Podcast Summary: The Peter McCormack Show – "WTF is Happening in 2020? With Guy Swann, Ben Prentice & Heavily Armed Clown" (WBD252)
Release Date: August 18, 2020

Introduction

Peter McCormack welcomes listeners to a pivotal episode of The Peter McCormack Show, featuring guests Guy Swann, Ben Prentice, and Heavily Armed Clown. The central theme revolves around Modern Monetary Theory (MMT), following a previous discussion with economist Stephanie Kelton. Peter expresses his intention to dissect and challenge MMT's premises with the help of his knowledgeable guests.

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Deep Dive into Modern Monetary Theory (MMT)

Time Stamp: [05:11]

Guy Swann initiates the conversation by adopting Stephanie Kelton’s perspective to present MMT’s viewpoints. He aims to critically evaluate her arguments by juxtaposing them with Austrian economic principles.

Ben Prentice shares his journey into economics, initially finding MMT appealing due to its logical monetary perspective. However, after extensive research and debates, particularly with economist Warren Mosler, he encounters significant contradictions within MMT. Ben underscores a fundamental flaw in MMT: “The one fundamental across the board mistake that modern monetary theorists make is conflating money with value.” He elaborates that money serves as an accounting tool, not as intrinsic value, emphasizing that without goods or services backing it, money holds no real worth.

Colin adds to the critique by highlighting that MMT often misattributes economic prosperity to monetary policy rather than technological advancements. He argues that “productivity for the sake of productivity, if there's no demand to support it, it doesn't equate to real wealth creation.”

Heavily Armed Clown emphasizes the prevalence of logical fallacies within MMT, referencing Henry Hazlett’s Economics in One Lesson. He contends that MMT and Keynesianism are inherently flawed because they offer governments the power to print money without aligning incentives toward genuine economic value creation.

MMT vs. Austrian Economics: Key Points of Contention

Time Stamp: [12:31]

• Quality of Production: Emphasis on producing goods and services that satisfy actual demand rather than indiscriminate productivity increases.

• Government Incentives: Colin argues that government spending mechanisms inherently lead to misallocation of resources due to politicians’ incentives to favor special interest groups, perpetuating deficits and inflationary policies.

• Deflation vs. Inflation: Ben advocates for deflation as a corrective measure to align economic behaviors with sustainability, likening it to ceasing destructive spending habits for long-term well-being.

Logical Fallacies and Government Incentives

Time Stamp: [21:37]

Heavily Armed Clown discusses how government-funded economists are less likely to support Austrian economics due to conflicting interests in maintaining the power to print money. He asserts that increasing inflation targets, like the 2% nominal inflation, leads to continuous money printing, which disrupts economic stability.

Ben Prentice further critiques MMT by illustrating how it enables corruption and poor resource allocation, using the analogy of giving children oversized tools that can cause more harm rather than solving underlying issues.

Potential Solutions and The Role of Bitcoin

Time Stamp: [35:34]

The guests explore hypothetical scenarios to rectify the issues plaguing MMT:

• Colin suggests removing the government's ability to expand the monetary base, advocating for a return to sound money principles over a generation.

• Ben aligns with the idea of replacing centralized monetary control with decentralized systems like Bitcoin, arguing that “prices are the most information-dense metric you could possibly find” and cannot be accurately managed by any central authority.

Heavily Armed Clown proposes abolishing patents and ending monopolies, alongside removing corporate tax benefits to restore competitive market dynamics.

Bitcoin as a Catalyst for Economic Reset

Time Stamp: [43:12]

The conversation shifts towards Bitcoin's potential to act as a decentralized alternative to traditional monetary systems:

• Guy Swann highlights recent corporate investments in Bitcoin (e.g., MicroStrategy's $250 million allocation), viewing it as a significant step towards widespread adoption. He remarks, “Our central bank policy tends to be what everyone else mirrors,” indicating Bitcoin's ability to serve as an independent store of value.

• Ben Prentice parallels Bitcoin adoption to the internet's evolution, emphasizing the long maturation process required for a decentralized financial infrastructure to replace centralized systems. He notes that “MicroStrategy's investment is the first clearly fallen domino”, signaling a potential rapid shift in financial paradigms.

Closing Thoughts and Future Outlook

Time Stamp: [89:50]

Peter McCormack reflects on the episode's impact, noting his increased bullishness on Bitcoin leading to significant personal and business investments. He underscores the importance of critical thinking and encourages listeners to engage with Bitcoin as a hedge against flawed economic policies.

Guy Swann and Ben Prentice express optimism about Bitcoin's growing acceptance and its role in dismantling problematic monetary systems. They advocate for continued education, investment, and the adoption of decentralized financial tools to ensure long-term economic stability.

Notable Quotes

• Ben Prentice on MMT's misunderstanding of money:

  "The money isn't value. It's an accounting system to allocate the actual stuff... The money itself is meaningless." [05:11]

• Colin on government incentives:

  “Nobody is ever going to be better than their incentives.” [12:47]

• Heavily Armed Clown on logical fallacies in MMT:

  “MMT is kind of like an evolution, or more of a propagandist, actually version of Keynesianism.” [20:07]

• Guy Swann on Bitcoin's arrival:

  “It is coming like a freight train.” [27:12]

• Ben Prentice on deflation:

  “Deflation is actually the best possible thing that we could want for coming out of this because it means that everyone's life gets better.” [35:04]

• Peter McCormack on his bullish stance:

  “Straight after that show, I went out and bought a load more bitcoin... I could not be any more bullish right now with bitcoin.” [89:26]

Conclusion

This episode serves as a comprehensive critique of Modern Monetary Theory, juxtaposed with Austrian economic principles and the transformative potential of Bitcoin. The guests collectively argue that MMT's flawed understanding of money leads to unsustainable economic policies, fostering inflation and corruption. Bitcoin emerges as a viable solution, offering a decentralized and sound monetary system that aligns incentives with genuine value creation. The discussion underscores the urgent need for systemic economic reforms and positions Bitcoin as a cornerstone for future financial stability.

Listeners are encouraged to critically assess current economic policies, explore decentralized financial alternatives like Bitcoin, and engage in informed discourse to navigate the evolving economic landscape.