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If I could hope for but one thing for you, so you'd be curious in all that you do.

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Cause love like a flower just wants to grow.

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Oh, and knowledge like your heart just wants to be known.

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If you like, please subscribe. This is Bitcoin Study Sessions.

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Bitcoin, BitPower, BitNet. So Bitcoin is a lot of things. And today, Lucas and I are going to discuss Bitcoin as a way nation states can win network power competitions.

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Specifically, we are going to discuss an essay entitled Great Power Network Competition and Bitcoin, an Assessment for Policymakers by Matthew Pines.

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It's collected in an anthology, The National Security in the Digital Age, Bitcoin as a Tool for Modern Statecraft, put out by the Bitcoin Policy Institute, I believe.

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And the essay also is available at the Bitcoin Policy Institute website, so you can get a PDF as well.

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So this essay, again, great power competition and Bitcoin. Global competition, well, I'll do what I usually do, give a quick summary, and then Lucas and I are going to hash this out, what Bitcoin as BitPower or as a network power competition might mean.

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So global competition in our era is primarily over networks. That's kind of the first starting premise of this essay. Trade, finance, critical supply chains, digital, telecom infrastructure, these are all networks. And why are networks so important? Why do we compete over networks?

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So the structure of current networks is kind of an abstract point about networks. It's very interesting. It's going to launch us into network power competition. The structure of current networks facilitates hegemonic power, Pines writes. So when you think of a network, you might think of just like a spider web where each kind of node is equally connected or randomly connected to other nodes. But it's not like that.

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And so, Lucas, could you bring up that image? This is an image from Pine's essay of what is called the Barabasi-Albert structure. So this is the way that networks, the type of networks that matter in global competitions currently manifest themselves, not as a dense spider web with each point or node connecting to every other point.

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Instead, as you can see, or if you can't see, a new node added to the network will tend to connect to an existing node.

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So you can see these like clusters of nodes, existing nodes becoming clusters of connected points with just kind of one edge that then connects one cluster of nodes or points to another cluster.

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There's like these hubs that nodes tend to be attracted to.

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It's not like perfectly peer-to-peer.

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It's not a decentralized network.

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You see these clusters.

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So given this structure, to quote Pines, network power consists in the ability of a state to exercise surveillance and control, I mean surveillance and choke point control over a global network.

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So to control or surveil a network like this is just to have control over a hub, which then serves as a choke point and all the edges that go into that.

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An example, maybe a helpful example that Pine gives of network power in a more informal setting, we all kind of know the friend who knows everybody else.

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They're a node for gossip in their community.

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All the edges and connections that people have are with them.

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They know everybody.

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They then kind of have an asymmetric information and influence in the community.

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They know something about everybody, and they can share or not share information as they desire.

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For a nation, then, network power is exerted over various networks due to this peculiar structure where there are choke points and hubs and collections of nodes connecting to other clusters.

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Just as that friend who knows everything, nations that are those big clusters and connections can use that to collect intelligence, influence, and impose sanctions.

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So for network power over trade, you can surveil and control major – if you have network power over trade, you can surveil and control major trade routes.

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If you have maybe network power over finance, you can control and surveil major financial hubs and institutions.

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Network power over information then would be some sort of control and surveillance over internet infrastructure like subsea cables or over major tech companies.

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So that's kind of the abstract idea of what a network is in the relevant sense and what is network power, the ability to control and surveil, and its real power in the modern era.

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Once you control the preferred network, in addition to this power being real, it is also hard to overcome.

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Once we're all in the network, it's tough to get out of that.

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To quote Pines, quote,

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network power is sticky power it attracts and then traps digital network power from control

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from controlling and influencing foundational information infrastructure is especially sticky

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so network power is real power in the modern era it's also sticky it attracts and then traps but

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it's not necessarily permanent so pines notes that another aspect of networks networks are dynamic

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and that they tend to route around control and abuse.

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So an example then would be in the U.S. regarding financial networks would be the world essentially debanking the West,

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debanking Russia by blocking them from the SWIFT system,

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the SWIFT being a bank messaging system that facilitates secure financial transaction between banks and across borders.

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If countries are nodes that trade with other nodes, the SWIFT system is a central hub that many nodes attach to.

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In this network that is international trade, a country does not really attach peer-to-peer with other countries for the purposes of the financial aspect of trade.

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Instead, each attaches to the SWIFT node, we could say, and the transaction is facilitated through that.

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So in 2022, Russia is excluded from SWIFT as a sanction for the war in Ukraine. SWIFT is then a choke point over which the U.S., the West, exercises network power. But networks are dynamic. And so these types of financial sanctions can lead nations to attempt to route around within the network or to create new networks.

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So that brings us to Pine's next key point. We have kind of now the abstract general nature of network power. Then he begins to talk about really the substance of the SA. So the U.S. currently has dominance over the monetary network. We have network power of a dominant nature, but it's vulnerable.

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So the dominance that the U.S. has is because the U.S. dollar is the global reserve currency and the U.S. treasury is a global reserve asset.

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So the U.S. dollar gains huge network effects from being the global reserve currency being held and used globally.

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It is a sort of highly connected node in a network that gives us network power because we control that node, which is a hub.

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We have the power to choke and surveil all the edges that connect to that node that is the dollars, the global reserve currency.

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We can surveil.

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We can analyze global transactions, collecting that through KYC, know your customer, and CTC, counter threat analysis.

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And we can also implement choke points by enforcement of sanctions, as in the SWIFT debanking of Russia, essentially, designating in designations of that sort to like terrorists and rogue states that block access to the global dollar system.

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But even though we are dominant and have that strong network power, we are vulnerable for two reasons, really.

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Well, so it's kind of a conglomeration of reasons.

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But the first big reason in any case is the U.S. is vulnerable for structural reasons relating to its overseeing the current system and issuing the global reserve currency and global reserve asset.

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So we saw this before in our conversations, the overarching vulnerability of the financial system, financial fiat system described by Lynn Alden.

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As we saw in her book, Broken Money, the nature of the fiat system encourages speculative bubbles that grow and then burst and then end up with a lot of debt on the public ledger taken over by the government.

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all then describe this as short-term business cycles that kind of lead to a long-term debt cycle

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or debt crisis because debt is never paid it just ends up going over to the government to present

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to which the government takes on to prevent the whole machine from falling apart so pines describes

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this in three simple steps one private debts surge prior to a banking crisis two private debts become

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public debts after the crisis, and three, public debts after the banking crisis precipitate

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sovereign debt crisis. That's kind of the overarching structural vulnerability of our

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financial system, and that is kind of leading, it seems, to the accumulation of debt and sovereign

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debt crisis. So the large amount of debt accumulating in the system makes the U.S.

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monetary network dominance a sort of brittle, fragile thing, subject to shocks, because we

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have to keep global liquidity going to supply the world with US dollar and treasuries that it needs

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to function as a financial network. This reduces our ability to deal with foreign adversaries who

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can kind of game the vulnerabilities and aspects of that system, like China, because they are

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integrated into the system and capable of even a big player like China dealing the system a huge

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shock if they want to. So in addition to this kind of overarching vulnerability of the entire system

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that Pines described, there are also specific political and geopolitical vulnerabilities,

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which are kind of the more important for this essay, I think. These are structural vulnerabilities

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that our financial system has based on the US system maintaining that global reserve currency.

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We've heard this before. Essentially, it's the Triffin dilemma and its implications,

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which is that the Triffin dilemma is this dilemma that any country faces if its currency

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is the global reserve currency. If you issue the global reserve currency, there's certain

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structural dynamics that arise and present a dilemma to you. Here is the Triffin dilemma

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succinctly stated. So we could say that to maintain the US dollar as a global reserve currency,

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the US has to supply the world with dollars. The world is hungry for those dollars. They need them

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for global commerce. So the US, we have to import more than we export. We export those dollars and

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import the things we're buying with them. The world isn't supplied with dollars. We keep that

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outflow of dollars going. This then leads to a structural trade deficit again, where dollars

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are flowing out and we're getting the items that we're buying. This though has implications. It

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leads to things like the hollowing out of the industrial base and the exaggerated growth of

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financialized fields. So manufacturing, domestic United States manufacturing can't compete globally

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because of the flood of imports that we are getting as we export the dollar and buy things

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and bring them in. This has a big impact on the defense industry, which depends on manufacturing

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large amounts of munitions. In the event of a conflict, it's often about just how many bullets,

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ballistic missiles, things can you expend. As we atrophy our manufacturing base by

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throwing those dollars abroad, buying things, and then causing domestic industries to become

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too expensive to operate. Those manufacturing industries go abroad. That has a big impact

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on the defense industry, again, because that depends upon manufacturing things domestically.

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One example is that China has 40% of global shipbuilding, of the shipbuilding market,

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and a capacity, as of the writing of this essay in 2023, of 230 times the U.S. capacity to build

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ships. So we have hollowed out our domestic manufacturing base, and that has recentered

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itself abroad, leading to, again, China accumulating a lot of that. This leads, when you atrophy your

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own manufacturing base, you have a difficulty in rapidly scaling up for conflict because

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it requires skilled labor to do that manufacturing with a long training time. You can't just

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suddenly switch from being a banker to building missiles. It also has difficulty in adjusting

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rapidly to a conflict because of supply chain issues. We now depend upon, for example,

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subcomponents for our defense industry that might come from China. Also, the U.S. net interest on

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our debt, as we approach sovereign debt crisis, as we accumulate debt, the net interest increases.

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As of 2023, the net interest expense exceeded the defense budget. So for that reason,

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as we accumulate debt and export our manufacturing, it becomes difficult to scale up quickly in the

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event of a conflict. While our industry is hollowed out in this way, other financialized

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industries grow, finance, insurance, and real estate. These grow because other nations have

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a trade surplus. We have the trade deficit. They have a surplus. They're selling stuff to the

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United States to get those dollars. And we have a deficit. We're sending out those dollars.

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So they then have this trade surplus in dollars. A lot of countries do. They then need a place to

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invest it. They turn back to the United States. And we then, through our finance, insurance,

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and real estate industries, create securities and hard assets for foreign countries to invest in.

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So we hollow out our industry and then we sell ourselves, our hard assets to foreign countries. Pines provocatively frames it in this way. Quote, this has greatly benefited this Triffin dilemma, the fact that we are, again, exporting dollars to the world and having to hollow out our industrial base, all of this.

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This has greatly benefited the technology and finance, insurance, and real estate sectors who exist to create investable securities and help direct foreign dollar surpluses into them, often via opaque tax-sheltered offshore structures.

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The U.S. is the money laundering capital of the world.

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So that last sentence, of course, very provocative.

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foreign nations are using all these dollars that they've acquired to buy U.S. hard assets,

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and they often do that through opaque channels. And then Pines characterizes that as a form of

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money laundering. So the U.S. has strategic vulnerabilities to our continued network power

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dominance over financial networks, the accumulation of debt, the atrophy of the industrial base,

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and the exploitation by foreign powers that buy our hard assets in that form of money laundering.

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So that brings us to the next key point in the essay.

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The strategic vulnerabilities to our financial network power means, of course, that our adversaries will seek to exploit those vulnerabilities.

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They can go out and read broken money just like we can.

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They can see what's happening.

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They know about the Triffin dilemma.

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China specifically has developed a long-term strategy to take advantage of the structural issues manifesting in our financial networks due to us issuing the global reserve currency.

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China has developed a block, build, and expand strategy.

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That's how Pines characterizes it.

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So block.

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First, they need to develop the ability to block U.S. sanctions.

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They saw viscerally in the example of Russia, you need a way to survive after you get debanked via SWIFT if, for example, China wants to go after Taiwan.

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So they then, in order to block, develop the ability to block U.S. sanctions, they develop CBDC, central bank digital currency and blockchain technology. So create a new monetary network that you can fall back on essentially if you get blocked.

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then if China gains network effects through its CBDC and blockchain systems that it's developing

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if nodes begin to attach to its currency and blockchain the world then could be forced to

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accept China's technical monetary architecture which would then of course give them network

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power the ability to surveil and choke in network transactions as nodes begin to attach to their hub

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So that is kind of China's strategy to block sanctions through new monetary networks.

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And these are kind of block, build, and expand, kind of all interrelated.

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The next aspect of this strategy is build.

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They are building out this alternative international settlement system that will allow their CBDCs to connect with CBDCs from other countries to allow a true kind of global financial network to develop.

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This includes building trade relationships with energy producers.

