You're The Voice | by Efrat Fenigson - Ep. 13: Prof. Peter St Onge - Hidden Truths About Money & Economy

Episode Date: November 16, 2023

My guest today is Prof. Peter St Onge: an economist at the Heritage Foundation, a Fellow at the Mises Institute, a former MBA professor, a libertarian and a freedom maximalist. We spoke about economies that drive wars and vice versa, about governments affinity to crises, we drew parallels between Marketing and Economics and Peter generously shared his view on the upcoming financial collapse, including gold & bitcoin's roles. Peter’s Substack, daily videos and podcast are priceless and I’m a humble student of economics thanks to his great resources - I recommend following him.  We talked about:  00:00 - Peter’s background 02:40 - Parallels in Marketing and Economics to influence behavior 07:00 - Economics captured by governments, Covid crisis example 18:45 - Inflation explained - what it is, what it isn't 28:20 - Economy of wars: how crises drive economies? Do governments ‘like’ crises? 37:00 - Gold and Bitcoin as alternatives to Fiat  49:00 - UBI (universal basic income) and CBDC 55:00 - End of the monetary cycle and upcoming financial collapse 1:02:30 - Peter’s hopeful view of the future ► If you got value, please like, comment, share, subscribe and support my work. Thank you! -- SPONSORS -- ►► Get your TREZOR wallet & accessories, with a 5% discount, using my code at checkout (get my discount code from the latest episode - yep, you’ll have to watch it): ⁠⁠⁠⁠⁠https://affil.trezor.io/SHUn⁠⁠⁠⁠⁠  -- LINKS -- Peter’s ⁠website⁠ | ⁠Substack⁠ | ⁠Twitter⁠ Efrat's Twitter:⁠⁠⁠⁠⁠ https://twitter.com/efenigson⁠⁠⁠⁠⁠ Efrat's Telegram:⁠⁠⁠⁠⁠ https://t.me/efenigson⁠⁠⁠⁠⁠ Watch/listen on all platforms:⁠⁠⁠⁠⁠ https://linktr.ee/yourethevoice⁠⁠⁠⁠⁠ Support Efrat's work:⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.buymeacoffee.com/efenigson⁠⁠⁠⁠⁠⁠ Support Efrat with Bitcoin:⁠⁠⁠⁠⁠ https://geyser.fund/project/efenigson⁠⁠

Good evening and good morning to you, Dr. Peter St. Onge. How are you? I'm great. Thanks for having me on, Efra. Thanks for coming. It's really my pleasure to host you. And I want to start, for those who don't know Peter, Dr. Peter St. Onge is an economist at the Heritage Foundation, a fellow at the Mises Institute, a former MBA professor, libertarian, and freedom maximalist, which I love. And that's one of the reasons why I started following you to begin with. And I've been a while now a reader of your Substack, a follower of yours on Twitter. I've been watching your daily videos and even listening to your weekly podcast.

So thank you for all this ample content that you produce. I know how difficult it is to produce so much content. So thank you so much for doing that. This is really brilliant. And I learn a lot from you because what you do for me is you put everything in such simple language to help people that really don't know much about economy to understand it. So thank you for doing that. And can you start with some background about you, how you got to where you are today, even start as earlier as your childhood? I read about it and it was really fun.

Well, thank you for that glowing introduction. I really appreciate it. And yes, I do try to simplify things. It honestly makes me angry how these jerks who control the world hide this stuff behind this academic mumbo jumbo and jargon. Uh, so that's, that's a big reason why I do try to simplify it. None of this stuff is actually very complex. Basically, somebody is trying to rip you off. Somebody is trying to control you, uh, and the rest of it is decoration. Uh, so I, uh, let's see, I studied economics in college.

And then when I graduated the, I graduated in Canada and the economy that is back in 1996, it was really rough. So I couldn't really get an economics job. and so I got a job in marketing working for a big telecoms company we were building telecoms infrastructure across Latin America and then I went on to work for a toy company a Japanese toy company called Takara they make the transformers and baby blades and so in both of those jobs you know a big part of marketing fundamentally is applied psychology okay so you're trying to understand what does the customer want? Okay. What's missing in their life? What would make

them happier? And whether this is a telecom system or whether it's a toy, the fundamental tools are identical. The customer needs something and you would like to try to provide that to them in a way that it's worth their time, right? That they're paying you less than the happiness that they get from your product and then you can make a profit on that and everybody walks away happy so anyway that's the world of marketing and there was a point where i i sort of sat down and tried to reconcile that with the model of behavior that you get from economics because economics is also in theory applied psychology where you're trying to model people so why do they buy sell trade build destroy have families you know why do people make choices and what struck me is that in

economics, you have these really, really beautiful models and just massive models that just have page after page of calculus and enormous budgets to sit in and do research on this and model this out. And yet those models are false. They're garbage. You know, the organizations that might use those behavioral models, such as a central bank or a government, they're constantly surprised. They're constantly caught flat foot. We saw this in the 2008 crisis, where the crisis just seemed to come out of nowhere. All of our, you know, diligent leaders armed with their tens of thousands of PhDs, they all said, boy, you know, it's, it's weird, just no idea what happened, who could have predicted it. and if you contrast that abject failure okay despite all the resources that go into you know the applied psychology of economics you contrast that with marketing if you had that kind of record in marketing right if you kept coming out with products that failed and you said well it's

it's just weird nobody could have predicted this you know if you had 10 000 phds sitting there cobbling together data for you and yet your products kept failing you'd be out of a job right you would you would no longer be controlling those decisions and yet government just comes back day after day you know uh jerome powell you know he had promised us that uh inflation was transitory janet yellen promised us that the banks were sound okay the next thing you know you've got 28 months now of inflation the imf is saying we're looking at years more you've got other people saying we're looking at decades more so that was an abject failure the banks got you know they got $100 billion plus in direct bailout, the so-called BTFB program. They then got these FTIC

coverages that they took the deposit insurance. Okay, so basically deposit on the money that you have in the bank. It took that to about 1% cover. In other words, it's basically bankrupt. It's 99 times overstretched. So that's our Fundamentally Sounds Banks for you. It's just a complete litany of failure so anyway when i was working in marketing i found it fascinating like why is it that economics it has so much prestige people trust it so much has so many i'm just billions of resource billions of dollars worth of resources that go into this field and it's just a complete failure and you know how do you reconcile that and for me what i concluded while marketing works i I mean, you can manipulate people's behavior to get them to buy more, to consume more.

