← The Digital Executive
The Digital Executive
Dr. Robert P. Murphy on Tokenizing Life Insurance, Austrian Economics, and Building Trust Through Blockchain | Ep 1072
00:11:28
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Foreign.
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Welcome to Coruscant Technologies, home of the Digital Executive podcast. Welcome to the Digital Executive. Today's guest is Dr. Robert P. Murphy. Dr. Robert P. Murphy is the co founder and chief economist at Infineo. He guides the firm's economic strategy and product design, drawing on his background in Austrian economics and insurance theory to ensure solutions like Life Notes are both financially sound and philosophically aligned. He is a leading American economist in the tradition of the Austrian school who holds a PhD in economics from New York University. He has taught at Hillsdale College in Texas Tech. Dr. Murphy has authored several economics books for the layperson, while his technical papers concentrate on money, banking, capital and interest theory. Well, good afternoon, Bob. Welcome to the show.
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Thanks for having me. Glad to be here.
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Absolutely, my friend. I appreciate it. You're hailing out of the Boston area. I know you're not quite there in Boston, but I appreciate you making the time today. We're an hour apart. I'm in Kansas City, but always love traversing the globe doing these on a daily basis. Bob, I'm going to jump into your very first question. You've built a career rooted in Austrian economics. How does that framework inform your work at Infineo and how in bringing products like Life Notes to the blockchain?
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Well, sure. So for people who don't know, the Austrian school, as the name suggests, is just a school of thought. There's like the Keynesians or the Chicago school. So the Austrians are a big name in that regard. And in terms of my day job, the reason my background in Austrian economics is so relevant is that the Austrian school has a very particular approach to money and banking and viewing them as just standard functions that even private sector actors could provide. Just like, you know, a lot of economists recognize that, hey, you wouldn't want the government making pizza or cars and that market forces would be the best way to deal with that. The Austrian school likewise says that banking services and even the production of money itself would be best reserved for the private sector. So given that background, it was very easy for me to transition and start working on real world applications of what you call digital money, if you want to call it that, in terms of private sector items that are either, you know, on the blockchain serving as a sort of pseudo money or beyond that, just in general, general, for example, like stablecoins, a lot of people looking at that are saying, hey, there's a sense in which stable coins that are pegged to the dollar, for example, it's like tether and things like that operate as A bank that, you know, people deposit their fiat dollars and then they have these claims on dollars that they can trade around more conveniently and in a sense economically that's like a bank. So those are the types of things that inform what I do for infineo. And LifeNotes in particular is a solution designed for institutional holders of life insurance. And so specifically Infinity. We're putting life ins on the blockchain and that just opens up all sorts of avenues. But again, that background really informs the economic modeling that I do for Infinio.
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B
That's awesome. Thank you. And I know I had a colleague of yours on the podcast as well, and it was great to hear and understand the fact that we're bringing so many things on chain these days, from real world assets to in this case, life insurance, which is awesome. And your background blends beautifully into this space. As you know, DEFI is becoming very popular and we really support that on the podcast here in our platform because were built on it. So I appreciate that. Bob, next question I have for you. With so much financial innovation happening today From DeFi to AI, how does Infinio balance tradition and innovation in building tools for modern investors and savers?
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Well, great question. And my background, which makes sense being rooted in Austrian economics, is I also had come upon, before I joined Infineo, this community of people in the life insurance sector who are using cash value life insurance as a cash management vehicle. And there's especially for the people in the United States, there's lots of tax advantages and things like that. And so I had helped develop a training program for that application. But the problem was life insurance, even though as an asset class it has many desirable properties. And in fact, for Infineo, I did a research paper showing that the, what's called the Sharpe ratio, which is like a measure of risk adjusted return, you look at the return relative to a benchmark and you divide by the volatility, basically. And so I did this analysis showing that whole life insurance, properly curated historically has a higher Sharpe ratio than just about any other asset class. I looked at real estate, the S&P 500 gold, bitcoin, treasuries, corporate bonds, triple A and so forth. And so that you had this asset that has all these remarkable properties. It's very stable, dependable growth, you can borrow against it. And so there's all these interesting properties for whole life insurance. But the downside is it's a very sluggish, conservative industry. And certainly like if you're a portfolio manager and you came across my white Paper, you wouldn't say, oh yeah, let me dial down my allocation to precious metals and bitcoin and real estate and I'll dial it up. My exposure to whole life insurance, like it just doesn't work like that. And so that's partly what we're doing in Infineo is we're marrying the, you know, old school, conservative, dependable, boring, if you will, performance of certain types of life insurance products with the convenience, accessibility and the transparency of the blockchain. And we're trying to combine the best of both worlds and that's the way that we're trying to split that difference.
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B
I appreciate that. And yeah, we talked a little bit about life insurance here previously as well. People use the cash value life insurance, it's, I think as an asset class, it's one of the better investments. But again, it is kind of old school, a little bit sluggish there. But what I like is you're bringing that again to the chain and really sparking some more interest in investments in this space. And I really appreciate that. And Bob, you've engaged with thinkers like Jordan Peterson on financial philosophy. What major themes or questions do you find resonate most when crossing between economics and public discourse?
