BTC Sessions - Economist Reveals IF Bitcoin COULD BREAK the Dollar! (DEEP DIVE) | Robert Murphy

Starting point is 00:00:00 As far as my personal views, yes, I like Bitcoin. I've written favorably about Bitcoin. Over time, the U.S. is just like its global empire is going to keep collapsing, and that the U.S. dollar is going to keep shedding its status as the global reserve currency. And that's already underway. This isn't just me speculating. In other words, once it starts going, I think it's going to go fast. Upending, the global monetary order is a colossal challenge.

Starting point is 00:00:23 But if you know the enemy and know yourself, you need not fear the result of 100 battles. To break down the inner workings of the money printer and explore a Bitcoin future, we're joined by the brilliant Dr. Bob Murphy, PhD in economics from New York University, senior fellow at the Mises Institute and chief economist at Infineo. Going beyond Bitcoin to give you the skills and insights to escape the Fiat Matrix, this is Mentor Sessions. Well, Dr. Murphy, thanks for joining us today. I'm going to start you off with the big, broad question,

Starting point is 00:00:59 which I feel like everybody sort of, of thinks they know, but maybe doesn't. And that is how is money made? And I'm going to preface this. I think we understand if money is backed by gold. Okay, that's a bill and it's backed by this much gold. And those of us in the Bitcoin space understand how Bitcoin is mined. But I have to tell you, it's only in the last year that I've begun to learn that Fiat is not created the way I thought fiat was created where it's just the government prints it. No, there's this reserve that buys it from this institution and then banks loan and the loan itself creates money almost like magic. I still have a bit of trouble wrapping my head around it. So would you be so kind as to explain

Starting point is 00:01:42 how Fiat money is created to me as if I were a six year old? Sure thing. And so I'll just take the U.S. obviously is the central focus of the discussion here. So I'll give a sort of overview. And then obviously, if you guys want to drill down into some specifics, we can do that. that one thing I do want to make clear is there's a distinction between like legal tender money and things that are broader than that that trade at par with money typically right and so specifically yes like you know the currency in your wallet it says it's a federal reserve note and that's kind of a historical throwback um you know that's legal tender currency and then also when the federal reserve buys assets it effectively writes a check electronically

Starting point is 00:02:27 you know, wires funds to the selling institution. And then any basically checking account deposit with the Fed itself, and those are called reserves, those are also legally equivalent, you know, to $100 bill, right? So a Chase Bank or something, if they have an account with the Fed, and the Fed buys a million dollars worth of bonds from them and then credits their account, you know, at the Fed with a million extra dollars, that is as good as if they had $100 bills in the vault.

Starting point is 00:02:54 Okay. Now, it's also true, though. And so that's one level. And you could call that like the monetary base or some people might call that M0. All right. But then the next layer out, and this is what you're getting at here, is you might think, okay, that's the end of the story. And that, you know, that kind of makes sense.

Starting point is 00:03:09 And we don't, you know, maybe it'd be better if those $100 bills were backed up by gold or something. They're not. They can just print money. But okay, fair enough. But then there's another layer to it where the commercial banks are involved as well. And so here's where things really do seem mysterious. It's that, strictly speaking, you. yes, if a commercial bank just lends you a thousand dollars and grants you a personal loan, let's say,

Starting point is 00:03:30 and then credits your account with $1,000, they didn't have to go get that from somewhere. Just the act of them lending you the money brings that into existence in the sense that if at any moment in time you added up all of the checking account deposits of everybody in the economy, they would all think that, oh, yeah, I have that money. I said to you, how much money you have right now? You say, oh, I got $80 in my wallet and I got $300 in my checking account. I have $380. Right.

Starting point is 00:03:55 So that process, when the bank, the commercial bank just lends money to somebody and credits their checking account, that number went up for that person. And the point is it didn't need to go down for somebody else in the system. And so the total amount of money. But again, there, that's just to be clear, that's not legally the same thing is a $100 bill in your wallet, right? That ultimately, if there's a bank run and then Chase tells its customer, sorry, we can't redeem your request or not if you show up, you know, the bank close.

Starting point is 00:04:23 as you go to the ATM, it doesn't work. You know, that signals the fact that it's not the same thing as having a $100 bill in your wallet that Chase technically owes you $100. However, in practice, the reason, this is the last thing I'll say, and then, you know, if you guys want to take it further, feel free. The reason though, in practice, economists call basically when the bank owes you money, that that's as good as money is because for most practical purposes, most merchants will accept the two at par, right?

Starting point is 00:04:50 So if you go to the grocery store and they ring it up and you owe them $90, you can either take out, you know, four-twenties and a 10 from your wallet, or you can swipe your debit card. And technically what happens is Chase, instead of having 300 in your checking account, now just says you have 210, and now Chase owes the grocery store $90. And that's the way you paid it, right? So technically you're in a sense paying with an IOU from Chase. You're not paying with literal legal tender money.

Starting point is 00:05:16 But because, yeah, Chase is probably good for it. That's why they tend to trade at par. And so that's why economists include checkable deposit. with commercial banks that are reputable as part of, quote, the money supply. But again, it's a broad. It's called M1, for example, right? So they have different layers. And that's the way, though, that, again, it's the, and you're right.

Starting point is 00:05:35 I agree with you, Gary. That's something I didn't fully understand even when I had a PhD in economics at that point. It was only until later that I, you know, my personal interest and, you know, familiar with the Austrian school took me into that stuff where it really clicked with me that, oh, yeah, there is a legitimate sense in which banks, when they lend money, create it. And the last thing I'll say is that's only true if there's what's called a fractional reserve system. If banking, if commercial banks follow what's called 100% reserves, then that wouldn't happen. For them to grant you an extra thousand dollars in your checking account, somebody would have had to like buy CDs or something.

Starting point is 00:06:08 And those people would have to think, I don't have this money right now. I got to wait. You know, I lent it to the bank. I got to wait to get it back. Whereas what's weird with checking accounts is like everybody is kind of quasi lending to the bank at a, you know, in an instant maturity loan or something that gets rolled. over infinitely times per day. You know, it's a weird thing to, you know, try to quantify what the heck are they doing. But, you know, I don't think it's wrong to say they're, in a sense, creating money out of thin air

Starting point is 00:06:33 by granting loans. Amazing. I'm glad you understand this. I'm glad somebody in the world understands this because you helped me. Definitely. I don't think I still fully have it, but that's my own incompetence. I appreciate it. It seems to me almost like it's almost like rehypothicating based on credibility, right?

Starting point is 00:06:49 Like instead of rehypothicating on something like gold along those lines as well, too. And what I'm finding fascinating that I'm curious that you can maybe break down for. So if you were to have a bank run, bank run, what's essentially to stop them from just continuing to print credit units in order to satisfy the demands of that bank run? So where is like the rubber meeting the road on that aspect? Right. So good question, Nathan. And that's also too that, you know, Gary, you're saying glad someone. What's weird is there are a lot of people that they understand everything I just said, but then they think that's literally the end of the story.

