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Parker Lewis and Robert Breedlove: Swan Signal Live E32

Posted 10/8/20 by Brady Swenson

Join Bitcoin philoso­phers Robert Breedlove, author of “Masters and Slaves of Money”, and Parker Lewis, author of the “Gradu­ally then Suddenly” blog series for a cosmic discus­sion about Bitcoin. They discuss how fiat perpet­u­ates inequality, how central banking causes the problems it is supposed to fix, how every­body follows their incen­tives (including the Fed), how fiat money distorts pricing and commu­ni­ca­tion, and how Bitcoin is free speech and a funda­mental monetary right. As always Brady Swenson, Swan’s Head of Educa­tion, hosts the lively discus­sion.

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0:00 Intro­duc­tion

2:47 How fiat money perpet­u­ates inequality

10:59 How Bitcoiniza­tion happens

13:48 Are Central Bankers lying to us or ignorant?

22:41 Fiat Money is a lie

29:54 Central Banking is theft

37:38 Bitcoin as a language and freedom of speech

47:10 Bitcoin’s absolute scarcity

55:25 Societal incen­tives toward work or theft

1:04:02 Who loses in the transi­tion to a Bitcoin standard?

1:11:45 Does absolute scarcity require both physical and digital realms?

1:20:29 Wrap up


Brady Swenson:

There we go. All right, everyone. Welcome back to Swan Signal Live. This is episode 32. On this edition we’ve got two Bitcoin philoso­phers for you. Two of my very favorite writers in the space, Parker Lewis and Robert Breedlove. We’re going to get a great conver­sa­tion with the two of them today. Before we start and dive in, I’ll give you a quick chill on what we’re doing here at Swan. We have built the best way, easiest way, the safest way to accumu­late Bitcoin with automatic recur­ring buys. You don’t need to time the market. You don’t need to even worry about logging back into an exchange. You just set up an account, tell us how much you want to stack, how often you want to stack it. We’ll stack it for you. You can also automat­i­cally withdraw it. Once you set up your account, the whole process is basically getting a confir­ma­tion email into your inbox, you click that, you withdraw, and you’re set.

You can set a threshold on that withdrawal. It’s so easy. It’s almost magical, as we hear from some of our customers. It’s a great experi­ence. Send your family and friends our way. We will treat them right. We’re laser focused on Bitcoin only. No distrac­tions from altcoins. We’re focused on educa­tion. We’ll help sort of be your wing man in teaching people about what Bitcoin is, your friends and family. You can join the Swan Force as you start refer­ring your friends and family at swanbitcoin.com/enlist. You’ll make 25% of the fees of all the purchases that your refer­rals make. You make 25% of those fees. You’ll be stacking sats while we’re helping your friends and family become hodlers. A couple more quick shout outs before we get on.

First, our Telegram group. We have a great active group in Telegram talking Bitcoin and all of the tangen­tial topics around Bitcoin. That’s at t.me/swansignal. Come join us there. It’s a lot of fun to hang out. Most of the Swan team is hanging out there all the time. We get into more in-depth conver­sa­tions than we can’t on Twitter. Check that out. Also, the Bitcoin Arsenal. Our creative director of Brekkie von Bitcoin has been collecting all of the dankest Bitcoin news out there and working with some of the mean masters to create this repos­i­tory called the Bitcoin Arsenal. That’s at swanbitcoin.com/arsenal and bitcoin_arsenal on Twitter. Really cool projects. Check that out up.

All right. I’d like to welcome Robert Breedlove to the show. You all know Robert. He has dropped some amazing pieces lately and is really stepping up his content produc­tion game. I know you’re happy to see it. I’m happy to see it. Rob, welcome to the show, man.

Robert Breedlove:

Hey, Brady. Thanks for having me again.

Brady Swenson:

Absolutely, man. We got Parker Lewis again on the show as well, author of the Gradu­ally, Then Suddenly series at Unchained Capital blog. Parker. What’s up, man? How are you doing?

Parker Lewis:

Doing well. Brady, thanks for having me on again, and always a pleasure to mix it up with Robert here as well, so looking forward to it.

Brady Swenson:

Absolutely. Yeah. Like I said, these guys are two of my very favorite Bitcoin writers. I know that’s a broadly held and broadly shared opinion. Let’s get right into it, guys. One thing that you guys, I think, better than anyone else who’s writing in this space is really estab­lishing the degree to which these inequal­i­ties that are perpet­u­ated by the fiat system are wreaking havoc on our lives and our society. Parker in your piece, Bitcoin is One for All, in Rob’s piece, Masters and Slaves of Money, you guys describe how fiat is the money of the few, the money of the masters, and the devas­tating effects that this reality wreaks on our society and civiliza­tion, individ­uals. I’d love to hear you guys discuss this idea back and forth about how fiat money perpet­u­ates inequality, the histor­ical scale at which this crime is being perpet­u­ated. Rob, you want to kick it off?

Robert Breedlove:

Yeah, sure. I frame it up in Masters and Slaves of Money as… I guess I was inspired by this from Creature From Jekyll Island origi­nally, where he actually described central banking as a currency counter­feiting opera­tion. The first aspect you under­stand about money and fiat currency in general is that it only has value because it was once redeemable for real money. It was redeemable for monetary metal. It was intro­duced as an innova­tion to help resolve some of its limita­tions. Specif­i­cally gold is not exactly optimal and the porta­bility in the visibility depart­ment. Paper backed by gold resolve some of that. Once a bank, though, moves beyond a one-to-one, being one unit of currency per one ounce of gold, for instance, and they started going to two to one, three to one, whatever, it’s a lie. It’s a fraud­u­lent opera­tion at that point.

Govern­ments histor­i­cally have always abused the money supply as the primary mecha­nism for extracting, basically scalping value off of the society that’s forced to use it. I the Masters and Slaves piece, I try… I guess there’s two ways to look at this. You can look at money, the scarcity of money as mapping onto the scarcity of time, which every­thing in an economy is the product of human time. One point there, even land takes hands to sell. Even if we think it’s something God given that we didn’t create per se, it’s still takes human time and effort to sell it and make it usable so on and so forth. Every­thing we trade is a product of human time.

Another way to look at that is you can say that the scarcity of money maps onto the scarcity of energy, which thermo­dy­namics teaches us the law of conser­va­tion of energy. Energy cannot be created nor destroyed, so basically it’s absolutely scarce. Once you start abusing that function, you’re using the counter­feited currency, which is now no longer actually money, because it’s not a final extin­guisher of debt, you’re using that currency to siphon value or time off of the society that’s forced to use it. I guess in a broad strokes nutshell, that’s how I tried to frame it in Masters and Slaves of Money, that fiat currency is essen­tially a pyramid scheme that is designed to scalp value off of citizens and reallo­cate it to those nearest the fiat currency spigot.

Brady Swenson:

Parker, you want to build on that?

Parker Lewis:

Yeah. I think, partic­u­larly, in the last piece that I wrote, released probably about a month ago now about Bitcoin is One for All, I think the themes that I talk about… Robert and I both take two very different approaches to talking about essen­tially what is the reality and what’s occur­ring. I think that there’s a result of it. Often­times I’ll describe Bitcoin saying, “Bitcoin is very diffi­cult to see, but once something clicks and once there’s a connec­tion made and you start to under­stand how this thing, Bitcoin, could be possible and how it could be viable as money, that is diffi­cult to unsee that. Then over time it becomes more and more intuitive. I think the same thing… because other side of the same coin is the Fed.

