Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics | Lex Fridman Podcast #284

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Link to the YouTube video: https://youtu.be/gp4U5aH_T6A

Lex Fridman: Let’s start with a big question: What is money? And what is the role of money in the history of human civilization?

Saifedean Ammous: Money is a medium of exchange. The thing that defines money is that it is a good that you don’t buy for its own sake — because you want to consume it itself, or because you want to employ it in the production of other goods, which is what capital goods are, so we have consumption goods, we have capital goods — money is distinct from those two, because it is a good that is acquired purely to be exchanged later on for other goods. So it’s not something that you acquire for its own sake — you acquire it so that you can then later on exchange it. And that’s a market good like all other goods: you acquire food because you eat it, you acquire a car to move you around, you acquire money so that you can exchange it for other goods. And that’s something that many people have a hard time grasping of: the concept of money as a market good. But it is a market good just like all others. And the importance of it is that it allows us to trade. It allows us to develop the division of labor, which would not be possible at any kind of sophisticated level without money. So if we live in a small society of 10 people, then think about all the things that we can make, all the things that we can produce. If we’re only 10 people isolated from the world, there’s only very few things that we can make, and therefore we can exchange those things directly with one another. But if we get in contact with other societies that have more people, then the opportunities for specialization increase — if there’s 10 people, the only thing that you can make is the very basics you need for your survival — but if you’re part of an economy of 10 million people, there’s much more room for specialization: you can make a car, you can make a house that’s very sophisticated. And that relies on the division of labor. That relies on you specializing in doing one tiny little thing which is not what you consume, and you trade that thing for all the things that you consume. So as the economy becomes more sophisticated and involves more people — and currently we’re all part of an economy of almost 8 billion people — each one of us produces one tiny little thing and they exchange that thing for all the things that they want. And so because we specialize, we become more productive in doing the thing that we’re good at, so there’s people out there who are engineers who are designing windshields in cars — it’s a very specialized thing. They sell a windshield design to Mercedes-Benz, and then from that, that windshield design is added on to millions of cars around the world, and from that they’re able to get enough money to meet all of their needs. So the division of labor is enhanced enormously with money because without money it’s very difficult to be able to exchange a large number of goods, it’s very difficult to have a sophisticated economy with a large degree of specialization because it’s very difficult to find people who want the thing that you have and have the thing that you want. We call this the coincidence of wants, and that’s really the problem that money solves. So you make apples and I make oranges — I’d like to have some of your apples but you don’t want my oranges, so we have a problem of coincidence of wants. So what do I do? You want bananas? I need to find somebody who has bananas, give them my oranges, take their bananas, give you their bananas, and then I take the apples — in that case bananas are a medium of exchange. So it’s natural that a medium of exchange will evolve and will emerge in an economy as an economy becomes more sophisticated. As we move beyond 10 people and 10 goods, it’s inevitable that we’re going to come to a situation where we have the problem of coincidence of wants, and the way to solve that is to use a medium of exchange. And it can be anything: it can be a banana, it can be food stuff, it can be any kind of good. As long as I acquire the good with the purpose of it passing it on to you, not for the purpose of me consuming it or using it, then that’s a medium of exchange.

Lex Fridman [5:38]: So when we look at the entirety of human society of millions, of billions of people, you think of them as a bunch of individuals running around — I love the the term coincidence of wants. So each one of them, it’s like a stochastic system: they have desires — it’s like a random collection of desires somehow rooted in our evolutionary history, but mostly random in terms of preference of banana or apple, that kind of thing. And then they also have the capacity for competence and excellence in a particular kind of labor. It’s like specialization — they’re able to be incredible at a particular set of tasks. So there’s a bunch of ants running around with consciousness and intelligence and they have desires and they have capabilities, and then there’s a coincidence of both the wants they have and the capabilities they have, and you want to create a system that exchanges those things. So when you imagine: What is a good? What are markets? When you imagine a market as like a hierarchical system, what do you imagine? What is a market?

Saifedean Ammous [6:53]: A market is just the name for the naturally emergent phenomena of people voluntarily exchanging things.

Lex Fridman: At any scale?

Saifedean Ammous: At any scale, yeah. It could be a market of 2 people on an island on their own, it could be 8 billion people across the planet.

Lex Fridman: Naturally emerging?

Saifedean Ammous: Yes — this is the thing I think that is very hard for many people who don’t have a good understanding of economics to grasp, that capitalism and markets are not something that you need a central planner or a government officer to make happen. Capitalism is just what happens when people are left to their own devices. Our cognitive capacity allows us to develop tools that we can use for production, and that’s what we do — that’s what humans have been doing since they started making spears to hunt. That’s the first capital good, probably. So we’re constantly accumulating capital, we’re constantly trading with one another. We find an opportunity: you’ve got a lot of oranges, I’ve got a lot of apples, then I’ll take some of yours, you’ll take some of mine, we’re both better off. This is just a naturally emergent thing, and money is what makes it enormously powerful. Money is what allows it to scale, really. Money is what allows it to go beyond small societies into just something that is global, because with money — again, as I was saying earlier — all you need to do is specialize in doing one thing, the thing you do best, and then you exchange that for money, and you don’t have to worry about whether the other people involved in this want what you have and have what you want. You just sell it for money to whoever wants it and you buy whatever you want from whoever has it, and that’s an enormous reduction in the mental burden of how a market economy functions. So the first thing that I would say about money is that it allows for the division of labor and it allows for the market system to grow. And the second thing is that money is a mechanism for storing value into the future. So again, as humans, we develop the capacity to think for the future — we make a spear so that we can hunt and then we see that it works and then we take it out of the animal that we hunted it with and we keep it for the next day’s hunt. And then we start making a better spear and we make a better fishing rod and then we make a fishing net and we make a fishing boat — and that’s our ability to think of the future. And as we start building durable goods, we start thinking more and more of the future, we start becoming more and more future-oriented, and that’s really the process of civilization: the process of denying our needs now in order to think for the future. So instead of spending all of our day on the beach enjoying ourselves, we take time off from leisure on the beach and spend some time making a spear or making a fishing rod so that our productivity in hunting or fishing tomorrow is going to be higher. And so that ability to think for the future is enhanced by our ability to provide for the future, and we do that with durable goods. But then money ends up being the best mechanism for providing for the future, because the future is uncertain so you can save your apples and oranges, you can save the spears, you can save the animal that you hunted, but these things — first they rot and they’re not very good at holding on to their value over time — but even if they were, even if have objects that are durable, the problem with them is that you don’t know if you need them tomorrow or next month or next year. You’re not sure if you’re going to be needing them and you might end up not needing them and you might end up not finding anybody who needs them, or finding somebody who needs them but doesn’t value them much and won’t give you much in exchange. Money allows you the optionality of saving the most liquid good, the most saleable good, so it’s something that you can sell tomorrow with the least uncertainty — it has the most liquidity, the most ability to be sold without a loss in its value. So money is our most advanced technology and our best technology for moving value into the future, and so I think history, really — I argue this in all my books — is that, really, history we see, we can think of it as a process of: our money gets harder, and so our money is gets better at holding on to its value for the future, and by harder I mean harder to produce. We find things that are hard to produce that are better at holding on to their value, so they hold on to their value better for the future, and that allows us to plot and plan for the future, that makes the future less uncertain, and that makes us more future-oriented. In other words it lowers our time preference. And the harder the money is, the better it is allowing us to think of the future.

Lex Fridman [11:42]: So people should know that you’ve written the book, The Bitcoin Standard from 2018, and then a new book called The Fiat Standard. The Bitcoin Standard is considered kind of the bible in the cryptocurrency space, in the Bitcoin space, of just a very rigorous, systematic explanation of, Why Bitcoin? What is it? Why should it be? Why is it good? So you’re describing, in that book and in the new book, different implementations of the technology of money. In the new book you talk about fiat money, which is another way to do money. So obviously there’s a lot of different ways to do money, and maybe we haven’t discovered the best way to do money yet — our conversation today is how to do money better. Maybe we’ll go back to bananas, eventually.

Saifedean Ammous: Very good reasons why we won’t!

Lex Fridman: Well we can agree to disagree on this. I’m open-minded to the bananas — they’re one of the biggest sources of joy to me when I first came to this country, is eating bananas. And so maybe perishable happiness will eventually become the best medium of exchange — I don’t know. I’m open-minded. Anyway, so you mentioned hard money and soft money. So it’s different ways to do money. What is hard money? What is soft money?

Saifedean Ammous [13:07]: In The Bitcoin Standard, I present the argument that money is always whatever is the hardest thing to make. Historically, I think we see many examples of that. So for instance, in prison people use cigarettes as money because nobody can make cigarettes in prison. In societies we have the example of Yap Island, for instance: it’s an island that doesn’t have any limestone but there’s a nearby island that has a lot of limestone and it’s very expensive, obviously, with primitive technology to move limestone from the from Palau to Yap. So on Yap, limestones were money. Rare seashells that are not easy to find end up serving as money in places where they’re rare. Glass beads were money in West Africa where there was no glass making technology because they were imported from abroad and they were very hard to make. And I think there’s a conscious effort — some people might recognize the hardness and the scarcity and choose this as money, but I think what’s more important is just a natural evolutionary process whereby people choose all kinds of random things as money — bananas, maybe even — but then the people who end up making these bad choices don’t end up with any wealth left, whereas the people who store their wealth in the things that are hard to make end up maintaining their wealth and maybe even increasing it over time. And of course this culminated in the end of the 19th century by basically the entire planet being on a gold standard.

Lex Fridman [14:37]: What is the gold standard?

Saifedean Ammous: The gold standard is basically when money is gold, or at least government currencies backed by gold. But the reason gold became money and not copper, not nickel, not bananas, is that gold is the hardest metal in the world and it is the hardest metal to increase the supply of. And the reason for that is based in chemistry: gold is indestructible — you can’t destroy gold in any meaningful sense. It’s it’s been accumulating stockpiles for thousands of years. The gold that was worn by Nefertiti back in ancient Egypt is today probably in somebody’s necklace or in somebody’s gold coin — it’s still there. So for thousands of years, humans have been digging for gold, they dig it out of the ground, they refine it, and then they put it in jewelry or a coin, and then it just stays there. It gets melted down into new other forms — the jewelry gets turned into coins or coins get turned into bars, but it’s just stockpiles that are accumulating. On the other hand, every year we get better at our technology of looking for gold — there’s more people all over the world, the population increases, the technology improves — so we keep finding more and more gold and we keep making the stockpiles bigger. However, because we’re constantly adding to a stockpile that is not being consumed, because there’s no way of consuming gold — you can’t eat it, you can’t burn it, it doesn’t rust — because of that, we’re constantly adding to a constantly growing stockpile. So if you look at the numbers, you see — over the last 100 years we’ve got pretty reliable data on gold production worldwide — we see that pretty much gold stockpiles increase at around 1.5%-2% per year every year. So yes we’re making more every year, but we’re making more so we’re adding to the stockpile, the stockpile grows more, so every year we’re adding only around 1.5%-2%. Compare that to the second-hardest metal historically was silver, and that increased historically around maybe 5% per year or so. Now it probably increases something like closer to 30% because it’s now getting used extensively in industrial uses. So when you use it in industry — when you put silver in a laptop, or in a camera, or in a machine — effectively you are consuming the stockpile because it’s not used as money. It’s taken out of the monetary stockpile. So over the last 150 years, since 1870 in particular, and I discussed this in detail in The Bitcoin Standard, what happened in 1870 was: Germany won the Franco-Prussian war and Germany was on a silver standard but the value of silver was declining so Germany did something very smart, which is they took their indemnity from France in gold and used that big chunk of gold to switch to going on a gold standard. And since then, silver’s been collapsing in value next to gold. So back then, the price of an ounce of gold was around 15 ounces of silver — today it’s closer to 100 ounces. It’s just been declining for the last 150 years. And so because of the fact that it’s lost its monetary role as people shifted toward gold, the value of silver went down and so it became economical to use it in more and more industrial applications, so the stockpile declines, and then as a result, that weakens its monetary properties more and more and more. So at the beginning of the 19th century, gold and silver were money — by the end, it was basically only gold, and the countries that were still on a silver standard, China and India in particular, suffered enormously from it because their money was devaluing very quickly next to gold, and so Europeans who would come to China or India were able to buy things practically at a big discount.

Lex Fridman [18:30]: So I hope it’s okay if I ask very simple, very basic questions. There’s few people in this world that are as good as you are at answering very basic, almost ridiculously basic questions, because I think exploring questions like, What is money? is a really great way to think from first principles, to really think deeply about this world, so I really appreciate you doing that. When you say standard, what does it mean? When you say silver standard, gold standard — again with the basic question.

Saifedean Ammous: The term really I think was based out of gold. The first time this came out was the gold standard, because I said gold was money at the end of the 19th century, but it wasn’t just that everybody was using gold coins and trading with gold coins, because that’s got a problem of divisibility. A lot of things are worth less than one gold coin, so how do you buy that thing? And the answer was that you created monetary instruments that were backed by gold, and so national currencies under the gold standard were specific units of gold, and that’s how a gold standard functioned. Money was gold, but you had pieces of paper that were redeemable in gold, so you could go to the central bank, you’d give them the piece of paper, the $100 bill or the $10 bill, and they’ll give you a specific quantity of gold in exchange. Effectively, the paper was just the receipt for gold.

Lex Fridman: So the paper exactly represented the amount of gold?

Saifedean Ammous: Exactly. That was the plan. That was what it was supposed to do, but arguably we never had a pure gold standard because the nature of gold means that the people who are in charge of the gold, they have an enormous amount of power because the gold is concentrated with them, and as long as not everybody shows up at the same time asking for their gold then you can make more receipts than you have gold.

Lex Fridman [20:21]: Sure. There’s always shady stuff going on, but at least that’s the stated goal, is the receipt should exactly represent the amount of gold there. And also when you say standard, it means that governments publicly stated that this is the approved, the main way of making transactions that are monetary, so this is the official money that you should be using if you live in this country.

Saifedean Ammous: Yes, although I would say it’s more like the other way around: it’s not that the government’s established gold as money — it’s more like the gold gave the governments the credibility for their currencies. So governments were not the ones that made gold money — gold has been money before states were invented. States — if you have a government and you’d like to have some legitimacy and you’d like to be able to deal with other governments on an equal footing, you had to go by the gold standard, you had to have a currency that was redeemable in gold so that you could trade with the rest of the world so that people could, in your country, use that currency. So it’s not that governments were choosing gold — it’s more like they were having to adapt their own currencies to gold in order to give their currencies credibility.

Lex Fridman [21:39]: So there’s a dance there, though, because if they had to, then why did they switch away from it after? So there is a dance where the governments, the people pressure — so first of all, the basic characteristics of the hard money pressures the governments and the people in terms of what should be used, then the people based on their community, the network effects, the narratives they tell each other, all that kind of stuff, they pressure the governments to take on a particular money, and then the governments, they like power, they like control, all those kinds of things, they pressure the people and tell different kinds of narratives. So there’s a dance going on in this evolution of what technology to use for a monetary system, so I don’t know if governments had to because they clearly didn’t have to because they eventually moved away from it, but there was pressure, probably.

Saifedean Ammous [22:38]: Yeah but I mean even after they moved away from it, central banks until today, they still hold a lot of gold reserves. In fact, if you look at 1914 when the world really went off the gold standard, the amount of gold reserves held by central banks was a tiny fraction of what it was. As time went on, central banks accumulated more and more gold. What ended up happening is they prevented their citizens from using the gold but they continued to use it. So gold continued to be money up until 1971 because effectively the world was on a dollar standard and the dollars were backed by gold, but then after 1971, even then central banks continued to accumulate gold because why would you as a central bank want to accumulate pieces of paper, effectively, or credit liabilities of another central bank that can produce them infinitely? And it’s a lesson that’s becoming more and more obvious to governments today as we see US sanctions taking, say, Russian reserves or Afghanistani reserves. And this is why we see China and Russia have accumulated a lot of gold over the last 10–20 years.

Lex Fridman [23:44]: So just to return to the question of definitions: What is hard money versus soft money?

Saifedean Ammous: Yes. So hard — I mean it’s a relative thing, but — the hardness refers to the difficulty of producing more units of the money supply. So an easy money would be a money that is relatively easy to make so you can increase the supply by 10%, 20%, 30%, 40%, 50% or something like that. So pretty much all market commodities other than gold and silver, they’re easy money and they’re not suitable as a monetary medium because they’re being consumed. So in The Bitcoin Standard I mentioned this metric called the Stock to Flow ratio, which is the ratio of the annual production — the flow — to the existing stockpiles. If you look at all the other metals, they’re easy money because they’re being consumed. So think about how much stockpiles of copper there are in the world today. So copper companies obviously have some stockpiles of copper, major copper consumers will have stockpiles of copper, but the vast majority of copper is essentially on a conveyor belt of production from the mine straight to the consumer good that it’s being used for. So the existing stockpiles are roughly in the range of one year’s production. If you take all of the companies — I don’t have exact statistics, it’s very difficult to get these, but — it’s roughly in the same range. Like, if copper production were to stop completely today, we’ll have about a year’s production stored in various places. So that makes copper terrible money, because if you started using copper as money — and this is why a lot of people say, Well, money is a collective illusion, money is a social construct — if we all agree that something is money, then something is money, I think it’s completely clueless, and it’s usually Marxists who believe this, so obviously no understanding of economics. It’s completely clueless, because even if everybody in society decided we wanted to make copper as money, even if we all decided to collectively take part in this hallucination or illusion, it would not make copper money. It would just make everybody who decides to take part in this hallucination poor — that’s it. It would make copper miners rich, it would make all of the people who chose copper as money poor, and copper would not be money. It can’t work, because what happens is, because of the fact that the stockpiles are so small, if you buy — even if you get the 1,000 richest people in the world, all the world’s billionaires, they get together and they all dump all of the money that they have, all the stocks, all the bonds, all the gold, all of the Bitcoin, everything that they own, they dump it and they buy copper with it. What’s gonna happen? Price of copper is gonna go up a lot, but what’s gonna stop copper miners from flooding the market with even more copper than what the billionaires bought? Nothing. They’re going to dump all of that extra copper production — if the price of copper is going to go up, there will be a lot more copper mining than all the other metals. A lot of nickel companies and gold miners are going to switch to focusing on copper and then they’re going to dump an enormous amount of copper on the market, the value of copper is going to crash, and the people who chose copper as money are just going to end up with large warehouses of very cheap, rusting metal.

Lex Fridman [27:06]: So that’s a brilliant description, and that kind of pushes towards gold where the Stock to Flow ratio I guess you would say is 1.5%-2% like you mentioned earlier?

Saifedean Ammous: Well that would be like the inverse of the Stock to Flow — that’s the supply growth rate, so the Stock to Flow is the inverse: it’s around 60.

Lex Fridman: 60, got it. But as somebody who likes human psychology, let me push back on the collective hallucination and the illusion: so that’s for copper, but what about paper money? You can’t smoke it, you can’t eat it, it’s supposed to just be the medium of exchange. And in that sense, what role does collective hallucination play in the effectiveness of money?

Saifedean Ammous: Exactly zero, because all of the paper money — first of all, there’s never been an instance, and again, this is flies in the face of what a lot of people like to think about money. There’s never been an instance where a government came out and said, All right, we’re printing out these pieces of paper use them as money this one is worth 10 apples, use it for buying things, and here’s the piece of paper — this has never happened. They’ve always taken fiat money, paper money, all of these things were always born out of fraud. Initially it was a receipt for gold, and then they told you, Well, you don’t need the gold anyway and you have to use this and then if you don’t use it we throw you in jail. So first of all you can’t enforce this thing, so it’s never really just happened, and it’s never been hallucinated into existence. People can hallucinate this kind of nonsense in writing textbooks and books and in academia, but in the real world, people don’t hallucinate money — people are very careful about what they put their money in.

Lex Fridman: For people listening: we’re gonna have fun in this conversation because you already said Marxist, fraud, hallucination — just because we use these words doesn’t mean they’re true, but they’re fun to talk about. So you have a strong certainty about the way you talk which I think is fun, but allow me in my dumb self to push back, to play devil’s advocate, and I’ll actually ask you sometimes to play devil’s advocate if possible because you’re smarter than me in all this stuff, so we want the smartest devil’s advocate if possible, and I’m certainly not that. But nevertheless, we are currently on a fiat standard, so paper money does have value, and the reason it has value is because we believe it has value. To what degree — if we put the hallucination word aside — the belief that something is worth value is the thing that helps money work? Because you’re saying it’s fraud and the belief is almost valueless, but how much value can we quantify the value of the belief? The collective belief?

Saifedean Ammous [30:17]: I should say: all economics is subjective. I consider myself an Austrian school economist, and the starting point of all Austrian economics is that all value is subjective. So obviously value only exists because humans choose to make the valuation. However, the economic reality of the way that money works means that it’s just a technology like all others. And so for me when people say, Well if we hallucinate that this thing can be money then it’ll be money, if we can hallucinate bananas to be money then we’ll have money, for me it’s like saying, Well if we hallucinate the bananas can be spaceships, there’ll be spaceships. I mean, you can call them spaceships if you want, but a banana is not going to get you to the moon with it.

Lex Fridman: Nevertheless — that’s true — so you’re drawing a big distinction between physical reality and the space of belief. But it seems like so much power of human civilization, so much destruction, so much creativity, creation, happens in our minds.

Saifedean Ammous: Absolutely — everything does happen in the mind.

Lex Fridman: You’re not going to get to the moon, but you might still have a significant impact on human civilization if a lot of people believe a thing.

Saifedean Ammous: True, but economic reality exists in a way in which your beliefs are rewarded when they match up with economic reality —

Lex Fridman: With physical reality.

