July 2025: Raoul Pal The Journey Man's Monthly Recap

0:00Join me, Raoul Powell, as I go on a journey of discovery through the macro, crypto and exponential age landscapes. In The Journeyman, I talk to the smartest people in the world so we can all become smarter together.

0:18Okay, the Trump cycle. 2017, we've been talking about this. Trump came in, the markets reacted, same fear about tariffs, same thing, the dollar went up, everything else. And the same thing happened this time around. I mean, people are people. And what happened is, And the dollar ripped in the back end of 2016. It ripped in the back end of 2024. The dollar ripping is a tightening of financial conditions that play through markets and the economy three months later, which is why we had the correction in the first quarter. We showed you all of this as part of the M2 thing. Anyway, we said it at the time, we've been tracking this before the dollar topped out and said, he's going to go for a weak dollar.

1:04They said they want a weak dollar. than fuck me, the dollar's been weak. It's been an extraordinary weakness. Now, this is not some structural, ever-ending weakness. That'll come at some point when we change the rules of the game. Right now, cyclical weakness being pushed by Trump and Besson's, and it will continue to do so. And that is an amazing tailwind for markets and risk. Bonds, everyone's like, oh my God, bond yields. Every time they go up, they're going to break out, they're going to get 6%. All the drama of the macro people. It's like last time, bonds were in a range for Trump, they'll probably be in a range for Trump this time.

1:40He'll get the front end lower and the yield curve will steep, and he will force the front end lower by changing the Fed chair, et cetera. And so bond yields are really not a big deal for this equation. So let's not worry about that shit. That's the macro doomers on X. We'll talk about that. Are you starting to see corporates using stable coins? I've just, you know, because for me, there's many of these multinationals that have all sorts of payment flows everywhere. There's enormous amounts of banking fees. There's a lot of restrictions. So if you're a metals and minings company or in Angola and you're in Tanzania and whatever, and you need to move money around, are you starting to see the rise of corporates yet?

2:21Definitely. There's many examples of this. There's a couple of different elements around stable coins. When we talk about stable coins, everyone just says dollars. And I think that's rightfully so because it's the vast majority. I think we have the largest stablecoin outside of dollars, and it's a gold stablecoin, and it's still less than a billion dollars. So it's mainly dollars. And so why do you need a dollar stablecoin? Well, because everybody wants a dollar, and it's really hard to get dollar bank accounts, especially if you're outside the U.S. Even in the U.S., by the Federal Reserve's own studies, 20 or 25 percent of the American population is unbanked or underbanked.

2:56So why do you need a stablecoin? Because you don't have a bank account. Why do you need a stablecoin? because you're outside the U.S. and you don't have access to a dollar bank account. Why do you need it? Because you need to be able to move money in real time. Maybe you're a trading company. Maybe you're doing remittances. You're a person in the U.S. and you want to send money to Mexico. You need to move not in three days in high fees. You want something that's immediate. The other reason could be because you want something that's programmable. You're getting to this agentic economy that everyone's talking about and you write about so much.

3:28How could you have an agentic economy without having a stablecoin? Having something that's programmable. Mark Andreessen has said software is going to eat the world. And if that's true, and I think it is, software is going to eat money too. And what does software eating money look like? It's a stablecoin. It's not the way the current money system works. So there's so many examples of where people would need to use a stablecoin versus the current rails. No dollar access, slow dollar access, no bank account access, programmable usages. And so some big examples of that are people paying suppliers in other countries in dollars.

4:07And now they can sit there and hold dollars and not turn it into some local fiat, where you have a currency that is unstable and depreciating, which most do against the dollar over time. Even though, you know, we're always worried about the U.S. debt load, which is unsustainable, of course. It's still not as bad as most other countries that you could be living in. And so all of those things have pushed the need for either corporates or for consumers to use dollars. And the TAM is huge here. You're maybe at$22 trillion of M2 today of dollars. There's$100 trillion of global M2. It's probably growing, what do you think, 8 % or 10 % a year?

4:45I mean, you write about this all the time. in five years, you're talking about like$150 trillion of M2 in the world. And, you know, 30 plus, I mean, you know, you're not going to have$250 billion of stable coins. You're going to have, you know, trillions, maybe tens of trillions of dollars of stable coins, which is, you know, a huge shift that's going to happen in the world. In the end, where I get to in all of this is somewhere down the line, the marginal cost of electricity will go to zero. And therefore, You have infinite abundance of intelligence plus humanoids. And so what is money at that point?

