The Pomp Podcast - #572: Jeff Booth on How Inflation Is Stealing Your Wealth

Episode Date: June 3, 2021

Jeff Booth is the author of the new book titled The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future. In this conversation, we discuss inflation, deflation, abundance, ESG goals are nonsense, Personal Greed vs Survival, Weimar Republic, Bitcoin, and the old system vs the new system. ======================= Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC. ======================= Exodus is an absolute game changer in the crypto wallet space, and we’ve teamed up to offer an exclusive discount for you, as listeners of the podcast. Sign up for Exodus today using my promo code Exodus.com/pomp. This is a no brainer for both newcomers and crypto heavyweights - go sign up today.  ======================= With 10M+ users, Crypto.com is the easiest place to buy, and sell 100+ cryptocurrencies. The Crypto.com Visa Card gives you up to 8% back instantly, and 100% back on Spotify and Netflix. Also, Crypto.com lets you earn up to 8.5% p.a. on BTC, and 14% p.a. on stablecoins. Get $25 when you download the Crypto.com App with code "pomp". Download the App now: https://crypto.onelink.me/J9Lg/pomppodcast2021 =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now, let's kick this thing off. Jeff Booth is the author of the new book titled The Price of Tomorrow, Why Deflation is the Key to an Abundant Future. In this conversation, we discuss inflation, deflation, abundance, ESG goals as nonsense, personal greed versus survival, the Weimar republic bitcoin in the old system versus the new system i really enjoyed this conversation with jeff and i think you'll learn a lot from it before we get into this episode though i want to quickly talk about our sponsors first up is revolute back to the basics for a second i've partnered with

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store again exodus.com slash pomp for your free download or search exodus on the app store or the play store last but not least are my friends over at crypto.com with over 10 million users crypto.com is the easiest place to buy and sell 100 plus cryptocurrencies the crypto.com visa card gives you up to eight percent back instantly and 100 back on spotify and netflix also crypto.com lets you earn high rates of interest on bitcoin and other stable coins get 25 when you download the crypto.com app using code POMP today. Again, $25 when you download the crypto.com app and use code POMP. You can download the app by going and clicking on the link in the description. All right, let's get this episode with Jeff. I hope you enjoy this one. Anthony Pompliano runs POMP

Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of POMP Investments. You should not treat any opinion expressed by POMP or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Jeff here with me. Thank you so much for doing this. Awesome to be here. Thanks. All right. We got a lot to cover. So let's just start with kind of the basics of inflation versus deflation. How do you describe that to people? I take a pretty simple outlook and I just say inflation is when your money is worth less over

time. Goods and services go up in relation to your money and deflation is the opposite. Your money is worth more over time and goods and services go down in value against your money. The entire world that we know today exists based on an inflationary system. So the money is devalued, meaning that goods and services, the price of those go up over time. It's pretty much common knowledge, right? And also accepted by the majority that that is how the system should work. I think you've got a very different opinion. I tend to be sympathetic to your view of the world. But maybe just describe, like, what are the issues with that inflationary system? And then why do you think that there's actually a different system that could be better?

Well, we've always grown, you're right, we've always grown up in an inflationary system, and it's worked well for the majority of population my parents house went up in value they paid back that debt with cheaper money than they earned more throughout their life and so on that path it sounded like a good thing we were taught it in school inflation is required and and this is what some of the stuff that i explored in the book and but then that system is bumping up against technology um so we've always lived in a system we measure everything from that system that we're in and then that system is bumping up technology wanting to bring down prices really fast wanting to do and what does technology do whether it's a ceo that puts

technology into the company whether it's you using technology technology does more for less Right. No CEO puts technology in their company to make prices go higher. They do it to give you more for less or to compete in an open market to to drive more value to you. You use technology for the same reason. And so when you add up what's happening with technology bumping into this force of inflation that that is really manmade, it's created manmade inflation that you ask, how could those two systems work together? So you have the technology being a deflationary force meeting the inflationary force of money and central banking. And now when they meet, you're saying one has to override the other. Okay. What is the legacy system and the people who are proponents of the inflationary system? Do they believe that the inflationary system will be the overriding force there? Or do they actually think that the deflationary force is greater? I, you know, it's hard to ask what every single person wants or doesn't. But what I would say is

most people are trapped in a system and they have no idea that there could be a totally different system that produces better outcomes. They have no clue because they live in the system. They measure their house prices by the system. They measure the food prices by the system. They measure everything by the system and they, and that system requires prices to always go up forever in perpetuity. And because that system is built on credit and that credit, if prices start to fall, would unwind because nothing's backing the credit, it would keep unwinding. And so if you allowed deflation to happen in that existing system, it unwinds to the ground. So you borrow money from me, somebody borrows money from you, and everybody thinks the other person is safe. But when it

starts unwinding it's just the counterparties move all the way and go to all the way to the sound sand there's nothing backing it it's just credit backing it and so credit in a deflationary system gets more expensive and can't be repaid so that's really the that's that's really the problem with these two systems but they're diametrically opposed and so what governments are doing or they're trying to print more money change the rules of free markets and become and centralize markets essentially to print more money to pretend that system still works and it has dramatic consequences this entire credit-based inflationary system it's basically a confidence game yeah well to a point so so again let's go it worked and it drove a lot of value to society

for a long time yes other countries if you looked at the u.s other countries didn't it didn't work for and everything else but with the with the reserve currency it worked it drove a lot of value for the economy it just it can't work going forward okay what what is the impetus or the kind of milestone that changes it did work but now it can't work so it always if you if you go if you if you break it down you and just ask yourself why do i want my money to get be worth less each year that that question kind of deserves an answer because i don't think personally any single person wants their money to be worth less each year but when they roll it up into a system they think that that's a good thing so so first but but so inflation is just

