Kind: captions
Language: en
oxygen
pretty important for human life there's
no price on it why it's not scarce
something like diamonds not that
important to human existence yet has a
huge price because the demand weigh
outstrips the supply the unique thing
about scarcity and money is that money
is always scarce right I want to walk
through one thread that I all of this is
me taking liberally from you so tell me
where I go astray here
um but this was a chain of events that I
was like oh my God I now actually
understand what's going on and this is
terrifying so you've got
um
World War II happens and you've got
people
invading countries and raiding their
gold stores because why would you invade
if you're not going to get something if
you can't steal something these are your
words so you invade a country you steal
their gold so people like [ __ ] I don't
want to get invaded so they started or
if I do I don't want them to be able to
steal my gold so they started sending
gold to the US
ends up storing all this gold for people
has a massive amount of gold and gold
historically basically money as we think
of it the the tangible dollars and bills
you would store gold in a protected
Warehouse somewhere and they would give
you a paper that represented the amount
of gold so people being Savvy started
trading that because it's as good as
gold because you can go and cash it in
so now the US Post World War II has all
this gold coming in and we then after
World War II have a the Bretton Woods uh
convention I'm not sure what it was
exactly but they say hey we've got all
this gold now we're gonna make the
dollar the central Reserve currency
Global Reserve currency excuse me and
but it's all backed by all this gold
that we have so hey we're good but in
1971 for reasons that you will have to
explain uh Nixon decided to take us off
of the gold standard so previously to
that if you had a dollar you could
actually go Redeemer for gold yes now
you couldn't and it was Fiat it was by
decree I say that this dollar has value
and therefore it has value uh the
problem is that's married to something
that happened at some point in the early
1900s that you will have to explain the
beast from Jekyll Island where we
decided uh to create a central bank
which isn't owned by the government
right correct which I still can't
believe is true the Federal Reserve yeah
is not the federal federal and has no
Reserve something crazy like this is
where I'm like language matters well
played that's a very good way to get me
think that this is a government all
right so we now break with the gold
standard and so it's we can literally
print money so as me the ignorant guy
that's been his whole life trying to
make money knows nothing about investing
I make the money I think I am safe
actually putting it under my bed only to
realize that there's actually somebody
that has the ability to go prone to go
Burr right and they can press a button
and it just makes more money and
therefore with more money floating
around you've got more people competing
to buy that loaf of bread or whatever so
the cost goes up as one would naturally
expect and so now
even though I theoretically have my
assets are going up and yeah I have more
money but I I either have the same
buying power so it's just an illusion or
I actually have less buying power and
it's actually devastating and so now we
get into this crazy making Loop of it
seems like I should be getting ahead but
I'm not getting ahead I think of
inflation as being a natural act but
really in the background are people
making these decisions and and we will
grant them that they are being kind
they're trying to do something nice
they're trying to level out volatility
if I had to guess is actually their
motivation but they level out that
volatility by
um creating debt cycles and devaluing
the currency which you are saying
mechanistically it just isn't different
than theft
um
but when people think of
redistribution of wealth as a good thing
is that just another crazy making thing
or are people right to think that no
this is good we should be redistributing
the wealth well
that's a good long question
um I would start with a long question
yeah so let's do this
wall three distribution first of all no
one ever thinks it's a good thing when
they're the target
no one ever no one ever wants to be
redistributed from no one ever
voluntarily gets redistributed from that
would be
giving up value or wealth or capital for
nothing in exchange I don't think anyone
I don't say no one ever but typically no
one ever will enter that
um agreement let's say so maybe we'll
track this Arc we'll do what is gold how
did we get gold
why and how Central Banking was
introduced and then we'll get into
um
really what's happened post 1971. so
and I love this question by the way what
is money right this is the name of the
show and this is the I think the key to
incepting these ideas into people or at
least getting people to question their
socioeconomic reality such that they can
peel back the layers of this onion and
see through some of these euphemisms
we've been getting to or we've been
given
and
one definition of money this is the
Austrian economic definition is that
it's a Universal Medium of Exchange
so again capitalism is built on free
exchange it's built on voluntary action
right self-ownership you go out into the
world create things of value you trade
them with other cell phone people the
result is we create more output per unit
of input we become more efficient acting
in concert than we do acting in
isolation this is the division of labor
this is the reason wealth and riches
exist because we specialize and we trade
with one another
in that process
something necessarily becomes most
exchangeable or most treatable right by
definition for all trading with one
another there's going to be a single
asset of that uh flurry of trading
activity that is the most liquid asset
the most treatable or exchangeable asset
that is money that's how money emerges
in the marketplace it is not a
government creation has nothing to do
with government other than the fact that
they monopolize it and try to control it
to control people
um and when you look at money from that
first principle standpoint
and this is from the Austrian School
there's a deep Long literature on this
you'll see that money needs to exhibit
five Key properties and this is an
important point
we typically think that we want the
thing right we want the table we want
the car whatever
but we don't we want the services the
thing renders to us so you could think
almost in the world of Economics there
are no such thing as Goods if you will I
know there are Goods I know they're
Stables I know there's cars but what we
are after is what services those goods
provide to us
so when we look at money the five
properties that market actors
voluntarily favor
you could also think of as the five
Services we seek from money
are divisibility durability
recognizability portability scarcity so
I'll walk through each one of these
money needs to be divisible pretty
obvious you want to transact at
different scales you want to buy coffee
and the same day you go and buy a house
right so you'd like to be able to give
someone a coin or send someone a wire
for 10 million bucks to buy a house
pretty obvious
um money needs to be durable
in that it's not going to corrode over
time if you put a bunch of gold in a
safe it's not going to decompose right
the half-life on gold is way longer than
uh matters to any of us if you put a
bunch of oranges in the safe and you're
using that as money that's gonna rot
pretty quickly so clearly durability
matters
money needs to be recognizable
which means that each trading party can
verify its authenticity so at every
transaction and I'm handing you dollars
you can certify either with that little
pin they mark on dollars to make sure
it's uh a legitimate you know U.S
federal reserve issued dollar or if it
was gold back in the day
they had different techniques for a
saying uh the Gold's authenticity making
sure it wasn't LED plated with gold in
fact the name sound money which you've
probably heard in your explorations of
the rabbit hole that referred to the
sound a gold coin made when dropped a
certain way so you could verify its
authenticity by the sound it would
create
and this is another reason we introduced
coinage and currency because
to verify money at every transaction is
a very significant transaction cost
transaction costs are dissipative to
trade right if we want to increase trade
and increase wealth we want to reduce
transaction costs so by abstracting into
currency or putting it in a warehouse
and trusting the warehouse custodian we
can now trade much more quickly and more
efficiently
so
that I mean that's that's one aspect of
money that coinage and currency helped
was recognizability
money also needs to be portable
pretty obvious you want to be able to
move it across space right if I'm buying
something in another city I need to get
my gold or dollars to the other City to
give it to the recipient
finally and most importantly
money has to be scarce
and now we typically think scarce is
purely a supply side function that's not
what scarcity means
scarcity occurs when demand outstrips
Supply so when there is more appetite
for the thing then there is a supply of
the thing
okay so oxygen
pretty important for human life there's
no price on it why
not scary it's not scarce the supply way
outstrips the Demand right
um something like diamonds not that
important to human existence yet it has
a huge price because the demand way
outstrips the supply the unique thing
about scarcity and money is that money
is always scarce
because it's a call option on everything
all the capital all the savings humans
can produce the heart of man is Never
Satisfied we always want more therefore
money is always scarce by definition
so what Market actors tend to favor is
the money that has the most inelastic
supply so this means the supply that is
least subject to change
uh by The Willpower of others
that is what
Market actors will Zero in on and here
there's another number of ways to think
about this
um
time
energy
second law of Thermodynamics we cannot
create in order to store energy right
we're sacrificing time and energy to
earn money
you would naturally want the thing
you're sacrificing this absolutely
scarce time and energy for to be
similarly absolutely scarce that would
be the ideal money right something that
can't be created or destroyed
um
with
money
to gloss over a little bit of History
monetary Metals best satisfied
divisibility durability recognizability
portability those were just and we've
tried a lot of experiments we've had
seashells we've had glass beads we've
had cattle we've we've used all kinds of
things as money right
Natural Market processes determine that
monetary metals were the most
satisfactory across the first four
properties or services that money can
render to us
of the monetary Metals gold was the most
scarce meaning specifically its Supply
was the least vulnerable to change no
matter how much effort time energy we
poured into producing gold its Supply
increased the slowest and the most
predictably
so this gave us a medium into which we
could store economic value
and we would know with relative
certainty that it would only change by
about two percent year over year so this
gave gold the store value function we
traditionally associate with it
um that's great right gold is great gold
is good money it's been good money 5 000
years
uh served a lot of purposes but the big
hang up with gold is lack of portability
right we talked about this a little bit
earlier you want to be able to move
across space obviously but Gold's heavy
it's physical right it's very expensive
to secure
um it actually in one way it's
beneficial and that you can store a lot
of economic value in a small area and
sort of uh amortize the security costs
around it but when you need to move it
that's when there's a lot of risk
involved
and this was the impetus for introducing
what you alluded to earlier were the
warehousing businesses so a private
Enterprise a free market function came
to be where a warehouse would take
custody of the gold give you the
warehouse receipt you can go and
transact it it's as good as gold right
you have a call option on gold
effectively
this wasn't introduced to augment the
portability of gold
well those warehouses became Banks
those Banks became central banks and
this is all again I'm not laying out a
nefarious scheme here this is the
economics
the economies of scale associated with
gold
it is more efficient to centralize
custody of this heavy bulky metal and
issue abstractions in it
it's more efficient to transact in that
model than it is with physical gold so
that's what drives this process the
problem is
you now have to trust the custodian
you've introduced what we call
counterparty risk there's a counterparty
to that trade I can trade this paper
with everyone and it's as good as gold
until I go to redeem the gold from the
warehouse and there's the Gold's not
there or they won't redeem it or a
fraction of what this paper represents
is available
um so that is kind of the history of
gold into Central Banking
and I guess
the history of Central Banking is quite
interesting
um
I would say that you know
maybe this is an important Point too
that people were all seeking something
for nothing
I think this is kind of unavoidable this
is the entrepreneurial path right you've
got a problem you've got an itch
you want to scratch that itch or solve
that problem with less effort
right the the really successful
entrepreneur is almost brilliantly lazy
right he's identifying a problem and
finding the quicker way a better way to
solve it
when he makes that Discovery he can now
sell that product or that service or
that method whatever it is into the
marketplace and because everyone wants
something for nothing they will reward
him right this is the entrepreneurial
process
so that's great we all want something
for nothing and it's a valid Noble
Pursuit the problem I think is when we
cross that line of self-ownership or of
morality
and we start seeking something
for nothing from others right someone
else has planted the garden someone else
has built the business someone else's
mind the gold
and instead of me performing the work
to create that value or earn that value
I figured that I can just go out and
co-opt or coerce or take that property
or that asset from that person that's a
path for me to get something for nothing
but it's the immoral path right so I see
this
as kind of like the driving force in
most Human Action we're trying to get
something for nothing but there's a line
that can be crossed
and we talked earlier about
self-ownership I think that's the line
when you violate the self-ownership of
someone else that's the problem
Central Banking sort of came about as
this natural institution to augment the
technological limitations of gold it
wasn't portable right
but when you put that much power you
concentrate that much power into one
Institution
it becomes noxious
it becomes corrupting it becomes uh
irresistible for some people of lower
Scruples anywhere in the world to seek
that seat of power
and this is what I think has really
started to deteriorate the monetary
system and if you look at the history of
Central Banking
it's a lot of
leveraging one another right you know
you talked about a lot of the gold
ending up in the United States this was
also pre-World War II A lot of it has to
do with
the balance of payments among countries
which are just inflows and outflows of
capital but particularly when things got
hot in Europe a lot of gold started
coming into the U.S and again with when
we with that much power or money in one
place
we became the world superpower and so we
stepped on to the the theater of war at
the end of World War II and we
declared ourselves Victorious
rightfully or wrongfully so you can make
your own judgments about that and then
we rewrote the rules of global banking
to favor the United States where the
dollar is pegged to gold
all of the currencies are pegged to the
dollar
so what this gave the United States is
the infamous exorbitant privilege as has
been called to be able to print money
we could send these paper certificates
out into the world and have them send us
goods and services in exchange
add infinitum right until the system
breaks down
countries had the option to call our
Bluff though they could accept these
dollars but they could redeem them for
gold if they thought were being
irresponsible with a monetary policy for
printing too much money
well countries started calling our Bluff
after 1944. uh we had this huge economic
boom and then again glossing over some
history I think it was Germany that
tried to repatriate some gold so they
tried to redeem dollars for gold and
then we had the infamous 1971 Nixon
shock that said no more gold redemptions
and from that point on and it was said
to be a temporary measure as governments
so often and infamously say
who was it that said that there's
nothing more permanent than a temporary
government solution
here we are exactly 50 years later in
[Music]
um
deep into this Global fiat currency
experiment led by the United States
and things have really come off the
hinges I've Point people on this topic
to this website WTF happened in 1971.com
this is not just economic right this is
it's socioeconomic there's you know
obesity rates have spiked
um drug addiction suicide clearly
indebtedness right when you think this
is tied to coming off the gold standard
as the austrians wrote a long time ago
the monetary standard and the moral
standard are inexorably linked
that and this gets into back into
property and time preference
um
when money's losing its value over time
we're all incentivized to be more
short-term thinking this is a
de-civilizing force
and I think it is at I don't want to say
it's the sole cause for a lot of the
cultural malaise we see in the world
today but I think it's a significant
contributor
okay that gets really complicated so
while very interesting I think we pushed
that down there's a line that I've heard
you say that I think is really important
for people to understand because I'm I'm
thinking of myself as I first started to
Grapple with this idea of inflation as
theft and I just couldn't make the words
even it seemed like such a non-sequitur
to me
and that is that there's no difference
between I had a realization when I first
got introduced to the stock market I
couldn't make it make sense until I was
like wait this is like baseball cards
right these unless it pays you a
dividend if it pays you a dividend it's
different because it's actually giving
you cash but if it doesn't it is
literally baseball cards it only has the
value that people agree that it has and
once they stop agreeing that it has that
value then it stops having that value in
any real way
when I think about inflation the
following sense that I heard you say
makes all the sense in the world which
is that there is no difference between
counterfeiting and inflating the amount
of dollars in the system absolutely it's
just that one we say is fine because the
Federal Reserve is doing it with the
sort of implicit um okay of the US
government and the other is uh person in
their basement you know that's right uh
doing it on the down low but it's the
same thing yeah and then I heard you
talk about there was a time where um
when
um Africa was being colonized that I
forget what region but they use glass
beads as a form of payment and the
people coming in were like word we've
got glass manufacturing places you know
back home we'll just make more of these
beads yeah and when you think about the
things that that money represents our
time and our energy right you do
something you you specialize as you said
your specialization
create something and then somebody who
doesn't want to specialize in that that
specialize in something else gives you
money it's a call on that good or
service and you give them that thing so
if you can just go make these glass
beads back home and bring you know ships
full of them you can slowly milk the
efforts of the people that you're
counterfeiting their money and when I
heard it said and again I also don't
imply I don't think that I choose to
look at this with no negative uh
Viewpoint that they're they're not doing
anything negative on purpose if this is
all good intentions just potentially
gone awry but when I heard it explained
how you would do it if you were
nefarious I was like oh my God because
you suddenly understand that that
there's this extractive nature of I'm
either getting you to do this for free
or because if nobody ever realizes that
the glass beads are fake then you just
have inflation right if you give me that
thing in exchange for glass beads the
next person goes but these are
counterfeit then you really lost that's
right but if I'm just slowly devaluing
it because every the prices are going up
because wow there's just so many glass
beads everywhere
um which first would feel like an
embarrassment of riches and then
suddenly you'd realize wait everything
is just re-normalized and either I can
afford the same thing or again I can
afford less
um
then I was like oh my God now I
understand how inflation is theft and
then you really do get into I think it
was Andrew Jackson punching a banker in
the face you have to understand what
happened on Jekyll Island so it's like
before we get to the sort of
morality side of all this was just
[ __ ] fascinating and I really hope
that we don't run out of time before we
get to it I want to understand Jekyll
Island why would Andrew Jackson punch a
central Banker in the face like because
I grew up in this system it seems
natural yeah
but there was a time where this was like
governments even by government agencies
or or government actors were like met
with such suspicion and the founding
fathers and how they were like yo you
have to be so careful of governmental
overreach it's like we don't have that
same Vibe today yes what happened on
Jekyll Island yes okay
great question
um I'd like to First reinforce the point
you just made that inflation
is legalized counterfeiting
counterfeiting is criminalized inflation
this is yup not my opinion this is in
fact mechanically how it works
and in the piece you're referring to
Masters and slaves of money I wrote
about this debacle in 16th century
western Africa where they were using
glass beads as money and I think
this history gives you a good foundation
for understanding what's happening today
it was really technologically difficult
to make glass beads at that time in
Western Africa so they they had reliable
and predictable scarcity a la gold as we
described earlier but only specific to
that region
European explorers arrive and they
quickly notice hey these glass beads are
being used as money
to you know as a call option on all the
wealth this area is producing
we can produce these glass beads in bulk
back in uh European glass making
facilities
very low cost
uh to the point where they started
packing ship holes full of glass beads
and this occurred over uh it was over a
300 year period they were shipping in
these glass beads so kind of doing it
slowly and surreptitiously enough there
was resistance actually
Africans could identify the counterfeit
beads they would try to only use the
authentic ones Europeans would introduce
you know more indistinguishably
counterfeit beads so there was back and
forth but over time what happened was
this
multi-century usurpation of African
wealth by European explorers through the
counterfeiting of money and what I mean
specifically here by counterfeiting is
that Delta
in cost of production right the cost of
production was high for glass beads in
Africa therefore they had reliable
scarcity therefore they had reliable
market value and utility as money the
cost of production in Europe was low so
they could inflate the supply really
quickly and use it to basically disrupt
uh the hard money system if you will in
Africa when I say hard money I mean it's
hard to produce but it was not hard to
produce for Europeans so therefore they
could usurp the wealth
um and this this points to a keep
property of money is that the market
value of the money is going to converge
to its cost of production over time
so if I can mine an ounce of gold for
nineteen hundred dollars and it's
selling on the market for two thousand
I'm gonna mine gold as hard as I can all
the way up until my cost of production
is
1999.99 right so long as there's a
profit margin baked in there and this
also points towards why fiat currency
always goes to zero the cost of fiat
currency production is effectively zero
again it's an entry on the federal
reserve's database right control enter
another 10 trillion dollars added to the
money supply so it's almost intuitive
through that lens why the market value
of fiat currency historically has always