5:27Well, now you're getting into the point. If I told you, and I'm not predicting this, although in the back of my mind, I've decided, I don't know if you've ever done this, I've decided not to predict publicly where I think Bitcoin is going to go. But I do think the second half of this year will be a explosive up move. And I say explosive because I believe the most important thing that happened the first half of the year was what Sundar Pichai said on the Lex Fridman podcast and also at the Google IO developer. When he said that from a year ago, we are up 50 times in token usage. okay now if you ask a hundred people on wall street what's a token with inside ai 99 of them won't know what it is unless you go specifically to the tech world when i hear tokens i think ai adoption i think inference i think reasoning i think ai agents are just starting ai agents to me are the most powerful force for productivity and job losses in terms of the the going through but it is massively powerful for Stripe.

6:37They should see exponential growth in stablecoin transactions. And you're seeing this, like the stablecoin adoption is happening at the same time. I just don't think people yet know on the wealthy side, know how to translate tokens to stablecoins, to Bitcoin, to Ethereum, to the power needed to fund all of that. But I think that's what we're going to learn. And I think that is an anti-fiat situation. I think it's fine. They'll go up together. But if Bitcoin were to go to, say,$500 ,000 by the end of this year, not predicting, I'm just saying if it did, because of a short squeeze, which I think is going to happen at some point from all the people realizing that it is a finite asset and there are people that need to borrow on it because they got in trouble from 21, 22, and they're borrowing future production and blah, blah, blah.

7:22I've seen, I've now gone through this. If we get a spike, well, that'll put it at$10 trillion in terms of Bitcoin. You'll have the entire ecosystem go up. I don't think the fiat system will see that type of growth in terms of this. And once that's moving at that speed, I think everyone from the investor world is going to start looking at how to participate at a time that wallets are easier to open. Have you ever wanted to trade Bitcoin, but haven't dared try? With Plus 500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo.

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8:30Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. And we're starting to see more and more. So I just have this belief that instead of this being a boom, I view this as a disruptive shift in money that has to happen at a time, not when the fiat system is doing well, but when the crypto thing is doing so well and it's not based on speculation, it's based on the transfer of money. Yeah. And I've always said it was a parallel financial system that got built and we're now migrating across.

9:08And what we're about to do is migrate the cash system onto stable coins. I mean, it's staggering but it's coming and when you've got the government talking about deficit financing and everyone kind of knows that it's debasement it'll only accelerate the adoption curve because it is the only way out it's this capitalism eating capitalism well here's the newest form and it's going to happen and nothing will and that's that's why i think we are i think all the turning points right now are that capitalism is eating capitalism and rather than it be a bearish argument for assets. It's not. But I think the pie of assets, the shift should be happening to a different system.

9:46And I think that's a very different argument. And I think it'll bring wealthy people in because then FOMO will set in, greed will fit in, and it'll be more towards the crypto world. And that's why I think Circle's important. I think CoreWeave's IPO is important. I think CoreScientific, you're seeing it in the traditional finance side. And when I hear people say, well, I think Bitcoin's not going up because people are moving in a circle. And I'm like, I don't know what you guys are talking about, but that's not the way it works. I just think the Ethereum side and the power side, the whole energy, all of the transactions, I thought the token side is big.

10:15It's the interconnectedness of everything. That's what people don't yet see. And what you're talking about is it's all part of the same thing. It's this new digital world that we're moving into that is entirely new. And it has its own system of money. It has its own system of truth. It has its own ledger system. It has its own everything. and it has its own intelligence and it has its own physicality. I mean, that's what we're moving into. It's a whole new world. Yep. And transactions and volumes are going to spike. And AI was the bridge to this. And this is why when I set up, when I decided not to stay in the hedge fund world, it was, let me try to talk about the traditional finance world through AI bridging to the new digital world.

10:58And it's an accelerant in this whole thing. And the AI agents is the most important thing because it gets to inference and reasoning, which then feeds into humanoids and everything else. You can't have humanoids. You can't have full self-driving, true full self-driving. You can't have all the other things without first getting digital employees, which is where the age of world is, and they need to transact with each other. And that's the phase that we're just, we know we're accelerating at right now. So because right now energy isn't free and you have to pay the agent for the energy use, you know, it all comes around.

11:27It's all fits together perfectly. You guys do a lot of work around debt refinancing cycles. You call it the everything code, the business cycle, the liquidity cycle, and how they all co-integrate together and just how fundamental the shift has been, especially since 2008. And I think the frameworks that you guys have developed have been very prescient. So I would love to just pass it to both of you to just kind of set the foundation here for the discussion and just level set on where things stand today here, first week of July. Yeah, I'll take the big picture part is, look, from our work, we kind of noticed the business cycle structure.

