{ "episodeId": "SLP518", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "lyn_alden": { "name": "Lyn Alden", "role": "guest", "tag": "LYN" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 8.51, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics, brought to you by Swann dot com. Today we're talking about Broken Money, this is Lyn Alden's new book. So Lyn Alden is a macro analyst, she is rejoining me on the show to talk about this. We talk about her thoughts on ledger money, who controls it, speed of transaction versus settlement, we talk a bit about base money and broad money. The GFC and the response to it, the incentives that we are under in a fiat standard, and what kind of debt actually makes sense under a Bitcoin standard. Here's my chat with Lyn. Lyn, welcome back to the show." }, { "speaker": "lyn_alden", "time": "00:43", "start": 43.07, "text": "Happy to be here, thanks for having me." }, { "speaker": "stephan", "time": "00:45", "start": 45.05, "text": "So, Lyn, I had a chance to read your book, I, I really enjoyed it. so the book is called Broken Money, for listeners, and I found it really well-researched and quite thorough in terms of some of the different topics, right? You talk about, you know, a bit of, there's a bit of history of money, a bit of- you know, central banking as, as contrasted with free market banking, and also obviously discussion about Bitcoin and where we're going. I think an interesting theme that came out to me, and I think this is a motif that you kept returning to, was this kind-- was this concept of- Money as a ledger and who gets to control that ledger. So, maybe let's start with that. So if you wanna just tell us a little bit about this concept of money as a ledger and why is it so important to focus on this concept as opposed to other concepts?" }, { "speaker": "lyn_alden", "time": "01:34", "start": 94.03, "text": "Sure, and this was a, a concept that was originally popularized by, Winters Casaris, many years ago, but it's not really something that appears much in literature, and so I, I really like that framing. there have been a number of people that have kind of maintained that idea since. He doesn't really do, a lot of content anymore, but there are other people that kind of make that reference. And I eventually came across that reference, not from him directly, but just from others talking about it, and I took that pretty Describe money, and it's also a unifying tool between different views of money, and it kind of reconciles kind of the two initial ways that money emerged. and so when we think of what money is, most definitions I think capture like eighty percent of it, but then there's like a little bit they don't capture, and so different definitions kind of capture most of it, but I think that one might be the most complete because on one hand, you know, humans control their own little ledgers, right? So if you're trying to solve- All the double coincidence of wants, right? You're trying to trade. There's really two main ways to do it. One is that you can, you can defer it over time so that you make the, you know, the, the coincidence easier to solve by the fact you don't have to have a surplus of what the other person needs right now. You can just exchange a value for something and then that person owes you at a later time. So that's, and that's been around since, you know, hunter-gatherer times, partially as gift culture, partially as kind of just local" }, { "speaker": "lyn_alden", "time": "03:04", "start": 183.97, "text": "And of course, the other way to do it is with a highly saleable commodity that acts as a unit of account and, and basically the most, the most tradable good that can be on one side of every transaction, and that'd be the commodity theory of money. And one way of kind of reconciling those as a broader concept is that they're both types of ledgers. one of them is a human-controlled ledger. Either in a small community or with an administrative state of some sort, like, you know, the, the temples of Babylon, of course, the modern day equivalent would be central banking, or you have, you let nature be the maintainer of the ledger in the sense that, you know, whether it's hunter-gatherers with, say, shell beads or it's gold, gold coins and bars, nature sets the parameters for how much of this unit can exist, how hard it is to create, how to create it, and people kind of de- refer to that natural scarcity as their ledger, and they don't necessi-necessarily see the whole ledger, but by physical exchange, by physical possession, they update the ledger, and so each one can kind of assess the properties of the ledger without necessarily seeing the full picture, just by looking around and seeing how rare is it, how hard is it to make, how often do I see it, with other people, they can come to a, you know, assessment of that commodity as a, a useful type of money. And then of course, Bitcoin is interesting be- Because in many ways it reconciles these views together in the, in the most perfected form we've seen, which is you have a literal ledger, that you can fully audit and it's fully transparent, but at the same time, instead of being like a centralized ledger run by a community or a temple or a central bank, it's a decentralized ledger that does have scarcity associated with it. So I, I just generally found that to be a interesting way to think about money, and it, it can potentially reach to different schools of thought and kind of bring them together to something" }, { "speaker": "stephan", "time": "04:55", "start": 295.19, "text": "Right. And as you were explaining there, there is-- there are different views of how people, we can call it different theories of money, right? So obviously the commodity theory of money, as you said, and I think the Austrians, people like Karl Menger and people like that, and Ludwig von Mises, are obviously That's, that's mostly the, that's their view. And then, let's say there, there's this other camp of people who maybe they see it as money is credit money, and this is like a David Graeber sort of view, and of course, you reference his work, in your book as well. And there are debates between these different camps on which view of money is more precise or which, you know, what is the, methodological-- what is the methodology by which you come to this idea of what is money? and then I guess we could also throw in maybe some people have, let's, let's call it like a charterist view, right? It's just this idea that just the state or the king just sets the money and that's just the lay of the land. but you do a good job, in, in how I was reading the book because you can see how Different views are prevalent depending on the society. So for example, a lot of Bitcoiners are familiar with, let's say, this example of the Isle of Yap, right? And these, these, these stones, and because it's a small community, they can sort of get away with just having this kind of- Ledger in our heads, or even, you know, if listeners are thinking with their friends, \"Oh, okay, I bought this guy, I paid for the dinner last time, maybe next time he's gonna pay for it,\" and things like that. And it's kind of an informal, nobody's really explicitly tracking it that way, but, you know, that maybe is a little more aligned with the debt or credit view of money. But then that obviously breaks down when you get to bigger- Societies, because obviously we can't keep track mentally in our head of, \"Oh, Lyn Alden owes me this much and Stephan owes Lyn that much.