TFTC: A Bitcoin Podcast - Tales from the Crypt #53: Matthew Mežinskis

Episode Date: December 11, 2018

Join Marty as he sits down with Matthew Mežinskis, co-host of the Crypto Voices podcast, to discuss Base Money, Free Banking, how Bitcoin plays into these concepts, and much more. Follow Crypto Voice on Twitter: www.twitter.com/crypto_voices Follow Marty on Twitter: www.twitter.com/MartyBent Thank you to our sponsor BlockFi! Go to www.blockfi.com/talesfromthecrypt to get $25 of free crypto collateral for loans under $10k and $50 of free crypto collateral for loans above $10k!

well hey there freaks it's your boy marty bent here to introduce you to this week's sponsor very glad to have these guys on board i'd like to introduce you freaks to block fi no one likes having to sell their crypto if they don't want to it's the last thing anybody wants to do especially if you're a hodler whether you're paying off credit cards or buying a house block fi helps crypto investors use their bitcoin ether and litecoin without selling backed by mike novogratz blockfi is lead is the leading crypto to usd lender in the u.s servicing over 45 states interest rates start as low as eight percent visit blockfi.com slash tales from the crypt that's blockfi.com slash tales from the crypt to learn more about using your crypto without having

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talesfromthecrypt. Check it out. It only takes two minutes. Try to preserve your crypto. Try to hodl onto it as long as possible. services like block fi are making this possible um and warning to you freaks very excited for this episode stick around till the very end we have some special bitcoin commercials for you what is up freaks welcome back to tales from the crypt it's your boy marty bent here on a monday

afternoon sipping on vodka sodas with a very special guest he's in town for the day for a day and a half uh the pleasure of meeting him while in uh riga latvia for for the baltic honey badger conference earlier this fall i'd like to introduce you freaks to the host of the crypto voices podcast and maybe the best voice in all of crypto and bitcoin in particular i want to introduce you freaks to maddie mazinskas how'd i do uh close good good thanks marty mazinskas would be the latvian pronunciation but uh growing up in ohio it was mazinskas confusing all the way around i know but uh yeah great to be here man it's great to meet you in riga and stoked for uh a lot of interesting new york bitcoin festivities tonight yeah it's a big

night here in new york city for you freaks that don't know it's a soho forum debate between uh dr lawrence white and ken rogoff uh just debating monetary policy larry is obviously free banking yep and uh ken rogoff uh wants nerp policy correct yep so we'll see uh that's gonna be an interesting one yep yep larry larry also the uh you know one of the consultants uh paid consultants now of this initiative q very exciting development in cryptocurrency yeah we'll get to that later it's not a cryptocurrency we're gonna get to larry later because i just listened to your podcast fair enough and it's incredible a couple things first uh crypto voices if you freaks haven't heard of it uh go look it up now it's one of the best uh i would say intellectually

dense uh podcasts from an economics perspective on cryptocurrency in particular out there it's one of my favorites um you and your co-host fernando uh ulrich do an incredible job and have done some incredible episodes one we're going to talk about in particular which is the episode you did on base money which i found completely fascinating i was actually lost on a car ride i'd accidentally toggled uh a trip on my google maps without toll roads so i got lost on like a back road for like four hours and luckily crypto voices with your base money episode in particular uh kept me sane throughout that that's perhaps the best time to listen to an episode on base money when you're lost in your car and yeah um but before we get all of that uh as is uh per

usual on this show how did you get into bitcoin i have no idea how you found your way here yeah yeah so i guess my story you know and i don't uh perhaps that's not known to many of our listeners but um i guess it's a bit a bit unique so i am i'm american but my father is uh is latvian uh from eastern europe uh although he is basically first generation american as well i mean he he uh was born during world war ii his family came over uh after world war ii um and so he basically grew up in the u.s as well but i have just all of his side of the family is from latvia so from this is always something i wanted to explore and just you know explore the family roots so from 2006 Six, after I finished university, college, moved to Latvia.

And I've been there ever since. Was initially in real estate. I was an analyst slash acquisitions manager for a small boutique firm in Riga, which was a good experience for me. But that was also like the height of the boom years. That's what got me interested in economics when it all came sort of crumbling down, asking questions. You know, why does it happen? Boom, bust, cycle, so on and so forth. and i heard about bitcoin um fairly early i think when a lot of the you know present sort of large

figures uh you know like trace mayor roger veer eric vorhees these guys heard about it all in like early 2011 that was about the same time that i heard about it but um unfortunately for me at that time it did not did not jump you know head first into it took some time i was reading about it i was still sort of intellectually intellectually curious about all this uh boom bus cycle economics money um and i don't know i just didn't take a flyer on it uh normally i would in those types of things i do have an investing background uh just by career and also just been investing since i was like 20 in stock so interested in all that stuff but it took me time which is a story i always tell people like you know you just you don't get into bitcoin until you're ready and so yeah for

me it took about that it did take that that well the first major boom wasn't the first boom but the first major boom over a thousand in late 2013 to really pay attention and in 2014 2015 started really delving in more um but that i guess is the general backstory yeah so were you just studying finance in college or did you study economy intently yep finance um had an international business minor whatever that means i traveled that yeah it just means traveling basically on the uh school's dime and you know partying in the evenings going to a couple classes in daytime international business was a great as it's one of the best decisions i ever made did you go to school in ohio yeah i went to university of cincinnati oh yeah so yeah born and raised there

basically i just took off after after college um and you know lots lots uh learned in eastern europe for sure we can talk i mean get into some of that but uh yeah we'll wait till a little drunker to get into this yeah yeah so we have some nice latvian vodka here oh we got to talk about the latvian vodka uh it looks like uh it looks like a russian bottle yeah so uh might have been a little bit surprised there definitely it is sourced in russia but it's bottled uh distilled in riga uh next time you're at the bar check out the back of the still each night bottle you'd be surprised to see that it's distilled in uh in latvia so it's very exciting it's my and it's delicious it's going down very well with this uh this carbonated water yeah the

older you get you know you got to just stick with those vodka sodas yeah skinny drinks yeah very skinny drinks i was actually just in a fat camp and this was my go-to drink so i've got i got a very high vodka tolerance right now fantastic i don't know if that's good or bad um yeah so let's jump into it what i wanted to bring you on in particular is because i think you have uh a very firm grip on economics and in general and the competing uh economic theories and how they might apply to bitcoin um i guess my first question is is obviously you didn't come from an economics background per se did was it the the uh economic downturn that sort of forced you to explore these things that bitcoin push you more towards these theories uh um yeah yeah yeah so a

couple things there um so i'm not an economist fernando brings the intellectual weight to the show uh he is actually a trained austrian economist yeah he's sitting on our desoto that's right yeah in uh in madrid and um you know but we both shared definitely an interest of like monetary policy specifically it's just was always interesting obviously you know as ron paul famously said you know money is one half of every transaction so it's it's probably something important we should understand so you know all the sound money austrian economic stuff have definitely gone down that rabbit hole uh i'd say from 2008 um but even before it was it was just curious to me i remember in latvia so like this is small you know they call them the baltic tigers at that time

these are small countries you know two three one million people depending on which country you're in uh very very small economies and i remember just going to like these american chamber of commerce events like after work and people like drinking wine people are like talking about how much money they're going to make and and latvian real estate is like priced the same on a yield basis it's like real estate in in downtown cincinnati you know which is not like a you know crazy market it's a normal mid-tier market but still i mean if you understand some of the economics of what's going on there it just that it didn't seem to make sense things were so mispriced and there was just not saying at all that i predicted the bubble did not at all but

it's seen i remember specifically at the time just thinking this is so so weird that everybody just thinks that by buying real estate specifically latvia had just like the u.s had a huge real estate dip and it was like just by buying real estate just by taking a loan just by levering up you can sort of you know beat normal productivity it seemed confusing to me it seemed curious so that's that sort of uh was the genesis there but yeah definitely obviously as you go down the sound money rabbit hole and start to see that bitcoin possibly has the best characteristics of any money ever invented uh it's hard to look back once you once you find that and understand it yeah and that's uh it's a huge theme on this podcast in particular is that people like you said ron paul

said money is one half of every transaction on earth and it's not until i found bitcoin at least i really started questioning the essence of what is money and that's something that i i think a lot of people don't have never asked and don't even know how to approach to ask if they had if they had to begin the thought experiment by themselves without any outside help um so that's one thing i think bitcoin is doing in particular uh that is is very beneficial for society overall is that is having people question these cornerstones of their lives, money being one of the most important. Yeah, and I can jump in.

I mean, to sort of, I don't think I've finished your initial question, but so on the show, like the reason, you know, and I started the show basically just wanted to do something creative. I've been buried in spreadsheets most of my professional life, doing some consulting, analytical things, and I just wanted to do something a bit more creative. So that was where the show came in. knew that i wanted to give it that sort of monetary policy bent or just keep focusing

on those questions no pun intended but uh the um like just sort of one general thing to say sort of tangent to your prior question i mean it's not necessarily my intent to uh to it's really just about trying to discover things that i'm curious about that's the reason started the show uh it's great to have fernando on there who has this sort of austrian trained background and it's just been interesting asking sort of the same questions to a variety of different guests uh some economists some business people some bitcoiners whatever um i think it's if you and just a little bit to plug the show about what we're trying to do like you know i know people probably don't know even what i've just said

rambling this early minutes of this show people don't know much about my own background but that's sort of by design like i'm not trying to be some you know bitcoin figure obviously i've as many people have come to learn it doesn't really even matter it's whatever the nodes are doing is what matters in bitcoin and that's all very exciting stuff but the point is just to ask questions not trying to be any sort of uh bitcoin soothsayer or anything uh i'm intellectually curious myself about these uh topics and i'm far from an expert so like it's it's so my view is that i'm sort of an economic observer i have an interest in uh money and credit and i think that bitcoin probably will be uh yeah the best money ever invented so that's sort of again like back to your initial

question like why i started it why we're doing it yeah and i'm trying to figure out should we jump into why you think bitcoin is the best money ever or should we start uh with the what your calculation of the world monetary base and then jump into yeah maybe maybe base money i think uh next so i think that's one thing that we're doing uh on the show and we've long-time listeners will know we've asked this to many economists many guests um one thing with bitcoin that is interesting is everybody's trying to quantify it to value it to compare it with other real world things like other money supplies and you know technically economically from a perspective of money it's uh it's it's hard to do if you don't have like a full grasp of that and again i'm not saying

i have a full grasp i'm not i'm not an economist you know definitely a caveat i want to make there But I do have this sort of understanding, especially working with Fernando and reading the things that I've read, a key difference between money that circulates in society today and bank money, which is like M1, deposits, PayPal, Venmo, and money, meaning basically the dollar or the euro in your wallet, calling that money. the key difference is that um uh an iou basically that's the difference so money base money the monetary base this is um this is something that i feel like you should edit this out because i'm waiting uh too long to describe it but no uh this is what tales from the crypt is all about these these uh candid moments definitely not how we do it as as our listeners probably know i try to I try to get a quick hour of just, you know, if you put it on 4X speed and you can just roll through it or in your car.

