Speaker 1: Hello, and welcome to another episode of The Mark Moss Show,
Speaker 1: where we talk about the decentralized revolution, talking about the
Speaker 1: way the world's changing, of course as we look at
Speaker 1: it through the lens of politics, finance, and technology, and
Speaker 1: of course it's technology that changes the world more than
Speaker 1: anything else, the way that we work and organize and communicate,
Speaker 1: and of course the technology that's changing the world right
Speaker 1: now is bitcoin and the decentralized technology that it has. Now,
Speaker 1: you know that I try to bring to you some
Speaker 1: education so you can understand the world a little bit differently,
Speaker 1: and some breaking news. And today I have a special
Speaker 1: guest so you can hear from somebody other than myself,
Speaker 1: and we are coming to you from Jackson Hole, Wyoming,
Speaker 1: where we are at Bitcoin ski Week, which is pretty amazing.
Speaker 1: We're getting to score some epic powder and have some
Speaker 1: amazing conversations and I grab someone to talk to you
Speaker 1: about this as well. So Sam, thanks for taking the
Speaker 1: time to come sit down with me. Yeah. Thanks Mark.
Speaker 1: So Sam, you know you have I mean, you do
Speaker 1: amazing research at Swan Swan Bitcoin for everybody that's listening,
Speaker 1: and I guess you're doing research on just macro topics
Speaker 1: But one of them where you've really kind of been
Speaker 1: digging in deep is in the banking world, right, so BIS,
Speaker 1: Bank of International Settlements, IMAF, etc. And I know one
Speaker 1: of the areas you've been digging into is central bank
Speaker 1: digital currencies quite a bit correct, Yeah, yeah, Now, first off,
Speaker 1: I would say, do you think that CBDs CBDCs are
Speaker 1: getting a lot of hype? Are they getting too much
Speaker 1: hype or not enough hype? I would say, I'd say
Speaker 1: the plausibility that one happens in the United States, it
Speaker 1: is probably getting too much hype. I think globally, maybe
Speaker 1: they're not getting as much hype. So I think there's
Speaker 1: a big difference between the developments that are happening in
Speaker 1: the United States versus globally. And if you look at
Speaker 1: a couple of surveys from the Bank of International Settlements,
Speaker 1: so for instance, twenty nineteen, around twenty percent of central
Speaker 1: bank surveyed said that they were likely to issue a
Speaker 1: retail CBDC, and fast forward to today that numbers up
Speaker 1: to sixty percent. So it's accelerating globally. But you know,
Speaker 1: in the United States, I think there's a lot of
Speaker 1: fear around the central bank digital currency. But there's a
Speaker 1: ton of hurdles that would need to be leaped over
Speaker 1: in order to issue one in the United States, and
Speaker 1: there's a lot of pushback right now, and that's encouraging
Speaker 1: to see. So frame up for US a central bank
Speaker 1: digital currency, because first off, I think most people already
Speaker 1: understand this, haven't thought through this, but I think it's
Speaker 1: something like eighty percent of dollars transactions are digital anyway. Yeah,
Speaker 1: I don't want them to ban cash, but the truth is,
Speaker 1: if I admit it, I don't really use cash. I
Speaker 1: use debit cards and credit cards and wire transfers and ah. Right,
Speaker 1: and so the majority of transactions are already digital. So
Speaker 1: we have digital dollars kind of, right, So what's the
Speaker 1: big deal with a CBDC. So there's a difference between
Speaker 1: the digital dollars that we have today and a retail CBDC,
Speaker 1: And there's three main differences in my mind. One is
Speaker 1: that a CBDC would be programmable, so you could have
Speaker 1: smart contract functionality that would execute on specific conditions so
Speaker 1: that you could do anything. You could say, hey, we
Speaker 1: want this certain cohort pup the population to not be
Speaker 1: able to buy this at a certain time, like and
Speaker 1: so you'd have this granular level of control that is
Speaker 1: not capable with the current digital dollars. The other difference
Speaker 1: is that ninety five percent of digital dollars today are
Speaker 1: privately issued. They're issued by commercial banks, okay, and so,
Speaker 1: or they're on like PayPal or something like that, and
Speaker 1: so they have default risk and liquidity risk that that
Speaker 1: company could go under, like Papal could under, like PayPal
Speaker 1: could go under, right, and or the bank or the bank,
Speaker 1: just like in the global financial crisis, a lot of
Speaker 1: people savings. They realize that those digital dollars are at risk.
Speaker 1: They have those risks. A central bank digital currency would
Speaker 1: be different. It would be a liability of the central
Speaker 1: bank itself, and so technically it would be a safer
Speaker 1: form of digital dollars because the central bank itself can't
Speaker 1: really default technically because it has access to a quote
Speaker 1: unquote money printer even though they don't technically print money,
Speaker 1: they would be able to work with the Treasury or
Speaker 1: something happen and flood the market with liquidity, and so
Speaker 1: they wouldn't have that risk. Better. I think it's it's
Speaker 1: that's their argument for why it's better. That's why they
Speaker 1: say they want to do that. And so it's kind
Speaker 1: of like a tough question because there's so many other
Speaker 1: risks to essential bank digital currency around privacy, around surveillance.
