Transcript: Jeff Booth: Accountability Via Deflation and Decentralization

Featuring: Jeff Booth and Raoul Pal

Published Date: July 30th, 2021

Length: 01:14:34

Synopsis: Jeff Booth, author of "The Price of Tomorrow: Why Deflation is the
Key to an Abundant Future," joins Real Vision CEO and co-founder Raoul Pal to
discuss the coming monetary revolution—one that will change the nature of
institutional power, driven by Bitcoin. Booth and Pal build a vivid outline of all
the problems and paradoxes that exist in our current systems of money and
government. Brainstorming potential fallout, Booth makes the case for Bitcoin to
emerge victorious after incumbent systems can no longer handle the pressure.
He believes the foundations of our society were doomed to fail from the moment
that those in power took control of the printing press. Booth discusses how this
corruption seeped into various parts of government and how a deflationary and
decentralized currency, like Bitcoin, is a vital necessity in holding the governing
class accountable. Filmed on July 19, 2021.

Video Link:
https://www.realvision.com/rv/channel/realvision/videos/1475516c53e14fd4b505b4947f64dfaf
The content and use of this transcription is intended for the use of registered users only. The transcription represents the contributor’s personal
views and is for general information only. It is not intended to amount to specific investment advice on which you should rely. We will not be liable to any
user for any loss or damage arising under or in connection with the use or reliance of the transcription.
 The Interview - CT: Jeff Booth: Accountability Via Deflation and
Decentralization

RAOUL PAL: Jeff, always great to see you. How are you?

JEFF BOOTH: Great. I'm great to see you too.

RAOUL PAL: It's been a while since you and I chatted. So, I really wanted to catch up with you. Obviously,
since we last spoke, I've come around to a lot of your thesis which part of mine is the exponential age. It's
the amount of new technology that's really hitting all at the same time and all going exponential at the same
time. And how these fits into crypto and the macro world and it's always great to chat with you about these
things. What are you thinking these days? Where are you at?

JEFF BOOTH: I think, what I'd say is first is Real Vision was actually the media outlet that launched that
whole book onto the scene I would say. So, I need to thank you first. Because this is something you know
that exponential movement to technology. And what was happening at our base layer or what's happening
with information. It was predicted that this was just going to accelerate and worldly we're on two different
systems. We're on a system that we live in that is an inflationary monetary system that is trying to push
prices up and in an exponentially deflationary system really, because of technology. These things turn into
information. Information wants to be free.

And so, we're about where you know from the book. It predicted the next, and then a bunch of the steps
that are coming. But it's way bigger than most realize. I know you're there now. You're completely there
now. But an entirely new financial system is going to emerge. And the existing financial system must continue
to concentrate wealth privilege or reset. And when I say wealth privilege, it's not just wealth and privilege.
It has the centralize control making authority in the state as a result of the system.

And that isn't a people problem. It's a system problem. And that's where I think a lot of people are mixed
up right now, taking a side whether it's Democrat. Republican in the US or other sides in different parts of
the world. And it's not a people problem at all, it's a system problem. The existing system must try to drive
inflation, or if they allow deflation as you know, the entire system resets or is destroyed, and every financial
institution, every institution in general fails as a result. But if they don't, you concentrate all power in the
government, and it looks like communism.

And so, we are predictively along that path. And if you think about rational actors in a system like this, and
that's why if you tone down the rhetoric that you hear everywhere, and you think about rational actors,
you're a rational actor, I'm a rational actor, at least I believe I am.

RAOUL PAL: We believe we are.

JEFF BOOTH: And most importantly-- And rational actors we vote with our time, and we vote with our
money. And we vote to get more for less with our money. Constantly. And you would think, just in the
natural world, voting more for last on a free market requires deflation. Because the only reason a company
could be successful is if they give you more for less. Otherwise, those companies will fail. If they try to give
you the opposite, they fail. So, in a free market, giving more for less is deflationary.

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The reason we didn't see it as much before is it wasn't technology empowered. So, now, when you're
getting more for less than a technology company, you're giving a lot more for less. And then we vote to use
Google. We vote to use Facebook. We vote to use Amazon. We're voting with our time to be able to use
it. And a lot of the things that we're voting with don't cost anything at all. And where they used to cost a lot
of money. So, let's use photography. We used to vote. We made Kodak a monopoly by voting to their
entire distribution channel of selling film and everything else.

And to think about all the people in that distribution, film selling, editing, everything else to be able to get
a small number of photos. And then look back at those photos a week later or no event to have them
developed and say, I missed the photo. I think about that in our own time. Whereas today, we have unlimited
photos, and they're essentially free. And so, where does that unlimited photo or those unlimited photos
show up in the GDP measure? Its negative GDP. These things turn into information and information becomes
free.

In a competitive environment, because we all vote with our time to get more for less, it keeps pushing prices
down. So, that's on one axis and that we should expect more of that. But we should expect more of that
and we're all rational actors voting with our tech. How can we believe that the world is aligned to that
incentive structure yet, the incentive structure needs to be flattened based on inflation getting less for more?
In that, what you'll see is the entire incentive structure is a consolidation of power, unfortunately. And it
removes-- by doing so you're removing individual rights and freedoms and the entire way.

And as you do that and as you remove an individual rights and freedoms, what the people most hurt from
that will vote to remove more individual rights and freedoms. Because they don't have the money to be able
to pay for the unnaturally high prices that you've created in the first place. So, they go back to the same
government.

RAOUL PAL: And this is a relevance of party politics as well. It happens on both extremes. E

JEFF BOOTH: Exactly. This isn't something that can be solved through politics. By the way there are so
many debates today in the world that are two orders of magnitude away from the root cause of it all. The
root cause of all is what we're discussing right now. Where we are moving with technology is incompatible
with an inflationary monetary system. It probably always was. But we didn't see it as fast. So, we'd have
80, 100 years cycles, big debt crises and typically, revolution and war and reset, or a different monetary
policy where you'd say the government-- essentially, the winner of the war would say, we promise we won't
do it this time. And then you'd get back to that. And it would build up again.