hidden tax. So governments don't want to tell you the truth about the services that you want and what they need to pay for them. So they hide it in inflation. Because tax rates would go way higher without inflation. And so inflation is a hidden tax, but it's a hidden tax on the most vulnerable part of society. So for somebody like me with lots of assets, it's a windfall. the debt gets less value less and the assets go up my rents go up on houses and everything else so it's a windfall what you're describing real quick just for people who are listening is um there are if we separate a population let's say the united states and we break it into 20 so top 20 next 20 all the way to the bottom 20 of americans at some point there is uh let's say

the top 50% have investable assets. They have non-cash, right, where they store wealth. The bottom 50%, again, general number, they don't have that. And so all of their wealth is in dollars. And what you're basically saying is that when the dollars are devalued, the people with the assets are benefiting. It's a good thing, right? They're encouraging it. They're cheering it on. The people at the bottom, though, are actually having the exact opposite effect they're seeing their wealth hit harder and harder with that invisible tax and actually you're becoming poorer and poorer and and if it was 50 50 that would be one thing but but the wealth inequality when you look how bad it is it's way worse and it's people measure income inequality

it's it's wealth inequality it's the it's actually what you just said it's the assets so just imagine you having one house and the house goes up in value and you're living in the house now you have and somebody but your your neighbor has two houses and both go up and and the rents go up so somebody on the other side of the equation the renter is paying a whole bunch more their money went down in value yours went up now imagine you're blackstone and you have hundreds of thousands or millions of houses that you're renting to a whole bunch of people it's it's a massive wealth transfer to the to the rich um and so the more you have more investable assets, real estate, stocks, everything else. That is just a staggering wealth transfer to the rich.

But again, going back to it, why do we need it? Why do we actually need inflation if you just go to the first principles? And before we go into, it won't work anyways, because technology is a stronger force why do we need it right and and who says that inflation is required who says that you have to devalue your money or hide taxes in inflation to be able to thrive as a society seems it seems like that's worth a question or worth an answer worth worth an answer and i don't see an answer for it what do you think their answer would be even if it's not a good one okay So what I know now is these two systems, because the system would fail spectacularly without inflation and without where do we go to. So system changes require something to move to.

We'll talk about Bitcoin a little bit as well. But what happens from the existing system? Let's say you're in government, Pomp. What do you do? do you just say okay game's over game's over let's stop stop printing because if you do every single bank collapses every single institution collapses there's chaos on the streets as the is what should have happened a long time ago kind of overriding free market forces forces it wouldn't have looked like this now but now because because governments have kicked the

can down the road so so far that now it would be a complete and utter collapse global global global collapse and so it's it's a they're stuck they're stuck in a corner um right now from the existing from the existing system and and i think what what was happening and this is why technology if we go on the other side the other system what what's around us all the time and we don't know but we don't notice how fast it's moving is this technology impact like my phone used to just be a phone remember it was only 2007 that the iphone was that came out and think of what you have for free on your phone today from photos to everything else to it's it's just all abundance more and more for less out of out of your phone it's it's you know it's it's everything now it's going to be

your ai device it's going to be a whole bunch of things and that that is a bigger impact going forward so most of the so that what that sets up is you're in a in a macro deflationary and uh world with government printing trying to stop it but if you go backwards in time you can see actually the evidence of what i what i'm saying in time so kind of when i wrote the book there was 185 trillion dollars of of new money so to call it stimulus credit creation to create 46 trillion dollars of economic growth over the last 20 years and what i think has happened is this we've actually not had we should have had with technology two or three percent deflation per year or disinflation per year that's what the natural course would have would have done and

instead of allowing the natural course so your your things everything around you would be getting less and less expensive and and and it wouldn't take as much labor so you wouldn't need as many jobs to be able to do that as things fell out of price but instead of allowing that to happen because and it isn't not bad people bad incentives on the existing system to kick the can down the road, we can grow our way out of that. So interest rates come down. We'll create a bunch of money. When we can't pay the money back, we're going to print money instead to pretend we can pay it back. And so that 2%, 2%, 3% natural rate of deflation that's moving forward is being offset with with inflationary or trying to print money and so now you're out if you if you looked at you're out

here and the fall to where the natural market would look like it's getting worse would be staggering so and what that means is the further we go down this path because technology is not moving slower it's moving so again most of the deflation is in front of us the further we go down the path the further we kick the can the more we kick down the can down the road and the worst the consequences are. Is there a point in time or a milestone that you can't kick the can further down the road? Because I think most people generally think if they understand kind of even at an elementary level, okay, a lot of what we're doing with bailouts and inflation and this stuff is we're just pushing the problems further ahead. Yeah, we're making it a little bit worse, but

at that time, we'll address it. You even hear the Federal Reserve at times talk about, we're not worried about inflation in 2020. If inflation shows up, we'll deal with it at that point we have confidence that we'll be able to do that then is there a point where just there is no more kicking the cane down the road and it's like kind of like d-day like hey just we got to deal with it today and it's not pretty you you've heard gradually then suddenly yes yes that's how markets that's how markets work and a lot of things don't i use that example in the book i think we talked about it before blockbuster 9 000 stores netflix different way of a different market and blockbuster put candy aisles in their stores and had one of their best years because

the candy the year before they went bankrupt so and it's just it was a it's crazy crazy and you'd look at those executives and blockbuster and you said how couldn't they see it that's what that's actually the most important part it is not typically not bad actors people trying to hurt you or anything else in the system. It is a system itself trying to do whatever it can to protect itself. And you could put any different president in, you could put any different, the system itself is built in a way to reinforce it. And the entire structure reinforces that. So it requires a system change to get to the other side. And this has huge implications, implications for actually it how humanity moves forward and and because because the consequence of

