WEBVTT - Lyn Alden Makes the Case for Bitcoin, Explains Why Money is Falling Behind the Times 0:00:00.240 --> 0:00:03.200 Hello, Maren talks Money Listeners. Just before we get to 0:00:03.240 --> 0:00:05.160 this week's exciting episode, I want to tell you about 0:00:05.160 --> 0:00:07.640 my column this week. It's out on Bloomberg dot com. 0:00:07.680 --> 0:00:10.400 This week I suggest a solution to the UK housing shortage, 0:00:10.400 --> 0:00:12.480 and boy do we need one. And the idea is 0:00:12.480 --> 0:00:14.840 that we should find ways for the over sixty five 0:00:14.960 --> 0:00:17.400 to step off the housing ladder so that more young 0:00:17.440 --> 0:00:21.240 people can step on. That involves planning change, it involves focus, 0:00:21.480 --> 0:00:25.000 and involves buy in from growth groups, but it is possible. 0:00:25.200 --> 0:00:26.880 Be sure to check it out at bloomberg dot com, 0:00:26.920 --> 0:00:29.080 slash wealth or search for my name. Of course, you 0:00:29.080 --> 0:00:32.120 can also find columns from Bloomberg's many other brilliant columnists, 0:00:32.120 --> 0:00:34.360 and be sure to subscribe to Bloomberg for access to 0:00:34.440 --> 0:00:42.880 insightful stories, data videos, podcasts, and much more. John, ma'am John, 0:00:42.920 --> 0:00:45.760 does anyone except for me have off youve advice like 0:00:45.840 --> 0:00:47.159 financial advice. 0:00:48.760 --> 0:00:52.879 Not financial advice nor now plenty of life advice, But 0:00:54.240 --> 0:00:54.680 we'll come. 0:00:54.560 --> 0:00:55.240 Back to that later. 0:00:55.640 --> 0:01:01.280 Offline, did you think you are paying anybody to offer 0:01:01.360 --> 0:01:03.080 you advice that you aren't getting? 0:01:04.120 --> 0:01:07.720 No? No, well thanks, and. 0:01:07.720 --> 0:01:08.840 All a lot of other people are. 0:01:11.080 --> 0:01:14.280 So this week we've had or were should we say 0:01:14.400 --> 0:01:16.759 were This week we've had results out from Saint James Place, 0:01:16.760 --> 0:01:17.839 and boy they've been a shocker. 0:01:17.840 --> 0:01:22.360 I'm sure you've seen them. Everything is lower, cashprop. 0:01:22.040 --> 0:01:24.440 Is a slightly lower anyway, but that's entirely overshadowed by 0:01:24.440 --> 0:01:26.840 the provisions. They've taken a pvision of four hundred and 0:01:26.920 --> 0:01:30.840 twenty six million pounds which they say is linked to 0:01:30.920 --> 0:01:35.119 evidencing and delivery of client servicing. I they can't prove 0:01:35.160 --> 0:01:38.480 that they have been providing clients with the advice that 0:01:38.480 --> 0:01:40.720 they should have been gotting on the ongoing service they 0:01:40.760 --> 0:01:42.480 should have been getting, and they may have to pay 0:01:42.640 --> 0:01:45.840 an awful lot of them back. It's absolutely huge. So 0:01:45.880 --> 0:01:48.520 the share price fell, we're talking, by the way, everybody. 0:01:48.560 --> 0:01:51.080 On Thursday the twenty eighth, the share price fell around 0:01:51.080 --> 0:01:52.880 thirty percent first thing this morning. Is back up a 0:01:52.920 --> 0:01:54.960 little bit now, but it is still down over one 0:01:55.040 --> 0:01:57.760 year sixty two percent, and that is a direct result 0:01:58.080 --> 0:02:02.680 of the regulatory authority starting to look at what represents 0:02:02.840 --> 0:02:05.760 value in the financial services industry. So a lot of 0:02:05.800 --> 0:02:07.320 people will get a night little bit of money. It's 0:02:07.320 --> 0:02:09.680 a bit like the cars where everyone didn't get quite 0:02:09.720 --> 0:02:11.480 what they're expecting from their interest rates and may not 0:02:11.560 --> 0:02:13.600 get a pile of money back. But do you know 0:02:13.639 --> 0:02:15.560 what I want to talk about when it comes to 0:02:15.560 --> 0:02:18.000 Saint James's Place is not so much the advice that 0:02:18.040 --> 0:02:20.239 people weren't getting, thought they might be getting, didn't know 0:02:20.280 --> 0:02:20.880 they were paying for. 0:02:21.040 --> 0:02:24.640 Or whatever it was. It's ESG because I like to 0:02:24.639 --> 0:02:26.080 bring a lot of stuff back to ESG. 0:02:26.600 --> 0:02:30.920 Now, yeah, I have had a look at Saint James 0:02:30.919 --> 0:02:36.440 Place ESG risk ratings and here we are on Sustainalytics 0:02:36.960 --> 0:02:41.360 and the ESG rating for Saint James Place is eighteen 0:02:41.520 --> 0:02:45.880 point six and that is considered to be low risk. 0:02:46.280 --> 0:02:48.919 So if we look, you can be negligible on zero 0:02:48.960 --> 0:02:51.800 to ten and at medium twenty to thirty, high thirty 0:02:51.840 --> 0:02:53.400 to forty, and severe forty. 0:02:53.880 --> 0:02:55.600 Now, if you were. 0:02:55.840 --> 0:02:59.600 An investor fund manager who invested with an ESG overlay 0:03:01.480 --> 0:03:04.320 and you health in James's Place, which I think some do, 0:03:05.160 --> 0:03:09.560 would you have fulfilled your brief even though the company 0:03:09.600 --> 0:03:13.959 has technically rated low risk for ESG purposes, I would say, 0:03:14.000 --> 0:03:15.840 and I'd like to hear your view on this, that 0:03:15.919 --> 0:03:19.919 for s and G purposes, this was a very high 0:03:20.040 --> 0:03:21.240 risk stop to hold. 0:03:23.960 --> 0:03:27.400 I mean, I think you're absolutely right. I think that 0:03:27.720 --> 0:03:32.520 anyone who read the papers, the financial bits of the papers, 0:03:32.600 --> 0:03:36.480 including no very very mainstream, high profile newspapers the Sunday Times, 0:03:36.480 --> 0:03:37.960 did a lot of good work on this. From what 0:03:38.000 --> 0:03:40.480 I remember, they would have realized that there was at 0:03:40.480 --> 0:03:44.720 the very least some controversy around Saint James's Place and 0:03:44.760 --> 0:03:48.120 the fees that it was charging and exactly how that 0:03:48.160 --> 0:03:51.240 fitted in with the FCA's overall view of how customers 0:03:51.240 --> 0:03:53.200 should be treated, and that's been saying that in the 0:03:53.200 --> 0:03:57.080 most diplomatic way possible. So yeah, I think if they 0:03:57.080 --> 0:03:59.800 had actually been doing any other than box ticking, then 0:04:00.040 --> 0:04:02.800 they should have realized that. I do think it also 0:04:02.880 --> 0:04:08.600 points to the fact that grouping ES and G it's 0:04:08.680 --> 0:04:11.320 kind of a mish mash of compute bollocks. If I'd 0:04:11.360 --> 0:04:14.680 allowed to say that, you know, it's like, as far 0:04:14.720 --> 0:04:17.120 as I can see, the E is the bit that 0:04:18.080 --> 0:04:22.839 gets all the attention. That's what people think of. So 0:04:22.880 --> 0:04:25.320 it's like, if it's a wind turbine creator, then yes, 0:04:25.440 --> 0:04:27.160 I'm going to buy that because it's it's E, and 0:04:27.200 --> 0:04:28.960 they don't really think about the S or the G. 0:04:29.640 --> 0:04:31.640 And if it's an oil major then not going to 0:04:31.640 --> 0:04:32.960 buy it because they just think about it, but they 0:04:33.000 --> 0:04:36.039 don't actually think, actually, this is a well run oil major. 0:04:36.120 --> 0:04:38.200 And that's before we even talk about how we meant 0:04:38.200 --> 0:04:40.880 to do without fossil fuels, you know, et cetera, et cetera. 0:04:42.040 --> 0:04:43.839 So yeah, I think it's more just it just points 0:04:43.839 --> 0:04:49.240 to that it was always a you know, a marketing 0:04:49.320 --> 0:04:53.160 tool at best, and a weird kind of metastasization that 0:04:53.279 --> 0:04:57.320 all of the stupid ideas that have come out during 0:04:57.360 --> 0:04:59.839 the zero percent interest rates. 0:05:00.200 --> 0:05:02.200 To me that if you look at the G, that 0:05:02.279 --> 0:05:04.520 should be the only one that really matters, because if 0:05:04.520 --> 0:05:06.559 the G is good, the rest will follow. 0:05:06.680 --> 0:05:06.840 Right. 0:05:06.880 --> 0:05:10.560 A well management a well managed company will obviously have 0:05:10.640 --> 0:05:12.760 an I to an S and an I to an 0:05:12.760 --> 0:05:16.240 E to environmental and social issues, But the G is 0:05:16.279 --> 0:05:19.479 the core thing. And you could say, and you know, 0:05:19.520 --> 0:05:21.320 we'll we'll look more closely. It's in James Places over 0:05:21.360 --> 0:05:23.400 the next couple of days. But you could say that 0:05:23.440 --> 0:05:24.560 it's the G that has. 0:05:24.440 --> 0:05:25.160 Fallen down here. 0:05:25.200 --> 0:05:28.160 I've just looked up when they announced their new fee structure, 0:05:28.160 --> 0:05:31.560 because everything everything changed again under regulatary pressure the end 0:05:31.600 --> 0:05:33.920 of last years in Change Place introduced a new fee 0:05:33.960 --> 0:05:36.800 structure and if you look at what these CEOs said 0:05:36.800 --> 0:05:39.719 at the time, given our confidence in making these changing. 0:05:39.800 --> 0:05:42.280 There is also no change to our ongoing dividend guidance, 0:05:42.320 --> 0:05:44.760 which continue to be based on blah blah blah. But 0:05:44.839 --> 0:05:46.960 what we found out today was that the dividend has 0:05:46.960 --> 0:05:49.640 been slashed fairly significantly. So there's a you know, there's 0:05:49.680 --> 0:05:51.440 a G issue there, and that seems to be the 0:05:51.440 --> 0:05:53.920 one that we should be looking at going forward. Anyway, 0:05:53.960 --> 0:05:56.280 that gave me an excuse to round about ESG briefly, 0:05:56.320 --> 0:06:01.120 but we'll move on from that. This is complicated, look 0:06:01.120 --> 0:06:03.480 at it more carefully than you ever might have thought 0:06:03.480 --> 0:06:06.599 that you needed to. Now, the next thing that's coming 0:06:06.680 --> 0:06:09.479 up is the budget quite soon. There's a lot of 0:06:09.560 --> 0:06:16.200 G issues going on there, right. We can't tell you exactly. 0:06:16.720 --> 0:06:17.320 Where's the G. 0:06:19.279 --> 0:06:23.880 Anyway, So inadequate G coming up next week definitely. We 0:06:23.920 --> 0:06:25.600 can't tell you what's going to happen, but we can 0:06:25.720 --> 0:06:28.000 tell you in advance to make absolutely sure that you 0:06:28.080 --> 0:06:31.680 have done everything you can to use all your tax allowances. 0:06:32.200 --> 0:06:34.600 You know, might as well use that iceer up now, 0:06:34.760 --> 0:06:36.840 might as well put what you can into your sip now. 0:06:36.880 --> 0:06:38.839 You just never know, right, John anything else we should 0:06:38.839 --> 0:06:40.000 be doing in advance. 0:06:41.600 --> 0:06:45.760 Well, it's the iSER SIP. If you're ruined the marginal 0:06:45.760 --> 0:06:50.159 income tax streets, obviously look at things like Salvary cyco phase. 0:06:51.440 --> 0:06:54.600 If you have got a lower on in spose or 0:06:55.440 --> 0:06:57.240 your spouse is the highly on in one, make sure 0:06:57.240 --> 0:07:01.320 your assets are distributed and our sensible tax efficient way. 0:07:02.320 --> 0:07:07.360 I don't see anything wrong with that. VCTs and thes's 0:07:07.360 --> 0:07:09.840 are obviously options if you really have an awful lot 0:07:09.840 --> 0:07:13.240 of money and you've used up your SIP allowance and 0:07:13.280 --> 0:07:17.280 your eyes allowance. But I think the other thing is 0:07:17.520 --> 0:07:20.720 and I mean I think it almost feels that it 0:07:20.720 --> 0:07:23.280 should be redundant to say this by now, because this 0:07:23.360 --> 0:07:26.440 has been the case for at least ten years now. 0:07:26.600 --> 0:07:31.840 But if you have your money and anything that even 0:07:31.960 --> 0:07:37.480 smells faintly like a tax dodge vehicle, then you shouldn't 0:07:37.520 --> 0:07:41.840 have because nowadays it's all about the spirit of the 0:07:41.880 --> 0:07:45.600 law rather than the letter of the law. So if 0:07:45.920 --> 0:07:48.320 the HMRC comes across this game that says that it's 0:07:48.320 --> 0:07:51.080 a bit avoiding tax, but they didn't intend it to 0:07:51.120 --> 0:07:53.720 be allowed to avoid tax, then you're going to carry 0:07:53.720 --> 0:07:55.800 the can for that at some point, And they're pretty 0:07:55.800 --> 0:07:59.960 aggressive it pursuing this, so don't be invested in it. 0:08:00.280 --> 0:08:04.520 And Dodgy basically just use the government approved tax efficient 0:08:04.600 --> 0:08:07.280 vehicles as best you can and then cross your fingers 0:08:07.320 --> 0:08:10.080 because the tax button is going to be high for 0:08:10.120 --> 0:08:11.560 a long time. Probably. 