← The "What is Money?" Show
The "What is Money?" Show
Synopsis of The Saylor Series with Michael Saylor (WiM221)
01:17:32
Michael Saylor joins me for a synopsis of our 17-episode series together titled "The Saylor Series." For those who don't have time for the ~25 hours of content contained in The Saylor Series, this ~1 hour episode crystallizes many of its key insights.
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- [00:00]
Michael Saylor
Foreign.
- [00:08]
Breedlove
Everybody, welcome to the what Is Money Show. I am thrilled to have you here joining me on my mission to help shine light on the corruption of money. Now, a little bit about this show and how it makes money. We are 100% sponsor based, which means that all the revenues we derive come from sponsorships. But I try to be very selective about the sponsors that I work with, specifically trying to choose those who have values well aligned to the values expressed on this show like freedom, education, self sovereignty, etc. So what I'm going to do is a few ad reads right here at the top of the show and then a few ad reads in the middle. And I hope you won't skip them. I hope you'll take the time, listen and see what they have to offer because again, these are hand selected sponsors. Now I'd like to tell you about our sponsor, Swann Private. Swan Private is a concierge financial services firm based in Los Angeles. Now I've known the Swann team for years and these guys are laser focused on the Bitcoin mission. They even have a zero tolerance policy for all ShitCoin. Recently their CEO Corey Clipston was instrumental in calling out many of these crypto scams right before they collapsed, saving a lot of people a lot of money in the process. Swan Private focuses on guiding high net worth individuals and businesses on all aspects of Bitcoin strategy including buying, custodying and market research. This concierge service provides you direct access to a private advisor by text, phone or email. So go to swan private.com breedlove today to sign up. Now I'd like to tell you about our sponsor ledn. LEDN lets you do more with your digital assets. For instance, LEDN offers a B2X loan product that lets you leverage your existing Bitcoin to buy even more Bitcoin. Or you can also get traditional Bitcoin collateralized US dollar loans through LEDN as well. LEDN also offers both Bitcoin and USDC denominated savings accounts letting you generate yield on your digital assets. Recently Leden has launched a Bitcoin mortgage product as well that lets you use Bitcoin to buy a home or finance one that you already own. So go to Leden IO that's L E D N IO today to sign up.
- [02:33]
Robert
Hey everybody. Welcome to the Sailor Series book release. Twitter space. This is actually the first Twitter space I've ever hosted, so thank you for joining us. And we have our esteemed guest, Mr. Michael Saylor who just joined.
- [02:52]
Michael Saylor
Hey, thanks for having me Robert.
- [02:55]
Robert
Thanks for Joining us, Michael. And so we, as many of you may know, Saylor and I recorded a long series together, 17 episodes in total, which was the inaugural series for my show, the what Is Money?
- [03:12]
Michael Saylor
Show.
- [03:13]
Robert
We released this. Started releasing this in late 2020 on both YouTube and the podcast feed. I think the total content comes to about 25 hours across the 17 episodes. And today, and more recently, we've released a book which is basically a transcript of our conversation with some summary bullet points at the end of each chapter. And today we're going to kind of go through a highlight reel of that conversation and the book itself, which is now available on Amazon. And I think, just for starters, I'd like to say that the feedback from this series has been overwhelming. You know, I was walking through my neighborhood in Nashville, Tennessee, about a week ago, and some guy in his 60s that was cutting his grass, you know, stops the lawnmower and, like, runs across the street and introduces himself and was, you know, thanking me profusely for. For this particular series. So it's been a bit strange to see how far the reach has been given that, you know, my. My initial question to Michael was just, you know, what is money? Let's. Let's talk about it for a long time and see where it goes. And so I personally was very excited that people have found this thing valuable, and the reach and longevity of it has been quite impressive as well. Michael, I wonder if you've had any particular feedback or comments you'd like to share from our conversation.
- [04:49]
Michael Saylor
Yeah, my thought was I never really thought much about what is money until you asked me and then we sat down for this podcast. I thought it'd be a couple of hours, and it. It turned out to be like 18 hours or something like that. And then we eventually did 25 hours. And everything we did in those sessions was pretty much based upon an outline that I just quickly reeled off. In the first hour, I just created an outline of. Of a bunch of things I wanted to cover, and then. And then the rest is just extemporaneous. So it's kind of interesting what comes out. Extempore. And when I looked at the transcript or this. This book you put together is 400 pages long. And I thought, that's a lot of words. A lot of words. But a fascinating subject, right? What is money? The highest form of energy that humans can channel. Right. Money is energy. A monetary system is an energy system. And as soon as you start thinking about money as an energy system, if you're an engineer, the next thing that pops up is you start thinking about, about every other energy system, hydraulic energy systems, water, electricity, thermodynamic energy systems, mechanical energy systems and the like. And there are so many lessons to learn from all those other energy systems that, that just, just as starting with the observation that money is energy and a monetary system is an energy transfer system to move energy through time and space and, or to vibrate energy on a given frequency or to program energy, redirect energy. Once you get that idea right, you think about pulley systems. And you know what, a pulley system allows one person to haul a weight which is 10x more than they could pick up without that pulley system. So mechanical advantage and block and tackle and leverage and, and then, you know, what are the techniques for redirecting energy? I'm going to pull down, but I want, I want the energy vector to move and out from me, right? How do I do that? That's, that's a subject that engineers deal with all the time, right? Mechanical engineers, civil engineers, nuclear engineers, aeronautical engineers, ocean engineers. They're always dealing with energy and materials and they study it with a great deal of discipline. And there are right and wrong answers right there. Mathematics matters. And there are laws of physics and you can't cheat. You know, there's always the, you know, the laws of thermodynamics, right? You know, energy can neither be created nor destroyed. You can only transform it, transform the nature of it. And, and once you accept that, right, you realize that the, I mean, the number one rule of thermodynamics is you can't cheat, right? You just cannot cheat. And engineers know this and they design all their systems with that in mind. There's no shortcuts. There is no such thing as a free lunch, as Heinlein would say in his books. And every aeronautical engineer knows you want the plane to go further than you're going to have to give up some payload or you're going to have to change the material. And you want it to go faster than you're going to give up some degree of safety and making it go faster. So engineers live in this world, but economists don't. And money has traditionally been the province of economists, or at least in our modern world, economists and politicians. You know, we have, we have lawyers in charge of the money supply. You know, economists, lawyers, politicians are considered to be qualified to run the monetary system, the bank, you know, the banking system, the money system and the money supply. But if you actually just accepted the idea that money is energy and a monetary system is an Energy network, then you would actually think that I ought to put an engineer in charge of that. And bitcoin's the first time when anybody figured out how to engineer a monetary system. And Satoshi is a, is an engineer, right? I mean, a multifaceted engineer