back to index

Robert Breedlove: Philosophy of Bitcoin from First Principles | Lex Fridman Podcast #176


small model | large model

link |
00:00:00.000
The following is a conversation with Robert Breedlove,
link |
00:00:03.080
someone who caught my attention
link |
00:00:04.920
and was recommended highly as a rigorous scholar
link |
00:00:08.040
and thinker in the space of decentralized finance
link |
00:00:10.920
and Bitcoin.
link |
00:00:12.160
His podcast titled What is Money?
link |
00:00:15.200
is a good representation of the way his mind works.
link |
00:00:18.240
He's willing to talk through ideas for many hours,
link |
00:00:21.600
willing to listen, willing to think,
link |
00:00:24.080
which makes him a great companion in conversation
link |
00:00:26.780
to explore the history, philosophy, and future of money.
link |
00:00:31.960
Quick mention of our sponsors,
link |
00:00:33.720
Fundrise, Element, MonkPak, and BetterHelp.
link |
00:00:38.200
Check them out in the description to support this podcast.
link |
00:00:41.780
As a side note, let me say that I'll have
link |
00:00:43.920
a number of conversations in the coming months
link |
00:00:46.000
on Bitcoin and other cryptocurrencies.
link |
00:00:49.320
None of these conversations are financial advice.
link |
00:00:52.280
That's not a legal warning, that's a genuine description
link |
00:00:54.800
of my goals and approach with these chats.
link |
00:00:57.500
At least for a while, I personally won't actively invest
link |
00:01:00.560
in Bitcoin or any other cryptocurrencies,
link |
00:01:03.360
except to learn about the technology itself.
link |
00:01:06.480
I don't think this should be a journalistic standard
link |
00:01:08.920
like the New York Times trying to establish,
link |
00:01:11.320
which I very much disagree with.
link |
00:01:13.120
In my humble opinion, I think journalists should be free
link |
00:01:16.660
to invest in Bitcoin if they want to.
link |
00:01:19.240
Luckily, I'm not a journalist.
link |
00:01:21.460
I just know my own psychology and I feel that my thinking
link |
00:01:24.560
will be muddled by excitement
link |
00:01:26.360
if I invest before I understand.
link |
00:01:29.000
I feel the same way about Tesla, for example.
link |
00:01:31.320
I still don't own any Tesla stock
link |
00:01:33.800
and I am still indeed fascinated by Tesla Autopilot
link |
00:01:37.340
as an artificial intelligence system.
link |
00:01:39.500
I work hard to be cognizant of the biases
link |
00:01:42.600
that arise in my mind and always try to choose the path
link |
00:01:47.280
that maximizes or maintains a freedom of thought
link |
00:01:52.040
as much as possible.
link |
00:01:53.720
Also, let me say that I try to be very careful
link |
00:01:56.200
in selecting guests based not only on the contents
link |
00:01:59.440
of their ideas, but the richness, complexity, music,
link |
00:02:03.000
style of their mind and character.
link |
00:02:05.140
Yes, I will talk with people with whom you
link |
00:02:08.020
and I may disagree, people who some may call bad
link |
00:02:12.080
or even evil human beings.
link |
00:02:14.840
I want to understand them because I believe that,
link |
00:02:18.100
as Solzhenitsyn said, the battle line between good and evil
link |
00:02:22.520
runs through the heart of every man.
link |
00:02:25.140
I think if you always run from evil,
link |
00:02:27.040
you become blind to the truth of human nature.
link |
00:02:30.440
This is the Lex Friedman Podcast
link |
00:02:32.800
and here is my conversation with Robert Breedlove.
link |
00:02:37.280
Rousseau opens his 1762 book, The Social Contract,
link |
00:02:41.480
with the following statement.
link |
00:02:43.380
"'Man is born free and everywhere he is in chains.'"
link |
00:02:47.460
So you talk about freedom and sovereignty quite a bit.
link |
00:02:50.800
What do these ideas mean to you, the idea of sovereignty?
link |
00:02:54.640
Freedom and sovereignty, I think they're very
link |
00:02:57.840
closely related.
link |
00:03:00.000
Let's start just focusing on sovereignty,
link |
00:03:01.740
which is a word I don't think we talk about enough.
link |
00:03:04.840
And the general definition of that I would give
link |
00:03:07.120
is the authority to act as you see fit.
link |
00:03:12.760
And it's a word that's etymologically associated
link |
00:03:15.840
with words like monarchy, money, reign.
link |
00:03:19.280
So historically, it's referred to whatever the locus
link |
00:03:23.520
of supreme power is in the sphere of human action.
link |
00:03:26.240
So whether, if you go like back into ancient Egypt,
link |
00:03:30.120
the Pharaoh had absolute sovereignty
link |
00:03:32.400
and everyone else was pretty much operating
link |
00:03:34.800
according to his interests.
link |
00:03:36.800
You fast forward to today, modern Western democracy,
link |
00:03:40.200
we have more decentralized sovereignty
link |
00:03:43.360
and that we all get to go vote and elect officials
link |
00:03:45.380
that make decisions on our behalf.
link |
00:03:47.700
So the theme of sovereignty across history
link |
00:03:51.000
is that it's been gradually decentralizing
link |
00:03:52.760
across our different models of socioeconomics.
link |
00:03:56.800
And it's largely, you could say it's rooted heavily
link |
00:04:01.100
in the money, I would argue,
link |
00:04:03.080
which is something we'll get a lot into here,
link |
00:04:04.700
where if you have money, you have the authority
link |
00:04:08.320
to act as you see fit in the world.
link |
00:04:11.420
And even in our current political sphere,
link |
00:04:14.160
if you have enough money, you can actually reshape the rules.
link |
00:04:17.000
You can reshape laws, you can lobby Congress.
link |
00:04:21.400
If you're in a certain situation, like many billionaires,
link |
00:04:24.640
you can negotiate your own tax treaty
link |
00:04:26.640
such that you can get favorable tax treatment
link |
00:04:28.520
with certain jurisdictions in the world.
link |
00:04:30.440
So this concept of sovereignty, which today we call,
link |
00:04:35.360
it's common to call states or nation states
link |
00:04:39.440
or government sovereign,
link |
00:04:41.080
meaning that they have power over people.
link |
00:04:44.600
But as I argue in a lot of my writing,
link |
00:04:46.040
I actually think that sovereignty
link |
00:04:48.000
and here's within the individual
link |
00:04:49.960
and that we each have our own interiorized space of choice,
link |
00:04:54.720
which is something like Victor Frankl
link |
00:04:56.120
called the final human freedom.
link |
00:04:58.080
And that we, no matter what our circumstances are,
link |
00:05:00.440
no matter what exogenous situation we face,
link |
00:05:03.340
we always have this endogenous power
link |
00:05:05.360
to choose how we respond to it.
link |
00:05:07.640
That's one of my favorite books is,
link |
00:05:09.280
A Man's Search for Meaning.
link |
00:05:11.120
Maybe we can break that apart a little bit.
link |
00:05:13.360
So you've kind of spoken about sovereignty
link |
00:05:16.880
as a closely linked to power,
link |
00:05:20.000
but is there something about your own mind
link |
00:05:22.240
being able to achieve sovereignty
link |
00:05:25.400
no matter what the monetary system is,
link |
00:05:27.260
no matter what, who has the control over centralized power,
link |
00:05:30.240
the money or whatever the mechanisms of sovereignty
link |
00:05:34.040
and the societal level?
link |
00:05:35.280
You as an individual, isn't ultimately all boiled down
link |
00:05:39.200
to what you can do with your mind, how you see the world?
link |
00:05:42.560
How you interpret it.
link |
00:05:43.600
Yeah, I agree.
link |
00:05:45.040
And as we get a little bit deeper into this,
link |
00:05:47.520
I think we'll come to see money
link |
00:05:48.680
as an extension of your mind.
link |
00:05:50.600
So there's a feedback between money and mind.
link |
00:05:52.560
For instance, you think in dollars today,
link |
00:05:54.840
almost guarantee it, most of us do here in the US.
link |
00:05:58.960
And it's a tool, right?
link |
00:06:00.200
It's a tool we're using to decomplexify the world around us,
link |
00:06:03.320
to deal with it, to understand the sacrifices and successes
link |
00:06:08.700
across an entire history of economic transactions.
link |
00:06:10.840
We can boil that all down to the price.
link |
00:06:12.400
So it's data compression.
link |
00:06:14.360
And if you can change,
link |
00:06:17.600
if there's a central body or central governance mechanism
link |
00:06:20.800
that can manipulate that money,
link |
00:06:21.880
it can have an impact on your mind.
link |
00:06:25.480
For instance, today, so I agree with you on the first hand,
link |
00:06:28.200
say that I do believe in free will.
link |
00:06:32.140
I do believe in individual autonomy,
link |
00:06:34.860
but I also think that there are certain devices and powers
link |
00:06:39.160
in the world around us
link |
00:06:40.000
that can actually influence how we think.
link |
00:06:42.120
And it's fascinating to think about the fact
link |
00:06:44.280
that money might be actually deeply integrated
link |
00:06:46.960
into the way we think and into our mind.
link |
00:06:51.320
You think about what are the core aspects of the human mind?
link |
00:06:54.120
What influences cognition,
link |
00:06:56.000
the way you reason about the world?
link |
00:06:58.320
You have the Chomsky languages at the core of everything,
link |
00:07:02.080
but you're kind of placing money as pretty close
link |
00:07:06.880
to the core of what it means
link |
00:07:08.660
to be an intelligent reasoning human.
link |
00:07:11.960
I think money is a direct derivation
link |
00:07:14.440
of action and speech, actually.
link |
00:07:16.120
It's another expression of the logos.
link |
00:07:19.160
If we even think of what it means to think
link |
00:07:23.000
is that we are generating two different courses of action,
link |
00:07:26.880
potential courses of action,
link |
00:07:28.600
and we're populating them with avatars, right?
link |
00:07:31.120
Maybe ourselves or others.
link |
00:07:32.680
And then we're comparing how we may act in each situation
link |
00:07:36.000
and what we think the result would be.
link |
00:07:37.400
So actually it's comparison.
link |
00:07:40.240
Basically it's comparison and contrasting
link |
00:07:41.880
of possible courses of action.
link |
00:07:44.260
And that's the same thing with words themselves.
link |
00:07:48.820
Most words, the vast majority of words
link |
00:07:53.180
only have meaning in relationship to other words, right?
link |
00:07:55.760
It's all contextual definitions of a word or more words.
link |
00:07:59.520
Now people have argued with me about this
link |
00:08:01.100
because there is a first word, right?
link |
00:08:02.780
Where you pick up rock and say rock.
link |
00:08:04.920
But most other words in higher abstraction
link |
00:08:08.300
tend to be relative.
link |
00:08:10.400
And what's funny about action and speech,
link |
00:08:15.440
and this gets, I got into a bit of this in our paper here,
link |
00:08:18.380
is that it's linked to evolutionary biology
link |
00:08:21.740
and that once human beings adopted upright stance,
link |
00:08:26.400
we freed our hands.
link |
00:08:27.940
We no longer needed our hands for locomotion.
link |
00:08:30.300
So we started to evolve more dexterity
link |
00:08:34.280
and notably we have opposable thumbs.
link |
00:08:35.920
So this gives us an ability to manipulate
link |
00:08:38.520
and particularize the environment
link |
00:08:39.960
in a way that most other animals cannot.
link |
00:08:42.360
And what's interesting about this is that
link |
00:08:44.120
as we gain this ability to manipulate natural resources
link |
00:08:49.020
and count, point, pointing was a big deal
link |
00:08:52.040
and that we could indicate prey
link |
00:08:54.640
or items that are far off distance
link |
00:08:56.600
and we could organize ourselves.
link |
00:09:00.560
At the same time we co evolved this fine musculature
link |
00:09:04.240
in the face and tongue.
link |
00:09:05.960
So it's as if speech developed,
link |
00:09:07.920
co evolved really with our dexterity.
link |
00:09:10.840
And as a natural extension of that came us making tools.
link |
00:09:17.120
Right, we started to create things
link |
00:09:18.400
to better satisfy our wants over time.
link |
00:09:21.280
And the most tradable tool in any society
link |
00:09:24.940
or the most tradable thing is money.
link |
00:09:26.680
So I really, I argue that action and speech
link |
00:09:31.240
are quintessential modes of self sovereign expression.
link |
00:09:35.280
And the money is just sort of a tech layer
link |
00:09:37.300
we've put right on top of that.
link |
00:09:38.920
And that it's a natural derivation of action and speech.
link |
00:09:42.300
Okay, that's fascinating to think about sovereignty
link |
00:09:44.980
from the evolutionary perspective.
link |
00:09:47.240
And then ultimately money is the technology layer
link |
00:09:50.240
that enables sovereignty.
link |
00:09:52.000
So, you know, it's really fascinating to think about
link |
00:09:57.360
our modern human society as deeply rooted
link |
00:10:01.120
in these like evolutionary roots
link |
00:10:03.280
from the very origins of life on earth.
link |
00:10:05.380
So what, you know, some of the ideas you just mentioned,
link |
00:10:09.780
what do you see are some interesting characteristics
link |
00:10:13.080
of just life on earth that propagated to us humans?
link |
00:10:18.320
Like what ideas propagated through,
link |
00:10:20.920
have roots in the evolution?
link |
00:10:23.540
Yeah, I think one of the deepest impulsions in life
link |
00:10:28.040
is the territorial imperative.
link |
00:10:29.880
So all life is seeking to expand its dominion
link |
00:10:35.260
over space and time.
link |
00:10:37.200
And we think about, you know, again, physically with space,
link |
00:10:40.940
it's advantageous to an animal or an organism
link |
00:10:43.720
to have more territory under its control
link |
00:10:45.940
to raise offspring.
link |
00:10:47.920
So it's all about reproductive fitness
link |
00:10:49.660
at the end of the day.
link |
00:10:50.880
And then we'd also think of reproduction itself
link |
00:10:53.840
as the genetic impulse to have more,
link |
00:10:57.000
to replicate oneself across time.
link |
00:10:58.880
So it's territoriality across time in a way.
link |
00:11:02.000
And this is very common in most animals.
link |
00:11:04.040
Not all animals are territorial, but many are.
link |
00:11:07.560
And you see very interesting behaviors
link |
00:11:10.000
resulting from territoriality.
link |
00:11:11.560
This is like animal combat.
link |
00:11:13.800
You know, the reason birds sing is territoriality,
link |
00:11:17.960
a number of other things.
link |
00:11:19.640
And it's my hypothesis and others have shared
link |
00:11:23.600
this hypothesis as well, that mankind is clearly,
link |
00:11:28.080
I think, would argue a territorial species
link |
00:11:30.280
and that he expresses this territoriality in property rights.
link |
00:11:35.000
So property, when we hear that word,
link |
00:11:38.200
we typically think of an asset.
link |
00:11:39.480
We think of, oh, this house or this stock or whatever.
link |
00:11:42.220
But property is actually the socially acknowledged
link |
00:11:45.080
relationship between a human and an asset,
link |
00:11:48.140
such that you have exclusive rights and responsibilities
link |
00:11:51.100
to a particular asset.
link |
00:11:53.860
It is not the asset itself.
link |
00:11:55.480
So property, it's information, it's a relationship.
link |
00:11:59.480
By the way, my mind was just blown.
link |
00:12:01.120
Property is information, it's not the actual asset.
link |
00:12:04.200
That's really important.
link |
00:12:05.580
Very important.
link |
00:12:06.560
That's really interesting.
link |
00:12:07.520
Yeah, and then it comes down to how do we organize ourselves
link |
00:12:12.520
such that property, that the contributions people are making
link |
00:12:19.400
are commensurate with the consideration they're receiving.
link |
00:12:22.160
So if you're adding value to a piece of property,
link |
00:12:24.720
you're developing a piece of land for use,
link |
00:12:27.920
in theory, to be fair, you should have the rights
link |
00:12:31.880
to that fruit if you go out and plant a garden
link |
00:12:34.100
or whatever it may be.
link |
00:12:37.480
And this is rooted in natural law,
link |
00:12:41.640
where we have rights to life, liberty, and property.
link |
00:12:44.440
Those are kind of just the base,
link |
00:12:46.000
the fundamental layer of morality and capitalism, frankly.
link |
00:12:49.920
And you could think of, to get really primordial with it,
link |
00:12:54.320
the first capitalist in the world,
link |
00:12:57.960
just to kind of get some definitions out here,
link |
00:12:59.700
I'll say capitalism versus communism or socialism
link |
00:13:03.960
as the spectrum I'll speak on.
link |
00:13:06.040
The first capitalist in the world would be the guy,
link |
00:13:09.400
the caveman, that maybe dug a little hole for himself
link |
00:13:12.380
to shield himself from the elements.
link |
00:13:14.920
Maybe there was a rainstorm or a snowstorm
link |
00:13:17.240
and he dug a little enclave and he protected himself.
link |
00:13:20.600
I thought you were gonna go, because you said primordial,
link |
00:13:22.920
I thought you were gonna go back to like
link |
00:13:24.560
earlier biological systems.
link |
00:13:27.160
I guess primordial for human, perhaps.
link |
00:13:29.240
For humans, yeah.
link |
00:13:30.600
Okay.
link |
00:13:31.440
And then the first communist or socialist
link |
00:13:34.100
would be someone that decided the fruits of his labor
link |
00:13:37.360
belonged to him.
link |
00:13:38.800
So he would have violently encroached on that individual
link |
00:13:41.280
and taken his plot for himself, for his own use.
link |
00:13:45.180
And that's the spectrum across which capitalism,
link |
00:13:50.180
in the pure sense, and communism in the pure sense operate
link |
00:13:53.560
in that capitalism, each individual has the exclusive rights
link |
00:13:57.640
to the fruits of their labor.
link |
00:13:59.180
So anything they spend their time, effort, energy
link |
00:14:02.160
creating in the world, they own the rights to that
link |
00:14:04.960
and they can trade those rights with others,
link |
00:14:07.080
other self owned people that have done similar things.
link |
00:14:10.360
Communism or socialism would imply that other people,
link |
00:14:13.740
typically the state, have the rights,
link |
00:14:16.040
at least some rights to the value you've created.
link |
00:14:19.580
So there's this interesting moment when that first caveman,
link |
00:14:22.520
that first capitalist drew a line, a circle in this cave
link |
00:14:27.400
and said, you know, this is mine.
link |
00:14:29.920
You could say it was free to be claimed
link |
00:14:32.240
at the time he claimed it.
link |
00:14:34.600
But it's an interesting moment when asset becomes an asset.
link |
00:14:41.640
When space time, as you were referring to it,
link |
00:14:43.600
becomes something that's now can be possessed
link |
00:14:46.860
by a human being.
link |
00:14:47.960
Is there something special about this moment?
link |
00:14:51.100
Because it feels like, first of all,
link |
00:14:53.820
in terms of space and time, it feels like there's a lot
link |
00:14:57.660
of available space time yet to be claimed.
link |
00:15:02.700
So if we just look at like the universe, right?
link |
00:15:05.380
We're talking about, there's a funny thing
link |
00:15:06.960
with Elon Musk and Mars, I think they sneaked in there
link |
00:15:11.220
for SpaceX, that nobody on earth has any authority
link |
00:15:15.540
on Mars or any, this is a very interesting question.
link |
00:15:18.980
It seems almost like humorous at this time,
link |
00:15:20.980
but perhaps not, perhaps there'll be sections of space,
link |
00:15:25.200
not just on planets that are gonna be even fought over.
link |
00:15:29.020
So is there something special about this moment?
link |
00:15:31.020
Because in discussing sort of violence
link |
00:15:35.140
and respect for property, it feels like this is
link |
00:15:37.440
a special moment because ultimately conflict arises
link |
00:15:42.440
when you make claims on a particular territory.
link |
00:15:46.640
It's not always in conflict where people say,
link |
00:15:50.200
when you look at Hitler or something, for example,
link |
00:15:52.800
his claim would be in many of the lands that he attacked
link |
00:15:57.040
and invaded that this is ultimately,
link |
00:15:59.720
this has always belonged to Germany.
link |
00:16:02.680
So is there something you could say as to like
link |
00:16:06.200
what it means to own an asset or a property?
link |
00:16:09.440
Yeah, so in the ancient days of hunters and gatherers,
link |
00:16:14.000
we could say that property was mostly a loyal title,
link |
00:16:19.240
which meant it's just whatever you can defend, right?
link |
00:16:22.360
So if you've got knives and daggers and satchels
link |
00:16:25.600
and maybe some pelts you've hunted,
link |
00:16:28.760
whatever you can hold and defend is yours.
link |
00:16:32.160
And there's not like, there's a government to appeal to,
link |
00:16:35.320
you're just sort of a free agent operating in the wild,
link |
00:16:39.120
defending the assets you can protect on you more or less.
link |
00:16:44.440
And what really changed the nature of property
link |
00:16:48.360
is when we get into the agricultural age.
link |
00:16:50.780
So there's a big flip where we went from just foraging
link |
00:16:55.240
and hunting all the time, constantly moving,
link |
00:16:57.320
trying to stay alive to deciding we're gonna settle here.
link |
00:17:00.440
We figured out how to cultivate crops.
link |
00:17:03.200
We can create, we can increase the population
link |
00:17:06.080
because we can harvest more energy from the sun
link |
00:17:08.480
and we can establish a longer term civilization.
link |
00:17:11.280
What happens in that transition
link |
00:17:13.600
is that we begin creating economic surplus.
link |
00:17:16.480
So for the first time in history,
link |
00:17:17.680
we have stock houses of grain to defend
link |
00:17:22.040
or maybe meat or cattle or whatever it is we're creating,
link |
00:17:25.260
we now have savings.
link |
00:17:27.960
And it's at that time when government emerges as well,
link |
00:17:33.420
because once you have savings
link |
00:17:35.120
or you have an economic surplus,
link |
00:17:36.320
you have something that other people want to steal, right?
link |
00:17:39.000
This one thing we'll touch on a lot today
link |
00:17:41.760
is people always want something for nothing.
link |
00:17:45.880
People are always seeking the path
link |
00:17:47.440
to get something for nothing.
link |
00:17:48.360
And I think that drives a lot of our decision making.
link |
00:17:51.600
And it actually encourages us to be innovative
link |
00:17:53.680
in a lot of ways, right?
link |
00:17:54.520
We're trying to, you could say it's our laziness
link |
00:17:58.060
that's helping us be inventive in a way.
link |
00:17:59.760
We're trying to accomplish greater results
link |
00:18:01.420
with less efforts over time,
link |
00:18:02.940
but we can cross that line in seeking something for nothing
link |
00:18:07.440
where we start to violate the life, liberty,
link |
00:18:09.240
and property of others.
link |
00:18:10.320
And that's where we shift from kind of capitalistic society
link |
00:18:13.160
to something more communistic.
link |
00:18:15.560
And so that's what government is.
link |
00:18:18.840
It's a protection producing enterprise
link |
00:18:21.680
for the economic surplus generated by a trading society.
link |
00:18:25.860
So when people begin to trade,
link |
00:18:28.460
they create what's called the division of labor,
link |
00:18:30.920
which is a very common economic term,
link |
00:18:33.020
basically means you're better at making hats,
link |
00:18:35.440
I'm better at making boots.
