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Speaker 1: Welcome to the first the Beginning, the premier episode of

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Speaker 1: Financial Harsey. This is the podcast where I will teach

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Speaker 1: you how money works so that you can make more,

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Speaker 1: keep more, and give more. Now, in order to be

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Speaker 1: able to do that, we have to understand how the

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Speaker 1: money machine works, how the economy operates behind the scenes,

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Speaker 1: and so what better place to start than the beginning.

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Speaker 1: So in this episode, we are talking about the beginning

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Speaker 1: of money. So we're gonna go all the way back

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Speaker 1: in time a couple of thousand years ago, and we

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Speaker 1: are going to talk about the beginning of the evolution

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Speaker 1: of money, of modern money, really, how it got from

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Speaker 1: where it started to where it's at today. Now we

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Speaker 1: are going to get through the first phase. We're gonna

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Speaker 1: talk today about when gold itself was money. Now, this

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Speaker 1: system lasted for a few thousand years um. It was

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Speaker 1: very stable. That's why it lasted so long. So what

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Speaker 1: we are going to do in this episode is walk

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Speaker 1: through how that monetary system works. Because the monetary system

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Speaker 1: is the foundation for the economy that is built on

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Speaker 1: top of it. So if we understand the mechanics of

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Speaker 1: the gold as money monetary system, what that will do

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Speaker 1: is allow us to understand how it evolved from that.

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Speaker 1: In the next couple of episodes, we will go through

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Speaker 1: how it evolved from that into the next system after that,

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Speaker 1: which is paper backed by gold, and then the next

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Speaker 1: system after that, which we're in today, which is paper

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Speaker 1: backed by nothing. And then finally we're going to get

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Speaker 1: into the fourth episode, which is going to be the

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Speaker 1: future of the monetary system, the potential the potential monetary

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Speaker 1: systems that we might enter into in the future when

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Speaker 1: this current phase ends. So for this first premiere episod

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Speaker 1: so since it's the beginning, no better place to start

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Speaker 1: than the beginning so that we can understand the origin

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Speaker 1: of the evolution of modern money and the economy that

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Speaker 1: we have today. So let's take a trip back in time,

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Speaker 1: and we are going to go into a hypothetical village,

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Speaker 1: a closed economic system. Imagine three thousand years ago, the

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Speaker 1: amount of technology that was there. You know, people were

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Speaker 1: using horses maybe you know, they were you know, they

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Speaker 1: had a little farm, they had their little houses, and

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Speaker 1: you know, not a lot of wealth compared to today's

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Speaker 1: standards for the most parts, um depending on where we're

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Speaker 1: at in the world. And we are going to be

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Speaker 1: looking at this, Uh, this caricature of a village where

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Speaker 1: everybody has gold coins, because, like I said, for thousands

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Speaker 1: of years that was money. Uh, it was gold and

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Speaker 1: silver and copper and other coins like that. Now one

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Speaker 1: thing to understand about in reality. Um, Reality is always

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Speaker 1: going to be a little bit more complicated than, uh

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Speaker 1: than when you're explaining how something works. Um. This is

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Speaker 1: true in physics, this is true in science. This is true.

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Speaker 1: And literally anything that you are explaining, Um, it's kind

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Speaker 1: of like a map. A map is going to be

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Speaker 1: um uh fundamentally missing something about reality in order to

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Speaker 1: make the map useful. Because if the map was identical

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Speaker 1: to the terrain that you're actually navigating over, then it

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Speaker 1: would be the exact terrain you're navigating over. It wouldn't

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Speaker 1: be a map anymore. So what a map does is

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Speaker 1: it intentionally uh gets rid of the useless, the things

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Speaker 1: that are not useful about the terrain, distills it down

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Speaker 1: to the essential information for what you're how you're trying

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Speaker 1: to navigate, only presents that in a scale down form,

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Speaker 1: and then it allows you to understand it. A map

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Speaker 1: that showed you literally everything that was identical to the

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Speaker 1: train you're in wouldn't be able to be useful for

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Speaker 1: you know, knowing how to get from point A to

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Speaker 1: point b um. And it's the same thing here. So

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Speaker 1: we're gonna go through a caricature here, and yes, from

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Speaker 1: the detail standpoint, it's going to be boiled down, it's

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Speaker 1: gonna be distilled, it's going to be simplified, and that's

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Speaker 1: why it is useful for understanding how money works. So

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Speaker 1: let's go to our hypothetical gold village here where everybody

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Speaker 1: has let's just say one gold coin. There's ten people

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Speaker 1: in this economy, and everybody has one gold coin, um,

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Speaker 1: and that's their money. You've got let's say a shoemaker,

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Speaker 1: You've got a roofmaker. You've got somebody with some cows

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Speaker 1: that makes the milk and the cheese. You've got somebody

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Speaker 1: with the chickens that makes the eggs. And for this example,

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Speaker 1: all of the needs are internally met with this one village.

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Speaker 1: They all trade with each other, and at the moment

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Speaker 1: where we enter in here, as we start studying this economy,

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Speaker 1: everybody has just one piece of gold, one gold coin,

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Speaker 1: and that is all the money in this economy. Now,

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Speaker 1: let's uh, let's ask the question what happens when a

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Speaker 1: transaction takes place. Um, So you've got somebody who makes

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Speaker 1: shoes and they want some eggs, and so when a

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Speaker 1: transaction takes place, money changes hands. Right now, that seems

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Speaker 1: like a very straightforward and simple and duh obvious statement there,

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Speaker 1: because when the when the shoemaker wants the eggs, he's

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Speaker 1: gonna give his gold coin to the to the egg

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Speaker 1: guy and he's gonna get some some eggs. Um. But

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Speaker 1: when we dive into the details of what's going on here,

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Speaker 1: we recognize a couple important factors, a couple of important

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Speaker 1: things that are going on here. Um. The only way

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Speaker 1: to get money in an economy like this is to

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Speaker 1: have something that somebody else wants badly enough that they

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Speaker 1: are willing to give you their money for it. That's it.

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Speaker 1: There's no way to get your hands ends on money

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Speaker 1: in this economy other than that. So if you have, uh,

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Speaker 1: you know, a new person pop up into this economy,

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Speaker 1: they just show up into this village, they need enough

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Speaker 1: money to be able to survive. Will suddenly they have

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Speaker 1: to do something, create something that somebody in that economy,

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Speaker 1: in that village wants badly enough to depart from their

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Speaker 1: money for And so maybe they they're really good at building,

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Speaker 1: fixing roofs, maybe they bring a new type of fruit

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Speaker 1: into the village. Whatever it is. Um, they have to.

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Speaker 1: And this is what's called providing value. This is creating wealth,

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Speaker 1: providing value. It's not usually explained a lot of entrepreneurs

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Speaker 1: talk about, hey, you have to create value. A lot

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Speaker 1: of ultra wealthy people who have built big businesses say, hey,

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Speaker 1: it all comes down to providing value, creating value. But

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Speaker 1: what does that really mean. All it means is that

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Speaker 1: you can give somebody something that they want badly enough

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Speaker 1: that they're willing to give you money for it. That's it.

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Speaker 1: That could be you're able to sing a song, uh,

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Speaker 1: you know well enough that people want to listen to

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Speaker 1: it and they're willing to pay you for it. Right,

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Speaker 1: it could be anything, um and and if somebody is

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Speaker 1: willing to pay you money for it, that, by definition,

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Speaker 1: is you providing or creating value or wealth. So when

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Speaker 1: when we when we take a look at that realization

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Speaker 1: that in this closed economy where the gold is money,

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Speaker 1: the only way to get your hands on money is

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Speaker 1: to have something that somebody else wants badly enough to

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Speaker 1: give you their money for it. Um. We recognize that suddenly, uh,

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Speaker 1: there is no ability for the money supply to change. Um,

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Speaker 1: whereas today the money supply is always changing. We've got

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Speaker 1: central banks and banks who can lend money into existence.

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Speaker 1: Money supply contracts and it grows, and we've got all

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Speaker 1: sorts of shenanigans going on that doesn't exist in our

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Speaker 1: in our gold village here, Uh, there's only ten pieces

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Speaker 1: of gold that are circulating, no more, no less. This

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Speaker 1: means that, uh, well I should I should stop here

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Speaker 1: and pause, because you're probably thinking at this moment, well,

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Speaker 1: there is one other way to get your hands on money,

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Speaker 1: even if gold is money, and that is to dig

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Speaker 1: it out of the ground. And you're exactly right. So

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Speaker 1: for thousands of years, gold mining has always existed as

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Speaker 1: as a business because some people, uh, in order to

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Speaker 1: get money, they're just gonna go dig that money out

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Speaker 1: of the ground. Um. Now, if we think about this

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Speaker 1: first second, it's the same today as it's always been. Uh.

