← The "What is Money?" Show
The "What is Money?" Show
How the Dollar Became a Computer Virus Installed Inside the Human Brain w/ Tom Bilyeu
02:13:21
What if the dollar isn't just a flawed tool — but a computer virus installed inside the human brain? In this conversation, Robert Breedlove joins Tom Bilyeu — co-founder of Quest Nutrition, founder of Impact Theory, and one of the most influential voices in entrepreneurship and mindset — for a first-principles demolition of everything most people believe about money. Starting from the foundations of self-ownership and property rights, the conversation moves through why fiat currency is a pyramid scheme with central banks at the apex, how inflation is mechanically indistinguishable from theft regardless of intent, why the dollar is a one-node SQL database that a small group of people can edit at will, and what Bitcoin actually is at the level of physics, game theory, and history. Tom brings a layman's relentless questioning and Robert builds the complete case from scratch — gold, Bretton Woods, Nixon, fractional reserve banking, the Gutenberg printing press, and why the emergence o...
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- [00:00]
Robert Breedlove
Only you can move your left arm. There's no argument that I can formulate that says no, I have some claim over your left arm and the actions that it takes. Yet we have that implemented in this system that can violate property rights. If I can violate your property rights, I'm effectively saying your self ownership is limited and that I have a higher claim on your life than you do. This is the rotten core at the heart of modern statism. We call it capitalism, but it's not. It's state marginalized capitalism with a communistic institution at its core called the central bank. If I can just become a shareholder to a central bank, I now have a share in a company that bears perpetual profits to me. I don't have to work. My incentives to work and satisfy the wants of market actors is diminished. And so I think it's evil. I do think central banking is evil. I'm not even saying that the institution was set out without intent. I'm just saying that mechanically it becomes the invariant to human action that causes strategies to be adapted to getting as close to the fiat currency spigot as possible versus being an entrepreneur. It's anti. Entrepreneurial entrepreneurs are the hero of the marketplace. We either create something of value to others and we succeed, or even when we don't succeed as entrepreneurs, our failure benefits the marketplace. It's information feedback into the hierarchy of human organization and central banking.
- [01:29]
Tom
Robert Breedlove, welcome to the show, man.
- [01:31]
Robert Breedlove
Glad to be here, Tom. Thank you for having me.
- [01:33]
Tom
I am very excited to have you. And I have recently gone way down the bitcoin and cryptocurrency rabbit hole. You come up early and often when somebody does that exploration. And I feel like I have a. I felt like I had a very intuitive understanding of what money is. You know, I spent a huge part of my life pursuing the accumulation of we. And then you hear the phrase from you, which stopped me in my tracks, which is inflation is theft. And it didn't make sense. Like it wasn't that I disagreed, it was that I couldn't make the sentence make sense. And I realized that I always thought of inflation. And we're going to get to answering the question around what is money? Why bitcoin is useful, all of that. But to me, to attack that head on doesn't work as well as talking about why inflation is theft because I had mistaken it for a fundamental property of nature.
- [02:30]
Robert Breedlove
Right.
- [02:31]
Tom
I just never thought beyond that. Inflation exists and it's roughly 2% a year. And that is what it is.
- [02:36]
Robert Breedlove
Yeah.
- [02:36]
Tom
And then I encountered Michael Saylor and him talking about hyper inflation. I was like, wait a second, what? Because I literally told my money manager I want to be as close to my money buried in the backyard as humanly possible during COVID Right. Because I didn't, I didn't know where that was going to leave us. Why is inflation theft? And maybe what is inflation?
- [02:56]
Robert Breedlove
Yeah, it's. I don't think you should feel bad not understanding it at the outset. I actually have argued in some of my writing that it's a euphemism. You know, the idea of economic inflation sounds wonderful. You want your house to become more valuable, you want your portfolio to appreciate. You want things in general to go up in dollar value. How they actually do that though, is very important. You want them to be value producing assets. Inflation, though, and this is a word that really gets twisted because it's got a lot of different meanings. Do you mean price inflation? Do you mean inflation of the money supply? And the way when I use the term inflation, I like to refer specifically to arbitrary increases in the supply of fiat currency. So what's happening in that instance is that the actual unit of perception we're using to value assets, the dollar, is being diminished. So.
- [03:57]
Tom
And fiat currency for people that don't know, is just money backed by the government.
- [04:01]
Robert Breedlove
Fiat currency, the word fiat means by decree. So this pretty much means. Because I said so under the veiled threat of force. And yeah, it is. You know, this gets a little bit deeper into the history of money. But the dollar originally was issued to make gold, which was money selected by the free market, more convenient to make it more portable, make it more transactable. Very difficult for us to settle in physical gold at every transaction. Right. So if you abstract that gold into paper, it makes it much more convenient. Right.
- [04:35]
Tom
Really fast. Because I think these are important pieces to put together. So you said very quickly that gold was what the market had decided on.
- [04:45]
Robert Breedlove
Yes.
- [04:45]
Tom
Why?
- [04:47]
Robert Breedlove
That's a deep rabbit hole we can go. That's the one money question. Yes.
- [04:51]
Tom
Yeah. I think we have to at least define what it is that made the market select gold. And for thousands of years.
- [04:57]
Robert Breedlove
Let me answer the fiat piece and then I'll go back to the gold. So we abstract gold into paper to make it more transactable. More convenient, faster and more portable, frankly, which is one of the properties of money we'll get into about gold. The problem is you end up trusting the custodian. So you put all your gold on deposit with a custodian that then issues the paper that's redeemable for the gold. And over time, this becomes the most alluring source of power for governments or anyone that can command force. They want to control that source of economic power because it's a call option on everything, which is one of the definitions of money, by the way. So you go from a full reserve currency where each dollar is redeemable for one unit of gold, to fractional reserve banking where there's an excess of paper beyond what the gold reserves can justify themselves to. Post1971 is fiat currency where it is not redeemable for gold whatsoever. So one answer for what is fiat currency? It is an irredeemable government debt certificate undergoing slow motion default via inflation while its use is forced on all of us, on free economic actors. No one would ever voluntarily hold a fiat currency. Why would you ever choose to hold a money that someone can arbitrarily diminish?
- [06:25]
Tom
I can answer that question and I think this becomes part of the debate around what this is going to look like in a post fiat world. But the answer is that you trust the government, that you were born into a system where the government seems stable and trustable. Your parents did it. And so it, it's like a promise made by somebody that you trust implicitly. And so, for instance, I'm relatively bright and educated and until about 18 months ago, I, I just thought, you make as much US dollar as you can, you put it under your mattress and you're fine. And then I was introduced to the idea of inflation and how even 2% becomes problematic really fast, 7% becomes terrifying, and 15%, you're devastated in less than a decade.
- [07:16]
Robert Breedlove
I was like, what?
- [07:18]
Tom
So that put me on this mad scramble. As somebody who never wanted to learn about investing, I was like, I'm good at making money. I have no interest in learning about finance or investing. And every time I would speak to my money manager, I was like, this is dumb. I don't want to learn about calls and puts and options. It's so complicated. So given how complicated it is, I just want to trust the government. So I would choose it out of laziness and terror.
- [07:43]
Robert Breedlove
Yes. So we're all prone to seek out cognitive expedients. And I would say even the dollar itself, you don't want dollars per se. You don't want a definite amount of dollars. You want, you want purchasing power.
- [07:56]
Tom
But I don't realize it.
- [07:57]
Robert Breedlove
You're right. Yes.
- [07:58]
Tom
But I don't realize it.
- [08:00]
Robert Breedlove
That's right. As a matter of cognitive expedience you think in terms of dollars. And so, and this is where you get deeper into what is money. Money is also a psychotechnology. It's like literacy or numeracy. It's a software implementation we put into our brain. We use it to communicate, negotiate, plan. I mean, how many times a day do you think in dollars? It's something that's deeply embedded in our cognitive machinery. Um, and that gets into my argument later about why central banking is kind of a computer virus on the human brain. But I think what would be an appropriate avenue here is to think, okay, you've been pursuing dollars your whole life. What you're actually pursuing is what those dollars can get you. That's what money is, right? Money is the most exchangeable good. You can think of it as a call option on anything the market can produce. So any good, any service, any knowledge, human time, anything people can do, any service anyone can render for you, money is a call option on that. And that's why it's the most valuable or apex good in a marketplace. So what it ultimately means is that money is the most important form of property. So what we're all really after, all of our businesses, our lifestyles, our governments, these are property strategies, if you will. These are ways to reach consensus on property, to distribute property in an equitable way, in a way that we all determine to be fair. Right? Fair and equitable. So it will probably help here to. We're setting up a lot of rabbit holes. We'll go into the property rabbit hole first. We typically think property is the house, the car, the, the stock, whatever. That's not what property is. Property is a relationship. It's an exclusively acknowledged relationship between the owner and the asset. Right? The fact that you own this house and no one else can come into it, if they did, you have recourse to the government, right? The apparatus of compulsion and coercion. You can call the police force and say, hey, this guy is violating my property, please remove him. That is the foundation of civilization. When we can go and take our most personal form of property, which is ourselves, right? And this is something we're talking offline self ownership. This is the foundational axiom on which all of this libertarian capitalistic philosophy is based. You own yourself. Only you can move your arm, only you can move your leg, right? You can't even sell that property. You can't trade away your consciousness or your willpower to anyone else. You own it and it's inalienable, cannot be traded away. What you choose to do with that Self ownership, you go out into the world and you voluntarily add value to something, right? You plant a garden, you build a business, or you trade the fruits of your labor with other cell phone people. That's how we create wealth, right? That's what enables us to focus, specialize and create wealth. So the basis of civilization is that relationship between the owner and their asset, which we call property. Money is just a reflection of the wealth in the world, right? The property that we have created through this capitalistic process. When you give one organization, right, this is all based on free market dynamics. But when you give one organization legal monopoly privileges, which is what the central bank is to now monopolize money and control its issuance, they have a mechanism to violate the property rights of all other economic actors that are using dollars, that are denominating assets in dollars. So this is something that's so fundamental that it's, it contradicts the premise of self ownership when we give power away to a single institution that can arbitrarily, at a political whim, choose to violate the relationships of all economic actors using that money.
- [12:08]
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- [13:10]
Robert Breedlove
So that's a bit of the what is property rabbit hole. We could go into gold next.
- [13:16]
Tom
First, let's go back to what you said, that nobody would voluntarily choose a fiat currency. And the reasoning behind that is, okay, you have a portion of the total, whatever that portion is. So the number of dollars that you have represents a dollar of the. A percentage of the total. If they can change the total at any time, they can dilute you and so your perception is that the value of your house is going up, but the reality is the value, the buying power of the dollar is going down.
- [13:46]
Robert Breedlove
That's correct.
- [13:46]
Tom
And so it creates a, the, the mental equivalent of an optical illusion.
- [13:52]
Robert Breedlove
Yes.
- [13:53]
Tom
So you think, oh my God, I'm winning. This is amazing. But in reality you have opted into a system where human beings, yeah. Like you said, arbitrarily make a decision as to whether or not they're going to inflate that by just. And this was, I'm embarrassed by how recently I thought this, I actually asked somebody and this, I think less than a year ago I said, where do they take the bags of money that they're printing? Like, whose doorstep are they dropping them off at? And of course the answer is it's a database and it's just a data entry. But even that, whose data entry are they changing?
