If I could hope for but one thing for you, so you'd be curious in all that you do.
Cause love like a flower just wants to grow.
Oh, and knowledge like your heart just wants to be known.
If you like, please subscribe. This is Bitcoin Study Sessions.
Today, Lucas and I are continuing our studies of broken money, why our financial system is failing us, and how we can make it better.
We're on the chapters 12 and 13, which kind of broadly speaking, as we're going to discuss,
are about the geopolitical effects of the U.S. operating as the world reserve currency,
how it's negative for both the U.S. and the world, and kind of we get some premonition at the end
that Bitcoin might be the solution to this global reserve asset problem. So I'll do what I do
usually and kind of give a summary of the book up until this point and a little bit more in-depth
summary of what we're going to discuss today, and then Lucas and I will hash it out. So we're on
part three but we began this book part one alden asked the question what is money uh sometimes it
has been a commodity historically like gold based on the characteristics scarcity portability divisibility
sometimes it's just been credit doing something for someone for a favor a deferral of payment
underlying both those theories alden concluded is that money is a ledger both commodity and credit
It depends on an underlying idea of an abstract ledger, a way to maintain a record of ownership
and transactions.
That brought us to part two of the book, The Birth of Banks.
And so kind of roughly in that section, banks developed because gold, which was used as a
commodity money, was insufficient to fuel the economy.
It moved too slow, especially in the age of telecommunications.
So banks, as a technology, were able to create paper claims for gold, which circulate much
quicker than actually shipping the gold around to settle transactions. This had a lot of secondary
effects like the expansion of credit through fractional reserve banking, where banks maintain
only a small amount of the reserves they have and the rest they lend out as paper claims on the
deposits, which leads to centralization and banks being backstopped by a central bank.
Then we moved on to part three where we're at where we are at today. The first part of part
three we discussed last time. Part three is the rise and fall of global monetary orders. So we're
getting into a geopolitical framework here. Last time we got kind of the three frameworks that
bring us to today, where there was the pre-1944 global monetary framework, which was kind of gold
standard, broadly speaking. Then there was 1944 to 1971. That's the Bretton Woods system, which is
the dollar pegged to gold, and then the dollar being the reserve asset. And then in 1971,
there's the Nixon shock, where Nixon ended redeemability of the dollar for gold. And
shortly thereafter that, we arrive at the petrodollar system, which is roughly speaking,
the system we have today, where Saudi Arabia requires paying for their oil in dollars.
All countries need oil, so they stack dollars in the form usually of U.S. treasuries, and then the dollar is kind of loosely backed by oil.
So that gets us to today, the latter part of part three, the rise and fall of global monetary orders.
And we're really kind of coming to head on the geopolitical and political aspect of a global monetary order, the reserve asset.
So chapter 12 is called Pushing Chaos to the Peripheries. The peripheries is the developing world, and the chaos that is being pushed there is kind of the worst consequences of our fiat-based monetary system where the dollar is not pegged to anything, and it's the reserve asset under the petrodollar system.
So like the using fiat as a reserve asset has a lot of volatility. The developed world mitigates that by shifting a lot of the worst consequences onto the developing world. It's, as Alden describes it, kind of a neocolonialism, a new form of colonialism that's an extension of the way that the developed world was predatory on the developing world in the past.
So there's really three ways that this happens, that chaos is pushed to the peripheries. First, the Federal Reserve System. The U.S. has the World Reserve Currency, and the Fed mandate is really about maintaining the stability of the U.S. financial system.
focus on U.S., it has no mandate to cater to the world at large, except to the extent that that
affects the U.S. financial system. So U.S. dollar is the world reserve currency, but the Fed that
managed that is only focusing on the effects that that has on the U.S. So this leads us to export
inflation and volatility as much as we can, the negative consequences out to the periphery to
other countries. If the Fed strengthens the dollar, this affects developing countries that
are in debt because their debt is denominated in dollars. So a stronger dollar means the debt is
now more difficult to pay back. If the Fed weakens the dollar, nations with dollar-based
savings in the form of treasuries, their savings are devalued. Also, of course, individuals
that have accrued dollars to save because their own currency is deficient have had their own
savings devalued. So that's the first way that chaos is pushed through the periphery,
through the Federal Reserve System that focuses on the US. The second way is through the IMF and
the World Bank, which are two institutions that were created in 1944 as part of the Bretton Woods
system, nominally to help developing countries, help all countries, but really the emphasis was
to help those that needed help with balance of payment issues, which is what the IMF did,
and the World Bank did helping fund the infrastructure, the development of infrastructure
projects. However, these two institutions are controlled by the developed countries.
They're headquartered in Washington, D.C., of course, close to the locus of U.S. power.
The U.S. has veto power. They're often headed by these institutions by European or French
officials. So what ends up happening is that the IMF and the World Bank, well-intentioned,
end up essentially engaging in predatory lending on an international scale. The loans really
meddle, the way the loans are given to developing countries kind of meddle with the sovereignty of
these countries and are designed really to change their economies, to redesign them so that they
and export to rich countries. So IMF loans and World Bank loans, et cetera, usually entail what's
called a structural adjustment, conditions such as increased taxes, higher interest rates, wage
ceilings, ending consumer subsidies on food and energy, restrictions on government spending,
especially to health care and education, and then favorable legal conditions for
multinationals that come in. So this kind of set of conditions, these impositions, these strings
attached to IMF lending serve to suppress domestic wages and make them more competitive
to export globally. But the effects on these developing countries can be extremely bad.
Some of these effects are multinational takeover. They've kind of restricted local access to credit
through these conditions in the loans, even as multinationals are given kind of beneficial
conditions to come into the country and take over. It also initiates a cycle of debt. This really is
a predatory lending cycle where old loans are repaid by taking out new loans, and they're kind
of never paid back, just rolled over. And this is, I think, a really overlooked point, and it's so
simple. Loans also end up going back to developed countries. We think, oh, this is great aid going
to developing countries. But no, like what happens is, for example, a loan is given for an
infrastructure project in a developing country, but then they have to contract with multinational
or, you know, companies in the United States or Europe, somewhere that has a technical capacity
to actually carry out and do the infrastructure project. So we give them, loan them money that
that didn't pay back to our companies.
These loans under the IMF and World Bank
are also pillaged by authoritarian leaders.
The money is often siphoned off
by corrupt officials in a government
given to their cronies.
Even when these people are later deposed
or taken out of power,
the people of the country are still liable
for the debt that has been actually siphoned off
to buy large black SUVs for leaders of countries.
even the designated effect is actually perverse of these loans and IMF and World Bank meddling.
They reshape economies to be export-driven, which is away from a natural diversified economy.
An example that Alden gives is, for example, Bangladesh is encouraged to do shrimp farming.
Bangladeshis can't even afford the shrimp. It's a luxury item that they're now farming.
They shift production away from local agriculture, local products they need. They begin to import basic items and export something for luxury consumption. Then if the shrimp market globally takes a downturn, the Bangladeshis, in order to pay for basic foodstuffs and other items coming in, have to get a new loan from the IMF.
a really good um alvin cites alex gladstein's book hidden repression how the imf and world bank
sell exploitation as development and that's kind of the canonical read on this subject definitely
worth a look the third way so we have the federal reserve system focusing on the u.s
the imf and world bank doing predatory lending the third way that chaos is pushed to the peripheries
that colonialism continues as neocolonialism is, well, the third one is literally just like
actual colonialism is still going on. Two examples that are given are in the French context. One is
Madagascar, which was invaded by the French in 1895. But apparently, and after that invasion,
the French then begin to tax the Malagasy people to pay for their own invasion to recoup their costs
and also to pay for infrastructure that they told the Malagasy people they needed.
Evidently, the French are still receiving payments from their colonial endeavor,
the payments in the form that they call a loan, but which is actually their past colonialism.
Another example is the CFA, the CFA franc countries in Western and Central Africa.
The CFA franc is also an old colonial project of the French.
It was a money that was managed by the French that was initially pegged to the franc and now to the euro.
France still essentially kind of engages in overseas, manipulates, manages the monetary policies of these nominally sovereign nations, collects fees for that, stores their foreign reserves.
and leaders in these countries that are anti-CIFA in the past have been kind of met with violent ends.
Alden notes.
So the summary of this chapter, to quote Alden,
it, the current global financial system, helps keep people in developing countries in a state of constant development,
dependency and ever-rising debt while structuring their economies around serving the wealthy and developed countries
rather than optimizing for self-sufficiency and well-roundedness.
