{ "episodeId": "SLP272", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "peter_st_onge": { "name": "Peter St Onge", "role": "guest", "tag": "PETER" }, "guest_2": { "name": "Guest 2", "role": "guest", "tag": "GUEST" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 8.97, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin. Have you wondered about the Bitcoin energy double standard and the energy costs per transaction, per block, or for the use of Bitcoin in general? And what's the impact of renewable energy on all of this? And how can we quantify the energy cost of a recession? Peter Peter St Onge joins me on the show to talk about this. He's an Austrian economist, he's a fellow at the Mises Institute. I've actually been connected with Peter for some time, but never actually spoken with him until now, so, it was great to chat with him, and I really enjoyed this conversation. I know you'll enjoy it. in addition to the energy stuff, we also talk about what it looks like under a deflationary growth standard, and also some of these questions around sticky wages, UBI and MMT also. But first, a message" }, { "speaker": "peter_st_onge", "time": "01:02", "start": 61.82, "text": "Greetings, Stephan Livera fans. This is Dread here, and I've some big news to share. Swan Bitcoin's new private client services division is open for business. Since last August, MicroStrategy 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 onboarding form or email the CEO personally, cory at swanbitcoin dot com. That's C O R Y. At swanbitcoin dot com. Respect funds" }, { "speaker": "stephan", "time": "02:02", "start": 121.62, "text": "on one low. Lynd at huddle huddle is a non-custodial Bitcoin backed lending platform so you can lend and borrow globally and anonymously. There's no KYC. So if you have stablecoins, you can lend the stablecoins out and earn some returns on that. On the other hand, if you have bitcoins and you need some liquidity and you don't want to sell, well, you can put them up as collateral and get fiat stablecoins so that way you can get some liquidity without trusting Passing your money to one party, it's held in a multi-signature escrow, and so Hoddle Hoddle and the counterparty will hold one key each, and it's a two of three. So this is a Bitcoin DeFi, peer-to-peer lending and borrowing. You can set your own terms and put up offers depending on how long you want to borrow or the interest rate. Go to lend dot hoddlehoddle dot com. Are you interested in Bitcoin mining? Compass is an online marketplace making it easier for everyone to mine Bitcoin. This is the anti-cloud mining option and have it sent to, facilities around the world with competitive electricity prices instead of the residential rates that most of us would be paying. So for years we've heard mining is only profitable if you're investing tons of money, but now with CompuS, you can tap into the economies of scale and access reasonably priced hardware and cheap industrial power rates. So there's no need for advanced technical knowledge to get started, CompuS helps you get started today. So go to CompuSmining.io to find out more. Onto the show with Peter. Peter, welcome to the show. Thanks for having me, Stefan. So, Peter, I've been following your work for a while and think we've been connected for a while, but we just never actually got around to actually speaking. So, I mean, here in a l-little bit of internet interaction, but not actually speaking. So, it's a pleasure to speak with you, and I know you've recently started writing about more about Bitcoin. I, I think you were even talking about it a bit earlier as well, but you sort of went," }, { "speaker": "guest_2", "time": "03:55", "start": 235.04, "text": "went Talking about it in late twenty fourteen, I was one of the first articles over at, Mises, right? So one of the issues for Mises as an organization, is that the Austrian community has traditionally been kind of goldbug, right? And there was a lot of hostility towards Bitcoin. And so Jeff Dye, president over there, he wanted us to put out a little bit more content sort of dealing with theory behind Bitcoin and sort of easing goldbugs into the concept that a, a currency can be legitimate even if it's not backed by some, you know, some physical asset. so I got into it back then, and sort of dabbled here and there. what changed for me, was really COVID. Right. So COVID was shocking, I think, on two fronts that are related to crypto, right? One of them is monetary, obviously. I mean, it, it's just gone completely wild. the last time we saw anything close to this, of course, was twenty o eight, when You know, the moment that inspired Satoshi Nakamoto. so one of them is monetary, the other one is really sort of the gatekeeper question. I, I've been-- I think many of us have been shocked, the degree to which, gatekeepers have been aggressive on commerce, on speech, in a number of areas. And so that really, got me sort of existentially interested in the question of decentralization and thinking that that is probably a heck of a lot more important Than I'd been assuming." }, { "speaker": "stephan", "time": "05:29", "start": 329.4, "text": "Yeah, that's an interesting way to put it, and I think it's that, you know, it's like the typical argument about how gold is easily centralized and held into vault, and it can't be-- Obviously, yes, you can send it internationally, but it's far more costly, and you generally are trusting somebody, whereas that's the whole thing that Bitcoin is changing, you're not having to trust, and that's, you know, and maybe people can make arguments about, okay, fine, maybe not everybody can read C++ and code Python For the most part, you know, anyone can spin up a phone wallet, and have Bitcoin on their phone and send it anywhere in the world. So I think that's really the important part, and I think it's the twenty twenty really Raise that importance in people's minds, and I think that's really what we've seen, and that's where we've seen, you know, big, big name advocates like Michael Saylor sort of activated in twenty twenty and other people like that. and, I know you recently wrote a piece for Mises as well, talking about Bitcoin and energy use. So Peter, are we, are we people, are we just people who like to boil the oceans?" }, { "speaker": "guest_2", "time": "06:32", "start": 391.63, "text": "That's right. That's, not to steal Nick Carter's thunder, that's apparently what he's Right. So what I wanted to do with this piece is that it's common, you know, digiconomist and, you know, other critics, they compare Bitcoin to fiat on the basis of like a Visa transaction. And of course, the, the cost per transaction of Visa, you aren't even scraping the surface, right? you know, finance as an industry, in the US, it accounts for over eight percent of GDP. That's just a hair under manufacturing. Manufacturing. Every single city on Earth is completely dominated by banks, skyscrapers, right? All of these things have enormous carbon costs, and then of course, beyond that, you've got the secondary effects, right? And, I mean, we, we know this on our side, right? We know the, the business cycle, the boom-bust, the inflationary boom that, you know, could be followed by either a bust or even potentially by stagflation. So we know about these things you've also got, you know, being able to print their own money makes it easier for governments to start wars, it makes them easier to grow their bureaucracy, and then those bureaucracies can sort of become a cancer that, you know, sustain and grow themselves. So anyway, there are all these sort of second order effects. To not so much fiat, but the, the current fiat system that we have, right? One where you have central banks that create boom-bust cycles, ones where those central banks cooperate with governments to, you know, print up, whatever paper they need. And so what I tried to do in this article is to sort of take a stab at estimating one of those secondary effects, which is specifically recessions." }, { "speaker": "stephan", "time": "08:23", "start": 502.91, "text": "Yeah, I like that idea. And I think first, let's also cover this idea that, and this is a common one, I, I'm sure listeners of this show will very much know it, but I think it's just to express that point as well, the energy cost per transaction. What we'll see sometimes with these, when the critics come out and say, \"Oh, you're boiling the ocean,\" they will naively extrapolate the amount of energy per transaction as though the, the system just scales that way, but that's really not what it is. It's actually more like that hash Hashing power is, think of it, we can think of it like that's the hash power that's just keeping the overall network running, it's not scaling just naively by the number of transactions. And, you know, people are sort of forgetting that the way Bitcoin works is, you know, let's say every block is ten minutes, right, on average, and each block might fit, call it two or three thousand transactions inside a block, right? That's really what we're talking about. It's not that it can like scale to, you know, millions of transactions or whatever, right? The