22 - The People’s Narrative | Ben Hunt

Episode: #22 July 20, 2020 ----- Tools from our sponsors to go bankless: Rocket Dollar https://bankless.cc/2C57MVW - tax shelter your crypto ($50 w/ "BANKLESS https://bankless.cc/2C57MVW") Ramp https://bankless.cc/2ZDJQRU - the fiat onramp for DeFi (mention Bankless!) Monolith https://bankless.cc/3e2TG4E - holy grail of bankless Visa cards Aave https://bankless.cc/aave - money lego for lending & borrowing ---- You need to understand the mental models of Ben Hunt to understand what's really going on in crypto. You need his models of epsilon, game theory, narrative, and common knowledge to truly understand markets. They don't teach you this on Wall Street. Or in business school. But for the Bankless Nation? This knowledge is required for our survival on the journey https://bankless.substack.com/p/-guide-1-starting-with-bankless. Dr. Ben Hunt is a masterful game theorist and narrative analyzer. His work at Epsilon Theory https://www.epsilontheory.com/, his outlook on the world, we've rarely felt so much alignment with someone outside the crypto community. And what does Ben thing about crypto anyway? Is it an opportunity to diminish the nudging oligarchy that runs our world? What advice does he have for us? Is there a chance this bankless thing might work? Enjoy our incredible conversation with Ben. We cover: Epsilon, narratives, and playing the player The Keynesian contest running the world The Common Knowledge Game & The Missionary Why our world is getting more chaotic How the Nudging Oligarchy shapes reality STOCKS GO UP Crypto vs the Oligarchy 3 Path for Crypto (and which one Ben thinks is promising) WTF is going on w/ equities? The power of the pack Join us next Monday for a fresh episode! ----- Resources discussed: Epsilon Theory Manifesto https://www.epsilontheory.com/epsilon-theory-manifesto/ Get N95 masks to the front-line https://www.epsilontheory.com/ppe-requests/ Ben describes the 3-Body Problem on Hidden Forces https://hiddenforces.io/podcasts/ben-hunt-narrative-machine/ ----- Episode Actions: Subscribe to Ben's newsletter at Epsilon Theory https://www.epsilontheory.com/ Send this episode to someone who's crypto curious Give us a 5-star review! (we're 70...we need 100) Also...subscribe to Bankless YouTube https://www.youtube.com/c/bankless to watch State of the Nation https://www.youtube.com/playlist?list=PLmkdAgtxf3ahHup7h1dxjs0SNwCSGdjVb every Tuesday. ----- Subscribe to podcast on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 | Spotify https://open.spotify.com/show/41TNnXSv5ExcQSzEGLlGhy | YouTube https://www.youtube.com/c/bankless | RSS Feed http://podcast.banklesshq.com/ Leave a review on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 Share the episode with someone you know! ----- Don't stop at the podcast! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Watch Bankless shows and tutorials on YouTube https://www.youtube.com/c/bankless Visit official Bankless website http://banklesshq.com/ for resources Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState ----- Not financial or tax advice. This podcast is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Do your own research.

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

• 0:13Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front around the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, how are you doing today?

• 0:32David Hoffman?

  Absolutely fantastic. We had Ben Hunt on the podcast. Ben Hunt is a very well-respected writer in the legacy world. He is the writer of Epsilon Theory Newsletter, and he does a fantastic job bringing in new ways to think about the world to an audience that might not have gotten exposed to it. And the need and demand for the thinking that Ben Hunt offers to the world is definitely well-reflected in the size and community that he's generated around his Epsilon Theory Newsletter.

• 1:07Ryan Sean Adams?

  Yeah, I've been reading Epsilon Theory forever, David. It's just a fantastic body of work. And I think the main ideas, the core ideas, Ben started this newsletter in 2013. The core ideas have really played out, like he's been right. The world is turning into a place that is valued more by narrative than by fundamentals. And he caught that switch very early. And I think he's got a lot to teach us in the crypto space about how narratives and game theory affect asset prices and virtually everything around us. They really are the base layer of the human experience. That's the social layer.

• 1:47Ryan Sean Adams?

  And so we get into these topics, and then we get a chance to apply them to crypto at the end. We really wanted to get Ben's perspective on crypto and to bring these mental models that he's come up with in creative for, as he said, David, the legacy world to crypto, and get his thoughts on it. So he shares that at the end, too. This is just a fantastic interview, incredibly fascinating. I think you will pick up new mental models. You'll be able to apply them both to the legacy world and equities and what's going on with central banks, and also to apply them to crypto. So I really think you're going to enjoy this one.

• 2:24David Hoffman?

  We talk a lot on the Bankless Podcast about narratives, about memes, and how they are baked into these systems. And so the crypto world is pretty familiar, I would say, with the world of narrative and the world of memes. And I think we appreciate it more than the the rest of the world, right? And what Ben Hunt is doing, in my opinion, is bringing that perspective to the legacy system, using different words other than like memes, because, you know, it's very, the word meme is is much more relevant to crypto. But in the legacy world, it's the narrative, right? And Ben Hunt calls this the epsilon, where he talks about the alpha and the beta. But then there's also the epsilon, which is the the human side of things.

• 3:06David Hoffman?

  The world, in my opinion, is separated into the physical world of atoms and science and physics. But then there's also the world of the stories that the human, that humans create in order to determine what is valuable, right? So how to act based off of what we know. And that's what Ben Hunt is doing in the legacy system. And so why Ben Hunt is such a good guest for the Bankless Podcast is because he's taking some of the things that we know, the story side of things, the narrative side of things, and he's applying it to the legacy markets and applying it to investing in a world that we thought was perhaps based off of, you know, hard facts and evidence and fundamentals. But turns out, it's actually based off of narratives

• 3:51David Hoffman?

  and stories. And so this is really where we overlap with Ben Hunt. And so getting him on to the Bankless Podcast to talk about these things was an absolute treat.

• 3:58Ryan Sean Adams?

  All right, we're gonna bring Ben Hunt on in just a few seconds. But first, we want to tell you about our sponsors.

• 4:04David Hoffman?

  As we all go westward, we need to get our values into the crypto world, but hopefully escape the tyranny of centralized rent-seeking institutions. And that's where Monolith can help you get your value into the crypto world while skipping over the crypto banks. Monolith, coming soon to Monolith, is an on-ramp directly from your old-world bank account into your smart contract wallet on Ethereum. And for those that don't know, Monolith also has a DeFi card which uses DAI in your smart contract wallet.

• 4:34Ryan Sean Adams?

  But on the Visa network. So you can go to your grocery store, swipe your DeFi card, pay for your groceries like a normal person and still be part of the crypto bankless, crypto economic future that we are all excited about. So you can get your value from your bank account directly into your crypto Visa card without having to go through any crypto bank intermediary, which is just absolutely fantastic. So in order to get started, go to monolith.xyz and get your bankless Visa card today. So the biggest thing that's holding crypto back is actually getting fiat into the system, moving from that old world to the new crypto world. What you have to do is create an account with an exchange, you have to wire funds. That's also holding your app back if you are a DeFi developer

• 5:19Ryan Sean Adams?

  and are building something on a network like Ethereum. What that means is in the fiat process, your users drop off when they're signing up and you're limiting your market to the hardcore crypto people. But what if you could make it super easy to on-ramp to your application using a fiat on-ramp? Ramp is that. It is a delightfully easy fiat on-ramp. It lets first time crypto users get ETH and DAI, USDC, whatever asset they want in five minutes or less. So this reduces the dropout rate and lets you build products for the real world. Zerion is using it. Ethereum is using it. Taurus is using it. DeFi apps that you probably know and use today are using it. What you need to do is

• 6:04Ryan Sean Adams?

  check this out and visit ramp.network to see how easy it is. You can get set up in 10 minutes or less and 100x your addressable market size as a developer. This is like the ultimate growth hack. And when you mention bankless, they'll on-ramp the first 100K in US dollars for free. So go to ramp.network, mention bankless, and get started.

• 6:28David Hoffman?

  All right, guys. Now that that's done, let's go ahead and get right into the interview with Dr. Ben Hunt.

• 6:41Ryan Sean Adams?

  Hello Bankless Nation. We are incredibly excited and honored to have Dr. Ben Hunt. He is a former fund manager, tech entrepreneur, poly sci professor. He's the writer of Epsilon Theory, which I read frequently. He writes narratives about game theory for investors and in general for people trying to understand the world. And I would be remiss if I didn't say he's actually part of the inspiration for starting the Bankless newsletter for me personally. Ben, how are you doing in these uncertain times, sir?

• 7:14Speaker 02

  I'm doing great, Ryan. Well, thanks for that introduction and I'm so glad to hear that, you know, something good came out of my work if it helped inspire you guys. And also hello to David behind the glass, as they say on the radio.

• 7:30David Hoffman?

  Hello, hello. Cheers and welcome.

• 7:32Ryan Sean Adams?

  Well, absolutely. We are just so excited to talk with you today because I think, I mean, you talk so much about communities and about, you call it the PAC.

• 7:43Speaker 02

  Yep.

• 7:44Ryan Sean Adams?

  And, you know, Bankless, we sort of, we sort of use the analogy of the nation for the Bankless PAC because it's kind of a tribe that's rallied around some similar ideas to the ideas you're talking about on Epsilon Theory all of the time. So what we'd really love to talk about today is some of those common base values between our communities, between crypto and between the Epsilon Theory movement, I would call it a movement. You've talked about the lowercase l values like freedom and liberty, you know, and thought and the lowercase c values.

• 8:20Speaker 02

  Yep, yep, yep. Small l liberal and small c conservative. Yep.

• 8:26Ryan Sean Adams?

  Exactly. And those are, I think, our values, base values that our communities share. So we just want to explore some of those and honestly expose the Bankless Nation to some of your fantastic ideas because they are so relevant to crypto. What else is crypto except narratives and game theory? And that's, that's a lot. About what you talk about. So I guess Ben, maybe, maybe to start, we could set some context for one of your biggest ideas, which is rooted in the epsilon theory name itself. You know, kind of where you got the name, where you came up with the name, what this,

• 9:08Ryan Sean Adams?

  what this epsilon, what the meaning of epsilon actually is. And maybe we could talk a little bit to introduce folks to a, an idea that comes from science, which is the, the three body problem. So could you describe maybe the three body problem? And then let's talk a little bit about the meaning of epsilon and how can explain the world?

