186. Bitcoin: The Future of Money? | Bitcoiner Book Club

[0] Welcome to the Jordan B. Peterson podcast.

[1] This is season four episode 40.

[2] In this episode, my dad is joined by four highly experienced bitcoiner content creators who've been invested in the world of Bitcoin for many years.

[3] They spoke about the intricacies of Bitcoin, how it works, other cryptocurrencies, blockchain security, philosophical opinions on the utility of money, and ideal economics.

[4] The opinions expressed in this podcast are for general informational purposes only.

[5] So don't listen to this and then spend all the money you can't afford to lose on Bitcoin.

[6] Thank you.

[7] This episode is brought to you by Helix Sleep.

[8] I took the Helix quiz at helixleep .com slash Jordan and I was matched with the helix midnight.

[9] So long days usually leave me feeling quite restless.

[10] My brain's going in hyper speed mode most of the time.

[11] So when my brain tries to slow down at night, the fact I have a mattress I'm comfortable with makes such a difference.

[12] I'm so picky about mattresses.

[13] If you're looking for a mattress, you take the quiz, you order the mattress that you're matched to and it comes right to your door shipped for free.

[14] They have a 10 -year warranty and you get to try it out for 100 nights risk -free.

[15] They'll even pick it up for you if you don't love it.

[16] Not sure it gets any better than that for a mattress company.

[17] For those of you that haven't tried Helix Sleep's mattress yet, they have soft, medium, and firm mattresses.

[18] Mattress is great for cooling you down if you overheat during the night and even a Helix Plus mattress for plus -sized sleepers.

[19] No matter your need, needs, assuming they can be fixed by a new mattress, Helix has got you.

[20] Helix Sleep has a quiz that matches your body type and sleep preferences so you can easily find the perfect mattress for you.

[21] You can also have an option where they make half the mattress a different way.

[22] So if you don't like your significant other, you can make it really hard or if you like them, you can make it soft.

[23] But if you guys like the mattress differently, at least they split the sides in half.

[24] So that's pretty cool.

[25] Go to helixleep .com.

[26] Jordan, take their two -minute sleep quiz, and they'll match you to a customized mattress that will give you the best sleep of your life.

[27] This is a pretty good deal.

[28] They're offering $200 off all mattress orders and two free pillows for our listeners at helixleep .com slash Jordan.

[29] That's helixleep .com slash Jordan for up to $200 off and two free pillows.

[30] If you enjoy this episode, be sure to subscribe.

[31] Well, hello everybody.

[32] I'm trying something a little different today.

[33] I'm speaking with a book club set up by John Vellis, essentially centering on Bitcoin, which is a phenomenon that I'm very interested in, but know very little about.

[34] I ran across John's podcast, partly because their book club also focused on my first book, Maps of Meaning.

[35] And so, I looked up Gigi Durr, who's speaking with me today, John Vellis, Richard James, and Robert Breedlove, who make up the four people in this particular incarnation of John's book club.

[36] I was interested in their thinking about Bitcoin, and I noticed they were also interested in maps of meaning.

[37] And so I thought we could try a free -flowing discussion.

[38] I haven't done a podcast, YouTube video with five people before, so we're going to see how it goes, and hopefully we'll have an interesting discussion.

[39] discussion about money, about Bitcoin, about maps of meaning, about maps of value, about languages of value, about information, all of that.

[40] So I'd like to introduce Gigi Durr, John Valles, Richard James, and Robert Reedlove.

[41] And maybe I can start with Gigi and you could just introduce yourself and we'll move from Gigi to John to Richard to Robert.

[42] So Gigi, it's all yours.

[43] Yes, I'll do my best.

[44] First of all, thanks for having us.

[45] It's a great pleasure.

[46] I think we're all great fans of yours.

[47] I think that's obvious.

[48] And yeah, about me. I think most people know me in the Bitcoin world because I wrote a little book called 21 Lessons.

[49] It's basically a short summary of what I've learned from falling down the Bitcoin rabbit hole.

[50] And other than that, I've been involved in the Bitcoin space for a couple of years.

[51] And I've just, I've learned a lot.

[52] I've read a lot about it.

[53] And so I try to pay it forward and share it with the community.

[54] And I think that's what brought me here.

[55] Thanks, John.

[56] Yeah, my name is John Valis.

[57] And as you said, Jordan, I host the Bitcoin Rapid Fire podcast.

[58] And first, I'll echo what Gigi said.

[59] It's a pleasure to be here.

[60] You know, big fan of your work, have listened to many hours of your stuff and, of course, read your books.

[61] I've been focusing in the podcast over the last year on exploring Bitcoin and what it is and what it means and speaking with all the different people that are involved in it.

[62] But as we told you a bit earlier, I've been placing the phenomenon that's been most interesting to me has been the transformations that seem to be occurring in individuals as a result of understanding and engaging with Bitcoin.

[63] And it's a very peculiar phenomenon, of course.

[64] And so that's why I found it so interesting.

[65] And of course, I think there's the book maps of meaning.

[66] And part of the reason why we explored it in the book club is because I think that provides a framework for understanding that phenomenon better.

[67] So hopefully we'll get into some of that today.

[68] Yeah, well, part of the reason I wanted to talk to you guys was because when I started looking into what you were doing, I was struck by two things that there seemed to be a psychological element to your endeavor, but also perhaps to Bitcoin and the Bitcoin community, such as it is.

[69] And then also, I was interested in your philosophical speculations about the domain of value.

[70] And so we'll go delve into that.

[71] What have you noticed about individual transformation?

[72] And do you think it's particular to Bitcoin?

[73] Like, it's a strange thing to notice and to bring up.

[74] So maybe you could elaborate on that a little bit.

[75] Sure.

[76] Well, the answer is yes.

[77] And one of the, you know, the interesting overlaps between your work and you and the changes that are represented in people that get involved in Bitcoin is I think there's a lot, it's a lot of the instantiation of a lot of the things you talk about are represented in the changes we're seeing in people that engage with Bitcoin.

[78] And of course, notwithstanding that your work generally, as it permeates out into the culture, is providing people with ideas to chew on.

[79] And that causes some degree of change.

[80] But what I've noticed in people in Bitcoin is that it rapidly accelerates this change toward taking more responsibility, as it were.

[81] Why do you think that is?

[82] Well, there's a couple of reasons.

[83] And I think the other aspect, you know, to sum up and not take up too much time initially here, is that changes people's time preference as well.

[84] It changes the relationship to time.

[85] And so the first, why I think that is is it's a very peculiar thing.

[86] But I think the genesis of it is that Bitcoin allows you to own something and to allow you to exclusively own something for the first time ever.

[87] And that is the private keys to your Bitcoin.

[88] So it's an extreme form of ownership that is not represented in any other domain of life.

[89] It's an inherent property right.

[90] What difference do you think this idea of unique ownership makes?

[91] And then how do you relate that or if you do to a difference in time preference?

[92] And what does that mean?

[93] Well, for one, I would say that because it's the first time to experience something like that, it changes your relationship to responsibility.

[94] And I think one of the outcomes from that is it causes you to contrast that extreme form of both ownership and responsibility in that domain to all the other domains of your life where, let's say, there's a dependence that exists.

[95] And so this is kind of the idea of freedom that Bitcoin seems to engender is that when you take, you know, complete sovereignty and control over the thing that most reflects, you know, who you are out into the social world at the very least, and that is money.

[96] That is the emblem of your time and sacrifice, or what you gain, rather, for your time and sacrifice.

[97] Once you take control over that, I think it provides a very powerful impetus to look at other areas of your life and see where you might establish greater sovereignty and take the responsibility to do that.

[98] Another part of it is once you come into this space and you start to realize basically the impact of the current system of money that we use, and I know this is a term that you use and you reference in the book, but you begin to see how Bitcoin represents the information, let's say the truthful speech that rectifies pathological hierarchies that evolved as a result of false money, you know, as a result of fiat money, let's say.

[99] And I think you could broadly say that money is information regarding your own value hierarchies that you, when you use it, you communicate.

[100] Right.

[101] And so when you use it, you communicate those.

[102] And to the extent that there's an intermediary or that there's anything that's distorting the fidelity of that communication, pathological hierarchies, incongruencies between what you're attempting to communicate and what you actually are communicating to that market, I think emerge.

[103] I think that was what I found interesting about the claims that you guys are making.

[104] And I wanted to have this discussion in part to evaluate that claim, to see if there's, well, to see how solidly developed that idea is because it's a very interesting idea that in some manner, Bitcoin is an incorruptible, provides an incorruptible language of value, preferable to gold, say.

[105] So maybe you have to buy the argument first that gold is preferable to a currency that isn't dependent upon something like gold.

[106] And that's also a separate argument.

[107] But you're making the case then that Bitcoin is superior even to gold.

[108] And so we'll go into that.

[109] What's your background, John?

[110] I started my career in finance.

[111] I lived in Shanghai, China for about a decade.

[112] And then whilst I was there, I got out of that because I did.

[113] I did.

[114] didn't enjoy the incentives that made, you know, the behavior that came from the incentives in that industry.

[115] And I went into natural medicine and did a degree in that and worked in that capacity for a couple of years.

[116] And then all the while I had been interested in Bitcoin and studying Bitcoin.

[117] And in 2019, it just kind of became overwhelming.

[118] So at the time I was living in Thailand, and I decided to start the podcast.

