{ "episodeId": "SLP270", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "bob_murphy": { "name": "Bob Murphy", "role": "guest", "tag": "BOB" }, "libertarian_theorist": { "name": "libertarian theorist", "role": "guest", "tag": "LIBERTARIAN" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 9.01, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin. Today for episode two hundred and seventy, my guest is Bob Murphy, Austrian economist, libertarian theorist, and podcaster. He's quite a prolific writer, and I have been following him for quite a few years, and he has actually been quite influential on my own thought on Austrian economics and libertarianism. In theory. So it was a real pleasure to interview him, and we talk about, all sorts of questions around Bitcoin and Austrian economics, and we also get into this question of what does a hard money Bitcoin world look like?" }, { "speaker": "bob_murphy", "time": "00:45", "start": 44.66, "text": "Street in Stefan Livera fans, this is Dread here, and I have some big news to share. Swan Bitcoin's new private client services division is open for business. So last August, Michael Strategy CEO Michael Saylor kicked off the trend of companies buying Bitcoin for their balance sheets. A flood of high-profile investors and companies have joined him, names like Paul Tudor Jones, BlackRock, Square, and Tesla. Swan Private exists to meet the massive international demand from thousands of companies, family offices, and high net worth investors from all around the globe. If you're thinking of buying between one hundred thousand and one hundred million US dollars worth of Bitcoin over the next year, visit swanbitcoin dot com slash private. That's swanbitcoin dot com slash private. Fill out the onboarding form or email the CEO personally, corey at swanbitcoin dot com. That's c o r y at swanbitcoin dot com. Respect funds on" }, { "speaker": "stephan", "time": "01:45", "start": 104.69, "text": "one love. Lend at Hoddle Hoddle is a non custodial Bitcoin backed lending platform so you can lend and borrow globally and anonymously. If you have stablecoins, you can put up an offer and lend them out and earn attractive returns, and it's all set peer to peer. On the other hand, if you have bitcoins and you need some liquidity, well, you can collateralize those and get some liquidity without trusting your money to any one party. It's locked in a two of three escrow. 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Check out my episode two five nine with Wit Gibbs if you wanna get a view on the process there, and that's Compassmining dot io. On to the show with Bob. Bob, welcome to the show. Thanks for having me. Bob, I'm a huge fan of your work. I've really, read a lot of your writing, which, and you're quite a prolific writer and, producer of content, so, definitely, very excited to chat with you today about Bitcoin and Austrian economics as well. I, I, I guess I'd love to just- Get, just start with a little bit of your thoughts on kind of where you see Bitcoin right now in terms of, I know you've been following it for some time and you were writing about it and speaking about it, I think in twenty twelve or twenty thirteen, if I recall correctly. So, I know you, you're no stranger to it, but, I'm curious what your thoughts are on it and where, where you sort of see the adoption of it going." }, { "speaker": "libertarian_theorist", "time": "03:55", "start": 235.01, "text": "Sure. So, I, I was not in the first wave, I suppose, of" }, { "speaker": "libertarian_theorist", "time": "04:02", "start": 242.45, "text": "People, you know, my friends and associates who, some of them early on were telling me, \"Oh, you should check out Bitcoin,\" and I didn't know what it was, and I was, \"Oh, yeah, I'll look into that,\" and I just didn't. In retrospect, I wish I'd looked into it earlier, obviously, as most people say. and then, yeah, I, I think it was, I don't know if you know Tatiana Moroz, but she at one point said to me something like, \"The thing that really got me interested" }, { "speaker": "libertarian_theorist", "time": "04:32", "start": 272.45, "text": "While kids sit in the corner and we know everyone else is stupid, but we're not changing anything. It was something like that, I don't remember. And she said, \"But when you go to a Bitcoin conference, you said it's everyone's real happy and they're productive and they're creating things, and it's just such a different vibe.\" And I was like, \"Oh, really?\" And I think that was her comment on that was what got me interested in terms of like what actually, you know, got me to, to go look at it. so just as an economist," }, { "speaker": "libertarian_theorist", "time": "05:02", "start": 302.43, "text": "Understand the mechanics of it enough, so I thought, okay, I get what it is, and now let me look at it as an economist and see, you know, how does that work? So you're probably familiar with Silas Barta, I wrote a Understanding Bitcoin guide early on. It was 'cause at that point, so things are way better now, but at that point, it was like the people who were technical and understood how Bitcoin worked didn't really know that much about monetary theory, and so the way they would talk about Bitcoin, it wasn't quite right. And then the, the The function of that guide was kind of just to give people the language and, you know, the, a framework. so throughout, I've always been trying to be agnostic about, like, hey, I'm not giving investment advice, but I did, I, I, I was willing to say to people that I think, yeah, in the year twenty fifty, like, p-- people will know who owns the bitcoins. I mean, some will be lost and whatever, but it's not like it's just a, a passing fad and no one's gonna care about the," }, { "speaker": "libertarian_theorist", "time": "06:02", "start": 362.43, "text": "Cryptocurrencies were just so much better that they eclipsed it, you know, I wasn't sure about that. so I guess n- now, I mean, it's clearly done very well, you know, surpassing most people's expectations except like the hardcore believers who're like, nope, nope, this isn't gonna be the, you know, the currency of the future. And so it's, I, I, I guess recently my, I've, I've started doing more of it, and this, this is the last thing I- and I'll turn it Friedrich Hayek had an essay in the seventies called The Denationalization of Money, where he proposed, where he said that, you know, fiat currency, fiat money has this bad rep, and that's because governments, you know, monopoly governments have always issued it, and just like if governments always build roads, the roads are terrible, but that doesn't mean roads per se are always bad. And so Hayek envisioned, could there be competing fiat money issuers in the private sector where it's all voluntary? But there you still had the problem of trusting the, the, you know market share, how could you stop them from just, you know, unloading a boatload of the currency, that sort of thing. So that's really what the innovation that Bitcoin gave, so that's what attracted to me, me to it. And so now more recently though, I made some wise guy remark on Twitter about how, hey, just because I'm not always talking about Bitcoin doesn't mean I think it's a bad investment or something like that. And someone pointed out to me and said, no, you're setting up a straw man, Bob, because I said something like, just because I" }, { "speaker": "libertarian_theorist", "time": "07:32", "start": 452.45, "text": "Most important development in advancing freedom in, you know, a century, and someone listening to your podcast wouldn't even know anything about it. And at first, I thought the guy was wrong, and I went and looked in my archive, and I realized, oh my gosh, I really haven't been talking, 'cause I wrote the guide, and I've, you know, in other people's interviews who interview me, I would talk about it, but I, but I realized, okay, this guy actually is right. I thought I had been talking more about it over the years than I actually had through" }, { "speaker": "libertarian_theorist", "time": "08:02", "start": 482.45, "text": "Things like that. So that's kind of my st- that it's, I always thought it was interesting theoretically, and I just wanted to clarify the terminology, you know, like so economists and Bitcoin, you know, miners and stuff could talk to each other. And then now I'm, I'm realizing, yeah, this really is like holding, you know, it's, it's really doing a lot and proving the critics wrong, at least so far. And so just people who are interested in, as a, last thing I'll say, what it's doing is sort of like how," }, { "speaker": "libertarian_theorist", "time": "08:32", "start": 512.49, "text": "That you don't need licensing of cab drivers," }, { "speaker": "stephan", "time": "08:35", "start": 514.59, "text": "exactly," }, { "speaker": "libertarian_theorist", "time": "08:35", "start": 515.11, "text": "and, and how the medallion system isn't about consumer safety, it's clearly just about rents for the cab drivers in the city, you know? That, and so likewise, now when people talk about, you know, oh, couldn't we have private currencies? That used to, that would have been considered crazy, like, oh, yeah, I want some private, yeah, I want, I would, do I want, you know, Walmart issuing the money? I don't think so. But now that you have Bitcoin as an example" }, { "speaker": "stephan", "time": "09:02", "start": 542.45, "text": "And I think it's a great, it's great that you're, gonna have Vijay on your show as well. Vijay is very well known in the Bitcoin world, and I think, you've certainly