Saifedean Ammous: — and they’re punished when they don’t. So if you ride a banana, jump off a cliff thinking you’re going to get to the moon, that solves the problem of people thinking the bananas are spaceships by killing people who think that bananas are spaceships. And to go back to your question in terms of paper money: so yes, even though ignoring the original sin of the creation of fiat money and ignoring everything that happened before 1971 — all right, well here we are, people are using it. Well, it’s not really paper money — we should say fiat money is predominantly credit. It’s also digital currency — more than 90% of dollars are digital, less than 10% of dollars are physical. So it is a digital currency, and all over the world all these governments are using digital currencies, effectively, with some physical manifestations in paper, but yet even within these currencies it’s still the same analysis, and I discussed this in Chapter 4 of The Bitcoin Standard: you look at government monies, you see that the currencies that have held on to their value — the ones that have the biggest value, the ones that play the biggest role in global trade, the ones that are used as currency reserves all over the world — are the ones that have the lowest supply growth rate. The ones whose central banks are the least inflationary. And on the other hand, the ones whose supply is more inflationary — similar to copper — end up failing. You look at Lebanon, Venezuela, Zimbabwe — these are currencies whose supply increases very quickly and therefore their value collapses. Whereas the dollar, the Swiss franc, the euro, the British pound, the Japanese yen, they increase at a much lower rate in general than these terrible currencies, and that’s why all over the world you see people are looking to get more dollars and more of these harder currencies than the easier ones. So I think this analysis of the hardness of the money and the ease of money is pretty well supported empirically.

Lex Fridman [33:37]: So like you said, you at least in part or in whole consider yourself an Austrian economist, so you’re perhaps a great person to ask about the basics: What is Austrian economics? What is Keynesian economics? How do you compare the two? What should people know? What are interesting defining characteristics to you about these schools?

Saifedean Ammous: Yeah so the way that I see it, Austrian economics is economics. We call it Austrian economics because economics has been hijacked by a bunch of frauds, really.

Lex Fridman: Or people who are wrong.

Saifedean Ammous: Well, it’s much worse than wrong — they’re people who are just essentially propagandists for inflation.

Lex Fridman: It’s like your opinion, man.

Saifedean Ammous: Yeah, well that’s also like your opinion, man. But you asked!

Lex Fridman: Yeah. That’s true. Well, I also talked to Paul Krugman on this podcast. The, Oh, speaks enough, but he is one of the people that is perhaps most harshly criticized by folks in the Austrian economics perspective and vice versa, which is a fascinating tension.

Saifedean Ammous: Yeah, he’s done a great job as an actor who plays an economist on TV and the Internet.

Lex Fridman: So anyway, now tell me what you really think? No, but so the basics of what is Austrian economics: What perspective does it take in the world?

Saifedean Ammous [35:00]: Yeah, so I mean Austrian economics really is the continuation of a tradition that goes back to the ancient Greeks of studying economics. Historically, it’s really just economics, and that has evolved over time, and the establishment of the Austrian school, per se, came in 1871, 150 years ago, when Carl Menger, the father of the school, wrote a book called Principles of Economics, and essentially invented marginal analysis, which is a big deal in economics. Marginal analysis is the idea that, in economics, individuals carry out decisions at the margin, that it’s when you’re making a choice between what should I spend my money on, you’re not making a choice whether it is this thing, Object A or B, which one is more valuable for me in general, which one is more valuable for me for the rest of my life — you’re choosing about the next unit right now at this point at this stage. And if you analyze economic decision-making at the margin, it makes a lot more sense, and you can understand why people decide and make the decisions that they do. Whereas, if you don’t apply marginal analysis, things don’t make sense. The key thing that marginal analysis helps us solve is what is called the water diamond paradox. So: you will die without water. We all need water, and yet water is dirt cheap. Whereas diamonds are extremely superfluous, nobody needs them, nobody’s going to live or die because they have a diamond, and yet they’re extremely expensive. So why is it that, as human beings, we pay maybe a dollar a liter for water? Whereas we pay thousands of dollars for a few grams of diamonds? Why is this the case? Do we value water less than diamonds? And the answer is No. But at the margin — where we are right now — you live in a place where water is very abundant, because cities are only built in places where water is abundant, and you’re only making a choice about the next unit of water. And so water is extremely abundant and you’re choosing about whether to spend the next unit of money on water. The valuation that you give to water given that you have a lot of water at home and that you live in a place that has abundant water is pretty low to the marginal unit, but it’s very high for water overall. So if I asked you: How much would you spend for water in general? How much would you pay for water for all of your life? It would be a lot higher than diamonds. If I told you can only have water or diamonds for the rest of your life, you choose water — obviously. But nobody’s ever had to make that choice — you only make your choices at the margin. So at the margin — where we are, modern civilization — we have an abundance of water, that’s why we have civilization, and diamonds are very rare and scarce. And you’re only buying your first diamond when you’re going to get married, you give it to your wife, and that’s going to be the first few grams of diamond that she’s ever going to own.

Lex Fridman: I’m giving my wife water.

Saifedean Ammous: Smart move. You should definitely give her Bitcoin instead of diamonds. I tell my wife — I occasionally remind her how many Bitcoin we could have had if I bought her Bitcoin with the price of the diamond.

Lex Fridman: What’s the downside of diamonds from the analysis of gold and so on?

Saifedean Ammous: Ah, that’s a great question — arguably, diamonds are a scam because they became popular as a thing in marriage after gold ownership was banned in the US in the 1930s and in many places around the world. So before that, you’d give gold. And the reason you’d give gold in a dowry in a wedding is because it wasn’t just that it’s pretty and shiny, it’s because it’s money. And so if you die, your wife can take the gold and she can live off of it. It’s a demonstration that you’re giving her something valuable, and that’s because nobody can make a lot more gold that has the high Stock to Flow ratio. But then they banned gold ownership, or they allowed people to only own very tiny quantities of gold, and that’s when the diamond industry stepped in and marketed diamonds as the thing that you need to give. But the problem with it is, of course, that diamonds aren’t like gold — they’re not very hard to make more of. And the reason we have scarcity in diamonds is really artificial: there’s effectively a monopoly of diamond producers. They restrict the supply, and it’s a pretty dirty business, and the way that they do it is: all of the talk about blood diamonds is a way for them to ensure their monopoly. So if you’re part of the monopoly of diamond producers then it doesn’t matter how many people get killed producing your diamonds — if you’re out of the monopoly, then human rights organizations descend on you and call for shutting you down for selling blood diamonds. And they’re also restricting the production of artificial diamonds — this is the other thing. You can make artificial diamond — you can’t make artificial gold. So they restrict the production of artificial diamond and they try and insist that you shouldn’t take artificial diamonds, but they’re indistinguishable from real diamonds. So it’s an artificial scarcity, and I think there’s going to come a point — at some point — that this monopoly is going to break and a lot of people are going to be left with essentially highly-devalued jewelry.

Lex Fridman [40:30]: I’m going to take this segment of the podcast when I’m getting married and I’m going to send it and then instead you’re getting water or Bitcoin.

Saifedean Ammous: Yes! Water and Bitcoin is all you need.

Lex Fridman: So marginal analysis: so the thing at the margin is the thing that allows you to most accurately capture human nature — the actual day-to-day decisions that we humans make.

Saifedean Ammous: Yeah, that’s really revolutionized economics in 1870, and that was Menger’s work. And then he had a student, Eugen von Böhm-Bawerk, who developed capital theory, and then he had a student, Ludwig von Mises, who is arguably the most important economist ever, and he developed theory of money and he wrote a book in called A Theory of Money and Credit and then in the 40's he wrote Human Action, which is a big treatise on economics. And this is the correct tradition of economics, and before World War I this was just known as economics. And then what happened in World War I — and I discussed this in detail in The Fiat Standard — is that the Bank of England essentially went off gold and tried to pass off their own credit as being as good as gold in order to finance the war. And incidentally here this is part of the history that is not discussed often — this is presented as an innovation: they needed, essentially, a propaganda school that would justify what they did, and later on it’s presented as, Oh hey, we realized that gold was not good and now look we’ve built this thing that is better than gold where now the government can just print money whenever it wants! And now money is not an issue anymore — which is extremely idiotic, because the whole point of money is that it’s not easy to make. If it’s easy to make, it’s not money anymore — it’s just destroying the entire function of money. And we’ve seen that happen extensively in the 20th century after countries went off the gold standard. So essentially, Keynesian economics is just inflation apologia — it’s just propaganda to justify inflationism. And it’s profoundly nonsensical — it’s built on the idea that if you just make more money, you can stimulate economic production. And of course this is very self-serving to the central banks and to the banks and to the governments who promote this nonsense, and this is also very pervasive: if you’ve had the misfortune of studying at a university over the last century, you were taught Keynesian garbage economics. You were taught that if there is a problem in the economy, the way to fix it is that the government prints money, the government lowers the interest rate, and then that leads to more economic production — which is completely nonsensical.

Lex Fridman [43:19]: So you’re — again, for the listener — you’re using strong words and I will push back just to play devil’s advocate to hopefully one day arrive at the truth. So just because it’s in the interest of the central banks and the government — the interests and the models of Keynesian economics and the government are aligned — doesn’t mean they’re wrong. So let’s give ‘em a chance. So the conventional wisdom, perhaps — economics wisdom — is that inflation is good in moderation as it encourages spending. But too much is bad because it completely devalues, destroys people’s savings. So a little bit of inflation is good to stimulate spending. I mean, I suppose this is one of the things that’s supported by Keynesian economics.

Saifedean Ammous: This is basically the whole point of Keynesian economics is to try and find an endless array of explanations to explain why inflation is a good thing.

Lex Fridman [44:26]: Well — the chicken and the egg. So that’s the cynical take: this is a propaganda machine to sell the government’s narrative. The less cynical take is this is a bunch of economists who —

Saifedean Ammous: — who figured out this thing and it happens to be good for banks and governments, and just because it’s good for them doesn’t mean —

Lex Fridman: — and it justifies the existence of government. And a foundational principle of your thought is that a lot of government is not a good thing. Your first gut instinct: government bad. Like I mentioned, I lived next door to Michael Malice, who probably beats you on the intensity and how quickly he says government bad, but there’s a potential argument for government good — some government is good, maybe a lot of government is good. Maybe we need a lot of centralized management for resource allocation and so on, because we humans specialize, we’re too busy and so on. So there is an argument for that, that exists — you probably disagree with any possible argument on that side. But anyway: Why is that idea of Keynesian economics wrong?

Saifedean Ammous [45:38]: I’m going to focus for this on the money idea — the idea that a little bit of inflation is good. The criticism is that without inflation people wouldn’t spend and then the economy would come to a grinding halt — and that’s nonsensical because people spend not because they want to keep this magical monster called the economy going, people spend because they need to consume because that’s how we live, that’s how we survive. You need to eat, you need shelter, you need clothes to keep you warm, and as technology advances, the capabilities of the things that we can do with our time increases and so we want to buy more things. So people buy things because people want to consume. There’s a limitless desire to consume. There’s no shortage of reasons for people to consume, whether it’s food or Ferraris or private jets. People just always want to buy more.

Lex Fridman: What about the fear about the uncertainty of the future where they might want to buy things but they’re really afraid because it seems like there’s like a pandemic going on or whatever. Can you have too much fear or uncertainty?

Saifedean Ammous: So here’s the thing: what I was saying is I was making the point that we don’t need to be motivated to consume. Like, we have the insatiable desire to consume. Everybody would like to have more of all kinds of things. Everybody would like to have a bigger house — well not everybody, some people have a big enough house, but — everybody would like a house, everybody would like a car, jet, all kinds of things, electronics, machines. So we don’t need a desire to consume. But of course, the limit on how much we consume is opportunity cost. Why don’t you buy a Ferrari? Well, because that’s really expensive and it would mean — well maybe you do have a Ferrari, but — I mean most people don’t buy Ferrari because it’s too expensive, they can’t afford it, they’d have to work too hard to get it, and if they do get it it might mean that they can’t afford their house anymore. So we have to economize — that’s a good thing. And we have to also think of the future. And so humans consume — we don’t need more motivation to consume. We have to deal with the economic reality of the things that limit us from consuming more. So what Keynesians present is that when there is a problem in the economy like there was after World War I — the problem is always caused by the inflation — and what the Keynesian hucksters do is that they look at the consequences of inflation and blame it on people not spending enough, when people are doing the rational thing. So there was inflation, it caused an unsustainable boom, it caused the recession, and now a lot of people lost their jobs and they don’t have enough money to go out and spend frivolously so they save for the future, the future is uncertain — that’s a good thing. That’s how you fix things. You lost some wealth, so you spend less. Like, if your business goes bust, if you lose your job, it’s natural and smart that you stop spending money on the frivolous things that you used to spend and you save it for the future, you invest in something else, you get a new job, and then once you’ve recovered, you start spending more. This is very sane and very good, and it’s the way to recovery. But essentially the Keynesians have used this as a justification for more inflation, because inflation is an addiction: once the government gets down the path of spending money to solve its problems, then every problem looks like it can be solved by more inflation. And so this is where Keynesian economics comes in. And of course, Keynesian economics is based on the work of Keynes which came in the 1930s. And this is the key point: it’s portrayed in the textbook as if it’s just this scientific breakthrough, that somebody in the 1930s — this genius — came about and realized that, Oh, we don’t actually need gold! We don’t need hard money! We can actually just print all the money! And in reality, of course, it was just the very thin, flimsy, idiotic justification for what governments were already doing for 20 years — they’d already gone off the gold standard and they’d gone through 20 years in which they were lying to their population, telling their population we’re still on a gold standard — but there are problems caused by various random things — but don’t worry, we’re going to be going back on the gold standard. 20 years later, after they went off the gold standard, they come up with this justification for why: Oh actually, the gold standard was bad — and this is a really pernicious thing about it is — the problems that were caused by us going off the gold standard were caused by the gold standard, and we’re going to fix them by going off the gold standard even more.

Lex Fridman [50:44]: Just because government is lying and it’s shady and it does these kinds of things doesn’t mean Keynesian economics is wrong so just because I wanted to separate a few things you said it could very well be very wrong and they could indeed be hucksters all of these colorful such colorful language I love you deeply for this this this is fun yeah but I mean you know it’s not like somebody like Krugman doesn’t use this kind of language when discussing Austrians it’s just that when actors like him use it it’s presented as if it is legitimate because he’s you know he’s part of the major shows [Laughter] so the case they make and the criticism Keynesians make of Austrian economics and the case to make for Keynesian economics is it’s based on empirical evidence so Austrian economists are pie in the sky theorists about like how human nature works and it’s just all theory and just like you said Keynesian economics kind of sell it as a science data-driven science and so where’s the data bro on the so one way of saying it is how do you know if we get rid of inflation how do you know if we get rid of central banks if we push toes that direction we will have a better world a better functioning economy better functioning markets better functioning society this is another inaccurate way in which they present the economics they present as if it’s just theory and the data doesn’t matter but that’s not the case what the Austrians say is that without guiding theory data is mute data is dumb data can’t say anything so theory first and then you have to have models to provide context for interpretation of exact data and it’s a sign of just how little self-awareness they have that they think that they’re just being led by the data when they’re being led by Keynes’s moronic theories and it’s they use the data to justify those theories and to stick by them and in fact they are the ones whose theories cannot be refuted because it’s just it’s just government mandated religion so according to Keynes’s nonsense you know so the way that the whole thing is the way that they justify the inflationism is this and I’m just using this to give an example of what you’re talking about in terms of theory the way they justify the inflationism to tie it back to the original point they just find it all right we need money to spend and then the level of spending in the economy is what determines the state of the economy and I’ve taught macroeconomics at university level for a while so I know this I know Keynesian nonsense better than most Keynesians know Austrians if not all of them I guarantee you and so the way they see it is the level of spending in the economy is what determines the state of the economy there’s a level of output and there’s a level of spending so there’s like the factories on the one side that are churning out goods and those goods have a certain quantity and value market value it’s completely nonsensical of course because how can the value of the goods produced be different from the value of the spending but let’s put that aside for a sentence for a second so the amount of spending that happens in the economy determines the state of the economy if the value of the production which they call y is higher than the aggregate expenditure so this is the production and the aggregate expenditure is lower then we don’t have enough spending to buy all the goods and then that causes a recession the factories start laying off workers and then the laid off workers start spending less and then that leads to aggregate expenditure dropping even further and so it’s a vicious cycle where the economy gets into recession and the only way out is for Keynes’s bankster buddies and government buddies to print a lot of money to give to themselves and then um that will that’s one interpretation so but to so to print more money to increase the expenditure that to to match the stimulus the level of sounds pretty good to me I’m sold all right but even though you’re saying huckster so yes I just you know like the way I love you very much but like

just for people who are listening I think it’s I love the way you talk and it’s great and keep doing

it but just for context um like I don’t know anything that involves

human nature deserves this level of certainty I at least my position is that we don’t know

what the hell we’re doing on basically anything and perhaps but I mean like there’s a lot

like certainty can get us in trouble it’s my worry I don’t know

much about economics I don’t even know you know financial systems monetary systems

um but I just seen us get in trouble with human psychology certainty certainty of

ideologies in general you mentioned marxism and so on I came from the soviet union there’s a lot of people that are

very certain throughout the history of the th century that communism

is the utopia that humanity should strive for so I’m I’m nervous around

certain I could be wrong but you know you asked me for my opinion yes yes sorry so it’s that little bit of a

caveat so to go back to the idea then on the other hand you have the level of if the other situation is when the

level of spending is higher than the amount of aggregate output yes in that situation you have too much spending so

therefore what ends up happening is inflation so according to the keynesian worldview this is really important because this is

a way that I’m going to get to your point about empirical data and to show you why um

they’re not correct yeah they’re not correct about what they say about empirical data

so then what this means is that there’s a level of output and there’s a level of aggregate expenditure the aggregate

expenditure can either be higher or lower than the output or equal to it if it’s higher

we get inflation if it’s lower we get recessions

okay so is there any universe in this model is there any

potential universe in which you can have both inflation and a recession

according to the keynesian model you can’t right because aggregate expenditures cannot be both higher and lower than

output so therefore if you were truly being an empirical person if you were looking

at evidence and trying to be and like trying to analyze data you’d look at this and say

one example you know one you just need one example of high inflation and high unemployment to refute this entire model

right and of course the world is full of examples of high inflation and high unemployment and that’s what happened in

the and of course you know they ignored it and when it happens in poor countries because you know poor countries don’t really matter but then

in the s that happened in the u.s and in the western economies in the most advanced industrial economies so

historically before then you had all these keynesian central bankers

talking about this model and saying you know well aggregate expenditures too low now and that’s why we have unemployment

so we need to print more money and then they print more money inflation goes up but also unemployment goes up

because this model is broken that’s not how the world works that’s not the level

of aggregate spending in the economy is not a lever with which you can control inflation and unemployment so what would

a scientist do what would a non-huckster do in this case

admit theory is wrong and find another way to reformulate it have the keynesians done that no still

the same garbage in the textbook that is being taught until today so is it possible to have a non-kenzia motto well

one that still supports moderate amount of inflation is good for the economy I mean since the s since

this has happened yeah this is what um basically most

fiat economists as I like to call them essentially anybody at a university financed by governments which is financed by central banks which is fine

we’ll talk about the effect of fiat money on our life as you write about in

your book Fiat Standard one of them is education I’m sure we’ll disagree there

too um I’m not smart enough to disagree but i’ll disagree anyway so yeah so a whole

bunch of other models came up but basically it’s I mean it’s such an example of motivated reasoning like

anybody who’s got a familiarity with the scientific method or who’s got an engineering background who comes into economics immediately has a lot of red

flags and I remember when I used to teach macroeconomics I used to teach you know introductory macroeconomics and

it’s a course that would be taken by econ majors as well as engineers a lot of engineers would take it as an elective and every time I’d explained

and I just teach you know the keynesian basic stuff and every time I explain it there’s always that smart engineering kid who just looks at me

and says sir this doesn’t make any sense because this and this and that I’m always like you get it exactly you’re

correct because if you have any kind of shred of scientific thinking you see that this is all motivated reasoning

like the answer is government needs to print money and here’s a whole bunch of models

brought up by people for why government printing money is good and the reason they’re coming up to this conclusion is

that you only get funded if you come up with this conclusion if you come up with a conclusion that we need to shut down the central bank you don’t get

funded by the central bank you don’t get published in the journals you don’t get a job at the prestigious universities

you don’t get quoted by fiat publications like the new york times and cnn they don’t invite you on as an

expert well that’s a fundamental flaw with a lot of institutions we have today huma and throughout human history let

me zoom out for just a second to the big question what is economics in general what’s the goal you said

there’s a bunch of models is any any economist basically trying to throw a bunch of models about human

behavior on the table and try to generalize it to the global scale

so both dance between micro and macro somehow in order to determine public policy and ex explain the past predict

the future prescribe policies that can control the future

those kinds of things that’s the big basic ridiculous question of what is economics

economics is the study the way the austrians define it is the study of how humans make choices under the condition

of scarcity we begin with the starting point of economics as the fact that scarcity exists

and now why does scarcity exist well because it’s easier to want things than it is to make them it’s much easier to want a

ferrari than it is to make one and so um because it’s you know we have

once and we have limited means to meet those ones we need to economize it’s a

permanent it’s a permanent marker of the human condition we are always economizing at

all times and so how people make those decisions under the conditions of scarcity is what

economists study so to go back to your point on empiricism in austrian school

so it isn’t that the austrians don’t believe in data on the contrary it’s that

theory has to inform data and in fact if you think about it as the example of the

stagflation of the shows if you have stagflation that just

completely refutes the keynesian model the austrian way of thinking which is

think from first principles understand how the world actually works think about how humans act and understand that

economics is really all about human action so it’s not about aggregates of goods this is really the

key distinction in terms of methodology and for the keynesians it’s physics envy they look at the

market economy very good individuals in the market economy and they think that they can understand the market economy by looking at

aggregates this is really the key point of what I think makes the

certain branch of economics pseudoscientific is the introduction of aggregates when you

when you introduce those aggregates you know how much production takes place how many people are unemployed

the percentage of the inflation rate and then you think that you can establish scientific relationship between those

aggregates it’s purely physics envy you know in physics

for instance or in chemistry you put let’s say a container with contains a gas and you have the