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Speaker 1: That's a labor or capital intensive business to be in. Now,

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Speaker 1: you might walk around and stumble upon a little chunk

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Speaker 1: of gold sitting on the ground, um, but you may

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Speaker 1: have to dig for it and maybe if you stumble

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Speaker 1: on a chunk of gold in the ground, maybe you

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Speaker 1: have to dig to get you know, unstuck from the ground,

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Speaker 1: and then maybe you have to melt it down and

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Speaker 1: refine it. Then maybe you have to stamp it into

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Speaker 1: a coin or pour it into a mold to make

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Speaker 1: a bar. And so just because um, you know, you

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Speaker 1: found gold, doesn't mean that it does take labor to

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Speaker 1: turn it into money. And so when we think about

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Speaker 1: it from that perspective, then we realize, okay, that means

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Speaker 1: it takes there's a cost associated even with getting free

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Speaker 1: money gold out of the ground. There's a cost associated

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Speaker 1: with that your time, your labor, the cost of the

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Speaker 1: tools to be able to do that. Um. And so

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Speaker 1: when when you look at a close economy like our village,

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Speaker 1: when we go back to our village, we've got somebody

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Speaker 1: there who his job is a gold miner, Um, there's

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Speaker 1: going to be a an equilibrium, there's going to be

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Speaker 1: a supply in a demand that will apply to him

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Speaker 1: being able to go get more gold out of the ground.

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Speaker 1: Because let's say the cost or the price of gold

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Speaker 1: in that economy right now is a thousand dollars announced

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Speaker 1: announced whatever it is let's just say a thousand dollars

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Speaker 1: announced this gold miner his job. He goes out and

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Speaker 1: he spends let's say eleven hundred dollars to get the

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Speaker 1: gold out of the ground and then refine it. Is

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Speaker 1: that um Is that profitable for him? No, it's not profitable,

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Speaker 1: So he's not going to do that. He's just gonna

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Speaker 1: go spend a thousand dollars to get gold from somebody else.

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Speaker 1: Now this might seem a little bit convoluted because in

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Speaker 1: this economy, the money itself is how prices are denominated

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Speaker 1: the gold itself. So you have something the price of

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Speaker 1: it is announce of gold, the price of it is

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Speaker 1: two ounces of gold. But the same principle applies, because

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Speaker 1: instead of measuring the cost of that gold with dollars,

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Speaker 1: we're just measuring the cost of that gold with eggs

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Speaker 1: or shoes. So the exact same principle applies. It's just

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Speaker 1: easier to grasp when we think of it in dollar

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Speaker 1: terms today. So this means that when there is a

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Speaker 1: shortage of of gold coins and people want more money,

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Speaker 1: it will be profitable for people to go dig it

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Speaker 1: out of the ground and make more of it. And

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Speaker 1: that is good that it's profitable because there's a shortage

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Speaker 1: of it, we need more of it. And then in

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Speaker 1: that village, when there's a surp us and everybody has savings,

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Speaker 1: that means that there's no more demand for extra new gold.

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Speaker 1: That means that it's going to be more expensive to

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Speaker 1: go get it out of the gold than is worth it.

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Speaker 1: You could just get it from somebody else by providing

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Speaker 1: something else of value that's cheaper than going to get

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Speaker 1: it out of the ground. And so there is a

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Speaker 1: very stable supply of money in an economy like this,

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Speaker 1: and that's why when we look back at history, we

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Speaker 1: track we can track gold prices, things, the price of

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Speaker 1: things in gold for thousands of years. You can look

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Speaker 1: at the price of a salary for a Roman centurion

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Speaker 1: um was thirty seven ounces of gold per year UM.

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Speaker 1: That is roughly the same as uh the price in

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Speaker 1: gold for an army captain today um. And so the

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Speaker 1: price of things in gold is relatively stable over time

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Speaker 1: because the supply of gold is relatively stable over time.

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Speaker 1: And so when we look at this closed economy, we're

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Speaker 1: going back to our little village, the money supply over

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Speaker 1: short periods of time just doesn't change. Um. All throughout history, Uh,

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Speaker 1: the money supply, the gold supply, I should say, has

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Speaker 1: increased between one and one and a half percent per year,

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Speaker 1: and uh it's never exceeded two percent. And so for

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Speaker 1: shorter periods of time the money supply has measured in

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Speaker 1: gold just doesn't change. And so in our village, we

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Speaker 1: can just say, for uh, for the purposes of understanding

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Speaker 1: what's going on here, that the money supply is constant

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Speaker 1: ten pieces of gold. And that's it. Now, let's let's

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Speaker 1: ask a hypothetical question. What would happen if an asteroid, uh,

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Speaker 1: in the middle of the night meteor drops and hits

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Speaker 1: in the very middle of the village town square. Everybody

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Speaker 1: comes out in the morning and realizes, hey, it dropped

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Speaker 1: from the sky. This giant rock created a little creater there,

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Speaker 1: and you know it's let's say, it's the size of

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Speaker 1: you know, a small suv, and it is pure gold.

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Speaker 1: It is shiny, it is yellow. And the entire fire

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Speaker 1: village thinks to themselves, we just got rich, right, because

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Speaker 1: it used to take me, let's say, one ounce of

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Speaker 1: gold to buy, uh, you know, some eggs that I

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Speaker 1: need for the week, and then it takes me another

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Speaker 1: ounce of gold to buy the milk that I need

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Speaker 1: for the week. And you know, I'm barely scraping by here.

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Speaker 1: And so now we're all going to divide up this

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Speaker 1: asteroid amongst ourselves, and we're all going to have a

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Speaker 1: ton of gold. That means that I'm going to be

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Speaker 1: able to afford to buy more stuff now right well,

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Speaker 1: not sell fast, as I'm sure that you can probably

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Speaker 1: probably see already, because the fact that this asteroid dropped

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Speaker 1: in the middle of our village and gave us all

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Speaker 1: extra gold didn't change anything about the amount of stuff. Now,

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Speaker 1: let's backtrack a little bit. What's the only way to

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Speaker 1: get your hands on money other than other than the

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Speaker 1: asteroid fallen in the middle. What's the only way in

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Speaker 1: this economy to get your hands on new money? To

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Speaker 1: have something that you're willing to give to somebody else

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Speaker 1: that they want badly enough that they're willing to give

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Speaker 1: you money for it. That means that if you are

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Speaker 1: able to acquire money without providing value creating something that

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Speaker 1: somebody else wants badly enough to pay for it, that

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Speaker 1: means that no new wealth was created. Yes, there's more

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Speaker 1: money right now because of this asteroid this media. Uh,

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Speaker 1: there's no new wealth though, because wealth is stuff. Wealth

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Speaker 1: is the value. Wealth is the goods and the services

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Speaker 1: in an economy. That's what the true value is. That's

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Speaker 1: what the wealth is. The only thing money serves, the

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Speaker 1: only purpose that money serves is to be the middleman

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Speaker 1: between the labor and the wealth. That's it. There's no

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Speaker 1: wealth in the money in and of itself. And so

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Speaker 1: the very fact that we have this giant lump of

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Speaker 1: gold in the middle of the of the village that

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Speaker 1: we all divide up and now we all have a

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Speaker 1: hundred ounces of gold, initially everybody will feel richer. And

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Speaker 1: then I'm gonna go to my my buddy, the egg maker,

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Speaker 1: and I'm gonna I'm gonna say, hey, I would like

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Speaker 1: my weekly allowance of eggs. Here's here's one ounce of gold.

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Speaker 1: And he's gonna say, well, I already have a ton

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Speaker 1: of gold. Uh, And so I I don't actually want

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Speaker 1: to give up my eggs this week because I have

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Speaker 1: a lot of gold, so I don't need your gold. Um.

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Speaker 1: And then you're gonna be like, well, okay, well what

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Speaker 1: about ten ounces? What about fifty ounces? And suddenly you'll

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Speaker 1: realize these people are realizing the prices in real time

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Speaker 1: are being bit up because now there's an abundance of money.

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Speaker 1: So the prices of all of the existing goods and

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Speaker 1: services that didn't change, the quantity of the goods and

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Speaker 1: services didn't change, so the prices of them have to

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Speaker 1: adjust upwards for the increased supply of money. Because money

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Speaker 1: just measures the amount of wealth in an economy. It's

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Speaker 1: like if you're measuring a house, and you're measuring a house,

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Speaker 1: and let's say it's you know, it's ten ft tall

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Speaker 1: this house and UH, and now suddenly something changes on

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Speaker 1: your measuring tape and you have an abundance of feet

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Speaker 1: on your measuring tape. Uh. The the the total number

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Speaker 1: of feet on that same distance doubles, UH from ten

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Speaker 1: to twenty. So now when you measure your house, it's

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Speaker 1: twenty ft tall. Well, did the size of the house

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Speaker 1: actually change. No, that's preposterous. Just the size of the

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Speaker 1: feet changed to accommodate for the extra feet that would

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Speaker 1: have to fit into the exact same amount of space

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Speaker 1: to the distance didn't actually change. The way you were

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Speaker 1: measuring the distance changed. So when the gold meteor dropped

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Speaker 1: in the middle of the UH, the village. The wealth

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Speaker 1: in the system didn't change. The amount of goods and

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Speaker 1: services were the same, so the way that they were

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Speaker 1: measured had to change. So since the money supply went

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Speaker 1: up by a hundred times, the prices of everything will

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Speaker 1: have to go up a hundred times. And so when

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Speaker 1: we see, when we see how how an increase in

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Speaker 1: the money supply impacts prices, that's a very uh, that's

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Speaker 1: a very easy way to recognize because you know, everybody's

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Speaker 1: got more money now, so you're gonna be able to

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Speaker 1: demand more prices, more more money for your wealth that

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Speaker 1: you're giving away because you don't need the old amount

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Speaker 1: of money anymore. You need more money now now that

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Speaker 1: there's more money in the system. It's all supply demand

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Speaker 1: relative to each other, money compared to the goods and services.

