The Breakdown - Ben Hunt on the Clash of Narratives in the Age of Coronavirus

Episode Date: March 11, 2020

The week of February 12, the Dow Jones Industrial Average was reaching new all time highs. Meanwhile, China’s quarantine of the 11 million people in Wuhan was three weeks old and expanding to other parts of the country.  While the global equities markets have finally started to catch up to the fear of a global pandemic, the Coronavirus has been one a profound case study in the power of narratives to shape behavior. Even now, those seeking to contain the spread in the US are fighting against narratives from leadership that range from “it’s just the flu” to “it’s a hoax from the media.”  On today’s episode of The Breakdown, NLW speaks with Epsilon Theory co-founder and market theorist Ben Hunt, who makes it his business to understand how narratives are shape and shaped by the world around us.  Since the beginning of the Coronavirus outbreak, Ben has been a clarion voice in the chaos. This episode is no exception.

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Wednesday, March 11th, and today we have a very special show. Ben Hunt is the author of Epsilon Theory. He is a market theorist. He is a political scientist. He has been in venture capital and hedge funds, and he has an extremely acute sense of how the narrative

is shaped by and shapes our actions in the world around us. Regular listeners of the breakdown know that I share this interest in narratives. For me, narratives are the way that we make sense of complex phenomenon, and they're also the way that we try to project our beliefs about the world to other people and try to get others to see the world the way that we see it. Now, usually when I'm talking about narratives on the breakdown, we're talking about something like whether Bitcoin will act as a safe haven in a recession or what the latest Ethereum narrative is, is it ethosmoney or world computer or something else. It's something about crypto specifically. Today we're talking about something a little bit different. We're talking

about markets and narratives in the age of the coronavirus. In early February, Ben wrote a post about the coronavirus called Body Count that argued effectively that the attempt to control and propagate a specific narrative was outweighing whatever the right policy was in effect that policymakers at the time just in China were trapped by their own narrative construction. Ben further argued that this is what policymakers have been doing effectively ever since the Vietnam war, where the narrative itself starts to dictate the actions that policymakers take rather than the other way around. Today we're going to talk about the narratives that have shaped the coronavirus in terms of both our public health response and in terms of markets. We're going to get into this

idea of policymakers being trapped by their own narratives and ask what it means for our response. As anyone who follows him on Twitter knows throughout this crisis, Ben has been a rare clear clarion voice actually speaking about what's happening in spite of and beyond whatever the current narratives are. So I hope you enjoy this conversation as much as I did. One final note, as usual with an interview, we've edited this very lightly so it stays true to the feel of our real conversation. All right, we are here with the man himself, Ben Hunt. Ben, thank you so much for taking some time today. I really appreciate it. Oh, it's my pleasure. Thanks for having me on.

So, you know, we were just talking a little bit about this before, but, you know, coronavirus is, I think, obviously, dominating every industry's topic of conversation. It's now finally after this weird incubation period in America dominating markets in some ways. But the conversation that I'm particularly interested in with you has to do with narratives and the propagation of information. And in some ways where I think it might be helpful to start, is your piece that you wrote that that kind of kicked off your engagement with this, I might say, was called body count.

And my read of that piece was effectively the idea is what happens when policymakers get trapped by the narratives they construct to buy themselves more time to figure it out, right? And the really interesting thing about that conversation for me, or when you wrote that, is that you had a conversation just after where you were talking about markets and how the kind of non-responsiveness of markets to the fact that there were millions of people quarantined in the supply chain capital of the world. And your contention was that that was actually just a byproduct of the fact of markets not representing what they thought we thought they did anymore. And so I wanted to maybe we could start there. Obviously, since that conversation, markets have

started to react in a big way. So, I mean, take me into that body count piece and this idea of narratives capturing or shaping what policymakers have to do. Sure, sure. You know, I've written what I think are three important pieces on this. I mean, important to me. I don't know. They're important to anyone else. But they start with that piece you're referring to, which are called body count. And that was really looking at what I would describe as the way that I called it play. politically corrupt, and I actually believe that, but it was the way in which the Chinese government was using narrative for its own benefit, rather than the benefit of its citizens who were impacted by the virus. The second note I wrote was about the World Health Organization

and the way that I very much believe that the response of senior leadership there was similarly a politically corrupt response, again, to benefit, not in the case of the World Health Organization, a country, but to benefit this bureaucracy, again, at the expense of the people, the world, who is supposed to look out for. And then the third piece, to really bring it home, was what I believe is and continues to be the corrupt political response of the United States to the coronavirus outbreak. So you're right. The first note was on this corrupt political response,

and by that I mean a false narrative constructed on the basis of false data, false numbers that came from the Chinese government. And the, you know, the crux of that argument is simply that the numbers we were getting from the Chinese government. And frankly, I think the numbers we continue to get from the Chinese government in several important respects were constructed. They were constructed with a particular view in mind, that view being to project an image of competence and calmness, regardless of what the reality was. And in that particular article, I tied it back to the U.S. experience in the Vietnam War where we similarly had constructed numbers.

