Kind: captions
Language: en
the problems go all the way to the
Bedrock of the financial system in terms
of treasuries being the new toxic waste
it's going to be at least as bad as 2008
but probably worse than that
you spent a million dollars of your own
money
to raise the alarm to the fact that the
government is printing trillions of
dollars and what I want to know is how
are you so sure that the U.S economy is
in really uh bad shape what does Bitcoin
have to do with this and how on Earth
could you justify spending a million
dollars of your own money to make people
aware of this I do believe uh that we're
in the middle of something or the
beginning of something that is at least
as serious as a 2008 crisis
um the government is extremely good at
kicking the can and like that's his
primary skill in some ways so it's hard
to know exactly when things will be
formally acknowledged as such you know
I've got I've got a bunch of slides that
show that the economic situation is
powerless a
um B that uh you know the the degree of
collapse across a number of different
Industries a number of different
weaknesses will probably necessitate
some form of bailouts or printing even
if it doesn't look exactly like 2008
um a lot of what the financial system
does is it evolves to evade last times
pattern recognition
um and so it won't it may not look
exactly like it used to despite what
form it comes in
um whether it's like treasury BuyBacks
or the people's QV which are different
ways of like injecting money into the
system that don't look exactly like the
2008 bailouts I do believe an enormous
amount of money is going to be printed
just like Ray dalio just like a number
of other people do and uh in such a case
you want to have outside money whether
that is uh gold whether that is a
foreign fiat currency that you have
faith in that's sort of outside the
fed's control uh or whether that is
Bitcoin or a cryptocurrency uh Bitcoin
in particular is you know built to be
difficult to seize uh I think that's
that's part of the answer and it's not
the only it's only not the only thing
you want an allocation you want to think
about other things in life like where
you live your location again Dali also
thinks of that as an important thing you
know early to 2010s Janet Yellen
incredibly reported as having known
about the housing crisis having seen it
and not raised the alarm and now I'm
actually sort of finding like you know
people don't want to hear you raise the
alarm or whatever they're like oh my God
you're a Doomer why are you saying this
right the financial crisis was maybe
officially acknowledged in September
2008 but of course it had been going on
for years before then it was just
something where it became undeniable at
that point but I felt it was my
responsibility having put together what
I had seen to be like you know what it's
a lot worse and people are saying it's
not just uh like a single Bank crisis
it's not even just a banking crisis it's
a Central Banking crisis the problems go
all the way to the Bedrock of the
financial system in terms of treasuries
being the new toxic waste and it's going
to be at least as bad as 2008 but
probably worse than that one thing I
really want to I want the audience to
understand why I become so obsessed with
this and I've heard you say that the
farther we get from the last
deleveraging the more cautious people
become and what I think people have the
the subroutine that runs in the average
American's mind for sure is that uh this
hasn't ever happened not realizing what
they mean is hasn't happened in my
lifetime and they don't realize the hard
truth which is that every single Empire
and every Reserve currency all
throughout all of recorded history have
all collapsed they have all failed they
have all gone through this massive
deleveraging and deleveraging is a
really polite way of saying everybody
loses everything
and it is a it is a bloodbath it is
often as Ray dalio talks about it it is
often marked by Blood literal blood in
the streets this is when we go to war
everybody's freaking out and so because
it's been so long since
um we've had a big war on a global scale
because nobody alive uh in the Western
World anyway is aware of a massive
deleveraging
they don't understand that a they do
happen B that they have when they happen
they happen fast and see when they
happen it is catastrophic and so I'm
like I don't want to be Chicken Little I
am super optimistic
but man the more I started getting into
Financial content the more I was like
whoa there's something going on here
redalia says that every society every
Empire goes through six stages stage six
is absolute collapse and for people that
don't know Rey
he built the largest hedge fund in the
world so this is somebody that literally
puts their own money at stake much in
the way that you have to say hey I think
I know what's going on he's been right
so many times that he's built the
largest hedge fund ever and so what he's
saying is okay there's six stages stage
six is total collapse P.S the US is
stage 5.5 so like that's that's not
ideal so as people hear you talk the one
thing you're a very metered guy but the
one thing I want people to understand
about why I'm obsessed with this content
is
um Sky's probably not falling today at
least that's my take we'll get to the
the sort of how impossible it is to
predict the timing a little bit later
but to really understand how these
Cycles happen and they are Cycles where
we're at in the cycle so that you
understand what to do so if you don't
mind walk us through the the rapidity
with which this stuff happens because I
know that you have uh some slides that
walk through like it was three days from
when SP BB collapses to when they're
printing like that the the speed at
which this stuff happens I think is
really important for people to
understand one other thing you might
want to just kind of point out to your
audience is
um like you know I I am I'm younger than
Rey uh but I've I've done some okay
things in life so you called out uh what
was going to happen with kovid that it
was going to be serious everybody said
you're out of your mind and you were
like one of the first people to call it
yeah and and I think I also gave a
pretty detailed projection of what would
happen and if you go and look at the you
know the qts on that
um it's one of those things that feels
like somebody was treated like uh I
nailed everything to such an extent that
it that it seems less remarkable today
because of you know it was um it's
almost like reading back history there's
like one thing I think I got wrong which
was like you know that full face masks
would be more common for longer but
otherwise I think I played it out
relatively well I'm an angel investor
and so what I do is I look at long-term
trends and I'm very early on them I'm
early on genomics and Robotics and Ai
and most of the time you want to
identify those things that have a lot of
positive upside right but Africa covered
was the first time I was looking at
someone's like I cannot
I cannot figure out a way that this
isn't bad you know what I mean like it
was kind of like that I just was looking
at chimney graphs too many charts and
like you know this is the first time
I've seen something you have to work
back to that time which is now several
years ago and I was like
this is the first time I've ever had a
Sinking Feeling where it's like down
into the right you know
um and that's mainly because I wasn't
really looking at such graphs I wasn't I
wasn't paying that much attention before
the financial crisis
um
I was in Academia at that time I was
just wasn't looking at markets or
whatever but I've got that kind of
feeling again let me let me actually
show the slides and and maybe jump go
there right perfect this concept of the
Fiat crisis right uh one way of thinking
about it is it's like okay how fast
could you know things unwind how fast do
they start printing trillions well it
was two days from the collapse of
Silicon Valley Bank to the printing of
300 billion dollars even if they didn't
call it printing it was two weeks for
500 billion dollars to move out of local
banks to money market funds and to uh
you know big Banks and so and so forth
for them to flee right
um it was two months to go from patient
zero the first patient being infected by
covet in the U.S to lockdown
um as January to March of 2020.
it was two quarters from uh Bernanke
declaring that it was a quote mild
recession in April 2008 the full-blown
financial crisis being acknowledged in
uh September 2008 okay finally it was
two years for the USSR to go from
superpower in 1989 to Total collapse and
non-existence in 1991 okay and so you
know the lesson of that is that too slow
is too late right that was you know two
days two weeks took months two quarters
two years too slow it's too late and
meaning if you don't react quickly
you're going to be too late you're going
to be the one left holding the bag to
get smashed by the freight train
well yeah and then what does react mean
and the thing about it is
um Paul Graham actually has a good
saying which is when something is
exponential it always feels like you're
reacting too early
and the reason is because you don't have
the normal social cues around you it's
like um uh it's like it's like flying by
instruments as opposed by opposed to
flying by looking out the window right
looking out the window you can see
nothing is wrong but instruments show
actually beep beep there's a big
mountain in front so you should pull up
right and you have to essentially trust
your instruments at that point because
nobody is saying anything everybody's
calm and um that's like absolute
Reckoning as opposed to relative
Reckoning
um and uh that's an unnatural way for
humans to behave especially when it
comes to doing something atypical
um you have to have the you know that's
what being an individual investor is
like that's what being an investor is
like I mean the whole point of course
you've heard Buy Low sell high right
um you know why it sounds oh yeah it's
much harder than it sounds right because
right if you're if you're buying low
you're going against a crowd if you're
selling high again you're going against
a crowd buying low you know you're
you're you're getting something when
everybody else thinks it's a bad idea
you're literally going opposite the
crowd both times so it's trivial when
you look at a graph oh I bought here and
I sold air when you actually if you
could have VR that would project the
emotions of the moment and then you're
hitting the buy button and at that time
and as you say the time to buy as much
blood in the streets or whatever right
or you you know you get greedy with
others or fearful fearful if you get VR
that captured the emotions at the moment
and being very contrary to the crowd
um it feels very different you know
anyway so
so too slow is too late and many things
are breaking okay so
um there's the recent debt ceiling
Showdown that was a near Miss but the uh
it boosted uncertainty in U.S debt it
felt like the conversation was different
this year did you feel like that as well
very much so and I reacted differently
and moved my money differently and yeah
it not only did it feel different when
you look at the chart of How High the
debt ceiling is now compared to what it
was last year like it is a straight
vertical line it's crazy yes that's
right and what's happened is basically
like
um in a sense you know you can think of
it as
um
the more people can deficit spend and
borrow without apparent Consequence the
more they do so it's as if you had a
seemingly infinite credit card and there
were no consequences for decades and uh
you were like accelerating into the wall
right because it just feels like nothing
is happening hey we're such a superpower
we're so Invincible even as the tide is
going out even as it'll get to like you
know Foreign Affairs now agrees it's a
multi-polar world
um China is like the number one car
manufacturer out of nowhere they're
becoming a plane manufacturer like all
of these graphs a huge amount of
essentially the US's
scope around the world is narrowing very
quickly
and its domestic scope there's massive
internal conflict
and yet its Ambitions go to the sky even
at State capacity is falling through the
floor
does that make sense right so
um one thing I want to Anchor people
around and I want to know if you think
this is true that the the the collapse
the big collapse begins with debt
and if it I think that the story that
we're going to go through at least in
the beginning part of the interview is
really a story of debt
um do you agree with that it is it is
debt but it's also
um you know it's it's it's several
different shocks at the same time
um so uh you know
dalio actually talks about
um the and I'm deciding him because I
think he came to similar conclusions but
I actually have in some ways maybe a
more hopeful take or or some of
different takes in terms of similar
inputs different outputs so yeah there's
the economics where you have
um essentially sovereign debt crisis not
not just brewing underway with lots of
smaller countries already defaulting but
you know the big ones you have to come
potentially
but you also have massive internal
political conflict in the U.S and you
have massive external superpower
conflict between the US and the dragon
bear you know Russia plus China
um
and you also have
um you know a couple other factors which
are a huge consequent decline in the
US's soft power globally and
domestically so you know super
majorities of Americans don't trust DC
and abroad you have you know France
Brazil
um Israel even uh you know allies right
that are trading in Yuan or declaring
strategic autonomy or you know Brazil's
is housing Iranian warships
um and uh even Taiwan said it would
shoot down you know U.S uh uh planes if
they tried to bomb tsmc right and um and
that was like a little Tempest in a
teapot but it was clear that a lot of
countries are kind of going their own
way okay and then finally you've got the
technological shocks
um where uh you know the in a sense
um
you know for like the ABCs of economic
apocalypse for blue America in
particular are you know AI Bitcoin and
China in the sense that AI takes their
jobs and Bitcoin uh takes their power
over money and China takes attention to
their military power
um because lots of the jobs especially
like you know the Northeast are lawyer
bureaucrat doctor like licensed jobs in
some way where an AI might be able to do
them better faster cheaper
um and then finally you have um the
uncensoring of social media and that is
you know what alone is done with Twitter
uh but it's also
um you know YouTube is following suit
they've they have reduced their level of
censorship on certain things and then
you also have things like Noster and
forecast which are decentralized social
media so that's like a digital glass
nost to a company bitcoin's digital
perestroika okay meaning
um when the Soviet Union collapsed you
had truly free speech which was uh you
know like a glass dump honest and you
also had free markets which is
perestroika and we're having that in the
west so you have like a lot of different
shocks hitting at the same time it is
not simply the economic shock it's in
the context of everything else does that
make sense all right so we have all
these things colliding at the same times
what I'll call a rogue wave phenomena
yeah and let me kind of just show yeah
like Rogue Wave right so but um Let me
show what all these things are right so
mentioned death ceiling was like a near
miss that the boosted uncertainty in U.S
debt
um there's an ongoing banking crisis
most U.S banks are quote technically
near insolvency hundreds are already
fully insolvent okay that's you know a
guy who disagrees on many other things
it's got a root beanie
um you know is saying that
there's a banking price at the time of
you know uh in in um May June of 2023
we've seen through the largest through
the four largest bank failures in in the
last two months somebody uh this guy
Bianco Jim Bianco Bianca research coined
the term it's not a bank run it's a bank
walk right deposits are leaving Banks
regularly
um they're not uh they're they're not
moving um all at once digitally
overnight they're moving pretty fast
um and they're moving to places with
higher interest rates they're moving out
of regional Banks right hundreds of
billions of dollars
um and uh you know when you start
something off with three of the large
four bank failures in the last few
months is that is that the end of
something uh you know it's funny uh you
know somebody observed
um the reason the banking crisis is kind
of operating in slow motion is we don't
have
um
it's not like on a blockchain where you
can see real-time financials for
everything in Banks you have to sort of
wait for the quarterly reports
so it's a hurry up and wait kind of
thing so every quarterly report that
people look and they're like oh my God
the losses are so big and then you know
they act on it right
um this is kind of a slow motion thing
in some ways I'm not saying there aren't
things that happen in between quarterly
reports sometimes there are like
obviously a bank run but but often
quality reports kick off a whole new
burst of activity
moreover it's not just you know these
these huge banks that have just filled
um Stanford study reports there's 2.2
trillion dollars in unrealized losses
that many U.S banks face the same risk
of Broad and Silicon Valley Bank and
fundamentally
um what happened as it will get to is
the the fed and the treasury
um the FED basically devalued treasuries
so the Bedrock of the financial system
everybody who bought treasury because
long-term treasuries in 2021 got
completely destroyed in 2022 and some of
those institutions started to collapse
in 2023 and so the safest asset in the
world became the risky assess in the
world how did they undergrade in return
this is an important idea how how does
how did the government end up doing that
let me give a few analogies first and
then let me get more kind of technical
or specific
do you remember in 2008 when the banks
uh sold AAA mortgage-backed Securities
to each other but they really weren't
AAA
right and it was something where it was
a combination of some of those guys
relying to themselves some of them were
lying to themselves so they could lie to
others the ratings agency is rely like
everybody was kind of uh you know a
combination of it's like self-interested
delusion right
um where you know oh my God are you
saying that these mortgages aren't
aren't real that would mean a housing
crash that would mean all these people
are going to lose their homes that's
anti-American right
um that was the tone in 0607 what are
you saying the housing market doesn't
always go up you're crazy right you're a
Doomer and uh you have to work back to
that period of time
but that is one of the reasons why this
is allowed to go on for so long the the
housing credit so I was able to get so
bad is because people thought well real
estate's the safe investment it's always
going to go up when is that ever going
to go down the government is backing it
et cetera et cetera right
and the AAA ratings
um on mortgages or or mortgage-backed
Securities is part of what allowed the
crisis to get so bad and one of the
issues was the rating agencies were not
able to down rate those things
um for a variety of reasons one is that
they're paid by the the you know uh the
the guys who they're they're rating okay
but so that's a private issue but the
second is later
um for example in 2011 when an s p
actually downgraded U.S debt from AAA
you know what happens to them no
no they got uh they got
um you know a case from the US
government and I believe like a senior
official there this guy you know Sharma
had to step down these government did
not like
um s p downgrading the debt and uh I'm
pretty sure that you know the government
would not have liked the ratings agency
is downgrading the mortgage-backed
Securities either in around 2008 because
it bipartisan Thing by both Bush and
Clinton was to get people into homes
okay nyt has this article like you know
the Bush Drive for home ownership fueled
a housing bubble and then there's
another one which was how the the
Clinton era roots of the financial
crisis okay in the Wall Street Journal
so if you have sometimes binocular
vision where you take the New York Times
attacking Republicans in the Wall Street
Journal that's attacking Democrats you
put it together and you're like oh that
was a bipartisan government caused
housing crash did you know that part
no
okay that's actually pretty important
right
um it's important what follows because
uh there's a bunch of movies that have
been made on the housing crisis and uh
there are some of them are good movies
there's The Big Short uh which talks
about you know The Outsiders and they're
seeing the problems there is uh
too big to fail which talks about like
the government's vantage point on it
um there's Margin Call which talks about
the bank's vantage point on it there's
inside job which is sort of like the
activist point on it which is calling
for more regulation but what there
really hasn't been at least to my
knowledge is one that shows the extent
to which government policy pushed Banks
to
um you know again in the words of both
the the times in the journal to
um because they wanted to get people
into houses because they wanted
affordable housing goals ending
redlining and so on and so forth both
the journal and the times are publishing
the truth on this around that time in
the early 2010s so the government was
nudging pushing Banks and if you didn't
um uh if you didn't go and uh you know
extend all these mortgages to people who
probably couldn't pay well often you got
acquired by a bank that did and that
would kind of
um you know override your decision
making anyway
so hold on I think it's important to
understand why why they're doing that so
are these ESG style goals where there's
like a moral imperative that's driving
it
that's exactly right you know for
example here's a quote December 21st
2008 again when the New York Times had
an incentive to attack Bush over this
um they said Bush Drive for home
ownership fuel housing bubble quote we
can put light where there's darkness and
hope where there's despondency and part
of it is working together as a nation to
encourage folks to own their own home
George only Bush October 15 2002 right
so that is the approach which says oh we
deregulated the market and you know push
people and so and forth
you can reboot your life your health
even your career anything you want all
you need is discipline I can teach you
the tactics that I learned while growing
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yeah
there's some truth to the idea that
um they pushed lending standards to be
low but that's not exactly the same as
deregulation to actually use regulations
to push Banks to hit certain uh whether
you call them formal or informal quotas
they were doing that then the other side
of it is
um the Clinton era roots of the
financial crisis in uh you know Wall
Street Journal article in 2013
and um that says affordable housing
goals established in the 1990s led to a
massive increase in Risky subprime
mortgages right and uh you know there's
a strong case the answer is going to be
traced to September 12 1992 on that day
presidential candidate Bill Clinton
proposed using private Pension funds to
invest in government priorities such as
affordable housing sharing long-term
broad-based economic benefits right and
um so the point is if you add up these
two articles again you start getting
binocular vision have you heard that
saying like uh you know there's there's
a stupid party in the evil party and
sometimes they get together and do
something bipartisan and that's both
stupid and evil have you heard that nice
it's lovely it's good right okay so one
thing I don't want to get lost in all
this I really want people to understand
why this stuff is happening so this is
maybe you and I don't agree on this but
I I am formulating a hypothesis the more
that I get into this uh that the
following is what's happening and this
is this is actually me synthesizing you
and dalio and a few other people like
Rao Paul so you what ends up happening
my thesis goes and please strike this
down where you think I'm wrong is that
uh you become the reserve currency you
now have the ability to print money to
cover up problems uh that begins to
change the uh the way that people
perceive money even at the governmental
level so now all of a sudden people
start trading what works in a free
market sense of working that you spend a
dollar you get to in return it exchanges
that for I I think morally we ought to
do this thing we do it it's not working
meaning that we're losing money so you
get the 2008 crisis but they're like
what crisis we're just gonna pay for
over it we're going to print money we're
going to it was bad but it wasn't fall
off a cliff bad
and so they print over that and they
they go oh look see that wasn't that bad
and we were doing something good and
we're trying to be moral actors because
to be honest like this was the big
Awakening that I went through I'm like
this sounds awesome I love that you're
ending redlining you're getting people
onto the housing ladder that previously
weren't like it all sounds amazing but
then Thomas Soul comes along and he
gives me this idea that then you start
watching play out which is the last 30
years have been marked by exchanging
what worked for what sounds good now
when you tie that to debt because again
my whole thesis
is that the collapse begins with debt
because if you don't have debt you can
get away with some of this but the
problem is you you end up getting into
the moment that we're in now which is
why you talk about all these problems
happening at the same time the reason I
think this becomes a that you're
potentially about to walk off a cliff is
because you have all this debt the
government has a full GDP in debt uh U.S
households have full GDP in debt
corporations have full GDP in debt and
so now all of a sudden the only way out
of that debt is to either lower your
interest rates which if you do that then
you're going to have inflation uh to
print money to cover some of your debts
which again inflation and so if you have
to print and you can't lower rates
anymore
now you're in trouble so they start
raising rates the problem is everybody's
got all this massive massive debt and
this is where editors put back up that
the debt ceiling picture where we see
this huge spike in the last year where
it is just mahusif the the amount of