• 9:30Speaker 02

  Yeah, yeah, you bet, Ryan. In fact, if you don't mind, I'll kind of flip that around. I'll kind of describe what, what epsilon is first and kind of why I call what I do. And you're right, I do hope it's a, it's a movement, right? I do call it epsilon theory and kind of where that comes from. So, you know, in, I started writing epsilon theory. This would be the, the summer of 2013, right? So just a little over seven years ago.

• 10:05Speaker 02

  And, you know, I, I had wound down my hedge fund. We can talk about that a little bit. It was a big hedge fund. We had about a billion dollars there. And I was trying to make sense of a world that from an investment perspective, didn't seem to make a lot of sense to me anymore. And, you know, my background from, from academic days and, you know, professorial days was in game theory. You know, it's always so silly, you know, people say, oh, there's, you know, game theory. And it has become kind of a meme in and of itself, kind of, kind of silly, silly science. So, I mean, it's not, it's, it's a, it's a real thing. And I've

• 10:50Speaker 02

  been a lot of years.

• 10:51Ryan Sean Adams?

  Oh, we love game theory. We love game theory and crypto.

• 10:56Speaker 02

  So I, you know, I, I knew I wanted to, to write this note and blog, whatever you want to call it.

• 11:04Speaker 02

  I was trying to figure out what to call it. And what I finally hit on was that in investing, the core, I'll call it formula, right? The core econometric description of what investing is, is that the value of your portfolio, the performance of your investments depends on alpha. You know, you see that in places like blogs like Seeking Alpha. And you know, people talk about hedge funds and what's your alpha? Alpha is basically your outperformance, right? Alpha is the idiosyncratic performance of your portfolio.

• 11:48Speaker 02

  What's special about you, right? That's your alpha. And then your performance is also your beta, which is how much of your portfolio, your performance goes up and down with broad markets, right? So beta, it's the performance of the overall market and how closely linked you are to that. And then alpha is your idiosyncratic performance. You know, what you do that's special to you.

• 12:22Speaker 02

  But those actually aren't the only two terms in this econometric formula. And in fact, in almost every econometric formula, there's a third term or a final term that's tacked on to the end. And it's the epsilon term. So in this formula, the full formula, if you write it out, it's not just, oh, your performance is alpha plus beta. It's alpha plus beta plus epsilon. And epsilon is the Greek letter E. And the way people think of it is, well, that's E for error. Yeah, right? It's everything that's left over

• 13:05Speaker 02

  that you can't explain from your variables and your formulation, whatever goes into your calculation of alpha.

• 13:13Ryan Sean Adams?

  It's all the stuff we don't understand.

• 13:16Speaker 02

  It's all the stuff we don't understand. That's exactly right. All the stuff that's outside of your formalization of alpha and beta. Like I say, look at any econometric formula in any field, and there's always this tacked on epsilon term, E for error. And the truth is, and this is a truth that comes after, you know, a lot of years and a lot of scars in, you know, lots of different fields, but, but including investing, is that yeah, there, there is a lot we don't understand. And just because we don't understand it, just because we don't formalize it in

• 14:00Speaker 02

  whatever we are putting into our conceptualization of alpha and beta, doesn't mean it's not real. It doesn't mean that it's error. It means that it's outside of our scope of thinking.

• 14:11Ryan Sean Adams?

  Well, you, you've used the analogy of dark matter, right Ben, to describe that?

• 14:15Speaker 02

  Yeah, yeah, yeah. Yeah, that's a, that's a great way to think about it. That's a great way to think about it. So, so, so the epsilon term is, yeah, think about it as like the dark matter in the universe, which, you know, as you know, you know, dark matter and dark energy, you know, is probably 95% of what's out there in the universe. It's just we can't see it or measure it or understand it. So we just kind of put it over there to the side and we spend all our time talking about the, the 5% that we can see and measure and visualize and all like that. So in, in investing, what is particularly left out of alpha and beta? And what is particularly, I think, frankly, something we can extract from epsilon

• 15:01Speaker 02

  is the strategic behavior of market participants. That's a mouthful, right? What I mean by that is there's this old poker saying, right, that you don't just play the cards, you also play the players. And the cards, think of those as the fundamentals, right? So that's going to be in alpha and beta. But playing the player? That's not in alpha and beta. That's in epsilon. And playing the player is as good a description, an informal description of what game theory is as anything I know. That's what game theory is, is trying to understand how do you play the player? Right? Not just playing the cards, but playing the player.

• 15:44Speaker 02

  So, so that's what epsilon theory is all about. It's trying to look at the strategic interaction of Market participants. It's trying to look at the strategic behavior of investors, of voters, of any sort of social interaction. Because, you know, like your example about dark matter and invisible matter. I really think that in a lot of times and circumstances, it is that strategic interaction, it is that playing the player that's so much more important than just playing the cards you're dealt. So, you know, I started writing Epsilon Theory.

• 16:27Speaker 02

  I sent it out, you know, and emailed about 100 people. And today, we've got, you know, over 100,000 people on that email list. And, you know, get about a quarter of a million people a month to the website. And that's all from word of mouth. You know, we've never done any marketing, never any advertising or anything around it. And I, look, I think I'm a pretty good writer and I think that's, you know, I like to think that, but that's not really what's responsible for the appetite for this, for the growth of this. What's responsible, and I'm certain of it, is that, you know, we are told over and over again,

• 17:10Speaker 02

  you know, these overly scientific and I'll say overly didactic kind of pronouncements about how to understand the world. And when you're in the world for a while, you realize, hey, you know, the world's a lot more than that. That the world is so much about stories and narratives and the way that impacts our behavior. All of this stuff is outside of the rules that we're told that govern markets or voting and all like that. And I think that as people have frankly woken up or been forced to confront the fact that these old rules don't work.

• 17:54Speaker 02

  I mean, frankly, I don't think they ever worked that well, but we all believed in them so that they did.

• 18:00Speaker 02

  You know, it's, it's, it's, it's really interesting to see over the last seven years, 10 years, whatever you want to call it, that I think everybody is now thinking in terms of narrative and playing the player and these strategic interactions. And I think that's so important for coming to grips with the real power structure of the world and frankly, what we can do to change it. So anyway, a long involved conversation. But, but it's, but it's, it's, it's important to me, this notion of epsilon and, and why I call what I do epsilon theory.

• 18:36David Hoffman?

  So Ben, I, I've always thought that like, if you want to win in the investing game, like you have to do what you said, which is to play the player along with playing the beta and also trying to play the alpha, right? Like you can't, you have to pay attention to all three of these things. They're, they're interlocking with each other and there is like this rock, paper, scissors game. But it's the playing the player side of things, the epsilon side of things that we are thinking is perhaps underappreciated or undervalued. And when we discuss about like how to play the market, what we're really talking about is like trying to understand like if I do this, then they do that.

• 19:17David Hoffman?

  And if they do that, then I'll do this. And we, and it's this hall of mirrors of trying to put yourself in the shoes of other people playing, playing the market, right? And so, and this is just converges back onto game theory, right? So like if I do this, uh, if my, if my opponent does this and I'm going to do this, and then that recurses over and over and over again. And what, to me, what epsilon is, is the substrate for thinking what your opponent is going to do, right? And so it is the, the narrative of sorts of the world that we live in, what we perceive to be valuable based off of the narratives that we share,

• 20:00David Hoffman?

  are how we try and frame what we think our opponents are going to do, right? And so, um, it, it, we're, I'm speaking in very general terms, so it's pretty difficult to make something concrete.

• 20:12Speaker 02

  Yeah, no, but, but, but listen, you're, you're, you're exactly right because this, this strategic interaction, game playing, right? It's not random and, and, and there, there, there are. I'll call them rules, but what I mean by rules is there are predictable patterns, predictable because they're very rational, predictable patterns in human behavior in these sort of strategic settings. So the one that I think is most powerful for markets, the one that I think is is is most powerful for really any sort of social market, and that can be investing markets,

• 20:53Speaker 02

  that can be voting markets, is certainly true for crypto markets, is the the strategic interaction of what's called the common knowledge game. And, you know, we're all familiar with a couple of games, right? We're all familiar with prisoner's dilemma because you see that on every police procedural TV show, right? That's that's one where they they question two people in separate rooms and the the predictable behavior.

• 21:23Speaker 02

  You know, to use the $10 economic word, the equilibrium is that both prisoners will rat each other out. It's it's the smart move, it's the rational thing to do. Now, there are ways to get around that, right? By setting up structures of the game that reward or punish ratting someone out, right? So if you know you're going to be sent to prison with the buddies of the guy you just ratted out, that's an incentive structure that changes the parameters of the game and may, you know, change the the predictable behavior, the equilibrium. But but it but there really are these sort of predictable behaviors, depending if you can understand the structure of the game.

• 22:07Speaker 02

  And the one, you know, we're like, say, we're familiar with, most people are pretty familiar with prisoner's dilemma. Most people are familiar with the game of chicken, right? If you've ever seen any, you know, movie like Footloose, right? Or, you know, driving your tractors at each other, you know, we were all familiar with that game. Yeah, some people are familiar with a game called the stag hunt, which I think is is actually pretty important, particularly when you're talking about politics and their national relations. But the the common knowledge game is is one that that I think most people aren't so familiar with. Even though, like I say, I think it's the game of markets.

• 22:48Speaker 02

  And, and it's hard to get familiar with it because it doesn't lend itself as well to a TV show or a movie, right? It doesn't boil down to a, you know, a single tense moment, right? Of tractors going at each other or, you know, an interrogation in a, in a, in a police squad. But the, the common knowledge game, and this, this goes back to the 1930s when a, you know, very famous economist then and still today, John Maynard Keynes, came up with this idea. And, and I think it's so right. It's, it's really, think of it as like the game theory for crowds, right?

• 23:27Speaker 02

  And what, what, the, the example Keynes gave was what he called the newspaper beauty contest. And this was, you know, back in the, I mean, this sounds crazy today, but, but in the, the 1930s, the newspapers, the social media of the day, uh, they would frequently run a contest where they would run, they would print the pictures of 10 pretty girls. I, I, again, it's inconceivable to think of this today, but this was really a thing, right? In the 1930s. And they would invite their readers to vote for who they think the prettiest girl is. And send in your vote and if you, the people who, the, if you vote for the girl who gets

• 24:11Speaker 02

  the most votes, then those voters will be entered into a sweepstakes drawing. You know, we'll, we'll pick one of those voters' names out of a hat and you'll win an all expense paid trip to Atlantic City for the Miss America pageant, right? So I, again, inconceivable today, but this is really, this was a thing. And so Keynes said, well, you know, let's think about how you play this game. So, you know, what he called the first level of thinking is that you really would look at the pictures and say, oh, I think, you know, top row, third from the right, I think she's the prettiest, I'm going to vote for her. And so you would fill out your little card and you'd send it into the newspaper, that's my vote.