converged to zero which we call
hyperinflation
so
that's all
I think a good way to look at it and
that's
um and that's happened many times
historically so it's not just
it's not purely that these Europeans are
set out with nefarious purposes per se
but if there's a dynamic in money where
you it needs to be costly to produce to
support its market value and therefore
support a sustainable trading economy if
it's cheap to produce then it will be uh
the market will be flooded with the
money in a hyperinflate essentially and
so that process again is why people
settled on gold it was the most
difficult thing to produce
so
the other thing that happens here is
that
when you're increasing the money supply
um like it's very common today in the US
we think oh there's not much inflation
you know food hasn't gone up a lot
whatever whatever but what you're not
seeing is that markets if they're
functioning properly we should actually
have price deflation over time as we get
smarter and better and more efficient at
making things or providing Services
prices should be coming down so the fact
that we're targeting price increases of
two percent is shadowing over what may
be we don't know right we don't know
what
um the increase in market efficiency
would actually do to prices absent the
Central Bank intervention so I think
this is a very important Point too that
you know people try to argue that the
degree of it is such that it can be
ignored or not worried about the two
percent's not that big of a deal you
know let them take what they need but
it's overshadowing the opportunity costs
of people that's being lost like we
would have five percent price deflation
or more in certain sectors
and so
to get to the why did Andrew Jackson
punch a central Banker in the face which
he is
as someone that grew up in Tennessee
he's my favorite Tennessean for this
very reason I think he also called them
a den of vipers and he said he would
route them out he resisted
um or at least he was instrumental in
the resistance of the first two
attempted implementations of a central
bank in the United States the Federal
Reserve being the successful third
is because this country was founded on
the principles of which we inherited
from the Magna Carta life
Liberty
property
as we've touched on earlier the central
bank is antithetical specifically to the
third one property right it's
arbitrarily violating the property
rights of some to enhance the property
rights of others is another way to look
at it
so what is that what is life liberty and
property
our life is our future
right these are the
to take to lose your life is to lose
your future let's say right
Liberty is your present it's your
present freedom right to lose your
Liberty is to become a slave right and
the the Spectrum to slavery is very
important too
zero percent tax or theft is a free man
right completely owns himself 100
taxation or theft is a slave all the
fruits of your labor go to someone else
and then
so you've got your life as your future
Liberty is your present
property is your past actually
it's how you've spent your past infusing
nature with your life and Liberty right
your self-ownership you've accumulated
fruits of Labor that becomes your
property
and so
the central that those are the kind of
the three tenets not only of natural law
but also basic morality right I don't
think anyone would sit here and argue
with you face to face and say no I have
a claim on you more than you do
I don't like it's a non-reasonable
argument and again this is this is a
priori right this is only you can move
your left arm
there's no argument that I can formulate
that says no I have some claim over your
left arm and the actions that it takes
yet we have that implemented in this
system that can violate property rights
if I can violate your property rights
I'm effectively saying your
self-ownership is limited and that I
have a higher claim on your life than
you do
this is like the rotten core
at the heart of modern uh statism we
call it capitalism but it's not it's
state marginalized capitalism with a
communistic institution at its core
called the central bank
so Andrew Jackson was a man that
understood these principles he
understood the importance of adhering to
life liberty and property for a not only
uh is it pragmatically the most wealth
generative model of human organization
but it's also the most humanitarian and
ethical right it offers the greatest
equality of opportunity to actually have
property rights in yourself in your time
in your labor
so
and it's you know thank goodness it's
that way thank goodness the ethical
humanitarian choice is also the most
wealth producing Choice otherwise we'd
have a really
ugly Dilemma on our hands
uh
I think Andrew Jackson and our founding
fathers understood these three pillars
of life liberty and property
as the most
important
components of human
organization that if we adhere to them
we can actually create
modes of being that increase our wealth
which is to say increase our
satisfactions right the heart of man is
never satisfied but this is the way to
optimize the satisfactions of human
beings
and create a mode of being that's
focused on trade cooperation
interdependence as opposed to Warfare or
fighting so it's to boil it all the way
down it's like
we can either cooperate and trade
let's say cooperate and compete it's
very important part of Entrepreneurship
right it's competition and trade
voluntarily with inviolable property and
we generate wealth
that's a positive sum game the pie is
growing or
we can violate the property of one
another and fight over it
and this gets to that old basket saying
that when goods and services don't cross
borders soldiers will
all right we need we're all seeking
something for nothing if we don't
channel that Human Action into these uh
productive channels of trade and
Entrepreneurship then we end up over
here uh in violence coercion and
compulsion the truth is hitting your
career goals is not easy you have to be
willing to go the extra mile to stand
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friend back to today's episode
okay so you've got Andrew Jackson trying
to root out the Vipers
I'm assuming he thought of them as
vipers because they can redistribute
wealth which is a violation of your
property that's right why then do we end
up creating the central bank and
why did they meet in secret like what
give us a little bit of background on
that meeting on Jekyll Island I know
they were pretending that they were
going on a hunting trip
there's it's such a weird Confluence of
things that are happening right now you
have this sense of like distrust of
people are working behind the scenes
against you but you also have the sense
of redistribution of wealth is good like
it's it's a very confusing time right
now and this is a still confusing to
this day people will argue with you
um that this you know the Fed was set up
with very good intentions and that this
whole which by the way this book The
Creature From Jekyll Island by G Edward
Griffin this was formative to my
understanding of Central Banking and
this is pre-bitcoin that I got into this
so I would really just encourage
audience to go check out that book uh
it's a it's a big book though you can
also read an Abridged version
called dishonest money I think was one
that I gave to my family and friends and
it sort of encapsulates the gist of it
um but to your question
I think
based on my study of that book that it
was done in secret and it was done over
a holiday weekend because this was a
time when people still understood the
ideological importance of life liberty
and property we learned a lot of lessons
from Central Banking and it's failure
and it's tyranny in England and even
before that so it was still fresh enough
on the human mind that we we were
resistant to its implementation
um but as far as why it got pushed again
it's just something for nothing
principle right there
if you could found an institution or a
business
and by the way all organizations are
businesses right governments or
businesses institutions or businesses
they're all property strategies as I
call them
if you could establish an institution
that could generate Perpetual profits
and be able to paper over its own losses
or you can never sustain a loss
would you not have a pretty large
incentive to establish that organization
I mean the equivalent question is if you
could magically wish for a money
printing machine right here on your
table
like wouldn't you want that wouldn't you
once you had it wouldn't you run that
machine until it was absolutely blowing
smoke and Sparks out the side of it I
mean that's Central Banking in a
nutshell is it human beings
in this pursuit of something for nothing
or in this pursuit of
um pursuit of wealth frankly right the
most powerful incentive in the world we
have tried to rationalize and formulate
different ways of creating socioeconomic
structures that favored the few that
could understand it and create that
privilege for themselves at the expense
of others
I think this is where Bitcoin needs to
enter a stage left here so I have a
quote from you
um actually I'm going to start with a
paraphrase from Alan Greenspan this is
you paraphrasing Alan Greenspan
um that sets us up then for a fewer
quote so Alan Greenspan again this is a
paraphrase a sound store value must be
made illegal otherwise fiat currency
would not be competitive
so you've got this idea of so a sound
store of money you talked about you
dropped that coin but basically that
it's the amount of it is fixed in
flexible Supply okay so that's sound now
this is your quote which uh I love and I
think sets us up for understanding why
the Bitcoin guy who has Bitcoin tattooed
on the inside of his arm like the most
painful place to get a tattoo uh says
this this entire system we've built is a
complex of unintended consequences and
Bitcoin is an immune response from the
collective economy
so if we buy into the idea that
they didn't have bad intentions to
create the central bank they don't have
bad intentions to make the printer go
Burr they just like they're trying to
they're trying to policy their way to
something that's far more stable which I
actually get and when I put like my they
don't have bad intentions hat on and I'm
like word like I get what they're trying
to do and I'm grateful that I've grown
up in a super stable environment where I
was able to go from you know sort of
lower middle class to generating real
wealth in my life so for me it worked
right I was able to jump class like all
the things that I was promised with the
American dream I was actually able to do
and so I'm like yo that stability is
amazing
um I didn't ever have to use weapons to
build my company which is a whole side
thing that I've talked about before
where I had former drug dealers working
for me long story there's a whole reason
why I think it's amazing to give people
second chance so
anyway they were telling me stories of
like people trying to confiscate their
product right which for me would have
been protein bars so I was like whoa the
thought of somebody showing up with
shotguns to take my protein was like
that's crazy that's a hard way to do
things yeah right so it's like okay this
is all work for me I like the stability
so when I have that hat on I'm like I
get what they're at least trying to do
but when you try to engineer a system
whoa like the number of things that go
wrong where you can change whether it's
ecological and you're trying to do
something and it has you know 10
different knock-on effects or whether
it's with money and it has different
knock-on effects
um
why though is Bitcoin the immune
response
yes
um it's funny you read that line I don't
barely remember you said while you I
heard you say it so whether you've read
it or written it or not I can't say but
in a podcast you said
um
so these principles that the United
States was founded upon again that have
been refined from the past from like the
Magna Carta
one of the most important if not the
most important is the principle of
inviolable property meaning again
property is the relationship between
yourself
and the value you create or the fruits
of your labor which is the foundation of
the scaffolding that lets you climb the
socioeconomic hierarchy right from as
you said lower middle class to where you
are today was because
you knew that you could hold the value
of the value you created and use it to
scaffold yourself upward if that
Foundation were not stable
right at least to some extent there
would be no way for you to have upward
Mobility so again it's we're back to
property rights being the basis of
civilization itself
they're pretty good here they're pretty
good in the US you can open a bank
account you can put dollars in it
your property audits will be violated by
inflation when the Federal Reserve is
printing money you're going to now need
to outpace inflation with some other
investment otherwise your property will
be diluted you don't have full property
in that money because if you try and
wire it to you know I don't know what
countries are on the ofac list today
Iran or something they'll block you and
say no you can't do it so you don't have
full rights in that property you are
being surveyed you don't have full
privacy but you have pretty good
property rights right relative to the
rest of the world
Bitcoin is the first permanent
implementation of this principle we've
been refining throughout human history
of inviolable property it actually
cannot be violated in any way
no one can produce more than 21 million
Bitcoin so it's
and I've argued this in some of my
writing that although it's an invention
we've actually discovered something with
Bitcoin we've discovered
absolute scarcity for money so if we're
back to those five properties of money
in terms of scarcity Bitcoin is absolute
it's not relative right it doesn't
change we know with
you know nothing's
um
people argue with me about this it's not
absolute everything's probabilistic true
uh Bitcoin has proven itself over 13
years of flawless operation that it does
two things essentially perfectly what's
your turn out a block on uh one block of
transactions on average every 10 minutes
and adhere to a supply cap of 21 million
so it's the first fixed Supply money
there has ever been
and I don't think you can recreate that
because by definition
money is a centripetal Network effect so
it we tend towards one so for the same
reasons we had one analog gold we're
likely only to have one digital gold
um
this so your property rights cannot be
violated by inflation because no one can
change the supply cap if you hold a
thousand Bitcoin you hold one thousand
of a possible 21 million forever right
you have a guaranteed fraction of the
total money supply
you cannot get that level of assurance
with any other asset in the world full
stop doesn't exist even with gold you
can hold all the physical gold you want
you're still not immune to
some technological breakthrough we
figured out figure out how to produce
gold in the lab very cheaply we mine an
asteroid we mind the ocean floor we find
a new South American Bonanza whatever
you're not immune to any of that but
with Bitcoin and again it's a bit of a
bet because it's only 13 years in but
it's done these things perfectly so far
if it continues to do what it's been
doing for 13 years you have a guaranteed
fraction of Total Money Supply so you
have an inviolable property right
further
this is again property is the
relationship right we've historically
always needed an enforcer
so you need the police force you need
the military to make sure no one comes
into your house and violates your
relationship with your house
we needed if maybe not necessarily a
monopoly on violence but you needed a
protection-producing Enterprise which
historically is the role of government
to enshrine your property rights
the problem of course is that they
willed the power to violate your
property rights as well which
historically has been very tempting for
governments and bureaucrats they
typically give into it and governments
get overthrown over time that's been the
cycle we're locked into
bitcoin's the first property
right independent of the Monopoly on
violence or independent of uh physical
protection production
it's an informational property right
it's just an alphanumeric string you can
store it in any information bearing
medium put in your mind put on your
computer put it in a song do whatever
you want with it and there's no the
enforcement is done by the mining
Network so the algorithm and the free
market competition that's going into
Bitcoin mining is effectively displacing
the protection that government was
historically necessary to provide in
Bitcoin itself so it's this radical new
you know some people call it a
metaphysical property right and that
it's just
an information Bearer asset so gold was
really good as a bear asset and that you
know assets equal liabilities plus
Equity the accounting equation gold was
pure Equity if I hold gold it's no one
else's liability that's really important
right I have no counterparty risk if I
hold physical gold
if I hold dollars that's not true right
I have this liability to the Federal
Reserve to the bank whoever whatever
counterparties are involved
bitcoin's the same as physical gold but
it's non-physical right it's
informational so it opens up this entire
new
sphere of possibilities and how you
custody it you can custody Bitcoin in
these multi-signature schemas that are
all but immune to theft you can chop the
key into a bunch of pieces and
distribute it geographically you have
these military-grade protocols wrapped
around it and it gives you an absence it
it is the highest implementation
of human self-ownership we've ever had
right in the past it's been scribbles on
the American Constitution or the Magna
Carta and like We'll always adhere to
this document no matter what but then
you know a few hundred years go by I'm
like well you know let's tweak this or
change that or add this
bitcoin's taken those principles we've
used with foundational documents
historically and it's permanently
emblazoned them in computer code
an unbreakable code basically is another
way to think about it so
it's the invention of inviolable
property right it's no longer a
principle we've grabbed this principle
out of
the space of ideas and we've anchored it
into reality via the thermodynamic
competition of Bitcoin mining
and it is so radically new and hard to
get your head around that it's
shattering World Views worldwide Bitcoin
I think you would agree with this I view
Bitcoin as a deflating currency fix
Supply
correct but as more people want it its
value is going to go up which if that is
true then the longer I hold it the more
pizza that same single Bitcoin will buy
exactly so that has changed my behavior
I think of dollars as like whatever like
spend it but when I have a Bitcoin I'm
like I don't want to mess with it this
is time preference yeah I want to hold
it so
because of that my base assumption is
that if you have a deflating currency
that thusly buys you more over time
it's so counterintuitive because
deflating makes it sound like it's bad
it's getting smaller but it's actually
growing more powerful exactly it's
buying me monetary dilution as inflation
and monetary enrichment as deflation
yeah the inflation deflation is a
Keynesian euphemism actually to sell the
idea of infections well played because
my brain is having a very hard time okay
so my Bitcoin is growing in purchasing
power over time and that has already
changed my behavior so I know that it's
going to change more people's behavior
my base assumption is that will cause a
decrease in Innovation because people
are like dude your iPhone is cool but
like uh I'd really rather wait and see
what my growing powered Bitcoin that's
the leap I want to challenge right there
where we say less we say more saving
equates to less Innovation yeah you can
see exact Ops
why the the nature of saving itself is
that we are delaying present consumption
and looking further into the future and
engaging in longer term production
processes yep now the austrians describe
this as the more round about the
production process which is equivalent
to saying the more finely we engage in
the division of labor so you have one
long production process to produce a
thing the more finely we chop that up
amongst ourselves the more productive we
become
so that
um
effort that impetus to push into longer
production processes that are more more
roundabout and more finely divided that
is innovation that is how we we become
more than some of our parts we
accomplish great doesn't feel true to me
with less efforts when I that's it
there's you actually think inflation
drives Innovation can I give anything
uh well so I'll tell you why I think
inflation and look trust me when I say I
am at the edge of I am thinking through
this in real time so this is not me
saying I believe this but this feels
right to me so when I think about what
gets people to innovate it is if I bust
my ass and I come up with something
better than other people I get more
value from people in a very fair
exchange where they think they're taking
advantage of me because they'd rather
have this thing that I've created than
they would they want the money as do you
have them exactly and so I'm like the
word this is amazing so now where what
we get into is right now with an
inflating currency people have just a
sense of like oh this money is it's it's
inconsequential it it God this is going
to sound stupid but a dollar is only
worth a dollar
whereas a Bitcoin to me feels very
precious it's like this gets becomes two
dollars three dollars ten dollars a
hundred so now I'm like uh I don't
really want to spend this okay because
of that I don't have the ease of like
buying that I would so now my evaluation
of the thing that you've created I'm way
more scrutinous
so I mean maybe just raises the bar on
Innovation but it it I think you're
saying it feels like it turn to Value
investing perhaps
so
for a long time
people would only invest in projects
that created real economic value
right and if your money is holding
purchasing power over time that's a good
bar
you can think about it like this
imagine we're on a world run by Bitcoin
so there's one hard money fixed Supply
everyone uses it in the world
every successful economic project every
entrepreneur every Innovation that
successfully increases productivity
that accretes to the purchasing power of
everyone's money
so
in a world where your money's constantly
losing purchasing power that is not
happening so you get more junk I guess
there's more of a there's there's
actually
the incentive and this is related more
directly to the violation of property
but there is an increased incentive to
consume rather than invest the more
rapidly you you violate property rights
and the more that it's permanent rather
than intermittent so if I know the high
degree of certainty that you keep 20 of
whatever that I make that I have a 20
less incentive to engage in investment
rather than consumption activities
and again that's what we're doing when
we print money we're actually inducing
or incentivizing consumption actions
over investment actions and investment
actions are what Drive Innovation it's
savings that underpin Investments
investments in that long-term production
structure I I suggested there's also r d
in their experimentation right we're
trying new things that is what creates
innovation in the real world
so if anything The Innovation that we've
seen in the 20th century has been in
spite of Central Banking not because of
it but it gets very murky here because
it's very easy
you could swap someone else into the
seat right now some canes and economists
and they'll give you a completely
different interpretation of economic
history right they can go through the
historical facts and Trace their own
Arrow of causality and say here's what
happened and we're back to Copernicus
back to Copernicus but here's what the
libertarian philosophers did they said
you can't mistake economic history for
actual economics economics is more of a
rationalistic science you you have
axioms man must act man prefers present
satisfaction to later satisfaction all
other things being equal like these
axioms it's like geometry I I so I
didn't understand why can't I take
economic history as economics if you
take economic history you can because
that actually happened so you're saying
you can't take the multiplication of
Economics social science right you
cannot mathematize economics in the same
ways you cannot mathematize psychology
I can't sit here and tell you the reason
you're doing this is because there was a
linear chain of causality and if we
repeated this experiment again the
economic experiment unfold in the same
way it's not possible because it's just
too complicated
there's no constants in Human Action
right so we know water freezes at zero
