Kind: captions
Language: en
the argument has been that a little bit
of inflation is necessary to stoke an
economy otherwise people will not
consume and there will be no economy
Robert Breedlove welcome back to the
show thanks for having me Tom glad to be
back very excited to have you
in any financial crisis what can
somebody do with their money strategy to
come out the other side better than they
went in yeah this is a kind of a
complicated question because one of the
things that money is I talk about this a
lot on the show is an insurance policy
on uncertainty so by definition a
financial crisis is a time of great
uncertainty
so the standard strategy you know your
grandmother's wisdom would be to save
your dollars save your hard-earned cash
um but that gets a little bit more
complicated and a very inflationary
environment where we are inflating
currency very rapidly or counterfeiting
currency
you throw that out it's the same thing
yeah so we covered that last time but
it's worth for people that are just
encountering you for the first time why
do you say that what is inflation and
why do you call it counterfeiting yeah
so inflation quite simply is legal
counterfeiting and counterfeiting is
Criminal inflation
they're mechanically the same thing but
inside of a legal Monopoly at a central
bank it's called quantitative easing or
some other euphemism that makes it sound
really good but if you or I do it we get
thrown in jail so it's it's just making
more money it's just a political
institution that has authorized itself
the exclusive ability to print money and
when you print money you are stealing
claims on wealth from other savers of
dollars
so
um you're the first person that I'd ever
heard say it like that I always thought
inflation was a law of physics that we
needed that things just inflated by two
percent year over year that's just the
way that it was
um so right now we are in a very
inflationary environment why and I would
say that's a part of why where I would
very much call what we're in right now a
crisis the media is trying to soft shoe
it but I think every day it's going to
be more and more problematic no I could
be wrong but I don't think so
um why are we in an inflationary
environment right now well we're in an
inflationary environment because we just
printed six trillion dollars in the US
over the past 24 plus months which is
what percentage of the total supply of
US Dollars you would have to check the
exact data on this but I want to say
it's an increase of about 40 percent of
the total Supply
um for since what 1913 no since 2000 20.
no but I'm saying the 40 of a supply
that started in 1913. so this isn't like
that's right that's correct so Supply
issuance starts in 1913 so for the first
108 years of dollar existence we
produced let's say again check my
numbers on this 15 trillion US dollars
and then we just increase that by an
additional six or roughly 40 percent in
the past two years so if you look at the
chart it's very kind of low and slow if
you burp burps on the way up and then
one huge Spike recently that's so crazy
I don't think people really understand
but before we go all the way down that
we will certainly get more into that so
okay we're in an inflationary
environment so how do you want people
thinking if Grandma is Grandma's wisdom
is now wrong because of that environment
and so if I because I really am right
now to your point uh you want as many
options as possible in the time of
uncertainty I am right now trying to be
as close to Gold buried in my backyard
as possible yeah I always feel the need
to say I'm not I don't actually have
gold buried in my backyard I don't want
people showing up uh but trying not to
be locked up in too many things that are
long term though full disclosure I do
own a
a very substantial amount of Bitcoin and
ethereum yeah uh but
for the most part I'm trying to have my
options open well I hope you have it in
self-custody at least
because that's buried in the backyard
yeah
yeah I'm not I'm not to the point that
you would be happy but I'm getting close
Okay because if it's Bitcoin on an
exchange or with a custodian it's not
your Bitcoin as we commonly say not your
keys not your coin
um I do I don't wanna
the spirit of Grandma she's right
actually you know holding options in the
face of uncertainty is the right
strategy it's just that the tool of
optimal optionality if that's a term is
not no longer the dollar it's
decreasingly the dollar the more you
print new dollars the more you're
debasing that instrument's ability to
store value across time so it's it's
less useful as a tool of optionality as
money is intended to be
and as a nice barbell to that strategy
Bitcoin is or gold physical gold is a
really nice adjunct because as you
debase currency that would indicate that
would basically equal you have more
dollars chasing the same amount or
relatively same amount of gold or
Bitcoin which would be a higher price of
Bitcoin or gold in dollar terms so I
want on inflation though I don't want to
leave this yet
it's a very complicated term people
often think price is going up as
inflation which it is that's a form of
inflation price inflation there's also
monetary inflation which is the
expansion of the fiat currency Supply
but to try and the reason I equate
inflation to counterfeiting because it
it doesn't exist without the legal
Monopoly of the Central Bank you don't
have
arbitrary expansion of the money supply
outside of a legal Monopoly just does
not exist so to try and give people a
useful analogy about this
if you slice a pizza into more slices it
doesn't mean that there's more pizza
available to eat
right you've increased the number of
slices nominally but the size and volume
of the pizza has not changed you cannot
feed more people with it
you could similarly think of money
as a an option on the global Capital
stock
and every time you print a new unit of
money you're basically slicing that
pizza if the pizza is the global Capital
stock you're slicing it into finer
slices or thinner slices but if I'm
printing more pizza why isn't it that I
have more pizza versus but you're not
printing pizza so Pizza is global
Capital yeah Capital stuff machines
equipment uh real assets let's say money
is just the option the call option to
acquire those assets and so if I
increase the number of options available
what I'm doing is taking away the
ability of those saving in dollars I'm
stealing from them it's you're stealing
their purchasing power
and that's why I always equate inflation
and counterfeiting it's the same thing
as if you could go out and print a bunch
of 100 bills increase the number in
circulation you could go out and buy
things that cost a hundred dollars that
other people went and worked and saved
uh to be able to afford those things
you're basically stealing from them
right you're bidding up the prices of
the things that they would otherwise buy
and that's what we've seen taken place
over the past 24 months so if it doesn't
create more pizza then why do people do
it
because people like to have convenient
strategies for wealth acquisition and
setting up a legal Monopoly to steal
from all of society is a really
convenient wealth acquisition strategy
it's interesting I think so because I've
gone on this journey I've had to wrap my
head around some of the fundamental
questions that you ask what is money
being one of them I think what this is
when people the reason that they print
is they're going to go buy assets with
what they've quote unquote printed so
uh the government works with the Federal
Reserve the Federal Reserve creates the
money out of thin air but the way that
they put it into the system is by
acquiring assets so they'll acquire
um governments or whatever yeah but
those are also born out of thin air the
government can issue debt add into an
item as the Federal Reserve can issue
dollars to buy government debt ad infant
item this is the most organized crime
syndicate that's ever existed on the
planet
okay so now that people know that that's
the way that we create inflation
what do we do in an inflationary
environment how do we protect our money
because right now I really I don't allow
myself to do overwhelm so I break things
up into manageable pieces but right now
like I don't know what to do in terms of
with my money so I have allocated about
as much Capital as I'm comfortable
allocating I'm keeping as much as I'm
not worried about being inflated into
Oblivion and inflation was as I wrapped
my head around that was the thing that
caused me to change my behavior because
prior to this I didn't want to think
about investing and then when I really
began to understand inflation I was like
whoa you have to invest your money into
something that its value goes up at at
least the same pace of inflation
otherwise to your point it's even though
I have the same number in my bank
everybody gets me exactly so
I was like okay I have to do something
but now I feel like we're going into I
feel like we are in a time of so much
uncertainty that I don't know what to do
anymore so even though I can describe I
can tell people what is happening but I
don't know that I have a good plan for
what to do like even in my own life so
what do I do well it's a number of
things
um first thing is to own assets that
cannot be counterfeited or printed into
existence so physical gold Bitcoin and
self-custody these are great options
um but Bitcoin is so volatile like how
do you do you just take a long time
Horizon approach on that well it's
volatile in terms of dollar terms right
and volatility is a function of price
Discovery so if Bitcoin is a sub 1
trillion dollar asset competing to be a
hundred trillion dollar asset you would
expect it to be volatile in dollar terms
so yes you would Advance cold comfort
when I need to buy diapers for my child
this is not I'm not advocating for
Bitcoin as a checking account I'm
advocating for Bitcoin as a long-term
savings account so Define the long term
to protect yourself from the aggression
of private property that's occurring
through the counterfeiting of currency
something like physical gold or Bitcoin
is useful for Bitcoin specifically it's
performed really well over four year
time Horizons so that's not necessarily
long term I wouldn't sit here and tell
you that Bitcoin will be at a higher
dollar price in four years and there's a
lot of uncertainty in the world no one
can make that claim but what you do know
is that you have a money with
effectively uh that's effectively
perfected the properties of money which
we talked about last time
specifically that we know it cannot be
increased in Supply whereas every other
primary money in the world the US dollar
uh leading the charge here is being
rapidly expanded in Supply so when you
price one in terms of the other you end
up with a higher bitcoin price as an
insurance policy against debasement of
the dollar
so one answers that own assets that
cannot be counterfeited Commodities
businesses
there's obviously a lot of risk here
that you have to navigate if it's a if
it's a public Equity they might actually
be printing it
um some companies issue more shares and
they actually have outstanding you can
check out the I think it was Chiquita
banana Scandal what yeah it's called
rehypothecation so there's a lot of
games played on Wall Street where they
will basically represent and sell more
shares than there actually are in
existence isn't that illegal of course
it's well it's illegal if you're not
inside the Monopoly if you're not a
prime broker okay I think is the
industry that's allowed to do that
but um so that's one area to be careful
of it's good to own businesses good to
own things uh productive factors in the
economy but if they're public equities I
do think you have to be a bit weary
about things uh another thing is assets
that are difficult to seize or
confiscate
so this again back to gold in your
backyard or Bitcoin in self-custody I
think what we are essentially seeing in
the world is that centralized
governments are bankrupt
and all government revenues are derived
through taxation inflation which are
both forms of theft and other forms of
of confiscation so I would expect those
activities to increase as monetary to
basement ramps up
um and it could even be accelerated now
that
people have an option to exit Fiat
currencies they can go into a savings
technology like Bitcoin this actually
puts additional inflationary pressure on
Fiat currencies over time because people
now have an incentive to
sell the thing you're using to steal
from me with
and hold the thing that you cannot steal
from me or use to steal from me which is
a good way to describe Bitcoin
so
assets that can't be printed assets that
cannot be seized
um
and then
the last one I guess I would say
knowledge you know it's very important
to kind of study the Ebbs and flows of
financial history
and equip yourself with a world view for
the world we're going into we've seen
currencies fail many times before you
could study the the Weimar Republic in
the 1920s Germany what happened there
um inflation has really corrosive
consequences on people's psychology
their morality their behavior
um
and
yeah I think that's a good start for
protecting yourself and the world that
we're going into so what are you doing
with your assets right now so if just
I'll go first so I have a ton in savings
just liquid basically going in and out
of really short-term bonds so no yield
but all stuff where barring the collapse
of the US government which I won't say
is is a zero percent chance risk but
certainly very low especially because
they control the money printer that's
right
um very low risk so money coming in and
out and then I have uh Bitcoin and eth
uh I have some in the stock market real
estate
that's sort of my portfolio all because
I don't consider myself a talented
investor in any way shape or form
um
what does yours look like so dollars and
treasuries are good short-term liquid
instruments people think you're smart
there
um I consider Bitcoin to be the best
long-term liquid instrument and that's
actually all of my portfolio
dollars in Bitcoin I don't actually do
the treasury game I hold a smaller
balance of dollars relative to
everything else I hold a lot of Bitcoin