[119] And as everyone on this part, this current podcast will attest, once you go down the Bitcoin rabbit hole, it's very, very, very difficult to claw your way out you know you're you're attempting to find the bottom rather than back to the surface so that kind of characterizes my pursuit since 2019 what's your background so i have a heavy tech background i studied computer science and i studied a little bit of physics and i've been a computer programmer for the last like 15 plus years um so yeah i think that sums it up i grew up with computers and i grew up online and so i know a thing or two about distributed systems and those kind of ideas that are very helpful to make sense of Bitcoin.

[120] But still, it took me a very, very long time to make sense of Bitcoin, like many years and multiple touchpoints because I lacked the economic knowledge that is required to understand this beast.

[121] And so the last couple of years, I read up on my economics and discovered Austrian economics and that was most helpful to make sense of Bitcoin and what.

[122] Right.

[123] And so that's another touch point because I've become interested in Austrian economics and going to be discussing Austrian economics with some Austrian economists.

[124] Well, they're not actually Austrian, but they're from that school.

[125] You also have a profound sense of sartorial splendor just so that you know it.

[126] Hey, Michaela here, interrupting your podcast.

[127] This episode is brought to you by bio -optimizers.

[128] People underestimate how much better electrolytes can make you feel.

[129] Sodium, potassium, and magnesium.

[130] Bio -optimizers have a product called magnesium breakers.

[131] through.

[132] I like it because there aren't any synthetic additives and preservatives.

[133] It contains all seven essential forms of magnesium, and it can be taken on an empty stomach.

[134] Taking it without food in your stomach actually allows for maximum absorption, so it should be taken on an empty stomach.

[135] Magnesium can aid in detoxification, fat metabolism, increasing energy, helping you sleep and reducing cortisol and your feelings of stress.

[136] I recommend trying magnesium breakthrough by bio -optimizers for at least 30 days to see how it will make a difference in your mood and stress levels.

[137] Tons of people are low in magnesium.

[138] This is a good product out there.

[139] Today you can get 10 % off with a special Jordan B. Peterson Show coupon code when you visit Mag Breakthrough .com slash JbPP and enter code JCP10.

[140] All their products are gluten -free, soy -free, lactose -free, non -GMO, free of chemicals, fillers, and made with all whole real natural ingredients.

[141] And they offer $365.

[142] day that's intense money back guarantee on all their products so you don't have to worry about that increasing electrolytes like sodium potassium and magnesium can reduce hunger and make it easier to intermittent fast if you take salt first thing in the morning can help you wake up as well if you're trying to ditch coffee go to mag breakthrough dot com slash jbpp and enter code jbp10 jbp10 to try their magnesium today enjoy the rest of the episode richard over to you Thanks very much, Dr. Pearson.

[143] So, yeah, my name's Richard James.

[144] I'm a filmmaker by trade, although in more recent years sort of have worked in other areas and just been running a small business in a completely unrelated area.

[145] But, you know, I've had almost a lifelong interest in economics.

[146] And I studied that through school and into university, but sort of fell out of love with it, I suppose.

[147] I kind of dropped out of economics at university, but, yeah, maintained an interest in that.

[148] And then I also came across the Austrian School of Economics, and I found that to be particularly eye -opening.

[149] And it led me down this path of asking that question of what is money, and as we've already mentioned, gold plays such an important role in that, and I think that understanding gold is the first step to understanding Bitcoin.

[150] And so, you know, I, in the last couple of years, I've sort of turned back to filmmaking and trying to link that interest to Austrian economics and Bitcoin.

[151] And last year, I sort of set myself a goal for a project to make a film related to Bitcoin and it had two particular parameters.

[152] One was that I wasn't allowed to spend a dollar and it had to cost zero dollars.

[153] And the other thing was I wasn't allowed to leave my desk.

[154] so I sort of basically put this thing together using content that had already been created by people working in Bitcoin and talking about Bitcoin and the film's called Hard Money it's available free online so that's sort of been my contribution I suppose but I'm more interested in the philosophy of money the history of money and in particular the phenomenon of inflation and the way that links to things like time preferences, as we've already talked about.

[155] And also, I suppose, political philosophy and libertarianism and these ideas that there's a certain way of thinking in Austrian economics called praxeology, which is about human action.

[156] And the way that, you know, really analyzing the way that people sort of pursue, it's very general in the way that they use means to pursue ends.

[157] Like that's the very first kind of axiom of the system.

[158] And from that we can draw a whole lot of deductions.

[159] And it's interesting the way that leads you down an ethical, being able to create an ethical framework as well.

[160] And that's where, I guess, your own work came into it where I found that found myself interested in this libertarian system of ethics or morals and, you know, maps of meaning, I think, is essentially a book about morality as well in that it's a book about how to act.

[161] So I found some very interesting parallels there.

[162] And what was it about, how would you define the Austrian School of Economics and why did it, why was it of particular interest to you?

[163] Well, the Austrian school is, I would say, it's a way of thinking that is about logical deduction rather than empiricism.

[164] I think the problem with economics in its current form, modern economics, Keynesian economics, because it's largely influenced by the work of John Maynard Keynes.

[165] I think it has a problem where it has this desire to imitate a physical science.

[166] It wants to analyze data, you know get complex in a mathematical sense but there's a fundamental problem there in that when you're trying to analyze something in economics you know we can't set up an experiment and you know run run a test on a parallel universe we're dealing with with real world you know you can't isolate the independent variables basically so it makes that kind of analysis, a fraught with a lot of danger.

[167] Whereas the behavioural economists are trying to deal with that to some degree, right, by running actual economic experiments.

[168] They're more like psychologists.

[169] They are psychologists fundamentally.

[170] And the Austrian school takes a very different approach, which is to say, you know, we'll take a certain set of fundamental axioms, you know, and then we'll just, we'll build our philosophy based on logical deduction.

[171] So it's sort of all done from the armchair, basically, rather than trying to validate anything via real -world data.

[172] I guess the relationship between action and economics and value, I suppose, is that people choose to act in relationship to those things that they value and that the manner in which they act is actually an indication of what they value.

[173] and so money becomes an index of people's value preferences and value preferences is associated with their preferences for action.

[174] I mean, that shapes even such things as perception, right?

[175] Because perception, we think about that as something that's automatic, essentially, because the world just appears to us in some sense.

[176] But you move your eyes constantly and you orient your head so that you can hear one thing rather than another and you pay preferential attention to one thing rather than another.

[177] And you do all of that as a consequence of, comparative value.

[178] And I was reading a book on Austrian economics last night, and they were talking about trying to define economics.

[179] And it struck me that the most suitable definition was something like the science of comparative value.

[180] It looks like that's what economists concentrate on.

[181] And then money becomes an index of comparative value.

[182] And then that leads, well, I'm going to talk to Robert next.

[183] I'll get him to introduce himself.

[184] But I know Robert has written a fair bit philosophically on the implications of money in general as a signal of value and of Bitcoin in particular.

[185] So, Robert?

[186] Hey, Jordan.

[187] My name is Robert Breedlove.

[188] It's a great honor to speak with you today.

[189] I'll just say that your work has had a profound impact on my life that I'd probably struggle to put into words, so I'll just leave it at thank you.

[190] I'm a lifelong student of philosophy and economics.

[191] Although more recently, thanks to Bitcoin, actually was introduced to Austrian economics, so I've been going down that rabbit hole for the past four years.

[192] My background before that is I have a master's degree in accounting and finance.

[193] I was a CPA for a number of years, so I did tax strategies for high net worth individuals, investment partnerships.

[194] From there, I moved on to be pretty much a career CFO focused in technology.

[195] And then most recently, I was operating a hedge fund before last year, you know, 2020 was transformative for a lot of us, and this quote from H .G. Wells really struck me and resonated.

[196] He said that civilization is a race between education and catastrophe.

[197] And my realization is that the world is so poorly informed about the socioeconomic significance and even philosophic significance of Bitcoin that it was incumbent upon me to take what I think I see is the solution to many problems in the world and just pour all my energy into education.

[198] And to that end, I started the What Is Money Show.

[199] I called it this because I do believe that question, what is money?

[200] This is the gateway to this rabbit hole that we've all fallen down.

[201] It is the key to unlocking a lot of the untruths in the world.

[202] And I think it's also the key to perceiving the corruption that's embedded in our current socioeconomic system, at the core of which is central banking, which I'm sure we'll get into a lot today.

[203] And yeah, I would just, to echo a couple of the things that were mentioned earlier, that question, what is money has a lot of answers, one of which is I think you've related in the past, is that money is essentially a contract with the future.

[204] And today, fiat currency, it's a violated social contract.

[205] So we have a money by which an institution effectively robs our future.

[206] They're compelling the demand, for this money, and they're violating its supply to enrich themselves and dispossessing everyone else, mostly people economically vulnerable.

[207] And to the point about morality, it's like if we don't have a secure social contract in the most important market in the world, which is money, then we can't possibly have a foundation for a sound social morality.

[208] So it causes people to be more short -term thinking when your money doesn't hold value over time.

[209] You can't plan.

[210] You can't create trusting long -term relationships.

[211] And then the last piece to that is, you know, with central banking violating the supply of money, they are twisting our perceptions.

[212] We perceive the world economically through prices.

[213] And when that perceptive, that perceptual mechanism is twisted, it breaks down your valuations, your goal orientations.

[214] You trust.

[215] I really just trust.

[216] Yeah, it really corrods socioeconomic fabric, social morality, and even individual.

[217] really, to John's point, I think it really breaks us down.

[218] And I've experienced that personally in my life.