done your part to teach people about Bitcoin. I mean, you've been writing about it over the years, so I think in terms of, you know, libertarians not doing enough to teach their followers about Bitcoin, I don't think you can, people could fairly level that charge against you, that you've actually done, you've done quite a bit to try" }, { "speaker": "libertarian_theorist", "time": "09:32", "start": 572.43, "text": "I could just say real fast, what it was, is, I think I made, you know, whatever contribution I was gonna do was early on when I was just like explaining how it worked, and then like, you know, maybe we'll get into this today with the regression theorem and that, and I was just trying to clarify stuff. But then I didn't stay on, on top of the technical stuff. So after a while, that's partly why I didn't comment, is because I just, I didn't know enough about the details to be able to really say, you know, like the difference All right, like what I thought I was gonna do, I did early on, and so people like you who were really into it, you, you knew what I did, and okay, fair enough. But, I think this guy's point, this critic of mine, was more saying, just, you know, you periodically telling the masses about it, you know, we, we need, we need your, you need your help, Bob. I think that's what, where it was coming from." }, { "speaker": "stephan", "time": "10:20", "start": 619.66, "text": "Yeah, of course. And I think that perhaps that charge could be more fairly leveled against maybe" }, { "speaker": "stephan", "time": "10:32", "start": 632.43, "text": "Capitalists, it might help us kind of push society in that direction, and I think that's an interesting idea. but I guess one other point I really wanted to bring up, and I think Vijay is known for really popularizing this within the Bitcoin world, is this idea that Bitcoin is going to move through stages. Now, this isn't a new idea, I've discussed this, with, Gita Hulsman, and he mentions, you know, people like Jeff Evans were saying it's this idea that it moves from collectible, store of value, medium of exchange People impose this incredibly high bar and say, \"Oh no, if it's not being used as like everything, unit of account, medium of exchange, everything all at once, it's failed and it's not gonna work.\" What's your view on that idea?" }, { "speaker": "libertarian_theorist", "time": "11:14", "start": 673.84, "text": "Okay, so let me confess, I actually wasn't aware of that passage from Jevons until I saw it in VJ's essay. And so, and even VJ's essay, I wasn't aware of it, or if I did see it, I forgot about it, 'cause it wasn't until more recently it was actually Spencer Schiff" }, { "speaker": "libertarian_theorist", "time": "11:32", "start": 692.43, "text": "For whatever reason, this is, you know, making the rounds again. And I was like, \"Whoa! \" And I said, \"I didn't know about that Jevons quote. \" So it's interesting just to give your listeners some of the background that part of the hesitancy on the, on the part of some libert, or let's say Austrian fans, with that is, I don't remember the exact quote, but Ludwig von Mises, when he was talking about money, said something along the lines of, \"It's common to ascribe several different functions to money, like" }, { "speaker": "libertarian_theorist", "time": "12:02", "start": 722.49, "text": "Are all, it, it, it's not helpful to think of it this way. Money is the universally accepted medium of account, and because it's that, it does those other things like automatically or something like that, you know, the words, exact words." }, { "speaker": "stephan", "time": "12:14", "start": 733.78, "text": "Yeah." }, { "speaker": "libertarian_theorist", "time": "12:14", "start": 734.1, "text": "So that's not actually con-- that doesn't contradict Jevons or, or what Vijay said, right? It could be that it goes through the stages before it becomes the commonly accepted medium of exchange, and then at that point, it does the other things too. So it's, it's not that Mises was In terms of those different functions, because hey, Mises told me not to, kind of thing." }, { "speaker": "stephan", "time": "12:36", "start": 756.25, "text": "Yeah." }, { "speaker": "libertarian_theorist", "time": "12:37", "start": 756.65, "text": "And then, and also a lot of times too, just the way people use the phrase store of value is just real loosey-goosey. And so, I mean, even forget Bitcoin, I'm just saying historically, like, and, and so that's just partly why I hadn't thought of it like that. But yeah, that, I certainly the way VJ lays it out, that seems very, very compelling to me. I guess part of the problem is" }, { "speaker": "libertarian_theorist", "time": "13:00", "start": 779.93, "text": "we Happen with gold, for example. You know what I mean? Like we can tell stories and maybe see certain things, but I think it's kind of tricky from our vantage point to, to literally know the, you know, the historical progression. Just like, I don't know if you're familiar with Stephan, what's the guy's" }, { "speaker": "stephan", "time": "13:15", "start": 795.04, "text": "name?" }, { "speaker": "libertarian_theorist", "time": "13:15", "start": 795.44, "text": "David Graeber, the Marxist," }, { "speaker": "stephan", "time": "13:18", "start": 798.08, "text": "yeah, the debt as money guy." }, { "speaker": "libertarian_theorist", "time": "13:20", "start": 799.8, "text": "So he, I, I don't know if you saw my like critical review of his big book, but, you know, he thinks the anthropological evidence" }, { "speaker": "libertarian_theorist", "time": "13:33", "start": 812.53, "text": "Money or commodity goods turned into a money and so forth, he thinks, you know, the different process altogether that would largely be like a state or a sovereign issuing fiat currency. And, and so like I got in there and, and I see why he thinks that, but I just showed, no, the anthropological evidence you present is actually more consistent with our theory. You know what I mean? Like he just, he's so sure he knows what happens that he goes and looks and says, \"Yep, the data confirm it.\" And so I'm saying, likewise here, that sure the history is consistent" }, { "speaker": "libertarian_theorist", "time": "14:02", "start": 842.47, "text": "Caution that, you know, d-how well do we really have, you know, do we have like diary entries from somebody in the year twenty-four, you know, to, to confirm that, at this point, you know, this is still just a, a, a, a collectible, but it's not yet money, you know what I mean? So, that, that's all I'm saying. But it, it certainly sounds plausible to me, and I, and I do think that, yes, with Bitcoin, that is what's gonna happen. And, in my most recent Oh, this thing is gonna be the currency of the future. It's gonna be worth, you know, in today's terms like millions of dollars per Bitcoin. I'd be crazy to spend it. Well, it can never get to that if everyone keeps thinking that, you know, that problem and just to show it's not end of story, there's a way to explain that dynamic, but it's a little bit tricky at first to think through how" }, { "speaker": "stephan", "time": "14:49", "start": 889.02, "text": "that works. I say, yeah, let's get into that a little bit, 'cause I think this is one of those things where maybe there's some Where this kind of idea of the hodl forever, like, okay, so I guess in practice then, maybe it's more like people who've been hodling for years, each of those people on the margin, at some point as the price rises up, they have some point where they're like, okay, I might use some of it to buy a house, buy a car for my family, or, you know, little things like that. But along the way up, there's kind of new waves of people who are coming in, and I think this is probably a point I've, I think I valuations between these things, right? Like the dollars in your account or my account or the bitcoins that I hold, like it exists already, it's already out there, eighteen point seven million or so today, and obviously the total cap is twenty one. But really, the process of Bitcoin adoption is actually that distributing out to more and more people, and only then can we actually go to the stage of people are gonna really use it day to day, whereas a-until then, people are going to be mostly holding, right?" }, { "speaker": "libertarian_theorist", "time": "15:58", "start": 958.13, "text": "Yeah, right. And, and so again, this is elementary, but let me And real basic things, you know, helps to clarify. So you're right, if the, the, you know, the, the typical holdler who is sitting there, no, I get, I'm, every spare dollar I get, I'm trading and, you know, add into my stack and sats and whatever, and I'm never gonna get rid of them until, you know, until the time is right, like maybe they have that kind of idea. And they keep seeing the price go up, they say, \"See, this is confirming that I'm right. The only way the price There were people, someone owned bitcoins and sold them for dollars today, and that's how we know what's today's price. So it's a bit weird that if everybody who currently owned bitcoins was gonna just be a holder forever person, we would go check and we'd say, we don't have any prices, 'cause there's no sales going on. You know what I mean? We'd have to say, oh, the price three days ago was such and such, and then the next day, price four days ago was this, and it would just sit there and it wouldn't go up." }, { "speaker": "libertarian_theorist", "time": "16:56", "start": 1016.33, "text": "You know" }, { "speaker": "libertarian_theorist", "time": "17:02", "start": 