now this is coming from someone who's
studied this asset in this space and the
history of money exclusively for six
years now so what I'm advocating for
other people to do is to go out and do
similar due diligence for themselves
their skill set
and create this world view and then make
a portfolio construction that reflects
that I can't sit here and prescribe you
any specific portfolio construction
because it's Unique to each individual
and if I were to do that
you would not have the level of
conviction or buy-in into that portfolio
so you would inevitably be shaken out
when the market starts to move emotions
would set in and you would be shaken out
of your positions so that's why I don't
believe in specific prescriptive
portfolio constructions but because
conviction is one of the most important
parts absolutely you have to believe in
what you're going you have to have
buy-in right it's not just that you
bought it physically but you need to
have intellectual buying you need to
understand what you own otherwise when
the price moves it's just like being at
the poker table
if someone
pushes in a big hand and you don't know
exactly what you have and you don't have
a read on your opponent then you're
going to get shaken out right you're
going to fold or you're going to call
make a bad call you're going to lose
it's the same thing when you own assets
you need to understand what you own
understand yourself understand the asset
and have a conviction in what it is
otherwise it's just not going to work in
my opinion that's really interesting and
one of the things is I certainly spend
time researching you is I just this is
my first time really paying attention to
a monetary cycle where there was
certainly in the crypto World there was
so much Euphoria until about a year-ish
ago and then it really started to falter
and go crazy and when people were
euphoric it was like man I was looking
sideways as people were taking out loans
and like getting into assets and I'm so
paranoid I was like there's no way I do
not trust myself enough and then same
thing with when people started to sell
it was like Panic selling
and the approach that I try to take is
okay I'm not I I personally view myself
as not being smart enough to beat the
market to try to do things on timing so
I'm just like what am I prepared to do
long term or what can't I lose on so
when I was talking to my the person who
handles the actual buying of bonds and
stuff like that I mean I I ask like 36
times like what happens if right the
price goes down do I still get my
principal back I may not get the
interest or whatever but I want to make
sure that I'm in something that I can
protect my principal so just looking at
all that and then on the crypto having a
thesis and saying okay as long as I
believe this to be true I'm not going to
sell if I stop believing not to be true
then I might you know look at it
differently but watching the human
behavior of seeing people
act like they're gamblers effectively
and I remember when one of the first
like big liquidation moments happened
and there were you know memes of like
people in front of their computer like
outside a nightclub there was one guys
outside a nightclub he squatted down in
front of his computer on the sidewalk
and he's just like holding his head
because obviously he had been liquidated
because I don't know if we want to go
into explaining it but like you you're
using leverage to buy it and it hits
that point where your collateral is now
exactly so boom you go from having
something to having nothing absolutely
devastating and I was just like oof this
is this isn't just I have mistaken money
for a property of physics
and when you realize that it's a
property of psychology or a useful
fiction as you refer to it you really
start to think differently about it well
there's an element of the physics as
well
um but I want to
say something here so leverage in crypto
is not a good mixture in my opinion I
think most people that play with
leverage most people that play with
assets Beyond Bitcoin which we
endearingly call [ __ ] coins in Bitcoin
Circle you almost always get burned
um I have some some friends that have
run the numbers on this as well of the
30 000 [ __ ] coins that exist
two and a half had outperformed Bitcoin
Over a four-year cycle most of them go
to zero go away or the vast majority of
them underperform Bitcoin so no leverage
uh preferably no [ __ ] coins so you might
want to sell your eth uh
do as you please but me personally I
just think that's another project that's
accumulated a lot of technical debt it
keeps moving the goal post I think it
will collapse at some point
um and
yeah those instances of people crying
and some people committing suicide I
don't know how true these stories are
but it can be ruinous to your life right
if you consider how important money is
to your day-to-day existence to lose all
of it in an instant can be
extraordinarily painful and I've you
know I've traded options in this asset
class for a long time or in a hedge fund
in the space I've felt the pain of
losing money rapidly it's not fun I
would not recommend it I would also say
that 99 of the hedge funds out there
cannot outperform buy and hold Bitcoin
just buy and hold Bitcoin the easiest
least intensive least energy output
strategy there is the smartest investors
in the world struggle to outperform that
so unless you think you are someone on
the spectrum of Rain Man intelligence or
some type of super prodigious Trader I
would not recommend leverage or [ __ ]
coins or trying to trade when Buy and
Hold Bitcoin is performed so well
all right so talk to me about the human
element of all this one of the things
that when I was researching for this
episode that I heard you talk about that
I thought was really interesting is that
for whatever reason every three
generations we forget how volatile
governments are how volatile currencies
can be I thought wow that's that Echoes
something that redalio talks about which
is this has happened many times before
just not in my lifetime and so because I
was born in the 70s to me it's like oh
this is all pretty stable like nice and
easy why do people do all these crazy
gyrations uh
but talk to me about the history of
money if Weimar Germany is the right
thing to look at for hyperinflation and
what comes of it let's start there what
what is it that the average person
living today hasn't seen that they need
to be very aware of yeah so to start
that I want to talk about how Theory
shapes how we see actually and to do
that I want to talk about Copernicus so
for a long time
we lived on this planet and we saw the
sun rising and falling right and we just
assumed that we were the center
and that the sun was going around us
right
um it was a bit of it's called
geocentrism I think it's kind of an
ancient form of egocentrism in a way or
and thought anthropocentrism where we
think we are the center of the universe
in most cases
and then Along Comes a guy named
Copernicus ran the numbers and said
actually the math says it's more likely
that we are going around the Sun
and so this shift in theory
did nothing to change the prior
empirical observations of the sun rising
and falling
but it completely inverted our
interpretation of that empirical data
all of a sudden we realized wow we've
been
defrauded by this optical illusion we
thought we were the center the sun was
going around us well it turns out we are
going around the Sun so I say this to
explain the way in which Theory right we
had a new theory heliocentrism that
actually changes the way we interpret
empirical data we often have this
inverted in our mind we think we see
data and infer Theory but it's the
opposite you have to the theory is the
frame that you're putting on reality
that determines how you see it the truth
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description alright my friend back to
today's episode and so Copernicus also
came up with a quantity theory of money
which is pretty interesting
he said that if you double the money
supply in an economy that the price
level will tend to double as well
now it's not that quantity theory of
money is not specifically correct
there's a lot of factors that influence
price but it's directionally correct if
you counterfeit six trillion dollars and
you had six trillion dollars to begin
with
in the long run prices will normalize at
about 2x to what they were so I think we
have been and as you just said you
thought it was this pillar of physics
that prices needed to go up at two
percent every year because we have been
conditioned into this false theory of
Keynesian economics
that we think Rising prices and in the
long run failing Fiat regimes is the
norm of human history
but the real problem we have is that we
are operating under a false economic
theory printing money does not solve
problems increasing nominal prices does
not make you richer
so I think that hopefully the emergence
of Bitcoin that's leading to the
Resurgence of discussions like this a
heightened interest in libertarian
philosophy and Austrian economics it's
actually throwing light on the this
Corruption of money that's hidden in
plain sight right how
crazy is it to think that the most
desired asset in the world the US dollar
is also the largest pyramid scheme we
have ever had in human history how how
do you think that affects us
psychologically when did it become a
pyramid scheme
well we started in 1913 with a Federal
Reserve
um fractional Reserve banking is
effectively a pyramid scheme right
you're you have more liabilities
outstanding than you do Assets in
reserve so you're running a fraud
so long as Oliver every dollar that you
or every 10 no every dollar that you
have in the bank you can loan out nine
or something you have a contract with
your depositor right they have given you
a dollar that's redeemable for gold and
you've given them a dollar in exchange a
liability now if I over issue those
liabilities but I don't increase the
amount of gold I have in reserve that's
why they call it a fractional Reserve as
opposed to a full Reserve yep all of a
sudden I'm now engaged in a fraud you
only have to have misrepresenting so
much of what you've promised people Yes
actually in the bank and you're good and
is it like 10 is there a number well the
number changes based on policy but in
reality anything less than 100 of fraud
right you have you have issued more
checks than your ass can cash so to
speak so if at any time the wrong amount
of people right if you're a 50 Reserve
Bank 51 of the people come to redeem
their money you're bankrupt right so
that and the you know we've seen the
bank run in movies like a beautiful life
people were again were very conditioned
to think it's the norm how does it run
on the bank even exists if it's a full
Reserve honest Bank it couldn't exist so
I would say the moment
we entered fractional Reserve banking it
became a pyramid scheme was that day one
um
the dollar was redeemable for gold
was reducible for Golden well there was
a brief moment where it stopped then we
got back on the goals in 1971 we break
forever exactly but when so we suspend
convertibility in times of War crisis so
that's when the banks know that we can
just pump money in so the fractional
Reserve can continue to exist it doesn't
want people coming to the bank to redeem
dollars for gold because that would show
the insolvency right when When the tide
goes out you see who's swimming naked as
a Warren Buffett said so get so we had
on and off convertibility
throughout the existence of the dollar
in times of war and crisis we outlawed
private gold ownership in 1933 executive
order 6102 and then the big one where we
move into this giant Global pyramid
scheme is 1971 where we break the tie to
Gold entirely so now governments have
the ability to issue dollars the US
government can issue dollars add
infinitum with no convertibility
constraint there's no check on this uh
on this issuance of dollars and I want
to say something here too
again inflation is legal counterfeiting
counterfeiting is Criminal inflation the
only thing you can do with printing
money is violate the property of others
you cannot issue any Equitable benefit
to an economic system whatsoever it's
not possible
so it's
I can't emphasize this point enough that
it is everywhere
and always only theft that is the only
thing printing money can do so any
economy that has a central bank which is
every economy has an institution an
anti-capitalistic institution of theft
integrated into its core
and that is the source of so much of the
psychological financial and moral
malaise I think we see in the world
okay so I I'm not saying this to play
Devil's Advocate I actually think this
either is something that you have an
answer for that I'm just unaware of or
I'm about to change your life I have no
idea where so one of the things
everyone's paranoid about deflation and
I'm just dumb enough that I was like why
would deflation ever be a problem that
means that my money gets more valuable
over time it has more buying power I'm
like that's amazing so but people get
really freaked out about that and you
hear economists talk about I'm actually
more worried about deflation than I am
inflation
so I was like well why would that be
true I think it was you that I heard
explain that in a deflationary
environment now people start hoarding
their money because they're like whoa
why would I spend this today if I wait a
week or a month or a year I can actually
buy more this is amazing and so they
stop spending and so then I was like
well hold on then inflation is a nudge
to get things moving and when I think
about all the amazing things that we've
built and created it requires people to
create and to buy and if you have
creation but no buying then creation
will stop and
if you have a deflating currency
people just the natural inclination is
to not spend I mean you'll buy what you
have to buy to stay alive but like even
when I think about my Bitcoin I'm like
well I'd rather hold it so
isn't it possible that it isn't a
Sinister desire to inflate the money
supply into Infinity that we create the
central bank but rather
I'm being generous but rather a desire
to know that there's going to be some
times where I have to nudge this a
