Bitcoin, Debt, and the Struggle for a Free Market

Briefing Notes contain: (1) a summary of podcast content; (2) potential information gaps; and (3) some speculative views on wider implications for Bitcoin. Most summaries are for Bitcoin-centered YouTube episodes but I also do some on AI and technological advance that spill over to affect Bitcoin.

Summary

The November 21, 2025 episode of Swan Signal Live features Jeff Booth arguing that accelerating technological deflation is colliding with a debt-based fiat system that must expand endlessly to survive. He explains how Bitcoin, as a scarce, energy-anchored protocol outside this control system, can enable a genuine free market where productivity gains flow broadly instead of being captured through inflation, asset bubbles, and growing surveillance. The discussion connects macro-structure, investor behavior, privacy technologies, and emerging policy initiatives to show why choices around self-custody, leverage, and regulation will shape whether Bitcoin mitigates or amplifies systemic risks.

Take-Home Messages

1. Technology vs. Debt Money: Booth argues that exponential gains from AI, automation, and robotics push prices down, but a fiat system built on credit must expand debt and inflation to avoid collapse.
2. Bitcoin as Free-Market Base Layer: He frames Bitcoin as an open, energy-anchored protocol that can price a genuine free market, with goods and services becoming cheaper over time relative to Bitcoin.
3. Volatility and Investor Behavior: The conversation stresses that large drawdowns are inherent to a monetizing asset, and that outcomes hinge on conviction, time horizon, and avoiding leverage-driven capitulation.
4. Surveillance and Stablecoins: Booth warns that stablecoins and fiat rails can entrench a global surveillance apparatus, making privacy-preserving layers on top of Bitcoin essential for civil liberties.
5. Policy and Institutional Realignment: Emerging institutional allocations and potential strategic reserves are presented as early signs that states and large asset managers may be forced to reconsider debt-based monetary orthodoxy.

Overview

In this episode of Swan Signal Live, Jeff Booth revisits his thesis from The Price of Tomorrow that the natural state of a free market is deflation. He argues that entrepreneurs constantly compete to deliver more value at lower cost, and that technologies such as AI, automation, and robotics compound this dynamic by driving productivity far faster than traditional measures capture. In Booth’s view, the key problem is not technology itself but a fiat architecture where money is lent into existence, forcing policymakers to expand credit and inflation merely to keep the system standing.

Booth points to the rapid rise in global debt over recent decades as evidence that authorities are fighting a losing battle against deflationary forces. He explains that as technology pushes prices down, a credit-based system must create ever more debt to maintain nominal growth, which in turn concentrates power and increases economic fragility. This cycle, he says, produces a “control system” in which governments and central banks respond to structural pressures with more regulation, larger bureaucracies, and increasingly intrusive interventions in markets and personal behavior.

Against this backdrop, Booth positions Bitcoin as a fundamentally different protocol that resides outside the legacy credit structure. Because Bitcoin is scarce, decentralized, and anchored in energy, he believes it can serve as a base layer for the world’s first genuine free market, where prices of goods and services fall over time relative to a stable monetary unit. He stresses that such a transition would redirect the gains from technological progress away from asset inflation and toward broad-based improvements in living standards.

The hosts and Booth also explore how these macro dynamics intersect with investor experience on shorter timeframes. They compare Bitcoin’s sharp drawdowns to the historic volatility of high-growth equities like Amazon, noting that many newcomers over-allocate, use leverage, and then capitulate when price falls 30–40% in a matter of weeks. Booth emphasizes self-custody, realistic sizing, and a long time horizon, while highlighting emerging privacy layers, federated custody models, and potential state-level policy changes as key factors that will shape how Bitcoin’s promise interacts with the existing financial order.

Stakeholder Perspectives

1. Retail savers: Seeking protection from inflation and asset bubbles, they may be attracted to Bitcoin’s scarcity but remain wary of volatility, technical complexity, and self-custody risks.
2. Policymakers and central banks: Focused on preventing deflation and financial crises, they are inclined to preserve the debt-based system and may see Bitcoin as both a systemic challenge and a potential pressure valve.
3. Institutional investors and asset managers: Evaluating Bitcoin alongside gold and real assets as portfolio ballast, they must reconcile long-term theses like Booth’s with regulatory uncertainty and reputational considerations.
4. Technology entrepreneurs and Bitcoin builders: Motivated to develop privacy-preserving federations, wallets, and payment rails, they balance usability and regulatory exposure against the goal of avoiding new centralized choke points.
5. Civil liberties and privacy advocates: Alarmed by the expansion of financial surveillance via fiat rails and stablecoins, they view Bitcoin and its privacy layers as essential infrastructure for preserving individual agency in a digital economy.

Implications and Future Outlook

Booth’s framing implies that the tension between technological deflation and debt-based money will sharpen as AI and automation permeate more sectors. If policymakers continue to lean on credit expansion (see my working paper, Bitcoin Worlds, for more on how traditional Keynesian and post-Keynesian economics views this as a virtue), the gap between what technology could deliver and what households actually experience may manifest as rising inequality, asset dependence, and political instability. Over the next decade, the question for governments is whether to integrate a Bitcoin-based standard as a safety valve for these pressures or to double down on the existing architecture with tighter controls and more frequent interventions.

