on banks debt.
Casper Hauser retweeted
I’ve been seeing a lot of chatter on X about “peak cycle” and how the economy looks late-cycle. So I wanted to tackle this head on and share a few thoughts of my own...
This is from the August 21st MIT publication:
A classic late-cycle economy typically has all the following ingredients:
✅ Manufacturing sentiment is extreme (think ISM ~60)
✅ Services sentiment is extreme
✅ Homebuilder sentiment is extreme
✅ Consumer confidence is high
✅ Worker confidence is high (JOLTS quits rate rising sharply)
✅ Investor sentiment is very bullish
✅ Small business confidence is high
✅ Job openings and hiring plans are rising
✅ Wage data and surveys show accelerating pay increases
✅ CEO confidence is strong and capex is booming
Now, I could add more to this, but when you score all of these inputs and turn them into a single timeseries, here’s what you get (chart 1).
Using data from ISM, NAHB, NFIB, BLS, AAII, The Conference Board, etc., US sentiment, when viewed as a complete picture, remains very subdued. We’re just not even close to the euphoric levels we see late in the business cycle, when everything listed above is stretched to extremes.
Peak cycle is when the ISM rolls over from 60+ to sub-50, inventories unwind, and demand cools. Supply and demand reset, inflation pressures ease, and the cycle eventually recovers out of the slowdown or recession – mostly depending on the extent to which financial conditions tightened during the cycle, particularly late on as central banks hike rates and drain liquidity.
However, based on this full set of indicators, the data is pointing to something very different. This does not look like an above-trend late-cycle economy. It looks much more like an early-cycle economy trying to build momentum.
Another really important factor, and a key reason we believe both the ISM and this sentiment composite will grind higher this year and into 2026, is the sheer scale of central bank easing via rate cuts.
Right now, nearly 90% of central banks are cutting rates. That is extraordinary, and on a forward-looking basis, it is a massive tailwind for the business cycle (chart 2).
By my playbook, the time to start talking late-cycle is when the teal line rolls over and begins to drop, as central banks turn to hiking rates to slow growth. Even then, there’s usually a nine-month lag before higher rates hit the real economy.
Right now, we’re just nowhere near that... in fact, the opposite is true.
To my earlier point, slowdown or recession is largely a function of how much financial conditions tighten late in the cycle. Oil prices are a big part of this equation. When oil runs 50% above trend, that represents a massive tightening and has almost always signaled recession, looking back to the early 1970s.
However, right now, we are nearly 20% below trend and still falling, which shows this component of financial conditions is still easing (chart 3).
Also, as I’ve pointed out many times in previous reports, when you look at Temporary Help Services, it has early-cycle vibes written all over it (chart 4).
Rising growth from deeply negative levels is an early-cycle dynamic. It tells you the economy is in recovery mode, not rolling over.
Late-cycle is the opposite: positive year-on-year growth that’s slowing, which reflects an overheated economy losing steam.
Why is unemployment still rising?
Because it lags the cycle. Jobs data is a six-month look in the rear-view mirror.
Here’s the thing: full-time hires are expensive. Benefits, pensions, overhead…
So what do businesses do first?
They typically increase overtime hours and bring in temp workers. Only when they feel confident do they finally lock in full-time staff. That way, they can scale without locking themselves into long-term payroll commitments.
So, this isn’t late-cycle. It’s early-cycle (growth up + inflation down = Macro Spring), soon transitioning to mid-cycle (growth up + inflation up = Macro Summer).
That’s how I see it, anyway...
Casper Hauser retweeted
Trump doesn't get it (at all)
A system that prioritizes an ever-increasing trade deficit, in exchange for capital inflows that exclusively enrich the top 1%, cannot continue indefinitely.
The dollar has Dutch Disease.
Short primer:
As the US imports more than they export, this leads to a worsening of the balance of trade, one of the main components of the 'current account'
In short, we spend way more on imports, than we make in income off our exports
So where does all that money that we spend on imports come from, since our 'income' can't cover it?
