Guy's Take_092 - Inflation Does One Thing

October 15, 2024 01:01:54
Guy's Take_092 - Inflation Does One Thing
Bitcoin Audible
Guy's Take_092 - Inflation Does One Thing

Oct 15 2024 | 01:01:54

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Hosted By

Guy Swann

Show Notes

You've likely been fed the narrative that inflation stimulates spending, benefits the economy, and that government expenditures have a profound 'multiplier effect.' This is often accompanied by an oversimplified explanation of how a money printer somehow magically boosts economic activity. These claims are just a few of the many justifications tied to the inevitable consequences of counterfeiting by government. However, the truth is that inflation has a singular, fundamental effect that's surprisingly straightforward to grasp. Beneath the surface, all the touted benefits of inflation crumble, revealing a far more insidious reality. It's time to cut through the noise and set the record straight, which is why I think it's time for a Guy's Take episode.

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Episode Transcript

[00:00:00] You have undoubtedly heard that inflation will boost spending. That sure it hurts, but it's good for the economy that government spending has a multiplier effect. That is followed by the most elementary school explanation of just people using money I've ever heard. And these aren't the only excuses. There are many more that come tied to the inescapable pains of government counterfeiting, but none of it is true in any meaningful sense because inflation does one thing and only one thing at a fundamental level, and it's actually really easy to understand. [00:00:42] So I think it's time for a guy's take episode the best in bitcoin made audible. I am Guy Swan, and this is bitcoin audible. [00:01:10] What is up, guys? Welcome back to bitcoin Audible. I am Guy Swan, the guy who has read more about bitcoin than anybody else you know. And I've got proof of work. If you've seen my show, if you've listened to my audiobooks, I think it's pretty clear that's who I am. That's me, Guy Swan. Welcome back to bitcoin Audible. Don't forget to check out. This show has been brought to you by. I mean, we're not like. We're kind of like sort of not brought to you by, but I'm going to give them a shout out anyway because coinkite and the cold card hardware wallet is where it's at. My discount code still works, so don't forget about it. And it's also a great way to support the show. And also, I've got a number of additional links just for some affiliates from a bunch of services that I know very well, that I have used extensively myself, and or just has a team of people that I know them very well and I trust them. It's basically just kind of a rundown of a handful of different services that I think are great for anybody who's trying to find like, oh, I need to do this in bitcoin. I need to. Where do I buy bitcoin? Go to Swan or river? It's just. It's just easy. If you want a bitcoin, want to be able to put bitcoin on a card really quick. Fold if you need a hardware wallet, just coinkite and the cold card or the bit box or honestly, actually, the tap signer. The tap signer is such a great tool that I think just not needing power or a screen is really, really underrated. That's also by coinkite and a handful of other really great things that I just thought were useful. And I was like, this would be a really good less list just to have standard on every episode. So if anybody was looking for something, you can probably find it, like getting into bitcoin. You can probably just find it right down in the description of this episode. And a lot of. A lot of this is actually preparation for getting the website together. Just because I know people are going to want a place to go to get information, you know, they're trying to learn about bitcoin. A lot of people, I feel like we're really going to be getting into a very exciting time, but also necessarily a very, very noisy time in bitcoin. The price is going to skyrocket. There's going to be a whole bunch of new gurus who are all telling you how you should have done bitcoin and how. How they're the ones who know and understand everything, and they're going to be giving you the worst possible advice. They're just there to capitalize on it, and they will be gone. The second it's not shooting up to $250,000. When it crashes back down to a hundred, uh, they'll be out of there. So I'm trying to preempt this and get a good list of resources to direct people to so that they just don't get lost, because it's so easy to get lost. And I don't want to seem arrogant or whatever, but I've been here for 13 years. I've had a podcast for half of that, and it's been literally my job to know as much about this space and the companies and the people as I can. If you haven't heard me recommend it, it probably means stay away from it until you hear me talk about it. Or if you want to ask me, I am accessible in a lot of different ways, and I try to answer as many questions as possible. I will look into it if I think it's worth looking into. If not, I'll just tell you, stay away from it. So that's just my preemptive message to the new people that are inevitably going to be finding bitcoin again in the coming days. [00:04:34] So with that, it's time to get into a guy's take episode inflation. [00:04:42] There is so much nonsense around the ideas of inflation, and it is shocking how simple it actually is. There's a reason it's confusing. The reason it's confusing is because it's really good to have something that is very simply understood as bad for one person and good for another to seem like it's murky to seem like it's a gray area. The idea that printing money is good for the economy is flatly and absolutely absurd. There is no functional that is absolutely impossible. And it is true for the exact same reason that if I wrote down on a napkin that we have infinite wealth, that we are rich and we can afford anything, and then gave you the napkin, would you be any richer? Would we actually have any more wealth? No, of course not. Money isn't wealth. And I have a two sats video on that, which actually, I guess I'll go ahead and put in the show notes. We'll probably need two of my two sats videos in the show notes to kind of get a foundational. One will be the give a shit matrix, and the other will be money is not real wealth. Money is an accounting system. It's a record keeping system. And one thing happens when you defraud the record keeping system by making a whole bunch of units that came out of nowhere. Nobody eats money. Nobody uses money for anything. It is simply a system of trade. It is a proxy for real resources. The money itself is not a resource. It's a record keeping system. And