So that's how the U.S. dollar as a World Reserve asset tends to push chaos to the peripheries through these institutions.
Chapter 13 is heavy is the head that wears the crown.
And so that's a reference to the burden that the U.S. has as the issuer of the World Reserve currency, the dollar.
So it's going to – having a world reserve currency – having a currency serve as like the world reserve asset both hurts those countries on the peripheries, developing countries, and also hurts the US.
So this refers to the negative aspects being the issue of the world reserve currency.
We even saw it when the dollar was pegged to gold under the Bretton Woods system, 1944-1971, gold fled the country due to the U.S. redeeming our issuance of dollars for gold.
Now, even in the unpegged petrodollar system, we have pure fiat as a world-deserved currency supported by the Saudis accepting dollars for gold.
so Alden here gives
I just want to take a step back and say in this chapter
to describe the negative effects
of the US issuing the world reserve currency
Alden gives a lot of definition of economic terms
that I'm not going to go into
I'm going to try to give a really simplified broad description
basically the world is hungry for dollars
when it's the world reserve asset
so this introduces a monetary premium on the dollar
dollars are desired
Other countries need them for commerce, to buy oil, for example. So the dollar is now strong enough that the U.S., we can just print money to buy all that we need and import things that we need, send out U.S. dollars, get back goods, rather than have to create them here domestically.
um this having a monetary premium premium on the u.s dollar in this way also just simply makes u.s
exports less competitive because u.s wages are um people in the u.s uh are gaining more in wages
and so it's less um it's less competitive for them to produce these products especially because we
can import them so chiefly because other countries need dollars for oil and for the liquidity of
global commerce. This leads to, over the long run, a structural trade deficit. We print dollars to
buy Chinese goods, which depreciate in value. For the countries that are receiving dollars,
usually in the form of treasuries, they can also diversify into U.S. real estate, U.S. equities.
And so foreign holders of U.S. assets increases, which means that the future U.S. income streams
from those assets decrease for domestic persons. So the result of this kind of is that U.S. has
geopolitical strength. We issue this reserve asset. We can maintain military bases abroad.
But given that we have this structural trade deficit, we end up deindustrializing,
hollowing out our industrial base, and then that industrial base being reconstructed in other
countries because it's cheaper to import than to create. This leads also to anger in the working
class, a rise of populism. We can ask qui bono, who benefits? Other industries grow domestically
that are not industrial, so to speak, those that have high margin in the domestic monopoly,
and so don't need to worry about cheap imports. That tends to be, Alden mentions, finance,
government, defense, technology, healthcare, whereas blue collar jobs then end up being
kind of sent overseas abroad. So to summarize, to quote Alden, the past 50 years can be described
as a period of dominion for United States elites, which came at the expansion of liberty and domestic
economic vibrancy for the majority. United States, the empire, quote unquote, grew while United States,
the country stagnated. And this was largely a bipartisan phenomenon. As a result, we have
hundreds of foreign military bases while our domestic infrastructure is aging. We can win
practically any naval battle while we fall behind the rest of the developed world in terms of
education. We actively engage with China in a great power competition while relying heavily
on importing Chinese-made goods to finance our consumption. So to focus on what she said there,
United States, the empire versus United States, the country. United States, the empire is that
which engaged in the war on terror, in which we invade Iraq, which has no connection to 9-11,
in which we do that with lots of popular support because the United States, as the issuer of the
world reserve currency, can simply print money rather than directly tax its citizens.
Alden quotes somebody who gave congressional testimony who called these credit card wars
that are financed through a congressional mechanism that does not require offsets in the budget.
So United States, the empire can print money to fund questionable endeavors like the war on terror as it occurred in Iraq.
We then also kind of see this empire decaying nowadays.
Maybe we feel it, but the way that Alden describes it more objectively is how China is subverting it.
China declares in 2013 that it's not in their interest to stack dollars to hold U.S. treasuries.
Instead, they launched something called the Belt and Road Initiative, which is kind of their attempt to engage in neocolonialism and mimic the IMF and World Bank.
China is now going to do a type of predatory lending, one might say, financing projects in developing countries with lots of strings attached about future usage of the projects, usually infrastructure that they're sponsoring, that they're funding.
um also china benefits by industrializing even as u.s industry is hollowed out so the summary is
that u.s kind of overall u.s is now defending its trade defending all these trade routes around the
world with its powerful navy while china conducts the most trade through these routes
so alden does give some prescription as to what should happen when she says um we should pull back
from United States the empire and emphasize United States the country.
And she even goes as far as to say that we should get rid of the dollar reserve,
the dollar as having this reserve currency status.
To quote Alden, losing dollar hegemony at this point would harm special interests
in the United States, would reduce the country's imperial reach,
and would require a shift of priorities, but ultimately it would lead toward
a more natural and balanced global economy and provide the opportunity for U.S. domestic revitalization.
Can another country even issue the reserve currency? What happens if the U.S. steps back?
Europe seems insufficient to the task. All the notes, they have insufficient kind of energy
independence. China also doesn't seem up to the task. They have a weak rule of law,
kind of people don't trust the ccp to manage the global reserve currency
does the world though need a reserve currency what it needs alvin says as she ends this chapter
is a neutral reserve asset that has natural scarcity and that is not issued by a government
and that we might take to be a nod to bitcoin so to toss it over to you lucas the question i was
left with like exiting this chapter like alvin it really gestures towards the multipolar world
that uses that word multipolar. I mean, do you think that the US, there's a lot of people who
like the idea of US as an empire, like dollar dominance. I think even Trump seems mixed. He
wants a strong dollar, even as he does endorse more populist sentiments of wanting to revitalize
domestically. So what do you think about that idea of refocusing on United States, the country
versus United States, the empire, maybe even to the extent of sacrificing US dollar hegemony?
having the world reserve currency is a good job if you could get it because
breaking it down into a very simple way of conceptualizing it if i'm the united states
and you are every other country in the world who uses the dollar and we're sitting across
the table from each other and you are knitting socks or you are writing books or you are baking
pies or you are making shoes. You make a shoe. I instantly write something on a piece of paper.
I hand that to you and now I take the shoe and you just accept it. And then you make another shoe
and it takes you three hours to make this shoe and it takes me three seconds to write this thing
on a piece of paper and I hand it to you and you give me the shoe and when it goes the other way
I have a piece of paper and I'm like I'm going to write on this piece of paper for your benefit
I'm going to create a contract and it's going to take me
30 minutes and you're going to have to work 15 hours in order to, you're going to have to make
10 pairs of shoes or something like that in order for me to exchange that for you. So it creates
this obviously beneficial for the, for the kingdom, for the empire that has it. It creates this ability
to not have to spend time in the same manner that other participants have to spend time
in order to acquire goods and acquire services.
So it's a great job if you can get it.
I think the story that Alden gives, the heavy is the head that wears the crown, which is
the story of the king who has this person that says, oh, your life must be so great
because you're king.
And the king says, all right, cool, step into it.
Let's see what happens.
And he says, all right, wear the crown, sit on the throne, have the servants, have the power.
And the guy's sitting there and he's having a great time until he looks up and he realizes that there's a sword dangling on a string above his head.
And if that string is severed, then he's dead.
And what it makes you think of is that there.
So you said something about the Navy of the United States, basically, is like we have this Navy that can win any battle.
And it's protecting the seas effectively for China's trade resources, because we're not trading.
We're not sending things overseas.
You know, we the things that we send overseas go in emails.
and they go in telephone calls.
We're not sending products overseas.
A little bit, but nowhere near compared.
But what I heard when you said that in my mind,
it was that the United States can win any naval battle for now.
Like, for now.
Until they don't, you know.
And the thing about the string hanging over the head of the king
is that the string eventually breaks.
I mean, even if it isn't cut, it just severs. It falls under the weakness of the might of the oppressive force that is trying to escape from its containment.
You know, the sword is the oppressive force trying to escape from its containment.
When it's dangled by a string, developed nations are the oppressive.
They're not they're oppressive to the United States.
At least they they are in what they need to do in order to survive.
They're not, I don't think, naturally opposed in any way.
I don't I don't see that they are wanting to actually be enemies.
But you see that they they want to escape from this system.
And there have been attempts and there have been tries.
And those attempts and those tries have been thwarted most often in the way of financial repression, but also very overtly in terms of covert action, you know, CIA meddling or the uprising of a different candidate.