0:08:11.960 --> 0:08:13.680 Yeah, it's interesting in that John Way and I was 0:08:13.680 --> 0:08:15.720 looking for a new accountant about five six years ago 0:08:15.760 --> 0:08:18.040 for various reasons, and I went round a couple of accountants, 0:08:18.920 --> 0:08:21.240 you know, just think who would suit, et cetera. And 0:08:21.320 --> 0:08:23.560 there seemed to be an incredibly easy way to decide 0:08:23.600 --> 0:08:27.480 which accountant not to use, because several of them suggested 0:08:27.600 --> 0:08:31.720 to me various tax avoidance schemes which turned out, of 0:08:31.760 --> 0:08:33.720 course in the end to be classed as evasion schemes 0:08:33.760 --> 0:08:36.840 to do with films being the obvious, etcetera. And it 0:08:36.880 --> 0:08:40.040 turned out the very very very easy way to check 0:08:40.080 --> 0:08:42.720 which accountant you want to use, and anyone who offers 0:08:42.720 --> 0:08:44.720 you that stuff is not the accountant you want to use. 0:08:44.760 --> 0:08:45.439 That fascinating. 0:08:46.880 --> 0:08:51.000 It's interesting. I mean, I do think there's something that 0:08:51.400 --> 0:08:53.679 sort of felt at the tame. I think this is 0:08:54.240 --> 0:09:01.040 it's not ideal that we have sort of moved to 0:09:01.400 --> 0:09:03.800 a situation where it's all about the intent of the 0:09:03.880 --> 0:09:06.160 law rather than the letter of the law, because I 0:09:06.200 --> 0:09:10.319 think that that's a blanket for lots of bad governance. 0:09:11.400 --> 0:09:14.480 And also, I mean, I do wonder how much that's 0:09:14.559 --> 0:09:19.439 kind of influenced the way that a lot of politicians 0:09:19.440 --> 0:09:23.160 seem to want to now just say things and make 0:09:23.240 --> 0:09:27.120 it so, and that whole virtue signal and idea where 0:09:27.240 --> 0:09:29.600 you think you've passed a law and therefore you have 0:09:29.679 --> 0:09:32.640 dealt with a problem, as opposed to having you think 0:09:32.679 --> 0:09:37.000 about what the consequences of the law might be. So 0:09:37.040 --> 0:09:39.880 I do wonder how much of that's down to well, okay, 0:09:39.920 --> 0:09:42.559 now that this spirit of the law rather than the 0:09:42.679 --> 0:09:44.920 letter of the law kind of thing. But you just 0:09:44.960 --> 0:09:47.440 have to live with it. Unfortunately, you have to operate 0:09:47.440 --> 0:09:48.360 in the world as it is. 0:09:50.160 --> 0:09:52.320 That's interesting how often we have to remind people of that, 0:09:52.440 --> 0:09:53.920 isn't it? 0:09:54.200 --> 0:09:55.200 This is quite striking. 0:09:58.400 --> 0:10:00.680 Welcome to Marriage, Trucks, Money, the US and much people 0:10:00.679 --> 0:10:02.839 who know the markets explain the markets. I'm there in 0:10:02.880 --> 0:10:05.120 sum set Web this week I speak with Lynn Alden, 0:10:05.120 --> 0:10:07.480 the author of Broken Money, where our financial system is 0:10:07.520 --> 0:10:10.480 failing us and how we can make it better. This 0:10:10.559 --> 0:10:13.120 book came highly recommended lots of other people have read 0:10:13.160 --> 0:10:14.800 it and told me I should too. 0:10:14.920 --> 0:10:17.160 I have no, and I have now and I have there. 0:10:17.200 --> 0:10:20.240 It's a tremendous guide to the history of money and 0:10:20.360 --> 0:10:22.880 where we are now with the modern money system. 0:10:23.880 --> 0:10:25.559 Lynn, thank you so much for joining us today. 0:10:25.800 --> 0:10:27.240 Happy to be here, Thank you for having me. 0:10:27.400 --> 0:10:33.079 It's interesting you put money in the context of ledgers systems. 0:10:33.679 --> 0:10:35.720 So in the very beginning, people you sed always talk 0:10:35.760 --> 0:10:38.160 about just barter and trading shells, et cetera, et cetera. 0:10:38.240 --> 0:10:41.600 But you take a slightly different approach to the beginnings 0:10:41.600 --> 0:10:42.040 of money. 0:10:42.080 --> 0:10:43.480 So I wonder if you could just talk to us 0:10:43.480 --> 0:10:44.280 a little bit about that. 0:10:44.520 --> 0:10:47.560 Sure, And so in kind of historical economic literature, there's 0:10:47.559 --> 0:10:50.400 really two camps for what money is at its foundation, 0:10:50.600 --> 0:10:52.520 and so the most common one that people hear about 0:10:52.600 --> 0:10:55.480 is that before money, people had to use barter, so 0:10:55.480 --> 0:10:57.880 they had to trade different things, and then eventually they 0:10:57.960 --> 0:11:00.439 realized that if they all agree on a shared universe account, 0:11:00.440 --> 0:11:02.760 that it can make trade way easier. And this tends 0:11:02.760 --> 0:11:05.760 to be an emergent phenomenon that happens in societies all 0:11:05.760 --> 0:11:08.480 over the place. They choose different types of money based 0:11:08.520 --> 0:11:11.400 on their technological development, based on what's available to them. 0:11:11.440 --> 0:11:14.360 But those moneys tend to have certain attributes, and certain 0:11:14.360 --> 0:11:17.440 technical changes tend to obsolete certain types of money, and 0:11:17.480 --> 0:11:19.360 it tends to be like an iterative process. So if 0:11:19.360 --> 0:11:21.959 you choose the wrong type of money, someone else can 0:11:21.960 --> 0:11:25.839 basically exploit your wrong choices until the society settles on 0:11:25.920 --> 0:11:28.760 the right Money's basically the good that you'd like to hold. 0:11:28.880 --> 0:11:32.400 It's liquid, that's portable, that's long lasting, and that you 0:11:32.400 --> 0:11:34.840 can basically always have a high likelihood that you can 0:11:34.880 --> 0:11:37.240 trade it for something else. That's not the one camp 0:11:37.320 --> 0:11:40.120 of money. The other one less from the economic side 0:11:40.120 --> 0:11:42.560 and more from the anthropology side, which is to point 0:11:42.559 --> 0:11:45.200 out that not a lot of barter is found even 0:11:45.240 --> 0:11:48.520 in hunter gather societies or in kind of history as 0:11:48.559 --> 0:11:50.480 we know it, that barter tends to be a pretty 0:11:50.520 --> 0:11:54.000 rare state. And instead they point out that societies tend 0:11:54.080 --> 0:11:57.319 to sidestep the need for barter before it even arises. 0:11:57.400 --> 0:12:00.960 It's basically such a basic problem that even pre dating 0:12:00.960 --> 0:12:04.280 commodity money, usually they use credit to try to reduce 0:12:04.320 --> 0:12:06.280 the number of times they actually have to make a 0:12:06.280 --> 0:12:09.559 physical transaction, they say, but instead of trying to trade 0:12:09.600 --> 0:12:12.200 spears for furs and trying to figure out exactly what 0:12:12.240 --> 0:12:14.880 you need when I need. Instead, I can just give 0:12:14.920 --> 0:12:16.439 you what you need because I happen to have a 0:12:16.480 --> 0:12:19.080 surplus of many things at the moment. And that's based 0:12:19.080 --> 0:12:21.160 on the premise that at a later time and I 0:12:21.240 --> 0:12:23.840 might be deficient on something, you owe me whatever I 0:12:23.840 --> 0:12:26.480 need at that time, and so credit is an early tool, 0:12:26.559 --> 0:12:29.600 along with commodity money to mitigate that. And I think 0:12:29.640 --> 0:12:32.079 that the two ways to summarize that are if you're 0:12:32.080 --> 0:12:34.920 trying to avoid the double coincidence of wants, basically the 0:12:35.040 --> 0:12:37.960 challenging thing of having a surplus is something that someone 0:12:38.000 --> 0:12:40.800 else has a deficiency in, and having a deficiency is 0:12:40.800 --> 0:12:42.679 something that someone else has a surplusit and therefore being 0:12:42.679 --> 0:12:44.640 able to make a trade. The two ways to make 0:12:44.679 --> 0:12:47.880 that easier are either a shared unit of account that 0:12:47.960 --> 0:12:50.280 we can use for one side of every transaction that's 0:12:50.280 --> 0:12:53.920 basically commodity money, or that we can delay that over 0:12:54.040 --> 0:12:57.040 time by making it so that our double coincidence of 0:12:57.120 --> 0:12:59.160 wants doesn't have to be for the same thing at 0:12:59.200 --> 0:13:01.800 the same time. As long as there's a period where 0:13:01.840 --> 0:13:04.120 you need something and is a later period, write something 0:13:04.400 --> 0:13:07.319 that can be extended and therefore have a higher probability 0:13:07.360 --> 0:13:09.720 of success. Those are kind of the two paths of 0:13:09.720 --> 0:13:10.880 where money has originally. 0:13:10.920 --> 0:13:12.920 Yeah, and he use a wonderful example at the very 0:13:12.960 --> 0:13:15.240 early part of the book with Godfather to explain about 0:13:15.360 --> 0:13:18.240 this kind of social credit use of money. 0:13:18.400 --> 0:13:20.800 Yeah, that was a key example because Veto in the 0:13:20.840 --> 0:13:24.240 movie has most things that he needs, and so when 0:13:24.240 --> 0:13:26.640 people come to him, he doesn't really need anything from them. 0:13:26.800 --> 0:13:28.360 He doesn't want a little bit of money from them, 0:13:28.400 --> 0:13:30.760 he doesn't want anything they really have at the time. 0:13:31.520 --> 0:13:33.120 But instead of what he does, it says, I'll do 0:13:33.200 --> 0:13:35.800 this favor for you now, because he's in the position 0:13:35.800 --> 0:13:38.319 where he has a surplus of many things, many resources, 0:13:38.679 --> 0:13:40.640 and in their shadow economy that he's got a lot 0:13:40.640 --> 0:13:43.320 of resources to deploy, and what he asks for in 0:13:43.360 --> 0:13:47.240 favor is an unspecified favorite of future time. So he's 0:13:47.240 --> 0:13:49.600 basically saying, there's absolutely nothing I really want from you 0:13:49.679 --> 0:13:51.960 right now, but I perceive that there's a chance in 0:13:52.000 --> 0:13:54.360 the future that I will. And so that's basically a 0:13:54.400 --> 0:13:58.040 way of him granting them something even though he doesn't 0:13:58.040 --> 0:14:00.960 need anything from them, because he employs the usage of credit. 0:14:01.040 --> 0:14:03.600 Okay, interesting, now, one of the other examples that you 0:14:03.679 --> 0:14:06.360 use is one of my favorite examples in this island 0:14:06.400 --> 0:14:09.480 in the South specific Yeah, they've always have historically used 0:14:09.520 --> 0:14:12.720 these very big round stones with a hole in the middle, 0:14:12.720 --> 0:14:15.880 which they called ry stones. Is money, right, And this 0:14:15.960 --> 0:14:18.920 has been very interesting to everyone who's been interested in 0:14:18.960 --> 0:14:21.720 bitcoin since the very beginning, because it really did operate 0:14:21.760 --> 0:14:24.400 as what we now think of as a proper ledger system, right. 