Arthur Hayes, CIO of Maelstrom, joins Laura Shin on Unchained to discuss his thesis that the Iran war and AI competition are creating an inflationary environment that will drive crypto markets higher.

The conversation covers how the ongoing conflict is forcing nations to reconsider their dollar asset holdings and supply chain dependencies, particularly as countries like Australia find themselves completely dependent on imports for critical resources like refined oil.

Hayes explores the intersection of geopolitics and technology, arguing that both the war economy and AI arms race between the US and China will require massive money printing, creating ideal conditions for Bitcoin and crypto assets.

War Economics Drive Inflation and Dollar Debasement

"Wars are inflationary, especially the U.S. Iran war is no different. Nations are going to spend on AI and drones, redefining supply lines, building pipelines, stockpiling commodities" - Arthur

Central banks will create credit to finance wartime spending, benefiting wealthy nations while potentially causing starvation in countries like Bangladesh and the Philippines

The Iran war is recalibrating global allegiances as populations in Europe, Asia, and Australia suffer more than Americans, potentially reducing their deference to U.S. dollar assets

Supply Chain Dependencies Expose Dollar System Flaws

Australia's 100% dependence on Chinese refined hydrocarbons created crisis when China stopped exports, forcing the Prime Minister to beg Singapore for jet fuel

The Strait of Malacca, controlled by Singapore, Indonesia, and Malaysia, represents a critical three-mile chokepoint for global commodity flows

"Great, I have a lot of dollars, but they don't buy me anything. Maybe I should have built my own refinery rather than holding this piece of paper guaranteed by the U.S. government" - Arthur

Sovereign nations are waking up to the need for physical infrastructure and commodity stockpiles rather than just dollar reserves, reducing structural demand for Treasuries

AI Arms Race Creates Red Queen Effect in CapEx

The 'Red Queen effect' in AI means companies must constantly spend on CapEx or their entire infrastructure becomes worthless when competitors build better models

"If you spend all this capex and your model is not as good, then nobody uses your model. The hundreds of billions of dollars you spend on CapEx is worthless" - Arthur

Anthropic's revenue increased 10x in less than a year because Claude is marginally better than OpenAI, demonstrating winner-take-all dynamics

Two catalysts could end the AI bubble: a massive IPO flop that signals market top, and political backlash from the 90% of Americans who don't benefit from AI gains

AI Deflationary Bust Threatens Banking System

Knowledge workers earning $150,000-200,000 annually will be reduced to $40,000 unemployment benefits, unable to service consumer debts held by banks

"It's game over for the Fugazi Fiat fractionalized banking system" unless central banks print enough money to prevent the credit crisis - Arthur

The timing mismatch between AI productivity gains and job creation will destroy the financial system that requires constantly growing GDP

Long-term AI could create a utopian future with robot labor and near-zero costs, freeing humans for arts, sports, and social activities

Hyperliquid Dominates Decentralized Perpetuals Trading

Hyperliquid's tokenomics include no massive VC pre-sale, massive airdrop to traders, and 97% of revenue used for token buybacks

"They have the most real volume. I look at average daily trading volume over open interest - the lower that ratio, the more organic the volume" - Arthur

The platform enables weekend trading of oil futures and equity indices when traditional markets are closed, providing crucial price discovery during volatile geopolitical events

Hayes takes pride in seeing his perpetual swap creation from BitMEX evolve into a product that could render large centralized exchanges obsolete

Privacy Coins Positioned for AI-Driven Surveillance Era

Zcash offers the most secure privacy cryptography and represents Hayes' largest position outside Bitcoin due to its asymmetric risk-reward profile

"With AI, big tech, and big government, it's very trivial to de-anonymize transactions. People want that privacy" - Arthur

Bitcoin should remain conservative and not add privacy features, allowing specialized coins like Zcash to serve that use case better

Near Protocol enables anonymous swaps from shielded Zcash to any crypto asset, with transaction fees potentially flipping NEAR from inflationary to deflationary