continuing kicking the can down the road like this it kind of raises up you can see the homeless you can see the people so some people are hurt by it some people are helped by it and it and it puts the electorate in a spot that will overthrow the government and and and but but again overthrow the government thinking that it's a person and and it's just a consolidation of power when you think about um the system itself it feels very weird that one the people who are in charge of the decisions that get made with the monetary kind of experiment they are appointed not elected i actually don't know if that matters or not if they would make any different decisions or if there would be the disruptive candidate like a trump was to american politics or whatever

kind of the outlier or if it would just we would elect the person anyways because they worked at some bank and we think they're smart but then also too is it's a very very small group of people that are making these decisions that affect 330 million americans inside the united states and whoever many else you know around the world that use the dollar as a reserve currency but what you're really saying here is it doesn't matter it doesn't matter if they're elected or appointed it doesn't matter if it was five people or 100 people making the decision the system is the system and they're actually doing exactly what the system needs them to do to continue to perpetuate the system that we live in and why we didn't see it

as fast as before why we never actually asked the question is inflation a hidden tax or is it a tax what um is because it happens so slowly in it 20 30 50 years ago it was happening slower because technology people talked about demographics they talked about in economics they talked about all the other things about okay supply chains are moving overseas and and then that's disinflationary or demographics is disinflationary but we're driving inflation against it but it's happening it was happening a lot more slowly than what you would suspect would happen with technology and the exponential movement of technology i use this on your last show but the folding of the paper 50 times and folding paper on itself 50 times reach a piece of paper will reach the sun

on fold 50. And on Moore's law, we're on fold 34. And so you start to think, what does fold 35 look like? When we think about self-driving cars and AI, and we're looking now, historically looking backwards, and we think we're looking forwards on this exponential pattern. We're not. So if it required as much printing to be able to pretend the world's the system still works to today what's it going to require going forward and so it's just these two systems are incongruent together they don't work together the new system is required for sure technology is not slowing down um and so so then you start to look into GDP. Ask an economist to measure the GDP output of all of the pictures you use on your phone. Think of what that's done for you and how many photos you take and curate

and edit and everything yourself at it compared to what Kodak and that entire industry looked like before or or or an economist to measure i i used to spend i i remembered spending 1999 for a record right a record um or then a cd there used to be record stores and cds now i spend ten dollars a month for unlimited music these things are deflationary and they're all around us yet we don't notice it because we're we're that we're living in a system that's trying to eradicate those gains and by the way those prices i just said are with the inflationary impact what would they be without it so that's one of my big questions is let's say that uh there was somebody who was incredibly forward thinking incredibly uh intelligent maybe even came from the future

and they were running uh kind of all central bank activities uh and they decided you know what i'm not going to play the game right i'm actually going to allow technology to run its course and go into this deflationary environment what would be different about today if had this had started in the 70s or 80s right is it one dollar would be able to buy a whole house like like literally the money would be so much more valuable and therefore uh you would be able to exchange it for other assets is it that technology actually would be further along and our lives would look like the technology utopias that you see you know in sci-fi movies or just like like what would be different well even uh keynes who's ridiculed and everything else today and and because a lot of his

policies have been turned into what we see now can he keynes but he predicted in a 1930 essay the economic possibilities of our grandchildren that we'd be working 15 hour weeks by now and and again technology saves time it would technology does more for less and the output of that is you get more for less and your time increases and and and but because that hasn't been followed and because we've warped monetary policy to be able to stop that essentially we're creating slaves right so a whole bunch of people on mouse wheels trying to to uh to work harder and harder to get more share of the pie take take bigger bets more gambling in into economics too to be to to try to to try to outpace this devaluating uh devaluation of currency that system can go on for a long time

so you asked about when does it stop it can i think people get confused and they think okay we're remember the macro trend is deflation that is what we should want if we want an abundant future that is what we we should want the the policy result is is inflationary and people are going to say in the well these two systems are competing against each other everybody's going to want more handouts they're going to want more money ask trying to try to get elected in as a government saying no here's what we're going to do we're going to turn off the taps good luck right suicide mission suicide mission and so you have to expect that that'll that'll happen but so will the negative externalities

of those decisions those negative externalities typically what happens is is war and revolution and then a reset of a currency that's if you go through history that's what it looks like um and and that path is that that's what that would lead lead to because the existing system cannot deal with where we are in technology today or the amount of debt to pay it back so it has to devalue it but but it can so so a lot of people think that we're going to go into hyperinflation right now i disagree completely because the market forces and i know it looks like it right now because of all the printing before and that and that inflation can unless printing is is moving up all the time to match the deflationary uh deflationary uh impact of technology is moving

up all the time so more and more and more you're not going to and then at some point you could break the currency and move into hyperinflation but but think about what's going to happen next year at this time so lumber prices were up three times housing prices are up and everything else so next year at this time when they reference the rate if lumber prices aren't that high that's going to be more deflation right and you're going to have to print more to be able to make things go up go up go up higher it's the whole system is a feedback loop do you think that the federal reserve can stop printing in terms of where we are today so coronavirus happens there's economic uncertainty right one moment then there's kind of panic chaos liquidity crisis

all hell breaks loose in markets uh i remember explaining to somebody march of 2020 there was only days people were walking around and like zombies in new york city right just like what is going on in these markets fed steps in central banks around the world they print trillions of dollars and it's all done from uh we are going to be responsive to the economic chaos liquidity crisis we're going to do everything we possibly can to not only stabilize markets but actually reverse the fall of these assets and head the other direction. They then decide multiple times in the United States since then, do it again in various forms, whatever. Their belief the entire time has been inflation wasn't going to happen in terms of high levels of inflation. We're getting

increasing levels of inflation right now. There's a belief that it's transitory. Is there a world where they just say, hey, look, eventually we kind of run out of the impact of what we've already printed we don't print anymore and therefore you know we're kind of back to the back to normal or back to the old day no or is it just here we go again they're gonna print more later this year and more next year and more the year after so so that's actually why you need to look at the trend line or we should look at the trend line and what what is what's technology telling us what's the inflation or what's the policy telling us and so remember if they allow deflation everything unwinds and the unwind would be severe just like in 2008 the unwind would have

