Kind: captions
Language: en
[Music]
robert breedlove welcome to the show man
glad to be here tom thank you for having
me i am very excited to have you and i
have recently gone way down the bitcoin
and cryptocurrency rabbit hole
uh you come up early and often when
somebody does that exploration
and i feel like i have a
i felt like i had a very um intuitive
understanding of what money is you know
it's been a huge part of my life
pursuing the accumulation of wealth
and
then you hear the phrase from you which
stopped me in my tracks which is
inflation is theft
and it didn't make sense like it wasn't
that i disagreed it was that i couldn't
make the sentence
make sense
and i realized that i always thought of
inflation and we're going to get to
answering the question around what is
money why bitcoin is useful all of that
but to me to attack that head-on doesn't
work as well as talking about why
inflation is theft because i had
mistaken it for a fundamental property
of nature right i just never thought
beyond that inflation exists and it's
roughly two percent a year and that is
what it is yeah and then i encountered
michael saylor and him talking about
hyper inflation i was like wait a second
what because i literally told my money
manager i want to be as close to my
money buried in the backyard as humanly
possible during covid right because i
didn't i didn't know where that was
going to leave us
um why is inflation theft and maybe what
is inflation
yeah it's um
i don't think you should feel bad not
understanding it at the outset
i actually have argued in some of my
writing that it's a euphemism you know
the idea of economic inflation sounds
wonderful
you want your house to become more
valuable you want your portfolio to
appreciate you want things in general to
go up in dollar value
how they actually do that though is very
important
you want them to be value producing
assets
uh inflation though and this is a word
that
really gets twisted because it's got a
lot of different meanings do you mean
price inflation do you mean inflation of
the money supply
and the way when i use the term
inflation i like to refer specifically
to
arbitrary increases in the supply of
fiat currency so what's happening in
that instance is that the actual unit of
perception we're using to value assets
the dollar
is being diminished so fiat currency for
people that don't know is just
money backed by the government
fiat currency the word fiat means by
decree so this pretty much means because
i said so under the veiled threat of
force um
and yeah it is
you know
this gets a little bit deeper into the
history of money but the dollar
originally was issued
to make gold
which was money selected by the free
market more convenient to make it more
portable make it more transactable very
difficult for us to settle in physical
gold at every transaction right so if
you abstract that gold into paper it
makes it much more convenient
all right really fast because i think
these are important pieces to put
together so
um you said very quickly that gold was
what the market had decided on yes why
that's a deep rabbit hole we can go
that's the money question yes yeah i
think we have to at least define what it
is
that made the market select gold and for
thousands of years let me answer the
fiat piece and then i'll go back to the
gold so
we abstract gold into paper to make it
more transactable more convenient uh
faster and more portable frankly which
is one of the properties of money we'll
get into about gold
the problem is you end up trusting the
custodian so you put all your gold on
deposit with a custodian
that then issues the paper that's
redeemable for the gold and over time
this becomes the most
alluring source of power for governments
or anyone that can command force
they want to control that source
of economic power because it's a it's a
call option on everything which is one
of the definitions of money by the way
so
you go from a full reserve currency
where each dollar is redeemable for one
unit of gold to fractional reserve
banking where there's an excess of paper
uh beyond what the gold reserves can
justify themselves
to post 1971 is fiat currency where it
is not redeemable for gold whatsoever
so
one answer for what is fiat currency it
is an irredeemable government debt
certificate
undergoing slow motion default via
inflation while its use is forced on all
of us on free economic actors no one
would ever voluntarily hold a fiat
currency why would you ever choose to
hold the money that someone can
arbitrarily diminish
i can answer that question and i think
this becomes part of the
debate around
what this is going to look like in a
post-fiat world but the answer is that
you trust the government that you were
born into a system where the government
seems stable and trustable your parents
did it and so
it
it's like a promise made by somebody
that you trust implicitly
and so
for instance i'm relatively bright and
educated and until about 18 months ago
i
i just thought you make as much us
dollar as you can you put it under your
mattress and you're fine and then i was
introduced to the idea of inflation and
how even two percent becomes problematic
really fast seven percent becomes
terrifying and 15
you're devastated in less than a decade
i was like what so that put me on this
mad scramble as somebody who never
wanted to learn about investing i was
like i'm good at making money i have no
interest in learning about finance or
investing
and every time i would speak to my money
manager i was like this is dumb i don't
i don't want to learn about calls and
puts and options it's so complicated so
given how complicated it is i just want
to trust the government so i would
choose it out of laziness and terror yes
so
we're all prone to seek out cognitive
expedience
and i would say even the dollar itself
you don't want dollars per say you don't
want a definite amount of dollars you
want purchasing power but i don't
realize it you're right yes but i don't
realize it that's right as a matter of
cognitive experience you think in terms
of dollars and so and this is where you
get deeper into what is money money is
also a psycho technology it's like
literacy or numeracy it's a software
implementation we put into our brain we
use it to communicate negotiate plan i
mean how many times a day do you think
in dollars it's something that's deeply
embedded in our cognitive machinery
um and that gets into my argument later