little bit to keep the economy moving
and the economy moving meaning people
want to buy something because they know
oh my money they have again I'm stealing
from you here they have a a
non-intellectual understanding so it's a
visceral feeling of like I should spend
some of this money and get something
because holding it into the future isn't
all that is cracked up to be
so I'm buying things that cycle gets us
all the Innovation that we see now yeah
that is the standard Keynesian argument
all excited
um it turns out though that human beings
want to consume no matter what we have
to eat we have to have shelter we have
to have transportation clothing all of
this I don't need a new iPhone well the
argument has been that a little bit of
inflation is necessary to stoke an
economy otherwise people will not
consume and there will be no economy yep
but I don't think that water that
argument holds water at the outset is
how are you going to eat
power to the bare minimum there's no
doubt but when you like if you just
imagine a world where the currency holds
steady or deflates don't you think
that'd be a pretty different world maybe
better I think it's a great much better
world yes so today our debt Global debt
to GDP is like 350 percent so that's
saying we have 350 percent
in liabilities relative to about
um
a 100 so it's a
100 trillion dollars in global GDP
roughly 350 450 trillion dollars in
global debt
that is a consequence of currency being
debased because
in an instance
where units of currency are losing
purchasing power over time I'm
incentivized to borrow the stronger
dollars today and pay back the weaker
dollars over time right so there's this
incentive for accumulation of debt
that's one bad consequence of a Fiat
economy why is that
the accumulation of debt debt shrinks
people's time Horizon
so what you're doing is you're
disincentivizing saving
that accumulation of options against the
uncertainty of the future that we
discussed you're disincentivizing that I
now instead of
delaying gratification today and saving
for the future I now want to sell the
future and buy today that's effectively
what you're doing when you take on debt
it's an inversion of the principle of
delayed gratification
um and it increases economic volatility
significantly because what did you just
describe the guy getting liquidated in
front of the club once prices hit
certain liquidation points or margin
calls assets are forcibly sold so this
increases Market volatility increases
the misallocation of capital do you
think Michael Saylor is crazy
no you can use debt intelligently
because he's going ham dude like I'm
dead being my breath so if you can use
that intelligently is your argument that
just most people won't here's what
Michael Saylor is doing though he is
taking on debt where he has favorable
terms favorable
um repayment frequency duration Etc so
he's
borrowing the weak money
selling it to buy the strong money which
is Bitcoin and then he's paying back
weaker dollars over time subject to uh
parameters that are favorable for him in
his business right he has strong balance
sheet all of these things that's the
smart use of debt but notice what he's
doing this is gresham's law by the way
gresham's law said that bad money tends
to drive good money out of circulation
and what he meant by that is in an
economy where say dollars pesos and
Bitcoin are circulating people are going
to spend the pesos first
assuming that's weaker than the dollar
in this example the Dollar's second and
they're going to hoard the Bitcoin
because the Bitcoin has a limited Supply
so when bad money circulates people that
tactile knowledge of their economic
reality they tend to hoard the thing
that can't be printed or is not being
debased the same is true when we used to
clip coins Emperors used to clip coins
and one would have say 100 silver
content they'd do another issuance that
had maybe 90 silver 80 silver and so on
but they all had the same face value
this is where Gresham actually developed
his law so they were legally circulating
with the same face value but people
being smart they hoarded the ones with
more precious metal content and spent
the ones with less
so that um hopefully points to how
things actually monetize and demonetize
this is why gold became money right
people wanted to hoard the thing that
was difficult to inflate or counterfeit
and spend the weaker monies and it turns
out gold historically is the most
difficult commodity to inflate or
counterfeit the supply of we can't
actually counterfeit the supply of it
not economically at least so
that's why it became the premier store
value I chose to hold the asset
I being one economic actor across the
whole history of economic actors people
zeroing in on this reality that there's
only one asset that can uh most
predictably hold its Supply across time
which is to say it is the best store of
value Asset available to them
this is the process of monetization and
demonetization that we've seen play out
across history
okay so I have a base assumption and my
base assumption is I think very clearly
different than yours but I'd love you to
State exactly where yours is so my base
assumption is that if you are holding a
current the value of a currency study or
you are deflating it that you will or
you're not holding decrease Innovation
or decreasing the value it's the supply
values determined Always by the market
the impact going back to your pizza
example though if if the size of the
pizza stays the same but only so much of
it is allocated to me but if my slice
gets bigger over time I would rather not
eat it now I'd rather wait until the
slice is really big and can feed me even
though it's not I'm not increasing the
size of the pizza but my allocation of
that pizza is growing larger that would
be to use the analogy of deflation tie
it to the pizza example that's where
we'd be well in that instance though you
would be a shareholder of a central bank
if the slice of your pizza is growing or
one of the first recipients why is that
true take Bitcoin Bitcoin Pizza is the
global Capital stock and so the slices
are basically and this is an analogy
obviously yeah the slices are the
representational option people have on
that stock
so you have one pizza which is all the
stuff in the world yep and we slice it
up into uh a net worth right that what
is the value of This Global Capital
stock now who owns Which slice
now if we start printing money we
basically start creating new slices that
are crowding out the other ones yep
whoever gets those new slices first is
stealing from those the holders of the
the previous slices
okay so I think there may be uh the
analogy might be breaking a little bit
so if if the pizza is the capital
technically the the money supply is what
I'm using to buy a piece of the pizza
and so as the you inflate the money the
size of pizza slice that I can buy is
actually smaller
so
as you
deflate the money yes now it takes less
to buy a bigger slice of the capital
right because the capital isn't
inflating or deflating the what exists
to buy is remaining constant
so now just to take it off the analogy
and just talk like direct so Bitcoin I
think you would agree with this I view
Bitcoin as a deflating currency fix
Supply
correct but as more people want it its
value is going to go up which if that is
true then the longer I hold it the more
pizza that same single Bitcoin will buy
exactly so that has changed my behavior
I think of dollars as like whatever like
spend it but when I have a Bitcoin I'm
like I don't want to mess with it this
is time preference yeah I want to hold
it so
because of that my base assumption is
that if you have a deflating currency
that thusly buys you more over time
it's so counterintuitive because
deflating makes it sound like it's bad
it's getting smaller but it's actually
growing more powerful exactly it's
buying me monetary dilution as inflation
and monetary enrichment as deflation
yeah the inflation deflation is a
Keynesian euphemism actually to sell the
idea of infections well played because
my brain is having a very hard time okay
so my Bitcoin is growing in purchasing
power over time and that has already
changed my behavior so I know that it's
going to change more people's behavior
my base assumption is that will cause a
decrease in Innovation because people
are like dude your iPhone is cool but
like uh I'd really rather wait and see
what my growing powered Bitcoin that's
the leap I want to challenge right there
where we say less we say more saving
equates to less Innovation I think it's
the exact Ops
why the the nature of saving itself is
that we are delaying present consumption
and looking further into the future and
engaging in longer term production
processes yep now the austrians describe
this as the more round about the
production process which is equivalent
to saying the more finely we engage in
the division of labor so you have one
long production process to produce a
thing the more finely we chop that up
amongst ourselves the more productive we
become
so that
um
effort that impetus to push into longer
production processes that are more more
roundabout and more finely divided that
is innovation that is how we we become
more than some of our parts we
accomplish great it doesn't feel true to
me
when I that's it there's you actually
think inflation drives Innovation can I
give anything
uh well so I'll tell you why I think
inflation and look trust me when I say I
am at the edge of I am thinking through
this in real time so this is not me
saying I believe this but this feels
right to me so when I think about what
gets people to innovate it is if I bust
my ass and I come up with something
better than other people I get more
value from people in a very fair
exchange where they think they're taking
advantage of me because they'd rather
have this thing that I've created than
they would they want the money as do you
have them exactly and so I'm like this
is amazing so now where what we get into
is right now with an inflating currency
people have just a sense of like oh this
money is it's it's inconsequential it it
God this is going to sound stupid but a
dollar is only worth a dollar whereas a
Bitcoin to me feels very precious it's
like this gets becomes two dollars three
dollars ten dollars a hundred so now I'm
like uh I don't really want to spend
this okay because of that I don't have
the ease of like buying that I would so
now my evaluation of the thing that
you've created I'm way more scrutinous
so I mean maybe just raises the bar on
Innovation but it it I think you're
saying it feels like it turn to Value
investing perhaps
so
for a long time
people would only invest in projects
that created real economic value right
and if your money is holding purchasing
power over time that's a good bar
you could think about it like this
imagine we're on a world run by Bitcoin
so there's one hard money fixed Supply
everyone uses it in the world
every successful economic project every
entrepreneur every Innovation that
successfully increases productivity
that accretes to the purchasing power of
everyone's money
so
in a world where your money's constantly
losing purchasing power that is not
happening so you get more junk I guess
there's more of a there's there's
actually
the incentive and this is related more
directly to the violation of property
but there is an increased incentive to
consume rather than invest the more
rapidly you you violate property rights
and the more that it's permanent rather
than intermittent so if I know the high
degree of certainty that you keep 20 of
whatever that I make then I have a 20
less incentive to engage in investment
rather than consumption activities
and again that's what we're doing when
we print money we're actually inducing
or incentivizing consumption actions
over investment actions and investment
actions are what Drive Innovation it's
savings that underpin Investments
investments in that long-term production
structure I I suggested there's also r d
in their experimentation right we're
trying new things that is what creates
innovation in the real world
so if anything The Innovation that we've
seen in the 20th century has been in
spite of Central Banking not because of
it but it gets very murky here because
it's very easy
you could swap someone else into the
seat right now some Keynes and
economists and they'll give you a
completely different interpretation of
economic history right they can go
through the historical facts and Trace
their own Arrow of causality and say
here's what happened and we're back to
Copernicus back to Copernicus but here's
what the the libertarian philosophers
did they said you can't mistake economic
history for actual economics economics
is more of a rationalistic science you
you have axioms man must act man prefers
present satisfaction to later
satisfaction all other things being
equal like these axioms it's like
geometry I so I didn't understand why
can't I take economic history as
economics if you take economic history
you can because that's actually happened
so you're saying you can't take the
impetation of Economics social science
right you cannot mathematize economics
in the same ways you cannot mathematize
psychology
I can't sit here and tell you the reason
you're doing this is because there was a
linear chain of causality
and if we repeated this experiment again
the economic experiment would unfold in
the same way it's not possible because
it's just too complicated
there's no constants in Human Action
right so we know water freezes at zero
degrees Celsius and that's a constant we
can build a framework of knowledge
around that there are no constants in
human action
constantly changing it's all all these
psychologies interlinked into the market
process so we're going to derail on this
but I'm just going to plant the flag to
say I think there will be a day where we
actually realize that human interactions
are completely predictable Free Will is
a total myth
but that doesn't help us now that could
be a pretty bleak day
I don't find it Bleak because the
experience will never feel like that
but that's going to completely derail us
because right now I don't Free Will is
seems to just be provably an illusion
so we will definitely get derailed on
