← The Peter McCormack Show
The Peter McCormack Show
Gradually then Suddenly Pt 4: Bitcoin & The Money Printer with Parker Lewis - WBD391
01:32:11
Location: Houston, TX Date: Thursday 25th August Company: Unchained Capital Role: Head of Business Development In times of economic crisis, central banks have the power to step in and attempt to aid recovery by ‘printing’ dollars. When injected...
Loading summary
Transcript113 lines
- [00:02]
Parker Lewis
The central bank can control the supply of its currency. It cannot make people value it. And if I know that the central bank can print trillions of dollars at zero cost, I will stop valuing that, as will everyone.
- [00:15]
Peter McCormack
Hello there from Boston. How are you? It is so good to be back traveling. I had a great couple of days down in Texas. Managed to see some of the bitcoin crowd down at Bit Block.
- [00:25]
Alex
Boom.
- [00:25]
Peter McCormack
And then I came up here to Massachusetts to watch the Ghost Inside play their first show since COVID Now I am about to jump on a plane to El Salvador. I'm going to make a film about Bitcoin. It is very exciting times. Anyway, welcome to the what Bitcoin did podcast, which is brought to you by Gemini, the only place I'm using for buying Bitcoin. I'm your host, Peter McCormack, and today I've got an interview with Parker Lewis, part four of our Gradually Then Suddenly series looking at the implications of the Money Printer. But before that, I do have a message from my show sponsors. And first up today we're going to kick off with Exodus Wallet, who I am using as my mobile and desktop wallet for Bitcoin. And you know what I'm going to be using in El Salvador over the next few days because I use it to go and access cash from the ATM down in El Zonte. Now, some of you know UX is super important to me, so when Exodus reached out to me, I spent some time playing with the app. And you know what?
- [01:15]
Alex
They crushed it.
- [01:16]
Peter McCormack
The experience is so cool that I'm happy to recommend it to you, my friends and my family. Now, Exodus Desktop gives you a way to secure and manage your Bitcoin in one beautiful application. And with their mobile wallet, you can send a receive safely you using a QR code or address, knowing that Exodus automatically checks all addresses for errors. So make sure you check it yourself out@exodus.com or search for Exodus in the Google or Apple app stores. And next up we have Casa, which is the safest way for you to store your Bitcoin now. Forgotten passwords, SIM swaps, and phishing attacks. There are way too many ways for you to have your Bitcoin lost or stolen. But with Casa, you never have to worry about your Bitcoin again. Because with the CASA multisig wallet, you can custody your Bitcoin, but you only move Bitcoin by signing transactions from multiple wallets. And these are wallets you get to distribute into different locations, protecting you from a range of mistakes, errors and vulnerabilities Now, I have been a customer for about a year now, so if you've got any questions about this, you can hit me up on my email or drop me a DM on Twitter. There's never been a better time to upgrade your bitcoin security and get total peace of mind. You can find out more as Keys Casa, which is K E Y S Casa. Also, let's talk about SportsBet IO, which is the very best place for online gaming because they accept bitcoin. And now with the football season back going, which is so great, so great to have football back, but it has been a strange start, Tottenham winning their first three games. Like what? How did that happen? Manage the odds. Manage the odds. You would have got on that. So now sportsbet IO has got you covered. Not just with football, they support tennis, motorsports, US Sports, they even have esports. And for new customers, they always have a range of promotions available. So if you want to find out more, please head over to SportsBet IO promotions, which is S P o r T S B E T IO Promotions. Okay, so onto the show and today I have my buddy Parker Lewis back on the show to finish up our Gradually then suddenly series. And this time we finally got to sit down and do it in person. Now, a few days ago I was down in Texas for BitBlock Boom. And we managed to find some time to sit down and get in central banking and the problems with the money printer, a topic that Parker felt we had missed in the other episodes of the series. Now, we all know in 2008 what the Central banks did with the printing of money to try and help August get out of that economic crisis. And at the time, the amounts being pumped into the economy was unprecedented. But in the last couple of years, in response to Covid, those numbers have been blown out of the water. And the amount of money being issued by the Fed and the ecb, the bank of England and every central bank around the world is quite staggering. So in this one, Parker breaks down what this means, the issues it causes and why Bitcoin fixes this. And he brings the heat, as ever, this time is absolutely no exception. So if you enjoy this or you got any questions or any feedback, you can hit me up on my email, which is hellohatbitcoindid.com okay, over to Parker.
- [04:08]
Alex
Parker. Hello, mate.
- [04:10]
Parker Lewis
Good to be here in Houston in.
- [04:12]
Alex
Texas again, where you're recruiting a lot of people, trying to get me to move to.
- [04:17]
Parker Lewis
Everybody should move to Texas.
- [04:19]
Alex
Everyone should move to Texas. Alright, good to see you. Have we done this in person before?
- [04:23]
Parker Lewis
I don't think so.
- [04:24]
Alex
We've only ever done remote.
- [04:25]
Parker Lewis
Yeah, I think we've done like three or four, but they've all been remote and good to be in person, especially here.
- [04:33]
Alex
Yeah, here in my hotel room.
- [04:34]
Parker Lewis
We're setting up the bitcoin meetup in Houston. So we're going to be heading there from here and getting to do it in person. We've done a few bitcoin meetups in Houston, but they haven't been well organized. So this is going to be the first one that is really well organized and goal to get all the energy folks here in Houston. Oil and gas industry that are starting to really turn onto bitcoin mining to get more engaged.
- [04:58]
Alex
We're going to be heading to Dallas tomorrow.
- [05:01]
Parker Lewis
Dallas tomorrow. Bitblock boom this weekend. So it's Texas week. We had BitDevs in Austin last week and then we had Plebfi Austin, which was a hackathon. Bitcoin and lightning hackathon over the weekend that Jeremy Rubin and Buck Perley organized. So a lot of things going on in the bitcoin world in Texas.
- [05:21]
Alex
Yeah, man. Texas and Bedford.
- [05:25]
Parker Lewis
That's why you're moving to Texas at some point in the future to be determined.
- [05:29]
Alex
Well, I'll tell you what the plan is. I'll tell you what's going to happen. I've been talking to my audio producer, Danny, who's been with me now for two and a half years. Crushed it for two and a half years. We've never actually met because he's based in Australia, but he is English. We're meeting in New York in September. We're going to do a week together of producing shows in person. And then what we're going to do is early next year, we're going to do a month in Austin. So we're going to come out, we're going to get an Airbnb or something, set up a studio, and we're going to do a month of shows, get as many people in as I can, fly them in. It's like a test run.
- [06:00]
Parker Lewis
You won't have to fly them in. They're already in Austin.
- [06:02]
Alex
Not everyone might have to fly a few, but, like, it's definitely. It's a test run for Austin. Like basing the show out of Austin. That is in the plans. Like, a lot of things are changing next year, which mean I can do it. So anyway, man, good to see you. Everything you're doing for bitcoin in Texas is amazing. We don't want to have all the bitcoiners in Texas, because we want to decentralize people. So look at everyone here.
- [06:26]
Parker Lewis
Bitcoin is going to be globally adopted. So no matter how many bitcoiners I get in Austin, more are created every day. So just naturally, as a. As a function of the way that bitcoin works and the way that bitcoin's adopted, that, that's not a real concern. But you know, right now, here, now, and a lot of people working on bitcoin, it creates a really good environment to have people kind of around each other, talk about ideas, and that's how the network grows.
- [06:53]
Alex
I think we're going to birth the bitcoiner right now. Alex here, who's coming in to shoot this for us, he's not a bitcoiner, he's learning about bitcoin right now. So we're going to birth a bitcoiner during this.
- [07:02]
Parker Lewis
Hopefully as we're talking, I'll also be specifically red pilling or orange billing. Alex.
- [07:07]
Alex
Yeah, we're going to orange put Alex in this one. So.
- [07:09]
Peter McCormack
All right.
- [07:10]
Alex
So we've done a series and it was meant to be three shows based on your gradually in the Suddenly series, which is excellent. Everyone knows how good it is. So much great feedback. And then at the end of the last one, you said you wanted to do one more. You wanted to talk about the money printer and the central bank, etc. I also have been at a time when I'm really rethinking everything personally in terms of my show and where I'm going with things and what I, you know, my role in supporting bitcoin. So I think there's a good cross section here. We talked about a few things beforehand. I told you I'm thinking of selling my bitcoin. We're going to have to go into that because you're going to tell me not to and I'm going to tell you why. But there's a lot happening. So I'm here with a blank sheet. I've got my notes.
- [07:53]
Parker Lewis
I'm going to need to know the why before I convince you out. So I need to know what I'm working against.