about why central banking is kind of a
computer virus on the human brain
but
i think what would be an appropriate
avenue here is to think okay
you've been pursuing dollars your whole
life what you're actually pursuing is
what those dollars can get you that's
what money is right money is the most
exchangeable good
you can think of it as a call option on
anything the market can produce so any
good any service any knowledge human
time anything people can do any service
anyone can render for you money is a
call option on that and that's why it's
the most valuable or apex good in a
marketplace
so
what it ultimately means is that money
is the most important form of property
so what we're all really after all of
our businesses our lifestyles our
governments these are property
strategies if you will these are ways to
reach consensus on property to
distribute property in an equitable way
in a way that we all determine to be um
fair right fair and equitable
so
it will probably help here to
we're setting up a lot of rabbit holes
we'll go into the property rabbit hole
first
we typically think property is
the house
the car the stock whatever that's not
what property is
property is a relationship it's an
exclusively acknowledged relationship
between the owner and the asset right
the fact that you own this house
and no one else can come into it if they
did you have recourse to
uh the government right the apparatus of
compulsion and coercion you can call the
police force and say hey this guy is
violating my property please remove him
that is the foundation of civilization
when we can go
and take
our most personal form of property which
is ourselves right and this is something
we're talking offline self-ownership
this is the foundational axiom on which
all of this
libertarian capitalistic philosophy is
based
um
you own yourself only you can move your
arm only you can move your leg right you
can't even sell
that property you can't trade away your
consciousness or your willpower to
anyone else you own it and it's
inalienable cannot be traded away
what you choose to do with that
self-ownership you go out into the world
and you voluntarily add value to
something right you plant a garden you
build a business
or you trade the fruits of your labor
with other cell phone people that's how
we create wealth right that's what
enables us to focus specialize and
create wealth so
the basis of civilization is that
relationship between the owner and their
asset which we call property
money is just a reflection of the wealth
in the world right the property that we
have created through this capitalistic
process
when you give one organization
right this is all based on free market
dynamics but when you give one
organization legal monopoly privileges
which is what the central bank is
to now monopolize money
and control its issuance
they have a mechanism to violate the
property rights of all other economic
actors that are using dollars that are
denominating assets in dollars
so
this is something that's so fundamental
that it it contradicts the premise of
self-ownership
when we give power away to a single
institution that can arbitrarily at a
political whim
uh choose to violate the relationships
of all economic actors using that money
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so
that's a bit of the what is property
rabbit hole we could go into gold next
well first let's go back to what you
said that nobody would voluntarily
choose a fiat currency and the reasoning
behind that is
okay you have a portion of the total
whatever that portion is so the number
of dollars you have represents a dollar
of the uh a percentage of the total if
they can change the total at any time
they can dilute you and so your
perception is that the value of your
house is going up but the reality is the
value
the buying power of the dollar is going
down that's correct and so it creates a
the the mental equivalent of an optical
illusion yes so you think oh my god i'm
winning this is amazing yes uh but in
reality you have opted into a system
where human beings yeah
like you said arbitrarily make a
decision as to whether or not they're
going to
inflate that by just
and this was i am embarrassed by how
recently i thought this i actually asked
somebody and this i think less than a
year ago i said where do they take the
bags of money that they're printing like
whose doorstep are they dropping them
off at and of course the the answer is
it's a database and it's just a data
entry but even that whose data entry are
they
changing
you're right the this is an important
point actually uh the us dollar is a one
node database it's on an sql server at
the federal reserve so it's the list of
who owns what dollars and there's one
group of individuals that update it for
everyone else arbitrarily
and
to your your earlier point about
inflation i think it's best to think
about this as like a cap table
right when you own a business and you
have shares in a business that you're
buying and selling
you wouldn't arbitrarily give one group
the ability to just issue new shares
whenever they want and dilute everyone
else that would clearly be asymmetric
and unfair to to the shareholders yet
that's exactly the model we have in
money exactly
right that you can think it's another
way to think about money maybe is it
it's a share
in the capital stock of the world right
my share of the us dollar supply
gives me a fraction of whatever u.s
dollars can buy it's if again if money
is a reflection of the total capital
pool or the total savings
um that's what it effectively represents
in its purchasing power
but when one group can just twist the
rules
to favor themselves and disfavor
everyone else you have a
disequilibriated structure or an
asymmetric monopolized structure um
so hopefully that explains inflation and
property a little bit
it does um
putting a real fine point on why it's
theft though
because it theft implies it implies ill
intent i don't know if that's what you
intend in fact let's start there do you
intend that that ill intent is afoot uh
i would say it's more the arbitrariness
right i don't necessarily want to dig
into the intent so much as mechanically
what happens
it's an arbitrary redistribution of
wealth or property from one group to
another so they're diluting the property
rights of dollar holders
anyone depending on the dollar to store
its value is being victimized
and those getting access to the freshly