ideal gas law pv equals to nrt calculate the pressure calculate the volume

and then and and then the temperature you can you if you have the pressure and volume you can calculate the temperature because

you have the um ni constants so there’s a

clear relationship that has been demonstrated in a laboratory and that can you know we can do it right now we can measure it and we can see it and it

continues to hold and all it takes is one scientist to show that this relationship does not hold to do an

experiment that shows this does not hold and it stops being a law of chemistry um then it’s and it’s broken

where whereas in economics what they’ve done is they’ve copied the superficial shape of this

without any of the scientific rigor that was used to build it there’s no

experiments you can’t experiment on economies we don’t have the ability to establish laws

and all the laws that we establish are just models that get people published and get them on the media to say

my model says we need to print more money but it’s never subject to actual scientific scrutiny if it were they

would all be rejected in minutes because the world is full of examples that contradict them was it possible to do scientific scrutiny when it’s human

nature when you can’t when there’s a nearly infinite number of variables and you can’t control them it’s a par so

what’s the best thing you could possibly do you do thought experiments

but the problem with thought experiments you know freud thinks everybody wants to have sex with their mother

is the right problem with freud I don’t know maybe he’s right well obviously I’m joking on that front but

the freud is probably under the keynes well no I think there’s power to the

orthotics man just like einstein you know a lot of general relativity special relativity that that’s a thought

experiment it originates in a thought experiment now is it true you know a nice thing about physics you

can’t eventually have experimental validation then the downside of economics is you really can’t have experimental

like definitive experimental scientific rigor of validation of a theory so a

thought experiment is just a thought experiment using your intuition you it’s the power of reasoning together human

nature and that’s why economics cannot make the claims that physics can make so with physics you can predict that if you

get this gas at this pressure at this volume the temperature will be that much and you can make that prediction

and test it a million times and you’ll always get the precisely correct answer with economics we can’t make

quantitative predictions on Twitter and even today you’re very certain about the statements you’re making

do you yeah but I don’t make quantitatively certain statements that’s the thing in economics we don’t make quantitative predictions we cannot do

that because we don’t have experiments but we can understand how the world actually works

with humility this is really the key difference that the keynesians think they just want to copy the methods of physics and then that’s just you know

gonna give them the certainty of the results of physics which is like me saying I’m just gonna put a red um

blanket on my back and jump from the fourth floor because I’m superman well it’s not the red blanket that’s gonna

make me superman there’s a lot more to it so humility manifests itself in economics as the

belief in a free market meaning like I can’t centralize I can’t do centralized control on this thing

we’re going to minimize the friction of the free exchange of goods

so um austrian economics puts priority in in the market yes and you could you could you could

arrive at it through two paths the the more um

the more practical path which most scientific-minded people arrive at you know I came from an engineering background so Initially had this idea

that what is lacking in economics is mathematicization we need to have better

math models we need to get all those tools from engineering apply them to economics and then we’ll be able to plan

the world economy and make it work better and then you start actually trying to solve problems you know trying

to actually calculate them and you realize nobody can have that ability because the difference ultimately comes down to

the fact we can’t have experiments and the reason we can’t have experiments is that you can experiment on particles of a gas you

can’t experiment on human beings on entire economies and because particles of a gas are just dumb matter

and so you know you kick matter in a certain way you can calculate exactly

how much is going to fly human beings are much more complex they have a will inside them and this is really

the this is the humility to understand that you are a human being and other people are also a human being just like

you and that the you know every person wakes up every morning and they have a million

things in their mind a million things they care about a million things they want to do and

you will never be able to make the decisions for somebody else let alone for millions of other people so this is

one path by which you arrive at the conclusion that free markets are better because you realize that all the people that think that they can centrally plan

markets can’t actually do that and that there’s really

nothing scientific about them except essentially the rituals they ape of the scientific process

and the other path I think that Iran makes you arrive at the austrian perspective or the libertarian

perspective I should say is simply the the notion of individuals

as having their own inalienable right to decide what they want to do with themselves if you

i mean the only way that you can give yourself the idea that um you get to be

planner is ultimately you think you’re better than other people you think your choice

your judgment overrides mine and I don’t think that’s a defensible position I think

I’m in no position to want to force anybody ever I will never want to force anybody to do anything they don’t want

um the keynesian perspective the central planning perspective is unlike physics

you know which is let’s force a bunch of particles to sit in a lab so that we can study them

in economics you’re forcing people to do things you know that’s stop these people from doing this job because it’s bad for

the economy and let’s get them to do that job let’s force them to pay this price let’s tax them this much let’s

prevent them from using gold as money and force them to use our credit as money so it has to rely on coercion

there’s no central planning without coercion and coercion is a crime in my opinion there’s no way that it is

justifiable morally or so from our politics from an ethical perspective your view is the I mean perhaps the

broadly speaking of the libertarian view is coercion is unethical

freedom is is essential what is what are the pros and cons of

government intervention in the economy so can you steal man can you provide pros you just kind of provided arguments

against is there any arguments to be made for government intervention for the role of

government in society speaking from a political or from an economic perspective what is a positive role of

government that you could imagine you can speak to I can repeat many other cases but I

don’t find any of them compelling for the reason that I mentioned which is that ultimately they all rely on putting

a gun to somebody’s head and using the threat of force so that’s for me it can never be justifiable whatever the ends

are if the means are violence and the threat of violence then the ends

aren’t justified everything that’s good governments will use as an excuse to justify coercion so you know what do you

like you like motherhood and apple pie well government needs to ensure that motherhood works well and we need

government central planning of birth we need regulations on birth for instance we need regulations on how

people give birth we need to ban people from giving birth in traditional ways that have been tried for thousands of

years we need to force people to do things in the modern scientific way well so what about things like

that all of us use so infrastructure for example or education

um or well the economy too right can you make a case

for the role of some large-scale centralized systems whether it’s government or not that do

this kind of management I guess perhaps you could say there’s the economies of scale argument that some things must

exist at a very hard a very large scale and therefore you would want um you

would want political accountability of the people who manage them this is kind of the argument that’s given for infrastructure monopolies you know for

instance roads or electricity um that let’s say we live in a country we

need one power plant the bigger the power plant the better off we will all be and there’s a natural monopoly in the

power plant business so we’re going to have to have one power plant and since there’s only one power plant then we

can’t just let anybody own it because then they’re going to make it too expensive so we need to have

the government own it so it can make it too expensive and you don’t find that case compelling not at all I used to

believe in it I was pretty much a keynesian when I first started my graduate studies at colombia

and no I don’t find that compelling at all because I think all these examples that they mention of natural monopolies

or economies of scale that can only fit at a scale of government it’s always it’s always you know

government bans people from opening power plants and then there’s only one power plant and they need to be in charge of it

but in reality um no in reality the you know power plants

can exist at all kinds of manners of scales of operation and yes of course there are benefits to centralization in

power plants in particular because there’s efficiency in generation you know one

big power plant is more efficient than equivalent smaller power plants

but there’s also inefficiencies in centralization because the more centralized and the bigger the plant is

the further away a lot of the population is going to be so you’re going to be losing a lot of the

electricity and transmission and you believe the free market is best in managing that dance that balance of

centralization exactly and if we do end up in a situation where there’s one power plant for an area

then I you know if the markets ends up centralizing all of it into one power

plant I don’t see that as a problem um there are places you know there’s a small town with only one barber shop is

that a catastrophe no because um they don’t need two barbershops now if that barbershop started to take

advantage of people started to charge higher price well then that’s just an opportunity for others to step in and

put them in their place and that’s the same thing with power plants it’s the same thing with everything um ultimately

i think the key thing is this from the central planning perspective

they’ll present you the problem as it is and they’ll tell you well this is bad so the fix you know and and what we can do

is better so let’s stop what’s bad and do what is better two problems here usually the reason

that the thing is bad in the first place is because it is a government monopoly is because of government intervention

but the second thing is that this notion that we could just pass a law and fix what’s wrong and make it better

is it ignores the fundamental underlying reality which is that what you’re doing

is you’re offering only one way for this problem to be solved and making all other solutions practically illegal

you’re taking taxpayer money you’re putting guns to people’s heads to take their money to use it to build say this

one solution for a power plant but you’re preventing the free market process from providing us with other

alternatives well so you phrased it sort of from that perspective but there in theory there is a feedback

accountability mechanism for the solution that you propose and enforce

by as you’re saying placing a gun to people’s head you’re accountable for the for that

choice for the quality of that solution by being voted out if you if the solution is actually bad

so it’s just a different selection mechanism and I think I personally believe it is a selection

mechanism that has worked in the past it just often does not work and nearly as well as a free market and

the question is are there in which the free market gets itself into trouble

so this theoretical view is that that’s the point of a free market is it doesn’t if

there’s trouble that’s a signal and it will respond to that signal and it will respond

appropriately to make you try to maximize happiness the question is is there a local optima that free markets

get stuck in and you need governments to represent the broader scale of the

people yeah well here’s out of that I think the fundamental problem here is the idea that there is a feedback

mechanism when there is coercion in one party when one party can employ coercion

and the other one cannot so in other words I’m going to put a gun to your head I’m going to take your money and I’m

going to use it to buy more guns for me to put against your head but somehow you’re going to put a paper in a box and

that’s going to deactivate my guns well love requires a push and pull a

little bit of tension a little spice in a relationship I think yeah I mean a little gun to the head now some good

luck to anybody who’s going to be dating you if you think you’re putting a gun to people’s head is comparable to a relationship

all jokes but yes I mean the people don’t often think of it as gun to the as

government and the military as gun to the head

um but that is sort of a libertarian perspective because ultimately when you know turtles all the way down and at

the bottom there’s guns yeah so bottom if you don’t want to pay if you don’t want to you know all right I don’t want to be part of your power

plant I want to get my own generator I don’t want to do it I don’t want to pay for it go to jail you can’t not pay for

it that’s really the symmetry which the market doesn’t have which is why in my opinion it’s not as if you know

I’m being stubborn and stuck on the idea that I want a market and that the government can’t work it’s presented as

if you know we’re choosing between two different machines you know should we use an apple or a pc and I’m just

constantly choosing one of them and saying that the other one can’t work it’s not equivalent it’s not two machines we’re comparing between

a machine and a gun to the head and we’re comparing between a situation in which anybody anywhere is free to

provide the service or the good and anybody anywhere is free to buy it from them or reject to buy it from them so

anyone can build a power plant anyone can succeed that anybody can fail at it anybody can build it in a way that I can

choose to take part in or not take part in I can build my own so we have a situation which million people let’s

say they each can freely choose to provide the good or to buy the good that

cannot be considered an alternative on an equal footing to a situation where one person or one entity

gets to decide for everybody and those who disagree go to jail so the problem is

that the alternative to governments is other large successful entities that

have humans in them and human nature is such that there’s corruption manipulation and so on

i think free market depends on the honest

communication of information as widely as possible so people can make great rational decisions but

sort of my fear is I’d like to propose is that in general there’s manipulation whether it’s government where there’s

companies they’re going to manipulate they’re going to try to do propaganda they’re going to try to manipulate you

deceive you shut down competition by playing games human games of different

kinds and sometimes even meaning well it’s not like everybody thinks they’re doing good

and they’re actually doing evil so how do we prevent the worst of human nature coming out

in a free market as well by not giving the worst of human nature a monopoly on violence in the

institution of governments that that little inkling of coercion that little bit of asymmetry

creates a gigantic like ripple effect of asymmetry in your view yes and it ends

up just being the place where you know corporations individuals free markets they can’t coerce without the resort to

government so you know you think about all the examples of corrupt corporations doing bad things

it’s always because they have certain privileges from governments because you

know that as it exists you know coca-cola mcdonald’s all of these giant corporations they can’t do anything to

me without government they can’t take any of my money and they can’t force me to buy their stuff and so

it doesn’t matter to me you know so if if coca-cola is corrupted that’s a problem for coca-cola customers that’s a

problem for coca-cola shareholders that’s a problem for anybody who deals with coca-cola but as somebody who

doesn’t drink their stuff and isn’t a shareholder I have absolutely no interest in what happens I they could

all go bust tomorrow and I don’t care I don’t buy their product and I don’t and I’m not a shareholder so in this

situation where you choose to voluntarily associate with people and you only give

your money to people you want to voluntarily give the money to so you either buy their product or invest in

their production in that situation the only way that a company can get my money is if they build the product that they

that I value or if they convince me that they are

going to use it in a way that’s profitable and they they might I may be wrong you know I may invest in a company

that fails or I may invest in a company that is turns out to be um fraudulent but that’s

my fault you know and it’s my fault that I gave them my

money and then it turned out to be scoundrels but it’s a totally different problem when we make it um mandatory you

know it’s violence it’s a crime to put a gun to my head and force me to

subsidize companies and force me to come at certain conclusions do you find an

interesting distinction we mentioned michael malus between anarchism and libertarianism so this particular use of violence

this like last resort this policing force that libertarianism is okay with

and anarchism is not okay with it so basically nation states that keep you safe from the worst of

war yeah I think to be more accurate the distinctions between anarchism and monarchism I think libertarianism is

kind of a vague term that can encompass both these a lot of things okay yeah um but on the karl marx to michael malus

spectrum where do you know I’m full anarchist you’re fully anarchist yeah full anarchist I mean

i don’t find any justification for the USe of force and I think um

recently perhaps I’ve maybe I’m getting old maybe I’m getting senile maybe I’m getting wise who knows but I’m beginning

to become more sympathetic to monarchy so I’m an anarchist monarchy which what is

that kings oh monarchy yeah [Laughter] and I think wait can you

are you joking or not no I’m not joking and I think um

I mean I think you know morally and intellectually I’m an anarchist but it’s

what the reality is we find ourselves in a world in which um a lot of people are not and the question is um

what is the thing that is going to provide you with more freedom and um I think

I’m recently coming around to the idea that monarchy might be the best way to

provide people with the largest amount of freedom because to have a free society you need a majority perhaps or a plurality of

people to have a very strong understanding of libertarian ideas to have a load time preference to have a

preference for the future so you need a majority of the population to not decide to go and do something

insane in order to continue to have a free society you know when a respiratory illness comes along

unfortunately you know the last couple of years showed that we the vast majority of people are

gonna freak out and lose their mind and support whatever their stupid tv tells them to support and

um you know there’s always a current thing and the media is always telling you that we need this current thing as an excuse for

more and more government power and more and more government coercion what’s the role of kings in queens and that’s

in that case of a monarchy what’s the role of a leader I think there might be a case that

so as I was saying you need the majority of the population to get together and decide nope

whatever is the case you know the answer is voluntary no matter how bad the disease is it

doesn’t justify forcing people to stay home you want to stay home stay home you want to wear a mask take a vaccine do

whatever you want but you can’t force others to do that so you need a majority of the people to strongly believe in this principle in

order to get it in a um in a democracy whereas in a monarchy

really just need the king to get it and I think the reason kings are more likely to get it is that kings have a low time

preference where they think about things for many generations whereas in the democratic system your president is

likely only going to be there for four years or eight years or years or five years or whatever it is

so the only way that you know all humans are self-interested so the only way that your president in a democracy

can provide for themselves is to maximize the amount of exploitation that they can do of the

population during their brief stint and then when he’s out you get a new one and

then that one wants to start all over again so every four years you get a new robber with monarchy

you sign up for a multi-generational subscription to the same family

and when they have the security of knowing that you know they you know his great grandson is going to be taking

money from your your great grandson suddenly his interests and yours align because

they both want your great grandson to be prosperous and have enough money for his great grandson to take so it’s a

monarchy with the tiny government so yeah so anything required to really

provide for a free market so for maximize individual freedom and the freedom of the economy yeah and if I

were king which is not highly unlikely to ever happen but I think you know if you look historically the the

dynasties that have succeeded at lasting for a long time the key thing that they managed to do is to basically be

libertarian the key to being a good king is to just leave people alone let them do whatever they want don’t rob them too

much or rob them as little as possible or maybe even don’t rob them and um you

know as a king use your power only to punish people who aggress against others

don’t use your power to enrich yourself and you enrich your friends and that’s really like if you look at

smart kings this is what they do this is what they teach their children and the cycle of kingdoms is that you know

the first king understands this builds the empire and the first couple of generations they get this and the

the society is free the economy is free and because of that you know the

p there’s peace and prosperity but then over time the next generation of kids become a lot

more high time preference they um they haven’t worked hard they don’t understand the meaning of

hard work so they become more likely to um engage in destructive behavior so raise

taxes um pass laws that require people to do things

even when they’re not hurting anybody and that ends up basically eventually destroying the

kingdom of course power corrupts yes you have to kind of create human

institutions that prevent you as a king or any kind of leader from

from expan so going back on the original promises and the purposes of your

position yeah and then distracting using tools of technology and communication to distract the populace

while you expand the power exactly all right you wrote The Fiat Standard

i think we danced around it quite a bit but I don’t know if we actually defined it so what is fiat money what is the

history of how it came to be the fascinating history of the birth of the fiat monetary system is something

that really only got uncovered in . this is extremely extremely interesting in

britain joined world war one and if you remember your history books it’s famous

that this was called august bank holiday it was just going to be a few weeks where the british troops were

going to go and kick european ass and come back triumphant and most european countries

believed that but then the war kept on dragging on and of course to finance the war

the government this is what they used to do under the gold standard governments would issue bonds so you’d issue the

bonds people would buy the bonds the money would be used to finance the military and then um the government

would pay off the bond over the next five or or years so for world war one the british government the british

treasury issued bonds for financing the war and this only came to light in

only a third of the bonds were actually subscribed so people british people and this is perhaps the greatest thing that

they’ve ever done they decided fighting a war in europe is just not my ideal way of investing my capital it’s a stupid

thing why should I go and fight because the austrians and the germans and the serbians are um

at each other’s throats I’d rather invest in something else so they only bought a third of the bond issue and

then one then the astonishing thing that happened which really set the tone for the next century of war murder

keynesianism and theft and inflation was that the bank of england

went and got two of the high-ranking officials in the back of england to buy the other remaining

outstanding two-thirds of the bonds under their own name with a line of credit from the bank of england so it

wasn’t their own money but they took money essentially from the bank of england bought two-thirds of the bonds that financed the war

and that was how england was able to keep going into the war so

that’s essentially what they did is what we today know as quantitative easing back then um they just got they printed

money from the bank of england or credit printed credit gave it to those two employees they bought the bonds the

government could fight the war sounds like it’s a nice idea and keynes of course being huckster

himself he’s and he himself said this was he wrote a letter to the bank of

england that was uncovered recently and he said I congratulate you on this masterly manipulation I quoted in the

book masterly manipulation is what he called it that they basically managed to buy the bonds using

the money of the government and of course he never had an idea of how economics works because he never could

ask the question of okay and then what all right so we just printed money to buy two thirds of these government bonds

what’s going to happen next you know what could go wrong not a question keynesians ask themselves because

you know their jobs depend on not thinking about what’s going to go wrong so a quick question about

war and somebody has been non-stop reading and thinking about the wars of the th century

and thinking that most of those wars were unjust unethical and

destructive um how else do you find how would you

finance a war so ideally you don’t no but I mean of course there are sometimes you know you want to fight for

self-defense yeah you finance it taxation or bonds so the people really

need to want to warn not just with their voices their thoughts their tweets or

their actual financials put up the bullets and the cost of the bullets and the bodies so their life and their

financial well-being [Music] um that’s how it was under the gold standard mostly because under the gold

standard the government couldn’t print gold and so they had a budget they had a certain amount of gold and that wasn’t

just you know they couldn’t infinitely increase it so they couldn’t tax their population um at will and it’s very

difficult to take money from people you know you go knock on doors and search everybody’s home see where they’re hiding their gold is very complicated on

the other hand when you gave them paper money which is what the case was in you could take their wealth just by

printing the money and that’s what changed everything when it comes to war that’s why the th century was the

century of total war because under the gold standard governments fought until they ran out of their own gold

under The Fiat Standard with paper money with credit money governments fought until they ran out of liquid wealth in

the hands of all of their citizens so let’s let’s find flaws in this thinking

if there’s any okay um there’s a lot of pacifist type of thinking in the in

world war ii as hitler was expanding expanding hitler framed himself as a victim of the past of history he never attacked

anybody everyone is always threatening to attack him that’s kind of the narrative and he keeps expanding he keeps sweet talking

with his charisma all the countries around him into sort of embracing pacifism stay out of the war

until the war is on your doorstep so france just very sub optimal military

strategy from the perspective of the many european nations in response to to hitler they were basically hoodwinked by

his his words so then there’s churchill winston churchill

who’s who stepped up and says perhaps irrationally from some kind of

economics perspective saying we’re not going to back down we’re going to fight germany and perhaps that step alone is

one of the biggest reasons that hitler failed in his expansion

that decision to fight back how

what’s the right way to do that if you’re a winston churchill what’s the right way to do that

if you’re um to to fight back evil when violence is required now you

could argue that um that no war is just but there is such a

thing as a just war index and a lot of people argue if there is

a just war in the th century it’s world war ii so how would you fund your britain

the war would would you require winston churchill to convince the populace

like don’t fight until they’re fully convinced that this is the right thing to do you can’t just make a decision for

them you have to convince them fully so that they give their life and they give their money to support the war is that the

right way to do it I think so and I think when you have a true um threat and a true evil and a true force

that people really do think is genuine you don’t need to convince them I mean

when when it’s real people will want to fight and people will want to pay to fight and um

i mean I think though on this particular example I think you know that the best way to fight hitler is to have not

fought world war one and not take out the kaiser of germany and if

if britain hadn’t written in the US had not gotten involved in world war one which really is

the senseless war about nothing what what was in it and what was the goal from anybody fighting that war if you

look at it after world war one there were very minor adjustments in the borders of the

countries that were participating so germany lost some land austria lost some land but really it wasn’t all that

massive and it wasn’t like you know it wasn’t like britain wanted to take over germany and move their people into

germany and kick the germans out so there was no real um value from that war

and that’s why the british people didn’t want to take part in it and that’s why if they hadn’t done this enormous the

criminal manipulation of printing money to buy the pawns britain wouldn’t have gotten into the war

