Episode Transcript
[00:00:01] It's a concern I often hear from those around me who are trying to wrap their heads around it. And it's understandable. After all, how could any financial system avoid being captured by those who already hold the most power and wealth?
[00:00:14] Want to just lead to the same unequal system again, only in a new form? You might ask, won't those who gained wealth in the current system dominate the new one by holding a disproportionate amount of it? The answer is as simple as it is powerful. It's no.
[00:00:33] The best in Bitcoin made Audible I am Guy Swan and this is Bitcoin Audible.
[00:00:56] 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. We've got an article today, a read that we are diving into by Peter Unglund and this one is. He's actually got a couple of articles now that I've really enjoyed and he has a shockingly low amount of followers for how much. I have enjoyed a number of things that he has written on this. So I highly recommend going and checking him out. I will obviously have the link to the show notes or excuse me, link to the article and his medium page. Granted, it might not. His medium page might not even be his main thing. I'm not sure. I just, I just know that I have been saving things that have come up through medium but highly recommended. I've really enjoyed his writing and we are getting into one today that just because I keep.
[00:01:53] I keep hearing this idea and I get, I get it, but it's so frustrating because it's, it's just a failure to understand what's wrong with the current system. This is what I find so so often is the people who think that the bitcoin system is going to be the same or it's not going to solve the problem have a misunderstanding of what's wrong now. They do not understand what is broken and why things are as bad as they are. They don't understand why the counterfeit class exists, how the incentives and the culture and the direction the We've shifted the market towards unsustainable and completely thoughtless and empty practices. The irresponsibility, the bloat, the corruption. They don't understand where this came from. They think that this is just a natural occurrence. This is just the way things things are. And thus when we have a bitcoin system, it's just going to be a different group of rich people. And I feel like Peter did a fantastic job of illustrating, just painting a picture as to why, why that's not true and what exactly is it like specifically that makes it not true. So we're going to dive into his article. Don't forget to check out the affiliates that we have. Great places to buy Bitcoin. If you buy bitcoin, please go through any of the links that I have for the that I really like and that I use is actually a really good way to help out the show. Another major thing that you can do is leave a review on like Apple podcasts or Google Play and then of course share it out. And thank you so much to also the, you know, boosters and zappers on Nostr. It is so cool having Albi Hub hooked up to my sovereign wallet and having a lightning address. It's so awesome being able to look at the exact same wallet that I use for spending and see all the zaps coming in. Thank you guys so much. I don't think you appreciate how much that helps and how great it is. So I just, I just want to give an infinite thanks to those guys, to the audio nots, to everybody who zaps me on Nostr and Fountain. It just, it really is an awesome thing and it goes a lot further than you probably think. So thank you. But with that, let's get into today's article and it's titled Opting in How Bitcoin Appeals to the Old System's Deepest Flaw to Radically Transform it by Peter England Many people wrestle with one specific question when it comes to transitioning to a new economic system based on Bitcoin.
[00:04:39] If the wealthy and powerful can use their wealth to buy Bitcoin, won't they end up controlling this new system just like they dominate the current one? It's a concern I often hear from those around me who are trying to wrap their heads around it. And it's understandable. After all, how could any financial system avoid being captured by those who already hold the most power and wealth?
[00:05:03] Wouldn't it just lead to the same unequal system again, only in a new form, you might ask, won't those who gained wealth in the current system dominate the new one by holding a disproportionate amount of it?
[00:05:17] The answer is as simple as it is powerful.
[00:05:22] It's no.
[00:05:23] This is where Satoshi's better idea truly shines.
[00:05:28] Let's dive in the two piles in our economy.
[00:05:35] To understand this, let's break the economy into two parts. On the left, you have the money supply. On the right you have all that money can buy goods and services such as houses, cars, food, education, etc.
[00:05:52] In today's system, there are two ways to pursue a living one chasing the expanding money supply Banks, corporations and speculators make money by ensuring that the left pile constantly expands to their advantage, and two Creating real value. Entrepreneurs, businesses, teachers, nurses and workers contribute to the right pile by producing and improving goods and services.
[00:06:23] The problem with today's system is that chasing the ever expanding money supply, positioning oneself as close as possible to the money printer, has become a far more profitable strategy than creating real value.
