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Fed Watch - Bitcoin and Macro

Feb 10, 2021

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In this episode of Bitcoin Magazine’s Fed Watch podcast, Christian Keroles and Ansel Lindner interview Nik Bhatia, author of Layered Money - From Gold and Dollars to Bitcoin and Central Bank Digital Currencies. Nik has a diverse background from a US Treasuries trading desk of a large institutional asset manager to being an Adjunct Professor teaching finance and economics at the University of Southern California.

The interview starts off with some high level background of Nik, specifically how his experience enabled him to understand Bitcoin early on. In these first few minutes we get a glimpse at just how wide ranging this conversation will be.

In Layered Money, Nik describes the history of money from the year 1250 to the present day as a series of developments adding complexity to the monetary system. We ask him if he views money as an evolutionary process and to step us through that idea. We drill down on this topic, which is of course central to this thesis on money, that money is defined as a whole of all the layers, and how they work together. Layers can be reused in a new money, but the current US dollar based financial system would not be the same if the layers were different.

The part of the interview that will probably be most familiar to Fed Watch listeners is the part on the Eurodollar system and how that interfaces with the domestic US dollar system. Layered Money gives a new framework by which to view this complicated relationship. It is not straightforward and we dig into the inflation versus deflation debate from Nik’s perspective.

Last, but definitely not least, we discuss Central Bank Digital Currencies (CBDC). Nik has a nuanced understanding of this emerging technology and its ramifications on the Layered Money framework. It is interesting that one of the questions we address is simply, “Do the central bankers know that CBDCs are threatening to remake the entire system?”

Overall, another great episode for your listening pleasure. Nik Bhatia is very knowledgeable about all the topics we commonly talk about on Fed Watch. This is one you don’t want to miss!

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