The Breakdown - Sound Money vs. the Great Reset, feat. Mark Moss

Episode Date: December 28, 2020

Mark Moss is the host of a fast-growing and popular YouTube channel covering economics, bitcoin and more. In this conversation, he discusses why gold, bitcoin and sound money have become even more important in the context of central bank printing gone wild. Find our guest online: @1MarkMoss The Breakdown is produced and distributed by CoinDesk.com

The big shock to me, and even though I expected it to happen, was the announcement of the IMF coming out a couple weeks ago calling for a Bretton Woods two moment. Basically, they're calling for a one-world currency. They're trying to get in front of each of these countries doing their own individual digital currency so they can have their own digital currency. Maybe that's backed by a basket of SDRs. What this is doing is the Fed now wants to launch their digital currency, which gets rid of all the local banks, the decentralization of banks, the local decisions being made. But the IMF then bypasses all the central banks and all the governments. The banker's taking over the world, basically. Welcome back to The Breakdown with me, NLW.

It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by crypto.com and nexo.io. And produced and distributed by CoinDesk. What's going on, guys? It is Sunday, December 27th. Today, on the breakdown's end of your extravaganza, I am joined by Mark Moss. Mark is one of the fastest growing YouTubers, especially when it comes to topics like Bitcoin, central banks, and alternative macroeconomic narratives. This is a super fun conversation about how the world is changing,

and I hope you enjoy it. All right, Mark, welcome to the breakdown. It's great to have you here. Yes, thanks so much. I'm excited to try this out. So like I was telling you, this is just a fun fast, rip through the end of the year, reflections on things. And I'm really excited to have you here because by virtue of the channel that you run and the content that you create, you have a context to think about a lot of these different issues. So it should be really fun. And let's start at the highest level. What is the most important economic story of 2020? I think the biggest economic story of 2020 is the Federal Reserve and the Central Bank's willingness to just completely print and create as much money as is needed or where they want to.

Yeah, and I think, you know, this is a jumping off point for so many conversations. So my next question was going to be, what's the most important economic story that people didn't pay enough attention to? But let's hang on this for a minute because it seems like something that's like, it's entered the dialogue in a different way. I mean, what did you see with this conversation? Yeah, so we can definitely jump into that. I didn't know how concise we need to be, but for sure, I think, you know, we've seen, obviously the Fed has been around since, you know, 1913, and they've just continued to grow in power. But really, it was 2008 is when we saw them just over respond to that great financial crash. And they printed was a $7,800 billion of tarp,

and then, you know, came out to be about a trillion dollars. But that completely was just dwarfed by what they did this year. And so this year, they just came out guns blazing, five, six, seven trillion dollars. They, you know, more in a month than they had done in 200 years. And so I think that was just a massive shift. And the reason why I think that's the biggest, you know, topic of the year is because whether you're thinking about stocks or whether it's bonds or obviously for us, Bitcoin, things like that, it drove all of those assets.

And so negatively or positively. So by putting that much money out, it furthered the use case of why we need an asset like Bitcoin. Obviously, it had a massive effect on the stock markets and whatnot. So, I mean, yeah, I just really underpinned everything. But also, like I said, it really, it shows their thinking and what they're willing to do moving forward. And so the raging debate on YouTube where I'm at in all the interviews that we do, The raging debate is what does the future have? Inflation or deflation? And the thing is that we know, we understand, I should say, we don't know, but we understand what natural markets should do.