one of the ways that you can actually know this and understand this is not only just the analogy that I give in the two sats video for money is not real wealth, but just think about everything that became money that did have some other use case that did, like gold. Gold actually had functional market use cases. But what happened when it became money? Everybody stopped using it for those things because it was way more valuable as a record keeping system. And instead, it all got made into coins and bars, which couldn't be used for any of the things that gold is used for in a marketing, in an actual utility sense. And they put it down in a bunch of vaults. They trapped it in a vault, and they locked it away. Why? Because it was a ledger that could not be tampered with. It shifted from a market good to a record keeping system, and literally priced out all of its uses in the market, except for the flaunting of wealth, which is just reinforced by the fact that it's money. But gold literally stopped being used in tons of different utilities that it was used for because it became money. [00:07:45] And then when money finally became fiat paper, all that actually happened was that it became a worse record keeping system. It no longer keeps track of value and is able to transmit value across long periods of time. It just bleeds out, it degrades, it rots. You might as well just keep a bunch of wood in your garage. [00:08:13] In fact, I think probably if you took good care of the wood, like just two by fours, if you took good care of it and you actually kept it out of the weather, it would probably degrade in value slower than our money does. Two x four s are pretty expensive today. [00:08:31] So inflation, there's a lot of different things to clear up about inflation before we get into this. So the first thing is to understand the difference between price inflation. And I know for anybody who's listening to the show, you've heard this before, but it is important, and you can't have it beaten into your head too many times. The difference between monetary inflation and price inflation, which is a simple way of saying the difference between prices going up and somebody printing money. Prices going up usually follows someone printing money, but it doesn't have to. For instance, there have been trillion, there's like been $30 trillion of newly issued debt since the nineties. But a gigabyte of hard drive space is still cheaper, vastly cheaper today than it was in the nineties, including in today's dollars. Why is that? Because technological growth has vastly outpaced the expansion of the money supply. So tech continues to get cheaper at a far faster rate than money is able to inflate. And then money is able to lose value, thanks to the printing machine. And this same thing goes for all goods, all services, everything across the economy. If the economy gets 5% more productive, on average across the board, and 5% of the money supply is also printed, well, then prices should all else held equal, be almost unchanged. But it means that things that were supposed to get 5% cheaper for us, things that were supposed to be more affordable, no longer are. So you can have lots and lots of money printing in which there is no actual price inflation, in which prices don't actually go up. But it does not mean that money printing has not had the effect that money printing does. And when I say inflation does one thing, when I named this episode, I mean inflation, the money printing kind, price inflation is just a consequence. Prices going up is just a downstream effect of printing money. So that's the first thing. Prices going up is not inflation. And I think it was purposefully conflated, because it's really easy to just point at the price of pop tarts and be like, oh, look, they're pretty much the same. There was no inflation even after you printed $4 trillion out of thin air and handed it to a bunch of banks and CEO's, and through corporate subsidies and government contracts. And of course, two completely pointless, arbitrary wars. So when I say inflation does one thing, I mean money printing does one thing, and it is only one thing. [00:11:25] Now, the other major piece that's critical to understand is the difference between a trade and a not trade. And I use that terminology or use that wording because there is only one sort of exchange that is a net positive for both parties, and everything else is a loss for one party and a gain for another. It's the difference between being in competition between a conflict between you and another person over a resource, and the exchange of net positive resources in both for both parties. [00:12:06] So a trade is when I have something that you want and you have something that I want that you do not need or want very badly, or at least not as badly as the thing that I have. And same goes for me. So for a simple example, I have two lawnmowers and you have two weed eaters. I trade you a lawnmower for a weed eater, and now both of us have more than we had. You could not mow the open large area of your yard very well, and I could not do any edging. Now, simply by trade, we both can do both of those jobs. Each one of us has a net addition of value. And a voluntary trade is axiomatically this way because a trade doesn't happen otherwise. And it doesn't matter how much you say, oh, well, you regret it later, or they didn't understand there's new information, or whatever it is. None of that matters because this is axiomatic to the idea of a voluntary trade. To begin with. Everything else is just kind of noise and individual measurements and situations around the fundamental reality. It's like, say, it's like the difference between saying, you know, if you make something hotter, it's going to expand, and if you make something colder, it's going to contract. Well, there's plenty of different, like, edge cases where something could change immediately after you make it hot or the container has changed all of that stuff. But none of it negates the fundamental reality of if you make something hotter, it will expand. If you make something colder, it will contract. They're simply unique or very specific conditions in which it's a little murky or you have to account for something, but the fundamental reality is the same. This goes for trade. So if you regret it later, doesn't matter. The voluntary trade only occurred because at the time of the trade, you thought you were getting more value, and they thought they were getting more value. If they defraud you like the other person had a weed eater that they said worked and it didn't work, well, that's simply fraud. That's not actually a trade. That is simply him taking your lawnmower in exchange for a lie. It's just a different form of being a thief. But