• 24:54Speaker 02

  And Kane said, "Well, you know, it doesn't take too long before you realize, you know, "hey, that's, that's not the way to win this game, right? The, what I'm trying to do is, "I'm trying to win that prize, that trip to Atlantic City. I, I, I shouldn't be voting "for the girl I actually think is the prettiest. I need to vote for the girl that everyone "else thinks is the prettiest. You know, what's the consensus view of who the prettiest "girl is? Because I, I, I want to be in that sweepstakes drawing." So he called this the, the, the second level of thinking. And then he, he said, "But, but "then you figure out," he said, "Well, some of us always said, "A lot of people don't "get past that second level of thinking." But they said, "Well, most people ultimately do get past it because they realize, "Well,

• 25:38Speaker 02

  "hell, am, am I the only one who's smart enough to figure out how to win this game?" Right? I, I mean, otherwise, and otherwise the thing is, is everyone else so stupid that they're going to vote for who they really think is the prettiest girl? Or is it, as Kane said, is there a third level of thinking where it's everybody trying to figure out what everybody thinks about the relative prettiness of these girls, right? It's, it's not the consensus. It's kind of like, what's the consensus of the consensus? And it, it's that third level of thinking that, that Kane said was so powerful because

• 26:21Speaker 02

  he said, "Look, forget about these newspaper contests and, you know, voting for pretty girls. What about the stock market? Where what you're doing when you buy a piece of stock is you're voting, you're saying, "Oh, I think that's a pretty company. I'm going to vote for that." And, and Kane said, "You know, the first level of thinking would be to say, "Ooh, I, I think that company is very attractive. It has great fundamentals and it's got, you know, good cash flow and a sound management team. I'm going to buy that stock." And then you realize, "Well, no, no, no, no, that's not how I'm going to win. What I, how to win is that second level of thinking. I, I want to, I want to buy stock in a company that everyone else thinks is attractive."

• 27:04Speaker 02

  And then you go to that third level of thinking where you say, "Well, every, isn't everybody doing this? Isn't it the crowd looking around to see the crowd who we think is the most attractive?"

• 27:18Speaker 02

  Kane's kind of left it at that and then in subsequent years, the and this is how the common knowledge game comes around. The question then becomes, well, how does the crowd? Figure out what the crowd is looking at? In terms of, you know, a pretty stock to buy? And and the answer is you introduce this concept of the missionary. Uh, the the the missionary that we we call that in game theory because the there's a famous thought problem about how the crowd? Figures out? What the crowd is thinking? And the the the game or the game, the thought experiment?

• 28:04Speaker 02

  Usually goes by the the name of the the island of the the green eyed tribe. And so the the setup for this thought experiment is? All right, there, there's, there's, there's an island. All the people there on the island have blue eyes. It is taboo? To have green eyes, meaning that? Uh, if you do have green eyes? You have to leave the island immediately. The the the next day you have to get in a canoe and you have to leave the island uh immediately.

• 28:38Speaker 02

  Uh, but? What's also taboo on this island is to talk about? Eye color? And in this thought experiment, there are no mirrors on the island. So, you know, so there could be people on this island who have? You know? Green eyes? But they never know it because nobody's going to tell them, hey, you've got green eyes. You need to leave the island. And there are no mirrors, so you'd never look at yourself and you'd say, oh? I've got green eyes, I've got to get off the island. But then one day? You know, so this this island, even though it has this taboo structure?

• 29:14Speaker 02

  Where green eyed people have to leave the island. Uh, it can, nobody ever leaves the island and life goes on happily. You know, for, for, for generations until one day the missionary comes. And the missionary gets there and you know, he's going to tell, you know, the truth to people. And so he gets up there, stands up on a, on a box. And he says to everybody on the island, because you know, he's not part of their taboo system. He says, I just want you to know, there are people here on this island with green eyes.

• 29:52Speaker 02

  And so then the thought question, the thought experiment is, okay, well, what happens next? And what happens when the missionary comes up and makes a statement like that? Is that the missionary is creating common knowledge. Common knowledge is what we all know that we all know. Right? So before the missionary said that. Each of us, each of those islanders individually knows that there are people on the island with green eyes. But that thought stays inside their head.

• 30:26Speaker 02

  After the missionary makes that public, makes that public statement.

• 30:32Speaker 02

  The people in the island, it doesn't change what each individual islander knows, but now they know that everybody knows. Now they know that everybody knows. So, so the question is what happens? Well, the answer to the question is. If there's, the answer is trivial if there's one person on the island with green eyes. Right? Because now that there's common knowledge that there is at least one green eyed person on the island. That one person who has green eyes looks around, he looks at everybody in the island, you know, it's a small island, you can see everybody. He says, well, everybody on this island that I see has got blue eyes. And he goes, oh shit, that must mean I'm the guy.

• 31:14Speaker 02

  So the next morning with one islander with, with, with green eyes, one. One islander leaves on his canoe the, the next morning. But then there's a question, well, what happens if there are two islanders? Two tribes people that have green eyes, what happens then? The answer to that, the answer to this thought experiment is that for every in.

• 31:41Speaker 02

  Islanders with green eyes, they all leave simultaneously in days later. Right, so how does that work? Well, the two, the, the, the two islanders are there with, with, with, with, with green eyes. Each one of them looks around and says, oh, man. Joe over there, he's got green eyes. He must be the guy that the missionary was talking about. So he waits till the next morning and he says, well, wait a second. Joe over there, he, he must have seen that we've all, why, why did, why is he still here on the island? I mean, he must have looked around. He must have seen that we all have. Oh, oh, no. Joe must have seen somebody with green eyes.

• 32:25Speaker 02

  And if I see that everybody's got blue eyes except Joe, that must mean that I have green eyes. And the same process is going through Joe's head. So both Joe and, and I myself, we both leave the morning of the second day.

• 32:43Speaker 02

  Right, so I've gone through this long example and the, the, the, the point of this is this, this is so much. You know, how markets work. Where it's nothing, nothing, nothing for a long period of time. And then boom, a lot of people leave the island on the same day. This process of creating common knowledge. And then all of us looking around at the crowd to say, am I the only one who's out of step here?

• 33:13Speaker 02

  That's the way this works. There's a time element to the creation of common knowledge. And the way that it hits a market.

• 33:24Speaker 02

  The more people who share the, I'll call it the, the, the non-common knowledge view. The longer it takes for the break in the narrative. But the bigger it will be. So you, these are the kind of principles, the, these game theory principles. That once you start applying it to the creation of common knowledge, these missionaries, these people who create narratives. Once you start analyzing and measuring how much these narratives are.

• 33:56Speaker 02

  Successful in creating a common knowledge, how many people are, let's call it, off-target, right? Have green eyes when the common knowledge says you need to have blue eyes? That inserts a time element and then a magnitude element for what the dislocation is going to be for markets. It's an incredibly powerful framework for understanding very predictable patterns of crowd and market behavior. And it's the sort of thing that is totally ignored, isn't even the right word. It's the dark matter for how, you know,

• 34:37Speaker 02

  we are told that we need to spend our time doing to try to understand how markets work. So again, sorry for the long-winded talk, but man, this stuff is so powerful once you start wrapping your head around it.

• 34:50Ryan Sean Adams?

  Ben, there is so much to unpack there because what it does is it absolutely flips investing on its head. But it's basically saying like all of the models that you thought were real and true and imbued in the fabric of reality investing, they're manipulatable by missionaries, by the, you know, by social structures, like, like the social system is at the base layer and that can be fundamentally manipulated.

• 35:20David Hoffman?

  Well, it makes them, it makes them time-dependent too, right? It makes them have an expiration date.

• 35:26Speaker 02

  There's a half-life to these narratives. It's, once you start measuring and visualizing narratives and that's, that's the, that's the focus of our research. So, so the, the, the company, you know, I started two years ago, partners, we call it Second Foundation Partners, you know, after the Isaac Asimov Second Foundation and, uh, which is a whole nother story, right? But, uh, but, but the, the research we're talking about is called natural language processing, NLP. And these are ideas that have been around, you know, I was writing about this stuff 30 years ago in academia.

• 36:04Speaker 02

  The problem 30 years ago, though, was that, you know, we had all the the

• 36:11Speaker 02

  the ideas and the formulas and the, you know, the models for how to look at this. We just didn't have the computing power. Right? We didn't, we didn't have the fire hose of data that we can get where I can get everything that's published in the world and transcripts of everything that CNBC, you know, vomits out there during the day.

• 36:28Ryan Sean Adams?

  Or even Twitter.

• 36:29Speaker 02

  Or, oh my God, or Twitter, right? I can get all of that and I can run it through as much computing processing power as I want through AWS or Azure or whatever. And our ability to now measure and visualize the structure of narrative. It, it's, it's like discovering a microscope, right? It's like somebody handed you a microscope in the 1700s. And, and, and they said, yeah, here, look, look at this under the microscope and they, they, they, they put a little piece of glass and a, and a little drop of dirty river water on there. Or, and, and you look at it through the microscope, say, holy shit, there's a whole world that's inside there.

• 37:11Ryan Sean Adams?

  Yeah, and it, it's the base layer of everything.

• 37:13Speaker 02

  Absolutely, absolutely. Cause, cause that's what it means to be a social animal. Of, you know, humans, there, there are four incredibly successful species of animals on the planet. There's the bee, there's the termite, there's the ant, and there's the human. It is not a coincidence that these four species that dominate the world.

• 37:40Speaker 02

  We're social animals. And, and there, you know, a few definitions of social animals, it's, uh, you know, multiple generations that live in the same nest. Uh, you know, shared, taking care of the young, the brood, right? But the, but the most important characteristic, the, the, the sine qua non for what it means to be a social animal is that you swim in an ocean of intraspecies communication. Right? For the bee, the ant, the termite, that's mostly pheromones, it's mostly chemical communication, which they literally swim in.

• 38:17Speaker 02

  We are no different. It's not chemicals, it's our words. And, you know, think about during the day, how many messages you receive from other humans? And, and the answer is, is for a typical human, it's like five or 6,000 discreet messages every day. And we don't recognize them, you know, discreetly and, and consciously, we couldn't, we'd go nuts, right? But we all know that we, that we swim in this ocean of communication. And just over the last couple of years, it's possible now to actually

• 38:59Speaker 02

  measure it, to visualize it, what I like to call narrative world. And now it, it, it's really possible today to, to, to actually start to measure and put some, some, some numbers behind these games like the common knowledge game, so that we can actually try to predict and anticipate human behavior in ways that just weren't possible before.