first part to understand, and then it's also comparative, right? I think you compare to, okay, well, look, how big is the financial sector? What are the costs? What are the energy costs associated with that?" }, { "speaker": "guest_2", "time": "09:32", "start": 571.89, "text": "Right, absolutely, and, you know, that's something that, Seifertine, for example, has emphasized quite a bit that, you know, you can essentially, you can account for the entire world economy on a settlement layer with roughly the same, Bitcoin energy consumption that we use today. Yes, it might go up because the Bitcoin price would probably On a structural architectural level, you know, in order to cover all the transactions in the world, you don't need a million bitcoins. It's, it's, you know, most of that energy use is coming from the block rewards. The block rewards are independent of how large each transaction is, so those individual transactions can be large enough that you could cover on a settlement basis, right? In other words, money being exchanged between banks or between central banks, you could cover, you know, substantially the entire world economy." }, { "speaker": "stephan", "time": "10:23", "start": 622.75, "text": "Yeah. And so I think you also touch on, a little bit of the-- Well, actually, let's go back to that point around boom-bust cycles, right? So I think what you're trying to outline in this piece is also talking about, hey, what is the actual energy cost that society is paying for all of this malinvestment that has been induced by government monetary intervention, like central banks and legal tender laws and blah, blah, blah, all the rest of it? Can you go into that? What-- How do we estimate that cost?" }, { "speaker": "guest_2", "time": "10:52", "start": 652.01, "text": "Right. So what I'd- I did here just go through the numbers. So I took the amount of wealth that was destroyed during the 2008 financial crisis. those numbers, you know, they're, they're easily available. It's the most recent crisis. I was a pretty big crisis, so it's representative, not as big as the current crisis, but At the time, we thought it was pretty big. So I took the amount, destroyed, which the Federal Reserve estimates at about eleven trillion dollars from peak to trough in the US. And then, you know, I, I made some estimates. So for example, Credit Suisse is one of the most cited estimates of, world wealth, and globally, there's about three times more wealth. So just kind of as a ball, just to get kind of a, a sense of what kind of numbers we're talking about, we mul- multiply that by about three So we're talking something like eleven trillion in the US, maybe thirty trillion worldwide. Now, step two is that there exist, pretty good estimates of what the carbon footprint is of a dollar of GDP. Okay? And what that's asking is, in order to create a given amount of wealth, on average, how much energy does that consume? Okay? And that's actually a surprisingly constant number around the world. it's about the same in the US as it is in India, for example, which I wouldn't have expected, but, at any rate, and that comes out to about, one point five kilowatt hours per dollar of GDP. All right? And these are from a variety of estimates, the estimates are fairly tightly clustered. That might be because they're making the same assumptions, but at any rate, that's kind of the closest that we have to like an official figure of, what the energy cost is of a dollar of wealth. And so I multiply And you come out to, was it sixteen thousand five hundred terawatt hours destroyed during the financial crisis? So we can take that number and we can then go back and we can look at I actually took the most negative numbers for Bitcoin. I went to DigiCognizant, who, you know, he's got controversial numbers, but anyway, because it's such a massive difference, I wanted to go ahead and take the worst case scenario. Right, so let me accept Bitcoin's worst critics' numbers, good. And he's got, eighty-six terawatt hours, worldwide, of which he ascribes sixteen to the US. no, no, I'm sorry, he doesn't ascribe it to the US. He doesn't try to break it down. I go back and look at, the location of nodes, and then based on that, you know, it's about nineteen percent of nodes are located in the US. So in the absence of, you know, some better estimator, I roughly took nineteen percent of that eighty-six. So either way you cut Whether it's on a US basis or on a worldwide basis, you're looking at something like five hundred to a thousand years of Bitcoin mining being destroyed in the twenty o eight crisis. Now, of course, that's not the only crisis we've had, right? Central banks do this for a living. Right? So the Federal Reserve, there's been, seventeen recessions, in the US since the Fed was founded about a hundred years ago. that, that's typical for other countries with central banks. Often, you know, they, they, they sort of catch a cold when the US has a recession, and then other countries catch it as well. Sometimes they make up their own. but either way, so we can take that five hundred to a thousand, and we can divide it by the historical fact that there's been about a re- A session every five years, and that gives you about a one hundred to two hundred times greater energy use from fiat than Bitcoin, and what that energy is being destroyed, right, the form of its destruction is that we have to rebuild These massive hunks of our economy essentially every five years." }, { "speaker": "stephan", "time": "14:53", "start": 892.81, "text": "Yeah, that's a really interesting implication because as, we talk about in the Austrian school, we're, we're fans of this, or we are, I guess, proponents of this idea that essentially that over time, as monetary interventions occur, malinvestments occur, and these are essentially, investments into industries or into projects that are literally, they can't be sustainable because the resources of society, if you will, the- Configuration of the resources is not appropriate to see the successful completion of all these projects, so we know that some of these must fail, these are malinvestments. And i-in some sense, when the big crash comes, it's like a, it's like, the tide goes out and we see who's swimming naked, right? We see, oh, see, look, those projects were unsustainable, they're not gonna work. now, one thing that I guess is interesting, and maybe this is another area where it might be sort of, we have to think carefully about how we thread This needle, because I know as Austrians, there's also a critique of the very notion of GDP, of gross domestic product, because, it-- because GDP only counts final goods, right? The, the final stage in the process, it doesn't include-- account for any of the intermediate process. And I know that, others such as Mark Skowzen has spoken about this idea of gross output to try to capture that, if you will, the full time structure or capital structure. so I'm wondering what you think on that idea. Do you agree with that or do you Have a slightly different take there or what's your view?" }, { "speaker": "guest_2", "time": "16:20", "start": 980.41, "text": "Yeah, it's always tricky. this comes up a lot with inflation statistics, for example, right? So you've got shadow stats some of those make more sense than what the standard number is, some of them might be debatable. And the problem, this is just common in advocacy in general, if you're talking to the choir, then you can get really fancy on which statistics you use, but if you're trying to appeal to a general audience, unless there's a darned good reason, you know, so, I mean, that's why, like, for the carbon numbers here, I'm using World Bank. Okay. I mean, I'm going as mainstream as possible, because otherwise your critics are always going to accuse you of cherry-picking, of using sympathetic sources. So, right, I mean, for sure, the idea here is more just to get kind of a sense and to make the point, right? Because many Bitcoiners before me, have made the point that, you know, secondary effects like recessions have to be included in the cost of fiat. It's not an original point, at all. And so what I wanted to do here was- Sort of to start to get a handle on it, like what kind of magnitudes are we talking here, right? Is fiat, you know, once we add the recession thing, you know, is it fifty percent worse than it looks? And, and it turns out it's, you know, a hundred, it's, it's massively worse. So right, for sure. You know, you could, you could look at GDP differently. you could tease out, you know, different forms of, of wealth or economic activity. you could try to differentiate financial wealth from You know, so for instance, malinvestments typically, involve destruction of, of, of, you know, something physical. we saw this during the twenty o eight crisis where, in some areas like Las Vegas, they were actually knocking down newly built houses. Right. So, you know, the vast majority of the wealth that evaporated in twenty o eight was financial wealth, right? So, you know, you can make a philos-- sort of philosophical debate, you know, how, how, how do you count that?" }, { "speaker": "stephan", "time": "18:31", "start": 