Once you see it for what it is that is diffi­cult to unseat in that as you are seeing the conse­quences of the actions that the Fed takes, it becomes very easy not to singu­larly blame the Fed’s opera­tions for a lot of the economic imbal­ance and the extreme levels of equality, but just the general unrest, that once that chink in the armor forms and you start to see really the funda­mental role that money plays in coordi­nating all economic activity, then it starts to become very intuitive that if you start to manip­u­late that function, whether it’s intended or unintended, how there can be signif­i­cant unintended conse­quences and really negative exter­nal­i­ties from that opera­tion of printing money or digitally creating it through quanti­ta­tive easing.

I thought the Roberts piece, Masters and Slaves of Money was great. I think there’s another way that I look at it that is; when I see somebody like Neel Kashkari get on 60 Minutes and talk about how they have an endless amount of money to print, I don’t think that Neel Kashkari is somebody that wants poor people to suffer or wants to advan­tage really powerful people over weak people. I think that part of that’s just may be an errant bias, but wanting to believe in the good of people, but at the same time, recog­nizing, he just doesn’t under­stand it. That so many people that have grown up because all that this taught from, I’d say, academic perspec­tive in terms of economics over the last 40, 50 years, is that active manage­ment of the money supply is a default activity, that the begin­ning assump­tion of that opera­tion is that there is some good to be served in the world by doing that.

Then it’s a matter of how do you affect it to opera­tionalize the most benefi­cial outcomes. If you turn that entirely on its head, which was maybe that entire assump­tion is wrong, then you can start to see or at least you can explain a way the behavior of central bankers every­where in, not neces­sarily intending to do harm, but not really being the master of their own domain, where they think that every­thing that there is, that they’re doing is helping in some marginal way, but it’s actually the root source of the problem.

It is actually what creates imbal­ance, and whether or not they want to accept it, that is the reality. Again, what Bitcoin repre­sents is not only the thing that fixes that, but it repre­sents a free market compe­ti­tion that takes it out of an intel­lec­tual debate and into a true market test where the actual individual is empow­ered with an option to look at these two systems and choose volun­tarily which one they want to contribute and store their time and value and what economy that they want to partic­i­pate in, because it ultimately is two diver­sion economies that are forming on top of two different monetary systems.

Brady Swenson:

Right. What point do the economies merge, Parker?

Parker Lewis:

Well, I think-

Brady Swenson:

Or how do the economies merge?

Parker Lewis:

I don’t think that they merge. I think that one wins and one loses, that and we’re all just people operating in the world, but that more and more people will exit. Say there’s 350 million people in the United States, we’re 325 million people in the United States that are contributing to varying degrees at different levels of economic activity. Immedi­ately local economies, state economies, national economies, global economies, but thinking of each one is a deriv­a­tive of others and that there are overlaps, and that today practi­cally everyone in the United States is still partic­i­pating in the dollar economy, but as knowl­edge distrib­utes and people learn about Bitcoin… I think about it this way, because often­times we talk about how… at least when we think about monetary maximalism or the term that was coined Bitcoin maximalism, which is more, I think, descrip­tive in the sense that there’s a reason why monetary networks are monop­o­listic, and that often­times people say that economies converge on a single form of money.

But I think, more realis­ti­cally, it’s that economies emerge from a single form of money rather than converging on one, and that the economic activity and the markets that form around it are actually derived or only made possible because everyone decides to use the same form of money. It could be the same universe of people, say, there is 325 million people and they’re all partic­i­pating in some form or fashion in various different economies, and that over time, completely, all of those individ­uals will shift over to Bitcoin. And that those two economies will look very different, but the constituents that make it up will all be the same, or realis­ti­cally, not uniformly, but that the same actors that are partic­i­pating, they will be partic­i­pating increas­ingly in the Bitcoin economy, but at the core of it, we’ll have a different pricing mecha­nism and we will have a different standard by which to assess value and to transfer value.

That it would be errant or I think it would be irrational to believe that once we’re all on a Bitcoin standard, that the economy will still be… we’ll still have trade and special­iza­tion, but the things that we’re demanding and the things that people are deliv­ering and things that people value on a Bitcoin standard will be very different. That value will be more true in that world, and there will be a lot more stability. But it takes time to essen­tially, I say, not converge those two economies, but to transi­tion from one world to the other.

Robert Breedlove:

Yeah. I think there’s a great point here, and I’ve had a lot of discus­sions with people about it, regarding the inten­tion­ality of central banking. For instance, I tweeted… this is several months ago, Jerome Powell is on live TV saying that central banking, monetary policy has nothing to do with wealth inequality. This was maybe three or four months ago. I basically tweeted out and said, “This guy’s lying to you.” I got a reply from one of my friends. He’s a hedge fund manager over in Europe, and he’s applying to me saying, “You’re crazy. Jerome Powell is a good guy. He’s just doing what he thinks is best. He’s trying to do his job well. It’s wrong of you to call him a liar.”

I actually don’t disagree and I’m not sure, I don’t know if Jerome Powell or Kashkari saying they have infinite cash, I’m not clear whether they under­stand the impli­ca­tions of their opera­tion or not. But what I am clear on, and again, reading the book, The Creature from Jekyll Island, is that this insti­tu­tion was estab­lished with a very specific intent. It was to maintain control over the economy, essen­tially, to be able to extract value from the economy at will and to fund warfare, which is another aspect that the VJ talks about. The counter argument I make to this is; money is a tool, but the monop­o­liza­tion of money can only be used for one thing, and it’s only useful for reallo­cating wealth. It can’t add any value to the economy. You can print all the money in the world, but it doesn’t infuse the economy with any new produc­tive equip­ment or human time or anything of value.

It’s only useful for reallo­cating wealth from those that use the money to those that can produce the money to the monop­o­list. The example… I made this counter argument to this hedge fund manager in Europe. I said, “If I walk into a field and I point a gun into the sky and I fire a bullet and the bullet falls five miles away and it kills someone, did I kill that person?” Regard­less of my knowl­edge of where that bullet landed, it was my action that fired the bullet, caused it to fall five miles away and kill this person. My position there was that regard­less of if I under­stand what I am doing, I am inflicting this pain in reality. I do say that Jerome Powell is lying when he says that monetary policy has no connec­tion to wealth disparity whatso­ever, because he is lying.

I don’t know if he knows that he’s lying, but he’s lying because we all… the Bitcoin space, we know the Cantillon effect. We know how it works. The value of Bitcoin in all of this is that it actually oblit­er­ates the concept of monetary policy. It’s no longer a policy. It’s once again, a function of natural law. We have 21 million as this unshak­able motif that’s kind of set stone and no one can do anything about it. It’s put outside the reach of everyone forever. That’s how I like to think about it. It disre­gards the inten­tion­ality of the current gover­nors, but just focuses on the outcome, I guess, is my general point.

Parker Lewis:

Yeah. There’s two things there that I think… because I think we look at it the same way, where in one way, it’s like I don’t know whether there’s inten­tion­ality, but I know the conse­quence, and so there­fore, it’s their respon­si­bility. You can’t absolve culpa­bility just because you were ignorant. There’s two quotes that come to mind. It’s the Dragh. quote. I believe it’s Draghi. No, maybe it was Juncker, where he said… it was one of the two. Maybe it was John Paul Juncker who said “When things get serious, you have to lie.” Then the idea… I think it was a 2010 60 Minutes speech or inter­view where Bernanke went on to 60 minutes and he explained in this… made me think about this, one of the questions in the chart, where he said, “There is a myth that what it is we’re doing is printing money. We’re not printing money. The currency in circu­la­tion is not changing meaning­fully.”

That is an example of something that I look at and say, “He is either straight up inten­tion­ally lying or he’s being purpose­fully obfus­cating the truth or be highly disin­gen­uous at best,” because in truth, they weren’t printing money. They were creating digital dollar. They weren’t physi­cally printing dollar bills. The question in the chat, because I think sometimes people are overly pedantic is… I say to people, “When the Fed does QE, every dollar that is created is created by the Fed. Every dollar that is physi­cally printed via the printing press is printed by the treasury, but a dollar doesn’t exist in the world without it being created at the Fed first, which means a dollar can’t be printed at the treasury if the fed didn’t first create it.”

