Byron Gilliam

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When people hoped that more efficient steam engines would help conserve England’s limited reserves of coal, William Jevons warned of just the opposite: Greater efficiency, he predicted, would lead to even greater consumption.&nbsp;



He was right, of course, and his prediction became known as the Jevons paradox, which is often invoked whenever efficiency gains inspire people to use more of something.



When cars got more fuel-efficient, people drove more; when lightbulbs got more efficient, people installed more of them; when HVAC got more efficient, people built bigger houses.



But these are better described as examples of a “rebound effect,” where some, but not all, of the expected savings from efficiency are offset by increased usage.



It wasn’t until the digital revolution that the Jevons paradox truly came into its own: As fast as Moore’s law has decreased the cost of computing, our use of computers has increased even faster.



As a result, things like semiconductors and cloud computing — where costs are in perpetual decline — have been both great businesses and great investments.&nbsp;&nbsp;



The current craze for investing in AI is similarly predicated on more efficient GPUs enabling a disproportionately large expansion of usage.



Microsoft’s Satya Nadella is confident that it will: “Jevons paradox strikes again,” he <a href="https://x.com/satyanadella/status/1883753899255046301">posted</a> on X in response to investors briefly worrying that the advent of DeepSeek would reduce demand for both GPUs and cloud services.&nbsp;



So far, he seems to be right — the efficiency gains from DeepSeek and other more efficient LLMs seem to have been more than offset by increased demand.&nbsp;



But any investor in either airline or telecommunication stocks can tell you that it doesn’t always work out that way.



In both cases, efficiency rose, costs fell and usage increased disproportionately — but investors still lost.



Airline traffic, for example, has increased exponentially since people started flying commercially in the 1950s (and with only the smallest of cyclical downturns):



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeaBqOYzu0azaYsc84h_iGgfy9C1_Sw_XDCvkh9OyRPlO95ws6ItZ2fHf4i7_mCqVgPs7K3i1U0kqLs6ycMeLno8ohYQmdFLOaDXi8FuiSBFyYIyEoi6uq1EqWvvHaM-Y_Tksj_PA?key=WRLkgfDF6uV-2-i6m20KfNva" alt=""/></figure>



That looks like a highly investable chart and the Jevons paradox-related <a href="https://www.iata.org/en/iata-repository/publications/economic-reports/global-air-passenger-markets-riding-out-periods-of-turbulence/">numbers</a> are even better: Since 1970, the real cost of air travel has fallen by 1.7% per year, on average, while the underlying rate of air traffic has grown 4.4% per year.



Anyone who had those numbers in advance would likely have started an airline or at least invested in airline stocks — but they’d have come to regret it: Warren Buffett calls airlines the “worst sort of business” and airline stocks a “deathtrap for investors.”



Similarly, lots of people who correctly predicted the explosion of internet traffic in the 1990s — or underpredicted it even — lost money buying stock in the companies that hosted that traffic.&nbsp;



Internet traffic grew 127% per year between 1997 and 2003 — at the end of which period investors in the likes of Level 3 Communications, Global Crossing and WorldCom were more or less wiped out.



Now consider crypto.



Much of crypto investing is predicated on the assumption that more efficient, lower-cost blockspace will lead to an exponential increase in demand for that blockspace.&nbsp;



The results have been mixed so far.



Cheaper blockspace has led to an explosion of activity on blockchains like Solana and Ethereum layer-2s like Base.



But that’s mostly been thanks to memecoin trading, which is presumably not a decades-long growth story — it’s hard to imagine that even cheaper blockspace will lead to even more memecoin trading.



(Let’s hope not, at least.)&nbsp;



For what the elasticity of blockspace demand looks like without memecoins, we might only have to look at Ethereum.



Early hopes that moving execution off-chain would lead to Ethereum collecting more fees in settlement and data availability than it lost in execution have been disappointed.



On Ethereum itself, the cost of transacting has fallen over 90% from its 2021 peak — but, per data from <a href="https://app.blockworksresearch.com/analytics/ethereum?dashboard=82">Blockworks Research</a>, the number of transactions is close to unchanged.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckG13181CJJ6hp1eT5_CxwQ1OQ22M-LWXTUxqM9NLqXKTvX-wG3nGzrKLHB9pjoR7n-WdGs1qz0BRBWOx7lpMxEZYFS39Is5p7pbIHfmoOcUPZNDmeb2WeC1zrOX06bvdtt2OdSg?key=WRLkgfDF6uV-2-i6m20KfNva" alt=""/></figure>



Worse still, the combined fees paid on all Ethereum-aligned layer-2 blockchains does not offset the loss of fees on layer-1 Ethereum — so the ecosystem as a whole does not appear to be an instance of the Jevons paradox.



That does not mean that it’s headed for failure.&nbsp;



The airline and telecommunication industries have been extremely useful to the world, providing positive externalities for society far in excess of the negative internalities that shareholders have suffered.



But that is a lesson to be learned: You can be right about the Jevons paradox and still lose money investing in it.



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investors

What crypto investors can learn from Jevons paradox

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The counterfeit of business is speculation. A man in business always gives value in return for his revenue, and thus performs a useful function.”



— Andrew Carnegie
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When asked about the competitive threat posed by newly formed Federal Steel, Andrew Carnegie scoffed that its real specialty was “manufacturing stock certificates,” not steel.



That dismissive comment was emblematic of the 1890s boom in industrial “trust” stocks, most of which Carnegie thought had little to do with business and everything to do with speculation.