again, none of this changes the fundamental nature of a trade. A trade is the only exchange where both parties explicitly benefit. And you always know that to be true. That is the default, because otherwise a trade doesn't happen. You don't have to give away your lawnmower, and as soon as you have to, it's not a voluntary trade anymore. It's just theft, or coercion, or fraud, or whatever other name you want to give it, but it's not a voluntary trade. [00:15:13] And the other option, the conflict option, the fighting over scarce resources option, is any form of theft, which includes fraud. [00:15:24] It includes the actual destruction of the resources, which wouldn't even be. Wouldn't even be theft. I guess it's still kind of theft. It's a theft from you, but it's not a theft benefit to them. It's just, you know, them destroying your stuff so that you can't use it. There's taxation, which is just stealing in a different form, and then there is counterfeiting, which is just theft through the defrauding of the record keeping system. So going back to the idea that money is a record keeping system, it's a system of reciprocal altruism, is that when you provide me with a whole bunch of benefit, and I don't have anything explicitly to give you, or nobody else has anything explicitly of value to give you in trade, well, what you do is you give them a favor receipt. You give them a receipt that says that's basically a record of this amount of value was given to me on at this time. [00:16:20] And then the person who doesn't know what to trade it for right now and wants to plan for the future and wants to be able to use up value at some later date, because they assume they will want something valuable, but they have nothing that they want to use up right now. They save the favor receipts. They trust that society will give them back that value, and thus they stop consuming. They save those receipts and they say at a later date, when society is wealthier or society presents me with something that I actually want or need, only then will I redeem my favors owed to me. And so they take their favor receipts and they go buy something. Again, involuntary trade. And it happens to be that the other person needs the receipts. They want to hold value into the future more than they want. Whatever that other thing is, whether it's wood, because they know it's just going to rot and they don't want to keep it in their garage, or it's a house, because they already own one and they don't, they don't need another one, or they want to rent to save money, or it's a weed eater, because they already have one and they don't need the other. And they don't really need a mower right now either. So they're just going to hold on to the receipts, the favor receipts at a later until at a later date. Maybe they need to replace their lump, but their weed eater, because their weed eater is going to break eventually. Or maybe they come up with an even better idea and something even more valuable comes along because people are ingenious and we innovate and we're creating new things all the time. Maybe there's something else that they'll want to trade for, but they're going to wait. So what do they do? They trade it for the receipts. They trade it for the money. That is what money does. And trade is the only option. Voluntary trade is the only option for creating a net increase in value for both parties involved in the trade. [00:18:11] Everything else is just a form of theft. [00:18:15] Counterfeiting is just a form of defrauding the favor receipts instead of just straight up stealing the stuff. So when you earn a bunch of money by working for me and then you take it to someone else, what the other person is doing is they're saying that as a society, we use this receipt system, we use this record keeping system. And I'm going to trust that the record keeping system is proof that you did something for someone else. [00:18:48] And because of that, society stays balanced. People are not able to take more resources out of the pool of stuff that we make, that they did not put into the pool of stuff that we make. So if you put in ten sandwiches worth of value into the pool of economic resources, you can't take out eleven. And the only time that you can take out eleven is if somebody explicitly says, here, you can borrow one of my sandwiches and here is the value, here's the price that I am willing to do that at counterfeiting money, printing new money, no matter what form it comes in, no matter who does it, is simply a means of turning a trade into a theft. It is defrauding the favor receipts. So that when you accept, if I print money and go buy something from you, you are making the implied assumption that I somehow earned that money that I contributed to society, the exact amount of value that I then took from you. But what if I just printed it? What if I counterfeited the notes? Well, it means that I get to take eleven sandwiches out of society and I don't put anything back again. That is all it does. It is simply turned what used to be a net value gain trade from both parties into one where I got your stuff and you actually got nothing. But if nobody can actually discern that that money is counterfeit, what happens is it ends up that I steal from society as a whole instead of you specifically, because then you take that tainted money and you go buy something from another person, and they don't know that it's tainted money that actually was never earned, et cetera, et cetera. And it continues to go down that line. And eventually what happens is that the price of everything is skewed just a little bit. There's noise put into the market, there's misinformation in our ability to communicate value to each other, and the result is one thing and one thing only. [00:21:02] It makes people poorer. [00:21:05] That is it. It makes society poorer. [00:21:10] That is all it does. [00:21:13] It replaces what once was a positive trade for fraud. And it doesn't matter who does it. It doesn't matter where it comes from. The idea that government is somehow some magical Harry Potter institution that can just win guardium Leviosa a bunch of shit into existence is absurd. It's stupid, it's childish, it is dumber than elementary school excuses for why we are supposed to steal from each other from time to time. It is only is, and can only ever be a fraudulent transaction where we used to have a valid one, one where a trade actually occurred. Now, undoubtedly you have heard the excuse that it boosts spending or it's good for the economy. And it usually follows with some, which, when you really think about it, absolutely ridiculous explanation of something like, well, when the government spends money to pay for, to pay this business or do this thing, then