When I see things like Bernanke in 2010 saying, “We’re not printing money,” I’m saying, “There’s no other way to say it, but you are printing money. You’re just doing it digitally because we live in a digital world and the conse­quence is exactly the same.” Someone is “intel­li­gent” because he’s not actually intel­li­gent, would under­stand that because they are masters of what their monetary policy is. I do think that in certain times, I would look at people like Jerome Powell and I would say, “Okay, I think where we’ve gotten to the point where it’s a combi­na­tion of the Draggy or Yanker, sorry, whereas things have gotten so serious that he knows he has to lie.

I don’t think he knows the extent to which central banking creates insta­bility in the economy or extreme levels of inequality, but I bet that he would be willing to say that there is some role over the longterm, he’s probably not willing to admit, the extent of it. But he also realizes, this comes from another Bernanke quote, but it speaks to the psychology of the Fed, this was from a 2011 meeting during QE 2 where he said, “Look, I can under­stand that monetary policy isn’t the solution.” Again, not willing to agree that it’s the actual problem, but he says, “I’m willing to agree that monetary policy isn’t the solution, that it can’t solve struc­tural problems, and that struc­tural problems may exist in the under­lying economy and with fiscal policy, but we must do something. We must be pallia­tive.”

I think that when I think about that kind of psychology of the central banker, pulling through from direct quotes of Bernanke and for central bankers from Europe as well, it’s that they don’t believe that they are the primary source or they would never be willing to accept that they are the primary source of insta­bility, but they know to an extent that what they’re doing has conse­quences and they’re also seeing the corre­la­tion of extreme levels of inequality forming. They don’t under­stand the actual push and pull and the mecha­nism that causes it, but they know that there’s some connec­tion and they have to lie about it because in the most immediate term, their policy and the conse­quences of it is that it causes short term stability at the conse­quence of longterm volatility. It’s very high time prefer­ence thinking, but it’s that idea of, “If I do something now, I can put the Band-Aid on it and I can actually ‘solve’ the problem for a day or two or a quarter or two quarters.”

But they’re doing that at the conse­quence of the entire economy falling apart in the longterm. That’s something that they won’t be able to control. They know that they’re lying to an extent, they don’t know to what degree. But they’re doing it, say, because they think that in the short term, they’re actually helping, which one could make the argument, but only in the world where you are willing to trade the short term for the longterm, which I think most of us as we start to come to under­stand Bitcoin, where we’ve become much more, not under­standing of the conse­quences of short term thinking, but how if we were to think with that low time prefer­ence and think in terms of Bitcoin in gener­a­tions, that we certainly would never make the decisions that central bankers do today, sacri­ficing today and the youth for our future.

Robert Breedlove:

I agree. I actually think fiat currency is accurately described as a living lie. That’s how it began. The fact that we had a paper that was redeemable for gold, that was then only fraction­ally backed by gold, then eventu­ally not backed at all by gold. We consider that money is intended to be this final extin­guisher of debt and this medium of exchange. If it loses its rooting to what the market selected as money, that is by defin­i­tion, a lie. The market is naturally zeroing in on truth in the form of accurate prices, useful tools, and as I argue in my piece, individual compet­i­tive compe­tence of virtue. In that sense via currency, it is an actual lie. It was held out as one thing and it was substi­tuted for another. It was a money substi­tute that lost its ability to be substi­tuted for money because you now cannot redeem that for anything.

To the other point, even if it’s not perhaps liter­ately printed, that’s why I try to distin­guish between… I like to say money is something more like gold or Bitcoin, it’s a bearer asset that can actually extin­guish a debt. It was 100% asset and 0% liability when it’s trans­ferred to a counter­party. Currency, as I like to distin­guish it, is what is typically a deriv­a­tive of money. That could be partially backed or no reserve, like we have with fiat currency. When they say they’re not printing money, I think he is actually… I think the farthest point is being liter­ally pedantic, trying to say, “we’re not actually printing money. We’re just putting new entries into a database.” (Silence).

Brady Swenson:

I think we’ve got-

Robert Breedlove:

–It’s inher­ently a high time prefer­ence–

Brady Swenson:

We lost you for just about maybe 10 seconds there. But you’re back.

Robert Breedlove:

I was saying, when you actually think about lying itself, it is a high time prefer­ence activity. Typically, someone’s going to lie in the short run to avoid conse­quences. That may get them out of trouble or whatever it is to get by for the short run. But once you’ve put that lie into the universe and, say, someone else figures out you told this lie, then all of a sudden you have to tell another lie to cover that up. Before, you know it, this thing snowballs out of control. I think that’s kind of an analogy to what central banking is. They started out with this original lie, and now it’s just this whole temple of laws that’s built around it to try and preserve its integrity. It’s…

Brady Swenson:

Rob, you’re going to come back and I’m going to be talking. yeah. What we’re up saying here, Parker, is, I think, a really good point. It starts with the original sin, the original lie of the creation of the Federal Reserve, and it’s snowballed with every decision to kick the can down the road to solve what is deemed as an economic crisis in the short term with printing more money. But do these people… are they really… Okay, they spend a lot of time as well justi­fying all of these actions, justi­fying the lies as they go down. There’s this entire academic tradi­tion built up for a century around justi­fying those decisions now. Do you think… you were kind of getting at this earlier, do you think that there’s aware­ness or self aware­ness of this in the Fed or the central banks around the country that there is something wrong, but it’s too late now?

Parker Lewis:

I think there’s probably more aware­ness in the mega banks, in the JP Morgans, the Goldman Sachs, Citibanks of the world, and the CEOs or the leader­ship of those organi­za­tions. I think that they know what the game is, and I think that they play the Fed like a fiddle. I think that the people that work at the Fed, given the incen­tives or the trade offs, I think that they are more ideal­istic, driven by a version of utopia, where they can just pull strings and people can print money and they can get the outcomes that they want. I think about that because they’re mostly acade­mics.

Jerome Powell comes from the private sector, but if you look at Bernanke and Yellen, that most of these people are acade­mics and don’t operate in the real world and think that most of their world view is informed by that lack of real world experi­ence and living in the world of academia, but that, one of the things I would point out is, while… I don’t know if it’s been proven, one of the specu­la­tions of what happened when the repo market broke was that JP Morgan was moving a massive amount of reserves, essen­tially trans­fer­ring reserves to be in bonds and to be in treasuries.

They were basically recog­nizing that they were front running peewee from the Fed, and they did it for profit matters. You can say it’s rational from their perspec­tive, but that demon­strated an under­standing of cause and effect as it relates to their actions and what response would need to be. I think that when you look at the bailouts from 2008, when you look at what’s happening, response to the repo market breaking in September and then to what’s happened subse­quently with the global economic shut down with COVID, that it would be much more accurate to say that the big banks that benefit the most, that are the JP Morgans and the Goldman Sachs and the Credit Suisses and the Deutsche Banks, they under­stand how the strings are actually pulled more so than those at the Fed do, and that people at the fed probably don’t under­stand to what extent they’re being taken advan­tage for, it’s the tail wagging the dog.

I think that there is intent, but that’s probably shifted more to those that have been directly bailed out that have taken the risk that has caused moral hazard to form. That over time, those big banks know that, again, it’s the old give a mouse a cookie, if you know that you’ve been bailed out once, and the Fed tried to demon­strate their indepen­dence with Lehman Brothers and that didn’t work. And they had to bail out every­body else there­after. I think it’s just the poorly aligned incen­tive and the combi­na­tion of skin in the game or no skin in the game acade­mics that are pulling strings that have massive unintended conse­quences, and that those people don’t have to feel brunt of it. That they can continue to go on and their jobs are going to be protected while they’re basically throwing a massive monkey wrench in the entire economy over and over again by pursuing the same policy responses, just doing it in a bigger and bigger way.