There were exceptions — the big monopolistic trusts formed in things like oil, sugar and tobacco unsurprisingly turned out to be good investments.&nbsp;



But there were also trusts formed in things like rope, wallpaper and coffins that were essentially stock-promotion schemes that did not.



The 1893 collapse of the National Cordage Company — the “Rope Trust” — even triggered a widespread financial panic that brought down many other trusts that were similarly in the business of “manufacturing stock certificates.”



That outcome might be a cautionary tale for crypto, an industry still best known for manufacturing tokens (not value).



The vast majority of those tokens don’t do anything — and those that do mostly just represent different ways of trading useless tokens.



The crypto market remains highly self-referential like that, but the hope has always been that this would change in time: Build a new financial system and the assets and investors will come.



If so, it feels like they should be arriving any time now — the technology is now good enough, blockspace is cheap and plentiful enough, and the SEC is in remission.&nbsp;



There are hopeful signs that it might be happening.&nbsp;



There’s a notable <a href="https://app.rwa.xyz/treasuries">boomlet</a> of real-world assets moving onchain, for example — mostly thanks to the success of BlackRock’s tokenized money market fund, BUIDL (a product that is in many ways genuinely superior to its off-chain equivalents).



Stablecoin assets are also <a href="https://defillama.com/stablecoins">trending higher</a> and may only be getting started: Mastercard’s <a href="https://x.com/MastercardNews/status/1916896208187986114?t=7DKVU8CYZHfPf5bbyvVSvQ&amp;s=19">announcement</a> this morning that it’ll be facilitating payments with stablecoins may be the thing that finally brings crypto to the non-crypto masses.



From levels of $240 billion now, a recent <a href="https://x.com/jerallaire/status/1915466281479753824">report</a> from Citi predicts that stablecoin assets under management will surge to as much as $3.5 trillion by 2030.



(Note: I did the math and found out that 2030 is four and a half years away. Shocking, I know, but true.)



If there are anything like 3.5 trillion tokenized dollars onchain, investable assets will follow.&nbsp;



I have recently, for example, bought two <a href="https://collectorcrypt.com/marketplace/cards">Pokémon cards</a> and a <a href="https://www.baxus.co/?sortBy=priority%3Adesc">bottle of whiskey</a> onchain, simply because I had some spare dollars onchain and crypto makes it very easy to buy Pokémon cards and bottles of whiskey.



So easy that I now consider both those things investable assets — not having to either take delivery or store collectibles like that is a game changer.



Investing in cards and bottles is also more fun than making 4% in BUIDL or losing 100% in memecoins.



Hopefully, there will soon be more options for crypto investors to choose from.



Kyle Samani even believes there will be all the options: “Virtually all assets will trade on inherently global and permissionless systems like Solana,” he predicted in a <a href="https://multicoin.capital/2025/01/22/the-solana-thesis-internet-capital-markets/">recent report</a> on the future of crypto capital markets.



If so, that will include stocks and bonds, of course, but also — and more intriguingly — all-new kinds of crypto-native assets.



It’s still kind of hard to imagine what these will look like beyond the current offering of blockchain and DeFi tokens — which are almost all self-referentially leveraged to the trading of crypto.&nbsp;



But now that blockspace is so cheap and plentiful, people are trying new things.&nbsp;



<a href="https://x.com/timedotfun?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">Time.fun</a>, for example, is an experiment in tokenizing people’s time; <a href="https://zora.co">Zora</a> is an experiment in using “content coins” to surface and prioritize information; TRUMP, a “celebrity coin,” is an experiment in tokenizing emoluments; <a href="https://www.story.foundation">Story Protocol</a> is an experiment in programable, tokenized IP; <a href="https://x.com/believeapp">Believe App</a> is an experiment that turns X posts into memecoins (or “idea coins”) that offer to fund the business ideas they loosely represent.



Like most experiments, these will probably fail.



But if crypto capital markets keep throwing spaghetti on the wall like this, some new and interesting things should eventually stick.&nbsp;



Importantly, they might not all be crypto things, either.&nbsp;



Wall Street has been doing less and less experimenting as of late: Tomasz Tunguz <a href="https://tomtunguz.com/ipo-size-2024/">notes</a> that only two companies with less than $100 million of revenue have IPO’d in the US since 2018.



Two!



That failure to offer investors new things to invest in is at least partly because the IPO process has gotten so expensive: Tunguz estimates that it can cost a $100 million revenue company as much as $26 million to list on a US stock exchange.&nbsp;&nbsp;&nbsp;



That is a prohibitively expensive way to raise capital.



Raising capital in crypto, by contrast, is almost infinitely cheaper.



In some cases, literally so: The token that Zora issued is “just for fun,” which means Zora has raised equity capital without having to sell equity — a weird trick that’s only possible in crypto.&nbsp;



That has not worked out very well for crypto investors so far.&nbsp; For most investors in most crypto tokens, returns have been pretty terrible.



Lots of people have gotten rich in crypto, of course, but not by creating or investing in useful things.&nbsp;



Instead, it’s mostly been from the manufacturing of tokens.&nbsp;



Andrew Carnegie would be unimpressed — businesses, he believed, should succeed by giving “value in return for the revenue” and not just offering new things to speculate on.&nbsp;



But he might be sympathetic to crypto markets because stock markets weren’t very serious in his time, either — not until he created the first modern stock by merging his Carnegie Steel Company into US Steel.



US Steel was the product of the kind of financial engineering Carnegie derided.



But it was also the first billion-dollar corporation, the first corporation to publish modern financial statements, and arguably the first to have truly public ownership.