1. Issuing Treasury bonds (increasing national debt)
2. Portfolio Investment (capital inflows into our stocks, bonds and other securities)
3. Foreign Direct Investment (foreign capital investment in infrastructure, real estate, etc.)
Any deficit in our current account (the balance of trade being the main component of 'current account') *must* be balanced by an equal and corresponding inflow of capital into our country.
Every dollar we use to pay China for their cheap trinkets, must be offset by an *inflow* of capital into our markets.
Here we see how beneficial that is for corporate profits
The correlation coefficient in the lower pane shows how strong of a correlation these two metrics have, with the correlation weakening with recessions but remaining strong, overall
**As the trade balance worsens, corporate profits increase**
Now, let's see how that's been working out for our stock market:
And here, we see the effect that this worsening trade deficit has on our fiscal deficit (remember, issuing US debt is one way to balance the BOT)
Now, this increasing fiscal deficit would *appear* to indicate that the dollar should have been weakening.
But it hasn't
All of these financial inflows (over $220B a quarter) help to bolster the value of the dollar. This strong demand for US assets drives the value of the dollar up, which, in turn, leads to our exports becoming more and more uncompetitive, further worsening the trade deficit.
This is Triffin's dilemma. This is the dynamic that Trump clearly does not seem to understand.
And finally, the most important chart of all:
The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy. They can go find another “sucker!” There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America.
Casper Hauser retweeted
Most of what I am reading about tariffs is misguided. Here is a quick primer on how I understand what’s happening. Using the Casio.
1- I am convinced the calculus backed-up from a desired outcome both on an aggregate level and at country level in the case of China / EZ
1/10
Casper Hauser retweeted
Market views update
Markets crawl higher if headlines remain neutral to benign this week, then freeze as we await April 2nd, which is reciprocal tariffs day announcement or, as Trump called it, Liberation Day.
April 2nd is similar to election night. It is the biggest event of the year by an order of magnitude. 10x more important than any FOMC, which is a lot. And anything can happen.
Trump could go soft, in which case markets would rally fast and furiously. Or could go half-way, adding uncertainty on timelines, in which case markets would take out the stops of all longs and shorts. Or go all out, in which case markets could easily crash another 10% to 15%, fast.
In worst case scenario sh*t would hit the fan then tariffs would start coming off as Trump negotiates hard in the following month, in which case peak negativity would hit around week 2 of April, which would coincide with US Tax Day.
The US economy is still strong, but will highly likely slow down due to tariffs regardless of the path Trump chooses. But every economist already expects a very sharp economic slow-down into year end. Which means, it is already largely priced-in.
Will share a more thorough update on views around tariffs, probabilities, and their economic impact this week time allowing.
Either way, you all want to be prepared and ready to act on "Liberation Day". It will be big.
Casper Hauser retweeted
Thoughts on this?
If @realDonaldTrump was serious about enacting real CHANGE that benefits low-to-middle-income American families, he should want the stock market to #crash (and then recover as his pro-growth policies are implemented).
Reminder: the stock market BOOMED under President Biden because of his failed K-shaped economic policies. No disruption to Biden's bull market means politically connected #capital is still winning the battle against #labor by a wide, politically disruptive margin.
We'll find out how serious @POTUS is about fixing this toxic imbalance in the coming months. CC @elonmusk @SecScottBessent @howardlutnick
Casper Hauser retweeted
Ya’ll never change.
Bitcoin is now experiencing its 11th 25%+ correction in ten years and every time everyone reacts like the sky is falling and every time everyone screams that it’s different this time.
This pullback looks, smells and feels 100% just like 2017 to me. Rising fiat liquidity leading to massive asset price gains.
Right now the new admin has decided that we need:
1. Lower treasury rates to refinance debt
2. Lower mortgage rates to unlock the housing and CRE markets
3. Lower treasury rates to save banks from their collective insolvency
China is in a deep recession and needs lower U.S. rates to support its own money printing regime. And print they will.