Brady Swenson:

Rob, do you think that this was inten­tional at the begin­ning of the Federal Reserve? We learn in Creatures from Jekyll Island, it seems like this was… the creation of the Federal Reserve was achieved with full knowl­edge of the power that it would bestow upon the share­holders of the bank. Maybe those involved now… as you said, the stone ball has rolled down the mountain quite a ways. Maybe those evolve now have good inten­tions, but the original lie, was that an inten­tional one, do you think?

Robert Breedlove:

I don’t think there’s much question actually. The model of central baking had been tried in times past, and it had proven very effec­tive as an apparatus for theft, basically. It gives its gover­nors nearly unlim­ited power to do what they want. The other thing, if you just… what Charlie Munger say, “Show me the incen­tives and I’ll show you the outcome.” If you just really simply look at the incen­tives of a central bank. They’re a private organi­za­tion. They have share­holders, share­holders draw dividends, so they have an incen­tive to increase their balance sheet, to increase the dividend payout. As Parker said earlier, they have no account­ability to the customers, the users of dollars, because we have no say in the matter. They are full monopoly.

There’s no incen­tive for them to pay atten­tion to or respond to customer prefer­ences because we have no choice. We’re forced to use dollars. Their incen­tive is to lie, even if you don’t under­stand it per se, just follow the incen­tives. I would say either read The Creature from Jekyll Island, or there’s the abridged version, Dishonest Money. I don’t see how you could make an argument that it wasn’t set up inten­tion­ally. I mean, they knew what they were doing. These are not dumb people. These are some of the smartest people in the world, and they’re just people that have had greed, I guess, get the best of them, which is, back to Bitcoin, this individual pursuit of self interest is what got us to gold. People were basically trying to store their value in different things, via negativa, to use Talebain term, we landed on gold.

It was the thing that could that supply could be compro­mised the least and the most slowly and the most predictably. But then they figured out another way to build a layer on top of it, what we call central banking today, that re enabled this decep­tion through greed. But in Bitcoin world, its a set of unbreak­able rules where we actually trans­mute individual pursuit of self interest and greed into collec­tive security and market capital­iza­tion of the network. That’s how I look at it. That’s the big break­through is that Bitcoin is just a profoundly and more effec­tive system for channeling greed into something positive.

Brady Swenson:

That’s amazing. That’s what capitalism is supposed to be in its ideal form. In order for that ideal to come true, you need to have the basic compo­nent of that mecha­nism. The capitalist mecha­nism is money has to have that incen­tive at it’s core and not be able to be manip­u­lated. In that sense, is this the first time that the idea of capitalism could actually be tested in its ideal form?

Robert Breedlove:

I think one of Parker’s earlier points on the economy emerging from a standard­iza­tion to one money. It’s like when do we standardize under these proto­cols, we pick up so much more efficiency gains. That’s what an economy is. We’re econo­mizing our action collec­tively. Yeah, I think with money, we’ve just never had an unbreak­able rule set. The rules have always been shady and distorted and manip­u­lated, and different govern­ments fighting over who gets to set the rules. We’re currently living in the American empire. Yeah, the capitalism in its purest sense was simply not possible for Bitcoin to the point where we’re talking about this yesterday. Maybe we need a new name. Someone suggested overnism at one point, which I thought was pretty cool. But it’s definitely something different. It just shows you that Bitcoin will cause us to rewrite the history books and reframe our under­standing of economics.

Parker Lewis:

Maybe the way that I would frame it is that we’re not going to neces­sarily see capitalism truly for the first time. I think what we have today is far from a free market. It’s often, I think, aptly described as crony capitalism, but that free markets are the natural tendency of human beings trying to interact, in their own self-interest, naturally benefiting from cooper­a­tion. What I think we’re going to see now is that we’ve seen an ebb and flow and evolu­tions of that over time, and that it’s like gravity that. That people do… when they are working in their own self-interest, eft to their own devices and left alone, they will cooperate and that there will be positive sum outcomes rather than zero sum or negative sum outcomes.

That what Bitcoin is unmarking or freeing up or removing friction from a system that, at one time, was working far more efficiently than it is today, and that is possible of working today because that monetary system and because the commu­ni­ca­tion system has been co-opted and because it’s been manip­u­lated so much that what we’re going to be evolving towards is getting back to a place in time where we are all speaking the same language of value and that we never were truly doing that, but we were perfecting that over time. That was the evolu­tion of money and moving from one medium to another that one good nib and use as money in a certain local economy and as we’ve evolved, we’ve been perfecting what monetary mediums that we’ve been using to be able to access larger markets beyond just local economies.

That Bitcoin will be the true perfec­tion of that because it will be…when we think about something like gold, it’s something very similar to gold, but rather than it being a common standard of value, because there was a point in time where cold really was a global standard, but the mecha­nism by which gold was princi­pally commu­ni­cated, at least as it evolved and matured, was not directly through that medium. That what we will see is that the medium that is the standard of value is actually how we directly commu­ni­cate and interact with each other, that it will also be the method of payment and that that commu­ni­ca­tion and the commu­ni­ca­tion of infor­ma­tion will be much more direct.

When you combine that with the advance­ments of the internet, then we’ll be able to be able to commu­ni­cate not only in terms of value, but practi­cally speaking, connecting far more people in the world. When you do that, you have more people contributing to ideas and figuring out how to solve problems for other people. That the some of that economy is far greater than anything we will likely could possibly have seen before at this point in time.

Brady Swenson:

Yeah. Amazing.

Robert Breedlove:

I agree completely. I love the language of value. I guess you’d maybe call it an analogy, but I actually think it is a language. If we stop to consider Words that are part of language, they only have meaning as a categor­ical compar­a­tives, basically. We’re using words to compare and commu­ni­cate meaning. If you look up the defin­i­tion of a word, what do you find? You find more words such as that your under­standing of any one word is depen­dent on this context of under­standing of other words. This gets back to the logos, which I wrote some about in the piece, but logos is a Greek word that means ratio or word. If we consider that the logos could mean a word itself, but it could also mean a ratio, and that’s what prices are. These are exchange ratios denom­i­nated in money.

It’s like an economic telecom­mu­ni­ca­tion system. These are the two primary means of inter­per­sonal commu­ni­ca­tion, it’s words and prices. I think we learned this lesson in the 20th century that you can’t… Free speech is neces­sary for… The lesson we’re learning now is that also applies to prices in an economy. They must be left undis­torted. That when we try and manip­u­late the money supply, it’s almost as bad, almost as catastrophic as suppressing the freedom of speech. That’s a good way to look at it. Words are this tool we’re using the compare and commu­ni­cate meaning, and money is a tool we’re using the compare and commu­ni­cate value. If you disturb or distort either one of those media of commu­ni­ca­tion, you create havoc in the world.

Brady Swenson:

It’s like the tower of Babel story, but with money. You’re creating 300 different languages start to commu­ni­cate value around the world. It just makes things so much more ineffi­cient. Parker, in one of his pieces, talks about how Bitcoin guaran­tees inalien­able right, similar to the freedom of speech as it is guaran­teed in the consti­tu­tion of United States. But the idea that Bitcoin guaran­tees a monetary right. Parker, I think this fits in here. If you want to talk about that right. What right that Bitcoin guaran­tees to its users?

