20VC: Larry Summers on How to Manage Inflation; Should We Increase Rates Even Higher, Why We Need To Change The US Tax System, Why Europe is a Museum, China is a Jail and Bitcoin is an Experiment & How a Trump Win Would Hurt the US Economy

Larry Summers is the Former Treasury Secretary and one of America's leading economists. In addition to serving as 71st Secretary of the Treasury in the Clinton Administration, Dr. Summers served as Director of the White House National Economic Council in the Obama Administration, as President of Harvard University, and as the Chief Economist of the World Bank. Huge thanks to Sarah Cannon for the intro to Larry today. In Today's Episode with Larry Summers We Discuss: 1. The Journey to Being One of the World's Leading Economists: How Larry's mother and father both being economists shaped his early thinking as an economist? How did Larry's parenting teach his children economics at an early age? What does Larry know now that he wishes he had known when he entered the workforce? 2. How to Get the US Out of Debt: What would Larry do to save the US economy today? What can be done to increase revenues for the US economy? Why does Larry believe carried interest should be taxed as income tax? Why does Larry believe we need more billionaires? How would he tax them more efficiently? Why does Larry believe cutting taxes is indefensible? What can be done to reduce inflation without massively hurting the poorest in society? 3. The World Around Us: What does Larry mean when he says, "Europe is a museum, China is a jail and Bitcoin is an experiement"? Why does Larry believe the next 5 years will be difficult for China? Why does Larry believe the next 5 years will be challenging for Europe? Which nation is Larry most confident about when projecting forward for the next 5-10 years? 4. Politics and a Trump Administration: How does Larry reflect on the role of Biden on the US economy and state of inflation? Would a Trump administration be better or worse for the US economy? What are the chances of Trump beating Biden in the next election? What would Larry most like to change about the US political system?

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

• 0:00Speaker 00

  Europe's a museum, Japan's a nursing home, China's a jail, and Bitcoin's an experiment. The United States always does the right thing, but only after exhausting all the alternatives. So the first thing I would do, enforce the tax law we have much better.

• 0:17Harry Stebbings?

  This is 20 VC with me, Harry Stebbins. And today, I'm so excited for the show. I've wanted to make this one happen for a long time, and so I'm so excited to welcome Larry Summers, former Treasury Secretary and one of America's leading economists. In addition to serving as the 71st Secretary of the Treasury in the Clinton administration, Larry Summers served as Director of the White House National Economic Council in the Obama administration, and as President of Harvard University, and as the Chief Economist of the World Bank. And I do want to say a huge thank you to Sarah Cannon at Co2 for the intro to Larry today, without which this episode would not have been possible. But before we dive into the show today, this episode is brought to you by Tegus, the go-to research destination for bold investing. Tegus curates expert insights, analysis, and financial data

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• 2:27Harry Stebbings?

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• 2:52Speaker 02

  You have now arrived at your destination.

• 2:55Harry Stebbings?

  Larry, I am so excited for this. Thank you so much for joining me, first off.

• 3:00Speaker 00

  Glad to be with you.

• 3:01Harry Stebbings?

  Now, I would love to start. I think parents shape us in the most unique and wonderful ways. Your parents, your mother's an economist, father an economist. How did your parents shape you, do you think, Larry?

• 3:12Speaker 00

  I came to believe in thinking analytically and thinking rationally about social phenomena. And so from a young age, I was used to asking economist-like questions. What about getting one more of those marginal analysis? How do costs compare with benefits? Thinking analytically about why houses were built the way they were. All those kinds of questions were parts of my childhood.

• 3:46Harry Stebbings?

  I have to ask, we just mentioned, you know, you're being a father and your son. Did that impact how you brought up your son and being a father yourself in terms of the conversations you have around the dinner table?

