1 00:00:00,000 --> 00:00:08,820 Imagine you're a teenager, saving up for a new phone, but inflation eats away and your money's 2 00:00:08,820 --> 00:00:17,420 gone before you can buy it. Or picture a government endlessly printing cash, causing booms that always 3 00:00:17,420 --> 00:00:25,720 create busts. These are just two examples of real world chaos that the economics of today creates. 4 00:00:26,560 --> 00:00:29,220 Keynesianism, the topic that I was taught at university. 5 00:00:29,640 --> 00:00:30,500 Trust the experts. 6 00:00:31,440 --> 00:00:35,180 But there's another school of economics that is unheard of. 7 00:00:35,620 --> 00:00:39,820 Austrian School of Economics, something that only came to me through actually researching Bitcoin. 8 00:00:40,240 --> 00:00:42,080 What is the Austrian School of Economics? 9 00:00:42,240 --> 00:00:44,860 How can it empower you to see through the myths? 10 00:00:45,540 --> 00:00:47,260 How can you build real wealth? 11 00:00:47,680 --> 00:00:53,400 Well, over the next 45 minutes, I'm going to unpack why personal choices drive the economy. 12 00:00:53,400 --> 00:01:01,160 how sound money protects your future, why free markets create prosperity without top-down control. 13 00:01:01,720 --> 00:01:07,920 If you've ever felt economics class was boring, irrelevant, like you just didn't get it. 14 00:01:08,100 --> 00:01:13,280 I personally, I sat in a bunch of statistics modules. I'm like, what the hell is going on here? 15 00:01:13,300 --> 00:01:16,720 Or some kind of microeconomics class, like this doesn't make sense. 16 00:01:17,400 --> 00:01:20,280 This episode is designed to be completely beginner-friendly. 17 00:01:20,960 --> 00:01:27,020 These insights, in my view, change my life, and they'll change how you view money, how 18 00:01:27,020 --> 00:01:31,000 you will want to do business in the future, and just generally the idea of what freedom 19 00:01:31,000 --> 00:01:31,500 is. 20 00:01:32,660 --> 00:01:35,700 So, if this sparks your curiosity, hit subscribe. 21 00:01:35,980 --> 00:01:37,160 I'd really appreciate that. 22 00:01:37,720 --> 00:01:39,480 If you're on Fountain, give us a boost. 23 00:01:39,840 --> 00:01:41,600 Head on to Noster, throw some zaps. 24 00:01:42,140 --> 00:01:42,740 And why care? 25 00:01:42,920 --> 00:01:48,000 Well, I'm a huge fan of Austrian economics, and it's something that wasn't clear to me, 26 00:01:48,000 --> 00:01:53,500 even though I've spent a vast portion of my adult life studying how to make money. 27 00:01:53,960 --> 00:01:55,020 I've thought about this before. 28 00:01:55,120 --> 00:01:57,180 I'm someone who is highly coached in how to make money, 29 00:01:57,260 --> 00:01:59,780 but never asked the question, what is money? 30 00:02:00,760 --> 00:02:03,100 Now, perhaps there's a nefarious angle to this. 31 00:02:03,340 --> 00:02:04,300 I'll touch on it later. 32 00:02:04,580 --> 00:02:07,460 But this is a form of economics that actually helps. 33 00:02:07,980 --> 00:02:11,320 And when I started researching this, I'm like, oh my God, that makes sense. 34 00:02:11,420 --> 00:02:14,660 And I've sat through hours of economics classes. 35 00:02:15,240 --> 00:02:15,500 Okay. 36 00:02:15,940 --> 00:02:17,060 Now, I'm not an academic. 37 00:02:17,060 --> 00:02:24,140 in fact I'll never be one but this lens on the world and this way of thinking transformed my life 38 00:02:24,140 --> 00:02:30,440 and it will for you too so keep listening and let me know what you think so reach out throw me a dm 39 00:02:30,440 --> 00:02:36,260 email me hi at jakewoodhouse.io what is the biggest aha moment of you today from this episode 40 00:02:36,260 --> 00:02:43,300 and equally and finally if you know someone who you think is clueless about money send them this 41 00:02:43,300 --> 00:02:50,540 episode. So what is the history of the Austrian School of Economics? I'm going to run through a 42 00:02:50,540 --> 00:03:01,640 timeline and teach you about where it came from and why. So late 1800s, the Austrian School emerged 43 00:03:01,640 --> 00:03:08,580 unsurprisingly in Austria, in Vienna, and it was a rebellion against the rigid, math-heavy economics 44 00:03:08,580 --> 00:03:16,520 of the time. And it focuses instead on human behavior and individual choices. There's a bunch 45 00:03:16,520 --> 00:03:22,300 of key thinkers that really built the school of economics. And I'm going to run through who they 46 00:03:22,300 --> 00:03:28,980 are now. It's in my view, it's a real underdog story. And it's interesting because why is it not 47 00:03:28,980 --> 00:03:33,960 taught in university? Like everything that was thrown at me as an undergraduate doing a business 48 00:03:33,960 --> 00:03:40,440 school degree was Keynesian philosophy. Central banks, printing money, controlling interest rates, 49 00:03:41,000 --> 00:03:46,600 stimulating demand, improving disposable income. It was this very convenient set of different 50 00:03:47,320 --> 00:03:54,280 tools and levers that could be used to create a happy medium of 2% inflation and a well-employed 51 00:03:54,280 --> 00:03:59,240 economy. And I just, I gobbled this stuff down. I regurgitated it in a bunch of exams and I got 52 00:03:59,240 --> 00:04:03,800 the grade I needed to then get to the next stage of life, which was working as a broker. 53 00:04:03,960 --> 00:04:08,180 But there was this whole area of economics that I never even heard about. 54 00:04:08,940 --> 00:04:10,360 That's the Austrian School of Economics. 55 00:04:10,460 --> 00:04:11,220 So when did it start? 56 00:04:11,460 --> 00:04:12,680 There was a guy called Karl Menger. 57 00:04:13,320 --> 00:04:19,300 So in 1871, he started philosophizing about these different ways of looking at the world. 58 00:04:19,380 --> 00:04:21,300 He publishes a book called Principles of Economics. 59 00:04:21,920 --> 00:04:24,440 And he introduced the idea of subjective value. 60 00:04:25,160 --> 00:04:26,880 Now, I'll get into more detail what that means later. 61 00:04:27,000 --> 00:04:30,960 But he is considered the father of the Austrian School of Economics. 62 00:04:30,960 --> 00:04:39,520 And ultimately what he wants to do is he wants to shift the focus of economics away from labor and cost to personal preferences driving prices. 63 00:04:40,100 --> 00:04:42,740 Now, I've gone and read his book, The Origins of Money. 64 00:04:42,980 --> 00:04:44,780 It doesn't take long. 65 00:04:45,060 --> 00:04:46,440 It's a really short read. 66 00:04:46,960 --> 00:04:55,760 And for me, what hit home so much about it was like people have been thinking about money in a very deep and very accurate way for a long time. 67 00:04:55,840 --> 00:04:56,960 Like, what is money? 68 00:04:56,960 --> 00:05:01,040 and this concept of the double coincidence of wants. 