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Language: en
Sovereign defaults are at an all-time
high we had 14 in the last 3 years
versus 19 in the previous 20 years
that's 4.7 per year now versus less than
one per year previously that's an
increase of almost 5x we have
millionaire migration uh to the US has
dropped by 86% in the last 3 years and
central banks are buying a ton of gold a
ton of gold the chart is ridiculous Pres
presumably because they see that
something is coming so it's like okay
the you you are the you got a lot I cut
out like 10 yeah so there's an insurance
crisis there's the fiscal crisis blue
states are bankrupt like California
Illinois places like that they're
they're losing a lot of there's the auto
loans there's the student loans there's
credit cards each of these are like
trillion dollar problems that could
crash the economy and they're all
happening essentially at the same time
it is insane so I feel like we're
standing on this real really rickety
thing you said that the you know the
economy is beginning to Creek uh but
I've heard you use an example before
that I worry is more accurate now
remember all I care about I want people
to look at this neither of us have a
crystal ball the one thing we are
guaranteed to get wrong is timing I just
want everyone to be very clear now the
wins and losses all come around timing
so of course like if I had a crystal
ball I would just shut the Showdown and
just going to make a lot of money so uh
I have no idea when this is going to
happen so to to be very clear but you've
used an example before that I think is
absolutely brilliant and that is this is
a Wy coyote moment yes what do you mean
try that so you know Wy Cody if people
haven't seen you can probably put up an
image of it his character from Looney
Tunes and they walk off a cliff and
they're just you know merily going in
midair then one day they look down
they're like oh my goodness and the
markdown is digital in a sense right
they just fall all the way straight down
right and if you look at the graphs of
some of these Banks stocks they're kind
of like that where they're analog and
they're just kind of floating through
the air and then suddenly somebody
actually looks at the financials they
look down and they're just digital they
die
overnight that that analogy is so apt
because and this is why I I never know
how to handle these moments because by
talking about it you are getting people
to look down and so in some ways you run
the risk of speeding it up so you talked
earlier about Janet Yellen she knew
there was a problem but she didn't speak
up now You' for people just listening he
just made a
Jan
yell but I don't know if I'm mad at her
for not broadcasting the problem but at
the same time I can't help myself out of
a moral sense of obligation from telling
people hey you might want to look down
why I make the face well the reason is
that line of argument that talking about
it is causing it is actually uh people
throw that around I think it's false but
it's false in a in an important and
interesting way which is when you know
when one of the things I found that's I
think a stupid kind of meme is you talk
about this type of stuff people be like
oh you're such a Doomer you're such a
downer just look on the bright side man
you know blah blah blah that kind of
thing right and you know the goal is to
be neither a a pessimist nor an optimist
but to be just a realist and if you're a
realist then um you're not a Pana right
like it's not a Doomer to say oh there's
a wall in front of you you might as you
might want to turn the car you know
that's like that's just that's being
smart right that's being realistic and
the thing is that what happens when you
talk about this stuff in the absence of
another human being there the negative
emotions that people have out of
visualizing what a deleveraging actually
is are projected on you oh you're
causing oh my God you're causing a bankr
etc you know who caus it is Jerome
Powell and the Federal Reserve and Janet
Yellen and the US Financial system but
especially Powell he's he's a chair of
the Federal Reserve why does Powell hate
America so much you know like that's
actually the question why did he you
know um devalue the treasuries that uh
the government had sold in in 2021 why
did he tell people that interest rates
were going to be kept at zero before
totally you know jacking them to the
Moon why do you say that inflation was
transitory when when it wasn't right I
have a slightly different hypothesis
which is all the things you just said
are true that the the mistake the the
actions that are being taken are being
taken by those people and those actions
are creating the problem but my whole
thing about it's it's the debt that
causes this collapse I don't think any
human any uh any group of people is a
better way to think about it I don't
think any group of people can stay
emotionally sober for long once they've
lost sight of the people who built the
thing so once you've had enough people
that have inherited the country working
well you you now just it it is
guaranteed to devolve into these choices
that happen around debt because again we
talked about this earlier this is a this
is a it's coming from a beautiful place
they want to they want more people in
housing they want to make things better
for people they want to elevate people
live people out of poverty make sure
that you know nobody goes without like
it really does like I understand the um
what you call the the awokening I think
the awokening of America
like the great awokening whoever came up
with it I like get it I get the impulse
to it but the problem is that you end up
you get in this debt cycle of oh let's
just let's let's inflate the currency
let's print money so we're printing
money we're inflating the currency and
look yeah kind of cheeky it does devalue
everybody's money but nobody feels it
too badly like honestly that in 2008 I
was like word like print money man if
that's going to help people that's
amazing I got devalued obviously and
then again svb I didn't have any money
in svb but I was still like word yeah
print so I'm just like wait is this much
to do about nothing or is this the cycle
that humans cannot get themselves out of
and I'm as much of the problem as
anybody else because I'm like yeah I
don't want to see people suffer man if
you can print like print I guess we all
like take a hint but it's like when does
it become a problem okay well so first
is um there's called the canlin effect
okay which is to say and you know I
think some people have an intuitive
grasp of this but but I'll explain it
anyway um printing money is in a sense
like official counterfeiting and the guy
who is got the counterfeited dollar
first can spend that and get more of the
purchasing power and then eventually it
makes its way through the system and the
entire money supply gets marked down and
it's got less of its purchasing power
with the 15th guy who's who's um got it
okay
and so printing is not Costless what
printing just does is it's like
basically inflation is taxation it's
like um let's say you had I don't know
hundred billion dollar okay in the
economy as a whole and then the
government prints another hundred
billion doll that's as if the government
seized 50% of the wealth in the
country does that make sense or at least
50% of the savings yes because I don't
know how intuitively this comes to
people but yes once you get it once the
penny drops it's brutal
yeah so in so inflation is taxation that
is to say and printing when especially
when you're printing a large percentage
of money supply it is essentially
centralized seizure of wealth the
difference is it is um if you think
about the difference between like a like
a in-your-face predator that's like
communism you know or like a like a lion
you can see it coming versus a stealth
Predator that's camouflaged like a snake
that's like kinanm um um communism they
would just go to your house with a gun
and they would just shoot you and take
your farm and you know throw you know
your your your children in a goog or
whatever right um very direct that was a
lived experience that a lived experience
of many people in Russia China Vietnam
like all kinds of people that's what
collectivization was okay but kinism is
it steals the money in a much more
subtle way where a button is hit and
it's like a mosquito you don't even feel
it right the blood is sucked or it's
like a camouflage snake or something
like that you're you're dead or bankrupt
or devalued at the end of the day but
it's you might even feel it's helping
you so for example let me show you uh in
particular a very important graph did
Republicans pay for 2008 so let's
revisit first take a look at this graph
okay have you seen this graph before Oh
yes my friend I told you every graph
you've ever put out I think I've seen
it's probably not literally true but
it's very close okay all right well
that's cool so there is a Wall Street
Journal article that this comes from
okay and um there it's actually like an
animated version so you could play the
animated version that goes back and
forth so you should do that point is
what is this graph showing um basically
it is showing congressional districts in
the US by their uh real GDP okay
inflation adjusted GDP and um what you
can see is the the kind of solid line
blue line and red line in 2008 uh
Democrat and Republican congressional
districts were were mostly evenly
matched as to say both them had Rich
districts both them had poor districts
and the median wealth median real GDP in
both the STA districts was comparable
okay 10 years later by 2018 the the
distribution of uh Democrat you know
districts had pulled away from the
Republicans like the median GDP of
Republicans was like $30 billion in
their congressional districts for
Democrats was like 50 billion or
thereabouts and moreover all all of the
wealthiest congressional districts were
suddenly Democrat so essentially in 10
years this massive Gap was opened up
between the two parties and this is how
you went from the uh like um sudent tie
wearing Republicans of the early 2000s
to the trucker hat pears of the late
2010s and that transformation happened
over the life of most of the people who
are watching this but I believe it
happened in part because the printing
went disproportionally to the coasts
that is to say if you track the canit
effect if you track the flow print of
money well it's a Fed it buys these
overpriced mortgages from Banks the
banks now have extra assets on their
books and they can spend it on financial
assets and uh then those people have
money in their bank accounts and then
they can go and spend it on houses or
Goods or whatever but that's
disproportionately in um in the coast
the money went to Washington DC it went
to New York and then some of it made its
way to Silicon Valley venture capital is
actually a tiny fraction of the overall
investment landscape it's like a few
billion versus hundreds of billions of
dollars but like a small rivette of that
printed money made its way out to
Silicon Valley venture capital and that
was probably like the most productive
use of the money because you're talking
about investing in businesses that are
being built from scratch and um and
that's a whole separate story as to to
what happened there but essentially the
money made its way to the coast uh and
uh and the guy in Oklahoma who's some
cashier in Oklahoma got the printed
dollar last and didn't even realize that
they had been devalued and um that they
had been essentially had a good chunk of
their assets seized and their whole town
had their assets seized um and the thing
about this is the whole time as you just
said people are like we're helping
people the FED save the world right well
what it actually was I mean you know
2009 2016 as a Democrat Administration
perhaps it was just a coincidence that
the Democrats became far richer than the
Republicans in 10 years okay but it does
seem like the cost of the print was
imposed on the political opposition in a
deniable and invisible way unconscious
even to those doing the imposing who
actually say we we save the world we
help people stimulus blah blah blah
right and that's like a camouflage
Predator where it's like anzing its
Target it doesn't even know the blood is
being
drained okay that's being attacked it's
like it's you know you know strikes like
this right and that's actually better
because you know a lion gets your fight
andlight response up you know it's a
predator mosquito doesn't it's done and
you don't even maybe detect that it's
happened right uh and so like we see
that Evolution has selected for the
camouflage predator and that's a lot of
what the financial system is um and and
if you think about this by the way and
you just start relating I mean think
about how many times Banks try to get
one over on you with fine print right
fine print is not a tactic it's a
strategy the whole point is to get
somebody to sign a contract that they
didn't fully read or they didn't didn't
understand in Parts legal e and lock
them into some adjustable rate mortgage
um or some student loan where they're
too naive to understand you know like
how bad it is for the rest of their life
and they're 18 and they don't you
they're not taught um interest rates
they're not taught taxes and stuff in
high school they're taught just a bunch
of gibberish and then they sign a
student loan for the rest of their lives
the system is sort of set up to get
people into debt and to be clear I'm as
capitalist as they come but I do believe
there's asymmetric information
information Arbitrage there and that
which you've seen at an individual level
that the financial system does is all
something it does in my view at a
collective level by the way there's
somebody else who paid for 2008 you know
who that was no potentially the uh the
Arab world and the reason is uh
basically food spikes helped trigger the
Arab Spring right the US export its
inflation remember the whole Arab Spring
in the early 2010s right I do very much
and this this this is going back to your
earlier thesis uh for everybody
listening along uh as as you biology as
you fractal into these ideas I want
people to understand that there is an
anchor there's something that triggers
this for you but like the the second
third fourth fifth order
consequences in hindsight can be seen
and so a big part of why I find you're
thinking so interesting is you're like
hey Look Backwards understand what
you're going to see going forwards
basically once you understand that
inflation is Taxation and that
Republicans paid for 2008 and uh with
their money and unfortunately a number
of people in the Middle East paid for
2008 in part with their lives because
you know people are like oh 2008 finan
crisis wasn't the end of the world well
you know what for that the AR spring it
was the end of a lot of people's world
right Libya was plunged into chaos that
inflation did destabilize countries and
even if you say it's only 20% the the
cause because it's multiple causes and I
that chaos how how did that happen I I
actually don't understand how the
inflation we didn't really feel it not
in like a way that broke us but it
caused actual instability in other
