Transcript
00:00:00 The following is a conversation with Robert Breedlove,
00:00:03 someone who caught my attention
00:00:04 and was recommended highly as a rigorous scholar
00:00:08 and thinker in the space of decentralized finance
00:00:10 and Bitcoin.
00:00:12 His podcast titled What is Money?
00:00:15 is a good representation of the way his mind works.
00:00:18 He’s willing to talk through ideas for many hours,
00:00:21 willing to listen, willing to think,
00:00:24 which makes him a great companion in conversation
00:00:26 to explore the history, philosophy, and future of money.
00:00:31 Quick mention of our sponsors,
00:00:33 Fundrise, Element, MonkPak, and BetterHelp.
00:00:38 Check them out in the description to support this podcast.
00:00:41 As a side note, let me say that I’ll have
00:00:43 a number of conversations in the coming months
00:00:46 on Bitcoin and other cryptocurrencies.
00:00:49 None of these conversations are financial advice.
00:00:52 That’s not a legal warning, that’s a genuine description
00:00:54 of my goals and approach with these chats.
00:00:57 At least for a while, I personally won’t actively invest
00:01:00 in Bitcoin or any other cryptocurrencies,
00:01:03 except to learn about the technology itself.
00:01:06 I don’t think this should be a journalistic standard
00:01:08 like the New York Times trying to establish,
00:01:11 which I very much disagree with.
00:01:13 In my humble opinion, I think journalists should be free
00:01:16 to invest in Bitcoin if they want to.
00:01:19 Luckily, I’m not a journalist.
00:01:21 I just know my own psychology and I feel that my thinking
00:01:24 will be muddled by excitement
00:01:26 if I invest before I understand.
00:01:29 I feel the same way about Tesla, for example.
00:01:31 I still don’t own any Tesla stock
00:01:33 and I am still indeed fascinated by Tesla Autopilot
00:01:37 as an artificial intelligence system.
00:01:39 I work hard to be cognizant of the biases
00:01:42 that arise in my mind and always try to choose the path
00:01:47 that maximizes or maintains a freedom of thought
00:01:52 as much as possible.
00:01:53 Also, let me say that I try to be very careful
00:01:56 in selecting guests based not only on the contents
00:01:59 of their ideas, but the richness, complexity, music,
00:02:03 style of their mind and character.
00:02:05 Yes, I will talk with people with whom you
00:02:08 and I may disagree, people who some may call bad
00:02:12 or even evil human beings.
00:02:14 I want to understand them because I believe that,
00:02:18 as Solzhenitsyn said, the battle line between good and evil
00:02:22 runs through the heart of every man.
00:02:25 I think if you always run from evil,
00:02:27 you become blind to the truth of human nature.
00:02:30 This is the Lex Friedman Podcast
00:02:32 and here is my conversation with Robert Breedlove.
00:02:37 Rousseau opens his 1762 book, The Social Contract,
00:02:41 with the following statement.
00:02:43 “‘Man is born free and everywhere he is in chains.’”
00:02:47 So you talk about freedom and sovereignty quite a bit.
00:02:50 What do these ideas mean to you, the idea of sovereignty?
00:02:54 Freedom and sovereignty, I think they’re very
00:02:57 closely related.
00:03:00 Let’s start just focusing on sovereignty,
00:03:01 which is a word I don’t think we talk about enough.
00:03:04 And the general definition of that I would give
00:03:07 is the authority to act as you see fit.
00:03:12 And it’s a word that’s etymologically associated
00:03:15 with words like monarchy, money, reign.
00:03:19 So historically, it’s referred to whatever the locus
00:03:23 of supreme power is in the sphere of human action.
00:03:26 So whether, if you go like back into ancient Egypt,
00:03:30 the Pharaoh had absolute sovereignty
00:03:32 and everyone else was pretty much operating
00:03:34 according to his interests.
00:03:36 You fast forward to today, modern Western democracy,
00:03:40 we have more decentralized sovereignty
00:03:43 and that we all get to go vote and elect officials
00:03:45 that make decisions on our behalf.
00:03:47 So the theme of sovereignty across history
00:03:51 is that it’s been gradually decentralizing
00:03:52 across our different models of socioeconomics.
00:03:56 And it’s largely, you could say it’s rooted heavily
00:04:01 in the money, I would argue,
00:04:03 which is something we’ll get a lot into here,
00:04:04 where if you have money, you have the authority
00:04:08 to act as you see fit in the world.
00:04:11 And even in our current political sphere,
00:04:14 if you have enough money, you can actually reshape the rules.
00:04:17 You can reshape laws, you can lobby Congress.
00:04:21 If you’re in a certain situation, like many billionaires,
00:04:24 you can negotiate your own tax treaty
00:04:26 such that you can get favorable tax treatment
00:04:28 with certain jurisdictions in the world.
00:04:30 So this concept of sovereignty, which today we call,
00:04:35 it’s common to call states or nation states
00:04:39 or government sovereign,
00:04:41 meaning that they have power over people.
00:04:44 But as I argue in a lot of my writing,
00:04:46 I actually think that sovereignty
00:04:48 and here’s within the individual
00:04:49 and that we each have our own interiorized space of choice,
00:04:54 which is something like Victor Frankl
00:04:56 called the final human freedom.
00:04:58 And that we, no matter what our circumstances are,
00:05:00 no matter what exogenous situation we face,
00:05:03 we always have this endogenous power
00:05:05 to choose how we respond to it.
00:05:07 That’s one of my favorite books is,
00:05:09 A Man’s Search for Meaning.
00:05:11 Maybe we can break that apart a little bit.
00:05:13 So you’ve kind of spoken about sovereignty
00:05:16 as a closely linked to power,
00:05:20 but is there something about your own mind
00:05:22 being able to achieve sovereignty
00:05:25 no matter what the monetary system is,
00:05:27 no matter what, who has the control over centralized power,
00:05:30 the money or whatever the mechanisms of sovereignty
00:05:34 and the societal level?
00:05:35 You as an individual, isn’t ultimately all boiled down
00:05:39 to what you can do with your mind, how you see the world?
00:05:42 How you interpret it.
00:05:43 Yeah, I agree.
00:05:45 And as we get a little bit deeper into this,
00:05:47 I think we’ll come to see money
00:05:48 as an extension of your mind.
00:05:50 So there’s a feedback between money and mind.
00:05:52 For instance, you think in dollars today,
00:05:54 almost guarantee it, most of us do here in the US.
00:05:58 And it’s a tool, right?
00:06:00 It’s a tool we’re using to decomplexify the world around us,
00:06:03 to deal with it, to understand the sacrifices and successes
00:06:08 across an entire history of economic transactions.
00:06:10 We can boil that all down to the price.
00:06:12 So it’s data compression.
00:06:14 And if you can change,
00:06:17 if there’s a central body or central governance mechanism
00:06:20 that can manipulate that money,
00:06:21 it can have an impact on your mind.
00:06:25 For instance, today, so I agree with you on the first hand,
00:06:28 say that I do believe in free will.
00:06:32 I do believe in individual autonomy,
00:06:34 but I also think that there are certain devices and powers
00:06:39 in the world around us
00:06:40 that can actually influence how we think.
00:06:42 And it’s fascinating to think about the fact
00:06:44 that money might be actually deeply integrated
00:06:46 into the way we think and into our mind.
00:06:51 You think about what are the core aspects of the human mind?
00:06:54 What influences cognition,
00:06:56 the way you reason about the world?
00:06:58 You have the Chomsky languages at the core of everything,
00:07:02 but you’re kind of placing money as pretty close
00:07:06 to the core of what it means
00:07:08 to be an intelligent reasoning human.
00:07:11 I think money is a direct derivation
00:07:14 of action and speech, actually.
00:07:16 It’s another expression of the logos.
00:07:19 If we even think of what it means to think
00:07:23 is that we are generating two different courses of action,
00:07:26 potential courses of action,
00:07:28 and we’re populating them with avatars, right?
00:07:31 Maybe ourselves or others.
00:07:32 And then we’re comparing how we may act in each situation
00:07:36 and what we think the result would be.
00:07:37 So actually it’s comparison.
00:07:40 Basically it’s comparison and contrasting
00:07:41 of possible courses of action.
00:07:44 And that’s the same thing with words themselves.
00:07:48 Most words, the vast majority of words
00:07:53 only have meaning in relationship to other words, right?
00:07:55 It’s all contextual definitions of a word or more words.
00:07:59 Now people have argued with me about this
00:08:01 because there is a first word, right?
00:08:02 Where you pick up rock and say rock.
00:08:04 But most other words in higher abstraction
00:08:08 tend to be relative.
00:08:10 And what’s funny about action and speech,
00:08:15 and this gets, I got into a bit of this in our paper here,
00:08:18 is that it’s linked to evolutionary biology
00:08:21 and that once human beings adopted upright stance,
00:08:26 we freed our hands.
00:08:27 We no longer needed our hands for locomotion.
00:08:30 So we started to evolve more dexterity
00:08:34 and notably we have opposable thumbs.
00:08:35 So this gives us an ability to manipulate
00:08:38 and particularize the environment
00:08:39 in a way that most other animals cannot.
00:08:42 And what’s interesting about this is that
00:08:44 as we gain this ability to manipulate natural resources
00:08:49 and count, point, pointing was a big deal
00:08:52 and that we could indicate prey
00:08:54 or items that are far off distance
00:08:56 and we could organize ourselves.
00:09:00 At the same time we co evolved this fine musculature
00:09:04 in the face and tongue.
00:09:05 So it’s as if speech developed,
00:09:07 co evolved really with our dexterity.
00:09:10 And as a natural extension of that came us making tools.
00:09:17 Right, we started to create things
00:09:18 to better satisfy our wants over time.
00:09:21 And the most tradable tool in any society
00:09:24 or the most tradable thing is money.
00:09:26 So I really, I argue that action and speech
00:09:31 are quintessential modes of self sovereign expression.
00:09:35 And the money is just sort of a tech layer
00:09:37 we’ve put right on top of that.
00:09:38 And that it’s a natural derivation of action and speech.
00:09:42 Okay, that’s fascinating to think about sovereignty
00:09:44 from the evolutionary perspective.
00:09:47 And then ultimately money is the technology layer
00:09:50 that enables sovereignty.
00:09:52 So, you know, it’s really fascinating to think about
00:09:57 our modern human society as deeply rooted
00:10:01 in these like evolutionary roots
00:10:03 from the very origins of life on earth.
00:10:05 So what, you know, some of the ideas you just mentioned,
00:10:09 what do you see are some interesting characteristics
00:10:13 of just life on earth that propagated to us humans?
00:10:18 Like what ideas propagated through,
00:10:20 have roots in the evolution?
00:10:23 Yeah, I think one of the deepest impulsions in life
00:10:28 is the territorial imperative.
00:10:29 So all life is seeking to expand its dominion
00:10:35 over space and time.
00:10:37 And we think about, you know, again, physically with space,
00:10:40 it’s advantageous to an animal or an organism
00:10:43 to have more territory under its control
00:10:45 to raise offspring.
00:10:47 So it’s all about reproductive fitness
00:10:49 at the end of the day.
00:10:50 And then we’d also think of reproduction itself
00:10:53 as the genetic impulse to have more,
00:10:57 to replicate oneself across time.
00:10:58 So it’s territoriality across time in a way.
00:11:02 And this is very common in most animals.
00:11:04 Not all animals are territorial, but many are.
00:11:07 And you see very interesting behaviors
00:11:10 resulting from territoriality.
00:11:11 This is like animal combat.
00:11:13 You know, the reason birds sing is territoriality,
00:11:17 a number of other things.
00:11:19 And it’s my hypothesis and others have shared
00:11:23 this hypothesis as well, that mankind is clearly,
00:11:28 I think, would argue a territorial species
00:11:30 and that he expresses this territoriality in property rights.
00:11:35 So property, when we hear that word,
00:11:38 we typically think of an asset.
00:11:39 We think of, oh, this house or this stock or whatever.
00:11:42 But property is actually the socially acknowledged
00:11:45 relationship between a human and an asset,
00:11:48 such that you have exclusive rights and responsibilities
00:11:51 to a particular asset.
00:11:53 It is not the asset itself.
00:11:55 So property, it’s information, it’s a relationship.
00:11:59 By the way, my mind was just blown.
00:12:01 Property is information, it’s not the actual asset.
00:12:04 That’s really important.
00:12:05 Very important.
00:12:06 That’s really interesting.
00:12:07 Yeah, and then it comes down to how do we organize ourselves
00:12:12 such that property, that the contributions people are making
00:12:19 are commensurate with the consideration they’re receiving.
00:12:22 So if you’re adding value to a piece of property,
00:12:24 you’re developing a piece of land for use,
00:12:27 in theory, to be fair, you should have the rights
00:12:31 to that fruit if you go out and plant a garden
00:12:34 or whatever it may be.
00:12:37 And this is rooted in natural law,
00:12:41 where we have rights to life, liberty, and property.
00:12:44 Those are kind of just the base,
00:12:46 the fundamental layer of morality and capitalism, frankly.
00:12:49 And you could think of, to get really primordial with it,
00:12:54 the first capitalist in the world,
00:12:57 just to kind of get some definitions out here,
00:12:59 I’ll say capitalism versus communism or socialism
00:13:03 as the spectrum I’ll speak on.
00:13:06 The first capitalist in the world would be the guy,
00:13:09 the caveman, that maybe dug a little hole for himself
00:13:12 to shield himself from the elements.
00:13:14 Maybe there was a rainstorm or a snowstorm
00:13:17 and he dug a little enclave and he protected himself.
00:13:20 I thought you were gonna go, because you said primordial,
00:13:22 I thought you were gonna go back to like
00:13:24 earlier biological systems.
00:13:27 I guess primordial for human, perhaps.
00:13:29 For humans, yeah.
00:13:30 Okay.
00:13:31 And then the first communist or socialist
00:13:34 would be someone that decided the fruits of his labor
00:13:37 belonged to him.
00:13:38 So he would have violently encroached on that individual
00:13:41 and taken his plot for himself, for his own use.
00:13:45 And that’s the spectrum across which capitalism,
00:13:50 in the pure sense, and communism in the pure sense operate
00:13:53 in that capitalism, each individual has the exclusive rights
00:13:57 to the fruits of their labor.
00:13:59 So anything they spend their time, effort, energy
00:14:02 creating in the world, they own the rights to that
00:14:04 and they can trade those rights with others,
00:14:07 other self owned people that have done similar things.
00:14:10 Communism or socialism would imply that other people,
00:14:13 typically the state, have the rights,
00:14:16 at least some rights to the value you’ve created.
00:14:19 So there’s this interesting moment when that first caveman,
00:14:22 that first capitalist drew a line, a circle in this cave
00:14:27 and said, you know, this is mine.
00:14:29 You could say it was free to be claimed
00:14:32 at the time he claimed it.
00:14:34 But it’s an interesting moment when asset becomes an asset.
00:14:41 When space time, as you were referring to it,
00:14:43 becomes something that’s now can be possessed
00:14:46 by a human being.
00:14:47 Is there something special about this moment?
00:14:51 Because it feels like, first of all,
00:14:53 in terms of space and time, it feels like there’s a lot
00:14:57 of available space time yet to be claimed.
00:15:02 So if we just look at like the universe, right?
00:15:05 We’re talking about, there’s a funny thing
00:15:06 with Elon Musk and Mars, I think they sneaked in there
00:15:11 for SpaceX, that nobody on earth has any authority
00:15:15 on Mars or any, this is a very interesting question.
00:15:18 It seems almost like humorous at this time,
00:15:20 but perhaps not, perhaps there’ll be sections of space,
00:15:25 not just on planets that are gonna be even fought over.
00:15:29 So is there something special about this moment?
00:15:31 Because in discussing sort of violence
00:15:35 and respect for property, it feels like this is
00:15:37 a special moment because ultimately conflict arises
00:15:42 when you make claims on a particular territory.
00:15:46 It’s not always in conflict where people say,
00:15:50 when you look at Hitler or something, for example,
00:15:52 his claim would be in many of the lands that he attacked
00:15:57 and invaded that this is ultimately,
00:15:59 this has always belonged to Germany.
00:16:02 So is there something you could say as to like
00:16:06 what it means to own an asset or a property?
00:16:09 Yeah, so in the ancient days of hunters and gatherers,
00:16:14 we could say that property was mostly a loyal title,
00:16:19 which meant it’s just whatever you can defend, right?
00:16:22 So if you’ve got knives and daggers and satchels
00:16:25 and maybe some pelts you’ve hunted,
00:16:28 whatever you can hold and defend is yours.
00:16:32 And there’s not like, there’s a government to appeal to,
00:16:35 you’re just sort of a free agent operating in the wild,
00:16:39 defending the assets you can protect on you more or less.
00:16:44 And what really changed the nature of property
00:16:48 is when we get into the agricultural age.
00:16:50 So there’s a big flip where we went from just foraging
00:16:55 and hunting all the time, constantly moving,
00:16:57 trying to stay alive to deciding we’re gonna settle here.
00:17:00 We figured out how to cultivate crops.
00:17:03 We can create, we can increase the population
00:17:06 because we can harvest more energy from the sun
00:17:08 and we can establish a longer term civilization.
00:17:11 What happens in that transition
00:17:13 is that we begin creating economic surplus.
00:17:16 So for the first time in history,
00:17:17 we have stock houses of grain to defend
00:17:22 or maybe meat or cattle or whatever it is we’re creating,
00:17:25 we now have savings.
00:17:27 And it’s at that time when government emerges as well,
00:17:33 because once you have savings
00:17:35 or you have an economic surplus,
00:17:36 you have something that other people want to steal, right?
00:17:39 This one thing we’ll touch on a lot today
00:17:41 is people always want something for nothing.
00:17:45 People are always seeking the path
00:17:47 to get something for nothing.
00:17:48 And I think that drives a lot of our decision making.
00:17:51 And it actually encourages us to be innovative
00:17:53 in a lot of ways, right?
00:17:54 We’re trying to, you could say it’s our laziness
00:17:58 that’s helping us be inventive in a way.
00:17:59 We’re trying to accomplish greater results
00:18:01 with less efforts over time,
00:18:02 but we can cross that line in seeking something for nothing
00:18:07 where we start to violate the life, liberty,
00:18:09 and property of others.
00:18:10 And that’s where we shift from kind of capitalistic society
00:18:13 to something more communistic.
00:18:15 And so that’s what government is.
00:18:18 It’s a protection producing enterprise
00:18:21 for the economic surplus generated by a trading society.
00:18:25 So when people begin to trade,
00:18:28 they create what’s called the division of labor,
00:18:30 which is a very common economic term,
00:18:33 basically means you’re better at making hats,
00:18:35 I’m better at making boots.
00:18:37 If you specialize in hats, I specialize in boots,
00:18:39 and we trade, we’ve created a positive sum game
00:18:42 where you and I both benefit.
00:18:43 So we become collectively more than the sum of our parts
00:18:47 through trade.
00:18:48 And that’s why human beings do trade
00:18:51 because we become more energy efficient as a result.
00:18:54 We create more outputs per unit of input.
00:18:56 And you can think of government in that respect,
00:18:59 if we’re looking at it maybe in a tech sense
00:19:01 that the economy is the trade network that generates wealth,
00:19:05 generates innovation, generates all,
00:19:07 this whole lap of luxury we live in today
00:19:09 that we’ve inherited from our forebears is from the market.
00:19:12 It’s not from a government.
00:19:14 The government is the network security, if you will.
00:19:17 So we’re paying expenses to a vendor to protect peace,
00:19:21 to preserve life, liberty, and property in that network
00:19:24 so that we can have, you know,
00:19:25 when there’s inevitably disputes over private property,
00:19:28 we can have nonviolent dispute resolution
00:19:30 in the rule of law.
00:19:33 And we can have a reasonable expectation
00:19:36 of being able to conduct commerce without violence.
00:19:39 The problem has been that the protector tends to,
00:19:43 you know, they’re in a monopolistic position, we would say.
00:19:46 They tend to start abusing that position
00:19:49 to obtain property for themselves.
00:19:53 Again, trying to get that something for nothing.
00:19:55 When you control, you know, you are the security guard
00:20:00 for the economy.
00:20:02 The first thing they tend to monopolize is money
00:20:04 because if you can control the money,
00:20:05 you’re effectively controlling people, their energy,
00:20:08 their perceptions.
00:20:10 And that becomes a, you know,
00:20:12 particularly through inflation,
00:20:14 becomes an avenue to get something for nothing
00:20:17 and that you can just print more money
00:20:20 that everyone else is forced to sacrifice their time
00:20:22 and energy to obtain.
00:20:24 What are your thoughts about anarchism?
00:20:27 So I talk quite a bit, he’ll be here in a few days,
00:20:30 actually, Michael Malice, about ideas of anarchy.
00:20:35 And his idea or the idea of anarchists
00:20:38 is that any amount of government will eventually become
00:20:42 the very kind of thing that you’re referring to.
00:20:45 So there’s almost no way to have a government
00:20:48 that doesn’t then try to monopolize power,
00:20:52 money, and all those kinds of things.
00:20:54 Do you think it’s possible to have a government
00:20:56 sort of on that spectrum of like anarchy,
00:20:59 maybe libertarianism,
00:21:02 I’m not sure how exactly the spectrum goes,
00:21:04 but where you have a small government
00:21:07 that protects the liberty and property rights
00:21:09 and those kinds of things and doesn’t expand
00:21:11 to then also control the monetary system
00:21:15 and all those other things?
00:21:17 Is it possible?
00:21:18 Agreed completely, it was not possible until Satoshi Nakamoto.
00:21:24 So for the first time in history,
00:21:25 we have a money that cannot be monopolized,
00:21:29 cannot be corrupted, cannot be changed,
00:21:32 cannot be weaponized, frankly.
00:21:34 Our current monetary system is weaponized
00:21:36 by those who can print money against those who cannot.
00:21:41 And I think when you have,
00:21:45 at the heart of every modern economy,
00:21:46 which even we could say the US,
00:21:48 we pride ourselves as free market capitalists.
00:21:51 You know, we out competed communism in the 20th century.
00:21:54 We think that this is the superior model.
00:21:58 Most business people will tell you
00:22:00 that the free market is the best allocator of resources,
00:22:03 all of these things.
00:22:05 But what we have at the heart of every modern economy,
00:22:07 including the US, is an anti capitalistic institution,
00:22:10 which is the central bank.
00:22:13 The temptation to monopolize money
00:22:15 throughout all of history has been too strong
00:22:17 for anyone to resist.
00:22:18 So any, even benevolent, quote unquote,
00:22:21 dictators that have taken over,
00:22:23 many dictators have inherited, say,
00:22:25 an inflationary regime where society is coming apart
00:22:28 because someone was clipping the coins
00:22:29 or someone was printing too much money,
00:22:31 and they’ll commit to going back to a hard money standard.
00:22:34 So they’ll keep society on a gold standard, for instance,
00:22:37 such that they cannot violate the money
00:22:40 to benefit themselves.
00:22:42 But inevitably, over time, because it is
00:22:45 a political institution, there’s an incentive there, right?
00:22:50 For, again, to get something for nothing,
00:22:53 to spend more than you’re making through tax revenues.
00:22:57 And with that incentive, people typically,
00:22:59 ultimately end up pursuing that inflationary path.
00:23:03 So we can get deeper into that about,
00:23:06 inflation is a term that we’ve been conditioned
00:23:09 to think today is just something normal.
00:23:10 The prices just go up, and then it’s pertinent
00:23:14 to a healthy economy, but it’s actually,
00:23:18 if you look at it from real first principles,
00:23:20 it is just theft integrated into the money.
00:23:22 It’s a technology backdoor,
00:23:23 is another way to think about it.
00:23:25 You wouldn’t buy a cell phone knowing
00:23:27 that someone could siphon your data off your private calls
00:23:30 and sell it into the market.
00:23:31 Now, I know we do that with a lot of social media stuff
00:23:33 today, and that’s something else we can get into,
00:23:35 but you wouldn’t do it willingly, right?
00:23:37 You prefer that your cell phone and your data
00:23:40 was monetized by you, or if you’re gonna sell it,
00:23:43 you would be able to selectively sell it.
00:23:45 Inflation is that it’s similar, it’s a tech backdoor.
00:23:49 So it’s a money that only a few people
00:23:53 can siphon value off of surreptitiously, typically slowly,
00:23:58 but eventually, as we’ve seen throughout history,
00:24:00 that slowly builds up into a rapidly
00:24:02 and then causes the monetary system to collapse.
00:24:05 Do you think there’s a benefit to inflation, possibly?
00:24:08 So when you have perfect information,
00:24:12 perhaps you don’t need inflation,
00:24:14 perhaps it is purely theft, but I think of inflation
00:24:17 as like the snooze button on the alarm.
00:24:21 So if you have a hard standard,
00:24:23 you better wake up when the alarm rings,
00:24:25 but all of us kind of like probably shouldn’t,
00:24:29 but use the snooze button.
00:24:30 It’s like, okay, well, five more minutes
00:24:32 or 10 more minutes, and then you’re saying
00:24:34 there’s naturally a slippery slope
00:24:36 where it becomes a drug that you fall in love with
00:24:40 and you abuse, but nevertheless,
00:24:43 the usefulness of the snooze button
00:24:46 is that you don’t know how you’ll be actually feeling
00:24:48 when the alarm rings.
00:24:50 You might be able to ready to pop up.
00:24:52 It might be like you really need those few more minutes
00:24:55 to psychologically get yourself out of bed.
00:24:57 This metaphor is just not working at all,
00:24:59 but do you think there’s a use to inflation sometimes
00:25:04 from like an economics perspective?
00:25:06 I think the drug metaphor is a little more apt
00:25:09 in that inflation does provide
00:25:12 an immediately stimulative effect when used early on.
00:25:19 But what it’s doing is it’s, again,
00:25:22 we talk about the balance between incentives
00:25:26 and disincentives, right?
00:25:27 That being necessary for a system to function properly.
00:25:31 With inflation, you’re essentially giving the people
00:25:35 that can print money a way to dampen
00:25:38 the disincentives they face.
00:25:40 So it destroys feedback loops, I guess you might say.
00:25:46 And another way to look at this is when you,
00:25:49 so using inflation, using quantitative easing,
00:25:52 you can decrease short term volatility in the marketplace.
00:25:56 So the market is basically this idea,
00:26:01 this form of free exchange that’s trying to zero in
00:26:03 on the best ideas.
00:26:04 And the ideas are those that are most fit to reality,
00:26:07 to satisfying the most wants.
00:26:08 It’s gonna overshoot, it’s gonna undershoot,
00:26:10 you have these little business cycles.
00:26:12 But when it’s undershooting
00:26:13 and you’re experiencing a business recession,
00:26:18 in a capitalist environment,
00:26:19 the market needs to clear that malinvestment,
00:26:21 that misallocation of capital.
00:26:23 That means someone made a bet on a certain idea
00:26:25 that it would satisfy wants in a particular way,
00:26:27 and that bet did not pan out.
00:26:29 If you then paper over the losses
00:26:31 that business is creating,
00:26:33 you’re now delaying and exacerbating the volatility
00:26:36 that that idea created.
00:26:39 So this is kind of a Tel Aviv concept
00:26:41 where you can dampen short run volatility,
00:26:46 but volatility is truth.
00:26:48 Volatility is us matching our ideas to reality, right?
00:26:53 We’re constantly, again, overshooting and undershooting.
00:26:55 So you delay volatility,
00:26:57 you’re just amplifying it and exacerbating it
00:26:59 in the long run.
00:27:01 And that’s what central bank is doing.
00:27:02 The central bank mandate is low unemployment
00:27:06 and low and expected inflation, basically.
00:27:13 And so they’re trying to achieve economic growth
00:27:16 in a stable way, quote unquote, stable way.
00:27:19 This is their ostensible purpose.
00:27:22 And that’s just not possible.
00:27:23 Growth is an inherently instable process.
00:27:27 Can you elaborate a little bit
00:27:29 about the nature of volatility?
00:27:33 Why is it communicating truth?
00:27:37 That’s something that a lot of people are afraid of
00:27:39 is the volatility.
00:27:40 Almost like it’s a sign of chaos,
00:27:44 and so they want to escape chaos.
00:27:48 But you’re saying that that’s actually,
00:27:51 whether it’s chaos or not, I don’t know,
00:27:53 but it’s getting us closer to the fundamental reality
00:27:57 that we should not be trying to escape.
00:28:00 Yeah, so if we consider that the universe
00:28:04 is pervaded by entropy, right?
00:28:06 This is the second law of thermodynamics
00:28:08 is that every closed system
00:28:10 tends towards greater disorder over time.
00:28:13 And that life itself, again,
00:28:15 I would argue expressed through the logos,
00:28:19 we, life, is the antientropic principle.
00:28:22 It’s the only thing that’s converting entropy into order,
00:28:24 chaos into order.
00:28:26 And that’s what entrepreneurs are doing, right?
00:28:29 We’re living at the edges of the known,
00:28:32 and we’re testing ourself against the entropy of nature,
00:28:37 trying to figure out new and better ways
00:28:38 of saying, doing, or making things.
00:28:41 And then if we do crack a code or figure something out,
00:28:44 we then have a big incentive.
00:28:45 The incentive is to get rich, right?
00:28:47 Because then you have a new idea
00:28:48 that you could then sell back into the marketplace.
00:28:50 So it’s this sequence of courageously confronting
00:28:57 the entropy of nature and converting it
00:28:59 into good and useful order,
00:29:00 which by the way is like the ancient idea of God in Genesis,
00:29:04 which I think is interesting,
00:29:06 that actually enables us to construct civilization
00:29:10 in these layers of anti entropy or order, you might say.
00:29:14 So today we live in a bubble of anti entropy or order,
00:29:19 like the coastlines are guarded by the nation
00:29:22 and the city has a certain police force
00:29:25 that keeps it in order.
00:29:27 Even the way we talk,
00:29:30 like clearly the words matter,
00:29:31 but also the nonverbal cues,
00:29:33 all these things are like order that has been established
00:29:35 over many, many, many thousands of years of human evolution.
00:29:40 And I think that’s, when I say volatility is truth,
00:29:46 what I’m saying is that the experience of uncertainty
00:29:49 is something that’s ineradicable from life, right?
00:29:53 And certainty, like it’s kind of a paradox
00:29:57 because we’re fighting against it, right?
00:29:58 We’re trying to innovate our way away from uncertainty
00:30:01 to create more capital,
00:30:03 which capital is very simply a way of mitigating uncertainty.