link |
00:18:37.440
If you specialize in hats, I specialize in boots,
link |
00:18:39.840
and we trade, we've created a positive sum game
link |
00:18:42.600
where you and I both benefit.
link |
00:18:43.840
So we become collectively more than the sum of our parts
link |
00:18:47.000
through trade.
link |
00:18:48.320
And that's why human beings do trade
link |
00:18:51.360
because we become more energy efficient as a result.
link |
00:18:54.040
We create more outputs per unit of input.
link |
00:18:56.560
And you can think of government in that respect,
link |
00:18:59.280
if we're looking at it maybe in a tech sense
link |
00:19:01.240
that the economy is the trade network that generates wealth,
link |
00:19:05.220
generates innovation, generates all,
link |
00:19:07.160
this whole lap of luxury we live in today
link |
00:19:09.120
that we've inherited from our forebears is from the market.
link |
00:19:12.680
It's not from a government.
link |
00:19:14.120
The government is the network security, if you will.
link |
00:19:17.500
So we're paying expenses to a vendor to protect peace,
link |
00:19:21.880
to preserve life, liberty, and property in that network
link |
00:19:24.480
so that we can have, you know,
link |
00:19:25.760
when there's inevitably disputes over private property,
link |
00:19:28.100
we can have nonviolent dispute resolution
link |
00:19:30.720
in the rule of law.
link |
00:19:33.280
And we can have a reasonable expectation
link |
00:19:36.040
of being able to conduct commerce without violence.
link |
00:19:39.440
The problem has been that the protector tends to,
link |
00:19:43.680
you know, they're in a monopolistic position, we would say.
link |
00:19:46.080
They tend to start abusing that position
link |
00:19:49.260
to obtain property for themselves.
link |
00:19:53.040
Again, trying to get that something for nothing.
link |
00:19:55.840
When you control, you know, you are the security guard
link |
00:20:00.320
for the economy.
link |
00:20:02.200
The first thing they tend to monopolize is money
link |
00:20:04.680
because if you can control the money,
link |
00:20:05.840
you're effectively controlling people, their energy,
link |
00:20:08.060
their perceptions.
link |
00:20:10.560
And that becomes a, you know,
link |
00:20:12.360
particularly through inflation,
link |
00:20:14.560
becomes an avenue to get something for nothing
link |
00:20:17.520
and that you can just print more money
link |
00:20:20.000
that everyone else is forced to sacrifice their time
link |
00:20:22.840
and energy to obtain.
link |
00:20:24.100
What are your thoughts about anarchism?
link |
00:20:27.580
So I talk quite a bit, he'll be here in a few days,
link |
00:20:30.940
actually, Michael Malice, about ideas of anarchy.
link |
00:20:35.420
And his idea or the idea of anarchists
link |
00:20:38.100
is that any amount of government will eventually become
link |
00:20:42.100
the very kind of thing that you're referring to.
link |
00:20:45.660
So there's almost no way to have a government
link |
00:20:48.460
that doesn't then try to monopolize power,
link |
00:20:52.180
money, and all those kinds of things.
link |
00:20:54.360
Do you think it's possible to have a government
link |
00:20:56.900
sort of on that spectrum of like anarchy,
link |
00:20:59.760
maybe libertarianism,
link |
00:21:02.020
I'm not sure how exactly the spectrum goes,
link |
00:21:04.620
but where you have a small government
link |
00:21:07.160
that protects the liberty and property rights
link |
00:21:09.060
and those kinds of things and doesn't expand
link |
00:21:11.940
to then also control the monetary system
link |
00:21:15.420
and all those other things?
link |
00:21:17.620
Is it possible?
link |
00:21:18.500
Agreed completely, it was not possible until Satoshi Nakamoto.
link |
00:21:24.120
So for the first time in history,
link |
00:21:25.620
we have a money that cannot be monopolized,
link |
00:21:29.180
cannot be corrupted, cannot be changed,
link |
00:21:32.920
cannot be weaponized, frankly.
link |
00:21:34.460
Our current monetary system is weaponized
link |
00:21:36.680
by those who can print money against those who cannot.
link |
00:21:41.660
And I think when you have,
link |
00:21:45.060
at the heart of every modern economy,
link |
00:21:46.880
which even we could say the US,
link |
00:21:48.620
we pride ourselves as free market capitalists.
link |
00:21:51.460
You know, we out competed communism in the 20th century.
link |
00:21:54.320
We think that this is the superior model.
link |
00:21:58.080
Most business people will tell you
link |
00:22:00.540
that the free market is the best allocator of resources,
link |
00:22:03.780
all of these things.
link |
00:22:05.300
But what we have at the heart of every modern economy,
link |
00:22:07.500
including the US, is an anti capitalistic institution,
link |
00:22:10.740
which is the central bank.
link |
00:22:13.560
The temptation to monopolize money
link |
00:22:15.460
throughout all of history has been too strong
link |
00:22:17.100
for anyone to resist.
link |
00:22:18.680
So any, even benevolent, quote unquote,
link |
00:22:21.540
dictators that have taken over,
link |
00:22:23.400
many dictators have inherited, say,
link |
00:22:25.300
an inflationary regime where society is coming apart
link |
00:22:28.260
because someone was clipping the coins
link |
00:22:29.580
or someone was printing too much money,
link |
00:22:31.260
and they'll commit to going back to a hard money standard.
link |
00:22:34.140
So they'll keep society on a gold standard, for instance,
link |
00:22:37.840
such that they cannot violate the money
link |
00:22:40.860
to benefit themselves.
link |
00:22:42.140
But inevitably, over time, because it is
link |
00:22:45.820
a political institution, there's an incentive there, right?
link |
00:22:50.660
For, again, to get something for nothing,
link |
00:22:53.140
to spend more than you're making through tax revenues.
link |
00:22:57.260
And with that incentive, people typically,
link |
00:22:59.700
ultimately end up pursuing that inflationary path.
link |
00:23:03.400
So we can get deeper into that about,
link |
00:23:06.680
inflation is a term that we've been conditioned
link |
00:23:09.400
to think today is just something normal.
link |
00:23:10.940
The prices just go up, and then it's pertinent
link |
00:23:14.780
to a healthy economy, but it's actually,
link |
00:23:18.820
if you look at it from real first principles,
link |
00:23:20.300
it is just theft integrated into the money.
link |
00:23:22.540
It's a technology backdoor,
link |
00:23:23.980
is another way to think about it.
link |
00:23:25.420
You wouldn't buy a cell phone knowing
link |
00:23:27.500
that someone could siphon your data off your private calls
link |
00:23:30.420
and sell it into the market.
link |
00:23:31.980
Now, I know we do that with a lot of social media stuff
link |
00:23:33.700
today, and that's something else we can get into,
link |
00:23:35.180
but you wouldn't do it willingly, right?
link |
00:23:37.580
You prefer that your cell phone and your data
link |
00:23:40.280
was monetized by you, or if you're gonna sell it,
link |
00:23:43.140
you would be able to selectively sell it.
link |
00:23:45.420
Inflation is that it's similar, it's a tech backdoor.
link |
00:23:49.100
So it's a money that only a few people
link |
00:23:53.500
can siphon value off of surreptitiously, typically slowly,
link |
00:23:58.340
but eventually, as we've seen throughout history,
link |
00:24:00.080
that slowly builds up into a rapidly
link |
00:24:02.580
and then causes the monetary system to collapse.
link |
00:24:05.820
Do you think there's a benefit to inflation, possibly?
link |
00:24:08.400
So when you have perfect information,
link |
00:24:12.420
perhaps you don't need inflation,
link |
00:24:14.260
perhaps it is purely theft, but I think of inflation
link |
00:24:17.220
as like the snooze button on the alarm.
link |
00:24:21.860
So if you have a hard standard,
link |
00:24:23.460
you better wake up when the alarm rings,
link |
00:24:25.820
but all of us kind of like probably shouldn't,
link |
00:24:29.340
but use the snooze button.
link |
00:24:30.700
It's like, okay, well, five more minutes
link |
00:24:32.220
or 10 more minutes, and then you're saying
link |
00:24:34.860
there's naturally a slippery slope
link |
00:24:36.980
where it becomes a drug that you fall in love with
link |
00:24:40.140
and you abuse, but nevertheless,
link |
00:24:43.980
the usefulness of the snooze button
link |
00:24:46.260
is that you don't know how you'll be actually feeling
link |
00:24:48.860
when the alarm rings.
link |
00:24:50.300
You might be able to ready to pop up.
link |
00:24:52.220
It might be like you really need those few more minutes
link |
00:24:55.420
to psychologically get yourself out of bed.
link |
00:24:57.540
This metaphor is just not working at all,
link |
00:24:59.820
but do you think there's a use to inflation sometimes
link |
00:25:04.820
from like an economics perspective?
link |
00:25:06.900
I think the drug metaphor is a little more apt
link |
00:25:09.620
in that inflation does provide
link |
00:25:12.260
an immediately stimulative effect when used early on.
link |
00:25:19.620
But what it's doing is it's, again,
link |
00:25:22.980
we talk about the balance between incentives
link |
00:25:26.140
and disincentives, right?
link |
00:25:27.340
That being necessary for a system to function properly.
link |
00:25:31.580
With inflation, you're essentially giving the people
link |
00:25:35.620
that can print money a way to dampen
link |
00:25:38.420
the disincentives they face.
link |
00:25:40.780
So it destroys feedback loops, I guess you might say.
link |
00:25:46.580
And another way to look at this is when you,
link |
00:25:49.340
so using inflation, using quantitative easing,
link |
00:25:52.260
you can decrease short term volatility in the marketplace.
link |
00:25:56.880
So the market is basically this idea,
link |
00:26:01.140
this form of free exchange that's trying to zero in
link |
00:26:03.300
on the best ideas.
link |
00:26:04.500
And the ideas are those that are most fit to reality,
link |
00:26:07.020
to satisfying the most wants.
link |
00:26:08.780
It's gonna overshoot, it's gonna undershoot,
link |
00:26:10.380
you have these little business cycles.
link |
00:26:12.020
But when it's undershooting
link |
00:26:13.500
and you're experiencing a business recession,
link |
00:26:18.020
in a capitalist environment,
link |
00:26:19.140
the market needs to clear that malinvestment,
link |
00:26:21.940
that misallocation of capital.
link |
00:26:23.260
That means someone made a bet on a certain idea
link |
00:26:25.420
that it would satisfy wants in a particular way,
link |
00:26:27.820
and that bet did not pan out.
link |
00:26:29.460
If you then paper over the losses
link |
00:26:31.460
that business is creating,
link |
00:26:33.020
you're now delaying and exacerbating the volatility
link |
00:26:36.820
that that idea created.
link |
00:26:39.140
So this is kind of a Tel Aviv concept
link |
00:26:41.400
where you can dampen short run volatility,
link |
00:26:46.060
but volatility is truth.
link |
00:26:48.340
Volatility is us matching our ideas to reality, right?
link |
00:26:53.420
We're constantly, again, overshooting and undershooting.
link |
00:26:55.200
So you delay volatility,
link |
00:26:57.640
you're just amplifying it and exacerbating it
link |
00:26:59.820
in the long run.
link |
00:27:01.180
And that's what central bank is doing.
link |
00:27:02.740
The central bank mandate is low unemployment
link |
00:27:06.860
and low and expected inflation, basically.
link |
00:27:13.300
And so they're trying to achieve economic growth
link |
00:27:16.820
in a stable way, quote unquote, stable way.
link |
00:27:19.500
This is their ostensible purpose.
link |
00:27:22.380
And that's just not possible.
link |
00:27:23.940
Growth is an inherently instable process.
link |
00:27:27.780
Can you elaborate a little bit
link |
00:27:29.420
about the nature of volatility?
link |
00:27:33.380
Why is it communicating truth?
link |
00:27:37.140
That's something that a lot of people are afraid of
link |
00:27:39.060
is the volatility.
link |
00:27:40.340
Almost like it's a sign of chaos,
link |
00:27:44.260
and so they want to escape chaos.
link |
00:27:48.220
But you're saying that that's actually,
link |
00:27:51.740
whether it's chaos or not, I don't know,
link |
00:27:53.640
but it's getting us closer to the fundamental reality
link |
00:27:57.600
that we should not be trying to escape.
link |
00:28:00.100
Yeah, so if we consider that the universe
link |
00:28:04.980
is pervaded by entropy, right?
link |
00:28:06.980
This is the second law of thermodynamics
link |
00:28:08.780
is that every closed system
link |
00:28:10.080
tends towards greater disorder over time.
link |
00:28:13.500
And that life itself, again,
link |
00:28:15.420
I would argue expressed through the logos,
link |
00:28:19.080
we, life, is the antientropic principle.
link |
00:28:22.180
It's the only thing that's converting entropy into order,
link |
00:28:24.740
chaos into order.
link |
00:28:26.500
And that's what entrepreneurs are doing, right?
link |
00:28:29.980
We're living at the edges of the known,
link |
00:28:32.700
and we're testing ourself against the entropy of nature,
link |
00:28:37.240
trying to figure out new and better ways
link |
00:28:38.900
of saying, doing, or making things.
link |
00:28:41.020
And then if we do crack a code or figure something out,
link |
00:28:44.260
we then have a big incentive.
link |
00:28:45.700
The incentive is to get rich, right?
link |
00:28:47.180
Because then you have a new idea
link |
00:28:48.380
that you could then sell back into the marketplace.
link |
00:28:50.940
So it's this sequence of courageously confronting
link |
00:28:57.360
the entropy of nature and converting it
link |
00:28:59.500
into good and useful order,
link |
00:29:00.820
which by the way is like the ancient idea of God in Genesis,
link |
00:29:04.100
which I think is interesting,
link |
00:29:06.900
that actually enables us to construct civilization
link |
00:29:10.120
in these layers of anti entropy or order, you might say.
link |
00:29:14.900
So today we live in a bubble of anti entropy or order,
link |
00:29:19.900
like the coastlines are guarded by the nation
link |
00:29:22.300
and the city has a certain police force
link |
00:29:25.340
that keeps it in order.
link |
00:29:27.940
Even the way we talk,
link |
00:29:30.260
like clearly the words matter,
link |
00:29:31.780
but also the nonverbal cues,
link |
00:29:33.060
all these things are like order that has been established
link |
00:29:35.340
over many, many, many thousands of years of human evolution.
link |
00:29:40.660
And I think that's, when I say volatility is truth,
link |
00:29:46.180
what I'm saying is that the experience of uncertainty
link |
00:29:49.340
is something that's ineradicable from life, right?
link |
00:29:53.580
And certainty, like it's kind of a paradox
link |
00:29:57.060
because we're fighting against it, right?
link |
00:29:58.980
We're trying to innovate our way away from uncertainty
link |
00:30:01.460
to create more capital,
link |
00:30:03.640
which capital is very simply a way of mitigating uncertainty.
link |
00:30:09.540
So this is why you might have like a stash of food
link |
00:30:12.340
in case the power goes out or a generator,
link |
00:30:14.620
like it helps you overcome uncertainty over time.
link |
00:30:17.780
But uncertainty is also where all the sweetness of life is.
link |
00:30:21.420
So there's gotta be this balance
link |
00:30:22.660
with one foot in, one foot out.
link |
00:30:25.300
So human society is this kind of bubble of order
link |
00:30:27.500
that we've constructed and slowly expanding,
link |
00:30:30.460
but at the edges, you're always going to have that chaos,
link |
00:30:33.180
that volatility, and that the entrepreneurs
link |
00:30:36.180
are kind of like jumping into that chaos
link |
00:30:39.460
and some of them die and some of them succeed.
link |
00:30:42.000
And so like, if you wanna grow this bubble of order,
link |
00:30:46.380
you have to be embracing the volatility at the edges.
link |
00:30:51.380
Yes.
link |
00:30:53.400
And reverence for entrepreneurship
link |
00:30:55.100
because these are the people putting their neck out,
link |
00:30:58.940
so to speak, risking themselves.
link |
00:31:01.260
And they're gonna contribute to society, by the way,
link |
00:31:03.220
whether they go up in flames or not.
link |
00:31:05.100
If they go up in flames,
link |
00:31:06.340
society has witnessed their experience
link |
00:31:08.560
as something not to do or something that doesn't work
link |
00:31:10.660
in a particular time and place.
link |
00:31:12.380
So that you could say them going up in flames
link |
00:31:14.780
is a way of enlightening the rest of us.
link |
00:31:16.780
Or if they figure something out,
link |
00:31:18.980
Steve Jobs creates the iPhone, changes the world forever.
link |
00:31:22.780
So enlightening the rest of us, okay.
link |
00:31:25.780
And Taleb would say.
link |
00:31:26.900
The fire of their failure, okay.
link |
00:31:28.580
Yeah, exactly.
link |
00:31:30.020
Taleb would say individual fragility
link |
00:31:35.020
is inseparable from ensemble anti fragility.
link |
00:31:38.580
So this means that, again,
link |
00:31:40.620
every time that entrepreneur goes up in flames
link |
00:31:42.760
or say a restaurant goes out of business,
link |
00:31:46.020
when a restaurant goes out of business,
link |
00:31:47.380
that particular cuisine strategy they were implementing
link |
00:31:50.220
in that particular time and place,
link |
00:31:51.580
that's a signal to all the other restaurants in the area
link |
00:31:53.500
that that doesn't work.
link |
00:31:54.900
So restaurant food improves from bankruptcy to bankruptcy.
link |
00:31:59.660
So it's this death of the individual components
link |
00:32:02.420
that contributes to the growth of the ensemble.
link |
00:32:05.460
As a small aside, maybe you can guide me through it.
link |
00:32:07.860
I don't know if you're paying attention,
link |
00:32:09.300
but there was some chaos around Taleb
link |
00:32:13.780
and the Bitcoin community.
link |
00:32:15.580
I wasn't quite paying attention,
link |
00:32:17.960
but from my outsider's perspective,
link |
00:32:20.220
I thought it seemed Taleb was a supporter of Bitcoin.
link |
00:32:24.500
And then a lot of people were very upset about something.
link |
00:32:26.900
I'm sorry if I don't know the details,
link |
00:32:28.260
but can you pull out some profound philosophical ideas
link |
00:32:33.020
from the disagreement of the chaos?
link |
00:32:34.860
I admittedly don't know too much about it either.
link |
00:32:37.940
I'm a big fan of his writing.
link |
00:32:41.300
He's always been a little different in person.
link |
00:32:45.780
Like I actually, he signed one of my books.
link |
00:32:47.500
I met him in person.
link |
00:32:48.340
He's just, he's got a very abrasive personality.
link |
00:32:50.660
He's kind of known for it.
link |
00:32:51.580
It's not, I don't think I'm passing any judgment here.
link |
00:32:54.140
He sort of embraces it.
link |
00:32:55.540
Yeah.
link |
00:32:56.380
But he had written the forward
link |
00:32:58.980
to a really important book in Bitcoin
link |
00:33:00.680
called the Bitcoin Standard for safety in a moose.
link |
00:33:03.800
And then I think they had a little Twitter beef
link |
00:33:06.900
because safety is very much against COVID mask
link |
00:33:10.880
and state intervention,
link |
00:33:12.700
whereas Taleb's on the other side of the fence.
link |
00:33:15.340
And so, and then after that beef,
link |
00:33:17.900
Taleb came out against Bitcoiners saying,
link |
00:33:19.580
oh, Bitcoiners are crazy and wrong.
link |
00:33:21.840
I think the great mask debate of the 2020
link |
00:33:24.700
will probably be the thing
link |
00:33:25.820
that ultimately leads to World War III.
link |
00:33:28.380
I've been very surprised how tense, how much like division
link |
00:33:33.380
this one little arguably silly thing has led to.
link |
00:33:39.140
I think a lot of people sort of project their,
link |
00:33:41.580
like, it's almost like not wearing a mask
link |
00:33:44.020
is a statement of sovereignty, of freedom,
link |
00:33:46.500
of like saying fuck you to the man,
link |
00:33:48.860
the government, the centralized power,
link |
00:33:50.900
or the dishonesty or the, in the scientific community,
link |
00:33:55.180
all those kinds of things.
link |
00:33:56.260
And then wearing a mask is a sort of kind of signaling
link |
00:33:59.520
of various kind of social aspects.
link |
00:34:03.600
I don't know.
link |
00:34:04.440
I'm not paying attention to it.
link |
00:34:05.500
I actually tuned out.
link |
00:34:06.820
I was part of a group of scientists
link |
00:34:08.480
that were looking into like, do masks work?
link |
00:34:10.580
This very interesting question.
link |
00:34:11.980
To me, it was an interesting question.
link |
00:34:13.880
I sort of roll in to ask that very interesting question
link |
00:34:17.580
because I think it is an interesting scientific question.
link |
00:34:20.500
But then I quickly realized that just as I was doing this,
link |
00:34:23.820
like scientific exploration of this very interesting question
link |
00:34:27.560
about Viron particles, like what kind of things,
link |
00:34:30.300
like from a scientific perspective,
link |
00:34:32.300
how do we prevent the spread of a pandemic?
link |
00:34:34.400
Forget COVID, any pandemic, super deadly or not deadly.
link |
00:34:38.020
Like there's tools, there's testing, there's masks,
link |
00:34:40.660
there's all these tools, how well do they work?
link |
00:34:43.220
And then I realized, you know, in April or so,
link |
00:34:46.740
it became a tool of politics, a tool of philosophy.
link |
00:34:49.980
And that's when I sort of pulled out.
link |
00:34:51.900
So it's fascinating.
link |
00:34:52.740
I think it's a canvas on which people project
link |
00:34:56.740
their emotions and I guess Tillam got caught up
link |
00:34:59.900
in that kind of, so there's nothing fundamental,
link |
00:35:02.480
I suppose, to their disagreement.
link |
00:35:04.540
Not that I'm aware of, but he is, you know,
link |
00:35:07.880
he's written some about in his books,
link |
00:35:11.340
the problem with centralization.
link |
00:35:13.220
I mean, a lot of his writing addresses that
link |
00:35:15.860
and he actually points to, I think Switzerland
link |
00:35:18.620
is the best government in the world
link |
00:35:20.300
because it's decentralized.
link |
00:35:21.700
So there's that, I don't think he has any,
link |
00:35:26.900
I'm not to speak for him, but I don't think he's voiced
link |
00:35:30.700
any specific critiques on Bitcoin per se.
link |
00:35:34.640
Could be wrong about that.
link |
00:35:35.740
It's just maybe his flavorful language
link |
00:35:37.820
and the way he likes to communicate.
link |
00:35:39.580
And the other theory is that maybe he's playing 4D chess
link |
00:35:42.300
and having a Twitter boating accident, you know.
link |
00:35:44.580
So I don't believe in Bitcoin, I've sold all my Bitcoin.
link |
00:35:48.140
Oh, I see.
link |
00:35:48.980
Yeah.
link |
00:35:49.820
Sorry, the boating accident in Bitcoin is this,
link |
00:35:55.020
I guess it's proverbial by this point,
link |
00:35:56.740
where it's the way you lose your Bitcoin.
link |
00:35:59.360
So if someone comes after you and says,
link |
00:36:00.880
hey, you know, whether it's a government
link |
00:36:02.880
or an individual's coming after you saying,
link |
00:36:04.200
give me all your Bitcoin or pay these taxes in Bitcoin,
link |
00:36:06.780
you go, oh, I had a boating accident and lost them all.
