← The "What is Money?" Show
The "What is Money?" Show
WiM019 - The Booth Series | Episode 9 | Game Theory and Bitcoin
01:10:51
Jeff Booth joins me for a multi-episode conversation covering the concepts laid out in his book "The Price of Tomorrow: Why Deflation is Key to an Abundant Future"
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- [00:00]
Jeff Booth
Foreign.
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Robert Breedlove
Hey guys, this is Robert Breedlove from the what is Money?
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Unknown
Show.
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Robert Breedlove
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Unknown
So Jeff, your book goes into game theory, which is a very important part of understanding bitcoin. It's a term thrown around a lot. And I actually think that the term game theory is a bit underrepresentative of what it actually is. I mean, theory sounds like, you know, something that would be, it's possibly expected to happen. But we observe game theory in nature. You know, as animals compete in an environment, they tend to exhibit very specific behaviors based on certain game theoretic parameters. So it's a bit stronger than theory, I think, in many respects, especially as it pertains to money and economics. So you do a great job of simplifying it and laying it out in your book. And I wonder that, you know, we know governments we saw arming themselves, say in the beginning of the nuclear age, basically accumulating a stockpile of weapons in anticipation of others doing the same. So all governments are accumulating armaments because they don't want to be left defenseless, essentially. And I wonder how you see Bitcoin changing geopolitical game theory or playing into geopolitical game theory. Is this something else that governments may eventually label a matter of national security? And see, actually to own some of the network as a means of defense against others, owning some of the network, how maybe you could just talk a little bit about that, how you see that all playing out.
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Jeff Booth
Okay. So game theory is a critical part of the Bitcoin network and it is what drives kind of fear of missing out and everything else. But if you just. Most people's understanding of game theory would look at Prisoner's dilemma kind of on a 4x4 grid and I. And somebody comes in and you and I did a crime together and offers me an incentive to turn on you, and you an incentive to turn on me. At some sort of point, there's a number of different outcomes from that. And at some sort of point, if you've created an incentive where I would in that case cheat or turn on you, and it's pretty predictable what will happen, so you can follow that. And so the best scenario for both parties in that there is to not turn on each other. So cooperation and cooperation in our species is the best. What that says is the best outcome for all of us through cooperation. But by creating an incentive for somebody against somebody else, then it creates a different incentive. And in other words, we don't cooperate. And then there's a whole bunch of iterative game theory. So that's what people understand, but iterative game theory. And what if you played the game more than once? So that's a nice theory in one sense of a game, but. And so in two criminals in crime, that doesn't happen over and over and over again. And so human nature, we build an iterative game theory. And so I believe that that's actually what ends up happening with trust. So you know the people in your network that you trust and everything else. And that's a lot of. Because you've seen them through time on how those, how they'll show up. I have this saying, it's going to be. This might be valuable for you. I believe anybody who they tell me they are, until they show me different, when they show me different, I believe that for all time. Because if I believe something else, then it's my fault. So when somebody shows me who they really are, I will forever believe that. By the way, that it's a really good analogy for right now when people say kind of in the whole system, what's happening in the system, and they're showing you a different result. Believe what they show you, not what they tell you.
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Unknown
So speak louder than words, right?
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Jeff Booth
Because they can't. Because again, that integrity against that it matters more what they show you. They cannot. You can easily say something, but what shows you is who you are. But going back to that in game theory and everything else, if you played the game over and over and over again. And what are the best strategies to win the game? Because in evolution, if you lose the game, you die if you keep losing the game. So you can say genetically, everything else, why are we designed to cooperate? Why are we designed to love, belong? Everything else? Because as a species we thrive by doing that. But by, by cheating. At some times you can get more of the pie. But then in the next game, somebody understands they cheated, so what will they do in the next game? They'll cheat. And so you get further and further, further and further divide. So it's something I think a lot about on how, okay, how we all make decisions, why it's better to cooperate for the group and why individually or in our own group, sometimes it's better to cheat. What does that look like? And to me, now I'm going down the rabbit hole myself. I think about, it's not about money for me and not about anything else. If I cheated for money or if I turned on a friend for something else like that, I have to live with those consequences. For me, the reason that it looks different is I totally measure not just the short term impact of something, I measure the long term impact. What does that look like? And I would imagine similarly for a whole bunch of people. And that creates a social society that either comes together and thrives for benefit of each person, their own as well, but for benefit, or a society that divides. And I think it's so tied into human nature and this kind of ties into. We are part of the system that we're trying to change. And we all have flaws and biases and these things designed into us, into part of the system. So we need to think about all these things, how they, how they, how they go together now. So, so now take that on a geopolitical level to that, us versus them. And I think I said this in one of the other things. Deflation defunds communism. It defunds the state. It is a free market force. And so I believe based on that, it is highly likely that rational governments that want to take a path and advance society are going to lean into this innovation first by helping the on ramps, on ramps, off ramps and an ecosystem develop. It's not ready for society to just break and bitcoin wins. It's not ready because all the institutions would fall, that you don't know how to drive on roads. Everything would. But I suspect out of that same thing, there's such an advantage for early government to understand what this means and to get in early and advance it. It's such an advantage for their own knowledge, for where technology is going and what that means to advance other industries and what it means for populations that at the same time is. It's a disadvantage for. For someone else. So I think that that is highly likely. It's still early. First people, then corporations, then governments. And I think that when we're still in very early stages of corporations and people. Very early stages. But I do think that that's coming.
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Unknown
That's interesting to come back to the prisoner's dilemma. So it's a great little anecdote that cooperation in that situation is the optimal strategy. It's in the best interest of both of those prisoners to remain silent, actively cooperating with one another. Yet because of the divisiveness, they can't communicate with one another. They're in separate cells. If they could communicate, they just said, hey, I'm going to stay silent. You stay silent. They would be more able to establish trust.
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Jeff Booth
Exactly.
