Kind: captions
Language: en
so the svb banking collapse the biology
sense that all of this is just going to
keep going keep going keep going and
we've reached some sort of threshold
moment that requires us to put the bit
signal into the sky as he said
how contained is this what happened with
svb is this going to go on are we at a
Tipping Point like help me understand
this moment uh it would be very
difficult for me to tell you whether or
not we've reached a Tipping Point I
think you can only evaluate that in
retrospect but I would say you know
everything we've talked about in my
first two appearances on the show we're
seeing that play out
fractional Reserve banking as a scam it
it always fails it cannot continue to
support the depositor's interest over
time
and uh you know we had biology on for a
Twitter space they got I think it got
attended by like half a million people
Jesus and he for those that don't know
he accepted a bet that Bitcoin would
reach one million dollars USD price in
the next 90 days which we're still in
the middle of so we'll see yeah we're 20
days in maybe 30 days in something like
that at this point and although that's a
very aggressive timetable in my
estimation
um I do think
directionally he is correct right the
same thing we've been talking about
previously the more currency you
counterfeit
uh the more bitcoin's price appreciates
right you're pricing Bitcoin in terms of
something you use the word counterfeit
so really let me give people like a 20
second primer on some of the things
you've thrown out here so the six word
thing yes go ahead do it inflation is
legal counterfeiting counterfeiting is
Criminal inflation so Central Banking is
a coordinated currency counterfeiting
cartel that runs the world
all right one of the questions I want to
ask you today is what you think the
government dossier on you says but we'll
get to that later okay so uh you've got
svb ends up imploding because of
fractional Reserve banking they
um you're only legally required as a
bank to hold it's less than 10 so if
somebody gives you a dollar you're
required to hold less than 10 cents the
rest you can invest loan out do whatever
you want uh so should people do a quote
unquote run on the bank you can find
yourself in a position where you can't
pay people back out now if you invest in
dumb things you have a real problem and
svb I think by most people's estimation
invested in really dumb things which we
may or may not get into the specifics of
but that's how we ended up here and then
immediately after that multiple other
banks failed I think we're up to five
now uh so it it is scary now your
contextualization is that this is just
the nature of uh fractional Reserve
banking full stop when you have a a
national bank or a central bank that
you're always going to have this problem
yeah so just to be clear a bank run
first of all this is when depositors
come to take their money out of the bank
and the bank does not have sufficient
assets to meet those Redemption requests
this is only possible with a fractional
Reserve Bank so what you just said you
give the bank a dollar they're only
required to hold 10 cents of that dollar
they can lend out the other 90 cents and
it it compounds too because once those
90 cents are lent out those in turn are
become Bank deposits that are in turn
lent out again at a ratio of ten to one
or whatever the reserve ratio is and
this compounds this is called the money
creation process you could look this up
in a full Reserve Bank where someone
gives you a dollar and the bank holds
the dollar a bank run is not possible
because they always have adequate assets
to meet their liabilities or their
Redemption requests
so only in the fraud of fractional
Reserve banking is the Specter of a bank
run even possible whatsoever I think
that's very important to note now with
svb in particular
they did something sort of dumb and they
had a taken a lot of customer deposits
they had bought treasuries long so these
are U.S debt instruments and they were
doing that because the the interest rate
right it was yielding an interest rate
but they needed to get some return so
exactly but what they've done now is
they've shifted their maturity out into
the future so if there is a quote run on
the bank or too many depositor requests
for Redemption at once that they would
not have enough money to meet those
requests and that's essentially what
happened now you there are ways to to
better manage that they could have
hedged their interest rate exposure so
that it had interest rates gone up
unexpectedly unexpectedly for them as it
did they could have covered that
um there's arguments to be made that
their Chief risk officer was put in
place not based on Merit but rather
based on gender or something like that
like kind of a wokust placement so maybe
that had something to do with it she or
he or they were not qualified for that
position
um but in general this entire
system of fractional Reserve banking is
not made to persist it does not it
cannot persist over time because you
fundamentally have a mismatch of assets
and liabilities how long have we had
fractional Reserve banking well there's
been fractional Reserve banking on and
off throughout history and why do you
say it can't persist if we've been doing
it for thousands of years because it
always leads to systemic collapse you're
saying the cycle what Ray dalio calls
the big cycle yeah the big credit cycle
you'd say has a lot to do with
um with fractional Reserve banking but
if everybody knows that the big cycle
happens and that it is well I guess let
me push you on what you just said are
you saying that the big cycle isn't just
about fractional Reserve banking I don't
know so Ray that's Ray's position about
this large credit cycle there's also
like the fourth turning there's a lot of
these
um perspectives that humans tend to have
you know history doesn't repeat but it
Rhymes so I'm not accrediting the entire
cyclic nature of human self-organization
to fractional Reserve banking but there
definitely are credit Cycles related to
fractional Reserve banking but for that
very money creation process I just
described
a lot of money gets lent out you get a
lot of debt and Credit in the system
which is effectively money all right
you've expanded the money supply
significantly but then once there's an
economic shock
the proverbial tide goes out and you
find out who's swimming naked right
there's not enough Assets in the system
to meet the outstanding liabilities so
this is why you get these deflationary
shocks or liquidity crises like we saw
in March 2020 everyone all of a sudden
needs dollars there's no dollars to be
had ultimately you get the Central Bank
intervening saying well we'll print a
lot of this money
um and that's meant to to fix the
problem but what you've actually done is
just kick the can down the road right
you've confiscated well from Savers yeah
I was gonna say it's actually worse than
just kicking it down the road well
you've you've conducted systemic theft
through inflation right you've robbed
Savers and you've pumped liquidity into
the system it's kind of like it's a
Band-Aid you know what Milton Friedman
said about inflation is that it's just
like alcoholism
the good effects come early right you
print the money you have the drink you
feel good
The Hangover comes later the pain comes
later the next day if you do it
continually right the pain comes later
in life you lose your job your family
falls apart whatever it is the same is
true of inflation you print the money
you get this spur for demand there's
liquidity there's a sense of confidence
restored to the system people start
selling Trading
and when that goes
comes to another culmination what you
get is a larger credit bubble so the 700
billion dollars we printed in 2008 to
bail out the financial system pills in
comparison by an order of magnitude to
the Six Trillion we printed for covid
and now we've authorized I think an
additional 2 trillion at this point for
this this nascent banking crisis that we
are in
so we're talking about eight trillion
dollar bailout package could be getting
larger
over the past three years that's over 10
times what we did in 2008. so this is
fractional Reserve banking right every
time
the crisis comes you have to print
exponentially more money because there
are exponentially more liabilities in
the system from the last round of
printing and so this is why it's
unsustainable and this is why it always
culminates in hyperinflation
because the central bank has not only
the precedent but also the incentive to
continue printing the money and tell the
currency hyperinflates into
worthlessness and they'll also fight
with every type of measure they can to
try and prevent that right they'll
prevent people from buying gold
executive order 6102 in 1933 they'll
enforce Capital controls to try to keep
money and capital in the country so
there won't be a flight say if you're in
China or some other country in the
currency suffering people would try to
fly to US Dollars China would prevent
that I think they have Capital controls
to the tune of like fifty thousand
dollars a year that only fifty thousand
dollars per year per person can leave
China
so you'll see these exotic regulations
trying to prevent
what is ultimately
an inevitability of economic reality
it's like when you print money
you're you're creating uh the incentives
for people to accumulate more debt
you're you're injecting more fragility
into the system such that when the next
shock hits you need even more
exponentially more money printed and
this can only go on so many rounds when
you're increasing orders of magnitude
each time so it seems like and it's hard
to say where the Tipping Point is again
without without hindsight but it does
seem like we are critically close to
some type of systemic breakdown
okay so talk to me about timeline and
your take on this so I know biology has
sort of hedged his bet a little bit and
said look this is just to get people's
attention but two million dollars is a
lot of money to put on the line just to
get people's attention I have to imagine
some part of him knows the credibility
hit he's going to take if if he misses
the 90 days and if he misses it by a lot
then it's really going to be problematic
because then it you know like let's say
that he misses by two or three years uh
that's a long time for people to be just
dismissive of like yeah yeah you're the
boy that cried wolf now I know his
background and he's very much not that
as far as I know he's only cried wolf
once before and he was right uh so
what's your take on that what was that
instance I'm actually not sure God what
was it did he call uh uh I forget it was
either 2008 or 2020 when you said hey I
think it was 2020. I think it was covet
he was like yo this is going to be a
real problem yeah and so when it played
out he was like one of the first people
to raise his hand and say it yeah yeah
he's got a reputation for being an early
adopter of damn near every uh
groundbreaking technology and he's not
one
with that one exception perhaps
typically to do something like this
right he's not a super radical guy
um but I think this is somewhat of a
Paul Revere type move you know like
Paul Revere Road through the town
telling the Americans the British are
coming before the Revolutionary War
um
biology's made this bet to in a way to
say that the printing is coming and the
printing is coming there's no question
about that because when you think more
banks are going to fail or for some
other reason
because of the because of economic
reality and the
the
systemic design of fractional Reserve
banking right you have a fundamental
mismatch of assets and liabilities but
we've had that for a long time so why we
printed money for a long time and we
printed money at an accelerating rate
right look at look at the 1980s Savings
and Loan crisis versus the 2008 bailout
Savings and Loan crisis I think is in
the tens of billions of dollars
2008 700 billion dollars
2020 six trillion dollars plus the two
trillion we just mentioned so it's it is
happening right it is exponentially more
quantitative easing or inflation or
systemic theft each time
so so long as like there's no reason to
think that would ever end because again
the Central Bank not only has the
precedent of doing that but also the
incentive to do that they profit from
the print right they earn seniorage
which is where they're creating money
uh cheaper than its actual value in the
marketplace so
I think biology's move is a Paul Revere
Type move uh now what other interests he
may have in place really has a lot of
Bitcoin he has a super early adopter in
Bitcoin uh this is probably not a lot of
money to him
um so if I'm looking at it through the
lens of his self-interest Maybe
it's just it's not as as impactful of a
play for him and maybe even if he's off
by a couple of years
maybe history would regard that as kind
of a selfless Brave move right like you
put skin in the game just to try to get
people's attention to emphasize this
fundamental failure
of fractional Reserve banking to try and
warn people to get their Capital out of
the system before it fails none of us
know when it's going to happen right
again that's his that's the ballsy kind
of aggressive thing is like putting a
timeline on it that's very hard to do
it's extremely hard to do as far as I
can tell I can just
look at an economic system and look how
it's functioned historically and tell
you what direction it's going over time
but to actually tell you specifically a
specific timetable for when things will
happen that is much more difficult
so
I think he's doing it for the right
reasons but what do I know
yeah I don't I don't know enough about
him to comment on his motives at all but
it it is an important question I think
for people to really look at so five
years ago I did not care about Finance I
didn't think about it at all all I
thought about was how to generate more
money it didn't bother me in the
slightest that I didn't know how to
invest it and then the more that I
started researching the whole idea of
okay you've generated all this wealth I
honestly thought I know we've talked
about this before but I honestly thought
that inflation was a law of nature I
didn't realize that it was happening
because of human behavior I thought it
just what I I just never thought about
it and so it was just like everybody
always said there's supercent inflation
so I thought word there's two percent
inflation it just is what it is uh and
as I was you know as I get more educated
on this and as I think about what it
really is
I realized whoa the idea of sustaining
your wealth the buying power that's a
