Why Your Money Becomes WORTHLESS & How To Build Wealth In The NEW ECONOMY | Robert Breedlove

oxygen pretty important for human life there's no price on it why it's not scarce something like diamonds not that important to human existence yet has a huge price because the demand weigh outstrips the supply the unique thing about scarcity and money is that money is always scarce right I want to walk through one thread that I all of this is me taking liberally from you so tell me where I go astray here um but this was a chain of events that I was like oh my God I now actually understand what's going on and this is terrifying so you've got um World War II happens and you've got people invading countries and raiding their gold stores because why would you invade if you're not going to get something if you can't steal something these are your words so you invade a country you steal their gold so people like I don't want to get invaded so they started or if I do I don't want them to be able to steal my gold so they started sending gold to the US ends up storing all this gold for people has a massive amount of gold and gold historically basically money as we think of it the the tangible dollars and bills you would store gold in a protected Warehouse somewhere and they would give you a paper that represented the amount of gold so people being Savvy started trading that because it's as good as gold because you can go and cash it in so now the US Post World War II has all this gold coming in and we then after World War II have a the Bretton Woods uh convention I'm not sure what it was exactly but they say hey we've got all this gold now we're gonna make the dollar the central Reserve currency Global Reserve currency excuse me and but it's all backed by all this gold that we have so hey we're good but in 1971 for reasons that you will have to explain uh Nixon decided to take us off of the gold standard so previously to that if you had a dollar you could actually go Redeemer for gold yes now you couldn't and it was Fiat it was by decree I say that this dollar has value and therefore it has value uh the problem is that's married to something that happened at some point in the early 1900s that you will have to explain the beast from Jekyll Island where we decided uh to create a central bank which isn't owned by the government right correct which I still can't believe is true the Federal Reserve yeah is not the federal federal and has no Reserve something crazy like this is where I'm like language matters well played that's a very good way to get me think that this is a government all right so we now break with the gold standard and so it's we can literally print money so as me the ignorant guy that's been his whole life trying to make money knows nothing about investing I make the money I think I am safe actually putting it under my bed only to realize that there's actually somebody that has the ability to go prone to go Burr right and they can press a button and it just makes more money and therefore with more money floating around you've got more people competing to buy that loaf of bread or whatever so the cost goes up as one would naturally expect and so now even though I theoretically have my assets are going up and yeah I have more money but I I either have the same buying power so it's just an illusion or I actually have less buying power and it's actually devastating and so now we get into this crazy making Loop of it seems like I should be getting ahead but I'm not getting ahead I think of inflation as being a natural act but really in the background are people making these decisions and and we will grant them that they are being kind they're trying to do something nice they're trying to level out volatility if I had to guess is actually their motivation but they level out that volatility by um creating debt cycles and devaluing the currency which you are saying mechanistically it just isn't different than theft um but when people think of redistribution of wealth as a good thing is that just another crazy making thing or are people right to think that no this is good we should be redistributing the wealth well that's a good long question um I would start with a long question yeah so let's do this wall three distribution first of all no one ever thinks it's a good thing when they're the target no one ever no one ever wants to be redistributed from no one ever voluntarily gets redistributed from that would be giving up value or wealth or capital for nothing in exchange I don't think anyone I don't say no one ever but typically no one ever will enter that um agreement let's say so maybe we'll track this Arc we'll do what is gold how did we get gold why and how Central Banking was introduced and then we'll get into um really what's happened post 1971. so and I love this question by the way what is money right this is the name of the show and this is the I think the key to incepting these ideas into people or at least getting people to question their socioeconomic reality such that they can peel back the layers of this onion and see through some of these euphemisms we've been getting to or we've been given and one definition of money this is the Austrian economic definition is that it's a Universal Medium of Exchange so again capitalism is built on free exchange it's built on voluntary action right self-ownership you go out into the world create things of value you trade them with other cell phone people the result is we create more output per unit of input we become more efficient acting in concert than we do acting in isolation this is the division of labor this is the reason wealth and riches exist because we specialize and we trade with one another in that process something necessarily becomes most exchangeable or most treatable right by definition for all trading with one another there's going to be a single asset of that uh flurry of trading activity that is the most liquid asset the most treatable or exchangeable asset that is money that's how money emerges in the marketplace it is not a government creation has nothing to do with government other than the fact that they monopolize it and try to control it to control people um and when you look at money from that first principle standpoint and this is from the Austrian School there's a deep Long literature on this you'll see that money needs to exhibit five Key properties and this is an important point we typically think that we want the thing right we want the table we want the car whatever but we don't we want the services the thing renders to us so you could think almost in the world of Economics there are no such thing as Goods if you will I know there are Goods I know they're Stables I know there's cars but what we are after is what services those goods provide to us so when we look at money the five properties that market actors voluntarily favor you could also think of as the five Services we seek from money are divisibility durability recognizability portability scarcity so I'll walk through each one of these money needs to be divisible pretty obvious you want to transact at different scales you want to buy coffee and the same day you go and buy a house right so you'd like to be able to give someone a coin or send someone a wire for 10 million bucks to buy a house pretty obvious um money needs to be durable in that it's not going to corrode over time if you put a bunch of gold in a safe it's not going to decompose right the half-life on gold is way longer than uh matters to any of us if you put a bunch of oranges in the safe and you're using that as money that's gonna rot pretty quickly so clearly durability matters money needs to be recognizable which means that each trading party can verify its authenticity so at every transaction and I'm handing you dollars you can certify either with that little pin they mark on dollars to make sure it's uh a legitimate you know U.S federal reserve issued dollar or if it was gold back in the day they had different techniques for a saying uh the Gold's authenticity making sure it wasn't LED plated with gold in fact the name sound money which you've probably heard in your explorations of the rabbit hole that referred to the sound a gold coin made when dropped a certain way so you could verify its authenticity by the sound it would create and this is another reason we introduced coinage and currency because to verify money at every transaction is a very significant transaction cost transaction costs are dissipative to trade right if we want to increase trade and increase wealth we want to reduce transaction costs so by abstracting into currency or putting it in a warehouse and trusting the warehouse custodian we can now trade much more quickly and more efficiently so that I mean that's that's one aspect of money that coinage and currency helped was recognizability money also needs to be portable pretty obvious you want to be able to move it across space right if I'm buying something in another city I need to get my gold or dollars to the other City to give it to the recipient finally and most importantly money has to be scarce and now we typically think scarce is purely a supply side function that's not what scarcity means scarcity occurs when demand outstrips Supply so when there is more appetite for the thing then there is a supply of the thing okay so oxygen pretty important for human life there's no price on it why not scary it's not scarce the supply way outstrips the Demand right um something like diamonds not that important to human existence yet it has a huge price because the demand way outstrips the supply the unique thing about scarcity and money is that money is always scarce because it's a call option on everything all the capital all the savings humans can produce the heart of man is Never Satisfied we always want more therefore money is always scarce by definition so what Market actors tend to favor is the money that has the most inelastic supply so this means the supply that is least subject to change uh by The Willpower of others that is what Market actors will Zero in on and here there's another number of ways to think about this um time energy second law of Thermodynamics we cannot create in order to store energy right we're sacrificing time and energy to earn money you would naturally want the thing you're sacrificing this absolutely scarce time and energy for to be similarly absolutely scarce that would be the ideal money right something that can't be created or destroyed um with money to gloss over a little bit of History monetary Metals best satisfied divisibility durability recognizability portability those were just and we've tried a lot of experiments we've had seashells we've had glass beads we've had cattle we've we've used all kinds of things as money right Natural Market processes determine that monetary metals were the most satisfactory across the first four properties or services that money can render to us of the monetary Metals gold was the most scarce meaning specifically its Supply was the least vulnerable to change no matter how much effort time energy we poured into producing gold its Supply increased the slowest and the most predictably so this gave us a medium into which we could store economic value and we would know with relative certainty that it would only change by about two percent year over year so this gave gold the store value function we traditionally associate with it um that's great right gold is great gold is good money it's been good money 5 000 years uh served a lot of purposes but the big hang up with gold is lack of portability right we talked about this a little bit earlier you want to be able to move across space obviously but Gold's heavy it's physical right it's very expensive to secure um it actually in one way it's beneficial and that you can store a lot of economic value in a small area and sort of uh amortize the security costs around it but when you need to move it that's when there's a lot of risk involved and this was the impetus for introducing what you alluded to earlier were the warehousing businesses so a private Enterprise a free market function came to be where a warehouse would take custody of the gold give you the warehouse receipt you can go and transact it it's as good as gold right you have a call option on gold effectively this wasn't introduced to augment the portability of gold well those warehouses became Banks those Banks became central banks and this is all again I'm not laying out a nefarious scheme here this is the economics the economies of scale associated with gold it is more efficient to centralize custody of this heavy bulky metal and issue abstractions in it it's more efficient to transact in that model than it is with physical gold so that's what drives this process the problem is you now have to trust the custodian you've introduced what we call counterparty risk there's a counterparty to that trade I can trade this paper with everyone and it's as good as gold until I go to redeem the gold from the warehouse and there's the Gold's not there or they won't redeem it or a fraction of what this paper represents is available um so that is kind of the history of gold into Central Banking and I guess the history of Central Banking is quite interesting um I would say that you know maybe this is an important Point too that people were all seeking something for nothing I think this is kind of unavoidable this is the entrepreneurial path right you've got a problem you've got an itch you want to scratch that itch or solve that problem with less effort right the the really successful entrepreneur is almost brilliantly lazy right he's identifying a problem and finding the quicker way a better way to solve it when he makes that Discovery he can now sell that product or that service or that method whatever it is into the marketplace and because everyone wants something for nothing they will reward him right this is the entrepreneurial process so that's great we all want something for nothing and it's a valid Noble Pursuit the problem I think is when we cross that line of self-ownership or of morality and we start seeking something for nothing from others right someone else has planted the garden someone else has built the business someone else's mind the gold and instead of me performing the work to create that value or earn that value I figured that I can just go out and co-opt or coerce or take that property or that asset from that person that's a path for me to get something for nothing but it's the immoral path right so I see this as kind of like the driving force in most Human Action we're trying to get something for nothing but there's a line that can be crossed and we talked earlier about self-ownership I think that's the line when you violate the self-ownership of someone else that's the problem Central Banking sort of came about as this natural institution to augment the technological limitations of gold it wasn't portable right but when you put that much power you concentrate that much power into one Institution it becomes noxious it becomes corrupting it becomes uh irresistible for some people of lower Scruples anywhere in the world to seek that seat of power and this is what I think has really started to deteriorate the monetary system and if you look at the history of Central Banking it's a lot of leveraging one another right you know you talked about a lot of the gold ending up in the United States this was also pre-World War II A lot of it has to do with the balance of payments among countries which are just inflows and outflows of capital but particularly when things got hot in Europe a lot of gold started coming into the U.S and again with when we with that much power or money in one place we became the world superpower and so we stepped on to the the theater of war at the end of World War II and we declared ourselves Victorious rightfully or wrongfully so you can make your own judgments about that and then we rewrote the rules of global banking to favor the United States where the dollar is pegged to gold all of the currencies are pegged to the dollar so what this gave the United States is the infamous exorbitant privilege as has been called to be able to print money we could send these paper certificates out into the world and have them send us goods and services in exchange add infinitum right until the system breaks down countries had the option to call our Bluff though they could accept these dollars but they could redeem them for gold if they thought were being irresponsible with a monetary policy for printing too much money well countries started calling our Bluff after 1944. uh we had this huge economic boom and then again glossing over some history I think it was Germany that tried to repatriate some gold so they tried to redeem dollars for gold and then we had the infamous 1971 Nixon shock that said no more gold redemptions and from that point on and it was said to be a temporary measure as governments so often and infamously say who was it that said that there's nothing more permanent than a temporary government solution here we are exactly 50 years later in 2021 [Music] um deep into this Global fiat currency experiment led by the United States and things have really come off the hinges I've Point people on this topic to this website WTF happened in 1971.com this is not just economic right this is it's socioeconomic there's you know obesity rates have spiked um drug addiction suicide clearly indebtedness right when you think this is tied to coming off the gold standard as the austrians wrote a long time ago the monetary standard and the moral standard are inexorably linked that and this gets into back into property and time preference um when money's losing its value over time we're all incentivized to be more short-term thinking this is a de-civilizing force and I think it is at I don't want to say it's the sole cause for a lot of the cultural malaise we see in the world today but I think it's a significant contributor okay that gets really complicated so while very interesting I think we pushed that down there's a line that I've heard you say that I think is really important for people to understand because I'm I'm thinking of myself as I first started to Grapple with this idea of inflation as theft and I just couldn't make the words even it seemed like such a non-sequitur to me and that is that there's no difference between I had a realization when I first got introduced to the stock market I couldn't make it make sense until I was like wait this is like baseball cards right these unless it pays you a dividend if it pays you a dividend it's different because it's actually giving you cash but if it doesn't it is literally baseball cards it only has the value that people agree that it has and once they stop agreeing that it has that value then it stops having that value in any real way when I think about inflation the following sense that I heard you say makes all the sense in the world which is that there is no difference between counterfeiting and inflating the amount of dollars in the system absolutely it's just that one we say is fine because the Federal Reserve is doing it with the sort of implicit um okay of the US government and the other is uh person in their basement you know that's right uh doing it on the down low but it's the same thing yeah and then I heard you talk about there was a time where um when um Africa was being colonized that I forget what region but they use glass beads as a form of payment and the people coming in were like word we've got glass manufacturing places you know back home we'll just make more of these beads yeah and when you think about the things that that money represents our time and our energy right you do something you you specialize as you said your specialization create something and then somebody who doesn't want to specialize in that that specialize in something else gives you money it's a call on that good or service and you give them that thing so if you can just go make these glass beads back home and bring you know ships full of them you can slowly milk the efforts of the people that you're counterfeiting their money and when I heard it said and again I also don't imply I don't think that I choose to look at this with no negative uh Viewpoint that they're they're not doing anything negative on purpose if this is all good intentions just potentially gone awry but when I heard it explained how you would do it if you were nefarious I was like oh my God because you suddenly understand that that there's this extractive nature of I'm either getting you to do this for free or because if nobody ever realizes that the glass beads are fake then you just have inflation right if you give me that thing in exchange for glass beads the next person goes but these are counterfeit then you really lost that's right but if I'm just slowly devaluing it because every the prices are going up because wow there's just so many glass beads everywhere um which first would feel like an embarrassment of riches and then suddenly you'd realize wait everything is just re-normalized and either I can afford the same thing or again I can afford less um then I was like oh my God now I understand how inflation is theft and then you really do get into I think it was Andrew Jackson punching a banker in the face you have to understand what happened on Jekyll Island so it's like before we get to the sort of morality side of all this was just fascinating and I really hope that we don't run out of time before we get to it I want to understand Jekyll Island why would Andrew Jackson punch a central Banker in the face like because I grew up in this system it seems natural yeah but there was a time where this was like governments even by government agencies or or government actors were like met with such suspicion and the founding fathers and how they were like yo you have to be so careful of governmental overreach it's like we don't have that same Vibe today yes what happened on Jekyll Island yes okay great question um I'd like to First reinforce the point you just made that inflation is legalized counterfeiting counterfeiting is criminalized inflation this is yup not my opinion this is in fact mechanically how it works and in the piece you're referring to Masters and slaves of money I wrote about this debacle in 16th century western Africa where they were using glass beads as money and I think this history gives you a good foundation for understanding what's happening today it was really technologically difficult to make glass beads at that time in Western Africa so they they had reliable and predictable scarcity a la gold as we described earlier but only specific to that region European explorers arrive and they quickly notice hey these glass beads are being used as money to you know as a call option on all the wealth this area is producing we can produce these glass beads in bulk back in uh European glass making facilities very low cost uh to the point where they started packing ship holes full of glass beads and this occurred over uh it was over a 300 year period they were shipping in these glass beads so kind of doing it slowly and surreptitiously enough there was resistance actually Africans could identify the counterfeit beads they would try to only use the authentic ones Europeans would introduce you know more indistinguishably counterfeit beads so there was back and forth but over time what happened was this multi-century usurpation of African wealth by European explorers through the counterfeiting of money and what I mean specifically here by counterfeiting is that Delta in cost of production right the cost of production was high for glass beads in Africa therefore they had reliable scarcity therefore they had reliable market value and utility as money the cost of production in Europe was low so they could inflate the supply really quickly and use it to basically disrupt uh the hard money system if you will in Africa when I say hard money I mean it's hard to produce but it was not hard to produce for Europeans so therefore they could usurp the wealth um and this this points to a keep property of money is that the market value of the money is going to converge to its cost of production over time so if I can mine an ounce of gold for nineteen hundred dollars and it's selling on the market for two thousand I'm gonna mine gold as hard as I can all the way up until my cost of production is 1999.99 right so long as there's a profit margin baked in there and this also points towards why fiat currency always goes to zero the cost of fiat currency production is effectively zero again it's an entry on the federal reserve's database right control enter another 10 trillion dollars added to the money supply so it's almost intuitive through that lens why the market value of fiat currency historically has always converged to zero which we call hyperinflation so that's all I think a good way to look at it and that's um and that's happened many times historically so it's not just it's not purely that these Europeans are set out with nefarious purposes per se but