they're going to spend it on something or buy stuff, and that company's going to then get it, and then they're going to pay your salary, and then you're going to make that money and you're going to spend it on something, et cetera, et cetera, all down the line, and it's going to have a money multiplier effect, and it's gonna make so much additional value down the line. And it all starts from the, the benevolent choice of the government to print money out of thin air and consume a bunch of resources for its goals instead of ours. Well, let me try to wrap around your head how stupid that explanation is. Now, for anybody who's hearing this for the first time, I don't want you to take offense. I don't want you to feel stupid for having believed that. We all believed it. It's fine. It's when it's given as the default answer and you know, you get a hundred on the test. If that's the bubble that you fill in in the multiple choice question, well, then we just walk away from it believing that nonsense. It's not, it is not a personal attack on you. It is totally okay. I believed that stupid crap. Everybody believed that stupid crap. All you have to do is corrected when you hear something that obviously counters a statement. That's absurd. And if you think about it, if you just carry this with you for just a little bit and you think about it for a little while, you will realize how ridiculous that explanation is. Here's how ridiculous the explanation is. That's the only thing money does. [00:23:54] What do I mean by that? There's no other scenario in which someone spending money doesn't result in that. The only job of money is to be a receipt for things that have been earned in the past, to be used in the future. If I. If I spend money right now to a business, what are they going to do? They're going to buy goods. They're going to pay salaries to their workers. Those people are going to buy stuff or trade with their neighbors, and then on and on and on and on. That's the only thing that money does. Every dollar that moves through the economy goes through that exact same interaction and through that process, and there is no other process. What happens to money after it is counterfeited has absolutely nothing to do with the problem of the counterfeiter. What happens when someone prints money out of thin air to buy up a bunch of resources out of society, consume them so that no else can have them, even though they contributed nothing at all, is during the course of this person earned money and did a voluntary trade in which value was a net positive. Then they traded with someone with a value that was net positive, and then they traded with someone with a value that was net positive. And then randomly, someone counterfeited a bunch of money, took a whole bunch of stuff in which they contributed nothing at all, and then that money went to a voluntary trade in which there was a net positive, et cetera, et cetera, et cetera. All that would have happened was a bunch of voluntary trades in which we exchanged with each other things that we all thought was a worthwhile trade, an exchange that was going to create more value for me and more value for you at the same time. And then in place of that, we have an institution now that has counterfeited trillions of dollars worth, is important to note, and then just destroyed, contributed nothing at all, and just destroyed an absurd and incomprehensible amount of value out of the economy, taken it out and used it almost universally to just make a bunch of bombs and blow shit up somewhere else, somewhere out in the Middle east. But that got put in the mixed we had voluntary trades, then somebody threw in a few trillion dollars worth of fraud, and then we had a bunch of voluntary trades again to then claim that the counterfeiting was some sort of net benefit, because afterward it turned back into actually useful trades. And to literally just describe what money does as if it's some revelation or it's only what happens after you print a bunch of money out of thin air is just beyond ridiculous. Now let me give you an example. Let me, let me get. Analogies are very prudent here, because it's very easy to confuse the idea of money as a resource or money as value in and of itself, because we're so used to relating to it that way on a personal level. So this is like saying, let's imagine that we all have a pool, and this is this pool of water. This tank of water, whatever it is, is our lifeblood. It is our most valuable and most fundamental resource. And we all know that there is this natural process of water evaporating into the atmosphere, clouds forming and it raining. And this is our only way to get water, is that we collect it while it rains. So everything is about getting more efficient and more targeted, about how to store about to safely and cleanly collect and store water. And it takes an enormous amount of work and enormous amount of time. There's droughts, there's, you know, terrible seasons, there's disasters. Our tank blows open, the pool cracks, whatever. Now imagine the government comes in and just takes a bathtub's worth of water out of your tank and puts it into their massive, massive tank. Then a whole bunch of bankers and corporations get to just kind of like pick out, pick up out of at will. And they go around and they take a big giant bathtub's worth of water out of everybody's tanks and they put it in the big giant tank, and a whole bunch of corporations that already have massive tanks just get to feed off of this one just as much as they want. And then when you say, wait, dude, what the. What the f, man, why'd you take my water? [00:28:42] Their explanation for why this is good for you is that, don't worry, man. Let me tell you about the water cycle. What's going to happen is water is going to evaporate up out of our tanks and go up into the clouds, and then it's going to rain, and some of it's going to come back down into your tank, and then you're going to end up with more water. Because we've stimulated the water cycle. We call it the government water multiplier. [00:29:12] That's it. That's what they explained. And all you have to do to know that it's actually not good for the economy and that it is, in fact, theft, is to go do it yourself, go counterfeit a billion dollars. [00:29:29] What will the government do? The simplest explanation for monetary inflation, for money printing is it is a way to tax you 10% more without actually taxing you. And it makes us hate each other. [00:29:43] It kills our available time. It makes our grocery bills go from $200 to $350, even though we're buying the same stuff. And in fact, it seems like a couple of these boxes has fewer cookies, and the steak seems to get a lot smaller after I cook it. The quality of