Andrew Hohns, founder/CEO of Battery Finance and Newmarket Capital, details #Bitcoin's role in fixing credit markets via collateral on a recent WBD episode. Let's use #Illinois pension crisis ($140B hole) as a case study showing how bitcoin's scarcity counters fiat debasement...
#Illinois pension crisis: $140B unfunded liability as of 2023. State devotes 20% of budget to stabilization payments. Taxes hiked repeatedly (property rates top 2.2%, income tax 4.95%). Result: 100K+ residents flee annually, gutting tax base, accelerating spiral.
Core thesis: Bitcoin collateral fixes credit markets warped by inflation. Fiat debasement erodes pensions (20-40% of funds in credit). #Illinois exemplifies: COLA-adjusted liabilities balloon to $174T nationally by 2034.
Hohns' model: Battery Finance issues loans backed by real estate & #Bitcoin. Underwrite assuming BTC=0; cash flows from assets cover debt. BTC upside shared 40-60% with borrower. First deal: $12.5M Philly multifamily, $1.5M buys 20 BTC. LTV drops as BTC rises, no volatility calls.
#Illinois application: Pension funds allocate to #bitcoin-backed bonds. Replaces inflation-vulnerable treasuries. BTC scarcity (21M cap, 95% mined) vs. gold's 1.5-2% annual dilution. Funds preserve real value; no more 5% Roman-style debasement over decades.
Inflation mechanics: Central banks monetize $37T U.S. debt via keystrokes. #Illinois mirrors; $40B general obligation bonds, interest > education spend. Video: Repeated bailouts (2008, COVID) inflate assets, debase savers. #Bitcoin hedges: Finite supply counters endless printing.
CBDC threat: 100+ countries test digital fiat for control (expiring funds, geo-fencing). #Illinois, already surveilled via IL SAVE, risks amplified erosion. Video: #Bitcoin as "freedom money" for 7B in unstable currencies. Mobile access equalizes savers from Chicago to rural counties.
Community rebuild: Video pushes #bitcoin for main streets. #Illinois towns (e.g., Rockford, Peoria) hollowed by out-migration, e-commerce. BTC loans at 6% (vs. 8%) + treasury allocation. Small biz adds uncorrelated asset: $10K BTC on $50K loan yields liquidity, appreciation.
#BitBonds proposal: Treasury issues bonds (90% funds spending, 10% buys BTC). 1% rate (vs. 4.5%); 50/50 upside split at maturity. U.S. guarantees principal. Savings: 25% interest cut, even if #bitcoin zeros. #Illinois pilots state BitBonds: Tax-exempt, stabilizes pensions sans tax hikes.
Projections: Historical #bitcoinreturns yield 10-20% investor yields. #Illinois: $25B tranche tests custody, scales to $140B liability. Offsets 20% budget drain. No new laws; market-driven. Counters Yellen-era short-term debt traps.
Behavioral shift: #Bitcoin enforces low-time preference. #Illinois workers, facing automation (trucking unions), save in sats vs. dissipating dollars. Farms recapitalize: BTC collateral funds equipment, draws youth vs. urban exodus. Reduces processed-food dependency; reclaims time for self-investment.
Risks mitigated: Loans lock #bitcoin 4+ years, align incentives. #Illinois adoption: Start municipal (Chicago studies via Adams model), scale statewide. Avoids California-style flight. Video data: Global assets inflate to quadrillions; BTC cycles persist but scarcity drives net upside.
Outcome: #Illinois deploys #bitcoin to term out debt, rebuild trust, halt spiral. Sovereigns lead or lag; video predicts U.S. federal pivot under BTC-literate policy. Funds protected; cities preserved. Cycle ends.
https://www.youtube.com/watch?v=Jx65RWs7ZCw