In the case of the Vietnam War, it was the U.S. made up the numbers around the body count. You know, how many North Vietnamese soldiers had been killed or wounded in the given day. And that was a staple of every nightly news broadcast with Walter Cronkine. or the like, I remember as a little boy seeing those broadcasts. And what really is the worst part of this is that for all countries who engage in this sort of narrative construction for their own political or bureaucratic ends, what always happens is that the narrative tale begins to wag the policy dog, meaning that you start to make actual, in the case of Vietnam War, war fighting decisions based on supporting the narrative.

And in the case today, we have actual disease fighting decisions that are made at every level in China through the World Health Organization here in the United States, decisions made to support the narrative rather than the effective prosecution of this battle against a disease. and, you know, to your point about whether markets take notice of this or how this always ends, what always is the case, whether you're talking about a war, like the Vietnam War, you're talking about a disease, is that the narrative ultimately collapses against the reality of the fight. In the case of the Vietnam War, the American narrative that we were winning the hearts and minds, that North Vietnam was on the verge of suing for peace, that was blasted into smithereens by the Tet Offensive. And in the Tet Offensive, which was militarily a disaster for North Vietnam and their Viet Cong forces in the South, in military terms, it was a disaster.

disaster, but in terms of the narrative, it gave the lie to the narrative. It was obvious after this offensive that North Vietnam was not close to surrendering, that we were not close to winning the hearts and minds of the South Vietnamese people. And once reality is injected into the markets or our politics or wherever these narratives are playing out, this is narratives break. This is how they collapse. It's very hard to collapse these narratives in a purely market environment, like the market around the price of Bitcoin, or the market environment around actually any stock market in the world over the last 10 years. What happens, though, is that there are these events, and the coronavirus outbreak is certainly one of them, where reality gives

the lie to these narratives that are constructed to further the advantage of, you know, a political party, a government, or a bureaucratic organization. So that's what I think's happening now, and I think there are lots of ramifications from that. The main one being, and this is what I'd love to discuss with you because I think it's so interesting for all of us, especially I'll call it the Bitcoin or the crypto community, is, well, once this big narrative collapses, and we're certainly seeing this narrative around competence and market calm and low volatility collapsing in the face of the reality of coronavirus, what are the rail of the reality of coronavirus? What are the ramifications of that? Because what I'll tell you is that once one big lie gives way,

other big lies tend to follow. So, you know, that's my story and I'm sticking to it. So this is fascinating because I think we're seeing two narrative collapses in real time. And it's almost sort of like potentially when neutron stars spin around each other and eventually become a black hole, right? And one of those is the health narrative and what this is going to do from a health perspective. The second is a fundamentals of the economy narrative. And whether this is the pin, not the balloon, so to speak, in the scorecard that has become our markets. And so I guess one of the really interesting things about the analogy that you make to Vietnam and both the situation that we're seeing now is that you have this weird confluence of the numbers with the

narrative, right, where some type of number becomes a, it's the new goal post, right? So the body count in Vietnam was, it was a narrative that was based on that number. And so the strategy became achieve that number, right? If winning is more people on that scoreboard, do it. I think that you could make an analogy to some extent with the stock market, right? If the stock market is going up, that means the economy is good. And certainly that's a conflation that has more to do with any one sort of type of policymaker. That's also, it's an easy number for media to report. I'll go farther than that. It's not just an analogy. I mean, it's an absolute fact. I mean, you know, the Trump administration and Donald Trump himself has not been shy about,

saying those exact words, that the stock market is my scorecard. The stock market is my scorecard. And, you know, I think to a large extent, every president has known that. It's just that, you know, this particular president, he tends to say the quiet part out loud, you know, and, you know, it doesn't even make a pretense that it would be anything but that, the stock market being the scorecard. I think that's absolutely been, again, the quiet part, the unspoken part, really since the great financial crisis of 2008. And it's been reflected not just in the stock market, right, but it's been reflected in every monetary and fiscal policy that we've been subjected to. since 2008.