extra debt that we have right now is not
a little it is it is unbelievable it's
like 400 more than normal it's just
absolutely astronomical so you have this
massive amount of debt you can no longer
lower interest rates in fact you have to
start raising interest rates the FED
gets everybody again this me quoting you
the FED gets everybody to buy into the
bonds treasuries like hey rates are
going to be low for the foreseeable
future all is good and then whatever six
months later they take them to the moon
the fastest rake height in in history or
certainly recent memory and so now
people like whoa whoa all these bonds
that I just bought they're now toxic I
can't get them off svb fails everybody's
blaming them as if they did something
crazy they put all their money in like
the supposed safe ass it and so now
you're in this game of like the only
solution left is to print because you
you can't lower interest rates uh
because if you you can't lower interest
rates because of inflation you can't
raise interest rates because you will
break the economy and more people aren't
going to be able to pay their debts
including the government itself and so
now you're in a conundrum where all of
your tools are gone except printing
money and so the question that I'll ask
you point blank is we've printed a lot
of money and nothing bad has happened so
why why now why why is it a problem now
in short like the system is starting to
Creak and you're starting to see uh what
I'd call consumer failures like in the
sense of in 2008 you know when you went
to your ATM or something that didn't
that that just continued to work
um the failures didn't were like
Enterprise failures in the sense that
there were guys who were sweating in
skyscrapers with piece of paper back and
forth that weren't where they what they
thought they were now you're having
Banks Blow Up on uh on Main Street
um you are having it it is becoming much
harder to cover things up okay so we
just talked about the fact that all
these Banks blew up the fact that there
was this near miss and the deaths in
we've got people talking about debt
again uh the fact that there's 2.2
trillion unrealized losses according to
the Stanford study and I'll come back to
what those are but we have
commercial real estate crisis due to
remote work due to all the crime in blue
cities and and so on
um commercial real estate prices could
crash 40 from their peak in a worse
disaster than the financial crisis
Morgan Stanley Morgan's okay that alone
is pretty bad all right
um two uh it was the worst year for
bonds evidently in recorded history
um so it's a bond crisis not just to
bank Christ and everybody buys bonds as
we'll come back to that SEC that's
actually at the core of a lot of this
um and uh you know monster scene is a
safe haven but now but they're actually
Central to to this this crisis it's not
like a
um it's a crisis that's caused by
governments just like 2008 but even more
directly
um Insurance remember AIG when they went
down in 2008 like the guys who were
supposed to backs up everybody you know
so today insurers also bought a lot of
bonds
um and you know double digit percentage
of their portfolio which are supposed to
be safe are held in now essentially
these unsafe assets are being devalued
in a big way isn't it like 70 of their
portfolio yeah exactly there's a graph
here life insurers have like 70 percent
and you can go to other kinds of
insurers and the thing is life insurance
you might say oh well that's different
than real estate Insurance there's
actually been a collapse in life
expectancy in the US like this overnight
huge collapse life insurers are paying
out way more than they expected and um
so lots of insurers are just getting
um they have to pay when they didn't
think they were gonna have to pay
okay this insurance crisis there's a
fiscal crisis 1.4 trillion in unfunded
pensions there's auto loans spiking
defaults in that trillion dollar plus
sector their student loans payments uh
May resume on 1.8 trillion in debt after
this multi-year holiday due to covid and
it's almost like the worst right if you
if you just kept it or you'd forgiven it
right both those you know would have
been better than suspending it for three
years and then resuming it because now
what's happened is
um people didn't sock away the cash for
a rainy day right they didn't
um didn't use it to pay down the debt
they just expanded their spending and
now suddenly it made them probably
gamble that uh you know the the the
um student loans go away forever right
and uh because it got suspended now
they're coming back they're like oh no
and now they've got that on top of their
rent payment or something like that so
that's going to be it let's use this as
an example so why then don't we just
forgive that debt
oh you I mean well first that's a that's
a huge tug of war between two groups
you're when you you know if one man's uh
assets and every man's liability you are
marking down a trillion dollars in
someone else's books and they will fight
to the nail to stop that from happening
right
um and uh so it's a zero-sum game it's
like
if you have the debt you want it to be
marked down if you if you're the uh if
you're the lender
you don't because that's your Revenue
stream right that's how you know maybe
if you're in college that's how you pay
your administrators or whatever right uh
why doesn't the US government just pay
that debt
well it could and if it does do that
then it's just printed a giant amount of
money and uh then people say why don't
you print the you know my mortgage as
well not just my student loan debt why
don't you print my car alone away right
and once you've kind of broken the seal
on that that's like the people's QE the
people's quantitative easing where the
money is printed not just to bail out
bangs but to bail out everybody and you
know what like At first people will some
people will love that but that much
introduction of money into the system
starts actually devaluing the currency
itself so you talk about student loans
there's credit card debt almost a
trillion dollars credit card debt record
high okay
um there is uh and there's yet more
right globally there's Ukraine the
Ukrainian crisis that's like at least
100 billion in it's a it's like 100
billion in direct costs for just the
arms but that understands it it's it's
easily a trillion indirect Europe alone
paid like 800 billion in energy costs
it's like a multi-trillion dollar War
um you know people say Wars cause blood
and treasure they I mean just think
about it like you've seen obviously
these bombs blowing up things in Ukraine
or what have you think about how
expensive a building is right it's like
somebody's entire life to pay for like a
like a house you know 30-year mortgage
or whatever so now you have a bomb that
blows up like a thousand percent of
apartment building that's like a
thousand economic lives wrecked right
even if the people didn't get blown up
it's like a thousand healthy working you
know uh people's 10 years of their life
or whatever is consumed if at current
very high housing prices so when whole
cities are leveled and stuff like that
that's a lot of damage right
and that's just within the country
obviously outside the energy crisis is
tremendous and of course the
humanitarian crisis is tremendous
um you also have so it's you know it's
the Ukraine crisis you have the energy
crisis in in Europe and some people are
like oh well price are down Synergy
price is over and it's like well what
was the cost of that right you had
demand destruction you had businesses
that shut down because they couldn't
afford the energy costs and then they
stopped consuming energy and maybe you
know that's that's why Energy prices are
down because they're not consuming you
know the the level of demand destruction
that probably happened in Q4 of last
year you need to see stats on it
and a Q4 of 22.2
um then dedolarization uh this guy
Stephen Jen who's not like uh he's not
like a Zero Hedge guy
um he says dedolarization's happening at
a stunning pace and people did not
um account for exchange rates and so on
he's like by his calculations uh you
know the dollar was down like you know
in terms of its share of
um assets but held by other countries
like 19 last year and everything else is
up you know southeast Asia
um all those countries the 10 countries
are using uh their own currency for
trade Indonesia president said that
Central Asia the ACU
um they met they said they want to
de-dollarize
um you have uh you know South America
Latin America Brazil saying they're
using the one you're in France saying
they want to use Iran you have Iraq in
the Middle East trading oil for Yuan you
have Russia trading role for Yuan
um and uh you have Israel even holding
you on and uh you know that's a lot of
countries that's a lot of the world
right there you know and um so
de-dollarization if the dollar is no
longer have to be used in an obligate
way right if it's no longer
um you know
it's only the thing you have to use if
you have options then that means you've
got another rail to go on and one thing
I should make clear by the way is I
don't think um this is very different
from dalio actually on this he thinks
the dollar just gets replaced by China
that's a clean kind of U.S China
replacement I actually think that
dedolarization is decentralization so
the kind of clean statement is money is
a store value meaning of exchange unit
of account and sometimes in the
cryptocurrency you might also include
like a system of control and like a
financial system okay so the store value
um that you know from treasuries or
you're just selling the dollar itself
you may go to goal central banks for
buying record amounts of gold or you may
go to bitcoin
uh or you may go to foreign Fiat so
medium exchange you may use foreign Fiat
currencies that you want you may use the
repeat you may use local currency you
may use cryptocurrencies
um in roughly that order I think so you
know
um
in terms of unit of count that may
Remain the dollar for a while but that's
like the last thing to flip you know
basically you can just look up an
exchange rate you know and flip that
that's the easiest one
um system of control is the most
important in some ways it's not normally
listed this is due to Andreas
Antonopoulos he came up with this
concept but system of control is who has
root access over the currency you're
using you know this was not necessarily
quite an explicit Concept in the past
but today it's very explicit is the Fed
can literally hit a button and freeze
accounts just like they did to the
Canadian truckers just like they did to
Russian assets you know the Kansas Bank
uh you know banking system to debt
and so system of control you know the
Chinese Yuan the Indian rupee Bitcoin
and ethereum those are outside the
ability of the US Financial system to
set down to shut down with one click
okay
um
then there is the financial system and I
think that's uh the Yuan and the repeat
for the domestic economies that's maybe
uh you know in the Middle East AED
device currency is still pegged to the
dollar maybe it gets unpegged uh you
know there's a Singapore dollar and then
of course there's ethereum and the
Global Financial system that's built on
on crypto
um so you have essentially both What I
Call Land and Cloud competitors to the
dollar land being you know the sort of
bricks and especially China you know
currency and then Cloud being
cryptocurrencies right and so once you
start enumering all those then you add
on top of that there's a huge
development since 2008 which is
um there's lots and lots of fintech and
crypto people around the world
okay and if you go to other countries
um often their payment systems are more
advanced than a Divas for example
um like WeChat in China or UPI in India
or you know even like you know grab pay
in Southeast Asia or you know Pags to
grow in Brazil and so like you know it's
not that hard nowadays stand up a
fintech or crypto company right and
um by contrast you have ACH and so on
within the US where it's like slow wire
times and what have you you know what
I'm talking about right like how uh
payment technology is relatively lagging
in the US yeah as soon as you get into
crypto You Realize Real Fast uh how slow
the Legacy system is so the point is
that
um the only thing the U.S financial
system is going for it is its Legacy
traction it's not technologically
Superior
it is not something which you choose
from scratch because the US is no longer
a major exporter of physical Goods
relative to China China's the world's
number one trade partner it's
um it's not something that either your
engineer in the U.S would pick or you're
conservative in the US would pick or
um you're you're much of the world would
pick right so it's an incumbent that has
incumbent advantages but if if it had to
be adopted from scratch today it's not
clear that it'd be adopted in that way
does that make sense right so that's
important that the rest of the world it
it's much easier to launch currencies
than to scale factories I've done both
okay it's not trivial to launch currency
but it's digital basically China is the
number one trade partner for most of
most of the world right yeah I think
that's shocking to the average listener
they they have no idea that's true see
here's the graph right like essentially
here's the US in the year 2000 here is
China's you know trade and raise you
know this is why it's amazing right and
so the thing is that's that's only
accelerated over the last three years
right in a sense of course that's really
terrifying this is where I I feel like
um people aren't seeing how all these
things are adding up in fact I wrote
down what I think your thesis is because
I'm again I I don't quite know if we
compact fully agree so it's like you've
got okay there's all the problems that
we just went through all the debt all
that stuff plus the lack of financial
Innovation on behalf of the US is is
leading to this moment where we are now
weak to contenders and the most obvious
Contender is China
um how close am I getting to
the stack of problems or the stack of
issues that you think are creating what
I referred to earlier as the rogue wave
that seems prone to be uh the mark of
the end of the US Empire I think the
lack of financial donation is certainly
a factor uh but it's it's really I mean
the physical world is made abroad right
like if you have to choose if you as I
showed that graph countries don't want
to choose but they have to choose
um try to make sure your chairs and your
screws right people think the
competition with China is like a
high-tech military competition in large
part it's a low-tech economic
competition China will screw you on the
screws right they will literally just
withhold the nuts bolt screws and so on
you can't make things right terrifyingly
during covid the medication and PPE
masks and so on yep that that's right in
fact actually there was there were
there's Aid air lifted it wasn't wasn't
made public or it was made public but
wasn't emphasized Aid came from China to
the U.S so August 6 2020 Rolling Stone
the unraveling of America and
essentially uh here's here's this thing
he said he's like um
basically
for more than two For the First Time The
International Community felt compelled
to send uh disaster relief to Washington
for more than two centuries reported the
Irish Times the United States has
stirred a very wide range of feelings in
the rest of the world love and hatred
fear and hope and being in contempt upon
anger but as there's one emotion is
never being directed towards the us
until now which is pity
it's American doctors and nurses eagerly
awaited emergency airlifts of basic
supplies from China the hinge of History
opened to the Asian Century okay that's
right
now the thing about it is I actually
somewhat discrew the quote in the sense
of this is actually I'd say not for more
than a two centuries it's really about
like U.S World dominance actually
relatively recent you know it is not
it's not like an eternal fact it um
there's this book by Stephen wertheim uh
which is good which is um
it's like called tomorrow the world uh
the birth of U.S Global Supremacy okay
do you call that do you mark that after
World War II
well it's actually in the lead up run up
to World War II and the thing is I mean
this is sort of obvious but you don't
become number one by accident
right it's like it's like it's kind of
like um deciding to do a startup right
you don't become Google by accident it's
really hard to become Google you have to
set out to become Google it's a it's a
very difficult process and even those
who set out to it don't don't come in
the reason I say that is
a lot of people just sort of think oh
you know the U.S kind of just fell into
this role and you know it it didn't it
didn't you know I never wanted to be you
know totally World dominant with
embassies in every country in in
military-based area or in a financial
system everyone regulations after work
no there were people in Washington DC
who had a quote plan for world
domination just like the Soviets did and
uh you know the difference is that I
think that from 1945 to 91
um the American version was better than
the Soviet version and why is that it's
because uh you know if you look at West
Germany versus East Germany West Germany
is better off South Korea versus North
Korea South Korea is better off you look
at
um you know the uh Taiwan and uh and
Hong Kong which are you know capitalists
and the PRC that was Communist for for
most of the Cold War
um and and the the Western aligned
countries were better off and so just
looked at it in terms of that neutral
ground the American American system with
its flaws from 1945 to 1981 was better
than the Soviet system
if it was Court world domination was
relatively benevolent world domination
what I think happened after 1991 is
um without the Soviet Czech uh you know
as bad as the Soviets were and it's good
that you know that is on the ashy of
history and Eastern Europe is free and
you know India's gone on capitalists and
all of that is generally good even
though it was tough for a lot of the
former Soviets
um what happened is the you know over
time
um at first US just helped Eastern
Europe get back on its feet and it was
occupied in making sure that the Soviet
Union didn't totally blow up do you know
for example that um or the post-soviet
since do you know that the uh they shell
the the Russian White House in 1993 do
you know about that no
yeah the like you heard a lot about TNN
in 89 but you didn't hear about 1993 and
Yeltsin ordering like the Russian White
House to be shelled with tanks even
though that's more of a
like
um you know
Russia was at least within the Western
Camp ish at that time ostensibly it's
like a it's a new democracy and so on
and so forth you've never heard about
that most people have not heard about
that but basically the the post-sovied
era was a huge mess and the U.S to its
credit like essentially supervised that
mass and it's revealed later that you
know the U.S was backing Yeltsin it
wasn't like a complete organic thing
that Yeltsin you know became Prima
Center Paris
um of course you know the CIA all these
guys have an interest in loose nukes not
making their way around so the US was
all over that situation it's almost like
um you're seeing a waiter they catch a
bunch of balls that have fallen you know
down from the air like it's like a bunch
of plates go in there to go look at this
and catch them you know so
in the early 90s I think the US overall
was doing a decent job not a great job
in some ways than foreign policy Eastern
Europe is way better off than it was
Estonia is way better off than it was
I'm not somebody who's just like oh the
US is always evil and so forth not at
all in fact I think the US has actually
done a lot of amazing things
what started happening in my view
towards the end of the 90s and then
especially in the 2000s is you started
to get that Messianic crusading neocon
slash Samantha power slash
responsibility to protect kind of thing
arguably starting with you know Kosovo
and then going into you know like Iraq
and all the Middle Eastern forever Wars
and then onto the present day where you
know we've got why is this
why is this bad good question
um the reason it's bad is that
Wars are never clean you know they're
always sold to the public on this clean
line of like here's the bad guy here's a
good guy and
um they're very very rarely clean
um like even even World War II you're
talking about like the firebombing of
Dresden you're talking about the nuking
of Hiroshima doing lots of civilians and
Innocents killed right and many other
Wars are much more great than that a b
is
um
like in general War should be a last
resort absolute absolute Last Resort and
usually you want to solve things with
economics or some kind of political
solution or something like that and uh
the reason it was bad in the late 90s is
um
it's it's just unchecked power you know
actually that's what am I think about if
power corrupts absolute power corrupts
absolutely have you heard that before
right of course so
um right so basically uh you know
especially like Iraq has something I
think we can have consensus on a country
is totally blown up on totally false
premises eight trillion dollars was
wasted on these Middle Eastern Wars huge
part of the debt by the way okay
um Iraq Afghanistan and so on
um Isis formed in the aftermath of that
all these countries in the Middle East
were destabilized
and for what
like there's no accountability a lot of
the same people are still in power a lot
of those neocons are still you know
advised they're saying now war with
Ukraine it's totally memoryless it's
like a sociopathic serial killer at this
point right and at best you'll get well
we meant well and then move on why do we
bring that up you know and why are you
dwelling on the past okay
well
um I mean we're going back to 1619 but
we can't go back to 2003 right like um
you know people will selectively
excavate aspects of History uh and and
use them as a weapon in you know like uh
the the current events but they they
won't do the things that you know in
your times was responsible for printing
this false intelligence and uh but they
want to go back 400 years to not to
their own their own faults right so like
if you notice like from 1945 to 1991
again like you can't defend everything
that yours foreign policy did during
that period
um people say oh they're right-wing
death squads and so on probably there
were but you know what they were
left-wing doubt squads the Communists
killed 100 million people and they
didn't play nice you know like the
Winona decrypts have shown that uh you
know that is v-e-n-o-n-a have you heard
that before no not once okay Winona
venona showed that
um basically the Soviet Union had
riddled the United States with Soviet
spies uh in fact you read Sean
mcmeekin's book Stalin's war and it
makes a point that like you know this is
not very well known about like World War
II you know when the number one first of
all he makes a point that World War II
was actually not Hitler's store but
Stalin's War because Stalin was actually
on two fronts he had both an Asian front
and European front and the second thing
is you know the least just to digress in
this for a second you know the least
covered but perhaps most important
theater in World War II
no
it's the Japanese Soviet
okay I don't know why did you literally
nothing about that Collision all right
so isn't that interesting obviously you
know about the Pacific War Between the
US and the Japanese you know a lot about
probably the European conflict between
you know Germany and Russia and Germany
and the US UK France but but isn't that
interesting you do and you know about
like Germany you know versus Russia in
terms of stock whatever
but why why didn't Japan and Russia
fight because Vladivostok is there
Russia has a huge you know Asian front
white and Japan invaded from the East
when uh Germany's invading for the West
why did they not pincer attack right
right why why did it happen in reverse
and it turns out that actually getting
Japan to fight the USA was
um in Sean mcnikan's report and in a lot
of documents that got Declassified
getting Japan to fight the USA was like
one of the number one goals of Soviet
foreign policy do you know that I did
not yeah so the reason is it goes all
the way back you know in 1905 you can
push back again further 1905 the
Japanese just to digress on this
Japanese
um beat the Russians in the
russo-japanese war 1904 to 1905. this
was the first time a non-white power had
beaten a quote European you know
ancestry country in a war this had huge
influence in terms of
anti-colonialist movements around the
world and in fact at the time the
Japanese positioned themselves uh you
know as friends of W.B DuBois and
African-American movement in in in the
US like what would later be called Civil
Rights Movement that's over a lot most
people don't know about uh there were
Indians who were sympathetic to the
Japanese because you know it's like oh
wow non-white people can be free or
whatever right
um of course you know Japanese were you
know like they committed terrible war
crimes later but that's an aspect of
history that people don't know about
point is that um after that after 1905
uh that was a huge you know like black
eye for the the Russian Empire and they
took the Japanese seriously culturally
after that and even after the Communist
Revolution
um even if the ideology changed
dramatically from SARS own communism you
know it didn't change
the geography right the the territory is
still abutting Japan right and uh so
they still had gym elliptical rivalry
with Japan they couldn't swap that part
out right and uh and they couldn't you
know their attempts to meet Japan
Communists but you know they didn't
succeed
and so uh so essentially for
for years and years and years Soviet
foreign policy was focused on how do we
get these other capitalist countries
that's how they thought of it like the
um how do we get these capitalist
countries to fight amongst each other
and so um you know there's guys like
Harry Dexter white there were Soviet
spies in the US and
um they they helped turn Japan against
the US and vice versa not saying that
anybody here was like a good guy okay
this goes to an idea of their second
third fourth fifth order consequences to
things and when you have a lot of things
happening at once especially on a
geopolitical stage this all plays into
why in this unique moment we are
standing so close to the precipice and
why people aren't hearing you that we're
standing this close so I want to I want
to re-anchor everybody around this
