Debasement Trade Is Primarily Anti-Fiat Currency Movement, Graticule's Levinson Says

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00:00What's your take on this debasement debate? It is gaining momentum. It is the hottest

00:05investment trend in town. Are you buying into that? First, thanks, Hustlinda. Thanks for having

00:12me. Yeah, I'm buying into it because it's been the most persistent, robust trend. And it's very

00:21hard to ignore. You know, as you were just talking about moments ago, it's really primarily an

00:28anti-fiat currency movement. That's a function of a lack of trust in a lot of governments around the

00:40world that show no ability to curtail spending. They want to run out of control deficits. And so

00:48citizens, investors, professional or otherwise, are turning to non-fiat instruments. And then

00:55additionally, the backdrop is also occurring around a massive wealth redistribution among

01:03age cohorts. Two younger generations, you know, pools of very large savings in developed markets.

01:10And those younger generations have a very different preference profile, primarily toward crypto and

01:18in Bitcoin in particular. But gold's a part of that mix, as is silver. And you're seeing that

01:25routinely each and every day. It flows.

01:30The thing is, it's still being debated, right? I mean, not everybody's buying into it. You are.

01:35But when you take a look at yields, for example, Ruth talked about how yields are trending higher. But if

01:40you take a look at the past three years, yields have pretty much been range bound. And that does not

01:48suggest debasement.

01:51Well, yields have been range bound. Real yields have been, you know, quite low. And as a function of that,

02:01there's no reason that there has not been a major impediment to shift away from paper or fiat related

02:11assets. And so, you know, you may suggest that people aren't buying into this much of a debate,

02:18but you can't find a more persistent trend in markets that is away from fiat generally over the

02:26last two years. And so remember, what you're also dealing with is the savings pool is enormous,

02:33you know, absolutely enormous. Just small adjustments or movements in that direction,

02:38you know, are very large sums and have a displacement effect on these other assets,

02:45which are not particularly deep markets historically.

02:50So just to be sure, the debasement trade does not require higher yields.

02:58No, debasement trade doesn't require higher yields at all. The debasement trade is facilitated by low

03:02yields. But you're seeing the back end of yield curves, particularly in places like the UK and France,

03:12which are arguably more problematic than the United States in this regard. But there,

03:19you're seeing a revolt of investors, by investors, unwilling to hold the long end, despite yields rising.

03:30That's not attracting new flows in. It's more of a warning that the back end can become discontinuous or

03:42unruly at minimum.

03:47Those who do not believe in the debasement trade also point to the dollar. Yes, we saw,

03:53you know, how the dollar dropped in the first half of 2025, but they say it is just the unwinding of the rally that we saw in 2024.

04:01What do you say to that?

04:02I think that's largely true. Look, the dollar, if you if you look back over the last decade, you know,

04:08the decade of so-called U.S. exceptionalism, the dollar just received an overwhelming amount of flows.

04:16And so just a natural unwinding of that to a degree has been an adjustment downward in the dollar.

04:26And while while that, too, may continue, that's been contained around, you know,

04:34what you might say is just sort of reasonable volatility of of that that asset class.

04:40The bigger trend has been the debasement more broadly, which is out of fiat altogether.

04:47You know, the the other the other part of the dollar trade, and this runs runs counter to the to the to the de-dollarization idea

04:55and is the notion of the growth in stable coins, which is effectively dollarizing,

05:02you know, much of crypto that isn't in Bitcoin.

05:07So, Adam, when it comes to the dollar, has it turned?

05:12Is this a pivotal moment for the currency?

05:15Where do you see it go from here?

05:17I don't think it's particularly pivotal.

05:18I think it's simply just a pause in in a trade that is somewhat advanced over the course of this year.

05:28The the the and you and you can have, you know, slight online small waves of of adjustment higher in the dollar,

05:37but nothing's changing against the back backdrop that we just described.

05:42And so other than marginal position adjustment, the underlying forces that are pushing this trade, pushing the reallocation are in place.

05:55And so you will see somewhat further de-dollarization.

05:59But I suspect the most persistent trend remains debasement and out of fiat currencies looking for alternatives.

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