produced or printed money first
are the victimizers they're the ones
actually extracting wealth from that
group and this is uh
especially abhorrent because if you
think who depends on the dollar to store
its value the most
the poor
those living on fixed income pensioners
retirees right people living paycheck to
paycheck these are the people being
stolen from
so i'm not going to make a claim about
intent there's a lot of arguments about
oh no central banking they don't mean to
be doing what they're doing they think
they're doing what's in everyone's best
interests
fine i'll accept the argument
but mechanically
those depending on the dollar are being
robbed by central banks
and those that receive the newly printed
money first and who receives the newly
printed money and how is that decided
and printed again is by changing numbers
in the database yes so a lot of the
beneficiaries are asset holders right um
name some assets
real estate stocks how so i own both of
those how do i benefit because i'm
terrified of inflation right so why am i
not excited because when money the store
value function of money is compromised
which is what's happening when when we
inflict inflation that the dollar's not
holding its value over time
people market actors are smart right
they're gonna move into a reliably
scarce asset
the most
predominant store value in the world
today are stocks frankly
so stocks real estate all these things
that are reliably scarce in an
inflationary environment become store
value assets so
people that hold those assets as a
larger percentage of their total net
worth will benefit at the expense of
those relying on dollars to hold their
value because what database entry is
changed in that scenario it's not like
they gave me more money for owning those
right but your home will appreciate
right and it's not based on supply and
demand so much as it is based on central
bank policy
so they've if you think about more
dollars chasing the same amount of stuff
it's kind of the simple way to think
about it this implies higher home prices
and it's not a consequence of supply and
demand in the marketplace per se it's
just that diminished unit of economic
perception part of the quote-unquote
printing of money is the government
buying like um corporate bonds and
things like that yes
it's because that's how they actually
get it into the system right they go and
buy a bunch of things whether it's
making sure that the california
government doesn't default on their uh
bonds and things like that
um
and then they actually buy things off of
companies right that's right and this is
a very i like to say central banking and
the fiat currency complex is as clear as
mud and twice as dirty right so it's
very uh confounding to say the least
but
um
essentially the government is issuing
new debt
right which the federal reserve is
buying so they're injecting dollars into
the economy uh that way it's become more
exotic recently where the fed's actually
spinning up special purpose vehicles to
buy corporate debt directly
i think equities as well
and so what's happening is
there's this confiscation of wealth
taking place and then the proceeds are
being doled out arbitrarily so you could
think of this the fed or
government beneficiaries of fed policy
as picking winners and losers
so this is antithetical to capitalism
right which capitalism is much more
darwinian right survival of the fittest
if the business is producing profits and
satisfying wants for people then people
will pay for it voluntarily and that
business will grow if the business is
unsatisfactory it's not delivering uh
good goods or services to people people
will abstain from doing business with
that entity and it will shrink and fail
and when that business fails its capital
will be reassimilated into the
marketplace and put to higher and best
use
that's what capitalism does but when you
have this
arbitrary avenue of confiscation
and and wealth redistribution it it
stymies that evolutionary impulse that
capitalism gives us so you end up with
zombie companies right and it's funny
that they use that term zombie
which is i had a good conversation with
a guy about this how this has entered
the modern mythology or lexicon
uh interestingly right after 1971 which
is when we went off the gold standard
the term zombie became much more widely
used but zombie companies are that
they're lost producing enterprises
they're not satisfying anyone's wants
but they're kept on life support by
central bank policy so we have central
bankers
printing money
to
harvest the productive surplus of the
economy
stealing from the productive economy and
then doling it out to these certain
entities that are producing losses and
keeping them alive
so it's um
very polluting in that way if you will
it's it's it's it's toxifying to the
darwinian process and i think that's why
it degrades
uh everything that's downstream from
economics like politics and culture et
cetera all right i want to walk through
one thread that all of this is me taking
liberally from you so tell me where i go
straight 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
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 could 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 um 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 redeem it 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 it's true the
federal reserve yeah is not the federal
federal and it has no reserves [ __ ]
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 spent 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
print a 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 this question yeah
so let's do this
wealth redistribution 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
see no one ever but typically no one
ever will enter that
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 if we're all trading with one
another there's going to be a single
asset
of that
flurry of trading activity that is the
most liquid asset the most tradable 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
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 there's tables 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
in 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
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 going
to rot pretty quickly so clearly
durability matters
money needs to be recognizable
which means that each trading party
can