if there's a dynamic in money where you it needs to be costly to produce to support its market value and therefore support a sustainable trading economy if it's cheap to produce then it will be uh the market will be flooded with the money in a hyperinflate essentially and so that process again is why people settled on gold it was the most difficult thing to produce so the other thing that happens here is that when you're increasing the money supply um like it's very common today in the US we think oh there's not much inflation you know food hasn't gone up a lot whatever whatever but what you're not seeing is that markets if they're functioning properly we should actually have price deflation over time as we get smarter and better and more efficient at making things or providing Services prices should be coming down so the fact that we're targeting price increases of two percent is shadowing over what may be we don't know right we don't know what um the increase in market efficiency would actually do to prices absent the Central Bank intervention so I think this is a very important Point too that you know people try to argue that the degree of it is such that it can be ignored or not worried about the two percent's not that big of a deal you know let them take what they need but it's overshadowing the opportunity costs of people that's being lost like we would have five percent price deflation or more in certain sectors and so to get to the why did Andrew Jackson punch a central Banker in the face which he is as someone that grew up in Tennessee he's my favorite Tennessean for this very reason I think he also called them a den of vipers and he said he would route them out he resisted um or at least he was instrumental in the resistance of the first two attempted implementations of a central bank in the United States the Federal Reserve being the successful third is because this country was founded on the principles of which we inherited from the Magna Carta life Liberty property as we've touched on earlier the central bank is antithetical specifically to the third one property right it's arbitrarily violating the property rights of some to enhance the property rights of others is another way to look at it so what is that what is life liberty and property our life is our future right these are the to take to lose your life is to lose your future let's say right Liberty is your present it's your present freedom right to lose your Liberty is to become a slave right and the the Spectrum to slavery is very important too zero percent tax or theft is a free man right completely owns himself 100 taxation or theft is a slave all the fruits of your labor go to someone else and then so you've got your life as your future Liberty is your present property is your past actually it's how you've spent your past infusing nature with your life and Liberty right your self-ownership you've accumulated fruits of Labor that becomes your property and so the central that those are the kind of the three tenets not only of natural law but also basic morality right I don't think anyone would sit here and argue with you face to face and say no I have a claim on you more than you do I don't like it's a non-reasonable argument and again this is this is a priori right this is only you can move your left arm there's no argument that I can formulate that says no I have some claim over your left arm and the actions that it takes yet we have that implemented in this system that can violate property rights if I can violate your property rights I'm effectively saying your self-ownership is limited and that I have a higher claim on your life than you do this is like the rotten core at the heart of modern uh statism we call it capitalism but it's not it's state marginalized capitalism with a communistic institution at its core called the central bank so Andrew Jackson was a man that understood these principles he understood the importance of adhering to life liberty and property for a not only uh is it pragmatically the most wealth generative model of human organization but it's also the most humanitarian and ethical right it offers the greatest equality of opportunity to actually have property rights in yourself in your time in your labor so and it's you know thank goodness it's that way thank goodness the ethical humanitarian choice is also the most wealth producing Choice otherwise we'd have a really ugly Dilemma on our hands uh I think Andrew Jackson and our founding fathers understood these three pillars of life liberty and property as the most important components of human organization that if we adhere to them we can actually create modes of being that increase our wealth which is to say increase our satisfactions right the heart of man is never satisfied but this is the way to optimize the satisfactions of human beings and create a mode of being that's focused on trade cooperation interdependence as opposed to Warfare or fighting so it's to boil it all the way down it's like we can either cooperate and trade let's say cooperate and compete it's very important part of Entrepreneurship right it's competition and trade voluntarily with inviolable property and we generate wealth that's a positive sum game the pie is growing or we can violate the property of one another and fight over it and this gets to that old basket saying that when goods and services don't cross borders soldiers will all right we need we're all seeking something for nothing if we don't channel that Human Action into these uh productive channels of trade and Entrepreneurship then we end up over here uh in violence coercion and compulsion the truth is hitting your career goals is not easy you have to be willing to go the extra mile to stand out and do hard things better than anybody else but there are 10 steps I want to take you through that will 100x your efficiency so you can crush your goals and get back more time into your day you'll not only get control of your time you'll learn how to use that momentum to take on your next big goal to help you do this I've created a list of the 10 most impactful things that any High achiever needs to dominate and you can download it for free by clicking the link in today's description alright my friend back to today's episode okay so you've got Andrew Jackson trying to root out the Vipers I'm assuming he thought of them as vipers because they can redistribute wealth which is a violation of your property that's right why then do we end up creating the central bank and why did they meet in secret like what give us a little bit of background on that meeting on Jekyll Island I know they were pretending that they were going on a hunting trip there's it's such a weird Confluence of things that are happening right now you have this sense of like distrust of people are working behind the scenes against you but you also have the sense of redistribution of wealth is good like it's it's a very confusing time right now and this is a still confusing to this day people will argue with you um that this you know the Fed was set up with very good intentions and that this whole which by the way this book The Creature From Jekyll Island by G Edward Griffin this was formative to my understanding of Central Banking and this is pre-bitcoin that I got into this so I would really just encourage audience to go check out that book uh it's a it's a big book though you can also read an Abridged version called dishonest money I think was one that I gave to my family and friends and it sort of encapsulates the gist of it um but to your question I think based on my study of that book that it was done in secret and it was done over a holiday weekend because this was a time when people still understood the ideological importance of life liberty and property we learned a lot of lessons from Central Banking and it's failure and it's tyranny in England and even before that so it was still fresh enough on the human mind that we we were resistant to its implementation um but as far as why it got pushed again it's just something for nothing principle right there if you could found an institution or a business and by the way all organizations are businesses right governments or businesses institutions or businesses they're all property strategies as I call them if you could establish an institution that could generate Perpetual profits and be able to paper over its own losses or you can never sustain a loss would you not have a pretty large incentive to establish that organization I mean the equivalent question is if you could magically wish for a money printing machine right here on your table like wouldn't you want that wouldn't you once you had it wouldn't you run that machine until it was absolutely blowing smoke and Sparks out the side of it I mean that's Central Banking in a nutshell is it human beings in this pursuit of something for nothing or in this pursuit of um pursuit of wealth frankly right the most powerful incentive in the world we have tried to rationalize and formulate different ways of creating socioeconomic structures that favored the few that could understand it and create that privilege for themselves at the expense of others I think this is where Bitcoin needs to enter a stage left here so I have a quote from you um actually I'm going to start with a paraphrase from Alan Greenspan this is you paraphrasing Alan Greenspan um that sets us up then for a fewer quote so Alan Greenspan again this is a paraphrase a sound store value must be made illegal otherwise fiat currency would not be competitive so you've got this idea of so a sound store of money you talked about you dropped that coin but basically that it's the amount of it is fixed in flexible Supply okay so that's sound now this is your quote which uh I love and I think sets us up for understanding why the Bitcoin guy who has Bitcoin tattooed on the inside of his arm like the most painful place to get a tattoo uh says this this entire system we've built is a complex of unintended consequences and Bitcoin is an immune response from the collective economy so if we buy into the idea that they didn't have bad intentions to create the central bank they don't have bad intentions to make the printer go Burr they just like they're trying to they're trying to policy their way to something that's far more stable which I actually get and when I put like my they don't have bad intentions hat on and I'm like word like I get what they're trying to do and I'm grateful that I've grown up in a super stable environment where I was able to go from you know sort of lower middle class to generating real wealth in my life so for me it worked right I was able to jump class like all the things that I was promised with the American dream I was actually able to do and so I'm like yo that stability is amazing um I didn't ever have to use weapons to build my company which is a whole side thing that I've talked about before where I had former drug dealers working for me long story there's a whole reason why I think it's amazing to give people second chance so anyway they were telling me stories of like people trying to confiscate their product right which for me would have been protein bars so I was like whoa the thought of somebody showing up with shotguns to take my protein was like that's crazy that's a hard way to do things yeah right so it's like okay this is all work for me I like the stability so when I have that hat on I'm like I get what they're at least trying to do but when you try to engineer a system whoa like the number of things that go wrong where you can change whether it's ecological and you're trying to do something and it has you know 10 different knock-on effects or whether it's with money and it has different knock-on effects um why though is Bitcoin the immune response yes um it's funny you read that line I don't barely remember you said while you I heard you say it so whether you've read it or written it or not I can't say but in a podcast you said um so these principles that the United States was founded upon again that have been refined from the past from like the Magna Carta one of the most important if not the most important is the principle of inviolable property meaning again property is the relationship between yourself and the value you create or the fruits of your labor which is the foundation of the scaffolding that lets you climb the socioeconomic hierarchy right from as you said lower middle class to where you are today was because you knew that you could hold the value of the value you created and use it to scaffold yourself upward if that Foundation were not stable right at least to some extent there would be no way for you to have upward Mobility so again it's we're back to property rights being the basis of civilization itself they're pretty good here they're pretty good in the US you can open a bank account you can put dollars in it your property audits will be violated by inflation when the Federal Reserve is printing money you're going to now need to outpace inflation with some other investment otherwise your property will be diluted you don't have full property in that money because if you try and wire it to you know I don't know what countries are on the ofac list today Iran or something they'll block you and say no you can't do it so you don't have full rights in that property you are being surveyed you don't have full privacy but you have pretty good property rights right relative to the rest of the world Bitcoin is the first permanent implementation of this principle we've been refining throughout human history of inviolable property it actually cannot be violated in any way no one can produce more than 21 million Bitcoin so it's and I've argued this in some of my writing that although it's an invention we've actually discovered something with Bitcoin we've discovered absolute scarcity for money so if we're back to those five properties of money in terms of scarcity Bitcoin is absolute it's not relative right it doesn't change we know with you know nothing's um people argue with me about this it's not absolute everything's probabilistic true uh Bitcoin has proven itself over 13 years of flawless operation that it does two things essentially perfectly what's your turn out a block on uh one block of transactions on average every 10 minutes and adhere to a supply cap of 21 million so it's the first fixed Supply money there has ever been and I don't think you can recreate that because by definition money is a centripetal Network effect so it we tend towards one so for the same reasons we had one analog gold we're likely only to have one digital gold um this so your property rights cannot be violated by inflation because no one can change the supply cap if you hold a thousand Bitcoin you hold one thousand of a possible 21 million forever right you have a guaranteed fraction of the total money supply you cannot get that level of assurance with any other asset in the world full stop doesn't exist even with gold you can hold all the physical gold you want you're still not immune to some technological breakthrough we figured out figure out how to produce gold in the lab very cheaply we mine an asteroid we mind the ocean floor we find a new South American Bonanza whatever you're not immune to any of that but with Bitcoin and again it's a bit of a bet because it's only 13 years in but it's done these things perfectly so far if it continues to do what it's been doing for 13 years you have a guaranteed fraction of Total Money Supply so you have an inviolable property right further this is again property is the relationship right we've historically always needed an enforcer so you need the police force you need the military to make sure no one comes into your house and violates your relationship with your house we needed if maybe not necessarily a monopoly on violence but you needed a protection-producing Enterprise which historically is the role of government to enshrine your property rights the problem of course is that they willed the power to violate your property rights as well which historically has been very tempting for governments and bureaucrats they typically give into it and governments get overthrown over time that's been the cycle we're locked into bitcoin's the first property right independent of the Monopoly on violence or independent of uh physical protection production it's an informational property right it's just an alphanumeric string you can store it in any information bearing medium put in your mind put on your computer put it in a song do whatever you want with it and there's no the enforcement is done by the mining Network so the algorithm and the free market competition that's going into Bitcoin mining is effectively displacing the protection that government was historically necessary to provide in Bitcoin itself so it's this radical new you know some people call it a metaphysical property right and that it's just an information Bearer asset so gold was really good as a bear asset and that you know assets equal liabilities plus Equity the accounting equation gold was pure Equity if I hold gold it's no one else's liability that's really important right I have no counterparty risk if I hold physical gold if I hold dollars that's not true right I have this liability to the Federal Reserve to the bank whoever whatever counterparties are involved bitcoin's the same as physical gold but it's non-physical right it's informational so it opens up this entire new sphere of possibilities and how you custody it you can custody Bitcoin in these multi-signature schemas that are all but immune to theft you can chop the key into a bunch of pieces and distribute it geographically you have these military-grade protocols wrapped around it and it gives you an absence it it is the highest implementation of human self-ownership we've ever had right in the past it's been scribbles on the American Constitution or the Magna Carta and like We'll always adhere to this document no matter what but then you know a few hundred years go by I'm like well you know let's tweak this or change that or add this bitcoin's taken those principles we've used with foundational documents historically and it's permanently emblazoned them in computer code an unbreakable code basically is another way to think about it so it's the invention of inviolable property right it's no longer a principle we've grabbed this principle out of the space of ideas and we've anchored it into reality via the thermodynamic competition of Bitcoin mining and it is so radically new and hard to get your head around that it's shattering World Views worldwide Bitcoin I think you would agree with this I view Bitcoin as a deflating currency fix Supply correct but as more people want it its value is going to go up which if that is true then the longer I hold it the more pizza that same single Bitcoin will buy exactly so that has changed my behavior I think of dollars as like whatever like spend it but when I have a Bitcoin I'm like I don't want to mess with it this is time preference yeah I want to hold it so because of that my base assumption is that if you have a deflating currency that thusly buys you more over time it's so counterintuitive because deflating makes it sound like it's bad it's getting smaller but it's actually growing more powerful exactly it's buying me monetary dilution as inflation and monetary enrichment as deflation yeah the inflation deflation is a Keynesian euphemism actually to sell the idea of infections well played because my brain is having a very hard time okay so my Bitcoin is growing in purchasing power over time and that has already changed my behavior so I know that it's going to change more people's behavior my base assumption is that will cause a decrease in Innovation because people are like dude your iPhone is cool but like uh I'd really rather wait and see what my growing powered Bitcoin that's the leap I want to challenge right there where we say less we say more saving equates to less Innovation yeah you can see exact Ops why the the nature of saving itself is that we are delaying present consumption and looking further into the future and engaging in longer term production processes yep now the austrians describe this as the more round about the production process which is equivalent to saying the more finely we engage in the division of labor so you have one long production process to produce a thing the more finely we chop that up amongst ourselves the more productive we become so that um effort that impetus to push into longer production processes that are more more roundabout and more finely divided that is innovation that is how we we become more than some of our parts we accomplish great doesn't feel true to me with less efforts when I that's it there's you actually think inflation drives Innovation can I give anything uh well so I'll tell you why I think inflation and look trust me when I say I am at the edge of I am thinking through this in real time so this is not me saying I believe this but this feels right to me so when I think about what gets people to innovate it is if I bust my ass and I come up with something better than other people I get more value from people in a very fair exchange where they think they're taking advantage of me because they'd rather have this thing that I've created than they would they want the money as do you have them exactly and so I'm like the word this is amazing so now where what we get into is right now with an inflating currency people have just a sense of like oh this money is it's it's inconsequential it it God this is going to sound stupid but a dollar is only worth a dollar whereas a Bitcoin to me feels very precious it's like this gets becomes two dollars three dollars ten dollars a hundred so now I'm like uh I don't really want to spend this okay because of that I don't have the ease of like buying that I would so now my evaluation of the thing that you've created I'm way more scrutinous so I mean maybe just raises the bar on Innovation but it it I think you're saying it feels like it turn to Value investing perhaps so for a long time people would only invest in projects that created real economic value right and if your money is holding purchasing power over time that's a good bar you can think about it like this imagine we're on a world run by Bitcoin so there's one hard money fixed Supply everyone uses it in the world every successful economic project every entrepreneur every Innovation that successfully increases productivity that accretes to the purchasing power of everyone's money so in a world where your money's constantly losing purchasing power that is not happening so you get more junk I guess there's more of a there's there's actually the incentive and this is related more directly to the violation of property but there is an increased incentive to consume rather than invest the more rapidly you you violate property rights and the more that it's permanent rather than intermittent so if I know the high degree of certainty that you keep 20 of whatever that I make that I have a 20 less incentive to engage in investment rather than consumption activities and again that's what we're doing when we print money we're actually inducing or incentivizing consumption actions over investment actions and investment actions are what Drive Innovation it's savings that underpin Investments investments in that long-term production structure I I suggested there's also r d in their experimentation right we're trying new things that is what creates innovation in the real world so if anything The Innovation that we've seen in the 20th century has been in spite of Central Banking not because of it but it gets very murky here because it's very easy you could swap someone else into the seat right now some canes and economists and they'll give you a completely different interpretation of economic history right they can go through the historical facts and Trace their own Arrow of causality and say here's what happened and we're back to Copernicus back to Copernicus but here's what the libertarian philosophers did they said you can't mistake economic history for actual economics economics is more of a rationalistic science you you have axioms man must act man prefers present satisfaction to later satisfaction all other things being equal like these axioms it's like geometry I I so I didn't understand why can't I take economic history as economics if you take economic history you can because that actually happened so you're saying you can't take the multiplication of Economics social science right you cannot mathematize economics in the same ways you cannot mathematize psychology I can't sit here and tell you the reason you're doing this is because there was a linear chain of causality and if we repeated this experiment again the economic experiment unfold in the same way it's not possible because it's just too complicated there's no constants in Human Action right so we know water freezes at zero degrees Celsius that's a constant we can build a framework of knowledge around that there are no constants in human