We’re likely going to see massive job cuts via government cuts, tech cuts and housing related cuts. At the same time ISM will likely rise for the next several months.
All of this tells us liquidity will continue to flow and the markets will do what they always do in this type of cycle. That liquidity will flow into stocks, Bitcoin, crypto and real estate.
Once again… buckle up… 🚀🚀
Casper Hauser retweeted
0/ Exploring the world of onchain art, a guest thread by @lukeweaver_eth
“The greatest artists of the 21st century won’t make paintings, they’ll make programs.”
Today, we’re highlighting artists and projects that are only possible on Ethereum
🧵👇
Casper Hauser retweeted
I think it’s pretty clear that what we’re seeing is the lagged effect of this period of severely tightening financial conditions (itself augmented by tariff volatility)
It’s also why I don’t think it makes any sense to be bearish on the rest of 2025
You’re now seeing those tight financial conditions unwound by the weakness caused by those very same tight financial conditions — it’s reflexive
This in turn *should* mean slowdown leads to rebound not slowdown leads to recession as the lagged effects of easing financial conditions plays out precisely the inverse of what we’re seeing now
Expecting recession calls to grow louder as downside economic surprises persist into March and more cuts get priced back into the curve, as outlined here
The irony here is that the weakening dollar and falling yields caused by recent downside economic surprises are precisely the easier financial conditions that will prevent a slowdown becoming a recession as we move into the rest of 2025
Buy the recession fears into the 200dMA if we get it -> sell 6600 later this year
Casper Hauser retweeted
Bitcoin is crashing.
Wondering why?
The cash & carry trade that’s been suppressing BTC’s price is now unwinding.
Here’s how it worked—and why its collapse is sending shockwaves through the market. 🧵👇
Casper Hauser retweeted
New 3h31m video on YouTube:
"Deep Dive into LLMs like ChatGPT"
This is a general audience deep dive into the Large Language Model (LLM) AI technology that powers ChatGPT and related products. It is covers the full training stack of how the models are developed, along with mental models of how to think about their "psychology", and how to get the best use them in practical applications.
We cover all the major stages:
1. pretraining: data, tokenization, Transformer neural network I/O and internals, inference, GPT-2 training example, Llama 3.1 base inference examples
2. supervised finetuning: conversations data, "LLM Psychology": hallucinations, tool use, knowledge/working memory, knowledge of self, models need tokens to think, spelling, jagged intelligence
3. reinforcement learning: practice makes perfect, DeepSeek-R1, AlphaGo, RLHF.
I designed this video for the "general audience" track of my videos, which I believe are accessible to most people, even without technical background. It should give you an intuitive understanding of the full training pipeline of LLMs like ChatGPT, with many examples along the way, and maybe some ways of thinking around current capabilities, where we are, and what's coming.
(Also, I have one "Intro to LLMs" video already from ~year ago, but that is just a re-recording of a random talk, so I wanted to loop around and do a lot more comprehensive version of this topic. They can still be combined, as the talk goes a lot deeper into other topics, e.g. LLM OS and LLM Security)
Hope it's fun & useful!
youtube.com/watch?v=7xTGNNLP…
Casper Hauser retweeted
The funny part of this is that policymakers could squash asset price speculation by draining liquidity from the financial system, but they can't do so for a long period of time because their own Treasury solvency now relies on their own liquidity.
Aka nothing stops this train.🧵
Casper Hauser retweeted
After 2 years of being a raging bull, a couple weeks ago, I spoke about it being a good time to raise some cash and buy puts, volatility coming. But here's the deal, market once again has it wrong. Fed will likely cut at least 4 times in '25. Why?
-Other central banks are cutting; these guys/gals meet every two months in Basel at the BIS and coordinate global monetary policy. Too big of a spread between say German Bunds and USTs is disaster, can't get too wide.
-Powell just provided stimulus to the wealthy with sustained high money market and short-term yields. Higher Fed Funds is a stimi to the rich, banks, and others holding significant cash. All Caffy did today was flatten a yield curve; not what he wants.