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China produces commodities, so they develop trade relationships with energy producers like Russia and like Saudi Arabia, which is looking for construction materials and tech that China has for its 2030 vision project.

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As it develops these kind of alternative trade or develops this kind of trading relationship with these parties, there's no need to use the U.S. dollar as a bridge currency in order to trade for energy and commodities, which are, of course, very significant parts of the economy.

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So that's China's attempt to build out alternative settlement internationally.

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The final aspect of their block build and expand strategy is China is developing, and this is really the heart of the essay, which is going to bring us to Bitcoin.

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The expansion that China is doing, China is developing a techno-authoritarian stack, which Pines characterizes as authoritarianism as a service that it is selling to the world.

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So the techno-authoritarian stack consists of things like the CBDC technology that I mentioned, but also infrastructure like fiber optic cable networks, cloud hosting, 5G, Internet of Things, and also surveillance tech that other authoritarian countries are hungry for, like AI monitoring software.

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In addition, kind of the promise that they will provide the tech know-how, training, assistance, and customer support.

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This is all, this techno-authoritarian stack that they're offering, this authoritarianism as a service, is a form, Pine says, of digital colonization by China.

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When a foreign power can read all your citizens' data, control all your domestic and international financial transactions, and run all your government services on their digital platforms, that foreign power effectively controls your country.

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So up until now, what Pines has done has set the stage for what he calls Cold War 2.0, a competition for network power over financial networks.

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Again, network power is real, and it is sticky. It attracts and traps, but it is also dynamic and can route around abuse or sanctions, choking and surveilling.

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When countries don't like that, they can attempt to route around.

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U.S. financial network dominance is vulnerable to this dynamic aspects of networks routing around abuse because of our accumulating debt, atrophying manufacturing base, and the sell-off of hard assets to our foreign adversaries in particular.

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And then in response to these vulnerabilities, China has a block, build, and expand strategy to try to exploit these vulnerabilities and replace them with its own system.

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So Cold War 2.0 then is fought by countries choosing which techno-monetary network they will attach to as nodes.

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You have the Chinese model of interconnected CBDCs that China is trying to build on its own techno-authoritarian stack in which it controls the infrastructure, in which we can kind of see appealing to authoritarian countries.

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And then against that, we have, of course, our very vulnerable current system, which is kind of falling apart. Apart from that, though, the West lacks currently a 21st century alternative that would kind of replace this, update our current system, and also respect our foundational values of openness and democracy.

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Cold War 2.0, techno-authoritarianism versus techno-democracy openness, whatever that's going to be from the United States. So Pines' thesis is that Bitcoin and stable coins could constitute this new technologically open stack offered by the United States as foundational to our own values.

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To quote Pines, Bitcoin and regulated dollar-based stablecoins may help the U.S. counter adversary efforts to challenge U.S. geoeconomic power while reinforcing liberal value systems around the world.

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So Bitcoin has these value systems.

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It is an inherent threat to authoritarians.

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It's a decentralized networks with privacy protections that can be built up on top of it.

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It does not embed the inherent programmable surveillance of a central bank digital currency. The Bitcoin network is peer-to-peer and permissionless. It goes around capital controls, the type that are oftentimes imposed by authoritarian countries.

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Bitcoin's increasing value monetarily as it monetizes also advertises itself to the world.

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It gains traction organically without imposition.

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Banning mining, as an example, just causes it to decentralize out of the country that banned it.

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As far as stablecoins, those are already proliferating rapidly, beating the Chinese CBDC.

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countries are also kind of organically wanting to take in stable coins.

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The U.S. dollar stable coin network could encourage the use of the dollar,

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even as it is no longer declining as global reserve currency,

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by making cross-border payments faster, cheaper, and easier with the dollar

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as the underlying aspect of the stable coin.

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If stable coin issuers hold lots of dollars in U.S. treasuries,

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something that they currently do and which can be encouraged with further regulation,

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So – and also like with Bitcoin, stablecoins are anti-authoritarian in Pines' estimation. They go right to the people in other countries. In fact, have – people in other countries have shown preference for them over local currencies that are kind of declining in value. They prefer to have the stablecoins.

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To quote Pines, Bitcoin and dollar stablecoin adoption along the front lines of Cold War 2.0 may serve as a bottom-up bulwark against China's geomonetary network expansion strategy.

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strategy. So Bitcoin then, as it monetizes, it can oppose Chinese geoeconomic network expansion,

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and will also kind of have Bitcoin as it monetizes will have additional advantages.

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Pines notes that Bitcoin is better from a strategic point of view for the United States than

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maybe remonetizing gold because China and Russia would actually be huge benefactors of remonetizing

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gold because they have big stockpiles. I think that's a very important point as people debate

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and talk about sovereign wealth funds and reserves, what those mean that, again, our adversaries

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already have large deposits of gold. Whereas the US has a large supply of Bitcoin, we also have

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large, you know, good amount of energy resources for mining. And in fact, Pines notes that Africa

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has a lot of stranded energy. If Bitcoin monetizes, becomes something akin to a global reserve asset

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or currency, China then, or Africa then, would be likely to tip towards that as it monetizes its

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energy. And that would drive a wedge between kind of authoritarians and those who have a more

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Bitcoin-oriented technological openness. This, of course, would also, monetizing Bitcoin,

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would remedy the structural issues that were kind of the underlying structural vulnerabilities that

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we have as a result of issuing the global reserve currency. It would allow us to rebuild our

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manufacturing base if we can now begin to accumulate surpluses and afford to pay people

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domestically instead of having to import certain things. With those balanced trade flows and trade

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surfaces, we would also no longer need to financialize our hard assets and try to sell

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them to our rivals because they're accumulating dollars and we're not. So that is Pine's paper.

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The old face of network power then is that Barabasi-Albert structure that we

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showed at the beginning. It is, again, hubs that are clusters of nodes with maybe one edge,

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one line connecting them to other hubs, allowing for choke point control and surveillance.

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The face of the Bitcoin network is obviously very different peer to peer. And just to have

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one representation of that, I don't know if you're, Lucas is having some tech issues. We had an image

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here that was of

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the Layer 2 Lightning Network.

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It been kind of floating around on Twitter You can find it It was tweeted by at not grubles and it available at HTTPS the lnrouter backslash graph

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And so what it shows is all the public nodes on the Lightning Network and the channels between them.

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And when you put that lightning network right next to the Barabasso-Albert structure, you see immediately that network power is a different thing when the network is completely decentralized.

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There is very little opportunity for choke point surveillance and control.

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So that it could be that I mean, that's Pine's paper.

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He doesn't mention that the lightning network decentralization or have that image.

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I also began saying that maybe Bitcoin could be BitPower, could be BitNet. These are different ways to think about Bitcoin. That's not something that Pine says. BitPower is, of course, Jason Lowry's idea in his software thesis.

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BitNet is my attempt to kind of give a helpful label maybe to Pine's discussion here where as I interpret this essay, it's saying that the nature of 21st century warfare is that it is competitions over networks in which network power is very important.

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And the very nature of network power competition is going to change if we're all participating in decentralized networks such as Bitcoin.

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So, I mean, Lucas, that's the essay in a nutshell.

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Do you have that or are tech difficulties going to prevent us from showing?

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I see two of you, in fact.

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Yeah.

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Two cameras there.

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Yeah.

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So my computer screen shut off for absolutely no reason.

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But apparently it's still running.

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Yeah.

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But I do have –

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It's not necessary that we show that either.

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No, I do have it.

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And I think that it's a wonderful thing to show because it's shocking to look at it and then realize exactly what it is that you're talking about here.

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I think it really puts into perspective just how prolific the network is.

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And I'll just describe it because if you're listening and not watching, what you're going to see if we get this up, again, the Barabasi structure, you have these hubs that are clusters of nodes and the hubs are connected by long lines.

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And so there it is. It's up on there.

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What you see with the Lightning Network decentralization is basically a circle just like filled in with points.

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It's just like maybe like you can see like some points that have greater intensity or size, but you can also see that otherwise it's just like filled in with points.

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There's no hubs or islands that present choke points.

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And again, this is just a lightning network.

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This is not even to speak of like direct peer-to-peer transactions on the Bitcoin network.

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This is more just kind of a visual.

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If we take seriously that network power is a very important thing, what does it mean when the nature of networks switches from being kind of centralized or chokepoint-oriented networks to completely decentralized networks onto which we build our financial system?

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Maybe sanctions don't work as well.

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We kind of know that with Bitcoin that it's used for, I mean, that's kind of the flack it gets is that it can be used by parties to do things that you don't want those parties to do.

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But as far as, you know, enabling a freedom forward vision of people connecting to whoever they want to connect with and countries not worried that they are going to be excluded from the financial system, it does at least preserve that vision.

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so yeah lucas i am curious i mean did you get that from this essay that the nature of network

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power itself is one network power is very significant for the 21st century but then two

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that the nature of network power itself could shift and that that's a good thing for

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I guess early adopters to the new system.

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What I find interesting, I'm glad you started here.

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What I find interesting is how he defines the nature of network power.

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And let me, you mentioned it, but let me just restate it here.

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Let's see.

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Well, maybe it's easier for you to restate.

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So here's kind of a definition.

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Network power consists in the ability of a state to exercise surveillance and choke point controls over a global network.

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So I read that and I thought about it.

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I don't really like what it sounds like.

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It doesn't sound good. It doesn't sound like something that you would want.

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It basically, I think, is saying that power over a network exists in order to control.

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Power over a network exists in order to exert power and to intervene into the world by having an asymmetric informational advantage.

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it's probably not false and so it's it's worth uh it's worth thinking about

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the words that he uses to describe it

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if you control the network and then you move to a network over which you have no control

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what does that mean for you and so one of the questions i i thought of um that i wanted to ask

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you was so we're we're talking about this in terms of this this paper is basically written

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from the viewpoint of hey we're the united states we have the world reserve currency however it's

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tenuous and um here are a number of attempts not just one but a number of attempts by other

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countries to go around that process. You can use words like subvert if you want to make it sound

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as though they're doing something that is wrong. Or you can say that they're innovating in order

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to find their way out of an oppressive system. I think if the paper was written by someone

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outside of the United States, then obviously it would have a far different tone. But the idea is

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preserve the U.S. dollar system, I think,

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or preserve the U.S. dollar advantage over the global monetary network.

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And I guess just kind of thinking about in that terms,

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one, I think the question really needs to be asked,

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is it something that you want to have control over?

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It sounds good for now.

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then we learn about what this Triffin Dilemma is.

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And the Triffin Dilemma basically says that if you export currency,

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then you'll have to import goods and services,

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which means that you'll be exporting your industrial base and your skill.

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And someone else will be fulfilling that.

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Because if what you provide to the world is money,

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that you make for nothing,

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and the fun part of that deal

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is that you get to trade that nothing for something,

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that something comes from somewhere,

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and that something originates on your shores,

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in your borders,

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with a middle class and an industrial base,

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and it slowly at first and then rapidly

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moves to another jurisdiction.

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You know, it sounds great when you're the guy in charge to go,

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hey, guess what I did?

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I talked all these other countries into this deal,

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and this deal is that we get to give them nothing,

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and they're going to give us all of their stuff.

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and his buddies are like, that's fantastic. Hey, by the way, we build that stuff.

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That's not going to be great for us. So why don't we do this? Why don't we make an even better deal?

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Since we're making this money up out of nothing anyways, why don't we make up some more of it

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and give it to them and say, hey, what we're doing is we're investing in you

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and we're going to come over and we're going to own that stuff over there. So we're going to go

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invest with our made up nothing into your country that's taking the something away from us.

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And we're going to maintain control over this, even though it's outside the borders of the

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United States. And so you create the oligopoly, the limited power structure surrounding the

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surrounding the creator of money.

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And what happens is that you end up losing the industrial base,

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you end up losing the skill and the will, really, to produce those things.

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And you find yourself in a position where you have this increasingly polarized world.

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And I'm going to share this graph because I've never seen it shown this way, and I think this is absolutely fantastic.

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So the author includes a graph that displays the United States net wealth share.

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Could you zoom in on that a bit?

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Yeah.

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displays the net wealth share of the United States.

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And it has two lines on this graph.

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So on the X axis is the years.

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So 1900 going by decade to 2020.

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On the y-axis is the percentage of net wealth that is shared by the green line is the top 0.1% and the red line is the bottom 90%.

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So to kind of state this in a different way that may be easier for somebody who's just listening.