better way for people to think about it
to sustain your buying power over time
you are forced due to the modern banking
system you are forced to have an
investment strategy otherwise you will
get inflated away over a lifetime it's
not going to happen in a year but like
at times of brutal inflation like during
covid you were looking at 10 15 percent
10 15 is a lot a lot a lot of money in
terms of reducing your buying power and
so that's when I realized oh my God like
I have to think about that I have to
come up with a strategy so when svb
happened it was the first time where I
because I'm very conservative when it
comes to money Ironically in business
I'm I am hyper tolerant of risk but when
it comes to finance because I feel so
ignorant on the topic I I'm just super
super cautious and when svb went down I
did not have any direct exposure to svb
but I had
[Music]
um
I had
money in usdc and so when I heard that
Circle had exposure to usdc and then it
might lose the Peg and for a while it
did it lost Peg like crazy so that was
the first time where I was like whoa I'm
finding myself scrambling on whatever a
Friday night to get all of our usdc
somewhere that it's not going to just
poof evaporate overnight so that said to
me okay I really need to pay attention
then government steps in cool everybody
calms down but then really smart people
are saying this is the beginning and so
I'm like okay the the way I'm coming
into this my thesis is
the government backstop did not change
any of the fundamentals all it did was
change the time Horizon and so now I
have this period where I can be
thoughtful I don't have to move in a
scramble and so the reason I want to
have you on is so that I could really
get my context right and so where I see
the sticking point here is you have the
fed the FED knows as much about money as
probably anybody else right like a lot
of people on the cryptocurrency side
they want to paint them with oh they're
stupid they don't know what they're
doing brush
look I doesn't mean I agree with what
they're doing but I'm not going to
approach them as if they're ignorant I'm
going to approach them as if they have a
different Take On The World than I have
but their take is going to have very
sincere and potentially severe
consequences so the the wall that
they're backed against that I think
they're aware of and thusly I think they
will try to move in a way that's
thoughtful is this
they know that if you print too much
that you will hyperinflate that that is
just a law of nature that you I I think
while they won't use the words theft or
whatever they recognize that you aren't
increasing the productivity so you're
not increasing the things that are
available to buy or the output and so
you're just making more dollars to buy
the same things which is how you get
inflation so they know they're doing
that so they're they can only let
themselves go create so crazy they know
that every Reserve currency
all throughout history has eventually
collapsed usually through hyperinflation
so they're they're going to be aware of
that then the other thing is okay we
know that the way to break the back of
hyperinflation or inflation in general
is to raise interest rates which just
slows everything down in the economy
they're obviously not afraid to do that
they've cranked up rates but now here's
where it gets tricky as you raise rates
and look this could meet my ignorance I
want to be very clear that I come into
this hyper humble but I have to have a
framework to think about the world in
order to make decisions so I come into
this saying all right what's going on
right now is they've raised rates so
fast that people aren't now able to make
good on their own payments which is
exactly what put what put svb into a
dangerous situation is you have all this
debt that you have to service but the
problem is you can't service that debt
as the interest rates go up so they know
that as well so they're going to be
trying to find like some some sort of
balance they I think and this is where
you're gonna have to to steer me I think
they know that a recession is inevitable
so it's just a question of are we going
to crash and explode on impact or is
there uh a miracle on the Hudson or
whatever it was called where they come
yeah they get us a water landing
everybody's able to to come off the
boats so
I'm looking at biology and and I I
tweeted at him and I was like uh
I get what you're saying but the the way
that they'll be able to milk the
timeline on this I think
90 days just isn't realistic
where do you do you think that they can
give us a water landing
you know I I struggle to talk about
Central Banking and a lot of the terms
that most people use because it's it's
almost presupposes that this institution
is like looking out for the greater good
or looking out for the common man like
can they give us the economy of water
landing like they're the pilots the very
metaphor we're using right they're
pilots on the airplane the ships you
know the planes having mechanical issues
maybe they can land it that's not what's
happening at all like they're hijacking
the plane of the global economy so let
me very clear about that I want to be
careful with our metaphors
um I would also I agree with most of
what you said about the framework of the
Central Bank except one piece is that
this Keynesian economic mentality is
that you can spur consumption with the
printing of money and so they they have
the kind of the tail wagging the dog
mentality where in economic reality you
have to produce before you consume right
you have to plant the seed and grow the
farm and grow the corn before you can
eat it that's economic reality in the
Keynesian model you can consume you can
increase consumption which will pull up
production and this is just backwards so
one of the levers they're thinking when
they print money is that they can
actually spur consumption which will
pull production into reality so that's
everything you said is correct except
for that one piece that I want to be
clear that they actually think that's
how the world works now again I don't
know if that is a deep in their heart of
hearts belief like in their economic
Consciousness or if this is just a a
euphemistic kind of
um
facade they put on the the purposeful
jargon and and opacity of language
that's used to confuse people
right so they can serve their cartel
boss's interest which is to continue
continue printing money and continue
people's General ignorance of economics
and money now for you early on too you
said you thought when you were ignorant
before getting into all this that
inflation was the way of nature prices
go up at two percent per year that's
normal nothing we can do about it
that's not your fault right that that's
you are the victim of a psyop in that
situation that's the Keynesian economic
psyop that we've had going on for since
the Inception of the Federal Reserve at
least since 1913 that we've been
conditioned to believe that inflation is
normal
that we need systemic theft uh systemic
debasement of purchasing power if you
want to say it in a nicer way to Spur
consumption all right to get people to
not save to not hoard their money we
need them to spend the money needs to
keep moving but the exact opposite is
what's true right it's like by Saving
Capital Savings is what underpins
investment investment is what underpins
and supports entrepreneurship
entrepreneurship is what creates good
and useful tools and services and
increasing increases in productivity
so
and the idea that inflation is is
necessary for a healthy economy
is easily destroyed if you just look at
what became money on the free market
historically which was gold right gold
was the most inflation resistant
commodity
in the global Marketplace no matter how
much human time effort or energy was
allocated towards its production its
Supply increased the least and it also
just due to its chemical nature it's
basically indestructible right so it has
the highest stock to flow ratio which is
the inverse of the inflationary one
divided by the inflation rate so stock
to flow ratio so it's another way of
saying gold had the lowest inflation
rate so you have to ask yourself
why would consensual Market actors
across history always favor gold as
becoming the dominant monetary
technology if inflation is necessary for
healthy economic activity
it's a not it's it's it just
self-refutes right it doesn't make any
sense whatsoever
and I think that's why we get mired in
these terms I hate the term inflation
let me push you on that for a second it
doesn't gold inflate at roughly two
percent
the supply of gold does that was the
lowest inflation commodity or the
highest stock to flow ratio commodity
that we had
historically to serve as money you can
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but if we've always had a money like
forever forever that inflated by two
percent
is it not possible that what we think of
as the normal modern economy really does
need that very minor inflation rate to
kick people out of store horde mode in
order to get the world that we have now
now people may say I don't want a
consumer economy that's a different
debate but to get the world that we have
now even gold has that here's what's
different with gold though gold Supply
is inflating in a competitive
Marketplace what do you mean by that
that's not a legal Monopoly there's not
a legal Monopoly that says we're going
to inflate gold two percent per year
it's the aggregate effort of all Market
actors in the world trying to produce
more gold it just happened to average
out at about one and a half to two
percent per year and it also varied
right when we had the Bonanza in South
America well you get a pop in Gold
supply for a few years and then it goes
back down
now maybe central banks chose two
percent as their Target because gold
historically was two percent that's
another topic but
inside of a legal Monopoly you're
arbitrarily inflating the supply there's
not a competition to mine fiat currency
so there's no cost to mine it and this
is the fundamental problem right you can
produce money from nothing
so at the push of a button or what used
to be printing of paper you can produce
new units of currency
which lay claim to which can be used to
acquire goods and services in the
marketplace that require work to produce
but the currency itself does not require
any work whatsoever
that's why it's a mechanism of theft and
that's why only the Federal Reserve is
allowed to do it not URI not anyone else
right
political power emanates from the barrel
of a gun I think Mao said the guns are
pointed outward from the central bank at
everyone else to preserve that exclusive
privilege to counterfeit currency inside
the central bank
now gold is different because anyone can
go out and mine gold it's a competitive
market the marginal cost to produce a
unit of gold tends towards the marginal
price of gold in the marketplace so if
Gold's trading at two thousand dollars
an ounce
then every Market actor is directly
incentivized to mine gold right up until
the point that they're spending nine
thousand Nineteen Hundred ninety nine
dollars and ninety nine cents per unit
of gold to mine it and going out and
selling it for a one cent profit right
that's fundamentally different than a
fiat currency system where you're
producing a money at near zero cost
and pushing it imposing its use on a
population via a legal Monopoly right
via the threat of force legally and
physically
so they're they're very very different
but the I do Grant you the two percent
may have been piggybacked by central
banks for that very reason
okay it's super interesting uh as I as I
every time I meet with you
ah you're so good at explaining this
like I I admit that I am very uh taken
aback by the idea that oh okay if
inflation isn't theft then why can't
people counterfeit money if it's not
stealing from people if it's not a
problem then why can't why do we treat
that as like a higher question to ask if
they can just print money why do we pay
taxes
wow
wow if inflation is not theft and we can
just print money and we don't have
enough money we can just print more
money and give everyone that doesn't
have enough money enough money why don't
we just do that instead of paying taxes
bro bro what a good way to ask that
question okay so intuitively that smack
says ridiculous but obviously it creates
cognitive dissonance for me around uh
why a little bit is okay
then a lot would be bad that's very
interesting all right now I'm going to
give you while I'm completely
acquiescing all of your points there is
there is some magic to the system now I
think I know what you're going to say
that there's too much brutality as the
system collapses and it's it collapses
predictably not you can't get exact on
the timeline which if you could it would
be a lot easier it's unsustainable but
are you familiar with the little dragons
policy in China
I'm not okay so this is either little or
small dragons
uh this was when they were like okay
um communism has not quite worked out
the way that we wanted it to work out we
don't want to stop being a communist
country but we do have to acquiesce that
the U.S and other
um capitalistic societies have had a lot
more Prosperity than we have so let's
create our Our Little Dragons
um little giants I forget one of the two
something like that uh system where
we're gonna let them be capitalistic
enough and so we're going to facilitate
some of these things we're going to let
them rise now we all just witnessed in
the last whatever five years the
collapse of that not collapse but where
they re-grabbed control and reminded
them that okay you don't get to be that
big you don't get to be that powerful
and it it is crazy to me that people
don't make a bigger deal out of Jack Ma
just like up and disappeared for two
months or whatever and then showed up
looking like a p-o-w and being like it's
all good it's just crazy to me there you
go anyway but it worked dude China went
on this insane Terror over whatever 30
years where just by like letting people
go with capital markets same I assume
fractional Reserve banking like all the
the things that you're framing is theft
uh smoking mirrors all of that which
again I acquies all those points but yet
it yields China's most
extraordinary boom this is not me taking
China side I think it's insane what they
they do and did and as somebody who has
red Mal the unknown story
yo like a hundred million people is
plenty of dead people for me to go bad
system uh
but the fact that they were able to use
the smoke and mirrors theft situation to
yield something extraordinary and and
somebody that I used to know quite well