• 39:27Ryan Sean Adams?

  So Ben, I think this has two really interesting implications, right? So the first is a bit of a red pill, probably for some of our listeners. That the, the things that we call fundamentals, right? You know, stocks have fundamentals, profit margin, these sorts of things. The things that we thought were so sturdy, the found, like the foundation, it's not actually the foundation. The foundation runs deeper than that. And even those fundamentals are based on narrative. Because the social system, you know, is, is what essentially puts in fundamental metrics, right? Like, why do we think discounted cash flows should be the basis for valuation of the company?

• 40:11Ryan Sean Adams?

  Well, because Wharton School of Business teaches it, basically, right? And every, all the MBAs believe it, and therefore the market believes it, right? That's the first implication.

• 40:19Speaker 02

  You know, let me, let me interrupt you there, all right? Because it's, it's not that.

• 40:24Speaker 02

  It's not that things like fundamentals and cash flows and the like. It's not that any of these models and lessons and principles, it's not that they're wrong. Right? It's whether they are useful. So, so, so, so let me give you an example. So, you know, it's the difference between Newtonian physics and Einsteinian physics, right? It's not that Newtonian physics is wrong.

• 40:53Speaker 02

  It's that

• 40:55Speaker 02

  in certain circumstances, like you're going really fast.

• 40:58Ryan Sean Adams?

  It's imprecise.

• 40:59Speaker 02

  You know, you know, you know, something the size of the sun, right? It doesn't work very well.

• 41:06Ryan Sean Adams?

  Yeah, they're non predictive.

• 41:07Speaker 02

  Right? So, so that's right. So, so Einsteinian physics, it's not that Newtonian physics is wrong. It's that it is a subset of a broader concept that we'll call Einsteinian physics. And in markets, it's exactly the same thing. So, you know, Ray Dalio, the founder of Bridgewater, which is just down the street from me. And, and look, for my money, Bridgewater is the best, smartest hedge fund on the planet. And I, I've got, I've got, honestly, I've got nothing but good things to say about those guys. I mean, they're weird as shit, right? Don't get me wrong. You know, I could never work there and, you know, there are a lot of stories and I know a lot of stories.

• 41:48Speaker 02

  But, but I think they're fantastic, right? For what they do and managing other people's money and being really smart about it.

• 41:53Ryan Sean Adams?

  Yeah, Ray's writing alone is just fantastic.

• 41:56Speaker 02

  It's, it's really good, right? I mean, anyway, that's a whole nother podcast to go down, right? But, but, but, you know, Ray's core idea around markets is what he calls the economic machine. Right? And he describes frankly, everything as a machine, including humans and the way we think it's, which is the whole other conversation we could have. But

• 42:21Speaker 02

  what, what Dolly was talking about, when he says there's an economic machine and that's how you should understand markets and, and, and stocks. He's not wrong. Right? It's, it's, it's like, it's like Newton isn't wrong when he says F equals MA.

• 42:41Speaker 02

  But there's a larger system that encompasses the economic machine, I'll call it the narrative machine, that in certain periods of time, your old fashioned narrative machine, economic machine, your old fashioned Newtonian physics, it just doesn't work very well. And ever since the great financial crisis, and this will finally return to that idea you introduced early on, the idea of the three body problem, our, our old ways of understanding, like Newtonian physics, like the economic machine, they just haven't worked, right? They just haven't been very useful. And I really think it's because, not that they're wrong per

• 43:25Speaker 02

  se, but because there's a larger machine, the narrative machine, I like to call it, like I say, that is, that is like Einsteinian physics, right? It's, it's the thing you need to, to really focus on to, to be useful when, you know, the world, the world gets a little crazy, like it has over the last 10 years.

• 43:50David Hoffman?

  Absolutely. So, so the world is getting super crazy right now. And I think this is where the, where the conversation is going to start to converge on the topic of crypto. But how we are getting there first, I feel like starts with the conversation of what happened in 2008, where the, the markets were in turmoil and the Fed, they started to integrate itself into the economy, into the market, by propping it up, right?

• 44:18Speaker 02

  Yeah.

• 44:18David Hoffman?

  And the-

• 44:19Speaker 02

  Yeah, yeah. And Ryan, it wasn't just that the markets were in turmoil, right? So it, it was that there was a non-trivial chance that the entire system would collapse.

• 44:30David Hoffman?

  Right, right.

• 44:31Speaker 02

  And it's, I, I remember this day so vividly. So the, the hedge fund I was running then, man, we, we, we killed it in 08, right? We had- I mean, we were, we were early, we were right.

• 44:47David Hoffman?

  Mm hmm.

• 44:47Speaker 02

  We were doing, we did really well in oh eight. And in our memory, I guess this was kind of September, well, this is right before Lehman was, you know, was taken out in the street and shot. And, um, you know, we'd had a great day. I mean, we were like five percent that day because the, you know, the shorts, the credit default swaps, everything was working for us. And, and, and I was kind of, you know, smiling to myself after the day and, uh, and then it kind of hit me and it was like,

• 45:20Speaker 02

  what if nobody's around to, to, to pay me what they owe me?

• 45:24David Hoffman?

  Yeah. What if the world goes to hell? It's not a victory.

• 45:27Speaker 02

  Exactly. Right. I, I, I mean, you know, all these big banks, you know, JP Morgan owes me a shitload of money on these contracts I have with them. Well, what if JP Morgan's not there tomorrow?

• 45:38David Hoffman?

  Right.

• 45:38Speaker 02

  And, you know, and that's, that was what was really at stake there, um, in, in, in oh eight. And what happened, you know, as you're describing.

• 45:51David Hoffman?

  To, to me, it's the, going back to the analogy that we were discussing, what happened was the missionary came and started to dictate what the rules are, right? And so the Fed came and said like, hey, you know, JP Morgan is going to be there tomorrow. We, we guarantee it, right? We are stepping into the free market and we are guaranteeing a future. And the reason why we are able to do that is because we have the money printer. This is, this is coming from the crypto narrative, right? And so in 2008, a new narrative stepped into play, right? Like a, a, and the epsilon grew stronger in, in the face of alpha and beta. Because the, the central bank said that the, we are going to make sure that the market, the free market moves

• 46:36David Hoffman?

  in the direction that we want it to, which I think has, uh, generated a substrate between 2008 and now coronavirus that, uh, some people may call, um, moral hazard in some ways, uh, which. The messaging from the Federal Reserve, which controls the dollar, which gives them the power to control the narrative in the first place, offers the market the backstop, the perceived backstop that will always be there, and has thus created this insanely strong V-shaped recovery because of the narrative that the Federal Reserve is there.

• 47:14David Hoffman?

  And it's the entire narrative, it's the belief in the Fed that is creating the current economic conditions that has arisen some of the most crazy manifestations, such as like Hertz going bankrupt and then rallying. We have the Davy Day Trader movement where he said he solved the markets, he solved stocks, because the rules are that stocks only go up. And so I think we are now starting to see the fact that this missionary comes and makes these statements, what it really is, it's the emperor's clothes parable metaphor, right? Where we are now, the free market is now starting to identify exactly, put their

• 47:58David Hoffman?

  finger right on the pulse of what is actually going on here with narratives.

• 48:02Ryan Sean Adams?

  Yeah, that's like the common knowledge we all operate under now, right?

• 48:07Speaker 02

  Yeah, it really is.

• 48:08Ryan Sean Adams?

  The Fed is going to prop up stocks.

• 48:10Speaker 02

  Yeah, the Fed's got your back. And so, you know, one kind of historical point, and then, you know, on with this. What, before we got the creation of common knowledge, and I'll call it the Fed as missionary, that really starts in 2009 with what they call forward guidance and the like. Before we got there, though, and I just want to, you know, it's important that, you know, kind of get this out there to your community, right? For everybody to know, because the history gets rewritten so much.

• 48:47Speaker 02

  What the Fed and the US Treasury did that before they started, you know, their common knowledge, their narrative missionary work was, you know, we're familiar with Lehman going bankrupt, but then what they did was called the Temporary Liquidity Guarantee Program. This was in October of 2008. And what they did there, this is where they really took action, not words, but action to prop up, to rescue the big banks. Because what they did in this program was they, they put the full faith and credit of the United States

• 49:28Speaker 02

  government behind the unsecured credit of federally chartered banks. All right, what the hell does that mean? What that means is that the next day Goldman Sachs became a federally chartered bank and over the next few weeks issued about $30 billion worth of, of corporate debt that was backstopped, that was cosigned by the US government. And it was, it was that program that saved the system. I understand that. But it was that

• 50:06Speaker 02

  program that also makes me so angry when I hear guys like Lloyd Blankfein and, you know, all the other Goldman Sachs guys says, oh, we weren't bailed out. We, you know, we started on two feet. That's bullshit. That's bullshit. Right? So in, in, in late 2008, the federal government put the government to backstop the debt of every federally chartered bank. And, and, and so the, you know, I like to call it, say, you know what?

• 50:45Speaker 02

  The pleasant skin of capitalism for me was ripped off in 2008 and I could see just the naked sinews of power below that, right? And so that exists, right? So what's been created over that, the new skin, is the skin of narrative and missionary work and the like, which you described very well. And by the way, Dave Portnoy is exactly right, right? That's the thing. He's exactly right.

• 51:24David Hoffman?

  Oh, he nailed it. Absolutely perfect. And he's making money off of it.

• 51:28Speaker 02

  Absolutely, absolutely. And he's like, you know, to use your story of the emperor's new clothes, he's like the little girl in the crowd who says, hey, the emperor's naked, right? It's not fundamentals and oh, what does this analyst say about the earnings potential for stock XYZ next week? Portnoy is exactly right.

• 51:48David Hoffman?

  He's saying the quiet part out loud.

• 51:52David Hoffman?

  Hey guys, we're going to pause the interview with Ben real quick and just talk about some of our fantastic bankless sponsors. AVE is a borrowing and lending protocol on Ethereum. So what that means is that you can deposit your assets into AVE and then take out a collateralized loan or simply deposit just to earn an interest rate. So you pay an interest rate for borrowing, you earn an interest rate for supplying. But what the magic of AVE offers you is stable interest rate loans, which is a really important money Lego for building out a bankless revolution. Having an interest rate that doesn't change under your feet is really important for long-term thinking and being able to plan out your own personal finance futures, but also make strong business decisions based on an interest rate that you can depend on.