been severe right but the the amount of printing required in 2008 to stop small was 250 billion and small remember the marches on wall street and everything else 800 billion it started at 250 billion and it went to 800 billion and now we laugh at that number 800 billion it's chump change there's a scene i literally uh wish we should clip it at some point and just i should tweet it uh there's a documentary called panic there's a documentary called hank uh and both of them involve many of the players in the uh financial crisis and at one point uh hank paulson i think is in panic is like i knew that we needed 700 billion but i knew i couldn't go in there and say that number so instead i went in and said we don't know yet you know what we needed but

whatever and he's kind of like laughing about it i'm like 700 billion would be a discount compared to you know they just printed two trillion literally a decade later and and then a bunch more and and so what will happen this could stabilize things for a little not without negative externalities um but then the next uh the next will cost way more it'll it has to continue every single time there's any sort of economic uncertainty or chaos or any sort of disruption in the market of just prices go up um it goes back to this idea of uh being addicted right the economy is addicted to the stimulus it has to have it and every time it needs a bigger shot of the stimulus in order to see the impact that it needs and so you used to get tens of

billions you got hundreds and they got trillions eventually we're gonna get 10 plus trillion dollar stimulus packages in the future so 185 trillion over the last 20 years before before covid before when i wrote the book produced 46 trillion dollars of economic return globally now that now it's going to take a lot more than that to produce more growth and the same thing is going to happen in other words it's it's just a shell game yep so so we've lost control of what the currency is and and that that is forcing people to ask wait if you could just make up money at this rate why am i paying taxes why am i and and so it's forcing more people and that's i think what's happening in bitcoin too is forcing more people to take a deeper look at their understanding

of how the game is played and and why is the game played that way what would you is there some law is there some physics law that requires the game to be played like that you know and then it was not really what's the new game or what's the future game that as people go and look at and ask those questions they seem to be gravitating towards there is a different way a deflationary type environment that could be successful so that's what i think it is and i think that's the only way that's congruent with kind of humanity moving forward um and and i've and i've looked through all of the different kind of plausible outcomes on the other and i'm going to simplify this i think this is where we're at we're in a world right now which is most people

don't realize it because they're measuring the system from the existing system and they think okay i can i i'm still okay i am i'm not as rich as that person but i'm still okay um and and so most people are living in this uh this system while the system break uh breaks not realizing that it's consolidating control at an alarming rate so when you do you don't you either have two spectrums right or and i won't go all the way to probably if i was to i'm going to simplify it but there's nuance between here you have free markets or you have dictators and or centralization and and through lots of experience through history we see how centralization ends in kind of the biggest thug and so if you remove free markets you you tilt and you move on a path in

a cascading path because people are short-term bias our own personal short-term bias for most peoples will will vote for the person that thinks they'll give them the most right now and and that center and that centralizes so the great theme right now is is we have centralized economies and and what i worry about is because this is the path we're on is centralized economies with um with ai and robotics and everything else that that look pretty dystopian if if it's hard for people to rise up against dictators today in their countries can you imagine rising up against a dictator with drones that can 20 000 exactly and so so and and or we have decentralization and hard money that is a forcing function to to let a free market or a more free

market work. When you think about that new world, one of the things that's the most interesting to me is in the old world, abundance does not get passed on to the civilization. In the new world, you do. This framing of deflation and inflation is antithetical in some way to what a traditional Keynesian economic, you know, kind of disciple would say, or even the mainstream media, frankly, where their belief is that you need inflation in order to get velocity of money. If you don't have velocity of money, you can't possibly have an abundant civilization. And so why do you think and are likely right that the deflationary environment actually creates a more abundant future rather than this inflationary one that needs that velocity of money?

So, so if we measured where I'm going to this, there's going to, there's going to be chaos on the chain and the system change no matter what. But the system change is coming no matter what. On, as the system moves forward, didn't, when I grew up, we wanted to save our money so we could buy more tomorrow. And if, and if, if I saved money and there was a, an event, um, and everything prices fell, I actually took more of the gains, right? That's how an economy works, risk, risk return. So today in the existing world, we essentially, you have a no lose bet for, for if your hedge fund and everything else or your bank, you know, no problem. There is no consequences of bad actors versus a system that changes. But more importantly than that is a lot of the things that we used to buy as things are being digitized. And those things, so we use the example of records, use the example of we can see that all around us, but it's just starting. so 3d printing is going to change complete supply chains and around things like this in this office this table everything else and it'll be printed in your home and it's really all it is is it's information that has been organized those atoms have been organized in a physical world and that

information is going to move from your head or ai into a 3d printer and it's going to be organized at your home and you're going to have abundance um in time that might take another 10 years it might take another 15 years but that is coming and there's nothing that the existing system can do to stop that from coming and they go up a level the more they the more the existing system kind of inflates what would a rational ceo do if they can't if they can't find if labor is going up and price and technology can remove that labor rational ceo is going to to exactly this is my favorite example they've literally replaced some of the cashiers with touchscreens yeah and and but that that's just start that's just starting and it's it and and

by the way why do they do that it's not because they're bad people it's because you as a shopper wouldn't shop there if they had to raise the prices to pay for everybody because we live in a competitive environment so the incentive the incentive system is is is does it right now the incentives are aligned to a broken model and if the incentives were aligned to a free market model you would see prices falling and you'd see you'd see your time increasing the prices would fall so far so fast so fast and they would keep falling after that so and let's i often get the example or the question what um what about a market that keeps really high margins you have a monopoly that keeps really high margins what do you think would happen with a whole bunch of entrepreneurs

you're an entrepreneur i'm an entrepreneur if i saw fat margins and technology being able to provide better outcomes for people that's the market i would attack first yep incentive incentives incentives change everything yeah as we're watching this happen forget bitcoin and sound money and all of this we already see technology is eating the world right and it's happening uh in a very real way very measurable way it's been happening for a long time this is not a new thing either right it's just uh in some weird way the horse to the car was technology eating the world But what we do see along the way is what I will call the pure capitalists with people who are interested in other things, right? So whether it's the ESG crowd, whether it's some sort of climate change, whether it's some sort of other thing that is not just pure economic incentives, drive the world, free markets, drive the world, let the system play out, and this is where we're going.