degrees Celsius that's a constant we can
build a framework of knowledge around
that there are no constants in human
action
constantly changing it's all all these
psychologies interlinked into the market
process so we're going to derail on this
but I'm just going to plant the flag to
say I think there will be a day where we
actually realize that human interactions
are completely predictable Free Will is
a total myth
but that doesn't help us now that could
be a pretty bleak day
I don't find it Bleak because the
experience will never feel like that
but that's going to completely derail us
because right now I don't Free Will is
seems to just be provably an illusion
so we will definitely get derailed on
this
yes if um
all right so instead of derailing on
that let's so this Copernicus idea of we
have a theory the theory is going to
completely shape how we interpret things
and definitely how we act so what is the
I call that a frame of reference frame
of reference is everything it is the
distorted mirror that we perceive
reality from and to your point it's
individual so everybody's got a frame of
reference it's going to dictate how they
think about what they see and that will
actually impact how they feel which will
impact what they do
what is the so are the the two using my
language frames of reference that we're
thinking about here the Keynesian model
versus the Austrian
let's talk about a very fundamental
Theory
which is the theory of the individual
now this is something that we take for
granted today we assume that you're an
individual I'm an individual we're all
freely interacting um
but in ancient times it wasn't this way
actually it was the family that was
considered to be the primary social unit
they called it the uh paterna families
and everyone was basically perceived as
a unit in that family that you you
served
the ends of that family uh it was
religious in nature this was
in ancient Rome it was the religion
it was uh the family and it was property
so we're talking about ancient people
that said on one piece of land
generation after generation the present
living family took care of the ancestors
right they worshiped the ancestors they
used to burn a hearth there was a fire
that every family maintained on an altar
and the first thing they did every time
they would wake up in the morning is
stoke the Flames of that fire and so
that was to symbolize their property
interest in that land that carried
forward from their ancestors into the
present day and if that fire were
extinguished that were that was
considered to be an
equal symbolic expression of the family
being extinguished so the whole primary
imagined social unit of the world was
the family the individual did not even
exist
now this is hard to imagine it didn't
exist or it just wasn't the primary way
that you thought of it this is very hard
to talk about because what I'm saying
and often we're talking about money is
the same thing you're trying to describe
water to a fish that's never broken the
surface
how much of our cultural programming do
we inherit from our parents from our
existence from our cultural heritage in
this world
yeah but let me ask you one question
because I get where you're going and I
can collectivists versus individualistic
societies has real uh real world impact
so I know there is a thing where you
would feel that me as an individual is
very much embedded in a collective and I
have to be thoughtful about that but
nobody would be confused if I poke you
and it hurts it's not like that person
would not be able to distinguish between
you getting poked and me getting I'm not
going there so let me try to prevent the
sidebar let's just say this the
individual did not exist as an economic
or a socioeconomic conception okay it
doesn't mean that you couldn't poke
someone and they go hey man don't poke
me right a socioeconomic exception of
the individual did not exist one of the
family did it was all centered around
the family and then families eventually
Stitch themselves together into tribes
and Clans and ultimately nation states
and that had a lot to do with the
unification of religion
but the individual is something that we
invented
we invented this the individual as an
economic as an economic actor okay and
from the individual economic actor that
came post-christ it was with Christ
and Paul's analysis of Christ and the
moral equality of men that we developed
the conception of the individual and
from the individual we extrapolated that
into individual private property rights
so we moved from a world where the
family had exclusive property interest
in the land it was also non-transferable
they weren't selling this stuff they
were just having dominion over it I
really think if anything it was like
territoriality like animals or
territorial over specific uh pieces of
land we were basically territory animals
right we were trying to survive the way
our ancestors did there wasn't much
Innovation occurring there surely wasn't
a lot of trade occurring and we had this
sort of primitive Society
but post-christ we invented as religion
was evolving we invented this conception
of the individual and I'm drawing on a
book here by that title inventing the
individual if you want to do a deep dive
on it explains it in depth
but to gloss over a little bit let's
just say that with Christ
came this idea of the equality of souls
that everyone had an equal Soul or a
moral equality if you will
and with that notion came
the 1215 Magna Carta life liberty and
property that we had this conception of
individual property rights so that you
as an individual now can stake a
transferable claim on assets in the
world
and that is what led to capitalism
proper right so we have individualized
property or we have socialized property
and I think the degree to which we print
money of the degree to which we have
government interference we are
socializing property and this is
causing people to consume rather than
invest it also causes people to
misallocate Capital because of the
tragedy of the commons no because again
if you keep 20 of everything that I make
right that's a socialized property right
you're taxing me yeah but why would that
sketch me out if this is an invention
yeah it reduces my incentive to invest
if I can only keep 80 of what I earn I
have a reduced incentive to invest
have you heard Ray dalio's take on this
so he talks about China as a
collectivist culture and he's like look
you can rail against them and think that
they're crazy but they think that we're
crazy and dealing at the individual
level and any one individual thinking
whoa you can't tread on me I'm an
individual whereas they're like you're
out of your mind like you live as a part
of the collective and if killing you is
better for the collective than kill you
we must and while admittedly those words
I'm putting in radelio's mouth his whole
thing is I know that you look at China
and you judge them and think that
they're crazy but just know that they
feel exactly the same in the opposite
direction so what I'm trying to figure
out is when I look at if being a part of
the collective makes me less likely to
invest the only way I can wrap my head
around that is if it's the same thing as
a tragedy of the commas I don't want the
collective to be able to take things
from me therefore I'm going to do
something with it spend it in this case
not invest it just so that I could reap
the immediate benefits of that and the
Collective Now doesn't have anything
that they can take from me if that isn't
it I don't stand where you're going I
don't think it's a matter of being part
of the collective or not part of the
collective that's not what I'm saying
what I'm saying is is the Integrity of
your property interest and let me
specify what property is
the exclusive power to control an asset
right you get to say what happens with
your cup no one else gets to say what
happens with your cup the prior to
Christ that didn't exist that is
property right well it existed between
the family and the land yep and it was
not exactly transferable now there was
trade occurring between families and
among Clans and whatnot but we didn't
have this
established legally protected morally
protected notion of the individual's
right to own property and transfer and
trade with others
so I'm not saying that this is
participating with a collective or not
participating with the collective it's
about Justice it's about people keeping
what they earn the value that they
create this is the entire premise of
libertarian philosophy
and so
pre-christ we didn't have that atomized
individual as an autonomous
socioeconomic actor did not exist
post-christ it comes and comes into
being right 1215 years later we signed
the King John signs the Magna Carta life
liberty and violable property you
started out as a Pasco when I asked
about the the copernicinian
that's right we're gonna take these two
frames of reference and so I'm tracking
that I've got the individual frame of
reference and I've got the Socialist I
think frame of reference
yes yes I'm tracking so far yes okay so
what I care about in there is what
behavior is elicited when you take that
frame of reference right so you could
think of the individual the fact that we
sit here right now you have bank
accounts you have assets you can sell
those in the marketplace with other cell
phone people that also have accounts and
assets we take all that for granted yep
but it's premised on private property
rights which is premised on the
socioeconomic conception of the
individual now again we take all this
for granted so we it's hard to even talk
about
but when you get to that you get to
private property rights you've now
entered a world where we have higher
intensity exchange occurring right more
people are trading more stuff
because more people have a greater
incentive in the assets that they own
they know that it's not being socialized
away from them now this is obviously
true more in the western world than it
is in many other parts of the world but
I would argue that's the reason the West
has been such a successful economic
story
because the reason we've become so
wealthy is because we've engaged in
higher intensity exchange and had a
deeper division of labor and all of this
is premised on this you could think of
this as live-action role-playing we are
pretending
that individual private property rights
exist all the time and we don't even
know it we know it when we give our keys
to the valet and just assume the guy is
going to give our car back right like we
have a legal structure in place there's
ownership documents between you and that
car
all of these things we sort of take for
granted that are just embedded in in how
we actually act so this is an enacted
Theory right we we observe
the sun rising and falling
and we reinterpret the data when we look
at it why do you want me to know this
what I'm trying to say is this
live-action role-playing this imaginal
structure this is different than
imaginary imaginary is like you bring a
pink elephant to mind imagine all is a
little kid tying the blanket around
their neck picking up a stick and
pretending to be Zorro okay we're all
doing imaginal all the time you are the
CEO of impact Theory or whatever it is
that's an imaginal role these people
that listen to you what you have to say
those are imaginal roles too
these imaginal roles that we take on
change how we relate to the real world
so the invention of private property
rights leads to capitalism
first of all led to the Magna Carta
which was a precursor to the U.S
Constitution
we have life liberty and pursuit of
happiness instead of inviolable property
and this has created the economic
division of labor and the capitalism we
see in the world today the wealth we
have created The Innovation
all of these things are born from this
imaginal conception of the individual as
a single autonomous economic actor and
I'm trying to say this because I think
it's very important that we are human
beings we're running a lot of software
it's stacked and a lot of it we take for
granted so
when I read the book inventing the
individual that blew my mind the idea
that the individual actually did not
exist at one point and then when we
invented it we created real Economic
Consequences in the world that is very
mind-blowing now I want to State why I
think that you're bringing this up when
I'm trying to figure out one embedded in
the context of what should people do
with their money and what ought the
money system be here's the prediction
that I think what you're telling me
makes about your world view that it was
sub-optimal to
think in a more collectivist way
it was far more optimal to invent the
idea of the individual even though it's
imaginal
and from that comes the idea of
individual property the Magna Carta
even to some extent the American
Democratic experiment which is something
I want to get into and so these things
are a progression we're getting better
which I think you would Define as
by owning my property richer is going to
confuse people I've heard you go down
that path before cruise
but even wealth is confusing like when I
tell people that my goal used to be to
get wealthy I'm like God I know what
they're hearing so I know what you mean
by that like
anyway I won't derail us on that because
even trying to put words was very
difficult but I'm with you spiritually
but I want to keep going on this so we
invent the individual it's better than
where we started because of this idea of
individual property rights which gives
us the incentive to invest our energies
into a highly specific way being an
architect making shoes running a media
company in my case whatever we get
highly specialized the whole world gets
to take advantage of all these people
doing highly specialized things
to a freakish degree when I think about
my the level of my ambition it's it
borders on pathology but I find that
utterly fascinating that nature has
created that I've tried to turn it off I
don't want to it's way more fun when I
have this wild ambition and ah more
bigger better do things cool by having
individual property rights we get to
harness that internal engine that people
like me you and gazillions of other
people have to create and we're
incentivized we get an echo back from
the world of wealth where I have more
optionality maybe is a good way to
explain wealth of access to things that
matter to me at a uh hierarchy of needs
level I can have a warm house food in my
belly certainty of food in my belly
tomorrow certainty of roof over my head
tomorrow all that so we're we're making
progress and now again prediction of
what I think you're trying to convey is
that as you revert through the modern
monetary systems the Keynesian economics
of hey let me inflate the money supply
to keep things moving I know Tom thinks
that a little bit of inflation is good
because it creates innovation in fact
he's moronic because it's moving us back
to this pre-individual I like to speak
in very aggressive language it's moving
us back to this
pre-individualistic place where people
are going to invest less they're going
to specialize less they we're going to
be less able to capitalize harness their
ambition because they don't get back
from the world the keepable fruits of
their labor yes how did I do you did
pretty well you're not moronic though
you have just been in that alternator
yeah
hundreds of millions of us have been
myself included before getting into
Bitcoin and all this stuff
there is a reason there is a
pseudoscience called Keynesian economics
that's infiltrated all modern
universities funded by central banks and
its exclusive purpose is to justify the
printing of money and the legal Monopoly
right it's it's a very perverse cycle
because you get a system that can steal
funds from people and then you use the
stolen funds to fund University
curricula confused it steals buying
power purchasing power
that's the only Power that really
matters yeah but I think people get lost
in that because they're like nobody's
stealing money from me I deposited a
hundred dollars I still have a hundred
dollars well the price of beef has gone
up 50 in the past 24 months so if you're
a Beefeater you've been stolen from by
50 and it's easy to get people to
understand taxes theft it it's more
complex but anyway as long as we're in
agreement that they're stealing via
buying power yeah I'm with you still in
purchasing power that's right so
you are correct however I would like to
take it
a step further because what we're saying
here is that when we print money again
that's the point I cannot over emphasize
you are only violating individual
private property rights you are
disturbing my power to control the
assets that I otherwise could right and
this comes in the form of price
inflation right if I'm a stake eater and
I've saved up to buy two years of stake
and the price of State goes up forty
percent because the Central Bank printed
money well they've stolen stake from the
effectively right or a house which is
something a lot of people insert your
favorite asset here I'm just picking
State because I'm a steak here
um so that is all well and good it's
incentivizing all the negative things
you highlighted right over consumption
rather than investment over utilization
of assets rather than preservation of
capital because
I there's a deeper reason there but
let's just leave it at that and then
misallocation of capital so
because governments suck at using my
money yeah it disturbs What's called the
price signal so you basically think that
the configuration of consumer
preferences is always changing in the
world people always want different stuff
all the time the production structure is
constantly trying to adapt and map on to
that new configuration of consumer
wishes right it's trying to satisfy
consumer wants or consumer wishes
the degree to which you socialize
property or violate property or steal it
inhibits the ability of the production
structure to adapt so you get
misallocation of capital uh this leads
to a lot of waste and stuff in the world
but as bad as all those things are
the point that I really find deeply
fascinating and whose work I'm drawing
on here is it's a book titled a theory
of socialism and capitalism by Hopi
it's a very dense book but
um it is deduced right he's deduced this
isn't an observation of economic history
in Reading someone's opinion these are
deductions from economic axioms so it's
hard to read but the insights you gain
are extremely powerful there's a fourth
consequence
to the violation of private property or
the socialization of property
and that is that
you have now stopped the degree to which
you're violating property is the degree
to which you are not rewarding
productive members of society
and you are rewarding political actors
in society
people that are and I've said this
before the legislators pen cannot create
wealth it can only reallocate wealth
so the degree to which a legislator can
become wealthy at the stroke of a
proverbial pin which is the passing of
laws policy Etc
there is an incentive to shift from a
productive role in society to this
non-productive extractive role
and the degree to which that becomes
larger is the degree to which more
people are drawn into non-productive
roles
so
what you're saying is there's a
non-producer right we're rewarding
non-productive activities when we print
money or when we confiscate property
in any way so
the thing that I'm fascinated with here
is this money being such a fundamental
technology to human Affairs it's used to
hide the widest spread violation of
private property rights we've ever seen
through this Global concerted action of
central banks or semi-concerted action
they're all inflating their currencies
people that are on the ground saving or
being taxed through this scheme
we are effectively through the
corruption of this
economic fabric we call money we're
actually corrupting our own individual
character development that now people
coming into the world that might
otherwise be a baker or an engineer or
some productive activity might instead
choose to go over here and be a a
Statesman or a politician or some other
extractive role and the degree to which
we're violating property in that
monetary system is the degree to which
they're incentivized to take on
political roles rather than productive
roles such that the corruption of this
technology that's so fundamental to our
human being
leads to the corruption of our character
and the corruption of who we are it's
like a breakdown or corrosion of the
moral composition of society
through the debasement of currency and
the violation of property
that's what I'm deeply fascinated by and
hopefully
talking about and helping spread
awareness about to prevent
okay so then I think we're gonna have to
get into axioms so as axioms were
something that I came to understand very
very late I will give people a very
quick primer an axiom is the base the
farthest down that you can take
something and there's nothing more below
that so
species something like that it's a base
thing and now from there everything is
going to make sense parallel lines never
touch
that's an axiom of euclidean geometry
there we go okay so getting into the
axioms of what ought to be you say you
should you try not to [ __ ] all over
people but you obviously have a sense of
how things ought to be at least as it
relates to money
um
what are your axioms on how the world
ought to be these are not my axioms
um I could just name a few from
libertarian philosophy now if you ask
why why would you say they're not yours
well
I'll name a few that I've read from
libertarian philosophers they're not
mine you're just saying you didn't think
of them I didn't originate them sure for
sure but I want to know what what do you
think is the the whatever number I'm
going to give you the basic answer like
what I think actually are economic
axioms and then I'll give you
the natural law ought answer which is
more of a Moral Moral Axiom if you will
uh I can't name all the the Austrian
economic ones but man must act is the
most fundamental so
this is to say action is the purpose
purpose of use of means to attain ends
that's what we're doing all the time
right you think about what you're going
to do with your day you decide you're
going to need pants to go out in public
well pants become a means to the end of
going out in public right you need some
food that's a means to the end of going
to do the next thing you're doing we're
constantly selecting valued ends and
then choosing means to get to that end
one of the biggest breakthroughs in my
life of understanding humans was when I
read from a biologist humans are an
active species yes I was like oh damn
like so I'm with you as an axiom to
understand people you mustn't will never
adjust it still and and I tweeted this
today actually inaction is an
impossibility
to choose to not act is an action you
have decided that given all of the
possible things you could do in the
world you'd rather just sit here that is
means to a certain end maybe I want to
meditate it's just sitting here could be
a means to the end of meditation but you
cannot not develop a purpose and select
means to pursue ends you can't do it as
a human as a living conscious human
being you can't do it
that's one act that is the Axiom really
of Austrian economics those other ones
like
um man prefers present satisfaction to
later satisfaction so all else being
equal I want to get paid now rather than
later if you want me to part with my
Capital well then you're going to pay me
something you're going to pay me an
interest rate and the degree of that
interest rate is how much I'll be
charging you for that time essentially
of Separation
um
theft always reduces productivity this
is another one taxation is theft so
anywhere that theft is occurring it's
reducing and disincentivizing further
productivity
that's an axiom because if you're
creating
a hundred bushels of apples and
someone's stealing 10 percent of them
well then your productivity has been cut
by 10 percent and
their satisfaction came at the expense
of your satisfaction so the net
satisfaction in the world has not
increased for instance
uh I'll leave it at three I want to give
you the moral one though you asked me
what I think we ought to do
and this is
singularly crystallized in natural law
and it says you can basically collapse
all the things all the Commandments and
everything else into one
which is do not steal
now you might say what about murder uh
well if you consider that
through this property lens that you own
your body
the relationship you have with your body
the exclusive power to control your body
that no one else has this is the most
fundamental property relationship so if
someone kills you then they've basically
stolen your life in this natural law
sense
um if someone puts you in jail right
then they've taken your freedom to move
about they've stolen your Liberty right
they've taken away your ability to move