countries what happened what's the
mechanism so food prices are the often
discussed mechanism that there was like
a a fruit vendor who uh set themselves
on fire um that helped uh you know
Muhammad bazizi right uh fruit vendors
set themselves on fire and that is
thought of as what triggered the Arab
Spring right like essentially you know
um his his prices December 17 December
2010 would have been a normal day if the
local um you know prices uh if the
prices hadn't changed right and um so
the thing about this is uh like it's
multifactorial there's a reason that the
government you know and media covered it
at that time and what not it was useful
in the sense of um have you seen that
clip from Wesley Clark where he talks
about how even in the early
2000s uh like there's folks in the
military industrial complex that decided
to invade like seven Arab countries have
you seen that one
no um Les Clark's former fourstar
General right and uh you know pretty
pretty senior guy before the Iraq
invasion that um that the US plan to
attack seven countries in in a few years
and actually a lot of that came true
right oh my God I did hear this and they
asked him why and he said I have no idea
there there were a bunch of these folks
in like the project for a New American
Century um who uh essentially thought
that Islamic fundamentalism was a huge
problem and they need to democratize the
entire Arab world with like what they
did to Germany and Japan right um that's
like the good motives version of it but
of course uh I mean good motives you
know what I'm saying it's like let's
let's call it that is probably what
their internal mental model was like yes
it's terrible that war exists but you
know it was terrible that World War II
happened and Japan and Germany are
better off for it so we need to conquer
the entire Middle East and democratize
them so that their women are free and
and what not that was The Narrative of
the early 2000s okay what happened of
course was just absolute
and Chaos with Isis and many of these
countries destabilized in Libya and
Civil War and that destabilize people
that that that feels more direct I'm
still trying to understand how re
inflate the currency why does that
impact their food prices we don't have a
blockchain where I can show a purchase B
from C and so I mean markets are you
know are
complicated but um the US exports
inflation um in part because uh it is
the consumer of all these products
around the world and um you know the
dollar is its major export and what is a
small or tolerable rise in prices in the
US is intolerable abroad if somebody's
like kind of living handt mouth to give
the you know what I could diagram out
for you by the way is like the exact
sequence where it goes from the FED
buying an asset from a bank which then
has a cash it can buy a stock
which then puts money in the hands of an
investor who can buy a house that's
actually something where you can
probably track it through the financial
system to track exactly how uh the
printed money is bidding up you know the
you ever heard this saying the price of
tea in China right like what does it
have to do the price of tea in China
what does it have to do the price of
grain in Libya okay to track it exactly
you need access to several different
databases that are not public you know
so you have to kind of look at the aggri
stats and say okay here's how the US
exports
inflation um and then people will argue
about that part of the point is that
it's meant to be deniable right but
um the concept of the US exporting
inflation is certainly not my like
Innovation or anything like that that's
something a lot of folks have talked
about so if you want to get mechanistic
about it You' probably have to go and
pull data sets from I don't know several
different grain venders and so on you
see okay this guy suddenly got a printed
money and so he bid up X which bit up Y
which bit up Z which bit up the prices
of this guy in the Middle East right but
that XY Z A and B are hidden because
they're not on Shain does that make
sense yeah right and that's actually
that's actually part of the point the
part of the point is the again the
mosquito right the camouflage Predator
the point is that you can't see it right
the point is that that's not public I
mean think about how much more coverage
we um we've got of Kim kardashan or
whatever in the 2010s then where did all
that printed money go hundreds of
billions of dollars trillions of dollars
where did all that go how manyan how
many articles have you seen is it is it
a daily thing on that a breakdown of
where the print of money went if you
know that inflation is
taxation then um you know one option is
you can just stay in the system like
those Republicans like those people in
the Middle East and those folks who are
near the money
spigot who can benefit from the candle
in effect do another print and they
benefit again first
right but if you see it coming and you
get out first now you're not part of the
base that is diluted if you get out to
outside money you get out to Gold you
get out to bitcoin you get out to maybe
a foreign Fiat um now you have an asset
where to go back to that example let's
say there's a hundred billion dollars
and the US government printed another
100 billion it seized 50% of of dollars
essentially right but
if there's 21 million Bitcoin the US
government cannot print even one Bitcoin
so can't seize the Bitcoin does that
make sense right by still yeah I'm I'm
not in the camp that Bitcoin is
unseizable I think that you you lock
somebody up they're going to real quick
be like all right here it is yes but but
basically it's not it's not easily
centrally seizable you have to go back
to Communism house to and this is
actually very important
um bit coin and cryptocurrencies more
generally increase the cost of
seesure okay because like a SWAT team
costs money you know it's like sure what
40 $50,000 or whatever right so now you
have to actually look at the p&l of
going in kicking in somebody's door and
beating them up and taking their private
keys right and you have to have you
first you have to find them you have to
find uh you have to have you know like
some legal authority to go in and beat
them up take the and then you have to
replicate that
and that'll arouse resistance because
now it's no longer the camouflage
Predator it's it's the lion right it's
something that you can actually see and
that I don't want to derail us on on
that part yet we're going to get into
that I which I think is a big thing with
the network State and all that but the
the question I want to ask before we
move on I think this is very important
so uh chath Hol haaa P haaa sorry uh so
I don't want to misrepresent his views
but he is I think he's incredibly bright
and uh he has said many times Jam
forgive me if I'm getting your um your
idea wrong here but basically that the
debt to GDP ratio is a big nothing
burger and everybody gets their panties
in a Twist as that number gets uh bigger
and you know we've got multiples of GDP
and debt and he's like me nothing's ever
going to happen it doesn't matter there
is no upper bound um what do you say to
that is is there a Breaking Point or can
we actually just keep printing money
basically
forever well you know shat is a you know
is a colleague and co-investor and I've
been on all in a bit and I think we have
a cordial relationship um J has also
said uh put 1% of your assets in Bitcoin
just in case because if everything else
goes to zero then um you know what like
they can't dilute
that so uh you know if you if you asked
him I don't know where he is at
numerically on that but he probably I
don't know if he'd say it there's 100%
prob
of no devaluation he's fiscated investor
he probably Hedges so that's that's the
first counter argument many people I
mean it's it's a point about not seeing
something in one's life I mean let me
make the point somewhat different way
um most of the 20th century um most
people in the 20th century saw an
economic Apocalypse of some kind it was
communism in Russia in Eastern Europe in
Vietnam in Korea in uh Cuba right it was
um Islamic fundamentalism in for example
Iran that was also asset seizures
happened there that's actually why a lot
of Persian people made their way to La a
lot of the entrepreneurial class their
assets were seized in that Revolution um
there was socialism in India there was
currency devaluations in Latin America
all the kleptocracies and you know like
uh Argentina was once a rich country and
it became poor in part because of this
these kind of currency crisis um
and and certainly there you know even
even the UK had huge problems after
World War II to pay for all of that and
so the you know I think uh there are
three countries uh Dalia talked about
this there's only three countries that
compounded through the 20th century
without an economic apocalypse and those
were the US Canada and
Australia and so you have this
interesting combination of three facts
first economic apocalypse is actually
fairly common second economic apocalypse
is uncommon for
Americans and third um economic
apocalypse is uncommon in American
Media and instead the one thing that we
are aware of is um you know the
potential for genocide on racial terms
right that is definitely a threat that's
something you should be aware of right
um actually most of the conflict in the
20th century was not on the basis of
just race it was on the basis of class
right um do you think Americans have to
worry about that
I do think so yes and the reason I think
so is um if you're not like immunized
against something I mean in many
ways I think this century is seeing sort
of a flipping okay where or flippening
where uh those countries that were on
the capitalist right in 1991 and the
Communist left in
1991 have essentially shifted sides
where now uh they're on the cultural
left and cultural right and um one of
the consequences is all the countries
that had suffered through socialism
communism and so on in the 20th century
even if they still call themselves
Communists like Vietnam or or or
China they're done with that in a sense
like you know they're not I mean there's
there's bad things that you know the the
CCPA is doing but they aren't like fully
abolishing cism and going back to malism
that that that make them too poor what
do you think they learned that made them
flip that
leaf generates power I mean that's like
capitalism I like to be really blunt
about it I mean basically you have an
economic machine and um you can you know
it turns out letting people
self-organized generates more wealth and
power than not right that's if you're
just totally cynical about it right um
and of course it is it also generates a
more contentment among the population
eventually you can get from a position
of totally enlightened self-interest to
okay it's more stable than the
alternative the people are you know have
have a good standard of living they're
not going to protest you can run the
government or whatever right
um the by contrast if the other side is
if you have been born rich have you
heard that you know saying like uh shirt
sleeves to shirt sleeves in three
generations love it yeah used to be an
old American saying right so the current
generation in the US has been born to
wealth right they're born a lot of
people who have come to majority have
essentially inherited this giant
superpower with the scale economic
system and so on and they didn't have to
work for it and fight for it fight in
Wars they didn't have to earn it and so
the memory of what it took to earn it
has fallen off so it's the opposite of
those you know who grew up under
socialism grew up under communism you're
not you know like in India for example
which is actually rising and doing quite
well on balance nowadays um nobody's
like romantic about 15 years ago it was
much worse you know life is getting
better there um you infrastructure is
improving technology is like a good
thing capitalism is a good thing and in
general you know not without its ups and
downs but things are generally up and to
the
right and by contrast in you know the
West I think they've forgotten what's
got them there and it's a combination of
you know oh we can spend without having
to produce you know you heard the
concept of the resource curse you know
what that is yes very much so yeah so
like the resource curse it's like uh you
know many countries that have oil
actually find that people just end up
fighting over the oil or or the money is
spent in a badway and so on and so forth
right it's like you don't have to earn
it or what have you I'm not saying all
like Norway used to seem to manage it
the UAE is managing fairly well now and
so so it's not 100% but but it's like um
it's something that can set you wrong
and so there's a huge difference between
founding and inheriting you know not
just for an individual but at a country
level you know George Washington
you know founded like the US military
right um and uh you know there was some
you know like Hamilton founded like the
ancestor what's the Federal Reserve
those guys understood the constraints in
the world as opposed to the 37th mayor
of this or the 42nd president of that
like those are folks who you know like
um inherited something they're just like
they were named into a system that was
going before them and then continues
after them in the same way that like the
15th of GM or something like that is so
far distant from the founder sometimes
you get somebody who's like San Nadella
who's like uh who manages to make their
way to the CEO position but has the DNA
of a Founder that's a very unusual kind
of person because to make your way to
the co position you sort have to be a
conformist and Rule follower and so on
and then to actually to
reinvent the whole organization you have
to have the founder DNA so it's unusual
that it happens it's not it's not you
know it's not zero probability
but right now you have a machine that's
the opposite of like in India or China
within living memory they were you know
they were Communists or socialists they
very poor so they don't take it for
granted whereas we'll always see people
saying in the US is of course we're
number one we'll always be number one we
inherited being number one I can't
believe you're saying we'd never be
number one it's not hungry and by the
way even you know like a great example
is the response to superpower
competition you remember Sputnik right
the course I mean probably before we
right so when Sputnik uh you know the
the Soviets launched you know
Sputnik the US response at the time
wasn't oh the Soviets have demographic
problems they're going to go to zero uh
you're you're a Doomer are you just
repeating Soviet propaganda by talking
about Sputnik you loser why don't you
believe in America blah blah blah blah
instead they're like oh boy these guys
are ahead we need to get back ahead
massive Math and Science you know uh
effort we're going to put on man and the
moon in you know before the end of the
decade like rising to the challenge and
treating your competition and taking
them seriously is actually how you win
as opposed to the so the response of
Soviets couldn't be more different than
the response of China which is a
combination of denial and actually
stealth imitation so it's denial it's