are they ultimately on the wrong side of history and what i mean by that is not so much that they their causes don't matter or their claims aren't factual in some way but it's the free market is going to be the greatest referee or the greatest kind of driver of progress not you know mandates and some of this other stuff like how do you think about some so no that's if unless you centralize everything okay explain so if you believe 12 people could control every every interaction in the economy or or the government you elect control everything and they will always do it in your best interest rather than their best interests then you should centralize you should really want centralization but what ends up happening is even if somebody the more that

Lord Acton quote, uh, uh, power crops and absolute power crops. Absolutely. The more power that somebody has over your decision-making process, the more, uh, the more it's, it's a gain in power and a loss for you. And that, that changes once it's, once it's concentrated like that, um, you'll lose everything. You will literally lose everything. So free market isn't perfect, but it is the best system it is the best system today so that is the the path of centralization that's what it'll look like and so the people closest to the government similar to what looks like today right get more of the gains and everybody races into the government to to protect that if you look look at russia look at china look at look at what they look at what economies like that look like and if

you want that here you'll you'll want centralization i forever have used an example of what is the difference between the person who uh is the blue collar worker at a corporation who wants to move up the ladder right get more into a position of power for economic gain and and kind of the egotistical return on having control and power and all stuff and a regular citizen who's essentially the blue collar worker equivalent who wants to then move up into some sort of position of government power, right? I mean, it's a very similar type of mechanic. Now, as we go through this transition, there's this belief that centralization is bad. I think you and I both would agree with that. And I think history would suggest that that is definitely true.

Historically, there's been maybe a line in the sand. The government was responsible for some portion of our lives. Whether we wanted it or not, that was just part of what they did. but it does feel like it is becoming more and more expansive in their uh mandate right in their eyes and so now all of a sudden uh monetary policy is becoming politicized in a lot of ways maybe it always has been it just wasn't so obvious but is that the natural progression also of government power as it just kind of continues to creep further and further and further into your life and history suggests that eventually it is essentially planned kind of communist driven or socialist driven not not not necessarily okay um but but on the trend we are on it on

on unsound money when when governments have control over money and can inflate that's that's where it takes you because people always vote for for i want because they need more they need more it's not so much that they're even greedy it's a pure survival so so so think about this. So should housing be, number one, you'd ask us over the last 20 years, $185 trillion. If you didn't increase, if you didn't create $185 trillion, would housing prices be as high as they are today? Probably not. If you didn't print as much money recently, would housing and real estate look like it looks like today? The answer is no, it wouldn't. Okay. So a whole bunch of people won out of that bet. Now rents are a lot higher and a whole bunch of people lost out

of that bet. So a lot of the people that are demanding more money, I need minimum wage to go up. I need, uh, I, I, I need free money. I need government subsidies are doing it because they can't pay the bills because government reached in and made a whole bunch of prices higher that they can't afford. And so, so that's, that's kind of why you get, once you start to get to this, the system change, you get revolution at some point. Um, Weimar Republic, the rise of Hitler was a result of the very same thing. Explain what happened in Weimar Republic. Uh, so we're, uh, world war one, they couldn't pay their debts. The U S, uh, uh, UK demanded reparations, payback for World War I. They went through a period of hyperinflation, just

print money to be able to pay back the debt in cheaper currency. Hitler started gaining power in that. He actually- As a revolutionist. As a revolutionist. He actually got put in jail for trying to overthrow the government in I think 1924, 1925, Dawes' plan came in and said, okay, we're going to give you more time to pay this back and discount some of this from other countries, including the U.S. And that fixed it for a while, kicked the can down the road for a while.

And then 1929 in the States, it started depression, kind of a global uh depression there as well so now we go back to hyperinflation so we print print more money a whole bunch of people that and and looks similar at a different at a different level than what's happening today but a whole bunch of people are enriched by that printing and then a whole bunch of people are killed by that that printing and so those people that are hurt go and look for a revolutionist that and what does does that person do typically they'll blame a person or a group of people and say it's not your fault it's their fault they're the reason that it looks like this and and it's believable they've taken your freedom

they've taken you for exactly exactly and it's believable so so that's how that's how you have a revolution or system change and then hitler essentially changed constitution and everything else to keep power and we know the rest of that history i often ask why don't why didn't people as they saw these signposts similar signposts that we see today why didn't they leave why didn't the rich people leave germany and and the the simple reason is because all of their currency was denominated there their their real estate was denominated there and and and they didn't see the real tail risk was the social revolution and the revolution that was coming that was the tail risk and so they they stayed and they and and and and what are you going to you're going to you can't

take your real estate with you you can't take your money you're not going to take suitcases of money with you on a plane so or a boat um and so they get stuck and that's and that's typically what happens bitcoin today allows it's a little different you remember 12 words you can move anywhere you're not going to take your memory and uh and and so so so so i think even just this alone with all of the science posts before we get into why it's so so important just if you looked at it through that lens alone it is a must-own asset it is a must-own where what's what's going on in the world today when you start to kind of unpack um bitcoin itself how much of your excitement or even sympathy for the asset in terms of why you hold in your

portfolio is economically driven from like a macroeconomics I have to have this to protect my wealth versus more of the social and political stuff which is you know if I need to move I can do it quickly if there's unrest if there's confiscation of assets all that type of stuff It's a super interesting question. I haven't been asked that before. Actually, for me, I think I lean more to Bitcoin because it brings fairness and equity to the world. It brings a free market forces