1111.19, "text": "Of course, yeah, that's an interesting way to put it." }, { "speaker": "guest_2", "time": "18:33", "start": 1113.47, "text": "Yeah. So, right, you know, I mean, for sure, the, you know, this isn't intended to be like the final word on, the cost of a fiat recession. It's more kind of to get a sense of it. and, you know, for me, I mean, when I sort of went through the numbers, I was, I was actually shocked. I didn't think it would be that much of a difference, but it's, it's tremendous." }, { "speaker": "stephan", "time": "18:56", "start": 1136.31, "text": "Yeah" }, { "speaker": "stephan", "time": "19:01", "start": 1140.81, "text": "This is cause, and I think the other kind of common arguments that come up here are to assess, and I'm sure you're probably, you've probably seen this as well. I think Roger Garrison did some, did a piece maybe three or four decades ago now. It was, it was, it, it was basically the proxy debate, but in the gold world, right? It was like gold versus fiat, and he was trying to say, look, the true cost of a monetary, you know, of the, of this is the cost of the overall monetary standard, and when we" }, { "speaker": "stephan", "time": "19:31", "start": 1171.05, "text": "because people, every, all the businessmen and just people in general are trying to control the government, because they wanna turn the guns of the government in their favor, right? They want to have favorable regulation, or they want to stop out their competitor, they want to entrench themselves. And so the real cost is actually looking at, you know, that one standard, monetary standard, the Bitcoin standard versus the fiat standard, and what kinds of things the fiat standard enables. And I think, of course, there's all these little pieces to it, and, you know, the work you've done, High-level numbers, what is the cost of all these recessions that are brought about by the fiat standard? But that's only just one thing, like people could say, \"Look, look how big the military of the US is. What is the cost of that from a carbon perspective, right?\"" }, { "speaker": "guest_2", "time": "20:14", "start": 1214.38, "text": "Yeah, right, absolutely. And, you know, I mean, I'm, I'm not even making a first attempt to estimate the human misery. there was a study, I can't remember the details at the moment, but there were, I don't know, tens of thousands of incremental During the, the 2008, crisis. Now, the 2008 crisis didn't cause cancer, but of course, what was happening was, you know, people were having their, their, you know, they were losing their life savings or they were losing their jobs, that tends to correlate with bad health. So, I mean, you know, you could keep going for quite a while, right? The financial costs of a recession, are only the start. And, you know, you had, Bob Murphy on, a couple weeks ago, and you made a great point on there, here, quoting it, \"It's not that entrepreneurs become idiots, it's that idiots become entrepreneurs.\" And, I mean, that's a fantastic way to put it. absolutely. You know, the availability of easy money means that the good entrepreneurs, the entrepreneurs with good ideas that customers need, well, want, they have to compete now. Right, so some idiot also got financing because they're handing it out like candy, and that guy's money spends just as well. Right? So he's hiring away top engineers to work on, you know, yet another Pets dot com or, you know, whatever the malinvestment is, and people forget this misallocation of resources. And, you know, governments tend to have a point of view. I, I, I mean, you see it often from fiat economists, who say that the fiat system is wonderful because it's- subsidizes investment. And then, you know, they like to point to all the things invented, during booms. and, you know, what they're, what they're forgetting here is that, fir-first of all, technology tends to improve not because of booms, it improves because of, you know, the, the free market system, right? you can make a lot of money making customers happy, and so because that mechanism, exists, entrepreneurs chase it. And but, you know Beyond that, sort of the part, that they're forgetting is how many resources were destroyed during that sort of orgy of, you know, throw everything to the wall and see what sticks, and then all the ones that got wiped out were sort of misusing these resources. and, you know, this sort of goes back to, an idea in economics, which is that, you know, it's the seen versus the unseen. Right. So you can't just focus on the good things you see during the boom. you have to also ask what would have happened. Right. So what might have happened is that all of these malinvestments might have not gotten funding that would have left these resources for the legitimate companies. There may have even been legitimate companies who were unable to get financing because they had to compete with all of these flashy ideas. So, right? We, we would want to sort of-- and, you know, again, that kind of comes back to these secondary, effects, you want to not just look at what's sort of right in front of you, but, you know, you also want to look at, what's harder to see." }, { "speaker": "stephan", "time": "23:33", "start": 1413.03, "text": "Yeah, that's really the challenge, isn't it? Because as people who are trying to think clearly about economics, we have to really try to think clearly through and trace out the implications of all kinds of actions. And when the government comes in, and, you know, and in many cases, right? Monetary intervention, intellectual property laws, regulations, whether it's AML and KYC laws or other regulate banking regulations and licensing, all of these factors, we have to think Through not just, \"Oh, see, it just made us safer because we got all this regulation. Now look how good the world is and how safe we are, thanks to the government.\" But the reality is we have to also think about the unseen, which is the costs we are paying as a society for that. The reduced economic prosperity and growth, the businesses that could have been set up, the fact that now in this fiat economy with super cheap credit, that we've created this environment where, as we've, as we've established, it is- Idiots become entrepreneurs, and then what's funny is that these idiots will then become, very famous and popular, very, very wealthy in some cases, and they believe that it is a, a factor of their skill. See, I'm so rich because I'm such a skilled investor or whatever, but they, they don't understand that they are, if you will the one arbitrating on the, they're the one kind of profiting out of this house of cards that has been created by fiat money, isn't it?" }, { "speaker": "guest_2", "time": "25:02", "start": 1502.5, "text": "For sure. And y-y-you get this funny effect along the way there where the people who are controlling, the finance, they, they have more leeway to choose who they fund, right? So, you know, they can behave more discriminatorily, right? They can give money to people they like, you know, so, I mean, if you look at, Funding that goes to women or minorities, for example, that it's, it's strikingly different. you know, if you look at businesses that are, that are bootstrapped, that are self-funded, in other words, that's kind of a neutral market test, those kinds of businesses tend to be far more diverse, which is implying that whomever these gatekeepers are, who are doling out the easy money, they give it to people who, for whatever reason, they personally choose them as opposed to the The market necessarily choosing them based on the quality of the product." }, { "speaker": "stephan", "time": "25:58", "start": 1557.82, "text": "that's very interesting. I, I hadn't thought, I, I wasn't aware of that, but in some ways it, you could see how maybe you could tell that to a progressive, and they might be interested in the idea then of more free market and less fiat money, because fiat money is driving this, from their perspective, right, if they're really caring a lot about, you know, the, the gender breakdown of entrepreneurs or the gender breakdown of who gets funded or the, you know, racial breakdown or whatever Well, then maybe that's a, an argument that you could present to that kind of person. I mean, obviously I'm kind of more, more on the right wing libertarian side, obviously, but, certainly I think there's different, a-aspects to consider there. I think another one, and you were touching on this as well in your article, is the whole renewable energy thing, right? So this is another thing that comes up in the Bitcoin world where people will say, \"Look, actually, Bitcoin, in some sense, enables all of this renewable energy because energy can be in We think about the whole question around renewable energy in Bitcoin." }, { "speaker": "guest_2", "time": "26:58", "start": 1617.94, "text": "Right. So that's kind of similar in the sense that, it's an opportunity to build bridges with people who may have a different point of view on renewable. I think you and I probably agree that, you know, there's nothing wrong with renewable, with renewable energy, but, you know, we shouldn't