You know, it's it is strange how the United States, which wants to spread freedom, seems to be really good at putting dictators into power and removing democratically elected candidates, which would seem counterintuitive to the narrative that is that is being spread.
And that takes me back to my very first thought about this chapter was the narrative versus the actuality.
Before we got on camera, we were talking about first principles and trying to think from first principles.
You don accept what somebody tells you about something and you also don accept the relationship to something that is familiar to that You don accept the reason by analogy You break it down into the grounded theory that Jason Lowry uses in his thesis And
so the monetary neocolonialism that is popularized by the United States as the
issuer of the world currency, the narrative is something almost like domestication.
It's sort of like this, you know, you've got this benevolent superpower and it's like they're adopting this this lost, you know, developing country and and offering guidance and cooperation.
It's it's almost like like they're a cow and we are going to care for the cow.
We're going to feed the cow. We're going to make sure that coyotes don't kill the cow.
And then what we're going to take in exchange is the milk.
That's kind of the narrative. But then there's the other way of viewing it, which is to look at what the outcomes are and to look at the outcomes in these countries and the examples that Alden gives, especially with the shrimp field, which it makes you it makes me think of the Bible.
There's a story in Judges about how a conqueror then goes out and salts the fields of the conquered in order to make them infertile so that they can't grow their own food.
And they are therefore dependent upon him.
And that's what happened with these shrimp farms was that they leveled all of these trees.
They tore out all of this ground that, or not tore out, they flooded all of this ground that had previously been farm ground that these people were using to feed themselves, to create their own food, to be self-sufficient.
And now, not only is that land taken out of production, but they flooded it with salt water.
And so even if you do remove that, then that salt remains. I used to actually work in this industry. I used to work in the soil amendment industry where we would take gypsum and use it to naturally remove salt from soil because it will bind with it.
the calcium sulfate will break down with the addition of water and bind with the sodium
and draw it out of there. And you would see insane differences in a very short time,
but it does take a while. It still takes a while. And by the way, this is just the small amount of
salt that you get from pumping a little, um, a little salt water out of the ground. It's not,
this is not ocean water. This is not ocean water. That's been flooded on top of this for years,
you know? So this, the, the second and third order effects of these decisions are not,
these are not easily reversible decisions, but so anyway, so you, you, it's affected. It's like
this biblical punishment of the conquered of salting the fields of the conquered to make them
depended upon you and it instead of milking the cow it's almost like going out to sedate the cow
slowly cut off a steak and then bandage it up and let it hobble off and then the next day do it again
and the next day and it becomes this horrific it becomes this horror movie of slowly cutting off
the pieces until there is nothing left and, and then taking that as your, as the spoils of your,
of your victory. So, um, the, the question about, um, the United States having the world reserve
currency and, and kind of what do we, what, where do we go from here? Um, you know, is it something
that we want to maintain. I would say that it's a whole lot like a movie star who
gets really used to doing the press and stops doing the work on their, you know, they're like,
they're an action star. And the thing that got them the role was the body that they had, right?
They like, Oh, this guy looks incredible. And then he gets the roles. And now he gets all the money
and he gets to stand in front of a crowd and just make money for standing there.
But when he abandons going to the gym, when he stops doing the work,
when he stops maintaining the body,
then you only have the last vestiges of the people that don't feel like they have any other choice
because they're invested in you.
It's like, oh, this is the seventh movie in this series.
I'm going to go watch it just because I watched the other six.
But by now, the superstar is bald and fat and old and wrinkled.
And it's not believable, the things that they're doing in the movie.
But you're just hanging on to it because you're suspending disbelief in order to be a participant in something.
I think if I can kind of view it that way, that's sort of how the United States looks right now.
And by the way, our movies reflect this.
Our media reflects this.
If you watch any, you watch anything that comes out of Hollywood, it's almost always old.
You know, it's people that were action stars in the 80s that are still action stars now.
And we're revisiting all of these old movies and we're continuing to push this stuff out.
Meantime, if you look at what Chinese movies and Chinese media look like, it looks like the stuff we put out in the 80s.
It's badass.
It's like Red Dawn on steroids with AI and it's killer and it's really good stuff.
and it's actionable and it's young and it's vital and it's virile and it's strong.
So I would say that the way that you look at that dollar dominance
and whether or not you want to maintain it is it depends on your time horizon.
If you can have that for a while, it's great, but it's never going to last
because what we know about money is that the natural money that is hardest will always rise to the top.
It doesn't matter what a global hierarchy says. It doesn't matter what they impose.
There will be created a natural order whereby that reserve currency, if it's not the strongest,
will be repatriated to the country that created it out of nothing.
and their shores will be flooded with inflation, much like we see now.
So you see other countries that they would much rather invest in United States real estate,
United States equities, United States hard assets.
And what that effectively is, is that we've got a fence
and you've got these guys on the outside of the fence just throwing dollars back over into the pool
and flooding it in order to get them out of their system
and take the means of our production and put that in their portfolio.
So it works against you in two ways.
It increases your inflation and it loses your ability to be strong by, you know,
hollowing out that industrial base, but also literally selling the means of production
in exchange for the dollars that you created out of nothing.
And by the way, by the time they get back to the United States,
you're at the very, very tail end and the worst benefit of the Cantillon effect.
It's, you know, it's great when you're selling it to the foreign country as a treasury.
That's cool.
And then it gets moved around and that, and then it finally gets, you know, it's like,
this is the last thing.
By now, these dollars are worth so much more less or worth so much less.
And you know that they're worth so much less because you see the price of real estate,
especially like farm real estate, you see that skyrocketing.
You know, in the 80s, even into the 90s,
you could see guys that were buying farm real estate in the United States
for hundreds of dollars an acre, 400, 500, 600.
You know, there's a lot of land out where my folks are that sold for 200, 400,
something like that, dollars an acre in the 70s and 80s.
And now it's three thousand, four thousand. And it's it's worse in other places.
You go up into Iowa and they're selling farm ground for over twenty thousand dollars an acre that used to be sold for, you know, a thousand dollars an acre.
And so you've had this problem for a long time and and and it's existed and it's getting it's getting worse.
It's, you know, working in that industry, I saw a lot of foreign, mainly Chinese, a lot of foreign purchasing.
So, yeah, it's I don't think I know that's a very long winded answer to your question because I wanted to kind of cover a couple of things.
But when I think about whether or not it's valuable for the United States to hang on to the dollar as a world reserve currency, I don't know that it's really valuable now.
I think we've passed the point of it being valuable because if you frame it in terms of not just can we create money out of thin air and use it to pay people for stuff.
If you think about the second and third order effects of what happens with that when it comes back into this country, when we lose our industrial base, when we lose our means of production, then no, I would say that it's certainly not in the best interest of the United States.
in probably any country to have the world reserve currency now because you have so many options.
Yeah. So that is then – you're a patriotic American. That is – is that a vote for the end
of American empire? And do you think that that's a problem? I mean Alden phrases it as we need to
return to United States, the country, revitalize domestically and end this notion of United States,
the empire. And she quotes or refers to Natalie Smolenski, who is a Bitcoin commentator,
an anthropologist, and who kind of says that if you're going to back away from this, from some
idea of America, the empire, you need to have a story to tell to Americans. People need something
to be proud of. And you're not going to be proud of, we are a nation in decline, an empire in
decline. And so, you know, if you want to step back from the United States, the empire, you need
to tell a new story about United States, something else to stand in, give people a positive vision
for what the future is going to look like. So I want to, I guess, just press you on that point,
because I think it gets to the heart of maybe the dilemma that a lot of Americans might feel
at hearing this is US dollar hegemony has negative and positive effects. You've went through them,
we've talked about them. But US geopolitical hegemony has led to this idea of empire military
bases in other countries, dramatic influence around the world. Is that something that a
patriotic American should be willing to give up? And if so, what is the vision of the future that
they're giving it up for? And just to complexify it a bit too, I think Trump has been a little bit
schizophrenic on this, maybe seeing the, you know, that he's walking a tightrope, because on one hand,
He's talking about like acquiring Greenland and the Panama Canal, these kind of seemingly imperial endeavors.
He also talks about he chastises bricks for wanting to introduce a new currency.
So he can seem a bit imperialist, even as he was definitely the less imperialist candidate in the elections.
So what do you think about what is the new story for America if we step back from America the empire?