interview is born out of you spend a
million dollars to get people to
understand why we're printing so much
money that's so crazy like there's no
way that people understand that you're
the only person I can conceive of that
would ever do this I mean it's just it
struck me as so bizarre when you first
first
um brought everybody's attention to this
you were going to pay the million
dollars to get attention I'm obsessed
with getting people to say like what
their thing is in a single sentence
here's a single sentence uh the
if in
2008 it was a banking crisis
in um in a mortgage crisis in trade
train three it's a Central Banking
crisis and a currency crisis now the
question becomes why why do these one
why is it a Central Banking crisis and
why then does it potentially mushroom
into something bigger we are now in an
inflationary environment
uh that had been denied that inflation
was going to happen for a decade
do inflation
uh because people have quote printed
money from 2008 to 2020 and the only
effect seemed to be on asset prices and
home prices and all the things in
financial markets but in the physical
world you had deflation partly due to
Tech bringing down prices you know
um like Electronics became cheaper and
so on
um and uh so people thought
if you go back to early 2021 that
inflation's a quote right-wing
conspiracy theory or it's not going to
happen hasn't happened for 12 years
you're so stupid for bringing it up and
there's all these articles about that
and so over the course of 2021 they're
first saying inflation is going to
happen so more stimulus is good we've
proven inflation can happen they're
saying oh maybe it's trans to inflation
but they're still selling hundreds of
billions of dollars in bonds during this
period
and uh then suddenly in you know as late
as November 2021 they're still saying
transfer inflation in December 2021
after Powell is renominated in November
22nd chapter 21. they hike start hiking
interest rates very rapidly
and everybody who was that deceit
I think it was to see I've got actually
an article on this called Too Fake to
tell okay
um which basically makes a case that
Powell was aware uh at least at one
point that
um so so let me give an analogy here
because it's a very technical sounding
space and uh when you explain all this
you know that Meme where the guy's like
pointing at the the cork board and you
know like there's all the lines
connected to everything else and you
look like the crazy guy yeah exactly see
the thing is the financial system is set
up to be intentionally opaque if you are
the fed and you're saying hey guys by
long duration bonds which will lock you
into an interest rate
um rates are going to be low forever so
just take what you can get now take it
out 10 years whatever all is going to be
well we don't have any intention of
raising the interest rates but you
actually do plan to raise interest rates
so then the problem is people put all
their money into an asset that you are
about to tank by raising the interest
rates so they effectively get you to buy
now I don't know I don't understand this
well enough to say whether they did it
on purpose or if this is just one of
those things that's too hard to predict
I don't know but
that was the effect hey guys buy these
bonds buy them long not gonna increase
the the interest rates anytime soon and
then people go buy them billions of
dollars worth of them and then they
raise the interest rates and so now the
value of those bonds tank now your money
is locked because when you bought them
just so people understand how this works
when they bought the bonds they thought
they'd be able to sell them so they
didn't think oh I'm going to be stuck
with this for 10 years it that's that's
the time to maturity but they thought
that they would be able to sell them
that the market would still be good
because interest rates were going to
stay low so it all hinges on this
question did he know did the FED know
they were going to raise rates because
if they knew they were going to raise
rates and they got the banks to buy in
now you've got a problem and I've heard
you say the phrase uh the FED lied and
Banks died now that that Sinister if
they knew they were going to raise the
rates that's really gnarly can you see
the screen there on page 193 of these
minutes okay
um the uh the Federal Reserve minutes
here
second I think we're a point of
encouraging risk taking
um
meanwhile we look like we're blowing a
fixed income duration bubble right
across the credit spectrum that will
result in big losses when rates come up
down the road you can almost say that is
our strategy okay so at least
10 years ago he was aware
that how could you not be aware in his
position but that if you sold a ton of
bonds and then hydrates very very
rapidly that you would devalue
everything you just sold like the bond
market is complicated so I came up with
an analogy to kind of explain this right
um imagine Apple told Best Buy and
Target and Walmart that is only going to
be selling iPhone 10s with a foreseeable
future okay and so it sold them billions
and billions and billions of dollars
worth of iPhone 10s and
um you know it said we're not going to
be selling better iPhones for a long
time buy these buy them in bulk and so
on and so forth okay then after Apple
sells all those billions of dollars in
inventory suddenly it turns around and
launches the iPhone 11 a better phone
and thereby devalues everything it just
sold by at least 10 or 20 percent and
even though it's maybe a small
depreciation it's across such a huge
amount of inventory that Best Buy Target
Walmart take massive losses and some of
these are low margin businesses so it's
like a huge huge hit to them and the
thing is that you know whether Apple
knew that it was going to launch the
iPhone 11 which it probably did
or even if it didn't know either way at
the time it sold those old iPhones it
was telling the buyers it's not going to
launch a better model for a long time
make sense right so had Apple done that
had it committed to not launching a new
phone and dumped a bunch of older phone
inventory on
um buyers
and then suddenly devalued all of that
you you know the buyers would have a
case they'd call that fraud right Apple
would have sold those assets on false
representations regardless of whether
they knew at the time that they were
going to launch the iPhone 11 and
frankly how could they have not okay but
even if they just change their minds the
commitment they gave to the guys who
bought it at the time that they were
selling it was we're not going to launch
a new phone for a long time so feel free
to buy tons of these that are our best
model okay does that make sense you know
and that's something that people can get
their heads around okay as a bond buyer
you have the same thing you think okay
do I want to buy at today's interest
rate or do I want to wait and maybe I'm
sure it will be higher and I'd buy
tomorrow especially because if I buy a
bond today it gets depreciated if the
interest rate is high tomorrow the
treasury and the FED are different
entities treasury is selling the bonds
and then fed is uh effectively saying
the price the bonds by setting interest
rates if you think of as a unitary
entity of the U.S government because
they do act together in most most cases
then it's like the US government sold
all of these Banks hundreds of billions
of dollars in assets that it then
devalued one of the things that I find
interesting is that value investing is
really broken down for what like at
least the last five years which leads to
the question what the hell is going on
and that's what you know that's what
we're really dancing with here is the
complexity of this problem but there
there are so many signals that
something's going on from all the things
we listed I just want to recap some of
the things we listed in in the beginning
here so you've got debt ceiling is way
up Market's estimating a record high
probability of U.S Sovereign default
most U.S banks are near insolvency or
already technically insolvent three of
the four largest bank failures in U.S
history have happened in the last two
months 2.2 trillion dollars in losses at
banks have yet to be reconciled Morgan
Stanley believes that the commercial
real estate in sector is poised to be a
worse disaster than the 2008 financial
crisis 2022 was the worst year for Bonds
in a long time D dollarization which you
went through in detail is happening uh
Sovereign defaults are at an all-time
high we had 14 in the last three 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 percent in the last three
years and central banks are buying a ton
of gold a ton of gold the chart is
ridiculous presumably because they see
that something is coming so it's like
okay
you are the actually you know you've 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 they're all happening
essentially at the same time it is
insane so I feel like we're standing on
this really rickety thing you said that
the you know the economy is beginning to
Creak 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 guaran 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 just shot The Showdown and just
go make a lot of money so uh I have no
idea when this is gonna 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 Wily
coyote moment
yes what do you mean by that
so you know Wiley Coyote if people
haven't seen you can probably put up an
image of it this character from Looney
Tunes and they walk off the cliff and
they're just you know merrily going in
midair that 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 Bank 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 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've for people just listening he just
made a face so we're gonna get to the
face in a second but like you've got
Janet Yellen who uh knows there's a
problem but doesn't broadcast the
problem 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
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why do I make the face well the reason
is that line of argument that talking
about it is causing it is actually
people throw that around I think it's
false but it's false in an important and
interesting way which is
when
you know when one of the things I've
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
pessimist nor an optimist but to be just
a realist and if you're a realist then
um you're not a Pollyanna right like
it's not a doomor to say oh there's a
wall in front you might as you might
want to turn the car you know that's
like that's just that's being smart
right
um just 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 bank or Etc you know who caused it is
Jerome Powell and the Federal Reserve
and Janet Yellen and the U.S financial
system but especially Powell he's a he's
the 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 uh
jacking them to the Moon why do you say
that inflation was transitory 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
that 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
wanna 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 wokening I
think the wokening of America
the Great Awakening 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 the
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 gonna 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 it okay but it's
like when does it become a problem okay
well so first is
um there's something called the cantalin
effect okay which is to say and I you
know I think some people have been
intuitive grass with this but but I'll
explain it anyway
um printing money is in a sense like
official counterfeiting and the guy who
is about the counterfeit a 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 100
billion dollars okay in the economy as a
whole and then the government prints
another 100 billion dollars that's as if
the government seized 50 of the wealth
in the country
does it make sense or at least 50 of the
savings yes because yes 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 putting 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 uh
like 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 it's camouflaged like a snake
that's like keynesianism
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 children
in a Gul blog or whatever right
um very direct I mean that was a lived
experience that's a live experience of
many people in Russia China Vietnam like
all kinds of people that's what collect
position was okay but keynesianism 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
your your dad are 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 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 that's my
friend I told you every grad
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's 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 U.S by their uh real
GDP okay inflation just a 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 of them
had Rich districts both of them had poor
districts and the median wealth median
real GDP in both the statistics was
comparable okay Ten 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 dollars
in their congressional districts
Democrats was like 50 billion or
thereabouts and moreover 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 suit and tie wearing Republicans of
the early 2000s to the trucker hat
proles 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
disproportionately to the coasts that's
to say if you track the candle in effect
if you track the floor print of money
well it's a fad it buys these overpriced
mortgages from Banks the banks now have
extra assets from their books and they
can spend it on financial assets and uh
then those people have money into 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 review let 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 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
talented Heather asset sees
um and the thing about this is the whole
time as you just said people are like
we're helping people the feds saved the
world right well what it actually was I
mean you know 2016 is 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 would actually say we saved
the world we help people stimulus blah
blah blah right and that's like a
camouflage Predator where it's like
anesthetizing its Target that doesn't
even know the blood is being drained
okay and it'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 and
flight 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 it's like we
see that Evolution has selected for the
camouflage predator and
that's a lot about 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
they didn't understand and parse the
league leaves 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
when they're 18 and they don't 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 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 also
something it does in my view at a
collective level by the way there's
somebody else who paid for 2008 you know
what that was hmm no potentially the uh
the Arab world and the reason is uh
basically food price spikes helped
trigger the Arab Spring right this
exported to inflation remember the whole
Arab Spring in the early 2010s right I
do very much and 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 your 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
financial crisis it wasn't the end of
the world well you know what for that
the Arab Spring 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 another
how did that happen I actually don't
understand how so 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 was
easy right uh fruit vendor sentences 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 at the
local
um you know prices uh it's 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
whatnot 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
Leslie Clark's former four-star general
right and uh you know pretty pretty
senior guy before the Iraq invasion that
um that the U.S 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 in 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
whatnot that was a narrative of the
early 2000s okay what happened of course
was just absolute Mayhem and Chaos with
Isis and many of these countries
destabilized in Libya and Civil War and
that would destabilize people that that
that feels more direct I'm still trying
to understand oh sure inflate the
currency
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 its 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
Horizon prices in the US is intolerable
abroad if somebody's like kind of living
hand to mouth to get 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 as a cash and 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've ever heard the saying the price
of tea in China right like what does it
have to do the price of tea in China
what does that 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
aggregate's death and say okay here's
how the U.S 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 concert of the U.S exporting
inflation is certainly not my like
Innovation or anything like that that's
what 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
vendors and so on you see okay this guy
suddenly got a printed onion so he bit
up X which bit up Y which bit of Z which
bit of the prices of this guy in the
Middle East right but that x y z A and B
are hidden because they're not on chain
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 Kardashian 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 I mean how many articles
have you seen is it is it a daily thing
on that a breakdown of where the
principle 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 cantalin 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 up to
bitcoin you get out to maybe a foreign
Fiat
um
now you have an asset where it's to go
back to that example let's say there's a
hundred billion dollars and the US
government prints another 100 billion it
seized 50 of of dollars essentially
right
but if there's 21 million Bitcoin the
use government cannot print even one
Bitcoin so can't seize the Bitcoin
does that make sense
yeah I'm not in the camp that Bitcoin is
unseasonable I think no that's true you
lock somebody up they're gonna real
quick be like all right here it is
yes but but basically it's not it's not
easily sensually seasable
you have to go back to Communism house
and this is actually very important
um
Bitcoin and cryptocurrencies more
generally increase the cost of seizure
okay because like a SWAT team costs
money you know it's like sure what are
forty fifty thousand dollars or whatever
right so now you have to actually look
at the p l of going and 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 don't have
to have you know like some legal
authority to go in and beat them up take
it 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
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
chamath Holly hopatia polyhapatia 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
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
pennies in a Twist as that number gets
uh bigger and you know we've got
multiples of GDP in debt and he's like
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 Shabbat is a you know as a
colleague and co-investor and uh being
on all in a bit and I think we have a
cordial relationship
um is also said uh put one percent of
your ass to 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
you'd say there's a hundred percent
probability of no devaluation he's he's
sophisticated investor who probably
Hedges so that's that's a first counter
argument many people I mean it's a point
about not seeing something in one's life
I mean let me make the point in some a
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 happen
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 crises
um and uh 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 base 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 we're flipping where
uh those countries that were on the
capitalist right in 1991 and the
Communists 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
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
CCP is doing but they aren't like fully
abolishing capitalism and going back to
maoism that that would make them to work
what do you think they learned that made
them flip that leaf
generates power
I mean that's like capitalism they 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-organize 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
to more contentment among the population
and eventually you can get from a
position of totally enlightened
self-interpress to okay it's more stable
than the alternative the people are you
know have a good standard living they're
not going to protest you can run the
government or whatever right
um
the by contrast if the other side if you
have been born rich have you heard that
you know saying like uh shirt sleeves to
short sleeves in three generations I
love it yeah you should be an old
American can sing right so the current
generation of the US has been born to
wealth right they're born a lot of
people who've come to majority have
essentially inherited this giant
superpower with the scaled economic
system and so on they didn't have to
work for it and fight for it fighting
Warriors 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 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 infrastructure is improving
technology is like a good thing
capitalism is a good thing and in
general you know now but that's 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've heard the 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 the or
the money you spent in a bad way 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 on 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 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 CEO of GM or something like that is
so far distant from the founder
sometimes you get somebody who's like
Satya 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 CEO position you
start 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
on 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 communist or socialists or
very poor so you don't take it for
granted whereas we will always see
people saying in the US is of course for
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 super power
competition remember Sputnik
right so when Sputnik uh you know the
the Soviets launched you know Sputnik
the U.S response at the time wasn't
oh the Soviets have demographic problems
are going to go to zero uh you're you're
a doom are you just repeating Soviet
propaganda by talking about Sputnik you
loser why don't you believe in America
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 gonna put a man in the
moon in you know before then 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 to
Soviets couldn't be more different than
the response to China which is a
combination of denial and actually
stealth imitation so denial it's like oh
you're saying you know China is going to
go to zero day you know uh there
obviously suck you know we have the
Mississippi River and they don't so
they're you know you don't talk about
other people who argue these like uh
again government against them but
demographics on the way out it's done
yeah exactly the demographics are done
they have terrible geography uh they
don't have a blue water Navy uh they
can't feed themselves and 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 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 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 U.S
was in a malays but you know we pulled
it out and so the US was making 10x the
amount of Steel of China in in that
period and now it's the other way around
China's main biology 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 manufacturer thing a variety of
different graphs look like this
um and the reason I think wheel 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 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 they're building things
they're gonna 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 U.S 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 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
joking by the way it might have been 48
hours so yes yes it was so fast I was
like this is insane and in the U.S
California especially like you can't get
a bathroom stall put in you've you've
shown this like cutting the exactly for
bathroom salts 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 Mao
the untold 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
out-compete me and so I want to I'll
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 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 wait
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 man you need that spirit
so there's a few things which I think of
as cope whenever you mentioned in China
that are worth addressing right one of
them immediately would people will come
with a psychological defense will 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 and so forth okay accept
I mean you know if you believe that
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 B-24 bomber The
Source Ken Burns says 60 Minutes to
build a p24 bomber okay which is crazy
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 double World War II America
could make a B-24 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 but their demographic is one is like
okay yeah we need to do industrial
policy but they're sort of it's like
LARPing right because they are trying to
do it with Printing and spending they're
like wow spending on factories this is
up and 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 without a CEO and uh
sorry I'm not I'm very bearish on
essentially industrial policy right now
okay it's like it's like saying you're
gonna do Venture Capital there's a
difference you're doing it well coming
back up a little bit the point is in in
if if the US was democracy in the 1940s
and China was Communist in 1970s it was
much more communist and genocidal than
and so if the argument is oh there are
Communist dictatorship that's why they
could do it well why weren't they
they're even more communist 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 there were
actually much more evil arguably 50
years ago when they were killing
millions of people during the Great Leap
Forward and Cultural Revolution yeah and
now I'm not saying anything 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 there's many
legitimate critiques but they're not