00:30:09 So this is why you might have like a stash of food
00:30:12 in case the power goes out or a generator,
00:30:14 like it helps you overcome uncertainty over time.
00:30:17 But uncertainty is also where all the sweetness of life is.
00:30:21 So there’s gotta be this balance
00:30:22 with one foot in, one foot out.
00:30:25 So human society is this kind of bubble of order
00:30:27 that we’ve constructed and slowly expanding,
00:30:30 but at the edges, you’re always going to have that chaos,
00:30:33 that volatility, and that the entrepreneurs
00:30:36 are kind of like jumping into that chaos
00:30:39 and some of them die and some of them succeed.
00:30:42 And so like, if you wanna grow this bubble of order,
00:30:46 you have to be embracing the volatility at the edges.
00:30:51 Yes.
00:30:53 And reverence for entrepreneurship
00:30:55 because these are the people putting their neck out,
00:30:58 so to speak, risking themselves.
00:31:01 And they’re gonna contribute to society, by the way,
00:31:03 whether they go up in flames or not.
00:31:05 If they go up in flames,
00:31:06 society has witnessed their experience
00:31:08 as something not to do or something that doesn’t work
00:31:10 in a particular time and place.
00:31:12 So that you could say them going up in flames
00:31:14 is a way of enlightening the rest of us.
00:31:16 Or if they figure something out,
00:31:18 Steve Jobs creates the iPhone, changes the world forever.
00:31:22 So enlightening the rest of us, okay.
00:31:25 And Taleb would say.
00:31:26 The fire of their failure, okay.
00:31:28 Yeah, exactly.
00:31:30 Taleb would say individual fragility
00:31:35 is inseparable from ensemble anti fragility.
00:31:38 So this means that, again,
00:31:40 every time that entrepreneur goes up in flames
00:31:42 or say a restaurant goes out of business,
00:31:46 when a restaurant goes out of business,
00:31:47 that particular cuisine strategy they were implementing
00:31:50 in that particular time and place,
00:31:51 that’s a signal to all the other restaurants in the area
00:31:53 that that doesn’t work.
00:31:54 So restaurant food improves from bankruptcy to bankruptcy.
00:31:59 So it’s this death of the individual components
00:32:02 that contributes to the growth of the ensemble.
00:32:05 As a small aside, maybe you can guide me through it.
00:32:07 I don’t know if you’re paying attention,
00:32:09 but there was some chaos around Taleb
00:32:13 and the Bitcoin community.
00:32:15 I wasn’t quite paying attention,
00:32:17 but from my outsider’s perspective,
00:32:20 I thought it seemed Taleb was a supporter of Bitcoin.
00:32:24 And then a lot of people were very upset about something.
00:32:26 I’m sorry if I don’t know the details,
00:32:28 but can you pull out some profound philosophical ideas
00:32:33 from the disagreement of the chaos?
00:32:34 I admittedly don’t know too much about it either.
00:32:37 I’m a big fan of his writing.
00:32:41 He’s always been a little different in person.
00:32:45 Like I actually, he signed one of my books.
00:32:47 I met him in person.
00:32:48 He’s just, he’s got a very abrasive personality.
00:32:50 He’s kind of known for it.
00:32:51 It’s not, I don’t think I’m passing any judgment here.
00:32:54 He sort of embraces it.
00:32:55 Yeah.
00:32:56 But he had written the forward
00:32:58 to a really important book in Bitcoin
00:33:00 called the Bitcoin Standard for safety in a moose.
00:33:03 And then I think they had a little Twitter beef
00:33:06 because safety is very much against COVID mask
00:33:10 and state intervention,
00:33:12 whereas Taleb’s on the other side of the fence.
00:33:15 And so, and then after that beef,
00:33:17 Taleb came out against Bitcoiners saying,
00:33:19 oh, Bitcoiners are crazy and wrong.
00:33:21 I think the great mask debate of the 2020
00:33:24 will probably be the thing
00:33:25 that ultimately leads to World War III.
00:33:28 I’ve been very surprised how tense, how much like division
00:33:33 this one little arguably silly thing has led to.
00:33:39 I think a lot of people sort of project their,
00:33:41 like, it’s almost like not wearing a mask
00:33:44 is a statement of sovereignty, of freedom,
00:33:46 of like saying fuck you to the man,
00:33:48 the government, the centralized power,
00:33:50 or the dishonesty or the, in the scientific community,
00:33:55 all those kinds of things.
00:33:56 And then wearing a mask is a sort of kind of signaling
00:33:59 of various kind of social aspects.
00:34:03 I don’t know.
00:34:04 I’m not paying attention to it.
00:34:05 I actually tuned out.
00:34:06 I was part of a group of scientists
00:34:08 that were looking into like, do masks work?
00:34:10 This very interesting question.
00:34:11 To me, it was an interesting question.
00:34:13 I sort of roll in to ask that very interesting question
00:34:17 because I think it is an interesting scientific question.
00:34:20 But then I quickly realized that just as I was doing this,
00:34:23 like scientific exploration of this very interesting question
00:34:27 about Viron particles, like what kind of things,
00:34:30 like from a scientific perspective,
00:34:32 how do we prevent the spread of a pandemic?
00:34:34 Forget COVID, any pandemic, super deadly or not deadly.
00:34:38 Like there’s tools, there’s testing, there’s masks,
00:34:40 there’s all these tools, how well do they work?
00:34:43 And then I realized, you know, in April or so,
00:34:46 it became a tool of politics, a tool of philosophy.
00:34:49 And that’s when I sort of pulled out.
00:34:51 So it’s fascinating.
00:34:52 I think it’s a canvas on which people project
00:34:56 their emotions and I guess Tillam got caught up
00:34:59 in that kind of, so there’s nothing fundamental,
00:35:02 I suppose, to their disagreement.
00:35:04 Not that I’m aware of, but he is, you know,
00:35:07 he’s written some about in his books,
00:35:11 the problem with centralization.
00:35:13 I mean, a lot of his writing addresses that
00:35:15 and he actually points to, I think Switzerland
00:35:18 is the best government in the world
00:35:20 because it’s decentralized.
00:35:21 So there’s that, I don’t think he has any,
00:35:26 I’m not to speak for him, but I don’t think he’s voiced
00:35:30 any specific critiques on Bitcoin per se.
00:35:34 Could be wrong about that.
00:35:35 It’s just maybe his flavorful language
00:35:37 and the way he likes to communicate.
00:35:39 And the other theory is that maybe he’s playing 4D chess
00:35:42 and having a Twitter boating accident, you know.
00:35:44 So I don’t believe in Bitcoin, I’ve sold all my Bitcoin.
00:35:48 Oh, I see.
00:35:48 Yeah.
00:35:49 Sorry, the boating accident in Bitcoin is this,
00:35:55 I guess it’s proverbial by this point,
00:35:56 where it’s the way you lose your Bitcoin.
00:35:59 So if someone comes after you and says,
00:36:00 hey, you know, whether it’s a government
00:36:02 or an individual’s coming after you saying,
00:36:04 give me all your Bitcoin or pay these taxes in Bitcoin,
00:36:06 you go, oh, I had a boating accident and lost them all.
00:36:09 Lost them all.
00:36:09 So, yeah.
00:36:13 But back to the fundamental nature of space time.
00:36:16 Let me ask you, because we’re kind of left at,
00:36:20 I’d like to go back to this idea of,
00:36:24 that you said that everything we think, say,
00:36:26 or do occurs within the bounds of space time.
00:36:31 So first of all, maybe you can comment on
00:36:33 what do you mean in this context about space time,
00:36:37 but also about the nature of truth.
00:36:40 Like how much of all of this is knowable?
00:36:43 How much of this is accessible to us humans?
00:36:46 How much uncertainty, like what we’re talking about,
00:36:49 is there in the world?
00:36:50 Are you, do you fall in a place
00:36:52 where we can reason deeply about this world
00:36:56 and it’s knowable, or is it mostly chaos
00:36:58 and we’re just holding on for dear life?
00:37:01 Yeah, I think I said that all action occurs
00:37:04 within the bounds of space time.
00:37:05 The other thing, everything we say, do, or make,
00:37:08 the other thing is that everything we say, do, or make
00:37:10 starts out as an idea.
00:37:12 So there’s this concept of universal Darwinism,
00:37:15 which basically applies Darwinian principles,
00:37:20 but outside of the biological sphere.
00:37:21 So we could say that this kind of gets into
00:37:23 Richard Dawkins memetics, that even ideas are competing,
00:37:27 reproducing, recombining.
00:37:29 That idea is so powerful, by the way.
00:37:30 I don’t think it’s been understood fully.
00:37:33 I think in the digital, in the 21st century,
00:37:38 in the digital world, from my perspective
00:37:40 in artificial intelligence,
00:37:42 there’s yet to be some profound things
00:37:44 to be discovered about this whole construct.
00:37:47 Agreed completely.
00:37:48 It’s been called an acid, actually,
00:37:51 in that it strips away all of the noninformational
00:37:55 components of something, just strips it down
00:37:57 to its bare bones.
00:37:59 I have a quote in here somewhere about that, but.
00:38:02 I’m sorry, which is called an acid?
00:38:03 The ideas?
00:38:04 The universal Darwinism.
00:38:05 Darwinism applied broadly, outside of the.
00:38:08 Applied broadly, and I’ll condition all of this
00:38:12 by saying that a lot, most of my thinking
00:38:14 is shaped by a book I read recently
00:38:16 called The Case Against Reality,
00:38:19 which introduced me to this concept,
00:38:20 but it tied into Darwinism that I’ve used
00:38:23 more broadly in the past, looking at things
00:38:24 like money and economics.
00:38:26 So the book, The Case Against Reality,
00:38:28 by Donald Hoffman, he has a quote in the book
00:38:32 that describes universal Darwinism.
00:38:35 It says, quote, universal Darwinism can,
00:38:37 without risk of refuting itself,
00:38:39 address our key question.
00:38:41 Does natural selection favor true perceptions?
00:38:44 If the answer happens to be no,
00:38:46 then it hasn’t shot itself in the foot.
00:38:49 The uncanny power of universal Darwinism
00:38:51 has been likened by the philosopher Dan Dennett
00:38:54 to a universal acid.
00:38:56 And Dan Dennett says, quote, there is no denying
00:38:58 at this point that Darwin’s idea is a universal solvent,
00:39:02 capable of cutting right to the heart
00:39:04 of everything in sight.
00:39:05 The question is, what does it leave behind?
00:39:08 I have tried to show that once it passes through everything,
00:39:10 we are left with stronger, sounder versions
00:39:13 of our most important ideas.
00:39:15 Some of the traditional details perish,
00:39:17 and some of these are losses to be regretted,
00:39:20 but good riddance to the rest of them.
00:39:22 What remains is more than enough to build on, unquote.
00:39:26 So the way I would interpret that is that life itself,
00:39:31 I’ve come to view life as information propagating
00:39:34 through flesh, and that we are,
00:39:38 I guess DNA is a quadratic code.
00:39:42 I think it’s four letters, maybe,
00:39:44 versus a binary, zeros and ones.
00:39:46 And we are ideas, we are strategies competing
00:39:49 with each other, and nature is that which selects.
00:39:54 It’s what selects the winning ideas,
00:39:56 the ones that are most fit
00:39:59 to environmental conditions, frankly.
00:40:02 You know, talking about sovereignty and individualism,
00:40:06 there might need to be some rethinking here
00:40:10 about what is actually the basic individual entity
00:40:13 that is to be sovereign.
00:40:15 Like maybe our biological meat vehicles
00:40:20 were like way overly attached to them.
00:40:25 Like maybe, especially with genetics
00:40:28 and all those kinds of things,
00:40:29 or artificial intelligence, or living more and more
00:40:31 in virtual worlds will become detached
00:40:34 from that kind of idea.
00:40:35 So for example, if I can clone you,
00:40:38 you know, make one million robbers,
00:40:42 and, you know, but you’ll all have the same idea,
00:40:46 what is your real value as the,
00:40:48 like I could just shoot you,
00:40:50 and there’ll still be 999 of you,
00:40:52 but the idea is the important thing,
00:40:55 the things you believe, so.
00:40:58 I would argue that I don’t know,
00:41:00 even if you clone someone perfectly,
00:41:02 I don’t think you can reproduce the individual themselves,
00:41:05 because we’re all a product of nature and nurture, right?
00:41:09 So my particular concourse of experiences,
00:41:12 the path dependence that I represent cannot be replicated,
00:41:15 nor can anyone’s for that matter.
00:41:17 Well, that’s a hypothesis, so.
00:41:20 True.
00:41:21 That’s of course a human meat bag would say.
00:41:27 Good point.
00:41:29 Like desperate trying to preserve himself.
00:41:31 You know, I think it reduces
00:41:33 to some fundamental questions about what is consciousness,
00:41:36 and whether that can be cloned.
00:41:38 All those kind of, you know,
00:41:39 it gets to the core of what it is to be human.
00:41:41 What are the things that make you particularly you?
00:41:45 Yeah, I think it would assume
00:41:46 kind of a materialist viewpoint on reality,
00:41:49 and that if you could reproduce every atom of an individual
00:41:52 that you would have their experience encapsulated in that.
00:41:55 And, you know, Hoffman’s, which his book is very radical,
00:41:58 he argues that space and time is not an objective reality,
00:42:03 it’s a biological interface.
00:42:06 So we are scanning our environment for fitness payoffs,
00:42:11 and this space and time is the rendering
00:42:13 specific to human beings
00:42:15 that allows us to navigate reality effectively.
00:42:18 So the further argument would be
00:42:20 that we all have pretty similar interfaces,
00:42:23 but they’re all slightly different too,
00:42:25 because we’re all, you know, adapting in different ways,
00:42:27 and that different animals have their own unique interfaces.
00:42:30 So we have a certain amount of photoreceptors in our eye,
00:42:32 whereas I think the number is three, might be five,
00:42:35 or something like the mantis shrimp has like seven or nine.
00:42:39 So they can see,
00:42:40 and we only see one 10 trillionth of the light spectrum.
00:42:46 So talk about a tiny fraction.
00:42:48 I mean, one 10 trillionth is a very minuscule number,
00:42:51 and that makes up all of the light
00:42:53 that we can interpret with our eyes.
00:42:55 But something like a mantis shrimp
00:42:56 could see, you know, much more of that.
00:42:58 So I think there’s this, we’re very conditioned
00:43:04 to have a fully materialist viewpoint on reality today,
00:43:07 where we think, you know,
00:43:10 the atomic clockwork kind of universe.
00:43:12 But I think there’s, I don’t think that’s true exactly.
00:43:16 And another school that goes into that
00:43:19 is actually Austrian economics,
00:43:22 where we could say that, you know,
00:43:24 we mentioned earlier that an asset is not property.
00:43:27 It’s actually based on the relationship
00:43:29 between the individual and the property.
00:43:32 There’s this whole realm of relevance associated with,
00:43:39 we’re all moving through life
00:43:41 in the course of a goal directed action.
00:43:43 So when we walk across a room, I go from A to B,
00:43:47 it’s because I valued B more than A.
00:43:50 So value is inseparable from human action.
00:43:52 We have a rank ordered value system in our mind,
00:43:56 each of us, and we’re constantly taking action
00:43:58 in accordance with those rank values.
00:44:01 Anything that accelerates us on the course
00:44:04 of our goal directed action towards our goal is useful.
00:44:09 Anything that impedes us, or we could say is valuable,
00:44:12 anything that impedes us is actually obstructing to value.
00:44:16 And anything that’s irrelevant is just valueless.
00:44:19 So this table that we’re using right now,
00:44:23 like this is an accessory to UNI
00:44:26 because it’s holding this paper
00:44:27 that’s holding the information
00:44:28 that’s guiding our conversation.
00:44:30 But we could pay someone $100 to jump over this table.
00:44:34 And this table could simultaneously be an accessory to UNI
00:44:37 and an obstacle to someone else.
00:44:39 So it’s this domain, this silent contention of willpower
00:44:43 and agendas occurring across the face of the earth
00:44:46 that is what Austrian economics really looks at.
00:44:50 It’s the realm of human action, as they call it.
00:44:54 It’s called praxeology.
00:44:55 So it’s a non materialist viewpoint on reality
00:44:58 and that things, we think in terms of matter being reality,
00:45:03 but it’s often more so in the sphere of human action,
00:45:06 what matters, that is reality.
00:45:08 It’s the relevance of a thing
00:45:10 to the course of one’s goal directed action.
00:45:12 And that’s ultimately exists in the space of ideas.
00:45:15 Yes.
00:45:16 Not in the space of physical matter.
00:45:19 And just to jump back to this line here,
00:45:20 I think his fundamental line here is the question is,
00:45:24 talking about universal Darwinism as an asset,
00:45:26 what does it leave behind?
00:45:28 I’ve tried to show that once it passes through everything,
00:45:30 we’re left with stronger, sounder versions
00:45:32 of our most useful ideas.
00:45:35 That’s the key point to me.
00:45:36 And that ideas and information, so far as we can tell,
00:45:40 are the most fundamental substrate of reality.
00:45:44 And information itself, back to entropy,
00:45:47 information is the resolution of entropy.
00:45:50 That’s what the bit is, right?
00:45:51 It’s a one or a zero.
00:45:52 Whatever reduces your entropy by half is a bit.
00:45:55 And we measure information in bits.
00:45:57 So.
00:45:58 And you’re right.
00:45:59 People don’t have ideas, ideas have people.
00:46:02 Honestly, it’s a really profound idea
00:46:07 or a statement about reality, a reframing of reality.
00:46:13 If we’re actually being deeply honest about it,
00:46:15 it’s quite painful.
00:46:17 I do appreciate that you defended
00:46:19 your biological meatbag earlier,
00:46:21 but it seems like ideas are the things that have power.
00:46:26 That me, Lex, for example, is worthless.
00:46:31 And relative to the ideas that used my brain
00:46:35 for a bit of a time.
00:46:37 But so far as we know, only human beings
00:46:40 can generate and share ideas.
00:46:42 So you can’t say Lex is worthless.
00:46:44 Like you are the node of the idea sphere.
00:46:47 I’m the newest fear.
00:46:49 So.
00:46:51 What is it?
00:46:52 From a Bitcoin perspective, I’m like, I’m mining.
00:46:55 I’m solving the cryptographic problem and generate.
00:47:01 In that sense, I’m a useful node.
00:47:03 Yeah, you’re competing to solve the puzzle of entropy,
00:47:06 right?
00:47:07 And when you do solve it, it benefits the entire network.
00:47:09 But I guess from my perspective,
00:47:13 just because just working in AI,
00:47:15 I’m looking at the longterm vision.
00:47:17 I see us humans and AI systems as really the same
00:47:22 and AI systems ultimately as something
00:47:25 that supersedes humans.
00:47:27 So what is intelligence?
00:47:33 So in the context of our current discussion,
00:47:36 I think intelligence is very closely linked
00:47:41 to this notion of ideas.
00:47:45 And it’s the ability to generate ideas,
00:47:48 to mold ideas, to compress seeming chaos
00:47:54 into some model, into some theory
00:47:58 that efficiently compresses the chaos
00:48:01 in a way where you can then integrate it with other ideas
00:48:04 and they can play and all those kinds of things.
00:48:07 So in that sense, it’s the turning chaos into order.
00:48:11 It’s the molding of ideas such that our human brains
00:48:15 can work with it.
00:48:17 And just from my perspective,
00:48:19 I don’t see any reason why that can not be algorithmatized,
00:48:22 converted into computational systems.
00:48:25 I would agree.
00:48:27 Which is scary.
00:48:29 Scary or potentially really promising, right?
00:48:33 It’s kind of the case of all novelty.
00:48:34 It’s terrifying as much as it is promising.
00:48:37 That’s why you’re pursuing it so heavily.
00:48:39 I would maybe take it a step further
00:48:42 and say that intelligence
00:48:44 in maybe its most simplistic form is error correction.
00:48:48 So we, humans have wants.
00:48:53 Again, we’re constantly expressing our value through action.
00:48:56 There’s no other way to express it by the way.
00:48:58 It’s whatever you choose to do in any moment,
00:49:00 you are expressing the values you hold
00:49:02 in your mind and your heart.
00:49:03 So as we move from less valued A to more valued B,
00:49:12 entropy happens, uncertainty happens, we fall off course.
00:49:16 And it is intelligence that enables us
00:49:19 to render information from that experience
00:49:21 and error correct, right?
00:49:23 So that we can move slightly,
00:49:25 shift our trajectory slightly more towards B
00:49:29 that we’re trying to move towards.
00:49:30 So I think that there’s something there
00:49:35 that I don’t know that we can make synthetically.
00:49:41 And that if we define intelligence as error correction,
00:49:45 it’s like error correction to what?
00:49:47 It’s error correction towards what we find is valuable.
00:49:50 So we’re trying to satisfy human wants.
00:49:52 Might not just be our own, could be others as well.
00:49:54 If I’m an entrepreneur,
00:49:55 I’m trying to solve the wants of others, not just myself.
00:49:57 And I’m trying to error correct myself towards that goal,
00:50:01 using intelligence and processing environmental feedback
00:50:04 through intelligence to error correct.
00:50:06 So I don’t know how,
00:50:08 if you eliminate the human element completely,
00:50:12 who’s doing the wanting, right?
00:50:13 Where does value come from?
00:50:15 I know the machine learning people who are listening
00:50:18 are saying that’s exactly what machine learning is,
00:50:20 which is error correction
00:50:21 because you have a loss function, objective function
00:50:24 that measures how wrong your thing is
00:50:28 and you wanna make it less wrong next time.
00:50:30 That’s the whole process of machine learning.
00:50:32 But you’re saying what humans are able to do
00:50:35 is in a world where there’s no maybe objective values,
00:50:42 absolute values, you’re generating that very loss function,
00:50:46 that objective function that measures the error
00:50:51 comes from the human mind.
00:50:55 Some aliens might disagree with you
00:50:57 because they might have a different objective function.
00:51:00 Obviously, the purpose comes from consciousness, I think.
00:51:02 And without purpose, there’s not error correction.
00:51:05 Yeah, I mean, this is again, a hypothesis.
00:51:08 Like where does purpose come from?
00:51:09 It seems to come from consciousness, you’re right.
00:51:13 That’s where suffering comes from
00:51:15 and you want to lessen suffering.
00:51:18 That’s where pleasure comes from.
00:51:20 It seems like it’s consciousness.
00:51:21 Maybe there’s something to this biological meat bag.
00:51:25 So to take it one layer deeper on this
00:51:27 and the reason I like this book so much,
00:51:29 again, The Case Against Reality.
00:51:31 So he’s making the case that space and time
00:51:33 are not fundamental.
00:51:35 Yes.
00:51:36 Which I started my intellectual explorations in physics,
00:51:39 actually astrophysics.
00:51:40 So for the longest time, even the way I describe money
00:51:42 as I talk about space and time, so that blew my mind.
00:51:46 But this dovetailed nicely with another book called Lila.
00:51:51 The author is Robert Persig.
00:51:53 So he wrote Zen and the Art of Motorcycle Maintenance,
00:51:55 which is a very popular book.
00:51:57 20 years later, he wrote Lila, which no one’s heard of,
00:52:00 which is crazy.
00:52:01 And he basically says he was wrong about his first book.
00:52:03 And he lays out this entire other metaphysics of quality,
00:52:08 he calls it.
00:52:09 So it’s the metaphysics, I think it’s metaphysics of quality.
00:52:12 But his supposition is that it’s not physical reality
00:52:18 that’s fundamental.
00:52:19 It’s not informational information that’s fundamental,
00:52:22 it’s value.
00:52:24 So he actually, and it’s a beautiful book,
00:52:26 I highly recommend it.
00:52:29 He essentially is refuting causality itself.
00:52:33 We think A causes B.
00:52:34 This book makes the case that B values precondition A,
00:52:42 so that we are actually creating our future
00:52:45 through our value systems.
00:52:48 And this goes back to something,
00:52:50 I think Solzhenitsyn said this,
00:52:52 that the line between good and evil
00:52:54 runs down the heart of every man.
00:52:56 So it’s as if our moral decisions
00:52:58 are actually what’s creating the outcomes
00:53:01 in reality over time.
00:53:03 And then that gets into all the wisdom traditions
00:53:05 related to religion,
00:53:06 where it’s always talking about loving thy neighbor
00:53:10 and loving God and all of these other things
00:53:12 that are good morally to create the best outcomes.
00:53:15 So values are fundamental.
00:53:17 Value, yes.
00:53:19 Value is fundamental.
00:53:22 Oh boy, yeah, that’s interesting.
00:53:26 It does feel like physics is not capturing something.
00:53:30 You know, there’s some people, panpsychists argue
00:53:35 that consciousness might be one of the fundamental
00:53:38 properties of nature,
00:53:39 like from which emerges everything we see.
00:53:42 So that could be just other words
00:53:46 for this same notion of value.
00:53:49 And then the basic laws of physics
00:53:51 are not capturing that currently.
00:53:54 So maybe humans, in order to understand
00:53:56 from where humans came from,
00:53:57 we have to understand these other properties of nature,
00:54:00 which are yet to be discovered at the physics level.
00:54:03 And it’s, we contend with that underlying nature,
00:54:08 whatever it is, with the logos, right?
00:54:10 So we’re looking at uncategorized nature
00:54:16 and then we’re assigning a word to it.
00:54:18 So we’re slicing up chaos into little boxes of order.
00:54:23 And then we’re establishing this social consensus
00:54:25 as to those labels, which we’d call words.
00:54:28 And we’re using that to communicate.
00:54:30 And when we communicate,
00:54:33 we can start to build these other things.
00:54:35 This is like the Yuval Harari imagined orders.
00:54:37 So we can create these useful fictions, right?
00:54:41 Whether it’s the nation state or human rights or money.
00:54:44 And that allows us to cooperate flexibly in large numbers
00:54:48 so that we can better contend with reality.
00:54:50 We can produce more complicated things.
00:54:53 We can enlarge that bubble of civilization against entropy.
00:54:58 And that’s what capitalism is all about.
00:55:01 It’s about further specializing knowledge,
00:55:04 further enriching mankind’s treasury of knowledge
00:55:08 and doing it.
00:55:09 But to do that, the communication media that we’re using,
00:55:14 the words have to have stable meaning.
00:55:16 The money needs to have value that’s dependable, right?
00:55:21 It needs to be something that’s, it’s not dictated
00:55:25 by any one group.
00:55:26 It’s reached by consensus of the entire group.
00:55:30 That’s how, so you could think it’s like optimizing
00:55:35 for error correction again,
00:55:36 where a free market would be harnessing the intelligence
00:55:39 of all market actors and a central planning
00:55:43 or essentially planned market would be harnessing
00:55:46 just the intelligence of a small group of bureaucrats.
00:55:49 And it’s not obvious how to achieve this kind
00:55:51 of consensus mechanism.
00:55:53 I mean, there’s obviously, we’ll talk about sort of Bitcoin
00:55:56 as an idea.
00:55:57 Ultimately, the idea of Bitcoin is connecting it to physics.
00:56:02 So like, you can trust that physical matter won’t change.
00:56:09 But, you know, there could be other ideas that we get.
00:56:12 Maybe physics could be changed.
00:56:14 If Eric Weinstein has anything to say about it.
00:56:17 Like it’s, you know, we right now believe
00:56:19 that physics can’t be changed.
00:56:21 The physical matter of the world, but maybe it can
00:56:24 in a way that we’re totally not understanding.
00:56:26 You mentioned sort of reality
00:56:28 from Donald Hoffman’s perspective.
00:56:32 Like if we don’t have even close to direct access
00:56:35 to the fabric of reality, maybe we’re living in a world
00:56:39 that’s very like many dimensions,
00:56:42 that the notions of space and time is just like a silly,
00:56:45 useful construct that’s not at all connected.
00:56:48 You’re starting to look at like Stephen Wolframs.
00:56:51 I don’t know if you’re familiar with this view
00:56:53 of the world that it’s like hypergraphs underneath it all.
00:56:57 Like these mathematical structures
00:56:58 from which everything emerges.
00:57:00 Like they’re like many, many, many orders of magnitude,
00:57:07 smaller than what we think of.
00:57:10 They’re even smaller than like strings and string theory.
00:57:13 So like those are the basic mathematical objects
00:57:15 from which it emerges.
00:57:16 I don’t, you know,
00:57:17 I think that’s an interesting philosophical framework.
00:57:20 It’s also, people should check out a cool way to play
00:57:25 with beautiful hypergraph mathematical structures.
00:57:27 So he has, I don’t know if you know who Stephen Wolfram is,
00:57:30 but he created Wolfram Alpha and all these tools
00:57:34 that you can actually visualize and play with.
00:57:36 So you can play with physics in a visual way,
00:57:39 which, or at least discrete mathematics,
00:57:43 which I think is incredible.
00:57:45 He doesn’t get enough love.
00:57:46 One of the reasons he, I think doesn’t get enough love
00:57:50 is because of this little quirk of human nature,
00:57:53 which is the ego.
00:57:55 And he sometimes frustrates a few folks
00:57:59 because he’s very, let’s say proud of his work.
00:58:03 I guess.
00:58:04 But it’s interesting to think about a world
00:58:10 where we don’t have direct access to reality,
00:58:13 as Hoffman argues.
00:58:14 And maybe, I don’t know if you can comment.
00:58:17 I don’t know if you’re familiar with Ayn Rand’s work
00:58:19 and her whole philosophy of objectivism
00:58:21 or her whole contention is that, you know,
00:58:25 we do have access.
00:58:28 I don’t want to misstate it,
00:58:29 but at least she would claim
00:58:33 that it’s not useful,
00:58:39 or I think she would probably say it’s not correct
00:58:41 to argue that we don’t have access to reality.
00:58:44 We have, hence, objectivism.
00:58:46 We have direct access to reality.
00:58:49 That’s the only thing we can reason about.
00:58:52 And the only way to live life morally
00:58:55 is to reason through everything,
00:58:57 starting with the axioms of reality,
00:58:59 which we do have direct access to.
00:59:02 Do you have thoughts about her work?
00:59:04 I am slightly ashamed to say I have not read Ayn Rand yet.
00:59:08 So she is high on my list
00:59:10 and she’s been recommended a number of times.
00:59:14 So I don’t know a lot specifically
00:59:16 about her philosophy or objectivism,
00:59:18 but to me, it resonates closely
00:59:21 with what the American pragmatist commented on truth.