link |
00:36:09.060
Lost them all.
link |
00:36:09.900
So, yeah.
link |
00:36:13.380
But back to the fundamental nature of space time.
link |
00:36:16.500
Let me ask you, because we're kind of left at,
link |
00:36:20.180
I'd like to go back to this idea of,
link |
00:36:24.160
that you said that everything we think, say,
link |
00:36:26.520
or do occurs within the bounds of space time.
link |
00:36:31.180
So first of all, maybe you can comment on
link |
00:36:33.580
what do you mean in this context about space time,
link |
00:36:37.140
but also about the nature of truth.
link |
00:36:40.660
Like how much of all of this is knowable?
link |
00:36:43.480
How much of this is accessible to us humans?
link |
00:36:46.400
How much uncertainty, like what we're talking about,
link |
00:36:49.180
is there in the world?
link |
00:36:50.720
Are you, do you fall in a place
link |
00:36:52.300
where we can reason deeply about this world
link |
00:36:56.060
and it's knowable, or is it mostly chaos
link |
00:36:58.540
and we're just holding on for dear life?
link |
00:37:01.380
Yeah, I think I said that all action occurs
link |
00:37:04.220
within the bounds of space time.
link |
00:37:05.560
The other thing, everything we say, do, or make,
link |
00:37:08.200
the other thing is that everything we say, do, or make
link |
00:37:10.380
starts out as an idea.
link |
00:37:12.460
So there's this concept of universal Darwinism,
link |
00:37:15.520
which basically applies Darwinian principles,
link |
00:37:20.060
but outside of the biological sphere.
link |
00:37:21.980
So we could say that this kind of gets into
link |
00:37:23.820
Richard Dawkins memetics, that even ideas are competing,
link |
00:37:27.220
reproducing, recombining.
link |
00:37:29.180
That idea is so powerful, by the way.
link |
00:37:30.860
I don't think it's been understood fully.
link |
00:37:33.900
I think in the digital, in the 21st century,
link |
00:37:38.940
in the digital world, from my perspective
link |
00:37:40.580
in artificial intelligence,
link |
00:37:42.540
there's yet to be some profound things
link |
00:37:44.500
to be discovered about this whole construct.
link |
00:37:47.220
Agreed completely.
link |
00:37:48.860
It's been called an acid, actually,
link |
00:37:51.540
in that it strips away all of the noninformational
link |
00:37:55.580
components of something, just strips it down
link |
00:37:57.140
to its bare bones.
link |
00:37:59.140
I have a quote in here somewhere about that, but.
link |
00:38:02.140
I'm sorry, which is called an acid?
link |
00:38:03.500
The ideas?
link |
00:38:04.340
The universal Darwinism.
link |
00:38:05.860
Darwinism applied broadly, outside of the.
link |
00:38:08.100
Applied broadly, and I'll condition all of this
link |
00:38:12.740
by saying that a lot, most of my thinking
link |
00:38:14.540
is shaped by a book I read recently
link |
00:38:16.300
called The Case Against Reality,
link |
00:38:19.340
which introduced me to this concept,
link |
00:38:20.660
but it tied into Darwinism that I've used
link |
00:38:23.380
more broadly in the past, looking at things
link |
00:38:24.760
like money and economics.
link |
00:38:26.340
So the book, The Case Against Reality,
link |
00:38:28.640
by Donald Hoffman, he has a quote in the book
link |
00:38:32.860
that describes universal Darwinism.
link |
00:38:35.740
It says, quote, universal Darwinism can,
link |
00:38:37.640
without risk of refuting itself,
link |
00:38:39.340
address our key question.
link |
00:38:41.500
Does natural selection favor true perceptions?
link |
00:38:44.820
If the answer happens to be no,
link |
00:38:46.780
then it hasn't shot itself in the foot.
link |
00:38:49.160
The uncanny power of universal Darwinism
link |
00:38:51.300
has been likened by the philosopher Dan Dennett
link |
00:38:54.120
to a universal acid.
link |
00:38:56.740
And Dan Dennett says, quote, there is no denying
link |
00:38:58.940
at this point that Darwin's idea is a universal solvent,
link |
00:39:02.380
capable of cutting right to the heart
link |
00:39:04.020
of everything in sight.
link |
00:39:05.720
The question is, what does it leave behind?
link |
00:39:08.500
I have tried to show that once it passes through everything,
link |
00:39:10.860
we are left with stronger, sounder versions
link |
00:39:13.100
of our most important ideas.
link |
00:39:15.740
Some of the traditional details perish,
link |
00:39:17.880
and some of these are losses to be regretted,
link |
00:39:20.380
but good riddance to the rest of them.
link |
00:39:22.220
What remains is more than enough to build on, unquote.
link |
00:39:26.340
So the way I would interpret that is that life itself,
link |
00:39:31.660
I've come to view life as information propagating
link |
00:39:34.620
through flesh, and that we are,
link |
00:39:38.620
I guess DNA is a quadratic code.
link |
00:39:42.820
I think it's four letters, maybe,
link |
00:39:44.220
versus a binary, zeros and ones.
link |
00:39:46.540
And we are ideas, we are strategies competing
link |
00:39:49.620
with each other, and nature is that which selects.
link |
00:39:54.300
It's what selects the winning ideas,
link |
00:39:56.500
the ones that are most fit
link |
00:39:59.100
to environmental conditions, frankly.
link |
00:40:02.400
You know, talking about sovereignty and individualism,
link |
00:40:06.280
there might need to be some rethinking here
link |
00:40:10.680
about what is actually the basic individual entity
link |
00:40:13.940
that is to be sovereign.
link |
00:40:15.600
Like maybe our biological meat vehicles
link |
00:40:20.760
were like way overly attached to them.
link |
00:40:25.220
Like maybe, especially with genetics
link |
00:40:28.040
and all those kinds of things,
link |
00:40:29.000
or artificial intelligence, or living more and more
link |
00:40:31.120
in virtual worlds will become detached
link |
00:40:34.200
from that kind of idea.
link |
00:40:35.860
So for example, if I can clone you,
link |
00:40:38.280
you know, make one million robbers,
link |
00:40:42.280
and, you know, but you'll all have the same idea,
link |
00:40:46.160
what is your real value as the,
link |
00:40:48.880
like I could just shoot you,
link |
00:40:50.000
and there'll still be 999 of you,
link |
00:40:52.840
but the idea is the important thing,
link |
00:40:55.200
the things you believe, so.
link |
00:40:58.260
I would argue that I don't know,
link |
00:41:00.200
even if you clone someone perfectly,
link |
00:41:02.080
I don't think you can reproduce the individual themselves,
link |
00:41:05.500
because we're all a product of nature and nurture, right?
link |
00:41:09.000
So my particular concourse of experiences,
link |
00:41:12.380
the path dependence that I represent cannot be replicated,
link |
00:41:15.800
nor can anyone's for that matter.
link |
00:41:17.560
Well, that's a hypothesis, so.
link |
00:41:20.520
True.
link |
00:41:21.360
That's of course a human meat bag would say.
link |
00:41:27.240
Good point.
link |
00:41:29.640
Like desperate trying to preserve himself.
link |
00:41:31.920
You know, I think it reduces
link |
00:41:33.960
to some fundamental questions about what is consciousness,
link |
00:41:36.440
and whether that can be cloned.
link |
00:41:38.000
All those kind of, you know,
link |
00:41:39.200
it gets to the core of what it is to be human.
link |
00:41:41.880
What are the things that make you particularly you?
link |
00:41:45.160
Yeah, I think it would assume
link |
00:41:46.880
kind of a materialist viewpoint on reality,
link |
00:41:49.200
and that if you could reproduce every atom of an individual
link |
00:41:52.160
that you would have their experience encapsulated in that.
link |
00:41:55.160
And, you know, Hoffman's, which his book is very radical,
link |
00:41:58.620
he argues that space and time is not an objective reality,
link |
00:42:03.620
it's a biological interface.
link |
00:42:06.040
So we are scanning our environment for fitness payoffs,
link |
00:42:11.080
and this space and time is the rendering
link |
00:42:13.520
specific to human beings
link |
00:42:15.040
that allows us to navigate reality effectively.
link |
00:42:18.960
So the further argument would be
link |
00:42:20.840
that we all have pretty similar interfaces,
link |
00:42:23.240
but they're all slightly different too,
link |
00:42:25.000
because we're all, you know, adapting in different ways,
link |
00:42:27.120
and that different animals have their own unique interfaces.
link |
00:42:30.280
So we have a certain amount of photoreceptors in our eye,
link |
00:42:32.780
whereas I think the number is three, might be five,
link |
00:42:35.920
or something like the mantis shrimp has like seven or nine.
link |
00:42:39.320
So they can see,
link |
00:42:40.960
and we only see one 10 trillionth of the light spectrum.
link |
00:42:46.960
So talk about a tiny fraction.
link |
00:42:48.640
I mean, one 10 trillionth is a very minuscule number,
link |
00:42:51.640
and that makes up all of the light
link |
00:42:53.340
that we can interpret with our eyes.
link |
00:42:55.320
But something like a mantis shrimp
link |
00:42:56.480
could see, you know, much more of that.
link |
00:42:58.760
So I think there's this, we're very conditioned
link |
00:43:04.160
to have a fully materialist viewpoint on reality today,
link |
00:43:07.280
where we think, you know,
link |
00:43:10.280
the atomic clockwork kind of universe.
link |
00:43:12.940
But I think there's, I don't think that's true exactly.
link |
00:43:16.460
And another school that goes into that
link |
00:43:19.740
is actually Austrian economics,
link |
00:43:22.000
where we could say that, you know,
link |
00:43:24.640
we mentioned earlier that an asset is not property.
link |
00:43:27.580
It's actually based on the relationship
link |
00:43:29.120
between the individual and the property.
link |
00:43:32.720
There's this whole realm of relevance associated with,
link |
00:43:39.860
we're all moving through life
link |
00:43:41.600
in the course of a goal directed action.
link |
00:43:43.540
So when we walk across a room, I go from A to B,
link |
00:43:47.400
it's because I valued B more than A.
link |
00:43:50.160
So value is inseparable from human action.
link |
00:43:52.920
We have a rank ordered value system in our mind,
link |
00:43:56.160
each of us, and we're constantly taking action
link |
00:43:58.360
in accordance with those rank values.
link |
00:44:01.500
Anything that accelerates us on the course
link |
00:44:04.560
of our goal directed action towards our goal is useful.
link |
00:44:09.520
Anything that impedes us, or we could say is valuable,
link |
00:44:12.720
anything that impedes us is actually obstructing to value.
link |
00:44:16.200
And anything that's irrelevant is just valueless.
link |
00:44:19.160
So this table that we're using right now,
link |
00:44:23.880
like this is an accessory to UNI
link |
00:44:26.360
because it's holding this paper
link |
00:44:27.480
that's holding the information
link |
00:44:28.480
that's guiding our conversation.
link |
00:44:30.320
But we could pay someone $100 to jump over this table.
link |
00:44:34.320
And this table could simultaneously be an accessory to UNI
link |
00:44:37.080
and an obstacle to someone else.
link |
00:44:39.500
So it's this domain, this silent contention of willpower
link |
00:44:43.880
and agendas occurring across the face of the earth
link |
00:44:46.740
that is what Austrian economics really looks at.
link |
00:44:50.040
It's the realm of human action, as they call it.
link |
00:44:54.040
It's called praxeology.
link |
00:44:55.560
So it's a non materialist viewpoint on reality
link |
00:44:58.560
and that things, we think in terms of matter being reality,
link |
00:45:03.200
but it's often more so in the sphere of human action,
link |
00:45:06.160
what matters, that is reality.
link |
00:45:08.620
It's the relevance of a thing
link |
00:45:10.240
to the course of one's goal directed action.
link |
00:45:12.400
And that's ultimately exists in the space of ideas.
link |
00:45:15.960
Yes.
link |
00:45:16.940
Not in the space of physical matter.
link |
00:45:19.040
And just to jump back to this line here,
link |
00:45:20.400
I think his fundamental line here is the question is,
link |
00:45:24.620
talking about universal Darwinism as an asset,
link |
00:45:26.880
what does it leave behind?
link |
00:45:28.360
I've tried to show that once it passes through everything,
link |
00:45:30.760
we're left with stronger, sounder versions
link |
00:45:32.920
of our most useful ideas.
link |
00:45:35.320
That's the key point to me.
link |
00:45:36.520
And that ideas and information, so far as we can tell,
link |
00:45:40.400
are the most fundamental substrate of reality.
link |
00:45:44.360
And information itself, back to entropy,
link |
00:45:47.560
information is the resolution of entropy.
link |
00:45:50.320
That's what the bit is, right?
link |
00:45:51.560
It's a one or a zero.
link |
00:45:52.440
Whatever reduces your entropy by half is a bit.
link |
00:45:55.040
And we measure information in bits.
link |
00:45:57.480
So.
link |
00:45:58.640
And you're right.
link |
00:45:59.760
People don't have ideas, ideas have people.
link |
00:46:02.840
Honestly, it's a really profound idea
link |
00:46:07.080
or a statement about reality, a reframing of reality.
link |
00:46:13.160
If we're actually being deeply honest about it,
link |
00:46:15.320
it's quite painful.
link |
00:46:17.240
I do appreciate that you defended
link |
00:46:19.280
your biological meatbag earlier,
link |
00:46:21.760
but it seems like ideas are the things that have power.
link |
00:46:26.020
That me, Lex, for example, is worthless.
link |
00:46:31.040
And relative to the ideas that used my brain
link |
00:46:35.820
for a bit of a time.
link |
00:46:37.600
But so far as we know, only human beings
link |
00:46:40.800
can generate and share ideas.
link |
00:46:42.400
So you can't say Lex is worthless.
link |
00:46:44.440
Like you are the node of the idea sphere.
link |
00:46:47.960
I'm the newest fear.
link |
00:46:49.080
So.
link |
00:46:51.120
What is it?
link |
00:46:52.040
From a Bitcoin perspective, I'm like, I'm mining.
link |
00:46:55.160
I'm solving the cryptographic problem and generate.
link |
00:47:01.040
In that sense, I'm a useful node.
link |
00:47:03.200
Yeah, you're competing to solve the puzzle of entropy,
link |
00:47:06.560
right?
link |
00:47:07.400
And when you do solve it, it benefits the entire network.
link |
00:47:09.620
But I guess from my perspective,
link |
00:47:13.320
just because just working in AI,
link |
00:47:15.400
I'm looking at the longterm vision.
link |
00:47:17.600
I see us humans and AI systems as really the same
link |
00:47:22.500
and AI systems ultimately as something
link |
00:47:25.000
that supersedes humans.
link |
00:47:27.120
So what is intelligence?
link |
00:47:33.360
So in the context of our current discussion,
link |
00:47:36.780
I think intelligence is very closely linked
link |
00:47:41.080
to this notion of ideas.
link |
00:47:45.340
And it's the ability to generate ideas,
link |
00:47:48.560
to mold ideas, to compress seeming chaos
link |
00:47:54.600
into some model, into some theory
link |
00:47:58.680
that efficiently compresses the chaos
link |
00:48:01.440
in a way where you can then integrate it with other ideas
link |
00:48:04.880
and they can play and all those kinds of things.
link |
00:48:07.080
So in that sense, it's the turning chaos into order.
link |
00:48:11.840
It's the molding of ideas such that our human brains
link |
00:48:15.720
can work with it.
link |
00:48:17.840
And just from my perspective,
link |
00:48:19.600
I don't see any reason why that can not be algorithmatized,
link |
00:48:22.880
converted into computational systems.
link |
00:48:25.580
I would agree.
link |
00:48:27.220
Which is scary.
link |
00:48:29.240
Scary or potentially really promising, right?
link |
00:48:33.400
It's kind of the case of all novelty.
link |
00:48:34.820
It's terrifying as much as it is promising.
link |
00:48:37.160
That's why you're pursuing it so heavily.
link |
00:48:39.440
I would maybe take it a step further
link |
00:48:42.520
and say that intelligence
link |
00:48:44.720
in maybe its most simplistic form is error correction.
link |
00:48:48.260
So we, humans have wants.
link |
00:48:53.300
Again, we're constantly expressing our value through action.
link |
00:48:56.240
There's no other way to express it by the way.
link |
00:48:58.000
It's whatever you choose to do in any moment,
link |
00:49:00.380
you are expressing the values you hold
link |
00:49:02.280
in your mind and your heart.
link |
00:49:03.680
So as we move from less valued A to more valued B,
link |
00:49:12.120
entropy happens, uncertainty happens, we fall off course.
link |
00:49:16.160
And it is intelligence that enables us
link |
00:49:19.320
to render information from that experience
link |
00:49:21.680
and error correct, right?
link |
00:49:23.720
So that we can move slightly,
link |
00:49:25.920
shift our trajectory slightly more towards B
link |
00:49:29.120
that we're trying to move towards.
link |
00:49:30.860
So I think that there's something there
link |
00:49:35.600
that I don't know that we can make synthetically.
link |
00:49:41.840
And that if we define intelligence as error correction,
link |
00:49:45.800
it's like error correction to what?
link |
00:49:47.120
It's error correction towards what we find is valuable.
link |
00:49:50.600
So we're trying to satisfy human wants.
link |
00:49:52.560
Might not just be our own, could be others as well.
link |
00:49:54.240
If I'm an entrepreneur,
link |
00:49:55.080
I'm trying to solve the wants of others, not just myself.
link |
00:49:57.560
And I'm trying to error correct myself towards that goal,
link |
00:50:01.400
using intelligence and processing environmental feedback
link |
00:50:04.680
through intelligence to error correct.
link |
00:50:06.560
So I don't know how,
link |
00:50:08.040
if you eliminate the human element completely,
link |
00:50:12.440
who's doing the wanting, right?
link |
00:50:13.940
Where does value come from?
link |
00:50:15.320
I know the machine learning people who are listening
link |
00:50:18.240
are saying that's exactly what machine learning is,
link |
00:50:20.280
which is error correction
link |
00:50:21.480
because you have a loss function, objective function
link |
00:50:24.060
that measures how wrong your thing is
link |
00:50:28.320
and you wanna make it less wrong next time.
link |
00:50:30.240
That's the whole process of machine learning.
link |
00:50:32.000
But you're saying what humans are able to do
link |
00:50:35.560
is in a world where there's no maybe objective values,
link |
00:50:42.280
absolute values, you're generating that very loss function,
link |
00:50:46.480
that objective function that measures the error
link |
00:50:51.480
comes from the human mind.
link |
00:50:55.120
Some aliens might disagree with you
link |
00:50:57.240
because they might have a different objective function.
link |
00:51:00.040
Obviously, the purpose comes from consciousness, I think.
link |
00:51:02.800
And without purpose, there's not error correction.
link |
00:51:05.560
Yeah, I mean, this is again, a hypothesis.
link |
00:51:08.000
Like where does purpose come from?
link |
00:51:09.560
It seems to come from consciousness, you're right.
link |
00:51:13.160
That's where suffering comes from
link |
00:51:15.160
and you want to lessen suffering.
link |
00:51:18.160
That's where pleasure comes from.
link |
00:51:20.120
It seems like it's consciousness.
link |
00:51:21.920
Maybe there's something to this biological meat bag.
link |
00:51:25.160
So to take it one layer deeper on this
link |
00:51:27.320
and the reason I like this book so much,
link |
00:51:29.120
again, The Case Against Reality.
link |
00:51:31.660
So he's making the case that space and time
link |
00:51:33.600
are not fundamental.
link |
00:51:35.200
Yes.
link |
00:51:36.040
Which I started my intellectual explorations in physics,
link |
00:51:39.260
actually astrophysics.
link |
00:51:40.180
So for the longest time, even the way I describe money
link |
00:51:42.660
as I talk about space and time, so that blew my mind.
link |
00:51:46.560
But this dovetailed nicely with another book called Lila.
link |
00:51:51.440
The author is Robert Persig.
link |
00:51:53.400
So he wrote Zen and the Art of Motorcycle Maintenance,
link |
00:51:55.560
which is a very popular book.
link |
00:51:57.280
20 years later, he wrote Lila, which no one's heard of,
link |
00:52:00.120
which is crazy.
link |
00:52:01.400
And he basically says he was wrong about his first book.
link |
00:52:03.920
And he lays out this entire other metaphysics of quality,
link |
00:52:08.400
he calls it.
link |
00:52:09.240
So it's the metaphysics, I think it's metaphysics of quality.
link |
00:52:12.480
But his supposition is that it's not physical reality
link |
00:52:18.080
that's fundamental.
link |
00:52:19.040
It's not informational information that's fundamental,
link |
00:52:22.240
it's value.
link |
00:52:24.240
So he actually, and it's a beautiful book,
link |
00:52:26.960
I highly recommend it.
link |
00:52:29.200
He essentially is refuting causality itself.
link |
00:52:33.180
We think A causes B.
link |
00:52:34.960
This book makes the case that B values precondition A,
link |
00:52:42.580
so that we are actually creating our future
link |
00:52:45.980
through our value systems.
link |
00:52:48.420
And this goes back to something,
link |
00:52:50.900
I think Solzhenitsyn said this,
link |
00:52:52.260
that the line between good and evil
link |
00:52:54.300
runs down the heart of every man.
link |
00:52:56.220
So it's as if our moral decisions
link |
00:52:58.940
are actually what's creating the outcomes
link |
00:53:01.500
in reality over time.
link |
00:53:03.260
And then that gets into all the wisdom traditions
link |
00:53:05.500
related to religion,
link |
00:53:06.620
where it's always talking about loving thy neighbor
link |
00:53:10.180
and loving God and all of these other things
link |
00:53:12.380
that are good morally to create the best outcomes.
link |
00:53:15.260
So values are fundamental.
link |
00:53:17.840
Value, yes.
link |
00:53:19.260
Value is fundamental.
link |
00:53:22.300
Oh boy, yeah, that's interesting.
link |
00:53:26.940
It does feel like physics is not capturing something.
link |
00:53:30.140
You know, there's some people, panpsychists argue
link |
00:53:35.500
that consciousness might be one of the fundamental
link |
00:53:38.300
properties of nature,
link |
00:53:39.620
like from which emerges everything we see.
link |
00:53:42.820
So that could be just other words
link |
00:53:46.420
for this same notion of value.
link |
00:53:49.420
And then the basic laws of physics
link |
00:53:51.700
are not capturing that currently.
link |
00:53:54.020
So maybe humans, in order to understand
link |
00:53:56.500
from where humans came from,
link |
00:53:57.820
we have to understand these other properties of nature,
link |
00:54:00.580
which are yet to be discovered at the physics level.
link |
00:54:03.500
And it's, we contend with that underlying nature,
link |
00:54:08.140
whatever it is, with the logos, right?
link |
00:54:10.760
So we're looking at uncategorized nature
link |
00:54:16.220
and then we're assigning a word to it.
link |
00:54:18.540
So we're slicing up chaos into little boxes of order.
link |
00:54:23.260
And then we're establishing this social consensus
link |
00:54:25.740
as to those labels, which we'd call words.
link |
00:54:28.860
And we're using that to communicate.
link |
00:54:30.780
And when we communicate,
link |
00:54:33.820
we can start to build these other things.
link |
00:54:35.260
This is like the Yuval Harari imagined orders.
link |
00:54:37.980
So we can create these useful fictions, right?