\" It's just not feasible, and then you don't have an actual way to," }, { "speaker": "stephan", "time": "06:57", "start": 417.41, "text": "Have a single unit of account, because then, you know, maybe you make, you know, if you make meat and I make, you know, whatever milk, and we, we can't, we have to, we need a way to account for that too. so I think that was nicely done in terms of, spelling out, I guess, you know, keeping track of favors, right, in the, in a, in a ledger sense. And so one other interesting area that you get into is this idea that you can rely a little bit on nature's difficulty, difficulty adjustment, if you will, right? As you spoke about with gold, the mere fact that it was hard to go and mine more of it With what enabled people to, let's say, have trust in gold as money, isn't it?" }, { "speaker": "lyn_alden", "time": "07:45", "start": 464.78, "text": "Yeah, that, and that's something that was explored back in the Bitcoin standard and other works basically that as technology improved over time, we were good at kind of eliminating certain types of commodity monies that were previously useful. So in a pre-industrialized society, seashells and, and other bead-like, instruments were very useful money, but once we had industrial revolution and that type of- Technological, ability, and even somewhat before that in many cultures, that really kind of ruled out that type of money as being, supply constrained in any sort of realistic way. And so we kind of went up the hierarchy of, of different types of commodity hardness until we got to silver and gold, and those are the ones that are still, especially gold, still relevant for today. Central banks still hold, significant amounts of gold usually. and what I found interesting is that that progression of technology that affects what commodity monies are useful also- plays a role in kind of the rise of the credit theory of money. And I, I would put chartalism kind of in that camp. It's, it's kind of like, you know, within the credit theory of money, you have a couple different camps. You have kind of the more emergent credit money, like a small community running its own ledger, and then you have like kind of the, the bigger nation state type of, ledger system. But they're both basically types of credit theory. And what's interesting about those is that although credit itself extends back to hunter-g Explicit monetary theories based around credit mostly arose with the invention of the telegraph. So, you know, for commodity money theory stretches back, you know, millennia, and that, that's been around for a long period of time, whereas the credit theory Once they invented and specifically once they deployed and, and made common use of the telegraph, when you could send information around very quickly, and gold had to be abstracted heavily to keep up with this arrangement, people kind of started naturally thinking, \"What is money anyway? Or why do we, why do we need to tether it to gold?\" And you can see why intelligent people at the time would start asking these questions. and, you know, you mentioned David Graeber, I, I cite his work. But I mean, he, he, for example, heavily cites Alfred Mitchell-Ennis, in, in his work, and I think that's kind of the, you know, if you're looking for some of the strongest source material in that camp, you'd probably go back to his essays. It's also way shorter to read. It's, you know, you can read his two major essays from like the early 1900s, over a century ago. They kind of lay out his case. He's, he's clearly an intelligent person. And but there's others at the" }, { "speaker": "lyn_alden", "time": "10:24", "start": 624.27, "text": "That's kind of arbitrary, and of course, I, I disagree with that view in many ways, and I go over the disagreements in my book. But it's really the rise of the Telegraph and this kind of information-based transaction system that even gave them an opening to make this type of argument and to, and to sound so much sophisticated in what they're saying, whereas pre-Telegraph, it'd be very hard to make that argument. and one of the, one of the big themes in the book is that We've that kind of century and a half where we had the speed of transactions at roughly the speed of light, but the speed of physical settlement of things like gold or other scarce money still at the speed of matter. Created basically a huge arbitrage for banks, central banks, it required abstraction and credit in order to kind of bridge the gap between that transaction speed and that settlement speed, and eventually it kind of completely broke that tether. And so we find ourselves in a world where there's a hundred and sixty different fiat currencies, each person is kind of just finds themselves in a bubble, and they hope that they're born in one of the areas that's, that's more developed and has a stronger currency system compared to the long tail where most of us end up in weaker cur- Currencies, where it's very hard to build liquid capital. and the kind of the theme of technological determinism is at play in the sense that, you know, we don't see one country with a gold standard today, we don't see one country with full reserve banking today. the technology kind of enables or empowers certain incentive structures that just kind of become ubiquitous. And of course, what's notable about, about Bitcoin is that it's the, it's the first credible way to have Settlements that are as fast as transactions, which is that the, the, the, the ledger itself can be updated in a similar way that, you know, back in the shell era or the gold era, you know, by physical possession you'd update the ledger, less credit, needed. But now you basically have that in digital form where you can, you know, agree over the internet and, and things like that to do a transaction, and the settlement itself can happen, either in real time or near real time with that type of transaction. And so that, but- Potentially collapses the need for abstraction, centralization, credit, at least certain types of credit for that whole arrangement. So that's one of the reasons why I find that framing to be useful, because, you know, for a century and a half there really wasn't better technology, and finally there is. And, you know, another point is that, that, that order had to happen that way. Like, there's no world where Bitcoin's invented and then the telegraph's invented, right? It's like telegraph is invented, transaction, trans- Transactions only need a minimal amount of data, and then over time, as we have the internet, as we have bandwidth, as we have radio, as we have more complex mathematical proofs, as we have encryption, eventually you get something as complex as Bitcoin that allows for that digital settlement. And so I, I just think that's a, another thing that maybe's not as covered as it could be in, in a number of, Bitcoin books." }, { "speaker": "stephan", "time": "13:25", "start": 805.27, "text": "And you focus on this idea being the technology enabling and, let's say, the path of history being determined by these things, because historically, what did people do? Well, they, maybe they had to trust in smaller gold and silver coins, and maybe they had to find a, a particular branded coin because that's what they could trust, or at least put some level of trust in that, or maybe historically there were different banks and maybe they would issue their own coin and, and that used- To be what people did, right, hundreds of years ago, because they didn't have Bitcoin, obviously, but, you know, a-and that unfortunately for a lot of people is where people can get abused, because maybe those coins can be debased, you know, those bankers can later turn fractional on us, and so I think it's an interesting way to spell out, The technol- technological constraints that we were under, like as, as humanity, right, as a broad, mass of people, that we were just under these constraints and we didn't have better ways. Now of course, you know, the Austrian libertarian in me could say, \"Well, we could have, you know, theoretically, tried to stay to a gold standard, but we all know that, that didn't actually play out in practice because again, there's an incentive for somebody to cheat, there's a certain centralization factor of that.\" And I think- I think that's why we have to sort of move to-- forward into a Bitcoin standard way of thinking, so in terms of, you know, looking at the, the previous technologies that people had, I think as you mentioned, some of that was where, you know, credit systems can come in, and in some cases it's more just like having to place more trust, isn't it? Right? That you're just placing trust that, you know, this gold coin really is gold and it's not something else, right?" }, { "speaker": "lyn_alden", "time": "15:14", "start": 914.32, "text": "Yeah, and, and the kind of the, the rise of banking over time and those trust relationships are interesting to map out. In some ways, banking emerged kind of the opposite of Bitcoin. So in Bitcoin, we have the base layer, and then we have Lightning on top of it. Whereas early banking looks more like the Lightning network, where it's channel based, rather than like broadcast based. And so you'd have, you know, something like a money changer or a halaladar, and they would have a specific set of relationships in other cities, could be their kin, could be Close business associates, and they would have an arrangement where if you wanted to send money from, you know, city A to city B, you could go to your hawala dar, give them the gold, and