uh built a
um basically a VC firm in China and he
said Tom it's it's the most breathtaking
thing I've ever seen and he was in
Tiananmen Square when it popped off
watched a guy get his head blown off
like 10 feet from him like there there
and he was like dude what's happened in
China's most beautiful breathtaking
thing I've ever been a part of he moved
there full time was just like this is
unbelievable so I'm torn with like you
make sense
and I can't even argue any of the
individual points
but yet the system yields the world that
I'm in
so I guess I would first have to say
I've never been to China
I have no first-hand experience
um
I am familiar with the little dragons
policy that you mentioned I think it was
related to agriculture originally that
they were super tight fisted no idea
communistically but then some of the
farmers actually defected from the
Communist plan because surprise surprise
they weren't growing enough food to
subsist much less feed anyone else so
they kind of abdicated from that regime
started growing their own food in a
capitalistic way trading amongst
themselves
um I I've heard about I've read a little
bit about this and heard secondhand some
of this through Jordan Peterson and then
the state actually came in and said oh
well this actually is more productive
they acknowledge the benefits of
capitalism and allowed some pocket of
free market capitalism to emerge at
least in agriculture and then maybe
they'd map that on to other Industries
that's my general understanding about it
um
you know so let's define these things
let's Define communism let's Define
capitalism maybe that would be helpful
communism
is this idea right that we can all what
is the old Marxist slogan from each
according to their ability to each
according to their need we don't need
money and prices we can all just
um acknowledge our fellow man and give
to each person what they need and take
as little as we need and we'll have this
communist Utopia right
um
obviously you could study the history of
Soviet Union and whatnot that doesn't
work it actually creates its opposite
you mentioned 100 billion people dead I
think that's the number of also in
Soviet Russia was around that amount
um the Practical implementation of this
typically is called socialism now this
word
like capitalism has a lot of different
interpretations
I like hapa's definition
and he says that socialism is an
institutionalized policy of aggression
against private property
so it's this idea right that we can
create one power
that can arbitrate all the economic
scarcity in the world take in all the
produce the products from all the labor
and and capital creation and economy and
Dole it out arbitrarily in a way that's
um in accordance with the greater good
right the ephemeral greater good that
that status always cite
now capitalism would be the opposite of
socialism this would be so if we maybe
to simplify socialism a bit you could
say this is
socialized property like you don't own
anything individually everyone owns
everything
and there's a great quote actually by
Aristotle he says when everyone owns
everything nobody takes care of anything
I think that's pretty well captures one
of the consequences of socialism there's
no incentive to do anything productive
because you don't get to keep any of the
fruits of your labor that's why this
socialist systems collapse
capitalism is
the social cooperation that occurs under
the institution of private property so
that's where you keep what you earn the
value you create the business you create
the farm you plant the house you build
you individually or the individuals that
contributed to it own that thing right
or if I am the home builder and I'm
paying laborers right they're trading
their time to me for money I'm paying
them money they're trading me their time
and labor to build the thing that I in
turn own because I paid them
so these are the two ends of the
spectrum and
if we talk about just the the pure
nature of Justice I mean I I don't know
that you could look anyone in the face
and say do you believe
human beings should be able to keep what
they earn
like do you Tom believe that a human
being should have the rights to the
value that they create like if I if I
build your table if I build a table
like I bring the wood I bring the skill
I bring the labor I bring the time the
planning the tools I build it
shouldn't I be free to trade this table
with anyone else should I be free to
burn this table should I be free to move
this table into my house or take it
anywhere like is there any other model
that makes sense is there any reason
that I build this table that you should
own it
it's interesting I can tell you what the
pushback is so first of all let me say I
am a died in the world capitalist I
believe in capitalism to my bones I
think anything else violates the reality
of human nature but as you were
describing that I was like okay I know
what the pushback is going to be it's
people that push back on the very idea
of ownership what do you mean you
brought the wood the wood is from the
earth bro you can't own the Earth like
that's crazy town what are you thinking
you can appropriate from nature assets
that are not being used so if there are
trees growing in the woods and no one's
using them no one's doing anything of
value with them
you can appropriate them uh justly just
appropriation you could read a book
people are going to argue with you on
that not me well but people you could
read a book titled the ethics of Liberty
by rothbard and he has a very detailed
explanation of what is just
appropriation and what is unjust
expropriation right we're actually
stealing from people because ultimately
what we're trying to reconcile here is
Human Action under conditions of
scarcity
now we're not saying and what's funny
because you say appropriating
resources from nature sounds like
something that's
anti-ecological like you don't like oh
I'm taking from the earth I'm just
stealing from the Earth
but there's kind of a strange Paradox
because under the institution of private
property we actually incentivize
ecological conservation
if you are dumping pollution if you have
a factory producing widgets and you're
dumping waste product into my River
right that I own
or my Creek or my stream or my land
whatever it is
I have an incentive to sue you or take
action against you to prevent that that
dumping
so if it's unowned right if it's an
unknown piece of land or creek that you
could just go dump there and there's no
again when everyone owns everything no
one takes care of anything there's no
one there that owns that piece of uh
that area that you're dumping into to
sue you
but if someone owns it they have an
incentive to sue you if they have an
incentive to sue you you now have to
include that into your cost structure of
your widget Factory
so all of a sudden you're not going to
just be you know it's very profitable to
pollute right if you have this waste
product coming out of your factory you
don't need it you just need to get rid
of it the easiest and cheapest thing to
do with it is just dump it where no
one's going to mess with you
but if everywhere you dump it is owned
property that's protected under private
property then the individual Proprietors
that hold that land have an incentive to
sue you which means you will not have
that encoded into your cost structure
which means you'll not have an incentive
to dispose of that in a clean way in a
way that doesn't damage an ecology or
the Earth so
you have to like these things are not
easy to understand necessarily you can't
just think one order deep because you
would think oh well you're appropriating
from nature that sounds really bad from
other Earth but if you actually think
two levels deep maybe three you'll and
read a book like the ethics of Liberty
by rothbard I think you'll see that
capitalism and the institution of
private property is the solution to
almost every problem in the world and
this is why centralized government and
the central bank is such a problem
because it only it generates all of its
revenues from the violation of private
property there is no consensual exchange
occurring
the government does not generate any
Revenue that is negotiated with its with
its constituents right when you get the
bill from the IRS
you just get a bill you can't negotiate
that you can't even leave the country if
you say you know what
the services I'm being rendered
are not good enough for the price I'm
being charged in my opinion and my
individual value judgment I think I'll
leave I'll go to another country where
I'm treated better
if you have above a two million dollar
net worth in the US well you have to pay
the exit tax say what that's right
so how did I not know about this tell me
more I know Canada has one I just found
out about that I was offended but I
didn't realize that America has one
that's right what's the exit tax if you
have above and you have to check me on
this because I've looked at in a while
but it's I think above a 2 million
dollar net worth and you the situation I
just described you get the bill you
decide this is not a good fair price for
the services I'm being provided I'm
going to move to Country X
well when you go to move your Capital to
Country X the US will first of all you'd
have to renounce your citizenship
because the U.S has a territorial tax
system which is one of I think two
countries in the world that do this
you're taxed on your worldwide income
uh this is sort of a benefit of being
the global dollar hegemon you just get
to write whatever rules benefits you the
most
whereas in other countries you know you
pay tax for the income earned inside of
that country
but the US like doesn't matter where you
live what you're doing all of that's
taxable in the U.S
and then further if you have capital in
the US and you try to move to another
jurisdiction that you're going to pay an
exit tax on whatever it is above two
million dollars so
you know just to get
a little more clear on that that's like
someone
breaking into your house putting a gun
to your head and you're saying pay me
otherwise I'm going to steal your stuff
right like it's it's
you as a individual cannot say no to a
service provider
right if there's a business that's
trying to sell you something
uh let me use another example here if
you're trying to buy a car
and you can't come to terms with an
individual car dealer right you guys are
negotiating back and forth you can't
come to terms you always have the power
to say no and go see his competitor next
door and to say no to that guy and go
see his competitor next door it's that
option to say no that's keeping
producers honest it's keeping the car
dealer honest he's at he knows you have
the power to say no and get up and walk
away at any time and he'll lose the
business so he's willing willing to deal
fairly with you
because you have the power to say no
so this is why you know competition
economic competition under conditions of
capitalism is so important for keeping
producers honest when you remove that
power to say no
or you can't say no to Uncle Sam
you can't even leave to another
jurisdiction without paying a tax
I mean this is
it's
tyranny basically it is it is less
visible less obvious less clear it's
it's mired in all of this
complexity and jargon and legalese but
it is
tyrannical
in my estimation so
the proper way to have a governance
system is one in which individuals can
refuse service right you can say no this
doesn't work for me I'm going to go
somewhere else
and um unfortunately the the Monopoly on
violence that is the state has not
allowed that historically
and for everything that is great in the
United States and there's a lot of great
stuff here and we've come a long way and
there's generally peace
I don't want to sound like a total
doomsayer on the nation state you know I
I just flew back from Hawaii like we can
get around peaceably we interact with
strangers
um there's not
typically a lot of violence out in the
world
there's still this problem right this
problem that we've normalized and
institutionalized theft and I just think
that that
is this fundamental Schism that we have
to try and get past as a species
to create something that is a
civilization that is sustainable would
you be willing to pay tax if there was
no inflation
I would be willing to pay well this is
where it's a contradiction in terms
when you have the right to say no it's
no longer a tax because a tax
technically is an imposed security fee
if you will right the government is
securing
an area via the rule of law and physical
Force such that the market process and
the division of labor can take hold
now I am willing to pay a security fee
right I will pay a security fee that
there are multiple security providers I
can say no to them I can move somewhere
else if I don't like the level of
service or the price that I'm being
charged that's fine that's not
technically a tax
I would call that a security provider
fee and that yes I would be willing to
pay but to your question
and this is where kind of the bitcoiner
view comes into play it's like if we can
just
get the money honest
then people gain a lot of that ability
right if again if you if you're holding
if you have access to something like
Bitcoin that you can move your wealth
into it's a hyper portable asset that no
one can inflate no one can counterfeit
very difficult to confiscate if you
custody it properly this gives the
individual that negotiating leverage
with the state that we've been sorely
lacking
so now if if you're in the United States
and you're worth 100 million dollars and
you you know let's say things get worse
over the next 10 years and you've just
had it up to your eyeballs and you're
living in San Francisco perhaps right
you're paying taxes through the nose
while you're living in like a modern
zombie apocalypse
maybe you don't want to pay that exit
tax maybe you just want to move your
wealth into Bitcoin and find another
place to go to and Bitcoin gives you the
ability to do that it would be much more
difficult to make that move through
traditional Fiat rails
so I think the Bitcoin review is if we
can get the money right
that the state so over time would sort
itself out it would become something
an institution that was more accountable
to the preferences of its citizens and
that's something we've talked about
before too okay so uh
uh are you an anarchist
I would say if you properly understand
the term Anarchy which is not was
another one of those terms that we think
you say the word Anarchy you think it's
chaos and lawlessness and everyone's
eating each other and killing each other
that's all what it means