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So what we're seeing is we're seeing a graph that shows the poorest 90% of people, how much of the total wealth do they own, and the richest 0.1%, how much of the total wealth do they own.

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And it appears that in times where those amounts are equal, where the richest 0.1% has gained so much of the wealth that their 0.1% people own the same amount as the bottom 90%, then we have the rise of populism.

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So the first time that these two lines cross, I guess you could probably say it's like in the early or the mid-teens,

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but it looks like the graph isn't really accurate right there.

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So let's just say the mid-20s, the roaring 20s, very populist time, again in the late 30s.

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and then it shows that in like 2016, 2018, we're there again.

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And obviously this graph is old, yet it shows the direction that we're moving, that we moved.

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So basically the emergence of populism comes when we have these lines crossed.

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So what does that mean?

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That means that you end up with the type of politics that we have right now, which is extremes, jingoistic, bombastic, and very, very segregated in terms of beliefs.

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my question though that i wanted to post to you is so we we know all of this we know that we have

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the triffin dilemma we know that there's a global monetary network um

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bargain shopping bargain shopping happening where other countries are looking at

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alternatives to the dollar. And I think the big question that I want to ask is,

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how long do you think the United States can maintain power over this dominant monetary system,

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which is currently the dollar? And I think from a bigger perspective, is it useful to even try?

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and I might riff on that a little later,

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but I want to get your thoughts on that

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because I think that there is something about this

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that is very seeing the trees without seeing the forest,

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and so I want to kind of get the take on what you think about

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the direction that we head.

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How long can we maintain power,

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And if we can only maintain power for five years or 10 or 50 or 500, if there is an admitting that we will lose that power, then what position will we be in when we do so?

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And will we be at that point, will we have gone so far down the wrong path that it makes it difficult to get back on the right one?

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So very, very long and rambling, but kind of want to kind of want to throw that at you and hear what you think there.

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No, I mean, I think that goes right to one of the key points of the essay.

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Is it useful? I mean, how long I guess I couldn't how long we could maintain the current system teetering, tottering pieces falling off of it.

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I don't know that, you know, what's the tipping point where it turns into something else?

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It crashes or something overcomes it.

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Well, we can kind of assume, right?

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I mean, not assume, but we can say the current system has been around for 54 years.

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And after 54 years, there are at least, if you want to count, I think you could probably count cryptocurrencies.

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If you look at it that way, then there are probably somewhere around 25,000 proposed alternatives to the system.

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Yeah.

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And just to say, I just want to say I couldn't put a discrete amount of time.

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There are lots of proposed alternatives.

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And I'll just add another fact into that to kind of illustrate that, that Pines notes that the total from Q4 2019 to Q2 2021 total public debt as a percentage of GDP increased to over 125 percent, peaking at 130 percent.

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This is significant because this is the historical point where 51 out of 52 times a country reached this level. It led to restructuring, devaluation, inflation, outright default. So I don't disagree with you that that's the point we find ourselves at now.

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And so that's why this particular essay, I think, is very essential. And to get like a key point of it, Pines, even though he advocates for stable coins mixed with Bitcoin at the end, he is not about trying to maintain the U.S. dollar as a global reserve currency, not as I read this.

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So he talks about issuing the global reserve currency, you have the Triffin dilemma, and it does lead kind of intellectually, it seems, to atrophying of the manufacturing base and the sell-off of your own assets because of foreign dollar surpluses.

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So he doesn't want to do that, but that doesn't mean that you want a dollar that disappears or a dollar that is weak or something like that.

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So how do you maintain the dollar but not have it as necessarily the global reserve currency?

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You monetize something else in its place and kind of put us onto a different monetary network altogether.

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And there's kind of two possible visions of a future monetary network.

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One is the techno-authoritarian stack, which appears dystopian to us in the United States, built on Chinese infrastructure subject to Chinese surveillance and control.

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with CBDC's program to do all sorts of manipulative and surveillance-based things.

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That's one path, the techno-authoritarian path.

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The other path is, is there a technological alternative that is freedom forward,

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that supports the U.S.'s purported foundational values of democracy and openness?

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That is the Bitcoin network.

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And so if we can monetize the Bitcoin network, have that be the new or be the architecture for the new financial network of the future, then the U.S. can preserve our own currency.

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We're not going to have a Venezuelan hyperinflationary scenario where our dollars become less than the paper they're printed on.

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But we also cease to supply global liquidity, support all settlement around the world with the dollar necessarily because Bitcoin is that underlying settlement mechanism.

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If we go that route, then again, the U.S. can have a first mover advantage within the new network of a hyper-Bitcoinized world where Bitcoin is the underlying financial network, the settlement layer.

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then the United States has a first mover advantage.

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We will not have surveillance choke point control.

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The nature of the Bitcoin network, again, is peer to peer decentralized.

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But we will have that, you know, we will, you know, just the fact that Bitcoin will

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monetize and become worth so much, we will still be a wealthy nation.

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We'll be able to have lots of hash rate to protect the integrity of our transactions

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on the network.

379
00:45:43,893 --> 00:45:50,213
So, I mean, I guess, is it useful to prop up the U.S. dollar not as a global reserve currency?

380
00:45:50,433 --> 00:45:57,393
And I don't think Pines is saying that, but it is, you know, it is if we don't want to hyperinflate our own currency, devalue it.

381
00:45:57,773 --> 00:46:03,193
We want, even as Bitcoin monetizes the U.S. dollar to have some some power.

382
00:46:03,333 --> 00:46:11,513
And I think stable coins fill that gap where they can be based on the dollar, but also tied to Bitcoin, support Bitcoin liquidity, things like that.

383
00:46:11,513 --> 00:46:18,093
How are dollar-backed stablecoins not propping up the U.S. dollar?

384
00:46:19,453 --> 00:46:21,213
Again, propping up in what sense?

385
00:46:21,573 --> 00:46:24,433
They can prop up the dollar as the global reserve currency.

386
00:46:24,433 --> 00:46:31,513
You can also prop up the dollar as a strong currency, but not the basis of global liquidity or settlement.

387
00:46:31,513 --> 00:46:37,013
I was thinking about this the other day

388
00:46:37,013 --> 00:46:39,113
because I saw the report that

389
00:46:39,113 --> 00:46:44,873
Tether, the amount of profit per employee at Tether,

390
00:46:45,293 --> 00:46:48,473
which is the world's largest, most used stablecoin,

391
00:46:49,313 --> 00:46:51,973
is somewhere around

392
00:46:51,973 --> 00:46:54,593
like 80...

393
00:46:54,593 --> 00:46:57,813
They say they had a net profit of $13 billion,

394
00:46:57,813 --> 00:47:03,273
which is somewhere between $86 million and $260 million per employee.

395
00:47:05,493 --> 00:47:06,813
And so what is that profit?

396
00:47:07,813 --> 00:47:20,073
That profit is a microcosm, a short-term example of its value extraction, right?

397
00:47:20,073 --> 00:47:33,873
So it's the seniorage, basically, that they get from issuing dollar stable coins against a dollar that is continuously losing value.

398
00:47:34,253 --> 00:47:46,193
So it's extraction of value, $13 billion in one year when stable coins are used by a minute amount of people in the world.

399
00:47:46,193 --> 00:47:52,373
I think of stablecoins basically the same way as I think of a central bank.

400
00:47:52,693 --> 00:47:54,573
I don't think that they're really any different.

401
00:47:54,753 --> 00:47:58,273
I mean, they're doing the exact same thing other than controlling interest rates,

402
00:47:58,993 --> 00:48:03,413
although there's arguments to be made that they control interest rates as well

403
00:48:03,413 --> 00:48:07,753
by housing wallets that offer interest payments.

404
00:48:07,753 --> 00:48:31,033
So I think that moving to stablecoins is simply a way to make the seniorage and the ability to extract value at a very granular level instead of doing it with T-bills, multi-million dollar T-bills that last for six months or four years or whatever.

405
00:48:31,933 --> 00:48:36,893
Instead of that, then we can just do it with individual stablecoins and we can extract the value that way.

406
00:48:36,893 --> 00:48:45,333
I was trying to think of, so I drove out to California and stopped at a couple gas stations.

407
00:48:45,513 --> 00:48:50,853
And, of course, you walk in, you walk around, you look at the stuff, and you're like, man, this is unappealing.

408
00:48:50,933 --> 00:48:52,113
I don't want to eat any of this.

409
00:48:52,133 --> 00:48:59,493
And there's always the little hot roller place that has the taquitos and the hot dogs that are just awful.

410
00:48:59,893 --> 00:49:02,413
I find all of that immensely appealing, but continue.

411
00:49:02,693 --> 00:49:03,233
It's awful.

412
00:49:03,933 --> 00:49:19,613
Anyways, so I'm thinking, like, so what if that's the dollar, that taquito, that it's, you know, the advantage of the Cantillon effect is being the guy who gets to it first.

413
00:49:19,613 --> 00:49:22,273
Because if it's been there for nine hours, then it's awful.

414
00:49:22,273 --> 00:49:32,213
and so what if the what if the dollars are taquitos and and um we're the ones the united

415
00:49:32,213 --> 00:49:37,493
states is the ones that's supplying the world with taquitos and then all of a sudden um it comes to

416
00:49:37,493 --> 00:49:45,533
be that anybody can just get filet mignon and and so now we have a choice we're like hey we'll

417
00:49:45,533 --> 00:49:49,333
We could offer this filet mignon next to our taquitos.

418
00:49:49,553 --> 00:49:55,033
That's not a good idea because who's going to buy a taquito when there's a filet mignon next to it?

419
00:49:56,453 --> 00:49:58,113
Probably not a rational actor.

420
00:49:58,313 --> 00:50:00,733
There might be some people that are duped into it and good for them.

421
00:50:02,533 --> 00:50:11,913
But you can't just put it next to it because then it highlights the vulnerability of the taquitos and how shitty they are.

422
00:50:11,913 --> 00:50:21,273
you also can't, um, you also can't say, Hey, you guys, we're going to sell you taquitos.

423
00:50:21,513 --> 00:50:28,373
We're going to eat filet mignon, uh, because they can just go out and get it on their own.

424
00:50:28,373 --> 00:50:34,893
Um, and that is like an implicit, um, implicit advertisement for it. You know,

425
00:50:34,893 --> 00:50:42,813
very much like the founder of a social media company who does not let his child use social

426
00:50:42,813 --> 00:50:47,953
media. I think that's the kind of, kind of would be the same thing. It's like saying,

427
00:50:48,093 --> 00:50:54,913
oh, it's okay for you, but there's no chance in hell that we will take that in. So I, I'm going to,

428
00:50:55,173 --> 00:50:59,933
go ahead. I see what you're getting at. There is no second best. And so why have stable coins? If

429
00:50:59,933 --> 00:51:02,893
we're just going to, why not just go Bitcoin all the way? Is that what you're saying? Well,

430
00:51:02,893 --> 00:51:11,313
it's so yeah i mean it's it's a horrible dilemma but it's actually not a difficult choice

431
00:51:11,313 --> 00:51:20,433
um there are like it's not a difficult choice in that if you look at what happens if you stay

432
00:51:20,433 --> 00:51:29,433
on this path and you continue to try to prop up the dollar um and you what does he there's there's

433
00:51:29,433 --> 00:51:36,033
something that basically, you know, what we're doing is we are trying to maintain a system that

434
00:51:36,033 --> 00:51:46,733
has short-term stability in exchange for guaranteed long-term failure. And the replacement for that

435
00:51:46,733 --> 00:51:55,173
has short-term volatility in exchange for what appears to be long-term resilience and long-term

436
00:51:55,173 --> 00:52:01,993
strength. And on the whole, when you're looking at that, that's not a choice. That's not a difficult

437
00:52:01,993 --> 00:52:10,893
choice at all. But it all depends on what your time preference is. And when you're engaged in

438
00:52:10,893 --> 00:52:16,993
populist politics, your time preference is very short. And your time preference is very short

439
00:52:16,993 --> 00:52:25,733
because there are pressing issues that need to be dealt with now lest they get much, much worse.