they would, you know, basically provide paper to a messenger or to yourself, and you could have that withdrawn from a hawala dar money changer in another city. and of course, you'd have to rely on that network for a period of time, although by knowing the person, you have, you have an ability to exact consequences on them should, should something happen, right? So The more trust can make sense to varying degrees. And then as, these kind of paper markets got more sophisticated, so I mean, some of it's the, the basic technology of things like the printing press, right? And other things just faster communication and, just more overall civilization, you, that kind of channel-based system gravitated more towards these institutions that were big and recognized enough that they could issue, you know, banknotes like bearer asset money and things like that. And of course, the challenge- There is that if you're the state, you know, and you know banks are where the money is, it's kind of easy to capture the banks and then you control the money now. and then when you have the telegraph, and you have a digital world, and you need that speed to operate, it's very easy for nation states to kind of capture the money system and create their own individual bubbles. And so it's one of those things where, to your point, it's fully possible theoretically to have like a gold reserve, full, full reserve system Is just in practice, the incentive structure is now so weighted against that, that the probability of that emerging and then, and then sustaining indefinitely is hard enough that we just don't really see it. and so it kind of keeps gearing towards that other solution up until something like Bitcoin is like a new, refreshed way to approach that. So I think that approaches of just saying, \"If we only did it this way, it'd be better,\" you know, that, that kind of approach has been trying and failing for a century now, and I, I think a much stronger approach is to say, \" Because technology kind of provided this opening that kind of rewards the wrong types of behavior, we have to look toward technology that, that can emerge, that can shift that back, and I think Bitcoin and kind of adjacent technologies built on top of it or around it are s- So far, what we have is the most credible way to, to make it so it's actually incentivized to have those kind of more sound money type of operations." }, { "speaker": "stephan", "time": "18:08", "start": 1088.43, "text": "Right. And as you said, even though there were some mechanisms, let's say reputational systems, so in that example with Hawala and the Hawala dot, if, let's say the Hawala dot cheats you, well then you could go tell people and that could wreck his reputation. And so there's some check against his bad behavior there, but maybe not enough of a check, right? And then- And also, as you spell out in your book, and of course, many other books talk about this, which is that there used to be a check on government's expansionary behavior, right? So as they spent a lot of money, they would have a, this effect of draining of gold reserves out of their cur- out of their government's coffers into some o-others government coffers. And so that historically was what used to happen. But again, what we saw was this kind of custodial nature of gold Holding and, you know, a lot of the gold being held by, for example, the United States, because a lot of the other countries were worried that they would get invaded and have the gold stolen. So, you know, it just had these kind of difficulties around Custody around securing your gold historically, that made it difficult to stay on a full reserve Bitcoin, on a full reserve gold standard, and so I think that was also helping explain, you know, a little bit of how we got here, right?" }, { "speaker": "lyn_alden", "time": "19:29", "start": 1168.87, "text": "Yeah, and I think what's ironic is that the efficiency of the international gold standard system ended up partially being its own downfall. And I catalogued this by referencing the 1875 book Money and the Mechanism of Exchange by Jevons. And he provided interesting data and analysis at the time, and it's written in such a way that it's still very accessible today, despite the age of the book. And basically, he described it both favorably, but also provided warnings. Which he's like, this system is becoming so efficient, we barely ever need to move gold. It's just like by, by telegraph and paper, we're able to update all of our transactions globally, things net out, everything kind of centrally clears through London. It's hyper efficient, but we can't forget that it's every one of these claims is supposed to be redeemable for gold, and we're currently operating at like twenty to one leverage, and so if this should encounter a problem, it could be catastrophic. And of course, decades later in World War One. As soon as that system was faced with some sort of international breakdown and conflict, it, it collapsed like a house of cards because of how leveraged it was. And part of why it was so leveraged is because gold itself was slow, people didn't wanna readily withdraw it. Even he, in the book, mentioned that most people just didn't wanna hold the physical gold. They're like, \"No, I'll put it in my bank, and it's, now I can move it around quicker, right? It's more divisible, it's better, it's more efficient.\" But by doing that and" }, { "speaker": "lyn_alden", "time": "20:58", "start": 1257.85, "text": "How it, it, it, you know, once that system broke, the all the claims for gold were the things that were made money good, rather than letting those claims collapse back down towards the monetary base of gold. So they said, \"Well, we're gonna break the gold peg, we're gonna, either change the gold peg or eventually just do away with the gold peg altogether, \"and gold was too slow to really keep up with this new abstracted system, even though the new system is more inflationary. And it's, and then to your point, like basically kings in, in old days, if they wanted to do war, they'd have to drain their reserves to do it, they'd have to raise taxes on the people, which could, you know, if they do it too much, could get like a revolution or a revolt. and then they'd have to be successful enough that when they go and like defeat their enemies, they get their gold. and if they failed on that, then they're kind of out of the business of war for a while. Whereas in this current arrangement where" }, { "speaker": "lyn_alden", "time": "21:53", "start": 1313.1, "text": "Fund war without transparent taxation even, so that people don't even fully know the scope of what's happening to their money. And so instead of just draining their own vault, they're, they're draining the savings of their entire citizenry. And then if you're the, if you're the global reserve currency issuer Like, like Britain was, going into World War One, and the United States isn't today, you can drain foreign reserves as well. So, for example, when the UK entered World War One They were able to drain the reserves of developing countries throughout the world that were holding the UK pound, denominated assets as part of their savings. And so that kind of ex-dramatically boosts the, the duration and magnitude of war that can occur, and it reduces the transparency with which how it's funded, wh-which is, it, it kinda kills one of the potential feedback loops that people would have access to to either, you know, revolt against the war or slow down the war in some way. That's kinda- Removed from them, and that, that's this modern era we've been in for more than a century." }, { "speaker": "stephan", "time": "22:54", "start": 1374.42, "text": "Back to the show in a moment. Now, if you wanna upgrade from broken money, make sure to use Bitcoin with your own keys. CoinKite dot com makes it easy for you to do this. Over at CoinKite, you can get a range of hardware devices that you can use to help secure your coins. Take them off an exchange or a custodian and make sure you hold your own keys for your Bitcoin in your self custody. The cold card is a great tool to do this with. Reliable and easy to use tool, you can buy the device itself and get a USB-C cable and plug it to your computer, use it easily with software like Sparrow Wallet or Specter Desktop. If you're more advanced, you can use microSD card and other more advanced features that help you keep your coins more secure. CoinKite also offer a range of other products such as the metal seed plate product and of course, the