BTC Sessions - EMBRACE Deflation With Bitcoin! Guest JEFF BOOTH ep126

Episode Date: December 15, 2020

Jeff Booth is an entrepreneur, tech leader, and author of the book “The Price of Tomorrow: Why Deflation Is Key To An Abundant Future”. In this episode we talk about natural deflationary nature of technology, how central bank policy is fighting a losing battle against those pressures, and why embracing the natural order of things may be the only path forward - perhaps with Bitcoin. https://twitter.com/JeffBooth thepriceoftomorrow.com/amazon/ SUPPORT THE SHOW: LEDN Bitcoin backed loans –  get $25 free https://bit.ly/397rlLN Get Wasabi wallet for Bitcoin privacy https://wasabiwallet.io/ Cobo Vault: secure your Bitcoin! https://bit.ly/2GgMFlH BillFodl: get your wallet backups in solid steel. https://privacypros.io/ Bitrefill: use Bitcoin to purchase gift cards https://www.bitrefill.com/buy/?code=O04UMic9 LIGHTNING tips: https://tippin.me/@BTCsessions Telegram channel: https://t.me/btc_sessions

Wasabi wallet and fairly private. Jeff Booth is the author of The Price of Tomorrow, Why Deflation is the key to an abundant future. Today we got to talking about the push and pull between inflation and deflation, the crazy monetary policies in printing that we've seen, not just this year, but in the past, like in the recession of 2008-2009 in the response to that, and how this all plays out and impacts the every day-to-day citizen. We also talk about a potential trajectory of where we could be headed if things continue down this path and how Bitcoin can present itself as a release valve to those that see it and understand it.

I really had a lot of fun with this discussion. I hope you enjoy it. I am Ben with the BTC Sessions, and this is your daily session. Before we done, in, of course, shout out to sponsors of the show, ledden.io. This is where you can use your Bitcoin for a variety of different services. Of course, they have their Bitcoin back loans, which have saved me on a couple occasions. And this is where you can use your Bitcoin as collateral to get a Canadian or US dollar loan.

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But if your house burns down or there's a flood, that backup may be lost entirely. It's also pretty easy to throw out. So you might want to check out putting your backup phrase or your backup seed to your wallet in solid steel. And you can do so over at privacyprose.io with, the bill foddle. Now, I've got one of these. I've actually had it for years, and it is one of the backups to one of my wallets. And I'm probably going to be stockpiling a few more of these things. Anyways, it's a solid steel piece with little plates or little tiles that you can slide the letters in and safely back up your seed. It is fireproof. It is waterproof, and it's you-proof, because you're

much less likely to throw out a piece of solid steel than a piece of paper. Head over to Privacypros. check them out. They've also got some other great stuff to protect you from a lot of different things. They've got Faraday bags, all kinds of different stuff. So check them out. And as always, links down below. Let's dive into this interview now. All right, Jeff, welcome to the show. Thank you so much for taking the time to be here. Fellow Canadian, very happy to have you. How are you? Really good, Ben. Thanks for having me. Yeah, I'm very excited for this chat. I have all I've got it right here. I've read your book a couple times through, really, really enjoy it.

And obviously my show is a Bitcoin-centered show. But, you know, there's often new people kind of coming into this space or curious about the why of Bitcoin. And one of the reasons I really like you book is it does paint a picture of why something like Bitcoin could be necessary. but it spends basically the entirety of the book, not talking about Bitcoin at all. It talks about the current system and some of the inherent flaws of the ways that we're doing things right now.

And so what I maybe wanted to start with here was there's a lot of people nowadays that they have this general sense that something is wrong, but they have a hard time, pinpointing what those things are, but they have this feeling of you're just a hamster on a wheel and you can't seem to catch up. And there's this difficulty understanding what's going on. So maybe without fully diving into the flaws and the why of what's going on,

what are some of the things that you currently see, some of the challenges that people face nowadays in their daily lives and just trying to keep up. Well, what I would say is if you're dealing with first principles, that thing that people can't feel is two forces working against each other. They're complete opposite forces. And one is the efficiency driven by technology that's moving into society everywhere. And that efficiency is deflationary. It makes prices go down and it removes jobs on the way.