[00:06:40] The rationale behind it is straightforward. If everything on the right side can be bought with money, and the money pile continuously grows as though it were a natural law, which it isn't, why not specialize on being the receiver of the new money instead of producing something that must later be exchanged for it anyways?
[00:06:59] To better understand the practices behind chasing the expanding money supply, here's a breakdown of how it works.
[00:07:06] Banks Too Big to Fail Banks operate on a business model where they borrow new money at the central bank rate and lend it to clients at a premium. This might already seem like a privileged position, but the real kicker comes when banks overextend themselves by lending too much at high risk. In any other business, failure would mean collapse. But for banks, the government steps in printing new money to bail them out. Essentially, the public foots the bill for bankers. Reckless risk taking. On top of this, banks profit from selling underperforming financial products to their less informed clients, keeping their profits rolling in.
[00:07:50] Big Corporations Access to Cheap Capital Large corporations are the recipients of the cheapest loans, those with the lowest interest rates that banks issue. This gives them a significant competitive advantage, which they use to acquire competitors and engage in monopolistic practices, allowing them to set prices and wages with little resistance. If they're not focused on buying out competitors, they may use this cheap capital to buy back their own stock buybacks, effectively distributing the borrowed money to shareholders by inflating the stock price. They may also use their access to cheap capital to pay for political influence.
[00:08:34] The end result? Greater corporate consolidation and further undermining of the free market.
[00:08:41] Political lobbying Regulatory capture Lobbyists earn their living as an extension of chasing the money supply. As they're on the payrolls of the big corporate interests. Lobbyists work to secure favorable regulations, particularly in areas like antitrust law, taxes and regulations, ensuring that the rules stay in favor of big corporations, while creating barriers for new entrants into the market. Political donations, another form of lobbying, are also used to shape political Candidacies, often resulting in the illusion of choice between only a few candidates based on the limited diversity of corporate interest rather than the genuine diversity of the electorate.
[00:09:28] Speculators Asset inflation As the money supply increases, asset prices, particularly fixed supply assets like stocks, rise. Speculators position themselves to be among the first recipients of newly expanded money by speculating and selling financial products. For example, when corporations engage in stock buybacks, speculators ride the wave, profiting from artificially inflated stock prices.
[00:10:00] While the approaches above may be morally questionable, many justify it by arguing that if they themselves didn't exploit the loophole, someone else would. It's just the way the system works, and they're not wrong. If you're an avid entrepreneur, business owner, or even just a regular citizen trying to build something of value for yourself and your family, you'll either be swallowed up, driven into bankruptcy, or left by the wayside unless you adapt to this harsh reality. But it doesn't have to be this way. The loophole that enables these practices exists solely because the current system has a single point of failure, the government's control over money creation. By directing resources toward influencing that control, individuals and corporations can amass disproportionate power and wealth. This is not so much a moral judgment of governments implying they're inherently corrupt or malicious, as it is an observation about the structural incentives at play which make governments highly vulnerable to corruption. In a system where one entity has the exclusive power to create money from thin air, that very authority will inevitably lead to money printing, especially when faced with economic pressures or political demands. A hundred different governments may resist the temptation for 100 years, but it only takes one rogue actor to sweep that all away, reversing a century of restraint.
[00:11:39] Once the printing begins, a self reinforcing cycle emerges. Those positioned closer to the source of new money enjoy immediate benefits, access to cheaper capital, influence over policy, and disproportionate economic advantages.
[00:11:57] This proximity then ensures that their influence only grows stronger over time, perpetuating a cycle where power and wealth consolidate further, all while the true creators of value are left at a disadvantage. Once the snowball effect takes hold, any government succeeding the last will find itself forced to adapt to the new economic reality because it's an electoral reality. By continuing the printing in order to avoid destabilizing the entire economy.
[00:12:32] Today, we've become so entrenched in this cycle that the dominant schools of economic thought have been backwards engineered to not only justify but champion inflation as a positive force. This idea is so deeply embedded in mainstream economics and policy Making that its absurdity is rarely questioned. We are told that moderate inflation promotes growth, fosters employment and drives innovation. But ask yourself, growth for whom? Employment at what cost? Innovation for what purpose? The so called growth is nothing more than debt fueled consumption, not sustainable progress. The employment, low wage, precarious jobs created to feed cycles of mindless consumption, leaving workers exhausted and unfulfilled. And the innovation? It's hollow, designed to squeeze short term profits and perpetuate a system that thrives on inequality and devastation.