But let's say it like this. So most money that we think about today, we talk about it as being, you know, in the money supply. It is actually a claim. It's a claim. It's an IOU. It started from, you know, a bank. Would you say that IOU represents future production all the time? And it represents a yes, it does. Yeah, that's one way of putting it. Basically, it represents a claim on the investments or the asset side of the bank's balance sheet. But it's not always backed one to one by cash, which is what a lot of people think that it is. And that's fine. I mean, I'm not 100 percent reserver. We've talked about this as well.

we could talk maybe getting that a little bit here but basically to bring it back um it is confusing even myself trying to lay it out simply it is confusing but there is a money supply in economics in uh just the way that money has developed that is comparable to bitcoin so one thing that i was always sort of seeing and thought that it could be corrected a little bit um you know on tweets or whatever people writing articles like okay bitcoin just passed you know the m1 money supply of Venezuela or something. As an economic sort of basic definition, it's not comparable to a checking account because those are basically, that's a debtor and creditor relationship with the bank when you have a checking account. We can get into what that

means. But with the monetary base, that is basically the most irreducible form of money. It's money that, you know, Fernando likes to say it's the ultimate asset of settlement. This is, it's been called reserve money by Asian banks. It's called basic money or the monetary base, usually by Western banks. It is settlement media by banks and governments. So that's what it means today. And that's called the monetary base. And as a comparison, we've compiled this on Crypto Voices.

we have an episode that you're referring to, where we sort of explain this, I think better than I'm explaining now. But the total base money in the world is about $20 trillion comparable. So if you look at, you know, the dollar, the euro, the yen, the yuan, the Brazilian real, the Indian rupee, those are the big ones. And then it falls off pretty quickly, the British pound, of course, as well. But the big four are the dollar, the euro, the yen, and the yuan. And the $20 trillion figure that I mentioned are just under. I've actually listed it. I've looked in IMF definitions of what's a pegged currency, what's not. That basically is going to encompass about 93% of the world's GDP. So we're not to 100 yet, but it's a diminishing return thing. It's not going

to go too much higher than $20 trillion. So that's actually the number. That is base money in the world that banks use to settle transactions and what the monetary base is comprised of is again physical cash physical notes that you know uh you hold in your wallet and then something called bank reserves i don't think we need to fully describe that yet but again it's it's basically what how banks settle at the end of the day banks would settle by net differences net differences in their bank reserves so those two things put together are the monetary base and that is the money supply that at the end of the day should be compared with bitcoin supply of 21 million which as we talk about in the exhibit bitcoin you know possible i think likely future base money of

the world uh we have fiat money which today is that 20 trillion and then we have past base money which has been silver but you know as safedine writes a lot of people recognize it has been gold mostly so that and that that number of all the gold in the world minus you know maybe 10 15 percent of industrial uh sort of uh recycling and industrial use somewhere around seven trillion so seven trillion for gold uh 20 trillion for fiat and what's the latest what are we under 80 now let's see we're under i don't know where we're at 70 maybe yeah uh for bitcoin around like 4 000 right now um yeah but billion uh 4 000 bitcoin times how much like 17.5 or dispersed on the market right now exactly and and not always yeah circulating um no but so free free

so i think this is an important distinction you guys are making because i i would agree this is what we should compare bitcoin to and and that's a function of me believing in i believe it was hal finney was the first to describe bitcoin as an international settlement layer for future central banks or future uh future free banking society yeah yeah he did indeed and um it's it's it's confusing as well because there are these terms that get thrown around that i think are um are that throw people off you know like uh if you may remember eric voskiel's presentation in he talked about how using the word reserve currency was misleading one of the most fascinating people i met at that conference by the way yeah he's very interesting fella and check out check out

the two-part episode with uh with crypto voices thanks buddy thanks um so so very interesting fella i think he has a very good perspective on economics but even his claim about saying that bitcoin won't be world's reserve currency in the future i agree with that and we can get into why i agree with that but it's even more uh confusing because we don't have a reserve currency today now everybody says the dollar is the world's reserve currency what they mean is that the dollar is the world's settlement currency you know gold is priced in dollars oil is priced in dollars so on and so forth but banks banks um they're not reserving dollars they're reserving government bonds now those bonds are priced in dollars and euros and yen and china specifically

is an interesting case um but central banks they don't hold like a huge stash of dollars they hold what's back in their dollar is a government bond and that note which we'll talk about in this this base money presentation like if you took a dollar bill out of your wallet went to the fed say hey i'd like to redeem this like to redeem this for your reserves they would give you four quarters or they would just give you a new note right it's an irredeemable currency so in fact in point of fact that the reserve currency of the world idea was completely abandoned in 1971 off the gold standard that was the end of any convertibility so for about 50 years we've been in a world of zero convertibility money there's no it's just its own thing right now like we talked about

murphy a couple weeks ago he said the same uh dollars are are used as money people demand them as money people uh hold them as money and that's that's fine uh but it would be actually incorrect to say that we have a reserve standard today uh so i'd actually even disagree with eric on that point i know where he's going with that topic he's he's referring it back to to gold but but we we haven't had a convertibility standard in 50 years anyway the dollar the euro the yen they're completely inconvertible and if if a central bank can't meet your your demand to redeem like one note for note like just say they don't have any on hand they have the license to print more and the monopoly so this is what you finally have to get to with fiat currency is the main crux of the

of the issue if there is one with fiat money is that there are these big institutions that have license to print you know ad nauseum without any restrictions so rather than and this is where we i like the work of of larry white and george selgin rather than having a free banking system where banks are competing redeeming on each other keeping each other in check which we've had in different periods of history which i think are fascinating we can talk about that too now we have a system which is basically a few main governments around the world have monopolized money uh it's irredeemable and they have a license to print as much as they want now i'm not saying they do that carte blanche all the time they don't understand risks i mean

we've had a dollar system for 50 years it's been where i mean could you imagine being like a gold bug in like 1979 you know when gold was going up to from 35 an ounce to 800 an ounce right you probably would have thought you know this is it we're going back to gold the market's shown it can work but no the central banker uh paul volcker actually pricked that bubble took interest rates to 20 and he he cut off that that massive central bank inflation that happened after the end of gold standard so you never know uh the monopoly power is extremely strong but it is the monopoly power at the end of the day that is sort of the crux of the issue is that there are these institutions central banks as adam smith said a monopoly it's not a big firm it's not like from the board game

it's not a company that is like so good that has 90 of the market share can come in undercut all your mom and pop shops and then later jack up prices that's not a monopoly those things can work at certain times and places for certain periods but they always have the threat of free competition coming in and undercutting them a monopoly at the end of the day is a a firm a private firm that has a special privilege from the government and that's the key is they have a special privilege they have a license so that's that's what we're up against that was a very incredible long-winded uh explanation of what the fed is and so i guess first question do you think the last 50 years will be looked at as an aberration uh on the long scale of history you

said i mean you alluded to the fact that this can last a lot longer than we expect um but i i would completely agree with that but i do believe at some point there will be this this will hit ahead where the the experiment sort of unwinds uh and we were like how the hell do we even get to this point where we thought this was okay um so that's like another theme of this podcast is that uh we were born at a point where we might be in a collective uh delusion we might be a part of collective delusion when it comes to money and what it is and how it operates. And we may have to rewire 7 billion brains, uh, to, to recognize this problem and then recognize what the solution is. Um, yeah, I completely agree with the way you asked that question and sort of the premise of

your question. Um, a key, a key phrase that you said that has been said a lot by Austrians and free market you know capitalists and volunteerists is at some point you know we we always think you know we have all these negatives in the negative column you stack it up and we have just a few positives must be clear that at some point the house of cards is going to come down it's going to end we're going to about yep get back on a more sound and stable standard uh that that definitely can go longer than you think so i i try to be humble about that and i i don't think you'll ever hear me uh making that case with bitcoin because i honestly don't know um you know it like one of the things that speculated a lot is this idea of like a fed coin or a central bank

coin that could compete um i don't think that will uh materialize that way because i think the government can't usually shows pretty accurately that they can't run websites you know they can't run health healthcare websites so right i don't i don't necessarily see a government designing a nice uh virtual currency as they call them they always call them virtual currencies a nice virtual currency that's better than bitcoin um but what i do see uh and i and i don't know how much of a prediction this is but i do see stable coins becoming monopolized by the government and perhaps those are the only quote virtual currencies that could be you know legal is that it's not it's not a prediction i

don't have anything to really base that off of but it's definitely a trend that governments typically do they see something that kind of works and they try to monopolize it they see something that works and they try to use force to you know selgen and white make this point all the time with money which i really like is that any monopolization of the money supply by a government is precisely born in the need for a to to to take taxes basically to it's a fiscal need they have their own budgets they have their own you know sort of lords and and and things that they need to take care of their their their castles and their lands and so on and so forth and i'm not trying to be too cynical there i it's it's just how it works is that they try to monopolize for

their own fiscal needs uh so what i do think with stable coins which are um an opportunity for them is obviously this is something new somewhat programmatic you know programmable money like the gemini dollar or tether um these things are making news headlines you know i heard i can't remember if it was a private or a public source in asia was saying they were worried that uh they needed to get ahead because all these this usdt all these these these uh abstractions of the dollar were taking place and they didn't have anything coming for the yuan or the yen so like asians were worried about this uh stable coins are definitely a phenomenon that people are talking about a lot and though i believe that we don't need one at all once bitcoin takes hold

like bitcoin would be the ultimate stable coin uh and free coin and you know so on and so forth um that is an opportunity like that is sort of the the nose in the in the tent so to speak that the uh the government could seize on to say okay there's a few issuers of these stable coins they're doing it well they're backing it the way we want to do it these are the ones that if they don't go outright monopoly saying those are the only ones that can issue it there they will at least favor those strongly that that to me seems like a trend they would do if the government does get involved because i don't think they're going to design it i mean no one you know no no good developer is going to work for the government to help them design it but

they could definitely monopolize a few that have and and they've they've done this in the past like this is what the federal reserve act was this is what most central banking acts are they're monopolizing big private players um and using their sort of you know standing in the market for their own benefit that's that's just what they do yeah they can create bearish entry via accreditation or basically regulations and stuff like that obviously but uh then yeah like what we're seeing actually i've talked about this with matt odell uh what we're seeing is obviously tether is uh the most popular uh and i would argue successful uh stable coin up to this point it's always in the news and uh tether works because it