- [07:58]
Alex
Well, we'll come to that. Like I said, it's a blank sheet. All the notes are on the computer. But I don't like to have a computer in front of me when we talk in person. I just find it distracting. Let's talk about the money printer, because you feel like that's a part of the series we didn't properly get into. So if you Want to explain why you want to get into that bit and then we'll start digging.
- [08:19]
Parker Lewis
Yeah. I think that there's an idea that we didn't talk about, which was kind of a core part of one of the pieces that I wrote, which is Bitcoin is one for all. I think oftentimes there's a question about is bitcoin too concentrated amongst a few people, and how will 7 billion people be able to adopt it, and will it be fair? Does it make sense to have a fixed monetary supply, and what are the consequences of that? I think one of the other things that is apparent kind of within our country here in the United States, but also just globally, is that in many ways, it feels like the fabric of society is fraying just a bit. Just a bit. And that pretty much on every single issue, kind of current issue, whether it's pandemic and Covid and the response or whatever the next one might be, or if it was Trump, that every single thing that happens is a lightning rod. And that for all the ills in society, people are always looking to political solutions. Left has its views of how to properly orchestrate society, and the right has its views. And the way that I really think about it is that any political differences exist at a fundamentally higher level, and that the actual economic structure and the monetary structure being broken is a lot of what is creating not only the division, but also why either political parties or political end of the spectrum, whatever views are proffered politically, can't actually solve the problem. Because the root problem that must first be solved is one that's monetary in nature. And that if we look at, again, regardless of political views, when Trump was president, trillions of dollars were being printed. When Biden is president, trillions of dollars are being printed. The only thing that enables the governments to run massive deficits is the central bank printing dollars to support it, or whether it's in Europe, the ECB digitally creating, printing euros. So wherever it might be, it's the same story. And that when people look at these problems and try to switch people in power and wonder, it's that definition of insanity where you keep doing the same thing and expecting different results. Only in this case, it's both parties taking their own crack at it and getting the same solution, and it's not working. And that, in my view, that is fundamentally a function of the real problem. Like there are political problems, and political problems need to be resolved. But it is so much driven by, if you think about the orders of effects, it's. You have to fix the money first. And then there will naturally be a lot of problems that are solved as a derivative of that, but you're not going to solve. And this is kind of a key part of the post that I wrote, is that the actual monetary structure that exists, that is centralized, the Fed, the ecb, the bank of Japan, the bank of England, PCOB in China, that actual structure is what causes imbalance. And oftentimes people talk about the growing wealth inequality. And I would fundamentally argue that that expanding wealth gap, that exacerbation of wealth extremes, is principally a function of central banking. And that when you remove that fly from the ointment, that's when things can be again to heal, but that they can't begin to heal until the actual monetary structure. Because the inherent problem in our entire economic system that's causing that is the current system in place. And that Bitcoin is the option to opt out of that system and into something that affords equal rights amongst everyone. And that ultimately when people can start to save in a form of money that holds its value, then that is what will actually cause balance to be restored. And so one of the things that I try to lay out and we can discuss is people talk about wealth inequality, wealth inequality, wealth inequality. Well, inequality is perfectly consistent with, with economic balance. If you're Steve Jobs and you create the iPhone and a billion people use it, that person should be holding more money than someone that hasn't contributed value to anybody else. That's the function of an economic system working. It's important, I think, to lay out from that start that it's not so much you're solving for economic equality. What you're solving for is economic balance. And what you get in the Fed system or the ECB system, any central bank system is it definitionally takes a world of imbalance, allows that imbalance to be sustained, and then be exacerbated. And that's what Bitcoin will really solve. And then once it solves that core monetary problem, then we can have the debates about what is the role of government and the scope of government. There might be certain things that people disagree about, but everyone should really be focused on fixing the monetary structure, because everything else will fall apart if that falls apart.
- [13:48]
Alex
Is wealth inequality the problem itself or is it the second order effects of wealth inequality that certain people get pushed out of being able to afford? Certain things like the squeeze of the middle class that people talk about, is that actually the issue rather than people seeing a visual difference in wealth?
- [14:08]
Parker Lewis
Well, I would think that it's, and I think that's one of the problems with the language is when everyone says wealth inequality. It's these wealth extremes. And in every economic system with balance, you're going to have a distribution, you're going to have inequality. And so I think it's important that when we talk kind of in those terms, it's kind of understanding that, kind of, that distinction. It's basically there's a wealth imbalance in a way that is not sustainable. There is too few kind of interests or people controlling too much of the economic share in such a way that if the Fed didn't exist or the ECB didn't exist, that that imbalance that is allowed to be sustained. It's like if you take a structure where you think about like, and I go Back to the 2008 financial crisis, take us in. Because I think it's helpful to define what I mean by imbalance. You have a system where it has unsustainable home values and those home values are starting to come down and correct and people who have savings in dollars and are on the lower part of the economic structure, the house is actually becoming more affordable as that's happening. But what the Fed basically does is they step in and they say, nope, we're going to, we need to target asset prices or we need to target price stability because it's core to their mandate. What that does is it's like as that imbalance is self correcting in the economy to be eliminated, it takes this unsustainable imbalance and says nope, we're going to stay right here. And we actually, we have an economic view that is we need asset prices to be driven higher. And then what happens is you are in a position of imbalance. The economic structure was saying we need to right size this, we need to eliminate imbalances. And that's what happens naturally as prices fluctuate and prices correct. And so when we talk about wealth inequality, I really think about it as inequities that are created as a function of the monetary system, not so much. Is wealth inequality a problem? Wealth inequality is a very natural state. It is if you've acquired wealth in a system that is fair, that's not manipulated on the monetary side in that world. Imagine a fixed supply of 21 million bitcoin. If you got a lot of Bitcoin, that means that you definitionally delivered a lot of value to others. And if someone delivered less value, then you will ultimately have fewer Bitcoin.
- [16:38]
Alex
That's not necessarily true right now because Some people could hold a lot of Bitcoin because they've exploited the current system. Are you talking about in the future?
- [16:47]
Parker Lewis
Well, I'm talking about as. As a. As an economic system, because I think about Bitcoin as an economic system that as 7 billion people adopt Bitcoin, that in the Bitcoin system, in order to get Bitcoin, you have to transfer value to some other existing bitcoin holder. Right? There's 18.7 million Bitcoin that exists. Say, there will only ever be 21 million. So if anyone that's coming to adopt Bitcoin, whether they've profited off of the flaws in the legacy system or not, they have to transfer value to somebody else to acquire that. And there's always somebody willing voluntarily on the other side saying, here, I'll give you my Bitcoin for this price. Right? The key difference between and when I think about that conceptually, it is in order to get Bitcoin, you have to deliver value on the free market, regardless of who principally has Bitcoin today or not. That key concept, that if you were to acquire money in this monetary system, you must deliver value to somebody on the other side. In the Fed system, 80% of all dollars that have been created have been created since 2008. So in the dollar system, that is not fundamentally true, you can either get dollars by delivering value to somebody else and be compensated, or the Fed will step in and allocate dollars. And what it ultimately does is it gives people that have benefited from that imbalance a second bite at the apple and a third bite at the apple and a fourth bite of the apple. Because necessarily, if there is imbalance and you come in to stabilize asset prices, you're stabilizing assets that have benefited, the people from the system being significantly weighted or skewed versus from people that are trying to rise up in the economy that don't have assets.
- [18:34]
Alex
It's essentially fighting against. The Fed is fighting against what Ray Dalio talks about. I did an interview recently with Dylan leclair because he wrote an article referencing that video, the famous Dalio video, which I'll include in the show Notes, but about allowing the system to self. Correct.