It works. Right. And, you know, the I mean, the funny part is that economics in the hands of governments is trying to do the same thing. Right. It's trying to manipulate you into spending more, you know, into depending what they want you to do. Right. They want you to spend more if they need the economy, you know, GDP to increase or they want you to spend less if they want to reduce inflation. It's all applied marketing, but it's such a failure. And it's so bad at what it aims to do. And, you know, I think where that's coming from, I talked about this recently on the Substack, but the field of economics was essentially captured by governments about 150 years ago, starting in Germany, because governments recognize that economists and economics is such a useful marketing tool fundamentally. The thing is that once it gets captured, and here I'm using Austrian analysis, you always want to model out the people making the actual decisions, okay? So the actual individuals in government who captured economics, those individuals' goals is not to grow the economy or to keep inflation low or to spread prosperity.

Okay, that's what they say in public, but their actual goals are bureaucratic goals. They want to increase their power. They want to move up the slippery pole of government. Maybe they want to get a nice job out of government, a golden parachute. So economics becomes once it becomes captured by government, it essentially becomes a crony operation where not only is it trying to manipulate people, it's trying to manipulate people for reasons other than what the government claims. OK, so it is not trying to manipulate you to make the economy grow and to keep inflation low. It is trying to manipulate you essentially to smooth the path for government to take on more and more power. Why? So that politicians and bureaucrats can monetize that power, can sell it to the highest bidder, and then they personally can benefit. You see it in Washington, D.C. Some of the richest areas of America are the suburbs surrounding D.C. And of course, D.C. makes nothing, right, is a giant parasite on certainly on the American people, but arguably on the world. And yet, look how rich it is.

It is a very rare congressman who, you know, after a couple of years in government, they're all millionaires. Alexandria Ocasio-Cortez, who, you know, I think she's relatively low on the crony polls. She's just started out. I'm sure she'll she'll rise higher over time. But when she first came to Washington, she couldn't afford a place to live. Now she's got millions and millions. So how is that? Lobbyists? Yeah. Why is that? Are they being bribed?

Yeah. Yes, essentially. Right. It's lobbyists. Janet Yellen was making, I think, $650,000 per speech. She's not that good of a speaker. I can't imagine what insights she's sharing for that kind of money. And when somebody needs a favor, she's going to remember those fantastic afternoons talking at, what would that be? $10,000 a minute. Oh, my God. I wasn't aware of that, that they were getting so much money for public speaking. Yeah. For public speaking, quote unquote, Hillary Clinton got massive. I think she actually was paid more than Janet Yellen. And again, she's a good speaker. She's not that good. Something else is going on there. Yes. Of course, I'm sure. And I think we've also, this is fascinating what you said before about applying psychology to in the end to economics, but governments doing that to benefit themselves. We've seen it in the last three years with COVID. I think one of the first posts that I've written on my Facebook that became viral was trying to understand to sorry, trying to explain to people the marketing campaign that is being run on them with bribing them to take something in order to go get vaccinated or, you know, to threaten them that if they don't do something, they will get punishment. like using very simple marketing tools in order to manipulate their behavior and it caught because people got it they got that there is some kind of you know mechanism or tactic here that is being operated on them but they at first they couldn't believe that the government will do that to them

but then but then you realize how much money is flowing behind the scenes through pharma absolutely Especially here in Israel with all these agreements. I think our prime minister was the one that purchased those injections from Pfizer for a crazy amount of money, a lot more than any other country because he wanted to be the first. Right. And so that was a driver of economy. And so to me, when you talk about economy in that way, I constantly think about marketing and how they apply those principles to try and manipulate people's behavior. I don't want people to take me the wrong way and think that I think that marketing is only manipulating people. Of course not. There is good marketing as well. But in this case, it's being used in a way against us. Yeah, there's what I like to call sustainable marketing, not in the stupid environmental sense, but in the sense that for marketing to be sustainable, right, in order to build a long-term relationship with the customer, the customer actually has to feel like they're benefiting from the relationship. And any marketer who rips off their customers, okay, you are going to, in marketing, you call it churn, okay? You're going to churn through your customers.

You're going to constantly be looking for new people because you ripped off the old ones. That is not how to make money in marketing. That is not how you become a billionaire. You do that by actually giving the customers what they want. And that's fascinating because then we can bring that back to what government's done. So government is constantly lying to us. It is marketing, I think, in a deceptive way. It is not sustainable marketing. And they pushed it so hard during COVID, not only for the shots themselves. When you look at the crony relationships, for example, with uh people on the fda board okay where they're actually being compensated by the companies uh you've got that type of crony beyond that they they moved heaven and earth on the economy during

covid fundamentally they wanted to bribe the public into accepting lockdowns right certainly in america we have really not since the 1600s have we had a situation where it was illegal to hold religious meetings. Okay. You could not hold mass. You cannot, you know, assemble in groups allegedly because of COVID. And, you know, of course, weeks later they decided that you could riot. That's no problem. Yeah. For Black Lives Matter, that's fine. Exactly. And so that was something that normally, you know, if you would ask me in 2019, do you think the American public will be okay with banning church service? I would have said, you're absolutely insane. They would never accept that. Why did they accept that? Because millions of people were being paid more

