I'd like to welcome Jeff Booth, the author of `The Price of Tomorrow` in
German, `Der Preis der Zukunft`. and that's the reason why we are sitting here
today. Hello Jeff! – Hi Nico, nice to meet you. Thank you very much for taking the time. –
Yeah, no problem at all. You wrote this book in 2019, right? That's right, and it was published shortly
before we had the whole corona thing, the crisis going on. Exactly. It published in, I
think, January 20, 2020. It says why deflation might
be the key to an abundant future. And now, deflation and inflation, that's a very
hotly debated topic everywhere around the world, but especially in Germany and Austria.
People hate inflation here. We had the hyperinflation in
the 1920s and still, you know, the families know about it,
the institutions know about it. Right now the inflation rates are going
up, and you're talking about deflation. Something doesn't add up. And that's why your book is so interesting,
because you have a thesis that's different. What do we see right now, why do we see
inflation, but why should we talk about deflation? We live in a world that's designed for inflation, and so our entire system is designed for,
call it two percent inflation, and that's it. And and i don't know if you've heard the saying: "When a measurement becomes an objective, it
ceases to be valuable as a measurement tool". And so we have two
percent inflation that is designed, and central banks around
the world are trying to meet that, and if you investigate that a
little deeper, why do we want inflation? So you'd say so inflation is just
when your money is worth less each year. So we have a policy around the
world, designed around the world, that we should have our
money worth less each year, and we believe that's required
for a productive society. But why do we believe that? What's the reason?
Because we were conditioned into believing it. "Hyperinflation is bad, but inflation at two
percent is good". And combined with recency bias – at least in the western world we haven't
lived through a hyperinflation event, since when you talk about Germany and Austria and what happened to lead up
to World War II and everything else. We haven't lived through
a hyperinflationary event, so we just trust that central bankers
know what they're doing and drive a two percent inflation rate,
which was really theft, right. So, I steal your money, it's a hidden tax which
arbitrarily takes from the middle class and poor and gives to the rich, because the rich
have assets that go up with inflation. The opposite side of inflation is wage deflation or savings deflation, so
it's one and the same thing. So your income or your savings rate is
going down. So, when the German and the Austrian savers are mad at Christine
Lagarde they have a right to do so? We're going to get into this –
they have a major right to do so. It's way worse than than
they probably even realize. And we would investigate some of that here too. So, on one side we live in a system
where we have been led to believe that our money must be worth less each
year to live in a productive society, but two percent is okay, so theft at two percent is okay, but if it went to theft
at five percent that's a bad thing. But when you investigate that,
you'd say: Is that true, right? So it has been true, and we live in that society, but what's happening is that you have
a bigger force moving the other way. So technology creates efficiency, and technology is moving exponentially into
every single industry at blinding speed. It's almost incomprehensible
how fast that's moving, and that means that efficiency
is exponentially deflationary. So technology moves one way... So you have two
different systems moving the exact opposite way: One system essentially requiring deflation to allow the abundance gained from
technology to be able to be broadly shared. It's a requirement of where
we're going in the digital age. And a system that we've lived in all of
our life, that we measure everything by, moving the opposite way. And they're moving faster and
faster away from each other. Some simple examples: in GDP 20 years ago you
would have seen, as a part of the GDP measure, you would have seen photography. And think about the entire
industry based on photography: editing, film distribution, driving back and forth
to the stores that require film distribution, and buying and the selling film to be
able to take a small amount of pictures, and Kodak was the king of that. And they invented the digital camera. Today all of that is gone, yet we
have an abundance in photography. And that abundance is free.
We take more and more photos, all the editing software
is available on our phones. We have unlimited photos, we use way
more photos, and it's completely free. And so, where does that as an
example show up in positive GDP? So that productivity that's happening
everywhere is actually negative GDP. So it's moving one way. Hasn't that always been the case,
that technology is deflationary? Yes, but if you look at cycles and
why everybody can feel something's wrong but they can't put their finger on it. Technology never moved
as fast as it's moving today. I use the example in in the book: They have folding a piece of paper on itself and
folding the piece, kind of an exponential pattern. So if you fold a piece of paper on itself a normal
eight and a half piece by eleven piece of paper, if you could continue folding it past
seven folds and continue folding it for 50 times, how thick would that piece of paper be? And the piece of paper would
be from here to the sun. I've asked that question to tens of thousands
of people in live audiences and everything else and and 99.9 % of the people
guess about two inches and what that says if 50 %
of the people got the answer? Then I think the human condition would say, okay
we're okay because we understand exponential patterns. But because nobody gets the answer
including me and that everybody thinks they can get the answer once they know that once they know
the answer, but it we it says human beings are really bad at exponential patterns yet we have an
exponential pattern on Moore's Law and technology moving at that rate. And where are we on if you
compare that analogy of folding piece of paper to the sun to today on technology we're unfold 33
moving to fold 34. So that means the steep steps everything in technology over the last 50 years
likely doubles in the next two years. So, when we look forward we can't grasp the rate of change,
the rate of change isn't just speeding up the rate of changes is exponential. Now, let me just
connect that to what we were talking about in the world we formerly lived
in inflation was still a theft ,but it was managed because technology wasn't
moving as fast and so it was it you had these 80 or 100 years debt cycles that created
these big debt bubbles that had to be reset and they were typically reset through
revolution and war and then you started again. Today we live in a different world, and
it's moving and technology is moving faster and faster the other way so it's happening
at a rate we can't even comprehend. Breaking the system at a rate we can't comprehend,
so if you connect those things I think what's happened is 30 years ago your actual natural
rate of disinflation based on technology would have been negative one percent, and
all over the world you've had central bankers lowering lowering interest rates trying to get the
target up to two percent and constantly missing the two percent.
Everybody around the world is measuring off zero when it was negative one percent and
why they're missing is it's going faster the other way that was thirty years ago. Today
the actual negative rate through technology gain might be negative five percent per year. How
could you know that? I'm just I'm extrapolating what's happening underneath from what's
happening in technology I can't know that from a data because the data is messy.
Because, we're looking at data through an inflationary system and printing money to
make inflation happen no matter what cost ,and the cost of that why people are
talking about okay we get inflation temporary inflation and then it
falls back down is because that money printing is distorting every price signal in
the world. And the inflation deflation debate is kind of a red herring. What's really happening
is and so policymakers say keep on printing staggering amounts of money to drive inflation and
then they say we have more room because inflation rates can't they can't they can't keep up so we're
not hitting our rates, so we need more printing to be able to cause it. But what's what's happening
is that society is breaking because of that, you're essentially concentrating all
wealth and power into very few hands and technology is moving the other
way and just this simple example. If you if you think about any rational actor I own
a whole bunch of technology companies what would i do if my if product if it's costing more and more
through labor because of because monetary easing wouldn't I use technology to be able to give
more value faster and remove labor faster. So the inflation is actually accelerating the whole
process? Exactly, so you remember two different systems reinforcing the exact opposite way. You
are, you just alluded to the fact that you're an author of the book, but you're not an economist
you're not like an author who has written 12 books ,you're an entrepreneur. Can you tell tell us
about a bit about yourself, where you came from as an entrepreneur, and also how did you come to the
epiphany about the deflation? So what I´d say, I'm curious I've always been curious and and I'd say
what drove that curiosity was an accountability. I wanted to create a better place in the world
for me and for every business as an entrepreneur. Essentially what you do, is say how can I provide
more value? I see a structure that's broken and if you provide more value to people you can create
a whole bunch of wealth for yourself by providing more value to other people. It's actually the
only way entrepreneurs win, because if you don't provide more value and it's a hard thing to do
because you're dealing in a really competitive world with monopoly power and everything else
and to create that you have to find enough value to break free of a monopoly and everything
else to benefit society to actually win. When you think about that process which that's
what I do in a whole bunch of different businesses that process must be especially with technology,
assuming that every rational actor is only voting for your goods or services. Because,
they're trying to get more for less that process in a free market must give
more for less, it must be deflationary. And so I couldn't understand
my first business, it took I can't remember the exact number
,but between five and six million dollars and about 60 developers over two years to
develop the technology um 20 years ago that today is available for essentially free. Every
entrepreneur can just plug into 50 a month or a sas model that gives actually better technology
that it took all of that to build on top of a sas model for 50 dollars a month through Shopify,
or something, or Amazon, and it's moving faster and faster. So if you just think about all of
that labor to do my one company replicated times thousands, hundreds of thousands of different
companies to where it is today you'd think. Why aren't prices coming down everywhere right? We
see in our phones we get more for less every app every app we use we get more for less. If
you look at your phone at the amount of amount of things that is it's moved out of cost
to now abundance it's why we use our phones it's why we sell it it's actually why we create every
monopoly power because they give us more for less and I couldn't understand why that wasn't
translating into lower prices everywhere and so when I and it was bugging me it was
really bugging me it was something I was talking about for years and years so being curious,
I wanted to learn every single thing about why. And, I would say as an entrepreneur I didn't
have a bias to how the system had to run I wanted I was more curious just like
I wanted to what could it look like and what must it look like for the world digital
world we're moving into and that led me onto. You said something I think it's important,
I didn't want to write the book. I actually I for years, if you talk to my
wife and everything else or friends around, this is something I was talking about for
10 years and I did not want to write a book. But, I could not believe that nobody could put the
pieces together you had these technology utopians driving one way and talking about how
more and more wealth and you had a financial system moving the exact opposite way.