- [14:28]
Robert Breedlove
You're right. The, this is an important point, actually. The, the US dollar is a one node database. It's on an SQL Server at the Federal Reserve. So it's the list of who owns what dollars. And there's one group of individuals that update it for everyone else arbitrarily. And to your earlier point about inflation, I think it's best to think about this as like a cap table. Right. When you own a business and you have shares in a business that you're buying and selling, you wouldn't arbitrarily give one group the ability to just issue new shares whenever they want and dilute everyone else. That would clearly be asymmetric and unfair to the shareholders. Yet that's exactly the model we have in money. Exactly right. It's another way to think about money maybe is that it's a share in the capital stock of the world. Right. My share of the US dollar supply gives me a fraction of whatever US dollars can buy. Again, if money is a reflection of the total capital pool or the total savings, that's what it effectively represents in its purchasing power. But when one group can just twist the rules to favor themselves and disfavor everyone else, you have a disequilibriated structure or an asymmetric monopolized structure. So hopefully that explains inflation and property a little bit.
- [15:53]
Tom
It does. Putting a real fine point on why it's theft though. Because it, theft implies, it implies ill intent. I don't know if that's what you intend. In fact, let's start there. Do you intend that that ill intent is afoot?
- [16:11]
Robert Breedlove
I would say it's more the arbitrariness. Right. I don't necessarily want to dig into the intent so much as mechanically what happens. It's an arbitrary redistribution of wealth or property from one group to another. So they're diluting the property rights of dollar holders. Anyone depending on the dollar to store its value is being victimized. And those getting access to the freshly produced or printed money first are the victimizers. They're the ones actually extracting wealth from that group. And this is especially abhorrent because if you think who depends on the dollar to store its value the most? The poor, those living on fixed income. Pensioners, retirees. Right. People living paycheck to paycheck. These are the people being stolen from. So I'm not going to make a claim about intent. There's a lot of arguments about, oh no, central banking. They don't mean to be doing what they're doing. They think they're doing what's in everyone's best interest. Fine, I'll accept the argument. But mechanically, those depending on the dollar are being robbed by central banks and those that receive the newly printed money first.
- [17:17]
Tom
And who receives the newly printed money and how is that decided and printed again is by changing numbers in a database.
- [17:23]
Robert Breedlove
Yes. So a lot of the beneficiaries are asset holders, Right?
- [17:28]
Tom
Name some assets.
- [17:30]
Robert Breedlove
Real estate, stocks.
- [17:32]
Tom
How so? I own both of those. How do I benefit? Because I'm terrified of inflation, right? So why am I not excited?
- [17:38]
Robert Breedlove
Because when money, the store value function of money is compromised, which is what's happening when, when we inflict inflation, that the dollar is not holding its value over time, people, market actors are smart, right? They're going to move into a reliably scarce asset. The most predominant store value in the world today are stocks, frankly. So stocks, real estate, all these things that are reliably scarce in an inflationary environment become store value assets. So people that hold those assets as a larger percentage of their total net worth will benefit at the expense of those relying on dollars to hold their value.
- [18:17]
Tom
Because what database entry is changed in that scenario? It's not like they gave me more money for owning those.
- [18:24]
Robert Breedlove
Right, but your home will appreciate. Right? And it's not based on supply and demand so much as it is based on central bank policy. So they've. If you think about more dollars chasing the same amount of stuff, it's kind of the simple way to think about it. This implies higher home prices and it's not a consequence of supply and demand in the marketplace per se. It's just that diminished unit of economic
- [18:49]
Tom
perception part of the quote unquote printing of money is the government buying like corporate bonds and things like that? It's because that's how they actually get it into the system, right? They go and buy, buy a bunch of things, whether it's making sure that the California government doesn't default on their bonds and things like that, and then they actually buy things off of companies, right?
- [19:14]
Robert Breedlove
That's right. And this is a very, I like to say central banking and the fiat currency complex is as clear as mud and twice as dirty.
- [19:22]
Tom
Nice.
- [19:22]
Robert Breedlove
So it's very confounding to say the least. But essentially the government is issuing new debt, right? Which the Federal Reserve is buying. So they're injecting dollars into the economy that way. It's become more exotic recently where the Fed's actually spinning up special purpose vehicles to buy corporate debt directly, I think equities as well. And so what's happening is there's this confiscation of wealth taking place and then the proceeds are being doled out or arbitrarily. So you can think of the Fed or government beneficiaries of Fed policy as picking winners and losers. So this is antithetical to capitalism, right? Which capitalism is much more Darwinian, Right. Survival of the fittest. If the business is producing profits and satisfying wants for people, then people will pay for it voluntarily and that business will grow. If the business is unsatisfactory, it's not delivering good goods or services to people, people will abstain from doing business with that entity and it will shrink and fail. And when that business fails, its capital will be reassimilated into the marketplace and put to higher and best use. That's what capitalism does. But when you have this arbitrary avenue of confiscation and wealth redistribution, it stymies that evolutionary impulse that capitalism gives us. So you end up with zombie companies.
- [20:53]
Sponsor/Advertisement Voice
Right?
- [20:53]
Robert Breedlove
And it's funny that they use that term zombie, which is. I had a good conversation with a guy about this, how this has entered the modern mythology or lexicon. Interestingly, right after 1971, which is when we went off the gold standard, the term zombie became much more widely used. But zombie companies are that they're loss producing enterprises. They're not satisfying anyone's wants, but they're kept on life support by central bank policy. So we have central bankers printing money to harvest the productive surplus of the economy, stealing from the productive economy and then doling it out to these certain entities that are producing losses and keeping them alive. So it's very polluting in that way, if you will. It's toxifying to the Darwinian process, and I think that's why it degrades everything that's downstream from economics, like politics and culture, etc.
- [21:49]
Tom
All right, I want to walk through one thread that all of this is me taking liberally from you, so tell me where I go astray here. But this was a chain of events that I was like, oh, my God, I now actually understand what's going on. And this is terrifying. So you've got World War II happens and you've got people invading countries and raiding their gold stores. Because why would you invade if you're not going to get something, if you can't steal something? These are your words. So you invade a country, you steal their gold. So people are like, fuck, I don't want to get invaded. So they started. Or if I do, I don't want them to be able to steal my gold. So they started sending gold to the US US ends up storing all this gold for people. Has a massive amount of gold. And gold, historically basically money as we think of it, the tangible dollars and bills. You would store gold in a protected warehouse somewhere and they would give you a paper that represented the amount of gold. So people, being savvy, started trading that because it's as good as gold, because you could go and cash it in. So now the US post World War II has all this gold coming in. And we then after World War II, have the Bretton woods convention. I'm not sure what it was exactly, but they say, hey, we've got all this gold now we're going to make the dollar the central reserve currency, global reserve currency. Excuse me. And. But it's all backed by all this gold that we have. So, hey, we're good. But in 1971, for reasons that you will have to explain, Nixon decided to take us off of the gold standard. So previously to that if you had a dollar, you could actually go redeem it for gold.
- [23:26]
Robert Breedlove
Yes.
- [23:27]
Tom
Now you couldn't. And it was fiat. It was by decree. I say that this dollar has value and therefore it has value. The problem is that's married to something that happened at some point in the early 1900s that you will have to explain. The Beast from Jekyll island, where we decided to create a central bank which isn't owned by the government.
- [23:48]
Robert Breedlove
Right, Correct.
- [23:48]
Tom
Which I still can't believe is true. The Federal Reserve is not the federal government.
- [23:52]
Robert Breedlove
Federal. And it has no reserves.
- [23:54]
Tom
Crazy like, this is where I'm like, language matters. Well played. That's a very good Way to get me think that this is a government. All right, so we now break with the gold standard. And so it's, we can literally print money. So as me, the ignorant guy that spent his whole life trying to make money knows nothing about investing. I make the money, I think I am safe actually putting it under my bed, only to realize that there's actually somebody that has the ability to go print or go brrrr, right? And they, they can press a button and it just makes more money. And the therefore with more money floating around, you've got more people competing to buy that loaf of bread or whatever. So the cost goes up as one would naturally expect. And so now even though I theoretically have my assets are going up and yay, I have more money, but I, I either have the same buying power, so it's just an illusion, or I actually have less buying power and it's actually devastating. And so now we get into this crazy making loop of it seems like I should be getting ahead, but I'm not getting ahead. I think of inflation as being a natural act, but really in the background are people making these decisions. And we will grant them that they are being kind. They're trying to do something nice. They're trying to level out volatility, if I had to guess, is actually their motivation. But they level out that volatility by creating debt cycles and devaluing the currency, which you are saying mechanistically, it just isn't different than theft. But when people think of redistribution of wealth as a good thing, is that just another crazy making thing or are people right to think that, no, this is good, we should be redistributing the wealth?
- [25:39]
Robert Breedlove
Well, that's a good long question.
- [25:43]
Tom
I would start with a long question.