Speaker 1: Like I don't think the risk the risk outweigh the benefits,
Speaker 1: is what I'm saying. Yeah, And so I can't think
Speaker 1: of the third one off the top of my head
Speaker 1: right now. But those are the two big differences. Oh
Speaker 1: that The third one is it could be a transmission
Speaker 1: channel for monetary policy and fiscal policy, and you'd be
Speaker 1: able to tax every single transaction that people make. So
Speaker 1: right now, take a piece off the top tape, a
Speaker 1: piece off the top of every single transaction. So let's
Speaker 1: just say hypothetically that cash would disappear, and it cash
Speaker 1: is declining rapidly over the last say ten years. And
Speaker 1: so if cash is gone, even if I gave you
Speaker 1: a quote unquote twenty dollars just because you know, we
Speaker 1: made a bet on a sports game or something, they
Speaker 1: would technically be able to tax that transaction so it
Speaker 1: could bring more revenue to the state. And so that's
Speaker 1: those three main differences between central bank digital currencies and
Speaker 1: private and private dollars. Today, digital dollars is the transmission
Speaker 1: channel for monetary, physical, and tax policy. It's programmable as
Speaker 1: well as it doesn't have default in liquidity risk, you know,
Speaker 1: on the taxing transactions piece right now, like we've seen
Speaker 1: the growth of venmo or PayPal, right, so venmo, like
Speaker 1: I can venmo you directly. It goes from my venmo
Speaker 1: to my credit card, credit card to my bank, my
Speaker 1: bank to your bank, your bank to your credit card,
Speaker 1: your to your venmo. Right, there's whatever, four to six
Speaker 1: people in the middle of that, and each one of
Speaker 1: them taxes. Yeah, the transaction. Right. So if the government
Speaker 1: were to the government to fed whatever we want to
Speaker 1: call that, were to provide the CBDC channel, they're technically
Speaker 1: all of those in one so the venmo, the credit card,
Speaker 1: the bank, whatever, And if they took the same amount
Speaker 1: of fee that was already being charged there, that could
Speaker 1: be like the tax or the transaction feed let's call it.
Speaker 1: That might be one way to look at it directly
Speaker 1: to the state, and then that would be a big
Speaker 1: revenue generator for the state, right and it wouldn't be
Speaker 1: any more than we'd be paying right now in venmo.
Speaker 1: So yeah, let's essentially yeah, and so technically it would
Speaker 1: be safer too, right, because of that most risk that
Speaker 1: it doesn't have that I explained, and this is why banks,
Speaker 1: the banking industry, and companies like PayPal are so worried
Speaker 1: about essential bank digital currency being issued because it would
Speaker 1: disintermediate them. It would technically be a better option, safer option,
Speaker 1: and the thought would be that a lot of funds
Speaker 1: would flow out of their you know, their companies into
Speaker 1: the central bank digital currency. So if if we stay
Speaker 1: with some of the problems, first of all, actually, before
Speaker 1: we go into the problems, let me ask another question
Speaker 1: from a from a global macroeconomic standpoint, Like, the governments
Speaker 1: of the world are going broke. The FEDS fighting inflation,
Speaker 1: they're losing and their fight against inflation, the government US government,
Speaker 1: the treasury is going broke. All the governments of the
Speaker 1: world are basically going broke. And so a lot of
Speaker 1: people think that the CBDC is the way that they
Speaker 1: solve that. So like, hey, they're at the fiscal cliff,
Speaker 1: and so what they're gonna do is they're going to
Speaker 1: create this event and they're gonna switch out and put
Speaker 1: everybody onto a CBDC, and that's how they're going to
Speaker 1: fix the problem. I don't see how that fixes the
Speaker 1: problem though. I don't think it fixes the problem at all.
Speaker 1: I think it would be the exact same problem in
Speaker 1: a new shiny wrapper that has embedded surveillance. I mean,
Speaker 1: it would be the exact same system. And they're looking
Speaker 1: at if you look at the design, they're leading designs,
Speaker 1: it's all out in the open. They write these research papers.
Speaker 1: They are recreating the current system. It's an intermediated central
Speaker 1: bank digital currency design. It's the same monetary system with
Speaker 1: all the same problems, just with increased control and surveillance.
Speaker 1: I mean it really is. So it wouldn't solve any problems.
Speaker 1: So the problems that got us here are one, they
Speaker 1: print too much money. I mean that that's ultimately if
Speaker 1: we want to boil it down, right yea, and so
Speaker 1: and then you said the transmission problems, and I don't
Speaker 1: know exactly what you're talking about. Potentially, like let's say
Speaker 1: during the COVID of pandemic, they had a problem getting
Speaker 1: money out into this little inefficient inefficient, right, So if
Speaker 1: this makes it more efficient, that means they can put
Speaker 1: even more money into the system. Yeah, yeah, exactly. And
Speaker 1: there's critics of CBDCs and one of them as this
Speaker 1: advisor for the Chicago Fed, and he wrote a comment
Speaker 1: in response to the Federal Reserves white paper on CBDCs,
Speaker 1: and he said that this will actually expand the balance
Speaker 1: sheet because they'll have to issue CBDCs, and if their
Speaker 1: liabilities on the Federal Reserve balance sheet, this could expand
Speaker 1: the balance sheet even more at a time where they're
Speaker 1: trying to regain credibility and reduce their balance sheet. So
Speaker 1: to actually it would do the opposite. It would actually
Speaker 1: just they would print more money. And they're thinking about
Speaker 1: how do we get banks to go along with this,
Speaker 1: and one of their proposed solutions to that problem is, oh,
Speaker 1: we'll just pay him. We'll give them more scentible print
Speaker 1: money and pay the banks so that they won't go
Speaker 1: out of business. And so they have all these problems
Speaker 1: of issue in a CBDCs, and a lot of their
Speaker 1: solutions to those problems are to print more money, which is,
Speaker 1: like you said, the root cause. Yeah, if you're just
Speaker 1: tuning in, you are listening to the Mark Mo Show,
Speaker 1: we're talking about the decentralized Revolution. I'm sitting down with
Speaker 1: Sam from Swan Bitcoin. We're talking about CBDC Central Bank
Speaker 1: digital currencies. We're gonna dig more into the problems, maybe
Speaker 1: non existing solutions, and then we're gonna talk about the
Speaker 1: reality of what a risk we have potentially in the
Speaker 1: United States and other countries. There's some big news that
Speaker 1: broke this week about another country launching one. We're gonna
Speaker 1: talk about that. We're back with all that and more
Speaker 1: in a minute. Don't go away, we're gonna be right back.