440
00:52:27,253 --> 00:52:40,433
I think that it's wonderful that we're talking about this on the time that USAID is being exposed

441
00:52:40,433 --> 00:52:45,633
as being the global money launderer for the United States

442
00:52:45,633 --> 00:53:03,206
and for everyone basically around the world I actually going to share this real quick because I this is a this is a post about the amount of grift that has been found just you know

443
00:53:03,306 --> 00:53:06,646
just in a couple of days. Go ahead. Well, I would just say just, I mean, to your

444
00:53:06,646 --> 00:53:11,966
underlying point though, is like, why, you know, should you prefer, I mean, you're saying, you know,

445
00:53:11,986 --> 00:53:16,986
you should prefer this over that. I mean, who's the you because like who Pines is writing for

446
00:53:16,986 --> 00:53:18,786
is the U.S. establishment politicians.

447
00:53:19,166 --> 00:53:20,106
And I think it was,

448
00:53:20,246 --> 00:53:21,386
they had the press conference yesterday

449
00:53:21,386 --> 00:53:23,666
with David Sachs as the crypto czar or whatever.

450
00:53:23,906 --> 00:53:25,566
And I believe it was in that one.

451
00:53:25,606 --> 00:53:26,286
I heard this yesterday,

452
00:53:26,366 --> 00:53:28,466
some politicians saying that the U.S. dollar dominance

453
00:53:28,466 --> 00:53:30,406
is like what they want to maintain

454
00:53:30,406 --> 00:53:31,746
and they're looking at a Bitcoin reserve.

455
00:53:31,926 --> 00:53:34,546
And so like U.S. dollar dominance

456
00:53:34,546 --> 00:53:37,586
is like the stated goal of the establishment.

457
00:53:37,586 --> 00:53:38,806
In order to talk to them,

458
00:53:38,906 --> 00:53:39,686
you don't, you know,

459
00:53:39,706 --> 00:53:41,246
one way is to try to make the argument

460
00:53:41,246 --> 00:53:42,906
that Bitcoin is better, good luck.

461
00:53:43,686 --> 00:53:44,866
Or you can say, you know,

462
00:53:44,866 --> 00:53:50,686
Bitcoin is going to help us move away from the Triffin dilemma, while we can also maintain the

463
00:53:50,686 --> 00:53:56,026
dominance of the US dollar through stable coins. And so I think it's a way that you talk to like,

464
00:53:56,446 --> 00:54:01,626
both, you know, politicians, but also people in the real world, the world is not ready tomorrow

465
00:54:01,626 --> 00:54:05,546
to go to the Bitcoin standard, people don't know what Bitcoin is, by and large. And so

466
00:54:05,546 --> 00:54:10,666
should you get Bitcoin, you individually, the listener specifically, for sure, if you believe

467
00:54:10,666 --> 00:54:14,926
that it's going to, you know, has the qualities that we think it has. But, you know, if you're

468
00:54:14,926 --> 00:54:22,806
advocating for some sort of move away from the dollar as a global reserve currency, it's a much

469
00:54:22,806 --> 00:54:28,906
bigger sell to say, go to Bitcoin than it is to say, you know, we can maintain dollar dominance

470
00:54:28,906 --> 00:54:35,066
without being the reserve currency if we also use stable coins and that other countries, people in

471
00:54:35,066 --> 00:54:40,606
other countries have preferentially shown that they want stable coins over Bitcoin. And they do

472
00:54:40,606 --> 00:54:45,046
have, at least as it's currently situated, you know, the Bitcoin network is good for large

473
00:54:45,046 --> 00:54:49,386
settlement, but not as good for daily transactions. Stable coins are really good for daily transactions.

474
00:54:50,046 --> 00:54:54,526
And so there does appear at this moment in time, we could talk about maybe 100 years from now,

475
00:54:54,546 --> 00:54:59,306
what we're going to have as a system, but Pines selling a transition away from the strategic

476
00:54:59,306 --> 00:55:04,906
vulnerabilities of the US maintaining the global reserve currency. I think it makes sense to propose

477
00:55:04,906 --> 00:55:09,926
a hybrid system where you do take use of the preference people have for stable coins in other

478
00:55:09,926 --> 00:55:15,706
countries, their particular functionality, that they are tied to the U.S. dollar, while also

479
00:55:15,706 --> 00:55:22,306
advocating that we do it with Bitcoin to move the settlement layer maybe away from the U.S.

480
00:55:22,546 --> 00:55:25,666
controlling the gold-brain sub-currency and asset, if that makes sense.

481
00:55:25,926 --> 00:55:30,786
Yeah, it makes sense. I just think that it is, I think it's very short-sighted

482
00:55:30,786 --> 00:55:40,666
because it's catering to and patronizing the people.

483
00:55:41,266 --> 00:55:45,666
By the way, I'm not saying that Matthew Pines is patronizing at all.

484
00:55:46,186 --> 00:55:51,706
What I'm saying is that the idea that we're going to maintain dollar dominance,

485
00:55:51,706 --> 00:55:54,426
because there's a second part to that, which is how long,

486
00:55:55,106 --> 00:55:57,586
because we know that fiat currencies fail.

487
00:55:58,126 --> 00:55:58,906
That's what they do.

488
00:55:59,406 --> 00:56:00,666
And what does all dominance mean?

489
00:56:00,666 --> 00:56:02,206
I think you raised that point earlier.

490
00:56:02,286 --> 00:56:04,446
Yeah, because we've reached peak dominance.

491
00:56:04,686 --> 00:56:06,126
Like, you're never going back.

492
00:56:06,566 --> 00:56:17,326
Like, you're never, you know, there is a reason why alternative systems came about and alternative systems came about because the current system does not work.

493
00:56:17,986 --> 00:56:29,286
It works in that it allows a very small number of unelected people to exploit the rest of the world.

494
00:56:29,286 --> 00:56:38,146
So it works for about 0.01% of people, but it does not work for the majority of people.

495
00:56:38,346 --> 00:56:45,966
And saying that it does, I think is just a misstatement of the facts.

496
00:56:50,926 --> 00:56:51,486
Okay.

497
00:56:52,106 --> 00:56:58,506
I think that the Pines would acknowledge that the administration themselves,

498
00:56:58,506 --> 00:57:14,346
Like US dollar dominance does not mean United States unipolar status because the administration, I think it was, is it Bessent has, the US Treasury Secretary has acknowledged a global economic reordering.

499
00:57:14,546 --> 00:57:18,346
And it was maybe Rubio who said that there is, we are now in a multipolar world.

500
00:57:18,346 --> 00:57:32,346
And so like part of what I see the Trump administration as doing is maintaining dominance in the sense of us being an economically dominant world power, but acknowledging that the world is multipolar.

501
00:57:33,346 --> 00:57:42,726
And, you know, it's actually a more secure system where we don't purport to be the most powerful and patronized to China and patronized to Russia.

502
00:57:42,726 --> 00:57:45,906
We acknowledge a sort of co-equal status in certain ways.

503
00:57:45,906 --> 00:58:04,706
The system becomes more stable is the idea, I think. And in a multipolar world, what better type of settlement system than Bitcoin, even as you want dollar dominance, making us economically strong through stable coins, which are also popular, you also want to entice people into your system.

504
00:58:04,706 --> 00:58:12,286
We don't we're not going to you know, one route we could go is the CBDC route, have our own stable coin essentially issued by the government.

505
00:58:12,286 --> 00:58:17,286
But you can't, Pine says, compete with China on the authoritarian axis.

506
00:58:17,286 --> 00:58:21,426
If you want to compete with China, you don't do authoritarianism light with your own CBDC.

507
00:58:21,926 --> 00:58:24,006
You go whole hog liberty.

508
00:58:24,466 --> 00:58:26,746
Bitcoin is the underlying settlement layer.

509
00:58:26,946 --> 00:58:31,086
That's going to entice people onto the network because Russia, they want to join the network.

510
00:58:31,226 --> 00:58:33,966
They're not going to be debanked through a swift sort of sanction.

511
00:58:34,706 --> 00:58:39,586
Even, you know, Africa wants on because they get to utilize their stranded energy.

512
00:58:40,226 --> 00:58:47,606
And then, of course, the kind of U.S. allied states went on, hopefully, because the U.S. is leading the charge.

513
00:58:47,606 --> 00:59:05,366
So, yeah. Yeah. I overall, I feel like I feel like it is it's kind of trying to think of the best way to put this.

514
00:59:06,146 --> 00:59:15,626
Like your parents are getting divorced and they come and they they try to tell you in very, very soft ways what's about to happen.

515
00:59:15,626 --> 00:59:18,946
oh, mommy and daddy are going to be spending some time apart,

516
00:59:19,346 --> 00:59:24,646
and you're going to be hanging out sometimes with mommy and sometimes with daddy,

517
00:59:25,446 --> 00:59:28,966
and you're going to have two birthdays.

518
00:59:29,566 --> 00:59:30,546
It's like, oh, we're going to...

519
00:59:30,546 --> 00:59:34,506
When we're avoiding talking about the elephant in the room,

520
00:59:34,606 --> 00:59:37,626
which is that when the United States triggered...

521
00:59:38,666 --> 00:59:40,126
When they sanctioned Russia,

522
00:59:40,126 --> 00:59:50,386
and they seized the FX reserves of people that were ostensibly connected to the Russian government

523
00:59:50,386 --> 00:59:57,006
in order to show their displeasure about the attacks in Ukraine.

524
00:59:57,006 --> 01:00:02,646
When they did that, that was the straw that broke the camel's back that had already been very weakened.

525
01:00:03,226 --> 01:00:06,946
You know, let's not pretend that this started in 2022.

526
01:00:06,946 --> 01:00:33,186
This began earlier. I think the Chinese digital currency and the Chinese knockoff of CHIPS and SWIFT, the clearinghouse interbank payment system and SWIFT, the international banking rails, they were starting to do that six years ago, at least.

527
01:00:33,646 --> 01:00:39,546
And so if they were starting to do it six years ago, they were probably talking about it a decade ago, trying to figure out solutions.

528
01:00:39,806 --> 01:00:43,966
And so this is a problem that will not.

529
01:00:44,186 --> 01:00:48,726
So what is it? You can't solve a problem with the same type of thinking that got you into it.

530
01:00:50,106 --> 01:00:54,806
You know, so I do love that he notes like things about like intervention.

531
01:00:54,806 --> 01:00:59,346
You know, intervention is going to be much more difficult if you have Bitcoin.

532
01:00:59,346 --> 01:01:05,846
being able to jump into markets in order to stabilize crises.

533
01:01:06,506 --> 01:01:09,226
One of the things that we've talked about before, however,

534
01:01:09,386 --> 01:01:15,286
is that what these statements like that fail to recognize,

535
01:01:15,646 --> 01:01:18,986
which I'm sure that Matthew Pines knows and just decides not to put in

536
01:01:18,986 --> 01:01:21,826
because he knows who his audience is,

537
01:01:21,826 --> 01:01:26,186
but what that fails to recognize is that the intervention

538
01:01:26,186 --> 01:01:29,386
is always the result of a previous intervention,

539
01:01:30,166 --> 01:01:34,906
is that governments do not solve problems that governments do not create.

540
01:01:36,266 --> 01:01:40,686
And so they are always basically chasing their own tail,

541
01:01:40,846 --> 01:01:44,646
the little Dutch boy sticking his finger into the dam with one hand

542
01:01:44,646 --> 01:01:47,606
and using a power drill to get through it with the other

543
01:01:47,606 --> 01:01:50,006
in order to create another problem.

544
01:01:50,006 --> 01:02:03,106
So it's anyway. So I wanted to I wanted to change gears. So there's no segue. I wanted to change gears because he talks about the United States being the global center of money laundering.

545
01:02:03,106 --> 01:02:28,326
And I just this is fantastic because let's talk about what we found with USAID, which is basically appears to be a way for bureaucrats in the United States to launder taxpayer money to their favored favored sycophants.

546
01:02:28,326 --> 01:02:31,286
I suppose is probably maybe a good way to say it.

547
01:02:31,346 --> 01:02:37,446
But here are some of the ridiculous projects that we have found that USAID spent money on.

548
01:02:38,266 --> 01:02:45,446
They did $1.5 million for art inclusion, art for inclusion of people with disabilities.

549
01:02:45,566 --> 01:02:46,646
That's cool. We need that.

550
01:02:46,806 --> 01:02:49,626
I don't know if USAID needs to do it.

551
01:02:50,286 --> 01:02:53,986
$2 million for sex changes and LGBT activism in Guatemala.

552
01:02:54,846 --> 01:03:00,006
$6 million to transform digital spaces to reflect feminist democratic principles.

553
01:03:00,206 --> 01:03:02,106
I have no idea what that means.