that had a pretty good familiarity not just with economics and politics, but had a good familiarity with mechanical engineering and electrical engineering and computer science and cybernetics systems and servo mechanisms and stability and feedback. And you know, first order stability is something that you, that you absolutely have to understand if you're an aeronautical engineer. When you design an airplane, if it's stable, it means when the plane tilts 10 degrees to the left, the, the lift on the wing builds up to bring the airplane back to center. And if it's stable, it'll tend to fly true and, and upright. And if it's unstable, when it tilts 10 degrees to the left, it'll tend to tilt 20 degrees more to the left and then it'll just flip and go into a spiral, a death spiral, and crash into the ground. You'll die. And so lack of stability typically means the plane crashes and burns. And in ocean engineering, when you build a ship, you want stability so that when the ship, you know, pitches, you know, 10 degrees to the, to one side, it tends to want to come back and you know, to stability, to a, to a neutral, buoyant, stable point. And if it does that right, then it's going to not capsize. But if it's unstable, the, you know, if you get the center of gravity too high or the center of mass too high in the ship, you know, you tilt 20 degrees to the laughter or, or something like that, you get a roll and the thing just rolls over. So not, not engineering systems with stability is a death sentence in the engineering world. But in the monetary world, not getting the stability right is a political inconvenience and you just kick the can down the road, leave it to the next person. Ultimately the result is the monetary system collapses. But if it takes 10 or 20 or 30 years, you're not there and you can just blame it on something else. So I think the question really had a big impact on me, as you can tell. And the result was whatever. 25 hours of content and 400 pages of stuff. And last I checked on YouTube, looks like we have 250,000 people viewed it. So that was quite surprising.
- [12:23]
Robert
Yeah, it's been quite tremendous. And I, I find it interesting that this just a relatively simple question about something that we all use and think through every day takes you straight into the, you know, some of the most primordial substances. We were talking about time and space and energy feedback systems, et cetera. And I really appreciated the framing. We were talking about Bitcoin moving us from politically run money to a appropriately engineered monetary system. And I guess the central theme, if there is one of the Sailor series, is that it's how human beings channel energy across space and time toward the achievement of their goals. And you did a really good job starting in the beginning. I don't know how much more first principles we can get. You started in the Stone Age and basically built your thesis all the way into the digital age. And in terms of how humans have channeled energy historically, you initially focus on three technologies. You focused on fire as an energy technology, you focus on missiles, and you focused on hydraulics as a means of channeling gravitational energy. Could you give us just like a brief overview of the significance of fire, missiles and hydraulics?
- [13:49]
Michael Saylor
Yeah, well, I mean, when I first started thinking about money as an energy system and money as a economic, a sociopolitical, economic form of energy, then it just led me to ask the question, what, what were the formative energy systems of the human race in the Paleolithic era? So I went back a hundred thousand years and I said, you know what, what elevated humanity and it's not, not that hard, right? You know, it's like fire. We've got, we've got Prometheus in our mythology and the whole point of fire is, is harnessing and channeling chemical energy and converting a log into heat or into light is a pretty good trick. And, and cooking food or pre digesting food using a wooden log is another pretty good trick. And I was focused on that because it's, it's so intricate, intricately interrelated with our evolutionary biology. And there's so many people with the thesis that humanity would never have, would never have emerged if we didn't actually master fire because we couldn't, we couldn't digest enough food and do it quick enough in order to divert energy to our brains. And so, you know, if you, if you don't have fire, you know, you're a horse or something or a cow and you're just eating all day long. But you're never going to get that smart because so much of your energy is diverted to your digestive tract. So it doesn't take much, much consideration to realize that without, you know, fire is a means of protection, a means of not freezing, death, a means of digestion, a means of signaling a means of information gathering and maintenance. You know, not to mention the fact that you, you don't just cook food, right? You, you cook terracotta clay or you cook materials. You can create construction materials. You can, you can work stones and, and you can harden, you know, the tip of a spear, right? You can smoke food to preserve it, right? Fire. Fire turns out to be pretty useful in so many different ways. You can scare away something bigger than you that would otherwise eat you. So it's, it's, it's defensive, it's offensive, it's constructive, it's useful. And you know that the missiles thing is just like you start thinking about converting potential energy to kinetic energy, right? A bow. I draw the string of a bow back, I put an arrow in it, and I Send the arrow 100ft or 200ft or a thousand feet or however long I'm gonna fling it. And if not that, I do it with a sling. And I, I think the, the, the critical idea there is that it's just very difficult for us to rise above, you know, any creature that, that has sharper fangs than us. And if, if someone's got, if someone's bigger or stronger or tougher than us, you have to stand off from a distance in order to beat them. So whoever masters missiles winds got, they've got the long reach. Not only can you actually stand back 100ft and blast something, but you can also stand up 30ft on a cliff and blast them. So, so it's a pretty good evolutionary trait to master the ability to direct an energy weapon in a distance. And it's pretty obvious today, right? I mean, someone's, someone's got a gun and you've got a knife, you're going to lose. And if they've got a rifle and you've got a pistol, you're going to lose. And if they've got artillery and you've got a rifle, you're going to lose. Ultimately, someone that can drop something from 50,000ft above you on your head is going to win. So missiles turn out to be pretty critical to advance as well of humanity over creatures. And then eventually the most sophisticated tribe that mastered the most sophisticated missiles dominates the less sophisticated tribe. And that's continued to this day with ICBMs and, and, and even, even the Star wars initiative that we credit for toppling the Soviet empire was, was either mastering the ability to fling a missile or mastering the ability to knock a missile out of the sky that someone else flung at you. I mean, the last subject, hydraulics really, it's just water power, right? I mean, water. Water is one of the most effective ways to channel gravitational energy. And, you know, ancient peoples took water and they created mills and they created machines and they, and they did work. And, you know, if you, if you have a waterfall and it'll do the work of 100 people, then, you know, that could be pretty useful to you, right? Especially if you're one person. You get the mill working and you can relax while the water does the work. So, so I think the significance of all these is they're early. They're Paleolithic energy systems with a different purpose. And if you mastered them, you built a civilization. And if you didn't master them, the best case is you run around with the animals and, you know, better off than the chimpanzees. Or the worst case is you don't master them and the tribe that's adjacent to you masters them and they just murder you and you're done. Right? And, and you get squeezed out of the entire ecosystem. So I, I think when we started to consider those, the big idea is the civilization the. That channels energy most effectively wins. And, and, and I think that was kind of the theme for the rest of the entire series of podcasts.