So what I would say, and I know that's not everybody's what they see yet, but that's what's happening. And on the other side, trying to stop that, is trying to stop that from happening is essentially debt creation and monetary easing to make prices go up because we've always lived in an inflationary world. So that structural change to how society will operate and is operating today is creating all sorts of distortion and prices, asset prices going up, division of wealth, a division of wealth, inequality, a whole bunch of what you see in the landscape politically is all caused by that. They're all second, third order effects of that fundamental fight of our time. And very rarely to human beings go through a time like this,

where the entire monetary system is collapsing that's going to need to be replaced by something else. So I try not to get into bad people. There's bad people in the system everywhere, but it's a system itself. And we are all caught as cogs inside that system, not questioning the system itself. that's what's happening and virtually everything there is so much tied to what i just said if you actually explore it on a first principles basis so what do you what do you think that people are you know where is this hitting them the hardest in their day-to-day life is it is it regular expenses is it wages not keeping up with with the the state of their day-to-day

expenses and and also why is it so hard for people to pinpoint what's going on well because we're caught in the system right and in a business if you're caught in the system if you're blockbuster um what is netflix is coming on Netflix looks like a really bad business right download speeds are slow they they have a they have a at that time it was a it was a rental business that you sent your movie back and forth by mail it's a terrible business. And Blockbuster looked impenetrable at that time.

And they didn't buy Netflix for $50 million when Netflix was in trouble. And so in Blockbuster, there's 9,000 stores are an advantage. But when download speeds change in an instant, because technology is advancing at this crazy rate that we can't comprehend, the advantage almost to Netflix and Blockbuster's

stores become an anchor around their neck. So that's what's happening to the financial system of the world today because of technology. It's moving so fast. And going back to what you said, it depends on where you are on the wealth equation line. So it's impossible to say how do people feel? Because if you own assets, assets move up with inflation. So if you own housing, if you own real estate, if you own commercial real estate, if you own commercial, estate, if you own gold, if you own Bitcoin, all of those things move up like crazy if you're

if you're debasing money and moving it. It's a function. So those, if you own stocks, right? So who owns the stocks, who owns the real estate, everything else? And who wins by inflation? There's a whole bunch of winners. And on that side of the line, they don't see it for a different reason, right? It's not bad people. Lots of them are my friends, close friends. I'm in the camp of having lots of assets. But that win, that unnatural win from money, monetary using and trying to create inflation creates an unnatural loss on the other side of ledger. So if you're working for wages, if you don't have, or if you have savings or fixed income or anything, and you don't have assets,

then the opposite side of the coin of inflation is wage deflation. You're getting paid less. The value of your money is going down. So if you just naturally look at that from a not, don't get emotional on which side of the line you're on. If you just look at it from the system, how the system operates,

winners on one side, losers on the other side. If you portray that forward and if you keep doing it, what happens to society? The losers rise up and take the winner, take what the winners have eventually. That's what happens to society. Why is that so difficult for people to see it happening? Or why, I guess, in the same vein.

So why is it difficult for people to see and understand that happening? But why, you know, from the sounds of it, some of the anger that gets placed. I see a lot of it, it gets placed upon companies and people that have assets rather than the system that is perpetuating that further divide. So in your opinion, do you think there's a reason that the anger gets placed in that direction and rather than potentially the right place? It's easier to put a face to it's easier to create a victim.

or that it's that person it's more emotional it's their fault that it created this and there's a whole bunch of people on both say let's say on the winning side that step into that unaware so they call

if you called it capitalism today we don't have capitalism today free market capitalism today we have governments trying to support asset prices high and keep those prices high and a whole bunch of people on the losing side of that equation can't pay for those asset prices that are high. Food prices going higher,

real estate going higher, their rents going higher, and their wages effectively going lower. And they can't keep up to what you called the mouse wheel. And they're working harder and harder trying to keep up. No, starting to realize this is a rigged game. And the people on the top of that ladder don't know it's rigged game. people on the bottom of the blood. So it's really easy to point fingers and it's that person's fault.

Yeah. It's really easy. It's really easy for politicians to create, you know, from the book, I dedicated an entire chapter to this, the, how to create us versus them. And it's really, it's really easy to do when people feel loss of hope. So let's maybe, dive into, again, for people that are watching, kind of coming into this, trying to understand

what these issues are and how these wealth divides are driven. Maybe let's, if you can speak to a little bit about the inflationary forces and kind of how they play out as in like the flow of money as it's created, let's say, for example, the 2008 financial crisis when money was created. How does that flow of new money kind of work to the disadvantage of the wage earner and the middle middle income lower income individual? So let me back up first because there's a lot of people that won't, and if they haven't read the book, kind of the central tenant in the book, and then I'll go into what you just asked about if you don't mind. So technology is exponentially.

deflationary. So it's moving everywhere. It's not just in your phone. It's everywhere. And we misunderstand exponentials. So if you fold a piece of paper on itself 50 times that piece of paper will reach from here to the sun. And I read that stat and it was, you don't believe it. And the first thing you do is go look it up, right? And because it's so, it breaks your brain. But if you compare Moore's law to where we are on that exponential, we're on that paper folding. We're on fold 34. So in 18 months, two years, everything that we've seen in technology over the last 50 years doubles. And so we're not in the small steps anymore.