[219] I've kind of flown high and mighty on the Fiat currency standard, and I've experienced a certain set of character traits developing myself, and I've experienced an antithetical set of traits developing myself as a result of studying and interacting deeply with Bitcoin.

[220] Can you elaborate on that a little bit?

[221] You're making a moral contrast that's personal.

[222] There's a story there.

[223] I'm kind of curious about it.

[224] So, yeah, I made a lot of, lot of money quickly at a young age.

[225] And I would say that I walked a bit of a darker path where I just thought that I had made it.

[226] I had arrived.

[227] I would just kind of party and cut up and travel.

[228] I didn't have a lot of, I had lost that deeper sense of meaning or sense of purpose that that you speak so eloquently to.

[229] And you know, you don't know it when you're up against it.

[230] I still thought that I was doing good things and was more or less a good person.

[231] But I was just going further and further off course, you know, becoming more and more short -term oriented, more and more pursuing immediate biological gratification, whether it's, you know, drinking or whatever.

[232] And Bitcoin and this rabbit hole just gave me the larger lens, which we talk about time preference.

[233] And when we say lowering your time preference, what we mean is we're expanding your time horizons.

[234] So you gain a greater sphere of concern, let's say, beyond yourself.

[235] And that sphere is made up of space and time.

[236] And as you do that, you start to see yourself as increasingly a more humble and infinitesimal piece of the total picture.

[237] But somehow it also enriches you to want to really dig into whatever gifts you have and give back to the whole picture.

[238] And why do you think the fiat currency, why do you think the fiat currency versus Bitcoin issue is relevant to that conundrum.

[239] You know, we could say it in the very severe original state of nature, where we're all just cavemen running around trying to eat and, you know, have shelter.

[240] That is an environment with a lot of scarcity, right?

[241] There's a lot of economic scarcity because we haven't begun to trade.

[242] We haven't created the division of labor and specialization that creates wealth.

[243] And I would argue that fiat currency, because it generates arbitrary.

[244] inflation.

[245] So it's artificially magnifying prices in the world.

[246] It's increasing prices when prices should be declining as we get smarter.

[247] It's actually magnifying the perception of scarcity in the world.

[248] And I think that contributes to social divisiveness up to and including things like cancel culture and other things we see in the world today.

[249] I really believe that artificial central bank induced inflation is a corrosive moral cancer on society.

[250] And I think we underestimate.

[251] So let's get some terms straight so that everybody knows what we're talking about.

[252] So maybe we start with fiat currency.

[253] And Gigi, I'm going to pick on you next because I want you to give us a technical description of Bitcoin, if you would.

[254] And then we can start exploring its psychological and philosophical implications.

[255] So let's talk about fiat currency, contrast that with a gold standard of Bitcoin.

[256] And then let's talk also about central banking and inflation and just flesh that out so everybody knows where we're at.

[257] that's for you Robert sorry that's for Robert I'll get Gigi I'll turn to you for the technical description of Bitcoin you like me to start with central banking sure yeah so to give the very high level description again the answer to what is money has many questions or many answers but one of them is we could say that it's a device for moving value or expressing value across space and time and historically it's a technology right?

[258] The free market selects what the best tool for the job is.

[259] That's true for essentially every market in the world today, but we've never allowed that to be the case in the realm of money.

[260] And the best approximation of that historically was gold.

[261] So if we understand that as a technology, money needs to fulfill five critical properties, needs to be divisible, durable, and scarce.

[262] And I'll gloss over a lot of history, but essentially monetary metals best satisfied the divisibility, recognizability, and portability, properties of money, and of the monetary metals, gold was the most scarce.

[263] And scarcity of money, so what scarcity means is when demand outstrips supply.

[264] But what's unique about money is that demand always exceeds supply.

[265] There's never a enough people always want more money right it's not like you're going to reach a certain amount of apples in your in your kitchen and you're satisfied with apples you always there's always more demand for money so we could say that money always has this scarcity property inherent to it but the the market gravitates towards the good that best satisfies those first four properties and then fifthly has the most inflexible supply so another way to say this is the most inflation -resistant monetary technology tends to be favored by market actors, because as it turns out, surprisingly enough, or not surprisingly, people don't like to get stolen from via inflation.

[266] You want to hold a money that holds its rarity and scarcity across time such that no one can dilute you.

[267] And so why do you regard inflation as theft?

[268] So inflation, it's just very simple supply and demand economics.

[269] If price or purchasing power in the case of money is where supply meets demand, if someone can arbitrarily increase the supply, they can steal purchasing power from the others using that as a store of value.

[270] So that's why, again, gold was selected on the market because there was sacrifice necessary to obtain gold.

[271] You had to expend time and energy to dig it out of the ground, such that in this game theoretic selection of money, everyone could trust that no one could arbitrarily violate the supply of gold.

[272] Because if they could, they would just print gold if you could and still value it with silver or something like that which happened on occasion which they did yeah they've counterfeited gold and any number of things the problem with gold though essentially is that it was great for holding value again back to our original definition money is a device for moving value across time and space so gold is excellent at holding value across time but it's a metals are pretty poor especially for a globalizing society at expressing value across space they're very heavy and difficult to move they're expensive to move, expensive to secure, et cetera, et cetera.

[273] So this is where paper currency was introduced.

[274] By abstracting gold into a paper currency, we could now increase its transactability across space.

[275] And so long as it was redeemable, one for one, right?

[276] One unit of currency for one ounce of gold, for instance.

[277] Then it maintained its ability to express a value across time as well.

[278] So we're basically augmenting this free market selected technology to make it more transactable across space and time.

[279] The problem with that, of course, is that it introduced the need.

[280] First of all, it made money debt.

[281] So now all of a sudden we don't have money.

[282] We have a paper certificate that's redeemable for money, which is gold.

[283] So this paper certificate becomes a debt instrument.

[284] And the problem is you now needed to trust the custodian, the bank.

[285] Whoever's holding that gold, you have to trust they will not produce paper currency in excess of their gold reserves.

[286] otherwise they are then the one artificially inflating the currency and able to steal from everyone else and as it turns out you know again money is like being the most important technology in the world the temptation to manipulate its supply has proven historically to be essentially irresistible and banks which tend to become central banks or nationalized banking operations over time have have always violated that trust function placed within you can you give us some reason examples of that?

[287] Well, sure, in 1971, the infamous Nixon shock, he took the world off a gold standard.

[288] You know, subsequent to World War II, we held the Bretton Woods Conference, where it was determined unilaterally by the United States, that the dollar would be pegged to gold, every other currency in the world would be pegged to the dollar.

[289] So this gave the United States, the infamous exorbitant privilege, to just basically be able to print whatever amount of money they want, send the world.

[290] world, these paper certificates called dollars and then receive goods and services in exchange.

[291] But other countries agreed to this, one, because the U .S. was the dominant military power of time, and two, because dollars were redeemable for gold.

[292] But between 1944 and 1971, it reached a point where enough countries had lost faith in the dollar that they were asking to redeem their currencies for gold, that Nixon decided to spontaneously close the gold window.

[293] So he just moved of the world off of a gold standard onto a purely fiat currency standard.

[294] And then there's since that point, actually since 1971 through today, it's been about a 50 year experiment, we have had disastrous socioeconomic consequences across a whole gamut of data.

[295] There's a great website to this effect.

[296] I would just encourage listeners to check out called WTF happened in 1971 .com.

[297] And it, you know, we've had obesity, suicide, addiction, clearly global debt to GDP is it exploded.

[298] It just points towards the devastating force that is arbitrary inflation.

[299] So, yeah, I hope that answers it.

[300] Yes, go ahead.

[301] Can I just jump in for a sec?

[302] Before we move on, we're talking a lot about value.

[303] And I think, Jordan, you mentioned something earlier that I just wanted to pull the string on a tiny little bit is, and you talk about this in your work, but when we, in order for value to emerge, right, we need to define limitations.

[304] So things are defined by their limitations.

[305] And as a result of that, we're able to separate them.

[306] So things emerge out of the void.

[307] Their limitations allow us to separate them.

[308] Then the problem is, how do we order them?

[309] Right.

[310] And then so that is how these value hierarchies emerge.

[311] And the internal measuring stick we use to order things is our own limitations of time and energy.

[312] So for a very basic example, If I'm going to look at the lamp, then I'm excluding everything else that I could look at.

[313] I'm devoting my time and energy resources to look at that lamp at the exclusion of everything else.

[314] The opportunity cost is infinite to anywhere you place your limited resources.

[315] And so the journey or the evolution of money, of finding a money, has been to try to find something that mimics our limitations, that mimics the sacrifices that we make when we bestow value on something.

[316] Why would you say mimics?

[317] Well, because we want something to reflect the same limitation.

[318] You know, when we're bestowing value on something through our sacrifices, that's basically what value is.

[319] I'm sacrificing my time and energy and perception to focus on one particular thing.

[320] If I want to express that out into the external world, the ideal way of doing that is to find something that is similarly limited as my own resources.

[321] So that's interesting.

[322] So, yeah, so money, I mean, it's obvious in one sense that money is a reflection of human value.

[323] But I hadn't exactly thought about it as a form of mimicry.

[324] So what we want is an arbitrary external agent that's mobile across people that signifies what people value, of course.

[325] So that signifies a measure of sacrifice.

[326] Why sacrifice?

[327] Well, that's how we create wealth in the world.

[328] We sacrifice our time and energy to create things.

[329] So money, that's just another definition.