What's happening today is that just being supercharged with technology. Because as you try to raise prices
against the natural forces, what do you think rational actors would do? Like they own a whole bunch of
businesses and technology businesses. Will I let my labor price keep going up? Or will I try to remove labor
with technology? Because if I don't remove labor with technology, my business is over. So, as you're pushing
on naturally against the market, you can expect more automation. And remember, these are polar opposite
forces. And again, rational actor.

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RAOUL PAL: With almost unlimited capital available at almost no cost, if you try to raise the wage input,
everyone is incentivized to disrupt those wages by putting technology in.

JEFF BOOTH: Exactly. And so, this is a system problem. It's not a people problem. And a system problem
can't be solved by the system, and it created the problem. It has to be solved from a different system. And
that's when I look at technology like Bitcoin that that is a different system that allows us to reset our world
in a peaceful path rather than a destructive path.

RAOUL PAL: But the problem is, have you bought [?], I'm just reading it now. The Great Reckoning. The
new book by-- the new book by -- it's like Victor. It's exactly down this whole [?] something. He's like from
a quarry. It's an amazing book. I will send you the full link and I'll put the link in the notes here as well
because it's incredible. It's basically around this. And how exactly as you're saying that we will end up with
concentrated power first. And it's going to tear the fabric of society because it's swinging between left and
right. And people who embrace technology and people who fear technology, all of this has to happen
before we eventually get to the next fear. And what you're suggesting is that we can't change this, the
dynamics of this until we end up adopting this new digital currency regime.

JEFF BOOTH: So, you know how long I've been studying this. The book, it was part of why people can't
put this piece together to see that it's a different system. And so, I had the forefront of a whole bunch of
technology companies. You have technology companies on one side believing that they're going to be $1
trillion and $2 trillion and $10 trillion entities as they drive artificial intelligence and robotics into the
business. And when you think about, if artificial intelligence is going to be at some point in time. It doesn't
matter if it's tomorrow or 10 years from now or 20 years from now. A path to be smarter than us. And it
will remove labor the entire way along that path.

But people think because of their fear, think about it as a light switch moment. And you can see this in
investing all the time. They dismiss what's happening in the trend because they think about a light switch
moment, or that light switch. So, when you do this, you're just concentrating more and more power into the
monopolies that have that. And then the whole bunch of people think that it's the monopoly, they created
the problem. Monopoly is just a rational actor doing what they need to survive in a business because if they
don't do it and the other company will do it. And so, you have more regulation.

RAOUL PAL: Now, these are not state granted monopolies. These are free market monopolies.

JEFF BOOTH: It's interesting. They're kind of free market. They're state granted monopolies because if
you essentially manipulate the base layer of currency, you will manipulate every other economic calculation
as a result. And so, they become almost state granted monopolies because you're granting, they're
destroying the base layer of currencies. And so, who goes to fix it? And because the population demands
that somebody-- it creates a huge us versus them in the population. And that because there's more of
everyone else left out of that economic calculation, that it was really as a result of printing more money. You
have a whole bunch of people voting in a new government to break them up.

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So, the easiest way to look at it is when you have manipulation in money, you have manipulation
everywhere else. But because people don't see that, they don't see that economic calculation. They're living
in a world that is a Bizarro world. Nobody has, everyone think housing always goes up. [?] gas. Would a
housing go up if I didn't print in a [?] I didn't due the market by 100 [?]?

RAOUL PAL: Is it going up or is the denominator going down which is my point?

JEFF BOOTH: Yeah. $185 trillion of additional stimulus went into the global housing market or global
market in the last 20 years. And so, the question only comes, can that continue? Will housing go up?

RAOUL PAL: So, why do you attach such an importance to the financial layer? Let's call it Bitcoin. How
does that change this entire dynamic? I can understand why it changes the financialization concerns, but
how does it change the whole dynamic of the capital and labor and all of the issues that are going on here?

JEFF BOOTH: So, let's first agree on some principles before we move to the next step. And I'm going to
ask you to push back on anything you don't agree with. Technology creates ex-efficiency and today that it
almost exponential efficiency. Do you agree with that?

RAOUL PAL: I agree.

JEFF BOOTH: That efficiency is deflationary in nature.

RAOUL PAL: Agreed.

JEFF BOOTH: Okay great. So, with those two things and the fact that it removes labor along the way.
We use technology to free our time. That is the point that's why it removes labor. Our time is supposed to
go up as our labor goes down. Yeah, down. But we have our miss out, miss wire because we think we can
have it both ways in two different systems. So, if you agree with those two things then every system created
on inflation, must as a byproduct, concentrate wealth and power and centralized government.

RAOUL PAL: Explain that leap of thinking.

JEFF BOOTH: So, free markets and technology must create deflation and prices going down on a
continuum. Most of the deflation is in front of us, not behind us. So, anything that creates inflation against
that free-market force must do so by concentrating all power and government or a small amount of people.

RAOUL PAL: Why does it concentrate the power?

JEFF BOOTH: Because what is inflation? Let's use this as a hidden tax. The easiest way to look at inflation
is why we vote for, it's a hidden tax. But it's a really bad hidden tax because it's layered on the most
vulnerable in society. And so, why is it years? So, just inflation is the opposite of this deflation argument.
Your Money loses value over time. Why must you have a society where your money loses value over time?

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It's probably the better argument. Is that a prerequisite for a functioning global economy in the digital age?
And I would say it's not. It's a relic that we believe in. And so, it's a hidden tax.

30 years ago, we might have had a negative 1% disinflation rate. Today, it might be negative 4% or 5%.
So, when we're talking about an inflation rate of, the people think they're talking about an inflation rate of
zero. The technology moving the exact opposite way. And these cycles are moving faster and faster in
opposite ways. So, why the Fed even right now, I know you're in the deflationary camp, I am too. But why
the Fed will get away with this and there are a whole bunch of people waving their arms around inflation
is going to be here forever. And they're stepping into the same trap that they did in 2008, that deflationary
forces are stronger.