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Unknown
Divisiveness, divisiveness deteriorates the strategy. Right. The strategy, optimal strategy for them each in isolation, then comes to betray one another. So I think the point there is that, yeah, it is by building these walls as us versus them that we're often causing game theory to work against us in a way. Right.
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Jeff Booth
And I think that's actually why game theory, it's a SC now and there's a. And because it's so tied into the way we operate and it's tied into us versus them. It's tied into our need for belongingness. It's tied into all of these things. It's, it's again, it's tied into our own mental models and biases on how we survived as a species. Yeah. And so it's like. So if we're making decisions based on these decisions and unaware that we're making these decisions again, each out for our own best interest without realizing the negative externalities of that. If you have a system designed for your own best interest, without the negative externalities, that's what will happen. And the existing inflationary system is that system.
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Unknown
Yeah, exactly. It's building those walls that invert game theory negatively.
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Jeff Booth
Right. And everybody chasing, I need more of this pie to be on this side so that I can, I can retire at some point with enough safety to survive.
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Unknown
The survival, perceived scarcity. Right. Everything's getting more expensive. I need more time to survive. I'm willing to do whatever it takes to whoever it takes to survive. It's, it's a. Yeah. It degenerates morality even.
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Jeff Booth
Yeah.
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Unknown
It just incentivizes people to not cooperate. So, I mean, I can't hardly think of a worse consequence or force in the world. And to your point, what's interesting there is that you said you. You believe who someone says they are until they prove otherwise. Prove themselves otherwise.
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Jeff Booth
Until they show themselves otherwise.
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Unknown
Show themselves otherwise. I've actually heard that. That is if you play the Prisoner's Dilemma, if you iterate it across a number of plays, that's actually the optimal strategy for Prisoner's Dilemma. You're supposed to trust initially.
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Jeff Booth
Exactly. Trust initially. If somebody. If somebody deceives you, you don't trust.
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Unknown
Yeah, you mirror the action exactly. And. And that's what life is. Life is a series of iterated games.
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Jeff Booth
That's. That's what it looks like. And that's what builds a social. Social fabric of the people in your network that you trust.
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Unknown
Right. So if we can have. So divisiveness incentivizes us to betray one another, we would say that breaking down those walls would better enable us to cooperate successfully. The communication medium or protocol. The more trusted it can be, the more likely we are then to cooperate because we can trust what's coming through that communication channel. And that's what Bitcoin is. Right. Bitcoin is. It solved Byzantine's General's problem, which was propagating a message through a network of inherently antagonistic participants. So you can't trust anyone in the network, but how do you broadcast a message across that network that everyone can believe that is accurate?
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Jeff Booth
And that's what, through math and code. Exactly. You can trust anybody.
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Unknown
Math, code and then competition. Right. The actual mining piece. And so I would say that, and I get a lot of this thinking from Jordan Peterson where he said the game of life is not to win, it's actually to have this blend of competence and likability or humility such that you are invited to play the maximum number of games.
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Jeff Booth
That's an interesting thought.
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Unknown
Just win at all cost in any one game. Because if you do that and you're ruthless and you cheat and whatever, you're going to be excluded from all these thousands of future games.
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Jeff Booth
Right.
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Unknown
So it's interesting to me that that is rooted in communication, this ability of us to cooperate and trust one another. The more we can trust the communication protocol, the more trust and flourishing we can build for ourselves. And that whole process, by the way, is eliminating individual bias. Right. The more we're cooperating, the less I need to know everything I can depend on. My blind spots can be complimented by others.
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Jeff Booth
Exactly. Especially if you had a stable money underneath it and couldn't be changed with. That's going back to why it's such a big idea. Why it is such a printing press type of idea. Because it's. It changes the way we think about humanity and what that means. It is really, I believe this, that this is going to sound, maybe not to the people in Bitcoin, but to others. It's going to sound. It is a step, function to where we're going. It is a total change to where we're going. And I think for humanity to pass from one side to another, to get to the next step, we have to go through this step. I think it's that big a deal and to the point. Robert. I don't know if we'll make it. If we don't. I don't know. I don't know. We create war machines that are not war machines from before. And some of the technology that's creating some of the stuff that's coming. We could easily destroy this world on the way, on the way through by relying on a system that forces us to compete for scarce resources. We could really easily do that, I think. So. It is to me that important.
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Unknown
Your point is strongly taken and I know I keep revisiting human action here, but it's just on the line. But that's how he concludes the book. It's like if we don't get people onto a truthful ideology, then we will destroy ourselves.
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Jeff Booth
A new story that is actually more believable. That is, that is true. That is because the story we're in right now isn't. Isn't the truth. It's just a story.
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Unknown
Yeah.
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Jeff Booth
We're operating. It is a truth. It's the truth that we live in something that is totally, totally about control and power.
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Unknown
Yeah. The truth is that it is a self destructive system.
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Jeff Booth
Exactly right.
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Unknown
And if we don't awaken to that or soon enough and start migrating to a sustainable system, a sustainable socioeconomic system like that, which would be built on top of thermodynamically sound money, something like Bitcoin. We're taking corruption out of the base layer, I guess is the gist of it.
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Jeff Booth
That's corruption out of the base layer of money. That is exactly what's happening. And if the corruption's in the base layer, this game theory of cheat is in the base layer, then cheat is everywhere in the system.
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Unknown
That's what we see today.
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Jeff Booth
That's what we see today.
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Unknown
This is where it's difficult to articulate it I think bitcoin is a compressor and to fix the money, fix the world. Then if someone just hears that from the outside looking in, you're like, okay, you, where's your tinfoil hat? Radical.
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Jeff Booth
It is true. That's what I mean. Defend the other system. Yeah, it is true. And more and more people are starting to realize, and more important people are realizing it and that's why there's a network effect on Bitcoin.
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Unknown
And so we can roll.
