Jeff Booth Masterclass: The Price of Tomorrow & the Truth About Inflation, Deflation and Bitcoin

we have never lived in a global free market you have no reference frame for what I'm talking about no one on the planet has a reference frame and what's happening on on on bitcoin is it's imposing a new set of rules and it's ruining people's reference frame it's imposing that what I just described you actually if you're living in Bitcoin you're living in the start of the first Global free market the world has ever [Music] seen all right not sure if I'm going to release this might be a podcast but I'm here with Jeff Booth

author of price of Tomorrow your favorite entrepreneur and um I am I am writing my own book and I'm having trouble explaining this world of inflation and how it will be met by the challenges of deflation and and the opportunities as well and so I'm just going to talk this out with Jeff and maybe it'll be helpful to someone if I if I do release this um because I think that this is one of the most important lessons that you could learn in Bitcoin is we live in this world that relies on ever expanding credit

but um it's it's completely incompatible with deflation and how technolog is inherently deflationary so Jeff first of all thank you for writing this book and I'm sorry that I I ask you probably the same question over 50 times I you you're not the only one it kind of it's and we just talked about this before uh we jumped on but the problem is this creates a cognitive dissonance in our brains and we can't grasp the unknown of the new system because we've never lived in it there's no books that ever reference it and so everything

we've ever learned is outside of a different in inside of a different system and this is imposing a new reality and so so so let's go as deep as you want to on this topic because I think it' be helpful for others too so you've had people come to you and it's like they read the book they love it they find it to be fantastic but they they kind of need you to explain the lesson over and over again because it's so contrarian to this system that is that has inflation baked in the cake like

why is it so hard for us to understand this so there's actually virtually no one I know that hasn't gone through the same process including so so think of somebody like Luke groman like he's brilliant brilliant um and he came up to Vancouver and I introduced him to one of the top AI General artificial intell general intelligence companies robotics companies and and he was talking at the time about the productivity growth miracle that AI was going to drive um and that how that would help solve the debt and I and I looked at him and

I said productivity growth is faster deflation that is the that's the key driver of the debt the the the exponential rise in credit is to stop and then the manipulation of that money is to stop the deflation because a credit-based system cannot allow deflation and so so even even Luke at that time now Luke is now totally understands this but I don't know anybody including myself who's with went through that process who didn't grap grapple with some of these Concepts because they're so different than anything we've ever uh worked with and that first principle um

has to touch everything else it has to touch everything else so so it's a so it's a confusing topic for for everyone it's not just if if you're having trouble hanging on to this it's because everybody has trouble hanging on to this well that makes me feel better um well why don't we start with breaking down inflation because prior to bitcoin I didn't really even think about inflation when I was a reporter if we did report on it it was usually around the target especially I'm trying to think like the 2010's decade inflation I think

was below their target for some of that but then everyone started paying attention to it after the pandemic oh my gosh uh peaked at 99.1% in 2022 I think June um but there are multiple kinds of inflation there's monetary inflation there's asset inflation and then there's CPI Consumer Price Index can you kind of break down um what inflation really is yeah and and so I I would actually rather start from the other other way okay because because then you can then you as a as a byproduct you can see what inflation really is because these

terms are all are all a construct from the existing system um so so if you start from a first principle um and you say instead of Technology being deflationary if you just start with the natural state of the free market is deflation um and you know how you just nodded your head um and it's funny everybody knows that to be true even though they can't explain it very well yeah they in the nod of your head is actually you know you feel that that's true and why would that be true the natural state of the

free market is deflation so let's dig into that deeper primarily because of this every single thing that an entrepreneur creates to create more value is competing against something that was there before and people were using and if they don't create more value they fail right and and if they create more value we use the the thing that creates more value and the output of that is some of the other's business is is impaired and the new business grows and the output of that is prices fall okay right and so and that's that's been the process

throughout time as we essentially and because what ends up happening in the free market is the scarce thing or the or the thing that um drives more margin creates more opportunities for entrepreneurs to attack that scarce thing and provide more value so it's a natural phen phenomenon um and we trade with people all over the world to gain more value and every sing every component of every components in this components computers components in everything is rely on that same principle to try to gain more value for ourselves so we are part of the equation we

are critical part of the equation that searches for more value so you ask yourself if the natural state of that process of us searching for more value is that prices fall and then we create ideas like artificial intelligence or chips and computers that were made from grains of sand right in Silicon to be able to create new and better ways to solve scarcity then as we create these these tools for human abundance then deflation should be faster and faster because the productivity growth moves faster and faster and it should flow to all of us every

single person in humanity 8 billion people in surface of eight billion people that's what the world should look like right and it it and and so so what does that mean on the surface of what I just said so first you could you could as a first principle you should argue what I just said try to poke holes in what I just said and find find ways and people will say well what about uh what about energy or what about some things that are scarce well let's look at energy as something as an ex example

so in Bitcoin terms energy price is falling and there's a free market now in energy that's using Bitcoin mining to chase abundant energy to create more energy so so as a first principle to life we need more energy right and we're on top of that work of of energy and if Energy prices are falling in real terms in Bitcoin then some of the other things that we need let's look at mining or resources that people use as examples that don't fall in price well look at a mine today versus a mine 100 years ago and

how much labor is then the mind today versus the output versus 100 years ago and the labor is way less yeah and and if you go to a mine today most of the vehicles are automated um most of the AI systems are moving into that pretty soon it'll be robotics into that so the so so measured in energy and output or abundance or growth then those prices are falling as well but we don't recognize those prices are falling right so we don't because in real terms they are falling and they will continue to fall forever

that's actually what Bitcoin is measuring so so in and I can tell you why Bitcoin is measuring that but first we'll go into the other part of that argument so first is a first principle try to poke a hole and what I just said like so so there is no I haven't seen a def I haven't seen an argument that that can critically uh critically fight what I just said that the natural state of the free market is deflation coin stories is proudly brought to you by bit Deere a global leader in disruptive technology for