link |
00:54:41.060
Whether it's the nation state or human rights or money.
link |
00:54:44.060
And that allows us to cooperate flexibly in large numbers
link |
00:54:48.580
so that we can better contend with reality.
link |
00:54:50.500
We can produce more complicated things.
link |
00:54:53.720
We can enlarge that bubble of civilization against entropy.
link |
00:54:58.380
And that's what capitalism is all about.
link |
00:55:01.100
It's about further specializing knowledge,
link |
00:55:04.520
further enriching mankind's treasury of knowledge
link |
00:55:08.700
and doing it.
link |
00:55:09.580
But to do that, the communication media that we're using,
link |
00:55:14.240
the words have to have stable meaning.
link |
00:55:16.780
The money needs to have value that's dependable, right?
link |
00:55:21.540
It needs to be something that's, it's not dictated
link |
00:55:25.600
by any one group.
link |
00:55:26.920
It's reached by consensus of the entire group.
link |
00:55:30.620
That's how, so you could think it's like optimizing
link |
00:55:35.580
for error correction again,
link |
00:55:36.760
where a free market would be harnessing the intelligence
link |
00:55:39.980
of all market actors and a central planning
link |
00:55:43.860
or essentially planned market would be harnessing
link |
00:55:46.020
just the intelligence of a small group of bureaucrats.
link |
00:55:49.860
And it's not obvious how to achieve this kind
link |
00:55:51.620
of consensus mechanism.
link |
00:55:53.460
I mean, there's obviously, we'll talk about sort of Bitcoin
link |
00:55:56.780
as an idea.
link |
00:55:57.880
Ultimately, the idea of Bitcoin is connecting it to physics.
link |
00:56:02.860
So like, you can trust that physical matter won't change.
link |
00:56:09.060
But, you know, there could be other ideas that we get.
link |
00:56:12.940
Maybe physics could be changed.
link |
00:56:14.660
If Eric Weinstein has anything to say about it.
link |
00:56:17.420
Like it's, you know, we right now believe
link |
00:56:19.980
that physics can't be changed.
link |
00:56:21.580
The physical matter of the world, but maybe it can
link |
00:56:24.460
in a way that we're totally not understanding.
link |
00:56:26.480
You mentioned sort of reality
link |
00:56:28.460
from Donald Hoffman's perspective.
link |
00:56:32.460
Like if we don't have even close to direct access
link |
00:56:35.440
to the fabric of reality, maybe we're living in a world
link |
00:56:39.600
that's very like many dimensions,
link |
00:56:42.420
that the notions of space and time is just like a silly,
link |
00:56:45.180
useful construct that's not at all connected.
link |
00:56:48.480
You're starting to look at like Stephen Wolframs.
link |
00:56:51.020
I don't know if you're familiar with this view
link |
00:56:53.500
of the world that it's like hypergraphs underneath it all.
link |
00:56:57.140
Like these mathematical structures
link |
00:56:58.660
from which everything emerges.
link |
00:57:00.460
Like they're like many, many, many orders of magnitude,
link |
00:57:07.380
smaller than what we think of.
link |
00:57:10.140
They're even smaller than like strings and string theory.
link |
00:57:13.240
So like those are the basic mathematical objects
link |
00:57:15.300
from which it emerges.
link |
00:57:16.540
I don't, you know,
link |
00:57:17.620
I think that's an interesting philosophical framework.
link |
00:57:20.540
It's also, people should check out a cool way to play
link |
00:57:25.340
with beautiful hypergraph mathematical structures.
link |
00:57:27.700
So he has, I don't know if you know who Stephen Wolfram is,
link |
00:57:30.040
but he created Wolfram Alpha and all these tools
link |
00:57:34.240
that you can actually visualize and play with.
link |
00:57:36.360
So you can play with physics in a visual way,
link |
00:57:39.280
which, or at least discrete mathematics,
link |
00:57:43.540
which I think is incredible.
link |
00:57:45.060
He doesn't get enough love.
link |
00:57:46.820
One of the reasons he, I think doesn't get enough love
link |
00:57:50.420
is because of this little quirk of human nature,
link |
00:57:53.360
which is the ego.
link |
00:57:55.700
And he sometimes frustrates a few folks
link |
00:57:59.860
because he's very, let's say proud of his work.
link |
00:58:03.980
I guess.
link |
00:58:04.820
But it's interesting to think about a world
link |
00:58:10.380
where we don't have direct access to reality,
link |
00:58:13.580
as Hoffman argues.
link |
00:58:14.980
And maybe, I don't know if you can comment.
link |
00:58:17.300
I don't know if you're familiar with Ayn Rand's work
link |
00:58:19.380
and her whole philosophy of objectivism
link |
00:58:21.980
or her whole contention is that, you know,
link |
00:58:25.700
we do have access.
link |
00:58:28.360
I don't want to misstate it,
link |
00:58:29.420
but at least she would claim
link |
00:58:33.220
that it's not useful,
link |
00:58:39.180
or I think she would probably say it's not correct
link |
00:58:41.600
to argue that we don't have access to reality.
link |
00:58:44.220
We have, hence, objectivism.
link |
00:58:46.060
We have direct access to reality.
link |
00:58:49.140
That's the only thing we can reason about.
link |
00:58:52.380
And the only way to live life morally
link |
00:58:55.120
is to reason through everything,
link |
00:58:57.740
starting with the axioms of reality,
link |
00:58:59.620
which we do have direct access to.
link |
00:59:02.060
Do you have thoughts about her work?
link |
00:59:04.580
I am slightly ashamed to say I have not read Ayn Rand yet.
link |
00:59:08.900
So she is high on my list
link |
00:59:10.500
and she's been recommended a number of times.
link |
00:59:14.700
So I don't know a lot specifically
link |
00:59:16.260
about her philosophy or objectivism,
link |
00:59:18.300
but to me, it resonates closely
link |
00:59:21.620
with what the American pragmatist commented on truth.
link |
00:59:25.780
And they distinguished what you could say
link |
00:59:28.140
is absolute truth, which is at the bottom of reality,
link |
00:59:31.300
whether it's Mr. Wolfram's mathematical formulas or value,
link |
00:59:34.340
whatever it may be, it's something ineffable,
link |
00:59:37.020
something beyond the reach of epistemology, perhaps even.
link |
00:59:42.340
And maybe that's why religion just sort of points to it.
link |
00:59:45.580
It's trying to use, I think Joseph Campbell said something
link |
00:59:50.060
like religion is using stories
link |
00:59:55.700
to point towards the same transcendental mystery
link |
00:59:58.460
we all experience but cannot articulate.
link |
01:00:01.220
So something like the artist,
link |
01:00:03.180
the artist uses lies to point to the truth,
link |
01:00:06.820
something like that, that kind of thing.
link |
01:00:10.140
That's really good.
link |
01:00:10.980
But the American pragmatist said that,
link |
01:00:13.700
because at the end of the day, this is all about,
link |
01:00:16.300
when we say truth, we need something
link |
01:00:18.580
that is close to social consensus
link |
01:00:23.420
and is not shakable by political action.
link |
01:00:25.980
So that's what physics and mathematics are.
link |
01:00:28.380
It's an unshakable point of reference,
link |
01:00:33.940
I guess you might say.
link |
01:00:35.140
So the American pragmatist defined truth
link |
01:00:39.420
as the end of inquiry.
link |
01:00:42.460
And in markets, we could say that the market itself
link |
01:00:48.420
is a forum that generates truth.
link |
01:00:50.620
We call this pragmatic truth
link |
01:00:51.940
to separate pure objective truth
link |
01:00:53.940
that we can't even talk about without polluting it
link |
01:00:56.580
versus pragmatic truth,
link |
01:00:57.700
which is something that's useful.
link |
01:00:59.340
So the example here would be,
link |
01:01:01.940
if I give you a map and you're trying to go
link |
01:01:05.580
from your house to the local brisket restaurant,
link |
01:01:09.060
and the map gets you from your house
link |
01:01:10.780
to the brisket restaurant,
link |
01:01:12.420
is that because the map is true
link |
01:01:13.940
or is that because the map is useful?
link |
01:01:16.740
They're very hard to disentangle
link |
01:01:18.620
when you're just looking at it pragmatically.
link |
01:01:21.420
And in markets, markets, I argue,
link |
01:01:23.900
generate three forms of pragmatic truth.
link |
01:01:26.460
One is the price.
link |
01:01:28.420
So this is the collective subjective demand
link |
01:01:33.420
and purchasing power of humanity
link |
01:01:35.860
running up against the objective supply of capital
link |
01:01:39.860
and resources in the marketplace.
link |
01:01:41.820
So there's demand overlaid on supply.
link |
01:01:44.380
The result of that is the price.
link |
01:01:46.060
So that is the most truthful exchange ratio,
link |
01:01:51.260
which is the closest approximation to the value
link |
01:01:54.180
of any good in the marketplace.
link |
01:01:56.100
So it gives us a data point on which we can operate.
link |
01:01:58.660
It's compressing all known market realities
link |
01:02:01.420
down into a single actionable number.
link |
01:02:03.860
You know, based on the price of bread or copper,
link |
01:02:05.980
whether you wanna buy more of it,
link |
01:02:07.580
you wanna abstain from buying it,
link |
01:02:09.060
or maybe you wanna try and find substitutes.
link |
01:02:11.420
And you can think of that price signal,
link |
01:02:13.940
it's like an economic nerve signal.
link |
01:02:15.580
It's coordinating human action across time.
link |
01:02:17.620
So if we're one socioeconomic superorganism or collective,
link |
01:02:22.900
that the price signal is the nerve.
link |
01:02:24.620
And that's the first form of pragmatic truth
link |
01:02:27.060
that markets generate.
link |
01:02:28.460
The second form would be tools and innovations themselves.
link |
01:02:32.300
So entrepreneurs are experimenting across time.
link |
01:02:35.700
They're trying to satisfy the wants of consumers.
link |
01:02:37.700
Consumers are sovereign in the marketplace.
link |
01:02:40.540
Whatever the consumer wants, the consumer gets, right?
link |
01:02:43.940
I'm trying to satisfy that.
link |
01:02:44.980
I'm trying to do it at a profit.
link |
01:02:46.460
So I'm trying to take viewing the existing price signals
link |
01:02:49.740
of goods in the marketplace.
link |
01:02:50.700
I'm trying to assemble those in a way
link |
01:02:53.260
at a cost lower than the final solution
link |
01:02:55.780
I'm delivering to my customer.
link |
01:02:57.380
I'm selling it at a price higher
link |
01:02:58.700
than the productive factors I combined to create it.
link |
01:03:02.820
And in that iterative process,
link |
01:03:05.100
we're constantly discovering new and better ways
link |
01:03:08.980
of solving problems or satisfying the wants.
link |
01:03:11.420
So we could say, to go out and dig a hole, right?
link |
01:03:14.900
Someone wants a hole dug,
link |
01:03:16.540
that a shovel is gonna let you do it much faster per hour
link |
01:03:20.260
than you would with your bare hands.
link |
01:03:22.460
So what is the pragmatic truth of digging holes?
link |
01:03:26.300
It's a shovel, right?
link |
01:03:27.380
It's the best way we know how to solve
link |
01:03:30.020
any particular problem based on
link |
01:03:33.020
the existing treasury of knowledge.
link |
01:03:35.340
So every tool, again, we're back to ideas being fundamental.
link |
01:03:39.140
The shovel itself is just a knowledge structure.
link |
01:03:42.980
We've figured out a way to create this particular implement
link |
01:03:45.620
and then we've indexed the raw materials
link |
01:03:47.780
we found in nature to this knowledge structure
link |
01:03:49.980
to create a shovel,
link |
01:03:51.220
which allows us to better satisfy human wants
link |
01:03:55.940
faster, cheaper, better, effectively.
link |
01:03:57.260
I'm trying to generalize,
link |
01:03:59.460
you're blowing my mind a little bit here.
link |
01:04:01.220
I'm trying to generalize the idea of tool
link |
01:04:03.660
to how to think about it.
link |
01:04:04.780
Cause I keep just, when you say tool,
link |
01:04:07.780
I keep imagining different tools,
link |
01:04:09.580
like specific instantiations of a tool.
link |
01:04:12.220
I'm trying to see, so the price is a pragmatic truth
link |
01:04:16.100
that's communicating value in this network.
link |
01:04:21.780
Subjective demands against objective supply.
link |
01:04:26.660
Subjective.
link |
01:04:27.500
So it's an economic democracy.
link |
01:04:29.260
Got it.
link |
01:04:30.100
So that's the demand supply.
link |
01:04:32.260
And then the tools are the ways of extracting
link |
01:04:36.380
or solving problems is the more general kind of thing.
link |
01:04:39.500
Or satisfying wants.
link |
01:04:40.860
Satisfying wants.
link |
01:04:42.740
So wants are somehow, that's part of the supply
link |
01:04:46.980
and the demand.
link |
01:04:48.060
And wants are back to value, right?
link |
01:04:49.900
Cause everything someone wants,
link |
01:04:51.140
they're expressing their value.
link |
01:04:53.180
Okay.
link |
01:04:54.020
Yeah.
link |
01:04:54.860
So the shovel is a pragmatic truth.
link |
01:04:57.460
The shovel is truth.
link |
01:04:58.860
It feels like a good book title.
link |
01:05:00.540
Okay, sorry.
link |
01:05:01.380
So what other pragma, what is it?
link |
01:05:03.220
And then the third one I would argue is virtue actually.
link |
01:05:08.540
Oh wow.
link |
01:05:09.740
And another way to maybe think about this
link |
01:05:13.340
is competitive competency,
link |
01:05:14.740
but it's also cooperative competency.
link |
01:05:17.140
So we're learning over time what characteristics,
link |
01:05:20.740
what patterns of action, what mindsets,
link |
01:05:24.780
what mental tools, what heuristics are most useful
link |
01:05:27.980
to satisfying customer wants.
link |
01:05:30.660
So I think that becomes over time,
link |
01:05:32.780
becomes sharpened into virtue, right?
link |
01:05:34.380
Like we know it's best to be honest
link |
01:05:36.500
because if you lie, it's very energy inefficient, right?
link |
01:05:39.340
You're creating this little fork of reality.
link |
01:05:41.700
And then if someone else asks you about that lie again,
link |
01:05:43.460
you have to put another layer of lies on top of it.
link |
01:05:46.140
Where if you just tell the truth,
link |
01:05:47.220
you're just recollecting what happened.
link |
01:05:49.300
And so that sort of keeps,
link |
01:05:52.820
again, when we're talking about delaying volatility, right?
link |
01:05:55.620
If you lie, you're delaying short term volatility,
link |
01:05:59.220
but you're increasing longterm volatility.
link |
01:06:00.860
What about murder?
link |
01:06:01.700
I haven't been able to figure out why murder is bad
link |
01:06:04.140
because I just keep wanting to murder people.
link |
01:06:07.140
And I've murdered many.
link |
01:06:08.300
She's the one for that.
link |
01:06:09.660
Well, that's why I'm trying to get an interview
link |
01:06:11.820
with Vladimir Putin.
link |
01:06:13.380
So that's fascinating, virtue in this market
link |
01:06:16.980
with the supplies and demands, and there's the tools,
link |
01:06:19.740
which is also a pragmatic truth, and there's virtue.
link |
01:06:23.300
It's a pragmatic truth.
link |
01:06:24.980
Yeah, and if we interfere with that free market process,
link |
01:06:28.220
again, if we overstep, which this maybe ties into murder,
link |
01:06:31.340
if you start to be coercive against life,
link |
01:06:34.580
liberty or property,
link |
01:06:35.980
so if you're forcibly taking someone's life,
link |
01:06:38.900
you're breaking down the trust in that market
link |
01:06:41.380
that generates these pragmatic truths.
link |
01:06:44.100
If you forcibly infringe on someone's liberty, right?
link |
01:06:48.700
For any reason other than them originally breaking
link |
01:06:53.220
or infringing upon life, liberty or property,
link |
01:06:55.060
then that's not gonna work either.
link |
01:06:56.860
And then if you violate private property rights,
link |
01:06:59.340
if you steal property from others,
link |
01:07:01.140
you're breaking down the trust
link |
01:07:04.340
that the intersubjective fabric of money and markets
link |
01:07:08.780
and the rule of law, all of these useful fictions
link |
01:07:11.140
are meant to preserve,
link |
01:07:12.140
you're corrupting it and breaking it down.
link |
01:07:14.780
What's kind of interesting to think about the market
link |
01:07:16.500
as helping evolve the virtues.
link |
01:07:20.580
It's sharpened into virtues.
link |
01:07:22.980
And then these virtues can then go
link |
01:07:24.700
into motivational posters,
link |
01:07:27.380
or like in books that we all agree on,
link |
01:07:30.340
and then eventually take for granted
link |
01:07:32.740
as if they were somehow fundamental to human nature,
link |
01:07:35.340
but they're not perhaps fundamental,
link |
01:07:37.700
they're just pragmatic truths.
link |
01:07:40.460
Yeah, another way to consider competition itself
link |
01:07:45.580
is that it is a discovery process.
link |
01:07:48.380
So, you know, entrepreneurs are competing with one another
link |
01:07:52.620
and they're trying to best satisfy consumer wants
link |
01:07:56.460
at the lowest possible price.
link |
01:07:57.700
So they're placing bets of time, energy and capital
link |
01:08:00.460
on themselves, on their idea, their business plan.
link |
01:08:03.740
And then the market decides, right?
link |
01:08:06.420
The consensus of market actors decide which one was better.
link |
01:08:10.260
One lives, one dies.
link |
01:08:12.860
So competition itself is helping us get closer to truth,
link |
01:08:16.900
to pragmatic truth.
link |
01:08:18.060
So we're discovering what is the right price for this asset.
link |
01:08:21.380
And that price, by the way, it's derived,
link |
01:08:24.180
again, in the sense of data compression.
link |
01:08:26.500
Everyone in the world can see that price.
link |
01:08:28.940
Everyone in the world can then put their skin in the game
link |
01:08:31.580
by choosing to buy or sell or short or go long
link |
01:08:34.300
or do any number of financial actions on that price.
link |
01:08:38.220
And that information is then propagated back out
link |
01:08:40.420
to everyone else.
link |
01:08:41.260
So it's this feedback loop between market actor and price
link |
01:08:44.980
that makes it so useful.
link |
01:08:48.100
And that's what carries us,
link |
01:08:52.500
so it's these collisions of interest that carry us,
link |
01:08:56.060
it removes the unuseful aspects of ourselves
link |
01:09:00.900
or of our tools or of a price
link |
01:09:02.940
and reveals pragmatic truth to us.
link |
01:09:05.420
Can you play my therapist for a second?
link |
01:09:08.220
And if we talk about creative destruction,
link |
01:09:11.300
I think, not Bukowski,
link |
01:09:15.260
Hunter S. Thompson has a quote,
link |
01:09:17.460
something like, for all instances of beauty,
link |
01:09:20.940
many souls must be trampled.
link |
01:09:22.820
Wow.
link |
01:09:25.060
But there does seem to be an aspect of competition
link |
01:09:32.580
that destroys, you were talking about entrepreneurs
link |
01:09:36.500
sort of on the outside of the circle of order,
link |
01:09:40.780
striving to make sense, to compress volatility
link |
01:09:45.140
of the chaos of the universe.
link |
01:09:47.860
Is there some way to protect a little bit
link |
01:09:53.420
against the pain of that destruction
link |
01:09:55.380
or that creative destruction,
link |
01:09:57.100
that entrepreneur screaming on fire
link |
01:10:00.340
as he enlightens the rest of us,
link |
01:10:03.660
is there some role for us humans together
link |
01:10:06.740
in the togetherness of it?
link |
01:10:10.220
Also government, but any kind of collectives
link |
01:10:15.060
in helping that entrepreneur who's on fire
link |
01:10:18.300
maybe after a few minutes to spray him with some water
link |
01:10:22.860
and put him out of his misery?
link |
01:10:26.460
I would say that pain is the inarguable basis of being.
link |
01:10:34.380
Pain is, no matter how you try to explain it away
link |
01:10:39.820
or describe it,
link |
01:10:41.340
or it's not something you can rationalize away.
link |
01:10:46.980
No one, I think ever,
link |
01:10:50.900
someone may want to cut themselves to have an endorphin high
link |
01:10:53.180
but no one wants to suffer, we'd say, right?
link |
01:10:55.060
So pain in that sense,
link |
01:10:56.980
it is what we're constantly trying to deal with
link |
01:11:00.500
and to move away from or create buffers between us
link |
01:11:04.780
and potential pain or potential uncertainty.
link |
01:11:07.620
And that pain is information.
link |
01:11:10.900
When we experience something
link |
01:11:12.500
that is misfit to the outcome we desired,
link |
01:11:16.100
that pain is what puts us,
link |
01:11:17.820
it encourages us to change our trajectory
link |
01:11:20.820
to get back on course towards our valued aim.
link |
01:11:24.060
So as far as, you need entrepreneurs that are exploring,
link |
01:11:31.020
and you're trying to do something new,
link |
01:11:32.340
if you're a pioneer of any kind,
link |
01:11:33.860
you are courageously facing pain.
link |
01:11:36.140
You're willfully confronting it.
link |
01:11:38.060
So I don't think it's avoidable in that sense.
link |
01:11:40.900
It's not like we can have pain free economic growth
link |
01:11:44.540
like the central bank would maybe have us lend to believe
link |
01:11:48.020
that we can just run these experiments
link |
01:11:50.220
and when they fail,
link |
01:11:51.060
we'll just paper over all the losses and continue.
link |
01:11:52.900
Or you're just delaying and exacerbating
link |
01:11:56.140
the inevitable volatility back to reality.
link |
01:11:59.660
But what I would say is that capitalism,
link |
01:12:02.660
because we're building,
link |
01:12:03.820
we're increasing the capital stock of the world,
link |
01:12:05.620
which again, capital is the mitigation of risk.
link |
01:12:08.060
So we're reducing the overall risk of existence
link |
01:12:10.420
by accumulating more capital in the world.
link |
01:12:12.580
And that's what protects that entrepreneur
link |
01:12:14.900
that's deciding, hey, I saved up a million bucks.
link |
01:12:17.580
I'm gonna go try this business idea.
link |
01:12:20.100
I'm gonna put all my money on the line.
link |
01:12:22.300
And if he goes up in flames,
link |
01:12:24.420
then his cost of living when he comes back to reality
link |
01:12:27.180
and he's starting over from zero,
link |
01:12:28.380
his cost of living is substantially lower
link |
01:12:31.060
starting over from zero than it was in the past.
link |
01:12:33.700
So then he would be out in the wilderness on his own.
link |
01:12:37.020
So it's the accumulation of capital stock
link |
01:12:40.020
is the buffer against uncertainty for everyone.
link |
01:12:43.300
And it gives you actually more potential
link |
01:12:47.060
to go out and experiment,
link |
01:12:48.420
to go out and confront the chaos of nature
link |
01:12:51.180
because you are better healed effectively.
link |
01:12:54.980
So I think we're speaking
link |
01:12:58.980
in sort of idealistic terms about the power of capitals
link |
01:13:03.020
and when it works well.
link |
01:13:04.740
Is there any aspects that you think
link |
01:13:07.020
that don't work well in a free market
link |
01:13:10.500
in all the basic pragmatic truths
link |
01:13:12.460
that we were talking about?