[00:13:35] In reality, inflation does nothing but transfer wealth upwards, erode social cohesion and accelerate the destruction of our planet by enforcing a system where ever increasing consumption, not real sustainable growth, is the benchmark of success. We are on a path where the only measure of achievement is how much we can extract and consume, no matter the damage done to society or the environment.
[00:14:06] It all traces back to the money printer. A loophole that exists because control over money creation is concentrated in a single point of failure.
[00:14:17] That's the inherent flaw of the current system. But so what if we change the system entirely? What if the loophole that created this reality did not exist?
[00:14:31] Enter Bitcoin.
[00:14:34] Unlike the fiat system where money can be printed at the government's discretion, Bitcoin's money supply is unchangeable and incorruptible. This resilience stems from its lack of a single point of failure, as it relies on a consensus mechanism maintained by a decentralized network of participants. No matter how many resources banks, corporations or governments throw at it, even if they all work together, they cannot alter Bitcoin's open protocol. The money supply will forever remain capped at 21 million coins.
[00:15:10] Now imagine a scenario where the asset heavy beneficiaries of the current system, banks, political lobbyists, corporations and speculators begin to adopt Bitcoin like they're already doing because its performance as an asset is too alluring to ignore.
[00:15:28] Won't it just lead to the same unequal system again, only in a new form? Won't those who gained wealth in the current system dominate the new one by holding a disproportionate amount?
[00:15:40] No, it won't. What will happen is that with every step they take to embrace it, they will reinforce a new system that undermines their traditional influence.
[00:15:51] Over time, their ability to manipulate the system and generate wealth from thin air evaporates.
[00:15:59] The services, influence and authority they once commanded will become irrelevant as they can no longer game the system to their advantage.
[00:16:09] This leads us to an interesting scenario.
[00:16:12] Once Bitcoin has been widely adopted, many of These old beneficiaries will hold substantial amounts of it, but they'll face a dilemma. What should they do with their money?
[00:16:25] Today, the wealthy store their value in various assets such as real estate, viewed as a hedge against inflation. However, in a deflationary market, the value of real estate will lose value over time relative to Bitcoin. There will be no more reliable store of value than Bitcoin itself. Traditional stores of value like real estate will trend to utility prices.
[00:16:51] In fact, everything that can be bought with money will gradually lose value relative to a fixed money supply like Bitcoin over time, making spending incentivized only when actually needed or when it creates added real value.
[00:17:06] Traditional banking, fractional reserve banking will no longer be an option for reinvestment as there are no interest rates to collect from loans created out of thin air. Bank managed funds will become largely irrelevant, consistently underperforming compared to Bitcoin. Political donations to influence monetary policy will become pointless, as there will be no central authority with monetary control to manipulate.
[00:17:33] While fiscal policy could still be influenced, governments will no longer be able to bait the poor by printing money to finance short term relief, masked as solutions for progress and fairness. Only for that wealth to funnel back to the rich. Without the crutch of inflationary funding, policies will be forced to provide real lasting value to the majority, rather than fueling the same hidden cycle of wealth redistribution.
[00:18:02] Speculation in foreign exchange markets and stock bubbles will diminish as inflation driven monetary systems will disappear, taking these opportunities for exploitation largely with them.
[00:18:16] So what remains?
[00:18:19] They have only two options. Either hold on to their Bitcoin, which will only help to increase the purchasing power for everyone else, or seek higher returns elsewhere. But here's the catch. In a world governed by sound money, their old tactics finding ever more creative ways to chase the expanding money supply, have become obsolete. In this new global economy, the only way to reinvest their holdings for a return potentially higher than Bitcoin itself, is to invest in ventures that create real value by expanding the right pile of the economy.
[00:18:57] Think of it this way. In a world where banking holds little to no value, who would be more valued? A banker or a nurse who can heal people?
