Transcript Ep. 881: Jim Bianco on Why 0% Interest Rates and Money Printing Are Gone for Good

Laura Shin:

Hey, all. In today's episode, macro expert Jim Bianco unpacked a series of major shifts taking place across the US economy, monetary policy, and crypto.

We started with the significant downward revisions to recent U.S. Job Growth data, something Jim believes most analysts are misinterpreting. He gave a great explanation as to why these numbers don't necessarily signal a weakening economy.

From there, we zoomed out. Jim argued we've entered a new economic regime, one where interest rates stay structurally higher, inflation is stickier, and the old playbook of zero rates and quantitative easing is off the table. He warns that money printing, as we know it, might never come back in our lifetimes, which I have a feeling most of you aren't going to love.

We also talk about crypto and the future of financial infrastructure. Jim lays out a vision for a real-time, low-cost payment system powered by stablecoins which sounded awesome and like streaming DeFi or DAO payments, but he says the U.S. regulatory landscape is a huge barrier to innovation, which isn't the best news, but I have to give him credit that does seem like it's likely. 

He’s also skeptical of tokenized stocks and crypto treasury companies, calling them “leveraged plays” that may not survive the next bear market.

Finally, Jim discusses the growing speculation that Fed Chair Jerome Powell could be replaced and what that would mean for markets. Spoiler: it could get messy.

Stick around, Jim doesn't hold back.

Heads up, everyone. We've got exciting news. Bits + Bips, our macro-meets-crypto show is officially spinning off into its own podcast feed, YouTube channel, and X account.

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We'll be posting here for a few more weeks, but starting in September, Bits + Bips will launch on its own feed. For now, we will publish longer clips from the show on those accounts. Remember, go to the show notes now and subscribe to Bits + Bips. That's, Bits-plus sign-Bips, spelled B-I-P-s, on YouTube, X, and wherever you get your podcasts.

Welcome, Jim.

Jim Bianco:

Thanks for having me, Laura.

Laura Shin:

So we recently had a really interesting payroll report. It came in well below forecasts. And then on top of that, there were downward revisions for previous months that showed overall actually the average gain over the past few months was only about 35,000.

I wondered for your reaction on that and what that means about where we are in this market.

Jim Bianco:

Well, I got a couple of reactions about it. You're right. The big story in the payroll report was those downward revisions to May and June. May went from 133,000 jobs created to 19-. June went from 147,000 jobs to be created to 14-. That's a net decline of 258,000 jobs.

That's the second largest two-month revision we've seen in 43 years. The only other one that was larger was when we lost 21 million jobs on the month that the COVID shut down the economy in April 2020, which is explainable.

This one is a little bit less explainable. So it's extraordinary what the number showed.

I got two reactions for you on them. Neither one of them are an economic reaction that the economy's slowing, we're going into recession. I don't think that's the case at all. I think that there's two problems with this report.

One, all economic data is based on surveys. They poll a bunch of companies. In this case, they have a universe of 120,000 companies. They usually get about 50,000 of those companies to report to them details about their hiring. And from that, they construct the report.

The number -- the response rate, the number of people that are responding to their surveys. Ten years ago, it was 80%. Today, it's 40%. It's like political polls, it's like everything else.

SurveyMonkey has ruined the world. Let's just start with that. It's become too easy for everybody to do a survey. So there's thousands of them, so everybody ignores them.

Also, if you will, the political polls of 2016, 2020, 2024, getting the elections wrong, have poisoned the well. Whenever anybody hears survey or poll, they think, oh, it's biased, it's wrong, it's crap. And so, it's held in disrespect.

I think that the Commerce Department, the Bureau of Labor Statistics, who Trump just fired the head of on Friday, they need to sit down and start to say, look, we got to stop using surveys. They don't know how. It's like asking somebody how to disconnect their foot. They don't know how to do it because that's the only way they've known how to do these surveys.

Now, there is ways you could do it. You can ask the IRS to give you withholding data. You can ask the states to give you unemployment insurance claims data and stuff.

So the first problem, I think, is that the reliance on these surveys with low-response rates is a problem. And that's not going to get better. Americans aren't going to change their mind next year and start answering surveys. And please, SurveyMonkey, send me another one to fill out. No. That's not going to happen. So they're going to have to start to realize that this is only going to continue to get worse.

