1 00:00:00,120 --> 00:00:02,520 Speaker 1: Welcome to How the Money. I'm Joel and I and 2 00:00:02,600 --> 00:00:05,440 Speaker 1: Matt and today we're talking Money the Origins of a 3 00:00:05,519 --> 00:00:28,200 Speaker 1: Made Up Thing with Jacob Goldstein. Yeah. Jacob Goldstein is 4 00:00:28,240 --> 00:00:31,200 Speaker 1: the co host of nprs Planet Money, and his stories 5 00:00:31,240 --> 00:00:34,560 Speaker 1: have aired on This American Life, All Things Considered Morning Edition. 6 00:00:35,000 --> 00:00:37,360 Speaker 1: He uh. He lives in Brooklyn with his wife, two kids, 7 00:00:37,360 --> 00:00:40,680 Speaker 1: and a small dog. And Jacob has previously worked as 8 00:00:40,720 --> 00:00:43,960 Speaker 1: a reporter at The Wall Street Journal and the Miami Herald. 9 00:00:44,360 --> 00:00:47,520 Speaker 1: He's written about money for The New York Times magazine, 10 00:00:47,560 --> 00:00:50,519 Speaker 1: and more recently, he has published his book Money, The 11 00:00:50,520 --> 00:00:53,400 Speaker 1: True Story of a Made Up Thing. And Yeah, we're 12 00:00:53,440 --> 00:00:56,160 Speaker 1: we're not just talking about the history and origins of 13 00:00:56,160 --> 00:00:58,240 Speaker 1: money today, but we're going to dive into where things 14 00:00:58,240 --> 00:01:00,720 Speaker 1: are today as well as maybe what the future of 15 00:01:00,760 --> 00:01:02,320 Speaker 1: money is going to be like. So, Jacob, thank you 16 00:01:02,360 --> 00:01:05,840 Speaker 1: for joining us today on the podcast. Thanks for having me, Jacob. 17 00:01:05,880 --> 00:01:07,520 Speaker 1: We're glad to have you. And one of the things 18 00:01:07,520 --> 00:01:09,360 Speaker 1: that Matt and I do every episode, we have a 19 00:01:09,400 --> 00:01:11,880 Speaker 1: craft beer while we're talking to our guest. One because 20 00:01:11,920 --> 00:01:14,480 Speaker 1: craft beer is delicious, and two because it's important. I 21 00:01:14,520 --> 00:01:17,240 Speaker 1: think when we're talking about money to prioritize something in 22 00:01:17,280 --> 00:01:19,360 Speaker 1: the here and now that you love. Wow, you're trying 23 00:01:19,400 --> 00:01:21,440 Speaker 1: to save and invest well for the future. So do 24 00:01:21,480 --> 00:01:23,959 Speaker 1: you have something similar, a craft beer equivalent, something that 25 00:01:24,000 --> 00:01:26,520 Speaker 1: you explore john in the here and now? Yes, And 26 00:01:26,680 --> 00:01:29,960 Speaker 1: I am also enjoying it right now right but it's 27 00:01:29,959 --> 00:01:32,800 Speaker 1: so boring. It's so boring compared to craft beer. I 28 00:01:32,840 --> 00:01:36,959 Speaker 1: feel a little bit embarrassing. It sucks. I'm wearing a 29 00:01:37,000 --> 00:01:39,240 Speaker 1: pair of socks that costs twenty dollars, which I would 30 00:01:39,240 --> 00:01:42,920 Speaker 1: have been ashamed of two years ago, probably a year ago. 31 00:01:43,040 --> 00:01:45,959 Speaker 1: But I just ordered my fifth pair, literally this morning, 32 00:01:46,040 --> 00:01:51,120 Speaker 1: of twenty socks. Nice smart Wolk by smart Wall. They're dyna. 33 00:01:51,440 --> 00:01:52,800 Speaker 1: They're worth it to me. They'd be worth it at 34 00:01:52,800 --> 00:01:56,560 Speaker 1: thirty Probably not worth but great. We all have a 35 00:01:56,560 --> 00:01:59,760 Speaker 1: line in the sand, right My first pair of smart 36 00:01:59,760 --> 00:02:02,600 Speaker 1: Wolds locks were in college. I had gotten a pair, uh, 37 00:02:02,640 --> 00:02:04,320 Speaker 1: and some friends were like, dude, if you're gonna do 38 00:02:04,480 --> 00:02:06,040 Speaker 1: be doing a lot of hiking. And at the time, 39 00:02:06,080 --> 00:02:08,240 Speaker 1: I was working out a boy's outdoor can I summer 40 00:02:08,280 --> 00:02:11,200 Speaker 1: camp and we were leading kids like backpacking trips and 41 00:02:11,240 --> 00:02:13,000 Speaker 1: they're like, with smart Wold socks, you can like rinse 42 00:02:13,000 --> 00:02:14,680 Speaker 1: them off in the creek, ring them out, hang them 43 00:02:14,720 --> 00:02:15,920 Speaker 1: up to dry, and you put them on. They feel 44 00:02:15,960 --> 00:02:19,280 Speaker 1: like they're just perfectly fresh. I still have a few bears. 45 00:02:19,320 --> 00:02:22,040 Speaker 1: They're great. Still seems kind of like a ridiculous amount 46 00:02:22,080 --> 00:02:24,280 Speaker 1: of money to me to spend on socks, but also 47 00:02:24,440 --> 00:02:26,560 Speaker 1: worth it. So I don't quite know how I hold 48 00:02:26,560 --> 00:02:28,720 Speaker 1: those two ideas at once, but I do well. I 49 00:02:28,760 --> 00:02:30,000 Speaker 1: feel like Joel is the same way. You're the same 50 00:02:30,000 --> 00:02:31,480 Speaker 1: way man. You pulled out some winter socks. We talked 51 00:02:31,480 --> 00:02:33,040 Speaker 1: about this on the show not too long ago, and 52 00:02:33,040 --> 00:02:34,560 Speaker 1: you're like, you know what, I'm not gonna put up 53 00:02:34,560 --> 00:02:36,560 Speaker 1: with holes in my socks anymore. On way, man, throw 54 00:02:36,560 --> 00:02:39,880 Speaker 1: those away. We're gonna get some good stuff here. It's empowering, right. 55 00:02:39,919 --> 00:02:42,000 Speaker 1: I'm I'm too old for this. I'm not a child. 56 00:02:42,040 --> 00:02:43,799 Speaker 1: I'm not a graduate student. I got a job. I 57 00:02:43,840 --> 00:02:46,120 Speaker 1: could buy socks. That's how I felt. I was like, 58 00:02:46,160 --> 00:02:48,000 Speaker 1: it's I'm done with holes in the socks. Like it. 59 00:02:48,120 --> 00:02:50,200 Speaker 1: I'm past that point. In my early mid twenties, I 60 00:02:50,240 --> 00:02:52,240 Speaker 1: was okay with it. I'm in my mid thirties now, man, 61 00:02:52,280 --> 00:02:55,040 Speaker 1: No way, not anymore. See that's the thing. I've got 62 00:02:55,040 --> 00:02:56,880 Speaker 1: my one pair of smart Wold socks, but otherwise all 63 00:02:56,880 --> 00:02:58,680 Speaker 1: the rest of my daily socks, they actually do have 64 00:02:58,720 --> 00:03:03,120 Speaker 1: holes in them, because I'm so I respect that too well. Jacob, Hey, 65 00:03:03,200 --> 00:03:05,880 Speaker 1: you know, we mentioned Brooklyn in your bio and that 66 00:03:05,880 --> 00:03:07,440 Speaker 1: that kind of makes us wonder. How has it been 67 00:03:07,480 --> 00:03:09,720 Speaker 1: living up in New York City over over the past year, 68 00:03:10,400 --> 00:03:14,000 Speaker 1: crowded in a two bedroom, one bathroom apartment with my 69 00:03:14,000 --> 00:03:17,520 Speaker 1: wife and two daughters. So, you know, we're like very close. 70 00:03:17,639 --> 00:03:20,640 Speaker 1: We're all very close to each other. You know, we're 71 00:03:20,720 --> 00:03:23,000 Speaker 1: fortunate my wife and I are able to do our 72 00:03:23,080 --> 00:03:26,040 Speaker 1: jobs from home, and we've stayed employed and we stayed healthy. 