[00:19:08] What defines this new paradigm is also that because the economy operates in a state of chronic deflation, long term investments are naturally favored over short term gains. As Bitcoin's purchasing power increases over time, simply holding it becomes rewarding. This incentivizes spending only when necessary or investing in projects with sustainable long term value.
[00:19:32] In essence, the larger and more forward thinking the business idea or vision, the more valuable it becomes. As a unit of Bitcoin in the future will be worth more than it is today. The exact opposite of the dynamics of the previous inflationary system.
[00:19:48] While this won't eliminate criminality, short termism or unethical practices altogether, it will greatly reduce the loopholes that have been exploited where those with the least moral restraint have consistently been rewarded. Instead, it will create a system where those who uphold fair competition and cooperation stand the most to gain. Simply put, it will push manipulators from the center to the edges of the economy where they belong. Under this new paradigm, everyone, including the wealthy from the old system, will be confronted with a fundamental question. How can I provide the greatest sustainable real value to the most people? The future will belong to anyone who continuously asks themselves that question. This is what makes the opt in reality of Bitcoin a genius feature to achieve radical systemic change. It draws the old system in by appealing to its deepest flawless greed. It's nothing less than a Trojan horse for peace, sustainability and an equitable world.
[00:21:07] I thought this was such a good way to explain this idea and the illustration of using the two different piles of money, of people chasing the money, the new money that is pushed into the economy, and people trying to actually produce real value in goods. And separating these two things I think is such a great way to illustrate this. I've kind of done the same thing in like two of my two sats videos and a bunch of different episodes. I try to make it clear when people talk because people think money is a resource. People think that money is something of value without recognizing that money is a record keeping system for access to the things of real value.
[00:22:00] So often, so often, people, I mean, I cannot tell you how many times I've heard this. I've heard this today in like the last couple of days. The, the whole like, aren't we just replacing the old system with a new system where everybody's going to, they're all going to be rich and they're all just going to dominate the new thing and they'll still control and own everything and there's nothing we can do. This, this defeatist attitude, that somehow nothing has changed because I guess there' rich people or something. And to those people I say, you never understood what the problem was. You never. And I don't, and I don't even mean that in like a bitter sense or like I'm angry, but legitimately you have to not understand what the actual problem is. If you think that just because, just because the same people, if the exact same people who are rich today in the fiat world end up rich in a bitcoin world, the problem that led them to destroying society, to parasitically suck trillions and trillions of dollars worth of resource, real resources, out of the economy and into their coffers under their ownership, where we became a middleman economy where they own everything and we rent it from them. That loophole does not exist in a bitcoin world because the loophole is explicitly about chasing newly printed dollars. And the bigger bitcoin gets, as it clearly is getting bigger, the bigger it gets, the more it will not. It will just immediately, like, instantly react to the amount of dollars being printed. And as that happens, the entire, the entire scam, the entire grift, is just moot.
[00:23:47] It's immunized the entire economy and all of our stuff is immunized against it. If they PR trillion dollars and the price of everything, the price of bitcoin goes up almost instantly as a reflection of that increased liquidity of the amount of money that they printed into the economy. Even if it's just an emotional thing, even if people are just speculating that, okay, well, now this will be the new price of bitcoin. It will be sustainable simply because they just printed the new dollars. And if there's no delay between the printing of dollars and the adjustment of prices in the economy because bitcoin has a comparative amount of liquidity, then there's no margin to steal. The margin between printing money and taking everyone's stuff at a price at which no one else can get it, especially if it is printed as debt is about the time delay is about the fact that the price doesn't adjust until after they put the new money into the economy and it circulates through a bunch of different transactions. And the entire grifting apparatus, the whole ecosystem of speculators, of lobbyists, of banks, of huge corporations, of the literal counterfeit class, they only survive. The entire industry is only sustainable and is only the center of the economy because of the flow of money, the flow of printed money that comes out of the political system and Federal Reserve system. And this quote does such a perfect job of just hitting the nail on the head of why this is. Quote the problem with today's system is that chasing the ever expanding money supply, positioning oneself as close as possible to the money printer, has become a far more profitable strategy than creating real value. It's easier and it has higher returns. Quote the rationale behind it is straightforward. If everything on the right Side obviously alluding to buildings, cars, real estate, just value, real value, services, products, everything, all of the stuff, the actual things in the economy. If everything on the right side can be bought with money and the money pile continuously grows as though it were a natural law, which it isn't, why not specialize on being the receiver of the new money instead of producing