• 52:38David Hoffman?

  In addition to their stable interest rates, there's also flash loans and flash loans are where you can borrow any amount of any asset for without any collateral, so long as you are also paying it back in the same transaction. The use cases for this are absolutely endless and I'm really optimistic that some creative developers are going to make some really cool tools using the AVE Money Lego system. We have been watching AVE climb the DeFi Pulse leaderboard, just growing and growing and growing in the assets deposited into their application, which just shows how strong of a system they have created. So you can go and check them out at ave.com. Deposit crypto to start earning or borrowing any Ethereum wallet works. So check it out.

• 53:19Ryan Sean Adams?

  I want to tell you about another Bankless tool that I personally use. It's fantastic. This one is for our US listeners. It's called Rocket Dollar. So if you have an IRA or a 401k, the problem is it's jailed inside of your brokerage. So your Fidelity account, your Schwab account, that means you don't have good access to crypto. The only crypto that you can buy is in a trust form and it's marked up like 5x, 6x, 8x the price. You're getting ripped off. So what you need to do is break your retirement account out of jail, set up something called a self-directed IRA or a self-directed 401k. We've written articles about this on Bankless that we'll include in the show notes. We've

• 54:03Ryan Sean Adams?

  written articles about this that we'll include in the show notes. Rocket Dollar takes care of all of the pain in getting set up. They help you with the paperwork. You can break your retirement account out of jail and also use the Bankless code to get $50 off. So make sure you use that code BANKLESS when you sign up on rocketdollar.com to get $50 off.

• 54:25David Hoffman?

  All right, let's go ahead and get right back into the interview with Ben Hunt.

• 54:30Ryan Sean Adams?

  Okay, so the byproduct of this, right? So missionaries are incredibly powerful because they can set narrative, particularly missionaries that are already in power. Nation-state missionaries might be the most powerful of all, and those are the ones at the central bank. So now we're operating under this new common knowledge narrative that stocks only go up because that's what the Fed wants. But the byproduct of this is something we talk about an awful lot on Bankless, right? Like, the name Bankless is like the goal of doing less with banks, adopting protocols rather than banks where we can, being self-sovereign over your money.

• 55:14Ryan Sean Adams?

  Because the byproduct of everything that we've been talking about is we've created what you call the nudging oligarchy. Can you talk a little bit about that?

• 55:23Speaker 02

  Yeah, so, look, I talk about the nudging oligarchy, and I talk about the nudging state. And what I mean by that is that, you know, we don't, we don't live in a Orwellian 1984 world where the, you know, in that book famously, the image of the state was a boot, you know, crushing the face of humanity for all time, right? That was, that was the, that was the self-proclaimed image of the state. And that's, that's not the image of our state, even though in many ways it and the oligarchy,

• 56:07Speaker 02

  you know, the corporate interests are, and I know I sound tinfoil-haddish with this stuff, but maybe not to your audience.

• 56:14Ryan Sean Adams?

  You're in good company, sir.

• 56:15Speaker 02

  Yeah, it's really real, right? This shit's real. It's not a jackboot, you know, smashing the face. It's a, it's a smiley face button. That's what it is. So, you know, I use a lot of imagery and pictures and, you know, when I write on epsilon theory. And I think the image I've used the most, and some of your audience will get this reference, is the, you know, there's this, this...

• 56:42Speaker 02

  You know, fantastic, um, you know, graphic novel, uh, became a, you know, an okay movie, right? Watchmen, right? And so the, the, the image of Watchmen is, is that, is that smiley face button, uh, with, uh, the, the blood dripping down it, you know, a few drops of blood dripping down it. And, and that, that to me is like the perfect imagery of what I mean about the nudging state and the nudging oligarchy. It's, it's, it's not done by, you know, jackbooted thugs. It's done by narrative, by this smiley face narrative of, oh, what? Wait, wait, wait. You're, you're going to, to buy crypto? Don't, don't you know that, you

• 57:24Speaker 02

  know, crypto is used by terrorists? What are you, are you supporting terrorism? You know, right? That, that's what, that's what a nudge is. That's what a nudge is.

• 57:34Ryan Sean Adams?

  And they, by the way, they

• 57:35Speaker 02

  That's so powerful.

• 57:36Ryan Sean Adams?

  They have to do that nudging in the West because of our social contract, because of Western liberal democracy, social contract. But in other places in the world, you know, it might be a bit more like 1984-ish. Um, China, for instance, Russia is just a, and the open oligarchy.

• 57:54Speaker 02

  Yeah, yeah, yeah. Russia for sure. But, but, but China's an interesting case, right? Because, because, you know, China is moving much more in the direction of nudge. So, so, so take their, kind of their social credit system, right? You, you know, familiar with this, right? Where there's this national database where everything you do, and it's a very Black Mirror kind of thing. I mean, it's, it is a Black Mirror thing. Everything you do, every action you take can be recorded and goes into your score, right? It's like your credit score, except it's your social score.

• 58:24Ryan Sean Adams?

  And that includes

• 58:25Speaker 02

  Citizen score. The citizens, right? And that includes the people you talk to, you know, you know, where you travel, what you do. And so what you find is that people, they, they, they self-control, right? They, they, they, they, they start to censor themselves. It is the self censorship that is the goal of the nudge, right? Because, and it, look, it makes a lot of sense. It's so much cheaper to get people to censor themselves than to force compliance, you know, with, you know, more policemen and everything else. It's, it's, it's the, it's the whole notion of

• 59:08Speaker 02

  Jeremy Bentham, this late 18th or 19th century British thinker, talked about the Panopticon. And it was his model for how you would design a prison with minimal guards. And the way the Panopticon works is on self censorship, on self regulation. Because you see in the middle of your prison, you can see all the other prisoners. And again, this is game theory, you know that the other prisoners can see you.

• 59:45Speaker 02

  And when you are being watched like that, and you know that others can be watching you, you censor yourself, you control yourself. And again, it's a very predictable pattern of human behavior. And you're increasingly seeing governments take advantage of this.

• 1:00:06Ryan Sean Adams?

  And now then, what we have is the Panopticon meets Moore's Law. Because they can be so much more efficient when they have the power of digital technology. So, you know, one thing that China is doing, for instance, you talked about nudging, right? And yeah, I agree with you, they're doing it digitally as well. But they are creating a central bank digital currency, basically. So, the ability, it's just an entry in a ledger, a centralized ledger. It's nothing, nothing public blockchain or crypto about it, nothing really free about it, it's a state apparatus.

• 1:00:44Ryan Sean Adams?

  And that gives them the power to freeze your bank account, to take your money at a will, to track every single commerce transaction that you do, to eliminate you from the economy, tie that to the good citizens score.

• 1:01:04Speaker 02

  Hey Ryan, guess what, coming soon to a liberal democracy near you.

• 1:01:07Ryan Sean Adams?

  Exactly.

• 1:01:09Speaker 02

  Right, right, I mean, the Nordic countries have pretty much already moved to this as well. I figure it'll be the, you know, the 2022, you know.

• 1:01:22Speaker 02

  Dollar rescue or, you know, anti-terrorism bill that'll do that in the United States.

• 1:01:28Ryan Sean Adams?

  Well, especially, and you've got, you've got more fodder because you just game theory and you just say nation-state against nation-state. Well, the US says, "In order to compete against China, we need to recruit Mark Zuckerberg and team to create Libra for us."

• 1:01:43Speaker 02

  Libra. No, absolutely. Yeah, I wrote a long piece on this. I mean, it's the co-opting of, and this is what governments always do with financial innovation, right? Which is, which is one of the reasons, and I, you know, maybe, you know, this is one of the paths for us to go down. It's one of the reasons why, you know, I'm not a, huh, what's my attitude towards, I'll call it, towards Bitcoin? I'm, it's not that I'm a skeptic or a cynic, is that it, I just,

• 1:02:17Speaker 02

  I've, what always happens is that governments co-opt these financial innovations, and they take, I like to call them the coyotes, the clever coyotes. I'm a coyote, right? We're too clever by half. We're too smart for our own good. We don't see the forest for the trees. They, they kill the coyotes. You know, governments are in the business of coyote control. And, and I've, and I've just seen this too many times, and I, I just, I see the path this is on. I am so sympathetic to the goals and the ends.

• 1:02:57Speaker 02

  We agree so much on the, where we need to be going in the world. I am so, certain is the wrong word, I'm, but I'm, I really believe that the tactics and the strategy to get to that desired endpoint,

• 1:03:21Speaker 02

  I don't think you can fight the nudging state and the nudging oligarchy on this battlefield of money. I, I think that is, that is the sine qua non, that is the raison d'etre here. I'm using lots of foreign languages here. That's why governments exist, is money.

• 1:03:43Speaker 02

  Right, senior age, this is what a government is. It is the control over money. It is existential to a government.

• 1:03:51Ryan Sean Adams?

  They do not want to give up that power and will not do so easily.

• 1:03:54Speaker 02

  They can't. They can't.

• 1:03:56David Hoffman?

  It is their power. And so there's a direct relationship between the size and spending of the military and the ability to print money to back that system. Like, the power and spread of the United States of America as a empire, regardless of whether we actually, like, we don't actually control the EU or South America, but we kind of do because of the dollar, right? It is the power that backs the United States. And this is kind of where I want, I know you just expressed maybe some apprehension or some cautiousness about Bitcoin as a successful alternative to this. However, when we talk about the nudging state,

• 1:04:42David Hoffman?

  we do have to also include the fact that Bitcoin and Ethereum, me and Ryan are more representative of the Ethereum community more so than the Bitcoin community, although we do believe in the power of Bitcoin. What these things represent is the ability to exit, right? And exiting this, the option to exit this system, we hope, offers a check on the ability of the nation-state to nudge. Because if the nation-state nudges you in a direction you don't want to go, you may have the option to exit out of this system. And while I don't believe that this is just going to be a peaceful transition, there's going to,

• 1:05:25David Hoffman?

  there's going to be a ton of conflict in a bunch of different ways. The mere ability to exit might put limits upon how far a nation-state can nudge its citizenry.

• 1:05:36Ryan Sean Adams?

  It kind of puts the nation-state almost, you know, rather than nation-state versus crypto, it's like nation-state versus people, right? Are you going to strip away the people's ability to buy Bitcoin or transact in it? That's a slippery slope for a Western democracy.