Crypto capital markets are still in their stage of manufacturing tokens.&nbsp;



But their US-Steel moment may — finally — be near.



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Markets

The time for permissionless capital markets is now

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Have markets been obsessing over the wrong Minsky?



After Liberation Day, we seemed to be headed for a “Minsky moment” in which global investors suddenly lose faith in the US dollar, triggering the kind of market collapse that economist Hyman Minsky warned about.



But after a big rally this week, the Nasdaq is back to within 1.4% of where it was before President Trump shocked the world with his &#8220;reciprocal&#8221; tariffs.



1.4% hardly seems like a disaster.&nbsp;



Stocks may have recovered because the president seems to be having second thoughts on tariffs — especially after the CEOs of three major retailers <a href="https://www.axios.com/2025/04/23/trump-economy-tariffs-china-powell">warned</a> that their shelves would soon be bare if the trade war doesn’t resolve itself more or less immediately.



That may have prompted the president to tell <a href="https://time.com/7280114/donald-trump-2025-interview-transcript/">Time magazine</a> on Tuesday that President Xi had called him seeking a deal on tariffs.



On Wednesday, Treasury Secretary Bessent also hinted at de-escalation, saying “there is an opportunity for a big deal” with China.



But even an immediate deal, however big, might not come soon enough, according to Bloomberg’s Chief Economist Anna Wong.



On this morning’s <a href="https://www.youtube.com/watch?v=BBQiJQQtsB0">Odd Lotts podcast</a>, Wong warned that, due to the long lead times in retail supply chains, “there’s a high probability that we’ll be seeing some empty shelves in the holiday season.”



Also this morning, China clarified that trade talks with the US haven’t even begun — in fact, they’re not even talking about talking as of yet.



The president seemed to disagree, <a href="https://www.youtube.com/watch?v=o_wHHVnBhgE">telling a reporter</a>, “They had a meeting this morning. It doesn’t matter who they is. We may reveal it later.”



Maybe “they” did have a meeting, who knows.&nbsp;



But none of this seems concrete enough to explain this week’s rally in equities.



So perhaps something else is afoot?



<h2 class="wp-block-heading">AI developments</h2>



One concrete bit of news this week was the good earnings report from Alphabet, which CEO Sundar Pichai <a href="https://x.com/TheTranscript_/status/1915498165182353468">attributed</a> to the company’s “full-stack approach to AI.”



That’s only one quarter of earnings from one company (whose stock was only up small today).



But it might serve as a timely reminder that what’s happening in AI right now is probably far more important than what’s happening with tariffs.&nbsp;



To name just a few recent developments: An <a href="https://arxiv.org/pdf/2503.23674">academic study</a> found that large-language models like ChatGPT now pass the Turing Test; Tyler Cowen <a href="https://marginalrevolution.com/marginalrevolution/2025/04/o3-and-agi-is-april-16th-agi-day.html">believes</a> artificial general intelligence (AGI), by his definition, is here; AI-empowered robots are <a href="https://www.cnn.com/2025/04/19/asia/china-first-humanoid-robot-half-marathon-intl-hnk/index.html">running marathons</a> and working as <a href="https://x.com/kimmonismus/status/1903381889957998881">cameramen</a>; and you can now buy your very own <a href="https://www.unitree.com/h1">humanoid robot</a> for less than the cost of a compact car.



Most impressively, an <a href="https://www.pi.website">AI startup</a> announced that it’s made great strides towards a “generalized physical intelligence&#8221; that will give robots “the ability to figure out how to correctly perform even a simple task in a new setting or with new objects.”



To get a sense for what that means, check out <a href="https://www.pi.website/blog/pi05?utm_source=substack&amp;utm_medium=email">this video</a> of a robot cleaning up houses it&#8217;s never been in before.&nbsp;



All of this was anticipated by the father of artificial intelligence, Marvin Minsky (no relation to the economist Hyman Minsky).



Marvin predicted way back in 1994 not only that robots would “inherit the earth” but also that they would do so peacefully — as our “children.”



That’s looking more and more prescient.



How good will the world be when the cost of a humanoid, house-cleaning robot gets so cheap that nearly everyone can afford one? That is a Minsky moment to look forward to — and it may be nigh.



<h2 class="wp-block-heading">Future sight</h2>



Let’s check the charts.



Predictions are hard (especially about the future):



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcNOv1W4xRBrL8Q_qD9m1b_rLwxIVQynT2LK0u4Pg9Q80OIr3SRrDcLEa5gYBZdqmyPwhEShUer41TgXPaRD4MviN9hMbGH2pDFq1LJJZuj82zZOdbFCz6YUtZNgtv268IjnuPeEQ?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



Despite all the news this week, the Polymarket odds of a recession are about unchanged at 55%. But you can take your pick of predictions: Bank of America thinks the odds of a US recession are still only <a href="https://x.com/MikeZaccardi/status/1915726624986652988">35%</a>; Ed Yardeni sees a <a href="https://www.marketwatch.com/story/overly-bearish-investors-risk-writing-off-2025-too-soon-these-strategies-offer-upside-and-downside-protection-77ab3c61">45%</a> of “stagflation/recession”; and Torston Slok sees a <a href="https://www.apolloacademy.com/probability-of-vtrr-90/">90% chance</a> of a “Voluntary Trade Reset Recession.”



Own goal?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfEufoFiJVNGYQa04A_iEMUGG3_BI5rocV_RjCY95BBmwddXXmNPTa_309Bql3kWJ11-UmFocRg_1OHKGtYnJ84XDtTIDqJMZYi301zLLlq_KZkig2jdnOFt4qVdd64ZTp1h9UN7g?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



New forecasts from the <a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era">IMF</a> suggest that the “supply shock” for the US (GDP down, inflation up) will be worse than the “demand shock” is for China (GDP down less, and inflation down, too).