- [20:01]
Robert
Yeah, great elaboration there. I. And so the civilization that channels the most energy the most intelligently wins. Obviously, these are primitive forms of energy, but they're very instrumental to building a civilization. But to your original answer to the question, like money would be the highest form of energy that a human can channel, if then that energy network that we call money is monopolized as it has been throughout history, what is that doing to this highest capability that humans have where we can use money to coordinate the actions of one another? What is the monopolization? How is it actually disruptive to that energy network that we call money?
- [20:51]
Michael Saylor
Fundamentally, the difference between monetary networks and sanitation, water networks or missile networks or fire furnaces is, is that you can't cheat Mother Nature. So if you create a. If you create an aqueduct system and you put a leak in it, then eventually you get half as much water. And if the leaks enough, you get no water. And if you can't move the water, the city of 50,000 people has enough water for 5,000 people and 45,000 people die. And that's it. And the people figure out that, that the mayor of the town screwed up the aqueduct when they all can't drink anything and they die. Right? And the same is true. You screw up your furnace and it burns your House down or you screw up your furnace and the, and the fire goes out and you freeze to death. Right? No cheating on that. Right? It's, it's pretty obvious. And, and it's not a political issue. Like nobody says it's not fair that the fire went out or it's not fair that the cistern didn't capture water and they don't. You know, when someone shoots you in the face with a missile or throws a bullet, you know, at you from a sling and you're there bleeding, you know, no one says, you know, that's not fair, right? I mean, the truth is the lead bullet flies through the atmosphere and they either hit you or they don't. So those are engineered systems controlled by the laws of physics. And they might be brutal, but you cannot cheat them. You cannot elect a new mayor that just passes a law that says the bullets don't work anymore and use that to save yourself from the enemy coming over the ridge. Money is different. Money is socio political energy. And so when it works perfectly, it is economic energy. But when it is captured by a political, a political organization or centralized, and when it is corrupted, it becomes imperfect energy. And, and so if we look at, at, at money through history, right, we've got Lydian coins and you know, we write about them. But, but you know, the history that you read is 10,000 incidences of one people conquer another people. They sack their city, they lay siege of their city. They kill all the people and they take all the money, they melt down all the old coins and they recap and they recoin new coins. So you know, it's the Spartans fighting with the Athenians, fighting with the Lydians fighting with the Persians fighting with the, you know, fill in the blank. The Romans and the Phoenicians and the Carthaginians and, and they've all got their own system of coinage. And you can literally find thousands and thousands of them. They all have gold in them. Generally what happens is you start out, you know, you start out as a, as a young virtuous people. The Romans, you're young and you're hungry and you conquer the Etruscans, you take all their gold, you take all their property, you build your own coinage. And then, and that coinage is high gold content traditionally if, if it was on a gold standard. And then you use that to build a free economy. And the economy has trade and people create ships and they create wagon wheels and they create buildings, and they create weapons and they hire mercenaries or they pay soldiers. And then you defend yourself and over time you expand. As long as the, as long as the society is not corrupt, when the political system is not corrupted, when the monetary system is not corrupted and everybody feels it's fair and equitable, that's an incentive for people to fight to defend their home because they, because they appreciate it and they love it. And it's an incentive for business people to work hard because they know they'll be fairly rewarded. So the, the city or the city state grows and it keeps expanding until eventually the son or the grandson or the. Or the 13th successor, the virtuous king takes over, gets lazy, debases the money, cuts the amount of gold in the coinage by 30% and then by 50%. And as they cut the, and debase the currency, people start to lose faith in the ruler and lose faith in the economic system and then they start to cheat and, or, you know, people don't want to defend it. And eventually the mercenaries want to be paid more and so, so, you know, taxes have to go up and the coinage has to get debased and eventually people lose faith in the entire system and along comes a younger, hungrier, more virtuous group of people that aren't so fat, dumb and happy and, and they conquer the older, fat, dumb and happy corrupt civilization. The history book written by the loser is something like these evil barbarians came and they. And they took our stuff for no reason whatsoever. And isn't that unfortunate? But the history eventually gets rewritten by the winners if they stick around long enough to be, you know, the, the civilization that failed was corrupted. The Romans said the Carthaginians were corrupt, you know, and so the winner rewrites the history book and they just take all the, the corrupted property and all the defective systems and they either destroy them or melt them down and reform them and the cycle begins anew. And that's why the gold that was in the Lydian coins probably made it into Persian coins, Athenian coins, Roman coins, you know, Venetian coins, floor Florentine coins, Spanish coins, British coins. You know, all through history we just keep going through this rise and fall. And I think the big idea here is I can't corrupt an aqueduct and I. You cannot create a corrupt airplane. You fly a corrupted airplane. Like, you know, Howard Hughes imposed his will on the Spruce Goose. Building a plane too big of materials, not strong enough with a propulsion system, not powerful enough. And it flew for whatever 20 seconds or 30, you know, 30 seconds and it didn't fly anymore. It doesn't matter how rich you are or how egotistical you Are, or how bad you want just won't fly. If you cheat the laws of physics and in, in money, well, it'll fly. And you can do irrational things if you have raw power for a period of time. I mean, Nero could act like Nero for about four years, and eventually the economy collapsed and he got murdered, you know, and Caligula did the same thing. So in the extreme cases, you can be literally, you know, crazy, you know, nuts, and suspend the laws of everything for anywhere from a number of months or a number of years. But eventually the economy collapses, the society collapses, people lose faith in you, you know, over the midterm, typically 10 to 20 years will do you in. You know, Zimbabwe has been getting driven, driven into the ground for about 40 or 50 years. I mean, I mean, you can't do it for 100 years without everybody dying or getting murdered or, or collapsing