BlockClock. So you can get all of that over at CoinKite dot com, use code Livera for a discount on your cold cards. This show Is also brought to you by Mempool dot space. Mempool dot space is a fully fledged multi-layer ecosystem viewer. It allows you to explore the Bitcoin ecosystem, whether that's the mempool, the blockchain, second layer networks like the Lightning Network, and just so many little features that you can use to track things in the transactions that you are sending or receiving. You can visualize the RBF replaced by fee history of a particular transaction. You can click into Bitcoin blocks, you can click Look into Bitcoin transactions, you can scroll the page and view past mempool blocks, there's all kinds of features, and the team is continually innovating, and of course, you can even run it yourself, it's fully open source and free software, so go to mempool dot space and target the fee for your transaction there. And now back to the show with Lyn. Yeah, and a great point while, while we're on this topic, you mentioned in the book as well how there was this, UK government war bond funding, project, and that they were basically trying to, obviously, get the citizens to go and help pay for the war by buying this, government debt, war bond, and you point out that, they actually weren't that successful with filling up the quota, and in, in the end, they ended up just basically faking it till they made it. Right? And they just sort of said, \"Oh, yeah, yeah, we'll just print out this extra money and, you know, and the public will, you know, unknowing of this. And so they had their sto- their purchasing power basically stolen from them by the government." }, { "speaker": "lyn_alden", "time": "25:23", "start": 1522.74, "text": "Yeah, and that's what, I mean, World War I was such a, like, a tragic thing because it wasn't even like World War II. It was, it was this like kind of needless conflict, and more and more countries got involved purely because they had pre-existing military alignments. And then the UK didn't even really have any pre-existing alignments, but it wanted to get involved because it didn't-- it wanted to put a check on Germany. And when you're trying to sell to the public, \"Hey, we need to go fight a war in continental Europe, it doesn't directly affect-- us, but for vague strategic reasons we have to go do this. So we're gonna draft an attack to go do it, that's super unpopular. So they tried to issue debt to finance the war, and it was like a massive amount of debt relative to their GDP, and it just only like a third of it was bought, which was, which was catastrophic. And so they just, they just lied, they just said, \"Wow, it was, it was very well funded, \"and what they really did was print it with the central bank. And so that kind of was like a, the early shot of this, this whole kind of fiat currency era of doing things and then deferring the consequences to the future and in a non-transparent way so that the people kind of get caught up in something that they didn't necessarily sign up for, or even things that were opposed on them, but transparently enough that they have a shot at kind of, you know, refuting it, when it just happens and it's both, happens without their consent and it's not even known. That's, that's much harder to deal with deal with. And another example I use is that, you know, there's an analysis of US wars, and if you look at each subsequent war over the past century, they get less and less funded by special war taxes and things like that, and they get more and more funded just through credit, which defers the kind of pain of dealing with that war. And so for example, when they did a poll of Americans, \"Do you want-- Should we invade Iraq?\" that was this kind of post-nine-eleven environment, it was still- Very kind of patriotic propagandist, that kind of thing, and over seventy percent of people were in favor of invading Iraq. But, but if you had instead phrased the question, \"Are you in favor of invading Iraq? Oh, and there's a ten percent income tax to do it, 'cause we're gonna pay for it in real time,\" you can imagine, I don't know what the poll numbers would be, but they would collapse surely. And so this idea that, that you have a free lunch, or at least it seems like a free lunch, where you're like, \"Well Sure. that kind of encourages things that wouldn't otherwise be allowed or supported if, if the cost is more transparent up front." }, { "speaker": "stephan", "time": "27:57", "start": 1677.09, "text": "Certainly, I hundred percent agree with you there. And then from a, even from a libertarian perspective, and you're looking at things, it's only through this kind of fiction of the state that enables this machinery of basically lying to people at scale and stealing their wealth at scale, because it's not just that, it's also-- I mean, certainly your, your point is correct, I fully agree with it. But it's also that they can hide the, the future cost. They can kind of stuff that cost into the future and stuff that cost onto future generations, right? And as you point out in your book as well, the cost estimates for some of these forever wars, like the Iraq war and so on, you know, they end up being, you know, multi-trillion dollar wars that people back in two thousand and three would have had no idea that they would have been this much of a failure and this expensive Expensive and just, you know, weighing on not just them, but their children and maybe their grandchildren." }, { "speaker": "lyn_alden", "time": "28:53", "start": 1733.0, "text": "Yeah, exactly, and I think that's the, the kind of one of the main downsides of the system is this, this opaqueness that is allowed because everything's so credit based. And again, it's one of those things that as long as they can do it, they will do it. And so one approach is to keep trying to say, \"No, don't do this, don't do this.\" And I think of course there should be people putting their voices up against that type If it's gonna be like either cured or mitigated kind of more globally and permanently, I, I think that's where technology comes into play, that basically that type of money has to become bad enough compared to alternatives, like let's say Bitcoin, where eventually more and more people shift their monetary savings towards something that can't be diluted, debased, and so it starts reducing their ability to do that. So for example, there's countries today that have mismanaged their ledger badly enough that they've kind of lost money printing privilege In a way, like they either get dollarized or partially dollarized, and so as soon as they print money, it kind of shows up in inflation right away, and it just becomes very ineffective, because so many people are holding their assets in other things, including foreign currencies or Bitcoin or whatever, you know, gold, housing, whatever the case may be. And if that were to eventually happen to developed countries, so far there's nothing really been good enough to, to do that to them, but, you know, Bitcoin right now, the, the shot we have, if that's That can eventually reduce or eliminate their power to do that, and that even to the extent that, say, nation states still exist, it's just that they have to operate on a more transparent way, which, which probably limits them in, in ways that they're not currently limited in." }, { "speaker": "stephan", "time": "30:34", "start": 1833.58, "text": "Another area I found interesting from your book was your discussion around base money and broad money. And so this kind of gets into obviously central banking and how the money gets created. Now there are different ways, there are different, let's call it transmission mechanisms by which that new money can be created. but do you wanna just start with offering a, an explanation, what is base money, what's broad money, and then we can take it further from there?" }, { "speaker": "lyn_alden", "time": "30:57", "start": 1857.48, "text": "Sure. In the context of fractional reserve banking, we end up getting two very different layers of, of money and what money is, and both of them in some sense are quite valid because they both have very important, ramifications. So the base money in, say, the free banking era would be gold essentially, and then broad money is basically the full amount of bank deposits, and bank notes, and, and gold itself. So it's, it's basically base money plus the thing Means that people have claims for base money, and of course, in a fractional reserve banking environment, that