00:59:25 And they distinguished what you could say
00:59:28 is absolute truth, which is at the bottom of reality,
00:59:31 whether it’s Mr. Wolfram’s mathematical formulas or value,
00:59:34 whatever it may be, it’s something ineffable,
00:59:37 something beyond the reach of epistemology, perhaps even.
00:59:42 And maybe that’s why religion just sort of points to it.
00:59:45 It’s trying to use, I think Joseph Campbell said something
00:59:50 like religion is using stories
00:59:55 to point towards the same transcendental mystery
00:59:58 we all experience but cannot articulate.
01:00:01 So something like the artist,
01:00:03 the artist uses lies to point to the truth,
01:00:06 something like that, that kind of thing.
01:00:10 That’s really good.
01:00:10 But the American pragmatist said that,
01:00:13 because at the end of the day, this is all about,
01:00:16 when we say truth, we need something
01:00:18 that is close to social consensus
01:00:23 and is not shakable by political action.
01:00:25 So that’s what physics and mathematics are.
01:00:28 It’s an unshakable point of reference,
01:00:33 I guess you might say.
01:00:35 So the American pragmatist defined truth
01:00:39 as the end of inquiry.
01:00:42 And in markets, we could say that the market itself
01:00:48 is a forum that generates truth.
01:00:50 We call this pragmatic truth
01:00:51 to separate pure objective truth
01:00:53 that we can’t even talk about without polluting it
01:00:56 versus pragmatic truth,
01:00:57 which is something that’s useful.
01:00:59 So the example here would be,
01:01:01 if I give you a map and you’re trying to go
01:01:05 from your house to the local brisket restaurant,
01:01:09 and the map gets you from your house
01:01:10 to the brisket restaurant,
01:01:12 is that because the map is true
01:01:13 or is that because the map is useful?
01:01:16 They’re very hard to disentangle
01:01:18 when you’re just looking at it pragmatically.
01:01:21 And in markets, markets, I argue,
01:01:23 generate three forms of pragmatic truth.
01:01:26 One is the price.
01:01:28 So this is the collective subjective demand
01:01:33 and purchasing power of humanity
01:01:35 running up against the objective supply of capital
01:01:39 and resources in the marketplace.
01:01:41 So there’s demand overlaid on supply.
01:01:44 The result of that is the price.
01:01:46 So that is the most truthful exchange ratio,
01:01:51 which is the closest approximation to the value
01:01:54 of any good in the marketplace.
01:01:56 So it gives us a data point on which we can operate.
01:01:58 It’s compressing all known market realities
01:02:01 down into a single actionable number.
01:02:03 You know, based on the price of bread or copper,
01:02:05 whether you wanna buy more of it,
01:02:07 you wanna abstain from buying it,
01:02:09 or maybe you wanna try and find substitutes.
01:02:11 And you can think of that price signal,
01:02:13 it’s like an economic nerve signal.
01:02:15 It’s coordinating human action across time.
01:02:17 So if we’re one socioeconomic superorganism or collective,
01:02:22 that the price signal is the nerve.
01:02:24 And that’s the first form of pragmatic truth
01:02:27 that markets generate.
01:02:28 The second form would be tools and innovations themselves.
01:02:32 So entrepreneurs are experimenting across time.
01:02:35 They’re trying to satisfy the wants of consumers.
01:02:37 Consumers are sovereign in the marketplace.
01:02:40 Whatever the consumer wants, the consumer gets, right?
01:02:43 I’m trying to satisfy that.
01:02:44 I’m trying to do it at a profit.
01:02:46 So I’m trying to take viewing the existing price signals
01:02:49 of goods in the marketplace.
01:02:50 I’m trying to assemble those in a way
01:02:53 at a cost lower than the final solution
01:02:55 I’m delivering to my customer.
01:02:57 I’m selling it at a price higher
01:02:58 than the productive factors I combined to create it.
01:03:02 And in that iterative process,
01:03:05 we’re constantly discovering new and better ways
01:03:08 of solving problems or satisfying the wants.
01:03:11 So we could say, to go out and dig a hole, right?
01:03:14 Someone wants a hole dug,
01:03:16 that a shovel is gonna let you do it much faster per hour
01:03:20 than you would with your bare hands.
01:03:22 So what is the pragmatic truth of digging holes?
01:03:26 It’s a shovel, right?
01:03:27 It’s the best way we know how to solve
01:03:30 any particular problem based on
01:03:33 the existing treasury of knowledge.
01:03:35 So every tool, again, we’re back to ideas being fundamental.
01:03:39 The shovel itself is just a knowledge structure.
01:03:42 We’ve figured out a way to create this particular implement
01:03:45 and then we’ve indexed the raw materials
01:03:47 we found in nature to this knowledge structure
01:03:49 to create a shovel,
01:03:51 which allows us to better satisfy human wants
01:03:55 faster, cheaper, better, effectively.
01:03:57 I’m trying to generalize,
01:03:59 you’re blowing my mind a little bit here.
01:04:01 I’m trying to generalize the idea of tool
01:04:03 to how to think about it.
01:04:04 Cause I keep just, when you say tool,
01:04:07 I keep imagining different tools,
01:04:09 like specific instantiations of a tool.
01:04:12 I’m trying to see, so the price is a pragmatic truth
01:04:16 that’s communicating value in this network.
01:04:21 Subjective demands against objective supply.
01:04:26 Subjective.
01:04:27 So it’s an economic democracy.
01:04:29 Got it.
01:04:30 So that’s the demand supply.
01:04:32 And then the tools are the ways of extracting
01:04:36 or solving problems is the more general kind of thing.
01:04:39 Or satisfying wants.
01:04:40 Satisfying wants.
01:04:42 So wants are somehow, that’s part of the supply
01:04:46 and the demand.
01:04:48 And wants are back to value, right?
01:04:49 Cause everything someone wants,
01:04:51 they’re expressing their value.
01:04:53 Okay.
01:04:54 Yeah.
01:04:54 So the shovel is a pragmatic truth.
01:04:57 The shovel is truth.
01:04:58 It feels like a good book title.
01:05:00 Okay, sorry.
01:05:01 So what other pragma, what is it?
01:05:03 And then the third one I would argue is virtue actually.
01:05:08 Oh wow.
01:05:09 And another way to maybe think about this
01:05:13 is competitive competency,
01:05:14 but it’s also cooperative competency.
01:05:17 So we’re learning over time what characteristics,
01:05:20 what patterns of action, what mindsets,
01:05:24 what mental tools, what heuristics are most useful
01:05:27 to satisfying customer wants.
01:05:30 So I think that becomes over time,
01:05:32 becomes sharpened into virtue, right?
01:05:34 Like we know it’s best to be honest
01:05:36 because if you lie, it’s very energy inefficient, right?
01:05:39 You’re creating this little fork of reality.
01:05:41 And then if someone else asks you about that lie again,
01:05:43 you have to put another layer of lies on top of it.
01:05:46 Where if you just tell the truth,
01:05:47 you’re just recollecting what happened.
01:05:49 And so that sort of keeps,
01:05:52 again, when we’re talking about delaying volatility, right?
01:05:55 If you lie, you’re delaying short term volatility,
01:05:59 but you’re increasing longterm volatility.
01:06:00 What about murder?
01:06:01 I haven’t been able to figure out why murder is bad
01:06:04 because I just keep wanting to murder people.
01:06:07 And I’ve murdered many.
01:06:08 She’s the one for that.
01:06:09 Well, that’s why I’m trying to get an interview
01:06:11 with Vladimir Putin.
01:06:13 So that’s fascinating, virtue in this market
01:06:16 with the supplies and demands, and there’s the tools,
01:06:19 which is also a pragmatic truth, and there’s virtue.
01:06:23 It’s a pragmatic truth.
01:06:24 Yeah, and if we interfere with that free market process,
01:06:28 again, if we overstep, which this maybe ties into murder,
01:06:31 if you start to be coercive against life,
01:06:34 liberty or property,
01:06:35 so if you’re forcibly taking someone’s life,
01:06:38 you’re breaking down the trust in that market
01:06:41 that generates these pragmatic truths.
01:06:44 If you forcibly infringe on someone’s liberty, right?
01:06:48 For any reason other than them originally breaking
01:06:53 or infringing upon life, liberty or property,
01:06:55 then that’s not gonna work either.
01:06:56 And then if you violate private property rights,
01:06:59 if you steal property from others,
01:07:01 you’re breaking down the trust
01:07:04 that the intersubjective fabric of money and markets
01:07:08 and the rule of law, all of these useful fictions
01:07:11 are meant to preserve,
01:07:12 you’re corrupting it and breaking it down.
01:07:14 What’s kind of interesting to think about the market
01:07:16 as helping evolve the virtues.
01:07:20 It’s sharpened into virtues.
01:07:22 And then these virtues can then go
01:07:24 into motivational posters,
01:07:27 or like in books that we all agree on,
01:07:30 and then eventually take for granted
01:07:32 as if they were somehow fundamental to human nature,
01:07:35 but they’re not perhaps fundamental,
01:07:37 they’re just pragmatic truths.
01:07:40 Yeah, another way to consider competition itself
01:07:45 is that it is a discovery process.
01:07:48 So, you know, entrepreneurs are competing with one another
01:07:52 and they’re trying to best satisfy consumer wants
01:07:56 at the lowest possible price.
01:07:57 So they’re placing bets of time, energy and capital
01:08:00 on themselves, on their idea, their business plan.
01:08:03 And then the market decides, right?
01:08:06 The consensus of market actors decide which one was better.
01:08:10 One lives, one dies.
01:08:12 So competition itself is helping us get closer to truth,
01:08:16 to pragmatic truth.
01:08:18 So we’re discovering what is the right price for this asset.
01:08:21 And that price, by the way, it’s derived,
01:08:24 again, in the sense of data compression.
01:08:26 Everyone in the world can see that price.
01:08:28 Everyone in the world can then put their skin in the game
01:08:31 by choosing to buy or sell or short or go long
01:08:34 or do any number of financial actions on that price.
01:08:38 And that information is then propagated back out
01:08:40 to everyone else.
01:08:41 So it’s this feedback loop between market actor and price
01:08:44 that makes it so useful.
01:08:48 And that’s what carries us,
01:08:52 so it’s these collisions of interest that carry us,
01:08:56 it removes the unuseful aspects of ourselves
01:09:00 or of our tools or of a price
01:09:02 and reveals pragmatic truth to us.
01:09:05 Can you play my therapist for a second?
01:09:08 And if we talk about creative destruction,
01:09:11 I think, not Bukowski,
01:09:15 Hunter S. Thompson has a quote,
01:09:17 something like, for all instances of beauty,
01:09:20 many souls must be trampled.
01:09:22 Wow.
01:09:25 But there does seem to be an aspect of competition
01:09:32 that destroys, you were talking about entrepreneurs
01:09:36 sort of on the outside of the circle of order,
01:09:40 striving to make sense, to compress volatility
01:09:45 of the chaos of the universe.
01:09:47 Is there some way to protect a little bit
01:09:53 against the pain of that destruction
01:09:55 or that creative destruction,
01:09:57 that entrepreneur screaming on fire
01:10:00 as he enlightens the rest of us,
01:10:03 is there some role for us humans together
01:10:06 in the togetherness of it?
01:10:10 Also government, but any kind of collectives
01:10:15 in helping that entrepreneur who’s on fire
01:10:18 maybe after a few minutes to spray him with some water
01:10:22 and put him out of his misery?
01:10:26 I would say that pain is the inarguable basis of being.
01:10:34 Pain is, no matter how you try to explain it away
01:10:39 or describe it,
01:10:41 or it’s not something you can rationalize away.
01:10:46 No one, I think ever,
01:10:50 someone may want to cut themselves to have an endorphin high
01:10:53 but no one wants to suffer, we’d say, right?
01:10:55 So pain in that sense,
01:10:56 it is what we’re constantly trying to deal with
01:11:00 and to move away from or create buffers between us
01:11:04 and potential pain or potential uncertainty.
01:11:07 And that pain is information.
01:11:10 When we experience something
01:11:12 that is misfit to the outcome we desired,
01:11:16 that pain is what puts us,
01:11:17 it encourages us to change our trajectory
01:11:20 to get back on course towards our valued aim.
01:11:24 So as far as, you need entrepreneurs that are exploring,
01:11:31 and you’re trying to do something new,
01:11:32 if you’re a pioneer of any kind,
01:11:33 you are courageously facing pain.
01:11:36 You’re willfully confronting it.
01:11:38 So I don’t think it’s avoidable in that sense.
01:11:40 It’s not like we can have pain free economic growth
01:11:44 like the central bank would maybe have us lend to believe
01:11:48 that we can just run these experiments
01:11:50 and when they fail,
01:11:51 we’ll just paper over all the losses and continue.
01:11:52 Or you’re just delaying and exacerbating
01:11:56 the inevitable volatility back to reality.
01:11:59 But what I would say is that capitalism,
01:12:02 because we’re building,
01:12:03 we’re increasing the capital stock of the world,
01:12:05 which again, capital is the mitigation of risk.
01:12:08 So we’re reducing the overall risk of existence
01:12:10 by accumulating more capital in the world.
01:12:12 And that’s what protects that entrepreneur
01:12:14 that’s deciding, hey, I saved up a million bucks.
01:12:17 I’m gonna go try this business idea.
01:12:20 I’m gonna put all my money on the line.
01:12:22 And if he goes up in flames,
01:12:24 then his cost of living when he comes back to reality
01:12:27 and he’s starting over from zero,
01:12:28 his cost of living is substantially lower
01:12:31 starting over from zero than it was in the past.
01:12:33 So then he would be out in the wilderness on his own.
01:12:37 So it’s the accumulation of capital stock
01:12:40 is the buffer against uncertainty for everyone.
01:12:43 And it gives you actually more potential
01:12:47 to go out and experiment,
01:12:48 to go out and confront the chaos of nature
01:12:51 because you are better healed effectively.
01:12:54 So I think we’re speaking
01:12:58 in sort of idealistic terms about the power of capitals
01:13:03 and when it works well.
01:13:04 Is there any aspects that you think
01:13:07 that don’t work well in a free market
01:13:10 in all the basic pragmatic truths
01:13:12 that we were talking about?
01:13:13 Is there ways it can go wrong?
01:13:16 So I would first argue that we have never seen
01:13:22 an actual purely free market.
01:13:25 Closest example would be kind of geopolitically
01:13:34 we have a free market
01:13:35 and that governments are not necessarily governed
01:13:41 but they are premised on governing large groups
01:13:46 of individuals.
01:13:47 So that’s not, doesn’t exactly.
01:13:49 You mean between governments?
01:13:52 Yes.
01:13:53 See, but isn’t there still,
01:13:54 so a free market, maybe you can correct me,
01:13:57 is the free market still grounded in the ideas
01:14:00 of property rights and all those kinds of things, right?
01:14:03 So governments tend to also sometimes
01:14:06 be violent towards each other.
01:14:07 That’s right.
01:14:08 So they don’t respect all the basic aspects of capitalism.
01:14:11 That’s right.
01:14:12 So maybe another way to look at this is that
01:14:15 gold is the original governor of government actually.
01:14:20 And this is the reason governments have abused
01:14:24 and gone off of the gold standard.
01:14:26 So historically, if you are a bank or a nation state
01:14:33 and you produce more currency
01:14:37 than your gold reserves can justify,
01:14:41 then gold will flow out of your bank
01:14:43 or out of your country.
01:14:45 So there’s this natural check via the money
01:14:50 that via capitalistic money, which is gold, right?
01:14:53 Gold was selected by the free market.
01:14:55 It’s not decreed by government.
01:14:57 It provided this natural check on government action.
01:15:01 So my, I guess to get back to the original question is
01:15:07 we’ve never seen a pure free market
01:15:10 because money has always been monopolized
01:15:15 and coerced, frankly.
01:15:16 So to try and answer what goes wrong with a free market
01:15:20 is really difficult because we’ve never actually seen it.
01:15:23 And I would define free market is one
01:15:27 in which government only protects life, liberty and property.
01:15:31 And so that has a very minimal role in society.
01:15:35 Again, just as network security
01:15:37 for the economic trade network.
01:15:39 And anything that, any government function that goes beyond
01:15:44 those three core functions, which by the way,
01:15:47 are pretty much the core tenants of morality as well.
01:15:49 So government’s just really intended to preserve,
01:15:52 you know, natural law, if you will.
01:15:55 Anything that goes beyond that is,
01:15:58 moves us closer to an unfree market.
01:16:00 So every regulation, every act of coercion
01:16:05 is actually a gradation closer to a purely unfree market,
01:16:10 which would be a monopoly.
01:16:12 So in terms of what I guess theoretically we could say
01:16:15 goes wrong in the free market is that it’s volatile.
01:16:20 It’s trading off, it’s accepting short term volatility
01:16:26 in exchange for less long run volatility.
01:16:29 And this tends to be the way of nature, by the way.
01:16:32 So if we look at something like there’s a region
01:16:37 in North America called Baja, California,
01:16:40 and it runs into the United States
01:16:43 and it runs down into Mexico as well.
01:16:45 So the same topology, but two different jurisdictions.
01:16:50 In the US, we very heavily manage forest fires.
01:16:55 We’re trying to manage nature effectively.
01:16:57 Whereas in Mexico is much more unregulated.
01:16:59 It just, when wildfires spring up, they let them burn off.
01:17:04 North America, when wildfires spring up,
01:17:06 we’re actually extinguishing them.
01:17:08 So we’re constantly trying to dampen
01:17:09 the short run volatility of these small brush fires.
01:17:12 Whereas in Mexico, we just let them burn.
01:17:13 We let nature do its thing.
01:17:15 The consequence of this is that the wildfires
01:17:18 still occur eventually, but they’re much larger
01:17:21 and much more devastating in North America
01:17:23 where human intervention has occurred
01:17:25 because it’s dampening nature’s natural corrective mechanism
01:17:31 of clearing this underbrush with these more frequent
01:17:34 and smaller fires at the cost of much larger fires.
01:17:38 So again, we’re delaying short term volatility
01:17:39 and exacerbating long run volatility.
01:17:42 And in Mexico, it’s the opposite, right?
01:17:44 Just these wildfires burn much smaller
01:17:46 and more continuously over time.
01:17:49 The further effect of that in North America
01:17:51 is that the fires can get so big and so hot
01:17:53 that it burns away the top soil.
01:17:55 So it actually destroys the fertility of the soil itself.
01:17:58 So the point of this is that human intervention, right?
01:18:02 Even the intention behind North American authorities
01:18:06 managing that forest fire is to create less destruction.
01:18:10 That is the intention,
01:18:11 but the intention is divergent from the outcome.
01:18:15 So in Taliban speak, he would say that human intervention
01:18:18 moves us from mediocre stan into extremist stan.
01:18:23 So mediocre stan would be something much more like nature
01:18:27 where for instance, you can’t double your body weight
01:18:30 in a day, probably can’t even do it in a year, right?
01:18:33 But in extremist stan,
01:18:34 which is something much more information based,
01:18:37 you can double or send your net worth to zero
01:18:41 in a single trade in a single moment, right?
01:18:44 So when we try and intervene
01:18:46 with natural biological systems
01:18:48 that have these feedback loops,
01:18:51 we actually start to push the system more
01:18:53 to behave more like an extremist stan system
01:18:57 that has less short run volatility,
01:18:59 but more extreme long run volatility.
01:19:03 So, but the question is,
01:19:04 where you look at capitalism or communism, for example,
01:19:09 and by the way, yes,
01:19:10 I will talk to somebody who’s a Marxist or a communist,
01:19:13 like Richard Wolff is a pretty eloquent defender
01:19:15 of these ideas because it’s always good
01:19:18 to really understand ideas
01:19:19 as opposed to just reject them offhand.
01:19:24 When you look at the system of capitalism
01:19:26 or the system of communism,
01:19:29 there’s ideals and a lot of people argue
01:19:32 in this perfect form would actually be good for the world.
01:19:35 The question is how resilient are they
01:19:38 to the corruption of human nature?
01:19:42 And I mean, you’re saying that there’s not a,
01:19:45 there’s never been a free market.
01:19:47 It’s a very true statement.
01:19:48 The question is how resilient is capitalism
01:19:52 or whatever implementations of capitalism
01:19:54 we had up to this point to human nature
01:19:57 where one person will become successful
01:19:59 through legitimate means
01:20:03 and starts to try to manipulate the system
01:20:05 that takes it away from a free market
01:20:07 or takes it away from the things
01:20:10 that gave them the riches in the first place.
01:20:13 And then try to, through corruption, get more,
01:20:17 get this, the thing you said, the lazy human ways.
01:20:20 Now try to figure out how to get something for nothing.
01:20:22 That’s right.
01:20:24 So how resilient do you think is capitalism to that?
01:20:26 Well, the best implementation we’ve had of it
01:20:31 really has been the United States, I think,
01:20:35 up until this point.
01:20:36 But it’s still the central banking itself.
01:20:42 This was in the 1848 Manifesto to the Communist Party.
01:20:45 Measure number five reads an exclusive state monopoly
01:20:49 and centralized control over cash and credit.
01:20:51 So the central bank is a Marxist or communist institution.
01:20:56 It is antithetical to the free market principles
01:20:58 on which the United States was founded.
01:21:00 And indeed, the United States resisted
01:21:02 the implementation of a central bank.
01:21:04 I think it was Andrew Jackson.
01:21:06 I know there was the first national bank,
01:21:08 the second national bank were both disbanded.
01:21:10 And then Andrew Jackson, which is my favorite Tennessean,
01:21:14 he has some famous quotes about routing out the bankers
01:21:18 like a den of vipers.
01:21:19 I think he punched one of the central bankers in the face.
01:21:23 Back when our leaders were a bit more badass,
01:21:26 I guess you might say.
01:21:28 And finally in 1913, the Federal Reserve was implemented.
01:21:35 And it’s been kind of all downhill from there.
01:21:39 So what is, can you, oh, sorry, go ahead.
01:21:41 I was just gonna say that communism and capitalism,
01:21:45 it’s also a matter of scale.
01:21:48 The ideal behind communism is from each
01:21:51 according to their ability to each according to their need.
01:21:54 Sounds beautiful, right?
01:21:55 Sounds like a great, peaceful, harmonious way
01:21:58 to organize ourselves.
01:22:00 The problem is, and by the way, I am a communist
01:22:03 in my family, in my home, right?
01:22:05 At that very smallest of scales.
01:22:07 Yes, in your very small circles of trust,
01:22:10 you’re much more likely to behave selflessly
01:22:13 towards one another.
01:22:14 By the way, I look forward to the Bitcoin community
01:22:17 clipping out that part, saying that Robert Breedlove
01:22:20 was a communist and the ideals of communism are beautiful.
01:22:23 Yeah, context matters, people.
01:22:25 Sorry, go ahead.
01:22:29 But to your point, it does not scale, right?
01:22:33 As we move into this larger system
01:22:37 of socioeconomic cooperation, which is necessary
01:22:41 to deepen the division of labor, to generate more wealth.
01:22:44 We need to interact with one another on much larger scales
01:22:48 than this communistic utopian ideal.
01:22:52 We get into the realm of capitalism
01:22:54 where we need really sound rules, hard rules,
01:22:58 consensus, verifiability, and frankly, prices.
01:23:03 Because the other thing in Soviet Russia
01:23:06 is they tried to replace the profit motive
01:23:08 or the price signal with this devotion to,
01:23:13 this nationalistic faith and devotion.
01:23:15 Where it’s like, you don’t need self interest anymore.
01:23:18 You don’t need prices or profits.
01:23:20 You can just protect Mother Russia, right?
01:23:23 And serve Mother Russia and that would create wealth.
01:23:26 And what happened, right?
01:23:28 They destroyed price signals.
01:23:29 There were shortages, there were famines,
01:23:32 there’s all levels of corruption.
01:23:35 Because to your point, it’s once you,
01:23:39 people have to run the system no matter what.
01:23:42 So when people are always pursuing something for nothing
01:23:45 and you put someone in a seat
01:23:46 of much closer to absolute power
01:23:49 where they’re making all the pricing decisions,
01:23:51 they own all of the productive factors in the economy,
01:23:54 they’re not beholden to any market force.
01:23:57 There’s no market check on their action
01:24:01 that that institution tends to become more corrupt.
01:24:04 And further, it’s an inferior resource strategy.
01:24:10 I alluded to this earlier where the other way
01:24:12 to think about free market versus central planning is
01:24:17 it’s decentralized or distributed computing
01:24:20 versus centralized computing.
01:24:22 So each one of us, I think that the number
01:24:26 is 120 bits per second of active awareness.
01:24:29 And so we can take in, clearly we process a lot more
01:24:32 than that, but our active awareness,
01:24:33 I think is 120 bits per second.
01:24:37 In a centralized planning body like in Soviet Russia,
01:24:40 they had the pricing czar.
01:24:41 Maybe they had 10, 20,000 people deciding the prices
01:24:44 for the entire country.
01:24:46 You’re only getting that much data throughput, right?
01:24:48 20,000 people times 120 bits per second.
01:24:52 Whereas in a free market, if everyone is free to interact
01:24:56 with deep capital markets based on an accurate price,
01:24:59 you’re getting the data throughput of 120 bits per second
01:25:02 times the entire economy, right?
01:25:04 So you’re getting, it’s a more efficient means
01:25:08 for disseminating knowledge effectively.
01:25:11 And then again, knowledge is just,
01:25:14 the more knowledge a socioeconomic structure can contain,
01:25:17 the more wealthy it is, right?
01:25:19 Prices, tools, all these things are just knowledge.
01:25:21 So in that respect, that’s why something like capitalism,
01:25:27 even in its marginalized form, state capitalism,
01:25:30 out competes communism.
01:25:33 It’s distributed computing versus centralized computing.
01:25:36 You know, we kind of brought up religion
01:25:40 and Joseph Campbell and myth and the propagation of ideas.
01:25:46 And kind of before I forget,
01:25:48 I wanted to ask your thoughts about this.
01:25:50 You know, Jordan Peterson, I haven’t really understood
01:25:55 exactly like be able to pin him down exactly
01:25:58 what he sees as the role of religion in human society.
01:26:03 But it feels like he’s describing it as having value for us.
01:26:12 The ideas of myth are valuable.
01:26:15 They’re valuable mechanisms toward,
01:26:18 I think you mentioned kind of directing us
01:26:21 in this world as a human society.
01:26:25 Do you think about myth?
01:26:26 Do you think about religion?
01:26:27 What’s the use of it in this construct of markets
01:26:31 in this framework of where ideas are ultimately
01:26:37 the fundamental thing that makes societies work?
01:26:44 Yeah, I think Jordan Peterson, who I’m a huge fan of,
01:26:49 he’s been very influential in my thinking
01:26:52 and influential on my own religious views as well.
01:26:56 I think his position would be, and he’s said this before,
01:27:00 that he acts as if God exists.
01:27:05 And I’ve had some arguments about this before,
01:27:08 but to me that points towards the preeminence of action
01:27:12 and how important action is
01:27:14 versus your cognitive beliefs necessarily.
01:27:19 And I think there is a lot of utility in that,
01:27:20 that if you follow the moral code of something,
01:27:24 like the Bible, you do reap benefits from that.
01:27:28 Society reaps benefits from that.
01:27:32 And sometimes I bring up this point and people are like,
01:27:35 oh my God, are you kidding me?
01:27:36 Have you read the Old Testament?
01:27:37 They’re clobbering people with rocks
01:27:39 when they do the wrong thing.
01:27:41 The Bible doesn’t claim to be this,
01:27:44 like do everything that was done in the Bible.
01:27:46 It’s more like charting this moral progression
01:27:48 where we came from this very barbaric society
01:27:51 into something more like the New Testament
01:27:54 where we’re honoring individual sovereignty
01:27:56 above the state and things like that.
01:27:58 So I think that mythology itself
01:28:02 is another form of data compression.
01:28:05 If you look at these stories,
01:28:08 Cain and Abel is a good example,
01:28:10 or Peterson makes the point that it’s a tiny story.
01:28:13 It’s a paragraph ish long,
01:28:16 but it contains so many layers of meaning
01:28:18 in regards to violence, to evil, betrayal, work,
01:28:24 the divergence between intention and result,
01:28:27 because I think Cain is actually making,
01:28:31 he’s making the effort to sacrifice for God,
01:28:34 but the sacrifices he’s making are not,
01:28:36 God doesn’t find them useful.
01:28:39 And so he sort of rejects them.
01:28:45 Again, if we’re organizing these stories
01:28:48 we’re organized by these useful fictions, right?
01:28:50 These, these Herarian imagined orders.
01:28:53 I think mythology is kind of the original version of that,
01:28:56 where we were learning to organize ourselves around stories
01:29:03 to best coordinate our action across space and time.
01:29:09 And so I think it’s very foundational.
01:29:14 And back to what we were saying in the beginning
01:29:16 that if value truly is fundamental,
01:29:18 I think it’s interesting that all these stories
01:29:20 point towards often common moral values.
01:29:24 They’re not perfectly aligned,
01:29:27 but it does speak to just the evolutionary importance
01:29:32 of morality and the subjectivity of morality,
01:29:34 where morality sort of evolves over time based on,
01:29:39 frankly, the capital stock we’ve accumulated.
01:29:40 The more capital stock we’ve accumulated,
01:29:42 the easier life is, the less barbaric we have to be.
01:29:45 Whereas if we’re living in conditions of true scarcity,
01:29:51 then we tend to be a bit more barbaric towards one another.
01:29:55 And that too, to dovetail this
01:29:57 into something largely unrelated,
01:29:59 but I think is really important is inflation.
01:30:03 Inflation by artificially increasing the prices
01:30:07 of goods and services in the world, right?
01:30:09 We’re injecting more dollars,
01:30:12 chasing the same level of goods and services.
01:30:15 We are artificially increasing scarcity,
01:30:19 perceived scarcity, right?
01:30:21 And when you increase perceived scarcity,
01:30:24 you are amplifying divisiveness.
01:30:30 The natural state of man is when everything is scarce
01:30:33 and you really have to fight hard
01:30:34 just to eat or drink water that day.
01:30:37 So it’s decivilizing in a way
01:30:40 by artificially amplifying
01:30:42 the perceived scarcity in the world.
01:30:44 Can you elaborate how does inflation increase
01:30:47 the perceived scarcity in the world?
01:30:49 So we could think the price itself is an indication,
01:30:52 it’s a data packet, if you will.