73 00:03:26,120 --> 00:03:30,240 Speaker 1: So like, at a basic level, I feel grateful. Last spring, 74 00:03:30,400 --> 00:03:34,119 Speaker 1: last you know, April in New York City was super 75 00:03:34,240 --> 00:03:39,200 Speaker 1: duper intense, somewhat scary. Since then, it's been okay. I 76 00:03:39,280 --> 00:03:41,800 Speaker 1: took my mother in law to get vaccinated last weekend. 77 00:03:41,840 --> 00:03:43,480 Speaker 1: That was kind of felt like the beginning of the end. 78 00:03:43,520 --> 00:03:46,160 Speaker 1: I'm hopeful. Yeah, it does feel like there's certainly a 79 00:03:46,240 --> 00:03:47,600 Speaker 1: light at the end of the tunnel. Now I know 80 00:03:47,720 --> 00:03:49,800 Speaker 1: more more and more folks that I know and some 81 00:03:49,840 --> 00:03:52,040 Speaker 1: of my relatives starting to get vaccinated, and it's like, 82 00:03:52,120 --> 00:03:54,320 Speaker 1: all right, we're on the men, we're getting there. How 83 00:03:54,400 --> 00:03:57,040 Speaker 1: are you guys doing? Where are you? We're in Atlanta, 84 00:03:57,280 --> 00:03:59,920 Speaker 1: and I feel like, yeah, we're fortunately more space than 85 00:04:00,320 --> 00:04:03,240 Speaker 1: you folks in New York, a little bit more space. Um, 86 00:04:03,400 --> 00:04:06,240 Speaker 1: And you know, the weather has for the most part. 87 00:04:06,280 --> 00:04:07,680 Speaker 1: I don't know if we've just Matt and I've talked 88 00:04:07,680 --> 00:04:09,480 Speaker 1: about this. I don't know if we're just appreciating it 89 00:04:09,520 --> 00:04:11,360 Speaker 1: more or if the weather was actually better this year. 90 00:04:11,600 --> 00:04:13,520 Speaker 1: But it just feels like the weather has been excellent. 91 00:04:13,560 --> 00:04:16,359 Speaker 1: So we've been really able to enjoy the outdoors up 92 00:04:16,400 --> 00:04:20,560 Speaker 1: until the last several weeks. Ye specifically last spring, and 93 00:04:20,640 --> 00:04:22,800 Speaker 1: like last fall. You know, you step outside and you're like, oh, 94 00:04:22,800 --> 00:04:25,119 Speaker 1: the sun is shining. We live in a beautiful world, 95 00:04:25,160 --> 00:04:28,080 Speaker 1: like look at look at the birds, look at the trees. Yeah. 96 00:04:28,120 --> 00:04:30,040 Speaker 1: I think the pandemic has made us appreciate some of 97 00:04:30,080 --> 00:04:32,000 Speaker 1: the things that we maybe didn't appreciate as much as 98 00:04:32,000 --> 00:04:34,159 Speaker 1: we should have or could have before. Yeah. But yeah, 99 00:04:34,160 --> 00:04:36,320 Speaker 1: we're certainly doing well. But thanks for asking. All right, 100 00:04:36,520 --> 00:04:39,560 Speaker 1: let's talk about money, Jacob. Your your book is all 101 00:04:39,560 --> 00:04:42,040 Speaker 1: about money. People do crazy things to get money. We 102 00:04:42,320 --> 00:04:45,360 Speaker 1: love hearing high flying success stories, and we like to 103 00:04:45,440 --> 00:04:48,000 Speaker 1: hear about folks that maybe forget their Bitcoin password and 104 00:04:48,040 --> 00:04:50,960 Speaker 1: could lose hundreds of millions of dollars because of it. Right. Uh, 105 00:04:51,080 --> 00:04:54,120 Speaker 1: Yet you start your book by stating that money is fiction. 106 00:04:54,920 --> 00:04:58,040 Speaker 1: Why are we also fixated on something that is essentially 107 00:04:58,080 --> 00:05:01,000 Speaker 1: a made up construct? Well, because it's really useful if 108 00:05:01,040 --> 00:05:05,119 Speaker 1: you want to get stuff, right, like socks or beer 109 00:05:05,320 --> 00:05:08,640 Speaker 1: or a house. The thing that is interesting to me 110 00:05:08,760 --> 00:05:13,720 Speaker 1: fundamentally is it feels. You know, I didn't study economics. 111 00:05:13,760 --> 00:05:16,480 Speaker 1: I didn't. I came to sort of thinking about money 112 00:05:16,520 --> 00:05:18,960 Speaker 1: and learning about money late in my life, and I was, 113 00:05:19,000 --> 00:05:21,039 Speaker 1: you know, in my thirties. I was an English major 114 00:05:21,080 --> 00:05:24,320 Speaker 1: and kind of wary of money, and and before I 115 00:05:24,360 --> 00:05:27,320 Speaker 1: started really thinking about money, I sort of vaguely thought 116 00:05:27,320 --> 00:05:29,720 Speaker 1: of it as this thing that exists in the world, 117 00:05:29,800 --> 00:05:33,120 Speaker 1: like water or gravity or something something that has some 118 00:05:33,160 --> 00:05:36,599 Speaker 1: set of like physical scientific properties that we can't do 119 00:05:36,640 --> 00:05:39,440 Speaker 1: anything about. And the more I learned about money, the 120 00:05:39,520 --> 00:05:42,000 Speaker 1: more it became clear to me that that is just 121 00:05:42,480 --> 00:05:46,400 Speaker 1: not true. Right. Money is a thing that people made 122 00:05:46,480 --> 00:05:49,080 Speaker 1: up together, and in fact didn't just make up once. 123 00:05:49,120 --> 00:05:51,240 Speaker 1: It's not just like there's no money and then there's money, 124 00:05:51,279 --> 00:05:53,000 Speaker 1: and that's the whole story. It's a thing that we 125 00:05:53,080 --> 00:05:57,520 Speaker 1: have continued and are continuing to reinvent and change the 126 00:05:57,600 --> 00:05:59,760 Speaker 1: rules about and realizing that it is really useful. It 127 00:05:59,839 --> 00:06:02,479 Speaker 1: make to more insightful about money. It also makes you 128 00:06:02,520 --> 00:06:04,800 Speaker 1: realize that there's sort of this ongoing set of choices 129 00:06:04,880 --> 00:06:06,880 Speaker 1: about how money works, and that we can change it 130 00:06:07,120 --> 00:06:09,599 Speaker 1: if we want to or if we have to. In 131 00:06:09,640 --> 00:06:11,960 Speaker 1: your book, you kind of talk about the origins of 132 00:06:12,000 --> 00:06:14,120 Speaker 1: money there at the beginning. Uh, And you know, it 133 00:06:14,120 --> 00:06:16,320 Speaker 1: would seem to make sense that money was essentially created 134 00:06:16,360 --> 00:06:19,320 Speaker 1: to solve the problem of bartering, you know, to exchange 135 00:06:19,320 --> 00:06:22,039 Speaker 1: whatever things that you have for the things that you 136 00:06:22,080 --> 00:06:25,080 Speaker 1: do want. But it is more complex than that. Can 137 00:06:25,080 --> 00:06:27,919 Speaker 1: you explain how that's so? Yeah? Yeah, And you know, 138 00:06:28,040 --> 00:06:30,120 Speaker 1: to be honest, that story about barter is when I 139 00:06:30,160 --> 00:06:33,080 Speaker 1: even told, you know, early when I was at Planet Money, 140 00:06:33,120 --> 00:06:35,120 Speaker 1: we did some live show and we did this idea 141 00:06:35,200 --> 00:06:37,479 Speaker 1: that money comes out of