- [25:45]
Robert Breedlove
Yeah. So let's do this wealth redistribution. First of all, no one ever thinks it's a good thing when they're the target. No one ever, no one ever wants to be redistributed from. No one ever voluntarily gets redistributed from. That would be giving up value or wealth or capital for nothing in exchange. I don't think anyone, I don't say no one ever. But typically no one ever will enter that agreement, let's say. So maybe we'll track this arc. We'll do what is gold? How did we get gold? Why and how central banking was introduced. And then we'll get into really what's happened post 1971. So, and I love this question, by the way, what is money? Right. This is the name of the show and this is the, I think the key to incepting these ideas into people, or at least getting people to question their socioeconomic reality, such that they can peel back the layers of this onion and see through some of these euphemisms we've been getting to or we've been given. And one definition of money, this is the Austrian economic definition, is that it's a universal medium of exchange. So again, capitalism is built on free exchange. It's built on voluntary action, right? Self ownership. You go out into the world, create things of value, you trade them with other self owned people. The result is we create more output per unit of input. We become more efficient acting in concert than we do acting in isolation. This is the division of labor. This is the reason wealth and riches exist, because we specialize and we trade with one another. In that process, something necessarily becomes most exchangeable or most treatable, right? By definition, for all trading with one another, there's going to be a single asset of that flurry of trading activity that is the most liquid asset, the most tradable or exchangeable asset. That is money. That's how money emerges in the marketplace. It is not a government creation, has nothing to do with government other than the fact that they monopolize it and try to control it, to control people. And when you look at money from that first principal standpoint, and this is from the Austrian school, there's a deep long literature on this, you'll see that money needs to exhibit five key properties. And this is an important point. We typically think that we want the thing, right? We want the table, we want the car, whatever, but we don't. We want the services the thing renders to us. So you could think almost in the world of economics, there are no such thing as goods, if you will. I know there are goods, I know there's tables, I know there's cars. But what we are after is what services those goods provide to us. So when we look at money, the five properties that market actors voluntarily favor, you could also think of as the five services we seek from money are divisibility, durability, recognizability, portability, scarcity. So I'll walk through each one of these. Money needs to be divisible. Pretty obvious. You want to transact at different scales. You want to buy coffee in the same day that you go and buy a house, right? So you'd like to be able to give someone a coin or send someone a wire for 10 million bucks to buy a house. Pretty obvious. Money needs to be done durable in that it's not going to corrode over time. If you put a bunch of gold in a safe, it's not going to decompose, right? The half life on gold is way longer than matters to any of us. If you put a bunch of oranges in the safe and you were using that as money, that's going to rot pretty quickly. So clearly durability matters. Money needs to be recognizable, which means that each trading party can verify its authenticity. So at every transaction, and I'm handing you dollars, you can certify either with that little pin they mark on dollars to make sure it's a legitimate, you know, U.S. federal Reserve issued dollar, or if it was gold back in the day, they had different techniques for assaying the gold's authenticity, making sure it wasn't lead plated with gold. In fact, the name sound money, which you've probably heard in your explorations of the rabbit hole, that referred to the sound a gold coin made when dropped a certain way, so you could verify its authenticity by the sound it would create. And this is another reason we introduced coinage and currency. Because to verify money at every transaction is a very significant transaction cost. Transaction costs are dissipative to trade, right? If we want to increase trade and increase wealth, we want to reduce transaction cost. So by abstracting into currency or putting it in a warehouse and trusting the warehouse custodian, we could now trade much more quickly and more efficiently. So that, I mean, that's one aspect of money that coinage and currency helped was recognizability. Money also needs to be portable. Pretty obvious you want to be able to move it across space, right? If I'm buying something in another city, I need to get my gold or dollars to the other city to give it to the receiver recipient. Finally and most importantly, money has to be scarce. And now we typically think scarce is purely a supply side function. That's not what scarcity means. Scarcity occurs when demand outstrips supply. So when there is more appetite for the thing than there is a supply of the thing. Okay, so oxygen, pretty important for human life. There's no price on it. Why not scarce? It's not scarce. The supply way outstrips the demand. Right? Something like diamonds, not that important to human existence yet has a huge price because the demand way outstrips the supply. The unique thing about scarcity and money is that money is always scarce because it's a call option on everything. All the capital, all the savings humans can produce. The heart of man is never satisfied. We always Want more. Therefore, money is always scarce by definition. So what market actors tend to favor is the money that has the most inelastic supply. So this means the supply that is least subject to change by the willpower of others. That is what market actors will zero in on. And there's another number of ways to think about this. Time energy, second law of thermodynamics. We cannot create nor destroy energy, right? We're sacrificing time and energy to earn money. You would naturally want the thing you're sacrificing this absolute scarce time and energy for to be similarly absolutely scarce. That would be the ideal money, right? Something that can't be created or destroyed with money. To gloss over a little bit of history, monetary metals best satisfied divisibility, durability, recognizability, portability. Those are just. And we've tried a lot of experiments. We've had seashells, we've had glass beads, we've had cattle. We've used all kinds of things as money, right? Natural market processes determined that monetary metals were the most satisfactory across the first four properties or services that money can render to us. Of the monetary metals, gold was the most scarce. Meaning specifically, its supply was the least vulnerable to change. No matter how much effort, time, energy we poured into producing gold, its supply increased the slowest and the most predictably. So this gave us a medium into which we could store economic value and we would know with relative certainty that it would only change by about 2% year over year. So this gave gold the store value function we traditionally associate with it. That's great, right? Gold is great. Gold is good money. It's been good money 5,000 years, served a lot of purposes. But the big hang up with gold is lack of portability, right? We talked about this a little bit earlier. You want to be able to move it across space, obviously. But gold's heavy, it's physical, right? It's very expensive to secure it, actually, in one way it's beneficial and that you can store a lot of economic value in a small area and sort of amortize the security cost around it. But when you need to move it, that's when there's a lot of risk involved. And this was the impetus for introducing what you alluded to earlier were the warehousing businesses. So a private enterprise, a free market function came to be where a warehouse would take custody of the gold, give you the warehouse receipt, you can go and transact it. It's as good as gold, right? You have a call option on gold, effectively this was introduced to augment the portability of gold. Well, those warehouses became banks, those banks became central banks. And this is all again, I'm not laying out a nefarious scheme here. This is the economics, the economies of scale associated with gold. It is more efficient to centralize custody of this heavy, bulky metal and issue abstractions in it. It's more efficient to transact in that model than it is with physical gold. So that's what drives this process. The problem is you now have to trust the custodian. You've introduced what we call counterparty risk. There's a counterparty to that trade. I can trade this paper with everyone and it's as good as gold until I go to redeem the gold from the warehouse and the gold's not there or they won't redeem it, or a fraction of what this paper represents is available. So that is kind of the history of gold into central banking. And I guess the history of central banking is quite interesting. I would say that, you know, maybe this is an important point too, that people, we're all seeking something for nothing. I think this is kind of unavoidable. This is the entrepreneurial path, right? You've got a problem, you've got an itch, you want to scratch that itch or solve that problem with less effort, right? The, the, the really successful entrepreneur is almost brilliantly lazy, right? He's identifying a problem and finding the quicker way, a better way to solve it. When he makes that discovery, he can now sell that product or that service or that method, whatever it is, into the marketplace. And because everyone wants something for nothing, they will reward him, right? This is the entrepreneurial process. So that's great. We all want something for nothing and it's a valid noble pursuit. The problem I think is when we cross that line of self ownership or of morality and we start seeking something for nothing from others, right? Someone else has planted the garden, someone else has built the business, someone else has mined the gold. And instead of me performing the work to create that value or earn that value, I figured that I can just go out and co opt or coerce or take that property or that asset from that person. That's a path for me to get something for nothing. But it's the immoral path, right? So I see this as kind of like the driving force in most human action. We're trying to get something for nothing. But there's a line that can be crossed. And we talked earlier about self ownership. I think that's the line when you violate the self ownership of someone else. That's of a part problem. Central banking sort of came about as this natural institution to augment the technological limitations of gold. It wasn't portable, right. But when you put that much power, you concentrate that much power into one institution, it becomes noxious, it becomes corrupting, it becomes irresistible for some people of lower scruples anywhere in the world to seek that seat of power. And this is what I think has really started to deteriorate the monetary system. And if you look at the history of central banking, it's a lot of leveraging one another, Right? You know, you talked about a lot of the gold ending up in the United States. This was also Pre World War II. A lot of it has to do with the balance of payments among countries, which are just inflows and outflows of capital. But particularly when things got hot in Europe, a lot of gold started coming into the US and again with when we with that much power or money in one place, we became the world superpower. And so we stepped on to the theater of war at the end of World War II and we declared ourselves victorious, rightfully or wrongfully. So you can make your own judgments about that. And then we rewrote the rules of global banking to favor the United States, where the dollar is pegged to gold, all of the currencies are pegged to the dollar. So what this gave the United States is the infamous exorbitant privilege, as it's been called, to be able to print money. We could send these paper certificates out into the world and have them send us goods and services in exchange ad infinitum, right until the system breaks down. Countries had the option to call our bluff, though. They could accept these dollars, but they could redeem them for gold if they thought we're being irresponsible with the monetary policy for printing too much money. Well, countries started calling our Bluff after 1944. We had this huge economic boom. And then again, glossing over some history, I think it was Germany that tried to repatriate some gold. So they tried to redeem dollars for gold. And then we had the infamous 1971 Nixon shock that said no more gold redemptions. And from that point on, and it was said to be a temporary measure, as governments so often and infamously say. Who was it that said that there's nothing more permanent than a temporary government solution? Here we are exactly 50 years later in 2021, deep into this global fiat currency experiment led by the United States, and things have really come off the Hinges. I've point people on this topic to this website. WTF happened in 1971 dot com. This is not just economic, right? This is, it's socioeconomic. There's, you know, obesity rates have spiked, drug addiction, suicide, clearly indebtedness. Right.
- [41:19]
Tom
When you think this is tied to
- [41:20]
Robert Breedlove
coming off the gold standard, as the Austrians wrote a long time ago, the monetary standard and the moral standard are inexorably linked. That and this gets into back into property and time preference. When money is losing its value over time, we're all incentivized to be more short term thinking this is a decivilizing force. And I think it is at. I don't want to say it's the sole cause for a lot of the cultural malaise we see in the world today, but I think it's a significant contributor.
- [41:54]
Tom
Okay, that gets really complicated. So while very interesting, I think we pushed that down. There's a line that I've heard you say that I think is really important for people to understand because I'm thinking of myself as I first started to grapple with this idea of inflation as theft and I just couldn't make the words even. It seemed like such a non sequitur to me. And that is that there's no difference between. I had a realization when I first got introduced to the stock market. I couldn't make it make sense until I was like, wait, this is like baseball cards, right? Unless it pays you a dividend. If it pays you a dividend, it's different because it's actually giving you cash. But if it doesn't, it is literally baseball cards. It only has the value that people agree that it has. And once they stop agreeing that it has that value, then it stops having that value in any real way. When I think about inflation, the following sentence that I heard you say makes all the sense in the world, which is that there is no difference between counterfeiting and inflating the amount of dollars in the system.
- [42:54]
Robert Breedlove
Absolutely.
- [42:55]
Tom
It's just that one we say is fine because the Federal Reserve is doing it with the sort of implicit okay of the US Government. And the other is a person in their basement. You know, that's right. Doing it on the down low, but it's the same thing. And then I heard you talk about there was a time where, when Africa was being colonized that I forget what region, but they use glass beads as a form of payment. And the people coming in were like, word, we've got glass manufacturing places, you know, back home. We'll Just make more of these beads.
- [43:30]
Robert Breedlove
Yeah.
- [43:31]
Tom
And when you think about the things that, that money represents, our time and our energy. Right. You do something, you, you specialize, as you said, your specialization creates something. And then somebody who doesn't want to specialize in that, that specializes in something else, gives you money. It's a call on that good or service, and you give them that thing. So if you can just go make these glass beads back home and bring, you know, ships full of them, you can slowly milk the efforts of the people that you're counterfeiting their money. And when I heard it said, and again, I also don't imply, I don't think that I choose to look at this with no negative viewpoint, that they're, they're not doing anything negative on purpose, that this is all good intentions just potentially gone awry. But when I heard it explained how you would do it if you were nefarious, I was like, oh my God. Because you suddenly understand that, that there's this extractive nature of I'm either getting you to do this for free or. Because if nobody ever realizes that the glass beads are fake, then you just have inflation. Right. If you give me that thing in exchange for glass beads that the next person goes, but these are counterfeit, then you really lost.
- [44:43]
Robert Breedlove
That's right.
- [44:44]
Tom
But if I'm just slowly devaluing it because the prices are going up, because, wow, there's just so many glass beads everywhere. Which first would feel like an embarrassment of riches. And then suddenly you'd realize, wait, everything is just re normalized and either I can afford the same thing or again, I can afford less. Then I was like, oh my God, now I understand how inflation is theft. And then you really do get into, I think it was Andrew Jackson punching a banker in the face. You have to understand what happened on Jekyll Island. So it's like before we get to the sort of morality side of all this, which is fucking fascinating, and I really hope that we don't run out of time before we get to it. I, I want to understand Jekyll Island. Why would Andrew Jackson punch a central banker in the face that like, because I grew up in this system, it seems natural.
- [45:34]
Robert Breedlove
Yeah.
- [45:35]
Tom
But there was a time where this was like governments, even by government agencies or government actors were like, met with such suspicion. And the founding fathers and how they were like, yo, you have to be so careful of governmental overreach. It's like, we don't have that same vibe today.
- [45:51]
Robert Breedlove
Yes.
- [45:52]
Tom
What happened on Jekyll Island.