Now, probably the more important issue, which I should have led with, is what's causing this slowdown in jobs, and it isn't necessarily that the economy is slowing. When you're talking about payroll reports and you're talking about unemployment, you're talking about 160 million people that have jobs in the United States, 164 million, to be exact, according to the payroll report. Big, huge parts of the population.

In other words, what you're really measuring, in large part, is the population growth of the country. And over the last four years, the population growth of the country has had epic changes because of immigration.

First, under the Biden administration, we were very left, let everybody in. 3 million people strode into the country, legally and illegally, in 2013.

Trump just tweeted out yesterday, for the third month in a row, May, June, July -- May and June is when we had the big downward revisions, and this is where I'm leading to, zero immigration in the country.

What does that mean? Well, we have low birth rates in this country and we've always had for a long time. The population growth of the country is practically near zero, I think right now.

And I think we're even overstating it when we say it's practically near zero because there's some evidence from remittances, from the Bank of Mexico, and some evidence from bus rides in Los Angeles that immigrants -- bus rides in Los Angeles have collapsed. The number of people that ride the buses have collapsed because all the undocumented workers are hiding. They're not going to work.

Your remittances back to Mexico, according to the Bank of Mexico, have nosedived in the last couple of months, and so have payrolls.

If you're not having a population that is growing, you only need to create maybe 10,000 jobs, 15,000 jobs a month in order to meet population growth. I got that number from the American Enterprise Institute is actually estimated that it could be as low by next year as zero. Any number above zero is fine. We're okay when it comes to higher -- we're just not used to that.

We need to reset our expectations. We think -- and this is where I'm really afraid we're about to have a big mistake. We look at 14-, 19-, 73-, 35,000 jobs a month ago, oh, my God, the Fed's got to cut rates. We have to stimulate the economy, shoot it with steroids to get us back to 100,000 jobs.

Well if you want 100,000 jobs, open the border. And Jay Powell can't open the border.

So short of that, the only other way you're going to get 100,000 jobs, my last thought on this, is there's another statistic called the labor participation rate. That's everybody between 18 and 64 years old, what percentage of them have a job? About 62% of that population has a job.

Who are the other 38? They're students, military, retired before 64, disabled, you know, have elected for whatever reason to not be in the workforce, like a homemaker or something like that. All right, that's who you got to get back into the job force in order to get back to 100,000 jobs if you're not having a population growing and having natural new college graduates and new people entering the country all the time that are looking for jobs.

How do you do that? Pay them more money. Pay them more money to come back into the workforce. Pay the undocumented workers more money to take the risk to get back on the LA bus. That's wage inflation.

So I have a feeling what the Fed's going to do, and what the market is demanding is we've got low payroll reports, we have to do something. Cut rates, make it worse. Make it worse by creating inflation, but you're not going to create any more jobs.

And that's what my biggest fear is right now.

Laura Shin:

It's interesting. Wait, I'm sorry. Just to understand, you said that was your fear, but it also seemed like that was something you were advocating. So I'm a little bit confused. Like you fear --

Jim Bianco:

No. I'm sorry. You're right. I worded it poorly. Let me say that again. The rest of Wall Street is advocating that the Fed, in response to these payroll reports, cut interest rates.

The market, the Fed fund futures market, right before the payroll report on Friday was giving about a 40% chance the Fed was going to cut rates in September. Now it's giving it a 90% chance, all based on those revisions to the report. 

And what the reaction in Wall Street is, they don't know anything about the population growth. They still think normal is 100,000 jobs a month. So when they see 35,000, they think we need to stimulate the economy to get back to 100. 

And I'm saying the only way you're going to get back to 100 is raising wages to drag people not in the workforce back into the workforce. That's wage inflation. And so, the demand that the Fed do something about this low payroll report is not going to fix the payroll problem, because the Fed cannot open the border and bring the population growth back up.

What they will wind up doing is creating more inflation, making it worse.

Laura Shin:

Right. So this goes back to some other comments I've heard you say on recent podcasts where you talked about how you don't feel interest rates will return to this 2% rate that was kind of known pre-COVID.