it it works the way it's supposed to do it's like it's allowing people to skirt u.s regulations and get a peg dollar uh on a peg digital dollar online to trade bitcoin um i would argue it's the most successful stable coin you see but what we're seeing now is like gemini coinbase have uh have gotten the okay from the government to create these stable coins and they're sort of posturing as hey we went through all these hoops to to make sure we check the boxes off in the regulations and it seems like they're going after tether uh and a bit of a witch hunt to say hey we had to do this you should have to comply too and maybe that is the the trojan horse for the government to step in and try to to input their monopoly power via regulations and stuff like

that uh i would argue we're already seeing that uh happen yeah um but then like the whole thing i think stable coins are a funny meme right now and i think they're i think i think reed is going to kill stable coins because stable coins are only stable until they aren't and the proliferation of more stable coins makes every other stable coin to come before it a little less stable because you have competition for something that's supposed to hold a peg which has proven in the traditional economy to never really work too well yeah i mean unless the government just comes down with an iron fist and says like these are the only ones that will be allowed and these are the only you know we're going to do it this way we're going to issue

our own dollars our own way you know through our traditional you know fomc meetings you know you're going to get some some uh some bulletins and some notices about how we do this but if it's going to come to virtual currency and things you can pay taxes in things you do this and that you can only use like you know the gemini dollar these things yeah i mean i trojan horse you know that i think that's the the best chance for them if i had to look at how they would compete with bitcoin how it will play out i genuinely do not know and i don't even know if we're speaking the correct like trend there but it definitely thinks like you said i mean it's a meme everybody's talking about stable coins everybody thinks stable coins are like the next big thing or whatever but it's

just it's just taking you know one abstraction which is the dollar the euro abstracting it further and abstracting it further and acting like it's got some bells and whistles there's nothing there well that's that's novel or new or good or sound like bitcoin is well exactly and to your point from earlier like the government does not have a monopoly anymore bitcoin does freely compete and i guess the the assumption i don't want to say you're making any assumptions but in the thought experiment we just played out there the assumption is that one government or coalition of governments would be able to form fit this regulation across the world which may not happen i don't think that i think that will happen it's a hard so that's that's the beauty

of bitcoin they could try to cut off the head somewhere somebody else takes that as an opportunity agreed um and so that's where i think i mean i wrote about today i wrote about uh i wrote about the the yellow vest uh somebody in the yellow vest protest at the buy bitcoin and i saw the uh the headline yeah bitcoin presents an optionality that hasn't existed since 1971 like you were saying and even in 1971 that optionality was not as good as the optionality we have now because government sees gold and they held it in a centralized location so they had more control over that supply over the supply of that sound money than they will ever have over bitcoin at this point yeah and to talk about gold a little bit i mean i i love gold like i think a lot of

bitcoiners do there's some bitcoiners that don't at all i think about some bitcoiners that are like just don't well i think just because what i just said like the fact that it's been centralized to an extent with with the told or the way it's uh housed by governments and the way it's been seized and it's basically hoarded by governments at this point i believe exactly i would i would agree and i think if you're talking about money for the digital age which we're moving into the digital age we're already in the digital age but if you're talking about the future of a monetary base for society it only seems rational that you would want something that's uh much more secure much more transportable much more immutable uh than gold and we've like you said it has been centralized

in fact i think it was actually nick zabo that wrote this i think but um it could have been the the big transport problem or basically with gold you know security of transporting large amounts uh that was really the the the end of the gold standard 1914 and world war one is it was you know german u-boats taking down british boats that were transporting gold to the fed because they were losing it so like gold just doesn't work in a certainly in a system that has developed an adversarial system yeah in an adversarial system in a uh in a in a large central government system which has for better for worse happened over the course of the 20th century gold has shown to to have failed there and again i don't have a problem with holding it as an investment

or as a as a hedge or as a escape hatch in similar ways that bitcoin does but it has shown to uh to have a tendency to be centralized and that is unfortunate for gold but i think just shines a light on what bitcoin can do yeah and it's um that's i mean that's been the biggest knock on bitcoiners to this they're not the biggest knock but one of the biggest knocks is uh you guys are just neo gold bugs which perturbs me a bit um perturbs me a lot actually because i wouldn't consider myself a gold bug at all and then i would argue that the advantages that you just laid out of bitcoin over gold not being centralized and being a true like i could walk around naked with 12 words in my head and transfer millions of dollars i believe that is a 10x improvement

on gold so i want to consider myself a new gold bug i would consider myself a sound money maximalist to a degree yeah um i think uh my view on on that idea is that it is it is true that bitcoin uh this goes back to the digital gold idea of bitcoin and there are critics obviously against bitcoiners um who say digital gold or store of value first before you get to medium of exchange there are more similar similarities with bitcoin to gold than there are bitcoin to fiat in that in that comparison because like the old monetary base of you know the old whether it was the gold standard or even before um any any system you know gold's really the classical gold center was like late 18 it was very short it was like late 1800s to world war one and and that was

it but gold as money as as a basic money as as the monetary base as sort of the settlement media that had been going on for you know millennia um but the the thing with gold the thing with gold is is that it has this sort of barbell problem it has like uh the sweet spot is in the middle but on the one side you have this like small change problem and on the other side you have this big transport problem like security and it just was never easily solved with gold i mean you had like in in britain you would have like there was a tri-metal system they had copper in in the u.s they had a bimetal system actually u.s was silver before they were gold i think still in the code i think the a dollar bill is defined as 371 grains of silver really yeah which is about 80 percent of

ounce is that that is the definition of a dollar fernando is actually going to do it uh at la bitconf i'm going to head down there after new york here he's going to give a speech on on what is a dollar so all this stuff is nebulous but the um the the the point that the thing that it's confusing and i think people just quickly attack bitcoin is that they think yeah it's just going to be settlement it's just going to be like sort of this store of value it can't uh it can't scale so on and so forth but that's that's if if you've studied money long enough and i wish i had a simplified way to say this but it's always about trade-offs with money like there's no there is no silver bullet so to speak it's always about maybe using a different metal to spend a

little bit less maybe use a different metal spend a little bit more or maybe even using paper in day-to-day which i think is totally fine by the way using paper i mean like that's that's just how you solved some problems with gold over time like some natural problems that they had um and and with with bitcoin i actually think that that's uh that's the greatest lesson and it's a lesson that bitcoin core whether they know it or not is shown to be following is that there are trade-offs like there are trade-offs in security versus economics like like my take and again it doesn't matter for me like if if roger wanted to claim that the whole problem with the scaling debate was censorship we actually interviewed roger about about the time that

bitcoin uh passed 10 000 about a year ago um like during the interview bitcoin was passing 10 000 for the first time and this was at post fork right yeah this was uh post bitcoin cash for bitcoin cash pre segue 2x failure i believe okay but i believe but it was it was the first time that bitcoin passed 10 000 like during the interview and i think it was coin market captain that's it might have not been gdx in any event uh it was interesting to talk to him about that and i posed uh like everybody's talked about this like a thousand times people might not expect or want to hear me go into this again but i pose the question like like you know i'm very sympathetic to your views roger about bitcoin not being able to scale on chain economically

for some reasons um but isn't it enough for you that the bitcoin core nodes have have signaled and have basically just decided as a network that security is more important and you know it was you know the i you know the road script he throws out it was the road script yeah i mean the censorship and the other deflections i guess but but to me that's like the crux of the debate that was the crux of the scaling debate that's the crux of the block size limit debate and it's still going to go on we're going to see this happen more and more but it's economics versus security i mean it's a trade-off and it's clear that the bitcoin core roadmap is in favor of security over economics and i think it's important to recognize that there's certainly good economics

there but the security is is uh is paramount and that's fine because actually you know what if you look back at some gold monetary history that's the same way it developed as well so there's good we're in good company there but on the other side obviously the the main secure security risk that we're going against or the nodes i should say are going against is obviously the cost of running and validating and and centralization risk so yeah it's it's the same trade-offs that there's always been and i think bitcoin core has shown really from the early days uh tremendous foresight nick carter said this as well when we interviewed him a couple weeks ago like a tremendous foresight to uh recognize the the importance of that security and that trade-off it there absolutely

is a trade-off like i don't think anybody should deny that there's a trade-off no trade-off no i don't think and i don't think i mean i don't think anybody worth their salt would deny it and i think the bitcoin core team in particular just has this mindset because um because they've got so many like lifelong cypherpunks and distributed system engineers who actually know how to build these systems and understand the trade-offs uh and that's the biggest knock on a theory like if we're going to compare chains like ethereum obviously did not understand these trade-offs from the beginning and uh there's a lot of arguments made with bitcoin in particular that maybe we should actually lower the block size uh run experiments we bought one of the

casa nodes here and been running experiments setting it up and for users who are using uh what we found in like the casa group users hasu in particular he met in uh riga as well as uh the bandwidth problem that you have from like setting a node and again security is imperative if we want to rip away the government's monopoly on money creation we can't make it so uh they can find a few few amount of nodes and shut them down so being able to run a node for an individual user is imperative and we're finding that you need to we might even need to to lower the block size to make it so that is possible in the long run um so i i just think that like you said the trade-offs have been weighed pretty heavily.

I think Bitcoin Core is doing a great job. We're going to let you take a little pee break here, and then we'll talk about Lightning, because I think Lightning is a great... It's just filling up the vodka break. It's not a pee break. Oh, filling up the vodka. All right, I'm going to take a pee break then,

and we'll get right back to it. So let me know when we're back. Are we just recording? Can I just go? Yeah, we're recording. So back now from this little break, Fun fact about Stoli, Marty, there's actually a brand dispute, a former Soviet Union brand dispute between Stoli, the brand. So you were surprised that it was actually distilled and bottled in Latvia.

And it's a Latvian company that distills it. I think it's a Luxembourg company that owns all the holdings. but um there's a uh since the soviet union ended it was it was bottled and distilled there in latvia which was part of soviet union but basically latvians just took took control of it and the russians uh or some contingency of russians did not want that to happen so there's a competing in kaliningrad and uh so if you're in russia and i think like some parts of europe like uh Maybe Belgium and Holland. If you see Stoli there, it's going to be the Kaliningrad Stoli.

Really? So they're competing Stoli brands. You would never know. But, yeah, it all looks Russian, but the Stoli that you will usually see in the Western world is Latvian Stoli. Well, it's delicious Stoli, too. Very exciting. Stoli and Tito's are my two favorite vodkas of choice.