0:14:24.560 --> 0:14:27.400 Yeah, And that's a useful example because so in the book, 0:14:27.400 --> 0:14:29.520 for example, when I talked about those two types of 0:14:29.560 --> 0:14:32.200 money that I talked about, either credit or commodity money, 0:14:32.720 --> 0:14:35.000 the thing that they really have in common is basically 0:14:35.040 --> 0:14:37.560 people are deciding on what ledger they're going to use, 0:14:37.680 --> 0:14:40.120 what is the unit of account, and what is the 0:14:40.200 --> 0:14:42.560 record system that they're going to rely on. And so 0:14:42.640 --> 0:14:46.400 if you're using commodity money, you're basically using nature as 0:14:46.520 --> 0:14:49.040 your tool for saying, Okay, here's the number of units 0:14:49.040 --> 0:14:51.400 that exist at a given time, here's and then those 0:14:51.480 --> 0:14:55.040 units are updated by physical possession, whereas if you're relying 0:14:55.040 --> 0:14:58.920 on credit or similar systems, you're relying on human administers 0:14:58.960 --> 0:15:02.080 of that ledger, either orly or in writing. And the 0:15:02.120 --> 0:15:05.360 yap stones are interesting because they were an early combination 0:15:05.440 --> 0:15:07.480 of both, they kind of get to the root of money, 0:15:07.520 --> 0:15:11.040 being a ledger itself. And so that's an instance where 0:15:11.640 --> 0:15:14.520 a unique set of circumstances gave them a particularly unique 0:15:14.560 --> 0:15:17.400 type of money. So most commodity moneys and early times 0:15:17.400 --> 0:15:20.080 were things like grains and shells and cocoa, and they 0:15:20.120 --> 0:15:22.280 tend to have these kind of common attributes, whereas the 0:15:22.360 --> 0:15:26.000 yap stones the ry stones were quite different. So they 0:15:26.000 --> 0:15:29.080 were on a small island, and there's another island two 0:15:29.160 --> 0:15:31.600 hundred and fifty miles away or so, and on that 0:15:31.720 --> 0:15:36.680 other island they had very attractive limestone, and so they 0:15:36.680 --> 0:15:38.600 did not have it on their own island. And so 0:15:38.720 --> 0:15:41.640 they would go on fairly simple boats and they would 0:15:41.680 --> 0:15:44.880 go across this kind of treacherous water. They'd go mine 0:15:45.080 --> 0:15:48.640 the limestone, bring it back, carve it into big circles, 0:15:49.120 --> 0:15:51.960 and they'd have different sizes. Some of them could be moved, 0:15:51.960 --> 0:15:53.440 and some of them were so big that they could 0:15:53.440 --> 0:15:56.560 never realistically be moved again. And they had all these 0:15:56.720 --> 0:16:00.200 these stones, these limestones now on their own island, and 0:16:00.440 --> 0:16:03.760 when they transacted with each other from major things, they 0:16:03.760 --> 0:16:07.000 would just orally say, this stone now belongs to this person. 0:16:07.200 --> 0:16:10.520 So the big stones themselves don't move, and instead it 0:16:10.640 --> 0:16:15.040 just basically the island has a mental and oral ledger 0:16:15.400 --> 0:16:18.080 of who owns all the stones, but that it is 0:16:18.120 --> 0:16:20.720 backed up by the physical properties of the stones themselves. 0:16:20.720 --> 0:16:23.200 It's very hard to add new stones to the system. 0:16:23.200 --> 0:16:25.320 It takes a lot of work to do it. It's 0:16:25.440 --> 0:16:28.120 very dependent on the time and place. So, for example, 0:16:28.440 --> 0:16:31.880 the fact that it's a small island makes oral transmission 0:16:31.880 --> 0:16:35.440 of the ledger possible. And two, the technological era that 0:16:35.480 --> 0:16:38.280 they existed in made it so that the stones were 0:16:38.360 --> 0:16:41.480 very hard to acquire, and that was eventually broken by 0:16:41.480 --> 0:16:45.040 the fact that as people from industrial societies came to 0:16:45.080 --> 0:16:48.800 the island saw how to exploit the system, they would 0:16:48.880 --> 0:16:52.320 use their advanced technologies to more rapidly increase the number 0:16:52.360 --> 0:16:55.400 of those stones on the island, or otherwise use forced 0:16:55.400 --> 0:16:59.000 to coerce them through their appreciation of the stones to 0:16:59.040 --> 0:17:01.800 do things. But in that era that served as a 0:17:01.800 --> 0:17:04.040 particularly unique type of money. 0:17:05.000 --> 0:17:07.280 But both parts are interesting, aren't they. The first when 0:17:07.280 --> 0:17:09.760 the money system was working well, and then secondly when 0:17:09.760 --> 0:17:14.040 it was effectively destroyed by people with better technology bringing 0:17:14.080 --> 0:17:16.760 in more stones and hence too much flow, destroying the 0:17:16.760 --> 0:17:19.320 whole thing. So, but both parts of it are interesting 0:17:19.320 --> 0:17:21.240 in the context of looking at how money works today. 0:17:21.320 --> 0:17:25.720 Yeah, and it also shows that even dying money systems 0:17:25.760 --> 0:17:28.240 can have a second wind or a way to try 0:17:28.280 --> 0:17:31.040 to fight back. So, for example, when the stone system 0:17:31.080 --> 0:17:35.679 started being disrupted by those more industrial technology, the people 0:17:35.760 --> 0:17:39.480 that use that money system would say, well, older stones 0:17:39.600 --> 0:17:43.159 are more valuable now because they are provably prior to 0:17:43.200 --> 0:17:46.320 this technology. And so all these newer stones, they're kind 0:17:46.359 --> 0:17:47.920 of like modern art. We're not going to treat them 0:17:47.920 --> 0:17:50.520 the same way, whereas like these older stones are like 0:17:50.600 --> 0:17:54.240 Da Vinci paintings, right, they're not able to be reproduced 0:17:54.240 --> 0:17:57.880 even with better technology because we're now adding age as 0:17:57.880 --> 0:18:01.400 a factor. And so there's still were attempts to make 0:18:01.440 --> 0:18:05.080 that system go longer, and just of course over the 0:18:05.119 --> 0:18:08.119 long arc of time it became more of a relic 0:18:08.160 --> 0:18:08.679 of the past. 0:18:09.520 --> 0:18:12.119 Now, I'm slightly wondering how to approach the rest of 0:18:12.119 --> 0:18:15.040 the history of money before we get to the today, 0:18:15.080 --> 0:18:17.680 because there's so much going on here, from money being 0:18:18.080 --> 0:18:22.040 connected to commodities right through to the beginning of fractional banking, etc. 0:18:22.480 --> 0:18:24.840 What do you think of the sort of key points 0:18:24.880 --> 0:18:27.760 on the journey from effectively YAP to here. 0:18:27.960 --> 0:18:30.440 I think the main thing is that as different moneies 0:18:30.600 --> 0:18:33.359 came together, so as all these societies met each other, 0:18:33.840 --> 0:18:38.280 there is an iterative process where the weaker moneies increasingly 0:18:38.320 --> 0:18:41.080 got sorted out, like the stones we just talked about 0:18:41.440 --> 0:18:44.800 and other types of moneies, until basically the ones that 0:18:44.960 --> 0:18:48.440 kind of were left standing given all of humanity shared 0:18:48.480 --> 0:18:51.399 technology was gold and silver because they were resistant to 0:18:51.480 --> 0:18:55.880 debasement even with better technology, and they had better properties 0:18:55.880 --> 0:18:59.040 of money in the more universal sense. And each society 0:18:59.119 --> 0:19:01.119 had their own money based on what was available, what 0:19:01.200 --> 0:19:05.280 was technologically suitable. But then as time progressed, as societies 0:19:05.320 --> 0:19:09.200 met each other, there were objectively better answers than other 0:19:09.280 --> 0:19:13.760 answers for what constitutes good money, and as those came together, 0:19:14.520 --> 0:19:16.760 the more suitable money would win out, until the whole 0:19:16.760 --> 0:19:19.240 world found itself on a shared standard. 0:19:21.160 --> 0:19:23.480 Okay, So then we end up with gold and silver 0:19:23.520 --> 0:19:27.800 effectively being a global money system. And what was the 0:19:27.840 --> 0:19:29.119 next big step after that? 0:19:29.400 --> 0:19:31.879 The next big step after that was so that was 0:19:32.080 --> 0:19:34.240 you know, thousands of years of kind of finding out 0:19:34.240 --> 0:19:36.760 what is the best physical money. But the other big 0:19:36.800 --> 0:19:39.760 step was how do you move money around? So even 0:19:39.840 --> 0:19:43.800 those top money still had limitations for verification, a physical 0:19:43.840 --> 0:19:47.800 transfer to visibility limitations in some cases, and so the 0:19:47.880 --> 0:19:52.199 other kind of technical path was different. Proto banking and 0:19:52.280 --> 0:19:55.840 full service banking arrangements that people and cultures would develop 0:19:55.920 --> 0:19:58.760 on top of those money systems so that they could 0:19:58.800 --> 0:20:03.000 move the ownership of the money more easily and faster 0:20:03.080 --> 0:20:06.080 and cheaper. They didn't have to move the physical money itself. 0:20:06.119 --> 0:20:07.919 An early example in the book that I used is 0:20:07.920 --> 0:20:12.760 the Hawala system, which is prevalently even before Italian city 0:20:12.800 --> 0:20:15.600 state banking, basically throughout North Africa, the Middle East and 0:20:15.600 --> 0:20:18.800 stretching into India, basically along the Silk Road path. There 0:20:18.800 --> 0:20:21.919 would be these money changers called haualidars, and if you 0:20:21.960 --> 0:20:25.000 wanted to transport gold from one city to another city, 0:20:25.040 --> 0:20:28.679 for example, the expensive way is to physically transport it, 0:20:28.880 --> 0:20:31.040 which you might do if you have a sufficient amount 0:20:31.040 --> 0:20:32.879 and you're highly secure, you might want to do that. 0:20:32.920 --> 0:20:35.119 But if you're doing that on a regular basis, a 0:20:35.240 --> 0:20:38.040 service that was provided was that you could deposit gold 0:20:38.040 --> 0:20:41.640 with your local haualidar. They would give you a receipt 0:20:41.840 --> 0:20:45.120 for that gold, and then you or your messenger could 0:20:45.200 --> 0:20:48.959 transfer that receipt to another city, and in that city, 0:20:49.119 --> 0:20:52.679 that Houalidar has a contact with another Haualidar, and you 0:20:52.720 --> 0:20:56.320 would redeem the gold from that other Haualidar, and those 0:20:56.359 --> 0:20:59.679 Haualidars between those cities would do multiple these transactions and 0:20:59.800 --> 0:21:02.480 give monther a given year and they would net out, 0:21:02.520 --> 0:21:05.480 so maybe every six months or every twelve months they 0:21:05.520 --> 0:21:07.920 would actually do a physical settlement to sort that out, 0:21:08.200 --> 0:21:10.800 but they're able to do multiple transactions between them just 0:21:10.920 --> 0:21:14.480 by transferring kind of the knowledge that was made. And 0:21:14.560 --> 0:21:16.760 so we can think of that as a series of 0:21:16.840 --> 0:21:21.440 analog encryptions. Because when they invented paper, it was improvement 0:21:21.480 --> 0:21:24.560 over papyrus. When they invented book binding, that was an 0:21:24.560 --> 0:21:27.760 improvement over scrolls. When they invented the printing press, that 0:21:27.800 --> 0:21:30.840 was an improvement over handwriting. They had to have analog 0:21:30.960 --> 0:21:33.480 encryption techniques to make it so that people could not 0:21:33.640 --> 0:21:37.000 just forge different types of receipts or copy different types 0:21:37.040 --> 0:21:39.959 of receipts that are redeemable for gold for obvious reasons 0:21:39.960 --> 0:21:42.840 relating to fraud, and so on top of all that 0:21:42.960 --> 0:21:45.720 kind of global contest to see what types of moneies 0:21:45.720 --> 0:21:49.440 are most suitable, there's also this kind of global growth 0:21:49.800 --> 0:21:52.840 in terms of all these different methods to more efficiently 0:21:52.880 --> 0:21:56.760 transfer the ownership of those underlying especially gold and silver, 0:21:56.840 --> 0:21:58.840 but really any sort of physical object. 0:22:00.119 --> 0:22:03.960 So now we're moving towards papers is bearer assets, and 0:22:04.000 --> 0:22:07.120 we're moving towards the possibility of fractional banking. 