69 00:05:01,700 --> 00:05:03,440 I don't want to jump into too much detail at this point. 70 00:05:03,580 --> 00:05:06,900 We'll get onto it later in terms of some of the key driving concepts 71 00:05:06,900 --> 00:05:08,300 of what the Austrian school is. 72 00:05:08,860 --> 00:05:13,640 So from the 1880s through the 1890s, von Baumbarbock, 73 00:05:14,080 --> 00:05:16,180 I've said that name incorrectly, I'm sure, 74 00:05:16,260 --> 00:05:19,680 but he was an Austrian finance minister 75 00:05:19,680 --> 00:05:22,020 and a disciple of Karl Menger's thoughts. 76 00:05:22,560 --> 00:05:23,600 And he builds out on this, 77 00:05:23,700 --> 00:05:26,320 and he really looks into the idea of capital interest 78 00:05:26,320 --> 00:05:30,160 and time preference, these three key areas of economics. 79 00:05:30,660 --> 00:05:32,880 And his book was called Capital and Interest. 80 00:05:33,480 --> 00:05:37,120 And he showed why saving for the future actually creates wealth. 81 00:05:38,220 --> 00:05:41,720 And from the early 1900s, the 1910s, the 1940s, 82 00:05:42,240 --> 00:05:45,800 the Austrian school was driven by a guy called Ludwig von Meissens. 83 00:05:46,240 --> 00:05:51,720 He escaped from Nazi Europe, and he wrote a book called Human Action in 1949. 84 00:05:52,340 --> 00:05:54,200 Now, this is an absolute beast of a book. 85 00:05:54,200 --> 00:05:55,300 It's the kind of thing you buy. 86 00:05:55,460 --> 00:05:56,220 It's this wide. 87 00:05:56,320 --> 00:06:00,340 I haven't yet read it, and it's on the to read list and has been for a number of years. 88 00:06:00,960 --> 00:06:02,540 So I will get around to that, I'm sure. 89 00:06:02,660 --> 00:06:11,900 But through that beast of a book, he really emphasizes this idea of purposeful human choices 90 00:06:11,900 --> 00:06:17,300 as an improvement or a superior way of looking at the economy over central planning. 91 00:06:17,780 --> 00:06:22,280 And he predicts the failure of socialism and explains it very, very well. 92 00:06:22,640 --> 00:06:25,020 One of his books that I have read is called Economic Policy. 93 00:06:25,020 --> 00:06:26,460 It was published in 1959. 94 00:06:26,940 --> 00:06:27,420 It's brilliant. 95 00:06:27,960 --> 00:06:32,980 You just read this stuff and he's just absolutely just churning through daily life, 96 00:06:33,360 --> 00:06:34,880 but synthesizing in such an accurate way. 97 00:06:34,940 --> 00:06:36,920 You're like, oh my God, this actually makes sense. 98 00:06:37,580 --> 00:06:40,200 Having, as I mentioned before, been in economics class, 99 00:06:40,260 --> 00:06:43,060 you're like, what are we even talking about here? 100 00:06:43,280 --> 00:06:46,040 This doesn't make much sense, but it didn't matter 101 00:06:46,040 --> 00:06:49,140 because it's actually just regurgitating an exam and then it'll be fine. 102 00:06:49,340 --> 00:06:50,560 How stupid that is. 103 00:06:51,860 --> 00:06:54,840 1930s through to 1970s, there was a guy called Friedrich Hayek. 104 00:06:55,020 --> 00:06:58,260 who really starts to globalize some of these ideas. 105 00:06:58,500 --> 00:07:01,280 He actually won a Nobel Prize in 1974. 106 00:07:01,280 --> 00:07:05,200 He wrote a book most famously called The Road to Serfdom in 1944. 107 00:07:06,200 --> 00:07:09,020 And his major warnings were against government overreach. 108 00:07:09,600 --> 00:07:12,540 He coined the concept of spontaneous order, 109 00:07:13,020 --> 00:07:17,020 which is in relation to how markets self-organize without bosses. 110 00:07:18,320 --> 00:07:22,280 Moving through to the 1960s to 1990s, there's a guy called Murray Rothbard. 111 00:07:22,280 --> 00:07:27,920 Rothbard. And he modernizes, slash also, in a sense, radicalizes the Austrian School of Economics. 112 00:07:28,440 --> 00:07:34,980 He wrote Man, Economy and State in 1962. He wrote another book called Anatomy of the State in 1974, 113 00:07:34,980 --> 00:07:40,560 which I've also read. It's not that long a read. You know, you can, I guess this is part of the 114 00:07:40,560 --> 00:07:46,520 interesting thing with research is what crops up, when, why. Okay, that's interesting. What was that 115 00:07:46,520 --> 00:07:49,880 guy reading? Oh, and then you can go and find their reading this and go and read what they were 116 00:07:49,880 --> 00:07:55,160 reading, right? And you down the rabbit hole you go. I will, of course, put in the show notes, 117 00:07:55,300 --> 00:07:59,340 the resources that I touch on today, because there's a lot of them, right? And the concept 118 00:07:59,340 --> 00:08:03,780 of this episode is really just a very, very lightly touch on the most important people, 119 00:08:04,220 --> 00:08:10,180 why it even exists, and the main insights that the Austrian school delivers. So, 120 00:08:10,800 --> 00:08:14,900 Murray Rothbard, just to finish off with him, he really applies the ideas of the Austrian school 121 00:08:14,900 --> 00:08:21,380 of economics to libertarianism. And he critiques fiat money and very strongly explains why fiat's 122 00:08:21,380 --> 00:08:27,880 a problem and advocates for pure free markets. Now, to bring it to today, there is an amazing 123 00:08:27,880 --> 00:08:33,040 thinker called Hans Herman Hopper. And there's also the Institute, the Mises Institute, which 124 00:08:33,040 --> 00:08:39,900 keeps this tradition alive. There are other players that I'm a fan of myself that have been 125 00:08:39,900 --> 00:08:44,620 important to me specifically through the Bitcoin space. So Seyfriedina Moose, the author of the 126 00:08:44,620 --> 00:08:48,580 Bitcoin Standard, a legendary book in the Bitcoin space, but also read his other books, 127 00:08:48,760 --> 00:08:52,780 The Fiat Standard and The Principles of Economics. I've heard him talk about before. That was the 128 00:08:52,780 --> 00:08:58,380 economics book he wished he'd read. And it's brilliant. And it is absolutely an Austrian 129 00:08:58,380 --> 00:09:03,480 School of Economics 101 beginner book. And I would highly recommend that. Shout out to Knut Svanholm, 130 00:09:03,700 --> 00:09:08,720 who wrote a book called Praxeology, The Invisible Hand That Feeds You. Knut's great because he really 131 00:09:08,720 --> 00:09:14,440 brings into daily real life. This is how it affects him and why it works. 132 00:09:14,440 --> 00:09:31,866 Larry Lippard author of a recent book called The Big Print he been studying the Austrian School for a long time I read a great book shout out to Nathan Smith who recommended this for me The Dow of Capital by Mark Spitznagel how you can include Austrian school concept into the idea of managing investment 133 00:09:31,866 --> 00:09:37,386 funds. Not so obvious, but also brilliant book, Bitcoin is Venice by Alan Farrington 134 00:09:37,386 --> 00:09:41,706 and his co-author, I forget his name right now, Sesha Myers, I think. 