[330] I didn't mean to interrupt, but money as a measure of sacrifice.

[331] Okay, Gigi, let's go to you now and let's fill in some of the gaps about Bitcoin per se.

[332] Do you want to fill us in about what it is and why you think it's significant?

[333] What's revolutionary about it?

[334] I'll try my best and I'll try to link it to what's just discussed.

[335] We always try to zero in on something that doesn't just melt away and that we can.

[336] can use as money.

[337] And historically, as we just discussed, gold and silver, precious metals were very good at that because gold is virtually indestructible.

[338] And it's also very scarce and invisible and so forth.

[339] The problem is, and that's what computer scientists try to solve like for, I guess, 50 years plus is if you want to do that in the informational realm, have something that represents value, it's basically impossible because you can copy information indefinitely.

[340] And that's what's described by the double spend problem.

[341] Like if you can read information, you can also copy it.

[342] So you cannot have a token in the digital realm that can't be copied.

[343] If you can read it, you can also write it down again.

[344] And that's a basic copying mechanism.

[345] And that's how computers work.

[346] Computers are just basic copying machines.

[347] So digital scarcity is kind of an oxymoron and was never possible before Bitcoin.

[348] And also in Bitcoin, like the way that Bitcoin works, it doesn't produce anything that can't be copied.

[349] Everything in Bitcoin is copied all the time and you can copy every aspect of it.

[350] And there's also nothing that is really encrypted.

[351] You know, it uses, it uses encryption technology like cryptographic technology, but it doesn't really encrypt anything.

[352] It only uses digital signatures schemes to make sure that the ownership of things is clear.

[353] But you can read everything in Bitcoin.

[354] It's completely plain text.

[355] That's why we also say it's speech.

[356] You know, it's, you can basically print out how Bitcoin works and put it in a book and you can actually read it and you can feed it into another computer and just spin it up again.

[357] And also the output that bitcoin produces this ledger which records who owns what is completely plain text like you can make sense of it by just looking at it kind of and so we have this problem that historically we found physical artifacts to represent this value gold coins for example and the gold coins they speak for themselves like whoever has the gold coin is in possession of this value the stored value someone else put work into it to extract the gold first and foremost and after exchanges, you know that whoever earned this gold coin or also stole it, like, it doesn't matter.

[358] Whoever has this bearer instrument, whoever has this gold coin, is in possession of some value and can redeem it, go to society and redeem it.

[359] You can, like, whatever goods and services you want to have, you can exchange your gold coin for that.

[360] And in the digital realm, doing that without any trusted third party before Bitcoin was impossible because of this double spend problem, because of the nature of information that you can.

[361] can't have any token that can't be copied.

[362] So what Bitcoin actually does is it is this play kind of, it is this intricate dance of computers all around the world that spin up a system that checks and verifies copies of this ledger and it makes invalid copies useless.

[363] So you can copy it and you can kind of transform the copies as well.

[364] But everyone who participates voluntarily in this game agrees to certain rules and the rules say that we only accept valid copies according to the rules that we signed up to.

[365] And this is what makes all this possible.

[366] And what comes out of it is simply a list.

[367] It's an unbreakable contract of trust.

[368] Yeah, it's like unbreakable is a really big word.

[369] And everything in Bitcoin works kind of probabilistically, including like cryptography itself.

[370] It's basically, it makes use of an asymmetry that some problems in our universe are very hard to solve.

[371] unless you know the exact solution to it.

[372] So that's basically all, like the root of all cryptography.

[373] Like if I know the secret, I can decipher the message instantly, very easily.

[374] But if you don't know the secret, you will have to guess every possible secret.

[375] And this is where this asymmetry of power comes from.

[376] So cryptography is inherently defensive.

[377] And this is what Bitcoin makes use of as well.

[378] Like if you don't have my private key, you cannot spend my Bitcoin, period.

[379] Like the heat death of the universe will come first before you, you will be able to do that and this is the power of bitcoin so can you get extremely simple and describe what bitcoin is yeah that's the 21 million bitcoin question um i'm afraid there is no simple answer like the the best i can give you is it's basically you can think of it as a as a shared excel sheet like shared a shared a shared ledger that simply attests to who owes what to whom like it has a list of these are the 21 million bitcoins that we have and john owns some and robert owns some and it's a list of transfers so it's a list of transactions and if you if you add all this up and make sense of all the transactions it's the the what is recorded is from the genesis of bitcoin up to the present moment everything that happened in the Bitcoin ecosystem.

[380] And so that's what makes it trade and ownership.

[381] That's what that's what makes it so trustworthy.

[382] It's like a it's a computerized accountant.

[383] It's keeping track of who owns what and who owes who what.

[384] And it's distributed everywhere so no one can corrupt it.

[385] And you can't get access to anyone's store because their key is encrypted in a way that makes it impossible to break.

[386] It's it's because everyone holds their own keys in the best case.

[387] Like I hold my own keys and you You don't even know, like, you can't associate my Bitcoin addresses with myself.

[388] That's also why I'm an invisible man. So a lot of Bitcoiners take care about their privacy.

[389] And that's a big, like a big topic in the Bitcoin world as well.

[390] And so there is simply no attack vector.

[391] You cannot, like you cannot invade all the homes of all the Bitcoiners across the world and steal the private keys.

[392] And that's what you would have to do to break the whole system.

[393] So the security is distributed in the sense that the security.

[394] security is at the edges.

[395] And the system itself is insanely resilient.

[396] And what enables this trust is exactly as you have said.

[397] It's transparent and it's radically distributed.

[398] Everyone has a copy.

[399] So I can check it for myself.

[400] From the very first block, like the genesis of Bitcoin, up to the present moment, I can verify everything myself.

[401] Right.

[402] So it's completely transparent.

[403] It's completely distributed.

[404] There's no centralized authority.

[405] It can't be cracked.

[406] It can't be stolen.

[407] It doesn't inflate.

[408] It can't be inflated.

[409] It isn't subject to, at least so far, to any form of overt administrative control.

[410] So let me ask all of you guys a question.

[411] Maybe John and Richard can chime in in this because they haven't spoken too much yet.

[412] So one of the questions might arise, especially in relationship to Robert's comments, is we switched to a fiat currency back in 1971.

[413] And obviously you guys are no fans of fiat currencies.

[414] But we do have money.

[415] And it does work we we can still it still stores value we can still spend it and so i would say please tell me why i'm wrong or if i'm wrong or if you agree the american dollar has been the currency of record essentially since 1971 perhaps since before that despite the fact that we've switched to a fiat exchange system and my sense is the reason that people use the american dollar is because the judgment of the world is that by and large the social structure of the United States, social and economic structure of the United States, is such that it's more reliable than any alternative.

[416] And so people trust individual Americans in some sense.

[417] They trust the trusted interrelationship they have with each other.

[418] They trust the emergent social institutions.

[419] And as a consequence of that, they're willing to put the same kind of faith into the dollar that you guys put into Bitcoin.

[420] And so that's working.

[421] And so what's the problem exactly?

[422] And is Is there something wrong with my reasoning?

[423] Maybe Richard, you could comment on that.

[424] And if not, someone else jump in.

[425] Well, I think we can make a fundamental distinction between a money that is chosen by the free market and a money that is forced upon someone by the use of the threat of force, which is essentially what the US dollar is and any other fiat currency.

[426] Your point is well taken, which is that the US dollar works.

[427] as money but i guess the question is in relation to to what uh or compared to what and and i think that um because we we sort of can't imagine this um this universe that doesn't exist where you know the free market was simply allowed to do to do what it would do um so there's there's two problems with with the um the u s dollar one is that um yeah it's it's basically it's imposed by this legal tender law.

[428] So in the United States, and yes, the United States has economic and political dominance, and that extends around the world.

[429] But citizens in the United States aren't free to transact in money that they choose.

[430] If I wanted to make a transaction in gold, I'm legally not allowed to do that.

[431] I'm not allowed to denominate a contract in gold.

[432] and I'm also in a technical sense prevented from saving my money in gold and that's really because of capital gains taxes if I want to want to use gold for example to protect my savings from debasement because slowly but surely the value of the US dollar does decline over time if I then want to go and use that saved money to actually make a transaction because I I'm legally obliged to, I have to pay a capital gains tax and sort of give back to the state the value I've tried to save.

[433] So I think, yeah, there's a utilitarian dimension.

[434] So you wouldn't regard that, you wouldn't regard necessarily any increase in value that pertain to investment in gold as an actual capital gain.

[435] You'd be more inclined, I may be putting words in your mouth, I hope not, but you'd be more inclined to think of that as a hedge against inflation.

[436] And so not an increase in wealth, but an actual maintenance of wealth, because gold hypothetically is more reliable than the dollar.

[437] You could make that case.

[438] Exactly correct.

[439] And this is the thing is that, you know, gold, holding gold is, yes, technically it's not an investment because there's no, there's no return.

[440] But the other interesting thing is that things that we put our money into these days that are investments such as real estate or shares and things like that most people are only doing that in an effort yeah not to earn a real return but only to sort of offset the loss of value that comes from the slowly depreciating currency so you know that's part of the problem of having a currency where the supply constantly inflates is that people aren't able to simply save money in a simple sense.

[441] They're not able to hold money.

[442] They have to take that money and invest it and take on the inherent risk in investing simply to maintain their purchasing power over time.

[443] And then that's basically, that purchasing power is taken away from them again when they try and rotate out of that investment back into money.

[444] Okay, so let me ask you a question about that.