01:30:54 The price is a data packet on supply and demand, right?
01:30:57 It’s telling you how much supply there is
01:31:00 of something in the world relative to the demand.
01:31:03 So when you print money
01:31:06 and artificially increase that price,
01:31:08 it’s diverging away from supply and demand.
01:31:10 It’s becoming just more of a product of policy
01:31:13 than it is of free market fundamentals.
01:31:17 The more expensive something is,
01:31:19 that is a signal to the marketplace and to market actors
01:31:22 that it is scarce, right?
01:31:24 That’s why a Leonardo painting
01:31:28 might sell for $16 million, there’s only one,
01:31:30 there’s a lot of demand for it.
01:31:32 Maybe my numbers are off, but you get the point.
01:31:36 It’s the reason mask spiked in price
01:31:38 after the COVID announcement, right?
01:31:39 There was not enough supply,
01:31:41 toilet paper, et cetera, et cetera.
01:31:43 So inflation, and by inflation,
01:31:47 I specifically mean arbitrary fiat currency
01:31:50 supply inflation by legal monopoly,
01:31:53 not inflation is a commonly misunderstood word.
01:31:57 That is amplifying the perception of scarcity
01:32:01 among market actors in the world.
01:32:03 And I would argue that it actually amplifies divisiveness.
01:32:07 I think this is the key maybe to looking at
01:32:12 the connection between the monopolization of money
01:32:15 and things like cancel culture,
01:32:17 because it’s increasing our natural predilection
01:32:22 to be combative with one another,
01:32:24 because we think there’s more scarcity in the world
01:32:26 than there actually is,
01:32:27 versus in a world where you’re not increasing
01:32:29 the money supply, prices are declining every year.
01:32:33 As prices decline, this is a signal to market actors
01:32:36 and the market that scarcity is declining.
01:32:39 There’s less need to fight over things.
01:32:41 And all of this ties back into the old Bastiat saying
01:32:46 that if goods don’t cross borders, soldiers will.
01:32:50 So if we’re not trading with one another,
01:32:52 if we’re not acting interdependently,
01:32:53 and we’re not becoming more intelligent as a market,
01:33:00 and that increased intelligence or increased knowledge
01:33:03 is reflected in decreased prices,
01:33:06 because prices are just the exchange ratios of things.
01:33:11 So the smarter we can solve problems,
01:33:12 the better we can solve problems, the less prices would be.
01:33:15 So it induces more cooperation.
01:33:18 I love how you tie inflation and cancel culture together
01:33:21 as essentially artificial creation of increase of conflict.
01:33:28 Artificially increasing scarcity
01:33:30 and thereby artificially increasing conflict.
01:33:33 That’s really fascinating.
01:33:35 You’re short circuiting my brain
01:33:38 many times throughout this conversation.
01:33:40 Okay, this robot is struggling to keep up.
01:33:45 Okay, maybe to step back at the useful fictions
01:33:50 or pragmatic truths.
01:33:53 Let me ask the question that you’ve answered
01:33:56 in many ways already, but let’s explicitly look at.
01:34:00 What is money?
01:34:01 Oh, as you know, that’s my favorite question.
01:34:04 Yes.
01:34:07 Is the name of the show I just launched,
01:34:09 the What is Money show?
01:34:13 Clearly, we could say that the Bitcoin rabbit hole
01:34:16 is what’s led me to explore a lot of these ideas in depth.
01:34:22 And I think as we’ve demonstrated today,
01:34:23 it goes well beyond just the economic sphere
01:34:26 when you start to think about things like exchange
01:34:28 and morality and time preference and civilization.
01:34:33 So I love the question, what is money?
01:34:35 I think it is the key to incepting a deeper understanding
01:34:40 of the world into people that if you actually
01:34:42 just start to ask the seemingly simple question,
01:34:47 it surfaces more and more layers of truth.
01:34:51 And I recently, I just wrote a piece,
01:34:55 I think I have 30 something answers to this question.
01:34:59 So there’s.
01:35:00 So sometimes it’s actually a more systematic way
01:35:03 of asking the question of what is the meaning of life?
01:35:06 There’s some questions that are almost unanswerable,
01:35:11 but in their asking allow you to deeply get closer to truth,
01:35:17 deeply understand the nature of our human existence.
01:35:21 And the meaning of life is almost like
01:35:23 this initial philosophers striving towards that.
01:35:28 If money is indeed as fundamental as you’ve described,
01:35:34 especially in the context of value being fundamental,
01:35:38 then that is a really, that’s a more,
01:35:40 let’s take a 21st century way of asking the same question
01:35:43 about what is the meaning of life.
01:35:45 You mentioned that it’s a meta property
01:35:47 out of the list of many ways to answer that question.
01:35:51 How would you help people to think about that?
01:35:53 Yeah, the first most serious answer
01:35:58 comes from the school of Austrian economics
01:36:01 and it defines money as a universal medium of exchange.
01:36:06 So this would be any good that is used,
01:36:12 held and used purely for purposes of facilitating exchange.
01:36:17 So in the configuration of demand for any particular asset,
01:36:23 it’s bifurcated between its utility,
01:36:26 which is something a service
01:36:28 that it can render to you in real time,
01:36:31 whether it’s, if it’s water, you’re thirsty,
01:36:35 that’s the utility of water is that it can quench your thirst
01:36:39 whereas the marketability would be the expectation
01:36:41 of future exchange that other people would want this asset
01:36:44 in the future to trade it for whatever they may have.
01:36:49 Money is just going to be the good in any trading economy
01:36:53 that has the highest proportion of marketability
01:36:56 relative to utility.
01:36:57 So today that would be gold.
01:37:00 Gold has utility, it’s used in electronics,
01:37:03 it’s used in dental dentistry and whatnot,
01:37:06 but it’s largely used as a store of value across time
01:37:09 and that’s what it’s been used for for 5,000 years.
01:37:12 So if we say gold has a $10 trillion market cap,
01:37:16 maybe 2 trillion of that is its utility value
01:37:19 or it’s actually demand for use in computers and dentistry
01:37:22 and an 8 trillion of that is demand
01:37:24 for its use as a store of value.
01:37:28 Money, the marketability aspects of money
01:37:32 boils down to five services that money can render.
01:37:36 Money needs to be divisible, it needs to be durable,
01:37:40 it needs to be recognizable, it needs to be portable
01:37:42 and it needs to be scarce.
01:37:45 So I’ll gloss over a lot of history with this
01:37:47 and just say that historically,
01:37:50 money’s always been a technology,
01:37:51 still is a technology or a tool.
01:37:53 I use these terms interchangeably
01:37:55 and you think of a technology
01:37:56 as just a more sophisticated tool effectively.
01:38:02 To best satisfy those properties,
01:38:03 monetary metals were determined
01:38:05 to be the most satisfactory tool,
01:38:08 the most divisible, most durable, most recognizable,
01:38:10 most portable tool in the marketplace.
01:38:13 Of the monetary metals, gold was the most scarce
01:38:17 as quantified by either its stock to flow ratio
01:38:20 or its inflation resistance.
01:38:22 So simple way to say this is that people always prefer
01:38:25 the money most resistant to inflation.
01:38:27 That’s a nice definition of scarcity in the context.
01:38:30 The money is, if you were to measure it,
01:38:34 the resistance to inflation.
01:38:36 So how hard is it to artificially increase
01:38:38 the supply of the thing?
01:38:39 That is the hardness of money.
01:38:41 And that’s why gold is hard money.
01:38:43 Because the alchemy is hard.
01:38:44 That’s right.
01:38:46 Because no one cracked the alchemy.
01:38:47 So gold became money.
01:38:49 So that’s such a nice clean explanation of what is money
01:38:56 with the five elements and gold ultimately won out
01:38:59 because of the last piece of scarcity.
01:39:01 That’s right.
01:39:02 And to get to maybe dig a little deeper there.
01:39:04 So scarcity, we commonly think of scarcity
01:39:08 as strictly a supply property,
01:39:12 where if there’s not much of something, then it’s scarce.
01:39:15 But it’s not actually true.
01:39:16 Scarcity occurs when demand exceeds supply.
01:39:20 So when there’s more demand than the supply can justify,
01:39:24 the thing becomes an economic good
01:39:26 and it establishes itself a market price.
01:39:30 So there’s more demand for the thing
01:39:31 than the supply can satisfy.
01:39:33 The unique thing about money as a concept at least
01:39:37 is that demand always exceeds supply.
01:39:40 There’s never enough money to satisfy everyone, right?
01:39:43 Because another definition for money,
01:39:46 it’s the most marketable good.
01:39:48 So it can be traded for any other good service,
01:39:53 piece of knowledge in the marketplace.
01:39:55 So humans being what we are, we’re never satisfied, right?
01:39:58 We always want more of something, whatever it may be.
01:40:01 So money as the ultimate token of obtaining that something
01:40:04 is always scarce as a concept.
01:40:09 But the problem with money is that if you can,
01:40:12 as you alluded to, easily increase its supply,
01:40:15 then all of a sudden you can compromise
01:40:17 the scarcity of it over time
01:40:19 and you can rob people through inflation.
01:40:23 So that’s why the market settled on gold as money.
01:40:26 And robbing is reallocating the value that I,
01:40:31 so essentially the one property, like why scarcity
01:40:36 is important is it adds a lot more friction
01:40:40 to the reallocation, like through essentially violence
01:40:47 or implied violence.
01:40:48 Well, it prevents it through cost of extraction too.
01:40:51 So if you want to go out and dilute gold holders today,
01:40:54 you have to go out into the world and mine gold.
01:40:57 It’s a very expensive process.
01:40:59 That process tends to find equilibrium
01:41:02 where production cost equals the market value of gold.
01:41:05 So if market value is $2,000 an ounce today of gold,
01:41:08 its production cost is going to be around there.
01:41:10 That’s the natural market equilibrium.
01:41:12 So that way gold miners cannot just dilute people over time.
01:41:16 Whereas if you look at something like fiat currency,
01:41:19 which we’re jumping ahead a little bit,
01:41:21 but its production cost is zero.
01:41:23 So there’s a reason the market value of fiat currency
01:41:26 historically has always converged to zero
01:41:29 because its production cost is near zero.
01:41:31 So the extension to that question might be
01:41:34 how did we get from gold to paper currency?
01:41:37 And again, this is rooted in the properties of money.
01:41:41 As good as monetary metals were
01:41:43 and as good as gold is as money at holding value across time,
01:41:47 it’s rather limited in terms of portability.
01:41:50 It is not as useful for moving value across space.
01:41:54 This is another definition of money, by the way,
01:41:55 a social device for moving value across space and time.
01:42:00 So to rectify this technological shortcoming of gold,
01:42:04 we introduced, first of all,
01:42:08 the custody of gold was gradually centralized
01:42:10 into fewer and fewer warehousing operations.
01:42:15 This is because there are economies of scale
01:42:17 associated with using gold as money.
01:42:20 And that if you centralize the custody,
01:42:23 the warehouse owner can then issue a paper receipt
01:42:26 called a warehouse receipt for that gold.
01:42:28 And then market participants can trade that paper
01:42:31 as if it’s good as gold.
01:42:32 And everyone has an option at any time
01:42:34 to go and redeem real gold from the warehouse.
01:42:36 So that system works until the problem with it
01:42:40 is that it introduces the need to trust the custodian.
01:42:44 So it’s introducing counterparty risk
01:42:45 in the form of the custodian.
01:42:47 And now should that warehouse choose
01:42:50 to increase the supply of paper notes to gold
01:42:54 beyond its supply.
01:42:55 So if it’s got three tons of gold
01:42:57 and it issues six tons worth of paper receipts,
01:43:00 all of a sudden it’s participating in a fraud.
01:43:03 It’s basically lying.
01:43:04 It’s representing that it has more gold
01:43:06 than it actually does.
01:43:08 And that is the pathway that we got into banking
01:43:12 and central banking,
01:43:14 is we needed a convenience mechanism
01:43:16 to rectify the portability shortcomings of gold.
01:43:19 We needed to be able to move value across space, right?
01:43:22 Gold was doing a great job at moving value over time,
01:43:24 but not space.
01:43:26 Paper currency gave us the ability
01:43:27 to move value across space,
01:43:29 but it introduced this attack vector
01:43:31 for warehouse operators, which became banks,
01:43:34 which became central banks,
01:43:36 to modify the supply to suit their own political agendas.
01:43:39 Added the snooze button.
01:43:42 That allows you to do a little fraud.
01:43:45 To get something for nothing.
01:43:47 Something, just a little bit at first.
01:43:49 Just this one morning, just a little bit.
01:43:53 I mean, I don’t know if you can speak
01:43:55 to the birth of fiat currency.
01:44:00 Is there some interesting characteristics
01:44:04 to those early steps that created it?
01:44:07 Like, could it have been averted?
01:44:09 Or is this the natural progression of governments?
01:44:14 You know, what’s funny is that central banking
01:44:18 was initially designed to be the custodian of gold, right?
01:44:22 And so they were going to custody the gold,
01:44:25 issue paper on top of it,
01:44:28 and then they would maintain,
01:44:30 you could trust the public stamp effectively.
01:44:32 You could trust that the central bank
01:44:33 had as much gold on reserve as they said they had,
01:44:36 and they were supposed to be the trustworthy institution.
01:44:38 So we went from placing our trust
01:44:41 in a free market game theoretic process,
01:44:43 or trusting gold,
01:44:45 and we began trusting this institution instead.
01:44:50 This, that institution would not have arisen
01:44:54 if the portability of gold was really high.
01:44:58 If we could have somehow sent gold
01:45:00 across a telecommunications channel,
01:45:02 there would have been no need for a central bank.
01:45:05 Everyone could have custodyed their gold
01:45:07 in any information bearing medium, frankly,
01:45:10 and they could beam it around the world at any time.
01:45:13 So this whole institution itself
01:45:16 is rooted in a technological shortcoming of gold.
01:45:21 So I think it’s, another way to think about that
01:45:24 is maybe had there been all the gold in the world today
01:45:28 fills two Olympic sized swimming pools,
01:45:31 all the gold mined throughout all of human history.
01:45:32 So there’s not a lot, right?
01:45:36 What if there had been just like way more?
01:45:38 There’d just been, I don’t know,
01:45:39 20,000 Olympic swimming pools worth.
01:45:41 Portability wouldn’t have been as much of an issue, right?
01:45:45 We could have, and this is to say,
01:45:46 assuming gold was still the most scarce metal
01:45:48 and all these things,
01:45:52 portability would have been less of an issue.
01:45:53 We would have had less dependence
01:45:55 or need for a central bank.
01:45:57 So I think it’s kind of idiosyncratic
01:46:00 in that we just happened to end up here on this planet
01:46:03 with a certain amount of gold.
01:46:05 It best satisfied the properties of money.
01:46:07 And a certain amount of humans,
01:46:08 a geographic dispersed such that portability
01:46:12 had certain properties that you want to achieve
01:46:14 for humans in the geographical space
01:46:16 to be able to be a exchange value.
01:46:18 It became more of an issue as we globalized, right?
01:46:20 As we became more of a global society,
01:46:22 we needed money that could move across space really fast.
01:46:26 So we could trade in international capital markets.
01:46:29 So that drove the central bank
01:46:33 to become the dominant institution of the world.
01:46:35 And if you follow the flows of gold throughout history,
01:46:39 you know, I’ve been watching this documentary
01:46:41 on World War I and World War II on Netflix.
01:46:43 I think it’s called World War II in Color.
01:46:45 Oh yeah, that’s really good.
01:46:47 So good.
01:46:50 When I say gold has been the governor of governments
01:46:53 or gold is geopolitical money,
01:46:55 like it is the base layer operating system,
01:46:59 has been the base layer operating system for analog society.
01:47:02 So it’s always been about who controls the gold,
01:47:05 is who makes the rules.
01:47:07 And that’s, in that context,
01:47:11 is why Bitcoin is so interesting
01:47:12 because it is the disruptor to
01:47:16 this base level operating system
01:47:18 that’s functioned for all of human history.
01:47:22 I think this is a good place to ask,
01:47:24 we asked the what is money question.
01:47:27 What is Bitcoin?
01:47:29 That’s a question as complicated as what is money?
01:47:35 I think if you get a general understanding of money
01:47:39 from a number of angles,
01:47:42 that we could say Bitcoin is the most superior
01:47:47 monetary technology that has ever existed.
01:47:51 So one of the most superior implementation
01:47:54 of the ideas of money that you talked about,
01:47:56 you talked about money as speech,
01:47:58 you talked about money as an idea,
01:48:01 we talked about money as sovereignty.
01:48:04 Yeah.
01:48:04 So we’re attaching the concept of money, to your point,
01:48:08 to whatever tool best satisfies those properties of money
01:48:13 or best renders those services we need for money.
01:48:16 And as you said, you’re using the word tool
01:48:19 and technology interchangeably here.
01:48:20 Yes, yes.
01:48:22 And another thing to think about here is that
01:48:24 we think often in terms of goods or services,
01:48:28 but actually everything is a service.
01:48:31 So it’s not the physical properties of this pen
01:48:35 that I find valuable,
01:48:36 it’s the services that it renders to me,
01:48:38 that I want to write a letter,
01:48:40 this serves me by allowing me to lay ink on paper
01:48:45 and communicate information.
01:48:47 So value, humans attach value as we alluded to earlier,
01:48:52 two services, not goods.
01:48:55 So the properties or the services that money renders
01:48:58 that human beings value are those five properties,
01:49:00 divisibility, durability,
01:49:01 recognizability, portability, scarcity.
01:49:05 Metals best satisfied those services historically,
01:49:09 but Bitcoin as the most superior monetary technology
01:49:12 in human history, essentially perfects them.
01:49:16 It’s as close to perfection as we’ve ever been.
01:49:18 So in terms of divisibility,
01:49:21 each Bitcoin can be broken down into 100 million subunits
01:49:25 called a satoshi.
01:49:29 If that divisibility were ever a problem,
01:49:31 which actually there was a question that came up recently,
01:49:35 if you divide the world population
01:49:37 by the total supply of Bitcoin,
01:49:38 you end up at like 0.3 Bitcoin per person,
01:49:42 call it 300,000 satoshis per person.
01:49:46 What if that was not enough to facilitate economic activity?
01:49:50 And the answer to that is Bitcoin can soft fork
01:49:53 into further divisibility.
01:49:54 So if Bitcoin ate all the money in the world
01:49:58 and the average Bitcoin or wealth
01:50:00 will say 300,000 satoshis each,
01:50:02 but that wasn’t divisible enough maybe to buy coffee
01:50:06 and do all these day to day transactions,
01:50:07 what would happen?
01:50:08 Well, we would increase its divisibility.
01:50:09 So Bitcoin’s perfected divisibility,
01:50:12 the divisibility of money,
01:50:13 lets us transact across scales, right?
01:50:16 We can buy coffee or we can buy a house.
01:50:21 Durability is an interesting one.
01:50:23 So clearly something like gold is very durable.
01:50:25 It’s resistant to degradation over time.
01:50:28 Bitcoin is just pure information,
01:50:30 but it’s stored in a distributed format.
01:50:33 So information stored in a distributed fashion
01:50:37 tends to be virtually infinitely durable.
01:50:40 The example I’d like to give here
01:50:41 is something like the Bible.
01:50:43 The Bible is just distributed information.
01:50:46 It’s stored everywhere and nowhere, so to speak.
01:50:49 And for that reason, it has outlasted empires.
01:50:53 And Bitcoin’s similar, right?
01:50:54 You can’t make changes to it unilaterally.
01:50:57 But to make explicit the ways in which it is not durable
01:51:01 is the fact that it relies on computing infrastructure.
01:51:05 Like it needs computers.
01:51:08 So if you were to destroy all the computers in the world,
01:51:11 it needs mechanisms that store and transfer information.
01:51:17 And so you could attack it.
01:51:20 I mean, you could attack gold in the same kind of way,
01:51:22 I suppose, through the physics,
01:51:23 but it’s probably easier to destroy
01:51:26 all the computers in the world
01:51:27 than it is to destroy all the gold in the world.
01:51:30 Maybe not, I don’t know.
01:51:32 Anyway.
01:51:33 Yeah, you’re right.
01:51:35 Maybe, I’m not sure which one would be harder to destroy.
01:51:38 The other thing is there’s a dynamic incentive.
01:51:41 So every time you destroy Bitcoin miners,
01:51:44 you’re creating incentives for anyone else
01:51:46 with access to electricity to mine
01:51:48 because you’re making the algorithm easier.
01:51:50 Yeah, so the destruction is difficult
01:51:54 because of the decentralized nature of the whole thing.
01:51:56 And the difficulty adjustment.
01:51:57 Yeah, so you’re gonna have to use nuclear weapons
01:52:00 and cover the whole globe, but anyway.
01:52:02 Yeah, and by then,
01:52:03 we’ve got much bigger problems than money, right?
01:52:06 That’s right, so okay, so that’s durability.
01:52:09 So portability, Bitcoin’s pure information,
01:52:12 it can move at the speed of light,
01:52:13 can’t get much faster than that.
01:52:15 Recognizability refers to the ability
01:52:19 to verify the veracity of the money or its authenticity.
01:52:23 So you can actually, when we used to transact gold,
01:52:27 there were time honored techniques for verifying
01:52:30 that it was gold and not gold plated lead, for instance.
01:52:32 This is where we get the term sound money.
01:52:34 A gold coin made a very particular sound
01:52:36 when dropped from a certain height.
01:52:38 You’ve seen people biting coins.
01:52:40 These are all techniques for testing the authenticity of gold.
01:52:44 And with Bitcoin, we have something unique
01:52:46 in that if you’re running a full node,
01:52:48 you can verify that the Bitcoin is Bitcoin, right?
01:52:51 It cannot be tampered with, it cannot be faked.
01:52:54 And in addition to that, as a node operator,
01:52:57 you can audit the total supply of Bitcoin at any time,
01:53:00 which is unlike any money in history.
01:53:01 So you know with full certainty,
01:53:04 if you’re holding 1000 Bitcoin,
01:53:06 you have 1000 out of a possible 21 million forever.
01:53:10 You have a guaranteed fraction of the total supply.
01:53:13 Yeah, so a full node contains information
01:53:14 about every transaction that’s ever been had
01:53:16 so you can figure out, yeah, I mean,
01:53:19 all the truth of this money is all right there.
01:53:23 Yeah, it’s like a fractal constituent
01:53:25 of the whole network, right?
01:53:27 The whole Bitcoin blockchain is comprised in a node too.
01:53:30 Not the proof of work piece,
01:53:32 but the entire transaction history.
01:53:34 And so that’s unique as well.
01:53:37 And that’s what makes Bitcoin the ultimate store of value
01:53:39 is that you know with certainty what the total supply is
01:53:43 and will ever be.
01:53:45 And you know that your share of that supply is fixed.
01:53:49 It cannot change.
01:53:50 It can only improve actually.
01:53:51 If someone loses, you know,
01:53:53 if the Satoshi stash is truly gone forever,
01:53:56 the million Bitcoin never moves,
01:53:58 then we’re talking about 1000 Bitcoin
01:53:59 out of 20 million instead and so on and so forth.
01:54:03 As more people lose access to their Bitcoin,
01:54:05 they’re basically making a contribution to everyone else.
01:54:08 It’s anti dilutive.
01:54:10 And there’s certain properties of Bitcoin
01:54:13 that are sort of a little bit more into the details
01:54:15 that ensure that the full nodes,
01:54:19 like the size of all the transactions that ever happened,
01:54:22 at least currently can be stored
01:54:24 in a single computer, for example.
01:54:25 So it doesn’t blow up too quickly.
01:54:28 That’s right.
01:54:28 But you know, there’s arguments that that’s not necessarily,
01:54:32 you can make arguments for that to be a very nice property,
01:54:35 but you can also say that there’s like drawbacks to it.
01:54:38 That’s hence the block size debates
01:54:41 and all those kinds of things.
01:54:42 Yeah, that was the Bitcoin Cash Civil War, right?
01:54:45 Was that particular piece.
01:54:47 Yeah.
01:54:48 And, you know, ostensibly they were saying,
01:54:50 oh, we need more transaction throughput
01:54:52 to buy more coffee and do more transactions.
01:54:55 But what they were actually doing
01:54:57 was increasing the size computing power necessary
01:55:01 to run a full node,
01:55:03 which would have theoretically compromised decentralization.
01:55:06 So yeah, but it would in theory,
01:55:09 and this is, you know, in theory,
01:55:11 it would allow you to have much more transactions.
01:55:15 That’s right.
01:55:16 But the drawback, it would,
01:55:18 because of no longer can be stored in a single computer,
01:55:21 personal computer, then it naturally leads
01:55:24 to the centralization.
01:55:25 Yes.
01:55:26 Which you see with gold.
01:55:28 Which would have compromised its survivability.
01:55:30 Right.
01:55:31 So, I said, what else is there?
01:55:34 The last one, which leads straight into this one,
01:55:36 actually is the most important one of money,
01:55:38 which is scarcity.
01:55:40 And that you need to know the supply is fixed
01:55:45 and safeguarded from counterfeiting and inflation,
01:55:49 which counterfeiting and inflation are the same thing,
01:55:52 by the way.
01:55:53 Counterfeiting is criminalized inflation.
01:55:57 Inflation is legalized counterfeiting.
01:56:00 So central banks today,
01:56:01 when they say they’re printing money, they’re not.
01:56:03 They’re counterfeiting currency.
01:56:05 That’s a very important part.
01:56:07 And Bitcoin, as I’ve argued in some of my writing,
01:56:11 is more than just an invention.
01:56:13 It’s actually the discovery of absolute scarcity.
01:56:16 And that we have unveiled a property of money
01:56:20 that we will only discover once, and it’s got really
01:56:25 major ramifications for the world at large.
01:56:28 So with gold, for instance, as we’ve covered,
01:56:33 it became money because it was the most relatively scarce
01:56:36 monetary metal, right?
01:56:37 Its supply was hardest to increase over time.
01:56:41 However, if we could somehow flip a switch today
01:56:44 and make everyone in the world go out and start mining gold,
01:56:46 we could increase the supply much more quickly.
01:56:49 We could, you know, it’s historic inflation rates
01:56:50 about 2%, we could double that pretty quickly.
01:56:54 Bitcoin, with Bitcoin, it is not possible.
01:56:58 So no matter how much effort and energy and capital
01:57:02 and operational expenditure we pour into the mining network,
01:57:05 we cannot deviate from its fixed
01:57:08 and diminishing supply curve from between now
01:57:11 and the last Bitcoin being mined in 2140
01:57:13 because of the difficulty adjustment.
01:57:15 It’s constantly, it’s adapting to human action actually.
01:57:18 So the harder we pursue it, the more that it recedes,
01:57:21 and then the less we pursue it,
01:57:23 the more available it makes itself.
01:57:26 And this is, it’s a real major breakthrough
01:57:30 because it’s the closest thing to perfect information
01:57:34 we’ve ever had in an economy.
01:57:37 And perfect information is this, it’s a theoretical,
01:57:41 but unattainable state of the market where all market actors
01:57:46 have all the relevant information about everything
01:57:50 so that they can compete as efficiently as possible.
01:57:53 And in a state of pure information, we have,
01:57:56 I’m sorry, perfect information, we have perfect competition.
01:57:59 And in perfect competition, we maximize wealth generation.
01:58:03 So we’re competing as freely as possible
01:58:06 from coercive and violent impediments.
01:58:10 And so I think Bitcoin in that sense
01:58:13 is going to pull the world closer to a state
01:58:17 of perfect competition than we’ve ever been before,
01:58:21 which would increase wealth generation
01:58:24 to an extent we’ve never seen before.
01:58:27 Many of the things you said about Bitcoin
01:58:30 also hold for other cryptocurrency technologies
01:58:32 that followed after.
01:58:36 Can you say something to why you think Bitcoin
01:58:40 is the superior technology
01:58:43 from a pragmatic truth perspective than say Ethereum,
01:58:49 but also other crypto, like Bitcoin Cash,
01:58:52 like other hard forks of Bitcoin,
01:58:55 and maybe things that might yet to be invented,
01:58:59 tools yet to be invented?
01:59:01 Yeah, so this is a good point of argument
01:59:05 because a lot of people have countered me and said,
01:59:08 Bitcoin cannot be absolute scarcity
01:59:11 because you can fork it and create something
01:59:13 with the same properties as Bitcoin
01:59:15 or potentially even better properties, right?
01:59:17 You create something with a deflationary monetary policy.
01:59:21 That’s what Bitcoin Cash was actually.
01:59:23 It forked Bitcoin with all of the same properties
01:59:26 except for the block size that we alluded to earlier.
01:59:29 The problem is that money is valued.
01:59:33 Again, it’s the good with a configuration of demand
01:59:36 that is predominantly marketability.
01:59:40 So it is valued based on its liquidity.
01:59:43 That is how many other trading partners are there
01:59:46 in that monetary network.
01:59:48 So it is a network valued because of its liquidity
01:59:53 and network effects.
01:59:54 So any new entrant into the market for money
01:59:59 is incentivized to always choose the money
02:00:02 with the deepest liquidity and the most network effects.
02:00:06 This is why money has tended to be a winner take all market
02:00:10 because it’s essentially a single purpose tool, right?
02:00:13 It is a tool for,
02:00:16 if we consider that tools are time saving devices, right?
02:00:19 The shovel that you dig more holes per man hour
02:00:21 than you can with your bare hands.
02:00:23 Money is a tool, there’s yet another definition of money
02:00:26 that lets us calculate, negotiate
02:00:28 and execute trades more quickly.
02:00:31 So that function tends to coalesce
02:00:36 towards one solution.
02:00:38 And so the short answer would be that
02:00:40 for the same reasons, quantifiable reasons, right?
02:00:44 Like inflation resistance and liquidity and network effects
02:00:48 that we have one analog gold,
02:00:50 we’re only likely to have one digital gold.
02:00:53 And I think the Bitcoin Cash Fork
02:00:55 proves that out empirically.
02:00:57 It’s a good case study because.
02:00:59 Well, it’s one case study, right?
02:01:00 But okay, so that’s really well put.
02:01:02 So like gold was sticky.
02:01:04 Once it was accepted, the network effects,
02:01:08 the winner take all took over.
02:01:11 And here’s a fundamentally different kind of like
02:01:15 analog versus digital is a leap in technologies.
02:01:18 That’s right.
02:01:19 And you’re suggesting that there may not be,
02:01:25 there’s unlikely to be other leaps of that kind
02:01:29 into a whole nother kind of space of technologies.