• 1:05:53Speaker 02

  Yeah, I think yes and no. It depends.

• 1:05:57Speaker 02

  It depends how existential it gets for that nation, right? Right? So I actually think that the... And look, I totally get what you're saying. There are clear... I hate to use this phrase, but I will. There are clear use cases for Bitcoin that are crucial and critical

• 1:06:21Speaker 02

  in lots of places around the world. Where in a sense, the government is at war with its citizenry, right? You know, you could use, you know, Venezuela, right? Or you could say, you know, in Lebanon, right? Which is why, you know, you're in Lebanon, what people want is they want US dollars, right? They don't want, you know, whatever the, you know... I should know what the Lebanese currency is. I don't, right? But nobody wants their domestic currency, right? They want dollars, first and foremost. Or they can get a, you know, if you have the ability to do it, they would want to get Bitcoin. I get those use cases. I get those, I guess I'll call them, store of value use cases.

• 1:07:04Speaker 02

  Because it's very similar to the argument around, you know, Bitcoins. You know, a store of value, like gold, you know, digital, you know, these sort of arguments.

• 1:07:15Speaker 02

  I know this exists. I think that works, and I'm not arguing with that. What I'm saying is that for me, for me, I think there's a bigger game afoot that we're all interested in, right? We're all interested in liberty and justice for all. We're all interested in how do we reduce? How do we mitigate this nudging oligarchy and nudging state, which aggrandizes, which takes more and more control over our bodies, our minds?

• 1:07:57Speaker 02

  That's the worst part, our autonomy, yeah, day after day after day. And I think the risk of focusing on the use cases that you're describing, which I'll call it kind of the gold store of value use cases you're describing, they're absolutely right.

• 1:08:16Speaker 02

  What I think we all have to be mindful of here is that the ability to be ghettoized, the ability for powerful states to pat you on the head and say, "Oh, that's right. Yes, you go over here and you play with your little friends who, you know, who also talk about gold all the time. Yes, yes, yes. Isn't that cute?" Right? That's what happens. And that's been the life of the gold bug. And I'm using that term, that pejorative term. I think of myself as a bit of a gold bug, right? I believe in these use cases you're talking about for Bitcoin. But what you see in the community of people who follow gold and the like is that they've

• 1:09:00Speaker 02

  been ghettoized. It's a miserable way to live because basically what you find yourself doing is you find yourself, in a sense and over time, hoping for catastrophe, right? Because you think, "Well, I just, you know, man, if the system really collapses, I'll be sitting pretty then." And it's like, really, dude? That's...

• 1:09:22Ryan Sean Adams?

  They call it Bitcoin Citadel idea, that like, "Oh, my hell, and the coiners are in the Citadel and they just watch from their palaces."

• 1:09:31Speaker 02

  Yeah. And I've, listen, I've lived that to an extent and it's just, it turns you into a grumpy grandpa. It's a...

• 1:09:39Ryan Sean Adams?

  It turns you into a maximalist, using crypto terms, I think.

• 1:09:43Speaker 02

  Yeah, yeah, yeah. So I get the use cases you're describing. I believe in the use cases you're describing. I personally believe in the use cases you're describing. I think, though, in my professional life and in the movement I'm trying to create, though, I'd like to, I'd like to go after bigger game, you know? And that may be a longer game I have to play. It's a longer hunt, right? I don't think that the battlefield I want to fight on is not really the battlefield of money, per se.

• 1:10:21Speaker 02

  Because I do think it lends itself either to when the chips really get down just to be outright crushed on that battlefield, i.e. outlawed, right? But even before then, you end up being, you know, like I say ghettoized and turned into this, you know, pat you on the head and oh, you stay over here and do that. So.

• 1:10:41Ryan Sean Adams?

  So Ben, I have three things to throw at you, but before I do, just on the top, on the topic of crypto to get your thoughts on, before I do, David, I think wanted to say something, maybe.

• 1:10:53David Hoffman?

  Well, I was actually just going to make a distinction between, so like I said, the bankless nation that we are trying to build out incorporates Bitcoin, but not, not just Bitcoin.

• 1:11:04Speaker 02

  I get it. I get it.

• 1:11:05David Hoffman?

  From the, from the greater outside perspective, you know, I think people know the name Ethereum, but they're far less familiar with it and what it does. And it's, and what it does is not any one particular thing. And in the Ethereum, in the Ethereum world and the Bitcoin world, we kind of consider these two different nations that are similar, but different. And the, the goal is to, even, even though that the nation state does have some control and influence and they can nudge perhaps people away from Bitcoin and reduce its meaning.

• 1:11:41David Hoffman?

  It's also a race, right? Because Bitcoin is a global nation. It's a global financial platform, which every single nation state is, is, or every single citizenry of every single nation state can take part of. And Ethereum is even the same thing, but Ethereum is even more generalizable. And so while I'll totally concede that like Bitcoin, because it is one singular thing, it's perhaps weaker to the nation state's influence. Ethereum isn't one single thing. It is a platform to host many things. And so the, the nation state can't.

• 1:12:19Speaker 02

  Listen, I'm really glad you brought that up because that, that is where, what you're describing is exactly where I would love, let's call it the crypto community, to use that kind of, in a silly term. Where I'd like to see things go, right? Because, because what?

• 1:12:39Speaker 02

  What, I'll use kind of a, you know, even kind of broader term, I'll call it, what I'll call is distributed ledger technologies, right, which, which underneath that, we can include all different, you know, instantiations of that. Right. What, what all this does is I think,

• 1:12:59Speaker 02

  attack in an incredibly elegant and powerful way, what I think is the Achilles heel of the nudging state and the nudging oligarchy. What I think it does is it solves a problem that must be solved in order to go after the, the, the, the bigger game that I, that I think is, is, is possible here. And that is that it solves the problem of distributed trust. Solving this problem of distributed trust is at the core of the, again, highfalutin word, movement, I want to try to create around,

• 1:13:44Speaker 02

  yes, investing, but, but, but more importantly, a fuddy duddy world citizenship. Right? How, how do you know that that

• 1:13:56Speaker 02

  person, right, that, that, that, that touring entity that you're, you know, talking with on, via email or whatever? Yeah. How do you share trust here? And, and, and finding that sort of permissionless,

• 1:14:13Speaker 02

  and I know there, there, that's a, that's a spectrum, right, where, where we can talk about that, depending on what, you know, instantiation of distributed ledger you're, you're, you're talking about, and the, and the different use cases will have different places on that spectrum. But, but attacking that spectrum problem of distributed trust is at the core of what has to be accomplished to really get at the big, the, the, the big game that we want to play here. So I get it, right? So, so, so, you know, moving towards decentralized finance in whatever form and fashion. Man, I am, I am, I am a total ally of that.

• 1:14:53Speaker 02

  Right? What, what, what I would like to see is I, and, and it's, and it's difficult sometimes because there's not money directly associated with it, you can't trade this. But I'm looking for finding these, these decentralized. Ways of, of I'll say, taking back your identity, taking back your data, taking back, you know, your, your, your, your vote and your actions. It's, it's all underpinned by these distributed ledger technologies that I think really get at this, attack this question of distributed trust. And, and that's why I'm so hopeful about the, the, the, the, the energy and the shared goals here.

• 1:15:35Speaker 02

  I'm, I'm just, I'm not particularly interested in playing on that battlefield of money per se. And, and, and I, and I get the, the, 30 years ago, the, you know, the, the, the 26 year old Ben would have been all over that. Right? So I, I get it, right? But, but, but, but that's not where I am now. And, and, and that's at the heart of, I, I think where, you know, you know, not that I get misinterpreted, but, but the, you know, the issues I have are, are around a lot of the, the, the finance applications of these distributed ledger technologies more generally.

• 1:16:14Ryan Sean Adams?

  So, so, so Ben, I, I think, you know, so many millennials, uh, read your work and resonate with it because, you know, you're talking about issues that they care about. Totally get that you are, um, less bullish on the bankless, kind of these bankless systems, um, usurping or replacing aspects of the nation state and the banks. But maybe you could give us some advice because we think there is still some hope there. And there are kind of three paths, um, I think by which we might be able to achieve it. So I would be interested in your advice on these three paths and just thoughts, given your game theory experience, given your sort of narrative experience, because those are

• 1:16:59Ryan Sean Adams?

  the realms we're playing in. So let me, let me kind of give you these three different paths and then maybe you could comment, uh, on each of them. So the first path is this, um, that

• 1:17:13Ryan Sean Adams?

  There's game theory involved between competing nation-states. And the way crypto-economic systems work is there is incredible, extraordinary value in getting in early, right? So, US is the reserve currency of the world. How much does China, as a supranational power, want the US to remain the reserve currency of the world? So, China adopts a decentralized currency. It doesn't have to be China, it could be Russia, it could be, you know, another, a smaller country. One nation-state adopts it, gives them an unfair advantage, and forces the other nations to adopt it.

• 1:17:54Ryan Sean Adams?

  And the way it gives them an unfair advantage is through price appreciation, potentially. The first, you know, central bank who starts buying Bitcoin, what's that, what's that going to, what path will the other central banks have to go down? So, there's this idea of game theory of nation-states. The second is this, this is kind of how the internet was adopted. It became so damn useful, right? So, did, did centralized state governments want an open communication protocol? Did they want cryptography embedded in things like, you know, HTTPS? Not really. But, the US adopted it in the early 90s and, you know, essentially put it out pro-regulation

• 1:18:36Ryan Sean Adams?

  because it was good for the economy and because it would give them an unfair advantage relative to other nations. So, there's the potential, we're seeing things like stable coins on Ethereum that are reaching $10 billion that are essentially bank-issued. We're seeing JP Morgan with their own stable coin, we're seeing Coinbase go to an IPO. They become more embedded in our existing financial system and it becomes so damn useful that essentially, nation-states have to adopt it, or they get left behind. Sort of like the internet, they have no other choice, other than to remain sort of like a North Korea, right? So, that's the second. The third is this, something we've been talking about, which is narrative shift. And this could be generational.

• 1:19:18Ryan Sean Adams?

  So there is, there is definitely a sense of disenfranchisement with younger generations. You know, millennials feel it, Gen Z is going to feel it even more so that we've missed the boat, that they have missed the boat, that the boomers have kind of rigged the system essentially. God bless boomers, we love them, you know, our parents are boomers. But there's less opportunity today than there was in their generation. So they rise up, they switch the narrative. The missionaries succeed, Dave and I would, would consider ourselves missionaries of a sort.