action constantly changing it's all all these psychologies interlinked into the market process so we're going to derail on this but I'm just going to plant the flag to say I think there will be a day where we actually realize that human interactions are completely predictable Free Will is a total myth but that doesn't help us now that could be a pretty bleak day I don't find it Bleak because the experience will never feel like that but that's going to completely derail us because right now I don't Free Will is seems to just be provably an illusion so we will definitely get derailed on this yes if um all right so instead of derailing on that let's so this Copernicus idea of we have a theory the theory is going to completely shape how we interpret things and definitely how we act so what is the I call that a frame of reference frame of reference is everything it is the distorted mirror that we perceive reality from and to your point it's individual so everybody's got a frame of reference it's going to dictate how they think about what they see and that will actually impact how they feel which will impact what they do what is the so are the the two using my language frames of reference that we're thinking about here the Keynesian model versus the Austrian let's talk about a very fundamental Theory which is the theory of the individual now this is something that we take for granted today we assume that you're an individual I'm an individual we're all freely interacting um but in ancient times it wasn't this way actually it was the family that was considered to be the primary social unit they called it the uh paterna families and everyone was basically perceived as a unit in that family that you you served the ends of that family uh it was religious in nature this was in ancient Rome it was the religion it was uh the family and it was property so we're talking about ancient people that said on one piece of land generation after generation the present living family took care of the ancestors right they worshiped the ancestors they used to burn a hearth there was a fire that every family maintained on an altar and the first thing they did every time they would wake up in the morning is stoke the Flames of that fire and so that was to symbolize their property interest in that land that carried forward from their ancestors into the present day and if that fire were extinguished that were that was considered to be an equal symbolic expression of the family being extinguished so the whole primary imagined social unit of the world was the family the individual did not even exist now this is hard to imagine it didn't exist or it just wasn't the primary way that you thought of it this is very hard to talk about because what I'm saying and often we're talking about money is the same thing you're trying to describe water to a fish that's never broken the surface how much of our cultural programming do we inherit from our parents from our existence from our cultural heritage in this world yeah but let me ask you one question because I get where you're going and I can collectivists versus individualistic societies has real uh real world impact so I know there is a thing where you would feel that me as an individual is very much embedded in a collective and I have to be thoughtful about that but nobody would be confused if I poke you and it hurts it's not like that person would not be able to distinguish between you getting poked and me getting I'm not going there so let me try to prevent the sidebar let's just say this the individual did not exist as an economic or a socioeconomic conception okay it doesn't mean that you couldn't poke someone and they go hey man don't poke me right a socioeconomic exception of the individual did not exist one of the family did it was all centered around the family and then families eventually Stitch themselves together into tribes and Clans and ultimately nation states and that had a lot to do with the unification of religion but the individual is something that we invented we invented this the individual as an economic as an economic actor okay and from the individual economic actor that came post-christ it was with Christ and Paul's analysis of Christ and the moral equality of men that we developed the conception of the individual and from the individual we extrapolated that into individual private property rights so we moved from a world where the family had exclusive property interest in the land it was also non-transferable they weren't selling this stuff they were just having dominion over it I really think if anything it was like territoriality like animals or territorial over specific uh pieces of land we were basically territory animals right we were trying to survive the way our ancestors did there wasn't much Innovation occurring there surely wasn't a lot of trade occurring and we had this sort of primitive Society but post-christ we invented as religion was evolving we invented this conception of the individual and I'm drawing on a book here by that title inventing the individual if you want to do a deep dive on it explains it in depth but to gloss over a little bit let's just say that with Christ came this idea of the equality of souls that everyone had an equal Soul or a moral equality if you will and with that notion came the 1215 Magna Carta life liberty and property that we had this conception of individual property rights so that you as an individual now can stake a transferable claim on assets in the world and that is what led to capitalism proper right so we have individualized property or we have socialized property and I think the degree to which we print money of the degree to which we have government interference we are socializing property and this is causing people to consume rather than invest it also causes people to misallocate Capital because of the tragedy of the commons no because again if you keep 20 of everything that I make right that's a socialized property right you're taxing me yeah but why would that sketch me out if this is an invention yeah it reduces my incentive to invest if I can only keep 80 of what I earn I have a reduced incentive to invest have you heard Ray dalio's take on this so he talks about China as a collectivist culture and he's like look you can rail against them and think that they're crazy but they think that we're crazy and dealing at the individual level and any one individual thinking whoa you can't tread on me I'm an individual whereas they're like you're out of your mind like you live as a part of the collective and if killing you is better for the collective than kill you we must and while admittedly those words I'm putting in radelio's mouth his whole thing is I know that you look at China and you judge them and think that they're crazy but just know that they feel exactly the same in the opposite direction so what I'm trying to figure out is when I look at if being a part of the collective makes me less likely to invest the only way I can wrap my head around that is if it's the same thing as a tragedy of the commas I don't want the collective to be able to take things from me therefore I'm going to do something with it spend it in this case not invest it just so that I could reap the immediate benefits of that and the Collective Now doesn't have anything that they can take from me if that isn't it I don't stand where you're going I don't think it's a matter of being part of the collective or not part of the collective that's not what I'm saying what I'm saying is is the Integrity of your property interest and let me specify what property is the exclusive power to control an asset right you get to say what happens with your cup no one else gets to say what happens with your cup the prior to Christ that didn't exist that is property right well it existed between the family and the land yep and it was not exactly transferable now there was trade occurring between families and among Clans and whatnot but we didn't have this established legally protected morally protected notion of the individual's right to own property and transfer and trade with others so I'm not saying that this is participating with a collective or not participating with the collective it's about Justice it's about people keeping what they earn the value that they create this is the entire premise of libertarian philosophy and so pre-christ we didn't have that atomized individual as an autonomous socioeconomic actor did not exist post-christ it comes and comes into being right 1215 years later we signed the King John signs the Magna Carta life liberty and violable property you started out as a Pasco when I asked about the the copernicinian that's right we're gonna take these two frames of reference and so I'm tracking that I've got the individual frame of reference and I've got the Socialist I think frame of reference yes yes I'm tracking so far yes okay so what I care about in there is what behavior is elicited when you take that frame of reference right so you could think of the individual the fact that we sit here right now you have bank accounts you have assets you can sell those in the marketplace with other cell phone people that also have accounts and assets we take all that for granted yep but it's premised on private property rights which is premised on the socioeconomic conception of the individual now again we take all this for granted so we it's hard to even talk about but when you get to that you get to private property rights you've now entered a world where we have higher intensity exchange occurring right more people are trading more stuff because more people have a greater incentive in the assets that they own they know that it's not being socialized away from them now this is obviously true more in the western world than it is in many other parts of the world but I would argue that's the reason the West has been such a successful economic story because the reason we've become so wealthy is because we've engaged in higher intensity exchange and had a deeper division of labor and all of this is premised on this you could think of this as live-action role-playing we are pretending that individual private property rights exist all the time and we don't even know it we know it when we give our keys to the valet and just assume the guy is going to give our car back right like we have a legal structure in place there's ownership documents between you and that car all of these things we sort of take for granted that are just embedded in in how we actually act so this is an enacted Theory right we we observe the sun rising and falling and we reinterpret the data when we look at it why do you want me to know this what I'm trying to say is this live-action role-playing this imaginal structure this is different than imaginary imaginary is like you bring a pink elephant to mind imagine all is a little kid tying the blanket around their neck picking up a stick and pretending to be Zorro okay we're all doing imaginal all the time you are the CEO of impact Theory or whatever it is that's an imaginal role these people that listen to you what you have to say those are imaginal roles too these imaginal roles that we take on change how we relate to the real world so the invention of private property rights leads to capitalism first of all led to the Magna Carta which was a precursor to the U.S Constitution we have life liberty and pursuit of happiness instead of inviolable property and this has created the economic division of labor and the capitalism we see in the world today the wealth we have created The Innovation all of these things are born from this imaginal conception of the individual as a single autonomous economic actor and I'm trying to say this because I think it's very important that we are human beings we're running a lot of software it's stacked and a lot of it we take for granted so when I read the book inventing the individual that blew my mind the idea that the individual actually did not exist at one point and then when we invented it we created real Economic Consequences in the world that is very mind-blowing now I want to State why I think that you're bringing this up when I'm trying to figure out one embedded in the context of what should people do with their money and what ought the money system be here's the prediction that I think what you're telling me makes about your world view that it was sub-optimal to think in a more collectivist way it was far more optimal to invent the idea of the individual even though it's imaginal and from that comes the idea of individual property the Magna Carta even to some extent the American Democratic experiment which is something I want to get into and so these things are a progression we're getting better which I think you would Define as by owning my property richer is going to confuse people I've heard you go down that path before cruise but even wealth is confusing like when I tell people that my goal used to be to get wealthy I'm like God I know what they're hearing so I know what you mean by that like anyway I won't derail us on that because even trying to put words was very difficult but I'm with you spiritually but I want to keep going on this so we invent the individual it's better than where we started because of this idea of individual property rights which gives us the incentive to invest our energies into a highly specific way being an architect making shoes running a media company in my case whatever we get highly specialized the whole world gets to take advantage of all these people doing highly specialized things to a freakish degree when I think about my the level of my ambition it's it borders on pathology but I find that utterly fascinating that nature has created that I've tried to turn it off I don't want to it's way more fun when I have this wild ambition and ah more bigger better do things cool by having individual property rights we get to harness that internal engine that people like me you and gazillions of other people have to create and we're incentivized we get an echo back from the world of wealth where I have more optionality maybe is a good way to explain wealth of access to things that matter to me at a uh hierarchy of needs level I can have a warm house food in my belly certainty of food in my belly tomorrow certainty of roof over my head tomorrow all that so we're we're making progress and now again prediction of what I think you're trying to convey is that as you revert through the modern monetary systems the Keynesian economics of hey let me inflate the money supply to keep things moving I know Tom thinks that a little bit of inflation is good because it creates innovation in fact he's moronic because it's moving us back to this pre-individual I like to speak in very aggressive language it's moving us back to this pre-individualistic place where people are going to invest less they're going to specialize less they we're going to be less able to capitalize harness their ambition because they don't get back from the world the keepable fruits of their labor yes how did I do you did pretty well you're not moronic though you have just been in that alternator yeah hundreds of millions of us have been myself included before getting into Bitcoin and all this stuff there is a reason there is a pseudoscience called Keynesian economics that's infiltrated all modern universities funded by central banks and its exclusive purpose is to justify the printing of money and the legal Monopoly right it's it's a very perverse cycle because you get a system that can steal funds from people and then you use the stolen funds to fund University curricula confused it steals buying power purchasing power that's the only Power that really matters yeah but I think people get lost in that because they're like nobody's stealing money from me I deposited a hundred dollars I still have a hundred dollars well the price of beef has gone up 50 in the past 24 months so if you're a Beefeater you've been stolen from by 50 and it's easy to get people to understand taxes theft it it's more complex but anyway as long as we're in agreement that they're stealing via buying power yeah I'm with you still in purchasing power that's right so you are correct however I would like to take it a step further because what we're saying here is that when we print money again that's the point I cannot over emphasize you are only violating individual private property rights you are disturbing my power to control the assets that I otherwise could right and this comes in the form of price inflation right if I'm a stake eater and I've saved up to buy two years of stake and the price of State goes up forty percent because the Central Bank printed money well they've stolen stake from the effectively right or a house which is something a lot of people insert your favorite asset here I'm just picking State because I'm a steak here um so that is all well and good it's incentivizing all the negative things you highlighted right over consumption rather than investment over utilization of assets rather than preservation of capital because I there's a deeper reason there but let's just leave it at that and then misallocation of capital so because governments suck at using my money yeah it disturbs What's called the price signal so you basically think that the configuration of consumer preferences is always changing in the world people always want different stuff all the time the production structure is constantly trying to adapt and map on to that new configuration of consumer wishes right it's trying to satisfy consumer wants or consumer wishes the degree to which you socialize property or violate property or steal it inhibits the ability of the production structure to adapt so you get misallocation of capital uh this leads to a lot of waste and stuff in the world but as bad as all those things are the point that I really find deeply fascinating and whose work I'm drawing on here is it's a book titled a theory of socialism and capitalism by Hopi it's a very dense book but um it is deduced right he's deduced this isn't an observation of economic history in Reading someone's opinion these are deductions from economic axioms so it's hard to read but the insights you gain are extremely powerful there's a fourth consequence to the violation of private property or the socialization of property and that is that you have now stopped the degree to which you're violating property is the degree to which you are not rewarding productive members of society and you are rewarding political actors in society people that are and I've said this before the legislators pen cannot create wealth it can only reallocate wealth so the degree to which a legislator can become wealthy at the stroke of a proverbial pin which is the passing of laws policy Etc there is an incentive to shift from a productive role in society to this non-productive extractive role and the degree to which that becomes larger is the degree to which more people are drawn into non-productive roles so what you're saying is there's a non-producer right we're rewarding non-productive activities when we print money or when we confiscate property in any way so the thing that I'm fascinated with here is this money being such a fundamental technology to human Affairs it's used to hide the widest spread violation of private property rights we've ever seen through this Global concerted action of central banks or semi-concerted action they're all inflating their currencies people that are on the ground saving or being taxed through this scheme we are effectively through the corruption of this economic fabric we call money we're actually corrupting our own individual character development that now people coming into the world that might otherwise be a baker or an engineer or some productive activity might instead choose to go over here and be a a Statesman or a politician or some other extractive role and the degree to which we're violating property in that monetary system is the degree to which they're incentivized to take on political roles rather than productive roles such that the corruption of this technology that's so fundamental to our human being leads to the corruption of our character and the corruption of who we are it's like a breakdown or corrosion of the moral composition of society through the debasement of currency and the violation of property that's what I'm deeply fascinated by and hopefully talking about and helping spread awareness about to prevent okay so then I think we're gonna have to get into axioms so as axioms were something that I came to understand very very late I will give people a very quick primer an axiom is the base the farthest down that you can take something and there's nothing more below that so species something like that it's a base thing and now from there everything is going to make sense parallel lines never touch that's an axiom of euclidean geometry there we go okay so getting into the axioms of what ought to be you say you should you try not to all over people but you obviously have a sense of how things ought to be at least as it relates to money um what are your axioms on how the world ought to be these are not my axioms um I could just name a few from libertarian philosophy now if you ask why why would you say they're not yours well I'll name a few that I've read from libertarian philosophers they're not mine you're just saying you didn't think of them I didn't originate them sure for sure but I want to know what what do you think is the the whatever number I'm going to give you the basic answer like what I think actually are economic axioms and then I'll give you the natural law ought answer which is more of a Moral Moral Axiom if you will uh I can't name all the the Austrian economic ones but man must act is the most fundamental so this is to say action is the purpose purpose of use of means to attain ends that's what we're doing all the time right you think about what you're going to do with your day you decide you're going to need pants to go out in public well pants become a means to the end of going out in public right you need some food that's a means to the end of going to do the next thing you're doing we're constantly selecting valued ends and then choosing means to get to that end one of the biggest breakthroughs in my life of understanding humans was when I read from a biologist humans are an active species yes I was like oh damn like so I'm with you as an axiom to understand people you mustn't will never adjust it still and and I tweeted this today actually inaction is an impossibility to choose to not act is an action you have decided that given all of the possible things you could do in the world you'd rather just sit here that is means to a certain end maybe I want to meditate it's just sitting here could be a means to the end of meditation but you cannot not develop a purpose and select means to pursue ends you can't do it as a human as a living conscious human being you can't do it that's one act that is the Axiom really of Austrian economics those other ones like um man prefers present satisfaction to later satisfaction so all else being equal I want to get paid now rather than later if you want me to part with my Capital well then you're going to pay me something you're going to pay me an interest rate and the degree of that interest rate is how much I'll be charging you for that time essentially of Separation um theft always reduces productivity this is another one taxation is theft so anywhere that theft is occurring it's reducing and disincentivizing further productivity that's an axiom because if you're creating a hundred bushels of apples and someone's stealing 10 percent of them well then your productivity has been cut by 10 percent and their satisfaction came at the expense of your satisfaction so the net satisfaction in the world has not increased for instance uh I'll leave it at three I want to give you the moral one though you asked me what I think we ought to do and this is singularly crystallized in natural law and it says you can basically collapse all the things all the Commandments and everything else into one which is do not steal now you might say what about murder uh well if you consider that through this property lens that you own your body the relationship you have with your body the exclusive power to control your body that no one else has this is the most fundamental property relationship so if someone kills you then they've basically stolen your life in this natural law sense um if someone puts you in jail right then they've taken your freedom to move about they've stolen your Liberty right they've taken away your ability to move about so there's you don't want to steal that either and then when it comes to property you know all of the assets that you've just acquired in the world that you've worked to obtain or that you've traded with others that have also acquired them justly this is again just Lee being the key word you want people that didn't take from others because that caused someone dissatisfaction they earned their satisfaction of getting