about so there's you don't want to steal
that either and then when it comes to
property you know all of the assets that
you've just acquired in the world that
you've worked to obtain or that you've
traded with others that have also
acquired them justly this is again just
Lee being the key word you want people
that didn't take from others because
that caused someone dissatisfaction
they earned their satisfaction of
getting the thing at the expense of
someone's dissatisfaction that's a net
negative on the world whereas if we
trade consensually as you intuited early
earlier
you assume what I have you want what I
have more than what you have otherwise
you wouldn't do the trade and I want the
same I want what you have more than what
I'm giving up
it's that's the inequality of exchange
that occurs where we both leave
psychically better off
we're at least better off in our own
mind otherwise we would have never done
the trade so the degree to which all
exchange is consensual is the degrees
which we increase net satisfaction in
the world so if you just get to do not
steal which means don't print money
don't tax don't actually steal or
confiscate things I think that is the in
my view the ultimate ought in the world
it's very clear
um I don't know that this will be
fruitful but I'm super curious I don't
know the Ten Commandments off by heart
but I think there's don't covet thy
neighbor's wife and love put no God
before me or something like that dude
are those workable into that or do they
become a different category of thought
you know I don't feel qualified to
answer that actually very fair religion
is actually one of the things I hoped
that we would have time to talk about
today though I don't feel like we're
there yet
so I want to say one more thing though
so
again check out the book tell me if I'm
right or wrong my interpretation of it
is Christ is essential to the invention
of the socioeconomic conception of the
individual
I want to say something to say something
about this you can now strip out the
historicity of Christ doesn't matter if
he ever lived
you can strip out the theology doesn't
matter if it was God not God
Supernatural natural doesn't matter
I think we could all agree that it's at
least embedded in the social fabric at
this point right the collective
mythology of how we got to hear Christ
is a big figure in that story
and now if he was indeed necessary or
inspirational to the invention of the
individual and the individual led to
private property rights which led to
capitalism which led to Fang stocks
which led to bitcoin
then
all of a sudden you start to see the
importance of that imaginal reality we
talked about earlier you know Peterson
says this all the time we're living in
stories the first time he said that I'm
like what the [ __ ] is he talking about
of course we're living in stories
everything's like a narrated sequence of
events but that's not I don't think
that's what he or the people that
inspired him like Carl Young and others
think they think more like this that we
inhabit mythologies right we're doing
this live-action role-playing called
private property rights because of this
story we have beneath the economic
substructure called judeo-christian
mythology or religion whatever you want
to call it so
I say this because I was turned off to
religion a lot I grew up Southern
Baptist and I became turned away from it
as I became older and more well studied
so I thought but now I've returned in a
very fascinating way it's like wow you
we have to have these stories to exist
we have to inhabit them
and we're currently inhabiting one and
it doesn't matter again you take out the
histrosity take out the Theology of
Christ it's still fundamental to get to
these things to get to capitalism to get
to Fang stocks to get to bitcoin so
there's very pragmatic real world
consequences right we're changing our
relationship with each other in the
world that's creating modernity based on
this live-action imaginal role-playing
we're doing through mythology maybe out
of ignorance I always felt like my
um getting wealthy did not take from
anybody I created something they wanted
I gave it to them at a fair price and
that worked out to my advantage
in that
um
they got what they wanted in that
momentary exchange but I was able to
build value in something that somebody
else wanted for me and so I could sell
that to them uh and
now where money is let's say in a world
where Bitcoin becomes essentially gold
it becomes the place where people store
their value uh
there's only 21 million and so now if
I'm Jeff Bezos and I have some just
insane portion of that and don't have
even really a mechanism to intelligently
spend it all uh and this is where we
probably have to get to people think
that Jeff Bezos has all that money
sitting in a bank and of course he does
not even have to sell portions for his
company
um to get that so does that notion of
equities like go away
like what does that
look like yeah absolutely interesting
stock markets will continue to exist but
I think where maybe your confusion here
is
again purchasing power versus the supply
of money so the purchasing power of
money will continue to increase the more
wealth we create through free exchange
so although there's only 21 million
Bitcoin it sounds like you know this
absolutely scarce number the amount of
purchasing power it can contain is
unlimited right you can have an
unlimited each not unlimited right there
is a cap like uh there can only be
whatever we can Touches for Bitcoin or
is that not well you can actually soft
Fork Bitcoin and divide it further so to
your point each Bitcoin and a lot of
people don't know this this is probably
important
you don't have to buy a whole Bitcoin
each Bitcoin is divisible into 100
million subunits called satoshi's if
ever that divisibility were inadequate
we're back to that property of money
into visibility if that were inadequate
um liquidity to support economic
activity right if Bitcoin were Global
money and one Satoshi were worth I don't
know a car or something you can soft
Fork the code
which is to say uh it's a simple
software update let's put it that way
to increase the divisibility of Bitcoin
so that's built into the code that's
built into the code so it's Bitcoin is
essentially and that's one of the
reasons it's better than gold infinitely
divisible right it's for only 21 million
units but you can infinitely divide it
now does that have the effect of
printing more money no and this is
another common uh commonly misunderstood
thing people think that if you can
increase the divisibility of it then all
of a sudden you're back into inflation
right but in the problem with inflation
is the distributive effects of inflation
it's that this group is producing new
money for themselves and you're not when
you just increase the divisibility of
the money it's it's a it's like a stock
speed equally stock split right
you had one share of stock now everyone
has ten no one was diluted everyone was
just increase the divisibility of their
stock that's essentially what the soft
Fork would be to bitcoin divisibility
now this this point this is very
important because people get this
confused
the more productive we become as a
global economy the more purchasing power
Bitcoin can contain and that is
unlimited that is limited only by the
amount of capital we can produce
money as a whether you're gonna have to
Define that then because if Capital
isn't money
what is it
because money is a form of capital but
let me distinguish this non-money
Capital let's say all the other things
right the buildings the stuff the cars
the factories the equipment all of the
productive factors in an economy
non-monetary productive factors
which I'm seeing loosely's Capital here
say non-money capital
money is a call option on all that right
it's denominating the value of all these
assets that are trading back and forth
but there's also this people are this
reservation demand for money people are
just holding money as a call option on
all that stuff so another definition of
money it's an insurance policy on
uncertainty the only reason people are
holding money is for its option value we
don't know what's going to happen in the
future therefore what's the answer to
uncertainty
optionality if I have no idea what's
going to happen I want the maximum
number of options to deal with all
possible contingencies that's what money
is that's another thing money is so
if you think of money so I'm talking my
answer fixed Supply Bitcoin over here
not changing right 21 million but this
Capital stock non-money non-monetary
Capital growing as we trade and produce
more and more this would imply the
purchasing power per Bitcoin is growing
right it's a call option on more and
more stuff this amount of stuff is
limited by us how much can we innovate
how much can we create
but there's no limitation on bitcoin
itself
and to the point of
a Bezos or any individual actor holding
an outsized portion of the money supply
that's capitalism
what we have removed though is the
ability for Bezos because he has such a
large position in the money supply to
change the rules of the monetary Network
right and that's what the FED has
effectively done it's like we hold all
the gold we're going to make the rules
Bretton Woods in 1944 we're going to
award ourselves this Perpetual free
lunch on the productive economy for the
right
of monopolizing money which sounds
asinine because it is
um that's not possible on a Bitcoin
standard so
the fixity of rules the the
unchangeableness or immutability of
rules
is the Bedrock of peaceful and
productive cooperation
and you know this if you sat down at a
table to play poker
and if the hand rankings changed every
few hands and one guy was deciding
I mean he would clean everyone out and
that would be that and he would never
want to play the game again right you
would want to go and find another game
to play
poker works is a game because the rules
don't change we can formulate strategies
and compete with one another one another
in a productive way
but when you if you want to drive people
insane and really create a lot of
conflict just try changing the rules of
the game every few hands now this
applies to any game especially money
that's what inflation's doing right
nobody knows the rules of the US dollar
how many are in circulation how many
will be in circulation who's profiting
we don't even know exactly who the
shareholders of the FED are what's their
dividend what are their criteria for
deciding how much how many dollars to
produce who's getting it first
who's going to be the Fed chair next
year like all there's all of this
uncertainty injected into managing the
asset that's intended to be an insurance
policy against uncertainty
that it's just oxymoronic in a way and
so Bitcoin is another way to look at it
is the most certain form of money we've
ever had
and if money is an insurance policy for
dealing with uncertainty you would want
maximal credibility in the properties of
money to deal with that uncertainty and
that is Bitcoin and that's why people
it's like people think you can ignore it
or avoid it or I don't want to hear
about it but it's like if you like
if you prefer wealth to poverty
and if you depend on the marketplace for
wealth which is the only generator of
wealth then you have to pay attention to
bitcoin
because it's monetizing
okay
now to go I hope that answers the
difference between purchasing power yeah
yeah in fact let me restate it because
as you were saying it you were [ __ ]
melting my brain so it's one of those
that's so self-evident that once you
hear it you're like oh my God I can't
believe I couldn't come to that on my
own but so basically it's everything
that we create has some value the way
that we denominate value of all kinds is
with money so whether that's Energy
Water
um air if you're on Mars which was a
joke I wasn't able to make when you said
it the first time because I didn't want
to interrupt you uh give them AKO Hagen
uh all of that stuff is denominated in
whatever the monetary system is so in
this case dollars or Bitcoin uh so it's
an umbrella that by its nature
encompasses all things so as you produce
more things then it grows to Encompass
that you could buy all of those things
that everything has value that can be
traded for that yeah the more rigid the
money supply
the more people will choose to store
their time energy wealth there and then
if the Capital stock non-money Capital
stock is growing then that would be
reflected in an appreciation
of the purchasing power of money and
this is like what gold gold has been
roughly uh one ounce of gold is equal to
a fine Man's suit for like 100 years
right but if you look at the price in
dollars it's gone from I don't know
thirty dollars to twelve hundred dollars
that's interesting I didn't know that
yeah
um
I had an Insight on that but now it is
gone hopefully to come back at some
point
um so going to the sort of next layer
deeper so the book The sovereign
individual which I've not read but I've
heard you talk about so many times
um it predicts a lot of things that
we're seeing it predicted cyber cash uh
crypto obviously
um but it predicted social media like so
what what is the key insight to that
book that allows it to predict all these
things and does it give us any insight
moving forward
yeah
um
they called social media narrow casting
as opposed to broadcasting which I
thought was interesting uh it also
predicted that
as the digital age started to really
progress that governments would uh
likely resort to pandemic like
situations to try and reinforce the
validity of their borders yikes which is
interesting what year was this written
this was written in 1997. whoa yeah
um insight
is again the the logic of violence and
the main point that they make is that
cryptography
allows us to insulate things or defend
Assets in a way
that is many orders of magnitude cheaper
than anything ever before so that the
cost of Defense has plummeted
which you could say has a commensurate
uh increase to the cost benefit ratio of
coercion right all of a sudden you can't
why break into the guy's house if you
can't steal his Bitcoin why invade the
country if you can't take their Bitcoin
that type of thing
that it would have a decentralizing
effect on government because government
is as large as it is because it extracts
Monopoly profits through senior age
through inflation through taxation right
none of these are mutually negotiated
free market phenomenon these are all
imposed and they're all able to be
imposed because people had no
alternative there was no alternative
monetary system it's like you have to
have a bank account
right before Bitcoin what else did you
do
hold Berry gold in your yard right all
right I mean it's pretty hard to
transact gold globally
um so that's the key insight and the
book
I'll warn you it's a bit of a dry read
but I would highly recommend getting
through it I think there's a lot of good
insights here
yeah that's um it the whole idea of
decentralization and all of the things
that it's going to change and again my
entry point was nfts to because for
everybody I think there's going to be
something that's relevant to your life
that forces you to get to First
principles thinking and once you're
there and you can predict then it
becomes really fascinating and as a a
person in media what I realized so I got
showed something
six years ago he called it V Adams and
of course it's become nfts but he didn't
call it that and he showed it to me and
I was like yeah that's going to change
my business like entirely and because
when I think about so we're trying to
build the next Disney and when I think
about that you start thinking about we
make things in plastic plush toys you
know all that stuff and it's very
expensive to make the first one and so
it it gets very difficult to like
reinforce your brand and there was this
moment back in the 80s where you could
do what they called selling from the
Shelf where you would promote the He-man
cartoon with toys on the shelf and so
they knew that moms like mine would take
you to Kmart and you didn't want to go
with her to the bra section so you go to
the toy section and you would see He-Man
sitting there and it would tell you that
there was a cartoon and so you wanted
the toy and you watched the cartoon and
the cartoon advertise the toy and so it
got into this Loop where they could
actually make enough money to make the
cartoons so anyway I'm thinking about
all this stuff and I'm like [ __ ] it's
really expensive they've changed the
laws on advertising and all that stuff
so how am I gonna crack that nut I see
the these V items and I'm like whoa
that's going to allow me to create
virtual products that because I'm again
technology is one way street I had a
really hard thesis that people will
value digital things in the same way
that they value physical things and but
the technology wasn't there wasn't ready
for prime time
Flash Forward obviously nfts hit and I'm
like whoa okay I recognize this is that
V Adam's thing like I'm all the way in
and but that to be able to understand
what I could truly do with it I had to
learn the technology which forced me to
understand blockchain smart contracts
all that stuff and then you're like oh
my God now you can predict while this is
going to go and that technology the
decentralization of things the trustless
nature of it all
man it's it's hard for me to wrap my
mind around the business implications
like when you start thinking about Dows
because I'm I'm a traditional business
guy and so I'm thinking whoa dials are
really going to come in it's going to be
a fascinating challenge to the
traditional way of doing business which
is highly centralized and so then I'm
like all right is Steve Jobs right and
that by creating this Walled Garden you
can create something better or is
Wikipedia right or Android maybe a
better
um analogous example where it's this
open system and it's more decentralized
and you let anybody use your operating
system that wants to and man it's
the change that's coming and the
rapidity with which it's going to hit us
is thrilling if you're looking at it
through the right lens certainly from a
business perspective I've never been
this excited in my life ever like this
is It's a moment of disruption and so in
fact I'm gonna put a slight
um I think your enthusiasm for Bitcoin
captures my enthusiasm for just the
moment of disruption that we're living
through right now where when you have
and because in business it's not scary
the way that it's scary thinking about
nation states uh
until nfts I was looking at try how do I
beat Disney at their own game and so I
told my team when we founded the company
I said our job is the same business long
enough to figure this out because I
don't right now see the path trying to
beat Disney at their own game is is a
losing Endeavor there are 90 years ahead
of us they have Untold billions of
dollars in Revenue this is all
pre-pandemic and they have billions of
dollars in IP and I was like like that's
a really tall order so the only thing we
could do is tell better stories and we
were certainly headed down that path of
like I think I see something culturally
that's happening that they seem blind to
and so that was what we were going to
capitalize on and then nfts happen I'm
like oh my God like the disruption now
that's going to happen they will be way
slower than will be to adopt the
technology certainly to push it to its
extremes and so
as things disrupt
for people that are able to get the
first principles faster and think and be
able to solve novel problems in a novel
way you've got like a real shot at
something here yeah now that the way
that people are going to think of that
moment of disruption the way that
they're going to capitalize on this
technology I think brings us to this
idea of morality and the I don't want to
put words in your mouth so I will simply
say the note that I took after listening
to you speak on the topic was I think
Bitcoin as God is what I wrote and you
said I'm not going to call Bitcoin God
but uh and it was the fact that those
could even be put in the same I'm trying
to find the exact note that I took
anyway it was close to that so
how do these come together how does
Jordan Peterson begin to influence the
way that you think about all of this
religion morality and what's happening
with Bitcoin
well that's a lot to unpack there I
would first
nft piece I don't know it's tremendous
amount about nfts but what I would
say
and this is in regards to centralization
versus decentralization
so many people get lost looking at other
alternative crypto assets or nfts or
other projects thinking that they have
the same trust minimized properties as
Bitcoin to say that they are truly
decentralized
uh no one has a political attack Vector
on the network or the good or whatever
it may be
it is my strong opinion that Bitcoin is
the only asset that is truly
uh credibly exhibited the qualities of
decentralization right it's undergone a
fork War people have tried to increase
the block size change the supply all
these things and Bitcoin is kind of
tried and true it's battle tested so
with nfts I would just say and crypto
more generally nfts and crypto I don't
think decentralization has been achieved
anywhere else
so I'll just leave it at that just so
people that is the key difference is
that Bitcoin is a one asset in the world
that no one can control
um one thing I want to say about the
Disney battle
this may be working your favor actually
is it should we move should Bitcoin
monetize and succeed as I have laid out
this will move us to a much more free
market laissez-faire capitalistic Market
environment or something like IP goes
away IP won't exist
because IP right now is premise on
litigation right someone violates your
IP you go and sue them and a bitcoinized
world it's going to be much more cost
prohibitive to enforce IP why so that
might work in your favor I don't
understand that
um
largely because property won't be viable
right if Bitcoin were the sole money in
the world it would be really hard to sue
someone for their Bitcoin be very very
hard to enforce that now had you staked
some of that Bitcoin or the local
governance model that assumes though
that governments have essentially
vanished from how we think of them now
right they will have transformed
significantly yes
um the point being that it's much less
economic to enforce IP I could just
leave it it is it is a long game thing
and it would be a dramatic change but
might work in your favor trying to take
out Disney
what is up my friend Tom bilyu here and
I have a big question to ask you how
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legendary peace out yeah that's
interesting we could definitely get lost
in that rabbit hole but I don't want to
deprive people of hearing this whole
thing about morality yes yes yes so very
interesting uh We've published a book
that I authored with the Jimmy song as a
fellow bitcoiner and a group of others
called titled thank God for Bitcoin
um this has received some you know some
criticism because people always go back
to this
um quote in the Bible the love of money
is the root of all evil
we're by no means advocating the love of
money or the love of Bitcoin or that
Bitcoin is God by the way we're simply
we wrote a moral Treatise on the history
of money I don't think we mentioned the
word Bitcoin until two-thirds or three
quarters of the way through the book
um and we looked at it through a
judeo-christian lens and what the Bible
references money many many times
and I think it it's written to be very
accessible uh almost like C.S Lewis
style very short punctuated sentences
you can read the whole book in maybe two
hours
um but the people that do read it report
it being very transformational to their
understanding of money right you go in
with this question just like what is
money what is bitcoin and you leave with
a good foundational understanding
of answers to those two questions
um
this and this is part of my own personal
journey I guess I was raised in
Tennessee I grew up Christian I was in
church on Wednesdays and Sundays
um I was always a very scientifically
minded young man
I became very fascinated with
astrophysics when I started reading by
myself around age of 11 I went straight
to the deep end of the pool as I liked
the joke I was reading Stephen Hawking
and Brian Green you know Jesus I was
just
enamored looking up at the night sky
like what is all this and so I thought
okay now that I know how to read I'm
gonna go try and figure it out I was
reading these books I could barely
comprehend but I think it just sparked
this deep curiosity in me but at the
time it also inspired a bit of an
Atheism in a way I was just very
scientific you know like I thought
Christianity was almost a fairy tale at
this point and this
this persisted through most of My
Teenage life and then
later on
uh helps gloss over some of this but I