Starting point is 00:07:19 And so a lot of them think like, oh, central banks are irrelevant. and it's all private, you know, and they look at the quantities and say, hey, you know, private banks create more money, you know, in terms of percentages than, you know, the central banks do. And so it's a right. But this gets to your question, Nathan, the point is, yes, ultimately legally speaking. And also just in terms of how the public would respond. If the only reason your grocery store lets you swipe the debit card is because it's a reputable play. If you just took out an IOU from your uncle Jim and said, here, I'm going to pay with this. They would say, what the heck is that? Right. And then so that's, that's the issue. And that, yes, in practice if the if the bank does get into trouble you know there there are banks that get shut down right that that happens often even though we don't typically think about it and so yes all of a sudden a bank whose ability to redeem immediately at par if that becomes if that comes into question then all of a sudden the community locks up and they don't accept you know claims on that bank anymore and that they no longer trade equivalently to money and so that is ultimately why central banks still matter and so on So part of what happens, though, is there were major bank runs in the early 1930s, for example,

Starting point is 00:08:27 you know, that went hand in hand with the Great Depression. You know, we can talk about that more if you want. But the conventional view that, you know, isn't wrong is that, oh, yeah, the banks got all screwed up and there were major bank runs. And that was a problem. And so then things like FDIC come into play and people think, oh, my money is guaranteed now. Like the federal government is telling me, you know, up to, what is it, $250,000 now per checking account. So it's weird that on the one hand, it solves that problem, right? That it makes the public not so eager to run.

Starting point is 00:08:58 But on the other hand, that means then you're not monitoring. You know, people are just opening checking accounts based on, you know, oh, where's your branch located? How many ATMs are in my area? Do you charge a fee monthly? Not let me look at your investment portfolio and see if you're, you know, putting my money to good use here. Like so it's kind of an odd mixture there.

Starting point is 00:09:16 But that that's partly the answer that that's one of the functions of FDIC. is to neuter that to make people less likely to go run of the bank. Because there's a sense in which commercial banks under fractures of banking are fundamentally illiquid. They're not in, people often at times say they're bankrupt, technically not necessarily. But no, by their very nature, they're illiquid, that they are borrowing very short, you know, like immediate redemption and then lending long. You know, they're making it like, yeah, give us your money. You can withdraw it just walking into the branch and we're going to go give someone a 30-year mortgage.

Starting point is 00:09:47 Like that's a very risky model. it's funny too because i think most people don't even necessarily realize that that when you are depositing money at a bank you're technically giving them a loan like it's no longer your money you're loaning that money like a very very short duration loan to them i'm curious like really kind of just teasing it apart and going into the weeds a little bit here as well too so if i understand the system correctly particularly with the commercial banking sector and uh the issuance of creation of dollars there as well too by the very nature of the system itself it has to continue expanding because in order, if everything's being issued as a result of a loan, that means in

Starting point is 00:10:20 like a year's time maturity, more currency units are going to be required in order to actually satisfy that loan. And the only way that more currency units would then be created is if somebody else then additionally took out a loan. So am I correct in that in terms of like the debt has to constantly expand because it is in fact built on debt? And with that, I'll just kind of tease in there a little bit as well too. If I understand it correctly, that means that paying back a loan is actually destroying currency units as well. With the underlying base money at the Federal Reserve level, is there any way that those units are also extinguished or are those more kind of a set fixture in the system?

Starting point is 00:10:55 Does any of that make sense? I know it's going a little bit in the weeds there. Yeah, it does make sense. And I can send you some articles. I've written at length on these topics. But yeah, so let's start. The easiest question of the quickest one first is, yes, there is legitimate sense in which when commercial banks extend loans, the money supply.

Starting point is 00:11:14 broadly measured like M1 or M2 expands. And then so yes, the flip side is also true. If somebody pays down a loan, not just, you know, the current interest, but if they literally pay down the principle so that, you know, the households indebtedness shrinks, then yes, that means the asset shrinks on the bank's balance sheet. And then, you know, the total quantity of money also shrinks. Right.

Starting point is 00:11:35 So that, that is true. So there's an accordion effect. And that partly plays into a lot of theories of the business cycle that, you know, like the money supply expands. gives us feeling of prosperity. And then when things get dicey and people, what do they want to do? They want to pay down debts. Well, that means the money supply is contracting. You know, maybe that's not what you want to have happen at the time when the economy is starting to totter. Right. So there's things like that where it can kind of like amplify, you know, the oscillations,

Starting point is 00:12:03 which is one of the reasons that people who are in favor, 100 percent reserves have that position, right, that they're saying that we don't want to be contributing, you know, adding fuel to the fire here. So there is that element. However, on the narrow question of, Does that system necessarily mean the total amount of debt has to keep expanding, like, because of pure arithmetic? I don't think that's literally the case. Just a simple example, like, if you borrow $100 from your neighbor and it's a 10% interest, you know, per week, let's say, you could just like, like, mow his lawn every week.

Starting point is 00:12:37 And he gives you $10. And then you just pay him the $10 back, right? So in that system, you could just, you know, you could look at it nice. And say, well, wait a minute, you know, if there's, let's say there's only $10 in existence between you two. Like there's just a $10 bill and that's it. That $10 bill could just keep changing hands week after week and you would service the debt. So that's the sense in which, you know, you might look at that and say, well, gee, if you owe him $110 and there's only $10, that's game over. But not if he keeps rolling over the principle, right?

Starting point is 00:13:05 So I'm saying there's, there's quirks like that. So it's not literally an arithmetic necessity that the system keeps growing. But yes, obviously there's built in reasons that it would. tend to grow in general, but again, it's not literally that it has to be the case because of math. Okay, that makes sense. So as long as it's still circulating, as long as there's basically, that's what I'm looking for, as long as still velocity and money, then you essentially can keep using that the service the debt and you have the same $10 bill just going around and round and round.

Starting point is 00:13:32 Right. That's theoretically possible. So just to show it's more nuanced than simply, you know, if people owe interest on the money, then, well, that means we owe more money than exists, though therefore everything blows up or implodes that, no, that doesn't necessarily follow. If you're enjoying this video with Dr. Murphy-Safar, please do us a favor, hit that like button. It really does help out. And now a quick message from this episode's sponsor.

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Starting point is 00:15:03 quirk in the way that kind of circular economy was running. One of the things we've heard for years from people in, I guess, the Keynesian school. And to be clear for those of listening, you were in the Austrian school, is that you need to actually grow the amount of money in the world for an expanding economy. And that's something that people have, I guess, criticized Bitcoin, I think, initially, although not as much lately, that there is a fixed supply. So if the economy grows, how can that keep up with it? Can you explain why that's kind of a, I don't know, a faulty premise, the idea that you need to kind of keep growing the money supply in order to keep up with a growing economy.

