We Study Billionaires - The Investor’s Podcast Network - BTC117: Bitcoin and the Start of the Information Era w/ Luke Broyles (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey, everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. This week I have a special guest, Mr. Luke Broyles, who's been creating a lot of great content around why Bitcoin is so important, how we're at the start of the information era, and why scarce digital monetary units are so vital at such a point in time. This was a really fun chat, and Luke has many great examples and analogies for people to wrap their head around why this technology is so important. So without further delay, here's my chat with Mr. Luke Broils.

Starting point is 00:00:36 You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone, welcome to the show. I'm here with Luke. Luke, welcome to the Investors podcast and the Bitcoin Fundamental Show. Thank you very much. It's quite an hour to be here. Great to have you.

Starting point is 00:01:06 So you're making a splash online. And my goodness, I found a couple of your threads on Twitter and was just kind of blown away at the content and the thought that you're putting together and putting out there. So I figured it would be great to bring you on the show and just learn more about you and who you are. So start off there and tell us a little bit about yourself. Well, thanks. As we were just talking before we start recording, you're one of the people that I really wanted to talk to just because your background and everything. I've loved your podcast for a long time, so it's like, it's, I'm so excited to be here. Yeah, who am I?

Starting point is 00:01:42 Where did I come from? I'm completely shocked with how much attention my threats have gotten online thus far. I've only posted two. And the first one I posted, not expecting much. And it went pretty much viral, more or less instantly, like same day. Like, I wasn't planning it at all. In retrospect, you know, I had typos in it. I was like, oh, no.

Starting point is 00:02:02 The perfectionist to me wished that I'd spent a little more time putting it together. But the second one did even better. And it's been really nice to have all this positive feedback from Twitter and have people such as yourself reach out to me and express interest in us. So it's been really great. And I am being told by others that I'm presenting other people's ideas and new ideas and a new lens. So hopefully today in this show, I can bring the presentation of Bitcoin with perhaps a new light and perhaps new ideas, whether they're right or wrong. Hopefully they're more right than wrong. But anyway, I'm looking forward to sharing what I have today.

Starting point is 00:02:38 I love it. I love it. So what was the impetus for writing the first thread that really kind of caught everyone's attention? Yeah. So I explained this a little bit on Blockware Solutions podcast with Joe last week. The long story short is that I first heard Bitcoin in 2017, and I was just new to finance, new to everything like that. And so like a risk off person that I am, which I know for those listening that might sound a little, silly that I'm super deep into Bitcoin and I'm risk off, but we'll get to that later,

Starting point is 00:03:07 trust me. I assumed it's a scam or speculation and I didn't really understand it. It was too unknown to me. It was too confusing and you know, you just go online or you watch any news clip and there's just so much jargon. It's so, it's just so complicated and most people think it's out of reach and I was like that too. So 2017, I heard of it and I completely ignored it. I didn't look into it at all. And then 2018, 2019, I had some contacts, friends, acquaintances that I knew we're very smart and I knew we're into Bitcoin. And so I realized, okay, if I'm going to be intellectually consistent here, I'm wrong. And either I'm wrong about my friends and my acquaintances and I've been duped and they're

Starting point is 00:03:47 actually not nearly as smart as I think they are because they're gambling all this money and this internet magic money. Or there's possibly something that I'm not understanding about this Bitcoin thing. So anyway, I go down the rabbit hole and eventually I come to the conclusions that we'll get to in this video of Bitcoin's inevitability and its significance for the era. And of course, like most bitcoins, eventually I want to start telling other people because I believe this is really important. I need to tell other people, warn other people, and in just a long process of trying to explain Bitcoin, which is, again, a very abstract, difficult topic for most people to understand.

Starting point is 00:04:24 I was just honing in my presentation more and more and eventually I have all these slides. And now with the bear market and Bitcoin and price being down, you know, less and less less people are interested in it, at least in my circle less people are interested in it. So I decided to, hey, you know, I'm getting less calls or less messages. Why don't I just post it on Twitter and see what happens? And I figured, shoot, maybe I'll get a thousand views. It'll be great. And, you know, I'll get a couple comments or thumbs up or emojis or whatever, but it instantly blew up. And I was like, wow, okay, I actually have the ability to present something here. And people gave wonderful feedback. And so now it's really, it's the cliche of overnight success, more or less, that has a long backstory.

Starting point is 00:05:05 And I'm not trying to overstate what I've done so far. I've only done two threads and, you know, I'm not huge or anything. But it's definitely felt like that. For two and a half, three years, I've been pretty much talking to people one-on-one or small presentations of a dozen people or so. And all of a sudden now, you know, thanks to the magic of the internet and this new communications network that we've created, it can get very wide viewership very quickly. So anyway, all that to say, that's my basic story of why I made the threads. It's basically my consolidation of trying

Starting point is 00:05:33 to explain Bitcoin as concisely as I can. So you have this five eras of monetary history. Walk us through some of this. Yeah. So this is a topic I've not actually yet discussed in my threads, and I probably will in the future in greater detail. But basically what the average person needs to understand. What I believe we to understand is that, like my first thread discusses, human society is defined by the technology of our era. So one of the main points to make my first thread is that we are in an ancient world of tomorrow today in the year of 2023 and that we actually have less in common with the person 100 years from now than the person 2,000 years ago. Because 100 years from now, technology is going to be so much more advanced that we can even conceive

Starting point is 00:06:16 today, if we're optimist and we assume that everything is going to continue as it is currently continuing, then basically the technology between today and then it's going to be incompatible. In the same way that we're incompatible with the pre-flight horse era of the 1920s and the early 20th century, late 19th century, in the same way, that's an ancient world technologically to today. That's us in the future. And so defining that and expanding on that first thread and that idea, it's not just eras are defined by the technology, they're also defined by the monetary technology of that era in the

Starting point is 00:06:50 different in different eras. And the quality of money of any given era is more or less limited to the advancement of technology of that era. So specifically what I'm talking about here. Well, the first kind of money that humans had was more or less basically social credit. You know, you had small villages and towns or whatever you want to call them in very, very ancient world before empires and ancient civilizations, you know, basically you are in debt to your neighbors, your family, and your, you know, your community. You provide work for other people and they've returned the work for you. And that's what I mean by social credit and not our modern understanding of social credit, but basically that it was a small community so that everyone

Starting point is 00:07:29 could keep track in their heads of who owns, whom, what. And that was pretty much the first monetary system where basically it's pure human trust. That's the currency, it's relationships, That's the currency of very early society. And then going from there, eventually you get to a more or less a world where you have small ancient societies, you know, Mesopotamia and Egypt and everything of that sort. And everyone begins to store their monetary energy in commodities that are more universally accepted. So things like salt or green, these things were once money and they were kept track of on tablets.

Starting point is 00:08:05 You know, the Samarians kept track of these things on tablets. You know, these are the ledgers, the first ledgers. And so really, these things were the first forms of money. And obviously, there are many, many examples here. I'm radically oversimplifying. But basically salt and grain is an advancement in technology that makes the old world seem ancient, you know, to upgrade from hunting and gathering to actually having farms where you can go greens and, you know, have cows and livestock and everything of that sort.

Starting point is 00:08:30 You know, those are the first kinds of money after the social credit era. And then, of course, technology continues to advance. and eventually we go to gold. And gold, you know, especially towards the beginning of AD, you know, Rome and everything of that sort, you have gold kind of taking the stage because while salt and grain is better than social credit, because you can actually touch it and you can actually quantify it, you know, in bushels or barrels or whatever on a tablet and actually have a ledger, you know, technology is progressing, your writing and everything now.

Starting point is 00:09:00 Now, gold's even better than that because the problem with grain, of course, is that, you know, it expires and gold doesn't really expire. So gold is a improvement of technology from the old monetary standards. So that's kind of the more ancient world that we think of today. You know, we're talking, you know, much later Egyptian period, Rome, China and other dynasties and empires. That's the gold era. And then you come to the Dutch and, you know, Middle Ages in that era, and you basically

Starting point is 00:09:25 have a debt monetary system where basically we more or less, and I know a lot of people will criticize you for saying upgrade, you know, because in many ways it's not an upgrade, but going from gold to a debt-based promissory energy system where, you know, again, all these things come back to trust. You know, social credit was trust. Salt and Green is trust that the next person in the future is going to value those things because you can eat them. Same thing with gold. Same thing with national currencies and everything like that. So the Dutch, you know, the reason I point them out here is that they were the first central bank.