And can a patriotic American do that?
yeah i'm a patriotic american but i'm probably not the definition of what most people would
think a patriotic american is i think that that term patriotism has really been bastardized to
mean that you will support and enable um propaganda and that you will support and enable
almost like addictive type behavior from your country.
So if I think about like, am I, am I a loving son?
And I think about my father, like I am a loving son to my father because I,
I want him to be, I want him to be strong.
I want him to be healthy.
And therefore I, I will, I will, you know,
encourage him to do those things that make him healthy as opposed to,
You know, like, basically, it's, it's like, do I want to listen to the stories of the strength of your youth? Or do I want to see you be strong now? I don't want to I don't want to enable the reminiscing and the rumination of America as the empire.
at the cost of the planning and the sacrifice that needs to be made for America, the country,
to be strong. So I agree entirely and I disagree with Trump's stance on some of that. I just think
he's ill-informed. I think that, and it's fun to say this because you can say this now,
And it can probably be true.
I think there's a whole lot of people that understand how the monetary system works and what you can and can't do with it much better than Trump and some of the people that are around him to advise.
I do think that he has some really good people, but you can't on one hand promote a strategic Bitcoin reserve and on the other hand say that the United States dollar is going to maintain strength as the world reserve currency.
Because if you promote the United States as the world currency, then you're trying to fight against the inevitability of a superior technology that is taking over, regardless of what you think about it.
Like, you know, war is not, you know, what is the quote is that you may not be interested in war, but war is interested in you.
And Bitcoin is war. If you look at it from Lowry's perspective, you don't you don't have to be interested in it.
You don't have to show it strength. You don't have to support it.
it's just taking over. It's just eating things. It's just removing the competition and like the
Strangler Vine coming up upon all of the competitors and running over them in the manner
that a bulldozer runs over an ant. It is inconsequential. Tick tock next block. This
train never stops it. And those are these fun little sayings that we have, but, but it is true.
Like nothing is stopping this. And so, um, this is posturing. Um, it's ill-informed posturing.
It is, I think probably specifically as posturing, uh, saying that the United States is going to
maintain the strength of the dollar that, you know, you can't, you know, bricks is not going
to happen that you're not going to like bricks is going to happen um or something like bricks is
going to happen um or the whole system just evolves and and countries no longer feel like
they need to have all of these uh political allies and political ties because you don't need that to
maintain a currency anymore you have something that maintains itself um it it doesn't care it's
superordinate to all of your laws. It's superordinate to all of your ideals. It stands
on top and it cannot be stopped by your technological attempts. And so, yeah, I just don't
think that there is a whole lot of congruence between the things that Trump and that administration
is saying with regard to attempting to maintain the dollar's position at the top of the pile.
I just and I also just don't think it's useful. I really don't think it's useful to the United
States. You can make the argument that there's a political advantage to be gained by doing that
because you can probably fool the world and you can probably maintain you might be able to even
push out some strength for the next two years and make sure that you're in a good position to win
the midterm elections. But I was thinking of it in my mind last night. I was thinking about
Germany in the 1930s and the thousand-year Reich, right? This vision of a thousand years for this
country. Obviously, there were some things that went wrong, but if you're thinking long-term,
then you're going to do things long term for your country.
But if you're thinking short term, if you're thinking two years to the next election,
then I think you're going to make some really stupid mistakes.
I don't think that there's any validity in trying to maintain the dollar as the world's reserve currency.
I actually believe that the faster the shock happens, the better it will be.
Um, but that's just my, I guess that's just my experience from my own life experience, which is that whenever there has been a shock in my life, whenever there's been a crisis, um, it helps to realign priorities in a way that is much more clear than if something is slowly going wrong and slowly falling by the wayside.
So I don't know. I kind of want to know, yeah, what do you think about that in terms of speed?
Yeah.
And I'll set it up by saying one of the things that I'm really interested in is studying, I think it's called the Hankey Krauss hyperinflation table.
I've seen Bology, sort of awesome post it, and I've seen a couple other places, which shows the amount of time that it takes for a currency to hyperinflate.
And I believe they define hyperinflation by prices doubling.
So there's a whole page full of these examples of major and minor and developing currencies that have hyperinflated during the – by the way, they're all during the fiat currency era.
Like this doesn't happen in silver.
This doesn't happen in cattle.
This doesn't happen in salt.
It only happens in fiat currency because eventually the music stops and there's the,
everybody goes for a chair and there's no chairs.
But anyways, the thing that I remember looking at it was I think the fastest occurrence for
prices to double was like a day, something like that.
And then there's a whole bunch of them where it's like, you know, 30 days, 25 days, 45 days,
67 days. But during every single one of those examples, there was not an off ramp. And today
there exists an off ramp. Like if Germany would have had an off ramp for their Deutschmark in the
20s when they hyperinflated, during a time where people were, the stories are you would go into a
bar and you would pay for all your drinks at the beginning of the night because by the end of the
night, the prices would have gone up. That's how fast their inflation was happening. And they didn't
have an off ramp. They didn't have a way for people to maintain the little bit of strength
left in their currency by moving it to something that was going to retain value. Instead, they
hyperinflated it by putting that currency back. You want to spend that money as fast as possible.
It becomes that debt spiral, or not debt spiral, but it becomes a spiral where the money, once it
starts becoming worth less, you start spinning it faster and faster and faster and faster because
you get less and less and less. And eventually it hyperinflates and explodes. So I kind of want to,
this is not really a theoretical question, but you're more than welcome to opine upon the speed
at which you think this can take. To put it into reference, I think it took about 30 years or so
for the world to really go to gold after they left to buy metallic standard.
And anybody left holding silver in their bags was caught out in the cold.
And we've read about this example earlier in this book where China tried to maintain a silver standard
and they fell behind by about 400 years in a manner of about 30 years.
They really lost their position in the world.
So if if we do see something like this, I mean, it's not if we will.
But where do you think it goes in terms of speed?
And what do you think that it's beneficial for it to happen faster than slower?
Is there actually some benefit to Trump trying to walk a tightrope and use Bitcoin to shore up the dollar while also trying to push out the dollar as the world's reserve currency and maintain that status?
Like, is that something that should be approached? I'm kind of throwing your question back at you. But with the addition of commenting on the speed aspect of it, is it better if it happens quickly or over 30 years?
so on the speed question um generally as you know it tends to happen very quickly metcalf's law
is that a network's value increases as the participants in the network increase
in a sort of exponential way because each of the nodes on the network is connecting with more and
more nodes as each new node is added alden in a past chapter said there's reverse metcalf's law
when the network collapses and they tend to collapse very very quickly with regard to trump
as you were talking, I think I might have been conflating two things as well.
There is the notion of maintaining a strong dollar and also the notion of
maintaining the dollar as the U.S. reserve currency, like the unit of account.
I think those are at odds with each other.
So maybe, yeah, to a certain extent, I mean, U.S. has to keep on,
to maintain global liquidity, has to keep on providing dollars.
But the dollar is strong right now, and it does have strength with respect
to other currencies. So the question is, can we maintain, can we keep the dollar from collapsing
while extricating it as the global reserve asset? And I think that's behind good faith criticism
of the Bitcoin strategic reserve. And Nick Carter specifically is somebody who's pro-Bitcoin.
He's a venture capitalist in Florida. I think it's Castle Island or something like that is his
company, but he's a prolific commentator on Twitter as well and in the media.
And he has come out against the strategic Bitcoin reserve, at least as far as having
an acquisition element to it of getting new Bitcoin.
For that reason, I think that he thinks it would quickly, it would signal a lack of confidence
in the dollar and so weaken the dollar.
And I think that, I mean, I don't agree or disagree with that.
I think I kind of actually disagree with that. But I think that in any case, there are people who want to think, and I think we all do, about how to navigate the extrication of the U.S. as a world reserve asset while maintaining the strength of the dollar.
And I think that it's going to happen quickly in terms of like a five to 10 year period, which I think is actually be slow in monetary terms and network terms.
But I think that it can be managed with things like Tether being tied to both treasuries and Bitcoin.
so things that tie the dollar to bitcoin i think are going to help us transition to more bitcoin
usage while maintaining the strength of the dollar something like that um i don't know if that answers
your question but i think that the goal is to maintain the strength of the dollar to a certain
extent while extricating it as a global reserve currency i think that that's a good idea because
i do think that america the empire is a notion that um should end not in a negative sense of
the collapse of the empire, but in a revitalized domestic United States. So a new narrative,
a new story, a new positive story arising that is not about empire, that is about
make America great again, you know, telling a new story about domestic revitalization that gives
people hope, even as America's imperial aspirations are retracted. So I guess I see that as the twin
goal is extricating the US currency from reserve status and also pulling back from imperial aspiration both of those connected And I think both of those pointing towards a positive future and things that can be managed
I guess.
