Joe Consorti: The Bitcoin Bear Is Slain. Here's How We Know

Consorti says Russia has legalized Bitcoin for foreign trade and settlement, while China and Iran are pursuing similar uses; he argues Bitcoin is emerging as an alternative after China and Russia moved away from U.S. Treasuries and found a joint gold-backed currency impractical for modern trade. He predicts that if Bitcoin becomes a primary settlement and value-storage asset over the next 5 to 15 years, the U.S. will probably need to foster its development and make institutional investment more comfortable.

Consorti expects elevated inflation to keep policy tight through the rest of the year, but says energy-price base effects could materially lower CPI early next year and give the Fed a reason to cut. He argues that Treasury yields ultimately reflect market pricing and tell the Fed what it should do; he also notes that the 10-year yield was at its highest since 2007 and the 30-year yield at its highest since 2004.

Consorti describes Treasury buybacks as repurchasing long-term debt with short-term borrowing, shifting principal repayment forward rather than having the Fed buy the debt; he says the aim is to limit growth in interest expense, which he estimates at about $1.3 trillion annually. He cites a $4 billion buyback against a stated $6 billion limit.

Consorti argues that bank reserves can support lending even when recipients cannot withdraw that liquidity as cash, making that lending capacity a form of money printing in a credit-based economy. He says that if people store more wealth in Bitcoin instead of dollars, money printing may become less effective and governments may need to print more to achieve the same effect, while Bitcoin’s fixed supply offers an alternative to state-controlled money.

Consorti argues that separating money from the state requires a decentralized protocol with rules no individual can change and enough energy behind it to protect those rules; he points to Bitcoin’s pseudonymous creator and absolute scarcity as features that support this. He also says a fixed-supply dollar could let technology-driven deflation lower prices, but would not solve what he calls spiritual rot.

The host says housing affordability is exceptionally poor, while cautioning that conditions differ from before the previous housing-market crash; Consorti says price inflation has made the goal of owning a home and raising a family on one income increasingly difficult. Consorti also notes that the 30-year Treasury yield was at its highest since 2004, putting mortgage rates above their pre-Great Financial Crisis level.