Starting point is 00:09:56 They had the first central bank, stock market, you know, basically a lot of what we would call the modern finance world really originated there. So that would be the fourth era, their fourth macro area era. And of course, each region in the world advanced at different times. And so, again, it's a radical oversimplication. But where are we on now and the big scope of where we are now, you know, basically I want to make the point in this show today that Bitcoin's a monetary singularity. And I would argue the monetary singularity, that meaning we're entering the fifth era here. And so fundamentally, what has to be understood, I believe, by the average person is that this is a very

Starting point is 00:10:29 rare event, and it makes perfect sense as we leave the industrial era of the 17th, 18th, 19th, 20th centuries, you know, all that era, more or less, and the industrial revolution, putting that in a pin, including that, now we're entering the information era, and we're only beginning to information age, and this is something I think that people don't realize, you know, just because the lives have changed so much, we think we're in the middle of the information age. It's like, no, we're at the very beginning of it, and we'll touch on that later. But that's the basic idea here, that humanity is a continual exponential curve of technological progress. That's the basis of history.

Starting point is 00:11:03 And the world's empires, the world's political movements and regimes, and the world's monetary standards, you know, frankly, are a function of the technological advancement of that time. Everything comes back to the technology. So that's the basic idea with those standards. And those five standards are loose again, but that's the basic idea. I'm curious to hear a little bit more on your thoughts on the comment about this being the beginning of the information era. What do you mean by that? Yeah, well, what I mean

Starting point is 00:11:31 by that is strictly an adoption curve here in the West, we're very privileged and spoiled. You know, I'm in the United States as you are and probably a lot of people listening to this. You know, we're all able to listen to this, you know, with their own headphones in real time. We have extremely low friction costs and it's basically free and instantaneous as soon as we want it. And it's a wonderful thing. But the reality is for about 40% of the world, depending on which sources you cite, you know, there's a significant portion of world that's yet to use the internet. And so if we were to say that given technology only has 60% adoption, you know, frankly, I wouldn't say we're in the height of the internet.

Starting point is 00:12:04 I would say we're only in the beginning. More or less, a third to half the world is yet to use the internet. And then once they do, you know, these developing nations and regions are going to industrialize. And so we're at the beginning of that. And so all these things coming in the future, artificial intelligence, humanoid robots, self-driving cars, all these other things, I think, can easily be, be classified in the information age. And really, you know, the information age, in my view, at least started with the computer

Starting point is 00:12:30 in, you know, the 40s, I think that's, you can debate that, though. But one way or another, I believe we're at the very beginning of the information age just because there's so many people yet to use the internet. And then once they begin using the internet, then that's where all the growth begins. You know, it to me, it's akin to saying in, you know, the early 20th century that the industrial era is over when it's like, okay, no, we just discovered flight and the locomotive is only, you know, 60, 70 percent adoption, whatever it is. So that's the basic idea there.

Starting point is 00:12:58 When we talk about boom bus of empires, what are some of your thoughts on where that is today with the United States, Europe, NATO, how do you see that? And what are some of the key driving factors that create that? Yeah, that's your question. I have a few slides here just to, if I can share my screen really quick, give me one second. All right, here we go. So to explain that, I think first we have to go back to technology because technology fundamentally improves the living standards of everyone. This first chart here that we're looking at is a GDP per capita for citizens from 1800 all the way up to the modern era here.

Starting point is 00:13:36 And if you look at the chart, it's color-coded and has very clear lines here that as GDP goes up and technology becomes better, everyone becomes richer. The rich become richer and the poor become richer. And I know this might be controversial to people, but statistically speaking, the poor becomes better. I'm richer at a faster rate than the wealthy people do. And I mean, this is a wonderful thing. This is why I care so much about Bitcoin. It's about helping other people. And we'll get to more of that later.

Starting point is 00:14:01 But basically, as these changes happen and looking at the next slide here, as poverty declines, as a function of time, you have social orders that change. So when it comes to the boom, bus cycle that you asked about with empires, I believe a major driving factor. And that is technological change. As a society develops, you know, if we look at the Portuguese, or the Spanish or the Dutch or, you know, Europe is one of the best examples of this because it's so clearly defined and it happens so quickly, you know, in a matter, and so consistently

Starting point is 00:14:32 over a long period of time, you can see clearly how one empire innovates and creates new technology and people become more prosperous. You know, looking at this chart here, you can see how, you know, technological cost of light goes down dramatically. Luke, the right side of your chart's getting cut off. Oh, I'm sorry. Here we go. There we go see it now. Okay, now we're good. Great. Go ahead.

Starting point is 00:14:52 Keep going. Yeah, yeah. So this being one of my favorite examples, you know, of that of candlelight, you know, and the cost of candlelight going down dramatically. I mean, obviously you can extrapolate this out to various eras of technological progress. But basically as the demographics of society change, both within a nation or empire and without its board, outside its borders as well, you know, people migrate based on this where prosperity is and prosperity, prosperity, of course, as a result of technological.

Starting point is 00:15:20 progress. And so as technology progresses and prosperity becomes cheaper for the average person, this causes empires to gain an upper hand one over the other. So one nation lurches forward in a positive way and having more prosperity for its people, its armies are better equipped and more technologically advanced to competing armies and everything. And all this innovation, which is extremely expensive, eventually competing nations do cheaper, faster, better than the prospering nation. I mean, to give a modern day example, take the United States and China. The United States in the mid-20th century, for example, was having all this technological progress. We were the hub of tech progress.

Starting point is 00:15:59 And many ways we still are. However, the rest of the world outside the United States doesn't have to expend those resources to the same degree the United States does. And so they can produce everything we do, you know, cheaper, faster, better. And again, this isn't anti-China, you know, only pro-American. the stance here. This is about, it's ultimately good for the world. You know, a lot of Americans really dislike the fact that China and other nations take away a lot of jobs, but the reality is this happens every time. You know, you have one empire that rises up. Prosperity becomes cheaper.

Starting point is 00:16:34 People become more prosperous. Life living standards become more expensive. And a competing nation is able to, you know, it's a global free market. And they basically compete them out. And so eventually the nation that has been prosperous for so long, decades or, even centuries, eventually what happens is that they don't like that growth is not going as fast as it used to. Now we've all these competitors. And so what do they do? They begin to borrow and borrow and borrow to make it look like the growth is continuing. And, you know, when you borrow, you're borrowing from your future self, you're delaying gratification. And when you do that on a societal level, eventually you begin to curtail innovation and you actually weaken it and you just cause a

Starting point is 00:17:13 vicious feedback loop. So anyway, long story short is that when we come here, to look at skipping ahead a little bit, right here what we have is a timeline, historical timeline of reserve currencies of the world. And this is just one aspect to look at dominant empires. But the important point I want to make here is, number one, reserve currencies change very frequently on historical timescale. And there are many more ways to define reserve currencies. This is just one way to define it globally, you know, especially the further back in time you go, the more local powers you have and everything. But for the sake of simplicity, this is one of my favorite charts to explain it. And one of the clear trends is it becomes faster and faster. The duration

Starting point is 00:17:53 at which a reserve currency lasts becomes shorter and shorter over time. And I would argue that fundamentally, like I said earlier, it all comes back to technology. And the reason at which these reserve currencies and likewise these empires are becoming shorter and shorter and shorter as a function of time is because as technology moves faster, these cycles of demographics and migration patterns and everything just happen faster and faster and faster. So that's the basic. idea of the boom bus cycle here. It just all comes back to technology because technology drives prosperity. Prosperity drives politics and armies and conflicts and everything of that. And when you think of war, what is war besides just a redistribution of resources and prosperity? Granted,

Starting point is 00:18:33 it's extremely expensive and disastrous and horrible, but that's basically the game theory of what it is. And so you ask specifically about the U.S. and I believe, frankly, that we're in a difficult spot here for the U.S. and for the Western general. If we look here at the consumer price index of the United States, what we have here is a clear trend that began in the middle of the 20th century and has only gotten worse since then. So I don't know if you have any comments on this chart. You've probably seen it before, but I don't know.

Starting point is 00:19:07 Do you have any reactions to just the striking visual of this? Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year,

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Starting point is 00:23:11 Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. Well, I guess I'm curious on your Y axis there. So this is percent of CPI because it seems like it's in stark contrast to what's being published. Yes, this is cumulative. Yeah.

Starting point is 00:23:37 Oh, okay, it's cumulative. Okay, gotcha. Yeah, yeah. This is between 1775 and all the way up to 2012. So it's not quite up to date today. So it's even higher than here. But what we can see for those that are perhaps listening audibly is that we more less have a flat line that goes up and down a little bit from 1775 all the way up until 1913.