barter because it's you know, 142 00:06:37,520 --> 00:06:40,120 Speaker 1: a more convenient solution, basically a more elegant solution. But 143 00:06:40,520 --> 00:06:44,360 Speaker 1: as I was researching the book, I realized that's probably 144 00:06:44,400 --> 00:06:47,800 Speaker 1: not true. Basically what happened was sorry, sorry to the 145 00:06:47,800 --> 00:06:51,839 Speaker 1: people who were at that talking two thousand eleven. Things 146 00:06:51,880 --> 00:06:55,640 Speaker 1: have changed a lot the world five thousand years ago. 147 00:06:55,680 --> 00:06:58,240 Speaker 1: It's not what we thought it was. Um. So, you know, 148 00:06:58,400 --> 00:07:01,600 Speaker 1: what happened in the twentieth century was anthropologists started going 149 00:07:01,640 --> 00:07:04,320 Speaker 1: out around the world and they had this Barter story 150 00:07:04,360 --> 00:07:06,640 Speaker 1: in their head. But as they were going to these 151 00:07:06,680 --> 00:07:10,680 Speaker 1: you know, different cultures that it different stages of development 152 00:07:10,920 --> 00:07:13,920 Speaker 1: that did money or sort of proto money differently, they 153 00:07:13,960 --> 00:07:18,520 Speaker 1: realized they never really saw that Barter world that you 154 00:07:18,560 --> 00:07:21,920 Speaker 1: would expect if that story were true. What they saw 155 00:07:22,000 --> 00:07:26,040 Speaker 1: instead was something I frankly find much more interesting. What 156 00:07:26,120 --> 00:07:28,680 Speaker 1: they found was, you know, so these cultures are typically 157 00:07:28,880 --> 00:07:31,080 Speaker 1: small right there, sort of we can think of it 158 00:07:31,160 --> 00:07:34,400 Speaker 1: as tribal. They're based on kinship. Everybody basically knows each other, right, 159 00:07:34,400 --> 00:07:37,320 Speaker 1: So you have this small society where everybody knows each other, 160 00:07:37,320 --> 00:07:42,200 Speaker 1: and they typically have lots of rules about gift giving 161 00:07:42,400 --> 00:07:45,040 Speaker 1: and reciprocity, you know, you when you have to give 162 00:07:45,080 --> 00:07:48,680 Speaker 1: somebody something and then what they owe you in return. Um. 163 00:07:48,760 --> 00:07:52,000 Speaker 1: And some of the most kind of classic ones, ones 164 00:07:52,080 --> 00:07:54,800 Speaker 1: that anthropologists saw again and again in lots of different places, 165 00:07:54,840 --> 00:07:57,080 Speaker 1: were about a marriage. Right. Marriage is a classic when 166 00:07:57,080 --> 00:08:00,400 Speaker 1: somebody's marrying somebody else, typically one family. You know, either 167 00:08:00,440 --> 00:08:02,640 Speaker 1: the bride of the groom family has to give certain 168 00:08:02,680 --> 00:08:05,480 Speaker 1: things to the family of the other marriage partner. Like 169 00:08:05,680 --> 00:08:07,640 Speaker 1: cattle is a classic right. If you're married somebody, you 170 00:08:07,720 --> 00:08:11,200 Speaker 1: gotta give cattle to their family. Another one, kind of 171 00:08:11,240 --> 00:08:15,520 Speaker 1: awesomely is murder. Right if you kill someone in somebody's family, 172 00:08:16,040 --> 00:08:19,760 Speaker 1: they're traditionally lots of specific rules about what you have 173 00:08:19,840 --> 00:08:23,160 Speaker 1: to give to that person's family. And so the sort 174 00:08:23,160 --> 00:08:26,120 Speaker 1: of new idea about where money comes from is is 175 00:08:26,160 --> 00:08:31,280 Speaker 1: that right, this these rules about giving and and reciprocity 176 00:08:31,320 --> 00:08:33,960 Speaker 1: where there is typically some specific thing like cattle, or 177 00:08:34,040 --> 00:08:36,960 Speaker 1: like gold bracelets in northern Europe a long time ago, 178 00:08:37,120 --> 00:08:40,319 Speaker 1: like calorie shells are like boar tusks on some particular 179 00:08:40,360 --> 00:08:43,520 Speaker 1: island in the South Pacific. Once you have these rules 180 00:08:43,559 --> 00:08:46,080 Speaker 1: that you're going to have to give this very specific thing, 181 00:08:46,200 --> 00:08:47,959 Speaker 1: and you know, if you ever want to get married, 182 00:08:48,120 --> 00:08:50,720 Speaker 1: then there's a reason to sort of accumulate those things. 183 00:08:50,800 --> 00:08:52,800 Speaker 1: Right then they become a sort of store of value, 184 00:08:52,880 --> 00:08:55,120 Speaker 1: useful not just for the thing itself, but for this 185 00:08:55,200 --> 00:08:58,160 Speaker 1: sort of future purpose. And the notion now is that 186 00:08:58,160 --> 00:09:02,240 Speaker 1: that's where money comes from. Interesting, and so like that's 187 00:09:02,240 --> 00:09:05,200 Speaker 1: the origins kind of, But when did we see money 188 00:09:05,280 --> 00:09:07,400 Speaker 1: appear in a similar context to the way we see 189 00:09:07,440 --> 00:09:10,920 Speaker 1: it now, like as coin based currency, And how did 190 00:09:11,040 --> 00:09:15,000 Speaker 1: that change come about in the world change. I see 191 00:09:15,040 --> 00:09:19,079 Speaker 1: what you did there. I don't even think I'm still 192 00:09:19,120 --> 00:09:21,920 Speaker 1: gonna blame you for it. So so it was like, 193 00:09:22,000 --> 00:09:24,120 Speaker 1: I don't have any front of you. It's about seven 194 00:09:24,200 --> 00:09:30,360 Speaker 1: hundred BC in the Eastern Mediterranean present day Turkey. Uh, 195 00:09:30,400 --> 00:09:33,480 Speaker 1: there was a kingdom called Lydia. Uh if you ever 196 00:09:33,520 --> 00:09:37,360 Speaker 1: heard of Creasus, this famous king uh who was like 197 00:09:37,440 --> 00:09:39,800 Speaker 1: the richest guy in the world. That that was Lydia. 198 00:09:39,920 --> 00:09:42,160 Speaker 1: And they happened to Jeff Bezos of his time. He 199 00:09:42,280 --> 00:09:45,760 Speaker 1: was the Bezos of his day. Not because he started 200 00:09:45,800 --> 00:09:48,720 Speaker 1: a very clever company that made the world better for consumers, 201 00:09:48,720 --> 00:09:51,080 Speaker 1: about because he happened to rule over a kingdom that 202 00:09:51,160 --> 00:09:53,800 Speaker 1: had a lot of this precious metal called electroum. So 203 00:09:53,840 --> 00:09:58,160 Speaker 1: he just got lucky. Basically, Uh, electrom is this naturally 204 00:09:58,200 --> 00:10:01,040 Speaker 1: occurring amalgam of goal than silver. So the gold and 205 00:10:01,080 --> 00:10:03,640 Speaker 1: silver are just blended up with each other into this rock. 206 00:10:03,679 --> 00:10:05,800 Speaker 1: And so obviously it's awesome to have a kingdom full 207 00:10:05,840 --> 00:10:08,280 Speaker 1: of gold and silver. But he had this kind of 208 00:10:08,720 --> 00:10:11,480 Speaker 1: like an ancient First world problem, which is when the 209 00:10:11,559 --> 00:10:14,120 Speaker 1: gold and silver are blended up together, it's hard to 210 00:10:14,160 --> 00:10:16,840 Speaker 1: know how much a given rock is worth, right because then, 211 00:10:17,360 --> 00:10:20,679 Speaker 1: as now, gold was more valuable in silver, and their 212 00:10:20,760 --> 00:10:22,440 Speaker 1: value was based on their weight, and you know, the 213 00:10:22,480 --> 00:10:25,440 Speaker 1: more gold in the rock, the more valuable. So it's 214 00:10:25,480 --> 00:10:27,640 Speaker 1: like you could do an assay and figure it out, 215 00:10:27,640 --> 00:10:31,600 Speaker 1: but that's like slow and inefficient, and silver in particular, 216 00:10:31,600 --> 00:10:33,560 Speaker 1: I should say, by this point was used as a 217 00:10:33,600 --> 00:10:35,800 Speaker 1: sort of proto money in this part of the world 218 00:10:35,800 --> 00:10:39,880 Speaker 1: for a long time. So somebody in Lydia comes up 219 00:10:39,920 --> 00:10:42,480 Speaker 1: with this idea of how to deal with this electron. 