- [18:52]
Parker Lewis
Correct. Yeah. And then that is. And I think about money because it's the economic good that coordinates all other economic activity, essentially. And I think that the most fundamental aspect of it is. And this is something that there's a few pieces by Hayek, we likely mentioned them on past podcasts. One is the use of knowledge in society, where it talks about the role of a price system. And everyone, if they kind of walk around their daily lives, the price of food at the grocery store, the gas at the gasoline station, Everything in life, there's prices. And those are communicating economic signals and they're taken for granted. But they only exist because the world converged on a single form of money. And that as the world converges on a single form of money, a price system begins to emerge from that. That once the world converges on one money, the. They're essentially all pricing their own goods and services, and that is how they then communicate economic value. It's this idea that value as a concept is inherently subjective. Money is one of the key parts that helps us objectively evaluate or value things that are subjective in value. And so if you start to think about it that way, that its concept of price and changing prices, which are ultimately an aggregate of human preferences. If I demand a lot of gasoline, either someone has to go get more gasoline or the price of gasoline is going to go up. But then as that, as that price changes, it sends a signal to the rest of the market and people might decide, hey, it's really beneficial if I'm in the business of helping get gasoline to the gas station. But then as more people do that, then prices come down because supply has increased, because people reacted to price signals. And so it's this idea that as prices change, that is the entire process of an economic structure finding balance. So if I go Back to the 2008 financial crisis example, it's like when the housing prices are coming down, that's. That's the market economy. All the people in the market saying, actually, I prefer other things, or I need dollars for other things. And housing needs to come down because it is in imbalance. And when the Fed. So that is actually the market taking an imbalance and trying to eliminate it. It's like the preferences are changing, and we only know that as a function of prices. And so that I think about money as that governor, it's basically as people speculate and pursue essentially games of trial and error to say, what do other people value? They are doing that based on changes in prices. That's dictating. That's the input to their behavior. That's how it's essentially like a cheat sheet. What are the things that I want to pursue? Whether it's podcasting. Well, if I do this, I can, you know, people will pay me X. Well, your only concept of X is because you know what everybody else values in terms of what those prices are. You See other podcasts, you see an opportunity, so you follow it. Then if a bunch of people get into podcasting and it's not going to be valued as much, but maybe as a whole it is. But only the top people that have the highest quality get paid. And so it's. But it's. But it's that appreciation for as prices change that guides individual decisions and then as they correct. It's a very natural function that takes. It's a very precise function, not necessarily precise, but it's a function of taking imbalance and eliminating it to find an equilibrium or balance. What the Fed does is it takes those imbalances, and as that housing market comes down to correct, it says, no, we can't have that because our system, we need stable prices, quote. And that's where it's the exact opposite of what you would want. There is imbalance. We need to find balance. And in Bitcoin, because you can't manipulate the money supply, you can't manipulate price signals. And if you can't manipulate price signals, and then what that means is that whenever imbalances exist, they will far more quickly correct, because there is not a exogenous market force to step in like the Fed and print $3 trillion to keep prices right where they're at. It's working in. It's like if the market economy is swimming downstream, the Fed and its actions are causing everyone to turn around and swim upstream, basically.
- [23:30]
Alex
So it's absolutely essential to have a fixed monetary supply. It can't work without this.
- [23:37]
Parker Lewis
I would say that if there is a mechanism that is exogenous to the economy, which is the Fed printing money, there's a current set of dollars that exist, and everyone's out there working and pricing their goods and services in dollars, and then the Fed can just unilaterally change the game and double the money supply. Then that currency that underpins the economic structure and the economic coordination function, it basically sends false price signals. And when you have false price signals, it causes economic distortion and ultimately economic imbalance. And that literally is the root of, of these massive wealth extremes. I think about it like. So it's not to say that you need a fixed money supply. There is a reality, and it might be kind of subject for another day, there is a reality that a fixed money supply is the optimal supply of money, one that doesn't change because it eliminates the supply of money as a function that's creating distortions. And in the function of price setting, which are preferences, which are constantly kind of creating imbalances and then eliminating imbalances, creating and eliminating. And so I'd say it's a reframing of the kind of comment your question would be. No, you don't need a fixed money supply, but you do need one that can't be created arbitrarily.
- [25:05]
Alex
So consistent. So I know some people would disagree with this entirely that any form of inflation in the money supply of Bitcoin is completely not acceptable. But I think what you're saying is if it exists as long as it's consistent, that would be fine. But it's the arbitrary ability to go in and just suddenly have a massive change because somebody wants to make that decision.
- [25:30]
Parker Lewis
Well, I would frame it a little bit differently that the ability to arbitrarily create money is a fundamental problem. It's the worst possible scenario that you could ask for if you were evaluating, you know, five options of money. One where somebody in a far off land can come in and immediately double the money supply. And most people in the economy have no concept of that. Right. 99% of people don't know that the Fed printed $3 trillion or what the implications will be. That's the worst end of the extreme. Now, it's not to say that. So it's a difference between the ability for arbitrary money to be inserted to the system by people that, that are very few in number versus the other end of the spectrum, which is having the predictability of something being fixed. It would be to say that if you had a form of money where you could reliably count on the fact that it only increased 1% a year, that would be better than the Fed being able to come in and print trillions of dollars. But money is ultimately an AB test such that if there were money that increased 1% a year and there was this other money that, that had a fixed money supply, each individual economic actor would be rational to opt into the form of money that didn't have some marginal amount of inflation, because ultimately that inflation is exogenous to the actual functioning of a monetary system or a price system. The price system, what you're learning from it is relative value. Value of individual goods, value of money itself, what its purchasing power is, but then also literally how many cars you have to build to make to buy a home or how many apples you got to produce to buy a car. That the information that's actually of value is that relative price signal and the changes in prices. So the fixed money supply is the polar opposite of one that can be arbitrarily increased. But that anywhere in between those, you're always going to be making AB decisions. And each, like, if you don't, you can't think in aggregates and think what's best for society. You have to think about what would an individual individual do if they had the opportunity to opt into a form of money that couldn't be debased because that debasement does not benefit the holder of the currency. And oftentimes people will think about, oh, well, there's really rich people and people have made millions of dollars, you quote, millions of dollars that they just own bitcoin, a fixed share of a money supply that can't be altered, that they immediately think to wealthy people and they think that system, doesn't that system benefit them. And one of the tweets that I included in my piece was a quote from Vitalik Buterin where he said the idea of owning a fixed supply of all the world's money indefinitely into the future seems very oligarchic. But the thing that's actually true is that by creating that environment, you can essentially ensure the same rights for the poorest people on the spectrum versus the wealthiest people on the spectrum. So if you are somebody in Nicaragua, the second poorest country in the Western hemisphere, and you deliver some good or service and got paid in bitcoin, you have the same rights within the bitcoin network as Paul Tudor Jones in New York. And that in the legacy financial system, the billionaire class has massive preferential benefits from the way that that structure is created versus, hey, most people, to the fact that everyone is incentivized, that if you can just opt into a system where there cannot be inflation, that means that the value you've delivered to the world can't be artificially or arbitrarily debased based on somebody else's incentives. So in that regard, it effectively levels the playing field by ensuring equal rights. Because the other scenario is, well, what is the mechanism by which inflation isn't introduced? Who gets to do that by what function? Clearly something like, well, I don't want to say clearly because most people don't understand gold. But, you know, if we're comparing gold to the, to the current version of central banking, you actually have to go mine gold out of the ground. You got to perform work to do that. You can't do it arbitrarily. It costs something to do. In the case of the fed, it costs literally zero, zero to print $3 trillion. It costs zero to print 10 trillion or zero to print 20.
- [30:09]
Alex
Do you ever think about the trade offs though, and some of the benefits that exist by having the money printer. So in times of crisis, the governments have the ability to put their hands into the money printer and be able to, you know, help society or help groups of people as a whole or. Do you ever think about, and I'm only doing this not because I, you know, I fundamentally believe the net benefit is to have a fixed monetary supply. But do you also think about the fact that there are certain things that maybe have advanced quicker because of the money printer? Maybe medicine's advanced quicker as with everything else, because there has been more money that's been able to be put towards those things. Do you ever think about that? The trade off? Like, do we lose or do we lose?
- [30:52]
Parker Lewis
Absolutely. And I think that, you know, I'd say kind of addressing the first part of that or the last part of the question. First, it's like, how would Venezuela feel, right? Like they might have accelerated some advancement of certain technologies that could be in hospitals. But then if your monetary structure breaks down and you can't deliver energy to the hospital and it's unsustainable, then did you do any economic good if you ended up in a worse spot ultimately? And so I would argue that you could look at individual kind of technological advancements and would say, hey, we actually got that quicker, whatever that might be, medical devices or whatever it might have been. But there is a reality that the end game of printing money, if the government can print trillions of dollars, there's a very fundamental truism, I would say, which is the central bank can control the supply of its currency, it cannot make people value it. And if I know that the central bank can print trillions of dollars at zero cost, I will stop valuing that, as will everyone. Because not everyone has to be rational economic actors. But ultimately they're, their time is scarce, their time is limited on earth and they're not going to go put in 10 hours, 14 hours a day of contributing value to somebody else for a unit of currency that can quickly be debased at zero cost. And so I think that the right perspective on that latter question is thinking about it from the contract of you might have accelerated something, but if you can't use it into the future because it's unsustainable, it's ultimately no good.
- [32:44]
Alex
But is there anything we lose where you're like, okay, there is a benefit to having the printer here, but as a net effect, it's not worth it. But is there anything.