everything has degraded. This is a natural process. It's referred to more generally as shrinkflation, but it's a natural process of things being lower in quality, because when people relate to things with a nominal price, they do not understand and they do not feel when the money loses value, what they think is that things are becoming more expensive. But what's really happening is that their money is bleeding out their favor. Receipts are being stolen from, they're being defrauded. But instead, what people see is evil businesses raising prices on them. And so the interesting dynamic here is that an honest business that keeps a set margin and actually keeps their product the same, and actually has the integrity to provide the exact same product and put push the exact same costs and the exact same margins forward to their customer is the first one, is the one that will actually raise their rates, will raise their prices by the amount that the new money printing would entail. Their costs go up. And so they raise their prices in order to keep everything robust and have the exact same system, the exact same quality ingredients, the exact same quality of processes. People hate them for it. They get furious about it. So what happens? Well, if you keep your nominal price the same and you just take out the actual, the real oils and you put in soy oil, you take out the good fats and you put in oxidized fats, you take out the real flavoring and you just order some chemicals from Monsanto that artificially create the same taste. You take out the actual fruit and then you put in a bunch of pectin and emulsifiers and just kind of some grain fillers, top it off with a literal dye and another batch of Monsanto chemicals. Well, your product now costs half as much to make because it's no longer real food, but it still tastes pretty similar. And you can just add a little bit extra sugar in it in case it's a little bland or doesn't quite have the exact same base as it used to, or you can cover it up by just making it sweeter. Their price stays the same and importantly, they sell you the product as if it hasn't changed and they still stick all over their packaging, natural flavors, when in reality there's no actual food left in the product. What happens to the consumer is that it appears as if that company is the one with integrity. They are the ones that has kept the price the same, which is the weight of that cost for the consumer, whereas this other one has jacked up their prices. What a bunch of evil, greedy monsters. When in reality, the one who raised their price kept giving you a quality product, and the one who kept their price the same lied to you about their product. They're selling the same thing in the same packaging and they keep making it crappier. They keep degrading the ingredients, they keep degrading the processes in order to make it cheaper and cheaper and cheaper. And this has happened for 40, 50 years. It is why we are shock full of chronic diseases. It is why we all eat crap. It is why fast food is full of awful oils. It is why we have a cancer epidemic. It is why we have more chronic disease than any society ever in the history of the world. It's why we are so unbelievably unhealthy and overweight. Our food has rapidly degraded over a period of 40 to 50 years, every single year, continuously, until we have gotten to the point where you can pick up your average thing off of a shelf. And there are very, very few ingredients that are actual food ingredients. And yes, this is a natural and known consequence of continuous money printing. And here's actually another really important historical fact. [00:34:20] There has never been a money, a fiat money, that has been continuously debased over a period of 5000 years in which it did not destroy the society. [00:34:32] That's the, there's, there is. The only end result is that the money dies and society has to reset. So not only does it quote unquote encourage spending and is good for the economy, it's one of the most universal, most uncontested record for destroying economies as almost anything outside of just outright military conquer, just bombing and stabbing and killing the crap out of a country. I think literal mass death and murder is the only thing that beats inflation. [00:35:10] So when they say it is good for the economy, the only thing that they mean, and you'll notice because it's the exact same thing that they point to, the only thing they mean is it's good for their economy. [00:35:25] It's good for they can hire more workers for whatever the hell they wanted to do or to build more bombs because that's what they wanted, not what you wanted. I mean, did you voluntarily go pay for a bomb? Would you, would you give up your lawnmower to make a bomb so that you go kill people? I doubt it. But your lawnmower might be twice as expensive, which means that money that you had saved up to buy a lawnmower now won't buy you one. You probably did lose one in order to go bomb people, to go kill people in Lebanon or Yemen or Israel or Gaza, wherever it is, doesn't matter. Our money pays for all of it. We funded both sides of damn near every war for a very, very long time. It is a straight racket. And don't take my word for it. There's an enormous amount of people in the military, especially high up in the military, who have said the exact same thing. All they are doing is protecting corporate interests overseas. So going back to our water analogy, government says it's good for the economy because they get to point to how the corporation that is funneling money out of that giant water tank was able to buy more or they were able to grow because they got debt that was so stupidly cheap. It's almost comical that they got like a 1% interest while you're paying 24% on your credit card. 1%. They could just take out the loan and just buy anything, just sit on it, and three years later they'd be able to pay it off and they would make more than 1% on basically anything that is even slightly scarce and then pay off the loan by just taking out another loan on the new value of the thing. They just buy houses. That's why Blackrock just buys houses like crazy. They own unbelievable amount of the entire pool of real estate. Why? Because they can get it at like 3% and they can get it with funds that don't exist, that nobody gave to them to lend out to actually make a risk on, and nobody would ever do it at 3%. Think about it, a lawnmower is $3,000. I looked it up. They're stupid expensive today. So think about this. What happens when someone is taking out a loan in order to buy something is they are literally removing these resources, they are moving these goods, removing these goods out of the economic pool of resources for their consumption and these corporate