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Jeff Booth
No, just. And what's going to emerge out of that, that ecosystem will blow people's brains. It's just it. There are a lot of people are thinking about it today and the money, but what actually emerges out of that system is a whole new world.
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Unknown
Yeah, a whole new. Yeah, everything is different. Every that is, I think the proper way to think about it is that the money is the base layer and it actually imprints its character on all the systems built on top of it. Everything's downstream from the money. So all of the systems and institutions we have today, they actually have. They're shaped by gold, frankly. Right. We have a large centralized custodian called the central bank for gold. Because gold's not portable, frankly. And so that, you know, that has second and third over consequences on all the other systems around it. And if we look at then this game theory, which again as you said is so important to understanding Bitcoin, how do we properly, I guess, what is the way in the interest of. I think a lot of what we're doing here today is very educational. Like people could listen to this and start to follow these strings from, you know, what is. Say what is money? Is the first question. To fix the money, fix the world. Bridging some of that gap there. How do we interpret Bitcoin through a game theoretical lens and then how do we interpret fiat currency?
- [20:51]
Jeff Booth
Well, that's what's happening. And game theory is obviously built into it. And as more and more people are investing in it or holding it and taking it off the system and into Coldwood Storage, it's built into the system that it's going up in price. And the existing system has to counter that by printing more money to defend against it. And a bunch of that money is moving into this. So I see it as a foregone conclusion that this and again take this route. Maybe I'm wrong, but I see it as foregone conclusion that this forcing function will force a rewrite of all the rules. And the earlier people understand that. And we're still so early in the cycle and so when you say a foregone conclusion that this will do that, that also means how much this is going to be worth. And it also means how much it's worth to people to get in early, including corporations, including governments and everything else to have a say in the new world that's being created on the backside.
- [22:16]
Unknown
Right.
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Jeff Booth
And to what that looks like, maybe I'm wrong. A high conviction that that's happening on the network effect. And we can't see how fast that's happening on the network effect. But the faster that that's happening, the faster the existing system is breaking down, the faster the existing system is breaking down. Take for instance insurance companies coming into Bitcoin. It's signaling what is going to happen next. You've kind of heard often probably slowly, then suddenly.
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Unknown
Mm, yeah, gradually.
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Jeff Booth
Exactly. When the, when the stampede comes because the existing system is building more and more fragility into the system all the time by printing. And the more and more people that are understanding the fragility and are voting otherwise for a new system, they're starting to. They're starting to piece together some of the things that we're talking about on what that new system could mean not just for them. They start with them self interest and then they move to my family. I need to get my family on this and my friends on this. And a lot of those people turn into massive advocates that talk about. And bigger than just what it means for them on a monetary. On wealth bigger than. And it moves to a bigger picture. But I think that's what's happening.
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Unknown
Agreed.
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Jeff Booth
And so sorry. And you can imagine we've talked about. I think we've talked about this before. Lots of people have talked about this before. But if the government decides to shut it down, it actually incentives and incentivizes based on the same thing, another government to take it.
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Unknown
That's right.
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Jeff Booth
Right. So based on. Based on game theory alone, there is an incentive to be early.
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Unknown
Right.
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Jeff Booth
There is an incentive right now to not tell anybody else that you're starting to accumulate. How do I start to accumulate as a government? How do I start to accumulate slowly or how do I build payment mechanisms for my citizens so they can accumulate into what the mayor of Miami is thinking of and everything else to be able to bring. So. So my city is better than the rest or to my state or to my. And that's what Wisconsin's doing around some of the. Some of. And then. And so game theory is playing out not just at the high levels, the US versus China and Everything else, but it's also in the city and state level. And so. And that's. We can see that all the time. We can see that happening right now. And so there creates early states that are, that are pro. Are going to attract a whole bunch of wealth and capital and expand, and states that are laggards are going to lose that capital.
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Unknown
Yeah. I think Preston's example of the 100 meter race, where all of a sudden the, you know, the genesis block was the starting gun, I guess, and there's a number of nation states running this race. We're in the early stages, but some will stumble early on and they'll just suffer in the end because there's such a disproportionate advantage offered to those who adopt early.
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Jeff Booth
Right.
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Unknown
To those who adopt first and quietly. To your point, if I look at just the game theory associated with fiat currency, the whole thing is a race to debase. It's the opposite of Bitcoin in a way. Right. There's a race to accumulate in bitcoin because there's less and less of it. So it's accumulating more and more purchasing power, whereas fiat currency is the antithesis of that. They're just swelling the supply every time there's. It's quantitative easing versus the quantitative tightening of Bitcoin. And this is, I think, used strategically in the geopolitical sense in that when you debase your currency, you can increase your net exports and you can also increase your acquisition of scarce assets. So the more in China is the great example you brought up. It's like the Chinese miracle. Like, well, really they expanded debt faster than any country in history. So that's how.
- [26:54]
Jeff Booth
And they kept their labor rate low. And labor rate as a percentage of the manufacturing base was a higher percentage. So all the manufacturing went to China to take advantage of cheap labor. And as that rate should have increased with their economy, they depressed the labor rate because if the labor rate increased, their exports would have crashed with it and that export market would have moved to a different country.
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Unknown
Yes. And so we know all of that. We have like empirical case of this that. Well, first of all, a quick study of history on fiat is that they all go to zero eventually. Pretty much.
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Jeff Booth
Only ones, only one right now is Japan, and it's in the middle of it. Right. So it will. Right, yeah.
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Unknown
And so there's the race to take fiat currency to zero to acquire assets along the way, or to increase net exports or keep labor rates suppressed, whatever your geopolitical goal is. Whereas the game theory of Bitcoin is the opposite. And they actually work in concert because the more you're inflating a currency, the more you're creating demand for inflation insurance, if you will. People want to hold it in anything, oil, gold, Bitcoin, anything scarce. And I think this. So that sounds maybe a little complicated, but we've basically compressed that narrative into just a few minutes. My thesis or hypothesis here is that that idea is just going to spread faster in the world. We haven't.
