Financial Engineering vs Tariffs
As Michael Saylor described his CEO dilemma of sitting on bucket loads of cash and needing a way to protect it from inflation, Bitcoin becomes a path. His strong MIT engineering background and technical understanding of Bitcoin fundamentals bolstered his confidence that this was a worthwhile investment.
This same remarkable engineering mindset opened the door to using Bitcoin in a greater Financial Engineering path that turbocharged his journey to one of unimagined proportions.
It is precisely this “Financial Engineering” that our monetary system forces on stakeholders that is responsible for the reduction in wages for the middle class and the unprecedented growth of the Billionaire class. This same “Financial Engineering” was responsible for the crash of 2008. And while Trump would have you focused on trade imbalances, the 2008 crisis revealed how financial innovations like credit default swaps created systemic risks that weren’t properly understood or managed. Similarly, today’s tariff conflicts are often presented as issues of trade imbalances or manufacturing competitiveness, but they’re fundamentally connected to capital flows and financial sector dynamics.
The underlying challenge in both cases is that financial systems have become disconnected from productive economic activity. It’s not that evil bankers fuck up again. Rather, stupid bankers don’t question the fundamentals of the monetary system they are playing in.
The financial sector has grown to extract value rather than create it. While finance is essential for allocating capital to productive uses, much of today’s economic activity involves trading existing assets rather than funding new productive enterprises. Engineering, smoke and mirrors, theft call it what you want, it’s the system, not the players.
Let me break it down for you: Bankers and government officials are pawns in a game they don’t fully understand. Like hamsters on a wheel, they need to take a break and use their hamster brains to see the wheel as a death sentence if they keep running faster.
A broken wheel
Imagine the traditional financial system as a sophisticated hamster wheel. The hamsters (bankers, investors, and government officials) run faster and faster, creating increasingly complex financial instruments. They believe they’re making progress, but they’re actually trapped in a closed system of money and debt. The wheel has come off the hinges and trapped them in a cage.
- The wheel spins faster (increased trading volume, higher-frequency transactions)
- The hamsters exert more energy (more complex financial engineering)
- The cage remains the same size (value extraction rather than creation)
- The wheel eventually becomes disconnected from reality and traps the hamster bankers (central banks and monetary policy)
The Bitcoin Exit
Bitcoin proposes a different paradigm — less like a hamster wheel and more like an open field:
- Fixed Supply: Unlike the hamster wheel’s endless treadmill of currency creation, Bitcoin has a capped supply of 21 million coins. The hamsters can’t create more wheels to run on.
- Permissionless Exploration: Instead of running in circles within a cage designed by others, Bitcoin allows the hamsters to exit the cage entirely and explore terrain that isn’t centrally controlled.
- Energy Directed Outward: Rather than expending energy running in place, Bitcoin mining converts energy into a secure, immutable ledger — energy that creates rather than just consumes.
- Blockchain vs. Hamster Wheel: While traditional finance measures success by speed (faster trading, quicker returns), Bitcoin introduces a different dimension time preference. The hamsters learn to store energy across time rather than expend it running in circles.
- Voluntary Participation: The hamsters on the wheel are trapped in a system they didn’t choose. Bitcoin participation is entirely voluntary — hamsters can decide to exit the wheel.
The hamsters on the traditional wheel keep running faster because they’re trying to stay ahead of monetary debasement — they must generate returns that outpace inflation. But this just makes the wheel spin faster, creating a death spiral.
Bitcoin offers hamsters a chance to step off the wheel entirely. Instead of running ever faster to extract diminishing value, they can store their energy in a system designed to preserve value across time. The hamsters can finally rest, knowing their stored energy won’t be devalued by other hamsters creating more wheel.
The irony is that the traditional financial hamsters view Bitcoin as just another wheel. They fail to see it’s the door to exit the cage.
Financial Engineering vs Value Creation
The Tariff Scapegoat
President Trump recently implemented sweeping global tariffs, which have reshuffled the international economic order and prompted retaliation from China and Europe.
The markets reacted strongly to these “reciprocal tariffs,” causing wild gyrations, including an unusual situation in which both the dollar and the S&P 500 fell simultaneously. The S&P 500 fell more than 10% in the days following the April 2 announcement and has remained down about 12% since its peak just after the inauguration. Using “Other Countries” as the boogieman in this bate as switch, he is either missing the facts or stretching the truth to fit his MAGA narrative.