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Speaker 1: So let's let's go back to that statement that I

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Speaker 1: made just a few minutes ago about money being the

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Speaker 1: middleman between labor and wealth, because that's what money is. Yes,

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Speaker 1: it measures wealth, but it operates as the middleman between

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Speaker 1: labor and wealth. Um, So what does that mean when

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Speaker 1: you provide value, when you create wealth, when you create

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Speaker 1: something that somebody else wants enough to be able to

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Speaker 1: give you their money for it. Um, what they're going

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Speaker 1: to do is give you money and take your thing. Right,

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Speaker 1: So we know that the wealth is the stuff the

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Speaker 1: goods and services. So you make a pair of shoes

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Speaker 1: and somebody gives you announce of gold for it. Now

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Speaker 1: you have announce of gold. So from a needs perspective,

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Speaker 1: from a wealth perspective, from a goods and services perspective,

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Speaker 1: from like a Maslow's hierarchy perspective, which one of you

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Speaker 1: is better off? Right now, the person with the gold

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Speaker 1: or the person with the shoes. Well, when it comes

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Speaker 1: down to it, the person with the shoes is better off. Right.

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Speaker 1: Why is that Well because money is where the value

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Speaker 1: of your labor is going to be stored until you

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Speaker 1: exchange it for real wealth. That's the purpose that money serves.

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Speaker 1: Because you might need eggs, but you make shoes. So

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Speaker 1: you go to the egg maker and you say hey,

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Speaker 1: and I keep on saying egg maker, and you know

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Speaker 1: I'm talking about a farmer. Here is somebody who has

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Speaker 1: chickens that lay the eggs, and then they're selling the eggs.

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Speaker 1: So they're selling eggs. You make shoes and you go

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Speaker 1: to me and say, hey, I've got some shoes, you've

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Speaker 1: got some eggs. What do you say? We do a

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Speaker 1: swap here. I give you some shoes, you give me

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Speaker 1: some eggs. And he says, perfect. I wanted shoes, you

339
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Speaker 1: want eggs. Let's do an exchange, and you say great.

340
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Speaker 1: H So you get your eggs, you get a couple leggs.

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Speaker 1: And then next week you go to him and you

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Speaker 1: say the same thing. Hey, I've got some more shoes

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Speaker 1: that I made. You've got some more eggs. I need

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Speaker 1: some eggs. Let's swap just like last week. And he says, whoa, whoa, whoa, whoa, whoa.

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Speaker 1: We just did this last week. This pair of shoes

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Speaker 1: you made, it's a high quality pair of shoes. It's

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Speaker 1: gonna last me at least a year. I don't need

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Speaker 1: any more shoes from you. Do you have anything else?

349
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Speaker 1: And you say, of course, I don't have anything else.

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Speaker 1: I'm a shoemaker. So you have come into uh this

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Speaker 1: problem here. Um it's called the coincidence of wants. And

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Speaker 1: that's the problem that money solves because suddenly what you

353
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Speaker 1: make is not wanted by that person that you want

354
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Speaker 1: their stuff anymore, so you have to go to find

355
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Speaker 1: somebody else. That wants shoes, give them the shoes, and

356
00:20:05,040 --> 00:20:08,520
Speaker 1: then find something, you know, get something from them that

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Speaker 1: you know the egg maker wants. So if the egg

358
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Speaker 1: maker wants apples, now you have to go to the

359
00:20:12,920 --> 00:20:14,920
Speaker 1: apple maker and you have to say, apple maker, do

360
00:20:14,960 --> 00:20:16,600
Speaker 1: you want some shoes? And he says yes, and you say,

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Speaker 1: oh good, thank god, I needed some eggs. So here's

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Speaker 1: some shoes. You give me some apples, and I go

363
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Speaker 1: take the apples to the egg maker, and then I

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Speaker 1: give that the apples to the egg maker and he

365
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Speaker 1: gives me the eggs. You can see how very very

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Speaker 1: quickly this would turn into an unsolvable issue. Every additional

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Speaker 1: person with additional wants that you layer in here, it

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Speaker 1: would become an unsolvable problem and no exchange would be

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Speaker 1: able to take place. Um. Further than that, there are

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Speaker 1: different values of things, so um, you might have to

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Speaker 1: store up, you know, a full houseful of apples to

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Speaker 1: be able to you know, have the same value in

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Speaker 1: apples as you have in uh, you know, to be

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Speaker 1: able to buy a house. Let's say, um, a whole

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Speaker 1: house full of apples equal the value of one house,

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Speaker 1: and they would all go bad by the time you're

377
00:21:04,160 --> 00:21:07,520
Speaker 1: able to create that many apples, and good luck finding

378
00:21:07,600 --> 00:21:10,000
Speaker 1: somebody who wants that many apples at one time and

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Speaker 1: is willing to give you their house for it. And

380
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Speaker 1: so money solved. The problem of the coincidence of wants.

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00:21:14,960 --> 00:21:18,159
Speaker 1: Money basically has boiled down to an evolutionary process that

382
00:21:18,200 --> 00:21:22,800
Speaker 1: has found out the thing that is able to store

383
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Speaker 1: value the best in between people's labor and wealth. Um.

384
00:21:29,520 --> 00:21:33,760
Speaker 1: It's the thing that people want the most because they

385
00:21:33,800 --> 00:21:37,720
Speaker 1: know it is most exchangeable for most other things. And

386
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Speaker 1: there have been many types of money throughout history, but

387
00:21:41,400 --> 00:21:46,679
Speaker 1: gold emerged naturally because it served those purposes best. It

388
00:21:46,720 --> 00:21:51,199
Speaker 1: doesn't rot, it doesn't decay, it doesn't um uh, it

389
00:21:51,240 --> 00:21:56,560
Speaker 1: doesn't rust um, it doesn't change colors, so it's easily identifiable. Um.

390
00:21:56,720 --> 00:21:59,359
Speaker 1: You can't destroy it. You know, you can melt it,

391
00:21:59,400 --> 00:22:01,560
Speaker 1: but it's still there, right, and so it's very durable,

392
00:22:01,680 --> 00:22:04,720
Speaker 1: last a long time. It's very scarce, it's hard to mind.

393
00:22:05,080 --> 00:22:09,080
Speaker 1: So because of these properties, it just became naturally what

394
00:22:09,119 --> 00:22:13,879
Speaker 1: people used as used as money. So when you provide value,

395
00:22:13,880 --> 00:22:16,159
Speaker 1: when you create something, when you create wealth, something that

396
00:22:16,200 --> 00:22:18,800
Speaker 1: somebody else wants badly enough to give you something they

397
00:22:18,800 --> 00:22:22,200
Speaker 1: own for it, you get money for it, and you

398
00:22:22,359 --> 00:22:26,080
Speaker 1: love that because that's where you store the value of

399
00:22:26,119 --> 00:22:29,720
Speaker 1: your labor until you want to go get whatevery wealth

400
00:22:29,800 --> 00:22:32,879
Speaker 1: you wanted, so you're able to then store it up

401
00:22:32,880 --> 00:22:34,520
Speaker 1: as much as you want. Let's say you keep on

402
00:22:34,560 --> 00:22:37,280
Speaker 1: selling shoes and selling shoes, and selling shoes and selling shoes,

403
00:22:37,400 --> 00:22:39,880
Speaker 1: and you get one once two ounces, three ounces, four ounces,

404
00:22:39,880 --> 00:22:42,440
Speaker 1: five ounces, a hundred ounces of gold, and then finally

405
00:22:42,440 --> 00:22:45,040
Speaker 1: you go all at once and you exchange the value

406
00:22:45,080 --> 00:22:48,400
Speaker 1: of all of that labor you've already done, all of that,

407
00:22:48,720 --> 00:22:51,560
Speaker 1: all stored up together. You exchange it all at once

408
00:22:51,960 --> 00:22:54,200
Speaker 1: for the wealth that is worth all of that labor

409
00:22:54,280 --> 00:22:57,640
Speaker 1: that you've already done for something that's you know, that's

410
00:22:57,760 --> 00:23:01,240
Speaker 1: let's say expensive, like a house. And so money serves

411
00:23:01,240 --> 00:23:04,359
Speaker 1: the purpose of being the middleman in between your labor

412
00:23:05,000 --> 00:23:10,840
Speaker 1: and your wealth. Um. Now this brings up a question