be, killing ourselves for it. but right, I mean, the statistics do say that, Bitcoin has substantially, greater percent of its energy coming from renewables. big reason for that is because Bitcoin rigs can locate anywhere. renewables, partly just because of where the energy is, but partly probably because of, how they get money from governments. they're often located in very strange places where, you don't have any customers. so the north of Canada, for example, has more hydro than it can sell. Quebec dumps hydro power, and this is perfectly usable hydro where we're allegedly in a climate crisis, so that's pretty bizarre. you know, there's a huge amount of, the power in China is located in the, the Himalayas. China's been on a, dam-building binge, out there, and again, there, there aren't many energy users in the Himalaya mountains. so- Right. The fact that Bitcoin rigs are so flexible and where they can be located means that, a lot of this energy can be put to use. So on raw numbers, let's see, economy wide, it's something like ten or eleven percent of energy which is coming from renewable sources, almost all of that is hydro, which I don't think anybody opposes. I mean, anyway, people on our side don't tend to oppose hydro, I'm sure somebody out there doesn't like hydro. almost none of it comes from solar and, and, and these other things. But right So eleven percent ish, for the economy as a whole, in Bitcoin it's closer to thirty-nine percent, something like that. So there's definitely a bias towards renewables. but having said, you know, what I wanted to do in this is sort of refocus, right? Because the problem with saying that about renewables is that the other side can then come right back and say, \"Well, it should be a hundred percent.\" It, you know, either it should be a hundred percent or they might say, \"Yes, but it's using up renewables that all of these other-- Customers could use. so I kind of feel like even getting into the renewables, yes, it's good for bridge building, but it kind of grants too much of the argument Right? It sort of grants ahead of time that, you know, this is, j-- you know, it's just a bunch of boys playing around with something. it ignores what Bitcoin is trying to replace, right? Because if you look at it in isolation, right? Any activity in isolation, every time humans breathe, there's a carbon footprint. So any activity in isolation can be labeled a waste. But you always wanna ask, okay, well, if you didn't breathe, what would be the al- Alternative, right? So, you know, and sort of focusing on the renewable energy, my concern about, that strategy is that it sort of grants that, yeah, okay, maybe this isn't really worth anything, but, but look, we're extremely green." }, { "speaker": "stephan", "time": "30:13", "start": 1813.17, "text": "Yeah, right. Interesting. Yeah. I mean, and for me as well, I mean, I'd probably take more of a Alex Epstein, Epstein position, on the whole thing, anyway, that I think a lot of renewables are Essentially being operated because of government subsidies. Now, that's one of those things where a lot of people will fight back and say, \"Oh, but see, fossil fuels get subsidies too.\" And, and, and to that I would rejoin, \"Uh, no, actually, what ha-what's happening there?\" At least, now, obviously, the debate rages all around the world. Here in Australia, the debate is often, \"Oh, see, look how much subsidy the fossil fuel people are getting.\" And it's like, \"No, you're-- th-this is like Subsidy specifically for the fossil fuel industry, but like the green sort of lefty people will come out and say, \"See, look how much of a subsidy you guys are getting too,\" and it's like, \"Mm, not quite.\" But I mean, broadly speaking, yeah, as you said, very few people actually have a problem with hydro, right? Hydro is totally fine. The issue really is more like the wind and solar, and from my perspective, or similar to the kind of Alex Epstein position, is they're unreliable, right? They're just not reliable, and they're not Better, I don't know, transmission or whatever. Again, I'm not an energy expert, but just the problem is fundamentally this, and if it was so great, why would it need subsidies, right? Just let the market operate, and obviously, if it's such a massive proper-profit opportunity, entrepreneurs will be running out there to go and install the wind and solar and do all of this. But nevertheless, it's, it's like people who want to set up wind and solar farms and, you know, those facilities, I guess they can now, Bitcoin does allow them to- not have to deal with the transmission and distribution aspects, because now they, they can go out to some super remote area and set up whatever facility they want and plug in their Bitcoin miners, and boom, off you go. but it becomes a bit more of a-- maybe it's becoming more like a political game where it's like, it's all about what, what is being subsidized. but also, that could also be an argument there where, in some sense, Bitcoin is, the, the incentive is for people to go and suck up whatever subsidy the government is giving on" }, { "speaker": "guest_2", "time": "32:27", "start": 1946.61, "text": "Right, right, without a doubt. And, you know, as the government gets bigger, it becomes a more attractive honey pot, and you get, you know, you were mentioning earlier companies who get distracted from serving the customer and instead go, you know, have gladiator duels over government subsidies, often in a way that can end up harming consumers, right? You know, so for example, subsidies that go to, solar and wind as part of that process, they often install mandates for local utilities to use the stuff they put out, and, you know, in Germany, for example, right? They've, they've had just soaring electricity costs. So it'd be one thing if it was simply picking the pockets of taxpayers, but it's often much worse than that." }, { "speaker": "stephan", "time": "33:14", "start": 1993.54, "text": "Back to the show in a moment. Coinlight dot com are the creators of Cold Card, and they have a new feature called Seed XOR, and there's a website for this, it's Seed X O R dot com. 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And that's the other thing as well that I've seen, and I think again, this is a point I've seen people like Alex Abstein make, which is that the introduction of more solar and wind into the grid can actually screw up the economics For the actually reliable energy, like, you know, coal, natural gas, and so on, where essentially they-- It's like, you know, it's similar to your car that you're having to stop and start, all the time driving in the city is way less efficient than just driving on the highway, steady speed. and unfortunately, what happens is people confuse the numbers and they look at things like LCOE, levelized cost of electricity, and say, \"Oh, look, see, solar and wind have a lower LCOE,\" but the problem is the unreliability Introducing and forcing this into the grid, you're kind of cross-up, forcing a cross subsidy, right, onto, and you're pushing the cost onto the coal and the natural gas people. Meanwhile, the rich people can sort of drive around in their Tesla, acting like they're so high and mighty and green, and look at you filthy masses using the unclean energy, but really it's because that's the co-- the cheap and effective one, isn't it?" }, { "speaker": "guest_2", "time": "36:42", "start": 2202.0, "text": "Right. Metaphorically, it might be cheaper to live in an RV. Than it is to live in your house, but with renewables, it tends to be that you have to live in your house and have the RV. I like that. There is no way that's cheaper, I guarantee you. You don't have to be an economist to know that is not cheaper. Now, on top of that, right? There's, there's an entire industry that shakes and bakes LCOE numbers, you know, similar with the tax subsidies, you know, they, they redefine things, they play games. so I doubt That the RV is even cheaper. but even so, you know, the point you made about the batteries, right? Because the battery, battery technology isn't there. Maybe it will be in, ten years, twenty, thirty years. Maybe it will be someday. It's not there now, and that means that aside from hydro, you are buying an RV, parking it in your driveway, and imagining that that makes your living costs cheaper. It doesn't." }, { "speaker": "stephan", "time": "37:45", "start": 2264.72, "text": "Yeah, it's, it's a shame, isn't it? But, We're, we're in this world now, and I see it like, well, you gotta just, you know, just gotta keep going, and, over time, I think it will, it will sort of prove out over time that, okay, yeah, we need reliable and cost-effective energy, and, ultimately, and we have to, I guess, change the narrative a little bit because we have to get people to think more about what's good for human prosperity rather than this whole narrative of, oh, the Earth is this perfect, pristine thing, and I need to reduce On the Earth, it's like, it's a very weird way of thinking, isn't it?" }, { "speaker": "guest_2", "time": "38:22", "start": 2301.98, "text": "For sure. And, you know, that get back, it gets back to the