germany would still be a kingdom and hitler wouldn’t rise and yeah there’d be small changes in the borders

of various european countries I’d struggle to see how it could have

been worse I mean as I struggled to see who benefited from four years of carnage

in europe and then this was this came at the height of civilization you know before that the people of europe had

um had the golden ear under the gold standard they were trading with one another they traveled and technology was

advancing and they did not expect this war to last this long and you know my favorite story

from world war one is the christmas truce um football game which I mentioned in my book

british and german soldiers at the height of the conflict they stopped on christmas day and they played a football game against each other

i mean this is not a real war where it’s it’s a war for survival

britain didn’t want to end germany germany didn’t want to end britain it was just kings

who were emboldened by the fact that they had a printing press playing with the lives of the people and

take that away take away the printing press take away their ability to print money I think we’d have had a much much

much better th century yeah the counterfactual history neil ferguson is a historian who gets in

quite a bit of a trouble basically well he’s a brit

suggesting that if britain stayed out of world war one there would be no hitler there would be no world war ii yep I

agree entirely but fiat money yeah so how fiat money

was born yeah let’s get back to that so they finance the war with that money so what is what could go wrong that’s where

we left off well what could go wrong when you’ve just printed an enormous amount of credit and use it to

buy bonds what goes wrong is that the value of the currency is going to go down or in other

words prices of things are going to go up so during the war prices keep going up and

this is of course is going to sound very familiar to victims of the th century

a government tells you it’s because of the war it’s not our fault it’s because of the germans it’s because of the foreigners it’s because of putin it’s

because of this it’s because of that this has always been the case there’s always um

war is a very good cover for inflation which is caused by monetary phenomena

so then the war ends and inflation prices have more than doubled over the past four years over

the four years of world war one prices more than doubled and then the british economy is in bad

trouble obviously you know it’s lost a lot of the labor force for four years that was out there fighting now

those workers come back you’ve got prices are up and so

people are requiring that are demanding that the government control prices and the government is trying to fix the

problem of inflation by doing price controls which is what they always do which is catastrophic because it makes

things worse when you implement price controls you when you make you know you say all right well

bread can’t be sold for more than x price well that’s just preventing

bread producers from producing a lot of bread and that’s just making the problem worse if you let the price rise the

extra price first of all it makes people economized so people will only buy what they need

and it provides the money for the bread producers to acquire the capital and the resources they need to produce more

bread which then brings the price of bread down but price controls destroy that and then they also implement wage

controls so you want to also make sure that people have high wages so you raise people’s

wages artificially you lower prices artificially and you cause an economic problem

and this this is basically you know I use this historical example because it’s the birth of fiat because the bank of

england was the most important monetary system in the world at that time and because it’s the prototype that

basically the entire planet copied over the last hundred years we’ve had this same thing happen the government prints

money because of a stupid reason because somebody in power decided this was worth destroying everybody’s livelihood and

savings for and then the consequences come in and then they start covering up with price controls wage controls and then that

makes things worse and then they um and and of course throughout all that

they’re promising that we’re going to go oh and oh so the other thing that they did which I mentioned in the chapter is they stopped people from

using physical gold and they confiscated the phys well they didn’t confiscate it but they took the physical gold and they gave people paper

so I call it the fiat white paper you know in Bitcoin we have the white paper the fiat white paper was that the

bank of england announced to all of its banks and post offices and from now on you should not make payment in gold and

you should take payment in gold and you should encourage all your customers to turn in all of their gold and give them paper instead is there an actual

document oh yeah yeah nice yeah it was this is all new stuff obviously nobody really likes to talk about this stuff

because you know they’re fiat economists so they don’t want to talk about the original sin

but well you should you should like republish it as the fiat white paper or something like that

there’s there’s a fascinating book by a guy called john osborne so in the s I think his name was montagu he was the

chief of the bank of england he commissioned one of his secretaries john osborne to study what the bank did

during world war one and it was a study that was kept under wraps

confidential in the bank of england only released almost a century later

and what was special about by the way about the year just it was a year on which

some of this information was released yeah a bunch of people got into parts of the basements of the bank of england and found this and published it and now you

can download it as a pdf and find all of the amazing details so they confiscated the gold

and they forced people to use the paper and they promised people that as soon as the war is going to be over this is temporary we’re going to be back to

using gold and of course you know um if you if you told people in britain this is this is the real scam about fiat if

you told people in britain in hey we’re going to go off the gold standard because it’s better I mean there might

have been lynchings of government officials because the british pound at that point it had been

the global currency of the whole world and the fact that the that they’d managed

the bank of england had kept the british pound at a fixed rate next to gold for since newton you know the exchange

rate the value of the british pound was set by isaac newton himself he was the warden of the mint and he

made the pound a specific amount of gold and since then up until world war one it was

. pounds per ounce of gold I think I might be wrong but I have it in the in

the book so he’d set that price and it was a matter of national pride for people in england you know the sterling is as good as gold because

for two centuries it has been stuck to gold there was the exception of the napoleonic wars but for two centuries

mostly it was stuck to that and so they went off that and then they couldn’t go back because

they wanted to go back they didn’t have enough gold they shipped their gold to the US to finance the war

and they had printed a whole bunch of money that was out there so this begins the problem

for england and that begins the end of england as the world’s superpower and the way they tried to fight that was

to get more and more countries around the world to establish central banks and have unhold british pounds so they’d

hold you know basically dumping their bags like just any other coin

you just if you get people to buy your coin you know that raises the value of your coin so can you define

coin coin is it’s in my my definition of coin is that it’s any form of money

where somebody can produce it soft money um not necessarily

i guess I think the difference so there’s easy money um but the

coin is something that someone can produce at the rate that is diff at a cost that is different from the market

cost so gold nobody can make gold except that they dig for it and the cost of mining gold is generally in the range of

the price of gold seems true for Bitcoin um but gold is not a coin gold is not a coin

the copper is cop I’m not so sure I wouldn’t call copper or coin as much as it is easy money

but I think um government currencies and other alt coins I think are coins because

somebody could click a button and make times the supply would it be fair to say that this began

with the will for war in world war one so

the march towards fiat began

with a global desire for war in the th century did war start this

or was war result it’s difficult to say really I think it goes both ways I think um you can’t have

permanent war without fiat and I also think

there’s a case to be made that you can’t really have fiat without war it’s so it’s some kind of weird dynamical system

with a chicken and egg situation and they build on top of each other and there’s a few individuals that figured

out there’s a way to manipulate this to play this kind of game and it escalates and nothing gives you the ability to

manipulate money quite like war when you have a war you can declare an emergency you can

call all the people who oppose you traitors you can you can you can get people to support

you not because what you’re doing is good but because you play on their sense of tribalism in your book you do cost

benefit analysis so you do acknowledge or think about the pros of fiat currency

can you can you do just that look at the benefit and look at the cost

just broadly at the highest level so the way that I write The Fiat Standard is that I try and

analyze it as an engineering system in the same way that I wrote The Bitcoin Standard so with The Bitcoin Standard I looked at Bitcoin from first principles

and tried to explain how it works for a reader that doesn’t really have much of a background in computer science

networks or economics and I thought i’ll do the same with the fiat you know let’s just ignore

the official stories and look at how this thing actually works and um

i think it does have value in the fact that it um you know the reason that it was that they were able to pull it off

is because it was not possible for people who don’t want to be part of it to use gold

independently of governments this is really the key thing gold is just very expensive to move around and

um the fact that it is expensive to move around means that there’s

there’s inevitably going to emerge institutions where it is centralized in physical location

and then these institutions trade liabilities for the gold so really the gold standard

intrinsically must involve credit as becoming part of the monetary system it

has to be the credit and because it gets centralized can easily be captured by the government so to be fair

the benefit of the fiat system is that it saves us on the cost of moving gold around which is pretty significant like

generally you know moving a bar of gold across the atlantic is going to cost somewhere between point one to one

percent of the cost of the gold bar so you move it times back and forth between the atlantic you need to pay the

whole gold bar the cost of the whole gold bar to move it times across well with fiat money with it’s

essentially government credit and so it’s just um sending a message from one’s central bank to another and you

can move it halfway around the world is there alsomething to be said about the cost in time so you’re saving the

sort of you’re reducing the friction yeah the communication as well exactly of the transactions as well exactly it’s

faster how big is that benefit because wouldn’t you argue that that potential is the

thing that enables modern economy both the speed and the low cost so increasing the scale and the frequency the speed of

the transactions yeah arguably it does help in that regard however it isn’t as

if you couldn’t have fast transactions built on top of gold so you could have gold being used for final settlement

and you could have um you know banks settling with one another you essentially using credits can you define

settlement just for people who are outside this world because we’ll mention that word quite a bit probably good question so the way

that it works is let’s say right now I’m gonna pay you ten dollars over um paypal or credit card so it shows up in

your paypal or credit card within a few seconds that I’ve sent you the money and then that’s yours but um you know

it didn’t also happen in those seconds that my bank which could be in another country

sent the money to your bank into your account it’s

there’s a lot of infrastructure underneath that so what actually happened is that I have an account with my bank and you have an account with

your bank and when the message is communicated from my app to yours

my bank crosses out the money and your bank credits you with the money and then at the end of the day week or month

um you know banks in the same city will settle with one another banks in the same country will settle with one another and banks with different from

different countries will settle with one another so they won’t you know they won’t move the ten dollars from my

account to yours at the end of the day or week or month they’ll tally all the money that was sent from

one bank to the other and then just settle the difference so turns out at the end of the month my bank had sent

million dollars to your bank and your bank had sent million dollars to my bank so they give them one million dollars

and that settles it that finalizes the transaction so final settlement d is like the you

can think about it as the infrastructure of the system and then you can think of these things as being the

higher layer levels and you had a wonderful discussion about that with the michael saylor so the final settlement

is like the the moment when you paper and ideas connect to physical

reality a yeah or just some representation of physical reality yeah and under gold

everything was tethered to physical reality because there was a market commodity at the bottom of all of this and nobody could print that market

commodity and so at the end of the month if your bank made too many payments if you made too many payments there was a

reckoning there you know if you were reckless if you were insolvent you went out of business

so there was no um there was no way to fool that but then we moved to the fiat century and

everything is credit at the end of the day the final layer is government credit and so

as long as you’re friends with the government basically you never go bankrupt so all kinds of hucksters manage to find

their way into um you know getting into position where they don’t get bankrupt so in part two

of The Fiat Standard called fiat life you describe the effects if you have money on a bunch of things like life

food science education what is the most pernicious effect of

fiat money on our world on our life so it’s taking a step outside the monetary system

actually like how that affects our life from this book I mean there’s there’s a whole bunch of things and I won’t be

able to go over them and I highly recommend reading the book but if I were to pick one I would say it’s the impact that it has on our time preference

on our valuation of the future so remember when we started the discussion I said that the um

a key function of money is that it serves as a store of value and the harder the money is the better it is at

providing us with the way for providing for our future and so the harder the money is the less we discount the future

we always discount the future compared to the present so if I told you I’m going to give you something today versus giving it to you years from

now the same thing you would prefer to take it now because then you’d get to enjoy it over the next years so we

always prefer the present to the future there’s always a discount on the future

and that discount is called time preference the degree to which we prefer the present to the future is called our time preference

so the higher our time preference the less we care about the future and the process of

civilization is the process of lowering our time preference where we start caring more for the future we start

prioritizing the present less and less so we start being able to not consume everything that we have and

store it and so money is essential for that and under the gold standard everyone in the world had the ability to

provide for their future by simply using the same money that they use you know you would work a day and you would get

paid in a gold coin and you could take that gold coin and keep it safe for years and know that

at the end of those years that gold coin would buy you slightly more than what it bought you the day that you

earned it so anybody could provide for their future and anybody could have very high degree of certainty that whatever

they’re saving is going to be there when they want it in the future because the money supply was only

increasing at one and a half percent whereas the um production of goods and services was increasing for most cases

for most periods at a higher rate than that so you could buy more apples and oranges and houses and cars

at the end of the years than you could at the beginning of the years so everybody had a way of providing for the future and with that people lower

their time preference and that is reflected across all aspects of life I think it’s not just the economic thing

you see it in the savings rate you know the ability to deny yourself gratification today I could take the

money that I have and throw a giant party buy a sports car buy a yacht and yet you decided I’m not

going to do that I’m going to keep it so that tomorrow I can throw a bigger party or buy a better yacht or

have a better life or give my children a better life so all of human civilization really is the

process of us lowering our time preference and finding harder monies that allow us to provide better for the

future is how we really technologically we do that it’s

i think of the hardness of money as being the control knob for our time preference and you can see this

reflected in the th century where we go from the money supply increases at around one and a half percent under gold

to this current situation where over the last years I ran the numbers on money supply and fiat the global fiat supply

has increased at around per year so we’ve done a x in the increase in the supply of money annually and is a

weighted average so um if you take a basic numerical average for all fiat currencies you get

something like percent the average fiat currency increases by but if you value it by the volume of

each currency so that you know you’re not giving equal weight to the venezuelan bolivar

increasing at percent a year and the dollar increasing at eight percent a year

um if you do it by value of the currencies so that you get the total supply fee and it’s something like

percent so unweighted is thirty percent you said yeah thirty percent it’s insane I’d like to see the worst ones the

the people that are dragging the average up yeah but fourteen percent is still an incredibly high high number and so

you’re saying that that’s sorry that’s the average over the century or the past over the past years s to we get world bank

data on that pretty reliable data on world bank and european union oecd data

i ran the numbers on that weighted average something like and what effect that has

on time preference the effect is now it’s much much much harder for everybody to provide for their future everywhere

in the world it’s much harder so how how do I get the equivalent of the old gold coin

that I could just put under my mattress and expect it to be there years from now well gold itself isn’t cutting it gold can’t keep up with inflation and

the reason for that is that gold is not being used as a money anymore in that you can’t

send it internationally you can’t use it to settle trade internationally which

therefore means demand for it monetarily is limited and so it’s um becoming more and more an

industrial metal and as a result as a result of the fact that its value doesn’t keep up with inflation it

becomes economical to use it in industry so we’re seeing gold become like silver in that it gets used in industry so the

stockpile declines and so the stock to flow ratio declines as well and it becomes more and more of an industrial

metal and it can’t um protect your wealth over time very well so what do you do well you could invest and and

this is kind of the obvious answer that keynesians will give you is well you just put your money in an investment but

investment is different from saving saving the whole point of saving is that the thing is liquid and that the thing

carries little uncertainty you know you just held the gold coin and it just sat there it did nothing it

didn’t take risk you knew that it was going to be there in years investment means you give

the gold coin to somebody to go and do something with it and it could work it could not work if

it works you get a positive return you get more gold back if it fails you might not get any of your gold back

so taking on risk is something very different from saving saving is just a way of buying the future

investing is taking on a risk and you could lose everything with it so

what ends up happening and and this is you know the keynesian objection I think is is is up is

very wrong and bad because investment is a job in itself

to figure out what to do with your money in order to beat inflation is something

that you know there are professionals out there on wall street that have phds in finance that have enormous computers

and they have enormous staffs of phds and masters degrees and math nerds that are crunching numbers and figuring out

how to allocate your portfolio so that you can beat inflation and guess what the majority of them don’t beat inflation the majority of them can’t

beat inflation not as measured by cpi which is completely fraudulent but um if you remember

yeah that or even you know the seven percent like if you look at just the increase in the money supply which I think is a much

better metric and and this is what’s reflected on the desirable goods like if you look at the price of real estate in

miami beach as michael saylor mentioned in your example it goes up at around six seven percent per year on average over

the last century so that’s you know if you want to live in a nice area that’s what happening to

real estate if you want to go to the good universities that’s what’s going up it’s going up at a rate that’s similar to the increase in the money supply and

you can beat cpi um but you know cpIs designed so you can beat it but you

can’t really beat the appreciation in the things that you actually want to buy and the price of good food the price of

good real estate so and you know most investment professionals fail at doing

that so what hope does a doctor or an engineer or a scientist or

an athlete have in doing those things investment is hard and saving should be easy exactly

saving is essential for us as a civilization and what fiat did is it took that away from

us and then it forced everybody to become an investor or more accurately a gambler

because you’re not just even because the money itself is broken because the money itself is constantly

changing in value investing is becoming more of a crapshoot I mean value investing is completely

underperforming compared to market analysis you know you listen to the fed

and you um [Music] that you know what matters to the price of individual companies is monetary

policy much more than it is their own performance so basically you need to be a junkie watching the fed and following

all the world’s central banks and need to learn macroeconomics and you need to learn what all the central banks are doing and

you need to understand how commodity markets work and you need to understand how equity markets work in bond markets and real estate markets

you need to do all of those things just in order to be able to save and earn them and keep the money that you’ve

already earned yeah that’s the criminal thing about it like I’ve already earned that money being a doctor being a

dentist being an athlete being an engineer I built a house for somebody and I got that money and all I want to

do is just make sure that I can have it years from now the only way to do so is to become a

crappy engineer because you have to spend half your time not doing engineering and instead spend half of

that time learning about japanese central bank monetary policy and commodity markets and what’s going to

happen to copper and what’s going to happen to oil and what’s happening in the wars and what’s

happening with foreign policy and Russia and the u.s and all those things

under the gold standard you didn’t care about any of that stuff your gold coin worked regardless of all of those things

so what this means is the future so first of all you know we have all of the problems I mentioned but also

it means that the future becomes much more uncertain so you’re far less likely to provide for yourself years from

now I’m far less likely to find an easy way to give yourself value years from now and so you

become more short-termist and that is reflected economically in a lower savings rate and we see savings rates

decline but it is also reflected in all manners of decision-making and I think if you really want to see what it is

take a look at a society that goes through hyperinflation and look at what happens there you know how do people

um change under hyperinflation and compare that to essentially what we see in the th

century all over under not hyperinflation but under low inflation you know

that you see across the board most of the time is just slow motion hyperinflation so

what happens in hyper inflation everybody gets their paychecks they run straight to the supermarket they spend

all of their money nobody thinks about savings nobody thinks about the future survival

until the end of this month is highly uncertain how likely are you to be planning for what you’re going to be

doing five years from now very unlikely but also it’s

reflected not just economically it’s also reflected in all aspects of morality on all the way in which we deal

with each other as human beings when your survival is precarious how much are you invested in the notion of

being a good citizen on caring about your reputation on caring about not getting caught in a crime

all of these things become harder to value so people start committing crime people start

caring less and less about the future and we see it reflected in everything and I argue you see it reflected in architecture you know we used to build

houses in the th century that last until today and then in the th century we build essentially disposable

cardboard boxes that get scrapped in years so what can you say about potential

positive effects of lower time preferences so I mean it’s a balance like you

basically you’re talking about an average kind of time preference but you know there’s some things in life where

low time preference could be a negative thing so like if I want to take on risk

not for investment put a kind of investment but say I want to start a business I want to

take something crazy take a leap into the unknown be an entrepreneur what can

you say about that kind of leap taking on debt what’s the value of that within the

current system what’s the right approach to that within the current system what’s the right approach overall from an

economics perspective so not it’s not saving for the future it’s

it’s doing something wild taking the money from your mattress taking on debt

and having a dream in your heart that you somehow just want to do maybe it’s not the wisest investment decision but

it’s something you know as being human it’s taking a leap into the unknown

because something in your heart says to do it I think you’re more likely to be taking the leap in the unknown when you have a little bit of gold in the

mattress than when you don’t I think this is the thing like if you look at the late th century

and I discussed this in The Bitcoin Standard that was the arguably the most innovative period in human history

you know there’s qualitative evidence you know you look at the world around you today pretty much everything that we use was invented in that period the car

the airplane the um the telegraph

the telephone the camera pretty much modern life as

late th century you know the period between and because the whole world was practically on a gold standard

the whole world was using the same money and the whole world could save in the same currency that meant that a bicycle

shop owner two bicycle shop owning brothers in north carolina could go and try and fly even as all the scientific

experts in were confirming that the possibility of flight has been

debunked as unscientific you know lord calvin said not in a million years we’re going to be flying thomas edison said

it’s never going to happen no I think it was edison who said a million years but kelvin also said it’s never going to happen yeah the new york times said it’s

never going to happen the same month in which the wright brothers did it and they continued to deny that it was going

to happen even two years after they did it um but that’s

why could they do that because they had savings in gold they had the security with something that you know

is going to be there and then you can take a risk with the stuff that is extra you know I have say three years

expenditures in gold under my mattress and I know that I could take a risk with

everything else because whatever bad things happen with all of my dreams like even you know flying think about

how insane that is I still can go back to the three years of gold that I have saved still okay to

take on debt given the stuff the gold and the match well this is the thing under the gold standard the way that people finance

things was predominantly with capital with equity so you would because you had gold savings I had gold savings

everybody had gold savings when you wanted to start the business you could use your own savings or somebody else’s

savings so you didn’t need to get into debt well you could get equity from others

and you could also get that from others so there was but it’s directly mapped to physical reality yeah it’s directly back

to economic reality and that there’s a hard money out there that you know what you’re spending money you know you want to build your airplane

factory you need to get actual resources so you get actual gold either yours or somebody else’s you borrow it or you give them

equity but there’s real resources now what happened with the fiat system and this is this is you know the first part

of the book where I look at it from an engineering kind of perspective is essentially and I think this is like the breakthrough inside of the book

what fiat does is that it replaces gold mining with credit creation

the way that we make fiat money the way that fiat is mined into existence is through credit creation most people

think of fiat money as being something that happens when government prints money and we still use the term government’s printing money but the vast

majority of fiat is not physical and in fact fiat is not created when it is printed physically it’s created when it

is lent so when you go to a bank to get a million loan to buy a house

that bank is not going to give you a million dollars from their own money or from their depositors money they’re

going to make a fresh new million dollars when you walk out of that bank the money supply has increased by one

million dollars to finance your home so what fiat does is I mean it was

basically born out of government credit and the credit of banks that are backed by the central bank and the government

so if you’re part of the institutions that are allowed fiat privilege where you can just issue

loans backed by the central bank backed by the currency you are effectively creating new currency new money every

time you issue the loan that’s fiat mining is credit creation I love it so

can you say something I mean you can’t really have credit without a demand for credit you can’t really have an increase

in supply without a demand for it is there any value you place in like the humans wanting it

basically people wanting to do something with that credit wanting to take big leaps big

risks big entrepreneurial decisions so is it all bad is all credit bad

no I think what’s bad is you know anything in in my opinion anything that

is consensual you know I want to borrow money from you and we agree the terms I can’t object to that um

as long as you and I both agree I can’t object to that but in the case of the fiat system it’s not

just you and the bank who come to an agreement everybody who uses the currency is forced to be part of that agreement

because if you default you know effectively what’s protecting the bank from you is the fact that the

government can just print a bunch of money and make the bank hold so effectively interesting so like that

little agreement between the bank and you is is actually an agreement between the bank you and the

entire populace that’s using the currency exactly they’re forced to provide the safety net for you and me to

go and make that loan and that safety net is the valuation of the currency that’s how it

that’s how the whole thing actually works so this is why you know I wrote The Bitcoin Standard explaining