And, you know, I want to be clear. I think that in March of 2009, when the Federal Reserve started its policies of extraordinary, you know, support by buying stuff and by using their words intentionally to try to, you know, influence markets, look, I think what they did in March 2009 was exactly the right thing to take. I mean, that's why we have central banks. We have them as that emergency liquidity provider of last resort. I like to use the example of, you know, pulp fiction where John Travolta gets that syringe of adrenaline and puts it, you know, right into the heart of the, you know, Odeeduma

Thurman. That's what the Fed did in March of 2009, and that's what Central Banks are supposed to do. What's happened since then, however, is what all the Fed did. is what always happens, that these emergency government actions become permanent government policy because it supports the power and the aggrandizement of these government organizations. I don't think that's necessarily good or bad. I think it's kind of sad, more than a little sad, but I am saying it is. And it really requires, again, some sort of implacable reality,

whether that's losing a war or whether that's losing a fight against a disease to give the lie to that. So look, I think you're right. We've got a lot of these big narratives, big stories that have been constructed for us over the last 10 years, 11 years, that are now really damaged. I will say this, though, because it's one thing to kind of talk about this stuff and and the like. I think we've developed some interesting tools over the last three or four years, really, to try to do more than, you know, just give our opinion on this stuff, but actually measure the strength and the impact of narratives to actually visualize the scope and the structure of these narratives over time. And while I will absolutely tell you that the, let's call it, the

Trumpian narrative of control over the economy and over this disease propagation in itself is clearly been just demolished. The other narratives that are out there, for example, the narrative that central banks are still large and in charge, that narrative is still there, right? So I don't want to, you know, to say that, oh, my God, you know, the dam is broken and all these old narratives are, powerful narratives are now down for the count. You know, what we're actually seeing is that you've got cracks in this dam

and you've got maybe little dams that are giving way, like the whole narrative around the Trump administration. But to date at least, that narrative around what I like to call central bank omnipotence, not omniscience, not that they know everything, but that they are able to drive market outcomes, that's still pretty powerful. That may also be going away, depending on how much the reality of this war against a disease

kicks us in the teeth. But for now, I think it is important to distinguish kind of the battles in this war against Narrative is taking place. I completely agree. And in fact, I would actually characterize the period that we're all living through as not just passive observers, but active contributors, as this interesting liminal period of trying to rest control of the ability to shape narratives away from just the traditional institutions that do it.

And I think in some ways what we're seeing. seeing. And part of what makes this such a hugely important moment is that people are, people don't know who to trust and who to look to for real sources of information in any real way. And in fact, I see every day as I watch Twitter, it's almost like you see this narrative battle played out, right? You have a meme war between it's just the flu or it's a media hoax or only old people get it on the one side and people who are trying to flatten the curve on the other. And it ends up taking on this narrative battle that everyone's a participant in. And in fact, you can see how some of the power and authority in narrative propagation has shifted by virtue of the fact of how

excited people were to see what the hell Joe Rogan was going to say about this yesterday, you know? Absolutely right. What you're seeing, I think, is a real transformation in what we call it, you know, my academic background on this stuff, and I even hate to talk about it because it's, it's become kind of a meme of its own and kind of a joke. But, you know, I really did get a PhD in game theory of all things, right? And, you know, again, I even hate to bring it up because I hear, oh, that's, yeah, now let's look at game theory, right? But the fact is that there, there really is a very powerful game that exists around, uh, as you're describing the propagation of these memes and ideas and the shifts that exist here.

And that powerful idea is what's called the common knowledge game. And it really is a way of looking at how the crowd looks at the crowd. And it is such a powerful force in all of human history. And what really drives the common knowledge game is, is what we call missionaries. You know, someone who gets in front of a camera, someone who gets behind a microphone, and is able to speak to the crowd.

And it's not so much that the crowd is hanging on every word of the missionary. It's not so much that the crowd really is focused on what the missionary is saying. The crowd is focused on the crowd that is watching the missionary speak. So quick, quick example, you know, at every Trump campaign rally, because he really, you know, whatever you think is his policies, and for me it's, you know, not much, you have to give him credit, he's a very effective politician. And he's a very effective politician, I believe, from his reality TV background, from his instinctive or learned mastery of the common knowledge game. What I mean by that is the very first thing Trump will talk about at any campaign rally is he will immediately say, hey, crowd, look at yourself. He will immediately compliment the crowd. He'll talk about, oh, my God, this is the biggest crowd we ever had in auditorium X, Y, Z.