413
00:23:11,119 --> 00:23:16,760
Speaker 1: about money hoarding, because we all have heard, we all know,

414
00:23:17,080 --> 00:23:20,679
Speaker 1: we all know, you know the Scrooge mc duck and

415
00:23:20,960 --> 00:23:25,240
Speaker 1: Ebenezer Scrooge from the Christmas Carol um And he's the

416
00:23:25,280 --> 00:23:28,680
Speaker 1: bad guy, right because he's got a ton of money

417
00:23:28,720 --> 00:23:32,000
Speaker 1: and he's a miser. He doesn't spend it, he's greedy,

418
00:23:32,119 --> 00:23:35,200
Speaker 1: he hoards it. He's a money hoarder. He saves all

419
00:23:35,240 --> 00:23:39,000
Speaker 1: that money, and because of that, people around him are suffering. Right,

420
00:23:39,200 --> 00:23:41,960
Speaker 1: the economy is in shambles. Nobody can afford anything because

421
00:23:42,000 --> 00:23:45,399
Speaker 1: he's got all the money. Now, we're gonna break this apart,

422
00:23:45,400 --> 00:23:48,280
Speaker 1: because that's not how it works. If you actually have

423
00:23:48,840 --> 00:23:52,480
Speaker 1: one miser in the middle of let's say a closed

424
00:23:52,520 --> 00:23:55,080
Speaker 1: village of closed economy like this, it's gonna be great

425
00:23:55,119 --> 00:23:58,199
Speaker 1: for everybody, and I'm gonna prove it. So we know

426
00:23:58,400 --> 00:24:00,240
Speaker 1: that money is the middleman between labor and helf. We

427
00:24:00,359 --> 00:24:02,639
Speaker 1: just walked through that, right, That's all it is. So

428
00:24:03,680 --> 00:24:07,040
Speaker 1: what do you have to do in a system where

429
00:24:07,080 --> 00:24:09,760
Speaker 1: you can't increase or decrease the total supply of money

430
00:24:09,840 --> 00:24:11,560
Speaker 1: like our village, what do you have to do to

431
00:24:11,640 --> 00:24:15,960
Speaker 1: get money? You have to create wealth, which is creating

432
00:24:16,000 --> 00:24:18,200
Speaker 1: something that somebody else wants badly enough to give you

433
00:24:18,240 --> 00:24:22,440
Speaker 1: their money for it. Perfect. So you've got our scrooge figure,

434
00:24:22,600 --> 00:24:28,479
Speaker 1: our miser, our money hoarder in order to accumulate money

435
00:24:28,560 --> 00:24:30,960
Speaker 1: from everybody. What he's going to have to do is

436
00:24:30,960 --> 00:24:33,080
Speaker 1: he's going to have to perform a service or create

437
00:24:33,080 --> 00:24:36,320
Speaker 1: a good that somebody else wants in order to badly

438
00:24:36,440 --> 00:24:40,000
Speaker 1: enough that they're willing to give him their money for it,

439
00:24:40,560 --> 00:24:42,600
Speaker 1: So they're going to do that. So it doesn't matter

440
00:24:42,720 --> 00:24:45,080
Speaker 1: in this example what he's making, whether he's making shoes,

441
00:24:45,119 --> 00:24:49,159
Speaker 1: whether he's making houses, whether he's performing accounting services, or

442
00:24:49,200 --> 00:24:52,600
Speaker 1: whatever he's doing. It doesn't matter here. What matters is

443
00:24:52,640 --> 00:24:55,560
Speaker 1: that the only way he can get that much money

444
00:24:55,560 --> 00:24:59,520
Speaker 1: in the first place is by creating that much value.

445
00:25:00,040 --> 00:25:02,960
Speaker 1: And the definition of that is that he's created something

446
00:25:03,240 --> 00:25:07,080
Speaker 1: that other people want badly enough that they are voluntarily

447
00:25:07,640 --> 00:25:12,600
Speaker 1: giving him their money for it. Nobody's coercing them. They're

448
00:25:12,600 --> 00:25:14,520
Speaker 1: looking at what he's creating, and they're saying, I want

449
00:25:14,600 --> 00:25:17,360
Speaker 1: that so bad, take my money. You know the meme

450
00:25:17,600 --> 00:25:19,800
Speaker 1: where they got to stack cash and it's saying, take

451
00:25:19,880 --> 00:25:23,199
Speaker 1: my money. That's what's going on here. Every time a

452
00:25:23,240 --> 00:25:27,520
Speaker 1: transaction happens, it's because both parties want what the other

453
00:25:27,560 --> 00:25:30,000
Speaker 1: party has more than what they currently have. I want

454
00:25:30,000 --> 00:25:32,679
Speaker 1: your money more than I want uh, these shoes. You

455
00:25:32,720 --> 00:25:35,800
Speaker 1: want these shoes more than you want your money because

456
00:25:35,840 --> 00:25:40,000
Speaker 1: your money is just your stored labor, and you want shoes.

457
00:25:40,359 --> 00:25:42,840
Speaker 1: So you're exchanging the value of your labor for the

458
00:25:42,920 --> 00:25:46,000
Speaker 1: real wealth, which is shoes. And I am creep doing

459
00:25:46,040 --> 00:25:48,879
Speaker 1: my labor right now, creating shoes, and I want to

460
00:25:48,920 --> 00:25:53,280
Speaker 1: store that labor in money. Okay, so that's the first step.

461
00:25:53,320 --> 00:25:55,280
Speaker 1: We know. The only way he was able to get

462
00:25:55,280 --> 00:25:58,359
Speaker 1: that much money in the first place is by providing

463
00:25:58,520 --> 00:26:01,439
Speaker 1: that much value, creating something that somebody else wanted so

464
00:26:01,520 --> 00:26:04,159
Speaker 1: much they were willing to depart with that much money

465
00:26:04,200 --> 00:26:08,200
Speaker 1: for it. So now you you asked the question, Okay, well,

466
00:26:08,320 --> 00:26:10,280
Speaker 1: isn't it bad that he's holding all that money, because

467
00:26:10,280 --> 00:26:12,080
Speaker 1: now that money isn't in the hands of anybody else,

468
00:26:12,119 --> 00:26:16,439
Speaker 1: so everybody's suffering. Nobody has money. Well, wait, money is

469
00:26:16,480 --> 00:26:21,880
Speaker 1: the middleman between labor and real wealth. When you spend money,

470
00:26:22,680 --> 00:26:26,400
Speaker 1: you are cashing in. Money is a claim on real

471
00:26:26,440 --> 00:26:29,520
Speaker 1: wealth because you create you you created the value with

472
00:26:29,560 --> 00:26:32,800
Speaker 1: the labor. In exchange for that, you got money, which

473
00:26:32,840 --> 00:26:34,679
Speaker 1: is a claim which is saying, at some point in

474
00:26:34,720 --> 00:26:37,639
Speaker 1: the future you can go take the value of your

475
00:26:37,680 --> 00:26:41,520
Speaker 1: labor and get something of real value for it. So

476
00:26:41,640 --> 00:26:46,359
Speaker 1: when you only have money, you have not yet exchanged

477
00:26:47,040 --> 00:26:50,680
Speaker 1: the value of your labor for real wealth. You're holding out,

478
00:26:51,040 --> 00:26:55,440
Speaker 1: You're waiting. You have not yet extracted real wealth from

479
00:26:55,600 --> 00:27:00,359
Speaker 1: somebody else as long as you still have the money.

480
00:27:00,600 --> 00:27:03,879
Speaker 1: So what the scrooge character, our miser, our money hoarder

481
00:27:03,920 --> 00:27:08,080
Speaker 1: in this story, in this village is doing is he's

482
00:27:08,240 --> 00:27:15,040
Speaker 1: creating real wealth for his village, creating real value. He's

483
00:27:15,040 --> 00:27:18,160
Speaker 1: getting money for it, and he's not spending his money,

484
00:27:18,240 --> 00:27:25,520
Speaker 1: which means he is not cashing out and extracting the

485
00:27:25,720 --> 00:27:31,320
Speaker 1: value of his labor from society. So up until this point,

486
00:27:31,320 --> 00:27:35,800
Speaker 1: while he's still money hoarding, he has created value, created

487
00:27:35,880 --> 00:27:41,960
Speaker 1: wealth for people, and he has not taken any wealth,

488
00:27:42,280 --> 00:27:47,879
Speaker 1: any value from people. So the money hoarder is providing

489
00:27:48,040 --> 00:27:54,080
Speaker 1: a charitable service for society, for the village because he

490
00:27:54,240 --> 00:27:59,199
Speaker 1: is very literally in a mathematical economical sense, he is

491
00:27:59,400 --> 00:28:03,760
Speaker 1: creating real wealth and letting other people have it, and

492
00:28:03,840 --> 00:28:09,119
Speaker 1: he is not exchanging it for other real wealth. So

493
00:28:09,200 --> 00:28:12,760
Speaker 1: the society is benefiting because the society is getting new shoes,