• 3:58Speaker 00

  Yeah, it was a part of my kids upbringing. Sometimes it worked better, sometimes it worked worse. When my daughter Rupee was four or five, I needed to get a taxi. And a taxi didn't come to my house when I wanted it. And I said, damn it, that's what you get with a monopoly. Have company and Ruthie said, what's a monopoly daddy? I said, well, it's when there's no competition and she didn't understand. And so I wanted to explain it to her. So I said, Ruthie, what would you do? If you went to a toy store and they didn't have the toy you wanted? And they were really mean to you. And I was hoping for the answer.

• 4:41Speaker 00

  Well, I'd go to a different toy store so I could explain to her about competition. But in fact, she said, well, then I'd steal their toys. Maybe Ruthie learned something out of that whole conversation. But I sort of learned something about how people react to market mechanisms.

• 4:57Harry Stebbings?

  You learn that there's no such thing as a lack of creativity in children.

• 5:01Speaker 00

  Something like that. I learned something about how people react when the market makes them unhappy.

• 5:07Harry Stebbings?

  Listen, I'm a big believer in Charlie Munger's statement, which is obviously show me the incentive and I'll show you the outcome. You you've had many a discussion. I've listened to many on recent runs on inflation. And I really wanted to start, honestly, Larry, with the question of do you believe that inflation targeting? Is fit for purpose as the main focus of Samsal Bank policy today?

• 5:28Speaker 00

  I think the main problems have been bad use of inflation targeting. And misjudgments about how the economy was functioning. Rather than a broad framework. I think some of the things the Fed did in terms of its so-called flexible average inflation targeting framework. Were not what I would have advised. But I think the much bigger problem was hopeful diagnosis and assessment. Rather than realistic diagnosis and assessment.

• 6:03Harry Stebbings?

  When you say about kind of bad inflation targeting. What makes good versus bad inflation targeting, given the transient nature of the future? Is it not fundamentally the most challenging thing to do well?

• 6:15Speaker 00

  What you have to do is form a realistic assessment of the economic forecast. And my view in 2021 was when we had massive budget deficits, 14% of GDP. When they were saying they were going to keep interest rates at zero for three, four years. And when they were buying up every bond in sight. It was kind of predictable that that would all be inflationary. But they wanted to do it. They were still fighting the last war. And they convinced themselves as contrary evidence developed. That it was all temporary transient stuff.

• 6:56Speaker 00

  Rather than being willing to be realistic about uncongenial belief. I think a very important attribute as a policymaker. Is you have to not get confused about what you want and what is. And I think the Fed got itself convinced that things were much more under control than they in fact were.

• 7:19Harry Stebbings?

  What you want versus what is, I love that. If it's what is, what would you have done?

• 7:25Speaker 00

  I would have recognized that a situation of very substantially excess demand was developing. I would have moved to signal my awareness of that. And to start putting my foot on the brakes much sooner than they did. And certainly as inflation was rising, as we were having a record inflation bubble. I would not have been putting my foot hard on the accelerator. By buying up mortgages in large quantity as the housing market was bubbling over.

• 8:04Harry Stebbings?

  Now, I heard you on a recent podcast and you said a fascinating stat. That about 30% of the stimulus packages had actually been spent. Meaning 70% was actually still in kind of consumer wallets. To what extent is that going to be shown in the subsequent quarters inflation numbers? The 70% remaining?

• 8:23Speaker 00

  The stimulus was largely delivered in 2021. Part of the reason why inflation accelerated through much of 2022 was that it was still being spent in 2022. And some of it is still going to be spent in 2023. And that's part of why the economy has seemed so strong, even as interest rates have gone up very substantially.

• 8:50Harry Stebbings?

  Can we increase interest rates at the level we need to without tanking the economy, Larry?

• 8:56Speaker 00

  I think that when you need to break the car and the car is going very fast, it may well be that you can't bring it down to a stop or to sustainable speed without some real skidding and risk of accident. And I think we have worked our way into a position like that, where my own view is that what Samuel Johnson said about second marriage is true about soft landings. They represent the triumph of hope over experience. And I don't think we're likely to be able to bring inflation

• 9:37Speaker 00

  down to its target level without some kind of economic downturn. That doesn't mean I want an economic downturn. That doesn't mean the goal of policy should be to have an economic downturn, but it means to recognize reality. Sometimes a medicine that's necessary has unpleasant side effects. That doesn't mean the doctor who prescribes it wants to hurt you, but the doctor who prescribes it recognizes that if you don't take it and you defer taking it, there's even going to be more pain and problem later. I think the Fed was much too slow to make the necessary prescription

• 10:22Speaker 00

  and therefore the economic disruption is going to be greater than it needed to be.