discovered yoga
yoga was very transformational for me uh
reintroduced me I guess to the spiritual
aspects of life I got into meditation
meditation changed my life I always had
trouble sleeping I was an overthinker
with meditation once I learned lights
out in 30 seconds every night now
which is a big deal if you can't sleep
you know uh
reliably and so
I was less scientific more spiritual but
I had not Revisited Christianity until
through Bitcoin actually I was
introduced to Jordan Peterson and his
work
and uh he's in my opinion one of the
greatest living lecturers I would call
them a philosopher
um you know he really gets at the
fundamental nature of things
and he looks at it looks at the world
through many different lenses
um and in that way
that method of kind of consilience right
looking what he calls multivariate
analysis looking at different topics
through different lenses
uh one of the main ones is
excuse me judeo-christian lens
he lended a lot of credence to religion
to me all of a sudden it was not this
fairy tale that I dismissed in my
younger years and I started to really
look into it um
more closely and I'm still looking if it
wasn't that fairy tale then what what
does it hint at
so my current View and I love Peterson's
answer to this that people often ask him
does he believe in God and he says I
don't believe in God but I act as if he
exists
so in my mind
that is Peterson putting the emphasis on
Human Action that's what matters
and if you look at the Austrian School
you'll learn that all Human Action is an
expression of value
to walk across the room
implies that you value being on the
other side of the room more than you
value sitting where you currently are so
we are constantly and unavoidably
expressing our values through action
and
looking at Christianity it is this
the Bible specifically it's not just a
moral text right it's got if you read it
from the Old Testament to the New
Testament it goes to this moral
development of humanity there's a lot
more kind of barbarism early on and it
shows how we learned and developed and
changed over time
so I think it points to the emergence of
morality morality sort of emerges from
the rules of the game if you will like
we can set our sights on something
and work towards it but the ultimate
implementation of the morality really
depends on the actual implementation of
systems and Technologies in a way
so
and Peterson has this definition of God
God's such a loaded term I hate even
talking about it sometimes because
people they're either oh guy in the sky
yeah right or God is everything you know
you can't even talk about it
uh Peterson has a number of definitions
one he says
in that hierarchy of values right we're
always we all have this rank ordered set
of values in our mind whatever we're
doing in the moment is an expression of
our current value if I take a sip of
water it means I value a sip of water
more than talking in that moment
Peterson says that God is the highest
value in the hierarchy of values so it's
almost like we're expressing God through
action in a way God is kind of like this
animating force or principle in life
um I think it was GK Chesterton said
that
a dead thing only a living thing can
swim upstream a dead thing can go with
it maybe I've inverted that but it's no
no that's right there's this principle
to life that
you know the entire universe tends
towards greater entropy more disorder
but life is antithetical to that we
actually are an organizing Force right
we we negate entropy we construct order
um and that is the ancient idea I got
from Peterson's work that's in Genesis
in the Bible said God is that
force that courageously confronts the
chaos of nature converts it into good
and useful order and I think that force
in that principle is embodied in the
entrepreneur actually that's what the
entrepreneur is doing right you're
going out into uncertainty you're
putting your skin in the game you're
staking your life your Capital your
ideas your reputation everything
trying to pull something out of that
unknown or that chaos that's useful and
good for others
so
I think and the entrepreneur is the
elementary unit of the free market right
so I think the free market itself this
idea of freedom
being a creative principal is very
closely connected to God
um another
maybe another way to look at God is this
you know it's clearly he's Eternal he
I'm not anthropomorphizing I'm just
using what's there this principle is
eternal which means it's outside of
space and time
what other elements of experience do we
have that are outside of space and time
truth
love
freedom right these things that are
they're Timeless right and they're
they're very important to
all these things we've talked about
right these foundational documents
markets uh revolutions they've been
fought over these Timeless ideals and I
think somehow
God is kind of a composite of those in a
way
um and I don't think it's a coincidence
that they're all creative principles
right truth as I'm argued in a lot of my
writing markets discover truth they
discover prices and tools
um love is clearly a creative principle
that's how we all got here uh and then
Freedom you know Freedom Is How We
maximize wealth in the marketplace free
trade as we've talked about today
so
this is I'm way out there on the the
philosophical side of things but to try
and bring it home
um
if God is the highest value in a
hierarchy of values another definition
Peterson has given of God is
the truthful speech which rectifies
pathological hierarchies
and I would Define a pathological
hierarchy
as one that is premised on anything that
negates truth or Freedom or love
and that is precisely what our current
socioeconomic hierarchy is built on
Central Banking
destroys price signals we didn't talk
about this a lot today but in there's a
saying in markets that price is truth
this is the
extant supply of capital in the world
overlaid with the human demands for that
capital is the price right it's
dynamically updating in real time it is
the truth of what is right now right
whatever something is selling for
clearing on the market that is truth
um another thing markets generate is
innovation
so the truth of digging a hole
is a shovel right it is the best most
truthful real way we figured out to
satisfy that want at that price
and then the third thing markets are
very heavily involved with is the the
development or promulgation of virtue
so we learn that honesty is more energy
efficient in the marketplace than
deception right if you tell a lie and
everyone's experiences to some extent
you tell one white lie then you have to
tell another second lie maybe to cover
it up and it's just it always blows up
right it's not good you're creating this
little Fork of reality
to try and um maybe
overcome some short-term pain
but you end up exacerbating long-term
pain right so this is this is a virtue
that's discovered through free exchange
and free interaction
Central Banking
destroys all that it destroys price
signals it subdues Innovation right your
entrepreneurs are setting out
surprises or supply and demand but when
the central bank's involved you can't
trust the price you don't know if it's
supply and demand or policy when you
can't trust the price you can't organize
your Affairs effectively towards
satisfying the wants of others I don't
know if this price increases because
more people want the table or because
this table is really scarce and the
central bank's printing a lot of money
right so me as an entrepreneur I may be
thinking oh people like tables I want to
produce a lot more I don't know I can't
disentangle the two so
distorting prices misleads entrepreneurs
which unwinds that that process of
confronting the chaos of nature
converting it into order and then it
induces moral wickedness
and that all of a sudden your strategy
again is to get as close to the fiat
currency spigot as possible because
that's the lowest effort means of
obtaining wealth if I can just become a
shareholder to a central bank I now have
a share in a company a central bank that
bears Perpetual profits to me I don't
have to work my incentives to work and
satisfy the wants of Market actors is
diminished so that I argue is
diminishing to virtue
and so
I think it's evil you know I do think
Central Banking is evil and I don't
I'm not even saying that the institution
was set out without intent I'm just
saying that mechanically
it in it becomes the invariant to Human
Action that causes strategies to be
adapted to getting as close to the fiat
currency spigot as possible versus being
an entrepreneur it's
anti-entrepreneurial let's put it that
way entrepreneurs are the hero of the
marketplace they go on to the hero's
journey they go out they get their clock
cleaned learn the hard way like I have
as you said you have and we take those
lessons we embody them we adapt our
strategy and we come back and hopefully
we either create something of value to
others and we succeed or even when we
don't succeed as entrepreneurs
our failure benefits the marketplace
because other entrepreneurs can say that
guy tried to open an Italian restaurant
on that block and it failed I'm gonna
not do that
I'm gonna go do something else right so
it's information feedback into the
hierarchy of human organization
and Central Banking distorts and
obscures all that in any financial
crisis what can somebody do with their
money strategy to come out the other
side better than they went in yeah this
is a kind of a complicated question
because one of the things that money is
I talk about this a lot on the show is
an insurance policy on uncertainty so by
definition a financial crisis is a time
of great uncertainty
so the standard strategy you know your
grandmother's wisdom would be to save
your dollars save your hard-earned cash
um but that gets a little bit more
complicated and a very inflationary
environment where we are inflating
currency very rapidly or counterfeiting
currency
you throw that out it's the same thing
yeah so we covered that last time but
it's worth for people that are just
encountering you for the first time why
do you say that what is inflation and
why do you call it counterfeiting yeah
so inflation quite simply is legal
counterfeiting and counterfeiting is
Criminal inflation
they're mechanically the same thing but
inside of a legal Monopoly at a central
bank it's called quantitative easing or
some other euphemism that makes it sound
really good but if you or I do it we get
thrown in jail so it's it's just making
more money it's just a political
institution that has authorized itself
the exclusive ability to print money and
when you print money you are stealing
claims on wealth from other savers of
dollars
so
um you're the first person that I'd ever
heard say it like that I always thought
inflation was a law of physics that we
needed that things just inflated by two
percent year over year that's just the
way that it was
um so right now we are in a very
inflationary environment why and I would
say that's a part of why where I would
very much call what we're in right now a
crisis the media is trying to soft shoe
it but I think every day it's going to
be more and more problematic no I could
be wrong but I don't think so
um why are we in an inflationary
environment right now well we're in an
inflationary environment because we just
printed six trillion dollars in the US
over the past 24 plus months which is
what percentage of the total supply of
US Dollars you would have to check the
exact data on this but I want to say
it's an increase of about 40 percent of
the total Supply
um for since what 1913 no since 2000 20.
no but I'm saying the 40 of a supply
that started in 1913. so this isn't like
that's right that's correct so Supply
issuance starts in 1913 so for the first
108 years of dollar existence we
produced let's say again check my
numbers on this 15 trillion US dollars
and then we just increase that by an
additional six or roughly 40 percent in
the past two years so if you look at the
chart it's very kind of low and slow if
you burp burps on the way up and then
one huge Spike recently that's so crazy
I don't think people really understand
but before we go all the way down that
we will certainly get more into that so
okay we're in an inflationary
environment so how do you want people
thinking if Grandma is Grandma's wisdom
is now wrong because of that environment
and so if I because I really am right
now to your point uh you want as many
options as possible in the time of
uncertainty I am right now trying to be
as close to Gold buried in my backyard
as possible yeah I always feel the need
to say I'm not I don't actually have
gold buried in my backyard I don't want
people showing up uh but trying not to
be locked up in too many things that are
long-term though full disclosure I do
own a
a very substantial amount of Bitcoin and
ethereum yeah uh but
for the most part I'm trying to have my
options open well I hope you have it in
self-custody at least
because that's buried in the backyard
yeah
yeah I'm not I'm not to the point that
you would be happy but I'm getting close
Okay because if it's Bitcoin on an
exchange or with a custodian it's not
your Bitcoin as we commonly say not your
keys not your coin
um I do I don't wanna
the spirit of Grandma she's right
actually you know holding options in the
face of uncertainty is the right
strategy it's just that the tool of
optimal optionality if that's a term is
not no longer the dollar it's
decreasingly the dollar the more you
print new dollars the more you're
debasing that instrument's ability to
store value across time so it's it's
less useful as a tool of optionality as
money is intended to be
and as a nice barbell to that strategy
Bitcoin is or gold physical gold is a
really nice adjunct because as you
debase currency that would indicate that
would basically equal you have more
dollars chasing the same amount or
relatively same amount of gold or
Bitcoin which would be a higher price of
Bitcoin or gold in dollar terms so I
want on inflation though I don't want to
leave this yet
it's a very complicated term people
often think price is going up as
inflation which it is that's a form of
inflation price inflation there's also
monetary inflation which is the
expansion of the fiat currency Supply
but to try and the reason I equate
inflation to counterfeiting because it
it doesn't exist without the legal
Monopoly of the Central Bank you don't
have
arbitrary expansion of the money supply
outside of a legal Monopoly just does
not exist so to try and give people a
useful analogy about this
if you slice a pizza into more slices it
doesn't mean that there's more pizza
available to eat
right you've increased the number of
slices nominally but the size and volume
of the pizza has not changed you cannot
feed more people with it you could
similarly think of money
as a an option on the global Capital
stock
and every time you print a new unit of
money you're basically slicing that
pizza if the pizza is the global Capital
stock you're slicing it into finer
slices or thinner slices but if I'm
printing more pizza why isn't it that I
have more pizza versus but you're not
printing pizza so Pizza is global
Capital yeah Capital stuff machines
equipment uh real assets let's say money
is just the option the call option to
acquire those assets and so if I
increase the number of options available
what I'm doing is taking away the
ability of those saving in dollars I'm
stealing from them it's you're stealing
their purchasing power
and that's why I always equate inflation
and counterfeiting it's the same thing
as if you could go out and print a bunch
of 100 bills increase the number in
circulation you could go out and buy
things that cost a hundred dollars that
other people went and worked and saved
uh to be able to afford those things
you're basically stealing from them
right you're bidding up the prices of
the things that they would otherwise buy
and that's what we've seen taken place
over the past 24 months so if it doesn't
create more pizza then why do people do
it
because people like to have convenient
strategies for wealth acquisition and
setting up a legal Monopoly to steal
from all of society is a really
convenient wealth acquisition strategy
it's interesting I think so because I've
gone on this journey I've had to wrap my
head around some of the fundamental
questions that you ask what is money
being one of them I think what this is
when people the reason that they print
is they're going to go buy assets with
what they've quote unquote printed so
uh the government works with the Federal
Reserve the Federal Reserve creates the
money out of thin air but the way that
they put it into the system is by
acquiring assets so they'll acquire
um governments or whatever yeah but
those are also born out of thin air the
government can issue debt add into an
item as the Federal Reserve can issue
dollars to buy government debt ad infant
item this is the most organized crime
syndicate that's ever existed on the
planet
okay so now that people know that that's
the way that we create inflation
what do we do in an inflationary
environment how do we protect our money
because right now I really I don't allow
myself to do overwhelm so I break things
up into manageable pieces but right now
like I don't know what to do in terms of
with my money so I have allocated about
as much Capital as I'm comfortable
allocating I'm keeping as much as I'm
not worried about being inflated into
Oblivion and inflation was as I wrapped
my head around that was the thing that
caused me to change my behavior because
prior to this I didn't want to think
about investing and then when I really
began to understand inflation I was like
whoa you have to invest your money into
something that its value goes up at at
least the same pace of inflation
otherwise to your point it's even though
I have the same number in my bank
everybody gets me exactly so
I was like okay I have to do something
but now I feel like we're going into I
feel like we are in a time of so much
uncertainty that I don't know what to do
anymore so even though I can describe I
can tell people what is happening but I
don't know that I have a good plan for
what to do like even in my own life so
what do I do well it's a number of
things
um first thing is to own assets that
cannot be counterfeited or printed into
existence so physical gold Bitcoin and
self-custody these are great options
um but Bitcoin is so volatile like how
do you do you just take a long time
Horizon approach on that well it's
volatile in terms of dollar terms right
and volatility is a function of price
Discovery so if Bitcoin is a sub 1
trillion dollar asset competing to be a
hundred trillion dollar asset you would
expect it to be volatile in dollar terms
so yes it's cold comfort when I need to
buy diapers for my child this is not I'm
not advocating for Bitcoin as a checking
account I'm advocating for Bitcoin as a
long-term savings account so Define the
long term to protect yourself from the
aggression of private property that's
occurring through the counterfeiting of
currency something like physical gold or
Bitcoin is useful for Bitcoin
specifically it's performed really well
over four years time Horizons so that's
not necessarily long term I wouldn't sit
here and tell you that Bitcoin will be
at a higher dollar price in four years
and there's a lot of uncertainty in the
world no one can make that claim but
what you do know is that you have a
money with effectively uh that's
effectively perfected the properties of
money which we talked about last time
specifically that we know it cannot be
increased in Supply whereas every other
primary money in the world the US dollar
leading the charge here is being rapidly
expanded in Supply so when you price one
in terms of the other you end up with a
higher bitcoin price as an insurance
policy against debasement of the dollar
so what answers that own assets that
cannot be counterfeited Commodities
businesses
there's obviously a lot of risk here
that you have to navigate if it's a if
it's a public Equity they might actually
be printing it
um some companies issue more shares and
they actually have outstanding you can
check out the I think it was Chiquita
bananas what yeah it's called
re-hypothecation so there's a lot of
games played on Wall Street where they
will basically represent and sell more
shares than there actually are in
existence isn't that illegal of course
it's well it's illegal if you're not
inside the Monopoly if you're not a
prime broker okay I think is the
industry that's allowed to do that but
um so that's one area to be careful of
it's good to own businesses good to own
things
uh productive factors in the economy but
if they're public equities I do think
you have to be a bit weary about things
uh another thing is assets that are
difficult to seize or confiscate
so this again back to gold in your
backyard or Bitcoin in self-custody I
think what we are essentially seeing in
the world is that centralized
governments are bankrupt
and all government revenues are derived
through taxation inflation
which were both forms of theft and other
forms of of confiscation so I would
expect those activities to increase as
monetary to basement ramps up
um and it could even be accelerated now
that people have an option to exit Fiat
currencies they can go into a savings
technology like Bitcoin this actually
puts additional inflationary pressure on
Fiat currencies over time because people
now have an incentive to
sell the thing you're using to steal
from me with
and hold the thing that you cannot steal
from me or use to steal from me which is
a good way to describe Bitcoin
so
assets that can't be printed assets that
cannot be seized
um
and then
the last one I guess I would say
knowledge you know it's very important
to kind of study the Ebbs and flows of
financial history
and equip yourself with a world view for
the world we're going into we've seen
currencies fail many times before you
could study the the Weimar Republic in
the 1920s Germany what happened there
um inflation has really corrosive
consequences on people's psychology
their morality their behavior
um
and
yeah I think that's a good start for
protecting yourself and the world that
we're going into so what are you doing
with your assets right now so if just uh
I'll go first so I have a ton in savings
just liquid basically going in and out
of really short-term bonds so no yield
but all stuff where barring the collapse
of the US government which I won't say
is is a zero percent chance risk but
certainly very low especially because
they control the money printer that's
correct
um very low risk so money coming in and
out and then I have uh Bitcoin and Eve
uh I have some in the stock market real
estate
that's sort of my portfolio all because
I don't consider myself a talented
investor in any way shape or form
[Music]
um
what does yours look like so dollars and
treasuries are good short-term liquid
instruments I think you're smart there
um I consider Bitcoin to be the best
long-term liquid instrument and that's
actually all of my portfolio
dollars in Bitcoin I don't actually do
the treasury game I hold a smaller
balance of dollars relative to
everything else and I hold a lot of
Bitcoin now this is coming from someone
who's studied this asset in this space
and the history of money exclusively for
six years now so what I'm advocating for
other people to do is to go out and do
similar due diligence for themselves
their skill set
and create this world view and then make
a portfolio construction that reflects
that I can't sit here and prescribe you
any specific portfolio construction
because it's Unique to each individual
and if I were to do that
you would not have the level of
conviction or buy-in into that portfolio
so you would inevitably be shaken out
when the market starts to move emotions
would set in and you would be shaken out
of your positions so that's why I don't
believe in specific prescriptive
portfolio constructions but because
conviction is one of the most important
parts absolutely you have to believe in
what you own you have to have
buy-in right it's not just that you
bought it physically but you need to
have intellectual buying you need to
understand what you own otherwise when
the price moves it's just like being at
the poker table
if someone
pushes in a big hand and you don't know
exactly what you have and you don't have
a read on your opponent then you're
going to get shaken out right you're
going to fold or you're going to call
make a bad call you're going to lose
it's the same thing when you own assets
you need to understand what you own
understand yourself understand the asset
and have a conviction in what it is
otherwise it's just not going to work in
my opinion that's really interesting and
one of the things is I certainly spend
time researching you is I just this is
my first time really paying attention to