Starting point is 00:15:44 Yeah, sure. And you're right. People, they would say that about gold. It's also one of the reasons that a lot of mainstream economists say, oh, the Fed should have like a 2% CPI inflation target, which for a lot of people, they're trying to debase the currency on a systematic basis. And if prices only rose 1%, they would be kicking themselves. Like, oh, we did a bad. And yes, they would be kicking them. But I disagree with the theory behind or the rationale.

Starting point is 00:16:09 So you're right, Gary. The claim is that, I mean, there's different versions or different, if you ask different people, I'd say what specifically would go wrong. So a real naive concern is to say, like, oh, yeah, so let's say the whole world's using Bitcoin as the money. And yet, especially once it caps out of $21 million, as long as real GDP is positive, then that means, you know, other things equal. The price of everything quoted in Satoshi's is just going to have to go down year after year, like like 3% or something.

Starting point is 00:16:37 And then so the concern is, well, doesn't that mean anybody, especially with a durable good, like a refrigerator or a computer car is going to not buy it because they're going to say, well, let me just wait. And it's going to get cheaper. And then wouldn't that cause? So, you know, that the quick account example is say, oh, you're right. And that's why no one ever buys computers, right? Because those keep getting, especially measured like in computing power, you know, even with our inflationary currency, you know, the metrics that, you know, the actual performance, you know, is dropping in price. But yet people buy new computers all the time. Right. So so there's that, you know, that's, you know, that's, you know, That's a more sillier one. A more sophisticated objection runs like this. They'll say, in general, like, let's say the real rate of interest is supposed to be 2%. In our world, if prices are rising 3% a year, then the nominal interest rate has got to be 5%. Right. So the people, you know, you lend out $100 today. You get 105 next year. But 3% of that is just the rising prices. And so you're getting real 2% real return. So you add them together. And then if you flipped it and went the other way, you could say if prices were falling 1% a year,

Starting point is 00:17:39 then the nominal interest rate only needs to be 1% to give you that 2% real return, right? See that, okay. But then the concern is, well, what if prices are falling 5% a year, then the nominal rate would have to be negative? And yet, why would anybody lend 100 today to get 97 back next year?

Starting point is 00:17:55 You would just sit on your cash. And so that is a, you know, so that some guy literally just a month ago emailed me that he was worried about Bitcoin or gold coins or whatever. And so there, I think there's a, just the quick thing I'll say, say on that is there's a distinction between the price of the final good and the things you would have to buy, like the inputs to make it. So like if it's a bottle of wine, for example, let's say right

Starting point is 00:18:17 now, you know, the spot price is $100. It's going to fall to $95 next year. That doesn't mean somebody wouldn't be willing to invest in it because what if right now, like the grapes and the glass and whatever you need to make it sells for 94. So you spend your $94 today as an investor. You make the physical bottle of wine. You hold it for a year. You know, it, it, it matures into a one-year-old ball and you sell it for 95, you still made an extra dollar on your investment than if you just sat on the 94 in cash, right? Even though by hypothesis or stipulation, I'm saying, let's assume all prices fall. Right.

Starting point is 00:18:49 Like even the grapes and the labor and everything also get cheaper, 5% cheaper. But still, you could just keep doing that year after year as long as you get what I'm saying, like the relation between. So there's things like that, like once you realize, no, it's not that that issue would cause some fundamental, you know, break upon investment in real physical processes. It was just people. People would have to take all that into account and make their forecasts. But that's the beauty of Bitcoin is it would be very predictable, right?

Starting point is 00:19:17 So yes, there is that hard cap in general. Once we settle down, yep, prices quoted in Satoshi's are going to fall over time. But it's going to be very predictable. And so people would just take that into account when they're writing up credit contracts and, you know, 100%. And it also assumes that there wouldn't be any present demand, right? the idea that like nobody would spend, it's like, I need stake today, regardless of the fact that it's going to be cheaper in a year's time.

Starting point is 00:19:41 Excuse me. I'm actually kind of curious jumping back on that a little bit. I want to tease apart the idea of a loan because this is something that I've thought about, but I realized as you were talking that we kind of have examples from history maybe to draw upon as well too. And so if we were thinking about living on a Bitcoin standard, returning to sound money, and even before even maybe discussing the transition and what that would necessarily look like, if we go back maybe like 115 years and look at when we were on a gold standard.

Starting point is 00:20:04 backed currency and gold was money. What did the loaning infrastructure kind of look like at the time, if that might be an example of what credit systems built on top of Bitcoin, if it was the underlying base asset, might look like in the future? Okay. So, yeah, broad brushstrokes. Like, if you look at a chart of the purchasing power of the dollar, for example, like over the 1800s, let's say, in the United States, it wasn't just a flat line. What would typically happen is like during wars in particular, it would, either the price level would rise or the purchasing power of the dollar would fall, you know, to use it's a reciprocal. But then after the war was over, then it would be the other way around, right? So in general, prices would rise during, you know, like the civil war, they went way up.

Starting point is 00:20:52 But then after the war, they came back down. And what happened is like even the north, like so the South was printing their own currency and that was terrible hyperinflation. But the north even, they went off the, you know, the. gold, silver backing to print green, you know, they call them greenbacks. And then, but after the war, they resumed parity, right? And they did it. They phased in. They just do it, you know, as soon as the peace fire or the ceasefire was signed or whatever.

Starting point is 00:21:18 But they definitely, you know, they said had legislation as to, okay, here's how we're going to go back and link the dollar back to the precious metals. And so that then caused price deflation, right? And so the idea was if you just held a bunch of, you know, go. old eagle coins or something that your grandpa gave you in 1800 and then you gave it to your grandkid as of 1890, those things in the marketplace could still go by the same amount of like, you know, tailored suits and steak or whatever. The purchasing power roughly stayed the same over long stretches, even though it was variable depending on the specific. So that obviously is not true anymore,

Starting point is 00:21:56 right? You would never sit on, you know, $100 bills, you know, for a rainy day. That would be crazy because, oh, you get killed by inflation, right? So I'm just showing like this how much things have changed because we, we switched over. So answer your question, in general, nominal interest rates tended to be lower. So nominal meaning just the actual market contractual rate, not inflation adjusted. Because lenders knew that, oh, yes, I'm going to be getting paid back in dollars that are, you know, roughly is the same strength as what I'm lending out. So there was that tendency. And so the, ironically, the fear of the.