Bitcoin mining and AI as a publicly traded leader biter boasts a massive 2.5 GW of electrical capacity and infrastructure underdevelopment across three continents now they're leveraging years of expertise in Data Center and Cloud management into high performance Computing through a partnership with Nvidia learn more at bit deer.com and explore how they are pioneering the future today the thought or question that comes to mind which maybe you'll want to answer now maybe we Circle back to um is okay I think of a technology like let's say um like the You' you've talked about the calculator right

before we used to have to pay I think I paid a fortune for one of those big calculators that I had to have at one point um the Texas Instruments one and now it's free everyone has it on their phone um in order to devise new technologies though haven't companies and entrepreneurs benefited from A system that inflates the money supply so that basically you can get Investments so that you can borrow and you can start your company and I would argue that like I mean QE gave rise to some of these new big tech companies

and the tech Darlings that don't have to generate any real Revenue I mean a lot of them don't make any money for many years Amazon didn't make money for a very long time but they were able to do it because someone because the cost of borrowing was free because they made money out they printed money no so I think that you just had a false equivalency because you because you can't measure the new system and so you've conflated that the only reason that the free market works is because you print money and and then people

uh people and that's not true at all the free market works because there's always something that's stuck and scarce creates margin opportunity for entrepreneurs to solve always but where do they get the money to like they have to borrow it from someone's Capital as opposed to it has to be deferred consumption Capital right the real idea of saving um versus made out of thin air and you you yeah I've always been an entrepreneur um and and very rarely can an entrepreneur raise debt very rarely when they have an idea because why because because it's too

much risk for debt the only money that an entrepreneur can raise for a new idea in something is somebody who believes in them in equity that their thing that they're going to build is going to create so much value for society that they're they're going to return more Equity so it's not it doesn't require debt it doesn't require it's it's a false again it's a belief system that it requires that and you you know what I'm saying is true because you see a lot of entrepreneurs get funding in fact ego death what we do is

we make investments so primarily ego is in in the the risk-free rate of the world is 45% irr that's a Bitcoin return against against the currency and so we're making investments in entrepreneurs to beat the risk-free rate of the World by creating value for the world right and then those entrepreneurs are are building balance sheets in Bitcoin um because of the value that they're adding so the process that I'm describing and we have a lot of money to do that and why do we have a lot of money to do that because other investors believe

in our ability to do that to be able to choose entrepreneurs and help those entrepreneurs Su uh succeed so it doesn't require debt right okay so if technology is deflationary then what I mean we do see price PR dropping we do see prices dropping in things like Electronics all the stuff that kind of distracts us but then you can look at one of those charts I think Charlie Bello has put this out before it's a really shocking one where the cost of everything really important like affording a home health care College tuition textbooks everything's going

up skyrocketing and then television electronics everything else is going down so can you how do you bridge that yeah so again this is so let's let's start in layer right and start at the top and and and again go through each one of these things so the natural state of the free market is deflation as we create technology and better tools or or or digital Goods that replace physical Goods those goods because they prices fall to the marginal cost of production faster because it's based on a line of code um fall faster even even faster

so so as phys iCal Goods would fall less fast because there's still more human labor in in in those goods and some and and so but I'm trying to do this in an order to be able because it's a comp but prices fall to the marginal cost of production as we create more and more technology in abundance then that means prices should fall faster and faster meaning there is no inflation rate there's no zero inflation rate the natural state of the market is not zero it's it's not 2% it's not 5% it is it is

negative it's a productivity rate of the world expanding and so that that today was would probably be now you can you cannot measure what I'm saying from the system you're measuring from and the chart that you just described I hate that chart because every single thing in that chart is also manipulated by the money supply so TVs computers would have fallen way faster iPhone would have been fallen way faster the the entire chart is being manipulated by money supply and everything in it is being measured so you have to be outside of the system to

see the real truth of how fast prices are falling that's why Bitcoin is outside of the system it's bounded by energy it's outside of the system so you can see the true rate of what I'm talking about has there there ever been a time in history where um that has been true where PR just fell so so yes let's go let's let's go into that so first principle The Natural State of free market is deflation second as we as we create more value we entrepreneurs have always throughout all of time tried to create more value

because and and what do they attack the highest margin opportunities because they make more money right so they're trying constantly the globe everyone on the planet is trying to to drive the best best value for others where's the best value where things are stuck the most as we do that F faster and faster and we live on top of everybody else who went before us progress we solve more problems faster and the natural rate would be complete abundance every you wouldn't need the job you think you need because the p prices would fall so so

so uh so fast um and it would keep on doing it forever sorry to stop you but if if prices are falling how do how do the producers make money be because they're competing until there's like how does the how did the producer of the calculator app make money they made money until so they made money because you used to buy it for a dollar a month and then somebody offered it for 50 cents and then offered more features for for 50 cents and then another one offered it for 25 cents one cent zero and

and they make money all the way to zero and then they go and then Entre rurs go somewhere else okay and and and and constantly constantly so there's forever competition in the free market to deliver more value to society and if you don't someone else will okay right so it's the only thing we've ever found that's in service of us through that competition it's a Cooperative process that builds a better world through the process of that competition so because you'll trade with somebody you don't like because it'll give you more value right you'll say I

don't like how Google's controlling everything yet you'll use them every day and if they charged you $5 a click you wouldn't use them anymore you'd use somebody else so it's it's our own need to G gain more value that drives this and we will trade with anybody who GES us more value and so when in time I mean cuz feel like even the history of money which so many of us explore right as bitcoiners um beads and shells to early coins which got coin clipped and they inflated and it was the fall of Empires which

