Is Your Money Losing Value? How to Stop Losing and Start Building Wealth | Robert Breedlove (Replay)

No one wants to hear that the money they save today will be worthless tomorrow, and yet no one can deny that inflation is hitting everyone at the grocery store. What does this all mean and what can you do about it? You’re living through a recession that the government can’t seem to agree on or admit to whether you like it or not. Robert Breedlove hosts the podcast, ‘What Is Money?’ has joined Tom a few times and broken down the complexities of money, inflation, and property rights. He’s a freedom maximalist, and bitcoin philosopher that offers food for thought that can melt your brain. His breakdown of inflation being a version of legal theft should grab your attention as it’s hard to ignore once you hear his explanation. We’re digging into key ideas such as: The money crisis How bitcoin is impacting future creation of wealth How you can better thrive during this financial crisis It always comes down to decision and how you choose to move through reality as it is not how you wish it were. [Original air date: 2-16-23] CHECK OUT OUR SPONSORS Range Rover: Explore the Range Rover Sport at https://landroverUSA.com https://landroverusa.com/ Rosetta Stone: Check out Rosetta Stone and use my code TODAY for a great deal: https://www.rosettastone.com https://www.rosettastone.com/ Betterhelp:This episode is sponsored by BetterHelp. Give online therapy a try at https://betterhelp.com/impacttheory and get 10% off your first month. ButcherBox:New users that sign up for ButcherBox will receive 2lbs of 100% grass fed ground beef in every box free for the lifetime of their subscription + $20 off your first box when you use code IMPACT at https://butcherbox.com/impact Netsuite:Spend less time looking backwards, and more time on what's next. Download the CFO's Guide to AI and Machine Learning at https://NetSuite.com/theory https://netsuite.com/theory Goldback: Goldbacks are currency for now, and for the future, get yours at https://impacttheory.co/GoldbackITNov Miro: Bring your teams to Miro’s revolutionary Innovation Workspace and be faster from idea to outcome at https://miro.com https://miro.com/. Legal Zoom: Launch, run, and protect your business at https://www.legalzoom.com/ – use promo code 'IMPACT' for 10% off! Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact Follow Robert Breedlove: YouTube: https://www.youtube.com/channel/UC43_LTf5Z4lbRjKCq0sIAVg Twitter: https://twitter.com/Breedlove22 LinkedIn:https://www.linkedin.com/in/breedlove22/ Podcast: https://whatismoneypodcast.com/ Instagram: https://www.instagram.com/breedlove_22/ What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business: join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business: see if you qualify here. https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox: sign up here. https://tombilyeu.com/ If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. Join me live on myTwitch stream https://impacttheory.co/4fitmnJ. I'm live daily from 6:30 to 8:30 am PT athttps://cms.megaphone.fm/organizations/0482bfe8-8502-11ed-af5d-3bdc320068d7/podcasts/0a41f61a-9ddf-11ed-9eb7-dbb3a40775f5/episodes/8ac68366-8a85-11ef-bb65-abca3ffdcf54/www.twitch.tv/tombilyeuwww.twitch.tv/tombilyeu https://impacttheory.co/4fitmnJ LISTEN TO IMPACT THEORY AD FREE + BONUS EPISODES on APPLE PODCASTS:apple.co/impacttheory http://apple.co/impacttheory FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

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• 0:45Tom Bilyeu?

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• 1:11Speaker 01

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• 1:37Tom Bilyeu?

  Oxygen, pretty important for human life. There's no price on it. Why? It's not scarce. Something like diamonds, not that important to human existence yet, has a huge price because the demand way outstrips the supply. The unique thing about scarcity in money is that money is always scarce. All right, I want to walk through one thread. All of this is me taking liberty from you. So tell me where I go astray here. But this was a chain of events that I was like, oh my God, I now actually understand what's going on, and this is terrifying. So you've got...

• 2:12Tom Bilyeu?

  World War II happens and you've got people invading countries and raiding their gold stores because why would you invade if you're not going to get something, if you can't steal something? These are your words. So you invade a country, you steal their gold. So people are like, fuck, I don't want to get invaded. So they started, or if I do, I don't want them to be able to steal my gold. So they started sending gold to the US. US ends up storing all this gold for people, has a massive amount of gold and gold historically, basically money as we think of it, the tangible dollars and bills, you would store gold in a protected warehouse somewhere and they would give you a paper that represented the amount of gold. So people being savvy started trading that because it's as good as gold because you could go and cash it in. So now

• 2:56Tom Bilyeu?

  the US post-World War II has all this gold coming in and we then after World War II have the Bretton Woods Convention. I'm not sure what it was exactly, but they say, hey, we've got all this gold now. We're going to make the dollar, the central reserve currency, global reserve currency, excuse me. And, but it's all backed by all this gold that we have. So, hey, we're good. But in 1971, for reasons that you will have to explain, Nixon decided to take us off of the gold standard. So previously to that, if you had a dollar, you could actually go redeem it for gold.

• 3:32Speaker 02

  Yes.

• 3:32Tom Bilyeu?

  Now you couldn't and it was fiat. It was by decree. I say that this dollar has value and therefore it has value. The problem is that's married to something that happened at some point in the early 1900s that you will have to explain, the beast from Jekyll Island, where we decided to create a central bank, which isn't owned by the government, right?

• 3:54Speaker 02

  Correct.

• 3:55Tom Bilyeu?

  Which I still can't believe is true. The Federal Reserve is not the federal government.

• 3:58Speaker 02

  It's not federal and it has no reserves.

• 4:00Tom Bilyeu?

  It's fucking crazy. Like this is where I'm like, language matters. Well played. That's a very good way to get me to think that this is a government. Alright, so we now break with the gold standard and so it's, we can literally print money. So as me, the ignorant guy that's spent his whole life trying to make money, knows nothing about investing. I make the money. I think I- I am safe actually putting it under my bed only to realize that there's actually somebody that has the ability to go print or go burr, right? And they can press a button and it just makes more money. And therefore with more money floating around, you've got more people competing to buy that loaf of bread or whatever. So the cost goes up as one would naturally expect. And so now,

• 4:43Tom Bilyeu?

  even though I theoretically have my assets are going up and yay, I have more money. But I I either have the same buying power. So it's just an illusion or I actually have less buying power and it's actually devastating. And so now we get into this crazy making loop of it seems like I should be getting ahead, but I'm not getting ahead. I think of inflation as being a natural act, but really in the background are people making these decisions and we will grant them that they're being kind. They're trying to do something nice. They're trying to level out volatility. If I had to guess is actually their motivation. Uh, but they level out that volatility by um, creating debt cycles.

• 5:22Tom Bilyeu?

  And devaluing the currency, which you are saying mechanistically it just isn't different than theft.

• 5:31Tom Bilyeu?

  But when people think of redistribution of wealth as a good thing.

• 5:39Tom Bilyeu?

  Is that just another crazy making thing? Or are people right to think that, no, this is good. We should be redistributing the wealth?

• 5:45Speaker 02

  Well, that's a good, long question. Um, I would start with this. Yeah. So let's do this. Wealth redistribution, first of all, no one ever thinks it's a good thing when they're the target. No one ever, no one ever wants to be redistributed from. No one ever voluntarily gets redistributed from. That would be giving up value or wealth or capital for nothing in exchange. I don't think anyone. I don't say no one ever, but typically no one ever will enter that um, agreement, let's say. So maybe we'll track this arc. We'll do what is gold? How did we get gold? Why and how central banking was introduced? And then we'll get into um,

• 6:29Speaker 02

  really what's happened post 1971. So.

• 6:34Speaker 02

  And I love this question, by the way. What is money? Right? This is the name of the show. And this is the, I think, the key to incepting these ideas into people, or at least getting people to question their socioeconomic reality such that they can peel back the layers of this onion and see through some of these euphemisms we've been getting to, or we've been given. And one definition of money, this is the Austrian economic definition, is that it's a universal medium of exchange. So, again, capitalism is built on free exchange, built on voluntary action. All right? Self-ownership, you go out into the world, create things of value, you trade them with other self-owned people.

• 7:17Speaker 02

  The result is, we create more output per unit of input. We become more efficient acting in concert than we do acting in isolation. This is the division of labor. This is the reason wealth and riches exist, because we specialize and we trade with one another. In that process, something necessarily becomes most exchangeable or most treatable, right? By definition, if we're all trading with one another, there's going to be a single asset of that flurry of trading activity that is the most liquid asset, the most treatable or exchangeable asset. That is money. That's how money emerges in the marketplace.

• 7:59Speaker 02

  It is not a government creation, has nothing to do with government, other than the fact that they monopolize it and try to control it to control people. And when you look at money from that first principle standpoint, and this is from the Austrian School, there's a deep, long literature on this, you'll see that money needs to exhibit five key properties. And this is an important point.

• 8:25Speaker 02

  We typically think that we want the thing, right? We want the table, we want the car, whatever. But we don't. We want the services the thing renders to us. So you could think almost in the world of economics, there are no such thing as goods, if you will. I know there are goods, I know there's tables, I know there's cars. But what we are after is what services those goods provide to us. So when we look at money, the five properties that market actors voluntarily favor, you could also think of as the five services we seek from money are divisibility, durability, recognizability, portability, scarcity. So I'll walk through each one of these.

• 9:10Speaker 02

  Money needs to be divisible. Pretty obvious. You want to transact at different scales. You want to buy coffee in the same day that you go and buy a house, right? So you'd like to be able to give someone a coin or send someone a wire for 10 million bucks to buy a house. Pretty obvious. Money needs to be durable in that it's not going to corrode over time. If you put a bunch of gold in a safe, it's not going to decompose, right? The half-life on gold is way longer than matters to any of us. If you put a bunch of oranges in the safe and you're using that as money, that's going to rot pretty quickly. So clearly durability matters. Money needs to be recognizable, which means that each trading party can verify its authenticity.

• 9:55Speaker 02

  So at every transaction, and I'm handing you dollars, you can certify either with that little pin they mark on dollars to make sure it's a legitimate, you know, US Federal Reserve issued dollar. Or if it was gold, back in the day, they had different techniques for assaying the gold's authenticity, making sure it wasn't lead plated with gold. In fact, the name "sound money", which you've probably heard in your explorations of the rabbit hole, that referred to the sound a gold coin made when dropped a certain way. So you could verify its authenticity by the sound it would create. And this is another reason we introduced coinage and currency because to verify money at every transaction is a very significant transaction cost.

• 10:40Speaker 02

  Transaction costs are dissipative to trade, right? If we want to increase trade and increase wealth, we want to reduce transaction costs. So by abstracting into currency or putting it in a warehouse and trusting the warehouse custodian, we can now trade much more quickly and more efficiently. So that, I mean, that's, that's one aspect of money that coinage and currency helped was recognizability. Money also needs to be portable. Pretty obvious, you want to be able to move it across space, right? If I'm buying something in another city, I need to get my gold or dollars to the other city to give it to the recipient. Finally, and most importantly, money has to be scarce.

• 11:23Speaker 02

  And now we typically think scarce is purely a supply-side function. That's not what scarcity means. Scarcity occurs when demand outstrips supply. So when there is more appetite for the thing, then there is a supply of the thing. Okay, so oxygen, pretty important for human life, there's no price on it. Why? Not scarce. Not scarce. The supply way outstrips the demand, right? Something like diamonds, not that important to human existence, yet has a huge price because the demand way outstrips the supply. The unique thing about scarcity in money is that money is always scarce because it's

• 12:07Speaker 02

  a call option on everything. All the capital, all the savings humans can produce, the heart of man is never satisfied. We always want more. Therefore, money is always scarce by definition. So what market actors tend to favor is the money that has the most inelastic supply. So this means a supply that is least subject to change by the willpower of others.

• 12:35Speaker 02

  That is what market actors will zero in on. And there's another, a number of ways to think about this.

• 12:45Speaker 02

  Time, energy, second law of thermodynamics. We cannot create nor destroy energy, right? We're sacrificing time and energy to earn money. You would naturally want the thing you're sacrificing this absolutely scarce time and energy for to be similarly absolutely scarce. That would be the ideal money, right? Something that can't be created or destroyed.

• 13:11Speaker 02

  With money, to gloss over a little bit of history. Monetary metals best satisfied divisibility, durability, recognizability, portability. Those were just, and we've tried a lot of experiments. We've had seashells, we've had glass beads, we've had cattle. We've, we've used all kinds of things as money, right? Natural market processes determine that monetary metals were the most satisfactory across the first four properties or services that money can render to us. Of the monetary metals, gold was the most scarce, meaning specifically its supply was the least vulnerable to change.

• 13:52Speaker 02

  No matter how much effort, time, energy we poured into producing gold, its supply increased the slowest and the most predictably. So this gave us a medium into which we could store economic value. And we would know with relative certainty that it would only change by about 2% year over year. So this gave gold the store value function we traditionally associate with it.

• 14:21Speaker 02

  That's great, right? Gold is great. Gold is good money. It's been good money, 5,000 years, uh, served a lot of purposes, but the big hangup with gold is lack of portability.

• 14:34Speaker 02

  Right, we talked about this a little bit earlier. You want to be able to move it across space, obviously, but gold's heavy. It's physical, right? It's very expensive to secure. It actually, in one way, it's beneficial in that you can store a lot of economic value in a small area and sort of amortize the security costs around it. But when you need to move it, that's when there's a lot of risk involved. And this was the impetus for introducing, which you alluded to earlier, were the warehousing businesses. So a private enterprise, a free market function, came to be where a warehouse would take custody of the gold, give you the warehouse receipt, you can go and transact it. It's as good as gold,

• 15:14Speaker 02

  right? You have a call option on gold effectively. This was introduced to augment the portability of gold. Well, those warehouses became banks. Those banks became central banks. And this is all, again, I'm not laying out a nefarious scheme here. This is the economics, the economies of scale associated with gold. It is more efficient to centralize custody of this heavy bulky metal and issue abstractions in it. It's more efficient to transact in that model than it is with physical gold. So that's what drives this process. The problem is, you now have to trust the custodian.

• 15:55Speaker 02

  You've introduced what we call counterparty risk. There's a counterparty to that trade. I can trade this paper with everyone and it's as good as gold until I go to redeem the gold from the warehouse and there's, the gold's not there, or they won't redeem it, or a fraction of what this paper represents is available. So that is kind of the history of gold into central banking. And I guess...

• 16:26Speaker 02

  The history of central banking is quite interesting.

• 16:31Speaker 02

  I would say that, you know, maybe this is an important point, too, that people were all seeking something for nothing. I think this is kind of unavoidable. This is the entrepreneurial path, right? You've got a problem, you've got an itch. You want to scratch that itch or solve that problem with less effort. Right, the really successful entrepreneur is almost brilliantly lazy. Right, he's identifying a problem and finding the quicker way, a better way to solve it. When he makes that discovery, he can now sell that product or that service or that method, whatever it is, into the marketplace.

• 17:14Speaker 02

  And because everyone wants something for nothing, they will reward him. Right, this is the entrepreneurial process.

• 17:22Tom Bilyeu?

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• 18:03Tom Bilyeu?

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• 18:48Tom Bilyeu?

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• 19:31Speaker 02

  So that's great. We all want something for nothing and it's a valid noble pursuit. The problem, I think, is when we cross that line of self ownership or of morality. And we start seeking something for nothing from others. Right? Someone else has planted the garden. Someone else has built the business. Someone else has mined the gold. And instead of me performing the work to create that value or earn that value. I figured that I can just go out and co-opt or coerce or take that property or that asset from that person. That's a path for me to get something for nothing. But it's the immoral path. Right? So I see this. It's kind of like the driving force in most human action.

• 20:13Speaker 02

  We're trying to get something for nothing, but there's a line that can be crossed. And we talked earlier about self ownership. I think that's the line. When you violate the self ownership of someone else, that's a problem. Central banking sort of came about as this natural institution to augment the technological limitations of gold. It wasn't portable. Right? But when you put that much power, you concentrate that much power into one institution, it becomes noxious, it becomes corrupting, it becomes irresistible for some people of lower scruples anywhere in the world to seek that seat of power.

• 20:54Speaker 02

  And this is what I think has really started to deteriorate the monetary system. And if you look at the history of central banking, it's a lot of leveraging one another, right? You know, you talked about a lot of the gold ending up in the United States. This is also pre-World War II. A lot of it has to do with the balance of payments among countries, which are just inflows and outflows of capital. But particularly when things got hot in Europe, a lot of gold started coming into the US. And again, with when we, with that much power or money in one place, we became the world's superpower.

• 21:33Speaker 02

  And so we stepped on to the theater of war at the end of World War II, and we declared ourselves victorious, rightfully or wrongfully so, you can make your own judgments about that. And then we rewrote the rules of global banking to favor the United States, where the dollar is pegged to gold, all of the currencies are pegged to the dollar. So what this gave the United States is the infamous exorbitant privilege, as it's been called. To be able to print money, we could send these paper certificates out into the world and have them send us goods and services in exchange, ad infinitum, right, until the

• 22:17Speaker 02

  system breaks down. Countries had the option to call our bluff, though. They could accept these dollars, but they could redeem them for gold if they thought we're being irresponsible with monetary policy for printing too much money. Well, countries started calling our bluff after 1944. We had this huge economic boom, and then, again, glossing over some history, I think it was Germany that tried to repatriate some gold, so they tried to redeem dollars for gold. And then we had the infamous 1971 Nixon shock that said, no more gold redemptions. And from that point on, and it was said to be a temporary measure, as governments so often and infamously say, who was it that said that there's nothing more permanent than a temporary government solution?

• 23:02Speaker 02

  Here we are exactly 50 years later in 2021, deep into this global fiat currency experiment led by the United States.

• 23:13Speaker 02

  And things have really come off the hinges. I point people on this topic to this website, wtfappenedin1971.com. This is not just economic, right? This is, it's socio-economic. There's, you know, obesity rates have spiked, drug addiction, suicide, clearly indebtedness, right?

• 23:34Tom Bilyeu?

  You think this is tied to coming off the gold standard?

• 23:37Speaker 02

  As the Austrians wrote a long time ago, "The monetary standard and the moral standard are inexorably linked." That, and this gets into, back into property and time preference.

• 23:51Speaker 02

  When money's losing its value over time, we're all incentivized to be more short-term thinking. This is a de-civilizing force. And I think it is that, I don't want to say it's the sole cause for a lot of the cultural malaise we see in the world today, but I think it's a significant contributor.

• 24:09Tom Bilyeu?

  Okay, that gets really complicated. So, while very interesting, I think we push that down. There's a line that I've heard you say that I think is really important for people to understand because I'm, I'm thinking of myself as I first started to grapple with this idea of inflation as theft and I just couldn't make the words even, it seemed like such a non sequitur to me. And that is that there's no difference between, I had a realization when I first got introduced to the stock market, I couldn't make it make sense until I was like, wait, this is like baseball cards, right? Unless it pays you a dividend. If it pays you a dividend, it's different because it's actually giving you cash. But if it doesn't, it is literally baseball cards. It only has the value that people agree that it has.

• 24:52Tom Bilyeu?

  And once they stop agreeing that it has that value, then it stops having that value in any real way. When I think about inflation, the following sentence that I heard you say makes all the sense in the world, which is that there is no difference between counterfeiting and inflating the amount of dollars in the system.

• 25:09Speaker 02

  Absolutely.

• 25:10Tom Bilyeu?

  It's just that one, we say is fine because the Federal Reserve is doing it with the sort of implicit okay of the US government. And the other is a person in their basement, you know,

• 25:21Speaker 02

  That's right.

• 25:22Tom Bilyeu?

  Uh, doing it on the down low, but it's the same thing.

• 25:26Speaker 02

  Yeah.

• 25:27Tom Bilyeu?

  And then I heard you talk about, there was a time where, um, when, um, Africa was being colonized that I forget what region, but they use glass beads as a form of payment. And the people coming in were like, word, we've got glass manufacturing places, you know, back home. We'll just make more of these beads.

• 25:46Speaker 02

  Yeah.

• 25:47Tom Bilyeu?

  And when you think about the things that, that money represents our time and our energy, right? You do something, you specialize, as you said, your specialization creates something. And then somebody who doesn't want to specialize in that, that specializes in something else, gives you money. It's a call on that good or service and you give them that thing. So if you can just go make these glass beads back home and bring, you know, ships full of them, you can slowly milk the efforts of the people that you're counterfeiting their money.

• 26:18Speaker 02

  That's right.

• 26:18Tom Bilyeu?

  And when I heard it said, and again, I also don't imply, I don't think that I choose to look at this with no negative viewpoint, that they're, they're not doing anything negative on purpose, that this is all good intentions, just potentially gone awry. But when I heard it explained how you would do it if you were nefarious, I was like, oh my God. Because you suddenly understand that, that there's this extractive nature of I'm either getting you to do this for free or because if nobody ever realizes that the glass beads are fake, then you just have inflation, right? If you give me that thing in exchange for glass beads, the next person goes, but these are counterfeit, then you really lost.

• 26:59Speaker 02

  That's right.

• 26:59Tom Bilyeu?

  But if I'm just slowly devaluing it, because every, the prices are going up because wow, there's just so many glass beads everywhere. Um, which first would feel like an embarrassment of riches. And then suddenly you'd realize, wait, everything is just re-normalized. And either I can afford the same thing, or again, I can afford less. Then I was like, oh my God, now I understand how inflation is theft. And then you really do get into, I think it was Andrew Jackson punching a banker in the face. You have to understand what happened on Jekyll Island. So it's like, before we get to the sort of morality side of all this, which is fucking fascinating. And I really hope that we don't run out of time before we get to it. I want to understand Jekyll Island.

• 27:42Tom Bilyeu?

  Why would Andrew Jackson punch a central banker in the face? Like, because I grew up in this system, it seems natural.

• 27:49Speaker 02

  Yeah.

• 27:51Tom Bilyeu?

  But there was a time where this was like governments, even by government agencies or government actors were like, met with such suspicion and the founding fathers and how they were like, yo, you have to be so careful of governmental overreach. It's like, we don't have that same vibe today.

• 28:06Speaker 02

  Yes.

• 28:07Tom Bilyeu?

  What happened on Jekyll Island?

• 28:08Speaker 02

  Yes, okay. Great question. I'd like to first reinforce the point you just made that inflation is legalized counterfeiting. Counterfeiting is criminalized inflation. This is not my opinion. This is in fact mechanically how it works. And in the piece you're referring to, Masters and Slaves of Money, I wrote about this debacle in 16th century Western Africa, where they were using glass beads as money. And I think this history gives you a good foundation for understanding what's happening today.

• 28:52Speaker 02

  It was really technologically difficult to make glass beads at that time in Western Africa. So they had reliable and predictable scarcity, à la gold, as we described earlier, but only specific to that region. European explorers arrive and they quickly notice, hey, these glass beads are being used as money to, you know, as a call option on all the wealth this area is producing. We can produce these glass beads in bulk back in European glass making facilities.