carbon, footprint of breathing. y-y-y-There's this, common tactic, on the greed side to ignore the benefits of the actual activity. Right. So, you know, is it, is it environmentally, destructive? Does it, you know, destroy trees if you have a bonfire in the backyard with your kids and you sing songs and you have hot chocolate? Yeah, if that's the only thing that matters to you is, you know, the raw number of trees in existence in tree form on Earth, yes, that would be destructive. you know, but it's sort of aside from that, Mrs. Lincoln, how was the play? I mean, you know, the main story here is the benefit that we're deriving from the activity itself. And what tends to happen is that any activity that leftists, well, not leftists, greens don't like, has to go through the gauntlet, right? And, you know, there's sort of a, a presumption that that's a complete waste of time. you know, I found an article a while back, criticizing tailgate parties. I don't know if you have those in Australia." }, { "speaker": "stephan", "time": "39:34", "start": 2374.05, "text": "What's that?" }, { "speaker": "guest_2", "time": "39:35", "start": 2375.31, "text": "So a tailgate, is when, football fans, they, they set up in the parking lot and they have barbecues and like" }, { "speaker": "stephan", "time": "39:42", "start": 2382.18, "text": "after the game and stuff." }, { "speaker": "guest_2", "time": "39:44", "start": 2383.9, "text": "Yeah, exactly. And this is a sort of a stereotype, stereotypically right, thing to do. left, leftists don't really enjoy that. and indeed, there's, there's a whole, you know, if you go over on Google, you can find all kinds of articles saying how, you know, tailgate parties are so bad for the environment. And then on the flip side, you know, if it's a naked drum circle, nobody ever thinks to ask whether, you know, whether this is environmentally harmful. Why? Because it's on the approved list of activities. so, you know, there's a very deep, political undercurrent, to a lot of this carbon footprint conversation to begin with, where, you know, anything they don't like is ipso facto wasteful. And, you know, again, because every single human activity you can possibly im- Imagine uses some sort of carbon footprint, right? Breathing, consumes calories, calories consume cow. you can put anything in the dock, you know, you can put anything on trial, but you wanna kind of stand back and understand what's, what's the goal here?" }, { "speaker": "stephan", "time": "40:49", "start": 2448.99, "text": "Yeah, that's really clever. And I think it, it just comes down to trying to police other people's energy use. They say your energy use is not okay, but mine is. That's like, if you boil it down, that's essentially what's going on here, right? Like you'll, you But, you know, just on Twitter recently, there's been some of the back and forth. There's that DHH guy who is apparently, he, he dr- he literally flies around the world and races these, you know, cars around on like the twenty-four hour racing. Like, how much emissions is that doing? now of course, you know, you might, we might sort of not even have that much of an issue with that, but the fa- it's more the hypocrisy, right? He's saying, \"See, you're not allowed to do this for your thing, but" }, { "speaker": "guest_2", "time": "41:34", "start": 2493.9, "text": "Absolutely, and we saw that, dramatically during COVID, right? So one type of protest was a super spreader event, another type of protest, could literally save the world. So yes, the, the double standard is alive and well." }, { "speaker": "stephan", "time": "41:52", "start": 2512.17, "text": "The Bitcoin energy double standard." }, { "speaker": "guest_2", "time": "41:56", "start": 2515.61, "text": "For sure, without a doubt. Any, anything they don't like is, so, and, and that brings us back to, yes, tactically it may be smart to emphasize the green angle for that reason, but, but right, I mean, you know, I think it's still important to kind of zoom out and say, okay, fine, on a green basis, Bitcoin loves green energy, but beyond that, it is, you know, the main reason it's green is because it avoids all of these, secondary effects." }, { "speaker": "stephan", "time": "42:22", "start": 2541.83, "text": "Yeah, that's a good way to put it. Like, the, we have to zoom out and look at what's the big cost, right? Like, don't get lost in the detail, look at the, what are the big costs that we are paying because of the fiat standard? and then that's the other thing as well, because as, you know, if we're bullish on Bitcoin, we are anticipating that the energy will rise. Bitcoin's energy use will rise, and we have to make our peace with that. We have to be okay with that, because we can't just, It's going up, and let's, let's deal with that and let's be open with that. I'm curious as well, do you have any idea on what that might look like in terms of the energy usage rising?" }, { "speaker": "guest_2", "time": "43:01", "start": 2581.03, "text": "Yeah, well, I had an article coincidentally today, just sort of playing around with the numbers on, hyperbitcoinization, and asking, you know, if Bitcoin at its current supply were to replace all of the fiat currency in the world, and, you know, just as a back of the envelope estimate, you come out to" }, { "speaker": "guest_2", "time": "43:22", "start": 2602.29, "text": "But what that would imply is roughly a hundred times greater energy use because the rewards would be, you know, a hundred times what they are now, yeah. Right, and, you know, currently the, the, the fees are so low, it's really, the rewards driving everything, and certainly w-- in, in that kind of a world, the rewards will be driving everything. which is horrifying, I think, to critics, but again, that's where this kind of analysis comes in, is that what that would imply is that Bitcoin would be temporarily as polluting as fiat, but of course, Bitcoin's block reward drops by half every four years So that's roughly twenty percent decline annualized. So yes, absolute worst case scenario, worst from, you know, critic standpoint, absolute worst case scenario, if the world went, hyper Bitcoin tomorrow, then yes, Bitcoin would be temporarily as bad as fiat On the recession count, right? 'cause, you know, we didn't, we haven't even got, gotten into wars and, and all these other things, we also haven't estimated the human cost of recessions, okay? So, you know, so just on this narrow, one of the many secondary, sort of collateral damage of fiat, yes, temporarily Bitcoin would be as bad. However, Bitcoin is also because of the block reward, improving its having its energy use every four years after that, which fiat doesn't seem to be doing." }, { "speaker": "stephan", "time": "44:53", "start": 2692.69, "text": "Yeah, that's a really interesting to think about. And so, yeah, I think it's just such an interesting world to think about, like if we were to move into that whole deflationary environment, like, like I was talking about in the episode with Bob, where, you know, imagining what it would be like in a, in a what Joseph Schumpeter would call growth deflation, right? This whole idea that-- and that, that's really fascinating to me because it's like you literally might have a, your salary might be falling, but your actual purchasing power might be rising" }, { "speaker": "guest_2", "time": "45:23", "start": 2723.39, "text": "Yeah, absolutely. And, you know, that's happened, for long periods, of human history. it happened in, in the US anyway, during the Victorian era, which is, in the US, it's called as the Gilded Age, which is kind of a socialist pejorative claiming that, you know, it was all fake, but really it was the Golden Age. I mean, you know, our, our, almost anything that makes the modern world modern was invented in that period. It's, it's just an astounding era, of invention, you know, you had cars, electricity, the telephone, television, all of it, telegraph. but during that period, right? You had, endemic deflation You also had astounding economic growth, right? you know, the, the modern world was built, in that period. And so there's this, modern assumption, and, and this often comes from Bitcoin critics as well, right? They say, \"No, no, Bitcoin can never be a, sort of standard money, because it's deflationary.\" and if you look back through history, the golden ages of history have been deflationary. Typically, the inflation, when it pitches over to inflation, which is typically- Simply because the government wants more money, when it pitches over to inflation is when it inflects and starts going down. So if we could return to a deflationary period, then absolutely, and, you know, people would get used to it pretty quickly. you know, people once lived in deflation, and then they had to get used to inflation. I'm sure that was disappointing. Everything seemed to be getting more and more expensive. And so if we lived in a world where everything is cheaper and cheaper every year, that would feel fantastic." }, { "speaker": "stephan", "time": "47:04", "start": 2823.67, "text": "Yeah, that's really interesting to think about. Now, the common rejoinder, I guess people would think about, \"Oh, but hang on, Peter, if I-- if my salary is falling or maybe staying flat or falling, we don't know for sure, how would I, just hypothetically That conversation go down where you come to me and say, \"Hey, Stefan, I'm actually gonna give you a two percent pay cut this year, but you should still be fine with it because your price has fell by five percent and Johnny over there, he took a pay cut, his pay cut is, five percent and yours is only two percent.