Hey, welcome back everybody. So Lucas and I today are moving on in the Satoshi Papers, Reflections on Political Economy After Bitcoin, edited by Natalie Smolenski.
We've read the introduction and the first two chapters, and now we're moving on to chapter three.
Each of these chapters is a discrete standalone essay organized around a specific topic related to both Bitcoin and, as we saw in the introduction, the idea of Bitcoin as possibly constituting a sort of refounding of the United States, a reorienting of the project of the United States towards the principles our nation was originally founded on.
And here we get such a reorientation. This essay is called Easy Money, Easy Wars, The Evolution of War Finance, Forever Wars, and the Prospects of a Bitcoin Peace.
The author is Sarah Kreps, who is a kind of long – like all authors here has a very long and distinguished bio.
But in short, she is a professor at Cornell University and a former active duty officer in the U.S. Air Force.
She's also the author of a book called Taxing Wars, The American Way of War Finance and the Decline of Democracy.
And this essay I think probably gives a fair summary of what that – one of the ideas that's in that book.
Easy Money, Easy Wars.
So this is a shorter, a slightly shorter essay than, for example, the one last week.
And it's also, the one last week we read was Natalie Smolenski's contribution towards an anthropological theory of money.
Very interesting, very kind of exploring a broad conceptual space of what anthropology has to say about money.
This essay, I think, is tighter in the sense that we get a very specific idea about how Bitcoin might impact the prosecution of wars by specifically the United States.
When I go through this, I'll give a, like I usually do, a short summary here, and then Lucas and I will discuss it.
And as I give this summary, just note that I'm going to leave out some of the historical data and anecdote, which gives the essay kind of richness and foundation.
But what I want to do is just get the kind of the core ideas and concepts on the table so we know what it's about.
Limitless money is the sinews of war.
That's Cicero.
The key point of this article is that borrowing is our current method for paying for war, which has tended to distance the cost of war from the public who is sponsoring war.
This has made people less likely to oppose war, which has in turn led to an increase in the frequency, duration, and intensity of war in the modern era.
But if Bitcoin was used as our reserve standard, then this would impose restraint on war spending because Bitcoin is absolutely finite and is easily auditable on a public blockchain.
So this article kind of starts laying out a history of ways that have been used to finance wars.
First was seniorage, minting or printing of money.
So that's kind of the difference in the cost to create the money between how much you will get when you put that money into circulation, the face value.
That it costs one cent to print a dollar bill and you get a dollar's worth.
That's the difference in that as a seniorage.
This concept also includes debasement, where base metals were used as a substitute for precious metals and coins so that Romans could finance foreign wars abroad by making the coins less and less pure over time.
So signorage, very used in the past. Now it's not the preferred method because it can lead to kind of rapid loss in confidence in government, and foreign merchants will not accept money as it becomes more and more debased.
Another way to kind of finance war was conscription and impressment.
That means just kind of drafting people against their will, forcing them into the war, including impressment, which is literally kind of forcing people into the war without pay.
That's also now not the preferred method to finance a war because, one, people feel the cost of that, so it makes people oppose the war.
And also we're kind of now normatively opposed to things that kind of seem like slavery.
Third is coalition building. That's when you augment military capacity through alliances, some parties to the alliance, then sponsor other parties and you get kind of that financial contribution from other nations.
Also, that's also not the preferred method now to finance a war because it takes lots of time to do all that diplomacy beforehand to get everybody in line and countries really aren't disposed to want to hand over a check to the United States to pay for a war in some other country.
The fourth way was conquest. So a country could finance wars by resource extraction, by conquering a people and converting them into a tax base. That's also now currently not the preferred method because similarly to conscription and impressment, it's just kind of normatively condemned a war of conquest nowadays.
That brings us to the last method of financing wars, which is kind of the center of this essay, taxation and borrowing, and really the distinction between those two. So taxation, like a direct tax on the people that pay for the war effort.
Krebs quotes thinkers as diverse as Immanuel Kant, Adam Smith, and Keynes, who all urge that taxation is the appropriate method to finance war.
And historically, some wars have been financed through kind of a direct mode of taxation.
The Korean War and an example that Kreps describes in a little more detail, the Second World War, where there was a – we begin the war with like 5% of the populace subject to an income tax.
We end the war with like 60% subject to an income tax.