0:22:06.800 --> 0:22:10.200 Right Yeah, Because basically any sort of money change or 0:22:10.200 --> 0:22:13.159 any sort of monetary entity would realize that a lot 0:22:13.200 --> 0:22:15.600 of people would deposit their gold. They'd have these paper 0:22:15.600 --> 0:22:18.360 receipts for gold, and they would find that way more 0:22:18.400 --> 0:22:21.440 convenient than holding their gold themselves. And so they would 0:22:21.480 --> 0:22:24.040 realize that most people do not redeem their gold all 0:22:24.080 --> 0:22:26.399 at once. Any given time, there's a small percentage that 0:22:26.480 --> 0:22:29.560 might be being redeemed or being deposited, but that they have 0:22:29.600 --> 0:22:32.800 a common float there, and so the temptation there is, okay, 0:22:32.840 --> 0:22:36.359 we can lend some of it out, earn interest and 0:22:36.400 --> 0:22:39.840 therefore reduce the fees that you charge your depositors and 0:22:39.920 --> 0:22:42.000 maybe even give them a share of interest, which allows 0:22:42.040 --> 0:22:46.280 you to outcompete other custodian type entities. And that works 0:22:46.320 --> 0:22:48.160 for a period of time, but it leads to obviously 0:22:48.600 --> 0:22:50.959 some systemic issues if you do get a bigger than 0:22:51.000 --> 0:22:57.000 normal attempt to withdraw the gold, and your assets are 0:22:57.040 --> 0:23:00.280 denominated partially in gold and partially in these less liquid 0:23:00.800 --> 0:23:03.639 loans and other assets other types of collateral, then you 0:23:03.680 --> 0:23:05.920 could fail to meet that, and so they started to 0:23:05.960 --> 0:23:10.800 introduce basically systemic instability into some of these arrangements, because 0:23:11.320 --> 0:23:12.720 the way I put it in the book is there 0:23:12.760 --> 0:23:16.439 was an increasing speed gap between transactions and settlements. So 0:23:16.600 --> 0:23:20.080 over time, as all these different layers on top of 0:23:20.160 --> 0:23:23.840 gold and silver became more and more efficient, it allowed 0:23:23.880 --> 0:23:27.080 those number of claims to grow compared to how much 0:23:27.200 --> 0:23:31.359 underlying metal there was, until it became systemic and a 0:23:31.400 --> 0:23:34.240 big technology I focus on, which people don't really think 0:23:34.280 --> 0:23:36.879 of the telegraph as a monetary technology, but it was 0:23:37.000 --> 0:23:40.160 arguably one of the biggest technologies for how we use 0:23:40.240 --> 0:23:43.720 money and how banking works. Because prior to the telegraph, 0:23:44.119 --> 0:23:47.040 anytime you transferred to information, you still had to get there. 0:23:47.080 --> 0:23:50.359 You had to physically move people, ships and horses and 0:23:50.359 --> 0:23:53.280 all that to get the information to another city, whereas 0:23:53.680 --> 0:23:56.280 in the eighteen sixties, once we had the telegraph over 0:23:56.400 --> 0:24:00.000 continents and across oceans, you could update each other's ledgers 0:24:00.160 --> 0:24:03.200 at the speed of light, and you had a huge 0:24:03.200 --> 0:24:05.679 gap between all these kind of banking arrangements and the 0:24:05.680 --> 0:24:09.080 physical gold, and you had a very kind of elaborate, 0:24:09.560 --> 0:24:13.160 hierarchical system of multiple claims for every unit. 0:24:12.920 --> 0:24:15.800 Of underlying sounds like the beginning of the end. 0:24:17.040 --> 0:24:19.960 That's how it ended up going. Basically. One of my 0:24:20.000 --> 0:24:23.760 favorite sources in the book is in eighteen seventy five, 0:24:23.880 --> 0:24:27.320 William Stanley Jevins wrote a book called The Money and 0:24:27.359 --> 0:24:30.280 the Mechanism of Exchange, and I cited that in the book, 0:24:30.840 --> 0:24:33.159 and it's a fascinating read because it's one hundred and 0:24:33.160 --> 0:24:37.520 fifty years ago and he's describing how the monetary system 0:24:37.520 --> 0:24:41.000 works and how technologies are making their monetary system more efficient, 0:24:41.600 --> 0:24:45.600 and he's very precient because he's on one hand, he's saying, 0:24:46.119 --> 0:24:49.359 look how efficient we've become. Every friction we encounter, we 0:24:49.480 --> 0:24:53.000 just centralize it. So you know, basically all global trade 0:24:53.000 --> 0:24:55.920 can just go through London now and everything can net 0:24:56.000 --> 0:24:59.359 out and gold rarely ever has to ever move, and 0:24:59.400 --> 0:25:03.040 it's hyper efficient, and this is great. The other hand 0:25:03.119 --> 0:25:05.560 is we have to remember that all of these claims 0:25:05.640 --> 0:25:08.480 are redeemable for gold, and the system's now levered twenty 0:25:08.480 --> 0:25:10.960 to one, and so if five percent of people show 0:25:11.000 --> 0:25:14.000 up and want their gold back. The system is illiquidated 0:25:14.520 --> 0:25:17.679 and not solvent, not able to make those claims, and 0:25:17.760 --> 0:25:21.080 so it's like he's balancing these kind of observations around 0:25:21.119 --> 0:25:24.960 efficiency and stability. And of course we know from history 0:25:24.960 --> 0:25:27.920 that a few decades later in World War One, that 0:25:28.160 --> 0:25:30.800 whole leverage system unraveled and we had to go through 0:25:30.800 --> 0:25:34.760 major transformations of what we use as money because that 0:25:35.200 --> 0:25:39.000 increasing kind of leverage, that increasing speed gap, really changed 0:25:39.040 --> 0:25:40.440 how humans interact with money. 0:25:41.520 --> 0:25:43.399 Well, you have them. I'm glad we've made it to 0:25:43.440 --> 0:25:46.840 World War One. We've skipped hundreds of years. We've done brilliantly. 0:25:47.040 --> 0:25:49.560 And in the middle of the book there's a really 0:25:49.840 --> 0:25:54.240 terrifying chot of the buying power of one hundred pounds 0:25:54.280 --> 0:25:56.800 over time seventeen fifty to twenty twenty three. And by 0:25:56.840 --> 0:25:59.640 the way it's telling is it is the oldest existing 0:25:59.680 --> 0:26:01.760 current in the world, doesn't it. I mean, it's been 0:26:01.760 --> 0:26:04.680 going for so many hundreds of years, it's really quite impressive. 0:26:04.800 --> 0:26:06.840 Was it's lost the majority it was value over that time, 0:26:06.880 --> 0:26:09.879 But nonetheless, sterling is the oldest consistent currency. 0:26:10.119 --> 0:26:12.840 Yeah, it's the oldest consistent currency that is still alive today. 0:26:13.280 --> 0:26:16.080 And it's interesting because for centuries it had a very 0:26:16.119 --> 0:26:19.000 slow debasement rate. It was an average of something like 0:26:19.040 --> 0:26:21.720 zero point one five percent per year. There were these 0:26:21.760 --> 0:26:25.280 occasional mild devaluations. It used to be a pound of silver, 0:26:25.760 --> 0:26:27.800 now it's a couple of grams of silver. But over 0:26:28.000 --> 0:26:31.440 like the first you know, six seven plus centuries, it's 0:26:31.480 --> 0:26:34.960 a very kind of steady, slow debasement rate. But once 0:26:35.040 --> 0:26:38.399 World War One happened, and once kind of this huge 0:26:38.440 --> 0:26:41.879 gap opened up between efficiency of trading all these claims 0:26:41.920 --> 0:26:45.720 around and being able to fraction reserve everything, you started 0:26:45.720 --> 0:26:49.640 to get this rapid deterioration in the pound sterling compared 0:26:49.680 --> 0:26:53.640 to the underlying precious metals and for perching power in general. 0:26:54.040 --> 0:26:56.080 And one of the observations I make in the book 0:26:56.160 --> 0:26:59.200 is that that opened up a kind of a problematic 0:26:59.200 --> 0:27:02.679 inct of structure, because the basement has been something that 0:27:02.920 --> 0:27:05.160 has existed for thousands of years, I mean, going back 0:27:05.160 --> 0:27:08.879 to Roman times and prior coinage has always been debased 0:27:08.920 --> 0:27:12.560 to varying degrees. But the modern system allowed that debasement 0:27:12.600 --> 0:27:15.880 to happen practically overnight instead of over years and decades. 0:27:15.880 --> 0:27:18.320 And so basically with a stroke of a pen, whenn 0:27:18.400 --> 0:27:20.639 entity a government can now print a lot of money 0:27:21.119 --> 0:27:24.280 and then break all the pegs to base all the money, 0:27:24.359 --> 0:27:26.600 and then as in the years that follow, as the 0:27:26.640 --> 0:27:29.760 inflation follows, then they go back and try to address 0:27:29.800 --> 0:27:34.240 what happened. And so what would normally take many years 0:27:34.240 --> 0:27:36.639 in a long period of time can be compressed into 0:27:36.720 --> 0:27:38.840 it really with a stroke of a pen. And that's 0:27:38.880 --> 0:27:41.560 the modern era of money that we find ourselves in. 0:27:42.920 --> 0:27:45.480 One of the extraordinary stories around this that you tell 0:27:45.520 --> 0:27:48.080 in the book is about the UK Warlon, which was 0:27:48.160 --> 0:27:51.760 only paid off relatively recently, and there was a publicity 0:27:51.800 --> 0:27:55.000 campaign at the time that suggested that the Warlane was 0:27:55.040 --> 0:27:57.679 an easy sell and it was hugely able subscribed and 0:27:57.920 --> 0:28:01.040 the British rushed to buy the wall to help finance 0:28:01.119 --> 0:28:03.439 the war, and that was what was put about at 0:28:03.440 --> 0:28:05.320 the time. But it turned out, of course not to 0:28:05.320 --> 0:28:07.320 be true at all, and we only found out much 0:28:07.400 --> 0:28:10.680 later in twenty seventeen that the Bank of England blog 0:28:10.800 --> 0:28:13.320 was called Bank Underground wrote a piece explaining the in fact, 0:28:13.320 --> 0:28:15.960 this hadn't happened at all, and effectively the money is 0:28:15.960 --> 0:28:19.520 simply been printed and then in a wonderful little end 0:28:19.520 --> 0:28:23.560 point of this saga the ft that had written stories 0:28:23.600 --> 0:28:25.560 at the time saying how wonderful it was that everyone 0:28:25.560 --> 0:28:28.520 had rushed to buy the wooloone printed and apology in 0:28:28.560 --> 0:28:32.160 twenty seventeen saying that everything they had written was not true. 0:28:32.200 --> 0:28:34.040 We are now happy to make it clear that none 0:28:34.080 --> 0:28:37.240 of the above was true. So this is when the 0:28:37.240 --> 0:28:42.000 central banks started this money printing process in real earnest 0:28:42.120 --> 0:28:45.000 and also started not quite telling us the truth about it. 0:28:45.120 --> 0:28:47.600 Well, we think of government finances ot and think of 0:28:47.760 --> 0:28:52.200 taxation and spending, and that is a fairly transparent process, 0:28:52.680 --> 0:28:55.240 and that can be kind of debated each year and 0:28:55.440 --> 0:28:57.640 each electa siason to see, Okay, what a tax is 0:28:57.680 --> 0:28:59.840 going to be, what is the budget deficit or surplus, 0:29:00.000 --> 0:29:02.640 what kind of thing is we're spending on. Whereas inflation 0:29:03.000 --> 0:29:06.680 is a more opaque form of taxation that can be 0:29:06.880 --> 0:29:10.640 done first and then sorted out later after the consequences 0:29:10.640 --> 0:29:13.680 have already occurred. And for example, in that arrangement to 0:29:13.720 --> 0:29:16.960 finance that war, they could just lie and say, Okay, 0:29:17.000 --> 0:29:19.560 the loans have been met, when really what they're doing 0:29:19.640 --> 0:29:23.200 is they're just printing money. They're financing the loans through 0:29:23.520 --> 0:29:27.160 new money creation. And therefore they're spending into the economy 0:29:27.560 --> 0:29:30.160 money that they did not withdraw from the economy. Therefore 0:29:30.200 --> 0:29:33.480 they're expanding new overall money supply, and therefore all of 0:29:33.480 --> 0:29:36.360 the holders of the currentsy all the holders of the bonds, 0:29:36.640 --> 0:29:40.520 including foreign holders of currency and bonds, are getting sharply 0:29:40.560 --> 0:29:44.920 devalued without knowledge that it's happening, and without having given 0:29:44.960 --> 0:29:47.520 any sort of consent or any sort of process to 0:29:47.560 --> 0:29:49.960 make that happen, and then only in hindsight in this 0:29:50.040 --> 0:29:52.680 case comically like a century later. But even if it 0:29:52.720 --> 0:29:55.800 takes place three years five years later, the consequences have 0:29:55.880 --> 0:29:58.760 smoothed out over time, they go back and realize that 0:29:58.800 --> 0:30:01.840 they never actually consent to. This is basically taxation without 0:30:02.280 --> 0:30:05.520 input or knowledge, and therefore it could not be debated, 0:30:05.600 --> 0:30:08.400 couldnot be protested, It couldnot be discussed in a way 0:30:08.480 --> 0:30:11.120 that would normally be done with taxation. I guess one 0:30:11.160 --> 0:30:13.680 of the themes in the book is that as technologies come, 0:30:14.200 --> 0:30:17.840 it can sometimes change the power structure, or the incentive structure, 0:30:18.040 --> 0:30:20.280 or where the source of power is. Prior to that 0:30:20.360 --> 0:30:25.160 kind of era of telecommunications and heavy use of banking, 0:30:25.640 --> 0:30:28.600 money was intrinsically hard to debate it was a very 0:30:28.680 --> 0:30:31.840 challenging physical process, slow process to do it, but in 0:30:31.880 --> 0:30:34.720 this modern era, because it can be done so quickly, 0:30:35.120 --> 0:30:38.240 it really shifts a lot of that power to those 0:30:38.520 --> 0:30:40.400 who wield the power of the printing press. 