The supply shock is underway:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeAP26x-m14hnr4Mjv9iFgieTkNI6Qacyq0WCDCVZtBkvkHK7_WCfv_b2-PYxfJSLITDIPpSoa-Xtjwy-0ruD3g_MRzIr9fKHTua8lmA4ni5BZuQYOduo3N4pE0CPcqrqmbxbbhbw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



A <a href="https://x.com/albertocavallo/status/1914163836241772878">study</a> of daily prices at retailers across the US finds that the price of goods from China rose immediately after the April 2nd announcement of tariffs and have continued to rise since. The price of goods from Mexico and Canada, however, have fallen (because of exemptions and chances of a trade deal, they think).



As bad as the last guy?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfb4EOwZocM2ZPI5iK4WMhc7EyTEebetiVxj0wEezf8s3HZC2lWvgtWYUTakesfd0-QqQ-8heTn6I08e--SFjQ8a8P0D8lfe9bIC277DYZ-L2j3oH_qQ0whkAvr_JTpPKDcs3zZlA?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



A Reuters/Ipsos poll out this week shows that President Trump’s approval rating on his handling of the economy is all the way down to, well, Joe-Biden levels.



What is this? A Minsky moment for ants?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe4PB2t3TvkZRZcZo8zp8PSZ6vZb47HW4mnHDQ-2J5h1_5qpJHSIA6oTGXZH3iBRjzFJR-DLzu7yAVXhXuxOzOFOCLhL-vDtpGtUMCtbatQUDOAh6HFKfKAl3SJjK93iG_5v9OojA?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



As recently as a week ago, the biggest concern in markets was that foreign investors had lost faith in the US dollar and would therefore be selling all of their US assets. But TIC data shows that foreign selling of US equities has been “moderate.”&nbsp;



Not much has happened — yet:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfTfy8VP1TKX2hURXKDn7EfY5h8RSLGX0g7HeiSFFA1SfrkgNINAu-1dan4ol1oQuIYlBv0xi-T-9Y9MxSfW2vtAQL5uc-fwujOp4CLsu_1y97RU4ZTrIz2ITCC2osAPpwakY2CtQ?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



&#8220;The softness in US soft data [eg, sentiment surveys] still has not spilled over to hard data,” <a href="https://x.com/AugurInfinity">Augur Infinity</a> writes. “Based on our calculation, soft data is now implying a meaningful contraction, while hard data continues to indicate above-trend growth.&#8221;



The canary in the Korean coal mine:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc_AkL0U2pL__LPv9Kt4TwR1x-TIgIJtD7uLqMX1fIeLlryzxC8h9UjGzDTBqqxX7btHX214wJ4HWFjJFADxqUMuWYfHLO9EZlxBjQb3UQ_jnJoRr865w2ENpxKUt5url7mg6e3?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



Exports from South Korea to the US are considered a leading indicator for global GDP. In April, they fell 14% from the year before.



Everything on hold?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeYl9S1LVLxxR1cBBsBOUrvSg8JHD3QX0m-2CC_A3GBmUkbX-Fz7ko3475vV4r9-yuWqbiD-lii2hwtwV7GfMsq1Cmn4vl12G2ojCCG5phBHr8WRcg3wcBE2V68rQhN-PlVun2rGw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



Citadel CEO <a href="https://www.semafor.com/article/04/23/2025/citadel-ceo-ken-griffin-trump-is-eroding-us-brand-and-making-the-country-poorer">Ken Griffin</a> opined this week that, thanks to the tariff turmoil, the US “has devolved into a nonsensical place” where business leaders spend all their time worrying about supply chain disruptions. “People are not going to raise [money] to build manufacturing in America,” he added, “because with the policy volatility, you actually undermine the very goal you’re trying to achieve.” The above survey data on capex intentions suggests he’s right.



Zooming out:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdvOZLq7s7Zbfhyaf1cUSz7THwQaLjuL5IAnh-aJaPSlXsWpMfDYHi-dAm3uU8lDWn6xSaz1503-xtM97XzP211N57AgGAsuZ_jVKj50J8juqYMdzdlAEIAxk7ESlCCviCq5bvfqw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



The S&amp;P 500 has outperformed gold by about 4,700% since 1980 — which makes the recent trend reversal seem a little less foreboding.&nbsp;



The contrarian indicator:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcj8VZpxn7y7cMIt-uc-QdDMJeC_5yAbItxewkqGZXHYjj-dcrNv8GmxWZxyRJTTW5-axkzCHeWjjfP9S0icK9JHMoS68K_eFM-tzi3wY32pzmECgXFLSpiPQIV8u1ERkUPK6nebw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



The “Magazine Cover Indicator” (which is real enough to have a <a href="https://en.wikipedia.org/wiki/Magazine_cover_indicator">Wikipedia entry</a>) was flashing green at the start of the week after the Economist ran an unprecedented fourth straight cover story that was bearish on the US and its currency.



That’s probably the real reason stocks were up this week: When everyone’s worried about the same thing at the same time, it probably won’t turn out as bad as everyone thinks.



So maybe we should get back to thinking about AI again — and hope it will be better than everyone thinks.&nbsp;



Have a great weekend, Minsky-moment readers.



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Donald Trump

Friday charts: The Marvin Minsky moment is here

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">subscribe</a>.