494
00:28:12,800 --> 00:28:16,800
Speaker 1: new accounting services, new roofs, knew whatever it is. And

495
00:28:16,960 --> 00:28:19,960
Speaker 1: he's not then going and taking those claims and saying,

496
00:28:19,960 --> 00:28:22,679
Speaker 1: okay for that, I want some eggs for that, I

497
00:28:22,760 --> 00:28:25,840
Speaker 1: want some shoes for that, I want a house for that,

498
00:28:25,920 --> 00:28:28,760
Speaker 1: I want a horse whatever. He's not doing that. He

499
00:28:28,800 --> 00:28:31,840
Speaker 1: hasn't spent any of that money. He hasn't crossed that

500
00:28:31,920 --> 00:28:36,040
Speaker 1: bridge from the middleman to real wealth. And so there

501
00:28:36,119 --> 00:28:40,240
Speaker 1: is a lot more wealth still circulating in society because

502
00:28:40,280 --> 00:28:45,200
Speaker 1: he hasn't claimed it yet. He hasn't issued or tried

503
00:28:45,240 --> 00:28:47,400
Speaker 1: to redeem his claim on that wealth. Because he has

504
00:28:47,440 --> 00:28:50,000
Speaker 1: a huge claim on it. He's got a ton of money,

505
00:28:50,080 --> 00:28:53,000
Speaker 1: but he hasn't redeemed that claim on the wealth that

506
00:28:53,080 --> 00:28:56,280
Speaker 1: will at some point eventually belong to him yet. So

507
00:28:56,400 --> 00:28:59,520
Speaker 1: while the money hoarder saves, and while the money hoarder

508
00:28:59,760 --> 00:29:04,520
Speaker 1: he holds on to all that all that money, the

509
00:29:04,640 --> 00:29:07,959
Speaker 1: rest of society has an abundance more than what they

510
00:29:08,000 --> 00:29:11,480
Speaker 1: would um of real wealth, of real goods and services.

511
00:29:11,520 --> 00:29:13,680
Speaker 1: There's more eggs in circulation than there would be. There's

512
00:29:13,720 --> 00:29:18,240
Speaker 1: more shoes, there's more you know, whatever it is. Now,

513
00:29:18,400 --> 00:29:21,480
Speaker 1: what that means is that there's also less money, right,

514
00:29:21,520 --> 00:29:23,560
Speaker 1: And this is what trips most people up and gives

515
00:29:23,560 --> 00:29:26,880
Speaker 1: most people the incorrect assumption about what's going on here,

516
00:29:26,920 --> 00:29:29,640
Speaker 1: because people equate money with wealth and it's not. Money

517
00:29:29,720 --> 00:29:32,600
Speaker 1: is the middleman between labor and wealth. But money is

518
00:29:32,600 --> 00:29:37,000
Speaker 1: not wealth. Money measures wealth, and so we have less

519
00:29:37,080 --> 00:29:40,520
Speaker 1: money and more wealth circulating in society because of the

520
00:29:40,560 --> 00:29:44,800
Speaker 1: money hoarder um. Instead of a hundred gold pieces circulating,

521
00:29:44,960 --> 00:29:47,600
Speaker 1: the miser is holding fifty of them, so there's only

522
00:29:47,600 --> 00:29:51,960
Speaker 1: fifty gold pieces circulating in this economy um. But there's also,

523
00:29:52,000 --> 00:29:54,640
Speaker 1: at the same time more wealth circulating because there's more

524
00:29:55,560 --> 00:29:58,120
Speaker 1: more stuff for people to trade back with back and

525
00:29:58,160 --> 00:30:00,719
Speaker 1: forth with each other. So supply I demand is what

526
00:30:00,760 --> 00:30:03,640
Speaker 1: governs all prices. And since there's less money and more stuff,

527
00:30:03,680 --> 00:30:07,880
Speaker 1: that means prices are a lot lower. I'll say that again.

528
00:30:08,480 --> 00:30:13,280
Speaker 1: Because there's less money and more stuff, that means prices

529
00:30:13,320 --> 00:30:16,200
Speaker 1: have to be lower. Just like when the asteroid hit,

530
00:30:17,000 --> 00:30:18,920
Speaker 1: there was more money but the same amount of stuff.

531
00:30:18,960 --> 00:30:21,160
Speaker 1: That means you have to measure all the stuff with

532
00:30:21,240 --> 00:30:23,560
Speaker 1: the additional money. That means the value of the money

533
00:30:23,600 --> 00:30:25,760
Speaker 1: went down relative to all the stuff. That means that

534
00:30:25,800 --> 00:30:29,400
Speaker 1: prices had to go up to compensate. The opposite happens

535
00:30:29,440 --> 00:30:31,920
Speaker 1: here when the miser holds on to half the money

536
00:30:31,960 --> 00:30:35,720
Speaker 1: supply that's half the money in circulation, more wealth. That's

537
00:30:35,840 --> 00:30:40,120
Speaker 1: less money uh compared to more wealth that is less

538
00:30:40,200 --> 00:30:42,600
Speaker 1: money measuring the same amount of wealth. That means it

539
00:30:42,640 --> 00:30:45,040
Speaker 1: takes less money to get the same amount of wealth.

540
00:30:45,080 --> 00:30:49,920
Speaker 1: That's another way of saying prices are lower. So because

541
00:30:49,960 --> 00:30:51,640
Speaker 1: we have a miser, because we have a money hoarder,

542
00:30:51,680 --> 00:30:55,800
Speaker 1: because we have a a hoarder money hoarder here, Um,

543
00:30:55,880 --> 00:30:59,520
Speaker 1: we have a system where, uh, there's more wealth circulating

544
00:30:59,600 --> 00:31:01,920
Speaker 1: and it's cheaper and easier for people to afford it

545
00:31:02,280 --> 00:31:05,600
Speaker 1: because of the saver, because of the miser, because of

546
00:31:05,640 --> 00:31:09,400
Speaker 1: the money hoarder. He is performing a charitable service to

547
00:31:10,080 --> 00:31:12,880
Speaker 1: his society. Now, at some point he'll die, that money

548
00:31:12,920 --> 00:31:15,560
Speaker 1: will go to his heirs. His heirs will spend it. Um.

549
00:31:15,600 --> 00:31:17,560
Speaker 1: At some point he'll decide to spend it, He'll go

550
00:31:17,600 --> 00:31:20,440
Speaker 1: on a spending manage. So it doesn't last forever. But

551
00:31:20,920 --> 00:31:24,440
Speaker 1: to the extent that there is an extreme saver, and

552
00:31:24,520 --> 00:31:29,640
Speaker 1: to the extent that there is uh, how long that lasts.

553
00:31:30,400 --> 00:31:34,400
Speaker 1: The saver, the money hoarder, the miser who saves up

554
00:31:34,400 --> 00:31:37,840
Speaker 1: money and doesn't spend it is performing a service for society.

555
00:31:37,880 --> 00:31:41,160
Speaker 1: They are creating wealth and not extracting any wealth in

556
00:31:41,240 --> 00:31:45,880
Speaker 1: return for it while they're saving. Now we're going to

557
00:31:45,880 --> 00:31:49,800
Speaker 1: touch on the um, the the the debt aspect of

558
00:31:49,840 --> 00:31:53,360
Speaker 1: this um, because debt is the last thing that we

559
00:31:53,400 --> 00:31:56,240
Speaker 1: haven't touched on in terms of this economy and how

560
00:31:56,320 --> 00:32:00,200
Speaker 1: debt works um now in today's day in a you

561
00:32:00,240 --> 00:32:03,480
Speaker 1: may or may not know this, But when when when

562
00:32:03,480 --> 00:32:06,520
Speaker 1: you spend money on your credit card, that's debt. When

563
00:32:06,560 --> 00:32:08,720
Speaker 1: you buy a house with the mortgage, that's debt. When

564
00:32:08,720 --> 00:32:11,400
Speaker 1: you buy a car with a car an auto loan,

565
00:32:11,480 --> 00:32:16,000
Speaker 1: that's debt. When when debt happens, that money is lent

566
00:32:16,120 --> 00:32:20,360
Speaker 1: into existence. Most people don't know this. Most people think

567
00:32:20,560 --> 00:32:23,520
Speaker 1: that when you spend money on a credit card that

568
00:32:23,680 --> 00:32:26,600
Speaker 1: you're you know, capital one has a limited amount of

569
00:32:26,640 --> 00:32:29,480
Speaker 1: money in their bank account, and when you swipe your

570
00:32:29,520 --> 00:32:32,000
Speaker 1: credit card, capital one transfers money from their own bank

571
00:32:32,000 --> 00:32:35,200
Speaker 1: account over to the grocery stores bank account. That's not

572
00:32:35,240 --> 00:32:38,280
Speaker 1: what happens. When you swipe a credit card, that money

573
00:32:38,320 --> 00:32:41,360
Speaker 1: comes into existence at the moment you swap that credit card.