- [45:53]
Robert Breedlove
Yes. Okay. Great question. I'd like to first reinforce the point you just made, that inflation is legalized counterfeiting. Counterfeiting is criminalized inflation. This is not my opinion. This is in fact mechanically how it works. And in the piece you're referring to masters and slaves of money. I wrote about this debacle in 16th century Western Africa where they were using glass beads as money. And I think this history gives you a good foundation for understanding what's happening today. It was really technologically difficult to make glass beads at that time in Western Africa. So they had reliable and predictable scarcity a la gold, as we described earlier, but only specific to that region. European explorers arrive and they quickly notice, hey, these glass beads are being used as money to, you know, as a call option on all the wealth this area is producing. We can produce these glass beads in bulk back in European glass making facilities, very low cost, to the point where they started packing ship holes full of glass beads. And this occurred over, it was over a 300 year period. They were shipping in these glass beads. So kind of doing it slowly and surreptitiously enough. There was resistance, actually. Africans could identify the counterfeit beads. They would try to only use the authentic ones. Europeans would introduce, you know, more indistinguishably counterfeit beads. So there was back and forth. But over time, what happened was this multi century usurpation of African wealth by European explorers through the counterfeiting of money. And what I mean specifically here by counterfeiting is that delta in cost of production, right? The cost of production was high for glass beads in Africa, therefore they had reliable scarcity, therefore they had reliable market value and utility as money. The cost of production in Europe was low, so they could inflate the supply really quickly and use it to basically disrupt the hard money system, if you will. In Africa, when I say hard money, I mean it's hard to produce, but it was not hard to produce for Europeans. So therefore they could usurp the wealth. And this, this points to a key property of money, is that the market value of the money is going to converge to its cost of production over time. So if I can mine an ounce of gold for $1900 and it's selling on the market for 10, 2000, I'm going to mine gold as hard as I can all the way up until my cost of production is $1999.99, right? So long as there's a profit margin baked in there. And this also points towards why fiat currency always goes to zero. The cost of fiat currency production is effectively zero. Again, it's an entry on the Federal Reserve's database. Right control enter another $10 trillion added to the money supply. So it's almost intuitive through that lens why the market value of fiat currency historically has always converged to zero, which we call hyperinflation. So that's all, I think, a good way to look at it. And that's happened many times historically. So it's not just. It's not purely that these Europeans are set out with nefarious purposes per se, but there's a dynamic in money where it needs to be costly to produce to support its market value and therefore support a sustainable trading economy. If it's cheap to produce, then it will be. The market will be flooded with the money and it'll hyperinflate, essentially. And so that process, again, is why people settled on gold. It was the most difficult thing to produce. So the other thing that happens here is that when you're increasing the money supply, like it's very common today in the US we think, oh, there's not much inflation, you know, food hasn't gone up a lot, whatever, whatever. But what you're not seeing is that markets, if they're functioning properly, we should actually have price deflation over time, as we get smarter and better and more efficient at making things or providing services, prices should be coming down. So the fact that we're targeting price increases of 2% is shadowing over what may be. We don't know. Right. We don't know what the increase in market efficiency would actually do to prices absent the central bank intervention. So I think this is a very important point too, that, you know, people try to argue that the degree of it is such that it can be ignored or not worried about the 2% is not that big of a deal. You know, let them take what they need. But it's overshadowing the opportunity cost, if you will, that's being lost. Like, we would have 5% price deflation or more in certain sectors. And so to get to the. Why did Andrew Jackson punch a central banker in the face, which he is, as someone that grew up in Tennessee, he's my favorite. Tennessee. And for this very reason, I think he also called them a den of vipers. And he said he would route them out. He resisted, or at least he was instrumental in the resistance of the first two attempted implementations of a central bank in the United States, the Federal Reserve being the successful third, is because this country was founded on the principles of which we inherited from the Magna Carta. Life, liberty, property. As we've touched on earlier, the central bank is antithetical specifically to the third one, property right. It's arbitrarily violating the property rights of some to enhance the property rights of others is another way to look at it. So what is that? What is life, liberty and property? Our life is our future, right? These are the to take to lose your life is to lose your future, let's say, right? Liberty is your present, your present freedom, right. To lose your liberty is to become a slave, right? And the, the spectrum to slavery is very important to you. 0% tax or theft is a free man, right? Completely owns himself 100%. Taxation or theft is a slave. All the fruits of your labor go to someone else. And then so you've got your life as your future. Liberty is your present, property is your past. Actually it's how you've spent your past infusing nature with your life and liberty, right? Your self ownership, you've accumulated fruits of labor that becomes your property. And so the central that those are the kind of the three tenets not only of natural law but also basic morality, right? I don't think anyone would sit here and argue with you face to face and say no, I have a claim on you more than you do. I don't like. It's a non reasonable argument. And again this is, this is a priori right. This is only you can move your left arm. There's no argument that I can formulate that says no, I have some claim over your left arm and the actions that it takes. Yet we have that implemented in this system that can violate property rights. If I can violate your property rights, I'm effectively saying your self ownership is limited and that I have a higher claim on your life than you do. This is like the rotten core at the heart of modern statism. We call it capitalism, but it's not, it's state marginalized capitalism with a communistic institution at its core called the central bank. So Andrew Jackson was a man that understood these principles. He understood the importance of adhering to life, liberty and property for a Not only is it pragmatically the most wealth generative model of human organization, but it's also the most humanitarian and ethical right. It offers the greatest equality of opportunity to actually have property rights in yourself, in your time, in your labor. So and it's, you know, thank goodness it's that way. Thank goodness the ethical humanitarian choice is also the most wealth producing choice. Otherwise we'd have a really Ugly dilemma on our hands. I think Andrew Jackson and our founding fathers understood these three pillars of life, liberty and property as the most important components of human organization. That if we adhere to them, we can actually create modes of being that increase our wealth, which is to say, increase our satisfactions. Right. The heart of man is never satisfied. But this is the way to optimize the satisfactions of human beings and create a mode of being that's focused on trade, cooperation, interdependence, as opposed to warfare or fighting. So it's to boil it all the way down. It's like we can either cooperate and trade, let's say cooperate and compete. It's a very important part of entrepreneurship. Right. It's competition and trade voluntarily with inviolable property. And we generate wealth. That's a positive sum game. The pie is growing. Or we can violate the property of one another and fight over it. And this gets to that old bast saying that when goods and services don't cross borders, soldiers will. Right. We need. We're all seeking something for nothing. If we don't channel that human action into these productive channels of trade and entrepreneurship, then we end up over here in violence, coercion, and compulsion.
- [56:03]
Tom
Okay, so you've got Andrew Jackson trying to root out the vipers. I'm assuming he thought of them as vipers because they can redistribute wealth, which is a violation of your property.
- [56:17]
Robert Breedlove
That's right.
- [56:18]
Tom
Why then do we end up creating the central bank? And why did they meet in secret? Give us a little bit of background on that meeting on Jekyll Island. I know they were pretending that they were going on a hunting trip.
- [56:32]
Robert Breedlove
And there's.
- [56:34]
Tom
It's such a weird confluence of things that are happening right now. You have this sense of like, distrust of people are working behind the scenes against you. But you also have the sense of redistribution of wealth is good. Like it's. It's a very confusing time right now,
- [56:49]
Robert Breedlove
and this is a. Still confusing to this day. People will argue with you that this, you know, the Fed was set up with very good intentions and that this whole. Which by the way, this book, the Creature from Jekyll island by G. Edward Griffin, this was formative to my understanding of central banking. And this is pre Bitcoin that I got into this. So I would really just encourage the audience to go check out that book. It's a. It's a big book, though you can also read an abridged version called Dishonest Money, I think was one that I gave to My family and friends. And it sort of encapsulates the gist of it. But to your question, I think based on my study of that book, that it was done in secret and it was done over a holiday weekend because this was a time when people still understood the ideological importance of life, liberty and property. We'd learned a lot of lessons from central banking and its failure and its tyranny in England and even before that. So it was still fresh enough on the human mind that we, we were resistant to its implementation. But as far as why it got pushed again, it's just something for nothing principle right there. If you could found an institution or a business, and by the way, all organizations are businesses, right? Governments are businesses, institutions or businesses, they're all property strategies as I call them. If you could establish an institution that could generate perpetual profits and be able to paper over its own losses, right. It can never sustain a loss, would you not have a pretty large incentive to establish that organization? I mean, the equivalent question is if you could magically wish for a money printing machine right here on your table, like, wouldn't you want that? Wouldn't you, once you had it, wouldn't you run that machine until it was absolutely blowing smoke and sparks out the side of it? I mean, that's central banking in a nutshell. Is it human beings in this pursuit of something for nothing or in this pursuit of wealth, frankly. Right. The most powerful incentive in the world. We have tried to rationalize and formulate different ways of creating socioeconomic structures that favored the few that could understand it and create that privilege for themselves at the expense of others.
- [59:17]
Tom
All right, I think this is where Bitcoin needs to enter stage left here. So I have a quote from you. Actually, I'm going to start with a paraphrase from Alan Greenspan. This is you paraphrasing Alan Greenspan. That sets us up then for your quote. So Alan Greenspan, again, this is a paraphrase. A sound store of value must be made illegal, otherwise fiat currency would not be competitive. So you've got this idea of so a sound store of money. You talked about, you dropped that coin, but basically that it's the amount of
- [59:52]
Robert Breedlove
it is fixed, inflexible supply.
- [59:55]
Tom
Okay, so that's sound. Now this is your quote, which I love and I think sets us up for understanding why the bitcoin guy who has bitcoin tattooed on the inside of his arm like the most painful place to get a tattoo says this. This entire system we've built is a complex of unintended consequences. And bitcoin is an immune response from the collective economy. So if we buy into the idea that they didn't have bad intentions to create the central bank, they don't have bad intentions to make the printer go brrr. They just like they're trying to, they're trying to policy their way to something that's far more stable, which I actually get. And when I put like my they don't have bad intentions hat on, I'm like, word, Like I get what they're trying to do. And I'm grateful that I've grown up in a super stable environment where I was able to go from, you know, sort of lower middle class to generating real wealth in my life. So for me it worked, right? I was able to jump class. Like all the things that I was promised with the American dream, I was actually able to do. And so I'm like, yo, that stability is amazing. I didn't ever have to use weapons to build my company, which is a whole side thing that I've talked about before where I had former drug dealers working for me. Long story. There's a whole reason why I think it's amazing to give people a second chance. So anyway, they were telling me stories of like people trying to confiscate their product, right. Which for me would have been protein bar. So it's like, whoa. The thought of somebody showing up with shotguns to take my protein was like, that's crazy. That's a hard way to do business. Yeah, right. So it's like, okay, this is all work for me. I like this stability. So when I have that hat on, I'm like, I get what they're at least trying to do. But when you try to engineer a system, whoa. Like the number of things that go wrong, where you can change, whether it's ecological and you're trying to do something and it has, you know, 10 different knock on effects or whether it's with money and it has different knock on effects. Why though is bitcoin the immune response?
- [62:10]
Robert Breedlove
Yes, it's funny you read that line. I don't barely remember.