Starting point is 00:22:33 you know, the people saying, oh, you need an elastic currency or you need like a depreciating currency is that that would imply actually the real rates of interest, I think, were probably a lot higher in the 1800s than nowadays, right? That it wasn't in other words that lenders would lend out for $100 and then get back less. They would obviously still get a positive return measured in money. And prices would either be constant or even gently fall depending on the time period. So the idea was, oh, interest rate, real interest rates were high. And so that might have stifled investment or so. But no, I'm pretty sure like the 1800s are a pretty good boom time in terms of industrialization and whatever.

Starting point is 00:23:12 You know what I mean? So just empirically, I think that shows, you know, what happened. The other element here, too, that is sometimes people say, oh, it's a problem with a system like that. Like, you don't want people just hoarding the money. You want them investing in things. And I'm going to say, no, it's not actually true that the average household, if all they're trying to do is save and like defer consumption to just keep their options open and say, yeah, we want to live below our means now. You know, I'm in my 30s. I have a certain income. I get like measured in Bitcoins. I don't want to go and blow that all, you know, on fancy cars and whatever. Let me save for the future. It's not that you have a particular investment strategy of, you know, I want to put it in the NASDAQ or Australian real estate. You know, you kind of just want to generically in the abstract.

Starting point is 00:23:59 defer consumption. So what is the most generic investment outlet is the money, right? And so I actually think that's a feature, not a bug of a system like this where people can, if they don't want to take on additional risk, and they don't have any particular views about the performance of this sector or that industry, they just want to defer spending to just hoard the money. I think that's actually good, whereas a lot of mainstream economists, especially Keynesians like you guys are saying, I think that's a bad thing. But no, prices can adjust. It's not that if I refrain from spending all of a sudden, you know, some factory is going to remain at 50% capacity for 10 years. No, prices adjust.

Starting point is 00:24:34 And if the factory can't sell at that price, it'll just lower its price. And then boom, it'll get, you know, its output taken. So I think that's the idea. And that in general, yeah, I think it's a good thing if some people save just by stacking, you know, Satoshis, that that's actually far from being a site of disaster. I think that's a good thing. Because then what that means, too, is the people who end up actually investing in the real resources like the farmland and the factories and the S&P 500 and whatnot are the ones who,

Starting point is 00:25:04 that's their job. Like they have a particular interest and expertise. It's not just a household saying, oh, you got to get in the stock market for your retirement. You're going to get killed. Right. That's actually not a good thing. And that's why, like in 2008, a bunch of people couldn't retire because they had their retirement in the stock market thinking that was safe and no, it wasn't.

Starting point is 00:25:21 Yeah. I mean, on a fundamental level, that's how it's supposed to be. Time is our only actual limited asset. So if you are delaying gratification, if you're buying a car now, that should cost you more than buying one down the road because you've delayed your gratification of having that time use immediate. So yeah, I mean, that makes complete sense to me. But literally just the other day I'm hearing in the EU, they're like, well, we're going to tax, I guess, just fallow savings to use an agricultural term, just people who aren't using their savings because it's not being put to use. I don't even know what that means, not being put to use. Yeah, and relayed that to they were doing this in Japan and whatnot, that because this was more like, I don't know, 10 years ago or something where, yeah, people were just very afraid of things and they were just willing to tolerate even in some places like negative interest rates.

Starting point is 00:26:13 And so then people were going to cash. And then I don't know if you said, but like some of the major central banks were then like literally, you know, exacting negative interest rates on people's checking account balances. And it was a kind of thing where, you know, a large institution, they're not going to just pull out and be. on, you know, billions of dollars worth of yen in currency, right? Because that's just kind of risky. And so, oh, just leave it parked there. And then they're even doing things, too. Like, if some institutional client were going to just go to cash, they were going to charge, assess you an interest charge based on your historical usage. You know what I mean? Like to even like ex post, just say, well, because you used to keep this much with us. And now since we switch to a negative

Starting point is 00:26:53 interest rate policy, you pull it all out, we're still going to, if you want to use it. And so it's like if you want to keep using the banking system, you got to just suck it. And again, where's all that coming from? This is very cansy in notion that low interest rates are good and they help the economy and that, yeah, the worst thing in the world is that people try to save and not spend. And that's, you know, because all that aggregate demand drops. And again, that's a, I think that's a bugaboo, but also that's partly the reason you get those periods where there's an unexpected shock to aggregate demand is because the system's so volatile in a like under a Bitcoin standard where no institution would have the ability just to flood the market or to contract it, the money supply, then things would be very predictable.

Starting point is 00:27:35 And, you know, everybody would have a pretty good idea about what's aggregate demand going to be three years from now. Yeah. I was going to say, yeah, there's one of the things about regarding savings that always stood out to me, too, is this idea that savings was somehow wrong, have very strong feelings. It's the other way around that it's incredibly almost like a higher moral good in the sense that you have provided, especially in a voluntary system, you have provided value to other people and not. reciprocally consumed. So you've just bettered everybody else's life and haven't taken the equivalent for yourself yet. We touched on that as well too. The idea that if you're, if you're messing with it, you're also screwing with the signals in the system, meaning that I would imagine, I believe this is correct, that if everybody is essentially

Starting point is 00:28:12 saving that we would see a decline in interest rates as, or sorry, we've maybe seen increase in interest rates as people are trying to attract, no, another way around. We see decline in interest rates, which would then signal to businesses that this might be a good opportunity to invest in capital expenditure or try to expand their production. or other things along those items too, because there is that kind of pent-up demand that is available if they can essentially access it. And the other thing that I want to touch on before, I had like a million other questions was this idea that the business cycle, that everybody kind of getting synced up. And this feels like very much so a direct result of messing with the money. Like it makes no sense

Starting point is 00:28:45 to me that every business sector would go through the same business cycle at the same time, right? That they would all align and have this big kind of crash and bust and boom. Like I could see like, okay, you have Uber come along and that disrupts the transportation industry. Makes sense, but I'm not sure why that necessarily impacts like agriculture or beef. Yeah, so that was great. I don't know if you did this on purpose, but everything you just said all is tied together in terms of the Austrian view to explain all those things. So yeah, the real, the way like Hayek would explain it is to say he had a nice quote.

Starting point is 00:29:18 I'm not going to get exactly. Something like in order to explain why things should go wrong, we should first understand why they should ever go right. And so his idea was, and Roger Garrison, who's an Austrian macro economist and has done a lot on, you know, business cycle modeling, takes that approach. And he's like when he does his PowerPoint lectures for undergrads and things like that, he first just says, let's understand how is it that a society in a normal, you know, long run equilibrium? If they live below their means, how is it that that leads to a rising standard of living? And so the idea is, yep, households save. that pushes down interest rates, you know, because like the loanable funds are higher,

Starting point is 00:29:55 other things equal, then that gives a green light to businesses to invest in longer projects, right? Because if you're like the example I actually, let's say you're going to, you're deciding should I build a apartment complex, you know, 15 story apartment complex. There's this plot of land. I can figure out how much is the real estate. How much would it cost me to build the thing? And, you know, let's say you do the calculate it. It costs me 10 million to build the thing. And then you figure out, okay, what are the vacancy rates and how much rent could I And what you're going to get is, you know, an idea of an upfront huge capital expenditure and then a flow of net income, you know, into the foreseeable future. And so what's a huge variable in your calculation to say, should I go ahead with that project is what's the cost of capital?