554
01:03:02,586 --> 01:03:06,626
I assume that that means that we're trying to make websites more feminist.

555
01:03:09,006 --> 01:03:13,386
$2.1 million to help the BBC value the diversity of Libyan society.

556
01:03:13,386 --> 01:03:17,946
$10 million of meals, which went to an al-Qaeda-linked terrorist group.

557
01:03:18,406 --> 01:03:23,386
$25 million for Deloitte to promote green transportation in the country of Georgia.

558
01:03:23,986 --> 01:03:40,726
I guess that's important for us. There were some really good ones. Yeah, here's $5 million to EcoHealth Alliance, which is one of the key non-governmental organizations that funded the bat research at the Wuhan lab.

559
01:03:40,726 --> 01:03:55,586
In fact, I saw one report which showed a grant that was issued directly to the researcher who is identified as patient zero of coronavirus, of COVID-19.

560
01:03:56,666 --> 01:04:05,146
So anyway, you know, 1.3 million to Arab and Jewish photographers, 1.5 million to promote LGBT advocacy in Jamaica.

561
01:04:05,326 --> 01:04:09,546
There's a whole bunch of LGBT stuff in this, like just over and over and over and over.

562
01:04:09,546 --> 01:04:15,686
But anyways, it does highlight that because it highlights it.

563
01:04:19,426 --> 01:04:29,346
I think, again, zooming out, I think that we really have to consider, is there an advantage to being the issuer of the global currency?

564
01:04:29,806 --> 01:04:33,526
Much like is there an advantage to being the dawn of the mafia?

565
01:04:33,526 --> 01:04:38,606
because, yes, all of these people are dependent upon you

566
01:04:38,606 --> 01:04:42,866
and all of these people you pay off in order to get things done.

567
01:04:43,706 --> 01:04:48,306
But that just means that your attack vectors are multiplied exponentially.

568
01:04:48,306 --> 01:04:53,286
It also guarantees that when you go down, you go down hard.

569
01:04:53,666 --> 01:04:55,066
You go down violently.

570
01:04:55,646 --> 01:04:58,086
You go down in an insurrection.

571
01:04:58,086 --> 01:05:05,946
you go down at the hands of the people that you use to prop yourself up.

572
01:05:05,946 --> 01:05:14,866
And so I do think it's worth zooming out and really considering from a very philosophical point of view,

573
01:05:15,306 --> 01:05:23,826
is there any long-term benefit to being in control of the global monetary network?

574
01:05:23,946 --> 01:05:24,866
Long-term benefit.

575
01:05:24,866 --> 01:05:28,506
And so I think, again, that takes us back to time frame.

576
01:05:29,206 --> 01:05:48,586
I think it does highlight Pines calling the current situation where the current war we're in is Cold War 2.0, where now the war is to fight for what monetary network is going to be the new prevailing monetary network, which one you're going to join if you're a country as a node.

577
01:05:48,586 --> 01:05:55,426
Cold War 2.0 is attracting countries to your monetary network to join your network, increase the network effects.

578
01:05:55,426 --> 01:06:23,586
Cold War 1.0, maybe it was characterized by those USAID types of soft power to prevent countries from, quote unquote, going communist or to kind of, you know, fight, you're fighting a Cold War through non-kinetic types of avenues by, you know, maybe maintaining choke points and surveillance on a network.

579
01:06:23,586 --> 01:06:30,226
or as Cold War 2.0, trying to get a new network going all together, which people want to join.

580
01:06:30,726 --> 01:06:40,146
And so maybe that shift from USAID type of like kind of U.S. tentacled influence around the world

581
01:06:40,146 --> 01:06:46,226
through money laundered to foreign entities to promote a certain type of ideology that's

582
01:06:46,226 --> 01:06:54,506
perceived to be Western around gender or something like that, you know, maybe that type of soft

583
01:06:54,506 --> 01:07:01,686
influence can decline as we realize that that's not important. The Cold War 2.0, again, is about

584
01:07:01,686 --> 01:07:08,666
the techno authoritarian stack, you know, versus whatever we're going to counterpose against that,

585
01:07:08,666 --> 01:07:12,626
which is, as Pines proposes, Bitcoin.

586
01:07:13,106 --> 01:07:17,666
Bitcoin, you know, maybe they're, you know, USAID should support,

587
01:07:18,066 --> 01:07:22,386
begin to support Bitcoin development in rural communities in Africa.

588
01:07:22,686 --> 01:07:24,626
You know, things like that.

589
01:07:24,766 --> 01:07:25,866
If we really do want to.

590
01:07:26,526 --> 01:07:30,226
Maybe it should support Bitcoin development in rural communities in Nebraska.

591
01:07:31,006 --> 01:07:31,846
It could do that, too.

592
01:07:32,066 --> 01:07:38,146
I mean, I only mean if we want, if we consider USAID as a form of soft power influence around the world

593
01:07:38,146 --> 01:07:40,806
to promote U.S. interests,

594
01:07:40,946 --> 01:07:43,366
and we're now moving from a Cold War 1.0

595
01:07:43,366 --> 01:07:44,866
to a Cold War 2.0 paradigm.

596
01:07:45,946 --> 01:07:46,626
I mean, I agree.

597
01:07:46,706 --> 01:07:48,046
I don't think that the U.S. should be funding

598
01:07:48,046 --> 01:07:49,946
a lot of things around the world in any sense.

599
01:07:49,986 --> 01:07:53,466
And I think that a lot of these types of attempts

600
01:07:53,466 --> 01:07:57,766
to interfere or interject aid abroad to accomplish a goal,

601
01:07:58,186 --> 01:08:01,246
they end up as that one line item you noted

602
01:08:01,246 --> 01:08:03,146
going into terrorist hands, things like that.

603
01:08:03,146 --> 01:08:08,126
I am just saying that if you were a full-throated proponent

604
01:08:08,126 --> 01:08:10,746
of the exercise of American power abroad,

605
01:08:11,606 --> 01:08:13,306
you should still buy into Pine's thesis

606
01:08:13,306 --> 01:08:14,986
and try to exercise that power

607
01:08:14,986 --> 01:08:17,806
to steer people towards adoption

608
01:08:17,806 --> 01:08:20,366
of the Bitcoin network by supporting that.

609
01:08:20,726 --> 01:08:21,986
And again, I don't think the government

610
01:08:21,986 --> 01:08:22,866
should have its hands in that.

611
01:08:22,966 --> 01:08:24,826
The Human Rights Foundation is doing that.

612
01:08:24,946 --> 01:08:26,186
There are private entities,

613
01:08:26,446 --> 01:08:28,046
individual citizens on the ground.

614
01:08:28,286 --> 01:08:30,006
The thing about Bitcoin is it's monetizing.

615
01:08:30,106 --> 01:08:31,086
It's going to do that itself.

616
01:08:31,206 --> 01:08:32,786
It bootstraps itself into

617
01:08:32,786 --> 01:08:35,286
kind of people wanting to do it.

618
01:08:35,426 --> 01:08:37,506
So I do think it's right to zoom out as you did.

619
01:08:37,506 --> 01:08:45,166
I think even zooming out, we can see that we're going to win Cold War 2.0, not with that type of graft that you've been citing.

620
01:08:45,886 --> 01:08:47,746
Yeah, I do think that you're right.

621
01:08:47,906 --> 01:08:56,666
Like, I do think that we'll look back someday and we'll look at all these podcasts and we'll look at all these talks we had and we'll look at all these things that we got excited about.

622
01:08:56,666 --> 01:09:04,406
and we'll realize that it was all barely moving the needle

623
01:09:04,406 --> 01:09:07,106
because what we were doing was watching,

624
01:09:07,406 --> 01:09:09,646
we were watching an idea whose time had come

625
01:09:09,646 --> 01:09:12,146
and it was simply going to happen.

626
01:09:12,326 --> 01:09:16,546
I do believe that it's incredibly important though

627
01:09:16,546 --> 01:09:19,666
for people to do things like this,

628
01:09:19,726 --> 01:09:20,866
to write papers like this,

629
01:09:20,986 --> 01:09:23,666
to move the policy discussion

630
01:09:23,666 --> 01:09:26,466
and the Overton window of what's acceptable

631
01:09:26,466 --> 01:09:34,366
to discuss in political circles, to move that a little bit further into this direction.

632
01:09:35,446 --> 01:09:37,286
Pines does an excellent job with that paper.

633
01:09:37,406 --> 01:09:43,086
One of the things that I really thought was interesting is how he draws the direct line

634
01:09:43,086 --> 01:09:50,226
between the atrophy of the defense industrial base and the dollar system.

635
01:09:50,226 --> 01:10:01,086
So effectively, to summarize what he says is basically that we have seen our industrial base for defense manufacturers,

636
01:10:01,666 --> 01:10:12,526
companies that make missiles and aircrafts and tanks and jeeps and tracked combat vehicles and torpedoes and helicopters, all of those things.

637
01:10:12,866 --> 01:10:18,406
We have seen the number of companies that do that shrink to effectively nothing.

638
01:10:18,406 --> 01:10:26,146
Um, so, uh, basically, uh, we have one, there's one company that makes tanks, general dynamics.

639
01:10:26,286 --> 01:10:27,326
They have no competition.

640
01:10:28,006 --> 01:10:32,506
Um, there's two companies that make missiles, Boeing and Lockheed Martin.

641
01:10:32,666 --> 01:10:34,886
There's two companies that make torpedoes.

642
01:10:35,006 --> 01:10:39,506
There's two companies that make, um, launch vehicles that are, are not reusable.

643
01:10:39,746 --> 01:10:41,526
There's three companies that make airplanes.

644
01:10:41,526 --> 01:10:47,226
Like we have lost all of this because what we have done is said, okay, we're going to

645
01:10:47,226 --> 01:10:54,426
export dollars, which means we have to import stuff. By the way, we've got people over here

646
01:10:54,426 --> 01:11:02,766
that they're super rich and they got super rich by developing these defense companies.

647
01:11:03,626 --> 01:11:08,846
And hey, we'll just make some more of this fake money and we'll give it to you and we'll call that

648
01:11:08,846 --> 01:11:12,586
investment. They're going to come over and now they're going to show you how to make these parts

649
01:11:12,586 --> 01:11:14,466
for our stuff in your country.

650
01:11:15,146 --> 01:11:17,126
So we'll buy it from you with this money

651
01:11:17,126 --> 01:11:18,246
that we made up out of nothing.

652
01:11:18,426 --> 01:11:22,586
And so it always comes back to the idea

653
01:11:22,586 --> 01:11:23,846
that there is no free lunch.

654
01:11:24,126 --> 01:11:25,846
Like you don't get something for free.

655
01:11:26,246 --> 01:11:29,706
You give up something huge when you offer nothing.

656
01:11:30,606 --> 01:11:33,526
And what you give up is apparently

657
01:11:33,526 --> 01:11:35,986
the ability to protect yourself from others.

658
01:11:35,986 --> 01:11:41,526
The ability to really stand up a good army,

659
01:11:41,526 --> 01:11:49,146
a good navy a good military the shocking because i read it i read it three times and you noted it

660
01:11:49,146 --> 01:11:56,186
in your summary that china has 232 times the building capacity for ships that the united

661
01:11:56,186 --> 01:12:01,706
states does as in 2023 i don't think it's gotten better i would assume that it's gotten much worse

662
01:12:01,706 --> 01:12:09,506
yeah i would like i cannot imagine that u.s global competitive advantage in um in manufacturing

663
01:12:09,506 --> 01:12:12,466
has done anything but decline since 2022.

664
01:12:13,606 --> 01:12:20,386
And that's very significant because the U.S. has its power and its privilege as the issuer

665
01:12:20,386 --> 01:12:23,986
of global reserve currency and as an empire or whatever.

666
01:12:24,206 --> 01:12:26,346
We protect global trade routes with our Navy.

667
01:12:26,546 --> 01:12:28,126
We keep trade open and flowing.

668
01:12:28,626 --> 01:12:34,886
You can't do that if you're 232X smaller in power than your rival.

669
01:12:34,886 --> 01:12:39,006
We are not the ones who can assure that trade routes stay open.

670
01:12:39,006 --> 01:12:40,206
I mean, yeah.

671
01:12:40,726 --> 01:12:40,946
Yeah.