• 29:27Speaker 02

  Very low cost, to the point where they started packing ship hulls full of glass beads. And this occurred over, it was over 300 year period, they were shipping in these glass beads. So kind of doing it slowly and surreptitiously enough. There was resistance, actually. Africans could identify the counterfeit beads, they would try to only use the authentic ones. Europeans would introduce, you know, more indistinguishably counterfeit beads. So there was back and forth. But over time, what happened was this multi-century usurpation of African wealth by European explorers through the counterfeiting of money. And what I mean specifically here by counterfeiting is that delta in cost of production, right?

• 30:10Speaker 02

  The cost of production was high for glass beads in Africa. Therefore, they had reliable scarcity. Therefore, they had reliable market value and utility as money. The cost of production in Europe was low. So they could inflate the supply really quickly and use it to basically disrupt the hard money system, if you will, in Africa. When I say hard money, I mean it's hard to produce. But it was not hard to produce for Europeans, so therefore they could usurp the wealth. And this, this points to a key property of money is that the market value of the money is going to converge to its cost of production over time. So if I can mine an ounce of gold for $1,900 and it's selling on the market for 2,000,

• 30:53Speaker 02

  I'm going to mine gold as hard as I can all the way up until my cost of production is $1,999.99, so long as there's a profit margin baked in there. And this also points towards why fiat currency always goes to zero. The cost of fiat currency production is effectively zero. Again, it's an entry on the Federal Reserve's database, right? Control, enter. Another $10 trillion added to the money supply. So it's almost intuitive through that lens, why the market value of fiat currency historically has always converged to zero, which we call hyperinflation. So that's all, I think, a good way to look at it. And that's, and that's happened many times historically. So it's not just...

• 31:40Speaker 02

  It's not purely that these Europeans are set out with nefarious purposes per se, but there's a dynamic in money where it needs to be costly to produce to support its market value and therefore support a sustainable trading economy. If it's cheap to produce, then it will be, the market will be flooded with the money and it will hyperinflate essentially. And so that process again is why people settled on gold. It was the most difficult thing to produce. So the other thing that happens here is that when you're increasing the money supply, like it's very common today in the US, we think, oh, there's not much inflation, you know, food hasn't gone up a lot, whatever, whatever.

• 32:24Speaker 02

  But what you're not seeing is that markets, if they're functioning properly, we should actually have price deflation over time. As we get smarter and better and more efficient at making things or providing services, prices should be coming down. So the fact that we're targeting price increases of 2% is shadowing over what may be, we don't know, right? We don't know what the increase in market efficiency would actually do to prices absent the central bank intervention. So I think this is a very important point too, that, you know, people will try to argue that the degree of it is such that it can be ignored or not worried about, the 2% is not that big of a deal, you know, let them take what they need.

• 33:05Speaker 02

  But it's overshadowing the opportunity costs, if you will, that's being lost. Like we would have 5% price deflation or more in certain sectors. And so to get to the, why did Andrew Jackson punch a central banker in the face, which he is, as someone that grew up in Tennessee, he's my favorite Tennessean for this very reason. I think he also called them a den of vipers and he said he would route them out. He resisted, or at least he was instrumental in the resistance of the first two attempted implementations of a central bank in the United States, the Federal Reserve being the successful third. Is because this country was founded on the principles of, which we inherited from the Magna Carta,

• 33:50Speaker 02

  life, liberty, property. As we've touched on earlier, the central bank is antithetical specifically to the third one, property. Right? It's arbitrarily violating the property rights of some to enhance the property rights of others. It's another way to look at it. So what is that? What is life, liberty, and property? Our life is our future. Right? These are the... To take, to lose your life is to lose your future, let's say, right? Liberty is your present. It's your present freedom. Right? To lose your liberty is to become a slave. Right? And the spectrum of slavery is very important to you.

• 34:34Speaker 02

  0% tax or theft is a free man, right? Completely owns himself. 100% taxation or theft is a slave. All the fruits of your labor go to someone else. And then... So you've got your life is your future, liberty is your present, property is your past, actually. It's how you've spent your past infusing nature with your life and liberty, right? Your self-ownership. You've accumulated fruits of labor. That becomes your property. And so, the central... That, those are the kind of the three tenants, not only of natural law, but also basic morality.

• 35:14Speaker 02

  Right? I don't think anyone would sit here and argue with you face to face and say, "No, I have a claim on you more than you do." I don't, like, it's a non-reasonable argument. And again, this is, this is a priori, right? This is, only you can move your left arm. There's no argument that I can formulate that says, "No, I have some claim over your left arm and the actions that it takes." Yet we have that implemented in this system that can violate property rights. If I can violate your property rights, I'm effectively saying your self-ownership is limited and that I have a higher claim on your life than you do. This is like the rotten core.

• 35:52Speaker 02

  At the heart of modern statism, we call it capitalism, but it's not. It's state marginalized capitalism with a communistic institution at its core called the central bank. So Andrew Jackson was a man that understood these principles. He understood the importance of adhering to life, liberty and property for a, not only is it pragmatically the most wealth generative model of human organization, but it's also the most humanitarian and ethical, right? It offers the greatest equality of opportunity to actually have property rights in yourself, in your time, in your labor. So, and it's, you know, thank goodness it's that way.

• 36:35Speaker 02

  Thank goodness the ethical humanitarian choice is also the most wealth-producing choice. Otherwise, we'd have a really ugly dilemma on our hands.

• 36:46Speaker 02

  I think Andrew Jackson and our founding fathers understood these three pillars of life, liberty and property as the most important components of human organization. That if we adhere to them, we can actually create modes of being that increase our wealth, which is to say increase our satisfactions, right? The heart of man is never satisfied, but this is the way to optimize the satisfactions of human beings. And create a mode of being that's focused on trade, cooperation, interdependence, as opposed to warfare or fighting.

• 37:27Speaker 02

  So it's, to boil it all the way down, it's like, we can either cooperate and trade, let's say cooperate and compete. It's a very important part of entrepreneurship, right? It's competition. And trade voluntarily with inviolable property and we generate wealth. That's a positive sum game. The pie is growing. Or we can violate the property of one another and fight over it. And this gets to that old bastion saying that when goods and services don't cross borders, soldiers will.

• 38:02Speaker 02

  Right, we need, we're all seeking something for nothing. If we don't channel that human action into these productive channels of trade and entrepreneurship, then we end up over here in violence, coercion, and compulsion.

• 38:17Tom Bilyeu?

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• 39:00Tom Bilyeu?

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• 39:42Tom Bilyeu?

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• 39:56Speaker 02

  Okay, so you've got Andrew Jackson trying to root out the Vipers.

• 40:01Tom Bilyeu?

  I'm assuming he thought of them as vipers because they can redistribute wealth, which is a violation of your property.

• 40:10Speaker 02

  That's right.

• 40:10Tom Bilyeu?

  Why then do we end up creating the central bank? And why did they meet in secret? Like, what, give us a little bit of background on that meeting on Jekyll Island. I know they were pretending that they were going on a hunting trip.

• 40:25Speaker 02

  Yeah.

• 40:26Tom Bilyeu?

  There's, it's such a weird confluence of things that are happening right now. You have this sense of like distrust of people are working behind the scenes against you. But you also have this sense of redistribution of wealth is good. Like, it's, it's a very confusing time right now.

• 40:42Speaker 02

  And this is still confusing to this day. People will argue with you that this, you know, the Fed was set up with very good intentions. And that this whole, which by the way, this book, The Creature from Jekyll Island by G. Edward Griffin, this was formative to my understanding of central banking. And this is pre Bitcoin that I got into this. So I would really just encourage the audience to go check out that book. It's a, it's a big book, though. You can also read an abridged version called Dishonest Money. I think was the one that I gave to my family and friends. And it sort of encapsulates the gist of it.

• 41:20Speaker 02

  But to your question, I think, based on my study of that book, that it was done in secret and it was done over a holiday weekend. Because this was a time when people still understood the ideological importance of life, liberty and property. We'd learned a lot of lessons from central banking and its failure and its tyranny in England. And even before that, so it was still fresh enough on the human mind that we, we were resistant to its implementation.

• 41:54Speaker 02

  But as far as why it got pushed, again, it's just something for nothing principle, right? There, if you could found an institution or a business, and by the way, all organizations are businesses, right? Governments are businesses, institutions are businesses. They're all property strategies, as I call them. If you could establish an institution that could generate perpetual Profits.

• 42:21Speaker 02

  And be able to paper over its own losses, right? It can never sustain a loss. Would you not have a pretty large incentive to establish that organization? I mean, the equivalent question is if you could magically wish for a money printing machine right here on your table. Like, wouldn't you want that? Wouldn't you? Once you had it, wouldn't you run that machine until it was absolutely blowing smoke and sparks out the side of it? I mean, that's central banking in a nutshell. Is it human beings? In this pursuit of something for nothing, or in this pursuit of, um, pursuit of wealth, frankly, right? The most powerful incentive in the world. We have tried to rationalize and formulate different ways of creating socioeconomic structures that

• 43:04Speaker 02

  favored the few that could understand it and create that privilege for themselves at the expense of others.

• 43:10Tom Bilyeu?

  I think this is where Bitcoin needs to enter, uh, stage left here. So I have a quote from you. Actually, I'm going to start with a paraphrase from Alan Greenspan. This is you paraphrasing Alan Greenspan. That sets us up then for your quote. So Alan Greenspan, again, this is a paraphrase. A sound store of value must be made illegal. Otherwise fiat currency would not be competitive. So you've got this idea of, so a sound store of money, you talked about, you drop that coin, but basically that it's the amount of it is fixed.

• 43:46Speaker 02

  Inflexible supply.

• 43:47Tom Bilyeu?

  Okay, so that's sound. Now, this is your quote, which, uh, I love, and I think sets us up for understanding why the Bitcoin guy who has Bitcoin tattooed on the inside of his arm, like the most painful place to get a tattoo, says this. "This entire system we've built is a complex of unintended consequences, and Bitcoin is an immune response from the collective economy." So if we buy into the idea that

• 44:19Tom Bilyeu?

  They didn't have bad intentions to create the central bank. They don't have bad intentions to make the print a go bur. They just like they're trying to, they're trying to policy their way to something that's far more stable, which I actually get. And when I put like my, they don't have bad intentions hat on, I'm like, word, like, I get what they're trying to do. And I'm grateful that I've grown up in a super stable environment where I was able to go from, you know, sort of lower middle class to generating real wealth in my life. So for me, it worked, right? I was able to jump class, like all the things that I was promised with the American dream, I was actually able to do. And so I'm like, yo, that stability is amazing.

• 45:05Tom Bilyeu?

  I didn't ever have to use weapons to build my company, which is a whole side thing that I've talked about before, where I had former drug dealers working for me. Long story. There's a whole reason why I think it's amazing to give people second chance. So anyway, they were telling me stories of like people trying to confiscate their product, right? Which for me would have been protein bars. So it was like, whoa, the thought of somebody showing up with shotguns to take my protein was like, that's crazy. That's a hard way to do business. Yeah, right? So it's like, okay, this is all work for me. I like this stability. So when I have that hat on, I'm like, I get what they're at least trying to do. But when you try to engineer a system, whoa, like the number of things that go wrong, where you can change, whether it's

• 45:49Tom Bilyeu?

  ecological and you're trying to do something and it has, you know, 10 different knock on effects, or whether it's with money and it has different knock on effects. Why though is Bitcoin the immune response?

• 46:02Speaker 02

  Yes. It's funny, you read that line. I don't barely remember.

• 46:06Tom Bilyeu?

  You said, well, you, I heard you say it. So whether you've read it or written it or not, I can't say, but in a podcast, you said.

• 46:15Speaker 02

  Um, so these principles that the United States was founded upon again, that have been refined from the past, from like the Magna Carta.

• 46:28Speaker 02

  One of the most important, if not the most important, is that principle of inviolable property. Meaning again, property as the relationship between yourself and the value you create or the fruits of your labor, which is the foundation of the scaffolding that lets you climb the socioeconomic hierarchy, right? From, as you said, lower middle class to where you are today, was because you knew that you could hold the value of the value you created and use it to scaffold yourself upward. If that foundation were not stable, right? At least to some extent, there would be no way if you'd have upward mobility. So again, it's we're back to property rights being the basis

• 47:10Speaker 02

  of civilization itself. They're pretty good here. They're pretty good in the US. You can open a bank account. You can put dollars in it. Your property rights will be violated by inflation. When the Federal Reserve is printing money, you're going to now need to outpace inflation with some other investment. Otherwise, your property will be diluted. You don't have full property in that money because if you try and wire it to, you know, I don't know what countries are on the OFAC list today, Iran or something, they'll block you and say, no, you can't do it. So you don't have full rights in that property. You are being surveyed. You don't have full privacy, but you have pretty good property rights, right? Relative to the rest of the world.

• 47:53Speaker 02

  Bitcoin is the first permanent implementation of this principle we've been refining throughout human history of inviolable property. It actually cannot be violated in any way. No one can produce more than 21 million Bitcoin. So it's, and I've argued this in some of my writing, that although it's an invention, we've actually discovered something with Bitcoin. We've discovered absolute scarcity for money. So if we're back to those five properties of money, in terms of scarcity, Bitcoin is absolute. It's not relative, right? It doesn't change. We know with You know, nothing's, um, people argue with me about this. It's not absolute. Everything's probabilistic.

• 48:37Speaker 02

  True. Uh, Bitcoin has proven itself over 13 years of flawless operation that it does two things essentially perfectly, which are churn out a block on, uh, one block of transactions on average every 10 minutes and adhere to a supply cap of 21 million. So it's the first fixed supply money there has ever been. And I don't think you can recreate that because by definition, money is a centripetal network effect. So it, we tend towards one. So for the same reasons we had one analog gold, we're likely only to have one digital gold.

• 49:17Speaker 02

  This, so your property rights cannot be violated by inflation because no one can change the supply cap. If you hold a thousand Bitcoin, you hold 1,000 of a possible 21 million forever, right? You have a guaranteed fraction of the total money supply. You cannot get that level of assurance with any other asset in the world. Full stop. Doesn't exist. Even with gold, you can hold all the physical gold you want. You're still not immune to, uh, some technological breakthrough. We figured out, figured out how to produce gold in the lab very cheaply. We mine an asteroid, we mine the ocean floor, we find a new South American Bonanza, whatever. You're not immune to any of that. But with Bitcoin, and again, it's a bit of a bet because it's only 13 years in,

• 50:02Speaker 02

  but it's done these things perfectly so far. If it continues to do what it's been doing for 13 years, you have a guaranteed fraction of total money supply. So you have an inviolable property right.

• 50:14Speaker 02

  Further, this is, again, property is the relationship, right? We've historically always needed an enforcer. So you need the police force, you need the military to make sure no one comes into your house and violates your relationship with your house. We needed, if, maybe not necessarily a monopoly on violence, but you needed a protection producing enterprise, which historically is the role of government, to enshrine your property rights.

• 50:42Speaker 02

  The problem, of course, is that they wield the power to violate your property rights as well, which historically has been very tempting for governments and bureaucrats. They typically give into it and governments get overthrown over time. That's been the cycle we're locked into.

• 50:57Speaker 02

  Bitcoins are first property right independent of the monopoly on violence, or independent of physical protection, production. It's an informational property, right? It's just an alphanumeric string. You can store it in any information-bearing medium. Put it in your mind, put it on your computer, put it in a song, do whatever you want with it. And there's no, the enforcement is done by the mining network. So the algorithm and the free market competition that's going into Bitcoin mining is effectively displacing the protection that government was historically necessary to provide in Bitcoin itself.

• 51:38Speaker 02

  So it's this radical new, you know, some people have called it a metaphysical property, right? And that it's just an information bearer asset. So gold was really good as a bearer asset in that, you know, assets equal liabilities plus equity, the accounting equation. Gold was pure equity. If I hold gold, it's no one else's liability. That's really important, right? I have no counterparty risk if I hold physical gold. If I hold dollars, that's not true, right? I have this liability to the Federal Reserve, to the bank, whoever, whatever counterparties are involved. Bitcoin's the same as physical gold, but it's non-physical, right? It's informational.

• 52:19Speaker 02

  So it opens up this entire new sphere of possibilities and how you custody it. You can custody Bitcoin in these multi-signature schemas that are all but immune to theft. You can chop the key into a bunch of pieces and distribute it geographically, have these military-grade protocols wrapped around it. And it gives you an absolute, it is the highest implementation of human self-ownership we've ever had. Right? In the past, it's been scribbles on the American Constitution or the Magna Carta, and like, we'll always adhere to this document, no matter what. But then, you know, a few hundred years go by, I'm like, well, you know, let's tweak this, or change that, or add this.

• 53:02Speaker 02

  Bitcoin's taken those principles we've used with foundational documents historically, and it's permanently emblazoned them in computer code. In unbreakable code, basically, is another way to think about it. So.

• 53:16Speaker 02

  It's the invention of inviolable property, right? It's no longer a principle. We've grabbed this principle out of the space of ideas and we've anchored it into reality via the thermodynamic competition of Bitcoin mining. And it is so radically new and hard to get your head around that it's shattering worldviews worldwide.

• 53:41Tom Bilyeu?

  Bitcoin, I think you would agree with this. I view Bitcoin as a deflating currency.

• 53:47Speaker 02

  Fixed supply.

• 53:48Tom Bilyeu?

  Correct, but as more people want it, its value is going to go up, which if that is true, then the longer I hold it, the more pizza that same single Bitcoin will buy.

• 54:00Speaker 02

  Exactly.

• 54:01Tom Bilyeu?

  So that has changed my behavior. I think of dollars as like, whatever, like spend it. But when I have a Bitcoin, I'm like, I don't want to mess with it.

• 54:08Speaker 02

  This is time preference.

• 54:09Tom Bilyeu?

  Yeah, I want to hold it. So because of that, my base assumption is that if you have a deflating currency that thusly buys you more over time, it's so counterintuitive because deflating makes it sound like it's bad, it's getting smaller, but it's actually growing more powerful.

• 54:28Speaker 02

  Exactly.

• 54:28Tom Bilyeu?

  It's buying me more.

• 54:29Speaker 02

  Monetary dilution is inflation and monetary enrichment is deflation. The inflation and deflation is a Keynesian euphemism, actually, to sell the idea of inflation.

• 54:39Tom Bilyeu?

  Well played, because my brain is having a very hard time. Okay, so my Bitcoin is growing in purchasing power over time, and that has already changed my behavior. So I know that it's going to change more people's behavior, and my base assumption is that will cause a decrease in innovation because people are like, dude, your iPhone is cool, but like, ah, I'd really rather wait and see what my growing powered Bitcoin will give you.

• 55:04Speaker 02

  That's the leap I want to challenge right there, where we say less, we say more saving equates to less innovation. I think it's the exact opposite, actually.

• 55:12Tom Bilyeu?

  Why?

• 55:13Speaker 02

  The, the nature of saving itself is that we are delaying present consumption and looking further into the future and engaging in longer term production processes.

• 55:25Tom Bilyeu?

  Yep.

• 55:26Speaker 02

  Now, the Austrians described this as the more roundabout the production process, which is equivalent to saying the more finely we engage in the division of labor. So you have one long production process to produce a thing. The more finely we chop that up amongst ourselves, the more productive we become. So that effort, that impetus to push into longer production processes that are more roundabout and more finely divided, that is innovation. That is how we become more than the sum of our parts. We accomplish greater results with less efforts.

• 56:03Tom Bilyeu?

  That doesn't feel true to me. So when I...

• 56:05Speaker 02

  That's it. You actually think inflation drives innovation. Can I give any example?

• 56:09Tom Bilyeu?

  I do. Well, so I'll tell you why I think inflation, and look, trust me when I say I am at the edge of, I am thinking through this in real time. So this is not me saying I believe this, but this feels right to me. So when I think about what gets people to innovate, it is if I bust my ass and I come up with something better than other people, I get more value from people in a very fair exchange where they think they're taking advantage of me because they'd rather have this thing that I've created than they would, they want the money.

• 56:40Speaker 02

  As do you of them.

• 56:41Tom Bilyeu?

  Exactly. And so I'm like, oh, word, this is amazing. So now where what we get into is right now with an inflating currency, people have just a sense of like, oh, this money is, it's inconsequential. It, it, God, this is going to sound stupid, but a dollar is only worth a dollar. Whereas a Bitcoin to me feels very precious. It's like this gets, becomes $2, $3, $10, $100. So now I'm like, ah, I don't really want to spend this. Okay. Because of that, I don't have the ease of like buying that I would. So now my evaluation of the thing that you've created, I'm way more scrutinous. So I mean, maybe it just raises the bar on innovation, but it, it...

• 57:25Speaker 02

  I think you're saying it's a return to value investing perhaps. So for a long time, people would only invest in projects that created real economic value, right? And if your money is holding purchasing power over time, that's a good bar. You could think about it like this. Imagine we're on a world run by Bitcoin. So there's one hard money, fixed supply, everyone uses it in the world. Every successful economic project, every entrepreneur, every innovation that successfully increases productivity, that accretes to the purchasing power of everyone's money.

• 58:06Speaker 02

  So in a world where your money is constantly losing purchasing power, that is not happening. So you get more junk, I guess, there's more of a, there's, there's actually the incentive, and this is related more directly to the violation of property, but there is an increased incentive to consume rather than invest. The more rapidly you violate property rights, and the more that it's permanent rather than intermittent. So if I know with a high degree of certainty that you keep 20% of whatever that I make, then I have a 20% less incentive to engage in investment rather than consumption activities. And again, that's what we're doing when we print money.

• 58:48Speaker 02

  We're actually inducing or incentivizing consumption actions over investment actions. And investment actions are what drive innovation. It's savings that underpin investments, investments in that long-term production structure I suggested. There's also R and D in there, experimentation, right? We're trying new things. That is what creates innovation in the real world. So if anything, the innovation that we've seen in the 20th century has been in spite of central banking, not because of it. But it gets very murky here because it's very easy. You could swap someone else into the seat right now, some Keynesian economists, and they'll give you a completely different interpretation of economic history, right?

• 59:30Speaker 02

  They can go through the historical facts and trace their own arrow of causality and say, here's what happened.

• 59:36Tom Bilyeu?

  Copernicus.

• 59:37Speaker 02

  Back to Copernicus, but here's what the libertarian philosophers did. They said you can't mistake economic history for actual economics. Economics is more of a rationalistic science. You have axioms. Man must act. Man prefers present satisfaction to later satisfaction, all other things being equal. Like these axioms, it's like geometry.

• 59:58Tom Bilyeu?

  So I didn't understand, why can't I take economic history as economics?

• 1:00:03Speaker 02

  If you take economic history, you can describe-

• 1:00:06Tom Bilyeu?