So this during the war incited widespread debate about this increase in taxation, but ultimately it was a popular war. It was considered almost an existential war. And so the public in full consciousness of the cost of war endorsed the taxation. The taxes were levied and the war was won. That's kind of the ideal for what taxation can look like when it's when it is used to pay for a popular war.
But for this very reason, governments have moved away from taxation. Wars are not usually popular, especially the ones that our governments kind of want to fight. In Vietnam, Lyndon Johnson postponed taxation as long as possible, exactly to prevent deeper questioning of our involvement there.
We also have the kind of what are referred to as the forever wars, Iraq and Afghanistan, which were not financed through taxation. Instead, borrowing has been the modern way to finance wars and has led to these quote unquote forever wars, $4 trillion in Iraq, $6 trillion in Afghanistan.
It would be hard to get that directly from the people through taxation without having widespread disagreement and protest of the war.
That brings us to the title of the essay, Easy Money, Easy Wars.
Wars typically have monetary and moral costs, and when you reduce those, you get more war.
The moral cost is body bags, right?
People dying in war, all the destruction and damage.
But this has been lessened with we have an all-volunteer army, so people are kind of, wow, they're accepting the risk of going to war.
But even more so, we have remote drone-based warfare.
We have an excellent Navy and Air Force, and most of our – we do our wars overseas, so we don't even see the moral impact.
The monetary cost is negated with borrowing.
People do not, as they would with taxation, feel the effects immediately.
We have routine debt financing of wars, which means there's no meaningful connection between public opinion and the conduct of war.
So easy money, easy wars.
When there is no moral or monetary cost in the public's mind, there is no sacrifice and there is no questioning.
What then can Bitcoin do?
The short answer is that it can reimpose a monetary restraint if it is adopted as a reserve asset.
That last part, as a reserve asset, there's a great distinction here that Krebs gives.
I love it a lot because I like when we get conceptual distinctions, kind of the defining of what terms mean in a ways that clarifies our thinking.
And so this helps clarify our thinking about what Bitcoin realistically could be in the near term future.
So generally, so the distinction, a monetary standard is the currency that is used as the primary medium of exchange, what you use to pay for your milk and eggs, and the unit of account, how we denominate the value of things.
The reserve standard, on the other hand, is a safe and liquid store of value that is widely accepted as collateral.
So the example would be when the U.S. was on the gold standard, the gold was the reserve standard, the dollar was still the medium of exchange and the unit of account.
And so Kreps realistically believes that Bitcoin, at least in its early stages, could best serve as a reserve standard like gold, a store of value in a form of pristine collateral.
To quote Kreps, in the near term, moving toward a system in which Bitcoin is held as a sovereign reserve asset is more plausible than replacing the U.S. dollar as the monetary standard on balance sheets and in transactions.
Sounds plausible to me.
So if Bitcoin was made into a reserve, if we had a Bitcoin reserve standard, this could act as a restraint on war in three ways in Kreps' estimation.
First, there's the public transparency of the transactions that occur on the blockchain.
When Bitcoin is moved around, all of the transactions are added into blocks.
We can see them, monitor them, see where things go.
There are, of course, this is kind of limited here because there are ways to do off-chain,
but there is at least that initial public transparency.
Second, there is the possibility of decentralized ownership by the people themselves of the reserve
asset.
Krebs doesn't go into detail on why this might be restraint on war, but just drawing from the underlying theme with the Satoshi Papers, when you have a nation of sovereign citizens who are, in this case, holding the reserve asset themselves, I think you do have a people who are less willing to blindly delegate power to a government, including to prosecute an unpopular war.
Third is the one that's kind of the most important.
Bitcoin has a finite supply and cannot be debased.
The protocol is as it is, and people are not incentivized to want to change the protocol
because then their Bitcoin are worth less.
So this finiteness, absolute scarcity of Bitcoin means the public and investors would keep
a closer eye on government expenditures if it was the reserve standard.
We'd be less inclined to want to get rid of it because we know, hey, well, all this Bitcoin
they're spending on war is not, it's a zero-sum thing.
You know, we don't want to lose it.
People would be more sensitive to the economic costs of war abroad because we're spending
a finite asset.