like they're not as murderous as
undermount right there's actually an
improvement you know like it's it's
seemingly by a country mile but if
everybody has a North star 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 am
not deaf to Ray dalio's 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 U.S
suddenly we woke up and we were like
that there might be a lot more pushback
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 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 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 a sum of charge 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 uyghurs in
western China that'd be the counter
argument the thing is that the U.S was
bombing you know Chinese weaker
militants and um you know once jailed
them and now defensive makes these
articles from foreign policies so here's
NBC News 2018 U.S targets Chinese weaker
militants as well as Taliban fighters in
Afghanistan U.S wants to jailbreakers
now defensive you've been in foreign
policy so the thing is that at one point
the US and China that we're both
thinking of what's going on there as
counter-terrorism and there's a woman
named Sheena greitens 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 greitens on
understanding China's policies in
xinjiang this is in uh you know the
belforcenter.org okay and
um
essentially like she she's saying that
China is talking about that as war on
terror very similar to how the U.S
Justified its interventions in the least
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
uh there's something Merit there no
doubt but um it's also something which
some people think it's like of being
supernationalistic 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 seen 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 covet
or 9 11 like the war on terror or covet
that didn't bring people together that's
just you know immediately got
politicized and you know if there's 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 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 it 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 free
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 first is just to 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 in
1951 there's lots of bipartisan stuff
happening in Congress in 2011 it was
just totally a bipartite graph and
that's a long traded one
this was 12 years ago how partisan had
gone at the leadership level and it's
even more aggressive than that right so
this is 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 that's
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 is 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
it's gotten even more disjoint since
then now blue has their own on Mastodon
and red is on you know a gab or
something and and uh so it's gotten even
more disjoint in their own you know
rooms right
um this study says uh that it's not just
that Democrats 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
yeah the sunnis and Shiites this is like
hearing us referred to in that way was
very eye-opening for me yeah if you ever
read the New York Times about a foreign
country it'll be like in arid steps of
so-and-so tribes have fought each other
for Millennia you know they'll kind of
like lava 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 hudutsi 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 viruses
we should shut down testing or something
like that like you know basically trying
to downplay it at the time Democrats
completely flipped and now they were
saying it was a huge deal and then they
flip two lockdowns and Republicans
flicked 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 Kamala Harris said
something like I'm not going to take a
trump vaccine and so at the time it was
the Democrat position was vaccine
hesitancy this has been totally memory
hold
and then after the election uh the
vaccine was actually
um you know held back until after the
election uh there's a this guy Eric
topos 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 a 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 whole thing has
gotten just sort of like forgotten
elections they forgotten about but
memory holder 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 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 the position because it's
the opposite of B and then vice versa
because just stick a thumb in the other
guy's eye does that make sense you know
um
and uh you know the the thing about that
is why is that important it means
um talking about the United States is it
actually a misnomer it's a dis United
States it's a it's
um the individual states
and 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 in
New York Times just like a year ago or
something uh what did they say it's like
the American I had a friend that put an
American flag up on his house and I said
oh that's going to get ripped down and
he was like oh yeah
okay I'm 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 221
there's a 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
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
though 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 the 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
do you think that helps or hurts the
pull apart
well that's 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 let's say for the Soviet Union to
collapse people had to have an
alternative system they'd look towards
that they would copy and so people copy
the U.S system right so when the Soviet
Union went down India moved towards
capitalism and so on China's only one
that didn't right it kind of kept its
own system at the time
um not the only one there are five
communist countries that seek Communists
but China is a big one that 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
the idea 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 is much more
important than 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'd
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 OP as a character to
the U.S Navy okay that's insane like
totally different than what you think of
as Middle East where everybody's boring
they're like all unified with each other
Saturday and Iran and China against the
US U.S is Unified its enemies
um you have even Iraq like trading a new
one with China if the UAE training and
you're going to China
um you have Brazil sending a massive
delegation
um to China you have macron taking photo
ops with Xi Jinping in China and part of
that is because again everything is
connected but the Ukraine war has 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 yellow vests 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 the reason is he you know
has always wanted to put strategic
autonomy for you then you have southeast
Asia which is another contested region
between China and the U.S and the Asian
countries are saying they're going to
dollarize and they're taking they they
have their own skepticism and part of
China but they're taking money from
China
and on and on and on you know
um you have like basically the fact that
China learned diplomacy
is
uh and is bringing uh also a one more
example the you know zielinski went and
took a call with China and now Lincoln
the secretary of state has said
um
China may be a partner for peace with
Russia Ukraine okay
dollarization
I mean would basically how seriously 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 renminbi'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 terrorist 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 of 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 USS star posted its highest GDP with
its fake stats and the year of his
collapsed 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 incentive
in terms of trade all these countries
that get hard goods from China will use
who you want to buy those goods from
China right so as you know he's kind of
Back to the Future how did you know the
Houstons start as a financial power it
started as a manufacturing and Export
and traded power right and in a sense
go ahead right you see my point right so
it's not that big a deal for 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
searching so so that's like the
fundamental is I mean it's not trivial
to replace a financial system but
remember my points earlier on how
fintech and crypto talents 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
I think it's it's really important to
because what people are going to push
back on there is they're going to say
okay uh sure they're doing a lot of
trade
um in the Yuan 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
and also and this will be big pushback
and this really resonates with me and
it's why I 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
arm's 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
are very aggressive moves uh certainly
sanctioning the life out of Russia that
signaled 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
dedolarization is decentralization
um and so meetings so it's not going to
break over to China Yuan it's going to
go into Bitcoin as but one example or
maybe just 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 you know 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 U.S treasuries as
um as a percent
total total debt yep right so that
peaked in 2013 is declined quite a lot
over the last 10 years right essentially
massively what percentage drop is that
do you know
I mean we're 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
four percent as of 22 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 U.S 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 abuse
Treasures so what are they buying
instead uh they're buying gold so
basically they're not saving so it's not
just a chart right here tells you
something like this this really is
interesting to me now I look at this
chart and I 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
yes treasuries they're buying more gold
right gold is a time-tested way of
physical goal is timeless way of saving
but you can just go in as a foreigner
you can go and load in gold and get back
you on and more importantly you can put
a new on 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 not everything is
necessarily reported
um have you heard my concept like
pre-headline people and post headline
people
no
it's to like a pre-headline person think
about a like a CEO or a researcher or a
reporter right the CEO knows a product
is going to launch a researcher knows a
study is going to be published a
reporter knows the story is going to
appear they know something is true
before the headline appears
makes sense right whereas a post
headline person can only process
something that has been officially
acknowledged by an establishment
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 that's a great Point
can I quote instead of quoting Elon Musk
on this point really fast 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 in the
coal mine svb died one of the staunchest
miners Credit Suisse 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 accrue data to form a world view
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
apparatchics 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
they're Pravda is a conspiracy theory
where's the source citation needed and
so and so forth like anybody uh you know
if you don't have
um
that's why I said pre-headline 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 but I think physical gold I think
physical gold is something that probably
returns as a
state to state
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 that they are ports
and all that type of stuff right it's
like a heart physically hard to carry
it's not modern in that sense still as
like a fire alarm like is something that
you can go ring ring ring and everybody
it 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 selling point it's
one of several challenging points you
know Bitcoin I think is another right
um the point being
that people who take like the very first
shorter approach oh China doesn't have
to open a capital account therefore and
and certainly I wouldn't want to have a
lot of Holdings and you want but people
might keep a checking account and you
want 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
detailerizations 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 should we
probably at this point need to get a
peek into your future thing with America
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 India Atlantic the trillion dollar
coin might be the least bad option why
the legal scholar one of the great
things the U.S mint can defuse and you
see the United States of America one
trillion dollars 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 why a trillion dollar coin whoa
what
oh you don't know about okay so
basically because the debt ceiling
evidently this was something that they
had a rationale that this would be a
workaround and the treasury could mint a
coin of any denominations 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 on 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 hadn't heard of
this I'm sorry I thought I thought you
had heard it if this 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's 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 they wouldn't phrase it
this way at all it's digital communism
that says because the U.S has the
government has guns you can see as much
of your wealth as it needs to by
printing money and it can force you to
give it back at some point if you want
so it can really just read 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 here
or whatever right
at which point you get to difficult
situation as I'll get to but this
trillion dollar coin thing comes out of
that school 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 crookman has talked about it
this guy on Bloomberg weisenthal has
talked about it Rowan Grace talked about
it's in the Atlantic it's taken
seriously as a policy proposal
and it's gotten closer
and you know since the last debt crisis
whether it actually happens or not it's
symbolic uh go ahead so the trillion
dollar coin would go in somebody's bank
account and allow them to not a human
not humans but in like in like the
governance 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 that they say it
wouldn't have any inflationary impact I
think I'm kidding just Google Google's
really dark see that's the thing is okay
so 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 assumptions so
here here is 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 our 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 your own is 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 if you think like oh my God
I just got a trillion dollars but now
your loaf of bread costs a trillion
dollars and so yes you have a trillion
dollars 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 a
hundred million dollars but my rent
moves up in proportion I may have 100
million dollars but I still have to live
in the same apartment I still have to
have the same car my gas proportionally
has gone up Foods 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 right or I may be
wrong but like okay so so there's a few
different filters 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 right but so like you
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 a 50 IQ guy
says uh these people can't
um afford their house so why are you
doing alone with them 100 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
rebut it and say actually when the
default rate rises above X then you know
your CDO crash the Y and your CDs
increases so they can go in 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 I think a lot of the financial
system is quote Smart in the sense of
like playing a three-card model Auntie
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 proved this I want to ask a very
pointed question
yeah do you think the people running the
global because this seems like a 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
apparatchics 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
pseudoscience 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 is dumb and what have
you
it's a mix
um you know this is 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 but
also helping oneself
uh evil is harming somebody else while
helping themselves
and stupid is harming somebody else
while harming one's itself
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 short-term gain by
harming somebody else but they spend
down especially recently they spend on
their trust so they harm everybody in
the long run like a lot of stuff they do
with sanctions or freezing
de-platforming censoring that's not just
a financial system but like the in the
social system
um it has a short run Advantage for for
them
um the institutions are doing this but
it's a long-term disadvantage because it
actually reduces their power but they're
but they're so short-sighted or short
term 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
000 years that you realize that for a
long time the sort of capital markets
that make capitalism work 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 Ray points out you unfortunately
you are in the middle of these big
cycles and when a de-leveraging 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 Nietzsche'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
nietzschean idea of we all crave power
to be in control of Our Lives be in
control of others uh to to be the one
with our hands on the stick as it were
because once I let my myself bring in
that bit of darkness my predictive
engine works better and that scares me
there's stupid and 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 uh 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
you gotta 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
bayonetting you know like Chinese
soldiers who had never met
um and uh the reason is that that was
tribe on tribe tribal Warfare so
um so that act that we consider evil
when those tribes were not at War would
in fact be considered laudable
when the tribes are 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 deceived
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 trillion
dollar coin stuff comes from make sure
the Republicans Can't Hold Us hostage
you know and in fact if you see this
article death ceiling 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 coins even
somebody without any Finance or
knowledge is just facially ridiculous it
summons a visual over here
premium bonds immediately people's eyes
glaze over oh that sounds maybe good
premium bonds right and now you need to
go through a long explanation of what
they are but notice he's agreeing that
their 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
can you get give me the punchline
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 add a minimum get my
principal back and I may get uh some
sort of return for buying that Bond so
one percent you know in in a low
environment so that seems okay because
you're asking me to give you my money uh
basically I'm gonna loan it to you I'm
gonna 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
recruitment 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
okay 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 Wily coyote moment of hey I said
this is real you can give me money it's
all good and I'm going 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
yeah basically they're two different
different ways to work around the debt
ceiling and have arguments that you're
not actually violating the debt ceiling
thing but still essentially creating new
money right and
um so so that is that that's like how
functionally they're equipped 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
you 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 debt 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 a vol
camouflage to give you another example
just to you see this video clip that I
pasted in
more Quebec Securities separate 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 I had to
declare bankruptcy or they lost a lot of
money or whatever because
um this teaser rate is actually a
terrible thing and uh 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 and they could just sell
it right and so
when you're set 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 are good right the other person
is buying a banner for consumption value
and utility value right
but when you're buying a financial
instrument
um I'm not saying that 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
stock and it's going to go up or down it
goes up then the buyer is getting a
better deal and it goes down then the
seller is getting a better deal so each
party you know there's a 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 grocery 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 good you know like I'm not
saying I'm not pathologizing every
single Financial interaction like that I
am how we're saying that there's a
greater degree of zero-sum behavior
there a 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 I'm saying if however it's
camouflaged in such a way then Bank B
doesn't see the fine print but Bank a
can be like
you agreed to xyw 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 uh we're seeing you
know this is dramatized in the movie
Margin Call where you know the the guys
were fooling their counter priorities
into buying these assets when they were
saying that they were more valuable AAA
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 Bernanke 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
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 just whatever
something like that right
um funny you should pick ears first of
all I noticed 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 me oh my fire I just remember a
little snippet it's like a little hash
and then I can look it up right but
um partly it's 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 makes it's
almost like a 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
Bernanke once again explains why QE is
not money printing okay and then after
so so lie or they'll disassemble 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 this fiscated 150 iqbals and say
well you're never going to be able to
tighten this Ponzi economy when you
started that's exactly the problem we're
running into we have had 20 years of
just abs absolutely systemic economic
fakery okay just to give you some
examples
blankie talking about how the quote
great moderation right means that
macroeconomic volatility is over right
meaning you know there's not going to be
any more if I we've solved
macroeconomics he was basically saying
this in early 2000 all right Cheney
saying that thing is then they 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 the 2020 covid 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 a solid 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 fatality of
it the great moderation we've tamed
macroeconomic volatility Cheney's saying
deficits don't matter Bush and Clinton
blew up the mortgage bubble in a
bipartisan way I showed you those before
in April 2008 Bernanke says we might see
a mild recession five months before the
collapse of Lehman and certainly in 2008
was not a mild recession right raisins
agency in 2008 okay so he said this
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 radiation in
2008 calling some yeah this thing the
great moderation was before the
financial crisis he was like I 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 saw 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
yeah yeah yeah but I would like to quote
biology for a second so maybe you've
heard of biology 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 it 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
macro economy so I think that 2008 in
any other time period is is 10x that
event that that I thought you were not
saying that 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 but the
function institutions it's like what
does one of your organs do could you
explain it preferably 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 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 short-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 as a
huge amount of volatility in the short
run
and um you can imagine that you could
have uh some flat coin where you Embrace
that as an engineering constraint and
you had a basket of goods and you had a
reserve a funds and you tried to
maintain the price stability of that
flat coin against a basket of goods
which you couldn't initially 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 so
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 short-term stability
and a huge crash at the end
right you know the concept of hormisis
have you ever heard of that oh yes a
little bit of bad does a little bit of
good uh 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 your uh
uh you know you're you're basically
gonna 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 in 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 in Tech and
they're trying to prop up these existing
institutions but you can see it also
outside the financial system where you
have
70 and 80 roles 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 it just
like you know gets washed away it's
similar to in my view that I think the
current situation is similar in some
ways to before World War one where you
know you had uh before World War one you
had the Kings and the Nobles you had the
monarchies and yeah there's concerts
from 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 was 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 copen there was a lot of change
that happened during covet in a year
that became like the year that the
internet it was the internet first right
for example every meeting now you can do
a remote meeting
um digital currency Rose uh like you
know all you know all kinds of things
there's like civil conflict in the US I
think in many ways 2020 was a preview of
what we're going to see in terms of of
um
like just like 2008 it's like a preview
of what we're going to see it's like an
appetizer before I mean the 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 mean I have a
teeth
course look I could be wrong and so on
but uh the
and let me also give some optimism right
over here so let me see if I can say in
a few sentences
optimism or whatever
um