Starting point is 00:24:00 You know, World War run, we have a dramatic increase in inflation, spending, you know, of course, fighting a war here in Europe. And after World War I, that goes down. And World War II, it increases again. And in the 1970s, and specifically the 1971, the CPI just kind of completely falls off the rails here. And the reason for this, for those that may not know, is that the United States has had multiple monetary standards in the course of its history.

Starting point is 00:24:26 Before the Federal Reserve, we had two central banks, neither of them exist anymore, of course. We've actually had two hyperinflationary events on U.S. soil. And what we have here now is we have a new monetary standard. In 1913, we have the creation of the Federal Reserve, the current Sundar Bank of the United States. And in 1944, we have the Brenton Woods Agreement, which basically pegged the U.S. dollar to gold. And we'll get to that in more in a moment. But 1971 here is really the year that is applicable to most people's lives watching the everyday person. That should be a date that most people know, but it's not tied to schools for.

Starting point is 00:25:00 reasons I won't get into here. But basically the reason it's important is because it detached the US dollar from gold. And as we were discussing monetary eras before, gold was an improvement on former monies. And one of the reasons that gold has been such a good form of money for so long is because it's an extremely high brute force physical cost to create more gold. It's extremely expensive to create more gold. Now granted, as the value of gold goes up, the economic incentive to mine more gold increases. So of course, is always going to be more gold dumped onto the market. This is just a factor of the free market. You know, price adjusts up, more gold be produced, if price goes down, less gold be produced, and then that increases value, so meaning price goes out, this is just how gold works.

Starting point is 00:25:43 But the problem with detaching a fiat currency from something of the brute force physical costs like gold or oil or some other tangible thing is you divorce, you know, this abstract concept of money, which is just a ledger of trust from reality. And now we're not. no longer trusting that the U.S. dollars peg to something real. We're just trusting that the U.S. dollars, that, you know, it's refundable. We're trusting people to issue it, that they're not going to issue it in an unlimited fashion. And of course, the problem with humans is that we're all sinful, we're all broken, and we're all corrupt. And so as soon as you detach gold from a fiat currency, all of a sudden, guess what, promises start being broken. And you see this runaway inflation

Starting point is 00:26:27 statistic here. So what we see is that as technology progressing and demographics began shifting 50 years ago, due to technology and prosperity post World War II, we saw that the United States basically said, hey, you know, we can't make our obligations with this gold peg, and we have to detach. And so that's what they did. And that's why we see this massive inflation spike. I would love to see from 2010 outward what this would look like, because it looks like this only goes out to about 2010 on the chart. I can only imagine if you added the next 13 years in there what angle would be looking like right now.

Starting point is 00:27:06 And that's assuming we trust the reported CPI numbers that are being told to us. Yes, yes, definitely. That's trusting those numbers. And the whole idea, you know, for those, especially the younger folks like myself, something I think I should say is that the whole idea of accounting for inflation is a new idea. You know, if we find the occurrence of adjusted for inflation in books all way back to 1800 here in this chart, you can see a clear spike in the early 1970s where the term, quote, unquote, adjusted for inflation becomes apparent. And the whole reason,

Starting point is 00:27:43 Preston, that we have this is because we have a ledger that is not consistent. It makes no sense. You know, even in the charts we were looking at earlier, you know, when we adjust for poverty or adjust for GDP per capita, we have to adjust for inflation. And the reason we have to adjust for inflation is because what is money? Money is the unit at which we determine and communicate value to one another. And if you change the inherent supply of money, you corrupt that metric. You make it inconsistent. You make it unreliable. A good metaphor I like to give is that like a meter stick. You know, if I had an inflation rate for the meter stick, where I inflated or debased the length of a meter stick.

Starting point is 00:28:29 You know, every architect and everyone that measures anything in the world would have to continually adjust their blueprints and their plans based on the changing of the length of the meter stick. And that might be a crude analogy. But that's the basic idea here. When you have a system, a ledger, a monetary system that's supposed to represent all the wealth in the world and then you create more money or destroy money

Starting point is 00:28:51 and you artificially change it, Well, what do you do? All you do is you corrupt everything. You make prices, which is the communication mechanism at which we determine value. You make it inherently correct it. And you basically cause this inherent communication breakdown in every layer of society. So I think looking at I really like some of Michael Saylor's thoughts on inflation where he's talking about it being a vector. And for each person, it's different. So like your inflation rate is different than my inflation rate just because we have totally different spending habits. We have different things that we value. And so for every person in the U.S. or around the world, this is something that I think

Starting point is 00:29:34 plays into the hand of the manipulators, of the currency manipulators that are adding extra units onto the ledger is they can publish these numbers. And it's really hard for one person to say, oh, that's not accurate because it all comes down to the weighting of every single individual person. and what they preface as being important or not important. But, yeah, I love this. This is a great point. Yeah, and that's really true. You know, one of the reasons there's so much noise in the financial space, you know,

Starting point is 00:30:03 especially those in the financial space will know what I'm about to say. But there's so much talk about interest rates constantly, you know, pretty much everyone's heard about interest rates and this and that, it yields and blah, blah, blah, and it doesn't really make sense to them. And basically to cut through the noise and get to the signal and root of it all, what's happening here is that the prices of money is changing. And so every time that Jerome Powell or some other central figure of this board that changes the supply of money, whenever they come out and say, this is the price of money or this is how

Starting point is 00:30:31 we're going to change this. And what they're basically doing is they're repricing everything. And that's why the market is so volatile and increasingly more volatile as the economy becomes and more dependent, as debt increases become more dependent on that price of money changing. And markets react in a greater and greater degree to that. So as we have these people that announce the change of the measure of value in the system, that's why so many news that's why people get paid so much money to try to predict what these folks are going to do. Because to be able to predict that, I mean, if you can predict what the Federal Reserve or any issue or currency is going to do, you can pretty much predict anything. The problem is, of course, nobody can predict what are going to do because they're humans and you can't trust humans.

Starting point is 00:31:14 Go to your next slide here, Luke. I like this next slide. This is really simple, but I think that it hammers home the point that, you know, when you have corrupt money, it basically corrupts the incentives and it corrupt society and all of the decision making that's taking place in there. I really like this. It's simple, but it works. Thank you. It works great. Thank you.

Starting point is 00:31:35 Yeah. Yeah. For those that are listening, oddly, basically what you have is you have this premise of corrupting money. So basically corrupting the ledger. And then when you do that, you corrupt the incentives. Because if you incentivize people to predict the change. change with monetary policy. Well, what are you doing? You're incentivizing less attention towards productivity and improving technology and thus making the world a better place for more people.

Starting point is 00:31:57 And you're increasing the incentive to predict that. And this is why you're seeing so much more more speculation today. And this is why you see so many more gamblers today and, you know, people are obsessed with the lottery. You know, continually over 50 years, people are becoming, even though technology is getting better and better and we're more prosperous than ever before, people are becoming more and more dependent on gambling and speculation and all that because we've corrupted the incentives in every layer of the world. Even in the investing world, things are just so crazy compared to what they were in the past. And so when you corrupt those incentives, you corrupt the society because the society inherently has to think shorter and shorter term, less and less long term thinking, a lower and lower savings rate.

Starting point is 00:32:33 And eventually, you know, when you corrupt the society enough and you have brains retrained to think in more zero-sum game thinking and short-term thinking, You then again correct the incentives and you again corrupt the incentives. It's just horrible feedback loop. And we see this again and again. Of course, there are infamous examples of Germany and Rome and all sorts of other times in history, which I won't get into because it's quite a bleak picture, although it's extremely predictable. And unfortunately, so my next few slides, we'll go through pretty quickly here, but it's basically emphasizing this larger point that when you corrupt the money,

Starting point is 00:33:07 you corrupt the incentives, when you corrupt the incentives, you corrupt the society. and then it's a feedback loop that continues from there. So going through these really quickly for those watching visually, what we see here in this first chart, again are the years 1913, 1944, 1971, and remember those are the three really big important years of monetary history in the 20th century for the United States. And this is a figure of income inequality in the United States. And you can see that pretty much instantly,

Starting point is 00:33:33 once we re-pegged the dollar to gold in the Brentwoods Agreement in 44, or income inequality dramatically decreased. And likewise, in the early 1970s, after we again, deep pegged, of course, the incentives shifted. There's a greater incentive to predict the market. And, of course, who's obsessed in doing that? That's, you know, the higher income earners. And so, of course, a greater flow of capital and value, again, left productivity and went back to managing money. And so, again, this is another chart just emphasizing the same point, not just the top 1%, but also the top half of percent that you can see in 1970,

Starting point is 00:34:07 the downtrend of decreasing income inequality shifted and actually started going back up for the last 50 years. And especially in the last 10 years, this has only gotten worse. And so one way to think about it, and we'll come back to this later with Bitcoin instead of gold, is that what we see is that currencies have depreciate against gold continually forever. One of my favorite examples is the British pound because you can, you know, The British pound is one of the oldest modern fiat currencies in the world. You can go back 800, 8,850 years or so. And you can see clearly that continually the pound is going down and down and down against gold.