• 10:27Harry Stebbings?

  If we think about like Volcker taking rates to 19, 20%, is there any incentive for the Fed or anyone else to raise interest rates to such a level which would cause such economic harm in the short term? Is there any incentive to, really?

• 10:42Speaker 00

  We're going to have to raise interest rates higher than we would have if we raised them more promptly. And if we delay excessively, we will have to raise them even higher as a consequence of that delay. There's nothing in the current situation that says to me that we need to get rates anywhere near where Volcker took them. But if we were to neglect this problem for long enough, and it was neglected for a decade during the seventies, we might get to such a point. But I think an important part, Henry, is the reason we

• 11:20Speaker 00

  have independent central banks and we don't have the political process make the monetary policy decision is because we need it to be taken with a view to the long run. In the short run, it's always easier to print more money and paper over problems. But when you keep doing that, you get into more and more trouble as people come to anticipate that inflation. And ultimately, it's like being on a treadmill. You have to go faster and faster and print more money, but you're not really getting any benefit from it. You're just doing what's necessary, given people's expectation.

• 12:05Harry Stebbings?

  A blunt question, Larry, and forgive me for it. What's the path out of the US indebtedness? It feels like the treadmill that we can't get off. What's the path out of US indebtedness? At the next fiscal cliff, I think there's 34 trillion of debt and growing. How do you think about that?

• 12:21Speaker 00

  First of all, we need to put it in perspective. A growing company can have a permanently growing debt. A growing economy can have a permanently growing government debt. A company probably wouldn't think about its debt by comparing its debt to its earnings. It would probably be much more likely to compare its debt service to its cash flow or to compare its debt to the market value. If you look at the US debt right now, the debt ratio is very high. The debt service ratio is much less exorbitant.

• 13:03Speaker 00

  And if you look at the ratio of debt to the present value of all our tax collections, that's also lower. I think that one needs to keep the problem in some perspective. But ultimately, we are on an unsustainable path. And my view is that we're going to have to raise revenues quite substantially. I don't think there's going to be a lot of scope for cutting spending, given the way in which our population is aging, given the way the price of healthcare rises to other things, given that interest rates are more likely to go up than down, given that our national security needs are likely increasing.

• 13:47Speaker 00

  So I think as a country, we're going to have to find ways to increase revenue collections. And of course, that's never easy for the political process to accept.

• 13:58Harry Stebbings?

  It's not, and you do that in the form of taxes. And I mean, you perfectly teed me up like, because that was my question, which is why do the IMF and governments still stick with conventional fiscal rules that constrain public sector growth, enhancing spending?

• 14:14Speaker 00

  I do think that it's appropriate to pay attention to the growth of debt. As I said, some growth of debt can be okay. But debt that is growing faster than income, when income's doing its best, that's likely to be problematic. And the need is going to be to find more revenue in the United States. I think there's some good ways to do that. But I certainly don't think we should be putting any arbitrary ceiling on the level of government spending, given the magnitude of both national security needs in our country and social needs in our country.

• 14:54Harry Stebbings?

  Larry, what would you do to find more revenue?

• 14:56Speaker 00

  So the first thing I would do is enforce the tax law we have much better. We have a gap between taxes that are owed, that everybody agrees are owed under the current law, and taxes actually collected that will total eight trillion dollars over the next 10 years. Eight trillion dollars. And that's because we don't audit the vast majority of even the wealthiest people. And so many of them just cheat, but it adds up to a lot of money. We could deter that if we went back to auditing people even at the rate that we did a decade ago.

• 15:36Speaker 00

  And we have stopped doing that. So we need to beef up the IRS very substantially so it can collect taxes that are owed.