I wouldn't, I don't know, I'm not pushing back, but I am going to challenge.
I don't think that the dollar is strong.
I think the dollar is the weakest it's probably ever been in history and continuing to get
weaker.
It just appears to be strong because it's being compared to a basket of other currencies.
But if we compare it to things that are less changing, like a house or the cost of farm real estate or the cost of Bitcoin, it would appear that the dollar is actually at or near the weakest it's ever been.
And it just, to me, I'll go back to something that I think was really, when I heard Michael Saylor challenge somebody on diversification, who said, I think you should have 2% of your assets in Bitcoin.
And he said, okay, it's cool that you want to do that.
However, show me 49 better ideas and I'll do it.
and that's kind of what I think about like he was the first person to frame it in that way for me and
now I kind of see that in every other avenue where Tom Brady was like I'm gonna throw footballs
and nobody else like said maybe you should diversify into bowling and trimming hedges
you know because you're you're really good but um you know diversification is really how you how
you make it. It's like, no, I think I'll just throw footballs. And in Coca-Cola, you know,
they make, make soda and maybe you should make tractors and maybe you should make lawn ornaments.
They're like, no, actually we're just really good at mixing sugar up with water. And so we're going
to do that. And that's how you become dominant. You don't become dominant by being indecisive.
You don't when you find the person that you want to be with, you don't also navigate 10 other relationships at one time in order to say, well, I'm going to put two percent of my love here.
You know, and by the way, that's what you see, like the happiest people have the tightest knit families.
They're close and they're they're really they really have a social community that they've invested a great deal of their time in a small amount of people.
So you've invested a great deal of your resources in a small amount of opportunities.
And so, yeah, I just I would challenge anybody that thinks that they can save the fiat system in any fashion.
You know, why would you ever choose to be involved?
Like you have a choice.
So why would you choose to be involved with a system that systematically robs you when you can buy the thing with the money that they're using to rob you?
You can buy the thing that they are talking about using to make their robbery proliferate for longer.
um you know like we we're gonna we're gonna we're gonna buy this thing that that makes it easier
for us to do this for longer to you and you're like well actually I can just buy that thing too
you know I don't I don't I no longer have to buy your dollars I no longer have to be subject to
your seizures I no longer have to be subject to your freezes and to your your sanctions I can just
by. I mean, to me, I don't, I don't think there is, I think that anyone that thinks that there
is an option here is woefully uninformed on what it looks like when a superior technology comes
around. The car showed up and nobody rides horses anymore. The plane showed up and nobody walks
places anymore. The refrigerator showed up and there's nobody delivering milk anymore.
like these these superior technologies they don't move in and take a little bit of the market share
they take over everything um and so that's kind of how i view it i just i just don't think that
there is there is that interim period where things get messy and that's why i hope that it goes very
fast because i don't want that mess to last for long no that's i mean my response was about speed
and the strength of the US dollar in reference to other currencies
and not in reference to the dollar over time.
So I just don't think that speed and decline,
it is like pulling the Band-Aid off quickly,
but the financial system is designed around the US dollar
and it's going to take some time, not centuries,
but not days either to redesign it, reincorporate it, build faith in the new system.
And so I agree that superior technology over time wins.
But I think that it's the U.S. should.
Alden gives this metaphor or just says pivot from a place of strength rather than weakness.
And I think that that means that she gives this other metaphor of the U.S. right now through the structural deficit.
it. It's like a boxer taking punches. The damage is accruing. And not feeling it.
Yeah. And you're not feeling it until such a point as you just kind of collapse. And so I don't think
that that collapse is what should happen. I think the speed, we should decelerate the decline in
order to ramp up the future, which I do think is a Bitcoin standard. But I think that that comes
with the US can manage its transition to it in a way that maintains the strength of the dollar
in the sense of not completely devastating people who have invested their lives in some
savings tech related to the dollar. You know, not everybody's full in on Bitcoin,
and there needs to be an, there doesn't need to be, but it would be good if the US in some way,
I think, could help manage a transition that was not sudden and overnight, that didn't go from
hyperinflating the US dollar to grasping onto Bitcoin, that there was pivoting from strength
to manage imperial retraction and the dollar's relative strength while we adopt new tech.
So I guess I don't think that speed is necessarily what we want to endorse,
except that on a modest timeframe, we want to pivot to something new,
if that makes sense, kind of a mishmash, mealy-mouthed, moderate position.
Yeah, I think, I don't know, I just think that's like a, I think that's a nice political answer.
But in terms of when I think when I think about what the United States is is maybe proposing to try to do with this, it seems as though you're trying to slowly manipulate the market.
And when you manipulate the market, what you do is you send the wrong signals to producers and consumers.
Producers produce things that shouldn't be produced and they don't produce things that should be.
and consumers obviously are in able to buy the things they need and they are able to buy things
they don't need. And the consequences of poor signals to the market, uh, last for generations.
And so that's where, I guess that's where I just maybe to stand on a bit of like a moral high horse
is to be able to say, I want it to happen immediately and fast, not, not for my own
personal benefit. But because by doing so, you will actually have a clear signal from the market
and that market will tell you where is the opportunity. And this leads to a question that
I wanted to ask you, which was when we have the system that we do, which is the dollar system that
is exporting our industrial base to other countries, and it creates the United States
as the service and technology sector, where we have all these very high margin industries,
finance, accounting, healthcare, things like that.
One of the problems with that, so there's one view that I have towards this,
and there's one quote that I think is really prescient in terms of taking a look at it.
The quote is Jeff Bezos, who says that your margin is my opportunity.
And the mindset that I have now is when I look at industries that have a high margin, I look for them to be most rapidly disrupted.
And the reason being is that the higher the margin, the greater the opportunity.
So if you're a safe cracker and you know that this safe on the left has a trillion dollars in it and this safe on the right has $500 in it, you're going to spend your time trying to crack the trillion dollar safe because there's a higher benefit ratio there.
Your cost to benefit ratio, because it's going to take you the same time pretty much to knock those things out.
So I also, by the way, I think that any this is this is my own this is my own little pet, my own little pet, little pet philosophy.
But I think that any industry where you see giant billboards of fat guys and bleach blonde girls who are promoting that specific sector, that one's going to get disrupted.
And across the nation, having traveled, that's real estate right now.
And real estate's getting crushed.
You had the ruling that takes away the, I believe it's like the buyer's premium because they're like, well, this is ridiculous.
You know, like you don't need to get paid 3% for doing literally nothing all the time.
And you just see everybody.
It's like it turns out everybody's a real estate agent now.
Like everybody's a real estate agent now.
Everybody, oh, I'm going to go get my real estate license.
Why?
Well, it's because it's a really high margin opportunity that you don't really have to do a whole lot for.
You don't have to know a whole lot about.
You can just kind of get in there and know some people and then make a lot of money.
So anyways, to round it back is that there's, I think, ample means, ample reason to believe that the high margin industries of the United States are going to be the next casualty of our dollar reserve system.
where first we lost the industrial base and that industrial base created this high margin,
this high margin service and information technology sector.
And I think we're going to be challenged in that very rapidly because in order to compete with that,
you don't have to build a factory. You don't have to have natural resources. You don't have to have the labor.
you just simply have to do something a little faster, a little cheaper, a little better in terms
of the computer work. And now you have the industry. These are, these are winner take all
industries as noted by the fact that there are usually between four and eight players at the top
of all of these. So I guess I want to frame that in terms of, I still want to keep it on, on, on
kind of the issue of the dollar as the world reserve currency. But do you feel that there is,
do you feel that that's worth trying to save more than saving the dollar as the reserve currency?
Or do you feel that it can be saved? What can be saved?
That high margin service and technology sector of the United States, the finance sector,
the, you know, the entrepreneurial sector, you're seeing a lot of people that are moving to Dubai and Portugal and taking their technological prowess with them to lower tax jurisdictions and places like that.
So I don't know, just kind of what are your thoughts about that as sort of a second and third order effect of the decay of the system?
I guess I don't see those high margin sectors being a result of deindustrialization. Maybe they were accelerated a bit by it. I think they can go hand in hand with reindustrializing.