the society. But, but you can, you can certainly corrupt a monetary system with political meddling, you know, over some number of years. I guess when you get a strong enough leader, they aren't. They normally crash their money supply in about 20 years. And if you're lucky, you know, if you're the world reserve currency or the world leader, maybe you'll last 100, 200 years before you crash the system. And I think the lesson to be learned there is, is engineering integrity. You know, having physical integrity linking your system to the physics of the real world is the safest thing to do because all, all governments eventually are corrupted, all corporations are corrupted. You know, any, any system run by mankind will eventually be corrupted. If not in the first generation, then, then the second or the third or the fourth generation. And, and it is really inevitable. It's, it's almost impossible to avoid because, you know, you've got that meme, you know, like, hard times make strong men, and the strong men make good times, and good times make easy or soft men, and soft men make hard times, right? It's like, it's very difficult if you've been successful, to make sure that your grandchildren are equally motivated. You know, and Genghis Khan learned this, and Alexander the Great learned this, and the Romans learned this eventually. You know, our Lord Acton said, right, absolute power corrupts absolutely. And so too much of anything eventually corrupts you. And nature has a way of solving the problem, right? This. You don't see any fat predators. And I look at all the beautiful birds, and I think they're all beautiful and they're all, and they're all very energetic and chirpy and happy and they Fly. Why is it that there are no corrupt, fat, dumb, happy birds? And the answer is because they don't last more than 48 hours in nature when they get fat, dumb and happy. Right. Nature pretty much will. It'll squeeze everything that is not, you know, operating at peak performance out of the ecosystem. Every, every last vestige of it is gone. So it's continually cleansing itself from irrationality or, or sloth.
- [31:24]
Robert
Yes, it's interesting that you could almost say leakage. Leakage destroys energy networks. And for human systems, this corruption is equivalent to leakage. You know, inflation obviously is clearly a leak of purchasing power, clearly corrupt. And it destroys civilization over time or eventually because you can't cheat nature as you're saying. So maybe you can cheat it for some period of time because, because it's a sociopolitical system, but eventually the proverbial bill comes due. And this whole process of leakage or corruption is really contradictory to the central tendency of nature, which is energy conservation or to follow the most energy efficient strategy. Something we talked a lot about in the series and you know, that helps clarify the importance of bitcoin. But we've, we've seen this happen time and time again, as you've said, right? The compromising of the monetary protocol through corruption or leakage, leading to the collapse of other protocols, ultimately the political protocols and many other eras of history like ancient Rome, are, are we seeing that today? Are we experiencing that today? I mean, clearly the monetary protocol is being compromised. It seems like the world is falling apart in a number of ways. Do you think we are going through one of those historic breakdowns today?
- [32:59]
Breedlove
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- [33:17]
Michael Saylor
Insurance, you got to have some insurance. You got to. There's an insurance. They shouldn't even call it insurance. They should just call it in case shit. I give a company some money in case shit happen. Now if shit don't happen, shouldn't I get my money back?
- [33:38]
Breedlove
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- [35:08]
Robert
want to miss it.
- [35:09]
Breedlove
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- [37:26]
Michael Saylor
Yeah, I mean I think that Safedine did some good research on it. And before 2020 the US was expanding the money supply by 7%. So we had 7% a year leakage annually. So we're basically leaking half the energy out of the system every 10 years on the world reserve currency since 1971 certainly, and I think probably since 1914 or so. So that's about as, that's about a 7% leakage per year, but it was about a 14% leakage per year in the, in the developing world. So the money energy has a half life or money has a half life of 10 years in strong currencies and has a half life of five years in the weak currencies. And that was the status quo till 2020. And the way that reflects itself is in weak nations, the currency collapses about every 20, 25 years. And we saw currency collapses, financial collapses in Russia, there was 1 in 96. We saw currency collapses in Argentina about every 20, 25 years. So weak countries in Africa, weak countries in South America, weak countries in Asia, they keep losing their currency system collapses every 20 to 30 years. And then the strong currency, it's going to last about 100 years or 50 years or so, 50 to 100 years. That all got accelerated in March of 2020 when I think the, the rate of monetary inflation in the US dollar, it doubled or tripled. It sort of went somewhere in the range of 20% a year, 15 to 20% a year. I think we expanded the money supply 20% each of the next two years. So a 40% debasement of the currency in the world reserve currency over 24 months. But if we look at the other currencies and what's going on with them, I think it's kind of even more disturbing if you look at currencies against the dollar in the last 12 months. The Japanese yen is down 23%, the Polish lot is down almost 19%, South African rand is down 17%, Great British pounds down 16%, Juan's down 15, the euro's down 15, and even the Chinese currency, which they control, is down about 8% year over year. So what we see is that the strongest currency, the dollar, is losing something at this point like 15% or more of its purchasing power a year. How do I know that? Well, the CPI and the PPI and dollars are clocking about 8.5% right now to 9%. But CPI and PPI are manipulated, distorted metrics of true monetary inflation because we cherry pick a subset of products and services and we choose to measure them in a managed fashion. So a reasonable conclusion is they certainly understate the extent of monetary inflation probably by, they probably understate it by half. You know, scarce desirable assets aren't included. We know American single family homes are up 40% in 24 months, and yet the inflation would indicate that they should only be up 12% or something. So, so overall the fiat currency system is, is bleeding energy at a more rapid rate. At a, at a 15, you know, percent monetary inflation rate, money has a half life of less than five years, four years. And you know, money in gold, if you had a perfect gold standard and gold inflates at 2% a year, money has a half life of 35 years. So the best you could get to is a half life of 35 years. And in a, and in a free market economy that's growing at 2% a year in real terms, if you're on a perfect gold standard and money has a half life of 35 years, you'll get price stability because the money will lose 2% of its