Every single measurement in our world driven by kind of that juxtaposition of two different
systems operating and it was it I just got mad. I looked forward and I saw the world
that my my kids would grow up in would be a really dangerous world if somebody didn't
do something, so that's why I wrote the book Where do we stand right now in your opinion ? You said it's because if we look at if we think
about this it's a bit like um exponential growth. After afterwards we do see it like with the
Iphone right the Iphone is 12 years old ,but we we use it five to six hours a day. Which is
crazy we use it for everything? Where do you see technology moving next? Where do you see it? Is
it everywhere? Is it in specific sectors that we should look to? So why this is so confusing for
people. Yeah is they're measuring their reality through a system that is manipulating their
reality and so you walk away and you believe okay well my house price could go up and up
forever, yet I vote every day for other things to come down in price I vote with my wallet so every
regional actor is choosing to get more for less. With that alone right, every rational actor
worldwide, and I mean by rational actor, I mean you and me and every single person listening
to this podcast. You don't get a vote with your money to get less for more. You vote with your
money and your time to get more for less. That's why you use an Iphone. That's why you use that's
why you use Google. That's why you use Amazon. That's why you are constantly voting with that.
How is it possible that with that being true that you could also believe in a
system that has to work the other way ? Has it ever worked? So, it does for time periods.
So why um and these are complicated topics but it almost require rewiring your brain and people push
back from that because they're so entrenched in a system. Some of the hard data from the book
over the last 20 years. So today in the world. Actually, take last year because
now the number is way higher, but there was over 250 trillion dollars of
global debt to support a global economy of 80 trillion dollars. And realise that if you have
that much debt and you have to pay that debt back then growth has to slow in the future because
your tax rate has to go up to pay that debt or or new economy or new growth opportunities
have to be huge to be able to offset that growth rate so as they did the debt goes up
that high it becomes a burden on future growth because the because the rate of interest
has to go to cover that just alone. But then when you investigate that and that
sounds like an alarmingly high number. But when you actually look deeper at that number 185
trillion of that 250 came over the last 20 years. As you would expect if
technology was moving one way and you had to keep in stasis going the other way And so now where are we? So now what you can
expect is technology is still moving this way. Every single company needs to remove labor faster
and they have more and more tools to be able to do that and debt is exploding. That's why you
could, that's why it was easy to predict from a system standpoint what the next steps if you
were going through the book all the next steps that would happen logically. Um, it almost gives
you a cheat code for where the world's going. And the debt has to that has to grow higher
and higher and higher and be monetised because there's no way to pay it back. It's just math
there's just there's no way to pay it back. But the central bankers, the politicians, do
they know that? So okay, and this is why these are these are really hard concepts, because we
live in the system we measure everything else. You use 185 trillion dollars everybody
thinks their house always goes up in value and they've never asked the question, would my
household go up in value without a 185 trillion dollars of stimulus over the last 20 years.
The answer is simply no. Houses would go down or stay constant. The value has gone up because
because you essentially you're destroying monetary value and assets are trying to hold some of
that value as you're monetising into that. So do bankers know about this? Now first, I
suspect not, I suspect most people on the planet don't know what we're talking about right now.
I wish they did that's why I wrote the book, and the book's been crazy adopted. So a lot of
people are starting to wake up to this concept. But, imagine you were a central banker
given the options that we just said. What would you do? Because the existing system
based on credit, because there's nothing backing it there's not gold backing it there's nothing
backing it. It's a system based on debt. It's the system based on credit, and if you allow credit
if you allow deflation into a credit-based system. The system keeps unwinding and it keeps on
unwinding because because I owe you money you owe somebody else money, and we
all think that that money is real. We would have that debt deflation
before we get to the actual deflation? So that's the problem. You would have every asset
around the world and every government would fail every bank would fail. As you repriced everything
in an instant, and as soon as that deflation started to happen as soon as a real market
started to happen why governments are trying to fight deflation at all costs is because because
it would unwind the entire world to the sand. But, they don't realise that the
consequence the the opposite consequences of trying to inflate send us through
a path of either central control of everything. Which uh which is looks like
totalitarianism it's it's it's a horrific human future so where you have a
small number of people in control of everything with artificial intelligence and
robotics. That is the path we're on right now. That sounds like China. Yeah, but
worse China. It sounds like China, but if you actually keep going keep going with how
much control is consolidated as a result of that and how much less labor is needed it
looks like China on steroids. That is and if you believe that one human or a couple of
humans should have domain over all other humans without realisation that they will
change their mind. Absolute power corrupts absolutely ,um you have a you have
humanity destined for a really dystopian future. So that is one alternative. That is the path that
we're on that's what it looks like. Along that path you also have path two. Which is revolution
and war people start waking up to this and that path creates a geopolitical risks all over the
world just ask this, this is kind of on China. In 2013, China stopped buying bonds in
the US, which is the government bonds. Before that, essentially, China was giving vendor
financing, keeping interest rates low in the US so consumers would buy more Chinese goods. Then,
China realised okay US won't pay the back their debts, so we can't we got to stop buying those
bonds, and what would China invest in? They would invest in rare earth minerals and everything else
and so they would take up natural pieces of the ecosystem that are there where we are going for
a digital transition. When that happens you get politicians realising there's a huge geopolitical
risk here and creating kind of war machines to be able to say, it's their fault that you look
that your problem looks like this. And by the way, when you talk about Germany and Austria. We've
seen these patterns repeat throughout history it's pretty pretty simple. The first thing you
do is you control your population through fear and you say it's those people.
Because, people will believe it and when concentration of wealth
gets as high as it's getting. More of the population votes for people to that
believe that, they'll believe in more printing. They'll believe in if I get so i don't have food
my housing prices keep going up, and they don't realise that the government is actually creating
those housing prices, and food prices to go up ,and they vote for governments who will give them
more redistribute that by doing the same thing. The printing and the inflation is responsible for
the concentration of wealth at the top right? It's responsible for it and what ends up happening
is, but it creates an us versus them mentality, because a lot of the people are left out of that
and that's the populace and those people vote for a different person in control
but versus on the same system to be able to help them because they don't
understand what we're talking about at the root cause of it all. So they vote kind of the system
carries forward they vote for the same system to drive more inflation to be able to give them
uh some of the money which further concentrates the wealth and power. And that's the system
that we're in today and it's pretty logical why people do that. There's one problem inflation
is easy, why should we not go that path you know as a society because it is the easy way?