• 15:46Harry Stebbings?

  Does that really make that much of a difference, Larry? Forgive me, because in proportion to the spending and the needs, taxing your individuals who are evading, does it make a difference?

• 15:56Speaker 00

  A trillion dollars here, a trillion dollars there, pretty soon you're talking real money. We could raise between half a trillion dollars and a trillion dollars that way. The business community was right to be very concerned that the corporate tax rate was too high a few years ago. But there was no need to take the corporate tax rate down to 21%. 25% would give very substantial incentives for business. And the United States stands out right now for rejecting a global agreement that would have made it much more difficult for corporations to put their income in the Cayman Islands or Ireland

• 16:39Speaker 00

  and therefore essentially completely avoid taxation. So we need global tax cooperation and reasonable corporate tax rates. There are also things that are frankly loopholes. I suspect many of the people who listen to your show.

• 17:00Harry Stebbings?

  Enjoy those loopholes.

• 17:02Speaker 00

  And if you've carried interest. They engage in real estate exchanges, so-called like-kind real estate exchanges, when carried interest gets capital gains tax treatment, even though it's compensation for working, really. If I sell a stock and buy a different stock, I have to pay capital gains tax on the stock I sell. If Donald Trump sells a property and exchanges that property for another property, he doesn't have to pay any capital gains tax. And that's not a reasonable tax provision. There are a variety of tax shelters.

• 17:43Speaker 00

  Basically, they make it possible for people who earn their living by trading assets to pay much lower taxes than people who earn their living making things for providing services. And if we fix that, we could also generate substantial revenue.

• 18:04Harry Stebbings?

  Should carried interest be taxed as income tax? Is that what you're saying is the solution?

• 18:10Speaker 00

  Of course it should. And you know it's, and I know it would probably be costly for you since you have a fund and the more successful your fund was, the more costly it would be for you. I participate in funds, so I'm a beneficiary as well. But it's wrong. There's no real reason why the fact that we are paid a bonus based on our performance should be a reason why our incomes should be taxed at a lower rate than those of the people who clean the floors in the buildings that we work in. You know that.

• 18:55Harry Stebbings?

  You're putting me on the spot on my own show, Larry. My point to you is, I think we should have a base rate of tax. I'm gonna go out there. I don't think a progressive tax system works. I think it disincentivizes people to work hard. I work my ass off. I have heart palpitations, I have psoriasis. I've given my life for this and I don't work thirty five hours a week or forty hours a week. I work ninety, a hundred and I have done for eight years. And now I get taxed fifty percent. That doesn't seem fair.

• 19:21Speaker 00

  First of all, let's make sure we understand each other. Your brother gets taxed at a lower rate on, say, the first hundred thousand dollars of income he earns. I'll get taxed at a lower rate on the first hundred thousand dollars of income that you earn. The only difference is that you seem to earn a lot more money than your brother. And on the extra money you earn, you are paying a higher fraction of this to the government. And I guess I would ask you, does a marginal dollar mean more to somebody who has ten million dollars? Or to somebody who has ten thousand dollars? My guess is it means more to somebody who has ten thousand dollars.

• 20:06Speaker 00

  So if we have to take some away, it's better to take some away from those who are less painful. And I will tell you that this is something that economists have studied a lot. I've had a lot of contact with a lot of entrepreneurs. And yes, the way the United States was in the nineteen fifties and sixties with ninety percent tax rates, crazy. The way the United States was in the mid sixties and seventies, seventy percent tax rates, crazy. But do I think that the current top federal income tax rate of thirty seven percent

• 20:48Speaker 00

  really is working to discourage very heavily work? I'm not sure that it is for very many people. One other thing, the biggest tax we have in the United States, the tax that collects more tax. Then the income tax, the payroll tax, you don't pay any payroll tax if your income is above a hundred and fifty thousand dollars on all the income above a hundred and fifty thousand dollars. And yet, people pay that eight percent tax and their employers pay that eight percent tax up to a hundred and fifty thousand dollars. So, look, we've got to make tough choices. Who gets the best advantage out of the fact that our country is well defended?