something that must later be exchanged for it? Anyways, you know, I liken this to the analogy I used in my bit block boom talk. I believe it was, was you have a 10 people in an economy and you know, one of them gets all the water, one of them makes the food, one of them builds the houses, one of them, you know, figures out does all the mechanics and engine work and all this stuff. Everybody does one of the jobs and they all trade and everybody's roughly equal. It's a totally, completely non existent economy. But for the sake of understanding the principle, I think this really illustrates it. Everybody does their one job and everybody trades. Because that's the whole concept of a society, right? That's what an economy does. It allows you to do one thing and me to do another and provide value and provide something that the other person needs in some way voluntarily and allows us to trade so that I don't have to build the house. You can build the house, but then you don't have to read about Bitcoin for eight hours a day for seven years and try to understand all of this stuff and use all of the tools to work through it. You can just trust that I've done that and I'll have a pretty good recommendation as to what you should use and how to do your setup. Because I've screwed it up 400 times. That's exactly how you build and get good at or do anything. That's exactly how you build a house, is you keep trying it and correct the things that don't work and then suddenly you have a huge skill set that's incredibly valuable to other people. And the whole concept of an economic system and the purpose of money is so that we can accurately trade. That accurately being the key point here. If the money doesn't change in supply, if money isn't being created, if it's only being exchanged between people who are making voluntary exchan and actually hold the weight, understand the cost it took them to get that money before they let go of it to get something from someone else, well then the money is an independent mechanism that actually allow means that it weighs the same for you as it does for me. It becomes the one thing that doesn't change so that we can measure the difference between all of the things that do change.
[00:28:40] Now, imagine in this economy of 10 people who are all doing their one job, one person prints the money, one person just writes numbers on paper and then hands it to the other people and they get all of the stuff.
[00:28:55] Now you have nine people working their asses off. You have one person building the cars and doing stuff to help other people. You have one person making the houses, you have one person making the food. And you have one person who gets food, housing, cars, water, everything that they want and need and has contributed absolutely nothing to anyone else. They are literally just a parasite.
[00:29:20] But here's the thing.
[00:29:22] That person's going to be the richest one, undoubtedly. They're going to buy the biggest house, they're going to have the nicest car. And if that's all it was, it wouldn't even be so bad. Most organisms can live with a parasite or two and not be killed. Like, we could at least just deal with it. There's still the scum of the earth. It's still a big problem, but it at least doesn't poison the rest of the system. Except what happens now?
[00:29:50] Well, the guy building houses has a whole lot less reason to build it for the other eight people than he does to build it for the guy who's near the money printer. The guy who's making cars has a lot less reason to make cars that are actually good for the other eight people and instead is going to be building the cars that the guy with the money printer wants.
[00:30:12] Slowly but surely, everybody in the economy is going to start to gather around the 10th guy with the money spigot. And it's going to change what we make, it's going to change how we make it. It's going to change who we cater to. It's going to change the culture, because they're going to look at this person as the most important, the most significant, because they have the biggest house and the nicest car. It's going to change how we culturally think about things. It's going to affect everybody's literal soul, like what they think about themselves. Because the person who built houses probably just wants to build houses for people, probably likes to build houses, and instead they're going to be building shallow pandering crap for the person with the money printer, who is the only one who doesn't understand what the cost of any of this stuff is, which means that it's going to degrade. It's going to degrade in quality, it's going to degrade in purpose and meaning. All of it is going to be empty. It's going to get emptier and emptier, and he is going to have to compromise on that in order to make the most money in real estate that he can make. And he's going to find himself building a bunch of vapid crap for rich people that he never even really wanted to build. And the thing that he was there in the first place to do, to make sure that other people had nice houses, that it was high quality, finds himself building garbage, compromising over and over on what he thinks is a good decision because the money dictates what he should be focusing on. It distorts everything. It sorts the value of everything quantitative. Everything becomes a quantitative measure, everything becomes is GDP higher? Do we have more arbitrary spending? And all of the important qualitative measurements of the economy just vanish. They become unimportant. When in fact qualitative is the only thing the economy actually is. You cannot quantify the economy. The entire thing is a giant subjective organism. Everybody is just deciding what is best for them. And it is insane to me that it has become common economic platitudes. It's become, quote unquote, common knowledge for people to believe that things that are bad for the individual are good for the economy. The economy is the individuals. There's nothing else. It's just the people. What's good for the people is good for the economy.