02:01:32 I would argue that Bitcoin,
02:01:34 it’s kind of like the ideological synthesis of gold,
02:01:38 taking the monetary properties of gold
02:01:39 and combining them with the internet itself.
02:01:41 And in doing so,
02:01:43 it has essentially perfected the properties of money, right?
02:01:47 You can’t get more divisible, durable, recognizable,
02:01:49 portable, or scarce than Bitcoin.
02:01:51 So Satoshi has kind of,
02:01:54 he left no design space for a superior technology
02:01:58 to intercede and out compete Bitcoin at this point.
02:02:01 Now that it’s established liquidity
02:02:02 in the network effects. Far superior technology, right?
02:02:04 Yeah, but it’s a combination of the tech itself
02:02:07 and the social layer that is coalesced to it.
02:02:10 You can’t separate those two out.
02:02:11 Like they’re all connected and then the political as well.
02:02:15 I mean, but the portability, for example,
02:02:17 that’s another way to phrase that is the,
02:02:20 what is it, the scaling.
02:02:22 So the number of transactions,
02:02:24 that’s a limitation for Bitcoin
02:02:27 that many argue is a feature, many argue is a bug.
02:02:30 You have a bunch of cryptocurrency technologies
02:02:33 that are able to achieve much higher,
02:02:37 much faster frequency of transactions,
02:02:40 much more transactions, you know, all that kind of stuff.
02:02:44 What are your thoughts on that?
02:02:47 You know, the low level of transactions
02:02:49 that’s possible with Bitcoin.
02:02:51 Do you think that’s a feature?
02:02:52 Do you think that’s a bug?
02:02:54 Necessary for security actually.
02:02:56 And even these other crypto assets that settle more quickly,
02:03:00 they settle with less assurance of finality.
02:03:03 So Nick Carter has a great piece on this actually called,
02:03:07 the settlement assurance is stupid.
02:03:09 It’s really good where the gist of it is
02:03:11 that there is more work being done in each block of Bitcoin
02:03:16 that it can’t, it is less vulnerable to reversion.
02:03:20 So it’s giving you higher degrees of assurance
02:03:23 that your settlement or your trade has occurred
02:03:26 with finality, whereas other blockchains
02:03:28 are much more vulnerable.
02:03:31 And again, with Bitcoin, the evolutionary path of money
02:03:35 with gold is that it was first used as a collectible.
02:03:40 It then became used as a store value.
02:03:43 After it had stored enough value,
02:03:44 it began to be used as a medium of exchange.
02:03:48 And then finally, when it was used widely enough
02:03:50 as a medium of exchange, it becomes a unit of account.
02:03:52 We actually start to think in the money.
02:03:54 Bitcoin’s following a similar path.
02:03:56 So started out as kind of a collectible.
02:04:00 Today, I would argue it’s a store value,
02:04:02 one of the most effective store value we’ve ever seen.
02:04:05 So that evolutionary path that Bitcoin’s following
02:04:08 is similar to gold.
02:04:10 First a collectible, today a store value.
02:04:12 To be an effective store value,
02:04:13 it has to optimize for supply cap.
02:04:18 That has to be the first,
02:04:19 and this is all Bitcoin really needs to do
02:04:22 to be successful by the way.
02:04:23 Exactly what it’s been doing for 12 years,
02:04:25 virtually flawlessly,
02:04:27 which is keep creating a block every 10 minutes
02:04:30 and keep enforcing a supply cap of 21 million.
02:04:34 As long as those two things hold,
02:04:36 it is sound money, the ultimate sound money,
02:04:40 the most inflation resistant money there’s ever been.
02:04:44 It’s actually completely immune.
02:04:47 It’s taken unexpected inflation to 0%.
02:04:50 We know with perfect certainty
02:04:51 what Bitcoin supply will ever be.
02:04:53 For it to be used more broadly as a medium of exchange,
02:04:59 it can’t make trade offs at the base layer
02:05:02 to increase its portability for instance.
02:05:05 Even though portability is maybe kind of a misnomer
02:05:07 because Bitcoin has extremely high portability,
02:05:10 just doesn’t have extremely high transaction throughput.
02:05:13 So we could say you can move it pretty quickly
02:05:16 anywhere in the world
02:05:17 as long as you’re willing to bid up for the block space,
02:05:20 but you can’t satisfy all the world’s economic volume.
02:05:24 You can’t do 300 million transactions per second
02:05:27 like you can on a centralized database like Visa.
02:05:30 But Bitcoin needs to be this,
02:05:34 it has to be a store value first
02:05:36 before it can be a medium of exchange.
02:05:38 So it has to protect the supply cap first
02:05:42 before making any trade offs for that.
02:05:44 And I would argue that that’s why Bitcoin is so rigid,
02:05:48 is that it’s optimized for survivability
02:05:50 and optimized for that supply cap.
02:05:51 And it’s pushing experimentation and other features
02:05:56 that would increase its transaction throughput
02:05:57 to higher layers.
02:05:59 So I think Lightning Network
02:06:01 is something that’s very interesting.
02:06:03 It’s still early,
02:06:05 but there’s a lot of throughput already being used
02:06:08 on the Lightning Network.
02:06:10 And it makes some slight trade offs
02:06:14 in terms of the trust minimization of Bitcoin.
02:06:16 You end up trusting these smart contracts
02:06:18 instead of move the Bitcoin,
02:06:19 but you pick up nearly unlimited transaction throughput.
02:06:22 So that’s how, and that’s how biology evolves.
02:06:25 That’s how the internet evolved.
02:06:26 It evolves in layers.
02:06:27 So I think Bitcoin,
02:06:29 you can sort of conceive of it
02:06:31 as the latest layer to the internet.
02:06:33 And it’s one that preserves this store value property
02:06:36 better than any asset we’ve ever had.
02:06:38 Let me ask sort of a critical question of,
02:06:41 if you’re wrong about your statements about Bitcoin,
02:06:46 and you find out years from now that you were wrong,
02:06:51 what would that look like?
02:06:54 What would be the things
02:06:55 that make you realize you were wrong?
02:06:57 Likely ideas or crazy out there ideas?
02:07:01 Do you think about this kind of stuff?
02:07:03 All the time.
02:07:04 Because you speak very confidently about Bitcoin.
02:07:08 And one of the things, let me put it this way.
02:07:11 I think certainty,
02:07:13 I feel like that’s like a stoic statement.
02:07:16 Certainty leads to ruin, something like that.
02:07:19 Like certainty, I think is an antithesis to progress often.
02:07:26 And especially in your writing,
02:07:28 but this is true for the Bitcoin community.
02:07:29 There’s a certainty about the Bitcoin.
02:07:34 And that makes me very skeptical,
02:07:36 no matter how good the ideas are.
02:07:38 Whenever things are good, this might be the Russian in me.
02:07:42 I think like, what are the ways this is gonna go wrong?
02:07:46 So what do you think are the ways this might go wrong
02:07:48 or you’re wrong in your conception of what Bitcoin is?
02:07:53 Yeah, so science evolves via negativa,
02:07:59 meaning that we’re not proving hypotheses
02:08:04 and that’s what becomes the body of science.
02:08:06 Science is whatever is left over as we disprove hypotheses.
02:08:12 Whatever we can empirically, through experimentation,
02:08:17 disprove, gets discarded.
02:08:19 And whatever remains, whatever theory remains,
02:08:23 it hasn’t been disproven, is science, effectively.
02:08:28 This process is similar to market actors zeroing in
02:08:33 on a store value, right?
02:08:35 They’re experimenting with different forms
02:08:37 of storing wealth across time.
02:08:41 Some do better than others
02:08:42 and eventually everyone ends up on the one that is best.
02:08:45 That’s what gold was.
02:08:47 In terms of understanding Bitcoin,
02:08:51 I look at it as a similar approach.
02:08:53 And that is the main question I’m asking myself
02:08:55 is how do you stop this thing?
02:08:57 How do you turn it off?
02:08:59 How do you end it?
02:09:00 If you’re a nation state, particularly,
02:09:02 who has the most to lose in this transition,
02:09:05 what is the attack vector by which they neutralize Bitcoin?
02:09:08 I mean, that is the $250 trillion question.
02:09:12 And I’ve spent five years thinking about this thing
02:09:16 very deeply.
02:09:17 I’ve read everything on monetary history.
02:09:19 I can get my hands on.
02:09:23 The general thought of how it is stopped,
02:09:27 and this is the snag point that a lot of people get to
02:09:31 in their explorations down the rabbit hole,
02:09:32 is they just say the government will never allow it.
02:09:35 And that becomes kind of their bottom.
02:09:36 It’s like, all right, Bitcoin’s interesting,
02:09:37 it’s superior money, blah, blah, blah,
02:09:39 but the government will never allow it.
02:09:40 And they say.
02:09:41 Was Ray Dalio, did he say that?
02:09:43 Dalio was currently stuck there, yeah.
02:09:45 So Ray Dalio said that Bitcoin seems to be too promising.
02:09:52 If it is in fact as promising as it looks,
02:09:56 governments are going to,
02:09:59 I don’t forget what the exact quote is,
02:10:00 but not allowed.
02:10:02 Ban it.
02:10:03 Governments will ban it.
02:10:05 So how do you get Ray Dalio unstuck from your perspective?
02:10:09 Well.
02:10:10 And how do you get unstuck from that idea
02:10:12 that governments, will governments,
02:10:14 how do you prevent governments from stopping a thing
02:10:18 that threatens centralized power?
02:10:22 Well, Bitcoin is an idea.
02:10:26 So governments that are really good
02:10:30 at fighting centralized threats to their power, right?
02:10:35 Whether that’s a currency counterfeiter
02:10:36 or competing nation state or business they don’t like,
02:10:40 or an individual they don’t like,
02:10:42 you know, they can kill them, they can throw them in jail.
02:10:44 They can use any number of course
02:10:46 of a violent tactics to suppress it.
02:10:49 But how do you point a gun at an idea?
02:10:52 How do you coerce an idea?
02:10:56 And that’s, you know, there’s some anecdotal history here
02:11:03 where there’s the PGP case, which in the United States,
02:11:09 the court was trying to classify it as munitions.
02:11:12 When we were shipping this
02:11:13 pretty good privacy software overseas,
02:11:17 government wanted to classify it as munitions
02:11:19 and restrict that exportation.
02:11:22 But, and this was a circuit court case precedent.
02:11:25 When the PGP attorneys actually printed out the source code
02:11:30 on paper and presented it as evidence in the court,
02:11:33 all of a sudden it became protected under freedom of speech
02:11:36 and that it’s just code is speech, code is language.
02:11:40 And therefore, at least in the United States,
02:11:43 it’s protected under the first amendment.
02:11:47 I think a government ban would be largely unenforceable,
02:11:52 frankly, on Bitcoin.
02:11:54 Being that it’s pure information,
02:11:56 if you suppress market actors
02:12:00 from using it in one jurisdiction,
02:12:02 you’re just creating incentives for them to go elsewhere.
02:12:05 And you’re actually increasing the incentive
02:12:07 for other jurisdictions to be favorable towards it
02:12:11 because then they can create,
02:12:12 they get to benefit from the tax revenue
02:12:14 and the businesses and the innovation
02:12:16 that’s occurring in and around Bitcoin as a result.
02:12:19 So you don’t think if a particular central bank,
02:12:21 like in Europe or United States,
02:12:25 bans it, not maybe using those terms,
02:12:28 but in some kind of way,
02:12:30 you think that provides a really strong incentive
02:12:32 for the other big players to enable it.
02:12:36 That’s right.
02:12:38 And that they’re more likely, by the way,
02:12:40 and governments know this, by the way, too.
02:12:42 The other thing that causes a government
02:12:46 to shoot itself in the foot is that if they ban something,
02:12:48 they draw a lot of attention to it.
02:12:50 People are smart.
02:12:51 I mean, people ask why, why would a government ban it?
02:12:53 Why can’t I use this?
02:12:55 So that’s kind of typically be the last arrow
02:12:57 in their quiver.
02:12:59 They may try to ban it if Bitcoin
02:13:02 really starts to monetize very quickly.
02:13:04 And the power structures that they impose today
02:13:06 start to dissolve faster than others might think they will,
02:13:12 then they might try and ban it.
02:13:13 But I think that ban will be largely unenforceable.
02:13:17 They’re more likely to tax it,
02:13:19 which they already do tax it.
02:13:21 They’re likely to increase taxation of it.
02:13:25 They’re likely to try and make it more white market
02:13:28 by actually tracing Bitcoin, seeing who has it,
02:13:32 attaching identities to Bitcoin ownership,
02:13:36 and making sure that they’re getting their pound of flesh
02:13:38 on all the transactions it results in.
02:13:41 But I don’t think, the other thing about this is,
02:13:45 so we saw the internet outcompete intranets,
02:13:53 in that we’d say that open source networks
02:13:55 tend to outcompete closed source networks.
02:13:57 And there’s a really good reason for this.
02:13:59 And it’s because in a closed source network,
02:14:03 there are costs associated with defending the network itself.
02:14:08 So you have to, the network owners,
02:14:12 the owners of the closed source network
02:14:13 have to expend resources protecting it from competitors.
02:14:17 And they have to expend resources imposing its rules
02:14:21 because they’re not voluntarily adopted rules.
02:14:23 So you actually have to impose these rule sets.
02:14:25 Whereas an open source network,
02:14:26 which is something much more akin to capitalism
02:14:29 in its pure sense, these are voluntarily adopted rules.
02:14:33 So all market participants have agreed
02:14:34 and consented to this rule set.
02:14:36 So there’s no enforcement costs
02:14:38 and there’s no turf protection
02:14:39 because anyone can freely enter or exit the open network.
02:14:43 For that energetic reason,
02:14:45 I think open networks outcompete close networks typically.
02:14:50 And in the digital age, that’s why I think open,
02:14:53 that’s why internet outcompetes intranet
02:14:55 and that’s why open source networks
02:14:57 are gonna eat closed source networks.
02:14:58 So what Bitcoin would be in that lens
02:15:01 is the ultimate open source monetary network
02:15:04 devouring closed source central bank monetary networks.
02:15:08 And I just don’t see how there’s no possibility
02:15:14 of unilaterally stopping Bitcoin or destroying it.
02:15:17 So then they’re more likely to regulate or tax it.
02:15:23 And again, the other fallacy here
02:15:25 is that a lot of people tend to think of governments
02:15:26 as these singular indivisible entities,
02:15:30 like they just move under one plan.
02:15:32 But in reality, it’s a lot of people, right?
02:15:34 A lot of people with loosely coupled interests
02:15:36 and agendas and whatnot, regulators and others
02:15:43 whether wearing their citizen hat,
02:15:45 they’re gonna see this thing monetizing,
02:15:47 they’re gonna be on the front lines
02:15:48 of trying to regulate it, trying to control it.
02:15:52 And I think what’s likely to happen
02:15:53 is they’re gonna start to adopt it,
02:15:55 to buy some of it even as an individual
02:15:59 or possibly even ultimately at a central bank
02:16:02 or sovereign wealth fund level,
02:16:03 as an insurance policy against its success.
02:16:07 And once you start to acquire something
02:16:09 and then you have a vested economic interest
02:16:12 in its monetization,
02:16:14 I think it kind of dissolves any of the power structures
02:16:17 that are arrayed against it from the inside.
02:16:20 So I’ve written a lot about this
02:16:22 in a new series called Sovereignism,
02:16:24 which is based loosely on a book
02:16:26 called The Sovereign Individual.
02:16:28 And that’s the general thesis
02:16:30 is that microprocessing technology would devour
02:16:34 our organizational models,
02:16:35 the most important of which is the nation state.
02:16:38 So I think we’re going into this world
02:16:39 where coercion and violence is just much less rewarding.
02:16:47 The economics of violence are declining
02:16:50 because of the low cost of protecting property, right?
02:16:54 You can now protect your monetary property in Bitcoin
02:16:59 at orders of magnitude less cost
02:17:01 than is necessary to run a banking network.
02:17:04 So it changes the way we organize ourselves.
02:17:09 And again, zooming back to gold
02:17:12 as kind of the original governor to governments,
02:17:14 where if they manipulated the money,
02:17:16 gold would leave their country.
02:17:18 That’s why governments have taken relatively concerted action
02:17:23 to go off of the gold standard.
02:17:25 There’s a great book on this called The Gold Wars
02:17:27 that outlines how governments have been waging
02:17:32 a cold war against gold for the past 50 years.
02:17:35 Bitcoin sort of renews hope
02:17:39 for that free market governor of governments.
02:17:41 And that is this digital gold
02:17:42 that governments cannot stop or coopt.
02:17:45 So I think it’s something,
02:17:47 that’s why I think it’s such a big deal
02:17:49 is that it is changing,
02:17:54 it’s a new useful fiction, you might say.
02:17:56 A useful fiction that’s superordinate
02:17:58 to the mythology of the nation state and government
02:18:02 as the dominant institution in the world.
02:18:04 Well, I hope you’re right
02:18:05 that all forms of centralized power
02:18:10 start breaking apart naturally.
02:18:12 So governments, the more and more power
02:18:14 is given to the individual, whatever the technology is.
02:18:18 And Bitcoin seems to be a promising technology
02:18:20 that empowers that, enables that.
02:18:22 That seems to be the trend.
02:18:24 And that’s a promising trend
02:18:26 at least from a perspective of somebody
02:18:29 who values this particular biological meat bag
02:18:33 that’s full of consciousness.
02:18:34 I think Bitcoin is exposing the greatest scam
02:18:37 in human history, which is political authority.
02:18:40 Like who gives anyone the right to be politically,
02:18:43 have political authority over anyone else?
02:18:46 People should be free to adopt the rules
02:18:49 and systems and tools that best suit their needs.
02:18:52 And that arc of history we covered earlier
02:18:56 where as socioeconomic systems have become more favorable
02:19:01 towards individual sovereignty,
02:19:03 the more wealthy we have become,
02:19:06 the more we have given the individual,
02:19:07 we’ve maximized individual choice,
02:19:10 the more wealth that society has created
02:19:12 and the more it has out competed
02:19:14 the systems that have come before it.
02:19:15 The latest would be capitalism triumphing over socialism.
02:19:21 Before maybe we eat, you are in Texas,
02:19:23 you brought over some brisket.
02:19:25 Before we may be indulge in that,
02:19:28 let me bring up one quick topic
02:19:30 and then we’ll take a break.
02:19:31 And the topic of what some may term
02:19:35 the toxicity of the Bitcoin community.
02:19:40 You’ve written that Bitcoin toxicity is tough love.
02:19:44 Do you wanna break that apart a little bit
02:19:46 sort of the idea, the philosophy of the toxicity
02:19:51 that seems to be present in part in the Bitcoin community?
02:19:58 Yeah, we were talking about this a little bit
02:20:01 before we recorded and I’ve been through the gauntlet
02:20:04 with Bitcoin toxicity as well.
02:20:07 I came into this space professionally in 2017.
02:20:12 I was originally running a multi strategy
02:20:15 crypto asset hedge fund.
02:20:17 And my initial investment thesis on the world
02:20:21 was that Bitcoin was a big deal,
02:20:23 but there were all these other exciting coins
02:20:25 and projects and ways the technology was going to be used.
02:20:28 And that view of reality met this immune,
02:20:35 I guess you could say as an ideological immune system,
02:20:37 this Bitcoin toxicity and that it’s kind of a filter
02:20:40 that’s trying to catch bad or useless
02:20:45 or even scamming ideas that this space is very well known for.
02:20:52 As we’ve touched on today, Bitcoin, in my opinion,
02:20:55 is this world shattering innovation,
02:20:57 but it’s in a sea of the most scammy stuff ever, right?
02:21:01 People, anybody can go and create a coin.
02:21:05 So you can go and launch one immediately online
02:21:09 and you can throw up a website, an advisor page,
02:21:14 post a white paper talking about
02:21:15 how great your technology is gonna be
02:21:16 and how it’s gonna change the world.
02:21:17 And then you can raise $30 million in Bitcoin
02:21:20 or Ethereum in 30 seconds kind of thing.
02:21:22 So it’s drawn in a lot of this scam artistry, you might say.
02:21:27 And I think people living through that,
02:21:31 because there is this natural predilection for people
02:21:33 when they first come into Bitcoin, you’re excited about it,
02:21:35 then you get lost in the shit coin universe.
02:21:39 And then just looking at the market success
02:21:43 of Bitcoin versus, and when I use the word shit coin,
02:21:46 I’m just.
02:21:47 You say with all the love in the world.
02:21:49 All the love in the world.
02:21:50 I guess you could call me a toxic maximalist in some ways,
02:21:53 although I consider myself a freedom maximalist,
02:21:55 not a Bitcoin maximalist.
02:21:56 Yeah, I saw that line, that’s a good line.
02:21:59 Bitcoin, tracking the market success of Bitcoin
02:22:03 versus alternative crypto assets,
02:22:06 the signal is very clear
02:22:07 that Bitcoin has out competed all of them.
02:22:09 So I think that Bitcoin cultural toxicity has evolved
02:22:13 as an immune response to those bad ideas,
02:22:15 which is actually, if you think about it,
02:22:17 kind of is a tough love, right?
02:22:19 You don’t want new entrance to the space
02:22:21 to get lost in shit coin jungle and learn the hard way,
02:22:26 the way many Bitcoin maximalists have
02:22:28 that the real innovation is Bitcoin.
02:22:31 But like an immune system, I think it can also go too far.
02:22:36 And so I think it’s useful when it is defending the space
02:22:40 from false narratives, we might say,
02:22:43 but it becomes detrimental when it’s attacking people
02:22:48 that are inquiring about Bitcoin
02:22:50 or people that are approaching Bitcoin
02:22:52 with a good spirit and good intention
02:22:54 and a desire to learn.
02:22:57 Because then at that point,
02:22:58 it’s actually impeding the free flow of ideas,
02:23:01 which the example in your clip
02:23:04 that was totally taken out of context.
02:23:06 And then you’re literally just saying,
02:23:07 I’m here to learn and contribute.
02:23:09 I think I’ve got some stuff to do.
02:23:10 And then people attack that.
02:23:11 Like that doesn’t make any fucking sense.
02:23:13 It’s like you’re attacking someone who’s approaching it
02:23:16 in a good spirit and asking questions.
02:23:18 Yeah, and I think sometimes talking about it,
02:23:22 the toxicity in the Bitcoin community as an immune response
02:23:26 has a negative effect of giving it a pass
02:23:30 because like it almost says,
02:23:32 look, it equates it with the human immune system,
02:23:35 which seems to do a really good job.
02:23:38 And so you could say that the toxicity has a lot of features
02:23:42 in the sea of fraudulent projects
02:23:47 that steal money from people.
02:23:52 It’s really useful to make sure
02:23:53 that you give people the harsh truth
02:23:56 about who is and isn’t a scammer.
02:24:00 You have to take it apart,
02:24:02 take it away from that metaphor of the immune system
02:24:04 and look at basic human nature.
02:24:06 And human nature can go to some dark places,
02:24:09 which is it’s sad to say that some people,
02:24:15 maybe many of us can enjoy for its own sake, the toxicity,
02:24:21 the mockery, the derision,
02:24:23 and you stop being part of the immune system
02:24:27 that makes a successful idea propagate
02:24:31 and start being a sort of a destructive virus yourself.
02:24:35 And that’s something I think about
02:24:37 because I am new to this particular immune system,
02:24:43 but I’ve explored other immune systems.
02:24:45 And I think you understand this world much better than me,
02:24:54 but I tend to prefer sort of love
02:24:57 as a mechanism for spreading ideas,
02:25:00 to err on the side of love and kindness
02:25:06 and almost like an open mindedness
02:25:09 in a way where you’re constantly lowering yourself
02:25:13 in the face of other ideas, constantly questioning yourself.
02:25:17 But I think I understand that that might be more applicable
02:25:24 in certain contexts,
02:25:25 like maybe in the space of science or something like that.
02:25:28 But in the space of Bitcoin, as it currently stands,
02:25:31 there’s so many people that are trying to scam others
02:25:33 out of their money
02:25:35 that the kind of harshness required is different.
02:25:39 Nevertheless, I do want to put it on people like yourself
02:25:45 and others who I know you wouldn’t consider yourself this,
02:25:48 but you’re one of the faces or leaders in this space
02:25:51 to call people out a little bit,
02:25:53 to inspire them to be more loving, I suppose.
02:25:57 But it’s difficult,
02:25:58 because you want to walk that line carefully.
02:26:00 You don’t want to be too loving and open minded,
02:26:03 otherwise your brain falls out.
02:26:04 I get it, it’s a difficult balance to walk.
02:26:06 It is subtle and it’s nuanced and it is difficult to walk.
02:26:11 And I think that, that’s why I try to say tough love,
02:26:14 because when we’re young, we may have certain ideas
02:26:19 about the way we want our life to go,
02:26:21 but then maybe our parents
02:26:22 are not letting us do certain things.
02:26:25 And we think they’re, I know when I was a kid,
02:26:27 I wanted to get my, when I was in fifth grade,
02:26:28 I wanted to get my ear pierced.
02:26:30 My mom wouldn’t let me do it.
02:26:31 And I was, oh, come on, mom, I thought it was so cool.
02:26:34 And then two years later, I’m like, thank you, mom,
02:26:36 for letting me get my ear pierced.
02:26:39 I think it comes from a place of good intention
02:26:41 that they are actually,
02:26:44 they have asked themselves that question, right?
02:26:46 That they’ve been inquiring
02:26:48 in why not this crypto asset or this crypto asset?
02:26:51 And they’ve done the exploration,
02:26:53 they keep coming back to Bitcoin
02:26:54 and they’ve seen people being taken advantage of.
02:26:59 But to your point, it’s like it can,
02:27:03 this tough love can become detrimental,
02:27:06 just like the immune system can become detrimental, right?
02:27:08 It can overreact and it can actually harm the human body.
02:27:12 So I would say that it’s such a tricky and nuanced topic
02:27:16 that even biology hasn’t figured it out, right?
02:27:18 A lot of people have autoimmune diseases.
02:27:21 And then there’s the other thing
02:27:22 that we have this natural, I agree with you about love.
02:27:25 I think love is like the deepest value.
02:27:28 That’s a whole nother philosophical thing,
02:27:30 but we’re biologically programmed to pay more attention
02:27:36 to things that are adversarial or harmful, right?
02:27:38 That’s part of us protecting the meat suit, so to speak.
02:27:42 So there is some maybe better delivery method
02:27:48 by being a little bit toxic to really get the point across,
02:27:50 like, hey, don’t get lost over here.
02:27:53 These things can hurt you.
02:27:55 Really try to focus on Bitcoin.
02:27:57 But the toxicity of that message,
02:27:59 I guess it increases its ability
02:28:01 to penetrate the individual, but it can also go too far.
02:28:04 So it is very…
02:28:05 It’s interesting, but I almost to push back a little bit,
02:28:08 toxicity is a funny word.
02:28:11 I think maybe another way to say it is,
02:28:15 I brought up like Christopher Hitchens
02:28:17 and somebody who like, okay,
02:28:20 you might say he’s toxic or something like that,
02:28:23 because he’s basically a intellectual powerhouse
02:28:27 who’s also a troll.
02:28:28 So he’s constantly, it’s like guerrilla warfare
02:28:31 in the space of ideas.
02:28:33 He’s very harsh in his disagreements and criticisms,
02:28:37 but he’s done with incredible grace and skill and poetry.
02:28:42 So…
02:28:43 We could use more of that.
02:28:44 We could use more of that.
02:28:45 So toxicity just like…
02:28:52 These are just words.
02:28:53 They can mean a lot of different things,
02:28:55 but disagreement doesn’t have to be done with love,
02:28:59 but it should be done with skill if it’s to be effective.
02:29:04 So there’s a lot of ways to be effective in guerrilla warfare,
02:29:08 but you wanna learn how to shoot
02:29:10 or whatever the weapon you’re using and to do it well.
02:29:12 Some people do it better than others.
02:29:14 And it’s worthwhile to learn to do it well.
02:29:17 Again, I prefer love, but even love,
02:29:21 just because you think you’re communicating a good idea,
02:29:25 which you very well may be,
02:29:26 doesn’t mean it also doesn’t require skill
02:29:28 to do the communication well,
02:29:30 whether it’s disagreement and harsh
02:29:33 or more agreement and loving and so on.
02:29:36 Yeah, I think very fundamentally that all of our decisions,
02:29:41 we alluded to earlier that every decision
02:29:44 is an expression of value, every action we take,
02:29:47 they ultimately come from fear or love.
02:29:49 Fear would be something much more in the biological domain
02:29:53 where it’s like, we’re trying to protect ego,
02:29:56 we’re trying to behave selfishly.
02:29:58 This is the domain of sin.
02:30:01 I don’t know all the sins, gluttony, greed, sloth, wrath,
02:30:03 lust, pride, envy, these are all selfish behaviors.
02:30:07 Whereas something like love,
02:30:09 it’s morally superior in that it’s more selfless.
02:30:14 I don’t know that we can properly
02:30:15 define love with words at all,
02:30:17 but I would say maybe like selfless action
02:30:19 could be kind of a generalization of it.
02:30:22 And that way, it is really hard to your point.
02:30:25 It’s hard to love in a world that has a lot of conflict
02:30:32 that might make you fearful
02:30:34 if you’re really focused on your meat suit.
02:30:36 But if you’re focused on the bigger picture
02:30:37 and you’re focused on others and legacy and life,
02:30:40 that there is a way to do it.
02:30:43 And that’s why I actually think Christ,
02:30:44 that is the highest moral aim, right?
02:30:46 He met all of the vitriol in life,
02:30:50 betrayal, hate, violence,
02:30:52 he met it all with love and he met it with compassion.
02:30:55 And that’s why, regardless of if you believe
02:30:58 that he actually lived or any of this,
02:31:00 he is symbolic of the highest moral consciousness possible.
02:31:05 And Carl Jung would say that that was a suitable
02:31:09 alternative to psychoanalysis,
02:31:12 was actually setting your moral aim higher
02:31:14 and striving towards it diligently.
02:31:16 So, I mean, I agree completely.
02:31:20 We need more of that in the Bitcoin space.
02:31:22 We need more of that in the world, frankly.
02:31:24 In the world, yeah.
02:31:24 And these things, they’re all intertwined.
02:31:28 We touched on the beginning, all of us get to decide,
02:31:32 but the world does influence what we do.