We're in the big steps. But people's brains think linear. And so if what I'm saying is true. true. So you can dig into anything I say the book is completely factual. If what I'm saying is true, you should be able to see on the other side of the ledger something going on to be able to stop prices coming down everywhere in society. You should be able to, it should be really visible, right, somewhere, somewhere. And so when I looked at overall debt, because it's really easy to hire if you just said personal debt or corporate debt or government debt or this country's

government debt or anything else, it's just a shell game. It moves around and everything else. But if you look at the overall global economy and overall debt, you can see kind of the shell game in entirety. And so what I wanted to see, and what I realized is end of 2019, we had $250 trillion dollars of global debt to run an 80 trillion dollar global economy. And the numbers are so staggering that takes your breath away. And you realize, can we ever pay that debt back? And so first, can we ever pay that debt back? And maybe, right?

You say, okay, if we pay the debt back, that means taxes have to go up. And growth has to slow by taxes going up. so to be able to pay that debt back. And that's a big enough, oh my God, we're essentially, we're stealing from the future by spending today. And we're pulling demand forward and the growth rate has to go down for us to pay back the debt. And that becomes not really plausible to pay the back that debt. But then on further examination, what you realize is against what I said, the exponential function, of technology, that $185 trillion of that new debt out of the $250 trillion

of debt came in the last 20 years. And it just, and it blows your mind until you realize there it is. There's the smoking gun that tells you this is what I'm saying is factual. And so that debt is, and again, because it's exponential deflationary, exponential efficiency, that exponential efficiency is exponentially deflationary, then what you should expect is the debt to be exponential on the other side going forward. So most of the deflation is in front of us, not behind us. And so the only way to stay in equilibrium is to have massive monetary easing

or printing or debt creation on the other side of that ledger. And so that's what we're seeing today, right? and it's going to get a lot worse. So now, examining what you asked. So if it was only debt, if it was just debt and raise taxes and the economy collapse and a whole bunch of people that own that debt

went broke and everything else, that's what capitalism calls for. Clean out of the old, refret, and everything grows again. But it grows from a lower base. As people who kind of abuse the system, are wiped out.

2008, 2000 before that, all you've seen is going back about 25 years, maybe longer than that, 30 years, breaking of the rules of capitalism

to crony capitalism, to save the people that made bad debts. Yeah. And so, and 2008, what you're saying today, You use the airlines as an example or use the oil patch in the U.S. as an example.

If you replace the debt and all the shareholders get wiped out and the debt goes to zero, I think the oil rigs still are valuable or the airplanes are still valuable. Just new people come in and run those things. And it starts again. But if you let the whole system fail or commercial real estate that should, be priced anywhere near where it is today. But if you let that fail from the government, then the entire system unwinds.

Because if you allow deflation to happen, the debt gets more expensive. Yeah. And it resets a different way. And it resets through financial failure and the entire system unwinds. You'd see asset prices falling by over 90%. You'd see a great depression.

You'd see every bank fail, fail. and you'd see governments fail as a byproduct if you let capitalism take its course today. And why would you see that? Because you haven't let capitalism take its course. You've delayed the pain. And so now when you explore this more, anybody who is cheering for the existing system is cheering for manipulation because it's the only way it works.

And if you're cheering for manipulation and not a flirt, market. Think about what you're cheering for. That's what's the result where we are in the existing system. So there's a logical set of next steps, next steps, next steps that are going to happen in the existing system. His existing system tries to protect itself. And that that protection of itself, again, not through willful neglect, but can you imagine that being, we're in Canada, Trudeau today and saying, okay, we're going to let it reset. They can't. So they print more and more.

I spoke to the Finance Committee of the House of Commons on Thursday. And what I realize is how far away an understanding of what the real problem is, we're not close to even understanding the factual where we are and how to build build a bridge across to the other side. So you can expect it to get a lot worse in printing. Yeah. Well, I mean, even just from 2008, 2009, and the response to that to the response this time around 2020, the amount of money printing is staggering.

I remember seeing 2008, 2009, as they started, you know, pumping out the stimulus, it was, you know, hundreds of billions of dollars. And that sounded a stagerness. downing then. Yeah. Yeah. And this. Yeah.

Trillions. Trillions easily. And multiple times over in, you know, I think something like 20% of all U.S. dollars were created this year. 25%. Wow. 25%. And I mean, that's only going to increase over time.

And it seems like if they successfully kick the can down the road again, then we're just bound to rinse and repeat, but with bigger numbers. With bigger numbers, more inequality, more, and so, so what would do politicians do when there's more inequality? It's their fault over here, right? We need a wealth tax. We need this. We need this.