money to sit on the couch than to go to work. Okay. The whole lockdown thing, right? When they came in with that, they said, so here's the deal. All you have to do is stay home, binge watch Netflix with a couple of pints of Haagen-Dazs. All right. And we're going to pay you more than you used to make. A lot of people saw that as a good deal. I don't blame them. That is a heck of a deal. But of course, what that's given us now is we have just this cascade that's probably going to last at least a decade. We've got this cascade of economic effects. We've got the inflation that came out of that. In the US, we've got about 5 million people who pulled out of the workforce, either they retired early or they went on government benefits for a while. There were

essentially no questions asked during COVID if you wanted to go on government benefits. Once people go on benefits. They tend to stay on them. I suspect this is also true in Israel. I know there's a fairly well-developed welfare state there. It's going to be true across the world. So you've got, you know, you had labor shortages that then whipsawed salaries. You've got the inflation. There was a point in the U.S. where about one out of three dollars had fresh ink on it. It had just been printed up during the lockdowns. And they use that to finance the lockdowns to pay all those people in the u.s we had ppp loans that handed uh you know all this money to businesses a lot of that a huge amount of that was fraudulent but the point is that that

was buying votes to convince people to accept these totalitarian lockdowns and you know now we're dealing with the after effects where you know it's like you're in the bathtub you know when you're a kid and you know you you you swing from one side to the other and before you know it the water's all uh you know pulling out of the bathtub that is where we are economically it's just they they push the pendulum so far over that i mean really none of us know what's coming next these are such huge changes and at the same time they also killed a lot of the small medium businesses for sure absolutely right and that's yeah is that part of the inflation is that part of like, how do we, not the inflation, but how do we get, how do we make our situation better

without stopping to spend government money? We will kill off the private, some of the private sector, right? Yeah, that's really, right. And, you know, that's, that's really, that's what the Fed is openly trying to do at this point. So, you know, most meetings, Jerome Powell comes out and, you know, complains about how there's too many jobs and, you know, he needs more job losses, which implies bankruptcies, which implies destroyed lives. But really, you know, essentially what's happening in the U.S. right now, I suspect is true in many countries in the world, is that they printed up all this money. It caused the inflation. What's happening right now is that governments are still printing out these massive budget deficits. Essentially, there's a pattern

where once the government, if the government grows, let's say because of a war or because of COVID, it typically doesn't shrink back to the original size, right? It might at best give about half of it back as sort of a historical pattern. So there's this ratchet effect where the government gets bigger and bigger. And so what's happened after COVID now is that the pandemic is long gone, but we've still got the spending, right? So in the US, for example, they're looking at what I think one and a half to two trillion dollar deficits essentially forever. Those were unheard of before COVID. And so that is creating ongoing inflation because you get all this new money that's being pumped into the market. And what they could do if they wanted to stop inflation would be to

sit down with the government and say, look, you guys have a problem. You have an addiction. You need to quit with the spending. Pull that in. Of course, that's an uncomfortable conversation because national legislators control the central banks. So the central bank would be criticizing their boss. And central banks don't want to lose their independence. They want to be able to control the money supply. They don't want the people through their legislators to control that. So they don't want to have that uncomfortable conversation.

So instead, they go to plan B, which is crush the private sector. And that's exactly what's happening now, where governments all over the world have increased interest rates. that raises borrowing costs and it tends to crush private businesses. It also crushes households. They lose their job. Meanwhile, they can't borrow because rates are so high. Credit standards tighten. And so that's really what he's doing is sacrificing regular people. Sort of think of it as Joe Biden needs his ice cream and they are clearing the highway of all of the private cars so that the government can spend as much as possible. So the idea is that if we the people

spend less right then that that takes pressure off of inflation uh and then the government can spend everything that its dark little heart desires and sort of soak up the inflation instead okay people normally think that inflation is just prices going up but they don't get that it's the government printing more money or creating more money and that you said something really nice the other day when i listened to you inflation is money chasing goods that's exactly right so you can sort of think of it as if there's a whole bunch of money for sale and there's a whole bunch of goods for sale and that's very counterintuitive for most people because people don't think that money is for sale and you know but think of it like you're a business right so

if you go to the grocery store right before they close for the day you can't offer them a dollar for everything in the store. Why? Because they're speculating that they'll be able to open tomorrow and that they'll be able to sell all those cans of soup tomorrow. Okay. Yeah. So only a certain amount of things are functionally for sale. There's a lot of stuff that's, it's effectively in inventory. Okay. They're willing to sell it at a certain price, but not at any price whatsoever. All right. And similarly, most money is actually saved up. Okay. It's not being offered. Sorry, just going to move you over here. It's not being offered at any given moment for goods, okay? It's in a savings account or it's in a retirement account or something like that. So there's only

a certain amount of money that people are sort of psychologically willing to spend that month, okay? Most of the rest of the money is effectively in the inventory. So you've got stores that have a bunch of stuff to sell. You have regular people who have a bunch of money. They have a bunch of budget. So they've got a bunch of money that they're ready to sell. And you can basically just divide one by the other, and that gives you what the inflation is in any given moment. Now, what that means is that the main thing that government can do to influence that number historically is that government prints a bunch more money, right? So if we take COVID, for example, what the Fed was doing effectively was allowing these huge government deficits because the Fed

would stand ready to go in and buy them. In fact, they did buy a lot of them. They bought government bonds, which is effectively printing money and handing it to the government in exchange for an ILU. And then the government flooded all that money out. It gave it out in stimulus checks or in government spending. So what that meant is that if you take those two piles, you got the goods for sale and the money for sale. All of a sudden, you had this huge increase in the money for sale. People had a bunch of money. And so that money was effectively chasing the remaining goods. Now, during covid, you actually it was even worse because the stuff for sale actually went down as well. Right. You had supply chains were jammed. You know, there are a variety of reasons.