- [32:53]
Parker Lewis
I think the only benefits are short term that it's trading the long term for the short term, which is not a great winning strategy. It's going to make things feel good on a very short term interim basis. And it's going to cause massive economic disruption over the long term. And I would look at it because when you, when you, you get into the fundamentals, you're like, oh, well, we got all this great medical device equipment because we made money basically costless. It's like. But we have these massive wealth extremes and the poorest people on the economic structure can't access it. How great is that? And so I would say in no scenario, for fundamental reasons, because I acknowledge that end game and I acknowledge that it ends in ruin, that we wouldn't ever want to trade the short term or accept a short term benefit at the cost of the long term. Because in this scenario, the long term event of a currency hyperinflating is cataclysmic. And it's also when we look back at history, the marginal cost to produce any good is where its value will trend. And I think when people start to get into the economic fundamentals of saying, why if I go to work and produce value for somebody else, can the government just decide to award money to somebody else? Because they think that that's what we collectively, at least our country, I believe Britain as well, is founded on the idea of an individual, at least the United States is, and that it's. We're not trading the interest of the individual over the collective. I mean, we ultimately are. But it's also that when you think about organizing people, that if you allow each individual to make their own decision, that the aggregate of those will add up to a greater collective whole too. But, but you have to just focus on the individual and their individual rights. And that is something that you're stripping from them. When you put the government printing press in the hands of 12 people sitting in Washington D.C. that are entirely disconnected from people in Kansas and people in Texas and people in Florida and people in California. And so when I bring it back to maybe the first part of your question, which was what about times of crisis? And that's a question that I honestly get quite often. But I also think that it's a false dilemma because there's nothing about Bitcoin and there's nothing about a fixed money supply that prevents the ability of a government to step in in time of crisis. There's also nothing that effectively prevents a central bank. The only thing that has to happen in a system where there's a fixed money Supply. If you want a central banker, you want the government to be able to spend a certain percentage of the economic share is you actually have to fund it. So you either have. In a world of bitcoin, you can have a central bank, you can have a lender of last resort, you would just have to capitalize it. The only way to capitalize it would be to actually capitalize it with Bitcoin. The way to do that would be to tax people. That way you put it all out in front on the table where you say, we think that it's important that we have these pools of bitcoin or pools of monetary capital to be able to save for a rainy day and we want these public institutions to allocate it. That is not what you have today. You have the worst kind of that. You don't tax people. You, you print it in a way that they don't actually have representation over it. And that is the fundamental problem. It basically strips the people's right to decide how they're going to be organized.
- [36:55]
Peter McCormack
Next up, I talked to Parker more about central banks and money printing. But before that, I do have a message from my amazing show sponsors. And we're going to kick off here with Ledger, the world's most popular hardware wallet. Now, a hardware wallet allows you to take custody of your Bitcoin. And I have been a Ledger customer since early 2017. And that Nano S I bought back then, I'm still using now. Ledger makes it easy for you to safely manage your Bitcoin using their Ledger Li software which interfaces with your device. And if you're an Android phone user, you can connect that to your nano S and manage your Bitcoin on the go. If you want to find out more, please head over to ledger.com which is L E D G-E R.com Next up, it's Gemini. Now, I am using them exclusively for buying selling Bitcoin. But as I said, I. I have not sold a single SAT through Gemini since they came on as a sponsor. But I am using the app to buy the dips. And I've also set up my dollar cost average with twice monthly buys of Bitcoin. And I'm yet to see a better or easier interface for buying Bitcoin. With a streamlined trading view, you have access to all the tools you need to understand and start investing all through one clear, attractive interface. So if you want to find out more, please head over to gemini.com which is G E M R. Also, let's talk about Revolut. Now, I'VE been talking about this for a few months. So many of you are aware, Louise, TSB, my bank for 25 years closed down all my accounts. They clearly don't like Bitcoin. And when Revolut heard this, they got in touch. They said, come on, Pete, move over to us. And you know what? It could not have been easier to create an account. And most importantly, they like Bitcoin and they want to make it easy for you to transfer to exchanges. And Revolut are offering 20 pounds or $20 to all new customers that complete three card transactions. It only takes a few minutes to set up. You can create a card and add it to Apple. Pay immediately to get that cash in your pocket as soon as possible. And you know what I would do? I would just convert that money straight into Bitcoin. Now, if you want to find out more, just please head over to revolut.com wbd that is R E V O-L-U-T.com wbd and this week we finish off with BlockFi, who recently announced the launch of their BlockFi Rewards Visa Signature Card. Now, for customers in the US who are interested in owning Bitcoin or stacking more SATs, the BlockFi Rewards Credit Card provides the easiest way to earn Bitcoin. Because you get 1.5% back in Bitcoin on all card purchases with no annual fee. It is the smartest way to stack sats with Bitcoin Rewards on every purchase. Not just that, but you can also get 3.5% back in Bitcoin during your first three months of card ownership. And you get 2% back in Bitcoin on every purchase, over $50,000 of annual spend. Now, if you're interested in finding out more, then please head over to blockfi.com, which is b l o c k f I dot com.
- [39:40]
Alex
What do you think's changed, though? Because when I look back at certainly on the uk, like economic history, there are times where the governments have run a surplus and times they've run a deficit, but felt like they were trying to balance over time. But it feels like this last decade, two decades, that idea of balancing the government's books seems to have gone out the window. It's just like we can run a permanent deficit and that deficit can grow to any level we want. I mean, the debt ceiling has no meaning anymore in the us. It just, it was a thing and now it isn't. What do you think has changed? Because one of the things I think about, I've mentioned it A few times. I wonder if it's got anything to do with the fact that we are now a global economic system and the first country to blink loses.
- [40:29]
Parker Lewis
No, I would say that it stems from the financial crisis. The financial crisis happened in the eyes of the Fed or central bankers all over the world, or politicians all over the world.
- [40:41]
Alex
But that was a global financial crisis.
- [40:43]
Parker Lewis
Sure, but something fundamentally changed from 2008 going forward, and that it was as the world in their mind was collapsing. Like, if the Fed hadn't stepped in, every Wall street investment bank would have filed for bankruptcy. And in many ways, because of the way that the Fed system works, the banking system has gone from, rather than just being another sector of the economy, it's basically centralized where everything has to go through the banking system. And I think the perspective was, well, if the banking system collapsed, everything's collapsed. But the reality is there's actually a real world economy, there's actually infrastructure that exists. But what happened was in response to that financial crisis, The Fed printed $3.6 trillion. It was crazier than anything that they've ever done. And because of the way the system is actually constructed, because people don't understand it very well. What they saw was trillions were printed and we didn't see hyperinflation. And they didn't understand why. But they then assume, well, we can do this forever. They can't do it forever. The reason why they can't do it forever is that that fissure that was opened in 2008, it never went away. And it was actually that fissure, which was an unsustainable credit system which dictates, and it exists in every major developed economy. It's not specific to the United States that the central banks and the governments have to continue to print money to prop up the credit system, otherwise that system will collapse. If that system collapse, it will create instability. But again, that is trading the short term for an adverse long term.
- [42:35]
Alex
But it feels like that could be happening now.
- [42:37]
Parker Lewis
Right, but that thing that. But when they saw actions being taken, trillions of dollars being printed, and they didn't immediately see the, the inflation show up, they thought, ah, we can do this, we can play God. But it wasn't so much that they could actually play God, it was that they didn't understand the cause and effect of what the Fed was doing.
- [43:00]
Alex
Why do you think they did get away with it economically? Like why they didn't see hyperinflation?
- [43:07]
Parker Lewis
The reason is that at the time of the great financial crisis, this is just specific to the U.S. yeah, there was about 52 and a half trillion dollars worth of dollar denominated debt in the banking system. There were only approximately $350 billion. So every dollar in the system had essentially been lent out more than 150 times. And when they. And also because of that dynamic, because the size of the credit system, which had only gotten to that point because of 30 to 40 years of every time there was an economic slowdown, think about every time there's an economic slowdown, Think about that as economic imbalance. And when the Fed would step in to put more dollars in, it would prevent that imbalance from being eliminated. It would just kick the can, kick the can down the road. But more than that, it would actually cause an imbalance to grow, bubbling up under the surface, massive wealth extremes where you don't have an economy that can function in a symbiotic way, where too few people are contributing and owning the productive assets of society and the people on the lower end of the economic spectrum just continue to fall further and further behind. That whole thing came to a tipping point in the financial crisis. But if you think about that dynamic of 52 and a half trillion dollars worth of dollar denominated credit, and what I reinforce for people is, you know, oftentimes people hear about the financial crisis and they feel about, they hear about, you know, strippers having five homes and cds and CDOs and synthetic cds, whatever it might be, that's not derivatives, that's not unfunded pension liabilities that people oftentimes quote about the federal government. The 52.5 trillion is just vanilla debt, you know, or at least what existed at the time. So think mortgages, student loans, credit cards, federal debt, state debt, local debt, corporate debt, fixed liability, fixed maturity debt at the time of the financial crisis was 52.5 trillion. There were only $350 billion. So when the Fed steps in and inserts 3.6 trillion from 2009 to 2014, the amount of debt, the system's still far too many dollars short. So they're essentially buying credit instruments to put new dollars. And essentially what that does on a very short term basis is it de levers the credit system by putting more dollars in that can support all the debt. That is why that combination of factors is why because the credit system is so large, it is the marginal price setter. And when you put those dollars in, all you were doing was putting the dollars in to ensure that the credit system didn't immediately collapse. But then what happens is that Inflation starts to appear. And the purpose of putting those dollars in is to allow the credit system to expand because that credit system is so much larger than the base money supply. That is how inflation ultimately comes through. So today we're at a point where in 2008 the credit system was 52.5 trillion. Today, approximately, I did not check the last quarterly report, it's about 85 trillion. So as the credit system expands, it always needs more dollars, otherwise it will collapse. But it is that amount of debt which is essentially future demand for dollars that creates short term stability in the price of dollars, because the entire system wide is today still $80 trillion short. And so that debt system, or the credit system is what creates relative scarcity for dollars such that you can put in another trillion and the whole thing doesn't immediately collapse. But as you do that, each individual person starts to figure it out slowly, they figure it out initially. For those that don't know that the Fed's printing money through their local prices, cost of bread goes up, cost of.