value a year, but the supply of goods and services will increase by 2% a year and they offset each other. So that's the ideal golden age gold standard with an economy with minimal meddling. Now if you have an economy with tons of public policy, if you have foreign policy, medical policy, trade policy policies, energy policies, you know, work labor policies, education policies, communication policies that all interfere with the free market, then of course the supply of goods and services is dramatically decreased versus the theoretical output of a free market without all those policies. And then if you combine that with a monetary policy that expands the money supply by 40%, right. You're going to get extreme inflation in certain areas the way you, and of course in areas. Well, you really got three tiers, I think in the world. You've got the US economy and the US Currency, which is the strongest? It's the world reserve currency. You've got Europe and Poland and our allies in Korea and Japan, and they're weaker, they're kind of pegged to us, but they're losing 10 to 20% of their value against our currency. And you've got the third tier developing world currencies like the peso and the Turkish lira. And of course, they're collapsing at 50% a year or more. And what you see is, of course, chaos in Lebanon. You see chaos in Sri Lanka, where the government will literally collapse or, you know, in Lebanon, right. People like someone holding hostages in a bank in order to get their own money back, which is sad, A sad, mean for the time. But I think all of this is indicative of the structural problem with fiat or political currency and political money. And it's gotten, you know, worse. Right. So however bad it was from 1971, it's almost like you could, you could divide periods, right? 1870 to 1914, gold standard, maybe reasonably stable, not perfect. If it was perfect, it would have been a Bitcoin standard in those years, and then the money would have gained 2 or 3% value every year instead of just holding constant. But I mean, it was the closest, approximately the closest mechanical approximation is like a mechanical watch versus a digital watch. The digital watch is always more accurate, but. But really good mechanical watches are pretty good, plus or minus a few seconds. So we had a good mechanical solution, you know, in that time period. Then I think we went to the gold reserve standard from 1819, 14 to, you know, Bretton woods, you know, based upon the Treaty of Genoa. And there the money started losing more of its, of its value. And we saw crises like the depression came out of it and eventually World War II. And then Bretton woods moved us to a. More of a gold reserve standard, but with the US as the only counterparty and all the gold in Fort Knox. And I think then we started inflating the currency certainly faster, right? We, we had a faux gold reserve standard, but, but I don't think we observed it. And, and we were definitely growing the money supply faster than 2% a year, I think probably. I think most likely 7% a year on average. And then you get to, you know, Nixon abandoning the gold standard, and, and it just trot on at 7% or more. And then we got to 2020, where we kind of threw out all sorts of rules and we just doubled, maybe tripled, tripled the monetary inflation rate in the US and maybe, you know, so stomped down on it. For about two years. And I think that now, 2022, right. We're just going through this massive, massive transition where I think politicians realize that inflating the money supply by 20% a year in the Western world was not sustainable. I think they figured that out and that's why interest rates are being taken up and, and we're squeezing back and that's why you have all these risk assets trading off and, and the like. But, but what's the conclusion? The conclusion is we've agreed that we're not going to inflate the money supply by 21%, but we're probably going to inflate it by 14% a year. There's no way we're going back to 7% a year inflation. So I think we probably land where we thought we would land, somewhere in the range of double for the next four years or something like that. Maybe 14% in the US but other currencies are worse. Right. In Japan, they're trying to peg the 10 years to 25 basis points, points, and that's why their currency is collapsing against the dollar. I don't, the story is not, you know, finished here. We'll see how it turns out. But, but bottom line is everybody for the last 30 years knew that the US dollar was not a store of value over the long term. And they all kind of went to indexes like the S and P index. And we used equities as a store of value or we use real estate, property as a stock store of value. I think looking at the next 20 years, I think people realize that in an environment where the monetary inflation rate is clocking at 15% a year, equities don't look like such a great store of value anymore because they're relying on cash flows. And so now you got to, you got to think about what is your property store of value and are you going to use real estate and if so, where are you going to put that real estate? Or are you going to use something like Bitcoin as your store of value? And the collapse, you know, there's that phrase, you know, you can, if you're going to boil a frog, you kind of want to crank up the temperature slowly. You can, it turns out you can boil people at 7% a year if you tell them it's 2% a year. And most people will grit their teeth and they'll fight through it. Only the really sensitive, sophisticated ones will realize that they're being boiled at 7% a year instead of 2% a year. I mean, I didn't realize it, Robert. You know, from 2010 to 2020, it didn't occur to me that the real monetary inflation rate was 7%. I thought, you know, I bought the political line as like, 2% or whatever. And I just, you know, blame myself. You know, I said, I just got to work harder. What's wrong with me? And then. But the thing is, when you crank up the inflation rate to 25% or. Or 20% in 12 months, it's a lot more difficult to ignore it. So at that point, a lot more people get sensitized. Not everybody, maybe 1 or 2% were sensitized from 2010 to 2020, but. And then maybe we got to 5% sensitized or 10% sensitized from 2020 to 2022. And now we're kind of on this education mission to. To sensitize the rest of the world with, you know, with the observation that, you know, look, ayn Rand said 50 years ago, 60 years ago, she said, my mission is to separate the economy from the state. Right? And so the ideologues understood it then, right? The Milton Friedmans of the world understood it. Right? And. And there were. There's a Chicago School of Economics that campaign for it, and von Mises and Frederick Hayek, right. But they didn't have a technology to solve the problem. So this was a philosophy. And your only method to address this was politics. It was a problem that had to be solved in the political realm. If you could get yourself appointed to be head of the Fed, or if you could become president of the United States, you know, then maybe, or be Paul Volcker, maybe you could take some action which represented sound money and natural, thermodynamically sound engineering principles. Maybe, maybe you could, but you had to be a politician. It wasn't until