So, the federal government says, see we have to print more money to cause more inflation. And they have
to keep going and keep going and it can never stop. If it stops, it tips to the other side, and you have a
dramatic unwinding into a deflationary and deflationary world. It can never stop.

RAOUL PAL: I know. We've seen that. So, people just think of it as this balance. Because there's huge
deflationary force, the Fed has to keep pushing up this inflationary pressure or devaluation of currency to
keep it. And as soon as something goes wrong, let's say the stock market falls or real estate falls or any of
the asset sides of the equation. Well, suddenly because of all the financialization it becomes massively
deflationary. And they can't allow it to happen because then all the parts become deflation at the same
time.

JEFF BOOTH: And if that happened, think about the magnitude of that. I have said on a number of
podcasts. But in 2008, I had a business worth about $120 million at that time, but we had LCS around the
world. [?] around the world. And there was a three-day period at the counterparty risk. No one would take
our LCR or money because they didn't trust that our bank had the money. Even though we had the money.
And so, if that happens, the financial system just stops. So, all around the world while you're finding-- in
this exponential, it has to match the offsetting technology. But by doing so, you're destroying society.

Again, what you're saying, what you just said is, if you said those two forces are totally opposite, you
just actually made was my point where you must concentrate all wealth and power in the hands of very
few people with monetary policy, printing money from inflation. It's a must, it has to happen. So, any
inflationary system against the natural force, that technology is the free market. Prices shouldn't be coming
down. So, anything that you do--

RAOUL PAL: And it's also, how I look at it is the price of variable assets including wages falls. So,
photograph, anything that can be variable, infinite supply off, falls. Anyone's fixed anchors against this
devaluation that's going on and rises in price. And so, what you've got at the basic human level, you've
got a lower value of human time. That's falling because it's been disrupted by technology and a bunch of
other forces like demographics and all the assets that they need to buy for future wealth. We're all going
up too much to afford. So. You've basically killed everybody. So, the rich get rich, the poor get poorer.

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JEFF BOOTH: Yeah, and there's not enough for the rich to stop all the poor from revolution and taking it
back by force. It looked through that long arc of history. This is pretty obvious what happens. Now, if you
want to go one level deeper about what this looks like for society. And this is why these are really, really
important conversations, really important conversations. And I'm going to add, I'm not actually in Bitcoin. I
think Bitcoin is going to be the best asymmetric bet on the planet today. But I'm actually not in it for the
money. I'm in it because I think it's actually the only chance that society could get through this piece falling.
That's how big of a deal I think it is.

And so now, why would I say that knowing all of the system changes and studying and how could we make
this transition. Because we need to make a transition from an inflationary system to deflationary one. For
the abundance gained from technology to be broadly distributed. Is that makes sense?

RAOUL PAL: Yeah. The one thing I can't get my head around when we talk about Bitcoin being
deflationary, in a deflationary world, surely the savings rate just goes through the roof, and nobody
consumes anything.

JEFF BOOTH: So, that people believe in, but I think it's like when we were kids where we believed in fairy
tales. It's not true. It's like, I'm still going to buy food. I'm still going to buy a whole bunch of things. I might
not overspend. And if I had-- and again this is the problem that you're talking about is a problem, it's a
relic of working in one system and believing everything you see in that system, because everything matches
that expectation, just like housing prices always go up. But now, housing prices always go up because
you're printing $185 trillion in 20 years. And believing the narrative because you're changing the dynamic.
And all of these things are relics of an understanding that we had in a different world and we're moving to
an Information Age.

Am I going to use less photos? Am I going for free? Am I going to consume less music? No. Am I going to-
- and more and more things are becoming information and those things are things that are going to happen.
Or those things are going to actually increase my abundance more for less on a path. Now, I will grant
you, and this is the hardest thing. And it's why we need a transition mechanism. There's a government in
the world that can do this and say okay, I'm going to get elected, I'm going to cause deflation. I'm going to
stop printing. Try to get elected on that policy. The entire global market collapses.

RAOUL PAL: I've always thought there has to be a gradual migration. Because I agree with your view
and I think it has to be a migration over time, so that it ends with a whimper not a bang. Because we cannot
allow it to end with a bang because that's total destruction of the entire system.

JEFF BOOTH: You're Powell today. You're Yellen today. What would you do? There's nothing you can
do.

RAOUL PAL: I would not do anything differently than they're doing now. I would literally would not
because it's a say, I'm going to pull the bottom card from the house of cards is simply a death penalty for
not only yourself but the entire global economy. So, why would you do that?

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JEFF BOOTH: Totally. But now, now play that system out. So, we know that printing must go up. We know
as a result of printing going up, society, it is really simple examples. House prices go up. BlackRock starts
bidding house prices because they're at the top of the pyramid. A whole bunch of renters can't get houses
because their wages and savings are going down in real terms. And so, they go back to the government
saying I need UBI, or I'll vote for anybody who will give me money without realizing that your pockets are
being picked the entire time. Society starts breaking up around these issues which you can see signposts all
around the world.

RAOUL PAL: Oh my God. You can see all over Twitter. The fighting over. All of this stuff. People don't
realize what they're fighting about but it's all about this.

JEFF BOOTH: It's perfect, Raoul. It's nonsense. I don't bite on any of those other things because it's
complete nonsense. This is the biggest-- this is the most important, until this is fixed what we're talking about
all of them are nonsense must continue. That's why I said, when you have misinformation in the base layer
of money, as a byproduct, you have misinformation everywhere else. And so, all of the other derivatives
are just misinformation and people taking sides and creating massive concentrations of power or I'm right,
you're right. But they're fighting over the wrong issue. It's completely wrong issues. And it's not political.
It's a money problem.

But keep going on what you're saying. There's nothing that can stop it from the system. The system must
continue to do it. Can you imagine if Powell came out tomorrow and said, we're going all in on Bitcoin?
So, what would I do in that case? I would build the financial architecture to something that could work and
not signal to the market that I was doing that.