0:30:41.840 --> 0:30:44.760 And it makes central banks extraordinarily powerful, doesn't it. And 0:30:44.840 --> 0:30:47.360 as one of the bizarre things about recent times has 0:30:47.400 --> 0:30:50.320 been the idea that an independent central bank is a 0:30:50.480 --> 0:30:53.560 very good thing, whereas in fact, in some ways it's 0:30:53.560 --> 0:30:55.800 a bit of a threat to democracy because if the 0:30:55.840 --> 0:30:58.240 central banks have the power to do this, to create 0:30:58.280 --> 0:31:01.160 the inflation and effectively to transfer between different groups in 0:31:01.160 --> 0:31:04.520 the economy, it's not necessarily something one likes to think 0:31:04.560 --> 0:31:06.280 of happening outside democracy. 0:31:06.880 --> 0:31:08.800 Yeah, and it's one of those things where central so 0:31:08.880 --> 0:31:11.560 central bank independence. The main purpose of it is so 0:31:11.600 --> 0:31:14.719 that the like a president or a prime minister some 0:31:14.760 --> 0:31:18.040 sort of leader can't just call up the central bank 0:31:18.200 --> 0:31:20.720 in a week leading up to an election and say, hey, 0:31:20.800 --> 0:31:22.680 I need you to cut industrates, or I need you 0:31:22.720 --> 0:31:25.200 to juice the economy, or I'm going to fire you, right, 0:31:25.240 --> 0:31:27.320 So that it's trying to avoid those kind of near 0:31:27.400 --> 0:31:30.600 term abuses of the system by instead having some sort 0:31:30.600 --> 0:31:36.040 of separate powers. The challenge is that, especially during crises, 0:31:36.640 --> 0:31:39.520 central bank independence tends to go away. The government just 0:31:39.600 --> 0:31:41.800 captures the central bank and says, look, it's a war. 0:31:41.960 --> 0:31:44.760 You're going to finance the war. So it's not really 0:31:44.880 --> 0:31:48.400 independent anymore. And then two, even when it is independent, 0:31:48.840 --> 0:31:52.040 people are end up therefore very reliant on the competence 0:31:52.280 --> 0:31:55.400 and the ethics of the central bank, which can be 0:31:55.480 --> 0:31:58.400 people that they didn't necessarily lack. Obviously, each country will 0:31:58.400 --> 0:32:00.920 have its own process for how the bank is structured, 0:32:00.960 --> 0:32:04.800 but these are generally appointed rather than elected officials. A 0:32:04.880 --> 0:32:07.760 rather small number of people dictating what the price of 0:32:07.800 --> 0:32:09.960 money is, what the price of money and time is 0:32:10.040 --> 0:32:14.200 essentially able to make low credit loans to certain entities 0:32:14.240 --> 0:32:16.800 and not other entities, and therefore they get quite a 0:32:16.840 --> 0:32:18.880 bit of power, the power of the purse, the power 0:32:18.920 --> 0:32:22.040 of even defining what our money is, something that is 0:32:22.080 --> 0:32:25.720 both powerful but opaque. 0:32:24.640 --> 0:32:27.960 And as I say, uncomfortable outside the democratic process. Now, 0:32:28.040 --> 0:32:31.440 let's flip forward another few decades and talk about today. 0:32:31.480 --> 0:32:33.160 And the key point of the book is that our 0:32:33.160 --> 0:32:36.080 money system is broken and that we're being failed by 0:32:36.080 --> 0:32:38.880 the system as a whole. So let's talk about what's 0:32:38.920 --> 0:32:41.440 broken now. More than has been in the past. What's 0:32:41.480 --> 0:32:44.720 so terrible, and that for most people money works. You know, 0:32:44.760 --> 0:32:46.840 they have a bank account, they investor bit, they buy 0:32:46.880 --> 0:32:49.880 this ou there are debit cards work, that bank accounts work. 0:32:49.880 --> 0:32:51.680 Now they're getting some interest on their bank account. That 0:32:51.680 --> 0:32:54.560 I was saying, this is marvelous. So for most people 0:32:54.600 --> 0:32:56.240 they would say, well, I don't know what you're talking about. 0:32:56.280 --> 0:32:57.040 My money works. 0:32:57.240 --> 0:32:59.320 Yeah. A distinction I make in the book is between 0:32:59.480 --> 0:33:02.120 developed and developing countries. I argue in the book that 0:33:02.160 --> 0:33:04.680 there's problems with money everywhere, but they're more obvious in 0:33:04.720 --> 0:33:07.360 certain areas than others. So when we zoom out, there 0:33:07.400 --> 0:33:09.920 are about one hundred and sixty currencies in the world, 0:33:10.400 --> 0:33:13.680 and outside of the handful many many listeners of this 0:33:13.720 --> 0:33:16.520 are probably in the handful of me and you and 0:33:16.560 --> 0:33:18.880 others listening are in the handful of currencies that are 0:33:18.920 --> 0:33:21.280 the least bad. These are the ones that lose value 0:33:21.560 --> 0:33:25.120 the slowest despite all the problems we just discussed. Outside 0:33:25.160 --> 0:33:28.880 of major wartime, they are kind of a slowly debasing currency, 0:33:29.080 --> 0:33:31.680 Whereas when you look at the long tail of most currencies, 0:33:31.720 --> 0:33:33.360 which is actually where most of the people in the 0:33:33.360 --> 0:33:37.760 world live, they experience much more rapid currency debasement, and 0:33:37.840 --> 0:33:40.080 therefore all of those issues we just talked about, the 0:33:40.120 --> 0:33:45.240 opaqueness of say, financing government through inflation, for example, things 0:33:45.320 --> 0:33:49.160 like that happen way more magnitude and way more frequency 0:33:49.520 --> 0:33:51.680 in many other countries in the world. So that's one 0:33:51.720 --> 0:33:54.600 big problem. And two, there's actually a shocking number of 0:33:54.600 --> 0:33:57.440 people in the world that are still unbanked. So you know, 0:33:57.480 --> 0:34:00.600 banks have been now around for centuries even longer in 0:34:00.640 --> 0:34:03.640 some forms, and yet there's in a fairly short period 0:34:03.680 --> 0:34:07.560 of time more people have smartphones than have bank accounts. 0:34:07.720 --> 0:34:10.080 In the current era, there's basically an inherent kind of 0:34:10.120 --> 0:34:13.360 limitation to banks and so the combination. 0:34:13.480 --> 0:34:16.360 But if you have a smartphone, do not automatically have 0:34:16.440 --> 0:34:18.399 a bank account. I mean in Kenya, I noticed it's 0:34:18.400 --> 0:34:21.360 all now, but there was empesser etc. There's always something 0:34:21.400 --> 0:34:23.560 you can do with the phone to create the equivalent 0:34:23.600 --> 0:34:24.840 of a bank account. 0:34:24.840 --> 0:34:27.440 The equivalent, yes, And I think that's actually one of 0:34:27.480 --> 0:34:29.799 the kind of pieces of my book is that technology 0:34:29.840 --> 0:34:33.320 is kind of enabling people to go around these issues. 0:34:33.520 --> 0:34:36.799 And so you know, in these countries I just talked 0:34:36.840 --> 0:34:40.360 about all these countries with failing currencies or mixed access 0:34:40.400 --> 0:34:43.960 to bank accounts. Technology is now enabling people to have 0:34:44.080 --> 0:34:46.520 more choice over their money. So things like bitcoin or 0:34:46.520 --> 0:34:50.719 stable coins allow people in all these different jurisdictions to say, 0:34:50.800 --> 0:34:54.239 instead of my local rapidly debasing currency that my wages 0:34:54.280 --> 0:34:57.400 and my savings are denominated in, I can go around 0:34:57.440 --> 0:35:00.799 that system and I can say I want dollars from 0:35:00.800 --> 0:35:04.120 this jurisdiction, or I want this decentralized currency bitcoin, or 0:35:04.120 --> 0:35:06.839 whatever the case may be, depending on their preferences, their 0:35:06.880 --> 0:35:11.239 volatility tolerance, their technical understanding. And so that's basically a 0:35:11.320 --> 0:35:14.360 way to break into all these different silos. And the 0:35:14.400 --> 0:35:15.920 other point I make in the book is that when 0:35:15.960 --> 0:35:18.840 we look at develop countries, so obviously we have a 0:35:18.880 --> 0:35:21.759 lot fewer obvious problems with our money. Like you said, 0:35:21.760 --> 0:35:24.040 we don't really have problems making payments, we don't really 0:35:24.040 --> 0:35:28.000 have problems with rapid debasement, but instead that the problems 0:35:28.040 --> 0:35:31.280 tend to be more subtle. So, for example, the rapid 0:35:31.280 --> 0:35:34.760 accumulation of government debt is one of those things where 0:35:35.200 --> 0:35:39.000 it's this kind of slowly growing instability outside of our 0:35:39.080 --> 0:35:42.280 kind of immediate concern, but something that long terms an issue, 0:35:42.280 --> 0:35:44.440 and I think a more kind of short term issue 0:35:44.520 --> 0:35:47.080 something that kind of happens on a regular basis is 0:35:47.080 --> 0:35:52.000 that people underestimate the importance of credit. And so, for example, 0:35:52.080 --> 0:35:56.239 during major crisses, when credit locks up, when governments and 0:35:56.320 --> 0:36:00.000 central banks give selective credit to some entities. For example, 0:36:00.040 --> 0:36:02.879 in the United States during the Global financial crisis, they 0:36:02.960 --> 0:36:06.640 gave credit to large banks, but they would not give 0:36:06.680 --> 0:36:10.200 credit to say, some smaller banks or homeowners and entities 0:36:10.239 --> 0:36:13.719 like that, and so they can selectively basically bail out 0:36:13.800 --> 0:36:16.800 certain entities more so than other entities. And this is 0:36:16.880 --> 0:36:20.280 kind of a recurring cycle that happens recession after recession 0:36:20.320 --> 0:36:23.319 after recession, and it's one of the key forces of 0:36:23.480 --> 0:36:27.320 wealth concentration that's happening under the surface. So in some ways, 0:36:27.480 --> 0:36:29.040 the kind of the problems of the money that we 0:36:29.080 --> 0:36:31.799 have in developed countries are more like the problems of 0:36:31.840 --> 0:36:34.160 having a bad diet. And we talk about the quality 0:36:34.200 --> 0:36:37.480 of food, for example, we might say, well, when we 0:36:37.560 --> 0:36:40.000 eat it, we get full, we function, we don't really 0:36:40.000 --> 0:36:42.279 see a problem. But of course if we're eating bad 0:36:42.280 --> 0:36:44.640 food over a long period of time, those problems tend 0:36:44.680 --> 0:36:48.439 to accumulate, Whereas in developing countries the money problems tend 0:36:48.440 --> 0:36:50.120 to be more bad on the surface, it's more like 0:36:50.160 --> 0:36:52.879 the food is poison, and it's more obviously in your 0:36:52.920 --> 0:36:55.319 face a problem. And so there's all these kinds of 0:36:55.320 --> 0:36:57.880 inefficiencies built up in the system, and I argue that 0:36:57.920 --> 0:36:59.960 a lot of it is just because of the technology 0:37:00.239 --> 0:37:04.120 path that we've you know, kind of the deterministic technological 0:37:04.160 --> 0:37:06.799 path and the order of technologies that we've had up 0:37:06.840 --> 0:37:07.400 to this point. 