- [62:14]
Tom
I said, well, you, I heard you say it. Whether you've read it or written it or not, I can't say. But in a podcast you said,
- [62:25]
Robert Breedlove
so these principles that the United States was founded upon, again, that have been refined from the past, from like the Magna Carta. One of the most important, if not the most important, is that principle of inviolable property. Meaning again, property is the relationship between yourself and the value you create or the fruits of your labor, which is the foundation or the scaffolding building that let you climb the socioeconomic hierarchy right from, as you said, lower middle class to where you are today was because you knew that you could hold the value of the value you created and use it to scaffold yourself upward. If that foundation were not stable, right, at least to some extent, there would be no way for you to have upward mobility. So again, it's we're back to property rights being the basis of civilization itself. They're pretty good here, they're pretty good in the US you can open a bank account, you can put dollars in it, your property rights will be violated by inflation. When the Federal Reserve is printing money, you're going to now need to outpace inflation with some other investment. Otherwise your property will be diluted. You don't have full property in that money because if you try and wire it to, you know, a, I don't know what countries are on the OFAC list today, Iran or something, they'll block you and say no, you can't do it. So you don't have full rights in that property you are being surveyed. You don't have full privacy, but you have pretty good property rights, right, relative to the rest of the world. Bitcoin is the first permanent implementation of this principle we've been refining throughout human history of inviolable property. It actually cannot be violated in any way. No one can produce more than 21 million bitcoin. So it's, and I've argued this in some of my writing that although it's an invention, we've actually discovered something with Bitcoin. We've discovered absolute scarcity for money. So if we're back to those five properties of money in terms of scarcity, Bitcoin is absolute. It's not relative. Right. It doesn't change. We know with, you know, nothing's people argue with me about this. It's not absolute. Everything's probabilistic. True. Bitcoin has proven itself over 13 years of flawless operation that it does two things essentially perfectly which are turn out a block on one block of transactions on average every 10 minutes and adhere to a supply cap of 21 million. So it's the first fixed supply money there has ever been. And I don't think you can recreate that because by definition money is a centripetal network effect. So it we tend towards one. So for the same reasons we had one analog gold, we're likely only to have one digital gold. This so Your property rights cannot be violated by inflation because no one can change the supply cap. If you hold a thousand Bitcoin, you hold 1,000 of a possible 21 million forever, right? You have a guaranteed fraction of the total money supply. You cannot get that level of assurance with any other asset in the world. Full stop. Doesn't exist. Even with gold, you can hold all the physical gold you want. You're still not immune to some technological breakthrough. We figured out figured out how to produce gold in the lab, very cheaply. We mine an asteroid, we mine the ocean floor, we find a new South American bonanza, whatever, you're not immune to any of that. But with Bitcoin, and again, it's a bit of a bet because it's only 13 years in, but it's done these things perfectly so far. If it continues to do what it's been doing for 13 years, you have a guaranteed fraction of total money supply. So you have an inviolable property, right? Further, this is again property is the relationship, right? We've historically always needed an enforcer. So you need the police force, you need the military to make sure no one comes into your house and violates your relationship with your house. We needed if maybe not necessarily a monopoly on violence, but you needed a protection producing enterprise, which historically is the role of government to enshrine your property rights. The problem of course is that they willed the power to violate your property rights as well, which historically has been very tempting for governments and bureaucrats. They typically give into it and governments get overthrown over time that's been the cycle we're locked into. Bitcoin's the first property, right? Independent of the monopoly on violence or independent of physical protection production. It's an informational property, right? It's just an alphanumeric string. You can store it in any information bearing medium. Put it in your mind, put it on your computer, put it in a song, do whatever you want with it. And there's no. The enforcement is done by the mining network. So the algorithm and the free market competition that's going into bitcoin mining is effectively displacing the protection that government was historically necessary to provide in Bitcoin itself. So it's this radical new, you know, some people have called it a metaphysical property, right? And that it's just an information bearer asset. So gold was really good as a bearer asset and that, you know, assets equal liabilities plus equity. The accounting equation, gold was pure equity. If I hold gold, it's no one else's liability that's really important, right? I have no counterparty risk if I hold physical gold, if I hold dollars. That's not true, right? I have this liability to the Federal Reserve, to the bank, whoever, whatever counterparties are involved. Bitcoin's the same as physical gold, but it's non physical. Right. It's informational. So it opens up this entire new sphere of possibilities and how you custody it. You can custody Bitcoin in these multi signature schemas that are all but immune to theft. You can chop the key into a bunch of pieces and distribute it geographically, have these military grade protocols wrapped around it and it gives you an absolute. It is the highest implementation of human self ownership we've ever had. In the past it's been scribbles on the American Constitution or the Magna Carta and we'll always adhere to this document no matter what. But then a few hundred years go by, we're like, well, let's tweak this or change that or add this. Bitcoin's taken those principles we've used with foundational documents historically and it's permanently emblazoned them in computer code, in unbreakable code, basically is another way to think about it. So it's the invention of inviolable property. It's no longer a principle. We've grabbed this principle out of the space of ideas and we've anchored it into reality via the thermodynamic competition of bitcoin mining. And it is so radically new and hard to get your head around that it's shattering worldviews worldwide.
- [69:51]
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Robert Breedlove
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Robert Breedlove
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- [70:30]
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- [71:00]
Tom
yeah, it really is difficult to wrap your head around. The part that starts to be a little unnerving for me is all right, if, if the government has come into existence to solidify the will of the people to protect you, to protect property, but then over time it begins to involve itself in that property. And you're in a fiat position now where part of how they get the control is through money. And now you have the first true sound money and it has the inelastic properties that make it, you know, the soundest money of all time. The question that I had for Michael Saylor, that he answers very differently than you, is aren't the government's going to get really upset about this, that their only real option would be to either mimic it, in which case now I have that counterparty risk because it's a government that created it versus this sort of mythical creator that poof has disappeared. And other than whatever units he or she or they have, is not trying to engage in the system in any way, shape or form, couldn't change it even if they wanted to. How do we avoid the government coming down with an iron fist and saying yeah, this is, this is illegal now?
- [72:36]
Robert Breedlove
Yeah, I do view this a little differently than Saylor, who is absolutely brilliant. I think his position in general is that they'll exist side by side. Fiat currencies and bitcoin, I tend to agree, in the medium term and I think that's happening today. Bitcoin's an almost trillion dollar asset. It exists side by side with countless or hundreds of fiat currencies, let's say. However, in the long run, I think Bitcoin, and again, we're back to that. The difficulty in understanding it is because it is so far outside our worldview. Right. The idea of gold being disrupted. Gold is almost the only game that humans have ever played. In a way, it's foundational to all of our institutions. It's a 5,000 year old technology that's so old we forgot what made it valuable. Everyone knows it's valuable. How many people can tell you the five properties of money and why gold was selected? The idea that that's being disrupted by this 13 year old digital upstart is pretty, pretty wild. But I think that bitcoin is an innovation as significant as the Gutenberg printing press, actually. And I think the implications of its emergence will be similarly disruptive to institutions in the world. You know, this is late in the 15th century, I believe, when the printing press was invented, the 500 years prior to that, there had been roughly 10 million books printed. All of a sudden, this super cheap and efficient way of reproducing books is invented. The Gutenberg printing press, which was a composite of other inventions, by the way, wasn't really a breakthrough in itself. It was one guy or guys put together four or five different other inventions and made this thing work. Similar to Bitcoin. Actually, that's what Satoshi did. He pulled together things that already existed, but just put them together in a radically new package that we call Bitcoin. Ten years after the invention of the printing press, 10 million books were produced. So the amount of books produced in 10 years equal to the amount produced in the 500 years prior, what did this do? This led to the rapid proliferation and dissemination of literacy numeracy. Again, psycho technologies, right? These. These modes of systemizing our cognition that actually increase our ability to cooperate. Absent or independent of institutions of the day, which. The dominant institution of the day was the church. They owned a monopoly on knowledge, effectively via the scriptoria, which is where scriptorium. I may be saying that, right?
- [75:24]
Tom
You can make it up. I have no idea. I've never heard that word before.
- [75:26]
Robert Breedlove
They used to have monks copying books by hand, right? So to produce one book took a lot of labor. Books were a luxury item. But all of a sudden, due to this innovation called the printing press, the cost of book production plummeted. Books become much more widely dispersed. And it. The church at first didn't realize this existential threat. Once it did, it actually tried to clamp down on the printing press, which created an interesting dynamic that we actually started producing books on how to produce the printing press. So it saw that this is a good allegory. I think that when the institution tries to clamp down on the disruptive technology, the subversive technology, let's say, it actually drives it to its highest and most useful form of subversion, actually. So the result of that was a lot more thinkers, a lot higher quality of thinking, variety of thinking, and in general, it created a market for heresy, right? This led to Martin Luther pinning that like, why do we need you? Individuals can now have this independent relationship with the word of God because they've developed literacy and whatnot. They don't need to go through this middleman of the church. And the printing press effectively led to the dissolution of the church as the dominant institution in the world. So we had separation of church and state and all the benefits of that created in the aftermath. I think encryption technology and this is driving a lot of this from the book the Sovereign Individual, which I've recommended highly, is similar that it actually disrupts functions of the government that we needed the government previously for. We can now provide with code, Bitcoin being an obvious one.
- [77:21]
Tom
Right.
- [77:21]
Robert Breedlove
We needed the physical enforcer for property historically. Now for money, the most important property, you don't need that enforcer anymore. So I think that bitcoin, its emergence will actually lead to the dissolution of the nation state as the dominant organizational model for human beings.
- [77:40]
Tom
Every time I hear you say that, and I may regret saying this out loud, but every time I hear you say that I'm like, like. And look, I know that that also would be its own form of social engineering to like, hey, don't tip off the government and like let this happen. Like if it more breathing room. And so there would be unintended consequences there. But it's like man. So I'm going to give you my layperson's view on bitcoin and why I become so. And admittedly I'm not a maximalist. So for me this is looking more broadly at like cryptocurrency and the digitization of value, which is how I see this. So my thesis is technology is a one way street. We will find anything that can be turned into code will be turned into code. For reasons such as that you can create absolute scarcity. You can now have a blockchain that will track ownership. So everybody knows exactly what's going on. There's a transparency to the ledger that, that we don't have to be slaves to as many laws of physics. You're still going to be tied to energy production. But once we are spending, once you can tap into the, the basically your nervous system and you can get me to feel like I'm flying where it is indistinguishable for me actually flying, then all bets are off. And I think given the human desire to pull the levels of our neurochemistry, we will just end up going down that route. So it just makes sense to me that things are, will be digitized, that money will be digitized, that anything again like I said, we can for sure. It's more efficient, it's more exciting, it's more interesting. It's. It just seems like an inevitable sort of one way street. And so I'm like, ooh. When I heard about this and finally went down the rabbit hole of learning what it actually is and why it works, I was like, okay, I Totally get this. And for me the, the priming mechanism was NFTs because I knew that would make sense for my business. All of that sort of irrelevant. But it took me down the path of, of learning what this is. And so now I'm like, whoa, whoa, whoa. For the first, not the first time, we're all living through a moment right now where for the first time we as just normal individuals are front running the institutions. And so I became obsessed with just getting people to look at it because I can't see the future, nor can you, nor can anybody. So I don't know what's going to work out so could end up being a disaster. So I don't want people to just do what I say. I want them to go learn what this is. Because I think it's, it is incredibly important for all human beings to be able to think from first principles, meaning, you know, how things work. Don't just think about things, think about the nature of things. And when you understand the nature of things, you can solve novel problems, a problem nobody's seen before. Nobody can give you a book. There is no way for me to sort of pre masticate the idea for you. But now you have the information like with literacy where you can go on this discovery mechanism and if you should lead to the same conclusion that I have come to, which is that oh my God, this moment of panic I had where so understand dude, this to me is funny and I really believe that the, the purpose and meaning that I'm finding in life is I've had to learn everything the hard way. I'm not particularly bright and I can't think fast, but I can think really fucking deeply about something. And so because I have to learn things the hard way with sort of normal hardware, right? I don't have particularly, I don't have a genius like that. But then I can sort of explain after I've really spent some time with it, I can explain it is I had this moment of panic where as this guy who managed to create tremendous wealth in his life by spending two decades getting good at business, right? Took me for fucking ever. I did not have natural instincts and entrepreneurship, but I figured it out and so then have created wealth in my life, but now I'm still ignorant to investing. So I've created like fucking crazy money. Money where people be like what? And but I don't know how to invest it. And so I get involved in the world of investing and I'm telling my money manager, just don't fucking take risks. All Right? Like, keep this shit as. Just keep me at the amount of money that I have, the buying power. That's all I'm looking for. I'm not trying to Warren Buffett this. I don't need to die as the richest person on earth. None of that matters to me. But they keep, like, haranguing me, Tom, you can't just do that.
- [82:07]
Robert Breedlove
Like, you.