Starting point is 00:34:44 Forever, for almost a millennia now, it's done nothing but go down against gold. Now, this chart here that we're looking at is just the last century, but we have multiple fiat currencies here. Of course, we can see German Marx collapsing in their early 1920s. This is one of the major factors that led to World War II. Of course, when you corrupt the money and you destroy society, you destroy the incentives, you know, everyone becomes much more open to the idea of a strong leader to come in and change everything and make everything, quote, quote, better. Obviously, I'm referring to Hitler. So, you know, anyway, we'll get to more of that later. But basically what we see is every fiat currency continues to decrease in value against gold as a function of time. And what that means as fiat currencies decrease in value is at prices of everything goes up. This is one of the things I think Jeff Booth is just brilliant. out is that he really defines this conflict between technology and central banks.

Starting point is 00:35:36 And I've kind of alluded to that too. The technology is making everything cheaper and cheaper. We have this massive force trying to force prices down, but because, you know, humans and people in charge of credit systems want to keep expanding the monetary supply so that we can have more yields and we can make prices go up and make all our voters and constituents and lobbyists happy, you know, we force prices up even though technology is making things cheaper in real terms. So this is kind of a comical, also depressing metric here is the price of a Campbell's can of soup, tomato soup. And what we see is it was very consistent for a long period

Starting point is 00:36:11 of time until that year, 1971 that we're talking about. And clearly something changed there. And all of a sudden, the price is becoming more volatile. And it's only going up, even though it's the same can of soup and, you know, technology is much better than it was, you know, 50, 55 years ago. that's what we have. And it's not just cans of soup, but it's also more essential things. You know, you look at electricity, all food. You can clearly see 1971 where we detached a fiat currency, aka our ledger, from a brute force physical cost. All of a sudden, everything with the brute force physical cost goes up in its denominated price because we're corrupting that measure of value at which we measure things. And so this goes to hourly consumption as well. We see a clear distinction here in

Starting point is 00:36:54 1971 and productivity's got up well over 200%, but compensation's only got up 100%. And, you know, Preston, one of the frustrating things for me, even though I'm a young person, a lot of young people don't understand Bitcoin yet and this whole idea. And it's really hard, you know, it's really depressing because I know so many people that are graduating college and their wages just don't keep up. They don't keep up with the cost of living anymore. It's just horrible. You know, I'm sure you've seen that too as well as everyone listening.

Starting point is 00:37:23 But this is one of, if not the main reason why is that, you know, we have basically sucked away the incentive from society becoming more, more productive and better and better technology. And we have instead directed an incentive towards financial management and planning and more or less speculating on what the Federal Reserve or banks are going to do with the supply of money. And so we see this clear divergence here from 1971 onwards between productivity and compensation for wages. We have multiple charts showing that here. And then likewise, you know, we can look at trade policies. And again, 1971, average wages or real median wages and everything. Everything begins to diverge and going completely opposite directions in the 70s. And when I refer to corrupting society, and this is perhaps even more controversial than everything I've already said,

Starting point is 00:38:13 but you change the incentive of the family structure. You know, if we look here clearly, the birth rate, as many people listening might be aware, birth rate globally is just collapsing. It's more or less been a free fall for half a century. And, you know, some people would say it's a coincidence, but I don't believe it is that in the early 1970s, we see two things. We see, number one, single income households begin to transition to dual income households. And likewise, the birth rate begins to decline. There's less time to be at home, less time with children, because the incentive is for more and more people to work, because the real value of wages and compared to productivity are only going down.

Starting point is 00:38:52 And so, you know, of course, as this happens, what you have is an increased desire for investors to save their money because they can't trust their ledger anymore. They have to store their economic value in assets. And one of those assets are houses. So houses not only become a consumer good anymore, but then they become monetized. Investors try to store monetary wealth within houses. You know, I'm an investor in real estate myself. you are too. And so it's this horrible realization that, wow, we're forcing the price of real estate up.

Starting point is 00:39:22 And it's because we can't trust our money. You know, there's nothing to attach the money to reality. So instead we have to store our money as something that's real, you know, land, wood, dirt, and that's real estate. And that's why we've seen clearly since the, again, since the 70s, housing prices have only become more and more monetized and more expensive in wages and real terms here. And so, again, we see stock markets doing the same thing. We see the S&P-E-E ratio and Schiller-P-E ratio. And for those listening audibly, you can't see it. But again, the Bsemedes is a clear bifurcation of previous trends. And we see everything begin to deteriorate.

Starting point is 00:40:00 And like I said before, we see only more and more speculation. We see this clearly later in 1970s. We see less and less incentive towards resources and productivity industries and more and more incentive towards banking and everything of that. And that's one of the reasons why we had in the great financial crisis in 2008, being that, you know, there was all this speculation from decades that eventually began to unwind. And, of course, what we do, we print ourselves out of it. But basically what we have here, demographics too. It's also specific to demographics and incredibly infuriating ways for me and probably for many people watching.

Starting point is 00:40:36 And incarceration rates, we can also look at that, the war on drugs and everything of that sort. And since the 70s, again, incarceration rates have only gone up. as people become more desperate and as the government needs a way to spend more money, just the incentives flow in one direction only. And so we can go on and on here. We have the cost of college tuition, you know, being my age, that's an especially important topic for my peers. You know, the cost of college tuition is going up dramatically.

Starting point is 00:41:01 And people wonder why. And well, this is the main reason why when you have a finite number of degrees and an infinite amount of money and everyone's incentivized to, you know, get a college degree because wages are going down, you have this horrible feedback loop where the incentive for college becomes greater, and then it's just this greater and greater dependence on the hand that feeds them. So, yeah, and then same thing with obesity here. Same thing with the consumption of meat. We see a clear divergence where chicken takes over everything.

Starting point is 00:41:29 The world chicken buys, I suppose, in the 1970s. And we see federal debt also explode in 1970s. Debt surplus begins to decline in the 1970s, and interest rates again, interest rates really important because that's the price of money. And we see the all-time peak for that. We're in the 70s and 80s, which are very inflationary periods. And since then, we've had to force interest rates down continually. Right now, we're at historically high periods of inflation rate, especially for the last

Starting point is 00:41:57 couple decades. And there's all this talk of recession. There's all this talk of crisis. There's all this talk of over-doing our rate hikes and everything. And we're barely higher than we were, you know, a couple decades ago. And so all that's all that is to say that we're having a greater and greater financial incentive. We're becoming more and more top-heavy with debt. And as we do that, we correct the society.

Starting point is 00:42:19 So all that to say is that when the money is a lie because we no longer have a consistent ledger, we have a greater incentive to lie and then we eventually have society built on lies. And that's why we have all this noise and all this chaos, both in the financial sector and the cultural sector and everything and that sort. And that's why it, in my opinion, that's why everything feels like it's getting worse and worse. Even though technology is getting better, you know, objectively, we're all more prosperous who were 10 years ago. Everything feels a little more disdointed than it was in the past.

Starting point is 00:42:48 And the reason for that is because we have an abstract lie at a fundamental basis of our society. And that is that our money isn't true. When you corrupt the money, you inherently corrupt every price of everything and you bake in inefficiency into every layer of society. So I know I just covered a lot and a lot of charts there, but I really wanted to emphasize this idea that this isn't just about money. this impacts everything in society. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:46:47 They can't describe in any type of granularity what you just described, especially with the charts that you've thrown up there and explain the why behind it. But they can sure as heck feel it. And any person you talk to, I don't care who it is right now. Everybody's like, what the heck is happening? It feels like everything's just coming off the rails. And I think it's because we're getting closer and closer to kind of the precipice of this monetary changeover that's in the works. We obviously have a bias and an opinion on where that's going.

Starting point is 00:47:22 And, you know, that's for the listener to decide whether they agree or not. But I think the more that I see really smart people like yourself laying out quantitative, charts that go into detail like you just showed. It's really hard to dispute and deny what we're about to go through, I think, here. Hey, let's talk a little bit about game theory. I know this is a topic that you like to cover. It's something that I haven't really covered too much on the show. I mean, we've covered it here and there, but what are some of your thoughts on game theory? Yeah, game theory. The game theory of money is really interesting to me. First thing to understand is that money converges on one.