[445] So maybe I could make a case that, you know, because we're all interdependent, whenever I generate wealth, I generate it as a consequence of my interdependence with other people.

[446] I wouldn't be able to do it on my own.

[447] I'm dependent on the infrastructure.

[448] I'm dependent on the government.

[449] Or at least I have the advantages that those things provide me. And so could I not make a case that if I've managed to accrue a substantial sum of excess capital savings, that it's reasonable for the rest of society to expect me to allow some of that to inflate away as a tax on my hoarding as a consequence of the fact that part of my wealth is generated as part of a shared endeavor.

[450] Because, you know, you could posit a wealth tax, right, that might address inequality so that there's a 2 % wealth tax or something like that on fortunes over $500 million.

[451] And so they decay with time to restore that hoarded wealth back to the general community.

[452] What do you think of an argument like that?

[453] well there's a the problem well a lot of this comes back to um you know we have to go right back to first principles about what we think about the nature of the government or the state like do we think that that institution helps or hinders do we think that that institution can actually redistribute resources um in a way that's fair and equitable um can it kind of do that efficiently that's almost an entirely different question.

[454] I tend to be very skeptical of what the state can do in that respect, and I think that freely acting individuals would possibly be able to do a better job.

[455] So you basically have a free market response to that objection, that the free market is going to do better as a calculating device?

[456] Absolutely.

[457] And the only other thing I'll quickly say before I think handing over is that the problem with using inflation as a redistributive method is that it actually unfairly works against the poorer people in society because those that have wealth you know you're talking about a wealth wealth tax or that sort of happens through inflation but the way that it generally plays out is those people who are wealthy they don't store their money as dollars they store in assets and those assets appreciate in value as a result of the inflation, whereas those people who are living on fixed wages, salaries, living week to week with a bank balance, and because they're spending a larger proportion of their money on goods and services, they're the ones who are actually most unfairly targeted by inflation.

[458] So it actually has the effect of increasing inequality.

[459] And do, why do you guys have any faith in the idea that there is actually measurable inflation?

[460] Because I, is it reasonable?

[461] I don't understand inflation.

[462] There's a basket of goods and services that are calculated.

[463] The price of them is calculated every year.

[464] But what's in that basket of goods and services seems to me to be a relatively arbitrary choice.

[465] I mean, what makes you think that there has, in fact, been objectively reliable inflation, say, over the last 30 years?

[466] given, for example, that many, many manufactured goods and so forth have got dramatically cheaper.

[467] Now, I know housing in many places has skyrocketed, you know, to a tremendous degree, but do you really feel that the currency has become corrupted and that you can, and what do you rely on to make that case?

[468] What data do you rely on?

[469] I could jump in here, I think.

[470] I would say unquestionably debasement of the currency.

[471] it is an arbitrary harvesting of the economic surplus a productive free market economy is creating.

[472] So as an economy gets more efficient, it generates more wealth that's passed back into two market actors in the form of declining prices.

[473] So we're getting smarter at making chairs, smarter providing services, electronics, all these things.

[474] But by printing money, you're basically stealing claims on that productive.

[475] on that economic surplus and doling it out arbitrarily.

[476] So we could say another way to think about this is that the free market itself, as you've described, Jordan, it's a distributed computing system.

[477] So we all have our 120 bits per second conscious attention span.

[478] You multiply that out by 8 billion market participants.

[479] That is the cognitive power of the free market.

[480] I want to emphasize that because it's such an important point and it could easily be skipped over because you know there are people who admire the ideas of central planning and you think well maybe there's 40 people doing your central planning and so maybe they're the smartest people in the world and they're doing your central planning but they have to calculate on the fly a virtually infinite amount of information if they don't have free market prices at their disposal they have to calculate what metal is worth what nails are worth what labor is worth what rubber is worth what cleanup is worth, what nursing is worth, et cetera, et cetera, and they have to do all those comparisons, and they have to do those computations, and there's actually no way even technically of doing that, and the alternative is to distribute that calculation across a virtually infinite number of actors, or actors in the billions, at least, and let every single person act as a computational device, and sum all that, and that's what the free market does.

[481] It's not, it's not even in principle replaceable by a logical cognitive mechanism.

[482] I can't see how it.

[483] is.

[484] That's exactly right.

[485] It's not even possible that a centralized bureaucracy, a centralized computing model can compete with a distributed computing model of the free market.

[486] We could in fact say that the free market is a pure economic democracy.

[487] People are voting by buying and selling.

[488] And whatever price is generated on any given asset, that's effectively the truth of what it trades at.

[489] Any intervention on that, any intervention, any regulation, any pricing czar, as they had in the USSR, you move towards, you move along that spectrum towards an economic tyranny where we have now the arbitrary wishes of a few overriding what the free market democracy is selecting.

[490] And to tie this back to the problems with dollar, the dollar is, you know, the dollar was gold, by the way, fiat currency never emerges on the free market.

[491] That distributed computing model never selects a fiat currency by itself.

[492] It's only when natural law is violated.

[493] When they step across the line of life, liberty, and property and say, I'm going to impose this technology on you or else.

[494] That's the only time fiat currency has ever emerged.

[495] And in fact, the dollar itself was just kind of a bait and switch.

[496] It was something redeemable for free market money gold that was then replaced with this compelled money.

[497] And again, if money is speech, we could say then that fiat currency is effectively compelled speech.

[498] It's the same thing.

[499] They're forcing a language, language of value.

[500] They're forcing its use on you.

[501] And if you boil it down to brass tass.

[502] the U .S. dollar today in all fiat currencies, they are mechanically, they're pyramid schemes.

[503] So pyramid scheme is a system of network marketing, basically, that's useful for enriching those in higher tiers at the expense of those in lower tiers.

[504] And you're constantly recruiting more lower tiers to enrich the top.

[505] And that's exactly.

[506] Let me draw an objection to that just briefly.

[507] So let's, I'm going to accept the pyramid scheme hypothesis.

[508] but I'm going to say that it's a pyramid scheme that sacrifices the future to the present, but that doesn't matter because the future is going to be so much more productive than the present that we can afford that leverage.

[509] It would be, so to make, this is the kernel of economics, right, is that I can delay consumption or gratification today, invest for the future, and then enjoy more in the future.

[510] Fiat currency and central planning more generally reverses that.

[511] It actually induces you to consume and take on debt today and disregard the future.

[512] This is the raising of the time preference that we spoke to earlier.

[513] And its arbitrary nature, again, as Mises would describe, all centrally planned action is it runs countervailing to what the free market would choose on its own.

[514] So no matter what you do, the government cannot make a good decision if they're coercing people to do it because they're withdrawing productive factors from the economy to fund that decision.

[515] If they want to go to war, for instance, the market may have not selected to go to war, but a government has decided that, no, we're going to pull these productive factors from the economy and push us into warfare.

[516] So it's contradictory to the essence of democracy itself.

[517] So you guys really see that Bitcoin has a just, you really do see it as a distributed form of government as well in some sense.

[518] It's disruptive to centralize government, yes.

[519] Yeah, and I think one of the elements of inflation, and again, this is the string back to what we were talking about earlier, and I do think it is a fundamental point to make, but if money is how we express our sacrifices and therefore our values into the matrix of value hierarchies that exist in the market, then inflation is doing so without the commensurate sacrifices that everyone else needs to make, to allow them to communicate that to the market.

[520] And so this is where the idea of pathological hierarchies is applicable is because a naturally emerging market where the fidelity between one's actions, one's choices, one's valuations, and the signal that they send out into the market is pristine, and I would make the case, that's what Bitcoin represents, whenever that is diluted in whatever capacity, you know, to a small degree or to a larger, degree, that's what creates incongruencies between the matrix of value hierarchies that are out in the market.

[521] If they are pristine, if we are all able to communicate with perfection, our value hierarchies to the market, we will see, in my opinion, emergent order.

[522] I don't see how it could be any other way.

[523] Where that gets thrown off is when that signal that we're sending carries alternative information, not information that we, you know, through our divine process of, you know, mediating chaos in order to bestow value on things and then express that through our actions, not that process, but through some other process of someone who controls the mechanism by which we communicate that.

[524] And so inflation is just, is changing the relationship between the matrix of value hierarchies without the commensurate sacrifices, and that is what creates power.

[525] pathological hierarchies, and that's what creates, you mentioned, you know, the inequality and the divisiveness and stuff.

[526] Why do we allow this?

[527] Now, we're not going to degenerate into conspiratorial thinking, and I'm always wary of any conversation that involves they, you know, an external actor.

[528] Like, we've allowed this as a global community.

[529] And if what we've done is flawed in the manner that your analysis indicates, why have we allowed it to happen?

[530] I could say who benefits and we could go there to begin with but again as i said i'm very leery of conspiratorial thinking i tend to think of large scale social problems as everybody's problem you know but so so what do you think about that what why why have we allowed this to happen and let's say who benefits and why well and who suffers i'm with you and 99 % of the time i attribute um you know the things that we see in the world that we might term evil or bad to incompetence and not uh right evil evil yeah not malevolence.

[531] I think, you know, there's many factors here, but one is it happens kind of, it happens in slow motion.

[532] And so people end up not being able to see it.

[533] For example, like you would say today, hey, I got my iPhone, I got Netflix, we're talking on Zoom, things are good and right in the world.

[534] And I, you know, I know oftentimes you discuss not to, you know, discredit, not to go out and try to change the world, not to be too critical of the state of the world, because the order that we experience is almost miraculous.