574
00:32:41,720 --> 00:32:44,760
Speaker 1: That three that you spend on groceries did not exist

575
00:32:45,320 --> 00:32:48,000
Speaker 1: before you swipe your credit card. And now that you

576
00:32:48,040 --> 00:32:51,120
Speaker 1: did swipe your credit card, now that money exists in

577
00:32:51,200 --> 00:32:55,040
Speaker 1: that grocery stores bank account and it didn't before. That

578
00:32:55,120 --> 00:32:58,040
Speaker 1: means when money, when debt is paid off, that money

579
00:32:58,160 --> 00:33:00,880
Speaker 1: also ceases to be in circular sation. That money is

580
00:33:00,920 --> 00:33:03,400
Speaker 1: destroyed when debt is paid off because you pulled money

581
00:33:03,400 --> 00:33:05,280
Speaker 1: out of the economy, from your work, from your job,

582
00:33:05,320 --> 00:33:07,760
Speaker 1: your labor, whatever, and you paid off that debt and

583
00:33:07,840 --> 00:33:10,960
Speaker 1: now that credit card balance goes to zero. That means

584
00:33:10,960 --> 00:33:13,400
Speaker 1: that money is not in circulation anymore, so that that

585
00:33:13,480 --> 00:33:17,760
Speaker 1: money is destroyed. Uh. This didn't exist or definitely it

586
00:33:17,800 --> 00:33:22,480
Speaker 1: couldn't exist when gold was money. Um. Why is that? Well,

587
00:33:22,520 --> 00:33:26,720
Speaker 1: because if I want to borrow money, and I go

588
00:33:26,800 --> 00:33:29,640
Speaker 1: to somebody and I say, hey, I want to spend

589
00:33:29,680 --> 00:33:31,920
Speaker 1: I want to buy some eggs from you. Um, I

590
00:33:31,960 --> 00:33:33,480
Speaker 1: go to my neighbor and ask for eggs and I

591
00:33:33,520 --> 00:33:36,960
Speaker 1: say I don't have the money. UM, he's gonna say okay,

592
00:33:37,160 --> 00:33:39,680
Speaker 1: then borrow it and you say okay. So you go

593
00:33:39,760 --> 00:33:41,200
Speaker 1: to your neighbor and you say, hey, I need a

594
00:33:41,200 --> 00:33:43,120
Speaker 1: gold coin and I'll pay you back, and they say okay,

595
00:33:43,160 --> 00:33:46,200
Speaker 1: here you go. So we see here that the only

596
00:33:46,280 --> 00:33:49,000
Speaker 1: way that a transaction can take place is if a

597
00:33:49,080 --> 00:33:52,760
Speaker 1: gold coin changed his hands. We thought that was very

598
00:33:52,840 --> 00:33:56,680
Speaker 1: adust statement earlier, but it becomes more apparent. Why it's

599
00:33:56,680 --> 00:34:01,560
Speaker 1: significant when we talk about debt because for thousands of

600
00:34:01,640 --> 00:34:05,520
Speaker 1: years when debt took place, Uh, there was no change

601
00:34:05,680 --> 00:34:08,080
Speaker 1: in the supply of money. I had to go to

602
00:34:08,239 --> 00:34:12,440
Speaker 1: my neighbor and I had to get a gold coin

603
00:34:12,560 --> 00:34:15,040
Speaker 1: from him, and that meant that since I was spending

604
00:34:15,040 --> 00:34:18,600
Speaker 1: that gold coin, he couldn't spend that gold coin. So

605
00:34:18,880 --> 00:34:21,560
Speaker 1: there was no increase or decrease in the supply of money.

606
00:34:21,760 --> 00:34:25,360
Speaker 1: When when debt happened, it was just a transfer of

607
00:34:25,400 --> 00:34:29,440
Speaker 1: who was spending that money UM and so in the

608
00:34:29,520 --> 00:34:32,000
Speaker 1: system for thousands of years, that's how it worked that

609
00:34:32,239 --> 00:34:35,320
Speaker 1: there was nothing that could increase or decrease the total

610
00:34:35,320 --> 00:34:37,960
Speaker 1: supply of money. Now, there were some things that could

611
00:34:38,000 --> 00:34:40,640
Speaker 1: increase or decrease the supply of money that was in circulation, right,

612
00:34:40,640 --> 00:34:42,279
Speaker 1: because if you've got a miser, you've got a saver,

613
00:34:42,400 --> 00:34:44,520
Speaker 1: there's gonna be less money in circulation. You've got a

614
00:34:44,520 --> 00:34:47,799
Speaker 1: gold miner, he's gonna slowly be putting more money into circulation.

615
00:34:48,239 --> 00:34:52,319
Speaker 1: And so the UH, the supply of money can UH,

616
00:34:52,480 --> 00:34:54,759
Speaker 1: the supply of money in circulation can change, but the

617
00:34:54,800 --> 00:34:59,160
Speaker 1: total supply of money UH is virtually stable throughout time.

618
00:34:59,560 --> 00:35:03,160
Speaker 1: Now one side note here, as we're nearing the end

619
00:35:03,200 --> 00:35:06,480
Speaker 1: of the episode, I want to mention that this podcast

620
00:35:06,960 --> 00:35:10,640
Speaker 1: is not just a it's it's definitely not like a

621
00:35:10,680 --> 00:35:14,920
Speaker 1: gold Bug podcast. Um, we're talking about gold here in

622
00:35:14,920 --> 00:35:17,759
Speaker 1: this episode a lot, just because we're we have to

623
00:35:17,840 --> 00:35:22,520
Speaker 1: understand how a gold only monetary system works, UH, to

624
00:35:22,640 --> 00:35:27,360
Speaker 1: understand the evolution of where we how we got to today. Um,

625
00:35:27,440 --> 00:35:29,040
Speaker 1: we're gonna be talking about all sort We're gonna be

626
00:35:29,040 --> 00:35:31,160
Speaker 1: talking about feat We're gonna talking about bitcoin, We're gonna

627
00:35:31,160 --> 00:35:32,680
Speaker 1: be talk about crypto. We're gonna be taling about stocks.

628
00:35:32,680 --> 00:35:34,120
Speaker 1: Are gonna be talking about real estate, We're gonna be

629
00:35:34,120 --> 00:35:36,239
Speaker 1: talking about news. We're gonna be talking about some politics.

630
00:35:36,280 --> 00:35:39,879
Speaker 1: Is what We're going to encompass everything about how money

631
00:35:39,880 --> 00:35:42,799
Speaker 1: works so that you can make more, keep more, and

632
00:35:42,880 --> 00:35:44,920
Speaker 1: give more. And I say make When I say make more,

633
00:35:44,960 --> 00:35:48,040
Speaker 1: I mean create more wealth, make more money, create more

634
00:35:48,120 --> 00:35:51,640
Speaker 1: income for yourself, all different sizes of the same coin. There.

635
00:35:51,680 --> 00:35:53,560
Speaker 1: When I say keep more, I mean save more. So

636
00:35:53,760 --> 00:35:55,000
Speaker 1: if you want to be able to keep more, you

637
00:35:55,040 --> 00:35:57,160
Speaker 1: have to make more and you have to save more,

638
00:35:57,320 --> 00:35:59,000
Speaker 1: because if you make more and spend more, you don't

639
00:35:59,080 --> 00:36:00,759
Speaker 1: keep more. And if you don't make more but you

640
00:36:00,800 --> 00:36:03,600
Speaker 1: do save more, you're limited to how much more you

641
00:36:03,640 --> 00:36:06,359
Speaker 1: can keep by how much you're making. So we want

642
00:36:06,400 --> 00:36:08,239
Speaker 1: to make more, and we want to keep more. And

643
00:36:08,280 --> 00:36:10,560
Speaker 1: the purpose of this is to give more. Why because

644
00:36:10,840 --> 00:36:13,439
Speaker 1: that is the purpose of life. It is to give back.

645
00:36:13,480 --> 00:36:15,400
Speaker 1: It is to create wealth for other people, not to

646
00:36:15,400 --> 00:36:18,640
Speaker 1: be selfish, but to be selfless, create wealth, create goods,

647
00:36:18,719 --> 00:36:24,279
Speaker 1: create uh, services for humanity, for society, further human progress,

648
00:36:24,760 --> 00:36:28,120
Speaker 1: make everybody else better off. And the more we do that, ironically,

649
00:36:28,120 --> 00:36:31,080
Speaker 1: the wealthier we will be come. So that is the

650
00:36:31,120 --> 00:36:33,439
Speaker 1: guiding purpose beyond this podcast. So it is by no

651
00:36:33,600 --> 00:36:37,799
Speaker 1: means just gonna be about gold. Unfortunately, just for this episode. Uh,

652
00:36:38,080 --> 00:36:39,879
Speaker 1: when we're talking about the first couple of thousand years

653
00:36:39,880 --> 00:36:42,720
Speaker 1: of money, that's where we have to start. So uh,

654
00:36:42,760 --> 00:36:46,719
Speaker 1: for the last portion of this first episode, we have

655
00:36:46,800 --> 00:36:50,640
Speaker 1: to talk about how how the growth of wealth happens.