0:37:08.960 --> 0:37:11.239 Okay, so how do we fix it? 0:37:11.320 --> 0:37:15.399 Linn. The book basically doesn't have a firmly prescriptive view, 0:37:15.400 --> 0:37:18.200 but it basically emphasized that some of these open source 0:37:18.239 --> 0:37:23.080 technologies that are still somewhat dismissed by academia and kind 0:37:23.080 --> 0:37:26.960 of mainstream journalism are I think a lot more powerful 0:37:27.000 --> 0:37:30.120 than they get credit for. Basically, within that kind of 0:37:30.160 --> 0:37:33.760 one hundred and sixty different currency framework that I mentioned, 0:37:34.160 --> 0:37:37.360 the fact that these currencies can go around borders, the 0:37:37.360 --> 0:37:40.080 fact that they can provide people more choice of what 0:37:40.160 --> 0:37:42.799 money that they want to hold, regardless to where they are. 0:37:42.880 --> 0:37:45.080 As long as they have some sort of basic internet connection, 0:37:45.200 --> 0:37:48.160 some sort of basic phone service, they're able to go 0:37:48.239 --> 0:37:52.279 around these types of blockades. And that's over the long 0:37:52.400 --> 0:37:54.879 arc of time, I think able to put a lot 0:37:54.920 --> 0:37:57.760 more restraints on the types of manipulations that can occur 0:37:58.000 --> 0:38:01.680 outside of their purview and give them more options. For example, 0:38:01.840 --> 0:38:04.680 I personally spend part of each year in Egypt. So 0:38:04.719 --> 0:38:06.480 I live most of the year in the United States 0:38:06.760 --> 0:38:09.120 part of each year in Egypt, and that's because some 0:38:09.200 --> 0:38:11.200 of my family and friends are in Egypt. My husband 0:38:11.200 --> 0:38:14.120 and I are kind of buy country, and whenever we're 0:38:14.160 --> 0:38:17.279 in Egypt, we see a lot of these problems, a 0:38:17.320 --> 0:38:20.160 lot more acutely compared to when we're in the United States, 0:38:20.719 --> 0:38:24.600 and I'm always reminded when I go there. How in 0:38:24.640 --> 0:38:29.600 the twenty first century, our technological aspects of money have 0:38:29.719 --> 0:38:32.399 not really caught up with the technological aspects of other 0:38:32.440 --> 0:38:35.440 parts of our lives. And so, for example, an anecdote 0:38:35.440 --> 0:38:36.799 that I'd like to share a lot is I know 0:38:37.080 --> 0:38:41.880 a physician in Egypt that holds physical cash dollars that 0:38:41.920 --> 0:38:45.320 he buys on the black market as his primary liquid 0:38:45.360 --> 0:38:48.680 savings because he doesn't trust the local currency. They have 0:38:48.680 --> 0:38:52.160 thirty seven percent inflation, They've had double digit inflation more 0:38:52.160 --> 0:38:55.040 often than not over the past fifty years. That's in 0:38:55.080 --> 0:38:57.040 the twenty first century. In twenty twenty four, that's his 0:38:57.200 --> 0:39:00.800 chosen monetary technology, and it just shows that this whole 0:39:00.800 --> 0:39:03.600 system I think is right for disruption. And I think 0:39:03.640 --> 0:39:07.319 that these kind of open source things, and I tend 0:39:07.320 --> 0:39:09.839 to focus on bitcoin and stable coins have thus far 0:39:09.960 --> 0:39:12.520 kind of had the most utility in these areas, serve 0:39:12.640 --> 0:39:15.600 people in these different jurisdictions and kind of go around 0:39:15.640 --> 0:39:19.759 and present an alternative to somebody's more centralized and kind 0:39:19.760 --> 0:39:23.960 of rapidly debasing or rapidly kind of financially abused systems. 0:39:24.840 --> 0:39:27.759 When people like me say that they can't quite get 0:39:27.760 --> 0:39:30.320 their head around the likes of bitcoin as a long 0:39:30.480 --> 0:39:34.480 term entity because they can't see the use case said, 0:39:34.520 --> 0:39:37.600 is simply because we're not looking outside the developed world 0:39:37.600 --> 0:39:38.319 for a use case. 0:39:38.640 --> 0:39:40.040 I think that's a big chunk of it. So in 0:39:40.080 --> 0:39:43.000 the developed world, for example, we don't really have a 0:39:43.440 --> 0:39:47.320 rapid like a major payment problem, and for our savings problem, 0:39:47.640 --> 0:39:49.520 we have some issues with it, but not really so 0:39:49.560 --> 0:39:51.319 for example, we can hold money in the s and 0:39:51.320 --> 0:39:54.960 P five hundred. Our equity markets are fairly good, and 0:39:55.080 --> 0:39:59.000 we don't really face problems too often with bank accounts 0:39:59.000 --> 0:40:02.399 being frozen or for kind of arbitrary reasons or things 0:40:02.480 --> 0:40:04.680 like that. Whereas when you go to many other countries. 0:40:05.080 --> 0:40:09.120 One the currency is rapidly debasing generally faster too. They 0:40:09.160 --> 0:40:12.240 don't really have access on average to as good equity 0:40:12.239 --> 0:40:14.839 markets as we do. You know, they'll have a lot 0:40:14.840 --> 0:40:17.680 of volatility, not a lot of upside. If the country 0:40:17.719 --> 0:40:20.759 even has a significant equity market to the extent that 0:40:20.760 --> 0:40:23.279 they can get access to offshore assets, it's usually more 0:40:23.280 --> 0:40:25.440 restricted to the wealthy end of the spectrum. Right, If 0:40:25.440 --> 0:40:27.239 you can afford an offshore bank account, if you can 0:40:27.280 --> 0:40:30.760 afford an offshore brokerage account, you're generally in a better position. 0:40:30.960 --> 0:40:33.120 And so there's a lot of these technologies are kind 0:40:33.120 --> 0:40:35.919 of an equalizer. They basically say, if you have a smartphone, 0:40:35.960 --> 0:40:38.160 then you can access to the type of things that historically 0:40:38.239 --> 0:40:42.160 we're more accessible to the wealthy. And then also, for example, 0:40:42.239 --> 0:40:44.799 if your bank accounts are just arbitrarily frozen, right, there 0:40:44.800 --> 0:40:46.680 are a lot of countries where if you protest or 0:40:46.719 --> 0:40:50.040 things like that, your bank account's just frozen, confiscated. And 0:40:50.160 --> 0:40:54.880 so there's actually you know, human rights organizations or democracy 0:40:54.920 --> 0:40:58.520 advocates and things like that that make use of stable coins, 0:40:58.520 --> 0:41:02.120 bitcoin and other sort of descentalized financial systems to go 0:41:02.200 --> 0:41:05.920 around the fact that their local jurisdictions got a monopoly 0:41:06.120 --> 0:41:08.600 over the monetary system. And I think that those are 0:41:08.719 --> 0:41:12.160 these things that often go overlooked in a lot of 0:41:12.160 --> 0:41:15.319 these discussions around the usefulness of this type of technology, 0:41:15.520 --> 0:41:18.520 which to some extent understandable because there's been so much fraud, 0:41:18.520 --> 0:41:22.040 there's been so much hype in the broader space, and 0:41:22.080 --> 0:41:24.680 I think it's a shame because underneath all of that 0:41:24.800 --> 0:41:27.839 kind of hype and fraud and problems, there are these 0:41:27.880 --> 0:41:31.080 seeds of really important use cases, at least for a 0:41:31.120 --> 0:41:32.440 subset of the technology. 0:41:33.480 --> 0:41:35.200 Now, let me just ask you about one of the 0:41:35.239 --> 0:41:38.359 other things that the skeptics such as me to say 0:41:38.560 --> 0:41:41.960 you mentioned earlier that in times of crisis, a central 0:41:41.960 --> 0:41:44.600 bank is no longer independent because and we know that 0:41:44.640 --> 0:41:47.560 it isn't a time of crisis that we understand properly 0:41:47.560 --> 0:41:53.360 the sovereignty of the nation state. Right, So if stable coins, Bitcoin, 0:41:53.480 --> 0:41:56.160 any of the new cryptocurrencies were to become a threat 0:41:56.440 --> 0:42:00.600 to an existing currency, surely the same thing can happen, 0:42:00.960 --> 0:42:02.759 and that if they become a threat, we find out 0:42:02.800 --> 0:42:04.880 about the power of the nation's stage and they're stopping 0:42:04.880 --> 0:42:05.280 a threat. 0:42:05.920 --> 0:42:09.040 So I think that depends on the authority of the 0:42:09.120 --> 0:42:11.360 nation state. And so an interesting case study in recent 0:42:11.440 --> 0:42:14.239 years was Nigeria. So that's a country of two hundred 0:42:14.239 --> 0:42:18.680 million people. They ban cryptocurrencies from their banking system, so 0:42:18.719 --> 0:42:20.799 they basically said banks can no longer send money to 0:42:20.960 --> 0:42:25.680 known crypto exchanges, and they introduced their enira, the CBDC 0:42:26.400 --> 0:42:28.840 and yet for you know, years, three years or so, 0:42:29.160 --> 0:42:32.799 they had very limited adoption of the enira. And they 0:42:32.840 --> 0:42:36.160 have one of the highest adoption rates of cryptocurrencies mainly 0:42:36.400 --> 0:42:40.600 stable coins and bitcoin in the world. And specifically they 0:42:40.600 --> 0:42:43.640 have really high peer to peer trading volumes because that's 0:42:43.680 --> 0:42:46.440 how they go around their local banking system. And so 0:42:46.440 --> 0:42:50.120 there are certain technologies or certain kind of transparency things 0:42:50.160 --> 0:42:54.040 that make it pretty hard for governments to always get 0:42:54.080 --> 0:42:56.640 away with specifically what they want to do. Now, obviously 0:42:56.920 --> 0:43:00.279 a country like China would would likely have more success 0:43:00.080 --> 0:43:01.960 us at pushing things that it wants to do then 0:43:02.000 --> 0:43:03.480 say a country like Nigeria. 0:43:03.640 --> 0:43:06.120 I wonder if we can briefly but move away from 0:43:06.120 --> 0:43:08.920 the book and talk in general about markets and economics, 0:43:08.960 --> 0:43:11.640 because you're not just an author a strategist, and the 0:43:11.640 --> 0:43:14.719 most important thing at the moment for everyone investing, for 0:43:14.760 --> 0:43:17.959 everyone is to think about where inflation is going next. 0:43:17.960 --> 0:43:20.040 And we talk a lot on this podcast about how 0:43:20.120 --> 0:43:23.359 we have not expected inflation to go up, come down, 0:43:23.440 --> 0:43:27.040 and stay down, because mostly when you have these inflationary episodes, 0:43:27.080 --> 0:43:29.279 they tend to come and go. You get inflation, you 0:43:29.280 --> 0:43:31.960 get a little disinflation, you get inflation again, et cetera. 0:43:32.280 --> 0:43:33.840 And having looked at your work, I see that's a 0:43:33.880 --> 0:43:35.799 few point that you agree with or appear to agree with. 0:43:36.040 --> 0:43:37.960 Yeah, And I think a big factor to focus on 0:43:38.040 --> 0:43:40.799 that's going to really dictate the pace of inflation is 0:43:40.840 --> 0:43:42.920 the energy side. So if you look back at all 0:43:42.960 --> 0:43:46.640 the major of modern history, they always coincided with spikes 0:43:46.640 --> 0:43:49.279 and energy prices because that's been underlying input for a 0:43:49.320 --> 0:43:53.440 lot of things. It's the underlying input for wages, it's transportation, automation. 0:43:54.000 --> 0:43:57.120 Now even currently things like AI run on quite a 0:43:57.160 --> 0:44:00.719 bit of power. And if you have abundant energy, then 0:44:00.880 --> 0:44:04.800 some of those other inflationary forces in the economy they're present, 0:44:04.840 --> 0:44:07.400 but they're not as severe as one might think. Whereas 0:44:07.520 --> 0:44:12.359 when the energy itself is inflationary, almost any reductions in 0:44:12.440 --> 0:44:15.240 other areas tend not to be sufficient to offset that inflation. 0:44:15.400 --> 0:44:18.560 So my kind of expectation is that on average, this 0:44:18.640 --> 0:44:21.160 decade is going to have higher average inflation than the 0:44:21.160 --> 0:44:25.719 prior couple decades, but the timing and severity of any 0:44:25.840 --> 0:44:29.520 kind of further inflation waves you might experience are likely 0:44:29.560 --> 0:44:33.719 to be quite coincident with energy. So I think basically, 0:44:33.719 --> 0:44:36.120 if one wants to have a strong opinion on that, 0:44:36.160 --> 0:44:39.600 they really have to dive into, especially in their particular country, 0:44:39.920 --> 0:44:43.560 the sources of energy that they use, the likelihood of, 0:44:43.600 --> 0:44:48.000 for example, global oil disruptions, the growth rate of US 0:44:48.080 --> 0:44:50.680 shale oil, and the ability to meat demands of the 0:44:50.680 --> 0:44:54.400 next five years or so. And so my expectation is 0:44:54.440 --> 0:44:57.480 that by the time this decade's finished, we're probably going 0:44:57.520 --> 0:45:01.800 to have another energy price spike and another inflation spike, 0:45:02.280 --> 0:45:05.080 and so I think that's where I'm focusing. I think, 0:45:05.120 --> 0:45:08.360 aside from that is just the ongoing issue of the 0:45:08.520 --> 0:45:11.680 money supply growth that occurred a few years ago is 0:45:11.800 --> 0:45:14.920 still working its way through the economy. It's still working 0:45:14.920 --> 0:45:18.239 its way through weight growth as a price growth, and 0:45:18.320 --> 0:45:20.879 so I think that process still has some time to go. 0:45:21.360 --> 0:45:24.600 But that if not for an energy spike, that can 0:45:24.640 --> 0:45:27.880 eventually settle back down. And it's really about the energy 0:45:27.880 --> 0:45:31.200 side that I think will determine the timing or magnitude 0:45:31.239 --> 0:45:32.680 of future inflation waves. 