So that's the problem we don't think and we don't think about the and that's why
politicians don't think about it too. You're not going to get elected, no one right now
would get elected saying we're going to cause a deflationary debt collapse and everything's going
to reprice and every hospital shutdown, every bank will shut down ,everybody's going to lose their
money and we're going to reset and don't worry it'll be a happy future, good luck, right! We
tried a little bit of that in austerity in the euro crisis in the 2010´s. But again because
I said the unwind would wind to the sand as soon as that austerity and that's when
the taper tantrum was the same thing. All of these things are the same. They're the
same thing there is no possible mathematical way out of the existing system that allows
deflation to be able to to happen without a complete reset and there's no way a politician
could get elected in that system to be able to allow that. That system has already that
system is we don't realise it it's already over ,but the consequences the consequences of on
humanity, our time, our labor. Essentially, if you think about we spend 40 years of
our life trying to accumulate enough money and working on our time and everything
else to try to live the last number of years of our life in relatable safety. And
on a keystroke that can be taken from you. Now it is, it has been taken every day.
Every day on a keystroke, it's taken from you essentially it's theft at the highest order
on a keystroke so but again we're measuring our world and every other economic calculation
from that world believing it to be true. And when technology is moving exactly the other
way. But where does the money end up? I mean who steals it. So if you, if governments had to be
truthful to you what most of the most of their revenue comes through inflation if they have to be
truthful you with you on what taxes you would have to pay to run society or everything else. Then
essentially moving the theft to above the line to truth. Government would have to get smaller.
Government would have to be, be more nimble and they would have they
would have to listen to voters who determine. It would be a true democracy,
it would be it would look like a true democracy. Today by hiding it in inflation, government
can get bigger and bigger and bigger. I'll give you a stat in 2019 um if you taxed
every US corporation 100%. So, if you, if they made no profits at all you took all of
the profits uh that's 2.25 trillion dollars. They printed 5 trillion last year. They will
print another 5 trillion this year. You can't even touch taxes is a red herring.
Most of the government revenue comes from from inflation, which is a hidden
theft. So in other words and then people bite on tax taxes all the time because
it creates an enemy. How dare those rich people control all of the wealth. We're going to
tax them more to be able to get elected. When the exact same thing keeps happening
where most of the revenue comes through inflation and it's a structural problem. So but
why would we vote for that? Why would you vote for why ,I wouldn't but? Why would people vote for
that because they don't see it. They don't see it that. What they, what they see is okay. I
get all these services and everything else and I want more and more. The electorate wants more
and more for l wants more and more all the time and when it when when a when a government,
when governments all over the world can hide giving more without taxing more it's below our
view. So it becomes really easy to have a system that is actually based on
a fraud feedback on itself. Are you saying that the natural state
of things without that financial system basically without central banks would be
deflationary? 100% the natural state of the world human innovation and progress assuming
we don't keep on creating the if assuming we're learning things and getting better all
the time then that has to be deflationary. Is there anything bad about the deflation?
And this is this is important uh really important because what people will hear about
inflation deflation debate. What they've been programmed to believe is people will buy less, and
the market will collapse, and everything else, and part of that is true by the way. The whole climate
crisis and everything else is caused by inflation. So you cannot stop so we'll get to that
in a second but climate cannot be solved through an inflationary monetary policy. An
inflationary monetary policy is climate change because it forces society to buy more and
more drive more and more back and forth as soon as oil prices start going down because new
energy clean energy is additive to the energy grid monetary policy must print money to make oil
prices go back up. To make all prices go up, so we're forced on an ever increasing
spiral to buy more and more and more and work more and more and more in a manufactured
environment that destroys our planet. Are you basically saying that because
there have been there have been inflationary periods and booms that
turned out to be fake in the past? Are you basically saying we are in the
middle of a 50-year inflationary boom? Yes, so that but we don't notice it because technology
is moving the other way. So if technology wasn't and you had that much printing. The
inflation rate would have skyrocketed. Where does it show up? It shows up in what people
are feeling right now working harder and harder for less and less and wondering what's wrong and
why are those people over there. How did they get so wealthy? Yeah, I think the world's 50 richest
50 people gained 1.8 trillion dollars this year. Yeah it's in the in the newspapers all the time,
the damn rich people. So, how did that happen? It happened because of the same thing we're
talking about. And so when people are people are wondering why. Essentially, their labor rate
is going down. They're working more and more hours trying to stay on this mouse wheel, going faster
and faster. They're starting to wake up to what we're talking about. But, they don't know the fix
yet. They don't know and so you have one system, you have these two systems colliding against each
other it's really but again because people measure everything by their daily life. And it's really
easy to believe in climate change is caused by uh it because you see it all around you but
you you don't connect it to it being caused by inflation it is caused by what we do, but is that
we do the things we do because of inflation we do the things we do because of inflation and every
rational actor forced through an inflationary policy will do the exact things things to try to
gain leverage and get out of the system and try to win against a system that's being manipulated
faster and faster because what's really happening is their time money is an arbitrary concept money
is all it is is a trade of your time we actually don't want more money we want more time we want
is we the money is a placeholder for what we think it will buy us in the future it'll buy us more
time more vacation more more i can vote i can get this i can retire with safety we trade our time
for money hoping that that might that time will be more valuable later on so if you arbitrarily
with keystroke distort money you distort our time you destroy our time and so the consequences are
really obvious what will happen next is society is trying to figure out what's happening here
and they're trying to figure out if you look at through history if you look at some of the worst
sins in humanity they come as a result of this and somebody gaining that much control on a population
because of this but it's easy to believe. So basically what you're saying is that
Christine Lagarde is stealing my time. Yes and Apple Google and Microsoft are
giving some of it back because I can talk to you right now without flying over to
Canada yeah and why you create why we are creating these monopolies and we're voting with
our time that all of this that we're doing right now is free that couldn't happen 20 years ago
completely free um and and and it couldn't happen 20 years ago and it doesn't show before if we had
to do this 20 years ago we would have to get on a flight the cost all of the jobs of of that and
it could only it could only see the people that were at the conference all of those and everything
else today it's it that digital distribution this interview could go it could go to Africa it could
go all over the world it's free information here's probably a better way to look at it um things
become information, information becomes free and everything is becoming
information. Do you think that people there's this concept of time preference
right if i have a low time preference i'm a saver i keep my money i consume it later
if i have a high time preference i just spend it immediately consume consume consume do you think
that people are predisposed with a time difference I think a lot of so so if you just look at
government policy if you just and i'm not i'm not trying to insinuate anything here
i'm just saying actually look at the facts when a government says we have negative interest
rates and native bond yields and everything else and effectively telling the market we are
going to destroy the value of your currency what would people do wouldn't well they start
spending it they they start spending they start spending they start consuming more they start
trying to figure out. How do i get out of this and everything else? Huge speculation speculation
all of the all of these things are natural consequences of that but put it this way let's
imagine you're a ceo of a fortune 500 company and and you know this is happening and cash on your
balance sheet let's use an airline for example um cash on your balance sheet is the
worst thing you could have because you know it's going to lose value and
other ceos of other competing airlines are investing their shares in cash in buybacks
to enrich in shareholders because because and you hold cash saving for a rainy day that would be
the normal course of action and in in a rainy day the person who saved cash would be able to
acquire other airlines and everything else and and the same as and that same thing would happen
personally and everything else people saving would over time win because their cash is worth more in
today's society it looks exactly the opposite so what would it would the rational choice for a ceo
to be rational choice would be lever lever lever buyback shares use leverage to buy
back shares then rainy day comes and they go back to the same government
um and they say i have to lay off all these people unless you bail me out and
the government is forced to bail them out because of the same problem that
government created in the first place So you just talked about a dystopian future
basically total control of everything now we know that so i mean we know that
cannot work well so it can work it just looks terrible it can work and so it's
to it works in russia works in china it just looks terrible for humanity
and that by the way these things happen today so look what happens to Navalny in Russia and
look what happens in Saudi Arabia to a journalist these things happen today they
happen all over the world today we don't we oh that's just one isolated
incident it is the normal course of today when power centralises as much
power power it's a normal course and and I often ask myself why don't enough people
stand up because if enough people stood up to that it would the government would fail the
the next day and you would and you would change it but why people don't stand up to it or enough
people stand up to it is people seek safety because standing up to it is so risky for your
family your health your livelihood and everything else that not enough people will stand up to it
same thing in Nazi Germany same thing and all over the world you see the same thing not enough people
will stand stand up to that type of power even though they might know that it's the right thing
to do they're waiting for everybody else to do it and that's the human nature thing and so I
don't think we're going to change that we're not going to get more people to stand up to it
now carry that forward now carry that forward that's looking at with the lens of history on what
happens more way more people seek safety and hide in this in the system that looks like that
then we'll stand up against it and that gives the system way more control to be able to
pick off the people that stand up against it over and over and over and over again
now now carry that forward where we're going with technology because
artificial intelligence is coming. Artificial intelligence and
robotics mean mean that that power consolidates even more and it consolidates
unilaterally and so if you allow a system to reinforce on itself like this i suspect no
one will be able to stand up against that might. Yeah, but who is controlling the system who are
the people so a very few number of people and when you say Christine Lagarde or other people today
and again it's easy to turn on those people people i actually don't believe that they actually
have done the consequences of the actions on what that will mean for society.