Satoshi gave us Bitcoin that you actually had a technology that was viral that you could build into a mobile phone or you could build into a website that might actually help you attack this or address this issue. So I say bitcoin is hope. I think we always had the problem. We had the problem 10,000 years ago. We had the problem under the Lydians. We say, oh yeah, they got conquered by a superior people. Well, here's a different interpretation. They became corrupt and they were conquered by as yet un uncorrupted people at an earlier stage in their life cycle. Before that, people got corrupted. So. So you've got the rise and fall of empires over and over and over again. I think von. Von Schliemann found Like when he found ancient Troy and he dug it up, he found 19 other ancient Troys underneath the one that he dug up. So people have been building and tearing down and building and tearing, tearing down and building and tearing down and building and tearing down, right? Thousands and thousands and thousands of years. This is the human condition, right? We can. Because we, you know, it makes you think, well, we had to build our houses of clay, and it was inevitable that they would get knocked down by a storm, and we had to keep rebuilding. How many times do you have to rebuild a house made of wood in the past 10,000 years on the same spot, right? A lot. The problem is not the human, the human aspiration. Humans have always wanted to build a beautiful house on a hill. The problem is you build the house on a hill with wood and it rots. And after 50 or 100 years, it gets knocked down or blown down. You got to do it again. And you got to do it again. You got to do it again. So the lack of a material with integrity that allows you to achieve that ideal has been the human tragedy. After Bitcoin, we now have a material. Now, if you combine the ideology with the material and you build it into a business or build it into a political system, you can build it into a currency, you can build it into a company, you can build it into a product or service, you can build it into a family, you can build it into a security, right? You can build it into something, and you can, you can then take advantage of the superior structure and integrity of bitcoin in order to achieve something, which is how much better? If gold's got a half life of 35 years and a fiat currency run well has got a half life of 10 years, and a fiat currency run poorly has got a half life of five years, well, bitcoin's got a half life of forever, right? It's not 100, not 1,000, 10,000, 100,000 years. So what if I told you, build a house with wood, it'll last 35 years? And then I said, oh, or, by the way, here's this new material that'll last a thousand years. Build a house with that, the entire society would presumably be a lot richer because you wouldn't have to keep rebuilding the city every hundred years or every 50 years, right? Maintenance cost deteriorates, right? Stuff doesn't break, and then you can redirect the access to human flourishing and progress.
- [54:10]
Robert
Beautifully said. You know, this whole perspective that you've given the world on money as energy really shows how closely I think we mirror our systems so we could maybe perhaps modify Lord Acton's phrase to say that corrupt money corrupts absolutely. And, you know, the faster the leakage, the corruption, or the inflation takes hold, the faster the system will fail.
- [54:36]
Michael Saylor
Right?
- [54:37]
Robert
This is, it's one thing that we've seen just repeatedly. And, and I guess the opposite of leakage or corruption for a monetary protocol would be standardization. Right? Like a standard that binds everyone universally is almost by definition an incorruptible standard, you know, a universal restriction, something like thermodynamics or gravity, you know, rules that we all have to play within. And we talked about this a little bit in the series, that there's are major Darwinian or competitive advantages that a society can unlock through standardization of protocols and, you know, focusing on money. Gold gave us a proxy for a standardized protocol, as you said, you know, about 2% per year. But still, that was obviously far from ideal. And gold standard never really worked either because it was always, it always ended up becoming corrupted by the political apparatus built on top of it. So how do you view the potential benefits of a global standardization onto an incorruptible money like Bitcoin? What type of gains do you expect humanity to unlock as a result of this transition?
- [55:58]
Michael Saylor
I think that there's just a multitrillion dollar a year bleed or, you know, something like trillions or $10 trillion of inefficiency in the economy every year because the monetary system is broken, the unit account is broken. And so what do I expect? I expect economic output would double. Right? It's. If, if you, if you've ever run a company, what you realize is the challenge in a company is to build systems that emulate gravity. Like the, the beauty of gravity is there are 8 billion people on the planet, and, and up is up for everybody, and down is down. And if the person actually drops something, the thing that they drop immediately goes down, driven by the force of gravity, the gravitational constant. They're all the same. They're, they're not political. There's no appeal. No lawyers get into it. It doesn't take six months to determine which way the thing that you drop should fall. It doesn't take 100 lawyers to determine whether it should stop falling. Right? Because gravity is universal and there is a universal constant. I can then build a house and build an elevator and build a car and, you know, I can be a gymnast and there's right and wrong and I can be punished. And, you know, stuff happens and you don't have to send a memo to 8 billion people to tell them how to walk across a room or how to jump up and down or how to play basketball or tell the ball how to bounce. It just works. In companies, you don't have that situation. So you oftentimes, when you're CEO, you're scratching your head saying, how do I encourage all 2000 people to do the right thing? If a customer calls and they're unhappy, how do I encourage 2,000 people to do the right thing without, you know, asking their boss's boss's boss's boss what to do? You know, how do I make sure that nature, that the naturally healthy phenomena occurs? Water runs downhill. You don't got to tell water which way to go, right? And so in companies, you spend a lot of time building systems, standard systems to tell people how to behave, and you hope to build it into the. The reflex DNA of the. Of the company so that it's healthy. But it's really difficult. And I think in a civilization, it's the same thing, or a nation or a city. How do you actually build an economy so that everyone does the right thing for everybody else rationally, naturally, without being told? And, and this the standard protocol, if it's decentralized, gravity is the decentralized protocol. So is friction. But, you know, language and math kind of are, in a way, right? I mean, there's a certain math, and it works. You know, anybody can add up two plus two and equal four. And if you say two plus two equals five, and you try to tell that to your brother, and you cheat