the thing at the expense of someone's dissatisfaction that's a net negative on the world whereas if we trade consensually as you intuited early earlier you assume what I have you want what I have more than what you have otherwise you wouldn't do the trade and I want the same I want what you have more than what I'm giving up it's that's the inequality of exchange that occurs where we both leave psychically better off we're at least better off in our own mind otherwise we would have never done the trade so the degree to which all exchange is consensual is the degrees which we increase net satisfaction in the world so if you just get to do not steal which means don't print money don't tax don't actually steal or confiscate things I think that is the in my view the ultimate ought in the world it's very clear um I don't know that this will be fruitful but I'm super curious I don't know the Ten Commandments off by heart but I think there's don't covet thy neighbor's wife and love put no God before me or something like that dude are those workable into that or do they become a different category of thought you know I don't feel qualified to answer that actually very fair religion is actually one of the things I hoped that we would have time to talk about today though I don't feel like we're there yet so I want to say one more thing though so again check out the book tell me if I'm right or wrong my interpretation of it is Christ is essential to the invention of the socioeconomic conception of the individual I want to say something to say something about this you can now strip out the historicity of Christ doesn't matter if he ever lived you can strip out the theology doesn't matter if it was God not God Supernatural natural doesn't matter I think we could all agree that it's at least embedded in the social fabric at this point right the collective mythology of how we got to hear Christ is a big figure in that story and now if he was indeed necessary or inspirational to the invention of the individual and the individual led to private property rights which led to capitalism which led to Fang stocks which led to bitcoin then all of a sudden you start to see the importance of that imaginal reality we talked about earlier you know Peterson says this all the time we're living in stories the first time he said that I'm like what the is he talking about of course we're living in stories everything's like a narrated sequence of events but that's not I don't think that's what he or the people that inspired him like Carl Young and others think they think more like this that we inhabit mythologies right we're doing this live-action role-playing called private property rights because of this story we have beneath the economic substructure called judeo-christian mythology or religion whatever you want to call it so I say this because I was turned off to religion a lot I grew up Southern Baptist and I became turned away from it as I became older and more well studied so I thought but now I've returned in a very fascinating way it's like wow you we have to have these stories to exist we have to inhabit them and we're currently inhabiting one and it doesn't matter again you take out the histrosity take out the Theology of Christ it's still fundamental to get to these things to get to capitalism to get to Fang stocks to get to bitcoin so there's very pragmatic real world consequences right we're changing our relationship with each other in the world that's creating modernity based on this live-action imaginal role-playing we're doing through mythology maybe out of ignorance I always felt like my um getting wealthy did not take from anybody I created something they wanted I gave it to them at a fair price and that worked out to my advantage in that um they got what they wanted in that momentary exchange but I was able to build value in something that somebody else wanted for me and so I could sell that to them uh and now where money is let's say in a world where Bitcoin becomes essentially gold it becomes the place where people store their value uh there's only 21 million and so now if I'm Jeff Bezos and I have some just insane portion of that and don't have even really a mechanism to intelligently spend it all uh and this is where we probably have to get to people think that Jeff Bezos has all that money sitting in a bank and of course he does not even have to sell portions for his company um to get that so does that notion of equities like go away like what does that look like yeah absolutely interesting stock markets will continue to exist but I think where maybe your confusion here is again purchasing power versus the supply of money so the purchasing power of money will continue to increase the more wealth we create through free exchange so although there's only 21 million Bitcoin it sounds like you know this absolutely scarce number the amount of purchasing power it can contain is unlimited right you can have an unlimited each not unlimited right there is a cap like uh there can only be whatever we can Touches for Bitcoin or is that not well you can actually soft Fork Bitcoin and divide it further so to your point each Bitcoin and a lot of people don't know this this is probably important you don't have to buy a whole Bitcoin each Bitcoin is divisible into 100 million subunits called satoshi's if ever that divisibility were inadequate we're back to that property of money into visibility if that were inadequate um liquidity to support economic activity right if Bitcoin were Global money and one Satoshi were worth I don't know a car or something you can soft Fork the code which is to say uh it's a simple software update let's put it that way to increase the divisibility of Bitcoin so that's built into the code that's built into the code so it's Bitcoin is essentially and that's one of the reasons it's better than gold infinitely divisible right it's for only 21 million units but you can infinitely divide it now does that have the effect of printing more money no and this is another common uh commonly misunderstood thing people think that if you can increase the divisibility of it then all of a sudden you're back into inflation right but in the problem with inflation is the distributive effects of inflation it's that this group is producing new money for themselves and you're not when you just increase the divisibility of the money it's it's a it's like a stock speed equally stock split right you had one share of stock now everyone has ten no one was diluted everyone was just increase the divisibility of their stock that's essentially what the soft Fork would be to bitcoin divisibility now this this point this is very important because people get this confused the more productive we become as a global economy the more purchasing power Bitcoin can contain and that is unlimited that is limited only by the amount of capital we can produce money as a whether you're gonna have to Define that then because if Capital isn't money what is it because money is a form of capital but let me distinguish this non-money Capital let's say all the other things right the buildings the stuff the cars the factories the equipment all of the productive factors in an economy non-monetary productive factors which I'm seeing loosely's Capital here say non-money capital money is a call option on all that right it's denominating the value of all these assets that are trading back and forth but there's also this people are this reservation demand for money people are just holding money as a call option on all that stuff so another definition of money it's an insurance policy on uncertainty the only reason people are holding money is for its option value we don't know what's going to happen in the future therefore what's the answer to uncertainty optionality if I have no idea what's going to happen I want the maximum number of options to deal with all possible contingencies that's what money is that's another thing money is so if you think of money so I'm talking my answer fixed Supply Bitcoin over here not changing right 21 million but this Capital stock non-money non-monetary Capital growing as we trade and produce more and more this would imply the purchasing power per Bitcoin is growing right it's a call option on more and more stuff this amount of stuff is limited by us how much can we innovate how much can we create but there's no limitation on bitcoin itself and to the point of a Bezos or any individual actor holding an outsized portion of the money supply that's capitalism what we have removed though is the ability for Bezos because he has such a large position in the money supply to change the rules of the monetary Network right and that's what the FED has effectively done it's like we hold all the gold we're going to make the rules Bretton Woods in 1944 we're going to award ourselves this Perpetual free lunch on the productive economy for the right of monopolizing money which sounds asinine because it is um that's not possible on a Bitcoin standard so the fixity of rules the the unchangeableness or immutability of rules is the Bedrock of peaceful and productive cooperation and you know this if you sat down at a table to play poker and if the hand rankings changed every few hands and one guy was deciding I mean he would clean everyone out and that would be that and he would never want to play the game again right you would want to go and find another game to play poker works is a game because the rules don't change we can formulate strategies and compete with one another one another in a productive way but when you if you want to drive people insane and really create a lot of conflict just try changing the rules of the game every few hands now this applies to any game especially money that's what inflation's doing right nobody knows the rules of the US dollar how many are in circulation how many will be in circulation who's profiting we don't even know exactly who the shareholders of the FED are what's their dividend what are their criteria for deciding how much how many dollars to produce who's getting it first who's going to be the Fed chair next year like all there's all of this uncertainty injected into managing the asset that's intended to be an insurance policy against uncertainty that it's just oxymoronic in a way and so Bitcoin is another way to look at it is the most certain form of money we've ever had and if money is an insurance policy for dealing with uncertainty you would want maximal credibility in the properties of money to deal with that uncertainty and that is Bitcoin and that's why people it's like people think you can ignore it or avoid it or I don't want to hear about it but it's like if you like if you prefer wealth to poverty and if you depend on the marketplace for wealth which is the only generator of wealth then you have to pay attention to bitcoin because it's monetizing okay now to go I hope that answers the difference between purchasing power yeah yeah in fact let me restate it because as you were saying it you were melting my brain so it's one of those that's so self-evident that once you hear it you're like oh my God I can't believe I couldn't come to that on my own but so basically it's everything that we create has some value the way that we denominate value of all kinds is with money so whether that's Energy Water um air if you're on Mars which was a joke I wasn't able to make when you said it the first time because I didn't want to interrupt you uh give them AKO Hagen uh all of that stuff is denominated in whatever the monetary system is so in this case dollars or Bitcoin uh so it's an umbrella that by its nature encompasses all things so as you produce more things then it grows to Encompass that you could buy all of those things that everything has value that can be traded for that yeah the more rigid the money supply the more people will choose to store their time energy wealth there and then if the Capital stock non-money Capital stock is growing then that would be reflected in an appreciation of the purchasing power of money and this is like what gold gold has been roughly uh one ounce of gold is equal to a fine Man's suit for like 100 years right but if you look at the price in dollars it's gone from I don't know thirty dollars to twelve hundred dollars that's interesting I didn't know that yeah um I had an Insight on that but now it is gone hopefully to come back at some point um so going to the sort of next layer deeper so the book The sovereign individual which I've not read but I've heard you talk about so many times um it predicts a lot of things that we're seeing it predicted cyber cash uh crypto obviously um but it predicted social media like so what what is the key insight to that book that allows it to predict all these things and does it give us any insight moving forward yeah um they called social media narrow casting as opposed to broadcasting which I thought was interesting uh it also predicted that as the digital age started to really progress that governments would uh likely resort to pandemic like situations to try and reinforce the validity of their borders yikes which is interesting what year was this written this was written in 1997. whoa yeah um insight is again the the logic of violence and the main point that they make is that cryptography allows us to insulate things or defend Assets in a way that is many orders of magnitude cheaper than anything ever before so that the cost of Defense has plummeted which you could say has a commensurate uh increase to the cost benefit ratio of coercion right all of a sudden you can't why break into the guy's house if you can't steal his Bitcoin why invade the country if you can't take their Bitcoin that type of thing that it would have a decentralizing effect on government because government is as large as it is because it extracts Monopoly profits through senior age through inflation through taxation right none of these are mutually negotiated free market phenomenon these are all imposed and they're all able to be imposed because people had no alternative there was no alternative monetary system it's like you have to have a bank account right before Bitcoin what else did you do hold Berry gold in your yard right all right I mean it's pretty hard to transact gold globally um so that's the key insight and the book I'll warn you it's a bit of a dry read but I would highly recommend getting through it I think there's a lot of good insights here yeah that's um it the whole idea of decentralization and all of the things that it's going to change and again my entry point was nfts to because for everybody I think there's going to be something that's relevant to your life that forces you to get to First principles thinking and once you're there and you can predict then it becomes really fascinating and as a a person in media what I realized so I got showed something six years ago he called it V Adams and of course it's become nfts but he didn't call it that and he showed it to me and I was like yeah that's going to change my business like entirely and because when I think about so we're trying to build the next Disney and when I think about that you start thinking about we make things in plastic plush toys you know all that stuff and it's very expensive to make the first one and so it it gets very difficult to like reinforce your brand and there was this moment back in the 80s where you could do what they called selling from the Shelf where you would promote the He-man cartoon with toys on the shelf and so they knew that moms like mine would take you to Kmart and you didn't want to go with her to the bra section so you go to the toy section and you would see He-Man sitting there and it would tell you that there was a cartoon and so you wanted the toy and you watched the cartoon and the cartoon advertise the toy and so it got into this Loop where they could actually make enough money to make the cartoons so anyway I'm thinking about all this stuff and I'm like it's really expensive they've changed the laws on advertising and all that stuff so how am I gonna crack that nut I see the these V items and I'm like whoa that's going to allow me to create virtual products that because I'm again technology is one way street I had a really hard thesis that people will value digital things in the same way that they value physical things and but the technology wasn't there wasn't ready for prime time Flash Forward obviously nfts hit and I'm like whoa okay I recognize this is that V Adam's thing like I'm all the way in and but that to be able to understand what I could truly do with it I had to learn the technology which forced me to understand blockchain smart contracts all that stuff and then you're like oh my God now you can predict while this is going to go and that technology the decentralization of things the trustless nature of it all man it's it's hard for me to wrap my mind around the business implications like when you start thinking about Dows because I'm I'm a traditional business guy and so I'm thinking whoa dials are really going to come in it's going to be a fascinating challenge to the traditional way of doing business which is highly centralized and so then I'm like all right is Steve Jobs right and that by creating this Walled Garden you can create something better or is Wikipedia right or Android maybe a better um analogous example where it's this open system and it's more decentralized and you let anybody use your operating system that wants to and man it's the change that's coming and the rapidity with which it's going to hit us is thrilling if you're looking at it through the right lens certainly from a business perspective I've never been this excited in my life ever like this is It's a moment of disruption and so in fact I'm gonna put a slight um I think your enthusiasm for Bitcoin captures my enthusiasm for just the moment of disruption that we're living through right now where when you have and because in business it's not scary the way that it's scary thinking about nation states uh until nfts I was looking at try how do I beat Disney at their own game and so I told my team when we founded the company I said our job is the same business long enough to figure this out because I don't right now see the path trying to beat Disney at their own game is is a losing Endeavor there are 90 years ahead of us they have Untold billions of dollars in Revenue this is all pre-pandemic and they have billions of dollars in IP and I was like like that's a really tall order so the only thing we could do is tell better stories and we were certainly headed down that path of like I think I see something culturally that's happening that they seem blind to and so that was what we were going to capitalize on and then nfts happen I'm like oh my God like the disruption now that's going to happen they will be way slower than will be to adopt the technology certainly to push it to its extremes and so as things disrupt for people that are able to get the first principles faster and think and be able to solve novel problems in a novel way you've got like a real shot at something here yeah now that the way that people are going to think of that moment of disruption the way that they're going to capitalize on this technology I think brings us to this idea of morality and the I don't want to put words in your mouth so I will simply say the note that I took after listening to you speak on the topic was I think Bitcoin as God is what I wrote and you said I'm not going to call Bitcoin God but uh and it was the fact that those could even be put in the same I'm trying to find the exact note that I took anyway it was close to that so how do these come together how does Jordan Peterson begin to influence the way that you think about all of this religion morality and what's happening with Bitcoin well that's a lot to unpack there I would first nft piece I don't know it's tremendous amount about nfts but what I would say and this is in regards to centralization versus decentralization so many people get lost looking at other alternative crypto assets or nfts or other projects thinking that they have the same trust minimized properties as Bitcoin to say that they are truly decentralized uh no one has a political attack Vector on the network or the good or whatever it may be it is my strong opinion that Bitcoin is the only asset that is truly uh credibly exhibited the qualities of decentralization right it's undergone a fork War people have tried to increase the block size change the supply all these things and Bitcoin is kind of tried and true it's battle tested so with nfts I would just say and crypto more generally nfts and crypto I don't think decentralization has been achieved anywhere else so I'll just leave it at that just so people that is the key difference is that Bitcoin is a one asset in the world that no one can control um one thing I want to say about the Disney battle this may be working your favor actually is it should we move should Bitcoin monetize and succeed as I have laid out this will move us to a much more free market laissez-faire capitalistic Market environment or something like IP goes away IP won't exist because IP right now is premise on litigation right someone violates your IP you go and sue them and a bitcoinized world it's going to be much more cost prohibitive to enforce IP why so that might work in your favor I don't understand that um largely because property won't be viable right if Bitcoin were the sole money in the world it would be really hard to sue someone for their Bitcoin be very very hard to enforce that now had you staked some of that Bitcoin or the local governance model that assumes though that governments have essentially vanished from how we think of them now right they will have transformed significantly yes um the point being that it's much less economic to enforce IP I could just leave it it is it is a long game thing and it would be a dramatic change but might work in your favor trying to take out Disney what is up my friend Tom bilyu here and I have a big question to ask you how would you rate your level of personal discipline on a scale of one to ten if your answer is anything less than a ten 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 discipline 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 yeah that's interesting we could definitely get lost in that rabbit hole but I don't want to deprive people of hearing this whole thing about morality yes yes yes so very interesting uh We've published a book that I authored with the Jimmy song as a fellow bitcoiner and a group of others called titled thank God for Bitcoin um this has received some you know some criticism because people always go back to this um quote in the Bible the love of money is the root of all evil we're by no means advocating the love of money or the love of Bitcoin or that Bitcoin is God by the way we're simply we wrote a moral Treatise on the history of money I don't think we mentioned the word Bitcoin until two-thirds or three quarters of the way through the book um and we looked at it through a judeo-christian lens and what the Bible references money many many times and I think it it's written to be very accessible uh almost like C.S Lewis style very short punctuated sentences you can read the whole book in maybe two hours um but the people that do read it report it being very transformational to their understanding of money right you go in with this question just like what is money what is bitcoin and you leave with a good foundational understanding of answers to those two questions um this and this is part of my own personal journey I guess I was raised in Tennessee I grew up Christian I was in church on Wednesdays and Sundays um I was always a very scientifically minded young man I became very fascinated with astrophysics when I started reading by myself around age of 11 I went straight to the deep end of the pool as I liked the joke I was reading Stephen Hawking and Brian Green you know Jesus I was just enamored looking up at the night sky like what is all this and so I thought okay now that I know how to read I'm gonna go try and figure it out I was reading these books I could barely comprehend but I think it just sparked this deep curiosity in me but at the time it also inspired a bit of an Atheism in a way I was just very scientific you know like I thought Christianity was almost a fairy tale at this point and this this persisted through most of My Teenage life and then later on uh helps gloss over some of this but I discovered yoga yoga was very transformational for me uh reintroduced me I guess to the spiritual aspects of life I got into meditation meditation changed my life I always had trouble sleeping I was an overthinker with meditation once I learned lights out in 30 seconds every night now which is a big deal if you can't sleep you know uh reliably and so I was less scientific more spiritual but I had not Revisited Christianity until through Bitcoin actually I was introduced to Jordan Peterson and his work and uh he's in my opinion one of the greatest living lecturers I would call