Anarchy means an archon so no ruler
not no rules no ruler we can have
consensually agreed upon rules all that
we need
but what we don't have is the asymmetry
of one individual or group of
individuals ruling over another group
and again in that book ethics of Liberty
by rothbard he draws that line between
the taxpayers and what he calls the tax
consumers
so there are those productive economic
entrepreneurs creating wealth right
increasing productivity
they're paying a portion of that
productivity in the form of profits to
the state
as tax
the beneficiaries of that taxation are
not it's a non-productive Enterprise
statism it's not creating anything of
value it's just extracting from things
of value that have been created the
individuals that benefit from that right
the shareholders of central banks
politicians
Etc they are tax consumers
so I think what we need and I've said
this on your show before is to
abolish inflation and Taxation so we
don't have this fundamental Schism it's
a Level Playing Field for everyone that
we're all
interacting under conditions of actual
capitalism that does not involve
taxation or inflation or a central bank
okay so very interesting I will say
though I'm going to try to leverage your
own logic against you here for a second
so earlier when I was pushing on
um gold you said hey I think the thing
you need to look at is there's a reason
that every society over time all went to
Gold they're just natural properties of
this thing that that people gravitate
towards and that you should take it
seriously that that emerges over time I
would say the same thing about
governments while we don't pick the same
style that's quite clear everybody does
ultimately
create some State whether that is a
monarchy or whether that's a
representative democracy but they they
create something and a couple things I
was thinking about while you were
talking are I'll pay a price a pretty
hefty price for cooperation and
stability
and to get cooperation instability and
all the crazy little nuanced ways there
really does in my estimation need to be
something
and I think that's something pretty
reasonably is the state and so when you
said that the state doesn't create
anything of value my pushback on that
would be they create something that is
of tremendous value which is they create
stability they facilitate cooperation
they allow for a mechanism by which we
create very formalized rules which I can
tell you even as a company I I came up
with a line that I repeat to my team all
the time which is you're only as good as
what you write down because even when
you tell somebody like this is the rule
unless it's in cold black and white like
there's just no way and so meaning
people will will be like wait that's a
rule you're like yo I've said that I'm
not joking 150 times how the [ __ ] are
you confused that that's how we do
things here and yet that's happened to
me so many times that I recognize it
really just is true so you have to write
things down but now once you write
things down then people start
interpreting it different ways and so
then you need a body a legislative body
that's going to be like no you should
interpret it this way and you need case
law to back it up and so all of a sudden
you're like oh we're back at the state
and so I I'm operating from the belief
that
just like gold will constantly present
itself as hard money because it's
created in an exploding star and those
don't shower things on us very often so
it's like it's super limited and that's
what makes it amazing and if people
could just for a second realize that's
no different than glass beads right like
if if you hear glass beads is money and
you're like hahaha these primitive fools
we just got glass beads that rain down
when a star explodes and it's just that
that's way harder and more rare than the
glass beads but it is just a shiny
trinket that we say has these properties
that we all go hey hey if I have this
thing can we all just agree that's
valuable and that way I can trade you
for cereal or a TV whatever so I think
that thing is just gonna constantly rear
its head that whatever is the very hard
thing which is why I'm PS I'm a huge
believer in Bitcoin I have a very
substantive amount of money in Bitcoin
uh
so I think that gold-like things will
always become the quote unquote hard
money but I think that states are always
or state-like things are always going to
pop up and be like this is the only way
to aggregate a lot of people and then
may the best style win and that okay
there's still a lot of arguing to be
done there about what the best style is
I mean China has seen us in full view
for a very long time they're like no
that's not the way we've seen China in
full View and we're like nah that's not
the way so it's like different cultures
are going to argue but everyone has a
state and so talking to Ray this morning
uh he was like basically Anarchy would
be the only mistake because you're
atomizing things down so far like I
think he would far faster sign up for
China's style I'm putting words in his
mouth I want to be very clear who did
not say that I am extrapolating but my
gut is that he would be far more likely
to go with that system because at least
there is
God consistency people are not going to
like that word uh in relation to China
even I'm a little uneasy using that word
but there but there is enough stability
that you can get things done where in
Anarchy though I'd love to talk to
Michael Mouse about this
in Anarchy you're atomizing things too
much I don't see how we get enough
cooperation to create stability and all
of the modern Miracles that we see
around us yeah so this is a great
question and you know the name of my
podcast the what is money show it's like
a rabbit hole question one of the first
rabbit holes it takes you into is what
is the state what is government now we
use these terms as if they're the same
they're interchangeable right the
government equals the state the state
equals the government uh and it took me
a while actually going down this road to
learn that they're not the same
um so what I just said about Anarchy
right it means no rulers not no rules
government is rules right what you just
described you need to write thing down I
assume this had to do with your
employees all of whom are consensually
employed and can quit at any time as you
can fire them at any time you are free
and to establish these rules they are
free to abide by them or opt out right
they could leave and go work for someone
else that's government right these this
consensual Nexus of rules that people
are abiding by you get industry
coalitions right coming together saying
here's the things we think we should do
um that's all that's even acceptable on
within the sphere of Anarchy Anarchy
doesn't mean no governance whatsoever
right doesn't mean no uh no rule of law
doesn't mean no arbitration all of these
things can exist in a free market
environment
they don't now what's different about
the state
as the state is that Monopoly on
violence that's extracting wealth
non-consensually and also passing
legislation by Fiat right this is not if
you contrast it to something like the
English common law tradition which is
we see people having disputes over time
we see how they've resolved them over
time we start to codify these things and
it's like how are wherever we've seen
this instance occur before or something
similar we codified into law so it's
legal Discovery we're discovering laws
that naturally emerge from dispute
resolutions over a long period of time
that's English common law you can
contrast this with legislation by Fiat
which is just a legislator saying here's
the new rule I wrote a new rule if you
don't abide by it here's the penalty and
here you know pay the tax or pay the
fine whatever it is very different right
it's antithetical in many ways to
English common law that's the purview of
the state so when I'm speaking
about the need to mitigate statism in
the world that's what I'm trying to
speak to it's this this non-consensual
aspect of human interaction it's not
necessary now the the retort would be
well what about when someone breaks into
your house that's not consensual you
need to respond non-consensually right
kicking them out that's the right to
self-defense so
in natural law libertarian philosophy
there's there's two sides to this coin
there's
the non-aggression principle which is
you know do not do no harm to anyone
but the flip side of that is if someone
does do harm to you well you have the
right to defend yourself right if
someone breaks in your house you have
the right to kill them
um in certain States
in certain States
the the state view though is that there
there are people in power and people out
of power right the people in power
whether this is Central Bank
shareholders or politicians or whoever
have rules that they promulgate and
impose on the citizenry
and it was that classic saying rules for
thee not for me right it creates this
Schism this what do we call them the
elites um it's silly right they're just
human beings but because of the
existence of this Monopoly on violence
you can position yourself inside of it
and use it to
cater to your own self-interest at the
expense of those who are forced to
comply with the rules that's the Schism
that I think is so harmful to humanity
but to get to answer your question it's
not again Anarchy is not no government
or no governance all of these things can
exist in an Antarctic world
what should not exist in my estimation
is this Act of non-consensual exchange
which I typically call theft because I
don't know what else you would call that
if you take something from someone and
they don't want you to take it
that means it's stuffed right or if you
don't give an individual the ability to
say no to a transaction
any type of interaction by the way right
what's the difference people hate when I
say this what's the difference between
sex and rape
it's consent right
what's the difference between a
transaction and Taxation
it's consent it's the same thing what's
the difference between slavery and
employment
it's consent do they have the right to
leave the job and go elsewhere or are
you forcing them to work at the point of
a gun or the threat of coercion this is
that element of human socioeconomic
reality that I feel strongly we need to
evolve Beyond and I think is core to
it is core to natural law philosophy
which is Core 2 Bitcoin philosophy right
this idea of do not steal
and you when you understand that to kill
someone is just to take their life right
you're stealing someone's life
or to the more commonly understood
version to steal someone's property or
things or to incarcerate someone or to
Force someone to comply with the rule of
Regulation under the threat of harm
right that's stealing you're stealing
their freedom
so if we have to crystallize it all down
into those three words I think that's
that's what we're going for
um in this this new Bitcoin Paradigm
that we're trying to articulate and
actualize the truth is hitting your
career goals is not easy you have to be
willing to go the extra mile to stand
out and do hard things better than
anybody else but there are 10 steps I
want to take you through that will 100x
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to help you do this I've created a list
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link in today's description alright my
friend back to today's episode so then
talk to me about the Paradigm what is
the Bitcoin Paradigm and do you think
that why why did gold not give birth to
the same Paradigm yeah it's very
interesting so
and I've talked about this before but
you know the what is money question the
properties of good money
which I won't elaborate here yeah I
think we talked about episode one
divisibility durability recognizability
portability scarcity gold was the best
tool for the job
but gold being just this glass beads
that rain down from stars on high it's
physical right it's not if money is just
an agreement which it really is it's
like this socially emergent agreement
between people that we all agree this
thing is going to mediate Exchange
again not something that was imposed by
any ruler there was no committee that
came together and said gold is money
we're all going to use it for trade
there was no meeting
it would just emerged as at the end of a
long sequence of consensual transactions
among Market actors that gold became the
thing because it best satisfied these
properties
but being physical
it's obviously not an ideal money if
money is just this agreement right it's
just a just an informational structure
if you will like a database of who owns
what right who has rendered
you could think of the purchasing power
in my money as a representation of how
many favors I've rendered to the market
right I've built a business or done
whatever to earn these profits
that I'm storing in money as purchasing
power
I can now take that purchasing power
into the market to have to redeem favors
from the market right and go to the
restaurant and get food I can travel I
can buy a house
uh it's that fundamental agreement that
makes
capitalism and peaceful human
interaction work right not only does it
allow us to overcome conditions of
scarcity optimally and that we can
create the most wealth when we have a
sound agreement like sound money
but it's also
um
preventing us from violently fighting
over resources because we have that
agreement to fall back on right like
just do your job earn the money you can
save and you can buy the things you want
rather than trying to go out and fight
and kill and take from other people so
the the Bitcoin Paradigm I think is
well like first on the gold
because it's physical it lacked
portability right this is like one of
the main drawbacks that it's you can't
move gold over space easily so really
these states could still hem people in
well so it's really good what you're
having gold is an instrument that's
really good for conserving purchasing
power over time right as we've touched
on it's inflation resistant all these
things
very bad at moving purchasing power
across distance so across space
so what did we do as human beings is
well we centralize the custody of gold
into one place we issue a token on top
of it called a banknote which was really
originally a warehouse receipt these are
called money warehouses put your money
in the warehouse you get a warehouse
receipt you can trade the warehouse or
sheet with others as if it is as good as
gold because indeed you can take it back
to the warehouse at any time and redeem
it for gold that was the original
banknote and this is the Genesis of
banking and ultimately Central Banking