RAOUL PAL: You open the throttle gradually. I have a personal opinion that may be crackpot but I'm not
the only person to have this opinion that the Bitcoin itself came out of the NSA and GCHQ out of the UK as
a trial balloon solution to see if we can get traction. Regardless or not, the story of it as you watch it is
gradual gentle acceptance. And every time we all get enthusiastic about, no this is going to say, yes. Of
course, they're not. Because they cannot open the floodgates, because the water behind is far too big, that
financial tide going out, is far too big.

JEFF BOOTH: And that's actually one of the reasons why I try to stay positive. I'm a maximalist for sure.
But I try not to jump into all the heat of the debates outside of this domain, because they're all rooted in this
conversation. And so, if you just carry what you just said-- I spoke last week to the entire British military.
What are they concerned about? They're concerned about using military on their own citizens, not on the
clock globally, because of what's happening. You can see the trends everywhere. And Bitcoin is a peaceful
path against that, but it needs to be broadly adopted to be able to-- and you can see that, it's accelerating.
Really exciting around the acceleration.

RAOUL PAL: Surely, forget the rhetoric, surely there are people within the corridors of power in countries
that are looking at this and saying, thank God, we've got this. Because this is unsustainable. And I've spoken
to the Department of Defense a few times in the US about this stuff. And they know that this is the biggest

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risk out there. Is the complete implosion of the financial system bigger than any risk with China, any risk
with anybody else?

JEFF BOOTH: It is the biggest risk because all of the other risks are derivatives of this. So, in an inflationary
monitor, let's use China as an example. And that's why people can't see what's happening. They're
measuring the world, and they're measuring all their media consumption of everything else from a base
layer of money that's being manipulated. Let's say, you know China stopped buying US bonds in about
2013. So, you're about to start monetizing there on. If you were China and you were manipulating your
labor rate down to be able to keep it in check, you're the exporter of the world and other people buy your
goods, and to do that, you had to essentially give vendor financing. You have to buy bonds to keep interest
rates low in the US to be able to have people continuing to buy your stuff. The markets are completely
interconnected.

And so, you could either let your labor rate go up and transition. But when most of your GDP comes from
the exports, that hurts. It's a hard transition to do. And on a byproduct. The US could let their labor rate go
down and drive more exports back and forth. But that rarely happens because people get ingrained. And
so, instead you use your currency as a weapon to be able to keep that in balance. Y

RAOUL PAL: Yeah, because you don't have to lower your wage. That's the issue, right? Nobody lowers
wages.

JEFF BOOTH: It's because people want to notice. Nobody exactly. So, you lower your wage through
currency manipulation instead and because people don't notice. Then people think let's go back to the [?]
of this. Then what would you do as a rational actor of China if you're competing with the US in that? Would
you continue buying their bonds? Of course, you wouldn't because the US must devalue their currency. So,
where would you put that money? You might, you put it in rare earth mineral mines? Might you put it into
a whole bunch of the assets that were needed for the digital transformation? And then if you ask that
question, then would you say-- I think China owns about 90% of that market today. Wouldn't that then
cause as you race to a digital future a geopolitical threat problem, where governments around the US says,
oh my God, we don't have enough of these rare earths. Minerals we need-- this was a real problem.

And so, you start sowing the seeds of and then people out here, us, we're focusing on I can't believe China's
doing this, or US is doing this, or all around the world, you get this-- the pockets all caused by pretty simple
equation. Technology pushes prices down. Free Market and technology keeps prices coming down forever
until either the--

RAOUL PAL: The biggest fear of China. I just wrote a note on this today to myself, as I'm writing to global
macro investors, the biggest fear of China's actually fear of technology. Yeah well, the biggest fear in China
is that if you tie into Bitcoin, Bitcoin doesn't work with communists. So, power centralizes. And power if you
control if you control money, so a centrally planned economy relies on printing money currency to be able
to control citizens, why we don't see and will vote, just like there's a whole bunch of people left out will vote
for that central control. So, right now, what's happening in the US candidate 26% of our economy is
government spending. That has to go higher, and a whole bunch of people will vote for more government

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spending. It must go. So, once it centralizes, it keeps centralizing. And that power keeps on accumulating
and the government, you remove the free market, and you remove individual rights and freedoms as a
result of that. Now go one level deeper. We both know or I know for sure that artificial intelligence is
coming. Artificial general intelligence is coming in one day, computers, you say 40 years 30 years,
whatever the number you want, one day computers will be smarter than humans. And robotics is a different
path of technology. And I'm not just talking about the robots that say that you can see and dance and jump
and do nothing but miniature robots and everything else. I think no, think about those two trends, hitting at
the same time. And artificial intelligence and robotics, just forget every other technology trend, just those
two how much labor is needed 00 or very little. And, now if you drive inflation into that environment where
labor is not needed then essentially you're giving up your invading individual sovereignty to a government
with a very small number of people with artificial intelligence and robotics. Do you think anybody would
stand up against that government in the future? They don't stand up now. So, if you look at what happens
in Russia and Novell one stands up and gets thrown in jail or poisoned, if you look at what happens around
the world and dictators, states or centrally planned states, standing up to power is certain death. That's
today in the world. So, very few people will actually stand up to that power because it's such a high risk,
most people will hide in that power and a very small button or people will be benefited in a huge way from
the most of the population will hide from that power. Now play that forward on these trend lines and see
governments with a small amount of people controlling artificial intelligence and robotics. How many people
would stand up there? So, central centralization, centralization and inflation with this lens turns into the
biggest risk for humanity. But how does Bitcoin change that dynamic? Because the robots are still coming,
artificial intelligence is still coming and governments still exist. Having financial freedom is not necessarily
human freedom, perfect. So, because Bitcoin is in harmony with the laws of nature and freedom markets
and everything else. What happens if it's not? And when I say it's not deflationary money, it's a currency
that allows for deflation. Right? So, as technology removes labor prices fall as a result. In this system, people
wouldn't believe that. And they would believe monopolies get bigger and bigger and hurt everybody else.
But imagine a monopoly trying to get bigger and bigger and a whole bunch of people out of work. And
one and one monopoly has huge margins. Where do you think the tax the margin, right, exactly the attack
of entrepreneurs with technology trying to deliver better results for society because you only win as an
entrepreneur when you give value to people, there would be a swarm of on all of these industries of the
free market attacking them, and reducing and reducing prices along the natural curve of technology. Yes,
labor would fall as a result, and time would go up. Just that's the point, we use technology to remove labor.
And so by trying to create labor going up against that force essentially you're concentrating power as a
result. People are really fearful of that change, but we're moving with technology that requires digitally
native currency that allows for a deflation period, it's a requirement. Because every other path leads to
centralization. And also, interestingly enough, in the prior world, when we had gold, it was suitable for that
day and age, and it would allow deflation, deflation was not uncommon. It was a natural cycle between
the booms and busts, the inflation, deflation, and inflation overall was a non existent thing. There were
periods when, when governments mismanaged and then it would self correct the other way we just don't
allow that to happen any longer so that's it. So, able for a long time. What people are worried about most
right now is the deflationary collapse of the existence of the existing system. And they're not thinking through
what we're talking about right now. Prices constantly come down as a function of productivity going up.
Productivity today is going up like crazy. It's just being robbed through inflation and handed to the people
in the technology companies. But product is a product of that productivity went up the inverse, we save our