- [82:07]
Tom
And I'm like, why? And no one could explain it to me. And the confused mind says, no. So they would try to explain mechanisms, calls, puts options that, you know, every seven years, I could double my money, all that. And I'm like, I don't give a. About that. I just. I've already made. Made the money. I just want to protect my money now. And then I discover NFTs, and then I discover Michael Sailor, and he goes into inflation and, like, what it means and how it breaks down your buying power. And I thought, oh, my God, I have to then keep making money, and I don't want to have to keep making money. So then I'm like, God damn it. And so I'm looking at inflation and I'm saying, here's one thing I find really fucking distressing. No one can agree on what's happening. So I'm like, then it's not super obvious. You've got Michael Saylor, who's like, tom, you're going to be broke in 62 days. And then you've got, you know, other people that are like, come on. Like, it's. You know, we're. We're only around 2%. Like, this is all madness. And then you've got people that are in between. And then I find you and you actually explain what inflation is. And now I'm at first principles. Now I understand it. Now I know what's happening. Now I'm really freaked out. So now my moral obligation goes to a hundred. But I'm like, breedlove, will you shut the fuck up? You're gonna, like, get the government, like, they're gonna freak the fuck out and they're gonna clamp down on this shit. And now I'm legitimately like, whoa, what do we do? Because my hope is that you're right about the thing and you're wrong about either the speed or the amplitude. Meaning you're probably right that on a long enough timeline, government takes on a new shape. But it happens over five or six generations. It doesn't happen in 20 years, which that would be literally bloody and terrifying. But if it happens over a hundred years, then I can see it where it just changes the dynamic between us as sovereign individuals and the government. Because quite frankly, I don't think most people want sovereignty, not 100% sovereignty. And I'll explain it through bitcoin. I know I'm supposed to put it on my cold storage device and put my cold storage device somewhere very safe, but I kind of prefer it on an exchange because I want them to deal with like the security and all of that because I'm sure as hell not storing it in my house because I don't want to incentivize somebody to break in. So now I've got a, I've got counterparty risk of like I'm storing it at a bank, like where am I putting this thing? So I realized, whoa, like I'm a, I trust myself a lot. Relatively bright, very hardworking, like, hey, if anybody can figure it out, I can figure it out. And I still want somebody else to deal with it.
- [85:10]
Robert Breedlove
Yeah, it's.
- [85:12]
Tom
And that's analogous to wanting a government to be the one to come in and protect my home. I don't, I don't want to need a gun. You know what I mean? Shit like that. I want a government to deal with some of these things.
- [85:22]
Robert Breedlove
Yeah. And again, as a means either a cognitive expedient or outsourcing security, like that's natural. We want that. I should make the important point. It's not black or white. It's not like banks or bitcoin. You actually have bitcoin banks. They already exist. Nideig and all these other guys, they're just taking custody of bitcoin now, giving you traditional banking services, but on a bitcoin standard. The other aspect is you don't have one pot of bitcoin. You can put a little with this bank, that bank, this bank, you can spread out your counterparty risk, keep some in self custody. I mentioned multi signature earlier. That might be a little bit beyond the scope of this conversation. But you can actually get redundancy plus self sovereignty. So you could trust yourself but not make your house a target by using a multi signature setup, which I think is the most useful schema for custody in your bitcoin because you get again, redundancy. You don't have a single point of failure, but you also don't have counterparty risk.
- [86:25]
Tom
And that's going out to like my friends or my family and saying, hey, you five or six people, you also have to sign for this to be moved. And one of you hopefully goes, did
- [86:34]
Robert Breedlove
Tom really want this?
- [86:36]
Tom
Right. That's what Multisig is correct.
- [86:38]
Robert Breedlove
Yeah, you're. You're selecting your circle of trust, basically, and structuring it in a way that a majority would not collude against you. Right.
- [86:46]
Tom
And that they don't probably even know who each other are.
- [86:48]
Robert Breedlove
Exactly. And there's a whole lot of game theoretic considerations to that. But it can be done as the. The point. And Bitcoin enables us. You can't do that with any other. Any other asset. So that's radically new to your point about breed love. Shut the fuck up. You're not the only one to say that actually, people have a bit of reticence about maybe discussing the geopolitical implications of Bitcoin. But the way that I look at it is that these conversations are going to be had. It's just a matter of are they being had behind closed doors, you know, favoring those in the room, or are these conversations we're going to have out in the open such that it does not produce such an asymmetric outcome? So maybe I'm wrong. You know, I could be persuaded one way or the other, and I've had a lot of smart people give me really good criticism about it. But it seems to me that in the digital age and the ethos of openness and transparency that we discuss, what we've done here, what world have we created for ourselves? How does this radical new asset or form of property change the game? And what are the geopolitical implications? What does this do in the broader span of human history to the institutions we've come to depend on? I think it's a fruitful conversation to. To be had out in the sunlight. I do think, though, that it could be, you know, we're very maybe indoctrinated to some extent that transitions have to be bloody, they have to be violent, and, you know, what have you. But again, a lot of this is rooted in the viability of property. Again, the book the Sovereign Individual goes into the logic of violence and how this has changed human behavior and human institutions over time. One simple example here would be the knight on horseback used to be the dominant force in the land, because this guy could afford a war horse, afford a suit of armor and a lance. The stirrup actually was very, very pivotal innovation, because before the stirrup, the armored knight was too heavy to get on horseback, so he didn't have mobility to be the force in the. The land. So the stirrup, the seemingly simple invention, changed the logic of violence. That allowed the knight to.
- [89:09]
Tom
That is so fascinating. Things like that. And how like what a big knock on effect they have.
- [89:16]
Robert Breedlove
Yes, utterly fascinating. So then that was this, you know, had implications on the feudal age and the knight, you know, the, the moral code of chivalry. All these things emerged from this kind of simple innovation that made the knight the dominant force. But then what happened? We invented gunpowder. So the, you know, one night that could take on 50 peasants in armed combat, all of a sudden One peasant at 200 yards can take out a knight. So it all changes again, right? Chivalry collapses, all these things. So when we change the logic of violence, which means, you know, the economic returns of violence or coercion or the cost of defense, the way we organize ourselves changes. And so you could think of Bitcoin as this new technology that so radically increases the cost to benefit ratio violence and that if someone's properly custody that again in a multi signature format or whatever, there's not any carrot at the end of robbing them. You're not going to get anything. Right? You can go. And in Bitcoin circles they call this the five dollar wrench attack. Because you buy the wrench for five dollars and you beat the guy over the head with a wrench until he gives up his bitcoin. But if he's custodied it properly, there's no incentive even to conduct a $5 wrench attack. So in this gigantic geopolitical upheaval that I anticipate occurring due to the monetization of bitcoin, I think it could be very uncertain at first. Governments are going to use their power in certain ways that could be unfavorable, let's say. But over time, as bitcoin continues to monetize and more and more people are holding their wealth in this inviolable property that would, I would tend to believe that the incentives towards peaceful cooperation would begin to outweigh the incentives to coercion. So although it could be a bit rocky in the beginning, I think the long term outcome is, is way more fruitful for humans. You know, we're. And something you said earlier too, that maybe people don't want sovereignty. Full sovereignty, full sovereignty. I think people, I think incentives are the fertile soil from which our humanity springs actually. Right. So we think is maybe a bit egotistical that we think that however we are, this is the way human, humans are. It's the way they've always been. But again that's totally not true. Right. Pre printing press, most of us were illiterate. We didn't have our cognitive software, was completely unrecognizable to what we are today. No one could sit here and have a conversation like this, much less with all these amazing tools we've created in the marketplace since then. So I think that by changing the fundamental soil, which are the incentives, again, like the logic of violence and all these other things, that we actually change our character traits and behaviors. I've said that. And to try and draw commonality here, I said organizations and institutions are all property strategies. You know, I think that even DNA itself is kind of a survival strategy or property strategy over time, right? We're all, all organisms geared towards reproduction. Reproduction necessitates territory. We need to take territory. Humans express territory and property, right? That's how we share and build, declare a property and create more wealth, actually, by trading through property rights. So I think that our strategies ultimately conform to the invariance on the game board, if you will. And Saylor talks about one of these is gravity, right? Like gravity is the one invariant that all of these strategies, whether you're a human being, whether you're a building, whether you're a government, like you're, you're adapting your strategy to gravity. It's an invariant, right? You can't. If you changed gravity, it would destroy all the humans and buildings and all the things. You can kind of consider Bitcoin, maybe I'm out on a limb here, But I think 21 million, this fixed supply asset as the emergence of a new, seemingly perfected invariant in the market for money. So it forces all of us to change our strategies to adopt this invariant in the space. So this is at the individual level, the institutional level, and at the nation state level sounds a bit radical, but I think that if you come to see DNA as a survival strategy propagating through blood, flesh and bone, and that all the other creations we make are just. You know, in biology, they call this the extended phenotype. We have the genotype, which is the genetic code, the strategy itself. We implement it in the phenotype, the body, the teeth, eyes. We have the extended phenotype, which are our tools and technologies or even our institutions, that it's all a strategy and that those strategies will adopt themselves to the invariants that we create for ourselves. I think Bitcoin is just the perfect invariant. Money.
- [94:24]
Tom
Very interesting. Okay. Now, when I think about the properties of this invariant money, one of them is that there's only ever going to be 21 million. And now it makes money feel like a zero sum game to me, which maybe out of ignorance, I always felt like My getting wealthy did not take from anybody. I created something they wanted. I gave it to them at a fair price. And that worked out to my advantage in that they got what they wanted in that momentary exchange. But I was able to build value in something that somebody else wanted for me, and so I could sell that to them. And now where money is, let's say in a world where bitcoin becomes essentially gold, it becomes the place where people store their value. There's only 21 million. And so now if I'm Jeff Bezos and I have some just insane portion of that and don't have even really a mechanism to intelligently spend it all, and this is where we probably have to get to. People think that Jeff Bezos has all that money sitting in a bank. And of course he does not. He would have to sell portions of his company to get that. So does that notion of equities, like, go away? Like, what does that look like?
- [95:54]
Robert Breedlove
Yeah, stock markets will continue to exist. But I think where maybe your confusion here is again, purchasing power versus the supply of money. So the purchasing power of money will continue to increase the more wealth we create through free exchange. So although there's only 21 million bitcoin, it sounds like, you know, this absolutely scarce number. The amount of purchasing power it can contain is unlimited, right? You can have an unlimited.
- [96:24]
Tom
It's not unlimited. Right. There is a cap. Like there can only be whatever we can satoshis per bitcoin.
- [96:28]
Robert Breedlove
Or is that not. Well, you can actually soft fork bitcoin and divide it further. So to your point, each bitcoin. And a lot of people don't know this, this is probably important. You don't have to buy a whole bitcoin. Each bitcoin is divisible into 100 million subunits called satoshis. If ever that divisibility were inadequate, we're back to that property of money divisibility. If that were inadequate liquidity to support economic activity. Right? If bitcoin were global money and one satoshi were worth, I don't know, a car or something, you can soft fork the code, which is to say it's a simple software update, let's put it that way, to increase the divisibility of bitcoin.
- [97:13]
Tom
And that's built into the code.
- [97:14]
Robert Breedlove
That's built into the code. So bitcoin is essentially. That's one of the reasons it's better than gold. Infinitely divisible, right?
- [97:21]
Tom
It's only 21 million units, but you can infinitely divide it. Now, does that have the effect of printing more money.
- [97:28]
Robert Breedlove
No, and this is another common, commonly misunderstood thing. People think that if you can increase the divisibility of it, then all of a sudden you're back into inflation, right? But in the problem with inflation is the distributive effects of inflation. It's that this group is producing new money for themselves and you're not. When you just increase the divisibility of the money. It's, it's a stock treated equally, stock split, right? You had one share of stock, now everyone has 10. No one was diluted. Everyone was just increase the divisibility of their stock. That's essentially what the soft fork would be to Bitcoin divisibility. Now this, this, this is very important because people get this confused. The more productive we become as a global economy, the more purchasing power Bitcoin can contain. And that is unlimited. That is limited only by the amount of capital we can produce. Money as a what?