672
01:12:41,526 --> 01:12:44,786
As the Royal United Services found in their study,

673
01:12:45,466 --> 01:12:48,086
a country must have either the manufacturing capacity

674
01:12:48,086 --> 01:12:50,366
to build massive quantities of ammunition

675
01:12:50,366 --> 01:12:53,566
or have other manufacturing industries

676
01:12:53,566 --> 01:12:56,386
that can be rapidly converted to ammunition production.

677
01:12:56,746 --> 01:12:57,986
You noted this in your summary.

678
01:12:57,986 --> 01:13:01,086
You can't just go from being a banker to making missiles.

679
01:13:02,066 --> 01:13:02,186
Yeah.

680
01:13:02,546 --> 01:13:05,646
Unfortunately, the West no longer seems to have either.

681
01:13:05,646 --> 01:13:18,046
If competition between autocracies and democracies has really entered a military phase, then the arsenal of democracy must first radically improve its approach to the production of material in wartime.

682
01:13:19,626 --> 01:13:33,346
This again, this goes back to highlight something that Jason Lowry brings up in his thesis, which is that there are benefits to autocracies.

683
01:13:33,346 --> 01:13:43,286
And one of the benefits, in fact, probably the most glaring benefit is that they are fast to move, that they can decide things, that they can go after it.

684
01:13:43,286 --> 01:13:53,926
democracy in the United States particularly was designed to be at loggerheads at all times.

685
01:13:53,926 --> 01:14:06,126
It was designed to be slow to change because rapid change without forethought has some pretty awful secondary consequences.

686
01:14:06,126 --> 01:14:16,086
And so we are in a position where we are undoubtedly competitionally restricted.

687
01:14:16,646 --> 01:14:18,546
We're in a very bad position.

688
01:14:19,286 --> 01:14:29,966
And not only are we in a very bad position, we are of a political system that does not lend itself to making rapid change.

689
01:14:29,966 --> 01:14:43,366
I think with the current administration, just in the first two weeks, I think that we're seeing evidence that we can see some type of rapid change.

690
01:14:43,646 --> 01:14:47,966
But I'm not sure yet what extent that can go to.

691
01:14:49,186 --> 01:14:54,726
We can see some sort of really shaking up.

692
01:14:55,726 --> 01:14:56,746
But I don't know.

693
01:14:56,746 --> 01:15:04,346
you know you can't you can't just you can't just build a port yeah you can't just build a a ship

694
01:15:04,346 --> 01:15:09,486
you know you can't just immediately catch up like you have to do certain things that

695
01:15:09,486 --> 01:15:15,466
certain things that the chinese have done very well for 40 years industrial espionage i mean

696
01:15:15,466 --> 01:15:24,006
yeah industrial espionage is um something that you have to do in order to stay up and

697
01:15:24,006 --> 01:15:39,166
And Mark Andreessen actually talks about this very well in one of his recent interviews where, you know, we've long celebrated the idea that the best minds in the world come to the United States to become educated.

698
01:15:40,686 --> 01:15:44,886
And our benefit from that is that some of them stay here.

699
01:15:44,886 --> 01:15:54,306
A lot of them, however, they take that knowledge and they go back to their country and they implement whatever it is they learn.

700
01:15:55,046 --> 01:16:00,826
And we end up shooting ourselves in the foot twofold.

701
01:16:01,926 --> 01:16:05,506
He was talking about affirmative action.

702
01:16:05,506 --> 01:16:15,086
and what affirmative action has actually done is that it didn't help black people get into school,

703
01:16:15,286 --> 01:16:17,486
at least not black people in the United States.

704
01:16:17,846 --> 01:16:24,886
If you're from Nigeria, if you're from Senegal, if you're from South America, then yes.

705
01:16:25,166 --> 01:16:27,086
But if you're from Chicago, no.

706
01:16:27,306 --> 01:16:31,466
In fact, it actually did not improve your opportunity to get into school.

707
01:16:31,466 --> 01:16:55,486
And so therefore, what we saw was we have a brain drain where we suck talent out of other countries and try to bring it here. A lot of it leaves, but we have let atrophy the brains of our domestic base, people from Wisconsin, Nebraska.

708
01:16:55,486 --> 01:17:17,526
I think he noted four specific groups. If you are white, if you're Jewish, if you're black, and if you're Asian, white, Jewish, black, and Asian, if you're any one of those four, then you have suffered greatly from affirmative action, which was put in place ostensibly for black people.

709
01:17:17,526 --> 01:17:29,526
Um, and so what, again, these, these long scale, long scale consequences of, of what are we trying to do by intervening?

710
01:17:30,446 --> 01:17:30,966
Yeah.

711
01:17:31,086 --> 01:17:35,426
Once again, we're, we're trying to fix a problem that we all, we created.

712
01:17:36,046 --> 01:17:36,486
Yeah.

713
01:17:36,686 --> 01:17:46,526
You know, we, not only do we not have a military industrial base, not only do we not have a middle class, not only do we not have a commercial consumer industrial base,

714
01:17:46,526 --> 01:18:00,926
We do not have a base of talent, of domestic talent, because we have not cultivated that in the same way that we have cultivated talent from other countries.

715
01:18:03,026 --> 01:18:06,606
And that's due to intervention.

716
01:18:07,026 --> 01:18:15,086
I mean, that's due to people trying to intervene on top of the free market in some way to do some sort of statist or authoritarian intervention.

717
01:18:15,086 --> 01:18:29,946
And I think that what's really interesting, too, about the network power competition that we find ourselves in is that we don't win by becoming, we don't beat the techno-authoritarian stack by becoming techno-authoritarian light.

718
01:18:30,226 --> 01:18:31,986
We don't beat it by intervention.

719
01:18:32,306 --> 01:18:41,806
We need to do some quick interventions, as you know, to right the ship, such as eliminating structural things that are causing bad incentives.

720
01:18:41,806 --> 01:19:00,266
But once we get our incentives in order, things grow in a capitalist free market, democratic and open system. Things grow from the fertile soil of all the minds, peer to peer, decentralized that connect with themselves to transact in a way that they don't grow in authoritarian societies.

721
01:19:00,266 --> 01:19:27,599
And so what we doing if we act in as Pines proposes is just writing the system and letting the system do its thing which the system again being you and me it not like we can passively sit by but it letting people in an open system show that openness always wins That the theory That the thesis of our nation over authoritarianism of the type of like you know we almost lurched towards in the past

722
01:19:27,739 --> 01:19:32,339
I don't know how, you know, a couple of decades, but which we can write ourselves again and

723
01:19:32,339 --> 01:19:38,759
remove state intervention and allow ourselves to reassert our thesis that freedom and liberty is

724
01:19:38,759 --> 01:19:44,539
what wins in the long run because it is, it does conduce to strength. Yeah. And the strength is in

725
01:19:44,539 --> 01:19:51,339
numbers is just that, you know, over a long enough timeframe, if there's a technology that's

726
01:19:51,339 --> 01:19:56,879
available to everyone that benefits everyone, then everyone will adopt it. Um, you know,

727
01:19:56,879 --> 01:20:07,799
there, there are, there are no advantages long-term to holding someone down to, to oppressing,

728
01:20:07,799 --> 01:20:16,259
to intervening in order to create desired outcomes that you can't predict.

729
01:20:17,399 --> 01:20:23,159
And so we do end up in this, you know, it's a very tough spot.

730
01:20:23,999 --> 01:20:30,879
And I think this is why I keep saying, like, this is kind of looking at the trees and not the forest.

731
01:20:31,379 --> 01:20:36,279
It is a very tough spot that we are in, but it's not a difficult decision.

732
01:20:36,279 --> 01:20:47,899
It is, I was thinking about the movie 127 Hours because I was driving past the place where the guy, he fell into the canyon, right?

733
01:20:48,199 --> 01:20:48,739
And he got his arms.

734
01:20:48,739 --> 01:20:51,099
Oh, that's the one about him being pinched between the boulders.

735
01:20:51,099 --> 01:20:52,839
Yeah, he had to cut his own arm off.

736
01:20:54,679 --> 01:21:04,639
And that's really, I think that's what you need to think about in terms of like you need to cut yourself free from this.

737
01:21:04,639 --> 01:21:09,619
as a, I'm not talking about you, I'm talking about the United States, like, look, do you want to

738
01:21:09,619 --> 01:21:18,159
compete on a global scale? And do you want to have innovation? And do you want to be a light

739
01:21:18,159 --> 01:21:28,099
of liberty and democracy and freedom and choice and the ability to pursue that which

740
01:21:28,099 --> 01:21:32,499
is noble and productive and creative,

741
01:21:33,619 --> 01:21:34,699
do you want that?

742
01:21:35,139 --> 01:21:38,579
Or do you want to hang on to this necrotic,

743
01:21:39,119 --> 01:21:44,039
dying limb that you have this tie to

744
01:21:44,039 --> 01:21:48,979
because it's part of you right now that you created?

745
01:21:48,979 --> 01:21:52,259
Pull out that pen knife and start hacking away

746
01:21:52,259 --> 01:21:54,819
because you need to get rid of this thing

747
01:21:54,819 --> 01:21:57,099
because it is cancerous, it's necrotic,

748
01:21:57,099 --> 01:21:59,919
It's killing everything that it touches.

749
01:22:01,779 --> 01:22:06,079
Everything that it comes into contact with, it is corrupting.

750
01:22:06,899 --> 01:22:11,899
It's making them poor.

751
01:22:12,479 --> 01:22:16,379
It's making them short-sighted in their approach to the world.

752
01:22:17,219 --> 01:22:19,119
It's creating dissension.

753
01:22:19,119 --> 01:22:21,379
like

754
01:22:21,379 --> 01:22:25,019
it's just so simple

755
01:22:25,019 --> 01:22:26,659
when you zoom out you're like

756
01:22:26,659 --> 01:22:28,899
okay there's a game being

757
01:22:28,899 --> 01:22:30,959
played and there's this bully

758
01:22:30,959 --> 01:22:32,819
that's in charge of the game and

759
01:22:32,819 --> 01:22:34,940
they set their own rules and they always

760
01:22:34,940 --> 01:22:36,819
win and you can go

761
01:22:36,819 --> 01:22:38,940
play that game or you can

762
01:22:38,940 --> 01:22:40,999
go play a fair game where the rules

763
01:22:40,999 --> 01:22:42,899
are clearly stated they're the same

764
01:22:42,899 --> 01:22:43,619
for everyone

765
01:22:43,619 --> 01:22:46,719
and nobody is

766
01:22:46,719 --> 01:22:48,279
advantaged over somebody else

767
01:22:48,279 --> 01:22:54,039
So, you know, it's a tough position, but it's an easy decision, I think, is what I'm saying.

768
01:22:54,039 --> 01:22:58,419
It's an easy decision if we zoom out and have foresight and have a strategic plan.

769
01:22:58,419 --> 01:23:03,319
And this paper is about how we currently have the absence of a plan.

770
01:23:03,459 --> 01:23:08,639
China has its block, build, and expand kind of a grand strategy.

771
01:23:08,899 --> 01:23:12,079
On this and other fronts, a digital belt or what is it?

772
01:23:12,119 --> 01:23:18,199
The Belt and Road and the Digital Silk Road initiatives, two initiatives to kind of create infrastructure.

773
01:23:18,279 --> 01:23:21,679
and networks physically and digitally around the world.

774
01:23:22,239 --> 01:23:23,419
What is the United States plan?

775
01:23:23,579 --> 01:23:24,879
And I think you're right.

776
01:23:24,979 --> 01:23:28,139
We need to zoom out and note the power of freedom.

777
01:23:28,359 --> 01:23:30,839
And then Pines is right that specifically, here's how we do it.

778
01:23:30,839 --> 01:23:36,559
We need to note that the monetary system we are within USD as global reserve currency

779
01:23:36,559 --> 01:23:37,639
is not the way.

780
01:23:37,819 --> 01:23:42,919
And here's a way to bootstrap into systems where people around the world will opt into

781
01:23:42,919 --> 01:23:50,639
our network on a free basis. Even as authoritarian countries try to impose CBDCs on their people,

782
01:23:50,639 --> 01:23:56,859
they will personally opt into the systems that we support because you can't stop Bitcoin from

783
01:23:56,859 --> 01:24:04,999
that type of adoption organically in those types of countries. So one final question I had, at least,

784
01:24:05,539 --> 01:24:11,959
was you cited Lowry, I think, a couple of times. And I wanted to get your take on

785
01:24:11,959 --> 01:24:20,959
a synthesis or just how they stack together Lowry's thesis and Pine's ideas. And to kick that off,

786
01:24:20,959 --> 01:24:26,319
I noted that there was one time where Pine's mentioned power projection, which is a key aspect

787
01:24:26,319 --> 01:24:34,239
of Lowry's theory. It's a common idea within military strategy. So it's not like it's only

788
01:24:34,239 --> 01:24:39,459
Lowry, but maybe it's a way to begin to compare the two. And I have a quote here. I'll read this

789
01:24:39,459 --> 01:24:41,599
and hopefully it'll give the basis for a question.