like oh you're saying you know China's
going to go to zero that you know they
obviously suck you know we have the
Mississippi River and they don't so
they're you know you know what I'm
talking about are the people who will
argue these like again got nothing
against demographics on the way out it's
done yeah exactly their demographics are
done they have terrible geography uh
they don't have a blue water Navy uh
they can't feed themselves and so on so
forth just to kind of go through these
points because people will raise them a
lot first on should I talk about that
for a second right yeah please this to
me gets into why we're in trouble yeah
so so first just looking at the graphs
you know maybe put the graph of steel
production okay and then put the graph
insane it's insane right so you see this
graph and uh what you can see is anybody
who's making analogy to the Past saying
oh you know it's just like the 1970s and
US was in a Mala but you know we pulled
it out and so the US was making 10x
amount of Steel of China in in in that
period
and now it's the other way around
China's making why why do you focus on
that well it's just I mean you can look
at tons of other stuff you can look at
you look at basically every raw material
or um not every raw material I should
say every manufactured thing a variety
of different graphs look like this um
and the reason I think Ste is
interesting exactly it's emblematic
these guys are playing to win and look
I'm in California uh if I had to do the
last three years over again I probably
would not be in California there is
there's just a growing sense of like um
that trying to win is bad and that you
shouldn't want to be competitive you
should want everybody to win and I'm
like no I'm here to win a championship I
want to be the best I want to play with
people that want to be the best and so
when you look at China and you're like
ah they're going to collapse like you
know we don't need to respond like we
responded to Sputnik I'm like you're
going to lose like you've got to be in
this game to win now you do not need to
love to crush your enemy and hear the
Lamentations of their women you know as
they're driven before you that's not my
vibe but my vibe is very much like the
reason that steel is interesting is
these guys are building things now are
they building too many things are they
building things they're going to like
knock down maybe but one thing I've
heard you talk about which I think is is
really insightful is that the that thing
that man if you're of my age when you
hear that idea of oh Pearl Harbor I
think we awoke a sleeping giant and like
you know this is like a fatal mistake
and the US comes and just like
manufactures and we do this unbelievable
stuff we're able to build this Navy and
army like unbelievable we end up doing
what we do in World War II absolutely
incredible amazing
amazing but now like if we had that same
moment now I don't think we'd be able to
manufacture our way out of this we've
outsourced all of that manufacturing and
so now we're in this different period
where culturally people don't want to be
dominant they don't want to be
aggressive like that scene is like bad
mojo and oh it's toxic masculinity or
whatever and I'm just like oh my God
like I need to be around people that
that want to go hard I want to be around
people that want to win like I want I
want to be around people and look this
is going to be a little naive so please
look past this this is I'm just trying
to explain like my spirit of competition
I don't look at China and think oh I
have to beat them and they're bad I look
at China and I go all right China I see
you I see what you're building I see
that you can build a train station or
whatever it was in in like a night not
not joking by the way I it might have
been 48 hours so yes it was so fast I
was like this is insane and in the US
California especially like you can't get
a bathroom stall put in you've you've
shown this like cutting the toib for a
bathroom stall it's like guys what is
happening and so getting back that
energy of like I want to go against the
best I want China to be as strong as
possible as somebody who has read Mal un
story I am so happy for them that they
have moved away from that and that
they're coming out I want a formidable
opponent but I I want to be sharpened by
that opponent I want to get better
because they're trying to outcompete me
and so I want to out compete like I want
to rise and do better and look I don't
want to go to war trust me when I say I
don't want to see them impoverished
that's not how I Envision this but when
when I was a kid and it was like us
versus Russia and it was like
they were doing cool stuff and we were
trying to do cool stuff it was like okay
that felt good like it it gave me a
sense of pride in my team it gave me a
reason to want to get in there and do
well and because of the way that I'm
wired I didn't want to crush my
opponents I didn't want to see bad
things happen to them but I did want to
win and like that spirit is just going
away I already know that the the
comments now to this section of the
video people are going to be like oh
this [ __ ] guy but I'm telling you you
need that spirit so there's a few things
which I think of as cope whenever you
mention China that are worth addressing
right one of them immediately will
people they'll come with a psychological
defense will'll be like oh China can
only do that because they're a Communist
dictatorship and we're a free country so
that's why it's messy and that's why
we're slow at building and so on so
forth okay
except I mean you know if you believe
America was a democracy in the 1940s it
could build a bomber in you know like a
day right actually no here's stats what
is it uh B2 bomber B24 bomber The Source
Ken Burns says 60 Minutes to build a B24
bomber okay which is crazy my God and um
that is of course that's the average
time right in terms of um you know how
many were being built per day right B24
Liberator long range bomber uh one came
off the line every 63 minutes okay like
now today it takes uh you know so dou
World War II America could make a B24
bomber in 60 minutes 2022 America needs
20 years to reopen a bathroom Okay in
San Francisco and the thing about this
is um there's actually two different
demographics because one demographic is
the one you just mentioned which says
that they don't want to win they want
like all these environmental impact
reports or what have you um the their
demographic is one who's like okay yeah
we need to do industrial policy but
there's sort of it's like laring right
because they are trying to do it with
Printing and spending they're like wow
spending on factories is up to the right
but you know what industrial policy is
like venture capital and simply spending
the money doesn't mean you'll get the
returns it has to be done in a capital
efficient fashion and I'm not seeing
that right I'm just seeing money thrown
around without constraint and without
accountability and without a CEO and uh
so I'm not I'm very bearish on
essentially industrial policy right now
okay you it's like it's like saying
you're going to do Venture Capital you
have to there's a difference you're
doing it well coming back up a little
bit point is in in if if the US was a
democracy in the 1940s and China was
Communist in 1970s it was much more
communist and genocidal then and so if
the argument is oh they're a Communist
dictatorship that's why they could do it
well why weren't they they're even more
Communists then if you're if you're
actually arguing
that that gives them strength it doesn't
because they were weaker 50 years ago
right and the US was stronger and you'll
argue it was still a democracy right so
so that actually blows up in my view
that kind of cope style argument that oh
uh you know it's because they're you
know evil that that's why they're strong
they were actually much more evil
arguably 50 years ago when they were
killing millions of people during the
greatly forward and Cultural Revolution
yeah anybody arguing against that I
think that's Madness yeah so so I'm not
saying they're good like in the sense of
I don't like the social credit system
and you know the the um the surveillance
you know State they've built and so on
there's many legitimate critiques but
they're not like
they're not as murderous as under ma
right there's actually an improvement
you know like it's it's seemingly by a
country mile but if everybody has a
Northstar which is human flourishing I
will say that yes I don't think humans
will flourish as well even under the
current um regime I just think that that
social credit scores and things it just
plays out in a way that breaks people's
spirit I think that uh part of what
allows for human flourishing is freedom
but I not deaf to Ray doia take which is
look they are a different Society they
have different values and so yes once
you realize that the people could rise
up at any point and they don't so there
is something going on there it's not bad
enough for them to drive them to revolt
now maybe it would be if the US suddenly
we woke up and we were like that there
might be a lot more push back so anyway
I can simultaneously hold multiple ideas
in my head I would not want to live
there does not seem like the thing
that's going to lead to maximal human
flourishing but I agree with you very
much much having studied a limited
amount but having done at least some
studying of Chinese history it's like
whoa it's a lot better than it was back
in the 70s 60s 50s 40s just way way way
better yeah so one thing also by the way
and this is controversial but I'm just
going to bring up these two articles so
that people can at least see them the
thing is that it is true that China has
uh some of charged that China is uh
being very um either it's genocidal or
it's cracking down or it's concentration
camps or something on on Wagers in
western China that' be the counter
argument the thing is that the US was
bombing you know Chinese weager
militants and um you know once jailed
them and now defends them you can see
these articles from foreign policy so
here's NBC News 2018 us targets Chinese
weager militants as well as Taliban
fighters in Afghanistan us wants jail
wers now defends at un and foreign
policy so the thing is that at one point
the US and China were both thinking of
what's going on there as quote
counterterrorism and there's a woman
named Sheena grens that has written
about this right and then it's kind of
totally switched sides right um and uh
you know this is not to defend anything
that's going on there um because I'm I'm
sure it's quite brutal um but it's like
Sheena grens on understanding China's
policies in Zing Jang this is in uh you
know know the belfer center.org okay and
um essentially like she she's saying
that China is talking about that as
quote war on terror very similar to how
the US Justified its interventions in
the Middle East um the reason I say this
is it's like okay that's useful to know
um because it is it's just not you know
it's just not talked about um and you
know one thing I find is um
you know the the the all the the
negativity towards Russia and China is
there's something merited there no doubt
but um it's also something which some
people think it's like oh being super
nationalistic and being super jingoistic
and having a big war is just what the
country needs to America needs to get
back together you know a big war that'll
bring us back together a common enemy
you know I've actually SE people make
this point have you heard that kind of
thing before of
course right so um the thing about that
is that's not necessarily true because
if there's a big war I mean if you think
about covid or 911 like the war on
terror or covid that didn't bring people
together that just you know immediately
got politicized and you know if there
was an alien invasion one side would
would sign with the aliens almost
certainly right like that's just the
Dynamics of how polarized it is and
um I think you know even though quote
China is a bipartisan issue now it's
questionable as to how long that lasts
we'll see um and it's a bad thing by the
way it's like you can't build America by
hating China you need to like love
America or love other Americans and you
see my graph on like it's not one
country it's two parties yes dude this
is one of the most troubling things you
say and I'm saying that in the context
of I know you're saying that we are
potentially facing Financial Armageddon
but this so going back to my rogue wave
interpretation of your thing and I
should explain that to people so Rogue
Wave happens when you have a bunch of
big but not destructive waves they come
together at once and somehow their
amplitudes magnify and it will create
this rogue wave that can topple an oil
tanker and that feels like uh when you
look at the collapse of an Empire it
usually they do not die from without
they suicide from within and so you need
this High degree of tension inside the
country so that you can't get everybody
on the same page that everybody's just
there's so much infighting so yeah walk
us through because this really freaks me
out that we're we no longer make sense
to think of us as Americans instead we
should think of us how as Democrat and
Republican or even better as one's own
tribe you know some people will say
republican or Texan or Christian or
Bitcoin or something like that and um
just first is just a level set because
you know like it's useful to quantify
something right so if you look at this
series of graphs right it's not one
country it's two parties so basically
this is Congress and an edge between two
nodes is whether they voted together
1951 there's lots of bipartisan stuff
happening in Congress Jes in 2011 it was
just totally a bipartite graph and
that's one oh it's even more than that
2018 2022 this was 12 years ago how
partisan had gotten at the leadership
level and it's even more aggressive than
that right so
this a 70-year trend right where you can
just see it gradually getting more it's
like mitosis it's like a cell coming
apart right for 70 years exactly what it
looks like that's crazy and then it's
visible at the individual level in a
totally different kind of data set so
the previous one was like voting this is
social networks and this is and the
previous one was leadership this is the
masses this from 2017 it's showing
people friending each other following
each other on social networks and red
follows red and blue follows blue and
this was six years ago okay got and even
more disjoint since then now blue has
their own on mastedon and red is on you
know gab or something and and so it's
got an even more disjoint in their own
you know rooms right um this study says
uh that it's not just that Democrats and
Republicans aren't friends with each
other Democrats and Republicans don't
marry each other 96% of Democrats are
not married to Republicans so ideology
becomes biology in one
generation right this to
about yeah the sunnis and Shiites this
is like hearing us referred to in that
way was very eye- openening for me yeah
if you ever read the New York Times
about a foreign country it'll be like in
the Arid steps of so and so tribes have
fought each other for Millennia you know