Bitcoin and basically the takeaway message of The Bitcoin Standard is you need to stack as much Bitcoin as you can

because this is the best money that has ever been invented and we’ll talk about that why Bitcoin is a hard or the

hardest money yeah but with fiat the conclusion of The Fiat Standard and again this is not financial advice I’m a

lowly academic you should listen to me on issues of money but I think theoretically and intellectually the

conclusion of the fiat system is you need to be short fiat as much as you can that’s the smart winning move so human

wisdom over thousands of years is to save try and not borrow as much as you can try and accumulate as much savings

as you can that’s reversed under fiat if you’re saving money you’re just subsidizing everybody else

taking on loans if you’re taking on loans you’re benefiting from all the people that are borrowing so the winning

move under the fiat system and this is what rich people do is you borrow rich people under the fiat monetary

system they don’t hold assets you know there isn’t if you’re worth a billion dollars today

you don’t have a billion dollars in a checking account you’ve got maybe a hundred thousand a million

of million or something like that a tiny fraction of your money is held in cash the majority is going to be held

in all kinds of other hard assets and you’re going to be borrowing you know the richest people in the world are

the biggest borrowers in the world the most powerful entities in the world the governments are the biggest borrowers in the world

and that’s that’s how they are the richest and the most powerful because every time you’re borrowing you’re

giving the bank an excuse to print new money so you’re devaluing everybody else’s money and you’re getting a bit of

the cut if you’re going to buy a house with your savings you know you’re accumulating the savings and they’re

losing value and if I were to go to buy the same house

with credit I’m getting the bank to print money for me so obviously they can cut

me in on that deal and that’s why it’s much cheaper for everybody to buy with credit that’s why everybody buys

everything on credit so when we look at the global monetary system the thing you want to do as a government is be the

sexiest currency out there so the the main currency like the dollar

currently is is the one that has the most power in that in that kind of context so you have if you if you were

to try to summarize what is the global monetary system it is as as it is today is a bunch of fiat currencies

battling for position for um for use

outside their nation and in so doing trying to gain power in the geopolitical sense is that if we

just zoom out what is the global monetary system like how what is what is it currently so

outside the united states the whole thing yeah you could say that but I think it’s more realistic looking at how it has actually evolved over the past

few decades it’s really a dollar system it’s not a system of currencies if

buying with one another it’s a dollar system and all other currencies are just basically I like to call them dollar

plus country risk so it always returns home to the dollar

yeah there is no competition there is no second best as michael saylor would say um and money is like that you know gold

was a winner take all by the end of the th century the global monetary market is effectively a winner take all for the

dollar and if we get it to Bitcoin you’ll know I also think

digital currencies are also going to be a winner-take-all situation so um money wants to be won in fact there is

no such thing as multiple currencies multiple currencies is just a step back to barter money is

one if you go back to a system of several currencies you’re just reinventing barter so um in in the case

of the dollar system you know the global dollar system is built around the dollar

because all central banks have dollar reserves and because all central banks use the dollars clearing mechanisms so

that’s why you’re basically playing in the dollar system this seems to have changed over the last

couple of months with the sanctions on Russia and the confiscation of Russian reserves

it remains to be seen what that’s going to do and how that’s going to change but um

it is looking like you know the this dollar system is clearly unsustainable it’s not sustainable for the u.s it’s

not sustainable for anybody speaking of which so you do an amazing podcast called the Bitcoin

Standard Podcast, so episode of that podcast is is about the very thing

you just mentioned and allow me please to read the description of that and then I ask you a couple questions about your

thoughts in general the description reads after the Russian invasion of Ukraine the US confiscated the Russian

central bank’s significant monetary reserves and banned some Russian banks from the swift network serious questions

are being asked about the survival of the post-war dollar based world monetary order

will Russia China and other countries actually build an alternative international settlement system after

years of threatening to do so question mark will global central banks stop accumulating u.s treasury bonds and

replace them with gold and commodities will we witness the birth of a new commodity gold-based monetary order

in this seminar we use the insights from The Bitcoin Standard and The Fiat Standard on temporal and spatial

sellability to explain why reports of the death of the dollar and the emergence of a new

gold standard may be exaggerated so I would love to get your analysis on the situation

what are the fundamentals of it what is swift what are the possible future evolutions of the global monetary system

yeah so swift is the network that the u.s federal reserve uses for moving money around the world

so basically the US government can sanction you off of swift as they’ve done with Russian banks as they’ve done

with Iran and as they’ve done with afghanistan so

effectively I mean this is really the catastrophe of the current monetary system is that in order to be able to

trade as a member as a citizen of your country you need your monopoly local central bank to be

on good terms with the US government so that they would let them operate and this is really like on top of the aspect of the

hardness of money this is the other really powerful thing about Bitcoin which is that it’s just purely a

technological thing it doesn’t matter if you’re Russian if you’re Iranian if you’re american if you’re chinese it’s a

technology and so it’s like a spoon or a knife or a car you know you operate

it properly and it works and so with Bitcoin it’s the same thing it doesn’t care about your passport if you have the private key you click send and the money

goes well it doesn’t really go but effectively it does go anywhere once and the money can move

without having to abide by political situations and the point here is not to bash u.s foreign policy

much as that might be deserved I’m just going to discuss it from a kind of a technical perspective it has to be a

political system with fiat because ultimately it relies on credit and then the government is the one that has the

guns and the government is going to decide who gets to pay their loans anyway in the government’s going to

have to make its own rules about who gets to play and who doesn’t and so it has to be

political as this kind of fiat system and um

you know when I wrote The Bitcoin Standard initially I used to be much more of a gold bug and in my mind you know

um goldbugs have spent the last years saying the global monetary system is going to collapse next week and we’re

going to go back to a gold standard and writing the fiat system Fiat Standard gave me a very good

appreciation for why this hasn’t happened and why it’s not very likely to happen I think the reason is

as I said earlier it’s just gold is very expensive to move around and perhaps more importantly it’s very expensive to

verify that’s really the problem with it it’s very expensive to verify that the gold that you’re receiving is original

gold so the only way to do this properly is to melt the gold bars down and recast

them which is pretty expensive so we have this situation now where Russia which is major one of the biggest

economies in the world has been kicked off two varying degrees off the global monetary system and the u.s has

confiscated their reserves and I don’t have political opinions about the war it’s not something I’m very familiar

with it’s outside of my area of expertise I’m just analyzing the monetary aspects of it it is on the one

hand whether you think it’s the war is justified or the sanctions are justified is not not something I can opine on

but the implication of this is that effectively the US might be shooting itself in the foot because it’s telling

everybody in the world your money in our system is not really your money it’s just a token to play in

our arcade at any point in time if you misbehave we kick you away out of the arcade and we take your tokens

and so I mean this is something that China Russia Iran and many countries have made a lot of noise about over the

past decades it got real this year but

it’s been decades of China Iran and Russia to some extent saying that you

know we want to build an alternative to the u.s dollar based system and yet they haven’t and I think there’s

very good reasons they haven’t and the reason is what do you do with based on how do you build it so you can do a

credit based system based on but then who’s going to be the big boss is it going to be China is going to be Russia

is it going to be Iran is it going to be india none of these countries wants to be well you know they don’t want to jump

out of the um the u.s based system to get into somebody else’s base system so China doesn’t want to use a Russian

system Russia doesn’t want to use a chinese system and so therefore you can’t use their own central banks currencies don’t you think

they have enough leverage india China Russia combined

with several other nations have enough leverage and incentive to create their own

system so any one player yes but if they collaborate yeah but then okay so what are you based

on like the who who’s going to be the boss who’s going to be the one who can in this case China

right because China is becoming increasingly an economic power in the world yeah that’s hard to deny yes it’s

true and it’s the most likely scenario perhaps if we where to witness something like this is going to be a chinese

based system is it possible to have like a split in um

what is the driving currency of the world it’s possible but I don’t think it’s sustainable again money wants to be

won and that’s the kind of thing that I argue in that seminar so we could see this emerge based around the yuan and

you know likely I mean Russia is obviously going to hurt economically from what happened from the confiscation

of the reserves and from the sanctions so it’s not going to be in a position and of course because it’s outside of

the US-based system it’s not in the strongest negotiating position with the chinese so the chinese

might be able to get them to join their yuan-based system but I don’t think that’s sustainable in

the long run because these governments can issue their laws and make their

designs and then make their monetary systems but ultimately

there’s there are billions of chinese people and billions of dollar-based people and they’re going to want to trade with one another and the power to

want to trade with one another is too strong that we can’t just split the world economy into two monetary systems

that don’t trade with one another so then they’re going to want to trade with one another or the dark

possibility is it the inability to trade as opposed to

being a forcing function for trade it could become a forcing function for conflict

in cyberspace and potentially hot war yes this is the scary part of it and this is basically how world war ii

happened you know because there’s an old historian who used to say when um oh I think his name is auto mallory and

i quote him in The Bitcoin Standard if goods don’t cross borders then bombs will

if people trade with one another they have an incentive for each other’s well-being and then they have less of an incentive to fight

and it was the death of global trade in the s because of the failure of the fiat system that brought about the rise

of the populism that on the rise of all those leaders that hated each other and helped finance the war and bring it about so that is the scary possibility

um and of course you know you can’t discount that with all the escalation that you see that is a possibility that it could turn into a real war but then

even so I think ultimately you can’t fight wars forever

there’s going to it’s going to end at some point and we’re going to be back at square one or well not in square one

we’re going to be back at the same dilemma of who’s going to have the global monetary system and so one

alternative is that what the chinese and the Russians could do is they could base it on a commodity so a lot of people are

now saying well they’re going to base it on copper and corn and agricultural commodities

and that’s that’s the analysis of assailability that we discuss in The Bitcoin Standard in The Fiat Standard

that’s I don’t think that’s workable if you end up basing the monetary system on copper as we said earlier it doesn’t

matter how many governments say that we’re going to make a new monetary system based on

copper grains and nickel and iron and so on it doesn’t matter you’re just going

to stockpile you’re going to have to stockpile those things in order to make a market in them and then if you talk about those things

you’re just raising their value inviting the producers to make more flood the market I hope they don’t try this

because it’s going to be a devastating devastating impact on the world economy you’re going

to have central banks bidding up the price of essential commodities that people need for real uses in order to back their

currencies with them and then just incentivizing the producers to make more and more and more of it and then

bringing the price back down so it’s going to be a very expensive mistake where we raise the price of copper destroy a lot of industries dependent on

copper it’s not just copper but also food and then increase the supply beyond what we need and the

end result is copper miners make out well governments go broke and we end up with a lot of rust and

copper in government warehouses that’s why I don’t think it works for the

to use commodities that are not monetary commodities then the question is maybe gold

can we go back on another gold standard and um I mean Russia seems to have done

that I’m not so sure it’s very difficult to get reliable information I’m trying to look into this more but they seem to

have said that they’re um they’re fixing the price of gold in rubles so they will buy and sell gold at a fixed drubal rate

which effectively means you’re on a gold standard now I’m not sure how much

how serious this is how they’ve managed to stick to it but it seems to have stabilized the ruble and in fact brought

it back to its pre-war level which I found absolutely astonishing you know considering all the sanctions going on

but um in the short run it’s obviously much better than having your currency pegged to nothing but in the long run

i also don’t think gold is gonna cut it in the st century do you think there’s any chance

they go full gangster move and um go into the digital space on the

blockchain and go with Bitcoin I think you know the point of this discussion is that you know we run

through all these other options you know a chinese-based system why it probably won’t work a commodity-based system why

it won’t work and a gold-based system why it won’t work I think they might have to learn this the wrong way

i mean the hard way but eventually I don’t see them doing it now but eventually I think

the winning move is going to be to go on a Bitcoin-based monetary system well I don’t know if everything always has to

be the hard way I’d love it not to be but I mean it’s

it doesn’t look like there is any kind of desire in China or in Russia to switch to a Bitcoin basis sleep to

Bitcoin so unfortunately I think we’re going to go through a few

years maybe many years of learning the lesson the hard way of trying to accumulate these commodities

and seeing the limitations that make them unsuitable as money today one of the things I’m really concerned about is

the tension the amount the increasing amount of hate in the

world yes and the increasing amount of power centers in the world

between which hate is um

making a regular appearance and because the weapons of war becoming more and more powerful as they have been in

the past um many decades I’m really concerned about nuclear war

so let us see if Bitcoin can fix this yes Bitcoin fixes all of this

first rule of Bitcoin is if it’s a problem Bitcoin fixes it all right well I have some personal

questions for Bitcoin then because I have some my life is pretty up so i’ll have to try to see a quick pause

for bathroom breaking sure let’s return to the basics what is Bitcoin we started with what is money

what is Bitcoin we talked about hard money inflation fiat the history

of money the history of war in the th century and that takes us into the st century what is Bitcoin

Bitcoin is a software and it’s a distributed software to operate the peer-to-peer network between

members who are all equal on the network they’re all peers and what this software does is that it allows you to operate a

payment network between those peers and that payment network has its own currency

and that seems like you know just a simple software game but the reason this is such a big deal is I believe Bitcoin

is the most advanced form of money ever invented and the reason for that comes from two properties that this network has

the first one is that the currency is the hardest money ever invented it’s the money whose

supply is the most resistant to inflation it’s the first monetary asset that we’ve ever

invented that is guaranteed to be fixed in its supply that cannot be increased beyond a certain number so there’s only

ever going to be million Bitcoins and that’s that’s a that’s a qualitative leap forward in our technologies of money all

of our monies leak essentially because people can always make more and more and more of

them you know the best money is the one that leaks the least which is gold because it only leaks one and a half

percent in other words your share of the gold stock is diluted by one and a half percent

every year ideally you’d like it to be zero Bitcoin is currently at around one point eight percent headed towards zero

so it’s the first money that we’ve ever had that goes to zero in terms of terminal supply so there’ll never be

more than million Bitcoin I think that’s a huge deal because you know as I said earlier

money is always whatever is the hardest to make and now Bitcoin is the hardest thing to make and then the second property which is

extremely important as well is the fact that it operates without the need to trust in anybody it

doesn’t have a party that is in charge of it it doesn’t have a central authority that can um

you know it’s as I said it’s peer-to-peer so there’s it only has users it doesn’t have any admins

there’s no authority in charge of Bitcoin that can take your Bitcoin that can stop you from using Bitcoin that

can change the rules of Bitcoin they can’t make more of it so it’s fixed it’s available for anybody in the world it’s

the hardest money ever invented and it is absolutely I think

an an enormously enormously significant invention because um if you read The Fiat Standard and the

Bitcoin Standard as well you’ll see my perspective for why I think a very large number of problems on the

world are co in the world are caused by easy money are caused by inflation

and caused by government having access to essentially an infinite

recourse to people’s wealth and I think Bitcoin fixes this because it allows us

to have money that has the sustainability of gold across time meaning it holds its value

across time like gold but much better than gold but also it has similar to it is similar to

fiat and that fiat can travel quickly but Bitcoin can travel even faster than fiat so

it combines gold’s saleability across time with fiat saleability across space in one

immutable package that nobody can change and nobody can control can you define the word sellability saleability is the

essential property of money it’s the ability of a good to be sold easily on the market

specifically to be sold without much loss in its value so houses are great for living in but they’re not very

saleable if you want to sell a house you can just click a button and sell a house and have a giant market of people

buying houses from you need to find um you need to find somebody who wants the exact house that you have with the

exact specifications that you have and because you know houses are not identical there’s no liquid giant market

for people to just buy and sell identical houses from so

gold for instance has a good salability as money because it’s a liquid good it’s uniform

and people are always buying it fiat dollars have great sellability because everybody’s always buying and

exchanging dollars for other goods so if you have a hundred dollar bill you can easily get rid of it and you’ll

get a hundred dollars worth of stuff for it if you have a hundred dollars worth of stuff it’s harder to get rid of it if

you have worth of phone it’s not as easy to spend it as a hundred dollar bill that’s scalability

what do you mean that Bitcoin I understand that Bitcoin has the sellability of gold across time

better even yeah better yes like on the order or whatever um and then and then

has the syllabity of fiat across space what does that mean so if you remember when you asked me what is the advantage

of fiat what does the um advantage offers us it’s cheaper to move fiat across space than it is to move gold you

know with with the current fiat monetary system for all of its flaws you know you can send money you know I could send

money from my bank account in the US to a bank account in China

in a couple days or in britain in france in a day or two which is you know much

faster than you could do with gold and much cheaper than you could do with gold but in reality with fiat you know the reason

Bitcoin improves on that is that with Bitcoin you’re actually selling you’re you’re sending final settlement in a

couple of hours so you send the Bitcoin transaction you get six confirmations in an hour you get about confirmations in two hours on

average with confirmations you know you’re pretty um definitely clearly safe

on this so within a couple of hours you could send a billion dollars across the ocean

and have final settlement on them it’s not just that you’ve sent a credit obligation that’s going to need weeks

and months to settle which is the case with fiat so it is faster than fiat effectively so it’s

harder than gold and faster than fiat that’s a good way of putting it

one other aspect of Bitcoin I have to ask to me and the human level is fascinating

is it was founded by satoshi nakamoto an anonymous founder there’s no leader

so that’s another aspect of the decentralization it’s leaderless yeah

so unfortunately it’s not a monarchy fortunately or fortunately yes

who is satoshi nakamoto do you think and first of all is it you it definitely is not me

um I don’t know who it is if it was would you tell me that’s a trick question I know great

question but I mean everybody who knows me knows I can’t really code so you would say that even if you could

but that’s true do you think it’s one person do you think it’s multiple people is it interesting to you do you think it’s fundamental to the coin itself to

not the coin the entirety of the concept um that its founders and animus and how

much guts do you think it takes if it’s one person just walk away from so much money