Starting point is 00:48:02 Why would you trust the second best money when you can just trust the best one? Silver is just an inferior gold. You know, take real estate. If we consider that out of formal money, there's, you know, the best piece of, you don't want the second best piece of real estate. You went the best one. So it's the same thing with money. Why would you want the peso or the lira when you could just have the U.S. dollar?

Starting point is 00:48:21 You know, you're taking everything is a risk. You might as well take the one that has a greater network effect and lower risk. And, you know, this is what's often attributed to Metcalf's law, and Gresham's law. which I probably don't have time to get into here, but all these theories are basically saying the same thing, that money is trust. All these monetary eras are basically various ways of saying trust. And of course, you're only going to trust the network that has more trust.

Starting point is 00:48:45 Why would you trust the second best when you could just stick with the best? And so what we have here when it comes to game theory is we are currently on the edge, like I said earlier, of becoming the ancient world tomorrow, even though we're the wrong world yesterday, or the ancient world of tomorrow. And when we look at everything, even before we get to Bitcoin,

Starting point is 00:49:05 you know, Bitcoin aside, what we see here is that we have an infinite supply of everything. You know, real estate is one of the most obvious examples. You know, a couple thousand years ago of stone one-story house is a really big deal.

Starting point is 00:49:19 And today, you know, the average person can afford a apartment or duplex or, you know, a house that's far more prosperous than a billionaire could have 100 years ago. You know, I know perhaps we not feel like we're as high in the social rankings as them, but, you know, truth is they didn't have air conditioning. They didn't have Wi-Fi routers in their houses. They didn't have computers, you know.

Starting point is 00:49:41 I mean, your phone in your pocket has a library bigger than Rockefeller's library. They didn't have an open AI. They could just write them anything they want on a whim. Yeah, yeah, exactly. So we have an infinite amount of prosperity here, basically. We're able to create more and more houses. we're able to have more and more intelligence, like artificial intelligence like you just referred to,

Starting point is 00:50:03 more and more books, more information, more and more knowledge. Like take the internet here, we have more and more connections. There's more of everything. And so basically, one of my favorite visuals

Starting point is 00:50:15 that I've designed to really emphasize this is this one here, is that we have an infinite amount of pretty much everything, infinite knowledge, metals, and energy, everything like I mentioned thus far, there's an endless amount

Starting point is 00:50:28 of stocks, there's an endless amount of bonds, endless amount of cash that we, you know, denominate everything in, endless amount of houses. All these things are open systems. And what I mean by open systems, I'd love to hear your thoughts on this with your engineering background. But, you know, open systems, the way I like to put it to people is that for the entirety of humanity thus far, what we have is we have, you know, basically a little ocean where we have a bunch of different ships. We have a bunch of different ships with holes in their holes. And they all are taking on water, their open systems. There's literally a hole in their hole

Starting point is 00:51:02 and they're taking on water. And so they're sinking at different rates. You know, again, to go back to the British pound, you know, 800 years ago or so, you could trade one pound for almost a dozen cows. And obviously today, the cows are much more expensive in relative terms to the pound. But cows are also cheaper because, you know,

Starting point is 00:51:19 we have more humans. There are more cows. And the value of one cow in real terms is much cheaper than it used to be. However, the British pound conversion rate to cows is significantly higher. And the reason for that is that cattle, if we can think of cattle as a system, is basically becoming more and more affordable people as that system leaks value. It leaks energy.

Starting point is 00:51:42 And it becomes more affordable. And the brute force physical cost of acquiring cows goes down. But the value of the pound goes down faster. So if we're thinking of two ships, the pound is sinking at a faster rate than the And so what people have done in the ancient rules is that they would save in things that, quote unquote, sunk the slowest. You save in gold, you save in cattle and, you know, lambs. And you know, back in the day, your farm was your livelihood. And then, of course, you know, today, a better example would be that of real estate or bonds or stocks. There's an endless

Starting point is 00:52:17 amount of real estate. We can always make more houses. We can always build higher, you know, and perhaps maybe in the future build more land. You know, who knows, or at least more efficiently use our land. you know, take stocks. There's an endless amount of companies and endless amount of brands, and those companies can issue more stocks. Granted, there are regulations that they have, but at the end of the day, there's an endless amount of stocks could be issued to the market and bonds. Similarly, there are regulations and expectations for, you know, these fixed income assets, but at the end of the day, we can create more debt. You know, we can always make more debt.

Starting point is 00:52:50 And so what we have here are a series of open systems that we save in versus cash, we can't trust our cash. You know, who's going to trust our cash? It's the most open system of all in our modern world. And so we're leaving this world where we have these 99 ships that are sinking in different rates and we're entering this world where for the first time, we have a closed monetary system. And this is something that was predicted. I spoke about this on my previous podcast and in my threads as well. This is something that was predicted by many folks. Four of the most famous ones were Tesla in 1900 and then four. Ford and 21, Heik and 84 and Friedman in 1999.

Starting point is 00:53:29 These were some of those famous people that predicted the eventual arrival this closed ledger. Granted, they predicted different aspects of it, but they all pretty much predict the same thing, that eventually, as the world becomes more and more prosperous, that we can't save in these assets anymore, and we eventually need something, you know, some ledger we can create that's actually a consistent monetary stock of the human race, basically. And that's what we have here, that we have infinite everything, but we have one closed monetary system. And really quick. And then I'd love to hear your thoughts from an engineer's

Starting point is 00:54:05 perspective. One of the metaphors I love is that of oxygen, you know, of all the assets in the world, you know, the most essential one for human survival is oxygen. Water is important. You know, heating is important. It's very cold outside. I need that to live. Food obviously is important, but oxygen, from a physiological standpoint, is the most essential commodity of the human race. Your brain, on a scientific level, has the greatest and fastest fear response of a lack of oxygen. So, you know, technically speaking, oxygen is the most valuable thing in our lives that we could own, and yet we never pay for it. And the reason we never pay for it is because it supply is infinite. And so, yes, demand is important, but supply, I would argue, is just as important and more important, because if there's an infinite supply of a very valuable thing, its price and relative terms to everything else, trends down forever.

Starting point is 00:55:01 And so the Mona Lisa is the other example I like to use. You know, there's only one Mona Lisa. You don't need it to survive. You're not going to die in five minutes or ever if the Mona Lisa were to be destroyed somehow in some horrific accident. but yet the price, the exchange rate, say, between the Mona Lisa and oxygen is trending up forever. You know, if you were to dominate the Mona Lisa in terms of oxygen, its value, relative value, just continues to appreciate. And that's more or less what we have here, that we have all these infinite systems. And eventually it became evident to these geniuses of the past and to the bitquiners of today that eventually if we're going to continue into the information age, we need some sort

Starting point is 00:55:42 of decentralized, distributed monetary system that has a fixed supply cap that's an immutable ledger and all these other qualities of good money, which we don't have time to get into here. But basically what it is is a system that is closed. And that's why, you know, Sailor, as an example you brought up earlier, you know, he's an engineer. And in my discussion, you know, you're an engineer and other people I talk to in my personal experience, engineers understand Bitcoin much faster than financial experts. And I believe that's because engineers are trained to understand the strength and survivability of a given system. And once one realizes that Bitcoin is designed to be an economic energy storage system that doesn't have an energy leak as a function of time, you realize that it's inevitable.