a monetary cycle where there was
certainly in the crypto World there was
so much Euphoria until about a year-ish
ago and then it really started to falter
and go crazy and when people were
euphoric it was like man I was looking
sideways as people were taking out loans
and like getting into assets and I'm so
paranoid I was like there's no way I do
not trust myself enough and then same
thing with when people started to sell
it was like Panic selling
and the approach that I try to take is
okay I'm not I I personally view myself
as not being smart enough to beat the
market to try to do things on timing so
I'm just like what am I prepared to do
long term or what can't I lose on so
when I was talking to my the person who
handles the actual buying of bonds and
stuff like that I mean I I ask like 36
times like what happens if right the
price goes down do I still get my
principal back I may not get the
interest or whatever but I want to make
sure that I'm in something that I can
protect my principal so just looking at
all that and then on the crypto having a
thesis and saying okay as long as I
believe this to be true I'm not going to
sell if I stop believing not to be true
then I might you know look at it
differently but watching the human
behavior of seeing people
act like they're gamblers effectively
and I remember when one of the first
like big liquidation moments happened
and there were you know memes of like
people in front of their computer like
outside a nightclub there was one guys
outside a nightclub he squatted down in
front of his computer on the sidewalk
and he's just like holding his head
because obviously he had been liquidated
because I don't know if we want to go
into explaining it but like you you're
using leverage to buy it and it hits
that point where your collateral is now
exactly so boom you go from having
something to having nothing absolutely
devastating and I was just like oof this
is this isn't just I have mistaken money
for a property of physics
and when you realize that it's a
property of psychology or useful fiction
as you refer to it you really start to
think differently about it
well there's an element of the physics
as well
um but I want to
say something here so leverage in crypto
is not a good mixture in my opinion I
think most people that play with
leverage most people that play with
assets Beyond Bitcoin which we
endearingly call [ __ ] coins in Bitcoin
Circle you almost always get burned
um I have some some friends that have
run the numbers on this as well of the
30 000 [ __ ] coins that exist
two and a half had outperformed Bitcoin
Over a four-year cycle most of them go
to zero go away or the vast majority of
them underperform Bitcoin so no leverage
uh preferably no [ __ ] coins so you might
want to sell your eth
um
do as you please but me personally I
just think that's another project that's
accumulated a lot of technical debt it
keeps moving the goal post I think it
will collapse at some point
um
and
yeah those instances of people crying
and some people committing suicide I
don't know how true these stories are
but it can be ruinous to your life right
if you consider how important money is
to your day-to-day existence to lose all
of it in an instant can be
extraordinarily painful and I've you
know I've traded options in this asset
class for a long time or in a hedge fund
in the space I've felt the pain of
losing money rapidly it's not fun I
would not recommend it I would also say
that 99 of the hedge funds out there
cannot outperform buy and hold Bitcoin
just buy and hold Bitcoin the easiest
least intensive least energy output
strategy there is the smartest investors
in the world struggle to outperform that
so unless you think you are someone on
the spectrum of Rain Man intelligence or
some type of super prodigious Trader I
would not recommend leverage or [ __ ]
coins or trying to trade when Buy and
Hold Bitcoin is performed so well
all right so talk to me about the human
element of all this one of the things
that when I was researching for this
episode that I heard you talk about that
I thought was really interesting is that
for whatever reason every three
generations we forget how volatile
governments are how volatile currencies
can be I thought wow that's that Echoes
something that redalio talks about which
is this has happened many times before
just not in my lifetime and so because I
was born in the 70s to me it's like oh
this is all pretty stable like nice and
easy why do people do all these crazy
gyrations uh
but talk to me about the history of
money if Weimar Germany is the right
thing to look at for hyperinflation and
what comes of it let's start there what
what is it that the average person
living today hasn't seen that they need
to be very aware of yeah so to start
that I want to talk about how Theory
shapes how we see actually and to do
that I want to talk about Copernicus so
for a long time
we lived on this planet and we saw the
sun rising and falling right and we just
assumed that we were the center
and the sun was going around us right
there was a bit of it's called
geocentrism I think it's kind of an
ancient form of egocentrism in a way or
and thought anthropocentrism where we
think we are the center of the universe
in most cases
and then Along Comes a guy named
Copernicus ran the numbers and said
actually the math says it's more likely
that we are going around the Sun
and so this shift in theory
did nothing to change the prior
empirical observations of the sun rising
and falling
but it completely inverted our
interpretation of that empirical data
all of a sudden we realized wow we've
been
defrauded by this optical illusion we
thought we were the center the sun was
going around us well it turns out we are
going around the Sun so I say this to
explain the way in which Theory all
right we had a new theory heliocentrism
that actually changes the way we
interpret empirical data we often have
this inverted in our mind we think we
see data and infer Theory but it's the
opposite you have to the theory is the
frame that you're putting on reality
that determines how you see it and so
Copernicus also came up with a quantity
theory of money which is pretty
interesting
he said that if you double the money
supply in an economy that the price
level will tend to double as well
now it's not that quantity theory of
money is not specifically correct
there's a lot of factors that influence
price but it's directionally correct if
you counterfeit six trillion dollars and
you had six trillion dollars to begin
with
in the long run prices will normalize at
about 2x to what they were so
I think we have been and as you just
said you thought it was this pillar of
physics that prices needed to go up at
two percent every year because we have
been conditioned into this false theory
of Keynesian economics
that we think Rising prices and in the
long run failing Fiat regimes is the
norm of human history
but the real problem we have is that we
are operating under a false economic
theory printing money does not solve
problems increasing nominal prices does
not make you richer
so I think that hopefully the emergence
of Bitcoin that's leading to the
Resurgence of discussions like this a
heightened interest in libertarian
philosophy and Austrian economics it's
actually throwing light on the this
Corruption of money that's hidden in
plain sight right how
crazy is it to think that the most
desired asset in the world the US dollar
is also the largest pyramid scheme we
have ever had in human history how do
you think that affects us
psychologically when did it become a
pyramid scheme
well we started in 1913 with a Federal
Reserve
um fractional Reserve banking is
effectively a pyramid scheme right
you're you have more liabilities
outstanding than you do Assets in
reserve so you're running a fraud
so long as Oliver every dollar that you
or every 10 no every dollar that you
have in the bank you can loan out nine
or something you have a contract with
your depositor right they have given you
a dollar that's redeemable for gold and
you've given them a dollar in exchange a
liability now if I over issue those
liabilities but I don't increase the
amount of gold I have in reserve that's
why they call it a fractional Reserve as
opposed to a full Reserve yep all of a
sudden I'm now engaged in a fraud you
only have to have misrepresenting so
much of what you've promised people Yes
actually in the bank and you're good and
is it like 10 is there a number well the
number changes based on policy but in
reality anything less than 100 of fraud
right you have you have issued more
checks than your ass can cash so to
speak so if at any time the wrong amount
of people right if you're a 50 Reserve
Bank 51 of the people come to redeem
their money you're bankrupt right so
that and the you know we've seen the
bank run and move is like a beautiful
life people were again were very
conditioned to think it's the norm how
does it run on the bank even exists if
it's a full Reserve honest Bank it
couldn't exist so I would say the moment
we entered fractional Reserve banking it
became a pyramid scheme was that day one
um
the dollar was redeemable for gold
it was reducible for Golden well there
was a brief moment where it stopped then
we got back on the goals in 1971 we
break forever exactly but when so we
suspend convertibility in times of War
crisis so that's when the banks know
that we can just pump money in so the
fractional Reserve can continue to exist
it doesn't want people coming to the
bank to redeem dollars for gold because
that would show the insolvency right
when When the tide goes out you see
who's swimming naked as a Warren Buffett
said so get so we had on and off
convertibility throughout the existence
of the dollar in times of war and crisis
we outlawed private gold ownership in
1933 executive order 6102 and then the
big one where we move into this giant
Global pyramid scheme is 1971 where we
break the tie to Gold entirely so now
governments have the ability to issue
dollars the US government can issue
dollars add infinitum with no
convertibility constraint there's no
check on this uh on this issuance of
dollars and I want to say something here
too
again inflation is legal counterfeiting
counterfeiting is Criminal inflation the
only thing you can do with printing
money is violate the property of others
you cannot issue any Equitable benefit
to an economic system whatsoever it's
not possible
so it's
I can't emphasize this point enough that
it is everywhere
and always only theft that is the only
thing printing money can do so any
economy that has a central bank which is
every economy has an institution an
anti-capitalistic institution of theft
integrated into its core
and that is the source of so much of the
psychological financial and moral
malaise I think we see in the world
okay so I I'm not saying this to play
Devil's Advocate I actually think this
either is something that you have an
answer for that I'm just unaware of or
I'm about to change your life I have no
idea where so one of the things
everyone's paranoid about deflation and
I'm just dumb enough that I was like why
would deflation ever be a problem that
means that my money gets more valuable
over time it has more buying power I'm
like that's amazing so but people get
really freaked out about that and you
hear economists talk about I'm actually
more worried about deflation than I am
inflation
so I was like well why would that be
true I think it was you that I heard
explain that in a deflationary
environment now people start hoarding
their money because they're like whoa
why would I spend this today if I wait a
week or a month or a year I can actually
buy more this is amazing and so they
stop spending and so then I was like
well hold on then inflation is a nudge
to get things moving and when I think
about all the amazing things that we've
built and created it requires people to
create and to buy and if you have
creation but no buying then creation
will stop and
if you have a deflating currency
people just the natural inclination is
to not spend I mean you'll buy what you
have to buy to stay alive but like even
when I think about my Bitcoin I'm like
well I'd rather hold it so
isn't it possible that it isn't a
Sinister desire to inflate the money
supply into Infinity that we create the
central bank but rather
I'm being generous but rather a desire
to know that there's going to be some
times where I have to nudge this a
little bit to keep the economy moving
and the economy moving meaning people
want to buy something because they know
oh my money they have again I'm stealing
from you here they have a a
non-intellectual understanding so it's a
visceral feeling of like I should spend
some of this money and get something
because holding it into the future isn't
all that is cracked up to be
so I'm buying things that cycle gets us
all the Innovation that we see now yeah
that is the standard Keynesian argument
um it turns out though that human beings
want to consume no matter what we have
to eat we have to have shelter we have
to have transportation clothing all of
this I don't need a new iPhone well the
argument has been that a little bit of
inflation is necessary to stoke an
economy otherwise people will not
consume and there will be no economy yep
but I don't think that water that
argument holds water at the outset
because how are you going to eat
how do you bare minimum there's no doubt
but when you like if you just imagine a
world where the currency holds steady or
deflates don't you think that'd be a
pretty different world maybe better I
think it's a great much better world yes
so today our debt Global debt to GDP is
like 350 percent so that's saying we
have 350 percent
in liabilities relative to about
um
a 100 so it's
100 trillion dollars in global GDP
roughly 350 450 trillion dollars in
global debt
that is a consequence of currency being
debased because
in an instance
where units of currency are losing
purchasing power over time I'm
incentivized to borrow the stronger
dollars today and pay back the weaker
dollars over time right so there's this
incentive for accumulation of debt
that's one bad consequence of a Fiat
economy why is that
the accumulation of debt debt shrinks
people's time Horizon
so what you're doing is you're
disincentivizing saving
that accumulation of options against the
uncertainty of the future that we
discuss you're disincentivizing that I
now instead of
delaying gratification today and saving
for the future I now want to sell the
future and buy today that's effectively
what you're doing when you take on debt
it's an inversion of the principle of
delayed gratification
um and it increases economic volatility
significantly because what did you just
describe the guy getting liquidated in
front of the club once prices hit
certain liquidation points or margin
calls assets are forcibly sold so this
increases Market volatility increases
the misallocation of capital do you
think Michael Saylor is crazy
no you can use debt intelligently
because he's going ham dude like I'm
dead being my breath so if you can use
that intelligently is your argument that
just most people won't here's what
Michael Saylor is doing though he is
taking on debt where he has favorable
terms favorable
um repayment frequency duration Etc so
he's
borrowing the weak money
selling it to buy the strong money which
is Bitcoin and then he's paying back
weaker dollars over time subject to uh
parameters that are favorable for him in
his business right his strong balance
sheet all of these things that's the
smart use of debt but notice what he's
doing this is gresham's law by the way
gresham's law said that bad money tends
to drive good money out of circulation
and what he meant by that is in an
economy where say dollars pesos and
Bitcoin are circulating people are going
to spend the pesos first
assuming that's weaker than the dollar
in this example the Dollar's second and
they're going to hoard the Bitcoin
because the Bitcoin has a limited Supply
so when bad money circulates people that
tactile knowledge of their economic
reality they tend to hoard the thing
that can't be printed or is not being
debased the same is true when we used to
clip coins Emperors used to clip coins
and one would have say 100 silver
content they'd do another issuance that
had maybe 90 silver 80 silver and so on
but they all had the same face value
this is where Gresham actually developed
his law so they were legally circulating
with the same face value but people
being smart they hoarded the ones with
more precious metal content and spent
the ones with less
so that
um hopefully points to how things
actually monetize and demonetize
this is why gold became money right
people wanted to hoard the thing that
was difficult to inflate or counterfeit
and spend the weaker monies and it turns
out gold historically is the most
difficult commodity to inflate or
counterfeit the supply of we can't
actually counterfeit the supply of it
not economically at least so
that's why it became the premier store
value I chose to hold the asset
I being one economic actor across the
whole history of economic actors people
zeroing in on this reality that there's
only one asset that can uh most
predictably hold its Supply across time
which is to say it is the best store of
value Asset available to them
this is the process of monetization and
demonetization that we've seen play out
across history
okay so I have a base assumption and my
base assumption is I think very clearly
different than yours but I'd love you to
State exactly where yours is so my base
assumption is that if you are holding a
current the value of a currency study or
you are deflating it that you will or
you're not holding decrease Innovation
or decreasing the value it's the supply
values determined Always by the market
the impact going back to your pizza
example though if if the size of the
pizza stays the same but only so much of
it is allocated to me but if my slice
gets bigger over time I would rather not
eat it now I'd rather wait until the
slice is really big and can feed me even
though it's not I'm not increasing the
size of the pizza but my allocation of
that pizza is growing larger that would
be to use the analogy of deflation tie
it to the pizza example that's where
we'd be well in that instance though you
would be a shareholder of a central bank
if the slice of your pizza is growing or
one of the first recipients why is that
true take Bitcoin Bitcoin Pizza is the
global Capital stock and so the slices
are basically and this is an analogy
obviously yeah the slices are the
representational option people have on
that stock
so you have one pizza which is all the
stuff in the world yep and we slice it
up into a net worth right that what is
the value of This Global Capital stock
now who owns Which slice
now if we start printing money we
basically start creating new slices that
are crowding out the other ones yep
whoever gets those new slices first is
stealing from those the holders of the
the previous slices if the government
has coming to existence
um to
solidify the will of the people to
protect you to protect property but then
over time it begins to involve itself in
that property and you're in a Fiat
position now where part of how they get
the control is through money and now you
have the first true sound money and it
has the inelastic properties that make
it you know the soundest money of all
time
the question that I had for Michael
Saylor that he answers very differently
than you is aren't the governments going
to get really upset about this that
their only real option would be to
either mimic it in which case now I have
that counterparty risk because it's a
government that created it versus this
sort of mythical creator that poof has
disappeared and
other than whatever units he or she or
they have is not trying to engage in the
system in any way shape or form couldn't
change it even if they wanted to
how do we avoid the government coming
down with an Iron Fist and saying yeah
this is this is illegal now
yeah I
[Music]
view this
a little differently than sailor who's
absolutely brilliant
um
I think his position
in general is that they'll exist side by
side Fiat currencies in Bitcoin
and I tend to agree in the medium term
and I think that's happening today
bitcoin's almost trillion dollar asset
it exists side by side with countless or
hundreds of Fiat currencies let's say
however in the long run I think Bitcoin
and again we're back to that
the difficulty in understanding it is
because it is so far outside our world
view
right the idea of gold being disrupted
gold is almost the only game that humans
have ever played in a way it's
foundational to all of our institutions
it's a 5 000 year old technology that's
so old we forgot what made it valuable
everyone knows it's valuable how many
people can tell you the five properties
of money and why Colt was selected
the idea that that's being disrupted by
this 13 year old digital upstart is
pretty pretty wild but I think that
Bitcoin is an innovation as significant
as the Gutenberg printing press actually
and I think the implications
of its emergence will be similarly
disruptive to institutions in the world
um
you know this is late in the 15th
century I believe when the printing
press was invented
the 500 years prior to that there had
been roughly 10 million books printed
all of a sudden this super cheap and
efficient way of reproducing books is
invented the Gutenberg printing press
which was a composite of other
inventions by the way wasn't really a
breakthrough in itself it was one guy or
guys put together four or five different
other inventions and made this thing
work similar to bitcoin actually that's
what Satoshi did he pulled together
things that already existed but just put
them in together in a radically new
package that we call Bitcoin
10 years after the invention of the
printing press 10 million books were
produced so the amount of books produced
in 10 years equaled the amount produced
in the 500 years prior what did this do
this led to the rapid proliferation and
dissemination of literacy numeracy again
psycho Technologies right these these
modes of systemizing our cognition that
actually increase our ability to
cooperate absent or independent of
institutions of the day which the
dominant institution of the day was the
church
they owned a monopoly on knowledge
effectively via the scriptoria which is
where uh scriptorium I may be saying
that you can make it out I have no
[ __ ] idea I've never heard that word
before they used to have monks copying
books by hand right so to produce one
book took a lot of Labor books were a
luxury item
but all of a sudden due to this
Innovation called the printing press the
cost of book production plummeted books
become much more uh widely dispersed
and it the church at first didn't
realize this existential threat once it
did it actually tried to clamp down on
the printing press
which created an interesting Dynamic
that
it we actually started producing books
on how to produce the printing press so
it saw that this is a good allegory I
think that when the institution tries to
grab tries to clamp down on the
disruptive technology
the subversive technology let's say it
actually drives it to its highest and
most useful form of subversion actually
so
the result of that was a lot more
thinkers a lot higher quality of
thinking variety of thinking
and in general it created a market for
heresy right this led to Martin Luther
pinning that like why do we need you we
individuals can now have this
independent relationship with the word
of God because they've developed
literacy and whatnot they don't need to
go through this middle man of the church
and the printing press effectively led
to the dissolution of the church as the
dominant institution in the world so we
had separation of church and state and
all the the benefits that that created
in the aftermath
I think encryption technology and this
is deriving a lot of this from the book
The sovereign individual which I've
recommended highly is similar that it
actually
disrupts
functions of the government that we
needed the government previously for we
can now provide with code Bitcoin being
an obvious one right we needed the
physical enforcer for property
historically now for money the most
important property you don't need that
enforcer anymore
so I think that Bitcoin
its emergence will actually lead to the
dissolution of the nation-state as the
dominant organizational model for human
beings
every time I hear you say that and I may
regret saying this out loud but every
time I hear you say that I'm like
I and look I know that that also would
be its own form of social engineering to
like hey don't tip off the government
and like let this happen like give it
more breathing room and so there would
be unintended consequences there but
it's like
man so I'm going to give you my
layperson's view on bitcoin and why I