we never learned that perspective in school and then the paper money because obviously gold had its physical limitations paper money built on top of it it seems like the natural state of human society has been to inflate when you can so so so again this is why and this is why I needed to go in stages for this and then you can push back if something's not true because this is the thing that's uh that uh that's so hard to grasp so so what does that mean what I just described what it means is we

have never lived in a global free market you have no reference frame for what I'm talking about no one on the planet has a reference frame for what I'm talking about you the way your brain will will compare things is compare from what has existed before and then try to make an association with what the new thing is and what's happening on on on bitcoin is it's imposing a new set of rules and it's ruining people's reference frame it's imposing that what I just described you actually if you're living in Bitcoin you're living in the

start of the first Global free market the world has ever seen with with within time 8 billion people in service of 8 billion people and the only thing that changes the only thing that could change that what I just said is if somehow Bitcoin became centralized or insecure but otherwise it doesn't care that I'm saying this is it is imposing a free market force on the world and everybody else is negotiating against their belief system and that happening right and and and and let's use before we get into inflation um and and kind of the

other side of the coin let's say if you believe if you're not in Bitcoin um and you believe in your piece of paper then it is true all prices rise for you right um and and and your life is likely getting worse and worse and it is also true that the government is centralizing because it has to centralize and it has to misallocate more and more capital and it has to do all these things because it's a structural problem that can't be fixed from that system it is likely true that from within that system if

you're measuring from that system let's say you're one of 7 billion people on the planet without assets you're getting stolen from at such a rate that you think the solve is from within that system and you're voting for people to and and why the world feels like it's dividing is that reason let's say you're one of the 100 people or thousand people with most of the assets then you're wondering why those people why you can't build walls high enough to keep those bad people out while you're stealing from those other people because entire system is

based on based on theft or inflation which is based on theft but those two viewpoints from inside the system depending where you would look uh from would be be they they would be true for you they wouldn't be true for the new system so now now let's say if you're most most of bitcoiners most of bitcoiners are measuring Bitcoin um from the US dollar and and so what would what would they be saying they would be they would be seeing and it would be true for them that I have an asset that is rising is

rising at 45% per year with volatility and my other assets are 8% 5% 2% and there's still inflation there's I still live in an inflationary world but my um but my but my Bitcoin is rising faster than inflation and that would be true for them and so what they would be doing is they would still be contributing to a centralized world that is was extractive and making that stronger from them and wondering why the world's still dividing well um because and then and then if you were in Bitcoin only if you really understood Bitcoin that

prices fall forever in it then prices would fall forever in it um and that would also be true and so so when I say these different viewpoints depending on the Observer of the system would all be true for each Observer and they would think they were right um and and so so it's it's and that's why kind of we've talked about this Lots um people find Bitcoin in their own time and when they're willing to because it's just an open protocol it doesn't care what you and I are saying about it right now it's decentralized

secure bounded by energy and it is repricing the world and if it stays decentralized and secure then nothing that I'm saying right now will change that it will repic every single thing it's outside the system repricing it but let's go back to now inflation um so if the natural state of that is uh if the natural state of the free market is deflation and we sit on top of everybody else who's ever gone before us all of their work and we make and we fix more and more problems then that means prices should fall faster

and faster and faster and forever but we've never lived in a global free market You could argue that the the rise of the US and protected by the Constitution individual rights and freedoms was the first local really local free market where people went from Europe from a more of a control system and they moved to the US and free markets are more productive and so the productivity rate of the US the growth of the US bounded by hard currency was the dawn of the US US Empire um and in in the late 1800s you had

you had um they called it the great deflation where that Pro those productivity gains had a rising middle class that you they were getting richer and richer and richer and that was the dawn of the US Empire now let's now let's just play what would happen through money and what's always happened through money um if you could control money then you can control everybody else because you could have a little bit of an inflation rate and steal the productivity gains from everyone else the more people on your system the more you've sto um and so

we've always centralized money humans have never not centralized money Gold's always been centralized and repriced through this and so let's use the free banking era in the US and what that would look like um so you had free markets um you had you you had you had um first coins before coins were clipped and everything else but it was use um you then you had a derivative instrument a piece of paper on top of the gold and then the bank centralized the gold and One bank would say I'm going to lend out your gold at

50% right because no one ever comes and gets all the gold at the same time right so they would only have half of the res half of the reserve not fully backed one to one exactly but then what would happen with that it's the same thing we saw with Celsius it's the same thing we saw with FDX same thing we we'll see a hundred times thousand million times more on the way to bitcoin monetizing everything changing everything um is the next Bank says well I'll I'll only Reserve 30% and I'll give you a higher interest

rate and the next rank says I'll Reserve 10% and I'll give you a higher interest rate and what creates is a bubble because because everybody goes to the highest interest rate we are part of the process and we centralize around that and that bubble creates a an economic boom because it's based on kind of faster growth growth money and fast and then then then as that collapses as everybody chases the same thing as that collapses we go back to the government to say how dare did they did this to us and government comes in and

says we'll centralize that and we'll and then the same thing happens at the government and the dawn of the Federal Reserve was this to this topic by trying to solve banking crisises that that and and instead and and and by by doing that and centralizing because the demand from population says you have to protect us from our own errors creates the regulation that then creates the uh the Federal Reserve that then money is coopted um and the whole thing starts again and that cooption and that and and then then through that that that process and

remember we are part of the process we've never been able to not centralize currencies um because we TR we we trust somebody else more than more than ourselves and so throughout time and then what happens through that centralized process is then gold is repriced or taken back or another country is invaded to take their gold um and um and we go to and because that can't solve the problem of inflationary monetary system we first divide our countries it's their fault their fault and then we have to create a bigger enemy outside of our borders it