12:03We're both business cycle analysts. We've both been looking at them for a long time. It changed after 2008, and it became like a metronome every four years. That's only happened once in the past, which was the 1950s and 60s, where it became very, very cyclical. But this is perfectly cyclical. And it got me thinking for a while, what the hell? So many of us didn't understand what happened to asset prices after 2008. We kind of knew quantitative easing was happening. We kind of knew stuff, but we didn't figure it out. And what I suddenly realized is that in 2008, we had a debt jubilee. And in fact, it was just forgiveness on interest.

12:42You don't pay interest payments. Remember, we did that over COVID, exactly the same mechanism, no interest payments. So no interest payments allowed every government who had basically, they'd all gone over 100 % of GDP and debt. So all economic activity or economic growth was used to paying of debts. So what they all did was basically restructure their debts between three and five years, creating an almost perfect four-year cycle. And then when you look at the debts today, we're in that fourth year now, where the final part, the larger part of the debt is due. And what we found is they start injecting liquidity over a period of three years, reaching maximum liquidity.

13:24That liquidity injection never really gets taken back. Some gets taken back in the bear market years when they're withdrawing liquidity, raising interest rates, trying to slow the economic cycle because of inflation or whatever. But over time, liquidity keeps rising. It's rising at a rate of about 8 % a year. And that is, in fact, the debasement rate of fiat currency. And what happens is, and this is the bit that gets contentious with people and they hate it, if you divide an asset by the global liquidity, you get to see whether it's outperformed. People hate that chart. Oh, they hate it. It is the best chart in the world because it then tells you, okay, if I'm to allocate to the S &P 500, are basically breaking even versus debasement.

14:17So the S &P 500 is not really adding much value. Well, when you look at the euro stocks and other markets, which are priced in their local currencies, you put them in dollars, they look similar. All the markets look very similar once you adjust for debasement. So that was interesting to me. Gold, complete almost flatline, really, versus debasement, as it should be, right? That's gold's job, to be the stable currency. And once we look to the world through this lens of the debasement of fiat currency, which again is still contentious, becoming less so nowadays, but it was really contentious when we started it, we realized there's actually only two assets that outperform this.

15:00One is tech stocks, and the other is crypto. And so that completely changed how I allocated and how I I understood tech stocks. I was a macro guy. I hated tech stocks. They're always too expensive. You're always a value guy. And I realized none of that made sense in this market. That's why the value investors have been getting killed is what had happened was all of this. Now, what is driving this? I think, Julian, if you can just bring up those demographic charts, because these are the absolute most important charts in the world, really, to understand. And GDP growth is driven by this magic formula, which is debt growth plus population growth plus productivity growth.

15:42That's how you drive trend rate of GDP. Now, debt growth's gone to extremists. And now really, we're just servicing debts. Basically, GDP keeps falling. And it's falling over time, the trend rate of GDP, because of the magic formula. And Julian, if you can get to the demographics charts, because they're the key ones here. The issue is here, the biggest secular factor in all of markets is this one thing, is the aging of population. And we can see the births rate is falling in the US much faster elsewhere. So that obviously is a function. The labor force participation rate, the size of the workforce, is a function of births deaths or the number of people being born, whatever, right?

16:27And you hear the phrase demographics are destiny. they are. Until the AI and the robots come, which are basically artificial humans, this is the problem that faces us all. But there's a way that they've got around this, if you go to the next chart, is they've increased government debt to offset the declining growth from the population. So part of the magic formula was the debt growth, and the other was the population growth. So they've used debt growth. This chart, nobody understands. It's never been copied on X, which is the bizarrest thing, because it's the most incredible chart of all, which basically says that all government debt growth is basically a function of labor force participation rate.

17:20Now, what's interesting is then, okay, so the debts keep going up. We know the forward look of where the labor force participation rate is going to go and how it's being funded is liquidity. This is Fed net liquidity. You're probably better to use US total liquidity because that includes the private sector because they're now using the banking sector. So what they're doing basically is debasing currency to pay for the debt. It's as old as the hills. It's as old as the story of economies. It's as old as the story of money. And it's happening at a very pernicious rate of 8%. So you kind of notice it, but don't notice it.

18:03But what's happening is asset prices keep going up optically, because the currency is getting debased. Even if you look at real estate adjusted by the debasement by liquidity, it's basically a flat line. But wages are a variable input. And so what you find is that wages do not account for this. It's also the same factor that is driving P ratios that drives everybody nuts. Why are P-E-A ratios going up over time? Because the P goes up because of debasement, the E is a variable and doesn't. So it always goes up in line with debasement. And we've shown that over time too. So this is the really big picture of what we look at.