[00:32:32] Savings is good for the economy. Surplus is good for the economy. Having leisure time is good for the economy. Not having to work your ass off and having time to actually make decisions about your lives. Having optionality and being able to choose that you don't want to work for this person because you actually have a Runway. You have the ability to choose, but because you have a little bit of savings, because you're not drowning in debt, because you actually have a sustainable economic foundation that's good for the economy. Because that's what the economy is, it's us. There's no such thing as shitty for people. Good for the economy. If going into debt is bad, if it is stressful, if it means that you have less options, it's bad for the economy. It doesn't matter what your metric says. And it poisons everything.
[00:33:15] It poisons everything. It completely screws up the pricing of all of it. It makes it look I even knowing it, it still becomes the smart financial decision. In 2017, I bought this house when I shouldn't really have bought a house. And that's as someone who could, who could afford it. But it made the most financial sense, most financial sense far in a way to get a house while it's still dirt cheap. Because I knew the money printer was going to go crazy. I knew it was going to be worth more. We have done so much work on this house. I bought it with as little down as I could possibly manage because I didn't want to sell any Bitcoin. I bought it with the lowest possible interest rate that I could get just to get the lowest monthly rate that was feasible because it was my first home purchase. I got like some FHA benefit or something where I didn't even. I could put down even less on the house than I originally had planned to do. Of course, I took that option and like I've said, I've done so much work to this house. We've redone the bathroom, redone the kitchen, redone both bathrooms and redone the kitchen. I put in Wayne Scotting in the room, replaced the bulk of the trim. We have dug out the crawl space and poured in cement and we have a basement. We have framed out that basement. We put a fence around the yard. We have done so much work to this thing without any of that. Just the Zillow estimate as to what the value of the house is now is over twice what our loan is. This house was in garbage condition when we got it. Like it was in crap condition. All of the cabinets were MDF and they were swollen. There was water damage all over the place. The another thing that we've done is we've waterproofed the foundation of this twice. We've put in a great. A ridiculous drainage system and two backup pumps that keep this, keep the water out of it even in like really crazy storms. None of that is factored into the price.
[00:35:20] None. Zillow doesn't know any of that. Just looking at the price of the houses in this area and the last time it was sold, this house is worth. I got a steal simply because I bet against the dollar. And you know how long houses were on the market.
[00:35:39] Basically BlackRock, just a bunch of huge corporations are just buying up houses as quick as they can get them. This has largely been the case the whole time, except for brief periods recently where the interest rates were actually pushed higher, where it actually became some sort of an economic decision as to whether or not you should have a house. Because the house will far and away outpace the interest rate in its price actually increasing. It'll increase 7% year over year at Least the last few years it's been like 20%. Interest rates are like 6. Like it makes, It's a, it's a complete no brainer from a financial sense if you actually know how to think about this in the terms of the money itself. But what that means is that I have been able to not. It means that you are getting value out of the economy. It literally is. It's, it's the huddling around the 10th guy who is printing money. We're getting loans from the bank to buy assets that will go up in prices so that we don't actually have to replenish the real value that we are taking out of the economy. Think about it in terms of houses. In terms of houses, not in terms of the dollars, not in terms of the amount of money. I only have to produce half a house in order to pay off my entire house. The original loan that I have to pay off requires a very small house. In fact, I might be able to do it with a nice double wide mobile home. What I owe is not at all what I took out of the stockpile of resources.