I’ve considered all these questions many times it’s very hard to formulate um a definitive answer to all of them

i don’t know who it is and I don’t know um why he or them or she

are not spending the coins that they most likely have I think what really matters

in Bitcoin about satoshIs the fact that he’s not there and this is what’s truly astonishing

about it the fact the most important fact in Bitcoin is the fact that the creators disappeared and the thing has

continued to operate now for almost years without him being there or years I think it’s been since he’s left

and this this is really the most important thing and you know maybe maybe he died or she died or they

you know they got into an accident on a road trip or whatever and that’s why they haven’t accessed their coins maybe

they’re incapacitated for some reason but whatever reason it is I really think

it’s faith or serendipity that is given us this very vital

very very very vital building ingredient in Bitcoin which no other digital currency would ever

recreate which is that you know because it was the first it was the one that was able to um

establish the first mover advantage and get all the people who are interested in the technology to get into it and so

that’s an enormous advantage but you know the the cherry on top or what made the whole

thing really function well is the fact that the guy who made it disappeared

and that it continued to operate which is just a clear illustration that this is a network with no admins

and I’m tempted to think that they’re incapacitated in some way probably dead or gone because I

i can’t believe the I don’t believe any human being would have this

level of self-control to not get into not want to meddle with their invention so much um

even even if they you know they might have had the self-control to like mine the first million coins to get the network going and then throw away the

coins on or send them to an address that they don’t have the key to um because they really just wanted the

network to take off they may have no access to the coins and that’s why they can’t move them I could see that

happening but I find it harder to believe that they would resist the temptation to mess with the network you

know it’s funny I find that the founders of ideas are often principled and have the integrity

that the eventual users of those ideas don’t fully have

I tend to you know we have the kind of cynical view power corrupts absolute power corrupts absolutely and we tend to

in our mind generalize that all humans are corruptable and perhaps that’s true to some degree

but I think some people are more corruptable than others and I find that there is I mean this I

like to think that satoshi nakamoto is out there and

you know just like george washington chose to walk away and it’s a principle and the principle is more powerful than

the financial reward or any of those kinds of things it’s a principle that stands for freedom

and there’s a lot of people throughout history even recent history that are willing to die for these principles

or live a life full of suffering and sacrifice because

they’re still living a life of principle and choosing that day after day after day so um I mean there’s power

to that money what’s what’s the worth of money in the end in terms of just personal financial

gain versus um knowing how much positive impact there

is so the person that chooses to walk away like that I think is the same kind of person that chooses to live

um live by that principle you have you have people like that you know in

grigori gracia pearlman in mathematics who turned down the fields medal

because he was yeah that’s the medal not billion dollars of Bitcoin well that’s I know

i know I’m joking well that’s actually an interesting just a brief comment you know when people talk about Bitcoin in

the cryptocurrency space it’s often mixed up financial interest

and ideas and I think there’s often correlated but

that good feeling you get when you win or you um number go up or you just

just somebody you know I found bucks on the street the other day and just that feeling of just like oh

like more money that positive feeling that’s correlated but it’s it is

distinct from the power of the idea to change a world to change the world for the better for the to alleviate it’s

like alex gladstein in the case of Bitcoin that decreased the amount of suffering in the world because of the

authoritarian regimes and just because your your number goes up like that

gambling feeling of like yes yes this is good and I mean short short-term

number go up there’s a long-term i’ll go up that’s more like investment and so on and there’s a short time that will go up

just a good feeling that you can’t you have to in your mind keep those distinct from um

from the power of the idea to transform the world and if you focus on the power of the idea

maybe a billion or billions of dollars don’t matter as much at least that’s what I would like to

believe perhaps but what matters ultimately is that the thing works without him the things worked for

years without him and I think this is this is the really important thing if they had stuck around for whatever

reason and they had continued to meddle with it it’s not clear to me how decentralized

it could have been this is the problem with the other currencies it’s like how do you

lose control of the frankenstein that you’ve created the only way that this frankenstein continues to survive is if

the person in charge of it continues to feed it and so it continues to be yours and that’s

that’s the problem with all the other digital currencies if you’ve heard about any of the other digital currencies out there

you’ve only heard about it because there’s a small group of people behind it that are working on it that are promoting it

and that’s why and I think you know michael seda’s discussion with you was a magnificent illustration of um

the difference between Bitcoin and altcoins in that they are securities and I think he makes a very compelling

brilliant case for why this is um makes them categorically

different from Bitcoin Bitcoin you’re buying property I think he mentioned he’s a huge fan of dogecoin but I might be misremembering

you are misremembering okay I need to maybe I’m quoting him out of context yes okay

let me just ask you about some possible criticisms of Bitcoin so on centralization so

there’s a criticism on the so on the mining and on the node side or the

node is not really the criticism but Bitcoin mining is not fully decentralized because a small number of

miners control a majority of the hashing power I looked it up as ten thousand fifteen

thousand whatever the number is of computers they have the full that are full nodes that have the full

that are actively connected to the network so you could argue that’s decentralized because it’s global it’s

all across the world but the miners they’re still um it’s more centralized so if you’re

thinking of making a case for Bitcoin being decentralized do you worry about the miners

being somewhat centralized is is the nodes the important thing to think about yeah and what number of nodes counts are

centralized and not the nodes are what matters because the nodes are what determines Bitcoin’s

consensus parameters I think the um the best way to think about it is

that miners simply sell a commodity to the nodes and that commodity is Bitcoin

blocks so what a miner does is they solve the proof-of-work problem so they keep operating their computers until

they can get a solution to the problem and then they attach that to a bunch of transactions and present it to the nodes

for the nodes to ratify and approve it so therefore this is and this is I strongly recommend

people learn about the block size war to understand why miners don’t control Bitcoin I

discussed this briefly in my Bitcoin Standard but there’s a recent book that discusses

this in detail called the block size war by jonathan beer it’s a great description of

in essentially the miners thought that they could control Bitcoin you know they had there was one mining company

that produced the majority of the machines that were on the network and they

and their allies had a control of the machines that were out there and they controlled the majority of the

hash rate and they thought that they could change Bitcoin’s supply not supply sorry they could change Bitcoin’s block size which is a

tiny little detail technical parameter it’s not even all that big of a deal for the economics

of it but they thought that they could pass this change they could force this change on the network

and the members of the network rejected it and they weren’t able to do it so the nodes are what is sovereign

the nodes are what determine the rules of the game the miners are a service provider the miners invest

capital up front you know they buy the machines they buy the electricity they buy the storage they buy the locations

they pay the rent and they invest all that money based on the idea that if they behave

according to what the nodes want the nodes will reward them with Bitcoin so the miners are in no position to dictate

terms for anyone you know they’ve they’ve put up their capital up front and they will only recoup it if they do

what the nodes want so therefore what really matters is the decentralization of the nodes so we want

to we you want to have as many nodes as possible you should um you want to have a system where there’s a large number of

nodes and this is of course the biggest problem with um

with other digital currencies is that you know because basically Bitcoin has cornered the market on a digital

currency the only way that you can really get traction um is to generate a whole bunch of buzzwords but you know

we’re doing this and we’re doing that and so other digital currencies are optimized

for um bells and whistles and buzzwords and that means adding a computational load

which makes the nodes bigger harder to operate and therefore you have a very small number of nodes in fact

very few digital currencies are keen to publicize how many nodes there are and they don’t have full nodes in

the true sense and it doesn’t even matter how many nodes they have because um

de facto you know you can you can spin up a million nodes tomorrow on aws

doesn’t really matter what matters is de facto do the nodes dictate the rules of consensus and the

fact that with most digital currencies you can have hard forks very frequently and they can change the supply all the time

means that there’s a small group of people who agree amongst themselves how to move forward yeah so you threw in

a few criticisms of all coins there but so one is the small group that one we could we could talk about

it’s a tricky one and we we talked about that with satoshi nakamoto but the other one is a

small number of nodes so to push back on that as computational power increases you can argue that

that enables more and more cheap computers to serve as nodes so at

least it paints the future where nodes are always increasing because computational power is always

increasing and getting cheaper and cheaper and cheaper so at least there’s a hope for the future for greater and

greater decentralization decentralization on the node front yeah but I mean

ultimately again it doesn’t really matter how many nodes you have if you have a you know

if the way that the currency is run is that you’re going to have a hard fork every few months which is the case with most other currencies Bitcoin is the

only one that’s not have a hard fork um basically the unique thing about

Bitcoin in a tactical sense is that you could get the original software that satoshi himself ran

in to start the network and you could run it today

and it would sync with the blockchain there’s one bug you need to fix one mistake that was owned that would

have only appeared I think in around or or something like that that he wasn’t aware of back then so you

just need to fix this one tiny little bug and then the consensus parameters are still the same so you’re able to sync to

it this is not true for most other digital currencies I’d say probably all of them because they’ve all had many

hard forks which they think of as upgrades and you know they they market this thing as you know well Bitcoin

can’t upgrade but we upgrade all the time well yeah you know what else upgrades all the time um facebook apple

amazon anything that centralizes very easy to upgrade and that’s precisely why as michael saylor says these things are

somebody’s liability they are security you’re carrying on somebody’s technical and economic liability they can

hard fork they can x the supply tomorrow yeah they can fall victim to the same

[Music] um corrupting forces that governments fall victim to sure and for people who

don’t know yeah hard fork is a

reverse incompatible change to to the underlying function of a

cryptocurrency of course there is hard forks of Bitcoin as well

I’m sure all of which you love dearly anyway but that doesn’t that doesn’t matter the original Bitcoin

for the most part has not undergone any changes and that’s one of the I mean it has undergone changes but none on none in

the important parameters of the network so another criticism

is about energy so the proof work contestants mechanism uses a lot of energy

what’s the response to that criticism of Bitcoin yes because it’s worth it okay the airplane uses a lot more

energy than a kayak you know when you’re gonna cross the atlantic next time what are you gonna take a kayak that is environmentally friendly according to

this insane definition or are you gonna take an airplane that consumes a lot of energy so the cost benefit analysis here

is such where you have to consider both the cost and the benefit exactly and I think it’s an astonishing

testament to just how far backward people’s scientific and technological

thinking has devolved to the point where we think of energy consumption as a bad thing I think it’s just and in the fiat

standard I discussed in the whole hysteria around energy and I think it’s a product of fiat

inflation because it’s a way of trying to covering up the fact that energy fuels that are reliable and necessary

for the current world are becoming more and more expensive because of inflation and so governments are always looking

for excuses for why you should not be using those things and so they promote all kinds of stupid pseudosciences to

tell you about why these things are bad but really you know all technology is well not all but

the vast majority of technological innovations involve economizing on human time and judgment and replacing it with

machines with reliable machines that spend a lot of energy so that’s what a telephone does instead of

having to send somebody across the world to tell somebody something else or send the letter the telephone allows you to

um do it the car is like that you could walk but a car consumes a lot more energy but it allows you to travel much

faster and safer and more reliably an airplane is like that modern telecommunication

human prosperity is an increase in the consumption of energy and I think it is

it is an absolutely criminal thing and I genuinely mean the word criminal

to portray energy consumption as a bad thing because it is truly depriving people of the chance to live a life that

makes life better you know in this sense it’s truly criminal to tell poor countries that they should not consume

the same energy sources that are being used in rich countries that on which our modern infrastructure and

modern life relies that’s what life is you know if you reduce the consumption of energy in the

us to the levels that you have in poor countries today the US would become desperately poor a lot of people would

die cities would collapse the quality of life would decrease significantly a high quality of life often requires

given the current technology high expenditure yeah and I should be clear you know it’s not a quality of life in the sense many people think of this as

oh yeah well you know um taking needless flights for vacations no no these are

these are the cherries on top of the cake but the substance of the cake and the real benefits of energy is the fact

that children premature babies survive in countries that have reliable -hour

cheap electricity if your child is born premature that you put it in an incubator put him in an incubator or her

they’re highly likely to survive if you don’t have -hour electricity that child is not going to make it and

you see it you know the level of energy consumption per capita is highly correlated not just to income but also

to health outcomes to infant mortality to all of the things that you care about and um Bitcoin is just

another technology it does consume a lot more energy than central banks a lot of Bitcoiners like to

take and a cop out of this by saying well you know central banks consume money and atms consume energy and I

think if you calculate how much central banks and banks consume I think it’s a rounding error next to

what Bitcoin consumes I think Bitcoin is just maybe not a rounding error but it’s still Bitcoin I think is going to

consume a lot more and that’s a good thing you know what’s humbling is to look because even just looking into this

forces me to look at the energy expenditures for many of the things we take for granted obviously computers and

other digital our digital lives I just Bitcoin becomes a rounding

error relative to how much energy spent on all the computers in our world but also like

things like home appliances microwaves and yeah hair dryers and stuff yeah it’s like

yeah I mean this is being hilarious it’s like oh these things that are just part of our modern

life they’re either the same order at least the same order of magnitude as Bitcoin

and they seem like trivial parts of life yeah and this is the thing all the

people that complain about Bitcoin’s energy consumption I presume they use washing machines now why should their

desire for clean and dry clothes to get to consume energy and

i mean I used to live in lebanon lebanon had hyperinflation I escaped from hyperinflation I escaped I

it prevented my life could have been ruined by hyperinflation and the reason that it wasn’t ruined is because I have Bitcoin

so I don’t know am I allowed to swear on your podcast yes please so your

washing machine given a choice between my washing machine and my Bitcoin i’ll choose

Bitcoin It’s a technology that has been that has already saved my life and I think it’s going to save the lives of many many many many more people so

um but of course I don’t have to choose between um my Bitcoin and my washing machine

because um this is you know we’re just constantly consuming more energy and we’re going to continue to consume more

energy in this world and that’s just what progress is and a small remark so in principle that I

don’t think this is a problem but the other thing about Bitcoin where it is different from washing machines Bitcoin is truly unique in this it’s the

only thing whose energy consumption can be produced absolutely anywhere your

washing machine needs to be in your house where you live and you live in a city surrounded by million people and

they all have their washing machines and they’re all connected to the grid and they generally tend to do their laundry

around the same time and so you have to put the load of the washing machine on

the grid at the same time there’s needs to be one power plant and all of the

infrastructure needs to work at the same time and the electricity is pretty expensive because it’s being done in a place with high

demand Bitcoin is does not need to buy electricity from places where it has high demand because

it can buy electricity from anywhere this is what’s truly mind-blowing about it you can buy you know what you need to

the electricity that you need for mining can be done anywhere so you can mine you know you can have a

waterfall in the north of canada miles away from any population center

there’s water falling there’s energy you can put a hydroelectric dam there and then you can use that energy to operate

the miners and then the miners just need a satellite internet connection and effectively you’re selling that energy

that is isolated to the grid and because of the way the Bitcoin functions because of the difficulty adjustment

the only profitable miners are the ones who can get cheap electricity basically if you’re mining at grid cost

if you’re mining it around the average electricity price in the world is around cents

if you’re mining at cents in Bitcoin you’re most likely not going to make it if you’re running your miners at

cents because everybody could mine at cents and so what happens is if everybody’s mining at cents

cents stops being profitable and then only the people mining at a lower price are profitable so that’s why

Bitcoin mining is not competing with your washing machine this is this is the absurd thing about this kind of energy

scarcity um viewpoint where oh no it’s a catastrophe Bitcoin is taking all the electricity as

if the electricity is just one fixed buy that we all have to share and fight over and this is that’s how I keep making fun

of these stupid headlines they put out where Bitcoin’s consuming more electricity than portugal all right well

maybe we should shut down portugal then what the hell has portugal giving us like obviously it’s not it’s not he

doesn’t mean that I’ve gotten so much criticism for saying krishna and cristiano ronaldo is not in the top five

um oh I apologize I love portugal that’s another discussion we should get into something

because you posted a few soccer things I’m not yeah I realize how passionate people are about this listen it was a

joke all right he does not love people potentially in the top five yeah I love portugal and even though I’m a liverpool fan I

still respect cristiano ronaldo a lot in fact I hold a very unpopular opinion where I think christian ronaldo’s the

greatest football player ever number one over pele maradona messi better than messi yes he’s been doing it for

years at the top nobody’s ever done that he’s won everything everywhere everywhere he goes at the top at the champions league

really strong argument to be made for him and messi’s never done anything outside of barcelona that’s the thing so

you appreciate performance long-term versus the genius of the actual play on

the field I mean the geniuses ronaldo is the top scorer of all time he’s like the

geniuses in the scoring not the actual dance of the of the play the creativity

well I mean I don’t know messi’s been absolutely mediocre since he’s left barcelona this is strong words

he’s got what two goals in psg season this year they’re out of the champions league what about mammad salla you’ve you’ve

posted oh yeah is he he’s a boy is he climbing up to be I think I think he

should win the ballon d’or this year he probably should have won it last year as well he’s been absolutely outstanding but um

i mean just people are so crazy about messi they keep giving him accolades he hasn’t deserved I think messi the last couple of ballon d’ors that he got I

mean he’s a great player and everything but no he didn’t he did not deserve it last year

we can agree to disagree there’s you’re a boston fan or a messy fan I would say

no I’m not I wouldn’t say I’m a barsa fan but bars a fan because of messi and I just I think it’s like there’s

certain things um so when I was growing up in the in the

soviet union in Russia I remember maradona he was the first person

i saw that I was like oh wow this could be um this is greatness in sport not just

football and sport right and for some reason I mean there’s something about like diagonal

like the way they were commentating the genius of his play the mix of ego and again the performance but being

able to carry a team on his shoulders that I just fell in love with whatever he represented and then by that

argentina and then messI saw when he was like when he was just like

right in the early days I mean when you first see a person and you see the genius and you notice that and then

it turns out to be actually a great player for some reason you’re invested you’re emotionally invested you’re um I

don’t know so you kind of just fall in love and then you get you pick sides I mean that that’s the thing about

football part of the fun things about football soccer is like you pick a guy you pick a team

and everyone else and you just have fun talking I mean there’s part of it you know it’s great it’s great

because I think you know obviously it’s very stupid thing to do but I think if you don’t do it in football you’re

gonna do it in real life elsewhere that’s right that’s why it’s very good like that’s it I you know instead of hating people for their religion and for

their skin color hate them because they support manchester united exactly

so you’re a liverpool fan yes yes hardcore long-term -h but yeah so to go back

to the original point on portugal um yeah energy Bitcoin is not competing with portugal because Bitcoin is

buying energy from places where we can’t buy it because all the places where we can buy energy for our washing machines

we’re bidding up the price enough to make it and non-viable for Bitcoin that’s why you know they’ll

you’ll see those headlines about Bitcoin consuming more energy than portugal well if you look at portugal I mean they’ve

got giant power plants in portugal they’ve got millions of people and they’ve got enormous amounts of infrastructure where are all of these

infrastructure for Bitcoin mining you don’t see it in the cities it’s all isolated it’s all out away from the

cities or it’s connected to grids that have serious over capacity so Bitcoin is

not out there buying the expensive energy taking energy away from people who can’t afford it

it’s out there buying its own energy because it doesn’t need to buy the expensive energy that people really need

so one other criticism from an investment perspective from a gambling perspective that people see is the

volatility of Bitcoin of course that’s been somewhat decreasing over time but

what’s your answer to the sort of criticism that Bitcoin is too volatile I want to stay away it doesn’t

seem like a safe place for me to invest either short-term or long-term

there’s no denying there’s a volatility and there’s a high oscillation in the value in the short-term so um I think

the the safe way to approach that is in terms of position sizing

if the volatility bothers you then you’re over invested perhaps so maybe

you should maybe you should reduce the size of your position so that the volatility doesn’t

bother you this is this is the short answer that you know like

stack as much as your conviction will allow you to tolerate the volatility um

but and of course the reason you should try and consider tolerating volatility

more is the options are you hold fiat assets which only go down stable you know

relatively stable not a lot of volatility day-to-day you know value of your dollar doesn’t change overnight

overnight or something like that but it does go down reliably it’s going to go down percent you can count on

it it might take a year two years five years ten years compared to the things that you want to buy it’s going to go

down by percent and it’s not going to come back and it’s going to go down another percent and

then another and another so the option really is

relatively short-term stability with long-term decline or short-term volatility with long-term rise

and so that’s another way in which Bitcoin teaches people to have a low time preference and think about the long-term

so stack accumulate and think of it in the long-term it’s a function of the fact that Bitcoin

is new Bitcoin is currently less than one percent of the global money market so there’s about a hundred trillion dollars of money out there in the world

um a hundred trillion dollars roughly of fiat and about trillion dollars of gold and Bitcoin is less than one

trillion dollars so you know one rich guy decides to get into Bitcoin that’s gonna show up on the

Bitcoin chart you look at it you know elon musk decides to buy Bitcoin you see the buy you know you see the news it

happens and you see the pump um he almost decides that he doesn’t like Bitcoin you see the drop

but you know a few years ago it used to be that one random millionaire would cause that pump now you have to be

the richest guy in the world to do that in a few years you’re gonna have to be the richest country in the world to be

able to do that to the Bitcoin price maybe many years maybe not a few years but as Bitcoin grows you know think

about it as a a liquid pool of money currently it’s a small pool next to a

much larger ocean which is the entire money market and so one person jumps from that to this small

pool they can make a big splash as the pool grows essentially the sailbility increases and the likelihood of one

individual purchase affecting the price so violently increases decreases

and so over time you know as the size of the market increases I think we’re going to see the volatility decline more and more

ultimately what you know if you look at gold historically gold has been very very stable it did not achieve its stability

because the central bank was in charge of gold supply or because there was a gold committee that decided how much

gold gets produced it achieved that stability because it became the most saleable good and so

therefore became the good that contains the most cash balances in the world and the end of the th century everybody

held cash balances in gold and the new production was a tiny little

addition to global production to the supply so that’s what made gold the most

relatively I shouldn’t stay stable because nothing is stable in economics but relatively it holds on to its value

and it’s much less volatile than digital currency than national currencies

that’s because it has the highest stock to flow ratio and that’s because its supply is

a tiny fraction of the liquid market and as the liquid market grows as the size of cash balances grows and trades in

Bitcoin cancel each other out um you get only slight changes in value so I think

as Bitcoin matures that’s going to decline so effectively I think you know the the end game is

Bitcoin is um huge you know Bitcoin is worth something like I think the total addressable

market for Bitcoin is not just national currencies and gold’s addressable market but also government

bonds that’s the really big one so how do banks compare to gold so you’re saying it’ll surpass gold with the

trillion yeah what’s bonds where’s bonds stand so then there’s also national currencies

which are about a hundred trillion and there’s government bonds which are around billion dollars

and sorry trillion dollars trillion two trillion sorry yes we’re saying if we’re saying billion we meant trillion yeah

so you think bonds can move to Bitcoin I’ve always held this is this is the prize this is

the main dish and the gold is the appetizer bonds are the main dish because bonds have replaced

yeah I mean bonds have replaced gold in people’s portfolio people you remember when we were saying gold was um you’d

hold it as a saving as the secure part of your portfolio and then you take risk with the equity currently people do that by holding a

part of their portfolio in bonds that’s the part that they treat as their saving account and then the rest they use for

specul not speculation for investment in which they take risk and yeah speculation and that’s stocks and equity and

other high-risk assets I think Bitcoin is not going to replace equity there will always be equity there

will always be companies and people who want to have equity but it will probably replace a big chunk of current equity markets because right

now if you want to save it used to be that you hold bonds now if you want to save you go into stock indexes

so I think Bitcoin likely eats a big chunk of equity markets because currently

it’s people are using it as saving and I think it eats all bonds that’s my most

ambitious well the question is the scale of time that happens across but the

most important statement you’re making is about trend yeah and also I mean let’s also remember currently bonds

nominally don’t beat inflation and in real terms they don’t come close to beating inflation so

um currently you know with bonds you’re taking on credit default risk to buy a bond and also

getting less money back in real terms well Bitcoin doesn’t offer you returns but in real terms it appreciates much

more and it has I believe a lot less risk associated with it than any company or government so let’s make things spicy

and ask if if Bitcoin fails in the long-term future as all you just said economics

volatility things happen in this world well the human civilization might end in this century I hope it doesn’t but it

might it could be catastrophic events if Bitcoin fails it goes to zero loses its number one

spot what would be the reason if you’re an alien visiting earth years from

now and just were to analyze the situation Bitcoin is a pretty new thing so the possible trajectories of how the

world evolves together with this new monetary technology is nearly infinite so if it fails one

of those trajectories surely involves Bitcoin failing what would be the reason I think the most likely reason that it

could fail I don’t think this is likely in general but I think it is the most likely of all the unlikely things that

could destroy Bitcoin is governments go back on a gold standard

oh interesting so they make in your view a better decision than the current system just not the best decision

yeah and I thought you would go much darker but so that’s yeah okay interesting so

maybe because of Russia because of China and so on because the current war they might reconsider

the power that america holds because of the monetary

because of being the primary currency and they’ll start thinking about going on the gold standard yeah but it would

also require the US and the europeans and everybody to want to join in this system and sing kumbaya

nice with each other around the gold standard I think you know given that gold already is about times larger than Bitcoin so

it has a first mover advantage yes um if governments were to go and peg their

currencies to gold again the price of gold would shoot up um five x

and it would rise in value a lot more of course that doesn’t necessarily kill Bitcoin

no again I’m not saying it’s likely to happen I’m saying it’s Imagine less likely

less unlikely than all the other unlikely scenarios because you know even with a nuclear war like

or half of the planet was destroyed the percent continue to run Bitcoin

there’s a quote okay there’s a movement a community of people referred to as

Bitcoin maximalists I’ve seen you referred at least in the past as the leader

of of the Bitcoin maximalist probably because of your book you know Bitcoin

standard consider the bible in general you’re one of the leaders in this space

do you regret any of the toxicity and derision that often or perhaps sometimes originates

from this community um definitely not I’m not in a position to regret other people’s actions so

let’s just be clear I think the rhetoric of community is

i reject this rhetoric because I think it’s a way for kind of political manipulation and

subversion to try and portray people as part of a community

and hold people responsible for other people’s actions which I think is ridiculous so you know some guy on the

internet said something mean to somebody and then this is very common and it’s I always try and not get involved in

these things some guy who identifies as a Bitcoiner says something to somebody that’s very wrong of course it

happens I mean tens of millions of people use Bitcoin around the world and a lot of these I’d say parasites you

know people who don’t have anything productive to do with their life um you know outrage merchants they’ll come out

and say something along the lines of you know the Bitcoin maximalists are um toxic they’re holding Bitcoin back and

they need and of course it’s manipulative the point behind it is they want to get to you to they want to get

people who are you know not that nobody with followers who said something silly they want to get the notable

people to basically change their message so the idea is you know I’m supposed to apologize because somebody

with followers I’ve never met in my life who calls themselves a Bitcoiner said a mean word and then I need to

apologize and I also need to cut down on my rhetoric about other digital currencies and I need to do that so