Parker Lewis:

Yeah. I’ve talked about this idea in a couple of different pieces, but one of the… I think my last piece, I took a tweet from Vitalik Buterin, the founder of Etherium, and he had a quote that said something along the lines of… the idea that you could have a fixed percentage of the entire world’s money supply for an indef­i­nite period of time sounds very oligarchic to him. I think that it was a really inter­esting tweet, not because what it says about Vitalik or about Etherium, but that is the argument that is made against a sound monetary standard, but it actually artic­u­late the reason and the power of a tool such as that. That if you flipped it around and you said, “Okay, what if every­body had access to that tool? What if the poorest people in the world could convert their time and energy into a form of money that could not be manip­u­lated and was fixing supply?” That levels the playing field with somebody like a Paul Tudor Jones, a billion­aire in New York that.

That somebody who is on the lower end of the economic spectrum in Argentina or Brazil or Nicaragua or wherever they may be, at the Bitcoin network level, every­body is treated equal. The substance of that is that whatever they choose to do in the world, whoever they are, wherever they are, they can contribute value that is inher­ently subjec­tive. That is one thing about money. That money is what allows us to take something that is inher­ently subjec­tive, like value, and be able to objec­tively measure it. That is what forms really the founda­tion of commu­ni­ca­tion system.

When I think about that and you say, “Hey, who would benefit most from leveling that playing field, and what are the conse­quences of this tool being avail­able to every­body?” That’s where it becomes… When I refer to it as an inalien­able right, when you think about it as at its very core, it’s people recog­nize that that money is solving an inner subjec­tive problem, and that there are benefits to trade special­iza­tion. That’s the idea. I saw somebody put in the comment that self-interest is not greed. It isn’t. Self-interest is “I’m figuring out how best to solve my own needs,” and the most effec­tive and efficient way to do that is to solve somebody else’s problems. if I do that and if every­body is thinking and doing that, not because we’re all utopias, that, that we actually will act in our own self interest by serving others.

But at that core, if I’m looking at that problem set and I need money as a tool to help me solve a problem, to work on my own self interest and to help others, that all I’m doing is I’m choosing to convert time and energy into a medium that will best capture value that will allow me to trade and get the benefit of that value that I’m creating today in the future from a wide range of people. What could be more funda­mental of a right than to convert that into a digital token? Why could anybody prevent me from choosing by force to say, “No, you have to take your time and put it into this month.” Because that’s the conse­quence. If someone were to say, “No, you can’t use Bitcoin,” they would essen­tially be saying, “You can’t convert your time and energy into a digital token.”

That the reverse side of that is, if you can’t do that, then you’re forcing me to say what? You’re going to say I have to put my time and energy into dollars? Because that is the reverse side of the coin. It is one of the most funda­mental rights just to say, “What are you allowed to convert time and energy into?” If you’re not allowed to convert that into money, then your most basic freedom and your ability to volun­tarily and peace­ably coordi­nate and cooperate with anybody else in your economy has suddenly been criti­cally impaired, I think is the core idea.

Robert Breedlove:

I think it’s a great point. I would add that it’s almost like this is… Bitcoin repre­sents the discovery of the freedom of speech in a lot of ways, because we have freedom of speech, again, the word, verbal version, but we haven’t had this freedom of speech in “Where do we store our time energy and how do we commu­ni­cate it?” That’s always been distorted histor­i­cally. It’s like the vote that actually matters too. We think, in Western society, “Oh, I go and vote for this politi­cian. He repre­sents my inter­ests and that’s how we create change or stability in society.” But that’s not really what matters. The vote that matters is how you spend your money. That selec­tion has just histor­i­cally been really narrow for people. We haven’t had a sound store value because it was antithet­ical to the fiat currency system.

For the first time, you can consider Bitcoin as the money through which we can commu­ni­cate our prefer­ences and a voice that cannot be distorted or muted. Politi­cians and govern­ments and central banks in the world are so aware of this asset because it’s a compet­i­tive threat that’s running counter­vailing to their opera­tion. Their opera­tion is to maintain this narra­tive, this false narra­tive and continue to have people operating in their system and having a lack of options, whereas Bitcoin gives you free options to express yourself.

Another way to think about this is… there’s was an old clinical psychol­o­gist named Jean Piaget. He talks about the differ­ence between equili­brated struc­tures and disequi­li­brated struc­tures. An equili­brated struc­ture is essen­tially a volun­tary game. It’s a game that people want to play because of their own self interest. A disequi­li­brated struc­ture is something where the rules are imposed. You have to play by these rules because I said so, because I have a gun or whatever. He made the point that, over time, the equili­brated struc­ture always out competes the disequi­li­brated struc­ture because you have to enforce the disequi­li­brated struc­ture. There is cost to enforcing these rules, to protecting the turf, to suppressing compe­ti­tion, such that over time, as Parker kind of said, people’s individual self-inter­ests becomes like gravity. They just gravi­tate towards this volun­tary game. That’s what Bitcoin is. It’s a volun­tary game outcom­peting this invol­un­tary system of stuff that we call central banking.

Brady Swenson:

It disin­ter­me­di­ating every­thing. If the internet and software and digital networks and proto­cols are disin­ter­me­di­ating industry after industry, this is the ultimate purpose of the internet. It’s both guaran­teeing to a much larger extent than a state ever could. A freedom of speech. It’s much easier for me to express myself if I’m in an author­i­tarian state and get it out over the internet than it would be other­wise. But then ultimately we have the language of value here being volun­tarily expressed over this medium as well. As Rob puts it, it’s zero to one moment, in your piece, The Bitcoin and The Number Zero, that it’s solitary moment, a singular moment in human history and the inven­tion of absolute scarcity. Let’s dive into that idea a little bit. I’d love to hear you two bat it back and forth. The idea that you can only create absolute scarcity once. Rob, you want to kick it off?

Robert Breedlove:

Yeah, sure. I argue that the inven­tion of Bitcoin… behind that inven­tion is the discovery of absolute scarcity for money. I speci­fied the money because you can create these crypto tokens where they fix supply that maybe are repre­sen­ta­tive of something else, but I think in the sphere of money that can only really happen once because… The case study I use there is Bitcoin Cash. We had this ideolog­ical divide that osten­sibly larger block sizes were needed for higher trans­ac­tion throughput at the base layer, was Bitcoin Cash’s is argument. Bitcoin Core was essen­tially saying that we needed to maintain small blocks to maximize decen­tral­iza­tion of the protocol, which protects its censor­ship resis­tant quali­ties. There was a divide. There was a divide at the social layer for Bitcoin. We’ve seen that play out over the past few years.

We’ve seen the market capital­iza­tion in Bitcoin terms of Bitcoin Cash collapse. As a student of the markets, I think that is an empir­ical point that the absolute scarce money supply of Bitcoin is a onetime discovery. The only way to really compete with it at this point is to fork it. We’ve seen that fork play out. It’s already happened. Bitcoin Cash is an abject failure. When you step back also to consider that money is just a single purpose technology, again, it’s just a tool for moving value across time and space and its value is supported by its liquidity and network effects, that it has this centripetal effect towards one standard. Again, back to the earlier point, the more standard­iza­tion we add, the economic efficiency that we gain. Given that all people need to trade globally, we only need one money.

In that general respect, I think absolute scarcity is perfect scarcity. Even negative scarcity wouldn’t make sense for reasons that I outline. It would reintro­duce polit­ical vectors as to who benefits from the defla­tionary monetary policy. Any infla­tion doesn’t make sense because it’s just, again, who benefits from it? Zero is this perfect showing point for the scarcity of money.

Parker Lewis:

Yeah. I think ne of the ideas…I can’t remember the specific quote, but I remember one of the ideas that I came away from The Number Zero and Bitcoin was the idea… something connected as I was reading it where there’s no energy leaking outside the system. I think it was when you were talking about the concepts of infinity and zero. There was just something about it. It’s just weird the way, for some reason, certain things connect, and you could say the same thing to 10 different people and the 11th person would inter­pret it differ­ently. But this idea with a fine nightly scarce form of money and in zero terminal infla­tion, that the conse­quence of that is that no energy escapes out of the system.