135 00:09:41,706 --> 00:09:47,606 a lot of what they're talking about in that is the genuine fostering of capital and that's what 136 00:09:47,606 --> 00:09:55,666 the austrian school uh iterates on and and vocalizes so well aussie friend konza he's been 137 00:09:55,666 --> 00:10:01,166 down the bitcoin rabbit hole but before that he's been down the the austrian school of economics 138 00:10:01,166 --> 00:10:05,866 even before coming to bitcoin so shout out to konza and some of his some of his stuff online's 139 00:10:05,866 --> 00:10:11,626 classic i've heard him described as the kind of the austrian attack dog you can like go you know 140 00:10:11,626 --> 00:10:15,806 tag him Konza red flag and he'll explain to whatever's going on how they're not thinking 141 00:10:15,806 --> 00:10:21,046 correctly about how markets work. Finally yes shout out to Robert Breedlove. I've learned so much from 142 00:10:21,046 --> 00:10:26,826 Robert and his podcast and he is someone who's gone and read things like human action and is able to 143 00:10:26,826 --> 00:10:33,186 then at least from my perspective when I listen to some of the things he talks through he reiterates 144 00:10:33,186 --> 00:10:38,786 what he's learned so eloquently and that's just an excellent way of learning. But long story short 145 00:10:38,786 --> 00:10:44,986 the Austrian School of Economics has had some amazing people carry the baton as a form of 146 00:10:44,986 --> 00:10:51,606 thinking through thick and thin over the last 150 years. And you're like, okay, well, this is a whole 147 00:10:51,606 --> 00:10:56,386 area of economics that I literally didn't even get told about until it became relevant to me. 148 00:10:56,866 --> 00:11:01,786 It's hugely influential in, of course, the Bitcoin space, but just generally tech entrepreneurship 149 00:11:01,786 --> 00:11:08,086 and anyone who's really worried about inflation. And one of the main reasons it's so different to 150 00:11:08,086 --> 00:11:15,126 Keynesianism is it doesn't vouch for increased government control and it doesn't push for 151 00:11:15,126 --> 00:11:21,966 government spending as a tool for happiness or a tool for the benefit of everyone. 152 00:11:22,626 --> 00:11:27,046 And so the Keynesian philosophies that the monetary scientists and the political scientists, 153 00:11:27,286 --> 00:11:31,066 they really kind of dovetail each other in terms of like, yeah, what we're going to do 154 00:11:31,066 --> 00:11:33,546 is we're going to print all this money and that's going to help you write policies. 155 00:11:33,546 --> 00:11:34,486 It's going to help everyone. 156 00:11:35,326 --> 00:11:37,086 But look at the mess we're in today, right? 157 00:11:37,086 --> 00:11:41,486 all-time highs in gold, all-time highs in Bitcoin, all-time highs in the stock market, 158 00:11:41,826 --> 00:11:47,386 at the same time as the inequality of wealth is bigger than ever before. People's real income 159 00:11:47,386 --> 00:11:53,006 is going backwards. What the fuck happened in 1971? Excellent website. Go and look at it. 160 00:11:53,006 --> 00:11:58,166 But it clearly shows you how the price of everything has been moving up. But the real 161 00:11:58,166 --> 00:12:03,106 inflation rate has been so high that it was a better standard of living 50 years ago than it 162 00:12:03,106 --> 00:12:08,446 is today. And ask yourself simple questions like, why is it that it's getting more and more difficult 163 00:12:08,446 --> 00:12:13,446 to afford to go on holiday every year? Why is it that every couple that you know in their 30s, 164 00:12:13,446 --> 00:12:18,666 both the husband and the wife are working? Why is it that no one can afford to get onto the 165 00:12:18,666 --> 00:12:24,306 property ladder? Why is it that the average income, instead of it being two and a half times your 166 00:12:24,306 --> 00:12:30,286 income to purchase of real estate to move into as a young family, it's now seven, eight, nine, 167 00:12:30,286 --> 00:12:37,826 10, 12 times the average salary, right? This is the problem with inflationary monetary policy 168 00:12:37,826 --> 00:12:42,846 driven by the Keynesian school. And John Maynard Keynes, not that this episode is about that, but 169 00:12:42,846 --> 00:12:47,026 he's a fruity fella, and I can perhaps do an episode in the future about who he was and 170 00:12:47,026 --> 00:12:53,086 why he was important. But let's get into it. So what are the core insights of the Austrian school 171 00:12:53,086 --> 00:12:57,526 now that we've covered a bit of the history and who the major players are? I'll try and keep this 172 00:12:57,526 --> 00:13:01,926 as simple as possible. And thankfully, a lot of the content is very simple. So it's not hard to 173 00:13:01,926 --> 00:13:07,686 understand. But these are the kind of concepts that I wish I'd been introduced to at university, 174 00:13:07,686 --> 00:13:11,926 or even earlier as a teenager, right, sitting in business studies classes, like trying to 175 00:13:11,926 --> 00:13:15,706 understand, like, how does the economy work? Well, how can I fit into the economy? What's an 176 00:13:15,706 --> 00:13:20,786 opportunity? What's a dead end? And some of that's just trial and error. But equally, had I had this 177 00:13:20,786 --> 00:13:25,066 lens on the world, I would have made superior decisions back then that would have saved me time. 178 00:13:25,066 --> 00:13:29,906 and I encourage you if any of this is interesting then just hit pause wherever you might be listening 179 00:13:29,906 --> 00:13:34,586 to me jot it down like how does this apply to your life so the first area I want to mention 180 00:13:34,586 --> 00:13:40,806 is time preference and you can have something called high time preference and low time preference 181 00:13:40,806 --> 00:13:47,626 and really what it is is why tomorrow matters today and basically the value that we put on 182 00:13:47,626 --> 00:13:52,386 something in the present is different to what we put on it in the future so if you were to give me 183 00:13:52,386 --> 00:13:59,726 $100 now versus $100 in a year, I value those two things differently. And so a low time preference 184 00:13:59,726 --> 00:14:07,146 person is patiently saving, builds capital and wealth. A high time preference person wants to 185 00:14:07,146 --> 00:14:13,906 spend now and consume in the moment. And that long term leads to poverty. Now, why does this matter? 