• 1:19:53Speaker 02

  For sure.

• 1:19:53Ryan Sean Adams?

  They succeed in bringing common knowledge that ETH is money. That's Ethereum's cryptocurrency, that Bitcoin is valuable, that because it's a non-sovereign store of wealth, it's worth holding and, you know, it's necessary. So essentially the millennials rise up. So those are three paths that possibly this could take and kind of intersect with, with game theory. Like what's your, what's your take on those? What advice would you give, you know, the 26 year old you who is into crypto?

• 1:20:24Speaker 02

  Yeah, so I, I, I think that of the three paths you described, I think that the third path, there is a variation on the third path that I think could be extremely powerful. The first two paths you, you described, I think are, are, I, I, I think those are, those are blocked paths. And, and so let me just quickly describe that first and then I'll go on to the third path, where I think there is a viable version of that. Right, so on the, the game theory of nations. You know, I'll talk about strong nations first, like a China.

• 1:21:08Speaker 02

  It's, yes, China would like to see the dollar as a reserve currency dethroned. But not because they really care about the dollar. What they care about is their own currency. What, what they're looking to do is to supplant, right? The, the US or protect their own centralized currency. That's the goal. That's their strategy. That's their goal. So adopting a decentralized currency is, is not aligned with their goals. Right? It's, so it's, it's not just taking down the dollar, forsaking, taking down the dollar. It's taking down the dollar to the degree that it either protects or elevates their own centralized currency.

• 1:21:51Speaker 02

  For weaker nations that might say, hey, you know, I could get some, as you described, competitive advantage by adopting a decentralized currency and, and the like. You know, Thucydides, you know, he's the historian of the Peloponnesian War, like 3,000 years ago. And again, the sole notion of, of repeated patterns in human behavior. One of the great lines from Thucydides is that the strong do what they will, the weak do as they must. And let's take example of a country like Switzerland, right? Pretty strong, powerful country, right? Right there in the heart of Europe, right there in the heart of the international banking system. For a long time, they had a competitive advantage by not having a decentralized currency,

• 1:22:35Speaker 02

  but by essentially having a decentralized banking system. Right? So you'd get your Swiss bank account and you would effectively be shielded from taxation and other controls that other countries wanted to put on the, the financial system. Well, that's gone, right? Because as soon as the US said, hey, you know what, Switzerland? This is bullshit. Switzerland said, yeah, you need to jump, right? That's what the US said. Switzerland said, how high?

• 1:23:05Speaker 02

  So, so I, I think that first path and, you know, we can talk through the different permutations of actually like, I, I really think that's a dead end.

• 1:23:14Speaker 02

  The second path about, I'll say, being very useful. I totally get the use cases. I think that that can exist. What happens when you allow, or when JP Morgan kind of takes you under their, their wing? Come over here, young fella. Let me, let me show you how the game is played. What happens is you become yet another table in the casino, right? And that's all you become, right? You're now, oh, we're gonna set you up over here next to the blackjack section. You're now the, the Pai Gow table here in the, the Wall Street Casino. And you can make money from that. You've developed Pai Gow. You say, fantastic. Great. Congratulations, right?

• 1:24:00Speaker 02

  But that's all you're ever gonna be. You're gonna be just another freaking game in the Wall Street Casino.

• 1:24:04Ryan Sean Adams?

  So you're saying that they co-opted, essentially, they co-opted the movement?

• 1:24:08Speaker 02

  That, that's right. That's right.

• 1:24:09Ryan Sean Adams?

  The banks do.

• 1:24:09Speaker 02

  Now, now, the third, that, that, that third approach you're talking about, the narrative.

• 1:24:16Speaker 02

  What, what I think is possible in terms of the, I'll call it, again, the distributed ledger, the distributed trust solution narrative, is to do some co-opting of your own. To find an, an alliance with...

• 1:24:39Speaker 02

  There are two ancient languages of investing. There are two populations of investors, you know, use whatever kind of analogy you want to use here. There are momentum investors, growth investors, same thing. And there are value investors. For the last decade, for the last 11 years, value investors who believe that fundamentals matter have been crushed, just crushed, for the, for the Dave Portnoy reasons, right? That's not what makes stocks move. Well, what...

• 1:25:17Speaker 02

  What's possible today is to say, you know what? Let's play a different game, right? Let's not play the, the, the public market game of, of, of, you know, the casino here and, you know, the, the, this lifting tide for all boats, whether they're crappy companies or, you know, whether they're bankrupt companies like Ertz or, or really good companies that, that, that have, you know, a great management team and cash flows and all that stuff that used to matter. Well, you know, what, what, what distributed ledger technologies, what Ethereum can play a role in particularly, less so Bitcoin, but especially Ethereum, I think, is in assigning

• 1:26:01Speaker 02

  value to and trust in private markets such that the fundamentals matter again, meaning that I can trust what the stated fundamentals of this company are, right? It, it, in, in a way that I can trust it because they report it, but it doesn't matter in public markets today. I honestly think that there is an enormous reservoir of desire, of hunger for an alternative financial, I'll call it financial system, an alternative financial network of investors

• 1:26:41Speaker 02

  and markets and trading that is outside of the public market casino utility that we have today and that what this, your community has is the integral part of that. So, you know, that's the kind of stuff that I'm, I'm really thinking about and, and writing some stuff on now because I think there is a natural alliance that can be cemented through the right narratives between value investors who are as.

• 1:27:19Speaker 02

  Fed up and discouraged with public markets as the Gen Z and Y and millennium that you're talking about, when you're talking about there's no path for us in this, the system we've got. I think there's a real potential marriage or alliance there that could, could shake the existing financial system and, and really create something interesting. So, you know, that's, that's really how, what I'm working on right now. And I, I, I think that that third avenue you described, I think it's got legs.

• 1:27:56Ryan Sean Adams?

  So Ben, you think there's a chance? Like, it's not too late. I mean, you think-

• 1:27:59Speaker 02

  Yeah. And I don't mean that in the dumb and dumber way, right? Where you know, oh, you're telling me there's a chance. That's not what I mean. I, I can see this. I can see this. The, the, you know, I'll-

• 1:28:12Ryan Sean Adams?

  It's just Ben, I mean, like, so the oligarchs, Ben, they feel so entrenched at the moment. And more and more powerful. So we've got NASDAQ reaching all time highs and we've got the prospect of 20 to 28 million Americans being evicted. That's happening at the exact same time. How does that happen? Like, it's, you know, uh, bankless and, and crypto is sort of our escape hatch, right? It's the thing that we are investing in, in order to beat back this oligarchy. But I guess my question is like, is there hope? Is it too late? Like-

• 1:28:49Speaker 02

  No, there's, there's absolutely hope. And I, and I tell you why. And, and this is the, cause you know, I started writing Absalom Theory seven years ago and I was in a pretty dark place, right? And it was like, what the hell? What the hell's going on with the world? And to start writing this and send it out to a hundred people and then again through word of mouth- There are a hundred thousand people. It's like, and this is, you know, before your time, but it's the old, you know, police song where, you know, you toss that message in a bottle into the ocean and then you come back the next morning and there are a thousand bottles that have washed back up on your shore, right? That's what my experience with Epsilon Theory has been,

• 1:29:31Speaker 02

  and it's been the most intrinsically powerful and rewarding thing that's ever happened to me. And, and that's why I try, and, and, and I think that you guys are experiencing some of the same thing, right? Where you're, you're, you're saying, "Look, guys," you realize you're not alone. There are tens of thousands, there are hundreds of thousands of, not just people, right? But successful people, people who are in this world and they are successful in this world, but they are not of this world, right? They, they're, look, they, they're not happy with how things are going either. They know that this isn't right and they're willing to, "Hey,

• 1:30:15Speaker 02

  you know what? Let's do something about it." So that's what I mean about finding your pack. The pack is there. It's just that you can't recognize them, right? So, so, look, we've got, you know, Epsilon Theory's got subscribers in every, it's a kind of a game we play, you know? Name a financial institution anywhere in the world, you know, a hedge fund, an asset manager, a, a big bank, a central bank. I, I will guarantee you, I've got at least one or two subscribers there.

• 1:30:45Ryan Sean Adams?

  That's amazing.

• 1:30:46Speaker 02

  Now, but, but it's like Fight Club, right? I mean, we're everywhere, but the difference here is okay to, to talk about, you know, being part of Epsilon Theory. It's okay to talk about being part of the bankless nation, right? You don't have to keep it secret, but the problem is you don't know who these other people are. Maybe it's the person sitting next to you in your cubicle, maybe it's not. And it, it's, it's, it's finding and it's linking people all around the world and what I'll call is an epistemic community, a community of knowledge, not just, just a community because, "Oh, I, I sit next to you in an office."

• 1:31:22Speaker 02

  This is a incredibly powerful thing. It it it's it's new to the world. The ability to create these epistemic communities. But man, this is how the world changes.

• 1:31:33David Hoffman?

  Mm hmm.

• 1:31:34Speaker 02

  And so I'm I'm I'm really optimistic about the what. I know this sounds crazy because I I write very pessimistically about the power again of this nudging state and nudging oligarchy, but man, it's happening and and I and I feel it, I see it. It's in my been in my own life. I suspect it's in your guys' lives as well. You you you see how this grows and spreads and how there's a hunger and a desire for it. And so I I I'm not pessimistic about where this all ends up. I just want to be very thoughtful in how we fight this.

• 1:32:17Speaker 02

  So that, you know, we don't get wiped out on a battlefield that has got really bad terrain for us. I don't want to charge a machine gun nest, you know. So.

• 1:32:30Ryan Sean Adams?

  So not not leading by telling Congress that crypto is money and it's here to replace you. Don't lead with that, is what you're saying.

• 1:32:39Speaker 02

  Exactly, exactly. But I I think I absolutely. You know, it's not the dumb and dumber chance. I I I think there are real avenues here of of creating alliances of similarly both disaffected, yet successful in this world. And having, you know, good hearted people who want the same thing, which is a world of liberty and justice for all, right? You know, imagine that. And, you know, it's going to take a long time, but man, it's happening.

• 1:33:13David Hoffman?

  So Ben, you spoke about these two types of investors, one of which are the value investors who have been disenfranchised, right? If you've been a value investor, you've been looking for the wrong wavelength. And what's been going and crypto, and one of the reasons why we wanted to bring you on, because so much of what you talk about is so incredibly relevant to crypto, which is the narrative, right? Crypto is primarily narrative at the moment. But baked into the narrative of crypto is a return to value investing. Because of the way that Bitcoin and Ethereum and all the sub protocols on Ethereum are inside out, you can see everyone has access to the same amount of information.