656
00:36:51,040 --> 00:36:52,840
Speaker 1: Because at this point you're probably thinking, hey, well, the

657
00:36:52,840 --> 00:36:55,640
Speaker 1: money supply can't increase, so how does anybody ever get richer?

658
00:36:55,640 --> 00:36:57,480
Speaker 1: Wouldn't this just mean people get poor and poor and

659
00:36:57,520 --> 00:37:00,520
Speaker 1: poor throughout time? Well, we know empirically that the answer

660
00:37:00,600 --> 00:37:03,400
Speaker 1: that has to be no. Because gold was money for

661
00:37:03,480 --> 00:37:07,880
Speaker 1: thousands of years, and wealth grew for thousands of years.

662
00:37:08,160 --> 00:37:10,000
Speaker 1: We've got a lot more wealth today than we did

663
00:37:10,000 --> 00:37:11,640
Speaker 1: a couple hundred years ago, and We've got a lot

664
00:37:11,640 --> 00:37:13,319
Speaker 1: more wealth a couple hundred years ago than we did

665
00:37:13,320 --> 00:37:15,319
Speaker 1: a couple of thousand years ago, and so on and

666
00:37:15,360 --> 00:37:17,360
Speaker 1: so forth. You go back through time and there's this

667
00:37:17,560 --> 00:37:21,240
Speaker 1: constant progression of increasing more and more and more wealth.

668
00:37:21,719 --> 00:37:24,200
Speaker 1: When you understand what wealth is, which is goods and

669
00:37:24,239 --> 00:37:27,239
Speaker 1: services and abundance and access to the things that you

670
00:37:27,280 --> 00:37:32,160
Speaker 1: need and want, it's very clear that wealth increases over time,

671
00:37:32,360 --> 00:37:34,680
Speaker 1: it doesn't decrease. It also means wealth is not a

672
00:37:34,800 --> 00:37:37,800
Speaker 1: zero sum game. Wealth could be both created and destroyed.

673
00:37:37,880 --> 00:37:40,960
Speaker 1: When you burn down your house, was that wealth transferred

674
00:37:41,000 --> 00:37:44,839
Speaker 1: to somebody, No, that wealth was destroyed. Yes, you get

675
00:37:44,840 --> 00:37:47,279
Speaker 1: a house back if you have fire insurance, but that

676
00:37:47,400 --> 00:37:50,439
Speaker 1: loss was taken by somebody. There's no transfer of wealth.

677
00:37:50,440 --> 00:37:53,040
Speaker 1: When a house burns down, it's destroyed. It has to

678
00:37:53,040 --> 00:37:57,360
Speaker 1: be rebuilt again, recreated again. Uh. And so when something

679
00:37:57,400 --> 00:38:00,160
Speaker 1: can be destroyed, that means something can can all so

680
00:38:00,360 --> 00:38:03,040
Speaker 1: be created. It has to. And when we look back

681
00:38:03,040 --> 00:38:07,760
Speaker 1: at time and we see there's there's millions and millions

682
00:38:07,760 --> 00:38:10,600
Speaker 1: and millions of times more wealth today than there was

683
00:38:11,000 --> 00:38:13,880
Speaker 1: a few thousand years ago, we know that wealth is created.

684
00:38:13,920 --> 00:38:15,440
Speaker 1: It's not just the same amount of wealth from a

685
00:38:15,440 --> 00:38:18,200
Speaker 1: few thousand years ago. That's being divvied up among eight

686
00:38:18,239 --> 00:38:21,040
Speaker 1: billion people, and and and you know, because then we

687
00:38:21,080 --> 00:38:23,080
Speaker 1: would see a couple of thousand years ago when there

688
00:38:23,080 --> 00:38:25,800
Speaker 1: were you know, very few people on earth relative to today,

689
00:38:26,000 --> 00:38:27,359
Speaker 1: they would have had a ton of wealth that they're

690
00:38:27,360 --> 00:38:29,920
Speaker 1: splitting up among themselves. And they're way worse off a

691
00:38:29,920 --> 00:38:32,200
Speaker 1: few thousand years ago than we are today. So how

692
00:38:32,280 --> 00:38:35,680
Speaker 1: does wealth grow then if the money supply can't grow, Well,

693
00:38:35,760 --> 00:38:40,279
Speaker 1: it's through something called deflation. Now this trips a lot

694
00:38:40,320 --> 00:38:43,520
Speaker 1: of people up, because when you think of your wealth

695
00:38:43,600 --> 00:38:46,879
Speaker 1: growing because of our current modern day monetary system, you

696
00:38:46,920 --> 00:38:50,680
Speaker 1: think of the number going up, you think, okay, I

697
00:38:50,680 --> 00:38:53,240
Speaker 1: went from a million dollars to two million dollars net worth,

698
00:38:53,320 --> 00:38:57,280
Speaker 1: that means I got richer. Well, if the money supply

699
00:38:57,560 --> 00:39:01,879
Speaker 1: doubled and your cost of living dub old, then your

700
00:39:01,960 --> 00:39:04,440
Speaker 1: net worth going from a million dollars to two million

701
00:39:04,440 --> 00:39:08,000
Speaker 1: dollars wasn't actually you getting richer, It was you staying

702
00:39:08,040 --> 00:39:12,360
Speaker 1: the same. Right, So we know that after just that

703
00:39:12,520 --> 00:39:14,960
Speaker 1: brief little glimpse there, we can see, Okay, well, I

704
00:39:14,960 --> 00:39:17,400
Speaker 1: guess wealth is not a growth of wealth is not

705
00:39:17,440 --> 00:39:20,080
Speaker 1: a function of prices going up We think of it

706
00:39:20,120 --> 00:39:23,120
Speaker 1: that way because that's how it's happened for a few decades,

707
00:39:23,600 --> 00:39:26,440
Speaker 1: but in the scheme of history, that's not actually how

708
00:39:26,600 --> 00:39:30,319
Speaker 1: it works through the long term course of history. So

709
00:39:30,719 --> 00:39:34,680
Speaker 1: how does wealth grow? Then it's the opposite. It's through deflation.

710
00:39:34,880 --> 00:39:37,720
Speaker 1: Since the money supply can't grow, it happens through deflation.

711
00:39:37,719 --> 00:39:41,759
Speaker 1: And here's how we start off hunters and gatherers. We

712
00:39:41,840 --> 00:39:43,279
Speaker 1: have to go out every day and all the day

713
00:39:43,320 --> 00:39:46,840
Speaker 1: all we're doing is uh finding food in the ground,

714
00:39:47,440 --> 00:39:51,960
Speaker 1: foraging um and eating raw fruits and vegetables. Well, suddenly

715
00:39:51,960 --> 00:39:54,640
Speaker 1: then we discover an invention called fire and share the

716
00:39:54,680 --> 00:39:56,759
Speaker 1: information with each other on how to use fire. And

717
00:39:56,800 --> 00:39:59,319
Speaker 1: we discover that when we cook food we can get

718
00:39:59,320 --> 00:40:00,480
Speaker 1: a lot more nutrient it is out of it. So

719
00:40:00,520 --> 00:40:03,879
Speaker 1: instead of having to eat ten carrots, we can eat

720
00:40:03,960 --> 00:40:07,359
Speaker 1: one carrot and get the same nutrients out of one

721
00:40:07,440 --> 00:40:10,480
Speaker 1: cooked carrot as it took for us as we needed

722
00:40:10,520 --> 00:40:14,440
Speaker 1: before ten rack carrots. And so now we go and

723
00:40:14,480 --> 00:40:16,920
Speaker 1: spend our time. We get one rock harret, we cook it,

724
00:40:16,960 --> 00:40:18,680
Speaker 1: we eat it, and instead of having to spend the

725
00:40:18,680 --> 00:40:20,759
Speaker 1: rest of the day looking for more carrots, we spend

726
00:40:20,760 --> 00:40:23,160
Speaker 1: the rest of the day hunting for animals, and then

727
00:40:23,200 --> 00:40:26,480
Speaker 1: suddenly we just we invent the bow and arrow, and

728
00:40:26,480 --> 00:40:30,080
Speaker 1: we invent traps, and we find better ways to get animals,

729
00:40:30,080 --> 00:40:32,280
Speaker 1: and we realize, hey, there's a lot more nutrient density

730
00:40:32,440 --> 00:40:34,719
Speaker 1: and animals. So abundance of nutrients here is what I'm

731
00:40:34,719 --> 00:40:36,840
Speaker 1: talking about. The abundance and food or nutrients what we

732
00:40:36,880 --> 00:40:40,240
Speaker 1: need increases, so then we spend more of our time

733
00:40:40,600 --> 00:40:42,719
Speaker 1: uh into other things that are more productive. Now we

734
00:40:42,760 --> 00:40:45,080
Speaker 1: spend more of our time making clothes and shelters, so

735
00:40:45,239 --> 00:40:47,319
Speaker 1: we don't burn as many calories because we're staying warmer

736
00:40:47,360 --> 00:40:49,800
Speaker 1: from our clothing in our shelter as we did before.