And we understand that this market is unnatural and it needs to be deleveraged. Jeff Booth, who wrote The Price of Tomorrow, talks about how as humans we have this natural tendency for deflation. The markets need deflation. Economists like Harry Dent have been calling for massive deflation. But at the same time, the feds want to inflate. And so we understand what natural markets want to do and should do. And we think there should be a big correction, you know, maybe next year. But we don't know what 12 guys in their head are thinking. But they have shown their hands. They have shown their willingness to print unlimited. And I think, you know, depending on how things shake out with the election, Biden has already started selecting people that will be with him on

his team and I think it just looks like more money printing ahead and I think they're going to do everything in their power. They have no choice but to continue to print and inflate. So it's really interesting to kind of break apart that last piece. They have no choice but to print more and inflate. So let's try to break it apart a little bit because I feel like there's a couple dimensions to it. On the one hand, there is the basically if they don't, the whole system that they've created crumbles and credit gets more expensive and all of a sudden huge numbers of zombie companies shut down overnight, yada, yada, yada. There's also the flip side of this, which is the Fed's mandate for unemployment, right,

which seems to be taking precedent in their heads, at least in how they're talking, over the precedent or over the part for economic stability. And in the context of the only tool you have for lowering unemployment being things like lowering interest rates and printing money, it's kind of a, it's such a dull instrument that has to go through so many people first that even, even If you were to take them as sincere in that attention, there's going to be so much collateral damage along the way because of all the other people in line in front of the people who are kind of they're trying to help, right?

Well, I don't think they care about the collateral damage. And maybe they don't even see it. So you just mentioned that their, you know, primary objective is unemployment. But that's rapidly changing. Again, given, you know, depending on what happens with this administration change, if we end up with a Biden administration, he's talked about bringing Janet Yellen in. And she's saying now their objectives aren't just unemployment, but also racial and gender diversity. I mean, what?

The Fed, they're going to print money to fix that. So it kind of shows where their head is at and what they're trying to do. And as you said, they have a blunt instrument. I guess what do they say when all you have is a hammer, the whole world looks like a nail. But, you know, they're going to attack that. And I think, you know, you and I and people that kind of sit on the sound money side, you know, maybe the Austrian economic side, we understand the fallout that that's going to cause and create.

And they're either just unwilling to see that or they're just ignorant to it. We can debate which one that is. But they're telling us. I mean, now they're going to fight racial inequality, income inequality, which of course they're creating with that. And so, yeah, watch out. Okay. So let's keep going through this list just so I don't fall fully down the Fed rabbit hole,

although we'll probably just keep talking about it anyways. So let's go to the second question. What is the most important economic story that people didn't pay enough attention to? So something that wasn't as on the radar. Well, obviously, we're in a little bit of an echo chamber, but I would say the big economic story that people aren't paying attention to is probably this massive shift that's actually coming really, really fast, which is the central bank digital currencies that are coming down the pipeline.

And even people that, you know, are in our little bubble, still maybe aren't really understanding exactly the ramifications of that and how fast it's coming. And I think it was really pretty shocking. You know, obviously China already launched theirs October 12th. The Fed's feverishly working on it. But what was the big shock to me and even kind of caught me off guard, even though I expected it to happen, was the announcement of the IMF coming out a couple weeks ago calling for a Bretton Woods two moment.

And of course, you have to understand what Bretton Woods One is to understand what Bretton Woods two means, but basically they're calling for a one world currency and they're trying to usurp. They're trying to get in front of each of these countries doing their own individual digital currency so they can have their own digital currency. Maybe that's backed by a basket of SDRs. The reason why that's super, super important is because they're compressing the stack, right? So if you understand how the banking system works and how money creation happens through debt, You have, you know, local banks, regional banks, central commercial banks, and they create money based off of the Fed, the central bank, giving them reserves. And so you kind of have this stack, these layers, and then it's kind of decentralized, you know, local banks can decide on their own.

But what this is doing is the Fed now wants to launch their digital currency, which gets rid of all the local banks, the decentralization of banks, the local decisions being made. But the IMF then bypasses all the central banks and all the governments. And now the basically one central bank of the world could be running the world. The banker's taking over the world, basically. Yeah, I mean, it's interesting. This goes back to the original, at the original Bretton Woods, John Maynard Keynes proposed what he called a bankor. And it was this.