790
01:24:41,599 --> 01:24:43,919
So, quote, this is Pines.

791
01:24:44,359 --> 01:24:50,919
This authoritarianism as a service fulfills a strategic purpose

792
01:24:50,919 --> 01:24:55,179
given China's current geostrategic power projection gap.

793
01:24:55,659 --> 01:25:00,839
It does not have the Blue Water Navy and overseas basing infrastructure yet

794
01:25:00,839 --> 01:25:05,459
to confidently secure its access to necessary strategic resources.

795
01:25:06,239 --> 01:25:15,339
Imperial aspirants of the past typically relied on in-situ military capabilities to keep pliable governments in power or to replace them.

796
01:25:15,739 --> 01:25:30,559
While its private military companies are growing alongside China's overseas energy and natural resource operations, these are still small-scale and lack official reinforcement to be a credible strategic force in distant political capitals.

797
01:25:30,559 --> 01:25:46,499
Wagner Group has filled this gap somewhat in certain, especially weak and unstable locales, but those mercenaries don't report ultimately to Beijing.

798
01:25:46,499 --> 01:26:01,699
While China hopes to have the hard power necessary eventually to project force across Eurasia, the next best thing is to close the, quote, virtual distance by means of digital colonization.

799
01:26:01,699 --> 01:26:07,259
foreign governments that rely on chinese providers for their essential digital telecommunications and

800
01:26:07,259 --> 01:26:12,379
financial infrastructure will have essentially traded away a good portion of their sovereignty

801
01:26:12,379 --> 01:26:18,539
and become de facto captured in china's strategic sphere of influence such governments are unlikely

802
01:26:18,539 --> 01:26:22,239
to renege on a contract with a chinese firm or against beijing at the un or other international

803
01:26:22,239 --> 01:26:30,359
forum so the i think just to kick off a question to you about lowry um this then china is trying to

804
01:26:30,359 --> 01:26:35,480
project digital power, not by harnessing proof of work or building on top of proof of work,

805
01:26:35,480 --> 01:26:43,639
but by digital colonization, supplying infrastructure and its authoritarian stack,

806
01:26:44,059 --> 01:26:49,980
authoritarianism as a service to other countries, hoping that they utilize, accept, and then build

807
01:26:49,980 --> 01:26:58,359
on that, giving China god-king admin rights over the thoroughfare that is digital finance,

808
01:26:58,359 --> 01:27:14,219
So finance as such. I mean, I guess, do you think that that's a good way to look at it? Does that put it in terms of Lowry's theory? And then I guess, what do you think Lowry would say to kind of Pine's statement of China's direction?

809
01:27:14,219 --> 01:27:16,539
or however you want to take that.

810
01:27:16,659 --> 01:27:18,940
It's just interesting to think how, you know,

811
01:27:19,099 --> 01:27:24,239
Lowry, given a software thesis that Bitcoin is physical power projection in cyberspace,

812
01:27:24,319 --> 01:27:25,379
that's what makes it valuable,

813
01:27:25,799 --> 01:27:29,419
goes up against Pine's statement of what China is actually doing,

814
01:27:29,739 --> 01:27:33,480
projecting power by creating that digital space from the ground up,

815
01:27:33,480 --> 01:27:37,739
by creating a new network in which it will have God-King admin rights.

816
01:27:38,339 --> 01:27:38,519
Yeah.

817
01:27:39,319 --> 01:27:42,559
So China actually has something to offer.

818
01:27:42,559 --> 01:27:53,359
You know, China can build. We cannot build. China can produce and manufacture. We can't do that.

819
01:27:55,299 --> 01:28:04,279
They actually have something to offer. They come in and they say, look, hey, you can have access to all of our economy, all of our goods and services.

820
01:28:05,379 --> 01:28:08,999
You know, we'll build ports, we'll build roads, we'll do all of this stuff.

821
01:28:09,599 --> 01:28:14,480
And by the way, we'll throw in this currency that makes it really easy for you to pay us.

822
01:28:14,719 --> 01:28:17,299
You can also have control over your citizens.

823
01:28:17,419 --> 01:28:17,919
That's awesome.

824
01:28:18,799 --> 01:28:19,819
You know, you want that.

825
01:28:19,980 --> 01:28:28,119
So if you're a government, you want that because you are adversarial with your constituents.

826
01:28:29,419 --> 01:28:30,379
You should be.

827
01:28:30,679 --> 01:28:31,219
You should be.

828
01:28:31,219 --> 01:28:33,579
You should not trust your government.

829
01:28:33,759 --> 01:28:38,619
You're not supposed to because a government will get out of control.

830
01:28:38,619 --> 01:29:00,039
So they have something to offer. The United States doesn't have anything to offer. The only thing the United States has to offer is, hey, we'll give you access to everything from China, but we'll take a 7% cut when we exchange your money for dollars and then change it back into yuan to pay China.

831
01:29:00,039 --> 01:29:09,299
So we have nothing to offer. I think what we really need to focus on is having something to offer.

832
01:29:12,440 --> 01:29:19,319
So we've talked a lot about the decay of the industrial base, the loss of the middle class.

833
01:29:19,599 --> 01:29:22,359
We've talked about all the things that we've lost.

834
01:29:22,619 --> 01:29:28,299
But let's highlight people like Palmer Luckey and let's highlight Palantir.

835
01:29:28,299 --> 01:29:38,339
Palantir and, you know, these companies that are, and Tesla and Amazon and to a certain extent,

836
01:29:38,480 --> 01:29:43,239
maybe Meta. I don't know that Meta is really doing anything truly useful right now.

837
01:29:44,059 --> 01:29:51,239
They're going to have a project to lay subsea cables, which is a material in-world project

838
01:29:51,239 --> 01:29:52,239
to create some infrastructure.

839
01:29:52,239 --> 01:29:56,039
I thought about that. What's the point of laying subsea cables when you've got Starlink?

840
01:29:58,299 --> 01:30:01,739
So you're not dependent on somebody else to manage your network, I guess.

841
01:30:02,059 --> 01:30:04,919
Or aren't you dependent on who's managing the subsea cable?

842
01:30:05,379 --> 01:30:08,359
I mean, unless you're managing it or something like that.

843
01:30:08,440 --> 01:30:09,959
Maybe there's greater throughput as well.

844
01:30:10,099 --> 01:30:10,579
I don't know.

845
01:30:10,759 --> 01:30:10,940
Yeah.

846
01:30:11,480 --> 01:30:16,980
But, I mean, anyways, but to say the United States has a lot to offer.

847
01:30:16,980 --> 01:30:21,299
The United States is the leader in a lot of technology.

848
01:30:21,299 --> 01:30:33,759
and it's done that despite being handcuffed by this previous administration and to a certain

849
01:30:33,759 --> 01:30:41,679
extent I would say going all the way back decades where we've had a really adversarial nature with

850
01:30:41,679 --> 01:30:50,899
technology and tech entrepreneurs that was basically extractive, oppressive and really

851
01:30:50,899 --> 01:30:53,999
putting the thumb down on people that were changing the world.

852
01:30:54,179 --> 01:30:59,559
So that is all to say, where does this align?

853
01:30:59,839 --> 01:31:03,440
How do we find similarities in this and Jason Lowry's thesis?

854
01:31:05,179 --> 01:31:07,819
If there are such similarities, unless you think they're different,

855
01:31:07,999 --> 01:31:10,399
like distinct, I guess, or oppositional.

856
01:31:10,399 --> 01:31:17,440
I think, so first off, I think when I read this,

857
01:31:17,440 --> 01:31:23,459
I thought of Lowry's thesis because I thought of this as kind of an application of grounded theory methodology,

858
01:31:23,980 --> 01:31:28,980
where you have two people that are coming at this from different directions,

859
01:31:29,199 --> 01:31:34,499
pulling from different sources, and coming to the same conclusion,

860
01:31:34,879 --> 01:31:38,099
which, as we mentioned in our software discussion,

861
01:31:38,699 --> 01:31:45,119
that is one of the benefits of grounded theory methodology over a typical hypothesis-first approach,

862
01:31:45,119 --> 01:31:52,659
is that hypothesis first approach, future attempts to do the same research,

863
01:31:52,899 --> 01:31:58,059
they only reconfirm, they don't actually make anything more robust.

864
01:31:58,539 --> 01:32:03,079
Grounded theory means that we have tested this in different ways,

865
01:32:03,339 --> 01:32:06,239
and it still is not false.

866
01:32:06,559 --> 01:32:09,139
And so that gets us closer to truth.

867
01:32:09,139 --> 01:32:14,519
So I think that this gets us closer to truth.

868
01:32:15,119 --> 01:32:25,039
in the subject. Jason Lowry is coming at this from the idea that Bitcoin is an imperative

869
01:32:25,759 --> 01:32:34,399
for global power projection competitions. I think Matthew Pines is saying that Bitcoin is

870
01:32:34,399 --> 01:32:53,719
is unavoidable as a means of shoring up and attempting to maintain some sort of political global dominance for the United States

871
01:32:53,719 --> 01:32:58,259
as the world moves from unipolar to multipolar.

872
01:32:58,259 --> 01:33:26,639
I think they get to the same place, especially at the very end, Pine's notes, the abundant energy production of the United States lends itself to effectively standing up its own hash force and creating its own hashing industry in order to have domestic control over its ability to put transactions on the blockchain.

873
01:33:26,639 --> 01:33:29,639
I find a lot of similarities.

874
01:33:29,859 --> 01:33:40,339
In fact, before we got on, I was reading through the citations to see if he actually cited Jason Lowry's thesis, which he does not.

875
01:33:40,499 --> 01:33:44,759
However, it does sound as though if he hasn't read it, I would be amazed.

876
01:33:45,419 --> 01:33:45,639
Yeah.

877
01:33:46,319 --> 01:33:47,399
He's read it, for sure.

878
01:33:47,399 --> 01:33:59,819
Yeah, so I'm super excited about this path of discussion because I think that it moves us a little bit closer to common sense.

879
01:34:00,079 --> 01:34:06,299
I think it moves us a little bit closer to taking out the pen knife and cutting off that necrotic arm.

880
01:34:06,299 --> 01:34:17,999
I think it moves us a little bit closer to let's think about the solution that works for the next thousand years, not the solution that works for the next midterm elections.

881
01:34:20,940 --> 01:34:26,980
So overall, I really appreciated this paper by Matthew Pines.

882
01:34:27,079 --> 01:34:34,879
I've read it twice now, and I may go back and even read it again just because I seem to keep picking up different things.

883
01:34:34,879 --> 01:34:45,219
As you noted, his approach to writing is more formalized and therefore very dense in the word.

884
01:34:45,339 --> 01:34:48,739
The word choice carries a lot of weight.

885
01:34:50,379 --> 01:34:54,499
And so he is very specific, very precise in his language.

886
01:34:56,259 --> 01:35:02,679
This reads, you do maybe have to read it and then, as you said, maybe copy and paste,

887
01:35:02,679 --> 01:35:09,219
put it into chat GPT and say, what, what exactly are we talking about here? Um, or do what I do,

888
01:35:09,219 --> 01:35:13,859
which is kind of like try to break it down into like hillbilly speech and say like, well, what,

889
01:35:13,980 --> 01:35:17,539
what's happening here? It's like, oh, the U S spit on Russia. And now everybody decides they're

890
01:35:17,539 --> 01:35:24,539
going to spit back. Okay, cool. Got it. Yeah. Um, so yeah, I'm that, I guess that's where I,

891
01:35:24,539 --> 01:35:27,379
that's where I kind of come down is that I find,

892
01:35:27,659 --> 01:35:37,499
I find that even though Matthew Pines may not be advocating in as full

893
01:35:37,499 --> 01:35:41,019
throated a manner for what Jason Lowry is,

894
01:35:41,859 --> 01:35:45,339
it would be hard to do that because,

895
01:35:45,339 --> 01:35:45,919
uh,

896
01:35:45,919 --> 01:35:50,599
what Jason Lowry says is very cut and dry.