In conclusion to this essay, Krebs confronts or notes a critique that people have.
borrowing to finance wars has seemingly been effective as a weapon the state is a form of
technology borrowing is also a military technology it allows you know the the a great amount of
spending to be done to prosecute a war are we then unilaterally disarming by giving up borrowing
on a fiat standard and Krebs responds that restraint is not the same as disarmament quote
restraint in war making is a key element of wise statecraft. And I hope to go into that more,
what that might mean, has been Lucas's and I's discussion, but I'll just return to the key point
and then we'll go into discussion here. The key point again is that borrowing is our current
primary method for paying for war. That has tended to establish a distance between the public paying
for the war and the prosecution of the war such that people are less likely to oppose the war.
which has led to an increase in the frequency, duration, and intensity of wars.
But if Bitcoin, a finite asset, is used as a reserve standard,
then maybe potentially it would impose restraint on war spending
because, again, being absolutely finite and easily publicly auditable,
the people will know they're losing a finite asset for every bullet that is shot,
for every bomb that is dropped.
So, Lucas, does that sound plausible?
Are you on board with this thesis that Bitcoin is a specific technology in this sense?
Yeah.
I think it takes us to a place where we can really think about the difference and really see the difference between a bearer asset and a non asset and given that we used to have bearer assets so when we operated on a metallic standard
when people held their own gold, when they held their own silver,
government was seen as much more of a service,
taking us back to the feudal lordships,
which would change all the time.
You might be in Belgium and have a French king that was providing you the services of government.
We'll protect your borders. We'll protect your people.
And in return, you'll give us a certain tribute.
You'll give us a certain amount of taxes in order to pay for that.
and when those taxes would become too egregious,
another, a change would occur.
A different lordship would take over
and this actually was,
in the terms of thinking about this as a market,
thinking about government as a service that has a market,
it created a much more efficient market.
Yes, governments changed more often.
If you look at a time-lapse map of what countries and nations, states, borders used to look like, it changed very – there was a time when it was always changing very rapidly.
and now we've settled into this somewhat, it's not static, but much more static than it was previously,
where we have consolidation instead of change from one feudal lordship to another.
and it gets us into this idea of understanding something that people used to I think implicitly
understand which was that when governments spend money it's not the government's money and
I think one of the things that has been kind of a great illusion perpetrated upon people is that
government money is somehow a different type of money.
Government money is always and will always be the people's money.
But it is, I guess, easily, it is much more easy to sustain that when you say,
oh, it's the government borrowing, it's the government that's taking this on, it's not me.
I'm not directly feeling this, even though you're indirectly feeling it.
You're indirectly feeling it because every dollar that the government creates in order to finance something is a dollar that makes all the dollars that you hold worth less.
And it's power.
this is a i think this is an interesting um thing where we consider where we're at as a society
today with all of the mental um mental fatigue and and mental problems that people have
one of the ways that people break out of that is to recognize that it is their power that
you cannot take power from me. You cannot, by your negative words and your own actions,
you can't take power from me. I can only give power to you. And if I blame you for my place
in life, if I blame you and act as a victim, then I'm giving you power. And there is, I think,
a similarity to draw there where we, since we don't directly feel like we're giving up
money, we also don't directly feel like we're giving power.
But there is this mechanism, this fiat mechanism that allows governments through seniorage
to create something out of nothing that something is the people's power.
and they are able to take the people's power without asking for it.
And they're able to take the people's future earning power
and bring it into the present
and use that in order to hit other people with it
as though you're reaching into the future,
stealing purchasing power
and turning it into bombs and bullets and weapons.
Go ahead.
I was just going to say, what you highlight about the perception that money is the creation of the sovereign and then how that robs this individual sovereignty and power of the populace.
Krebs notes in here that there's an interesting intersection between this debate and modern monetary theory, which is the kind of predominant paradigm of the way we conceptualize money, the way that the chattering class does, rather.
I'll quote that passage here. She says, while some, like the proponents of modern monetary theory, argue that endless borrowing in terms of a currency, that the sovereign itself issues appears to have no downside, others realize that easy money has led to the fundamental misperception that war is essentially costless.
so i i like this as i mean you'll sometimes see on twitter debates like mmt people jumping in and
trying like who do we owe the debt to you know like it's just it's to ourselves all these types
of things as if there's no negative externalities to having to sovereign whip up value out of
nothingness um but then you can point to both like at least the perception that things are
costless including war and we get endless forever wars so like what more persuasive argument is there
against a modern monetary theorist and saying, do you like all these wars we're having?
And do you like the fact that this is inherently anti-democratic in that the costlessness of the thing is exactly divorcing from the people,
their own perception of the costs that it actually has.
And so leading to people like to not oppose wars.
So I think that this in itself is like an excellent nutshell argument against why MMT is ridiculous without even getting into like circular argumentation about what debt is or something like that.