has to be their fault we go to global conflict um we we kill millions of people um we come uh we we then devise in institutions will the winner of the war institutions let's never forget let's protect this we'll never do this again and the hope and the winner of the war resets the currency to a new standard against the same thing and it's the process starts over um so I've read a couple of um I don't know I don't know if alternative is the right word but in school you learned that the Free banking

era was the wildcat banks they were really bad right we needed something like the the Federal Reserve and um we needed a lender of Last Resort but if you do read this time in history it the free market regulated itself more because if the bank took on too much risk it imploded and you knew not to sty your money there and so um yes there were crises but they were more contained and they were smaller rather than when you concentrate all the power you develop these institutions that are too big to fail and obviously the

banks wanted a lender of last resort resort they wanted a back stop so um you know that that side of the history is also fascinating because the big big powerful Bankers were incentivized to have a federal reserve and then place all the um place all the burdens and the bill on the taxpayers um but I I do want to talk about like the idea of the crackup boom before these bus because a lot of people are not familiar necessarily with the business Cycles but they've lived it they they can name the the bubbles that popped

from the 90s to the 2000s to the pandemic and and the recessions that followed obviously we haven't had one officially yet here but um but the idea that you say in price of Tomorrow of inflation does have this like short-term kind of like a drug addict that's getting high right like it's good like more stuff gets produced the money money does get allocated places and and this system has led to people being able to afford a home or take out that loan for a car all of that right when does it catch up and and

then crash because I would argue that now they they don't allow it to crash yeah so so the home in real terms two different systems the home in real terms is falling the home measured against a piece of paper that's debasing is rising and so so what that means is the system that based on it there is no natural rate of inflation there is no inflation so monetary inflation when you talk asset inflation yeah it's all monetary inflation that drives asset allocation asset inflation and all of these Mis misallocations through the market because it's it's

it's a control system that is essentially stops the free market from working and if you have a control system that stops the free market from working then you have to constantly rely on more and more control and coercion because you're you're destroying the free market with your control system and so it has to it's just a it's just a a Time window and one end of that time window has to end in total control like think about where AI is going in both systems one system has to be everything's controlled and prices rise against prices

falling and that price of RI Rising is stealing from you to control you and you're on a hamster wheel to try to get more and more assets within that creating more control right and and ultimately it has to end in a super power some person controlling everything and and very rarely does it end there it end before it gets there you you go to global conflict because it's just based on theft it's based on broken systems and it gets so but on that on that and and look at some of the control systems in dictatorships

that that look like that um in because broken money and you're making that system stronger from broken uh broken money trying to get enough it's somebody has to lose for you to win yeah in that system it's based on exploitation and extraction and so so there is no inflation the the natural state of the market is deflation and faster and faster deflation uh forever that's the yeah just a just a quick question on human nature um because I know that you're a Believer like me Jeff that people are mostly good and they they crave connectivity

and like we're all seeking love um if you benefit from this type of system that steals are people just not aware that they're crushing the rest of the people or is there I mean is it all just incentive systems you want to maintain and preserve your position I think so few people are aware of this um and and part part of the journey down the rabbit hole and part of the part of the cognitive dissonance for me too is like it's easy to look at my knowledge now and then say uh say everyone else should

do this but 10 years ago I was equally like I didn't know I I didn't realize that this that Bitcoin could actually be it was a discovery that for the first time in history we could get off of the this um this path this exploitative path and we could move to a competitive Cooperative one that heals Humanity I didn't know that and so some of the things I had to wrestle with in my own cognitive dissidence to let go of lies that I constantly believe that I believed inflation might be the greatest lie ever told

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show that that somehow that's good for you so people are not ready to hear that is so contrarian yeah the greatest lie ever told and so if if you believe that inflation is good for you like just on now attack that go through that so why do you believe that yeah and people will say well well like you like you did the free market can't work right because debt is needed uh well that's not true right so why do you and and you keep on going why why why because what you're really saying if you

believe that is I believe for humans to trade with each other that there has to be theft in money that my money has to get worth be worth less over time and somebody has to be able to make decisions to make my money worth less over time for me to trade with other people on this planet so how did they convince I mean literally this is what all the academic books about economics teach it's it's like a little of inflation is healthy they have a Target rate of 2% it allows for more flexibility it allows

for stability and growth like how did we get it so backwards so BEC because the credit based system has to have inflation to to to grow and the credit based system is insolvent so if the credit based system allows why nobody talks about this is from a credit based system they are right um be and and if you if your entire world structure is a credit pay system then then it requires higher and higher rates of in inflation to stay solvent or a wipe out and a collapse a deflationary spell a collapse and a restart

but if everything was wiped out by that every single asset every single work trade Supply chains grocery stores every single thing would collapse right and so the fear of that collapse has people in so scared of that collapse and so unwilling to look at a different type of solution that they're inside this system telling them I'm saving the world I need to do this otherwise those stupid people those poor people will starve to death when when they're actually creating the same same problem and you have seven and a half billion people on this planet literally

living in modern day slavery unaware that they're living in modern day slavery from this uh from the same system and so take 7 and a half billion people out of modern-day slavery and add them to the free market where their minds and they're uh and can can create value for us too and you will have a faster rate of deflation you'll have a faster rate of abundance for everybody can you break down um what you discuss when it comes to for example the price of homes um not reflecting their utility but but basically bluffed up

by all of this money printing because one thing that people celebrate is their house went up in value only to realize that if they were to sell it capital gains tax you're going to have to buy a house just as overpriced oh your property taxes have gone up and if you're on a fixed income that's really hard I mean there are so many things that we celebrate that we probably shouldn't yeah so so so if you had just if you had money that that lost value let's before we talk about hos let's talk about we

have money that loses value and there some people believe that inflation uh is required for you to spend right for you to spend spend otherwise you wouldn't spend no one in it incentivizes you it incentivizes spending so number one it's just insanely wrong because you don't spend because of inflation you spend because you want to buy the things you want to buy because you know a TV gets you get more valuable and you still buy a TV you buy computers you buy you buy a whole bunch of things that you know in time will be