1022.43, "text": "Price actually wouldn't go up, it would just stay stuck." }, { "speaker": "stephan", "time": "17:06", "start": 1025.67, "text": "It's funny to think about, but you're right, yeah. But it's kind of like, I guess that would be if, if it's literally one hundred percent a hodl forever. In reality, it might be even ninety nine percent or ninety nine point nine percent, and just that little marginal person, right, they're the person setting the price, right?" }, { "speaker": "libertarian_theorist", "time": "17:19", "start": 1039.16, "text": "And, and so yeah, so I think the, the way around that, you know, sort of contradiction or paradox is to say, you know, if you think the price Okay, it can't be literally correct to say everyone who owns bitcoins, if they were smart, would never get rid of them, because then we would all just be stuck holding them and, you know, the price would be undefined or at least you'd say the last known price was, and it would stay there forever, and that's, that, that can't be right. And so, and yet to get to the future state where Bitcoin is the currency of the world means on every side, or on each transaction, one side is gonna be, the buyer's gonna be giving up bitcoins for it" }, { "speaker": "libertarian_theorist", "time": "18:02", "start": 1082.49, "text": "Or, you know, twenty-one hundred. At that point, it's not gonna be hold 'em forever. It's gonna be, no, any, anytime you want something, you g- you get rid of Bitcoin. That's what it does, that's its fu- its function. You know, it's a medium of exchange. You acquire them only because you're gonna give them away in the future to get real goods and services. That's what a medium of exchange does. And so at that point, it can't be a hold 'em forever mentality. And so, you know, how do A little bit one bitcoin will be the equivalent in today's money of, you know, ten million dollars each. So right now, this, it's at sixty-five thousand or whatever, it's way underpriced. So the more I get, I'm, I'm sitting on them 'cause I know it's gonna go up as more and more people realize how, how great this is. That's correct. But as it gets closer and closer, at some point you would say, okay, now I don't need to hold it forever because it's actually gotten close to what I think its correct fundamental value" }, { "speaker": "libertarian_theorist", "time": "19:02", "start": 1142.43, "text": "Actually is now approaching the fundamental value, and then the last tweak is to say, you're, you know, allowed to, as it's going up, you can, you become fantastically wealthy, and so it's not irrational for you to sell off some of it. There's nothing wrong about that. Like, so even if you're, you know, if you're, forget Bitcoin, just you're sitting on barrels of oil or something, and you think oil's gonna be trading for a thousand dollars a barrel thirty years from now, as it starts going up, you know, especially if you need cash" }, { "speaker": "libertarian_theorist", "time": "19:32", "start": 1172.49, "text": "The money or maybe you wanna do that, but it's not crazy for you to sell early or, you know, there's other things you could do. Once they get more sophisticated financial derivative things and you can, you know, buy calls and puts on Bitcoin and futures contract, then you can get more sophisticated maybe if you thought, \"Oh no, I'd really like to take some profits now, but I still think this thing is gonna go up.\" You could do something more sophisticated than just trading it at what you think is still a lowball price. But the point is, you'd, you'd-- And you trade this until it's, you know, got to a market price of ten million US dollars, that you're allowed to, to do that. So that, that's, like you say, kind of, and you're performing a social function. So the more people who had that strategy that said, \"No, I'm holding it until it hits ten million US dollars, \"because that's when the whole world will be using it, if the price was rapidly appreciating, so more and more people started getting in on it, and like you said, just some people on the margin were" }, { "speaker": "libertarian_theorist", "time": "20:32", "start": 1232.43, "text": "Instead of having to wait till the year twenty one hundred, it gets pulled to the, you know, the forward, and then, oh, maybe it's by the year twenty twenty five, where it hits that ten million price, and then we can all start using it as a medium of exchange. So it's, it's actually performing a social function, and all this stuff is predicated on the assumption that the, the forecasters are right. If, if actually Peter Schiff is right, well, then you're hurting things by holding. You're, you're screwing things up even more. But assuming Forward in time, so we don't have to wait as long to use the better currency." }, { "speaker": "stephan", "time": "21:06", "start": 1265.69, "text": "Yeah, yeah. and so I'm curious as well, so this is like the whole Peter Schiff thing as well, where he'll be like, \"Oh, there's no intrinsic value,\" but, I mean, maybe, he might be getting at this idea that somehow money must do something else, like that there must be some kind of non-monetary use for something. Or that, that's one side, or the other side would be, \"Well, can something work purely" }, { "speaker": "stephan", "time": "21:33", "start": 1292.67, "text": "Looking for the most saleable, really what matters is whatever's the most marketable or the most saleable. Where do you come down on that?" }, { "speaker": "libertarian_theorist", "time": "21:39", "start": 1298.94, "text": "Okay, so I'll make two, two points on that, and then obviously you can take it however you'd like. So regarding, you know, Schiff's position, and, and the reason I pick on him is, is just because, you know, it's a lot of people have been saying that about, especially in the hard money, you know, pro gold community, have been saying that about Bitcoin. And so my point to them is, okay Hero. Anything above that is just pure speculation in the sense that there's no rhyme or reason for why should it be sixty-three thousand versus two or versus thirty million, you know what I mean? Like if, if Bitcoin is whatever people think it's gonna be, kind of deal. But by the same token, gold, you know, has a commodity perp, you know, function, you know, as an industrial uses and then as jewelry, you know, it's pretty to look at and so people would pay for it. But then once it had that and then gained because of its various attributes" }, { "speaker": "libertarian_theorist", "time": "22:32", "start": 1352.47, "text": "Power is much higher than it would have been had people not used it though, just like you can see with the demonetization of silver, how the market price of silver fell relative to other things, including gold. And so there's a sense in which, okay, gold right now isn't a bubble because a big chunk of its market value isn't due to its industrial uses or even, you know, as jewelry, but because of its role as the money or, you know, as a store of value, whatever term you wanna use right now, if it's not technically money, all right? So, Overvalued, it should really be about two hundred and fifty dollars an ounce, because that's what we can explain from its fundamental. You, you know, he doesn't talk like that. And so I'm saying, okay, so if you get how gold can be a perfectly good medium of exchange whose market value is whatever it is, two thousand, because in eighteen hundred of that is due to its monetary history or abilities, and only two hundred is that, well, that gap then that's what you can explain Bitcoin is. So yeah, Bitcoin's at sixty-three thousand or whatever right now, and sixty For, you know, making sandwiches and cars. And there, to me, there's nothing contradictory. And you, now, you, some, someone like Chef might be tempted to say, \"Well, no, see, there's gotta be like a fundamental building block, and then the, the, you know, purchasing or the, you know, the monetary thing gets added on top of that. But with Bitcoin, there's no foundation. But it's not a percentage thing. It's not that gold would be something like a two hundred, and then because of its monetary uses, it gets multiplied by a Well, why couldn't you just add it to zero instead of adding it to two hundred or whatever? So to me, it's-- that, that's what I'm saying there. And then, when you were bringing up, the, the role, the, the Menger and so forth, so there, people, and if you wanna, I'll, I'll do a real short version and then tell me stuff, and if you wanna make it longer, it has to do with Mises' regression theorem, and this again was something that people would trot out early on who were fans Basically, what, what he was doing is he was using subjective value theory applied to money. And economists before him had tried to do it. So, you know, Menger's pioneer subjective value theory in eighteen seventy one, and Mises' The Theory of Money and Credit comes out in nineteen twelve. So there's a, you know, big several decades there. And so you'd think, why did it take so long for Mises to do this? And the reason was some economists had said that, that, oh yeah, just like we explain, you know, why is it that oranges trade The subjective preferences that people value, oranges and apples on the margin, blah, blah, margin utility. The reason that seemed like a, a dead end when it came to money was you said, \"Why is it that people value money so much?\" And you said, \"Oh, because it has purchasing power.\" \"Oh, why does money have purchasing power?\" \"Well, because people value it so much.