Starting point is 00:56:30 So I love that. I love that. As an engineer, you got me all excited there with that last statement. Because, I mean, it's really coming down to the long. of conservation of energy. Energy cannot be created nor destroyed. And when you're looking at the existing system, the Fiat system, I mean, let's just say the whole Fiat global system is 100 units, right? And then tomorrow it's 105 units. And then the day after that, it's 110 units. You are creating, you are quote unquote creating energy in that system, right? It's not,

Starting point is 00:57:05 it's not 100 for everybody to use. And if people abuse the unit that they've got, well, they're going to lose it. And if they've done smart and intelligent things with that, maybe they're going to inherit more of those units. You don't have that. And it goes back to the chart that you had there where when you corrupt the ledger and you corrupt the money, you're corrupting the incentive structure of how people are going to act. And so they're clawing for these energy units that are being produced and inserted into a system that is not paying attention to the laws of the conservation of energy, and they're trying to manipulate it into their favor, and they're looking for the gatekeepers, right? It all comes down at that point to who's the gatekeeper that's adding these monetary units into the

Starting point is 00:57:49 system, and how can I gain political favor with them as fast and as close to them as I possibly can. So it's exciting. I love that you put those four up there. Was it Ford who was saying that there needed to be some tie to like an energy ledger? I forget which one had that. I forget which one of them had that quote, but they were literally saying that it needed to be somehow through some type of technological advancement

Starting point is 00:58:17 that the ledger is tied to energy itself. I forget which one of them said it, though. Yeah, oh boy, you're going to derail me a little bit here, but I have to know, I have to say it. Yeah. Yeah, so you're right. Tesla was the first, and he predicted certain aspects of Bitcoin,

Starting point is 00:58:34 which we don't have time to get into before, since you brought him up, it's really fascinating. Ford was the one, in my opinion, that was the one that first predicted the monetary aspects of this ledger that today we call Bitcoin. And what he said is that eventually we need a way to basically create this ledger that has a tie to the natural wealth of the world. Now, what the heck does that mean? Well, for the average person listening, and I'm really going to rush through this here,

Starting point is 00:59:03 But what we need, if we're going to transition from the ancient world of the industrial age and upgrade to the modern world of the information age, what we're doing now, is the first thing we need is an global energy system that makes energy universal and a consistent unit. The second thing we need after an energy layer is a information layer. You know, information age, you've got to have a way to transfer energy into information. Okay. And the third system is you need a way to communicate. that information from one area to another, one person to another, you know, over time,

Starting point is 00:59:38 you know, some way you need the ability to communicate that information with extremely low friction cost of space and time. And then the fourth and final layer to that is you need a way of transferring value, you know, and this is the order it has to happen. You need energy first. So something that is within the laws of physics like you're saying. And then second, you need a way to turn that into information, something a little more abstract. And third, you need a way to communicate that.

Starting point is 01:00:01 And then once you have those three, only then can you then create the monetary layer because, you know, again, what is money? Money is economic energy and then money is information and money is a system of communicating that information with one another. You know, it's a ledger of economic energy that communicates. So these are essential steps. And for those that don't follow what I'm saying yet, what I'm basically referring to are the big four transformations of the last, you know, century, century half or so. The energy layers, the electric grid, where basically, as Ford said, we convert natural energy into electric energy. You know, you have coal plants, or today we have nuclear reactors or solar panels or burning

Starting point is 01:00:42 natural gas. You know, we convert natural wealth of the Earth and the Sun and Earth's core into electricity that can then be distributed in a global electric grid or a series of very large electric grids that communicate with each other globally. And then, okay, what is something that? It converts that electricity of energy and information. Well, that's the computer. Obviously, you plug it into the wall.

Starting point is 01:01:05 Electricity flows in and then you get information out. You know, again, this all comes back to, you know, conservation of energy, like you're saying. Nothing's created or destroyed. The energy is transferred from the natural world into the electric system, into the information system. And then that information system communicates, you know, like we're talking on this video call here. It's virtually instantaneous for extremely low brute force physical cost. This is essential.

Starting point is 01:01:29 It had to happen, and it had to happen after the computer for obvious reasons. And then, you know, finally we have this monetary layer where basically it is an algorithm that condenses value closer and closer. And this gets to the big idea here. I'm jumping the gun a little bit, but the idea that Bitcoin is the monetary singularity of the human race, that basically what Bitcoin is, is that Bitcoin is an algorithm that converts natural wealth into information through computers that then communicates over the internet into this fixed ledger that for the first time in human history, we have

Starting point is 01:02:03 really our first measure of wealth. As absurd as that sounds, pretty much every money we've had before Bitcoin is a precursor to Bitcoin because nothing else has been a closed system. And Bitcoin's the first closed system. And that's why people have a very hard time understanding it because, first of all, they don't understand money. Second of all, they don't understand how the money's corrupted. And third of all, they don't understand Bitcoin because it's not acting similarly to

Starting point is 01:02:27 every other form of money we had. So anyway, jumping the gun a little bit. But to answer your question, that's what Ford more or less was predicting. And he actually tried to make Bitcoin. People don't know that. He actually tried in 1920s.

Starting point is 01:02:38 He failed, obviously, because that information or the communications, aka Internet or computer, you know, he couldn't have made Bitcoin. But he actually tried because he believed it was extremely important for the future of humanity. Yeah,

Starting point is 01:02:51 I think for people that were, you know, movers and shakers back then, they could see how the game is played. They can see how the people at the highest level are able to get a first bite at the fresh printed fiat that's coming off the printing press. And so some of them had an appreciation for what something like this could potentially usher into the world, Ford being one of them. Okay, so let's talk about linear terms, log terms, getting off zero. Give us some of your thoughts on these ideas.

Starting point is 01:03:23 Yeah, so one of the things that people unfortunately assume about Bitcoin is that it's a risk on asset, it's really volatile. That is true. And because of that, it's a high risk speculation. And to their credit, they're not wrong in their worldview. It's just, respectfully speaking, their worldview is wrong. In the current worldview, something is volatile and something that goes up, you know, we all, in our current mindset, again, in our ancient worldview mindset, we have this view that when something goes up, It must inherently come down because what does everything do? Everything comes down because we can only make more.

Starting point is 01:03:58 And likewise, we assume because it's volatile, it's high risk because in a world where we have money managers and people to issue currency to keep stable prices, we assume something that's volatile against a stable political currency unit must mean that's high risk because it's in relation to everything else. And so just coming into it, because our incentives and because our understanding of money has been so corrupted, we have trouble understanding Bitcoin. But when it comes to your question here, basically the, the important thing to understand is that Bitcoin is a piece of technology, and it inherently is going to be volatile because it expands at an exponential rate.

Starting point is 01:04:32 And all technology is expanding exponential rate for all of human history. So, well, all utility is inherently going to be a function. And the only time at which Bitcoin is not going to be volatile is once it's fully adopted, you know, I mean, you have to take the internet. You know, if you had a price for the total value of the internet, it would be nothing but volatile forever. It would have been volatile during the lockdowns of 2020. It would have been volatile in the tech bubble. It would have been volatile this whole time, except the fact that the network is increasingly volatile to the upside becoming more valuable. Because one can think of the Internet as the communications network of the human race.

Starting point is 01:05:09 One can think of computers as informational network of the human race. The electric grid is the energy network of the human race. and Bitcoin basically as the digital economic monetary system, the human race. So that's something that should be said first when differentiating between linear and logarithmic view here. And to emphasize that point, let me give a little brief. Well, you're pulling that up. So much in academics is taught that if there's volatility, that equals risk. And they're not actually talking about what's fundamentally, I know when we talk about it with respect to equity.

Starting point is 01:05:46 I would get so frustrated with this idea that so many academics are saying, well, it's got all this historical volatility. So it's a high risk thing. And I'm thinking, no, it's a business. And the underlying assets on the balance sheet of the business relative to all their competition's assets is where the real risk lies. But it's almost like that's not even discussed. It's like, well, the price action was volatile. So it's risky. It's like, come on, give me a break.

Starting point is 01:06:12 So when I'm looking at Bitcoin in a similar light, people are looking at the price action, they're saying it's volatile, but they don't even understand the beginning of the fundamentals behind it. They don't understand that their second layer, immediate settlement, you know, peer-to-peer type things happening and being just shared all over the world. They don't see any of that type of stuff. So just a little pet peeve of my own as you're bringing up the slide. And sorry to interrupt you, but go ahead there. No, no, it's fine. Frankly, it's a cheap cop-out. Yeah, yeah, exactly. I once believe that, too. I ignored it for years. because of that, yeah, it's volatile, whatever.

Starting point is 01:06:48 It's like, okay, what if this replaces something? And that's the slide I want to get to here is that what we have here are two lines. The first line being a, this is a conceptual idea here. We're basically of the Stone Age and the Bronze Age. And of course, which system is more volatile when you compare these two systems? Well, it's the incoming age. It's the Bronze Age. Why is that?