this
side yes if um
all right so instead of derailing on
that let's so this Copernicus idea of we
have a theory the theory is going to
completely shape how we interpret things
and definitely how we act so what is the
I call that a frame of reference frame
of reference is everything it is the
distorted mirror that we perceive
reality from and to your point it's
individual so everybody's got a frame of
reference it's going to dictate how they
think about what they see and that will
actually impact how they feel which will
impact what they do
what is the so are the the two using my
language frames of reference that we're
thinking about here the Keynesian model
versus the Austrian
let's talk about a very fundamental
Theory
which is the theory of the individual
now this is something that we take for
granted today we assume that you're an
individual I'm an individual we're all
freely interacting um
but in ancient times it wasn't this way
actually it was the family that was
considered to be the primary social unit
they call it the uh paterna families
and everyone was basically perceived as
a unit in that family that you you
served
the ends of that family uh it was
religious in nature this was
in ancient Rome it was the religion
it was uh the family and it was property
so we're talking about ancient people
that said on one piece of land
generation after generation the present
living family took care of the ancestors
right they worshiped the ancestors they
used to burn a hearth there was a fire
that every family maintained on an altar
and the first thing they did every time
they would wake up in the morning is
stoke the Flames of that fire and so
that was to symbolize their property
interest in that land that carried
forward from their ancestors into the
present day and if that fire were
extinguished that work that was
considered to be an
equal symbolic expression of the family
being extinguished so the whole primary
imagined social unit of the world was
the family the individual did not even
exist
now this is hard to imagine it didn't
exist or it just wasn't the primary way
that you thought of this is very hard to
talk about because what I'm saying and
often we're talking about money is the
same thing you're trying to describe
water to a fish that's never broken the
surface
how much of our cultural programming do
we inherit from our parents from our
existence from our cultural heritage in
this world
yeah but let me ask you one question
because I get where you're going and I
can collectivists versus individualistic
societies has real uh real world impact
so I know there is a thing where you
would feel that me as an individual is
very much embedded in a collective and I
have to be thoughtful about that but
nobody would be confused if I poke you
and it hurts it's not like that person
would not be able to distinguish between
you getting poked and me getting I'm not
going there so let me try to prevent the
sidebar let's just say this the
individual did not exist as an economic
or a socioeconomic conception okay it
doesn't mean that you couldn't poke
someone and they're like hey man don't
poke me right a socioeconomic exception
of the individual did not exist one of
the family did it was all centered
around the family and then families
eventually Stitch themselves together
into tribes and Clans and ultimately
nation states and that had a lot to do
with the unification of religion
but the individual is something that we
invented
we invented this the individual as an
economics as an economic actor okay and
from the individual economic actor that
came post-christ it was with Christ
and Paul's analysis of Christ and the
moral equality of men that we developed
the conception of the individual and
from the individual we extrapolated that
into individual private property rights
so we moved from a world where the
family had exclusive property interest
in the land it was also non-transferable
they weren't selling this stuff they
were just having dominion over it I
really think if anything it was like
territoriality like animals or
territorial over specific uh pieces of
land we were basically territory animals
right we were trying to survive the way
our ancestors did there wasn't much
Innovation occurring there surely wasn't
a lot of trade occurring and we had this
sort of primitive Society
but post-christ we invented as religion
was evolving we invented this conception
of the individual and I'm drawing on a
book here by that title inventing the
individual if you want to do a deep dive
on it explains it in depth but to gloss
over a little bit let's just say that
with Christ
came this idea of the equality of souls
that everyone had an equal Soul or a
moral equality if you will
and with that notion came
the 1215 Magna Carta life liberty and
property that we had this conception of
individual property rights so that you
as an individual now can stake a
transferable claim on assets in the
world
and that is what led to capitalism
proper right so we have individualized
property or we have socialized property
and I think the degree to which we print
money of the degree to which we have
government interference we are
socializing property and this is
causing people to consume rather than
invest it also causes people to
misallocate Capital because of the
tragedy of the commons no because again
if you keep 20 of everything that I make
right that's a socialized property right
you're taxing me yeah but why would that
sketch me out if this is an invention
yeah it reduces my incentive to invest
if I can only keep 80 of what I earn I
have a reduced incentive to invest
have you heard Ray dalio's take on this
so he talks about China as a
collectivist culture and he's like look
you can rail against them and think that
they're crazy but they think that we're
crazy and dealing at the individual
level and any one individual thinking
whoa you can't tread on me I'm an
individual whereas they're like you're
out of your mind like you live as a part
of the collective and if killing you is
better for the collective than kill you
we must and while admittedly those words
I'm putting in radelio's mouth his whole
thing is I know that you look at China
and you judge them and think that
they're crazy but just know that they
feel exactly the same in the opposite
direction so what I'm trying to figure
out is when I look at if being a part of
the collective makes me less likely to
invest the only way I can wrap my head
around that is if it's the same thing as
a tragedy of the commas I don't want the
collective to be able to take things
from me therefore I'm going to do
something with it spend it in this case
not invest it just so that I could reap
the immediate benefits of that and the
Collective Now doesn't have anything
that they can take from me if that isn't
it I don't unders stand where you're
going I don't think it's a matter of
being part of the collective or not part
of the collective that's not what I'm
saying what I'm saying is is the
Integrity of your property interest and
let me specify what property is
the exclusive power to control an asset
right you get to say what happens with
your cup no one else gets to say what
happens with your car the prior to
Christ that didn't exist that is
property right well it existed between
the family and the land yep and it was
not exactly transferable now there was
trade occurring between families and
among Clans and whatnot but we didn't
have this
established legally protected morally
protected notion of the individual's
right to own property and transfer and
trade with others
so I'm not saying that this is
participating with a collective or not
participating with the collective it's
about Justice it's about people keeping
what they earn the value that they
create this is the entire premise of
libertarian philosophy
and so
pre-christ we didn't have that atomized
individual as an autonomous
socioeconomic actor did not exist
post-christ it comes and comes into
being right 1215 years later we signed
the King John signs the Magna Carta life
liberty and viable property you started
when I asked about the the copernicanian
that's right we're gonna take these two
frames of reference and so I'm tracking
that I've got the individual frame of
reference and I've got the Socialist I
think the frame of reference
yes yes tracking so far yes okay so what
I care about in there is what behavior
is elicited when you take that frame of
reference right so you could think of
the individual the fact that we sit here
right now you have bank accounts you
have assets you can sell those in the
marketplace with other cell phone people
that also have accounts and assets we
take all that for granted yep but it's
premised on private property rights
which is premised on the socioeconomic
conception of the individual now again
we take all this for granted so we it's
hard to even talk about
but when you get to that you get to
private property rights you've now
entered a world where we have higher
intensity exchange occurring right more
people are trading more stuff
because more people have a greater
incentive in the assets that they own
they know that it's not being socialized
away from them now this is obviously
true more in the western world than it
is in many other parts of the world but
I would argue that's the reason the West
has been such a successful economic
story
because the reason we've become so
wealthy is because we've engaged in
higher intensity exchange and had a
deeper division of labor and all of this
is premised on this you could think of
this as live action role-playing we are
pretending
that individual private property rights
exist all the time and we don't even
know it we know it when we give our keys
to the valet and just assume the guy is
going to give our car back right like we
have a legal structure in place there's
ownership documents between you and that
car
all of these things we sort of take for
granted that are just embedded in in how
we actually act so this is an enacted
Theory right we we observe
the sun rising and falling
and we reinterpret the data when we look
at it
what I'm trying to say is this
live-action role-playing this imaginal
structure this is different than
imaginary imaginary is like you bring a
pink elephant to mind imagine all is a
little kid tying the blanket around
their neck picking up a stick and
pretending to be Zorro okay we're all
doing imaginal all the time you are the
CEO of impact Theory or whatever it is
that's an imaginal role these people
that listen to you what you have to say
those are imaginal roles too
these imaginal roles that we take on
change how we relate to the real world
so the invention of private property
rights leads to capitalism
first of all led to the Magna Carta
which was a precursor to the U.S
Constitution
we have life liberty and pursuit of
happiness instead of inviolable property
and this has created the economic
division of labor and the capitalism we
see in the world today the wealth we
have created The Innovation
all of these things are born from this
imaginal conception of the individual as
a single autonomous economic actor and
I'm trying to say this because I think
it's very important that we are human
beings we're running a lot of software
it's stacked and a lot of it we take for
granted so
when I read the book inventing the
individual that blew my mind the idea
that the individual actually did not
exist at one point and then when we
invented it we created real Economic
Consequences in the world that is very
mind-blowing now I want to State why I
think that you're bringing this up when
I'm trying to figure out one embedded in
the context of what should people do
with their money and what ought the
money system be here's the prediction
that I think what you're telling me
makes about your world view that it was
sub-optimal to
think in a more collectivist way it was
far more optimal to invent the idea of
the individual even though it's imaginal
and from that comes the idea of
individual property the Magna Carta even
to some extent the American Democratic
experiment which is something I want to
get into and so these things are a
progression we're getting better which I
think you would Define as
by owning my property richer is going to
confuse people I've heard you go down
that path Before Christmas need to
Define it but even wealth is confusing
like when I tell people that my goal
used to be to get wealthy I'm like God I
know what they're hearing so I know what
you mean by that like
anyway I won't derail us on that because
even trying to put words was very
difficult but I'm with you spiritually
but I want to keep going on this so we
invent the individual it's better than
where we started because of this idea of
individual property rights which gives
us the incentive to invest our energies
into a highly specific way being an
architect making shoes running a media
company in my case whatever we get
highly specialized the whole world gets
to take advantage of all these people
doing highly specialized things
to a freakish degree when I think about
my the level of my ambition it's it
borders on pathology but I find that
utterly fascinating that nature has
created that I've tried to turn it off I
don't want to it's way more fun when I
have this wild ambition and ah more
bigger better do things cool what is up
my friend Tom bilyu here and I have a
big question to ask you how would you
rate your level of personal discipline
on a scale of one to ten if your answer
is anything less than a 10 I've got
something cool for you and let me tell
you right now discipline by its very
nature means compelling yourself to do
difficult things that are stressful
boring which is what kills most people
or possibly scary or even painful now
here is the thing achieving huge goals
and stretching to reach your potential
requires you to do those challenging
stressful things and to stick with them
even when it gets boring and it will get
boring building your levels of personal
discipline is not easy but let me tell
you it pays off in fact I will tell you
you're never going to achieve anything
meaningful unless you develop this all
right I've just released a class from
Impact Theory university called how to