disconnect can go grow quite large. And in the modern sense, the monetary base isn't no longer gold, but it transitioned over time. So first, it was in, in, in say a free banking context, it was literally just gold, and then in a, a gold-backed central banking context, it was the central bank balance sheet which would be partially backed by gold. and then in the modern sense, it's, it's back- By treasuries and mortgage backed securities. but basically the, in the modern sense, the monetary base is money that is a direct liability of the central bank, right? So that's the closest thing we have to the definition of a dollar, which would be a direct Federal Reserve liability, either in terms of banknotes or bank reserves. and the former is ac-accessible to the public, whereas the second is only accessible to banks. and so that's, that's the monetary base of the country. We can also add a couple of things like the Treasury General Account Which is really another type of bank reserve, but it's, it's, it's, you know, it's kind of part of the monetary base. And so when you, when you have that together, that's like base money. And then banks, because they fractionally lend it and they create new deposits, and they're able to change how much leverage they have relative to their liquid assets, far more of us have claims for dollars than there are actual base dollars. And then at a higher level than that, there's the eurodollar banking system. So there's, there's kind of Reserve, a layer that is already fractionally reserved, or we have things like debt securities, which are dollars owed at a specific time in the future, and all of that can reach very, very large numbers compared to the monetary base. And so back in the, classical gold standard era, the international standard, like in the, in the late eighteen hundreds and going into the early nineteen hundreds, you know, that was, like in England for example, was lever twenty to one. and in, in going into nineteen twenty-nine, the, the whole kind of nineteen twenties period had this Big credit growth, which is basically that broad money supply was growing a lot faster than base money, and by the time nineteen twenty nine hit, that ratio was like insanely high, and the same thing happened in two thousand eight, and when that happens, you know, if it was- If it was like a purely free banking system and you started having credit collapse, then that broad money would have to collapse to being a lot closer to the base money because nobody can, can print more base money. but in an environment that's more centralized in the post Telegraph era where gold's not fast enough to keep up with the kind of the unit of account that people are using and the nation states are enforcing, instead what happens during those major crises is the base money's expanded to kind of mostly support that existing number of broad money units. And so all those years and decades of fractional reserve banking get made money good by an expansion of the base money, which, which occurs depending on the time period due to the breaking of a gold peg, changing of a gold peg, disregarding of a gold peg, or if it's already a fiat currency system, just printing a lot more base money. And so that kind of makes it so that that constant money supply growth is allowed to continue indefinitely, and that's what gives us a, a permanent degree of Of money supply inflation, price inflation, and debasement of the unit of account that everybody uses." }, { "speaker": "stephan", "time": "34:49", "start": 2089.46, "text": "Yeah. And so in a modern context, especially in the US financial system context, as we've seen, you know, listeners are familiar over the last, you know- Fifteen, twenty years, we've had, you know, this series of, you know, events happen, like the global financial crisis in two thousand and eight, and then the Federal Reserve and the US government come out with new programs. And, in your book, you also talk about how they are, in some sense, manipulating those ratios because maybe they wanna manipulate the liquidity in the system or maybe, as you were saying, there's-- we have the base money, right? Like, that can be physical cash or bank reserves or the broad money, which is obviously, you know, once New fiat currency is being created, and could you explain a little bit about how some of these programs can help them manipulate that, whether it's QE or QT, as an example?" }, { "speaker": "lyn_alden", "time": "35:40", "start": 2140.2, "text": "Sure, and, and I think one thing to, know the difference of is between like a normal banking crisis and like one of these like structural, massive generational banking crises, because under the hood they end up being very different. So in, in most recessions or issues in, in say the past several decades, you'd have a gradually increasing base layer of money, a gradually increasing broad layer of money, and that ratio was increasing over time, so there were more and more claims, for the, the base, and you'd have occasional- Issues, but it wouldn't really change, the nature of the system too much, and partly because you had steadily declining interest rates, higher levels of debt could keep being supported by the fact that their cost of maintaining that debt was going down due to, lower interest rates. but both in nineteen twenty-nine and then again in two thousand eight, when you have the combination of that you've built up so much claims relative to the base and you run into zero interest rates, you kind of run out of room to keep kicking the can down the road, at least methods. And so that's when you see a sudden jump in the amount of base money in the system. Basically, that's where they kinda just default on what the, what the unit that they're using is, and they create more of those units just to support that whole system. So one of the things that people thought at the time was that, rapid QE would be inflationary or even hyperinflationary, and they say, \"Well, if that wasn't inflationary, maybe money printing's not inflationary.\" And I think what people miss is that it was inflationary, but Taproot is not zero inflation, it's massive deflation. So basically, if there was not QE in two thousand eight, you would have that broad money stack start to collapse down towards the base layer. But by, you know, creating all this new base money and providing liquidity to any banks that needed it, they stopped that money supply growth from collapsing, which is a type of inflation, but it's against deflation. So instead of, you know, rewarding people that were holding dollars or gold or things like that, it, it basically rewarded people that were still taking- Taking on risk in that regard. Yeah. And that's" }, { "speaker": "stephan", "time": "37:43", "start": 2262.52, "text": "why you use the term anti-deflationary in the book, right? Yes." }, { "speaker": "lyn_alden", "time": "37:46", "start": 2266.4, "text": "Yes. Because, yeah, we have to compare what the counterfactual would have been, and zero isn't the counterfactual. whereas, and what you see with these kind of, generational banking crises, they, they tend to be one-two punches. So the first bubble is like the collapsing of a private debt bubble and an expansion of the monetary base that kind of offsets that collapsing bubble, and so you don't get rapid inflation, instead ignation and just like a, a shift of where the leverage is, it goes from the private sector up to the public sector. And then it's that second crisis, that's the more inflationary one. So back in the, in the Great Depression, first you had the Great Depression itself, which was disinflationary, then you got kind of a small burst of inflation when you had all the recapitalization and the peg break and stuff like that, but you didn't really have the major inflation until you had, you know, World War II, and that's when a lot of the debt got shifted" }, { "speaker": "lyn_alden", "time": "38:40", "start": 2319.98, "text": "The amount of broad money in the system, not just base money, and we're kind of seeing a similar thing today, which is that during the whole twenty tens decade after the two thousand eight crisis, you had economic stagnation, you didn't have a sharp jump in broad money supply, you just had a sharp jump in the base money supply to keep that broad money supply from collapsing. But then what we've seen here in the twenty twenties is that after a lot of that debt was transferred from the private sector to the public sector, now it's more inflationary, and now when