02:31:34 It does influence kind of if we adopt fear or love,
02:31:39 but it takes, I don’t know, it takes good systems
02:31:42 and it takes, I guess, good leaders to set an example.
02:31:45 Yeah, I do believe that there’s like individual people
02:31:48 can have a ripple effect.
02:31:50 So that’s what I try to do, sort of embody the,
02:31:53 I’m just one ant.
02:31:55 But one of the things I have faith in is,
02:31:59 I’m trying to do that more.
02:32:02 I know this is a podcast,
02:32:04 but I’m trying to do less talking and more doing.
02:32:10 I’ve been disappointed in myself, if I’m being honest,
02:32:13 how much talking I’ve been doing,
02:32:15 as opposed to, like in my own private life,
02:32:20 I live the thing I talk about,
02:32:22 but I also haven’t created much.
02:32:26 And I believe in the power of individuals that create stuff,
02:32:30 like create an idea through those individuals
02:32:33 that try to create something new, the world progresses.
02:32:35 And hopefully there’s more and more,
02:32:37 more and more of those people.
02:32:39 So you mentioned kind of people who,
02:32:42 what the Bitcoin community might call scammers.
02:32:48 I have a lot of passions in my life
02:32:50 that I focus a lot of my attention to.
02:32:54 Bitcoin doesn’t happen to be yet one of them.
02:32:59 Bitcoin and cryptocurrency, you know.
02:33:01 I’m always looking for things to really fall in love with.
02:33:08 So how is a person like me supposed to figure out,
02:33:13 I also happen to have a platform a little bit,
02:33:16 and how am I supposed to figure out who is interesting,
02:33:21 what is an interesting set of ideas and what are not?
02:33:25 Because people are financially tied into
02:33:27 a lot of the cryptocurrencies that we’re talking about,
02:33:29 certainly with Bitcoin, you know, their livelihood,
02:33:33 their wellbeing is tied up to it.
02:33:35 So it becomes much more emotional, much more personal.
02:33:37 It’s no longer purely an exploration of ideas.
02:33:41 It’s really almost like a threat on your property.
02:33:44 Like it’s a personal threat
02:33:45 and it makes it very difficult to explore those ideas.
02:33:47 So I understand that, but it makes it very difficult
02:33:50 for somebody like me to just walk in and be curious.
02:33:55 So how do I proceed in this difficult world
02:33:59 in exploring this landscape
02:34:02 and not give a platform to ideas that may harm others?
02:34:10 I guess first I’d like to commend your forthrightness
02:34:14 about this, because I don’t think many people
02:34:17 try to walk that line necessarily.
02:34:18 People, again, kind of the territorial imperative,
02:34:22 they’ll put whoever on, they’ll help expand their reach.
02:34:25 Oh yeah, that’s true.
02:34:27 Or say whatever needs to be said to expand their reach.
02:34:29 So I think you’re coming from a good place.
02:34:31 I’ll say that.
02:34:33 There’s a great piece written
02:34:36 on the topic of scammers and scamming.
02:34:38 I think it was by Goldstein.
02:34:40 He wrote a piece called, Everyone’s a Scammer.
02:34:42 And it’s sort of back to this general human proclivity
02:34:46 to try and get something for nothing always,
02:34:48 which again, it can be positive,
02:34:50 it can be innovative, or it can be a negative.
02:34:52 You can be trying to steal from people.
02:34:57 That might be, I think that’s a useful piece
02:34:59 just to kind of see the crypto world through that lens.
02:35:03 And that’s how Bitcoiners are thinking all the time.
02:35:06 They are by nature adversarial thinkers.
02:35:08 So they’re trying to minimize the need for trust
02:35:11 in any situation and maximize verification.
02:35:14 As far as sifting through the ideas,
02:35:18 I guess this is back where the cultural immune system
02:35:23 has some utility.
02:35:25 Because there were times when I thought
02:35:28 this particular crypto asset,
02:35:30 Augur was one I was really into,
02:35:32 that it could facilitate prediction markets
02:35:34 and prediction markets could make markets more efficient,
02:35:38 et cetera, et cetera.
02:35:39 But when that investment does get to the point
02:35:43 when that investment thesis basically met
02:35:45 the cultural filter or immune system,
02:35:49 it forced me to reevaluate my position,
02:35:51 forced me to really look into it more deeply.
02:35:54 And through that exploration,
02:35:55 I realized that it would need to be built on Bitcoin
02:35:58 to work basically.
02:35:59 So it really comes down to like you doing your homework,
02:36:03 but we can’t all deeply evaluate every idea out there.
02:36:08 One of the things I struggle with was Alex Jones,
02:36:11 for example, had dinner with him.
02:36:16 I could tell that will be a very fun conversation,
02:36:19 but like then I also understand that there’s
02:36:24 like consequences to that conversation
02:36:27 that should be explored with care.
02:36:30 And so you need to take on the responsibility
02:36:34 of being a chef with the puffer fish
02:36:35 and all those kinds of things.
02:36:37 That said, just like you said,
02:36:39 it’s very difficult to know this ahead of time
02:36:43 and I will probably make mistakes.
02:36:46 And that’s a shitty thing to have to live with
02:36:49 that I’m going to make mistakes
02:36:51 and some of them very large.
02:36:52 Like, yeah, I mean, I can imagine a bunch of different ways,
02:36:57 but all we can do in this world
02:36:59 is once we make the mistakes,
02:37:00 we acknowledge those mistakes and learn.
02:37:04 And also, I have to put this on the rest of us
02:37:09 that you don’t take one thing that a person did
02:37:15 and then burn them at the stake for it.
02:37:17 That you realize that we all make mistakes,
02:37:20 that a particular mistake does not make the person.
02:37:23 And this applies to taking stuff out of context
02:37:27 over hundreds of hours of talking,
02:37:30 but it applies to actual, in context, big mistake.
02:37:37 So what if I murdered somebody at some point?
02:37:39 Just give me a break.
02:37:40 No, there are some things that are too far, of course,
02:37:42 but in general, we need to give each other a chance.
02:37:47 Yeah, but I’m still,
02:37:50 I walk with a heavy heart
02:37:51 knowing that I’ll probably make a mistake,
02:37:54 especially one that I didn’t mean to.
02:37:56 That’s the one that worries me most.
02:37:58 This is human nature, like hamartia, to miss the mark.
02:38:03 That’s the root word of sin.
02:38:05 We are sinful by nature.
02:38:07 We can’t help it.
02:38:08 There’s no way, again, pain is information, right?
02:38:11 There’s no way to learn other than trying, failing,
02:38:15 learning, and then you put yourself in better formation,
02:38:19 right, in formation to better deal with it next time.
02:38:22 So I hope, I don’t get the sense
02:38:26 that you’re actually afraid of making a misstep.
02:38:30 I think you’re just maybe disappointed’s a better word.
02:38:35 You know you’re gonna make the mistakes.
02:38:36 Yeah, that’s exactly, that’s a much, much better word.
02:38:39 But we have to embrace that.
02:38:41 That’s the only way anything,
02:38:42 that’s the only way we can advance,
02:38:43 is that we’re dealing with an incomprehensible reality.
02:38:46 All we can do is throw spaghetti at the wall
02:38:48 and see what sticks.
02:38:50 And in that process, we’re all inherently gonna hurt
02:38:53 ourselves and hurt others,
02:38:54 and that’s where love and forgiveness come into play, right?
02:38:57 And yeah, I think the other thing is that this culture
02:39:02 of reducing people down to a label, right,
02:39:05 whether it’s racism or whether you’re calling them a scammer
02:39:07 or any number of terms,
02:39:11 you’re discounting their sovereignty to zero, right?
02:39:14 You’re taking a super complex human that is vast,
02:39:18 contains multitudes, is changing over time,
02:39:21 and you’re trying to put them in a bucket of a word.
02:39:25 And that is just, I think, a cognitive fallacy.
02:39:28 Like, it’s not only gonna hurt the person
02:39:30 that you’re winnowing down to a word,
02:39:32 it’s also gonna hurt you.
02:39:34 And it’s gonna, in your attempt to decomplexify reality
02:39:38 by assigning this person to a term,
02:39:40 you’re actually gonna create bad outcomes for yourself.
02:39:42 Because you’re not gonna understand that person.
02:39:45 I do also think there’s a failure
02:39:46 of our social media technology that incentivizes
02:39:50 that kind of reduction to a label.
02:39:53 It’s just the viral nature of that reduction.
02:39:56 So not only do we humans naturally do that,
02:40:01 our social media platforms make that easier, more fun,
02:40:07 more effective to do that at scale, the mass hysteria.
02:40:11 So I think there’s actually technological ways
02:40:15 of adding friction to that.
02:40:18 Yeah, I wonder, I mean, I agree with you that it’s,
02:40:21 social media is an amplifier to our natural,
02:40:24 this natural way of dealing with one another.
02:40:27 But I wonder, and my thinking has evolved a lot on this,
02:40:30 that there’s something below
02:40:32 the way we’re treating each other too, right?
02:40:35 We could say civilization sort of advances
02:40:37 in the tools we make and the way we treat each other.
02:40:40 We tend to have better tools, better quality of life,
02:40:42 and better morality, better quality of living,
02:40:46 and ways of dealing with one another.
02:40:49 And I think that when you corrupt the money,
02:40:53 that it really does push us the negative direction,
02:40:56 pushes us away from, again, encouraging,
02:41:02 or magnifying scarcity artificially
02:41:05 causes us to be more divisive.
02:41:07 When things are more divisive,
02:41:08 we tend to be less civilized, less nuanced,
02:41:11 more black or white, or this or that,
02:41:14 or you’re this, or you’re label A or label B.
02:41:17 So I really think, and this is a harder one to unravel,
02:41:20 but I think if we can fix the money, right,
02:41:24 which again is the base layer operating system
02:41:26 for human moral action in the world,
02:41:30 that it has downstream effects.
02:41:32 So we’d actually maybe start to treat each other
02:41:34 a little better on social media,
02:41:36 despite the fact that it enables this faster communication.
02:41:41 That’s interesting, so perhaps fixing social media
02:41:44 as I’ve been thinking about is treating the symptom,
02:41:48 not the cause.
02:41:49 Yeah, that is the Bitcoin rabbit hole in a nutshell,
02:41:52 is that they say fix the money, fix the world.
02:41:54 You keep tracing these different social malaises
02:41:58 or technological difficulties, lack of innovation.
02:42:03 Weinstein’s entire Portal podcast,
02:42:06 something went wrong in the early 70s.
02:42:08 We went off the gold standard in 1971,
02:42:11 and there’s a great website, wtfhappat1971.com,
02:42:15 goes through this whole gamut of socioeconomic data
02:42:18 that’s completely gone askew since the early 70s.
02:42:22 Yeah, you had this whole video,
02:42:24 what do you think about Eric Weinstein and Bitcoin
02:42:29 and the gold standard?
02:42:31 Does he, I actually haven’t heard him talk about his thesis
02:42:35 about the 70s in connection to the,
02:42:39 going off of the gold standard.
02:42:42 Yeah, what are your thoughts there?
02:42:43 What are your thoughts about his general relationship
02:42:46 with the Bitcoin idea and the community?
02:42:49 Yeah, the first exposure I had to Eric was his,
02:42:52 I think it was his first episode with Peter Thiel,
02:42:55 and they’re going through that thesis
02:42:57 that there’s been this general institutional rot
02:43:00 and suppression of innovation since the early 70s,
02:43:03 and he’s trying to identify what it is.
02:43:05 I don’t think they ever pended on the money
02:43:09 on going off the gold standard,
02:43:11 but in recent interactions with Eric,
02:43:14 I’ve interacted with him on Clubhouse.
02:43:17 We recently released an episode of the show
02:43:19 I did with Chris Espley,
02:43:22 and it was titled Dear Eric Weinstein.
02:43:24 So we’re going through his worldview
02:43:26 that he’s expressed in the portal
02:43:27 and tying it back to the money in different ways.
02:43:31 And he’s been, he’s engaged.
02:43:33 Eric retweeted the show.
02:43:35 We’ve exchanged some messages.
02:43:36 He’s been very open minded.
02:43:38 He’s asked some really good questions.
02:43:40 So I get the sense that he’s approaching
02:43:42 this very wholeheartedly.
02:43:45 He does bring with him his existing worldview
02:43:48 and his existing theory.
02:43:50 The one that really blew up was gauge theory.
02:43:52 They got really popular.
02:43:53 I don’t know a lot about gauge theory.
02:43:54 I actually messaged Eric and said,
02:43:56 I want to learn more genuinely,
02:43:58 because he seems to be serious
02:44:01 that that needs to be considered in the sphere of money.
02:44:03 And so I want to learn more about it.
02:44:06 But I think overall it’s great.
02:44:08 It’s great to see an intellectual heavyweight
02:44:10 of his caliber gravitating towards Bitcoin.
02:44:14 Yeah, he has some gauge theoretic conceptions
02:44:18 about the world broadly, but also about economics,
02:44:23 which ultimately boils down to just a set of mathematics,
02:44:27 which allows you to more effectively reason about the world.
02:44:30 And he has a certain set of views there.
02:44:33 So it’s fascinating to see him grapple with it.
02:44:37 I think he’s also kind of actually kind of like all of us,
02:44:42 grappling with the idea of what is Bitcoin in this world.
02:44:45 It’s a very young technology,
02:44:47 and it’s unclear exactly how the ideas of the past
02:44:52 fit with it and integrate, how the two integrate together.
02:44:57 And so it’s interesting to explore,
02:44:59 not just Bitcoin in the particular.
02:45:01 So for me, like what I’ve always saw Bitcoin as
02:45:06 from the beginning, from a narrow worldview
02:45:11 is computer science, which is where I come from.
02:45:14 And so I wasn’t almost aware
02:45:16 in the social, political, financial aspects of Bitcoin.
02:45:21 But now I see that there’s not just power,
02:45:26 but there’s fascinating ideas to explore on that side
02:45:29 of things, not just the computer science,
02:45:31 not just the technical details,
02:45:33 but the political, the socioeconomic, the philosophical.
02:45:39 That’s where I find all the fascination in the world,
02:45:43 frankly.
02:45:45 One other thing about Weinstein and intellectuals
02:45:49 more generally that are skeptical of Bitcoin,
02:45:52 I would challenge them to read the book,
02:45:54 Human Action, written by Mises.
02:45:57 I think in 1949, he published the English version.
02:46:01 It’s essentially the Bible of Austrian economics.
02:46:04 And I think Austrian economics is a noticeable gap
02:46:09 in most modern intellectuals worldviews,
02:46:13 that it’s not taught in school.
02:46:15 I mean, I have a master’s degree in accounting and finance,
02:46:17 studied a lot of economics in school.
02:46:19 There’s not one peep of Austrian econ.
02:46:21 The least we’d love talking about all the degrees he has.
02:46:26 I was a CPA.
02:46:27 But that curriculum that we get in college
02:46:35 is noticeably deficient in Austrian economics.
02:46:38 And I think there’s a reason why, right?
02:46:40 It’s heavily government influenced.
02:46:45 Again, master’s degree in accounting,
02:46:46 they never taught me about what money is
02:46:48 or where money comes from.
02:46:49 All you learn is that the central bank issues money
02:46:53 and the central bank takes money away.
02:46:55 So it’s conceived of in the textbooks
02:46:58 quite literally as God, right?
02:47:00 An entity that suffers no opportunity costs,
02:47:03 that basically is the foundation
02:47:06 of the entire Keynesian worldview
02:47:09 that you’re taught in economics.
02:47:10 And Austrian economics is the opposite
02:47:14 end of the spectrum of that, right?
02:47:16 It’s actually the culmination,
02:47:18 which economics is the youngest science in the world,
02:47:20 by the way.
02:47:21 So it is kind of the front,
02:47:24 it’s the frontiers of science in many ways,
02:47:27 like to actually, when I say praxeology,
02:47:29 many people have never even heard of that.
02:47:31 But it’s something, it’s an a priori study
02:47:35 equivalent to something like mathematics,
02:47:37 that you’re building things from first principles
02:47:39 to reason about economic reality.
02:47:42 And I think that book, it’s a very difficult book
02:47:46 written by Mises, 1200 pages, translated from German.
02:47:49 The way he wields English is fascinating
02:47:52 and terrifying all at the same time.
02:47:54 It’d probably take you six months to read it
02:47:56 if you read it daily, seriously.
02:47:58 Like it’s a beast of a book.
02:48:00 But that will plug the gap, I think in most,
02:48:04 any intellectual that’s skeptical about Bitcoin,
02:48:06 I think that will plug the gap that’s necessary
02:48:08 for you to see it in a new light.
02:48:10 Well, I’ll take that as a challenge.
02:48:12 Now that we took a little bit of a break,
02:48:14 ate some good Texas brisket, thank you for that,
02:48:16 by the way, for passing over.
02:48:17 Quite welcome.
02:48:18 Let me ask the ridiculous question.
02:48:21 At the core of the idea of Bitcoin,
02:48:24 is this guy or this entity named Satoshi Nakamoto?
02:48:28 So the ridiculous question is, who is Satoshi Nakamoto?
02:48:32 And first of all, is it you?
02:48:35 It’s not me.
02:48:37 I wish.
02:48:38 And is this an interesting question?
02:48:41 Or is it just something about our human nature
02:48:43 that wants to, that always tends towards mystery?
02:48:47 Well, as we’ve touched on a bit today,
02:48:51 you know, mythology, in my opinion,
02:48:53 is something that is intrinsic to how we see the world
02:48:57 in a lot of ways.
02:48:58 Like it’s how, it’s kind of the structure
02:49:02 by which we build these useful fictions.
02:49:05 And so in that way, you could just say that
02:49:08 Satoshi is the godhead of Bitcoin, effectively.
02:49:11 And I think a compelling argument could be made
02:49:15 that his disappearance is what really solidifies
02:49:18 Bitcoin’s decentralization.
02:49:20 Because if there were one individual to personally vilify
02:49:25 or denigrate or attack, you know, to disparage
02:49:30 or question the motives of, you know,
02:49:33 if he’s out on the Hollywood Hills partying,
02:49:37 everyone knows he’s got a million Bitcoin, you know,
02:49:40 it would just kind of tarnish the entire project
02:49:43 in a lot of ways.
02:49:44 But the fact that on that theme, something for nothing,
02:49:48 this guy actually gave humanity something for nothing.
02:49:51 And it appears that he didn’t profit in any way.
02:49:56 He, she, or they.
02:49:59 I actually heard recently that he identified as a he
02:50:01 in some of his communications.
02:50:03 So it sounds like it is a he.
02:50:04 So like his communication is being like studied,
02:50:11 like almost like exactly as if he is a religious.
02:50:14 That’s right.
02:50:15 Like a prophet.
02:50:18 It’s fascinating to imagine that he’s still alive
02:50:24 and living in this world.
02:50:27 And it’s even more fascinating to imagine
02:50:29 that he’s perhaps participating in the Bitcoin community
02:50:32 because I mean, that takes a special human being
02:50:36 to out of principle do that, to do, to remain anonymous.
02:50:41 That’s very much the George Washington.
02:50:43 Yeah, I always wonder like how many people are like that?
02:50:46 There’s a cliche that like absolute power corrupts,
02:50:48 absolutely, like power corrupts.
02:50:51 But it seems like the progress of humanity depends
02:50:55 on the people whom power doesn’t corrupt.
02:50:57 And it’s enough to have just a small selection of those.
02:51:04 And even if most of us are too weak, we give into power.
02:51:09 If given the chance, all it takes is a few.
02:51:14 That’s, I’ve never thought of it like that,
02:51:15 but Marcus Aurelius immediately came to mind.
02:51:18 You know, the guy that he had the keys to the kingdom
02:51:21 and he apparently adhered to the stoic virtues
02:51:26 until the end, but yeah, I agree with Satoshi.
02:51:30 The other thing that’s interesting is he would be by far
02:51:35 the most wealthy person in the world on a liquid asset basis
02:51:39 because he has a million Bitcoin,
02:51:42 which is 60 billion liquid net worth at current prices.
02:51:47 So if he is still alive and just operating in the world,
02:51:51 he is daily and moment to moment resisting massive
02:51:56 incentives to go and just be the richest guy in the world.
02:52:01 He’s the ultimate hodler.
02:52:02 Yeah.
02:52:03 Yeah.
02:52:05 I mean, so it’s, I mean, it’s turning down
02:52:07 not just financial success, but also fame.
02:52:12 I mean, fame is another drug.
02:52:14 It’s kind of power, but it’s in itself is also a drug,
02:52:17 especially in this modern society, in this attention.
02:52:20 And he would have both.
02:52:21 He would have both.
02:52:22 It’s fun to imagine who it could be.
02:52:25 It’s fascinating if it’s somebody like you
02:52:27 or somebody like Elon or somebody like that.
02:52:30 That’s fascinating to think about.
02:52:31 I think Elon would be hilarious if he came out
02:52:34 and he was Satoshi and be like,
02:52:36 hey guys, I know I’m already the richest guy in the world,
02:52:38 but I gotta go ahead and double my lead here.
02:52:42 What do you make of Elon Musk investing with Tesla,
02:52:46 investing in Bitcoin and maybe broaden it out
02:52:50 in some of these other, you know,
02:52:54 big billionaires, but also people tied to major companies
02:52:57 investing in Bitcoin?
02:52:59 Yeah, I think Michael Saylor really led the charge on that.
02:53:04 He’s the CEO of MicroStrategy
02:53:06 that I think they’ve acquired upwards
02:53:09 of $2 billion in Bitcoin now.
02:53:11 Started acquiring August, maybe of 2020.
02:53:15 And he’s, you know, personally bought a lot of it.
02:53:19 He bought a lot as a treasury reserve asset
02:53:22 for his company, MicroStrategy.
02:53:24 Then they leveraged up on a convertible note
02:53:27 and bought more.
02:53:28 So he’s really gone, really leading the charge
02:53:32 in this Bitcoin institutional adoption.
02:53:35 Your conversation with him is a really interesting one.
02:53:38 Your series of, I mean, series of episodes I suppose,
02:53:41 but it’s only a couple of conversations, I guess.
02:53:44 Yeah, we recorded twice, five and a half hours each.
02:53:48 So it’s about 11 hours of content.
02:53:50 Yeah, thank you.
02:53:50 A lot of people have said that it’s the best
02:53:55 first principle thing they’ve ever seen on Bitcoin,
02:53:57 which I take no credit for that at all.
02:53:59 I mean, I just sat down with a guy and unleashed him.
02:54:02 He’s just a beast.
02:54:04 Yeah, but it’s fascinating that his longterm vision with it.
02:54:11 I mean, I’m not sure I’m all philosophically bought in,
02:54:15 but if he’s right, if this set of ideas are as powerful
02:54:20 as he describes, as you described,
02:54:24 that this would change the world,
02:54:26 which as you say, it’s funny that a company
02:54:28 like MicroStrategy might be the company
02:54:34 that has the biggest macro effect
02:54:38 on our economy and our world.
02:54:40 Yeah, the conversation reshaped my worldview a lot too,
02:54:44 because he framed money as energy,
02:54:48 which I had often thought of money as time.
02:54:50 And it explored those connections a lot in my writing,
02:54:53 but looking at it as energy, and then his supposition
02:54:57 that the purpose of life is to basically channel energy
02:55:01 across space and time.
02:55:03 So we’re just trying to figure out how to channel
02:55:05 more energy across space and time
02:55:07 toward the satisfaction of aims.
02:55:09 And his definition, or his answer to that question,
02:55:12 what is money, is that money is the highest form of energy
02:55:15 a human being can channel.
02:55:17 So it’s a claim to all other forms of energy
02:55:19 we can manifest in the world.
02:55:20 And that just completely reshaped how I see it,
02:55:24 brought in this whole other side
02:55:26 to my intellectual explorations of money.
02:55:30 Can you elaborate on that a little bit?
02:55:32 So I understand money is time,
02:55:34 which in itself is a really powerful idea.
02:55:37 But money is energy, and channeling energy,
02:55:39 can you break that apart?
02:55:40 Yeah, so I guess I definitely have to check out
02:55:44 the whole series to really get his perspective,
02:55:46 but I’ll do my best to condense it.
02:55:51 Life itself, all forms of life are,
02:55:54 they’re dependent on energy, right?
02:55:56 Energy fuels everything, fuels life in action and motion
02:56:00 and all of that.
02:56:02 And we could say that maybe like a plant
02:56:06 is harnessing solar energy
02:56:08 and then reallocating that into growth.
02:56:11 So its aim is to grow towards the sun, right?
02:56:15 So it’s allocating energy towards its goal
02:56:17 of harnessing more solar energy kind of thing.
02:56:20 So, and humans too have evolved
02:56:27 to figure out how to harness energy in different ways
02:56:30 to satisfy higher and more complicated aims.
02:56:35 So the original energy network
02:56:38 that he referenced was fire, right?
02:56:41 We actually learned to wield fire as a tool in and of itself.
02:56:45 So not only are we learning to channel energy,
02:56:48 but we’re actually learning how to isolate energy
02:56:51 as a tool in and of itself.
02:56:53 And so we went into that,
02:56:55 how harnessing fire had changed human beings.
02:56:59 And actually, this is one of the earliest examples too
02:57:04 of a coevolution between tool and our biology,
02:57:07 because when we developed fire, we developed cooking.
02:57:11 And cooking is, you can kind of think of it
02:57:13 as pre digestion in a way.
02:57:14 We’re liberating these macronutrients
02:57:16 or making things that otherwise
02:57:18 would not be digestible, edible.
02:57:22 And it increases the efficiency
02:57:23 by which we extract nutrients from food.
02:57:26 That’s what cooking does.
02:57:27 So when we figured out cooking,
02:57:29 we liberated all these digestive resources
02:57:33 that were reallocated towards higher cognitive development.
02:57:36 So there’s this evolutionary path
02:57:39 between figuring out fire and us becoming smarter,
02:57:42 which is interesting.
02:57:45 Some other early examples he gave,
02:57:47 he went into were missiles and hydraulics.
02:57:51 So missiles being, we learned to hunt at a distance.
02:57:56 We can’t bring down a wooly mammoth,
02:57:58 maybe with spears and up close and personal force,
02:58:03 but we could with spears and javelins and slings and whatnot.
02:58:07 And then he went into how we’ve used water
02:58:11 to channel hydraulic energy.
02:58:12 So we can basically overcome gravity.
02:58:14 We can move, there’s theories that the pyramids
02:58:19 were constructed using, the blocks were moved
02:58:22 using hydraulic energy or using water.
02:58:25 Clearly we use like cargo ships and whatnot
02:58:27 to move things much more efficiently across water
02:58:29 than we could the land.
02:58:32 So his whole view is how we keep figuring out better ways
02:58:37 and more efficient ways to harness energy and channel it.
02:58:40 And in that perspective, money has always represented
02:58:46 a claim on all other forms of energy.
02:58:48 So whatever energy couldn’t be channeled
02:58:51 towards something useful in the economy historically
02:58:54 would go into gold mining.
02:58:55 So gold became this residual, this economic,
02:58:59 this token of the excess energy created
02:59:03 by the market economy.
02:59:05 And then you could take that token of energy
02:59:07 and use it to redeem for any other form of energy
02:59:10 or any of the products of energy itself.
02:59:13 So it’s, I guess it’s my best approximation of it.
02:59:17 And it just really shattered my worldview again,
02:59:22 because I’d always thought about it as time.
02:59:23 Like we spend time sacrificing to obtain money
02:59:26 that we then redeem for commencement sacrifices
02:59:28 from others, but I’d never considered it purely as energy.
02:59:32 And then it also ties back into gold,
02:59:35 where there was an energy expenditure necessary
02:59:38 to obtain gold.
02:59:40 So there’s a proof of work associated with obtaining gold
02:59:43 that protected its market value, right?
02:59:46 So you had to expend, again,
02:59:47 if market value of gold’s 2000 an ounce,
02:59:50 you had to expend 1900 an ounce mining.
02:59:53 So it kept producers honest in a way.
02:59:56 So do you think something like proof of stake
02:59:58 that’s more about reputation
03:00:01 than actual exertion, like energy can work?
03:00:10 No, I think proof of stake is inherently centralizing.
03:00:15 It’s like the old Matthew principle,
03:00:18 from those who have to those who have,
03:00:20 more will be given from those who have not,
03:00:22 everything will be taken.
03:00:24 That’s what proof of stake is.
03:00:26 You need proof of work to embody skin in the game
03:00:29 in the marketplace, such that contributions
03:00:33 are commensurate with consideration received.
03:00:36 That’s how systems work.
03:00:39 What’s the idea why proof of work might
03:00:44 incentivize decentralization?
03:00:49 Do you worry that as Bitcoin becomes more powerful,
03:00:53 it may become, again, more centralized?
03:00:56 Well, the decentralization of Bitcoin
03:01:00 is largely driven by the nodes, actually,
03:01:03 which aren’t actually mining.
03:01:05 They’re just choosing which rule set to implement.
03:01:10 And then the mining network’s
03:01:12 actually enforcing that rule set.
03:01:14 So I think the mining network
03:01:19 is inherently decentralized in that,
03:01:22 really anyone with access to cheap energy
03:01:24 can become a miner.
03:01:25 You can freely enter or exit the market
03:01:27 or the network at any time.
03:01:30 But maintaining the block size at a manageable level
03:01:34 is what’s key to maintaining node decentralization.
03:01:38 This is an interesting question.
03:01:40 Who do you think has more power, the miners or the nodes?
03:01:44 Because the nodes carry the idea of the protocol,
03:01:49 like the specifics.
03:01:52 So in some sense, they have more power,
03:01:55 if Bitcoin is an idea.
03:01:58 They’re kind of mutually indispensable though,
03:02:00 because you can’t have,
03:02:03 there’s no security without the miners.
03:02:05 So without the miners, Bitcoin is just an idea.
03:02:08 And the idea of Bitcoin has maybe existed
03:02:11 even before Bitcoin, right?
03:02:13 Just sound money.
03:02:13 We just say sound money as an idea.
03:02:15 But there was no way to root that into thermodynamic reality
03:02:19 without Satoshi figuring out, not just proof of work,
03:02:24 it’s the entire composite of the difficulty adjustment,
03:02:27 proof of work, one way hashing, et cetera.
03:02:31 So I don’t know, that’s hard to say,
03:02:34 hard to disentangle the two.
03:02:36 You’ve talked about money as morality too.
03:02:40 How do you think about moral and immoral action
03:02:43 in the context of money?