verify its authenticity so 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
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 lead 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 scarce it's not
scarce the supply way outstrips the
demand right
something like diamonds
not that important to human existence
yet 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
time
energy
[Music]
second law of thermodynamics we cannot
create nor destroy 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 we've tried
a lot of experiments we've had sea
shells we've had
glass beads we've had cattle we've we've
used all kinds of things as money right
natural market processes determined 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 it
across space obviously
but gold's heavy it's physical right
it's very expensive to secure
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
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
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
we're 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 a niche
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 a 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 seed 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 is
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 us
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
uh we had this huge economic boom and
then again glossing over some history i
think it was germany they 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
2021 um
deep into this global fiat currency
experiment led by the united states
um
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
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
when money is losing its value over time
we're all incentivized to be more
short-term thinking
this is a de-civilized 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
um 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 a 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 we're
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
specialize as you said your
specialization
creates something and then somebody who
doesn't want to specialize in that that
specializes 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 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 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
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 this which is [ __ ]
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
not my opinion
this is in fact mechanically
how it works
um 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 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 the 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
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
and this this points to a key
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
and it's selling on the market for 2 000
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
uh 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
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 there's a
dynamic in money or 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
the market will be flooded with the
money and 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
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 due 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 cost if you will 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
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 there's 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 to you
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 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 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
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 see 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 bastion saying
that when goods and services don't cross
borders soldiers will
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
in violence coercion and compulsion
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 yeah 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 was
pre-bitcoin that i got into this so i
would really just encourage the audience
to go check out that book
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
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'd learned a
lot of lessons from central banking and
its failure and its 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
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
pursuit of wealth frankly right the most
powerful incentive in the world we have
tried to rationalize and formulate
different ways of creating uh
socio-economic structures that favored
the few that could understand it and
create that privilege for themselves at
the expense of others
all right i think this is where bitcoin
needs to enter uh stage left here so i
have a quote from you um actually i'm
gonna start with a paraphrase
from alan greenspan this is you
paraphrasing alan greenspan
um that sets us up then for your quote
so alan greenspan again this is a
paraphrase
a sound store of 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
inflexible supply okay so that's sound
now this is your quote which uh i love
and i think sets this 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
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
um 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 it 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
business 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 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 that 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 if you'd have upper
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 rights 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
which are turn out a block on
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
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 1 000 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 figured out how to produce
gold in the lab very cheaply we mine an
asteroid we mine 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 bearer
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
bitcoins 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 absolute 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
in 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
hey thank you so much for watching this
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yeah it really is uh
difficult to wrap your head around the