that allow the abundance gained from technology to be passed to the broadest possible audience. That's my primary reason. I don't need more money. I don't need more anything. Life is good. life is great um i love what i do i had tons of friends tons like i love everything i do so so i wrote the book more because i'm living in this system benefiting from this

benefiting from this system understanding that like i couldn't understand why prices weren't falling at the rate they should be falling when when all of the technology companies that i was building were producing crazy returns for people that's why people were using the are using the technology companies and so i couldn't understand why that wasn't happening at the rate that it should be so that's that's what i investigated so for me personally i'm in it more for the fairness when if i now put on my investor hat when i think about um how much is in bitcoin how much is in other things my hurdle rate for an for an investment in is in say a company is really high because because i know what bitcoin is going to do i know how i i or i believe um i i believe it's

going to be i i believe it's going to be a reserve currency i believe it's going to be a bunch more than that in in time and and so i believe in in what that will do uh for a return rate and so i measure every other return rate, other things that I would invest time or against that placeholder. Yeah. Walk me through, what does that world look like? Bitcoin is the global reserve currency. The central banks fail. They give up. They exist. Then they just do a bad job. How do you see from where we are today? Walk me through, maybe not a finish line, but just 25, 50 years from now, what does that path look like so yeah i wrote an article uh called the greatest game um and it's worth because it lays out this path and on what happens by the way it's not a foregone conclusion

i think there's a high high probability bitcoin i think it's unstoppable at this at this point but i understand all the fud and why that why people would want to try to stop it and and if think about kind of attack vectors on on bitcoin whether it's esg and everything else which are complete nonsense we can go into those um i understand the attack vectors for the centralization why why there's a bunch of people in power that think that this is a really bad thing and it's not a bad thing it is the best but then i put on how do you stop a technology that puts in empowerment in the hands of people empowers people it's really hard to stop especially at the size of asset class it already is and how it's already built into the rails

so i i suspect the network effect that's happening on bitcoin to it to to change a lot of people's views and and it it'd be a forcing function for for what we talked about in the existing system over time early people on people coming on now and holding now or hodling now will get more of the share of the gains on that if you go distant into the future um into in into that here's a question i'm often asked said well wouldn't you just create new winners new losers and it's interesting to think in a free market on bitcoin um the only way to hold bitcoin is produce value for others the only way to gain bitcoin right so otherwise so if you wanted to to manipulate control then by doing so you're distributing your bitcoin do it to others and you lose control

so so so it is it's congruent to where technology is taking us humanity everything else in my mind and i think um going through all of the movements kind of they because we have a short-term bias right we all do and we were a recency bias and and so we'll look at okay today it's inflation oh yeah it's going to be inflation forever the governments are doing this china's doing this It's going to be all over the map, and I would expect volatility throughout this time, and on the way other side, way less volatility in the asset class, but I don't think there's anything governments can do to stop it at this point. I mean, even cautious saying this on a podcast, because I think about what I would try to do if I was desperate to stop it. I would try to make some other coin more popular that I work. would that work so so so i i don't think we should dis i don't think we should discount

how powerful the existing system is on our lives currency and and and so so um i know a whole bunch of people in bitcoin would not let it work but but if if if if government went into theory i'm thinking i could control this over time um and it ran up in price for some time in that i don't think it would work i think it would centralize again i think that's exactly what would happen but i understand the i would understand the rationale to try to find something i could centralize do you have thoughts around proof of stake proof of work and kind of the centralization of proof of stake and just like the rich control that's how that's why that's why I think Bitcoin is the only system. That's actually why it's such an important thing

for me right now. I'll sound like a fanatic or a zealot on this, but that's actually why it's so important. If you believe in open free markets, I believe you have to do everything you can to make Bitcoin successful, because I think it's the only thing that both has a scale and it can't be taken by governments. So there's potentially other coins that could be regulated faster, but Bitcoin both has a scale. So governments didn't see it fast enough. And now it's in the hands of a whole bunch of people.

Tens of millions. Tens of millions, exactly. So let's just take the downside of that, tens of millions of people. Those people aren't going to give it up. And more and more people are kind of learning what we're talking about now and coming in and holding and holding. And so, yes, there's a whole bunch of people trading. Yes, there's a whole bunch of people that are in and out and out. But the hodlers and people that are holding Bitcoin and understand what we're saying, I don't think that is the ensure we get more people onto it for that reason.

and you're going to have decentralization forever. You're going to have a currency that empowers human beings forever or I don't want to say forever. You have quantum, you have a different change. But it might be humanity's greatest invention. And when I say that, I know full well what people say on Twitter and everything else when I look back at printing press and internet and everything else but we have a habit of building on top of other great inventions

and the next greatest and and and so information creates more information and more error correction on that information and and and and this uh this is a huge breakthrough um i think if you looked back at the printing press and that in the time of the printing press when it was invented people wouldn't have thought that was a great invention against other inventions at the time too so i think that's that that's the level this is playing at fixing money forever you you described esg as kind of nonsense um in terms of fiat currencies and and some of the goals describe a little bit more about what you mean by that so and and i want to be careful with nonsense because i'm in some companies and i i'm chairman of three different companies that are doing a whole bunch

in less carbon or climate change. So things that are involved in ESG-related things. Exactly, but not washing, not greenwashing. Not a virtue signaling. Exactly. Real companies that have created technology impact that lowers cost and provides benefit. Um, so, so, and so there's an economic benefit to drive, uh, drive and, and so they're growing