Starting point is 00:30:37 You know, what's the going market rate of interest adjusted for the riskiness of this project, right? And if it's a high rate of interest, then you're not going to do it. If it's a low rate of interest, then you will do it. right. And so that's, you know, the insight and the Austrians say that an important price that helps coordinate activities is in the interest rate or, you know, the constellation of interest rates on the yield curve or whatever. And that's what helps coordinate. So when households defer consumption and save more, how do the entrepreneurs know what to invest in, right? And it makes a difference, right? If households have a very long-term horizon, very low time preference, maybe the business want to invest in really long-term

Starting point is 00:31:15 projects, whereas, you know, if the households are relatively impatient, nah, we can't tie this capital up too long. And interest rates are like the penalty on tying up the capital for too long. So what happens? So that's, you know, the way it works normally when the interest rates right, it just helps coordinate that. And that's how, you know, society retools away from making TVs and, you know, steak dinners and whatever and makes drill presses and more factories and things like that. That's how you could understand, oh, so we get more physically productive over time if we save and invest more. and the interest rate quarter. But now what happens if the reason the interest rate dropped from 6% to 1%

Starting point is 00:31:50 isn't because the households consumed less and saved more and that channeled real savings into the, you know, entrepreneurial sector, what if the reason interest rates dropped is just the banks decided to create more loans? And actually now at the lower interest rate, households save less because now, oh, I can, you know, credit card rates are, I'm getting a special APR of 1%. Yeah, why don't we take that vacation?

Starting point is 00:32:12 So it's you get a double whammy where the, businesses are getting the green light to invest in long-term projects because interest rates are low. Capital is really cheap, seemingly, and the households are actually consuming more. And so in the Austrian view, that sets up this unsustainable boom that gives this appearance of prosperity for a couple of years, but then it eventually leads to a crash. And so finally, you know, Nathan, that's their explanation. Why does there seem to be these cluster of errors? Because you're right. In general, yeah, a restaurant might fail. A guy thought, oh, this community is ready for Thai food? No, they weren't. You go out of business.

Starting point is 00:32:42 But why is it that a bunch of entrepreneurs all seem to be hiring at the same time and, you know, unemployment drops. There's a boom underway. And then all of a sudden a bunch of people a few years into it say, ooh, we over expanded. We shouldn't have. Why does it seem like their mistakes are correlated in the Austrian view? It's because the interest rates are manipulated. It's beautiful. We've touched on it a few times. So I think it's worth kind of maybe expanding upon it here for the moment as well, too, is that for anyone that might not necessarily be familiar with some of the inner workings of the differences between the two. Could you even? just touch on the difference between the Austrian view and the Keynesian view. And maybe if you can't even touch on the Chicago and MMT. And why they're wrong. Right. Sure. So yeah, I just there I spoke about the Austrian view. So the closest version of that, some people, well, aren't you guys kind of like the Chicago school? And so yes, on many areas, the Austrians are, you know, compatible with the

Starting point is 00:33:37 Chicago school, you know, Milton Friedman type view, you know, very free market oriented in general. But ironically, one of the huge differences in terms of their policy analysis, like putting aside like methodology and stuff, is this issue of money and banking. So the biggest, the best example I can give you is Milton Friedman's explanation of what happened in the Great Depression is he said, yeah, everything was fine in the 20s. The Fed was doing a great job. And then like the one guy had a heart attack or something like. And so there was as a personnel change. And then especially when the bank runs. started in the early 30s, Friedman says the Fed should have come in and just inflated like crazy

Starting point is 00:34:16 to create enough new base money to offset, you know, the fact that people were pulling their money. And the Fed was too timid. They did inflate, by the way, just so you guys know, they did slash interest rates. But his point was it was too little, too late. And so his explanation for why things got so bad in the early 30s is the Fed didn't inflate enough. Whereas the Austrian view, it's the exact opposite. They say, no, the reason there was a boom in the roaring 20s was because the, the, the Fed was too loose and then that set up the, you know, the stock market got bit up to an

Starting point is 00:34:45 unsustainable level. That's what caused the 29 stock market crash. And then, yeah, there was the, you know, the deflation. But for example, there was in the 1920 to 21 depression, the prices dropped there more aggressively than in any 12 months span in the 30s, right? And yet we don't remember the 1920s as being one long depression, right? So I'm saying the particular things they point to as to why the 30s were so bad, you know, those individual factors were also true like in the 1920 and 21 one. And yet, no, they hit rock bottom and recovered. So that's an element there. The Keynesians, yeah, in general, the Keynesians think recessions occur when there's not of aggregate demand. So their big deal is to goose spending. And yeah, first you lower interest

Starting point is 00:35:28 rates. But if interest rates hit zero percent, then you're in what's called a liquidity trap. And then they think that means at that point, the federal government has to run a budget deficit just to get more spending in play. So again, the Austrian disagreed that because they think, you know, aggregate spending is not the issue. They look more at like real factors that in general, just like, it accrued Keynesian view. It's like, oh, if you just had Christmas every month, we never have a recession. And I think there's intuitively people know, no, that can't be right.

Starting point is 00:35:59 Something's got right. I mean, in a sense, they're saying growth comes from consumption. Right. Not by expanding the pie, but by consuming more of it. Right, right. And so, yeah, so that the, the Austrians kind of line up, I would say with common sense. I realized that's like loading the deck to say, we're common sense. There's a reason I'm an Austrian, right?

Starting point is 00:36:16 Obviously, I think they're right. So there's that element. And also, too, again, if you guys want to unpack it, like the Keynesians had this thing called the paradox of thrift. And they, you know, and Paul Krugman could give you a very sophisticated explanation as to why, oh, yes, your intuition's wrong. And that's what, but I think I could sit there and listen to what he said and then say, okay, and let me explain what he just said is wrong.