be be you'll be able to buy them cheaper and they'll be more valuable and so you spend when you buy food every day you a whole raft of things that you buy anyway so to to to say that you wouldn't isn't when we you do is so insane but let's let's argue the other side of this what they're actually saying because what they're what they're saying is is for people to buy I need to to steal their money I'm incenting them to buy because otherwi if they don't buy I'm going to steal more of their

money I'm stealing 2% at a time but it adds up but it's more than 2% because it shouldn't be it shouldn't be the inflation rate it should be measured from the actual productivity rate the deflation rate in this in the system so it's way more than 2% and people know it's more than 2% because their food prices are going up more more than that there other prices are going up so um but but think of what that's saying to live in a productive Society I have to I have to steal your money so you can

spend if you and if you want to measure the world from that and you think that that's a good thing for you what do you think the world would look like and if that rate had to increase or 2% isn't enough to make people spend I'm going to make it 10% I'm going to make it 50% and look at countries that do that and as grocery store prices are changing daily what does society look like and you can so so you can you can see just in arguing the other side of that coin that if

you believe that it's so insane but but how that's tied to housing because what ends up happening is I can't store my money in Money I have to store it in something else yes so so a house has a becomes a monetary premium MH um and it and 100 years ago we lived in a house neighborhood everything else it used to be a utility where we' raise our families but as it attracts a monetary premium and everybody knows I can't store my money and money I have to store it in something else then then the

house turns into money and it attaches a monetary premium and instead of having one house as an investor you have to have 10 or 20 to protect your assets protect your money from being stolen and if you have more and more of those assets it looks like it's relative to everyone else you're winning while they are losing at a crazy rate yeah relative to relative to the destruction of the world that that causes you're losing too because you can't build walls high enough to keep everybody else out right if you're uh if you're doing that

so so both all parties lose in that in that system but it's because money's broken and these assets turn into a store of value against money being broken which uh which when then those assets if you actually measured those assets from the money supply rate you see they haven't risen at all right they've risen the exact rate of monetary debasement um and um and and so it's not the house going up it's the money going down in value right I know um I had a viral clip with with my last interview with Michael sailor where

he talked about land banking and how the wealthy they do they buy up all these homes they don't even live in them and they price the average family out and now you see more and more people not able to afford the home which was once so core to the American dream it's something I've I've struggled with but you write something in your book that I want to touch on because specifically when you're discussing homes um the rising price of assets um if we leverage those assets like a home we add debt our return is even

greater because the asset increases in value while the dollars that we pay back in debt are priced in today dollar today's dollars and with inflation and growth in our incomes due to inflation we pay back the debt tomorrow in dollars that are worth less and so you say housing is a classic example of the leverage you buy a house in the 1970s for $60,000 income Rises mortgage becomes easier to pay while inflation increases the value of the home to 1.5 million in 2018 overall you wrote this process in the world has driven much of the

world out of poverty but what happens if we can't count on a system of growth and inflation anymore so I want to touch on that like a lot of people would say that well without Deb without a mortgage I wouldn't have a house but you you disagree like if our system wasn't based on inflation probably homes would be more affordable is what you're saying yeah so so go back a hundred years go back to go back to when uh when early in this us cycle so people about houses out to their savings um yeah and

uh and they didn't have to work for 50 years to pay off a mortgage they bought it out of their their savings a Sear's home I think in 19 20 something but you could look up at the stat a Sears home delivered to your uh toe lot at that at that time so you could get a packaged home Windows Doors Lumber package roof everything uh Plumbing the entire thing delivered to your uh to your lot for $2,500 it's crazy so every single thing inside that component package of the Home Lumber all of these things also

faced more and more automation more and more value and all of those materials would be way cheaper on a hard money standard so so so now if you add the inflation rate that's made all of those more expensive unnaturally made them more expensive you can see what's H happened so what would life look like in a world where all that $2500 that was at that time got cheaper and cheaper and cheaper and cheaper what would houses look like they would be utility value again but you do like you're saying that this current system has brought

a lot of people out of poverty around the world so so and just like you could say the rise of Rise of China based on the same thing you had this massive un unsustainable debt that looked solvent and it brought people out but that thing is going has to collapse has to be repaid one way or the other so it was so looks it looks good uh good on in a short window but they but what it actually over a Long window or a a longer term window it has to collapse so let me ask

you something because um I know you're in Canada but so so much of American um policies influence the world right and the US dollar is the global Reserve currency for so long we did have a strong middle class and my parents wanted to come here from communist Poland in the 80s and all they looked in terms of America was the quality of life and the opportunity here um but in 1971 was when we went off the gold standard things were still kind like pretty good what when would you say was the inflection or turning point

because when I started to I think for me it was when I went off to college and the great financial crisis hit I saw a sudden change and I entered into the reporting world and I was I was interviewing average Americans who really were afraid about the future lacking hope um feeling like they couldn't afford the cost of living there seemed to be this divide that was that was created that you you talk about populism in the book right people getting frustrated because they no longer look at the top as a source of inspiration that

they feel they could reach it's like they're working harder and harder and actually moving backwards and that breeds that can breed resentment I mean I hate to say this but right now what we're seeing with this this Luigi mangion the the killer of the the CEO there there's like this whole section of of the internet that Praises him as a hero because they hate CEOs they see these they see them as parasites that are taking you know 300 times what the average worker is and that that I used to never see that in society if

you saw someone wealthy and successful you would aspire to it you'd be you know like you you'd admire it you'd want to achieve that too is it like we've turned into people who completely resent anyone who has anything because they have so much and no one thinks it's possible anymore yeah and because it's not based on the free market it's not based on they know it but they don't know it they don't know it and they don't know it and they think that there's a solve from within there and that's what I said you can't