-Gov't borrowing costs must be contained, given the amount of bill issuance, Fed must accommodate
-Too much $$ strength makes Jack a dull boy. The DXY cannot continue to climb much higher without ramifications.
-Tax receipts are grossly dependent on stock market doing well. Gov't needs scares like today to force taxable profit taking, but needs overall strong upward performance in the long run. The gov't gets what it needs. Powell cannot let a deep and prolonged selloff exist for too long, maybe 6-9 months tops.
I could go on, but listen to the below pod for full thoughts, and say hello to a season of high vol. Who knows, could go up or down 3% any given day. Global reset coming, but look for gold and bitcoin at the end of the rainbow when all the shock and awe is done. I think the call of this pod was 15,000 S&P by end of Trump's term. We'll see in coming months/years if anything I said holds water, but might be worth a listen. Thanks again @TFTC21 and @MartyBent for having me.
"The government has gotten itself pretty much in a Ponzi scheme type situation, like Bernie Madoff, where everything is great as long as the stock market's going up." - @MelMattison1
US government spending now mirrors a Ponzi scheme, requiring endless market gains to avoid fiscal collapse.
Casper Hauser retweeted
Why Chainlink $link CCIP Is the /Future of Global Settlements/—and Ripple $xrp Isn’t.
(warning: quite a long read, but this needs to be said.)
Cross-border payments are one of the most transformative use cases for blockchain technology, and Ripple has long positioned itself as the go-to solution for this challenge. However, Ripple’s approach is showing its age. Its reliance on a closed network, limited interoperability, and centralized components make it less suited for the interconnected, decentralized future we’re building.
Chainlink’s Cross-Chain Interoperability Protocol (CCIP) is emerging as the superior solution, offering a universal liquidity layer that connects blockchains, traditional financial systems, and enterprises into one seamless global network. Here's why CCIP will replace Ripple’s model and dominate the future of cross-border payments and settlements.
———————————————————
1. Ripple’s Siloed Approach: A Closed System
Ripple’s solution centers around facilitating payments between banks and financial institutions using its RippleNet network and the $XRP token. While this was innovative a decade ago, today it presents several limitations:
-Limited Interoperability: RippleNet primarily connects participants within its own ecosystem. It doesn’t seamlessly integrate with other blockchain networks or diverse enterprise systems.
-Dependence on XRP: For settlement, Ripple heavily relies on $XRP, which introduces volatility risks and forces institutions to adopt a specific token.
-Centralized Control: Ripple’s network is not entirely decentralized, as its nodes and governance are controlled by Ripple Labs and selected participants.
In a world moving toward open, decentralized systems, these limitations make Ripple’s approach increasingly outdated.
———————————————————
2. Chainlink CCIP: The Universal Liquidity Layer
In contrast, Chainlink’s CCIP represents a transformative leap forward by offering a truly universal and decentralized standard for cross-chain and cross-network communication. Here’s why CCIP is the future of global settlements:
a. True Interoperability
CCIP connects all blockchains, both public and private, as well as traditional financial systems.
Banks, enterprises, and DeFi protocols can transact seamlessly across networks without needing to adopt any specific chain or token.
CCIP acts like the TCP/IP of blockchain, enabling fluid and frictionless communication between diverse systems.
b. Token Agnosticism
Unlike Ripple’s reliance on $XRP, CCIP allows institutions to use any asset—whether fiat, stablecoins, or tokenized securities—for settlement.
This flexibility reduces adoption barriers and accommodates the unique requirements of financial institutions.
c. Decentralized and Secure
CCIP leverages Chainlink’s decentralized oracle network to ensure the secure and tamper-proof execution of cross-chain transactions.
Chainlink’s proven track record of securing billions in DeFi underpins the reliability of CCIP, ensuring no single entity controls the system.