And in fact, to the extent that those high margin sectors depend on U.S. power projection, maybe that's needed because once the U.S. hollows out its industrialized sectors sufficiently, then we're a paper tiger in relation to other countries that actually have an industrial sector and can make new arms even as we print pieces of paper to try to buy those arms from them.
So I guess I don't see the necessary relation between domestic revitalization by encouraging reindustrialization and also the preservation of those high margin information related sectors.
I guess I think that they can go hand in hand. And in fact, at a certain point, it would be necessary that we have a more diversified portfolio of industry in the United States in order for each of those particular industries to flourish.
it may be that it does put us in a good position to re-industrialize because we have a lot of
technological prowess that can be applied to industry you know industrial processes yeah
exactly yeah yeah yeah that's a good argument i think and i think that's why germany you know
has its its strength for a while was exactly that and even though they paid high wages in their
industrial sector that they were very efficient and apply technology well so they could still
compete on a global um global stage but yeah what do you think about then do you think this is
taking a turn a bit but do you think that tariffs are a potential solution um
in in the short term in that they will encourage us to re-industrialize make
Americans have to turn domestically to buy goods rather than importing them cheaply.
Trump, when he proposed tariffs, got a lot of grief from economists whose models they said showed
that this would be bad for the economy. But I think that we may be in sort of an unprecedented
position at this moment in history, given us holding the global reserve currency and being
at this advanced stage of it. And so I wonder, maybe tariffs aren't as nonsensical as certain
economists make them seem once you really kind of see that this historical moment is different and
that what Trump is trying to do as far as encouraging local industry is a valid thing to do
to mitigate one of the harms of the US being a global reserve currency. Do you think tariffs are
a good idea? Overall, I don't believe that tariffs are a good idea. And I can just come at that by
saying they do send an inaccurate signal to producers and consumers and they do cloud the
market and they do in some fashion misallocate resources. I understand the argument that if a
pair of jeans in the United States costs $100 to make and in China they cost $30, that putting a
$70 tariff on Chinese jeans allows for American producers to be competitive. However,
that is not thinking about the desired outcome.
And the desired outcome is to make things better for the United States people,
not for the United States industrial sector or the United States gene manufacturing sector.
I think there's a whole lot of danger in turning tariffs into the sort of like modern day,
like instead of putting pork barrel projects into bills,
I think there's a lot of danger that tariffs just pop up in every industry that has a strong lobby and not in the industries that don't have strong lobbies.
And to put it in the in the words of or the observation of my host in Colombia, lobbying is legalized bribery.
And what we have developed in the United States with the beltway system, you've got in D.C. the inner beltway and the outer beltway.
The Outer Beltway is the highest per capita income jurisdiction in the United States.
Lobbyists are the highest per capita income jurisdiction in the United States.
And it's because they engage in a practice of legalized bribery.
and it's not always what you and I think about in terms of bribery where it's like I'm going to hand
a bag of cash to a boxer before the match and then he's going to take a fall in round three
it's you're going to vote on this bill in order to get this factory built in this jurisdiction
and then when you leave office you're going to be on our board earning a million dollars a year
in showing up for three meetings via Zoom.
And that's far more insidious
because the effects of it last so much longer.
So I do, I think, have a genuine fear
that tariffs will proliferate the bribery system
in the United States and make it even more outrageous.
I don't agree with tariffs from an economic perspective
because they send an inaccurate signal for resource allocation to the market.
I do agree, and you did say this in your question, short-term.
Short-term, if we can dispense with the idea that they send a bad signal to the market,
if we can dispense with the idea that it encourages immoral behavior, what about short-term?
So short term, what it would do is it would inspire a number of participants in gene manufacturing in the United States that aren't currently enlisted in that operation to join up.
And most of them shouldn't be there. However, there will be people just because there are people that are more competent than others.
There will be people that turn out to be really good at it and they will be able to stand on their own after those tariffs are removed or they will be able to slowly wean themselves off of it.
However, I do think that tariffs are something that once put in place are really hard to take out of place.
And so you just effectively are going to put a semi-permanent price floor on a certain good by putting a tariff there.
And the end result is that consumers in the United States are not getting a better deal.
They're not benefiting.
You know, there is the argument to be made that, you know, there's going to be a couple more jobs to be had.
But those jobs are very tenuous because they're wholly dependent upon that tariff.
So, no, I just I think any game you have to play where you have to any game you play where you have to rig the rules in your favor to be competitive is a game that you should look at and go.
I should go play some other game because eventually something bad is going to happen.
Like you're going to be exploited. And especially if you are rigging the rules in your favor, like there's incentive for the oppressed in that system to exploit you.
Go play a fair game. Go play a fair game where the incentive is for everybody to just do well for themselves.
And you're not the heavy head wearing the crown.
So I guess that's kind of how I think about that.
No, I don't disagree.
I would note two things. Maybe the steel man, the tariff argument.
One is you gave Gene Manufacturer, but we could replace that with high-tech components or something.
So there are –
There's national security concerns.
Yeah, there's industries that are vital to national security and our advancement into the future, et cetera.
Also, that tariffs send inaccurate signals.
I think people would respond – they would respond that we are already in a managed system that is sending very inaccurate signals.
And so we're sending a strong signal to try to reorient it.
There's already people who exploit the arbitrage that US as a reserve currency.
People domestically, they import a bunch of cheap products and sell them.
And so they're really – they're exploiting the false signal that is sent by the US having this global reserve status.
And so tariffs, again, a shock in the opposite direction.
And not to endorse that.
That's the – we don't live in a free, free market.
We live in a free market system with a bunch of already inaccurate signals being sent due to – for political reasons.
And so it's a valid thing I think for people to lobby for their own signal to be sent in a certain sense.
that to me is an argument for two wrongs making a right and it really makes me think of it well
it's just an it's an argument did not utterly capitulate in the face of other people doing
something too well what what it makes i mean i don't know yet what it makes me think of is that
um saying it's okay to do something that is um bad but just a different sort of bad it's to me
To me, what that really rings, and by the way, this is really popular with the woke side, is that they really like tariffs.
They enjoy them.
And it's because they can manipulate markets with them.
And it makes me think it really does.
the first thought that came to mind when you said that, because I instantly, in my mind,
I recognize it as doing something wrong in order to combat doing something else wrong,
which is when I look at the woke ideology is I saw that they were fighting racism with racism,
that they were fighting sexism with sexism. They were fighting homophobia with heterophobia.
that the argument was like, oh, the pendulum swung too far in this direction.
So it's OK that there are certain groups that are disenfranchised now because they historically
haven't been.
And it's time for them to get their ass kicking, as opposed to maybe we could look at this
in terms of how can we just all be better?
and how can we, instead of promoting racism and promoting sexism and promoting all these,
how can we simply look at people on the merits?
And so I look at that.
I look at markets on the – I want to look at the market on the merit.
I completely agree that there are some national security interests that need to be prioritized.
What I would say is that if you want to really look at the outcomes and how they tend to proliferate,
then really what you should do is you should say, well, the national security interests,
those are the ones where the government should absolutely 100 percent not be involved in any sort of fashion
because everything that government touches, they ruin.
And it's not because they're government.
It's because they the nature of it is that it creates a middleman who has a handout,
who needs to be fed and they take resources away from resolving the problem.
Um, the industries that have proliferated in the United States did so without government support, like no government support. Um, they did so because they were able to explode, like less regulation, less involvement, less participation by the government.
So, I mean, I would say that if you want to encourage an industry, the best thing for the government to do would be completely leave.
Like, I'm perfectly fine if the industry wants to put – if they want to put tariffs on cereal and, I don't know, cereal and swatch watches.
Cool.
But that's fine.
But leave my computer chips alone.
Well, I think you've selected a nice moral high ground to die on.
But as a realist I mean people have to operate within the system as it is until the system is different And you know it a small sucker to a person who has lost their blue collar job to say no no no
The world depends upon unreasonable men.
Yeah.
You have to be unreasonable to break out of the unreasonable system.
In the long term, you know, those people are going to change history.
But in the short term, as we transition to a new system, it's like lobbying you posit as an evil.
But lobbying for crypto, Bitcoin and stuff has led to positive changes and has elected a president who is pro-Bitcoin.
So in the short term, I think people have to be pragmatic and work with the tools that are endemic to the system in order to change the system.
I think that unreasonable people in the long term can bring new ideas, but it takes utterly reasonable men to actually move things and get things done.
OK, I can buy some of that.
I do think there's some good.
I just want to kill your idealism, choke it to death and bury it.