[00:37:19] And here's the thing, he talks about this in this piece. It says, well, if I won't, if I don't do it, somebody else will. It's just the way the system works. And it's 100% true. Like it would be so stupid of me to not do it when it doesn't prevent anything. There's no way to get around it. BlackRock is still just going to buy it and sell it to somebody else. I don't have any sort of meaningful effect on it at all. It is quite literally just how the system works. And that's the most dangerous thing about it, is that you don't have to be a morally bad person. In fact, quite the opposite. You can be a perfectly moral person and simply just not understand what is happening, or you can understand it, but it's still for your sake. It puts you at odds with the value of society. It breaks down the cohesion that has us working cooperating together as a society to make things better and instead puts us in a position to chase resources, to chase assets off the market as fast as possible before they go up in price. It shifts the entire system into a scarcity mindset to buy up and own as much as you possibly can as fast as you can. That whole thing will be flipped on its head in a bitcoin world because nothing will make, nothing will go up in value like bitcoin will. And bitcoin isn't a resource, it's a record keeping system.
[00:38:59] To save in bitcoin means that you are explicitly not taking things out of the right stockpile of resources.
[00:39:08] The actual goods, services, products, assets, real estate, the things that people need to live for their standard of living. You are leaving things in the pool of economic resources for everyone else's benefit. And people don't understand that. The 10th guy who was printing money in our little example, his grift continued indefinitely.
[00:39:31] There was never a time in which he couldn't do this. In fact, his position was permanent. It was a part of the apparatus of society that value resources, goods, everything that we made would flow to him and then he would just use the money printer to gobble it all up. So in context of the premise that he built this article off of, of people saying that like, oh, won't it just be the same thing? Understand that if we ever did like a full, like just chop off the rich and let's say we all got mad one day because we were like, this system is unfair. And so we went to that 10th guy's house and we kicked him out of the house. Or we, we took his car, we took all of his cars and we split them up and we gave them to the eight people. We got mad at him. And so we, we burned all his stuff down and took what we wanted and made him poor. It didn't change anything. The spigot will still be there and someone will still be the 10th guy. In fact, if he isn't killed, then he'll just fall right back into the same position we didn't actually take. We didn't fix anything about the system. We just got mad at him because he was the best at exploiting it. So when we talk about like him, oh okay, well that guy is going to have all of this money and all of this wealth and he'll just be able to buy up a lot of bitcoin. Except that what that does, the act of buying up that bitcoin closes the valve on the loophole. Sure. It doesn't make him poor, it doesn't punish him for being in his position. If he makes the realization and decides to buy bitcoin like the rest of us. And so he's still rich in a bitcoin world, not from a sustainable sense, but from a sheer, I just have X amount. And so in the short term it didn't solve the problem, it didn't correct the imbalance, but in the long term it's permanently closed the loophole. It's the last time he can do it.
[00:41:33] All of the privilege of the banks being able to loan money out of thin air at a Federal Reserve rate and then just tack on a few percent and just get a free supply of rent on everything, on all of the capital of the society. That's what they do. They get the money printing interest rate and they turn around and just make the interest rate higher. And they lend it to us and we owe. We owe them all of the stuff that we buy with it. They make rent on a money printer.
[00:42:06] I hope you appreciate how bonkers that is, how insane and just idiotic that system is. The banks lose that position, they lose that privilege. They cannot lend out bitcoin that doesn't exist. Nobody is going to lend them bitcoin at an interest rate that is not a real interest rate because they have to explicitly lose their bitcoin to do that. And nobody can print bitcoin. Huge corporations and impossibly low interest loans will not be able to get that anymore. And this is another thing that people don't realize is that the whole, like giant corporations can get 1% interest, 2% interest loans. Never made any sense. That was never realistic. In fact, banks should be even less interested in giving them enormous amounts of capital for no reason because they already have saturated markets. They are not going. They are the least likely to experience 300% and 500% growth. The only reason they can at this stage is because they get loans at impossible rates that nobody would ever give them because it's newly printed money and it doesn't cost the bank anything. It just needs to be like a tiny bit higher than what they got from the money spigot. And what do they do with it? They just buy up all their competitors.