[535] But I would say that there's an element of that that may cause you not to see how things have become disordered.

[536] I mean, it's difficult to see that.

[537] And so when we talk about the disruptive effect of inflation that I just alluded to, a lot of people have a difficult time seeing that.

[538] We can objectively isolate problems that are going on in the world, inequality and social problems and all the craziness that we see in the world.

[539] we attribute that to fill in the blank cause, whereas I think what we attribute most of that to is the disordering that results from this fractured congruence of value hierarchies that are being communicated in a market.

[540] That's where I think most of that comes from, but it takes time to play out.

[541] It's a form of faulty information.

[542] Right.

[543] And we are leveraging right now, are still benefiting from the order, the structure that was imposed as a result of, let's say, being on a gold standard and the political and social dynamic that that fosters.

[544] In many cases, we've been living off the stability that that fosters for the last several decades.

[545] I think you could make a case that despite technological advancement that might cause us to think, hey, things aren't so bad or may cause to distract us.

[546] I think you can make the case that the equity that we've been living off of of that stability is coming to an end.

[547] And I think we're seeing that in many different cases.

[548] But, you know, I think that's why it happens in slow motion and people are not educated enough or necessarily paying attention enough to notice the relationship between all the different things that are going on.

[549] Okay.

[550] So let me ask you guys a question about what happened in 2008.

[551] And so I may be completely wrong about this.

[552] But my understanding was that the 2008 crisis was fundamentally produced by a technological revolution.

[553] And the technological revolution was something like the realization that you could take investments of a certain risk level, mortgages, let's say, substandard mortgages.

[554] And by bundling them together in huge trenches and huge groups, you could quantify the risk.

[555] And as a consequence of quantifying the risk, you could discount.

[556] you could make the group of investments more valuable than they would be as the sum of the individual investments, which I thought was a brilliant innovation.

[557] And so now these companies, banks traded these huge tranches of subprime mortgages because they could quantify the risk.

[558] And that means that that could be accounted for financially.

[559] And so the risk was ameliorated.

[560] And the flaw was, well, no one realized that doing so en masse would increase the probability, that housing prices would become correlated across time, across huge geographical regions, for example, across the entire United States.

[561] And so the housing market could collapse all at once.

[562] So you could make the case that that was actually a flaw in the free market computing prowess because a technological innovation came along, warped the entire system, and then what had to happen was the political system had to rescue it.

[563] And so I watched that and I thought, well, did I, was the political system embedded in the economic system, which is, I think, the argument you guys are fundamentally making, or is the economic system embedded in the political system?

[564] And is, what's wrong with my analysis of what happened in 2008?

[565] Wasn't it the case that the market was rescued by the, by the political actors?

[566] Is that incorrect?

[567] The arson is putting out the fire.

[568] Sorry, go ahead, Rob.

[569] No, I could start and you guys feel free to jump in.

[570] So I would first encourage you to look into what's called the Euro dollar system, which is essentially these, this we control the pyramid scheme in the U .S., the domestic dollar supply, but there's this offshore derivative system where everyone's trying to peg the dollars that the central bank doesn't control.

[571] That's actually been considered to be at the root of the 2008 crisis, and then this was kind of a cover story.

[572] But if we just get back to error, so we could say risk is error, right?

[573] So there was this embedded risk that we thought we had calculated and contained.

[574] But what was actually happening is because we have centrally planned money, it's pushing hidden risk into the economy, right?

[575] Because the free market distributed intelligence, intelligence being defined as error correction, it's mitigated by the central planning of money.

[576] So these hidden risk accumulate, and that's why we've had increased volatility since 1971.

[577] We have these huge economic booms, we print a bunch of money, inflation runs hot, but so to assets.

[578] Everyone thinks they're doing really well.

[579] And then we have these catastrophic retracements back to economic reality.

[580] That's because incremental reaction to risk is not being implemented.

[581] That's what you'd expect, right?

[582] We're diverging perceptions from reality, effectively.

[583] So even the correction in March 2020, that was the sharpest liquidity collapse in the history of markets.

[584] It was faster than 1929 so we would expect as more fiat currency which is artificial liquidity is pumped into the system it's further distorting this economic perceptual faculty and creates even more volatile boom and bust this is the Austrian business cycle theory in a nutshell and the only way this the only way to resolve this is to let the free market clear errors that's what it does that's what consciousness does too by the way so you think of the free market is our interconnected consciousnesses mediated by the price signal.

[585] When you disturb the price signal, our consciousnesses become divided and we have increased errors and blowups.

[586] Well, that's why I suggest to people that they don't engage in deception because they distort the value signals and they warp their own consciousness.

[587] It's a very dangerous thing to do.

[588] That's right.

[589] Because you only use deception.

[590] That's exactly what money does.

[591] That's exactly what Fiat money does.

[592] Fiat currency is a living lie.

[593] That's what that's it in a nutshell.

[594] And maybe to bring this home, the question you asked could also be rephrased to pick a more like an example that people might be familiar with.

[595] You could also ask like, was the drug addict or was the person suffering from alcoholism saved by alcohol because he suffered withdrawal?

[596] And that's like a very similar question.

[597] And then you could argue, yes, we gave him the substance and he survived.

[598] So it was a good thing.

[599] And he made it through.

[600] but what would actually be necessary is kind of, you know, like that's not a cure.

[601] You would need to quit cold Turkey.

[602] And that's what Bitcoiners are arguing or just in general people advocating for sound money are arguing that we need to get off the Fiat standard that can be arbitrarily manipulated and manipulates the price signals, manipulates the whole economy.

[603] Okay, so that's a fundamental tenet of Austrian economics is essentially that central planning in relationship to the monetary supply that isn't informed by incremental free market decisions produces error that accumulates and produces cyclical booms and busts.

[604] That's very interesting because there is a psychological analog to that.

[605] Psychological analog to that is failure to react to error when they're committed incrementally to store the errors up which compound across time and to collapse.

[606] And the oldest myths, some of which I talk about in Maps of Meaning, talk about, for example, the re -emergence of Tiamat in the Mesopotamian myth, which is the consequence of corruption accumulates and produces catastrophe.

[607] It's the flood myth idea, essentially.

[608] So the business cycle theory in Austrian economics is a recast of the flood myth and the Tower of Babel.

[609] Is that right?

[610] Because those are the two parallels, the two mythological parallels.

[611] Tower of Babel is administrative overload essentially and the corruption of systems and the flood is, you know, the catastrophe.

[612] catastrophe, the downside of the natural catastrophe, I would say.

[613] Yeah, well, I think you hit on one of the main points of this discussion generally is that truth is represented across scales.

[614] Maybe that's a part of the definition of truth is that you can see it across scales.

[615] It's represented in different forms.

[616] It's certainly part of the definition of deep truth.

[617] Right.

[618] And so when we look at maps of meaning, you know, I think this is part of the reason why we're so interested in talking about it is because we take those truths that are seemingly entirely unrelated to markets and money.

[619] It's all about, it's all about mediating the forces of nature, the structure of reality in conjunction with the social relationships that constitute life and trying to figure out what behavior is the most optimal balance between the two.

[620] And I think we could carry that over to money and markets.

[621] Well, it's funny because, you know, maps of meaning could have been called maps of value, and obviously money is a map of value, but I hadn't drawn the analogy between a map of value and money, although in retrospect, that seems like an obvious thing to do, which is why I got interested in your idea about incorruptible money.

[622] Yeah.

[623] And so you think of incorruptible money as a computationally advantageous, essentially.

[624] That's the basis of the idea.

[625] Yeah.

[626] And I think, again, to pursue this, I think Bitcoin is the rejection.

[627] of hero in different form.

[628] It takes the forces of nature.

[629] It digs into chaos, into pure entropy, into pure energy, and let's say mathematics, and spits out the greatest form of order that we as human beings use in the social realm, which is money.

[630] And it does so in the archetypal way, in the maximal possible way of doing so.

[631] And it does so in an incorruptible manner.

[632] And so if you take a lot, you know, if you take those things, you could easily, you know, that could easily have been talking about the regenerative hero as described in maps of meaning.

[633] And I think it's represented in Bitcoin.

[634] It's instantiated in Bitcoin.

[635] And that's why it's having such a revelatory effect on it.

[636] It provides a really weird bridge between the objective world and the world of value too, doesn't it?

[637] Because all the computation occurs in objective, like that's objectively real.

[638] And that objectively real incorruptible computation produces an unerring signal of value, or that's the theory, at least.

[639] Okay, so let's talk practically for a bit.

[640] So then we'll return to the central discussion.

[641] I mean, Elon Musk is recently objected to Bitcoin on the basis of, and maybe this is this a flaw?

[642] Bitcoin becomes more and more expensive to produce as we proceed through time, and the consequence of that is that we do, in fact, use up more energy, or at least that's in one form, which is computational energy.

[643] Maybe we gain that back and, you know, efficiencies within the market itself.

[644] You could argue that.

[645] But what do you think about Musk's recent decision with regard to Bitcoin?

[646] I would love to jump in on that because I have written about that extensively.

[647] And I think what you said is exactly right that Bitcoin is a map of value, so to speak.

[648] And what's so interesting about Bitcoin is that Bitcoin is both the map and the territory.

[649] And as I've said before, in the informational realm, we cannot, we cannot link usually.

[650] Like, we cannot link the map to the territory.

[651] You cannot do it.

[652] If you have something in the real world, writing something down about it, you will always have to trust the person that wrote it down.