You had warehouses that were closed because they couldn't find enough workers. Small businesses were closing. That's exactly right. And so the effect was compounded. So you had less stuff than normal. You had more money than normal. and so therefore you got higher prices the thing about inflation itself like when you kind of zoom out so for hundreds and hundreds of years everybody had understood the word inflation to mean increase in the amount of money in existence and the fed actually did a paper on this because it's not a conspiracy theory the fed itself has a paper where they talk about the evolution of the meaning of inflation that it used to mean printing more money if you inflate the money supply then

you would print more money and everybody knew that if you print more money you know that's too much money chasing too few goods and so you'll get higher prices and what happened i mean partly the fed was was was part of the game uh but they wanted to sort of hide why the prices are rising You know, they wanted to talk about Mr. Putin's war or, you know, the Arab oil embargo or just, you know, whatever they can find in the newspaper, they want to try to find as many scapegoats as possible. And so the way they've really successfully done that is to confuse people into thinking that the word inflation means price rises when actually inflation means a rise in the amount of money and a rise in the amount of money always historically leads to a rise in prices. If we look at Weimar, Germany, for example, you know, that was not supply chains and, you know, you don't get a trillion percent inflation from, you know, these sort of headline grabbing things. It's very easy to see why Weimar had hyperinflation because they were printing so much money. And this is the case all the time.

We normally can't see it because the relationship is not one to one. right so if they print up a bunch of money uh in 2008 for example they printed money and they gave the banks and so the banks kept it okay so it was not chasing goods right it was not uh money for sale it was savings all right so in that case it didn't uh increase inflation even though a lot of people thought it it was going to at the time um so there's usually a transmission it can take three or six or 12 months for the inflation actually translate into rising prices. But that confusion is very important because I think out of the topics in economics, one of the most understood, like one of the hardest for people to grasp is money, inflation, how prices rise. And I do think

a big part of that is that they have intentionally sort of muddied the waters and made it unclear to people. They try to hide exactly what's happening. And in fact, I mean, you've got the Federal Reserve. They put out comic books aimed at children to try to explain how the economy works and how inflation works. And that's exactly the garbage they put out. They do not mention how much money was created. They do not mention fractional reserve, which is where banks pyramid on top of the money so they can relend your money out essentially over and over. They don't mention any of that the actual causes of a rising money supply inflation which then leads to prices okay they don't want to talk about any of that instead they play this game where it's all headline stuff

it's you know you had the oil and you had the war whatever else they can find in the headlines to try to justify why the prices are going up and then of course the federal reserve you know function fundamentally they're the ones driving the inflation they are the only ones who are driving the inflation because they're the only ones who are allowed to print money either directly or by effectively licensing commercial banks through the bailout function but fundamentally the federal reserve is the only one who can create inflation is what milton friedman you know he said inflation is always and everywhere uh a monetary phenomenon uh but they want you know if people accept this sort of headline driven you know you got the boat stuck in the suez and whatnot

If people accept that, then the Fed can actually portray itself as a firefighter when it is the arsonist, right? So the Fed creates the inflation, and then it has this whole narrative where, you know, if you look up in the newspaper, most mentions of the Fed are going to be talking about the Fed fighting inflation. This is the arsonist posing as a fight. They are the only cause of inflation. Yes.

Why do they fight inflation? Well, because my favorite metaphor is a gasoline thief. OK, so if you steal gasoline from your neighbors, the trick there is you just take a little bit every day. OK, you take like, you know, maybe one or two liters a day. You don't empty their tanks, for God's sakes. That's going to be the end of the game. They're going to notice that. And so the trick is you just take a little bit at a time. So when the Fed is fighting inflation, the inflation they caused, what they're saying is, oops, we created too much. we either printed too much money or we allowed banks commercial banks to print too much money either way this is embarrassing the voters are angry because prices are going up five or ten percent if the voters get angry congress gets angry if congress gets angry then the whole hustle

is gone is is is over you know we're going to lose our power to inflate so yes most of the time when you read about the fed they're trying to fight the inflation they caused because it got away from them and it is so convenient that people think that they're the savior when really they're the cause of this this is true for all of government i mean the wars are started by government people don't start wars okay governments are the only ones who can start wars and always the government's coming and they say we are here to protect you you say protect us from what they say from wars who's starting the war like every single problem the poverty the you know generations of people who um you know they go to public schools that are uh they come out unable to read or they're lifelong

criminals you know you have social disorder you have all of these uh social problems that are fundamentally caused by governments and then what's amazing is governments get up there with a straight face with their nice expensive suits that their lobbyists bought for them and they portray themselves as the savior of all the problems they're causing wow and uh if i relate that also to um you know we're talking about wars this is naturally something i wanted to talk to you about because economies seem to be driven by wars conflicts and and emergencies and uh you wrote an excellent article called the Fed as VC of venture capital of the crisis industrial complex. And you wrote about the crisis, the, the crises that, you know, are brought to us

by the Fed or the central bank, right? How they can be a driver to all those different crises in order to cover up on things. And you also, you quoted something really interesting there that i saw chaos is not a pit chaos is a ladder right right yeah yeah that's a classic quote from game of thrones yeah yes yes and you know and i'm looking at what's happening here right now with this war in israel hamas and and i see the chaos i feel it and to me i i definitely feel that a lot of this is intentional a lot of this is being is being allowed to happen and there are more obviously it's a bigger conflict than just israel and palestine this is way way bigger we see the involvement of the u.s and russia and china behind the scenes iran saudi arabia etc so

you know how how are they using this chaos as a ladder how are those crises moving or shaping economies? Yeah, I think it's a huge concern. Traditionally, we all sort of imagine that the job of government is to prevent crises. And certainly speaking from the perspective of the U.S., it looks a lot like the U.S. is trying to foment as many wars as possible. We have soldiers, I mean, I don't know, it's something like over 100 countries that we have active duty soldiers in. it starts to look a lot like like venture capital investments you know where you put a little hundred thousand dollars here a couple million there and you hope that one of them grows into a nice big war uh so that you know you can make a lot of money for lockheed martin and boeing