Speaker 1: All right, welcome back. If you're just tune in, you
Speaker 1: were listening to the Mark mo Show. We're talking about
Speaker 1: the decentralized Revolution, and I'm in the studio with Sam
Speaker 1: Callahan from Swan Bitcoin. He's the what the macro analyst,
Speaker 1: thereat lead analyst, lead analysts. Yeah, anyway, he spends a
Speaker 1: lot of time researching these topics. Let's just let's just
Speaker 1: say that, right, and too much time. Right, that's his job.
Speaker 1: He can get paid to research these things. And specifically,
Speaker 1: you've been really been digging into banking. So we're talking
Speaker 1: about central bank digital currencies. Now back to that, we
Speaker 1: were talking about how they don't really solve any of
Speaker 1: the problem. So when people think, oh, well they're gonna
Speaker 1: they're gonna crash the markets and switches to a CBDC.
Speaker 1: It's like that doesn't really do anything. I guess you
Speaker 1: could maybe look at like when gold used to be
Speaker 1: money pre nineteen thirty three, and then they switched everybody
Speaker 1: to a fiat money and then they devalued it, so
Speaker 1: everyone basically still had the same dollars, they just bought less.
Speaker 1: So I suppose they could say, through some sort of
Speaker 1: liquidity event, like the banks are broke, FDIC is going
Speaker 1: to step in and give you money, but instead they
Speaker 1: give you a new CBDC money and now steve value
Speaker 1: because now they don't see FDIC doesn't have enough money.
Speaker 1: Obviously they are like a nine percent ratio or something
Speaker 1: something like that, something like that, so they have to
Speaker 1: print away more money. So they're gonna give you your money,
Speaker 1: here's your money, here's your hundred thousand back, but it
Speaker 1: only buys you forty thousand worth of goods or something
Speaker 1: like that. Well, they'll I think what they'll do is
Speaker 1: if they do go along with this retail CBDC and
Speaker 1: issue it, they'll attach some kind of incentive stimulus, right UBI,
Speaker 1: And that's to try to get people to use it.
Speaker 1: And this is what other essential banks around the world
Speaker 1: have done, so China did, that's Nigeria, Bahamas. They all
Speaker 1: have these these random incentives. It's like, you know, it's
Speaker 1: like somebody in a van trying to give candy to
Speaker 1: a kid, like, don't worry, it's safe. You know, here
Speaker 1: you go, and people might fall for that. But the
Speaker 1: adoption rates of other central bank digital currency have been
Speaker 1: extremely low, extremely disappointing because people don't want them. And
Speaker 1: you look at the proponents of them, and they have
Speaker 1: a lot of arguments why is CBDC would be good.
Speaker 1: One of them is financial inclusion, promote financial inclusion. One
Speaker 1: of them is more efficient payments. One of them is
Speaker 1: it'll actually improve financial stability. Those are the three main ones,
Speaker 1: and when you look into the data, it actually does
Speaker 1: none of those things and actually worsens all three of
Speaker 1: those things. All right, So once you dig into the data,
Speaker 1: dig into the facts, you realize that this is just
Speaker 1: a bad idea, Like if we look past the surveillance
Speaker 1: and the nineteen eighty four kind of style, what this
Speaker 1: would enable, it doesn't actually do any of the things
Speaker 1: that they think perceived benefits. So it's really just all risk.
Speaker 1: It's all risk to do this, and it takes a
Speaker 1: ton of time and resources to try to research it
Speaker 1: and build it, and it's a huge waste of time.
Speaker 1: And that's why I pushed back against them. A huge
Speaker 1: waste of time, resources, energy, money, all those things. There's
Speaker 1: no perceived benefit from the greater good. There's perceived benefit
Speaker 1: from authoritarian standpoint. Yes, let's talk more about sort of
Speaker 1: this idea that they're hoping to increase, which would be
Speaker 1: greater inclusion. So I think it was in like twenty
Speaker 1: sixteen there was like two billion adults in the world
Speaker 1: that had no access to banking. I think that numbers
Speaker 1: come down to billion and a half or something like that.
Speaker 1: But people all around the world, and if we take
Speaker 1: off our well, I guess it's a good question. When
Speaker 1: we talk about bitcoin and really global macro, we think
Speaker 1: about it from a global standpoint, not a very US standpoint.
Speaker 1: And so if I think about this banking problem of
Speaker 1: being people under banked, it's a global problem, and most
Speaker 1: of those probably billion and a half people around the
Speaker 1: world don't have access to banking and typically don't have
Speaker 1: permission to join banking. So if you're a fifteen year
Speaker 1: old kid from I ran like you can't get a
Speaker 1: bank account, right, but these are maybe more not global issues,
Speaker 1: they're more local issues. So I saw this week Australia's
Speaker 1: Central Bank is set to launch a live pilot of
Speaker 1: a central bank digital currency in the coming months, According
Speaker 1: to a Jane statement from the Reserve Bank of Australia,
Speaker 1: a research project to explore potential use cases in economic
Speaker 1: benefits of a central bank digital currency CBDC in Australia.
Speaker 1: So while we may see countries like Australia going with it,
Speaker 1: or you said earlier you think like the ECB might
Speaker 1: be next, maybe in the US we don't have it.
Speaker 1: So this isn't really as much of a global phenomenon.