  That actually happened. So you're saying you can't take the interpretation of economic history?

• 1:00:11Speaker 02

  It's a social science, right? You cannot mathematize economics in the same ways you cannot mathematize psychology. I can't sit here and tell you the reason you're doing this is because there was a linear chain of causality. And if we repeated this experiment again, the economic experiment would unfold in the same way. It's not possible.

• 1:00:28Tom Bilyeu?

  Because it's just too complicated to predict human interaction.

• 1:00:31Speaker 02

  There's no constants in human action, right? So we know water freezes at zero degrees Celsius. That's a constant. We can build a framework of knowledge around that. There are no constants in human action. It's constantly changing. It's all, all these psychologies interlinked into the market process.

• 1:00:47Tom Bilyeu?

  So we're gonna derail on this, but I'm just gonna plant the flag to say, I think there will be a day where we actually realize that human interactions are completely predictable. Free will is a total myth. But that doesn't help us now.

• 1:00:58Speaker 02

  That could be a pretty bleak day.

• 1:01:00Tom Bilyeu?

  I don't find it bleak, because the experience will never feel like that. But that's gonna completely derail us, because right now, I don't, free will is, seems to just be provably an illusion. So-

• 1:01:14Speaker 02

  We will definitely get derailed on this.

• 1:01:17Tom Bilyeu?

  Yes.

• 1:01:20Tom Bilyeu?

  Alright, so instead of derailing on that, let's, so this Copernicus idea of, we have a theory. The theory is going to completely shape how we interpret things and definitely how we act. So what is the, I call that a frame of reference. Frame of reference is everything. It is the distorted mirror that we perceive reality from, and to your point, it's individual. So, everybody's got a frame of reference that's gonna dictate how they think about what they see, and that will actually impact how they feel, which will impact what they do. What is the, so are the two, using my language, frames of reference that we're thinking about here?

• 1:02:05Tom Bilyeu?

  The Keynesian model versus the Austrian?

• 1:02:08Speaker 02

  Let's talk about a very fundamental theory, which is the theory of the individual. Now, this is something that we take for granted today. We assume that you're an individual, I'm an individual, we're all freely interacting. But in ancient times, it wasn't this way. Actually, it was the family that was considered to be the primary social unit. They called it the paterna familias. And everyone was basically perceived as a unit in that family, that you served the ends of that family. It was religious in nature. This was, in ancient Rome, it was the religion, it was the family, and it was property.

• 1:02:53Speaker 02

  So we're talking about ancient people that set on one piece of land, generation after generation. The present living family took care of the ancestors, right? They worshipped the ancestors. They used to burn a hearth. There was a fire that every family maintained on an altar. And the first thing they did every time they would wake up in the morning is stoke the flames of that fire. And so that was to symbolize their property interest in that land that carried forward from their ancestors into the present day. And if that fire were extinguished, that was considered to be an equal symbolic expression of the family being extinguished.

• 1:03:33Speaker 02

  So the whole primary imagined social unit of the world was the family. The individual did not even exist. Now, this is hard to imagine.

• 1:03:44Tom Bilyeu?

  The individual didn't exist, or it just wasn't the primary way that you thought about it?

• 1:03:47Speaker 02

  This is very hard to talk about, because what I'm saying, and often we're talking about money, it's the same thing. You're trying to describe water to a fish that's never broken the surface. How much of our cultural programming do we inherit from our parents? From our existence, from our cultural heritage in this world?

• 1:04:05Tom Bilyeu?

  Yeah, but let me ask you one question, because I get where you're going. And I can, collectivist versus individualistic societies has real, uh, real world impact. So I know there is a thing where you would feel that me as an individual is very much embedded in a collective, and I have to be thoughtful about that. But nobody would be confused if I poke you and it hurts. It's not like that person would not be able to distinguish between you getting poked and me getting poked.

• 1:04:30Speaker 02

  I'm not going there, so let me try to prevent the sidebar. Let's just say this, the individual did not exist as an economic or socioeconomic conception.

• 1:04:40Tom Bilyeu?

  Okay.

• 1:04:41Speaker 02

  It doesn't mean that you couldn't poke someone and they'd be like, "Hey, man, don't poke me."

• 1:04:44Tom Bilyeu?

  Right.

• 1:04:45Speaker 02

  A socioeconomic conception of the individual did not exist. One of the family did. It was all centered around the family. And then families eventually stitched themselves together into tribes and clans and ultimately nation-states. And that had a lot to do with the unification of religion. But the individual is something that we invented. We invented this-

• 1:05:06Tom Bilyeu?

  The individual as an economic something?

• 1:05:08Speaker 02

  As an economic actor.

• 1:05:09Tom Bilyeu?

  Okay.

• 1:05:10Speaker 02

  And from the individual economic actor that came post-Christ, it was with Christ and Paul's analysis of Christ and the moral equality of men that we developed the conception of the individual. And from the individual, we extrapolated that into individual private property rights. So we moved from a world where the family had exclusive property interest in the land. It was also non-transferable. They weren't selling this stuff. They were just, uh, having dominion over it. I really think, if anything, it was like territoriality. Like animals are territorial over specific, uh, pieces of land. We were basically territory animals, right? We were trying to survive the way our ancestors did.

• 1:05:55Speaker 02

  There wasn't much innovation occurring. There surely wasn't a lot of trade occurring. And we had this sort of primitive society. But post-Christ, we invented, as religion was evolving, we invented this conception of the individual. And I'm drawing on a book here by that title, "Inventing the Individual." If you want to do a deep dive on it, explains it in depth. But to gloss over a little bit, let's just say that with Christ came this idea of the equality of souls, that everyone had an equal soul or a moral equality, if you will. And with that notion came the 1215 Magna Carta, Life, Liberty and Property, that we had this conception of individual property rights. So that you as an individual now can stake a transferable claim

• 1:06:40Speaker 02

  on assets in the world. And that is what led to capitalism proper, right? So we have individualized property or we have socialized property. And I think the degree to which we print money or the degree to which we have government interference, we are socializing property. And this is causing people to consume rather than invest. It also causes people to misallocate capital.

• 1:07:07Tom Bilyeu?

  Because of the tragedy of the commons?

• 1:07:09Speaker 02

  No, because again, if you keep 20% of everything that I make, right? That's a socialized property, right? You're taxing me.

• 1:07:17Tom Bilyeu?

  Yeah, but why would that skitch me out? If this is an invention.

• 1:07:20Speaker 02

  It doesn't skitch you out, it skitch me out. It reduces my incentive to invest. If I can only keep 80% of what I earn, I have a reduced incentive to invest.

• 1:07:30Tom Bilyeu?

  Have you heard Ray Dalio's take on this? So he talks about China as a collectivist culture. And he's like, look, you can rail against them and think that they're crazy, but they think that we're crazy and dealing at the individual level and any one individual thinking, whoa, you can't tread on me, I'm an individual. Whereas they're like, you're out of your mind. Like you live as a part of the collective. And if killing you is better for the collective, then kill you, we must. And while admittedly, those words I'm putting in Ray Dalio's mouth, his whole thing is, I know that you look at China and you judge them and think that they're crazy, but just know that they feel exactly the same in the opposite direction. So what I'm trying to figure out is, when I look at. If being a part of the collective makes me less likely to invest,

• 1:08:15Tom Bilyeu?

  the only way I can wrap my head around that is if it's the same thing as the tragedy of the commons. I don't want the collective to be able to take things from me. Therefore, I'm going to do something with it, spend it in this case, not invest it, just so that I could reap the immediate benefits of that. And the collective now doesn't have anything that they can take from me. If that isn't it, I don't understand where you're going.

• 1:08:35Speaker 02

  I don't think it's a matter of being part of the collective or not part of the collective. That's not what I'm saying. What I'm saying is, is the integrity of your property interest, and let me specify what property is, the exclusive power to control an asset. You get to say what happens with your cup. No one else gets to say what happens with your cup.

• 1:08:55Tom Bilyeu?

  But prior to Christ, that didn't exist?

• 1:08:56Speaker 02

  That is property, right? Well, it existed between the family and the land.

• 1:09:00Tom Bilyeu?

  Yep.

• 1:09:01Speaker 02

  And it was not exactly transferable. Now, there was trade occurring between families and among clans and whatnot, but we didn't have this established, legally protected, morally protected notion of the individual's right to own property and transfer and trade with others. So, I'm not saying that this is participating with the collective or not participating with the collective. It's about justice. It's about people keeping what they earn, the value that they create. This is the entire premise of libertarian philosophy. And so, pre-Christ, we didn't have that atomized individual as an autonomous socioeconomic actor. It did not exist. Post-Christ, it comes into being, right?

• 1:09:44Speaker 02

  1,215 years later, we sign the Magna Carta. Life, liberty, inviolable property.

• 1:09:51Tom Bilyeu?

  You started down this path that when I asked about the Copernicanian.

• 1:09:57Speaker 02

  That's where I'm going.

• 1:09:57Tom Bilyeu?

  We're going to take these two frames of reference. And so, I'm tracking that I've got the individual frame of reference and I've got the socialist, I think, frame of reference. Yes, tracking so far?

• 1:10:12Speaker 02

  Yes.

• 1:10:12Tom Bilyeu?

  Okay, so what I care about in there is what behavior is elicited when you take that frame of reference?

• 1:10:18Speaker 02

  Right, so you could think of the individual, the fact that we sit here right now, you have bank accounts, you have assets, you can sell those in the marketplace with other self-owned people that also have accounts and assets. We take all that for granted.

• 1:10:34Tom Bilyeu?

  Yep.

• 1:10:35Speaker 02

  But it's premised on private property rights, which is premised on the socioeconomic conception of the individual. Now, again, we take all this for granted, so it's hard to even talk about. But when you get to that, you get to private property rights, you've now entered a world where we have higher intensity exchange occurring, right? More people are trading more stuff, because more people have a greater incentive in the assets that they own. They know that it's not being socialized away from them. Now, this is obviously true more in the Western world than it is in many other parts of the world. But I would argue, that's the reason the West has been such a successful economic story. Because the reason we've become so wealthy is because we've engaged in higher intensity

• 1:11:18Speaker 02

  exchange and had a deeper division of labor. And all of this is premised on this, you could think of this as live-action role-playing. We are pretending that individual private property rights exist all the time, and we don't even know it. We know it when we give our keys to the valet and just assume the guy's gonna give our car back, right? Like, we have a legal structure in place, there's ownership documents between you and that car, all of these things we sort of take for granted that are just embedded in how we actually act. So this is an enacted theory, right? We observe the sun rising and falling, and we reinterpret the data when we look at it with a different theory.

• 1:12:02Tom Bilyeu?

  Why do you want me to know this?

• 1:12:03Speaker 02

  What I'm trying to say is, this...

• 1:12:07Speaker 02

  Live action role playing. This imaginal structure, this is different than imaginary. Imaginary is like you bring a pink elephant to mind. Imaginal is a little kid tying the blanket around their neck, picking up a stick and pretending to be Zorro.

• 1:12:21Tom Bilyeu?

  Okay.

• 1:12:22Speaker 02

  We're all doing imaginal all the time. You are the CEO of Impact Theory or whatever it is. That's an imaginal role. These people that listen to you and what you have to say, those are imaginal roles too. These imaginal roles that we take on, change how we relate to the real world. So the invention of private property rights leads to capitalism. First of all, led to the Magna Carta, which was a precursor to the US Constitution. We have life, liberty, and pursuit of happiness instead of inviolable property. And this has created the economic division of labor and the capitalism we see in the world today. The wealth we have created, the innovation. All of these things are born from this imaginal conception

• 1:13:04Speaker 02

  of the individual as a single autonomous economic actor. And I'm trying to say this because I think it's very important that we are human beings. We're running a lot of software. It's stacked and a lot of it we take for granted. So when I read the book, Inventing the Individual, that blew my mind. The idea that the individual actually did not exist at one point. And then when we invented it, we created real economic consequences in the world.

• 1:13:29Tom Bilyeu?

  That is very mind blowing. Now I want to state why I think that you're bringing this up when I'm trying to figure out, one, embedded in the context of what should people do with their money? And what ought the money system be? Here's the prediction that I think what you're telling me makes about your worldview, that it was suboptimal to think in a more collectivist way. It was far more optimal to invent the idea of the individual, even though it's imaginal. And from that comes the idea of individual property, the Magna Carta,

• 1:14:12Tom Bilyeu?

  even to some extent, the American democratic experiment, which is something I want to get into. And so these things are a progression. We're getting better, which I think you would define as.

• 1:14:26Tom Bilyeu?

  By owning my property, richer is going to confuse people. I've heard you go down that path before.

• 1:14:32Speaker 02

  Creation of aggregate wealth.

• 1:14:33Tom Bilyeu?

  We'll just need to define it.

• 1:14:33Speaker 02

  Yeah.

• 1:14:34Tom Bilyeu?

  But even wealth is confusing. Like, when I tell people that my goal used to be to get wealthy, I'm like, God, I know what they're hearing. So I know what you mean by that. Like, anyway, I won't derail us on that, because even trying to put words, it was very difficult. But I'm with you spiritually, and I want to keep going on this. So, we invent the individual. It's better than where we started. Because of this idea of individual property rights, which gives us the incentive to invest our energies into a highly specific way.

• 1:15:02Speaker 02

  Yes.

• 1:15:02Tom Bilyeu?

  Being an architect, making shoes, running a media company in my case, whatever. We get highly specialized. The whole world gets to take advantage of all these people doing highly specialized things. To a freakish degree. When I think about my, the level of my ambition, it's, it borders on pathology.

• 1:15:21Speaker 02

  Uh huh.

• 1:15:22Tom Bilyeu?

  But I find that utterly fascinating, that nature has created that. I've tried to turn it off. I don't want to. It's way more fun when I have this wild ambition. Ah, more, bigger, better, do things, cool. By having individual property rights, we get to harness that internal engine that people like me, you, and gazillions of other people have to create. And we're incentivized. We get an echo back from the world of wealth, where I have more optionality, maybe is a good way to explain wealth.

• 1:15:52Speaker 02

  Yep.

• 1:15:53Tom Bilyeu?

  I have access to things that matter to me at a hierarchy of needs level. I can have a wormhouse, food in my belly, certainty of food in my belly tomorrow, certainty of a roof over my head tomorrow, all that. So, we're, we're making progress. And now, again, prediction of what I think you're trying to convey is that as you revert...

• 1:16:16Tom Bilyeu?

  Through the modern monetary systems, the Keynesian economics of, hey, let me inflate the money supply to keep things moving. I know Tom thinks that a little bit of inflation is good because it creates innovation. In fact, he's moronic because it's moving us back to this pre-individual, I like to speak in very aggressive language, it's moving us back to this pre-individualistic place where people are going to invest less, they're going to specialize less, they, we're going to be less able to capitalize, harness their ambition because they don't get back from the world the keepable fruits of their labor. How did I do?

• 1:16:55Speaker 02

  You did pretty well. You're not moronic, though. You have just been indoctrinated-

• 1:16:59Tom Bilyeu?

  That idea might be moronic.

• 1:17:01Speaker 02

  Hundreds of millions of us have been, myself included, before getting into Bitcoin and all this stuff. There is a reason, there is a pseudoscience called Keynesian economics that's infiltrated all modern universities funded by central banks and its exclusive purpose is to justify the printing of money and the legal monopoly. Right? It's, it's a very perverse cycle because you get a system that can steal funds from people and then you use the stolen funds to fund university curricula-

• 1:17:30Tom Bilyeu?

  So that people don't get confused, it steals buying power.

• 1:17:33Speaker 02

  Purchasing power. That's the only power that really matters.

• 1:17:37Tom Bilyeu?

  Yeah, but I think people get lost in that because they're like, nobody's stealing money from me. I deposited a hundred dollars, I still have a hundred dollars.

• 1:17:44Speaker 02

  Well, the price of beef has gone up 50% in the past 24 months, so if you're a beef eater, you've been stolen from by 50% and-

• 1:17:50Tom Bilyeu?

  It's easy to get people to understand taxes theft, it, it's more complex. But anyway, as long as we're in agreement that they're stealing via buying power, I'm with you.

• 1:17:59Speaker 02

  Stealing purchasing power, that's right. So you were correct. However, I would like to take it-

• 1:18:07Speaker 02

  A step further, because what we're saying here is that when we print money, again, that's the point I cannot overemphasize, you are only violating individual private property rights. You are disturbing my power to control the assets that I otherwise could, right? And this comes in the form of price inflation, right? If I'm a steak eater and I've saved up to buy two years of steak and the price of steak goes up 40% because the central bank printed money, well, they've stolen steak from me effectively, right?

• 1:18:36Tom Bilyeu?

  Or a house, which is something a lot of people are complaining about.

• 1:18:38Speaker 02

  Insert your favorite asset here. I'm just picking steak because I'm a steak eater. So that is all well and good. It's incentivizing all the negative things you highlighted, right? Overconsumption rather than investment, overutilization of assets rather than preservation of capital, because there's a deeper reason there, but let's just leave it at that. And then misallocation of capital, so.

• 1:19:04Tom Bilyeu?

  Because governments suck at using my money.

• 1:19:06Speaker 02

  Yeah, it disturbs what's called the price signal. So you could basically think that the configuration of consumer preferences is always changing in the world. People always want different stuff all the time. The production structure is constantly trying to adapt and map on to that new configuration of consumer wishes, right? It's trying to satisfy consumer wants or consumer wishes. The degree to which you socialize property or violate property or steal, it inhibits the ability of the production structure to adapt. So you get misallocation of capital. This leads to a lot of waste and stuff in the world. But as bad as all those things are, the point that I really find deeply fascinating and whose work I'm drawing on here is,

• 1:19:47Speaker 02

  it's a book titled "A Theory of Socialism and Capitalism" by Hape. It's a very dense book, but it is deduced, right? He's deduced, this isn't an observation of economic history in reading someone's opinion. These are deductions from economic axioms. So it's hard to read, but the insights you gain are extremely powerful. There's a fourth consequence to the violation of private property or the socialization of property. And that is that you have now stopped, the degree to which you're violating property is the degree to which you are not rewarding productive members of society. And you are rewarding political actors in society.

• 1:20:32Speaker 02

  People that are, and I've said this before, the legislator's pen cannot create wealth, it can only reallocate wealth. So the degree to which a legislator can become wealthy at the stroke of a proverbial pen, which is the passing of laws, policy, etc. There is an incentive to shift from a productive role in society to this non-productive, extractive role. And the degree to which that becomes larger is the degree to which more people are drawn into non-productive roles. So what you're saying is there's a non-producer, right? We're rewarding non-productive activities when we print money or when we confiscate property in any way.

• 1:21:17Speaker 02

  So the thing that I'm fascinated with here is this money being such a fundamental technology to human affairs, it's used to hide the widest spread violation of private property rights we've ever seen through this global concerted action of central banks or semi-consorted action. They're all inflating their currencies. People that are on the ground saving are being taxed through this scheme. We are effectively, through the corruption of this economic fabric we call money, we're actually corrupting our own individual character development. That now people coming into the world that might otherwise be a baker or an engineer or some productive activity

• 1:22:00Speaker 02

  might instead choose to go over here and be a statesman or a politician or some other extractive role. And the degree to which we're violating property in that monetary system is the degree to which they're incentivized to take on political roles rather than productive roles. Such that the corruption of this technology that's so fundamental to our human being leads to the corruption of our character. And the corruption of who we are. It's like a breakdown or corrosion of the moral composition of society. Through the debasement of currency and the violation of property. That's what I'm deeply fascinated by and hopefully talking about and helping spread awareness about to prevent.

• 1:22:40Tom Bilyeu?

  Okay, so then I think we're gonna have to get into axioms. So as axioms are something that I came to understand very, very late, I will give people a very quick primer. An axiom is the base, the farthest down that you can take something and there's nothing more below that. So humans are an active species. Something like that. It's a base thing and now from there, everything is gonna make sense.

• 1:23:01Speaker 02

  Two parallel lines never touch. That's an axiom of Euclidean geometry.

• 1:23:05Tom Bilyeu?

  There we go. Okay, so getting into the axioms of what ought to be. You say you try not to should all over people, but you obviously have a sense of how things ought to be, at least as it relates to money. What are your axioms on how the world ought to be?

• 1:23:25Speaker 02

  These are not my axioms. I could just name a few from libertarian philosophy.

• 1:23:32Tom Bilyeu?

  Now, if you're asking me- Why would you say they're not yours?

• 1:23:34Speaker 02

  Well, I'll name a few that I've read from libertarian philosophers. They're not mine.

• 1:23:39Tom Bilyeu?

  You're just saying you didn't think of them?

• 1:23:40Speaker 02

  I didn't originate them.

• 1:23:41Tom Bilyeu?

  Sure, sure, sure, but I wanna know, what do you think is the, whatever number of-

• 1:23:46Speaker 02

  I'm gonna give you the is answer, like what I think actually are economic axioms, and then I'll give you the natural law ought answer, which is more of a moral, moral axiom, if you will. I can't name all the Austrian economic ones, but man must act is the most fundamental. So, this is to say, action is the purpose, purpose of use of means to attain ends.

• 1:24:13Speaker 02

  That's what we're doing all the time, right? You think about what you're gonna do with your day. You decide you're gonna need pants to go out in public. Well, pants become a means to the end of going out in public. Right? You eat some food. That's a means to the end of going to do the next thing you're doing. We're constantly selecting valued ends and then choosing means to get to that end.

• 1:24:33Tom Bilyeu?

  One of the biggest breakthroughs in my life of understanding humans was when I read from a biologist, humans are an active species.

• 1:24:39Speaker 02

  Yes.

• 1:24:40Tom Bilyeu?

  I was like, oh damn. Like, so I'm with you. As an axiom to understand people, you mustn't, will never just sit still.

• 1:24:46Speaker 02

  And, and I tweeted this today, actually. Inaction is an impossibility. To choose to not act is an action. You have decided that, given all of the possible things you could do in the world, you'd rather just sit here. That is means to a certain end. Maybe I want to meditate. Just sitting here could be a means to the end of meditation. But you cannot not develop a purpose and select means to pursue ends. You can't do it as a human, as a living conscious human being, you can't do it. That's one, that is the axiom really of Austrian economics. There's other ones like, um, man prefers present satisfaction to later satisfaction. So all else being equal, I wanna get paid now rather than later. If you want me to part with my capital, well, then you're gonna pay me something.

• 1:25:31Speaker 02

  You're gonna pay me an interest rate. And the degree of that interest rate is how much I'll be charging you for that time, essentially of separation.

• 1:25:41Speaker 02

  Theft always reduces productivity. This is another one. Um, taxation is theft. So anywhere that theft is occurring, it's reducing and disincentivizing further productivity. That's an axiom. Because if you're, you're creating a hundred bushels of apples and someone's stealing 10% of them, well, then your productivity has been cut by 10%. And their satisfaction came at the expense of your satisfaction. So the net satisfaction in the world has not increased, for instance. Uh, I'll leave it at three. I wanna give you the moral one, though. You asked me what I think we ought to do.