You talked about how you feel that we're in this post-COVID world. You gave some examples, one of them being the increase in remote work.

But I was just curious how would you characterize this new post-COVID world, like as part of this reduction in immigration part of that, or what do you think this new normal is or will be?

Jim Bianco:

So every time you have a recession or a financial crisis, and we had both in 2020, the economy changes and this one changed and it's a very different economy.

What's changed about it? Well, I'll give you three things. One is remote work.

Prior to COVID, about 5% of the workforce was working remotely. In other words, remote is you get paid to do your job away from a central location. Whether it is an office, a site, a school, or a hospital, you're paid to do your job somewhere else. 5% of the workforce, pre-COVID. Today, it's about 27% of the workforce.

And about half the jobs in the United States cannot be remote. You can't be remote as a construction worker, a policeman, a surgeon, a waitress. So that means that half the people that can -- half the people in this country that can be remote are remote right now. That's a huge tectonic change in the labor market right now.

In other words, labor economists that -- and I always criticize Powell about this too, when Powell says we see broad evidence of the economy normalizing. What's abnormal about it, Jay? We see broad evidence that the economy is returning to pre-pandemic levels.

What I'm arguing about the financial crisis and recession has changed the economy is that's a previous cycle. We're not going back there. Whatever you thought the economy was in 2019, we're not going to go back to that.

Now, when I said it's changed, don't confuse that with saying I said it was dystopian. Change sometimes can be better, it can be different. I think it's different now. It's not necessarily worse. So that's the first one.

The second one is deglobalization highlighted by tariffs. All of a sudden, international cooperation is out the window. There's actually a new word that's kind of come into the lexicon, and that is "segmentation", that we're segmenting the global economy now as opposed to globalizing the global economy.

And the third one is definitely attitudes about immigration. And that has changed the population trends within countries -- not the global population trend, but within countries that has definitely changed the population trends.

So when you add all of those up, I think we're in a different cycle. I'm speaking to a largely crypto crowd and I know that the crypto guys like this. So let me put this in, in perspective. Money printing — you probably will never see again in your lifetime. Zero interest rates — you will probably never see again in your lifetime. Yield curve control — you will probably never see again in your lifetime. Those are artifacts of the previous cycle.

This cycle is going to be more about frictions, stickier inflation. We've got inflation that has averaged since 2020, 4%. It's now down into the high twos, but I think this is a cyclical low in inflation, and we've got interest rates in the -- I'm talking about the 30 year now, in the 4.5 to 5% range. That's normal. I think that's where they should be.

But we've got people like the President screaming and yelling that 5% interest rates are a disaster and we need to fire Jay Powell and we need to cut interest rates and to bring those rates down immediately.

He's thinking it's 2010 to 2019, when interest rates was zero for most of that period, and the 10-year note was at 2%. We're in a completely different cycle because in that cycle we didn't have all of these things. We had globalization, we didn't have remote work, we didn't have the concerns that we had about globalization, and we had persistently low inflation during that period.

That was the period, the era -- or if I want to put it different way, from 2000 to 2020, I think that era was really about deflation. That's over. We're now in an era of inflation.

We could be in an era of high inflation, we could be in the era of lower inflation, but we're not in an era of no inflation. That was the 2020 or maybe '97, actually to be more specific, the Asian Financial Crisis to COVID, that deflation period is over.

We're now in some low grade to medium grade to high grade levels of inflation, and that means you're going to have to have higher interest rates along the way.

Laura Shin:

So it sounds the comments that you made about how we will not see massive money printing again in our lifetimes, obviously that's probably triggering to crypto people. But you mentioned this issue about how President Trump wants to try to fire Fed Chair Jerome Powell.

Do you think he will? And if he does, who do you think would be good in that position? Who do you think he'll put in that position? I'd be interested to hear all your thoughts on that.

Jim Bianco:

Yeah. Just real quick on that last point about being triggering to crypto people about no more money printing. We've been doing quantitative tightening for two years. We've been doing the opposite of money printing. We've been contracting the balance sheet. That was a different era. All I'm trying to say is that was a different era.