your brother, he punches you in the face and you learn that maybe two plus two doesn't equal five, you know, and if you cheat in a business deal by bending math, you know, you get punished. And if you try to cheat nature by pretending that you've actually got, you know, four pulleys up there, and there's really only three, you know, and the system doesn't work, then you kind of get feedback. So we have these systems, physics, math, language, like, the English language is good, I can tell you, well, Robert, I really like you. And, you know, the words mean something to you, and they mean something to me. But if I actually decided unilaterally to say, robert, I really hate you, but I redefined the word hate to be the word like. But I was the only guy that did it. You would look at me strange and not want to interact with me because you still think like means like, and you think hate means the opposite of like. So I don't get to Redefine the English protocol. Even if I wish I could, you know, even, you know, it's like the emperor has no clothes. Being rich or powerful doesn't mean that you can re rewrite your own language. You will delaminate from the civilization. So, so money, you know, the key to money is you want a standard protocol. And, and if you have a defective one, like, like you think anything's getting done in Zimbabwe right now, right, when, when, you know, when you've got a currency that's collapsing in the Weimar Republic, right. In that case, people are so worried about what happens next week that they don't have time to think a year in advance, much less a decade in advance or 100 years in advance. So, so a standard system that is incorruptible, that is diffuse everywhere is, is reasonably speaking, I don't see how you come to conclusion that the economy doesn't run at 50% efficiency with the current monetary system or less. Like, we're certainly running in second gear, not fourth gear. And you can make arguments that the economy runs at 10% efficiency. Again, coming back to my, my point, like, if I actually denied you the ability to use steel and glass in New York City, like, could you build it? Like, what did it look like? If you go back and you look at, you look at all the islands in the Mediterranean, you know, the island has 50,000 people on it today, but in ancient times it had 5,000 people because that's how much water falls on the island. So what happens if I take away your sophisticated energy system? Oh, well, 90% of the people die. Is there any way around it? No, no way around it at all. Right. So I think the energy system is critical. I guess the other organic metaphor is, you know, is blood and bleeding for an athlete. And what we know is if you want to be a top performing athlete and you want to win your triathlons or your Ironmans or whatever it might be, or just run at top performance, you can't afford to be bleeding yourself. It takes a month to recover from giving a pint of blood. So maybe you can give a little bit of blood once every few months, but that's about the most you can do. If I bleed you every week, your athletic performance is deteriorate, is deteriorated all the time. If I bleed you every day, I probably kill you, right? If I bleed you fast enough. So what's, what's the, what's the cost of losing 20% of your energy a year? And how does that compound, and at what point does it Cause system collapse. Right. It's like elementary triage, right? The most famous phrase in medicine, stop the bleeding. Well, you know, first make sure you're breathing, then stop the bleeding and then deal with the problem. And money, monetary inflation is bleeding and this society is bleeding. It's always been bleeding, you know, always. And it's bled worse or better at different times. But I would say right now we're in a pretty, pretty difficult situation where it's not reasonable to think that the economy is going to advance. In fact, in fact, the bigger idea here is the way we measure inflation is defective. So CPI is not inflation because it is a distorted metric. But the way we measure economic output is also distorted. Like the gdp, the nominal size of the economy is distorted. If I cut the number of airline flights in half, but I double the price of a ticket or I increase the price of a ticket by 110%, I can represent to you that the airline industry is 10% larger measured in dollars. But of course it's half as large measured in actual flights or passenger miles. And so the real economy has been in recession compression. It's probably shrunk 10, 20% a year for the past two years. But we tell ourselves that the economy is slightly growing. You know, in all those years where we grew the money supply 7% and the economy grew 3%, what was really happening here? Think about it hard. The real economy is not growing and portions. Yeah, the availability of goods and services and the delivery time and the convenience of those services is deteriorating. Even though we can construct a nominal metric to tell tell ourselves that the economy is growing. So that's the long winded answer. The question. The summary is the economy is crippled because the money is defective. And when Bitcoin is 10x bigger or 100x bigger than it is now, 80% of the economy will be crippled with 80% defective money. So, so we're going to have a crippled worldwide economy for a long time. And if you're wondering, you know, where the signs of that are, well, just look at across the entire world. Look at what's going on in Sri Lanka, look at the problem in China when they blow up the 30, you know, the 30 apartment buildings that are empty. Look at the problems we have in South America. Look at the slums, look at the urban blight, look at the crime, right? We have it all around us. And these are all just signs of corrupt, defective energy systems that just don't work.
- [66:31]
Robert
Brilliantly said Mike, I want to be respectful of your time. Do you have time for one more question.
- [66:37]
Michael Saylor
Yeah, sure. Let's do one more.
- [66:39]
Robert
Okay. So what I'm hearing you saying is Bitcoin, in many ways is like the first true level playing field we've ever really had. I mean, besides something like gravity, thermodynamics, et cetera, the first man made level playing field, let's say, meaning that it's rules that bind us universally. They cannot be corrupted. They cannot be broken. Maybe English is a close proxy for this. Like an open.
- [67:05]
Michael Saylor
That's what I'm thinking. Right. I mean, everybody can learn English and you use the words I love you anywhere in the world, they mean the same thing. And maybe the system slightly evolves or corrupts over time, but it's a decentralized evolution that's fair and equitable to everybody and just on the periphery. Sometimes we invent new words and we fight over whether we like the words or not, right?
- [67:31]
Robert
Yes. Yes. So it works.
- [67:34]
Michael Saylor
Right.
- [67:34]
Robert
And even though it undergoes attacks, you know, certain politicians and whatnot, maybe. Maybe try to attack language and change
- [67:41]
Michael Saylor
meanings at times, Arabic math is better. Right? Like the meaning of the word 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10. Yeah, right. And that's been pretty stable and decentralized for thousand years or something.