they'll kind of like have a Gorillas in
the Mist kind of thing right um but the
level of conflict in the west now is uh
is tribal it's Sunni Shiite it's hudu
tosti once you kind of start applying
that filter um it's only partially
ideological and one way of seeing that
is during covid do you remember like
there were like four flips for example
at the beginning Republicans were
worried about covid and Democrats said
it was racist to talk about the China
virus this is from like roughly January
to March okay once Trump started
acknowledging it and even saying
something like oh you know the uh the
virus is we should shut down testing or
something like that like you know
basically trying to downplay it uh at
the time Democrats completely flipped
and now they were saying it was a huge
deal and they flipped to lockdowns and
Republicans flipp flipped to
libertarian and then Trump's vaccine
Trump pushed you know operation warp
speed and so on through and got the
government out of the way for vaccine
development and if you remember Kam La
Harris said something like I'm not going
to take a trump vaccine and so at the
time was the Democrat position was
vaccine hesitancy this has been totally
memory hold and and then after the
election uh the vaccine was actually um
you know held back until after the
election uh there's a there guy Eric
toppo who talked about how I that was
like there was a campaign or lobbying
campaign like to keep the vaccine back
so you know it wouldn't affect the
election either way um then I flipped
again and now Democrats role for the
vaccine okay and uh and then uh
eventually it became something where
Democrats kind of gave up on lockdown
and then the thing has gotten just sort
of like forgotten and I shouldn't say
forgotten about it but memory hold or
not discussed so the point is that's
like at least like two or three or four
flips depending on how you count okay
and when you have flips like that it's
Tribal not ideological each tribe is
saying what they you know um there can
be some rationalization for each tribe
at any given point in time oh I didn't
think it was serious than I thought it
was Oh I thought it was serious and I
realized it wasn't and maybe there's
some truth to that on you know but it's
also something where a is taking a
position because it's the opposite of B
and then vice versa because it's stick a
thumb in the other guy's eye does that
make sense you know oh yes
um and uh you know the the thing about
that is why is that important it means
um talking about the United States is
actually a misnomer it's a disunited
States it's a it's um the individual
states and um it's Democrat and
Republican and you know it's something
where like the flag itself is a
contested symbol where you'll find
people saying you know New York Times
just like a year ago or something what
do they say is like the American flag
had a friend that put an American flag
up on his house and I said oh that's G
to get ripped down and he was like oh it
already and shock crazy ouch yeah Fourth
of July symbol of unity that may no
longer unite um people make assumptions
so the flag is like a contested symbol
okay and um that was like July
the point being that um you know I think
the only thing that you can get super
majorities 99% of Americans to agree on
is that they value the dollar not the
flag that is actually the it's an
economic Union like the EU where the
dollar is the last tattered piece of
paper that's holding the thing
together you know and um you know like
the EU has the Euro right it's like an
economic Union even right so if there's
like a serious currency crisis which I
think is coming because we're already in
a background of high inflation with all
of these crashes they're going to have
to print that's a high level version of
why that printing will cause way more
inflation and then you have something
and you have options also right you have
exits you have Alternatives you have um
cryptocurrency and you have foreign
currencies and you have other countries
that are opting out and getting into
gold or trading with China the thing is
a helps or hurts the pull
apart well that's it it I mean helps it
accelerates in a sense right because a
person can pass away without any
successor but for a system to die it
needs a successor or multiple successors
like they say for the Soviet Union to
collapse people had to have an
alternative system they could look
towards that they would copy and so
people copied the US system right so
when the Soviet Union went down India
moved towards capitalism and so on
China's the only one that didn't right
it kind of kept its own system at the
time um not the only one there were five
communist countries that seed communist
but China was a big one that did almost
everybody else went into the kind of
capitalist liberal democracy Camp so
right now what's happening what happened
in March is really epocal because you
had you had AI going vertical and that's
a whole other massive storyline that's
like an entire multiple podcast whatever
you had AI going vertical you had the
banking crisis getting underway showing
how important this devaluation of bonds
was and you actually also had china
going vertical which is much more
important to people realize do you know
what I mean by that China going vertical
in March no it's going to ask you this
was just not covered in the western
press it should have been blaring front
page headlines and total focus on it
China developed a new muscle that I had
not seen them Flex they had been kind of
yelling and so on for the past few years
they developed the muscle of
diplomacy and they figured out how to
get a peace treaty between Saudi and
Iran which is a huge deal to get Saudi
Yemen War to stop to essentially unify
the Middle Eastern countries around
Chinese like China being the hegemon
coming in like um like for example
they're forming like a unified Navy in
the region with Chinese input as an as a
c to the US Navy okay that's insane like
totally different than what you think of
this Middle East where everybody's
Waring they're like all unified with
each other Saudi and Iran and China
against the US the US is Unified its
enemies um you have even Iraq like
trading in Yuan with China you have the
UA trading in Yuan with China um you
have Brazil sending a massive delegation
um to China you have macron taking photo
ops with seian ping and China and part
of that is because again everything is
connected but the Ukraine war has caused
such huge energy costs and other costs
to Western Europe that macron and France
are dealing with like social unrest um
you know they're the lfs a while ago and
now there's people protesting pensions
and things so he needs wealth for his
country and you know what China's can
export stuff and he can do economic
deals with them so that's why he's kind
of part of why he's reaching out there
reason is he you know has always wanted
to put strategic autonomy for Europe
then you have southeast Asia which is
another contested region between China
and the US and the Asen countries are
saying they're going to dollarize and
they're taking they they they have their
own skepticism in part of China but
they're taking money from
China and on and on and on and on you
know um you have like basically the fact
that ch to learn
diplomacy is and is bringing also one
more example the you know zinski went
and took a call with China and now
blinkin the secretary of state has said
um China may be a partner for peace with
Russia Ukraine okay how you take the
dollarization I mean would basically how
serious I take it very seriously and the
reason I take it seriously is uh there's
actually this great article saying um
China's uh you know
unusual path to reserve currency status
right and um what's it called the the
rin's unconventional route to reserve
currency status and this was actually
here's I'm pasting the link here in in
chat and it was also written up in the
um Financial Times and essentially uh
the
um the point they're making if you
remember that graph would show that
China traded with the rest of the world
right um the terrifying graph that shows
that yeah they've basically taken over
most of the world yeah so a lot of
people the US is so Finance heavy that
people will point to the dollar share
reserves and say hey that's still really
high therefore nothing is happening
right but this is like pointing to in my
view Soviet GDP the USSR posted its
highest GDP with its fake stats in the
year of its collapse okay um the
difference here is all these countries
are trading with China so if you go away
from thinking about in terms of finance
and thinking about instead in terms of
trade all these countries that get hard
goods from China will use the Yuan to
buy those goods from China right so as
you know it's kind of Back to the Future
how did you know the US didn't start as
a financial power it started as a
manufacturing and Export and trade power
right and in a sense it's a
very go ahead right you see my point
right so it's not that big a deal those
countries to flip over to paying China
in its own currency and holding some of
that currency to pay for their imports
from China and those Imports just keep
surging so so that's like the the
fundamental is I mean it's not trivial
to replace a financial system but
remember my points earlier on how
fintech and crypto Talent all around the
world and people have launched
currencies there's countless fintech and
crypto companies payments companies
right so that Talent is there in a way
that it wasn't in 2008 people know how
to do that from scratch okay this though
I think it's it's really important to
because what people are going to push
back on there is they going to say okay
sure they're doing a lot of trade um in
the Ian but they're still reserving in
dollars uh or storing value in dollars
because they're doing that it's never
going to lose its status as a reserve
currency because of that we're going to
be able to keep printing money um and
also and this will be big push back and
this really resonates with me and it's
why I would not be putting any of my
money into Yuan I don't trust the
Chinese government not to seize it so
it's like I get that countries are going
to um for sure for sure they're going to
do more trade with China but if they're
smart they're going to keep them at arms
length they're not going to overextend
themselves they're going to stay in the
most trusted uh currency which the
question becomes will the most trusted
currency be the US dollar given our very
aggressive moves uh certainly
sanctioning the life out of Russia uh
that signal to people that hey like
we're not afraid to weaponize the dollar
against people I think that's a terrible
signal at a time where China is taking
over a lot of the world trade but I do
have a feeling that people are going to
be very hesitant to switch over from the
dollar uh to the Yuan what say you to
that yeah so so that's why I was saying
dollarization is
decentralization um and so meaning break
over to China youan it's going to go
into Bitcoin as but one example or maybe
just scatter you forget about Bitcoin
for a second right so I think it because
it's a big world with eight billion
people right so after this thing
fractures you have even if a few hundred
million people pick an option that's
actually enough to to do quite a lot
with it right so first let me just give
some graphs to level set you see this
graph which shows foreign Holdings of us
treasuries as um as as a percent
yal total debt yep right so that peaked
in 2013 has declined quite a lot over
the last 10 years right essentially
massively what percentage drop is that
do you
know I mean that what from 34% to 24%
it's like 10% absolute relative yeah
sorry it's too small for me to read the
numbers I can just see the arc oh yeah
so it's 34% at the peak here and 4% as
of 2022 it's probably dropped off quite
a bit more in 2023 so um the point is
that foreigners when they're saving
money are not saving it in US Bonds in
the same way they're reducing their bond
Holdings Japan China Etc okay um for the
most part this is a whole graph on
foreign Holdings of us treasuries so
what are they buying instead uh they're
buying gold so basically they're not
saving so it's not just this chart right
here tells you something like this this
really is interesting to me now I look
at this chart and expect the price of
gold to have skyrocketed but it hasn't
has
it well so that's an interesting point
right so basically by the way if you
take this chart in the previous one you
can see as foreigners are buying less us
treasuries they're buying more gold
right gold is a Time tested way a
physical gold is a Time tested way of
saving but you can just go and as a
foreigner you can go and load in gold
and get back Yuan and more importantly
you can put in Yuan and get gold out
okay if that is true China does have an
open Capital account in
Gold okay and the thing is that not
everything you know uh not everything is
necessarily reported um have you heard
my concept of like preh headline people
and pohe headline people no so like a
pre-head line person think about a like
a CEO or a researcher or a reporter
right the co knows a product is going to
launch a researcher knows a study is
going to be published a reporter knows a
story is going to appear they know
something is true before the headline
appears make sense right whereas a post
headline person can only process
something that has been officially
acknowledged by an establishment
out okay yeah I talk a lot about this as
an entrepreneur you cannot lead unless
you understand the essence of the thing
if you understand the essence of the
thing now you can make predictions you
can move in a way where you don't have
to follow people uh Point can I quote
you quoting Elon Musk on this point
really fast you you posted this tweet I
thought this was absolutely brilliant so
uh this is you like giving context for
everything you're saying is going wrong
and uh Elon Musk tweeted between Tesla
starlink and Twitter I may have more
real-time global economic data in one
head than anyone ever and then he goes
on to say fed data has too much latency
mild recession is already here it's not
like just the canary and the coal mine
svb do died one of the staunchest miners
credit sis died too and the cemetery is
filling up fast so one just sort of
closing the loop on on all the trouble
and people seeing it but reinforcing
that point that you're making that there
are people that are able to acrew data
to form a worldview to have a hypothesis
on where this goes and they're able to
move differently yeah and the thing is
there's a lot of people nowadays who are
like regime apparat chics who are just
incredibly
literal and you know you know the term
NPCs right like just basically yeah like
anything that has not been published in
an official Source um that they that
they think like their prda is a
conspiracy theory where's the source
citation needed and so and so forth like
anybody you know if you don't have um
that's why I said pre-head line versus
post headline people
um they are so literal that they cannot
make logical inferences right and so and
that doesn't mean it's 100% but for
example not every single currency deal