link |
01:13:13.580
Is there ways it can go wrong?
link |
01:13:16.900
So I would first argue that we have never seen
link |
01:13:22.940
an actual purely free market.
link |
01:13:25.500
Closest example would be kind of geopolitically
link |
01:13:34.580
we have a free market
link |
01:13:35.740
and that governments are not necessarily governed
link |
01:13:41.580
but they are premised on governing large groups
link |
01:13:46.780
of individuals.
link |
01:13:47.620
So that's not, doesn't exactly.
link |
01:13:49.940
You mean between governments?
link |
01:13:52.100
Yes.
link |
01:13:53.140
See, but isn't there still,
link |
01:13:54.620
so a free market, maybe you can correct me,
link |
01:13:57.780
is the free market still grounded in the ideas
link |
01:14:00.460
of property rights and all those kinds of things, right?
link |
01:14:03.980
So governments tend to also sometimes
link |
01:14:06.300
be violent towards each other.
link |
01:14:07.820
That's right.
link |
01:14:08.660
So they don't respect all the basic aspects of capitalism.
link |
01:14:11.820
That's right.
link |
01:14:12.660
So maybe another way to look at this is that
link |
01:14:15.020
gold is the original governor of government actually.
link |
01:14:20.860
And this is the reason governments have abused
link |
01:14:24.140
and gone off of the gold standard.
link |
01:14:26.980
So historically, if you are a bank or a nation state
link |
01:14:33.180
and you produce more currency
link |
01:14:37.820
than your gold reserves can justify,
link |
01:14:41.020
then gold will flow out of your bank
link |
01:14:43.860
or out of your country.
link |
01:14:45.020
So there's this natural check via the money
link |
01:14:50.020
that via capitalistic money, which is gold, right?
link |
01:14:53.300
Gold was selected by the free market.
link |
01:14:55.060
It's not decreed by government.
link |
01:14:57.460
It provided this natural check on government action.
link |
01:15:01.460
So my, I guess to get back to the original question is
link |
01:15:07.020
we've never seen a pure free market
link |
01:15:10.580
because money has always been monopolized
link |
01:15:15.100
and coerced, frankly.
link |
01:15:16.980
So to try and answer what goes wrong with a free market
link |
01:15:20.780
is really difficult because we've never actually seen it.
link |
01:15:23.580
And I would define free market is one
link |
01:15:27.620
in which government only protects life, liberty and property.
link |
01:15:31.580
And so that has a very minimal role in society.
link |
01:15:35.060
Again, just as network security
link |
01:15:37.340
for the economic trade network.
link |
01:15:39.740
And anything that, any government function that goes beyond
link |
01:15:44.660
those three core functions, which by the way,
link |
01:15:47.140
are pretty much the core tenants of morality as well.
link |
01:15:49.540
So government's just really intended to preserve,
link |
01:15:52.340
you know, natural law, if you will.
link |
01:15:55.060
Anything that goes beyond that is,
link |
01:15:58.060
moves us closer to an unfree market.
link |
01:16:00.580
So every regulation, every act of coercion
link |
01:16:05.100
is actually a gradation closer to a purely unfree market,
link |
01:16:10.540
which would be a monopoly.
link |
01:16:12.260
So in terms of what I guess theoretically we could say
link |
01:16:15.980
goes wrong in the free market is that it's volatile.
link |
01:16:20.220
It's trading off, it's accepting short term volatility
link |
01:16:26.500
in exchange for less long run volatility.
link |
01:16:29.820
And this tends to be the way of nature, by the way.
link |
01:16:32.300
So if we look at something like there's a region
link |
01:16:37.300
in North America called Baja, California,
link |
01:16:40.300
and it runs into the United States
link |
01:16:43.660
and it runs down into Mexico as well.
link |
01:16:45.420
So the same topology, but two different jurisdictions.
link |
01:16:50.340
In the US, we very heavily manage forest fires.
link |
01:16:55.580
We're trying to manage nature effectively.
link |
01:16:57.900
Whereas in Mexico is much more unregulated.
link |
01:16:59.980
It just, when wildfires spring up, they let them burn off.
link |
01:17:04.260
North America, when wildfires spring up,
link |
01:17:06.220
we're actually extinguishing them.
link |
01:17:08.140
So we're constantly trying to dampen
link |
01:17:09.660
the short run volatility of these small brush fires.
link |
01:17:12.260
Whereas in Mexico, we just let them burn.
link |
01:17:13.660
We let nature do its thing.
link |
01:17:15.500
The consequence of this is that the wildfires
link |
01:17:18.860
still occur eventually, but they're much larger
link |
01:17:21.260
and much more devastating in North America
link |
01:17:23.140
where human intervention has occurred
link |
01:17:25.180
because it's dampening nature's natural corrective mechanism
link |
01:17:31.820
of clearing this underbrush with these more frequent
link |
01:17:34.620
and smaller fires at the cost of much larger fires.
link |
01:17:38.020
So again, we're delaying short term volatility
link |
01:17:39.860
and exacerbating long run volatility.
link |
01:17:42.580
And in Mexico, it's the opposite, right?
link |
01:17:44.340
Just these wildfires burn much smaller
link |
01:17:46.500
and more continuously over time.
link |
01:17:49.340
The further effect of that in North America
link |
01:17:51.020
is that the fires can get so big and so hot
link |
01:17:53.180
that it burns away the top soil.
link |
01:17:55.100
So it actually destroys the fertility of the soil itself.
link |
01:17:58.460
So the point of this is that human intervention, right?
link |
01:18:02.940
Even the intention behind North American authorities
link |
01:18:06.540
managing that forest fire is to create less destruction.
link |
01:18:10.260
That is the intention,
link |
01:18:11.940
but the intention is divergent from the outcome.
link |
01:18:15.300
So in Taliban speak, he would say that human intervention
link |
01:18:18.900
moves us from mediocre stan into extremist stan.
link |
01:18:23.980
So mediocre stan would be something much more like nature
link |
01:18:27.340
where for instance, you can't double your body weight
link |
01:18:30.140
in a day, probably can't even do it in a year, right?
link |
01:18:33.700
But in extremist stan,
link |
01:18:34.740
which is something much more information based,
link |
01:18:37.140
you can double or send your net worth to zero
link |
01:18:41.900
in a single trade in a single moment, right?
link |
01:18:44.740
So when we try and intervene
link |
01:18:46.700
with natural biological systems
link |
01:18:48.620
that have these feedback loops,
link |
01:18:51.740
we actually start to push the system more
link |
01:18:53.820
to behave more like an extremist stan system
link |
01:18:57.340
that has less short run volatility,
link |
01:18:59.900
but more extreme long run volatility.
link |
01:19:03.260
So, but the question is,
link |
01:19:04.820
where you look at capitalism or communism, for example,
link |
01:19:09.340
and by the way, yes,
link |
01:19:10.580
I will talk to somebody who's a Marxist or a communist,
link |
01:19:13.180
like Richard Wolff is a pretty eloquent defender
link |
01:19:15.700
of these ideas because it's always good
link |
01:19:18.300
to really understand ideas
link |
01:19:19.980
as opposed to just reject them offhand.
link |
01:19:24.100
When you look at the system of capitalism
link |
01:19:26.300
or the system of communism,
link |
01:19:29.420
there's ideals and a lot of people argue
link |
01:19:32.140
in this perfect form would actually be good for the world.
link |
01:19:35.780
The question is how resilient are they
link |
01:19:38.620
to the corruption of human nature?
link |
01:19:42.220
And I mean, you're saying that there's not a,
link |
01:19:45.220
there's never been a free market.
link |
01:19:47.380
It's a very true statement.
link |
01:19:48.820
The question is how resilient is capitalism
link |
01:19:52.940
or whatever implementations of capitalism
link |
01:19:54.700
we had up to this point to human nature
link |
01:19:57.340
where one person will become successful
link |
01:19:59.340
through legitimate means
link |
01:20:03.060
and starts to try to manipulate the system
link |
01:20:05.940
that takes it away from a free market
link |
01:20:07.580
or takes it away from the things
link |
01:20:10.940
that gave them the riches in the first place.
link |
01:20:13.900
And then try to, through corruption, get more,
link |
01:20:17.220
get this, the thing you said, the lazy human ways.
link |
01:20:20.780
Now try to figure out how to get something for nothing.
link |
01:20:22.980
That's right.
link |
01:20:24.220
So how resilient do you think is capitalism to that?
link |
01:20:26.820
Well, the best implementation we've had of it
link |
01:20:31.460
really has been the United States, I think,
link |
01:20:35.700
up until this point.
link |
01:20:36.620
But it's still the central banking itself.
link |
01:20:42.420
This was in the 1848 Manifesto to the Communist Party.
link |
01:20:45.820
Measure number five reads an exclusive state monopoly
link |
01:20:49.740
and centralized control over cash and credit.
link |
01:20:51.860
So the central bank is a Marxist or communist institution.
link |
01:20:56.620
It is antithetical to the free market principles
link |
01:20:58.740
on which the United States was founded.
link |
01:21:00.460
And indeed, the United States resisted
link |
01:21:02.060
the implementation of a central bank.
link |
01:21:04.460
I think it was Andrew Jackson.
link |
01:21:06.500
I know there was the first national bank,
link |
01:21:08.420
the second national bank were both disbanded.
link |
01:21:10.820
And then Andrew Jackson, which is my favorite Tennessean,
link |
01:21:14.060
he has some famous quotes about routing out the bankers
link |
01:21:18.180
like a den of vipers.
link |
01:21:19.700
I think he punched one of the central bankers in the face.
link |
01:21:23.060
Back when our leaders were a bit more badass,
link |
01:21:26.980
I guess you might say.
link |
01:21:28.820
And finally in 1913, the Federal Reserve was implemented.
link |
01:21:35.380
And it's been kind of all downhill from there.
link |
01:21:39.460
So what is, can you, oh, sorry, go ahead.
link |
01:21:41.940
I was just gonna say that communism and capitalism,
link |
01:21:45.620
it's also a matter of scale.
link |
01:21:48.660
The ideal behind communism is from each
link |
01:21:51.500
according to their ability to each according to their need.
link |
01:21:54.100
Sounds beautiful, right?
link |
01:21:55.420
Sounds like a great, peaceful, harmonious way
link |
01:21:58.380
to organize ourselves.
link |
01:22:00.020
The problem is, and by the way, I am a communist
link |
01:22:03.700
in my family, in my home, right?
link |
01:22:05.500
At that very smallest of scales.
link |
01:22:07.140
Yes, in your very small circles of trust,
link |
01:22:10.220
you're much more likely to behave selflessly
link |
01:22:13.940
towards one another.
link |
01:22:14.780
By the way, I look forward to the Bitcoin community
link |
01:22:17.260
clipping out that part, saying that Robert Breedlove
link |
01:22:20.900
was a communist and the ideals of communism are beautiful.
link |
01:22:23.980
Yeah, context matters, people.
link |
01:22:25.580
Sorry, go ahead.
link |
01:22:29.420
But to your point, it does not scale, right?
link |
01:22:33.100
As we move into this larger system
link |
01:22:37.900
of socioeconomic cooperation, which is necessary
link |
01:22:41.580
to deepen the division of labor, to generate more wealth.
link |
01:22:44.940
We need to interact with one another on much larger scales
link |
01:22:48.540
than this communistic utopian ideal.
link |
01:22:52.220
We get into the realm of capitalism
link |
01:22:54.340
where we need really sound rules, hard rules,
link |
01:22:58.020
consensus, verifiability, and frankly, prices.
link |
01:23:03.620
Because the other thing in Soviet Russia
link |
01:23:06.340
is they tried to replace the profit motive
link |
01:23:08.780
or the price signal with this devotion to,
link |
01:23:13.140
this nationalistic faith and devotion.
link |
01:23:15.420
Where it's like, you don't need self interest anymore.
link |
01:23:18.340
You don't need prices or profits.
link |
01:23:20.300
You can just protect Mother Russia, right?
link |
01:23:23.220
And serve Mother Russia and that would create wealth.
link |
01:23:26.420
And what happened, right?
link |
01:23:28.060
They destroyed price signals.
link |
01:23:29.780
There were shortages, there were famines,
link |
01:23:32.180
there's all levels of corruption.
link |
01:23:35.980
Because to your point, it's once you,
link |
01:23:39.860
people have to run the system no matter what.
link |
01:23:42.500
So when people are always pursuing something for nothing
link |
01:23:45.420
and you put someone in a seat
link |
01:23:46.700
of much closer to absolute power
link |
01:23:49.260
where they're making all the pricing decisions,
link |
01:23:51.420
they own all of the productive factors in the economy,
link |
01:23:54.820
they're not beholden to any market force.
link |
01:23:57.780
There's no market check on their action
link |
01:24:01.700
that that institution tends to become more corrupt.
link |
01:24:04.820
And further, it's an inferior resource strategy.
link |
01:24:10.700
I alluded to this earlier where the other way
link |
01:24:12.860
to think about free market versus central planning is
link |
01:24:17.340
it's decentralized or distributed computing
link |
01:24:20.460
versus centralized computing.
link |
01:24:22.820
So each one of us, I think that the number
link |
01:24:26.180
is 120 bits per second of active awareness.
link |
01:24:29.460
And so we can take in, clearly we process a lot more
link |
01:24:32.060
than that, but our active awareness,
link |
01:24:33.180
I think is 120 bits per second.
link |
01:24:37.540
In a centralized planning body like in Soviet Russia,
link |
01:24:40.700
they had the pricing czar.
link |
01:24:41.900
Maybe they had 10, 20,000 people deciding the prices
link |
01:24:44.740
for the entire country.
link |
01:24:46.100
You're only getting that much data throughput, right?
link |
01:24:48.980
20,000 people times 120 bits per second.
link |
01:24:52.340
Whereas in a free market, if everyone is free to interact
link |
01:24:56.140
with deep capital markets based on an accurate price,
link |
01:24:59.060
you're getting the data throughput of 120 bits per second
link |
01:25:02.060
times the entire economy, right?
link |
01:25:04.460
So you're getting, it's a more efficient means
link |
01:25:08.820
for disseminating knowledge effectively.
link |
01:25:11.780
And then again, knowledge is just,
link |
01:25:14.020
the more knowledge a socioeconomic structure can contain,
link |
01:25:17.300
the more wealthy it is, right?
link |
01:25:19.180
Prices, tools, all these things are just knowledge.
link |
01:25:21.780
So in that respect, that's why something like capitalism,
link |
01:25:27.100
even in its marginalized form, state capitalism,
link |
01:25:30.740
out competes communism.
link |
01:25:33.100
It's distributed computing versus centralized computing.
link |
01:25:36.420
You know, we kind of brought up religion
link |
01:25:40.620
and Joseph Campbell and myth and the propagation of ideas.
link |
01:25:46.100
And kind of before I forget,
link |
01:25:48.020
I wanted to ask your thoughts about this.
link |
01:25:50.580
You know, Jordan Peterson, I haven't really understood
link |
01:25:55.060
exactly like be able to pin him down exactly
link |
01:25:58.580
what he sees as the role of religion in human society.
link |
01:26:03.580
But it feels like he's describing it as having value for us.
link |
01:26:12.140
The ideas of myth are valuable.
link |
01:26:15.300
They're valuable mechanisms toward,
link |
01:26:18.460
I think you mentioned kind of directing us
link |
01:26:21.340
in this world as a human society.
link |
01:26:25.020
Do you think about myth?
link |
01:26:26.060
Do you think about religion?
link |
01:26:27.460
What's the use of it in this construct of markets
link |
01:26:31.820
in this framework of where ideas are ultimately
link |
01:26:37.940
the fundamental thing that makes societies work?
link |
01:26:44.540
Yeah, I think Jordan Peterson, who I'm a huge fan of,
link |
01:26:49.780
he's been very influential in my thinking
link |
01:26:52.740
and influential on my own religious views as well.
link |
01:26:56.180
I think his position would be, and he's said this before,
link |
01:27:00.180
that he acts as if God exists.
link |
01:27:05.220
And I've had some arguments about this before,
link |
01:27:08.460
but to me that points towards the preeminence of action
link |
01:27:12.660
and how important action is
link |
01:27:14.180
versus your cognitive beliefs necessarily.
link |
01:27:19.100
And I think there is a lot of utility in that,
link |
01:27:20.820
that if you follow the moral code of something,
link |
01:27:24.380
like the Bible, you do reap benefits from that.
link |
01:27:28.420
Society reaps benefits from that.
link |
01:27:32.700
And sometimes I bring up this point and people are like,
link |
01:27:35.460
oh my God, are you kidding me?
link |
01:27:36.300
Have you read the Old Testament?
link |
01:27:37.620
They're clobbering people with rocks
link |
01:27:39.540
when they do the wrong thing.
link |
01:27:41.500
The Bible doesn't claim to be this,
link |
01:27:44.580
like do everything that was done in the Bible.
link |
01:27:46.500
It's more like charting this moral progression
link |
01:27:48.940
where we came from this very barbaric society
link |
01:27:51.620
into something more like the New Testament
link |
01:27:54.220
where we're honoring individual sovereignty
link |
01:27:56.820
above the state and things like that.
link |
01:27:58.220
So I think that mythology itself
link |
01:28:02.980
is another form of data compression.
link |
01:28:05.580
If you look at these stories,
link |
01:28:08.100
Cain and Abel is a good example,
link |
01:28:10.020
or Peterson makes the point that it's a tiny story.
link |
01:28:13.020
It's a paragraph ish long,
link |
01:28:16.020
but it contains so many layers of meaning
link |
01:28:18.620
in regards to violence, to evil, betrayal, work,
link |
01:28:24.620
the divergence between intention and result,
link |
01:28:27.220
because I think Cain is actually making,
link |
01:28:31.180
he's making the effort to sacrifice for God,
link |
01:28:34.420
but the sacrifices he's making are not,
link |
01:28:36.700
God doesn't find them useful.
link |
01:28:39.180
And so he sort of rejects them.
link |
01:28:45.220
Again, if we're organizing these stories
link |
01:28:48.260
we're organized by these useful fictions, right?
link |
01:28:50.500
These, these Herarian imagined orders.
link |
01:28:53.420
I think mythology is kind of the original version of that,
link |
01:28:56.820
where we were learning to organize ourselves around stories
link |
01:29:03.340
to best coordinate our action across space and time.
link |
01:29:09.140
And so I think it's very foundational.
link |
01:29:14.220
And back to what we were saying in the beginning
link |
01:29:16.180
that if value truly is fundamental,
link |
01:29:18.420
I think it's interesting that all these stories
link |
01:29:20.900
point towards often common moral values.
link |
01:29:24.620
They're not perfectly aligned,
link |
01:29:27.700
but it does speak to just the evolutionary importance
link |
01:29:32.220
of morality and the subjectivity of morality,
link |
01:29:34.620
where morality sort of evolves over time based on,
link |
01:29:39.100
frankly, the capital stock we've accumulated.
link |
01:29:40.900
The more capital stock we've accumulated,
link |
01:29:42.580
the easier life is, the less barbaric we have to be.
link |
01:29:45.700
Whereas if we're living in conditions of true scarcity,
link |
01:29:51.140
then we tend to be a bit more barbaric towards one another.
link |
01:29:55.300
And that too, to dovetail this
link |
01:29:57.180
into something largely unrelated,
link |
01:29:59.380
but I think is really important is inflation.
link |
01:30:03.100
Inflation by artificially increasing the prices
link |
01:30:07.380
of goods and services in the world, right?
link |
01:30:09.620
We're injecting more dollars,
link |
01:30:12.060
chasing the same level of goods and services.
link |
01:30:15.020
We are artificially increasing scarcity,
link |
01:30:19.460
perceived scarcity, right?
link |
01:30:21.700
And when you increase perceived scarcity,
link |
01:30:24.780
you are amplifying divisiveness.
link |
01:30:30.060
The natural state of man is when everything is scarce
link |
01:30:33.300
and you really have to fight hard
link |
01:30:34.700
just to eat or drink water that day.
link |
01:30:37.580
So it's decivilizing in a way
link |
01:30:40.540
by artificially amplifying
link |
01:30:42.540
the perceived scarcity in the world.
link |
01:30:44.780
Can you elaborate how does inflation increase
link |
01:30:47.340
the perceived scarcity in the world?
link |
01:30:49.220
So we could think the price itself is an indication,
link |
01:30:52.980
it's a data packet, if you will.
link |
01:30:54.620
The price is a data packet on supply and demand, right?
link |
01:30:57.820
It's telling you how much supply there is
link |
01:31:00.460
of something in the world relative to the demand.
link |
01:31:03.540
So when you print money
link |
01:31:06.460
and artificially increase that price,
link |
01:31:08.620
it's diverging away from supply and demand.
link |
01:31:10.820
It's becoming just more of a product of policy
link |
01:31:13.820
than it is of free market fundamentals.
link |
01:31:17.900
The more expensive something is,
link |
01:31:19.980
that is a signal to the marketplace and to market actors
link |
01:31:22.860
that it is scarce, right?
link |
01:31:24.700
That's why a Leonardo painting
link |
01:31:28.340
might sell for $16 million, there's only one,
link |
01:31:30.780
there's a lot of demand for it.
link |
01:31:32.940
Maybe my numbers are off, but you get the point.
link |
01:31:36.020
It's the reason mask spiked in price
link |
01:31:38.420
after the COVID announcement, right?
link |
01:31:39.940
There was not enough supply,
link |
01:31:41.900
toilet paper, et cetera, et cetera.
link |
01:31:43.660
So inflation, and by inflation,
link |
01:31:47.700
I specifically mean arbitrary fiat currency
link |
01:31:50.900
supply inflation by legal monopoly,
link |
01:31:53.900
not inflation is a commonly misunderstood word.
link |
01:31:57.340
That is amplifying the perception of scarcity
link |
01:32:01.380
among market actors in the world.
link |
01:32:03.580
And I would argue that it actually amplifies divisiveness.
link |
01:32:07.860
I think this is the key maybe to looking at
link |
01:32:12.060
the connection between the monopolization of money
link |
01:32:15.140
and things like cancel culture,
link |
01:32:17.180
because it's increasing our natural predilection
link |
01:32:22.820
to be combative with one another,
link |
01:32:24.340
because we think there's more scarcity in the world
link |
01:32:26.740
than there actually is,
link |
01:32:27.980
versus in a world where you're not increasing
link |
01:32:29.900
the money supply, prices are declining every year.
link |
01:32:33.220
As prices decline, this is a signal to market actors
link |
01:32:36.460
and the market that scarcity is declining.
link |
01:32:39.020
There's less need to fight over things.
link |
01:32:41.940
And all of this ties back into the old Bastiat saying
link |
01:32:46.180
that if goods don't cross borders, soldiers will.
link |
01:32:50.300
So if we're not trading with one another,
link |
01:32:52.020
if we're not acting interdependently,
link |
01:32:53.940
and we're not becoming more intelligent as a market,
link |
01:33:00.140
and that increased intelligence or increased knowledge
link |
01:33:03.820
is reflected in decreased prices,
link |
01:33:06.620
because prices are just the exchange ratios of things.
link |
01:33:11.020
So the smarter we can solve problems,
link |
01:33:12.980
the better we can solve problems, the less prices would be.
link |
01:33:15.900
So it induces more cooperation.
