BlackRock’s Endgame? Tokenization, Bitcoin, and Global Control
VIDEO TRANSCRIPT
“The U.S. has benefited from the dollar serving as the world’s reserve currency for decades. But that’s not guaranteed to last forever. If the U.S. doesn’t get its debt under control, if deficits keep ballooning, America risks losing that position [to digital assets like Bitcoin.]”
This is a recent quote from Larry Fink, the CEO of Blackrock, the world’s largest asset manager. When you consider that Blackrock has been one of the largest buyers of BTC via its ETFs, it begs the question of what this huge and powerful company is planning. Today, we look at the answer.
My name is Nic, and you’re watching the Coin Bureau.
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The quote in the introduction comes from Larry’s annual letter to investors, which is titled QUOTE ‘the democratization of investing’. In other words, making it easier for retail investors to access capital markets, which Larry describes as one of the most powerful and important systems on the planet.
Larry starts by explaining the first stock exchange opened in Amsterdam way back in 1602, and that prior to this period, investing was only available in a private form and accessible only by the wealthy. Of course, Larry acknowledges that 90% of investors in the stock exchange were wealthy too.
Even so, the introduction of the first public markets 400 years ago brought investing one step closer to being available to the average person. Case in point, the remaining 10% of investors in the Amsterdam stock exchange were regular folks, [which meant there wasn’t much retail for institutions to dump on. ]
Jokes aside, Larry points out that the fundamental purpose of public markets is to create a QUOTE ‘prosperity flywheel’, wherein people invest in markets, the companies in those markets make more profits, and share those profits with the people who invested in them in the form of dividends and such.
Larry highlights the fact that today, 60% of Americans are invested in stocks, a figure that has roughly doubled since the 1980s. Meanwhile, global GDP has grown more during the last 40 years than it did over the previous two thousand, but Larry underscores the fact that this growth hasn’t been equal.
On the contrary: those with wealth - i.e. those with assets - have gotten wealthier, and those without assets have gotten poorer, except for a few segments of the working class in a few countries that have benefitted from globalization. Logically, Larry believes that this capitalist system needs to be fixed.
And, from Larry’s perspective, the solution is simple: make it easier for the average person to invest in assets, and they’ll be able to build wealth too. To that end, Larry believes that two things need to happen: markets need to be made more accessible, and more people need to become investors.
In Larry’s own words, QUOTE ‘More investment. More investors. That’s the answer.’ But obviously, Larry seems to omit the fact that this so-called democratization of investing won’t address the underlying problem. All it will do is make existing asset holders even richer, but let’s not jump the gun just yet.
By the way, [if you’re enjoying the video so far, then be sure to smash that like button to let us know, and subscribe to the channel and ping that notification bell so you don’t miss the next one].
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Now, in the next part of the letter, Larry makes a peculiar claim, and that’s that the money to finance things will not come as much from banks, governments, or corporations – instead, capital markets will be the main vehicle for financing. Larry reveals that Blackrock has believed this since he founded it in 1989.
What’s interesting is that Larry believes we are still in the early stages of this process, but that this process is going to accelerate. That’s just because governments cannot afford to spend that much on infrastructure, because they’re already massively in debt – they’ll have to rely on the markets.
At the same time, companies cannot afford to borrow much more from banks, because lending standards are becoming more constrained. They too will have to rely on the markets. In case it wasn’t clear enough, Larry is basically saying that governments and companies will need to rely on Blackrock.
The caveat is that it’s not Blackrock that provides the money – and this is one the biggest misunderstandings when it comes to asset managers. They are merely the custodians of other people’s capital. The reason why Blackrock and co. have so much influence is because of how they’ve been investing this capital.
Anyways, Larry notes that there’s over 25 trillion dollars sitting in banks and money market funds, and claims that this QUOTE ‘abundant capital’ is QUOTE ‘being deployed too narrowly’. If this sounds familiar, that’s because officials in the EU have been saying something similar about European savings.
In case you missed the memo, EU commission president Ursula Von Der Leyen and European Central Bank president Christine Lagarde have both talked about how they’re going to use the savings of European citizens to fund the EU’s agenda. Naturally, this has led to quite a few questions and concerns.
It looks like Blackrock wants to do the same thing, but the difference is that [they want to use carrots rather than sticks]. In Larry’s view, the only reason why these savings aren’t being invested is because there aren’t any investments that savers find appealing. As such, all that’s needed is better offerings.
What better offerings does Blackrock have in mind? Infrastructure via private markets. Larry reveals that a staggering 68 trillion dollars of infrastructure spending will be required between now and 2040. In case you forgot, governments don’t have enough money for this, and neither do the corporations, apparently.
So, who is going to pay for it? The retail investors, apparently. Larry seems to claim that investors will benefit financially from this infrastructure. This foreshadows the privatization of said infrastructure. Want to use a road? You’ll need a highway stamp. Want to cross a bridge? Pay a toll, and so on.