really, some of these companies are growing really fast as a result and exciting. So it's not the climate, I'm not a climate change denier and everything else. Um, but, um, but so why is it nonsense? Quite simply, and I haven't seen an answer for this. I ask it all the time. how do you solve climate change through an inflationary monetary system and and and let's poke on that so let's use some examples so you print a bunch of money you make house prices go up as a result so there's a whole bunch more jobs in building houses and there's a whole bunch more uh lumber needed to put so the entire economy right is is actually gamed to grow faster to to emit more because you're devaluing money to be able to grow fat

grow faster so the environmental negative side effect is a negative side effect of trying to grow faster which is all rooted from the devaluation of money can can you grow forever on a finite planet right pretty simple pretty simple equation yet so why do the only people that believe we can do that are economists right it's it's so it's it's logical information can grow forever and and so as information essentially is information it's things become information you get more for less that's what's uh that's what's happening it doesn't grow the same way that our our notion of growth is changing with with what's happening with uh technology Um, and, and so, or use oil. So to, and, and let's, let's, so today we have new energy coming

on through solar and battery, uh, storage and solar and storage, which is, uh, the low, low, some of the lowest cost energy, which is getting cheaper at 11% a year. And for a long time that took subsidies to try to drive an industry, to try to make it hit that, that point. And maybe you could argue today there's still some subsidies but it's close to that tipping point where in some regions it's the lowest cost energy without subsidies and it's getting cheaper and and so as that's taking more of the energy infrastructure and it'll it'll it drives down prices so if energy is the number one input in everything else and prices are being driven down then why are oil prices $70 a barrel or whatever i haven't looked in the last little bit but why

and they're $70 a barrel because you've debased currency against oil and oil is um is a scarce resource and so those will go up making oil more profitable driving exploration and toil and everything else so so and all of that was caused by printing more money so again And anybody on your blog, reach out to me, find a way, put it on Twitter, how an inflationary monetary policy is congruent with climate change, and I'd debate that. You're saying that it's impossible for an inflationary monetary policy to be congruent with ESG goals and actually being serious about creating change in the environment. It's impossible.

It is absolutely. Does Bitcoin solve climate change? Yes. Yes, it does. All right, explain that. Because you and I both know, I've said this before as well, and people think that's a crazy statement. So explain it. And because it forces a free market, because it forces technology to allow technology to do its job and save you time and reduce prices.

So you're not on a treadwheel racing, racing more, more, more through a, to try to, to like, why do we work in the first place? Right. If you, if you, and I'll go back to, but, but you're trying to work to be able to say, have security in your life and to have enough things when you retire. So you're going to work 60 years of your life to 50 years of your life to retire with hopefully enough to live the last 10 years of your life. All well knowing that the goalposts are moving the whole time, trying to move further. So if you're in that environment, what would you do? You're going to try to take risks to get out of this environment. You might lever up a whole bunch of debt at the wrong time because central bank's policy

is changed to be able to try to get off the treadmill because you know the goalposts are moving further and further away. So all of the incentives are aligned for everybody to do that job when we wouldn't need to in a different system. The system itself would fix that. But that system is also responsible for all the climate change, for all the climate damage and environmental damage because it requires more and more and more and more forever.

More things, higher prices forever or the system collapses that's it and that's why i say that system collapses imminent anyways whether through climate whether through centralization of government whether through revolution is that that there is a system change coming bitcoin produces i believe and by the way when i was going through bitcoin i was looking for anything else too i was looking for anything that what could be a path to get to where technology is taking us, um, that, uh, that is a plausible path and it, and it's only Bitcoin. And so that, um, but that it, because it allows, it allows, um, it allows for an equitable world. It allows for the prices to fall. You're not

wasting your time on this treadmill and the externalities of that change means you get things for, for less and it doesn't cause the same damage to the environment too. If you're talking about ESG. Yeah. When you think about the transition, is it the bad stuff has to happen in order to create the transition is there some sort of carrot that can be put out there of esg or uh dampening the wealth inequality gap or you know name your uh kind of thing that people care about that bitcoin does fix or solve or is it just it doesn't matter and there has to be a blowing up of the well of the existing system and the example that i can only think of is like the burning of the boats yeah right the whole example of when people would come to the united states or go

looking for new land uh cortez yeah yeah they would literally burn the boats because that means we're not going back yeah we gotta make it work yeah uh is that some element of like the only way to actually make the new system successful etc is the burning of the boats and that means the old system has to kind of have a catastrophic event it again it's going to have a catastrophe it's had lots of catastrophic events it's going to have catastrophic events that's a for sure but when you say it has had catastrophic events is 2008 financial crisis a catastrophic event your eyes well it is because because of what it did to free margaret's okay right it changed the rules essentially it's essentially it said there's no consequences um for bad bets if you're high

enough in the if you're high enough on the ladder there's no consequences for bad bets if you're low on the ladder and you if you take too much of a loan we're going to wipe you out but if you're high enough there's no consequence that's what it said which is the same thing is happening today so agreed and that you know the two things i think you and i see eye to eye on for sure was during 2020 uh one you're bailing out bad businesses they're bad capital allocators they took risk they got caught uh why are we giving them money basically taking bad money and chasing even worse money. Two was you can say you're handing out money to people all you want.