link |
01:33:18.820
I love how you tie inflation and cancel culture together
link |
01:33:21.660
as essentially artificial creation of increase of conflict.
link |
01:33:28.380
Artificially increasing scarcity
link |
01:33:30.420
and thereby artificially increasing conflict.
link |
01:33:33.300
That's really fascinating.
link |
01:33:35.820
You're short circuiting my brain
link |
01:33:38.460
many times throughout this conversation.
link |
01:33:40.500
Okay, this robot is struggling to keep up.
link |
01:33:45.340
Okay, maybe to step back at the useful fictions
link |
01:33:50.860
or pragmatic truths.
link |
01:33:53.860
Let me ask the question that you've answered
link |
01:33:56.180
in many ways already, but let's explicitly look at.
link |
01:34:00.260
What is money?
link |
01:34:01.900
Oh, as you know, that's my favorite question.
link |
01:34:04.060
Yes.
link |
01:34:07.500
Is the name of the show I just launched,
link |
01:34:09.940
the What is Money show?
link |
01:34:13.420
Clearly, we could say that the Bitcoin rabbit hole
link |
01:34:16.980
is what's led me to explore a lot of these ideas in depth.
link |
01:34:22.180
And I think as we've demonstrated today,
link |
01:34:23.860
it goes well beyond just the economic sphere
link |
01:34:26.660
when you start to think about things like exchange
link |
01:34:28.780
and morality and time preference and civilization.
link |
01:34:33.140
So I love the question, what is money?
link |
01:34:35.980
I think it is the key to incepting a deeper understanding
link |
01:34:40.340
of the world into people that if you actually
link |
01:34:42.260
just start to ask the seemingly simple question,
link |
01:34:47.220
it surfaces more and more layers of truth.
link |
01:34:51.420
And I recently, I just wrote a piece,
link |
01:34:55.820
I think I have 30 something answers to this question.
link |
01:34:59.780
So there's.
link |
01:35:00.620
So sometimes it's actually a more systematic way
link |
01:35:03.340
of asking the question of what is the meaning of life?
link |
01:35:06.540
There's some questions that are almost unanswerable,
link |
01:35:11.180
but in their asking allow you to deeply get closer to truth,
link |
01:35:17.540
deeply understand the nature of our human existence.
link |
01:35:21.420
And the meaning of life is almost like
link |
01:35:23.020
this initial philosophers striving towards that.
link |
01:35:28.020
If money is indeed as fundamental as you've described,
link |
01:35:34.540
especially in the context of value being fundamental,
link |
01:35:38.140
then that is a really, that's a more,
link |
01:35:40.380
let's take a 21st century way of asking the same question
link |
01:35:43.140
about what is the meaning of life.
link |
01:35:45.060
You mentioned that it's a meta property
link |
01:35:47.740
out of the list of many ways to answer that question.
link |
01:35:51.080
How would you help people to think about that?
link |
01:35:53.260
Yeah, the first most serious answer
link |
01:35:58.620
comes from the school of Austrian economics
link |
01:36:01.440
and it defines money as a universal medium of exchange.
link |
01:36:06.500
So this would be any good that is used,
link |
01:36:12.540
held and used purely for purposes of facilitating exchange.
link |
01:36:17.540
So in the configuration of demand for any particular asset,
link |
01:36:23.860
it's bifurcated between its utility,
link |
01:36:26.780
which is something a service
link |
01:36:28.220
that it can render to you in real time,
link |
01:36:31.020
whether it's, if it's water, you're thirsty,
link |
01:36:35.060
that's the utility of water is that it can quench your thirst
link |
01:36:39.080
whereas the marketability would be the expectation
link |
01:36:41.900
of future exchange that other people would want this asset
link |
01:36:44.980
in the future to trade it for whatever they may have.
link |
01:36:49.180
Money is just going to be the good in any trading economy
link |
01:36:53.660
that has the highest proportion of marketability
link |
01:36:56.020
relative to utility.
link |
01:36:57.900
So today that would be gold.
link |
01:37:00.580
Gold has utility, it's used in electronics,
link |
01:37:03.460
it's used in dental dentistry and whatnot,
link |
01:37:06.540
but it's largely used as a store of value across time
link |
01:37:09.920
and that's what it's been used for for 5,000 years.
link |
01:37:12.200
So if we say gold has a $10 trillion market cap,
link |
01:37:16.700
maybe 2 trillion of that is its utility value
link |
01:37:19.380
or it's actually demand for use in computers and dentistry
link |
01:37:22.620
and an 8 trillion of that is demand
link |
01:37:24.500
for its use as a store of value.
link |
01:37:28.500
Money, the marketability aspects of money
link |
01:37:32.540
boils down to five services that money can render.
link |
01:37:36.780
Money needs to be divisible, it needs to be durable,
link |
01:37:40.340
it needs to be recognizable, it needs to be portable
link |
01:37:42.820
and it needs to be scarce.
link |
01:37:45.640
So I'll gloss over a lot of history with this
link |
01:37:47.240
and just say that historically,
link |
01:37:50.040
money's always been a technology,
link |
01:37:51.920
still is a technology or a tool.
link |
01:37:53.700
I use these terms interchangeably
link |
01:37:55.180
and you think of a technology
link |
01:37:56.780
as just a more sophisticated tool effectively.
link |
01:38:02.620
To best satisfy those properties,
link |
01:38:03.980
monetary metals were determined
link |
01:38:05.620
to be the most satisfactory tool,
link |
01:38:08.340
the most divisible, most durable, most recognizable,
link |
01:38:10.060
most portable tool in the marketplace.
link |
01:38:13.180
Of the monetary metals, gold was the most scarce
link |
01:38:17.060
as quantified by either its stock to flow ratio
link |
01:38:20.620
or its inflation resistance.
link |
01:38:22.280
So simple way to say this is that people always prefer
link |
01:38:25.580
the money most resistant to inflation.
link |
01:38:27.980
That's a nice definition of scarcity in the context.
link |
01:38:30.780
The money is, if you were to measure it,
link |
01:38:34.020
the resistance to inflation.
link |
01:38:36.180
So how hard is it to artificially increase
link |
01:38:38.340
the supply of the thing?
link |
01:38:39.980
That is the hardness of money.
link |
01:38:41.860
And that's why gold is hard money.
link |
01:38:43.420
Because the alchemy is hard.
link |
01:38:44.900
That's right.
link |
01:38:46.140
Because no one cracked the alchemy.
link |
01:38:47.300
So gold became money.
link |
01:38:49.820
So that's such a nice clean explanation of what is money
link |
01:38:56.180
with the five elements and gold ultimately won out
link |
01:38:59.340
because of the last piece of scarcity.
link |
01:39:01.740
That's right.
link |
01:39:02.580
And to get to maybe dig a little deeper there.
link |
01:39:04.660
So scarcity, we commonly think of scarcity
link |
01:39:08.460
as strictly a supply property,
link |
01:39:12.460
where if there's not much of something, then it's scarce.
link |
01:39:15.260
But it's not actually true.
link |
01:39:16.580
Scarcity occurs when demand exceeds supply.
link |
01:39:20.780
So when there's more demand than the supply can justify,
link |
01:39:24.380
the thing becomes an economic good
link |
01:39:26.300
and it establishes itself a market price.
link |
01:39:30.060
So there's more demand for the thing
link |
01:39:31.560
than the supply can satisfy.
link |
01:39:33.780
The unique thing about money as a concept at least
link |
01:39:37.060
is that demand always exceeds supply.
link |
01:39:40.780
There's never enough money to satisfy everyone, right?
link |
01:39:43.500
Because another definition for money,
link |
01:39:46.380
it's the most marketable good.
link |
01:39:48.580
So it can be traded for any other good service,
link |
01:39:53.080
piece of knowledge in the marketplace.
link |
01:39:55.140
So humans being what we are, we're never satisfied, right?
link |
01:39:58.220
We always want more of something, whatever it may be.
link |
01:40:01.220
So money as the ultimate token of obtaining that something
link |
01:40:04.980
is always scarce as a concept.
link |
01:40:09.020
But the problem with money is that if you can,
link |
01:40:12.580
as you alluded to, easily increase its supply,
link |
01:40:15.500
then all of a sudden you can compromise
link |
01:40:17.060
the scarcity of it over time
link |
01:40:19.980
and you can rob people through inflation.
link |
01:40:23.220
So that's why the market settled on gold as money.
link |
01:40:26.580
And robbing is reallocating the value that I,
link |
01:40:31.500
so essentially the one property, like why scarcity
link |
01:40:36.580
is important is it adds a lot more friction
link |
01:40:40.880
to the reallocation, like through essentially violence
link |
01:40:47.460
or implied violence.
link |
01:40:48.900
Well, it prevents it through cost of extraction too.
link |
01:40:51.380
So if you want to go out and dilute gold holders today,
link |
01:40:54.460
you have to go out into the world and mine gold.
link |
01:40:57.420
It's a very expensive process.
link |
01:40:59.720
That process tends to find equilibrium
link |
01:41:02.700
where production cost equals the market value of gold.
link |
01:41:05.180
So if market value is $2,000 an ounce today of gold,
link |
01:41:08.500
its production cost is going to be around there.
link |
01:41:10.960
That's the natural market equilibrium.
link |
01:41:12.420
So that way gold miners cannot just dilute people over time.
link |
01:41:16.820
Whereas if you look at something like fiat currency,
link |
01:41:19.700
which we're jumping ahead a little bit,
link |
01:41:21.180
but its production cost is zero.
link |
01:41:23.860
So there's a reason the market value of fiat currency
link |
01:41:26.540
historically has always converged to zero
link |
01:41:29.500
because its production cost is near zero.
link |
01:41:31.500
So the extension to that question might be
link |
01:41:34.060
how did we get from gold to paper currency?
link |
01:41:37.700
And again, this is rooted in the properties of money.
link |
01:41:41.620
As good as monetary metals were
link |
01:41:43.140
and as good as gold is as money at holding value across time,
link |
01:41:47.660
it's rather limited in terms of portability.
link |
01:41:50.740
It is not as useful for moving value across space.
link |
01:41:54.100
This is another definition of money, by the way,
link |
01:41:55.820
a social device for moving value across space and time.
link |
01:42:00.340
So to rectify this technological shortcoming of gold,
link |
01:42:04.820
we introduced, first of all,
link |
01:42:08.180
the custody of gold was gradually centralized
link |
01:42:10.900
into fewer and fewer warehousing operations.
link |
01:42:15.580
This is because there are economies of scale
link |
01:42:17.780
associated with using gold as money.
link |
01:42:20.980
And that if you centralize the custody,
link |
01:42:23.120
the warehouse owner can then issue a paper receipt
link |
01:42:26.460
called a warehouse receipt for that gold.
link |
01:42:28.540
And then market participants can trade that paper
link |
01:42:31.100
as if it's good as gold.
link |
01:42:32.500
And everyone has an option at any time
link |
01:42:34.160
to go and redeem real gold from the warehouse.
link |
01:42:36.860
So that system works until the problem with it
link |
01:42:40.740
is that it introduces the need to trust the custodian.
link |
01:42:44.120
So it's introducing counterparty risk
link |
01:42:45.820
in the form of the custodian.
link |
01:42:47.660
And now should that warehouse choose
link |
01:42:50.240
to increase the supply of paper notes to gold
link |
01:42:54.140
beyond its supply.
link |
01:42:55.420
So if it's got three tons of gold
link |
01:42:57.580
and it issues six tons worth of paper receipts,
link |
01:43:00.900
all of a sudden it's participating in a fraud.
link |
01:43:03.440
It's basically lying.
link |
01:43:04.520
It's representing that it has more gold
link |
01:43:06.140
than it actually does.
link |
01:43:08.900
And that is the pathway that we got into banking
link |
01:43:12.780
and central banking,
link |
01:43:14.000
is we needed a convenience mechanism
link |
01:43:16.540
to rectify the portability shortcomings of gold.
link |
01:43:19.460
We needed to be able to move value across space, right?
link |
01:43:22.180
Gold was doing a great job at moving value over time,
link |
01:43:24.660
but not space.
link |
01:43:26.020
Paper currency gave us the ability
link |
01:43:27.380
to move value across space,
link |
01:43:29.140
but it introduced this attack vector
link |
01:43:31.560
for warehouse operators, which became banks,
link |
01:43:34.200
which became central banks,
link |
01:43:36.040
to modify the supply to suit their own political agendas.
link |
01:43:39.980
Added the snooze button.
link |
01:43:42.380
That allows you to do a little fraud.
link |
01:43:45.900
To get something for nothing.
link |
01:43:47.300
Something, just a little bit at first.
link |
01:43:49.140
Just this one morning, just a little bit.
link |
01:43:53.500
I mean, I don't know if you can speak
link |
01:43:55.020
to the birth of fiat currency.
link |
01:44:00.140
Is there some interesting characteristics
link |
01:44:04.180
to those early steps that created it?
link |
01:44:07.580
Like, could it have been averted?
link |
01:44:09.940
Or is this the natural progression of governments?
link |
01:44:14.940
You know, what's funny is that central banking
link |
01:44:18.240
was initially designed to be the custodian of gold, right?
link |
01:44:22.560
And so they were going to custody the gold,
link |
01:44:25.640
issue paper on top of it,
link |
01:44:28.800
and then they would maintain,
link |
01:44:30.560
you could trust the public stamp effectively.
link |
01:44:32.560
You could trust that the central bank
link |
01:44:33.840
had as much gold on reserve as they said they had,
link |
01:44:36.480
and they were supposed to be the trustworthy institution.
link |
01:44:38.360
So we went from placing our trust
link |
01:44:41.160
in a free market game theoretic process,
link |
01:44:43.800
or trusting gold,
link |
01:44:45.960
and we began trusting this institution instead.
link |
01:44:50.880
This, that institution would not have arisen
link |
01:44:54.440
if the portability of gold was really high.
link |
01:44:58.160
If we could have somehow sent gold
link |
01:45:00.380
across a telecommunications channel,
link |
01:45:02.320
there would have been no need for a central bank.
link |
01:45:05.080
Everyone could have custodyed their gold
link |
01:45:07.560
in any information bearing medium, frankly,
link |
01:45:10.760
and they could beam it around the world at any time.
link |
01:45:13.760
So this whole institution itself
link |
01:45:16.920
is rooted in a technological shortcoming of gold.
link |
01:45:21.080
So I think it's, another way to think about that
link |
01:45:24.160
is maybe had there been all the gold in the world today
link |
01:45:28.600
fills two Olympic sized swimming pools,
link |
01:45:31.000
all the gold mined throughout all of human history.
link |
01:45:32.960
So there's not a lot, right?
link |
01:45:36.000
What if there had been just like way more?
link |
01:45:38.760
There'd just been, I don't know,
link |
01:45:39.600
20,000 Olympic swimming pools worth.
link |
01:45:41.840
Portability wouldn't have been as much of an issue, right?
link |
01:45:45.280
We could have, and this is to say,
link |
01:45:46.960
assuming gold was still the most scarce metal
link |
01:45:48.920
and all these things,
link |
01:45:52.100
portability would have been less of an issue.
link |
01:45:53.440
We would have had less dependence
link |
01:45:55.960
or need for a central bank.
link |
01:45:57.960
So I think it's kind of idiosyncratic
link |
01:46:00.200
in that we just happened to end up here on this planet
link |
01:46:03.720
with a certain amount of gold.
link |
01:46:05.120
It best satisfied the properties of money.
link |
01:46:07.400
And a certain amount of humans,
link |
01:46:08.920
a geographic dispersed such that portability
link |
01:46:12.120
had certain properties that you want to achieve
link |
01:46:14.280
for humans in the geographical space
link |
01:46:16.080
to be able to be a exchange value.
link |
01:46:18.720
It became more of an issue as we globalized, right?
link |
01:46:20.920
As we became more of a global society,
link |
01:46:22.560
we needed money that could move across space really fast.
link |
01:46:26.440
So we could trade in international capital markets.
link |
01:46:29.620
So that drove the central bank
link |
01:46:33.520
to become the dominant institution of the world.
link |
01:46:35.680
And if you follow the flows of gold throughout history,
link |
01:46:39.080
you know, I've been watching this documentary
link |
01:46:41.200
on World War I and World War II on Netflix.
link |
01:46:43.640
I think it's called World War II in Color.
link |
01:46:45.840
Oh yeah, that's really good.
link |
01:46:47.680
So good.
link |
01:46:50.640
When I say gold has been the governor of governments
link |
01:46:53.480
or gold is geopolitical money,
link |
01:46:55.080
like it is the base layer operating system,
link |
01:46:59.140
has been the base layer operating system for analog society.
link |
01:47:02.120
So it's always been about who controls the gold,
link |
01:47:05.680
is who makes the rules.
link |
01:47:07.760
And that's, in that context,
link |
01:47:11.200
is why Bitcoin is so interesting
link |
01:47:12.720
because it is the disruptor to
link |
01:47:16.280
this base level operating system
link |
01:47:18.840
that's functioned for all of human history.
link |
01:47:22.040
I think this is a good place to ask,
link |
01:47:24.440
we asked the what is money question.
link |
01:47:27.880
What is Bitcoin?
link |
01:47:29.100
That's a question as complicated as what is money?
link |
01:47:35.120
I think if you get a general understanding of money
link |
01:47:39.160
from a number of angles,
link |
01:47:42.800
that we could say Bitcoin is the most superior
link |
01:47:47.880
monetary technology that has ever existed.
link |
01:47:51.560
So one of the most superior implementation
link |
01:47:54.760
of the ideas of money that you talked about,
link |
01:47:56.720
you talked about money as speech,
link |
01:47:58.320
you talked about money as an idea,
link |
01:48:01.000
we talked about money as sovereignty.
link |
01:48:04.040
Yeah.
link |
01:48:04.880
So we're attaching the concept of money, to your point,
link |
01:48:08.160
to whatever tool best satisfies those properties of money
link |
01:48:13.760
or best renders those services we need for money.
link |
01:48:16.840
And as you said, you're using the word tool
link |
01:48:19.320
and technology interchangeably here.
link |
01:48:20.720
Yes, yes.
link |
01:48:22.300
And another thing to think about here is that
link |
01:48:24.820
we think often in terms of goods or services,
link |
01:48:28.480
but actually everything is a service.
link |
01:48:31.880
So it's not the physical properties of this pen
link |
01:48:35.520
that I find valuable,
link |
01:48:36.800
it's the services that it renders to me,
link |
01:48:38.800
that I want to write a letter,
link |
01:48:40.460
this serves me by allowing me to lay ink on paper
link |
01:48:45.800
and communicate information.
link |
01:48:47.880
So value, humans attach value as we alluded to earlier,
link |
01:48:52.880
two services, not goods.
link |
01:48:55.520
So the properties or the services that money renders
link |
01:48:58.080
that human beings value are those five properties,
link |
01:49:00.760
divisibility, durability,
link |
01:49:01.920
recognizability, portability, scarcity.
link |
01:49:05.200
Metals best satisfied those services historically,
link |
01:49:09.280
but Bitcoin as the most superior monetary technology
link |
01:49:12.280
in human history, essentially perfects them.
link |
01:49:16.640
It's as close to perfection as we've ever been.
link |
01:49:18.400
So in terms of divisibility,
link |
01:49:21.040
each Bitcoin can be broken down into 100 million subunits
link |
01:49:25.120
called a satoshi.
link |
01:49:29.240
If that divisibility were ever a problem,
link |
01:49:31.480
which actually there was a question that came up recently,
link |
01:49:35.120
if you divide the world population
link |
01:49:37.440
by the total supply of Bitcoin,
link |
01:49:38.760
you end up at like 0.3 Bitcoin per person,
link |
01:49:42.000
call it 300,000 satoshis per person.
link |
01:49:46.060
What if that was not enough to facilitate economic activity?
link |
01:49:50.560
And the answer to that is Bitcoin can soft fork
link |
01:49:53.200
into further divisibility.
link |
01:49:54.560
So if Bitcoin ate all the money in the world
link |
01:49:58.120
and the average Bitcoin or wealth
link |
01:50:00.480
will say 300,000 satoshis each,
link |
01:50:02.080
but that wasn't divisible enough maybe to buy coffee
link |
01:50:06.160
and do all these day to day transactions,
link |
01:50:07.560
what would happen?
link |
01:50:08.400
Well, we would increase its divisibility.
link |
01:50:09.800
So Bitcoin's perfected divisibility,
link |
01:50:12.480
the divisibility of money,
link |
01:50:13.820
lets us transact across scales, right?
link |
01:50:16.440
We can buy coffee or we can buy a house.
link |
01:50:21.240
Durability is an interesting one.
link |
01:50:23.160
So clearly something like gold is very durable.
link |
01:50:25.400
It's resistant to degradation over time.
link |
01:50:28.280
Bitcoin is just pure information,
link |
01:50:30.280
but it's stored in a distributed format.
link |
01:50:33.540
So information stored in a distributed fashion
link |
01:50:37.000
tends to be virtually infinitely durable.
link |
01:50:40.840
The example I'd like to give here
link |
01:50:41.800
is something like the Bible.
link |
01:50:43.600
The Bible is just distributed information.
link |
01:50:46.100
It's stored everywhere and nowhere, so to speak.
link |
01:50:49.240
And for that reason, it has outlasted empires.
link |
01:50:53.160
And Bitcoin's similar, right?
link |
01:50:54.360
You can't make changes to it unilaterally.
link |
01:50:57.080
But to make explicit the ways in which it is not durable
link |
01:51:01.960
is the fact that it relies on computing infrastructure.
link |
01:51:05.440
Like it needs computers.
link |
01:51:08.360
So if you were to destroy all the computers in the world,
link |
01:51:11.160
it needs mechanisms that store and transfer information.
link |
01:51:17.620
And so you could attack it.
link |
01:51:20.100
I mean, you could attack gold in the same kind of way,
link |
01:51:22.100
I suppose, through the physics,
link |
01:51:23.800
but it's probably easier to destroy
link |
01:51:26.260
all the computers in the world
link |
01:51:27.380
than it is to destroy all the gold in the world.
link |
01:51:30.300
Maybe not, I don't know.
link |
01:51:32.340
Anyway.
link |
01:51:33.660
Yeah, you're right.
link |
01:51:35.660
Maybe, I'm not sure which one would be harder to destroy.
link |
01:51:38.480
The other thing is there's a dynamic incentive.
link |
01:51:41.900
So every time you destroy Bitcoin miners,
link |
01:51:44.820
you're creating incentives for anyone else
link |
01:51:46.580
with access to electricity to mine
link |
01:51:48.900
because you're making the algorithm easier.
link |
01:51:50.700
Yeah, so the destruction is difficult
link |
01:51:54.100
because of the decentralized nature of the whole thing.
link |
01:51:56.580
And the difficulty adjustment.
link |
01:51:57.900
Yeah, so you're gonna have to use nuclear weapons
link |
01:52:00.480
and cover the whole globe, but anyway.
link |
01:52:02.620
Yeah, and by then,
link |
01:52:03.860
we've got much bigger problems than money, right?
link |
01:52:06.020
That's right, so okay, so that's durability.
link |
01:52:09.660
So portability, Bitcoin's pure information,
link |
01:52:12.300
it can move at the speed of light,
link |
01:52:13.620
can't get much faster than that.
link |
01:52:15.900
Recognizability refers to the ability
link |
01:52:19.540
to verify the veracity of the money or its authenticity.