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Well, I think here and again, I was a guest on Jordan Peterson's podcast a few years ago at this point and, and yeah, what I noticed about particularly early in his career when he first came on the scene and zoomed in popularity and was going around, you know, just speaking to huge audiences, I think part of the appeal and the certain segment of the population that resonated with his mess message was that they didn't trust the so called experts and they felt like something was, was really screwy with the system and that they felt this guy at least was trying to identify at least some element where he was just saying what a lot of people were thinking. But for whatever reason, you know, the establishment, if you will, was trying to tell people, oh no, no, you can't talk like that. So I think there was that sort of element and I noticed there are some similarities in response to your question here, Brian, that between that and attitude and what I'm finding as an economist, that likewise there are lots of people, particularly after the 08 crisis, there are a lot of people who just don't trust, you know, the talking heads they see on cnbc, for example, or you know, somebody from the Federal Reserve bank comes out and gives some speech and people just don't believe that anymore. Like for years they were told that all the inflation's transitory and it just kept going higher and higher. So and they also know that oh we're going to go bail out like in the wake of the 08 crash, we're going to bail out all these big banks that made bad bets with mortgage backed securities and things like that Meanwh while regular people are struggling to keep up with their mortgage and they're getting evicted. Right. So people had this sense that something is screwy. They don't trust the experts. So in my role, like that's what I try to do just as a figure in the public sphere for one thing is just to show here these are complex topics. Everybody knows that economics is important. How the financial system works is very relevant to everyone's daily life. And so they, they need people to give them information on that. And so I try to just show that I'm not here with an agenda and just explain things and say to come to build a rapport or trust. And then that ties in nicely with what we're doing in Infineo because again, part of the virtue of taking assets and tokenizing them or putting them on the blockchain is you get that automatic transparency. So for example, any kind of structured product that we develop that's backed up if you will by life insurance, people can go and see like what carriers are they coming from and you know, what's the, what's the nature of these and are there other liens against these assets? Right. So that's the virtue of putting things on the blockchain amongst others is that you have this excellent transparency so you don't have to just trust some third party institution. You can go verify it for yourself.
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B
That's amazing and I appreciate that. And what a great opportunity to obviously to be on Jordan Peterson show. I think that's cool. And he is really trying to make the world a better place through what he does with, you know, being a clinical psychologist and all. But there are a lot of false narratives out there. You know, we're told, watch the news, we'll, we'll get the truth there. We know that's, that's not always the case. And we're finding out more and more that people need to, you know, rely on something that's transparent and trustworthy. And what we're finding is in the blockchain space and what you're doing, which I really love, is bringing that transparency to this space. And I appreciate you leveraging your knowledge and spreading the word there. And Bob, looking ahead, how do you see Infinio evolving as More people seek financial autonomy in a world of increasing monetary and fiscal instability.
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Well, great question. What we're seeking to do here at Infineo, one way of putting it is that we're developing an operating system for life insurance, or if you prefer, we're developing an ecosystem for owners of life insurance assets where they can interact with each other and we're just giving more capabilities and functionality to what they're doing. So right now we already have over $500 million in life insurance that's been tokenized, that's on the blockchain. If people go to Infinio AI, they can go and see for themselves. And do it with your own policy if you want. And so right now what we're offering is the ability that we have like an AI system. We call it AI, Bob, because it's been trained on my life insurance writings and so forth. They can just give people feedback on their policy and, you know, analyze things. Hey, if I need to send my kid to college in eight years, you know, what do I need to do in terms of paying premiums and blah, blah, blah, it can help with that. But long term vision is, yes, we want to have this whole ecosystem where people can, once they tokenize their conventional life insurance assets, it now becomes much more useful to them that they can borrow against it from others who recognize the nature of these assets. Just putting it on the blockchain, getting that transparency allows for connections between lots of different groups who normally would not have exposure to this asset class. And so that's ultimately what we want to do. And so that feeds into your question, which is people are starting to doubt that it's not that they're going to put all their money into Bitcoin or something, but they're realizing the conventional way of investment and so forth, and retirement planning is becoming more and more dubious. A lot of people under 50 years age, they don't think their Social Security is going to be there for them. So they're trying to diversify and to get into what you might call alternative assets. And so here at Infinio, we're trying to say, hey, to the extent that you're interested in life insurance is an asset class, we're the place for you to go, that we're, you know, the headquarters for that way of thinking.
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B
Thank you, appreciate that. And Infineo is doing some really great things. Obviously you're working on developing this ecosystem for folks to thrive in this life insurance space or, you know, alternative investing. Right. But I like that you're leveraging the power of AI to help consumers learn more about this asset class, I think, and so much more education that people should get their hands on. And they're absolutely going to do it with Nvidia. And I think you said Infineo AI is the Bob Right. That is helping folks. So I appreciate that, really do. And Bob, it was such a pleasure having you on the show today, and I look forward to speaking with you real soon.
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Thanks so much for having me. Glad to be here.
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Bye for now.