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Capital runs as surely and instantly where it is most wanted, and where there is most to be made of it, as water runs to find its level.” — Walter Bagehot (1873)
</blockquote>



Q: What’s it cost to have dinner with the president?



The <a href="https://gettrumpmemes.com/dinner">official website</a> promoting a “Dinner with President TRUMP” pitches the opportunity as “The most EXCLUSIVE INVITATION in the World.”&nbsp;



(Reader beware, the site has more capitalization than a German dictionary.)



Specifically, the dinner is “Only for the TOP 220 $TRUMP Coin Holders,” which does indeed make it pretty exclusive: You’d need to buy about $380,000 of TRUMP to break into the top 220, <a href="https://solscan.io/token/6p6xgHyF7AeE6TZkSmFsko444wqoP15icUSqi2jfGiPN">per Solscan</a>.



It might not take quite as much as that because some of the addresses in the top 220 are exchanges (which presumably won’t register their holdings) and some are individual holders who might not want to be KYC’d — the Secret Service will want names, not just FmEMyxFASzDyADXycG8CCTrNB1AMSdoigog3SixNzMNb (as the current 220th-largest holder is publicly known).



Still, anything close to that seems like a steep price for a 220 person dinner — even if it is “the most EXCLUSIVE INVITATION.”



Also, it’s not.



Slightly lower down on the site is an invitation for the top 25 holders of TRUMP to an “Exclusive Reception.”



I did the math and 25 is less than 220, so I think that must be the world’s most exclusive invitation.



I’m sure they will both feel exclusive — in both cases, “Black Tie is optional and preferred.”&nbsp;



But the top 25 also get a tour: “PLUS, We have separately by us arranged for a Special VIP Tour for you.”



(Correct grammar appears to be optional and not preferred.)



The 25th-largest holder of $TRUMP (excluding exchanges) currently holds about $5 million worth.



Interestingly, this implies that the market is pricing the event with 11x fewer people at 13x the cost — pretty efficient!



If you also add in the value of the VIP tour, I’d say the crypto market is being extremely efficient in the relative pricing of these two invitations — so much so that I’m certain Eugene Fama will soon be writing a paper on it.



Fama — the high priest of efficient markets — will probably wait until we find out the true cost of dinner (however exclusive), which won’t be determined until the ex-date on May 12 (i.e., the date when they take a snapshot for eligibility).



The organizers are being very clever about eligibility: “Your average holdings during this period will determine your ranking.”



I’m estimating that average price will be difficult, so aspiring attendees will have to purchase $TRUMP well in excess of the minimum if they want to guarantee themselves an invite.



That could get expensive, but the final cost will be a function of how much the TRUMP token goes down immediately after the date of record (like when a stock drops after paying a dividend).



The dinner news bumped the price of TRUMP by about 20% yesterday and I’m guessing the market will price in future such invitations, so the token shouldn’t give back all of those gains on May 12.



If it gives back, say, 10%, the real cost of an EXCLUSIVE dinner with the president will probably be in the range of about $40,000.



Good to know!



Q: How do you know this is real?



Because I read the website’s FAQs:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXez9HLKJY3HnBK9QSmUx76SamXdR-U10TEuD9_EEjJoJuGbu-rATBrsULOd23X2H9jQrxtI0RmZlENqK1NbAj60Quw6nLrYNZJ0pFLXC1ukTKpX-_z9ZkzoUp6k9rkKKnjF0c9c?key=8pM6FdysZAP0KWyLpM7UARPD" alt=""/></figure>



Q: Is $TRUMP still a memecoin?



It has real utility now: dinner with the president! And maybe a tour!!!



So, no, I don’t think it is.



$TRUMP is now a utility coin.



Q: Who is the target audience for the dinner?



Judging by the site, they appear to be targeting people who have $380,000+ to drop on a <s>memecoin</s> utility coin, who like random capitalization and dislike grammar, and who find a 1990s infomercial vibe enticing.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdHKVR3jCpm11wbASfNS-gHA37fvWQS_so54fD96i_abKMW-QWF_VSJir6O8VtzmdQU6Ca3cOC-wXB1PEjJo6dPivpquWtsyy71OY1s8SC77gyvWuoDMd_bZ-wN29Ll-zu-q6hl1Q?key=8pM6FdysZAP0KWyLpM7UARPD" alt=""/></figure>



I don’t know who resides in the overlapping middle of that Venn diagram, but I’d love to find out.



More importantly, this raises the question of why people think being one of 220 people in a room with the president is worth putting $380,000 at risk.



The answer could be benign: entertainment value, bragging rights or simple fandom.



But it could also be sinister: buying influence with the president.



Call me naive, but I think it’s the former — mostly because the wacky website seems to signal that this really is for entertainment purposes only and that attending the dinner will not get you pardoned of any federal crimes.



It feels to me like one of those Nigerian prince emails that were deliberately written with poor grammar, implausible stories and blatant red flags to ensure that only the easiest targets would respond to them.



(Scammers don’t want to waste time on anyone who’s likely to figure out they’re being scammed.)



The Trump Dinner website feels similarly calculated to select for those who really do think that being one of 220 people in a room with the president is worth tens of thousands of dollars (with no expectations of anything else).



Q: How much has the Trump family extracted from crypto so far?



The crypto-skeptic <a href="https://x.com/molly0xFFF/status/1913000905307504794?t=a7rcw9waSV4gucsAxejbOg&amp;s=19">Molly White</a> totals it up to about $1 billion, although that’s just a partial accounting (her total leaves out some big ticket items like the 20% of the US bitcoin mining company that Hut8 <a href="https://hut8.com/2025/03/31/hut-8-and-eric-trump-launch-american-bitcoin-to-set-a-new-standard-in-bitcoin-mining/">recently awarded</a> Eric Trump).