link |
01:52:23.360
So you can actually, when we used to transact gold,
link |
01:52:27.320
there were time honored techniques for verifying
link |
01:52:30.000
that it was gold and not gold plated lead, for instance.
link |
01:52:32.980
This is where we get the term sound money.
link |
01:52:34.860
A gold coin made a very particular sound
link |
01:52:36.760
when dropped from a certain height.
link |
01:52:38.620
You've seen people biting coins.
link |
01:52:40.220
These are all techniques for testing the authenticity of gold.
link |
01:52:44.100
And with Bitcoin, we have something unique
link |
01:52:46.440
in that if you're running a full node,
link |
01:52:48.300
you can verify that the Bitcoin is Bitcoin, right?
link |
01:52:51.180
It cannot be tampered with, it cannot be faked.
link |
01:52:54.880
And in addition to that, as a node operator,
link |
01:52:57.260
you can audit the total supply of Bitcoin at any time,
link |
01:53:00.000
which is unlike any money in history.
link |
01:53:01.560
So you know with full certainty,
link |
01:53:04.180
if you're holding 1000 Bitcoin,
link |
01:53:06.820
you have 1000 out of a possible 21 million forever.
link |
01:53:10.420
You have a guaranteed fraction of the total supply.
link |
01:53:13.040
Yeah, so a full node contains information
link |
01:53:14.740
about every transaction that's ever been had
link |
01:53:16.580
so you can figure out, yeah, I mean,
link |
01:53:19.180
all the truth of this money is all right there.
link |
01:53:23.840
Yeah, it's like a fractal constituent
link |
01:53:25.800
of the whole network, right?
link |
01:53:27.100
The whole Bitcoin blockchain is comprised in a node too.
link |
01:53:30.820
Not the proof of work piece,
link |
01:53:32.180
but the entire transaction history.
link |
01:53:34.380
And so that's unique as well.
link |
01:53:37.060
And that's what makes Bitcoin the ultimate store of value
link |
01:53:39.940
is that you know with certainty what the total supply is
link |
01:53:43.780
and will ever be.
link |
01:53:45.100
And you know that your share of that supply is fixed.
link |
01:53:49.440
It cannot change.
link |
01:53:50.460
It can only improve actually.
link |
01:53:51.860
If someone loses, you know,
link |
01:53:53.700
if the Satoshi stash is truly gone forever,
link |
01:53:56.020
the million Bitcoin never moves,
link |
01:53:58.000
then we're talking about 1000 Bitcoin
link |
01:53:59.960
out of 20 million instead and so on and so forth.
link |
01:54:03.140
As more people lose access to their Bitcoin,
link |
01:54:05.760
they're basically making a contribution to everyone else.
link |
01:54:08.060
It's anti dilutive.
link |
01:54:10.460
And there's certain properties of Bitcoin
link |
01:54:13.200
that are sort of a little bit more into the details
link |
01:54:15.500
that ensure that the full nodes,
link |
01:54:19.080
like the size of all the transactions that ever happened,
link |
01:54:22.860
at least currently can be stored
link |
01:54:24.340
in a single computer, for example.
link |
01:54:25.740
So it doesn't blow up too quickly.
link |
01:54:28.040
That's right.
link |
01:54:28.880
But you know, there's arguments that that's not necessarily,
link |
01:54:32.100
you can make arguments for that to be a very nice property,
link |
01:54:35.660
but you can also say that there's like drawbacks to it.
link |
01:54:38.260
That's hence the block size debates
link |
01:54:41.540
and all those kinds of things.
link |
01:54:42.500
Yeah, that was the Bitcoin Cash Civil War, right?
link |
01:54:45.300
Was that particular piece.
link |
01:54:47.580
Yeah.
link |
01:54:48.420
And, you know, ostensibly they were saying,
link |
01:54:50.780
oh, we need more transaction throughput
link |
01:54:52.840
to buy more coffee and do more transactions.
link |
01:54:55.380
But what they were actually doing
link |
01:54:57.520
was increasing the size computing power necessary
link |
01:55:01.900
to run a full node,
link |
01:55:03.060
which would have theoretically compromised decentralization.
link |
01:55:06.800
So yeah, but it would in theory,
link |
01:55:09.540
and this is, you know, in theory,
link |
01:55:11.660
it would allow you to have much more transactions.
link |
01:55:15.100
That's right.
link |
01:55:16.020
But the drawback, it would,
link |
01:55:18.540
because of no longer can be stored in a single computer,
link |
01:55:21.740
personal computer, then it naturally leads
link |
01:55:24.740
to the centralization.
link |
01:55:25.940
Yes.
link |
01:55:26.780
Which you see with gold.
link |
01:55:28.060
Which would have compromised its survivability.
link |
01:55:30.660
Right.
link |
01:55:31.780
So, I said, what else is there?
link |
01:55:34.300
The last one, which leads straight into this one,
link |
01:55:36.300
actually is the most important one of money,
link |
01:55:38.460
which is scarcity.
link |
01:55:40.020
And that you need to know the supply is fixed
link |
01:55:45.220
and safeguarded from counterfeiting and inflation,
link |
01:55:49.460
which counterfeiting and inflation are the same thing,
link |
01:55:52.620
by the way.
link |
01:55:53.740
Counterfeiting is criminalized inflation.
link |
01:55:57.460
Inflation is legalized counterfeiting.
link |
01:56:00.140
So central banks today,
link |
01:56:01.780
when they say they're printing money, they're not.
link |
01:56:03.220
They're counterfeiting currency.
link |
01:56:05.480
That's a very important part.
link |
01:56:07.140
And Bitcoin, as I've argued in some of my writing,
link |
01:56:11.380
is more than just an invention.
link |
01:56:13.540
It's actually the discovery of absolute scarcity.
link |
01:56:16.840
And that we have unveiled a property of money
link |
01:56:20.040
that we will only discover once, and it's got really
link |
01:56:25.460
major ramifications for the world at large.
link |
01:56:28.720
So with gold, for instance, as we've covered,
link |
01:56:33.660
it became money because it was the most relatively scarce
link |
01:56:36.980
monetary metal, right?
link |
01:56:37.980
Its supply was hardest to increase over time.
link |
01:56:41.100
However, if we could somehow flip a switch today
link |
01:56:44.180
and make everyone in the world go out and start mining gold,
link |
01:56:46.920
we could increase the supply much more quickly.
link |
01:56:49.100
We could, you know, it's historic inflation rates
link |
01:56:50.980
about 2%, we could double that pretty quickly.
link |
01:56:54.960
Bitcoin, with Bitcoin, it is not possible.
link |
01:56:58.580
So no matter how much effort and energy and capital
link |
01:57:02.500
and operational expenditure we pour into the mining network,
link |
01:57:05.540
we cannot deviate from its fixed
link |
01:57:08.300
and diminishing supply curve from between now
link |
01:57:11.000
and the last Bitcoin being mined in 2140
link |
01:57:13.620
because of the difficulty adjustment.
link |
01:57:15.020
It's constantly, it's adapting to human action actually.
link |
01:57:18.420
So the harder we pursue it, the more that it recedes,
link |
01:57:21.940
and then the less we pursue it,
link |
01:57:23.340
the more available it makes itself.
link |
01:57:26.020
And this is, it's a real major breakthrough
link |
01:57:30.300
because it's the closest thing to perfect information
link |
01:57:34.640
we've ever had in an economy.
link |
01:57:37.340
And perfect information is this, it's a theoretical,
link |
01:57:41.340
but unattainable state of the market where all market actors
link |
01:57:46.340
have all the relevant information about everything
link |
01:57:50.220
so that they can compete as efficiently as possible.
link |
01:57:53.100
And in a state of pure information, we have,
link |
01:57:56.060
I'm sorry, perfect information, we have perfect competition.
link |
01:57:59.020
And in perfect competition, we maximize wealth generation.
link |
01:58:03.140
So we're competing as freely as possible
link |
01:58:06.420
from coercive and violent impediments.
link |
01:58:10.140
And so I think Bitcoin in that sense
link |
01:58:13.220
is going to pull the world closer to a state
link |
01:58:17.900
of perfect competition than we've ever been before,
link |
01:58:21.720
which would increase wealth generation
link |
01:58:24.560
to an extent we've never seen before.
link |
01:58:27.540
Many of the things you said about Bitcoin
link |
01:58:30.460
also hold for other cryptocurrency technologies
link |
01:58:32.860
that followed after.
link |
01:58:36.120
Can you say something to why you think Bitcoin
link |
01:58:40.680
is the superior technology
link |
01:58:43.900
from a pragmatic truth perspective than say Ethereum,
link |
01:58:49.200
but also other crypto, like Bitcoin Cash,
link |
01:58:52.660
like other hard forks of Bitcoin,
link |
01:58:55.380
and maybe things that might yet to be invented,
link |
01:58:59.780
tools yet to be invented?
link |
01:59:01.420
Yeah, so this is a good point of argument
link |
01:59:05.100
because a lot of people have countered me and said,
link |
01:59:08.380
Bitcoin cannot be absolute scarcity
link |
01:59:11.260
because you can fork it and create something
link |
01:59:13.220
with the same properties as Bitcoin
link |
01:59:15.500
or potentially even better properties, right?
link |
01:59:17.700
You create something with a deflationary monetary policy.
link |
01:59:21.620
That's what Bitcoin Cash was actually.
link |
01:59:23.620
It forked Bitcoin with all of the same properties
link |
01:59:26.220
except for the block size that we alluded to earlier.
link |
01:59:29.260
The problem is that money is valued.
link |
01:59:33.020
Again, it's the good with a configuration of demand
link |
01:59:36.580
that is predominantly marketability.
link |
01:59:40.400
So it is valued based on its liquidity.
link |
01:59:43.560
That is how many other trading partners are there
link |
01:59:46.620
in that monetary network.
link |
01:59:48.780
So it is a network valued because of its liquidity
link |
01:59:53.420
and network effects.
link |
01:59:54.820
So any new entrant into the market for money
link |
01:59:59.180
is incentivized to always choose the money
link |
02:00:02.780
with the deepest liquidity and the most network effects.
link |
02:00:06.460
This is why money has tended to be a winner take all market
link |
02:00:10.540
because it's essentially a single purpose tool, right?
link |
02:00:13.480
It is a tool for,
link |
02:00:16.600
if we consider that tools are time saving devices, right?
link |
02:00:19.700
The shovel that you dig more holes per man hour
link |
02:00:21.680
than you can with your bare hands.
link |
02:00:23.180
Money is a tool, there's yet another definition of money
link |
02:00:26.280
that lets us calculate, negotiate
link |
02:00:28.580
and execute trades more quickly.
link |
02:00:31.540
So that function tends to coalesce
link |
02:00:36.180
towards one solution.
link |
02:00:38.500
And so the short answer would be that
link |
02:00:40.860
for the same reasons, quantifiable reasons, right?
link |
02:00:44.620
Like inflation resistance and liquidity and network effects
link |
02:00:48.500
that we have one analog gold,
link |
02:00:50.660
we're only likely to have one digital gold.
link |
02:00:53.540
And I think the Bitcoin Cash Fork
link |
02:00:55.500
proves that out empirically.
link |
02:00:57.220
It's a good case study because.
link |
02:00:59.540
Well, it's one case study, right?
link |
02:01:00.860
But okay, so that's really well put.
link |
02:01:02.980
So like gold was sticky.
link |
02:01:04.580
Once it was accepted, the network effects,
link |
02:01:08.460
the winner take all took over.
link |
02:01:11.020
And here's a fundamentally different kind of like
link |
02:01:15.380
analog versus digital is a leap in technologies.
link |
02:01:18.700
That's right.
link |
02:01:19.900
And you're suggesting that there may not be,
link |
02:01:25.340
there's unlikely to be other leaps of that kind
link |
02:01:29.100
into a whole nother kind of space of technologies.
link |
02:01:32.260
I would argue that Bitcoin,
link |
02:01:34.700
it's kind of like the ideological synthesis of gold,
link |
02:01:38.040
taking the monetary properties of gold
link |
02:01:39.380
and combining them with the internet itself.
link |
02:01:41.860
And in doing so,
link |
02:01:43.220
it has essentially perfected the properties of money, right?
link |
02:01:47.140
You can't get more divisible, durable, recognizable,
link |
02:01:49.700
portable, or scarce than Bitcoin.
link |
02:01:51.780
So Satoshi has kind of,
link |
02:01:54.260
he left no design space for a superior technology
link |
02:01:58.360
to intercede and out compete Bitcoin at this point.
link |
02:02:01.320
Now that it's established liquidity
link |
02:02:02.720
in the network effects. Far superior technology, right?
link |
02:02:04.740
Yeah, but it's a combination of the tech itself
link |
02:02:07.340
and the social layer that is coalesced to it.
link |
02:02:10.220
You can't separate those two out.
link |
02:02:11.740
Like they're all connected and then the political as well.
link |
02:02:15.020
I mean, but the portability, for example,
link |
02:02:17.460
that's another way to phrase that is the,
link |
02:02:20.060
what is it, the scaling.
link |
02:02:22.000
So the number of transactions,
link |
02:02:24.400
that's a limitation for Bitcoin
link |
02:02:27.080
that many argue is a feature, many argue is a bug.
link |
02:02:30.880
You have a bunch of cryptocurrency technologies
link |
02:02:33.500
that are able to achieve much higher,
link |
02:02:37.020
much faster frequency of transactions,
link |
02:02:40.420
much more transactions, you know, all that kind of stuff.
link |
02:02:44.700
What are your thoughts on that?
link |
02:02:47.380
You know, the low level of transactions
link |
02:02:49.660
that's possible with Bitcoin.
link |
02:02:51.760
Do you think that's a feature?
link |
02:02:52.880
Do you think that's a bug?
link |
02:02:54.500
Necessary for security actually.
link |
02:02:56.860
And even these other crypto assets that settle more quickly,
link |
02:03:00.280
they settle with less assurance of finality.
link |
02:03:03.660
So Nick Carter has a great piece on this actually called,
link |
02:03:07.080
the settlement assurance is stupid.
link |
02:03:09.260
It's really good where the gist of it is
link |
02:03:11.540
that there is more work being done in each block of Bitcoin
link |
02:03:16.780
that it can't, it is less vulnerable to reversion.
link |
02:03:20.700
So it's giving you higher degrees of assurance
link |
02:03:23.900
that your settlement or your trade has occurred
link |
02:03:26.040
with finality, whereas other blockchains
link |
02:03:28.540
are much more vulnerable.
link |
02:03:31.300
And again, with Bitcoin, the evolutionary path of money
link |
02:03:35.780
with gold is that it was first used as a collectible.
link |
02:03:40.600
It then became used as a store value.
link |
02:03:43.140
After it had stored enough value,
link |
02:03:44.740
it began to be used as a medium of exchange.
link |
02:03:48.740
And then finally, when it was used widely enough
link |
02:03:50.260
as a medium of exchange, it becomes a unit of account.
link |
02:03:52.580
We actually start to think in the money.
link |
02:03:54.940
Bitcoin's following a similar path.
link |
02:03:56.880
So started out as kind of a collectible.
link |
02:04:00.420
Today, I would argue it's a store value,
link |
02:04:02.260
one of the most effective store value we've ever seen.
link |
02:04:05.620
So that evolutionary path that Bitcoin's following
link |
02:04:08.580
is similar to gold.
link |
02:04:10.260
First a collectible, today a store value.
link |
02:04:12.260
To be an effective store value,
link |
02:04:13.940
it has to optimize for supply cap.
link |
02:04:18.540
That has to be the first,
link |
02:04:19.900
and this is all Bitcoin really needs to do
link |
02:04:22.300
to be successful by the way.
link |
02:04:23.780
Exactly what it's been doing for 12 years,
link |
02:04:25.860
virtually flawlessly,
link |
02:04:27.420
which is keep creating a block every 10 minutes
link |
02:04:30.340
and keep enforcing a supply cap of 21 million.
link |
02:04:34.020
As long as those two things hold,
link |
02:04:36.880
it is sound money, the ultimate sound money,
link |
02:04:40.620
the most inflation resistant money there's ever been.
link |
02:04:44.620
It's actually completely immune.
link |
02:04:47.800
It's taken unexpected inflation to 0%.
link |
02:04:50.340
We know with perfect certainty
link |
02:04:51.620
what Bitcoin supply will ever be.
link |
02:04:53.420
For it to be used more broadly as a medium of exchange,
link |
02:04:59.540
it can't make trade offs at the base layer
link |
02:05:02.260
to increase its portability for instance.
link |
02:05:05.340
Even though portability is maybe kind of a misnomer
link |
02:05:07.980
because Bitcoin has extremely high portability,
link |
02:05:10.620
just doesn't have extremely high transaction throughput.
link |
02:05:13.500
So we could say you can move it pretty quickly
link |
02:05:16.680
anywhere in the world
link |
02:05:17.520
as long as you're willing to bid up for the block space,
link |
02:05:20.980
but you can't satisfy all the world's economic volume.
link |
02:05:24.980
You can't do 300 million transactions per second
link |
02:05:27.100
like you can on a centralized database like Visa.
link |
02:05:30.700
But Bitcoin needs to be this,
link |
02:05:34.740
it has to be a store value first
link |
02:05:36.380
before it can be a medium of exchange.
link |
02:05:38.740
So it has to protect the supply cap first
link |
02:05:42.620
before making any trade offs for that.
link |
02:05:44.340
And I would argue that that's why Bitcoin is so rigid,
link |
02:05:48.340
is that it's optimized for survivability
link |
02:05:50.140
and optimized for that supply cap.
link |
02:05:51.720
And it's pushing experimentation and other features
link |
02:05:56.100
that would increase its transaction throughput
link |
02:05:57.760
to higher layers.
link |
02:05:59.420
So I think Lightning Network
link |
02:06:01.420
is something that's very interesting.
link |
02:06:03.460
It's still early,
link |
02:06:05.700
but there's a lot of throughput already being used
link |
02:06:08.660
on the Lightning Network.
link |
02:06:10.540
And it makes some slight trade offs
link |
02:06:14.260
in terms of the trust minimization of Bitcoin.
link |
02:06:16.060
You end up trusting these smart contracts
link |
02:06:18.180
instead of move the Bitcoin,
link |
02:06:19.500
but you pick up nearly unlimited transaction throughput.
link |
02:06:22.940
So that's how, and that's how biology evolves.
link |
02:06:25.620
That's how the internet evolved.
link |
02:06:26.780
It evolves in layers.
link |
02:06:27.860
So I think Bitcoin,
link |
02:06:29.960
you can sort of conceive of it
link |
02:06:31.020
as the latest layer to the internet.
link |
02:06:33.820
And it's one that preserves this store value property
link |
02:06:36.860
better than any asset we've ever had.
link |
02:06:38.920
Let me ask sort of a critical question of,
link |
02:06:41.820
if you're wrong about your statements about Bitcoin,
link |
02:06:46.060
and you find out years from now that you were wrong,
link |
02:06:51.860
what would that look like?
link |
02:06:54.020
What would be the things
link |
02:06:55.300
that make you realize you were wrong?
link |
02:06:57.520
Likely ideas or crazy out there ideas?
link |
02:07:01.320
Do you think about this kind of stuff?
link |
02:07:03.180
All the time.
link |
02:07:04.020
Because you speak very confidently about Bitcoin.
link |
02:07:08.480
And one of the things, let me put it this way.
link |
02:07:11.580
I think certainty,
link |
02:07:13.440
I feel like that's like a stoic statement.
link |
02:07:16.640
Certainty leads to ruin, something like that.
link |
02:07:19.800
Like certainty, I think is an antithesis to progress often.
link |
02:07:26.640
And especially in your writing,
link |
02:07:28.260
but this is true for the Bitcoin community.
link |
02:07:29.920
There's a certainty about the Bitcoin.
link |
02:07:34.960
And that makes me very skeptical,
link |
02:07:36.860
no matter how good the ideas are.
link |
02:07:38.880
Whenever things are good, this might be the Russian in me.
link |
02:07:42.220
I think like, what are the ways this is gonna go wrong?
link |
02:07:46.160
So what do you think are the ways this might go wrong
link |
02:07:48.800
or you're wrong in your conception of what Bitcoin is?
link |
02:07:53.040
Yeah, so science evolves via negativa,
link |
02:07:59.800
meaning that we're not proving hypotheses
link |
02:08:04.200
and that's what becomes the body of science.
link |
02:08:06.940
Science is whatever is left over as we disprove hypotheses.
link |
02:08:12.540
Whatever we can empirically, through experimentation,
link |
02:08:17.340
disprove, gets discarded.
link |
02:08:19.680
And whatever remains, whatever theory remains,
link |
02:08:23.180
it hasn't been disproven, is science, effectively.
link |
02:08:28.500
This process is similar to market actors zeroing in
link |
02:08:33.600
on a store value, right?
link |
02:08:35.620
They're experimenting with different forms
link |
02:08:37.760
of storing wealth across time.
link |
02:08:41.180
Some do better than others
link |
02:08:42.540
and eventually everyone ends up on the one that is best.
link |
02:08:45.540
That's what gold was.
link |
02:08:47.940
In terms of understanding Bitcoin,
link |
02:08:51.280
I look at it as a similar approach.
link |
02:08:53.460
And that is the main question I'm asking myself
link |
02:08:55.660
is how do you stop this thing?
link |
02:08:57.580
How do you turn it off?
link |
02:08:59.220
How do you end it?
link |
02:09:00.060
If you're a nation state, particularly,
link |
02:09:02.220
who has the most to lose in this transition,
link |
02:09:05.220
what is the attack vector by which they neutralize Bitcoin?
link |
02:09:08.500
I mean, that is the $250 trillion question.
link |
02:09:12.140
And I've spent five years thinking about this thing
link |
02:09:16.580
very deeply.
link |
02:09:17.420
I've read everything on monetary history.
link |
02:09:19.400
I can get my hands on.
link |
02:09:23.660
The general thought of how it is stopped,
link |
02:09:27.860
and this is the snag point that a lot of people get to
link |
02:09:31.300
in their explorations down the rabbit hole,
link |
02:09:32.820
is they just say the government will never allow it.
link |
02:09:35.180
And that becomes kind of their bottom.
link |
02:09:36.580
It's like, all right, Bitcoin's interesting,
link |
02:09:37.800
it's superior money, blah, blah, blah,
link |
02:09:39.140
but the government will never allow it.
link |
02:09:40.780
And they say.
link |
02:09:41.620
Was Ray Dalio, did he say that?
link |
02:09:43.340
Dalio was currently stuck there, yeah.
link |
02:09:45.800
So Ray Dalio said that Bitcoin seems to be too promising.
link |
02:09:52.580
If it is in fact as promising as it looks,
link |
02:09:56.740
governments are going to,
link |
02:09:59.260
I don't forget what the exact quote is,
link |
02:10:00.860
but not allowed.
link |
02:10:02.280
Ban it.
link |
02:10:03.660
Governments will ban it.
link |
02:10:05.300
So how do you get Ray Dalio unstuck from your perspective?
link |
02:10:09.940
Well.
link |
02:10:10.780
And how do you get unstuck from that idea
link |
02:10:12.740
that governments, will governments,
link |
02:10:14.860
how do you prevent governments from stopping a thing
link |
02:10:18.440
that threatens centralized power?
link |
02:10:22.580
Well, Bitcoin is an idea.