0:45:32.719 --> 0:45:35.200 Okay, and how would that affect markets? 0:45:35.840 --> 0:45:38.840 So if you were to get another sustained inflation wave, 0:45:39.160 --> 0:45:43.320 that probably of the market would then price bond you'll hire. 0:45:43.719 --> 0:45:45.759 And I would be concerned about some of these really 0:45:45.840 --> 0:45:48.680 high valued equities that are trading at thirty, forty fifty 0:45:48.680 --> 0:45:52.239 times earnings in some cases, because you tend to have 0:45:52.280 --> 0:45:56.600 a thing where during periods of low inflation, equity valuations 0:45:56.680 --> 0:45:59.000 and can get very high because the cost of money 0:45:59.040 --> 0:46:02.239 is very low. Whereas in environments where we have more 0:46:02.280 --> 0:46:05.799 of these inflation of core inputs, some of these more 0:46:06.040 --> 0:46:09.360 disinflation type of assets, high valued equities or bonds and 0:46:09.400 --> 0:46:12.520 things like that, tend to do very poorly. So a 0:46:12.560 --> 0:46:16.640 lot of investors are invested with structural disinflation in mind. 0:46:16.800 --> 0:46:20.040 The classic sixty to forty portfolio of equities and bonds, 0:46:20.080 --> 0:46:23.120 and especially market cap weighted equities, so they're very geared 0:46:23.200 --> 0:46:27.000 towards the large growth stocks, especially in the United States markets. 0:46:27.280 --> 0:46:30.920 I like having a separate segment in a portfolio focused 0:46:30.960 --> 0:46:34.720 on energy because that is in many cases a better 0:46:34.840 --> 0:46:38.400 hedge against the rest of the assets during decades that 0:46:38.440 --> 0:46:42.279 are more inflation a on average. So during disinflationary decades, 0:46:42.800 --> 0:46:46.800 bonds are a better hedge for equities, whereas during inflationary decades, 0:46:47.000 --> 0:46:48.839 energy tends to be a better hedge for the rest 0:46:48.840 --> 0:46:51.080 of in equity portfolio. So I certainly like to have 0:46:51.120 --> 0:46:52.760 that slice of protection. 0:46:53.960 --> 0:46:56.240 Now, Lynn, I always ask at the end of the podcast, 0:46:56.320 --> 0:46:58.520 always asked the same question. I feeling slightly embarrassed and 0:46:58.520 --> 0:47:00.920 a little pointless asking you this question, but I have 0:47:00.960 --> 0:47:05.200 to because I ask everybody. Okay, if you. 0:47:04.640 --> 0:47:05.160 Here we go. 0:47:05.600 --> 0:47:08.799 If you were to only be able to invest in 0:47:08.920 --> 0:47:12.160 one asset over a ten year period, and you were 0:47:12.280 --> 0:47:15.359 only given a choice of two assets, one of those 0:47:15.480 --> 0:47:19.279 was gold and one of those was bitcoin, which would 0:47:19.280 --> 0:47:19.800 you choose? 0:47:21.000 --> 0:47:23.720 So Bitcoin is the risk your choice in the sense 0:47:23.800 --> 0:47:26.839 that there's a non zero chance that the investment gets 0:47:26.840 --> 0:47:29.799 heavily disrupted in some way, whereas gold by the end 0:47:29.800 --> 0:47:31.719 of the decade that you're still going to have you 0:47:31.760 --> 0:47:34.720 know roughly probably what your perching power is. But between 0:47:34.719 --> 0:47:38.120 the two, I would have to probably go with bitcoin, Okay. 0:47:37.800 --> 0:47:40.080 So you still have some confidence in gold. That's interesting. 0:47:40.600 --> 0:47:43.840 So gold has had this place as a kind of 0:47:43.840 --> 0:47:47.280 a mental backstop for kind of the global financial system. 0:47:47.480 --> 0:47:49.160 It's kind of this this like head, this kind of 0:47:49.200 --> 0:47:51.960 bearer asset that you can hold that can't be rapidly debased. 0:47:52.480 --> 0:47:57.400 And in a world of bitcoin and digital assets and equities, 0:47:57.680 --> 0:48:00.919 I think gold is still an analog backups. People say, 0:48:00.920 --> 0:48:04.080 what about cyber attacks, what about Internet outages, what about 0:48:04.120 --> 0:48:06.839 power disruptions, all this kind of tail risks that people 0:48:06.920 --> 0:48:10.040 can imagine. I think gold just transfers over to that 0:48:10.680 --> 0:48:14.840 new world and still serves that kind of similar mental backstop. 0:48:14.840 --> 0:48:17.839 And it's also still what central banks prefer as their 0:48:18.040 --> 0:48:22.760 their main underlying collateral, aside from other other countries bonds. 0:48:25.560 --> 0:48:28.000 Final question, everyone's going to go out and buy your 0:48:28.000 --> 0:48:30.000 book and read it now if they haven't already on 0:48:30.040 --> 0:48:31.719 any lots of well listen as they've already got it 0:48:31.719 --> 0:48:34.239 and already read it. But your book aside, is there 0:48:34.680 --> 0:48:37.040 are there any books that will one book in particular 0:48:37.080 --> 0:48:39.200 that you see as an investing bible that you would 0:48:39.200 --> 0:48:41.080 recommend to everybody that they should read. 0:48:41.120 --> 0:48:41.880 Do you have a favorite? 0:48:41.920 --> 0:48:44.200 So? I think actually a really simple one is the 0:48:44.239 --> 0:48:48.120 most important thing by Howard Marx, and it's the reason 0:48:48.160 --> 0:48:50.840 I like it it's a very accessible read. It's not 0:48:50.880 --> 0:48:54.560 really about them like the detailed mechanics of investing. It's 0:48:54.880 --> 0:48:57.319 based on just investing principles. And so if people that 0:48:57.560 --> 0:49:00.800 aren't familiar with him, Howard Marx is a billionaire investor 0:49:01.200 --> 0:49:04.759 primarily in junk bonds, but the book itself applies to 0:49:05.440 --> 0:49:08.239 He's well known for his kind of macro or insightful 0:49:08.320 --> 0:49:11.799 articles on multiple topics, and the book itself is not 0:49:11.880 --> 0:49:14.600 about any specific asset class. It's more about the mindset 0:49:15.040 --> 0:49:17.200 and kind of the joke of the book is that 0:49:17.320 --> 0:49:20.759 Howard found himself whenever people say would talk to him 0:49:20.800 --> 0:49:22.560 and say the most important thing is this, and then 0:49:22.600 --> 0:49:24.600 like in another conversation, you'd be like the most important 0:49:24.600 --> 0:49:26.799 thing and it'd be like a different topic. So, as 0:49:26.800 --> 0:49:29.359 a joke wrote the book in every chapter is a 0:49:29.360 --> 0:49:32.840 different most important thing. And so the book itself is 0:49:32.880 --> 0:49:38.319 a fairly concise set of independent descriptions or recommendations for 0:49:38.440 --> 0:49:40.800 how to think about investing, how to think about finance. 0:49:42.280 --> 0:49:45.520 Wonderful, Lynn, thank you so much for all those fascinating insights. 0:49:45.520 --> 0:49:46.440 We hugely appreciate you. 0:49:46.520 --> 0:49:47.959 Joinning you thank you for having me. 0:49:54.880 --> 0:49:56.359 With me now to reflect to what we just said 0:49:56.400 --> 0:49:58.920 from Lynn Alden, author of Broken Money, is senior reporter 0:49:59.160 --> 0:50:02.640 John Steppeg. John, I'm so glad you're had to talk 0:50:02.680 --> 0:50:05.160 to me about this one. This was just the most 0:50:05.160 --> 0:50:06.640 fascinating podcast, wasn't it. 0:50:07.280 --> 0:50:10.440 I know, I thought it was great. Actually really really 0:50:12.400 --> 0:50:15.840 their history of money is so interesting, and I would 0:50:15.840 --> 0:50:20.000 say that Len's basically summed it up, you know, your 0:50:20.040 --> 0:50:21.960 lessening this. She actually probably don't really have to go 0:50:22.040 --> 0:50:24.720 and read my chairs apart for the hard book obviously, 0:50:25.960 --> 0:50:27.400 So no, I thought I thought it was great. 0:50:27.800 --> 0:50:29.439 Yeah, I mean, I just loved the way. 0:50:29.600 --> 0:50:32.040 I love the way that she looked at money from 0:50:32.120 --> 0:50:35.919 the very beginning as being ledger based, you know, because 0:50:35.960 --> 0:50:37.600 people don't think about it. We talked about this a 0:50:37.600 --> 0:50:39.759 bit about about how people look at the origins of 0:50:39.800 --> 0:50:42.160 money being about barter, where in fact it's much more 0:50:42.239 --> 0:50:45.240 likely it was never about barter. It was always about 0:50:45.239 --> 0:50:50.040 credit credit in people's heads, credit credit using stones, using 0:50:50.040 --> 0:50:52.520 shells or whatever. But what we're not talking about barter, 0:50:52.680 --> 0:50:56.319 we're talking about keeping ledgers. And I wrote about this 0:50:56.800 --> 0:51:00.360 years ago. Actually I wrote about my bitcoin first. I 0:51:00.360 --> 0:51:04.439 wrote about it ledgers and wrote about how the rise 0:51:04.480 --> 0:51:08.200 tones of yapp were a ledger currency, and bitcoin was 0:51:08.200 --> 0:51:10.719 the modern version of that, and that you know, she's 0:51:10.760 --> 0:51:13.520 really expanded on all that stuff in this book and 0:51:13.560 --> 0:51:15.600 taken her through the entire history of money with this 0:51:15.719 --> 0:51:17.040 idea of the ledger. 0:51:16.719 --> 0:51:20.160 Of the background. And I think it's absolutely fascinating, brilliant. 0:51:21.000 --> 0:51:23.640 I mean, I agree because one thing I remember whenever 0:51:23.680 --> 0:51:27.359 I first started getting interested in history of money, which 0:51:27.360 --> 0:51:31.080 I guess was about twenty years ago, the prevailing idea 0:51:31.400 --> 0:51:34.759 was the commodity idea, the idea that we'd kind of 0:51:34.800 --> 0:51:39.440 gradually found better and better substances for solving the you know, 0:51:39.520 --> 0:51:43.799 the the timing of kind of woants and so we're 0:51:43.800 --> 0:51:46.719 going from one of our salt t shales to gold eventually. 0:51:47.520 --> 0:51:48.880 And I think it was at the kind of I 0:51:48.920 --> 0:51:51.600 think it was David Graeber's book that eventually kind of 0:51:51.640 --> 0:51:55.480 displaced that in the popular imagination at that point when 0:51:55.560 --> 0:51:58.040 you start to realize, well, so that's it's really daft 0:51:58.200 --> 0:52:02.640 to imagine that that's how things started, because you couldn't 0:52:02.680 --> 0:52:05.920 get anything done then until someone had come up with 0:52:05.960 --> 0:52:08.600 the idea of a currency. But it's like, you say, 0:52:08.600 --> 0:52:10.839 this ledger thing, if you've got a small enough tribe 0:52:10.880 --> 0:52:13.160 of people. Then everyone can remember, well, you know Dave 0:52:13.440 --> 0:52:17.319 always Merrin, who always join, who owns summer? You know 0:52:17.600 --> 0:52:20.160 this amount of money, and then you don't have to 0:52:20.840 --> 0:52:25.200 have any real you know, it doesn't have to be 0:52:25.200 --> 0:52:28.200 a kind of anything that represents it in a passing 0:52:28.520 --> 0:52:30.480 things sort of way. You've just got all that big 0:52:30.480 --> 0:52:32.880 stone is yours or know what's mine? Now? So no, 0:52:33.000 --> 0:52:35.760 I do I think that that made a lot of sense. 0:52:36.160 --> 0:52:38.879 Yeah, and I when you think about the point here 0:52:39.040 --> 0:52:42.280 being that all money does is moves goods and services 0:52:42.320 --> 0:52:45.239 through time, right, That's all it does. And so you 0:52:45.360 --> 0:52:48.040 only need it. You don't need anything physical for that. 0:52:48.080 --> 0:52:50.480 You simply need the record. And we didn't talk about this, 0:52:50.520 --> 0:52:54.600 but my favorite favorite bit about rites right stands and 0:52:54.719 --> 0:52:58.000 Yap is the story which may or may not be true, 0:52:58.000 --> 0:52:59.960 but I think it is about one of the boats 0:53:00.040 --> 0:53:03.440 coming back from the distant island with very large ry 0:53:03.520 --> 0:53:08.960 stones on the boat thinking and so the stones are 0:53:08.960 --> 0:53:14.040 then lost under the sea, but they still exist as wealth. 