that China has done has probably been
announced uh people speculate that they
may be doing gold deals behind the
scenes with the Middle East where that
is a well-known proven currency and you
know where do I think gold physical gold
lands come back to the gold price gold
price is increasing right um where I
think physical gold I think physical
gold is something that probably returns
as a state
toate
instrument um and maybe Indians in
particular use it as an individual thing
gold is still like a big thing in India
at the individual
level but the thing about gold is you
know this overhead of verifying it and
validating it and it can be spotted with
the metal detector at the airport and
all that type of stuff right it's like
hard physically hard to carry it's not
modern in that sense still as like a
fire alarm like as something that you
can go ring ring ring and and everybody
runs out of a burning building and they
Converge on one spot that's like a
proven spot before they go back to their
homes or
something Gold's a pretty good shelling
point it's one of several shelling
points you know Bitcoin I think is
another right um the point
being that people who take like the very
first order approach oh China doesn't
have an opening Capital account
therefore I'm never and and certainly I
wouldn't want to have a lot of Holdings
in the Yan but people might keep a
checking account in Yan to pay for their
imports from China and they have their
savings account in gold or perhaps your
local Fiat or Bitcoin that's what I mean
by dollarization is decentralization
does that make sense very much so now so
we haven't talked a lot about Bitcoin
and actually do want to get a better
understanding of where you think this
goes uh and we probably at this point
need to get a peak into your future
thing with America uh American Anarchy
China control so on and so forth but
sure um
so one of the things that you really
grab people's attention with is this
idea that Bitcoin will go to a million
dollars uh anybody holding Bitcoin sort
of wants that to be true but if you're
anything like me you also don't want it
to be true because you know that it just
the amount of
brutality uh when you put out that tweet
I said I'll be a hell of a lot richer if
that actually does happen but oh my God
I hope you're wrong so do you really see
a path to bitcoin going to a million or
is it just going to be one sort of small
player in this
decentralized fracturing of a whole
bunch of different um whether it's coins
or uh Sovereign Fiat that get a piece of
the pie you see the in the Atlantic the
trillion doll coin might be the least
bad option why the legal scholar Rowan
gr thinks the US Min can defuse and you
see the United States of america1
trillion dollar okay
and this is
now it wasn't actually pursued okay but
the the fact that this was this got
closer to to being done or discussed
okay and it was defended by Krugman and
it was only rejected from a optic
slash uh tactical standpoint because
understand why why a trillion dollar
coin wh wh what oh you don't know about
okay so basically because the debt
sealing evidently this was something
that they had a rationale that this
would be a workaround and the treasury
could mint a coin of any denomination
just um like they could they could just
mint a coin and deposit it and you know
via some magic you the debt ceiling
wouldn't be a constraint anymore in
government spending I'm I'm outright
confused by this one so I see a trillion
dollar coin I assume somebody's kidding
and they're just talking about
hyperinflation because it does make me
immediately think about that oh you had
heard of this sorry I thought I thought
I thought you had heard is this is a
meme like what have you heard of like
modern monetary Theory I've heard of it
but I couldn't tell you what it is
basically it's a group of folks who
believe that the only constraint on the
US government's um you know ability to
print is inflation and Taxation like
that is to say they can and should print
as much money as they want um you know
it it is something which is just a
legacy stupid constraint that we have a
debt ceiling or whatever it's
essentially like the would phrase it
this way at all it's digital communism
that says because the US has the
government has guns it can seize as much
of your wealth as it needs to by
printing money and it can force you to
give it back at gunpoint if you want so
it can redistribute all the wealth and
so on and so forth okay so people which
is true that it can digitally do that
and then the question is whether that
breaks the illusion and people move to
some other currency or whatever right at
which point um you get to difficult
situation as I'll get to but this
trillion dollar coin thing comes out of
that school where where uh they're like
we don't want to negotiate with
Republicans over the debt ceiling
instead uh we will use this um you know
thing in in uh you know legal code to
Mint a trillion dollar coin and deposit
it such that we don't have to negotiate
with Republicans at all it's almost like
an executive order right the point is
though that this creation of money
they're obsessed with it like a lot of
these folks are like mint the coin mint
the coin Krugman has talked about it
this guy on Blom wisenthal has talked
about it Rowan gray has talked about
it's in the Atlantic it's taken
seriously as a policy proposal and it's
gotten
closer you know since the last debt
crisis whether it actually happens or
not it's symbolic of goad so the
trillion dollar coin would go in
somebody's bank account and allow them
to not a not a humans but in like in
like the government's bank account and
then it wouldn't need to um you know
like raise the debt ceiling because it
now has the money it wouldn't change
anything is how they say it wouldn't
have any inflationary impact think I'm
kidding just Google Google trillion
dollar coin see that's thing expression
on your face go ahead yeah I want to
make fun of them but I I want to pause
before I do that I'm going to assume
that they're smart well-meaning
well-intentioned people but they really
believe this is going to work and so one
of us has the wrong base assumption so
here here is a a law that I live by and
I really believe this is true when two
smart well-intentioned people think the
other is stupid they have different base
assumptions now a base assumption is
your belief about how you are and how
the world is and if now when you have a
collision of values it's a totally
separate thing and that's how you it's
what you believe the world ought to be
like versus how it actually is so I
believe maybe erroneous erroneously but
when I hear a trillion dollar coin I
have a base assumption that says if you
print money you have what you're calling
tax you have robbed people of the buying
power because of something mechanistic
not something philosophical something
mechanistic that there is now more money
but no additional goods and so the cost
of the goods goes up because everybody's
like so flush with cash that they will
pay more for a finite pool of items and
so the cost of those items necessarily
goes up to match the number of people
just like throwing money at them and so
it you think like oh my God I just got a
trillion dollars but now your loaf of
bread cost a trillion dollars and so yes
you have a trillion dollar but
everything just costs more in proportion
and so you haven't gotten rich like I
will just tell you as somebody who went
from normal money to rich in the refresh
of a banking app because I sold a piece
of my company like that moment where you
outstrip inflation your life changes
everything's different you can afford
different everything everything it's
just like it it's a really fascinating
moment but if my rent like if somebody
gives me $100 million but my rent moves
up in proportion I may have $100 million
but I still have to live in the same
apartment I still have to have the same
car my gas proportionally is gone up
food's proportionally gone up so it it
literally doesn't matter
so what am I missing like if really take
their stance for a second because I want
to understand like they're not idiots
they may be wrong or I may be wrong but
like okay so so there's a few different
on it right I understand so first is you
know conflict versus mistake it's like
is this something where they're just
making a mistake or is it something
where they're a different tribe and you
know the government tribe blue tribe
wants to you know attack um Republican
tribe or non-government tribe right um
that's one filter the second filter is
you know the 50 IQ 100 IQ 150 IQ meme uh
yes and love it but us said to make fun
of something
well yeah so 50 IQ guys like trillion
dollar coin is stupid 100 IQ guys like
no and then gives this whole Krugman
gibberish on why you know like the
trillion dollar coin won't be
inflationary and so on and the 150 is
like yeah it's stupid right so there's
like this is kind of like cdos or AAA
rated subprime mortgages the 50 IQ guy
says uh these people can't um afford
their house so why are you doing a loan
with them IQ guy has all this stupid you
know math or whatever that explains why
you know that
um that that house is good and then the
150 IQ guy can actually go into the math
and rebutt it and say actually when the
default rate rises above X then you know
your CDO crash to Y and your CDs
increases so they can go in and and plow
through those abstractions and show why
it actually
collapses but but that's kind of what's
in my view happening here now one thing
I will say is
um I think a lot of the financial system
is quote Smart in the sense of like
playing a three card Monty on people
they'll go like this and the thing is
that the trillion dollar coin is less
clever than their usual kinds of
Illusions you know when they do
quantitative easing or the bank term
funding program that is set up to be
hard to understand it is like naturally
selected and evolved to be understand
you know I can prove that to you well
you prove this I want to ask a very
pointed question yeah do you think the
people running the global because this
seems like a Glo Global problem are the
people running the Global Financial
system evil
um so it's a really difficult question I
think some of them are evil I think some
of them are stupid I think some of them
have are like Soviet I think it's the
close analogy is like Soviet appara
chics right um let's just go to 2008 for
a second there's some mix of fraud some
some error some like spin some tribalism
some pseudo science right and different
people did different things at the same
time right like the result was evil um
some of the inputs were evil a lot of it
was stupid like financiers thinking of
everybody else as dumb and and what have
you it's a mix um you know there there's
a way of thinking about it you know
which is good is helping somebody else
without concern for yourself um smart is
helping somebody else while also helping
oneself
uh evil is harming somebody else while
helping
oneself and stupid is harming somebody
else while harming
oneself and I think a lot of the things
the financial system does are it's evil
in the short run and stupid in the long
run like they have a shortterm gain by
harming somebody else but they spend
down especially recently they spend down
their trust so they harm everybody in
the long run like a lot of stuff they do
with sanctions or freezing deplatforming
censoring that's not just the financial
system but like the in social system um
it has a short-run Advantage for for
them um the institutions that are doing
this but it's a long run disadvantage
because it actually reduces their power
but they're but they're so shortsighted
or short oriented they only see that I'm
gonna sort of refute my my own Point
here so um as you were saying that I
really want to believe that people are
well-intentioned that they look at this
incredibly um complex thing that is the
economy they look at the Modern miracle
that is the modern economy when you look
back at I mean tens of thousands 20,
years that you realize that for a long
time the sort of capital markets that
make capitalism work that they didn't
exist and so we've had this just
Cambrian
explosion of um betterment for the world
with Innovation and all of that because
we we really sort of Master this
economic game now as Ry points out you
unfortunately you are in the middle of
these big cycles and when a deleveraging
happens it's really brutal but if you
don't care about any one
generation on the long Arc of History
it's pretty amazing and I've heard you
talk about these helixes so there is a
sense of repetition in the way that
societies move but we are also moving up
and we are making progress and so that
is
um there's something very interesting
there so anyway but when I look at that
I do say to myself all of this makes a
lot more sense once you know nii's Will
To Power and I do sometimes chastise
myself for my really wanting to believe
that the way that the Global Financial
system is set up is well-intentioned
people who maybe have gotten out over
their skis a little bit and they're
really trying to do something wonderful
and beautiful but I do worry what I know
about the the niichan idea of we all
crave power to be in control of Our
Lives to be in control of others uh to
to be the one with our hands on the
stick as it were um because once I let
myself bring in that bit of Darkness uh
my predictive engine works better and
that scares me there's St B evil there's
also tribal and if you remember the
thing about like it's not one country
it's two parties you know um
the thing is so okay if if you just
imagine like a Japanese guy was in
Beijing and he just started suddenly
knifing you know five Chinese guys okay
that would be a huge incident that would
be something that'd be considered a
crime by the Chinese government the
Japanese
government the guy would go to jail
right be a huge thing if that happened
80 years ago right when Japanese were
you know invading China
that guy might get the Japanese guy
might get a medal you know like Banting
you know like Chinese soldiers who we
never met um and uh the reason is that
that was tribe on tribe tribal Warfare
so um so that act that we'd consider
evil when those tribes were not at War
would in fact be considered laudable
when the tribes were at
War and that's like conflict versus
mistake and so if you feel that the
Republicans or the population at large
or whatever is is evil then any
deception or whatever I mean like you
know obviously the Allies deceive the
Nazis during World War II um and there's
all kinds of spy versus spy deception
sabotage Etc versus the Soviets you know
if it's another tribe then people will
do what they want to do and uh what they
what they feel is right for their tribe
they'll justify it that way right and a
lot of that the doll coin stuff comes
from make sure the Republicans Can't
Hold Us hostage you know and in fact if
you you see this article debt sealing
gimmicks this is exactly what I'm
talking about in terms of the evolution
of camouflage okay there were two
courses of action that he's stating were
equivalent minting a trillion dollar
coin and premium bonds trillion dollar
coin even somebody without any Finance