186 00:14:13,906 --> 00:14:19,246 Well, it explains where an interest rate comes from. And it's essentially the compensation for 187 00:14:19,246 --> 00:14:26,546 waiting. So if you were to get $100 today or $100 in the future, what is the differential in price 188 00:14:26,546 --> 00:14:32,086 between those two moments that you receive the capital? And the differential is an interest rate. 189 00:14:33,366 --> 00:14:38,546 And so when you doctor or manipulate interest rates via central banking, you know, there's a 190 00:14:38,546 --> 00:14:43,066 handful of men that sit down and go, oh, do you know what? I think the economy is a bit overcooked 191 00:14:43,066 --> 00:14:49,006 at the moment. We're going to take off the interest rate by 0.25%. Oh, no, we're going to take it off 192 00:14:49,006 --> 00:14:53,866 by half a percent. We're going to put it up. But they're manually changing the cost of capital. 193 00:14:54,646 --> 00:15:01,206 And when you massage the interest rate to become too cheap, this increases malinvestments and 194 00:15:01,206 --> 00:15:07,166 actually, through the Austrian lens, causes the boom bust recessionary process that we go through. 195 00:15:08,306 --> 00:15:11,346 Let's just think about this in the real world. What does this mean? Going back to this idea of 196 00:15:11,346 --> 00:15:14,786 me as a teenager and I'm thinking about saving for something. I'm like, OK, I'm going to save up 197 00:15:14,786 --> 00:15:19,866 for this big goal. But then an impulse buyer comes along and I'm like, oh, I'm going to buy that now. 198 00:15:20,126 --> 00:15:25,806 And I never get to the bigger goal. And it's that concept that it teaches delayed gratification. 199 00:15:26,486 --> 00:15:30,546 Now, one of the problems with an inflationary monetary policy is that $100 that you receive 200 00:15:30,546 --> 00:15:37,346 today, where you know that what that buys today is a pair of trainers. If you keep that $100 and 201 00:15:37,346 --> 00:15:42,686 you save it for 12 months, well, it's not going to buy you a pair of trainers because the money 202 00:15:42,686 --> 00:15:49,986 itself is eroding in power, purchasing power. So, and we'll come on to that later, governments 203 00:15:49,986 --> 00:15:57,846 distort the price signal with easy credit. And it creates bubbles, like the 2008 housing 204 00:15:57,846 --> 00:16:04,786 crisis, the housing crash, the overvalued mortgage market, and the global financial 205 00:16:04,786 --> 00:16:10,586 crisis it was called at the time. So ask yourself, how might this affect your daily choices? 206 00:16:10,586 --> 00:16:17,346 do you choose to eat that cake right now or not do you choose to walk or do you choose to take a taxi 207 00:16:17,346 --> 00:16:23,866 do you choose to spend today or save for tomorrow these are all time preference concepts and what I 208 00:16:23,866 --> 00:16:29,906 have learned is that and we'll come on to what sound money is now the ability to save with sound 209 00:16:29,906 --> 00:16:36,626 money helps lower my time preference such that I have a better understanding of my future because 210 00:16:36,626 --> 00:16:41,086 I can rely on a pot of capital to be there for me as and when I need it. 211 00:16:42,046 --> 00:16:45,646 And so that brings me on nicely to the idea, which is the second main concept of Austrian 212 00:16:45,646 --> 00:16:47,686 School of Economics, sound money. 213 00:16:48,586 --> 00:16:51,386 And another way of thinking about it is an anchor against chaos. 214 00:16:52,246 --> 00:16:53,746 So what is the core concept here? 215 00:16:54,126 --> 00:16:55,666 Money should be sound. 216 00:16:56,226 --> 00:16:59,606 Now, traditionally, the Austrian School would be gold bugs. 217 00:16:59,606 --> 00:17:06,026 They'd be talking about gold as a store of value, as a way to... 218 00:17:06,626 --> 00:17:10,586 issue credit against if you needed to, but it has a limited supply. 219 00:17:10,886 --> 00:17:13,346 So you can rely on it as a store of value. 220 00:17:14,286 --> 00:17:18,446 Sound money is not fiat by decree. 221 00:17:18,766 --> 00:17:21,986 The paper money that governments had today that they can inflate at will. 222 00:17:22,746 --> 00:17:26,046 Now, another way of thinking about this is hard money versus soft. 223 00:17:26,626 --> 00:17:29,926 And hard money and sound money are the same thing. 224 00:17:31,886 --> 00:17:35,186 Now, from the Austrian perspective, inflation is theft. 225 00:17:35,186 --> 00:17:36,806 what? 226 00:17:37,246 --> 00:17:37,986 imagine that 227 00:17:37,986 --> 00:17:38,646 theft 228 00:17:38,646 --> 00:17:39,906 all of these people 229 00:17:39,906 --> 00:17:40,626 the experts 230 00:17:40,626 --> 00:17:41,346 they get up and they say 231 00:17:41,346 --> 00:17:42,466 oh we've done so well 232 00:17:42,466 --> 00:17:44,086 we've kept the CPI 233 00:17:44,086 --> 00:17:44,446 within 234 00:17:44,446 --> 00:17:44,946 you know 235 00:17:44,946 --> 00:17:45,726 three and a half percent 236 00:17:45,726 --> 00:17:46,306 this year 237 00:17:46,306 --> 00:17:47,626 or from an Austrian perspective 238 00:17:47,626 --> 00:17:48,046 that means 239 00:17:48,046 --> 00:17:49,546 everyone's agreeing 240 00:17:49,546 --> 00:17:50,906 to having three and a half percent 241 00:17:50,906 --> 00:17:51,646 of their stuff 242 00:17:51,646 --> 00:17:52,166 stolen 243 00:17:52,166 --> 00:17:53,206 right 244 00:17:53,206 --> 00:17:54,806 so inflation is theft 245 00:17:54,806 --> 00:17:56,086 it devalues savings 246 00:17:56,086 --> 00:17:57,726 punishes savers 247 00:17:57,726 --> 00:17:59,806 and benefits debtors 248 00:17:59,806 --> 00:18:01,406 now who are the biggest debtors 249 00:18:01,406 --> 00:18:02,046 in these economies 250 00:18:02,046 --> 00:18:03,486 the credit based system 251 00:18:03,486 --> 00:18:04,086 that's grown up 252 00:18:04,086 --> 00:18:05,046 over the last 50 years 253 00:18:05,046 --> 00:18:12,126 governments. And what a surprise. They don't allow, no, that's not the right word. They choose 254 00:18:12,126 --> 00:18:18,226 to have Keynesian economic theory in their university degrees that they've fund the academic 255 00:18:18,226 --> 00:18:24,786 world rather than having the Austrian school. What a surprise that is. So sound money, it forces 256 00:18:24,786 --> 00:18:31,666 fiscal discipline. So what's an example? Imagine your piggy bank is shrinking every single year in 257 00:18:31,666 --> 00:18:48,752 purchasing power due to the money printing Well if your piggy bank was gold or Bitcoin as sour money well there are alternatives that preserve your purchasing power Now it very very core insight as well It this idea of the business cycle 258 00:18:48,911 --> 00:18:54,951 the boom-bust periods, the Great Depression or the roaring 20s or the global financial crisis 259 00:18:54,951 --> 00:18:59,091 or whatever it is that comes up. The Austrian school is very clear about this. It's like 260 00:18:59,091 --> 00:19:06,992 cheap fiat credit create booms. It pushes the economy