\"" }, { "speaker": "guest_2", "time": "47:36", "start": 2856.13, "text": "Right. Right, and for sure, employees don't like this, you know? everybody would like to get a raise every year, especially because we live so long in an inflationary world that, you know, it seems" }, { "speaker": "guest_2", "time": "47:52", "start": 2871.64, "text": "so without a doubt, employees don't like this, but again, you know, throughout history, we have lived through a period where there's been widespread deflation. wages would fall substantially. you know, so in the what, eighteen seventy to eighteen eighty period, wages fell by twenty percent. eighteen twelve to eighteen eighteen, these are all for the US, they fell by a quarter. People kept going to work. they didn't all quit their jobs. I can't remember who said it on Twitter, but somebody was saying that, you know unsustainable because everybody would quit. And you know people who have jobs, you know, I mean, I mean, they might not be happy, but really every-- everybody's just gonna quit, you know, how, how are they gonna pay their rent? so it's silly, you know, the idea that everybody would just be so angry that like every single person in the economy would quit their job. No, people wouldn't like it, but of course, you know, many of them, you know, the way that the company would explain it is they would say, \"Well, look, you know, we can't charge a hundred dollars for our product, we can only charge ninety, so, you know, we have to, we have to cut costs.\" so, I mean, the employee's not necessarily, you know, gonna pour Now, in the modern era, you know, part of the reason why there's so much, resistance to wages falling is because of unions. And I, I don't know, you know, about the laws outside of the US, in the US specifically, union activity is protected against prosecution for violence. so, I mean, there are explicitly-- There's an N. Mon's case in nineteen seventy-three that went before the Supreme Court, and ever since then, the FBI prosecutes nothing that is even vaguely- related to union violence. my wife's grandfather was a constable in West Virginia during the coal riots there. he got shot at. the union guys know exactly who did it. nothing. Right? So, I mean, y-y-yes, unions resist falling wages for sure, but, but I, I mean, first of all, unions resist any wage that's not what they want. I mean, this, you know, there's no magic number around zero, you know? And, and I mean, to be fair, that's, that's union's, job in life. their job is to drive up the wages of their members and to shut out non-members and render them unemployable. that's what they're paid to do. but the idea that, you know, globally people react, you know, that they have widespread riots or something when wages are going down, not only is that silly, but that's historically not true. When there's widespread deflation, wages must fall, companies find a way to explain it to their employees and employees cope." }, { "speaker": "stephan", "time": "50:37", "start": 3037.36, "text": "Yeah. And ultimately, it's competition, right? Because they can-- there might be some other industry that's expanding, and if you go there, you might actually get a pay increase because the, the growth in that and the demand- Demand for that industry is so high that even in a deflationary world, you can still get a pay rise, or, you know, you might get promoted and still get pay rises from that, but, you know, just, I guess, the idea is just to kind of talk it out and think out what would the implications of that be. Now, the other, I guess, on the counter side, the Keynesians have this whole sticky wages argument, right? So, so what's the sticky wages argument? Why do they believe that?" }, { "speaker": "guest_2", "time": "51:10", "start": 3069.56, "text": "Right. The sticky wages argument is the idea that," }, { "speaker": "guest_2", "time": "51:18", "start": 3077.79, "text": "change faster than wages. wages tend to be negotiated year by year, and then on top of that, there might be this reluctance, you know, where companies try to postpone wage cuts, because they're afraid that it'll be discouraging to the employees. And yes, that's true if you don't have system-wide deflation. So if every other company in the economy is giving raises and your company isn't, then yes, if you cut wages, people will start- start looking for the exits, they'll start sending out their CVs. In fact, your best employees will send out their CVs, your worst employees will stick around until the bitter end 'cause they got nowhere better to go. So yes, it can be terminal for an individual company if they start cutting wages when nobody else is. However, right, and empirically, you know, if we look back to the eighteen seventies, for example, and we have solid numbers on that, right, when the wages are going down, yet you have, there were periods, around the end of When you had six percent growth, which, you know, it's been a long time since America had sustainable growth at that level, that's more like Singapore today. in that kind of environment, it's different, right? All wages will be coming down, not all, there'll be a tendency for wages across the economy to come down because of the generalized deflation, but then at the same time, you know, jobs are plentiful, employers are competing with each other, and so, you know, Some of that mitigates, the price, the, the fallen wages, and then, you know, some of that also just, gives employees, sort of more hope, right? You know, they have a lot of different options that they didn't have before." }, { "speaker": "stephan", "time": "53:00", "start": 3180.38, "text": "Yeah. And, statistic there got me thinking as well, because I wonder, you know, so we are currently in a world where normally economists and so on will say, \"Oh, look, if you got two or maybe three percent economic growth, that's good in the develop-- in" }, { "speaker": "stephan", "time": "53:18", "start": 3197.65, "text": "Rates we might see in a fully, you know, Bitcoin deflationary world, do you think five percent, ten percent is reasonable? Do you think we could see that kind of thing?" }, { "speaker": "guest_2", "time": "53:26", "start": 3206.21, "text": "Yeah, it's a really interesting question. I mean, empirically, last time around, we did have five, six percent. So, you know, I think as a sort of starting bid, I think that's absolutely possible. it may be a good deal higher because, you know, the internet, fundamentally makes a whole lot of processes a lot more efficient. it Easier to find talent, you can collaborate, it's sort of a much more fluid use of particularly human resources, right, where people can be repurposed, to some more useful activity, just on a, on a technology basis, right? It's just easier to do. You know, you also have access to worldwide pools of, human capital, you know, so if you have an excellent engineer, in India, in, in, in Germany, right? That person can then be brought into a project in San Francisco Or something. So, right. I think, you know, just pure speculation, I would imagine that it's probably something, higher than it was last time around, you know, seven, eight percent somewhere around there. Certainly much higher than our politicians are. You know, nowadays in the West, it's typically impressive if you clear two and a half percent, which is pathetic, you know. And I think part of the reason that voters put up with this is because, they just don't know history. They don't know how things used to be when, you know, I think we didn't have the technologies that, like the internet, that should be making growth faster to today, right? But instead, effectively, you know, whether it's regulations, taxes, redistribution of assets through fiat money, right? All of these things, I think, have sort of half killed the golden goose, and most of what's left is just, sort of, running to stay in place, right? It's, you know, covering, you know, wear and tear of infrastructure and so on. And so on. So I mean, most of what we do continue to produce, most of it is, is simply absorbed in, staying in place." }, { "speaker": "stephan", "time": "55:25", "start": 3325.07, "text": "Yeah. And I'm also curious your thoughts on this whole question of the debt to equity ratio. Like, are we going to see a world where maybe more people use equity to fund a business or to start their business? And maybe there's more of a tendency where you just save up and you start your business as opposed to, you know, going to the bank asking for credit and, the kind of- Typical cycle right now being more about whoever can get cheap credit is the one who's gonna win because they can scale up faster and do all of those