Starting point is 00:36:34 And actually saving is good and that kind of thing. again, the fundamental issues, because for the Austrians, it was the prior mail investments during the boom period that makes the bust not only inevitable, but actually corrective, right? That you actually, if people are going to jobs that are wrong, if 10% of the workers every day are getting up and going to the wrong workplay, they shouldn't be doing that. It's a misallocation of resources. The only way to fix that is for them to get laid off. You know, in a voluntary society where you don't have a dictator just telling people where to go, right? Like you have to, if you're, if where you're going, your labor is not socially supposed to be there, you, in a market economy, you get laid off. And that's painful for you. But ultimately, that's the only way you're going to get that person to go where, where they're supposed to be. Right. So that's kind of why the, you know, the recession is like this painful corrective procedure. But, you know, in the Austrian view, that's actually the healing process. And then the MMTers, um, their view. Sorry, I have to laugh. Yeah. They're, um, the reason they're very appealed. And the reason they're very appealed. is because they just appeal to like accounting tautologies. Okay. So they their whole

Starting point is 00:37:39 shtick is very different from like the Keynesian view, even though some people think, aren't they kind of like Keynesians on steroids? But so their appeal is a lot different. Like just a quick example, they'll do things like like Stephanie Kelton's, who's one of their gurus. She tells a story in her book where she was meeting with a bunch of like policy people and, you know, treasury officials and stuff like that. And she's given a presentation. And she said, hey, show of hands, if you guys in here could, you know, snap your fingers and get rid of the national debt, would you do it? And they're like, well, yeah, of course we would. And she's like, okay. And then she goes, okay, a different question. Show of hands, all of the

Starting point is 00:38:14 treasury securities owned by pension funds and things like, if you guys could snap your fingers and all those assets would disappear, would you do it? And they're like, well, no, of course not. That would cause a calamity. And then she says, well, those are, you know, the accounting flip side of the same event. And they're all like, oh. So there are things like that where, you know, they have some interesting ways of looking at stuff, but still ultimately, you know, I would, you know, so they have a whole, they build up a whole superstructure on, oh, the federal government's red ink is our black ink and stuff like that. So the reason I think that's, you know, like it's superficially, you know, it's correct insofar as it goes, but

Starting point is 00:38:48 the, the ALGI uses, like, if, if some guy borrows a thousand dollars from you, and then, you know, he owes it, you know, so he owes you a thousand dollars. And then he sticks. a gun in your belly and says, give me a thousand dollars, so you do. And then he says, hey, you know, that thousand dollars I owed you? There you go. That, you know, before he paid me back, that I owe you that, you know, he, I held from him isn't an asset in the same way that a company that's going to have to go sell goods and services and generate a profit is. And so likewise, to know that the federal government, you know, if I have a treasury and to know that they owe me this thousand dollars, if how are they going to get it, they're either going to print it or they're going to tax everybody

Starting point is 00:39:27 to give me it, that shouldn't make me feel like, oh, I'm so glad, you know, the private sector has these net assets from, you know what I mean? Like, it's just fundamentally different. So even though the accounting isn't wrong, I think it's extremely misleading. Yeah, it almost seems to me like could be wrong on this. Like they're leaning into the idea like, yes, the monopoly on violence does have value. Like that to the people who have it.

Starting point is 00:39:46 Like that's basically what they're saying. Oh, you're not putting words of it. They had a documentary. And I encourage people to watch it. It's a well done documentary. It's called finding the money because they're, big thing is to say, let's not argue about like, how are we going to pay for the green new deal or single payer health care? We have a printing press. You know, the issue was just, you know, real

Starting point is 00:40:04 resource constraints, right? So that's their whole shtick. And yeah, at one point when they're talking about, you know, why do we have taxes, right? Because you might wonder, you know, in the MMT framework, if we can just issue money, why even to, but their answer is for what you just said, Nate, is that, oh, because we, we have to induce the public to hold the currency. So why would they work for these pieces of paper? It's because ultimately they're going to get thrown in a cage if they don't give us enough every April 15th. And you should see the way they talk about it. It's like creepy.

Starting point is 00:40:35 They're like, ah, taxes. And they get, I'm not, I'm not exaggerating. Like it'll wear you out. It's creepy. So I appreciate the blunt honesty. You're saying, yeah, violence is good, ultimately. Right, right. At least when wielded by people who care about social justice.

Starting point is 00:40:48 Of course. Of course. So on and so forth. Well, I mean, I, go ahead. Sorry. No, I'll let you go out to this gear. I just wanted to quickly point out too, because one thing that you're saying, you said, you mentioned pain as we were talking to in a couple minutes ago here as well, too. And I couldn't help but think about the analogy of even like the human body and stuff as well, too. And I think this is something that the Austrians get that nobody else does that. Like if I say like, oh, you could live a pain free life. Most people would be like, oh, yeah, that sounds good. It kind of on the surface seems like a good idea. But that's really, really bad. Because even the fact that, like, you know, some labor might need to get laid off so they can ultimately go somewhere else because it was misallocated. If you don't have that pain, you don't have that corrective mechanism. In the same way, that if you don't have your own pain receptors in your body, you're going to damage your hands, your limbs, everything, and you're ultimately going to fall apart. You can't maintain and correct for

Starting point is 00:41:32 changes in like equilibrium if you don't have that feedback, even though it's uncomfortable. Sorry, Gary, I interrupted you. No, I mean, it's very similar vein of what I was going to go with. I mean, you talked about how it, I mean, essentially all the money, it causes malinvestment, it causes a distortion of incentives. It's almost like poison in the system. And in order to correct, it. There has to be some immediate pain, which nobody wants to experience. So just to chime in on that. You guys are right. And as opposed to like the, you know, just having a nervous system and pain in general,

Starting point is 00:42:05 the specific metaphor a lot of times people use is like a hangover, right? Or like, you know, going cold turkey if you're a heroin addict or something. And yeah, withdrawal is not fun. And you might think you're doing the guy a favor. Let's just give a little dose to get them through this. But it's like, no. And so so that's what the Austrians often will appeal to. And then the, you know, Keynes and MMTers hold that up as example of how sadistic

Starting point is 00:42:26 you know, the Austin, they can, I call them Austerians, like to be abroad, like people who are for fiscal austerity, not just Austrians. And, you know, because in their view, that just misdiagnosing the problem. Like, no, there's nothing wrong with, it's not heroin. It's like something you about your body needs. And why it's like oxygen. And no, you're not helping the patient by cutting off their oxygen. So again, a lot of this stuff, it depends what you think the economic issue is. And then your metaphor is either appropriate or it's, you know, sadistic. But anyway, yeah. No, it makes sense. And we could use these human body metaphors and sometimes you use well. sometimes not and we can't always compare economics and trade to human body metaphors. I understand that. Are you still keeping your Bitcoin on the exchange? Are you confident in your current Bitcoin setup? At Bitcoin Mentor, we've helped hundreds of people level up their security and fast track their Bitcoin understanding. If you find that you say we don't have time to go through other tutorials, the books, and the guides, you can book a free strategy session with me by simply scanning the QR code or clicking the link in the description down below. Discover how Ben, Gary, myself, the entire expert team at Bitcoin Mentor can help you accelerate your Bitcoin journey.