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Jeff Booth
That's exactly what's happening. Because now again, and that's why this truth and people are seeing the asymmetric bad, including insurance companies and including hedge funds and everything else, and they're starting to say, wait, I, I understand the game board and I understand if the game board looks like this from a structural level and there's nothing you can do to change the game board, I understand how this is going to play out. In that thinking, Bitcoin is not a risk, it's the safest bet you could make.
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Unknown
It becomes a cooperative strategy. Right?
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Jeff Booth
Exactly.
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Unknown
Again, we have in digital age of saying, we said the prisoner's dilemma, the more reliable and sound that communication medium is between the prisoners, the more likely they are to cooperate. Well now we have this more of a free market for ideas than we've ever had before in the digital age. We've got decentralized media, Twitter, all these things where people are much more peer to peer than we are getting our messaging broadcasted from a centralized authority. I think that just makes, enables people to zero in on truth more quickly. I think the veil has been ripped back on inflationism this time. And smart money or the more intelligent investors among us, they're just not going to get caught off guard by this. Because it's not that complicated.
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Jeff Booth
It's not that complicated. It is really not that complicated. We believe in a lie that inflation is required for us to thrive. And that is a complete lie. It is not true. We might believe it. A whole bunch of people have caught, been caught into that belief system and everything else and they act accordingly with that belief system and they trust it universally. And Bitcoin is exposed the lie. And there is no way. There's no chance that the lie is going to go back into a box.
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Unknown
Yes, exactly. Yeah, the genie is out of the bottle. The idea is out and you can't, can't put the toothpaste back.
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Jeff Booth
Not everybody knows they're living in the lie yet.
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Unknown
Right.
- [30:32]
Jeff Booth
There's a whole bunch of people who still believe that. And still. And because it's so wired into the brain and everything that they see every day is in the system that they're measuring against the lie in the system that's being manipulated. Corruption against backs back to prisoners and the corruption of the base layer. Yeah, they see it. That's what they experience every day. So they're living in that system and it's hard to break free of that system. Yes, but. But that system is predictably going to get worse and worse and worse while the other system gets stronger and stronger and stronger. And that's what's driving the competing network effects as one system unwinds and the other one takes its place.
- [31:14]
Unknown
This is the old, the future's already here, just not evenly distributed.
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Jeff Booth
Exactly.
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Unknown
And I love your last point there, which I hadn't thought about as much, is that it does this collision of a. Call it a game theory that's unwinding and a game theory that's succeeding. It's accreting value. So we have a cooperative game in bitcoin, I guess out competing a non cooperative game in fiat. And as those two worlds collide, it does create these advocates, these extreme bitcoin advocates or like, you know, I would put myself there and you're selling, we're out here sticking our neck out a little bit frankly on behalf of others. I think to just talk about these things that 20 years ago I think people would not only label us with a tinfoil hat, but it would be considered dangerous maybe to talk about a lot of this, to talk about.
- [32:12]
Jeff Booth
When I wrote, when I wrote my book, I wrote my book with full conviction. I said to, I said to my wife Kelly, I said there is a high degree chance that I am put in the camp of crazy person going up against the system and labeled that if anybody reads this book. But that destroys our ability to make money because nobody wants me on their boards or invested in their companies because it's so. Because you have to. Going up against a system with something like this, you have to be prepared for. We did, I did. Are we prepared or am I prepared for what that looks like?
- [32:59]
Unknown
Right.
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Jeff Booth
Am I prepared to be. To be zero? Could I and say what would that look like versus not saying it and what that looks like. That's what I had to be prepared for. Every single video you're doing right now, every single video I'm doing will be judged if we're right 20 years from now and a whole bunch of things we might make mistakes on or will, will be back in, back in. And people will be making Fun of us. Or on the opposite, they won't. They won't be. They'll be saying, wow, they saw it before others. And we all have to be. Is that what we believe in? And could we be wrong and with conviction? But that's why, like, I don't care. I really don't. I believe in this until somebody proves me otherwise, that something that I'm saying is not factual and is not tied to logic and data. It doesn't matter if the rules change. Smart people change with the rules.
- [34:11]
Unknown
Right?
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Jeff Booth
Right, Right. That is how humans adapt. Right. Adaptability is our species for survival. So when there's a rule change and technology imposed a rule change, you change with the rules or you don't. And so we could. Maybe I'm wrong again. Back to maybe you're wrong and everything else. And maybe people will criticize later on or maybe they won't. But I know my truth right now. And until I see a different. Until I see somebody come with better evidence on a new something that works better, I'm bitcoin.
- [34:52]
Unknown
Love it. And I think this is called telepathical. The soul in the game. Right? It's actually one step beyond skin in the game, where skin in the game is you're exposed to the consequences of your own actions, both incentive and disincentive, based on what you do. But there's a step beyond that where you're taking downside risk on behalf of others. And it sounds like you chose to do that in writing the book and you had to talk with yourself and you knew you were taking certain risk. Right. Possibly even career risk, to be perceived as the tinfoil hat guy. But I don't know. I think it's very admirable that you took that step. So I'm sure there's plenty of us out there that agree that have been influenced by your book, so thank you for doing that.
- [35:41]
Jeff Booth
Appreciate it. But that same. I think that connection and everything else is actually. And if you said my belongings in that. That. Not that I don't look at everywhere else but my. I can't believe. I actually cannot believe how many awesome relationships I built out of. Out of writing that book. I actually. It's been. It's been one of the greatest things I did that I didn't know was like, I never wanted to be an author. And it was. But the relationships built out of that, the people I've. The people I've met, there's like just incredibly brilliant, really great people who equally. It's just. It's Been awesome. It's just been. You never know. And so this turned out to be. This turned out to be just a really great bet.