build Ironclad discipline that teaches
you the process of building yourself up
in this area so that you can push
yourself to do the hard things that
greatness is going to require of you
right click the link on the screen
register for this class right now and
let's get to work I will see you inside
this Workshop from Impact Theory
University until then my friends be
legendary peace out
by having individual property rights we
get to harness that internal engine that
people like me you and gazillions of
other people have to create and we're
incentivized we get an echo back from
the world of wealth where I have more
optionality maybe is a good way to
explain wealth of access to things that
matter to me at a uh hierarchy of needs
level I can have a warm house food in my
belly certainty of food in my belly
tomorrow certainty of roof over my head
tomorrow all that so we're we're making
progress and now again prediction of
what I think you're trying to convey is
that as you revert through the modern
monetary systems the Keynesian economics
of hey let me inflate the money supply
to keep things moving I know Tom thinks
that a little bit of inflation is good
because it creates innovation in fact
he's moronic because it's moving us back
to this pre-individual I like to speak
in very aggressive language it's moving
us back to this
pre-individualistic place where people
are going to invest less they're going
to specialize less they we're going to
be less able to capitalize harness their
ambition because they don't get back
from the world the keepable fruits of
their labor yes how did I do you did
pretty well you're not moronic though
you have just been an alternative
hundreds of millions of us have been
myself included before getting into
Bitcoin and all this stuff
there is a reason there is a
pseudoscience called Keynesian economics
that's infiltrated all modern
universities funded by central banks and
its exclusive purpose is to justify the
printing of money and the legal Monopoly
right it's it's a very perverse cycle
because you get a system that can steal
funds from people and then you use the
stolen funds to fund University
curricula confused it steals buying
power purchasing power
that's the only Power that really
matters yeah but I think people get lost
in that because they're like nobody's
stealing money from me I deposited a
hundred dollars I still have a hundred
dollars well the price of beef has gone
up 50 in the past 24 months so if you're
a Beefeater you've been stolen from by
50 and it's easy to get people to
understand taxes theft it it's more
complex but anyway as long as we're in
agreement that they're stealing via
buying power stealing purchasing power
that's right so
you are correct however I would like to
take it
a step further because what we're saying
here is that when we print money again
that's the point I cannot over emphasize
you are only violating individual
private property rights you are
disturbing my power to control the
assets that I otherwise could right and
this comes in the form of price
inflation right if I'm a stake eater and
I've saved up to buy two years of stake
and the price of State goes up forty
percent because the Central Bank printed
money well they've stolen stake from me
effectively right or a house which is
something a lot of people insert your
favorite asset here I'm just picking
steak because I'm a steak here
um so that is all well and good it's
incentivizing all the negative things
you highlighted right over consumption
rather than investment over utilization
of assets rather than preservation of
capital because
I there's a deeper reason there but
let's just leave it at that and then
misallocation of capital so
because governments suck at using my
money yeah it disturbs What's called the
price signal so you basically think that
the configuration of consumer
preferences is always changing in the
world people always want different stuff
all the time the production structure is
constantly trying to adapt and map on to
that new configuration of consumer
wishes right it's trying to satisfy
consumer wants or consumer wishes
the degree to which you socialize
property or violate property or steal it
inhibits the ability of the production
structure to adapt so you get
misallocation of capital uh this leads
to a lot of waste and stuff in the world
but as bad as all those things are
the point that I really find deeply
fascinating and whose work I'm drawing
on here is it's a book titled a theory
of socialism and capitalism by Hopi
it's a very dense book but
um it is deduced right he's deduced this
isn't an observation of economic history
in Reading someone's opinion these are
deductions from economic axioms so it's
hard to read but the insights you gain
are extremely powerful there's a fourth
consequence
to the violation of private property or
the socialization of property
and that is that
you have now stopped the degree to which
you're violating property is the degree
to which you are not rewarding
productive members of society
and you are rewarding political actors
in society
people that are and I've said this
before the legislators pen cannot create
wealth it can only reallocate wealth
so the degree to which a legislator can
become wealthy at the stroke of a
proverbial pin which is the passing of
laws policy Etc
there is an incentive to shift from a
productive role in society to this
non-productive extractive role
and the degree to which that becomes
larger is the degree to which more
people are drawn into non-productive
roles
so
what you're saying is there's a
non-producer right we're rewarding
non-productive activities when we print
money or when we confiscate property
in any way so
the thing that I'm fascinated with here
is this money being such a fundamental
technology to human Affairs it's used to
hide the widest spread violation of
private property rights we've ever seen
through this Global concerted action of
central banks or semi-concerted action
they're all inflating their currencies
people that are on the ground saving or
being taxed through this scheme
we are effectively through the
corruption of this economic fabric we
call money we're actually corrupting our
own individual character development
that now people coming into the world
that might otherwise be a baker or an
engineer or some productive activity
might instead choose to go over here and
be a a Statesman or a politician or some
other extractive role and the degree to
which we're violating property in that
monetary system is the degree to which
they're incentivized to take on
political roles rather than productive
roles such that the corruption of this
technology that's so fundamental to our
human being
leads to the corruption of our character
and the corruption of who we are it's
like a breakdown or corrosion of the
moral composition of society
through the debasement of currency and
the violation of property
that's what I'm deeply fascinated by and
hopefully
talking about and helping spread
awareness about to prevent
okay so then I think we're gonna have to
get into axioms so as axioms were
something that I came to understand very
very late I will give people a very
quick primer an axiom is the base the
farthest down that you can take
something and there's nothing more below
that so
species something like that it's a base
thing and now from there everything is
going to make sense parallel lines never
touch
that's an axiom of euclidean geometry
there we go okay so getting into the
axioms of what ought to be you say you
should you try not to [ __ ] all over
people but you obviously have a sense of
how things ought to be at least as it
relates to money
um
what are your axioms on how the world
ought to be these are not my axioms
um I could just name a few from
libertarian philosophy now if you ask
why why would you say they're not yours
well
I'll name a few that I've read from
libertarian philosophers they're not
mine you're just saying you didn't think
of them I didn't originate them sure for
sure but I want to know what what do you
think is the the whatever number I'm
going to give you the basic answer like
what I think actually are economic
axioms and then I'll give you
the natural law ought answer which is
more of a Moral Moral Axiom if you will
uh I can't name all the the Austrian
economic ones but man must act as the
most fundamental so
this is to say action is the purpose
purpose of use of means to attain ends
that's what we're doing all the time
right you think about what you're going
to do with your day you decide you're
going to need pants to go out in public
well pants become a means to the end of
going out in public right you need some
food that's a means to the end of going
to do the next thing you're doing we're
constantly selecting valued ends and
then choosing means to get to that end
one of the biggest breakthroughs in my
life of understanding humans was when I
read from a biologist humans are an
active species yes I was like oh damn
like so I'm with you as an axiom to
understand people you mustn't will never
adjust it still and and I tweeted this
today actually inaction is an
impossibility
to choose to not act is an action you
have decided that given all of the
possible things you could do in the
world you'd rather just sit here that is
means to a certain end maybe I want to
meditate it's just sitting here could be
a means to the end of meditation but you
cannot not develop a purpose and select
means to pursue ends you can't do it as
a human as a living conscious human
being you can't do it
that's one
act that is the Axiom really of Austrian
economics those other ones like
Man prefers present satisfaction to
later satisfaction so all else being
equal I want to get paid now rather than
later if you want me to part with my
Capital well then you're going to pay me
something you're going to pay me an
interest rate and the degree of that
interest rate is how much I'll be
charging you for that time essentially
of Separation
um
theft always reduces productivity this
is another one taxation is theft so
anywhere that theft is occurring it's
reducing and disincentivizing further
productivity
that's an axiom because if you're
creating
a hundred bushels of apples and
someone's stealing 10 percent of them
well then your productivity has been cut
by 10 percent and
their satisfaction came at the expense
of your satisfaction so the net
satisfaction in the world has not
increased for instance
uh I'll leave it at three I want to give
you the moral one though you asked me
what I think we ought to do
and this is
singularly crystallized in natural law
and it says you can basically collapse
all the things all the Commandments and
everything else into one
which is do not steal
now you might say well what about murder
uh well if you consider that
through this property lens that you own
your body
the relationship you have with your body
the exclusive power to control your body
that no one else has this is the most
fundamental property relationship so if
someone kills you then they've basically
stolen your life in this natural law
sense
um if someone puts you in jail right
then they've taken your freedom to move
about they've stolen your Liberty right
they've taken away your ability to move
about so there's you don't want to steal
that either and then when it comes to
property you know all of the assets that
you've just acquired in the world that
you've worked to obtain or that you've
traded with others that have also
acquired them justly
this is again just Lee being the key
word you want people that didn't take
from others because that caused someone
dissatisfaction
they earned their satisfaction of
getting the thing
at the expense of someone's
dissatisfaction that's a net negative on
the world whereas if we trade
consensually as you intuited earlier
earlier
you assume what I have you want what I
have more than what you have otherwise
you wouldn't do the trade and I want the
same I want what you have more than what
I'm giving up
it's that's the inequality of exchange
that occurs where we both leave
psychically better off
we're at least better off in our own
mind otherwise we would have never done
the trade so the degree to which all
exchange is consensual is the degrees
which we increase net satisfaction in
the world so if you just get to do not
steal which means don't print money
don't tax don't actually steal or
confiscate things I think that is the in
my view the ultimate ought in the world
it's very clear
um I don't know that this will be
fruitful but I'm super curious I don't
know the 10 amendments off by heart but
I think there's don't covet thy
neighbor's wife and love put no God
before me or something like that dude
are those workable into that or do they
become a different category of thought
you know I don't feel qualified to
answer that actually very fair religion
is actually one of the things I hoped
that we would have time to talk about
today though I don't feel like we're
there yet
so I want to say one more thing though
so
again check out the book tell me if I'm
right or wrong my interpretation of it
is Christ is essential to the invention
of the socioeconomic conception of the
individual
I want to say something to say something
about this you can now strip out the
historicity of Christ doesn't matter if
he ever lived
you can strip out the theology doesn't
matter if it was God not God
Supernatural natural doesn't matter
I think we could all agree that it's at
least embedded in the social fabric at
this point right the collective
mythology of how we got to hear Christ
is a big figure in that story
and now if he was indeed necessary or
inspirational to the invention of the
individual and the individual led to
private property rights which led to
capitalism which led to Fang stocks
which led to bitcoin
then
all of a sudden you start to see the
importance of that imaginal reality we
talked about earlier you know Peterson
says this all the time we're living in
stories the first time he said that I'm
like what the [ __ ] is he talking about
of course we're living in stories
everything's like a narrated sequence of
events but that's not I don't think
that's what he or the people that
inspired him like Carl Young and others