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time, and labor rates or labor rates would go down. And in less massive new industries, space being one
or something else that we didn't see today turned into an increasing rate of more and more jobs, which if
that happened, Bitcoin would work perfectly, too. But you must have an EMP. You must have today a
digitally native currency which is global in nature because it's digitally native. That allows for deflation to
avoid what we're talking about is really, gets dystopian, on an inflationary system. One of my particular
theories is the metaverse ends up solving a lot of this. Now, again, that's using the same digital currency.
But we can create a sense of purpose in a digital world. You can almost create pointless jobs that you do,
like building buildings that you don't do in the real world any longer in the digital world. It just dug on that
one a little bit. And again, a bunch of these constructs are really hard to see because I know the NFTs and
everything else and what she was talking about there, maybe. But it almost doesn't matter if we need the
job in the first place? Well, we don't know that's unanswerable yet, right? We've not had a society where
we've had to go through the transition where a human's sense of purpose within a society that's inbred
within us it's not genetic, but it's embedded within us as a society that our sense of purpose is our job, our
function within that society. And that's the change that's not going to change in one generation rather to
two or three generation things at minimum. Yeah. So, people are going to be as we go through this
transition, but I'm really interested in the transition phase less with where this all goes, because we're about
to go through one of the biggest transitions, maybe the biggest transition in all human history. And can we
pass this peacefully? Can we find a purpose for people as they're becoming less purposeful? Because if not,
the British military. Here's an urgent issue that we're going to solve, regardless of whether you think you
believe or don't believe that Bitcoin is the final solution, this transition, we have to get right. And that's why
I tricked you, it's that I would rather have more time to get that right. Instead of predicting what people
want, and giving them a useless job, it and I used this before, too, but we could dig holes with spoons. Why
don't we do so instead of trying to make up a job now, if the free market says, Here's something people
want, and they want to do it, and that's a job. That's where then that's my point, I think we will create jobs.
But in the end, technology can get rid of those two. So, it's not, it's just a transition. The end is the same in
the transition. Is it happening so fast? So how is it? How is AI created? There's a whole bunch of people
that today believe humans are part of the loop on AI forever. And that's just not true. The humans remove
the errors and help remove the errors. And then the AI takes over and does it way better than humans. So,
in the early transition, as AI is moving in you need humans and they constantly help optimize and everything
else but then they could speak cats way better. Today there are avatars, avatars on YouTube and Twitter,
everything else that you wouldn't know that our AI avatars today, take a year from now, two years from
now, five years from now, what are those look like? Will you even be able to know if you're talking? Once
you've seen stuff like GPT? Three, and how it creates text? Once you see this, I think it's decrypted whenever
the pigtail has been investing in, which is this whole video technology. Once you've seen the face, you have
no idea what's real and what's not. What does reality mean any longer? Even that as a concept becomes
difficult. Exactly. So, now to take what you just said, a job created around a digital city or something. And
the AI is going to create digital cities competing with you. What does that job look like? And so, I'm not
saying you're wrong in the metaverse and everything else. But you might be right or along the track
transition. But it doesn't really matter. In the end, what we have to have is a financial system anchored to
that reality, to allow the transition from one system that will not work with that reality move to transition to
another system. And anything. I don't see another system that could do it other than Bitcoin. Why does it
need to be anything else? It doesn't, I think they call it Yeah, we all know it works. And, it's construction is
perfect for that. And over time, there'll be adaptations in terms of applications that can be built on it and