Speaker 1: It's more of like a local Well yeah, I give
Speaker 1: it an extremely low probability of a retail CBDC in
Speaker 1: the United States for a lot of reasons. One is
Speaker 1: just where the land of the free, and this is
Speaker 1: like really a not anti freedom technology, is how I
Speaker 1: would call it. It leads to censorship, leads to surveillance,
Speaker 1: infringes on the rights and liberties of individuals, and it's
Speaker 1: really against American values and you're seeing a lot of
Speaker 1: pushback in Congress and then the Federal Reserve actually can't
Speaker 1: legally issue currency, so there would have to be new
Speaker 1: legislation passed to approve of CBDC. And I just think
Speaker 1: there's a ton of pushback. If you look at the
Speaker 1: public comments in response to the Fed's white paper. I
Speaker 1: looked through every single one of them, and seventy three
Speaker 1: percent of those comments I deemed negative there against CBDCs.
Speaker 1: And I was really lenient in terms of what I
Speaker 1: considered positive comments. So seventy three percent of those comments
Speaker 1: were negative. The American people do not want this thing.
Speaker 1: And then there's there's other reasons why in America it
Speaker 1: just doesn't make sense, the financial inclusion. The FDIC did
Speaker 1: a study on American households. Four point five percent of
Speaker 1: American households still remain the bank today, and the reasons
Speaker 1: in the survey from the FBIC were number one, high
Speaker 1: minimal cost to open a bank account, number two, privacy concerns,
Speaker 1: Number three they don't trust banks, and number four was
Speaker 1: high unpredictable fees. Now, essential bank digital currency would do
Speaker 1: none of those things. They wouldn't improve any of those things.
Speaker 1: They would actually worsen them, because like let's take fees
Speaker 1: and let's take high minimal costs to open up bank account.
Speaker 1: Those two reasons it would cost money for commercial banks
Speaker 1: to implement a CBDC system. It would take compliance costs
Speaker 1: with a MLK by C, it would take operational costs
Speaker 1: to build out the technology in the system to be
Speaker 1: interoperable with a cbd system, to create a digital wallet,
Speaker 1: to maintain the wallets, those all they would all cost
Speaker 1: money for these banks to do, and so the logical
Speaker 1: conclusion is that they will pass on those costs in
Speaker 1: the form of higher fees for their users, for their consumers,
Speaker 1: and so it would actually lead to higher fees and
Speaker 1: it would actually lead to higher expenses and costs for consumers,
Speaker 1: which are the reasons they're in bank in the first place.
Speaker 1: And specifically, it would hurt small community banks. And small
Speaker 1: community banks are absolutely critical for serving underserved communities in
Speaker 1: America in terms of critical financial services. They make up
Speaker 1: fifteen percent of total loans, but they make up thirty
Speaker 1: one percent of loans to small businesses and thirty four
Speaker 1: percent of loans to farmers. Wow. Right, So this is
Speaker 1: they would have a really hard time implementing a CDC
Speaker 1: CBDC system compared to larger banks because they don't have
Speaker 1: the profit margins, they don't have the technical capabilities, and
Speaker 1: so they would be forced to close. And this is
Speaker 1: the continuation of a trend of bank consolidation over the
Speaker 1: last twenty years. Right, So, like that's why it would
Speaker 1: really worsen financial inclusion, even though they say it's going
Speaker 1: to promote it. It would cause these small and community
Speaker 1: banks to close up shop worse, like causing more financial
Speaker 1: it would cause financial exclusion. And so that's why I'm
Speaker 1: pretty passionate about this because I just think it's such
Speaker 1: a bad idea. It's such a bad idea. There's like
Speaker 1: no no positives in like all. But to your point
Speaker 1: about the consolidation of banks, you know, for a lot
Speaker 1: of people who haven't spent a lot of time thinking
Speaker 1: about this, the consolidation or the centralization of all these
Speaker 1: decision making capabilities is a big problem. So central bank,
Speaker 1: I'm sorry, commercial or community banks know about their local community. Yeah, so, like, hey,
Speaker 1: I want to start avocado stand well in California, Like,
Speaker 1: that's probably pretty good business. If I want to do
Speaker 1: in Wyoming, it's probably not. And that's that local bank
Speaker 1: should know the difference of my local climate, economy things
Speaker 1: like that and should be making those decisions on a
Speaker 1: local basis. And so as you start to consolidate those
Speaker 1: movements up and so now it's just one central bank,
Speaker 1: the FED going to tell me whether I should start
Speaker 1: avocado stand or not, like they don't have the information
Speaker 1: to do that. And so next thing, you know, small
Speaker 1: businesses suffer and it goes to big banks. If you're
Speaker 1: just tuning in, you're listening to the Markmas Show, we're
Speaker 1: talking about the decentralized revolution, of course each and every week.
Speaker 1: But I'm down sitting down with Sam Callahan. We are
Speaker 1: talking about central bank digital currencies. We're gonna talk about banking.
Speaker 1: I want to talk about some other risks in banking
Speaker 1: as well, and then we'll speculate a little bit about
Speaker 1: some of the probabilities of some of these things happening.
Speaker 1: So we had lots to cover some very important stuff,
Speaker 1: some stuff he's super passionate about, and you should be
Speaker 1: passionate about as well, because this is going to affect
Speaker 1: you if you're not educated it. We'll be back with
Speaker 1: all that and more in a minute. Don't go away,
Speaker 1: all right, welcome back. If you just tune in, you
Speaker 1: are listening to the Mark Moss Show, sitting down with
Speaker 1: Sam Calhan. We are talking about central bank digital currencies.