- [36:33]
Unknown
Yeah, you love to see it frankly because you knew you were stepping into a risk and risk is a two sided coin. Right. Reward is the other side. It sounds like it paid off in ways maybe you couldn't even have foreseen.
- [36:45]
Jeff Booth
So yeah, yeah, I had a talk to with actually somebody who reached out to me because I get asked obviously a lot in business and everything else had to talk today and took half an hour to walk them through and I kind of walked through that exists that same thing. The entrepreneurial risk is an asymmetric bet in yourself and what you do is you. I have a point of view and I step off the comfortable path and I have that point of view knowing the whole while it's going to be you might be wrong and you're hardened and either you're learning and changing and changing on that point of view and it doesn't mean you're going to create a whole bunch of wealth or anything else. It's the learning and that step off. And people who say they want to be entrepreneurs without wanting to step off are really saying because ideas are free. It's only when the hard test of putting that trying to get that idea into action that you see did it work? Did it not work everything else? But I always have underestimated the benefit that accrues by taking that risk. I've always underestimated that benefit. And that benefit has come in relationships, curiosity, learning and everything else. And this is no different. The risk was writing it, but the benefit was so much greater, thousand times greater than I could have ever imagined in my own learning curiosity about this puzzle pieces and the people I've met along the way.
- [38:24]
Unknown
Yeah, it's inspirational, right. And I inspirational for myself and I hope to others as well that we need more risk takers in the world. I know we said they're not risk takers necessarily but it's people that are looking at a potential future and then putting their skin in the game to make it happen. Versus the world we live in today is largely governed by risk transfer ors. Whereas central banks not taking any risk, they're just allocating risk. Something blows up over here, it's heads I win, tails you lose kind of thing for a lot of these firms close to the fiat currency spigot.
- [39:04]
Jeff Booth
And again we get we're so far down this spectrum and we see the negative externalities that we think. Like if you Took Powell today and said, okay, what are you going to do? I don't know. I don't know what you would do. This existing system is unfair, fixable because it's a structural change. But if you turned off easing, everybody sees it because it winds down to the sand. It's a deflationary depression and there's nothing backing the deflationary depression. So all the banks fail and the governments fail on top of that. So that is what they're dealing with. And I understand the severity of, I understand all of the severity of what we're talking about. It's a no win situation caused by something way further back that they didn't see happening. Technology changing the rules and trying to overcome change kind of control the printing press by, by doing this, it's now gotten so big that what would you do? So I don't know if I, if I, if I was given all the power of the world to, to, to change that system, it would choose bitcoin. Yeah, I would, I would transfer, I would, I would, I would say we do, we need to make it, we need to make a transition to a new system that is in, is in line with human progress.
- [40:31]
Unknown
Right.
- [40:32]
Jeff Booth
And I need to be early on that system. That's what I would do. And I need to keep this going in the meantime while we, while we, while we transfer wealth to the new system or transfer society to the new system.
- [40:47]
Unknown
So this is something I've been ambivalent on. Maybe you can help me think about it better. I run into a lot of advocates for UBI and not in the bitcoin community. But I guess just being in bitcoin you hear about it a lot. And there are proclaimed bitcoin advocates out there that are also pro ubi, Universal basic income. And the argument there is that, look, we know bitcoin is the future. We know bitcoin is going to eat everything. Let's use UBI in the interim to allocate wealth to those who need it most. So, you know, I guess MMT style printing press, but directing the funds not to, not through the banking system, through the top tier banks and lending out to lower tier banks and so on and so forth, but helicopter money direct to middle and lower class. And so part of me is like, okay, after reading something like the Law by Bastiat, it's that plunder can never be justified. But the system's already plundering people. Every time you print a dollar, you're stealing from somebody. So do we just turn the thing up and try to allocate the stolen proceeds to the people that need it most and accelerate it blowing up and us moving on to a bitcoin standard, Is that like to fly the thing into the ground? Is that the.
- [42:12]
Jeff Booth
So that's the problem. So inflation, if you just kind of looked at it, you're trying to push prices up so you can give other people more to be able to pay for the prices you pushed up. So ultimately it's that math that can't work right? Somebody essentially there is no free market. Somebody is choosing who gets what right. And it's just, how much should you give to these people? How much should you give this people? But it is not anything to do with the market. So at some point that collapses. I do. What I would say is, and then you look at different countries and you. What you would say, and people look at different countries and they say, well, Norway can provide education and everything else without kind of thinking what drove that wealth was the oil wealth to be able to do that, or Canada can do this and they have a. Without realizing that Canada is so in debt and that it'll blow up first because of the debt. And the thing that might make it hold on is as printing goes up, commodities matter more and Canada's filled with commodities. So people take a narrow view of one country that they think looks more socialist without understanding the inputs that allow that to happen, and they misjudge the entire system. So that happens all the time. And again, it's bias. I'm looking for an example that will make my case is what ends up happening. And I'm going to cherry pick the information that makes my case the best. So now try to level set there and say, should there be why it feels like in the US right now, kind of the collision is way more, way more profound right now than Canada is because our dollar hasn't run away yet. And we have, we have kind of medical for everybody. Or we have a social safety net that yes, taxes in some cases might be higher to provide that social safety net. And all of this thing might not be needed in a new system, but it holds society together while this is going on. And so now just kind of going back to human action. If there's no social safety net, you lose your job and you're sick and you can't get into the hospital and you have no way to pay for that, and you're on food stamps and then that goes away or something like that. You're rising up, you're blaming other people and you could easily be and so if you just think about your personal. What it matters to you and what it would look like to you in each of these scenarios, you can kind of see human action driving on what would, what would happen now, going back to your UBI thing, I don't know. I hate it because it is so misaligned with a free market and it only concentrates more power. I hate it for that reason. But in a system that is so broken, I don't know what to what how some people that are so hurt by that system. And what do you do in the meantime while that system's unwinding to keep. Well, you're pushing them further and further into poverty with your policies today. What do you do to be able to help stem the tide while the new system is emerging? I don't know that. So I don't know that answer. But I would suspect that on that transition from one system to another, those are some of the complicated things that societies need to think about. And it's going to be, it's going to be a fight these things because you're creating general, you're creating a belief system that a whole bunch of people that have money got it because of their innovation and how smart they were and much of that is created by the printing itself, but they don't know it. And you're creating a belief system on the other side of the. And so these things are thorny issues to deal with, to say the, to say the least.