And this is actually only the second time we've drank vodka on this podcast. The first time was with Bitcoin Sign Guy, and it is uh one of the highest highly one of the most highly touted episodes we've had now i feel honored well i hope uh i think i'm actually positive i won't compete there but uh i don't know i don't know matthew i don't know maddie i think we're gonna get there uh vodka maybe the elixir that uh that brings out the magic good good good so we were talking about what were we talking about yeah gold we're comparing gold and bitcoin uh and big comparisons important to talk about fleshed out but interesting i think i think we would both agree that bitcoin has a

comparative advantage yeah the edge uh in many places and uh like you were just describing you were talking with nick carter earlier and what he's big on is the narratives and how the narratives have evolved throughout time and bitcoin in particular a lot of the big blockers who forked out the bitcoin cash have been touting that bitcoin is the the easiest way to quickly send money at a cheap fee uh for the masses we we quickly found as the network became more popular that that may not be the case and to make that possible you would have to increase increasingly raise the block size which may make which is a trade-off you have to make from a security perspective making the chain less secure um i've been a big believer that uh this space is filled

with a bunch of impatient assholes that don't know how to wait for the infrastructure to get build out and it seems as though we may have that infrastructure being built out in earnest with the lightning network and uh going back to the narratives part uh so with narratives in particular people have been confused over what is the i mean actually i shouldn't say people have been confused the dominant narrative has shifted over time but i believe the best narrative has existed since the early beginnings which is hal finney's narrative which we touched on earlier and it seems like lightning network is enabling a sort of free banking system where bitcoin at the protocol level could be a reserve settlement layer and then lightning can be your meeting of exchange

layer where a lot of the the economic activity is happening yeah so a couple things there and i think i'll probably go on like 10 tangents so let's see if i can get through them but um um firstly regarding uh lightning and uh what it's what it's doing uh compared to maybe another prior system or whatnot it's very similar in my opinion to um how banks have generally evolved and that system believe it or not uh it's it's better than what i'm about to describe but that system actually has always been a system of ious and and claims and again it's about trade-offs it's about uh an efficient form of making payments but the thing is with banks like banks were never there banks were never created to tell us what money is banks were

there to allocate capital efficiently they were there to move capital from its least efficient point to its most efficient point and in the meantime facilitate payments like that's that's what banks were for so banks all banks do is move ious around that's all they do they don't tell us what money is they don't it's not banks's decision it's not our even even with the government monopoly of the banking system which has largely taken hold today and and as evidenced by the fact that we have irredeemable paper basically irredeemable government money which is just its own thing so as we talked about that 20 trillion um you know 80 of that is the four largest economic blocks in the world that's just it's it's just how the system has evolved uh

but banks specifically what they do day to day they don't they don't tell us what money is they're just pushing ious around so when we look at something like uh lightning i think it is amazing it's definitely trustless in many ways and it's better than any sort of bank iou that has uh been created in the past it still is something slightly maybe akin to an iou it's not a we're about to trigger people yep yep yep um actually i will quote peter todd said this um i think which is a great uh a great quote he was responding to someone i can't remember who basically said in no way is a lightning uh channel a lightning payment bitcoin on lightning and iou and he responded he said no it's not uh though meaning yes it is he responded and said

uh though though uh bitcoin on lightning you know can be sent trustlessly across channels there is the possibility that the sender could try to take it back and in some situations may succeed he said something like that but he said don't don't oversell the security and then he said you know lightning is basically some sort of a middle ground where it's not technically an iou but it's not technically obviously on-chain bitcoin and to me that's just an obvious statement it's a great statement like to say that lightning is like a middle ground for payments is or for ious i guess i should say lightning is a middle ground of what traditionally has been an iou and not is a great is a great improvement on what we've had an upgrade it's an upgrade yeah and and

again so a lot of the problems that we've had with the gold standard and throughout history is we have had some speculative attacks by rival governments rival banks and that causes this quote-unquote instability with the with the standard money but with lighting obviously it's not like that because it's locked on chain there's all sorts of i mean all sorts of anonymity you know things in place it's onion routed and there's no like it's not it's not going to be that tomorrow it's like ready like it's just this is the beautiful thing about technology as well it compounds upon itself it gets better and better so i i think that it will prove to be a supreme form of a of a of a layered payment system but it is a layer like it's it's it's not quite m1

so i guess maybe what i should do uh and just stop me if you want me to if you want to talk keep going topic but uh so so describing how it would work in uh in let's let's say like a gold standard system um a it never first of all this is another thing where to defend the free bankers and depend defend like the free market finding the right solution it was never like um the market will always find a solution so it was never like gold merchants were collecting gold from gullible people they put it in their vaults and then after a while uh people didn't want the gold they just wanted the paper and they started to trade the paper and the gold merchants realized hey we're greedy gold merchants we can start to lend out this gold and no one will be the wiser it never

happened that way in fact the paper was demanded it was demanded this is what selgen and white write about which i really appreciate and i think it highlights this system the the layered system on top of gold was more efficient than you know again this small change sort of big transport problem the sweet spot actually turned out to be paper more often than not adam smith wrote about this and yes it is true that not all of there was actually never a hundred percent reserved gold system ever. The only times it was really tried was actually by governments monopolizing it, trying to do it, like this is quote unquote better, and they all failed spectacularly. They all ended up lending money themselves and not keeping appropriate reserves and couldn't

keep up with the market. But as Selgin and White and others have written, there have been times in history which have shown the brilliance of the free market using this sort of a layered system uh and it's been and it worked fine because it's cheaper to go outside of the the base settlement media which was gold and it was cheaper to start using claims and notes and things that were you know you easier settled between banks than the actual coin the bullion the specie than the actual settlement media which was gold so so it is with bitcoin but it's in a very very unique absolutely better way the settlement media in bitcoin is still on-chain bitcoin it's when when you hold on-chain bitcoin no one else holds it it's absolutely your asset it's no one else's

liability it's 100 like that that's basic money it's the ultimate asset of settlement when you hold on-chain bitcoin it's very unique it's just like holding a dollar in your wallet or it's just like holding a gold coin you know in your hand but obviously obviously we need trade-offs to make payments like we can't we can't everybody knows that we can't do every payment in the world on the blockchain that's obvious right we can't we can't scale every single payment not some people yeah well um if you read the history of money in banking it should be obvious this is my point if you read the history of money in banking that's what i was gonna say it should be obvious to you for those for those freaks out there who are uh not so inclined to read let's talk about some

examples you're talking uh about larry and and selgen pointing out some examples in history where it has worked so let's talk about some of these examples canada is a good one uh in canada um they had no central bank they had competing private banks when are we talking uh late 1800s yeah that's a good point late 1800s to 1930 canada didn't have a central bank and if you look at the notes which are basically fiduciary media this is notes that the banks issue that are traded as money but again as we talked about the beginning of the episode that wasn't base money it was it was an iou it was a claim the banks were you know they were issuing out to participants in the canadian marketplace um the need to hold currency was always highest at the harvest time because

when you you know in the spring summer fall that's when you needed that's when you needed more currency you need to pay workers more so actually the the need of currency changed based on the season seasonality and you can look at a uh a graph selgen has showed this many times you can look at a graph of canadian bank notes issued you know on a on a on a macro level and it's like this beautiful sawtooth pattern where it's higher in the summer and then it's lower in the winter and he and he's like do you think this is some like lovely central bank you know uh uh nice top-down uh i can't even i can't even flatter the the people that that focus on planned economies but you know trying trying to trying to make it seem like oh you must

think this was a beautifully planned top-down thing no canada didn't even have a central bank And they beautifully, in this like sawtooth pattern, which was always moving up, they were increasing the currency when it was needed, decreasing it when it was not. And that was done through a system of claims with competing banks. No one ran off with the gold that was deposited there. No one ran off. Like people didn't suffer from hyperinflation. The banks were able to branch, which was another problem with the U.S. system at the time. Even though the U.S. didn't have a central bank, U.S. central banks couldn't branch.

It was a huge problem. So notes would circulate at massive discounts. Like, you couldn't have a note from Washington go to, like, Ohio because it wouldn't be accepted. It's like a massive discount. Yeah. So, there were peculiarities of the U.S. regulation system that were bad, even though the U.S. didn't have a central bank at the time. But he shows that with the least regulation possible, the purest sort of free market system possible, and nothing is like, there's no equilibrium in markets. They're always tending toward one way or another.

There's always a monopoly force. There's always information asymmetry. But you were able to see with a situation like Canada, and it happened in Scotland, it happened in Sweden, similar examples, that currency was able to be allocated where it was needed, where it was demanded, when it was needed, and when it was not, it was not. And this happened in the form of paper notes. And so it worked. It worked well. It was cheap. It was efficient.

And Canada had a worse depression, in fact, for other reasons, global reasons. Yeah, I was going to say, the World War I in this? Right. Well, in the 20s as well, there was a lot of contagion, and there was depressions everywhere in the 20s, at the end of the 20s. But Canada's was worse than the U.S. The U.S. had I don't know how many umpteen hundred banks fail. Canada had zero.

Now, Canada was a smaller country, for sure, different economic. How'd they fare worse then? Well, the depression, like the economic drop in activity. And this is, again, influenced by global factors. And the banks didn't fail. But the banks didn't fail. That's the key point. That's interesting.

So the U.S. had, I should know the number, but the U.S. had, I think it was hundreds. I hope I'm not misquoting. Let's just say it's a lot of banks fail. Everybody knows the Great Depression. It was horrible for banks, bank runs, so on and so forth. And the Fed existed then, by the way. So the U.S. had a central bank.

The Fed was about 10. Canada had no central bank. It had a very decentralized system. And it did suffer from global problems. But no banks failed and no one lost confidence in their bank. So these are lessons that we can learn from that like the market actually can deliver it if you let it. And money in the market may be more separated than people perceive in their minds, right? More separated or what do you mean when you say money in the market?

Like they operate separate of each other. Oh, yeah, yeah. No, no, I got what you mean. Yeah. yeah um whereas i would i would i would i would argue that most people assume that they're very intertwined exactly in today's world and there are plenty of examples and so selgen uses this example as well with uh with private uh note issuance which i i agree with is like there was never a story again in the in the in the renaissance that like some gold broker just

ran off with the gold and no one got it if anything it was regulated 100 reserve facilities that showed to be the worst. Also, there was never a time where there was 100% reserved private money. It was usually like 30% would be the max from like the 1500s, 1600s. And then down into late 1700s, 1800s, Industrial Revolution Scotland,

specie reserves of notes outstanding got to like 1% or 2%. And it worked. Meaning there's 1% or 2% of gold outstanding of the notes. And it worked fine. There were no runs on the banks. There was no problems. There was one bank, I think it was called the Air Bank,

they did inflate, they did issue more notes than they had reserves, and they wanted to grow quickly, so on and so forth, they took risks. But what happens in this system, Selgin uses this example, it's like a chain gang. Like, people recognize, like hey, because at that time, which was natural and normal, we were under a gold, basically a gold standard,

there was money in the vault, It was a convertibility system. You could convert the note for gold if you wanted. If you wanted, you didn't have to. Most people didn't feel the need to. But if you wanted, and there were competing bank notes. It wasn't just one dollar bill. Many banks had many notes with their different logos, completely competing freely in the market.