220 00:10:42,520 --> 00:10:44,920 Speaker 1: They say, okay, what if we take a bunch of 221 00:10:44,920 --> 00:10:49,800 Speaker 1: electron that has a pretty consistent ratio of gold to silver, 222 00:10:50,440 --> 00:10:53,960 Speaker 1: and we cut it into standard sized lumps, and then 223 00:10:54,000 --> 00:10:57,000 Speaker 1: on each lump we stamp an image of a lion, 224 00:10:57,200 --> 00:11:00,559 Speaker 1: which I believe was like the Royal seal, the image 225 00:11:01,120 --> 00:11:03,840 Speaker 1: to indicate that it is a standard size and a 226 00:11:03,920 --> 00:11:08,400 Speaker 1: standard ratio of gold to silver. And people love these 227 00:11:08,440 --> 00:11:12,080 Speaker 1: things that we're basically the first coins, right. Uh, they 228 00:11:12,360 --> 00:11:15,440 Speaker 1: were little coins, they were standard and because they had 229 00:11:15,480 --> 00:11:17,920 Speaker 1: the same weight or mass and the same ratio of 230 00:11:17,960 --> 00:11:20,200 Speaker 1: gold to silver, they all had the same value. So 231 00:11:20,240 --> 00:11:23,760 Speaker 1: it's just a much more efficient way of of using 232 00:11:23,760 --> 00:11:25,960 Speaker 1: a precious metal as money. I mean, if I can 233 00:11:26,000 --> 00:11:27,800 Speaker 1: go on, there's the next step that I like even 234 00:11:27,880 --> 00:11:30,160 Speaker 1: better about what happened in Greece. Can I keep going? 235 00:11:30,360 --> 00:11:33,880 Speaker 1: Of course? Yeah. So so this was the same time, 236 00:11:34,080 --> 00:11:36,760 Speaker 1: like right literally you know next door if you think 237 00:11:36,800 --> 00:11:38,560 Speaker 1: of the map, right next sort of Turkey is Greece. 238 00:11:38,960 --> 00:11:41,679 Speaker 1: And this is the moment in history when what we 239 00:11:41,800 --> 00:11:44,199 Speaker 1: think of as ancient Greece, you know, classical Greece and 240 00:11:44,200 --> 00:11:47,120 Speaker 1: Grease where they invented the Olympics and democracy and we're 241 00:11:47,120 --> 00:11:49,120 Speaker 1: togas and all the things. Did they were togas in Grease? 242 00:11:49,200 --> 00:11:53,160 Speaker 1: Or was that room? I take back togas um uh 243 00:11:53,200 --> 00:11:56,400 Speaker 1: that it was just emerging, and not long after the 244 00:11:56,480 --> 00:11:58,680 Speaker 1: Lydians made coins out of electron. People like coins so 245 00:11:58,760 --> 00:12:01,200 Speaker 1: much that they started makings out of gold and silver. 246 00:12:01,840 --> 00:12:04,160 Speaker 1: And then Lydia got conquered by the court by by 247 00:12:04,160 --> 00:12:06,440 Speaker 1: the Persian so they sort of disappeared from the scene. 248 00:12:06,960 --> 00:12:11,839 Speaker 1: But the Greeks loved coins, silver coins in particular. And 249 00:12:11,960 --> 00:12:15,520 Speaker 1: what's really interesting to me about that is I think 250 00:12:15,520 --> 00:12:18,120 Speaker 1: it's not a coincidence that the first place coins really 251 00:12:18,160 --> 00:12:21,040 Speaker 1: took off was Greece. And also Greece was like you know, 252 00:12:21,240 --> 00:12:26,440 Speaker 1: famously the cradle of democracy, because before this point to 253 00:12:26,520 --> 00:12:28,480 Speaker 1: be a little reductive, it wasn't quite this reductive, but 254 00:12:28,559 --> 00:12:31,160 Speaker 1: like before this point, they were like the small kind 255 00:12:31,200 --> 00:12:33,600 Speaker 1: of tribal societies like I talked about, where it's all 256 00:12:33,640 --> 00:12:37,480 Speaker 1: you know, kinship and reciprocity and whatever, warm fuzzy whatever. 257 00:12:37,880 --> 00:12:40,319 Speaker 1: And then on the other hand you had great, big, 258 00:12:41,520 --> 00:12:45,800 Speaker 1: bigger society sort of city states, but that were very hierarchical. 259 00:12:45,800 --> 00:12:47,520 Speaker 1: They would be like a priest or a king or 260 00:12:47,520 --> 00:12:50,440 Speaker 1: a queen who ruled and who largely sort of directed 261 00:12:50,440 --> 00:12:53,240 Speaker 1: all of the economic activity. Today, like we would call it, 262 00:12:53,559 --> 00:12:56,079 Speaker 1: I don't like a totalitarian state. Basically, you know, they 263 00:12:56,080 --> 00:12:58,360 Speaker 1: told everybody what to do and took took from some 264 00:12:58,400 --> 00:13:01,160 Speaker 1: people and gave to others. They called it a abute society. 265 00:13:01,280 --> 00:13:05,959 Speaker 1: And so Greece, interestingly, at this time, was in between, right. 266 00:13:06,000 --> 00:13:09,000 Speaker 1: It was too big to be the like kinship, reciprocity, 267 00:13:09,000 --> 00:13:13,960 Speaker 1: gift giving, but also to sort of egalitarian, to be 268 00:13:14,040 --> 00:13:16,040 Speaker 1: this kind of top down the king is going to 269 00:13:16,120 --> 00:13:20,640 Speaker 1: take everything and redistribute it, and so money coins are 270 00:13:20,760 --> 00:13:24,480 Speaker 1: like the perfect way to have exchange of goods when 271 00:13:24,480 --> 00:13:26,320 Speaker 1: you're in between, right, when you're in this world that's 272 00:13:26,320 --> 00:13:30,920 Speaker 1: too big for for gift giving and to egalitarian for 273 00:13:31,080 --> 00:13:33,760 Speaker 1: you know, tribute and redistribution. So it's really elegant, right, 274 00:13:33,760 --> 00:13:35,840 Speaker 1: and it's a really nice story about how money works 275 00:13:35,840 --> 00:13:38,320 Speaker 1: and how money allows us to be in this world 276 00:13:38,320 --> 00:13:41,600 Speaker 1: we're in now right where this big complex society that 277 00:13:41,640 --> 00:13:44,640 Speaker 1: allows people to buy what they want and sell their 278 00:13:44,720 --> 00:13:48,760 Speaker 1: labor for money, which obviously it seems that's a lot 279 00:13:48,800 --> 00:13:50,679 Speaker 1: like what we have going on today, and you know, 280 00:13:50,760 --> 00:13:52,920 Speaker 1: kind of progressing along on a different part of the globe. 