I’m only responsible for my own actions and I don’t recall regretting anything

okay but let me push back or push further into that direction fine let’s see community aside labels suck

for sure but you have a spicy way about you on Twitter

now even in this conversation you know you had some some good strong words

I’ve always believed life is too short to mince words one day I’m going to be dead and I’m on my

deathbed I’m not going to look back and say I wish I was a little bit more

circumspect in expressing my opinions I’m far more likely to think you know what I wish I said what I really think

yes life is too short to hold back your opinion the question is what is really your opinion because

you’re you’re many people in one so there’s a person that loves there’s

kindness for the human beings there’s a person that gets annoyed there’s a person that enjoys this agreement as

a person that enjoys collaboration and you can emphasize all of those different things each of those different things

weigh it differently in your online interaction there are some aspects of online interaction that encourages

in different communities online interaction is one community that encourages kind of derision and mockery

and so on so you get you can choose if you want to engage that part of yourself or some other part of yourself economics

is another community that enjoys being like very straightforward about

their disagreements pretty harsh it’s fun to watch because it feels like you arrive at the truth much faster

because you tear each other apart um but you know that’s a choice that’s a

deliberate choice and you mean I don’t want to label an entire community of people by its extremes I don’t think you

should do that but there’s cultural characteristics you start to notice when you go to france it’s a certain way when

you go to britain london is different than rural alberta and you know new york is different than iowa you start to

notice things I mean you don’t want to generalize there’s all kinds of people everywhere but you know there’s a certain way of

communication on crypto Twitter in general but also Bitcoin maximalist that I even early on

received a bunch of heat it’s like what the hell so it listen there’s definitely a

difference when I go to the computer science community machine learning community it’s way friendlier than the

cryptocurrency community um I have much more freedom to actually

be what I enjoy being which is um asking simple dumb questions even when I’ve already spent

years sometimes decades with an idea I like asking dumb questions anyway the crypto folks punish you for this

for curiosity for um like exploration I understand the

mechanism because so many other people come into that community and they might masquerade as q as

curious but really they’re trying to inject they’re trying to sell some kind of altcoin there’s some scheme there’s some

scheme to make money and so I understand maybe that’s just the dynamics of the community by nature it’s not like you

respond appropriately to the amount of charlatans in the community so if the

fraction of charlatans is low maybe you can afford to be more loving and kind and so on and when the

fraction of charlatans is high you have to be harsher perhaps perhaps but I think also you

know the stakes are extremely high in this situation and I think you know if you don’t like Bitcoiners if you think Bitcoins are toxic wait till you meet

fiatus you know the fiat community has financed world wars and genocides and

tyrants and the mass death and destruction the fiat community if you want to use that term I

don’t believe that you should but I mean you know fiat has destroyed the savings of pretty much anybody who’s lived

through the last th century pretty much anybody who’s lived through the th century no matter where you lived switzerland us ethiopia Russia you’ve

gone through fiat problems you’ve had hyperinflation you’ve had bank confiscation there isn’t

a family in the world today that hasn’t had its wealth destroyed over the last century you know they all have a story

about the inflation and the hyperinflation and Bitcoin offers us a way out of this and um coins

altcoins are essentially fiat world’s last gasp

attempt to try and salvage fiat to try and salvage the idea that some people will continue to be able to

print money and other people will have to use that money you know this is Twitter it’s a free market it’s

the internet you don’t have to follow anybody that’s the thing like so I what I found what I find really

objectionable about the people who are so butthurt always about Bitcoin maximalists is

you don’t have to click follow on people you don’t like there are million Twitter accounts

and if you choose to follow the accounts that say things that annoy you and then complain about the fact that they say

things that annoy you I’m sorry but you’re an idiot then you don’t know how to use Twitter just follow the accounts that you like

it’s you know you don’t have to be part of this you don’t have to listen to those people you can choose there are a lot of

Bitcoiners that don’t act like this you can just unfollow the ones I’ve lost since in the past

year man time flies I’ve met a lot of them and I enjoy them a lot and you build that community of people that you

enjoy they’re less the communicating the way you enjoy and it’s becoming meme at this point that I block with love I

think yes because I did not I block very prolifically and I strongly recommend people continue to block I

think Twitter is you know you’re not going to get to interact with million accounts anyway so you want to be constantly curating the experience by

getting rid of people you don’t like and following people that you like and that’s just how you know after years

of using Twitter you know you get you accumulate the block list which is very big which I’m very happy for and

I’m going to pass on to my children it’s in your deathbed your grandchildren

will gather around and your grandfather can finally share yeah the full list

yeah so like again it’s just a Twitter account if it bothers you so much ask yourself why it bothers you that some

people are still I’m not referring to you obviously but I mean the people that are constantly aggravated about this I

don’t get bothered by anything on Twitter I just block immediately and I get to curate the experience that I

enjoy and I recommend people do that it’s really a lot less pathetic than

complaining about strangers saying things you don’t like which a lot of um and of course the reason for it is

you know I mean when I say it’s stupid it’s not really stupid there’s an ulterior motive there then the ulterior

motive is hey I have this coin that I made with five other friends of mine and I’d like you to I’d like to write

your coattails Bitcoiners and I’d like you to please help me promote this like this I get this

practically every week whether through email or through Twitter where hey you know this is our coin um you know

it’s just like Bitcoin but it’s better because it does this and this and that and you know basically how can we get

you to promote this coin for us and being straightforward and forthright is

a great productivity hack because um you know you just tell those people no I’m not interested it’s a stupid

coin and I wish you a quick and swift failure before you take a lot of people’s money

um and that’s what I genuinely think well but i’ll just be upfront with the fact at least for my taste just labeling

everything as a coin worries me so that’s just my own preference it’s not a judgment on you

it’s just my own preference that I’m afraid i’ll miss good ideas I think when you’re me personally when

I’m too certain about things when I um too tribal about things i’ll miss actually

really strong ideas outlier ideas totally new ideas so that that worries

me one one of the downsides of the way Bitcoin is how much it is at stake

financially is that it’s less open to good actually by design that it’s not

changing like with the hard forks and so on that there’s not a kind of curiosity about exploration of ideas

of course in some way that curiosity can start getting ejected when you start talking

about other layers built on top of Bitcoin you start talking about applications or different things like

lightning network that’s where the curiosity can emerge but still like that’s why with with cryptocurrency in general I just tried

to keep an open mind and just the coin as a term is just like a statement that

I’m gonna close my mind to it that’s the way I hear it and but coming out of your mouth

because you say a lot of other edgy stuff it’s just more you having fun that’s the way I hear but if I said

something like that that’s I feel like I would feel like I’m closing my mind I mean let me give you the counter

argument to that how much time do you spend emailing back all these nigerian prince email scams that you know email

you tell you send me five thousand dollars and i’ll send you million dollars none no none why are you being

close-minded to all these great ideas no but I’m also you know maybe one of them will actually

send you million but I don’t know if I know the difference between the nigerian prince and many other people I do talk to who

are colleagues and so on that are also emailing me and they’re also offering me things but they don’t sound

as ridiculously spammy yeah but I mean the moment that somebody tells you hey I’m gonna give you million dollars

for nothing just if you send me five thousand dollars you know you’re getting something for nothing and essentially

with all of the digital currencies it’s the same pitch say hey you know come use this thing that will allow you

to do things that all of the things that they pretend that they can do that can be done with computers without having

digital currencies you know we already have aws that does cloud computing that does everything that coins pretend

to do the only difference is aws doesn’t have its own monetary system tact on top of it to allow jeff bezos to basically

print his own money but don’t you think there’s some gray area so let me let me go for the historical record and let’s

see if you’ve changed as a philosopher economist human being you

tweeted three years ago oh well anyone who believes proof stake can work is either one completely clueless

at how and why Bitcoin works at all or two a con artist using it as a buzzword

to promote a worthless scam like ethereum do you still believe that

ethereum is a scam and in general proof stake you’re either clueless if you think it’s

interesting yeah no I still stand by that um I think the would you classify a theorem as a coin for

sure it’s the um it’s the mother from which the coins spring

the royal the king Bitcoin yeah I think the key thing is you know the way to think about there’s another tweet

from a couple of years ago which is essentially proof work was like the invention of flight like we’ve got in

this machine and we managed to get it to fly off the ground and proof stake is hey we found a great way to make

airplanes cheaper and faster by not making them fly

by keeping them on the ground like the invention of proof work the reason the entire digital currency

space exists is because Bitcoin operates based on proof-of-work if Bitcoin was based on proof-of-stake it would have

died or been shut down from day one but that’s a hypothesis and a lot of people believe that and I think they have a lot

of strong support but basically proof-of-work is is grounded in physics

in the real world the proof stake is more about is politics it’s the federal reserve it’s exactly what we have it’s

exactly what we have it’s just a group of people who get to decide the rules and it’s essentially a a system

that is you know it’s a security it’s a company so it’s not an innovation in any sense it’s a step backward to what we

already had which is you get a bunch of people in charge of the money now the only reason it survives in this

and the reason I call these things a scam and I have no problem with calling them a scam is because they fraudulently

present themselves as being decentralized they present themselves as just being a different way of doing

decentralization than Bitcoin when it’s not it’s just they’re writing Bitcoins codetails and they’re writing the fact

that most people don’t quite understand what Bitcoin is and how it works to portray themselves as a cheaper better

more more efficient way of doing what Bitcoin does it’s not it’s a less

legally accountable way of doing what central banks do right so and the basic criticism is that

there’s a group of people sometimes a very small group of people that can control the parameters of the operation of the system it’s over

time you can’t trust it’s not gold under the mattress it

doesn’t have that kind of heart it’s not properly and I really very strongly recommend your discussion with sailor for people who

want to elaborate more on this there’s a bunch of people in charge which means that um you know legally they should be doing

this under securities law um but even as an anarchist if I don’t want to care about that

the technical implication of it is this is never going to be adopted as a neutral way of transferring value on the

internet because we you need something that enemies can trade with one another you can’t have

something that has a small group of people in charge because a the small group of people themselves can be

corrupted and b they can be coerced you know you can put a bunch of people in a room put a gun to

their head and um you can change everything in any of these digital currencies and that’s why

that’s why I think you know you’ll find a lot more sympathy among theaters to

coins the keynesian economist to ethereum fanboy pipeline is a very

strong one because it it’s the same thing it’s like you like the idea of people being in charge

in money and you think you’re going to be the one who’s going to be in charge of money so you see a lot of this

phenomena and you see the same people that want gold and don’t like central banking they get into Bitcoin yeah so

just to actually push back a couple of things so one is theater it sounds like I’m trying to be

a sophisticated brit talking about theater but

for many reasons it’s not making me feel good about that so you know day by day things change you

used to be one of those so people evolve people learn people that are supportive of Bitcoin might

eventually become supporters of ethereum or go back to supporting fiat we don’t know people evolve for

different reasons you grow up you mature or you become enlightened so I think

every single person sort of as this technology is evolving as this world is evolving

as wars break on the geopolitics changes the monetary system is constantly

put under stress people will evolve so we’re trying to all figure it out together that’s why like open-mindedness

here I think for people like me at least is seems essential I know so I expect you to be

answering all the spam emails you get I will prince by prince by prince but no I

i don’t have a clear understanding what is a good investment of my time what is the good investment of my money

that doesn’t seem clear because things um things are good at promoting themselves

I’m not talking about all the different kinds of things like ethereum altcoins and so on I just mean

life like dating jobs um

friendships like everybody’s advertising themselves is a great investment right um but you

don’t you don’t know and you have to keep an open mind and also you know I don’t um and be sort of self-introspective

about what um how like biases I operate under

and ways I delude myself like hallucinations that I’m living under it’s like breaking you know

breaking out of all these hallucinations it’s very hard to introspect thinking like what are the assumptions

under which I lived my entire life that might be actually false assumptions that’s a really

difficult thought process to take it’s a dangerous one it’s you the nietzsche if you gaze longer to the

abyss the best case into you it’s like alex jones talks about this

i mean he’s living he’s got demons in his head so he has like the all these conspiracy

theories that it holds in his head but it begins to really destroy him so it’s a psychological burden to to carry so if

you question if you question authority if you question government if you question culture the way things have been done

it’s really difficult um and the biases you are operate under

it’s really difficult to question them so I think like being constantly open-minded and self-critical

not constantly but a little bit every day is important I think yeah but I mean you know you’re talking to somebody and

i grew up in ramallah in palestine in the west bank I’ve changed my mind on all kinds of

different things the fact that I was even open to the idea of Bitcoin is required has required an enormous

enormous amount it’s a heck of a journey so I’d much rather appreciate um you know

direct arguments rather than these kind of general fluffy you know you should be oh of course yes you should be

open-minded but you know also you come up with conclusions and you delete spam email sometimes when you know that it is

spam because you have to move on with your life you can’t there’s an opportunity cost of considering every spam email so well to me okay so i’ll

i’ll just say from my relatively sort of shallow perspective

almost like a technical person mostly my understanding of economics is weak um proof stake is not obviously

a weak consensus mechanism relative to proof work so it’s not that’s not obvious to me

that that goes wrong and get becomes corrupted in the way that governments get corrupted because it still

seems decentralized now your criticism of governance is an interesting one but if you put that aside

it still is a decentralized mechanism and it’s more transparent than the mechanism

that governments operate it isn’t it’s exactly what the federal reserve is the federal reserve is a proof stake system the federal reserve is owned by

its constituent banks and so the rules of the federal reserve and the regulations are determined by the ownership which is the banks so it’s

exactly what the federal reserve is but it’s too back door the agreements between the banks and the federal

reserve it feels like a lot of those agreements are made between individuals that sort of behind the scenes it’s not hard

to it’s opaque yes but the only way that a proof stake system will take off is if you have a military to force people

to use it that’s the thing ultimately there’s no way that it’s going to take off on on a

free market and that’s why you know for all of the bluster about wanting to move to a proof-of-stake system ethereum have been saying this

since it’s now been eight years you know they’ve been talking about it they we still haven’t seen the proof

stake system operational in the wild it’s vaporware for all practical things proof stake it’s

potential I mean you can do it in a centralized way but like um can it survive can it last for a long

time I don’t think so and I think um you know it it can last perhaps initially with

marketing with centralized marketing you can promote it but ultimately

user demand the people that are not interested in speculating because they want to get rich on this the people that

are going to use it they’re going to want to use it because they can trust that it is not going to be messed

with yes so like but there’s also applications that I was a lot lightening network but there’s applications on top

like well the reason I’m interested in things like ethereum is you might think it’s ridiculous I thought it was

ridiculous but nfts right so what’s the you can have nfts probably on top of Bitcoin but you don’t

because there’s no marketing on in Bitcoin because all of these ideas get promoted on proprietary coins because yes but

there’s the network effects of ideas of applications so they just take off for some reason and human civilization is

such that you get excited about stuff and large amounts of people believe a thing and they start to get excited it

actually has impact like the fact that nfts can have an impact on the art world or the world in general

is is wild to me but it it worked so well you know the question is david rothko has an impact

on the art world doesn’t say much I’m saying these ideas have you know we’re

collective intelligent beings and we can believe a thing and that has that has power that has led to major

wars and all those kinds of things so the it’s interesting to me that nfts took

hold and the question is is there distributed you know dabs is there’s distributed apps built on top of different blockchains that might somehow

transform the world you have to kind of keep an open mind to that because right now it’s like it’s

like I’m the same place with that as I am with like virtual reality it’s like all right

this seems like a really intellectually promising set of ideas here but there’s something

either technically or socially not quite taking hold why and I don’t know what the right answer

is so with virtual reality what’s the right answer is it just technically the latency is too high or

the games are not good enough or is it a fundamentally flawed idea that you can live in a virtual world and enjoy it

that the physical world is just orders of magnitude better or a two-dimensional display is just

as good as a three-dimensional world I don’t know why is virtual reality not taking off it’s been since the s right

i don’t have strong opinions on it um on on the prospects of the technology I personally I don’t want to ever

imagine myself having something on my eyes I’d rather just go out into the real world um but I don’t have strong opinions on

virtual reality I do have one dabs and nfd’s yeah what’s your criticism of dabs and nfts is this a distraction it’s a

way to sell um a flawed technology the problem with the apps is I mean it’s

just the economics of it makes no sense in the sense that um you know currently um

if you wanted to run an application whatever the application is you want to run it on aws you pay a

specific amount of money you want to run it on your own laptop you pay a specific amount of money per kilobyte of data if

you wanted to run the same thing on a distributed ledger where you’re distributing the data over thousands of computers worldwide it’s infinitely more

expensive and that’s why we haven’t seen any of these dapps take off and that’s why I’ve said this

many years ago the only working application of blockchain technology is Bitcoin because

with Bitcoin you know you’re with a few hundred bytes of data with a few bytes of data you could move a billion dollars

worth of um economic value from here to China and move it safely and reliably so that

power I can’t see it being justified for anything that is not as mission critical

as moving large amounts of value which require very little amount of information so

when you look at all of the buzzwords that the ethereum and other altcoin marketing people like to use and you

know if you want to wonder really why we come to this kind of aggression is because

we’ve heard all of this you know I’ve had all these hucksters come to me for years you know it’s been I’ve had um you

know people in talk to me about how um ethereum blockchain technology is going

to revolutionize real estate deeds in india I remember this guy um

I’m not gonna mention his name but this guy was you know and he sold a lot of coins and he got made

a lot of money off of coins based on the I based on all these silly ideas we can have blackjack on a distributed

ledger we’re going to have indian real estate on a distributed ledger and it’s just it’s concerned trolling

marketing you know oh there’s a problem with real estate in india real estate deeds blockchain fixes this buy my

coin and then people buy the coin indian real estate isn’t fixed and the guy gets rich and they move on

but I mean I’m still waiting for a dap to actually emerge like you know it’s

the promise that we keep hearing is something completely world changing world transforming and the reality is

not one app like there’s one of my good friends jimmy song eventually they refused to go ahead with

it but he wanted to bet with one of the ethereum people about about these dapps you know the

ethereum people are constantly saying those daps are going to grow and they’re going to have so many applications and they’re going to have so many ideas and

the reality is all the apps that work are centralized apps you know so there is no

uber on the blockchain there is no um Twitter on the blockchain there is no

social media on blockchain because these are businesses and businesses require centralized authority to make decisions

you can’t have it be decentralized yeah listen you’re frustrated and I could see it over a few years of just having dealt

with a humongous influx of charlatans I wouldn’t say frustrated I’m amused

it’s no it’s water off my back no but a man that uses in a community that uses the word

coin is a little bit you have you call it amusement and I think amusement is the way

to deal with the frustration it’s a channel in your frustration like la sometimes when

you have to deal with the best way is just to laugh at the absurdity of it all and that’s what you

mean by amusement um but the fact is like

there’s things like artificial intelligence for what is it how many decades six seven

decades has been off and on promising to change everything

and it has failed time and time again to deliver to the promise

but that doesn’t mean there’s something fundamental and really powerful about both the small and the big things going

on within the actual research and development within those communities there’s a lot of exciting

developments and the scale at which those developments might actually have a transformative impact the time scale is

unclear it seems like we all certainly over promise we dream too big

and too aggressively in the ai community but a lot of yeah and I’m happy to give people the benefit of the doubt when

they’re over promising but not when they’re making their own money when you start making your own currency then you

don’t get the benefit of the doubt because if your idea needs you to have a new currency that you print when Bitcoin

is out there then I’m gonna go ahead and assume that you’re doing this for them good time to mention that I am actually launching

my

I’m gonna have to block you with love okay um one thing I wanted to ask you

about is the fed’s this paper they released in january th

on the potential central bank digital currency cbdc what are your thoughts about that is it just another like is

there pros and cons to this is it all interesting to you that they’re even considering this kind of thing I used to

think that it’s um it’s just basically um waffle it’s meaningless

because as it exists the dollar is a central bank digital currency right the vast majority of dollars are digital and um

but I think the way that over the last couple of years I’ve changed my mind on this I think this is that there’s some serious substance behind these ideas

and what they mean effectively is the disintermediation of the banking system

and giving everybody an account at the federal reserve this is this is kind of the really dangerous

idea and I think this is enormously significant effectively as somebody who’s lived in the soviet union what this is is the return of the

ghost bank on a global scale with modern technology so under the soviet union there was something called the goss bank

or people’s bank and that was the only bank in the country and you had an account with the national bank

and you know if you said something wrong your money got terminated from the goss bank now

imagine that combined with the power of digital technology and you can see that this could

be an enormously powerful um technology really because if banks are out of the picture then we

change the fundamental reality of fiat as being the creation of money through

lending and then it becomes the creation of money truly by fiat by government fiat so we move to a system in which

money is just basically it’s like we have money that is pieces of paper and every time we’ve had

money we’ve had fiat money that was just pieces of paper it collapsed very quickly

with the current system money is credit and the creation of credit is restricted to some point and the creation of credit

is self-correcting I discussed this in The Fiat Standard if you if if the central bank allows banks to create too

much credit that creates a bubble and then there’s a collapse in the money supply which prevents hyperinflation

from happening because the you know the money creation is self-destructive it’s self-correcting so

you end up with an average of like seven percent per year increase because you have ten percent for five years and then

you get negative for one year and it’s correcting but now if you get rid

of the credit creation mechanism and it’s just assigning money directly we’re likely going to get much faster

inflation and I think the that’s obviously a huge problem and perhaps the even bigger

problem is the enormous amount of power that it gives to governments it’s it allows them

to create an awful dystopia where you know you’ve got your money

on your phone and anything you do is completely supervised

and controlled through your spending so they want to introduce a new lockdown then they’ll just make your money not

work you know your money’s broken today you can’t spend money or you can only spend money in your local supermarket

for the next three months because you can’t leave your neighborhood your money stops working outside of your neighborhood you know the chinese

social credit score system is an example of this and I think I don’t know I don’t

have a crystal ball so I don’t know what the likelihood is of implementing something like this in the u.s

um I’ve discussed it with michael saylor he thinks it’s highly unlikely he thinks you know

the people who’ve been pushing this are very far from the position of power and the traditional monetary and financial

system is going to survive intact I certainly hope so I think this would

be a terrible thing if it comes to pass but I don’t think many people think that it is something that would undermine Bitcoin like a lot of common objection

to Bitcoin is well government searches can launch their own digital currencies and then Bitcoin is going to die and I think this

is completely missing the point people think Bitcoin is important because it’s digital it’s not

national currencies can be digital Bitcoin is important because it’s not inflationary and because nobody controls

it central bank digital currencies are likely to be very inflationary and they’re likely to have very strong

control at the top so if anything they are an advertisement for Bitcoin rather than a replacement for it if it’s