knowledge is just facially ridiculous it
summons a visual over here premium bonds
IM medely people's eyes glaze over oh
that sounds maybe good premium bonds
right and now you need to go through a
long explanation what they are but
notice he's agreeing that they're
equivalent in terms of their function
but natural selection selected against
the trillion dollar coin because it's
too obvious and it's selected for the
premium bond in his kind of thing over
here does that make sense but what it it
it does in that I understand the words
coming out of your mouth but I don't yet
understand why a premium bond is
actually like a trillion dollar coin
because presumably that's the whole
you have to read this whole thing G give
me the punch line quickly but first let
me say for those that don't understand
bonds so I'd be buying a bond because I
think that it's backed by the US
government I'm not going to lose my
money if I hold it to maturity I at a
minimum get my um principal back and I
may get uh some sort of return for
buying that Bond so 1% you know in in a
low environment um so that seems okay
cuz you're asking me to give you my
money
uh basically I'm going to loan it to you
I'm going to buy that debt uh but you
have to give me my money back whereas in
a trillion dollar coin you're just
making it up yeah but basically the
thing the point is I can explain how
premium bonds work and this article does
but actually that gets us into the 100
IQ trap right where the whole point is
that kman is admitting that the trillion
dollar coin in the premium Bond are
equivalent but the premium bond is
harder to explain and that's why it's a
more likely path and this is exactly how
the camouflage evolves do you understand
is okay let let me see if I understand
yes I understand the camouflage part but
let me understand why I'm going to take
my best guess at why they are the same
they are the same because the debt that
they created they create out of thin air
so I'm buying something that isn't real
I'm in a Wy coyote moment of hey I said
this is real you can give me money it's
all good and I'm G to give you that
money back and the reason I can
guarantee it is because I will I will
print the trillion dollar coin in order
to be able to pay you back because I'm
just printing the money to make sure
that I Bas there are two different ways
to work around the debt ceiling and have
arguments that you're not actually
violating the debt cealing thing but
still essentially creating new money
right and um so so that is that that's
like how functionally they're equivalent
I
mean I I you can read it like you know I
can explain it but the point is getting
yourself mired in that complexity I mean
can't okay what are they doing they're
issuing a new note with an interest rate
that's far above market and they're
selling the dead instruments for more
than their par value already it's like
eye glazing you have to actually go and
diagram this thing out and that's the
point it's evolve camouflage to give you
another example just to you see this
video clip that I pasted
in marback Securities subprime loans
tranches basically for anybody watching
the uh the or just listening to the
podcast is basically that Financial
instruments are designed to confuse you
yes this is a clip from The Big Short in
a totally different context the point is
you could headline it and you could say
hey uh this number of people who got a
mortgage like this have gotten
bankrupted in the future had to declare
bankruptcy or they lost a lot of money
or whatever because um this teaser rate
is actually a terrible thing and your
rates are going to go up and your
payments are going to go up um
or they could say look our teaser rate
only 9.95 blah blah blah and they could
just sell it right and so when you're I
mean the thing is Wall Street and
finance as opposed to other sectors like
um if you're producing I don't know
bananas you're selling the bananas and
you're trading a good right the other
person is buying the banana for
consumption value and utility value
right but when you're buying a financial
instrument um I'm saying it's always bad
sometimes it's okay right uh but often
at Wall Street it it's something which
is zero sum you know for example you a
stock and either it's going to go up or
down if it goes up then the buyer is
getting a better deal and if it goes
down then the seller is getting a better
deal so each party you know there's that
question which is like how are you
screwing me right that is what the Wall
Street guys ask each other you know
you've probably heard that before
I I haven't heard it said like that but
that is not at all
surprising yeah and the difference is
that when you go and you buy a banana or
whatever from the groceries like
nobody's screwing anybody right that guy
produced a good you gave some money and
both parties are happier right that's
gains from trade in the stock example
I'm not again it's possible that you
sell the stock and it goes up but you
need liquidity at that time frame or you
know like I'm not saying I'm not
pathologizing every single Financial
interaction like that I am how saying
that there's a greater degree of Zero
Sum Behavior there much greater degree
right and um because of that that
culture has evolved uh and the contracts
evolved it's easily spotted okay if it's
it's obvious how uh Bank a is screwing
Bank B then Bank B spots it you see what
I'm saying if however it's camouflaged
in such a way then Bank B doesn't see
the print but Bank a can be like H uhh
you agreed to x y w and z we got you
right so each party is kind of
weaponizing the contract system to try
to fool the other guy into getting a a
worse thing you know this is dramatized
in the movie Margin Call where you know
the the guys were fooling their
counterparties into buying these assets
when they were saying that they were
more valuable tripa mortgages you
remember that right
um and so uh so let me come back so the
point is the financial system is set up
to deceive you as to what it's actually
doing hence you know banki for example
years ago talked about how quantitative
easing wasn't printing money but then
more recently Powell admitted that it
was right um just to show you those two
clips so I always I always try to have
citations for everything I'm saying yeah
man I have to say that's one thing like
you're the way your brain works is
terrifying I don't know how you remember
all these things that they exist first
of all and that B that you can find them
as quickly as you can uh yeah I tweeted
about that when I was researching I was
like what the hell your memory is
prodigious is that like a thing you you
when you think about your own identity
is is your memory being like freakishly
robust part of your self- identity I I
don't notice it um it's like I don't
know it's like your ears or whatever
something like that right um funny you
should pick ears first of all I notice
my [ __ ] ears because they are so big
and then second I I notice my memory
because it is so shoddy when I yeah I
when I look at how much you reference I
have to believe that you you you
remember a disproportionate amount of
what you encounter or you have a time
machine or something and you have more
hours in the day I don't know but it is
uh people always ask my I actually
remember a little snippet it's like a
little hash and then I can look it up
right but um partly I've got it's kind
of like I've got a story it's like a
clothesline and then I can hang things
off of that you know so it it makes it's
all almost like remembering song lyrics
and you can um you can play it front to
back but it's not necessarily Random
Access you know prompted recall anyway
here is uh banki once again explains why
QE is not money printing okay and then a
so so they'll lie or they'll dissemble
or they'll convince themselves it's not
money printing because we intend to do
quantitative tightening later so we're
not introducing into the system
permanently and you don't understand
you're not sophisticated right and of
course the sophisticated 150 IQ will say
well you're never going to be able to
tighten this Ponzi economy when you
started and that's exactly the problem
we're running into we have had 20 years
of just absolutely systemic economic
fakery okay just to give you some
examples banki talking about how the
quote great moderation right means that
macroeconomic volatility is over all
right meaning you know there's not going
to be any more F we've solved
macroeconomics he was basically saying
this in early 2000 right Cheney
saying really they really have gotten
rid of that volatility so my my like
central question is does it break at
some point because they really have
reduced the amount of volatility
tremendously I disagree I mean like just
the 2008 crisis or 2020 Co that's
significant macroeconomic volatility yes
but compare that to 1929 man it's like
it it was
Devastation okay but like what he was
talking about was there wouldn't be a
financial crisis right that like he's
like we Sol macro there's no business
cycle that's what he's talking about
okay there's no business cycle that
isn't true let me give the totality of
it the great moderation we've tamed
macroeconomic volatility chany saying
deficits don't matter Bush and Clinton
blew up the mortgage bubble in a
bipartisan way I showed you those before
in april8 bankei says we might see a
mild recession five months before the
collapse of Leman and certainly 2008 was
not a mild recession right raing agency
is
2008 before the 2008 crisis yeah that's
my point it could be a mild recession
that's not what it was it was far far
worse than that right right um yeah yeah
yeah here the rating in 2008 calling
yeah this thing the great moderation was
before the financial crisis he's like we
killed it I still think he has a point
but fair so if he's saying that before
when he's still like pounding his chest
saying that there is no such thing as
macro basically anymore he's basically
saying we've solved macro it's all done
it's a little bit like Rutherford saying
we've solved physics there's nothing
left before quantum mechanics it's like
you know yeah yeah but I would like to
quote bology for a second so you've
heard apology right uh so one an idea
that you have that I think is is really
brilliant is that uh okay so give me
give me fiat currency and what I'm going
to do is I'm going to rob from you
constantly but just a little bit and by
doing that I'm going to be able to keep
I'm going to be able to keep it stable
so I think that that what you're doing
to the currency also applies to the
macroeconomy so I think that 2008 in any
other time period is is 10x that event
that that it actually not saying it
wasn't difficult sometimes you know
there's like you know an evolved
function of something where people don't
know exactly what that institution is
doing and their verbal defenses of it
are not actually what the function of
the institution is it's like what does
one of your organs do could you explain
it verbally it just does that right it's
kind of evolved to do that right and uh
your point is you're actually citing me
on this and it's true and I thought you
might bring that up which
is one way of thinking about Fiat is the
dollar has had that long-term decline
you know that the decline we're talking
about like the inflation cost of the
dollar over time right it has a
long-term decline in return for
short-term stability right and um like
essentially what's happening is they're
borrowing from the future they're
printing you have this long-term decline
of purchasing power but it's like
relatively smooth During the period so
you can plan on a term basis right and
the thing about it is that's actually
sometimes a valuable property to have
something that is flat and it's not
going to oscillate that much in terms of
purchasing power over the short run as
opposed to something like cryptocurrency
which goes up and down percentage or
whatever each day right Bitcoin has the
opposite set of trade-offs in a sense
where it's appreciating over the long
run but has a huge amount of volatility
in the
short and um you could imagine that you
could have uh some flat coin where uh
you Embrace that as an engineering
constraint and you had a basket of goods
and you had a reserve of funds and you
tried to maintain the price stability of
that flat coin against a basket of goods
which you couldn't necessarily do if
there was a true shortage if you tried
to maintain let's say the price of this
you know flat coin against grain and
suddenly there's a grain shortage then
no matter what you do financially in the
physical world that Supply is gone so
the price is going to rise right but
point is though that yes under some
conditions it's possible to have a
long-term decline but shortterm
stability and a huge crash at the end
right do you know the concept of
hormesis have you ever heard of that oh
yes a little bit of bad does a little
bit of good uh it's interesting I would
not have expected you to bring up
hormesis in this context so do tell how
uh how we get there here
um so this is kind of the graph you know
like and so it's kind of like if you
have too much volatility yeah you're
dead right but if you have too little
volatility well it's actually also worse
than having some volatility that you can
adapt to it's like exercise if you have
too much exercise you're dead if you
have too little then um you're
um uh you know you're you're basically
going to decline and die yeah that's
right but in the middle is kind of the
sweet spot right
and so what a lot of the system has done
is um and this is actually a broader
point in many ways we have the Eternal
Western present right blue America is
holding on to the present while the tech
Libertarians are in the future and the
conservatives are in the past and uh the
Chinese and and so on are both like the
future and the past they think of
themselves as like the Chinese Empire
right so the Western president is
hanging on with his fingernails and you
can see it in the financial system
where it's like bailing out GM and 400
something companies in the S&P have no
growth and they're all intact and
they're trying to prop up these existing
institutions you can see it also outside
the financial system where you have 70
and 80 RS running for president and you
have all the Hollywood remakes and Top
Gun infinity and uh oh we're gonna do a
cold war again and it's all this stuff
which is just referencing this
increasingly distant faded glory and
just trying to keep the current system
together um and to keep the present
going for as long as possible without
adapting to the Future and then you get
just the whole thing just snaps and
breaks I think right and just like you
know gets washed away it's similar to in
my view that think the current situation
is similar in some ways to before World
War I where you know you had before War
I you had the Kings and the Nobles you
had the monarchies and yeah there was
con monarchy but there's still absolute
monarchies and that world seemed like it
was eternal and it wasn't going away and
maybe it was changing it changing very
slowly but under the hood all these
political movements technological
movements Industrial Revolution all this
stuff was bubbling and then in a