———————————————————
3. Global Liquidity: The CCIP Advantage
One of CCIP’s most revolutionary features is its ability to create a global liquidity layer. This is achieved through:
-Composability: CCIP enables assets to flow seamlessly between DeFi and TradFi systems, creating unified liquidity pools.
-Programmable Settlement: Smart contract logic ensures automated, trustless settlement of payments across borders.
-Efficiency and Cost Savings: By eliminating intermediaries and automating processes, CCIP dramatically reduces the time and cost of global transactions.
Ripple’s closed approach simply can’t compete with the openness and scalability that CCIP offers.
———————————————————
4. Institutional Adoption: Chainlink’s Growing Edge
Major financial institutions, including SWIFT, DTCC, and BNY Mellon, are already exploring or integrating Chainlink’s CCIP and oracle solutions. These partnerships highlight Chainlink’s growing role as the infrastructure provider for both traditional finance and blockchain ecosystems.
(And thus /greatly/ increasing its chances of becoming a global standard.)
Ripple’s adoption, meanwhile, has stagnated, as its reliance on $XRP and limited interoperability fail to meet the evolving demands of global finance.
———————————————————
5. Chainlink Economics 2.0: Aligning Adoption with
$LINK Demand
/Every/ CCIP transaction generates fees paid in $LINK, directly tying adoption to token demand. With Chainlink staking and fee-sharing models, this creates:
-A sustainable reward system for $LINK holders.
-An ever-tightening supply as more $LINK is locked in staking and node operations.
Ripple’s $XRP, in contrast, suffers from inflationary pressures and limited utility beyond its closed network.
———————————————————
6. Why CCIP Will Dominate Cross-Border Payments
CCIP’s universal, open, and decentralized design makes it the ideal solution for cross-border payments in the modern financial system. Ripple’s reliance on outdated, closed models cannot match the innovation and scalability of Chainlink’s approach.
Key Takeaways:
-Ripple represents the past: a siloed, XRP-dependent system with limited interoperability.
-Chainlink CCIP is the future: a universal liquidity layer that connects all systems—blockchains, enterprises, and banks.
-As institutions adopt CCIP, the demand for $LINK will soar, driving exponential value creation.
Once again; the global financial system needs a /universal standard/—not another walled garden. Chainlink CCIP is building that standard today.
Casper Hauser retweeted
I think AI agents have the potential to be one of the big themes of this cycle, especially with people feeling that they missed Nvidia and most AI price discovery taking place in private markets. Talk about agents is heating up, especially with OpenAI expected to launch its own AI agent early next year.
I've been following the emergence of this still-small crypto/AI sector and think there is something there. This was initially catalyzed by GOAT, which is essentially a memecoin tied to a Twitter account with AI-generated tweets. Since then, we've seen several new agents emerge such as Luna, which garnered 500k+ Tiktok followers. While still in its infancy, I believe this sector, which still doesn't even have 1 coin worth over $1 billion market cap, has the potential to grow substantially if there are even just a few breakthrough agents.
Now the important part, how to think about playing it. I think the question here comes down to where you think the value accrues in the stack and where flows will come from people allocating to the sector. You can bet on the agents themselves, which could potentially generate returns like a memecoin, but there's a chance you could make a wrong pick or another agent overtakes them in that niche within a short period of time. Maybe you make some smaller bets here, but not sure there is where you allocate the bulk. Imo I think the best way to allocate currently is to the platforms on which the agents are launched through.
The two platform-related assets that I think are the most noteworthy at the moment are @vvaifudotfun ( $vvaifu) on Solana and @virtuals_io ( #virtual) on Base. Both platforms allow users to instantly launch agents on their platforms, similar to pumpfun, connected to various social media platforms, and soon, more capabilities -- with value accrual back to the platform's token in the form of burns. This could get very reflexive, as shown in the graphic below.
Do your own research, not financial advice, this is basically liquid venture investing at this stage, but I think it's worth keeping an eye on the sector and how it evolves. Discl I have/had positions in both Vvaifu and Virtual.