We had a line, you know, two miles out the door. He immediately gets the crowd to pay attention to itself. And that's so crucial. In the middle of his speech, he'll stop whatever he's talking about, and he'll say, you know, just look around at yourselves. What an amazing crowd you are. And, you know, what a ton of people here. The very last thing he will say at every campaign rally is once again to call the attention of the crowd to itself. This is entirely intentional. It's incredibly effective because we are hardwired as social animals to respond to anticipate the crowd.

How is the crowd reacting to what is being said? So what we're seeing today, and Rogan's a great example of this, because he plays the game really well too. Right? Because it's, yes, we're interested in what Joe Rogan, the man is saying, but what we're also really focused on is,

oh my God, look at all the people who are listening, to what Joe Roken is saying. And it's that phenomenon of the crowd watching the crowd that is really at the heart of what I'll call our political or narrative entrepreneurs who, as you say, are trying to reshape a narrative or to create a narrative of their own. It's fascinating to watch out, to watch for, but particularly if you get a sense of the mechanics of this, where what really drives the efficacy of narrative, construction is first and foremost getting the crowd to look at the crowd. Super, super interesting. I feel like this is exactly what markets might be losing the

plot on a little bit, right? You're seeing these cracks. I mean, they're more than cracks. You're seeing them manifest in populist political campaigns, but even to take a smaller example. So there was this viral tweet, I'm sure you saw it last week, where someone said that Bloomberg, instead of spending $500 million on his campaign ads, could have given everyone in America, all 327 million people in America, a million dollars and still had a huge fortune to walk away with. And this would have been fine.

It would have been relegated to a shot in Freud of math mistake, except for the fact that then MSNBC had it as the centerpiece of this overly kind of wrought, poignant, you know, conversation about inequality and politics. And the most interesting thing about that to me was that the original author doubled down after when, you know, everyone, before she turned off her account, rightly so, because God knows she doesn't deserve whatever she was getting for a math mistake. But her second tweet after this was the point still stands, Bloomberg could give everyone a million dollars. And it was this really interesting moment where it is so clear how much, just on a gut level, a feeling level, people breeze through that math.

They didn't even take the time to double check it because that's something that they want to believe. And there is this real rawness. And this, I think, is the real crack in the dam. And what I personally am watching for to see in the markets is there's this big crack between the idea of stock markets at all time highs and people's sense that they are falling farther behind, rightly or wrongly. And you can throw facts at them. In fact, again, another really interesting thing from Twitter, Orrin Cass did this tweet storm about new research that I think

came out of the Manhattan Institute that actually finally put some numbers around this sense of economic dislocation that were that kind of validated the point, not in terms of the traditional terms of how economists put it, but in terms of things like how likely it was to, you know, how many paychecks it took to buy certain things that you used to be able to buy. And so this is a very long way of saying that, you know, we're, it feels like about to get the latest test in whether the government's intervention in markets is enough to keep up the asset prices as the determinant of market success, that political scorecard, or whether there's an actual reset

and whether that reset actually comes with it a different type of political scorecard that needs to be constructed on the backside. Yeah, so, you know, Ben Shapiro, who, you know, God knows we've got a lot of problems with Ben Shapiro, but, you know, he's got this famous line, right, that facts don't care about your feelings.

And it's one of the things I, it's like, you know, I think he's kind of a silly guy in a lot of respects. including this one, right? Because it's not that facts don't care about your feelings, right? It's just the reverse. You know, your feelings don't really care about the facts. And that's because that feeling, for example,

of whether it's wealth inequality or whether it's being left behind and the like, you know, you can choose whatever facts you like and you can, you know, make mistakes in that fact pattern and choose ridiculous facts and, you know, mathematically impossible facts, if you like, but it doesn't change the way you feel, right? It really doesn't. And the narrative here, it's, you know, everything is based on a story. It's the stories we tell ourselves. It's the stories we tell others. And when people kind of dismiss that out of hand, I think they're, you know, they're just misreading what it is to be, again, the human animal.

And to your point, right, it's not that narratives and narrative construction ever goes away, right, to be replaced. Oh, here are the facts of the situation. What happens is that narratives, stories are replaced with another narrative and another story. So what I'm really focused on is not that, oh, the, you know, the, you know, the, you know, Trump narrative of, okay, we can, you know, prop up the scorecard of markets through words alone. It's not that, you know, I'm saying, okay, well, now that's going to be replaced by some, you know, fact-based, you know, understanding of the world. No, it's, okay, what narrative is going to take its place? And once you start seeing the world in those kind of terms, once you start seeing the