03:02:47 There’s this great quote by Rothbard,
03:02:51 who’s a famous Austrian economist.
03:02:53 And he says, quote, to be moral, an act must be free,
03:02:58 unquote.
03:03:00 And I think morality, it changes over time
03:03:07 and it is, it has its roots
03:03:12 in biology.
03:03:15 Jordan Peterson makes the point that even animals
03:03:17 have their own sort of pseudo morality.
03:03:21 Where like with wolf packs, for instance,
03:03:24 if there’s a dispute between the alpha males,
03:03:26 or I guess between an alpha male and a incumbent,
03:03:30 the two males will have a fight basically.
03:03:35 And then when one, it’s decided that one has won,
03:03:39 the loser will basically roll over and give up his neck
03:03:42 to the alpha male.
03:03:44 And they do this instead of fighting to the death
03:03:47 because in a wolf pack, they need every wolf
03:03:50 so they can go out and bring down,
03:03:52 you never know when you’re gonna need the 20th wolf
03:03:54 to bring down the big buffalo the next day or whatever.
03:03:56 So they’ve developed this less than fight to the death
03:04:01 social morality to optimize their effectiveness
03:04:04 as a wolf pack.
03:04:07 And similarly for humans, like our morality
03:04:10 sort of emerges through competition and play even.
03:04:16 There are these implicit rules that come into place
03:04:19 based on how we’re organizing ourselves over time.
03:04:23 And with, so with money it’s interesting
03:04:29 because most tools we would consider to be amoral,
03:04:34 as in a hammer can be used to build a house
03:04:38 which could be seen to be good,
03:04:39 like a good constructive purpose,
03:04:40 or it could be used to bash them on skull,
03:04:43 which could be something evil.
03:04:45 And that the tool itself is amoral,
03:04:49 doesn’t have any independent morality of its own.
03:04:51 All of the morality is associated
03:04:54 with the wielder of the tool.
03:04:55 So what’s the quote like, any tool can be a weapon
03:04:58 if you hold it right sort of thing.
03:05:01 But money’s maybe a little bit different in that
03:05:05 when you monopolize money,
03:05:11 it’s only useful as a tool for one thing.
03:05:15 And that’s for allocating wealth away from some
03:05:17 and to others.
03:05:19 So it is the only utility of monopolized money is theft.
03:05:24 There’s no other, there’s a lot of propaganda out there
03:05:28 that will say, oh, we need to print money
03:05:29 to get out of this disaster or to give to the poor,
03:05:34 whatever moralistically camouflaged political aim
03:05:40 is being discussed, the base layer of monopolized money
03:05:44 is that it’s only useful for taking from some
03:05:46 and giving to others.
03:05:47 So another way to think about this is that money
03:05:51 is a paper claim on the savings of society.
03:05:55 So it is just a ticket for redeeming savings,
03:05:58 which could be time, could be capital,
03:06:00 it could be knowledge from any market actor in the world.
03:06:04 So it’s kind of a list of who owns what,
03:06:06 if you will, it’s a proxy list.
03:06:08 If there’s one group that can amend that list
03:06:11 and others cannot, then they’re basically able
03:06:14 and incented to modify that list to their own benefit.
03:06:20 And that’s effectively what a central bank is doing.
03:06:23 So a central bank is determining how much money to create.
03:06:27 They’re also determining who gets to receive
03:06:28 that money first and the first recipients of that money
03:06:33 are gonna be the beneficiaries in an inflationary regime.
03:06:37 So those that receive the money last
03:06:39 are the ones being robbed.
03:06:40 Those that receive the money first are the ones
03:06:42 that are receiving the stolen proceeds, let’s say.
03:06:48 And this has a really corrosive effect on social morality
03:06:53 because if we consider that people’s time horizon,
03:06:59 which the Austrians call the time preference,
03:07:02 the more short term thinking you are,
03:07:05 the more likely you are to engage in selfish behavior.
03:07:10 If you know that it’s all over tomorrow
03:07:15 and you’ve been working your whole life
03:07:16 to develop this business or create this reputation
03:07:20 or whatever your thing is,
03:07:21 but you just are given the foreknowledge that tomorrow
03:07:23 it’s all gonna end, you’re much more likely to go out
03:07:26 and just maybe get drunk and party that night
03:07:28 because there’s no more repercussions.
03:07:32 Whereas if you know that you’re gonna live
03:07:35 for a very long time, you’re much more likely
03:07:38 to plan for the future.
03:07:45 So we just say that your time horizon
03:07:46 is closely related to your morality.
03:07:48 The longer term thinking you are, the more moral
03:07:51 you would tend to behave, the more you would care
03:07:53 about long term relationship building
03:07:55 versus going out and getting wasted.
03:07:57 And money too impinges very closely on our time preference.
03:08:03 And again, time preference is the Austrian term.
03:08:05 So low time preference means you’re long term oriented,
03:08:09 high time preference means you’re short term oriented,
03:08:11 which can be a little trippy for some people
03:08:13 because it sounds backwards.
03:08:14 But if your money constantly loses value,
03:08:21 you are incentivized to become more short term oriented.
03:08:25 You are handicapped in your ability to plan for the future
03:08:29 because your money, which is intended to be,
03:08:33 here’s another definition of money,
03:08:35 as an insurance policy against uncertainty.
03:08:38 So no matter what problems you encounter in the world,
03:08:40 this money will best help you deal with those problems.
03:08:44 When that insurance policy against uncertainty
03:08:46 is injected with uncertainty, it’s polluted
03:08:49 with the uncertainty of inflation,
03:08:51 your time horizon shrinks,
03:08:53 your ability to plan long term shrinks.
03:08:55 And this impinges on social morality.
03:08:58 So there’s a great book on this called Honest Money
03:09:01 by Gary North.
03:09:02 And in that book, he gives the parable of the wine maker.
03:09:06 And the wine maker, if we just imagine
03:09:10 the hypothetical wine maker,
03:09:12 operating a business in a centrally banked economy.
03:09:15 And let’s say his central bank just doubled
03:09:17 the money supply to quote unquote save the economy.
03:09:21 Say an increase in money supply from one to $2 trillion.
03:09:24 This wine maker that’s accustomed to selling wine
03:09:26 at $20 a bottle is now faced with basically three choices.
03:09:34 And an important point here too,
03:09:36 before we get into his three choices,
03:09:37 are what prices are themselves.
03:09:39 Prices are the most visible aspect of any service.
03:09:43 So when you increase prices,
03:09:46 you’re incentivizing your customers to look elsewhere.
03:09:49 They’re gonna look at your competition.
03:09:51 When you decrease prices,
03:09:53 you’re incentivizing market actors
03:09:55 to look closer at your product, right?
03:09:57 You’re delivering a solution at a lower price.
03:10:00 So this wine maker that’s accustomed to selling his wine
03:10:02 at a $20 price point, all of a sudden,
03:10:05 because of a central bank has tripled the money supply,
03:10:07 he has three choices.
03:10:10 He can either keep selling his bottle at $20
03:10:14 and all of his inputs will increase due to inflation by 50%.
03:10:19 So he will lose 50% of his profit margin as a result.
03:10:24 So he can choose to eat that loss.
03:10:26 He can choose to double the selling price
03:10:28 of his bottle of wine from $20 to $40,
03:10:31 because all of the price of his inputs doubled.
03:10:33 So then he would maintain his profit margin.
03:10:36 Or the third one is that he could choose
03:10:40 to water down his wine or use inferior ingredients.
03:10:44 So he could use cheaper inputs
03:10:46 and maintain the output at the same price.
03:10:51 So he could basically start selling his customers
03:10:53 an inferior product for the same price
03:10:55 to preserve his profit margin.
03:10:57 Now, again, case number one, it’s not very palatable.
03:11:01 He doesn’t wanna eat the economic loss.
03:11:03 Case number two, he doesn’t wanna eat the profit margin.
03:11:06 Case number two, it’s not very good either,
03:11:08 because he’s then incentivizing all of his customers
03:11:10 to go shop other winemakers if he doubles his price.
03:11:14 So human nature being what it is,
03:11:16 trying to get something for nothing,
03:11:18 inflation actually seeps into other industries
03:11:21 by encouraging producers into option three,
03:11:24 which is to deceive your customer in the short run.
03:11:27 And again, this would be done initially at the margins.
03:11:31 Maybe it’s just a few drops of water.
03:11:32 Maybe it’s just some cheaper grapes.
03:11:35 But over time, this inflation is actually inducing producers
03:11:42 to weigh their financial wellbeing
03:11:45 against their moral integrity.
03:11:47 So it’s forcing them into this dilemma
03:11:49 that would not exist in a free market economy.
03:11:53 And as they charge more money for wine that is inferior,
03:11:58 the buyers of that wine,
03:12:00 also living in a central banked economy
03:12:02 are also getting scammed by not only the inflation,
03:12:05 but also the wine.
03:12:06 So it becomes this kind of corrosive contagious moral effect
03:12:12 that propagates throughout an economy.
03:12:14 And that’s why I’ve argued in a lot of my writing
03:12:18 that inflation is this infectious moral cancer on the world.
03:12:24 I think it is tied back to a lot of the social strangeness
03:12:30 we’ve seen in modern times,
03:12:32 where there seems to be a lot of fake people
03:12:35 and a lot of fake businesses and a lot of scams,
03:12:38 all of these things.
03:12:38 I think it really is rooted in the money.
03:12:40 And Bitcoin, as the first money in history
03:12:45 that has a 0% terminal inflation rate,
03:12:47 or said differently, zero unexpected inflation.
03:12:50 There’s no theft integrated into Bitcoin.
03:12:54 You can only earn it through work
03:12:56 or sacrificing resources to obtain it.
03:12:58 It is the antidote to this moral cancer
03:13:03 that inflation riddles our society with.
03:13:07 Again, you’re blowing my mind a little bit
03:13:08 to think about the ripple effects of inflation,
03:13:11 the way it seeps through our interactions.
03:13:15 So at the very, the early ripples
03:13:18 is the effect it has on the products,
03:13:20 on the dilution of the wine.
03:13:23 But also it might have ripple effects on the character,
03:13:27 on the behavior of people.
03:13:30 That’s interesting, artificial creation of scarcity,
03:13:33 creating, having effects on society at the social,
03:13:38 like the social fabric.
03:13:40 And I guess you’re arguing the morality.
03:13:43 It’s perverting free market dynamics,
03:13:45 which again, we said free markets generate pragmatic truth.
03:13:49 So inflation distorts price signals,
03:13:52 which means it confuses capital allocation.
03:13:54 So we’re trying to solve problems,
03:13:56 but all of a sudden we can’t tell
03:13:58 if this price increase is a matter
03:13:59 of true supply and demand change
03:14:01 or a matter of policy change.
03:14:03 So it clouds our economic perceptions.
03:14:07 It suppresses innovation
03:14:09 because now you’ve exacerbated
03:14:11 the boom and bust business cycle.
03:14:12 People are gonna overborrow and go into projects
03:14:14 that they can’t profitably sustain.
03:14:16 So then there’ll be a huge collapse.
03:14:18 So that actually breaks the market’s function
03:14:22 of generating innovation.
03:14:24 And then, yeah, I would argue too
03:14:25 that it pollutes our pursuit of virtue, let’s say.
03:14:29 Maybe it’s pushing back, but I don’t think so.
03:14:33 It’s not as clear to me,
03:14:34 perhaps because I haven’t thought about it deeply,
03:14:36 that money is core to life and human interaction
03:14:43 because there might be other forces,
03:14:45 other fraudulent forces, other things in human nature
03:14:48 that are creating these effects as well.
03:14:51 So it’s clear, I think you’re articulating really well
03:14:53 that there’s these negative effects from inflation.
03:14:56 I wonder if there’s other undiscovered,
03:14:59 not undiscovered, but ones we’re not making explicit now,
03:15:02 forces that are creating all the things we’re seeing now
03:15:08 with, like you said, cancer culture and all those things,
03:15:11 but also the negative effects on the quality of products,
03:15:16 on the excellence of the creativity and the innovation,
03:15:20 all those kinds of things.
03:15:21 I wonder if there’s other factors.
03:15:23 It’s kind of, listen, it’s compelling to think money’s
03:15:26 at the core of it all.
03:15:28 Like if you fix, I forgot what the phrase was.
03:15:30 Fix the money, fix the world.
03:15:31 Yeah, fix the money, fix the world.
03:15:35 Again, things that sound good, I’m skeptical of by nature.
03:15:40 So I wonder if there’s other things that are beyond money
03:15:44 that are somehow deeply integrated into our human nature.
03:15:47 Another one related to money is social cohesion itself.
03:15:51 So very simple anecdote for this was the more you increase
03:15:57 the inflation rate, social cohesion is inversely
03:16:01 proportionate to that.
03:16:02 So the extreme example would be hyperinflation, right?
03:16:04 Where the money is produced in such excess
03:16:07 that it loses all meaning and relevance.
03:16:09 So today in Venezuela, there is cash clogging the gutters,
03:16:14 clogging the streets, clogging the sewer system,
03:16:17 because the cash has lost all relevance.
03:16:21 And so anecdotally, we would suspect that,
03:16:23 okay, if there’s a inverse relationship
03:16:27 between inflation and social cohesion,
03:16:29 if we could then take inflation to zero,
03:16:32 couldn’t we theoretically increase
03:16:34 social cohesion to its maximum?
03:16:38 So another way to say that is inflation
03:16:40 is a decivilizing force, whereas natural price deflation,
03:16:45 which would occur in a hard money economy,
03:16:48 where there’s either a fixed supply of Bitcoin
03:16:51 or a relatively scarce supply of gold, for instance,
03:16:56 that lays claim to an increasing capital stock
03:17:00 of goods and services, prices would naturally decline
03:17:03 every year as we became smarter.
03:17:06 So the market price becomes a reflection
03:17:07 of our collective knowledge.
03:17:09 So by letting prices decline naturally over time,
03:17:12 we can actually induce civilization.
03:17:16 But by trying to force prices higher all the time
03:17:18 via the central bank, we’re creating the opposite effect.
03:17:21 So we talked a little bit about the Soviet Union,
03:17:24 and I happened to have lived through the collapse
03:17:26 of the Soviet Union.
03:17:28 And so what are the factors, the causes in your mind
03:17:34 to why the Soviet Union collapsed?
03:17:38 So, you know, definitely a multivariate situation.
03:17:42 I think there’s a lot of factors.
03:17:45 One that jumped out to me recently,
03:17:48 again, from that documentary that I didn’t note before
03:17:51 was that at one point, Stalin eliminated,
03:17:54 I think 75% of his intelligence force,
03:17:59 which I think when you’re competing
03:18:01 with another nation state, you know,
03:18:04 and intelligence and covert operations
03:18:06 are very integral to your survival,
03:18:08 I think that was definitely a shot in the foot.
03:18:13 But at a higher level, I would say that capitalism
03:18:19 and communism were each resource strategies
03:18:23 of the 20th century nation state.
03:18:27 And they seem, you know, we commonly consider them
03:18:30 to be diametrically opposed,
03:18:31 but there’s actually a lot of commonality between the two.
03:18:34 The difference would be that in Soviet Russia,
03:18:39 as we alluded to earlier,
03:18:40 they tried to completely replace price signals
03:18:44 with this nationalistic faith and devotion.
03:18:46 So they removed the economic nerve signal,
03:18:50 which coordinated the allocation of capital over time.
03:18:53 So this inhibited their ability to generate wealth.
03:18:57 Whereas in the United States,
03:18:58 we left most markets open to free enterprise.
03:19:02 So we honored the integrity of price signals
03:19:06 and we allowed people to trade and accumulate wealth.
03:19:11 So in every market, except the market for money,
03:19:14 both markets maintained a central bank as we’ve gotten to.
03:19:18 So I think in a really big picture standpoint,
03:19:23 that’s why capitalism outcompetes communism
03:19:27 is because it is able to generate more wealth
03:19:31 than communism was,
03:19:32 and therefore was able to put financial pressure
03:19:35 on the USSR until it reached the point of bankruptcy,
03:19:39 essentially.
03:19:41 A similar model, I would argue,
03:19:44 is that for the same reasons we saw
03:19:48 capitalism outcompete communism,
03:19:50 which I think the data that I recall
03:19:53 was that the USSR’s economy was valued
03:19:56 at close to one third of its inputs.
03:19:59 So if you just didn’t do anything inside the USSR
03:20:02 and just sold all the raw materials that were going into it,
03:20:05 it would have been worth three times as much
03:20:07 as sending the materials in,
03:20:09 running it through the efforts
03:20:10 and then shipping things back out.
03:20:12 It was value destructive versus value creative.
03:20:16 And I would argue this is because,
03:20:18 again, the centralized computing model
03:20:21 versus decentralized computing model,
03:20:23 it just became more and more corrupt over time.
03:20:27 It got to the point where I think most of the occupations
03:20:30 in USSR towards the end were as informants, right?
03:20:34 They were working for the state.
03:20:37 Jordan Peterson makes this point too,
03:20:38 that at some point it was actually illegal
03:20:40 to be sad in Soviet Russia.
03:20:43 Because if you were sad,
03:20:44 you were contradicting the utopian view of the state.
03:20:48 So if you were sad,
03:20:49 you’re implying the state’s not doing something wrong.
03:20:51 But by the way, this does remind me,
03:20:55 do you know what Jordan Peterson thinks about Bitcoin
03:20:57 and about the future impact of Bitcoin on the society?
03:21:02 No, I don’t actually.
03:21:06 We’re hopefully gonna be talking to him soon about that.
03:21:10 We did a book club on his book, Maps of Meaning,
03:21:14 and he engaged with us about it.
03:21:16 So we’re hoping to deliver the orange bill to Mr. Peterson.
03:21:19 The orange bill.
03:21:20 I think his audience is one of the most important audiences
03:21:24 in the world to understand Bitcoin,
03:21:25 these people that are conscientious and responsible.
03:21:29 I think they’ll quickly understand Bitcoin’s
03:21:34 value proposition and help elucidate it to the world.
03:21:38 I’m trying to remember what he said about it.
03:21:41 Basically, I think his support of Bitcoin
03:21:44 is grounded in the kind of people
03:21:47 who are opposing Bitcoin.
03:21:49 So without understanding Bitcoin,
03:21:52 he starts to like Bitcoin
03:21:54 because of the people who are opposing it.
03:21:56 He’s, you know, you start to, I mean,
03:21:59 that’s partially why I am interested in Bitcoin.
03:22:03 It’s like all the people in power
03:22:08 and all the kind of shady, fraudulent,
03:22:12 non genuine people who are dismissing Bitcoin
03:22:17 are making me think, hmm.
03:22:19 One of Jordan’s definitions of God is,
03:22:23 he says, God is found in the truthful speech
03:22:26 that rectifies pathological hierarchies.
03:22:30 And I think that is a beautiful definition
03:22:34 of what Bitcoin is doing in the world.
03:22:36 And that we have this pathological hierarchy
03:22:39 called central banking,
03:22:40 by which the rich get richer and the poor get poorer,
03:22:45 that is used as a mechanism for perpetual theft
03:22:48 and funding warfare at a global scale.
03:22:51 Like Ron Paul said, it’s no coincidence
03:22:53 that the 20th century of total war
03:22:56 was also the century of central banking.
03:22:59 When you have an institution of currency counterfeiting,
03:23:04 which the central bank is,
03:23:06 you are no longer bounded by your own balance sheet
03:23:09 when you go to war.
03:23:10 You don’t have to just go to war on your own resources.
03:23:12 You can now pillage the commonwealth
03:23:15 and pull for the savings of society as a whole
03:23:18 before you go bankrupt.
03:23:21 And indeed, this is what Hitler did, right?
03:23:23 Hitler hyperinflated in the Weimar Republic
03:23:28 to fund his war efforts.
03:23:31 And frankly, every dictator, every world war,
03:23:35 every internment camp in history was made possible
03:23:39 by the weaponization of money in fiat currency.
03:23:43 So I hope, I know Jordan Peterson
03:23:46 is a huge proponent of free speech.
03:23:49 And I think that’s ultimately at its deepest essence,
03:23:51 that’s what Bitcoin really is, right?
03:23:53 It is just the purest form
03:23:55 of monetary speech we’ve ever had.
03:23:58 And by purifying that primary operating system
03:24:02 of human action, I think we can eliminate
03:24:06 this pathological hierarchy that is unfortunately
03:24:09 the dominant institution in the world today.
03:24:11 Yeah, I’m definitely,
03:24:13 especially with these explorations of Bitcoin,
03:24:16 this journey I’ve been on,
03:24:18 I’ll revisit some of the aspects of human history
03:24:21 that I’ve been looking at like Stalin and Hitler
03:24:24 with a, from a perspective of a monetary perspective,
03:24:28 like what are the effects of inflation?
03:24:33 How was it used as a tool in gaining power
03:24:37 and maintaining power and manipulating the populace
03:24:42 in doing, in inflicting suffering
03:24:47 and I would say evil onto the world.
03:24:51 It’s interesting.
03:24:52 I, it’s interesting.
03:24:54 I’m gonna have to sort of go back into the hole.
03:24:56 So I tend to focus more on the human nature
03:25:02 and less about the tools
03:25:05 that human nature leverages to affect change.
03:25:08 But you’re right that in some sense,
03:25:11 money is a tool which can be effectively used
03:25:17 to perform moral and immoral actions
03:25:21 depending on how it’s used.
03:25:23 There’s a feedback between the two, right?
03:25:25 There’s, specifically with money itself,
03:25:31 it’s the, here’s the way I’ve been posing it lately
03:25:36 is that I actually think we typically think of people
03:25:39 as good or bad, or again,
03:25:41 trying to label people all the time,
03:25:43 but I think people and their characters
03:25:45 are emergent properties of the incentive structures
03:25:48 they inhabit.
03:25:49 Yeah.
03:25:50 So, you know, what does Charlie Munger say?
03:25:53 Don’t show me the incentives,
03:25:54 I’ll show you the outcome kind of thing.
03:25:56 This is a flawed incentive structure
03:25:59 we’ve been operating within.
03:26:01 Now I’m not speaking to the intention.
03:26:03 People want to argue with me all the time.
03:26:04 Like Jerome Powell’s not a bad guy.
03:26:06 He’s doing his best at the central bank.
03:26:08 He’s doing what he thinks is right.
03:26:09 That’s fine.
03:26:11 Well, that’s true or not, it actually doesn’t matter.
03:26:13 The intention is divergent from the outcome.
03:26:16 The institution that they are running
03:26:18 is premised on deception and theft,
03:26:20 and it is handicapping the productive economy.
03:26:22 So when we’re, even the terms we use, printing money,
03:26:26 you’re not creating any new value.
03:26:27 You’re not infusing the economy with anything,
03:26:29 any new productive factors whatsoever.
03:26:31 You’re just creating new value.
03:26:33 You’re not infusing the economy with anything,
03:26:35 any new productive factors whatsoever.
03:26:37 You’re just harvesting the economic surplus
03:26:39 created by entrepreneurs in the marketplace.
03:26:42 It’s impossible to add any value to an economy
03:26:45 by increasing the paper claims on its savings.
03:26:48 So there’s a feedback loop between man and tool,
03:26:54 between creator and created.
03:26:56 And I think we have to honor the relationship
03:26:59 above either one, right?
03:27:01 Trying to put the right people in the system
03:27:03 in the right place.
03:27:04 Do you think the interesting question
03:27:05 of whether the people that are in control of central banks
03:27:12 or in positions of power there,
03:27:14 if they themselves are malevolent,
03:27:17 they themselves are bad actors,
03:27:19 or they’re simply like leaves floating along the river,
03:27:25 sort of just the cog in the machine,
03:27:29 an ant in an ant colony
03:27:31 that operates in a certain kind of way.
03:27:33 Like, where do you put the blame?
03:27:36 Do you put the blame on the way things are operating
03:27:40 onto the individuals or onto the system itself,
03:27:44 the idea behind the system?
03:27:46 Where, and is it useful to place the blame somewhere?
03:27:50 Because for me, it might be useful to understand that
03:27:53 in order to figure out what the solution is.
03:27:57 I tend to not put the blame on the individual.
03:27:59 Like I tend to believe most people are good
03:28:02 and want to see themselves as good.
03:28:05 And so in that case, it’s very difficult
03:28:07 to be truly malevolent as you would need to be to control,
03:28:11 to gain centralized power at the large scale.
03:28:14 But I know a lot of conspiracy theorists
03:28:19 and just a lot of people think that there is evil humans
03:28:23 in the world that seek power, maintain that power,
03:28:26 and then use that power for bad purposes.
03:28:29 I think they’re just people.
03:28:32 And they’re just trying to get something for nothing,
03:28:34 like all of us do.
03:28:35 I like this framework of thought.
03:28:37 Well, honestly, and that’s what the central bank is,
03:28:42 is the ultimate institution to get something for nothing.
03:28:44 You get a perpetual income stream,
03:28:49 the ability to acquire more and more territory in the world
03:28:53 through monopolizing the supply of money.
03:28:56 And you can literally print money.
03:28:59 You can buy your way out of anything
03:29:01 and buy your way into anything in the world.
03:29:03 So it is, I think the most, not say the most,
03:29:08 but a group of very intelligent people
03:29:10 put this thing together and figured out
03:29:12 how to get something for nothing in perpetuity
03:29:17 by clouding people’s conception of money.
03:29:20 And if we look at the central bank is,
03:29:24 it’s been around for a while,
03:29:25 but the latest implementation here in the US is the Fed.
03:29:29 It’s about a hundred years old.
03:29:30 It’s an analog age institution that I think has lost
03:29:34 a lot of its relevance in the modern age.
03:29:37 And I don’t think it will survive
03:29:40 the ever galvanizing gaze of the digital age.
03:29:43 There’s just too much sunlight, too much transparency today.
03:29:47 Ideas move too quickly for something like this
03:29:49 to remain relevant.
03:29:51 But they are just people.
03:29:53 They are just seeking something for nothing.
03:29:55 But I think when you concentrate that much power
03:29:58 and that much control, that much wealth
03:30:00 into the hands of few, it does change.
03:30:04 Hayek argued that the nature of power,
03:30:09 again, it’s something that we all sort of desire.
03:30:11 To be completely powerless, you’re really unhappy, right?
03:30:14 If you’re totally powerless, you’re a slave.
03:30:16 Someone else tells you what to do.
03:30:17 You have no autonomy.
03:30:18 It’s miserable, right?
03:30:20 So there’s this, it makes the consolidation
03:30:23 of power alluring and that we want to protect ourselves
03:30:25 from that slave state, let’s say.
03:30:28 But like many things, it can be taken too far.
03:30:31 And when you concentrate power into too few hands,
03:30:35 Hayek argues that it actually transforms.
03:30:38 It becomes something much more intoxicating
03:30:41 than it would be if it was held in a more distributed way.
03:30:44 And I think that gets into a lot of these,
03:30:47 I don’t know if they call themselves elites
03:30:50 or people call them elites or whatever,
03:30:51 like let’s say shareholders of central banks,
03:30:54 people participating in the World Economic Forum,
03:30:56 things like this.
03:30:59 They come, I guess the incentives, right?
03:31:01 The incentive schema they’re in is rewarding them constantly,
03:31:05 telling them everything they’re doing,
03:31:06 saying and thinking is correct
03:31:08 because they just keep getting richer all the time.
03:31:10 And it leads you closer to this definition of evil,
03:31:15 which in the book, Paradise Lost,
03:31:19 Friedman said, evil is the force
03:31:20 which believes its knowledge is complete.
03:31:23 So these people become more and more convinced
03:31:27 that they have the plan or they have the course of action
03:31:32 that will save the world,
03:31:33 that if everyone would just listen to them,
03:31:35 that they would lead us to the promised land, right?
03:31:38 Whether this is Bill Gates saving us from a climate crisis
03:31:41 or any of these other economic policies
03:31:44 that are targeted at a certain outcome,
03:31:46 but almost always diverge almost perfectly
03:31:49 from that outcome, creating its opposite effect.
03:31:53 I think that’s the problem,
03:31:55 that we have this mechanism that can concentrate wealth
03:31:58 and power into the hands of so few
03:32:01 that it leads to the proliferation of evil,
03:32:05 meaning that it convinces people
03:32:06 that their knowledge is complete.
03:32:08 Whereas something like a Bitcoin
03:32:12 almost forces the opposite outcome.
03:32:17 In a Bitcoin denominated world, a pure free market,
03:32:22 the consumer is sovereign.
03:32:24 So you cannot earn value in the world
03:32:28 unless you are serving your fellow man,
03:32:30 unless they have expressed through their buy and sell
03:32:34 decisions in the marketplace, right?
03:32:35 You’ve created a satisfaction of a particular want
03:32:39 that they value so much,
03:32:41 they’ve acquired so much of your good or service
03:32:43 that you’ve become rich.
03:32:45 You can only maintain that position of wealth
03:32:47 so long as you continue to serve your fellow man.
03:32:49 So it changes the incentives such that dominance
03:32:54 in the world can no longer be paired with coercion.
03:32:59 It has to be paired with competence.
03:33:01 And that’s how this, when we say Bitcoin fixes this,
03:33:05 that’s what we mean.
03:33:06 Like it restores that skin in the game,
03:33:09 that balance of incentives and disincentives
03:33:11 that help us properly navigate reality.
03:33:13 And it prevents the buildup of systemic rot
03:33:17 like we see with the central bank.
03:33:20 What books?
03:33:21 People love this question.
03:33:23 And you’re exceptionally well read.
03:33:25 You’ve explored all kinds of ideas.
03:33:28 Is there some books, technical, fiction, philosophical,
03:33:31 coloring books, children’s books had an impact on your life
03:33:35 and you would maybe recommend to others
03:33:38 that they should read?
03:33:39 I think we mentioned a couple of them here today,
03:33:43 but I think a really useful triplet of books
03:33:49 that I’ve been recommending recently
03:33:51 to help diffuse this materialist worldview of reality
03:33:56 where we still think in kind of the Newtonian model
03:33:58 that it’s atoms and cause and effect.
03:34:03 I’d first recommend Jordan Peterson’s book,
03:34:05 Maps of Meaning.
03:34:06 It’s a deep dive into mythology
03:34:11 and how it’s developed over the course of history
03:34:14 and how it’s reflected both in our social structures
03:34:17 and our intra psychic nature really,
03:34:21 and how they come to reflect one another in a way.
03:34:23 Like the way we think again shapes the world
03:34:25 and then the way the world is shaped,
03:34:26 shapes the way we think.