build walls high enough if the world looks like that if you're on if you're on the wealthy side it the world's coming for you right in inside that system it is and so so think about this there's 2750 billionaires in the world they're 63 millionaires in the world and they all can't have a Bitcoin and and they think they're safe from what's Happening as it's getting worse and worse and worse and they they can feel it too right these are I would say predominantly these aren't bad people these are these are people who believe that

um that it was all made by them from them from themselves and they are they're they're smarter better but but they're sitting on top of a system that keeps making that extracts so much from other people to retain their as their assets go up higher and higher they're and they think they're immune from that theft and and they it's not their fault it's a it's a construct of the system that is that is driving this and and if you just go back further to so again it's hard for our minds to grasp these things because

we're gra grasping local maximums of different times and trying to compare our situation to to a different situation and everything else and this is such a this is such a state change that has never existed in humanity before imposing it's like a state change in physics going ice to water right water to ice it's everything is different on the state change and this state change in um in Bitcoin is everything is different it's is imposing the reality I'm describing and it doesn't care about your reality that you that you've lived in it is imposing a

new reality where we are first Times living in a global free market now everybody has to negotiate with that with their own right and it's hard because we've never lived in that and and what you're doing even now this time when I moved here gold in 71 when I moved here what so why did your parents move here and they moved here because the US was more free than other nations so it was more productive but you didn't know nor did I and this is one of the hardest things that I had to kind of

unwind in my thinking is by living in one of the Nations Western Nations that controlled uh currency we were extracting from those others and their plight was because of our game right right it was exactly because of our game that they they lived the the uh the way they did because it wasn't a global free market at that point and and and so so a lot of the plight of people in Africa and South America was because of the system that was that that was created uh there and why would they want to get on

boats and come to the Nations that were extracting of course they would because because they're living in uh crazy poverty and then what ends up happening in in in the US or here is we don't see it we want to ignore it for so long when we know when we can see other nations what what it looks like on on the opposite end of that spectrum because in an exploitative system somebody has to lose for somebody to win um and we were on the winning s uh Winning Side of that equation and we don't see

our own thing until it starts to hurt us and so that's what's happening in the US right now and there's a whole bunch of people in the US that are now starting to realize that they're hurt too by the same process because it's it's it's it's getting to the end of days of the system before it just completely collapses and we saw it with the anger the frustration on both sides um with this election I think it was a referendum on like how many people are just feeling left behind and they just want anyone who

promises that they're going to make their lives easier right um how do they like like how do how how do how do they from A system that must steal more of their energy right yeah go ahead I'll be honest I mean I I'm so grateful that um the universe led me to bitcoin and I obviously had a a curiosity something I had a pain point that resonated with the message and I wanted to learn more but I was one of those people which is why I really relate because in the 2010s uh after my parents

lost everything in the great financial crisis I thought that the solution is tax the wealthy it's the greedy people at the top who are responsible for all this pain and struggling they have enough of the pie we need someone to go in there and I was like a hardcore Bernie supporter I'm ashamed to admit now um you know I I but I thought someone needs to go in and like force them to pay their fair share that's what it was about and so when I hear that cry from people I no longer I don't I

don't look at them and I think oh God you're so stupid you don't understand I just think oh you just you haven't you haven't learned enough to understand what is happening and how and why and you're placing the blame because out of pain out of struggle out of pain and you you want someone to come in and fix it but that's not at the core how it works and to your earlier point about like my parents wanting to come here I share a small anecdote in the book that there was a time where everyone wanted

to get their hands on dollars in Poland but it was illegal like the the there was a special police force that would go to homes and check if you were if you if someone tattled on you um and said that you have dollars and that was a that was a great CME yeah and and because obviously they don't want you to have it was like Capital controls they don't want you to have an escape from the system yeah and and that same thing is happening today and that same thing so so if you said right

now where we are in this cycle you have a couple of the different that's why I don't price Bitcoin in pieces of paper and I never do I don't so you shouldn't take Bitcoin to a piece of paper to then measure prices that's ludicrous it's as it's it's as lud CIS is in pricing in the piece of paper right um be because a currency should price other things and if you if you look at Bitcoin um is pricing other things you can see the economic reality of what I'm describing in the global free market you

can see and and right now you have this this liquidity um dry up and other nations are going through deflationary deflationary spirals um and and US dollar is getting stronger versus uh versus uh those currencies and their debts are denominated in the US so they're getting wiped out they're getting um and it's creating a lack of liquidity in the market and if it goes on for too long the market just capitulates like crazy and those houses and everything else people are having assets inside that system that needs way more liquidity to stay solvent starts to

roll over so you so you have this interesting Dil and and and people are scared of Bitcoin in this example when the next shoe to drop on this is there has to be way more manipulation of money right no matter who's in office no matter what makes no difference okay I want to come to that because I I really um am curious your thoughts on the current state of the world and where where we're headed but first I um one big important thing that I would love for you to expand on is when you say

asset inflation is wage deflation can we zero in on that for a moment because I think for a lot of people like for example some some people argue well my I get a raise every year right wages have gone up incomes have gone up but they have not gone up at the pace of assets like stocks and real estate so I I did a measurement I think it was from 2000 where the average annual rate of the expansion of the money supply measured in M2 is 6.5% homes went up about 4% and I know that's

very Regional there were some areas that went crazy in the US right but it was 4% over that same time period wages went up 2.9% why aren't the um why isn't the growth happening also at the worker level yeah and so what I I don't say asset inflation is I say inflation is wage deflation okay so it's just the other side of the coin so what does inflation mean it means I'm diluting your currency to to and by diluting your currency one thing in economics is wages are sticky meaning you don't recognize the dilution of

your currency is the dilution of your purchasing power and you can easily be fooled that a 2% raise is a good thing but your purchasing power has been diluted way more than that yeah and and because wages are sticky they don't go up as fast as inflation and so if wages are sticky now now but because these these two systems are almost Polar Opposites right if wages are sticky in and you have a neutral money and and that neutral money in Bitcoin allows deflation then wages are sticky on the way down too and so your