I don't I actually don't believe they potentially they're looking they're looking near term and
they're worried so much about the collapse of inflation that they're trying to run out of it
and trying to create more and more essentially misinformation to be able to keep the structure
in place we didn't want to be the pilot when the plane crashes you know totally and that's
what they're doing they're doing the same thing that any business does look at what Kodak
did even though they invented the digital camera look at what Blockbuster in the us did when
Netflix provided more for less and though and they added candy aisles to their stores thinking
that people wanted to drive to the store to get candy or popcorn with their movies instead of
downloading them through Netflix it's a natural course of action for the system to take a natural
set of events to protect the system at all costs. I look at all the people in the
system today that's what they're doing for fear of consequences of a total
reset and in that view. Now any system whether it's a bitcoin system, whether it's any
system has good and back bad actors. And a lot of times in a system that has gone on like this a lot
of people will will look like really bad actors at the top, but I'd say most of it is caused by
a system reinforcing itself and those people it might be narcissism. It might be and
incentives and education. Exactly it might be I need to do this to have domain over other people
to be able to help them without realising the consequences of those actions on the next step
and the next step. But, there was one person who definitely knew what he was doing and that
was Alan Greenspan. We know that he knew what he was doing and he was the one lowering
interest rates after the dot com bust yeah and again so what I mean, but on all of these
things what alternative go back in time, because the system is it's been a
credit business system for a long time. In 2008, we saw it, I've said this
on a number of podcasts, but um I had a business that was
doing hundreds of millions, 120 million dollars in revenue at the
time and had letters of credits all over the world with containers moving all
over the world, hundreds of thousands of containers. A building business right?
Yeah a building supply business, a digital building supply business, and in that
time for three days no counterparty on the other side of the world even though we had all the money
backed for these letters of credit. No counter party would take our money because they were
worried about not us they were worried about the bank failing and everything else. So what happened
for a three-day period is the world stopped most people didn't notice that because they were
they would never have seen that and so you I knew that tarp and all of these things were coming
because what I was just talking about the unwind it would just keep on it'd accelerate
that unwind and it just because there's nothing there and everything just stops
and now the money just disintegrates because there was never any money there anyways.
It was just credit and so that cascading unwind created a way to take essentially bail
out the people that created the problem and a whole bunch of people got really
wealthy through that printing printing of money the same people who got wealthy the banking
financial institutions that created the problem created a wealthy and you destroyed capitalism.
But what you're talking about it even now about Allen Greenspan before that because
it's a mathematical structure that if you allow deflation to happen
which is the natural course of action it will unwind and so nothing is nothing has
changed. The only thing that's happened that changed in the entire thing in fact again going
back to why I wrote the book this is coming winter is coming and the only thing that's changed is the
the amount of when we think about good deflation bad deflation um what people are worried about
right now is that cascading collapse and deflation which is a complete reset because and they confuse
that with natural progress disinflation, good deflation they are what we want you know more
for less. Exactly, they confuse the two things but deflation is always always happens after
a debt bubble that can't be paid back that you have to go through a cleansing of the system and
you could go through that cleansing of the system. So, if you if you go totalitarian governments you
might not have to go through the cleansing of the system if you go through war and reset what ends
up happening is you cleanse the system through war and reset and everything resets and that's been
the typical transition path. And so if you look at all of these things and that's why i'm sure we're
going to talk a little bit about Bitcoin as well you have to where we are today in the world you
have to have a transition path from one system to another system and where technology is leading
in the world us in the world you must must if you don't want door one totalitarianism door two war/
reset. You must have a digitally native currency that allows for deflection, so the abundance
gained from technology's progress is broadly shared. When you started writing that book,
did you already know about Bitcoin? I did um but i would say I and still today i have
uh an open mind could it be something else um i have not seen another I have not seen
anything um even though I'm open to it i've not seen it so my conviction on Bitcoin
has only grown since writing the book I for a very long time thought
it would be gold. Yeah and again through five thousand years of history it
has always been gold but that doesn't mean uh through five thousand years of history we always
rode horses as well and then we then we invented cars. Um so, Bitcoin is the again the gold has
some some shortcomings, some major shortcomings, that allows it to be concentrated and then
controlled and controlled and taken away because you have to store gold um you can't
you can't spend a gold bar. It's really hard to it's centrally stored and a currency is built
on top of it and then look at 1971. Essentially, the US changed the rules of gold because
they couldn't pay their debts to France and they went off the gold reserve and that
that and if you look at back into 1933 same thing happened in the US it's a natural
course of history that gold repeats that gold is was a good store of value always has
been a good store of value, but today Bitcoin is a way better store value because it's an
open monetary network that is decentralised in nature and nobody can take it from you.
Because, it does seem to me that the central banks basically kept the gold as a plan b the whole time
they never talk about it but they still own it. Yeah and they could go back to something really
like a gold standard it's like as a middle way between inflation and actual deflation yeah and
so why I um and now I've done a lot of kind of thinking on this topic thinking could that
be a way. And in a short term if depending on your cycle if you're invested in gold and
everything else there actually could be some head fakes to gold along the way and it's
not a bad investment from that standpoint. Do I own any personally no because I
don't believe in its long-term structure, but could governments do exactly what you
said. Potentially, but here is the potential they would have to agree and you think what's
happening there's less and less trust in the world and more and more counterparty
risk as as everybody's trying to find their own way to be able to so essentially
you're fracturing societies manufacturing states and they would have to agree to what the
reset would look like. And then how much gold does China have how much gold does US have what is who
owns what and everything else to get to that point I suspect it's not possible without war. It's
all very depressing. Yeah and by the way, I'm a super hopeful entrepreneur I'm
hopeful I'm uh that's why I wrote the book. But you do give some hope and the hope is always
connected to deflation um something I wanted to add it's interesting I didn't know if you knew
that, but in english we talk about inflation and we talk about price inflation right, to you
know distinguish between the the monetary base, the monetary, the printing basically and
the effects in German we have a word. It's called `Teuerung` which is basically price inflation so we started off with the
original definition of inflation. Interesting, I'm telling you this because I thought about
this we don't have a word for price deflation we do have one for inflation because it's we
needed that yeah and we don't have one for price deflation. That's interesting and there's
that the third horseman of the apocalypse. He has a like um a scale, the scale is supposed to
be a symbol for famine and inflation. There's also no horsemen for deflation. That's interesting and
and Niko when you when you talk about these things it's amazing how language and these things
reinforce on each other and we don't even think about what the natural we don't talk about
what we're talking about right now ever. We just keep on going on our merry way in a system that
we know can't survive. And when you investigate, why wouldn't we want things to be less costly?