But it was the same gold standard. But it never happened that the sound banks were run upon. What happened is the unsound bank were run upon because it would be natural because you start to see, hey these banks are clearing every day like they're looking at their notes and their coffers they're looking at you know the trade and some competing banks see we're seeing a lot of air bank notes maybe we should go ask them for the gold and that's what they did and the bank failed like spectacular i don't i don't know so the banks orchestrated a run on that private banks orchestrated a run on that bank it wasn't like the people it wasn't like some morality issue of

100% reserve. That's an example of the system keeping itself in check. Exactly, exactly. And no central bank there. No central bank running at that time. So these are really interesting examples of where the free market can do it better. And Selgin also uses this quote, which I really like.

He says, banks weren't failing because they were run upon. Those banks that were run upon were run upon because they were failing. people could recognize that it wasn't like this contagion or this you know everybody running around with their heads cut off or like or like the uh it's a wonderful life like people quote the movies when people are at the bank right the those things unfortunately they're movies and people don't actually read the history so again the reason i'm quoting all this it's been muddled throughout history that free banking works it works uh people like selgen and white who we can

talk about uh we're gonna see tonight they've argued convincingly in my mind that free banking works the market can keep things in check but a key component of money always is this sort of check and balance like you have not not checking balance but this uh trade-off you always have trade-offs like there's no the system worked well it worked well enough when it was allowed to be tried but yeah you had paper you had some banks that were fractionalizing more than they should of most of the time that was corrected but actually most of the time people didn't even feel the need they didn't feel the need to carry the coin around so this is extremely analogous today in my mind about on-chain versus off-chain bitcoin like people very likely in the future if

this history comes to pass they're not going to feel the need to make small payments with on-chain bitcoin they're gonna they're just gonna use a layered system that's faster maybe a bit more risk peter todd said it great he said it's a middle ground you can find the tweet he said it's a middle ground it's not it's not quite an iou but we should also admit lightning network is different it's a lightning network i'm not saying it's a different coin obviously we know it's not but lightning network settlement is different than bitcoin on-chain settlement and that's fine yeah it's great this is going to be an analogy that is anathema to a lot of bitcoiners out there but uh i don't know if you saw the the extension that came out of uh

the chain code labs lightning residency that's been blowing up recently it's called lightning jewel it's a web extension that allows you to to pay quickly uh pay lightning invoices quickly within the browser without having like tall or excuse me tab alt to another wallet yeah i've heard you guys talk about it actually yeah i haven't used it well it seems very cool it's obviously and it is very cool actually uh but it is uh it is burdensome uh to the extent that a user has to run their own node and basically the the natural thought experiment that that comes out of an extension like this that forces users to run their own node is like well if we're going to create a good ux to onboard billions of people the likelihood of everybody running a node is

unlikely so we might have to do some cloud node hosting which is very very taboo in the bitcoin world because you never trust a third party but the uh developer of jewel willow burn shout out will uh he brought brought up the fact that hey i'm comfortable with having 50 to 100 in my venmo account at any given time i'm not going to put every paycheck into venmo a trusted third party that's trusting another third party that i'm keeping my money with but uh lightning network there's these trade-offs where hey i'm comfortable with 100 on lightning network where i'll keep most of my savings at the protocol level in a wallet that's secured by a private key.

But in the Lightning Network, I may be a bit riskier where I say, hey, the tradeoffs are such that I am willing to eat the security tradeoffs for the quick transactions that are basically free. So as we see this getting built out, I think these tradeoffs are even going to get distracted a little bit more. is like all right who's okay with uh sacrificing security for a couple hundred bucks on the

lightning network like maybe that's the way the lightning network is used in the future where you just top it off every once in a while maybe once a month or something like that and that is uh an instance where all right the trade-off's okay yep and there's a ton of possibilities it's uh very hard to predict um you know there are these these roadmaps these plans these uh this free competition which is amazing it's fantastic i think it's only going to be uh from a from a free market standpoint like it's the best shot anybody's had to develop this sort of thing um and you know if you're not into what we're saying or you think that everything should be done on chain or you disagree with the statement that we can't have everything in the world put on a blockchain

then there's those experiments too and by the way i'm totally fine with that i mean it doesn't bother me like that bitcoin cash b cash people go off and do those things there's i think it's good for bitcoin to see yeah it's just it it's uh it's a great it's it's just like it's an incredible experiment that we're seeing and obviously it's nothing new to be saying those things but um i i will admit i don't like i i mean i'm not a technical person anyway we definitely prefer to talk about like economic stuff with bitcoin but this uh lightning network specifically is going to be a very interesting experiment of again i say like quasi i use quasi claims i don't mean that in a bad way i just mean there are there are some trade-offs it's clear you should know

that if you have bitcoin in a lightning channel it's not the same it's just not the same as on jane bitcoin it's totally fine i think it's better than any other iou system that's ever been developed middle ground is a nice way to describe it and we're gonna we're just gonna see like you said there's going to be different different plugins and different ways to do it and um i think that that that's all for the for the good but it's very interesting like i guess the point that i'd try to get across to your listeners is it's very interesting to see bitcoin develop in a way that to me seems completely analogous to how monetary history has always unfolded and it's with some trade-offs it's with some natural free market competition normally winning normally succeeding

and then unfortunately you see that things can get centralized the government can take it over the government can tell you they can give you a bit more protection they can give you fdic insurance they can give you legal tender laws they can protect you to make things exactly the way you need to be when in reality again all of those things are born from fiscal problems of the government itself trying to take care of itself so the the great hope for me is that we can keep the government out of bitcoin forever and i think that it's it's the best shot we've ever had with any money i mean we're moving into the digital age why would you why would you not want a digital money that's a global protocol that's defendable that's uncensorable i mean it's um uh what is the

phrase that um trace mayor i think is calling it the apex predator was that was that his phrase uh it might have been someone else i don't know if it's trace but yeah it's the apex predator apex predator is great but uh i'm not trying to coin anything here but what bitcoin does it's like it is ultimate settlement media but it's actually like the ultimate balance budget as well because if you want to try to contribute in bitcoin great uh go for it you know try to mine try to develop try to do whatever you want but if if you're not able to do that if you're going to be out competed um there will be other market market participants that are going to fill that void and at the end of the day the budget is still balanced which is an amazing thing i mean

there is no again private private money always succeeded in the past and it was always monopolized by a government trying to balance its budget that's the only reason governments monopolize money they were trying to balance their budgets bitcoin it is a balanced budget like you can't you can't stop it it's a honey badger all those things that is a really powerful thing like bitcoin is a balanced budget that's basically that's that's one of the ways that i look at it Well, that's a beautiful way to put it. And what I also want to dive into here is where we get a little heady in the podcast when the buzz starts kicking in. It's like, how incredible is it that the plebs now have control of the monetary policy, whereas everything has been decreed for at least the last 100 years almost, or 105 years now, decreed from, in the U.S. in particular, from the central bank.

Now the plebs get to, the plebs is probably not the right term. but you could be the right word yeah the plebs we get to experiment with this it's open source technology we get to have our input we get to vote on it if we run nodes uh the the function of monetary policy has been handed over to the people with bitcoin and i think that is something that that i mean people have not grasped yet where uh you truly have a say in in the world today like you said earlier money is one half of every transaction in the world that is a very important app and before 2000 2000 january 3rd 2009 like nobody had to say and how something that affects half their life uh worked and now the floodgates have been open and

you can shit post about it all you want you know and let's let's uh maybe review how people are going to learn about this technology because still it's as we know it's very nascent and not a lot of people understand the open source power but i mean if you're going to go to a mainstream media outlet i mainstream i mean like let's let's focus on us like your local news your uh or or your national news your cnn your local 12 or whatever your local channel is from local to national your mainstream media any commentary on what you just said would just be rambling incertitude from that side i mean these people have no idea what they're talking about they maybe could make some bumbling phrase about the price but they have you're not going to get any there anything there so

mainstream media obviously is out and and clueless like if you want to learn about it you just can't You have to use other sources. Sign up for Marty's bent. There you go. And the business news is interesting because business news, like I watch business news. I like Bloomberg.

I used to watch CNBC more. But these people, they understand profit and loss. They understand supply and demand. Sometimes they stop there and they just sort of comment again back to price movements. uh even there i mean after all these years like if you've noticed if you've watched the last

bitcoin boom and bust right from 2013 to 2014 it is identical but louder than four years ago identical identical people were loving the same people yeah they were loving this thing sort of failing the price was fun because all they understand is like price and volatility they don't understand anything about open source governance or yeah i mean how how to run a node how i mean they don't understand anything how a network would be upgraded they don't understand anything there so surprisingly even with business news where you would expect a bit more nuanced educated opinion it's like the same vomit i mean they're literally vomiting on screen like they're reading a teleprompter well my my favorite vomit is when they say hoddles hold on to dear life it's

like if you're gonna say that yeah you have no idea no understanding what it actually yes where it was born and how what it and what the ethos behind that being born exactly exactly it's not hold on for dear life it's like hey i'm not a traitor that's what hoddle means yeah and it wasn't born at all from hold on for dear life i i mean that that wasn't like the genesis of the phrase but the the the way they're just philistines these people they're philistines they they don't have any any culture towards towards towards what is happening there they they just they can regurgitate a few things about volatility and price i mean just the phrases like it's so easy to read between the lines of someone who doesn't understand anything about that technology and the

latest one has been the mining death spiral uh people don't get the difficulty addressing yeah well they're it's so funny to see it makes its way onto the teleprompter uh a journalist you know a news anchor has no idea what mining or hash rate in bitcoin even means at all tries to tries to intelligently ask a guest who knows more just vomiting they're vomiting whatever the teleprompter says they they cannot put two sentences together regarding this this uh this concept it's it's absolutely incredible so point being mainstream video no business media maybe one out of a hundred even we had joe weisenthal on i think he's a pretty good skeptic he he uh he would be in my one or two out of a hundred that that knows uh knows what he's talking about and i like

that he's a skeptic and and you know matt miller is from bloomberg he likes it um no doubt there are there are like let's give credit where credit is due but there are a lot of other people from his network who the at crypto publications terrible are incredibly cynical and again they cannot put two sentences together regarding a technological or economic benefit of bitcoin they're just they're just regurgitating something that's usually about price and volatility well it's nothing there what do you say what do you think that says about the long-term potential of mass adoption do you think that's a hurdle we have to overcome do you think bitcoin is sort of uh it doesn't care about whether or not you understand what it is or do you think there is