• 1:26:21Speaker 02

  And this is singularly crystallized in natural law. And it says you can basically collapse all the things, all the commandments and everything else into one, which is do not steal.

• 1:26:36Speaker 02

  Now, you might say, "Well, what about murder?" Uh, well, if you consider that through this property lens, that you own your body, the relationship you have with your body, the exclusive power to control your body that no one else has, this is the most fundamental property relationship. So if someone kills you, then they've basically stolen your life in this natural law sense. If someone puts you in jail, right, then they've taken your freedom to move about. They've stolen your liberty, right? They've taken away your ability to move about. So there's, you don't want to steal that either. And then when it comes to property, you know, all of the assets that you've justly acquired in the world,

• 1:27:17Speaker 02

  that you've worked to obtain, or that you've traded with others that have also acquired them justly. This is, again, justly being the key word. You want people that didn't take from others because that caused someone dissatisfaction. They earned their satisfaction of getting the thing at the expense of someone's dissatisfaction. That's a net negative on the world. Whereas if we trade consensually, as you intuited earlier, you assume what I have, you want what I have more than what you have. Otherwise, you wouldn't do the trade. And I want the same. I want what you have more than what I'm giving up. It's, that's the inequality of exchange that occurs where we both leave psychically better off. We're at least better off in our own mind, otherwise we would have never done the trade.

• 1:28:02Speaker 02

  So the degree to which all exchange is consensual is the degree to which we increase net satisfaction in the world. So if you just get to do not steal, which means don't print money, don't tax, don't actually steal or confiscate things, I think that is the, in my view, the ultimate ought in the world.

• 1:28:24Tom Bilyeu?

  It's very clear. Um, I don't know that this will be fruitful, but I'm super curious. I don't know the Ten Commandments off by heart, but I think there's, "Don't covet thy neighbor's wife and love, put no God before me," or something like that. Do, are those workable into that, or do they become a different category of thought?

• 1:28:42Speaker 02

  You know, I don't feel qualified to answer that, actually.

• 1:28:44Tom Bilyeu?

  Very fair. Religion's actually one of the things I hoped that we would have time to talk about today, though I don't feel like we're there yet.

• 1:28:51Speaker 02

  Uh, so I want to say one more thing, though. So-

• 1:28:56Speaker 02

  Again, check out the book, Tell Me If I'm Right or Wrong. My interpretation of it is Christ is essential to the invention of the socioeconomic conception of the individual. I want to say something about this. You can now strip out the historicity of Christ. Does it matter if he ever lived? You can strip out the theology. Does it matter if it was God, not God, supernatural, natural, doesn't matter? I think we could all agree that it's at least embedded in the social fabric at this point, right? The collective mythology of how we got to here. Christ is a big figure in that story. And now, if he was indeed necessary or inspirational to the invention of the individual,

• 1:29:37Speaker 02

  and the individual led to private property rights, which led to capitalism, which led to FAANG stocks, which led to Bitcoin, then all of the sudden, you start to see the importance of that imaginal reality we talked about earlier. You know, Peterson says this all the time, "We're living in stories." The first time he said that, I'm like, "What the fuck is he talking about?" Of course, we're living in stories. Everything's like a narrated sequence of events, but that's not, I don't think that's what he or the people that inspired him, like Carl Jung and others, think. They think more like this, that we inhabit mythologies, right? We're doing this live-action role-playing called private property rights. Because of this story, we have beneath the economic substructure called Judeo-Christian mythology, or religion, whatever you want to call it.

• 1:30:20Speaker 02

  So, I say this because I was turned off to religion a lot. I grew up Southern Baptist, and I became, turned away from it. As I became older and more well-studied, so I thought. But now, I've returned in a very fascinating way. It's like, wow, you, we have to have these stories to exist. We have to inhabit them. And we're currently inhabiting one. And it doesn't matter, again, you take out the historicity, take out the theology of Christ, it's still fundamental to get to these things, to get to capitalism, to get to FAANG stocks, to get to Bitcoin. So, there's very pragmatic, real-world consequences, right? We're changing our relationship with each other in the world that's creating modernity

• 1:31:01Speaker 02

  based on this live-action, imaginal role-playing we're doing through mythology.

• 1:31:06Tom Bilyeu?

  Maybe out of ignorance, I always felt like my getting wealthy did not take from anybody. I created something they wanted. I gave it to them at a fair price. And that worked out to my advantage.

• 1:31:22Tom Bilyeu?

  In that they got what they wanted in that momentary exchange, but I was able to build value in something that somebody else wanted for me. And so I could sell that to them. And now where money is, let's say, in a world where Bitcoin becomes essentially gold, it becomes the place where people store their value. There's only 21 million. And so now, if I'm Jeff Bezos, and I have some just insane portion of that, and don't have even really a mechanism to intelligently spend it all. And this is where we probably have to get to. People think that Jeff Bezos has all that money sitting in a bank. And

• 1:32:07Tom Bilyeu?

  of course, he does not even have to sell portions of his company to get that. So does that notion of equities like go away? Like, what does that look like?

• 1:32:22Speaker 02

  Yeah, so stock markets will continue to exist. But I think where maybe your confusion here is, again, purchasing power versus the supply of money. So the purchasing power of money will continue to increase the more wealth we create through free exchange. So although there's only 21 million Bitcoin, it sounds like, you know, this absolutely scarce number, the amount of purchasing power it can contain is unlimited. All right, you can have an unlimited.

• 1:32:51Tom Bilyeu?

  It's not unlimited, right? There is a cap. Like, there can only be so many satoshis for Bitcoin? Or is that not true?

• 1:32:57Speaker 02

  Well, you can actually soft fork Bitcoin and divide it further. So to your point, each Bitcoin, and a lot of people don't know this, this is probably important. You don't have to buy a whole Bitcoin. Each Bitcoin is divisible into 100 million subunits called satoshis. If ever that divisibility were inadequate, we're back to that property of money divisibility, if that were inadequate liquidity to support economic activity, right? If Bitcoin were global money, and one satoshi were worth, I don't know, a Or something, you can soft fork the code, which is to say, uh, it's a simple software update, let's put it that way, to increase the divisibility of Bitcoin.

• 1:33:40Tom Bilyeu?

  So that's built into the code.

• 1:33:42Speaker 02

  That's built into the code. So it's Bitcoin is essentially, and that's one of the reasons it's better than gold, infinitely divisible, right?

• 1:33:49Tom Bilyeu?

  It's only 21 million units, but you can infinitely divide it. Now, does that have the effect of printing more money?

• 1:33:56Speaker 02

  No, and this is another common, uh, commonly misunderstood thing. People think that if you can increase the divisibility of it, then all of a sudden you're back into inflation, right? But in the problem with inflation is the distributive effects of inflation. It's that this group is producing new money for themselves and you're not. When you just increase the divisibility of the money, it's, it's a, it's like a stock split.

• 1:34:17Tom Bilyeu?

  Equally.

• 1:34:18Speaker 02

  Stock split, right? You had one share of stock, now everyone has 10. No one was diluted, everyone was just increased the divisibility of their stock. That's essentially what the soft fork would be to Bitcoin divisibility. Now, this, this point, this is very important because people get this confused. The more productive we become as a global economy, the more purchasing power Bitcoin can contain. And that is unlimited, that is limited only by the amount of capital we can produce. Money as a.

• 1:34:48Tom Bilyeu?

  Well, you're gonna have to define that then, because if capital isn't money, what is it?

• 1:34:55Speaker 02

  Because he's. Money is a form of capital, but let me distinguish this, non-money capital. Let's say all the other things, right? The buildings, the stuff, the cars, the factories, the equipment, all of the productive factors in an economy, non-monetary productive factors, which I'm saying loosely is capital here, say non-money capital. Money's a call option on all that, right? It's denominating the value of all these assets that are trading back and forth. But there's also this, people are, this reservation demand for money. People are just holding money as a call option on all that stuff. So another definition of money, it's an insurance policy on uncertainty. The only reason people are holding money is for its option value. We don't know what's going to happen in the future.

• 1:35:40Speaker 02

  Therefore, what's the answer to uncertainty? Optionality. If I have no idea what's gonna happen, I want the maximum number of options to deal with all possible contingencies. That's what money is. It's another thing money is. So if you think of money, sorry, I'm talking with my hands here. Fixed supply Bitcoin over here, not changing, right? 21 million. But this capital stock, non-money, non-monetary capital, growing as we trade and produce more and more, this would imply the purchasing power per Bitcoin is growing, right? It's a call option on more and more stuff. This amount of stuff is limited by us. How much can we innovate? How much can we create? But

• 1:36:19Speaker 02

  there's no limitation on Bitcoin itself. And to the point of a Bezos or any individual actor holding an outsized portion of the money supply, that's capitalism. What we have removed, though, is the ability for Bezos, because he has such a large position in the money supply, to change the rules of the monetary network, right? And that's what the Fed has effectively done. It's like, we hold all the gold, we're gonna make the rules, Bretton Woods, 1944. We're gonna award ourselves this perpetual free lunch on the productive economy for the right of monopolizing money, which sounds asinine, because it is.

• 1:37:02Speaker 02

  That's not possible on a Bitcoin standard. So the fixity of rules, the unchangeableness or immutability of rules is the bedrock of peaceful and productive cooperation. And you know this, if you sat down at a table to play poker, and if the hand rankings changed every few hands and one guy was deciding, I mean, he would clean everyone out, and that would be that, and he would never want to play the game again, right? You would want to go and find another game to play. Poker works as a game because the rules don't change. We can formulate strategies and compete with one another, one another, in a productive way. But when you, if you want to drive people insane and really create a lot of conflict,

• 1:37:46Speaker 02

  just try changing the rules of the game every few hands. Now, this applies to any game, especially money. That's what inflation's doing, right? Nobody knows the rules of the US dollar. How many are in circulation? How many will be in circulation? Who's profiting? We don't even know exactly who the shareholders of the Fed are. What's their dividend? What are their criteria for deciding how much, how many dollars to produce? Who's getting it first? Who's going to be the Fed chair next year? Like, all, there's all of this uncertainty injected into managing the asset that's intended to be an insurance policy against uncertainty. That it's just oxymoronic in a way. And so Bitcoin is another way to look at it, is the

• 1:38:28Speaker 02

  most certain form of money we've ever had. And if money is an insurance policy for dealing with uncertainty, you would want maximal credibility in the properties of money to deal with that uncertainty. And that is Bitcoin. And that's why people, it's like, people think you can ignore it or avoid it, or I don't want to hear about it, but it's like, if you like, if you prefer wealth to poverty, and if you depend on the marketplace for wealth, which is the only generator of wealth, then you have to pay attention to Bitcoin. Because it's monetizing.

• 1:39:06Tom Bilyeu?

  Okay, now to go a layer even deeper.

• 1:39:09Speaker 02

  The difference between purchasing power and.

• 1:39:11Tom Bilyeu?

  Yeah, yeah. In, in fact, let me restate it, because as you were saying it, you were fucking melting my brain. So it's one of those that's so self-evident that once you hear it, you're like, oh my God, I can't believe I couldn't come to that on my own. But, so basically, it's, everything that we create has some value. The way that we denominate value of all kinds is with money. So whether that's energy, water, air, if you're on Mars, which was a joke I wasn't able to make when you said it the first time, because I didn't want to interrupt you. Give them a.

• 1:39:41Tom Bilyeu?

  All of that stuff is denominated in whatever the monetary system is. So in this case, dollars. Or Bitcoin. So it's an umbrella that by its nature encompasses all things. So as you produce more things, then it grows to encompass that you could buy all of those things. That everything has value that can be traded for that.

• 1:40:04Speaker 02

  Yeah, the more rigid the money supply, the more people choose to store their time, energy, wealth. There. And then if the capital stock, non-money capital stock is growing, then that would be reflected in an appreciation of the purchasing power of money. And this is like what gold, gold has been roughly, uh, one ounce of gold has equaled a fine man's suit for like a hundred years, right? But if you look at the price in dollars, it's gone from, I don't know, thirty dollars to twelve hundred dollars.

• 1:40:34Tom Bilyeu?

  That's interesting. I didn't know that.

• 1:40:35Speaker 02

  Yeah.

• 1:40:38Tom Bilyeu?

  I had an insight on that, but now it is gone, hopefully to come back at some point. So going to the sort of next layer deeper. So the book, The Sovereign Individual, which I have not read, but I've heard you talk about so many times. It predicts a lot of things that we're seeing. It predicted cyber cash, crypto, obviously.

• 1:41:02Tom Bilyeu?

  But it predicted social media, like, so what, what is the key insight to that book that allows it to predict all these things? And does it give us any insight moving forward?

• 1:41:14Speaker 02

  Yeah. It called social media narrow casting as opposed to broadcasting, which I thought was interesting. It also predicted that as the digital age started to really progress, that governments would likely resort to pandemic-like situations to try and reinforce the validity of their borders.

• 1:41:38Tom Bilyeu?

  Yikes.

• 1:41:39Speaker 02

  Which is interesting.

• 1:41:40Tom Bilyeu?

  What year was this written?

• 1:41:41Speaker 02

  This was written in nineteen ninety seven.

• 1:41:43Tom Bilyeu?

  Whoa.

• 1:41:43Speaker 02

  Yeah. And the key insight is again, the, the logic of violence. And the main point that they make is that cryptography allows us to insulate things or defend assets in a way that is many orders of magnitude cheaper than anything ever before, so that the cost of defense has plummeted.

• 1:42:11Speaker 02

  What you could say has a commensurate increase to the cost benefit ratio of coercion. Right? All of a sudden, you can't, why break into the guy's house if you can't sell his Bitcoin? Why invade the country if you can't take their Bitcoin, that type of thing? That it would have a decentralizing effect on government because government is as large as it is because it extracts monopoly profits through seniorage, through inflation, through taxation. Right? None of these are mutually negotiated free market phenomenon. These are all imposed and they're all able to be imposed because people had no alternative. There was no alternative monetary system. It's like you have to have a bank account. Right? Before Bitcoin, what else did you do? Hold berry gold in your yard?

• 1:42:56Tom Bilyeu?

  Right.

• 1:42:56Speaker 02

  Right? I mean, it's pretty hard to transact gold globally. So that's the key insight and the book, I'll warn you, it's a bit of a dry read, but I would highly recommend getting through it. I think there's a lot of good insights there.

• 1:43:10Tom Bilyeu?

  Yeah, that's, um, it, the whole idea of decentralization and all of the things that it's going to change. And again, my entry point was NFTs to, because for everybody, I think there's going to be something that's relevant to your life that forces you to get to first principles thinking. And once you're there and you can predict, then it becomes really fascinating. And as a person in media, what I realized, so I got showed something like six years ago. He called it V atoms and of course it's become NFTs. But he didn't call it that and he showed it to me and I was like, yo, that's going to change my business like entirely. And because when I think about, so we're trying to build the next Disney.

• 1:43:53Tom Bilyeu?

  And when I think about that, you start thinking about, we make things in plastic, plush toys, you know, all that stuff. And it's very expensive to make the first one. And so it gets very difficult to like reinforce your brand. And there was this moment back in the eighties where you could do what they called selling from the shelf, where you would promote the He-Man cartoon with toys on the shelf. And so they knew that moms like mine would take you to Kmart and you didn't want to go with her to the bra section. So you go to the toy section and you would see He-Man sitting there and it would tell you that there Was a cartoon and so you wanted the toy and you watched the cartoon and the cartoon advertised the toy. And so it got into this loop where they could actually make enough money to make the cartoons. So anyway, I'm thinking about all this stuff and I'm like, fuck, it's really expensive. They've changed the laws on advertising and all that stuff. So how am I going to crack that nut?

• 1:44:37Tom Bilyeu?

  I see these V atoms and I'm like, whoa, that's going to allow me to create virtual products that, because I'm, again, technology is one way street. I had a really hard thesis that people will value digital things in the same way that they value physical things. And, but the technology wasn't there, wasn't ready for prime time. Flash forward, obviously NFTs hit and I'm like, whoa, okay, I recognize this is that V atoms thing. Like I'm all the way in. And, but that, to be able to understand what I could truly do with it, I had to learn the technology, which forced me to understand blockchain, smart contracts, all that stuff. And then you're like, oh my God, now you can predict where all this is going to go. And that technology, the decentralization of things, the trustless nature of it all.

• 1:45:24Tom Bilyeu?

  Man, it's, it's hard for me to wrap my mind around the business implications. Like when you start thinking about DAOs, because I'm, I'm a traditional business guy. And so I'm thinking, whoa, DAOs are really going to come in. It's going to be a fascinating challenge to the traditional way of doing business, which is highly centralized. And so then I'm like, all right, is Steve Jobs right? And that by creating this walled garden, you can create something better. Or is Wikipedia right? Or Android may be a better analogous example where it's this open system and it's more decentralized. And you let anybody use your operating system that wants to.

• 1:46:00Tom Bilyeu?

  And man, it's, the change that's coming and the rapidity with which it's going to hit us is thrilling. If you're looking at it through the right lens, certainly from a business perspective, I've never been this excited in my life ever. Like this is, it's a moment of disruption. And so in fact, I'm going to put a slight, I think your enthusiasm for Bitcoin captures my enthusiasm for just the moment of disruption that we're living through right now. Where when you have, and because in business, it's not scary, the way that it's scary thinking about nation states.

• 1:46:39Tom Bilyeu?

  Until NFTs, I was looking at how do I beat Disney at their own game? And so I told my team when we founded the company, I said, our job is to stay in business long enough to figure this out because I don't right now see the path. Trying to beat Disney at their own game is a losing endeavor. They're 90 years ahead of us. They have untold billions of dollars in revenue. This is all pre pandemic and they have billions of dollars in IP. And I was like, whoa, like that's a really tall order. So the only thing we could do is tell better stories and we were certainly headed down that path of like, I think I see something culturally that's happening that they seem blind to. And so that was what we were going to capitalize on. And then NFTs happened.

• 1:47:20Tom Bilyeu?

  I'm like, oh my God, like the disruption now that's going to happen, they will be way slower than will be to adopt the technology, certainly to push it to its extremes. And so as things disrupt, for people that are able to get to first principles faster and think and be able to solve novel problems in a novel way, you've got like a real shot at something here. Now that, the way that people are going to think of that moment of disruption, the way that they're going to capitalize on this technology, I think brings us to this idea of morality and the, I don't want to put words in your mouth. So I will simply say the note that I took after listening to you speak on the topic

• 1:48:05Tom Bilyeu?

  was, I think Bitcoin as a god is what I wrote. And you said, I'm not going to call Bitcoin god, but, and it was the fact that those could even be put in the same, I'm trying to find the exact note that I took. Anyway, it was close to that. So how do these come together? How does Jordan Peterson begin to influence the way that you think about all of this religion, morality, and what's happening with Bitcoin?

• 1:48:32Tom Bilyeu?

  Well, that's a lot to unpack there. I would first, the NFT piece.

• 1:48:38Speaker 02

  I don't know a tremendous amount about NFTs, but what I would say, and this is in regards to centralization versus decentralization. So many people get lost looking at other alternative crypto assets or NFTs or the projects, thinking that they have the same trust minimized properties as Bitcoin, to say that they are truly decentralized. Uh, no one has a political attack vector on the network or the good or whatever it may be.

• 1:49:09Speaker 02

  It is my strong opinion that Bitcoin is the only asset that has truly, uh, credibly exhibited the qualities of decentralization, right? It's undergone a fork war. People have tried to increase the block size, change the supply, all these things. And Bitcoin is kind of tried and true. It's battle tested. So with NFTs, I would just say, and crypto more generally, NFTs and crypto, I don't think decentralization has been achieved anywhere else. So I'll just leave it at that, just so people, that is the key difference is that Bitcoin is the one asset in the world that no one can control. Um, one thing I wanted to say about the Disney battle, this may work in your favor, actually, is that should we move,

• 1:49:52Speaker 02

  should Bitcoin monetize and succeed as I have laid out? This will move us to a much more free market laissez faire, capitalistic market environment, where something like IP goes away. IP won't exist. Because IP right now is premised on litigation, right? Someone violates your IP, you go and sue them. In a Bitcoinized world, it's going to be much more cost prohibitive to enforce IP.

• 1:50:21Tom Bilyeu?

  Why?

• 1:50:21Speaker 02

  So that might work in your favor.

• 1:50:23Tom Bilyeu?

  I don't understand that.

• 1:50:26Speaker 02

  Largely because property won't be viable, right? If Bitcoin were the sole money in the world, it would be really hard to sue someone for their Bitcoin. It'd be very, very hard to enforce that. Now, had you staked some of that Bitcoin with a local governance model.

• 1:50:40Tom Bilyeu?

  That assumes though, that governments have essentially vanished from how we think of them now, right?

• 1:50:45Speaker 02

  They will have transformed significantly. Yes. The point being that it's much less economic to enforce IP. I could just leave it at that. It is, it is a long game thing and it would be a dramatic change, but might work in your favor trying to take out Disney.

• 1:51:00Tom Bilyeu?

  Yeah, that's interesting. We could definitely get lost in that rabbit hole, but I don't want to deprive people of hearing this whole thing about morality.

• 1:51:08Speaker 02

  Yes, yes, yes. So we've published a book that I authored with Jimmy Song, as a fellow Bitcoiner and a group of others called, titled, "Thank God for Bitcoin." This has received, you know, some criticism because people always go back to this

• 1:51:27Speaker 02

  quote in the Bible, "The love of money is the root of all evil." We're by no means advocating the love of money or the love of Bitcoin, or that Bitcoin is God, by the way. We're simply, we wrote a moral treatise on the history of money. I don't even think we mentioned the word Bitcoin until two thirds or three quarters of the way through the book. And we looked at it through a Judeo-Christian lens. And what the Bible references money many, many times. And I think it's written to be very accessible, almost like C.S. Lewis style, very short, punctuated sentences. You can read the whole book in maybe two hours.

• 1:52:09Speaker 02

  But the people that do read it report it being very transformational to their understanding of money. Right? You go in with this question, just like, what is money? What is Bitcoin? And you leave with a good foundational understanding of answers to those two questions.

• 1:52:27Speaker 02

  This, and this is part of my own personal journey, I guess. I was raised in Tennessee. I grew up Christian. I was in church on Wednesdays and Sundays. I was always a very scientifically minded young man. I became very fascinated with astrophysics. When I started reading by myself around age of 11, I went straight to the deep end of the pool, as I like to joke. I was reading Stephen Hawking and Brian Greene.

• 1:52:54Tom Bilyeu?

  Jesus.

• 1:52:56Speaker 02

  I was just...