Why wouldn't we want to get more for less all the time? I think the entire economics
establishment and everything else has almost been brainwashed into this narrative and without
realisation that, and maybe for a reason that I'll get that to this in a second. But, you had
to on top of gold because of the just transported because transportation everything else you had to
build a layer on top and you had to build extra slack in the system to increase monetary velocity. But on a
technology solution that clears every 10 minutes, you actually don't need more slack in the
system because it clears every 10 minutes. So you get monetary velocity through technology
and so it's a different way through through Bitcoin you have a different type of monetary
velocity which allows that the abundance gained through technology to be broadly shared and
when you when you think about this in um. Why wouldn't we want more for less? And
how economics is structured economics is structured around uh scarcity, either real or
perceived. It's not structured around value, and the the oxygen you breathe right now is free.
Why is the most valuable thing in your life not the most expensive. Well don't
tell the government, they might tax it. Yeah exactly but that's the point.
Why aren't there way more jobs in air control. There aren't more
jobs there because it's abundant. There's jobs in filling tanks underwater
for oxygen because it's scarcity. So we have our natural state of the world where technology
is creating more and more abundance everywhere it's all around us look at your google maps.
Look at your look at all of the things on your phone that are now free that weren't free
before abundant. As they become abundant, it's impossible to charge for those
things, and why is it impossible to charge because it's a piece of code. That piece of code
can transition everywhere as information becomes free. And more and more competitors will
reach into a market to drive it to free. So we live in that natural state of the world or
that should be the natural state of the world as we look uh and we're we're fighting it with
everything we have hurting society as a result. You don't think that the printing will ever
end okay just like that it will just go on? It will just get worse. So it can't because of the
economic collapse that would happen as a result and when I say economic collapse we have
to again go through that pattern and say how would it be possible if you're Christine
Lagarde if you're Powell and everything else what would you do right now if you signal if you
signal today that you're coming into Bitcoin. The existing system collapses, yeah um, it all
it all starts unwinding so until the transition path is more tighter now if i were them I would be
driving that door as fast as possible behind the scenes but realising that I almost had to keep
the pretend game going until the structure was it was ready because because we're not ready
to live in an entirely Bitcoin world today. No we are not there. We are not, we are not close,
we're so early in that inning and that's actually what also provides the asymmetric bet on the
upside of wealth creation on Bitcoin. People that understand that, because most people look at
it, most people take a look at where technology is going and and they don't look through an
exponential path. What happens next same thing is the internet and why most people missed what was
happening and all of the value is derived from it today that network effect what was created
starting in 89 of the internet we know it. But, in 95, 96 if you tried to download a cat picture
on the internet, it would have taken a week right. And most of the value on top of that layer came
way later. Google started in I think 99 or 2000 Amazon was 95 and 95 Facebook was 2006.
If you think about all of the value is on top of that network effect that they built
and built and so where are we in in Bitcoin we're, if you equate it to
where we are in the internet, and kind of rates of growth we're in 1996. And
most of the value is to come it's not uh but people are people are thinking about Bitcoin
through a lens the same way that some people looked at the internet in 1995 thinking
that, it's always going to look like this. What do you think the central
banks are going to do, are the incentives aligned in a way that they
that they can see Bitcoin like you do is basically a possible solution? So a system or will
they just fight it? They will fight it, they'll fight it uh some countries will um so
some countries and just because of game theory are more incented to go early like what we just
saw in El Salvador I actually didn't predict um so I wrote a piece called 'The Greatest Game' if
any of your listeners are reading it. iI's on me medium. But it predicts all of the next steps
on what's happening and it's so far almost uh exactly what's happening through central
bank digital currencies why that's a must on the existing system. What will happen
next? The um and on the other side I ,but i didn't i didn't see a country like El
Salvador implementing Bitcoin as a payment rail as fast as they they did. Why I didn't see that
is is measured through my my lens in Canada in a pretty safe society and everything else. I
saw Bitcoin winning store of value first and then and having a 10x advantage
10 times advantage over gold in a store of value and that after store value
then central banks would peg to it. Then one day as Bitcoin went higher and higher it
would turn into a currency as well through the second layer and lightning network.
What I didn't anticipate is is that 10 times value even with something that's as upwardly volatile
as Bitcoin, in El Salvador provides 10 times value to their citizens because they're is so
blocked out of a financial system. That even with that price volatility it's way more valuable
than the than the US dollar or whatnot looks like. So now you have on Bitcoin the monetary network
kind of the store of value and layer two reinforcing each other faster and faster.
Now how many El Salvadors are there versus the G7 and so when you when you think about
now who benefits more becoming earlier on Bitcoin adoption what you can see really clearly is that
at a certain point along this transition that more and more countries must adopt it driving
the network effect faster and faster and faster and more to all all parties on it and so
I suspect that the G7 will be late to the party. I wish that wasn't the case. I'm hopeful that
I'm hopeful that at least they'll um move into Bitcoin mining into the uh and such but uh but
I suspect they'll be late. But basically I mean have you ever tried going to the street and
telling a random person that the seven most powerful nations in the world will not be able to
stop that silly little Bitcoin thing that we've heard on the news from. Because, people don't
really think about Bitcoin as much as you do. Yeah and I have I spend is but you know I
spend a lot of time here thinking through this. But I will tell you this at the
highest orders of all different business government everything else this is
being talked about way more than you think. Here's a simple way for your listeners
to think about it. Name the last time that a technology that empowered individual
rights and freedoms and humanity was stopped. It's never been never happened so we forgot
about it, but yeah maybe we forgot about it but I can't imagine us forgetting about something that
is this pervasive on a network effect that drives it so printing press would be an example printing
press gave a lot of information and power and moved it from the church to humanity and we built
more value on top of essentially that information asymmetry that existed in the church to drive
a scientific revolution on top of this. It was more minds came in and more information and then
because of the written word was codified other people could error correct off of that information
so first you have to add an abundance of more information and a lot of misinformation into
that which was error corrected by the technology and more people. So the technology created more
information and then the technology, more people error corrected the information. Today that
technology that's doing that same thing is in an order of magnitude versus the printing
press probably 20 orders of magnitude different than the printing ,because but it's doing the
same thing. You have information exploding and a lot of that information having misinformation you
have actually misinformation in the base of money which must create more misinformation everywhere
else and you have it being error corrected at a rate as well and so what you're what you're
seeing on bitcoin is that error correction. It's happening with that and it's happening
way faster than most people anticipate I don't understand the error correction. So
what who used the printing press in the beginning? I am supposed to know this? Churches! Yes. Essentially, to create this is the way that the
that you have to live because the church says so and then what ended up happening.
Different religions sprung out of the same thing that created more control over people through
this exact same thing now my difference protestant versus catholics. Tiny little control variations
to say this is the way versus this is a way and a lot of people believing that. But as as
that as that printing press drove more information and out you could contribute individuals
could contribute to that information graph and sometimes their ideas, Galileo for instance
and others, contradicted what we observed through the world the contradicted long-held
beliefs and it was forced to have an answer and that error correction through
people forcing forcing an action is something that has a contradiction.
Created what I said science and everything that sits on top of that. That same thing is
happening today um and I would say Bitcoin forces an answer to what we're talking
about today. The technology, my book forces an answer to how is how is inflation congruent
with her humanity thriving in a technology driven world. But is there any way of moving from the
old system to a new system that is not horrible? Bitcoin is the most hopeful path but there's
going to be a lot of people hurt through this transition systems are messy.
Why do people get hurt? A lot of people that are levering
up into the existing system and trying to gain more and more wealth in the
existing system and buy more and more houses. What they're really doing is
magnifying their risk to one country. Right so if I bought a whole bunch of houses
in one country, because I don't realise that my and I levered up to be able to do that and
my rents are going higher and all these people are paying higher and higher rents
and I'm getting rich and rich as a result. I might not see that when revolution
comes to be able to take my housing back. I might not see that and then where would
I go because all my wealth is tied to that one country. Where would i go? It's a
fascinating facet of people that they would they're obsessed with real estate. Yeah but that,
so let's dig into that more. I actually think that this might be a little crazy, but think
about this from first principle standpoint. Real estate primarily, our fascination with owning
real estate, is actually what gives the state its power to be able to create an inflationary
environment. Because we think those property rights will last forever and and it's our way
of control and it locks us into one country and when revolution come. Look at Lebanon,
look at anywhere. That same thing happens you can't get out all of your wealth is stored in
real estate and you're locked in forever. You can very literally also not get out of the system
because you're in debt now. You have to go work and pay the house off for 30 years and then you're
too tired. You're sitting in a system reinforcing on the system without the realisation of
what that system and the benefits to you the externalities of that system hurt, how
that system hurts a whole bunch of other people because you're winning in that system and you're
winning more and more you don't realize that okay my rents went up. I have this vast real
estate empire and all the rents went up which really meant that the somebody else's
savings and they're working harder and harder trying to catch that and it's impossible to
catch it and at some point whether government takes your real estate back and or taxes
it totally different to redistribute it. Or um all your time labor to be able to do that
or these people come to rise up and steal it back or take it back through a revolution. You don't
even realise it and you're locked into a system. I often ask myself, because we can see this.