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 okay 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 bank's just like
we're taking your money now
right crazy anyway keep going so there's
going to be some kind of seizure agreed
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 Dahlia's
principles has changed 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 non-obvious one
and it may just be hiking raises the
moon and you know just watching the
system collapse and you know doing
selective we don't know exactly how the
thing will unwind sometimes things
surprise you right it's probably likely
it's gonna be printing point is though
G7 countries are going to have a real
problem and they're going to be harder
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 in the cbdc and so on and
so forth if they cannot
uh then you have a different branch
point in 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 statements okay and then
you'd go back to the future of something
more like the 1800s where you could get
a plot out of land and you could build a
town or or something like that or even
you know the Alaska purchased Louisiana
Purchase things of that nature their
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
glasses 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 you remember when we talked
about the Arab Spring right in 2010 the
Arab Spring had happened
and you know people knew that Twitter
and Facebook had been a component and
literally like the overthrow of
countries they had political appoint
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 it's
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 tutors still calling
themselves a free speech between the
Free Speech party all that stuff is 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 2010s and in my
video in the 2020s all politics becomes
crypto tribalism why because again
taking that true analogy just like you
went from Twitter being acknowledged out
of 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 was 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 flip that's also why
there was a counter-attack on Twitter
from 2016 to 2022 and it looked like the
genie had been partially pushed back in
the bottle but now along then free
Twitter again and we have digital
glasses okay so with that whole story
where even as big as social media had
gone to hundreds of millions of users
billions of dollars public companies
overthrowing governments in 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
financier 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 Elsa alvador has adopted Bitcoin as
an actual currency in 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's the
Tennessee Dow law there's Texas saying
Bitcoin shall not being infringed
there's
um there's all you know Colorado accepts
crypto for taxes 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 right and and I the good
news is I'm learning about this stuff so
enough of me is 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 Bernanke
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 so
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 is a threat you know what I
mean
um 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 doing 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 Class 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 goal Clause said the government
will pay x amount of gold to somebody
um if you know like like a bond it was
basically a clause that was there to
prevent inflation right I could ask for
my payment and 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 bonds that had been
signed well before that said the US
government will pay you in Gold but FDR
is saying I will see the gold okay so
this went there's a bunch of cases of
different kinds it 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
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 just the it's just all got
into fully 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's not necessarily true because
remember you know the Civil War remember
World War II right yeah 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
because he's like the things we had to
do the people that tried 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 punch line 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 a dollar they literally just
sees 30 of your wealth it's bananas
that's right so I well yeah it's like a
dilution of 70 and by one measure but
yes the cases dominated the news
throughout the period on January 13th
Elliott Thurston you know wrote rarely
if ever has a supreme court of the
United States confronted issues of
larger import 1935. on the morning after
Physicians the New York Times ran five
fun-page 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 moon landing or 9 11 attacks than it
did other major Supreme Court decisions
such as Roe versus Wade okay the phrase
gold Clause appeared in more times
articles 49 on the day after than
poultry minimum wage abortion combined
on the days after Schechter West Coast
in a row right academics also touted the
case's magnitude and import right and so
you know this is 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 this uh 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 of time you
have the captain's 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 State book and they get
really amazing and detailed like for
example you go forwards in time and
China's a senior partner in the
china-russia relationship you go
backwards in time and the Soviets the
Russians or 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 a guy
who's you know the the senior official
in Scotland is a Pakistani origin guy
and the British prime 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 sighting
we've had staliness Russia to choke out
Ukraine with the Walter Durante 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 and reporters in the
early 20th century
um that was like you know Ida Tarbell
and all the quote muckrakers went and
attacked Rockefeller and and all the
captains of industry demonized them laid
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
battle on his Twitter and we have it all
in podcast and we have
um you know all of these sub stacks and
so on and so forth right so we're seeing
like some of the same
um like like like uh
confrontations or conflicts almost like
uh you've seen these really complicated
origami things and they fold and unfold
but you see some of the same faces as
they unfold and fold do 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 because 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 but I 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 a 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 it's
like map making 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 is organized by was not on the base
of the lands but the mines 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 do I wanna
only in the West
yeah mostly and I think the reason is
um I think the future is to
decentralized West in 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 economy they're like on
their state capacity increasing Arc
things are getting better 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 the 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 swaths
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 know the concept of
roll up in business like you take a
bunch of small things you roll them a
bit more of course right that's what the
nation state was it was basically like
um you know they're 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're 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
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 so you had
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 gonna guarantee
that he's doing it in a way where some
people are just getting their necks
stepped on like even how Napoleon came
to power it's like you won he was truly
a military genius and so he could go in
and bring the riches back and so people
were 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 eat like now let's really get into
the crazy stuff the fact that Hitler the
rise and follow the Third Reich
fascinating book everybody should read
it the fact that he was able to talk
um
oh God what was it called checo 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 a
broad generalizations right but
typically the right things about things
in terms of Heroes and individuals and
the left thinks 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 teeth on
it look I'm not
pulling on a course but what I think
about it is it's not just that there's 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 the crazies of the French
Revolution while they're being crazy
they had unified France and their
propaganda they had you know essentially
rationalized this whole thing they'd
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 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
Mao did a lot of terrible things
I shouldn't say but still are with
things and unified China right so yeah
there's a lot of things and unified time
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 ding Xiaoping is a 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 on 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 of 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 Ax and I'll pay
DUI 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 it
really really scales
right like you have no unit cost
everybody installs the same software in
their head that 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 swath
of territory right and that's a really
important component of it it's not just
uh you know the the Warriors it's a
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 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 absurdum I know it's
not so much you mean it but if you just
have a guy who comes out of a weight
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 in the the kind of
small version of this it's not that
small but like 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
stereotypically right they also have the
left aspects of omission and
um like often an egalitarian dress code
and we're all living it together against
this you know oppositional kind of thing
you know like a like an Insurgent or
revolutionary movement right which would
have historically been left things
and so I think you kind of need both
anyway coming back up so the point is
that um
for 500 years going into
1950 ish 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 the world you know this country
called San Marino uh yes I've heard you
talk about it yeah that was the
protective like a guy who becomes king
and then he like yeah wow you really
keep there you really have done your
research that's right yeah so um yeah so
Garibaldi when he was unifying Italy
um San Marino at least as the story has
it gave him refuge and so he let them be
Sovereign and so you can see like this
duckbilled platypus you know this
missing link that exists 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 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 did things get rolled up in
position states is defense and
production and scalability and so on all
these centralizing 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 India 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 this is a 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 U.S
at the same time on the same channel you
know and they're all like just the same
softwares and cylinder heads I Love Lucy
you know like this right and the worst
is you know
um like Mal's Little Red Book or uh you
know like Hitler or Stalin or something
like that right that's like you know
just the propagandizing right
and so uh point is that right around
that time what's interesting is
sometimes at the very peak of something
something's invented so transistor was
independent right
and so you go from transistor to the
computer you know Mainframe and the
personal computer and uh you have cable
television and you have the internet of
course and
um the smartphone and cryptocurrency and
for the last 70 odd years we've been in
a decentralizing Arc that is faster 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 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 assumptions
Like Home Video rentals and so on
that turned out to just be a window in
history that was in 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 there
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 writing 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 could 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
in-person 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 and the thing is that we don't
usually found that many countries
um there actually have been quite a lot
that have been founded over the last
seven years that's a very encounterative
thing there's an idea here that I find
very interesting so so uh you have this
Force working against us where or for or
against us where we're centralizing
decentralizing but what feels like at
least in the um the example that I can
think of certainly with the US uh maybe
even with MAO definitely with
Blockbuster is there there is a category
error that's made and the category error
blinds people to
um the path to the next societal
movement so take Mouse China take
Blockbuster which I did not expect to be
drawing a parallel between these two but
I think the same thing is happening and
then I'll bring it back to the U.S which
is why what I'm really thinking about
obviously because I live here so
um I'll just can't jump in for a second
the corporate analogies might the
corporate analogies might seem trivial
but they're not because they're some of
the largest scale experiments we can run
within our lifetimes you know you're
talking about millions of people
billions of dollars and they're founded
they grow to maturity and they die over
10 to 20 to 30 years right
um You you cannot run experiments that
are much longer than that within one
human lifetime that's why corporate
history is actually very useful to study
because it you can relate to it to a
greater extent whereas history books are
farther and more distant you know go
ahead yeah and I think they're actually
a really good example of the network
State uh which for people if they're
trying to grasp at what that is like
imagine a corporation but instead of it
being a corporation you're basically
it's culture so you come together for
cultural reasons all right let me let me
finish this question I'll come back to
that go ahead yes so all right so when
you look at uh categorical errors I
think they are the most dangerous error
that you can make because it is to
fundamentally misunderstand the nature
of the thing and so if you're
Blockbuster or Kodak and you think the
nature of the thing is uh I'm selling
you the experience of coming in and
selecting a DVD and going home with it
uh you're coming in you're buying
popcorn Etc et cetera and you don't
realize that the actual category of
thing is I'm just entertaining you in
the way that you want to be entertained
or I'm removing friction from the
entertainment process so instead of
having to go to a movie theater you come
here and you can pick whatever movie you
don't have to worry about start times
Etc et cetera so if they had understood
that what their job was was to move
remove the friction from the
entertainment experience then they would
have seen oh Netflix does that even
better so there's even less friction you
get you know in the beginning for kids
that don't know it's like you used to
ship the DVD back and forth in the mail
but you could go online and say here are
the next three or five depending on
which thing you signed up for videos
that I want as I send them back to you
you send me the next one so you can
watch whatever you wanted there was no
more late fees et cetera et cetera okay
so you take Mao Mao
organizes everybody's steamrolls is the
right word he steamrolls over everybody
literally you can't imagine how Sinister
and evil this guy was read Mao the
untold story it is unimaginable that a
human being could do that to other human
beings absolutely insane so he
galvanizes this group of people and he
thinks that basically terror is the
organizing principle now he does give
them uh ideology to cling to but it's
really Terror that works and you see him
make these realizations throughout his
life whereas the following regimes
realize oh actually we can hold people
together with ideology and by making
them feel better
now we're seeing sort of a flirtation
with a return to the hammer and people
can't let you step too far out of line
but to your earlier point I don't think
that they will make the category error
of thinking oh you can just do the
top-down Authority and you don't have to
give them a better life because if if
they're really understanding oh the
nature the essence of running a
government is you have to make people's
lives better over time now their thesis
is as long as you do it at the
population level you can Crush some
people use that the sort of crushing
there to keep people in line but as long
as on balance it's better for people and
it continues to get better everything's
going to be okay so they're focused
ruthlessly me using your words ruthless
execution so that they're they're really
able to make your life better and
because they're really able to make
people's lives better because they have
not misunderstood they have not made a
categorical error okay so China gets the
category thing right they do well Mao I
think misunderstands it the new regimes
get it better which is why they've had
prosperity in a way that Mao has failed
to do Blockbuster makes a category error
Netflix does not Netflix ends up taking
over okay us U.S is now beginning to
break apart and the question becomes are
they making a category error or is this
just the the reality of the human now to
take this idea and look at it through
the lens of what's happening right now
is people making a categorical error uh
I think that it's it suddenly becomes
easier to predict what's going on so
when I look at when I combine two things
the will to power which we talked about
earlier where I said my prediction
engine starts working better when I
realize that people have a Will To Power
they're not necessarily trying to be
good bad or whatever but they are trying
to be in control they want that will to
power and then mix that with a category
uh error that I think they're making
which is that democracy is when a single
party who is right has all the control
and the category error there for me is
that democracy works and creates a
thriving society when and only when
there is a respect of the tension
between right and left and that this is
where this is like the the fundamental
category error that I think people make
certainly in America maybe all across
the West that we're seeing play out
right now is that there is a right
answer and that right answer is
compassion and there is a wrong answer
and that wrong answer is the right and
I'm saying it's pathology on both sides
and it is only the tension between the
two that works and so people have to
mistrust their own emotions because
everybody thinks their worldview is
right and so the right things are right
the left thinks they're right not not
disagreeing but let me give like a
different lens to the situation one
that's that I've thought about a lot
actually which is
um
rebranding versus reinterpretation Okay
so
basically words like
democracy capitalism communism
Christianity are so capacious they can
contain both X and its opposite for
example Christianity
um was in the times at the time of the
Romans it was like the slave religions
the Revolutionary religion that tore
down the Roman Empire right and you know
sooner a rich man can go through and I
have a needle and get to have it then
and the first shall be last and last
shall be first and then after the Dark
Ages and and so on suddenly Christianity
was reinterpreted
and not suddenly over time he was
reinterpreted and fused with like a lot
of the Germanic stuff as uh as what
Nietzsche would call a master religion
so now a Justified hierarchy now you had
the oxymoronic concept of a Christian
King which is like a left right Fusion
right and you had things where you think
about Christmas you have
um Saint Nicholas Santa Claus and you
have the manger you're seeing from
Bethlehem if you think about it Santa
Claus comes from like these like
northern European like these snow myths
and so on and Bethlehem is like the
Middle East and that's confusion of two
events that are like or two cultures
that are five thousand miles apart you
know right or whatever 3000 miles apart
they're just totally different you know
Santa Claus and and Bethlehem we think
of them as being the same because
they're like a fusion of ideologies that
you don't usually give too much thought
to
um
it's like it's like Fusion Cuisine or
something like that I have a fusion
ideology
the point is Christianity contained both
a revolutionary ideology and a
hierarchical one which is just got
reinterpreted
and that's true of Communism which was
you know the Revolutionary ideology of
the 1800s and now where's the hammer and
sickle flying the number one brand of
Communism in the world is the Chinese
Communist party you know Marx's You Know
communist ideology of Northern Europe
where is it most popular it's flying a
flag on a warship in the South China Sea
okay that's where the heroin sickle is
just think about that right that Meme
that ideology made its way all the way
out there and it got totally inverted
from a revolutionary thing into a
hierarchical thing right uh think about
capitalism like capitalism could be The
Agrarian capitalism of the 1800s or the
industrial capitalism of the 1900s or
the uh you know the information Tech
capitalism of today those are very
different things even if there's some
shared patterns you know
um and then finally democracy right
um you know democracy can mean like FDR
style democracy where essentially you
know he ruled for four he ruled till he
died right basically another way of
thinking about FDR is he was uh the
least bad communist or socialist
dictator okay and uh to to you know I
know that sounds provocative but have
you read the book uh three new deals
basically three new deals reflection on
Roosevelt's America Mussolini's Italy
and Hitler's Germany how did he rule
until he died he ruled for Fortune until
he died isn't that interesting that
similar to like Stalin and the other
dictators of that period right
um he was he was the least bad of them
but he you know he turned the government
on his opponents he launched audits of
them uh he forced their fortunes into
trust like he went after Andrew Mellon
and Huey Long and so on
um he ordered the gold seizures he
obviously ordered the Japanese
internment people do know about that uh
you know before he took power
um he had there's a thing the the gay
entrapment uh Scandal
um where basically
um he you know this is a thing before I
became a president where uh he had young
men go and try to sleep with guys in the
Navy to try to find people in the Navy
were Gage to get them drummed out of the
Navy the this MIT has written about the
Sherry Zane has written about this right
so he did a lot of crazy stuff right it
wasn't he wasn't as bad as Mao in the
sense of you know he didn't kill as many
people domestically but he did order you
know like the Japanese internment
firebombing cold seizures he was pretty
pretty nasty guy in many ways right so
Henry Wallace was FDR's vice president
uh and um Henry Wallace was a Soviet
sympathizer he actually went and toured
magadon which is like a Soviet Gulag and
um was like hey this is great it's like
the Tennessee Valley authard right and
there was a very close race for the vice
presidency in 1944 or because people
knew that FDR was sick and there's a
bunch of ballots and Harry Truman won on
the last ballot and FDR just didn't
fight it too much or whatever and Truman
was just like a cipher but the entire
world was extremely lucky that Henry
Wallace didn't become president in 1945
because had he become president
um he was like a Soviet sympathizer and
he might have just handed over the
entire I think to the Soviets and we'd
all be under the Iron Curtain now do you
bring up um FDR in this moment because
he's an example of somebody who's
reinterpreting uh like all of our
Democratic Values but actually twisting
them democracy meant FDR democracy man
FDR rule to fully died democracy men FDR
built a unit party remember that thing
where it showed the uh the graph which
had everybody voting together in 1950
and then they'd come apart much 2011
right yep so the counter argument to
what you're saying is it's not that
democracy works when right and left are
balanced so actually works when FDR is
turned into a a party with no real
differences right he squashed all the
difference it's like it's like the con
it was like the Communist Party of China
there's only one party right Republican
Democrat or cosmetic-ish differences and
then they became well you're saying
that's an interpretation of this
versus that's right what I would say to
that is the reason that you're saying
that it's good that the other guy didn't
get elected is because it was already a
perversion of democracy it was a
reinterpretation that man you can people
are malleable you can get them to buy
just about anything go ahead well that's
the thing is basically I mean were there
elections there were elections did he
happen to win every single one of those
lectures he happens to win every single
one of those elections right do you have
been doing four terms right so it's only
people say oh it wasn't a democracy then
right people think it's continuously
being our democracy I mean you know a
similar character you know Lincoln
suspended habeas corpus right
Woodrow Wilson
um you know like a lot of these guys a
lot of the presidents were you know did
things that were uh you know where they
quote democracy
um not by not by what most people would
normally think today
um but
but they preserve the brand
you know and it's I don't even call it
cynical it's it's like sort of Beyonce
it's like it's like Christianity as I
said you know Christianity just has a
long history and sometimes it means X
and sometimes it means the opposite of X
right and so in many ways today is ultra
democracy right it's like real democracy
it's not like a single party that has
some internal you know disagreements it
is oh the
the form is becoming the substance the
form of Elections is actually becoming