become so and admittedly I'm not a
maximalist so for me this is looking
more broadly at like cryptocurrency and
the digitization of value which is how I
see this so my thesis is
technology is a one-way Street
we will find anything that can be turned
into code will be turned into code for
reasons such as that you can create
absolute scarcity you can now have a
blockchain that will track ownership so
everybody knows exactly what's going on
there's a transparency to The Ledger
that
um that we don't have to be slaves to as
many laws of physics you're still going
to be tied to energy production
um but once we are spending once you can
tap into the um
the basically your nervous system and
you can get me to feel like I'm flying
where it is indistinguishable from me
actually flying then all bets are off
and I think given the human desire to
pull the levels of our neurochemistry we
will just end up going down that route
so it just makes sense to me that things
will be digitized that money will be
digitized that
um anything again like I said more
efficiently we can for sure it's more
efficient it's more exciting it's more
interesting it's it just seems like an
inevitable sort of one-way Street and so
I'm like oh when I heard about this and
finally went down the rabbit hole of
learning what it actually is and why it
works I was like okay I totally get this
and for me the the priming mechanism was
nfts because I knew that would make
sense for my business all of that sort
of irrelevant but it took me down the
path of of learning what this is
and so now I'm like whoa whoa for the
first not the first time we're all
living through a moment right now where
for the first time we as just normal
individuals are front running the
institutions and so I became obsessed
with just getting people to look at it
because I can't see the future nor can
you nor can anybody so I don't know
what's going to work out it could end up
being a disaster so I don't want people
to just do what I say I want them to go
learn what this is because I think it's
it is incredibly important for all human
beings to be able to think from first
principles meaning you know how things
work don't just think about things think
about the nature of things and when you
understand the nature of things you can
solve novel problems a problem nobody's
seen before nobody can give you a book
there is no way for me to sort of
pre-masticate the idea for you but now
you have the information like with
literacy where you can go on this
discovery mechanism and if you should
lead to the same conclusion that I have
come to which is that oh my God this
moment of panic I had where so
understand dude that this to me is funny
and I really believe that the
the purpose and meaning that I'm finding
in life is I've had to learn everything
the hard way I'm not particularly bright
and I can't think fast but I can think
really [ __ ] deeply about something
and so because I have to learn things
the hard way with sort of normal
Hardware right I don't have particularly
I don't have a genius like that but then
I can sort of explain after I've really
spent some time with it I can explain it
is I had this moment of panic where as
this guy who managed to create
tremendous wealth in his life by
spending two decades getting good at
business right took me for [ __ ] ever
I did not have Natural Instincts and
Entrepreneurship but I figured it out
and so then have created wealth in my
life but now I'm still ignorant to
investing so I've created like [ __ ]
crazy money money where people be like
what and but I don't know how to invest
it and so I get involved in the world of
investing and I'm telling my money
manager just don't [ __ ] take risks
all right like keep this [ __ ] as just
keep me at the amount of money that I
have the buying power that's all I'm
looking for I'm not trying to Warren
Buffett this [ __ ] I don't need to die as
the richest person on Earth none of that
matters to me
but they keep like haranguing me Tom you
can't just do that like you and I'm like
why and no one could explain it to me
and the confused mind says no
so they would try to explain mechanisms
calls puts options
um that you know every seven years I
could double my money all that and I'm
like I don't give a [ __ ] about that I
just I've already made the money I just
want to protect my money now
and then I discover nfts and then I
discover [ __ ] Michael Saylor and he
goes into inflation and like what it
means and how it breaks down your buying
power and I thought oh my God I have to
then keep making money and I don't want
to have to keep making money so then I'm
like God damn it and so I'm looking at
inflation and I'm saying here's one
thing I find really [ __ ] distressing
no one can agree on what's Happening so
I'm like then it's not super obvious
you've got Michael Saylor who's like Tom
you're going to be broke in 62 days and
then you've got you know uh other people
that are like come on like it's you know
we're we're only around two percent like
this is all Madness and then you've got
people that are in between and then I
find you and you actually explain what
inflation is and now I'm at first
principles now I understand it now I
know what's happening
now I'm really freaked out so now my
moral obligation goes to a hundred but
I'm like Breedlove will you shut the
[ __ ] up you're gonna like get the
government like they're gonna freak the
[ __ ] out and they're gonna clamp down on
this [ __ ] and now I'm legitimately like
whoa what do we do because my hope is
that you're right about the thing and
you're wrong about either the speed or
the amplitude meaning you're probably
right that on a long enough timeline
government takes on a new shape but it
happens over five or six Generations it
doesn't happen in 20 years which that
would be literally bloody and terrifying
but if it happens over a hundred years
then I can see it where it just changes
the dynamic between us as Sovereign
individuals and the government because
quite frankly
I don't think most people want
sovereignty
not not a hundred percent sovereignty
yeah and I'll explain it through Bitcoin
I know I'm supposed to
put it on my cold storage device and put
my cold storage device somewhere very
safe
[Music]
but I kind of prefer it on an exchange
because I want them to deal with like
the security and all of that because I'm
sure as hell not storing it in my house
because I don't want to incentivize
somebody to break in so now I've got a
I've got counterparty risk of like I'm
starting at a bank like where am I
putting this [ __ ] thing so
I realized whoa like I'm a I trust
myself a lot relatively bright very hard
working like hey if anybody can figure
it out I can figure it out and I still
want somebody else to deal with it
yeah it's
and that's analogous to wanting a
government to be the one to come in and
protect my home I don't need I don't
want to need a gun you know what I mean
[ __ ] like that I want a government to
deal with some of these things yeah and
again uh as a means either a cognitive
expedient or Outsourcing security like
that's natural we want that that should
make the important point it's not black
or white it's not like
Banks or Bitcoin you actually have
Bitcoin Banks they already exist
um you know knightig and all these other
guys they're just taking custody of
Bitcoin now giving you traditional
banking services but on a Bitcoin
standard uh the other aspect is it's not
you don't have one pot of Bitcoin you
know you can put a little with this bank
that bank this Bank you can spread out
your counterparty risk keep selling
self-custody
I mentioned multi-signature earlier that
might be a little bit beyond the scope
of this conversation but you can
actually get redundancy plus
self-sovereignty so you could trust
yourself but not make your house a
target by using a multi-signature setup
which I think is the most uh useful
schema for custody in your Bitcoin
because you get again redundancy you
don't have a single point of failure but
you also don't have counterparty risk or
you have that's going out to like my
friends or my family and saying hey you
five or six people you also have to sign
for this to be moved and one of you
hopefully goes did Tom really want this
right that's what multi-sig is correct
yeah you're you're selecting your circle
of Trust basically uh and structuring it
in a way that a majority would not
collude against you right and that they
don't probably even know who each other
are exactly and there's a whole lot of
game theoretic considerations to that
but it can be done is the point um and
Bitcoin enables us you can't do that
with any other any other assets so
that's radically new
um to your point about Breedlove shut
the [ __ ] up you're not the only one to
say that actually
um
people have a bit of reticence about
maybe discussing the geopolitical
implications of Bitcoin
but the way that I look at it is that
these conversations are going to be had
it's just a matter of are they being had
behind closed doors you know favoring
those in the room or are these
conversations we're going to have out in
the open
um such that it does not produce such an
asymmetric outcome
so maybe I'm wrong you know I could be
persuaded one way or the other and I've
had a lot of smart people give me really
good criticism about it but it seems to
me that
in the digital age you know on the ethos
of openness and transparency that we
discuss what we've done here what world
have we created for ourselves how does
this radical new asset or form of
property change the game
and what are the geopolitical
implications what does this do in the
the broader span of human history to the
institutions we've come to depend on
um
I think it's a fruitful conversation to
be had out in the sunlight
um
I do think though that
it could be
you know we're very
maybe indoctrinated to some extent that
transitions have to be bloody they have
to be violent and you know what have you
but
again a lot of this is rooted in the
viability of property again
um the book The sovereign individual
goes into the logic of violence and how
this has changed
human behavior and human institutions
over time
one simple example here would be the
Knight on Horseback used to be the
dominant force in the land because this
guy can afford a war horse afford a suit
of armor and a lance
uh the Stirrup actually was very uh very
pivotal Innovation because before the
Stirrup the armored Knight was too heavy
to get on Horseback so he didn't have
Mobility to be the force on the land so
the Stirrup the seemingly simple
invention changed the logic of violence
that allowed the Knight it is so
fascinating things like that yeah how
like what a big knock-on effect they
have yes utterly fast so then that was
this you know had implications on the
feudal age and the night you know uh the
the moral code of chivalry all these
things emerge from this kind of simple
Innovation that made the Knight the
dominant Force but then what happened
we invented gunpowder so the you know
one night that could take on 50 peasants
in armed combat all of a sudden one
peasant at 200 yards can take out a
knight
so it all changes again right chivalry
collapses all these things so when we
change the logic of violence which means
you know the economic returns of
violence or coercion or the cost of
Defense the way we organize ourselves
changes and so you could think of
Bitcoin as this new technology that so
radically increases the cost to benefit
ratio of violence and that
if someone's properly custody of it
again in a multi-signature format or
whatever
there's not any carrot at the end of
robbing them you're not going to get
anything right you can go and in Bitcoin
circles they call this the five dollar
wrench attack because you buy the wrench
for five dollars and you beat the guy
over the head with a wrench until he
gives up his Bitcoin but if he's custody
it properly there's no incentive even to
conduct a five dollar wrench attack so
in this gigantic geopolitical upheaval
that I anticipate
occurring due to the monetization of
Bitcoin I think it could be very
uncertain at first you know governments
are going to use their power in certain
ways that could be unfavorable let's say
but over time as Bitcoin continues to
monetize and more and more people are
holding their wealth in this inviolable
property that would
I would tend to believe that the
incentives towards peaceful cooperation
would begin to outweigh the incentives
to coercion so although it could be a
bit Rocky in the beginning I think the
long-term outcome is way more fruitful
for for humans you know we're
and uh something you said earlier too
that
maybe people don't want sovereignty
full song full sovereignty I think
people
I think incentives are the fertile soil
from which our Humanity Springs actually
all right so we think is maybe a bit
egotistical that we think that however
we are this is the way humans are it's
the way they've always been but again
that's totally not true right
pre-printing press most of us were
illiterate we didn't have our cognitive
software was completely unrecognizable
it's what we are today no one could sit
here and have a conversation like this
much less with all these amazing tools
we've created in the marketplace since
then
so
I think that by changing the fundamental
soil which are the incentives again like
the logic of violence all these other
things that we actually change our
character traits and behaviors
um I've said that and to try and draw a
commonality here
I said organizations and institutions
are all property strategies you know I
think that even DNA itself is kind of a
survival strategy or property strategy
over time right we're all all organisms
geared towards reproduction reproduction
necessitates territory we need to take
territory humans Express territory and
property right that's how we share and
and build uh declare property and create
more wealth actually by by trading
through property rights so I think that
we our strategies
ultimately conform to the invariance
on the game board if you will and sailor
talks about one of these is gravity
right like
gravity is the one invariant that all
of these strategies whether you're a
human being whether you're a building
whether you're a government like you're
you're adapting your strategy to gravity
it's an invariant right you can't if you
change gravity it would destroy all the
humans and buildings and all the things
you can kind of consider Bitcoin
maybe I'm out on a limb here but I think
21 million this fixed Supply asset as
the emergence of a new
seemingly perfected invariant in the
market for money so it forces all of us
to change our strategies to adopt this
invariant in the in the the space so
this is at the individual level the
institutional level and at the
nation-state level
um
sounds a bit radical but I think that if
you come to see
you know DNA as a survival strategy
propagating Through Blood flesh and Bone
and that all the other creations we make
are just
um you know in biology they call this
the extended phenotype we have the
genotype which is the genetic code the
strategy itself we implement it in the
phenotype the body the teeth eyes we
have the extended phenotype which are
our tools and Technologies or even our
institutions that it's all a strategy
and that those strategies will adopt
themselves to the invariance that we
create for ourselves I think Bitcoin is
just the perfect invariant money strong
men make easy times easy times make weak
men weak men make Hard Times Hard Times
make strong men and you get in this Loop
it's catchy and it's easy to remember
but it doesn't have the Fidelity of
where you're going this question that
I'm going to ask is going to seem
perhaps unrelated but it's everything to
me are rich people evil
because that's the narrative that that's
the world view that people are taking
and I think now using your level of
fidelity what I see that breaks the
reason it becomes hard times is they
break the the individual property rights
yes and then Society begins to break
down because there's something
fundamental to my need to be able to
control my destiny and when I can't do
that Darkness ensues because I will try
to do that and to get me to fall in line
you will have to violently oppress me
yes and when you violently oppress me to
get me to what I actually think they
have something beautiful in mind that
they want to do they really want to help
people but to get everyone to stop being
an individual takes an obscene amount of
punishment
and that was not the question I was
expecting whatsoever
um I'd like to First
okay my first answer would be no but I
want to be more specific so
ja Nixon oh yeah the line between good
and evil cuts down the heart of every
man
it is my assertion
I'm sure there's a lot of factors that
move that line in people but when I look
at history I see material incentives as
being the strongest force moving that
line around when people are compensated
to do something they're much more likely
to do that something regardless of
regardless of its moral qualities let's
see
so
and again as well I always talk about
property it's like the less viable we
can make property you can remove that
option entirely I always talk about
making versus taking right making being
the entrepreneurial path trade hard work
delayed gratification that's one way to
acquire wealth
the other way the political way of just
taking whatever the makers made right
you just steal it from them
the degree to which we can make taking
more expensive or less possible which is
saying the same thing is the degree to
which we shift that moral composition or
ethical or uh pragmatic composition of
society what people are actually doing
everyone's trying to get more wealthy
all the time it's natural right you want
to live in a bigger place you want to
eat nicer food you want to have more
freedom this is very natural it's
nothing to be ashamed of
the means by which you acquire that is
something to be ashamed of though if
you're taking it from someone you should
be ashamed because you did not create
that value you stole it from someone
the more we can make this an
impossibility the more we can have
people engage in the making
path
and this is where we talk about Bitcoin
being so important because Bitcoin is in
my opinion the most expensive form of
property to violate in human history
borderline's not impossible if you
custody it properly and you maintain all
your protocols there's not really a
feasible way to take it
that makes tyranny less profitable let's
say so when I see good and evil the Ebbs
and flows of Good and Evil in the world
it is occurring in everyone's heart and
if you don't admit that then you're not
being honest with yourself right we all
have the capability to be evil or do
dark things we've probably all done some
dark things maybe there's some
exceptions out there I know I'm not one
of them
we cannot change human nature so far as
I know but we can change the incentive
structures we inhabit and we can make
property more expensive to violate and
by doing so we can shift the moral
composition of society so no rich people
are not evil and like you said earlier
um
to elaborate on red like okay
I guess it's sort of rooted in that
Axiom that man prefers present
satisfaction to later satisfaction
that's almost like saying you'd re you
just given the options between rich and
poverty which one do you choose all else
being equal
I hope everyone's saying rich I mean you
don't even have to use you could give it
all away right you could be rich and
then give it all away and still be back
in poverty but if you just chose poverty
you just be in poverty so
that uh
selection process that's occurring in
everyone's heart I think the the moving
the soldier knits and heart line
the most effective way we can do that is
to make property expensive to violate
that is the most important material
incentive
uh that we can move in the world and on
this this notion of religious impulse
and how we're attaching this to our
stories you are the unifying principle
of your organization
just like God is the unified principle
in the church
we do impute a religious value to these
hierarchies that we're in uh I think
because
all action is Promised on faith we
talked about this in the last episode
you never know what's going to happen
right you can just
choose an end that you want to obtain
and then choose means and then try to
act towards it but you're constantly
messing up errors getting off course and
trying to get back on path right so
every action is an Act of Faith in a way
right you just have the faith that the
thing that you're trying to make happen
will happen and if it doesn't you'll
error correct
so there is this there's this religious
quality to all human hierarchies doesn't
make you a priest or anything but people
in your organization are going to look
up to you they're going to look hey I'm
giving you my best working years or
whatever the guy said to you
that's a real thing right he's on an act
of Faith betting that your company and
your mission and your ability to lead
and unify that organization will be an
adequate exchange a consensual exchange
of his working years for whatever you're
going to do for him like that's very
there's something to that and
ultimately into this division the
divisiveness between the rich and poor
and people getting upset and trying to
create class conflict I think it
obscures
the grandest truth on this little pill
blue dot is that we're one big family
all right we're all here we've all got
the same limited resources to deal with
the best thing we can do is
intelligently coordinate our action such
that
people are doing what their best at
specializing in what they're best at
everyone's doing that and then we trade
with one another so that we enjoy the
best quality of everything that anyone
can do in the world right and we don't
have to be good at it so you can be
really good at running a media company
and you can still go to this restaurant
down here and eat the best sushi in the
world because he specialized at Sushi
and he can go home and enjoy your
YouTube channel because you specialize
at this that's the ideal World in my
opinion people living peaceably
specializing innovating not stealing
from each other and
you know
the religious piece I don't I don't know
I just I'm a guy that grew up in
Tennessee I consider myself an aspiring
disciple of Christ I don't know if that
means I'm religious or not but it gives
me
a lot of meaning in my life and gives me
something to
look someone to look up to someone to
try and imitate someone to try and and
make to lead you to be a stronger better
person right it's like a the highest
Consciousness you could imagine whether
it really happened or not it's in that
story and I can relate to that story I
can read that story every night I can
enact it in my life I can carry it into
my organization to be a better leader
better man better person so
I think that's where the world needs to
go
why are people so angry right now I
and admittedly a subset why is a subset
of people so upset
I want I think that there really is
something going on but I can't quite
tell what it is so one of the things you
hear is that the Boomers have trapped so
much wealth that they're staying in
positions too long organizations are
becoming corrupted
but if well like my parents are boomers
and don't feel trapped by them at all
um the system has worked for me so I'm
so confused by people's take on it
am I delusional so the the story that I
believe is accurate but it's certainly
the story that I tell myself
is I am an average person who has worked
my ass off to turn potential into skill
set I've deployed that skill set very
strategically in order to create value
for people and they wanted the things
that I've created more than they wanted
their money that allowed me to build
equity ice then sold that company and
was able to after many years of living
like I was broke finally able to capture
the value that I built into the company
um but when I hear the way people talk
about people that have generated wealth
it it's
they want people to pay tax on
um unrealized gains no matter how much
uh the wealthy paying tax like Elon Musk
has now paid uh in a single year more
tax than basically anybody in human
history not basically I think that's
actually a true statement uh but all the
responses are but it's not enough and
and so I can't relate to that mental
frame of reference but being generous
and assuming that there really is
something going that if I were a kid now
that I would have the same frame of
reference that they have
why what's happening yeah
people are mad because they're victims
of the largest heist in human history
like especially if you're young right
now and you're living paycheck to
paycheck
especially over the past couple of years
that prices are soaring wages are flat
right this is the same story since 1971.