281 00:13:53,080 --> 00:13:55,520 Speaker 1: You know, when paper money came onto the scene, you know, 282 00:13:55,520 --> 00:13:58,000 Speaker 1: it turned out that it wasn't even backed by anything. 283 00:13:58,040 --> 00:14:00,600 Speaker 1: It didn't have any inherent value, wasn't stay out of 284 00:14:00,760 --> 00:14:03,680 Speaker 1: this precious metal. It was just being printed. And so 285 00:14:03,800 --> 00:14:05,600 Speaker 1: can you can you share the quick story of the 286 00:14:05,600 --> 00:14:09,240 Speaker 1: first paper money and what made it possible? Yeah? Yeah, 287 00:14:09,240 --> 00:14:12,520 Speaker 1: So that's also an amazing story. So it it takes 288 00:14:12,520 --> 00:14:14,600 Speaker 1: a while. So so the first paper money comes in 289 00:14:14,720 --> 00:14:18,079 Speaker 1: around that you're a thousand in this province called Sichuan 290 00:14:18,160 --> 00:14:22,040 Speaker 1: in China, and at the time in Sichuan. So so 291 00:14:22,120 --> 00:14:25,760 Speaker 1: coins had been around for you know whatever, sixteen hundred 292 00:14:25,840 --> 00:14:27,880 Speaker 1: years by this point, and they spread all around the world, 293 00:14:27,880 --> 00:14:30,480 Speaker 1: and coins were money, and you know they were the 294 00:14:30,800 --> 00:14:32,800 Speaker 1: value of the coin was still based on the metal 295 00:14:32,840 --> 00:14:35,560 Speaker 1: it contained, and in a lot of China, bronze was 296 00:14:35,600 --> 00:14:37,880 Speaker 1: the metal they used for coins. But in Sichuan they 297 00:14:37,960 --> 00:14:41,240 Speaker 1: used a lot of iron coins, and iron is not 298 00:14:41,400 --> 00:14:43,320 Speaker 1: worth much, was not worth much, So it was like 299 00:14:43,520 --> 00:14:46,240 Speaker 1: crappy money, right. It was basically like their only money 300 00:14:46,320 --> 00:14:50,400 Speaker 1: was pennies. So like, for example, a pound a pound 301 00:14:50,480 --> 00:14:53,120 Speaker 1: of salt cost a pound and a half of iron coins. 302 00:14:53,160 --> 00:14:56,600 Speaker 1: It's just bad, right, It's just inefficient, not efficient. You 303 00:14:56,640 --> 00:14:58,520 Speaker 1: couldn't even put it in your car because cars weren't 304 00:14:58,520 --> 00:15:01,840 Speaker 1: gonna be invented for a thousand years. Uh So, so 305 00:15:02,200 --> 00:15:06,000 Speaker 1: some merchants in Sichuan has this idea that Chinese conveniently 306 00:15:06,000 --> 00:15:08,960 Speaker 1: have invented paper by this point, and so the merchant says, look, 307 00:15:09,040 --> 00:15:11,200 Speaker 1: leave your iron coins with me, and I'll give you 308 00:15:11,240 --> 00:15:13,440 Speaker 1: a paper receipt, right like a claim check, and you 309 00:15:13,480 --> 00:15:15,280 Speaker 1: can bring it back and I'll give your coins back. 310 00:15:15,440 --> 00:15:17,920 Speaker 1: And so people take the receipts and then rather than 311 00:15:17,960 --> 00:15:19,480 Speaker 1: go back to the merchant and get the coins. When 312 00:15:19,480 --> 00:15:21,480 Speaker 1: they want to buy something, they just give the receipt 313 00:15:21,760 --> 00:15:24,040 Speaker 1: to the seller that look, here's the receipt for the coins. 314 00:15:24,080 --> 00:15:25,560 Speaker 1: You take the receipt, I'll take the stuff. If you 315 00:15:25,560 --> 00:15:28,400 Speaker 1: want the coins, you can go get them. And that 316 00:15:28,640 --> 00:15:32,680 Speaker 1: is the birth of paper money. It's great. The government 317 00:15:32,760 --> 00:15:35,600 Speaker 1: sees this, they like it, they get involved. Paper money 318 00:15:35,680 --> 00:15:39,000 Speaker 1: spreads all around China and it's really like it's a 319 00:15:39,080 --> 00:15:42,000 Speaker 1: technological breakthrough, right. It sounds kind of silly today when 320 00:15:42,040 --> 00:15:44,960 Speaker 1: we associate you know, technology with computers, etcetera, but it 321 00:15:45,080 --> 00:15:48,280 Speaker 1: really is. Right, there's no motorized transport. So if you 322 00:15:48,320 --> 00:15:51,680 Speaker 1: think of how much cheaper and more efficient it makes 323 00:15:51,760 --> 00:15:54,120 Speaker 1: trade when you can carry a piece of paper instead 324 00:15:54,160 --> 00:15:57,320 Speaker 1: of a wagon load of coins, it's huge and in 325 00:15:57,360 --> 00:16:02,040 Speaker 1: fact it's part of this larger sort of proto industrial revolution, 326 00:16:02,080 --> 00:16:05,280 Speaker 1: this real economic revolution in China at this moment around 327 00:16:05,320 --> 00:16:07,800 Speaker 1: a thousand a d. When they have more trade, they 328 00:16:07,840 --> 00:16:10,960 Speaker 1: have scientific breakthroughs, they have cities growing to like a 329 00:16:11,040 --> 00:16:13,800 Speaker 1: million people, which is like ten x European cities at 330 00:16:13,800 --> 00:16:16,600 Speaker 1: the time, and like you know, restaurants in cities and 331 00:16:17,120 --> 00:16:20,640 Speaker 1: just a real, a real economic boom, like you don't 332 00:16:20,680 --> 00:16:23,080 Speaker 1: see anywhere in the world really until you know, eight 333 00:16:23,240 --> 00:16:26,800 Speaker 1: hundred or so in Europe. Uh, and then all this 334 00:16:26,920 --> 00:16:28,640 Speaker 1: is going on, and then wouldn't you know what, the 335 00:16:28,720 --> 00:16:34,520 Speaker 1: Mongols invade China, what around twelve d ish And this 336 00:16:34,600 --> 00:16:36,120 Speaker 1: is getting to the moment you were mentioning. So the 337 00:16:36,160 --> 00:16:38,520 Speaker 1: Mongols also love paper money. You know, they control all 338 00:16:38,560 --> 00:16:41,000 Speaker 1: of Asia. They're riding around on horseback. They think paper 339 00:16:41,000 --> 00:16:44,960 Speaker 1: money is a great idea. And Genghis Khan's grandson, Kubla 340 00:16:45,080 --> 00:16:48,560 Speaker 1: Icon becomes the Great Cohn, and he loves paper money, 341 00:16:48,800 --> 00:16:51,160 Speaker 1: and he is the one who takes this next step 342 00:16:51,480 --> 00:16:55,720 Speaker 1: where he says, you know, now this paper money is 343 00:16:55,800 --> 00:16:58,560 Speaker 1: no longer going to be a claim check for coins. 344 00:16:58,680 --> 00:17:03,640 Speaker 1: It's just gonna be paper money. And sort of amazingly 345 00:17:03,840 --> 00:17:08,000 Speaker 1: it works like China keeps going, the economy keeps humming along. 346 00:17:08,040 --> 00:17:11,120 Speaker 1: There is some inflation, not surprising, but but it's functional. 