uh it's horrific and you know i think if the u.s were not involved then there are a lot of conflicts in the world to keep it relatively unemotional i'd stick with russian ukraine um there's a negotiation to be had there um you know the the the people in the eastern ukraine uh are largely russian speaking they were not thrilled being part of ukraine in a sane world they they would have had some kind of autonomy autonomy or perhaps independence uh just like the united states got independence from a country that it was not happy with uh that would have been negotiated if the U.S. and Europe, as sort of a U.S. crony, did not stand ready to invest in that war. I think there are a lot of conflicts in the world where it pays both sides to keep the war

running. And there are often very easy solutions to these wars. But I don't think they get a hearing because Washington is so ready to invest in these conflicts. And why is it so ready to invest, I think it's fundamentally the lobbyists. And sort of, I think the bigger picture here is going back to that idea that governments exist to neutralize crises. And I think what we've seen over certainly the past couple of decades is that it's starting to look like governments actually sort of like these crises. In fact, they might take things that are not crises, they might elevate them. So they might take, say, a respiratory infection and elevate that into a pretend world-ending pandemic. They might take global warming, which may or may not be occurring,

but it's certainly not catastrophic. CO2 is wonderful for plants. There's not enough CO2 in the world for plants. If we look at parts of the world that are warmer, they typically have more people living them. They have much more farm production. Siberia is not great for farming nobody lives there uh you could argue that the world should be warmer but at any rate this is certainly not a world-ending catastrophe earth earth's temperature has fluctuated a lot um indeed people live in you know what is the temperature in malaysia or singapore uh many many people live there happily and that temperature is you know i don't know 20 degrees higher than it is in canada apparently we can live in a variety of environments so i think

the concern here is that governments, for whatever reason, they have, well, they have noticed that every crisis grows their power, grows their budget, grows their personal fortunes. You know, they can make money off the crony relationships. And so in a way, governments are actually enthusiastic about crises, like they want crises. It certainly felt like that in Ukraine, where, you know, United States policy, even in the face of potential nuclear war, the U.S. seemed to sort of enjoy pushing the limits. You know, let's give them F-16s, let's give them ballistic missiles. Like, why are you playing with fire? Like, isn't your job to minimize crises, not actually to invent new crises? And I think really what's driving that is central banks. You know, so

central banks can effectively finance that early stage of the crisis. If you take the Afghan conflict for example right so clearly the u.s had to punish the perpetrators of 9-11 just as i think israel does uh at the moment um but in the u.s case that then turned into a 20-year occupation the u.s has very little um national interests in afghanistan there's no reason to occupy afghanistan uh but it paid enormously well and moreover what happened was that to the u to the american people the cost was hidden okay because the afghan conflict could be funded by deficit spending for the american people the ultimately two trillion dollars and many american lives that were lost in afghanistan those appeared to be costless because they were deficit funded

why could they be deficit funded because the central bank stood ready to take care of all those things so i think that that's a real risk it's a you know major reason to get rid of central banks is that they hide the costs of new crises so that voters can either be neutral about new crises they can be okay with them or maybe sometimes uh they get excited about them you know yeah let's go blow up crap um because they can't see the costs right the costs are hidden if you sort of imagine a world without central bankers then in the u.s context uh they would actually have to sit down with families and they have to say okay i'm going to take you know a $1,000 from every household for Ukraine, and you're going to have to pay that next month.

And there will be a lot of Americans who would say, why do I care about Ukraine, right? They would have a very different attitude if it weren't funded by deficits that are ultimately financed by central banks. So, Peter, then it really helps that the fiat system is so complicated to understand because then people cannot resist or they cannot really fully comprehend how the system works and how it's taking money from them right in the end of the day because it's so like there are so many layers there are so many levels that go through from the the moment that they say okay we're going to support this country for a war until it really hits your pocket you sitting at home that's what

ends up happening and of course by the time it hits your pocket well we're already five years in you've got you know you've got so many um dead people um you know who at that point the voters are not going to say well okay forget about it let's just go home okay you they can sort of float the war until voters are committed okay like at this point you know you will have had so many outrages committed against your own soldiers or perhaps your own civilians, that voters are sort of locked in. They understandably have to stick with the war. And so it hides the costs long enough for voters to become committed. Okay. And if I take you from here to some of the sound alternatives of money, I mean, we're not going to get to how fiat works,

But I do encourage people to go and check. If they don't get how the system works today, they should definitely research it. But then let's talk about gold and Bitcoin a little bit as alternatives to the monetary system that we know. and and i would say that most people use the current monetary system because they just simply see other people around them using it they really don't understand and they trust that if everyone's using it then it's fine and since not very many people use gold and bitcoin they're very hesitant about it and then they have all these concerns yeah i think that's absolutely right um most people uh they don't know much about the monetary system they don't care about it very much um it works they see other people using it you know when we lived in a gold standard up until nixon broke it well really fdr broke it and then nixon finished it off uh in that gold standard era

people would have looked at you like you were insane if you suggested our current system which is that the government can print or the central bank at the behest of the government can print unlimited amounts of tokens, uh, called dollars. And then those tokens, it's like water poured into wine. They will then dilute your dollars. All right. So they can functionally steal your money that way. Uh, if you would suggest to that, to people in the gold standard era, they would have thought you're absolutely insane. Uh, but yet that is the system that we have today. And then of course, today, if you go to people and you say, okay, we're going to have a gold standard, then they, they assume you're crazy as well. Um, you know, most people, they don't

understand how money works they don't want to understand they just want it to work and then of course every so often they screw it up so badly that you get 10 inflation or you know you get um a lot of the inflation that goes into housing uh or other asset prices and then people say why our house is so expensive and then you have to kind of sit down with them and explain how fiat money works and why exactly the central bank is doing this to you or why they have the ability uh to do this to you and if you can explain that then yes they can come around to gold if they can actually understand that you know these these kinds of things did not happen under gold standard uh in the u.s uh up until the federal reserve so if you take the it was 150 years between