sort of a an intellectual uh hurdle that we need to get a lot of people over before bitcoin becomes successful both all three what you said yeah i mean hurdle uh definitely like i think as marad says like i like his view like long term he's obviously very long-term bullish short-term you know a little bit bearish and um there are you know there these are markets there's going to be ups and downs there's going to be euphoria there's going to be things that are outside of the trend and that people should be prepared for that if i would put my investment hat on which um i usually only do for myself or like you know a little bit with my consulting work but that's mostly still strictly calculations i try to not give investment advice in fact i hate

saying this is not investment advice that's the worst cheesiest thing because in bitcoin again bitcoin is a system where caveat emptor is like key that is king like you it absolutely you can't complain to anyone if something goes wrong in bitcoin and when things go right it's just caveat emptor like you can't there's no there's no third party you can blame exactly praise personal responsibility like exactly this is a personal decision like but if i uh if i had to put my investment hat on one thing i would generally say even without bitcoin at all like if we just had like two assets like fiat cash and we had gold i would say let cash be like your courage like if you're going to um try to make an outsized bet or take advantage of some market movement the

only way you're gonna be able to do that is with cash this is you know as rothbard said like cat if if there was no uncertainty in the economy there would be no reason for cash flip that on its head and say use cash with courage like hold cash um the the only way you'll be able to take advantage of down downswings in the market drawdowns in the market is if you have cash i have so so let's just say a less volatile less adopting less emerging market than bitcoin I think cash is bullion like gold or cash is fiat obviously one of those is tax one of those is not so you have to think about all those things but having like cash in your portfolio will give you courage and that's like just a very small point from an investment standpoint but with bitcoin

a lot of people don't see this like you said this adoption is going to take time or at least I think I think it's going to take time there are so many people that don't look at bitcoin from that lens of having courage like every every bitcoin that i buy every little piece of a bitcoin that i buy it gives me courage i have more courage like let cash give you courage yes it would have been great to have a bit more courage with fiat than bitcoin in december of 2017 than just than december of 2018 but that that that's those are just swings and and so on and so forth like at the end of the day the way that i look at bitcoin is with courage like if i if i were holding bullion if i were holding cash if i were holding bitcoin the way that bitcoin is

and its life cycle of being adopted it's clear it's a unique opportunity i think uh doesn't pierre say it's like a once in a humanity opportunity not just once in a lifetime it's once in humanity yeah opportunity like this is digital we're moving as fernando says as well like this is money for the digital age so cash should give you courage let like any any philistine on television that's just trying to just discourage you from holding cash is doing it doing you a disservice if if you don't have it if you don't have courage buying bitcoin then don't buy bitcoin don't do it don't run a node don't try you know the lightning network just hold dollars and and and go on and there'll be plenty of people in the world that will do this but obviously the trend

over time the technological adoption so on and so forth to me and to you and to plenty of people that are in bitcoin cash is like cash gives me courage in the future and it doesn't matter about like the next month year two years it's more about long term down the line think about your family think about your friends um so cat i would say well cash is for the uncertainty in the economy but let cash give you courage instead of just trying to think about the next i don't know s&p play or something else just let cash give you courage and well this is a good segue into what we want to get into which is the post-soviet eastern europe uh in a book i'm not sure if you've read this but a book that is gospel to a lot of bitcoiners especially the hyper cypherpunks

is a sovereign individual and they basically called they predicted bitcoin on page 25 and the preface to their prediction was the uh the mid 90s currency crises that happened in russia and latin america uh and it basically said in the future and like you were saying that cash gives you courage cash gives you courage i want to be a little provocative and take a little further like bitcoin gives you certainty with with a private key like you are certain that you have a claim to that bitcoin whether or not that bitcoin is worth as many u.s dollars as when you bought it is a is another question but you have certainty that you have access to that utxo on the ledger and with your private key um and that is something that the sovereign individual and i

this is what i want to talk about like what happened in soviet russia we don't touch about latin america but like in the mid 90s and basically the the uh the disseminate or not dissemination the disintegration of dissolution dissolution of uh the soviet union because of a currency crisis uh bitcoin is sort of a a direct answer to that type of problem so you're somebody who lives in latvia uh sort of you probably moved there a decade after these currency crisis had proliferated pretty pretty terribly what's it like what do you notice from the psyche of the people living there do they talk about money a lot is it something that's on the top of their priority list as uh something that should be secured as a re i don't want to say they've already rebuilt their

societies but as they arbiter their societies into the future is there something that's uh very high on their priority list is money being being secure and sound yeah i mean lots to say there again with trying to not do too many tangents uh my friend uh giovannis uh chelanis he's in lithuania he runs the lithuanian free market institute it's a very interesting uh organization they started up like right after the soviet union he says the one thing that any socialist left-leaning uh social democrat i don't want to even make it sound like i'm against one or the other that's that's uh leans towards socialism but like the one thing that any communist socialist is sort of inoculized uh against in the baltics is this deep red communism which usually just results in death

and destruction and uh that's a good thing for that part of the world right now but it's a bad thing for obviously uh parts of the western worlders have completely forgotten you know how they got to where they were um it's a whole it's a whole nother discussion probably when you talk about the uh benefits of of capitalism versus you know the problems that communism uh causes but yeah i would invite any listener who is in europe on a trip come to eastern europe i'll buy you a beer we can come to look at you know the infrastructure of latvian countryside uh feels like there's like a lot of lutheran state of the roads yeah there's there's a lot of Lutheran influence.

It was a big German. Riga was founded by Germans in the 13th century, beginning, basically the end of the 12th century. It has basically that part of the world has been dominated either by Germany or Russia or Sweden the entire time. So there are people that sort of know how to suffer. They've lived under oppressive regimes

their entire existence, really. and why is that is that trade routes are they in the middle of trade routes or something uh yeah trade routes uh it's beautiful northern europe on the baltic sea it's really nice it's land that was coveted and they just i don't know i guess they they had more tribal people they were more dispersed uh than centralized empires i don't want to make any don't think i'm insinuating anything about how centralized or decentralized networks work but i mean you know it's it's complicated subject but i do think that if you were able to show say a western american who was like liberal is a word that's funny like living in europe for selling liberal means like libertarian

it means like classically liberal it means like you're more open to change um liberal in the u.s is like they would describe that as a social democrat socialist tense yeah so social social democrat is a good word any social democrat that sort of believes in their system i mean just come to the utopia of them all which was former soviet union and see the state of their infrastructure see how much they have been you know behind you for 50 years and now they're recovering now they're doing well now they're doing better um so so that's just like a small invitation definitely please come uh i'll buy you a beer and we can we can talk about it uh there's no there's no there's no silver bullet to any of this but the lesson is very clear to me and i think to most

eastern europeans especially you know migrant families that have gone to the u.s to the uk or australia and there are many uh that have basically you know sent been sending letters back home during the soviet union seeing updates about how tough life has been and it continues again and again i mean we have it in venezuela zimbabwe now has more inflation inflation is an animal that just it will rear its ugly head at any time it's impossible to predict it's impossible to predict no one knows when uh this whole study about the monetary base we've done which i don't want to maybe get back in on that tangent but like there's been a lot of monetary base inflation in the world in the last 10 years but we haven't seen like crazy inflation well let's jump into

Well, we haven't seen crazy inflation in terms of price inflation for the CPI basket that the Fed would have you believe is the most important metric from which to measure inflation. But I would say, like, look at asset prices, whether it be equities, real estate, college tuition, car prices, or actually not car prices in particular. but i will say health care college tuition housing three cornerstones of society here in america i would argue um have hyperinflated over the last 10 years yeah and i think over the long term that's always true like you can't uh maybe predict it over the long term but or of the short term but you can see it over the long term absolutely true like it's it's higher than other prices in general year on year john williams nice uh solid old school economist he makes this point a lot in his newsletters like the way that they've defined inflation has been changing since the 80s since

the 80s so the hedonics the basically the variables that they put into the index they've changed you know this is a common thing i think most austrians or libertarians or classical liberals know you know like if it used to be steak now it's beef and they you know they just they sort of rice now it's not even beef right right that obviously that's uh that's the trend is that they keep diluting the index but all these things are still again i sort of go back to what i said if you were a gold bug in 1979 you got to be careful i'm very careful to predict like there is a point there will come a point there is this time i do not know let's talk about recent history though let's talk about central banks buying uh national or treasury bonds and equities

so japan in particular how long can japan go well it's been since 1990 right but but it is coming to a head is it yeah they're trying to unwind their bond buying program i mean it they could say they're trying to unwind but obviously the moment that well all right for you freaks we're getting into like a very like we know what we're talking about right now for you freaks that are trying to understand what we're jumping into so a big trend is has been recently japan started the trend uh japan has terrible demographics and it was a very stagnant economy uh a very uh uh what's the word i'm looking for uh stagnant not stagnant but it's been automated it's been automated by technology in particular which has driven down wages and and really uh fucked with

japan's economy and in japan the japanese or the bank of japan has uh respond to that by printing money and they were the first to start a qe program in the 90s and it just persisted for 25 almost 30 years now which is crazy to think but now they're venturing into buying japanese government bonds uh and equities they own like what is it 40 of the etf well i think that's the key point is that right and uh this was this was my point is that even though you have to sort of watch what they do not what they say and again short term it's impossible to predict inflation in general is impossible and i mean price inflation it's impossible to predict when an economy would go into hyperinflation so if anyone tells you that they know they don't

yeah there are a myriad of factors it could be social unrest it could be a political crisis you know brexit could have caused hyperinflation you never know turkey is the perfect example they They didn't print any money, but they had hyperinflationaries. They were printing, but yeah, it wasn't like... Nothing like Zimbabwe or Venezuela. It wasn't Zimbabwe numbers of monetary-based inflation, yes. But I would say to that, again, to be cautious, there is the only limit of what central banks can do to, quote,

keep the system in check, is how many assets there are in the world. Japan could buy everything. Fuck, man. they could buy the s&p they can buy you know they're already buying you know nasdaq as you said they're buying like a lot of these etfs and things but like swiss bank owns fang stocks there are there is no limit so the fed in that sense is actually mild the only thing that the fed owns that's not conventional is mortgage-backed securities which they did after the 2008 crisis they mostly just own treasuries u.s treasury which is typical and they own mortgage-backed

securities but there is no limit to what a central bank can do there's no limit to that monopoly power the key really at the end of the day all i can say is that the key is that a sound money a stable money doesn't have that outsized influence which is licensed or protected from the government and thus is bitcoin you know so i think that gives me like great hope and i have uh i have great as i said great courage in holding bitcoin which i think you me your listeners a lot of people we are definitely on a tail end of society at this point because most people don't have that courage i think why is it needed it's a ponzi scheme it's a scam it's we have mx we have visa what's the point of it all this is gonna take this could take decades i mean this could take i've conceded