think they think more like this that we
inhabit mythologies right we're doing
this live-action role-playing called
private property rights because of this
story we have beneath the economic
substructure called judeo-christian
mythology or religion whatever you want
to call it so
I say this because I was turned off to
religion a lot I grew up Southern
Baptist and I became turned away from it
as I became older and more well studied
so I thought but now I've returned in a
very fascinating way it's like wow you
we have to have these stories to exist
we have to inhabit them
and we're currently inhabiting one and
it doesn't matter again you take out the
histrosity take out the Theology of
Christ it's still fundamental to get to
these things to get to capitalism to get
to Fang stocks to get to bitcoin so
there's very pragmatic real world
consequences right we're changing our
relationship with each other in the
world that's creating modernity based on
this live-action imaginal role-playing
we're doing through mythology that's
what I'm like
struggling to articulate but very tuned
into right now
in a very uh I don't know that it's a
similar way but in a similar vein I have
been thinking a lot about what I call
the god-shaped hole in the human psyche
so I don't know I I haven't thought
through this so I'm thinking out loud
and thank you for indulging me uh that
there is something in the human psyche
where we have to believe that the story
is true and we have to be serving
something bigger than ourselves and what
I will round to Magic
really does something to people it makes
them feel something so the the state
seems to be taking on a new role that
fills that that it's this magical thing
that's going to make all of your
problems go away I'm very intrigued by
people growing up now that really
resonate with that
uh religion obviously for hundreds maybe
thousands maybe tens of thousands of
years filled that role there was some
deity that you could pray to
they were Grand and magical and and I
don't know if we're programmed for
Wonder and awe and that's how we combine
that with our need to make sense of
things to have a story that acts as an
organizing principle but even when I
think about running a company and this
is going to be controversial but I don't
mean it to be as I really think about
what my job is as a CEO one of them is
to give people Something to Believe In
part of it is to be someone they can
believe in that
and and I've had to confront this
because my I'm very
um introverted
and so my instinct is always to pull
back and to collapse inside of my own
mind and like today I was getting my
hair cut
and at first I was just listening to you
uh in podcasts but then we get to the
point where I have to take my headphones
out and at that point I literally just
closed my eyes and I fall inside of my
own imagination and I find that as close
to space travel as I'm going to get in
my lifetime
and so as I fall inside of myself I will
then create too much distance between
myself and my team
and so I've had to be like whoa like
what something bad happens when I do
that and so how do I re-engage why do I
have to re-engage what am I doing what
am I providing in that moment and my
hypothesis is that I'm turning the
company's Mission into meaning and
purpose into that bigger story that
they're able to live inside of that
gives them a Sprinkle of magic that
allows them to give so much their
productivity one of my employees was
like dude I'm giving you my Prime uh
earning years and it was like he needed
to know it mattered and I was like wow
like that's a really powerful statement
so to me it's the same conversation it
has taken the guise of religion it plays
out in all of these
structures the useful fictions Noah
Yuval Harare is somebody you've all know
a Harare my apologies you fall uh is
somebody that speaks this really
interestingly that that becomes the very
thing that makes humans the most
dominant apex predator of the world has
ever seen the ability to group up in
very large but flexible groups but we do
it through these stories and so
my I am very intrigued I actually
considered making this interview me
reading
um
responses to tweets from people that
have such a different frame of reference
to me that they sound crazy and just
like getting your take uh so tied to
this I'm going to ask you one question
which is is very much a lead into this
idea which I I see a frame of reference
taking hold of people that scares me
because I think it's going to break
the thing that makes
Society work
and until you I always saw it in the
following loop I think you have way more
Fidelity so I think it's more
interesting to talk in your terms but
I'll give people the loop I thought of
previously
that uh strong men make easy times easy
times make weak men weak men make Hard
Times Hard Times make strong men and you
get in this Loop
it's catchy and it's easy to remember
but it doesn't have the Fidelity of
where you're going this question that
I'm going to ask is going to seem
perhaps unrelated but it's everything to
me are rich people evil
because that's the narrative that that's
the world view that people are taking
and I think now using your level of
fidelity what I see that breaks the
reason it becomes hard times is they
break the the individual property rights
yes and then Society begins to break
down because there's something
fundamental to my need to be able to
control my destiny and when I can't do
that Darkness ensues because I will try
to do that and to get me to fall in line
you will have to violently oppress me
yes and when you violently oppress me to
get me to what I actually think they
have something beautiful in mind that
they want to do they really want to help
people but to get everyone to stop being
an individual takes an obscene amount of
punishment
so that was a great lead-in and that was
not the question I was expecting
whatsoever
um I'd like to First
okay my first answer would be no but I
want to be more specific so
ja Nixon oh yeah the line between good
and evil cuts down the heart of every
man
it is my assertion
I'm sure there's a lot of factors that
move that line in people but when I look
at history I see material incentives as
being the strongest force moving that
line around when people are compensated
to do something they're much more likely
to do that something regardless of
regardless of its moral qualities let's
say
so
and again as well I always talk about
property it's like the less viable we
can make property you can remove that
option entirely I always talk about
making versus taking right making being
the entrepreneurial path trade hard work
delayed gratification that's one way to
acquire wealth
the other way the political way of just
taking whatever the makers made right
you just steal it from them
the degree to which we can make taking
more expensive or less possible which is
saying the same thing is the degree to
which we shift that moral composition or
ethical or uh pragmatic composition of
society what people are actually doing
everyone's trying to get more wealthy
all the time it's natural right you want
to live in a bigger place you want to
eat nicer food you want to have more
freedom this is very natural it's
nothing to be ashamed of
the means by which you acquire that is
something to be ashamed of though if
you're taking it from someone you should
be ashamed because you did not create
that value you stole it from someone
the more we can make this an
impossibility the more we can have
people engage in the making
path
and this is where we talk about Bitcoin
being so important because Bitcoin is in
my opinion the most expensive form of
property to violate in human history
borderline is not impossible if you
custody it properly and you maintain all
your protocols there's not really a
feasible way to take it
that makes tyranny less profitable let's
say
so when I see good and evil the Ebbs and
flows of Good and Evil in the world it
is occurring in everyone's heart and if
you don't admit that then you're not
being honest with yourself right we all
have the capability to be evil or do
dark things we've probably all done some
dark things maybe there's some
exceptions out there I know I'm not one
of them
we cannot change human nature so far as
I know but we can change the incentive
structures we inhabit and we can make
property more expensive to violate and
by doing so we can shift the moral
composition of society so no rich people
are not evil and like you said earlier
um
to elaborate on red like okay
I guess it's sort of rooted in that
Axiom that man prefers present
satisfaction to later satisfaction
that's almost like saying you'd re you
just given the options between rich and
poverty which one do you choose all else
being equal
I hope everyone's saying rich I mean you
don't even have to use you could give it
all away right you could be rich and
then give it all away and still be back
in poverty but if you just chose poverty
you'd just be in poverty so
that uh
selection process that's occurring in
everyone's heart I think the the moving
the soldier knits and heart line
the most effective way we can do that is
to make property expensive to violate
that is the most important material
incentive
uh that we can move in the world and on
this this notion of religious impulse
and how we're attaching this to our
stories you are the unifying principle
of your organization
just like God is the unified principle
in the church
we do impute a religious value to these
hierarchies that we're in uh I think
because
all action is premised on faith we
talked about this in the last episode
you never know what's going to happen
right you can just
choose an end that you want to obtain
and then choose means and then try to
act towards it but you're constantly
messing up errors getting off course and
trying to get back on path right so
every action is an Act of Faith in a way
right you just have the faith that the
thing that you're trying to make happen
will happen and if it doesn't you'll
error correct
so there is this there's this religious
quality to all human hierarchies doesn't
make you a priest or anything but people
in your organization are going to look
up to you they're going to look hey I'm
giving you my best working years or
whatever the guy said to you
that's a real thing right he's on an act
of Faith betting that your company and
your mission and your ability to lead
and unify that organization will be an
adequate exchange a consensual exchange
of his working years for whatever you're
going to do for him like that's very
there's something to that and
ultimately in this division the
divisiveness between the rich and poor
and people getting upset and trying to
create class conflict I think it
obscures
the grandest truth on this little pill
blue dot is that we're one big family
all right we're all here we've all got
the same limited resources to deal with
the best thing we can do is
intelligently coordinate our action such
that
people are doing what their best at
specializing what they're best at
everyone's doing that and then we trade
with one another so that we enjoy the
best quality of everything that anyone
can do in the world right and we don't
have to be good at it so you can be
really good at running a media company
and you can still go to this restaurant
down here and eat the best sushi in the
world because he specialized at Sushi
and he can go home and enjoy your
YouTube channel because you specialize
at this that's the ideal World in my
opinion people living peaceably
specializing innovating not stealing
from each other and
you know
the religious piece I don't I don't know
I just I'm a guy that grew up in
Tennessee I consider myself an aspiring
disciple of Christ I don't know if that
means I'm religious or not but it gives
me
a lot of meaning in my life and gives me
something to
look someone to look up to someone to
try and imitate someone to try and and
make to lead you to be a stronger better
person right it's like a the highest
Consciousness you could imagine whether
it really happened or not it's in that
story and I can relate to that story I
can read that story every night I can
enact it in my life I can carry it into
my organization to be a better leader
better man better person so
I think that's where the world needs to
go
why are people so angry right now I
and admittedly a subset why is a subset
of people so upset
I want I think that there really is
something going on but I can't quite
tell what it is so one of the things you
hear is that the Boomers have trapped so
much wealth that they're staying in
positions too long organizations are
becoming corrupted
but if well like my parents are boomers
and don't feel trapped by them at all
um the system has worked for me so I'm
so confused by people's take on it
am I delusional so the the story that I
believe is accurate but it's certainly
the story that I tell myself
is I am an average person who has worked
my ass off to turn potential into skill
set I've deployed that skill set very
strategically in order to create value
for people and they wanted the things
that I've created more than they wanted
their money that allowed me to build
equity ice then sold that company and
was able to after many years of living
like I was broke finally able to capture
the value that I built into the company
um but when I hear the way people talk
about people that have generated wealth
it it's
they want people to pay tax on
um unrealized gains no matter how much
uh the wealthy paying tax like Elon Musk
has now paid uh in a single year more
tax than basically anybody in human
history not basically I think that's
actually a true statement but all the
responses are but it's not enough and
and so I can't relate to that mental
frame of reference but being generous
and assuming that there really is
something going that if I were a kid now
that I would have the same frame of
reference that they have
why what's happening
yeah
um
people are mad because they're victims
of the largest heist in human history
like especially if you're young right
now and you're living paycheck to
paycheck
especially over the past couple of years
the prices are soaring wages are flat
right this is the same story since 1971.