897
01:35:51,199 --> 01:35:51,659
Um,

898
01:35:51,919 --> 01:35:52,899
you need to do this.

899
01:35:52,899 --> 01:35:54,279
You need to do it now.

900
01:35:54,539 --> 01:36:05,239
You need to do it wholeheartedly, full-throatedly, and with as much resources as you can bear because this is a war and it's already happening and it's been happening for a while.

901
01:36:05,519 --> 01:36:08,480
So, yeah, that's kind of what I think about it.

902
01:36:08,480 --> 01:36:16,919
No, Pines has to be the public messaging and language we use to talk to politicians right now to begin action.

903
01:36:16,919 --> 01:36:24,899
And Lowry's thesis is what you hold in your heart to motivate you long term to understand the significance of what you're doing.

904
01:36:24,899 --> 01:36:36,319
I think that right now, think about like rhetorically the Bitcoin strategic reserve, a sovereign wealth fund that may include Bitcoin.

905
01:36:36,459 --> 01:36:39,039
These types of thoughts are being considered by the administration.

906
01:36:39,799 --> 01:36:46,779
So there needs to be a dialogue that connects to the decision makers in the room regarding these things.

907
01:36:46,919 --> 01:36:50,879
maybe back channel talking, you know, amongst themselves.

908
01:36:51,059 --> 01:36:52,219
Lowry's thesis does that.

909
01:36:52,219 --> 01:36:57,139
But public messaging to them, as Pines did, he has another publication with the Bitcoin

910
01:36:57,139 --> 01:37:02,459
Policy Institute, which is like a policy brief to incoming Treasury Secretary Besant, where

911
01:37:02,459 --> 01:37:08,419
he really formulates this in a way that could be acceptable to Besant and also acceptable

912
01:37:08,419 --> 01:37:12,679
to people he would have to answer to both, you know, upward hierarchically to Trump and

913
01:37:12,679 --> 01:37:16,520
also outward to the people who may be skeptical of Bitcoin somewhat.

914
01:37:16,919 --> 01:37:23,239
For example, I would note two, I think, good faith critics of the Bitcoin strategic reserve, George Selgin and Nick Carter.

915
01:37:23,899 --> 01:37:28,759
George Selgin, from the angle that why do you need a Bitcoin strategic reserve?

916
01:37:29,020 --> 01:37:37,619
Strategic reserves are used to backstop a foreign currency because they're not the global reserve currency.

917
01:37:38,119 --> 01:37:40,099
We're the global reserve currency. We don't need that.

918
01:37:40,259 --> 01:37:45,379
And then Nick Carter, his critique, I take it being something – as I understand it being something like,

919
01:37:45,379 --> 01:37:49,539
you're going to signal weakness in the dollar or run on these types of things.

920
01:37:49,599 --> 01:37:53,639
So those are both good faith critics because at their heart, those people both understand Bitcoin.

921
01:37:54,279 --> 01:38:03,039
And this is a good response to both of them, like Pines steady approach where you want the first mover advantage into the Bitcoin network.

922
01:38:03,039 --> 01:38:10,980
We can do this without trashing the dollar by incorporating stable coins in response to Selgin kind of just openly acknowledging,

923
01:38:10,980 --> 01:38:18,279
maybe this is a move away from the U.S.'s global reserve currency while maintaining dollar dominance.

924
01:38:18,879 --> 01:38:21,699
But we're going to get out of the Triffin dilemma one way or the other.

925
01:38:21,839 --> 01:38:23,559
And so we're going to need a strategic reserve.

926
01:38:23,559 --> 01:38:30,480
And if we're going to bootstrap ourselves out, slowly monetize a different system, we have to start somewhere, something like that.

927
01:38:30,539 --> 01:38:35,579
But I think Pines offers a very productive dialogue to the decision makers in the room,

928
01:38:35,619 --> 01:38:39,079
as well as good faith critics to the Bitcoin strategic reserve.

929
01:38:39,079 --> 01:38:56,959
Yeah, I think it's just like, again, going back to kind of hammer this point home, is that it's really important to consider if having the global reserve currency is a benefit because of the Triffin dilemma.

930
01:38:56,959 --> 01:39:11,259
And so if you have the global reserve currency, then you will export currency and you will import goods and services and you will export your industrial base and your defense capacity and your middle class and your skills.

931
01:39:12,199 --> 01:39:14,039
You will export all of those things.

932
01:39:14,299 --> 01:39:16,199
You will lose those things.

933
01:39:16,359 --> 01:39:20,020
And I don't think that there's a way to avoid that.

934
01:39:20,020 --> 01:39:30,339
I was trying to think through in my mind if there was a way to limit, like, oh, we're going to export dollars.

935
01:39:30,639 --> 01:39:37,259
We'll sell you dollars, but we only will sell it for energy.

936
01:39:37,759 --> 01:39:38,619
Like, what if we did that?

937
01:39:38,719 --> 01:39:40,919
What if we only sold it for energy?

938
01:39:42,139 --> 01:39:45,659
Then that might be maybe something.

939
01:39:45,659 --> 01:39:54,059
Because if you're bringing more energy into your country, then you are creating opportunities.

940
01:39:55,059 --> 01:39:58,339
So maybe that's something that you could do.

941
01:39:58,599 --> 01:40:09,739
But I just, you know, people don't have a hard time trading a pair of Nikes for made-up imaginary money.

942
01:40:09,739 --> 01:40:15,639
But eventually they're going to get tired of trading oil and coal and natural gas for that.

943
01:40:15,659 --> 01:40:18,039
So I don't think that that works long term.

944
01:40:18,319 --> 01:40:22,199
So the Triffin dilemma was a really fun thing to learn about.

945
01:40:22,759 --> 01:40:28,959
I think it's something that we intuitively kind of understand maybe,

946
01:40:29,179 --> 01:40:35,379
but to hear it kind of lined out and really understand it from that perspective of

947
01:40:35,379 --> 01:40:39,139
when you have the global reserve currency, this is what will happen.

948
01:40:39,319 --> 01:40:41,119
You will hollow out your country.

949
01:40:41,359 --> 01:40:42,799
You will create populism.

950
01:40:42,799 --> 01:40:51,279
that populism will result in massive political instability like this is all just step by step by

951
01:40:51,279 --> 01:40:57,399
step by step down the road we go yeah and and so this is profound this tripping dilemma is propounded

952
01:40:57,399 --> 01:41:04,579
in the 60s so it's been known for quite some time you know our adversaries are aware that when you

953
01:41:04,579 --> 01:41:10,699
hold the global reserve currency certain structural vulnerabilities occur and we have to accommodate

954
01:41:10,699 --> 01:41:13,919
ourselves have a response to that. And I think this is a really good paper. I would note at the

955
01:41:13,919 --> 01:41:19,679
beginning, I said that, so this essay is collected in national security in the digital age, Bitcoin

956
01:41:19,679 --> 01:41:25,619
as a tool for modern statecraft. It's actually, this book is though issued by the Bitcoin Today

957
01:41:25,619 --> 01:41:31,480
Coalition. The PDF was originally published by the Bitcoin Policy Institute and is available on

958
01:41:31,480 --> 01:41:36,020
their website. This is an excellent anthology. I've kind of skimmed some of the other essays.

959
01:41:36,020 --> 01:41:49,959
We may hit them in the future. What Lucas and I are doing, we're also reading Balaji Srinivasan's The Network State right now. And we're going to try to do that, I think, for a while of reading a book, discussing the book, but interspersing that with discussions of essays.

960
01:41:49,959 --> 01:41:57,119
and so if you have any ideas of essays you'd like us to read consider think about definitely shoot

961
01:41:57,119 --> 01:42:01,219
recommendations there's a lot of interesting stuff out there but i'm really interested in stuff that

962
01:42:01,219 --> 01:42:07,879
kind of um either you know people themselves have written and they're kind of interested in some

963
01:42:07,879 --> 01:42:14,520
feedback on um but also really are in the domain and kind of being debated by other people kind of

964
01:42:14,520 --> 01:42:19,699
to facilitate a dialogue and really, um, help hopefully through our discussions. I hope,

965
01:42:19,919 --> 01:42:26,039
I hope that they help other people, um, get the key points for an ongoing debate and feel kind of

966
01:42:26,039 --> 01:42:32,199
better, um, more confident themselves in participating in that debate. Yeah. I, especially

967
01:42:32,199 --> 01:42:38,359
papers like this. Um, first off, this was an excellent choice. I'm so, so glad you picked it

968
01:42:38,359 --> 01:42:42,359
because I am going to be rereading it and I am going to be reading what, uh, what he wrote for

969
01:42:42,359 --> 01:42:48,520
Scott Bessent. I think something like this is fantastic for people if they're listening,

970
01:42:48,819 --> 01:42:59,020
if they have a connection with a congressperson, that they would be doing the world a favor by

971
01:42:59,020 --> 01:43:03,299
trying to get this in their hands and trying to get someone to take a look at this and be serious

972
01:43:03,299 --> 01:43:10,039
about it. If you feel as though your congressperson cannot read it, then maybe they'll make a pop-up

973
01:43:10,039 --> 01:43:13,499
or some sort of picture book in the end.

974
01:43:13,919 --> 01:43:15,859
If only they had a podcast about it,

975
01:43:15,879 --> 01:43:17,539
they could send a link to their congressman as well.

976
01:43:17,539 --> 01:43:20,799
God dang, with a couple of jokers from Kansas.

977
01:43:20,799 --> 01:43:25,480
I know, comparing taquitos to whatever you compared it to.

978
01:43:25,559 --> 01:43:28,239
Hey, man, you've got to go to where the people are.

979
01:43:28,619 --> 01:43:29,099
That's right.

980
01:43:29,219 --> 01:43:29,359
Yeah.

981
01:43:29,879 --> 01:43:32,699
No, I think this one was really fantastic.

982
01:43:33,379 --> 01:43:35,599
Matthew Pines is a name that I've heard of,

983
01:43:35,639 --> 01:43:38,099
but I have never consumed any of his information.

984
01:43:38,520 --> 01:43:39,319
Check him out.

985
01:43:39,319 --> 01:43:42,059
He has a lot of really good information on UAPs.

986
01:43:42,899 --> 01:43:44,999
Actually, here's an Easter egg for you.

987
01:43:45,459 --> 01:43:54,839
The Scott Bessette policy brief on including Bitcoin in a reserve, there's a line or two about that you look at the end.

988
01:43:54,839 --> 01:44:03,480
He cites the literature on UAPs, and it's something about we need to be ready for if exotic technology enters the discourse in the near term, something like that.

989
01:44:03,619 --> 01:44:08,359
So this UAP stuff, if you have any doubt that it's vital and real, listen to Matthew Pines.

990
01:44:08,359 --> 01:44:11,980
He also integrates it into the debates that we're having right now.

991
01:44:12,099 --> 01:44:15,859
And he also has really interesting takes on consciousness, the nature of consciousness.

992
01:44:16,619 --> 01:44:17,819
Very fascinating guy.

993
01:44:17,899 --> 01:44:18,299
Check him out.

994
01:44:18,319 --> 01:44:21,879
He's on Twitter and he has some other publications, the Bitcoin Policy Institute.

995
01:44:22,379 --> 01:44:26,459
Isn't it a great world where magic internet money is now considered just normal discourse?

996
01:44:26,459 --> 01:44:29,379
And it's like, oh, you know, we might just talk about aliens.

997
01:44:29,839 --> 01:44:32,399
Something more exotic is needed to keep us excited.

998
01:44:32,579 --> 01:44:33,199
Throw in some aliens.

999
01:44:34,639 --> 01:44:37,559
Oh, an insatiable desire for novelty.

1000
01:44:37,559 --> 01:44:39,480
fantastic

1001
01:44:39,480 --> 01:44:41,480
well let's wrap it up

1002
01:44:41,480 --> 01:44:42,480
and we'll get to another one

1003
01:44:42,480 --> 01:44:44,299
thanks for joining us

1004
01:44:44,299 --> 01:44:45,279
and we'll talk to you soon

1005
01:44:45,279 --> 01:44:46,319
right on

1006
01:45:07,559 --> 01:45:37,539
Thank you.

1007
01:45:37,559 --> 01:45:43,319
owning a cave and that way I'll never have to mow a lawn or replace roof shingles ever again,

1008
01:45:43,619 --> 01:45:45,279
which would be wonderful. Thanks.