If you look through the arc of history in monetary policy and economics, I can show you 5,000 years until about 2000 that money printing was only a thing that was done by fringe countries that ended badly. Then it was done by the main powerful countries for a couple of years and now it's over. And so is negative interest rates.

I think it'll be a thousand years before we see negative interest rates again, because in order to get negative interest rates again, you're going to have to get rid of inflation. And that's why I think that that era is -- in fact, we've got 5,000 years of history of interest rates going back to 3000 BC. And the only time we've ever seen negative interest rates in those 5,000 years was 2010 to 2020. And that's why I think that was a unique period in history that won't be repeated.

Now, to your question about Powell. I know Polymarket's got the probability that Trump fires Powell at about 15%. And the thinking is, well, he doesn't really want to fire Powell. He just needs him there to be his punching bag, to basically just call him every dirty name in the book and blame him for everything under the sun.

I'll put the odds at 45 that he'll fire Powell. Now, I picked that number specifically because it's less than 50 right now, but it's a lot closer to being a reality than I think the market is facing. Because I think Trump will pull the trigger. I think it's going to come down as far as firing Powell to his Jackson Hole speech at the end of August.

Does he give a speech and say we're going to cut rates? He won't fire him. Does he give a speech and say we're not going to cut rates? I think he might move to fire him at that point. And so that's a real possibility.

Now, who's he going to replace him with? Well, last week was very interesting. Adriana Kugler, who's a Fed governor, missed the Fed meeting on Wednesday. There was only 11 voters. The Fed said she was attending to a personal matter.

And then two days later, Friday, she resigned.

So she didn't say what the personal matter is or why she was resigning, but if you ask me, that sounds like a health problem. I hope it isn't. I hope that there's some other explanation for it. But she missed the meeting and then she resigned two days later. She's done on Friday.

Trump has said that in the coming days, maybe by the end of the week, he might name who's going to fill her spot. Now, remember, it requires Senate confirmation. But more importantly, that's the only Fed seat that's going to be available for the next two years.

In order to be the Fed chairman, you also have to be a governor. So whoever he wants to be the chairman, he'll have to appoint to that empty governor seat as a governor. They'll get approved as a governor, and then renominate them as chairman and then they'll have to go through approval all over again.

So by the end of the week, maybe in the next week, if Trump is true with his incoming days statement, we should know who he's going to appoint to that seat. We should know who's going to replace Jay Powell.

Furthermore, that person could be on the board before the September 17th FOMC meeting if the Senate moves fast enough to approve them. And that would give Trump another vote to cut interest rates.

And that would cement this idea that Scott Bessent, the Treasury Secretary, pushed last year, called the Shadow Fed. His argument was you can't get rid of Powell, although technically you can. But I'll talk about that a second -- you can't get rid of Powell, so appoint his successor early. Tell everybody that this is their successor, and then everybody will say, well, I don't want to listen to the guy who's leaving, he's not as important as the person who's going to take over, and they will become a more important voice than Jay Powell, so-called Shadow Fed.

Now quickly about how can Trump fire Powell? He can't fire him. The legal terms are the job of Federal Reserve Chairman is not at-will. At-will is a job like the Treasury Secretary's at-will. The President of the United States can fire the Treasury Secretary for any reason or no reason just because he wants to. He doesn't need to explain.

For cause is the job of the Federal Reserve Chairman. Now, for cause has never been adjudicated, but it's understood to not mean I disagree with you on monetary policy, but understood to mean something like malfeasance, illegal activity, immoral activity or something like that, that is untowardly and we don't want somebody that does that to be the head of the Fed. So he could fire him for cause.

Okay. What's the for cause thing? The renovation of the building. Now, I've said this before in another podcast, I'll say it with you. My name ends in a vowel, and I live in Chicago. I have family members who work in the construction business and I have family members that work in government projects, government construction projects.

Let me just say this bluntly. Every government project that's ever been done, construction project that's ever been done, is being done, or will ever be done, is 100% of them have fraud and abuse and illegal activities to them. They all do. It's the process of the government doing anything. We elect to ignore it.

Now the Fed has got a $3 billion renovation on its buildings going on. If you want to put an inspector in there and look hard enough, you're going to find some unseemly and stuff that you're going to be afraid to look at. And it's all approved by the Federal Reserve Chairman? Yes. It was -- and the board, but it was all approved by the Federal Reserve Chairman.