- [47:10]
Alex
Cars go up, which we're seeing now, we're seeing a lot of evidence of that now.
- [47:16]
Parker Lewis
But it happens through the credit system up until the point where everyone figures out that it's actually a game of musical chairs. And it's not like five people walking around with only four chairs, it's 20 people walking around with one chair. And that what happened in 2008 was governments, Central bankers looked at it, they fundamentally did not understand, they do not understand that dynamic, they don't understand why it didn't immediately cause prices to double or triple when you effectively. The Fed increased the money spike eight times over 16 years, people looked at it and said, well, we didn't see inflation, so therefore let's keep going, boys. And ultimately everyone who has any common sense or a lick of common sense would look at it and say this is crazy, it's not going to end well. And then what the, the political elite look at it say, but we had to do it. And I think that if you're actually in the market dealing with the implications, you will look around, you will say it was crazy, it's not going to end well, and is not going to end well. And that as those people in the market look around and say if the governments keep doing this out of self preservation and as a survival instinct, I have to find a path to optimize.
- [48:46]
Alex
What'S politically not popular, what's politically not popular to solve these financial problems.
- [48:52]
Parker Lewis
Well, I think it's politically palatable to kick the can down the road.
- [48:55]
Alex
Yeah, of course. Because you want to win your next election, keep your seat, you know, keep your party in power. It's not being politically popular to turn around and say, you know what, we can't print any more money. We're going to go through a massive economic shock. We've all got to ride this out together. It's not politically popular.
- [49:11]
Parker Lewis
It's absolutely not. One of the things that I did on my path to bitcoin was I went back and read the transcripts from a lot of Fed meetings and that you start to understand the psychology of people in power. And you know, there might be a scenario where these people are just incredibly evil and they're just trying to fuck over poor people. Like that's a scenario. It's not one that I, I don't buy that. I, I don't buy that either. But I also do very kind of firmly hold that they do not understand the consequences of their actions. And you can't judge people by their, their intentions, but by the results of their policies. And that, that. When I, When I was reading those transcripts, there was a particular quote from Ben Bernanke, I believe it was in 2011. And in 2011, the financial crisis was in 2008, 2009. The Fed had inserted about $1.6 trillion into the system between 2009 and middle of 2011. So they had, you know, increased the monetary, the base money supply in the banking system by like 5x that things started to recede back to like it was basically the world was going back into another financial crisis and there was the European debt crisis. It went from recovery to shit, was getting bad quickly. And Ben Bernanke had a quote in, I believe it was like an August 2011 Fed meeting. That one thing I reiterate for people is that the Fed transcripts don't come out for five years. So what was happening in 2011 doesn't actually come out until 2016. So nobody knew about this at the time. But he basically said, paraphrasing but close to verbatim, that he was willing to accept that monetary policy wasn't the solution and that the problems were a combination of fiscal and structural. But, quote, we must be palliative. And he was basically saying, I can recognize that we're not the solution, but we must do something. And that there is a reality that common sense people have that inaction is an action. If you keep doing something and it's not turning out well for you, you don't just keep doing it. And that in the case of the Fed, the problem is that they keep doing things that don't work, but they also have the power and ability to keep doing it in a big way to say, yeah, we're going to create a trillion new dollars today or we're going to create 3 trillion over three months, and that everybody else has to face the consequences. And that if anybody knew or had that knowledge that they would opt out of it if they could, not only would that not be how they behave in their current lives because they're constrained by market forces and, and the consequences of trial and error, but they, they would, they would say, stop. Like, let's reevaluate. I can't keep, you know, plowing money into this thing that, that loses money, or I get fired from the same job five times, I can't be pursuing this job. They'd have to stop and reevaluate. In the Fed's world, it's like, nope, we can just keep going. And that the beautiful thing about Bitcoin is that we just eliminate that ability. We eliminate the ability for people outside of, you know, essentially outside of an elected government, because technically the Fed is a private entity from screwing with our money. We basically said, you know, anybody who opts into Bitcoin says, I am willing to opt into a system voluntarily where nobody gets to print money, including myself, but that is a better alternative. By opting into a system which is the Fed system, that is, somebody gets to print money, it's just not me. And I don't know who it is, and I don't know why they do it. And they might think that they're acting in my best interest, but I'm the person that decides what my best interest is. And then when you add up all those individual decisions of hundreds of millions, if not billions of people doing the AB analysis, which one of those two things do I want to opt into? Do I want to opt into if I contribute value to other human beings and they pay me in a form of money that somebody else can't arbitrarily devalue the amount of work that I put in?
- [53:42]
Alex
Yeah. So if you came this out, I mean, I'm asking if you have. I'm sure you have, but how this plays out, Because I can imagine for a long time we're going to be in this dual position of sovereign currencies and Bitcoin. You see a future on a certain timescale where perhaps we end up not having the Fed or the ECB and government changes. But have you Gamed out how that actually happens? Is it a shock to the system? Is it a slow collapse? How do you see this playing out? Because it's really hard to imagine a world where we don't have governments controlling the money. Because we've always had that in our lifetime and my parents lifetimes have you came that out?
- [54:27]
Parker Lewis
I mean timing is the hardest thing to predict. I would say that I try to go down to micro decisions, individual decision points, economic incentives. Every individual has the opportunity to contribute value into the world for the benefit of others and to determine what form of money they want to store the value that they're not immediately spending it. And they have an incentive to choose the best form of money. The form of money that is going to give them a combination of range of access to purchase things from other people as well as assurances that that money will be accepted by people people into the future. The greatest assurance of that is that the value that's stored in it is held over the future. That creates the greatest incentive for other people to adopt it. And so the way I can't game out exactly timing I could, I could postulate on time is not important.
- [55:28]
Alex
More. More than what actually happens.
- [55:31]
Parker Lewis
Yeah. So I would think about it behaviorally as. As more people as knowledge distributes. As more people learn about Bitcoin, as more people learn about money for the first time. Like you said, money has always been a function of government for. For anyone who's alive today. It is true that that has always been the case. And for the first time that is not the case. Or it's not the only option. And that the more people that evaluate that question, the more that will opt in to Bitcoin that there is. If all value is subjective, there are objective ways to evaluate what is going to be more functional as money. And that it's a very clear in the AB test between Bitcoin and the dollar, Bitcoin and Euros, Bitcoin and yen, Bitcoin and gold in my view because of properties that have emerged in Bitcoin it's fixed supply, ability to transmit it over the communication channel, the ability to divide into very small or large units or aggregate into large units. That in that a B Test it's like 99 out of 100 will choose that. But adoption. Just because I have that perspective doesn't mean that the path to adoption isn't a hard one. That people have to pursue that on their own interest. That you'll never be able to explain Bitcoin to someone that that isn't Curious about knowing about it. But there's also a reality that as more people adopt bitcoin, it becomes easier to adopt. Not just because there's more infrastructure, even though there is, but not just because there's more educational content. It's because more people have looked at this equation, stared, been perplexed by it, and then come to understand it. You know, oftentimes thanks to your podcast. But then as that happens, there's a virtuous feedback loop. And as more people have adopted bitcoin, the value of the monetary system is larger. It can afford more capital to build more infrastructure to make it easier to use, and more people can contribute to content around it, to package ideas. Those ideas over time, just as a function of the market determining what is good content versus what is bad. And it being refined becomes easier to earn. But then at the end of that day, when there's 100 million people that have Bitcoin number, 100 million and one is a lot easier to adopt than when there were a million people and the million and first.
- [58:03]
Alex
Well, Greg Foss said it to me recently. He said bitcoin is a better buy and $35,000. I think I was surprised when he said it than it was at $1,000. Obviously, if you bought it, $1,000 held up to 35,000. That's great for you. But as a. As if you talk about the safety of an investment in it, it's a Safer bet at 35,000, 1,000, because there's more participants in the market, there's more people you can pay for things from or receive from. And it's just a whole big infrastructure.