But I don’t think you can blame crypto for that — as Bagehot notes, capital (in any form) will flow to where it’s most wanted, like water finding its level.



Capital does seem to flow disproportionately from crypto, however.&nbsp;



By comparison, Amazon is <a href="https://www.rollingstone.com/politics/politics-news/amazon-paying-license-melania-trump-documentary-1235227761/">reportedly</a> paying $40 million for the rights to a documentary on the first lady that they know approximately no one will watch.



That seems at least as egregious as any crypto money that the Trump family has earned — but it’s only 0.002% of Amazon’s market capitalization.



By contrast, the $1 billion that the Trump family has probably extracted from crypto is 0.3% of crypto’s market capitalization — 150x more.



Big picture, I think that’s because crypto, where everything is financialized and tradeable, commands attention far in excess of its market value.



That’s good because it creates opportunities for newsletter writers who might otherwise be stocking shelves at Home Depot or something.



But it’s also bad because it creates disproportionately large opportunities for grifting.



Q: Is crypto worth it then?



I hope so — partly because I’m not ready to start my near-retirement job at Home Depot just yet.&nbsp;



But also because I still believe in the <a href="https://mail.blockworks.com/p/why-the-world-is-better-with-bitcoin?_bhlid=3761740d0f96e5c48eebfb5278a711be7c167e71&amp;utm_campaign=why-the-world-is-better-with-bitcoin&amp;utm_medium=newsletter&amp;utm_source=mail.blockworks.com">Resistance Money</a> thesis that the world is a better place with bitcoin than without it and <a href="https://mail.blockworks.com/p/read-write-newsletter-book-review-part-one">Chris Dixon’s thesis</a> that crypto can be an anti-corporate, decentralized iteration of the internet.



For a timely reminder of the latter, you might have a listen to the <a href="https://marginalrevolution.com/marginalrevolution/2025/04/my-excellent-conversation-with-chris-dixon.html">conversation</a> that Tyler Cowen had with Chris Dixon this week.&nbsp;



Among other things, Cowen predicts that “without open source, we might end up with two governments, US and China.”&nbsp;



(Because every other government will be outsourced to an AI model made in either the US or China.)



For better and worse, crypto is open-source money and markets.



Q: Would you buy equity from someone wearing a hoodie?



Not if they had the hood up, no.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd-ZXf6wy_D3ULDxGpkd1yHvHMwjZmLILnFnTqGFy8JRAsLIgti3yBNtfX8zRS7nI1zoyxumzwgcLstGLY7kYgpPn0Cw3AnfGAC_97t21jwFePgMVSME4oUK49R5-I2N_29ARXJtw?key=8pM6FdysZAP0KWyLpM7UARPD" alt=""/></figure>



But that’s just me.



Mark Zuckerberg famously wore pajamas to a meeting with Sequoia Capital and that worked out pretty well, so maybe Maller’s new Bitcoin venture, <a href="https://www.businesswire.com/news/home/20250423962305/en/Tether-SoftBank-Group-and-Jack-Mallers-Launch-Twenty-One-a-Bitcoin-native-Company-Through-a-Business-Combination-With-Cantor-Equity-Partners">Twenty One</a>, will work out too.



(On the other hand, there’s also the counterexample of Sam Bankman-Fried wearing shorts and a T-shirt on stage with Bill Clinton and Tony Blair, so maybe not.)



More concretely, Twenty One “will introduce two key performance metrics”: Bitcoin per share (BPS) and Bitcoin return rate (BRR).



This is a take on the “bitcoin yield” metric that Michael Saylor invented for Strategy (née MicroStrategy), so I assume that Twenty One’s business plan is to sell equity above NAV (which is not really a business plan — it’s just financial engineering).



That worked for Strategy, of course, but Strategy was first and it had the special sauce of Michael Saylor.



I’m not sure that’s a repeatable, well, strategy.



But the CEO’s photo will probably filter out any investors who agree with me.



It will be up to markets to decide whether Twenty One (and Trump’s dinner) is where capital is “most to be made of.”



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Crypto prices dinner with the president

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<blockquote class="wp-block-quote is-style-default is-layout-flow wp-block-quote-is-layout-flow">
“There are only two ways to make money in business: bundling and unbundling.”



— Jim Barksdale, former CEO of Netscape
</blockquote>



Stablecoins might unbundle banking (and then re-bundle it)



Bundling and unbundling aren’t the only ways to make money, of course — you can also invent something new or do an old thing more efficiently, for example.



But Jim Barksdale’s comment — made spontaneously to close a roadshow meeting for the Netscape IPO — became a dictum in tech circles because it explains a lot of things about the business of technology.



Much of the internet revolution, for example, can be framed as unbundling.&nbsp;



The internet caused newspapers to be unbundled into Craigslist, search engines and blog posts.



Fiber optics caused cable TV to be unbundled into streaming services.



Barksdale&#8217;s Netscape might be said to have unbundled the internet, letting users bypass bundled services like AOL and CompuServe, including email, news, chat and curated web access.



Sometimes, these unbundled services then get rebundled.



It used to be that to listen to a single song we liked, we had to buy 12 of them bundled into an album.



With the advent of the internet, we could buy each song individually as MP3 files (or download them illegally for free).



Now, we typically buy a bundle of millions of songs from Apple Music or Spotify.