• 21:33Speaker 00

  Who gets the greatest advantage out of all the fruits of our national labs? I think it's people who are more fortunate, like you and me.

• 21:43Harry Stebbings?

  Regardless of like whether it's fair or not, a question I have is like, is it realistic, Larry? Because like you said very accurately, a lot of our audience do take advantage of the benefits of moving abroad, moving to Lisbon, moving to Milan or Italy now where they have the great tax treatment. Is it even realistic when you can move and avoid taxes bluntly?

• 22:04Speaker 00

  If you're an American citizen, you cannot avoid taxes by moving. Your tax, your global income, wherever you are, if you are an American citizen, you can renounce your American citizenship. And there are a certain number of economic Benedict Donalds who do just that. But most people don't want to renounce their American citizenship because it comes with a great deal of benefit. So I don't think it is impractical. If you look, the economy grew faster during the period several decades ago when we had higher tax rates than it has grown more recently.

• 22:49Speaker 00

  I think the argument for cutting high tax rates is pretty much indefensible, starting from where we are. Now, look, I am not someone who believes we should have a wealth tax. I am not someone who believes we should soak the rich. I am somebody who believes in creating opportunity rather than going to war with inequality.

• 23:14Speaker 00

  Because I think if we had more entrepreneurs, more multi-billionaires like Steve Jobs or Bill Gates, that we would be a better country. But to suggest that somehow we can't impose taxes at current levels, that we can't reform the estate tax to make the estate tax something that people pay, rather than they're largely successful in avoiding, I think that's, to be honest, demagogic and contradicted by all the evidence that we have. Now, true, it's much easier for the federal government to do this than it is for an individual

• 23:56Speaker 00

  state to do this, because if the state does it, if California does it, people will move to Nevada. If New York does it, people will move to Florida. But at the federal level, I don't have any doubt at all that we can maintain the current level of taxes and that we could actually raise more revenues.

• 24:17Harry Stebbings?

  You said about renouncing US citizenship there, and it made me think about kind of actually the US dollar itself as the reserve currency. How do you think about the demise of the US dollar as the reserve currency state? And do you think people are getting ahead of themselves in their negativity and pessimism?

• 24:32Speaker 00

  I think they are. I think, first of all, if you look at the history of when other countries have lost their reserve currency status like Britain, it's the least of their problems. Britain lost the pound's special role after it stopped being a superpower and stopped being an effectively functional economy. So we may make serious enough mistakes as a country that people no longer want to hold the dollar, but if we make mistakes that grave, the fact that people aren't rushing for dollars will be the least of our problems. I also think that if you want to get out of the dollar, you have to get into some other currency. There's a lot that's problematic about other currencies.

• 25:16Speaker 00

  It's a joke, but not without some element of truth, to say that Europe's a museum, Japan's a nursing home. China's a jail and Bitcoin's an experiment. So I think the dollar has a lot of the kind of advantages that the English language has. It's right now kind of where everybody else is. And so that makes it where everybody wants to be. So if we don't make grave mistakes, I think the dollar is going to remain the world's reserve currency.

• 25:49Harry Stebbings?

  How do you think about the next five years for Europe, Larry? I'm fascinated. You said about it there as a museum. How do you think about the next five years for Europe? I'm fascinated.

• 25:57Speaker 00

  Look, I think Europe's challenge is to catch the waves of innovation. You think about entrepreneurship, if you think about great companies that have been created in the last 25 years. Europe has not been a creator and a scaler of great enterprises. If one thinks about the whole information technology wave, one thinks about American companies. One thinks about Chinese companies. One thinks about Israeli companies. And I don't know what part of that is a reflection of the way the financial system is structured

• 26:40Speaker 00

  with a lot of emphasis on large, relatively bureaucratic banks. I don't know how much of that is a culture in the educational system that disproportionately focuses away from science and math and that tends to be disciplined and to discourage icon classism. I don't know what the roots of it are. I don't know whether it has to do with regulation that makes fluidity and flexibility very difficult. You know, no one would check into a hotel if they thought they might not be allowed to check out.