the substance of Warring tribes does
that make sense you know like it does
um
and so you know one way you know there's
this guy uh who writes gray mirror this
guy
um
Curtis Sherman and he talks about how
like Washington and Lincoln and FDR were
both all like resets where they just
kind of reunified the whole thing after
a fragmentation period and we're
actually uh you know like um France is
on its nth Republic right and in many
ways the US is actually there was like
the 1776 to 1789 then there's like
America 2.0 which is the you know the
the Bill of Rights era and to to the
Lincoln era there's America like 3.0 and
then we're now actually in America 4.0
and we need America 5.0 right 4.0 is
like the FDR ERA with 10th Amendment
getting repealed and so on
repealed was central government just
asserting its power over everything
I think there's substitutes to this
um I think uh what's interesting about
this is it's not really specific to the
person it was just a global
technological Trend at that time that
you know people could execute these
Roll-Ups uh and the ideologies that
worked in the 20th century were
communism Fascism and uh fortunately
Democratic capitalism which was
certainly the least bad of the three but
those were three that worked to roll up
huge numbers of people into this Mass to
this fighting force now today in the
internet era
I think we're gonna have different
ideologies that are optimized for the
network as opposed to the state we're
already seeing some of them
um locism is actually you know people
have called book of some similar to
Communism but you know focus them if
communism starts on the factory floor
and there's a strike and it's about
Regional wealth wilkism starts on the
internet and there's a cancellation and
a redistribution of status
okay and so it's like a network first
ideology because most people don't have
an experience many educated people even
many working people don't have an
experience of going to the factory floor
and turning a crank and so on even
working people are often like service
workers or retail or something like that
so the entire
experience of being on a factory like an
assembly line
paradoxically that's that giving people
the training to go in physically do
something fold into a foreman that
actually helped the union organizers
organize strikes because people are used
to doing mapreduce in the physical world
right now today people are not used to
doing that but you know what they are
used to doing they're used to hitting
keys on their phone or their laptop and
so any ideology in the west has to start
Network first it has to start with the
keyboard and the laptop if it can't
start with you know in it it has to be
digital first because
anything that's a 20th century throwback
is simply not the experience the
ideologies that worked in the training
center are not the experienced people
say the exception is China that still
has huge amounts of factories so they
can still do 20th century like things
where they have these giant military
marches and these giant parades and 20th
Century industrialized gear and so on
and so forth because a huge much larger
percentage of their population as the
current experience of living and working
in a factory right
um that is just not the case in the US
and that and the reason I say this is
these are like sort of technological
societal
substructures that underpin What
ideologies are ideologies are even
feasible okay so my question is when a
20th century machine like China that is
still capable of the big marches and all
that meets a network state that is more
optimized around smaller ideologies not
necessarily geographically bound who's
going to win and and obviously I'm
asking that in the context of we have a
potential Collision on the horizon
between America and China yeah so I have
a different view on what I think is
going to happen here and the short
version is
um
and bullish on red America and Great
America in the sense of the let's call
it the conservatives and the tech
Libertarians uh it's not exactly
libertarian but it's roughly Tech I'm
very bearish on Bloom America and what I
actually think is we may see like a
financial collapse
in blue America
that makes it difficult to wage a giant
war against China a
B is I don't actually even think that
would be a competitive fight much less
so than people think I think people
think of the us as like the overdog
versus China but I actually think if it
if push came to Chicago in any
conventional War China wins
and especially in the medium run and the
reason being because they just have the
manufacturing plan it's like fighting
your factory they'll screw you on the
screws you know they just out produce it
takes years and years and years I mean
just like the nuclear subs and the
August steel Australia UK US they're
supposed to arrive in like
20 30 or 2040 or something like that it
takes decades to do things in the US to
build things physically and it's not
like it just becomes magically faster or
more cost effective and cost effect is
very important by the way when it comes
to military equipment staff 35 it's the
Zumwalt the you know the Ford class uh
aircraft carrier the um literal combat
ship you know like look I'm not a
military expert but from everything that
I can see there's massive cost and time
overruns in military equipment as there
are in um in the public sector the 300
million dollar bus lands are you know
the same kind of thing in the Pentagon
there's a woman recently who's talking
to John Stewart you can probably play
that clip the deputy defendant secretary
is Kathleen Hicks
um saying wasn't a big deal the audit
yeah the audit right they couldn't
couldn't find a few trillion dollars
I mean come on right like the thing is
that
um
actually I was able to boil it down to
two premises
do you believe the US can print infinite
money and do you believe the US has an
invincible military
do you believe a b both or neither okay
and it actually turns out to my surprise
so first of all uh just my audience
alone do you know how many people said
uh
the US can neither put an infinite money
without consequence
nor has an invincible military what
percentage of my audience do you think
said no to both
yeah more of them thought that was
possible than either of us would have
expected less actually 44 in my view 44
of the people who responded to my poll
said they think the U.S neither can
print in for money nor has a misp
military so it means 55 of my audience
did you didn't you expect your audience
to to put that super high yes I I
thought your audience would be way more
sophisticated be like 90 are like no way
can't do either yes U.S military not
Invincible printing money can't do it
correct so that means that if 55 of my
audience thinks the US can either print
in for the money or has Invincible
military or both
if that's 55 of my audience that's 95 or
more of like the right so so what that
means is
um just to calibrate I recognize what
I'm about to say is uh contrarian
because it is not what what most people
have been raised to believe they've been
raised on
Transformers and GI Joe and Independence
Day right you know whether people think
the US military is good or bad they do
think of it as Invincible or
all-powerful and that is intentional the
movies portrayed that way the military
collaborates with filmmakers on that to
make it look cool both for recruiting
purposes and intimidation purposes you
know like all kinds of movies you know
aliens attack the world and the decision
goes to Mr President what should we do
you know and you know that wouldn't work
if it was the president of Bolivia
you know you're not looking into the
like that would have to be a plot point
in the movie why are we looking to
Bolivian president you know by default
uh you know people will look to the
secret Labs of the USA the secret CIA
this even when the US is the bad guy
like in The Bourne Supremacy or
something they're uh they're the
powerful one right
that has just started to change with
movies like don't look up
okay if you compare contagion of 2010 to
don't look up you see that movie don't
look it up
yes it's really worth watching because
it is I think it is meant to be like a
climate change Parable I took it as
a coven Parable but really just a
parable and steep capacity and it was an
interesting transitional movie
because it still portrayed the us as
being
to Global events in the sense of all the
action about the meteors and stuff like
that people are looking to the president
and so on what to do
but unlike contagion or many of the
other movies to the silk it portrayed
the us as a basically politically
conflicted bumbling kind of thing that
wasn't able to solve it at the end and
the world did end okay very different
than Independence Day or or even I mean
the movie Contagion in 2010 in
retrospect it actually got a lot right
you know origin of the virus and so
forth uh where it got wrong was that the
CDC and the government were competent
right and that they were like you know
calm well-meaning apolitical civil
servants as opposed to basically you
know right what what happened
and so that was actually the fictional
part the fictional part
was not the virus it was the competence
of the US government the state capacity
right so the reason I see all this is
to protect the future of the world I
actually think you can boil it back to
those two premises do you think this can
print infant amount without consequence
do you think the U.S is Invincible
military the reason is fiat currency is
backed by women with guns okay Paul
Krugman has admitted that and said that
it's a lower quote he's like Fiat money
is backed by members guns what he means
by that is that
um you know like uh the backing isn't
like a bar of gold the backing is State
Force it'll force you to accept the
currency it'll you know it'll throw you
in jail if you don't and all this type
of stuff right
but here's the thing
um
in general more people on the left will
say the US can print infant money in
general more people on the right will
say the US has Invincible military but
these are actually equivalent premises
you know why
because they're both fake
well because if fiat currency is backed
by them in with guns you can have a
mathematical it's like an if and only if
kind of thing it's like if you can print
infinite money again without consequence
you can buy whatever soldiers and guns
you need whatever technology you need
whatever bombs you need you can just buy
infinite money no consequence conversely
if you have an invincible military you
can force people to accept your terrible
currency no matter how devalued it is
right
so those are an if and only if a implies
B and B implies a okay so
um so these two things in a sense even
if the left and right discreet each
other they sort of prop each other up
it's like vectors that oppose on this
axis but some on this axis you know what
I'm saying right so
um the uh it's like you know the the the
compassionate mother and Stern father
visions of the state
some in a vision of it as being
omnipotent does that make sense
okay it's like literally replacing
god with gov
okay like God replaced with the state
God replaced the government and and
people talk about this political
Theology and so on Carlson has written
about this I wrote about this in the
network State book
um it's it's basically what is the
strongest force in the world is it
almighty God is it the US military or is
it encryption is it God stated or
network and from that you drive her up a
lot right and so a lot of these people
who believe the US can print for money
or that has an invincible military
are literally people who think of
the government is God
they don't think it has limits
they're secular they don't believe in a
supernatural
um they also don't believe in encryption
and they don't believe in other states
right like they are secular nationalists
and the most comparable frankly to
people in the late Soviet Union
who also were secular they didn't have
Christianity the network and capitalism
you know they didn't didn't have that
really they really believed in the state
they've been raised in the state even if
they were critical of the state they
fundamentally thought you know the edits
around the Communist system I think
everybody has a god-sized hole that they
have to fill what form can religion take
that is the most useful or at least
least damaging
I think there's multiple solutions to
this and so I don't think there's any
one Forum per se you know like for
example like um there are being
there have been times when
Christianity's done you know the Spanish
Inquisition and there's times when it's
built great Cathedrals and there's times
when you know the Islamic world like the
abbasids and Nomads have had you know
amazing
um you know art and and Science and
other times when speaking you know less
fortunate and you know same with
Hinduism and same with every great
religion right and so
um even communism as as anti-communist
as I am
um you know as we mentioned before the
word contained both X and it's opposite
right
um
and today China's communist but it's
producing a lot and a lot of people
there who you know there's a lot of
people that actually like it right you
know I I maybe they don't have options
but but um it's producing a lot and so
so the question of you know religion
here
um
it's it's basically an organizing
principle and uh there's just many
different possible it's sort of like
saying and this is a trivial sounding
example but
um
are you using uh the Google stack or the
Microsoft stack for your company
right and you can kind of be successful
both and you can fail with both
um and a lot of it is in the leadership
and how it kind of uses that software
that's not to say that every software if
you had to predict then why one will go
pathological at any one time is is it
predictable based on uh other cultural
forces or just not predictable at all
I'm not saying religions are infinitely
plastic you know
but they're pretty plastic
you can you can make them say as I said
with X and the opposite of X and Y and Z
I I do think that when a group is under
threat
especially if it's under threat
economically or something like that it
starts asserting okay we're poor but
we're better
you know like uh for example in the
Soviet Union like oh yeah well may the
capitalists have more money but we're
caught we're purely communist and we're
sharing and they're exploiting each
other or whatever right and
um you know you'd see in you know like
um
various places people would say well oh
you know the westerners they may be
wealthy but they lack
Spirit you know like in India you know
we we're you know we're more spiritual
or that'd be a defense I would hear at
times in the past and nowadays though
you hear that kind of cope coming from
the West which is sure everybody else is
economically out executing Us in Asia or
whatever but uh you know China's doing
that because there are Communist
dictatorship and you know we are we
might be poor or we build slurpose
because we're a democracy we're better
morally right and as I mentioned like
when the US was a democracy ostensibly
at least in the mid-century it could
build and when China was even more
genocidally you know much more genocide
that the Communists in the 70s it
couldn't right so that Sonic's actually
the active ingredient there so it's not
a moral you know Salve or at least it's
not in an obvious way if you have all
four quadrants democracy that can build
democracy that can't build communism
that can't build communism that can then
it doesn't seem like that's the active
ingredient per se you know
so I don't know I'd say it's in a sense
um
I mean it's kind of it's it's it's just
what the leadership is that can take
that ideology and shape it into
something you know it has to have I if
your ideology was Flat Earth ideology
you probably couldn't shape it into
something but the great religions have
endured over a long period of time
because they do have some way of
organizing people right they do work
they like they install in human brains
and they have the right Hooks and so on
to build communities and you know
enforce laws and so and so forth and um
you know all the all the groups that you
read about in the Bible that got killed
didn't have good enough operating
systems to make it to the present day so
basically just like you can have atheist
monotheist polytheists with with God
right like no Gods one God many gods
right you know so like monotheist is
like the abrahamic religions polytheists
like Hinduism you could have atheist
monotheist polytheists with States right
the a status is like an anarchist
whether they're a left-handerchist or an
anarcho capitalist right
um
the uh monostatist is like you know
America first or you know Chinese
Nationalist and then policy this is like
a digital Nomad a remote worker
and so for example there's a difference
between the person who believes in no
States and the person who believes in
many states
um just like there's a difference in
atheists and the polytheist right Hindu
doesn't believe in no gods they believe
in many gods even if
they're Often equated by the monotheist
right it's like somebody who jumps
between countries and is remote working
or digital Nomad is not against a state
to maintain order they just want a
choice of States they're very different
than an anarchist does that make sense
if they're often equated with that okay
and then the third category in the
network that is in some sense the newest
in some sense the oldest but
you know by the network today it's very
literal like the internet but in the
past you can think of this capitalism or
peer-to-peer relationships and so on in
fact this guy Jacob Burkhart who many
many years ago way before the internet
was invented and so on said you know the
three great force is funny I found this
just an old book and I was like amazed
at it and I tweeted it's like the three
great forces are
um the state the church and then he
called it culture but by culture he was
talking about all peer-to-peer
interactions and he essentially said
it's everything that's not you know the
state or the church or whatever right
and so he was talking about God's State
Network even then which is amazing
someone else coming to a similar kind of
thing okay this book I think is force
and Freedom by Burkhardt anyway the
network you could be an atheist uh
monotheist and polytheist with respect
to network so the for example the no
coiner
is somebody who doesn't believe in
Bitcoin at all they're like an acorner
right then a monocoiner is like a
Bitcoin monotheist right a maximalist or
an ethereum maximalist
um and uh a poly coin or something holds
multiple coins and of course this can
apply to social networks as well but I
think what's going to happen we're still
in the transitional stage but social
networks and cryptocurrencies and
messaging apps and so it all become the
same thing
like every social network has a built-in
cryptocurrency and it had like of a
certain scale okay we're still like in
the same sense that you might say we're
early in the internet but these things
are relatively young you know and um
monetizing social networks becomes much
easier with cryptocurrencies and and so
on so I think that's always starting to
happen with like for example forecasters
native currencies like ethereum and
um uh Noster is like you know it's got a
Bitcoin community and Elon may add Doge
or something like that to Twitter I have
no information about that I think so
um why do why does that end up happening
what is what is the nature of the
network state that makes that a function
well this is not even the network state
yet but it's just uh you know social
networks will allow for communication
they should allow for transaction right
you can you can very complicated
Communications on social networks if you
think about it you can do a message to I
can send a message to 900 000 people
like this okay you know how hard it is
to deliver like a piece of mail to 900
000 people
it's like really expensive and time
consuming and so on right if you go back
I mean every individual jump
um this is funny you know this is
actually reconciling the Peter Thiel and
Evan Will Williams School of
technological innovation teal is like
zero to one like have a huge jump right
Evan Williams says everything is
incremental Innovation just take what it
is and make it faster better right the
extra she reconcile in the following way
where you go from physical mail
to email in the late 80s early 90s and
you still have to buy it you have to buy
a big bulky computer somebody else has
to have an internet connection with a
modem they have to also have a bulky
computer that's like thousands of
dollars of setup and training cost
versus just send a envelope right but
you do get instant right you do get same
day you know there and back right then
you go from physical mail to email to uh
group email with reply all
and then so-called mime attachment so
you now have attachments you can have
photos and stuff and then you go to like
a Facebook thread
and each step is like you know
incremental right it's like obviously
continues with the previous one like a
reply all with attachments is like a
email group which is similar to a
Facebook thread right where right but if
you think about implementing a Facebook
thread with physical mail
what would you do you'd post a postcard
of like some I don't know like um
something we posted a a photo of uh some
party or something like that or a
wedding or whatever and they're going to
send that to 900 people they're gonna
print out that postcard send 900 people
and all those people are going to make a
remark on it LOL or great and they're
going to send it to the other 900 people
you know if you just think about how
many
broadcast messages that is right a
Facebook thread that has that goes to
900 people and as 10 people comment has
like 9 000 messages being sent back and
forth I mean that would cost enormous
amount of money in terms of postcards
right so like what social networks have
done in terms of communication relative
to the world we grew up in the 80s is
absolutely incalculable you know or it
is not incal it's calculable but it's
massive right like a Communications that
would have cost you your entire year
salary is completely free
right with me so far so that is what's
happening with cryptocurrency it's
making I mean every form of cat
everything you can think about with
capital formation you could spool up an
launching entity you could Finance it it
could acquire something it could sell
something it could have ai operated it
could acquire another thing it could all
be bought all capitalism becomes digital
and Unchained like that's obviously the
way things go because we're still in
this transitional error where you have
paper definitions of entities right and
yet everything else about you know the
business world is online but you have
these paper documents that you know how
do you know for example can you just run
a script over your company to make sure
you're in compliance with every contract
does every contract have a machine
readable thing which says how to pay
this person and who pays it and who's
the signatory and what is the
constraints you need to be in like when
we're thinking about a company is like a
contract execution engine it's bound by
a bunch of contracts in
to receive why and so on it's like a
lawyers way of thinking about if you've
ever done a data room for a company's
acquisition or or even a VC investment
you have to compile all these contracts
that bind the company this Employment
contract that contract for delivery of
this this debt contract and so on and so
forth all that should and will be
programmable
and all that will happen on in
integrated in my view into either social
media or chat or some combination where
you have a group of people they're not
just chatting with each other you can
not just do a group chat you can
actually have a group not just a
crowdfunding but like an economic
vehicle like why can't you just
instantly start a company with 10 other
people and just start doing things and
selling things right it's because the
pain to go and set up a company and tear
it down just like it used to be a pain
to go and get a radio license but now I
can just jump on a podcast right and um
so so that's that's why uh like it's
obvious to me that like on chain stuff
that crypto is is going to be a big
thing uh is a big thing but it's it's
like like clearly obvious but um
not everybody is there yet well the big
question that I have is as we really
begin to put a fine point on exactly
what the phenomenon is that is the
network state so you we were talking
about the different forms that God takes
and one of the forms is is crypto the
network state so what is that organizing
principle there's kind of two different
things which are what's the scenario for
the current world that's why I was on
the unprintable money and so and so
forth and then what is what I think is a
piece of the next world not the only
piece the starting currency is can we
start new countries that's the constant
Network State I wrote a book at the
network c.com it's V1 it'll be updated
um but you can go and read it there and
I think it's decent the premises that
start new countries is possible
preferable and profitable so let's first
talk about the possible part
our new country's even possible
so you know we know that we've started
new companies like Google out of a
garage uh and new communities like
Facebook out of a dorm room
and your currencies like Bitcoin off of
white paper so could we start new
countries right and as crazy as that
sounds let me first give you a visual of
what this might look like okay so this
is a visual of a network State it's
something which it's group people that
has a population comparable to that of a
legacy nation state but has an annual
income and physical footprint also
comparable to one the main difference is
that it's physically distributed rather
than concentrated in one place
so might have the total land area of
Estonia collectively owned by the people
but just spread all over the world in
ranches and subdivisions and towns and
cul-de-sacs like imagine a Chinatown was
actually collectively owned by the
people and part of a Global Network of
them okay
and just to see how a network State
could build out do you see this GIF on
screen all right so I'm just going to
play this this starts from one person in
Tokyo okay if I play this you go from
one person to Tokyo they're just making
you know this is how a Founder could go
from one to a million right one then 17
people 172.