Yeah.
If you're able to think about it in terms of, look, it's our money.
There is no such thing as government money.
There is just money. And when the government unilaterally, when the government on their own chooses to feed themselves, to feed themselves this money that they create out of nothing.
And it is something. The something is that it's the future debt of the people that have to pay it back.
to think about it in those terms it's very understandable then to
to look back and see all of these warnings from people that thomas jefferson was one of them who
talked about that the government should never be allowed to print money and was very specific
in saying printing coining money is different when you coin money then you actually have to
have you have a physical limitation and I think this is interesting you mentioned briefly like
coin clipping and debasement of metallic currency so this was something that started
to our knowledge it started in Rome where they would clip the edges off of coins in order to
make them slightly hardly noticeably smaller but then remelt that in order to create so you think
about it. You take 10 coins and you clip them each and now you can have 11. So you've just
increased your monetary base by 10% out of nothing. You put that money back into circulation.
People don't know it. They don't know it. This, by the way, is why our coins have ridges on the
outer part of them. That ridge was a mechanism that was put into place in order to try and
limit the ability of people to coin money. And then we go on to printing money. And when it
comes to printing money, governments are literally only limited by how much paper and how much ink
they can get. The stat that I've seen was that it takes 77 cents of cost in order to print a $100
bill. So that means when the government makes a $100 bill, they're effectively stealing $99.23
cents of future earning power from individuals. And that's pretty bad. That's pretty bad because
that system led to 90 to 95% decrease in purchasing power of money. But then it goes
to a point that just literally cannot be calculated where we can create 5 trillion,
10 trillion 100 trillion limitless trillions quintillions quadrillions of dollars for nothing
like just changing a number in a spreadsheet and so there's no limit and um
if the government was an addict and money was their drug and there was no limit then they would
simply overdose over and over and over and over. And that's, I think, what we see now with the
explosion of debt going from, the United States had a surplus 25, 28 years ago, and now we're
$37 trillion in debt. And a trillion is just a number that cannot be comprehended by the mind.
So a million can't be complimented. A thousand can barely be complimented.
Over a hundred escapes me, to be honest with you.
Yeah, yeah. Anything past, you know, my dad always said-
Ten digits here, ten fingers.
The kind of guy that can't count past 21 with his shoes on and his pants zipped.
It makes it so clear, but we've never considered this because we've never been asked to consider it.
But when it gets to this point where it's too far gone, now we're forced to.
Now we're forced to think about, well, how do we limit this?
because clearly it's a problem.
Clearly this is an issue.
And the modern monetary theorist is just, it's hilarious.
It's this, oh, we can just abracadabra all the money we want out of nothing.
There will be no consequences.
It'll be fine.
But now we're seeing those consequences.
We're seeing countries de-dollarized.
We're seeing countries take on Bitcoin.
They were seeing the implosion of the bond market where worldwide government treasuries are not desirable.
And why are they not desirable?
Well, people have finally started to figure out that if the money is decreasing in purchasing power by 7 to 10 to 15, 20% per year, and what you get in return for holding that money is 2 to 3 to 4 or 0%, then why would you ever do that?
And when you see governments that are trending towards backing their money, backing their money with something solid, be it gold or be it Bitcoin, then there there is no reason why you wouldn't just want to under want to hold the underlying commodity.
Why would I go and own this bond, which is backed by Bitcoin?
Why would I go and own this bond, which is backed by gold?
If I can simply bypass that mechanism and own the gold, own the Bitcoin, because what the government is telling you when they back their money with a commodity like gold or like Bitcoin, what they're telling you is that this thing is not worth anything without the commodity.
And so with the commodity, why would you just not bypass that product?
I think it's great, by the way. I think it's great. I think it's going to limit governments and force them into competing as a service.
Limit, but not completely end. I mean, there will still be government borrowing, and Krebs says this.
You can still issue bonds and then make them payable in future increases in Bitcoin.
They'll just have to pay a proper amount.
Right, and to the extent that you believe that the sovereign is creditworthy, you're like, yeah, they're good for it.
And you make people may believe that about the United States.
They can look at the productive capacity.
They can look at all sorts of things and they can, you know, take on a bit of risk and do
a Bitcoin bond rather than just holding the underlying assets.
So, I mean, I still there will still be a place for the issuance of bonds in Bitcoin,
all sorts of borrowing denominated in Bitcoin or whatever.