link |
02:10:26.060
So governments that are really good
link |
02:10:30.300
at fighting centralized threats to their power, right?
link |
02:10:35.060
Whether that's a currency counterfeiter
link |
02:10:36.700
or competing nation state or business they don't like,
link |
02:10:40.400
or an individual they don't like,
link |
02:10:42.500
you know, they can kill them, they can throw them in jail.
link |
02:10:44.940
They can use any number of course
link |
02:10:46.700
of a violent tactics to suppress it.
link |
02:10:49.300
But how do you point a gun at an idea?
link |
02:10:52.600
How do you coerce an idea?
link |
02:10:56.580
And that's, you know, there's some anecdotal history here
link |
02:11:03.400
where there's the PGP case, which in the United States,
link |
02:11:09.400
the court was trying to classify it as munitions.
link |
02:11:12.320
When we were shipping this
link |
02:11:13.920
pretty good privacy software overseas,
link |
02:11:17.920
government wanted to classify it as munitions
link |
02:11:19.440
and restrict that exportation.
link |
02:11:22.380
But, and this was a circuit court case precedent.
link |
02:11:25.320
When the PGP attorneys actually printed out the source code
link |
02:11:30.000
on paper and presented it as evidence in the court,
link |
02:11:33.560
all of a sudden it became protected under freedom of speech
link |
02:11:36.400
and that it's just code is speech, code is language.
link |
02:11:40.360
And therefore, at least in the United States,
link |
02:11:43.080
it's protected under the first amendment.
link |
02:11:47.920
I think a government ban would be largely unenforceable,
link |
02:11:52.760
frankly, on Bitcoin.
link |
02:11:54.560
Being that it's pure information,
link |
02:11:56.920
if you suppress market actors
link |
02:12:00.440
from using it in one jurisdiction,
link |
02:12:02.160
you're just creating incentives for them to go elsewhere.
link |
02:12:05.860
And you're actually increasing the incentive
link |
02:12:07.440
for other jurisdictions to be favorable towards it
link |
02:12:11.320
because then they can create,
link |
02:12:12.880
they get to benefit from the tax revenue
link |
02:12:14.480
and the businesses and the innovation
link |
02:12:16.400
that's occurring in and around Bitcoin as a result.
link |
02:12:19.360
So you don't think if a particular central bank,
link |
02:12:21.920
like in Europe or United States,
link |
02:12:25.040
bans it, not maybe using those terms,
link |
02:12:28.440
but in some kind of way,
link |
02:12:30.440
you think that provides a really strong incentive
link |
02:12:32.760
for the other big players to enable it.
link |
02:12:36.320
That's right.
link |
02:12:38.560
And that they're more likely, by the way,
link |
02:12:40.640
and governments know this, by the way, too.
link |
02:12:42.560
The other thing that causes a government
link |
02:12:46.160
to shoot itself in the foot is that if they ban something,
link |
02:12:48.320
they draw a lot of attention to it.
link |
02:12:50.520
People are smart.
link |
02:12:51.520
I mean, people ask why, why would a government ban it?
link |
02:12:53.920
Why can't I use this?
link |
02:12:55.220
So that's kind of typically be the last arrow
link |
02:12:57.640
in their quiver.
link |
02:12:59.760
They may try to ban it if Bitcoin
link |
02:13:02.280
really starts to monetize very quickly.
link |
02:13:04.080
And the power structures that they impose today
link |
02:13:06.640
start to dissolve faster than others might think they will,
link |
02:13:12.240
then they might try and ban it.
link |
02:13:13.440
But I think that ban will be largely unenforceable.
link |
02:13:17.760
They're more likely to tax it,
link |
02:13:19.480
which they already do tax it.
link |
02:13:21.480
They're likely to increase taxation of it.
link |
02:13:25.480
They're likely to try and make it more white market
link |
02:13:28.520
by actually tracing Bitcoin, seeing who has it,
link |
02:13:32.400
attaching identities to Bitcoin ownership,
link |
02:13:36.060
and making sure that they're getting their pound of flesh
link |
02:13:38.280
on all the transactions it results in.
link |
02:13:41.600
But I don't think, the other thing about this is,
link |
02:13:45.760
so we saw the internet outcompete intranets,
link |
02:13:53.000
in that we'd say that open source networks
link |
02:13:55.200
tend to outcompete closed source networks.
link |
02:13:57.100
And there's a really good reason for this.
link |
02:13:59.320
And it's because in a closed source network,
link |
02:14:03.520
there are costs associated with defending the network itself.
link |
02:14:08.180
So you have to, the network owners,
link |
02:14:12.180
the owners of the closed source network
link |
02:14:13.460
have to expend resources protecting it from competitors.
link |
02:14:17.560
And they have to expend resources imposing its rules
link |
02:14:21.000
because they're not voluntarily adopted rules.
link |
02:14:23.220
So you actually have to impose these rule sets.
link |
02:14:25.380
Whereas an open source network,
link |
02:14:26.880
which is something much more akin to capitalism
link |
02:14:29.160
in its pure sense, these are voluntarily adopted rules.
link |
02:14:33.000
So all market participants have agreed
link |
02:14:34.880
and consented to this rule set.
link |
02:14:36.720
So there's no enforcement costs
link |
02:14:38.400
and there's no turf protection
link |
02:14:39.620
because anyone can freely enter or exit the open network.
link |
02:14:43.000
For that energetic reason,
link |
02:14:45.020
I think open networks outcompete close networks typically.
link |
02:14:50.520
And in the digital age, that's why I think open,
link |
02:14:53.560
that's why internet outcompetes intranet
link |
02:14:55.200
and that's why open source networks
link |
02:14:57.240
are gonna eat closed source networks.
link |
02:14:58.840
So what Bitcoin would be in that lens
link |
02:15:01.180
is the ultimate open source monetary network
link |
02:15:04.220
devouring closed source central bank monetary networks.
link |
02:15:08.460
And I just don't see how there's no possibility
link |
02:15:14.280
of unilaterally stopping Bitcoin or destroying it.
link |
02:15:17.560
So then they're more likely to regulate or tax it.
link |
02:15:23.360
And again, the other fallacy here
link |
02:15:25.160
is that a lot of people tend to think of governments
link |
02:15:26.780
as these singular indivisible entities,
link |
02:15:30.760
like they just move under one plan.
link |
02:15:32.920
But in reality, it's a lot of people, right?
link |
02:15:34.960
A lot of people with loosely coupled interests
link |
02:15:36.880
and agendas and whatnot, regulators and others
link |
02:15:43.080
whether wearing their citizen hat,
link |
02:15:45.640
they're gonna see this thing monetizing,
link |
02:15:47.320
they're gonna be on the front lines
link |
02:15:48.640
of trying to regulate it, trying to control it.
link |
02:15:52.120
And I think what's likely to happen
link |
02:15:53.480
is they're gonna start to adopt it,
link |
02:15:55.600
to buy some of it even as an individual
link |
02:15:59.480
or possibly even ultimately at a central bank
link |
02:16:02.040
or sovereign wealth fund level,
link |
02:16:03.760
as an insurance policy against its success.
link |
02:16:07.200
And once you start to acquire something
link |
02:16:09.640
and then you have a vested economic interest
link |
02:16:12.760
in its monetization,
link |
02:16:14.360
I think it kind of dissolves any of the power structures
link |
02:16:17.560
that are arrayed against it from the inside.
link |
02:16:20.520
So I've written a lot about this
link |
02:16:22.720
in a new series called Sovereignism,
link |
02:16:24.480
which is based loosely on a book
link |
02:16:26.640
called The Sovereign Individual.
link |
02:16:28.760
And that's the general thesis
link |
02:16:30.240
is that microprocessing technology would devour
link |
02:16:34.080
our organizational models,
link |
02:16:35.780
the most important of which is the nation state.
link |
02:16:38.300
So I think we're going into this world
link |
02:16:39.960
where coercion and violence is just much less rewarding.
link |
02:16:47.600
The economics of violence are declining
link |
02:16:50.380
because of the low cost of protecting property, right?
link |
02:16:54.460
You can now protect your monetary property in Bitcoin
link |
02:16:59.460
at orders of magnitude less cost
link |
02:17:01.800
than is necessary to run a banking network.
link |
02:17:04.020
So it changes the way we organize ourselves.
link |
02:17:09.520
And again, zooming back to gold
link |
02:17:12.240
as kind of the original governor to governments,
link |
02:17:14.740
where if they manipulated the money,
link |
02:17:16.200
gold would leave their country.
link |
02:17:18.040
That's why governments have taken relatively concerted action
link |
02:17:23.180
to go off of the gold standard.
link |
02:17:25.320
There's a great book on this called The Gold Wars
link |
02:17:27.720
that outlines how governments have been waging
link |
02:17:32.120
a cold war against gold for the past 50 years.
link |
02:17:35.840
Bitcoin sort of renews hope
link |
02:17:39.240
for that free market governor of governments.
link |
02:17:41.600
And that is this digital gold
link |
02:17:42.860
that governments cannot stop or coopt.
link |
02:17:45.520
So I think it's something,
link |
02:17:47.680
that's why I think it's such a big deal
link |
02:17:49.480
is that it is changing,
link |
02:17:54.480
it's a new useful fiction, you might say.
link |
02:17:56.800
A useful fiction that's superordinate
link |
02:17:58.600
to the mythology of the nation state and government
link |
02:18:02.240
as the dominant institution in the world.
link |
02:18:04.240
Well, I hope you're right
link |
02:18:05.400
that all forms of centralized power
link |
02:18:10.400
start breaking apart naturally.
link |
02:18:12.660
So governments, the more and more power
link |
02:18:14.960
is given to the individual, whatever the technology is.
link |
02:18:18.400
And Bitcoin seems to be a promising technology
link |
02:18:20.720
that empowers that, enables that.
link |
02:18:22.880
That seems to be the trend.
link |
02:18:24.720
And that's a promising trend
link |
02:18:26.320
at least from a perspective of somebody
link |
02:18:29.120
who values this particular biological meat bag
link |
02:18:33.400
that's full of consciousness.
link |
02:18:34.800
I think Bitcoin is exposing the greatest scam
link |
02:18:37.680
in human history, which is political authority.
link |
02:18:40.720
Like who gives anyone the right to be politically,
link |
02:18:43.860
have political authority over anyone else?
link |
02:18:46.100
People should be free to adopt the rules
link |
02:18:49.040
and systems and tools that best suit their needs.
link |
02:18:52.040
And that arc of history we covered earlier
link |
02:18:56.180
where as socioeconomic systems have become more favorable
link |
02:19:01.920
towards individual sovereignty,
link |
02:19:03.440
the more wealthy we have become,
link |
02:19:06.120
the more we have given the individual,
link |
02:19:07.880
we've maximized individual choice,
link |
02:19:10.520
the more wealth that society has created
link |
02:19:12.440
and the more it has out competed
link |
02:19:14.460
the systems that have come before it.
link |
02:19:15.840
The latest would be capitalism triumphing over socialism.
link |
02:19:21.040
Before maybe we eat, you are in Texas,
link |
02:19:23.920
you brought over some brisket.
link |
02:19:25.720
Before we may be indulge in that,
link |
02:19:28.000
let me bring up one quick topic
link |
02:19:30.000
and then we'll take a break.
link |
02:19:31.680
And the topic of what some may term
link |
02:19:35.720
the toxicity of the Bitcoin community.
link |
02:19:40.480
You've written that Bitcoin toxicity is tough love.
link |
02:19:44.400
Do you wanna break that apart a little bit
link |
02:19:46.660
sort of the idea, the philosophy of the toxicity
link |
02:19:51.660
that seems to be present in part in the Bitcoin community?
link |
02:19:58.620
Yeah, we were talking about this a little bit
link |
02:20:01.380
before we recorded and I've been through the gauntlet
link |
02:20:04.780
with Bitcoin toxicity as well.
link |
02:20:07.580
I came into this space professionally in 2017.
link |
02:20:12.940
I was originally running a multi strategy
link |
02:20:15.000
crypto asset hedge fund.
link |
02:20:17.160
And my initial investment thesis on the world
link |
02:20:21.620
was that Bitcoin was a big deal,
link |
02:20:23.260
but there were all these other exciting coins
link |
02:20:25.220
and projects and ways the technology was going to be used.
link |
02:20:28.880
And that view of reality met this immune,
link |
02:20:35.420
I guess you could say as an ideological immune system,
link |
02:20:37.980
this Bitcoin toxicity and that it's kind of a filter
link |
02:20:40.940
that's trying to catch bad or useless
link |
02:20:45.460
or even scamming ideas that this space is very well known for.
link |
02:20:52.860
As we've touched on today, Bitcoin, in my opinion,
link |
02:20:55.180
is this world shattering innovation,
link |
02:20:57.940
but it's in a sea of the most scammy stuff ever, right?
link |
02:21:01.500
People, anybody can go and create a coin.
link |
02:21:05.460
So you can go and launch one immediately online
link |
02:21:09.480
and you can throw up a website, an advisor page,
link |
02:21:14.020
post a white paper talking about
link |
02:21:15.060
how great your technology is gonna be
link |
02:21:16.500
and how it's gonna change the world.
link |
02:21:17.640
And then you can raise $30 million in Bitcoin
link |
02:21:20.240
or Ethereum in 30 seconds kind of thing.
link |
02:21:22.660
So it's drawn in a lot of this scam artistry, you might say.
link |
02:21:27.500
And I think people living through that,
link |
02:21:31.180
because there is this natural predilection for people
link |
02:21:33.500
when they first come into Bitcoin, you're excited about it,
link |
02:21:35.920
then you get lost in the shit coin universe.
link |
02:21:39.460
And then just looking at the market success
link |
02:21:43.340
of Bitcoin versus, and when I use the word shit coin,
link |
02:21:46.060
I'm just.
link |
02:21:47.040
You say with all the love in the world.
link |
02:21:49.020
All the love in the world.
link |
02:21:50.660
I guess you could call me a toxic maximalist in some ways,
link |
02:21:53.180
although I consider myself a freedom maximalist,
link |
02:21:55.420
not a Bitcoin maximalist.
link |
02:21:56.260
Yeah, I saw that line, that's a good line.
link |
02:21:59.740
Bitcoin, tracking the market success of Bitcoin
link |
02:22:03.100
versus alternative crypto assets,
link |
02:22:06.300
the signal is very clear
link |
02:22:07.400
that Bitcoin has out competed all of them.
link |
02:22:09.480
So I think that Bitcoin cultural toxicity has evolved
link |
02:22:13.140
as an immune response to those bad ideas,
link |
02:22:15.620
which is actually, if you think about it,
link |
02:22:17.780
kind of is a tough love, right?
link |
02:22:19.100
You don't want new entrance to the space
link |
02:22:21.660
to get lost in shit coin jungle and learn the hard way,
link |
02:22:26.140
the way many Bitcoin maximalists have
link |
02:22:28.060
that the real innovation is Bitcoin.
link |
02:22:31.320
But like an immune system, I think it can also go too far.
link |
02:22:36.500
And so I think it's useful when it is defending the space
link |
02:22:40.840
from false narratives, we might say,
link |
02:22:43.460
but it becomes detrimental when it's attacking people
link |
02:22:48.180
that are inquiring about Bitcoin
link |
02:22:50.080
or people that are approaching Bitcoin
link |
02:22:52.240
with a good spirit and good intention
link |
02:22:54.860
and a desire to learn.
link |
02:22:57.420
Because then at that point,
link |
02:22:58.340
it's actually impeding the free flow of ideas,
link |
02:23:01.720
which the example in your clip
link |
02:23:04.580
that was totally taken out of context.
link |
02:23:06.500
And then you're literally just saying,
link |
02:23:07.940
I'm here to learn and contribute.
link |
02:23:09.240
I think I've got some stuff to do.
link |
02:23:10.780
And then people attack that.
link |
02:23:11.860
Like that doesn't make any fucking sense.
link |
02:23:13.900
It's like you're attacking someone who's approaching it
link |
02:23:16.140
in a good spirit and asking questions.
link |
02:23:18.380
Yeah, and I think sometimes talking about it,
link |
02:23:22.660
the toxicity in the Bitcoin community as an immune response
link |
02:23:26.440
has a negative effect of giving it a pass
link |
02:23:30.740
because like it almost says,
link |
02:23:32.620
look, it equates it with the human immune system,
link |
02:23:35.940
which seems to do a really good job.
link |
02:23:38.620
And so you could say that the toxicity has a lot of features
link |
02:23:42.500
in the sea of fraudulent projects
link |
02:23:47.780
that steal money from people.
link |
02:23:52.180
It's really useful to make sure
link |
02:23:53.860
that you give people the harsh truth
link |
02:23:56.420
about who is and isn't a scammer.
link |
02:24:00.020
You have to take it apart,
link |
02:24:02.260
take it away from that metaphor of the immune system
link |
02:24:04.460
and look at basic human nature.
link |
02:24:06.620
And human nature can go to some dark places,
link |
02:24:09.180
which is it's sad to say that some people,
link |
02:24:15.220
maybe many of us can enjoy for its own sake, the toxicity,
link |
02:24:21.060
the mockery, the derision,
link |
02:24:23.300
and you stop being part of the immune system
link |
02:24:27.940
that makes a successful idea propagate
link |
02:24:31.000
and start being a sort of a destructive virus yourself.
link |
02:24:35.120
And that's something I think about
link |
02:24:37.740
because I am new to this particular immune system,
link |
02:24:43.140
but I've explored other immune systems.
link |
02:24:45.980
And I think you understand this world much better than me,
link |
02:24:54.820
but I tend to prefer sort of love
link |
02:24:57.780
as a mechanism for spreading ideas,
link |
02:25:00.340
to err on the side of love and kindness
link |
02:25:06.220
and almost like an open mindedness
link |
02:25:09.300
in a way where you're constantly lowering yourself
link |
02:25:13.180
in the face of other ideas, constantly questioning yourself.
link |
02:25:17.820
But I think I understand that that might be more applicable
link |
02:25:24.180
in certain contexts,
link |
02:25:25.180
like maybe in the space of science or something like that.
link |
02:25:28.080
But in the space of Bitcoin, as it currently stands,
link |
02:25:31.260
there's so many people that are trying to scam others
link |
02:25:33.980
out of their money
link |
02:25:35.580
that the kind of harshness required is different.
link |
02:25:39.100
Nevertheless, I do want to put it on people like yourself
link |
02:25:45.060
and others who I know you wouldn't consider yourself this,
link |
02:25:48.180
but you're one of the faces or leaders in this space
link |
02:25:51.460
to call people out a little bit,
link |
02:25:53.660
to inspire them to be more loving, I suppose.
link |
02:25:57.220
But it's difficult,
link |
02:25:58.140
because you want to walk that line carefully.
link |
02:26:00.260
You don't want to be too loving and open minded,
link |
02:26:03.260
otherwise your brain falls out.
link |
02:26:04.540
I get it, it's a difficult balance to walk.
link |
02:26:06.980
It is subtle and it's nuanced and it is difficult to walk.
link |
02:26:11.140
And I think that, that's why I try to say tough love,
link |
02:26:14.220
because when we're young, we may have certain ideas
link |
02:26:19.220
about the way we want our life to go,
link |
02:26:21.620
but then maybe our parents
link |
02:26:22.980
are not letting us do certain things.
link |
02:26:25.300
And we think they're, I know when I was a kid,
link |
02:26:27.260
I wanted to get my, when I was in fifth grade,
link |
02:26:28.620
I wanted to get my ear pierced.
link |
02:26:30.220
My mom wouldn't let me do it.
link |
02:26:31.580
And I was, oh, come on, mom, I thought it was so cool.
link |
02:26:34.460
And then two years later, I'm like, thank you, mom,
link |
02:26:36.700
for letting me get my ear pierced.
link |
02:26:39.460
I think it comes from a place of good intention
link |
02:26:41.700
that they are actually,
link |
02:26:44.700
they have asked themselves that question, right?
link |
02:26:46.780
That they've been inquiring
link |
02:26:48.660
in why not this crypto asset or this crypto asset?
link |
02:26:51.940
And they've done the exploration,
link |
02:26:53.380
they keep coming back to Bitcoin
link |
02:26:54.940
and they've seen people being taken advantage of.
link |
02:26:59.580
But to your point, it's like it can,
link |
02:27:03.880
this tough love can become detrimental,
link |
02:27:06.780
just like the immune system can become detrimental, right?
link |
02:27:08.980
It can overreact and it can actually harm the human body.
link |
02:27:12.420
So I would say that it's such a tricky and nuanced topic
link |
02:27:16.220
that even biology hasn't figured it out, right?
link |
02:27:18.180
A lot of people have autoimmune diseases.
link |
02:27:21.980
And then there's the other thing
link |
02:27:22.820
that we have this natural, I agree with you about love.
link |
02:27:25.780
I think love is like the deepest value.
link |
02:27:28.660
That's a whole nother philosophical thing,
link |
02:27:30.540
but we're biologically programmed to pay more attention
link |
02:27:36.260
to things that are adversarial or harmful, right?
link |
02:27:38.860
That's part of us protecting the meat suit, so to speak.
link |
02:27:42.340
So there is some maybe better delivery method
link |
02:27:48.020
by being a little bit toxic to really get the point across,
link |
02:27:50.980
like, hey, don't get lost over here.
link |
02:27:53.580
These things can hurt you.
link |
02:27:55.580
Really try to focus on Bitcoin.
link |
02:27:57.140
But the toxicity of that message,
link |
02:27:59.620
I guess it increases its ability
link |
02:28:01.100
to penetrate the individual, but it can also go too far.
link |
02:28:04.140
So it is very...
link |
02:28:05.220
It's interesting, but I almost to push back a little bit,
link |
02:28:08.780
toxicity is a funny word.
link |
02:28:11.100
I think maybe another way to say it is,
link |
02:28:15.540
I brought up like Christopher Hitchens
link |
02:28:17.660
and somebody who like, okay,
link |
02:28:20.980
you might say he's toxic or something like that,
link |
02:28:23.660
because he's basically a intellectual powerhouse
link |
02:28:27.100
who's also a troll.
link |
02:28:28.740
So he's constantly, it's like guerrilla warfare
link |
02:28:31.140
in the space of ideas.
link |
02:28:33.340
He's very harsh in his disagreements and criticisms,
link |
02:28:37.020
but he's done with incredible grace and skill and poetry.
link |
02:28:42.260
So...
link |
02:28:43.180
We could use more of that.
link |
02:28:44.380
We could use more of that.
link |
02:28:45.780
So toxicity just like...
link |
02:28:52.540
These are just words.
link |
02:28:53.540
They can mean a lot of different things,
link |
02:28:55.180
but disagreement doesn't have to be done with love,
link |
02:28:59.940
but it should be done with skill if it's to be effective.
link |
02:29:04.340
So there's a lot of ways to be effective in guerrilla warfare,
link |
02:29:08.300
but you wanna learn how to shoot
link |
02:29:10.180
or whatever the weapon you're using and to do it well.
link |
02:29:12.820
Some people do it better than others.
link |
02:29:14.540
And it's worthwhile to learn to do it well.
link |
02:29:17.780
Again, I prefer love, but even love,
link |
02:29:21.180
just because you think you're communicating a good idea,
link |
02:29:25.420
which you very well may be,
link |
02:29:26.740
doesn't mean it also doesn't require skill