entities, because the banks themselves have the permission to invent money to counterfeit money out of thin air. Well then who cares what the interest rate is? If I can just make money out of thin air, well I can just do it for 1%, 2%, because now I'm just making 2%. And then when I give it to a whole bunch of corporations, well what are they going to do? Well they're just going to turn around and buy houses. They're just going to buy anything that will make more than 2%. It doesn't matter if it's actually demolishing value, doesn't matter if it's actually ruining goods in the actual economy. So going back to our idea of the idea of a lawnmower, this is just the consumption of resources. So it doesn't matter that it's a house or a lawnmower, it's the same 3% per year. [00:38:42] Lending out means a lawnmower is worth $90 for renting for an entire year and or $7.50 per month. Would you give up your lawnmower, not have your lawnmower for $7 a month? Would you consider that a positive investment and a good way to lose the value of your lawn mower? And of course now you have to figure out a different way to cut your lawn or you have to hire somebody, which I suspect will cost more than $7.50 a month. And I bet that after three years of doing this, you're going to have, you know, a $1500 loss in the actual value of the mower as well as something broken by then. In fact, if you rent it out, it's even more likely to be broken than if you were just using your, using it yourself. That is what 3% interest means. [00:39:37] And a lot of these corporate entities, a lot of these banks are getting 0%, 1%. It is the equivalent of taking resources out of the economy that you need, that we need to live to work day to day and it being, and us being priced out of the market or having to rent something that we would have otherwise owned. The money printer is why corporations and banks are utterly massive. It is why they are the center of society. They never would be otherwise. It is why we rent everything from the counterfeit class and nobody has any savings and nobody has any time. And even as technology gets better and better, all it does is make things go faster and faster and everything is still too hard and nobody gets a break. [00:40:34] It is all because we print $6 trillion. That is a million million. I do not think people, that you just, there is no comprehension there to understand how much value is being eviscerated out of society, how much value we would be able to keep if it were not for that. We are literally paying 30, 40, upwards of 50% in actual taxes on the VaLUE that we have available to US. I think it's Milton Friedman. Milton Friedman or Hayek. [00:41:13] I think it was MilTon FRiEdMAN that said the balance, the budget is always balanced. There's no such thing as an unbalanced budget because the government always uses up the resources directly. Stealing the money from people is just the transparent way to do it. And inflating the money supply is just the quiet way to do it. It's just the way that makes it look like they're not doing anything. And there's such thing as a free lunch when really the exact same thing happened, you just lost that amount of resources. When the government goes into, when the government has $4 trillion in tax receipts and it goes into debt, 2 trillion more dollars, you just lost $6 trillion in value, 4 trillion was taxed, 2 trillion was just stolen through fraudulent money receipts. But that is how much left the society that was pushed from the middle class and the poor up to the corporate, banking and political class. [00:42:08] Inflation does one thing, it just makes people poor. Now going back to the idea that it encourages spending and it's good for the economy, which outside of the comically ridiculous, oh, you know, it will, it will rise up, it will evaporate out of our tanks and then it will go into the clouds and it will pour back down into your tank and therefore you'll have more water in the end, ignoring that ridiculous argument, we'll go to the other ridiculous argument, that because it's bleeding out your savings or it has made it unaffordable to do something that used to be affordable, that it encourages spending. [00:42:49] Oh man, this one's stupid. And it's also, I'll give you the easy example is that, you know, let's say you have a store and somebody comes with a rock and they break your window, and now you have to go buy a new window, and now the window maker has more funds to go buy. And, you know, here's the typical excuse. Oh, the water evaporates and then it rains again somewhere else. And this is good because it encourages spending. Now you had to go buy something. Well, do you feel better off that you had savings or that you had money you were going to spend on making your store better? And now you just lost a window that you already had, like you had ac, you know, and it was closed. It was like your, your business was efficient and you had a nice window that looked good and was useful and served its purpose, and now it was destroyed by somebody and you had to replace it. And in addition, money went to window making resources that was completely artificial. We didn't need more windows. We had perfectly good windows until some asshole came by with a rock and destroyed yours. This is literally the argument that society got better because we destroyed something. [00:44:08] This is even worse than theft. Like if somebody stole your window, at least the window will still possibly be like, go to actually doing something useful. Maybe they put the window in their house. This is going back to our earlier example of rather than stealing your lawn mower, they just set it on fire. This is so much worse than just defrauding somebody or stealing from them. You flatly just destroyed resources for no reason and forced people to do work, to spend resources, to take what was there for their family's security that was going to be used for something in the future and waste it to get back to zero, to recover the things that they lost today, that it's not encouraging spending. It just means you destroyed something. That's it. It's the only thing that means you made a situation far worse for some. The society is us, man. Society is us. If you make somebody poorer and you destroy their savings and you make their, their situation more fragile, and you make them work to achieve something that they had already achieved, all you've done is called damage. You've caused damage and you've misallocated resources to window making when it actually should have gone to, you know, the store owners, kids, braces or something, something that they were going to spend it on, something that actually would have represented a trade of positive value rather than the destruction of a