Yeah, it's adorable.
It's adorable.
But I would, the problem, I don't know, the problem I have with this is that, so we're creating a crypto industry.
We're creating a crypto regulation industry that is not going to exist in some other country that is just going to say it's a sandbox.
Do what you will.
We recognize that there are benefits to this that we don't need to have a hand in.
But our regulatory framework could be sandbox.
That's a valid one.
We could choose and we could have a lobbyist that advance that position.
That would be a good thing.
Well, just look at in terms of where it's gone already.
So you originally there was no regulation around crypto. And then there stepped in some fairly strict stuff, you know, capital gains, pretty ridiculous to pay capital gains on Bitcoin. Bitcoin is functionally sending someone Bitcoin is no different than sending someone an email.
and I don't get taxed on an email.
Literally what I'm doing is I am sending a transaction
in a digital system that is not necessarily
and cannot really be proven
to be in the domain of the taxing jurisdiction.
So somebody is going to realize that
and somebody is going to say,
it's utterly ridiculous that we have capital gains tax
on this thing.
Like we don't tax texts.
We don't tax emails.
Why would we text?
Why would you go around and cares about your texts or emails? No one's going to buy those from you for everybody cares about everybody cares about them because reading those things, putting clauses into your terms of service that say that you can read those things and take the information out and use that to market to people that created the most powerful companies that have ever existed in the entire world.
there is more there is that's where all the value is there all of the value in the world
is in information it's not in it's not in cows and it's not in socks it's in that information
so i see what you're saying and it's just information like the the value transfer of
bitcoin is merely letters and numbers just like the text that i send in the email that i send is
letters but so is the transmission of equities nowadays through a stock market i mean that all
happens electronically, all of its movement on the ledger of all monetary or value-based things
anymore when we're moving towards reduction termination.
Yeah, but the stock market is housed in the United States.
That is a physical jurisdiction.
Some of the people who transact in Bitcoin are.
It has a physical jurisdiction that people literally buy.
You've heard these stories, I'm sure.
Buying the closest real estate that you can to the stock market so that you can be one
nanosecond faster on, on, you know, there is a geographical tie to that. There's no geographical
tie to Bitcoin. There is people who own Bitcoin have it. It's everywhere. It's every node. It's
every node in the entire world, but the holders of it are in a specific geographic location. And so
it's, I mean, law is an arbitrary convention and the people who define the, the standing under it
of a certain thing can define it in a certain way. I think, yeah, that gets us kind of far
field, but I think it's taxable. All tax is an arbitrary legalistic convention. If they want to
define it a certain way, they're casting magic spells in a different way, but that's the case.
I think you're going to find in very short order that Bitcoin is not taxable. And I think you're
going to find that it's not taxable, not because there's not a will to tax it, but because there's
so much will for it to not be taxed. Because people, for the first time, have the opportunity
to hold on to it and not have it taken away and be able to say, no, just just flat out. No,
you can't take this away from me. You can't take it by force. The returns to violence and the
returns to lawfare in terms of the economic return that you get to putting somebody in a chair,
tying them down and beating them until you get their Bitcoin password out of them or taking them
to court and suing them over and over in a country that has the strongest property rights in the world.
The returns to those sorts of violence and oppression have dramatically fallen to the
point that it is no longer economically feasible to take that approach. So I think, and by the way,
it doesn't have to happen here. It doesn't have to happen here. It happened, you know,
in in dubai there's zero tax on cryptocurrency yeah and and what happens is that people vote
with their feet and they flood and they leave maybe people will move to dubai but i don't think
that matt that the fact that people can engage in mass tax evasion with bitcoin is an argument for
making it untaxable i don't i mean i think the government can still make it taxable to the extent
that it goes through corporate channels they have to report all that stuff and to the extent that
you think that bitcoin we're going to hyper bitcoin eyes it's always going to hit some taxable
transparent entity, a corporation or something like that. Unless you're going to borrow against
it and never sell your Bitcoin and use fiat, in which case you're endorsing that world of fiat
currency in addition to Bitcoin. But there's always going to be individuals who are incorporated
in the United States, entities that are incorporated in the United States and have to report things to
the government. And they're not going to engage in tax evasion just because it's easier with Bitcoin.
i think it's short-sighted to believe that the system that we are currently in is not going to
be radically altered by surely is yeah by you know by because we're in we're in a system that
is created to encourage debt and it's created like you know that's why the rules are written
the way they are so that if you have an asset and you take a loan against it there is no tax on it
And it's encouraging that because that's what benefits the system.
But you don't have to play those rules anymore.
And it doesn't have to be that the change happens here first because it will happen somewhere else.
And the benefit will be so great that the system, the new system will be adapted by players who want to continue to be competitive in a global market.
I cannot see it going in a different direction.
I can certainly see the current system fighting tooth and nail to maintain the rent-seeking status that it has because that is to their benefit.
But when I think about the way that the Bitcoin network grows is simply by adding more people that exchange more value, and they don't need anything in between them.
They don't need a government between them.
They don't need a bank between them.
And they're not going to opt in for it.
You know, it's now an opt in system instead of a claw your way out of its system.
And why would you ever do that?
I'm never going to move to Dubai, no matter how favorable a tax jurisdiction it is.
I'm not going to leave the United States.
You know, I may be some part of Latin America.
I could conceivably.
But I think the vast majority of the United States, people in the United States are not going to go to Panama to Dubai just because it's even if there was a tax on Bitcoin in the United States.
and not in one of those other jurisdictions.
Breather the man with heart so dead
who never to himself hath said,
this is my own, my native land.
We all have the sentiment that we love,
not we all, but many people have the sentiment
that they love the place in which they were born,
even if it does impose some taxation on them.
That's like the whole idea of Europe now.
People are okay living there
despite its ossification economically
because they like the quaintness of it.
They like it because it's their homeland.
And people do not move just for favorable tax reasons,
except for maybe marginally some billionaires here and there.
I think that there are a couple hundred million people that came to the United States that would disagree with that.
And they were Europeans first.
Yeah, I was just speaking for myself, I guess I would never have to do that.
Right, right. But again, I think that we can have those feelings.
And I certainly have those feelings. I don't want to leave the United States. I wouldn't prefer it.
But it turns out that throughout history, there have been numerous examples of times when the economic situation has gotten so bad in a country that used to be strong that people who would have never left leave.
And that's that's not an outlier.
That's the common theme.
And you see the exportation of of talent to the places that treat it best.
and so I
it's great
I love the United States
it's awesome but
in terms of
can it
keep you? Probably
can it keep
the vast majority of its talent?
I don't think so because the talent that came here
was free agents to begin with
it came here from other countries
there is a native
there is a spirit
of the United States
and the people within it that is prone to adventure.
It does have that reckless feel.
It does have that idea that we're going to set out in a wagon
and we're going to go across a country that we've never seen
in order to get away from an oppressive tax structure,
in order to get away from a system that does not benefit us,
and to have opportunity to be able to grow our own whatever,
our own food, our own resources, our own families,
without the inhibition of an overarching power source.
Yeah.
I just think that that's,
I think it's such a constant theme throughout the globe
and throughout history that I see no reason
why you can't see a hundred million,
like I see no reason why you can't see
50 million people leave the United States.
Not immediately, but why,
if you're if if you're a if you're someone that has the means to do it um why would you like why
why would you other than sentiment and the thing about sentiment is that you rapidly learn going
through sentimental things that it's never the actual thing that holds the value of the memory
it is just the memory like going through stuff with my parents uh when they when they're like
cleaning up and finding old pictures and old college yearbooks and baby pictures and stuff,
right? It's not the picture itself that's valuable. It's the memory because they put,
you enjoy it and then you put it away. So you can take a picture of the farm to South America and
you can take a picture of your local coffee shop to Dubai and you can still retain that same
sentiment. But then you can also live in a place where you aren't constantly under the thumb of
what has become up until November, a more and more oppressive regime that remains to be seen,
whether or not it's going to be less oppressive in the future.
Yeah. I mean, so I don't know. We're not, you know, I don't know the relative debates,
of course, of Dubai. There's lots of talk about their human rights regime not being the best.
And of course, you know, there may be many reasons why it's not the perfect sandbox of freedom. But even that aside, there is, I think, bracketing other than sentiment as a reason, you know, like that's the only reason people might want to stay. That's all there is to life is sentiment. There's much more. I mean, there's much more in life than what money can buy than what Bitcoin can buy. And at the end of the day, that's family. That's being close to people you love. And there's people who are not going to leave.