independence and the federal reserve we had no inflation we had zero aggregate inflation yeah there were periods where prices might go up and then there were other periods where they went down and it evened out to, I think it was like 0.02% aggregate over like per year. I mean, it was essentially zero inflation over 150 years. And this is actually kind of amazing from an economic historian perspective. Effectively, what was happening was that as the economy grew, okay, that meant more stuff was for sale. Okay. Normally that would have made the dollar stronger, but then what was happening was people were discovering new gold deposits. they were mining more gold so that meant that you had more money for sale now okay remember those

two piles the stuff for sale the money for sale so there was more gold because of you know gold discoveries um but then there was also more stuff because the economy was growing what's kind of amazing to me is that over 150 years those were just imperfect uh you know they were perfectly proportional which to me is kind of stunning it's it's it's almost like the hand of god like why why is gold able to perfectly match the broader economy i mean keep in mind like you know you have economic historians who go back and try to estimate what the economy was doing in like 1860 and they can't figure it out okay but yet gold knows okay gold it can just perfectly match exactly what the economy is doing um which is pretty impressive now of course now we have

something new uh was bitcoin and i think that the situation with bitcoin is very similar to gold so like if you take somebody who is living in the fiat system or even somebody who understands what a gold standard looks like and you tell them okay i'm going to base it on uh ones and zeros that have no physical instantiation they are going to look at you like you are insane especially boomers and gen x that's what i get for sure and i think the key there is you know first off um first off i think to understand what bitcoin is that it is very very secure um i think when you hear about quote-unquote bitcoin hacks those are not bitcoin hacks those are hacks of websites of companies that are buying or selling bitcoin okay known as exchanges that would be like um if amazon.com

gets hacked that is not the dollar getting hacked that is not the u.s dollar uh and so it's similar with bitcoin and in terms of what to me anyway is interesting about bitcoin is that in many ways it is a superior version of gold uh and the the key benefits it has is um first of all the inflation rate is fixed okay gold gold did magically manage to grow in line with the economy but what would be even nicer is having a money that has zero water being poured into the wine okay and and that is ultimately bitcoin it's not yet it has an inflation rate that goes down little by little uh every four years currently bitcoin is just about matching gold in the inflation rate and i'm using the old school definition of inflation meaning how much new money is printed every year

so gold is printed new gold is discovered at about one and a half percent a year bitcoin is also i believe around that rate that's about to drop uh in i think next yeah in next year next year and at that point bitcoin will grow about half as fast as gold uh so that's one benefit but i think really the most important so in other words bitcoin is harder than gold fundamentally i think the other really important aspect of bitcoin is that it is unseizable okay government cannot seize bitcoin and this goes back to unless they catch you and torture you they could catch you and torture you and yes they could seize your um specific hunk of bitcoin if you look back sort of historically you know so if you are a gold bug and you're talking to somebody who's a fan of the fiat

money system yeah a common response might be they'll say okay there are 200 countries in the world none of those countries use gold so if gold is so amazing why doesn't anybody use it and i think the answer to that question is because governments are very very good at violence it's their specialty it's the only thing they're good at and well actually not particularly good at it but anyway it's the only thing they do and what happens in a gold system is that you can't put out a gold certificate and say, okay, this is backed by gold, which I've hidden in a secret location. Okay. Can't do it. Nobody's going to accept your piece of paper, right? You actually have to show people the goal, which means it has to be guarded somewhere, generally centralized

in like a fort that has, you know, men surrounding it and sharks with lasers on their head. And so that kind of infrastructure is going to be very, very easy for a government to find. I mean, you have to publicize it. You say, here is the gold. Here's the camera of the vault to show you the gold. And the government, it's going to be easy to come visit you. And then the government is going to have a sit down, and they're going to tell you what they need you to do with that gold.

And that has happened across history. Really fundamentally, at any rate, it happened in the U.S. It's happened many, many times through history. It happened in 74? That's what happened with FDR in 1932, I want to say. yep uh 71 was where nixon so fdr seized the gold uh he made it illegal to own gold there were a lot of people who kept their gold but they couldn't transact it because uh you would get arrested for that i mean you would be showing the government that you actually have the gold uh so anyway they

seized it and a lot of that went into fort knox so fort knox which americans are very proud of as the gold store that is stolen goods that should be returned to the victims um but at any rate then the US continued what's called the gold window, where other countries were allowed to trade their dollars for gold. They continued that system for about 40 years. And the reason they did that was that they wanted other countries to stay dependent on the US dollar. It's a big reason why the US dollar became the reserve currency in the world. But at any rate, that continued until 1971 when Nixon closed the gold window. He actually said it was temporary. So I'm going to take government at their word and i'm i'm i'm waiting any moment now yeah that was 50 50 years later we're still

waiting on that but but any day now i'm sure they're going to reopen the gold window and like the two weeks of covid to flatten the curve same thing that's exactly right yes nixon said two weeks to close the gold window amazing okay got it good um some people tell me satoshi might be a cia figure i told him who cares who he is like i mean his identity i mean it worked the the currency works so yeah well that's that that's the beauty of it is that you want a tech where you don't care who invented it like he could be the most evil person on earth uh it does not matter um you know it's a bit like the internet like none of us actually care who invented the internet because it doesn't matter you know there's um i mean the internet is kind of a mixed

bag i think a lot of the people who did invent it were generally libertarians they were very pro freedom and they thought that the internet was going to lead to a democratization of communication and information which it did but of course in the case of the internet you had this unintended consequence where governments also are now using it as a panopticon as a totalitarian instrument to surveil and control people uh so apparently that's a battle that you know i think is probably going to be permanent we're gonna have to keep fighting them off we just had nikki haley in our government attack uh i saw her today yeah love it she's something special a reminder at least for americans that it doesn't matter which party uh they're normalizing all of them censorship yeah

yep absolutely and we now have in israel rules new rules and regulations uh thanks to the war that they're legally can censor us. So, you know, it's happening everywhere. Yeah, and governments love it. You know, historically, governments have used war to restrict rights. In the U.S., you know, we had a very strong free speech culture.