When I was thinking about that idea and trying to relate it in… or at least how I was thinking about it in my latest piece, it’s this idea that if you… Because within again, academic circles and intel­lec­tual economic debates, people argue for the benefit of being able to print money, to ease finan­cial condi­tions and just brag to man, but if you actually start to under­stand what the role of money is, and that it actually is a commu­ni­ca­tion system, and it’s a way that we objec­tify what is a subjec­tive concept of value, and that the goal that you’re trying to facil­i­tate through money is to be able to commu­ni­cate with others and convert the value that you create into a broad set of goods created and services created by other people to actually act in your own self interest.

That in that world, you’ve actually incen­tivized to commu­ni­cate with more and more people. That if there’s a wider range of choice of things that you could put poten­tially convert your own time and energy and into the time of energy and others, and that monetary network has it grows actually benefits you. That thinking about that world… That the actual amount of money is the nominal amount is not meaningful. That what we’re actually ascer­taining from it is the exchange ratios of how much individ­u­ally and in aggre­gate, what people value and how things are valuable relative to others. That money is that tool that says, “Hey, how many cars do I need to produce to buy a house or how many apples do I need to sell to buy an iPhone.”

That at that root level, all trying to learn through a monetary medium are any number of relative exchange ratios of various different goods and services, and that if you have that fine scarce form of money, no energy is leaking out of the system and more perfect infor­ma­tion is being commu­ni­cated. That connecting it back into this idea that if you are going to get money in the Bitcoin world, it has to come, again, not in 100% percent of the time, but that the best way to do that is by… think about 21 million Bitcoin, no more Bitcoin can be graded. I have zero. How am I going to get it?

There’s a lot of people in the world that will have Bitcoin, and I have to deliver value to one of them. That in that world, the positive exter­nal­i­ties of the least path of resis­tance to getting money that opens you up to this various range of choice for all these people that can contribute to a monetary network is, at the incep­tion point, deliv­ering value to others. Producing for others more than you consume so that you can have savings.

Then when you compare that vis a vis the current system, which is, if you look since 2008, 80% of the dollars that exist in the world have been created by the Fed in the last 12 years. That in the dollar system, you can either get money by deliv­ering values to others, or by and large, 80% of the money that exists, you can either get it through deliv­ering value or by the Fed giving you more money, if you are one of the people that are so lucky to be in that seat where the Fed gives you money. Which system has better incen­tives and which system is more prone to have better outcomes? The one of which in order to get money, overwhelming respect, the easiest way to do that would be to deliver value to others in return for that money or to have a co-opted system where one in 10 or one in 20 dollars that exist over time, will have been earned via actually deliv­ering value to others. That system inher­ently becomes more corrupt than the one that we’re shifting towards.

Brady Swenson:

Yeah. Yeah.

Robert Breedlove:

I think that’s a great point. The incen­tive system is either guiding people towards work or towards stuffed. If you’re trying to get near the fiat currency spigot, you’re basically benefiting from theft via infla­tion. Whereas if you’re living in a society that the money can’t be artifi­cially increased, you have to work and add value to our money. Another way to maybe think about this is that all online market value is driven by scarcity. Every­thing is trading at a ratio to every­thing else. Scarcity itself is just a relative concept. It’s just a relative to, “This good is more scarce than this good.” At the bottom of that really is the scarcity of time. The time or energy neces­sary to produce these things that are relatively scarce. If we see that, that scarcity is relative, all things trade as a ratio to all of the things, the most tradable thing in any economy is money. A money with a perfect scarcity is by defin­i­tion, the most scarce and valuable thing.

When you come to see scarcity as the bedrock of market value, then I think it helps you see absolute scarcity as the perfected state of money in a way. To get into the Taleb concept of a Wittgen­stein’s Ruler. It says, “If you’re measuring a table but you can’t trust the dimen­sions of the ruler, you’re not sure if you’re measuring the table or measuring the ruler.” You need a money, a fixed frame of refer­ence that does not bend… the supply doesn’t expand or contract based on economic activity. It becomes this absolute unit of measure­ment for valua­tions in the real economy. In that sense, I think… that is Bitcoin’s center of gravity is that it’s that perfectly scarce money. The incen­tives just cause people to collapse into it over time.

Brady Swenson:

Let’s talk about that value though. The differ­ence between value in a Bitcoin world and a fiat world. All right. Parker, I’m going to shoot this one at you. We have ‘value’ accrued, and we account for it in various ways. That value includes all kinds of rehypoth­e­cated money. The unknown question of whether or not there’s going to be more money printed at any given moment. All of these finan­cially engineered methods of creating value, take that away from the on the base level, in a Bitcoin world, how much of this value that’s out there now is actually real? If we move to a Bitcoin world, what does that mean? How does that value deflate into the new economy? What’s going to happen there? How does it play out?

Parker Lewis:

Yeah. I think that that obviously is impos­sible to predict, but I think I’ll maybe shine some light in terms of how I think about it concep­tu­ally, about how I think direc­tion­ally how a Bitcoin economy would differ from the legacy economy, and then some key struc­tural differ­ences. I think one of the concepts that sits at the core of it is that this concept that Robert was talking about earlier, which is that when we think about the opera­tion of printing money, whether it’s the treasury liter­ally printing money or the Fed digitally creating dollars and trans­fer­ring them around the finan­cial system, it is that all of that finan­cial­iza­tion and money… starting at money creation, it’s sending false signals through the market.

The way that I would relate what that means is by sending a false price signal. Essen­tially by printing money, every signal that’s being sent through the pricing system becomes manip­u­lated and ultimately becomes false in the sense that it would be different and the price system and the local prices throughout the economy would inher­ently be different if not for those opera­tions. That the economy is set on a different course as a direct result of them. That if you start out sending false signals, then the natural result of that is that in order to sustain the direc­tion, you have to continue to do that. The entire incen­tives that underpin the economy become manip­u­lated and distorted to the extent that they have to be perpet­u­ally manip­u­lated in order to sustain any semblance of quote unquote ‘stability.’

When you change those incen­tives, and when I think about the current economy and what it looks like, today the banking system has become the epicenter and the bleeding part economies all over the world. Somebody would look at that and say, “Hey, that doesn’t seem like it’s a very noteworthy comment to make,” but the reality is that it wouldn’t exist that way if not for central banking and if not for the Fed contin­uing to print and print more money each time the credit system has expanded and then attempts to contract or even collapse. The conse­quences of that is rather than banking being one sector within an economy that provides a service to all the others, it’s really shifted to be the center such that the Fed and central bankers and acade­mics all over the place come to believe that if the banking system went away, that the world would cease to exist.

They think that way because it has tenta­cles in to the entire real economy. It’s like it shifted from… if you were to think about horizon­tally, all of these different economy servicing each other, banking, telecom­mu­ni­ca­tions, health­care, agricul­ture, energy, all being inter­re­lated and servicing each other. Money and banking, because we’ve shifted over to the alloca­tion of resources and the economy being facil­i­tated directly through the monetary medium to a world where infor­ma­tion is commu­ni­cated and resources are allocated through the function of credit. That through that process, and it’s happened directly as a conse­quence of the Fed, that the banking sector, rather than just being one sector of many has become liter­ally the epicenter that all other… The successful, at least today on a day to day basis, successful opera­tion of any business is depen­dent on the banking sector either to move money around, not neces­sarily through credit, through debit, but also through the function of credit.