\" And it looked like you were just arguing in a circle. And so Mises solved that paradox or that circular regula, and he said, \"No, the reason it has purchasing power right" }, { "speaker": "libertarian_theorist", "time": "25:32", "start": 1532.45, "text": "dollars now, because I have this idea that I can take the hundred dollars in the near future and buy stuff with it that I'm willing to give up my labor right now to get the stuff from. Well, how do I, how do I know that? Well, because in the immediate past, looking around, I can see what a hundred dollars can get me, and I can kind of do a rough estimate. But then that looks like you're just saying, okay, so you're explaining the purchasing power today by reference to yesterday's purchasing power. Well, why did money have that purchasing power yesterday?" }, { "speaker": "libertarian_theorist", "time": "26:02", "start": 1562.43, "text": "You don't have to go back forever, you go back to barter when everything was just, you know, a regular commodity, and then that's where the explanation stops. So it w- so what it was doing rhetorically, the regression theorem, was just showing it's okay for us to use subjective value theory, not just to explain real goods, but also the money good. It's in the same framework and that doesn't open us up to charges that we're committing a logical con- or like an infinite regress. Alright, so that's what he was doing with it, and that's the" }, { "speaker": "libertarian_theorist", "time": "26:32", "start": 1592.43, "text": "Generally speaking, if you go and look at Mises' arguments, what he was showing, what, what he was claiming was that anything that's a medium of exchange had to have a prior history, is a regular good, just, you know, commodity. And so Bitcoin already is a medium of exchange, nobody would deny that. And so my point has always been a modest one of the Austrian saying, if you think the regression theorem has something to say about Bitcoin's adoption or viability, the hurdle would have been Bitcoin can never become a medium of exchange because the regression theorem. Like that's a plausible, in saying that. And so since it is a medium of exchange, that means Mises was wrong if that's what you thought he was saying. But it's not, oh yeah, sure it's a medium of exchange, but it's never gonna be adopted by enough people that will call it a money. There's nothing there in, in what Mises wrote. So I'm saying those who are really clinging to Mises and saying, no, no, the regression theorem says Bitcoin can't happen, you're just saying Mises was wrong, because really, clearly what he's" }, { "speaker": "libertarian_theorist", "time": "27:27", "start": 1646.53, "text": "saying is it can't become But I'm just saying that's where the logjam would have been, it's not Bitcoin becoming money." }, { "speaker": "stephan", "time": "27:37", "start": 1657.48, "text": "Yeah, yeah, and I, I, I think you're right, I think that was unfortunately, catching point for a lot of Austrians who came, who were more in the gold world, where they kind of said, \"Oh, gold won't, Bitcoin won't work, because of the regression theorem.\" But I think in some sense it's like, well, other people had a different answer, right? People like Conrad Graf, and I believe," }, { "speaker": "stephan", "time": "28:00", "start": 1680.37, "text": "I Initial transaction back in, you know, one of those first times when it got transacted in a more barter sense, right? Whether it was the ten thousand bitcoins for two pizzas or some of the earlier, what, really early ones where it was just on a forum and some random, you know, internet nerds are doing Bitcoin transactions, but at that point, you know, it had already surpassed, and then now it's not like Bitcoin is gonna fail 'cause it doesn't supposedly meet the regression theorem anymore, right?" }, { "speaker": "libertarian_theorist", "time": "28:25", "start": 1705.17, "text": "Right. So, yeah, so specifically what I said, and you know, I Was wrong or not, but what, what Mises had in mind and why at first it seemed so clear that, oh yeah, of course, for something to become a medium of exchange, it must have had a prior history as a regular commodity. Is he saying, look, what for, you know, for a medium of exchange, again, what, what does that mean? It means you're willing to trade away valuable goods and services to acquire this thing that's the medium of exchange, not because you, you're gonna consume it, not even because you're gonna use it in production, but because you For it now, I would be willing to give up for the things I'm gonna get in the future when I spend this, right? It's because you're really making like an intertemporal trade, a trade in your mind, and this thing is just the medium to effect those trades, right? That's what the term medium, like, you know, like sound is a medium through which sound waves travel, it's just showing this is the good through which this intertemporal transaction takes place, it goes through. And so you're really selling today's labor for the car's next year when you're So Lisa's point was, how can that work? The only way that makes sense is if you say, i-is if you know what the purchasing power of that good is, right? Because if no-- if this has never been, if it's not currently, you know, good that's being used in barter, that we, we have some idea of how much does this trade for in terms of apples and oranges and horses and chickens. Well, then it doesn't make sense to say, \"Oh, I would be, you know, would I be willing to give up my hours of labor" }, { "speaker": "libertarian_theorist", "time": "30:02", "start": 1802.43, "text": "Don't know what it trades for. And so that's, that's kind of his point is that it, it needs to have been a commodity, not because of some metaphysical reason, he just meant because people need to know what is its market value against other goods and services to be, to determine does it make sense for me to take this thing and trade, even though I can't personally use it. Right? So that, that was the idea. So that's why he thought it had to have this prior history before it was adopted for its possible uses as a medium of exchange. And so with Bitcoin" }, { "speaker": "libertarian_theorist", "time": "30:33", "start": 1832.59, "text": "The white paper's published and people, you know, have it on an internet boards or whatever. Nobody knows what the heck is this thing worth, 'cause it's not worth that, you know, there's no history. And people thought it was kind of a neat thing, and yeah, some guy on a lark said, \"Okay, yeah, I'll give you two pizzas for ten thousand or whatever the thing was.\" And so you could say to that guy, \"Well, why would you do that? Why would you give up two perfectly good pizzas for these things that you have no, you know" }, { "speaker": "libertarian_theorist", "time": "31:03", "start": 1862.61, "text": "The thing that Mises didn't fully appr- is that the thing might have an extremely low purchasing power early on to just get off the ground, and then there is a history, and then people can start going from there. And so I think that was, I just, I just, so my personal take is I think Mises was wrong, and he didn't think of that possibility that, yeah, it could start if it had a really low purchasing power. And the reason he didn't think that is because, like, it wouldn't make sense with shells or something, you know what I mean? Shells that are useless. And then like, why would I give up a horse for a bunch of shells? You go, \"Oh, because you can take the shells and go get what you want. Because we'll tell that guy to also give up his good stuff or shells he can't use. \" And that would sound like the stupidest idea ever, right? But that's because the shells aren't particularly useful, whereas Bitcoin, of course, you know, the reason they thought this might take off is because of its attributes and how if we could get enough people using this, look at" }, { "speaker": "libertarian_theorist", "time": "31:59", "start": 1918.83, "text": "how, you" }, { "speaker": "stephan", "time": "32:02", "start": 1922.43, "text": "I'm, I'm curious as well, what other things are there that you, I mean, you probably see a bunch of bitcoiner, you know, spouting off on Twitter or whatever. What things do you think other bitcoiners are getting wrong? maybe, maybe one example might be, one, might be like money isn't a measuring rod. I've seen you make that point, or I'm, I'm curious as well if you've got any other things that you think maybe bitcoiners aren't quite getting right about Austrian" }, { "speaker": "libertarian_theorist", "time": "32:24", "start": 1944.01, "text": "economics. Okay, well, that's It'll come back to me though, 'cause it's, it's so seductive, 'cause I, I got in, I wrote a thing on, there were some, but there were some prominent like supply side economists who were, when they were battling against inflation, were saying how money should be a measuring rod of value, just like, you know, the ruler, and when the government debases the currency, it's like they say a foot has fifteen inches, and that's crazy. And actually, even though you get where they're coming from, and they're, you know Just wrote a lot about, no, money isn't a measuring value, a measuring out of value, and that's the wrong way to think of it. So why don't we, if you don't mind, come back to that, but let me just mention like some more fun ones and, 'cause I'm, I'm actually curious to get your take on this too. So me as an outsider, I noticed this was that, two, two things. So originally people were saying how, oh, this is the wave of the future, this is so awesome because it's this anonymous thing and Public ledger. This is actually much easier to trace your transactions in Bitcoin than even using cash. So what do you-- So that seemed weird. And then, and then the other one, was that the, the, you know, the, the proponents of Bitcoin early on were saying, \"This isn't about personalities, you know, nobody can, can hijack this system. You don't have to trust anyone. It's, it's, you know, peer to peer. There, there's nobody in charge of Bitcoin. It's, it's beyond human control. That's Even Hiex's vision of privately issued currencies, technically that company could screw you over. And then later though, it was when there were arguments about like Bitcoin versus Bitcoin Cash and other forks and this and that, like the two communities would be yelling at the other ones and saying, \"They're ruining Bitcoin, I can't believe these idiots are going...