Something similar may now be happening with crypto and banking.



Stablecoins are often described as tokenized dollars or money market funds issued by a crypto version of narrow banks.



But the best way to understand their potential significance might be as an attempt to unbundle banking.



Banks bundle all kinds of financial services: deposits, custody, payments, credit cards, lending, asset management, investment banking — most of which you are probably not interested in when you open a bank account.&nbsp;



Stablecoins, by contrast, offer the two services you are definitely interested in — the storage and transfer of money — and nothing else.



This might catch on because doing one thing well and leaving everything else out is often what disruptive technologies do best.



Stablecoins are a disruptive technology because they turn money into software — composable, portable and always on.



This is likely to cause problems for the legacy banks that are dependent on deposits as a cheap source of funding and whose offerings are encumbered by legacy systems and compliance regulations.



Stablecoins could take business from them by being a better kind of money offered in a better kind of checking account.



But that doesn’t mean that issuing them will be a better kind of business.&nbsp;



The risk disclosure section of Circle’s recent <a href="https://www.sec.gov/Archives/edgar/data/1876042/000119312525070481/d737521ds1.htm">S1 filing</a>, for example, is long and frightening: Competition, it warns, is “intense and increasing,” its profitability is dependent on interest rates (and therefore out of its control), CBDCs could “eliminate or reduce the need” for stablecoins, and regulation remains highly uncertain.



The S-1 also makes clear that it’s more expensive to issue stablecoins than Tether&#8217;s oft-cited results might have you think: Circle incurred $482 million of operating expenses in 2024 and just over $1 billion of “distribution, transaction and other costs.”



But you don’t have to read a 225-page S1 to be concerned — you only have to read this morning’s <a href="https://www.bloomberg.com/news/articles/2025-04-23/paypal-aims-to-boost-stablecoin-use-by-offering-3-7-on-balances?utm_source=telegram&amp;utm_content=crypto&amp;utm_medium=social">Bloomberg headline</a> that “PayPal Aims To Boost Stablecoin Use By Offering 3.7% on Balances.”



That 3.7% is only about 60 bps below the fed funds rate, which isn’t much of a gross margin for issuers to work with.



If that becomes the norm, how will they make money from stablecoins?



Barksdale’s dictum suggests that stablecoins might have to become a loss leader for other, more profitable services.



As Circle’s S-1 implies, stablecoins seem likely to be issued by payments companies, banks and crypto exchanges as a way to attract or retain customers, irrespective of profitability.



To stay competitive, stablecoin issuers might need to offer the same core services — payments, banking and exchanges — as the companies they’re disrupting.



In other words: rebundle!&nbsp;



There is precedent for this.



As Barksdale’s Netscape colleague Marc Andreessen puts it, startups that disrupt incumbents by unbundling their services “often end up reforming themselves into a version of the company they took down.”



This has been a recurring pattern: As startups grow, the natural strategy is to “stay focused on your core and then add things to it,” Barksdale explains.&nbsp;



“And before long, you become a big bundle again.”



A current example is Robinhood, which will <a href="https://www.bankingdive.com/news/robinhood-to-launch-banking-product-deepak-rao/744277/">soon</a> offer checking and savings accounts, payments and cash withdrawals in addition to its core business of brokerage.



It feels like only a matter of time until it adds a stablecoin to that offering (as it has <a href="https://www.bloomberg.com/news/articles/2024-09-26/robinhood-revolut-explore-entering-the-burgeoning-stablecoin-sector">reportedly</a> considered doing).



Robinhood would probably treat it as a loss leader, if so, and that could threaten stablecoin issuers’ already thin margins.&nbsp;



To stay profitable, stablecoin issuers might then have to rebundle some of the banking services they left behind.



They might even be required to rebundle.



The risk section of Circle’s S-1 filing includes a warning that “legislation requiring stablecoin issuers to be banks or to be affiliated with banks could materially affect our business.”



That may be why Circle and others are <a href="https://www.wsj.com/finance/currencies/crypto-knocks-on-the-door-of-a-banking-world-that-shut-it-out-082b3968?st=VkCCZA">reportedly</a> planning to apply for bank charters and licenses, despite the considerable cost that entails.



But could all this be an upside risk, too?



Bundling, after all, is one of only two ways to make money.



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Banking

Stablecoins might unbundle banking (and then rebundle it)

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“I respect his independence,” former President Nixon reassured the White House crowd at the 1970 <a href="https://www.presidency.ucsb.edu/documents/remarks-the-swearing-dr-arthur-f-burns-chairman-the-board-governors-the-federal-reserve">swearing-in</a> of Fed Chair Arthur Burns.



“However, I hope that independently he will conclude that my views are the ones that should be followed.”



There’s no video of the event, so it’s hard to say for sure, but I’m guessing that was meant as a joke.



It’s also exactly how things worked out.



Burns famously allowed Fed policy to become subservient to Nixon’s political goals, fueling the 1970s epidemic of inflation.



The much-maligned Fed chair <a href="https://www.cato.org/publications/commentary/failed-fed">reportedly</a> acknowledged this as a tactical surrender: &#8220;We dare not exercise our independence for fear of losing it.&#8221;



Subsequent Fed chairs have fought their corner more resolutely, stressing that the Federal Reserve is an independent agency within government.



“Our independence is a matter of law,” Jerome Powell <a href="https://youtu.be/XUFVr430VLU?si=8g0IAiEL-1KBEuZn">said</a> just last week.



But that plain statement may mean less than it sounds.