things, but I wonder whether that, there will just be this fundamental readjustment to the world that we're under a hard money. What, what's your view on that idea?" }, { "speaker": "guest_2", "time": "56:05", "start": 3365.04, "text": "Yeah, for sure. I heard that conversation, you were talking about that with Bob, and, I agree a hundred percent. We know that the ratios of equity to debt, right? We know that that's off because debt is- It is subsidized. If debt were priced at a free market rate, then, you know, as a humble economist, we would just observe what the market did and we would say, okay, good, that's how much debt people want, that's, that's, how much equity they want. But because debt is financed, we can be certain that, there's too much debt use, that, that is an inefficient number. now how much higher that would be, if debt were not subsidized is an interesting question. I mean, personally, I really like equity People can choose their level of risk, you know, as, as long as you have, liquid secondary markets, people can, you know, scale up and down their risk as they get older, as the kids graduate, you know, all of these sort of life events. I mean, it's, it's just very, elegant how you can adjust all these things using equity. So, you know, personally, you know, I think equity is, is one of the greatest inventions of, human history. You know, many innovations wouldn't have occurred," }, { "speaker": "guest_2", "time": "57:18", "start": 3437.57, "text": "I would assume that first off, under a, Bitcoin standard, you would probably have quite a bit more equity, and secondly, I would think that, you know, this, this would align the incentives of the creators, much better than, today's debt system does." }, { "speaker": "stephan", "time": "57:33", "start": 3453.38, "text": "Yeah, very interesting stuff. And I think a typical rejoinder might also be something like, \"Oh, but, you know, like, okay, so a typical rejoinder might be something like, \"Oh, but debt is senior to equity in the, you know, in the, If something goes wrong, right? If you have a debt claim, you're much more secure on that, and, and people have this conception that, oh, but without debt, we wouldn't have all the investment. But I think it's all kind of, all of this is kind of, a lot of this has come up because of the subsidies for debt and because of fiat money, right? Or because of fiat money induced the creation of the, that structure that way, so then the institutions of society have gone that way as well, right?" }, { "speaker": "guest_2", "time": "58:12", "start": 3491.76, "text": "Right, exactly, exactly. if you subsidize It will appear to be important, but, you know, if people only chose that debt because it was subsidized, then, you know, it's, it's, it's not necessarily, the efficient level. And, you know, because equity is so flexible, you know, in terms of, sen- seniority of, of, of debt and things like this, you can diversify that, right? I mean, you know, people can put smaller shares, they can- You know, they can buy equity and things that are, countercyclical. It, it, it's just much more elegant how you can hedge and risk manage, on equity, I think than it is on debt." }, { "speaker": "stephan", "time": "58:54", "start": 3534.11, "text": "yeah, yeah. And I think another topic that is, I guess, becoming more prevalent now is this whole UBI, MMT style thinking, and I know you've written on this years ago, and I think it-- the thing is, this debate came up in a more intellectual or academic sense where it was kind of like, \"Oh Robots are gonna take all of our jobs, and there'll be all these people who are unable to adjust, and therefore we need UBI, that is the just thing to do, and then the MMT people sort of enable some of that. And then now it's almost like we're seeing it COVID-induced, because, oh, see, you need, we need to lock you down, and we'll just pay you checks and so on. So it's an interesting kind of, way that that debate has come out now, and it's almost like we're having a quasi-UBI in You've got thoughts on this? What's your view on sort of how that conversation is happening, and is it really true that robots are gonna take all of our jobs, or is it more that there, there will just be new jobs, but we just can't predict what they're gonna be?" }, { "speaker": "guest_2", "time": "59:55", "start": 3595.17, "text": "Right. And, and that's a really good point, what COVID did. COVID really refocused the argument. we, we can get down in a second, but right, just sort of the big picture, robots is up there with, global warming for justify the government getting involved. And sort of you zoom out on the robots question or automation, the countries that have lots of robots, that have lots of automation, you know, Japan or Germany, there are many, many more jobs than there are in Burundi or Cambodia. Okay? There aren't many robots in Burundi, and there are no jobs in Burundi. Alright? So that, that's sort of the starting point is that empirically it doesn't work that way, right? And, you know, the question is the seen versus the unseen, right? So as an economy automates, it gets much richer. Automation partly causes, the society, to become richer, but they, they interact. And so, right, empirically, automation creates more jobs. And my favorite metaphor for this is an escalator, okay? So you are, you are walking, down an escalator, or rather, you're riding up an escalator, but every so often you have to step down one step, okay? Compared to standing still on the stairs, okay? So if, right? So automation is making us richer. And yes, every so often, computer card punchers aren't needed anymore. secretaries used to be a huge employment sector, and, you know, most business people are their own secretary. they have Outlook, they have email programs, they have calendars, they don't have a dedicated secretary. So, right, every so often, your specific job function gets automated and you have to step down one step. Okay? You have to take the next job down. But in the- Meantime, because society is getting richer, specifically because of that automation, that's the escalator moving you up, right? So the end result is, you know, for example, an electrician in India makes much less than an electrician in Australia, not because Australian electricians are good at their job. Maybe they are, maybe they aren't. You know, I have no idea. My, my guess would be, you know, even a well-respected electrician in either country Three is probably comparable. No, what's happening is one of them is on an escalator, right? So that automation makes all of the other jobs pay better Right? So, you know, if we sort of carry that through to its logical conclusion, as automation continues, you get, increasingly, y-you know, jobs that may not get respect today, right? Something like, taking care of children, being a bartender, being a good listener. Okay? If, if you're a good listener and you can sit with seniors and, you know, listen to them talk about, you know, how life was in the fifties, and you're a real good listener and they enjoy talking to you, that's worth nothing Nothing today, okay? Pretty close to nothing, 'cause you can't monetize it, right? It's very human, it's essentially impossible to automate, right? Because the value comes from the fact that it's being done by a human, okay? There's a bunch of activities like that, and as society, as, as our economy gets more automated, as it gets wealthier, The, the, the money sort of trickles down to all of those things, right? They're all increasing in salary such that those previously low-respect jobs now pay a lot more, right? So if we sort of, you know, take it out to the end point, most people in the economy would be doing things that, you know, are very human-y, right? They're either creative or they involve, you know, some, some way of interacting with people, so like a coach, a teacher, a counselor, keeping- Literally people company, right? All of these things, these would be the kinds of jobs we would do, and today those jobs may pay very little, because we live in a poor society, but in the future, right? If we let automation continue, those jobs will pay quite a bit better. And by the way, many people find those kinds of jobs much more satisfying. My, the-- my favorite job in my whole life was, being a bartender. I loved it, and, you know, I got a family, so I can't support them on a bartender wage If it paid a lot better, I'd love to go back." }, { "speaker": "stephan", "time": "01:04:27", "start": 3867.77, "text": "Yeah, that's a really cool way to put it, because, I guess to put it simply, because we're gonna be living in this growth deflationary world, more things can be automated, we can produce more for less, right? At a, just at a fundamental level, we can make more out of less, out of less of our time or less, you know, resources, physical resources in the world, and so we're getting more productive. Now, I guess the common rejoinder here might be, now, You know, some of those new jobs being created, they are only for the high skilled people or high intellect people, only if you're a computer programmer. And the, I guess the rejoinder would be something like, you know, because if you're kind of on the, you know, you're not one of, you're one of the poorer people or maybe less skilled people, maybe they, they might make an argument that, oh, see, you're not gonna get the benefit out of all of this amazing new things. All the wealth is gonna go to that top one percent, you know, the To be prosecuted here, right?" }, { "speaker": "guest_2", "time": "01:05:26", "start": 3926.67, "text": "Right, for sure. And they, they actually make, make both arguments. Sometimes the same person makes both arguments. they'll claim that all the new jobs are McJobs, they're crappy jobs, they don't pay anything, you, you know, you can't support a family on them. And then at the same time, they'll say, \"And the new jobs are, you know, this is only gonna be a tiny elite who like program AI programs or something like that.