window. And if you think that that's a silly example, that's literally the example they use in an economics book, a modern keynesian government, schooling, economics book. They literally use the broken window theory. I shit you not and say that if you break windows, it is good for the economy. And this is the exact same reason why a bunch of dumb journalists, every single time something terrible happens like a hurricane comes through and just demolishes people and a whole bunch of people die. Inevitably there's some dumbass headline that says, don't worry, at least it's good for the economy. This is not an exaggeration. This exact thing happens, and this exact argument is made genuine real life. There is blood flowing through their brain. Probably people say this out loud. Let me explain to you, even if that wasn't perfectly clear, let me explain to you why this is so unbelievably stupid. [00:46:47] It would mean same, same thing goes for war. Is war for the good, good for the economy. They literally, they still to this day say, if you read an economics textbooks, and you probably heard this in school, and you may very well believe it, please don't think I am insulting you. Don't take it personally. But it is the stupidest thing in the world to say that the war, world war two got us out of the Great Depression, that just blowing stuff up saved the economy. [00:47:11] If that were true, there would be no reason to go to war. [00:47:16] There would be no reason. Why would you pointlessly kill people when you can just blow stuff up? We could put the entire economy to work. Everybody who is everybody who's a doctor, nope. Get them off making bombs and ships. Everybody who makes sandwiches, everybody who makes tvs, everybody who makes smartphones. No. Take everybody away and put them in $1 million a year jobs making ships and bombs, and we will make the biggest armada in the world, and then we will just sail it off the coast a little bit out into the ocean, and then we will blow all of it up with the bombs that we built. That would look so cool. We would have 100% employment. Everybody would be making a million dollars a year, and we could just do it over and over and over again, and we would be infinitely wealthy forever. Unless, of course, what we want our medical services and sandwiches and tvs and houses, because now we have nobody making those things. And instead, like retarded keynesian economists, we're all just building stuff and obliterating it, wasting time, digging holes that nobody wants and filling them back in. We are doing the equivalent of an entire economy's worth of pointless busy work for no reason at all, so that we can have the appearance of wealth, and on paper, the GDP would look great. The job numbers would look great, but we would have missed the entire point of an economic system to begin with. No, it doesn't encourage spending. No, it doesn't boost the economy. It makes people waste, replacing resources that they otherwise wouldn't have needed to. It makes people not save, which makes the system more fragile and makes everyone else put all of the individual people, all of the citizens in society trapped. It traps them in jobs. Our ability to save money for the long run is our ability to choose our job. If you don't have four months worth of savings and your job just really sucks and you have no immediate prospect, you're stuck there. And if you saved $10,000 to do that back in 2020, thinking that it was going to get you four months, and you kept it until today, and now you need it, you're going to get at best, a month, maybe a month and a half, if you want to keep your same standard of living, because that money is worth way less than it was when you saved it. If you didn't make 15% per year, you are losing. I want to say that again. If you did not make 15% per year for those four years, you've lost value. Somewhere between twelve and 15% is the break even price, at least when it comes to shadow stats, and specifically in larger cities. If you live out in a rural area, that's not quite the same story. But this actually lends itself to a whole nother rabbit hole of why inflation is such a mess, or why money printing is such a mess is because it takes so long to actually distribute through the economy. You actually have vastly larger differences in certain, like, highly populated areas versus low populated areas than you actually naturally would. But again, that's a different discussion that's going into the weeds and the noise of specific situations and caveats. We're focusing on the fundamental truth that all of those caveats are in reference to. And the simple fact of the matter is that inflation, money printing, is just a form of fraud, and the only meaningful lasting effect it has on a society is to create more poverty. Period. It is also important to note that everything that those corporate subsidies and government contracts and politicians do with the money is a shift of those resources from the top right quadrant in the give a ship matrix to the bottom left. And if you do not know the give a shit matrix, you definitely should. It's a very, very fundamental and foundational mental framing for why and how resources should be spent. And it makes the whole world make so much sense. And the video is like five minutes, the link will be right down in the show notes. It is one of the prime prerequisites to understanding any of this, in my opinion. [00:51:57] Now, anybody who's listening to this show for any length of time knows this, obviously, and it's probably here because of this. But I think it's worth repeating. [00:52:08] The reason bitcoin exists, and the reason bitcoin is a trillion and a half in market value, is because it serves as a form of proof of concept. Let's call it beta software for a system of record keeping, a system of money where you can know without a shadow of a doubt, you can audit the entire system from top to bottom, and you can participate freely in the auditing and confirming of every single piece of information in that system. It is a monetary system in which counterfeiting funds is impossible. [00:52:52] There is no money printing in the bitcoin system. [00:52:57] And I want it, I hope, I want. [00:53:01] I want to frame something really quick before I hit my reasoning why this is important. [00:53:09] Everything going up in price is not natural. [00:53:13] I want to say that again. [00:53:15] Everything getting more expensive over time is not natural. In a natural sound money economy, everything gets cheaper. Nothing gets more expensive. Even things that are scarce and hard to obtain will just get less expensive more slowly. That includes real estate, that includes stocks, that includes tvs and electronics and chairs. And literally any