Starting point is 00:43:29 Simply scan the QR code or head to Bitcoin Mentor.io to learn more about how we can help you. To breast hacks, like let's say there is a way to have a sound money system, whether somehow we're able to achieve that in gold, which I think you can't because you're still dealing with humans who have to ship the gold back and forth. You needed something to represent the gold and that's going to get manipulated. Or if it happens with Bitcoin, which I think is what. people like Nathan and I are betting on and I don't exactly know where you stand on that, Dr. Murphy. If you can move to this sound money system, what are we looking at?

Starting point is 00:44:07 Are we able to get kind of a smooth plane landing here? How much will it sort of hurt in the interim? Is this all going to transition nicely? Or, you know, the best case scenario or worst case scenario, are we going Thunderdome? And what should people prepare for either way? Um, okay. So yeah, as far as my personal views, yes, I, uh, like Bitcoin. I've written favorably about Bitcoin. Um, I also still like gold. And actually, you know, I'm open to the idea of there might be things of like token. I know they exist right now, but I think they might gain in popularity of like, you know, real world assets, tokenization, you know, like blockchain based tokens that correspond to some physical gold, you know, in a safe vault somewhere in Switzerland or something, you know. So I think all those

Starting point is 00:44:54 types of things are there. And in general, yes, I think what's going to happen is over time the U.S. is just like its global empire is going to keep collapsing or you could say shrinking if it may be less dramatic. And that the U.S. dollar is going to keep shedding its status as the global reserve currency. I mean, that's already underway. This isn't just me speculating. It's just I'm saying just extrapolating current trends like since from 2000 to today. Could you expand on that a little bit? even just going to be some examples or what you're seeing that's showing the collapse in the U.S. dollar kind of hegemony? Yeah.

Starting point is 00:45:26 I mean, so I don't remember the exact statistics on the top of my head, but just because I wrote an article. And then I was on a zero hedge debate a year ago at this point with Jim Rickards was on my side. And we were debating two other guys who were more bullish on the U.S. dollar than we were. I think it was Brett Johnson and Michael every. Yeah. It was the other guy. Yeah. That was a good one.

Starting point is 00:45:47 Brad being the dollar milkshake guy. Yeah. And so anyway, there, you know, we took the kind of provide, I think, I think we said 2040. Did we say 24? Did we say 2040? Anyway, they kind of pushed us to be more aggressive than, you know, to make it more provocative. Okay, fine. But anyway, yes, that there, it was like just looking at the statistics in terms of the

Starting point is 00:46:06 proportion of the U.S. dollar in foreign exchange reserves among central banks. That has fallen a lot from like 2000 to now, right? And so if you just extrapolate that forward, I think it was like in the early 20, 40s at which point the dollar would be below 50%, right? If you just, you know, and I think it's going to, for me, it's a kind of thing where it's like, the reason people are still hold dollars around the world is because people still hold dollars around the world. You know, in other words, once it starts going, I think it's going to go fast.

Starting point is 00:46:36 And so there's that element. And also, too, just a lot of, like the thing, whatever one thinks about, you know, the Ukraine situation, but the U.S. government's reliance on financial sector measures like, cutting off Russia from the, you know, the Swift system and all that stuff. I think a lot of places around the world, you know, corporations and governments who, you know, they don't have a problem with the U.S. per se. We were just like, wow, they can just flip a switch and then we're cut off from international trade.

Starting point is 00:47:03 That seems kind of precarious. And so I think that, you know, we're not going to see it right now. But I think over the next five to 10 years just seeing that and how much, oh, if your, if your economy is tied to the U.S. dollar, they can just shut you off that I think that's going to get people. And then again, it's the kind of thing where it's going to be hard. to predict because it's it's like you know it's like if everyone wants to switch their their phone network or you know oh we don't like facebook anymore let's go somewhere else like it's hard to court

Starting point is 00:47:28 but once there is a viable alternative and it picks up momentum then it can be a mad dash if the fundamentals were wrong for the thing that was like had the first mover advantage so i i think you're going to see that and just also economically that i like the bricks nations you know are China if you use purchasing power parity has it had a higher GDP than the the U.S. for a long time at this point, right? When people keep talking about, you know, oh, at some point China will overtake us, that's using the official exchange rates in terms of like trying to say like how much, you know, a basket of goods can you want buy versus the dollar. If you try to measure it that way, China already like I think in 2014 had a higher GDP

Starting point is 00:48:08 than the U.S. Right. So I'm just saying that. Yeah, I had no idea. Yeah. And also and you might say, well, yeah, but shouldn't the market exchange rate. But what's funny is even like the right wing, you know, America were tough guys, people, they think China's manipulating its currency, right? Meaning they think they're artificially undervaluing it to boost exports. So it's like, okay, so under your own framework, if China allowed its currency to rise, then that would mean it's GDP, you know what I'm saying? So even on their own framework, like they would have to admit, oh, yeah, the China's GDP is a lot closer to ours than we thought last Tuesday, you know.

Starting point is 00:48:41 So anyway, I'm just saying, I think that yes, going forward that the U.S., it's going to be more of a multipolar role. I'm not saying China's going to be the new superpower. I think it's going to be a multipolar world for the next few decades. And that in that framework, yeah, the dollar's not going to be supreme, especially because I think, you know, what they're doing. They just keep racking up debt, you know, that this can't persist. And so then, yes, where are you going to go?

Starting point is 00:49:06 I think the rise of blockchain technology is going to allow not just Bitcoin, but again, also like tokenized assets and whatever that rely on blockchains. I think that's where people are going to go is like an escape. And so ultimately to come back to your question, you know, I'm kind of like, this is an example I use. It's sort of like the matrix, right, that the world of the matrix on the one hand, you know, that's horrifying, like, you know, all the big simulation and the control and pressure. But the other hand, their technology was cool, right? Like when you're, when, when Morpheus pulls Neo and they're in a little spaceship flying around, they had better technology than we have now. You know what I mean?

Starting point is 00:49:46 So I think there's going to be both are true at the same time, like AI. is going to allow the average person to do a lot of cool things like Tony Stark in his house with it was it Jarvis I forget the name of his thing like individual productivity is going to go through the roof as you get more personal assistance and you can just do all kinds of stuff but on the other hand that is going to give governments you know and corporations a lot more control over you so I'm being a good economist here I'm trying to say every possible position so no matter what happens I can say I told you guys but but I do actually believe all that stuff I just I think that you're going to see all

Starting point is 00:50:18 this stuff play out. Last thing else, I do think that whatever group of people you think runs the world, if that's how you think of things, it seems to me. The Illuminati. Yes. There you go. That they realized what was happening on the Biden administration was flirting with nuclear war between Russia and the United States. And I think they backed off that. So I don't like what's going on in the Middle East right now, but I think they are deciding, we can do that. And, you know, some people might die, but it's probably not going to lead to World War III. anytime in the next five years. So I do think that they are trying to, you know, continue to consolidate control and do whatever their private agendas are. But they realized,

Starting point is 00:50:59 whoa, we were getting a little bit close there to outright, you know, global destruction. Let's back off from that. And on that note, I just wanted to point out too. So even like last night, funny enough, I was reading about how, I guess as Russian oil companies have begun settling with China and India and using Bitcoin as the intermediary to make those transactions. And just one thing I want to kind of touch on to see if maybe there's some hope there as well, too. Even if we were to do this when we do the sound money transition, it sounds like it possible.