you know look at the charts always
recommend the website WTF happened
1971.com
WTF happened in 1971.com make sure I'm
saying that right all these charts shows
in 1971 there's a Divergence from
productivity and wages the working class
the lower middle and increasingly middle
and lower classes are being squeezed in
this false economic Paradigm that we
have with Keynesian economics because we
broke the peg to Gold well that enabled
the more rapid violation of private
property rights through monetary
inflation
and all of those that corrosion of
society the moral decomposition I
described I think it all follows from
that and people today don't understand
what's happening right again you don't
need to cognitively understand it helps
if you cognitively understand but you
just feel that you're getting scammed
and squeezed all the time right no
matter what you do nothing is working
even if there's no Mal intent behind it
when you repeatedly try an action and
reality does not respond the way you
want it to you are in the unknown right
you're in unexplored territory and
you're scrambling to get back to
something that makes sense where I can
do an action and get some semblance of
an expected response
youth are not getting that today right
they're going to work they're saving
their money prices keep going up too
fast they're still getting squeezed
they're moving back in with their
parents etc etc so
I think we're in the state early stages
of currency failure
and people that are on the wrong side of
the economic hierarchy in those
situations are feeling the pain they
can't necessarily properly attribute the
cause they don't know they don't
understand the nature of property and
money and all these things we're talking
about so what do they do
there they reduce to this barbarism of
class Consciousness right rich people
are evil these people are evil a lot of
it's pointed at the government I wish
more of it was pointed at the government
because that is the sole legal violator
of the do not steal dictum that I shared
earlier this is the only legal
Enterprise we have that generates all of
its revenues through theft
uh that's a big problem and
that is dangerous because we've done
that before right we did this with
Marxism that there was a
the problem was diagnosed that some
people were getting rich and some people
were getting poor right there was a
there was a corruption or malignancy in
the economic hierarchy but the Marxist
prescription was to abolish private
property
the exact wrong thing you want to do for
all the reasons we've described today
right you have no prices
all of the wealth then rolls up into
very few hands the state they own
everything
uh wealth creation collapses Mass
suffering Mass starvation genocide all
of these things come from that root in
my opinion
I think what we need to abolish is
Taxation and inflation and the central
bank
that would maximize the Integrity of
individual private property rights which
would remove this do not steal at least
the institutionalized element of do not
steal remove it from the world and
enable people to deal with each other on
consensual terms
right just like you wouldn't
the guy that's giving you his best
working years you wouldn't bang him over
the head to keep him here right like
coercion in that relationship is never
going to work long run even if you get
the guy to stay here and beat him over
the head with a wrench and say you're
going to work for me no matter what
he's not going to work so well for you
he's not going to work as hard for you
he's not going to work as smart for you
he's going to backstab you every chance
he gets
so if non-consensual exchange doesn't
work in that very simple bilateral
transaction why do we think it works
when we scale it up to the multiplicity
of the whole global economy
and yet we have that integrated into our
money today money that's supposed to be
this instrument of trust and trade and
integrity and optionality right there's
a lot of uncertainty in the world but I
know if I save my dollars like Grandma
told me I can protect myself against
that entropy we're destroying that we've
got no firm footing left in the world of
course people are going crazy
and I've written about this that I think
I had a guy on the show Matthias Desmond
he wrote the psychology of
totalitarianism on the phenomena of mass
psychosis
and he lays out a lot of very
intelligent reasons why we've had Mass
psychosis in the past and why he thinks
we're going through one again
but I shared with it I think the
violation of property is one of these
things
because if you sit down you know we
talked about this last time too to play
a game
poker for instance I always like poker
because I like to play poker and you
start changing the rules randomly every
few hands or changing the hand rankings
whatever
don't you think every play at the table
is going to go absolutely [ __ ] crazy
like you can't make sense to build a
strategy there's no play left it's just
noise and Madness
that's what we're doing in the world we
don't know how many dollars in our
existence we don't know how many will be
in existence we don't know who decides
we don't know who profits from their
production it's just a giant opaque
pyramid scheme that we all use as our
primary means of exchange and that I
think is
I don't want to say it's the only
problem in the world we have a lot of
problems but it seems like the biggest
one that I can hope to aim at
and it's really interesting that at
least as we break along political lines
in the U.S that half the people roughly
want more government bigger government
and if you're right and again I will
attribute only actually that's not true
I used to attribute only positive things
since I've started learning about
Nietzsche and the world of power I
realize oh wait there's actually
something else going on here
um but the idea that
the
I wouldn't say Mass psychosis but the
frame of reference that has way lower
utility
is that we need to abolish property
rights everything needs to go to the
government be redistributed
is the thing that will yield the exact
opposite of what they want Ubi but it
does feel like I get where they're
coming from and even somebody like Ray
dalio and I don't know what his thesis
is on how the taxation should change but
he has said himself like yes we need a
new tax policy we need to find a way to
better distribute the wealth
and I do wonder about this with Bitcoin
because the supply is finite
isn't it possible that Jeff Bezos just
ends up with all the Bitcoin or Michael
Saylor in this case like how do we
ensure that
the game of the libertarian philosophy
does not end up in the same pathology
that everything else ends up that's a
great question
well we know that at least from a
Libertarian perspective that it won't
because it's the stealing that's the
problem right but somebody can win the
game so well that everybody else is well
let's think let's think through it
though so any individual holder of
Bitcoin that has a very large
accumulation let's pick Satoshi he's got
a million Bitcoin supposedly no one
hasn't moved uh since the beginning of
Bitcoin
but that would be the largest single
holder if that is one individual and
if he holds that Bitcoin does that in
any way determine
his capacity to change the rules of the
Bitcoin Network
I'm asking the question I'm not sure why
because I know the answer the answer is
no so the greatest risk that a Satoshi
brings to bitcoin is Market risk so he
could go and start dumping his million
Bitcoin on the market right he could
suppress the price
um
you know who it depends on bitcoin's
market cap how he does it how long he
does it Etc how long that would persist
but the key point is that there's no way
to for him even him the creator of
Bitcoin the largest holder of Bitcoin
again we don't know who he is so he's
anonymous even that godhead individual
of Bitcoin cannot change the rules of
the system that he himself created
and that is the key point so Jeff Bezos
comes in and I don't know his net worth
or how much Bitcoin he could buy let's
say he could buy a million Bitcoin first
of all to do that you're going to bid
the price of Bitcoin up significantly
right so you're enriching
older holders they have larger
unrealized gains imputed into their
positions which is a larger incentive to
sell your Bitcoin for cash or goods or
services
and that's how
through these price Cycles Bitcoin has
tended to become more distributed into
more hands for that very reason right if
you bought it at a penny you're
incentive to sell at 100 bucks is
significant and at a thousand bucks it's
gargantuan right so people tend to be
selling it and buying it over time
Bezos comes in buys a million Bitcoin a
million in 1.1 million Bitcoin so now
he's he's uh super order Satoshi what's
his story well he's bit up the market
cap of Bitcoin significantly but can he
himself do anything to change the rules
of the game
no there's no amount of Bitcoin you can
buy to change the rules of the game
and there's a large
degree a large share of Bitcoin let's
say is held by people like me that won't
ever sell
so there's also that that you're always
up against not that it could ever affect
the rules anyways but you're never going
to have one guy owning 21 million
Bitcoin I guess would be the point
um and if you did
you'd be in a world with Free banking
where people would go out and start
their own bank and issue their own
currencies as a substitute
um and so that would be that alternate
reality but I just in a Libertarian
model so that presumes that there is no
government as we would recognize it
today well that controls the monetary
yeah I guess I was also assuming Bitcoin
had succeeded in that scenario and
somehow I think the question you're
getting is like what if happens if
someone gets all the Bitcoin yeah I'm
just trying to think through a
Libertarian scenario so what I don't
want to fall prey to is what I would
view as a fallacy of
everybody always says oh no no that
wasn't real communism or that wasn't
real socialism and if we just do it
right everything is going to be fine
like that that really is a dangerous way
to think and if yeah I really hope
people can stop themselves from that one
but I don't want to hear the same thing
on libertarianism like there's a reason
I think my base assumption there's a
reason that we don't have libertarianism
either because it you'll never be able
to walk that line is my guess and that
what ends up happening is you get strong
people that end up dominating and then
the weak people go [ __ ] that noise and
so they group up to take down the bully
and that grouping up is like whoa this
feels really good and so then you have
governments they start small good
intentions and they just pathologize
over time as they get bigger and bigger
and bigger but the pathologization is
expressed through taxation that is the
domination right the stealing the
stealing yep so
again from a practical engineering
perspective the only thing we can do
about that we can't change human nature
people are always going to steal if
that's an option available do you think
the make stealing more expensive yep
that's how you dissuade and remove
non-consensual exchange from the
economic fabric so that I think makes
the following prediction that the only
reason libertarianism has never truly
profitable to steal yeah because there's
never been and libertarianism will never
exist to the extent that it is
profitable to steal because people will
always do what is profitable always
I mean that could maybe be an axiom like
people always do what's profitable at
least psychically this kind of gets back
to what we said earlier on the last
episode that all action is an expression
of value right people do things because
they expect to they expect it to be a
good outcome otherwise you wouldn't do
it even people that are cutting
themselves and physically damaging
themselves they're looking for some high
or some goodness of that
um it's almost platonic where he says
every action we take is aimed at the
good
and you could think of you know horrible
things but the individual actor thinks
what they're doing is good to them or
for them in some way otherwise they
would not do it so we can't do anything
about that
but what we can do is change the actual
incentive structures we inhabit and make
the stealing game less profitable
thereby shifting human action towards
making rather than taking
what do you think though about so
because the argument that's hiding in
that is that there's no way to shut off
or kill Bitcoin but
when I watch China be like nope sorry
and I get it it didn't kill Bitcoin but
you can regionally kill Bitcoin and I
know of course yes you could take your
things and go but that's not easy so
it's pretty effective to either at a
country level say nope this is done or
like with what happened to Russia where
you shut things off at the like the um
transmitting layer so what kind of risk
do you think exists there for
governments and it will be whack-a-mole
I totally understand that but for them
to just keep crushing any sort of
because if libertarianism only exists in
a world where stealing is no longer
profitable they just make sure that
stealing continues to be profitable at
least in their geographic location yeah
and that could always be the case with
physical property but at least something