- [47:01]
Unknown
Yeah, it's incredibly thorny because, you know, we're talking about violating the very principles on which free market capitalism is based, like totally violating private property rights. Like someone thought they owned a thing, tomorrow they won't. And I don't know, I'm not convinced that there is a mechanical way to actually do that and in a way that benefits the middle class. I'm kind of with you that no matter which way we distribute these funds, because of the people that choose how they're allocated, they have their own incentives, their own political agendas that it's going to get allocated to the people that make the biggest campaign contributions and like, you know, like it typically is. So it'll just drive inequality until the.
- [47:45]
Jeff Booth
But until, but until that gets so, so rape on one side that the others, the other side side, can promise UBI to get elected. Which almost happened here. Yeah, which almost happened in the last election cycle in the run up to whether it was Biden or Sanders. Right. So. And you can see the groups driving into this because of. And you're Getting a bigger. You're getting a bigger base. So. So the further you push society to the breaking point, you should expect the resulting chaos. And so this existing system that you said I have, corrupt base layer money, and everybody's talking about the chaos without talking about their thing driving at all. It's crazy. It's ludicrous.
- [48:38]
Unknown
Hacking at the leaves and ignoring the roots.
- [48:40]
Jeff Booth
Right, Exactly.
- [48:41]
Unknown
Yeah. So I get lost on this one, too. I just don't think in my mind you can never justify the plunder. I just could never imagine myself being like, oh, yeah, we need UBI for this transition. It just doesn't. I don't know, really hard for me to get behind that. But I guess I would say one thing that would make sense is like, we're already going to do these $1.9 trillion stimulus rounds like we just did. Maybe it would be best to accelerate this transition if those disbursements were made in Bitcoin.
- [49:12]
Jeff Booth
So that would be an interesting. That would be an interesting thing. Actually. Funny enough, my mom's gonna love this, because when I wrote my book a long time ago, she said, you know what the government should do? Instead of the New Deal, you should. They should. Instead of sending out these checks, they should put it into Bitcoin.
- [49:32]
Unknown
Yeah.
- [49:35]
Jeff Booth
And for each citizen. And they'll drive a way bigger wealth divide. So. So sorry. With a way better transition path.
- [49:45]
Unknown
Yeah. And knowledge transfer or awareness. I guess all of a sudden people are like, oh, my. That would be. Talk about a seal of legitimacy. Right?
- [49:54]
Jeff Booth
Right.
- [49:57]
Unknown
Yeah. I get people joke on Twitter sometimes. You know, they'll say, jeff Booth for president or whoever.
- [50:05]
Jeff Booth
But I couldn't change it. I could change. I could change. I could. What I would do is exactly what I'm doing here. I would lay out, here's where we are, here's the facts. And you'd bring critical thought to how do you build to the transition? Not to all of the noise that's going on in the existing. Most of what's happening today is noise, votes, everything else, playing on people's fears in the existing and changing. That's why I said changing an actor in that system won't change the system.
- [50:43]
Unknown
Right. It's like, if I'm going to run and do something like that, then I'd be running on a platform of deconstructing politics. So put me into this job. I'm going to be here to dismantle the whole department and get us onto a better governance.
- [50:59]
Jeff Booth
A perfect world would look like, I don't need to Be here.
- [51:02]
Unknown
Right, Exactly.
- [51:05]
Jeff Booth
But that's what in fact, in a CEO, if you're really thinking about what you're trying to do is you're trying to develop team and everything else. So you don't need to be. You're not needed. You just. You're trying to design yourself out of a job.
- [51:19]
Unknown
Right? Yeah. Incredible. And very thorny, I think, is the big takeaway there. It's hard.
- [51:30]
Jeff Booth
Very, very thorny. These are really complex issues. So we've grown up in a pretty stable, especially in the western world. Not all regions look like us, but we've grown up in a pretty safe time growing up without some of these things. And if you look back through history, there's points of this that look like this. So they're normally around stable money. And then there's points of disintegration because of the same thing. But our measuring stick or how we think about is if you zoom out, but there's nobody alive today that's kind of been through not very many people that have been alive or that are alive and realize all of the backdrop of what causes this. So we're likely a lot of times make. Keep on making the same mistake into a system that reinforces it on itself because we don't know how to measure a different system. Right.
- [52:43]
Unknown
Yeah. There's no. There's no historical precedent. So where we are, it's venturing into even with a bit like moving on to a bitcoin standard. Although it has a lot of historical analogies, we'd say maybe the gold standard. It would be something radically new.
- [53:03]
Jeff Booth
It would be something radically.
- [53:06]
Unknown
Right. Comes a lot of fear and hesitancy from people.
- [53:10]
Jeff Booth
So in a world that's changing fast, the curious thrive that can change their viewpoints with how fast the world can update their mental model faster with how fast the world's moving technology changed the rules. It requires a digital native currency to move that allows for deflation. Those things are, I believe, are facts. When we compare facts from a different time, it didn't look like that. The world didn't look like that. So I said this on one of your other ones, but can you imagine owning gold and your entire thesis for owning gold. Everything's happening and bitcoin's emerging instead of gold. Like your entire 20 years, 30 years of backdrop, everything that you got paid for to provide gold advice is breaking down as you're doing it to a different medium that 10 times better than gold. Can you imagine what that would feel like and why you might defend the previous reality? Because your entire being is involved in there. And for the exact same reason that you said it's important. It's moving to a different. It's moving to a different currency or different. Different standard. That'd be hard to do that. That might be. If I. If it was me, that might be hard to deal with.