crises happen, money directly sent out to the public, trying to raise interest to rein in that inflation isn't, isn't somewhat inflationary itself because now it's causing high interest expense, from the government, which is a type of ironically deficit stimulus, which can be inflationary. And so that we're kind of in the second wave of that now. And I find that, that studying these dynamics has been very helpful for understanding periods of deflation, periods of inflation, and how these things can go together. And, and one final point. Because this comes up in a lot with some of the debates I've had, is that when you're in an environment where banks really trust each other, they're able to get away with this, like, you know, having very little base money to support the claims. Because whenever a bank has any sort of liquidity challenge, they can just borrow money from another bank. and so you'd have an environment like, say, the nineteen nineties or the early two thousands, where someone will say, \"Look, they had almost no base money and there was no problem,\" but that's because banks trusted each seventies, when with Jevons, he's sitting there saying like, \"You know, look at all this exchange that happens and almost no gold ever changes hands. \" You kind of have a similar environment for that with bank reserves. But the problem is, when you have that highly leveraged system, the second it runs into a crisis that's truly big in scale, like you, you know, you get so highly leveraged, interest rates are already zero, there's really not much else that can be done. banks don't trust each other, and rightly so, and so a bank" }, { "speaker": "lyn_alden", "time": "40:39", "start": 2439.4, "text": "Hash, and the other ninety-seven percent is like these less liquid assets, and a-- almost every bank finds itself in that condition, and no bank is gonna lend to another bank, or the, or the amount of lending is very constrained, and that's when the central bank comes in and says, \"Well, we're just gonna print a lot more base money, and we're gonna re-liquify the system ourselves so the banks become less reliant.\" But that's what, again, retroactively justifies all that fractional banking and makes all those broad IOUs money good rather than letting them collapse down towards what" }, { "speaker": "stephan", "time": "41:10", "start": 2469.5, "text": "Obviously, it also can be seen like a bit of a bailout, right? Because some of these banks may have taken on loans or, in this case, extended loans to people who were simply not creditworthy, and they, you know, in a real free market, they would have gone under. But actually, what's happened is the government has said, \"Oh, okay, let me just take those assets off your balance sheet and I'll put them on my balance sheet, and here's some reserves,\" and they just sort of- Try to keep the system alive, a-a-like you said, it's an anti-deflationary sort of effect to just sort of stop the house of cards collapsing. I'm kind of loosely, putting it, but yeah. Yeah." }, { "speaker": "lyn_alden", "time": "41:43", "start": 2502.59, "text": "And, and it is a bailout to, and to your point, and there's, there's kind of two methods of bailout. There's the direct bailout, which is when you just give someone money or give a bank money, you say, \"Look, we'll buy this like toxic asset from you for real money and, you're good now" }, { "speaker": "lyn_alden", "time": "42:01", "start": 2520.78, "text": "Bailout is the provision of credit, at below market rates at a time when no one else is, is being lent to. And so, you know, a lot of banks will say, \"Look, we paid out, we weren't bailed out, we were, we paid back everything we were given by the government.\" But the, the mere fact that you were given access to cheap credit by the government at a time when others weren't, and you were able to go and survive and buy other assets at far lower prices, was a type of bailout. And, and if you look back You know, a lot of homeowners went under and lost their homes, but, you know, Ethereum, if you gave them like a few year emergency loan at below market rates, they could have got through that. Yeah, they might have made it through, 'cause those house prices did eventually mostly recover. and that's basically what happened to banks, where they were given the liquidity to get through and, and the money supply was expanded, and they were eventually kind of, you know, made good, at least most of them were made good. That was not extended to homeowners and, Banks versus other banks. And so that's what sparked things like Occupy Wall Street or Tea Party and things like that, basically pointing out that this is, you know, it's obviously selection bias, it's obviously corrupt in various ways. And we see kind of similar things here during the, the, you know, the kind of the recent crisis, which is that you'd have some direct bailouts, but then you'd also have things like the provision of below-market credit. and so for example, when, when credit markets seized up in like March 2020 One of the first things the Federal Reserve could do was, was buy corporate bond ETFs and corporate bonds broadly. That's, it's like a very, you know, once they got authorization from Congress to do that. Because that's not something they could fully do on their own, but once they got authorization to do that, it's very easy for them to go out and re-liquify the corporate bond market. So very large corporations like Coca-Cola and McDonald's and Apple could go back to issuing bonds with no problem, whereas there weren't similar mechanisms in place to restore credit to small businesses. These, these businesses are more reliant on things like bank loans with their local bank, and so that's kind of a more decentralized, more, relationship-driven type of market, and it's very- Flow to help that market, right? So the bigger, you know, if you're a big restaurant chain, you got bailed out a lot quicker than if you're a small mom and pop restaurant, and that's, you know, almost nobody would be in favor of bailing out a big corporation and not small ones. And then they try to fix it with the PPP loans, that turn into grants, and of, of course, the challenge there is that while you do save certain businesses, when you actually kinda look at the numbers, the majority of that money went to very wealthy people because it There was not really like a strong filtering mechanism for who actually needed it. It wasn't like it only went to restaurants and other things like that. It went to like law firms, investment managers, investment research that weren't planning on laying anyone off anyway, 'cause they're not really harmed by the, by the sort of like, \"I hate free" }, { "speaker": "stephan", "time": "44:54", "start": 2694.34, "text": "money, let's take it. \" Yeah." }, { "speaker": "lyn_alden", "time": "44:56", "start": 2696.0, "text": "So it's like some people got like, you know, five thousand dollars in stimulus checks, and other people got five hundred thousand dollars in stimulus checks, and it was just under a different name. And so that" }, { "speaker": "lyn_alden", "time": "45:10", "start": 2710.03, "text": "They're not, they're always like targeted. So someone, someone somewhere is getting money siphoned away from them in a non-transparent way, and someone else is getting rewarded in a non-transparent way." }, { "speaker": "stephan", "time": "45:21", "start": 2720.63, "text": "Yeah. And so one other area I'm curious to ask about is fiscal spending, is that inflationary? Because this is a common area of debate and discussion. Some people say, \"Well, no, that on its own isn't the inflationary thing.