03:34:29 That’s an excellent book.
03:34:30 It’s very dense and difficult read.
03:34:33 Actually this trilogy is pretty brutal.
03:34:35 Probably take you a year to read, hours a day.
03:34:39 The second one I mentioned earlier
03:34:40 was Human Action by Mises.
03:34:44 The ultimate tome on Austrian economics
03:34:46 will help explicate this realm of relevance.
03:34:50 I think that economics truly is where again,
03:34:56 there are things and then these things become means or ends
03:35:00 once we channel our purpose through them.
03:35:03 So this realm of non materialist relevance
03:35:07 that I think is really important to grasping economics
03:35:10 at a first principles level,
03:35:11 I think that book lays it out tremendously.
03:35:15 And then the last one would be,
03:35:16 I think I mentioned this at the beginning,
03:35:17 was that book Lila by Robert Persig,
03:35:19 where he’s making the case that value is fundamental.
03:35:23 And all of these books,
03:35:25 they kind of all point to that actually.
03:35:27 They’re pointing back to value being the fundamental thing,
03:35:31 values expressed through moral action
03:35:35 as being the fundamental substrate of reality.
03:35:37 So if you’re like me, I grew up quite scientific minded.
03:35:42 It’ll help diffuse some of that
03:35:43 and maybe retrain you to the other side of reality.
03:35:47 So you said these books are difficult.
03:35:49 Maybe you can comment on which aspect is difficult.
03:35:52 Is it just the technical nature?
03:35:54 Is it the length?
03:35:55 Is it the depth of the ideas
03:35:56 or how long it takes to integrate them?
03:35:58 And more sort of importantly,
03:36:01 is there recommendation advice you can give
03:36:04 on how to integrate these ideas,
03:36:09 how to read, how to learn in the spaces there
03:36:13 from your own life?
03:36:15 Like how do you enjoy taking in ideas?
03:36:17 And this could be for these books,
03:36:18 but also in the Bitcoin world
03:36:21 and reading a bunch of different ideas written by others,
03:36:24 just integrating stuff, even watching podcasts
03:36:28 and all those kinds of things.
03:36:29 Yeah, I’m a reader.
03:36:31 I love to read.
03:36:33 One of the most useful things I’ve ever done
03:36:35 was take a speed reading course.
03:36:38 I actually think there’s a version of this
03:36:40 available on Tim Ferriss’s website.
03:36:41 It’s like a 30 minute speed reading course.
03:36:44 It’s all about eye movement.
03:36:45 Instead of moving your eye continuously line over line,
03:36:48 it’s more about jumping in your brain.
03:36:50 You can train your brain to just absorb words
03:36:53 in their totality versus kind of reading word by word.
03:36:56 And also not, I haven’t fully taken that journey actually,
03:37:00 but I remember taking a few steps on that journey,
03:37:05 realizing that I’m speaking inside my head.
03:37:08 Yeah.
03:37:09 I’m saying the words inside my head
03:37:10 and that’s actually getting in the way.
03:37:12 That’s right.
03:37:13 So there’s a lot of little hacks like that.
03:37:15 I maybe lazily, now that you mentioned,
03:37:17 I’ll have to revisit this.
03:37:19 But I have convinced myself that I don’t need to read faster
03:37:23 because that’s not ultimately the bottleneck.
03:37:25 The bottleneck is in me thinking about stuff.
03:37:28 In fact, I like reading really slowly
03:37:30 or so I convinced myself.
03:37:32 Because ultimately it’s not about gaining more information.
03:37:35 It’s about time spent thinking deeply.
03:37:38 Yes, yes.
03:37:40 But maybe that’s just me being very lazy
03:37:43 because yes, it’s true.
03:37:44 It’s important to think deeply,
03:37:45 but maybe I could speed up the consumption of information.
03:37:49 It’s fine.
03:37:50 I like to be dynamic actually.
03:37:51 So usually speed reading initially
03:37:55 and that diffused that internal dialogue for me
03:37:58 because when I was reading one word at a time,
03:37:59 I was having that too.
03:38:00 You almost get a feedback in your own head
03:38:02 when you’re reading the word out loud
03:38:03 and it’s clouding your thoughts.
03:38:04 If you’re speed reading, you can’t do that.
03:38:06 You’re taking in groups of words at a time
03:38:08 so you can’t internally verbalize it, I guess.
03:38:13 And then I also am really big on annotating,
03:38:15 underlining, writing in the margins.
03:38:17 I prefer a physical book,
03:38:20 but I also read the Kindle a lot
03:38:21 because it’s just so convenient.
03:38:23 Anywhere you’re waiting in line or every night before bed,
03:38:25 I’m reading my Kindle.
03:38:27 And I also advocate rereading a lot.
03:38:30 So if you found something that struck you at a deep level
03:38:34 or you found particularly fascinating,
03:38:36 like you have to listen to that.
03:38:37 That’s your, I don’t know, your mind or your spirit signal
03:38:41 that that is something meaningful to you
03:38:43 and you should, to your point, reread it,
03:38:46 sit with it for a long time, write about it.
03:38:49 And that becomes the ultimate triumvirate
03:38:52 of synthesizing an idea, actually.
03:38:55 If you can read about it and then write about it
03:38:59 and then go and talk about it,
03:39:01 you get this crystallization of understanding
03:39:03 that’s just not possible doing any one of the three
03:39:05 or any two of the three.
03:39:08 So I definitely highly recommend people to do that.
03:39:12 And in terms of how are those books difficult?
03:39:16 I mean, and if you’re reading a lot of books,
03:39:18 are difficult, I mean, in every way,
03:39:19 they’re all long books.
03:39:22 In terms of density, I would say Lila is the less,
03:39:26 the least dense, maybe Maps of Meaning.
03:39:32 I don’t know, but Maps of Meaning
03:39:33 and Human Action are both extremely dense.
03:39:35 But they’re just, I had to read those books very slow.
03:39:40 That you just have to take your time with them.
03:39:42 To give you an idea with Jordan Peterson,
03:39:44 he’s said this a lot with Maps of Meaning.
03:39:46 He spent three hours a day writing for 15 years
03:39:50 to write that book.
03:39:51 It’s probably, I think it’s a 600 page book.
03:39:53 He said he estimates he rewrote every sentence
03:39:55 in the book 50 times, five, zero,
03:39:58 to try and get it just perfected.
03:40:01 And when you read these sentences,
03:40:05 you can tell that he rewrote it 50 times.
03:40:08 I’ve used actually Anki for spaced repetition.
03:40:13 It’s like a piece of, it’s an app.
03:40:15 I’m not sure if you’re familiar with it,
03:40:17 but it allows you to load in facts or terms
03:40:22 or entire paragraphs.
03:40:24 And then it brings them, you review them every day
03:40:29 and then it brings them up less and less often over time
03:40:33 as you show yourself being able to remember
03:40:36 the thing that you wanted to memorize.
03:40:39 And oftentimes when I’m reading,
03:40:41 what I want to memorize is the key idea.
03:40:43 But also like I use it for, I’m terrible with names.
03:40:47 So I’m starting to use it for names too,
03:40:49 names of people, names of like people
03:40:52 that I want to remember.
03:40:53 And also throughout history and also in my own personal life
03:40:56 but also events, you know, dates to me
03:40:59 are usually not important,
03:41:00 but sometimes dates are really important.
03:41:03 And so it’s really useful.
03:41:04 I recommend it highly.
03:41:05 Naval, I think mentioned a piece of software
03:41:08 called Readwise or something like that,
03:41:11 that I hope I’m saying that correctly.
03:41:14 It’s something like that.
03:41:16 And what it does is it goes to your highlights
03:41:18 from your Kindle or the various places
03:41:23 where you highlight stuff that integrates with Goodreads.
03:41:27 And it does the same kind of spaced repetition
03:41:29 but for things you’ve highlighted.
03:41:31 So it sends an email every day.
03:41:35 It’s been really, I recommend it highly
03:41:38 because it sends like to me an email form,
03:41:43 a selection of the things I’ve highlighted
03:41:45 and previous things I’ve read.
03:41:47 And it’s like this weird like shock to your memory
03:41:52 that sprinkles like I have probably way too much Orwell
03:41:56 in there and it just kind of like, it brings you back.
03:42:00 And these ideas are, because what you realize,
03:42:03 depending on how you highlight, but at least for me,
03:42:07 and I think it’s probably true for a lot of people,
03:42:08 the things you’ve highlighted had at that moment
03:42:11 and like an emotional impact on you.
03:42:13 And so like these things are just like hitting you hard
03:42:16 again, it’s like, whoa, it might not be meaningful
03:42:19 to anyone else except you.
03:42:20 And it’s something I recommend.
03:42:23 You never know with these like hacks or tools and so on,
03:42:25 like what’s actually BS and what is amazing.
03:42:29 And that one is kind of amazing.
03:42:31 So at least for me, it works for me and Naval.
03:42:34 I think he’s the one.
03:42:35 Read wise you said. Read wise.
03:42:37 Or something close to that.
03:42:39 It could be read something else,
03:42:41 like read wealth or something.
03:42:43 The one other thing I really like,
03:42:46 and this is more of a new one,
03:42:48 is I used to always listen to music at the gym,
03:42:50 but now I’ve just, because I’m so backlogged on podcasts,
03:42:54 right, there’s so many, I exclusively listen to podcasts
03:42:59 when I’m walking or when I’m at the gym,
03:43:00 anytime I’m doing something that I can’t read basically.
03:43:03 And I think there’s something really special
03:43:07 about exercise and ideation.
03:43:09 I mean, I don’t know if this happens to everyone,
03:43:12 but my creative juices just go ballistic.
03:43:14 When I’m at the gym, like I hit a certain point of,
03:43:17 I guess, heart rate and you’re sweating enough,
03:43:19 then the ideas just start to flow.
03:43:21 So I’m basically at the gym now listening to podcasts,
03:43:25 exercising as fast as I can to try to get to that state of,
03:43:30 you know, where you’re just straining,
03:43:31 your strenuous exercise, I guess you would say,
03:43:34 and then I end up typing notes into my phone
03:43:36 as fast as I can with all these ideas that are flowing.
03:43:39 So I’ve created a lot of good writing out of that.
03:43:42 Yeah, it’s kind of work.
03:43:43 So I do running quite a bit, so running outside,
03:43:47 and I’ll listen to, I’ve been, okay,
03:43:51 I told myself this has been going on for about a year,
03:43:55 is I only listen, like the stuff that’s either World War II
03:44:00 or World War I related.
03:44:01 So Hitler, Stalin, like difficult historical stuff.
03:44:09 And also listen to brown noise.
03:44:13 So those are the two modes.
03:44:14 So brown noise helps me, this is like white noise,
03:44:18 but like deeper, I guess, it helps me remove the world.
03:44:22 And at the gym, there’s a lot of distractions.
03:44:24 When you’re running, there’s a lot of distractions.
03:44:26 It helps me remove the world.
03:44:27 So one, I’ll be listening to difficult historical ideas.
03:44:32 And then when my mind is all of a sudden
03:44:34 starting to generate ideas,
03:44:36 I’ll listen to brown noise and then force myself to think.
03:44:40 It’s kind of, it’s meditative in a sense,
03:44:44 and your mind wants to be lazy.
03:44:46 You want to, it’s hard, man, like running and thinking
03:44:51 in the sense that some of the ideas
03:44:53 that come into your head are pretty heavy.
03:44:56 It’s about your own life, your own demons come in there,
03:44:59 but also just difficult ideas
03:45:01 that require you thinking through
03:45:02 and persevering through that,
03:45:05 like not letting yourself get lazy
03:45:07 and thinking through it has been really for me rewarding
03:45:10 in the same way that you’re saying it is for you.
03:45:13 It’s true that like podcasts and music,
03:45:16 like shallow, like funny podcasts or music
03:45:20 have been a kind of filler distraction.
03:45:23 But informational podcasts, like podcasts
03:45:27 that have some depths of ideas or audio books
03:45:30 have been truly rewarding.
03:45:32 I try to listen now less and less to podcasts
03:45:34 that are just fun,
03:45:37 because I feel like I enjoy it too much
03:45:39 and I don’t allow my mind to get bored
03:45:41 and to think through stuff, to explore ideas.
03:45:45 It’s so easy to fill the space
03:45:49 that usually would be filled with thought
03:45:52 and instead fill it with fun podcasts.
03:45:55 Like there’s a bunch of comedy podcasts I really enjoy.
03:45:58 So there’s value to that, of course,
03:46:00 but you have to realize it’s entertainment.
03:46:02 It’s not, you don’t get much value except entertainment.
03:46:07 Right, right.
03:46:08 And there’s utility to the boredom too, I think,
03:46:10 where to give your mind the space,
03:46:15 I guess your subconscious,
03:46:16 maybe the space to chew on some of these problems, right?
03:46:19 Where you’ve imbibed so much knowledge,
03:46:21 you’ve highlighted and thought about something,
03:46:23 but then you need to stop thinking about it for a while
03:46:25 and let it marinate in the subconscious.
03:46:27 And then these flashes of insight
03:46:30 that people have described,
03:46:32 sometimes I get them in the middle of the night,
03:46:33 like I just wake up from a dream and have them
03:46:35 and I got to write it down
03:46:35 or sometimes just in nature taking a walk.
03:46:38 But I think that’s very important too.
03:46:40 We can’t just brute force our way into understanding.
03:46:44 There’s this interplay between
03:46:46 kind of the brute force reading intake
03:46:47 and then just relaxing, meditating, sleeping, being bored,
03:46:52 letting your subconscious do the heavy lifting.
03:46:56 And there’s, you should be aware of the fact
03:46:59 that there’s a war for your attention going on.
03:47:01 So there’s a lot of,
03:47:02 there’s been better and better and better mechanisms
03:47:05 that are designed to steal your attention.
03:47:08 So I kind of see it as a war zone
03:47:10 between my right for boredom
03:47:15 and the internet wanting your attention.
03:47:17 In fact, Clubhouse as an app has been,
03:47:21 I’m probably not gonna use Clubhouse much anymore.
03:47:24 There’s some aspect of my own inner loneliness
03:47:27 and whatever it is that pulled me into Clubhouse
03:47:31 a little bit too much to where it robbed me
03:47:33 from that lonely time alone
03:47:36 where I sit and listen to Bruce Springsteen
03:47:38 and think about life, right?
03:47:39 So I wanna.
03:47:40 That’s way more important.
03:47:41 That’s way, well yeah, at least it’s all in balance
03:47:44 because there is a Clubhouse like a lot
03:47:47 of these social networks when you use right
03:47:48 can be a way to discover new ideas, new people.
03:47:52 But the boredom is just being alone
03:47:55 with your thoughts is priceless.
03:47:57 Absolutely.
03:47:58 And you gotta know yourself, right?
03:47:59 Like it took me a long time to realize I need solitude.
03:48:03 Like just how I’m wired, how I’m built.
03:48:05 I need like an hour a day solitude.
03:48:07 So you gotta listen to that part of yourself.
03:48:08 You might be compromising something like that
03:48:11 where you feel like you always need to be
03:48:12 with your girlfriend or whatever it may be.
03:48:14 But I would suggest listening to that voice.
03:48:18 Yeah, I try to, I tried to remember things
03:48:20 that made me feel good over time.
03:48:23 Like longterm had positive impact
03:48:25 and longterm had negative impact
03:48:27 and do more of the former and less of the latter.
03:48:31 We don’t often think like that.
03:48:33 You know, we talked offline about like carnivore diets
03:48:35 for example, I try to remember
03:48:38 that carbs don’t make me feel good.
03:48:40 Yeah.
03:48:41 In the moment it’s hard to remember that.
03:48:43 It’s hard, it’s hard.
03:48:45 But you have to remember that that’s the case.
03:48:47 And in the same way, exercise,
03:48:51 it’s hard to remember that exercise makes me feel good.
03:48:56 Like especially when it’s time to go to the gym, right?
03:48:58 Especially when it’s time to go to the gym.
03:48:59 But you should remember that
03:49:00 because the kind of person you are without exercise,
03:49:03 for me, just like you beautifully said
03:49:06 that you have to know yourself.
03:49:07 The kind of person I am without exercise
03:49:10 is a less good person, a person I’m less proud of.
03:49:15 The food thing is so hard.
03:49:16 By the way, I still, you know,
03:49:19 I can’t tell you how many times I’ve learned the lesson,
03:49:21 like don’t eat that.
03:49:23 But then, you know, you go a few weeks
03:49:25 of not eating whatever that is,
03:49:26 and you’re feeling good.
03:49:28 And then you’re, I don’t know,
03:49:29 something creeps up inside you.
03:49:30 Like, ah, you could just have one or you could just do this.
03:49:33 But for me, it’s sugar.
03:49:34 Like sugar just makes me feel terrible.
03:49:36 But I always, not always, but if it’s been a long time,
03:49:40 I start to make that exception in my mind.
03:49:41 Like, oh, you can have a little bit.
03:49:43 And then I eat it and I feel terrible.
03:49:44 So I don’t know how many times I’ve done that dance,
03:49:45 but it’s not cool.
03:49:47 Well, it depends on how painful it is
03:49:48 and then you learn the lesson.
03:49:49 I actually embraced the fact
03:49:51 that I’ll never learn the lesson with vodka.
03:49:54 Every time I drink, especially with Russians,
03:49:57 is like, I quit drinking every time.
03:50:00 And then I forget, there’s like a slow drop off.
03:50:02 It’ll be like two weeks and then.
03:50:05 Na zdorovie.
03:50:05 Na zdorovie, very good.
03:50:08 So it never makes you feel good.
03:50:12 It never results in anything good
03:50:15 except the beautiful social chaos,
03:50:20 which is ultimately somehow, there’s value to chaos too.
03:50:24 There’s value to that.
03:50:25 Whatever the hell stupid stuff you do when you get trashed.
03:50:29 The over the top emotion of love usually
03:50:32 or whatever camaraderie, there’s value to that too.
03:50:36 Like as I get older, I realize,
03:50:39 because the world,
03:50:43 sometimes especially when you get older
03:50:44 and the world wants you to be an adult,
03:50:47 in order to maintain the youthful spirit,
03:50:49 you have to use all the tools you can.
03:50:51 Alcohol is one of them.
03:50:53 To do all the stupid shit you can,
03:50:55 even if you’re like getting older.
03:50:57 To lower the inhibitions.
03:51:00 Again, it’s that taste of uncertainty
03:51:01 that is the sweetness of life, right?
03:51:03 To be able to go out and be a flaneur at a party
03:51:06 and not really know what you’re gonna do.
03:51:08 And we have this draw to the wild side of life.
03:51:12 As much as we try and build up order around ourselves,
03:51:15 I think there’s always gonna be an appetite for that.
03:51:18 I’ve always, most of my life,
03:51:21 I’ve always been a social drinker,
03:51:23 but I actually gave up alcohol a year ago.
03:51:25 And I would add that to the idea,
03:51:30 the repertoire for dealing with bigger ideas
03:51:33 because alcohol is fun, it’s amazing, good times.
03:51:39 It can be analgesic, it can give you all these benefits
03:51:42 if you use the right amounts.
03:51:43 But I got to the point personally
03:51:46 where I was trying to wrestle with these ideas
03:51:48 that are just so much bigger than me.
03:51:50 And I have this backlog of books
03:51:52 that was growing faster than I could read them
03:51:55 that I just reached a point where I decided
03:51:58 I wanted to start making sacrifices toward attaining that.
03:52:01 And alcohol was just an easy one.
03:52:03 It’s you spend,
03:52:05 even if you just drink socially on the weekends,
03:52:08 you’re probably spending five to 10 hours drinking
03:52:12 and then maybe another, what?
03:52:13 Five to 10 hours recovering perhaps on the day after.
03:52:19 So it was a difficult transition initially,
03:52:23 but once you get through a couple of months,
03:52:25 I feel amazing without it.
03:52:27 I sleep better than ever.
03:52:28 My workouts are better than ever.
03:52:30 I’m sharper than ever.
03:52:31 I’m more lucid.
03:52:33 So I’m not trying to be a proponent for not drinking,
03:52:35 but I just want to say.
03:52:36 But you’re a proponent for sacrifice.
03:52:38 I am a big proponent for sacrifice, yes.
03:52:40 Is there advice you would give to a young person today
03:52:43 curious about Bitcoin,
03:52:45 curious about how they succeed in the world
03:52:50 or both career wise and just in life in general?
03:52:55 I mean, the strongest piece of advice I have for,
03:52:58 this is beyond just Bitcoin.
03:53:01 This is you managing your own personal and financial affairs
03:53:05 is that you need to invest in knowledge first.
03:53:11 It’s not good enough to just follow the crowd
03:53:15 and buy a 60, 40 portfolio and put it in a Roth RA
03:53:20 and plan on social security.
03:53:22 I mean, the world’s changing much faster
03:53:25 than any existing institution
03:53:28 is going to be able to keep up with.
03:53:31 So that’s why I like,
03:53:33 I mean, that’s why I named the show,
03:53:34 the question, what is money?
03:53:35 Like, I think that to me is the rabbit
03:53:38 that took me down the rabbit holes.
03:53:40 Like just asking that question naturally progressed
03:53:43 to these other questions.
03:53:45 Like what is value?
03:53:46 What is government?
03:53:47 What is the purpose of society?
03:53:50 Speech, all of these things.
03:53:52 So I would encourage people to arm yourself
03:53:57 with knowledge and study.
03:53:58 And like that, a lot of financial people
03:54:01 always give you a line of advice
03:54:04 and then say, this is not financial advice.
03:54:06 I’m like, this is financial advice.
03:54:07 Like study, study, learn.
03:54:12 Knowledge is power.
03:54:13 Yeah.
03:54:14 This is official financial advice.
03:54:16 And you’re exercising your divine trait,
03:54:19 which is the logos, right?
03:54:22 That we are these animals
03:54:24 that can tell and believe stories.
03:54:26 So it feels like almost a sacred duty
03:54:28 to really sharpen that part of ourselves
03:54:31 and use it to create the best world possible.
03:54:36 And then the second one was the,
03:54:39 I think health and fitness stuff.
03:54:40 I was, maybe everyone does this in their 20s.
03:54:45 They just live a little fast and beat themselves up.
03:54:49 Not that I wasn’t, like I was living well
03:54:54 and successful by a lot of measures,
03:54:58 but I wish I had maybe got my act together
03:55:00 a little bit sooner.
03:55:04 I just think.
03:55:05 Health wise, morality wise.
03:55:07 Yeah, drinking, I think morality and eating.
03:55:11 I just was kind of doing whatever I wanted in some ways.
03:55:14 Let’s say.
03:55:16 Is there a value to a trajectory
03:55:18 that includes a lot of mistakes?
03:55:19 So maybe you’re supposed to make the mistakes in your 20s.
03:55:22 That’s a great point.
03:55:23 Maybe the 20s are all about the mistakes.
03:55:25 Accumulate the most mistakes possible.
03:55:27 Yeah, I don’t.
03:55:28 As quickly as possible.
03:55:30 I don’t regret any of it,
03:55:32 but now that I’m kind of in this place where I feel good
03:55:35 and I know the value of a good night’s sleep
03:55:37 and just, I’ve more deeply explored my own potential
03:55:42 that I feel maybe a little regretful
03:55:44 that I didn’t do this earlier is all I’m saying.
03:55:46 So maybe just exploring different sides of yourself.
03:55:50 See what it’s like to go and make a bunch of mistakes
03:55:52 and be wild and crazy
03:55:53 and then maybe try to walk the straight and narrow
03:55:55 for a few months and just see what it’s like.
03:55:58 There’s probably a guy doing vodka shots right now
03:56:02 listening to this podcast with his buddies
03:56:03 and if you are, please take a shot for us
03:56:07 for all the mistakes you should make in your 20s.
03:56:11 And what about love?
03:56:18 We talked about money is ultimately a mechanism
03:56:21 by which you can pave a moral path through life.
03:56:29 To me, one of the purest expressions
03:56:31 that is love broadly defined for a family, for others,
03:56:36 for knowledge, for the world,
03:56:38 is basically an optimistic open view to the world
03:56:40 that embraces all that is beautiful about this world.
03:56:44 So do you think about love often in a personal sense,
03:56:51 romantic, family, friendship, and in the broad sense
03:56:54 about its value in a successful life?
03:56:59 Yeah, of course.
03:57:01 I’m blessed to have a two and a half year old daughter
03:57:04 and love is a word we throw around.
03:57:09 I love these potato chips, I love you, man.
03:57:11 I love you, my daughter.
03:57:12 It’s got so many different intensities,
03:57:15 I guess you might say.
03:57:19 I don’t know, my intuition is that
03:57:23 it is something very fundamental to the universe.
03:57:27 Again, I know words don’t do it justice,
03:57:29 but if we just proxy love with selfless action,
03:57:34 the whole damn universe is selflessly acting, right?
03:57:38 It’s just unfolding and it may sound a bit hippy dippy,
03:57:43 but my intuition is just that love
03:57:45 is the core of it somehow.
03:57:48 I don’t have anything to back that up really, it’s just.
03:57:51 In the way you’re framing it, it’s making me think
03:57:55 that love, we talked about sort of meditation,
03:58:00 is as opposed to thinking from an egocentric perspective
03:58:05 of you, the individual operating in this world,
03:58:08 is allowing you to be empathetic towards the world
03:58:10 and thereby think of the universe,
03:58:13 think of the world acting through you.
03:58:15 Almost like accepting this notion that ideas have you,
03:58:20 you don’t have ideas,
03:58:22 that you’re not existing in the universe,
03:58:25 the universe is existing through you.
03:58:27 It’s sort of like, that’s what selfless in that context means
03:58:32 is like embracing that thought.
03:58:34 That’s a weird thought.
03:58:36 It’s a weird thought that we’re just here for a little bit
03:58:38 of time, these meat vehicles, receptacles,
03:58:45 and this much bigger thing is just using us,
03:58:51 not in a malevolent way, but just like a river flows,
03:58:55 is using us to create more and more beautiful things.
03:58:59 Yes, yes, more and more beautiful things.
03:59:01 We are the universe experiencing itself, frankly, right?
03:59:06 So.
03:59:06 That’s a trippy thought, man.
03:59:08 Yeah.
03:59:09 That in some sense the universe created us
03:59:12 to experience itself.
03:59:13 And we are one of the highest forms of beauty
03:59:17 that nature has created, right?
03:59:19 If we just think one of the most complex
03:59:23 and adaptive thing, we’re a reflection of nature.
03:59:26 And another thing that comes to mind here is that
03:59:30 Dalio has this quote where he says, truth or more accurately,
03:59:36 an accurate depiction of reality is necessary
03:59:39 for any good outcome.
03:59:42 So when we think that love or value is primary,
03:59:47 I think that too reinforces this thesis
03:59:49 that acting out of love or acting out of proper moral action,
03:59:54 you’re best reflecting the fundamental nature of reality.
03:59:58 Therefore, you’re best creating the best possible outcomes
04:00:01 or the things of the most beauty,
04:00:02 whether that’s your artistic expression,
04:00:03 your children, your business, whatever it is.
04:00:07 And Jordan Peterson goes deep into that
04:00:09 where you have to listen to that sense of meaning
04:00:12 in your life.
04:00:13 Or you might have some decision on paper
04:00:15 that’s so great this way, but your heart says no,
04:00:18 your heart says otherwise.
04:00:22 I’ve tried to listen to my heart throughout
04:00:24 and I think that creates the best outcomes.
04:00:26 But nevertheless, does it make you sad
04:00:30 that you in particular, Robert,
04:00:34 are gonna be dead pretty soon?
04:00:38 As we talk about scarcity, one of the certain things
04:00:42 that ensure the scarcity of the human experience
04:00:45 is the fact that you and your consciousness
04:00:48 are gonna be done, they have a deadline.
04:00:51 Only time and Bitcoin are absolutely scarce.
04:00:54 I’m fortunate, I guess I got started
04:01:03 on this philosophical journey a bit when I was younger,
04:01:05 but I got into Musashi and Sun Tzu quite a bit,
04:01:11 who wrote, Musashi wrote the Book of Five Rings,
04:01:16 Sun Tzu wrote The Art of War.
04:01:17 And one of the things that, I mean,
04:01:19 these guys were just absolute beasts.
04:01:22 They lived and died by the sword
04:01:24 and they were just very great equanimity
04:01:28 about all things in life.
04:01:30 And I also found this kind of in the stoic philosophy
04:01:32 where they just are very cool with everything.
04:01:37 And one of the lines there is that the way of the warrior
04:01:40 is the resolute acceptance of death.
04:01:43 And so I’ve always tried to think about that.
04:01:45 Like, of course I experienced fear,
04:01:46 I experienced everything that you do on a meat suit, right?
04:01:51 Like anxiety and all the things,
04:01:53 but I always try to have that higher order view of myself
04:01:58 and that it’s just a certain experience occurring
04:02:02 at a certain level,
04:02:03 but it shouldn’t override your kind of highest order self.
04:02:06 That’s just resolutely accepted death
04:02:09 and that this is your one play in life.
04:02:13 So hopefully that propels me towards proper action.
04:02:18 I think scarcity cannot help, but lead to something good.
04:02:25 Just like with this conversation,
04:02:26 sadly must come to an end.
04:02:29 The scarcity of it is what makes it beautiful.
04:02:31 So Robert, this was one of my favorite conversations
04:02:35 philosophically and in every other level,
04:02:40 just the ideas and the way you express them around Bitcoin,
04:02:44 around morality, around money.
04:02:47 Has been really inspiring and really educational.
04:02:51 And I’m glad you’re out there fighting the good fight.
04:02:54 And I’m glad you’re wasting all of this time with me.
04:02:57 It was really fun.
04:02:58 And thank you for coming down to Texas
04:03:01 and having some good old brisket together.
04:03:05 This was really fun, man.
04:03:06 This was awesome.
04:03:07 Thanks for having me, man.
04:03:09 Thanks for listening to this conversation
04:03:11 with Robert Breedlove.
04:03:13 And thank you to Fundrise, Element, Mugpack, and BetterHelp.
04:03:18 Check them out in the description to support this podcast.
04:03:21 And now let me leave you with some words
04:03:24 from Nassim Nicholas Taleb.
04:03:26 “‘Antifragility is beyond resilience or robustness.
04:03:29 “‘The resilient resists shocks and stay the same.
04:03:33 “‘The antifragile gets better.’”
04:03:36 Thank you for listening and hope to see you next time.