1729 and 170
000 and so on this is how the network
State builds it out okay and you
essentially recruit people from around
the world who have this Collective
hallucination and they crowdfund larger
and larger things until you start a new
country
as crazy as that is right yeah how would
you actually go about doing that let me
give a little bit more meat on the bone
as you put it basically most countries
are actually smaller countries
most of the United Nations has less than
10 million people
there's only 14 countries of more than
100 million people okay
and not obviously we've actually seen a
lot of new countries since the U.N never
mind thinking about how 1950 was Peak
centralization
right the unusual thing about our period
in my view is so if you look because the
breakdown of the British Empire
and the French Empire and then over here
the Soviet Empire all these new
countries arose
and for the last 30 years we've been in
a very unusual time of a unipolar world
right with this hyper power
and when that breaks down
uh you know the number of new country
type entities will go absolutely
vertical just like you know this curve
kind of looks like the number of new
currencies as well as you go from like
50 something UN member countries to like
190 today it's almost like a 4X by the
way you don't think of it as being we
have 4X as many countries or UN members
I mean that's a precise definition at
least for today you don't think we have
4X as many UN members as we did in 1945.
point is as this sort of it's like
Adam's decomposing as these things fly
into different directions
now
um you know the number of countries has
been flat for a while but then so is it
to Creation new currencies and then it
spiked right so U.N membership has grown
over time so if you forexed these things
right
um
could we do more right so first premise
then again is most countries are small
countries second is lots of new
countries have been founded okay
actually we're gained un membership
the third premise is that
cryptocurrencies rank with Fiat
currencies so here is
um
basically the you know it's a funny site
called Fiat Market cap.com okay like
coin market cap and the thing is that at
the time of this you know screenshot or
whatever Bitcoin was the 27th currency
globally by market cap so question is
could crypto countries rank with Fiat
countries and how would that look well
before we have a table of currencies now
we would take the Wikipedia you know the
table of countries and right over here
something that has one million 729 314
people would Nestle right between
Bahrain and Latvia
okay and whereas this would be in Europe
and this would be in Asia this is global
and decentralized it breaks a
fundamental assumption
which says it has to be in one place
that's what the internet allows allows
us to this will this is one of several I
think critical insights or critical
insights let's say if you believe this
it's an important insight
the internet allows us to network
enclaves
so lots of fragmented pieces of
territory and fragmented groups of
people are much more useful than they
were before
so it's an opposite direction of the
whole roll-up era of the nation state
you have the fragmentation era and the
network State rolls them up in a
different way online so they're unified
in the cloud but they're separated on
the land right and not completely
separated but they're in clusters
and the thing is that if you look at
most countries are not growing that much
in population but the network state
would or a network State because this is
just an example of one
would grow by immigration and
reproduction and so if you want to solve
the birth crisis or what have you you
can't really do it necessarily with
economic incentives like Singapore other
places have tried that I think you kind
of need to give type A personalities a
Leaderboard on which they want to win
okay and so you knock out you have 10
kids boom you just contributed like you
can actually have personal contributions
to this leaderboard over here and you
gain status in society for doing that
and that is actually the kind of thing
if you want to quote fixed birth rates I
think it's the kind of thing that would
work right
um
so so crypto countries remain with Fiat
countries
and this is where a network sheet would
would rank and of course you could have
multiple of them all right and so one
key concept here and this is the one
that's the biggest ticking point for
some people everybody's got a difference
you compartment they're like why do you
think you could become un recognized
well the answer is sufficient traction
results in diplomatic recognition how do
we know that well tubaloo uh has done
deals with GoDaddy okay so it's like a
sovereign country has done you know
basically the dot TV extension if you've
ever seen like twitch.tv or something
that's that's toovalu and GoDaddy have a
deal
Nevada the state is going to deal with
Tesla for the geiger Factory El Salvador
accepts Bitcoin as its National currency
there's many more examples of this
Colombia deal for the dot Co domain name
um Virginia with Amazon for hq2 the
mayors of Miami and New York except
Bitcoin Wyoming and Tennessee have Dow
laws so they're interfacing with
ethereum so if you have companies and
um uh currencies
interfacing with cities and countries
um the land is already negotiating with
the cloud
right that for for a sufficient scale of
money in a sufficient you know let's say
oomph and social impact
um already today lots of politicians
love to have a photo op with a prominent
entrepreneur who has a large online to
follow that's a huge thing today right
especially if they're trying to recruit
Tech or Founders to their region the
endorsement of that founder is like a
huge thing they bring Economic
Development the only people who don't
get this are in DC because they've taken
it for granted forever
right exit is the leverage where it's
like oh you can't take those Founders
entrepreneurs for granted you have to
attract business to your area right only
if you've inherited it can you take it
for granted okay so sufficient traction
equals diplomatic recognition
so now number two starting new country
says preferable right so why are new
countries profitable it's about the push
and a pull so first is that's like you
know Sri Lanka and Venezuela and Panama
there's a lot of instability in the
world right now thanks to inflation
thanks to you know like things like
Ukraine and whatnot so um there's all
these sovereign debt crises that are
happening so powerless people now have
an alternative to fail States
okay so that's one side of it the other
side is ambitious people now have an
alternative in the form of Frontier
societies
okay so since humans expanded Out of
Africa since people came to the US for
the Statue of Liberty for the moon
landing and so on you know they can come
from our flooding but this is you know
the the moon landing there's a there's
something within the human spirit that
it's pioneering that wants to push
Frontiers right and that's actually
present in every culture you know China
had zhenghi even if you know they they
pulled that back right obviously the
Native Americans you know their
ancestors made it across the Bering
Strait and
um you know Indians have their immigrant
culture like everybody many cultures
have something in them that's like okay
we drive to push the frontier whether
it's science or technology or the
physical world right and what's funny is
this Coalition of the powerless and the
power user is actually the same as the
crypto coalition crypto is not for
buying coffee that's actually the middle
class Normie use case but what crypto is
for is for the powerless people who are
just trying to hang on to a bank account
and the power user is pushing the limits
of what a bank account even is and uh
and that's the same as what the network
CS4 if you've got a decent upper middle
class or middle class existence in a
normal first world country you may not
care but if your country is breaking
down or you want to
um break into the future and have the
self-driving car city or the um
lunchevity land where people are
actually focused on you know
transhumanism or human self-improvement
you need to be able to change
regulations the communities that you
start here uh even if they look like
this on the map they don't all have to
try to go for diplomatic recognition
right so they can have different levels
of quote sovereignty or what have you
the point is however that you can
Network communities together all around
the world you can find your people and
live with them in crowdfund building
skip okay so that's why Network states
are possible here's why they're
preferable
finally profitable so last but not least
like this is a fun graph which is our
annual revenue per user of nation state
social networks and network States so
I've you know just to kind of
um it's a fun equivalence but consider
your tax revenue as being the revenue of
a nation state from a person and your
normal you know Revenue like ad revenue
is the social network Revenue social
networks are known to have the scale of
hundreds of millions or even billions of
users right this is meta WeChat Tick
Tock LinkedIn Twitter Etc hundreds of
millions of billions of users but their
monetization per user is only in like
the tens of dollars
okay but if you make twenty dollars per
person and you have four billion people
that's 80 billion dollars a year it's
amazing amount of money Jesus okay
conversely the nation states
um many of them are small they have much
fewer people like one to five million
people that's like Estonia Singapore
Israel et cetera but the monetization
per person is in the tens of thousands
of dollars per okay then up over here
here's the US and here's China and
that's why they are the quote to
superpowers because they have the
highest combination of scale and
monetization per person
right they have enormous scale and
modernization right and it's a log scale
on this annexes okay
a successful Network State though like a
public company would be around here so
they'd be lucrative enough crucially
they could attract Venture Capital they
could track financing and that's
important because something like this
the more people you can align behind
something the more feasible of accounts
so this shows I think because profitable
becomes more economically feasible
you're not going you know pushing down
in a sense it's like a physical social
network now I want to battle to the
death on how real uh I think this is
okay so I love this concept I think it's
really interesting but every time I
think about this my brain breaks a
little because I have some core
fundamental things that seem like they
are Show Stoppers but I know you've
thought a lot more about this than I
have okay so uh the way that I see this
is that
the nation the the actual Nations that
these reside within will fight this with
everything they have and so I will give
people exhibit a
um so exhibit a is the U.S we we have
become regulatory uh just oppressive
when it comes to crypto and web3 and so
when I see that posturing and I know
that that creates opportunities it
creates opportunities at the state level
it creates opportunities at the national
level but because you're going to have
the the
inter-jurisdictional Warfare even a
country that opens itself up and is like
okay this is going to be our
differentiator how are they going to
make their money for letting you be the
nation-state so it's basically worst
case you have a country that clamps down
so the U.S right now is making no moves
to let this happen they're they're
taking the exact opposite tact in fact
I've heard you say that the US is
mimicking China and how they're locking
down and everything or cracking down and
everything us is not a it's not United
anymore it's not unitary entity DC and
and blue America is hostile to new stuff
absolutely but red and purple America
may not be number one number two is
um
the design of the network state is
set up to be resistant to the nation
state in the same way that Bitcoin is
it's physically decentralized right so
if you've got them let's have this
debate so I don't I don't think Bitcoin
is very resistant
um disabuse me of this if you have I get
that you can make it hard for me I get
that you make it more expensive we
talked about that earlier but dude I
only have to destroy the lives of so
many people before people either flee at
which point I clamp down on you anyway
and I'm going to Capital control the
out of you and so you try to leave
and I'm like yeah you're gonna pay what
was it a hundred months of salary or
whatever countries have done uh yeah
right
right like they're they are going to
find ways to stop you from being Capital
flight uh so this is going to be a huge
fight I'm I'm not disagreeing with that
um but I don't think that Legacy
governments are going to win it and uh
or rather they're not going to win it to
a hundred percent
okay okay and I'll give several
Arguments for this
the first is that in the centralizing
arc upward you had you know the Brain
Trust you ever heard of that FDR had all
these smart guys you know there there
was there was a period from the early
1930s to 1969 where you had Hoover Dam
Manhattan Project Apollo
were all the smart guys could no longer
this is crucial they could no longer go
and found they couldn't be Rockefeller
and Carnegie and and so and so forth so
they joined the government
that's why you had all this Tech talent
in the government that's an unusual
thing
all these you know genius scientists and
so on and engineers
after that period IQ and before that
period the IQ drained out of the federal
government
like the federal government did not get
the best people arguably in the exchange
they were they were all building
railroads and you know then later
Automobiles and Aviation the early 20th
century right
um it was it was something which was in
a bearing time and now today a lot of
the IQ a lot of the intelligence has
gone out of especially the U.S federal
government okay if you have a perfect
you know math sat and
um you know you're really good with
numbers
but you can make a lot more money in
being an AI engineer or an AI founder
than you can as like some bureaucrat
regulating it right
um and then you know like and you have
potentially more power as well in the
sense of you can build entire thing from
scratch you have more creative control
right this is why you're seeing lots of
professors leaving Stanford things to go
and start companies that's why you're
seeing journalists go to sub stack this
is why you're seeing
um you know people leave Wall Street to
go to fintech or crypto like the East
Coast establishment just doesn't have
the pull that the frontier does right
that's it so it's a lot of the Charisma
and the IQ has been just drained out of
the centralized state in the opposite of
what the 20th century was okay so that
alone by the way just you know saying
Personnel is policy number two is
um Foreign Affairs you know has admitted
it's kind of lagging in here but they've
admitted the world is now multiple
which means that blue America has more
power over fewer people you're they're
seeing red America and purple America
Breakaway at home you have States it's
not just Sanctuary cities but it's like
gun laws drug laws abortion laws
education laws crypto laws all kinds of
things make America States again like
DeSantis has his own military the
Florida state guard you know that the
degree to which states are breaking away
from the feds and simply just disobeying
them and just doing what they want
um is more similar to the pre-1933 and
arguably the pre-1861 era and there's a
huge tension between states and the FEDS
there within the us then outside the U.S
the Foreign Affairs point about the
world being multi-polar as we talked
about earlier you know Brazil and France
and Saudi and Iran and China it's not
just China Russia Iran anymore by the
way on their own it's all these
countries in the middle who are breaking
away uh you know Fiona Hill who's this
um National Security person actually
admitted this in the Leonard Mary
lecture that she gave like a few weeks
ago
um I'll just quote this one second
um as you look that up one thing to have
in the back of your mind this feels to
me like it only works if there is
catastrophic
um fragmentation like even the states
breaking back apart I doubt is going to
be enough it feels like did you have you
read the book infomocracy I've heard of
it you remind me again
oh my God this is like I'm surprised you
didn't write it so this is a Sci-Fi book
about the network State come to life and
so like every block the rules change and
you just get an update to your phone
that's like okay you've entered this
Zone and here are the rules you might
want to know about and basically
everybody gets to vote with their feet
constantly and you're moving from one
jurisdiction to another and if you like
that jurisdiction you move in you stay
and if you don't you leave and so people
are constantly vying to get people to
come to them and the the conceit of the
book is basically that we got to that
point but that that to me is like the
miracle the miracle is that the states
will let this go to that point the one
thing I'll say is the reason that this
idea is so interesting to me and the
reason that I am so fascinated by how
your mind works is you're the only one
that goes yeah we probably are going to
fall apart oh and by the way don't worry
there's this other thing I think if
there wasn't uh like if we didn't and
begin the the first several hours of
this conversation describing how we're
standing at the precipice and we're
about to fall off uh I I wouldn't buy
into this idea at all I'd be like nice
idea but it's geographically bound
ultimately and it's never going to work
but I do think that as El Salvador tries
to use like oh my God like our currency
is a mess we have to use the some of
these ideas cryptography specifically in
order to restabilize maybe Argentina
starts to do the same thing maybe other
countries are like hey wait a second
this is actually pretty interesting if
the U.S goes through a tremendous moment
of Crisis which for reasons we have
talked about I think borders on
inevitable if I am right that you cannot
just print infinite money but they're
going to try and you're going to have a
problem you you're at least I think in a
break back into States that's my sort of
thesis on that is that the state becomes
the more dominant relationship between
the federal government and the states
yeah like like the I don't know you
might call it provinces or something
like a state state is unfortunately in
the U.S means both Kentucky but it also
means a a sovereign government without
the disillusionment of the the
um governmental entities that we have
now you will just get a bizarre warring
faction so I'm going to be in my network
state but I'm only going to sort of be
in my Network's take I'm still going to
be beholden to some government even if
it's a friendly government like Texas or
Florida they still want theirs like they
have a business model their business
model is extracted from my taxes they're
certainly not going to let go of that on
some level they're going to get theirs
and so now I'm I'm sort of paying Guild
dues I guess to my thing but it's like
if they can't give me more then I'm in
trouble and I believe in your idea of
the frontier but like I need to carve
space away for the frontier to actually
carry the benefits of an Asheville
Frontier there's an aspect certainly of
the current Financial system which is
Wiley Coyote okay but my mental model is
the transition that you're talking about
or that we're talking about the fragment
education is already happening in a huge
way and the reason let me give you some
examples like on this guy I'm sure I
mispronounced his name is French guy
gills babine he talks about transfer of
sovereignty think about it postal mail
has been replaced by email and taxi
medallions transfer sovereignty to Uber
and Lyft they're actually the taxi
regulators and NASA has been replaced by
SpaceX and on and on and on you go to
functions of the centralized state that