them a philosopher um you know he really gets at the fundamental nature of things and he looks at it looks at the world through many different lenses um and in that way that method of kind of consilience right looking what he calls multivariate analysis looking at different topics through different lenses uh one of the main ones is excuse me judeo-christian lens he lended a lot of credence to religion to me all of a sudden it was not this fairy tale that I dismissed in my younger years and I started to really look into it um more closely and I'm still looking if it wasn't that fairy tale then what what does it hint at so my current View and I love Peterson's answer to this that people often ask him does he believe in God and he says I don't believe in God but I act as if he exists so in my mind that is Peterson putting the emphasis on Human Action that's what matters and if you look at the Austrian School you'll learn that all Human Action is an expression of value to walk across the room implies that you value being on the other side of the room more than you value sitting where you currently are so we are constantly and unavoidably expressing our values through action and looking at Christianity it is this the Bible specifically it's not just a moral text right it's got if you read it from the Old Testament to the New Testament it goes to this moral development of humanity there's a lot more kind of barbarism early on and it shows how we learned and developed and changed over time so I think it points to the emergence of morality morality sort of emerges from the rules of the game if you will like we can set our sights on something and work towards it but the ultimate implementation of the morality really depends on the actual implementation of systems and Technologies in a way so and Peterson has this definition of God God's such a loaded term I hate even talking about it sometimes because people they're either oh guy in the sky yeah right or God is everything you know you can't even talk about it uh Peterson has a number of definitions one he says in that hierarchy of values right we're always we all have this rank ordered set of values in our mind whatever we're doing in the moment is an expression of our current value if I take a sip of water it means I value a sip of water more than talking in that moment Peterson says that God is the highest value in the hierarchy of values so it's almost like we're expressing God through action in a way God is kind of like this animating force or principle in life um I think it was GK Chesterton said that a dead thing only a living thing can swim upstream a dead thing can go with it maybe I've inverted that but it's no no that's right there's this principle to life that you know the entire universe tends towards greater entropy more disorder but life is antithetical to that we actually are an organizing Force right we we negate entropy we construct order um and that is the ancient idea I got from Peterson's work that's in Genesis in the Bible said God is that force that courageously confronts the chaos of nature converts it into good and useful order and I think that force in that principle is embodied in the entrepreneur actually that's what the entrepreneur is doing right you're going out into uncertainty you're putting your skin in the game you're staking your life your Capital your ideas your reputation everything trying to pull something out of that unknown or that chaos that's useful and good for others so I think and the entrepreneur is the elementary unit of the free market right so I think the free market itself this idea of freedom being a creative principal is very closely connected to God um another maybe another way to look at God is this you know it's clearly he's Eternal he I'm not anthropomorphizing I'm just using what's there this principle is eternal which means it's outside of space and time what other elements of experience do we have that are outside of space and time truth love freedom right these things that are they're Timeless right and they're they're very important to all these things we've talked about right these foundational documents markets uh revolutions they've been fought over these Timeless ideals and I think somehow God is kind of a composite of those in a way um and I don't think it's a coincidence that they're all creative principles right truth as I'm argued in a lot of my writing markets discover truth they discover prices and tools um love is clearly a creative principle that's how we all got here uh and then Freedom you know Freedom Is How We maximize wealth in the marketplace free trade as we've talked about today so this is I'm way out there on the the philosophical side of things but to try and bring it home um if God is the highest value in a hierarchy of values another definition Peterson has given of God is the truthful speech which rectifies pathological hierarchies and I would Define a pathological hierarchy as one that is premised on anything that negates truth or Freedom or love and that is precisely what our current socioeconomic hierarchy is built on Central Banking destroys price signals we didn't talk about this a lot today but in there's a saying in markets that price is truth this is the extant supply of capital in the world overlaid with the human demands for that capital is the price right it's dynamically updating in real time it is the truth of what is right now right whatever something is selling for clearing on the market that is truth um another thing markets generate is innovation so the truth of digging a hole is a shovel right it is the best most truthful real way we figured out to satisfy that want at that price and then the third thing markets are very heavily involved with is the the development or promulgation of virtue so we learn that honesty is more energy efficient in the marketplace than deception right if you tell a lie and everyone's experiences to some extent you tell one white lie then you have to tell another second lie maybe to cover it up and it's just it always blows up right it's not good you're creating this little Fork of reality to try and um maybe overcome some short-term pain but you end up exacerbating long-term pain right so this is this is a virtue that's discovered through free exchange and free interaction Central Banking destroys all that it destroys price signals it subdues Innovation right your entrepreneurs are setting out surprises or supply and demand but when the central bank's involved you can't trust the price you don't know if it's supply and demand or policy when you can't trust the price you can't organize your Affairs effectively towards satisfying the wants of others I don't know if this price increases because more people want the table or because this table is really scarce and the central bank's printing a lot of money right so me as an entrepreneur I may be thinking oh people like tables I want to produce a lot more I don't know I can't disentangle the two so distorting prices misleads entrepreneurs which unwinds that that process of confronting the chaos of nature converting it into order and then it induces moral wickedness and that all of a sudden your strategy again is to get as close to the fiat currency spigot as possible because that's the lowest effort means of obtaining wealth if I can just become a shareholder to a central bank I now have a share in a company a central bank that bears Perpetual profits to me I don't have to work my incentives to work and satisfy the wants of Market actors is diminished so that I argue is diminishing to virtue and so I think it's evil you know I do think Central Banking is evil and I don't I'm not even saying that the institution was set out without intent I'm just saying that mechanically it in it becomes the invariant to Human Action that causes strategies to be adapted to getting as close to the fiat currency spigot as possible versus being an entrepreneur it's anti-entrepreneurial let's put it that way entrepreneurs are the hero of the marketplace they go on to the hero's journey they go out they get their clock cleaned learn the hard way like I have as you said you have and we take those lessons we embody them we adapt our strategy and we come back and hopefully we either create something of value to others and we succeed or even when we don't succeed as entrepreneurs our failure benefits the marketplace because other entrepreneurs can say that guy tried to open an Italian restaurant on that block and it failed I'm gonna not do that I'm gonna go do something else right so it's information feedback into the hierarchy of human organization and Central Banking distorts and obscures all that in any financial crisis what can somebody do with their money strategy to come out the other side better than they went in yeah this is a kind of a complicated question because one of the things that money is I talk about this a lot on the show is an insurance policy on uncertainty so by definition a financial crisis is a time of great uncertainty so the standard strategy you know your grandmother's wisdom would be to save your dollars save your hard-earned cash um but that gets a little bit more complicated and a very inflationary environment where we are inflating currency very rapidly or counterfeiting currency you throw that out it's the same thing yeah so we covered that last time but it's worth for people that are just encountering you for the first time why do you say that what is inflation and why do you call it counterfeiting yeah so inflation quite simply is legal counterfeiting and counterfeiting is Criminal inflation they're mechanically the same thing but inside of a legal Monopoly at a central bank it's called quantitative easing or some other euphemism that makes it sound really good but if you or I do it we get thrown in jail so it's it's just making more money it's just a political institution that has authorized itself the exclusive ability to print money and when you print money you are stealing claims on wealth from other savers of dollars so um you're the first person that I'd ever heard say it like that I always thought inflation was a law of physics that we needed that things just inflated by two percent year over year that's just the way that it was um so right now we are in a very inflationary environment why and I would say that's a part of why where I would very much call what we're in right now a crisis the media is trying to soft shoe it but I think every day it's going to be more and more problematic no I could be wrong but I don't think so um why are we in an inflationary environment right now well we're in an inflationary environment because we just printed six trillion dollars in the US over the past 24 plus months which is what percentage of the total supply of US Dollars you would have to check the exact data on this but I want to say it's an increase of about 40 percent of the total Supply um for since what 1913 no since 2000 20. no but I'm saying the 40 of a supply that started in 1913. so this isn't like that's right that's correct so Supply issuance starts in 1913 so for the first 108 years of dollar existence we produced let's say again check my numbers on this 15 trillion US dollars and then we just increase that by an additional six or roughly 40 percent in the past two years so if you look at the chart it's very kind of low and slow if you burp burps on the way up and then one huge Spike recently that's so crazy I don't think people really understand but before we go all the way down that we will certainly get more into that so okay we're in an inflationary environment so how do you want people thinking if Grandma is Grandma's wisdom is now wrong because of that environment and so if I because I really am right now to your point uh you want as many options as possible in the time of uncertainty I am right now trying to be as close to Gold buried in my backyard as possible yeah I always feel the need to say I'm not I don't actually have gold buried in my backyard I don't want people showing up uh but trying not to be locked up in too many things that are long-term though full disclosure I do own a a very substantial amount of Bitcoin and ethereum yeah uh but for the most part I'm trying to have my options open well I hope you have it in self-custody at least because that's buried in the backyard yeah yeah I'm not I'm not to the point that you would be happy but I'm getting close Okay because if it's Bitcoin on an exchange or with a custodian it's not your Bitcoin as we commonly say not your keys not your coin um I do I don't wanna the spirit of Grandma she's right actually you know holding options in the face of uncertainty is the right strategy it's just that the tool of optimal optionality if that's a term is not no longer the dollar it's decreasingly the dollar the more you print new dollars the more you're debasing that instrument's ability to store value across time so it's it's less useful as a tool of optionality as money is intended to be and as a nice barbell to that strategy Bitcoin is or gold physical gold is a really nice adjunct because as you debase currency that would indicate that would basically equal you have more dollars chasing the same amount or relatively same amount of gold or Bitcoin which would be a higher price of Bitcoin or gold in dollar terms so I want on inflation though I don't want to leave this yet it's a very complicated term people often think price is going up as inflation which it is that's a form of inflation price inflation there's also monetary inflation which is the expansion of the fiat currency Supply but to try and the reason I equate inflation to counterfeiting because it it doesn't exist without the legal Monopoly of the Central Bank you don't have arbitrary expansion of the money supply outside of a legal Monopoly just does not exist so to try and give people a useful analogy about this if you slice a pizza into more slices it doesn't mean that there's more pizza available to eat right you've increased the number of slices nominally but the size and volume of the pizza has not changed you cannot feed more people with it you could similarly think of money as a an option on the global Capital stock and every time you print a new unit of money you're basically slicing that pizza if the pizza is the global Capital stock you're slicing it into finer slices or thinner slices but if I'm printing more pizza why isn't it that I have more pizza versus but you're not printing pizza so Pizza is global Capital yeah Capital stuff machines equipment uh real assets let's say money is just the option the call option to acquire those assets and so if I increase the number of options available what I'm doing is taking away the ability of those saving in dollars I'm stealing from them it's you're stealing their purchasing power and that's why I always equate inflation and counterfeiting it's the same thing as if you could go out and print a bunch of 100 bills increase the number in circulation you could go out and buy things that cost a hundred dollars that other people went and worked and saved uh to be able to afford those things you're basically stealing from them right you're bidding up the prices of the things that they would otherwise buy and that's what we've seen taken place over the past 24 months so if it doesn't create more pizza then why do people do it because people like to have convenient strategies for wealth acquisition and setting up a legal Monopoly to steal from all of society is a really convenient wealth acquisition strategy it's interesting I think so because I've gone on this journey I've had to wrap my head around some of the fundamental questions that you ask what is money being one of them I think what this is when people the reason that they print is they're going to go buy assets with what they've quote unquote printed so uh the government works with the Federal Reserve the Federal Reserve creates the money out of thin air but the way that they put it into the system is by acquiring assets so they'll acquire um governments or whatever yeah but those are also born out of thin air the government can issue debt add into an item as the Federal Reserve can issue dollars to buy government debt ad infant item this is the most organized crime syndicate that's ever existed on the planet okay so now that people know that that's the way that we create inflation what do we do in an inflationary environment how do we protect our money because right now I really I don't allow myself to do overwhelm so I break things up into manageable pieces but right now like I don't know what to do in terms of with my money so I have allocated about as much Capital as I'm comfortable allocating I'm keeping as much as I'm not worried about being inflated into Oblivion and inflation was as I wrapped my head around that was the thing that caused me to change my behavior because prior to this I didn't want to think about investing and then when I really began to understand inflation I was like whoa you have to invest your money into something that its value goes up at at least the same pace of inflation otherwise to your point it's even though I have the same number in my bank everybody gets me exactly so I was like okay I have to do something but now I feel like we're going into I feel like we are in a time of so much uncertainty that I don't know what to do anymore so even though I can describe I can tell people what is happening but I don't know that I have a good plan for what to do like even in my own life so what do I do well it's a number of things um first thing is to own assets that cannot be counterfeited or printed into existence so physical gold Bitcoin and self-custody these are great options um but Bitcoin is so volatile like how do you do you just take a long time Horizon approach on that well it's volatile in terms of dollar terms right and volatility is a function of price Discovery so if Bitcoin is a sub 1 trillion dollar asset competing to be a hundred trillion dollar asset you would expect it to be volatile in dollar terms so yes it's cold comfort when I need to buy diapers for my child this is not I'm not advocating for Bitcoin as a checking account I'm advocating for Bitcoin as a long-term savings account so Define the long term to protect yourself from the aggression of private property that's occurring through the counterfeiting of currency something like physical gold or Bitcoin is useful for Bitcoin specifically it's performed really well over four years time Horizons so that's not necessarily long term I wouldn't sit here and tell you that Bitcoin will be at a higher dollar price in four years and there's a lot of uncertainty in the world no one can make that claim but what you do know is that you have a money with effectively uh that's effectively perfected the properties of money which we talked about last time specifically that we know it cannot be increased in Supply whereas every other primary money in the world the US dollar leading the charge here is being rapidly expanded in Supply so when you price one in terms of the other you end up with a higher bitcoin price as an insurance policy against debasement of the dollar so what answers that own assets that cannot be counterfeited Commodities businesses there's obviously a lot of risk here that you have to navigate if it's a if it's a public Equity they might actually be printing it um some companies issue more shares and they actually have outstanding you can check out the I think it was Chiquita bananas what yeah it's called re-hypothecation so there's a lot of games played on Wall Street where they will basically represent and sell more shares than there actually are in existence isn't that illegal of course it's well it's illegal if you're not inside the Monopoly if you're not a prime broker okay I think is the industry that's allowed to do that but um so that's one area to be careful of it's good to own businesses good to own things uh productive factors in the economy but if they're public equities I do think you have to be a bit weary about things uh another thing is assets that are difficult to seize or confiscate so this again back to gold in your backyard or Bitcoin in self-custody I think what we are essentially seeing in the world is that centralized governments are bankrupt and all government revenues are derived through taxation inflation which were both forms of theft and other forms of of confiscation so I would expect those activities to increase as monetary to basement ramps up um and it could even be accelerated now that people have an option to exit Fiat currencies they can go into a savings technology like Bitcoin this actually puts additional inflationary pressure on Fiat currencies over time because people now have an incentive to sell the thing you're using to steal from me with and hold the thing that you cannot steal from me or use to steal from me which is a good way to describe Bitcoin so assets that can't be printed assets that cannot be seized um and then the last one I guess I would say knowledge you know it's very important to kind of study the Ebbs and flows of financial history and equip yourself with a world view for the world we're going into we've seen currencies fail many times before you could study the the Weimar Republic in the 1920s Germany what happened there um inflation has really corrosive consequences on people's psychology their morality their behavior um and yeah I think that's a good start for protecting yourself and the world that we're going into so what are you doing with your assets right now so if just uh I'll go first so I have a ton in savings just liquid basically going in and out of really short-term bonds so no yield but all stuff where barring the collapse of the US government which I won't say is is a zero percent chance risk but certainly very low especially because they control the money printer that's correct um very low risk so money coming in and out and then I have uh Bitcoin and Eve uh I have some in the stock market real estate that's sort of my portfolio all because I don't consider myself a talented investor in any way shape or form [Music] um what does yours look like so dollars and treasuries are good short-term liquid instruments I think you're smart there um I consider Bitcoin to be the best long-term liquid instrument and that's actually all of my portfolio dollars in Bitcoin I don't actually do the treasury game I hold a smaller balance of dollars relative to everything else and I hold a lot of Bitcoin now this is coming from someone who's studied this asset in this space and the history of money exclusively for six years now so what I'm advocating for other people to do is to go out and do similar due diligence for themselves their skill set and create this world view and then make a portfolio construction that reflects that I can't sit here and prescribe you any specific portfolio construction because it's Unique to each individual and if I were to do that you would not have the level of conviction or buy-in into that portfolio so you would inevitably be shaken out when the market starts to move emotions would set in and you would be shaken out of your positions so that's why I don't believe in specific prescriptive portfolio constructions but because conviction is one of the most important parts absolutely you have to believe in what you own you have to have buy-in right it's not just that you bought it physically but you need to have intellectual buying you need to understand what you own otherwise when the price moves it's just like being at the poker table if someone pushes in a big hand and you don't know exactly what you have and you don't have a read on your opponent then you're going to get shaken out right you're going to fold or you're going to call make a bad call you're going to lose it's the same thing when you own assets you need to understand what you own understand yourself understand the asset and have a conviction in what it is otherwise it's just not going to work in my opinion that's really interesting and one of the things is I certainly spend time researching you is I just this is my first time really paying attention to a monetary cycle where there was certainly in the crypto World there was so much Euphoria until about a year-ish ago and then it really started to falter and go crazy and when people were euphoric it was like man I was looking sideways as people were taking out loans and like getting into assets and I'm so paranoid I was like there's no way I do not trust myself enough and then same thing with when people started to sell it was like Panic selling and the approach that I try to take is okay I'm not I I personally view myself as not being smart enough to beat the market to try to do things on timing so I'm just like what am I prepared to do long term or what can't I lose on so when I was talking to my the person who handles the actual buying of bonds and stuff like that I mean I I ask like 36 times like what happens if right the price goes down do I still get my principal back I may not get the interest or