That the core differ­ence in the Bitcoin economy, I think, will be that banking sector will shift from being the epicenter of the economy to being just one segment of the economy that is not more or less impor­tant than any others. It will likely be less impor­tant, say, than health­care, energy, telecom­mu­ni­ca­tions, whatever it may be, the things that produce real value in the role, their status will be raised to the actual… those being what is truly deliv­ering value. They won’t be depen­dent on the banking system. The banking system will only be valued to the extent that they truly deliver value in an unmanip­u­lated world, not in one where the system has become rigged to shift it such that every other economic sector is depen­dent on banking.

I think that is the core conse­quence. That the result of what that looks like from there is very impos­sible to predict and say. There still will be credit. There still will be stock exchanges. There still will be stocks. But that business and that sector of the economy will be far smaller as a conse­quence. People will not need to funnel through it in order to access other points of the economy. There will be more direct commu­ni­ca­tion between telecom sectors, energy sectors, health­care, agricul­ture.

Brady Swenson:

Yeah. What happens to all that value, man? To me, I feel like, as I’m learning about this stuff, that there’s just this layer, like you’re saying, of real value. Value that’s being produced that people want to consume, there­fore, it has value. Then there’s just the whole layer of just vapor value that doesn’t actually exist, except for in ledgers and databases in this middleman industry of money changing industry that they’ve sort of built on this house of cards. What happens to all of that? Who’s going to lose in the popping of that entry? Is it mostly the finan­cial industry that’s out or are their tenta­cles really going to cause damage in the real… the businesses creating real value to?

Parker Lewis:

Well, I think that there’s a reality that every­body in the world is currently operating on manip­u­lated price signals, and that we’re all going to have to bear, to varying different degrees, the conse­quences of easy money and monetary mediums all over the world being printed to the extent that eventu­ally the forms of money that we’re all relying on today will eventu­ally fail. I believe that Bitcoin will be the currency that practi­cally every­body in the world is using to fuel their economy. I think that the short answer to that question is every­body… When we think about the value of… the value, there’s a $250 trillion global credit system and that a lot of that value is going to be proven to be impaired. On a direct basis, I’d say, the people that overwhelm­ingly hold those assets are going to figure out that nobody else values them and that the price signal of the par value of those bonds or whatever they’re currently trading at will prove to be errantly wrong.

When I say wrong, it’s thinking about this idea of there will only be 21 million Bitcoin, and all it’s capturing is a more accurate view of what people value. Today it’s the same thing. There’s 250 trillion of a global credit system and it costs $40,000 to go buy a car. How much do we value the car rather than holding a debt instru­ment? There will be some degra­da­tion of value in the aggre­gate because there will be some insta­bility as these large currency and monetary systems continue to break down. That’s essen­tially what we see during the COVID economic shutdown. There’s real conse­quences to shutting down an entire economy. That these things aren’t static things that exist in the world. That all economic systems and all local economies are so inter­de­pen­dent, and that if you throw a monkey wrench in one, it’s going to have a ripple effect into others.

When economy start to break down because money starts to break down, the quintes­sen­tial example is Venezuela. Who lost the most there? Every­body lost. Every­body loses by economic insta­bility and every­body gains in the end of the day by economic stability. That will actually be fostered and improved upon through the use of a more stable form of money. But that there’s probably going to be some turbu­lence between then and now where we’re going to have to probably feel some pain in aggre­gate, almost certainly. But at the other side, Bitcoin repre­sents that anchor or rock that allows us to bootstrap and pull ourselves out of it, because if not, then the world would go the way of Venezuela, essen­tially.

Brady Swenson:

This is why you want to own real assets right now. Rob, any thoughts there before I move on to one more question for you?

Robert Breedlove:

Yeah. I thought that’s a great point. Money, you can consider it as the base layer protocol for an economy. It’s what we’re using to facil­i­tate all trans­ac­tions. If that base layer is compro­mised, then the scope of trade is reduced and trade is what gener­ates wealth. Me doing what I do best you’re doing what you do best, all of us trading. That’s how we accom­plish greater results with the same or less efforts. That’s the root of produc­tivity and compar­a­tive advan­tage, if you will. I like to think that in this transi­tion, we’ll actually go back towards the original functions of banking, where today we’re in this crazy world where market prices have become more of a function of monetary policy than supply and demand, because again, price signals are totally disrupted.

But I think we’ll go back to where a bank essen­tially provides two functions, which were custody. They were actually custodying money and other assets, and they were doing maturity matching. They were time log depos­i­tors’ savings and use those to lend out and do a credit analysis on invest­ments. You have a customer keeping their savings in a bank in what we would call maybe a CD today that has a one-year time lock. They get paid 5%. The bank turns out and loans that money out because savings is the basis of invest­ment. They loan that money out at say seven or 8%, and they net the differ­ence. Bank was providing this custody and maturity matching function. That’s what I think we’ll get back to providing on a free market.

Another thing to think about is if gold itself had been… if we were able to secure gold cheaply, so we didn’t need to centralize in vaults to pick up that economy of scale, and if we can transmit gold digitally, which is basically what Bitcoin is, there would be no central bank, basically. The central bank was devel­oped on the short­com­ings of gold. I think Bitcoin is removing those short­com­ings is another way to look at it, elimi­nating central banking. There’s just no need for it because it resolves the short­com­ings of gold. The thing I see on the back of that is a return to value investing, where money as a claim on the savings of society at full market penetra­tion would tend to appre­ciate year over year in line with savings growth or produc­tivity growth. Fluctu­ating with demand, of course, but say it’s the global economy is growing at two to 5% per year. That’s what money would tend to appre­ciate as, and that would be your bench­mark rate for investing.

You would only allocate into projects that had a prospec­tive return higher than that bench­mark rate. Whereas today you have to put your money anywhere except fiat currency to protect it. That leads to all this capital misal­lo­ca­tion, the unicorns, the exacer­ba­tion of the boom/bust cycle. All of these things we get away from, I think, on a Bitcoin center.

Brady Swenson:

I’m mindful of time. Can you guys hang out for a little bit longer or do you need to jet? This is the end of our sched­uled time here.

Robert Breedlove:

I’ve got about 15 more minutes.

Parker Lewis:

Yeah, I have until 2:30 pm.

Brady Swenson:

Okay, cool. All right. This is just an idea that came up when I was going through you guys’ pieces. I thought it was inter­esting question. Just a prompt to get some thoughts from you guys’ brains. Rob has this quote in his piece, The Number Zero and Bitcoin, and it’s “Zero is the fulcrum between real and imagi­nary number planes.” All right. “It implies then that Bitcoin is the fulcrum between the physical and digital planes.” Rob, you can get this one off. Do you think that first of all… first of all, it’s two levels there. They sound like they might be the same question, but I think they’re a little different. Do you think digital scarcity is possible without an anchor in physical reality, and does absolute scarcity require a combi­na­tion of digital and physical planes?

Robert Breedlove:

Digital scarcity, to my knowl­edge, is not possible. It’s not possible to provide assur­ance of supply limita­tion without some form of energy expen­di­ture. I think to have digital or absolute scarcity, you have to have a connec­tion to physical reality, to thermo­dy­namic reality via an expen­di­ture of energy. What was the second part of the question?

Brady Swenson:

Do you think absolute scarcity requires a combi­na­tion of digital and physical planes? Do you think it would be even possible without humanity living in both the digital and physical planes now?

Robert Breedlove:

Yeah, I don’t. I wrote about this in the piece that how could you guarantee the supply of anything physi­cally? It’s just not possible because we can always create more of anything. It’s just kind of a function of time. Even gold, which was the best tool for mapping the scarcity of time and energy that money’s intended to, if you could, all of a sudden, make everyone go mine gold, we could increase in supply a lot more quickly. There’s something special about Bitcoin existing in the non corpo­real infor­ma­tional domain that we can estab­lish this consensus every 10 minutes that it’s still, the same amount, the supply schedule is still being executed as it’s laid out and there’s still 21 million supply cap. I don’t think that’s possible without the constant iterating digital consensus. I don’t see how you could do that without that.