B your company has to come to you and and ask you to take less money and so so they they're just totally inverse and that's the rise of the middle class but why why are they last to move is that is it the CLE effect because as the money gets issued at both the Central Bank level and and banks with the multiplier effect and they don't have to have a lot in reserves like it just it goes to investors essentially first it pools in assets before a company like because I think a lot of people

ask this right like well people are good why wouldn't the company invest in the labor and pay if they're making more money and the CEO is able to make $10 million why isn't that shared with the workers so so the um the company is only in business it to service other people and their job is to be the and they're competing against other companies who are constantly trying to provide more value in the free market and so they're not incentive in the free market so let's let's let's use let's let's say um that let's use

Google as an example tomorrow Google says I'm going to give everybody I'm going to Triple everybody's wages and Google pays a lot but let's say somebody else or yeah let's say let's say Costco I'm going to Triple everyone's uh wages the impact of that is prices rise to you and you won't shop at Costco anymore and somebody else will beat Costco because you'll CH you'll change your purchasing power to to the person who gives you the most value so we're we're almost Hypocrites in this process and it's not um and we think and we think

it's everybody else but we are like our purchases power and our and our labor inside the company we're working with it's it's the same thing yeah right in other words how could you want your house to go up but you everything else you're choosing to come down in value yeah sure we choosing to rise in value come down in purchasing price so those two things are two different systems and we can't understand that we're the same thing we're the labor and we're the labor and the purchaser right we're angry that you know when we go

out to eat it's more expensive but we want our house to go up in value but oh wait these workers want increase in minimum wage well they can't have I it's so funny how backwards we get it all and that that whole thing it comes from our own hypocrisy on a system that is that is miswired for us like it's because it's stealing from us and we're confused I I uh sometimes sometimes I go to places even just for lunch that maybe I went to when I was younger and I don't know it's just things

have changed not only has the quality of the food let's say that I'm buying that has definitely changed the sizes of things have changed but also I feel like yes a minimum wage job was never something you could thrive on but it was like a good entry point you could make enough to maybe supplement what you were doing maybe it was education or maybe you had um you were helping your family but it wasn't like now you can't you can't survive on that type of income you need multiple people living in the same home to

afford what once was so easy for one and and I can understand why people would be they don't have a good attitude when they're serving you they don't they don't care because they're having such a hard time how can they express joy and and be more customer service minded when it's so hard today yeah it's moving to nihilism and they just don't care about the world's getting worse and they don't they can't but they don't understand they haven't looked deep enough or they're in so much pain that they think that there's a solve somewhere else

or somebody else's fault and they and and that keeps them from investigating Bitcoin at a deeper level but but and it's their pain that's caus and then they go and listen to experts telling them that they should live that should be the way that they live because an monetary system has to look like that and because it sounds too confusing um and and you people use all these big terms QE liquidity this and this program this program this program and it's so confusing that they don't want it's it they can't ask the question because they

feel like they're not smart enough to know the question that's actually why I start the other side because if you're trying to explain the rub Goldberg machine that is just a system in with checks and balances to keep the system solvent that that has to have more and more manipulation it's almost impossible to chase that down to the sand because there's always another thing there's always a hidden off balance sheet money that's that's stolen there's always the extra programs that are funded there's always growth of government in outside that system and trying to chase it

in that I know I know it because I've chased it all down but trying to explain it from that system is ludicrous and if you start with the natural state of the free market is deflation and if somebody go understands that then they can start to see the generation the multi-generational the the the greatest lie we've ever been told wow okay this is really interesting because yeah I usually start the conversation with inflation um the last topic I just really want to explore with you is where we're going today um and the reason I really

want to hear your take is because I feel like right now bitcoiners are even bifurcating into two teams one that is really excited about the government potentially embracing Bitcoin and the Strategic reserve and others who see that as a great threat to the freedom technology aspect of Bitcoin and Bitcoin being more of a medium of exchange than just a store of value and a lot of people I think are uh so excited about this election and the idea of cutting government spending and reforming some things uh but to your earlier points about how this current

system is so fundamentally opposed to a deflationary world they're going to have to keep printing money money they're going to probably have to do things that concentrate power what is your take on the current state of the world yeah and you and I've talked about this be before or briefly and and I'm on I I simplify the whole thing I I try to simplify things and I say if if Bitcoin fails as a medium of exchange it will fail as a Curren as a store of value um just as a simple um and here's the

thing I know Bitcoin will not fail as a medium exchange and so how I look at and and I can totally appreciate um somebody wanting to attract more Bitcoin and measure in in the US dollar and and leverage against that and and I and I realize most people pricing in Bitcoin or pricing in the US dollar are actually through that action because they're not holding their own Bitcoin they're um they're not spending in Bitcoin they're hold they're holding it as a store of value only and they're pricing it in the US dollar they're essentially a