Bitcoin if it’s gold’s away from multiple nations to partake so if you were to imagine a future where

we move from the Fiat standard back to the gold standard and then to

the Bitcoin standard or skipping that going directly to the Bitcoin standard

what would it take is the gradual is immediate what are possible trajectories that take

us well basically where the final sort of empirical observation is that you overtake

Bitcoin overtakes first gold and then bonds in terms of its of monetary

power in the world but like just specifically from a government perspective how how do we

move the united states China Russia india european union

to to a Bitcoin Standard I’m not entirely concerned about whether governments move or not in fact I’d be

very happy for them not to move as long as possible so that individuals can accumulate more

and more Bitcoin while it’s still cheap so the people will move

and the governments will catch up yeah and I think this is kind of what I allude to I mean the point of the fiat

standard Fiat Standard is really a Bitcoin book and it talks about fiat most of the time but it’s

does so to analyze Bitcoin and the rise of Bitcoin in the final chapter I discuss how I think this relationship plays out

um I the way that I tend to think of it is that most likely what’s going to

happen is we’re going to have kind of financial apartheid where there’s going to be two monetary systems

one is government controlled and it comes with increasing amounts of surveillance and inflation

and then if you want you can just opt out of that and get into Bitcoin and

it’s likely going to be difficult for governments to stop people from getting into Bitcoin

for all the technical reasons that make it very hard to stop Bitcoin so then we have this alternative that is

Bitcoin which is not inflationary and does not have a central authority that

can censor it I think um gradually is my hope and I also think my

most likely scenario but maybe I am biased because everybody thinks what they want is

what’s going to happen I think we’re just going to witness you know the same relationship because

governments make their currency so that they can devalue them and Bitcoin thrives on that and more and

more people are going to learn more and more people are going to find out and whether it’s through

curiosity or self-interest or through the destruction of the national currency all roads lead to Bitcoin so more and

more people are going to buy Bitcoin the price of Bitcoin is going to go up and as it goes up Bitcoin becomes a more

significant part of the world economy and this is this is something that the skeptics don’t get like a lot of the academic

skeptics to Bitcoin you know they they offer up all these theories about why

they think Bitcoin can’t work and then they present it and they think you know they’ve delivered the knockout blow as

if Bitcoin needs their permission or the word is going to need their permission well the reality is people are going to join Bitcoin out of greed out of

self-interest number go up technology is is really what’s going to get everybody

in yeah and that’s really the trojan horse for fixing the world you know come for the

greed and stay for the revolution it’s gonna keep going up because people don’t like to be poor um except for most

economists and academics people don’t like to be poor people don’t enjoy getting their wealth

destroyed and they care more about their self-interest than they care about economic theories about whether this

works as money or not they see their cousin escaped hyperinflation managed to get a bigger house because they bought Bitcoin

five years ago they realized maybe I should stop um mocking my cousin and start buying more Bitcoin and this is I

think an indomitable force that’s going to continue and one thing

um most Bitcoiners tend to lean toward an apocalyptic transition you know the fiat

is going to collapse we’re going to get hyperinflation everything is going to be terrible and then we’re going to move to Bitcoin

and I present the case for why I think maybe that might not be the case maybe we won’t get this kind of apocalyptic

scenario and it’s because and this was like the conclusion of The Fiat Standard which is

once you realize that mining fiat is creating debt and Bitcoin is allowed so in order to

have fiat money we need to have people borrow we need to have people make loans and

the problem that fiat money runs into today is that if you want to save money if you want to hold savings

you have a problem where do you put your savings so you put your savings in debt in the creation of more bonds

wherever you take your savings you create a bubble in those things and this is why we see a bubble in the stock market a bubble in the bond market

bubbling housing it’s because people are looking for savings looking for a place where they can save all of those things

are crappy saving instruments because they’re like they’re like copper in that there’s

nothing to stop the people behind them to make more of them house builders can build more houses

governments can issue more bonds um the crappy fraudulent companies can list on the stock market and make more

stocks well Bitcoin finally offers us an outlet we don’t need to keep creating more debt

we can invest in this asset that is hard and that is internationally liquid

and that nobody can make more of so there is no bubble in it there is no mechanism for

somebody to increase the supply and bring the price crashing down like with copper and real estate and bonds

so Bitcoin is the way out and this is why I think there’s a good case to be made for why the fiat authorities

might embrace Bitcoin because they’ll see it is their way out of this enormous

debt bubble that everybody is stuck in particularly the richest and most powerful people in the world

and the richest and most powerful governments in the world are the world’s biggest borrowers they’re the ones in a lot of debt so a continuous slow

devaluation of the value of that debt as people upgrade and move on to a hard

asset that continues to appreciate is the way that we is the peaceful way that

we wind down the fiat ponzI think you could see it being like a political part of a political platform for future

people that run for president those kinds of things to address obviously

it’s not just for the powerful and the rich the people are bothered by the debt

the people are bothered by everything that you describe with fiat and if you want to

sell yourself in a democracy as a good leader you might want to make that part of the platform you mentioned you know

michael malus he just texted me asking me to ask you

what do you like best about michael malus if you can spend five to ten to twenty to an hour talking

about the genius of michael malus what um what do you like where does one even start well obviously the haircut first

yeah he just gets sexier with age that’s for sure that’s yeah um do you know his ideas

his trolling and humor have you gotten a chance to interact with him yes yes I’ve met michael maybe

years ago in new york I used to live in new york when he used to live in new york I met him a couple of times there was an

um a bunch of anarchists in new york used to throw a happy hour once a month it

was called the high time preference happy hour in honor of hanzo manhatta so I met him

there a couple of times and we followed each other on Twitter for a while is it interesting

that you’re aware of philosophical differences in your world views um no I think we pretty much see eye to

eye um I think the difference is mainly that he’s he spends a lot of time focusing on

american politics and american pop culture which I don’t pay much attention to I guess so you look more

at the monetary system the economics of it all and just the history and just looking at zooming out

at the big picture of it although recently he’s working on a book called the white pill

and he’s been every every time I see him I mean he’s in some dark aspect of the th century

he’s just like I just finished writing about holland holomore as you might imagine he’s not taking

much I believe of a monetary perspective on things his book his writing at least for for

time his um kind of philosophical ideology perspective that as a

but you argue that those are actually inextricably linked but yeah and I don’t think he would

disagree but it would but a book has to be you know can only be so long I suppose

it can only focus on so many things if you can put on your wise sage hat

and give some advice to young people I mean you know the past four hours have been a kind of advice but if you can

focus and if somebody in high school or college is thinking about what to do with their career can have a

successful career or to have a life they can be proud of what would you tell them I’d say probably the most important

advice that I would give is to find a way to give value to other people and this is really the key thing you need to

wake up every morning and figure out how to serve others this is this is the key to everything you want

in life everything that you want is on the other side of you serving others so

figure out how you can serve others in a good way how you can do it in a way that they value and you’ve got an incredible

mechanism for figuring that out which is the market go out there and do things for other people and um you know the market will

tell you the market will tell you exactly if you’re young you have the enormous advantage of being able to make

things make mistakes essentially and learn from them so go out there do things of value for

others figuring out how you can do something that pre-contra what is it that you can

do that contributes the most value to other people’s lives and increasingly I think with the modern

technology this is increasingly becoming online and it’s I think you know you should consider how

you can create value online because that sk scales beyond anything you can do in the

physical world in a very very well maybe not beyond obviously there are profitable businesses in in

in the physical world but I think online is enormous potential and coding I think is enormously

powerful I’m not a coder myself but I strongly recommend people get into learning how to code

and I think it’s probably the thing that carries the most power so initially we were working with

our hands we started working with machines machines are much more productive well code is an even higher

level of productivity where you basically program the machines to produce things so

um you know few clicks of a keyboard and you can move millions of machines around

the world in certain ways so it carries an enormous amount of value I think um

i always tell all young people to learn to code it’s the best thing I used to tell it to my students when I was at university I tell them to drop

out and go learn to code it’s probably a better use of their time and money we could probably do both

yeah university has an interesting function I mean probably you and I have different perspective on this probably has to do

with a little bit of a different journey in terms of um fields because I’m so

I’ve stayed engineering focused for a long time and there’s less some of the troubles you might highlight in the

education system there’s less troubles of that kind in engineering because

math hasn’t changed for a long time so yeah it’s a lot of it is just doing hard

things being forced to do hard things and becoming a bit of a generalist while

on the side you’re also becoming a specialist based on your own passion by your own

passion so school at least high school I don’t know about the university but high school

that’s a really nice one of the only times in your life at least in my life

i was forced but now I see given the opportunity to spend my

entire day learning broadly and that’s something I don’t know the way time works it just runs away from

you never really get a chance to do learn quite that broadly again yeah that’s the curse of

specialization is you kind of never get a chance to study biology chemistry if you’re a physicist on you

know time runs away from you so it’s enjoy the broad the broad education of it but yeah

like you said find the things that valued by the market

and on the other side of it you said all the good stuff so that’s also a way to get happiness

yeah and I’d also add the horse that I like to whip all the time is the low time preference aspect of things

saving with Bitcoin so I think my advice to young people is you know when you’re young you think of the world in the very

short-term generally you’re focused on the present and you think that everything that’s happening in the

present is the most important thing that’s ever going to happen in the history of humanity lower your time preference think about

the future think about think further down the line think about the consequences of the things that you do

and then what you know and so you do this now it feels good today but then what happens tomorrow you know you go

out you drink you enjoy yourself well think about the hangover but more in long-term think about the implication of

living this kind of life think about every decision that you make the long-term implication of it

and part of that is Bitcoin part of that is um save in Bitcoin I urge everybody to put savings in Bitcoin for the long

term don’t buy Bitcoin for the short-term you know don’t buy Bitcoin today so that you can sell it you don’t put your

savings in Bitcoin today so that you can sell it all next month and buy a house put money in Bitcoin that you expect to

keep in Bitcoin for another five ten years or so at least four years is what

i recommend for people so keep a low time preference focus on the future and saving Bitcoin and learn about how to

buy Bitcoin how to learn about all this technology part of this is this conversation but there’s so much awesome

material out there and thank you by the way for this gift of a hardware wallet

so you should definitely invest in it yourself and what would you call this these are open

dimes open dimes yeah so this is like usb that you can like a hardware device that stores

Bitcoin yeah so you don’t have to worry about us knowing the password it contains the password within it and it’s tamper proof

so you can save the Bitcoin on it and so when the apocalypse comes you need the value to be stored an

actual thing that you can have in your physical possession yeah that’s exactly what this is um you’ve had a heck of a life

you’ve been in a bunch of places in this world a lot of places life is not easy

in some of those places what has been if you can take a step to

to maybe a bit of a dark step for a short time what has been

maybe darkest time period place you ever gone in your mind a dark period of your of your life

a struggle they had to overcome it to survive well I’m palestinian so that is the

tragedy of my life I’m palestinian jordanian my family’s

suffered a lot because of this historically I grew up in ramallah in the west bank it wasn’t

[Music] ideal to see that um people like to think of it as this intractable conflict between two bitter

enemies but um the reality of the matter is that it’s not a foreign ideology came in with the idea

that this country needs to be occupied by people from only one religion and the existing population

which you know I mean jews had always lived in palestine historically and at the turn of the th century they

were only of the population but then with the birth of fiat money incidentally you know the link with all

of this is that um when the bank of england went off gold a big reason why they were able to

pull that off was that the rothschild banking family supported them and in exchange the rothschilds got palestine

and the balfour declaration was written by the

government of britain to the rothschild family telling them that um

they’d like to make um palestine a homeland for jews so obviously that’s not very convenient

for people who are not jewish for whom that is a homeland and the past years has been a very painful struggle

if you happen to not be jewish and obviously you know obviously palestinians have done all

kinds of things trying to fight back and they’ve done all kinds of wrong things but I don’t think you can escape the

fundamental reality underlying this which is that if you’re not jewish you are

being moved out of the land and so it’s happened in it happened in my fam

more land was taken over by israel now you see it with the settlements um you know if you ignore the day-to-day

headlines and you ignore the media propaganda and you ignore all of this thing there’s a very clear thing that is

happening which is more land owned by an exclusive

ideology that believes this land needs to be owned by people from one religion and everybody else is being

kicked out and so that is the that is the tragedy of my

life and my wife is also a palestinian refugee from lebanon and her family was

evicted from jaffa which is today on the outskirts of tel aviv

they still have their homes in yafa their homes are being lived you know they got kicked out of their homes and

their lands and their property they became refugees in lebanon so my children you know it’s it’s an

ongoing tragedy it’s not something that is um a lot of the people that think of it

as you know they think palestinians are just out there to get israelis because they hate them but it’s a it’s an

inescapable tragedy I don’t have a home anywhere is there an escape from this tragedy in the future that you see

if you zoom out across the scale of decades will we see

i hesitate to say peace but

a significant decrease in human suffering in this part of the region I certainly hope so and I think um you

know my interest in Bitcoin comes from came from a place of desperation with

um the situation there traditional politics is a dead end um

i don’t see what I can be doing to make things better there using traditional politics and I think a

good friend of mine pierre richard you may know him on Twitter um one of the brightest minds in Bitcoin in my opinion

he told me his theories that Bitcoin is going to bring peace to the middle east because land is a coin

[Laughter] and land is a coin I love it and I think he’s got a very good point there

that the this fixation with land and the bitterness of the with which people um have to the land is

likely to decline when people are going to have a form of property that they can keep and so

hopefully that will help in one way and of course the more obvious way is that

this is a conflict of governments and it’s a conflict that is financed by fiat and from day one you know the entirely

insane notion that you could um build a national and ethnic homeland and of

course you know this is the early th century so the idea behind zionism is coming from

the same place where all these other ethnic nationalisms of europe were emerging and we saw how

well how how horribly these worked out but the idea that you could you know it’s one thing to say we want

to build a homeland for germans in germany it’s one thing to say we want to build the homelands for germans somewhere else

and that was that was um palestine that was zionism and that was only possible

thanks to fiat thanks to the ability of the british government and all these other governments to continue

to finance this colonialist effort over time and you know it continues to finance war and

it continues you know we see war all over the world continue to escalate because

um the people who make the decision to escalate the war are not the ones who are paying for it and they’re not the ones who are fighting they’re the ones

who sit in offices and in the case of you know most of middle eastern conflict it’s

it’s people who live abroad you know it’s people who are abroad or not part of it who just are emotionally

charged to it because they watch it on tv so you know you have billions of muslims around the world and um

jews around the world who feel extremely emotionally attached to it they’re not the ones fighting they’re not the

ones paying their own money they’re just getting governments to send money and to send weapons and take part

and um it’s fun as a spectator sport for most of

these people because they don’t get to live in it but I got to live in it I saw it I grew up there I saw

i saw the settlement expansion and you know recently a few weeks ago I went back to ramallah and it’s just

it’s amazing every time you go the settlements are just growing in an astonishing way like it’s

it’s not just housing units that are going up it’s an entire attempt to build

to basically suffocate palestinian areas and force palestinians to leave or

keep them living in horrific conditions and if I may just because I have family in

Ukraine have family in Russia since this war echoes of similar things are happening

in that part of the world too and I shudder to think about the decades to come

of the hate that is brewing the suffering that is brewing based on decisions and pressures and

from not always people directly impacted by this so again

it feels like that military conflict is not just a creation of

like people on the ground it’s the creation of leaders power centers and um

and perhaps again I’m not smart enough but even the monetary system probably has a role to

play I absolutely think it does monetary system is what allows um is what allows people to just continue

to treat war as a spectator sport yeah that’s that’s really what it comes down to and it starts with world war one and

it’s continued and this is why I really I think I’ve said this before um I’ve

tweeted this before and it was a pretty popular tweet but it also got a lot of people um to to dismiss the idea with

mockery of course but I really think Bitcoin is the only technology that’s going to end world war

one once world war one started we got into this endless conflict it’s been going

ongoing since then if you look at all the world’s conflicts today pretty much they all trace back to world war one

and it’s because when that pandora’s box of government control of money was

opened there was no longer a real restraint on war except complete defeat and complete

destruction and complete death the war had to be total before that you know and then

under the gold standard kings would send professional armies to

fight each other in battlefields and as soon as it became clear that one

side was establishing an advantage the fighting would stop and the king would the kings or the would

settle you know would agree to new terms because it was extremely expensive to build a professional army and you ran

out of money so it was always the smartest thing to do is to just stop fighting whenever you could

and wars would take place you know countries would fight each other in the battlefield but in the cities life went

on as normal and people within the same cities within the cities of the two countries would be trading with one

another life would go on but the war would be there and it was just an an

independent part of politics that all right we have a problem over this piece of land let’s do it and let’s take it

outside we don’t fight in the civilian areas we go to the battlefield we fight with professional armies and in fact

sometimes the conflicts would be you know the armies would line up and they would just have a small

contingent of the two armies fight with one another and as soon as one of them establishes an advantage then

um all right well you won let’s move on with it governments were far far far more

careful about their monetary policy and their sorry

their war policy when they couldn’t print their money and that has changed with fiat and that has allowed this new

emergence of this class of what I like to call chicken hawks of people who sit in offices like the

entire foreign policy establishment in washington dc people who have never fought and war

whose children will never fight a war will never pay to fight a war who’ll never suffer a broken window in their

house because of war sitting there and based on these moronic garbage that they teach at

moronic fiat universities about politics and geopolitics making decisions about you know we need to invade that country

and we need to send war there and they can do that because they have this endless money printer where and that’s

why you know back under gold if you were a warrior you know you went and actually

joined the war and that you know the people who pontificated about war were the people

who had experience with war the people who were sending their own children to war the people were fighting with their

own money now you have all these fat parasitics come sitting in washington dc deciding

and washington’s just an example but all over the world this exists people have never fought will never carry the

consequences who are going to devalue the world’s money in order to go and

have other people’s children fight each other because of stupid garbage they learned about

politics in university you said you value low time preference

um but I have news for you that one day you will die as far as we know you’re a

mortal being do you think about your death do you think about your mortality

are you afraid of it I’ve spent a lot of time

introspecting and thinking about these things and I value life a lot I value my time on

earth a lot and you’ll see this in my dealings with people you know go back to Twitter why am I so brash and

straightforward it really is because life is short because I don’t want to waste I think you know on my

I’ve I’ve said this before on my tombstone let it be written he

never let anyone waste his time twice in his life is short yeah you can waste my time once

you can get me to do something and then I realize that was a waste of time you will never get me to waste my time twice and so you show up in my Twitter with

something stupid you’re never showing up you’re a fast learner you give people a chance but you’re a fast learner yeah so

i try and I try and use my time very wisely and I’m unapologetic about it it’s my time is the most precious thing

and like the way to get on my side on my list forever is to try and

take away my time and to abuse my time if you do that I’m it’s the one

that’s the one unforgivable sin for me and I think that’s that’s really I think that’s my way of coming to terms with

mortality we’re all going to die and so let’s make the most out of it while we’re still here and of course the other way you come to terms with mortality is

you have children given what you just said um

doubly so it’s a huge honor that you will spend your valuable time with me this is the first time you did it so you

probably regret all of it so we’ll probably never see each other again but I’m glad this has been great took

the chance to do it it’s a huge honor and I’ve been a huge fan of yours thank you thank you thank you impact on the

world that you probably are not even aware of it’s tremendous and a lot of people love you and your work is

important even you know I disagree with some things you say and there’s people that disagree with you but

everybody respects you and thank you so much for spending your really valuable talent today brother thank you sir

really appreciate it this was not a waste of time and I’d be happy to do it again thanks for listening to this conversation with safety and moose to

support this podcast please check out our sponsors in the description and now let me leave you with some words

from the austrian economist friedrich hayek economic control is not merely control

of a sector of human life which can be separated from the rest it is the control of the means for all our ends

thank you for listening and hope to see you next time

you