Podcast Summary: "Money, Violence, and The State with Brent Johnson (WiM 032)"

Episode Release Date: July 16, 2021
Host: Robert Breedlove
Guest: Brent Johnson, Founder of Santiago Capital

1. Introduction and Guest Background

Robert Breedlove welcomes Brent Johnson to "What is Money?" Show, recalling their meeting at the Rebel Capitalist show in Miami. Brent Johnson introduces himself, detailing his 20+ years in finance, including his start on Wall Street during the dot-com crash, and his evolution into a wealth management expert focused on capital, finance, money, and macroeconomics.

Notable Quote:

Brent Johnson [03:23]: "I believe that the last 20 years... has kind of prepared me for what I think is going to happen over the next five to 10 years."

2. Brent Johnson’s Journey into Economics and Austrian School

Brent recounts a pivotal moment in 2007 when a client’s insightful questions about inflation, taxes, and debt led him to scrutinize the U.S. economy, revealing significant fiscal imbalances. This experience spurred his self-education in economics, leading him to embrace the Austrian School of Economics, which emphasizes free markets and critiques central bank interventions.

Notable Quote:

Brent Johnson [08:41]: "That young couple... made me realize they really didn't know. They couldn't answer them because they really didn't know they were salespeople."

3. Debt versus Barter: Insights from David Graeber

Brent discusses David Graeber’s perspective from his book Debt: The First 5,000 Years, highlighting Graeber’s argument that debt and credit systems preceded barter economies. This contrasts sharply with the Austrian narrative, which posits that barter naturally evolved into money based on marketability, like gold.

Notable Quote:

Brent Johnson [26:09]: "Debt and money created at the same time because... the state had to issue the money before it could ask for it."

4. The Nature of Money and the Role of the State

The conversation delves into how money has historically been a tool of the state to enforce tribute and taxes, often leading to the state's monopolization of money. Brent critiques the Austrian view for not fully accounting for the state’s role in shaping money through coercion and violence.

Notable Quote:

Brent Johnson [21:01]: "Money is the most important tool for humans. If you can control that tool, you can control people."

5. Money and Violence: Government's Monopoly

Brent elucidates the intrinsic link between money and violence, explaining that governments, as monopolists of violence, dictate the form of money through taxation demands. This coercive power ensures compliance and control, undermining the notion of a purely free market.

Notable Quote:

Brent Johnson [21:15]: "That's just the way it is. You don't like it, but it's the way it is."

6. Bitcoin as Decentralized Money and Market Alternative

Brent highlights Bitcoin’s role as a decentralized form of money that challenges state monopolies. He appreciates Bitcoin’s technological simplicity and its potential to serve as a store of value, independent of governmental control. Brent underscores Bitcoin’s market-driven growth as evidence of demand for alternatives to fiat currencies.

Notable Quote:

Brent Johnson [57:38]: "Bitcoin's optimized to survive. So long as it continues to survive just doing what it's been doing flawlessly for 12 years, it continues to eat monetary premium."

7. Government Response to Bitcoin and Potential Conflicts

The discussion shifts to how governments perceive Bitcoin as a threat to their monetary control. Brent argues that despite Bitcoin’s resilience, states will likely attempt to control or suppress it through legal and coercive measures, reflecting historical precedents where authorities have reacted against disruptive technologies.

Notable Quote:

Brent Johnson [112:10]: "As a result, people said it's not a threat to the dollar and other currencies because it's just going to be a form of collateral. However, it is by design political."

8. Macroeconomic Perspectives: The US Dollar, Gold, and Geopolitics

Brent provides his macroeconomic outlook, asserting that the US dollar will strengthen relative to other fiat currencies despite massive money printing. He emphasizes the dollar’s status as the world reserve currency, supported by global debt denominated in dollars and the US military’s enforcement capabilities.

Additionally, Brent discusses gold’s enduring value and its role as a financial insurance policy for states, predicting continued growth in gold prices and its strategic importance for countries like China.

Notable Quotes:

Brent Johnson [86:25]: "The dollar is the best of the worst... the world is on a US dollar standard."
Brent Johnson [101:53]: "Gold is going to go much higher in the years ahead."

9. The Future of Money and Potential Conflicts

Brent explores the future interplay between digital currencies like Bitcoin and state-controlled money. He foresees increased volatility and geopolitical tensions as governments react to Bitcoin’s rise. Brent warns of potential conflicts, including currency wars and real warfare, driven by states' attempts to maintain their monetary dominance.

Notable Quote:

Brent Johnson [77:35]: "If bitcoin is going to be as successful as many people think it is, it is going to involve a battle. And I believe that when that battle comes, the state will be able to inflict a lot of pain."

10. Conclusion and Final Thoughts

In closing, Brent underscores the transformative impact of digital technologies on money and governance. While optimistic about Bitcoin’s potential, he remains cautious about the inevitable governmental pushback. Brent advocates for balanced investment strategies, emphasizing knowledge over blind allegiance to any single asset.

Notable Quote:

Brent Johnson [115:53]: "I don't think there's a solution, frankly, to not having this natural monopoly on violence emerge in the marketplace."

Key Takeaways

• Debt Systems Precede Barter: Contrary to traditional economic theories, debt and credit systems may have existed before barter, as per David Graeber’s research.

• State’s Role in Money: Governments use their monopoly on violence to dictate the form and control of money, impeding the emergence of a pure free market.

• Bitcoin’s Potential: Bitcoin represents a significant challenge to state-controlled fiat currencies, offering a decentralized alternative that could reshape economic power structures.

• Government Pushback: States will likely attempt to control or suppress Bitcoin to maintain their monetary dominance, leading to potential conflicts.

• Macroeconomic Outlook: The US dollar remains strong due to its reserve currency status and global debt dependencies, while gold continues to hold intrinsic value.

• Future Uncertainties: The intersection of digital technology and macroeconomics introduces volatility and geopolitical tensions, with Bitcoin at the forefront of potential economic transformations.

Where to Find Brent Johnson

• Website: santiagocapital.com
• Twitter: @SantiagoAUC
• YouTube: Search for "Brent Johnson Santiago Capital"

This episode provides a deep dive into the intricate relationships between money, violence, the state, and emerging digital currencies like Bitcoin. Brent Johnson offers a nuanced perspective that merges Austrian economic principles with contemporary macroeconomic realities, highlighting both the promise and challenges of decentralized financial systems.