• 1:52:58Speaker 02

  Enamored, looking up at the night sky, like, what is all this? And so I thought, okay, now that I know how to read, I'm gonna go try and figure it out. I was reading these books I could barely comprehend, but I think it just sparked this deep curiosity in me. But at the time, it also inspired a bit of an atheism, in a way. I was just very scientific, you know? Like, I thought Christianity was almost a fairy tale at this point. And this persisted through most of my teenage life. And then, later on, I'll gloss over some of this, but I discovered yoga. Yoga was very transformational for me. Reintroduced me, I guess, to the spiritual aspects of life. I got into meditation. Meditation changed my life.

• 1:53:43Speaker 02

  I always had trouble sleeping. I was an over thinker with meditation, which I learned. Lights out in 30 seconds every night now, which is a big deal if you can't sleep, you know, reliably. And so, I was less scientific, more spiritual, but I had not revisited Christianity until, through Bitcoin, actually. I was introduced to Jordan Peterson and his work. And he's, in my opinion, one of the greatest living lecturers. I would call him a philosopher. You know, he really gets at the fundamental nature of things. And he looks at it, looks at the world through many different lenses.

• 1:54:28Speaker 02

  And in that way, that method of kind of conciliance, right? Looking, what he calls multivariate analysis, looking at different topics through different lenses. One of the main ones is Judeo-Christian lens. He lended a lot of credence to religion to me. All of a sudden, it was not this fairy tale that I dismissed in my younger years, and I started to really look into it more closely.

• 1:54:56Tom Bilyeu?

  And I'm still looking. If it wasn't that fairy tale, then what, what does it hint at?

• 1:55:01Speaker 02

  So, my current view- And I love Peterson's answer to this, that people often ask him, does he believe in God? And he says, I don't believe in God, but I act as if he exists. So in my mind, that is Peterson putting the emphasis on human action. That's what matters. And if you look at the Austrian School, you'll learn that all human action is an expression of value. To walk across the room implies that you value being on the other side of the room more than you value sitting where you currently are. So we are constantly and unavoidably expressing our values through action.

• 1:55:42Speaker 02

  And looking at Christianity, it is this, the Bible specifically, it's not just a moral text, right? It's got, if you read it from the Old Testament to the New Testament, it goes through this moral development of humanity. There's a lot more kind of barbarism early on, and it shows how we learned and developed and changed over time. So I think it points to the emergence of morality. Morality sort of emerges from the rules of the game, if you will. Like, we can set our sights on something and work towards it, but the ultimate implementation of the morality really depends on the actual implementation of systems and technologies, in a way. So Peterson has this definition of God. God's such a loaded term.

• 1:56:27Speaker 02

  I hate even talking about it sometimes because people, they're either, oh, guy in the sky? Yeah, right. Or God is everything, you know, you can't even talk about it.

• 1:56:38Speaker 02

  Peterson has a number of definitions. One, he says, in that hierarchy of values, right? We're always, we all have this rank ordered set of values in our mind. Whatever we're doing in the moment is an expression of our current value. If I take a sip of water, it means I value a sip of water more than talking in that moment. Peterson says that God is the highest value in the hierarchy of values. So it's almost like we're expressing God through action in a way. God is kind of like this animating force or principle in life.

• 1:57:10Speaker 02

  I think it was G.K. Chesterton said that- A dead thing, only a living thing can swim upstream. A dead thing can go with it. Maybe I inverted that, but it's

• 1:57:21Tom Bilyeu?

  No, no, no, that's right.

• 1:57:22Speaker 02

  There's this principle to life that, you know, the entire universe tends towards greater entropy, more disorder. But life is antithetical to that. We actually are an organizing force, right? We, we negate entropy, we construct order. And that is the ancient idea I got from Peterson's work that's in Genesis and the Bible is that God is that force that courageously confronts the chaos of nature, converts it into good and useful order. And I think that force and that principle is embodied in the entrepreneur. Actually, that's what the entrepreneur is doing, right? You're going out into uncertainty, you're putting your skin in the game, you're staking your life, your capital, your ideas, your reputation, everything.

• 1:58:07Speaker 02

  Trying to pull something out of that unknown or that chaos that's useful and good for others. So I think, and the entrepreneur is the elementary unit of the free market, right? So I think the free market itself, this idea of freedom, being a creative principle is very closely connected to God. Another,

• 1:58:35Speaker 02

  maybe another way to look at God is this, you know, it's clearly he's eternal. He, I'm not anthropomorphizing, I'm just using what's there. This principle is eternal, which means it's outside of space and time. What other elements of experience do we have that are outside of space and time?

• 1:58:54Speaker 02

  Truth, love, freedom, right? These things that are, they're timeless, right? And they're, they're very important to,

• 1:59:03Speaker 02

  to all these things we've talked about, right? These foundational documents, markets, revolutions, they've been fought over these timeless ideals. And I think somehow God is kind of a composite of those in a way. And I don't think it's a coincidence that they're all creative principles, right? Truth, as I've argued in a lot of my writing, markets discover truth, they discover prices and tools. Love is clearly a creative principle. How we all got here and then freedom, you know, freedom is how we maximize wealth in the marketplace, free trade, as we've talked about today. So

• 1:59:40Speaker 02

  this is I'm way out there on the philosophical side of things, but to try and bring it home. If God is the highest value in a hierarchy of values, another definition Peterson has given of God is the truthful speech which rectifies pathological hierarchies. And I would define a pathological hierarchy as one that is premised on anything that negates truth or freedom or love. And that is precisely what our current socioeconomic hierarchy is built on. Central banking destroys price signals. We didn't talk about this a lot today, but there's a saying in markets that price is truth. This is the

• 2:00:25Speaker 02

  extent supply of capital in the world overlaid with the human demands for that capital is the price, right? It's dynamically updating in real time. It is the truth of what is right now, right? Whatever something is selling for clearing on the market, that is truth.

• 2:00:42Speaker 02

  Another thing markets generate is innovation. So the truth of digging a hole is a shovel, right? It is the best, most truthful, real way we figured out to satisfy that want at that price. And then the third thing markets are very heavily involved with is the development or promulgation of virtue. So we learn that honesty is more energy efficient in the marketplace than deception, right? If you tell a lie and everyone's experiences to some extent, you tell one white lie, then you have to tell another second lie, maybe to cover it up and it's just, it always blows up, right? It's not good. You're creating this little fork of reality to try and maybe

• 2:01:25Speaker 02

  overcome some short-term pain, but you end up exacerbating long-term pain, right? So this is, this is a virtue that's discovered through free exchange and free interaction. Central banking destroys all that. It destroys price signals. It subdues innovation, right? Your entrepreneurs are setting out.

• 2:01:48Speaker 02

  So prices are supply and demand, but when the central bank's involved, you can't trust the price. You don't know if it's supply and demand or policy. When you can't trust the price, you can't organize your affairs effectively towards satisfying the wants of others. I don't know if this price increase is because more people want the table, or because this table's really scarce and the central bank's printing a lot of money. Alright, so me as an entrepreneur, I may be thinking, "Oh, people like tables. I want to produce a lot more." I don't know. I can't disentangle the two. So distorting prices misleads entrepreneurs, which unwinds that process of confronting the chaos of nature, converting it into order, and then it induces moral wickedness. And that all of a sudden,

• 2:02:29Speaker 02

  your strategy, again, is to get as close to the fiat currency spigot as possible, because that's the lowest effort means of obtaining wealth. If I can just become a shareholder to a central bank, I now have a share in a company, a central bank, that bears perpetual profits to me. I don't have to work. My incentives to work and satisfy the wants of market actors is diminished. So that, I argue, is diminishing to virtue. And so, I think it's evil. You know, I do think central banking is evil. And I don't, I'm not even

• 2:03:09Speaker 02

  saying that the institution was set out with that intent. I'm just saying that mechanically, it becomes the invariant to human action that causes strategies to be adapted to getting as close to the fiat currency spigot as possible versus being an entrepreneur. It's anti-entrepreneurial. Let's put it that way. Entrepreneurs are the hero of the marketplace. They go on to the hero's journey. They go out, they get their clock cleaned, learn the hard way, like I have, as you said you have. And we take those lessons, we embody them, we adapt our strategy, and we come back. And hopefully, we either create something of value to others and we succeed, or even when we don't succeed as entrepreneurs,

• 2:03:55Speaker 02

  Our failure benefits the marketplace because other entrepreneurs can say, "That guy tried to open an Italian restaurant on that block and it failed. I'm gonna not do that. I'm gonna go do something else." So it's information feedback into the hierarchy of human organization. And central banking distorts and obscures all that.

• 2:04:15Tom Bilyeu?

  In any financial crisis, what can somebody do with their money strategy to come out the other side better than they went in?

• 2:04:22Speaker 02

  Yeah, this is a kind of a complicated question because one of the things that money is, I talk about this a lot on the show, is an insurance policy on uncertainty. So by definition, a financial crisis is a time of great uncertainty. So the standard strategy, you know, your grandmother's wisdom, would be to save your dollars, save your hard-earned cash. But that gets a little bit more complicated in a very inflationary environment where we are inflating currency very rapidly or counterfeiting currency.

• 2:04:53Tom Bilyeu?

  You throw that out.

• 2:04:55Speaker 02

  It's the same thing.

• 2:04:56Tom Bilyeu?

  Yeah, so we covered that last time, but it's worth, for people that are just encountering you for the first time, why do you say that, what is inflation and why do you call it counterfeiting?

• 2:05:05Speaker 02

  Yeah, so inflation quite simply is legal counterfeiting and counterfeiting is criminal inflation. They're mechanically the same thing, but inside of a legal monopoly at a central bank, it's called quantitative easing or some other euphemism that makes it sound really good. But if you or I do it, we get thrown in jail.

• 2:05:23Tom Bilyeu?

  So it's just making more money?

• 2:05:25Speaker 02

  It's just a political institution that has authorized itself the exclusive ability to print money. And when you print money, you are stealing claims on wealth from other savers of dollars. So.

• 2:05:41Tom Bilyeu?

  You're the first person that I'd ever heard say it like that. I always thought inflation was. A law of physics that we needed, that things just inflated by 2% year over year. That's just the way that it was. So, right now, we are in a very inflationary environment. Why? And I would say that's a part of why we're, I would very much call what we're in right now a crisis. The media is trying to soft shoe it, but I think every day it's going to be more and more problematic. And I could be wrong, but I don't think so. Why are we in an inflationary environment right now?

• 2:06:18Speaker 02

  Well, we're in an inflationary environment because we just printed $6 trillion in the US over the past 24-plus months.

• 2:06:25Tom Bilyeu?

  Which is what percentage of the total supply of US dollars?

• 2:06:28Speaker 02

  You would have to check the exact data on this, but I want to say it's an increase of about 40% of the total supply.

• 2:06:35Tom Bilyeu?

  For, since what, 1913?

• 2:06:38Speaker 02

  No, since 2020.

• 2:06:41Tom Bilyeu?

  No, but I'm saying the 40% of a supply that started in 1913. So this isn't like-

• 2:06:45Speaker 02

  That's right, that's correct. So, supply issuance starts in 1913. So for the first 108 years of dollar existence, we produced, let's say, again, check my numbers on this, 15 trillion US dollars. And then we just increased that by an additional 6 or roughly 40% in the past 2 years. So if you look at the chart, it's very kind of low and slow with a few burps on the way up, and then one huge spike recently.

• 2:07:11Tom Bilyeu?

  It's so crazy. I don't think people really understand, but before we go all the way down that, we will certainly get more into that. So, okay, we're in an inflationary environment, so how do you want people thinking? If grandma is, grandma's wisdom is now wrong because of that environment. And so if I, because I really am right now, to your point about you want as many options as possible in a time of uncertainty. I am right now trying to be as close to gold buried in my backyard as possible.

• 2:07:38Speaker 02

  Yeah.

• 2:07:38Tom Bilyeu?

  I always feel the need to say, I'm not, I don't actually have gold buried in my backyard. I don't want people showing up. Uh, but trying not to be locked up in too many things that are long term. Though full disclosure, I do own a very substantial amount of Bitcoin and Ethereum.

• 2:07:56Speaker 02

  Yeah.

• 2:07:57Tom Bilyeu?

  Uh, but for the most part, I'm trying to have my options open.

• 2:08:02Speaker 02

  Well, I hope you have it in self custody at least. Yeah. Because that's buried in the backyard.

• 2:08:06Tom Bilyeu?

  Yeah. Yeah, I'm not, I'm not to the point that you would be happy, but I'm getting close.

• 2:08:14Speaker 02

  Okay. Because if it's Bitcoin on an exchange or with a custodian, it's not your Bitcoin, as we commonly say. Not your keys, not your coin. I do, I don't want to disparage grandma. She's right, actually. You know, holding options in the face of uncertainty is the right strategy. It's just that the tool of optimal optionality, if that's a term, is not, no longer the dollar. It's decreasingly the dollar. The more you print new dollars, the more you're debasing that instrument's ability to store value across time. So it's, it's less useful as a tool of optionality, as money's intended to be. And as a nice barbell to that strategy, Bitcoin is, or gold, physical gold, is a really nice adjunct.

• 2:08:57Speaker 02

  Because as you debase currency, that would indicate, that would basically equal you have more dollars chasing the same amount or relatively same amount of gold or Bitcoin, which would be a higher price of Bitcoin or gold in dollar terms. So I want, on inflation, I don't want to leave this yet. Uh, it's a very complicated term. People often think price is going up is inflation, which it is. That's a form of inflation, price inflation. There's also monetary inflation, which is the expansion of the fiat currency supply. But to try, and the reason I equate inflation to counterfeiting, because it, it doesn't exist without the legal monopoly of the central bank. You don't have arbitrary expansion of the money supply outside of a legal monopoly. It just does not exist.

• 2:09:41Speaker 02

  So to try and give people a useful analogy about this.

• 2:09:46Speaker 02

  If you slice a pizza into more slices, it doesn't mean that there's more pizza available to eat. Right? You've increased the number of slices nominally, but the size and volume of the pizza has not changed. You cannot feed more people with it. You could similarly think of money as an option on the global capital stock. And every time you print a new unit of money, you're basically slicing that pizza. If the pizza is the global capital stock, you're slicing it into finer slices or thinner slices.

• 2:10:20Tom Bilyeu?

  But if I'm printing more pizza, why isn't it that I have more pizza versus...

• 2:10:25Speaker 02

  But you're not printing pizza. So pizza is global capital.

• 2:10:27Tom Bilyeu?

  Yeah.

• 2:10:28Speaker 02

  Capital, stuff, machines, equipment, real assets, let's say. Money is just the option, the call option to acquire those assets. And so if I increase the number of options available, what I'm doing is taking away the ability of those saving in dollars. I'm stealing from them. You're stealing their purchasing power. And that's why I always equate inflation and counterfeiting. It's the same thing as if you could go out and print a bunch of $100 bills, increase the number in circulation. You could go out and buy things that cost $100 that other people went and worked and saved to be able to afford those things. You're basically stealing from them, right? You're bidding up the prices of the things that they would otherwise buy.

• 2:11:12Speaker 02

  And that's what we've seen taking place over the past 24 months.

• 2:11:15Tom Bilyeu?

  So if it doesn't create more pizza, then why do people do it?

• 2:11:18Speaker 02

  Because people like to have convenient strategies for wealth acquisition. And setting up a legal monopoly to steal from all of society is a really convenient wealth acquisition strategy.

• 2:11:29Tom Bilyeu?

  It's interesting. So because I've gone on this journey, I've had to wrap my head around some of the fundamental questions that you ask. What is money being one of them? I think what this is when people... The reason that they print is they're going to go buy assets with what they've quote-unquote printed. So the government works with the Federal Reserve. The Federal Reserve creates the money out of thin air, but the way that they put it into the system is by acquiring assets. So they'll acquire government bonds or whatever.

• 2:11:59Speaker 02

  Yeah, but those are also born out of thin air. The government can issue debt ad infinitum as the Federal Reserve can issue dollars to buy government debt ad infinitum. This is the most organized crime syndicate that's ever existed on the planet.

• 2:12:11Tom Bilyeu?

  Okay, so now that people know that that's the way that we create inflation, what do we do in an inflationary environment? How do we protect our money? Because right now, I really, I don't allow myself to do overwhelm. So I break things up into manageable pieces. But right now, like, I don't know what to do in terms of with my money. So I have allocated about as much capital as I'm comfortable allocating. I'm keeping as much as I'm not worried about being inflated into oblivion. And inflation was, as I wrap my head around that, was the thing that caused me to change my behavior. Because prior to this, I didn't want to think about investing. And then when I really began to understand inflation, I was like, whoa,

• 2:12:56Tom Bilyeu?

  you have to invest your money into something that its value goes up at at least the same pace of inflation. Otherwise, to your point, it's even though I have the same number in my bank account, but it gives me, exactly. So I was like, okay, I have to do something. But now I feel like we're going into, I feel like we are in a time of so much uncertainty that I don't know what to do anymore. So even though I can describe, I can tell people what is happening, but I don't know that I have a good plan for what to do, like even in my own life. So what do I do?

• 2:13:35Speaker 02

  Well, it's a number of things.

• 2:13:38Speaker 02

  First thing is to own assets that cannot be counterfeited or printed into existence. So physical gold, Bitcoin in self custody, these are great options.

• 2:13:48Tom Bilyeu?

  But Bitcoin is so volatile, like, how do you, do you just take a long time horizon approach on that?

• 2:13:55Speaker 02

  Well, it's volatile in terms, dollar terms, right? And volatility is a function of price discovery. So if Bitcoin is a sub one trillion dollar asset, competing to be a hundred trillion dollar asset, you would expect it to be volatile in dollar terms. So yes.

• 2:14:11Tom Bilyeu?

  But that's called comfort when I need to. To buy diapers for my child.

• 2:14:15Speaker 02

  This is not, I'm not advocating for Bitcoin as a checking account. I'm advocating for Bitcoin as a long-term savings account.

• 2:14:21Tom Bilyeu?

  Define long-term.

• 2:14:22Speaker 02

  To protect yourself from the aggression of private property that's occurring through the counterfeiting of currency. Something like physical gold or Bitcoin is useful. For Bitcoin specifically, it's performed really well over four-year time horizons. So that's not necessarily long-term. I wouldn't sit here and tell you that Bitcoin will be at a higher dollar price in four years. There's a lot of uncertainty in the world. No one can make that claim. But what you do know is that you have a money with effectively, that's effectively perfected the properties of money, which we talked about last time. Specifically that we know it cannot be increased in supply. Whereas every other primary money in the world, the US dollar, leading the charge here, is being rapidly expanded in supply.

• 2:15:04Speaker 02

  So when you price one in terms of the other, you end up with a higher Bitcoin price as an insurance policy against debasement of the dollar. So one answer is that, own assets that cannot be counterfeited. Commodities, businesses. There's obviously a lot of risk here that you have to navigate. If it's a, if it's a public equity, they might actually be printing it. Some companies issue more shares than they actually have outstanding. You could check out the, I think it was, Chiquita Banana scandal.

• 2:15:33Tom Bilyeu?

  What?

• 2:15:34Speaker 02

  Yeah, it's called rehypothecation. So there's a lot of games played on Wall Street where they will basically represent and sell more shares than there actually are in existence.

• 2:15:43Tom Bilyeu?

  Isn't that illegal?

• 2:15:44Speaker 02

  Of course it's, well, it's illegal if you're not inside the monopoly, if you're not a prime broker.

• 2:15:49Tom Bilyeu?

  Okay.

• 2:15:50Speaker 02

  I think is the industry that's allowed to do that. But, so that's one area to be careful of. It's good to own businesses, good to own things. Productive factors in the economy. But if they're public equities, I do think you have to be a bit weary about things. Another thing is assets that are difficult to seize or confiscate. So this again, back to gold in your backyard or Bitcoin in self-custody. I think what we are essentially seeing in the world is that centralized governments are bankrupt. And all government revenues are derived through taxation, inflation, which are both forms of theft and other forms of confiscation.

• 2:16:33Speaker 02

  So I would expect those activities to increase as monetary debasement ramps up. And it could even be accelerated now that people have an option to exit fiat currencies. They can go into a savings technology like Bitcoin. This actually puts additional inflationary pressure on fiat currencies over time. Because people now have an incentive to sell the thing you're using to steal from me with, and hold the thing that you cannot steal from me or use to steal from me, which is a good way to describe Bitcoin. So assets that can't be printed, assets that cannot be seized. And then the last one, I guess I would say knowledge.

• 2:17:17Speaker 02

  You know, it's very important to kind of study the ebbs and flows of financial history. And equip yourself with a worldview for the world we're going into. We've seen currencies fail many times before. You could study the Weimar Republic in 1920s Germany, what happened there. Inflation has really corrosive consequences on people's psychology, their morality, their behavior. And yeah, I think that's a good start for protecting yourself and the world that we're going into.

• 2:17:53Tom Bilyeu?

  So what are you doing with your assets right now? So if just I'll go first. So I have a ton in savings, just liquid, basically going in and out of really short-term bonds. So no yield, but all stuff where barring the collapse of the US government, which I won't say is a 0% chance risk, but certainly very low, especially because they control the money printer.

• 2:18:17Speaker 02

  That's right.

• 2:18:19Tom Bilyeu?

  Very low risk, so money coming in and out. And then I have Bitcoin and ETH. I have some in the stock market, real estate. That's sort of my portfolio. All because I don't consider myself a talented investor in any way, shape, or form.

• 2:18:41Tom Bilyeu?

  What does yours look like?

• 2:18:42Speaker 02

  So dollars and treasuries are good, short-term liquid instruments. I think you're smart there. I consider Bitcoin to be the best long-term liquid instrument. And that's actually all of my portfolio. Dollars and Bitcoin. I don't actually do the treasury game. I hold a smaller balance of dollars relative to everything else, and I hold a lot of Bitcoin. Now, this is coming from someone who's studied this asset and this space and the history of money exclusively for six years now. So what I'm advocating for other people to do is to go out and do similar due diligence for themselves, their skill set, and create this worldview and then make a portfolio construction that reflects that.

• 2:19:25Speaker 02

  I can't sit here and prescribe you any specific portfolio construction because it's unique to each individual. And if I were to do that, you would not have the level of conviction or buy-in into that portfolio. So you would inevitably be shaken out. When the market starts to move, emotions would set in and you would be shaken out of your positions. So that's why I don't believe in specific prescriptive portfolio constructions, but...

• 2:19:49Tom Bilyeu?

  Because conviction is one of the most important parts?

• 2:19:51Speaker 02

  Absolutely. You have to believe in what you own. You have to have buy-in, right? It's not just that you bought it physically, but you need to have intellectual buy-in. You need to understand what you own. Otherwise, when the price moves, it's just like being at the poker table. If someone pushes in a big hand and you don't know exactly what you have, and you don't have a read on your opponent, then you're going to get shaken out, right? You're going to fold, or you're going to call, make a bad call, you're going to lose. It's the same thing when you own assets. You need to understand what you own, understand yourself, understand the asset, and have a conviction in what it is. Otherwise, it's just not going to work, in my opinion.