Case in point, Larry says QUOTE ‘The beauty of investing in private markets isn't about owning a particular bridge, tunnel, or mid-sized company.’ He then claims that the real benefit is diversification, and argues that the next generation portfolio should be 50% stocks, 30% bonds, and 20% private credit.
[But there’s just one problem], and that’s that most retail investors can’t currently invest in private credit. After recounting how Blackrock democratized access to public markets with ETFs, Larry proclaims that Blackrock will do the same for private markets, foreshadowing its dominance in this investing niche.
And it begins with an investment fund called Global Infrastructure Partners or GIP, which Blackrock acquired last October. QUOTE ‘GIP owns some of the world's most important infrastructure assets on behalf of our clients—London’s Gatwick Airport, key energy pipelines, and over 40 global data centers.’
If that wasn’t spooky enough, Blackrock has purchased QUOTE ‘a network of 43 ports across 23 countries’ and that QUOTE ‘one in every 20 shipping containers moving around the world passes through these ports each year.’ If this trend continues, Blackrock could one day own most of the world’s infrastructure.
But again, it’s not Blackrock’s money that’s being used to purchase this infrastructure per se – it’s the money of its clients. The catch is that Blackrock is likely to use its influence in private markets the same way it has in public markets with ESG and the like. This is the aspect of Blackrock that is a tad scary.
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Anyhow, partway through his letter, Larry pivots to retirement and asset tokenization, which he sees as another technology that could further democratize investing. Regarding retirement, Larry commences with a sobering statistic – more than half of retirees fear running out of money more than they do death.
Not only that, but 33% of Americans have no savings, and a third of Americans also said they would have a hard time scraping together 500 dollars to pay an unexpected bill. This makes you wonder how exactly democratizing finance will help, given that a substantial percentage of people are struggling to pay bills.
If that wasn’t concerning enough, Larry also touched on the fact that Social Security will run out of money by 2035, and that even pension funds are only 80% funded. Put differently, the boomers are cooked, but Larry believes that Blackrock can help – just give us the money, and we’ll buy some roads and bridges.
No money? No problem. Larry has a three-point plan to help you. The first is working with non-profits to set aside money for the poorest plebs. The second is to try and auto-enroll all workers into 401k plans, and the third is to help young people start investing earlier. Seems that’s the best they can do for us.
On that note, Larry points out that the average American estimates that they need over 2 million dollars to retire comfortably. They’re going to be awfully disappointed when inflation makes that figure 10x bigger. Funnily enough though, Larry thinks that 2 million is a lot – even more than he was expecting.
What’s even funnier is that, given this lofty goal, Larry says QUOTE ‘we're going to need better ways to boost portfolios.’ As you might have guessed, the answer is to invest in infrastructure via private markets. What’s wild is that Larry admits that any money invested in private markets will be locked for a while.
QUOTE ‘When you invest in private assets—like a bridge, for example—the values of those assets aren’t updated daily, and you can't withdraw your money whenever you want. It's a bridge, after all—not a stock.’ Fortunately, or unfortunately, Larry says that bridges will become liquid investments eventually.
He also drops another thought-provoking statistic: 30% of all money flowing into US markets is coming from retirement investing. What happens when all the boomers retire and start selling more than they’re buying? Larry doesn’t say, but he does recommend a Blackrock product that schedules these outflows.
Never mind that some of the infrastructure Larry wants retirees to spend their money on will only be complete by the time they’re dead.
Speaking of which, he reveals that it takes a whopping 13 years to get approval to build a high voltage power line in the US and the EU. That’s not the construction – that’s just the approval. That’s an issue, because we’re going to need lots of energy to power the humanoid robots that are going to replace us.
This is actually not a joke – Larry says that the energy demand of AI data centers alone could push existing power grids to the limit, with the states of Utah, Ohio, and Texas warning about exactly that. The irony is that a lot of this has to do with the restrictions placed on energy by, err… ESG investing.
Not surprisingly, Larry doesn’t acknowledge Blackrock’s role in holding back the development of reliable and constant energy sources. He just acknowledges that wind and solar alone aren’t going to cut it, which is literally the opposite of what ESG investors like Blackrock were saying just a few years ago.
In fact, Larry even goes as far as praising nuclear power, something that was likewise unthinkable just a few years ago under the ESG ideology. Larry applauds China for rapidly building out nuclear plants. He doesn’t have anything to say about Germany shutting its nuclear plants during an energy shortage though.
To add insult to injury, Larry shares a graph that showcases how a person’s quality of life is directly related to how much energy they get to use. Believe it or not, but many ESG investors were completely unaware of this, and it looks like there are still a few countries that deny the reality of physics.
On a completely unrelated note, Larry praises Europe’s slow walk towards reducing trade barriers within the bloc, which will likely allow for more corporate monopolies to form, boosting GDP, as always. He also applauds the possibility that AI could be used to address Europe’s demographic implosion.