The first break in that was really World War I, so they're arresting people who opposed the war. uh the people who and then fdr did it again um and you know the people who did these things were not punished and so government will keep doing them even in the u.s which i think has arguably the uh strongest legal protections for free speech but even here i mean the past couple of years we've seen it uh tucker carlson was being attacked as a uh putin stooge and you know There were politicians suggesting that he should be censored. War is the health of the state.

It gives them budget. It gives them money. It gives them control. And, you know, all governments very much want to silence the people so that only they can talk. Unbelievable. Do I have a few more minutes with you since we have this? Yeah, just a few more minutes.

Okay, so I'm going to ask you about your vision or prediction for universal basic income together with AI and then leading us down the path of CBDC for an even greater total control. How do you see that panning out? Yeah, UBI, I think they're absolutely going to push. They already had a test run during COVID. So there were a lot of countries, Canada, for example, that pushed out pretty much an explicit UBI. In the U.S., you know, there have been a lot of sort of tests where they've tried to push out a UBI. What they're hoping to do is to generate data where they can try to convince people that a UBI is positive. Of course, a UBI is very destructive.

So the idea is that you just pay people money to not work at all. That is, you know, that's the Roman bread in the bread and circuses formula. And of course, when you start doing that, you have to ask at that point, well, you know, somebody has to feed these people. So who exactly is doing that? And, you know, government has no assets of its own. Everything government has is stolen. So if government is going to be giving some people food without working, then it means it's going to be taking that for other people. So you get this progression where you have a smaller and smaller percent of the population who's working, and those people have to support a larger and larger class of dependents.

We already have a lot of dependents in the U.S., but that would certainly increase. And a second problem, which I didn't actually realize, I was living in Canada during the pandemic, and it didn't occur to me until I saw it in Living Color, that in Canada, one of the first things they shut down was blue-collar work. Okay, so construction workers, truck drivers, person to person contact, blue collar type jobs, those were effectively banned. White collar workers still kept a hangout and, you know, type away on their computers. And I was surprised at the time, like, why didn't the left get upset about this, about all these jobs being destroyed, because this was their constituency. These are the first rungs on the economic ladder for young people or for people who don't have very good skills. And there was no protest whatsoever. The left was just like, yep, yep, that's good. Get rid of all the waitresses, the truck drivers, construction workers. And I think the reason was because they had that UBI in place.

So in other words, those kind of lower skilled jobs, they're usually not very appealing. they're not very impressive okay they don't pay that well some of those jobs are dirty you know you're you're cleaning people's houses or something and so like they they sort of don't have a built-in constituency and so once you have a UBI I think that support for those jobs just melts and the problem is that those jobs are the first rung on the ladder yeah like that's that's where people start to build skills they learn how to come to work on time you know they they just learned like human 101, you know, how do you interact with a customer? Um, and so if you knock those rungs out, then I think you get what we're starting to see really a lot of the world

now where you get these young people who are in their twenties and when they look at a decent job, they, they can't see a path to get from here to there. Yes. It feels like jumping across a canyon, like, you know, a 30 meter and you know, the older people say, well, you know, you just got to jump harder and they can't see the path and the reason is because those rungs are being knocked out so i think that ubi is is catastrophic but i think it's also guaranteed it's incoming because it's a huge vote winner we also saw that from covid and with cbdc it's going to be even easier for them to bring it on i absolutely their pilot now in thailand is for the poorer people they want to lure them in through giving them free money

so that's what they'll that's exactly what they'll try to do um just like with covid how they bribed people by you know paying a certain percent of the population to sit on the couch exactly the same game they will take the bottom 20 30 percent those are relatively cheap votes to buy so they will combine a cbdc with a ubi they'll say we need the cbdc in order to automate the ubi so that the payments can be automatic you can probably get 20 of the population to jump on board just out of the your money. You combine that with the 40% of the population who are totalitarians to begin with, and you get a winning coalition. I really hope they're not going to expedite their CBDC launch here in Israel, which I know they're working on very, very diligently because of the

war, because they are making sounds of it. A lot of people are being evacuated from their homes. Their businesses are being closed down. They have to live in a temporary hotel or whatever and so this is the classic time for them to start bringing people on board those platforms so this is always the concern you know i used to teach um uh in in one of the in one of my classes on business strategy um i would teach about regulations and there was just one of my favorite charts was that you can map out the regulations year by year okay and this is back right after the 2008 crisis and you can see regulations in environment labor safety whatever there's all these regulations governments do and you had this nice chart where it kind of bumps

along smoothly and then you have the 2008 crisis and every single regulation exploded okay not only financial regulation which you would expect it was a 2008 financial crisis but actually environmental regulation every single regulation soared all right that's a very important point when government has the crisis they want they will grow everything right so i mean absolutely i'm i'm not surprised that the israeli government is pushing cbdc's they are going to push all of it they're going to push the green stuff uh you know i'm assuming that schools are an issue that you know they'll they'll be pushing to shut uh parents out of school decisions across the board stuff that has absolutely nothing to do with the war they will take the opportunity to push them

unbelievable okay and my my last question and maybe the most important one i hear a lot of people like you and financial experts that i follow talking about the end of a cycle that we're in now a monetary cycle you talked about it a little bit at the bitcoin amsterdam conference that we were both in and um and and the upcoming financial collapse that everyone's talking about you know we we're seeing a lot of different dots in this game of the u.s hegemony destabilization the bricks gaining more power banks are starting to collapse uh the feds bringing printing more money and there are many indications for a collapse coming so i'm curious about your outlook on these changes in in the u.s hegemony and the u.s dollar domination like how do

you see this playing out and i know this is very dynamic because everything can change especially in light of the that war which is obviously related to everyone um but i'm sure you have some insights about it yeah i think if we go back through history uh we know how the book ends we don't know how every chapter ends uh we are in in many ways we've been down this road a hundred times before uh fiat has fiat meaning unlimited printing of money that has been tried many times through history uh starting with the song dynasty china in what about 950 or 1050 ad and every time it leads to the same thing which is hyperinflation and by the way global war okay every single time you have hyperinflation it does lead to war um the government tries to