that this could this could happen well like hyper bitcoinization quote unquote i don't think that will happen like very quickly if at all but i've very heavily conceded that could happen past my lifetime yeah at some point past my lifetime um but staying in this vein of conversation uh what the hell were we just talking regarding the central banking and their asset purchases yes but oh hyperinflation um i just had it what was it uh bitcoin is there an end to it is there going to be how they're going to exit maybe how would they exit or how well how do you think they'd exit um no ah shit i had a very good follow-up question to that um um yeah so trina thought i was getting you're talking about japan uh and would you agree that

their money printing has enabled them to buy these type of assets i mean that's the definition of it yeah when they so when they on the balance sheet when they print money it's actually their liability to society it's a liability on their balance sheet but they match it with an asset that they bought that printed money for so typically it's government bonds that's the typical thing and that's historic i mean that's that goes back to governments always monopolizing money it matches their sort of credit um but there is no limit to the assets they can buy so japan has sort of paved the way they're buying stocks and switzerland has followed suit and there are others i mean zimbabwe just bought everything in their country so to speak and then it was gone so another way

of saying that is there's no limit to the amount of money there is no limit to the monetary inflation that is an increase in the stock of the monetary base which we were talking about the beginning there's no limit to that they have full uh monopoly but i would quickly quickly counter again i am not trying to sound like a doom and gloomer or sound that that's even a system that can't work it does work to an extent um and it works but it also all right so yeah this is the segue that i forgot for like five minutes and finally remember the segues into the ethics of money production great book guido jurgman holzman wrote the ethics of money production in 2007 the year before bitcoin came out and uh page i know vividly from pages 70 to 72 i believe there's

like four paragraphs in which he describes uh the opportunity costs that arise when you print money from a central authority uh they basically enable investments uh in like i mean i think the vc boom here in america is a perfect example of it they enable investments of of uh sort of wasteful endeavors where things seem feasible which they normally exactly and you have invest and he investable opportunities on these three pages he he incites a biblical story of uh the the builders in the time of jesus who had easy access to money would try to build temples but they'd only get like a tenth of the way and you'd have 30 temples built like 20 percent which is sort of the same system that we find ourselves in today, where the easy printing of money has enabled unwise

investments, whereas if we were on a more sound money, the investments that would be made would be made with more critical thought, and there's a bigger opportunity cost, which I would believe Holtzman would argue drives smarter decisions. Yeah, so my initial answer might be not what you would expect but i would quickly counter and defend systems that were free again uh to using fiduciary media which means bank created money ious um to facilitate a better functioning society than one that did not have those things one that just functioned on a purely narrow banking 100 percent reserve gold standard system adam smith wrote about this many people wrote about that from adam smith to selgen so on and so forth uh it's it's important to keep in mind and this is

where i think fernando is is with me as well i think it he he uh he studied under uh hernando de soto or uh jesus suerte de soto um who is a big 100 percent reserver uh big roth party and these guys are like again i'm not an economist i'm not trying to sound like i can what is it what does it take to be an economist though that's a good question good question but i'm definitely not one uh all i can tell you is that marty definitely not one but but uh the the again it comes back to that phrase like you said there comes a point here's here's here's what an economist is economists should be someone who macy said this hayek said this who explains to you clearly the situation and then stops it's purely descriptive and not prescriptive this is

very very important i mean this is again like how many economists have you seen on tv who give this sort of you know highfalutin they know the solution to all your problems the ubs's head economist went on cnbc the other did you see that and and i didn't see that one but and then when they get a bit edgy when they get a bit edgy themselves and we could name names we could not in any means but my question to you is how many of these people were locked in the janitor's closet when they were younger i mean these people these people have no skin in the game to quote taleb they have no skin in the game so an economist if you want to take an economist's word at the correct level the correct value it should only be as a descriptive explanatory reason the moment

that he prescribes the moment he says i know better than you i think he probably was thrown in the janitor's closet i really do because these people are taking an asymmetric view on their own productive capacity in society i'm much rather going to listen to an entrepreneur to someone who has skin in the game someone who you know a ceo a minor someone who someone who is doing work regardless of the field whatever you're talking about than an economist and that's just that's like it's so i know it sounds trivial or whatever and it's not though that's the plight of our modern age is the hubris of some economists who think they can micromanage a global economy that's why i think we're in the situation that we are because we have a an elite class of

academics that think they know how to pull the levers in such a way that can make the world perfect yeah and and and quickly again i want to try to cover the bases like you may think that i'm not with the austrians or if i'm making some critiques of some of these guys that are 100 reservers i'm i'm very sympathetic to a lot of their views as well but you know there are definitely some some points of disagreement there but mostly academic and i want to try to close the bow on on this on this 100 reserve stuff just quickly but uh you know like we had bob murphy on our show we had george selgin on our show they did a soho forum which we're about to go to uh a debate um on fractional reserve banking this is a very narrow academic uh uh it's it's a very

focused debate that is interesting as hell like i really like it but at the end of the day i don't think it means much towards the way actors in the market will will act um but what i think they both agree on was the most important point i tried to like i like bob murphy a lot even though i maybe sympathize with selgen's writings a bit more at least regarding the history not on some of his prescriptive stuff because selgen toes a line too i mean he's an economist he he works he he prescribes things too but point being both of those economists they agree that the solution to their disagreement would be the free market taking action it would not be government intervention murphy thinks that reserves would be higher he actually interestingly doesn't say 100 but he

says it would be higher than what selgen thinks this is what he said on our show and i think that's what it gets down to is like those guys those economists and and huerta de soto all of these free market economists they all agree that if you remove the monopoly from society then you're going to get to something that is more reflective of how people act and that's that's that's i think where it goes there so i just wanted to sort of make that point in case your listeners thought i was like not sympathetic to these austrians i definitely am um but back to your question about uh holzman where were we there you lost your train of thought now i did but with holzman and no so so let's get into the ethics of money like is there an ethical line like we were talking

about japan printing money and pushing it into equities and etfs uh so there's signage there where they're printing the money and they get first access to that money and are in turn allowed to turn around and loan it out at a higher interest rate for nothing basically uh like is there a line at which i don't want to say society recognize like where is like where does the ethics of money production come in and is there a way we can frame bitcoin in a way that makes it obvious like hey this is obviously a more ethical system i don't think there's any start starting point i don't think there's any ending point again if you say line if it comes to a point i think you're always going to be surprised and i think that there is no limit to the amount of shenanigans the amount

of assets that any central bank can purchase with their printed money and i don't say that in like a flippant way or a way that's not even like possible i mean this has been done this is just fact this is this has been done being descriptive time and time again that's all i'm trying to do is describe maybe i'm more economist than i'd like to be i really am just trying to describe but uh steve hanky does a great uh exhibit on inflation i don't know if you've seen his great twitter follower yeah with uh with with kato he's not such a fan of bitcoin actually oh i know he's not but he's cool but he is a fan of sound money at least in his view and he makes the point and he also follow like he he calculates inflation based on purchasing

power parity of all of these these countries and you if you actually read some of the work that he's done and and and you you digest what he's saying it really hits home to me at least is like this is the the challenge of any individual actor working in a massive alongside a massive monopoly is like you never know when it might go wrong you just never know it could be tomorrow it could be five years from now again imagine if you were a gold bug in 1979 gold hit one year later gold hit 800 for about five seconds and then it never recovered until the year 2000 i don't think that at all is analogous to bitcoin as far as price action but they can go on a lot longer than you think that they can and their only limit is assets in the world they can buy every single

asset in the world technically let's say there's two limits that that limit of how much they could buy and then uh the human capacity to be uh duped for so long i think it's more of a social thing than a than a mathematic or like a like you said you shouldn't draw lines or like point to like hey this is yeah it's going to be like a psychological thing where it's sort of like a an avalanche effect where snow slowly falls for three or four years and then there's one point where it's like all right everybody just collectively loses confidence and you have an avalanche and it's unpredictable i mean weimar republic uh you know venezuela zimbabwe all different cases all different post-soviet basically every post-soviet republic you know massive suffering massive

suicides massive social unrest it's it's it's it's completely unpredictable it's not moral in any sense of the word and you just have to you have to you have to take out and take responsibility and be careful we have to get going soon i completely agree and that train of thought is like leads me to ask this question like do we truly live in a capitalist society in america today i know you don't live here right now but like in america is america truly capitalist or you do you think it's a socialism of the rich to a certain extent i mean i i don't look at myself as someone to make those judgments um i think you know as is everything there's a gradient like some people are very happy to pay taxes in the u.s some people aren't happy to pay taxes some

people are very happy to evade taxes in uh russia some people are happy to pay you know putin his little uh his his uh his peter's pence or whatever the word is but i mean uh alms pay his alms his alms their little dues i mean it's all individual the the market is a collection of unlimited demands desires wants and needs and a limited supply people are going to try to take advantage of it um uh you know the the main the main key i've said it i think again and again but it's for me it's it's where the buck stops is that when you have uh a monopoly granted from government you should usually be most cautious in how you you act around that monopoly and bitcoin gives us the best chance we've ever had to like be an escape hatch to give you courage to

protect your family so on and so forth uh we're about to go see larry white which we've talked about a little bit during the show i don't know if you want to go into his new hip project no well that's what all right so before we go into it so i was listening to your interview with larry white earlier today rehashing it i listened to it twice today because i agree with a lot of you said and i was actually disappointed yeah after listening to it to find out that he's uh latched his reputation on the initiative queue so for you freaks that don't know initiative queue is a quasi altcoin i don't even know if you can call an altcoin because you i don't think you can mine it right now i think they've marketed themselves as not a cryptocurrency

yeah they're they're marking themselves as sort of this global currency where if enough people sign up there will be enough liquidity uh they're actually make like creating fomo where they're saying hey if you get in early enough enough people join like it will be worth a lot of money in the future which uh and to to highlight something in your interview with uh dr lawrence white in particular that he said is like once you have a corporation uh doing signage like that is not what you want and it seems like he has completely sold his soul to initiative initiative q in particular which does exactly what he was telling people not to do yeah when you had him on your podcast yeah so just a couple points here i mean i know we're

running long but um larry so so i don't know larry personally we've interviewed him we've interviewed uh his student dr selgin who you've you know if you've been making it this far in the show obviously i have a tremendous amount of respect uh i i like reading what both of them have written massive volumes on just great free banking uh freedom of of choice in in markets and economy and and everything that they're very very open to freedom and the you know opposing that monopoly that we've been talking about uh larry if like if i was going to speculate and you know i guess i just i should comment on this since i've been quoting them as people that i i look look up to like he's definitely an og in the space like his uh his i think his twitter feed is like