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stuff. So, I don't think, why does it need to be anything else? But I've never really got that whole discussion
about crypto maximalism and stuff and what well, it does its job. And there are other things that do other
things. They're not the same thing. Yeah. And probably from when I say maximalism and everything else,
because that job is so important for a variety of other reasons. And because if you looked in in the crypto
space, in general, there's actually a whole there's what would happen in in any market, if a market leader
took place a whole bunch of trip, people will try to create versions of that market leader to try to siphon off
value or try to it's just a free market acting. So, acting in its best interest trying to make more money. And
when I look at the entire alt coin space, I totally get that I understand it. And maybe some of those things. I
don't see any personally. And I know you do but maybe some of those things are a good bet or something
else or in a short term trade are really good. But because this is such an important foundational thing, to
be able to get to the other side. What I think about my time going into the only thing that I think can actually
get us to the other side. That's what I would say and I yeah, I might get that. I don't know how long this
period of transition is. Personally, I want to get through the transition. Because this is a much riskier thing
than the reinvention of the final state. It's this period where all the stress lies. Yeah. And as I say, if we don't
navigate this, you can have Civil War, you can have nation state war, you can, there's so many outcomes,
which are slightly terrifying. And I think our job at this phase is to understand where this could go. But
navigate this path. Yeah. So, there I totally agree. And that's actually where you want a whole bunch of
really great debate. You can't have this debate. So, we can all have it all day. But nobody in power can
have the debate because you admit it, the first rule is not admitting the problem. Yeah. And that, and that's
fair. And that's actually if you a derivative of the Maximo ism would be caused by that. Right? Because a
system changes required, and that there's no in this existing system will not, will not reference it. And so I
think you're right there and they can't reference it. And so how does that and what not only can they not
reference the new system, they can't reference the flaws in their own system, right? Because, because that
in itself, leads everybody to go look at the new set up. There's nothing they can do. So, the interesting thing
as well, society jumps around, around red herrings that are problems from the existing system, climate
change being probably the biggest red herring. Inflation is climate change. And think through that, you on
a finite planet, you can have growth forever, by manipulating money. So, people have essentially useless
jobs, you're paying them less to work more and more, to drive two cars to work, to try to pay for passes at
prices that you've just increased naturally in the first place. Anyways, to be able to inflation equals climate
change the entire system is climate change or in the problem with environment and everything else. For as
opposed to using the word inflation financialization. Yes. So, what you're doing is allowing excess
consumption to be boring in the future, which you never have to pay back, which is done at gigantic,
preposterous scale. So, because capital is now priced to free, and so anybody can do anything, or even
feed it into today's oil prices. So, you have new energy hitting the market at lower prices, through solar and
other technologies, whether that'll be the state of where technology goes or not, but solar is getting cheaper
by 11% a year. So, additive to the energy grid, headed lower prices, deflation, but the system can't allow
deflation. So, energy is the number one input of everything else. So, what must the system do to stop green
clean energy, or green or cleaner energy from arriving, you must debase your currency to drive oil prices
up a whole bunch of a whole bunch of former markets, that oil wasn't competitive, now becomes competitive
again. And you're driving. Again you're driving to different systems. And as these accelerate, you have to
accelerate their printing on the other side. So, the entire thing is when I said, warfare, you could use
financialization, but it's inflation or the printing of money that is structuring of currency at the base, because
it's not just about the printing of money. It's the fact that the private sector could generate money as well.

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So, it's the creation of money. And that's why I think of financialization. There's another thought process
that therefore goes through into the future in a future world where there is no inflation, and asset prices
don't go up. Are we not going to find the capital is priced differently? And so, you're going to potentially
slow the pace of innovation? Because you're going to get a repricing of capital markets. So, for sure, in the
transition stage yes you're right. But there's so many things in that transition stage that we're moving from
one system to another that people fear that is going to happen anyways. It's just that does it happen as a
disorderly unwind or through a revolution and war? Or do you concentrate all power in the government
and we are just a bunch of pawns in that system? So, how do you think it plays out? How do I hope it plays
out? And I am not interested in your hope. So, I'm interested in what is your reality marker? Where do you
think the base case is? There are probably way too many variables. When you think about a system that's
this unstable, you must expect black swans. So, 111 case would be would be this US government says we're
going really slow print and and everywhere collapses at financial markets collapse and everything else and
it starts spinning and that and then they come back in US dollar would get really strong in that case and
almost like 2008. And then you could collapse and then start reflating again, that's one one scenario, but
the externalities of that now are way bigger problems, because places would fail everywhere. I think the
government would be forced to act faster than they even did in 2008. In that environment, it is as if the US
tries to taper Good night, right. So, you trying to thread that needle would be really difficult but that would
be one case. Now, my base case is that they keep doing what they're doing. But it gets worse and worse
and worse. For and not just worse and worse from a, from a system change perspective, worse and worse,
because populations will start marching on the streets and and and empower governments to remove
individual rights and freedoms to be able to blame others and change the system. It's how I would say that's
my most likely path, that we don't live in a democracy anymore when it looks like that. And what happens
if we do? I'm actually a white swan person. And this actually. And my version of this is the supermassive
black hole that I've described a few times about the Bitcoin outperformance of other assets. What's
interesting about Bitcoin obviously, is you can devise it divided down to eight decimal places. So, basically,
everybody can have the same percentage of their net worth. And in a world where the central banks keep
doing what they're doing, which is almost guaranteed, for the reasons you correctly point out, then that is
a world where Bitcoin outperforms. Okay, it has to by definition, and therefore, it's going to suck in more
capital, which we're seeing it doing. The number of wallet addresses grows over time, it's a network effect,
and it's very clear. So, what happens is, you're reducing the burden of society, by them migrating across
over time, because you're creating the outcome that causes. So, by the end of whatever end game is, most
of us are over here already. That's the peaceful path. That is why you want every single part. In fact, it's
actually why I'm not into altcoins as I want every single person on the planet to have some Bitcoin allocation.
And because I think it is that important to make this transition, but we live in a capitalist system. And people
will see this, they will see it, that it's the best performing asset, much like equities have held so much of the
world's wealth, and real estate, other things. So, I don't see how that doesn't happen. So, the only issue
here, is if the government tries to shut the throttle. Yeah, because then you're going to cause problems.
Yeah. And ISIS, I suspect it's too late for a government to shut the throttle, like China just did. Right. But
then, it'll go underground. Well, I think somebody put a comment who said it, he said, You can't ban
Bitcoin. You can ban yourself from Bitcoin, right? So, what happens is, let's say you are a nation that doesn't
have a complete autocratic control over your people. And you ban it, and people see other people making
money and protecting their wealth from it. You're going to create civil unrest whether it doesn't China or
not, I don't know if this is a big experiment. We're going to find out. So, now let's tie that into the existing