artificially up, which then bursts into 261 00:19:06,992 --> 00:19:13,591 a massive downturn and a bust. Why? Why would you purposely do that to an economy? Wouldn't it be 262 00:19:13,591 --> 00:19:18,792 much easier if we had a sound money upon which to do all the transactions that we want to? 263 00:19:20,091 --> 00:19:24,951 So how has inflation hit your wallet? When you think about that, how much more is your beef this 264 00:19:24,951 --> 00:19:29,431 year? How much higher is the house you want to buy? Is the car you want to get at the same price 265 00:19:29,431 --> 00:19:35,552 as the previous year? And think through, why would, if you had an Austrian School of Economics 266 00:19:35,552 --> 00:19:41,792 background, why would you love Bitcoin? Have a think about that. So core value number three 267 00:19:41,792 --> 00:19:49,451 to the Austrian School of Economics, value is subjective. What? What do you mean? So no one size 268 00:19:49,451 --> 00:19:56,391 fits all prices. Okay. Well, so this is Carl Menger's revolution, essentially. It's like value 269 00:19:56,391 --> 00:20:04,012 isn't in the labor or the costs, but it's in individual minds. The classic example of this 270 00:20:04,012 --> 00:20:10,711 is a bottle of water is worthless in a lake, but priceless in a desert. So what's the implication? 271 00:20:10,711 --> 00:20:18,532 Well, markets set prices via supply and demand from personal valuations. There's no fair price 272 00:20:18,532 --> 00:20:24,871 dictated by an expert. One of the things I wish I'd learned at school is instead of looking at 273 00:20:24,871 --> 00:20:31,072 like, oh, here's a supply and demand curve, we're going to hit equilibrium. No. Explain to me why 274 00:20:31,072 --> 00:20:35,992 the price is moving and how someone might choose to pay more for something than someone else would. 275 00:20:36,711 --> 00:20:39,371 So look at what happened with NFTs in recent times. 276 00:20:39,851 --> 00:20:41,951 Like complete misallocation of capital. 277 00:20:42,351 --> 00:20:45,731 People are highly speculative in hyperinflationary environments. 278 00:20:46,312 --> 00:20:50,512 But at the end of the day, someone somewhere was willing to pay for something because they valued it. 279 00:20:50,911 --> 00:20:55,012 Now, they may or may not have been right, but it's still that's why people chose to do it. 280 00:20:55,012 --> 00:20:58,111 It was their individual choice. And that's what sets the price. 281 00:20:58,111 --> 00:21:06,211 so you know you'll have a favorite gadget think about it why do you value that one more than 282 00:21:06,211 --> 00:21:14,851 others or equally like this concept of um you know exploitation in a trade it's like well oh yeah 283 00:21:14,851 --> 00:21:18,911 we've got to step in and regulate this market because we don't want so-and-so being exploited 284 00:21:18,911 --> 00:21:24,691 so well no that person out of their free will is choosing to either sell their time 285 00:21:24,691 --> 00:21:30,671 to do something or they're choosing to buy a product it's not an exploitation that's going on 286 00:21:30,671 --> 00:21:35,171 that's like some kind of nefarious thing that has to be controlled by someone you know our centrally 287 00:21:35,171 --> 00:21:40,351 planned regulation let's get involved like no no no let the free market figure itself out if people 288 00:21:40,351 --> 00:21:45,411 choose to sell their time for that figure then let them do it and there's this really interesting 289 00:21:45,411 --> 00:21:52,211 process of going through like why the minimum wage is actually net negative for people who are 290 00:21:52,211 --> 00:21:56,611 trying to work in those spaces and for business owners that operate companies that require 291 00:21:56,611 --> 00:21:59,171 characters to fulfill certain roles. 292 00:21:59,731 --> 00:22:03,371 And that's not what this episode is about, but take some inspiration from it. 293 00:22:03,772 --> 00:22:04,572 You know, why? 294 00:22:04,711 --> 00:22:08,532 Ask yourself, why is a minimum wage rule actually good? 295 00:22:09,151 --> 00:22:12,512 And through the Austrian lens, it really, it really puts it into question. 296 00:22:13,072 --> 00:22:17,131 So the other core area of Austrian economy, like we've touched on slightly before, so 297 00:22:17,131 --> 00:22:22,191 free market principles, spontaneous order and individualism. 298 00:22:22,931 --> 00:22:24,292 What's this kind of founded on? 299 00:22:24,371 --> 00:22:28,131 It's like, well, basically, the economy self-organizes via voluntary exchanges. 300 00:22:28,752 --> 00:22:30,391 There's no need for central planners. 301 00:22:31,371 --> 00:22:34,072 Now, Hayek described this as the knowledge problem. 302 00:22:34,471 --> 00:22:38,492 Like, no one knows everything, but they use the market to figure things out. 303 00:22:38,951 --> 00:22:41,752 So it's a methodological individualism. 304 00:22:42,231 --> 00:22:43,492 That's quite a statement, that, isn't it? 305 00:22:43,671 --> 00:22:48,871 But people study the economy through their individual actions, not aggregates like GDP. 306 00:22:49,772 --> 00:22:51,131 GDP makes no difference. 307 00:22:51,131 --> 00:22:52,211 It's like, who cares? 308 00:22:52,691 --> 00:22:53,532 The real question is that, 309 00:22:53,631 --> 00:22:55,631 why is everyone behaving the way that they are? 310 00:22:56,451 --> 00:22:58,312 Now, the Austrian School fosters innovation. 311 00:22:58,711 --> 00:23:00,072 It focuses on efficiency. 312 00:23:00,731 --> 00:23:03,012 And it quite clearly shows how price signals 313 00:23:03,012 --> 00:23:05,552 guide resources better than bureaucrats. 314 00:23:06,111 --> 00:23:08,151 A good example of this one that always gets me 315 00:23:08,151 --> 00:23:09,371 is think about mining. 316 00:23:10,131 --> 00:23:11,651 So, okay, right now, 317 00:23:12,032 --> 00:23:13,611 the iron ore price will be trading 318 00:23:13,611 --> 00:23:14,731 at whatever it's trading at. 319 00:23:15,231 --> 00:23:16,951 And there'll be certain areas of the world 320 00:23:16,951 --> 00:23:19,631 that you could remove iron ore from, 321 00:23:19,631 --> 00:23:21,931 but the iron ore price is not high enough. 322 00:23:22,671 --> 00:23:24,832 So when the iron ore price goes up, 323 00:23:24,891 --> 00:23:27,471 because supply somewhere has been squeezed, 324 00:23:27,611 --> 00:23:30,591 maybe there was a dam that flooded a particular port 325 00:23:30,591 --> 00:23:33,411 and the Brazilians suddenly can't sell any iron ore. 326 00:23:33,532 --> 00:23:37,691 So the price will go from $200 to $250 a ton of iron ore, 327 00:23:37,951 --> 00:23:40,851 at which point there's a certain section of mining opportunities 328 00:23:40,851 --> 00:23:41,671 that make sense. 