Starting point is 01:07:10 It's because it absorbs all the value, all the economic value of the previous system. Again, no energy is. created or destroyed, and then it creates new value. And so inherently, it has to be more volatile than the old system. And then if we go from the Bronze Age to the Iron Age, you know, again, thinking in terms of technological eras, you go from that ancient world, the Bronze Age to the modern era of that time, the Iron Age, and it's more volatile than the previous system. And also, it becomes faster because, again, technology is exponential. It gets faster and faster. The number of lifetimes, number of centuries it takes to upgrade, go down continuously. You go from the Iron Age,

Starting point is 01:07:46 to the medieval area, the same thing. The same thing occurs. You go from again to the Renaissance and age of exploration, you know, the 15th, 16th century, the new world and everything. And then you have more recent history, you know, at the beginning of the industrial era. You know, the locomotive is one of my favorite metaphors for Bitcoin for reasons I won't get into right now at this moment. But basically you compare, you know, the Renaissance and that era of exploring the world and

Starting point is 01:08:11 this massive expansion, you have this more volatile, much faster. new era of the locomotive that the locomotive ushers in. And today, this is my argument of where we are today. And we did touch on this a little earlier. But what we have here is one line of the previous era, technologically speaking, of the industrial revolution, the era of the locomotive, of steel. And what we have here is the beginning of the information age, which, you know, arbitrarily remarking at the beginning of the computer, or at least I am, in 1948, you know, We're, you know, half a century, well, more than half a century now into the information age closing in on a century here.

Starting point is 01:08:49 And I believe we're only just beginning the exponential curve, which I know might sound crazy to people. But again, about half the world has not used the internet. And once they do, you know, that, again, Metcalf's law, as you bring in more people to the internet, you create more value. We're only at the beginning. You know, there's still so many people that, you know, send checks, don't use the internet, even people that do have, quote, unquote, internet access.

Starting point is 01:09:09 that there's so much that is not a part of the internet yet that eventually is going to be, and the efficiencies will just continue. And so Bitcoin as a subset of the information age here, what we're looking at here is a system that's growing 80%, roughly speaking, faster than the internet on a companion growth rate. So Bitcoin is growing faster than the internet, and that's one of people's big turnoffs, as I think, well, Bitcoin won't matter to me until it's fully adopted. Well, the problem is, like I said, the internet's not fully adopted, and think about how much That's changed your life.

Starting point is 01:09:40 You know, by the time Bitcoin reaches 15% adoption, your life's going to be radically different than it is today. Luke, when I'm looking at this, and you've brought this up a couple times about the internet not being all over the world to very many people and them having access to this information age that's really starting to take off. When I look at what Bitcoin does in bringing the incentive structure for mining to these local communities, all around the world and how it energizes first those communities and gives them an economic incentive to energize their local communities. It then ushers in their ability to access all of this information and to access all of these tools that are readily available to people like you and me here in the United States.

Starting point is 01:10:33 And it's almost like they go hand in hand together. Yeah, exactly. These different systems that are on top of each other, referencing, they all reinforce each other. You know, the faster you adopt the energy grid, the faster you can upgrade to all these other things, you know, it's just a reinforcing. And then this is nothing new. This happened with the printing press, you know, back in that exponential curve of

Starting point is 01:10:52 that area, you know, bringing the printing press, you cause faster and faster change in, you know, the Catholic Church at the time and you cause more political change, you know, it's how everything's connected. When you have a new technology and especially a new network effect that compounds with other network effects, you get an exponentially, greater impact on society, which then it impacts everything else with it. So again, it all comes back to technology here. Talk to us a little bit about diversification here before we finish things up. Yeah, diversification. Let me skip ahead of my slides a little bit. So really quick, one of the things

Starting point is 01:11:29 with stocks, because that's typically one of the first things people refer to stocks. You know, again, like I was saying, stocks are incredibly monetized. You know, this chart here, where we're looking at is S&P 500 versus the total assets of the Fed, ECB, Bank of Japan, and People's Bank of China in dollars. What we see is a clear correlation that as the balance sheet of these central banks increases, we also see a direct correlation with the SEP 500. Again, if you can predict what these issuers of currency or to what degree they're going to manipulate the ledger, then you can pretty much predict anything, including the stock market.

Starting point is 01:12:03 And to the bottom right, you see pricing stocks in terms of gold. and you see the world's becoming more volatile. Again, since 1913, the creation of the Federal Reserve are becoming more and more cyclical and boom and bus cycles. These things are becoming quite clear. And one of the more offensive ideas to people, you know, again, to really hit at home for the average person, because the average person listening probably wins quite a bit of stocks. But one of the problems with stocks is that they're actually not going up in value in terms

Starting point is 01:12:30 versus the political currency units that you're denominating them within. You know, if we look at the top chart here in this green line, we think we have exponential growth in stocks and that stocks only go up and yada yada yada. But in reality, stocks have been virtually flat for half a century. They declined quite a bit in 1970s as gold had a major rally value transitioned down to stocks back into gold. And then we had the major dot-com bubble where everything was exploded and that we've been pretty much flat since that crash. And people don't really understand this because when my stocks go up in price and I feel richer and it's like, well, yes, because technology has made everything cheaper. Your stocks are doing nothing but keeping pace.

Starting point is 01:13:07 with the expansion of the ledger that you're denominating those stocks within. You know, again, when the money is a lie, the true value of your stocks that the stocks are trying to communicate to you is a lie. It doesn't make any sense. And you inherently then believe that the stocks are going up in value and everything else is keeping the same price. When in reality, it's like, no, the stocks are keeping the same value. And technology is forcing the prices or everything else down. And the point here again comes back to monetary premium. If you compare the United States stock market in blue here versus the rest of the world, the United States clearly has a monetary premium because, again, if you're going to store monetary energy,

Starting point is 01:13:43 why would you choose the second best stock market? But you can just choose the United States stock market. And so when it comes to diversification and thinking about this, if I'm going to skip ahead a little bit here, one of the main ideas, and I love this graphic so much, one of my favorite Twitter folks out there, what you see here is that, you know, again, for the first time, we have this ship, with a whole, with no open flaws in the system. And so we have a consistent store of value, a consistent measure of global wealth. And if you stop thinking of the world in terms of corrupted political currency units,

Starting point is 01:14:17 and you instead begin thinking of the world in terms of fixed and mutable electric energy units within a closed, finite system, what you begin to see is that the relative value of every other system in the world continues to decline. Again, to use the oxygen versus Mona Lisa metaphor, you know, it doesn't matter how valuable oxygen is to your survival. If it's an open system with an infinite supply, its relative price compared to the finite closed system of the Mona Lisa has to go down. The relative value has to go down. And so you ask about diversification. If we look at this here, it pretty much doesn't matter what you own.

Starting point is 01:14:54 It doesn't matter if you own stocks or your own Turkish currency, Argentine currency, gold or real estate. everything is pretty much going down in relative terms against Bitcoin. And one of the big frustrating things, again, when it comes to volatility, like you said so well earlier, is that people look at Bitcoin and think, oh, it's volatile, blah, blah, blah, blah. It's a bubble, whatever. And then it crashes and think, oh, it's dead. It's like, well, what if Bitcoin is not skyrocketing in value than crashing? What if instead it's the US dollar that's volatile?

Starting point is 01:15:25 I mean, think about this dramatic rise in interest rates. What if over the last year Bitcoin has not... collapsed and priced against the U.S. dollar, 70%. One if the U.S. dollar has actually rallied against Bitcoin 300%. What if we're not in the middle of a Bitcoin crash? We're in the middle of a dollar's parabolic spike upwards. And both these things can be true at the same time. I know Bitcoin's crashed, obviously, so.

Starting point is 01:15:48 But it's just that mindset change that we don't even think about because we're so used to thinking about that a U.S. dollar equals value when it doesn't, and it never has. Yeah, I think for people that would hear that, like, I completely agree with what you just said. But I think for Wall Streeters, if they were going to battle back, they'd be like, well, Bitcoin is such a small market cap compared to, like, if you took all the world's fiat currencies, that that's why it's bumping around at such a volatility.

Starting point is 01:16:14 And there's some truth to that, too, right? But I think as we get further along on the timeline, and, you know, your opinion, my opinion, is that Bitcoin's going to continue to rip in dollar or whatever fiat terms you got, if you got a long enough time horizon, And as those market caps of these Fiat currencies to Bitcoin start to reach a parity, it's going to, it's going to demonstrate exactly what you said is you're going to see that maybe it's the Fiat currencies that are the ones that are moving in such dramatic fashion because you're kind of reaching similar buying power between the two networks, the two monetary networks. Yeah. So, yeah. And one more word on diversification, I really would like to add here. I know we're about to end, but one more thing I like to add is that this is some speculation

Starting point is 01:17:05 of something that could happen. This is already happening. This chart that I've had up here for a minute is the U.S. dollar against Bitcoin in logarithmic terms, again, because you can only think about technology in logarithmic terms. What we see here are clear lower lows and lower highs of the U.S. dollar against Bitcoin for over a decade. This is nothing new. it's not just started, it's only getting faster.