[653] And what's so ingenious in the world of Bitcoin is, Bitcoin uses the only thing you can do with information, which is to transform it, to anchor it to the real world.

[654] So this is what proof of work does.

[655] That's what the energy expenditure is for.

[656] And the energy is used for various things.

[657] So it's used to secure the system.

[658] It's used to distribute new coins.

[659] It's used to make sure that the history becomes incorruptible.

[660] So it also secures the past.

[661] So it does a couple of things.

[662] It also makes sure like it even decentralizes time itself, which sounds kind of weird, but it's very hard to keep a decentralized system synchronous because of relativity and other effects.

[663] So you would have, if you wouldn't have something like physical proof of work, you would need to trust a central authority in terms of time because the order of things like the order of transactions needs an absolute order of time.

[664] And all these, all these things combined are solved by the proof of work system that Satoshi Nakamoto introduced.

[665] And so the, like the energy expenditure, the basic question becomes, once you realize that the basic question becomes, is it worth it?

[666] And society in general, society in general, society in general, Musk, this question about all kinds of things, like our car's worth it, our smartphones worth it, is the Internet worth it?

[667] All these things, they take up a lot of energy.

[668] And Bitcoin has argued that Bitcoin is definitely worth it for the sound money aspect alone.

[669] Musk is determining by Fiat that it isn't.

[670] Well, I mean, instead of letting the market decide.

[671] It's very hard to decipher what Musk meant with his recent comments because Tesla is still holding a lot of Bitcoin on their balance sheet.

[672] I think it's about $2 billion US dollars worth in Bitcoin, and they don't intend to sell any.

[673] And so, you know, like, it's a political game to, to, like, it's, so let me ask you this.

[674] If you guys are right, this tell me if I'm leaping somewhere I shouldn't be here, but what should happen is that whatever energy is expended in the production of Bitcoin and the maintenance of the system should be more than recouped by the increased efficiency of every system that use Bitcoin as a transactional device.

[675] And so the net energy, there'll be a net energy gain, not a net energy loss if you calculated it across the entire system.

[676] And so it's a mistake just to look at the cost of generating Bitcoin in the absence of considering the efficiencies that Bitcoin would produce.

[677] And the same is true for gold as well.

[678] You know, like it takes a lot of energy to extract gold from the ground.

[679] And historically, society in general answered this question in the affirmative.

[680] Yes, it's way worth it.

[681] It's worth to dig this up.

[682] Right, but there were limits, right?

[683] Because once the ore becomes insufficiently rich, at some point you stop refining it.

[684] So there's a limit.

[685] But according to your logic, at least, the limit on the energy expenditure that Bitcoin produces should be produced by the market response to Bitcoin, not by some Fiat judgment about whether or not, it's like ecologically sustainable because that's just a guess.

[686] And the best indicator that we have for ecological stability is going to be cumulative free market decisions, even though those aren't necessarily very good.

[687] They're better than anything else we could possibly generate rationally.

[688] And just to clarify one point, and then I'll let Robert dig into this, Bitcoin doesn't take energy because the production of Bitcoin takes energy.

[689] The production of Bitcoin, it's an emission schedule, so it's constant.

[690] We know when the last Bitcoin will be mined.

[691] It's going to be around in 2 ,140.

[692] And it doesn't matter how much energy you expand.

[693] It won't go quicker.

[694] It won't go slower.

[695] So if you dig harder for it, it will be harder to find.

[696] And if you stop digging for it, it will get easier to find.

[697] So that's the genius invention of the difficulty adjustment.

[698] So there is no one -to -one link of Bitcoin production and energy expanded.

[699] The energy is used for different things for its security, for example.

[700] And Robert, I think you want to say a few things.

[701] Yeah, I'll try to dovetel and tie some things together.

[702] So the general tenant here is there is no value in money without sacrifice.

[703] There has to be an energy expenditure to secure the supply of money or the network of money.

[704] That's what insures against its corruption, basically.

[705] And if we zoom out even...

[706] Otherwise, it wouldn't cost anything.

[707] That's right.

[708] And someone would just arbitrarily suck value out of it by printing it.

[709] That's what the central bank is designed to do.

[710] So if we zoom out, a little further we could say the entire purpose of the world economy is to increase collective energy efficiency that's why that's why we are trading and specializing that's what profits are actually right it's an indication that we've a free energy provided we satisfied a want more efficiently and that that rewarded profits to the entrepreneur that then invites more competition more production etc etc so back to john's point the entrepreneur this is the the individual element that courageously faces the chaos of nature, right, with his skin in the game, his own capital plans, et cetera, trying to convert it into good and useful order.

[711] The entrepreneur is the living hero myth.

[712] And that's what the free market honors.

[713] It honors the sacrifices that entrepreneurs go out into the world and make for us, whereas something like a bureaucracy is antithetical to that.

[714] So to get back to your point about why central banking, how did we allow it to happen?

[715] I boil it down to this is that even the entrepreneur, he's pursuing something for nothing.

[716] He's trying to find a way to satisfy wants more cheaply, more efficiently to enrich himself and to enrich others.

[717] That axis you talk about between chaos and order good and evil, right?

[718] We're all pursuing something for nothing, but there's a point where you can cross that axis into the domain of evil, where it's intentionally harmful to others to benefit ourselves.

[719] I think that's what central banking has done, right?

[720] It's the entrepreneur wants something for nothing by figuring out how to provide a good or service, but so does the central bank.

[721] But it's crossed that divide to where it's actually economically harming others to give its shareholders, its private shareholders, a perpetual economic free lunch.

[722] It has no sacrifice in the money creation process.

[723] It pays a dividend to undisclosed shareholders.

[724] It's a parasite on the productive economy effectively.

[725] And I would say that no one is better than their incentives, right?

[726] It's not like, how did we let this happen?

[727] like there was just an attack vector on gold.

[728] There's technological shortcomings of gold that allowed it to be corrupted.

[729] That's how we got the central bank built on top of gold.

[730] So I think by introducing Bitcoin, a money that's really hard to steal in terms of inflation or confiscation, it pushes us to be more hardworking as a society because that is the only profitable strategy.

[731] We become entrepreneurial, whereas if money is easy to steal like it is under the central bank model via inflation, we slide towards kleptocracy.

[732] Right?

[733] And that's what you see.

[734] Even Elon, he's very close to the Fiat.

[735] I like the we terminology a lot better, you know, because because it does, you make a case there.

[736] You make a case for a kind of technological inadequacy is that as a species, we haven't been able to generate a sufficiently incorruptible language of value.

[737] And that has produced all sorts of negative consequences, some of which you're outlining.

[738] It's a problem that we all have.

[739] Okay, so practically speaking, guys, Bitcoin, it's not easy to spend.

[740] It's not, you can't.

[741] go into a store and spend it.

[742] Like, it doesn't have that portability that you described Robert as a cardinal element of a necessary currency.

[743] And it isn't obvious to me that it's been rapidly moving in that direction, but that may be a mere consequence of my ignorance or my time scale.

[744] Maybe it'll happen in 10 years, and that's virtually instant from a historical perspective.

[745] I mean, how do you think, do you think Bitcoin can leap the gap between its, what would you say, somewhat Store -valiocentric.

[746] Yes, that's right, exactly.

[747] Can I just hop in real quick on the last point before we answer this and then we'll get to it?

[748] But, Jordan, you mentioned, you know, is this energy expenditure and the environmental issues around Bitcoin, is it worthwhile?

[749] Right.

[750] And as you said, the market is the best thing to determine whether something is worthwhile or not.

[751] I tend to think of our impact on the planet, not as the planet in isolation, but as in human flourishing.

[752] I mean, isn't that what we should be looking at when we talk about the environment?

[753] Not just is the natural world harmed in some way, but is our relations?

[754] Well, otherwise, we're just talking about maximizing someone's ideological perception.

[755] Exactly, exactly.

[756] This is what the environment should be.

[757] Right.

[758] So I think our question should be, what is basically the ratio between the consumption of resources and the human flourishing that it nets?

[759] And I think that money, because it's the thing that allows you to determine the relative worth, of worthwhileness of everything else, it means that there is nothing more important than that object.

[760] So whatever the free market selects as the money, the resources used to instantiate that, to perpetuate it, are definitely worthwhile because it permits the relative valuation of everything else downstream of it.

[761] I just wanted to get that piece out.

[762] Yeah, yeah, a fair point, a fair point.

[763] If I might jump in in terms of like you can't go to the corner shop and spend your Bitcoin, I would say, you know, that's a fair criticism, but that was true 20 years ago for e -commerce and other technologies.

[764] So it happens gradually than suddenly.

[765] Like that was the same criticism was like, what am I going to do with a smartphone?

[766] What am I going to do with the internet?

[767] Electricity.

[768] It doesn't work yet, you know.

[769] Electricity, a lot of bitcoins or some bitcoins like to use this.

[770] metaphor because Bitcoin is also a network and electricity is also a network.

[771] So you have network effects that they take a while to grow, but Bitcoin is very usable already and there are a lot of people already living on a Bitcoin standard.

[772] So they are earning Bitcoin, they are spending Bitcoin, they're using Bitcoin day -to -day.

[773] Currently, because we are still in this early adoption phase and Bitcoin is an exponential technology built up on other exponential technologies.

[774] So it lives on the internet and it uses like smartphones and other devices that are exponentially in nature to propagate itself, then it will just take a while until it is ubiquitous.

[775] But I think also it is unstoppable, just like the Internet was.