• 27:23Speaker 00

  And people are very reluctant to hire other people when they think they won't be able to fire them if it doesn't work out. I think there's a lot of Rigidity, some of it comes from regulation, some of it comes from culture. That means at least the last generation, or probably more than a generation. The Zuckerbergs and the Bezos and the Jackmas tended to not be European. And I think that has a very broad and substantial impact on European economies.

• 28:05Harry Stebbings?

  Final one before we do a quick fire, but we mentioned Jack Ma, we mentioned China there. When you analyze the next five years for China, Xi Jinping has got a lot on his plate. How do you analyze the next five years for China? And given what we said there about the challenges for Europe, how do you think about them?

• 28:19Speaker 00

  It's a difficult five years for China. Look, what makes GDP, what makes an economy? It's people and it's capital. China has more desire for capital flight than any country ever has in the history of the world. It's controlled, but if it wasn't controlled, there would be staggering capital flight from China. And the number of babies born in China has fallen by just about half in the last six years. And so if you're thinking about a society where people don't want to have children and they want to take their capital out, that's a society where the broad swath of the society is showing a lack of confidence.

• 29:02Speaker 00

  If a country's own people aren't confident, I'm not sure why I should be.

• 29:07Harry Stebbings?

  Are you confident about any nation or which nation are you most confident about?

• 29:11Speaker 00

  I'm not confident about any place. And Andy Grove said something very wise when he said that only the paranoid survive. But I am ultimately really quite optimistic about the United States. I'm very mindful of Donald Trump. I'm very mindful of deaths of despair. I'm very mindful of paralysis in Washington. And yet, the lesson of American history is that America has this extraordinary.

• 29:44Speaker 00

  For self denying prophecy. When Jimmy Carter declared a crisis of the national spirit. When people felt that America was ungovernable. After three presidential assassinations and Watergate in the early nineteen seventies. Those predictions, those worries, those alarms. Set in motion the changes that have made America such a resilient society. I believe that that capacity for alarm, doing the work of reason. And reflection and ultimately renewal.

• 30:26Speaker 00

  Gives me an ultimate sense of optimism about the United States. Winston Churchill did not say it, although it's often attributed to him. The United States always does the right thing, but only after exhausting all the alternatives.

• 30:44Harry Stebbings?

  Is Trump better than Biden? Would he place us in a better economic situation or a worse than Biden? And I'm not asking who you want to win or who you don't. But just would he make economically the US stronger or weaker?

• 30:56Speaker 00

  I believe very strongly that by undermining the rule of law. On which contracts, exchange and property depend. By alienating the rest of the world. And by pitting some groups of Americans against other groups of Americans. And devaluing the idea of unity and common aspiration. That a second Trump administration would do grave damage to the American economy. For a sustained period. I say that as someone who has been a member of the Democratic Party.

• 31:38Speaker 00

  But always resisted the tendency to become hyper alarmed. About the policies of the Republican Party. I fear that Trump represents a different and.

• 31:54Speaker 00

  Dangerous possible dimension in American politics. Perhaps the model would be Juan Peron in Argentina with a strong emphasis on the soil, a strong nationalist inward turn. And what he set in motion has had catastrophic consequences for Argentina for many decades now. After World War Two, people expected that there were a set of natural resource countries that were likely to be quite successful. And the list was New Zealand, Australia, Canada, and Argentina.

• 32:38Speaker 00

  And one of those nations stands out for having failed over the last seventy five years. And it's because of a set of ideas and approaches very much like those that I fear a second Trump administration would break.

• 32:55Harry Stebbings?

  Larry, I would love to do a quick fire. So I say a short statement, you give me your immediate thoughts. What are the chances Trump does get in?

• 33:02Speaker 00

  Low but not zero.

• 33:04Harry Stebbings?

  What have you changed your mind on in the last twelve months, Larry?