His thesis was that no individual nation state should have the world's reserve currency. should be this basket approach. And of course, the U.S. was on the verge of winning World War II, so they did not go for that plan. But it is interesting, I mean, especially since the introduction of Libra, right after that, the Bank of the Bank of England Governor Mark Carney came out with this idea of a synthetic hegemonic currency, which is what he called it, which is hilarious because it's like, I am like as far from a conspiracy theorist as you get. And I'm sitting here being like, Mark, Mark, don't, not you, Mark, Mark Carney. Like, don't use the word. hegemonic in your proposal if you don't want people to lose their minds. But anyways, I think

it is interesting that this has, this conversation has accelerated radically. And I agree with you that although we've heard these initials a lot, right, CBDC, we haven't grocked just how important and integral and fundamental a conversation it is, I don't think, yet. Yeah, I would definitely agree. I did a video on Mark Carney's statement when he was in making that, making that that exact announcement you're talking about. And it got a lot of feedback. And so, yeah, it's been coming. We've been watching it.

But like I said, I think, in my opinion, that's a really big deal that maybe most people aren't catching on to. This episode is brought to you by crypto.com, the crypto super app that lets you buy, earn, and spend crypto all in one place and earn up to 8.5% per year on your Bitcoin. Download the crypto.com app now to see the interest rates you could be earning on BTC and more than 20 other coin. Once in the app, you can apply for the crypto.com metal card, which pays you up to 8% cashback instantly on all purchases. Reserve yours in the crypto.com app today.

Looking for the best way to stay on top of your investment game? Nexo.io has you covered in three easy steps with their high-yield savings account for digital assets. Step one, create an account at nexo.io. Step two, transfer assets to your secure nexo wallet with no minimum or maximum limits on funds deposited. Step three, sit back, relax, and earn up to 12% compounding interest paid out daily on your crypto and fiat. Your passive income made simple. Get started at nexo.io.

Let's talk about, I guess, about kind of what we saw over the year. And, you know, were these changes, be it central bank changes, policy changes, economic changes, government power changes, were they a fundamental or a paradigm shift? or was everything that we saw this year just an acceleration of changes that were already happening? Yeah, I would say it's an acceleration. It's like an accelerant, like a gasoline port on a fire, right? So we've already been going down this path. Like I said, in 2008 was really when we saw the government, I mean, kind of the first part of QE starting to come out. And so this has definitely been a continuation of that, just an accelerant. So yeah, I mean, the whole COVID pandemic, obviously, it was the big news for 2020. And it's just really accelerated. or maybe even exaggerated all the existing problems that we've already had, from weakness in the economy to the Fed trying to print money, to the rise of a sound store value like Bitcoin, right, pushing more people to that.

So all these things that were already in motion have just been accelerated. Even the massive shift of education, right? Learning from home, maybe not going to college, working from home. We've seen, you know, the big Silicon Valley Giants say you don't have to ever come back to work, just work remotely. So all these things were already happening. But yeah, just a massive exaggeration. Yeah, absolutely. So you obviously spend a ton of time looking at lots and lots of different assets, lots and lots of different markets.

What asset or market surprised you most over the last year? Wow. The market that has surprised me the most over the last year, well, the ones that have definitely caught my attention. are both gold and Bitcoin, right? Sound money. People in the U.S. are blind to the fact that, you know, what the problems that we have with our currencies, why a sound money, a hard money, it would be important. And that's why I've always tried to talk about the why. Why do we need that? And they've really done a good job marketing and helping us show the why. And so, you know, gold, I became a pretty big gold bug back in like 2008. And obviously since like 2011, we've kind of been in like a bare market.

for that. And so, you know, to see it come roaring back to life over the last year has been pretty good. That's kind of surprised me how fast that's come back, although it's kind of weakened. But I wouldn't say I'm surprised with Bitcoin, but definitely the rise of Bitcoin this year has been pretty amazing. I guess maybe I am a little bit surprised by how quickly some of the old guard, if you will, the old Wall Street Titans have started to change their tunes. Yeah. I mean, this has been, I think, a very noticeable feature of this year. is, you know, I mean, it may be entirely that, you know, come next year we're sitting here at this time, having the same conversation. And there's been such a torrential flood that these trickles are like nothing.