- [54:40]
Unknown
Well, this is interesting, actually. So we're talking about the benefits earlier of the bitcoin cultural immune system, if you will, where there's this. The in group out group dynamic is necessary in a way because it's an intolerant minority. I would say the. The precursor to that was were the gold bugs, right? They were the minority, but. So they had the right reasoning, like bitcoiners and gold bugs have similar reasoning, similar worldview, similar libertarian bent, different answers to the question. So is it gold bugs clinging on to this worldview because they had to be intolerant for so long? Is that why. Is that the source of Bitcoin derangement syndrome?
- [55:23]
Jeff Booth
Maybe. And maybe if something else takes bitcoin, I'd suspect it's not true, but not going to happen. That would. Same thing would happen to bitcoiners, right?
- [55:32]
Unknown
Yeah. Right.
- [55:36]
Jeff Booth
So with that empathy for what other people are going through and why they. And it's a bigger group, like, I understand all the dynamics of why it might look like that and still I could disagree. I could disagree with the principle and I believe in a different medium, but I don't disagree with the idea or anything else. And gold for a long time was a really good hold governments in check. It wasn't it at some point people cheat and it always broke down because of that, because you had to centralize it. But for a long time it was the best we had. So I understand why a whole bunch of people would think it's going back to that.
- [56:25]
Unknown
There's this ambivalence here again, that keeps striking me. That does not. Maybe we always want to think right and wrong answers, but it really is situational because there's ambivalence between hold the line, be the intolerant minority, but also have humility when you know you could be wrong at any time. As you've said a number of times on the show, it's like you need to have both and you need to be able to switch between them, I guess. But that's very difficult to do. Like you don't know exactly when to be intolerant, when to be humble.
- [56:57]
Jeff Booth
But again, I think that's what I said about the strong opinions weakly held.
- [57:01]
Unknown
Right. Right. Right.
- [57:04]
Jeff Booth
In a world that's moving really fast. If there was one thing out of this whole thing, take that. Strong opinions. Always trying looking for information to disprove your hypothesis.
- [57:16]
Unknown
Right.
- [57:17]
Jeff Booth
And it allows you to be curious at a whole bunch of different levels. And so I believe this until I'm proven otherwise or until that information, I'm open to anything that will disprove it. But it has to be something that actually disproves it, not just a whole bunch of fun.
- [57:36]
Unknown
Yeah. So you have to run your own internal scientific method all the time. Right. Always trying to disprove your own components of the worldview. I guess so.
- [57:47]
Jeff Booth
Funny enough though that when you talk about, when we talked about even what we opened up today, that belongingness that most people don't see in a whole bunch of other decision making process that they do, I get to that out of deriving it from things I see in my own opinions or there were wrong or my own biases that were wrong and then trying to connect that to other, other stuff. So again, strong opinions, weekly held and I'm constantly. I'll update my algorithm.
- [58:24]
Unknown
Yeah, yeah, yeah. Bayesian inference, which I think you referred.
- [58:29]
Jeff Booth
To.
- [58:32]
Unknown
Hypothesis action or the OODA loop is the same thing. Right. You observe, orient, decide, act.
- [58:38]
Jeff Booth
Scientific method is similar. All of these concepts are different ways of explaining similar types of ideas.
- [58:48]
Unknown
Iterative perception, right?
- [58:50]
Jeff Booth
Exactly, yeah.
- [58:51]
Unknown
Theory of perception and action. And I guess that here I find too the importance of Occam's razor, which is just would describe as the simplest solution tends to be the right solution. And you can say that we have all this complexity in the world. Things are very confusing, we don't know who to believe. You know, things are increasingly unmoored from reality. I mean, you know, people are putting snap screenshots on Twitter of news headlines and it's the craziest stuff. You know, all these gender politics and group identity. This we're just like.
- [59:31]
Jeff Booth
To belong. Right, to belong. So desperate to belong to a group that by doing so they create a group that another group doesn't belong to.
- [59:44]
Unknown
Yeah. And it's, I mean the. Again, this is like we're talking about earlier with Fix the Money, Fix the world. My intuition tells me that it's very closely related to us being in the peak of the fiat experiment. We have the money, we're just unmoored ourselves from economic reality. So other systems of thought and identity become bizarre and strange and unmoored from reality.
- [60:07]
Jeff Booth
Yeah, they matter more to us or whatever. We're so consumed by that addiction of belonging. And now we have, now we have media that allows us to do that at scale. The personal connection, you probably know Dunbar's number power of 150. So we believe that we can push back past Dunbar's number with a whole bunch of relative strangers that all really care about us and by being on social media all the time. And we miss the, the depth and breadth of relationships that really drive our lives. And so I'm not saying you can't find different people that really drive your lives, but it's hard to expand that number, that depth past 150.
- [60:59]
Unknown
Right, agreed. And then I feel strongly this is related to inflation. Again, it's driving divisiveness. Right. It's elevating perceived scarcity. So it's driving divisiveness and I guess you would say unnecessary divisiveness. Like people start to really cluster into these groups that don't even make sense. This is where I'm very much my own hypothesis that money is an extension of mind. Actually, you know, we think in dollars, and I think with most tools and structures we create for ourselves. There's a reflexivity between man and tool. Right. The tool actually shapes us back. I think money has a significantly influential character on ourselves. So I think these things are related. You unmoor the money, you unmoor the culture. And we're seeing that right now.
- [61:55]
Jeff Booth
That I totally agree with. And I go back to what are the things that you really need? Like, what are the. What if you really break it all down? How much money do you need?