cataclysm like the modern world arose
right and we kind of saw some of that
during covid there was a lot of change
that happened during covid in a year
that became like the year that the
internet it was internet first right for
example every meeting now can do a
remote meeting um digital currency rows
uh like you know all kind you know all
kinds of things there's like civil
conflict in us I think in many ways 2020
was a preview of what we're going to see
in terms of
um like just like 2008 is like a preview
what we're gonna see it's like an
appetizer before a main course of a lot
of change happening at once all right
you have a very clear thesis on this
what what is the change what does the
future look like what does the future
look like so I have a thesis and of
course look I could be wrong and so on
but uh
the and let me also give some optimism
or whatever here so let me see if I can
say it in a few sentences optimism or
whatever all right so the um the few
sentence thesis
is
uh
G7
countries
are actually running out of money um
and uh will attempt asset seizure in the
future whether through inflation or
actual seizure that is so dark Nation
where's where's my
optimism okay I'm getting to the optim
that's terrifying I don't I don't know
that people understand like how gnarly
seizure is so first of all I have family
in Cyprus and so watching this happen
where the banks just like we're taking
your money now crazy anyway keep going
so there's going to be some kind of
seizure agree terrified but agreed so
the reason whether it's via inflation or
actually seizure I mean the reason is
like um people didn't expect Doo's
principles of the change of world order
it came out I think right before Ukraine
and the rate hikes you know and it
seemed obvious that the path they were
going to take was just going to be
printing a ton of money but sometimes
the path they take is a nonobvious one
and it may just be hiking rid to the
moon and you just watching the system
collapse and you know doing
selective we don't know exactly how
thing will unwind sometimes things
surprise you right it's probably likely
it's going to be printing point is
though G7 countries are gonna have a
real problem and they're gonna be hard
up for money and then a lot of the world
hinges on whether or not
um the G7 countries and China can seize
digital
assets if they can that's like one
branch point in history it means that
you have like total States and the cbdc
and so on and so forth if they
cannot uh then you have a different
branch Point history where it means that
communities can now uh basically have
digital gold or
cryptocurrency and crowdfund bits of
territory where they can have their own
startup societies and eventually what I
call Network States okay and then you'd
go back to the future of something more
like the 1800s where could get a plot of
land and you could build a town or or
something like that or even you know the
Alaska Purchase Louisiana Purchase
things of that nature where there
sovereigns would sell
land the real the branch point is
fundamentally will asset seizure be
possible in the digital world and uh the
biggest risk factor for that is actually
Apple Google and Microsoft because they
have operating system access and um
that's actually if I think about what
I'm most concerned about it is the fact
that Apple has software update and
Google can you know get into your Google
Drive and Microsoft you know has Windows
and if ordered by the state in theory
they could scan your hard drive for
private keys and then pull your digital
assets that is to me one of the most
important problems that's coming up in
the next X number of years you might say
well that sounds kind of crazy biology
and let me see if I can motivate that a
little bit
um in 2010 remember we talked about the
Arab Spring right 10 the Arab Spring had
happened and you know people knew that
Twitter and Facebook had been a
component in literally like the
overthrow of countries they had
political importance remember that oh
yes yeah yet still in 2010 2011 if you
had said in 10
years the most important political issue
in the world or at least for a few days
will be whether the president can
tweet people who laughed right come on
because they thought that social media's
destabilizing political impact that its
political importance was something that
happened
elsewhere right that you know really
wasn't a big deal at home we have a
culture of free speech who cares Twitter
still calling themselves the Free Speech
ring of the Free Speech party all that
stuff was the early
2010s now what's happened over the last
10 years uh you know from basically
let's say the 2010s is all politics
became social media over the 2010
and in my view in the 2020s all politics
becomes crypto tribalism why because
again taking that Twitter analogy just
like you went from Twitter being
acknowledged to have political
importance to being the main event of
all politics and every politician is on
Twitter first and they think about
Twitter first often as when they do
something they do a bill and they're
thinking about it for Twitter right I
don't think it's that's an exaggeration
to say that I mean Twitter didn't just
it the 2016 election also really wasn't
about trump it was about Twitter Twitter
was Upstream it elected trump it elected
bolsonaro it got brexit through it was
essentially a parallel media channel and
that's why those elections flipped
that's also why there was a
Counterattack on Twitter from 2016 to
2022 and it looked like the genie had
been partially pushed back in the bottle
but now Al then free Twitter again and
we have digital glasnost okay so with
that whole story where even as big as
social media have gotten to hundreds of
millions of users billions of dollars
public companies overthrowing
governments into 2010 people still
didn't think it was going to be the main
thing for the president of the United
States of America with me so far
yep okay so in the same way in 2023
where cryptocurrency is is it's a
trillion dollars it's hundreds of
millions of users globally it's quite a
few billionaires publicly traded
companies and even perhaps more
importantly every single bank finance
year government in the world has heard
of Bitcoin and many of them have
launched cbdc programs in part or in
whole motivated by the competitive
threat of cryptocurrency okay and El
Salvador has adopted Bitcoin as a
national currency and Panama and I think
Central African Republic are considering
it um and so it's kind of like the Arab
Spring the sense of there there's like
there's already a political proof point
of cryptocurrency's importance you know
there's the Wyoming Dow law there the
Tennessee Dow law there's Texas saying
Bitcoin shall not be infringed there's
um there's all you know Colorado excepts
scrypto for taxes blah blah blah blah
there's all of this stuff that's
happened and yet still if I said that in
a few
years one of the most important
questions in the world will be does
government have enough cryptocurrency to
finance its operations that still seems
unrealistic okay that's still something
which seems distant oh the US government
is going to count how much Bitcoin it
has right the looming question though
that I hope you'll address is some part
of me is like yeah that sucks I want the
government to be able to print more
money so sure right and and I the good
news is I'm learning about this stuff so
enough of me as like sort of old school
that I still remember being blind to all
of this and enjoying the magic trick and
so it's just that it breaks at some
point anyway go ahead
today if you look at Ben banki talking
about gold or you hear anybody in the
establishment talking about gold it's
with an eye roll like oh stupid gold
bugs right Bitcoin it's not taken
seriously digital gold it's just not
taken seriously it's thought of as maybe
you know if they're against it they're
against it because they think it's oh
maybe it's instability or something like
that but they don't think of it as like
a threat in the same way they thought of
Christianity as a threat or or
capitalism as a threat you know you know
what I mean um they or nationalism you
know like those are things that they
they think of as a threat gold is
thought of as a stupid curiosity right
not actually something that could
disrupt the
system that's not how it was in back in
the day 90 years ago um you like the
most important thing in the world
basically 1933 to 1935 like front page
news like 911 or the financial crisis
was the gold Clause
cases okay so the gold Clause cases were
essentially the question of whether or
not the US government under FDR could
essentially default on its obligations
and say you know the gold Clause said
the government will pay x amount of gold
to somebody um if you know like like a
bond it was it was basically a clause
that was there to prevent inflation
right I could ask for my payment in Gold
essentially okay
and FDR passed um an executive order
6102 saying everybody had to surrender
their gold so that seemed to be
incompatible with the bonds that had
been signed well before that said the US
government will pay you gold but FDR is
saying I will seize a gold okay so this
went there's a bunch of cases of
different kinds that all got collected
went to the Supreme Court and these this
was like the big event of like 1935 okay
everybody cared about this uh it's about
uh a forgotten chapter in um America's
economic history okay and it was a huge
deal at the time okay and the thing
about it is gold was taken extremely
extremely seriously um because they
hadn't inherited the system they were
trying to build a new one Fiat and gold
were fighting at that time so the thing
about this is when you go back and you
you kind of read about that you're like
whoa uh the just the it's just all
gotten totally memory hold right um the
emotions on it have have totally changed
um nobody even remembers it right and um
here I want to show you something hold
on so yeah whenever you're pressing up
on a hundred years on something the
cultural memory is just not there nobody
has emotions nobody's even grandparents
have the emotion around that thing and
so us trying to capture that it sounds
true because remember you know the Civil
War remember World War II right yeah but
none of that has real resonance anymore
like this is going back to your very
statement about when you have to found
it versus inherit it even though World
War II we've got documentaries and stuff
nobody has a sense of like the greatest
Generation anymore nobody has a sense of
what they gave up I don't know if you've
seen that video of the World War II
veteran crying cuz he's like the things
we had to do the people that died the
things that we sacrificed it's all for
nothing it's for nothing like that [ __ ]
was heartbreaking to see that guy that's
a guy with memory of what it means to go
to war who watched the guy next to him
get his brains blown out you know like
imagine your friend next to you gets
shot there's there's brain and blood in
your mouth from your best friend like
that [ __ ] is very real to you and so now
all of a sudden like hey you know what
happens when things go wrong so I do
feel like that that is a big part of it
to think that people from 1935 are going
to have like some visceral sense of what
it means when the government just like
I'll I'll take your gold now and you
know I know part of the punchline of
this where it's like I'm going to take
your gold I'm going to buy it back at
whatever 70 cents on the dollar or I'm
going to buy it from you at 70 cents on
the dollar they literally just seize 30%
of your wealth it's bananas that's right
so well yeah it's like a dilution of 70%
in by by one measure but yes the cases
dominated the news throughout the period
on January 13th Elliot thiron you know
wrote rarely if ever has the Supreme
Court of the United States confronted
issues of larger import 1935 on the
morning after decisions the New York
Times ran five fund prage articles about
them and they were the overwhelming
focus of the news and business sections
um for perspective the number of
Articles devoted to them more closely
resembles that of historic moments like
the moonlanding or 911 attacks than it
did other major Supreme Court decisions
such as Ro versus Wade okay the phrase
gold Clause appeared in more times
articles 49 on the day after than
poultry minimum wage abortion combined
the days after shre West Coast and row
right academics also touted the cas's
magnitude and import right and so you
know this has taken their place among
the great landmarks of American
constitutional history so this is
remarkable dude I think we're about to
live through this again I I don't know
what you think about this but when I
watch the the posture right now towards
crypto this feels like Capital controls
in the
making uh that they're revving up I mean
uh with the um the the requested freeze
of binance Us's assets I don't know how
that's going to play out but man that
really starts to smack of like Hey we're
doing it we're doing it to protect you
don't worry but like PS we're gonna
freeze your assets it's like what I'm
sorry that's right so the thing is so
the the one of the macro Frameworks I
have is um well it's not exactly
reassuring it is that history is running
in reverse
okay so if you think of 1950 as Peak
centralization with One telephone
company and two superpowers and three TV
stations you go forwards in time to 1991
the internet Frontier opens backwards in
time to 1890 the American frontier
closes forwards in time you have
covid-19 backwards in time Spanish Flu
you go forwards in time you have the
tech billionaires backwards in time you
have the captains of industry the robber
barons and so on and uh this is true
there's lots and lots and lots of events
like this I've got like 50 of them in
the network shade book and they get
really amazing and detail like for
example you go forwards in time and
China is a senior partner in the China
Russia relationship you go backwards in
time and the Soviets the Russians are
the senior partner in the Russia China
relationship you go forwards in time and
you have an Indian origin and Pakistani
origin guy debating the partition of the
UK because the guy who's you know the
the senior official in Scotland is a pxi
origin guy and the British prime
minister is is is Indian you go
backwards in time you have British
origin guys debating the partition of
India okay um you go forwards in time
and you have the New York Times siding
with Ukraine against Russia you go
backwards in time you have the New York
Times siding with stalinist Russia to
choke out Ukraine with the Walter Durant
articles where you know the New York
Times covered up the Ukrainian famine
right and um and that's like remarkable
where some of the same hinge points in
history so specific
are occurring again but with the
opposite outcome a major one that's
happening uh is um you know there's
actually a confrontation between
journalists and Founders entrepreneurs
and uh you know and reporters in the
early 20th century um that was like you
know Ida Tarbell and all the quote mck
rers went and attacked Rockefeller and
and all the captains of industry
demonized them lay the groundwork for