But it is notable that you can kind of map out Paul Tudor Jones, Drucken Miller, you know, Bill Miller and so on and so forth, Guggenheim partners recently, like all of these kind of firms shifting. And it does feel like we're watching the ground shift right underneath our feet in a way that's hopefully positive. Yeah, I mean, know, a lot of people want to argue if it's, if it's positive or negative, getting institutional investment in, you know, I, I always love to go back to a high X quote, which is, you know, we'll never have a sell money again until we take the thing out of the hand as the government can't be done in a forceful way, but in a sly, roundabout way. And so because of that, I've always kind of believed in this kind of people's money, kind of populist money, you know, retail driven,

which obviously it has been. And so it certainly doesn't need the institutional involvement to succeed, but it's definitely accelerating it. Could it be good or bad? I mean, I think like most things, they can be both. And so we just kind of have to see how that plays out. But I think there's enough protections built into Bitcoin to protect it from an attack. As a matter of fact, when I started my YouTube channel a couple years ago, the first four videos were a four-part series talking about how Wall Street was going to come and try and take over a Bitcoin and what they were going to try to do, try to financialize it, try to inflate it, et cetera. And I talked about how Bitcoin has kind of built in protection measures for that. So yeah, it's going to be interesting to see how it plays out,

but it's definitely a big catalyst right now. I made a video last week talking about how the Bitcoin shortage. And basically what I was saying is that between Cash app and now PayPal, they're buying up like 110% of the Bitcoin, the new daily mine Bitcoin. And then, uh, gray scale was already buying 118 percent. So it's like, where does that volume come from? So it's definitely, definitely having an effect for sure. It's almost like we're in this kind of a jubilant sort of phase as these Wall Street Titans come in where we're just excited for A, the validation, B, the price pressure. But there is probably going to need to be a calibration in terms of, you know, what it means to have these as allies, you know, and what's the good of that? What's the bad of that?

What are the other sort of social layer protections that we need to ensure that we can kind of, you know, drive the whole space in the direction that serves the original purpose versus just kind of another another asset? And there are lots of people out there who are totally convinced. I mean, Ben Hunt the other day called it, you know, inevitably just another Wall Street casino game, you know, lamentingly, he said that. And I think that there's a legitimate fear for that. I love that point that you just brought up, you know, and that is a legitimate fear. I think, you know, for me, I really came into Bitcoin Strong back in 2015, and it was because the ideology, I finally saw a tool that we have that we can actually fight back. And so there's really nothing else. I'm a strong Second Amendment of supporter, but what are we really going to do with, even if we have fully automatic machine guns?

What are we going to do against the military, right? So the only tool we really have is Bitcoin decryption. And I have started to see some of the. industry people coming in and they're not maybe not only just happy with the increased regulation, but even maybe calling for that. And so that definitely is or could be a negative. I think the individualism, you know, libertarian kind of revolutionist view is what's important. And I think I've seen a lot of people, especially even just lately in the last couple weeks, really questioning like how does it fit in with the market? How does it?

fit with the currency market. Someone has been asking questions, how does it fit in with the euro dollar market? How does it affect the euro? Well, it doesn't. It doesn't. It prevents all that. It would have never allowed that to happen in the first place. So it's not about trying to figure how to integrate it. And so I think we do need to kind of keep that revolution spirit alive a little bit. And so we'll see how that plays out. One kind of simple, overly simplistic probably way to put it, is there's this whole censorship resistant dimension to Bitcoin and there's a whole store of value kind of dimension. And I think there's a lot of folks potentially that we'll find to care about one and not the other. And that'll be a bit of a challenge. I'm interested, you know, you get so much feedback every