- [58:33]
Parker Lewis
Yeah. And there's also a function that as bitcoin is adopted by more people, its value rises. The value of the monetary value of a monetary network that has 10 million people is less than the value of monetary that has 100 million people. And it's not just 10 times more valuable. And that is because the number of potential trading partners doesn't just go up linearly, it goes up exponentially.
- [58:58]
Alex
Like the telephones.
- [58:59]
Parker Lewis
Yeah. But also fundamentally, as more people adopt bitcoin, the network itself becomes further and further decentralized at many different layers. And that, as that happens, the credibility of its fixed supply of the core rules that ensure that there will only ever be 21 million. Bitcoin, not static. There are a core set of rules that don't change. But as more and more people adopt bitcoin, as the network becomes more decentralized, it becomes functionally harder to change those rules. So the credibility of bitcoin's fixed monetary policy of 21 million gets more and more credible when it's 100 million versus 10 million, and it will be when it's a billion. And so those are the incentives that dictate kind of how this happens. But I also think that kind of to that question of sequencing, while the timing is unpredictable, there is a way to think about if there's 365 days in a year and there's a certain number of people, how many people come to learn about bitcoin every day? If there's more content about it, if the price is going up, if it's talked about on news, if Congress is starting to give it credibility by saying we need to legislate certain things, more people learn about it. So the actual distribution of knowledge accelerates. And the propensity to adopt, because the hurdle rate is now lower, as more people adopt, it will accelerate. And what will ultimately happen is people will be looking around and they will start to convert things that are monetary substitutes into bitcoin, like bonds, stocks, real estate. There's a lot of things that people have started to store their wealth in that's intended to be passive as a way to outstrip or outrun the central bank printing money. When they realize that they can opt out of that whole game, they will sell those assets for Bitcoin because they found a superior alternative to do what they were always intending to do. As they do that, as they start to sell bonds to buy bitcoin, like why own a US treasury that yields 50 basis point when the government is 2 or 3xing the supply of currency, that essentially will accelerate. It will impair the credit impulse at the same time that it's inducing the credit system to contract, which, because it's as. As leveraged as it is, it will induce basically the credit system to collapse, not because of bitcoin, but because the system itself is so fragile and so unsustainable. And as that happens, it will actually accelerate the need of the central bank to print more money to keep the system propped up. And so it will actually feed on itself and accelerate. Whether the critical mass of bitcoin holders is 10% of people or 20% of people, it's unclear. But I think psychologically, once it gets to that point where it's like 1 in 10 people have adopted Bitcoin or 2 in 10, 1 in 5, that things begin to really accelerate, that the marginal cost to adopt Bitcoin and the uncertainty about it becomes lower and lower. And Its value proposition is inversely related to that.
- [62:22]
Alex
Yeah, it's really interesting because it feels like. It feels like we're a lot closer to that point than I thought we would be during this run. I didn't expect to see companies coming and buying the amount of bitcoin they were. I certainly didn't expect to see a government making bitcoin legal tender, which is. We were two weeks away from that. September 7th. That happens. I think that is going to be a really interesting. Essentially a project for bitcoin. See how that plays out in El Salvador. See what actually happens to the country. I mean, how much are your eyes on that as almost like a test bed for a lens into the future, what bitcoin can mean for a country where it is legal tender there, where it is essentially, I guess, taking them away from their own government for the things they can do. I mean, look, we know they don't have their own currency as it is, but it's putting them in a very different situation.
- [63:16]
Parker Lewis
Yeah. I mean, I think that it will do wonders for El Salvador ultimately. I think that in terms of the grand scheme of bitcoin, what it. What its most important function is that. That it normalizes kind of re. Anchors. What is this? Because, you know, one brave soul or a group of brave souls were willing to. To be early in that. But the same thing is true of virtually everything. So Michael Saylor, first person to come out and say, I'm shifting over my corporate balance sheet to bitcoin to the tune of 90% to the tune. Maybe now it's like 95%. Right. That. That there. There is always like, definitionally, somebody has to move first. Right. And so I. But I do agree with you that, that I wouldn't have expected, you know, a company like MicroStrategy to come out and. And do that as early as they did, or El Salvador. But to that question of. It feels. It feels functionally different today than it did 24 months ago. And a critical thing happened, which was there was a massive imbalance in the credit system. People attribute it to Covid. Covid might have exacerbated it, but when the Fed came in and printed $3 trillion in three months, that took people from being a frog in a pot of water that slowly boils versus throwing a frog in a boiling pot of water. And that it was. Everyone had been lulled to sleep by kind of the decade that happened after the financial crisis and we were returning to some level of normalcy. And then when that fragility started to Reappear that day in March, March 12, when Dow Jones was down 10%, high yield and investment grade credit were both down 25% in a matter of a few weeks. And then the Fed came in and basically said, we're going to print all the dollars in the world. There's no limits. Neel Kashkari got on 60 Minutes and said, there's infinite amount of cash at the Fed. There are people in the market like Michael Saylor, the President of El Salvador, Paul Tudor Jones, whoever it might be, that otherwise would not have woken up out of a trance. And they were like, holy shit, this is real. It was the band Aid being ripped off. And now that they're paying attention, because they can't not be, because it was like they were just punched in the face versus, you know, death of a thousand cuts that now each incremental action that the Fed takes, I think they printed 150 billion in June alone. That was nearly 2x. Maybe it was 160 billion. It was 2x, the height of the prior QE programs. Each time they do it, people are more cognizant of it. And they know now that there's an alternative, or at least more people are figuring out that there's an alternative. And so next time the Fed steps in and prints a trillion dollars, you know, and that it won't be long before the next trillion comes in, in my view, that everyone is at the front of their seats and they're actively searching out. And at that same time, the propensity to adopt Bitcoin is becoming greater and greater because more people have crossed over that path. They've looked at the equation, they've had to ask the fundamental questions. And while there is a lot of speculation, the signal that they find is that 21 million. And they figure out that that is the solution to this very problem that's staring at them square in the face, which is their government printing money, putting their business at risk, putting their families at risk, putting their livelihoods at risk, because they know that it will end well and they're not willing to sit back and just accept somebody in a far off land fucking up their lives.
- [66:59]
Alex
So do you think much about what this means? Because I've talked to you about one of the things on my mind at the moment is governance and political instability and the polarized society politically. And every specific issue. I constantly try to imagine a world, a bitcoin world, but also just a world where people are a bit more cohesive. How do you have anarchists and libertarians and people on the left, on the right and apolitical. How do you all kind of ordinate and work well together? Bitcoin is a tool for this. But I can't get my head into the place where I think, what will this world actually look like? Because certain amount of power is taken away from the government with this. They become a provider of services, which we all know is something which would be a preferred way the government operates. But I can't actually picture this world like, what is the role of government? How will it exist? What does it mean for police forces? What does it mean for medical services? What does it mean for fire services? What does it mean for, I don't know, conservation or protection of parks or protection of areas of natural beauty? Like all different things that governments do. Like, I know there's shit along all the things, but there's other things I think they do to do better or will be done better centralized. How do you think about all that? Because it feels like a really different world. I don't. Don't even know if it'll happen in.
- [68:23]
Parker Lewis
Our lifetime, but I expect it will.
- [68:26]
Alex
You think it will?
- [68:26]
Parker Lewis
Yeah. So the good thing is we'll get to see and then we can come back and talk about it. But that the, the way that I would frame it is that whether it's all the division and the role of government, it's like, I think most, you know, kind of keying in on an individual kind of problem or circumstance that I think everyone agrees on, which is there are exacerbating wealth extremes. And that is a problem what people disagree about. You know, again, there's a lot of things that people are divided about and a lot of people have problems about. But like just keying in on that one. About 50% of the people in the United States don't have like $500 of savings. Right? And I think, you know, whether someone's on the left side of the spectrum or the right side of the spectrum, it's. That's a problem. I don't know any logical person that would look like and say it's not. And now they might not understand the extent of the problem and it's actually their own problem because it's going to result in economic instability or we already have economic instability. Everyone has an interest in finding economic balance. Where the extreme comes in is what the right solution is. And both the beauty of it as well as the problem is it's not something that they can fix that. The only way that they can then come back and Have a discussion to think about problems at a higher level is once the money supply gets fixed, the solution is not political. It's both the blessing and the curse. Because curses, they all think that it's. They. Whoever thinks that there's a political solution to something thinks that there must be one. But I think the analogy that I use, it's like, you know, cleaning the window, trying to clean the windows on the 100th floor of a skyscraper when the bottom 10 floors are like Jenga, a Jenga set with, with only one square left. You know, what's the, what's the purpose of working on the hundredth floor? To fix a problem that is so, so much higher up in, in the kind of order of effects versus fixing the foundation. And, and that the, the blessing is that the foundation has been fixed. Everyone else just has to figure it out in their own time. And so I don't think that it's so much what is life like without government? And it's not that we're not going to have parks and it's not going to. We're not going to have, you know, EMS and fire is that we're just going to have to pay for it via taxes. And that when you do that, that you'll find out what people actually value in government performing. Because government either performs the function or somebody else's, if it's of value and people value it, that they will figure out a way to get that value delivered and that they're. There are ways. And I think that at least my own personal philosophy is there's ways that people decide to organize themselves. We have a republic. If somebody wants to go out, because I think at a fundamental level, it's like, go out now, even if it's, you know, go through the thought experiment of, you know, ignore that there's the United States. You know, go out into the middle of the country, find a river and set up an encampment. And then people come along and they want to come live under, abide by your rules or you set a certain set of rules. Someone wants to benefit from some sort of economic structure that you've put in place. A water system or a waste management system or a telecom system. Somebody, if they want to come into your economic system, they've got to play by your rules. But you also tell them how those rules get set and how they change. There's nothing about Bitcoin that fundamentally changes that. That it just means that, you know, the government can't spend money that it doesn't have. And that through the function of having to actually pay for things via taxes is if they, if the government right now, Congress, if they came out and they said, hey, Americans, we're going to tax you $5 trillion to pay for this budget, it would never get done. They'd all be fired.