347 00:17:12,040 --> 00:17:16,560 Speaker 1: And then there's a counter revolution. The Mongols get driven 348 00:17:16,600 --> 00:17:21,320 Speaker 1: out of China. There's this new Ming dynasty. They don't trust, 349 00:17:21,680 --> 00:17:23,800 Speaker 1: kind of like populist or something. They don't trust all 350 00:17:23,840 --> 00:17:26,800 Speaker 1: this weird paper money, and they don't like cities. Their 351 00:17:26,880 --> 00:17:29,760 Speaker 1: dream is like the self sufficient agricultural village, and they 352 00:17:29,800 --> 00:17:33,600 Speaker 1: actually wind up getting rid of paper money altogether. So 353 00:17:33,680 --> 00:17:36,959 Speaker 1: this incredible sort of breakthrough comes in and China drives 354 00:17:37,000 --> 00:17:41,040 Speaker 1: this economic transformation and then they're like, you know, let's 355 00:17:41,080 --> 00:17:43,119 Speaker 1: just get rid of that. Let's let's just forget all 356 00:17:43,160 --> 00:17:45,879 Speaker 1: about that, and paper money basically disappears from the world 357 00:17:45,880 --> 00:17:48,400 Speaker 1: for like a couple hundred years. As humans are prone 358 00:17:48,440 --> 00:17:49,920 Speaker 1: to do, screw up a good thing every now to 359 00:17:50,200 --> 00:17:53,680 Speaker 1: right that right, it's not broke ming dynasty, don't fix 360 00:17:53,720 --> 00:17:56,359 Speaker 1: it right, right? Well, so one of the things that 361 00:17:56,440 --> 00:17:59,080 Speaker 1: made that money possible was the fact that they believed 362 00:17:59,080 --> 00:18:01,080 Speaker 1: in it, right, And so we're actually gonna talk more 363 00:18:01,119 --> 00:18:03,159 Speaker 1: about belief in the role that that plays when it 364 00:18:03,200 --> 00:18:05,160 Speaker 1: comes to money and kind of how we treat it today. 365 00:18:05,160 --> 00:18:16,320 Speaker 1: We'll get to all of that right after the break art. 366 00:18:16,320 --> 00:18:19,160 Speaker 1: We're back from break we're talking with Jacob Goldstein about money. 367 00:18:19,320 --> 00:18:23,040 Speaker 1: And Jacob already some fascinating stuff. Man. Uh. In chapter 368 00:18:23,200 --> 00:18:27,320 Speaker 1: five in your book you it's titled finance as time travel, 369 00:18:27,480 --> 00:18:30,000 Speaker 1: and it seems that the concept uh set off the 370 00:18:30,040 --> 00:18:34,680 Speaker 1: invention of modern capitalism in Amsterdam back in So how 371 00:18:34,720 --> 00:18:37,760 Speaker 1: how did that come about? Right? So I should say 372 00:18:37,800 --> 00:18:39,960 Speaker 1: By the way, you guys may may know this already, 373 00:18:40,040 --> 00:18:42,760 Speaker 1: that phrase finances time travel. I take it from a 374 00:18:42,840 --> 00:18:46,200 Speaker 1: writer named Matt Levine who has a finance newsletter called 375 00:18:46,240 --> 00:18:50,000 Speaker 1: money Stuff that's free. He writes for Bloomberg and it's great. 376 00:18:50,240 --> 00:18:52,359 Speaker 1: So let me just say, if you're listening to the show, 377 00:18:52,880 --> 00:18:54,959 Speaker 1: probably means you're interested in money. If you are interested 378 00:18:55,000 --> 00:18:59,000 Speaker 1: in a sort of wonky finance newsletter, money Stuff by 379 00:18:59,040 --> 00:19:01,399 Speaker 1: Matt Levine is really good, so awesome, and you recently 380 00:19:01,400 --> 00:19:06,680 Speaker 1: fired that back up to right like after he got 381 00:19:06,720 --> 00:19:08,600 Speaker 1: back just in time for the whole game stop thing. 382 00:19:08,640 --> 00:19:12,720 Speaker 1: Thank good. Uh So, the basic story is it's you 383 00:19:12,760 --> 00:19:17,120 Speaker 1: know six, and this is when Europeans are going out 384 00:19:17,200 --> 00:19:20,680 Speaker 1: and colonizing the world and doing horrible things to people 385 00:19:20,680 --> 00:19:23,680 Speaker 1: all around the world and getting rich doing it, right, Um, 386 00:19:24,280 --> 00:19:30,119 Speaker 1: And it's really expensive to build a ship and send 387 00:19:30,160 --> 00:19:32,480 Speaker 1: it all the way halfway around the world to go 388 00:19:32,520 --> 00:19:34,560 Speaker 1: get a bunch of spices and come back. Right. So 389 00:19:34,640 --> 00:19:36,679 Speaker 1: you you have this idea, You're like, well, if I 390 00:19:36,720 --> 00:19:39,720 Speaker 1: could get the money to build a ship and send 391 00:19:39,760 --> 00:19:41,320 Speaker 1: it around the world and come back with spices, I 392 00:19:41,359 --> 00:19:43,960 Speaker 1: could be rich, right, But in order to get rich, 393 00:19:44,440 --> 00:19:47,520 Speaker 1: I need money now, It's sort of analogus today to like, 394 00:19:47,720 --> 00:19:49,960 Speaker 1: maybe you get a job offer, but you don't have 395 00:19:50,000 --> 00:19:52,120 Speaker 1: a car, right, and it's like, well, if I have 396 00:19:52,240 --> 00:19:53,920 Speaker 1: the job, I'll be able to make the money tout 397 00:19:53,920 --> 00:19:55,760 Speaker 1: of the car, but I don't have the money now. 398 00:19:56,000 --> 00:19:58,199 Speaker 1: So what you need to do is you need to 399 00:19:58,880 --> 00:20:02,440 Speaker 1: pull pull backwards in time the money that you're gonna 400 00:20:02,480 --> 00:20:05,159 Speaker 1: make in the future. Right, You're like, I'm gonna have 401 00:20:05,200 --> 00:20:06,919 Speaker 1: the money once I have the job. I'm gonna have 402 00:20:06,960 --> 00:20:09,919 Speaker 1: the money once that ship gets back from from Asia. 403 00:20:10,400 --> 00:20:12,440 Speaker 1: But what I need is somebody to give me money now. 404 00:20:12,680 --> 00:20:16,159 Speaker 1: And so that is the fundamental function of finance. Right. 405 00:20:16,200 --> 00:20:18,919 Speaker 1: There's one person who has some money now but doesn't 406 00:20:18,960 --> 00:20:20,639 Speaker 1: need it, doesn't know exactly what to do with it, 407 00:20:21,000 --> 00:20:23,719 Speaker 1: and will trade money now for the possibility of more 408 00:20:23,800 --> 00:20:25,400 Speaker 1: money in the future. And then on the other side, 409 00:20:25,440 --> 00:20:27,720 Speaker 1: there's somebody who needs the money now and it will 410 00:20:27,760 --> 00:20:29,840 Speaker 1: take it and pay some interest on it or give 411 00:20:29,920 --> 00:20:32,520 Speaker 1: up some equity for it because they think they can 412 00:20:32,520 --> 00:20:34,320 Speaker 1: get even more in the future. And so that's what 413 00:20:34,440 --> 00:20:38,479 Speaker 1: happened in Amsterdam and wound up creating basically the first 414 00:20:39,040 --> 00:20:42,280 Speaker 1: modern multinational corporation that anybody could buy stock and they 415 00:20:42,280 --> 00:20:45,360 Speaker 1: created the Dutch East India Company, which was a company 416 00:20:45,400 --> 00:20:48,760 Speaker 1: to send ships to to the Spice Islands to Asia 417 00:20:48,840 --> 00:20:52,159 Speaker 1: to bring back spices basically, and they sold