All of those capitalists, they're destroying it. Destroying the free market. And a whole bunch of people believe that rhetoric. When it's not bad at all, when it's not that at all, it. it's because you're printing money out. You're ruining the rules of capitalism. Yeah. So let's maybe take a look at the difference between the recession in 2008, 2009, and the response to that.

And this time around, so the last time you saw huge injections of capital that more or less went to banking institutions and that had a very different effect than. what we may see now. And still, I'm not quite sure on the divvying up of the stimulus this time around, but you did see some direct into the pockets of individuals, regular citizens, getting money sent out to them. Maybe you can speak a little bit to the effects of last time around where that money went and the divide that it drove,

and how the effects this time around may differ based on where the money flows first. Yeah, so it's largely the same today. It's so nothing has really changed. A lot of people don't don't see that. They see, oh, I've gotten money. Somebody has given me money. Why is it the same? Yeah.

So the transfer mechanism today, take the Fed or the Bank of Canada and everything else, the transfer for mechanism to society is through the banks. And so effectively what ends up happening is banks take off bad loans off their balance sheet, transfer them to the central bank, and they get injected new money, fresh money that's been made up, just punched in on a key. So it was originally supposed to be paid by the individuals that took out the debt. But now the bank has stepped in. But yeah, because think about it.

If there's a whole bunch of failing loans here and my loan portfolio in a bank is bad, I can't lend more money. So I need to take that off my balance sheet and I give it to somebody else, the central bank in this case. And I get new fresh made up money. I think about this. That made up money, nobody paid for. And now I get to lend it out at an interest rate so I can build up my balance sheet and everything else, and I get to lend it out a whole bunch of times.

But what's that happening is, because of this wealth inequality and everything else, there isn't enough businesses to lend out to. So that money is just going into asset monetization and everything else. It's a very top of the ladder, and there's very little of it gets to. the greater, try to be a small business and get access to that money, no chance, right? Because there has to be a reasonable chance for the bank to get paid back, to be able to lend.

So why M2 is collapsed and that money isn't getting to society is because of that, and it moves into asset price inflation. And the same reason that BlackRock went in and bought all the real estate in 2008 is the same, the same reason. Massive returns for all of the people at the top. hedge funds, front running this cycle, massive returns for anybody with access to that window, access to that free money window. And then the next step and the next step is just like a pyramid.

And then at the bottom, they get killed. So that is the way that kind of that central bank, which effectively used to be in independent from Treasury. What's happening, what it will happen next is the political will will will overtake the central bank's neutrality. And because people will demand it. And so you're going to get MMT helicopter drops of money. You're going to take two citizens.

Will it make a difference in the long term? No. Because think about the, think about, again, from facts, the roots. So as a central bank and government, I hold asset prices unnaturally high with made-up money. And then I go and take more made-up money and I give people more made-up money to pay. I decide how much money they get to pay, they get to keep paying for those artificially high prices. And it's just a concentration of more and more power. and more and more and more government control.

It's anything about the free market. And so that's what's happening. I fully expect more money to. That's why socialism creeps in because there's a whole bunch of younger people today. There's a whole bunch of people that don't believe in a free market because they haven't seen a free market.

And so it's really easy to convince those people. It's not your fault. it's those wealthy people's fault for creating businesses and everything else. And it's really easy to get elected and say, I'm going to give you money. Think of where that money comes from. And that's where we'll get into Bitcoin and everything else. Where does that money come from? So isn't any interest rate on made up money usury?

Isn't it a little legal? because it's an infinite interest rate because you made up the money in the first place. And so if you want inflation, inflation is the most insidious of taxes of all. What it is, is it inflation is think about what inflation is when you, so I'm sure in everybody's personal life, they don't want prices to go up. They want things to get cheaper, right? That means the value of your money is going up. And the value of your time is going up.

So why do we buy that we need inflation in our society? And if you look at who wins, who loses, a credit-based system based on debt alone and made up money needs inflation. It requires that you have to have it. Because otherwise, once it starts to fall, the whole thing unwinds. So who owns the debt? If you have tons of debt, inflation is a really good thing for you. You pay back the debt with cheaper dollars tomorrow.

So just again, different winners, different losers. But it actually doesn't matter. In the end, all of this doesn't matter. Technology is a stronger force than central bankers have an ability to do without losing control of their currencies. So before we dive into talking a little bit more about deflation itself. I wanted to maybe just take a look at,

so we hear a lot of stuff about hitting inflation targets and central bank saying, oh, we're below our inflation target and it's, you know, we need to get it higher. And we even had Stats Canada come out say that inflation in Canada has only been 0.5% after over the last number of years. I can't remember how many years they said. Is that reflective of the reality and if not why?