Within the Bitcoin ecosystem, the maturation of privacy-preserving federations, layered custody arrangements, and robust self-custody tools will strongly influence how widely Booth’s envisioned free market can emerge in practice. If users can combine meaningful privacy, liquidity, and ease of use, Bitcoin may migrate from a primarily speculative asset to a day-to-day reference point for savings and pricing in some jurisdictions. Conversely, if surveillance-centric designs dominate and regulatory barriers remain high, adoption may cluster among high-conviction holders and specific regions rather than spreading evenly across societies.

For decision-makers, this episode underscores that Bitcoin’s trajectory will be shaped as much by social, legal, and behavioral factors as by code. Investor education on leverage, time horizons, and custody will interact with institutional portfolio shifts and potential strategic reserves to produce feedback loops in liquidity and price stability. At the same time, legislative experiments and court decisions around tax treatment, state-level reserves, and privacy standards will either open pathways for a more deflationary, technology-aligned monetary order or entrench the current debt-driven control system.

Some Key Information Gaps

1. How long can accelerating AI and robotics-driven productivity be reconciled with a fiat system that requires ever-faster debt creation to avoid deflationary collapse? Clarifying this timeline is critical for assessing when fiscal and monetary stress might force structural change or crisis in existing systems.
2. Under what conditions can Bitcoin credibly function as the primary pricing protocol for a global free market rather than remaining a niche or parallel asset? Identifying those thresholds would help policymakers and institutions evaluate when Bitcoin shifts from speculative vehicle to core monetary infrastructure.
3. How might expanded use of stablecoins tied to US treasuries accelerate the emergence of a global surveillance state and constrain financial freedoms for individuals and firms? Understanding these pathways is essential for designing safeguards that protect civil liberties while preserving financial integrity.
4. Which technical and governance models for Fedimint, Fedi, and similar ecash federations best balance privacy, usability, resilience, and resistance to capture? Comparative analysis of these designs would guide builders and regulators toward architectures that avoid recreating centralized choke points.
5. What would be the macroeconomic, legal, and operational consequences of the United States formally codifying a strategic Bitcoin reserve and allowing federal tax payments in Bitcoin without capital gains tax? Exploring this scenario would illuminate how such policies might alter global reserve practices, domestic fiscal operations, and international monetary competition.

Broader Implications for Bitcoin

Technological Deflation and Monetary Architecture

Over the next 3–5 years, growing divergence between technological abundance and debt-based money will pressure policymakers to reconsider the foundations of monetary architecture. If productivity gains continue to be channeled into asset inflation instead of lower consumer prices, social legitimacy of existing systems may erode, opening political space for alternatives like Bitcoin. A shift toward harder base money would not eliminate business cycles, but it could re-anchor expectations around savings, investment, and the distribution of technological gains.

Surveillance-Resistant Financial Infrastructure

As digital payment rails, stablecoins, and potential CBDCs expand, the practical distinction between financial infrastructure and surveillance infrastructure will narrow. Bitcoin-based systems that integrate robust privacy—through federations, ecash-style instruments, and improved network topology—offer one of the few credible counterweights to pervasive data harvesting. Over time, jurisdictions that permit or even encourage such tools may become magnets for talent and capital seeking both monetary and civil liberties, while more restrictive regimes risk capital flight and informal workarounds.

Institutional Portfolios and Systemic Risk

Large asset managers, endowments, and sovereign entities are beginning to treat Bitcoin as part of a broader shift toward scarce, non-sovereign assets in response to high debt loads and uncertain real yields. As allocations grow, Bitcoin’s behavior will feed back into assessments of liquidity, correlation, and tail risk across the financial system, influencing how crises propagate and how quickly capital re-prices monetary regimes. If strategic reserves and coordinated institutional positioning emerge, Bitcoin could evolve from a perceived source of volatility into a stabilizing reference asset during fiat stress episodes.

Political Economy of Abundance vs. Control

The contrast Booth draws between an abundance-driven free market and a control-oriented debt system highlights a deeper political economy choice facing societies. In one trajectory, governments lean on monetary expansion, regulation, and surveillance to manage distributional tensions arising from technology, risking a long grind of mistrust and stagnation. In another, broader use of hard digital money and open protocols encourages competition in governance models, nudging states toward frameworks that rely more on voluntary participation and less on monetary manipulation.

Redefining Macroeconomic Policy Toolkits

If Bitcoin adoption continues to grow, standard macroeconomic tools such as discretionary monetary easing, financial repression, and surprise inflation will lose potency relative to past decades. Policymakers will need to rely more on transparent taxation, explicit redistribution, and structural reforms rather than hidden balance-sheet adjustments to manage shocks and fund public goods. This transition could provoke short-term friction but ultimately push macroeconomic debates toward clearer trade-offs, where the costs and benefits of interventions are more visible to citizens and markets.