Starting point is 00:51:28 You're talking past the sale. I like it. Thank you. It might be possible that although it would be very bad for the American Empire, it may not be bad for America and the citizens necessarily, particularly with productivity gains. Yeah. And that was the point I made. I had written an article on this stuff.

Starting point is 00:51:46 And I said that, yeah, it's going to be painful. it's a necessary condition that yeah it's the obviously if your country gets conquered by some foreign empire and you're paying you know taxes to them or whatever and a bunch of your people get killed in the initial strike that's not good but the average person living under the empire it's also not good for them either you know what i mean that yes i think you know peace among all nations is better for the average people even in the in the countries that are stronger and could dominate in the short term so yeah even having the global reserve currency that has allowed the U.S.

Starting point is 00:52:20 to effectively export $100 bills and then get a bunch of, you know, Japanese cars and Chinese textiles and whatnot in exchange. And superficially, that looks like a good deal. But in the long run, I think that it has led to instability and that I think, yeah, the average American, especially now that I think we're at the end of that anyway.

Starting point is 00:52:38 So that system can't continue. So, you know, you could ask as of 1950 with the whole Bretton Woods, you know, was that good for the Americans over the next 30 years, maybe? But that's not the issue anymore. issues right now going forward. And yeah, I don't think the average American is better off maintaining this global empire. I think that if they shrank that, that was certainly, you know, in terms of just lower military budgets, but also blowback from terrorism and things like that.

Starting point is 00:53:04 I just, I think that the U.S., you know, it'll benefit the average American if they greatly restrict what they're what they're doing in terms of foreign policy and monetary policy, too, that, yeah, the transition. You're right. If the dollar crash, that would all of a sudden people going to Walmart, everything would be a lot more expensive. And that would be shocking. But arguably cutting off the ability of the federal government to just spend money recklessly, I think in the long run, that probably is good for the average American household. It's pain now or pain later, right? There's no way of getting around it. Gary? I mean, that's what it is. I guess just practically speaking, what can people do when this time of

Starting point is 00:53:47 sound money comes to best prepare themselves. And again, we're not officially giving investment advice here, but just general ways to prepare yourself for this hopeful transition. And I should just say, too, because it's somewhat of a paradox. I even heard it recently where someone was saying, you know, I don't understand like, you know, you got Michael Saylor out of telling everyone, you don't even need to invest them, just just hold rule and blah, blah, blah. And it's not a pair. And they're right in the sense because they were saying, how can Bitcoin ever become the global money if nobody ever spends it, right? And that is. And that is. And that is. And it. And it's, true, but the point is, yes, it, during the transition, suppose it, we do get to the point where

Starting point is 00:54:23 in the year 2050, you know, Bitcoin was what everybody, everybody uses, at least for ultimate settlement, you know, at least layered and whatever, then, yeah, what would happen is at that point, once it got to the point where every household had a little bit and every corporation had a bunch and, you know, big governments had a bunch. After that, it got to the point. And then there were no more people piling into it, then, you know, the double digit price appreciation would taper off. off. Right. And then people would start allocating out and say, oh, well, at this point now, you know, I'm probably going to earn 1% of my Bitcoin. I could earn 10% over here. Maybe I'll, you know, and then that's how they would then transition into people using it for commercial

Starting point is 00:55:02 transactions as opposed to just, you know, pure holding. And but it's, it's not a wash that you are performing a social service, right? Like if the world is supposed to, for fundamental reasons, switch to Bitcoin by a few people who see that now piling into. And, but it's, you know, it and jacking up the price, they're pulling that forward, that point at which everybody's using it, right? So I'm just saying, if the predictions are correct, then you're, you're doing a socially useful service by piling into it. So, good, good. I like to know that what we're doing is the correct answer and the moral good too. Yes. I was going to say even to at the end there that, like, it'll reach a point like no one's going to spend. It's like, yeah, but the producers out there,

Starting point is 00:55:39 they're going to be demanding it as compensation for their work and their labor and for their services and their product. So if you want to hire Dr. Murphy in 2050 to come. and work for you, you're going to have to pay them in Bitcoin. Right. And again, this whole, this idea that everything's just going to come to a standstill because knowing it's prices fall, right? So yes, maybe I'm not going to be able to sell my labor at, you know, 100 Satoshes per hour because no one, you know, everyone wants to huddle. But if I lower it to 50 or 10 or, you know what I mean? At some point, it would happen. And then once you get that equilibrium going, then things can commence. Sure. Also, on a very basic level, I'm not a cyborg. I'm a human being. I would like to

Starting point is 00:56:14 buy food to eat. I would like to spend on entertainment occasionally. I'd like to buy things for my kids. These are all ways I spend money. Right. Yes. And even like the most hardcore hodler, like if some, you know, kids living in his one bedroom apartment and then his Bitcoin holdings keep going up and up and he realized I could go buy an island and have a, you know, a fleet of servants by selling off 0.1% of my holdings. I think he might say, I'm going to do that. You know what I mean? And so there you go. And there he just released some to the world. There you go. That marginal value will change, right? Eventually, at some point, the price of the island is like, okay, I could shave a little off. Yep, yeah.

Starting point is 00:56:48 Beautiful. Gary, did you have anything else? I guess I want your final prediction, Dr. Murphy. Ooh, yeah, I got another one. When do we get our flying cars? Does it happen before Bitcoin is a global reserve currency or after? Before. All right. Okay, invest in flying cars, kids.

Starting point is 00:57:08 All right, that'll be the next one. I didn't say that. I just said it's going to happen. Beautiful. Awesome. Thank you so much, Dr. Murphy. This is incredibly insightful and enjoyable conversation. Please, where can people go to check out your work? Where can they find you? All the social media, all the things. What is it? Sure. So I'm a chief economist for Infinio where we work on, you know, blockchain-based finance stuff. So that's at infinio.a-I-I-I-I-S-A-I-I-S-R. And then also I'd point people to the M-S-I-S-I-N-S institute where I hosted what's called the Human Action podcast that's weekly, talk about Austrian economics. That's M-E-S-E-S-O-R. If you enjoy this episode with Dr. Murphy, please like, share, and subscribe, and check out the last episode on finding freedom through homesteading above.

BTC Sessions - Economist Reveals IF Bitcoin COULD BREAK the Dollar! (DEEP DIVE) | Robert Murphy

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