you know look at the charts I always
recommend the website WTF happened
1971.com
WTF happened in 1971.com make sure I'm
saying that right all these charts shows
in 1971 there's a Divergence from
productivity and wages the working class
the lower middle and increasingly middle
and lower classes are being squeezed in
this false economic Paradigm that we
have with Keynesian economics because we
broke the peg to Gold well that enabled
the more rapid violation of private
property rights through monetary
inflation
and all of those that corrosion of
society the moral decomposition I
described I think it all follows from
that and people today don't understand
what's happening right again you don't
need to cognitively understand it helps
if you cognitively understand but you
just feel that you're getting scammed
and squeezed all the time right no
matter what you do nothing is working
even if there's no Mal intent behind it
when you repeatedly try an action and
reality does not respond the way you
want it to you are in the unknown right
you're in unexplored territory and
you're scrambling to get back to
something that makes sense where I can
do an action and get some semblance of
an expected response
youth are not getting that today right
they're going to work they're saving
their money prices keep going up too
fast they're still getting squeezed
they're moving back in with their
parents etc etc so
I think we're in the state early stages
of currency failure
and people that are on the wrong side of
the economic hierarchy in those
situations are feeling the pain they
can't necessarily properly attribute the
cause they don't know they don't
understand the nature of property and
money and all these things we're talking
about so what do they do
there they reduce to this barbarism of
class Consciousness right rich people
are evil these people are evil a lot of
it's pointed at the government I wish
more of it was pointed at the government
because that is the sole legal violator
of the do not steal dictum that I shared
earlier this is the only legal
Enterprise we have that generates all of
its revenues through theft
uh that's a big problem and
that is dangerous because we've done
that before right we did this with
Marxism that there was a
the problem was diagnosed that some
people were getting rich and some people
were getting poor right there was a
there was a corruption or malignancy in
the economic hierarchy but the Marxist
prescription was to abolish private
property
the exact wrong thing you want to do for
all the reasons we've described today
right you have no prices all of the
wealth then rolls up into very few hands
the state they own everything
uh wealth creation collapses Mass
suffering Mass starvation genocide all
of these things come from that root in
my opinion
I think what we need to abolish is
Taxation and inflation and the central
bank
that would maximize the Integrity of
individual private property rights which
would remove this do not steal at least
the institutionalized element of do not
steal remove it from the world and
enable people to deal with each other on
consensual terms
right just like you wouldn't
the guy that's giving you his best
working years you wouldn't bang him over
the head to keep him here right like
coercion in that relationship is never
going to work long run even if you get
the guy to stay here and beat him over
the head with a wrench and say you're
going to work for me no matter what
he's not going to work so well for you
he's not going to work as hard for you
he's not going to work as smart for you
he's going to backstab you every chance
he gets so if non-consensual exchange
doesn't work in that very simple
bilateral transaction why do we think it
works when we scale it up to the
multiplicity of the whole global economy
and yet we have that integrated into our
money today money that's supposed to be
this instrument of trust and trade and
integrity and optionality right there's
a lot of uncertainty in the world but I
know if I save my dollars like Grandma
told me I can protect myself against
that entropy we're destroying that we've
got no firm footing left in the world of
course people are going crazy
and I've written about this that I think
I had a guy on the show Matthias Desmond
he wrote the psychology of
totalitarianism on the phenomena of mass
psychosis
and he lays out a lot of very
intelligent reasons why we've had Mass
psychosis in the past and why he thinks
we're going through one again
but I shared with it I think the
violation of property is one of these
things
because if you sit down you know we
talked about this last time too to play
a game
poker for instance I always like poker
because I like to play poker and you
start changing the rules randomly every
few hands or changing the hand rankings
whatever
don't you think every play of the table
is going to go absolutely [ __ ] crazy
like you can't make sense to build a
strategy there's no play left it's just
noise and Madness
that's what we're doing in the world we
don't know how many dollars in our
existence we don't know how many will be
in existence we don't know who decides
we don't know who profits from their
production it's just a giant opaque
pyramid scheme that we all use as our
primary means of exchange and that I
think is
I don't want to say it's the only
problem in the world we have a lot of
problems but it seems like the biggest
one that I can hope to aim at
and it's really interesting that at
least as we break along political lines
in the U.S that half the people roughly
want more government bigger government
and if you're right and again I will
attribute only actually that's not true
I used to attribute only positive things
since I've started learning about
Nietzsche and the world of power I
realize oh wait there's actually
something else going on here
um but the idea that
the
I wouldn't say Mass psychosis but the
frame of reference that has way lower
utility
is that we need to abolish property
rights everything needs to go to the
government be redistributed
is the thing that will yield the exact
opposite of what they want Ubi but it
does feel like I get where they're
coming from and even somebody like Ray
dalio and I don't know what his thesis
is on how the taxation should change but
he has said himself like yes we need a
new tax policy we need to find a way to
better distribute the wealth
and I do wonder about this with
Bitcoin because the supply is finite
isn't it possible that Jeff Bezos just
ends up with all the Bitcoin or Michael
Saylor in this case like how do we
ensure that
the game of the libertarian philosophy
does not end up in the same pathology
that everything else ends up that's a
great question
well we know that at least from a
Libertarian perspective that it won't
because it's the stealing that's the
problem right but somebody can win the
game so well that everybody else is well
let's think let's think through it
though so any individual holder of
Bitcoin that has a very large
accumulation let's pick Satoshi he's got
a million Bitcoin supposedly no one
hasn't moved uh since the beginning of
Bitcoin
but that would be the largest single
holder if that is one individual and
if he holds that Bitcoin does that in
any way determine
his capacity to change the rules of the
Bitcoin Network
I'm asking the question I'm not sure why
because I know the answer the answer is
no so the greatest risk that a Satoshi
brings to bitcoin is Market risk so he
could go and start dumping his million
Bitcoin on the market right he could
suppress the price
um
you know who it depends on bitcoin's
market cap how he does it how long he
does it Etc how long that would persist
but the key point is that there's no way
to for him even him the creator of
Bitcoin the largest holder of Bitcoin
again we don't know who he is so he's
anonymous even that godhead individual
of Bitcoin cannot change the rules of
the system that he himself created
and that is the key point so Jeff Bezos
comes in and I don't know his net worth
or how much Bitcoin he could buy let's
say he could buy a million Bitcoin first
of all to do that you're going to bid
the price of Bitcoin up significantly
right so you're enriching
older holders they have larger
unrealized gains imputed into their
positions which is a larger incentive to
sell your Bitcoin for cash or goods or
services
and that's how
through these price Cycles Bitcoin has
tended to become more distributed into
more hands for that very reason right if
you bought it at a penny you're
incentive to sell at 100 bucks is
significant and at a thousand bucks it's
gargantuan right so people tend to be
selling it and buying it over time
Bezos comes in buys a million Bitcoin a
million and 1.1 million Bitcoin so now
he's he's uh super order Satoshi what's
his story well he's bit up the market
cap of Bitcoin significantly but can he
himself do anything to change the rules
of the game
no there's no amount of Bitcoin you can
buy to change the rules of the game
and there's a large
degree a large share of Bitcoin let's
say is held by people like me that won't
ever sell
so there's also that that you're always
up against not that it could ever affect
the rules anyways but you're never going
to have one guy owning 21 million
Bitcoin I guess would be the point
um and if you did you'd be in a world
with Free banking where people would go
out and start their own bank and issue
their own currencies as a substitute
um and so that would be that alternate
reality but I just in a Libertarian
model so that presumes that there is no
government as we would recognize it
today well that controls the monetary
yeah I guess I was also assuming Bitcoin
had succeeded in that scenario and
somehow I think the question you're
getting is like what if happens if
someone gets all the Bitcoin yeah I'm
just trying to think through a
Libertarian scenario so what I don't
want to fall prey to is what I would
view as a fallacy of
everybody always says oh no no that
wasn't real communism or that wasn't
real socialism and if we just do it
right everything is going to be fine
like that that really is a dangerous way
to think and if yeah I really hope
people can stop themselves from that one
but I don't want to hear the same thing
on libertarianism like there's a reason
I think my base assumption there's a
reason that we don't have libertarianism
either because it you'll never be able
to walk that line is my guess and that
what ends up happening is you get strong
people that end up dominating and then
the weak people go [ __ ] that noise and
so they group up to take down the bully
and that grouping up is like whoa this
feels really good and so then you have
governments they start small good
intentions and they just pathologize
over time as they get bigger and bigger
and bigger but the pathologization is
expressed through taxation that is the
domination right the stealing the
stealing yep so
again from a practical engineering
perspective the only thing we can do
about that we can't change human nature
people are always going to steal if
that's an option available do you think
the make stealing more expensive yep
that's how you dissuade and remove
non-consensual exchange from the
economic fabric
so that I think makes the following
prediction that the only reason
libertarianism has never truly
profitable to steal yeah because there's
never been and libertarianism will never
exist to the extent that it is
profitable to steal because people will
always do what is profitable always
I mean that could maybe be an axiom like
people always do what's profitable at
least psychically this kind of gets back
to what we said earlier on the last
episode that all action is an expression
of value right people do things because
they expect to they expect it to be a
good outcome otherwise you wouldn't do
it even people that are cutting
themselves and physically damaging
themselves they're looking for some high
or some goodness of that
um it's almost platonic where it says
every action we take is aimed at the
good
and you could think of you know horrible
things but the individual actor thinks
what they're doing is good to them or
for them in some way otherwise they
would not do it so we can't do anything
about that
but what we can do is change the actual
incentive structures we inhabit and make
the stealing game less profitable
thereby shifting human action towards
making rather than taking what do you
think though about so because the
argument that's hiding in that is that
there's no way to shut off or kill
Bitcoin but
when I watch shine to be like nope sorry
and I get it it didn't kill Bitcoin but
you can regionally kill Bitcoin and I
know of course yes you could take your
things and go but that's not easy so
it's pretty effective to either at a
country level say nope this is done or
like with what happened to Russia where
you shut things off at the like the um
transmitting layer so what kind of risk
do you think exists there for
governments and it will be whack-a-mole
I totally understand that but for them
to just keep crushing any sort of
because if libertarianism only exists in
a world where stealing is no longer
profitable they just make sure that
stealing continues to be profitable at
least in their geographic location yeah
and that could always be the case with
physical property but at least something
like Bitcoin gives us the option to vote
with our wallet or vote with our feet
and leads man they like they're not
playing that game I want to get to China
so uh whack-a-mole's a good analogy
actually because we have to remember the
Bitcoin mining Network
these miners are like Yay big right so
what happens in a country like China
um The Authority comes down and says hey
no more mining here's all these legal
restrictions against it what happens
a lot of these things these miners get
boxed up shipped to another location
plugged back in right so the network
itself is kind of amorphous
if there's a regulatory Crackdown in a
certain area miners will just fly into
other jurisdictions and get plugged back
in
um now
actually about China
would you agree that they are the most I
guess the largest
Communist Regime in human history I'm
pretty sure there are over a billion
people
I'd say the CCP has got the reputation
from being one of the most ruthless and
overtly powerful
uh in human history
um there's a there's a lot of stories
that are leaking out of China about the
atrocities taking place there
uh
I mean would you agree that at least
today let's say of present governments
that they are the most ruthless and uh
totalitarian regime after your earlier
point I am not qualified to answer that
question if you take scale into account
from my very ignorant perspective that
seems true okay
they shut down Bitcoin mining I think
we're about a year and a half ago at
this point
I think 20 and someone have to check my
numbers on this because it's been a few
months since I looked at it but it was
20 of bitcoin's hash rate is still
coming out of China really yes I did not
know that so if the most ruthless
authoritarian regime on the planet with
its heaviest Iron Fist can't squash this
guacamole amorphous game of Bitcoin
mining so people are just doing it like
hacker style then who can well my theory
is that again it's easy to mentally
frame the CCP or China as a singular
indivisible entity that moves as a whole
it's not what it is at all right there's
a bunch of little five thumbs of power
and uh families and all these things and
what do people do people do what's
profitable so they have a super
abundance of hydropower in China
for instance I know that they have other
sources of power I'm sure
if that power can't be sold to the Grid
at a profitable rate and it's more
profitable to Blind Bitcoin how are you
going to stop like what
what Iron Fist can control the
individual maneuvers of 1.2 billion
people when it comes to something like
this I don't
I don't think it's feasible I don't
think it's Prof as profitable to try and
enforce and control and prevent Bitcoin
mining as it is for people to just
circumvent the law in whatever way
they're doing it and continue Bitcoin
mining and that past 18 months
I think shows that that 20 of the hash
rate again check the numbers is still
coming out of China so
if the most ruthless regime in the world
can't put a lid on this thing then what
other government has a chance
yeah I had no idea that there was still
20 hash rate what percentage is that of
what was there before that I don't know
I want to say they were in the I want to
say they were the majority of the hash
rate and above 50 percent
so it wildly diminished it but still I
mean that 20 is a really big number yeah
interesting I didn't know that so when
you think about the so I've heard you
say that America is thus far the best
economic experiment we've ever run but
that there's potentially something
better beyond that what would that
better thing be is it no government well
I think we go back to
the exclusive scope of government as
circumscribed by the Magna Carta which
was the preservation of life liberty and
inviolable property do you think we made
a mistake in the American Constitution
to say Pursuit of Happiness instead of
property I do but I've heard arguments
to the contrary and I haven't done the
dig on that so in my extremely strong
views about the importance of property I
see it as a mistake but I've heard
there's a religious or spiritual element
to it but I'm not qualified to speak to
that one
um ultimately
government is the social apparatus of
coercion compulsion and violence
you only want to invoke that social
apparatus
and as a means of retaliation or
resolution to some form of coercion
compulsion of violence right someone
stole your stuff someone hurts you
someone hurts someone you love that's
when you need recourse to the state or
the law so
to the extent that we can move the world
toward one in which government
exclusively maintains that scope of
service
that it defends life it defends Liberty
and it defends property
that seems to me the best
solution for dealing with this it's
almost like a necessary evil right
violence and force is an ever-present
reality we have to deal with it somehow
this seems to be and this is what you
know the founding fathers and obviously
the people that inspired them thought as
well
the government that governs best governs
least right just
restrict it to that very specific scope
of service
and now okay it sounds great in theory
but history has obviously been a real
pain in the ass with that because once
you put all the power in one place
absolute power corrupts absolutely
institutions don't follow the laws that
they promulgate institutions follow the
individuals that run the institutions
those individuals tend to be corruptable
they will bend the publicly applied rule
for private gain that is actually my
definition of corruption there's a rule
that we're all supposed to play by and
then one guy twists the rule to his
advantage and everyone else has to keep
playing by it or is otherwise hurt by it
that's corruption in a nutshell and
that's what I think inflation and
Taxation all these things are
so
that would then I guess with Bitcoin
that's why we call Bitcoin Incorruptible
money right it's a the first Level
Playing Field we've ever had in the
sphere of Economics a rule set that no
one can change everyone just plays by by
consent now it's always optional to use
Bitcoin you're never coerced to use it
but that option to have
space or territory in a monetary Network
that no one can compromise and no one
can change
that option becomes more valuable in the
marketplace as the other money space is
increasingly having its rules twisted
and violated and changed right more
Capital controls more inflation more
taxation more confusion as this place
gets more chaotic there is increasing
demand for this place of
integrity and transparency and
universality
so
that's how I see this playing out is
that the violation of property rights is
going to continue to accelerate as it
always has with governments that creates
this osmotic pressure for people to
adopt the option of not being violated
right as people try to preserve wealth
across time this is sucking economic
energy out of the Fiat system and into
the Bitcoin system and now you have
people with a very strong form of
property
that is immune to Capital controls it
can go anywhere in the world with it and
they can basically vote with their feet
so you're defunding this mechanism and
empowering individuals to self-organize
in the way that best suits them
individually
and that hopefully restricts government
over time because you're now you're
removing the revenue sources of Taxation
and inflation from government definitely
inflation taxations more interesting
when it comes to bitcoin over time we'll
see how that plays out it's at least
going to shrink government and hopefully
shrink government back towards that
exclusive scope of the preservation of
life liberty and property which is the
philosophical theoretical Perfection of
government as conceived 800 years ago
have you read the book infomocracy I
have not it's interesting it comes to a
similar conclusion that you've come to
but I think from a pretty different
angle so the idea is that the world
fractures into all these tiny little
countries and that even as you move
through a city you're moving through
countries and each one because you can
track people so specifically and data is
like the oil it's you get this just
completely fractionated world I heard
you say that while you have no concept
of what timeline would be if it's 10
years or 100 years 200 years whatever
but that you think that there will
sometimes be like 20 000 different
countries why is that the natural
conclusion of this osmotic pressure into
the Bitcoin world so
this is one of my favorite books
actually it might be closely related to
the one you just mentioned uh the
sovereign individual written in 1997
it predicted things like the move from
what do they call it broadcasting to
narrow casting so they're predicting
social media
as a consequence of mobile digital
Technologies so interesting to hear
people like predict that stuff yeah it
predicted uh the government use of
certain medical
policy to
revalidate its borders let's say to
control the flows of people in and out
of countries
and it predicted the emergence again
written in 1997 of what they called
Anonymous digital cyber cache
and the extrapolation from that
invention was basically the fracturing
and collapse of the nation-state as the
dominant institution in the world now
it's a very dense book
um I'll try to give you the very there's
a lot that goes into it but just the
very basic premise of why that is the
case why do you go from Anonymous
digital cyber cache to the fracturing of
the nation-state
is
sort of what I tried to just describe
right like we've all been forced into
monetary policy up until this point we
did to the point we don't even know what
inflation is right like how much
purchasing power have you been milked of
inflation in your career that you really
have no idea about really it's
it's an interesting uh kind of Insidious
invisible taxation
once people have an option to exit that
for a uh either an individually selected
monetary policy or one that is just
fixed like in Bitcoin I don't even like
calling Bitcoin a monetary policy
because there's no policing to it it's
not being enforced in any way it's just
an option you just go and freely choose
uh to use this this type of money that
no one can print
and so
as that unfolds and people realize that
there's an option to
again people are going to do what's
profitable right and profitability also
entails reducing cost so if I can reduce
my cost structure by Saving in Bitcoin
rather than saving in dollars then I'm
going to do that and then once I'm in
Bitcoin I now have more leverage in my
negotiations with the state that they
can't as easily they can't inflate they
can't as easily tax me either because I
have a form of property that's immune to
Capital controls it's globally
transactable I Can Vote with my feet and
move anywhere in the world that that
would lead to a reorganization of people
into jurisdictions where they are
treated best
so the most Capital the most Talent the
best performers will naturally coalesce
into the jurisdictions where they're
treated best
and a lot of this
the thinking on this too it's rooted on
kind of an obscure literature on the
economics of violence or Force
um I've written about this a bit in my
sovereignism series again the sovereign
individual goes into it
but let's just say that
the ways we project power in the world
can radically change our political Modes
of organization a very simple example of
this was
for a long time the armed Knight on
Horseback was the dominant martial force
in the land right no one could take out
an arm night it was the strongest form
of military hardware in the world pretty
much
you know he that single Knight could
kill 50 peasants
let's say no problem so that was the
weapon in the world all of a sudden the
invention of gunpowder what happens
one peasant can now take out an armed
night on Horseback at 200 yards
that led to the collapse of feudalism
collapse of the medieval church as the
law on the land like there were all
these follow-on consequences as a result
of that simple change that someone
figured out you put explosive powder and
a long pipe and shoot a ball of the guy
and he's dead
um so with Bitcoin it's it's the
ultimate defender's Advantage right
earlier when you're talking about the
strong people coming into Power
dominating the weaker people well now
the weaker people will have recourse to
a form of wealth that is indomitable you
cannot steal it from them right they can
so there's less profitability for the
the aggressor he can't get the property
and there's more optionality for the
victim
so that leads to a world that's more
heavily consensual
in my opinion everybody in America
should be a business owner however not
everybody should be in the business of
starting a company and not everybody
should be in the business of operating a
company
so what does that mean well you can be a
worker and an owner right you this
concept of equity you have to understand
this because wealthy people are working
for Equity they're not just working for
a salary