part that starts to be a little
unnerving for me is all right if
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 pouf 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
[Music]
how do we avoid
the government coming down with an iron
fist and saying yeah this is this is
illegal now
yeah i do
view this
a little differently than in sailor
who's absolutely brilliant um
i think his position
in general is that they'll exist side by
side fiat currencies in bitcoin
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 worldview
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 what gold 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 it 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 it 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 equals the amount produced
in the 500 years prior
what did this do
this led to the rapid proliferation and
dissemination of literacy
numeracy again psychotechnologies right
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
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
uh which created an interesting dynamic
that
it we 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 uh the
institution tries to gra 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 pending
that like why do we need you and that 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 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 shh
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
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
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 for 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 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 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 it's going to work out this
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 that's right
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 um 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 sailor 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 100 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 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 storing at
a bank like where am i putting this
[ __ ] thing so
i realized whoa like i'm uh 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 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 i 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 nidaeg 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 this bank that
bank this bank you can spread out your
counterparty risk
keep some income 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 custodying your bitcoin
because you get again redundancy you
don't have single point of failure but
you also don't have counterparty risk or
you have yeah 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 multisig 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 yeah 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 asset so
that's radically new um
and 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
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 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
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
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
the stirrup actually was very
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 to that [ __ ] 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 emerged
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 they 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 can think of bitcoin as this
new technology that so radically
increases the cost to benefit ratio
violence and that
if someone's properly custody that again
in a multi-signature format or whatever
there's not any carrot at the end of
robbing them you're not gonna 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 custodied 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
something you said earlier too that
maybe people don't want sovereignty
full 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 and
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
to 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 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 in
property
right that's how we share and build uh
declare property and create
more wealth actually 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
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 invariants that we
create for ourselves i think bitcoin is
just the perfect invariant money
very interesting okay now when i think
about the properties of this invariant
money
one of them is that there's only ever
going to be 21 million
and
now it makes money feel like a zero-sum
game to me
which may be 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
[Music]
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 so
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
it's not unlimited right there is a cap
like uh there can only be whatever we
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 divisibility if that were
inadequate
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 that's one of the reasons
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
treated 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 to visibility 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 what 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 as 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 it's another thing money is so
if you think of money i'm sorry 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 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 sit 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 as 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 and 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 al 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 along i hope that answers the
difference between purchasing power yeah
yeah in fact let me restate it because
as you were saying 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
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 a call
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 30 to 1200
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 have 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 cache
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
it 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
um situations to try and reinforce the
validity of their borders yikes which is
interesting what year was this written