so it was that
technological flaw let's say of gold as
money
that led to the centralization of its
custody in Bank vaults
and when you put that much power in one
place right the institutions that grow
up around it what's Lord Acton's
Infamous dictum absolute power corrupts
absolutely
well money is damn near the closest
thing we have in a technological sense
to absolute power right so the
institutions that have grown up around
these centralized gold hordes are
unsurprisingly the most corrupt
institutions in the world specifically
the Central Bank the one that I hammer
on all the time and the reason I hammer
on it
um
again a book which I've mentioned before
the creature from Jekyll Island go read
this book like you may not know what
social banking is you may wonder why I'm
so motivated to talk about it this book
is a free there's a free audiobook
version on YouTube if you listen to it
on 1.5 x speed you can get through the
whole book in five hours I promise you
it will change your life
um so that
we're living under that Paradigm right
that gold became money because it was
the best thing we had but it lacked
portability so there were economic
advantages to be gained from
centralizing its custody in one place
surprising unsurprisingly the
institutions that came up around that
are extremely corrupt because humans are
corruptable frankly right we're sinful
we're falling creatures specifically I
just want to make sure that I'm
understanding the what the cause and
effect here is because it is
aggregatable and we need it to be
protected
it gets centralized and that gives birth
to Central Banking correct okay so the
Paradigm of gold is Central Banking
that's basically Gold's Legacy it
culminates in Central Banking okay yes
and again
not by Design originally it's just
people trying to overcome exactly it's
emergent
because gold had this technological flaw
that was not very portable we couldn't
move purchasing power across space very
easily so we needed some institution or
mechanism on top of that to augment that
shortcoming
that's what the bank was that's what
banknotes are that's what currency is
right at least when it used to be pegged
to gold
so that's the situation we're in right
so it's
interesting and deep kind of to think
about it this way like we are living
under a very certain
socioeconomic and even political
Paradigm because there's a technological
flaw
in the golden glass beads that rain down
on us from Heaven that just happened to
be the best thing we had
to embody this agreement we call money
now enter Bitcoin what is bitcoin done
it's taken those five properties of
money and perfected them right so it's
better than gold and every conceivable
Dimension but the one that's really of
note is that portability
right so not only is Bitcoin perfected
at
holding purchasing power over time and
that has a perfectly fixed Supply it
cannot be debased counterfeited or
inflated so you know if you have a
thousand Bitcoin you have a thousand out
of a possible 21 million forever that
agreement will never be broken cannot be
changed
but also it's fully dematerialized or
digitized or informationalized that you
can move it at the speed of light you
don't need a bank I don't need to stick
it in one centralized custodian because
it's trivial to custody at myself it's
just information all right I can sort of
my brain I can store it in hardware
store on a computer I can write it on
paper any information bearing medium can
be used to custody Bitcoin so now all of
the sudden
that every all the institutional
realities we've built on top of gold are
called into question
it's like if we don't need to centralize
the custody of Bitcoin
and Bitcoin
for reasons I won't go into here but
basically
when it's better across all these
properties of money the Bitcoin thesis
is that it will out-compete gold for
those reasons
everywhere humans have come into contact
with a superior monetary technology
they've gravitated towards that Superior
monetary technology over time it's not
by choice necessary necessarily because
you know you could study
um China and India staying on the silver
standard longer than countries in the
west moving to a gold standard they were
impoverished as a result of that
decision because we had harder money we
had more ability to conserve purchasing
power over time that led to the
colonialization of India of China and
all these things so
it it's an outcome that almost gets
imposed upon you it's not just an
arbitrary choice of are we going to use
silver or are we going to use gold it's
what is the best tool for the job right
and so if you bring a proverbial night
knife to a gunfight you're going to lose
so when you look at gold versus Bitcoin
gold is bringing a knife to a gunfight
like Bitcoin is the most Superior
monetary technology we've ever had so
the the larger thesis is people discover
that over time in waves and we've seen
that play out and we joke in the Bitcoin
community that bitcoin's an IQ test
because you have to figure out all of
this interdisciplinary chaotic history
you also have to figure all of that out
which is like reading a lot of old
esoteric books and listening to a
million podcasts and getting into
natural law and libertarianism none of
which are taught in mainstream
curriculum so you also have to you have
to unplug yourself from the Matrix over
here and then you have to go down all
these rabbit holes over here
the number that's thrown around in
Bitcoin is a minimum of 100 hours of
studying just to start to really grock
Bitcoin and then like a thousand hours
to be like oh my God this is the
greatest innovation in human history
um
and everything now that gets built on
top of it looks different right so
that's why
simultaneously
um
very optimistic for the future of the
world
but also
it's so disruptive
right all the institutional realities
that we've come to accept
are now called into question their
utility is called into question and so
it's all it can be scary at the same
time very but give me so I understand
the Paradigm of gold gold gives us the
Paradigm it's it's emergent it took time
but it gives essential banking what is
the Paradigm of Bitcoin like what does
it give us like yeah individual
sovereign individual and what does that
look like
sovereignty is the authority to act as
one sees fit governments become service
providers that I can opt out of I think
the state goes away
government becomes a local Affair once
again fully consensual right just a
Nexus of rules and regulations that we
still geographically bound
I would say more geographically bound
right now like how many decision makers
in Washington DC as we sit here in Los
Angeles are influencing our lives right
we're just rose on a spreadsheet to them
we don't have many face-to-face
interactions with them yet their
decisions and their actions have a lot
of influence and impact on our lives
I don't think that's the case on a
Bitcoin standard I think government
becomes something much more like the
post office
the way it should be right just a local
little service provider that you can use
or not use and it doesn't have any undue
sway in your life
so and in that world you've now
sovereignty is no longer aggregating at
the state layer right well the state
would go away it's not going to
aggregate at the government layer it
Aggregates at the personal layer the
individual level so and that way you
could say that Bitcoin is the ultimate
realization of that old
adage power to the people right it's
giving power to the people by enabling
them to conserve purchasing power over
time which is
in a non-violent World
um
which I know we're in a violent world
but purchasing power is the most
important form of power there is
to the extent that physical power cannot
be used to steal purchasing power
so if I can't
if you hold gold and you're you've got a
treasure chest of gold over here I can
just shoot you and take the treasure
chest right because it's physical very
easy to do
but in a Bitcoin world where you've
custody this thing in your own secret
collaborative custody Arrangement you've
got the key chopped up you've got a
circle of trust there's a protocol right
that even if I kill you I'm not going to
get your Bitcoin
that's a huge disincentive to violence
so this whole world looks fundamentally
more peaceful
um more wealthy
um you would assume there'd be more
flourishing of the arts and culture and
all of these things uh that we've seen
under the classical gold standard
and you could study periods like the
Gilded Age which we call it in the
United States in France they called it
La Belle a polk these were periods of
artistic and cultural flourishing at the
same time you could travel anywhere in
the world and use gold as currency
right it was it could be used anywhere
in the world it's like something we
can't even do today
so that's the hope you know it's uh that
we can
we finally in Bitcoin created an
agreement that none of us know how to
break
and since it can be used to conserve
purchasing power that's very hard to
steal
through coercion or violence
that eliminates or at least mitigates
the carrot the proverbial carrot that
exists today for violence and coercion
so
calls a lot of things into question and
I think
um tomorrow looks much different from
today on a Bitcoin standard hmm
okay so talk about something that I only
have an intuition and I man I always
tell people not to trust their intuition
I know there are a lot of people that
say you should I think that's a Fool's
errand I think your intuition has to be
trained I don't think any of us have
training on what a hyper-individualized
world looks like but
there's a book called infomocracy which
basically plays out that idea what
happens if
[Music]
um
apparently the state goes away and it's
just governments in the way that you've
described it people that are hyper
regionalized and they create their own
rules and when I was reading the book I
was like this is a nightmare so it you
would go in that book from block to
block rules of change you basically get
an update on your phone that's like hey
you've entered a new area here are all
the rules here and I just thought oh God
that would be so tedious like having to
figure out like oh what can I do here
versus here like that just really struck
me as something that would not be fun
there
to your point like hey theoretically the
way that it would play out is well
people are going to go aggregate to the
places that have the best rules but what
what I'm trying to convey is there will
be a human desire to be a part of a
larger group that has some [ __ ] figured
out and I have a feeling that the thing
that gives birth to the state is not
gold the thing that gives birth to the
state is human nature and that human
nature is going to force us back into
these moments so
I'm I am just guessing again and please
I'm thinking out loud I I am not trying
to put forth everybody needs to agree
with what I'm about to say but this is
me exploring the idea
I think that in a world where Bitcoin
ends up taking over for gold I think it
will get folded into the systems that we
already have I have a very different
intuition around
um how easy it would be to get
somebody's gold or Bitcoin as so we we
know that gold has been confiscated uh I
think it will be very easy for the state
to do that and
people that love Bitcoin better pray
that Bitcoin is not an IQ test because
most people will fail that IQ test and
so the reality of being a human is and
just intelligence is distributed the way
intelligence is distributed we've seen
for Millennia what ends up happening and
I think the state is the weak man
seeking protection from the strong man
and I don't see all the sudden everybody
becoming strong even if you look at
Viking societies like now we have to get
into Define strong because you had the
Berserkers who Lord knows I would not
want to come up against in battle but I
might be perfectly fine going up against
them in an intellectual Challenge and
when you look at and I'm starting to
talk in fractals forgive me I will try
to make sure I bring this all back
together if you look at Wolf societies
this is really shocking to me
I always thought the alpha male would be
the biggest and the strongest but that
isn't true the alpha male is the one
most willing to make decisions and that
the pack believes is going to make the
right decisions and so when I saw a beta
male which we all think of as oh that's
the weak guy whatever in this wolf pack
and it was the big [ __ ] off wolf and it
would stare everybody down growl at them
and it was like I have the chills right
now remembering how tough that [ __ ]
wolf looked and he told everybody else
to [ __ ] off and then the alpha male came
in an eight not the beta male not the
guy telling people to back off the guy
he was protecting and I thought that's
nature that is one guy goes I'm the big
strong guy but I'm not the guy that
makes the best decisions and I know that
and I'm better off playing the role of
the enforcer so that this guy that's
better off making decisions can come in
and do that now what ends up happening
when that's sort of the law of the land
is the head guy ends up getting killed
so [ __ ] off and everybody's like oh
my God like this is getting so tedious
so you only get so many years where that
guy is able to keep all the sort of
dangerous things at Bay
and so and when I say week like
I'm not even saying I'm not the weak guy
that wants the protection so I should
probably move away from a derogatory
term but it's somebody that goes um
I understand that I'm way stronger as a
part of a collective than I am off on my
own and so I think human nature is going
to force us to go back into these groups
all the time and so if anything maybe
Bitcoin creates this world where we
accordion and we get big and we shrink
back and we get big and we shrink back
and it creates its own sort of loop it's
a different Loop but it's a loop
nonetheless and
let me get back now to coercion so I
hear people talk about this a lot and I
think those are people that have never
had the eye of Sauron
put upon them which is the state and
when I watch what Jordan Peterson is
going through I'm like oh my God people
can turn against you
and he at one point I think he said he
has 10 lawsuits going like they'll just
Peck him to death and as tough and
amazing as he is I'm really worried that
just the Relentless nature of
that kind of Oppression of the nameless
faces I got I don't even know who's
coming after me anymore it's just these
constant like attacks so anyway I think
the government as it stands today there
is no Universe in which they let Capital
flight happen just go into Bitcoin and I