329 00:23:42,052 --> 00:23:45,532 And the pricing signal of the increased commodity price 330 00:23:45,532 --> 00:23:48,211 reaches the primary means of production 331 00:23:48,211 --> 00:23:49,951 that goes out and finds more iron ore 332 00:23:49,951 --> 00:23:52,411 because it's now profitable to mine it at those levels. 333 00:23:53,012 --> 00:23:53,711 And guess what happens? 334 00:23:54,171 --> 00:23:56,111 It hits the market and slowly but surely, 335 00:23:56,471 --> 00:23:57,471 that price change, 336 00:23:57,911 --> 00:24:00,512 it actually rounds back to where the market 337 00:24:00,512 --> 00:24:02,931 fairly wants to trade because the supply increased. 338 00:24:03,812 --> 00:24:05,512 This is classic Austrian school thinking. 339 00:24:05,812 --> 00:24:07,351 You don't need someone to come in and say, 340 00:24:07,351 --> 00:24:09,772 oh, we've got to get the government 341 00:24:09,772 --> 00:24:11,631 to help people avoid price gouging, 342 00:24:11,731 --> 00:24:12,371 whatever they talk about. 343 00:24:12,532 --> 00:24:14,471 So as soon as you see government 344 00:24:14,471 --> 00:24:15,691 talking about price controls, 345 00:24:15,691 --> 00:24:18,691 big red flag from an Austrian school perspective. 346 00:24:19,012 --> 00:24:20,931 And to me, I've adopted some of these thinking. 347 00:24:21,072 --> 00:24:23,451 It doesn't make sense to regulate prices. 348 00:24:23,691 --> 00:24:25,611 It completely destroys the market. 349 00:24:26,012 --> 00:24:28,191 If it destroys the market, no one can tell what's going on. 350 00:24:28,451 --> 00:24:31,332 And therefore, what people actually want doesn't get supplied. 351 00:24:32,552 --> 00:24:35,052 I think you could probably summarize this. 352 00:24:35,131 --> 00:24:35,731 It's a great point. 353 00:24:35,812 --> 00:24:36,931 It's basically free market. 354 00:24:36,931 --> 00:24:40,611 The free market is a thing of absolute magic. 355 00:24:41,211 --> 00:24:42,711 And it needs to be let to do its thing. 356 00:24:42,711 --> 00:24:46,272 and if it is, it's the most efficient way of running an economy. 357 00:24:46,832 --> 00:24:49,252 That doesn't mean, however, that you can't study it, right? 358 00:24:49,332 --> 00:24:52,332 So price signals guide resources better than bureaucrats. 359 00:24:53,272 --> 00:24:56,671 Now, this is like, you know, okay, you go to school 360 00:24:56,671 --> 00:24:58,151 and I'm thinking back to me as a teenager. 361 00:24:58,252 --> 00:24:59,812 It's like, all right, you've got to do whatever it was, 362 00:24:59,871 --> 00:25:02,572 11 subjects or nine subjects for your GCSEs 363 00:25:02,572 --> 00:25:04,312 as a 16-year-old in the UK at the time. 364 00:25:05,072 --> 00:25:07,471 And it's like, okay, well, you're going to do these 10 classes 365 00:25:07,471 --> 00:25:08,191 and you don't have a choice. 366 00:25:08,631 --> 00:25:10,631 Like you're being forced into the curriculum versus, 367 00:25:10,631 --> 00:25:13,512 oh, actually, I'm going to choose the 10 subjects that I'm going to do. 368 00:25:14,151 --> 00:25:18,131 So a free market lets talents flourish without coercion. 369 00:25:19,391 --> 00:25:22,591 Now, an obvious take that comes to mind is 370 00:25:22,591 --> 00:25:27,792 the truly centrally planned economies that I've ever seen 371 00:25:27,792 --> 00:25:32,992 or have been attempted, like the USSR was the major one, 372 00:25:33,351 --> 00:25:34,572 it completely failed. 373 00:25:35,371 --> 00:25:38,231 It absolutely shockingly failed people. 374 00:25:38,231 --> 00:25:48,911 I can't remember what the statistics are. Sorry, forgive me. I'll have to look this up. But a lot of people starve due to the inability to supply food because of centrally planned economies. 375 00:25:49,451 --> 00:25:57,832 How horrendous is that? When you consider how much abundance is out there and the ability for farmers to go and create and supply food to the marketplace. 376 00:25:58,371 --> 00:26:06,211 And when a central planner thinks they're smarter than nature, kills people because they're not. But that's crazy, right? 377 00:26:06,211 --> 00:26:32,191 Another area is then something like regulations. So just recently here in Australia, there's crypto regulations coming in. And what's it going to do? Well, it's probably going to benefit the incumbent banks. It's probably going to benefit people that are pumping their own shitcoin. But for people that are offering Bitcoin only services, it makes business more expensive to do. And what if that kills a startup business? 378 00:26:32,191 --> 00:26:39,012 oh well done you've just regulated out of the market a perfectly good business that is helping 379 00:26:39,012 --> 00:26:44,951 people save and sell money like it just backwards oh but don't worry the government's got your back 380 00:26:44,951 --> 00:26:53,532 now some of the other kind of major insights that i really like talking about we and we have covered 381 00:26:53,532 --> 00:27:01,032 slightly already but the the idea of a business cycle like why is it that roughly every decade 382 00:27:01,032 --> 00:27:06,431 we have a recession and it's the recession to kill all recessions. 383 00:27:06,431 --> 00:27:09,532 And then we have a boom to kill all booms. 384 00:27:10,451 --> 00:27:13,451 And when you look at that through the Austrian School of Economics, 385 00:27:13,572 --> 00:27:16,211 and that's why in my previous episode we were talking a lot about liquidity, 386 00:27:16,651 --> 00:27:18,111 it's all about credit expansion. 387 00:27:18,951 --> 00:27:23,752 And the credit-based economy that we live in since 1971 388 00:27:23,752 --> 00:27:29,332 is constantly trying to expand so that it can pay back the interest 389 00:27:29,332 --> 00:27:30,292 that it's already created. 390 00:27:30,292 --> 00:27:36,272 And it makes a handful of extraordinarily powerful fiat bankers a lot of money. 391 00:27:36,492 --> 00:27:38,752 But is it actually good for the everyday person? 392 00:27:39,371 --> 00:27:42,411 And it makes it incredibly difficult to plan. 393 00:27:42,852 --> 00:27:44,431 Oh, next year we're going into a recession. 394 00:27:44,572 --> 00:27:45,292 What does that mean? 395 00:27:45,992 --> 00:27:48,171 Are people going to have disposable income to buy my products? 396 00:27:48,252 --> 00:27:49,332 What's the price going to be? 397 00:27:49,592 --> 00:27:54,092 If $1 buys this today, but I can't tell you how much $1 is going to buy in a year's time 398 00:27:54,092 --> 00:28:10,977 because the purchasing power is going to be eroded due to an unknown inflation target it makes it just incredibly difficult to do any business It actually quite extraordinary how much innovation and how much business is being done in spite of how bad the business cycle is due 399 00:28:10,977 --> 00:28:18,317 to credit expansion. Conveniently, the Keynesians, of course, are still very much driving the 400 00:28:18,317 --> 00:28:25,997 discussion in central bank circles. The chancellor of different countries is often very well schooled 401 00:28:25,997 --> 00:28:27,097 in that area of thought. 