world through that lens of stories that explain the world to you, you know, you start to see it everywhere. You start to see that effort, as you're describing earlier, to construct a new narrative. And you start to appreciate, all right, well, this is the effective way of doing it. This is not the effective way of doing it. But you just see it everywhere. And I think what's so incumbent on all of us and the hardest thing of the world, really, is to see others, but especially to see ourselves through this lens, right,

to say, you know, well, what are the stories I'm kind of telling myself, right, to get through the day or, you know, deal, deal with the world? And, you know, is that story one that I'm proud of? Is it one that supports a healthy life? It's something I think we all have to, to to wrestle with in every aspect of our life. Because as much as we want to talk about the stories that others tell us, you know, it's also so important to think about, well, what are the stories we're telling ourselves? I mean, it's David Foster Wallace's, this is water, but in terms of destruction in our daily lives, we swim in these, we are all participants in these narratives, you know? When we are propagating any one of them, it's because we legitimately believe it's the

right one. And we don't know that we're a foot soldier in that battle, but we are. I mean, I think even going back to your point about these cascading narratives, where narratives aren't replaced by facts, but other narratives, you're starting to see the inkling of this. If there is a big crack in the market logic, which, by the way, has been completely bipartisan for the last decade, is you have the MMT side and you have the bickoner side, right? Which is, you know, there's other people who aren't even bitcoins who agree, the sound money side, let's call it, right? Who have, you have, you very different takes on what type of narrative should follow that, but both have a sense that and are strange bedfellows, to say the least, in the fact that something's got to give.

But maybe let's bring it back to coronavirus and this set of narratives for just a minute. In a weird way, we saw the first narrative battleground was around numbers. And actually both sides were trying to use numbers to their advantage. On the one side, you had the people who were saying that this isn't a big deal, and they were using first the flu analogy as a set of numbers, and then real cases as their numbers. Meanwhile, the other wing or the other perspective was trying to use exponential growth numbers, theoretical numbers, right?

And it turns out, I think, in a lot of ways, real numbers right there are going to beat math from a narrative perspective and future math a lot of times, but things seem to be shifting from a narrative perspective as it gets closer and closer to home. How do you see the current state of the narrative battleground with regard to not the market response, but specifically the health response,

and how does this play out? Well, so I think through a combination of forces, the U.S. federal response and to an extent, state and local responses as well, adopted a narrative of don't test, don't tell. It's a variation of that Chinese approach to narrative construction that we were talking about at the very beginning. I mean, the CCP has such control over information flow,

particularly what goes out of the country, but also inside the country, is that they can essentially make the numbers out of whole cloth, right? So how many people, how many confirmed cases are in Wuhan? I don't know, you know, make up a number, right? And, you know, and this was the point of that first note, which is that, look actually through, you know, the numbers that were being reported were actually impossible, given the real-world characteristics of any disease,

that there was no combination of disease propagation and combined with quarantine and treatment controls that could possibly come up with the very smooth function of numbers that was being reported by the Chinese government and then parroted by the World Health Organization. So the Chinese government had this advantage of, you know, we want to control the narrative by controlling the numbers. Well, you know, we can make up whatever numbers we want to. Now, that's much less possible, right, to just make it up out of

whole cloth once it gets outside of China. And so what you've seen, certainly in the U.S. case, and I'd argue in most countries around the world, I can give you some exceptions, but in most countries around the world, the immediate narrative, the immediate narrative, narrative response of government was to minimize the impact of coronavirus. How do you do that? Well, let's minimize the numbers. We're going to minimize the numbers. And that's problematic, right? Because you can't just make them up. You're not China. You're not the Chinese Communist Party. You can't just make them up out of whole cloth. Well, let's, maybe we just don't test, right? Because if the numbers that are reported are confirmed cases. So, you know, if you've got CV-19 spreading around and, you know,

let's make a bet that it's actually going to be a mild impact, right? Let's make a bet that it's not going to be so bad. And to, you know, give us time to hopefully, you know, monitor that and, you know, God forbid, it does start to get out of hand. Well, we need to respond. Let's really intentionally throttle down on the testing we do here so that the reported numbers don't get out of hand or don't get ahead of us. So when you look at really this, from the top on down, this concerted effort to minimize the impact of the coronavirus, its main instrument has been in this effort not to test people. And, you know, how does that work? Well, first of all, it works through, unfortunately, a shortage of tests themselves. And that was kind of a self-inflicted wound. That's kind of

classic bureaucratic bungling here in the United States. More important, though, in terms of limiting the testing was to define the criteria for who can be tested. It's called a patient, P-U-I criteria, patients under investigation. And really for about two months there from all of January through February, call it 27th, the PUI, the criteria of who was allowed to be tested, required that you either had been in close contact with another confirmed case of coronavirus or you had traveled to mainland China in the prior 14 days, and you were symptomatic.

