Long term Debt Cycle and Bitcoin w/ Dylan LeClair - Fed Watch - Bitcoin Magazine

In this episode of Bitcoin Magazine’s “Fed Watch” podcast, hosts Christian Keroles and Ansel Lindner sat down with Dylan LeClair from Bitcoin Magazine.

LeClair is the writer of “The Conclusion Of The Long-Term Debt Cycle And The Rise Of Bitcoin,” an article on Bitcoin Magazine using Ray Dalio’s long-term debt cycle to look at the current system and how bitcoin fits in. LeClair is a great example of the growing Bitcoin Magazine community; spreading valuable content to beginners, who in turn become the valuable content producers.
After some introductions, LeClair begun by walking through short-term versus long-term debt cycles. Most people will be familiar with the idea of business cycles. These are periods of seven to ten years, where the economy expands and contracts, recovery and recession. Those are the short-term cycles. We all live through several of them in our lifetimes.

However, the long-term debt cycles can be anywhere between 75 to 100 years in length. These cycles are due to each individual short-term cycle not completely clearing the bad debts and misallocations of capital out of the system. Every 75 to 100 years, a larger bust finally resets the economy more deeply. It happens so infrequently, no one personally remembers the last cycle, so no one other than economic historians are around to warn everyone.

LeClair and the co-hosts then discussed the tools at the disposal of the government and the Federal Reserve to delay or deal with short- and long-term debt cycles. These tools are typically used in order, because they vary in how politically difficult they are to get enacted. First is to adjust interest rates, next is quantitative easing (QE), lastly the government starts spending to boost the recovery. Whether or not these tools work as designed was the topic of conversation on this podcast. Do they or can they accomplish their goal? We tried to answer that.

Toward the end of the show, talk turned to bitcoin. For bitcoin, as an asset with no counterparty risk, in other words, there’s no direct risk to bitcoin from these long-term debt cycles. It could happen fast, over the next couple of years, or slowly, taking another decade or two. The question they ended the episode on was, “Where does the dam break?” Which central bank will fall first, or which one will adopt bitcoin first? It’s quite possible that the Federal Reserve is the first major central bank to have bitcoin reserves.

Make sure to subscribe to the Fed Watch podcast feed wherever you listen to podcasts.

Timestamps:

0:00 - 4:52 Intro
4:52 - 8:04 How Dylan learned about Bitcoin
8:04 - 10:06 How Dylan understands the big picture economics
10:06 - 12:03 What about Bitcoin caught Dylan's eye?
12:03 - 13:34 What Dylan's experience has been with Bitcoin Magazine?
13:34 - 17:45 Short and long-term debt cycles
17:45 - 19:26 What's interesting about this cycle
19:26 - 22:04 The deflationary spiral
22:11 - 23:56 The monetary policy responses
23:56 - 24:49 Lowering of the Fed Funds Rate
24:49 - 26:24 Does the Fed control interest rates?
26:24 - 28:38 The global economy isn't managed by the central banks
28:38 - 31:40 Fiscal policy
31:40 - 36:32 Bitcoin prevents the Fed from being able to kick the can
37:09 - 39:57 The current state of the United States and potential social unrest
39:57 - 43:17 The individual implications of the Fed's policies
43:17 - 44:44 The Fourth Turning
44:44 - 47:35 What's on the horizon?
47:35 - 51:31 Where will the crisis begin?
51:31 - 52:06 Bitcoin is certainty
52:06 - 54:21 Closing comments

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