studying private currencies before they were cool i mean you know the most obscure thing like if i even mentioned small change on this podcast i mean he would be able to tell you like just example after example after example of small token even token fiduciary change that worked better in the free market than some royal minted public silver 100 content quality silver coin he'd be able to tell you that actually a private token fiduciary coin function better in this market so on and so forth i'm just trying to give you a flavor of this guy's definitely like an og in the space and they know what they're talking about as far as uh historical banking and economics go uh i can only assume that it so it came out after we interviewed him

i can only assume that um he looks at this as an opportunity you know he's later in life of of of taking part in something that's interesting but but the way that they have marketed and i understand he's like a consultant in the project you know whatever that means but uh he didn't like start or he's he's not the technical person behind it they've marketed it themselves as being basically imagine you got into bitcoin like eight years ago that's one thing they also say they're not a cryptocurrency and they also say you know like you need to accept one email and then send five emails to your friends yeah it's very i'm sure he has his own network effect reasons why he would think that that could be something interesting but i have no explanation of why he would support

a project like that and not maybe write more or talk more about bitcoin or even a stable coin right i mean because at the end of the day like what is like what is the what is accruing value out of that like especially if it's not proof of work where you literally have to expend capital to prove that you did the work to add transactions to the bitcoin ledger and because of that you're rewarded with bitcoin with initiative q it's like it might not even be a blockchain it's like how can you bootstrap that value it can't just be uh sort of credentials of of people that are respected quote unquote in certain arenas i've given it next to no time to even research myself but i can say that the fact that they've marketed it as being imagine you in the early years of

bitcoin and at the simultaneously same time saying we're not a cryptocurrency it's very confusing to me and um and on top of that like he certainly knows the history of e-gold and liberty uh dollars reserve like he knows that history so uh i don't have an explanation but we're about to go see him debate ken rogoff on the benefits and the merits of free cash in society yeah and ken rogoff is some status freak who wants nerf policy to go to go mainstream and i mean all of the moral philosophical free market reasons why cash is good uh larry will be defending tonight so i'm very interested to see what he will say about that oh and that's one thing you should know is like i could disagree with larry on initiative q but i do broadly with a broad

stroke agree with his uh philosophy behind free banking and the way there should be an open competition for monies on the market um and if and again everybody in bitcoin whether it be from a crypto cryptography standpoint or an economic standpoint stands on the shoulder of giants and without guys like larry um or george selgin sort of paving the way for us to even grow on these ideas we would not be here even though he might be misguided with initiative q i am very much thankful for and the the groundwork that he's agreed that he's late agreed agreed all right we've got some commercials to uh to record too before we go we're only 20 minutes away from the event so we're not too late but uh we should wrap up here we're coming up on two hours we

ripped two hours um so are we done with the actual content for the show no not yet do you have a final note for any of the freaks out there for anybody who's just listening to this well yeah I would just, you know, maybe it was because the vodka was not flowing smoothly enough at the beginning for me. I still, I understand that the differences in money supplies are a confusing thing. And the difference between what a claim is and actual basic money is a confusing thing. And the role that credit plays in all of that is a confusing thing. i hope that uh some of that at least my view on that is uh beneficial to your listeners and if they like what they're hearing and they haven't heard our show definitely can listen to that we

explore those issues but uh that yeah there's i wish i could give a simpler answer for some of this money is definitely a complicated thing credit is probably outstripped uh money as far as like it's older than money um but money is a medium of exchange that uh exists when societies get developed enough that's the point they're developed enough this is something i want to talk about with you okay go ahead all right so the whole debate is like uh money to become money as it goes to this continuum uh collectibles sort of value medium of exchange uh unit of account uh and i've been talking about this pierre richard in particular more recently is that it is all encompassing in bitcoin now it's just not perfect for each use case it's perfect as a

speculative asset but you can use it as a medium of exchange but the opportunity cost of using it as a unit or excuse me a medium of exchange right now uh is pretty high yep um the so i guess the argument is does it have to go through this continuum is it is it in a very strict silo where it's like hey it's a medium of exchange here it's a store of value here it's a unit of account here or can it be all-encompassing while sort of attaining liquidity over time so my general answer is i don't know that's why i like to ask questions and do this show uh but so answering myself is more challenging but no fernando road i think uh store value then medium of exchange and then finally a unit of account the more interesting thing is is medium

of exchange like that's when you know it's a money but uh i think the more interesting thing on top of that marty is that we we've never no one alive today has ever witnessed a money truly becoming adopted so no one really knows um a lot of people also have this thing about the credit theory of money which is a whole nother thing graber graber as well yeah but but i mean that is that if you read sydney homer's you know history of interest rates he makes this clear as well like credit is i use the example as well we talked about this george selden on our show like credit is ubiquitous everywhere like it it happened in ancient times it happens now credit is different than money so like two cavemen you know i'll make the fire today you make the fire

tomorrow these are credit transactions this can happen all the way from then to now like you and your uh you and your sister like i'll do the dishes today you the dishes tomorrow that that's credit could credit be uh abstracted as far like could credit be abstracted to a point where it's analogous to risk like that's basically what it is at the end of the day you need risk for society to succeed i think that is uh the definition but but it's it's it's not necessarily saying that i i don't know how to close close the loop on risk because that probably brings up other finance things in my head that i don't want to get into on the end of your show but as far as a exchange mechanism very simply let's say uh it's absolutely true like graber is right

and i i agree with him there that credit and sydney homer writes this many people write this credit was the first thing it's it's clear that we needed like an easy way to exchange would be through credit sydney homer writes like it needs no barter it needs no trade it needs no commodity it needs no metal credit is ubiquitous throughout society um it comes like from us there's another good book uh who needs the fed i think it is it's john tamney he's uh he's an austrian but he's sort like me like he's more on the not worrying about fractional reserve side and he writes the same things i mean credit uh like we can demonstrate this right now like i have one bitcoin i loan it to you you have that bitcoin you loan it to someone else uh they have that bitcoin they loan it to

someone else and then let's say that person loans that bitcoin back to me that i just count four people there one bitcoin that totally can happen it's a normal it can totally happen inside the question is should it happen should individuals enact in those you know should they partake in those credit transactions that's up to the market to decide was that a stupid choice was that a smart choice was there how much risk was involved you need it back so on and so forth so credit is totally ubiquitous in society you can have a million credit transactions on the same bitcoin there's no problem with that i have no issue and again i'm not prescribing i'm just trying to describe but money when money that's not money bottom line is that's not money money is something

where you have a more developed society you might not be in that place in the next few days you may be trading in you know south america and you may be going back to spain and you're going to need something different to make an exchange because a credit is just not going to cut it so that's what money comes into so money graber is right money comes after credit so uh he is right there but he's absolutely i think uh well i i would i think he's wrong in the fact where credit can create a sound you can create a sound money yeah he basically makes the argument the credit is money the credit theory of money and i don't agree with that at all because it's clear we need money in certain times and places money takes value into the future and you can use money across

societies that are more developed than you know like a tribe if you're just a tribe then you're not going to be able to use uh some certain credit mechanisms that you could use normally in that tribe but outside of that tribe when you get more developed and economy comes and you have more specialization you have more businesses and more people you need a medium of exchange to make it all work and that's the crux of it you know we asked like i was very i don't know proud or happy that we got selgen as our first first guest because i specifically huge first guest and those questions probably your best i don't want to it probably was my best our best interview top three interviews i mean yeah like we we were asking all of the main questions that i i still

struggle with i mean i'm not saying like i'm an expert in all of those but like medium of exchange when you're talking about money that is the cornerstone of a money i don't i don't even bother like the argument of whether store value should come first whatnot i totally agree with like as fernando writes or as i think you are getting to i'm totally fine with the argument that store value is first again doesn't matter what i say anyway bitcoin core nodes are going to do what they do and that's great and i think it's fantastic doesn't have to be bitcoin core nodes could be little bitcoin nodes it could be little bitcoin nodes yeah it could be but that's an interesting question too um because you know bitcoin core nodes probably looked at bitcoin xt

and classic nodes as an attack uh whereas they might not look at little bitcoin as an attack yeah because it's in consensus right that's a great well this is a conversation it is but generally the consensus rules are the same if those are i guess the the main things but they were not with xt and classic but in any event like that yeah that's a whole very fascinating topic as well we slightly touched on that with carter in our interview but like i think that's another thing to explore i don't know the answer to that if you can have like a ethereum style two main implementations i do not know the answer i would argue no but i do like that there are competing implementations just in the sense that it gives you different perspectives on how to view

bitcoin libitcoin like when we were riga talking to eric vasquez like the like we were he was holding court with like a circle of like six of us and i was just giving him shit right but it makes you think like they don't even have a utxo set in the bitcoin which blows my mind it's like i can't even view bitcoin without like utxos no he's a solid thinker and uh i enjoy enjoy him very much listening to his points but i enjoy like i i enjoy it all in bitcoin i mean it's um no one knows for sure hyperinflation is completely unpredictable that's another point i want to make clear to your listeners hyperinflation is completely unpredictable it can happen at any time any place you never know uh sound money is is is something that is proven slowly over time

and i don't know stop me at some point marty no i think this is actually a great segue because we gotta we gotta leave we gotta leave before we leave though uh maddie is gonna record some bitcoin commercials that i'm gonna tag on to the end of this uh a lot of them being very pertinent to the subject that we're just talking about but you know i'm gonna need like five takes to make it sound good for each one or we have to do this live on the show do you hear yourself talk i don't think you can hear yourself so your voice is immaculate all you need to do is just read the sentence and it'll be fine i'm flattered thank you um all right let's do it where can we find out more about you because i don't know where other than your podcast yeah uh i guess by design

again but uh i like that again i i really uh i appreciate you saying that um crypto voices.com crypto voices.com is the site and the podcast same name uh crypto underscore voices on twitter again not not trying to be someone that uh can can pontificate on how it should be or prescribe something in bitcoin just trying to describe it trying to ask questions and i'm intellectually curious about the stuff that we ask mostly about monetary policy um probably some ramblings in between but hopefully you guys uh at least enjoyed a little bit of the cut oh jib that we're we're talking about it's uh the most underrated podcast in bitcoin i would say by far and i'm fine with that description too and no i i thank you for making it it is uh helped me out uh especially

when i get lost on on long drives that's the best the best time to turn on the crypto voices podcast but seriously i know i appreciate you taking some of your your time on your short visit to Thank you for the vodka. It's been a great time. We're going to record some commercials. Peace and love, Freaks. I hope we can do it again soon. Thanks, Marty.

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