Trader right and one day they're going to sell their Bitcoin for something else into uh um in in the U measured in US Dollars and and and that's okay it's going to happen anyways but these two systems are incompatible right we've already determined the natural state of the free market is deflation and the us-based system is inflationary so the inflationary system has to centralize whether it attracts more Bitcoin on its balance sheet or in Black Rock's balance sheet or in micro strategy or anything else it has to rely on inflation and over time if it

if it centralizes more and more and more and and people let's just use again two opposite ends of the spectrum and then we can um we don't have to yell at different people inside and but let's just go from from first principles if you have an inil AR system against productivity growth in the world it has to eventually manipulate money it has to centralize people won't see it and if you're if you're in the derivative instrument instead of Bitcoin if you have your money on an exchange or somebody else's um uh uh platform it is

not your Bitcoin it is somebody else's Bitcoin and it will likely be centralized and priced on you at some point or that or that company will probably get liquidated at some point because the natural state of the free market is deflation and and and because you are inside that system and giving your energy to the system you will probably underestimate that risk similar to the example I gave before if you were um in the in the bank that that gave you a return by leveraging your bit your gold you would underestimate that risk it has

to centralize because it's based on a based on a structure that has to centralize but does the centralization mean like confiscation like if you leave if you trust your coins to an exchange or you purchase through an ETF issuer that the government eventually will be incentivized to just say oh this is my domain at at some point let's say it just at some point on that because it has to continue to centralize and if you continued to do that and if every let's just say everyone continued to do that then then Bitcoin layer one would

be suppressed just like gold was suppressed by Layer Two because we wouldn't care about Bitcoin layer one we would care about the derivative instrument because that's what we would be spending in and we would we would be we would forget the Innovation that this was decentralized and secure and we would try the centralized currency on top and then you would play games from that centralized currency just like you play games in Gold you would you would you would write derivatives contracts and nobody would see the underlied S because they wouldn't care that could still have

a massive rise in Bitcoin in if you're measuring in US Dollars it could still have a staggering rise in bit Bitcoin um as as a US dollar as a US goes and and tries to gain more of it and other countries G play game theory but it ends in a place that that is centralizing so I know that this was more of a a silly off-hand comment by President Trump but when he said that oh we could pay off our debt using Bitcoin do you see that as possible like to just level I mean clear

our balance sheet of the of the debt that we owe because this is is the best appreciating asset and strong that means selling the Bitcoin at some point yeah right and then what would that do right so so so you could you could have your balance sheet that is more favorably impacted but but likely that inflationary monetary system has to drive more and more inflation the US dollar is an inflationary debt based system so why would you do that instead of just printing more money so do you think that we will get a strategic Bitcoin

reserve and that the government has some sort of um plan in place to create a Bitcoin backed Dollar in the same way that we had the Petra dollar which countries are now moving away from absolutely so think do I think that that's going to happen absolutely I think that's going to happen somebody has to do that there's a there's going to be an nation state that does that um and and I suspect that because remember Bitcoin is imposing this this discipline so the countries that go first um just like if you went first in in

Bitcoin your money hasn't been devalued you have more purchasing power it goes further same thing for any government buying um the they so they can provide more services to their citizens over time if they go if they go early same for any County same for any state same for any uh country same for El Salvador same for every person you don't have to wait for your country to do this it's an open monetary networked secured by energy and you just have to move your time and you have the benefit so of course of course I

suspect Trump is going to do this early in his presidency because if he doesn't then it's going to be a show for his presidency because you're you're going to have you're you're going to have to print so much money or have a deflationary spiral um and and this is a way to essentially print the money into something that that that drives prosperity for the for US citizens and if he doesn't some other countries will is that because you're saying I mean right now things appear great on paper the stock market's doing great right I mean

no recession we soft landed but actually there's something around the corner um and those misallocated resources are going to come due and uh and on the other side of it we do need to strengthen our balance sheet with something like Bitcoin so the lack of liquidity when I say liquidity lack of printing money or interest rates way lower interest rates that drive of way a massive uh uh funding more debt giant massive debts so when when Powell just said he's not going to decrease interest rates as fast right now yeah people can so you have

a liquidity tightening in the market and people can feel that liquidity tightening in the market it will roll over and cause a capitulation everywhere stock prices will keep will US dollar will go stronger a lot stronger um or um uh other countries other other assets will sell off like crazy until there's a change in we're going to we're going to create uh liquidity that liquidity for setting up for next year in Bitcoin if you want to measure in US dollars two things are going to happen you're going to have um right now you're facing this

liquidity uh crunch and at some point Like Larry leopard's new book the big print might be launched just in time so you can read it before the big print um my gosh and so so so relative to that money being debased at a crazy rate Bitcoin will will go through the roof and and because it's uh because it's also the only non- counterparty risk asset in the world to the Tethered to the other other system and you there's going to be a supply crunch in it you could see some fireworks next year in this but

but by us printing into that they gain the benefit of the rise right and so if they don't print into that they don't G gain the uh benefit of the r uh the rise and so uh so I suspect that is going to happen I suspect that's going to happen early in Trump's term again if I'm I can't say for sure but if I'm measuring probabilities it it seems like the natural thing that they have they have to do um and and if they don't this is just Game Theory at a nation state level now

and uh and somebody's going to do this wow so we are really early the ones of us who are in it early um I just saw the other day I think it's a company that ego death invests in they tweeted that they now have 30 Bitcoin which doesn't sound like a lot but 30 Bitcoin especially if you fast forward out you know 10 20 years it's like companies are going to be announcing that they bought you know 0.02 Bitcoin we have we have companies that are adding Bitcoin to their balance sheet every single month that

are that they're they're growing so fast they're growing uh they're so profitable that they're adding Bitcoin to the balance sheet every month and and and it's staggering I can't believe we get to do this in um in and most people don't even see it yeah yeah I mean to be able to have a whole Bitcoin it's going to be I think that's going to be extremely rare someday um okay I'm going to stop recording thank you Jeff if I do release this I I feel like this might be might be useful to people so I'm

inclined to you want me to release it right yeah up to you your your call thank you so much for checking out this episode of coin stories make sure you're subscribed to the show and hit that notifications button so you never miss any new content also check out our weekly free news letter at the newblock Dos substack docomo for entertainment and educational purposes only nothing should constitute as investment advice and you should always do your own research I'm always open to feedback and guest suggestions so please feel free to reach out at info talking bitcoin.com

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