So there's your for cause right there. It'll be something along the lines with the Fed building. So if he wants to fire him, if he wants to look that hard, he can't. Now it's 45%, but I also think if Powell gives that Jackson Hole speech and says, I'm not cutting rates in September, all bets are off then at that point.

Laura Shin:

And so you said earlier that you feel like cutting the interest rate would not be a good idea. But basically, if Trump has its way, then that would likely happen. So what do you think the impact of that would be?

Jim Bianco:

Look to last year, and look to Europe. What happened? Trump likes to say that the ECB's cut rates 10 times and our guy, he hasn't moved once. Well, actually he did. He cut rates in September, November, and December of last year.

What did the 10-year yield do? The day before he cut rates at the September meeting a year ago, September 18th was the meeting, the 10-year yield was at 3.6%. By January of this year, it went from 3.6 in four months to 4.85. It went up 125 basis points or 1.25%.

Why did the rates go up when the Fed was cutting rates? I like to argue that the market is basically looking at Fed policy. And when the Fed decides to do something: cut rates, raise rates, hold steady, if the market agrees with the Fed that that's the right policy, then longer-term interest rates will generally do the same thing.

If they're cutting, they'll fall. If they're hiking, they'll hike. If the market agree -- if the market disagrees and thinks it's a mistake to cut rates, you're just going to stimulate an economy that doesn't need it, you're going to risk having more inflation. It will reject it. It'll reject it by having long rates go up.

Europe, as Trump said, they've cut rates 10 times. Yeah, well, if Trump would look at the 10-year German government bond, or the 10-year French OAT, those yields today are higher, higher today than they were before the first of those 10 cuts. Not by much, maybe 10 or 15 basis points. But they have not gone down, if you want to say it in those words, they haven't gone down an inch even though they've cut rates 10 times.

Why? Market's rejecting the policy. It's not what it wants. So if Trump gets what he wants and he forces through all these rate cuts, if the market decides it is not the thing we want, I think long-term yields go straight up and put pressure on all financial markets at that point. That's the risk that we face.

It is not axiomatic. Oh, he cuts rates, mortgages fall. They didn't last year. Mortgages shot straight up to 7.5% last year when he cut rates. It doesn't necessarily have to be the case. Only if the rate cuts the market agrees it's the proper policy to do.

Laura Shin:

All right. So in a moment we're going to talk about stablecoins and some of the things that are happening in that land. But first, a quick word from the sponsors to make this show possible.

Heads up, everyone. We've got exciting news. Bits + Bips, our macro-meets-crypto show is officially spinning off into its own podcast feed, YouTube channel, and X account.

If you've been enjoying the deep dives into interest rates, monetary policy, and how they intersect with the crypto markets, make sure to follow Bits + Bips wherever you get your podcasts on YouTube and on X. You'll find the links to YouTube, X, and other podcast platforms in the show notes.

If you're watching this, there's a QR code on screen. We'll be posting here for a few more weeks, but starting in September, Bits + Bips will launch on its own feed. For now, we will publish longer clips from the show on those accounts. Remember, go to the show notes now and subscribe to Bits + Bips. That's Bits-plus sign-Bips, spelled B-I-P-s, on YouTube, X, and wherever you get your podcasts.

Back to my conversation with Jim.

So let's now turn to the GENIUS Act, which you mentioned earlier. Here we are. We're just in this really interesting time because I'm sure you saw in the crypto community before the Circle IPO, there were a lot of prominent people in crypto who kind of discounted it, saying Circle profits would never be as good as they are at this moment in time because interest rates they expected would come down. They talked about how Circle is giving more than half of its profits to Coinbase.

And then obviously, things didn't quite turn out that way. So I was just curious why you thought that happened. But then we can shift a little bit more broadly to the GENIUS Act. But actually, let's start with Circle.

Jim Bianco:

I'll argue to you that it's part of a bigger thing that's going on in the marketplace. Today as we're recording, we've recovered about 80% of Friday's loss in the S&P 500. Buy the dip worked together.