get the argument it's going to be well
the US government might not or maybe
Canada doesn't or maybe China doesn't
but somebody does and so then you're
going to see competitiveness and I want
to ask you about China's recent reversal
because maybe that is the argument
against my own argument but I
I think
that Bitcoin is going to get regulated
they're already
going after nfts
other uh what I think you would call
[ __ ] coins uh with a Vengeance and I
don't think they leave Bitcoin alone
even if they go okay this is digital
gold we're on board with that uh but
we're gonna regulate the [ __ ] out of it
and just like I'm guessing given that
you just broke my heart about a two
million dollar cap on if I wanted to
leave uh that they're gonna be like yeah
you can't just leave it that so you
might want to and then bitcoiners are
going to say yeah but I don't have to
give them my thing yeah true but how
long are you going to stay in solitary
confinement before you go just take my
[ __ ] money I don't care anymore it
will happen everyone has a Breaking
Point and if you don't believe me read
the Google archipelago if you put me
into a gulag
how long before I go yeah no amount of
money is worth this you can have all my
Bitcoin hmm
well it is a grim future you paint and
there are some bitcoiners that see
something similar right they think that
the gulags are coming regardless with or
without Bitcoin because that's the
natural trajectory of statism
but with the introduction of Bitcoin
yeah it could be about that could be
putting people in very coercive
situations in an attempt to extract
their purchasing power which is what the
state does that's the that's the a
really good description for its business
model actually
now
my question would be though if
the state
as in as a going concern now maybe early
on you're right maybe there are these
gulags and maybe they throw all the
bitcoiners in there and try to get their
purchasing power whatever right the
Bitcoin gets confiscated let's assume
all bitcoiners capitulate everyone all
the Bitcoin ends up in the hands of the
state
um
how does the state then continue to
generate Revenue though because it needs
to
in that world right where Fiat
currencies have presumably failed right
why that's why everyone's in the gulag
and they're taking Bitcoin the state now
has all of its Bitcoin we're now in a
Bitcoin standard
how would that Institution
the state be a going concern as a
business from that point forward because
you're now on a monetary standard that
it's very difficult to tax and
confiscate so you're saying we'd be in a
world where the state just keeps
throwing new people into prison to
extract their purchasing power they
won't need to like if you just think
about the way the state Works they're
just going to say Hey look
totally fine with you guys storing your
wealth in Bitcoin we love the most but
you are going to pay tax and so of
course everyone starts paying tax on
that and whether it's treated like a
property tax and it's like a house and
you just this is how much Bitcoin I have
which by the way is an open ledger so
everybody can see it uh you're gonna pay
your money on that in the beginning
people will try to hide it they'll try
to be
um you know they'll try to Chuck and
Jive and then ultimately over time maybe
10 years maybe 100 years but the
government will figure out okay this is
who has what we're going to tax it and
when they catch somebody they're gonna
penalize them just like they would
penalize people now for tax evasion and
enough people go meh I like the the
system is good enough that I'm going to
pay that tax and bro if you don't think
people will capitulate to the state real
[ __ ] fast read Mao it dude what they
got people to accept is terrifying and
so let's say that even though I think
this is a very problematic aspect if
Bitcoin is an IQ test and now you have
the smartest people the most hardcore
people they're like there's no way I'm
not going to capitulate I'm going to
find a way I'm going to get out of this
country whatever I'm going to read the
tea leaves I'm going to move before they
get into Capital controls all that word
what's that one percent
half a percent it certainly isn't five
percent so now you've got be generous
ninety percent of people are trapped now
that may make
the ultra intelligent bitcoiners be like
word dude I'm gonna be in the 10 I
literally don't care that grosses me out
in a way that I can't even say and I
want to know what we do for everybody
how we find a way and I get it it's
super Pollyanna but I want to find that
thing where everybody
is able to maximize their freedom to
maximize human flourishing to minimize
human suffering so on and so forth I
just don't see a way the maximization of
human flourishing is found in the
minimization of the state that's when
you say minimization
to yeah
ideally to zero zero percent status
again that's not no government yeah
still have government and rules and
regulations and all these things but
um the word regulations a little tricky
because we consider that today
regulation by Fiat right someone writes
a rule if you don't abide by it you're
in trouble that's not what a regulation
could be or should be could just be a
consensual agreement you make to live in
a place
um this we seem to be hung up on this IQ
test so maybe I should try to decompose
that a little bit if you go into the
global South today right the two billion
people living in the global South that
are unbanked or under banked
I don't we don't need to talk about the
value of Bitcoin at all they get it like
this all of them instantaneously so I'm
not saying the IQ test may have been a
bad analogy because I'm not saying all
these two billion people have 150 IQs
I'm saying that they have first-hand
experience of the pain that can be
inflicted through the monopolization of
currency and through the predations of
the state on their purchasing power
right this is an this is a repeat
offense in the lives of many people
living in developing economies right
there they have nowhere to store
purchasing power they have had nowhere
to store purchasing power ever right are
they they're knocking Bitcoin at a
faster rate yes are there stats on that
uh I would have to I would defer to the
work of Alex glad scene on this I'm
actually talking to him tonight at the
swan event he works super interested he
works for the human rights foundation
and they do a lot of uh work in the
global South encouraging Bitcoin
adoption but it's happening naturally it
would be the point I don't have the data
off the top of my head
um
but again there's a saying I I use a lot
on the show is that pain is information
right so it's people don't really change
their ways or their mode of being until
there's a reason there's a motivational
there's a motivational Force encouraging
them to do that
uh
literally pain is that thing that puts
you in a new formation right it is equal
to information this is also something
that talab's work goes into a lot so IQ
tests may be a bad analogy it's wherever
people are suffering the most under
statism they are going to be the ones
that are most inclined to quickly
understand Bitcoin and adopt Bitcoin as
a means of necessity right whereas here
in the West
whatever right for a rich guy like you
can you can get by and you're not
feeling the pain day in and day out
maybe you can take a flyer on bitcoin
like if you don't if you're not
ideologically committed or care about
any of these things we're talking about
I'm not talking about you specifically
just some rich guy in La that's not the
case for people in the global South
right it's like do I want to eat next
week well then I better figure out how
the [ __ ] I'm gonna store my purchasing
power over time and so Bitcoin is uh
let's say more obvious to people living
under those conditions it's not a matter
necessarily of IQ it's more a matter of
circumstances
so that is my
hope and it's it's paradoxical in a way
because now what we get
is the state and the final analysis if
what I'm saying is correct sorry about
that
in the final analysis the state
we'll do more to orange pill people
which is to give to educate them about
Bitcoin than anything any of us
Educators content creators
whatever can possibly do by inducing
Pain by inducing pain right they're
actually creating the motivational Force
for people to learn and move purchasing
power into a form that cannot be as
easily preyed upon so
that is the course that I think it takes
and I think that
I mean I do agree with you right as
human nature there are these recurrent
patterns but we I think the way I see it
is that human
nature takes the shape of its container
there's an old saying it's like human
nature is like water it takes the shape
of its container
those containers in my estimation are
the incentive structures that we inhabit
people will tend to do whatever is
profitable for them now profit and pure
economics is a psychological phenomenon
right whatever you think is more about
we've said this before right to walk
from one side of the room to the other I
have to Value being on the other side of
the room more than I value being where
I'm at currently
but there's a very strong connection
between psychological profit and
financial profit and I think when we
make coercion and violence less
profitable activities
for humans to engage in right by virtue
of having confiscation or seizure
seizure resistant money as we do with
Bitcoin that the businesses that
specialize in coercion and violence will
start to go away over time
um you know we I'm trying to think of a
another example
um
we used to hunt whales in the ocean to
harvest the oil from their blubber to
make candles because that was the most
efficient form of lighting we had right
so there was a lot of violence and
coercion being perpetrated against those
whales because it was profitable to give
people a means of artificial lighting
well once we figured out electronic or
electric lighting we stopped predating
on the wells for that reason
so it's this matter of Shifting The
Profit incentive pouring people into a
new incentive schema that changes human
behavior over time and I think
ultimately leads to the dissolution of
Central Banking and statism more
generally
now could I be wrong app is so [ __ ]
lutely this is a Monumental change I'm
just one guy trying to pull the threads
together looking at where we started how
we got to hear and where we're possibly
going as a result of this momentous
monetary Innovation we call Bitcoin
please
um
help me look at it from other
perspectives because you know the the
change is so radical and it's happening
so fast in the digital age that there's
no one person that's going to get it all
the best thing we can do is assimilate
the viewpoints of others
and so that's what I'm trying to do as
aggressively as possible I'm trying to
read as many relevant books as I can and
talk to as many smart people as I can on
the show about these very topics
and this is where my current Viewpoint
is but
I will reserve the humility to be quite
wrong about all of it but I do think
where my view is today that that
incentives are the ground stuff Of Human
Action and I think when you have a
fundamental change of the base layer
incentive structure which was gold and
now I think becomes Bitcoin over time
you see fundamentally different patterns
Of Human Action emerge from that change
in in the base layer
okay Canada's and the freedom Convoy
seem like a pretty good dry run for
Bitcoins seizure resistance I don't know
that it was seizure but what happened
were did Bitcoin rails get disrupted in
any way shape or form were they monitor
did people get blocks I know they were
blocking
they were uh freezing accounts of people
that had donated that's right to the
GoFundMe which I still can't believe
that people just like let that one go
that that's pretty terrifying yeah it's
terrifying and the Silence of Western
leaders during that Saga is equally
terrifying
um you know a blatant violation of
private property rights for you know
leveled against peaceful protesters in a
one of the most liberal democracies in
the world I think by by many standards
um it was not Bitcoin that was
confiscated it was people were
allocating actually Bitcoin is what got
into the hands of the protesters
successfully the big and I had uh BJ
Victor on the show to talk about this he
was one of the main participants in in
the freedom Convoy
I think it was close to 10 million
dollars raised via a GoFundMe which is a
centralized fiat-based service much like
a uh what's the other competitor of a
similar name
yeah
it's a company right you send money
people start a campaign you send money
to the company they Dole it out to the
campaign campaigners
um that was seized basically that was
stopped right the bank accounts were
frozen of the contributors and the
protesters uh I think a few hundred
thousand dollars got through but the
bulk of the 10 million dollars was
frozen they initially said they weren't
going to return it I think they
ultimately ended up returning most of it
uh at that time people started using
Bitcoin as an alternative and I want to
say and have to check the numbers on
this but I think a couple of million
dollars actually got through to the
freedom Convoy via Bitcoin because it's
an Unstoppable payments channel in the
same way that it's an unseasonable money
when it's custody properly Etc
so that was a
good instance of Bitcoin functioning as
an alternative to traditional
as a functioning as an alternative to
traditional Fiat rails but also
highlighting the unstoppability of it
that once you know you send a Bitcoin
payment it's like sliding a glass or a
gold coin across the table there's no
Authority in the world that can reverse
that transaction and now something you
said earlier I want to be clear yes
Bitcoin is a public Ledger
but the Privacy tools are improving day
by day with Bitcoin there's a way to use
Bitcoin now that's super Anonymous you
could check out Wasabi wallet they've
done a great job
what's that how do they work
um I'm not going to speak to the
technical details because I'm the wrong
guy to talk to you but essentially uh
it's a Bitcoin wallet has privacy built
in by default full disclosure they are a
sponsor on the show so they have a
wallet privacy features built into it I
think we used to have to do coin joins
manually VPN or something
again uh
it goes there they then it's just like
my rough non-technical guy description
of a coin join but you're basically
putting uh unspent transaction outputs
which are actually what you're spending
when you use Bitcoin into a s and you're
grouping them together multiple