I think it would seem likely it's just, you know, the risk assessment becomes different
for both parties, for sure.
What do you think about the productive capacity of the United States Do you think that it is significant When I look at the productive capacity of the United States I see something like it like 30 of it is financial services which is basically an extractive economy where it populated by middlemen who are just gatekeepers to resources or gatekeepers to institutional knowledge
So a gatekeeper to resource would be like, I have to go through my financial advisor in order to buy stocks.
I have to go through him in order to buy bonds.
I have to go through a real estate agent in order to buy real estate.
I have to go through an accountant in order to navigate the very difficult taxation process.
But that all gets eliminated with blockchain and AI.
That all becomes direct.
It's done all that.
So there's two things about that.
First, what do I think about the productive capacity of the United States?
Very, very super bullish for two reasons.
One, you mentioned it's kind of the brain drain going into finance.
So finance is super lucrative right now.
It's good that there's people who are really smart going into that.
That shows that incentives are working or whatever.
As finance diminishes or gets redirected into better finance with Bitcoin, the brain drain will move around.
I feel good about the liquid capacity of thinking people to find and retrain and go into whatever.
So I'm not concerned about the brain drain.
We will redrain that swamp or reallocate or whatever.
The other thing you mentioned, like the fact that there's processes for a lot of it is you have to go to the middleman to do this thing.
You have to get approval.
Another one thing about that's not all bad.
So when I hear that, I think due process of law.
One of the things that – one of the reasons people like the U.S. dollar, I think, and U.S. bonds is there's a perception that the U.S. court system, that U.S. norms regarding the enforcement of property rights are very strong.
We're based in the common law. You know, it's this why I really don't fear China. People like adopting the yuan or whatever, like widely, because I think people don't trust the United States 100 percent.
But I think you're even less inclined to trust a country with that has communist ideology and so doesn't respect property rights, etc.
I think that one of the things the United States has going for it is we have strong due process, right? We have like federal courts command the president to do or not do a thing, right? And to a certain extent, like that's good because people see that, holy cow, in the United States, like due process is so strong that even the, like the figure of sovereign power themselves is constrained by the law.
And I think that is good in a sense.
And so maybe this is just me being a lawyer talking and defending my future worth against AI or whatever.
But I do think that due process is something that you should never underestimate the dollar value of it.
Property rights are strong because we do have the common law heritage we do and the power to enforce it, et cetera, et cetera.
So bullish on the United States, I guess.
You bring up a good point when you talk about like if you are backing your currency with Bitcoin, are you unilaterally disarming?
And this has been one of the things that I do look at as it is kind of a danger in that if the United States, let's just, you know, be like Elon, let's think to the limit.
And let's just say, what if the United States went full with a Bitcoin-backed currency?
Not just E-law. I think a lot of people do that.
But anybody who chooses to think in this manner, think to the limit.
And let's just say they went completely in on a hard money standard, and meanwhile the rest of the world stayed on an easy money standard.
there would be a intermediary period where the countries that are still able to create
money out of nothing would have a distinct advantage. And you can think of it like,
just think about like being on a basketball court and playing a basketball game. And it's like one
team is like, oh, there's rules. And we're going to follow the rules. We're going to dribble.
We're going to not foul. We're going to do these things. And the other side is just like, oh,
there are no rules. And for a while, they are going to dominate. They're going to break arms.
They're going to kick people. They're going to set landmines at the free throw line, et cetera,
et cetera. Eventually, you'll move to a different court. As Jason Lowry talks about, you'll move to
a different domain and you'll compete in that domain. And the one that you leave will eventually
dry up because no one wants to play with someone who won't follow any rules.
But there is that intermediary period where it is kind of scary, where, you know, let's
say the U.S. and China are at odds and China, due to its incredible productive capacity
right now and the giant economic engine that they've built that feeds a huge portion of
the world.
They trade with like twice as many countries as the United States does.
If they're able to draw upon those dependent states, those vassal states, and use their economies, use their future and borrow against that, then they will be able to draw more power from the future into the present and become for a while much more powerful.
So there is, even think about a relationship, man.
Like think about like in order for a relationship to work, you have to be vulnerable.
You have to put your heart out on the line and you have to like say, here it is.
Here's my heart.
I pull it out.
It's beating.
I offer it to you and I hope that you don't destroy it.
And you have to hope that the other person won't destroy it.