[776] You know, the Internet dematerialized all kinds of things, and it just took a little bit to play out.

[777] And Netflix wasn't possible from day one, and video Zoom calls that we are having right now weren't possible from day one.

[778] And very similarly, Bitcoin is evolving and building itself up in layers.

[779] And currently, its main use is as a censorship.

[780] resistant money.

[781] If you are not allowed to have a bank account for whatever reason, Bitcoin serves you very well.

[782] And if you want to have a long -term store of value, Bitcoin is an excellent choice of store of value as well.

[783] And just look at the data.

[784] Like historically, year over year, Bitcoin compared to the US dollar, gain 200%.

[785] So if you put some money in Bitcoin, if you have done that in the past, you are better off than having money on the bank account or under your mattress because of the inflationary nature of fiat currencies that we discussed.

[786] And I think it will just, it will just continue to evolve just like the internet did, and people will find it useful for various different reasons.

[787] Now, you regard it as unstoppable.

[788] And so on what basis do you make that claim?

[789] Why do you believe that?

[790] Bitcoin is pure information.

[791] It is pure information.

[792] And also the system that is running it, like the asset itself is pure information.

[793] I can store 12 words in my head and I have Bitcoin in my head, literally.

[794] So it is very useful in that regard.

[795] That's what makes it virtually resistant to, nobody can take it away from you.

[796] Like if you secure it properly, Bitcoin has certain properties that allows you to make sure that you and only you can spend the Bitcoin.

[797] And on the system side of things, the Bitcoin network itself, it's just computer code.

[798] And so it's just information.

[799] And we as a society are very good at making sure that important information, information that various people regard as important survives.

[800] So we often like to compare Bitcoin to other informational texts just like the Bible, for example, that outlast empires because it is very hard to destroy pure information if it is distributed well enough.

[801] And the whole reason for the Bitcoin system to work in that complicated manner that it does is because it maximizes decentralization.

[802] It maximizes censorship resistant.

[803] The whole idea of the Bitcoin system is to build something that they can't stop and it doesn't matter who they are.

[804] So it's to build a system that we as humanity can't stop.

[805] Right, right.

[806] To build a system that we can't.

[807] Well, so that's, well, you know, that's kind of an interesting conundrum there too.

[808] you're going to ask yourself, there's no shortage of dire science fiction predictions about the buildings of systems that we can't even stop.

[809] Downsides to Bitcoin, well, how about the facilitation of criminal activity, underground criminal activity, for example?

[810] And like if you guys put your heads together and you had to critique Bitcoin as a social danger, what would you say?

[811] There's definitely the criminal element, which seems immediately relevant.

[812] I would say it's the same as with every powerful tool.

[813] Like a chef's knife is a very dangerous weapon, but you can also prepare beautiful meals with it.

[814] And we have to kind of make sure to wield these powerful tools directly.

[815] But it's also kind of, you know, like the genies out of the bottle.

[816] We kind of have to, just like with the internet, you know, like the internet and every other technology before it, it can.

[817] It's just a tool.

[818] It can be used for good and bad.

[819] And there's plenty of crime facilitated online as well.

[820] And I don't even want to go into bank robberies and cars that were early adopted by bank robbers so that they can run away faster.

[821] So I think that would be my answer to that question.

[822] And Jordan, just very quickly on that one, you know, in your writing and such, you detail how the religious traditions, particularly Christianity in our case, have informed the legal system.

[823] And one of the very special ways that it's done so is that it sanctifies the sovereignty of the individual, even if that individual has obviously committed a crime.

[824] They are given the right of due process.

[825] They are presumed innocent until proven guilty.

[826] And this is a technology that fundamentally sanctifies the sovereignty of every individual.

[827] And what they choose to do with that sovereignty is their choice.

[828] Yes, as a society, we will hold them to account.

[829] a case all of you that the very act of Bitcoin sanctifying the sovereignty of the individuals actually tilting individuals towards doing something good rather than something bad.

[830] That it's not just neutral, as Gigi was laying it out, that there's an intrinsic ethic to Bitcoin that is more likely to tilt it in a positive direction, which would be a more, what would you say, a more powerful rejoinder to the Bitcoin equals criminality criticism.

[831] So the question is, is that, see, that's what I'm trying to wrestle with here, is, okay, so let's accept your proposition that Bitcoin is an incorruptible currency.

[832] And that seems fair enough.

[833] I mean, I can't come up with an obvious rejoinder to that.

[834] And then, so that means that we have an incorruptible language of value that enables us to make better decisions.

[835] Well, we do use money to make decisions.

[836] I mean, sometimes, look, sometimes when I'm trying to decide whether I'll do one thing or another, I'll do the thing that makes more money because I can't decide any other way, right?

[837] It's an obvious way of picking one thing over another when they're relatively commensurate.

[838] Other people seem to value it more because they'll pay more for it.

[839] So it's actually helpful as a cognitive, it's a helpful cognitive tool, pricing, obviously, because it simplifies decision -making to a tremendous degree.

[840] So it's integrally involved with decision -making.

[841] You could make the case that in an economy or in a market that's properly constituted and structured, i .e. people's expression of their values is not corrupted, that you following that signal of something being more financially rewarding is moving toward the good, because the good is the aggregation of all.

[842] So that's really what's at the bottom of this, as far as I was concerned.

[843] That's what got me so intrigued by what you were thinking, because that's an unbelievably radical claim.

[844] And it doesn't apply if the money is corrupted.

[845] Right.

[846] You're basically saying that you can rely on an incorruptible currency as an unerring signal of value.

[847] So you're doing all your computation externally.

[848] You know, in this new book I wrote beyond order, I made the case that a lot of our sanity is distributed.

[849] Like we tend to think of ourselves as organized within.

[850] That's part of the psychoanalytic tradition, the psychological tradition for that matter.

[851] We sort of keep ourselves sane if our psyches are well structured.

[852] But a lot of the way we stay sane is by interacting with other people.

[853] And the signals they send us and that we respond to keep us sane.

[854] And you can see we're all going off in all sorts of weird conspiratorial directions as a consequence of being locked down under COVID for so long, because everybody's brains are, we haven't been subjected to enough social correction for a while because we're isolated and we all go kind of off the rails as a consequence.

[855] So if the value language is incorruptible, then you can externalize your cognition and you can rely on the market almost completely to make decisions for you.

[856] So you'd buy the cheapest car.

[857] for example, all other things being equal, because the calculation would have already been done for you.

[858] I mean, there's going to be a bit of individual idiosyncrasy, but fundamentally.

[859] The greatest reward would be climbing the value hierarchy of the market in aggregate.

[860] And then the question becomes, what is at the top of the value hierarchy of the market, of the collectivity of all people?

[861] And so then, in my opinion, yes, that allows you to outsource some of your cognitive load and determine where you should deploy your resources more easily.

[862] But I think that also allows us to contend with what is.

[863] And if we can do that, then I think we can solve our problems more easily.

[864] And of course, the market is a massive component of identifying those things.

[865] And I think it empowers us to say, which is a huge part of your message, is when we see things out in the world that we don't like or agree with, our action is what changes those things.

[866] our contribution to that market to nudge or shift the matrix of value hierarchies in whatever way is how we affect the is the best way we can affect change.

[867] Well, we do affect change because we buy things and then there's more of them.

[868] I mean, we do have that impact every time we make a purchasing decision.

[869] So that part of this I would just add that so sovereignty itself, it's the generative source of sovereignty.

[870] it is the logos right so as you've described in your your work we we first had thought i guess you could say then we had action then we developed speech to describe our actions and that became embedded in something like the bible we describe our moral development across time and then money we'd say money is the tech layer on top of that it is the natural extension of speech and action that allows us to as a mode of self -sovereign expression so when we uh and that's rooted in the logos the logos defined as the word or ratio in Greek.

[871] Prices are exchange ratios denominated in money for, again, outsourcing this cognitive load to the market.

[872] It's the same thing as words.

[873] Prices in words.

[874] You could say prices are speech, right?

[875] Or money is speech expressed through prices.

[876] And when we violate that, when we have an institution, which also we create institutions to do the same thing, we want an institution so we don't have to think about the important civilizational operation.

[877] We can just rely on the institutional practice so we don't need to think about it.

[878] When we corrupt, that institution tries to corrupt words or prices, as communism did in the 20th century or central banking does to prices today, it destroys the generative principle of order in the world, which is individual sovereignty.

[879] So that's what Bitcoin is.

[880] It's just a tool that maximizes the freedom and the sovereignty of the individual, empowering them to be entrepreneurial, and then usher in a more wealthy and abundant world as a result.

[881] And maybe if I tag on to that, I think you in your work, you came to the conclusion that free speech is paramount, but it's also dangerous, but it is good.

[882] And we would be saying that Bitcoin is free speech money.

[883] And along the same lines, it is very powerful and it can be dangerous, but it is also good.

[884] So the net benefit outweighs everything else.

[885] All right.

[886] That is a great place.

[887] end, guys, that's a nice natural place to end.

[888] Gigi, John, Richard, Robert.

[889] Thank you very much.

[890] I can't believe that our time is over.

[891] That flew by madly, and that's exactly what I was hoping it would do.

[892] So it was a pleasure talking to you guys.

[893] We'll do this again, hey?

[894] And I really appreciate you taking the time to speak with me, and I hope everybody who's listening or watching found this engaging and useful.

[895] And I'll keep reading what you're doing and watching what you're doing.

[896] And we'll see how all this transpires.

[897] I don't know.

[898] I don't know.