participants are coming together and
then they're they're mixing the
transaction outputs so whatever goes in
you don't really know who it comes out
to or how much so it's a way to
anonymize your Bitcoin stash effectively
that used to be a manual process and
companies like Wasabi have now built
this in by default so you can just put
your Bitcoin in the wallet and it's
mixing behind the scenes so where do you
think that goes from a regulatory
standpoint do you think they tolerate
that it's open source software
how does that help it's protected under
the freedom of speech and how can you
stop it it's just information free and
open source software
and so Wasabi doesn't make any money
selling software they make money on the
actual mixing so when they actually
provide and again all of this check me
on because I'm not exactly sure I'm not
affiliated with them other than they are
a sponsor on the show nor am I a
technical expert on bitcoin but the
point is privacy technology is improving
drastically day by day so although
Bitcoin is a public Ledger there is a
way to use it anonymously and that's the
fundamental
war that I think the State loses
you're not going to outpace The
Innovation that's occurring in
cryptography you're just not going to do
it like the state is not
um let's say very Innovative for all the
things they do really well like stealing
and killing and destroying they're not
particularly Innovative and you know we
as we talked about in our first episode
together
the way the printing press was
disruptive to the medieval church I view
cryptography as disruptive to statism
cryptography as a much broader idea than
just Bitcoin well putting Bitcoin is a
big piece of that but other things like
uh now Noster is becoming a very popular
tool and this is a
you know again I can't speak technically
to this but I've heard of Nasser but I
don't I couldn't tell you if that's a
new AI video program it's a
decentralized relay service that lets
you build Unstoppable communication
channels so there's like a an
Unstoppable Twitter now basically is the
first one of the first instances
bitcoiners will go crazy on me because
they it's a very big deal and now what I
say that in that the people that I trust
in the space technically are telling me
it's a very big deal I just signed up
for Noster I've Barely Used it
um but the point being that
cryptographic tools and this is
something the cypherpunks have been
writing about for decades now
give the individual
unparalleled negotiating leverage with
all collectives
right it's very empowering to the
individual that you can anonymize your
identity your purchasing power
etc etc that gives you a lot of Leverage
to negotiate with any Collective
whatsoever the largest and most
dangerous of which is the state
so that is the war that I don't think
the state is going to want as the
technology war was you know technology
is that Mega political variable that no
one can control and really seems to
dictate
um
how we spend our time and what we do
every day and all the institutions we
build like we described all the
institutional realities that occurred on
top of gold had to do with the
technological properties of gold
and I think for similar reasons the
technological properties of cryptography
also influence uh all of the the stories
and social constructs that we create
man that's interesting I haven't thought
at all basically about
uh technology
outpacing the government where it goes
beyond I mean I thought a lot about AI
but where it goes from that perspective
to your point about a Bitcoin Paradigm
where the individual is more Sovereign
I don't think any of this happens
maybe quickly but I could see
that gives me the first glimmers of like
a path to where it's like it will just
become uncontrollable over time uh where
people do more and more of their living
anonymously
that's really interesting that's
reflectively you can selectively
disclose your identity that's the great
power of it is you have the freedom to
selectively disclose whatever you want
right your purchasing power your
identity
Etc or to not disclose and let me Riff
on something for a second did you read
the sovereign individual yet that was
one I've read a large enough chunk that
it was disrupting my sleep because it's
so terrifying it's not that terrifying I
think this is where you and I disagree
so this brings us back to what do you
think the government's dossier on you
says on me yeah I have no earthly idea
do you think you have one I don't know I
guarantee you have one I would assume we
probably all do in the content creator
space like above a certain viewers of
content creators might be thicker than
the next yeah maybe so uh you were the
first person when I talked to I was like
hey don't don't keep saying this shut
the [ __ ] up Breedlove yeah it was I was
just like uh the implications of what
you're saying are so right radical that
so Andrew Bustamante
recently on the show yeah you have them
coming on yes I was literally just going
to say you have to come on you're going
to love him a because he's utterly
fascinating but he made it very clear
that oh yeah yeah the government keeps
dossias on people like you no they may
not be like in your business but they're
like okay we're aware of you somebody
that has a powerful voice somebody that
refers to all of this as theft and you
know all that uh they're certainly not
going to be blind to that so
um that is very interesting to me all
right here's the idea that I want to uh
run by you so we build we are building
what will one day be a metaverse I think
people leap to that too quickly uh but
just for Simplicity of conversation so
we're building a metaverse so I think a
lot about oh people are going to live
their lives increasingly online and this
is the silver bolt that I always talk to
people who are like crypto's dead I'm
like do you think tomorrow will be more
or less digital than today I have yet to
encounter somebody no matter how
skeptical they are the things that we're
going to become less technological
tomorrow than we are today so okay cool
if we're going to be more digital
tomorrow than we are today what are the
odds that the next generation will have
an affinity for digital things oh it's
going to be more okay cool what do you
think then are the odds that people will
want their digital items to have more of
the properties of the physical world oh
yeah that makes sense more Okay cool so
now it's like now you've just come to
the blockchain so you realize the
blockchain is the thing that gives the
physical properties to digital items so
I know where it is I know who owns it I
know what it does it you know I know how
many there are so okay cool we've now
been able to give digital items these
things so that's going to give people
the ability to really invest in
themselves inside of the digital world
because all of the ways you like to flex
in the outside world you're going to be
able to do in the digital world so it
will just matter I think it was Michael
Saylor that said uh for virtual things
to matter they have to have the property
of matter and so it's like we can
actually do that now
so as people begin to spend more time in
the digital world and they have the
blockchain and so they're able to invest
in themselves and each generation is
going to be more and more comfortable
inside of these digital spaces
in there is where it becomes way easier
to anonymize yourself and so as Noster
or something else allows you to from the
moment you come on for that to get you
know muddied up so it's like oh you saw
me go into the ecosystem but you have no
idea who I came out as and so once that
moment gets anonymized now you can build
a persistent identity in the virtual
world that has many of the
characteristics of the physical world
but now I'm able to abstract myself so
let's say that for me eighty percent
ninety percent of my economic activities
are all online and they are that one
step removed now which was my big hang
up with the state is they're always
going to have geography over you they're
always going to be able to say oh you're
in my jurisdiction and therefore you
would have to up and move which is like
the ultimate pain in the ass not that
some people won't do it but the vast
majority of people won't do it
especially if they make it incredibly
difficult but if if there is an
unbreakable and that's where I get very
dubious about
the the state as you would call it
brings out a bigger and bigger Hammer
when they need to so you can look at how
hard China's been able to clamp down on
their people
but let's just pretend for a minute that
there is a way for the technological
advances to outpace the state so grossly
that people are able to get into a
completely virtual economic stream and
lifestyle in a completely Anonymous way
that I could see
breaking over a generation or two really
beginning to soften the grip that the
state has on people that could get
interesting fast
yes so agreed like we are definitely on
a trajectory that is increasingly
digital
um I I'm also very I think that the
hardware is going to transform
significantly over time so right now
we're all kind of trapped within the
windows of the smartphone or the laptop
I I do subscribe to the view that we're
going to get the hardware more and more
out of the way so it starts to blend
more seamlessly with reality
whether that's augmented virtual some
Confluence of the two I'm not sure but
we're going to start in
physical reality is going to start to be
more of a data Rich environment the
thesis I've had about this is the
world's becoming a video game you know
like it's more video games
um which is very fascinating that's a
very radically new world uh I'm
interested to see how that plays out I
would push back though on the blockchain
just like uh crypto and other
crypto assets right I put them all under
this rubric of [ __ ] coin
because I really do think that the only
proven use case for what Satoshi
actually called the time chain which
somehow got converted into a blockchain
because it's a chain of a block of
transactions
is this state resistant digital cyber
cache that we call Bitcoin I think
that's the only utility for the whole
construct
everything else I think is kind of like
uh
liquid Venture Capital with low to no
due diligence and largely just gambling
devices now those gambling devices which
is kind of interesting when you're the
more rapidly you debase a currency when
I study hybrid inflations historically
people increase their tendency to gamble
right everyone's trying to scam everyone
else and outpace inflation so maybe some
of these things will do really well well
financially they'll perform really well
in Bull markets and they'll go to zero
and bear markets that could persist for
a long period of time I'm not sure there
is a major Crackdown on them as you just
alluded to the SEC is coming down on
[ __ ] coins hard uh they issued
a notice even to coinbase right a
publicly traded company that a lot of
these things are unregistered Securities
I think that whole process will continue
um
the blockchain though I think it's just
a buzzword it's a marketing buzzword it
does not like the way you describe it to
make things in digital reality matters
to give them the properties of matter
that's only one instance that's Bitcoin
that's that's proof of work mining is
what cements Bitcoin a digital construct
into physical reality
now you can have other proof of work
chains that do this similar thing but I
think in the long run Bitcoin out
competes all those other proof of work
chains because again the one use case
for a Time chain is money money is a
network that tends towards one as we saw
with gold right gold out competes all
the other monies in the world to become
the one free market money I think we
have a similar set of Dynamics at hand
with digital gold which is Bitcoin so
Bitcoin is the one time chain to rule
them all
all these other consensus mechanisms
proof of stake proof of space proof of
this proof of that it's all [ __ ]
bogus marketing nonsense it all goes
away because it's hackable
it is not
embedded in physical reality through the
expenditure of energy so it's not
thermodynamically connected you're not
you have to have a bridge between
digital and physical reality and that
bridge is a thermodynamic Bridge called
proof of work mining if it's anything
but that it's not there's no there's no
Bridge
so there's a great book actually that um
I don't know if you've seen Jason
Lowry's work going around on Twitter
he's the US space force guy I wrote a
thesis on bitcoin which he calls soft
War very interesting but
um
he's arguing that that
so Bitcoin brings physics-like
consequences into digital reality right
so it's kind of This One Singular unique
invention
um something that can't be replicated
another way that I've heard this said is
that
the innovation of Bitcoin cannot be
replicated because resistance to
replication is the invention right the
fact that no one can make more than 21
million Bitcoin is the big deal right we
have fixed Supply asset
that's why you can't replicate it
despite all these [ __ ] coin attempts of
copy paste start new coin stop start Tom
coin stop robcoin blah blah blah sell it
to the public they're all just
unregistered Securities at that point
but the one
unique phenomena that you get is Bitcoin
you get that one connection between
digital and physical reality so I think
the word blockchain goes away eventually
um in Bitcoin circles it already has
gone away we call it a Time chain it's
satoshi's time chain it underpins
Bitcoin which is the one true digital
asset right and that it's there's no
counterparty risk associated with it it
has a perfectly fixed Supply it's got a
proven record of resisting social
attacks on it right you could study the
Block Wars of 2017 where people tried to
change the consensus rules of Bitcoin
and failed
um and I think there's just full
consolidation at that base layer over
time So eventually
after the gambling uh the the gambling
Allure of [ __ ] coins goes away probably
with the collapse of Fiat currencies
that [ __ ] coins go away and the term
blockchain goes away and we just have
Bitcoin
so
I do I again I subscribe to that view of
the future where you see the world
becoming more of a video game and all of
these things but I think it's going to
be denominated through Bitcoin Bitcoin
is that fundamental connection point
between the digital and physical world
other things that are built on top of
Bitcoin
that a lot of you know you've probably
had Raul Powell on the show right he
thinks it's all the [ __ ] coins are going
to provide all these different utilities
I think all of those utilities get built