Starting point is 01:17:26 And it's not just the US dollar, it's also assets, you know, again, talking about diversification. Political currency units, again, the dollar have been trending to zero against Bitcoin for over a decade. Rent and housing has been going down. And this is one of the things, again, you'll go back to one of my favorites, Jeff Booth, you know, we think deflation's bad. We think prices going down is bad. When reality is good, it's good. It's good when food prices go down because prosperity is becoming more affordable.

Starting point is 01:17:52 For the first time, since we have a fixed immutable ledger, we can have the productivity gains of society flow back into the global monetary stock instead of being debase-inflated away and breaking out of physics and corruption of the ledger. So this is a good thing. This being one of those main examples that rent and housing is continuing to glow down. And so likewise, you know, Tesla stock has had a great decade, but it's still down against Bitcoin because it's a more open system. Gold's going down and stock indices are going down. It doesn't matter if the NASDAQ or Dow or S&P 500, your mutual funds, whatever. And probably what one, you know, I say in the slide here that they're going to zero, I probably shouldn't have said that.

Starting point is 01:18:32 I probably should have said they're trending toward zero. You know, in the same way, the auction never quite hits zero against motor lease. So these things will probably never quite hit zero. But they'll continue to have 80, 90 percent declines, you know, continually forever. You know, it doesn't matter what you own. This is one of my favorite charts to get the point across. Before you go to this last one, I think it's really important for people to know that it's not like you're saying that the value of Apple or Google or any of these companies is zero. You're just saying that in a world that has been conditioned to think that dollars and euros and yen are valuable and that they're this valuation in today's terms, when would you move to this exponential event where things,

Starting point is 01:19:20 are going to be valued in this monetary energy. The valuation is way different to what you think the value of call it one Bitcoin is today. And it's so drastic that it makes it look like it's trending to zero, but it'll never get there for a lot of equities that continue to produce tangible value to society and have products and services that people actually want to use, right? That's not going away. It's just the, it's a little hard for people to wrap their head around if they haven't put a lot of deep thought into what some of that actually means. But go back to your slide there. I want you to show that last one for people to see.

Starting point is 01:19:58 Yeah, yeah. Let me get back to it. It's really quick. Yeah, this is, for those that don't know how Finney was one of the first big, well, he was literally the first besides the Toshy. And back in 2009, two years before Bitcoin hit $1. Okay. So this is not just before Bitcoin's $1.

Starting point is 01:20:16 It's two years before it's $1. how funny he basically had this thought experiment. And he basically predicted exactly what this chart here shows you, total global wealth in terms of Bitcoin declining exponentially towards zero forever in relative terms to Bitcoin. That's basically how funny predicted. He said if this happens, Bitcoin would get to $10 million, blah, blah, blah, blah. Say it's more like 40 million adjusted for inflation and it'll probably be 400 million in a decade or so.

Starting point is 01:20:40 And that price adjustment just continues up forever. But the more important point, as you said here, is that relative wealth and terms of Bitcoin just declines forever. And so basically what we're looking at here is a likely future where as technology makes everything more abundant, as we have an infinite amount of debt, an infinite amount of prosperity and everything just trends towards infinity, you know, the only finite system in, you know, humankind. It's valuable trend towards infinity. And, you know, often people say, well, what if you could just make down to Bitcoin? And it's like, well, that's a whole other conversation, but you can't. It's a system designed to prevent replications

Starting point is 01:21:15 of itself. In the same way that the Mona Lisa. is a piece of art that's designed to be unique. And it's designed. If you copy the Mona Lisa, you only make a lesser version in the same way with Bitcoin. You only make a lesser version. So I guess for the average person wondering, okay, what does this mean for me?

Starting point is 01:21:32 Should I buy? What should I buy or whatever? Basically, my view would be that if we invert this, instead of thinking of everything else declining and relative value against Bitcoin, if we inverse it and realize it, how Finney was right all the way back in 2009, What we've seen with Bitcoin is its consumption of everything else and went from zero cents for years up to six cents.

Starting point is 01:21:57 It skyrocketed $30,000, crashed 90 percent to $2 and skyrocketed and crash and skyrocketed crash. And right now we're in a period where Bitcoin's price denominated in political currency units happens to be down again in large cause because the value of those political currency units has been inflected upwards as the minister of those currency minister on Powell's made the more valuable. But basically, what are we looking at here? Well, I would strongly argue that what we're looking at here is a continued expansion Bitcoin is in the future. It'll continue its massive skyrocketing trend. It'll alternate between skyrocketing dramatically and crashing dramatically upwards forever. And it's going to be really hard at time.

Starting point is 01:22:37 It's just I would just encourage the other person to get off zero. Because if we think of this, again, from a physics perspective, and perhaps you have a closing comment on this, you know, I think of Bitcoin is a monetary black hole of the human race. You know, for the entirety of humanity, we have been dealing with plants and we store wealth and planets and asteroids and stars and, you know, all these things. And, you know, if you throw energy at one, you throw an asteroid at a planet, you destroy the planet and everything like that. And that's why currencies fail.

Starting point is 01:23:04 You know, you have an opposing nation that apply brute force physical costs in the form of military or economic sanctions and you try to destroy it. And so we've had the system of these sinking ships and these floating planes. And for the first time ever, we have designed something that is basically singularity. And we look at it and we don't understand it because it doesn't behave like a planet. It's just this tiny little thing that nobody can see is this abstract concept. It doesn't make any sense to us. It's a little dark orb.

Starting point is 01:23:34 And we look at it and we think, oh, whatever. It's just a bubble. It's just this thing. It doesn't make any sense. I mean, nobody understands it. Okay. But the problem that I would challenge you a person listening to is. is this is what if that thing actually is a threat to you? What if Bitcoin is not a get rich

Starting point is 01:23:51 quick scheme or an opportunity? What if Bitcoin is not a symptom of the increasing speculation of an increasingly corrupted ledger and the symptoms of that? What if Bitcoin is actually a solution and it's doing exactly the opposite of what you would expect the world's lowest risk asset to do? And that's what I would argue. As absurd as that might sound and perhaps even you disagree with me, but I would argue that Bitcoin's already the lowest risk asset on planet Earth. Because if we assume the future world is coming, and we hope that's coming, the only low risk asset in that world is having a share of the global monetary stock. Why would you own a security in a company with cash flows? You have a CEO and scandals and cash for the market.

Starting point is 01:24:33 Why would you own planets in a universe where there's a black hole that's expanding infinitely forever? You know, it's like you can try to censor it. You can try to destroy it. China has tried to censor Bitcoin. And every time they censor it, they only make the network stronger. And that's why they've given up on censoring it. You know, no matter how much mass you throw it the black hole, no matter how much attention or negativity, throw up Bitcoin,

Starting point is 01:24:53 it just absorbs it and grows greater and greater in volatile fashion. And so I genuinely believe that Bitcoin's going to absorb all monetary premium of assets and eventually become the global means of storing value for the human race. And this is a good thing. And I believe it's going to save global life. Yeah, it's going to bring in global cooperation. It's going to usher in an age of global cooperation. I completely agree with you, especially at this point in the timeline.

Starting point is 01:25:20 You know, maybe if it was 30 years from now, there may be equity that could outperform or outpace what remains as far as what more monetary energy is going to be pumped into it. But where we're at right now, I'm with you 100%, Luke. Really appreciate your time coming on and all the slides that you put together that, you know, if people were listening to this on, audio, I'd highly encourage you to go back and see some of Luke's slides because he put up some awesome charts for you to contemplate and look at. Luke, give people a handoff if they want to learn more about you, where they can find you, and anything else that you want to highlight. Thanks, yes. I love getting visual presentations for people to try to turn this abstract idea of energy and monetary and close into something that they can understand without getting too

Starting point is 01:26:06 technical or putting in the jargon. I like to bridge the gap for people. And so anyway, there's a lot more slides we didn't get to, and maybe next time we'll have to do this again and share. But yeah, I'm on Twitter. Luke Rose, you can follow me there. And I'm sure I'm going to be doing a lot of cool things there in the future so you can go there. And ultimately, even more important than following me is just continuing to learn about Bitcoin and getting off zero as soon as you can, as soon as you feel comfortable. Luke, thank you so much. We'll have links to that in the show notes so people can just click on that and find you real fast. And thank you so much for making time tonight. Of course. Thank you.

Starting point is 01:26:38 If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I'd love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it's something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening, and I'll catch you again next week. Thank you for listening to TIP. To access our show notes, courses, or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only.

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We Study Billionaires - The Investor’s Podcast Network - BTC117: Bitcoin and the Start of the Information Era w/ Luke Broyles (Bitcoin Podcast)

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