• 2:20:31Tom Bilyeu?

  That's really interesting. And one of the things, as I certainly spend time researching you, is I just... This is my first time really paying attention to a monetary cycle, where there was certainly, in the crypto world, there was so much euphoria until about a year-ish ago, and then it really started to falter and go crazy. And when people were euphoric, it was like, man, I was looking sideways as people were taking out loans and like getting into assets and I'm so paranoid. I was like, there's no way. I do not trust myself enough. And then same thing with when people started to sell, it was like panic selling.

• 2:21:13Tom Bilyeu?

  And the approach that I try to take is, okay, I'm not, I, I personally view myself as not being smart enough to beat the market, to try to do things on timing. So I'm just like, what am I prepared to do? Long-term or what can't I lose on? So when I was talking to my, the person who handles the actual buying of bonds and stuff like that. And I, I asked like 36 times, like what happens if, right? The price goes down. Do I still get my principal back? I may not get the interest or whatever, but I want to make sure that I'm in something that I can protect my principal. So just looking at all that. And then on the crypto, having a thesis and saying, okay, as long as I believe this to be true, I'm not going to sell.

• 2:21:55Tom Bilyeu?

  If I stop believing that to be true, then I might, you know, look at it differently. But watching the human behavior of seeing people act like they're gamblers effectively. And I remember when one of the first like big liquidation moments happened and there were, you know, memes of like people in front of their computer, like outside a nightclub, there was one. Guys outside a nightclub, he's squatted down in front of his computer on the sidewalk and he's just like holding his head because obviously he had been liquidated because I don't know if we want to go into explaining it, but like you, you're using leverage to buy it and it hits that point where your collateral is now the

• 2:22:36Tom Bilyeu?

  Exactly. So boom, you go from having something to having nothing. Absolutely devastating. And I was just like, oof, this is This isn't just, I have mistaken money for a property of physics.

• 2:22:55Tom Bilyeu?

  And when you realize that it's a property of psychology or useful fiction, as you refer to it, you really start to think differently about it.

• 2:23:03Speaker 02

  Well, there's an element of the physics as well. But I want to say something here. So leverage in crypto is not a good mixture, in my opinion. I think most people that play with leverage, most people that play with assets beyond Bitcoin, which we endearingly call shitcoins in Bitcoin Circle, you almost always get burned. I have some friends that have run the numbers on this as well. Of the 30,000 shitcoins that exist, two and a half had outperformed Bitcoin over a four-year cycle. Most of them go to zero, go away, or the vast majority of them underperform Bitcoin. So no leverage, preferably no shitcoins, so you might want to sell your ETH.

• 2:23:50Speaker 02

  Do as you please, but me personally, I just think that's another project that's accumulated a lot of technical debt. It keeps moving the goalposts. I think it will collapse at some point.

• 2:24:01Speaker 02

  And yeah, those instances of people crying and some people committing suicide, I don't know how true these stories are, but it can be ruinous to your life, right? If you consider how important money is to your day-to-day existence, to lose all of it in an instant can be extraordinarily painful. And I've, you know, I've traded options in this asset class for a long time. I ran a hedge fund in the space. I've felt the pain of losing money rapidly. It's not fun. I would not recommend it. I would also say that 99% of the hedge funds out there... Cannot outperform buy and hold Bitcoin. Just buy and hold Bitcoin.

• 2:24:43Speaker 02

  The easiest, least intensive, least energy output strategy there is. The smartest investors in the world struggle to outperform that. So unless you think you are someone on the spectrum of Rain Man Intelligence or some type of super prodigious trader, I would not recommend leverage or shitcoins or trying to trade when buy and hold Bitcoin has performed so well.

• 2:25:08Tom Bilyeu?

  All right, so talk to me about the human element of all this. One of the things that when I was researching for this episode that I heard you talk about that I thought was really interesting is that for whatever reason, every three generations we forget how volatile governments are, how volatile currencies can be. And I thought, wow, that echoes something that Ray Dalio talks about, which is this has happened many times before, just not in my lifetime. And so because I was born in the 70s, to me, it's like, oh, this is all pretty stable, like nice and easy. Why do people do all these crazy gyrations?

• 2:25:43Tom Bilyeu?

  But talk to me about the history of money. If Weimar Germany is the right thing to look at for hyperinflation and what comes of it, let's start there. What is it that the average person living today hasn't seen that they need to be very aware of?

• 2:25:58Speaker 02

  Yeah, so to start that, I want to talk about how theory shapes how we see, actually. And to do that, I want to talk about Copernicus. So for a long time, we lived on this planet and we saw the sun rising and falling, right? And we just assumed that we were the center and that the sun was going around us, right?

• 2:26:24Speaker 02

  It was a bit of, it's called geocentrism. I think it's kind of an ancient form of egocentrism in a way, or anthropocentrism, where we think we are the center of the universe in most cases. And then along comes a guy named Copernicus, ran the numbers and said, actually, the math says it's more likely that we are going around the sun.

• 2:26:45Speaker 02

  And so this shift in theory did nothing to change the prior empirical observations of the sun rising and falling, but it completely inverted our interpretation of that empirical data. All of a sudden, we realized, wow, we've been defrauded by this optical illusion. We thought we were the center, the sun was going around us. Well, it turns out we are going around the sun. So I say this to explain the way in which theory, all right, we had a new theory, heliocentrism, that actually changes the way we interpret empirical data. We often have this inverted in our mind. We think we see data and infer a theory, but it's the opposite. You have to, the theory is the frame that you're putting on reality that determines how you see it.

• 2:27:30Speaker 02

  And so Copernicus also came up with the quantity theory of money, which is pretty interesting. He said that if you double the money supply in an economy, that the price level tend to double as well. Now, it's not, that quantity theory of money is not specifically correct. There's a lot of factors that influence price, but it's directionally correct. If you counterfeit $6 trillion and you had $6 trillion to begin with, in the long run, prices will normalize at about 2X to what they were. So I think we have been, and as you just said, you thought it was this pillar of physics that prices needed to go up at 2% every year because we have been conditioned into this

• 2:28:11Speaker 02

  false theory of Keynesian economics, that we think rising prices and in the long run, failing fiat regimes is the norm of human history. But the real problem we have is that we are operating under a false economic theory. Printing money does not solve problems. Increasing nominal prices does not make you richer. So I think that hopefully the emergence of Bitcoin, that's leading to the resurgence of discussions like this, a heightened interest in libertarian philosophy and Austrian economics, it's actually throwing light on this corruption of money that's hidden in plain sight, right?

• 2:28:52Speaker 02

  How crazy is it to think that the most desired asset in the world, the US dollar, is also the largest pyramid scheme we have ever had in human history? How, how do you think that affects us psychologically?

• 2:29:06Tom Bilyeu?

  When did it become a pyramid scheme?

• 2:29:08Speaker 02

  Well, we started in 1913 with the Federal Reserve. Fractional reserve banking is effectively a pyramid scheme, right? You have more liabilities outstanding than you do assets in reserve. So you're running a fraud.

• 2:29:22Tom Bilyeu?

  So for every dollar that you are every 10, no, every dollar that you have in the bank, you can loan out nine or something.

• 2:29:30Speaker 02

  You have a contract with your depositor, right? They have given you a dollar that's redeemable for gold and you've given them a dollar in exchange, a liability. Now, if I overissue those liabilities, but I don't increase the amount of gold I have in reserve, this is why they call it a fractional reserve as opposed to a full reserve.

• 2:29:47Tom Bilyeu?

  Yep.

• 2:29:48Speaker 02

  All of a sudden, I'm now engaged in a fraud.

• 2:29:49Tom Bilyeu?

  You only have to have so much of what you've promised people.

• 2:29:54Speaker 02

  Yes.

• 2:29:55Tom Bilyeu?

  Actually in the bank.

• 2:29:56Speaker 02

  Yes.

• 2:29:56Tom Bilyeu?

  And you're good. And like 10%? Is there a number?

• 2:29:59Speaker 02

  Well, the number changes based on policy, but in reality, anything less than 100% is a fraud.

• 2:30:04Tom Bilyeu?

  Right.

• 2:30:05Speaker 02

  You have issued more checks than you're asked in cash, so to speak. So if at any time, the wrong amount of people, right? If you're a 50% reserve bank, 51% of the people come to redeem their money, you're bankrupt.

• 2:30:18Tom Bilyeu?

  Right.

• 2:30:19Speaker 02

  So that and the, you know, we've seen the bank run in movies like A Beautiful Life. People were, again, were very conditioned to think it's the norm. How does it run on the bank even exist? If it's a full reserve, honest bank, it couldn't exist. So I would say the moment we entered fractional reserve banking, it became a pyramid scheme.

• 2:30:37Tom Bilyeu?

  Was that day one?

• 2:30:41Speaker 02

  The dollar was redeemable for gold.

• 2:30:46Tom Bilyeu?

  Was redeemable for gold. Well, there was a brief moment where it stopped and we got back on the gold standard. In 1971, we break forever.

• 2:30:53Speaker 02

  Exactly.

• 2:30:54Tom Bilyeu?

  But when?

• 2:30:55Speaker 02

  So we suspend convertibility in times of war crisis. So that's when the banks.

• 2:30:59Tom Bilyeu?

  So that we can just pump money in.

• 2:31:01Speaker 02

  So the fractional reserve can continue to exist. It doesn't want people coming to the bank to redeem dollars for gold because that would show the insolvency, right? When the tide goes out, you see who's swimming naked, as Warren Buffett said. So we had on and off convertibility throughout the existence of the dollar in times of war and crisis. We outlawed private gold ownership in 1933, Executive Order 6102. And then the big one, where we move into this giant global pyramid scheme is 1971, where we break the tie to gold entirely. So now governments have the ability to issue dollars, the US government can issue dollars, ad infinitum, with no convertibility constraint.

• 2:31:45Speaker 02

  There's no check on this issuance of dollars. And I want to say something here, too. Again, inflation is legal counterfeiting. Counterfeiting is criminal inflation. The only thing you can do with printing money is violate the property of others. You cannot issue any equitable benefit to an economic system whatsoever. It's not possible. So I can't emphasize this point enough, that it is everywhere and always only theft. That is the only thing printing money can do. So any economy that has a central bank, which is every economy, has an institution, an anti-capitalistic institution of theft integrated into its core.

• 2:32:29Speaker 02

  And that is the source of so much of the psychological, financial, and moral malaise, I think, we see in the world.

• 2:32:36Tom Bilyeu?

  Okay, so I'm not saying this to play devil's advocate. I actually think this either is something that you have an answer for, that I'm just unaware of, or I'm about to change your life, I have no idea where. So, one of the things, everyone's paranoid about deflation. And I'm just dumb enough that I was like, why would deflation ever be a problem? That means that my money gets more valuable over time, it has more buying power. I'm like, that's amazing! But people get really freaked out about that. And you hear economists talk about, "I'm actually more worried about deflation than I am inflation." So I was like, well, why would that be true? I think it was you that I heard explain that in a deflationary environment, now people start hoarding their money, because they're like, whoa, whoa, whoa, why would I spend this today?

• 2:33:19Tom Bilyeu?

  If I wait a week, or a month, or a year, I can actually buy more, this is amazing! And so they stop spending. And so, then I was like, well, hold on, then inflation is a nudge to get things moving. And when I think about... All the amazing things that we've built and created, it requires people to create and to buy. And if you have creation but no buying, then creation will stop. And if you have a deflating currency, people, just the natural inclination is to not spend. I mean, you'll buy what you have to buy to stay alive. But like even when I think about my Bitcoin, I'm like, well, I'd rather hold it. So isn't it possible that it isn't a sinister desire

• 2:34:04Tom Bilyeu?

  to inflate the money supply into infinity, that we create the central bank, but rather, I'm being generous, but rather a desire to know that there's gonna be some times where I have to nudge this a little bit to keep the economy moving. And the economy moving, meaning people want to buy something because they know, oh, my money, they have, again, I'm stealing from you here. They have a non-intellectual understanding. So it's a visceral feeling of like, I should spend some of this money and get something because holding it into the future isn't all that it's cracked up to be. So I'm buying things. That cycle gets us all the innovation that we see now.

• 2:34:45Speaker 02

  Yeah, that is the standard Keynesian argument.

• 2:34:48Speaker 02

  It turns out, though, that human beings want to consume no matter what. We have to eat, we have to have shelter, we have to have transportation, clothing, all of these things.

• 2:34:59Tom Bilyeu?

  I don't need a new iPhone.

• 2:35:00Speaker 02

  Well, the argument has been that a little bit of inflation is necessary to stoke an economy. Otherwise, people will not consume and there will be no economy.

• 2:35:12Tom Bilyeu?

  Yep.

• 2:35:13Speaker 02

  But I don't think that water, that argument holds water at the outset. Is how are you going to eat?

• 2:35:19Tom Bilyeu?

  I'll do the bare minimum, there's no doubt. But when you like, if you just imagine a world where the currency holds steady or deflates, don't you think that'd be a pretty different world? Maybe better.

• 2:35:33Speaker 02

  I think it's a great, much better world, yes. So today, our debt, global debt to GDP is like 350%. So that's saying we have 350% in liabilities relative to about 100. So it's $100 trillion in global GDP roughly, $350, $450 trillion in global debt. That is a consequence of currency being debased because in an instance where units of currency are losing purchasing power over time, I'm incentivized to borrow the stronger dollars today and pay back the weaker dollars over time, right? So there's this incentive for accumulation of debt.

• 2:36:18Speaker 02

  That's one bad consequence of a fiat economy.

• 2:36:22Tom Bilyeu?

  Why is that bad?

• 2:36:23Speaker 02

  The accumulation of debt. Debt shrinks people's time horizon. So what you're doing is you're disincentivizing saving. That accumulation of options against the uncertainty of the future that we discussed, you're disincentivizing that. I now, instead of delaying gratification today and saving for the future, I now want to sell the future and buy today. That's effectively what you're doing when you take on debt. It's an inversion of the principle of delayed gratification. And it increases economic volatility significantly because, what did you just describe? The guy getting liquidated in front of the club. Once prices hit certain liquidation points or margin calls, assets are forcibly sold.

• 2:37:08Speaker 02

  So this increases market volatility, increases the misallocation of capital.

• 2:37:12Tom Bilyeu?

  Do you think Michael Saylor's crazy?

• 2:37:14Speaker 02

  No, you can use debt intelligently.

• 2:37:16Tom Bilyeu?

  Because he's going ham, dude.

• 2:37:18Speaker 02

  You can use debt intelligently.

• 2:37:20Tom Bilyeu?

  Like, I'm holding my breath. So if you can use debt intelligently, is your argument that just most people won't use it intelligently?

• 2:37:26Speaker 02

  Well, here's what Michael Saylor is doing, though. He is taking on debt where he has favorable terms, favorable repayment frequency, duration, et cetera. So he's... Borrowing the weak money, selling it to buy the strong money, which is Bitcoin. And then he's paying back weaker dollars over time. Subject to parameters that are favorable for him in his business, right? His strong balance sheet, all of these things. That's the smart use of debt, but notice what he's doing. This is Gresham's Law, by the way. Gresham's Law said that bad money tends to drive good money out of circulation. And what he meant by that is, in an economy where, say, dollars, pesos and Bitcoin are circulating,

• 2:38:11Speaker 02

  people are going to spend the pesos first, assuming that's weaker than the dollar in this example, the dollar is second, and they're going to hoard the Bitcoin. Because the Bitcoin has a limited supply. So when bad money circulates, people with that tactile knowledge of their economic reality, they tend to hoard the thing that can't be printed or is not being debased. The same is true when we used to clip coins. Emperors used to clip coins and one would have, say, 100% silver content. They'd do another issuance that had maybe 90% silver, 80% silver, and so on. But they all had the same face value. This is where Gresham actually developed his law. So they were legally circulating with the same face value. But people being smart, they hoarded the ones with more precious metal content

• 2:38:56Speaker 02

  and spent the ones with less. So that hopefully points to how things actually monetize and demonetize. This is why gold became money, right? People wanted to hoard the thing that was difficult to inflate or counterfeit and spend the weaker monies. And it turns out, gold historically is the most difficult commodity to inflate or counterfeit the supply of. We can't actually counterfeit the supply of it, not economically at least. So that's why it became the premier store of value. I chose to hold the asset. I being one economic actor across the whole history of economic actors. People zeroing in on this reality that there's only one asset that can most predictably hold its supply across time,

• 2:39:41Speaker 02

  which is to say it is the best store of value asset available to them. This is the process of monetization and demonetization that we've seen play out across history.

• 2:39:52Tom Bilyeu?

  Okay, so I have a base assumption and my base assumption is, I think, very clearly different than yours, but I'd love you to state exactly where yours is. So my base assumption is that if you are holding a currency, the value of a currency steady, or you are deflating it, that you will

• 2:40:09Speaker 02

  Well, you're not holding

• 2:40:09Tom Bilyeu?

  decrease innovation.

• 2:40:10Speaker 02

  Or decreasing the value, it's the supply. Value is determined always by the market.

• 2:40:15Tom Bilyeu?

  The impact, going back to your pizza example, though, if, if the size of the pizza stays the same, but only so much of it is allocated to me, but if my slice gets bigger over time, I would rather not eat it now, I'd rather wait until the slice is really big and can feed me, even though it's not, I'm not increasing the size of the pizza, but my allocation of that pizza is growing larger. That would be, to use the analogy of deflation, tie it to the pizza example, that's where we'd be.

• 2:40:45Speaker 02

  Well, in that instance, though, you would be a shareholder of a central bank. If the slice of your pizza is growing, or one of the first recipients of

• 2:40:53Tom Bilyeu?

  Why is that true? So, take Bitcoin. Bitcoin

• 2:40:55Speaker 02

  Pizza is the global capital stock. And so the slices are basically, and this is an analogy, obviously. The slices are the representational option people have on that stock. So you have one pizza, which is all the stuff in the world.

• 2:41:10Tom Bilyeu?

  Yep.

• 2:41:10Speaker 02

  And we slice it up into a net worth, right? What is the value of this global capital stock? Now, who owns which slice? Now, if we start printing money, we basically start creating new slices that are crowding out the other ones.

• 2:41:24Tom Bilyeu?

  Yep.

• 2:41:25Speaker 02

  Whoever gets those new slices first is stealing from those, the holders of the previous slices.

• 2:41:31Tom Bilyeu?

  If the government has coming to existence to

• 2:41:40Tom Bilyeu?

  solidify the will of the people to protect you, to protect property, but then, over time, it begins to involve itself in that property, and you're in a fiat position now where part of how they get the control is through money, and now you have the first true sound money, and it has the inelastic properties that make it, you know, the soundest money of all time. The question that I had for Michael Saylor, that he answers very differently than you is, aren't the governments going to get really upset about this? That their only real option would be to either mimic it,

• 2:42:24Tom Bilyeu?

  in which case, now I have that counterparty risk because it's a government that created it, versus this sort of mythical creator that poof has disappeared and other than whatever units he or she or they have is not trying to engage in the system in any way, shape or form, couldn't change it even if they wanted to.

• 2:42:46Tom Bilyeu?

  How do we avoid the government coming down with an iron fist and saying, yeah, this is, this is illegal now?

• 2:42:56Speaker 02

  Yeah, I do view this a little differently than Saylor, who's absolutely brilliant.

• 2:43:05Speaker 02

  I think his position in general is that they'll exist side by side, fiat currencies and Bitcoin. I tend to agree in the medium term, and I think that's happening today. Bitcoin's an almost trillion dollar asset. It exists side by side with countless or hundreds of fiat currencies, let's say. However, in the long run, I think Bitcoin, and again, we're back to that. The difficulty in understanding it is because it is so far outside our worldview. Right? The idea of gold being disrupted. Gold is almost the only game that humans have ever played in a way. It's foundational to all of our institutions. It's a 5,000 year old technology that's so old, we forgot what made it valuable.

• 2:43:51Speaker 02

  Everyone knows it's valuable. How many people can tell you the five properties of money and why gold was selected? The idea that that's being disrupted by this 13 year old digital upstart is pretty, pretty wild. But I think that

• 2:44:07Speaker 02

  Bitcoin is an innovation as significant as the Gutenberg printing press, actually. And I think the implications of its emergence will be similarly disruptive to institutions in the world.

• 2:44:25Speaker 02

  You know, this is late in the 15th century, I believe, when the printing press was invented.

• 2:44:32Speaker 02

  The 500 years prior to that, there'd been roughly 10 million books printed. All of a sudden, this super cheap and efficient way of reproducing books is invented, the Gutenberg printing press, which was a composite of other inventions, by the way. It wasn't really a breakthrough in itself. It was one guy or guys put together four or five different other inventions and made this thing work. Similar to Bitcoin, actually. That's what Satoshi did. He pulled together things that already existed, but just put them together in a radically new package that we call Bitcoin. 10 years after the invention of the printing press, 10 million books were produced. So the amount of books produced in 10 years equal to the amount produced in the 500 years prior. What did this do?

• 2:45:14Speaker 02

  This led to the rapid proliferation and dissemination of literacy, numeracy. Again, psychotechnologies, right? These modes of systemizing our cognition that actually increase our ability to cooperate absent or independent of institutions of the day, which the dominant institution of the day was the church. They owned a monopoly on knowledge effectively via the scriptoria, which is where, uh, scriptorium. I may be saying that wrong.

• 2:45:44Tom Bilyeu?

  You can make it up. I have no fucking idea. I've never heard that word before in my life.

• 2:45:47Speaker 02

  They used to have monks copying books by hand, right? So to produce one book took a lot of labor. Books were a luxury item. But all of a sudden, due to this innovation called the printing press, the cost of book production plummeted. Books become much more widely dispersed. And the church at first didn't realize this existential threat. Once it did, it actually tried to clamp down on the printing press, uh, which created an interesting dynamic that... We actually started producing books on how to produce the printing press. So it saw that, this is a good allegory, I think, that when the institution tries to clamp down on the disruptive technology, the subversive technology, let's say, it

• 2:46:31Speaker 02

  actually drives it to its highest and most useful form of subversion, actually. So the result of that was a lot more thinkers, a lot higher quality of thinking, variety of thinking, and in general, it created a market for heresy. Right? This led to Martin Luther penning that, like, why do we need you? Individuals can now have this independent relationship with the word of God because they've developed literacy and whatnot. They don't need to go through this middleman of the church. And the printing press effectively led to the dissolution of the church as the dominant institution in the world.