Everything I'm talking about right now if you actually zoom out from your own personal spot
and look through the lens of the world you can see it everywhere. The signposts are absolutely
everywhere you'd have to be blind not to see it. So if that's the case, then wouldn't you search
for something that is unconfiscatable? That if you remembered 12 words like in Bitcoin you could
move anywhere in the world with your wealth and everything else and nobody could take it from you.
You could get on a plane you you don't have to take a whole bunch of gold bars on a plane. Which
you would never be able to do. You can remember 12 words and you can take your wealth anywhere
and wouldn't it also be probable that jurisdictions around the world whether they're
G7 or not would compete for that wealth through competition that was
building better long-term societies because here's the thing. I'm totally fine paying
taxes. I'm totally fine. I want a firefighter in my neighbourhood. What I don't want is somebody
to lie to me, I want integrity. I want to know where the taxes go and I want to live in a
society where I'm not the wealthiest person. Everybody else is living in despair. I'm happy to
pay for that, but I want it to be based on truth. I want it to be based instead
of being based on a fraud and so if you think through logically what's
happening in this open monetary network. You're going to have more and more governments
that are going to be essentially building to truth over time. So that's what makes me really
hopeful. The smartest thing that the governments and the central banks could do would be
to just let it grow, right? The smartest thing they could do is they know they're in a system
that has to fail. Mathematically has to fail. The smartest thing that you could do is
let it grow even regulation or some sort and when I say regulation provides
certainty that it is going to grow. So that and by the way if current policymakers
don't, new policymakers will be elected on a platform that will. People will demand it.
Do you think that Bitcoin as a movement is already big enough? Yes, yes I think it's I
think it's virtually unstoppable right now. And when I say that I also want to hit it with a
caveat. I might be wrong,. but I've done a lot of work on all different possible game theory
at different outcomes and everything else. And, I hope I'm not wrong because I think
because it provides the best transition path and it provides a transition path to something
that is super hopeful for humanity. There are two important questions that we still have to cover.
First of all, the first question everybody has who you know just hears about Bitcoin. Why
Bitcoin and not one of the 10 000 other coins? So most of the other coins and if you use that
10x value creation so Google provides a 10x value over existing media. What ends up happening is
other companies don't see it, so they don't close the loophole as fast and google becomes kind
of a platform and monopoly power out of that. But if Microsoft saw what Google was
early on remember Google started as free, there was no there was no money there
there's no way to make money. They copied a model called Overture which was a pay-per-click
model that actually gave them all the revenue. When Google started it was a free search
engine and so the whole bunch of the monopolies dismissed it, because it was nothing. Internet
wasn't big enough and everything else. There's no way to make money so it gained enough
users and transit that all of a sudden it turned and that's what I'm talking about a 10x type
of value. What Bitcoin did because of the 10 12 year cycle or whatever we're in right now
is is it created an open monetary network that policy makers didn't see for a long time
and it and it drove a network effect and more and more people on that network and
created a whole bunch of value for a whole bunch of people on that network effect and
continues to do so now at a crazy great rate. If policymakers saw it in the beginning all of the
same kind of fun that's happening today would have happened. China would have stopped at
China their policy makers would have stopped it in in the beginning earlier and
they could have stopped it at that point. Today the more they try to stop it the more
they encourage it. It's a marketing ploy because what's happening is the more that
there's, let's use climate change there's a lot as people believe proof of work leads to
because energy usage increases climate change and and i'd say the vast majority of environmentalists
and everything else actually believe that. I hate to say this but it's almost a government
conspiracy because inflation equals climate change and if anybody can tell me why that's
wrong I would love to debate them on it but inflationary and monetary policy in a
finite world guarantees that this world burns guaranteed. Because people spend money
and don't think about resources as much they have if they don't have any place to save
their money. Exactly it keeps on going and going going and it gets exponentially worse so why
climate gets exponentially worse is because of inflation it's not because of Bitcoin. It's the
opposite of what people believe so the problem is they're looking through an existing system
thinking that the system can solve it and the system cannot solve it. So Bitcoin is actually
the most positive thing for the environment period but that's not what most people believe.
It's just that belief it's true but most people don't believe it so the more and more energy is
trying to stop this and but every time that kind of and when i say more misinformation
hits something that's based on truth more people look at that truth and realise
it. In essence, you're driving Bitcoin's adoption faster and faster and faster with more
information as more as the monetary layer gets destroyed. More and more people are
looking for an alternative and you're driving that faster so that's one. Now
let's focus on your other coins so when if you saw something gaining that much
value and you were an entrepreneur what you would try to do is create a `Me too`
type of thing so you could capitalise on that value. So you see Amazon and you see
early on you saw thousands of clones trying to create `Me Too` types
of companies that could stand out in difference. The only way to stand out in
difference is to provide 10 times the value of the of the leader. So you'd have to same the
same thing that at 10x value in Bitcoin over gold as a `Me Too` you'd have to take to create a
10x value over Bitcoin to displace Bitcoin. I don't see it at all i don't see close to it
iIsee a whole bunch of and now people will you know some of your listeners might so say okay well
Yahoo was Yahoo was this and then Google display uh yeah yahoo which is true Google
play provided a 10x value to yahoo. And why do I know that I used both early on as a
marketer we had to spend five thousand dollars um per an ad space on Yahoo as a marketer on
Google. It was free we built Google it was free. It was free so it provided a 10x value
but the more important more important part is that all of those coins, all of
those kind of uh third-party coins, they're all they all become centrally controlled.
It looks like so to try to produce that value over Bitcoin because Bitcoin has
this monitor it doesn't have a marketing team it doesn't have the people are the marketing
team all of these other coins have marketing teams and everything else and what they need
to do is essentially centralise to be able to to try to provide more value. And
so I suspect that most of them go to to zero in time um that they're not they're
not long-term investments. I hope that's true because iIm not in Bitcoin for money I'm in
Bitcoin for kind of a change in a transition transition path but I do also understand that
this, that why governments might lean into a different coin. They could control exactly that's
because there's this weird tendency by people who don't understand Bitcoin haven't put in any work,
but also you know are close to the establishment politicians, central bankers, they hate Bitcoin
and then they start you know shilling other coins because they don't have a problem talking about
Ethereum. So basically what you're saying is that the other coins tend to centralize they must and
decentralization is one of the main um advantages of Bitcoin yeah yeah that is interesting
yeah and the centralisation um fits much more into our current system. Because what they're
trying to do is stand out from Bitcoin's value. Do you believe in let's go start number one do you
believe that any of these other coins has a chance to both have the run that Bitcoin had to drive the
network effect to be a monetary store of value. They will tell you they're not trying to be
a monetary standard so in other words what you're saying is Bitcoin has already won them
on monetary store value it's just very early if they win the monetary store value which they've
already won then would it be logical to drive a different coin for all of your purchasing or
would you drive a layer two network off of Bitcoin to do your purchasing and I think it's pretty
obvious. What's what's going to happen and that's what El Salvador just did by coming onto
lightning and the network on on a purchasing. But while Bitcoin was going after monetary store
value there was an opening for a whole bunch of nfts whole bunch of other stuff to do other kind
of Ethereum came out as we're going to be the world super computer and a whole bunch of other
things that Bitcoin wasn't even trying to be. It was funny because Vitalik Buterin did
the `Me Too` thing yeah and now everybody who was with him also it does a `Me Too`
thing of Ethereum and but again that's logica because as gas fees go up on Ethereum it
creates opportunity for other people to do the exact same thing in a race to the bottom. What
the most important thing to this conversation is it just confuses a whole bunch of people.