distract people perhaps it tries to export the young men uh they're less trouble overseas than they might be at home uh it's always the same combination every single time i've actually written on this on song dynasty china they went to war with everybody and by the way they lost those wars over and over ultimately they got caught they got conquered by the mongols and then the mongols put the chinese uh government in chains at the time china was almost half of world gdp it quite dominant and that's what they used as the war elephant to take over the world it was not because the mongols were amazing fighters it was because china printed fiat money collapsed its economy couldn't pay the soldiers the soldiers defected same pattern every single time the and

you know if we look at where we are today we've actually never been where we are today which is that every country in the world is on fiat money that has never occurred before uh it's a very risky experiment they're running. We are seeing it play out here where, you know, sort of the first control on that that kind of keeps it from collapsing is don't print too much money, right? And we're starting to break that now. They broke it first in the 1970s, right? That was then corrected, Paul Volcker. When I speak of the U.S., really the entire world's monetary system is still dependent on the U.S. So Paul Volcker effectively controls hyperinflation for the entire earth, whether that's a good or bad thing, that is the world we live in. They fixed it in the

1970s. And then now it's gotten away from them again, where they printed too much money. Now inflation is starting to take off. And the question I think this time around is, do they have the ability to control themselves like they did in the 1970s? And that's really going to be the open question here. So in the US, for example, we almost had a failed treasury auction last week. Those are the kinds of warning signs that they should be waking up. They should be cutting back the government spending, trying to reduce the amount of debt that's coming out. But of course, you've seen nothing approaching that. We just had Janet Yellen, Joe Biden talking about how we can pay for all the wars. Give me more. I want more. This isn't even a challenge, people.

So I think that there is no control on it. I think that they're going to keep going as fast as they can, as fast as the voters will accept, meaning as much debt as possible, as much inflation as possible. We've already got a lot of economists like Paul Krugman who are trying to sell 3% inflation. They're saying, you know, there's no real logical reason why your money erodes at 2% a year. Let's make it erode at 3%. you know, they've got this entire paid army of economists who basically propagandize for inflation. So the question is, they're going to mobilize all of that. They're going to try to keep pushing, keep getting closer and closer as they can to that hyperinflation. And, you know,

we don't know if that's going to take five years, 10 years, 20 years. I think it is interesting if we're talking about what comes next, where, you know, historically, when you do get to that inflationary crash the world always goes back to hard money uh and historically that's generally been gold or silver which operate pretty much the same way uh what for me is interesting is that depending when the collapse comes are we going you know if it's 20 years down the road i think there's a good chance that we actually skip gold this time uh and go directly to bitcoin which for me would be pretty interesting because if we go to bitcoin that actually ends the cycle right The problem with gold, as much as I love gold, the problem with gold is that physical vulnerability.

The same thing that gives gold its value, the fact that you can drop it on your foot, that is also what makes it vulnerable to governments. And that's why we have these cycles each time. Government screws it up. People go back to hard money. Government drives like the policemen in the rearview mirror. They drive safe for a couple of years, and then they do the same thing again. They seize the gold, and then it's off to the races. So what for me is exciting about Bitcoin is that it holds the prospect that because it cannot be seized by government, the next crash could be, or the next cycle, the next monetary crisis cycle could be the last one.

Amen to that. I really hope so. And on that note, if you don't have Bitcoin, go get some. Get some Bitcoin. It might just catch on. Yes. Exactly. Wow. So after being in Amsterdam in this conference, you know, it really opened my eyes. I'm a Bitcoiner already for like a couple of years, but that conference really gave me some hope for humanity because I really feel like we're down that vicious spiral and it's got to stop somewhere. Are we going to start another cycle of 80 years? You know what I mean? I don't want to be dead. Not for me, for my son. I don't want that. Yes, absolutely. And I am optimistic for the record. All of the elite is arrayed against us. It's almost hilarious what we're up against. I mean, we are outnumbered like 10 to 1, 100 to 1. it it's even you know uh where i work at heritage where we're you know relatively well funded and well resourced and even then we are so outmatched it is absolutely hilarious um all you can do is laugh but the thing is the thing that gives me optimism is the people are absolutely with us

once you open their eyes once they can actually see what's going on because the elite narrative does not make sense it is internally inconsistent it's it's gobbledygook it's garbage once you actually if you have a chance to sit down and talk with people they flip and once they flip they stayed flip you open their eyes you you red pill them and then you orange pill them that's bingo nicely put that's exactly how i was gonna put it right so um i am actually very optimistic you see you know trust collapsing in news media in hollywood uh in the education system the u.s which is government propaganda it is very exciting to me absolutely so i i am very optimistic it is going to be an unpleasant 10 years i agree but i am very excited for what

comes next me too wow thank you so much for that and thank you for a wonderful conversation and please, please keep going with your content. You are just amazing. And, uh, yes, yes, please do. I'm going to put a link in the notes so that everyone can follow you. And, you know, just, just thank you. Huge. Thank you. Yeah. I was going to say it is an absolute honor to do it. I've been so thrilled how many people want to understand these topics. And I mean, just people, there are there are millions and millions of people whose eyes are open and it's it's just a thrill of a ride and i would just add that your reach on twitter and in some of the other platforms is amazing yes thank you elon if he is listening i appreciate everything you've done for

free speech uh our american politicians have done crap it's close to it it's close it's close enough for me after what they tried to do to us to give us experimental medicines that kill us i i am very happy with 99 free speech i will take yes yes and you yeah you'll just keep exploding because people need to know what you're sharing with the world so thank you for that okay thank you keep please keep doing what you're doing we need we need our voice uh from tel aviv there so absolutely looking forward to your content i will thank you so much and uh on that note thank you very much for listening everyone