\" you know, where do you come down on that or how would you explain that, you know, for somebody who's asking the question, is government fiscal spending inflationary?" }, { "speaker": "lyn_alden", "time": "45:44", "start": 2744.04, "text": "So there's a little bit of nuance there, but in, in general, it's inflationary, but we can conceptualize a couple ways in which it, it can be inflationary. basically, especially when you have monetized fiscal spending, so basically the, the, the, the government is spending, but instead of, you know, extracting that with taxes or something else, it's just having a central bank print most of that to, to buy their bonds, that results in a direct expansion of the broad money supply. and there's a couple ways that that can be Just the, just the money supply growth itself, even, you know, let's, let's step back for a second. So when the, when the government spends the money, we can imagine a spectrum of productivity for how that money can be spent, right? So they could go out and they could build a bunch of petting zoos, and that's just, it's not productive, or they could go out and build a bunch of nuclear reactors, for example, and they could, you know, have a lot of basically power infrastructure, right? There's kind of a spectrum of things they could do Effectively, they spend that money, the less inflationary it's likely to be, because you're expanding the money supply, but you're also expanding goods and services, or at least certain types of goods and services. But the challenge there is that even by doing that, even if you're on the more productive side of the spectrum, by increasing the money supply Very scarce goods like waterfront property and, and fine art and things like that, those are likely to increase in supply along with the money supply, whereas whatever was spent on might not increase. So for example, maybe power prices wouldn't increase if most of that money went towards building new, new power sources, for example, if that was part of the program. Now, of course, if that money's terribly spent, they go out and do all sorts of malinvestment and it's, or it's just driven towards consumption or things like that, then it's likely to be even more inflationary Expansion of the money supply, you're not really getting any more goods and services. And so, you know, for example, a lot of, I think, MMTers will point to the nineteen forties as one of the more constructive examples, and I would agree that among, in the spectrum of things that money was spent on You know, outside of the war itself, a lot of that was, went towards manufacturing facilities that could be repurposed after the war. It went towards, putting GI's through college and technical school when they got back. It went towards, later the interstate highway system. So that was among the types of, of things that money could be printed for, that was not really the worst case scenario. So you had inflation in some things, but then you kind of got that under control after that period of time. But most, fiscal expenditures or rapid increases in the money supply would be efficient than that, and they would go towards things that are not creating new factories, not creating new power sources, not, resulting in rapid training of the public, and instead they're generally going towards either consumption or boondoggles, whatever the case may be, and that's even more likely to be inflationary than semi-productive spending." }, { "speaker": "stephan", "time": "48:37", "start": 2917.42, "text": "Now, the lead sponsor of this show is Swann dot com, and Swann dot com makes it safe and easy for you to buy Bitcoin. We're living in a world of broken money, and Bitcoin is what we, many of us, believe to be the answer. With Swann dot com, you can do recurring purchase plans. This is a great way to just accumulate a little bit every day or every week or every month, and you can just set it and forget it, Swann and chill. It makes it really easy for you to stack Sats over the long term, and Swann makes it By making it easy to self-custody your coins with automated withdrawal. So this is a fantastic feature, and I think more people should be using this kind of feature where they can automatically stack Sats and then auto-withdraw to their own self-custody. So if you're interested in starting stacking Sats or learning about Bitcoin, go and get started over at swan dot com. And now back to the show with Lyn. I see. And, another area that I found quite interesting from, your explanations in the book was your explanation of how Kind of paradoxically, in the fiat standard that we live under, it has benefited people who found the Goldilocks zone of how much debt to have, right? Like obviously there were people who were in too much debt and maybe they were overlevered and they got wrecked somehow, and then maybe the people who had zero debt, they would, they, they were the ones getting inflated away. So they were the ones losing out, right? If you're sa-saving fiat currency and they're printing more of it, you're losing out. But if you were in that sort of Goldilocks" }, { "speaker": "stephan", "time": "50:09", "start": 3009.22, "text": "It's interesting that in the fiat standard, that's almost the behavior that gets rewarded." }, { "speaker": "lyn_alden", "time": "50:15", "start": 3015.13, "text": "Yeah, that's it, it's, it's kind of that bell curve example. And so because the unit of account itself is depreciating, and because bank accounts and other things are paying interest that is largely below the rate of new money creation, if you're a saver, you're getting, your share of the pie is, is gradually getting diluted, whereas, other people are getting a Expanded. And if, even taking a step further, let's say you mostly know this is happening and you decide to buy real, assets, but without leverage, so you buy things like real estate, gold, stocks, things like that. The problem there is that those are, for real estate, is taxed on a regular basis, plus taxed when you sell, and it's, it's taxed on the nominal gain, rather than just the real gain. and same thing's true for equities, although they don't have the recurring- Tax, you just have like the, the capital gains, and then the same thing's true for gold, that, that has a, a, a tax at the end. So the government still manages to recoup, a lot of the value appreciation for most assets if that asset Just mostly increase at the rate of broad money supply growth. Basically, you know, if you invest in Apple at the right time and hold for decades, you're gonna vastly outperform money supply growth, you know, if you're gonna, if you're a really good stock picker, but if you're, say, buying the index or buying a typical piece of real estate or gold or something like that, you're kinda just treading water after capital gains taxes. and so kind of the, the one way to, to really win in that system, if you're not like a top one percent superior Is to buy kind of solid things with, with very inexpensive long term credit, if it's available to you. and that's, the more you get wealthy, the more that becomes available to you. and so the kind of the smart thing to do is if you're gonna buy real estate, buy it with a thirty year low fixed rate mortgage and refinance it whenever you get, whenever you can. you know, buy high quality IOUs on very low amounts of margin, things like that, because that, that behavior is what constantly got rewarded. 'cause kinda like how if you're a saver and you're getting paid an interest rate that is below the rate of money supply growth, you're getting diluted. Well, on the opposite side of that, if you're taking out long duration loans with interest rates that are below the rate of money supply growth, you're basically shorting that fiat currency and you're accumulating real assets, and you're doing it in so you're getting a boost so that you overcome kind of the capital gains taxes and other sort of ways that the government claws back some of the non-leveraged exposures to real assets. And so in that system, access to credit becomes very paramount. It, it becomes kind of the easiest path towards wealth creation, and then that of course benefits those that hand out credit or are kind of closely tied to the system or that have easy access to credit. And then that also ends up applying on the broader scale. So for example, you know, the whole kind of multi-decade era of private equity was really leveraged buyouts, basically a large, well-connected firm that had access to cheap capital Would go buy smaller businesses that don't really have access to cheap capital, and they kind of accumulate them under their umbrella, and then potentially spin them out with higher leverage, in a larger entity. And then you'd also see things like, you know, large hardware stores like Lowe's or Home Depot would be able to kind of eat all their small mom-and-pop competitors around the country because they had access to much lower cost of capital. And there's, I think, two parts to that. So like one part is just market driven, w- you know, a larger, more diversified entity is gonna have access to lower cost of capital, that's just generally the case, and that's, you know, it's not a bad thing, but W- you know, a lot of these companies, what they do is they hold debt as a permanent part of their capital structure because they can. So it's like if you ask, \"Why does Coca-Cola have debt? \" I