Some would say a better solution would be to make life affordable enough for Europeans to have more children, but let’s not get into that debate.
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Now, seemingly out of the blue, Larry then changes the topic to Bitcoin and says what I noted in the introduction: the US dollar is the world’s reserve currency, but it may not be for long if the United States continues going deeper into debt. He notes that by 2030, mandatory spending and debt servicing will use up all federal revenue.
Larry then claims that if the US can’t get its debt situation under control, then the US dollar could lose its reserve currency status and be overtaken by a digital asset like Bitcoin. Larry explains that this could happen if investors start to see BTC as being a safer bet than the USD, but this is highly debatable.
Some would say that investors see gold as a safe haven asset in the current environment, evidenced by the fact that gold has recently been hitting all-time highs and continues to rally higher. Historically speaking, gold was the safe store of value, and backed fiat currencies, so it’s the more logical choice.
Then again, it’s possible that investors could eventually see Bitcoin as digital gold. For the time being, though, it’s clear that they see it as a risk asset, even with Larry claiming that it’s QUOTE ‘digitizing gold’. Let’s just not forget that asset managers are also fans of stablecoins and central bank digital currencies.
In any case, this ties into the buzzphrase of the moment, which is asset tokenization. Larry explains that tokenization involves QUOTE ‘turning real-world assets—stocks, bonds, real estate—into digital tokens tradable online. Each token certifies your ownership of a specific asset, much like a digital deed. Unlike traditional paper certificates, these tokens live securely on a blockchain, enabling instant buying, selling, and transferring without cumbersome paperwork or waiting periods.’ A perfect definition, no doubt.
Larry believes that every asset can be tokenized, and if they are, it will provide an enormous boost to capital markets, which you’ll recall will become the lifeblood of the entire planet, per Blackrock’s thesis. Tokenized assets will also democratize access, shareholder voting, and yield, which is certainly good news.
The bad news is that there’s one thing Larry and Blackrock want, and that’s QUOTE ‘a new digital identity verification system’, because apparently existing forms of ID aren’t enough. What’s the matter? Don’t you want to build wealth by investing in bridges and roads? Just tokenize your identity, it’ll be fine, right?
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This brings me to the big question, and that’s what Blackrock is planning. By this point the answer should be clear: the asset manager is trying to suck in as much money as it can, primarily from retail, by allowing them to invest in private markets, primarily for infrastructure, which someone needs to pay for.
When you zoom out, it really looks like the powers that be are trying to trick the plebs into keeping the unsustainable financial system going for just a little bit longer. Remember that the US government is projected to essentially run out of money by 2030. That’s an issue for the global financial system.
You see, US government debt, or rather US bonds, are the primary form of collateral in the financial system. Like all assets, the price of US bonds is determined by supply and demand. The more debt that the US government must issue, the larger the supply, and the lower that bond prices fall, all else equal.
Since the US government is already low on money, this means that any further infrastructure spending would require even more borrowing, which would cause US bond prices to fall. In turn, this would cause anyone who used US bonds as collateral to borrow money to default, which is quite a few people.
This default would result in the forced selling of US bonds, causing prices to fall further. As prices fall, US bond yields would rise, which would force interest rates higher in the US, making it even harder for the US government to pay back its debt, creating a debt spiral that collapses the US dollar, per Larry’s point.
If that wasn’t bad enough, most countries are in similar positions, financially speaking. They’ve borrowed as much as they realistically can, and if they borrow any more, then it will either cause a spike in interest rates that destroys the economy, or a spike in inflation that eventually also destroys the economy.
The worst part is that the main reason why the economy and the markets have done so well is because of all the money that governments have been spending, especially the US government. If they were to reduce their spending in any meaningful way, then the economy and the markets would suffer too.
If you listen closely, it really sounds like a game of musical chairs, and the chairs are running out. This has institutions like the EU and Blackrock looking for other chairs to add to the game so that it keeps going. They can all see the tens of trillions of savings that people are sitting on, and they want that money.
Notably, this is even true in places like China, where the CCP is trying to boost domestic consumption.
This begs the question of how exactly the powers that be will convince the people with trillions of dollars of savings to invest that money. As I hinted earlier, there are only two answers: sticks and carrots. A stick would be launching a CBDC and manually forcing this money into the markets against the will of savers.
A carrot would be creating a speculative mania in the markets that incentivizes savers to allocate their capital – to play a song that’s so catchy, that they voluntarily add their chair to the musical game. As the most accessible and most volatile asset class in the world, crypto is perfectly positioned to be that song.
And the craziest part is that the stablecoins used to buy these cryptocurrencies are backed by US government debt, meaning that every time someone buys a stablecoin to buy a crypto, they’re buying US government debt. And it looks like tokenized assets will trade primarily against stablecoins too.
You can learn all about that using the link in the top right, and I’ll see you there. Thanks for watching and don’t forget to hit subscribe if you haven’t already.
This is Nic, signing off.
