A bad leader

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Google Ultra

Yes. I tested it. I paid a ridiculous $204.99, for a maximum of five queries per day, just to see what this model could do. 

My general rule of thumb is that Open AI overstate the capability of their models (GPT5 came out a few hours ago) and Google does the opposite. To date, most of Google’s AI stuff has been free, or inexpensive. Suddenly, they have a model that has crushed every test, that they barely talk about, and they want to charge $410/month for five queries a day. I had to try it. 

It scored 99.2% (GPT5-Pro got 96.7%) on AIME 2025 which you can have a go at yourself here. No other model is close. 

My overall experience with it was excellent. In fact it is perhaps the first model that behaves with confidence, if that is possible? Many of them are apologetic and flattering where I found this one simply behaves like it is brilliant. Maybe it is. 

Naturally I asked it about my one and only topic du jour. 

The answer was long and detailed and better than I could have done. Most interesting was this; AI makes the price of everything go down so why should bitcoin go up? The answer is the fiscal response. We pretty much already know what the fiscal response to AI is going to be. We already see it everywhere.  

If? For a long time this has been true. Not necessarily the concept of AI as we now think of it but machines everywhere. There is no question in my mind that employment and income decoupled a long time ago. The pain is being felt but the smoke and mirrors of nominal pay increases keeps the show on the road. The pain I refer to is nobody under 30 can buy a house and many of them therefore, don’t have children. 

And yes. I did waste one of my 5 questions asking about price. It came up with something very interesting there too. “The scarcity premium”. 

Base case scenario, $1.86m! Seems totally ridiculous, probably is. 

It’s 30% per annum until 2035 but in a world where you need 12.5% to stand still, it is perhaps not so crazy. It also happens to be significantly below the annualised rate of return of the ListedReserve Managed Fund since we launched in 2018. 

I would not be investing any money on the basis of this. All we have done here is ask an algorithm to run an algorithm and who really cares what it says? It is simply an experiment so that in 2035 we can come back and laugh at how stupid the frontier models of the time were. This is a frontier model though and I am stunned by its general capability. 

Considering that, the models in 2035 are going to be way beyond anything we have now. They will write specific software in the instant of your query. Operating systems, apps, all that nonsense you contend with now will likely be gone and all the jobs with it. There will be (already is) an explosion of technical abundance and scarcity will matter a lot. 

It's scary stuff, but here in Sydney the roads are empty and the city is empty because people no longer seem to work on Fridays. 

Will we laugh at the prediction in 2035?

A bad leader

Some of you will remember the Village Watchman from an article in 2023. I was reminded of it when Donald Trump sacked the commissioner of the US Labour Bureau for being a “bad leader”.

In reality, she had the misfortune of having to report numbers the President didn’t like. Specifically, that the US economy only created 74,000 jobs in June. Previous months were also revised down. One of her colleagues leapt to her defense.

I believe him, “a perfect bell curve of non-systematic post publishing revision”.  I can’t think of a more fabulous response from an economist than that. Technically accurate but total nonsense. 

The problem is his ‘simply come in late’ numbers are just made up. They are sourced from ordinary people running businesses and doing their best. 50% of whom are likely just putting down “whatever’ on the form because they have to get home and make dinner. Directionally, the overall picture is likely correct. The scale of change is likely indicatively correct but that's as good as it gets. 

It doesn’t matter what the number is, the fact that Wall Street hangs off it like it's chiselled in stone is probably because none of them have ever filled in one of these stupid forms. 

Australia’s statistics are derived from the Labour Force Survey. The ABS explains its process here.  Statistically, it is robust and beautiful, but by the time I reached question 89 on the survey, I was a bit tired. 

Tell me, citizen, what was the reason that you did not start the job you don’t have last week? Was it 1, you were waiting? Or 5, other. 

The temptation to answer “3” must be overwhelming. 

And we are seriously claiming that 26,000 households complete this accurately each month?

Perhaps our general senses are better than the statistics. We know, because we feel that prices went up a lot. We know it’s very hard to get a job anywhere because there is something happening in the workforce that we cannot quite pinpoint. It’s AI driven but nobody wants to admit it yet. We also know, and feel, that GDP per capita is going backwards in Australia and has been for a while. 

It is very hard to find statistical anchors in an economy, things that don’t move around in shifting sands. Specifically, a thing that all people can agree on at all times, independent of each other and the government. If there were such a thing, it would be valuable. 

A new Chair

…..it is incumbent on the SEC to ensure that market participants have maximum choice when deciding where to custody and trade crypto assets.  As I have said before, the right to have self-custody of one’s private property is a core American value.[16] I believe deeply in the right to use a self-custodial digital wallet to maintain personal crypto assets and participate in on-chain activities like staking. 

Perhaps the first meaningful speech from the new SEC Chairman. Without getting too deep into the bowels of it, “the right to self-custody” is a significant statement. Across the world, in particular in Europe there is a movement to prevent self-custodial wallets. The simple reason is that in those scenarios, governments and regulators are not aware of who is sending what to whom. 

It goes to the heart of the entire purpose of why cryptocurrency was created. Am I allowed to transact on a free and open monetary network or not? We know that Europe and China prefer that their citizens stay within the walled garden of their fiat currencies. Famously, Christine Lagarde once said

“There has to be regulation. This has to be applied and agreed upon ... at a global level because if there is an escape that escape will be used”

The matter is far from settled. If we consider China, Europe and India together, that is 50% of the people on earth who cannot freely use the network. 

The SEC Chairman has correctly identified the issue at hand. It is a core principle of American freedoms but I doubt when push comes to shove it will be upheld. Indeed push came to shove in 2022, it was not upheld and America brought Operation Choke Point II to us. 

Wicked Smart

A new site for visualising bitcoin statistics.

My personal favourite remains the clarkmoody dashboard.

Euro-Trash

That chart encompasses the entire time period of the Eurozone. As you can see in the early days 1999-2005 Germany was behind the curve a bit as they dealt with the expense and complexity of reunification. Then it went on a decade-long run of dominating. They arguably benefitted more than anyone from the Euro and the EU; central position, manufacturing powerhouse. Everything went through Germany. 

Since 2020 though, all change. The downward spike of Covid can be ignored other than to say, their factories were turned off so it is not surprising. You can’t ‘build a Mercedes from home’. 

Energy costs are the primary reason. The blanket cut-off of nuclear power across Germany means they simply cannot afford to manufacture things because their energy costs are prohibitive. They have the new issue of defense spending too. Germany is raising defence spending to 3.5% of economic output by 2029. To do it they are borrowing nearly 400 billion euro. It would seem the bond market has noticed.

The premium on Italian versus German bonds is now at all time lows. A mere 83 basis points extra for lending to Italy. I’d say that is overdone, but the bond market is rarely wrong. 

Where did it all go wrong? Right here. 

No energy, no economy.

Further Information

Our July 2025 report to investors can be found here.