Specifically, Powell meant that individual members of the FOMC are insulated from politics because they can’t be fired: “We’re not removable except for cause,” he noted. “We serve very long terms.”&nbsp;



(“Seemingly endless terms,” he added, drawing a laugh from the sympathetic crowd.)



This, he says, allows the FOMC to do its job “strictly without consideration of political or any other extraneous factors.”



“We’re never going to be influenced by any political pressure,” he promised.



If so, that would be a new development.



For the first two decades of its existence, political influence on the Fed was explicit: By law, the treasury secretary automatically served as the chair of the Federal Reserve as well.



That changed in 1935 as the Fed gained a measure of independence with the chair becoming a presidential appointee, no longer tied to the Treasury Department.



In 1951, the Fed won a further degree of independence when the Treasury Department formally agreed that the Fed could set interest rates without its input.



Still, this hard-won independence remained contingent on political approval.



The Fed was established by an Act of Congress and Congress retains the ability to revise the Act if it disapproves of how its creation is operating.



This is why, at his final press conference as Fed chair, Ben Bernanke offered a simple piece of <a href="https://www.richmondfed.org/publications/research/econ_focus/2016/q2/federal_reserve">advice</a> to his successor, Janet Yellen: “Congress is our boss.”



It’s been a reluctant boss, for the most part — after delegating its Constitutional power over money to the Fed, Congress has generally only held the Fed accountable after financial disasters.



Often, the Congressional response to those disasters is to grant the Fed more power, not less.



This is by design.



In <a href="https://www.amazon.com/Myth-Independence-Congress-Governs-Federal/dp/0691163197/ref=sr_1_1?crid=9YHOJHSKC7T0&amp;dib=eyJ2IjoiMSJ9.bsZyT3haiztxYj-2kE6IVQ.JVQBzmH_0aksmHRtvUROqFvO2YSV6vL3czdA0R9vIZM&amp;dib_tag=se&amp;keywords=the+myth+of+independence+how+congress+governs+the+federal+reserve&amp;qid=1745285598&amp;sprefix=the+myth+of+independ%2Caps%2C160&amp;sr=8-1">The Myth of Independence</a>, Sarah Binder and Mark Spindel explain that, whatever Fed chairs like to say, the Federal Reserve is actually “interdependent” with Congress — and that Congress retains the ultimate authority through the Federal Reserve Act and its power to revise it.



The Fed, they explain, is dependent on Congress for its authority and Congress is dependent on the Fed for its stewardship of the economy.



This arrangement works for Congress largely because it gives them someone to blame when things go wrong — Binder and Spindel note that former Fed Chair William Martin once testified in Congress that “we’re here to be blamed.”



The result, they say, is that the Fed is &#8220;acutely sensitive to the need to secure political support for its policy choices.”



Similarly, the monetary economist James Dorn <a href="https://www.cato.org/sites/cato.org/files/2019-09/cj-v39n3-5.pdf">found</a> that “the Fed is independent, but in practice that independence is continuously tested by political pressures for using accommodative monetary policy and credit allocation to win votes.”



It&#8217;s mostly been presidents who’ve exerted that political pressure.



Truman called William Martin a “traitor”; LBJ summoned the long-serving Martin to his Texas ranch to verbally assault him over interest rates; Burns was famously subservient to Nixon; Carter reassigned former Fed Chair William Miller to the Treasury Department because interest rates were too low; Paul Volcker was able to raise rates to 20% only because he had Reagan’s backing.



Dorn’s study found all this presidential pressure to be effective: “An examination of the evidence reveals that presidents tend to get the monetary policy they desire,” he concluded.



As a matter of principle, that may not be the worst thing — we wouldn’t let unelected bureaucrats set tax rates without political recourse, so why should we let Fed bureaucrats set interest rates?



As a matter of practice, however, it hasn’t worked out well.



In a <a href="https://econweb.umd.edu/~drechsel/papers/drechsel_political_pressure_shocks.pdf">study</a> of presidential influence on the Fed, the economist Thomas Drechsel unsurprisingly found that political pressure increases inflation “strongly and persistently.”



Specifically, he concluded that “increasing political pressure by half as much as Nixon, for six months, raises the price level more than 8% after a decade.”



Drechsel also found that presidential pressure to lower interest rates negatively affects GDP.



The effect is mild, but he cites it as evidence that “political pressure is not successful” for presidents hoping to win votes by raising economic activity.&nbsp;



That hasn’t stopped them from trying, of course, as we were reminded this week.



Does publicly calling Chair Powell a “major loser” amount to half as much political pressure as Nixon applied on former Chair Burns?&nbsp;



If so, history suggests we have an 8% increase to the price level to look forward to.



Or does President Trump’s schoolyard name calling amount to, say, twice as much pressure?&nbsp;



Drechsel doesn’t do the math on that because, before this week, who could have imagined a president exerting twice as much pressure on a Fed chair than Nixon did with Burns?



But investors appear to be doing the math for themselves: Bitcoin ETFs took in <a href="https://farside.co.uk/btc/">$381 million</a> yesterday — a notable reversal of the recent trend.



That’s helped push the price of bitcoin to near an <a href="https://x.com/MikeZaccardi/status/1914676954868973719">all-time high</a> relative to the S&amp;P 500 — a surprisingly sensible reaction to renewed presidential pressure on a Fed chair.



When former President Nixon swore in Chair Burns in 1970, gold traded at $35 an ounce.



When President Carter swore in Chair Volcker in 1979, it was about $300 and on its way to a high of $850 a year later.



Markets seem to sense the Fed has another tough decade ahead of it — one spent fighting for its independence.



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