Speaker 1: He's the lead analyst over at swan Bitcoin. They put
Speaker 1: out amazing research. Go check them out. Swan Bitcoin easy
Speaker 1: place to get your bitcoin dollar cost average into bitcoin
Speaker 1: as well, So check that out. But Sam, so we
Speaker 1: were talking about, you know, all these things, and before
Speaker 1: the breakoff, was talking about this. You were talking about
Speaker 1: the consolidation of the banking and I was kind of
Speaker 1: adding on and how that if we take the decision
Speaker 1: making away, this decentralized decision making from local banks that
Speaker 1: have local knowledge and try to consolidate to a federal system,
Speaker 1: that's going to be very bad for local businesses. And
Speaker 1: really it would consolidate all businesses where big businesses, big
Speaker 1: national based businesses might get the funding and local don't. Yeah,
Speaker 1: and when you have consolidation of the banking industry, you
Speaker 1: have decreased competition, right, So like when you have only
Speaker 1: four megabanks, which there's a chart after the global financial
Speaker 1: crisis where it just shows the consolidation into basically four
Speaker 1: or five megabanks in America, right or basically globally. And
Speaker 1: when there's decreased competition, you can have exorbitant fees. They
Speaker 1: can get away with that. They have this thing called
Speaker 1: junk fees, and it's a huge problem. It's the fourth reason,
Speaker 1: top reason why people remain unbanked is high, unpredictable fees.
Speaker 1: And I think that's a result of the consolidation. And
Speaker 1: so if CBDCs will make it harder for these small
Speaker 1: community banks to stay in business, it'll lead to higher
Speaker 1: fees because there's less competition in the banking industry. Now
Speaker 1: I want to talk about some of the risks for
Speaker 1: a minute, because you touched on it, but you didn't
Speaker 1: really get expand on them. So like we saw like
Speaker 1: MasterCard is piloting a program to track your carbon score, right,
Speaker 1: so that's a problem. So like potentially with this ESG
Speaker 1: and all these carbon the metrics that are coming out,
Speaker 1: I could say, hey, your carbon score is too high,
Speaker 1: your credit card doesn't work, your bank account doesn't work,
Speaker 1: You've you've gone over your allotment of meat. So we
Speaker 1: saw there was a study done in the European Union
Speaker 1: just in the last couple of weeks and it basically
Speaker 1: came out and they it was a research report. It
Speaker 1: was done on behalf of the government, so it's not
Speaker 1: policy yet. But they basically said, what is the right
Speaker 1: amount of meat for people to eat? And I forget
Speaker 1: the numbers, but it was something like avert person eats
Speaker 1: like two hundgram and they say, should eat eight. How
Speaker 1: much travel should each person have and they said I
Speaker 1: think they said each person should be limited to do
Speaker 1: I want to say it was one trip every two
Speaker 1: years and then all these crazy metrics. Now this was
Speaker 1: just a research report, right, not policy, but if they
Speaker 1: decided those things should be policy or like they're talking
Speaker 1: about these fifteen minute cities, right, yeah, so hey, you've
Speaker 1: driven more than you can drive, so now you can't
Speaker 1: get gas, can't get more of it. I mean that's
Speaker 1: where this goes, right, It is where this goes. And
Speaker 1: that's the programmable nature of CBDC. So I don't think
Speaker 1: people understand that it would be built into the money itself,
Speaker 1: Like just think of your cash as having an on
Speaker 1: and off switch and all of these restrictions and all
Speaker 1: of these controls. It would allow the government to use
Speaker 1: money itself to push social agenda behavior behavioral economics. Yeah,
Speaker 1: and that's that's that's a terrible world, right, Like we
Speaker 1: don't want to be told what to do, and the
Speaker 1: freedom to transact, it's a prerequisite for a lot of freedoms.
Speaker 1: It underpins it all, It underpins it all. So I
Speaker 1: don't think people quite understand the risks here because when
Speaker 1: what we're talking about a CBDC, what we're really talking
Speaker 1: about is fundamental rights and fundamental rights to transact, fundamental
Speaker 1: rights of privacy which would be infringed upon with this technology.
Speaker 1: And they know these risks in their own research. They
Speaker 1: talk about these risks all the time. But they say, well,
Speaker 1: we can't have privacy like cash because we have to
Speaker 1: stop money laundering, right, criminal activity mlk i C. We
Speaker 1: have to comply with that. That's despite the fact that
Speaker 1: a KYC there's nothing to stop financial crimes, you know,
Speaker 1: and maybe even helps it, and maybe even helps it.
Speaker 1: The fence and report showed that the big banks laundered
Speaker 1: like two trillion dollars or something like that. Yeah, and
Speaker 1: they paid minimal fees and fines, and it's like, really
Speaker 1: that inclusion that they have allows them to get away
Speaker 1: with it, right, And so they're basically saying that they're
Speaker 1: not gonna have privacy built into this thing. They say
Speaker 1: Actually there's a paper by the BIZ titled Embedded Surveillance. Yea.
Speaker 1: So it's a serious issue and that's why I'm passionate
Speaker 1: about it, and that's why I just try to raise awareness,
Speaker 1: even though I think there's a low probability of it
Speaker 1: happening in the United States. I think this is one
Speaker 1: of this is a big issue that people should know
Speaker 1: more about because it's happening. The research and development is accelerating,
Speaker 1: and even in the United States, the Federal Reserve just
Speaker 1: had a pilot. They just expanded their pilot with the
Speaker 1: Monetary Authority of Singapore to start piloting how one would
Speaker 1: transact with the CBDC. So they just keep kind of
Speaker 1: snowballing it, and even though there's a lot of pushback
Speaker 1: from the public and city and congressmen like Tom Emmer,
Speaker 1: Yeah exactly. He just passed an act. I think it's
Speaker 1: the Anti Surveillance Act or something like that. Cruise has
Speaker 1: also put a couple of things forward. Yeah, yeah, and
Speaker 1: that Warren Davidson spoke out about it. So it's starting
Speaker 1: to gain traction and that's encouraging to see. Now let's
Speaker 1: talk about incentives. So we like to talk about incentives
Speaker 1: a lot. Show me the incentives, I'll show you the outcome.
Speaker 1: Charliemonger said, I think so we have like the people.
Speaker 1: The players would be the people us, right, the retail users.