like Bitcoin gives us the option to vote
with our wallet or vote with our feet
and leave
man they like they're not playing that
game I want to get to China so uh
whack-a-mole's a good analogy actually
because we have to remember the Bitcoin
mining Network
these miners are like Yay big right so
what happens in a country like China
um The Authority comes down and says hey
no more mining here's all these legal
restrictions against it what happens
a lot of these things these miners get
boxed up shipped to another location
plugged back in right so the network
itself is kind of amorphous if there's a
regulatory Crackdown in a certain area
miners will just fly into other
jurisdictions and get plugged back in
um now
actually about China
would you agree that they are the most I
guess the largest
Communist Regime in human history I'm
pretty sure there are over a billion
people
I'd say the CCP has got the reputation
from being one of the most ruthless and
overtly powerful
uh in human history
um there's a there's a lot of stories
that are leaking out of China about the
atrocities taking place there
uh
I mean would you agree that at least
today let's say of present governments
that they are the most ruthless and uh
totalitarian regime after your earlier
point I am not qualified to answer that
question if you take scale into account
from my very ignorant perspective that
seems true okay
they shut down Bitcoin mining I think
we're about a year and a half ago at
this point
I think 20 and someone have to check my
numbers on this because it's been a few
months since I looked at it but it was
20 of bitcoin's hash rate is still
coming out of China really yes I did not
know that so if the most ruthless
authoritarian regime on the planet with
its heaviest Iron Fist can't squash this
guacamole amorphous game of Bitcoin
mining so people are just doing it like
hacker style then who can't well my
theory is that again it's easy to
mentally frame the CCP or China as a
singular indivisible entity that moves
as a whole it's not what it is at all
right there's a bunch of little five
thumbs of power and uh families and all
these things and what do people do
people do what's profitable so they have
a super abundance of hydropower in China
for instance I know that they have other
sources of power I'm sure
if that power can't be sold to the Grid
at a profitable rate and it's more
profitable to Blind Bitcoin how are you
going to stop like what
what Iron Fist can control the
individual maneuvers of 1.2 billion
people when it comes to something like
this I don't
I don't think it's feasible I don't
think it's Prof as profitable to try and
enforce and control and prevent Bitcoin
mining as it is for people to just
circumvent the law in whatever way
they're doing it and continue Bitcoin
mining and that past 18 months
I think shows that that 20 of the hash
rate again check the numbers is still
coming out of China so
if the most ruthless regime in the world
can't put a lid on this thing then what
other government has a chance
yeah I had no idea that there was still
20 hash rate what percentage is that of
what was there before that I don't know
I want to say they were in the I want to
say they were the majority of the house
rate and above 50 percent
so it wildly diminished it but still I
mean that 20 is a really big number yeah
interesting I didn't know that so when
you think about the so I've heard you
say that America is thus far the best
economic experiment we've ever run but
that there's potentially something
better beyond that what would that
better thing be is it no government well
I think we go back to
the exclusive scope of government as
circumscribed by the Magna Carta which
was the preservation of life liberty and
invaluable property do you think we made
a mistake in the American Constitution
to say Pursuit of Happiness instead of
property I do but I've heard arguments
to the contrary and I haven't done the
dig on that so in my extremely strong
views about the importance of property I
see it as a mistake but I've heard
there's a religious or spiritual element
to it but I'm not qualified to speak to
that one
um
ultimately
government is the social apparatus of
coercion compulsion and violence
you only want to invoke that social
apparatus
and as a means of retaliation or
resolution to some form of coercion
compulsion of violence right someone
stole your stuff someone hurts you
someone hurts someone you love that's
when you need recourse to the state or
the law so
to the extent that we can move the world
toward one in which government
exclusively maintains that scope of
service
that it defends life it defends Liberty
and it defends property
that seems to me the best
solution for dealing with this it's
almost like a necessary evil right
violence and force is an ever-present
reality we have to deal with it somehow
this seems to be and this is what you
know the founding fathers and obviously
the people that inspired them thought as
well
the government that governs best governs
least right just
restrict it to that very specific scope
of service
and now okay it sounds great in theory
but history has obviously been a real
pain in the ass for that because once
you put all the power in one place
absolute power corrupts absolutely
institutions don't follow the laws that
they promulgate institutions follow the
individuals that run the institutions
those individuals tend to be corruptable
they will bend the publicly applied rule
for private gain that is actually my
definition of corruption there's a rule
that we're all supposed to play by and
then one guy twists the rule to his
advantage and everyone else has to keep
playing by it or is otherwise hurt by it
that's corruption in a nutshell and
that's what I think inflation and
Taxation all these things are
so
that would then I guess with Bitcoin
that's why we call Bitcoin Incorruptible
money right it's a the first Level
Playing Field we've ever had in the
sphere of Economics a rule set that no
one can change everyone just plays by by
consent now it's always optional to use
Bitcoin you're never coerced to use it
but that option to have
space or territory in a monetary Network
that no one can compromise and no one
can change
that option becomes more valuable in the
marketplace as the other money space is
increasingly having its rules twisted
and violated and changed right more
Capital controls more inflation more
taxation more confusion as this place
gets more chaotic there is increasing
demand for this place of
integrity and transparency and
universality
so
that's how I see this playing out is
that the violation of property rights is
going to continue to accelerate as it
always has with governments that creates
this osmotic pressure for people to
adopt the option of not being violated
right as people try to preserve wealth
across time this is sucking economic
energy out of the Fiat system and into
the Bitcoin system and now you have
people with a very strong form of
property
that is immune to Capital controls it
can go anywhere in the world with it and
they can basically vote with their feet
so you're defunding this mechanism and
empowering individuals to self-organize
in the way that best suits them
individually
and that hopefully restricts government
over time because you're now you're
removing the revenue sources of Taxation
and inflation from government definitely
inflation taxations more interesting
when it comes to bitcoin over time we'll
see how that plays out it's at least
going to shrink government and hopefully
shrink government back towards that
exclusive scope of the preservation of
life liberty and property which was the
philosophical theoretical Perfection of
government as conceived 800 years ago
have you read the book infomocracy I
have not it's interesting it comes to a
similar conclusion that you've come to
but I think from a pretty different
angle so the idea is that the world
fractures into all these tiny little
countries and that even as you move
through a city you're moving through
countries and each one because you can
track people so specifically and data is
like the oil it's you get this just
completely fractionated world I heard
you say that while you have no concept
of what timeline would be if it's 10
years or 100 years 200 years whatever
but that you think that there will
sometimes be like 20 000 different
countries
why is that the natural conclusion of
this osmotic pressure into the Bitcoin
world so
this is one of my favorite books
actually it might be closely related to
the one you just mentioned the sovereign
individual written in 1997
it predicted things like the move from
what do they call it broadcasting to
narrow casting so they're predicting
social media
as a consequence of mobile digital
Technologies so interesting to hear
people like predict that stuff yeah it
predicted uh the government use of
certain medical
policy to
revalidate its borders let's say to
control the flows of people in and out
of countries
and it predicted the emergence again
written in 1997 of what they called
Anonymous digital cyber cache
and the extrapolation from that
invention was basically the fracturing
and collapse of the nation-state as the
dominant institution in the world now
it's a very dense book
I'll try to give you the very there's a
lot that goes into it but just the very
basic premise of why that is the case
why do you go from Anonymous digital
cyber cache to the fracturing of the
nation-state
is
sort of what I tried to just describe
right like we've all been forced into
monetary policy up until this point we
did to the point we don't even know what
inflation is right like how much
purchasing power have you been milked of
inflation in your career that you really
have no idea about really it's
it's an interesting uh kind of Insidious
invisible taxation
once people have an option to exit that
for a uh either an individually selected
monetary policy or one that is just
fixed like in Bitcoin I don't even like
calling Bitcoin a monetary policy
because there's no policing to it it's
not being enforced in any way it's just
an option you just go and freely choose
uh to use this this type of money that
no one can print
and so
as that unfolds and people realize that
there's an option to
again people are going to do what's
profitable right and profitability also
entails reducing cost so if I can reduce
my cost structure by Saving in Bitcoin
rather than saving in dollars then I'm
going to do that and then once I'm in
Bitcoin I now have more leverage in my
negotiations with the state that they
can't as easily they can't inflate they
can't as easily tax me either because I
have a form of property that's immune to
Capital controls it's globally
transactable I Can Vote with my feet and
move anywhere in the world that that
would lead to a reorganization of people
into jurisdictions where they are
treated best
so the most Capital the most Talent the
best performers will naturally coalesce
into the jurisdictions where they're
treated best
and a lot of this
the thinking on this too it's rooted on
kind of an obscure literature on the
economics of violence or Force
um I've written about this a bit uh my
sovereignism series again the sovereign
individual goes into it
but let's just say that
the ways we project power in the world
can radically change our political Modes
of organization a very simple example of
this was
for a long time the armed Knight on
Horseback was the dominant martial force
in the land right no one can take out an
arm night it was the strongest form of
military hardware in the world pretty
much
you know he a single Knight could kill
50 peasants
let's say no problem so that was the
weapon in the world all of a sudden the
invention of gunpowder what happens
one peasant can now take out an arm
night on Horseback at 200 yards
that led to the collapse of feudalism
collapse of the medieval church as the
law on the land like there were all
these follow-on consequences as a result
of that simple change that someone
figured out you put explosive powder and
a long pipe and shoot a ball of the guy
and he's dead
um so with Bitcoin it's it's the
ultimate defender's Advantage right
earlier when you're talking about the
strong people coming into Power
dominating the weaker people well now
the weaker people will have recourse to
a form of wealth that is indomitable you
cannot steal it from them right they can
so there's less profitability for the
the aggressor you can't get the property
and there's more optionality for the
victim
so that leads to a world that's more
heavily consensual
in my opinion
yeah man it is going to be so
interesting to watch this all play out
it happens slowly enough and with enough
uncertainty that it is
um
it's fascinating to watch people argue
and all of that where can people follow
you as you help
translate what's happening for us uh
yeah I would say check out the show it's
what is moneypodcast.com
I love it boys and girls if you haven't
already be sure to subscribe and until
next time my friends be a legendary take
care peace if you want to learn the
money habits of the ultra wealthy be
sure to check out this episode with Wall
Street Trapper all right thank you real
fast what are three things that people
do habits money habits that keep people
broke three money habits that keep
people broke I would say the first thing
is not investing at all