- [98:21]
Tom
You're gonna have to define that then. Because if capital isn't money, what is it?
- [98:27]
Robert Breedlove
Because money is a form of capital. But let me distinguish this non money capital, let's say all the other things, right? The buildings, the stuff, the cars, the factories, the equipment, all of the productive factors in an economy, non monetary productive factors, which I'm seeing Loosely's capital here, say non money capital. Money's a call option on all that, right? It's denominating the value of all these assets that are trading back and forth. But there's also this, people are, this reservation demand for money. People are just holding money as a call option on all that stuff. So another definition of money, it's an insurance policy on uncertainty. The only reason people are holding money is for its option value. We don't know what's going to happen in the future. Therefore, what's the answer to uncertainty? Optionality. If I have no idea what's going to happen, I want the maximum number of options to deal with all possible contingencies. That's what money is. It's another thing money is. So if you think of money, so I'm talking my hands here, fixed supply Bitcoin over here, not changing, right? 21 million. But this capital stock, non money, non monetary capital growing as we trade and produce more and more. This would imply the purchasing power per Bitcoin is growing, going, right? It's a call option on more and more stuff. This amount of stuff is limited by us. How much can we innovate, how much can we create? But there's no limitation on bitcoin. Itself and to the point of a Bezos or any individual actor holding an outsized portion of the money supply. That's capitalism. What we have removed, though, is the ability for Bezos, because he has such a large position in the money supply, to change the rules of the monetary network, right? And that's what the Fed has effectively done. It's like, we hold all the gold. We're going to make the rules. Bretton Woods, 1944. We're going to award ourselves this perpetual free lunch on the productive economy for the right of monopolizing money, which sounds asinine because it is. That's not possible on a Bitcoin standard. So the fixity of rules, the unchangeableness or immutability of rules, is the bedrock of peaceful and productive cooperation. And you know this. If you sat down at a table to play poker and if the hand rankings changed every few hands and one guy was deciding, I mean, he would clean everyone out and that would be that. And you would never want to play the game again, right? You would want to go and find another game to play. Poker works as a game because the rules don't change. We can formulate strategies and compete with one another, one another in a productive way. But when you, if you want to drive people insane and really create a lot of conflict, just try changing the rules of the game every few hands. Now, this applies to any game, especially money. That's what inflation's doing, right? Nobody knows the rules of the US Dollar, how many are in circulation, how many will be in circulation, who's profiting? We don't even know exactly who the shareholders of the Fed are, what's their dividend, what are their criteria for deciding how much, how many dollars to produce, who's getting it first, who's going to be the Fed chair next year? Like all, there's all of this uncertainty injected into managing the asset. That's intended to be an insurance policy against uncertainty. That it's just oxymoronic in a way. And so bitcoin is another way to look at it is the most certain form of money we've ever had. And if money is an insurance policy for dealing with uncertainty, you would want maximal credibility in the properties of money to deal with that uncertainty. And that is Bitcoin. And that's why people, it's like people think you can ignore it or avoid it or I don't want to hear about it. But it's like if you like, if you prefer wealth to poverty and if you depend on the marketplace for wealth, which is the only generator of wealth, then you have to pay attention to Bitcoin because it's monetizing. So there's a very special place called
- [102:42]
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- [103:50]
Tom
Okay, now to go a little bit.
- [103:52]
Robert Breedlove
I hope that answered the difference between purchasing power and in fact let me
- [103:56]
Tom
restate it because as you were saying it, you were fucking melting my brain. So it's one of those that's so self evident that once you hear it you're like, oh my God, I can't believe I couldn't come to that. I'm a my own. But so basically it's everything that we create has some value. The way that we denominate value of all kinds is with money. So whether that's energy, water, air, if you're on Mars, which was a joke I wasn't able to make when you said it the first time because I didn't want to interrupt you. Give them a cohagen. All of that stuff is denominated in whatever the monetary system is. So in this case dollars or bitcoin. So it's an umbrella that by its nature encompasses all things. So as you produce more things, then it grows to encompass that you could buy all of those things, that everything has value that can be traded for that.
- [104:48]
Robert Breedlove
Yeah, the more rigid the money supply, the more people will choose to store their time, energy, wealth there. And then if the capital stock, non money capital stock is growing, then that would be reflected in an appreciation of the purchasing power of Money. And this is like what? Gold? Gold has been roughly 1 ounce of gold is equal to a fine man suit for like 100 years. Right. But if you look at the price in dollars, it's gone from, I don't know, $30 to $1200.
- [105:18]
Tom
That's interesting. I didn't know that.
- [105:19]
Robert Breedlove
Yeah,
- [105:22]
Tom
I had an insight on that, but now it is gone. Hopefully to come back at some point. So going to the sort of next layer. Deeper. So the book the Sovereign Individual, which I've not read, but I've heard you talk about so many times, it predicts a lot of things that we're seeing. It predicted cyber cash, crypto, obviously, but it predicted social media. Like, so what, what is the key insight to that book that allows it to predict all these things and does it give us any insight moving forward?
- [105:58]
Robert Breedlove
Yeah, it called social media narrow casting as opposed to broadcasting, which I thought was interesting. It also predicted that as the digital age started to really progress, that governments would likely resort to pandemic like situations to try and reinforce the validity of their borders.
- [106:22]
Tom
Yikes.
- [106:23]
Robert Breedlove
Which is interesting.
- [106:24]
Tom
What year was this written?
- [106:25]
Robert Breedlove
This was written in 1997. Whoa. Yeah. And the key insight is again, the. The logic of violence. And the main point that they make is that cryptography allows us to insulate things or defend assets in a way that is many orders of magnitude cheaper than anything ever before. So that the cost of defense has plummeted, which you could say has a commensurate increase to the cost benefit ratio of coercion. Right. All of a sudden you can't. Why break into the guy's house if you can't sell his bitcoin? Why invade the country if you can't take their bitcoin? That type of thing. That it would have a decentralizing effect on government because government is as large as it is because it extracts monopoly profits through seniorage, through inflation, through taxation. Right. None of these are mutually negotiated free market phenomenon. These are all imposed and they're all able to be imposed because people had no alternative. There was no alternative monetary system. It's like you have to have a bank account. Right. Before Bitcoin. What else did you do? Hold Barry Gold in your yard? Right, right. I mean, it's pretty hard to transact gold globally. So that's the key insight. And the book, I'll warn you, it's a bit of a dry read, but I would highly recommend getting through it. I think there's a lot of good insights there.
- [107:54]
Tom
Yeah, that's it. The whole idea of decentralization and all of the things that it's going to change. And again, my entry Point was NFTs to. Because for everybody, I think there's going to be something that's relevant to your life that forces you to get to first principles thinking. And once you're there and you can predict, then it becomes really fascinating. And as a person in media, what I realized. So I got showed something like six years ago, he called it V atoms. And of course it's become NFTs, but he didn't call it that. And he showed it to me and I was like, yo, that's going to change my business, like, entirely. And because when I think about so we're trying to build the next Disney. And when I think about that, you start thinking about, we make things in plastic, plush toys, you know, all that stuff. And it's very expensive to make the first one. And so it, it gets very difficult to like, reinforce your brand. And there was this moment back in the 80s where you could do what they called selling from the shelf, where you would promote the he man cartoon with toys on the shelf. And so they knew that moms like mine would take you to Kmart and you didn't want to go with her to the bra section. So you go to the toy section and you would see he man sitting there and it would tell you that there was a cartoon. And so you wanted the toy and you watched the cartoon and the cartoon advertised the toy. And so it got into this loop where they could actually make enough money to make the cartoons. So anyway, I'm thinking about all this stuff and I'm like, fuck, it's really expensive. They change the laws on advertising and all that stuff. So how am I going to crack that nut? I see these V atoms and I'm like, whoa. That's going to allow me to create virtual products. That because I'm again, technology is one way street. I had a really hard thesis that people will value digital things in the same way that they value physical things. And. But the technology wasn't there, wasn't ready for primetime flash forward, obviously NFTs hit. And I'm like, whoa, okay, I recognize this is that V. Adams thing. Like, I'm all the way in and. But that to be able to understand what I could truly do with it, I had to learn the technology, which forced me to understand blockchain, smart contracts, all that stuff. And then you're like, oh my God, now you can predict where all this is going to go. And that technology, the Decentralization of things, the trustless nature of it all, man, it's hard for me to wrap my mind around the business implications, like when you start thinking about Daos, because I'm. I'm a traditional business guy. And so I'm thinking, whoa, Daos are really going to come in. It's going to be a fascinating challenge to the traditional way of doing business, which is highly centralized. And so then I'm like, all right, is Steve Jobs right? And that by creating this walled garden, you can create something better? Or is Wikipedia right? Or Android? Maybe a better analogous example where it's this open system and it's more decentralized and you let anybody use your operating system that wants to. And, man, it's the change that's coming and the rapidity with which it's going to hit us is thrilling if you're looking at it through the right lens, certainly from a business perspective. I've never been this excited in my life, ever. Like, this is. It's a moment of disruption. And so, in fact, I'm going to put a slight. I think your enthusiasm for Bitcoin captures my enthusiasm for just the moment of disruption that we're living through right now.
- [111:14]
Robert Breedlove
Where.
- [111:15]
Tom
When you have. And because in business, it's not scary the way that it's scary thinking about nation states. Until NFTs, I was looking at trying, how do I beat Disney at their own game? And so I told my team when we founded the company, I said, our job is to stay in business long enough to figure this out, because I don't right now. See the path. Trying to beat Disney at their own game is. Is a losing endeavor. They're 90 years ahead of us. They have untold billions of dollars in revenue. This is all pre pandemic, and they have billions of dollars in ip. And I was like, whoa. Like, that's a really tall order. So the only thing we could do is tell better stories. And we were certainly headed down that path of, like, I think I see something culturally that's happening that they seem blind to. And so that was what we were going to capitalize on. And then NFTs happen. I'm like, oh, my God, like, the disruption, now that's going to happen. They will be way slower than will be to adopt the technology, certainly to push it to its extremes. And so as things disrupt for people that are able to get to first principles faster and think and be able to solve novel problems in a novel way, you've got, like a real shot at something here.
- [112:30]
Robert Breedlove
Yeah.
- [112:30]
Tom
Now that the way that people are going to think of that moment of disruption, the way that they're going to capitalize on this technology, I think brings us to this idea of morality and the. I don't want to put words in your mouth, so I will simply say the note that I took after listening to you speak on the topic was I think Bitcoin as God is what I wrote. And you said I'm not going to call Bitcoin God. But and it was the fact that those could even be put in the same. I'm trying to find the exact note that I took. Anyway, it was close to that. So how do these come together? How does Jordan Peterson begin to influence the way that you think about all of this religion, morality and what's happening with Bitcoin?
- [113:15]
Robert Breedlove
Well that's a lot done packed here. I would first the NFT piece. I don't know a tremendous amount about NFTs but what I would say, and this is in regards to centralization versus decentralization. So many people get lost looking at other alternative crypto assets or NFTs or the projects thinking that they have the same trust minimized properties as Bitcoin to say that they are truly decentralized. No one has a political attack vector on the network or the good or whatever it may be. It is my strong opinion that Bitcoin is the only asset that is truly credibly exhibited the qualities of decentralization. Right. It's undergone a fork war. People have tried to increase the block size, change the supply, all these things. And Bitcoin is kind of tried and true, it's battle tested. So within FTS I would just say and crypto more generally, NFTs and crypto, I don't think decentralization has been achieved anywhere else. So I'll just leave it at that. Just so people, that is the key difference is that Bitcoin is the 1 asset in the world that no one can control. One thing I wanted to say about the Disney battle, this may work in your favor actually is that should we move, should Bitcoin monetize and succeed as I have laid out, this will move us to a much more free market last say fair capitalistic market environment or something like IP goes away, IP won't exist because IP right now is premise on litigation. Right? Someone violates your ip, you go and sue them. In a bitcoinized world, it's going to be much more cost prohibitive to enforce ip.