this was written in 1997. wow yeah
and the key
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 so you have to have a
bank account
right before bitcoin what else did you
do
hold barry gold in your yard right 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
person in media
what i realized so i got showed
something
like six years ago he called it v adams
and of course it's become
uh nfts but he didn't call it that and
he showed it to me and i was like yo
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 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 advertised 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 and advertising
and all that stuff so how am i going to
crack that nut i see these v items and
i'm like whoa
that's going to allow me to create
virtual products that because i'm again
technology's 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 nft's hit and
i'm like whoa okay i recognize this is
that v adams 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 where
all 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 dowse
because i'm i'm a traditional business
guy and so i'm thinking whoa daos 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 trying 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 to stay in
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 they're 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 done back there i
would first
the nft piece
i don't know a tremendous amount about
nfts but what i would
say
and this is in regards to centralization
versus decentralization
it's 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
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 the one asset in the world
that no one can control
um one thing i want to say about the
disney battle
this may work in your favor actually is
that should we move should bitcoin
monetize and succeed as i
have laid out
this will move us to a much more free
market lasse fair capitalistic market
environment where 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 in 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
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
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 or 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
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
almost like cs 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 the age
of 11 i went straight to the deep end of
the pool as i like to joke i was reading
stephen hawking and brian greene 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 i'll 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 him a philosopher
you know he really gets at the
fundamental nature of things
and he looks at it looks at the world
through many different lenses
and in that way
that method of kind of conciliance right
looking what he calls multivariate
analysis looking at different topics
through different lenses
uh one of the main ones is
the
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 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 kind if you
read it from the old testament to the
new testament it goes through 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
peterson has this definition of god
god's such a loaded term i hate even
talking about it sometimes because
people
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
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 it's that
god is that
force that courageously confronts the
chaos of nature converts it into good
and useful order and i think that
force and 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 principle is very
closely connected to god
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 timeless
right and they're they're very important
to
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
and i don't think it's a coincidence
that they're all creative principles
right truth as i've argued in a lot of
my writing markets discover truth they
discover prices and tools
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
socio-economic hierarchy is built on
central banking
destroys price signals we didn't talk
about this a lot today but and 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
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 are supply and demand but when
the central banks 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 increase is because
more people want the table or because
this table is really scarce and the
central bank's printing a lot of money
all 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 heroes
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
so
that was a lot to unpack and there's a
lot of rabbit holes into my riding there
but i hope that generally answered it no
man it did and dude i
was blown away by researching you by
spending time with you like this is it's
crazy you really have a an amazing
ability to think through this stuff and
then articulate it for people where can
people follow you join you on this
journey
i just want to thank you for having me
by the way dude round one i assure you
the next time you're in la let me know
because [ __ ] there's so much more that
we could go into that is for sure this
is great man um i really admire what
you've done and you know hope to emulate
some of that myself um i just got into
the media game actually um
i was my background's in accounting
finance i was running a hedge fund
but this quote with
i think it was h.g wells
civilization as a race between education
and catastrophe
that's a great question that quote just
really hit me hard um you know sailor
has this big focus on education i heard
that quote around that time too
and
as an entrepreneur i'm just trying to
listen to the market people have
appreciated my writing and my talking so
i want to focus on that i want to
help
enshrine the importance of inviolable
property and what it means for humanity
so
that's the direction i've gone
the show i launched is called the what
is money show so i'm trying to incept
that idea into people's mind
i'm on youtube
what is moneypodcast.com
and then you can find me on twitter
at breedlove22 which is my last name
b-r-e-d-l-o-v-e-22
word
awesome man thank you again so much for
coming on the show boys and girls be
sure to follow him trust me it will blow
your mind and speaking of things it will
blow your mind if you haven't already be
sure to subscribe and until next time my
friends be legendary take care peace
you