\" And, you know, in both cases, I mean, we can go logically Say, you know, that-- Why would you think that's the case? You know, if we look at jobs growth, the new jobs over, say, the past fifty or seventy years in developed economies that are increasingly automating, those jobs are higher paid than the jobs that were previous to them. So, I mean, empirically, neither of those things is happening. The, you know, the new jobs that are coming in are disproportionately middle class. Now, they're often jobs that used to be working class or used to, you know, not pay that much, but because society in general- is going up in in, in income, they become middle class jobs. So right, so the answer is, you know, sort of the first critique that it's only gonna be, rich people doing it. I mean, that's, that's not what we see in the economies today. you know, just to give an example, so let's see, in the US, Europe, Australia, about seventy-five to eighty percent of jobs are services today. it's eighty-five percent in Canada, it's ninety-five percent in Hong Kong, right? Almost all jobs in Hong Kong" }, { "speaker": "guest_2", "time": "01:06:56", "start": 4016.14, "text": "you know, they're not manufacturing, it's none of that stuff, so all of those jobs vanished. Hong Kong isn't poor. In fact, you know, during that entire process of shedding those jobs, it got very, very rich, right? It's, it's, I believe at this point it's, it's richer than Australia, it's richer than, the US, I believe, on a per capita basis. So, right? I mean, empirically. You know, again, this is the new global warming. This is, you know, there's an entire industry, that produces, statistics that are cherry-picked or sort of shaped in a way, to make people concerned. they go at it from every angle, right? They claim, \"No, no, the ju- new jobs are only for the elites.\" They claim the new jobs are only McJobs. And so the best we can do is say, \"Well, we have proof. we have history, and many, many countries have gone Hong Kong levels of prosperity, and none of them protected, you know, the manufacturing jobs. And guess what? you know, the, the working class in Hong Kong does fantastic, the working class in Japan does fantastic, right? There was a time when, Japan was overwhelmingly a manufacturing economy. They all got hollowed out, is the term that Japanese use, the jobs all went to China. Japan lost them. Almost no industries can you be competitive making stuff in Japan Japan. So are Japanese starving the street? No, they, you know, as, as part of that hollowing out process, because they largely let it happen, the economy got richer, and so, you know, Japanese have different jobs now, and many of those are quite fun. You know, for example, there's a revitalization of traditional, arts in Japan. You know, people who make swords for a living or make bows, who do flower arranging. There's a revitalization of this because a wealthier society Society means that now you have people who are willing to pay, and quite often they'll, they'll pay a lot. I saw a story a couple years ago, there was a guy, he was interested in making steampunk keyboards. Alright, so there's a keyboard for your computer, and it's got, you know, the, the brushed copper, and it's got the little lights, and, you know, the whole steampunk aesthetic. So he made one, and somebody offered him like two thousand dollars for it. And so, he, he said, \"Okay, yeah, sure, for two thousand, yeah.\" And then he made more, and he kept raising the price because people kept offering him money, and he quit his day job, and he makes steampunk keyboards. And I don't know" }, { "speaker": "guest_2", "time": "01:09:33", "start": 4173.96, "text": "Making more than a corporate lawyer, and he loves it. So this, this is the picture of what happens in a wealthy society. You know, people, they go back to, tradition, you know, they support the arts, they support, excellence, craftsmanship. It's a beautiful thing." }, { "speaker": "stephan", "time": "01:09:51", "start": 4191.55, "text": "I love that. It's really, really great explanation. And I guess to summarize, it's that living in a growth deflationary world, everything is gonna get cheaper, we're all gonna get richer, and because of that newfound wealth Wealth, there'll be all these new jobs created or current jobs that exist today that aren't well compensated, will become well co-compensated. And because, you know, we're humans and we like to interact with other humans, oftentimes it will be in jobs that involve some kind of human-to-human interaction or maybe entertainment, right? Like maybe stand-up comics become really popular because we love to go out and see a show and be entertained, and, you know, maybe that they will do really well. And, you know, you, you might say, \"Oh, fine, but...\" But, you know, in the age of the internet, only the top few can do well, but the reality is now, it's like people love to see it in person, and now that, that will be a huge, there'll be a huge premium to go out and do that kind of thing. And so it's, it's sort of, I think we, we just have to be able to make the argument well. And I think obviously Bitcoin will be a big part of driving this shift, that like it will sort of, I think it will effectively defang a lot of the government or take" }, { "speaker": "stephan", "time": "01:11:03", "start": 4263.96, "text": "Stripped back and more like an actual, genuine service provider than an actual kind of authoritative kind of overlord that controls where you go, where you, you know, where you can travel and all of this." }, { "speaker": "guest_2", "time": "01:11:15", "start": 4275.12, "text": "Absolutely. And, you know, a government that has to live within its means, you know, or can't just print the money, that also gives us a government that has a natural symbiosis with society. Okay? In other words, it is healthy for a government to need tax revenue. Why? Because if it needs tax revenue, it needs us to be prosperous. It's very important to reestablish that link, and that's something we've seen through COVID, right? You know, you have governments, in Canada, where I spent most of the pandemic, the government really doesn't care. Look, they got enough money, you know, and you want there to be the, this, you know, you wanna recover that natural symbiosis so that the government goes back to being a partner in helping us all grow, rather than what it, what it increasingly is, because of, You know, fiat money, which is kind of a, a cancer is a strong word, but, it's not as helpful as it could be." }, { "speaker": "stephan", "time": "01:12:11", "start": 4331.88, "text": "Yeah. Yeah, fascinating stuff, Peter. I've really enjoyed chatting with you. really, you know, really interesting conversation. And so for listeners who wanna find you online, what's the best place for them to follow you and, find out more about your work?" }, { "speaker": "guest_2", "time": "01:12:27", "start": 4347.15, "text": "nowadays I'm usu- I'm, usually on, Twitter, ProfStange, which is I've also got a newsletter on Austrian economics and, crypto called cryptoeconomy.substack.com. The Substack guys, by the way, are very good on free speech, so that's why I went with that platform." }, { "speaker": "stephan", "time": "01:12:46", "start": 4366.2, "text": "Awesome, man. I'll put, I'll put the links in the, the show notes there. Thank you, Peter, for joining me." }, { "speaker": "guest_2", "time": "01:12:50", "start": 4370.73, "text": "Thank you, Stefan." }, { "speaker": "stephan", "time": "01:12:52", "start": 4372.15, "text": "So I hope you found that insightful. I certainly enjoyed my chat with Peter. I think there's a lot of insights there in terms of considering the seen versus the unseen when we are thinking about Bitcoin use as well as the impacts going forward if we are moving into this world of so called UBI and MMT and how to correctly think about what's going on there and whether robots are really gonna take all our jobs or are we actually gonna see the creation of new industries or other amplification of current workers' productivity such that they can, be paid a lot more. get the show notes at stephanlivera dot com slash two seven two and make sure you're subscribed, I've got an interesting episode coming up soon with Andrew Edel." } ] }