18:45It allowed us to understand And there's only two assets to own. And then we got to a further realization, which is, OK, if everything, if 90 % of all of, sorry, 97 % of all of NASDAQ's price action is driven by debasement, it's the strongest factor we've ever had in any macro regime in history. OK, great. That makes macro super easy. For crypto, it's 90%. So we've basically got a factor that's so powerful that nothing else matters. Brilliant. Do you think that at some point, I guess you're seeing this as a lot of the time you're still having to turn into a fund structure, you know, crypto investments for clients, whether it's the hedge funds that you have internally or whatever it is, or you have to turn it into an equity.

19:38Are you yet seeing them saying, how do we do tokens and buy tokens and hold tokens? Only in venture, right? That's really the only place that I think we're seeing, how do I buy and hold tokens, right? It's very hard right now to get investors' heads around holding the direct tokens. I'm talking institutional investors now. I'm not talking individual investors. But I think that institutions are still not clear on the tokenomics and how they work. I think they're still not clear, or I think that they realize that there's not a lot of clarity and transparency in some protocols in terms of what their tokenomics are and how they operate.

20:24And I think that that makes it more challenging, right? Not only do you have all the business dynamics that you need to model to determine the attractiveness of an investment, you also need to model these new things called token pools that there's not a lot of legal clarity around what the obligations are there. And sometimes there's not even a lot of clarity around the plans of the issuer themselves on how they're going to deal with the token pool. And then there's the whole community aspect, which they've never had to deal with in an investment before. So I think that it's still a challenge to get these institutions to understand the tokens.

21:00What we try and do through our education role is really help them to understand that there has been a reliance on open source protocols in our society for decades now, but we were never able to invest in those protocols. And that if you can get their mind around this idea that a token is not an equity, but a token is a way of sharing ownership of open source code, that starts to help. But that's a big leap for a lot of traditional investors. The team might get it again, but the general portfolio managers are like, oh, this sounds like too much like early stage technology investing. Exactly. So I think that we'll get there, but it's much more of an educational hurdle than putting an equity into a crypto wrapper or putting crypto into an ETF, right?

21:52Those are still things that are easier for people, I think, to understand. What are you trying to do with the institutional side? Because a lot of people don't know that side of the business unless you're an institutional customer. What are you trying to do? What are you building? All right. So to keep it simple, when we say institutional, I'm referring to the world's largest hedge funds, asset managers, wealth platforms, banks, financial services firms, tech firms, sovereigns, sovereign wealth funds. So really big institutional managers of capital. And what we're trying to do is to enable all the things they want to do within crypto in one space.

22:33And so that's sell it, buy it, stake it, finance it, have a holistic experience. And so the big play we're making is a platform trade. It's a bundling of services. And, you know, we had our institutional summit this week. I was just telling you about it. So we've got 500 people that came to New York and we showed this progression of all the things that we've built over time. And it's absolutely amazing. So we've managed to accumulate, like, for example, so stats around our success would be we were chosen for eight out of the 11 Bitcoin ETFs in the US. We've got 81 percent of all ETF assets. We're the clear choice for all the new crypto custodians, crypto treasuries that are coming out.

23:19We've got 40 % of the world's largest hedge funds have all chosen Coinbase and have onwarded here. And so I think our differentiating point now, five and a half years later, is that we have the marquee client franchise to die for. So we'll talk about the clients and then we'll talk about the infrastructure side you're building as well, because that's the hidden story, which is massive. But on the client side, did you see the light bulb moment happen, the light switch turn on as soon as regulation changed? What happened? Well, arguably, the light bulb moment came on for clients prior to the last down cycle.

23:58I mean, the ETFs came during still a moment of great uncertainty. And that was a light bulb bond for many, but not everyone was activated. Then we have the election and the onset of the tangible progress of regulation actually passing. And right now we're having a crazy moment of FOMO. So all the people that are already involved have a huge head start. And everyone else, you touched on it a minute ago, but we've launched and sort of rebranded an existing offering called Crypto as a Service. So all the infrastructure that we built, we're now offering to everyone else that wants to get in the space.

24:37So think about custody as a service, wallets as a service, trading as a service. And so that's powering. We announced some quite big partnerships with Webull, PayPal, eToro. So it's pretty cool. We have like, think of it like direct client acquisition, where people onboarded onto the platform like a hedge fund. And also think about like enterprise sales would be the tech term. or platform sales. And that's powering everyone else that's sort of catching up. If you like this episode, I'd love for you to head over to realvision.com forward slash join for a free membership. Start your journey today to unfuck your future.

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