Who's the big dominant player in the stock market today? It's retail investor. It is not a hedge fund. It is not a pension manager. It is an individual person who's directing their own account times millions, probably on a Reddit sub thread, getting some ideas on where they should be going. And we've got memes -- and we've got the meme stock mania going all over again.

I think that Circle is a perfect vehicle for that type of retail investor to really just pile into it. It might not be Krispy Kremes or GoPro or some of these other meme stocks that are going completely ballistic right now, but it's kind of at the next level there.

And I think that what you're seeing with Circle and some of these other ones is that meme-stockification because of the dominance of retail investors, especially the crypto crowd, which loves it, and they've piled into it.

But I agree with you though, the fundamentals of it, they're not terrible, but they're not necessarily as great as everybody makes it out to be.

Laura Shin:

Let's now talk about the GENIUS Act. We're at this moment in time where we can clearly see so many banks, fintechs, crypto companies are all sort of converging in the same space.

And ahead of the GENIUS Act, there was this concern by the banking lobby that stablecoins can affect deposits and thus hurt the ability of banks to lend. And so supposedly that's one of the reasons that stablecoin issuers were banned from paying interest to consumers.

However, you've probably seen some of the different announcements that have come out. It looks like there are companies that are coming up with creative ways to issue yield on stablecoins, but it's through partners. It's not directly the issuers.

So I was just wondering what you thought about stablecoins in terms of whether or not they are a threat to bank deposits and how this competition that we're seeing between banks, fintech, stablecoin issuers, stablecoin partners, even the likes of Walmart and Amazon. How do you feel like this will play out in the stablecoin space?

Jim Bianco:

There's a couple things about the GENIUS Act that I really like. Just so everybody knows, I'm kind of ambivalent about the GENIUS Act. I think it's better that we have it than we don't have it. I think we're kind of overselling it a little bit.

But the one part of the GENIUS Act that I do think is really good is that they're going to make a push and allow for the regulations to allow payment rails to develop a little bit more.

I've used this example before and I'll use it again. Personally, the car I own, when I take it back to the dealer and I get my oil changed, I buy parts for it and stuff like that. I got an email from them a couple of weeks ago, said that if you want to do anything like service or buying parts, get your oil change and you pay with a credit card, they're going to charge me 3% extra.

So I got to pay the credit card fee. If I want to pay with Venmo or Zelle, they won't charge me that. And you're seeing more and more of that, that companies are pushing back against these credit card fees.

Now that 3% fee is interesting, because somewhere on my computer I've got a little image: Western Union invented the Money Telegram in 1871. I got an image from back then. $300 of a Money Telegram, $9 of fees, $309 total invoice.

150 years ago, if you wanted to send somebody $300, it cost you 3%. 150 years ago, they had to put $300 of coins and paper currencies in a saddlebag and ride it to you on a horse. If I go pay $300 to buy a part for my car from my dealer, in order for me to send him $300, somebody's got to pay 3%.

In 150 years, there has been no improvement in the payment rails. That is probably one of the more backward things. I actually think it's one of the more constricting things in the economy itself.

We should have real-time payments that can handle a billion payments a second. They should be instantaneous, they should be sub penny. So if you want to pay a third of a cent or something like that, and they should be free.

We don't get charged for sending emails, we don't get charged for sending texts, and we send hundreds of millions of them every second around the world. Money payments should be the same way.

So they're pushing on that and they're starting to argue that maybe stablecoins could be on the leading edge of that. Now the problem with TradFi is that they're kind of bastardizing these terms, stablecoins.

I've heard prominent people on Wall Street say, yes, we're all fighting for stablecoins. JPMorgan will have a stablecoin, Citibank will have a stablecoin, as you mentioned, Walmart might have a stablecoin. I'm like, those aren't stablecoins. Those are TradFi payment rails is what they are.

In fact, even one guy even said to me, yeah, maybe even the Fed will have a stablecoin. No, that's a CBDC. A stablecoin is on a crypto network. It is not something that's run by JPMorgan servers or run by the Federal Reserve or the Treasury Department servers. Those are just more of the same.

So I'm not sure that they understand what these things are supposed to be.

The other thing I would say is that they said that there's $200 billion of stablecoins and they think in 10 years it's going to be 2 trillion. And they're implying that payments are going to be a major part of stablecoins. Well, we got to fix the payment rails in order for that to happen.