- [72:39]
Alex
That's why they have to print them.
- [72:42]
Parker Lewis
And they do that because they can, because they don't actually have to do the unpopular thing, which is to tax and pay for it. And any common sense person would say, well, shouldn't it be fine that they can't print money to pay for all these things? Because how do we know what we actually value if they're just printing money to do it? Like, put the bill on our table and say, hey, we want to go do this thing over here, we're going to need to tax you to do it. And people would say yes or no. And there will be an equilibrium. It will just be far smaller than what it is now today.
- [73:13]
Alex
Yeah, yeah. It's fascinating to watch. And it's funny when I talk to different people involved in bitcoin about different things. With you, it's primarily about the role of money. And I think the first interview we ever did with that. But I think we should move on towards this point because I was saying to you before that I've been thinking about selling my bitcoin, so we should cover this because I know we've got blasphemy. We've got blasphemy. And I know what you're going to say because actually you need to hold bitcoin, have skin in the games, certain things like that. But I think we might even have had this conversation before. I don't think so. I thought we had.
- [73:50]
Parker Lewis
Maybe, maybe.
- [73:53]
Alex
Because I've been thinking about this a lot, thinking about governance, thinking about the world of bitcoin, and I feel a certain sense of responsibility with producing content. And sometimes I wonder if I produce content which suits my bitcoin. Right. So my last show I was talking about the bitcoin Willy Woo shows, which are all about trading and making more bitcoin, which are really fascinating shows. I learn a lot about it, but actually at the same time I don't feel like, are they serving. Is this about serving the good of everyone with understand bitcoin? And I'm repeating myself, but my interview with Weinstein really impacted me. I have not been able to stop thinking about that question, what are we doing? And I know bitcoin Twitter isn't the real world, but it is fighting, yelling at each Other memes being mean, laserized, whatever. And I'm a hypocrite myself sometimes. And I was thinking, how could I be as objective as possible trying to be a semi interviewer journalist in doing this? And I was like, I think I need to sell my Bitcoin.
- [74:59]
Parker Lewis
Yeah. I would think that you have to look at them as two fundamentally different actions, which is because there's also the alternative, which is, well, maybe I should not produce content for bitcoin. Right. Because if you start thinking about it that way, I have two decision points and they're totally independent of each other. There's produce content for Bitcoin, not produce content for Bitcoin or holding the best form of money that's ever existed versus, not that those are two independent decisions and they're independent of each other. That if you say, okay, imagine that I did not report on Bitcoin, there's.
- [75:41]
Alex
No scenario where I sell my Bitcoin and don't make Bitcoin content.
- [75:45]
Parker Lewis
Well, no, no, but I'm saying you have to go through the thought exercise to be able to understand why you're drawing a false dilemma for yourself.
- [75:52]
Alex
We're doing your first principles here, aren't we? Yeah.
- [75:55]
Parker Lewis
That it's, you don't produce content for Bitcoin. What is the right economic decision for you as an individual and for you as your family? If you don't hold money that's going to preserve its value into the future and you determine to hold euros or pounds and your family becomes impoverished, Was that a good economic decision? And so you have to think about that fundamental question. And then when you come back and say, okay, now I'm producing content, am I really being objective about how Bitcoin works or doesn't work or my perspective of it? If you on a personal level have made that decision as an individual to say, okay, ignore the fact that whatever I do in the world, I need to store my value in a form of money that is actually going to be functional in the future. Otherwise the scenario is ruinous for you and your family. Then you're like, well, if I come to that personal decision that that's what's best for me and my family, then there is nothing that exists at a higher level that is, that is in conflict with a position that you take that you're not, you know, you wouldn't be sitting up here. And I, and I think about it by what I do, building a bitcoin company that helps people secure their Bitcoin, producing bitcoin content, having 90% of my wealth. Plus, in bitcoin, I am very incentivized to know about whether or not I've made the wrong decision.
- [77:30]
Alex
That's fair. Yeah.
- [77:31]
Parker Lewis
Right. Because ultimately each of us has to be making that decision. If we're wrong, we're the ones that are most incentivized to know that we're wrong and to get the hell out as quickly as possible. Maybe it'd be a little bit unethical if I came to that decision that bitcoin is not the best form of money that's ever existed and sold my bitcoin and then told everybody else about it. But so long as you hold that core understanding of bitcoin and that. That that fundamental view is right, then. Then it's a quality. Then it's a question of quality of your journalism. Am I being objective? Was. Did something come up that gave me a concern and I didn't say it because I want more people to view.
- [78:15]
Alex
It, and that is happening.
- [78:16]
Parker Lewis
Well, but that's a question of objectivity. And then if you're conscious of it, then be more objective, not sell your bitcoin. You're conscious of it already, so you've figured it out. It's just a matter of changing your behavior, not selling your bitcoin.
- [78:33]
Alex
I'm sending my bitcoin, though, maybe a little bit.
- [78:36]
Parker Lewis
You can hold your bitcoin and be more objective if you. If you need to be.
- [78:40]
Alex
Yeah.
- [78:42]
Parker Lewis
But I think that, you know, the other side of it is that when I talked about the way that bitcoin is adopted, that if I kind of step out of your role and into mine, if I, through my company, with my team, with our team, if we build a piece of infrastructure that makes it holding bitcoin more secure, that people can, Can. Can store their wealth in a way that they can sleep at night and know that it's going to be there and that it can't be lost, the actual network increases in value because more people can look at it and say, oh, I can have a larger percentage of my wealth in Bitcoin versus any other asset. That doesn't mean over 50%, but that the more secure it is, the more I'm willing to store in the network that those two things are correlated with each other. So as I'm out there as a team or as we're building as a team, that infrastructure, it's actually making the currency itself more valuable. Not in totality, but because now there exists a piece of infrastructure, as is another company building some other piece of the Infrastructure that is not static, that as the infrastructure gets better and better, more and more people get brought along to benefit from it. That it's not zero sum. And the same applies to content. That if the fundamental is true, which is not the case with altcoins, the founders and people, they benefit, they become super wealthy and all the other people get wrecked. Right. In Bitcoin, if you're building infrastructure, it literally allows for other people to more securely access those same benefits. Technical people might have been able to do it five years ago. Now we're making the same thing that technical people would do five years ago available to. To normal people that aren't as technical, so that value transfers onto them. Same thing exists with content. If you're working based on the right fundamentals, that bitcoin is functional, viable as money is the best form of money that ever exists. I hold this as a core understanding of the way that bitcoin works vis a vis any other money. And then I'm producing content about it, then you also are contributing that value by. Because it would be actually the opposite. If you sold your bitcoin and you were writing about producing content about how good or bad bitcoin is, it would kind of be incoherent. You would be like a profiteer. That's just that you would have the wrong incentive. You would just be doing things to, quote, make money to get the most eyeballs, not necessarily aligned to contribute. Because if you're producing bad content and bitcoin people will turn you off. Right. It's a game of trial and error. And that there's a very high market signal for that.
- [81:28]
Alex
Yeah. And that signal turns up in strange places because it's not. The signal isn't on Bitcoin Twitter. That's the interesting thing. It's actually in my emails. That's where the signal comes. It's one of those interesting things. My content is driven by who writes to me and what they say, not what people shout on Twitter about. Which is why recently I've been saying, actually I'm going to start. Start talking to people who are politically on the left a bit more because I'm getting a lot of people coming in just asking me questions similar to the questions I asked you a moment ago about what happens about like conservation of things. Not to say that I am a lefty myself or not to say that like I'm trying to push Bitcoin in a different agenda.