- [67:55]
Robert
Yeah. Unless you're a postmodernist. And two plus two does not equal four. But Bitcoin is. Seems to be a language of value that's entirely beyond corruption because you just can't argue with whatever's on that ledger. Just is.
- [68:11]
Michael Saylor
Right.
- [68:12]
Robert
You own it. It happened. So, yeah, very important way to look at it there. And so the question I'm asking here is you concluded our original nine episodes together. We're focusing the discussion on the intervention of human beings into dynamic systems like the natural economy. And you concluded that it was episode nine by saying that we've been trying to turn nature into a zoo. And it was kind of a haunting ending in a way. And it certainly seems like the construction of that zoo has started to accelerate recently. How do we free ourselves from this? How do we present. Prevent ourselves from becoming zoo animals, if you want to use that analogy? How can we free ourselves to our higher humanity going into this future?
- [69:11]
Michael Saylor
I think there are a lot of lessons in environmental sciences and ecology. You know, like I. I have a living shoreline that I gaze at sometimes. And a living shoreline is. Is where you'll actually create. You'll create a revit mint to keep. Keep the. The waves or the water from washing away or eroding the shore. But you have to have Breaks in the revitments where that, where the tidal water can get in and out in order to cleanse the shoreline and avoid a buildup of stagnant water and bacteria that, that kills everything. So you have to have continual circulation and you have to be in relationship with nature. We have this phrase, you know, it's not natural, right? And, or it, it is natural kind of means it's a good thing, it's unnatural, means it's not necessarily a good thing. I think that zoo creatures will live longer in captivity, but they end up becoming fat and blind and toothless and they can't fend for themselves. They have to be fed. And over time, if you start to conclude that the healthy lion is the fat toothless lion that has to be fed through a feeding tube, then you have a pretty distorted view of virtue, right? And so, so studying the lions in the zoo is probably not a good idea. And, and if you decide to domesticate yourself, then the question becomes who's your zookeeper? And when will they tire of you and stop feeding you through the tube and stop protecting you? And as soon as they stop, you're going to die. So the, the problem with all these systems, all the monetary systems is we attempt to create these artificial systems, you know, like the proof of stake systems. You're trying to create a system in software and you're just trusting some software engineers to make it, to make it honest and virtuous. And as soon as one of them has a good idea and they keep having good ideas, they keep loading on idea after idea after idea and you, you end up with this shark duck that lives in the trees idea that makes no sense. But because you've got an all powerful being and you know, in the ecosystem that gets to just go ahead and put 187 foot nose and 37 antlers on the shark duck and you can't stop it. You know, there's no feedback to point out that, you know, having 137 antlers on a shark duck. Duck makes it impossible to swim, right? Or fly. So the way that you keep from creating those monstrosities is you subject yourself to natural rigor on a consistent basis. And Bitcoin subjects itself to natural rigor because you have to generate SHA256 hashes and you have to generate them consistently with energy and you start breaking the rules, you can't generate the hashes, you know, or if you fall behind and you have old antiquated equipment, you can't afford to compete with the new modern equipment. So there's a never ending replacement of the old generation with the new generation. And the lazy incompetent is squeezed off the network by, by the, the younger, more aggressive, right? And someone that, that loses their money because they lose their keys. They don't just get it back by appealing to authority, they lose it. And it's a contribution of their energy to everybody else in the ecosystem. So Bitcoin is, is naturally engineered to be organically healthy in the same way that, you know, a creature in nature can't help but be healthy. It's, you can't regulate your body temperature at 37 degrees Fahrenheit for long before you simply just die, right? It's like it doesn't matter how much you wish you could, you just can't, right? And, and that's, that is the brutal discipline of nature. And the result is you have this feedback and then you have a constant Darwinian evolution to the virtuous. And that's how life continues. So I think the recipe for virtue in a monetary system is you have to plug it into nature, right? Gold was plugged into nature in a roundabout way, not perfect because you could sort of sack a city and inflate the supply of gold or, you know, or you could find more gold and you can lie about the quality of the gold and you could centralize the gold and seize it. Right? So not perfect, but, but there was some thermodynamic relationship to nature and matter and energy. And I think Bitcoin achieves that thermodynamic relationship via proof of work mining. And, and that's what makes it healthy. The fact that it's, it's, it's an open protocol that's decentralized, you know, makes it, makes it uncorruptible, you know, much, much, much harder to corrupt than something that does naturally centralize. And so I do think it is like, it is like Arabic math, it is like a standard English language. It is like certain other protocols like tcp, IP and the like. It's a base level protocol to build a civilization, you know, and, and, and, and it is a wonderful achievement. And just like, just like we can't really expect to advance without mastering the flow of water or mechanics, you know, or, or fire or electricity. We can't really expect to drive forward the socioeconomic political systems of humanity without mastering money or monetary engineering. So I think one day, one day we will see a subject called monetary engineering that will be taught in engineering schools, you know, all around the world. And we'll know that we've succeeded seated when you have a choice of studying electrical engineering or nuclear engineering or aeronautical engineering or monetary engineering. And, and when we put monetary engineers, you know, in charge of our systems instead of, instead of just putting lawyers and politicians in charge of these things.
- [76:24]
Robert
Wonderfully said. Yeah. Constant continuous feedback. Learning honest work seems to be the path to individual and collective success in this world. Michael, thank you for your time, your eloquence, your skin in the game. Again, Sailor series starts at episode one. What is Money Show? This is on YouTube and whatismoneypodcast.com and the Sailor series book is now available paperback, hardback and Kindle versions on Amazon. Michael, thank you again.
- [76:57]
Michael Saylor
Yeah, thanks for doing this with me, Robert. I really enjoyed it and I hope, I hope people get some value from this and, and find ways that they can use it to inspire people around them or, or improve their own lives. And I look forward to any comments and feedback and until then, onward and
- [77:18]
Robert
upward, onward and upward. Thank you so much.