0:53:14.200 --> 0:53:17.200 They're still owned. Everyone knows they're there. They don't need 0:53:17.239 --> 0:53:18.040 to be seen. 0:53:20.080 --> 0:53:23.080 To be part of the system. That are you. Yeah, 0:53:23.160 --> 0:53:25.840 you own that one that's under the sea. No, No, 0:53:25.960 --> 0:53:28.320 you own it. Yeah, exactly, I just I just swapped 0:53:28.320 --> 0:53:30.399 to you for some I do I think, I mean, 0:53:31.000 --> 0:53:33.920 I think my question then low after this, and probably 0:53:33.960 --> 0:53:39.480 the main thing that that actually I was thinking was so, 0:53:40.320 --> 0:53:44.640 has this changed your view on Bitcoin of crypto currencies 0:53:44.840 --> 0:53:51.920 in any way? No, No, because I mean it's very 0:53:52.120 --> 0:53:54.960 it's all very logical, and it makes an awful lot 0:53:55.040 --> 0:53:57.280 of sense. And I think that a lot of Len's 0:53:57.280 --> 0:54:01.960 points about the difference between developed markets and developing markets 0:54:02.719 --> 0:54:04.600 what interesting as well. 0:54:05.360 --> 0:54:07.319 Yes, absolutely, she's right with that. 0:54:07.480 --> 0:54:09.919 One thing she is definitely right about and I thought 0:54:09.960 --> 0:54:12.839 it when I looked at her work before, is that 0:54:12.880 --> 0:54:15.839 you and I and our conversations have very often overlooked 0:54:15.880 --> 0:54:20.040 the fact that develop markets don't have the semi reliable 0:54:20.040 --> 0:54:23.920 money systems that we do. But the bit where I 0:54:24.000 --> 0:54:27.920 didn't find Lens replied to me to be satisfactory, and 0:54:28.040 --> 0:54:31.719 where I'm still concerned is that I believe in the 0:54:31.800 --> 0:54:35.120 nation state and the sovereignty of the nation state and 0:54:35.160 --> 0:54:38.960 the reassertion of the nation state in times of crisis, right, 0:54:39.280 --> 0:54:41.520 And we do find that that whenever there is a 0:54:41.640 --> 0:54:44.359 financial crisis or died any other kind of crisis, we 0:54:44.400 --> 0:54:46.800 see the nation state showing who holds power. 0:54:47.000 --> 0:54:50.160 And interestingly, I. 0:54:48.960 --> 0:54:51.040 Think back to the podcast we did a few weeks 0:54:51.040 --> 0:54:55.480 ago on space, and that conversation has come up again. Now, 0:54:55.600 --> 0:54:57.920 how do you control space? Who wins in space? What 0:54:57.960 --> 0:55:00.600 are the rules in space? Why can't you just take 0:55:00.640 --> 0:55:03.120 over Mars if he feels like it? And the answer 0:55:03.280 --> 0:55:06.880 is because he has to take off from the territory 0:55:06.920 --> 0:55:11.680 of a nation state, right, So therefore you can't. Nothing 0:55:11.800 --> 0:55:16.719 private can have power over over the nation state, be 0:55:16.800 --> 0:55:18.920 it in space or beard a new kind of money. 0:55:19.000 --> 0:55:21.160 And that's the bit where That's the bit where I really. 0:55:21.000 --> 0:55:22.880 Was hoping that Lin would give me an answer that 0:55:22.960 --> 0:55:27.000 I could work with, but that was the one point 0:55:27.040 --> 0:55:28.920 where she couldn't and didn't. 0:55:29.120 --> 0:55:30.360 So I still. 0:55:30.200 --> 0:55:35.360 Think that you can't have a currency operating out with 0:55:35.680 --> 0:55:39.560 a sovereign currency and hold its value indefinitely. 0:55:41.640 --> 0:55:43.960 See I mean, I think I said a good point, 0:55:44.040 --> 0:55:49.080 and I agree because bas of what I mean, what 0:55:49.480 --> 0:55:51.960 Bog's don't is that in the absence of actually Belden 0:55:52.000 --> 0:55:54.640 is owin rawbot army, your eight ill and musk can 0:55:54.920 --> 0:55:57.800 do the permission or of the nation state, and the 0:55:57.880 --> 0:56:00.719 nation state has the monopoly of a visa and that's 0:56:01.280 --> 0:56:06.560 basically what it boils down to. But I mean within 0:56:06.640 --> 0:56:10.200 all that then no, it's it's that thing of well, 0:56:10.280 --> 0:56:14.040 we can still, I guess recognize that something like bitcoin 0:56:15.080 --> 0:56:20.560 does have value within the context that it may not. 0:56:20.760 --> 0:56:22.800 You know, it's not going to go on and replace 0:56:22.840 --> 0:56:24.440 the dollar, and it's not going to go on and 0:56:24.480 --> 0:56:29.400 replace the pound. It's just but but I guess, I 0:56:29.400 --> 0:56:33.680 guess the argument that is digital gold makes the fair 0:56:33.920 --> 0:56:35.040 element sense. 0:56:36.239 --> 0:56:40.600 Sean, you've been oneever, but you. 0:56:40.560 --> 0:56:43.719 Know I've always been a bit wobblier on this than 0:56:43.920 --> 0:56:50.120 than you side. The question is always a bit well 0:56:50.160 --> 0:56:52.480 what value is it that you know? What price is it? 0:56:52.520 --> 0:56:55.920 But it's got a it has a function. It's not 0:56:56.000 --> 0:57:00.879 a scam. I think that, Len, if you are. 0:57:00.800 --> 0:57:03.960 Listening to this, you've done something nobody else has been 0:57:04.040 --> 0:57:09.200 able to do. Your broad John steppeic round the cryptocurrencies. 0:57:09.719 --> 0:57:11.920 So I'm gonna finish change my mind. 0:57:12.480 --> 0:57:18.000 Something I've never matched changed mind on anything. Don't forget that. 0:57:18.160 --> 0:57:22.760 Limb finished by saying bitcoin is riskier than gold in 0:57:22.800 --> 0:57:25.680 the sense that there is a non zero chance that 0:57:25.760 --> 0:57:29.800 the investment gets heavily disrupted in some way, whereas gold. 0:57:29.960 --> 0:57:32.600 You know that by the end of the decade, I'm 0:57:32.640 --> 0:57:34.360 adding a little to a quota, You're still going to 0:57:34.400 --> 0:57:34.640 have it. 0:57:36.120 --> 0:57:38.960 I mean, that's it was the fact partly that she 0:57:39.040 --> 0:57:41.680 acknowledged that that I thought, well, you know, you're not 0:57:42.480 --> 0:57:45.680 You're not one of these you know, idea logues or 0:57:45.680 --> 0:57:47.680 when these people is going to come more Twitter afterwards 0:57:47.720 --> 0:57:51.960 and harasses because we didn't mention their particular favorite crypto 0:57:52.000 --> 0:57:54.680 coin or something like that. You know, it clearly has 0:57:54.720 --> 0:57:58.480 a very deep understanding of the money system. But I 0:57:58.520 --> 0:58:03.840 say the thing also I wanted to bring up was 0:58:03.880 --> 0:58:08.520 I was recently reading an Old Bank for International Settlements 0:58:08.560 --> 0:58:13.280 report on digital currencies because I was bored and I 0:58:13.320 --> 0:58:14.960 was on a plane, and that was the only thing 0:58:15.000 --> 0:58:19.320 in my back. And what was interesting about that is 0:58:20.440 --> 0:58:22.600 because I think this is the other the other part 0:58:22.680 --> 0:58:25.880 of what Linn's talking about in the crypto currency thing 0:58:25.920 --> 0:58:31.120 in general, is that it's very clear that sovereigns want 0:58:31.320 --> 0:58:34.760 their cut and they are taking this seriously like central 0:58:34.800 --> 0:58:38.680 bank digital currencies are the you know, the suffering the 0:58:38.680 --> 0:58:46.120 equivalent of basically recognizing the threat posed by something like 0:58:46.200 --> 0:58:49.360 Bitcoin or more and more accurately stable coins, the thing 0:58:49.360 --> 0:58:51.960 that's freaking them out of stable coins, because those are 0:58:52.600 --> 0:58:57.360 kind of like I guess, almost like counters, not counterfeit, 0:58:57.440 --> 0:59:02.560 but private very versions of the dollar, but they're backed 0:59:02.560 --> 0:59:05.480 by dollars, but they're being used in the digital realm. 0:59:05.920 --> 0:59:09.400 And if that realm is gonna what the BIS was 0:59:09.440 --> 0:59:11.960 basically saying is the central banks, and it was doing 0:59:11.960 --> 0:59:13.880 in a very cuddly way, but was saying that central 0:59:13.920 --> 0:59:17.200 banks should be part of that world so that they 0:59:17.280 --> 0:59:20.720 can provide the asset elast resort, the currency elast resort 0:59:20.840 --> 0:59:24.000 basically for all the future applications that will be on 0:59:24.880 --> 0:59:27.680 the blockchain, if you like. And then when they were 0:59:27.680 --> 0:59:31.040 talking about the applications, that was a bit fuzzier. I 0:59:31.120 --> 0:59:33.320 think the problem there is it's like if I want 0:59:33.320 --> 0:59:36.600 to send money to you from my bank account, then fine, 0:59:36.760 --> 0:59:39.840 there's about ten different transactions behind the curtain, but I 0:59:39.880 --> 0:59:43.840 don't care, and you don't care. Yeah, it takes seconds, 0:59:43.920 --> 0:59:46.400 and if it doesn't arrive, then we can shout it somewhere. 0:59:46.480 --> 0:59:46.680 You know. 0:59:46.720 --> 0:59:49.240 It's not as from an end user point of view, 0:59:49.280 --> 0:59:50.080 it doesn't matter. 0:59:50.360 --> 0:59:52.640 I always use it, always use a camvoice when I 0:59:52.640 --> 0:59:53.600 call customer services. 0:59:53.640 --> 0:59:59.280 By the way, Oh yeah, but it's a shouty camvoice. 1:00:00.120 --> 1:00:03.320 I just use my accent. That helps a lot of 1:00:03.320 --> 1:00:10.120 the time, unless it's a Glasswegian call center. But it's 1:00:10.120 --> 1:00:13.280 a trade finance so where you've got to you know, 1:00:13.760 --> 1:00:15.960 you've got to order a shipload of goods from something 1:00:15.960 --> 1:00:18.920 from you know, somewhere across the world, and the problem 1:00:19.000 --> 1:00:21.280 is that you don't want to pay them before you've 1:00:21.280 --> 1:00:22.960 got the goods, they don't want to send the goods 1:00:23.000 --> 1:00:25.479 before you pay them, And then there's a whole load 1:00:25.520 --> 1:00:28.920 of complicated bits in the middle where the person on 1:00:28.920 --> 1:00:31.160 the other side of the world might also be staking 1:00:31.240 --> 1:00:34.400 the goods is collateral to like five different people, and 1:00:34.480 --> 1:00:37.080 you don't know anything about it. So that's sort of 1:00:37.120 --> 1:00:39.640 areas where they were talking about how kind of programmall 1:00:39.640 --> 1:00:42.240 bowl contracts and smart cuncies and all the rest of 1:00:42.280 --> 1:00:46.240 it might actually work better for these specific applications. So 1:00:46.280 --> 1:00:48.680 I guess a long way round, what I'm talking about 1:00:48.760 --> 1:00:52.120 is that it's clear that this technology does have some 1:00:52.440 --> 1:00:58.000 use in certain financial areas, and I think perhaps the 1:00:58.000 --> 1:01:01.200 biggest threat to something like bitcoin is that central banks 1:01:01.200 --> 1:01:04.200 are just going to come in and occupy that space. 1:01:05.400 --> 1:01:07.920 But it is again, it is a real area of technology. 1:01:07.960 --> 1:01:13.360 It's not something that is just a problem. Can I 1:01:13.480 --> 1:01:16.400 looking for us a solution? Looking for a problem, Well, 1:01:16.400 --> 1:01:16.800 I think. 1:01:16.640 --> 1:01:18.840 We better live in the John. We'll live it with 1:01:19.240 --> 1:01:21.439 John the convert. And you know they were saying nothing 1:01:21.480 --> 1:01:29.720 worse than a convert. Thanks for listening to this week's 1:01:29.720 --> 1:01:32.080 Maren Tooks Money. We'll be back next week. In the meantime, 1:01:32.120 --> 1:01:34.400 if you like us show, rate, review, and subscribe wherever 1:01:34.440 --> 1:01:37.000 you listen to your podcasts, and of course tell your friends. 1:01:37.240 --> 1:01:39.440 And finally, we now have our show emails those ender 1:01:39.480 --> 1:01:43.240 long ideas, questions or comment to Merin Money at Bloomberg 1:01:43.440 --> 1:01:46.880 dot net. This episode was hosted by me Maren Sumset 1:01:46.920 --> 1:01:50.040 Web produced by some asidi. Special thanks to Lynn Alden 1:01:50.080 --> 1:01:51.440 and John Steppeck.