• 2:47:12Speaker 02

  So we had separation of church and state and all of the benefits that that created in the aftermath. I think encryption technology, and this is deriving a lot of this from the book, The Sovereign Individual, which I've recommended highly, is similar, that it actually disrupts functions of the government that we needed the government previously for. We can now provide with code, Bitcoin being an obvious one, right? We needed the physical enforcer for property historically. Now for money, the most important property, you don't need that enforcer anymore. So I think that Bitcoin, its emergence will actually lead to the dissolution of the nation-state

• 2:47:57Speaker 02

  as the dominant organizational model for human beings.

• 2:48:00Tom Bilyeu?

  Every time I hear you say that, and I may regret saying this out loud, but every time I hear you say that, I'm like, shh, shh, shh. And look, I know that that also would be its own form of social engineering to like, hey, don't tip off the government, like, let this happen, like, give it more breathing room. And so there would be unintended consequences there. But it's like, man. So I'm going to give you my layperson's view on Bitcoin and why I've become so, and admittedly, I'm not a maximalist, so for me, this is looking more broadly at cryptocurrency and the digitization of value, which is how I see this. So my thesis is technology is a one-way street.

• 2:48:43Tom Bilyeu?

  We will find anything that can be turned into code will be turned into code for reasons such as that you can create absolute scarcity. You can now have a blockchain that will track ownership. So everybody knows exactly what's going on. There's a transparency to the ledger that

• 2:49:00Tom Bilyeu?

  that we don't have to be slaves to as many laws of physics. You're still going to be tied to energy production. But once we are spending, once you can tap into the

• 2:49:14Tom Bilyeu?

  the, basically your nervous system and you can get me to feel like I'm flying where it is indistinguishable for me actually flying, then all bets are off. And I think, given the human desire to pull the levels of our neurochemistry, we will just end up going down that route. So it just makes sense to me that things will be digitized, that money will be digitized, that anything, again, like I said, anything we can, for sure. It's more efficient, it's more exciting, it's more interesting. It's, it just seems like an inevitable sort of one-way street. And so I'm like, ooh, when I heard about this and finally went down the rabbit hole of learning what it actually is and why it works. I was like, okay, I totally get this.

• 2:49:57Tom Bilyeu?

  And for me, the, the priming mechanism was NFTs because I knew that would make sense for my business. All of that's sort of irrelevant, but it took me down the path of, of learning what this is.

• 2:50:09Tom Bilyeu?

  And so now I'm like, whoa, whoa, whoa. For the first, not the first time, we're all living through a moment right now where, for the first time, we, as just normal individuals are front-running the institutions. And so I became obsessed with just getting people to look at it because I can't see the future, nor can you, nor can anybody. So I don't know it's going to work out. It could end up being a disaster. So I don't want people to just do what I say. I want them to go learn what this is because I think it's, it is incredibly important for all human beings to be able to think from first principles, meaning you know how things work. Don't just think about things, think about the nature of things. And when you understand the nature of things, you can solve novel problems. A problem nobody's seen before, nobody can give you a book, there is no way.

• 2:50:53Tom Bilyeu?

  For me to sort of pre-masticate the idea for you. But now you have the information, like with literacy, where you can go on this discovery mechanism. And if you should lead to the same conclusion that I have come to, which is that, oh my God, this moment of panic I had where... So understand, dude, that this to me is funny. And I really believe that the, the purpose and meaning that I'm finding in life is, I've had to learn everything the hard way. I'm not particularly bright and I can't think fast, but I can think really fucking deeply about something. And so because I have to learn things the hard way with sort of normal hardware, right? I don't have particularly, I don't have a genius like that.

• 2:51:36Tom Bilyeu?

  But then I can sort of explain, after I've really spent some time with it, I can explain it.

• 2:51:43Tom Bilyeu?

  Is I had this moment of panic where, as this guy who managed to create tremendous wealth in his life by spending two decades getting good at business, right? Took me for fucking ever. I did not have natural instincts and entrepreneurship, but I figured it out. And so then have created wealth in my life. But now I'm still ignorant to investing. So I've created like fucking crazy money, money where people be like, what? And, but I don't know how to invest it. And so I get involved in the world of investing and I'm telling my money manager, just don't fucking take risks, all right? Like, keep this shit as, just keep me at the amount of money that I have, the buying power. That's all I'm looking for. I'm not trying to Warren Buffett this shit. I don't need to die as the richest person on earth. None of that matters to me.

• 2:52:24Tom Bilyeu?

  But they keep like haranguing me, Tom, you can't just do that. Like you, and I'm like, why? And no one could explain it to me. And the confused mind says no. So they would try to explain mechanisms, calls, puts, options, that, you know, every seven years I could double my money, all that. And I'm like, I don't give a shit about that. I just, I've already made the money. I just want to protect my money now. And then I discover NFTs and then I discover fucking Michael Saylor. And he goes into inflation and like what it means and how it breaks down your buying power. And I thought, oh my God, I have to then keep making money and I don't want to have to keep making money. That's right.

• 2:53:06Tom Bilyeu?

  So then I'm like, God damn it. And so I'm looking at inflation and I'm saying, here's one thing I find really fucking distressing. No one can agree on what's happening. So I'm like, then it's not super obvious. You've got Michael Saylor, who's like, Tom, you're going to be broke in 62 days. And then you've got, you know, other people that are like, come on, like it's, you know, we're, we're only around 2%. Like this is all madness. And then you've got people that are in between. And then I find you and you actually explain what inflation is. And now I'm at first principles. Now I understand it. Now I know what's happening. Now I'm really freaked out. So now my moral obligation goes to 100, but I'm like, Breedlove, will you shut the fuck up?

• 2:53:47Tom Bilyeu?

  You're gonna like, get the government, like they're gonna freak the fuck out and they're gonna clamp down on this shit. And now I'm legitimately like, whoa, what do we do? Because my hope is that you're right about the thing and you're wrong about either the speed or the amplitude. Meaning you're probably right that on a long enough timeline, government takes on a new shape. But it happens over five or six generations. It doesn't happen in 20 years, which that would be literally bloody and terrifying. But if it happens over 100 years, then I can see it where it just changes the dynamic between us as sovereign individuals and the government.

• 2:54:32Tom Bilyeu?

  Because quite frankly, I don't think most people want sovereignty. Not, not 100% sovereignty. Yeah. And I'll explain it through Bitcoin. I know I'm supposed to put it on my cold storage device and put my cold storage device somewhere very safe.

• 2:54:55Tom Bilyeu?

  But I kind of prefer it on an exchange because I want them to deal with like the security and all of that because I'm sure as hell not storing it in my house because I don't want to incentivize somebody to break in. So now I've got a I've got counterparty risk of like I'm storing it at a bank like where am I putting this fucking thing? So I realized whoa, like I'm a I trust myself a lot, relatively bright, very hardworking, like, hey, if anybody can figure it out, I can figure it out. And I still want somebody else to deal with it.

• 2:55:31Speaker 02

  Yeah, it's.

• 2:55:33Tom Bilyeu?

  And that's analogous to wanting a government to be the one to come in and protect my home. I don't need I don't want to need a gun. You know what I mean? Shit like that. I want a government to deal with some of these things.

• 2:55:43Speaker 02

  Yeah. And again, as a means of either a cognitive expedient or outsourcing security, like that's natural. We want that. I should make the important point. It's not black or white. It's not like banks or Bitcoin. You actually have Bitcoin banks. They already exist. You know, Nightig and all these other guys, they're just taking custody of Bitcoin now, giving you traditional banking services, but on a Bitcoin standard. The other aspect is it's not you don't have one pot of Bitcoin, you know, you can put a little with this bank, that bank, this bank, you can spread out your counterparty risk, keep someone self custody. I mentioned multi-signature earlier that might be a little bit beyond the scope

• 2:56:25Speaker 02

  of this conversation, but you can actually get redundancy plus self sovereignty. So you could trust yourself, but not make your house a target by using a multi-signature setup, which I think is the most useful schema for custody in your Bitcoin. Because you get, again, redundancy, you don't have single point of failure, but you also don't have counterparty risk.

• 2:56:45Tom Bilyeu?

  And that's going out to like my friends or my family and saying, hey, you five or six people, you also have to sign for this to be moved. And one of you hopefully goes, did Tom really want this? Right? That's what multi-sig is?

• 2:56:58Speaker 02

  Correct. Yeah, you're you're selecting your circle of trust, basically, and structuring it in a way that a majority would not collude against you.

• 2:57:06Tom Bilyeu?

  Yeah, and that they don't probably even know who each other are.

• 2:57:09Speaker 02

  Exactly. And there's a whole lot of game theoretic considerations to that, but it can be done is the point. And Bitcoin enables us. You can't do that with any other any other assets. So. That's radically new. To your point about breed love, shut the fuck up. You're not the only one to say that, actually.

• 2:57:26Speaker 02

  People have a bit of reticence about maybe discussing the geopolitical implications of Bitcoin. But the way that I look at it is that these conversations are going to be had. It's just a matter of are they being had behind closed doors, you know, favoring those in the room? Or are these conversations we're going to have out in the open?

• 2:57:54Speaker 02

  Such that it does not produce such an asymmetric outcome? So maybe I'm wrong, you know, I could be persuaded one way or the other. And I've had a lot of smart people give me really good criticism about it. But it seems to me that in the digital age, you know, and the ethos of openness and transparency that we discuss what we've done here, what world have we created for ourselves? How does this radical new asset or form of property change the game? And what are the geopolitical implications? What does this do in the broader span of human history to the institutions we've come to depend on?

• 2:58:31Speaker 02

  I think it's a fruitful conversation to be had out in the sunlight. I do think, though, that it could be, you know, we're very maybe indoctrinated to some extent that transitions have to be bloody, they have to be violent and, you know, what have you. But again, a lot of this is rooted in the viability of property. Again, the book The Sovereign Individual goes into the logic of violence and how this has changed human behavior and human institutions over time.

• 2:59:02Speaker 02

  One simple example here would be the knight on horseback. It used to be the dominant force in the land because this guy could afford a warhorse, afford a suit of armor and a lance. The stirrup actually was very, very pivotal innovation because before the stirrup, The armored knight was too heavy to get on horseback, so he didn't have mobility to be the force on the land. So the stirrup, the seemingly simple invention, changed the logic of violence that allowed the knight to become dominant.

• 2:59:30Tom Bilyeu?

  That shit is so fascinating, things like that, and how, like, what a big knock-on effect they have.

• 2:59:36Speaker 02

  Yes.

• 2:59:36Tom Bilyeu?

  Utterly fascinating.

• 2:59:37Speaker 02

  So then that was, this, you know, had implications on the feudal age and the knight, you know, uh, the, the moral code of chivalry. All these things emerged from this kind of simple innovation that made the knight the dominant force. But then what happened? We invented gunpowder. So the, you know, one knight that could take on 50 peasants in armed combat, all of a sudden, one peasant at 200 yards can take out a knight. So it all changes again, right? Chivalry collapses, all these things. So when we change the logic of violence, which means, you know, the economic returns of violence or coercion, or the cost of defense, the way we organize ourselves changes.

• 3:00:17Speaker 02

  And so you can think of Bitcoin as this new technology that so radically increases the cost to benefit ratio of violence. And that if someone's properly custody of it, again, in a multi-signature format or whatever, there's not any carrot at the end of robbing them. You're not going to get anything, right? You can go and in Bitcoin circles, they call this the $5 wrench attack. Cause you buy the wrench for $5 and you beat the guy over the head with a wrench until he gives up his Bitcoin. But if he's custody of it properly, there's no incentive even to conduct a $5 wrench attack. So in this gigantic geopolitical upheaval that I anticipate occurring

• 3:00:59Speaker 02

  due to the monetization of Bitcoin, I think it could be very uncertain at first, you know? Governments are going to use their power in certain ways that could be unfavorable, let's say. But over time, as Bitcoin continues to monetize and more and more people are holding their wealth in this inviolable property, that would. I would tend to believe that the incentives towards peaceful cooperation would begin to outweigh the incentives to coercion. So although it could be a bit rocky in the beginning, I think the long term outcome is way more fruitful for for humans, you know, we're. And something you said earlier, too, that maybe people don't want sovereignty.

• 3:01:44Tom Bilyeu?

  Full sovereignty.

• 3:01:45Speaker 02

  Full sovereignty. I think people.

• 3:01:49Speaker 02

  I think incentives are the fertile soil from which our humanity springs, actually. Alright, so we think is maybe a bit egotistical that we think that however we are, this is the way humans are, and it's the way they've always been. But again, that's totally not true, right? Pre-printing press, most of us were illiterate. We didn't have our cognitive software was completely unrecognizable to what we are today. No one could sit here and have a conversation like this, much less with all these amazing tools we've created in the marketplace since then. So. I think that by changing the fundamental. Soil, which are the incentives, again, like the logic of violence, all these other things, that we actually change our character traits and behaviors.

• 3:02:34Speaker 02

  I've said that, and to try and draw a commonality here. I said organizations and institutions are all property strategies, you know, I think that even DNA itself is kind of a. Survival strategy or property strategy over time. Right, we're all all organisms geared towards reproduction. Reproduction necessitates territory. We need to take territory. Humans express territory in property. Right, that's how we share and and build, uh, declare property and create. More wealth, actually, by by trading through property rights. So I think that we, our strategies. Ultimately conform to the invariance. On the game. Board, if you will, and Sailor talks about one of these is gravity, right?

• 3:03:19Speaker 02

  Like, gravity is the one invariant that all of these strategies, whether you're a human being, whether you're a building, whether you're a government, like you're, you're adapting your strategy to gravity. It's an invariant, right? You can't, if you change gravity, it would destroy all the humans and buildings and all the things. You can kind of consider Bitcoin, maybe I'm out on a limb here, but I think 21 million, this fixed supply asset, as the emergence of a new seemingly perfected invariant in the market for money. So it forces all of us to change our strategies to adopt this invariant in the, in the space. So this is at the individual level, the institutional level, and at the nation state level.

• 3:04:06Speaker 02

  Sounds a bit radical, but I think that if you come to see, you know, DNA as a survival strategy propagating through blood, flesh and bone, and that all the other creations we make are just, you know, in biology, they call this the extended phenotype. We have the genotype, which is the genetic code, the strategy itself. We implement it in the phenotype, the body, the teeth, the eyes. We have the extended phenotype, which are our tools and technologies, or even our institutions, that it's all a strategy. And that those strategies will adopt themselves to the invariance that we create for ourselves. I think Bitcoin is just the perfect invariant money.

• 3:04:44Tom Bilyeu?

  Strong men make easy times. Easy times make weak men. Weak men make hard times. Hard times make strong men. And you get in this loop.

• 3:04:56Tom Bilyeu?

  It's catchy and it's easy to remember, but it doesn't have the fidelity of where you're going. This question that I'm going to ask is going to seem perhaps unrelated, but it's everything to me. Are rich people evil?

• 3:05:13Tom Bilyeu?

  Because that's the narrative, that's the worldview that people are taking. And I think now, using your level of fidelity, what I see that breaks, the reason it becomes hard times, is they break the individual property rights.

• 3:05:28Speaker 02

  Yes.

• 3:05:28Tom Bilyeu?

  And then, society begins to break down because there's something fundamental to my need to be able to control my destiny. And when I can't do that, darkness ensues. Because I will try to do that, and to get me to fall in line, you will have to violently oppress me.

• 3:05:44Speaker 02

  Yeah.

• 3:05:45Tom Bilyeu?

  And when you violently oppress me to get me to what I actually think, they have something beautiful in mind that they want to do. They really want to help people. But to get everyone to stop being an individual takes an obscene amount of punishment. So are people...

• 3:06:02Speaker 02

  That was a great lead in, and it was not the question I was expecting whatsoever. I'd like to first... My first answer would be no, but I want to be more specific. So Solzhenitsyn.

• 3:06:16Tom Bilyeu?

  Oh, yeah.

• 3:06:16Speaker 02

  The line between good and evil cuts down the heart of every man. It is my assertion. I'm sure there's a lot of factors that move that line in people. But when I look at history, I see material incentives as being the strongest force moving that line around. When people are compensated to do something, they're much more likely to do that something regardless of its moral qualities, let's say. So, and again, is why I always talk about property. It's like, the less viable we can make property, you can remove that option entirely. I always talk about making versus taking, right? Making being the entrepreneurial path, trade, hard work, delayed gratification,

• 3:07:00Speaker 02

  that's one way to acquire wealth. The other way, the political way, of just taking whatever the makers made, right? You just steal it from them. The degree to which we can make taking more expensive or less possible, which is saying the same thing, is the degree to which we shift that moral composition, or ethical, or pragmatic composition of society, what people are actually doing. Everyone's trying to get more wealthy all the time. It's natural, right? You want to live in a bigger place. You want to eat nicer food. You want to have more freedom. This is very natural. It's nothing to be ashamed of. The means by which you acquire that is something to be ashamed of, though. If you're taking it from someone, you should be ashamed, because you did not create that value. You stole it from someone.

• 3:07:45Speaker 02

  The more we can make this an impossibility, the more we can have people engage in the making path. And this is where we talk about Bitcoin being so important, because Bitcoin is, in my opinion, the most expensive form of property to violate in human history. Borderline's not impossible. If you custody it properly and you maintain all your protocols, there's not really a feasible way to take it. That makes tyranny less profitable, let's say. So when I see good and evil, the ebbs and flows of good and evil in the world, it is occurring in everyone's heart. And if you don't admit that, then you're not being honest with yourself, right? We all have the capability to be evil or do dark things. We've probably all done some dark things.

• 3:08:30Speaker 02

  Maybe there's some exceptions out there. I know I'm not one of them. We cannot change human nature, so far as I know. But we can change the incentive structures we inhabit. And we can make property more expensive to violate. And by doing so, we can shift the moral composition of society. So no, rich people are not evil. And like you said earlier, to elaborate on rich, like, okay. I guess it's sort of rooted in that axiom that man prefers present satisfaction to later satisfaction. That's almost like saying you're just given the options between rich and poverty. Which one do you choose? All else being equal. I hope everyone's saying rich. I mean, you don't even have to use it. You could give it all away, right? You could be rich and then give it all away and still be back in poverty.

• 3:09:14Speaker 02

  But if you just chose poverty, you'd just be in poverty. So.

• 3:09:19Speaker 02

  That selection process that's occurring in everyone's heart, I think the moving the soldier units and heart line, the most effective way we can do that is to make property expensive to violate. That is the most important material incentive that we can move in the world. And on this notion of religious impulse and how we're attaching this to our stories, you are the unifying principle of your organization. Just like God is the unifying principle in the church. We do impute a religious value to these hierarchies that we're in. I think because all action is premised on faith. We talked about this in the last episode. You never know what's going to happen, right?

• 3:10:01Speaker 02

  You can just choose an end that you want to obtain and then choose means and then try to act towards it. But you're constantly messing up errors, getting off course and trying to get back on path. Right? So every action is an act of faith in a way, right? You just have the faith that the thing that you're trying to make happen will happen. And if it doesn't, you'll error correct. So there is this, there's this religious quality to all human hierarchies. Doesn't make you a priest or anything, but people in your organization are going to look up to you. They're going to look, hey, I'm giving you my best working years, or whatever the guy said to you. That's a real thing, right? He's on an act of faith, betting that your company and your mission

• 3:10:44Speaker 02

  and your ability to lead and unify that organization will be an adequate exchange, a consensual exchange of his working years for whatever you're going to do for him. Like that's very, there's something to that. And ultimately, and in this division, the divisiveness between the rich and poor and people getting upset and trying to create class conflict. I think it obscures the grandest truth on this little pill, boob dot, is that we're one big family. All right, we're all here. We've all got the same limited resources to deal with. The best thing we can do is intelligently coordinate our action such that

• 3:11:21Speaker 02

  People are doing what they're best at, specializing in what they're best at. Everyone's doing that, and then we trade with one another so that we enjoy the best quality of everything that anyone can do in the world. Right? And we don't have to be good at it. So you can be really good at running a media company, and you can still go to this restaurant down here and eat the best sushi in the world. Because he specializes in sushi, and he can go home and enjoy your YouTube channel. Because you specialize in this. That's the ideal world, in my opinion. People living peaceably, specializing, innovating, not stealing from each other. And, you know,

• 3:11:57Speaker 02

  the religious piece, I don't, I don't know. I just, I'm a guy that grew up in Tennessee. I consider myself an aspiring disciple of Christ. I don't know if that means I'm religious or not, but it gives me a lot of meaning in my life, and gives me something to look, someone to look up to, someone to try and imitate, someone to try and, and make, to lead you, to be a stronger, better person, right? It's like the highest consciousness you could imagine. Whether it really happened or not, it's in that story. And I can relate to that story. I can read that story every night. I can enact it in my life. I can carry it into my organization to be a better leader, better man, better person. So I think that's where the world needs to go.

• 3:12:39Tom Bilyeu?

  Why are people so angry right now? I, and admittedly, a subset. Why is a subset of people so upset? I want, I think that there really is something going on, but I can't quite tell what it is. So, one of the things you hear is that the boomers have trapped so much wealth that they're staying in positions too long, organizations are becoming corrupted. But if, well, like, my parents are boomers, and don't feel trapped by them at all. Um, the system has worked for me, so I'm so confused by people's take on it.

• 3:13:21Tom Bilyeu?

  Am I delusional? So the, the story that I believe is accurate, but it's certainly the story that I tell myself, is I am an average person who has worked my ass off to turn potential into skillset. I have deployed that skillset very strategically in order to create value for people. And they wanted the things that I've created more than they wanted their money. That allowed me to build equity. I then sold that company and was able to, after many years of living like I was broke, finally able to capture the value that I built into the company. But when I hear the way people talk about people that have generated wealth, it's,

• 3:14:06Tom Bilyeu?

  they want people to pay tax on unrealized gains, no matter how much. The wealthy pay in tax, like Elon Musk has now paid in a single year more tax than basically anybody in human history. Not basically, I think that's actually a true statement. But all the responses are, but it's not enough. And, and so I can't relate to that mental frame of reference. But being generous and assuming that there really is something going, that if I were a kid now, that I would have the same frame of reference that they have. Why? What's happening?

• 3:14:43Speaker 02

  Yeah. People are mad because they're victims of the largest heist in human history. Like especially if you're young right now and you're living paycheck to paycheck. Especially over the past couple of years, that prices are soaring, wages are flat, right? This is the same story since 1971. Product, you know, look at the charts. I always recommend the website, wtfhappened1971.com. WTF happened in 1971.com. Make sure I'm saying that right. All these charts shows in 1971, there's a divergence in productivity and wages. The working class, the lower, middle, and increasingly middle and lower classes are

• 3:15:27Speaker 02

  being squeezed in this false economic paradigm that we have with Keynesian economics.

• 3:15:32Tom Bilyeu?

  Because we broke.