whatever but I want to make sure that I'm in something that I can protect my principal so just looking at all that and then on the crypto having a thesis and saying okay as long as I believe this to be true I'm not going to sell if I stop believing not to be true then I might you know look at it differently but watching the human behavior of seeing people act like they're gamblers effectively and I remember when one of the first like big liquidation moments happened and there were you know memes of like people in front of their computer like outside a nightclub there was one guys outside a nightclub he squatted down in front of his computer on the sidewalk and he's just like holding his head because obviously he had been liquidated because I don't know if we want to go into explaining it but like you you're using leverage to buy it and it hits that point where your collateral is now exactly so boom you go from having something to having nothing absolutely devastating and I was just like oof this is this isn't just I have mistaken money for a property of physics and when you realize that it's a property of psychology or useful fiction as you refer to it you really start to think differently about it well there's an element of the physics as well um but I want to say something here so leverage in crypto is not a good mixture in my opinion I think most people that play with leverage most people that play with assets Beyond Bitcoin which we endearingly call coins in Bitcoin Circle you almost always get burned um I have some some friends that have run the numbers on this as well of the 30 000 coins that exist two and a half had outperformed Bitcoin Over a four-year cycle most of them go to zero go away or the vast majority of them underperform Bitcoin so no leverage uh preferably no coins so you might want to sell your eth um do as you please but me personally I just think that's another project that's accumulated a lot of technical debt it keeps moving the goal post I think it will collapse at some point um and yeah those instances of people crying and some people committing suicide I don't know how true these stories are but it can be ruinous to your life right if you consider how important money is to your day-to-day existence to lose all of it in an instant can be extraordinarily painful and I've you know I've traded options in this asset class for a long time or in a hedge fund in the space I've felt the pain of losing money rapidly it's not fun I would not recommend it I would also say that 99 of the hedge funds out there cannot outperform buy and hold Bitcoin just buy and hold Bitcoin the easiest least intensive least energy output strategy there is the smartest investors in the world struggle to outperform that so unless you think you are someone on the spectrum of Rain Man intelligence or some type of super prodigious Trader I would not recommend leverage or coins or trying to trade when Buy and Hold Bitcoin is performed so well all right so talk to me about the human element of all this one of the things that when I was researching for this episode that I heard you talk about that I thought was really interesting is that for whatever reason every three generations we forget how volatile governments are how volatile currencies can be I thought wow that's that Echoes something that redalio talks about which is this has happened many times before just not in my lifetime and so because I was born in the 70s to me it's like oh this is all pretty stable like nice and easy why do people do all these crazy gyrations uh but talk to me about the history of money if Weimar Germany is the right thing to look at for hyperinflation and what comes of it let's start there what what is it that the average person living today hasn't seen that they need to be very aware of yeah so to start that I want to talk about how Theory shapes how we see actually and to do that I want to talk about Copernicus so for a long time we lived on this planet and we saw the sun rising and falling right and we just assumed that we were the center and the sun was going around us right there was a bit of it's called geocentrism I think it's kind of an ancient form of egocentrism in a way or and thought anthropocentrism where we think we are the center of the universe in most cases and then Along Comes a guy named Copernicus ran the numbers and said actually the math says it's more likely that we are going around the Sun and so this shift in theory did nothing to change the prior empirical observations of the sun rising and falling but it completely inverted our interpretation of that empirical data all of a sudden we realized wow we've been defrauded by this optical illusion we thought we were the center the sun was going around us well it turns out we are going around the Sun so I say this to explain the way in which Theory all right we had a new theory heliocentrism that actually changes the way we interpret empirical data we often have this inverted in our mind we think we see data and infer Theory but it's the opposite you have to the theory is the frame that you're putting on reality that determines how you see it and so Copernicus also came up with a quantity theory of money which is pretty interesting he said that if you double the money supply in an economy that the price level will tend to double as well now it's not that quantity theory of money is not specifically correct there's a lot of factors that influence price but it's directionally correct if you counterfeit six trillion dollars and you had six trillion dollars to begin with in the long run prices will normalize at about 2x to what they were so I think we have been and as you just said you thought it was this pillar of physics that prices needed to go up at two percent every year because we have been conditioned into this false theory of Keynesian economics that we think Rising prices and in the long run failing Fiat regimes is the norm of human history but the real problem we have is that we are operating under a false economic theory printing money does not solve problems increasing nominal prices does not make you richer so I think that hopefully the emergence of Bitcoin that's leading to the Resurgence of discussions like this a heightened interest in libertarian philosophy and Austrian economics it's actually throwing light on the this Corruption of money that's hidden in plain sight right how crazy is it to think that the most desired asset in the world the US dollar is also the largest pyramid scheme we have ever had in human history how do you think that affects us psychologically when did it become a pyramid scheme well we started in 1913 with a Federal Reserve um fractional Reserve banking is effectively a pyramid scheme right you're you have more liabilities outstanding than you do Assets in reserve so you're running a fraud so long as Oliver every dollar that you or every 10 no every dollar that you have in the bank you can loan out nine or something you have a contract with your depositor right they have given you a dollar that's redeemable for gold and you've given them a dollar in exchange a liability now if I over issue those liabilities but I don't increase the amount of gold I have in reserve that's why they call it a fractional Reserve as opposed to a full Reserve yep all of a sudden I'm now engaged in a fraud you only have to have misrepresenting so much of what you've promised people Yes actually in the bank and you're good and is it like 10 is there a number well the number changes based on policy but in reality anything less than 100 of fraud right you have you have issued more checks than your ass can cash so to speak so if at any time the wrong amount of people right if you're a 50 Reserve Bank 51 of the people come to redeem their money you're bankrupt right so that and the you know we've seen the bank run and move is like a beautiful life people were again were very conditioned to think it's the norm how does it run on the bank even exists if it's a full Reserve honest Bank it couldn't exist so I would say the moment we entered fractional Reserve banking it became a pyramid scheme was that day one um the dollar was redeemable for gold it was reducible for Golden well there was a brief moment where it stopped then we got back on the goals in 1971 we break forever exactly but when so we suspend convertibility in times of War crisis so that's when the banks know that we can just pump money in so the fractional Reserve can continue to exist it doesn't want people coming to the bank to redeem dollars for gold because that would show the insolvency right when When the tide goes out you see who's swimming naked as a Warren Buffett said so get so we had on and off convertibility throughout the existence of the dollar in times of war and crisis we outlawed private gold ownership in 1933 executive order 6102 and then the big one where we move into this giant Global pyramid scheme is 1971 where we break the tie to Gold entirely so now governments have the ability to issue dollars the US government can issue dollars add infinitum with no convertibility constraint there's no check on this uh on this issuance of dollars and I want to say something here too again inflation is legal counterfeiting counterfeiting is Criminal inflation the only thing you can do with printing money is violate the property of others you cannot issue any Equitable benefit to an economic system whatsoever it's not possible so it's I can't emphasize this point enough that it is everywhere and always only theft that is the only thing printing money can do so any economy that has a central bank which is every economy has an institution an anti-capitalistic institution of theft integrated into its core and that is the source of so much of the psychological financial and moral malaise I think we see in the world okay so I I'm not saying this to play Devil's Advocate I actually think this either is something that you have an answer for that I'm just unaware of or I'm about to change your life I have no idea where so one of the things everyone's paranoid about deflation and I'm just dumb enough that I was like why would deflation ever be a problem that means that my money gets more valuable over time it has more buying power I'm like that's amazing so but people get really freaked out about that and you hear economists talk about I'm actually more worried about deflation than I am inflation so I was like well why would that be true I think it was you that I heard explain that in a deflationary environment now people start hoarding their money because they're like whoa why would I spend this today if I wait a week or a month or a year I can actually buy more this is amazing and so they stop spending and so then I was like well hold on then inflation is a nudge to get things moving and when I think about all the amazing things that we've built and created it requires people to create and to buy and if you have creation but no buying then creation will stop and if you have a deflating currency people just the natural inclination is to not spend I mean you'll buy what you have to buy to stay alive but like even when I think about my Bitcoin I'm like well I'd rather hold it so isn't it possible that it isn't a Sinister desire to inflate the money supply into Infinity that we create the central bank but rather I'm being generous but rather a desire to know that there's going to be some times where I have to nudge this a little bit to keep the economy moving and the economy moving meaning people want to buy something because they know oh my money they have again I'm stealing from you here they have a a non-intellectual understanding so it's a visceral feeling of like I should spend some of this money and get something because holding it into the future isn't all that is cracked up to be so I'm buying things that cycle gets us all the Innovation that we see now yeah that is the standard Keynesian argument um it turns out though that human beings want to consume no matter what we have to eat we have to have shelter we have to have transportation clothing all of this I don't need a new iPhone well the argument has been that a little bit of inflation is necessary to stoke an economy otherwise people will not consume and there will be no economy yep but I don't think that water that argument holds water at the outset because how are you going to eat how do you bare minimum there's no doubt but when you like if you just imagine a world where the currency holds steady or deflates don't you think that'd be a pretty different world maybe better I think it's a great much better world yes so today our debt Global debt to GDP is like 350 percent so that's saying we have 350 percent in liabilities relative to about um a 100 so it's 100 trillion dollars in global GDP roughly 350 450 trillion dollars in global debt that is a consequence of currency being debased because in an instance where units of currency are losing purchasing power over time I'm incentivized to borrow the stronger dollars today and pay back the weaker dollars over time right so there's this incentive for accumulation of debt that's one bad consequence of a Fiat economy why is that the accumulation of debt debt shrinks people's time Horizon so what you're doing is you're disincentivizing saving that accumulation of options against the uncertainty of the future that we discuss you're disincentivizing that I now instead of delaying gratification today and saving for the future I now want to sell the future and buy today that's effectively what you're doing when you take on debt it's an inversion of the principle of delayed gratification um and it increases economic volatility significantly because what did you just describe the guy getting liquidated in front of the club once prices hit certain liquidation points or margin calls assets are forcibly sold so this increases Market volatility increases the misallocation of capital do you think Michael Saylor is crazy no you can use debt intelligently because he's going ham dude like I'm dead being my breath so if you can use that intelligently is your argument that just most people won't here's what Michael Saylor is doing though he is taking on debt where he has favorable terms favorable um repayment frequency duration Etc so he's borrowing the weak money selling it to buy the strong money which is Bitcoin and then he's paying back weaker dollars over time subject to uh parameters that are favorable for him in his business right his strong balance sheet all of these things that's the smart use of debt but notice what he's doing this is gresham's law by the way gresham's law said that bad money tends to drive good money out of circulation and what he meant by that is in an economy where say dollars pesos and Bitcoin are circulating people are going to spend the pesos first assuming that's weaker than the dollar in this example the Dollar's second and they're going to hoard the Bitcoin because the Bitcoin has a limited Supply so when bad money circulates people that tactile knowledge of their economic reality they tend to hoard the thing that can't be printed or is not being debased the same is true when we used to clip coins Emperors used to clip coins and one would have say 100 silver content they'd do another issuance that had maybe 90 silver 80 silver and so on but they all had the same face value this is where Gresham actually developed his law so they were legally circulating with the same face value but people being smart they hoarded the ones with more precious metal content and spent the ones with less so that um hopefully points to how things actually monetize and demonetize this is why gold became money right people wanted to hoard the thing that was difficult to inflate or counterfeit and spend the weaker monies and it turns out gold historically is the most difficult commodity to inflate or counterfeit the supply of we can't actually counterfeit the supply of it not economically at least so that's why it became the premier store value I chose to hold the asset I being one economic actor across the whole history of economic actors people zeroing in on this reality that there's only one asset that can uh most predictably hold its Supply across time which is to say it is the best store of value Asset available to them this is the process of monetization and demonetization that we've seen play out across history okay so I have a base assumption and my base assumption is I think very clearly different than yours but I'd love you to State exactly where yours is so my base assumption is that if you are holding a current the value of a currency study or you are deflating it that you will or you're not holding decrease Innovation or decreasing the value it's the supply values determined Always by the market the impact going back to your pizza example though if if the size of the pizza stays the same but only so much of it is allocated to me but if my slice gets bigger over time I would rather not eat it now I'd rather wait until the slice is really big and can feed me even though it's not I'm not increasing the size of the pizza but my allocation of that pizza is growing larger that would be to use the analogy of deflation tie it to the pizza example that's where we'd be well in that instance though you would be a shareholder of a central bank if the slice of your pizza is growing or one of the first recipients why is that true take Bitcoin Bitcoin Pizza is the global Capital stock and so the slices are basically and this is an analogy obviously yeah the slices are the representational option people have on that stock so you have one pizza which is all the stuff in the world yep and we slice it up into a net worth right that what is the value of This Global Capital stock now who owns Which slice now if we start printing money we basically start creating new slices that are crowding out the other ones yep whoever gets those new slices first is stealing from those the holders of the the previous slices if the government has coming to existence um to solidify the will of the people to protect you to protect property but then over time it begins to involve itself in that property and you're in a Fiat position now where part of how they get the control is through money and now you have the first true sound money and it has the inelastic properties that make it you know the soundest money of all time the question that I had for Michael Saylor that he answers very differently than you is aren't the governments going to get really upset about this that their only real option would be to either mimic it in which case now I have that counterparty risk because it's a government that created it versus this sort of mythical creator that poof has disappeared and other than whatever units he or she or they have is not trying to engage in the system in any way shape or form couldn't change it even if they wanted to how do we avoid the government coming down with an Iron Fist and saying yeah this is this is illegal now yeah I [Music] view this a little differently than sailor who's absolutely brilliant um I think his position in general is that they'll exist side by side Fiat currencies in Bitcoin and I tend to agree in the medium term and I think that's happening today bitcoin's almost trillion dollar asset it exists side by side with countless or hundreds of Fiat currencies let's say however in the long run I think Bitcoin and again we're back to that the difficulty in understanding it is because it is so far outside our world view right the idea of gold being disrupted gold is almost the only game that humans have ever played in a way it's foundational to all of our institutions it's a 5 000 year old technology that's so old we forgot what made it valuable everyone knows it's valuable how many people can tell you the five properties of money and why Colt was selected the idea that that's being disrupted by this 13 year old digital upstart is pretty pretty wild but I think that Bitcoin is an innovation as significant as the Gutenberg printing press actually and I think the implications of its emergence will be similarly disruptive to institutions in the world um you know this is late in the 15th century I believe when the printing press was invented the 500 years prior to that there had been roughly 10 million books printed all of a sudden this super cheap and efficient way of reproducing books is invented the Gutenberg printing press which was a composite of other inventions by the way wasn't really a breakthrough in itself it was one guy or guys put together four or five different other inventions and made this thing work similar to bitcoin actually that's what Satoshi did he pulled together things that already existed but just put them in together in a radically new package that we call Bitcoin 10 years after the invention of the printing press 10 million books were produced so the amount of books produced in 10 years equaled the amount produced in the 500 years prior what did this do this led to the rapid proliferation and dissemination of literacy numeracy again psycho Technologies right these these modes of systemizing our cognition that actually increase our ability to cooperate absent or independent of institutions of the day which the dominant institution of the day was the church they owned a monopoly on knowledge effectively via the scriptoria which is where uh scriptorium I may be saying that you can make it out I have no idea I've never heard that word before they used to have monks copying books by hand right so to produce one book took a lot of Labor books were a luxury item but all of a sudden due to this Innovation called the printing press the cost of book production plummeted books become much more uh widely dispersed and it the church at first didn't realize this existential threat once it did it actually tried to clamp down on the printing press which created an interesting Dynamic that it we actually started producing books on how to produce the printing press so it saw that this is a good allegory I think that when the institution tries to grab tries to clamp down on the disruptive technology the subversive technology let's say it actually drives it to its highest and most useful form of subversion actually so the result of that was a lot more thinkers a lot higher quality of thinking variety of thinking and in general it created a market for heresy right this led to Martin Luther pinning that like why do we need you we individuals can now have this independent relationship with the word of God because they've developed literacy and whatnot they don't need to go through this middle man of the church and the printing press effectively led to the dissolution of the church as the dominant institution in the world so we had separation of church and state and all the the benefits that that created in the aftermath I think encryption technology and this is deriving a lot of this from the book The sovereign individual which I've recommended highly is similar that it actually disrupts functions of the government that we needed the government previously for we can now provide with code Bitcoin being an obvious one right we needed the physical enforcer for property historically now for money the most important property you don't need that enforcer anymore so I think that Bitcoin its emergence will actually lead to the dissolution of the nation-state as the dominant organizational model for human beings every time I hear you say that and I may regret saying this out loud but every time I hear you say that I'm like I and look I know that that also would be its own form of social engineering to like hey don't tip off the government and like let this happen like give it more breathing room and so there would be unintended consequences there but it's like man so I'm going to give you my layperson's view on bitcoin and why I become so and admittedly I'm not a maximalist so for me this is looking more broadly at like cryptocurrency and the digitization of value which is how I see this so my thesis is technology is a one-way Street we will find anything that can be turned into code will be turned into code for reasons such as that you can create absolute scarcity you can now have a blockchain that will track ownership so everybody knows exactly what's going on there's a transparency to The Ledger that um that we don't have to be slaves to as many laws of physics you're still going to be tied to energy production um but once we are spending once you can tap into the um the basically your nervous system and you can get me to feel like I'm flying where it is indistinguishable from me actually flying then all bets are off and I think given the human desire to pull the levels of our neurochemistry we will just end up going down that route so it just makes sense to me that things will be digitized that money will be digitized that um anything again like I said more efficiently we can for sure it's more efficient it's more exciting it's more interesting it's it just seems like an inevitable sort of one-way Street and so I'm like oh when I heard about this and