[00:43:29] They just buy up. This is exactly what happened. It's a huge lobbyist. It's just a grift. It's a. It's a circular grift. I saw this with the. Was it like an 900 billion or no? I guess it was 900 million. I guess it was back when millions was still like a large amount of money. In the 90s. It was like a basically like a $1 billion bring Internet to everybody package. And it was so funny because I saw this and it wasn't until after a few years and I started getting into this and looking back on it that I understood actually what was happening. But I knew we had Fred's cable or something like that, and like we knew of the guy through other people. Like, it was just like Some dude who set up an Internet service provider in our small town and was just running Internet and had Internet connections. And there were like something like many, many thousand is like different company ISPs. Like so many towns were just run by some like literally like Bob's Cable, you know, Nancy's Internet, high speed Internet. I mean obviously these are silly examples, but like straight up they were just small companies that were providing one service to one locale, interconnected. And then the government came up with the bright idea because a bunch of lobbyists thought it was a bright idea of just loaning out a shit ton of money to a bunch of huge corporations to quote unquote, provide everyone with Internet.
[00:45:03] And they did not run any lines, they did not build out infrastructure. They bought Fred's, Bob's and Nancy's high speed Internet service.
[00:45:14] They just consolidated. And what was once a huge, diverse, vibrant ecosystem of competitors just became like four companies. And it's so crazy because we've seen the same thing everywhere. We've seen the exact same thing in banks. We've seen the same consolidation, unnatural consolidation in so many different industries to the point that people hate capitalism because it means big everything. No, fiat, Fiat means big everything. This is what happens when you have a money printer and it makes speculators because there's so much money flooding into the financial system that there's just massive volatility. Things grow for no reason. One of the craziest things is that the average return for The S&P 500 is literally the average growth in the M2 money supply. It's the exact same. None of it, none of it is real. There's not. Nothing just grows forever in price. That doesn't make any sense. The only way, the only way that that can happen is if there's more money. That's it. Things can only grow comparatively if you have company A and company B in the exact same industry or just in the exact same economy. If company B grows, the only way that it can do that from a monetary value perspective is if other things are falling as a proportion of the economy. Just as a simple example, the Internet company, the company that publishes on the Internet specifically grows in a stock market valuation because they are taking readers who used to be on the newspaper. Now this does not make it zero sum. I'm just talking about the economy is not zero sum. They have added enormous amounts of value and they are going to bring on many, many readers that don't that never even read the newspaper because they've lowered the barrier to entry, they've created more value and more accessibility to that thing. But in the stock market it is zero sum because everything can't just go up forever. It is the amount of people and the amount of the amount of people who are in the investor class who are actually investing in companies. They have to do so specifically at the cost, at the trade off of not investing in one thing and choosing now to invest in a new thing. All that fighting, all the fees, all the dividends, everything that comes with the S&P 500 with these big giant stock market indexes, all they are are a reflection of the money supply. There is no real sustainable nominal growth in the stock market that isn't just about dollars, it's just about printing dollars.
[00:48:06] This creates a massive, massive industry of speculators, of traders, of financiers, of people who financialize crap for the sake of financializing it. And they don't even remember why. They've completely disconnected, they've completely lost touch with the fact that all of the other stuff, the stuff in the right pile, is the only thing that's actually worth anything. And their derivatives and their stock markets and their equity only relate to what in the real world they are pointing at by themselves. They are valueless.
[00:48:46] Bitcoin fixes this.
[00:48:48] This is why Parker Lewis piece the great definancialization is that it is going to definancialize everything because it makes no sense to invest in anything else if you don't think it's actually going to have a explicit real return.
[00:49:06] There's no just like numbers go up forever. It's just the money. The money will just reflect the growth of society and otherwise investment will simply be the things that are worth investing in and we will stop wasting our capital giving it all to blackrock so they can own the world and we can rent it back for them.
[00:49:25] Fiat is a bug.
[00:49:28] Fiat is a loophole to take value, real value, out of the economy, out of the society, and never put it back in. Bitcoin simply fixes the loophole so that to stay rich, to maintain any wealth, you have to actually do something worthwhile. And it doesn't matter who's rich, it becomes true for everyone. And there's no exception because you can't print more Bitcoin.
[00:50:02] And that is it.
[00:50:04] Shout out to Peter for this amazing article. Don't forget to follow him. Drop some applause and check out the many great links we have right down in the show Notes and I am Guy Swan and I will catch you on the next episode of Bitcoin audible. Until then, everybody Take it easy, guys.
[00:50:35] All rational action is in the first place, individual action. Only the individual thinks, only the individual reasons, Only the individual acts.
[00:50:49] Ludwig von Mises.