are being replaced by the decentralized
network essentially by Tech Founders and
you know you have things and I mentioned
this like a few years just go pronounce
even more explicit like a few years ago
like David Cameron who was the head of
uh you know 60 million something social
network called the UK it's a joke but
it's funny
um had an audience with Zuckerberg who
uh you know runs a 50x larger social
network 3 billion people right and um
and it was like Zuck was like everyone
could say endorsing Cameron but simply
appearing with him it actually gave
Cameron and Zuck is able to communicate
with more people on a daily basis than
the president the prime minister of the
United Kingdom or the or frankly any
head of state right if Zuck wanted to
buy a lot massive and if you think about
it today Elon musk's endorsement
by simply appearing alongside somebody
is quite important for a DeSantis or a
RFK junior or what have you a long run
so he's the lord of the cloud as opposed
to Lord of the land right and
um it's clearly very politically
important they that's a very important
constituency Twitter may be the most
important Battlefield in politics right
now right so and that is run by
entrepreneurs right
um
so in many ways like the state has
already given up a lot of power to the
network arguably you can say I mean
there's different moments you could put
it at but in you know people you you you
stay or still say are the most powerful
man in the world like about the US
president you know they say that right
um
after you know Trump was de-platformed
in early 2021 from Twitter Trump wasn't
even the most powerful man in his own
country
astonishing yeah and that is a I mean
because the CEOs of uh Google and
Twitter and Facebook and so on and so
forth as a Consortium plus others in the
in the government and media
basically made a decision that you know
no Moss right and they apply for not
just Trump but all the supporters okay
that is one of several ways in which
network is more powerful than state in
some ways not every way but enough ways
that's why the network state it works
it's a phrase that works on several
different levels
um it identifies leviathans identifies a
unifying thing that combines in San
Francisco State identifies conflicts
between them it's just like a pair of
words that you can unpack in a lot of
different and useful ways
the point is though that basically once
you realize network is already more
powerful in the state in some ways
um you know as I mentioned email I
mentioned the tech Founders
cryptocurrencies have more scale I mean
Bitcoin ethereum are bigger than most
national currencies
um you know social networks are bigger
in scaled in most countries uh Tech
Founders are wealthier than most
politicians and so on et cetera et
cetera like there's already being a
significant transfer of sovereignty not
everywhere like China is actually
um China has engineers in the federal
government they're a federal government
right or their national government and I
think by the way that is like the key
boundary line
essentially your head of state needs to
have the skills of a tech CEO a tech
founder or a venture capitalist
or will eventually lose power to someone
with such skills won't they also lose
power to somebody with guns like at some
point because like right now Tesla's
backed by men with guns right all of
this ultimately is still nested within a
government so when I think about the
network State I get the the people that
are geographically next to each other if
somebody comes and puts them under
attack physically they can defend each
other but if you've got a guy that's
part of I mean let's just take Mega the
mega Network State a very unpopular
Network State and so if you've got one
guy that's isolated and he's isolated in
Minneapolis like bro is in trouble so
one of the thought exercises I was
running as you were talking is okay if
if the USSR collapsed now and we have
all of these tools would network States
arise in their stead and I thought what
they're going to become is it's going to
be protectorates so it's going to be
like Mafia rule you're going to get
groups of people and some of them I'm
sure will be honorable et cetera et
cetera but it will be it will stay
largely geographically bound because
you're going to need people to protect
you and so I think it would add an
interesting layer and that you could
communicate what you stand for and all
of that in a way that would be easier
you'd recruiting people would be easier
but at the end of the day if you're the
satellite guy of an unpopular group in
your physical area and there is a
breakdown of rule of traditional law
meaning people with guns your toast like
they're going to come for you and batter
you and so they're just gonna you're
gonna reconsolidate geographically and
once they have to reconsolidate
reconsolidate geographically I'm like
now the the traditional state has a way
to fight back because you you can only
sort of vote with your feet because you
still have to Cluster and say a few
things first is if the traditional State
breaks up it's actually pretty hard to
organize violence you know and so if it
breaks up those marauding gangs or
whatever are are
um I mean there's a lot of intermediate
between where the US was and where it is
and like Brazil and then Venezuela and
then like Somalia right like there's
there's ton of intermediates on that
continuum
and
um
several points here right the first is
um
that
you don't have to disclose you know like
your membership in this community
um for example when you walk down the
street uh yeah some buildings have logos
on them but you know who's living in
what place do you have x-ray glasses
like your augmented reality glasses
don't necessarily give you information
on who's there right people could be
Christian they could be Mormon whatever
right all the type of stuff so number
one is
these communities don't need to be
perceptible or visible to everybody not
everybody needs to be able to see the
map or the full map maybe you need to
hold an nft to see some of it maybe in
some jurisdictions where one node of the
network is persecuted it's invisible
okay so invisibility is a big part of
security
okay like stealth just like a stealth
bomber except it's uh still don't get
involved that's it B is that um
a big part of the physical security
problem now especially in the US is
because we're in this weird
we'll see how long it lasts but this
anarcho-tyrannical state where uh the
state won't defend you but also won't
let you defend yourself for example
they're like throw somebody in jail for
defending themselves right or you know
you fire somebody for her I mean this is
there's so many examples of this now but
it's like the state is basically on the
side of the criminals right de facto
where uh you know this guy is in your
case where this guy shot a robber but
then he got charged with murder or
something like that right that's that's
like non-non
um it's like fairly frequent and um
that's an unusual State of Affairs which
may not be able to last that long
because people still need to respect and
comply with the state for it to be able
to go and throw somebody in jail and
have that stick for people to kind of
not shelter that person and and whatnot
and um the uh that combination of
Anarchy and tyranny you know San
Francisco is like a perfect example of
this where the working class Uber driver
um you know they they're subject to
tyranny and sense so they have this
super expensive parking ticket for being
on the side of the road for a second
that just destroys their entire day's
income
but a crazy guy can smash the window and
nothing happens to them
right so that's that's a combination of
the Anarchy and the Tyranny right and
um
this is uh this is something which I
don't think we'll be able to be
sustained indefinitely we'll see okay
um
the point being that if it flips either
way and you have either pure Anarchy or
you have like an actual civilized state
in a state of pure Anarchy a rough order
is just quickly restored like that that
group you know like that marauding group
gets beaten by a better group right and
I know that sounds very Mad Max and
whatever you know in the fall of the
Soviet Union
there were Oregon there was organized
crime there were gangs and so on there
were civil conflicts that may be the
best model for what's happening but it
wasn't everywhere in the world it was in
the former Soviet Union right it was
Focus there right so closer you are in
some ways potentially to Blue America
the worse off you are data by the way in
my view is maybe the most surprising
part of this whole thing it may be
something like covid where you know
early code most people were totally
apathetic about it didn't wasn't
existing
and some people are like oh wow this
could be really bad but the least
obvious conclusion of all was this this
will infect 700 million people kill
seven million people including a million
Americans dead from covet at least all
the official numbers
and then two years later people like
yeah I wasn't that big a deal we lived
right that to me is the most surprising
thing of all that the world is
essentially already largely decoupled
from the US you saw that graph where all
these countries are trading with China
right and lots of world has already
decoupled in a big way Russia was able
to decouple from the US in the middle of
a war and they're basically okay
right there's just that we people taught
their financial system would collapse
they dropped the whole account of the us
being the indispensable country is no
longer true
that's a non-obvious but it's a really
important Point here's a let me show you
two things this is why this seemingly
dry International Affair stuff really
matters like this thing see this thing
where it says uh the global distribution
of power it's it's like a weirdly
phrased question but you see the thing
on screen right
like basically what they're asking this
is foreign affairs which is like you
know on this particular topic they'll be
the absolute last to acknowledge it
they're like the official you know
publication the state department and so
they're asking the global distribution
of power today is closer to being
unipolar than this being bipolar
multiple so if you really agree with
xenopolar you're here and if you really
think it's uh bipolar or multipolar
you're here right
um that say you disagree that it's
unipolar so you're over here okay so
even the people that Foreign Affairs
polls it might be 60 or 70 30.
they're saying it's multipolar
which means the US is no longer the DC
is no longer in control of Affairs
so lots of mental models are built on
the idea that they've got an organized
government they've got a powerful
military they've got a well-respected
currency they've got diplomatic oomph
and if you start substituting the the
government of don't look up in your head
that's going to be closer I think to
reality here is this lecture Leonard
Mary lectured by Fiona Hill she's like a
you know russiagate kind of person you
know like very much a you know
very very much like a state department
official voice and Glenn Greenwald and I
had the same reaction when we saw this
uh this talk she basically said
um Ukraine you know that that the US is
kind of lost in narrative on it uh this
has not become a proxy war between the
us against Russia the war is the reverse
right and basically she said the war in
Ukraine's perhaps the event that makes
the passing of pax Americana apparent to
everyone
right because for example do you know
what percentage of the world actually
sanctioned Russia
I don't even have a guess it's 15 85 in
the world did not sanction Russia
wow okay that's that's why like wow okay
wow opposite of the 1930s in your 1930s
New York Times partnered with stalinist
Ukraine and was he able to uh in 1930s
the New York Times partnered with
stalinist Russia and was able to
effectively choke out Ukraine right like
they they helped cause the Ukrainian fam
and Durante wrote all those fake
articles Jesus that that whole thing is
crazy have you read the book The Red
famine yes and also you know this I
highly highly highly recommend if you
like the thing is
the New York Times will tell you about
everybody else's crimes but their own
okay and so get this book the great lady
winked okay how and it goes through how
um everything from you know the
Ukrainian famine the Vietnam War uh uh
you know like Cuban Revolution
um you know basically every just like
you know talking about how the tech
Founders are now sort of endorsing
politicians right and helping them level
up right you know like with with Cameron
or Elon the opposite happened in the
20th century like almost every communist
dictator had a journalist backing them
up for example uh Lennon had John Reed
who wrote 10 days that shook the world
Stalin had Walter Durante
um Mao had the sky Edgar snow who wrote
like red star rising over China uh Ho
Chi Minh had David halberstam the New
York Times who wrote These fake stories
about uh Buddhists you know in in being
persecuted in South Vietnam they're
later admitted to be fake it was planted
by like a North Vietnamese spy
um you had guys like Owen Lattimore that
you know assisted the Communists you had
um Herbert Matthews again another New
York Times who wrote this hydrographical
article on Castro that helped him
recruit for the Cuban Revolution and
made him seem to be like ideologically
mysterious when he was just a communist
and on and on and on right like
basically whether it's Lenin Stalin Mao
Castro uh Ho Chi Minh there was a
journalist there usually a western
journalist backing them and writing
propaganda for them and getting them
distribution and influence many of the
individual ukrainians and Russians are
victims of this right but the New York
Times was trying to team the Ukraine to
sanction Russia but this time it didn't
work
so it's like history is running in
Reverse with the opposite outcome this
time right 85 of the world did not go
along with the sanctions because of
social media because of other things
people had a contrary View and for
various reasons other countries didn't
you know they were neutral or whatever
on on Russia you know versus Nato right
at least that's how they saw it to be
clear by the way one thing I just want
to say about this is
I you know like
I know lots of Eastern Europeans lots of
estonians lots of you know folks in the
baltics many of those people don't want
to be forcibly reintegrated to the
Russian Empire like pune's Invasion
killed tons of innocent people
um you know even if like you know he
thinks oh NATO had its guns there and so
on there are a lot of other ways a lot
of other things that could have been
done other than this
and so I'm very sympathetic to lots of
folks in Poland or Estonia or Ukraine
that don't want to be forcibly regulated
to Russia after they just got their
independence right so I get all of that
um
Fiona Hill is talking about is there's
you know there's there's the Russian
perspective the Ukrainian perspective
there's the Eastern European protective
there's the American perspective but
there's also the Chinese perspective
which is
um you know which is one thing there's
an Indian perspective which is why is
India you know being asked to bankrupt
itself for some European War we're just
going to buy oil from wherever but you
know we'll remain neutral there's the
African perspective everybody's got a
perspective on this I think the
assumption that you may have of
in a background way right of like a
competent state that can organize stuff
and that'll go after you and so and so
forth like China has that
you know for sure China is very very
organ they're like lawful evil you know
what I mean in a sense I mean they're
not they're not I mean lots of Chinese
people are good people and so on I'm not
saying all and of course right but let's
say if the Communist party wants to get
you they're very very organized right
whereas in in you know the US
blue America you know the books are like
chaotic evil it's BLM riots it's um
setting things on fire it's
um it's like cancellation it's
disorganized it's chaotic it's sometimes
effective but it's also got a very short
attention span and so it'll surge up and
it'll go away like an animal like you
know looking and then it'll you know if
if you're invisible it can be away from
it right
um
and the advantage of I mean the
disadvention of chaoticable is this very
unpredictable in a certain way you know
it's like surge or whatever advantages
it doesn't have like a planning Horizon
and it's in a sense less dangerous than
lawfully the Lost level I think is um
uh you know it's it's more concerning
because it's more organized right most
people as I said even only 45 of my
audience believes that this can't print
infinite money and doesn't have an
invincible military
and those are equivalent like Fiat
currencies back in the middle of guns if
neither of those things is true if the
US can print money and if it doesn't
have a mental military
which and I think I think uh for the
reasons I mentioned you know all the
stuff on the fed and the treasury and
credit card uh crisis and student loan
all those things that we've talked about
right like how bonds have been devalued
that underpins can't print infinite
money it's already an inflationary time
they can't print on top of printing
it'll just go out of control
and why don't they have an invincible
military because China has this
manufacturing Goliath right and the US
is terrible at building physical things
it's all those it's not just the public
works like La sombre the bus shade in LA
or the you know the bathroom in San
Francisco that took 20 years or the 300
million dollar bus lane but it's also
there's a wallet in the F you know 35
and the you know aircraft carriers and
the Ford class aircraft carrier and the
in the literal combat chip and all these
other things military has built so so
those are the reasons of course these
are unobservables maybe I'm completely
wrong and and you know the the state is
really good at kicking the can forever
right so just decades the thing keeps
grinding on
but I have a kind of a feeling that even
as the ability to print and the economic
sphere of the US is declining they're
pushing it harder
and even as the US is becoming
militarily weaker and more disorganized
and less competent they're pushing it
harder too apology you know why you're
so interesting
so Ray dalio is he's mapping out the six
phases and you feel like when he's
talking you're at a thirty thousandth of
you it's very useful in terms of um how
to organize your thoughts where you pick
up the mantle is I'm zooming in on the
territory and now I'm seeing the
intricacies of how everything falls
apart I'm able to start formulating a
hypothesis on how this starts to build
moving forward and because you're so
tech savvy
it really feels like you have the
closest ability to predict the big arcs
you've been very honest that of course
you could be wrong and who knows sort of
how this all goes and it's very
complicated but you have the clearest
vision for how the pieces get put
together
in a world where we have cryptocurrency
we have cryptography we have the network
effects of the internet and all that
it's utterly mind-blowing I I can't
believe that we've gotten this far I've
so many other questions that um I could
ask it's absolute bananas where can
people keep up with you
balajias.com maybe you can put that on
screen I don't actually need
subscription Revenue but what I do want
to do is engage people on some of these
things because
unlike a lot of people I don't think oh
collapse comes and then magically the
next thing appears you need to start
building the next thing before the
collapse awesome brother the way your
mind works is insane thank you for
sharing it with us today it was uh
amazing everybody at home if you haven't
already be sure to subscribe and until
next time my friends be legendary take
care peace
if you want to learn why crypto is
taking over check out this episode with
Rao Paul I went down this journey that
you're going down now
in 2012.
and that Journey led me to crypto