Speaker 1: We have the banks, We have the FED which is
Speaker 1: maybe part of the banks, and then we have like
Speaker 1: the government. Like these are kind of the four parties
Speaker 1: maybe that we would think about and the incentives. So
Speaker 1: the people, our incentive is to try to keep as
Speaker 1: much freedom as we have and try to keep our
Speaker 1: costs low, predictable, privacy, all those things. So of course
Speaker 1: we don't want that. The banks wouldn't really want this
Speaker 1: because to the point you've made, most banks can't keep
Speaker 1: up with it. Even if they could, they don't want
Speaker 1: to spend the money, time resources to do it a
Speaker 1: lot of and won't be able to do it, and
Speaker 1: so effectively this could cut the banks out altogether. And
Speaker 1: we have accounts directly with the FED, and all the
Speaker 1: commercial banks are gone. So the banks don't really want it,
Speaker 1: right well, even if so, they've kind of moved past
Speaker 1: the design of an account directly at the FED. Because
Speaker 1: the FED doesn't have it, they don't have the abilities
Speaker 1: to serve a customer facing roles. They want that the
Speaker 1: commercial banks to keep that because they don't want all
Speaker 1: the risks, the operational risks, the security risks they want
Speaker 1: the commercial banks still evolve that what they want is
Speaker 1: a two tiered intermediated system similar to what we have,
Speaker 1: where there's just a little CBDC account at the commercial banks.
Speaker 1: But even then they would disintermediate the banks because it
Speaker 1: would take their bank deposits out of those you know,
Speaker 1: those deposits would move from deposits at commercial banks into
Speaker 1: CBDC accounts, And deposits at commercial banks are their main
Speaker 1: source of funding, makes up seventy one percent of their
Speaker 1: bank funding, and it's their cheapest form of funding. So
Speaker 1: if it flows out of their deposits into a CBDC account,
Speaker 1: it would still disintermediate the don't they park most of
Speaker 1: that back at the FED anyway, And that's what the
Speaker 1: reverse repot is. Yeah, So this is when they're when
Speaker 1: they're designed, they're trying to figure out how to make
Speaker 1: it work. It's so complicated, and if they start they're like, oh, well,
Speaker 1: we can do this, we can do this. But the
Speaker 1: fact is the fact that it has all these issues
Speaker 1: before it even comes into existence. You have to ask
Speaker 1: yourself why would even risk it? Like why even if
Speaker 1: they're all these perceived problems already exists and they're trying
Speaker 1: to come up with like patchwork solutions before it even happens,
Speaker 1: Like why why go through with it? So the people
Speaker 1: don't want it, the banks don't want it. The government
Speaker 1: probably wants it because they get the power and the
Speaker 1: control correct and they can control monetary policy easier. So
Speaker 1: I think it's interesting to see what's going on in Nigeria.
Speaker 1: You mentioned Nigeria. They rolled out the e niara and
Speaker 1: they've used, you said, like the van with the candy
Speaker 1: or whatever they I call it. They've used the carrot
Speaker 1: and the stick. So the carrot was, hey, we'll give
Speaker 1: you discounts on your taxi trips and your petticab things whatever,
Speaker 1: and then not enough people were using it. And what's
Speaker 1: interesting is when you look at some of the comments
Speaker 1: of why people are like, we already have bitcoin, yep, right,
Speaker 1: we already have that. And this is no different than
Speaker 1: the nyara. And the reason why we don't use than
Speaker 1: auras because it loses, you debase it, it loses, right,
Speaker 1: So we don't use nara because you base it Eatra
Speaker 1: is the same thing, and you're still going to be
Speaker 1: base it the same way, So why would we do that?
Speaker 1: And we already have a a bitcoin. So the carrot didn't work.
Speaker 1: So then came the stick, and the stick was, now
Speaker 1: what I think, You get no more cash withdraws than
Speaker 1: like twenty five dollars a day, so you can withdraw
Speaker 1: eat nyara, but you can't withdraw cash. So that was
Speaker 1: kind of the carret in the stick. But what I
Speaker 1: like is the people's response to that, which is like, look,
Speaker 1: this is no different than what we already have and
Speaker 1: we don't need that, and we already have bitcoin for
Speaker 1: digital transactions and things like that. It's like they don't
Speaker 1: trust them, right, that's the underlying trust, and they've abused
Speaker 1: their trust, and so it doesn't matter if it's a
Speaker 1: new technology. They don't like the people that are issuing it.
Speaker 1: They don't trust them after years and years of harm
Speaker 1: that they've gone through because of their policies. And then Bitcoin,
Speaker 1: you know, I talked about these problems of like financial inclusion,
Speaker 1: Bitcoin actually solves them, right, So it already has or
Speaker 1: it already has right. So like Bitcoin's open, it's permission
Speaker 1: lists you don't need there's no minimal cost to open
Speaker 1: up a quote unquote account in bitcoin. The fees are
Speaker 1: like transparent and predictable and lower, and so it fixes
Speaker 1: a lot of these underlying problems of why people remain unbanked. Yeah,
Speaker 1: I want to talk more about that in a minute
Speaker 1: when we come back. I also want to talk about
Speaker 1: the role stable coins might play today and maybe in
Speaker 1: the future, So I want to talk about that in
Speaker 1: a minute. You're listening to the Mark mass Show sitting
Speaker 1: down with Sam Callahan from Swan Bitcoin talking about central
Speaker 1: bank digital currencies, the good, the bad, the ugly, and
Speaker 1: the dangers. We'll be back with more in a minute.
Speaker 1: Don't go away, We right back, all right, Welcome back.
Speaker 1: If you just tune in, you are listening to the
Speaker 1: Mark Moss Show sitting down with Sam Callahan, the lead
Speaker 1: analyst over at Swan Bitcoin and make it really easy
Speaker 1: to get bitcoin if you wanted to, If you want
Speaker 1: to buy a little bit and want a DCA into
Speaker 1: a dollar cost average, which you should think about. We're
Speaker 1: down in Jackson, Whole, Wyoming at the Bitcoin Ski Week
Speaker 1: and we're giving you some important information between some runs.