402 00:28:27,497 --> 00:28:28,517 And it's like, yeah, convenience. 403 00:28:28,737 --> 00:28:30,197 Basically, guys, we're going to make everything better 404 00:28:30,197 --> 00:28:32,497 by printing more money and doing more regulation. 405 00:28:33,137 --> 00:28:34,537 But is that actually right? 406 00:28:36,117 --> 00:28:39,257 So my series, I touched on the socialist calculation problem, 407 00:28:39,657 --> 00:28:41,677 that without prices from markets, 408 00:28:42,137 --> 00:28:43,917 planners can't allocate resources efficiently. 409 00:28:44,597 --> 00:28:47,677 And so ultimately, socialism is just doomed to waste. 410 00:28:48,177 --> 00:28:53,337 Now, that's highly triggering for people that lean to the left. 411 00:28:53,497 --> 00:28:55,797 But basically, you can't trade. 412 00:28:55,997 --> 00:28:59,357 Like if you're not allowed to have a price on something, how do I know? 413 00:28:59,537 --> 00:29:00,617 How do I know anything? 414 00:29:01,277 --> 00:29:04,937 And what I do like about the Austrian school is, of course, the emphasis on the entrepreneur. 415 00:29:05,877 --> 00:29:10,917 And it's like, OK, right now you're in a position to see an opportunity. 416 00:29:11,237 --> 00:29:12,717 And what do you do about that? 417 00:29:12,917 --> 00:29:15,217 You go out and and you take a risk. 418 00:29:15,557 --> 00:29:15,997 Right. 419 00:29:16,037 --> 00:29:24,077 But the point is, is the market gives the individual the opportunity to supply something to people that need it. 420 00:29:24,077 --> 00:29:26,177 And that's what drives progress. 421 00:29:27,477 --> 00:29:32,897 So I mentioned Knut before in his book, Praxeology, but Mises talks about this a lot. 422 00:29:33,777 --> 00:29:39,617 It's a deductive form of logic for economics, and it's based on human action axioms. 423 00:29:40,597 --> 00:29:43,397 Again, this is an episode for 101 beginner type stuff. 424 00:29:43,597 --> 00:29:46,877 So you might hear these phrases and be like, what the hell is Jake talking about? 425 00:29:47,297 --> 00:29:48,017 That's the point. 426 00:29:48,517 --> 00:29:50,457 You know, dive further into these subjects. 427 00:29:51,337 --> 00:29:56,057 You know, as a beginner, I wish I had learned some of these things many, many years ago, 428 00:29:56,057 --> 00:30:01,197 because it would have saved me so much time and I wouldn't have made lots of bad decisions. 429 00:30:01,657 --> 00:30:08,977 But what I find with the Austrian School of Economics that I like so much is it really just helps you look at the world in a way that starts to make sense. 430 00:30:08,977 --> 00:30:19,877 It's like, ah, OK, so people make decisions for their own self-interest and their value for something they might buy from you is going to change based on their circumstances. 431 00:30:20,457 --> 00:30:34,177 Cool. And so the net benefit or disbenefit of central planning can be very, very well articulated as being extremely net negative and that the free market is a superior way of organizing ourselves. 432 00:30:34,677 --> 00:30:40,457 Basically, it's a case of get the fuck out of the way and let everyone do what they want and we'll organize ourselves. 433 00:30:41,057 --> 00:30:47,897 Now, that, of course, scares the hell out of any politician who's supposedly offering safety, quote unquote, to the masses, 434 00:30:48,257 --> 00:30:52,137 who want to be told that they're going to be looked after and we're going to save you and all this kind of stuff. 435 00:30:52,137 --> 00:30:54,897 It's like, no, no, no one's going to come and save you. 436 00:30:55,357 --> 00:31:00,577 You be productive, spot opportunities, follow them, and you'll get paid for it. 437 00:31:01,277 --> 00:31:03,057 And then life is better. 438 00:31:03,337 --> 00:31:04,237 It's like, oh, well, that actually works. 439 00:31:04,457 --> 00:31:05,597 How much more sense does that make? 440 00:31:05,597 --> 00:31:11,257 I thought it'd be cool just to pull out some quotes from some of these leading thinkers. 441 00:31:12,277 --> 00:31:13,237 A little bit of on my sees. 442 00:31:13,597 --> 00:31:16,317 Human action is purposeful behavior. 443 00:31:17,297 --> 00:31:17,437 Hmm. 444 00:31:18,097 --> 00:31:18,437 Okay. 445 00:31:18,857 --> 00:31:20,877 So basically, economics isn't numbers. 446 00:31:21,477 --> 00:31:24,377 It's actually understanding goal-driven choices. 447 00:31:25,237 --> 00:31:25,377 Hmm. 448 00:31:26,217 --> 00:31:27,177 Think about this. 449 00:31:27,277 --> 00:31:30,937 How does that flip, this concept of the rational actor? 450 00:31:30,937 --> 00:31:37,837 to me at least it's it's so fun because it's actually it's just it's a process of reasoning 451 00:31:37,837 --> 00:31:43,837 it's not a process of like let's try and use as many statistical models to prove this hypothesis 452 00:31:43,837 --> 00:31:49,837 to be true so no mate humans are completely inconsistent one minute they'll be happy the 453 00:31:49,837 --> 00:31:53,697 next they'll be angry they're going to make different economic decisions in those two different 454 00:31:53,697 --> 00:31:58,797 mindsets don't even try and guess what they're going to do from a kind of scientific perspective 455 00:31:59,557 --> 00:32:01,477 It's like, think about what they want, 456 00:32:01,817 --> 00:32:04,257 understand the incentive, and then you'll get there. 457 00:32:04,817 --> 00:32:05,377 I love that. 458 00:32:05,497 --> 00:32:07,857 Human action is purposeful behavior. 459 00:32:08,877 --> 00:32:09,837 So Friedrich Hayek, 460 00:32:10,477 --> 00:32:13,657 the curious task of economics is to demonstrate to men 461 00:32:13,657 --> 00:32:17,477 how little they really know about what they imagine they can design. 462 00:32:18,237 --> 00:32:19,337 How cool is that? 463 00:32:20,097 --> 00:32:22,077 Basically, warning against hubris. 464 00:32:23,517 --> 00:32:27,097 Who thinks that, oh yeah, we're going to organize this stimulus package 465 00:32:27,097 --> 00:32:28,957 and it's going to be perfect for everyone. 466 00:32:30,217 --> 00:32:31,017 That's bullshit. 467 00:32:31,357 --> 00:32:35,737 You have absolutely no idea what that's going to actually do 468 00:32:35,737 --> 00:32:38,157 to the real economic choices of people on the street. 469 00:32:38,717 --> 00:32:40,737 So don't even try and claim to say that you can. 470 00:32:41,957 --> 00:32:43,497 And my spin on that is basically, 471 00:32:43,797 --> 00:32:47,037 humility beats top-down control every single time. 472 00:32:48,117 --> 00:32:49,897 Quote number three, so Murray Rothbard. 