So that's what's happening. They need their, so when you hear inflation targets of 2%, and now they're recreating rules to make them to create more than 2% inflation, you should hear this. We're doing everything we can to destroy the value of your currency, and we can't destroy it enough. because prices are getting cheaper, faster. So what we're going to do is we're going to create asset price inflation.

We're going to do everything we can. Hear what they're saying. That's what they're saying. And eventually they're going to be successful in destroying the currency, eventually. But right now, deflation is a bigger force. And the money is just going into a hole and into a hole and into a hole. and is protecting prices from falling. And more and more money needs to go into that hole.

So if you keep doing that, you can expect what's going to happen to society. Do you think that the way that they're measuring inflation is correct? Or do you think that they kind of pull and pull prices from what is relevant for them to be able to enable their policies? Or how do you see it? Yeah, I don't know if you've seen. seen this, but if you look at the Chapwood index, so

for your listeners, it's a more correct way of seeing what the real inflation rate is society. The thing that people are feeling, why is the food price going up, why is this going up? And governments change that weighting all the time.

But again, I try not to get again into at the top of this argument is technology, it creates this exponentially increasing efficiency, and that efficiency is deflationary. Every CEO who uses technology is trying to give you more for less. They're not trying to destroy jobs.

They're not trying to do that. They're trying to give you more for less in a market where every other company is trying to do the same thing. That means the result of human innovation is naturally deflationary. and you could fight that for a long time. We've seen central bankers fight it for a long time, but you can only fight it by changing the rules of capitalism and making up money.

It's too great a force. So that's the top of this level. And yes, down below, yes, I can change my definition of CPI. Yes, I can do this. Yes, I can do this. Again, all of these are moving the peas on a board. Yes, I can. print money. Yes, I can do this. But the top of this argument is there's been a structural change to society. And there's nothing in the end that can stop that.

So what let's let's dive a little bit further into deflation itself. What are because deflation, most people hear that and it tends to be in a negative connotation. What are, what are some of the arguments put forth against deflation? What are, what are the, the, the, the, the, the, the, the, the, the, the, the, the, the Have you seen the IMF video about chairs? No, I haven't seen that one. So the whole thing, well, people wouldn't buy chairs, where they would save their money and they wouldn't buy chairs. And then the economy would collapse because people wouldn't buy.

And it's so ridiculous a concept that the IMF is putting this out about deflation to scare people. We grew up in an inflationary world. My parents' house went up and up and up. And they didn't see it. And their debt went down in real terms because they got paid more through their lives. And I grew up in that world. So did you. We all measure all our interactions from that world.

Just ask what deflation is. It's just when your value of your money goes up and goods and services go down. Why is that such a bad thing? Now, what you'll hear, IMF video notwithstanding, and a whole bunch of other things about purchasing chairs, it's just completely incongruent with what happens today in society. If the iPhone launches and it's more expensive than the one you can get free on the plan, last year's version you can get free on the plan,

and there's a line around the block for it. We don't save our money when the value of the goods or whatever we want is more value is valuable to us. And you can distort that from a central banking policy all you want. If you take interest rates, now, like these are two different sides of the coin, right? You can take interest rates to negative as a central bank.

If you take interest rates to negative, what message do you send to every CEO? Buy back your stock. Don't have cash. Because if you have cash on your balance sheet, it's going to lose value. we're trying to make your dollars worth less. So why would any CEO, in their right mind, hold cash on the balance sheet?

And so then blip in the market or anything, oh my God, I'm going to have to fire all these employees because I don't have cash on my balance sheet, because the government created a system that I shouldn't have cash on my balance sheet. I need to be bailout. And so it just reinforces on the, it just reinforces, itself and reinforces on itself when why our savings back why should our money not be worth what

it is worth the same or more tomorrow would that would that all of a sudden ruin everything it wouldn't it's just it's our perception by the way it in the in the moment the transition from one system to the other system it's going to be ugly but it's going to be ugly no matter what but if If you get through on the other side of that system, deflation is a natural, it should be natural. It's human innovation and a free market. Prices should be going down and our value of our time should be going up as a result. Again, if every single person, the reason you use technology is it's the time savings.

So it's an efficiency savings. It's the same thing for a business. So let's, I guess, now kind of jump into, I guess, kind of the Bitcoin portion of this, but more just the idea that Bitcoin presents itself as an option to leave an inflationary system for an inherently, I mean, it's disinflationary, but eventually deflationary in terms of currency. So in a system where there are options, where you get to choose where you hold your money, what does that, how does that potentially play out for the individual, for companies and eventually for nations? What kind of response do you kind of potentially see coming down the road?