• 1:33:57David Hoffman?

  What is baked into the narrative of investing in Ethereum, investing in assets on Ethereum, is that you are actually given the assurances that you need and the information and data that you need to allow a resurgence of value investing.

• 1:34:13Speaker 02

  That's exactly what I'm saying. Right, so you're sharing these same principles, that there is some bedrock that you can trust, right? And for value investors, it's the fundamentals of a company. You know, can I trust that? And moreover, can I trust that that work I put into understanding that, that that matters?

• 1:34:33David Hoffman?

  And won't go away.

• 1:34:35Speaker 02

  For what, for what, for what, the value that people assign to that, right? And it's the same thing with Ethereum and Bitcoin as well. There's, there's a bedrock there that you can point to and say, okay, this you can trust, right? Is, whatever you want to call it, proof of work, or whatever you want to call it. Say, this exists, I can trust it, that's the bedrock I'm going to build on. And that sort of shared... Principle combined with using the right words and right language. Man, I, I like saying, I think that's got legs.

• 1:35:13Ryan Sean Adams?

  Well, I think we need some DeFi missionaries who can speak to the fundamental investors, right? Cause that's a cohort that would resonate with what we're talking about, the transparency, so less power to the bankers, like a more market-driven economy. We'll get there, you know, I think the, the crypto anarchy narrative is, you know, for some people, it's not for this group though. And yeah, it's a, it's part of adapting that narrative. Ben, what, one more thing I've got to ask you. So this V-shaped recovery in equities, like, were you surprised? How is this happening? Is it going to continue to happen?

• 1:35:55Speaker 02

  So, you know, we saw the same thing happen in 2008. And I wrote a note about this. You know what, I guess what people forget is that in March of 2008, the, the market was down about, about 20%. And at the end of March, the US government took an investment bank, Bear Stearns. They executed it. They, they, again, I use this phrase when talking about Lehman, this really happened with Bear Stearns. They took it out into the street and they shot it in the head and they gave the carcass, literally the office building to JP Morgan.

• 1:36:39Speaker 02

  And that was supposed to be it. Systemic risk was off the table. Bear Stearns was the bad apple. And by eliminating Bear Stearns, all was well. And then in fact, what you saw in markets was markets went right back up to where they were when they started the year in, in, in 2008. And, you know, if you weren't living it, you tend to forget that stuff, right? Because it, you know, we remember 2008 is, oh my God, markets ended the year down 50%, right? And that's true. But in May of that year, markets were back at their peak for the year.

• 1:37:20Speaker 02

  Is, you know, this classic V-shaped recovery in markets. Now, the answer, of course, was, well, Bear Stearns wasn't just a bad apple. It was all the big banks. And then, starting in May and then really accelerating in the late summer, the markets collapsed to, we know what happened in September and October. So.

• 1:37:42Speaker 02

  Would I, if, if we were thinking about this, you know, in 2008, I would say, uh, this is, this is just what happened then.

• 1:37:53Speaker 02

  V-shaped recovery because systemic risk is off the table, quote unquote, but, you know, we're, we're, we're heading back down. The difference today is that this is that three-body problem that we kind of never quite got around to, but we'll save for another time. Yeah. The, the central bank intervention in these markets is so much greater today to Dave Portnoy's point, right? This is the difference between today and 12 years ago, that the central bank is there to actually buy shit. Right? And to, to lend money directly to corporations. And if push comes to shove, they'll just buy stocks. They'll just buy stocks, right? Like Japan already does and the Swiss National Bank does.

• 1:38:32Speaker 02

  Stock must go up. And, yes, stocks will go up, right? If the central bank is buying it. So, you know, that's, that's the difference today. I, so I don't, so the V-shaped recovery did not just surprise me. Because that's what happened in 2008, and that's what always happens when people say, oh, it's a short-term thing. We'll have some solution around the corner. I don't think that's the case when it comes to COVID-19. I don't think a solution is around the corner. I think that things are getting worse and will continue to get worse in the United States and other countries. Not in Europe, but, but, but I think it's, I, I think it gets a lot worse before I think it gets any better here in the US. How does that impact the stock market?

• 1:39:18Speaker 02

  Should make it go down. Whether it will will depend is, you know, will the Fed say, oh, yeah, I guess we'll stop now? Or will they do more? And my guess is they'll do more. And that's the common knowledge we have today. And, you know, that's why the stock market stays up.

• 1:39:35Ryan Sean Adams?

  It's tricky, tricky to predict, in fact, impossible to predict. That's what the three body problem says. And by the way, we never quite got to it. We won't have time today. But there, Ben, you did a great description of the three body problem on our friend Dimitri's podcast and hidden forces. We will include that in the show notes. There's a good section in there. Yeah. So, yeah, we won't, we won't leave the bankless nation hanging on that.

• 1:39:57Speaker 02

  Yeah, good, good, good. Well, you guys got the, the, the island of the, the blue eyed tribe. So

• 1:40:04Ryan Sean Adams?

  Yes. So we'll be a reference point.

• 1:40:06Speaker 02

  Extra, a little different.

• 1:40:07Ryan Sean Adams?

  Yeah. Okay. So, um, communities from, uh, you know, last thing I, I, I think we want to quickly talk about, um, been talking about how governments have failed us. Um, but communities are the hope and that's the future. One thing that you are doing with N95 masks is getting them to healthcare workers. Can you talk about getting PPP, uh, PPE to healthcare workers? And what you guys are doing on that?

• 1:40:33Speaker 02

  Well, I, well, thanks for bringing that up. It's something that's very important to me. And it, and I mean that both for what we're doing directly, which is, you know, to date, we've, we've bought and we've distributed about a hundred thousand or more, about 110,000 uh, N95 and KN95 masks, you know, these medical respirators to more than a thousand hospitals and clinics and fire departments and prisons and shelters, uh, you know, all across the country, about, about 46 states, we've sent them. And we, we don't send them in big batches.

• 1:41:10Speaker 02

  We send anywhere from 50 to 200 masks directly to doctors and nurses and EMTs and, uh, social workers who have an urgent need for this because we live in this freaking trickle down society. And it's not just trickle down when it comes to money. It's also trickle down when it comes to PPE, you know, the, the medical supplies that these heroes, these who are fighting this battle on the front lines, need to protect themselves. So we, we, we started a charity to, to, to raise the money and then we, we, we buy the

• 1:41:49Speaker 02

  masks from, you know, all over the world and, you know, it's like an underground railroad of masks we set up. And then we, we, we deliver them directly to, you know, the, the people who really needing it. And I, and I, I always want to talk about it because it's, A, I think it's, it's, it's really doing a lot of good in the world, but B is an example of what we can all do. Right? We, we all think we have to participate on some grand scale, right? And, and, and that's what the oligarchs and the states want you to think. The, the fact is that we can all make a difference from the bottom up.

• 1:42:33Speaker 02

  We really can, particularly if we find our pack. We find, it doesn't take a lot of people. It's, it's your family, it's your friends, it's, you know, it's, it's just getting five or six people together and saying, shit, I'm going to do something in my community to make a difference for the other human beings who are in this foxhole. And, and, and, and maybe they'll have very different politics and maybe they'll have very different whatever, race, class, it, it doesn't matter. And this is how the world really changes. It doesn't change from the top down because the sociopaths take it over. It changes from the bottom up.

• 1:43:16Speaker 02

  And, and it's, it's, it's not sexy, it's not glamorous and it takes a long time, but this is how the world really does change. And it's why the work you guys are doing is so important to, to create this pack, this nation, like you're calling it. It, it's why I think frankly, what I'm doing is important too.

• 1:43:39Speaker 02

  End up, I get passionate about this stuff. I can go on and on. I'll just leave it at that. Find your pack, work from the bottom up, and watch how the world changes. Because it's not just a virus that's contagious. It's good works like this. It's even more contagious. And anyway, man, that's why I'm so happy to be on you guys' show. Because I think you guys are doing exactly the same thing and getting this message out here. Yeah, we're going to change the world.

• 1:44:14David Hoffman?

  Absolutely. Nations and communities and everything that we try and organize people by is all underpinned by passion and purpose. And so Ben, to the degree that you are leading that charge, we will absolutely follow you. So, thank you in that.

• 1:44:29Speaker 02

  You got it, man. Thanks for having me on. This was a blast.

• 1:44:33Ryan Sean Adams?

  Ben, it's been a lot of fun. Bankless Nation, that was Dr. Ben Hunt. We have common values: liberty and justice for all. Bankless is about a money system for all. Going bankless is how you join your pack, as Ben mentioned. And I've got a strange feeling that our paths with Epsilon Theory and Ben's work in the Bankless Nation are going to intersect in some way in the future. There's just too many commonalities, too much common value system that I would not be surprised at all. Actions for today. One thing you need to do is sign up for Epsilon Theory. That's Ben's newsletter. It's kindred values and

• 1:45:18Ryan Sean Adams?

  it's a fantastic read every time it comes out in my inbox. I am all about reading everything that Ben and his fellow writers are writing about. Also, take a look at his N95 program, the Epsilon Theory N95 program that he talked about. We'll include links to both. The second thing you can do is send this episode to someone who's crypto curious. That's how you invite your friends and family to the Bankless pack. Give them some exposure. If they are... Seeing the issues that you're seeing with the nudging oligarchy in the nudging state, this is definitely the community for them. Last thing we need, David, I saw that we're at about 70 five-star reviews on iTunes. Can we get to 100 in the next

• 1:46:03Ryan Sean Adams?

  month or so? What do you think?

• 1:46:04David Hoffman?

  Hey, it depends on the Bankless Nation. If the Bankless Nation will get us to 100, it's in their hands. And so if you please could go to wherever you listen to podcasts and give us those five-star reviews, so we can grow the Bankless Nation louder and prouder than ever before, that is your duty. That is, as a patriot of the Bankless world, that is what we need you to do. So if you could go ahead and please do that, we would greatly appreciate it, and the Bankless Nation would thank you.

• 1:46:31Ryan Sean Adams?

  As always, guys, risks and disclaimers. We talked a little bit about Bitcoin and ETH. Both are risky. Crypto is risky. None of this is financial advice. You could lose what you put into crypto, but we are headed west. This is the frontier. It's not for everyone, but we are excited that you are with us on the journey. Thanks a lot.