• 3:15:33Speaker 02

  The peg to gold. Well, that enabled the more rapid violation of private property rights through monetary inflation. And all of those, that corrosion of society, the moral decomposition I described, I think it all follows from that. And people today don't understand what's happening, right? Again, you don't need to cognitively understand, it helps if you cognitively understand, but you just feel that you're getting scammed and squeezed all the time, right? No matter what you do, nothing is working. Even if there's no malintent behind it, when you repeatedly try an action and reality does not respond the way you want it to, you are in the unknown, right? You're in unexplored territory. And you're scrambling to get back to something that makes sense, where I can

• 3:16:17Speaker 02

  do an action and get some semblance of an expected response. Youth are not getting that today, right? They're going to work, they're saving their money. Prices keep going up too fast, they're still getting squeezed, they're moving back in with their parents, et cetera, et cetera. So I think we're in the state, early stages of currency failure. And people that are on the wrong side of the economic hierarchy in those situations are feeling the pain. They can't necessarily properly attribute the cause. They don't know, they don't understand the nature of property and money and all these things we're talking about. So what do they do? They're, they reduce to this barbarism of class consciousness, right? Rich people are evil. These people are evil.

• 3:17:02Speaker 02

  A lot of it's pointed at the government. I wish more of it was pointed at the government because that is the sole legal violator of the do not steal dictum that I shared earlier. This is the only legal enterprise we have that generates all of its revenues through theft. Uh, that's a big problem. And that is dangerous because we've done that before, right? We did this with Marxism, that there was a The problem was diagnosed that some people were getting rich and some people were getting poor, right? There was a corruption or malignancy in the economic hierarchy. But the Marxist prescription was to abolish private property.

• 3:17:44Speaker 02

  The exact wrong thing you want to do for all the reasons we've described today, right? You have no prices, all of the wealth then rolls up into very few hands. The state, they own everything. Wealth creation collapses, mass suffering, mass starvation, genocide. All of these things come from that root, in my opinion. I think what we need to abolish is taxation and inflation and the central bank. That would maximize the integrity of individual private property rights, which would remove this "do not steal", at least the institutionalized element of "do not steal",

• 3:18:23Speaker 02

  remove it from the world and enable people to deal with each other on consensual terms. Right? Just like you wouldn't... The guy that's giving you his best working years, you wouldn't bang him over the head to keep him here, right? Like coercion in that relationship's never going to work long run. Even if you get the guy to stay here and beat him over the head with a wrench and say, "You're gonna work for me no matter what", he's not gonna work so well for you. He's not gonna work as hard for you. He's not gonna work as smart for you. He's gonna backstab you every chance he gets. So if non-consensual exchange doesn't work in that very simple bilateral transaction, why do we think it works when we scale it up to the multiplicity of the whole global economy? And yet we have that integrated into our money today.

• 3:19:03Speaker 02

  Money that's supposed to be this instrument of trust and trade and integrity and optionality, right? There's a lot of uncertainty in the world, but I know if I save my dollars, like grandma told me, I can protect myself against that entropy. We're destroying that. We've got no firm footing left in the world. Of course, people are going crazy. And I've written about this, that I think... I had a guy on the show, Matthias Desmond. He wrote "The Psychology of Totalitarianism", on the phenomena of mass psychosis. And he lays out a lot of very intelligent reasons why we've had mass psychoses in the past and why he thinks we're going through one again. But I shared with him, I think the violation of property is one of these things. Because if you sit down, you know,

• 3:19:46Speaker 02

  we talked about this last time too, to play a game... Poker, for instance, I always like poker because I like to play poker. And you start changing the rules randomly every few hands or changing the hand rankings, whatever. Don't you think every play at the table is going to go absolutely fucking crazy? Like, you can't make sense to build a strategy. There's no play left. It's just noise and madness. That's what we're doing in the world. We don't know how many dollars are in our existence. We don't know how many will be in existence. We don't know who decides. We don't know who profits from their production. It's just a giant opaque pyramid scheme that we all use as our primary means of exchange. And that, I think, is, I don't want to say it's the only problem in the world. We have a lot of problems.

• 3:20:29Speaker 02

  But it seems like the biggest one that I can hope to aim at.

• 3:20:35Tom Bilyeu?

  And it's really interesting that, at least as we break along political lines in the US, that half the people roughly want more government, bigger government. And if you're right, and again, I will attribute only, actually, that's not true. I used to attribute only positive things since I've started learning about Nietzsche and the world of power. I realized, oh, wait, there's actually something else going on here. But the idea that the, I wouldn't say mass psychosis, but the frame of reference that has way lower utility is that we need to abolish property rights.

• 3:21:16Tom Bilyeu?

  Everything needs to go to the government, be redistributed, is the thing that will yield the exact opposite of what they want.

• 3:21:23Speaker 02

  UBI.

• 3:21:24Tom Bilyeu?

  But it does feel like, I get where they're coming from. And even somebody like Ray Dalio, and I don't know what his thesis is on how the taxation should change, but he has said himself, like, yes, we need a new tax policy. We need to find a way to better distribute the wealth. And I do wonder about this with Bitcoin. Because the supply is finite, isn't it possible that Jeff Bezos just ends up with all the Bitcoin, or Michael Saylor in this case? Like, how do we ensure that the game of the libertarian philosophy does not end up in the same pathology that everything else ends up in?

• 3:22:04Speaker 02

  That's a great question. Well, we know that, at least from a libertarian perspective, that it won't. Because it's the stealing that's the problem, right?

• 3:22:13Tom Bilyeu?

  But somebody can win the game so well.

• 3:22:15Speaker 02

  That everybody else is. Well, let's think, let's think through it, though. So any individual holder of Bitcoin that has a very large accumulation, let's pick Satoshi. He's got a million Bitcoin supposedly. No one hasn't moved since the beginning of Bitcoin. But that would be the largest single holder if that is one individual. And if he holds that Bitcoin, does that in any way determine his capacity to change the rules of the Bitcoin network?

• 3:22:47Speaker 02

  I'm asking the question, I'm not sure why, because I know the answer. The answer is no. So the greatest risk that a Satoshi brings to Bitcoin is market risk. So he could go and start dumping his million Bitcoin on the market, right? He could suppress the price.

• 3:23:02Speaker 02

  You know, who, it depends on Bitcoin's market cap, how he does it, how long he does it, etc. How long that would persist. But the key point is that there's no way to, for him, even him, the creator of Bitcoin, the largest holder of Bitcoin, again, we don't know who he is, so he's anonymous, even that godhead individual of Bitcoin cannot change the rules of the system that he himself created. And that is the key point. So Jeff Bezos comes in and I don't know his net worth, or how much Bitcoin he could buy, let's say he could buy a million Bitcoin. First of all, to do that, you're going to bid the price of Bitcoin up significantly, right?

• 3:23:43Speaker 02

  So you're enriching older holders, they have larger unrealized gains imputed into their positions, which is a larger incentive to sell your Bitcoin for cash or goods or services. And that's how through these price cycles Bitcoin has tended to become more distributed into more hands for that very reason, right? If you bought it at a penny, your incentive to sell at 100 bucks is significant, and at 1,000 bucks, it's gargantuan, right? So people tend to be selling it and buying it over time. Bezos comes in, buys a million Bitcoin, a million, 1.1 million Bitcoin, so now he's, he's superordinate to Satoshi. What's his story? Well, he's bid up the market cap of Bitcoin

• 3:24:25Speaker 02

  significantly, but can he himself do anything to change the rules of the game? No, there's no amount of Bitcoin you can buy to change the rules of the game. And there's a large degree, a large share of Bitcoin, let's say, is held by people like me that won't ever sell. So there's also that, that you're always up against. Not that it could ever affect the rules anyways, but you're never gonna have one guy owning 21 million Bitcoin, I guess would be the point. And if you did, you'd be in a world with free banking, where people would go out and start their own bank and issue their own currencies as a substitute. And so that would be that alternate reality, but I just-

• 3:25:10Tom Bilyeu?

  In a libertarian model, so that presumes that there is no government as we would recognize it today.

• 3:25:17Speaker 02

  Well-

• 3:25:18Tom Bilyeu?

  That controls the monetary-

• 3:25:19Speaker 02

  Yeah, I guess I was also assuming Bitcoin had succeeded in that scenario and somehow... I think the question you're getting is like, what if happens if someone gets all the Bitcoin?

• 3:25:28Tom Bilyeu?

  Yeah, I'm just trying to think through libertarian scenarios. So what I don't wanna fall prey to is what I would view as a fallacy of...

• 3:25:37Tom Bilyeu?

  Everybody always says, "Oh, no, no, no, that wasn't real communism, or that wasn't real socialism, and if we just do it right, everything is gonna be fine." Like, that, that really is a dangerous way to think. And if, yeah, I really hope people can stop themselves from that one. But I don't wanna hear the same thing on libertarianism. Like, there's a reason, I think, my base assumption, there's a reason that we don't have libertarianism either, because it, you'll never be able to walk that line, is my guess. And that what ends up happening is you get strong people that end up dominating, and then the weak people go, "Fuck that noise", and so they group up to take down the bully. And that grouping up is like, whoa, this feels really good. And so then you have governments, they start small, good intentions,

• 3:26:20Tom Bilyeu?

  and they just pathologize over time as they get bigger and bigger and bigger.

• 3:26:23Speaker 02

  But the pathologization is expressed through taxation. That is the domination, right? The stealing, the stealing.

• 3:26:29Tom Bilyeu?

  Yep.

• 3:26:29Speaker 02

  So, again, from a practical engineering perspective, the only thing we can do about that, we can't change human nature, people are always gonna steal if that's an option available to them.

• 3:26:39Tom Bilyeu?

  So do you think the-

• 3:26:40Speaker 02

  Make stealing more expensive.

• 3:26:42Tom Bilyeu?

  Yep.

• 3:26:42Speaker 02

  That's how you dissuade and remove non-consensual exchange from the economic fabric.

• 3:26:48Tom Bilyeu?

  So that, I think, makes the following prediction- That the only reason libertarianism has never truly

• 3:26:54Speaker 02

  It's profitable to steal.

• 3:26:55Tom Bilyeu?

  Yeah, because there's never been a

• 3:26:56Speaker 02

  And libertarianism will never exist to the extent that it is profitable to steal. Because people will always do what is profitable. Always. I mean, that could maybe be an axiom, like people always do what's profitable. At least psychically. This is kind of gets back to what we said earlier on the last episode that all action is an expression of value. Right? People do things because they expect to, they expect it to be a good outcome. Otherwise, you wouldn't do it. Even people that are cutting themselves and physically damaging themselves. They're looking for some high or some goodness of that. It's almost platonic where it says every action we take is aimed at the good. And you can think of, you know, horrible things, but the individual actor thinks what they're doing

• 3:27:39Speaker 02

  is good to them or for them in some way, otherwise they would not do it. So we can't do anything about that. But what we can do is change the actual incentive structures we inhabit. And make the stealing game less profitable. Thereby shifting human action towards making rather than taking.

• 3:28:01Tom Bilyeu?

  What do you think, though, about, so, because the argument that's hiding in that is that there's no way to shut off or kill Bitcoin. But when I watch China, be like, nope, sorry. And I get it, it didn't kill Bitcoin. But you can regionally kill Bitcoin. And I know, of course, yes, you could take your things and go, but that's not easy. So it's pretty effective to either at a country level, say, nope, this is done. Or like with what happened to Russia, where you shut things off at the like the transmitting layer. So what kind of risk do you think exists there for

• 3:28:42Tom Bilyeu?

  governments, and it will be whack a mole, I totally understand that, but for them to just keep Any sort of, because if libertarianism only exists in a world where stealing is no longer profitable, they just make sure that stealing continues to be profitable, at least in their geographic location.

• 3:29:00Speaker 02

  Yeah, and that could always be the case with physical property. But at least something like Bitcoin gives us the option to vote with our wallet or vote with our feet and lead jurisdictions.

• 3:29:10Tom Bilyeu?

  China, man, they like, they're not playing that game.

• 3:29:12Speaker 02

  I want to get to China. So whack-a-mole's a good analogy, actually, because we have to remember the Bitcoin mining network, these miners are like yay big, right? So what happens in a country like China? The authority comes down and says, hey, no more mining, here's all these legal restrictions against it. What happens? A lot of these things, these miners get boxed up, shipped to another location, plugged back in, right? So the network itself is kind of amorphous. If there's a regulatory crackdown in a certain area, miners will just fly into other jurisdictions and get plugged back in.

• 3:29:48Speaker 02

  Now, actually about China, would you agree that they are the most, I guess the largest communist regime in human history? I'm pretty sure they're over a billion people. I'd say the CCP has got the reputation for being one of the most ruthless and overtly powerful in human history.

• 3:30:12Speaker 02

  There's a, there's a lot of stories that are leaking out of China about the atrocities taking place there.

• 3:30:20Speaker 02

  I mean, would you agree that at least today, let's say of present governments, that they are the most ruthless and totalitarian regime?

• 3:30:28Tom Bilyeu?

  To your earlier point, I am not qualified to answer that question. If you take scale into account from my very ignorant perspective, that seems true.

• 3:30:36Speaker 02

  Okay.

• 3:30:39Speaker 02

  They shut down Bitcoin mining, I think, were about a year and a half ago at this point.

• 3:30:47Speaker 02

  I think 20%, and so I'll have to check my numbers on this because it's been a few months since I looked at it, but it was 20% of Bitcoin's hash rate is still coming out of China.

• 3:30:56Tom Bilyeu?

  Really?

• 3:30:57Speaker 02

  Yes.

• 3:30:57Tom Bilyeu?

  I did not know that.

• 3:30:58Speaker 02

  So if the most ruthless authoritarian regime on the planet, with its heaviest iron fist, can't squash this whack-a-mole amorphous game of Bitcoin mining.

• 3:31:08Tom Bilyeu?

  So people are just doing it like hacker stuff?

• 3:31:10Speaker 02

  Then who can? Well, my theory is that, again, it's easy to mentally frame the CCP or China as a singular indivisible entity that moves as a whole. It's not what it is at all, right? There's a bunch of little fiefdoms of power and families and all these things. And what do people do? People do what's profitable. So they have a super abundance of hydropower in China. For instance, I know that. They have other sources of power, I'm sure. If that power can't be sold to the grid at a profitable rate and it's more profitable to mine Bitcoin, how are you going to stop? Like, what? What iron fist can control the individual maneuvers of 1.2 billion people when it comes to something like this?

• 3:31:54Speaker 02

  I don't, I don't think it's feasible. I don't think it's as profitable to try and enforce and control and prevent Bitcoin mining as it is for people to just circumvent the law in whatever way they're doing it and continue Bitcoin mining. And that past 18 months, I think, shows that. That 20% of the hash rate, again, check the numbers, is still coming out of China. So if the most ruthless regime in the world can't put a lid on this thing, then what other government has a chance?

• 3:32:24Tom Bilyeu?

  Yeah, I had no idea that there was still 20% hash rate. What percentage is that of what was there before?

• 3:32:31Speaker 02

  That I don't know. I want to say they were in the, I want to say they were in the majority of the hash rate and above 50%.

• 3:32:38Tom Bilyeu?

  So it wildly diminished it, but still, I mean, that 20% is a really big number.

• 3:32:43Speaker 02

  Yeah.

• 3:32:44Tom Bilyeu?

  Interesting, I didn't know that. So when you think about the, so I've heard you say that America is thus far the best economic experiment we've ever run, but that there's potentially something better beyond that.

• 3:33:01Speaker 02

  What would that better thing be? Is it no government? Well, I think we go back to the exclusive scope of government as circumscribed by the Magna Carta, which was the preservation of life, liberty, and inviolable property. Do you think we made a mistake in the American Constitution to say pursuit of happiness instead of property? I do, but I've heard arguments to the contrary, and I haven't done the dig on that. So in my extremely strong views about the importance of property, I see it as a mistake. But I've heard there's a religious or spiritual element to it, but I'm not qualified to speak to that one.

• 3:33:41Speaker 02

  Ultimately, government is the social apparatus of coercion, compulsion, and violence. You only want to invoke that social apparatus as a means of retaliation or resolution to some form of coercion, compulsion, or violence, right? Someone stole your stuff, someone hurt you, someone hurt someone you love. That's when you need recourse to the state or the law. So to the extent that we can move the world toward one in which government exclusively maintains that scope of service, that it defends life, it defends liberty, and it defends property, that seems to me the best solution for dealing with this.

• 3:34:27Speaker 02

  It's almost like a necessary evil, right? Violence and force is an ever-present reality. We have to deal with it somehow. This seems to be, and this is what the founding fathers and obviously the people that inspired them thought as well, the government that governs best governs least, right? Just restrict it to that very specific scope of service. And now, okay, it sounds great in theory, but history has obviously been a real pain in the ass of that because once you put all the power in one place, absolute power corrupts absolutely. Institutions don't follow the laws that they promulgate. Institutions follow the individuals that run the institutions.

• 3:35:08Speaker 02

  Those individuals tend to be corruptible. They will bend the publicly applied rule for private gain. That is actually my definition of corruption. There's a rule that we're all supposed to play by, and then one guy twists the rule to his advantage, and everyone else has to keep playing by it or is otherwise hurt by it. That's corruption in a nutshell. And that's what I think inflation and taxation and all these things are.

• 3:35:31Speaker 02

  That would then, I guess with Bitcoin, that's why we call Bitcoin incorruptible money. Right? It's a, the first level playing field we've ever had in the sphere of economics. A rule set that no one can change. Everyone just plays by, by consent. Now, it's always optional to use Bitcoin. You're never coerced to use it. But that option, to have space or territory in a monetary network that no one can compromise and no one can change. That option becomes more valuable in the marketplace as the other money space is increasingly having its rules twisted and violated and changed. Right? More capital controls, more inflation, more taxation, more confusion.

• 3:36:14Speaker 02

  As this place gets more chaotic, there is increasing demand for this place of integrity and transparency and universality. So, that's how I see this playing out, is that the violation of property rights is going to continue to accelerate, as it always has with governments. That creates this osmotic pressure for people to adopt the option of not being violated. Right? As people try to preserve wealth across time. This is sucking economic energy out of the fiat system and into the Bitcoin system. And now you have people with a very strong form of property that is immune to capital controls, it can go anywhere in the world with it. And they can basically vote with their feet.

• 3:36:58Speaker 02

  So you're defunding this mechanism and empowering individuals to self-organize in the way that best suits them individually. And that hopefully restricts government over time, because you're now, you're removing the revenue sources of taxation and inflation from government. Definitely inflation, taxation's more interesting when it comes to Bitcoin over time. We'll see how that plays out. It's at least going to shrink government. And hopefully shrink government back towards that exclusive scope of the preservation of life, liberty and property. Which is the philosophical, theoretical perfection of government as conceived 800 years ago.

• 3:37:38Tom Bilyeu?

  Have you read the book Infomocracy?

• 3:37:40Speaker 02

  I have not.

• 3:37:41Tom Bilyeu?

  Interesting, it comes to a similar conclusion that you've come to, but I think from a pretty different angle. So the idea is that the world fractures into all these tiny little countries, and that even as you move through a city, you're moving through countries. And each one, because you can track people so specifically, and data is like the oil, it's, you get this just completely fractionated world. And I heard you say that while you have no concept of what timeline would be, if it's 10 years, or 100 years, 200 years, whatever, but that you think that there will sometime be like 20,000 different countries. Why is that the natural conclusion of this osmotic pressure into the Bitcoin world?

• 3:38:25Speaker 02

  So, this is one of my favorite books, actually. It might be closely related to the one you just mentioned, The Sovereign Individual. Written in 1997, it predicted things like the move from, what do they call it, broadcasting to narrowcasting. So they're predicting social media as a consequence of mobile digital technologies.

• 3:38:46Tom Bilyeu?

  So interesting to hear people like predict that stuff.

• 3:38:49Speaker 02

  Yeah, it predicted the government use of certain medical policy to revalidate its borders, let's say, to control the flows of people in and out of countries. And it predicted the emergence, again, written in 1997, of what they called anonymous digital cybercash. And the extrapolation from that invention was basically the fracturing and collapse of the nation-state as the dominant institution in the world. Now, it's a very dense book. I'll try to give you the very, there's a lot that goes into it, but just the very basic premise of why that is the case. Why do you go from anonymous digital cybercash

• 3:39:32Speaker 02

  to the fracturing of the nation-state is sort of what I tried to just describe, right? Like, we've all been forced into monetary policy up until this point. We did, to the point, we don't even know what inflation is, right? Like, how much purchasing power have you been milked of inflation in your career that you really have no idea about, really? It's, it's an interesting, kind of insidious, invisible taxation.

• 3:39:58Speaker 02

  Once people have an option to exit that for a either an individually-selected monetary policy or one that is just fixed, like in Bitcoin, I don't even like calling Bitcoin a monetary policy because there's no policing to it. It's not being enforced in any way. It's just an option. You just go and freely choose to use this type of money that no one can print. And so, as that unfolds and people realize that there's an option to again, people are going to do what's profitable, right? And profitability also entails reducing costs. So if I can reduce my cost structure by saving in Bitcoin rather than saving in dollars, then I'm going to do that.

• 3:40:42Speaker 02

  And then, once I'm in Bitcoin, I now have more leverage in my negotiations with the state that they can't as easily, they can't inflate, they can't as easily tax me either because I have a form of property that's immune to capital controls. It's globally transactable. I can vote with my feet and move anywhere in the world. That that would lead to a reorganization of people into jurisdictions where they are treated best. So the most capital, the most talent, the best performers will naturally coalesce into the jurisdictions where they're treated best. And a lot of this, the thinking on this too, it's rooted on kind of an obscure literature on the economics of violence or force. I've written about this a bit

• 3:41:27Speaker 02

  in my Sovereignism series. Again, The Sovereign Individual goes into it. But let's just say that the ways we project power in the world can radically change our political modes of organization. A very simple example of this was for a long time, the armed knight on horseback was the dominant martial force in the land, right? No one can take out an armed knight. It was the strongest form of military hardware in the world, pretty much. You know, a single knight could kill 50 peasants. Let's say, no problem. So that was the weapon in the world. All of a sudden, the invention of gunpowder. What happens? One peasant can now take out an armed knight on horseback at 200 yards.

• 3:42:13Speaker 02

  That led to the collapse of feudalism, collapse of the medieval church as the law on the land, like there were all these follow-on consequences. As a result of that simple change that someone figured out, you put explosive powder in a long pipe and shoot a ball at the guy and he's dead. So with Bitcoin, it's the ultimate defender's advantage, right? Earlier, when you were talking about the strong people coming into power, dominating the weaker people. Well, now, the weaker people will have recourse to a form of wealth that is indomitable. You cannot steal it from them, right? They can, so there's less profitability for the aggressor. He can't get the property and there's more optionality for the victim.

• 3:42:56Speaker 02

  So that leads to a world that's more heavily consensual, in my opinion.

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