That's a big question. So in about a week, I have a paper coming out on what it looks like for the existing system and what it looks like. Because the more that the existing system breaks down, and it's because it's structurally that will benefit Bitcoin expanding faster and faster. So most of the responses around the existing system will benefit Bitcoin. coin. But there's a couple pieces in here that need to be explored bigger. It's going to be we won't be able to explore them on this show, all of the pieces. But those are all, and probably the best analog to use to that is what does an existing business do when faced with the same thing? What did Blockbuster do? But Candy aisles in their stores. Right. And it's humorous

because the executives of Blockbuster actually believe that might work. But when they're dealing with a structural change, you can see it just drives them off a cliff faster. But that's a normal response from a business. So why would do that? Is universal basic income the candy aisle of central banks? Exactly. But universal basic income will come,

or MMD or whatever form, those things will come. And for a short period of time, it actually might work. And quell some of, but what people aren't who wouldn't see is in one country when you do it, what happens to another country? If you're creating all of this money and you're doing this and your dollar loses value, by the way, if your dollar loses value, you gain competitiveness of labor because your labor rate goes down. So that inflation or that are size. So your dollar loses value, and jobs can move there for a while because your labor rate goes down.

And the labor rate is a function of overall technology. Now you don't have to remove labor as fast with technology because you've paid them less. But what's the response? Another government, who is losing labor to that equation, needs to do more and print more to regain that balance. So that's what's happening all over the world. And we look at housing in Canada and we say, and nobody in Canada says housing always goes up, or real estate always goes up.

And it's just a belief system without asking, would it go up without $185 trillion of easing over the last 20 years? And answer is pretty simply no. And then extending to what I said, we see the Asian influx into our housing. Why? Because everyone in Asia knows that the money is going to be devalued. It has to be.

So they try to get their money out of that and they put it into safe haven like our housing. And so it doesn't matter where that money is printed in the world. It all is racing around hot money, racing around to try to find safe stores of value. Bitcoin is the safest store of value in that. It is a lifeboat from the coming economic storms. And the more easing that happens over here, the faster it's going to expand.

And for the first time in human history, there's something else that people can put into their money into that can't be confiscated. So gold could be confiscated. You have to centrally store it. And when you look back through a history, it was always confiscated by the state. Always. And why people don't realize how fast this is happening all around the world is because they measure their interactions in their own currency. So if you're a beneficiary of inflation, let's use, I use this example quite often, but let's use the Weimar Republic. in the Weimar Republic, there's a whole bunch of people that won all of the shop owners and all of the business owners.

They won because of those inflationary policies. What happened next? Who do you turn the tide of populace against when people stand out as the winners? You go and take it back. So that's Hitler's election, who was created. And by the time that happens, it's too late. So how do those people leave or how does anybody leave the country when all of their wealth is denominated in that country? And they were a beneficiary.

And so back then, people would sow gold under their clothes and try to get out of the country. But it's living as a refugee in another country. Bitcoin is a lifeboat away from that. Because if you can remember your 12 words, you don't need anybody. You can move anywhere in the world. You could get on a plane and nothing can stop you. Yeah, it's definitely a, it's a huge shift because it's not only, again, a, a way to protect yourself from, from that inflation and get your, get your wealth into something that, I mean, part of the benefit of Bitcoin is, the absolute certainty of its monetary policy is that guarantee because before, I mean,

we did have a gold-backed currency previously. And that was very surprisingly to not much, I don't want to say fanfare, but there wasn't too much of a response from individuals when we went off the gold standard. I think maybe because people didn't really understand the implications. Like, why? Let's dig into that a little bit. Tax rates in the 60s in the U.S. were 90%. But if you look at kind of the middle class and the wealth game from society,

it was incredible because the productivity was going into that. But for government to extend, you can't go past 90%. You can't go to 150% in taxes. And to pay for the Vietnam more and everything else, U.S. couldn't pay for it. So they went off the gold standard and exported the pain to every other country around. And it showed up as a tiny little bit of pain to every other country because of it took U.S. problem and exported it.

And yes, France, other countries who held gold were certainly hurt, but it was distributed. Now we had a fiat currency. And in the 70s, you had this inflation rate and stagnation, right? As you actually tried to make the debt cheaper in nominal terms, you tried to inflate your way out of that, which worked.

And there was a boom at the end of the 70s, crazy boom as a whole bunch of people were loading up on debt and you had inflation that was going on. And Volker came in and increased rates to 20-something percent. And the entire economy collapsed in their early early 80s.