given day, you know, with the things that your audience is interested in. What has been kind of most interesting for you about the topics that your audience is curious about, the questions they have, the beliefs they have, you know, going into, I'm sure you're constantly thinking about, like, what type of content do I want to create, what type of things do I want to talk about, you know, what are you thinking about for 2021 based on the feedback or the interaction with your audience? Yeah, I sure do get a lot of feedback. And it's interesting. You know, the brain, the mind is so amazing how it can just synthesize data. And I probably get 5,000 comments a week. And I do go through them. I'm one of the few people that probably responds to most of my comments. So I'm 5,000 comments a

week at least I go through. So I see that as far as the feedback that I'm seeing and the interest, I guess there's, and maybe it's just maybe I'm in my own bubble, but there's definitely a lot of interest and even concern with how this world is shaping up, right? I think people are, people are aware that there's something wrong at the core. And, you know, from my mind, it all comes back down to the money. And so there's a lot of concern. Like people are really legitimately concerned on on their future, um, on their money specifically. Um, also a lot lately about even, you know, um, authoritarian governments, um, being, becoming too powerful and things like that. And again, maybe that kind of plays into the content that I talk about. Um, I try to, you know, kind of report the news and, and talk about topics that

I'm interested in as well. So, um, but there, there is definitely fear. People are. are worried. People are concerned. I think people are really trying to figure it out. They understand there's massive changes coming. And everyone's looking for an answer. The one problem that I see, though, probably the biggest obstacle I see from people is that they're not flexible enough in their thinking. So they're always looking for someone to tell them what's going to happen. And that's not the case. None of us know the future. And really, most of us are not trying to predict the future. What we're doing is we're reading the signs and we're trying to assign probabilities of things that happen. And so all of a sudden things change and we have

to change our thinking and change our direction. And so I get comments like, oh, you know, you said this, but now you're changing your mind. You waffle too much. And it's like, I'm not, I'm not waffling. You know, we have to be a little bit more flexible, especially now more than ever. We need to be more responsive and we need to be paying attention. And so, yeah, that's what I'm seeing. Yeah, I think flexibility of mine and the ability to integrate new information is absolutely an asset, not a detriment. So I'm with you on that one. I guess by way, kind of last question to wrap up, what's the thing that makes you most pessimistic or nervous heading into this next year? And what's the thing that makes you most optimistic? Well, the thing that has me the most

pessimistic and to be honest, it takes up a good majority of my time. And I'm trying to gather and share the information as I can. But the thing that makes me the most pessimistic is, is exactly what I talked about, the IMF. I mean, what they're doing, what the W.EF is saying and doing, World Economic Forum, right? They're planning the Great Reset. You said you're not into conspiracy theories. And I try not, I don't even like that word. But if you just go to their website and read through what they're saying or get get his book you can read it for yourself and and that's not really a world that I'm super excited for um so I'm pretty I'm pretty scared for that I'm trying to navigate that best for my family right now. Um, we're looking at getting second passports right now and just

trying to stay on top of on what's going on. Um, so I'm afraid of this authoritarian world that's continuing to encroach on our liberty. Um, that's my, that's what I'm most pessimistic about. What gives me hope and really the only thing that gives me hope is Bitcoin, because Bitcoin is tool that we can use to fight back. I believe, kind of going back to the book, like the sovereign individual, I believe we're moving into a world where the only way we can beat the grip of authoritarianism is when nations will start to compete for us. And throughout history, that's never really been possible. You know, growing up, I had friends that moved from Iran or South Africa. They left authoritarianism oppression to come to a free country, but they had to come penniless.

They couldn't come with any gold or any money or whatever. And now we can move with Bitcoin. And so that will allow this real competition to take place, which I believe that's the only thing that I can break that grip. And so that's what gives me optimism for the future. Super interesting answer. I love the idea. And it's something that I've been paying attention to for a long time as well, this idea of just competing for citizenship and what that might mean and how that might be a countervailing force. So I love it, Mark. And I appreciate you taking time.

I gave everyone the shout out to the show at the beginning or the YouTube channel, rather, in the intro. But I encourage you again, go check out. Mark online. I'll make sure the link is in the show notes. And Mark, always awesome to talk to you. Keep up the great work. Thanks so much. I appreciate it. It was super fun.