They have to be instantaneous, they have to be free, and they have to be sub penny. I'll talk about the payment rails in a second.

But there is a way you can get stablecoins from 200 billion to 2 trillion, 10X, the price of crypto. So instead of it being 120,000, just around the number on Bitcoin, if it goes to 1.2 million, excuse me, that's 10X. If it goes to 1.2 million, instead of needing 120,000 stablecoins to buy 1 bitcoin, you'll need 1.2 million. That's how you wind up getting from 200,000 to 2 trillion.

Well, if that's what they think, if they actually think that the price of crypto's going to 10X, then say you think the price of crypto is going to 10X. But they're -- actually, 90% of stablecoins on crypto networks are used for trading. They're not used for payments. Payments, the rails have to be fixed in a way.

Now, what am I envisioning? Just so people understand. In 2025, in the digital economy we live in, the way we pay for stuff is all 1950s. It's all screwed up. Your payment… your paycheck, my paycheck, we should get paid not every Friday or once a month or whatever your payroll processor is. You should be paid every minute. You should be paid every second. A constant inflow into your account.

Your monthly rent, your monthly mortgage shouldn't be due at the end of the month. It should be every second money comes out of your account that you get paid.

You should not have to pay a monthly fee for Netflix or anything. There should be no such thing as a monthly fee. If I want to connect to the New York Times or the Netflix, I'll connect my wallet, and if I want to buy, if I want to read some article, I'll click on it and it'll take $0.03 out of my wallet immediately and I can read the article.

Or if I'm on Netflix, I don't have an account, I connect my wallet. Hey, this looks like an interesting movie. I start playing it, and they take a penny and a half a minute, or some subsection of it a second. And the meter just keeps running on very small numbers until I'm done. And when I stop, then they stop paying too.

That's the way we should be paying for everything.

Stablecoins have a way to get there, but we have to fix the payment rails. We're so far away from doing any of that. The whole idea of a monthly fee and your mortgages due at the end of the month and you get paid on every Friday, we developed that 80 years ago and we haven't changed anything.

We have the technology for it. We had the technology to send a billion emails a second for free. We could do the same thing with money, but we're just not ready to do it because it's so regulated and it's such a money maker for TradFi.

That's why you said that TradFi killed the idea that stablecoins could pay interest. Sure. There's innovative ways around it, but at best, all you're going to wind up doing is making a stablecoin equal to a money market fund.

A money market fund has a $1 price, never changes. Stablecoin is a $1 price, never changes. Money fund is backed one-for-one for every dollar in the money market -- for every dollar I put in, it owns a dollar of assets, usually treasuries. Stablecoin is back for one for one.

Money market passes through interest. Stablecoin does not. If there's innovative ways to get interest, you could have gotten those plus 4% on all those treasuries that they own.

So I think that's going to really retard the use of stablecoins.

Why would I leave -- why would I take my money out of a 4% investment and put it into a 0% investment? Because I want to buy crypto. That's why 90% of it is used for crypto. I'm not going to use it for payments because that money that sits around for payments doesn't earn me any interest. In TradFi, it does.

So once we fix the payment rails, I think this could change. But I'm afraid that people are going to say, look at JPMorgan, they developed a stablecoin. I'm like, that's not a stablecoin. It's run on JPMorgan server. It's a TradFi product. So we've got this other thing about we don't really know what the product is.

Laura Shin:

Yeah. Although also JP will be doing their deposit token, which is even a different animal. I did want to ask though --

Jim Bianco:

Again, it's not a crypto. It's not a crypto deposit token. Although they're trying to pretend it is.

Laura Shin:

Yeah. Well, I did want to ask also just about how -- we're seeing like, so Coinbase, they're offering for, I think 0.1% on USDC held on their platform. We're seeing that Stripe, they just acquired -- or not just, but several months ago they acquired Bridge, which does APIs, and they make it easier to integrate stablecoins. We're seeing pretty much just all these different players are coming in.

So do you feel like certain categories will be more advantaged over others when it comes to winning this race? Or do you feel that just there's going to be just a huge proliferation, or how do you think the stablecoin kind of competition will play out?

Jim Bianco:

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