the trust busting and essentially the
government to take over and quasi
nationalize a bunch of those companies
with regulations and so on and so forth
and uh so I had a Tarbell and the
journalists beat Rockefeller and the
founders in the early 20th century but
now there is a similar Clash that
happened from 2013 to 2021 between the
media and Tech the tech Founders but now
it looks like the founders won that batt
on as Twitter and we have all-in podcast
and we have um you know all of these
substacks and so on and so for right so
we're seeing like some of the same um
like like like uh confrontations or
conflicts it's almost like uh You' seen
these really complicated origami things
and they fold and unfold but you see
some of the same faces as they unfold
and fold you know what I'm talking about
yep yep right so you know I look I can't
understand it all this is such a huge
thing that I can't pretend to understand
this this whole way that the world folds
and unfolds in this way I'm going to
push you on that though so I've heard
you bring this up a lot and your
punchline is always that there's
something here but I don't know what it
is so the two hypotheses that I think
explain this are first that centralizing
technology was Rising for hundreds of
years going into a peak in 1950 and so
that's like obviously the nation state
itself um why should say Obviously most
people don't know I mean do you know
what was there before Germany and before
Italy and before France that's a mess
that does not look
it does not look rational or logical
from the standpoint of a map and the
reason is maps are actually like
sophisticated maps are relatively new
technology that's to say they weren't
there for thousands of years hundreds of
years um you know a map is think about
how hard it is to make a map you have to
be able to travel long distances pretty
quickly you need surveying
technology um you know like a straight
line on a map seems like a small thing
but there's like mountains and swamps
and all this crazy stuff in between them
right so like mapmaking if you think
about how you'd make a map and make it
accurate it's actually a pretty
non-trivial thing to do right so on a
map this doesn't look you know like all
that rational what it was organized by
was not on the base of the lands but the
mins on the basis of communities of like
mind what what I hear you saying is that
we have this constant tendency to bundle
unbundle bundle unbundle and so here
we're looking at these different states
that were unbundled for a long time we
have had a moment of bundling and now as
a part of the thesis around the network
State we're going to see this re
unbundling now what I wna only in the
West in the west yeah mostly and I think
the reason is um I think the future is a
decentralized West and a centralized
East like the East meaning Russia India
China but especially India China and
then you know a lot of countries have
gone through social they're like on
their state capacity increased Arc
things are getting like roads are
getting better highways are getting
better infrastructure is getting better
they're on their increasing Arc the
closer you are sort of blue America and
the G7 you're on like a declining Arc
and so crazy man it's a opposite of the
20th century also that's the other part
right so the first part is centralizing
technology so just to continue my point
right why why would we see this this
history running in Reverse well going
into
1950 um you had mass media you had mass
production you had mechanized Warfare
you basically had to control huge swats
of land and natural resources and you
had to team up to uh not get beat up
right and that's why Germany was all
these like little small principalities
but in part due to the Napoleonic Wars
like basically uh you you know the
concept of roll up in business like you
take a bunch of small things you roll
them up inate right that's what the
state was it was basically like um you
know all these different groups in like
their vicinity of what we now call
France and many of them didn't speak
what we now call French and after the
French Revolution they were all put
together they were all educated in the
same language they were unified in the
same way and this is this is actually to
you know they're bad parts of the French
Revolution many bad parts and people
have written about that namely the
beheading but what yeah beheadings and
so on but what people don't ask is uh
why did the left how could it work in
the sense of after all that internal
chaos and Anarchy how could they
generate a military that could just go
and sweep over everything else right to
the same extent like you a strong leader
I'm very curious yeah what do you think
because researching Napoleon and his
rise to power this this is my thesis on
history and people don't pay enough
attention to history as a PSA uh when
you have like the bundling as you were
showing Germany I was like yeah the only
way to bundle that mess is if you have a
strong man that comes in and like starts
throwing his weight around and he's more
intimidating and he'll like he one he's
creating order so let's not discount
that so he's bringing order to something
but I'm going to guarantee that he's
doing it in a way where some people are
just getting their neck stepped on like
even how Napoleon came to power it's
like you one he was truly a military
genius and so he could go in and bring
the riches back and so people are like
whoa maybe this guy's better than we
thought and as soon as he started losing
then he was ousted but if you're on a
tear and you're able to intimidate back
down your own people and go abroad steal
riches win Wars man e like now let's
really get into the crazy stuff the fact
that Hitler the rise and fall of the
Third Reich fascinating book everybody
should read it the fact that he was able
to talk um oh God what was it called
czecho Slovenia oh God I forget the
original name of what is now the Czech
Republic always for some reason uh he
talked them out of their country he
there was no shot fired he just
literally talked them out of their
country so anyway it it it it can be a
pretty dark period when you unite the
bundling process here is something that
might complement this view on the like
the the strong man part of it is
definitely it's definitely a piece of it
but this is actually something I feel
the right has a blind spot on which is
to say that uh and this is this is these
are broad generalizations right but
typically the right thinks about things
in terms of Heroes and individuals and
left think of things in terms of
Institutions and ideologies so you don't
just the thing is for something like you
know Napoleon and at least my thes on it
look I'm not a Napoleonic War but what I
what I think about it is it's not just
that there was a strong man there was a
strong ideology what I mean by that is
Napoleon in a sense benefited from the
fact that they the The Crazies of the
French Revolution while they' being
crazy they had unified France and their
propaganda they had you know essentially
rationalized this whole thing they'
smoothed it all out and everybody was
under um you know the control of this
centralized government and uh and so the
the the base of all these people who had
been propaganda I I should go and like
I'll double check you know all the
things on this afterwards but but
essentially that was something
it's a little bit like
um ma did a lot of terrible things I
shouldn't say but dear with things and
unified China right so yeah heble things
and unified China but true and he
smoothed out all of these issues and and
so on and so forth and then a right of
Center person could come in and like d
xaing is like capitalist and then take
that unified thing and then you know
Implement capitalism on top of it and
you know it turns out that it's kind of
hard to unify a gigantic swath of land
without using both left and right
tactics because um the right is like
economics and you know the military but
the left is like propaganda and ideology
and even though it's not called This Way
religion right um it's um it's like the
software that all these people are
running in their heads why do they think
of themselves as being part of the same
people well you educated them and you
brainwashed them and you um you know you
instructed them and you taught them and
you made them do X and Y and Z and the
thing is normally the the right
libertarian thinks about everything in
terms of okay here's a fair trade you
pay me X and I'll pay you why and so on
but the left authoritarian thinks I'm
not going to pay anybody anything
they're just going to do it and you know
what if you can pull it off at really
really
scales right like you have no unit cost
everybody installs the same software in
their head they're all basically
educated to do the same thing and they
have to do it and you're not going to
pay them and in fact they're going to
pay you right if you can pull it off you
can unify this absolutely gigantic swap
of territory right and that's a really
important component of it it's not just
uh you know the the Warriors it's the
priests it's um it's not just the swords
it's the words you know you you need
that kind of unifying ideology and uh I
recognize it's an idiosyncratic way of
thinking about right and left I talk
about this at length in the network
State book but that's why it's not
enough to just have a strong man what I
mean by that just to take a reduction at
obser him I know it's not the sense of
which you mean it but if you just have a
guy who comes out of a wait room he's a
strong man why do people follow him
right he has to actually be a leader in
some sense he has to have um the ability
to run an organization he has to have
some motivating ideology you know this
is also the the kind of small version of
this it's not that small but somewhat
small is like a Founder who's got a
vision for changing the world as a
company right yes they have the right
aspects of you know hierarchy and
capitalism and meritocracy or whatever
you know like Ser typically right they
also have the left aspects of a mission
and um like often an egalitarian dress
code and we're all in it together
against this you know oppositional kind
of thing you know like a like an
Insurgent or revolutionary movement
right which have historically been left
things
and so I think you kind of need both
anyway coming back up so point is that
um for 500 years going into
1950 is you had this centralizing
tendency and um this was something where
you had small city states couldn't
compete in fact one way of showing that
the exception that proves Ro do you know
this country called San Marino oh yes
I've heard you talk about it yeah that
was a protector of like a guy who
becomes King and then he like keep there
you really have done your research
that's right yeah so um yeah so gab
Baldi when he was unifying Italy um San
Reno at least as the story has it gave
him refuge and so he let them be
Sovereign and so you can see like this
duck bill platypus you know this missing
link that exists to the present day San
Marino is like a piece of what the past
was okay and it's like surrounded by
Italy it clearly is like it's like
30,000 people or something like that but
it's maintained its sovereignty through
the years and you're like oh why is that
not just a piece of Italy it's like it's
like a Tiny Town really you know in
Italy it's a totally fine place or
whatever right um and their un
membership is very valuable to them and
and and whatnot but now you're like oh
okay that's what the old world was
before all got rolled up into these
gigantic centralized nation states part
of why the things get rolled up into
nation states is defense and production
and scalability and so on all these C
caling Tendencies okay and and so what
you got in 1950 was a very atypical
thing for the whole world like you had
this gigantic American Empire with
hundreds of millions of people and you
had the Soviet Empire with hundreds of
millions of people the Chinese you know
Indian these are just like a relatively
few number of states and many of them
were running like just two operating
systems right capitalism and communism
so a very very very centralized world
with lots of the you know differences of
different cultures and so on all just
got steamrolled paved over and the best
version of that was everybody watches I
Love Lucy in the US at the same time on
the same channel you know and they're
all like just the same soft install in
their heads I Love Lucy you know like
this right and the worst is you know um
like Ma's Little Red Book or uh you know
like Hitler or Stalin or something like
that right that's like you know just the
propaganda iing right
and so uh point is that right around
that time what's interesting is
sometimes at the very peak of something
something is invented so transistor was
invented right and so you go from
transistor to the computer you know main
frame and then the personal computer and
uh you have cable television and you
have the internet of course and um the
smartphone and crypto currency and for
the last 70 odd years we've been in a
decentralizing Arc that is fast in my
view than the centralizing arc is the
decentralizing arc is that is that
pathological is it a breaking apart
inappropriately or is there something
good here because you have a a picture
of how this can become good but it feels
like it's born out of rot if I'm
completely honest it's it's both and
right it is something where like um for
example
Blockbuster is an example of a company
that was set up under a certain set of
technological assump
Like Home Video rentals and so on that
turned out to just be a window in
history that was with our lifetime and
it Rose and it died right it Rose you
know when it was a technological Pioneer
on the basis of like home VHS when that
was a breakthrough and then it fell once
streaming became possible right we saw
that within our lifetimes with me so far
right yep so you think about the giant
centralized State and it's like
Blockbuster where there was a point at
which it was riding the curve of
technological innovation and it was just
crushing everything in its path and now
the technological wave is against it and
those ideologies that seemed Unstoppable
when the Technologies favored them those
organizational
structures uh you know for example
Blockbuster had physical stores all
around the country and it had late fee
policies its entire business model its
organizational culture was based on this
DVD that you come back home it had
popcorn that it sold right
all that stuff gone with Netflix Netflix
doesn't sell popcorn Netflix doesn't
have inperson stores Netflix just
streams the video to you it doesn't have
late fees all every aspect of the
business model got just totally
destroyed um by technology and we saw
that in our lifetimes right and you just
now have to take a wider lens and you
think of that happening not just to
companies but to countries to hear more
about Ray Delio's warning on the
upcoming recession which we're almost
certainly already in watch the full
episode here talk to me about the three
forces that you see that are influencing
this moment we've got Banks collapsing
US dollars under attack uh looming
recession what