So I think this ties to the question I wanted to end with.
Alden says we need to step back from, quote, America, the empire and get back to, quote, America, the country.
And again, Smolenski's point is there needs to be a positive narrative tied to what that is.
What is America, the country?
How do you define that?
What's the story you give it so that people endorse that vision and want to make that great again and actually step back from empire?
And so maybe even to put a finer point on that, I mentioned to you before we were talking, Sam Hyde, the comedian, has this video that he taped to Elon Musk.
It's relating to the H-1B debate, but it goes much broader, I think, in that there is the idea America the country, even if we endorse that, there's one subset, Vivek, Elon, others like that who say America is an idea.
And there's another set, Sam Hyde, other people on the other side of the H1B debate to say America is a nation. America is a collection of people with a shared history and a shared culture.
So one camp says America is an idea, an abstract narrative about competitiveness, about entrepreneurial spirit.
The other ones who say America is not inherently about competitiveness.
People are more than economic units.
People are inherently based and grounded in their culture.
They're inherently tied through filial bonds to their family.
And, you know, you can't have unchosen obligations in life.
If you can be born into a family where your brother or sister is disabled and maybe you have a bond or obligation to them that is unfair that you can't just jettison, that you have to support them.
So what is America? Is America the country?
Even if we move away from America the empire and endorse America the country to revitalize domestically, do we say America is an idea or do we say America is a nation, a culture tied to a specific piece of land?
where people have an identity they did not choose and which is not reducible to them as an economic
unit, um, cashes out in terms of competitiveness and entrepreneurial spirit. I want to give you
credit for probably the best question that you've posed during our discussions here. And I think,
I think it's the best question because it immediately popped into my mind what I think
is a beautiful story, uh, in terms of being able to answer it. So, so maybe it's, it's just that it,
It inspires this. But I want to I want to yeah, I want to weave my way through this a little bit.
And I'll up front state my answer and say that it's both. But one is a consequence of the other.
So you've got the idea and you've got the nation. But I'm just going to say the culture or the community.
Let's say the community. What is a nation? It's just a big community. Right.
You've heard people I've heard the quote was like a nation is a group of people that agree to like selectively forget the same things, the same history or something like that.
But but it's culture. Like, I understand the argument. Like, are we a nation of free market, open competitiveness? Or are we a nation of free speech and this and that and, you know, and guns and football and apple pie and and, you know, all these things.
So it's an idea that creates a culture. One leads to another. And the way that I think I know that is I'm going to this is for the benefit of everybody that might be listening, but but for you and me.
So the most vibrant culture that I've ever experienced was when I moved up to Wenatchee, Washington, and I stayed with Grant in his little apartment there. And we went out and we went out and we started doing a lot of things with people in the community that were simply a consequence of things that we wanted to do in order to better ourselves.
We wanted to go do some cold punches.
And so we started going down to the Columbia River every morning and getting in the water.
And then we mentioned it to some other people.
And we grew a group that started coming with us every day and wanted to challenge ourselves to go do some yoga.
So we found a vibrant community of people in that yoga studio that turns out were interested in a lot of the things that we were interested in as well.
We wanted to go do some hiking.
And so we found some people along the way who wanted to come along and hike with us.
And that all culminated when we decided to host a party.
And we had this party in this tiny little, what, 600 square foot apartment, maybe.
and we had like 40 people in there and every single one of them was a friend. None of them
were hangers on. None of them were somebody that you didn't want to talk to. And we knew that they
were all people that we wanted to talk to and wanted to enjoy because we got called in for a
noise complaint because we were having so much fun. It was the idea that was first proffered by
by Grant when he read my blog when I was living in Columbia and said, hey, you know, this is such
a cool place up in Wenatchee. He was really, really just selling the idea of these things.
He wasn't even offering for me to come. And I kind of invited myself and I said, OK, well,
we're both interested in these same sort of things, in bettering ourselves and being competitive with
ourselves, um, in improving ourselves in, in these other manners. And so let's go do these
activities. Let's do the cold punch. Let's do the exercising. Let's go to the open mic night. Um,
and, uh, and let's engage in, in all of these different communities. And as a result of the
idea, we created a, a miniature nation of friends. We created a community, we created a culture,
that became much more valuable than the idea.
And so I love the question.
And I think the answer is that it is both.
I think it's the idea that leads to the culture.
I think that the idea of wanting to escape the oppressiveness of the regimes
and the kingdoms and the monarchies in Europe
is what led people to come to the shores of the United States.
And they didn't bring with them the rules.
Those rules were made after the Constitution was created after that idea had planted enough seeds
and started to grow such that there was commonalities that were able to be encoded in law
and encoded in rights and natural liberties. So yeah, I think that the answer to your question
is that it is a beautiful transformation of the idea expressing itself through the culture.
yeah no i i agree with that i think that ideas definitely come from the culture and you have to
be in a certain culture for certain ideas to be able to flourish if you're in communist china
you know you're not going to be able to um do certain things that you can do here for cultural
due to cultural constraints that place constraints on the ideas that one can have but i think that
you know that's to in the context of the h1b debate it was the idea people who look at as
America as purely an abstract idea about being free market competitive, they would say,
you can take somebody from some other nation, drop them in the United States, and they're an
American. And people on the culture side say, no, there's actually an acculturation,
enculturation, assimilation aspect, where you learn many things about how to be an American,
how to respect free speech, how to even maybe just things like how you operate your body in space,
your body bubble, the hygiene that you have, how you treat the public spaces that you're in.
These are all learned things that are cultural that then allow certain ideas to flourish within
them like entrepreneurship, human dignity, things like that. So I agree with you. I do think ideas
are related to culture, but culture is primary. And I think, I mean, take that back to the original
question then. If one has to define what United States, the country, what's the positive vision
going forward, I think one has to, you know, if you really want people to believe in it,
you can't just say America, the country is about free market competition and entrepreneurship,
because that's, I think, a cold and empty vision for most people, not completely empty. And those
are those are good things, but they only have value to the extent that they enrich our communities
and are, you know, that are products of our culture.
And so it can seem blood and soil nationalist to say something like that.
But I think it's just realistic that what makes a human a human is the cultural apparatus
that generated the consciousness that person has in the way that that then caches out
in the ideas that they, you know, put into the world and operate within.
So I would agree with you.
Ideas are important, but they stem from culture and that any definition positive,
any positive definition of America, the country going forward, if it's a tool for domestic revitalization and a step away from hegemony and empire,
is going to have to respect that we do have a culture and that it's not just some abstract ideal free floating without a culture.
so so maybe maybe you can maybe you can find a compromise between what both of us are saying
if you can view ideas as a personal culture as an individual and an idea is a culture that an
individual has that would combined with other people who have similar ideas arises from from
which we see a nation and a community. And yeah, I, yeah, I don't know. It's a, it's a beautiful
thing to consider that, that I, by the way, I do completely agree that you can't take someone from
outside the United States and drop them in the United States and have them be an American. I
think we see examples of that. And the reason, by the way, is that you can't take an American
and drop them in China and have them be Chinese.
Like that can't happen.
Like it just can't happen.
But you can eventually – like the difference is that I can never be Chinese ever.
Like it just – it cannot happen.
But a Chinese person can be an American.
And so there is beauty in that flexibility and the adaptability of being able to adopt those ideas and beliefs.
So yeah.
Yeah, no, I think that that's a good ending point. I mean, this part three was the rise and fall of global monetary orders. We've been talking about the rise of the next order. And these kinds of broad questions about one's vision of the United States or whatever country you're in, I mean, we're going to create or in some sense orchestrate or be dragged into the next global monetary order.
And so I think it does benefit us to have these large conceptual discussions about what a nation is and what's important. So I think that's a really great place, a point to have coalesced on here at the end.
Yeah, I think the we are going to see that the next world order is created more so from the bottom up than from the top down. And that's something that sounds good to me, because it just means that there's going to be more people involved in in solving the problem. And the more people that you have to solve the problem, the more chances that you'll run into a really good idea on how to solve it. So, yeah, I love it. Fantastic.
and as always a wonderful discussion here on broken money and we'll guess we'll see you guys
next time i'm lucas and that's grant he's at the whole frame on twitter and i am at lucas maddy
see you guys see you later thank you for listening if you like please subscribe every little bit gets
me one tiny step closer to my ultimate goal of living in a cave you never have to buy windows
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