- [115:05]
Tom
Why?
- [115:05]
Robert Breedlove
So that might work in your favor.
- [115:07]
Tom
I don't Understand that
- [115:10]
Robert Breedlove
largely because property won't be viable. Right. If bitcoin were the sole money in the world, it would be really hard to sue someone for their bitcoin. Be very, very hard to enforce that. Now, had you staked some of that Bitcoin or the local governance model.
- [115:23]
Tom
That assumes though that governments have essentially vanished from how we think of them now. Right.
- [115:29]
Robert Breedlove
They will have transformed significantly. Yes. The point being that it's much less economic to enforce ip. I could just leave it at that. It is a long game thing and it would be a dramatic change, but might work in your favor trying to take out Disney.
- [115:45]
Tom
Yeah, that's interesting. We could definitely get lost in that rabbit hole. But I don't want to deprive people of hearing this whole thing about morality,
- [115:53]
Robert Breedlove
which I find very interesting. We've published a book I authored with Jimmy Song as a fellow bitcoiner and a group of others called titled thank God for Bitcoin. This has received some criticism because people always go back to this quote in the Bible. The love of money is the root of all evil. We're by no means advocating the love of money or the love of bitcoin or that bitcoin is God, by the way, were simply we wrote a moral treatise on the history of money. I don't think we mentioned the word Bitcoin until 2/3 or 3/4 of the way through the book. And we looked at it through a Judeo Christian lens and what the Bible references money many, many times. And I think it's written to be very accessible, almost like CS Lewis style. Very short, punctuated sentences. You can read the whole book and maybe two hours. But the people that do read it report it being very transformational to their understanding of money. Right. You go in with this question just like, what is money? What is bitcoin? And you leave with a good foundational understanding of answers to those two questions. This and this. As part of my own personal journey, I guess. I was raised in Tennessee. I grew up Christian. I was in church on Wednesdays and Sundays. I was always a very scientifically minded young man. I became very fascinated with astrophysics when I started reading by myself around age of 11. I went straight to the deep end of the pool. As I like to joke. I was reading Stephen Hawking and Brian Greene.
- [117:39]
Tom
Jesus.
- [117:40]
Robert Breedlove
I was just enamored, looking up at the night sky like, what is all this? And so I thought, okay, now that I know how to read, I'm going to go try and figure it out. I was reading these books, I Could barely comprehend. But I think it just sparked this deep curiosity in me. But at the time, it also inspired a bit of an atheism in a way. I was just very scientific, you know, like, I thought Christianity was almost a fairy tale at this point. And this. This persisted through most of my teenage life. And then later on, I'll gloss over some of this, but I discovered yoga. Yoga was very transformational for me. Reintroduced me, I guess, to the spiritual aspects of life. I got into meditation. Meditation changed my life. I always had trouble sleeping. I was an overthinker with meditation once. I learned lights out in 30 seconds every night now, which is a big deal if you can't sleep, you know, reliably. And so I was less scientific, more spiritual. But I had not revisited Christianity until through Bitcoin, actually. I was introduced to Jordan Peterson and his work, and he's, in my opinion, one of the greatest living lecturers. I would call him a philosopher. Um, you know, he really gets at the fundamental nature of things. And he looks at it, looks at the world through many different lenses. And in that way, that method of kind of consilience, right? Looking what he calls multivariate analysis, looking at different topics through different lenses. One of the main ones is, excuse me, Judeo, Christian lens. He lended a lot of credence to religion. To me, all of a sudden, it was not this fairy tale that I dismissed in my younger years. And I started to really look into it more closely. And I'm still looking.
- [119:41]
Tom
If it wasn't that fairy tale, then what? What does it hint at?
- [119:46]
Robert Breedlove
So my current view, and I love Peterson's answer to this, that people often ask him, does he believe in God? And he says, I don't believe in God, but I act as if he exists. So in my mind, that is Peterson putting the emphasis on human action. That's what matters. And if you look at the Austrian school, you'll learn that all human action is an expression of value. To walk across the room implies that you value being on the other side of the room more than you value sitting where you currently are. So we are constantly and unavoidably expressing our values through action. And looking at Christianity, it is this, the Bible specifically, it's not just a moral text, right? If you read it from the Old Testament to the New Testament, it goes through this moral development of humanity. There's a lot more kind of barbarism early on, and it shows how we learned and developed and changed over time. So I think it points to the emergence of morality Morality sort of emerges from the rules of the game, if you will. Like, we can set our sights on something and work towards it. But the ultimate implementation of the morality really depends on the actual implementation of systems and technologies in a way. So. And Peterson has this definition of God. God's such a loaded term. I hate even talking about it sometimes because people either, oh, guy in the sky. Yeah, right. Or God is everything, you know, you can't even talk about it. Peterson has a number of definitions. One, he says, in that hierarchy of values, right, we're always. We all have this rank ordered set of values in our mind. Whatever we're doing in the moment is an expression of our current value. If I take a sip of water, it means I value a sip of water more than talking in that moment. Peterson says that God is the highest value in the hierarchy of values. So it's almost like we're expressing God through action in a way. God is kind of like this animating force or principle in life. I think it was GK Chesterton said that a dead thing, only a living thing can swim upstream. A dead thing can swim, can go with it. Maybe I've inverted that, but it's.
- [122:10]
Tom
No, no, no, that's right.
- [122:11]
Robert Breedlove
There's this principle to life that, you know, the entire universe tends towards greater entropy, more disorder, but life is antithetical to that. We actually are an organizing force, right? We, we negate entropy, we construct order. And that is the ancient idea I got from Peterson's work that's in Genesis in the Bible, is that God is that force that courageously confronts the chaos of nature, converts it into good and useful order. And I think that force and that principle is embodied in the entrepreneur. Actually, that's what the entrepreneur is doing, right? You're going out into uncertainty. You're putting your skin in the game. You're staking your life, your capital, your ideas, your reputation, everything, trying to pull something out of that unknown or that chaos that's useful and good for others. So I think. And the entrepreneur is the elementary unit of the free market, right? So I think the free market itself, this idea of freedom being a creative principle, is very closely connected to God. Another, maybe another way to look at God is this. You know, it's clearly he's eternal. He. I'm not anthropomorphizing, I'm just using what's there. This principle is eternal, which means it's outside of space and time. What other elements of experience do we have that are outside of space and time? Truth, love, Freedom, right? These things that are, they're timeless, right? And they're, they're very important to, to all these things we've talked about, right? These foundational documents, markets, revolutions, they've been fought over, these timeless ideals. And I think somehow God is kind of a composite of those in a way. And I don't think it's a coincidence that they're all creative principles, right? Truth. As I've argued in a lot of my writing, markets discover truth, they discover prices and tools. Love is clearly a creative principle. It's how we all got here. And then freedom, you know, freedom is how we maximize wealth in the marketplace. Free trade, as we've talked about today. So this is, I'm way out there on the philosophical side of things, but to try and bring it home. If God is the highest value in a hierarchy of values. Another definition Peterson has given of God is the truthful speech, which rectifies pathological hierarchies. And I would define a pathological hierarchy as one that is premised on anything that negates truth or freedom or love. And that is precisely what our current socioeconomic hierarchy is built on. Central banking destroys price signals. We didn't talk about this a lot today, but in there's a saying in markets that price is truth. This is the extant supply of capital in the world overlaid with the human demands for that capital is the price, right? It's dynamically updating in real time. It is the truth of what is right now, right? Whatever something is selling for clearing on the market, that is truth. Another thing markets generate is innovation. So the truth of digging a hole is a shovel, right? It is the best, most truthful, real way we figured out to satisfy that want at that price. And then the third thing markets are very heavily involved with is the development or promulgation of virtue. So we learn that honesty is more energy efficient in the marketplace than deception, right? If you tell a lie and everyone's experiences, to some extent, you tell one white lie, then you have to tell another second lie, maybe to cover it up. And it's just, it always blows up, right? It's not good. You're creating this little fork of reality to try and maybe overcome some short term pain, but you end up exacerbating long term pain, right? So this is, this is a virtue that's discovered through free exchange and free interaction. Central banking destroys all that. It destroys price signals, it subdues innovation, right? Your entrepreneurs are setting out surprises or supply and demand, but when the central bank's involved you can't trust the price. You don't know if it's supply and demand or policy. When you can't trust the price, you can't organize your affairs effectively towards satisfying the wants of others. I don't know if this price increase is because more people want the table or because this table is really scarce and the central bank's printing a lot of money. So me as an entrepreneur, I may be thinking, oh, people like tables, I want to produce a lot more. I don't know. I can't disentangle the two. So distorting prices misleads entrepreneurs, which unwinds that process of confronting the chaos of nature, converting it into order, and then it induces moral wickedness. And that all of a sudden your strategy again is to get as close to the fiat currency spigot as possible, because that's the lowest effort means of obtaining wealth. If I can just become a shareholder to a central bank, I now have a share in a company, a central bank that bears perpetual profits to me. I don't have to work. My incentives to work and satisfy the wants of market actors is diminished. So that, I argue, is diminishing to virtue. And so I think it's evil. I do think central banking is evil. And I'm not even saying that the institution was set out without intent. I'm just saying that mechanically, it becomes the invariant to human action. That causes strategies to be adapted to getting as close to the fiat currency spigot as possible versus being an entrepreneur. It's anti entrepreneurial, let's put it that way. Entrepreneurs are the hero of the marketplace. They go onto the hero's journey. They go out, they get their clock cleaned, learn the hard way, like I have, as you said, you have. And we take those lessons, we embody them, we adapt our strategy and we come back. And hopefully we either create something of value to others and we succeed, or even when we don't succeed as entrepreneurs, our failure benefits the marketplace. Because other entrepreneurs can say, that guy tried to open an Italian restaurant on that block and it failed. I'm going to not do that. I'm going to go do something else, right? So it's information feedback into the hierarchy of human organization. And central banking distorts and obscures all that. So that was a lot, lot to unpack. And there's a lot of rabbit holes into my writing there, but I hope that generally answered it. No, man, it did.
- [129:12]
Tom
And dude, I was blown away by researching you, by spending time with you, like this is, it's crazy you really have an amazing ability to think through this stuff and then articulate it for people. Where can people follow you, join you on this journey?
- [129:30]
Robert Breedlove
I just want to thank you for having me.
- [129:31]
Tom
By the way, dude, round one. I assure you that next time you're in la, let me know because there's so much more that we could go into. That is for sure.
- [129:40]
Robert Breedlove
This is great, man. I really admire what you've done and, you know, hope to emulate some of that myself. I just got into the media game, actually. I was. My background's in accounting finance. I was running a hedge fund. But this quote with, I think it was H.G. wells, civilization is a race between education and catastrophe. That quote just really hit me hard. You know, Saylor has this big focus on education. I heard that quote around that time too. And as an entrepreneur, I'm just trying to listen to the market. People have appreciated my writing and my talking, so I want to focus on that. I want to help enshrine the importance of inviolable property and what it means for humanity. So that's the direction I've gone. The show I launch is called the what is Money Show. So I'm trying to incept that idea into people's mind. I'm on YouTube whatismoneypodcast.com and then you can find me on Twitter reedlove22, which is my last name. B R double E D L O V E 22 word.
- [130:49]
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Robert Breedlove
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Robert Breedlove
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Robert Breedlove
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Robert Breedlove
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