If any of those criteria did not exist, yes, you had been to mainland China, but you were not symptomatic. Or you were symptomatic. You had all the symptoms of coronavirus infection, but we couldn't say for sure you had been next to another confirmed case, and we couldn't say for sure

that you'd been in mainland China over the last 14 days. Well, no test for you. It's not that the test was not available. It was that the test was not allowed. Now, that blew up on the 26th of February with the first case of what's called community spread in the UC Davis Medical Center in Sacramento, where a patient came in, a patient had been intubated, clear viral infection. the doctors at UC Davis Medical Center,

they had treated coronavirus cases before. They took one look and said, oh, my God, we got to get a test. This really looks to us like CV-19. The CDC, which at the time had complete control over who could be tested, they refused. They refused because, yeah, you've got all the symptoms, but, you know, this patient has not been to mainland China.

in the past 14 days. It did not meet our PUI patient under investigation criteria. So this goes on for four days. Ultimately, kind of reading between the lines here, my sense is that the doctors basically kind of, they stole a test from the CDC, got the patient tested, said, oh my God, yeah, it's rampant coronavirus infection, and, you know, publicized this. Now, the impact of this is not just this one patient got bad. bad care for a long time, the implications of this go so far beyond this, because the treatment protocols for just an unknown viral infection, which was the required diagnosis prior to getting the coronavirus test, are different than the hospital's protocols once a coronavirus infection

has been diagnosed. You move from what's called droplet protection to what's called airborne protection protocols. And because this patient at UC Davis Medical Center was without the airborne safety protocols for four days, 124 staffers at the hospital, including 36 nurses, are now in quarantine for the disease. The hospital where this patient was before the patient was transferred to UC Davis. An unknown number of hospital staff there are on quarantine, three have already tested positive for coronavirus, all from this one patient, all from the refusal of the CDC to test based on these criteria that were so ridiculously restrictive and ignored or rejected the possibility that it was even possible to have coronavirus if you didn't fit these narrow restrictions,

these narrow criteria. Now, that's when reality meets narrative. And so what we've seen since that date over the last, gosh, it hasn't been that long, you know, it's been 13 days, almost two weeks now. What we've seen now is just the crumbling of this narrative of don't test, what I like to call don't test, don't tell. And this is now what has was at the foundation of the overarching narrative of minimization to the point where people say, look, we can't know what the real world extent of this is, you know, how many people have it, what we should be doing if we can't test and know what the reality is. So, you know, this has really been what's at the forefront of just of the last 14 days,

and it's a great case study and how a narrative of don't test, don't tell, is blown up by the real world and how that changes. It's just fascinating and has such far-reaching consequences, I think. Where does, you know, the interesting thing is that it's been blown up. if you're willing to go deep enough, but people have dug in their heels so hard. I mean, the big one now is that you've seen a shift from it's just the flu to it's just going to kill old people, which is very black never. But I mean, this is really the most common response that I see from people who think that I am or someone that I know is blowing it out of proportion, right? On Twitter, on Facebook, on whatever. It's just going to kill old people. And I wonder at what point it,

like how far does it have to go for there not to just be another thing? Like, well, will people be doing math after a million people have died saying, you know what, we have 327,000 times, or 327 times that in America? Bloomberg could just give them all a million dollars and they'll be fine. Right. So here's what I think in this, I know, this may sound a little ethereal, but I think it's very real. I think that many people, in particular the people who are the most, most strident proponents of the, oh, well, you know, the olds had it coming anyway, or, you know,

oh, well, you had a preexisting condition. Well, you were, you were kind of asking for it, weren't you? You know, I think that the most strident proponents of that, and this is, this is true for so many people, and to a lesser extent, is that, look, let's be honest, I think a lot of people have some, you know, sociopathie right in their, in their psychological makeup. And what I mean by that is a lack of empathy, really a, and I mean this in the clinical sense, a clinical inability to have not sympathy, but empathy, to put themselves in someone else's shoes. And frankly, I think that most various.

successful politicians and CEOs and every really successful, you know, hedge fund manager I've ever met is a high-functioning sociopath in the sense that you have the ability to compartmentalize that what applies to you, you're not lying when you say whatever it is you say. You really believe it at the time because you have this incredible ability to compartmentalize and to eliminate any feelings of empathy. Now, look, I think that's a rare phenomenon, what I'm calling that, that high-functioning sociopathie. But I think so many people, we have a stunted sense of empathy.