473 00:32:50,377 --> 00:32:53,477 It is no crime to be ignorant of economics, 474 00:32:53,697 --> 00:32:56,057 which is, after all, a specialized discipline. 475 00:32:56,057 --> 00:33:01,777 but it is totally irresponsible to have a loud and vociferous opinion on economic subjects whilst 476 00:33:01,777 --> 00:33:08,457 remaining in this state of ignorance kind of amusing right it's essentially challenging the 477 00:33:08,457 --> 00:33:16,157 blind faith we have in politics and politicians the latest chancellor will be appointed his position 478 00:33:16,157 --> 00:33:23,577 or her position but what do they know oh don't worry guys trust the experts and almost always 479 00:33:23,577 --> 00:33:27,377 it leads to more money printing and more trust the experts. 480 00:33:28,357 --> 00:33:32,557 So where does that really ultimately help me reflect? 481 00:33:32,737 --> 00:33:35,317 What economic opinions do you hold? 482 00:33:36,357 --> 00:33:38,097 And perhaps it's time to question them. 483 00:33:38,917 --> 00:33:40,597 Now, quote number four, finally, Carl Menger, 484 00:33:41,457 --> 00:33:44,577 value does not exist outside the consciousness of man. 485 00:33:46,117 --> 00:33:46,477 Wow. 486 00:33:47,237 --> 00:33:48,677 It's quite powerful that, isn't it? 487 00:33:48,677 --> 00:33:52,617 It really ties back to this idea of subjectivity. 488 00:33:53,577 --> 00:34:17,597 Now, in my case, I'm investing my own money. It's like, where am I wrong? Where am I right? And how do I want to show up in the world every day? And what are the values that I hold and the ethics that I have and the self-image of the future me? How does this all blend together to make decisions? And how do I make superior decisions? 489 00:34:17,597 --> 00:34:22,277 and even time energetics and universal law. 490 00:34:22,457 --> 00:34:24,857 And so much of this all comes through 491 00:34:24,857 --> 00:34:29,677 because it's like a horse doesn't understand prices. 492 00:34:31,077 --> 00:34:32,277 I don't know why I even thought of a horse, 493 00:34:32,377 --> 00:34:34,297 but like other mammals, they don't get it. 494 00:34:34,657 --> 00:34:36,197 Other reptiles, they don't get it. 495 00:34:36,557 --> 00:34:37,797 Other plants, they don't get it. 496 00:34:37,797 --> 00:34:41,537 Like the mycelium world, mushrooms, they don't get it. 497 00:34:42,317 --> 00:34:45,397 Value does not exist outside the consciousness of man. 498 00:34:45,397 --> 00:34:50,937 And, you know, just really, it's time to seriously question things. 499 00:34:51,457 --> 00:34:56,537 Why is it that inequality is at an all-time high in terms of wealth gap? 500 00:34:56,677 --> 00:34:59,357 Why is it that the gold price is running like it is? 501 00:34:59,457 --> 00:35:01,597 Why is it that Bitcoin is bashing through all-time highs? 502 00:35:01,977 --> 00:35:04,137 Why is it that the stock market is at all-time highs? 503 00:35:04,257 --> 00:35:06,077 Why is it that they're cutting interest rates? 504 00:35:06,537 --> 00:35:10,137 Why is it that debt-to-GDP ratios are so unbelievably high? 505 00:35:10,137 --> 00:35:20,157 This is the back end of half a century of extraordinary credit expansion based on no real value tied to that. 506 00:35:21,097 --> 00:35:26,677 And so what we see in the economy today, it's not where I see things going. 507 00:35:26,817 --> 00:35:31,377 Why leverage on Bitcoin is so interesting is it's commodity based credit. 508 00:35:31,837 --> 00:35:35,957 And it will always tie back to Bitcoin as the underlying asset. 509 00:35:35,957 --> 00:35:37,957 And this is what used to happen with gold. 510 00:35:37,957 --> 00:35:41,677 But they removed the peg to gold and we went pure fiat. 511 00:35:41,897 --> 00:35:43,777 So what that became is just circulating credit. 512 00:35:43,917 --> 00:35:46,517 It's as good as they claim it to be until it's not. 513 00:35:47,137 --> 00:35:50,077 And the way that a bank can leverage itself. 514 00:35:50,537 --> 00:35:55,477 I read yesterday that Bear Stearns was leveraged something like 30, 35 to 1 when it went bankrupt. 515 00:35:56,377 --> 00:35:59,657 And supposedly the regulation is that a bank can do 10 to 1. 516 00:36:00,377 --> 00:36:02,617 So these banks are out there behaving poorly. 517 00:36:02,617 --> 00:36:06,097 and they know that the moral hazard 518 00:36:06,097 --> 00:36:10,157 they've regulated into their system 519 00:36:10,157 --> 00:36:13,357 is that they get bailout, right? 520 00:36:13,397 --> 00:36:15,477 That's what the global financial crisis taught all of us. 521 00:36:15,617 --> 00:36:16,797 The banks got saved 522 00:36:16,797 --> 00:36:19,197 and the average person on the street got screwed. 523 00:36:19,957 --> 00:36:21,437 And that's how the system functions. 524 00:36:21,977 --> 00:36:23,657 So the more we can learn about alternatives 525 00:36:23,657 --> 00:36:25,917 to the system that we were given, the better. 526 00:36:26,057 --> 00:36:27,077 That's what sound money is. 527 00:36:27,097 --> 00:36:27,977 That's what Bitcoin is. 528 00:36:28,117 --> 00:36:30,537 But equally, the more we learn about the fiat system itself, 529 00:36:30,537 --> 00:36:32,357 the more that we can go and exploit it. 530 00:36:32,617 --> 00:36:36,137 No, I'm not talking about doing illegal things, but you can make better choices. 531 00:36:37,017 --> 00:36:42,497 And without Austrian School of Economics as a lens on the world, I wouldn't be able to do what I'm doing. 532 00:36:42,957 --> 00:36:46,837 I wouldn't see value in Bitcoin if I didn't understand what sound money is. 533 00:36:47,117 --> 00:36:50,277 And the day that that penny dropped, my life completely changed. 534 00:36:50,877 --> 00:36:52,257 I hope you've enjoyed the episode. 535 00:36:52,757 --> 00:36:57,297 It was always designed to be a bit of a flavor for Austrian economics. 536 00:36:57,957 --> 00:36:59,377 It's massively helped my life. 537 00:36:59,437 --> 00:37:00,717 So I encourage you to dig deeper. 538 00:37:00,717 --> 00:37:03,637 I will list a whole bunch of resources in the show notes. 539 00:37:04,197 --> 00:37:09,677 If you want to help me out, then hit subscribe, send us some zaps on NOSTA, hit us with a boost 540 00:37:09,677 --> 00:37:10,257 on Fountain. 541 00:37:10,617 --> 00:37:13,917 If you want to reach out, like, how's Austrian economics changed your life? 542 00:37:14,457 --> 00:37:16,617 Could any of these concepts improve your decision making? 543 00:37:16,897 --> 00:37:17,657 I'd love to hear from you. 544 00:37:17,697 --> 00:37:19,997 Email me, hi, at jakewoodhouse.io. 545 00:37:20,217 --> 00:37:20,917 Until next time. 546 00:37:21,117 --> 00:37:21,477 Thank you.