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financial system and create more misinformation. Right? Must it not just, they must keep printing but that
printing is misinformation. And that To be able to hide what you're doing, when I use that climate change
example you must create more info or misinformation on top of that and that's a must have the existing
system. And that's what you're describing, and I think you're right, not just from a, I make a bunch of money
on Bitcoin. But the more that misinformation moves and the more people realize it's really a centralization
of all control, the more people start to understand why Bitcoin is the exact opposite. And it's free, it's more
of a free market type of instrument. Now, let's think about how the government would look in that system.
So, if you were elected, and you had to, you had to tell the truth, and the truth more than maybe a lot of
other people, but the revenue doesn't come from taxes, the revenue comes from inflation. And so, if you tax
100% of profits of all the US companies in 2019, it's 2.2 5 trillion. And last year, with $5 trillion, amazing
this year, probably this summer number, so you can't even you can't even touch your yearly deficit, let
alone the debt. So, if you tax all the profits 100%. So, we know it's not taxes, it's from inflow, most of the
revenues is derived from inflation. And inflation is just a hidden tax. So, what would happen in this new
system essentially would bring Truth and Honesty to governments. I personally want a firefighter in my
neighborhood. I'm happy to pay taxes per firefighter in my neighborhood, the thing I have that just burns
me is when somebody lies to me and I know they're lying. That's what. So, if governments or new politicians
and a new system start campaigning on the truth, on a system that allows the truth and says, Here's where
your taxes will go, What do you want? It turns into a more like a real representative of democracy? That's
not human. It's just not human. This coalesse three humans and they want to grab power in any way they
can. There's no way on Earth humans are going to change the utopians just because there's no inflation.
So, when you have a system design that forces truth before we have monetary printing, financialization,
we still had lives, we still had, we built religions based on the back of all this stuff. Humans are humans, we
create nonsense to grab power. We always did. I agree. Totally agree with that. But when you have a
system that is based on don't trust verify that is the base layer of money, it forces a whole bunch of different
actions on top of that and the different actions are what we're talking about when people try to manipulate
that? Of course, they will, will they be able to manipulate it is what I'm getting at, and they won't be able
to manipulate it, it is truly taken out of their hands to manipulate it.Now, then we get to choose, Will people
still try to manipulate us? Of course they will. Will we get to see the truth in that? Of course we will. I don't
think so. Because the spoken word is not verifiable. And humans are spoken word creatures. I definitely
want to add artificial intelligence, which is better at lying than we are and evading. Yet, there's no way that
we're going to become utopian. Just because we got a new system of money. In my book, in the first, I
think, first page of the book I don't believe in utopia or dystopia because we will rebel on both sides.
Humans are too. So, I agree with you. And game theory tells you that game theory, so I agree with you
there. But if you have a monetary base layer which is what is money in the first place, it's just information,
it's a trade of our time. That's all it is. It's just information. It's trading our time. It makes sense that if you're
just starting our time, you're just starting money, which is just a trade of our time. And it's information,
you're distorting everything else is a byproduct. So, if you don't just start that if you can't distort that or a
whole bunch of other things are fixed as a result. And so, what you'll find you're saying you're seeing now
in the free market, you're seeing it now in El Salvador. Look at the number of searches going up for real.
Why didn't this work for gold? Why didn't Why didn't it work? It did work for gold for some time. For time.
I wasn't empires rows, empires collapse. People got ripped off their good governments, bad governments
everyone fought each other. Nothing was any good. Do you have to centralize it and it wasn't it wasn't a
currency that could because of that centralization and human control. It could be it could be taken. That is

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probably the simplest explanation for gold ore. And so, why was it bought after world war two? Because
US had all the gold? Why did the US go off the gold reserve? Because they couldn't pay because of their
tax rates I think we're at 90% visit. In in the 60s, US couldn't pay for the Vietnam War. So, they exported
the problem around the world. And when France demanded their gold back, why because it has to be
centralized. And then when you centralize you trust to human judgment. And why and why because
country's domestic issues always take priority or international ones. Going all the way back to what I said
before. Today, where we are with technology requires a digitally native current currency, by definition, that
digitally native currency is global in nature, that allows for deflation, and then stops what you just what you
just said, well, gold is global, but it has to be centrally, it has to be centrally stored. You have to trust
somebody has those gold or so it doesn't because we can all store gold. So, it can be distributed in nature
as well. It can be and it's proven its worth in doing that. So,I'm not saying that the Wealth of Nations, I'm
talking about the wealth of individuals, you can own gold coins, and you can store them and everyone has
for 3000-4000 years. When was the last June gold goes by you might but but very few people on gold
coins, that they're going to pay the pay something because they're not part of our of our monetary system.
But in the past they were right. The Romans had an old coins or silver coins, and you would use them as
money. And they were fungible with other gold coins. And they got centralized when you built money on
top of that. Right. So, when you built a layer two money on top of that the result was centralization of layer
one money. Yeah. All societies have credit, right? They always have. And that always gets built on the low
one money. And in the end, you get a claim on it. That will happen. Same with Bitcoin. If I lend all the
Bitcoin and take everybody's collateral, I will own Bitcoin. It carries that forward. So, the claim on the gold
was bought by France in 1971, they had a claim on the gold, what happened to change the rules? So,
what happened in the 30s, with gold, and the US changed the rules? Why couldn't they change the rules
here? Just because it's a global centralized money that's digital in nature, and distributed doesn't mean I'm
in a small nation state, and I just say, was non fungible. So, you mean, changing the rules on Bitcoin as a
protocol level. Now remember protocol level, just the human level? Okay, so carry that or carry that forward.
So, essentially, what you said before, I'm going to opt my citizens off of that, I'm going to close the on
ramps. That's right. And people will do that, that that can happen. But that creates an incentive in game
theory for other countries to move faster. I'm thinking a bit later is like when this game of thrones plays out,
which is, once you build the layer two, which is lending on top, and then what happens is, he you
successfully lens ends up with all the collateral, and then you concentrate the power in the hands of the few
with the wealth. And somebody wants to now not pay their debts back, which is what humans do, we're
still got the same problem, just because we've got this lovely new money, which, I believe in, but I'm just
thinking it's not a panacea, because in the end, somebody goes, Well, sorry, we don't need your money,
because we're going to have a different money. And humans have always done that, when you have a
system design that forces free market rules. So, if you lent your Bitcoin out, and you're getting an interest
rate on your Bitcoin, and you lent it out to a custodial solution, that lever means that you lose your Bitcoin.
So, if you don't trust other people on a fractional reserve system to be able to bail, you bail out people who
made bad loans like the system requires today, instantly clearing and it's an end so you have your money.
Monetary velocity around the world, because it's instantly clearing. And so, if you leave her to it today, and
human beings for fear and greed, we create markets that are based on fear and greed. But at a protocol
level like Bitcoin it'll get wiped out. Yes, but you'll still create the leverage layer. It's so good. So, you still
get inflation? Because you can create leverage there. I'm not getting that. So, when I'm talking about that
laptop, I don't actually know, if you'd actually create as much of a leverage layer, you'll create some