finally went down the rabbit hole of learning what it actually is and why it works I was like okay I totally get this and for me the the priming mechanism was nfts because I knew that would make sense for my business all of that sort of irrelevant but it took me down the path of of learning what this is and so now I'm like whoa whoa for the first not the first time we're all living through a moment right now where for the first time we as just normal individuals are front running the institutions and so I became obsessed with just getting people to look at it because I can't see the future nor can you nor can anybody so I don't know what's going to work out it could end up being a disaster so I don't want people to just do what I say I want them to go learn what this is because I think it's it is incredibly important for all human beings to be able to think from first principles meaning you know how things work don't just think about things think about the nature of things and when you understand the nature of things you can solve novel problems a problem nobody's seen before nobody can give you a book there is no way for me to sort of pre-masticate the idea for you but now you have the information like with literacy where you can go on this discovery mechanism and if you should lead to the same conclusion that I have come to which is that oh my God this moment of panic I had where so understand dude that this to me is funny and I really believe that the the purpose and meaning that I'm finding in life is I've had to learn everything the hard way I'm not particularly bright and I can't think fast but I can think really deeply about something and so because I have to learn things the hard way with sort of normal Hardware right I don't have particularly I don't have a genius like that but then I can sort of explain after I've really spent some time with it I can explain it is I had this moment of panic where as this guy who managed to create tremendous wealth in his life by spending two decades getting good at business right took me for ever I did not have Natural Instincts and Entrepreneurship but I figured it out and so then have created wealth in my life but now I'm still ignorant to investing so I've created like crazy money money where people be like what and but I don't know how to invest it and so I get involved in the world of investing and I'm telling my money manager just don't take risks all right like keep this as just keep me at the amount of money that I have the buying power that's all I'm looking for I'm not trying to Warren Buffett this I don't need to die as the richest person on Earth none of that matters to me but they keep like haranguing me Tom you can't just do that like you and I'm like why and no one could explain it to me and the confused mind says no so they would try to explain mechanisms calls puts options um that you know every seven years I could double my money all that and I'm like I don't give a about that I just I've already made the money I just want to protect my money now and then I discover nfts and then I discover Michael Saylor and he goes into inflation and like what it means and how it breaks down your buying power and I thought oh my God I have to then keep making money and I don't want to have to keep making money so then I'm like God damn it and so I'm looking at inflation and I'm saying here's one thing I find really distressing no one can agree on what's Happening so I'm like then it's not super obvious you've got Michael Saylor who's like Tom you're going to be broke in 62 days and then you've got you know uh other people that are like come on like it's you know we're we're only around two percent like this is all Madness and then you've got people that are in between and then I find you and you actually explain what inflation is and now I'm at first principles now I understand it now I know what's happening now I'm really freaked out so now my moral obligation goes to a hundred but I'm like Breedlove will you shut the up you're gonna like get the government like they're gonna freak the out and they're gonna clamp down on this and now I'm legitimately like whoa what do we do because my hope is that you're right about the thing and you're wrong about either the speed or the amplitude meaning you're probably right that on a long enough timeline government takes on a new shape but it happens over five or six Generations it doesn't happen in 20 years which that would be literally bloody and terrifying but if it happens over a hundred years then I can see it where it just changes the dynamic between us as Sovereign individuals and the government because quite frankly I don't think most people want sovereignty not not a hundred percent sovereignty yeah and I'll explain it through Bitcoin I know I'm supposed to put it on my cold storage device and put my cold storage device somewhere very safe [Music] but I kind of prefer it on an exchange because I want them to deal with like the security and all of that because I'm sure as hell not storing it in my house because I don't want to incentivize somebody to break in so now I've got a I've got counterparty risk of like I'm starting at a bank like where am I putting this thing so I realized whoa like I'm a I trust myself a lot relatively bright very hard working like hey if anybody can figure it out I can figure it out and I still want somebody else to deal with it yeah it's and that's analogous to wanting a government to be the one to come in and protect my home I don't need I don't want to need a gun you know what I mean like that I want a government to deal with some of these things yeah and again uh as a means either a cognitive expedient or Outsourcing security like that's natural we want that that should make the important point it's not black or white it's not like Banks or Bitcoin you actually have Bitcoin Banks they already exist um you know knightig and all these other guys they're just taking custody of Bitcoin now giving you traditional banking services but on a Bitcoin standard uh the other aspect is it's not you don't have one pot of Bitcoin you know you can put a little with this bank that bank this Bank you can spread out your counterparty risk keep selling self-custody I mentioned multi-signature earlier that might be a little bit beyond the scope of this conversation but you can actually get redundancy plus self-sovereignty so you could trust yourself but not make your house a target by using a multi-signature setup which I think is the most uh useful schema for custody in your Bitcoin because you get again redundancy you don't have a single point of failure but you also don't have counterparty risk or you have that's going out to like my friends or my family and saying hey you five or six people you also have to sign for this to be moved and one of you hopefully goes did Tom really want this right that's what multi-sig is correct yeah you're you're selecting your circle of Trust basically uh and structuring it in a way that a majority would not collude against you right and that they don't probably even know who each other are exactly and there's a whole lot of game theoretic considerations to that but it can be done is the point um and Bitcoin enables us you can't do that with any other any other assets so that's radically new um to your point about Breedlove shut the up you're not the only one to say that actually um people have a bit of reticence about maybe discussing the geopolitical implications of Bitcoin but the way that I look at it is that these conversations are going to be had it's just a matter of are they being had behind closed doors you know favoring those in the room or are these conversations we're going to have out in the open um such that it does not produce such an asymmetric outcome so maybe I'm wrong you know I could be persuaded one way or the other and I've had a lot of smart people give me really good criticism about it but it seems to me that in the digital age you know on the ethos of openness and transparency that we discuss what we've done here what world have we created for ourselves how does this radical new asset or form of property change the game and what are the geopolitical implications what does this do in the the broader span of human history to the institutions we've come to depend on um I think it's a fruitful conversation to be had out in the sunlight um I do think though that it could be you know we're very maybe indoctrinated to some extent that transitions have to be bloody they have to be violent and you know what have you but again a lot of this is rooted in the viability of property again um the book The sovereign individual goes into the logic of violence and how this has changed human behavior and human institutions over time one simple example here would be the Knight on Horseback used to be the dominant force in the land because this guy can afford a war horse afford a suit of armor and a lance uh the Stirrup actually was very uh very pivotal Innovation because before the Stirrup the armored Knight was too heavy to get on Horseback so he didn't have Mobility to be the force on the land so the Stirrup the seemingly simple invention changed the logic of violence that allowed the Knight it is so fascinating things like that yeah how like what a big knock-on effect they have yes utterly fast so then that was this you know had implications on the feudal age and the night you know uh the the moral code of chivalry all these things emerge from this kind of simple Innovation that made the Knight the dominant Force but then what happened we invented gunpowder so the you know one night that could take on 50 peasants in armed combat all of a sudden one peasant at 200 yards can take out a knight so it all changes again right chivalry collapses all these things so when we change the logic of violence which means you know the economic returns of violence or coercion or the cost of Defense the way we organize ourselves changes and so you could think of Bitcoin as this new technology that so radically increases the cost to benefit ratio of violence and that if someone's properly custody of it again in a multi-signature format or whatever there's not any carrot at the end of robbing them you're not going to get anything right you can go and in Bitcoin circles they call this the five dollar wrench attack because you buy the wrench for five dollars and you beat the guy over the head with a wrench until he gives up his Bitcoin but if he's custody it properly there's no incentive even to conduct a five dollar wrench attack so in this gigantic geopolitical upheaval that I anticipate occurring due to the monetization of Bitcoin I think it could be very uncertain at first you know governments are going to use their power in certain ways that could be unfavorable let's say but over time as Bitcoin continues to monetize and more and more people are holding their wealth in this inviolable property that would I would tend to believe that the incentives towards peaceful cooperation would begin to outweigh the incentives to coercion so although it could be a bit Rocky in the beginning I think the long-term outcome is way more fruitful for for humans you know we're and uh something you said earlier too that maybe people don't want sovereignty full song full sovereignty I think people I think incentives are the fertile soil from which our Humanity Springs actually all right so we think is maybe a bit egotistical that we think that however we are this is the way humans are it's the way they've always been but again that's totally not true right pre-printing press most of us were illiterate we didn't have our cognitive software was completely unrecognizable it's what we are today no one could sit here and have a conversation like this much less with all these amazing tools we've created in the marketplace since then so I think that by changing the fundamental soil which are the incentives again like the logic of violence all these other things that we actually change our character traits and behaviors um I've said that and to try and draw a commonality here I said organizations and institutions are all property strategies you know I think that even DNA itself is kind of a survival strategy or property strategy over time right we're all all organisms geared towards reproduction reproduction necessitates territory we need to take territory humans Express territory and property right that's how we share and and build uh declare property and create more wealth actually by by trading through property rights so I think that we our strategies ultimately conform to the invariance on the game board if you will and sailor talks about one of these is gravity right like gravity is the one invariant that all of these strategies whether you're a human being whether you're a building whether you're a government like you're you're adapting your strategy to gravity it's an invariant right you can't if you change gravity it would destroy all the humans and buildings and all the things you can kind of consider Bitcoin maybe I'm out on a limb here but I think 21 million this fixed Supply asset as the emergence of a new seemingly perfected invariant in the market for money so it forces all of us to change our strategies to adopt this invariant in the in the the space so this is at the individual level the institutional level and at the nation-state level um sounds a bit radical but I think that if you come to see you know DNA as a survival strategy propagating Through Blood flesh and Bone and that all the other creations we make are just um you know in biology they call this the extended phenotype we have the genotype which is the genetic code the strategy itself we implement it in the phenotype the body the teeth eyes we have the extended phenotype which are our tools and Technologies or even our institutions that it's all a strategy and that those strategies will adopt themselves to the invariance that we create for ourselves I think Bitcoin is just the perfect invariant money strong men make easy times easy times make weak men weak men make Hard Times Hard Times make strong men and you get in this Loop it's catchy and it's easy to remember but it doesn't have the Fidelity of where you're going this question that I'm going to ask is going to seem perhaps unrelated but it's everything to me are rich people evil because that's the narrative that that's the world view that people are taking and I think now using your level of fidelity what I see that breaks the reason it becomes hard times is they break the the individual property rights yes and then Society begins to break down because there's something fundamental to my need to be able to control my destiny and when I can't do that Darkness ensues because I will try to do that and to get me to fall in line you will have to violently oppress me yes and when you violently oppress me to get me to what I actually think they have something beautiful in mind that they want to do they really want to help people but to get everyone to stop being an individual takes an obscene amount of punishment and that was not the question I was expecting whatsoever um I'd like to First okay my first answer would be no but I want to be more specific so ja Nixon oh yeah the line between good and evil cuts down the heart of every man it is my assertion I'm sure there's a lot of factors that move that line in people but when I look at history I see material incentives as being the strongest force moving that line around when people are compensated to do something they're much more likely to do that something regardless of regardless of its moral qualities let's see so and again as well I always talk about property it's like the less viable we can make property you can remove that option entirely I always talk about making versus taking right making being the entrepreneurial path trade hard work delayed gratification that's one way to acquire wealth the other way the political way of just taking whatever the makers made right you just steal it from them the degree to which we can make taking more expensive or less possible which is saying the same thing is the degree to which we shift that moral composition or ethical or uh pragmatic composition of society what people are actually doing everyone's trying to get more wealthy all the time it's natural right you want to live in a bigger place you want to eat nicer food you want to have more freedom this is very natural it's nothing to be ashamed of the means by which you acquire that is something to be ashamed of though if you're taking it from someone you should be ashamed because you did not create that value you stole it from someone the more we can make this an impossibility the more we can have people engage in the making path and this is where we talk about Bitcoin being so important because Bitcoin is in my opinion the most expensive form of property to violate in human history borderline's not impossible if you custody it properly and you maintain all your protocols there's not really a feasible way to take it that makes tyranny less profitable let's say so when I see good and evil the Ebbs and flows of Good and Evil in the world it is occurring in everyone's heart and if you don't admit that then you're not being honest with yourself right we all have the capability to be evil or do dark things we've probably all done some dark things maybe there's some exceptions out there I know I'm not one of them we cannot change human nature so far as I know but we can change the incentive structures we inhabit and we can make property more expensive to violate and by doing so we can shift the moral composition of society so no rich people are not evil and like you said earlier um to elaborate on red like okay I guess it's sort of rooted in that Axiom that man prefers present satisfaction to later satisfaction that's almost like saying you'd re you just given the options between rich and poverty which one do you choose all else being equal I hope everyone's saying rich I mean you don't even have to use you could give it all away right you could be rich and then give it all away and still be back in poverty but if you just chose poverty you just be in poverty so that uh selection process that's occurring in everyone's heart I think the the moving the soldier knits and heart line the most effective way we can do that is to make property expensive to violate that is the most important material incentive uh that we can move in the world and on this this notion of religious impulse and how we're attaching this to our stories you are the unifying principle of your organization just like God is the unified principle in the church we do impute a religious value to these hierarchies that we're in uh I think because all action is Promised on faith we talked about this in the last episode you never know what's going to happen right you can just choose an end that you want to obtain and then choose means and then try to act towards it but you're constantly messing up errors getting off course and trying to get back on path right so every action is an Act of Faith in a way right you just have the faith that the thing that you're trying to make happen will happen and if it doesn't you'll error correct so there is this there's this religious quality to all human hierarchies doesn't make you a priest or anything but people in your organization are going to look up to you they're going to look hey I'm giving you my best working years or whatever the guy said to you that's a real thing right he's on an act of Faith betting that your company and your mission and your ability to lead and unify that organization will be an adequate exchange a consensual exchange of his working years for whatever you're going to do for him like that's very there's something to that and ultimately into this division the divisiveness between the rich and poor and people getting upset and trying to create class conflict I think it obscures the grandest truth on this little pill blue dot is that we're one big family all right we're all here we've all got the same limited resources to deal with the best thing we can do is intelligently coordinate our action such that people are doing what their best at specializing in what they're best at everyone's doing that and then we trade with one another so that we enjoy the best quality of everything that anyone can do in the world right and we don't have to be good at it so you can be really good at running a media company and you can still go to this restaurant down here and eat the best sushi in the world because he specialized at Sushi and he can go home and enjoy your YouTube channel because you specialize at this that's the ideal World in my opinion people living peaceably specializing innovating not stealing from each other and you know the religious piece I don't I don't know I just I'm a guy that grew up in Tennessee I consider myself an aspiring disciple of Christ I don't know if that means I'm religious or not but it gives me a lot of meaning in my life and gives me something to look someone to look up to someone to try and imitate someone to try and and make to lead you to be a stronger better person right it's like a the highest Consciousness you could imagine whether it really happened or not it's in that story and I can relate to that story I can read that story every night I can enact it in my life I can carry it into my organization to be a better leader better man better person so I think that's where the world needs to go why are people so angry right now I and admittedly a subset why is a subset of people so upset I want I think that there really is something going on but I can't quite tell what it is so one of the things you hear is that the Boomers have trapped so much wealth that they're staying in positions too long organizations are becoming corrupted but if well like my parents are boomers and don't feel trapped by them at all um the system has worked for me so I'm so confused by people's take on it am I delusional so the the story that I believe is accurate but it's certainly the story that I tell myself is I am an average person who has worked my ass off to turn potential into skill set I've deployed that skill set very strategically in order to create value for people and they wanted the things that I've created more than they wanted their money that allowed me to build equity ice then sold that company and was able to after many years of living like I was broke finally able to capture the value that I built into the company um but when I hear the way people talk about people that have generated wealth it it's they want people to pay tax on um unrealized gains no matter how much uh the wealthy paying tax like Elon Musk has now paid uh in a single year more tax than basically anybody in human history not basically I think that's actually a true statement uh but all the responses are but it's not enough and and so I can't relate to that mental frame of reference but being generous and assuming that there really is something going that if I were a kid now that I would have the same frame of reference that they have why what's happening yeah people are mad because they're victims of the largest heist in human history like especially if you're young right now and you're living paycheck to paycheck especially over the past couple of years that prices are soaring wages are flat right this is the same story since 1971. you know look at the charts I always recommend the website WTF happened 1971.com WTF happened in 1971.com make sure I'm saying that right all these charts shows in 1971 there's a Divergence from productivity and wages the working class the lower middle and increasingly middle and lower classes are being squeezed in this false economic Paradigm that we have with Keynesian economics because we broke the peg to Gold well that enabled the more rapid violation of private property rights through monetary inflation and all of those that corrosion of society the moral decomposition I described I think it all follows from that and people today don't understand what's happening right again you don't need to cognitively understand it helps if you cognitively understand but you just feel that you're getting scammed and squeezed all the time right no matter what you do nothing is working even if there's no Mal intent behind it when you repeatedly try an action and reality does not respond the way you want it to you are in the unknown right you're in unexplored territory and you're scrambling to get back to something that makes sense where I can do an action and get some semblance of an expected response youth are not getting that today right they're going to work they're saving their money prices keep going up too fast they're still getting squeezed they're moving back in with their parents etc etc so I think we're in the state early stages of currency failure and people that are on the wrong side of the economic hierarchy in those situations are feeling the pain they can't necessarily properly attribute the cause they don't know they don't understand the nature