mean, they're like a century-old, super, profitable, successful company. Why do they hold debt? And the answer is that they're, they're choosing to short the fiat currency for long durations because they can, because they- that's something that they can do that a small business doesn't really have that same type of access to." }, { "speaker": "stephan", "time": "54:30", "start": 3269.93, "text": "It's a competitive advantage That the small businesses can't." }, { "speaker": "lyn_alden", "time": "54:35", "start": 3275.15, "text": "Exactly. And then that, that's the part of it that only really makes sense in a fiat currency system. So if you had a gold standard or a Bitcoin standard, you know, and there are certain entities that want credit, a larger, safer, more diversified entity is still gonna have access to lower cost of capital, but there's no reason to borrow for very long durations because you're, you're buying a unit of account that appreciates versus most things. whereas in this kind of environment of constant fiat currency dilution, larger- Entities get extra rewarded by being able to have these kind of permanent, like thirty-year shorts on the fiat currency that they keep rolling over at lower rates." }, { "speaker": "stephan", "time": "55:12", "start": 3311.86, "text": "Yeah, and it really changes our behaviors, and I think a lot of people just don't understand this point. so They maybe sort of loosely act in this way because that's the incentive that pushes them that way, but they're not sort of thinking at the level of, \"Oh, I need to be short, I need to be structurally short the fiat currency over the long term.\" They're not thinking in those terms, of course, like most people. but then that also brings the question, what would it look like on a Bitcoin standard? Does that mean, like, like, like our friend Fifteen, who believes that it's going to be basically a very no or low debt sort of situation? Now I don't agree with him. I think it'll be a very low debt, full reserve style credit system, that maybe there'll be some small forms of credit, but maybe not at the same level like we have today, simply because, like we said, the, the technology where post the telegraph, right? Like once we have this technology, it simply won't make as much sense to just be structurally short the fiat currency or structurally short the actual unit of account" }, { "speaker": "lyn_alden", "time": "56:14", "start": 3374.12, "text": "Yeah, I think that the overall credit would be vastly reduced in that type of system. I don't think it'd be zero credit, but I think, it would be much reduced credit. And again, you can kind of separate into two types, which is things like debt as a permanent part of a capital structure or, or long duration debt would make a lot less sense. So for example, it wouldn't make any sense for Coca-Cola to have, you know, gold-denominated or Bitcoin-denominated debt on their balance sheet for thirty years. It wouldn't make-- you know, governments Ever-growing debt to GDP ratios, it wouldn't make sense to have a house that you buy at a thirty-year mortgage denominated in things like gold or Bitcoin. If you look at the average, like, let's say the median home, you know, it generally doesn't outperform gold, especially when you consider maintenance and, taxes and things like that. And so you wouldn't short gold and use it to buy a house, you'd only short fiat currency to buy a house. And so in that type of hard money environment, you know, the types of debt that Still exist, I think would be highly productive shorter term debt. It could be, for example, you're a business and you wanna have like a revolving credit line for seasonal changes in your business, that kind of thing is collateralized by the equity of your business. maybe if you're a homeowner, you wanna get a very small loan to do an expansion of some sort, there could be a, a liquidity provision collateralizing your home with a very low loan-to-value ratio. if someone wants to get education, I mean, there's multiple ways to do it, but one of the Something that's gonna probably, increase your income sub-substantially. you know, you could have a business expansion where you don't really wanna give away your equity permanently, so you're able to secure a little, kind of a, maybe a two-year loan that's, again, collateralized by your business for that expansion. Maybe you're buying a home and you get like a five-year payment term, you know, that's, that's common in Egypt, I was just in Egypt, they would only buy homes with like three-year, five-year, seven Because no one's gonna lend for super long terms in the Egyptian pound for opposite reasons. and so I think there are still credit provision that makes sense in that world, but it's just much smaller because most of those kind of long duration permanent rolling debt balances no longer make sense, and only high impactful, high rate of return, very safe types of debt are what make sense, and again, and then they wouldn't be fractionally reserved, or at least it wouldn't make sense safely to fractionally reserve them, that would be back- Backed up by capital that is duration matched or that is, that is, you know, kind of permanent capital of a lending institution." }, { "speaker": "stephan", "time": "58:52", "start": 3531.91, "text": "Yeah, good way to put it. And so we can think of it like the- Maybe one way to put it is the borrowing cost in that world will be so much higher, and because of that, there'll be very few projects that, let's say, meet the quote-unquote hurdle rate or the IRR, right? The internal rate of return. That if you're a businessman and you're looking at my project, I'm like, okay, do I do an expansion to build out a new factory, and, oh, look, I can see instantly it's gonna be very profitable, it's got an IRR of forty percent, and I can borrow at ten or fifteen Buying a home for thirty years isn't gonna be like, they're not gonna get that kind of profitability on just simply buying a home to live in, and so I think that may be one way to sort of distinguish, you know, the fiat standard and the debt that exists, y- under the fiat standard and the debt that may exist or is likely to exist under a Bitcoin standard." }, { "speaker": "lyn_alden", "time": "59:48", "start": 3588.13, "text": "Yeah, debt in the fiat standard is a core part of the system, because most fiat currency comes into existence through debt creation. And the incentives to have some degree of debt are very high in the fiat currency system, and people that avoid having debt for moral reasons or other reasons end up, end up getting kind of punished for having that view, even though historically that view was often rewarded. Basically, you know, in this environment, savings kind of de-emphasized and having moderate amounts of debt Of debt is emphasized, because that's, that's what works well over time, whereas if you had Bitcoin as the base layer of money, that goes back to rewarding savers. you don't have to lend it out to maintain your stack, that could, that's just like an optional thing that professionals could choose to engage in, and the borrowers wouldn't get rewarded unless they're doing something very high impactful, basically engaging in some degree of entrepreneurship or, or, you know, something like that. Rather than just making use of the fact that they're able to short something that depreciates over time." }, { "speaker": "stephan", "time": "01:00:53", "start": 3653.51, "text": "Fantastic. Well, look, I think that's about all we've got time for, but, I just wanna say to listeners, it's a great book, go and check it out. Lyn, where can people find your book?" }, { "speaker": "lyn_alden", "time": "01:01:02", "start": 3662.63, "text": "so it's on Amazon, Broken Money, and I expect to have it out in a couple other, online bookstores shortly. and it's available in hardcover, paperback, and e-book, and I have a, audiobook coming out shortly as well." }, { "speaker": "stephan", "time": "01:01:15", "start": 3675.94, "text": "Fantastic. Well, I'll put the links in the show notes, and Lynn, I'm looking forward to catching up at Pacific Bitcoin." }, { "speaker": "lyn_alden", "time": "01:01:20", "start": 3680.77, "text": "Yep, looking forward to it." }, { "speaker": "stephan", "time": "01:01:22", "start": 3682.83, "text": "If you enjoyed the show, make sure to leave a like and help share the show out there so other people can also learn about Bitcoin. Get the show notes at stephanilivera dot com, and I'll see you in the citadels." } ] }