Yes exactly just so that's the main problem it's just people talk about cryptocurrencies
there isn't cryptocurrencies, there's Bitcoin. There's a whole bunch of others and
if you wanted to if you wanted to gamble like so I don't personally invest in a
whole bunch of gold mining exploration plays whereas whereby you could actually make a
lot of money there if you were the right one early and everything else and got out at
the right time most of them are stock place um but there's a couple that
aren't. In the whole altcoin space I see a whole bunch of gambling and so if somebody's
time preference and they want to gamble with their money and everything else. I do understand why
they might be there and if they are in early what gives them more knowledge in something than
somebody else. So I understand why people are doing that, but they can get just killed and
they because they don't understand the kind of the principles driving it. i'm personally looking
at way longer term plays and what I have what I believe in that has kind of asymmetric bet upside.
What about central bank digital currencies? They're coming what does that mean
so so what it means uh the ECB put out today you know from my book. That I
wrote about uh one of the working papers that talks about central bank digital currencies
and there's a reason bringing them out so you could take negative interest rates to negative
six and essentially tax people on their savings because if you did that today um people would
hold cash and so if you take interest rates too far negative people would take their money
out of the bank and they would cause a bank run because people hold cash under them beneath their
mattress. Governments cannot go way negative in rates without people moving to cash a central
bank digital currency changes that they can take your money with a keystroke. They can they can
change the rules instantly and all your savings could be gone whether they would in the beginning
not who knows and everything else but it but again against an unstable system that must happen
over time it must get worse and worse and worse and all of the other consequences we talked about
must get worse and worse as a result of that. But are they coming? They are absolutely coming. Don't you think they are rushing it feels to
me they're rushing it? Because you have Bitcoin it's an open monetary standard we're
operating on a network effect and a whole ecosystem building on it that is
forcing their hand and they're trying to gain the upper hand. But yes they're rushing it
and but it doesn't matter because the structure of what they're rushing cannot work anyways. Well
it can work, it can concentrate all power and control in a few number hands. If you believe,
there's some there's a funny thing happening banks, the bankers, I talked to they
were never nervous about Bitcoin but they're nervous about central bank
digital currencies. They don't like it. I wrote about that because it removes the
need for a bank. The banks have been the big the greatest beneficiary of printing the
greatest. The banks are given a one-way bet heads I win tails I win. I can make a
a bet that everything would fail. I can lever up and everything else and everything would fail
and if I make that bet and I make way more money and things start to fail. Government comes
in and recapitalises me that's the way. We don't have a system that looks like a
free market. We have a crony capitalism, the entire system is based on crony capitalism
with the banks at the very top of the ladder that have been the most enriched
by that system. Now but it required because you had central banks that were
supposed to have independence from government but now government and central
banks are really close together right because they have to be um and what
ends up happening. The central bank would print a bunch of money give it to the
banks and the banks would distribute it. Well that's not happening fast enough banks
won't make those loans because they're too risky so you have m2 collapsing in real market
because there's not enough of a economy so the monetary velocity isn't getting out there. So the
central bank has to step into the bank's position through a central bank digital
currency and that means the banks essentially this is going to sound
bad, but it's true time at the trough is coming to an end. They're not needed. The more
you centralise the system, the less people profit. That's what ends up happening and that's
why the path is really clear to the to very few people in control of the whole thing
and so now so now you have banks who were for were long since fighting Bitcoin are now
coming onto Bitcoin. Because they can start to project what happens next without it so some
of your strongest people that were fighting it are turning into advocates, because they
realise that without it the free market dies. Is it still alive somewhere? Which? The free
market? Not really, so the closest we have to a free market is in Bitcoin and that's actually
what that brings on the high volatility rate too. But even if you use Bitcoin as a free
market um when the entire market is being misallocated like it is with printing money then
it's hard to say anything is a free market. Well I agree. But most people I would ask in here in
Austria would tell you that we're basically living through Somalia, basically there's no state,
everybody for themselves, tribal capitalism. Yeah so it isn't, it's so that's created
by manipulating people's time and money because money is just an arbitrary concept and
so when when somebody. Like if you believe in inflation, you also believe that you
believe that inflation is required against everything we've just talked about you
also believe that somebody should control you? Lots of people do that somebody actually some of
the top of the ladder who could change their mind with a keystroke should control all of everything
you do and if you believe in that that's fine. I just don't believe in that. I don't either, but many people do. Yeah the system is
already so you know fine tuned that people want to be controlled in a way
you want to be told what to do. Or they don't know.
Or they just don't know so. This conversation that we're having brings us into
awareness for a bunch more people. Some of those people that we're bringing this into awareness
will will first push back against the things because it's so different than they've they've
always believed. A change like this is radical and again it's not programmed in their mind it's
not something they think about every day. They don't think about an entire economic system and
how that would reinforce and cause all this chaos. They don't need to think about that every day
they trust in the system and then build their everything they do on top of that system. When
you have the base layer of a system crumbling people are confused and
they'll and what will they do typically when they're confused or fearful
of a system. They'll go into the system deeper to trust somebody to fix it for
them without without going through this what we're talking about it but and they will
make this easy because there will be a central bank digital currency and then there will be
universal basic income right and and because you said you said people love the inflation.
We want to get the money we want to feel like we're getting richer and that would be
a way they don't love the inflation they don't go through this thought experiment to
get to it what they what they what they do. I use this monopoly example and so if you
and it's probably a very it to for people that don't see what we're talking about. Here's
what that looks like. If you go around a game board on monopoly and you play with four friends
and you are fortunate lucky enough to land on the right things the first three times around
the board and you go around it pretty quickly then you gain an up upper hand over others who
landed on go to jail, landed on free parking, and everything else. Just because of the luck of
the roll of the dice you gained an advantage that reinforces on itself as you put more houses
on the properties and everything else your advantage reinforces itself and and
their disadvantage reinforces on itself. os you have two systems reinforcing on
themselves and you go around the game until somebody has no more money or somebody
has all the money. Jeff thank you so much for this talk it's tonight in Vienna and the morning
in Canada I think where you're sitting. Yep! Maybe as a last question, give us your vision
for the next couple of years what's going to happen in the so-called old system and
what's going to happen in the new system? The old system is going to continue to, it
must continue to print and it must continue to centralise and more and more of the free
market will be will be pushed into government spending and policy and that's going to create
a whole bunch of geopolitical risk and tension around the world and essentially that system
is going to be fighting for its last breath. By continuing to do the same thing to to
reinforce that system. I wish what I just said wasn't true but it's a mathematical certainty
but it so that's what's going to happen and that that is likely to create a whole bunch
of pain for people and a whole bunch of us versus them. Most people are focusing on
um a derivative of the root cause so they're focusing on the leaves instead of the root
but those things that they think are important. They are going to turn them against other people
at an ever increasing rate. So that is all these are likelihoods out of the existing system and
and that's probably what happens on the existing system. At the same time, you might have policy
makers talk about how do we how do we transition what are a great reset so you're going to have a
whole bunch of things trying to get the existing system to maintain its influence and power well
a new system is emerging and that new system I believe is Bitcoin right and when i say
I believe i believe it's Bitcoin and i hope it's Bitcoin because it provides the best
transition path from one place to another so Bitcoin should materially increase it's going
to be volatile along the way um, but even if you don't believe that you should have some as
an insurance policy in case I'm right um and but the entire network effect and what ends up
happening on Bitcoin is going to you know move faster and faster at the same pace the is the same
rate as kind of the other one is disintegrating. My hope is that that needle can be thread in
a way that provides the best possible path for humanity to make this transition and the people
that are the people that are helping build this transition early enough and actually a lot
of people most hurt by the existing system will most benefit from bitcoin. If you
just said. But they don't know that right. No but that's actually why I talked on these
podcasts. Remember that this is something that I just volunteer I volunteer my time to be
able to do this I'm not trying to make any money from this whole uh all of this work that i do i'm
trying to get more people engaged in something that has a huge importance into their life and
their kids lives and everything else and so or at least to look at least to look deeper into what
we're talking about. Because you're right the most to hurt by this uh most hurt by the existing
system believe the most in the existing system and that and um but that actually gives me hope
too. Because if you just think 21 million Bitcoin and there's 46 million multi-millionaires um and
there's uh about 2000 billionaires in the world. There is not enough Bitcoin
that the existing establishment could it could could have that much power or
Bitcoin is going to be broadly distributed and people are going to be individuals
are going to be having more say in the financial institutions of the future. But what
about you know the Bitcoin whales of today they will turn into the most fabulously rich
people ever to live. So it's an interesting thing that people talk about that and say and and
and that might and and why that might be a reason not to do it. It's like saying that it's like me
saying I wouldn't invest in Amazon at five dollars because Jeff Bezos would be richer than
me. Makes no sense. Makes no sense. It makes no sense but even if you
carry that forward and you say okay and remember what's happening I keep going back to
this but we measure a system today and we measure in the new system through the lens of today
and instead of what it would look like just imagine in that future that somebody has a
whole bunch of wealth on a Bitcoin standard and look like a Bitcoin standard. The only
way they can gain more wealth in that standard is to provide more value to you. If they try to
gain control by hiring more and more people to gain control or creating a war machine to create
control they distribute their Bitcoin by doing so it fixes a seated structure. It changes the
incentive structure, it doesn't bring equality because people aren't equal sometimes the skill
set is more valuable today. AI research there's a skill set is more valuable than um than somebody
than a berry picker. It doesn't change equality, it changes fairness and so so bringing fair
rules and the right incentive structure ensures that that if we're delivering more
value to society we would get paid more. If we're not we but all prices keep
falling a lot along that axis from a free market we're working and if you try to
exhibit control through that you're distributing Bitcoin by creating control. Jeff one last
question we started with deflation and we're going to end with deflation the fallacy
that deflation is bad because people will not spend the money. How do you destroy that?