of property and money and all these things we're talking about so what do they do there they reduce to this barbarism of class Consciousness right rich people are evil these people are evil a lot of it's pointed at the government I wish more of it was pointed at the government because that is the sole legal violator of the do not steal dictum that I shared earlier this is the only legal Enterprise we have that generates all of its revenues through theft uh that's a big problem and that is dangerous because we've done that before right we did this with Marxism that there was a the problem was diagnosed that some people were getting rich and some people were getting poor right there was a there was a corruption or malignancy in the economic hierarchy but the Marxist prescription was to abolish private property the exact wrong thing you want to do for all the reasons we've described today right you have no prices all of the wealth then rolls up into very few hands the state they own everything uh wealth creation collapses Mass suffering Mass starvation genocide all of these things come from that root in my opinion I think what we need to abolish is Taxation and inflation and the central bank that would maximize the Integrity of individual private property rights which would remove this do not steal at least the institutionalized element of do not steal remove it from the world and enable people to deal with each other on consensual terms right just like you wouldn't the guy that's giving you his best working years you wouldn't bang him over the head to keep him here right like coercion in that relationship is never going to work long run even if you get the guy to stay here and beat him over the head with a wrench and say you're going to work for me no matter what he's not going to work so well for you he's not going to work as hard for you he's not going to work as smart for you he's going to backstab you every chance he gets so if non-consensual exchange doesn't work in that very simple bilateral transaction why do we think it works when we scale it up to the multiplicity of the whole global economy and yet we have that integrated into our money today money that's supposed to be this instrument of trust and trade and integrity and optionality right there's a lot of uncertainty in the world but I know if I save my dollars like Grandma told me I can protect myself against that entropy we're destroying that we've got no firm footing left in the world of course people are going crazy and I've written about this that I think I had a guy on the show Matthias Desmond he wrote the psychology of totalitarianism on the phenomena of mass psychosis and he lays out a lot of very intelligent reasons why we've had Mass psychosis in the past and why he thinks we're going through one again but I shared with it I think the violation of property is one of these things because if you sit down you know we talked about this last time too to play a game poker for instance I always like poker because I like to play poker and you start changing the rules randomly every few hands or changing the hand rankings whatever don't you think every play of the table is going to go absolutely crazy like you can't make sense to build a strategy there's no play left it's just noise and Madness that's what we're doing in the world we don't know how many dollars in our existence we don't know how many will be in existence we don't know who decides we don't know who profits from their production it's just a giant opaque pyramid scheme that we all use as our primary means of exchange and that I think is I don't want to say it's the only problem in the world we have a lot of problems but it seems like the biggest one that I can hope to aim at and it's really interesting that at least as we break along political lines in the U.S that half the people roughly want more government bigger government and if you're right and again I will attribute only actually that's not true I used to attribute only positive things since I've started learning about Nietzsche and the world of power I realize oh wait there's actually something else going on here um but the idea that the I wouldn't say Mass psychosis but the frame of reference that has way lower utility is that we need to abolish property rights everything needs to go to the government be redistributed is the thing that will yield the exact opposite of what they want Ubi but it does feel like I get where they're coming from and even somebody like Ray dalio and I don't know what his thesis is on how the taxation should change but he has said himself like yes we need a new tax policy we need to find a way to better distribute the wealth and I do wonder about this with Bitcoin because the supply is finite isn't it possible that Jeff Bezos just ends up with all the Bitcoin or Michael Saylor in this case like how do we ensure that the game of the libertarian philosophy does not end up in the same pathology that everything else ends up that's a great question well we know that at least from a Libertarian perspective that it won't because it's the stealing that's the problem right but somebody can win the game so well that everybody else is well let's think let's think through it though so any individual holder of Bitcoin that has a very large accumulation let's pick Satoshi he's got a million Bitcoin supposedly no one hasn't moved uh since the beginning of Bitcoin but that would be the largest single holder if that is one individual and if he holds that Bitcoin does that in any way determine his capacity to change the rules of the Bitcoin Network I'm asking the question I'm not sure why because I know the answer the answer is no so the greatest risk that a Satoshi brings to bitcoin is Market risk so he could go and start dumping his million Bitcoin on the market right he could suppress the price um you know who it depends on bitcoin's market cap how he does it how long he does it Etc how long that would persist but the key point is that there's no way to for him even him the creator of Bitcoin the largest holder of Bitcoin again we don't know who he is so he's anonymous even that godhead individual of Bitcoin cannot change the rules of the system that he himself created and that is the key point so Jeff Bezos comes in and I don't know his net worth or how much Bitcoin he could buy let's say he could buy a million Bitcoin first of all to do that you're going to bid the price of Bitcoin up significantly right so you're enriching older holders they have larger unrealized gains imputed into their positions which is a larger incentive to sell your Bitcoin for cash or goods or services and that's how through these price Cycles Bitcoin has tended to become more distributed into more hands for that very reason right if you bought it at a penny you're incentive to sell at 100 bucks is significant and at a thousand bucks it's gargantuan right so people tend to be selling it and buying it over time Bezos comes in buys a million Bitcoin a million and 1.1 million Bitcoin so now he's he's uh super order Satoshi what's his story well he's bit up the market cap of Bitcoin significantly but can he himself do anything to change the rules of the game no there's no amount of Bitcoin you can buy to change the rules of the game and there's a large degree a large share of Bitcoin let's say is held by people like me that won't ever sell so there's also that that you're always up against not that it could ever affect the rules anyways but you're never going to have one guy owning 21 million Bitcoin I guess would be the point um and if you did you'd be in a world with Free banking where people would go out and start their own bank and issue their own currencies as a substitute um and so that would be that alternate reality but I just in a Libertarian model so that presumes that there is no government as we would recognize it today well that controls the monetary yeah I guess I was also assuming Bitcoin had succeeded in that scenario and somehow I think the question you're getting is like what if happens if someone gets all the Bitcoin yeah I'm just trying to think through a Libertarian scenario so what I don't want to fall prey to is what I would view as a fallacy of everybody always says oh no no that wasn't real communism or that wasn't real socialism and if we just do it right everything is going to be fine like that that really is a dangerous way to think and if yeah I really hope people can stop themselves from that one but I don't want to hear the same thing on libertarianism like there's a reason I think my base assumption there's a reason that we don't have libertarianism either because it you'll never be able to walk that line is my guess and that what ends up happening is you get strong people that end up dominating and then the weak people go that noise and so they group up to take down the bully and that grouping up is like whoa this feels really good and so then you have governments they start small good intentions and they just pathologize over time as they get bigger and bigger and bigger but the pathologization is expressed through taxation that is the domination right the stealing the stealing yep so again from a practical engineering perspective the only thing we can do about that we can't change human nature people are always going to steal if that's an option available do you think the make stealing more expensive yep that's how you dissuade and remove non-consensual exchange from the economic fabric so that I think makes the following prediction that the only reason libertarianism has never truly profitable to steal yeah because there's never been and libertarianism will never exist to the extent that it is profitable to steal because people will always do what is profitable always I mean that could maybe be an axiom like people always do what's profitable at least psychically this kind of gets back to what we said earlier on the last episode that all action is an expression of value right people do things because they expect to they expect it to be a good outcome otherwise you wouldn't do it even people that are cutting themselves and physically damaging themselves they're looking for some high or some goodness of that um it's almost platonic where it says every action we take is aimed at the good and you could think of you know horrible things but the individual actor thinks what they're doing is good to them or for them in some way otherwise they would not do it so we can't do anything about that but what we can do is change the actual incentive structures we inhabit and make the stealing game less profitable thereby shifting human action towards making rather than taking what do you think though about so because the argument that's hiding in that is that there's no way to shut off or kill Bitcoin but when I watch shine to be like nope sorry and I get it it didn't kill Bitcoin but you can regionally kill Bitcoin and I know of course yes you could take your things and go but that's not easy so it's pretty effective to either at a country level say nope this is done or like with what happened to Russia where you shut things off at the like the um transmitting layer so what kind of risk do you think exists there for governments and it will be whack-a-mole I totally understand that but for them to just keep crushing any sort of because if libertarianism only exists in a world where stealing is no longer profitable they just make sure that stealing continues to be profitable at least in their geographic location yeah and that could always be the case with physical property but at least something like Bitcoin gives us the option to vote with our wallet or vote with our feet and leads man they like they're not playing that game I want to get to China so uh whack-a-mole's a good analogy actually because we have to remember the Bitcoin mining Network these miners are like Yay big right so what happens in a country like China um The Authority comes down and says hey no more mining here's all these legal restrictions against it what happens a lot of these things these miners get boxed up shipped to another location plugged back in right so the network itself is kind of amorphous if there's a regulatory Crackdown in a certain area miners will just fly into other jurisdictions and get plugged back in um now actually about China would you agree that they are the most I guess the largest Communist Regime in human history I'm pretty sure there are over a billion people I'd say the CCP has got the reputation from being one of the most ruthless and overtly powerful uh in human history um there's a there's a lot of stories that are leaking out of China about the atrocities taking place there uh I mean would you agree that at least today let's say of present governments that they are the most ruthless and uh totalitarian regime after your earlier point I am not qualified to answer that question if you take scale into account from my very ignorant perspective that seems true okay they shut down Bitcoin mining I think we're about a year and a half ago at this point I think 20 and someone have to check my numbers on this because it's been a few months since I looked at it but it was 20 of bitcoin's hash rate is still coming out of China really yes I did not know that so if the most ruthless authoritarian regime on the planet with its heaviest Iron Fist can't squash this guacamole amorphous game of Bitcoin mining so people are just doing it like hacker style then who can well my theory is that again it's easy to mentally frame the CCP or China as a singular indivisible entity that moves as a whole it's not what it is at all right there's a bunch of little five thumbs of power and uh families and all these things and what do people do people do what's profitable so they have a super abundance of hydropower in China for instance I know that they have other sources of power I'm sure if that power can't be sold to the Grid at a profitable rate and it's more profitable to Blind Bitcoin how are you going to stop like what what Iron Fist can control the individual maneuvers of 1.2 billion people when it comes to something like this I don't I don't think it's feasible I don't think it's Prof as profitable to try and enforce and control and prevent Bitcoin mining as it is for people to just circumvent the law in whatever way they're doing it and continue Bitcoin mining and that past 18 months I think shows that that 20 of the hash rate again check the numbers is still coming out of China so if the most ruthless regime in the world can't put a lid on this thing then what other government has a chance yeah I had no idea that there was still 20 hash rate what percentage is that of what was there before that I don't know I want to say they were in the I want to say they were the majority of the hash rate and above 50 percent so it wildly diminished it but still I mean that 20 is a really big number yeah interesting I didn't know that so when you think about the so I've heard you say that America is thus far the best economic experiment we've ever run but that there's potentially something better beyond that what would that better thing be is it no government well I think we go back to the exclusive scope of government as circumscribed by the Magna Carta which was the preservation of life liberty and inviolable property do you think we made a mistake in the American Constitution to say Pursuit of Happiness instead of property I do but I've heard arguments to the contrary and I haven't done the dig on that so in my extremely strong views about the importance of property I see it as a mistake but I've heard there's a religious or spiritual element to it but I'm not qualified to speak to that one um ultimately government is the social apparatus of coercion compulsion and violence you only want to invoke that social apparatus and as a means of retaliation or resolution to some form of coercion compulsion of violence right someone stole your stuff someone hurts you someone hurts someone you love that's when you need recourse to the state or the law so to the extent that we can move the world toward one in which government exclusively maintains that scope of service that it defends life it defends Liberty and it defends property that seems to me the best solution for dealing with this it's almost like a necessary evil right violence and force is an ever-present reality we have to deal with it somehow this seems to be and this is what you know the founding fathers and obviously the people that inspired them thought as well the government that governs best governs least right just restrict it to that very specific scope of service and now okay it sounds great in theory but history has obviously been a real pain in the ass with that because once you put all the power in one place absolute power corrupts absolutely institutions don't follow the laws that they promulgate institutions follow the individuals that run the institutions those individuals tend to be corruptable they will bend the publicly applied rule for private gain that is actually my definition of corruption there's a rule that we're all supposed to play by and then one guy twists the rule to his advantage and everyone else has to keep playing by it or is otherwise hurt by it that's corruption in a nutshell and that's what I think inflation and Taxation all these things are so that would then I guess with Bitcoin that's why we call Bitcoin Incorruptible money right it's a the first Level Playing Field we've ever had in the sphere of Economics a rule set that no one can change everyone just plays by by consent now it's always optional to use Bitcoin you're never coerced to use it but that option to have space or territory in a monetary Network that no one can compromise and no one can change that option becomes more valuable in the marketplace as the other money space is increasingly having its rules twisted and violated and changed right more Capital controls more inflation more taxation more confusion as this place gets more chaotic there is increasing demand for this place of integrity and transparency and universality so that's how I see this playing out is that the violation of property rights is going to continue to accelerate as it always has with governments that creates this osmotic pressure for people to adopt the option of not being violated right as people try to preserve wealth across time this is sucking economic energy out of the Fiat system and into the Bitcoin system and now you have people with a very strong form of property that is immune to Capital controls it can go anywhere in the world with it and they can basically vote with their feet so you're defunding this mechanism and empowering individuals to self-organize in the way that best suits them individually and that hopefully restricts government over time because you're now you're removing the revenue sources of Taxation and inflation from government definitely inflation taxations more interesting when it comes to bitcoin over time we'll see how that plays out it's at least going to shrink government and hopefully shrink government back towards that exclusive scope of the preservation of life liberty and property which is the philosophical theoretical Perfection of government as conceived 800 years ago have you read the book infomocracy I have not it's interesting it comes to a similar conclusion that you've come to but I think from a pretty different angle so the idea is that the world fractures into all these tiny little countries and that even as you move through a city you're moving through countries and each one because you can track people so specifically and data is like the oil it's you get this just completely fractionated world I heard you say that while you have no concept of what timeline would be if it's 10 years or 100 years 200 years whatever but that you think that there will sometimes be like 20 000 different countries why is that the natural conclusion of this osmotic pressure into the Bitcoin world so this is one of my favorite books actually it might be closely related to the one you just mentioned uh the sovereign individual written in 1997 it predicted things like the move from what do they call it broadcasting to narrow casting so they're predicting social media as a consequence of mobile digital Technologies so interesting to hear people like predict that stuff yeah it predicted uh the government use of certain medical policy to revalidate its borders let's say to control the flows of people in and out of countries and it predicted the emergence again written in 1997 of what they called Anonymous digital cyber cache and the extrapolation from that invention was basically the fracturing and collapse of the nation-state as the dominant institution in the world now it's a very dense book um I'll try to give you the very there's a lot that goes into it but just the very basic premise of why that is the case why do you go from Anonymous digital cyber cache to the fracturing of the nation-state is sort of what I tried to just describe right like we've all been forced into monetary policy up until this point we did to the point we don't even know what inflation is right like how much purchasing power have you been milked of inflation in your career that you really have no idea about really it's it's an interesting uh kind of Insidious invisible taxation once people have an option to exit that for a uh either an individually selected monetary policy or one that is just fixed like in Bitcoin I don't even like calling Bitcoin a monetary policy because there's no policing to it it's not being enforced in any way it's just an option you just go and freely choose uh to use this this type of money that no one can print and so as that unfolds and people realize that there's an option to again people are going to do what's profitable right and profitability also entails reducing cost so if I can reduce my cost structure by Saving in Bitcoin rather than saving in dollars then I'm going to do that and then once I'm in Bitcoin I now have more leverage in my negotiations with the state that they can't as easily they can't inflate they can't as easily tax me either because I have a form of property that's immune to Capital controls it's globally transactable I Can Vote with my feet and move anywhere in the world that that would lead to a reorganization of people into jurisdictions where they are treated best so the most Capital the most Talent the best performers will naturally coalesce into the jurisdictions where they're treated best and a lot of this the thinking on this too it's rooted on kind of an obscure literature on the economics of violence or Force um I've written about this a bit in my sovereignism series again the sovereign individual goes into it but let's just say that the ways we project power in the world can radically change our political Modes of organization a very simple example of this was for a long time the armed Knight on Horseback was the dominant martial force in the land right no one could take out an arm night it was the strongest form of military hardware in the world pretty much you know he that single Knight could kill 50 peasants let's say no problem so that was the weapon in the world all of a sudden the invention of gunpowder what happens one peasant can now take out an armed night on Horseback at 200 yards that led to the collapse of feudalism collapse of the medieval church as the law on the land like there were all these follow-on consequences as a result of that simple change that someone figured out you put explosive powder and a long pipe and shoot a ball of the guy and he's dead um so with Bitcoin it's it's the ultimate defender's Advantage right earlier when you're talking about the strong people coming into Power dominating the weaker people well now the weaker people will have recourse to a form of wealth that is indomitable you cannot steal it from them right they can so there's less profitability for the the aggressor he can't get the property and there's more optionality for the victim so that leads to a world that's more heavily consensual in my opinion everybody in America should be a business owner however not everybody should be in the business of starting a company and not everybody should be in the business of operating a company so what does that mean well you can be a worker and an owner right you this concept of equity you have to understand this because wealthy people are working for Equity they're not just working for a salary

Channel: Tom Bilyeu

Views: 546,607

Keywords: Tom Bilyeu, Impact Theory, ImpactTheory, TomBilyeu, Inside Quest, InsideQuest, Tom Bilyou, Theory Impact, motivation, inspiration, talk show, interview, motivational speech, Robert Breedlove, What is Money?, Conversations with Tom, Health Theory, interview show, mindset, economics, government, fiat currency, bitcoin, investing, building wealth, what is money, understanding money, private property, cryptocurrency, inflation, what is inflation, money strategy

Id: dU1eJ48ECMM

Length: 219min 42sec (13182 seconds)

Published: Thu Feb 16 2023