\" It was almost like we were having an election in between the two camps, and I was like, \"Wait a minute, I thought human personalities had nothing to do with it, you know?\" So I, I know those aren't literal contradictions, but I'm" }, { "speaker": "stephan", "time": "34:29", "start": 2069.27, "text": "Okay, back to the show in a moment. Have you thought about your backups? CipherSafe dot io are producing metal backup seed products like the cipher wheel. They've got a product called the Bitcoin Recovery Tag specifically helping you with recovery. This is an extra stainless steel tag with information like the original wallet, gap limit, derivation types, and scripts used. 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But to the, you know, so-so called contradiction, I would say it depends on who you're talking to, because there are some people who try to sort of make Bitcoin fit, you know, they try to make it more palatable to people in the government, and for that reason, there are some people out there trying I would say, yeah, look, see, it's all a public ledger, and therefore, it's not good for criminals and blah, blah, blah. I just think that's not the consistent way to go about it, though. I think of it more like, we should bite the bullet. We should just say, look, I'm sorry, it's a neutral tool. Some people will use it for good, some people will use it for bad, and that's the way of the world, and I'm sorry, that's just how it is. on that same point, also, to, try and market their product as though, \"Oh, hey, look, see, I can help you track, track things on the chain,\" blah, blah, blah, to, to try and help appease, for example, AML regulators, anti-money laundering or sanctions and so on, financial, fin- quote-unquote, financial crimes regulations, right? I, it's the typical one there. So I guess the way I would resolve that is I would say, \"Let's bite the bullet. I think it's a neutral tool, and we should just accept" }, { "speaker": "stephan", "time": "38:24", "start": 2304.38, "text": "You know, I bite the bullet there and I say openly, yeah, I think there will be criminals who use Bitcoin, but that's-- Bitcoin is the money of enemies, and we have to accept that, and we have to just openly say, \"Yeah, I'm sorry, but the net benefit of Bitcoin is gonna be so much greater that, okay, even a few criminals using it isn't gonna, you know, it's gonna be a net benefit, great net benefit to society, obviously, to stop fiat inflation, stop central banking, blah, blah, blah, like longer term.\"" }, { "speaker": "stephan", "time": "38:54", "start": 2334.36, "text": "You know, obviously, I was more on the small-blocker side and I was more, you know, anti-Bitcoin, right? But I think it depends on-- I think part of it is Bitcoin isn't impossible to change, it's just extremely, extremely, extremely difficult to change. And I'd say that's probably the first part. And I think, the other part is it depends on which view you take, because there are some people who take the view of more like, \"We knew that was gonna fail, we were just trying to help you understand why that was a bad idea" }, { "speaker": "stephan", "time": "39:25", "start": 2364.54, "text": "sort of deeply into the nuance of it, that it can be a bit challenging. but a really interesting book is called, I, I forgot the exact name, but it's by Jonathan Bier, B I E R, from, BitMEX Research. He wrote this book called The Block, Block Size War. and he, he really catalogs and shows exactly, those last few years, in terms of, I think sort of twenty fifteen, sixteen, seventeen, culminating in twenty seventeen, obviously with the whole Beecash, SegWit Yeah, so I would say it comes down to, Bitcoin isn't impossible to change, it's just extremely difficult to change, and the changes that are, if, if you will, possible, there's a range of those, right? Obviously, I think anyone trying to change the twenty-one million limit, that's a non- that's a non-starter, that's like not even gonna get out the door, because like literally, you're gonna basically make all the current holders have to devalue their own, they're gonna have to dilute their own share of Bitcoin. I, it's" }, { "speaker": "libertarian_theorist", "time": "40:25", "start": 2424.7, "text": "I apologize, I don't know if, like, if your audience is so savvy that this is like, stupid for them to hear, but if I share our conversation with, like, some of my fans, then they won't know this stuff. So if you don't mind me, can you just spell the-- So it's, it's, you see how sometimes the way people talk, it's like, \"Oh, in order to break the twenty-one million thing, you know, you would need a, a supercomputer that was older than the age of the universe,\" and then, but on the I thought, so strictly speaking, could it be po-- is it mathematically possible that all the miners could go and say, \"Yes, that there should be now twenty-five million bitcoins.\"" }, { "speaker": "stephan", "time": "41:06", "start": 2465.66, "text": "Gotcha." }, { "speaker": "libertarian_theorist", "time": "41:06", "start": 2466.1, "text": "And could they do that? No." }, { "speaker": "stephan", "time": "41:08", "start": 2467.6, "text": "So the answer is," }, { "speaker": "libertarian_theorist", "time": "41:09", "start": 2468.81, "text": "okay." }, { "speaker": "stephan", "time": "41:09", "start": 2469.31, "text": "So think of it this way, everyone running a Bitcoin full node is verifying, and miners are helping secure, they are providing hash power to help secure the chain, but their power isn't of validity, their power is one of transaction ordering. And so in this case, there, hypothetically, if the miners all tried to make a fork of Bitcoin and only mine the twenty-five million fork of Bitcoin, all the Bitcoin node runners, who are holders and not necessarily miners, they would just reject that. And then they would be-- basically, we can think of the, the miners, they're kind of like security guards. So if the security guards, you know, say you're some millionaire, and then like the security guards say, \"Hey, we're gonna go guard that other house over there,\" well, you'll just hire some new security guards" }, { "speaker": "libertarian_theorist", "time": "41:54", "start": 2514.36, "text": "It's possible I misspoke. I, I didn't mean, I didn't mean to. I was trying to say, w-what is the relevant community? Like, clearly, if everyone who has anything to do with Bitcoin agreed, oh yeah, I used to think twenty-one million that was a non-negotiable point, but I've seen the light and it, it should be twenty-five million. That would be better for all of us. Could that, could that conceivably happen? Even though you'd think that, no, that'd be-- they would never agree to that, but could" }, { "speaker": "stephan", "time": "42:24", "start": 2544.36, "text": "So validating Bitcoin node user and every holder and that they all somehow, like, if you could get them to agree. Basically the point here is, could you get them to agree to dilute their own supply? And, I, I, what I'm saying is that in practice, it would just be a completely non-starter. Like, that would just never, you would never, like, 'cause what are they gonna get out of that? What are they gonna get for that? Like, oh, you'd, I just dilute my supply and for what," }, { "speaker": "libertarian_theorist", "time": "42:50", "start": 2570.23, "text": "right? So- Yeah, I mean split and be like, you know, if you said to everyone, \"We're gonna proportionally increase it to-- or let's say we made it forty-two million, we're just gonna double everybody's holdings because right now the purchasing power is too high even with the Satoshi thing, and we just wanna cut the price of a Satoshi in half just to make transactions easier, and we're just gonna do this thing, and you know, you're all just gonna have double.\" So yeah, the, the purchasing power will be cut in half, but you'll have twice as many." }, { "speaker": "stephan", "time": "43:22", "start": 2601.81, "text": "so I think in Bitcoin, like, hypoth-- the number, the actual number is a bit less than twenty-one million in the year twenty-one forty or whatever, right? But just for taking that for stipulation, and then each Bitcoin has one hundred million satoshis, well, for example, the Lightning Network, some clients of that do denominate in milli-satoshi, so even a fraction already down. So basically, I think the answer would be that we go smaller and smaller fractions of Bitcoin than to do a quote-unquote stock split." }, { "speaker": "libertarian_theorist", "time": "43:50", "start": 2629.79, "text": "Right. So by the way, I agree with you that I, I ethos of Bitcoin and what it's supposed to be, like that's such a better-- I mean, it's sort of like going up to NRA members and stuff and saying, \"What if we made, if we construed the Second Amendment to mean you could have a water pistol?