stock to 418 00:20:52,320 --> 00:20:55,040 Speaker 1: essentially anybody who wanted to buy it. And there was 419 00:20:55,080 --> 00:20:58,680 Speaker 1: this provision in the charter that said, if you decide 420 00:20:58,720 --> 00:21:01,040 Speaker 1: you want to get rid of your stock before you 421 00:21:01,080 --> 00:21:04,520 Speaker 1: know the company pays out its profits, you can come 422 00:21:04,560 --> 00:21:07,119 Speaker 1: to the office with whoever wants to buy it and 423 00:21:07,160 --> 00:21:09,520 Speaker 1: well you know right in the ledger that you're transferring 424 00:21:09,560 --> 00:21:13,560 Speaker 1: your shares. And that little line in the company's charter 425 00:21:14,400 --> 00:21:16,960 Speaker 1: launched the first stock market, right. The first stock market 426 00:21:16,960 --> 00:21:18,960 Speaker 1: was basically to trade this one stock, the Dutch East 427 00:21:18,960 --> 00:21:22,320 Speaker 1: India Company. But people started buying and selling shares, and 428 00:21:22,359 --> 00:21:25,560 Speaker 1: they started out on this on this bridge in Amsterdam 429 00:21:25,600 --> 00:21:27,080 Speaker 1: where the ships would come in, because that's where you 430 00:21:27,119 --> 00:21:29,080 Speaker 1: would get the news first, right like the way high 431 00:21:29,080 --> 00:21:32,320 Speaker 1: frequency traders today you know, fight over thousands of the second. 432 00:21:32,359 --> 00:21:33,880 Speaker 1: You wanted to be like right next to the ship 433 00:21:33,960 --> 00:21:36,320 Speaker 1: so you could find out if the voyage went well 434 00:21:36,440 --> 00:21:39,119 Speaker 1: or badly in trade accordingly, and then got so crowded 435 00:21:39,119 --> 00:21:41,560 Speaker 1: on the bridge that they actually built a special courtyard 436 00:21:41,560 --> 00:21:44,240 Speaker 1: where people could go and trade every day. So you know, 437 00:21:44,280 --> 00:21:47,000 Speaker 1: we hinted at this before the before the break, but 438 00:21:47,040 --> 00:21:50,480 Speaker 1: you know, like what role did belief play in contributing 439 00:21:50,520 --> 00:21:52,640 Speaker 1: to the creation of the way that they were using 440 00:21:52,640 --> 00:21:54,800 Speaker 1: money then? And you know the way we use money today? 441 00:21:54,880 --> 00:21:58,000 Speaker 1: And how substantial do you feel that that belief is 442 00:21:58,200 --> 00:22:01,200 Speaker 1: in kind of how we view and handle mone today. Oh, 443 00:22:01,280 --> 00:22:05,679 Speaker 1: it's profound. I mean it's it's the fundamental sort of 444 00:22:05,800 --> 00:22:09,480 Speaker 1: quality of money all the way through the history of money. 445 00:22:09,560 --> 00:22:12,919 Speaker 1: I think today it's it's more obvious than ever because 446 00:22:13,480 --> 00:22:17,200 Speaker 1: there is no physical thing there anymore. Right, I mean, 447 00:22:17,560 --> 00:22:19,520 Speaker 1: when you're on the gold standard, you can be like, well, 448 00:22:19,560 --> 00:22:24,720 Speaker 1: gold is real, even though gold is only valuable because people, 449 00:22:25,119 --> 00:22:27,680 Speaker 1: you know, I think that it's money, right, Like the 450 00:22:27,720 --> 00:22:31,080 Speaker 1: fundamental qualities of gold are not useful for not dying 451 00:22:31,200 --> 00:22:34,480 Speaker 1: or for being comfortable. Right, it's not like wheat or 452 00:22:34,560 --> 00:22:38,080 Speaker 1: something wheat I would buy is not made up. But today, 453 00:22:38,119 --> 00:22:39,720 Speaker 1: like you might even think of a piece of paper, 454 00:22:39,800 --> 00:22:42,119 Speaker 1: But like most money is not even a piece of paper, right, 455 00:22:42,160 --> 00:22:44,959 Speaker 1: most money is just money in your bank account. And 456 00:22:45,000 --> 00:22:47,760 Speaker 1: like there is not a stack of dollars in the 457 00:22:47,800 --> 00:22:50,480 Speaker 1: bank for every dollar you have, and you're checking out. Yeah, 458 00:22:50,520 --> 00:22:53,920 Speaker 1: it's ones and zeros and like there's nothing there, right, 459 00:22:53,960 --> 00:22:56,199 Speaker 1: It's just I mean, it reminds me a little bit 460 00:22:56,240 --> 00:22:59,159 Speaker 1: of the of the reciprocity thing in in like you know, 461 00:22:59,280 --> 00:23:01,480 Speaker 1: traditional CULTU is right, it's like you give somebody something 462 00:23:01,520 --> 00:23:03,040 Speaker 1: and you trust that they're going to give you something back. 463 00:23:03,080 --> 00:23:07,000 Speaker 1: Like you take uh, some extra ones zeroes in your 464 00:23:07,000 --> 00:23:09,320 Speaker 1: bank account because you trust that you can use those 465 00:23:09,320 --> 00:23:11,919 Speaker 1: ones and zeros to pay the mortgage or by groceries. 466 00:23:12,240 --> 00:23:14,280 Speaker 1: Like there's nothing I mean, I guess you could say 467 00:23:14,280 --> 00:23:18,160 Speaker 1: you trust the government. Right. Also fundamentally, now, what money 468 00:23:18,240 --> 00:23:22,080 Speaker 1: is really kind of founded on is trust in the government, 469 00:23:22,119 --> 00:23:24,200 Speaker 1: trust in you know, in case of the dollar, trust 470 00:23:24,240 --> 00:23:27,160 Speaker 1: in the United States. As a going concern. I feel 471 00:23:27,160 --> 00:23:28,679 Speaker 1: like we should change the name of our podcast from 472 00:23:28,680 --> 00:23:31,560 Speaker 1: how to Money to how to Believe? Like how this 473 00:23:31,600 --> 00:23:34,280 Speaker 1: conversation you know, how to Believe? I like it. I 474 00:23:34,320 --> 00:23:37,520 Speaker 1: believe it makes the most sense. Now, let's talk about 475 00:23:37,560 --> 00:23:40,399 Speaker 1: the gold standard. That's obviously a really important period in 476 00:23:40,440 --> 00:23:43,320 Speaker 1: the history of money too. What precipitated, like the world's 477 00:23:43,320 --> 00:23:47,199 Speaker 1: superpowers to tie their currencies to a colorful metal in 478 00:23:47,200 --> 00:23:49,879 Speaker 1: the first dase Like you said, it's not super useful 479 00:23:50,040 --> 00:23:53,040 Speaker 1: like wheat, Like what makes gold the you know, the 480 00:23:53,280 --> 00:23:56,400 Speaker 1: thing that they want to attach their their paper currency to. Well, 481 00:23:56,480 --> 00:23:58,479 Speaker 1: So for a long time it was gold and silver, 482 00:23:58,760 --> 00:24:00,600 Speaker 1: and sometimes it was more gold and sometimes it was 483 00:24:00,640 --> 00:24:03,199 Speaker 1: more silver, and like this isn't in the book, Uh, 484 00:24:03,440 --> 00:24:04,960 Speaker 1: you should buy the book. Anyways, a long time I 485 00:24:05,040 --> 00:24:08,360 Speaker 1: actually did a fun show where where I went with 486 00:24:08,400 --> 00:24:10,879 Speaker 1: a guy worked with We went through the