I don't know if that's going to be a great scenario for governments, but in order to be virtuous, in order to grow, you do have to do that in order to gain coalition and build.
So there is certainly – it's not all green pastures going forward.
If you are the first person to go play by the rules, then that means that you are unilaterally choosing to limit yourself in ways that other people are not.
Yeah. Yep. That was one of the questions I was going to ask you is how, like, realistic did you or how satisfying did you find Krebs' argument that this unilateral restraint would not be a bad thing, given that total war in the past seemingly has been won by those who could suck all the resources out of the populace or whatever.
Yeah. But, you know, there's another aspect of this, which I think maybe speaks to this topic. So we are a democracy. There is, I think, a strength to that. So one of the key parts of this essay is so taxation is necessary for the public to truly see the cost and be able to truly give its consent to the war. That's the way that a democracy works.
There is this idea, a theory in political science called democratic peace theory. I was a poli-sci philosophy dual major, and I recall the democratic peace theory being like taught almost as an iron law of politics. And there's not many iron laws in the social sciences, right, because things don't operate that way.
But this idea is that democracies don't fight other democracies. Empirically, there's not wars between democracies. Now, Krebs notes it hasn't been the case that democracies against non-democracies, that has not been less violent.
In fact, there's been more wars in that sense, but democratic peace theory at least has held true that democracies haven't fought other democracies.
There's something in when you can establish a democratic linkage between the public and the sacrifice the public is going to have to make, and then when the public has some say in the matter, it does tend towards peace.
Is that a unilateral thing? Maybe not if there's a lot of democracies. And it also, as we see in the World War II, like what happened in World War II, if you piss off a democracy and they see the threat as existential, I mean, they do mobilize, I think, with even more fury than a non-democracy.
You can only whip a thrall, a slave, a peon so much and get so much out of them, but try to take something from a free man and you're going to get like much more fury.
And so I do see – I mean like democratic peace holds, but also don't touch a democracy because, again, free people when their freedom is threatened are some of the most terrifying things on this earth I think.
Yeah, you wake the sleeping giant. And that's that is kind of the interesting thing about a democracy. And I think I think let's be honest, like we're not a true democracy. You know, we're a representative republic. And we we have we have people that are supposed to be voting for our best interests that may or may not.
You know, one of the things that when you get a lot of education traveling around the world about what the United States is like, and you see kind of the other side of it.
And yes, very much we have these freedoms and what we have in exchange for those freedoms is we have a big weapon that we occasionally mobilize and in recent times almost perpetually mobilize.
You mentioned the forever wars and how we've just continued to – there's a case to be made that we've been at war constantly since World War II, that there literally has not been a time when there has been peace.
And we have been, as many people say, enforcing democracy at the point of a gun across the world.
But you are very right.
And I found this like when I came to Malaysia, like a lot of the things that I am used to as an American, I did not get to experience when I came here.
Like, you know, just people, people showing up on time, giving their best effort, acting as though they have something to lose.
If you have nothing, you have nothing to lose.
And so what is your incentive?
What's your skin in the game in order to produce?
And so it does offend someone who comes from a background of a great deal of freedom. It does kind of offend that person in their soul when they see examples that do not abide by that. And it does enrage and spark action.
I'm of the belief that that's very good.
I do believe that there are no choices.
There are only trade-offs.
We do trade off a lot of things when we have a democracy.
One of those things is that we don't move fast.
We typically grind and grind and grind and grind and grind.
And then when something becomes important to everyone, then we all move in the same direction.
But until that point, it's just opposing forces, opposing forces.
And then finally we split off into a vector and we do wake that sleeping giant.
And I think that's fantastic.
I think that it is the thing that, regardless of all the faults, has served to create something that is beautiful, that is unique.
and hopefully will continue to exist in an even more pure form.
And I think divorcing the money from the government
or at the very least marrying the money to the government
in a way that imposes restraint is beneficial to all.
I think it's beneficial to the government.
Actually, I shouldn't say to all.
It's obviously not beneficial to the military industrial complex.
That is very true.
It's definitely not beneficial to that.
And I don't think that that is something that most people are going to be upset to see go away,
other than those who directly benefit from it.
So, yeah, I guess that's very true.
And one thing I do want to point out, like the taxation thing, like I think it is very important for people to view borrowing by the government as taxation.
That is absolutely what it is.
You are taxing the people without their consent.
In a very real sense, borrowing by the government is taxation without representation.
or at the best it's probably taxation with sort of like clouded representation.