Brady Swenson:

What about the concept itself? The concept of absolute scarcity. Does that even exist in the natural world? Can that concept exist? Is this a new idea that we’ve been presented with? I guess this is what you’re saying with The Number Zero and Bitcoin. The idea of absolute scarcity is completely novel to human thought.

Robert Breedlove:

Yeah. Here’s maybe another way to think about it. Absolute scarcity exists before Bitcoin. It’s either in the form of time, which is quite myste­rious, or thermo­dy­namics and the law of conser­va­tion of energy mass. Energy cannot be created nor destroyed in the universe. I think that’s maybe another good way to look at Bitcoin is that it is a monetary technology that for the first time, perfectly maps on to the absolute scarcity of time or energy in the universe. That’s what we’re treating here. We’re treating our time and energy through money. If the medium doesn’t repre­sent the substance with high fidelity, which in the case of Bitcoin, it’s perfect fidelity, then signal gets lost and there’s room for distor­tion. I think in that way that, yes, it is a concept that exists prior to man, like the law of thermal dynamics have been here way before we have been here, but we have now figured out this protocol that maps on to these laws. The other inter­esting parallel here is, you know the old saying, “There’s no free lunch in the universe.”

Robert Breedlove:

That comes from thermo­dy­namics. Thermo­dy­namics are the physical laws that we cannot break. That’s the law of physics that we can’t manip­u­late or change. By mapping a monetary system onto that, we have devel­oped this unbreak­able set of rules for money that we call Bitcoin. That’s where, in the grand scien­tific philo­soph­ical sense, I think it’s just… I don’t like to use the word inevitable, but as close to inevitable as you can get, because it’s so perfectly maps onto the funda­mental nature of reality that how do you escape it?

Brady Swenson:

Parker, you’ve written a whole piece about this, Bitcoin being inevitable. I know where you stand on that subject, but do you have any thoughts about the special nature of the relation­ships between the physical world and the digital world for Bitcoin as a money and as an idea?

Parker Lewis:

Yeah. I definitely have some ideas. I would say that both Robert and then one of the co-founders here at Unchained, Dhruv Bansal, if you really want to get cosmic, you should get Dhruv on and he could start to really dig into these subjects better than I could. But I do think, in short, and I don’t want to go on a long, tangent, but I think that the short answer, or at least my perspec­tive is there does need to be a connec­tion between the physical world and the digital world in order for that absolute or finite scarcity to exist. Yes, the only way that absolute scarcity in the sense that we’re describing it can exist is that it exists in a digital form because I think that, to Robert’s point, one of the ideas of what we saw over millennia humans constantly searching for better and better forms of this tool that we refer to as money.

That goal had been that standard. That in the physical world, yes, there is a finite amount of gold, but from a practical appli­ca­tion, our ability to use it and to find more, that it practi­cally is not finite. That when we combine the… anchoring this digital form of money in the real world through energy expen­di­ture and being able to prove that work and the energy has been consumed, and that’s the function by which this digital form of money moves, that when you combine that with the proper­ties that only something digital can have, and the key distinc­tions being that it can be trans­mitted over a commu­ni­ca­tion channel and that it can be easily divided and moved at very low costs, that is something that can exist merely in the physical world.

That when you create that link and create that digital form factor of it, that it actually causes us to stop searching for other forms of money. That we’ve, in the current itera­tion, truly perfected it and reached that point where once we accept that more money can’t be derived, that we actually stop fulfilling the unpro­duc­tive activity or pursuing the unpro­duc­tive activity of trying to print more money, which essen­tially is, I think, something that people inevitably attempt to pursue.

They try gold with fool’s gold and dollars with finan­cial engineering. That people, just by their very nature, are incented to try to create money out of thin air. They want the free lunch, but if we have live in this new reality where people accept that it is impos­sible to do this and that the incen­tives all around because it is in the form factor of being digital and because we don’t need repre­sen­ta­tive technology, like the dollars that helped solve various limita­tions of gold, that people will actually stop the pursuit of printing more and more money. That is really what creates this finite and absolute scarcity is that we all agree that more can’t be created so we can get on with our lives and actually doing things that other people value.

Brady Swenson:

Love it man. Thank you guys so much. This is our episode with the Bitcoin philoso­phers. This is the moniker that we’re giving you guys. I hope it sticks because I think it’s pretty cool. Rob, thanks so much for your time, man. Parker, I appre­ciate it.

Parker Lewis:

Yeah, enjoyed it guys.

Robert Breedlove:

Thanks for anything, Parker.

Brady Swenson:

We’ll sign off. Go to swambitcoin.com/breedlove. You’ll get $10 of free Bitcoin dropped to your account. You can support Rob’s work. You can also grab your own Swan Force ref link at swanbitcoin.com/enlist. That’s this week. See you next week when we have Danielle DiMartino Booth and Michael Saylor, Giga Chad himself, Michael Saylor. Danielle and Michael will be together for the first hour, and we’ll be talking about macro­eco­nomics, Fed policy, how it affects businesses, and running a corpo­ra­tion in America. The last half hour, it’ll just be one on one with me and Michael Saylor. That should be a fantastic fire episode. So stay tuned for next week. Thanks all.

Past Episodes

Episode 8 –Andy Edstrom and Ansel Linder

Episode 9 –Rockstar Devel­oper and Jeremy Rubin

Episode 10 – Bitcoin TINA and CK Snarks

Episode 11– Gigi and Knut Svanholm

Episode 12 –Adam Back and Preston Pysh

Episode 13 –Alex Gladstein and Matt Odell

Episode 14 –Robert Breedlove and Tuur Demeester

Episode 15 –Isaiah Jackson and Max Keiser

Episode 16 –Gigi and Udi Wertheimer

Episode 17 –Aleks Svetski and Jimmy Song

Episode 18 –Stephan Livera and Marty Bent

Episode 19 –Mark Moss and Ben Prentice

Episode 20 –Samson Mow and Parker Lewis

Episode 21–Lyn Alden and Jeff Booth

Episode 22– Robert Breedlove and Cory Klipp­sten

Episode 23 — Saifedean Ammous and George Gammon

Episode 24 –Jameson Lopp and Eric Martin­dale

Episode 25 –Preston Pysh and Andy Edstrom

Episode 26 –Lyn Alden and Nic Carter

Episode 27 — Erik Townsend and Yan Pritzker

Episode 28 — Max Keiser and Tone Vays

Episode 29 –Preston Pysh and Andy Edstrom

Episode 30–Raoul Pal and Vijay Boyapati

Episode 31–Dan Tapiero and Dan Matuszewski


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The Number Zero and Bitcoin –Robert’s Writing

An Open Letter to Ray Dalio –Robert’s Writing

Masters and Slaves of Money –Robert’s Writing

Robert Breedlove

Breedlove on Linkedin

Breedlove on Twitter

Breedlove on Medium

The Number Zero and Bitcoin –Robert’s Writing

An Open Letter to Ray Dalio –Robert’s Writing

Masters and Slaves of Money –Robert’s Writing

This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. Swan Bitcoin is the easiest way to buy Bitcoin using your bank account automatically every week or month, starting with as little as $10. Sign up or learn more here.

Brady Swenson

Brady is the Head of Education at Swan Bitcoin, the best place to buy Bitcoin with easy recurring purchases straight from your bank account. Brady also hosts Citizen Bitcoin, a podcast focused on documenting his journey learning Bitcoin, featuring some of the biggest names in the Bitcoin world.

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