737
00:40:49,880 --> 00:40:52,120
Speaker 1: And so now we have an increase in wealth that way.

738
00:40:52,280 --> 00:40:54,360
Speaker 1: And we continue to do this, and we invent farming,

739
00:40:54,360 --> 00:40:55,799
Speaker 1: and instead of having to go out and look for

740
00:40:55,800 --> 00:40:58,840
Speaker 1: the food, the food and animals, the plants, the fruits

741
00:40:58,880 --> 00:41:00,719
Speaker 1: and vegetables and the animals, now we bring them to

742
00:41:00,840 --> 00:41:03,840
Speaker 1: us and we don't have to hunt and and forage anymore.

743
00:41:03,960 --> 00:41:05,640
Speaker 1: We just go out to our farm and we gather

744
00:41:05,719 --> 00:41:08,400
Speaker 1: it from our farm. And then we spend all the

745
00:41:08,440 --> 00:41:12,120
Speaker 1: extra time making you know, inventions to make our farming easier.

746
00:41:12,160 --> 00:41:14,520
Speaker 1: We use animals. We offload human labor to animals to

747
00:41:14,960 --> 00:41:17,640
Speaker 1: uh do our crops better and easier. And then we

748
00:41:17,680 --> 00:41:20,799
Speaker 1: invent the steam engine, and we invent tractors that now

749
00:41:20,880 --> 00:41:24,040
Speaker 1: replace twenty people or a hundred people for the same

750
00:41:24,040 --> 00:41:28,680
Speaker 1: exact task. This is the growth of wealth over time.

751
00:41:29,000 --> 00:41:34,520
Speaker 1: It's offloading human labor to animals and nature machines so

752
00:41:34,560 --> 00:41:36,640
Speaker 1: that we can spend our time doing things they're more

753
00:41:36,640 --> 00:41:41,240
Speaker 1: productive and have more abundance of what we want and need. Now,

754
00:41:41,360 --> 00:41:44,840
Speaker 1: if the money supply is not changing this entire time,

755
00:41:45,360 --> 00:41:48,680
Speaker 1: that means we're constantly throughout time getting more and more

756
00:41:48,680 --> 00:41:50,840
Speaker 1: and more and more wealth because we're getting more and

757
00:41:50,840 --> 00:41:53,359
Speaker 1: more abundance of food, of clothing, of shelter, of transportation,

758
00:41:53,400 --> 00:41:56,560
Speaker 1: of time, of all of that. So as we have

759
00:41:56,640 --> 00:42:01,319
Speaker 1: an abundance of wealth and stuff grow over time, that

760
00:42:01,360 --> 00:42:05,080
Speaker 1: means that the price of that stuff has to go down.

761
00:42:05,239 --> 00:42:07,919
Speaker 1: Remember it's supply and demand, all's being als being equal.

762
00:42:07,920 --> 00:42:10,560
Speaker 1: If the money supplies stays the same but everything else

763
00:42:10,640 --> 00:42:13,720
Speaker 1: increases in quantity, that means the price of that stuff

764
00:42:13,880 --> 00:42:18,239
Speaker 1: has to decrease. If just like the asteroid, when the

765
00:42:18,280 --> 00:42:21,520
Speaker 1: asteroid hits in the middle of our village, what happens

766
00:42:21,560 --> 00:42:25,400
Speaker 1: to the value of the gold, it goes down drastically, instantly,

767
00:42:25,560 --> 00:42:28,719
Speaker 1: just plummets. Right. Why is that because the supply of

768
00:42:28,760 --> 00:42:32,120
Speaker 1: the gold skyrocketed relative to everything else. So now it

769
00:42:32,160 --> 00:42:34,440
Speaker 1: takes more gold to get all the stuff that you

770
00:42:34,480 --> 00:42:37,560
Speaker 1: could get before because there's more gold relative to all

771
00:42:37,600 --> 00:42:40,239
Speaker 1: the stuff. So if you have more stuff relative to

772
00:42:40,280 --> 00:42:42,440
Speaker 1: the amount of money, now it takes less money to

773
00:42:42,520 --> 00:42:45,400
Speaker 1: get the stuff that it did before because the money

774
00:42:45,480 --> 00:42:47,840
Speaker 1: is more scarce relative to all the stuff, and so

775
00:42:47,920 --> 00:42:51,360
Speaker 1: it takes less money. That means things get cheaper over time.

776
00:42:52,120 --> 00:42:55,200
Speaker 1: So as wealth grows and the money supplies stays, the

777
00:42:55,280 --> 00:42:59,080
Speaker 1: same stuff gets cheaper. So every year you don't get

778
00:42:59,080 --> 00:43:01,080
Speaker 1: a pay raise, but you're cost of living goes down.

779
00:43:01,560 --> 00:43:04,520
Speaker 1: Every year. You put a dollar away this year, Next

780
00:43:04,640 --> 00:43:06,879
Speaker 1: year it's worth two dollars. Next year you put away

781
00:43:06,920 --> 00:43:09,040
Speaker 1: two dollars. In the year after that, that three dollars

782
00:43:09,040 --> 00:43:12,080
Speaker 1: that you've saved is now worth five dollars. So your

783
00:43:12,160 --> 00:43:15,200
Speaker 1: income grows over time, not because the number goes up,

784
00:43:15,719 --> 00:43:18,840
Speaker 1: but because the value of your income goes up because

785
00:43:18,840 --> 00:43:21,600
Speaker 1: the wealth gets cheaper. And by wealth I mean goods

786
00:43:21,640 --> 00:43:23,560
Speaker 1: and services and stuff. And you know that already by now,

787
00:43:24,520 --> 00:43:32,000
Speaker 1: as your savings accumulates, it grows in value over time

788
00:43:32,400 --> 00:43:36,600
Speaker 1: because wealth gets cheaper, so you don't have to invest

789
00:43:36,640 --> 00:43:41,080
Speaker 1: in risky assets in risky ventures. All you have to

790
00:43:41,120 --> 00:43:45,040
Speaker 1: do is save. You save, that money increases in value

791
00:43:45,120 --> 00:43:49,000
Speaker 1: year after year after year, and you know that it's

792
00:43:49,040 --> 00:43:51,440
Speaker 1: going to be worth more next year than it's worth today.

793
00:43:51,640 --> 00:43:55,640
Speaker 1: So the incentive is to save. The incentive is to

794
00:43:55,719 --> 00:43:59,759
Speaker 1: be the miser. The incentive is to provide value for

795
00:44:00,080 --> 00:44:04,839
Speaker 1: society without exchanging back your claim on wealth with society.

796
00:44:05,080 --> 00:44:10,399
Speaker 1: The incentive for everybody is to create wealth and give

797
00:44:10,440 --> 00:44:14,680
Speaker 1: it out to the economy and not redeem their claim

798
00:44:14,800 --> 00:44:17,960
Speaker 1: for their own wealth for as long as possible, until

799
00:44:17,960 --> 00:44:21,680
Speaker 1: they're able to build up a very sizeable chunk of savings.

800
00:44:21,840 --> 00:44:24,560
Speaker 1: You know, it's all subjective, but a sizeable chunk of

801
00:44:24,600 --> 00:44:26,640
Speaker 1: savings for themselves until they're able to get what they

802
00:44:26,680 --> 00:44:32,560
Speaker 1: really really want. It increases the time preference of society

803
00:44:32,640 --> 00:44:38,160
Speaker 1: and UH lays the foundation for a long term, healthy,

804
00:44:38,320 --> 00:44:43,640
Speaker 1: robust growth. Now, in the next episode, we are going

805
00:44:43,680 --> 00:44:48,560
Speaker 1: to look at how this changed. Because this sounds like utopia,

806
00:44:48,640 --> 00:44:51,080
Speaker 1: This sounds like the best thing in the world. How

807
00:44:51,120 --> 00:44:54,560
Speaker 1: did we ever leave that? Give that up and move

808
00:44:54,600 --> 00:44:57,120
Speaker 1: to a system where people gave up the metal in

809
00:44:57,239 --> 00:44:59,840
Speaker 1: exchange for paper. We're going to talk about that in

810
00:44:59,840 --> 00:45:05,080
Speaker 1: an next episode, the Invention of banking, and I would

811
00:45:05,160 --> 00:45:07,279
Speaker 1: love to see you there. Thank you so much for

812
00:45:07,360 --> 00:45:12,839
Speaker 1: sticking with me through this thousands of years historical overview,

813
00:45:13,040 --> 00:45:16,360
Speaker 1: the map of the sound money hard money terrain that

814
00:45:16,400 --> 00:45:19,560
Speaker 1: we were looking at to understand how that economy works.

815
00:45:19,920 --> 00:45:22,920
Speaker 1: Because now that you have this foundation, will see how

816
00:45:22,960 --> 00:45:28,440
Speaker 1: it translated into evolving into the next system. Next episode

817
00:45:28,520 --> 00:45:31,959
Speaker 1: is available already. Thank you so much for listening. See

818
00:45:32,000 --> 00:45:32,680
Speaker 1: on the next one.