And so we do need to start understanding that whether we give the government money out of our pocket or they simply take it out of our future by debasing the money that we currently own those really aren different
It is taxation.
And so viewing that in that light, it is much more honest and honorable for people to choose to be taxed.
Because I think what people point out, they're like, well, if we had to choose to be taxed, then we wouldn't.
It's like, yeah, probably.
Like, that's probably true.
And that's not necessarily a bad thing.
We would choose to be taxed.
We would just choose to be taxed at a rate that was determined by the market that fairly compensated those who were giving up.
If we're borrowing instead of borrowing at 0%, it would probably be something like 12 or 15.
Or if you're counting Bitcoin as the hurdle rate, it would probably be something like 30.
where you're just not going to make that move unless there is a strong correlation between the benefit gained and the sacrifice that's made.
So that was my rant.
easy to like, you know, when the Doge group started or whatever, that agency, you know,
they began to highlight instances of very frivolous government spending. And it's easy to sign off on
those things when it's not like directly coming out of your pocketbook in a direct sort of way.
So what Bitcoin could do to war, it could also do to other sorts of discretionary spending that,
Here's a quote I think that relates to this from the essay.
Yet the fact that most of this is borrowed money means that the electoral process, which elected officials are held accountable, effectively ignores the issue of fiscal restraint.
With no penalties suffered at the ballot box, American elected officials feel free to spend effectively without limit on wars as well as on other initiatives, foreign and domestic.
So again, it's just when taxation, when it's borrowing instead of taxation, the causal link is obscured in the minds of the people from the loss of purchasing power, money that they have, and the things that they're getting.
And so we have less restraint on any sort of initiative.
So Bitcoin potentially being a finite, absolutely scarce asset on publicly auditable blockchain could help with all sorts of frivolous government spending or at least make us like force it in front of us.
This is what you're spending your money on.
And so people can't plead ignorance or whatever.
Yeah, there's a time dilation in between the action and the consequence.
and because we don't really pay attention to that, we don't feel it immediately,
then we think it's okay.
This is much like a wild night on the town and you take 20 shots because you feel great
and nobody thinks about what am I going to feel like the next two days.
Or if every time you ate a donut you gained a pound immediately,
then you probably wouldn't eat that donut.
But, you know, these things take time. You know, the results that you see in three three months are a direct consequence of what you're doing today.
And the results that we see today with the debt and the forever wars are a direct consequence of the ability for a government to just take money, just print.
And we do get to vote and we do get to have our say.
But realistically, in action, you know, it's the old people that vote.
It's not the young people that vote.
And the old people don't have to, you know, they look at it and they're like,
my time horizon is like three to five years, maybe 10.
So I'm not worried that Social Security is going to be bankrupt in 15
or that the money is going to be worth 50% less in 10.
And, you know, it's much less felt, but it's the young people who have to live with those consequences as they go down, as they're portrayed throughout history or throughout the future.
Yeah.
It gets ugly.
No.
It gets really ugly really fast.
And I think it is one of the few things that we can look at and we can say, look, if we can divorce, if we can separate, if we can limit the government's ability to create money out of nothing, then the only losers are the people who profit from war.
and profiting from war is a it just feels bad it feels inherently immoral it feels non-virtuous
and so um if we were to remove the ability for governments to do that then um i think most people
would would be happy about that you know it's it's uh you know we're we're all fighting these wars
except we're not fighting them on the battlefield.
We're just fighting them in that we're going to have to be more and more productive.
We're going to have to compete harder and harder in order to have the same standard of living into the future
when the consequences of this borrowing is made known through the future replacement of money.
And not just we, but like future generations that are not yet of voting age.
I mean, that's another way in which borrowing is anti-democratic in that we are disenfranchising the people who are actually paying the tax.
That's a brilliant way to think about it.
They don't get – the future generations don't get a vote.
We just vote interlaterally that you guys are going to pay for this forever war in Iraq because we think it's a brilliant sojourn.
Yeah, nobody looks at the sonogram picture of a four-month-old fetus and says, hey, we just took away your voting power and your right to determine how to live your monetary future 30 years into the ether.
Yeah. So anti-democratic both like anti-democratic temporally as well. And in that it like future generations disenfranchised. That's I don't know. Those are the key points I had. Is there anything else like you wanted to add or say on this very excellent essay?
just the i really love how the author breaks down the different types of paying for war with
the taxation as a you know direct taxation and then you've got conscription where it's like hey
you know and this is another thing that i think is really entertaining so the united states when
they print money they call it quantitative easing when some other country prints money we call it
currency debasement. When the United States has conscription, we call it the draft. Like we make
it sound like you're getting picks to do something cool. I was like the first round of the draft.