• 33:07Speaker 00

  The potential importance of AI in changing the way in which we all live as a consequential challenge that all of us need to be thinking about.

• 33:22Harry Stebbings?

  Will AI produce higher returns to labor or capital?

• 33:26Speaker 00

  Ultimately, both, because it will make us more productive.

• 33:31Harry Stebbings?

  What do you know to be true that others highly doubt?

• 33:35Speaker 00

  That there are laws and regularities in economics and social science, just like there are in physical or biological science, that cannot be suspended for political convenience. If you print too much money, you will have too much inflation. If you control prices, you will have black markets and corruption. There are real economic... Laws which those who design policy have to respect.

• 34:09Harry Stebbings?

  What political or business leader do you most look up to and why them?

• 34:13Speaker 00

  I have always had enormous admiration for John Maynard Keynes, for the rigor of his thought, the clarity of his expression and his willingness to always be involved in the issues of the day.

• 34:32Harry Stebbings?

  Is there a way to manage inflation without the poorest parts of society being the most hit?

• 34:40Speaker 00

  The way to hit the poorest parts of society hardest is to not manage inflation. You and I can configure our financial affairs so we're hedged against inflation. We may even by borrowing money be able to be beneficiaries of inflation as we pay it back in cheaper forms. But the most important thing we can do for the poor is to make sure that we are effectively managing inflation. As we do that, it's terribly, terribly important that we have the right safety nets in place in terms of unemployment insurance, in terms of social support payments.

• 35:22Speaker 00

  But make no mistake, a failure to contain inflation, a determination to not focus on inflation is a determination to enable the shrewd and worldly to benefit at the expense of the people who are the backbone of our societies.

• 35:44Harry Stebbings?

  What's the best use case for crypto, Larry?

• 35:46Speaker 00

  Probably to facilitate contracting between parties who don't know each other and trust each other through devices like blockchain. Ultimately, what has enabled capitalism to develop is institutional changes like contracts originally, like double entry bookkeeping, like a common law corporation that facilitate exchange and interaction.

• 36:14Speaker 00

  interaction between people who don't like each other and don't trust each other. And if and where crypto can do that, it can perform a very valuable function. Unfortunately, I'm not sure that's that large a part of the crypto ecosystem. When the ecosystem is fueling speculation or when the objective is the circumvention of legitimate government regulation or tax obligations, that's where I become more skeptical about the world of crypto.

• 36:48Harry Stebbings?

  Now, final one, people always have opinions. What do you think is the biggest misconception people have of you? And what would you say to that?

• 36:56Speaker 00

  I'm a person who believes that there's no such thing as a bad fact. It's always better to surface any fact and that it's really important to consider all perspectives in debate. Because whether they're right or whether they're wrong, it's ultimately the argument that gets you closer to truth and takes the world forward. I think that is an optimistic altruistic view about humanity and its prospect.

• 37:34Speaker 00

  And I know that there are many others who have a perspective that sees truth as much more relative, sees arguments as much less constructive and we'll have to see what happens.

• 37:52Harry Stebbings?

  Larry, I've absolutely loved this. I so appreciate you answering my slightly varying questions, but this has been a joy. And thank you so much for joining me.

• 38:01Speaker 00

  Thank you.

• 38:04Harry Stebbings?

  As I said at the beginning, shows like this are really the thing that I live for. I absolutely love that discussion. Larry was incredible on the show there. If you'd like to see more from us, of course you can on YouTube by searching for 20 VC. But before we leave you today, this episode is brought to you by Tegus, the go to research destination for bold investing. Tegus curates expert insights, analysis and

• 38:24Harry Stebbings?

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• 39:06Harry Stebbings?

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• 39:51Harry Stebbings?

  integration, making it the only platform for built in contracts, visas, background checks, payroll, equipment, benefits, and beyond. So are you ready to see how Deal can scale with your global and local teams? Visit deal.com/20vc and book your demo today. That's deal.com/20vc to book your demo today. As always, I so appreciate your support and on Wednesday, we have the incredible Noah Weiss, CPO at Slack on the show.