And you saw it originally and, well, you know, why worry about it's just, you know, Chinese people die. And then it's, oh, well, he's over in South Korea. And now it's over here. Well, it's old people. Yeah. What I'll call this kind of low-level lack of empathy, where that breaks down is when someone you know, someone in your community or someone who in your circle gets sick and gets really sick and maybe dies. So that's, you know, for the true high-functioning sociopaths, nothing ever breaks through this, right? They'll be talking about numbers and making these horrific claims that basically boiled down to, you know, the old's had it coming or, you know, preexisting condition means, oh, well, you know, you're asking for it.

I think for most people that breaks down as it becomes real to their lives. The sad truth is that I think that so many people in this world have such a stunted sense of empathy, that it requires a tragedy to hit them square between the eyes in the form of someone they care about before they can extend any sort of empathy to any other human being. Sad but true. You know it's really interesting. And boy, if you had asked me this morning when I woke up and I was going to do my daily Bitcoin podcast, if I was going to talk about my history thesis on Biafra, I would have said no.

So when I was in college, I thought that I was going to go into global post-conflict development or conflict relief or something like that. And I ended up very much not doing that. But one of the things that I was really fascinated with was why people give a shit about people far away from them. because this seems like a pretty fundamental question to the superstructure of how you change systems. Because ultimately, development, I'm so glad that people do it. But it's, you know, if the choice is fixing a system in the first place or cleaning up the mess of a system that someone else made, I'm kind of more interested in remaking the system. But when I went out and looked at where this whole movement of people caring about people far away had started,

Like, this is actually a relatively new phenomenon. The British abolitionist movement was the first time in human history that people had advocated for a group that was other than them. That's only a couple hundred years ago, right? And then if you get farther along, it really wasn't until the early 1970s that we had any sort of citizen, right, nonprofit humanitarian aid type of thing, where Americans were sending relief supplies over to other places. And it was every book that I read, it was always Biafra.

That was the starting point, the Biafra, Nigeria, Civil War, where Biafra, tried to separate. And so I had all of these theories and ideas going into it, and I went to a school that happens to have the biggest original Africa archive in the U.S., so I was able to actually go back and look at Biafran propaganda as compared to New York Times reporting from the same day. And so I first thought, well, this is the first time that we were talking about genocide in any real way and that the Holocaust was being referred to as a genocide. Maybe it was that. Nope, didn't move an inch, right? The Biafran propagandists were unbelievably good. They were hitting that note right from the beginning. Nothing, nothing, nothing.

What happened is that Cameroon got cut off militarily and Biafra was now isolated. And the Nigerian government basically started starving them. They denied them of all supplies. And for the first time, there were TV cameras that could go over there and actually send back these images of starving children. And that you can literally trace the first pictures that show up of starvation, not of armed conflict, not of some theoretical idea of disease, but of starvation to that moment. and all of a sudden Americans are airlifting in supplies and probably unwittingly, you know, extended that conflict about a year longer than it might have gone otherwise. But it was so interesting to me because, you know, it on some intuitive level, the idea of being hungry

is something that we can really empathize with, right? For parents, the idea of their kids being hungry is something that they can empathize with. Because it's an emotion that we experience, although in a very small scale, every single day, it's like, hey, I'm hungry and ready for this. And, you know, I'm not a psychologist, so I can't say conclusively that that was the reason that those hunger images. But what I can say looking at it is that it needed that trigger to connect it to people's lived experience for them to care. And I feel like that's sort of what you're describing here is that there is going to be some set of people for whom it may even be evolutionarily that are that we, you know, I mean, this is like the numbers that suggest we can only have 150 close friends or whatever, right? There are these things that may be programmed in.

But the idea that it can stay abstract for a very long time is, I think, something that we're actually seeing here. Well, you know, I wrote a series of notes last year called Things Fall Apart. Right. And I'm going to mispronounce his name, Chinwa Chibi, you know, that masterpiece novel called Things Fall Apart. And, you know, if any of your listeners have never read that book, you know, you must. I'm sorry, it's one of those books you must read. So it's about a lot, right? But, but Chibi was from Nigeria.

He was, you know, he was an ambassador for Biafra when it declared its independence. And I think what we are dealing with in the world today, a world of polarization, a world of at every level, right, a world of narrative construction, frankly, a world of mass violence, right, and on a lot of different dimensions. It's captured in that novel, this is written in the 50s, right? it's captured in pictures of what happened in Biafra, as you're describing in the 60s, the late 60s, things are falling apart. And in what can, the only thing, right, that I think that can keep us together is to find these old stories. old stories of, I like to call it small l liberalism, of, you know, liberty and justice for all.