And if my family, that was a tough period of time because people had debt and the debt that you couldn't pay back the debt, you went broke. The governments didn't own the debt to that. time. So increasing the interest rates was, you hurt the economy. You could start get your handle on inflation, but you could then reset. Today, the government's hold the debt. Today,

the corporations own the debt. So I don't see how interest rates in this environment could ever go up. They can't. I just want to jump back to something that you said. You were referring to, the U.S. couldn't afford paying for the Vietnam War. And this was, if I'm not mistaken, one of the things that kind of made people realize that the U.S. was already inflating the currency more than their gold reserves that they had. And I think it was France maybe that first wanted to repatriate their gold. Yeah, they wanted to repay in gold. Yeah. Yeah. And so do you think there's any coincidence there that since going off the gold standard, moving to a fiat currency to fund in armed conflict, do you think that it's any coincidence that we've had ongoing armed conflict for much more extended periods of time since then?

Yes, 100%. But it's actually the next step of that is it just went from gold to the petrodollars system. So you had to buy oil in U.S. dollars. So it just changed from gold to oil and the game repeated. But why taxes went down or why people believe tax rates went down in the U.S. is because they hid how much of the taxes were actually being collected in inflation. So it's a really good game for governments

to increase essentially the distribution game. They're in more of, I determine who gets what by putting with inflation. And it's a really good way. Truth is, kind of in an inflation rate to whatever, if you're crazy, creating money and being able to lend it at nothing and creating inflation. You don't need any taxes, zero.

You could hide it all in inflation, but then people would really understand how the game is played. So let's jump forward a little bit because, you know, we alluded to the idea that a transition from an inflationary world to a deflationary world that embraces deflation, that transition period could be a mess and can be quite painful. But let's move beyond that. And let's say that transition does successfully take place. What does what does a world that has embraced the idea of deflation look like in in terms of positives, but also what challenges are faced in that environment too? So first of all, let's just square on this before we go there. And it's

really important. Inflation is a construct in people's mind that is around made up money. Only. Just making up money and more government control. Period. Look deeper. Have your listeners look deeper.

It is just made up money. It's just a construct. So if you believe that that's the way we should keep going, if you believe that we should just keep on printing money and never, then have, and no free market government control of everything,

that's where it leads to totalitarianism. It leads to a communist state. That's where, I wish it didn't, but that's where we are on this. It's so far away from the free market, and there are winners. There are also a ton of losers, and the closer you are to government,

the closer you are to a winner. So if that's what you believe in, then then then then but realize what you're voting for realize that the other side of that equation is is deflation or a currency that allows for deflation a currency that I would say allows for nature to take its course if there's growth in economy if there's actually good growth in the economy prices will rise if there's if technology is taking labor prices will fall. Key point.

Prices would fall to a point as technology takes labor to a point that you don't need the job to thrive because prices would have fallen that far. Economics is about scarcity and not about value. You don't pay for the air you breathe

because it's free. Think about today how much we used to pay for our film developed for photos and we could only we could only take a few photos of anything because it costs so much. Photo quality got better and better and better and we took more photos. Today, there's limitless photos. They're all free.

And it's not captured in GDP because it's free. That's the nature of technology and it doesn't require more jobs. A lot of people think that all your phone apps and everything else require more jobs. a lot of those phone apps are done by technology. You don't pay for your flashlight anymore. You don't pay for your camera anymore. A LIDAR system that was $10,000 10,000 years ago is now in the new iPhone for free. That's the point.

The more that that actually is allowed to happen, the more the jobs can come out. And we would get abundance of a whole bunch of things. We can't even imagine what that would look like because we're, measuring all of our interactions in a different system. That's the really hard thing. We can't even imagine what the future would look like. And so, and it's tied to so many different things. So I use the example of climate today.

So think about climate in what we're talking about, this construct of these two forces. So on one hand, you have government saying climate change is the number one issue of time. Are you hear it all the time? And we need to invest in climate change. So we need to make up more money to be able to invest in climate change. On the other hand, you have solar entering solar, wind and everything else now at the lowest cost of energy production and getting lower every year. Why do you think oil prices are falling in real terms? Because you have new energy that's lower and lower in cost competing with old energy.

And so that new energy that is going to get lower and lower in cost is deflationary. What in an inflationary monetary system, what has to happen? So that new energy that's clean, that if we agree that it's the number one issue of our time, that is that clean energy is really good. It should heal the planet, everything else, and energy should get cheaper and cheaper. And energy is the number one input in every business that we have. So that sounds like a good thing. But now to stay in an inflationary policy,

you have to debase the currency more to counteract that deflation, that efficiency game. You have to. So in other words, all of the work that you're doing to bring climate better, or trying to make climate change better, you're making an order of magnitude worse because you have to print money to drive inflation because if that happens, the whole system resets.