\"" }, { "speaker": "stephan", "time": "44:04", "start": 2644.18, "text": "Yeah." }, { "speaker": "libertarian_theorist", "time": "44:05", "start": 2644.52, "text": "Like, and they would say, \"No, that's not-- \" You know what I mean? So they might, some of the, especially NRA, 'cause they're, they're wishy-washy, might be okay with banning, you know, fully automatic weapons and things, but they would never agree" }, { "speaker": "libertarian_theorist", "time": "44:24", "start": 2664.34, "text": "There's times when people, yeah, make it seem as if it's literally mathematically impa- and I might have been one of them, like I think I've, have used phrases to say like Bitcoin's harder, harder money than gold because technically an asteroid could come to Earth that has a bunch of gold on it or somewhere we could go get it or the scientists could figure out in the lab how to turn, you know, other baser metals into gold just, you know, with a low cost process, whereas with Bitcoin, it's mathematically fixed at twenty one million, and so you" }, { "speaker": "libertarian_theorist", "time": "44:54", "start": 2694.38, "text": "And maybe from our perspective, we'd look and say, \"Well, that's not Bitcoin, that's something else.\" But they might call it, right?" }, { "speaker": "stephan", "time": "44:59", "start": 2699.44, "text": "Yeah, and I think most-- a lot of people would say that, that you've changed the protocol at that point, and it's no longer Bitcoin." }, { "speaker": "libertarian_theorist", "time": "45:05", "start": 2705.38, "text": "But still, the-- it's conceivable that the people, you could go take a time machine and go to the year twenty-three hundred, and it's possible there would be a billion bitcoins being traded, and everyone calls it Bitcoin and thinks that, \"No, no, this is the descendant of" }, { "speaker": "libertarian_theorist", "time": "45:24", "start": 2724.38, "text": "Technically, that, that is possible." }, { "speaker": "stephan", "time": "45:26", "start": 2726.46, "text": "Yeah, I guess theo-- it's one of those things where it may be theoretically possible, but just in reality, it's just like such an infinitesimally, like, just it's not even worth, you know, entering that." }, { "speaker": "libertarian_theorist", "time": "45:37", "start": 2736.98, "text": "But I, I guess it's just to, like, to show people that technically there is some human control over what happens with Bitcoin, but it's dispersed throughout the community. So it's sort of like trying to get-- It's, it's, to me, I don't know if you like this" }, { "speaker": "stephan", "time": "45:51", "start": 2751.31, "text": "analogy," }, { "speaker": "libertarian_theorist", "time": "45:55", "start": 2754.84, "text": "Right, but if we said in the year twenty-two hundred, imagine if the word up" }, { "speaker": "stephan", "time": "45:58", "start": 2758.24, "text": "meant down, meant" }, { "speaker": "libertarian_theorist", "time": "45:59", "start": 2759.0, "text": "moving towards the floor, that would be kind of weird, and you'd say, \"I really doubt that would happen,\" you know? So it might be something like that," }, { "speaker": "stephan", "time": "46:06", "start": 2766.4, "text": "Yeah, I think, I think it's kind of like that, and I think, I mean, I, I've heard your analogy as well on, you know, the markup for security, thinking about, you know, law as kind of like dictionary, like imagine law and dictionaries and" }, { "speaker": "libertarian_theorist", "time": "46:17", "start": 2776.71, "text": "language" }, { "speaker": "stephan", "time": "46:21", "start": 2781.39, "text": "and Because, I think a lot of, if you're technically being precise, as an Austrian, it's more like money isn't neutral and our demand to hold it will shift, and I think that's also why the purchasing power of that value will really shift. And so we can't just say, \"Oh, this is now the measuring rod of the world.\" It's, I don't think that's quite precise. but what do you, what do you think?" }, { "speaker": "libertarian_theorist", "time": "46:46", "start": 2805.79, "text": "Right. So I, I just looked up to refresh my memory. So it was, yeah, Steve Forbes, Money and how, you know, the Fed's debasing the currency or whatever, how to return to sound money. And, and there they were saying money should be a measuring rod, just like a ruler, and again, you know, to, to allow currency debasement is like allowing to say that, you know, eighteen inches for a foot kind of thing, and you can see how that would screw everything up. And so David Gordon of the Mises Institute reviewed that book and said, \"Yeah, it's got some great stuff about, you know, dangers of government, but actually this point here" }, { "speaker": "libertarian_theorist", "time": "47:24", "start": 2844.38, "text": "By Arthur Laffer, so Mar-- Miles is like a, you know, supply side, so you can see why he likes Steve Forbes, their all, you know, tax cuts for the win kind of mentality. So he was aghast and like, how the heck does David Gordon, this is basic stuff, like, you know, couldn't believe, how could someone writing for the Mises Institute not know, you know, this is standard, any Austrian should agree, and then I had jumped in to say, no, it's a technical point, but David Gordon is right and you guys are missing What is a measuring rod? It's because length is an objective feature of the world, and so we know, like, what, what we mean by a foot. You know, there's some rod somewhere in a museum, like in France or-- Well, maybe France, that's where the meter is. I don't know where they have the-- where they define what the foot is. To say, \"This is what we mean by a foot,\" and then nowaday, you know, they give more precise definitions too, based on, you know, chemistry or something. But we know what we mean by" }, { "speaker": "libertarian_theorist", "time": "48:24", "start": 2904.34, "text": "Technically take this thing and you lay it end to end, you said that's what it means to say this is thirty two feet wide. And so when you say like, \"Oh, this car traded for ten thousand dollars, so did the, did that price, does the money somehow measure how much value is in the car?\" That doesn't make any sense. That no, all that really happened is this person traded ten thousand dollars in cash and this person traded a car. And why did they do that? It wasn't because there was some sort of equality. The guy who gave up the cash thought the To the trade, and the seller, or yeah, the seller thought vice versa. He thought the ten thousand dollars in cash was more valuable than the car, and that's why he agreed to the trade. So there's no equality there, the ten thousand dollars equals the car in any sense. It's both parties, they just had different valuations, and that was the, what made the trade go through. And then another way to see it is, 'cause I think Steve Forbes was a fan of the gold standard, and so was Mises. So let's say we," }, { "speaker": "libertarian_theorist", "time": "49:22", "start": 2961.71, "text": "you know, we had it I kept it like that. And so I think Steve Forbes is saying, \"Ah, back in those days, in the classical gold standard, the dollar was a measuring rod of value 'cause it was fixed. But suppose, you know, there's a huge discovery of new gold or an, you know, an asteroid comes and the amount of gold in the world doubles, well, yes, it's true, the dollar fixed in terms of gold wouldn't change, right? It would still be twenty sixty-- twenty dollars and sixty-seven cents 'cause the, you know, the, the US government would, would Gold's value, market value relative to everything else would be lower, right? There's more gold floating around, and so the gold, the price of stuff quoted in gold ounces would go up. And so if a dollar is locked in, in a certain ratio to gold, that means the dollar prices of everything would go up. They might not literally double, but they would go up a lot. And so to the average person looking around, the dollar prices of everything they buy would, would double. So that would feel like inflation to them, even though the, you know, I'm saying it's, it Because that dollar locked into gold at that ratio was measuring the value, you'd say, \"Oh no, it just the currency got debased.\" And, and Steve Forbes said, \"No, it couldn't have, because the dollars...\" And I said, \"Well, no, because the amount of gold just suddenly unexpectedly doubled.