I don't care if you're handing out $100 or $1,200 or whatever the number is, you're going to drastically increase prices that are going to completely offset and actually make it worse than handing the money out, right? And so I think those types of things along with 2008, they're catastrophic in the sense that they have a material impact. But the system still, although maybe rocky, although there's still kind of a cliff to run off of, it's still here and so do we have to basically run off the cliff and have like the the complete

implosion of the system or can we actually just transition almost like it feels like you transitioned then i transitioned then square transitions yeah so that's actually why it's really important that you have individuals and lots of them acquiring bitcoin because the more individuals the the the more peaceful the transition will be that's that's what you you want not hedge funds not everything else they're part of it they're going to play in the game but why we want a lot of think about the people most hurt by by the policies those are the people that are most in favor of the policies and many of them don't understand bitcoin and there's this there's this essentially marketing or or or that that they're stuck in a cnbc cnn

at Newsflow or Fox or anything else that they don't really see what's happening here. Those are the people that need to see what's happening here because, because they're most hurt by this. They're bearing the consequences of this. And so getting a lot more people on board there I think is, is, it would be really important. So that's probably one of the most important things you think is getting individuals around the world to acquire Bitcoin and hold their stake in the network. And that ultimately ends up being a very great defensive mechanism, not only for Bitcoin and decentralization, but also for the lack of kind of violent protest and revolution. It ultimately ushers in this peaceful transition. That's I believe so. Yeah. One of the things that

this reminds me of is people always ask about global reserve currency status. And an idea that's fascinated me now for a couple of years is every single currency that was the global reserve currency fell and was replaced happened through violent conflict. You have the global reserve currency as your country. I come, we fight, I win. I now install my currency as the global reserve currency and we move on with the world over and over and over again since the fall of Rome all the way through. Bitcoin is actually the first time where having the strongest defense makes you the most powerful in the world right when you move from an analog world of violent combat to a cyber world having the stronger defense makes you the most powerful not having

the strongest offense and so if all of a sudden you have an impenetrable computer network that continues to rise it doesn't matter how good anyone else's offense is your defense is better therefore you're the strongest and so is it the first global reserve currency that ascends to that position without firing a bomb a bullet i i think so that's the hope that that is the hope think about what the existing system is doing and look at the signposts of the existing system one one mention i just wanted to when you say bailouts for not bad capital allocators just think about the system first and think about what would you do as a ceo if you uh had cash on your balance sheet and interest rates were negative or nearly negative you would spend that cash

somewhere right you would acquire something you'd do something to be able to make sure you didn't hold cash on your balance sheet because the government essentially was saying we're penalizing you for holding cash and if you in a free market if you hold cash and your other ceo doesn't he levers levers up then you're not going to be the ceo for uh for very long so the incentives are designed to create the instability in the market which then requires more bailouts when when the instability shows now now go back to the um in the existing in the existing system so what was it the year and i think until the 2013 the deal with china was u.s buys china stuff china buys uh u.s treasury bonds and then that ended in about 2013 now now u.s doesn't have who finances

the growing deficit and not enough people not enough external financing and you're printing money to be able to to hold rate rates down um so where does china put that money wouldn't it be a rational actor in a system that we're we're we're essentially i'm you're going to pay me back with devalued dollars where am i going to put my money wouldn't you wouldn't you think a rational actor would put their money into commodities that are needed for the transition to technology like rare earth mines and everything else so if you look at through the lens of what other countries are doing and buying up assets hard assets of things that are needed for the uh for the transition essentially things that can't be taken away from you the value you're

that's where you're so when you see the signposts you certainly see the rhetoric build around the world around around evil empires and everything else all caused by by money that doesn't work right but but but rational actors in their own in their own uh mind what will one of those what will one of uh do you think we'll ever trust i know for me i know the answer um will we ever trust a country's currency again as a reserve currency it's not even a country currency just a currency that is manipulatable by people yeah exactly will we ever trust that again and so that's what bitcoin does it removes the manipulation forever one of the questions i get that i want to end with is in a deflationary environment when there

is chaos when there is uncertainty when there is some sort of external event that provides a shock to the system and you can't manipulate the currency do you just allow the free market to correct and that kind of cleans it up or is there other things that people will be able to do right Because the whole idea is in the legacy system, the monetary policy manipulation is what the solution is. Whether it's good or bad, that is the solution. If you take away that tool in the toolbox, what happens? Or do we just not have those events? So at first we do, and people lever up.

So look at Iceland in 2008. Greece kept on, okay, we're going to kick the can down the road. We need this. Iceland said, you lent us the money on these terms. We're writing it off. and and and and their economy came back faster than anybody else else because because of that because they took a hit and and and came back that's what should should happen that's what should happen free market free market self-correcting and so so i don't think it's

needed i don't i don't believe that that you need this i think if you created a transmission mechanism like this now governments might peg currencies to this and still have a transmission mechanism i don't think it would work long time uh term if they're if they ran their own currency on top of it because that's what would happen they would get further and further away and you'd have resets um but um but from a i i don't think it's needed i think the free market would solve it and the free market would solve it in a couple of ways first people would increase their savings rate to be able to take those take those shocks they would make sure um and uh and when the shocks happened people would be resilient and they would find find ways faster through it

yeah i tend to agree uh before i let you go um where can we send people to just learn more from you right so i know you've got the book i know that you've done a bunch of content but when you when you meet somebody on the street and they say hey you're an interesting guy you've got some really interesting ideas where do you send them i send them to you i send them to robert i send them to preston so that's the thing this wasn't i wrote the book because it was the price of tomorrow yeah because i cared about this problem and i cared a lot so i did a lot of research and carried about the problem and so i'll still write things and i'll put them out but i don't need to

be again i didn't do it to be seen or anything else most of my time is actually in in the businesses and everything else that i really and i really enjoy so my perfect world a whole bunch of other people take the mantle and and that's what the beautiful thing about bitcoin is um There are some crazy smart people in this community. And if you have an important message, it'll be shared. It'll be broadcast. So for people, you follow a lot of them, Pomp, but you do a great job here and so do many of the others.

But I would just follow it for people. I would go onto Bitcoin Twitter. I would follow a bunch of the, the, the, the top people and they'll point you to other top people because they're not trying to control all the thing to make themselves look good. Typically they're trying to share the best information. Yeah. I think that's a great piece of advice. Uh, and then people can buy the book, uh, on any, just Amazon's probably best. Yeah. Jeff Bezos taking all our money. All right. And then what is your Twitter account? Yeah. At Jeff booth. All right. Thank you so much for doing this. I really enjoyed it. And I think

everyone else learned a lot so we'll have to do it again okay thanks