How do you answer to that? Really simply. Do you buy a phone even though you
know the next year is going to be give you more? Of course you do. Do you buy food even though if you waited food
might go down in price? Of course you do. There's a whole bunch of things there's a whole bunch
of economic calculations that you decide to buy every day. That even though they're cheaper
in the future you'll still be it makes no sense that people believe that unilaterally.
All it does is take away wasteful spending. The stuff we don't actually need there's
stuff you don't need it just takes away wasteful spending. Which and that's what the irony
is people that believe in climate change can be solved through an inflationary system that
causes climate change. Um the irony is they don't understand that point that I just that I just
said. It's just waste most of it is just waste and more so the technology today is such
a path as things turn into information and information is free you get
the abundance without the things like I have a look at your phone look at all
the things that are abundant today that you used to pay for you have you have unlimited you
have unlimited. I used to buy a whole bunch of maps every time I went on a road trip. I don't
do that anymore I have an unlimited information the map became information the information became
free but that's also the reason why the system is working still. That's right because I can I
pay ever more for basically for my apartment but I don't really have to buy any other stuff
that's right and food and food you're paying ever more for and you're driving a system that
is essentially less things that you can charge more for as technology is embedded into more
things as taking away taking away the requirement of those things that's what's happening.
They built a 3d printed house in Germany with all the regulations and that's why i'm
saying Germany because they have the strictest building regulations in the world. Again all
of these things i think if you think about uh I'll use the example of a chair because Christine
Lagarde thinks inflation will stop buying chairs and uh and that's and and then the economies
collapse so use an example of a chair. What is a chair it's information how did we
created that how do you create that chair somebody's mind had an idea for a chair um
and that to to reach economic value that idea for their chair that design of the chair must
be must work in the market in a must provide more value to more people for that chair to be due to
to be produced. How do they do that they created hey what about this i have this idea for this
chair it's a unique chair and everything else. That I have this idea for a chair I'm going to
test market that whole bunch of people markets and everything else hey retail stores would you
buy this chair if i could produce it for this. I go produce it I send it to China whole bunch
more jobs whole bunch of everything else. Just on information that was in my mind and a
chair that is now produced shipped overseas put in distribution distribution between distribution
warehouse and store so somebody could drive to the store to look around at all the chairs and say
I like that one drive back with their chair. Just came from information the entire job entire
structures all of the jobs combined to be all of that information within 10 years maybe even faster
that information will move into a digital printer and you'll be able to print your chair in
your in your region might be faster than 10 years and the entire supply chain and all of
those jobs of all that information moving to to produce things changes radically and it
reduces it reduces costs. The next step of that is that information your idea is embedded with
artificial intelligence and you have unlimited designs unlimited information of chairs that
can be produced instantaneously for almost free. Our entire system is being redesigned
to an information-led system and there's nothing that the government can do to stop it.
It'll accelerate. So we're going from a system where we print nothing, but
too much money to a system where we can print everything, but no money.
Exactly so what you have is abundance and money scarcity and everything else so abundance and
is somebody choosing how much money can print creates scarcity everywhere else or scarcity and
money creates abundance everywhere else. That's the choice we live in and Bitcoin is one choice
and the existing system is the other choice. That's a lot to unpack there. But it
is it is true, that's what's happening. You know when you talk about abundance
people think you're Karl Marks. And I don't think that way at all I think a
hundred percent free market I think or when I say a free market with checks and balances to be able
to make uh make sure but with where truth reigns supreme where integrity and truth matters.
That's what I that's that's what I think and I don't think um I think Karl Marx had it wrong.
Why I think that is is because he missed the human condition, humans are and if you miss
the human condition we need to take humans out of the loop of monetary policy and trust
math and code because humans can be corrupted. So this is one thing that the
computers actually do better? They do it than the people because because it's
like can you imagine it think thinking today that you could know more information
,than all of the information, that's and setting policy to drive every economic
calculation down the stream. Is that ludicrous? How arrogant is it to think that you could
look backwards. Essentially, you're running an economy for the future driving driving 90
miles an hour through your rear-view mirror you're driving it off a cliff. We've known that
prices are an information system for decades it's but we're still messing with them. We're messing
with them because of human greed and arrogance. Unfortunately and the world is changing and
there's and again that human greed and arrogance is is turning into it is it is reinforcing what's
what's happening and you're seeing more and more people opt out of the system and that is what
gives you hope and optimism. That's what gives me hope and optimism because on the other side of
this transition you have something that looks and this is a great that you have something that
looks way more like Star Trek than Star Wars That's a very good point to end on I
wanted to end on something positive. Let's go with Star Trek. Jeff thank you very
much your book `The Price of Tomorrow` in German `Der Preiß der Zukunft´ it's been just been
published in Germany, Austria, and Switzerland. Apricot for luck! I think you can get
it everywhere starting with Amazon. Do you want to give us one last message, where
can we follow you? What is best for me is just at Jeff Booth on Twitter um the uh again my core
my core thing is I'm an entrepreneur technology businesses and everything else. This just this
just happens to be a passion because I care about the world in which my kids grow up in. I
do too! Thank you so much Jeff! Thanks very much.
This guy and James at InvestAnswers - just love listening to them. The way they can take the complex and explain in such simple terms, that's the true sign of intelligence for me.
Downloaded the book on Audible and currently working my way through it.
everyone needs more than their basic salary to be financially secured. the best thing to do with your money is to invest. money left in savings always end up used with no returns.
Really great to listen to this. Thanks for posting. And I totally agree with where he says we're heading. We have to consume more and more, our entire system is based on ever increasing consumption, and we live in a finite world... collapse is the only logical result in that model.
This is the most comprehensive interview I have ever seen. Booth is genius.
this was fantastic! the book was interesting but felt very high-level to me. it's great to see him explain things verbally, adds a lot of depth to the text.
The most amazing conversation I have heard on monetary policy, bitcoin and society. EVERYONE MUST HEAR THIS!!!