So there are so many things that because we measure the existing system by all the interactions, we can't even see. Yeah. So it sounds like on the individual level, there are some things to consider here. Do you, to kind of start rounding things out, do you see any actions that individual people might consider taking or things to think about or dive into that may assist them in either insulating themselves

or preparing themselves for kind of a transition from an inflationary environment to a deflationary one in the coming years? and if so, where should they be looking? What should they be considering? Yeah, I think the biggest tail risks are revolutions, what happens to our political systems and everything else. I think those are the biggest tail risk that people won't see coming because once it comes, it's too late.

So I think Bitcoin is a must-own asset in this. And don't do your research lightly. look deep. Like you have a Bitcoin channel. So I'm sure a lot of people come and follow you with some of the different videos and everything else. I would encourage people to understand why this innovation is so important at a first principles level. We talked to just before we started this show. So the problem with Bitcoin, we're not the problem with Bitcoin, but what it looks like to new people coming into the Bitcoin environment is it looks like a religion. It looks like it's and I would say don't let that scare you.

Realize, understand deeper why people have gone so deep on Bitcoin and really, because once you've gone down the rabbit hole on Bitcoin and you understand how these monetary systems work and the benefits of Bitcoin, you might too be a believer like that. But it's a scary place to enter because you enter this what seems like a religion. There's a lot of, but yeah, so do the research, do your own research. Your show does a really good job of this, as people do the research on why it's important. On the other side of it, so put some in. has a put some

and the beautiful thing about Bitcoin is it doesn't matter if you're a billionaire it doesn't care it doesn't care what the market's doing it doesn't you could you could add to it every week you could add a paycheck to it each week and on one side on one system

you know it has it requires inflation and it requires that to lose that money to lose value so if you leave your money or your wages or anything else in that system just know that.

On the other, on Bitcoin, it should be a beneficiary of all of that printing. So depending on what you start with, how you decide to do that, self-custody, everything else, you might want to add to it over time. I personally do add to it over time and increase it as a portion of my network over time. There are a lot of places, like if you looked at a short term, that you can make a ton of money in the existing system. But your money has to grow faster than the inflation rate or the implied inflation rate. So if it's just a store of value in a house and you take a whole bunch of debt to buy a house or a business or a commercial piece of real estate,

realize that that money to be able to do that. And let's say that's your entire net worth. and if governments get away with this inflation, it could go up a lot higher. But what do governments have to do? They have to tax that at a different rate. They have to come back and tax it at a different rate and realize it's all being driven by stimulus.

So that seems like a pretty bad, one-sided bet to me. It's not that I wouldn't want some of my wealth in real estate, but it seems to go all in on real estate is a really crazy one-sided bat that could wipe me out. Awesome. So I guess I'm going to start wrapping it here, conscious of time. I just want to kind of have a good nice, I hope this is useful for people to kind of start diving down this line of thought and understanding the inherent, not just inefficiencies,

but systemic problems and cracks in the way of life that we have right now. For people that are diving specifically down the Bitcoin rabbit hole, obviously, I do shows, but I do like to point people towards books and resources that I've used. But has there been any resource that for you has helped you better understand? understand Bitcoin. I'm close to the community. I'm really close to the community.

So Twitter, Finn Twiton, Twitter is a really great spot. And there's so many great people on it. Preston, Raupol, John Valis, Pian Marmach, Marty Bend. I'm going to miss a whole bunch of names.

There's Breedlove, but there's a ton of really great content and people who care about not just Bitcoin price, but what it means for society. And so once you follow for your viewers, follow some of them if they're not following some of them and you'll be led to a whole bunch of others as well. Yeah, 100%. I will echo that for sure. the names that you just mentioned really do shed some interesting light on on what kind of innovation has happened here and the potential impacts again not just blindly following price because

people see number go up but actually diving into the meat of why it was even necessary in the first place and what it can fix if it is successful I think it's very important for people to start to understand those implications um Jeff would you be able to let people know where they would you be able to let people know where they can find you in terms of if you're on Twitter website and anything where people can easily find you sure and my my Twitter address is at Jeff Booth that's probably the best the best way okay awesome and I'll have a link to the book down below definitely recommend a read of it It does give a pretty well-rounded view of everything, the price of tomorrow.

Jeff, thank you so much for spending your time with me today. Awesome, Ben. Thanks. Thank you, guys. So much for watching and or listening. If you are here on YouTube, please do hit like, subscribe, and share all of those things really help bump this content in front of more eyeballs. If you want to help the show in another way, you can hit up the sponsors I mentioned down below. That was Ledon, Cobo, Bit Refill, and Privacy Pro.

aka the Bill Fottle. All that is in the show notes. And if you really loved what you saw, you can always draw me a lightning network tip at my tippin.me page. That is t-i-p-p-in.m-me-slash-at-B-T-C sessions. With that, I'm out. Have yourselves a wonderful day, a wonderful evening,

wherever you may be. And I'll see you next time for your daily session. Huddled by Bix-BetCoy.