Speaker 1: Hopefully we're gonna get it in the powder. But we're
Speaker 1: talking about central big digital currencies, the good, the bad,
Speaker 1: the ugly, the scary. You need to be informed because
Speaker 1: this is something that's gonna could potentially affect your life,
Speaker 1: and we should all be arming ourselves with knowledge and
Speaker 1: trying to push back as best as we can. Now,
Speaker 1: two things I want to talk about. One you were
Speaker 1: saying right before we took a break all the things
Speaker 1: that they're hoping to solve with the CBDC, which is
Speaker 1: more inclusion, meaning more people have access to it. A
Speaker 1: problem is if you live in certain parts of the world,
Speaker 1: like there may be no bank within hours from you,
Speaker 1: right so it's hard to get a bank account, or
Speaker 1: you don't have the proper ID or from the wrong countries.
Speaker 1: There's all these reasons why inclusion is there. The fees obviously,
Speaker 1: like an El Salvador with the first time I visit
Speaker 1: a bitcoin beach, what I hadn't realized before because I've
Speaker 1: been there before is that they have access to banks,
Speaker 1: but because they don't have enough money that the cost
Speaker 1: to have the bank account is so high that they
Speaker 1: can't afford it. And the merchants they don't do enough
Speaker 1: volume to have a payment processor, so they just don't
Speaker 1: have banks. So there's lots of reasons why. So they
Speaker 1: want to solve that the financial inclusion. They want to
Speaker 1: make it easier to send money across border, right, right,
Speaker 1: except for you'll solve all these different currencies, so the
Speaker 1: border problem will still be there, so it doesn't actually
Speaker 1: solve that. So all the problems that they want to
Speaker 1: solve have already been solved, both bitcoin and then mostly
Speaker 1: with stable coins as well. Yeah, and I think that's
Speaker 1: it's the private sector, right, providing innovation, which is what
Speaker 1: the private sector is great at, responding to user needs
Speaker 1: in the marketplace. When you have public institutions that try
Speaker 1: to force innovation top down that nobody asked for. Now,
Speaker 1: I don't see anybody raising their hand saying I really
Speaker 1: want to CBDC with built in surveillance and restrictions. Yeah,
Speaker 1: what you know. But bitcoin is being adopted at a
Speaker 1: grassroots level because people are or finding value in it
Speaker 1: and people are actually using it because it solves those
Speaker 1: problems and it works. It just works all right. So
Speaker 1: you could be hours from a bank and most people
Speaker 1: have smartphones. Now majority of the world has smartphones. We're
Speaker 1: full adoption basically, so I can just download an app
Speaker 1: and instantly receive payment as a merchant or a retail person,
Speaker 1: I don't have to travel three hours to a bank, right,
Speaker 1: I mean, it's it's solved it instantly. Yeah. And the
Speaker 1: cross border payments. I like that you brought that up
Speaker 1: because that's one of their big advocate. Advocates for CBDCs
Speaker 1: say it will help that, but like you said, it
Speaker 1: doesn't fix the underlying problems of why cross border payments
Speaker 1: are still slow and expensive, which is fragmented data standards,
Speaker 1: compliance with different mL KYC policies of different jurisdictions, differences
Speaker 1: in time zones of these correspondent banks. Like Bitcoin solves that.
Speaker 1: The Lightning working hours, Yes, Lightning network solves that. And
Speaker 1: so it's it's just they are ignoring this private sector
Speaker 1: solution because it disintered mediates then because it removes the
Speaker 1: need of inter areas entirely. So how how is Lightning
Speaker 1: solved that? Well, Lightning those they don't know, people don't
Speaker 1: Lightning is a second layer payment protocol built on top
Speaker 1: of Bitcoin that allows for basically feeless, uh instant payments.
Speaker 1: It's it's how we solved this problem of cross border
Speaker 1: payments as well as micropayments, because you can do it
Speaker 1: with final settlement, meaning nobody can stop it. It's censorship resistant,
Speaker 1: and it's fast, and it's cheap and you can use
Speaker 1: it all built on top of bitcoin. And so the
Speaker 1: Lightning network is what you know, Alsavodor is using it.
Speaker 1: People in Africa are using it to send payments across
Speaker 1: borders within Africa at a fraction of the cross and
Speaker 1: these remittance fees are so high in Africa, and with
Speaker 1: these cross border payments that the savings that people have
Speaker 1: when they use Lightning is substantial, substantial. Think about what
Speaker 1: he said, I mean, just to make it easy if
Speaker 1: you're not if you're not following along. Is that like
Speaker 1: Venmo is like a way to send dollars on top
Speaker 1: of your bank account. Yeah, Lightning is a way to
Speaker 1: send bitcoin on top of your bigcoin account. So I
Speaker 1: think about it kind of in those terms. The other
Speaker 1: thing I would say is that maybe you don't understand
Speaker 1: how this works. So like you're in the United States
Speaker 1: and you've got Venmo, like cool, whatever, But the lady
Speaker 1: that cuts my hair is from Afghanistan. She moved here
Speaker 1: from Afghanistan. I don't know, twenty years ago whatever. And
Speaker 1: of course we know the you know, US was in
Speaker 1: war over there for twenty years. We pulled out and
Speaker 1: it was a big tragedy whatever. And so now the
Speaker 1: Taliban took over and they took over the banking system,
Speaker 1: and she still knows like women friends there and she
Speaker 1: wants to give them money, and she has no way
Speaker 1: to give them money because if she sends them money,
Speaker 1: the Taliban would just take it. So there's this massive
Speaker 1: humanitarian crisis going on where women specifically in Afghanistan are
Speaker 1: being you know, oppressed in a big way, and she
Speaker 1: from Afghanistan wants to help them, and she has no
Speaker 1: way to give them money. And yet she could just
Speaker 1: transact enlightning and from her bed literally could send it
Speaker 1: free and instantly, and there's no way for it to
Speaker 1: be intercepted by the Taliban, yep, and completely permissionless right permission,
Speaker 1: So they can just send it. No, they don't have
Speaker 1: to ask permission from the banks to send it. They
Speaker 1: can just do it peer to peer. And that's the
Speaker 1: power of bitcoin, right. I think that's the from the
Speaker 1: get go that's been of the value proposition of bitcoin.