- [82:12]
Peter McCormack
But that's.
- [82:13]
Alex
Those questions are being asked and I think that's actually also a function of Bitcoin's growth this year, the amount of people it's expanded to, we've got all the nerds and the weirdos and the crazies now involved in bitcoin and the radicals. This is permeating the mainstream. And it's going to be people on the left and the right, which, by the way, are different where you are in the world. Like in the uk, we talk about the left and the right. It's very different from here in the us. But there is a lot of demand now from people who are, I think, a bit more of the mainstream.
- [82:39]
Parker Lewis
Yeah, I do. And I think that there are, there are people who will have those questions of, like, well, how do we know this whole fixed supply thing is a good idea? Right. And those people are going to have to go through their own rigorous thought processes and they're going to come in with a firmly held belief that this collective view of the world is a better world. As they get into the functional viability of money and how it works and what its consequences are, they will come to the conclusion that. That the Fed system has fucked over poor people.
- [83:08]
Alex
Yep.
- [83:09]
Parker Lewis
Now, in order to get there, they're going to have to, you know, work through a lot of biases that the, that the opposite is true. But, but that is the point. The Fed will come out and say, you know, there's a quote from Jerome Powell where he's like, you know, there's a lot of things that are, you know, he was basically specifically asked. And I don't think that Jerome Powell, like, you know, is. I mean, I think that is. Policies are terrible, but it's a function of the Fed more so it is any individual. But he was asked, like, there's certain people that think that QE led to an expanding wealth gap. And his response was something where he basically stuttered along and said, there's a lot of things, there's a lot of theories about what's causing an expanding wealth gap. Monetary policy isn't one of them. Now, when each individual thinks about their own actions, their own incentives, and then multiplies that out by every other person's that exists in an economy, they will figure out that the Fed's function takes a world of imbalance, which definitionally says there is a skew that is unsustainable and allows it continue to exist into the future. And it exists like a thousand pounds on people's shoulder who are on the lower end of the spectrum that are trying to rise up. And certain people are capable of doing that. But the, the deck is stacked against them and that bitcoin will ultimately bring people together. That once they can come in and understand, hey we agree on this as a monetary structure, then they can actually figure out what it is they disagree on. And I believe that there will be a lot less. I was thinking about this political divide and how it's really important that bitcoin not be political because it isn't. It's this monetary things of political organization exist at a different kind of functional societal level. But that it's that liberals are going to love bitcoin when they figure out what it will do for people on the lower end of the economic spectrum and that have lower income levels and Democrats are going to hate it and that conservatives are going to love bitcoin when they figure out what it's going to do for government deficits and Republicans are going to hate it and that we're going to figure out who are the real people and who are politicians basically.
- [85:30]
Alex
You orange peeled. Alex, you in? You in bitcoin. We started you on the journey. I think we should go get some barbecue or some food anyway. Anything we didn't cover that you wanted to cover today?
- [85:42]
Parker Lewis
No, I think we covered it all. Any questions? Anything you need me to talk you out of?
- [85:48]
Alex
No, I'm just in a phase and I do this and I think what it is is like three or four times in my life I have self sabotage because I've got to a point, I'm like, I've kind of. It's very selfish and personal level. It's like, okay, I've peaked. This is easy. Turning up every week, having a conversation with. If I interview you, I need five, six main questions and then a few responses. And you wax lyrical about bitcoin and I'm fascinated. I just sit and I consume it all. But it's got too easy. I'm like what's the next level now? How do I level this up? So it's just a period of I'm very transparent as people know. I'm happy to do on camera. I don't have to hide who I am. I'm just saying I'm going through this moment. I've been a little bit disillusioned recently and I'm just thinking what are we doing?
- [86:35]
Parker Lewis
I think yeah, you need to step out of the what are we doing? And get to your audience and see how it's delivering value to them.
- [86:41]
Alex
But the thing is they'll usually reply when they. They'll usually on something like this, I'll get 10, 20, 30 emails, I'll say, no, you're doing a great job. Carry on, carry on. But it's like, I'm not sure if that's the right answer. So I'm just thinking about what's next. Where do we go next with this? How do we go from a million a month to 10 million? And what is the conversation that needs to happen? It's on my mind, but this was very helpful.
- [87:08]
Parker Lewis
I mean, one thing to think about, and it might get redundant for you, but you know, when the next 9 million people are, I think that there's probably 10 million people that have any material exposure to bitcoin. I've seen estimates of 150 million total people in the United States that you know, when. Let's assume that there aren't 10 million people listening to bitcoin podcast. When they are, they're going to need to hear the same things. And that people probably transition where, you know, once they get bitcoin, they probably consume less podcasts. But then there's going to be 10x more people that, you know, don't necessarily want to go back and listen to a podcast from two years ago. And you might be in a position of not wanting to recreate the same old content where it feels redundant. So question is how you continue to create a medium that communicates those messages and puts the same type of people out so that more and more people can understand it. And I think the goal ultimately being that I think Michael Saylor put out a tweet where it was how many hours did it take you have you spent studying bitcoin where the goal should be. It takes fewer and fewer man hours to understand Bitcoin, to get to the point, to understand why a fixed money supply of 21 million is a superior form of money, that it is credibly enforced and that because it is, that's going to obsolete all of the money and that figuring out how short a timeframe and that's the way that you align your incentive with your, with your guests. Because once that's done, once everybody in the world has bitcoinized, you don't have to talk about bitcoin anymore. Maybe you could stop before then, but that, but that your incentives are aligned with your guests, that if your goal is to help people understand bitcoin in a shorter period of time as possible so they can get on with the rest of their life. Because the benefit of is once you have a form of money that can't be debased, at least in my Experience with a lot of people in my network, you actually think about money. You worry about money less. You can get on with your life. You can focus on doing the things that you actually value. Learning about bitcoin is only fun until the point that you get it. And then. And then there's a period thereafter where you want to tell all your friends, but we'll get beyond this point. It will likely be in the next 10 years where it's just everything's bitcoin. We got to go back to solving, you know, other problems. Yeah, we'll solve the most. You know, it's not that it's the most important, because there's a lot of things in life that are more important than money. But if we don't have a working economic system, if you don't have money, that the quality of life that we kind of live today are going to degrade significantly, and that's what we're working the interest to preserve.
- [89:38]
Alex
All right, well, stick with it for a while anyway. Man, I always love to do.
- [89:42]
Parker Lewis
Parker, you should start billing in bitcoin.
- [89:45]
Alex
To further align your interests again. It's another thing I've thought about. I did it, so I'd done it a little bit. Like, two sponsors paying bitcoin, one paid a whole year in advance back in February. Great time. That becomes a problem if, at the end of this year, we go into a bear market and we have drawdowns. Like, I've had it before where I've had sponsors paying bitcoin and I've held bitcoin.
- [90:09]
Parker Lewis
Just align yourself with your customers. Take bitcoin. You've done very well. You're dealing with these internal. Am I objective for being paid in it?
- [90:21]
Alex
It's a tricky one because I still have a lot of bills to pay in dollars. Well, pounds, actually. But look, it's on my mind. I think it's more. I'm like. I think I've built, like, 10, 20% in Bitcoin. I might go up to, like, 50 or whatever, but it's definitely something I'm gonna think about.
- [90:35]
Parker Lewis
Cool.
- [90:36]
Alex
I need to go and eat. I'm hungry. All right, let's do it. Good, Chef. Yeah.
- [90:41]
Peter McCormack
Okay. What do you think of that one? Do you enjoy that? Now, listen, I've known Parker for a few years now, and I'm always talking to him, always picking his brain. He's constantly steering me in the right direction and trying to get me to move to Texas. So it was finally good to sit down with him and record one in person. And to do that in Texas as well. Now while I was down there, I also recorded with Stefan Navarro, so keep your eye out on that. That one will be dropping on Wednesday. Anyway, listen, I hope you enjoyed this one and as ever, if you want to get in touch with me, you can hit me up on my email which is hello, what Bitcoin did calm or jump into my telegram channel. And also if you want to support the show, if you've been a long term listener and you're like, you know what Pete, I like you. I want to help you. Just head over to Apple Podcasts and go and leave me a review. Hopefully you think the show deserves five stars. Maybe you're like, no, what Pete, you show shit. I think it deserves one star. I don't care, just go and give her a review. I look at most of them, you know, I get my feedback from them. So please go and leave a review. Outside of that, if you have any questions you want to hit me up, my email address is hellohatbitcoindid.com or you can jump into my telegram group. And as I said, I'm off to El Salvador. I'm off to make a film which is going to be very cool. Looking forward to getting that done, getting that pump together out. All right, have a great week and I'll see you all soon.