\" And so, anyway, that's, that's kind of the argument I use to try to just drive home that the dollar or money isn't a measuring rod of value when you think through subjective value theory, that literally doesn't even make sense. And then, moreover, just practically" }, { "speaker": "libertarian_theorist", "time": "50:54", "start": 3054.34, "text": "Money defined in terms of precious metals or whatever, that's still not getting you what you think you're getting. And going the other way too, if all of a sudden like people thought, so again, the dollar, let's say it's locked into gold at twenty dollars and sixty-seven cents an ounce, suppose just for whatever reason, like people decide that gold causes cancer, or that they just, they think gold is ugly and no one wants to use it for jewelry anymore. Likewise, the demand to hold gold for these other purposes would drop, its per-- its value relative to other goods and such would drop What would happen in practice, in case the listeners are getting lost, is people wouldn't wanna spend their, you know, if they had twenty, if they had an ounce of gold, something that cost twenty dollars and sixty seven cents, now that the gold, you know, they don't think it's as pretty anymore, they think it's radioactive, it's causing cancer, the seller would say, \"Oh, no, I don't want that ounce of gold, I don't want, you know, get rid, I'm not taking that. You'd have to give me two ounces or something" }, { "speaker": "libertarian_theorist", "time": "51:55", "start": 3114.72, "text": "And so now there'd be a huge influx of gold into the coffers of the bank, and they would be com-committed by law to have to give twenty sixty seven in new currency, so that would cause the amount of dollars circulating to go up. So that's the mechanics of what would actually happen under the classical gold standard if all of a sudden people didn't wanna hold gold anymore, they would just turn it into the authorities at what they consider to be a bargain price at that time, and so now the amount of dollars would all of a sudden shoot up. So historically, the reason the gold standard was" }, { "speaker": "libertarian_theorist", "time": "52:25", "start": 3144.84, "text": "It wasn't that all of a sudden gold was found to be causing cancer, people liked it, and so it limited how many dollars the government, in, you know, francs and british pounds and whatever, the authorities could print if they were committed to the gold standard. And so it was a check on printing up currency, but again, it's not because it was a measuring rod of value, that's just not-- that doesn't make any sense." }, { "speaker": "stephan", "time": "52:44", "start": 3163.63, "text": "Yeah, it's not precise, and I think it's, it's, yeah, it's more important to kind of have that, To adopt Bitcoin, and you could see a scenario where maybe ten, fifteen years, twenty years later, if more people are holding Bitcoin, does that then make it more difficult, for people, for the government to fund itself using cheap debt? And is that in essence, you know, because I think this is a topic where I feel like a lot of libertarians are, are missing the point, and they're not understanding that Bitcoin can actually achieve a very libertarian outcome of making the state smaller by forcing it to explicitly tax us instead of, being able to Push the cost into the future with cheap debt. What's your view on that whole idea?" }, { "speaker": "libertarian_theorist", "time": "53:29", "start": 3208.86, "text": "it's been a while since I've thought through that. O-originally, I was really optimistic, and then when I talked to someone who explained the mechanics of how Bitcoin worked, I thought, \"Oh, it's not gonna be a silver bullet like in the next ten years.\" Like at first, I just thought it might be this way that the more of us who start using Bitcoin, we can like send purchasing power to each other, and the authorities can't stop it as long as you just get on And then they could, you know, even if they couldn't catch you, if they caught the service provider, you know, that kind of stuff. So I, I realized like just piecemeal guerrilla operations kind of thing, it's not that we could just totally have a dark economy using Bitcoin, like there would still be ways. But I do think that, yeah, if, if like the whole world all of a sudden just started using Bitcoin and that was now the money of the world, that, yeah, then the, the governments, they wouldn't be able to inflate. Like it was You and say, \"Give me some of your bitcoins,\" or \"How much did you earn last year?\" Well, \"Give me half of it.\" They could still do that and throw you in a cage, but in terms of them being able just to go buy fighter jets by printing up dollars, they wouldn't be able to do that, and also they wouldn't be able just to issue debt. So they could-- Nothing would stop them from issuing debt, but without having a central bank there to monetize it, interest rates on that debt would go up, just like nothing's stopping a company right now from" }, { "speaker": "libertarian_theorist", "time": "54:54", "start": 3294.38, "text": "They charge is gonna go up, and so there's a natural in-built, in-built limit. So, it's ironically the MMT camp, you know, they talk about a country being a monetary sovereign, and what they mean is not only, it's not merely that, so it's a necessary but insufficient condition that they issue a fiat currency, it's also gotta be that they don't tie it to anything, like sort of the classical gold standard, that wouldn't count, and also that they, they only borrow in that debt denominated in that currency. And so that's why" }, { "speaker": "libertarian_theorist", "time": "55:25", "start": 3324.64, "text": "People, because then, you know, and so if, if you think it through, that the more people that use Bitcoin and, and there's their day to day currency, that would take away the, what the MMT campers mean by monetary sovereignty from more and more governments. Where exactly. Yeah, they can print up these things called dollars, but it's, it'd be like, you know, the Zimbabwe government just printing up and it just crashes against it. Whereas right now, the Fed can create five trillion new dollars and the markets kind of absorb it. It's not that, you Proportionally, so there's no point to it." }, { "speaker": "stephan", "time": "55:56", "start": 3355.9, "text": "Yeah, of course. And I think, so I think the way, you know, I guess to reflect the way many Bitcoiners are thinking about it is, I mean, we joke about it, we, you know, my friend Safteen, we call, Safteen calls it number go up technology, right? So this idea that it's so scarce and you can't make more of it, right? So this Julian Simon idea that anything we want, you, humans can make more of it, except with Bitcoin, obviously. And so is constantly going down. If more and more people start running to Bitcoin, and then it, it becomes more like a hard money Bitcoin world, then I think that substantially shrinks the size of the government because right now, part of how they can achieve this is using cheap debt, and we, I think we are moving into a world where it is going to be more equity based as opposed to cheap debt based. so I'm wondering whether you see any, like, I guess from a like a broader macro view, do you see it that being a potential thing if people, if more Bitcoin, do you think it would be a more equity based world as opposed to debt funding?" }, { "speaker": "libertarian_theorist", "time": "56:58", "start": 3418.46, "text": "Yeah, I, I, I do think so. I mean, I would, I would wanna think about it more, like, before I really took a strong stand, but yes, I, I think that's true. And you're right, I mean, I've written, sure," }, { "speaker": "stephan", "time": "57:07", "start": 3426.62, "text": "yeah," }, { "speaker": "libertarian_theorist", "time": "57:07", "start": 3427.14, "text": "not in the context of Bitcoin adoption, but just in general about how, why is it that we're such a debt based economy? And, and it was really bothering me, like, in the wake of the financial You need the public sector to take on more debt, otherwise incomes go down. And, and I was just coming up with simple, you know, thought experiments to just show counterexamples to say, \"No, that's not true,\" and it had, and it had to do with equity. That, that, you know, they just assumed that, you know, oh, gee, for this guy to reduce his debt, somewhere else in the community must be increasing their debt, you know, or doesn't work. And it's like, no, you could be increasing your equity," }, { "speaker": "libertarian_theorist", "time": "57:48", "start": 3467.99, "text": "and, you know, But it's someone else's liability, whereas with equity, it's your asset, and there's nobody in the community whose liability it is, if that, you know, I get, get, so, and, and people weren't getting that, and that's the sense in which we can all have more greater financial assets. It's not just a zero sum game, and it's, and yet the way some people were writing, both the MMT camp and, you know, even the just standard New Keynesian like Paul Krugman camp, is that it seemed like they were thinking that that wasn't" }, { "speaker": "libertarian_theorist", "time": "58:24", "start": 3504.34, "text": "Net debt is good because the only way to get net private saving is for the government to increase its debt, and that's just not true. You, you know, Robinson Crusoe on an island can have net private saving. So once you unpack what they mean by net, yeah, it is true, but that's because that's a stupid term. You know what I mean? It doesn't mean what it sounds like it means. They're making it sound like if the government doesn't run up a deficit, then the people in the private sector can't all be saving. It's only like one guy saves My long-winded way of saying, right, I think there's some weird intellectual shortcoming where a lot of people have convinced themselves that debt finance is the way to go and that it's the only way that capitalism can work, and that's just not true. You could have equity finance, and that's a lot, a lot safer, and, you know, for obvious reasons. And that, yeah, probably having hard money being the standard would certainly help in that regard and, and, and implement that, incentivize it, and, so certainly the more people using Bitcoin, yeah. So I People who use Bitcoin, probably the less you would see debt financing and more equity financing." }, { "speaker": "stephan", "time": "59:29", "start": 3569.0, "text": "Right. Yeah. And I'm curious as well whether you have any thoughts and, I don't