That was a key pick. Yeah. When another country does it, we call it conscription or being,
you know, basically being Shanghai. I guess Shanghai would be more of like the impressment
thing. But one of the things to note is that those are very ineffective routes in order to get people
to do what you want, like conscripted forces and especially impress, impressment forces.
They don't fight hard. They don't want to be there. They have no, you know, they,
if you're, again, let's take it back, take it back to playing a basketball game.
you're standing there and you're you've declared yourself to be the captain solely because you're
the only person there and there just happens to be a guy walking by and you're like hey
you're on my team and he's like i don't want to play and you're like yeah it's not your choice
um you're you're coming out here and they're like but i'm four feet tall i'm not good at basketball
i'm i weigh 250 pounds and i can't run and i've only got one leg and i'm blind in one eye and
And you're like, yeah, it's okay.
You're the new shooting guard.
Like, cool.
How many threes do you think that guy's going to make?
How often is he going to get open?
You know, you're not optimizing for people that are going to do a good job at getting you the outcome that you want.
And so if you're not optimizing for efficiency, then you have to optimize for quantity.
and when you optimize for quantity, it's just, you know, we're just going to throw as many
resources at the wall until we knock down the wall and those resources are going to splatter
and splatter and splatter and splatter and be wasted until finally one of them breaks through.
And so, yeah, it very much is a needless sacrifice of people's futures to use that sort of method.
and it's good that it's politically unpopular.
It should be politically unpopular.
The unfortunate thing is that they found a political feasible way
in order to accomplish the same means.
We can pay volunteer forces.
Honestly, we could pay every soldier a million dollars a year if we wanted to.
We could just make it up out of nothing.
And so that's...
Yeah, it's not great in the end. It's not great in the end. I think we're starting to see the death throw of these sorts of methods and move back towards something that is more reasonable.
And by the way, you do a very good job, I think, of bringing me back to me kind of talking about, oh, you know, the United States economy, it's all financial based and it's extractive and it's kind of doom and gloom.
But you do point out, you know, there are people moving out of that.
There are if you look at the space right now, what's growing is engineers and physicists and biologists that are going back to these hard sciences sciences and doing very valuable things with their mind that 30 years ago they would have been trading derivatives.
20 years ago, they would have been trading mortgage backed securities.
and Nassim Taleb is a perfect example of that where he talks about how we've lost an entire
generation of brilliant minds to finance because that's where the incentives were and thankfully
now the incentives have changed and they are moving in a different direction. So the trend
is there. We are trending towards a more virtuous society by the application of minds into industries
that are accretive instead of extractive.
And that does give, that gives me a lot of hope for the future.
And it makes me feel like there is better around the corner.
Yeah.
And I wouldn't even say loss of generation.
I mean, some of the stuff that you mentioned is probably not net positive, maybe net negative,
but, you know, investors, speculators will always serve a role in helping come to like
a market equilibrium price for something.
So there is like utility added.
And I mean, not some of it's artificial for sure, a ton of it because of the way that the Fiat system operates.
But I wanted to say I received the library copy of the Satoshi papers.
Yeah, I could do some book ASMR here.
Look at the fine.
You got the blocks inside of it.
They really did a fine job.
I mean, I love when you have like a lot of care goes into creating something of beauty.
Like a book can just be a piece of pulp and, you know, some paper between some covers and you got the content.
But this has like the gold spine.
It's got the red attached bookmark.
And so it's just such a lovely that they put the effort into this and that people actually, you know, want to own a beautiful book.
I like both of those things.
And I would encourage get the paperback.
If you don't have either of them, if you got the paperback, make an investment for your fireplace.
and get the library edition of the Satoshi papers.
It's a quality artifact and is possibly the only asset that will appreciate faster than Bitcoin, not investment advice.
It is beautiful.
It's a beautiful collection of essays.
The authors have done such an incredible job, and I'm really happy that we get the chance to,
however a limited audience is going to listen to this, be it large or small,
that there will be some people who otherwise would not have come to appreciate this.
So kudos again to the incredible work that these academics and authors have done on this work.
Right on. Thanks for the call. We appreciate it.
Fantastic. We'll see you guys next time.