on top of Bitcoin so there's full
consolidation at layer one and then all
of these uh ancillary utilities that all
these [ __ ] coins claim to do will be
constructed in higher order protocols on
top of Bitcoin
um and that view is just really informed
by you know the the monetary history of
gold
the nature of proof of work itself
and
um I guess you could say culturally like
a cultural observation of just Bitcoin
maximalism in the present that you see
these other projects are basically all
scams I mean I'm painting with broad
Strokes here I'm sure there have been
some real uh genuine projects in the
space but
it's such a preponderance that I've
gotten to the point where
I may have shared this with you before
but I you've heard of the useful fiction
right we treat every gun as if it's
loaded obviously not every gun is loaded
but we pretend as if it is so so we
don't hurt ourselves or others when
we're using a gun or cleaning a gun
I've adopted the useful fiction of all
non-bitcoin crypto assets or [ __ ] coins
and they're scams and to be avoided at
all costs and
Maybe I'm Wrong to one or two percent
perhaps but in general I think it's a
useful fiction you have the right rubric
I think for anything passing itself off
as this is the thing of value that's
going to go up
and I think that that so I was screaming
that from the rooftops so to create the
next what we call borderless
entertainment which you're saying life
becomes a video game I think it's an
emergent property that is the marriage
of AI in the blockchain
time chain in your language I don't care
I would say marriage with Bitcoin yeah I
don't care if it's Bitcoin whatever it's
that that innovation
brings the the elements of physics to
the digital world which is super
absolutely important yeah now I'm gonna
say as you were saying that that we're
we're talking past each other a little
bit in that we have different base
assumptions so my base assumption is
that for all of the world to become a
video game
you're going to need scarcity just to
give you a really it's not the only
thing but you're going to need scarcity
for sure I also control I'd say scarcity
and provable control whose is it who can
do what with it
those two elements at a minimum you're
gonna need for the digitization of real
life or something that is so like real
life that it has stakes and it matters
to you and you emotionally invest
physically
invest and certainly financially invest
so
that's absolutely required but
when you're talking [ __ ] coins you're
speaking to the part of human beings
that want to gamble that want to
speculate on it all that what I'm trying
to get people to understand in the the
land of entertainment where I play
don't think of it as an investment
drives me [ __ ] crazy that people
think of it like an investment
it's utility and it lets you do
something and if you don't bring the
properties of matter into the virtual
world then it will never be engaging it
will never be the thing you want it to
be so but now understanding that I need
the I mean I'll just for the sake of the
argument I'll just completely adopt it
it's all going to be Bitcoin cool I need
the time change time chain in order to
bring all of that with me now into this
virtual experience that I'm trying to
build so you can have a far deeper
experience than you would be able to
have if the virtual world didn't exist
everything is going to be on some level
of that chain now games are never going
to survive on the kind of throughput
that you get in the base layer just
can't you have to be able to transaction
so rapidly sure but now you're I don't
think people should try to make money
off of playing video games unless you're
trying to be a professional athlete then
word cool yep love it but like the idea
of playing to earn that's that's
enjoyment suicide like really you just
you're going to rob all the fun out of
it for sure like they've shown this if
you pay a kid to get good grades their
grades end up tanking because now
they're just doing it for the money
they're not doing it for an intrinsic
motivation anyway I'll set that aside so
I there there is going to be a just
deep deep stack of things that people
want to exist in the virtual world the
easiest one is close okay you're going
to want to present yourself in a way
that communicates something about who
you are for that to be meaningful it has
to be a finite Supply I have to know
that it's yours boom now we're back to
time chain I think that is the tip of an
absolutely gigantic Iceberg of things
that people will want in the virtual
world I assume you've read Ready Player
One the book no it's like what
wow
the great news is you have a wonderful
book to look forward to but that really
Paints the picture of the intimate
experiences that become possible
in a I won't I don't think it's going to
be trapped in VR but
when everybody can create
and put it up into this shared virtual
world
it will ultimately fragment into these
deeply personal experiences
my favorite example from the book I
don't know if you know who um John
Hughes was but he was a filmmaker really
prolific in the 80s made a ton of movies
that just felt some kind of way he did
home alone uh it's probably to this
generation his most famous film okay
um and in the book somebody may all of
his films are set in Chicago much like
all of Stephen King's stories are set in
Maine and somebody built like a a town
that included Ferris Bueller's house the
Home Alone house the pretty and pink
house like all of his famous movies with
all of his characters and they were all
run by AI so you could like go and meet
the characters and interact with these
things like they were a movie anyway
all of that requires the time chain for
all of that stuff to matter for the
things you have in that world to have
significance so yeah I see
I see that technology as as being
critically important to the future I
imagine I agree with that wholeheartedly
and I if I'm hearing you correctly which
I would also agree with that use if we
assume that Bitcoin if assume what I'm
saying is correct about the time chain
being the single kind of bridge between
the two worlds that Bitcoin ends up
being the base money of not only
physical reality out here for all the
reasons I've highlighted again if
assuming I'm correct but it would also
be the base money of this new emergent
digital reality right that but also the
thing that makes a shirt
valuable Yeah well yeah it's giving
emergence to the digital Reality by
virtue of bringing physics like
consequences into the digital world
which don't exist before Bitcoin
irreversible transactions exactly yeah
so you're you're you're bringing the
irreversibility of time or the time
chain into digital space which is very
interesting right creates economic
scarcity creates a possibility for all
these Virtual Worlds that have some
tangible meaning I guess you might say
that you can't just create them add
infant item right a shirt could be a
unique luxury shirt and that if I uh
wear it in a dungeon and I lose and that
shirt gets destroyed in that battle and
it's now actually gone to be actually
gone all of a sudden it's like whoa like
I'm gonna stop and think about this
stuff and so it's like if things come
too easily too cheaply they're too
instantaneous there's no cost whatsoever
The Human Condition is such that you
won't meaningfully engage with it yeah
so what you said too that you needed
scarcity and control right over the
actual assets to for it to work right
for it to work like the real world
and I think Bitcoin does provide you
both I would say the control element's a
little bit more interesting though
because you're right these are all going
to be Bitcoin base layer transactions
occurring in game right you're probably
going to put
post some Bitcoin in the game and then
you're going to get some in-game tokens
to go out and buy the shirts or weapons
or Shields or whatever it may be uh you
would then be
I don't know I guess you'd be trusting
the in-game world to honor the scarcity
of that item which has historically not
been a good bet right sometimes either
players hack it and they start duping
the items I cut my teeth on digital
assets by the way in Diablo 2. back in
eight maybe I think is when that game
was out so I was just a kid
and you know you traded these unique
items in digital space but then
eventually players cracked the code and
started duping them right and you had
hyperinflation of all the items you know
I mean look I don't know enough about
the technology but this this is my whole
point about the blockchain so when we
create items
uh the way that we think about it is
you're you're actually putting that item
in a box and so somebody could come in
and steal them all if we're not careful
and so obviously we have to be very
thoughtful about that
um but if the blockchain only
acknowledges there are this many in
existence unless you can hack how many
are in existence the game would say nope
that's not a real item right so that is
a Layman's interpretation of what's
actually happening under the hood but or
unless you can Fork the chain or roll
back the chain which that's the key
property of Bitcoin even ethereum right
has been rolled back has been forked
let's go you can check out the Dow case
study in 2016.
bitcoin's the only one that can't be
rolled back probabilistically so that's
why I mean that what you just hit hit on
there it's like you need to be able to
trust that these things are
for all
intents and purposes in digital reality
they are physical right even though
they're non-physical they right they're
as if they were physical as in if you
lose the shirt in battle it's gone for
good
um so I do think that's a unique
property that only Bitcoin can provide
through the the bridge of thermodynamic
proof of work mining
um and I it's gonna be fascinating
because I think in that world you end up
with a lot of little games right people
play all kinds of different games or I'm
using the word games but these could be
virtual environments of any sort right
it could be virtual concerts whatever it
may be but Bitcoin is going to be the
main medium of exchange between all of
them so if you go and
put up some Bitcoin to buy some in-game
tokens to play game a well when you're
done playing game a you might sell the
tokens to buy Bitcoin back and then take
the Bitcoin over to game B and buy the
same game token something like that so
it's
simultaneously catalyzing a new digital
economy that was not possible prior to
bitcoin's existence serving as the base
money for that new emergent digital
reality and out competing gold in
traditional physical analog reality to
be base money in this world so I mean
this type of dialogue gives you some
inkling of just how profound Bitcoin
really is like the possibilities are
uh hard to imagine let's say no doubt
one thing that I want to better
understand is I think about where this
is going regulatory all that good stuff
is China's about face
so China basically outlawed mining as
far as I know their hash rate dropped to
zero but now my understanding is that
it's back up to like 21 yeah I don't
know that it ever dropped to zero but
how loaded to go uh first of all I'm not
sure how reliable the data is
um and again there's another one of
those areas I'm not super certain on but
my understanding was it was at 50 and it
dropped to 20 okay so even when they
said no more when they outlawed it it
never went below roughly 20 again I'm
not sure the volatility in a room but it
went from basically 50 to 20. now was
there interim volatility closer down to
zero perhaps
um you know we've talked about this a
bit before but ultimately these miners
you know they're this big they're shoe
boxes you unplug them from one place and
plug them in another place so there
could have been a brief period where a
lot of miners came offline and were
shuffled into other places
But ultimately you know I go back to
this idea that humans follow incentives
and not laws so if there is a way
and in China specifically due to all the
central planning they have this huge
excess energy production capacity right
these giant dams and whatnot
and they have these ghost cities so
there's not a lot of grid to sell that
energy into well that's a huge incentive
to just plug in a miner and turn that
excess energy capacity into money I
think human beings are going to follow
that incentive no matter what and again
it doesn't matter if the state says no
well the state's probably going to do it
itself even if the state Outlaws it well
the people that are inside the state and
can go plug in those miners to turn that
excess energy into money will do so
so it's it's it's
um we're highlighting that amorphous
kind of network Dynamic that Bitcoin has
even in the physical world like you try
to whack the mole right and it's like a
it's like a Hydra right you cut off one
head and seven more pop up and it's
place and um that's just a property that
makes it extremely anti-fragile and
difficult for regulatory
bodies to deal with because they're
accustomed to dealing with centralized
organizations right one building one CEO
one guy one team you can just stop it
you can cut them off from the Fiat rails
Etc but but bitcoin's something
fundamentally different right it's just
these again little shoe boxes plugged in
all over the world
performing computations and giving rise
to this uh Incorruptible monetary
structure so very difficult for even the
most authoritarian
regime probably in history at this point
right we got 1.3 1.4 billion people in
China
living under an iron fist
um we you know should probably mention
all of the human rights atrocities that
are occurring in China
I'm not sure the your friend that
started the VC company there he said
it's been great in all of this but they
have gulags active now right people are
getting black bags there's social credit
score systems uh again Alex gladson who
I'm talking about tonight he's done a
lot of good work on this China's a
nightmare
if you're a civilian especially if
you're an outspoken civilian so for
whatever veneer of success they may have
there's a dark abysmal underbelly of
fundamental uh human rights violations
and anti-human freedom
all right man this is a crazy future to
be looking into I am sure you will be at
The Cutting Edge of all this stuff as we
move forward so where can people follow
you for the latest info yeah I'm at uh
what is moneypodcast.com and then my
biggest social platform is Twitter at
breedlove22.
love it all right everybody if you
haven't already be sure to subscribe and
until next time my friends be legendary
take care peace
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