- [62:05]
Unknown
Right.
- [62:06]
Jeff Booth
How much. You know that that equation matters in what type of environment I live, if I live in, it's something where I can't pay my food, it's going to matter a lot more and everything else. But. But when you really. What are the things that drive your happiness? And what, what do you. What are you really happy that you have? What do you have? Gratitude. I've always found if you have gratitude for the things that I have, more stuff comes.
- [62:35]
Unknown
And it's the little things ultimately. Right?
- [62:37]
Jeff Booth
Exactly. And yeah, so it's actually the way more important things. Way more important things, which is sort.
- [62:46]
Unknown
Of an Occam's razor in and of itself. It's like just the simple little things or it's going to make you happy in life anyways, so be grateful for. For them. You attract more of them. And Bitcoin, I guess it takes some work to see it, but it really is the simple solution to all of these problems.
- [63:04]
Jeff Booth
It is a simple solution to all of these problems. It's that big a deal.
- [63:11]
Unknown
So do you think. Then there's a quote in your book, says that the lesson is our lives are defined by the politics, positive impact we have on others. Which gets back to your point about, you know, centering our lives on love and belonging. This is related to the money, I guess. I mean, we just are able to.
- [63:33]
Jeff Booth
We didn't talk about it in the other episode. I said, I've known people kind of chasing more and more money all their lives, and then when they get to the end of their lives, they wish they, they wish they had to do over. And publicly everybody thinks they're, wow, they, they made it privately. It doesn't look like that anywhere in their life. That's profound sadness. Can you imagine doing that in your life? A lot of people do that in their life. We're chasing some sort of relic of power or status or any something else, only to get it and then realize, why did I want it? What is the thing out of the thing you want that is really driving it? And most of those things around connection, most of those things around the people that you care about and the people that care about you. I haven't told this story and I don't think any podcasts. When I left my business knowing that the debt was going to take it to zero and kind of a year before that, my own wealth in that business was $100 million. And I knew the debt was going to wipe it out and wipe out all friends, everybody else. And instead of taking kind of, I don't want to say, a bribe, a deal where I would help them do that and own more of the company, I left knowing that, okay, now I'm wiped out, too. So I walked home from work that day after 19 years of building a company and my wife, family, they knew this, but I didn't have a job. I didn't have. We had sold our house, we had sold everything into the business, especially into the final part to try to make sure that this didn't happen. And I walked away with zero, not knowing how I'd pay rent because we'd sold our house at the end of the month. And so I've experienced the highs, the lows, everything else. Here's what within When I walked away within 12 hours, three different friends called. Those three friends don't know each other and don't know each other called and said, and my wife Kelly heard two of them because it was on speakerphone. Jeff, I'm going to wire you $100,000 to your personal bank account. You never have to pay me back. Don't tell Kelly. Almost verbatim. It's like they practice the line. And all I could think is, who am I to deserve this? And you could think. And what I didn't realize is I had abundance the entire time. I had everything I could ever want. The money was a smoke show. Anything else it was. It might have, but I had everything I could ever want all the time. And how fast. Forget the wealth. How fast the wealth built back. How fast everything else. I had everything I could ever want. And when you have relationships like that, and when I say, who would do that for. For somebody else? I would be one of those people that would do it for somebody else. But I never knew it would come back to me.
- [67:04]
Unknown
Wow. That is very powerful.
- [67:09]
Jeff Booth
So what do you need? So what do you need at the end of the. At the end of the end of your days? What do you really need? And so when. When you think of the things that you have by being the person you are and just kind of keep doing that, everything else is just part of the fun ride.
- [67:28]
Unknown
Yeah.
- [67:29]
Jeff Booth
I don't know if I knew it at the time. I don't know. And honestly, when you. Because I literally didn't know how I'd pay rent. I didn't know how I didn't know what I do. Didn't know what you're totally lost. But. And it reminded me of the movie It's a Wonderful Life. And so that's what it. That's what it felt. That's what it felt like. And so to be able to experience that, to know what you have when you have nothing, is a gift. That crazy.
- [68:07]
Unknown
Beautiful story. I mean, what. Yeah. I don't know what to say. That's amazing story.
- [68:18]
Jeff Booth
But it's. But again, when you have some of those things, that type of story is something that, like, almost the best thing that could have happened was walking away from my company, because I would have never seen that. And so it was a learning for me. It was a wild learning for me about all the stuff that I already had.
- [68:43]
Unknown
That. Thank you for sharing that. I think that's a beautiful place to wrap up and a beautiful piece of life philosophy for people to incorporate. It's like really, I guess, being grateful for what you have every day. And it's not. Not out there. You know, the answer's not out there. It's in here. Today.
- [69:08]
Jeff Booth
It's in here. Yeah. And in this whole kind of. You can see it tying it back to bitcoin. Tying it to. That's not the reason for bitcoin. But bitcoin allows more people to see that, have the time to be able to understand that it's not corruption and everything corrupting the base layer of money that you're chasing some artificial dream about what matters to you. You'll expand your time so you have the things that you can understand, the things that matter. That is the way that that will take. Take society. Yeah.
- [69:49]
Unknown
We can set our own goalposts right. Instead of pursuing these artificial ones.
- [69:54]
Jeff Booth
Yeah.
- [69:55]
Unknown
Jeff, thank you so much. That was an awesome way to wrap this up.
- [70:01]
Jeff Booth
Awesome.
- [70:03]
Unknown
The book, which has already been wildly successful, but I guess you could maybe tell audience where to get it and.
- [70:10]
Jeff Booth
Where to find you best places. Effbooth on Twitter. Why don't you put it in the show notes. The book. I think people. People know.
- [70:22]
Unknown
Okay. Yeah, yeah. It is a great book and I highly encourage everyone to share. Just cuts to the chase. It's very readable and hopefully will help make people more aware of what's going on. A lot of people seem blind to this.