and everything gets lower cost over time. And this is fundamental to why we get out of bed and do or invent or think and create any ideas whatsoever. It is axiomatic. The only reason you go do something is because you're trying to improve. [00:54:09] Nobody spends three days trying to make something worse. Not in their own lives, not when they're trading, they don't. Nothing that you are hired to do at any job is about making that business crappier. And if that is actually the result, it's just because a bunch of people somewhere along the line made a big mistake and eventually it will just kill the company. Because if it's not getting better, it's just dying. [00:54:34] Understand? [00:54:36] It is perfectly natural. It is axiomatic that in a sound money economy, everything should get cheaper over time. It should all behave exactly like hard drive space. [00:54:51] And no, it does not slow down the economy. No, it's not bad for the economy. It's bad for the government and the corporations that are printing money out of thin air and loaning it to themselves, because it means their loan is worth more overtime, which means that their obligations hurt worse the longer they don't pay them back, because that's what happens with real resources, and it should cost more if they don't ever actually return the favors that they stole. This is why they hate it. They are the biggest debtors in the world. Of course they are going to say deflation is bad because it's horrible for them. And that doesn't even have to be some big conspiracy where they only care about themselves. They're just only going to do the math. From their perspective, the best example of deflation is the price of electronics. And no, it's not. Electronics don't fall in price because the economy is terrible or because the electronics industry is being destroyed or collapsing. It is explicitly a sign of growth. [00:55:56] It means that it has grown and progressed massively in the period of time in which everything got cheaper. The natural falling of prices of things in the economy is the result of growth and innovation, in exactly the same way that the ever rising prices of everything in the economy is the result of printing money. If there is anything I want to take with you, I want you to take with you from this show, it is that nothing should consistently go up in price, ever. It should all get easier and better, except ironically, the record keeping system that keeps track of it. The only thing that should go up in value always, because it is the mirror of the society that uses it, is money. And it will naturally do so if you simply dont destroy the money, if you simply do not inflate it to the tune of trillions every single year. And there's no way to get all of this out of one episode. But you cannot fathom the scope, the sheer scale of the consequences of our fiat system. Everything about how the economy looks today would be completely different. We would not have these massive, massive unprofitable corporations that just constantly buy back their stock, that constantly go into debt to pay off their debts. And everything is this flowing of going into debt to get the next year's supply and capacity, and then building products and services and selling them in order to pay off most of last year's debt, and then going into debt further in order to do it again next year in a perpetually growing debt cycle that has no end, that is not natural, that is not sustainable. It just so happens to be one of the most historically successful destroyers of countries in history. And no, I promise you, it's not different this time. And all of the people who own the institutions and are adamant about saying it is different and there is such thing as a free lunch, are the people who are getting it by taking the water out of your tank. [00:58:24] The value of bitcoin is the possibility. [00:58:28] Well, really, the proof that this canon has been solved with a money that we can use anywhere in the world. It is not a payment network. [00:58:41] It is not a toy, it is not an app. [00:58:44] It is a fundamental. It is a nuclear grade global software system for a money that can be used anywhere, that can be verified easily and cheaply by anyone, and that cannot be counterfeited by a single person on the face of the earth. [00:59:04] The fiat money problem is a $100 trillion problem. So I'll leave it with you to decide what the value of the solution is and with that will close out today's episode. [00:59:18] Thank you guys for listening. Hope you enjoyed this rant for anybody new. I hope it wasn't too jarring, and I genuinely hope nobody takes this personally. There's absolutely nothing wrong and there's nothing that makes us stupid for believing stupid stuff, but it is kind of a reflection on us if we learn that it's stupid and then continue to believe it. So take that as it is. But I hope you enjoyed the episode. I hope you learned something. I will have a probably another two sats video to try to sum this one up into four minutes and make it as simple to understand as possible so that you can share it out. Don't forget to share this episode out to anybody that you know who is interested in bitcoin and or is asking themselves what the hell inflation is and why it's so terrible and why it hurts so much and why it is that the damn journalists and politicians tell me that it's good for me because it doesn't feel like it's good. Well, don't worry. You should trust your gut because it's not. It hurts and it's stupid and it just makes people poor and it's just really good for politicians and giant corporations and so they're willing to make an investment into telling you otherwise. And I'll reiterate my last point that I really want you to take with you. Nothing should get more expensive over time. [01:00:33] The whole point of the economy is to make things better, is to innovate and become more efficient. Everything should be more affordable. And imagine if your salary bought you more stuff next year rather than less. Your same salary bought you more stuff next year than it did this year because of all the hard work you and everyone else did to make stuff better. [01:00:56] Imagine how much more time, wealth, access and stability we would all have if that simple truth was just allowed to occur. Because all you have to do is not defraud the economy for trillions and trillions of dollars. And that will just happen because that's how stuff works. [01:01:18] So burn that one in the back of your mind, and I'll catch you on the next episode of bitcoin. Audible. I am guy Swan. And until then, everybody take it easy. Guys. [01:01:42] Think before you speak, and read before you think. [01:01:48] Fran Lebowitz.

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