Imagine that, right? It's also small C conservatism, right? It's a sense of honor and shame and there is a role for tradition and the people who came before us. We lose these things when things fall apart. And very destructive stories take their place, very destructive narratives. And what I'm trying to do in my writing and what I think is important for all of us as citizens, as, you know, freaking human beings, is to work, to relearn the old stories. and to apply them in our daily lives, apply them in our own communities,

apply them as broadly as we can. Because the old stories are stories of empathy. The old stories are stories of extending to others the rights that you want to be extended to yourself. And, you know, I'm not a religious guy, right? But this is the golden rule. This is due unto others as you would have them do unto you. There's a reason why that's a really core piece of wisdom for a couple of thousand years. There's no more, I think, important aspect of education.

And by that I include our own personal education of ourselves, the stories we tell ourselves, to use that phrase again, then the development of empathy, the willingness to extend unto others the same treatment that you want to have extended to yourself. So you're totally right about how the Biafran conflict is such a story point of kind of seeing the power of imagery, a power of story,

You're exactly right about that lived experience of, oh, my God, these children are starving here. How powerful that is to get people to extend empathy. I think that, you know, it's our job as human beings to not only learn that lesson, but to apply it in our own lives. So many respects empathy, I like to call, you know, clear eyes, full hearts. you know, that whole hearts part, that's what we're talking about with empathy, and there's nothing more important than the world. So I've kept you now for about twice as long as a normal podcast, but one more question that I think dovetails from that. I think I know your answer just based on, you know, reading your Twitter and seeing your writing on this, that you feel

that we're probably in for more bad before it gets good from a health level, and maybe even from an economic level as well. But in this period of narrative battle and narrative shift and this evolution, do you have any cause for optimism about where we might find ourselves far on the other side, right? So not in the immediate term, not in the even the medium term necessarily, but really on the other side of this crisis whenever it ends? Absolutely. And I tell you, you know, when I started writing these Epsilon Theory notes about seven years ago now, I was starting from a pretty dark place, and I

was really just writing to myself, and I you know, tossed a note into a bottle. That's what it's like when you, you know, hit the publish note, you know, the publish button on a website. And, you know, it's like the old police song, you know, you

come in the next morning and there's a thousand bottles that have washed up on your shore. the outpouring of not support, that's the wrong word, the outpouring of engagement, since publishing those notes, the hunger that people have for finding a community that does believe in those small L liberal virtues, that really is trying to seek truth, right, and to see the world with clear eyes and to act with others with full hearts, man, we're everywhere.

We're everywhere. We had, you know, a quarter of a million people coming to the website every month, right, to read and to connect with other people who are looking for the same thing. It's like Fight Club, except, you know, the first rule of this group is, yeah, tell other people. So, you know, you ask what I, do I have optimism about coming out on the other side? Damn straight I do. Damn straight I do. There are tens of thousands of us all over the world who don't have some stunted form of empathy, but are really trying to figure this shit out and really care about the sort of world that we leave for ourselves and our children and their

children's children. Yeah, I've got a lot of optimism. It's going to be a constant struggle, and we've got to play the long game, right? This isn't something that gets fixed. This isn't something that in my lifetime I'm even going to see, you know, some sort of better society take place. But I absolutely think that we can make a good. difference. And it's podcasts like yours, it's writing like mine. It's, it's all of that.

It's a it's a bottom up process. It never comes from the top down, right? It never comes from a Bloomberg, you know, not a million dollars per person, but a buck 50 per person in the United States. That never happens. It doesn't come from the top down. It only comes from the bottom up, which is why I'm so delighted to be on your podcast and, you know, it's these are the things that change the world. So thanks for having. Thank you so much for being here. And I loved how in the Find Your Tribe note, Rusty begrudgingly admitted that even the Bitcoin community was one of these versions. Because certainly that's what it's what it's been for me and a lot of us to be able to find a group of people who are not content to surrender participation.

and their own future. Exactly right. It's very powerful. Ben, appreciate all of the awareness that you're trying to spread on Twitter, and you've taken some time off from that and everything else you do to join us today. My pleasure. Thanks again for having me. Well, I certainly don't have much to add after that.

You can find Ben on Twitter at Epsilon Theory. Follow him if you want to stay up on the latest coronavirus, the latest narratives and markets. As you can tell, he's a very unique thinker. All right, guys, that'll do it for today. Catch you back here tomorrow for The Breakdown.