Disconnect from Productive Economic Activity
Harvard Kennedy School Professor Robert Lawrence points out that while both Trump and previous administrations have been “obsessed with restoring American manufacturing,” manufacturing now represents only about 8% of American employment. Even if the US completely closed its trade deficit in manufactured goods, manufacturing employment would likely increase by only 1–2 percentage points. Harvard
This disconnect highlights how policy focused on manufacturing revival often fails to address the reality of an economy that has evolved beyond its manufacturing base, with financialization taking center stage instead.
Financial Markets vs. Real Economy
Financial market reactions have behaved differently from historical patterns. As the Atlantic Council notes, when financial markets are stressed, investors usually shift money into safe haven assets like US Treasury securities and the US dollar. However, this pattern has been disrupted during the current tariff turmoil. Atlantic Council
A CNBC poll found that 73% of Americans reported being “financially stressed,” with 66% pointing to tariff wars as a primary source of that stress. This demonstrates how financial market volatility affects American households’ sense of economic security. CNBC
The Role of the Federal Reserve
The Federal Reserve faces a particularly difficult situation as it deals with potential stagflation when both unemployment and inflation rise simultaneously. As CNBC reports, “if it sees leading gauges of unemployment perk up, the Fed will cut interest rates… If it sniffs out a coming rise in inflation, it can raise rates.” But what happens when both occur at once? CNBC
Broader Economic Implications
Experts are concerned about a potential recession, with Claudia Sahm, chief economist at New Century Advisors, telling TIME: “It will be difficult for the U.S. to avoid a recession if the tariffs stay at the level that’s been announced.” She links this to multiple factors, including “the downsizing of the federal government, the cutting of the grants that go to government adjacent sectors, and then shutting down immigration into the country.” Time
Business sentiment is deteriorating, with the National Federation of Independent Business reporting that its small business optimism index saw its biggest one-month decline since December 2020. As market strategist Steve Sosnick observed, “Markets remain relatively thin and skittish… So each of these moves get amplified.” NBC News
Connecting Financialization and Tariff Turmoil Dots
The immediate focus following tariff announcements has been on stock market reactions rather than real economic impacts, showing how financial markets have become central to economic policy considerations. The obsession with manufacturing revival through tariffs represents an attempt to reconnect financial flows with productive activity, but as Professor Lawrence points out, manufacturing represents a relatively small portion of the modern US economy.
The reaction of bond markets and currency markets demonstrates how deeply integrated the US financial system is with global markets, making policy changes like tariffs have outsized impacts through financial channels rather than just trade channels. The financial sector tends to amplify economic uncertainty through market volatility, which feeds back into real economic decision making by businesses and consumers.
Michael Saylor is no Ordinary Hamster.
His engineering education from MIT, his experience as a CEO, and his foresight enabled him to write prophetic technical books and to blaze a logical trail, leveraging the new monetary asset, Bitcoin. BlackRock and Larry Fink also came to the party, and the government woke up to the new reality. The Fiat treadmill is broken, and Bitcoin represents more than a digital asset. It brings monetary dynamics that fix what is wrong with the fiat hamster wheel.
While his work with Strategy B clearly involves financial engineering, he has studied Bitcoin. He understands that it is a revolutionary monetary technology that will someday eclipse even his financial machinations.
The monetary system, not trade disputes, lies at the heart of our economic dysfunction. Other countries are not responsible for the downgrade of our middle class; it is the same old bankers who don’t know any better.
While politicians direct public attention toward tariffs and manufacturing jobs, they obscure the fundamental issue: a financial system that has become untethered from productive activity. Bitcoin and similar alternatives represent more than just new assets; they offer an escape from the endless “hamster wheel” of fiat currency, where financial engineering extracts rather than builds value.
By adopting a monetary system with a fixed supply and resistance to manipulation, we address the root cause rather than merely treating symptoms.
This paradigm shift recognizes that true economic prosperity comes not from reshuffling existing pieces through trade policies but from fixing the broken monetary foundation that incentivizes short-term extraction over long-term value creation.