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leverage. Who knows? I'm just, I'm just trying to think through this stuff. Because I don't know the answers.
But where does the leverage come from in the first place? Right, then the leverage comes from humans
wanting things they don't have? because they can't afford them. Right? Right, whatever that may be. Right?
So, they're not willing to accept that the transaction of time equals money. They want to say I want to
forward sell my time, either collectively as a company or collectively as a country or individually as a person.
And I want to have more now. Because I want to buy or invest in and where does that come from? From it.
So, let's look at real estate as a claim that makes a country stronger? Now, where does it come from? It
depends, right? So, if it's the eurodollar market, it comes from thin air. And I know I realized where it comes
from now. So, I totally realized where it comes from. Now I'm talking about in the news, it comes from the
stable coin market, it comes from thin air. And if it comes from a bunch of stuff, and I don't really have a
problem with this, per se, because humans always do this. But I'm just thinking, when are we just going to
go through the same cycle over again, I don't think we will. And I think where it comes from is that humans
stop borrowing. Less so or productivity drives boring. So, when you move to productivity, which productivity
enables the abundance to flow to people and people will lend out, but it'll be a way smaller amount today,
we work in a credit based system that was created out of thin air, of course people are going to borrow at
zero interest rates are going to keep on borrowing at zero, it won't look like that. And so in this system
change you'll have a whole bunch of people trying to apply 100 times leverage to their Bitcoin, and a whole
bunch of is a whole bunch of and you think stable coins and everything else, a whole bunch of exchanges
that allow that. And they'll blow up at some point because of Bitcoin, it gets cleared. And you can make a
whole bunch of money on that. But you bet the free market wins. And and and, and they'll get destroyed.
The other one thing, just the final thing, because I'm just digesting a lot of this and it's super interesting
climate change. I get what you're saying is that the financialization created more fake demand for stuff. But
the other issue we had was a demographic bulge. That came of enormous proportions. Right. And that was
based on medicines and a whole bunch of other stuff. World War Two was the other great thing after
World War Two, it also changed in, in global health care, medicines, vaccines and stuff, we saw this huge
rise in population. Now, even without the financialization, that probably would have driven climate change.
The financialization probably tends to exponential right. Exactly that fight financially. So, how can you solve
climate change through a system that requires you to grow up? And if people say, Well, I don't know, the
new information age is much less energy intensive, because it's very job is to be as energy efficient as
possible because you're converting energy into information. And again, we're early in that cycle, and it
and it's exponential in nature. And so, that means most of the deflation is in front of us. But corresponding
in an inflationary system, you must increase at the rate that technology is going the other way just to make
it look like you're in a real room or cascading fail or can collapse. So, it's crazy when the existing system
is talking about ESG and everything else, when it is the cause of all the things but it's now not the solution.
Right? It can't be, it can't be so. So, in Why? Well, the solution is now not get rid of leverage, because, the
climate issues, and now they're, in one row, if it was only leverage, if it was leveraged as a great thing to
make a higher return, it's not just leveraged that can't fail, it is leveraged. Is leveraged, that is, so it's not a
free market at all. It's a manipulated market, it's leverage that I have, I have a two headed coin. Heads, I
win. Some doesn't that I've thought about this in depth, I just think this is the best money making opportunity
of all time, the fact that you have a one way market and you have, if your particular horse is Bitcoin, which
has proven itself to do spectacularly well in this environment, then that should be it is like, you have the
greatest wealth making opportunity of your entire lifetime. So, you just said that I love what you just said,
because that's what is the case for most people for Blackstone, or black or sorry, BlackRock, for a bunch of

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it's a one way market. And there's a whole bunch of people. And by the way, I'm in the market because of
a bunch of technology companies and I have tons of wealth, I'm in a one way market that I can't lose,
because of the existing system. The more wealth you have in the existing system, you're in a one way
market. And what people are blind to in that one way market is in yours, it's going to be taken from them.
Because if you're at the top of that one way market when revolution comes, you're not going to be at the
top for very long. And that's what that was, what is it that one way market will be, that's what will happen.
So, but for everyone else, there's also a one way market because of the system change. And that's Bitcoin
because those people, what we're talking about, all of those people that need Bitcoin, the most never had
a chance to get into the other one way market. No, hey, they can put 10% of their total worth, like the rich
dude can? Yeah, in exact proportion. And they're not penalized by something that costs x. Because you
can fractionalize it. It's perfect. Yeah, that's perfect. Jeff, fascinating conversation as ever, my friend. Always
fun with you. Yeah. Good to talk to you. And lots of thinking about as ever, let's see how this all plays out.
It's going to be an extraordinary time. As I say, I worry a bit about this transition. And I don't even know
what fights are going to be the fights, but there's going to be many of them. One thing that's worth it for
people and your show is widely followed and everything else is it when you're thinking about people. It's
not the people, they're caught in a system and they're looking at it through that system. The system is the
system that's doing this and it's almost universal in just about every debate. Now, I said I took a whole
bunch of notes on exactly this. And a lot of the arguments that are all about technology, but also embedded
in that technology thing is the fact that there's a winner take all situation that's underway right now, because
of work. Fascinating. Jeff, brilliant to talk to you. Yeah, you too. Thanks for Thank you.

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