Speaker 1: I think it's just so important to think about stories
Speaker 1: like that, And it's one reason why I really believe
Speaker 1: that people need to travel more, because sometimes we get
Speaker 1: really stuck in this US centric viewpoint where like I
Speaker 1: don't even tell you how much my hotel room is
Speaker 1: here in Jackson Hole, Wyoming, that I took on a
Speaker 1: plane in first class to sit here, and I'm sipping
Speaker 1: twenty dollars drinks at the bar, and like, what do
Speaker 1: I need different money for? Right? Yeah, But like when
Speaker 1: you start thinking about these poor women in Afghanistan or
Speaker 1: even in El Salvador for that matter, Right, so I
Speaker 1: think it's like thirty percent of their GDP is remittances. Yeah,
Speaker 1: something like that. Right, So the thirty percent of the
Speaker 1: revenue is remittances. And if you for me to send
Speaker 1: someone money and to Elsava or wherever, like I'd have
Speaker 1: to go to my bank cash, go to Walmart or
Speaker 1: the gross store standline fill out the forms for Western Union.
Speaker 1: That's gonna take me an hour. I don't want to
Speaker 1: do that. And then they may have to get on
Speaker 1: a bus and ride a bus for three or four
Speaker 1: hours to get to the city to get the cash,
Speaker 1: and then ride back three or four hours with the cash.
Speaker 1: Hopefully don't get robbed and then they pay depends on
Speaker 1: the transaction, but maybe twenty third of that in fees. Yeah,
Speaker 1: and now with bitcoin, I can do it from my
Speaker 1: bedroom and they can receive it in their bedroom. No bus,
Speaker 1: no no risk, no fees, no nothing. Yeah, it's a
Speaker 1: completely antiquated system. And bitcoin is like a ferrari and
Speaker 1: they're still using a horse and buggy like that's or
Speaker 1: lightnings like a ferrari, I guess you could say. And
Speaker 1: you know, the average cost for cross border payments is
Speaker 1: around six six point three eight percent, So to send
Speaker 1: two hundred dollars, you have that in fees on average,
Speaker 1: and it takes about two to three days on average.
Speaker 1: And so that's a lot of money for somebody who's
Speaker 1: you know, a poor family in Africa trying to send
Speaker 1: money back home to their other family. That's like that
Speaker 1: may not sound like a lot to a West Center
Speaker 1: who has a lot of privilege, but that is substantial
Speaker 1: amount of fees to pay just to send money back home.
Speaker 1: It's a substantial part of their paychecks. So that's this
Speaker 1: is why bitcoin can empower people and promote financial inclusion
Speaker 1: and promote individual economic empowerment. Yeah, they say, there's what
Speaker 1: does this saying a standing army is no match for
Speaker 1: a good idea whose time has come or something like that, right,
Speaker 1: And so I think when I look at businesses and
Speaker 1: I look at technologies, you have technologies that are improvement offers.
Speaker 1: They're offering you a little improvement off of what they have.
Speaker 1: And then we have opportunity switches where it's something completely
Speaker 1: different and that's usually going to be, you know, a
Speaker 1: hundred times or a thousand times better. And when you
Speaker 1: have that, there's just no way to stop it. And
Speaker 1: when you think about the Afghanistan, or you think about
Speaker 1: the El Salvador, you think about North Korea, you know,
Speaker 1: or even in the US, problems we might have like
Speaker 1: how do you send fifteen cents on an on the internet? Right? Yeah,
Speaker 1: there's just no other way. There's just not Yeah, and
Speaker 1: so it's not just a good idea that's come it's
Speaker 1: solved the problem that has no other solution. I mean,
Speaker 1: it's a it's a groundbreaking technology, yeah, you know, it's
Speaker 1: it's it's one of those technologies that doesn't come around
Speaker 1: often that will change everything. And that's what I believe,
Speaker 1: similar to the Internet and similar to these grand, big ideas,
Speaker 1: big technologies that reshape our world, and that's what I
Speaker 1: think bitcoin is. Yeah. Well, if you're just tuning in,
Speaker 1: you're listening to the Mark Maas Show and sitting down
Speaker 1: with Sam Callahan. He is the lead analyst over at
Speaker 1: swan Bitcoin. Check them out. I use them. It's a
Speaker 1: great place to get bitcoin if you want to do that,
Speaker 1: they'll send it directly to your cold wallet and check
Speaker 1: out Sam's research when you're over there. You know. A
Speaker 1: couple parting thoughts, I just leave, is one really really
Speaker 1: take the time to think about the CBDCs. I'm not
Speaker 1: a big fan of politics and voting. I don't think
Speaker 1: that it holds a lot of power. But at the
Speaker 1: same time, it's what we have and as long as
Speaker 1: I'm breathing, I'm swinging, and so we might as well
Speaker 1: use it. We might as well push back. We might
Speaker 1: as well slow the tide as much as we can.
Speaker 1: So do that, you know, talk to your friends, to
Speaker 1: your family, your co workers, push back on the politicians
Speaker 1: in your local area. Tell them you don't want to CBDCs,
Speaker 1: make your voice be heard, and opt out. Buy some bitcoin. Anyway,
Speaker 1: That's what I got. Thanks, for listening until next time.