know, you've got a, your, this is your graduate thesis as well, around interest rates, and because I wonder in that kind of world, it might be that, you know, if you want debt, and maybe there's a lot less, a lot, lot less debt, but you have to pay much, much higher interest costs for that. I'm wondering what you think on that idea," }, { "speaker": "stephan", "time": "59:54", "start": 3594.46, "text": "Of interest and that it's more just like it's just a reflection of people's time preference. So if they have a very low time preference, then they, on average, are willing to have a lower interest rate because they've got a-- they're willing to, you know, forego, their consumption. Whereas if they're high time preference, then you would think their interest rate that they would charge someone is higher because it's costing them more, right?" }, { "speaker": "libertarian_theorist", "time": "01:00:17", "start": 3617.69, "text": "Right. So I let me answer this way. I think if everybody were using Bitcoin were the money, and that's, you know, Coins, and especially, you know, once we hit the twenty-one million or like you say, you know, just under, asymptotically get close to it, that the normal state of affairs would be price deflation. So, the price of cars and houses and so quoted in bitcoins would, would-- well, certainly cars, maybe not houses, but certainly cars and food would go down. Clothing, newly produced goods each year that have a short lifespan, those prices quoted in bitcoins would go down over time, 'cause the quantity produced each year would typically go up, you know, as Yeah. And then with a given thing, and then certainly as more, more people are born, you know, the, the g-- the fixed number of satoshis has to get this, you know, and so they have to have a higher purchasing power just so everybody's got a decent amount of purchasing power with this, with that finite amount, you know, just getting redistributed around so each person claims, holds less and less actual satoshis on average as the population rises. so that would have to happen. And so I think you would see real interest rates would be higher than they are now" }, { "speaker": "libertarian_theorist", "time": "01:01:24", "start": 3684.34, "text": "Close to it, it's, so I think you would see that, like, and that would just show that there's real money involved and that sort of logically makes sense. The intertemporal exchange rate would be positive, as it were, like to, you know, to take goods from the present and the, you know, present goods command a premium or future goods, and that sort of like goes hand in hand with a positive real rate of interest. And so, but the, the nominal rate wouldn't have to be as high because prices are dropping. So you would know that, They're gonna be cheaper anyway, so they're gonna be, so that the satoshis I'm getting paid back with next year buy more stuff than what they could buy when I gave them up. So there's that natural appreciation. So it's the opposite of what happens now. Now, if you give up a hundred dollars, and there's someone's gonna give you a hundred and three next year, you're like, oh, but I'm only-- That's not gonna buy as much, you know? So I might even be losing money if inflation's higher than three percent. So that's why you economic sense in that regime, and so that would encourage saving, by the way, too. That's why you would defer consumption, 'cause you're getting that real interest rate, which is, you know, healthy for productive long-term growth, but the nominal interest rate might still be pretty low, just because, again, that prices keep falling measured in Bitcoin. And so, you know, you, if you, you'd be willing to part with it, because you knew when you're getting it paid back, it's gonna have more purchasing power." }, { "speaker": "stephan", "time": "01:02:45", "start": 3765.59, "text": "Yeah, that's really fascinating to think about, There was more patronage because people reached a saturation point in terms of what they could invest in, whereas when we're living in this fiat financing world, there's this always more and more projects that they can just throw money at, whereas historically they might have been more about, okay, I've kind of hit a certain saturation point in what I can invest in, and so now I'm actually just gonna start funding various arts and projects and building a big cathedral and things like that. Is that something you've seen as well in your kind of studies as well?" }, { "speaker": "libertarian_theorist", "time": "01:03:22", "start": 3802.63, "text": "I, well, I don't So, so yes, it would. One thing too is people would hold a larger share of their portfolio in the form of actual cash, you know, so in that world they would call the bitcoins cash. And so, whereas now, again, because of price inflation, you know, you, you don't, you don't wanna be sitting on actual hundred dollar bills in, in your home safe, you know, unless you're worried about the banks collapsing or something, but in general, you don't wanna have a bunch of your wealth literally in currency just because that's crazy, you're not earning any interest easy to hold a bunch of your wealth in the actual form of satoshis, because again, prices are coming down, that's just giving you, you know, you're earning a positive rate of return just sitting on cash, which is, you know, baffles most people, but that, that, that'll be the normal state of affairs. And I think that, so this kind of goes, you're right about, you know, equity versus debt, like that's, that's less risky, you know what I mean, for people just to be holding, you know, it's very liquid, And so the idea is that, yeah, when nominal interest rates are really low, like, like insurance companies, for ex-life insurance companies, you know, they're taking in premiums and they, they, they know there's liabilities on their books that people are gonna be dying over time or pension funds or whatever, you know, they're, they're taking contributions from the workers' paychecks and they know they gotta, you know, pro-produce because when they retire, they gotta have assets giving off income to be able to fund their retirement. If interest rates are really low in terms of safe things, you We, which is that can't work. We can't invest in treasuries right now because the rate of interest is so-- the yield is so low that, and so they're getting the riskier stuff. So, yeah, I think that would, would totally be reversed in a, in a hard money world, which we would have if everybody's using Bitcoin. And, and, and so right, a lot of these frivolous investments, I think, wouldn't happen. Also, too, some of it is, there's this selection element. It's not so much just this, the Like, you know, oh, interest rates get pushed artificially low, and so entrepreneurs invest in, you know, mail investments because the inter-- and people will say, \"But if it was something stupid, and they knew it was stupid at eight percent, how come if the central bank pushes it to two, all of a sudden these savvy investors are, \"Oh, like, don't they know rates are gonna rise down the road? \" You know? But it's not necessarily the same people. It's that if they push it down low enough, then maybe some joker comes in who borrows at the" }, { "speaker": "libertarian_theorist", "time": "01:05:54", "start": 3954.34, "text": "The, the qua-- you know, the criteria for who's credit worthy also tends to get lowered during a, you know, a mania, during a credit boom. It's so it's also that the, you know, borrowers are given huge sums of money who really shouldn't be getting loans at all. And so they, and they go and invest in stupid projects." }, { "speaker": "stephan", "time": "01:06:09", "start": 3969.83, "text": "Yeah, have, have you heard that? I'm sure you've probably heard that joke, right? It's, it's not that, entrepreneurs become idiots, it's that idiots become entrepreneurs." }, { "speaker": "libertarian_theorist", "time": "01:06:17", "start": 3977.61, "text": "I haven't heard" }, { "speaker": "stephan", "time": "01:06:24", "start": 3984.38, "text": "Bob, I, I'm a huge fan. This is really great. I really enjoyed chatting with you. I wanna respect your time. but before we let you go, obviously, listeners, make sure you follow Bob and, you know, you subscribe to his show. and, yeah, Bob, where can listeners find you and listen to you online?" }, { "speaker": "libertarian_theorist", "time": "01:06:41", "start": 4001.09, "text": "Sure, yeah, just I'll point them to bobmurphyshow dot com. That's my podcast, and that's got links to my other stuff, but that's the, yeah," }, { "speaker": "stephan", "time": "01:06:49", "start": 4009.97, "text": "that's the main You and, le-reading from your works, it was, it was a, it was a pleasure and, and an honor to interview you. Thanks for joining me." }, { "speaker": "libertarian_theorist", "time": "01:07:00", "start": 4020.18, "text": "Oh, thanks. I appreciate it. Thanks so much, and I, I learned a lot from this talk as well, so thanks." }, { "speaker": "stephan", "time": "01:07:05", "start": 4025.16, "text": "Just a quick note before we finish up from my friends Wiz and Simon over at Mempool.Space. There's been some congestion recently with the ha-- slowdown in the hash rate, blocks are running slower, and so there might be more people with a transaction that is stuck or potentially even pur space to track your transaction and for tools to help you get your stuck transaction confirmed. Get the show notes for the episode at stephanlivera dot com slash two seven zero. Thanks, and I will see you in the citadels." } ] }