periodic table, 487 00:24:11,240 --> 00:24:13,360 Speaker 1: like if you're going to choose an element, why would 488 00:24:13,400 --> 00:24:16,520 Speaker 1: it be gold or silver? And and you can actually 489 00:24:16,520 --> 00:24:19,439 Speaker 1: pretty much get rid of everything except the precious metals, 490 00:24:19,600 --> 00:24:22,959 Speaker 1: which are quite good because they're like rare but not 491 00:24:23,080 --> 00:24:28,000 Speaker 1: too rare. They they don't rust or blow up or degrade, 492 00:24:28,080 --> 00:24:32,119 Speaker 1: they're not radioactive, and they're you know, divisible. Right, you 493 00:24:32,160 --> 00:24:35,199 Speaker 1: can cut gold into smaller pieces in a way that 494 00:24:35,240 --> 00:24:37,399 Speaker 1: you can't cut a cow into smaller pieces, or at 495 00:24:37,440 --> 00:24:38,920 Speaker 1: least if you cut it into smaller pieces, it's not 496 00:24:38,960 --> 00:24:41,320 Speaker 1: gonna last for long, right, So for a long time 497 00:24:41,320 --> 00:24:44,120 Speaker 1: it basically came down to gold and silver. But there 498 00:24:44,200 --> 00:24:46,720 Speaker 1: was this weird problem where like you try and set 499 00:24:46,760 --> 00:24:48,879 Speaker 1: your money to like a fixed amount of gold and 500 00:24:48,920 --> 00:24:51,679 Speaker 1: a fixed amount of silver, and then like somebody finds 501 00:24:51,680 --> 00:24:53,439 Speaker 1: a bunch of silver in the New World, and like 502 00:24:53,520 --> 00:24:56,520 Speaker 1: the relative sort of price of gold and silver change, 503 00:24:56,560 --> 00:24:59,919 Speaker 1: so then that ratio of the actual value of the 504 00:25:00,000 --> 00:25:02,840 Speaker 1: metal changes and that kind of messes up your your currency, 505 00:25:02,840 --> 00:25:05,640 Speaker 1: your paper money. So it was really hard to keep 506 00:25:05,680 --> 00:25:09,560 Speaker 1: this sort of bi metalism they called bimetalism going. So finally, 507 00:25:09,640 --> 00:25:14,879 Speaker 1: in the first half of the eight hundreds, England, which Britain, 508 00:25:14,880 --> 00:25:17,280 Speaker 1: which at the time was the most important economy in 509 00:25:17,280 --> 00:25:19,880 Speaker 1: the world, I think, said we're just going to give 510 00:25:20,000 --> 00:25:23,000 Speaker 1: up and just do gold. Enough of this gold and 511 00:25:23,040 --> 00:25:25,160 Speaker 1: silver thing. It's not working. We haven't been able ever 512 00:25:25,200 --> 00:25:27,199 Speaker 1: to get the ratio right. Even Isaac Newton when he 513 00:25:27,240 --> 00:25:29,680 Speaker 1: was the head of the Minute, even he couldn't do it. Uh. 514 00:25:29,720 --> 00:25:34,840 Speaker 1: And so they say a pound, you know, the British pound, 515 00:25:34,920 --> 00:25:37,600 Speaker 1: is going to be defined now and forever as a 516 00:25:37,600 --> 00:25:41,919 Speaker 1: certain amount of gold. So everybody winds up following this. 517 00:25:42,040 --> 00:25:44,480 Speaker 1: Not everybody, but most of the big economies in the world, 518 00:25:44,520 --> 00:25:48,240 Speaker 1: including the United States. In the United States, it was, uh, 519 00:25:48,400 --> 00:25:52,919 Speaker 1: one ounce of gold got you twenty dollars and change forever. 520 00:25:53,040 --> 00:25:55,520 Speaker 1: That was the definition of a dollar was this amount 521 00:25:55,520 --> 00:25:59,520 Speaker 1: of gold. And there were pros and cons basically to 522 00:25:59,560 --> 00:26:02,040 Speaker 1: the whole being on the gold standard. I mean, one 523 00:26:02,080 --> 00:26:04,840 Speaker 1: of the pros was, I mean the classic pro that 524 00:26:05,320 --> 00:26:08,000 Speaker 1: you know people talk about it is it constrains governments, right, 525 00:26:08,000 --> 00:26:11,879 Speaker 1: it prevents governments from printing infinite amounts of money. But 526 00:26:12,040 --> 00:26:16,119 Speaker 1: but a little more subtly it um it makes the 527 00:26:16,160 --> 00:26:18,640 Speaker 1: exchange rate between all of the different currencies that are 528 00:26:18,760 --> 00:26:21,760 Speaker 1: tied to gold fixed, right because they don't change in 529 00:26:21,800 --> 00:26:25,760 Speaker 1: relative terms, and so that makes uh international trade easier. 530 00:26:25,800 --> 00:26:28,160 Speaker 1: You don't have to worry about getting screwed by weird 531 00:26:28,160 --> 00:26:31,639 Speaker 1: currency fluctuations essentially. And it was indeed, you know, the 532 00:26:31,680 --> 00:26:33,959 Speaker 1: second half of the nineteenth century was this kind of 533 00:26:34,600 --> 00:26:38,560 Speaker 1: era of globalization, and so that was nice. But the 534 00:26:38,560 --> 00:26:42,680 Speaker 1: big problem came uh in the depression. Really, I mean 535 00:26:42,680 --> 00:26:45,800 Speaker 1: there were problems earlier people thought about it, but the 536 00:26:45,920 --> 00:26:49,560 Speaker 1: real bad moment for the gold standard was the depression. 537 00:26:49,960 --> 00:26:52,200 Speaker 1: Because what happened in the depression. You know, everybody talks 538 00:26:52,240 --> 00:26:56,080 Speaker 1: about the crash of and that was bad, but that 539 00:26:56,200 --> 00:27:00,880 Speaker 1: wasn't depression bad, right, that was like recession bad. And 540 00:27:00,920 --> 00:27:03,639 Speaker 1: what turned the recession into the depression was the fact 541 00:27:03,720 --> 00:27:08,320 Speaker 1: that prices started to fall and wages started to fall, 542 00:27:09,119 --> 00:27:12,000 Speaker 1: and you know, once wages started to fall, then people 543 00:27:12,080 --> 00:27:14,639 Speaker 1: couldn't pay their debts, right, because your wage falls and 544 00:27:14,680 --> 00:27:17,800 Speaker 1: prices are falling, but debts don't fall. Debts are the same, 545 00:27:17,800 --> 00:27:20,119 Speaker 1: so it's harder and harder for people to pay their debts. 546 00:27:20,680 --> 00:27:23,360 Speaker 1: And you get into this terrible spiral. People are defaulting 547 00:27:23,359 --> 00:27:26,120 Speaker 1: on their loans, banks are going bus, prices are falling more. 548 00:27:26,680 --> 00:27:29,879 Speaker 1: And a way to fix that is to stop the 549 00:27:29,920 --> 00:27:33,639 Speaker 1: fall in prices by printing more money. Right, that's what 550 00:27:33,760 --> 00:27:36,280 Speaker 1: the Fed does today. Even before you get to deflation. Right, 551 00:27:36,280 --> 00:27:38,760 Speaker 1: if we go into a recession, people start losing their jobs. 552 00:27:39,080 --> 00:27:42,800 Speaker 1: The Fed basically creates more money, lowers interest rates, makes 553 00:27:42,840 --> 00:27:46,160 Speaker 1: it easy for people to borrow, keeps prices from falling, 554 00:27:46,200 --> 00:27:48,879 Speaker 1: keeps us from falling into this deflationary spiral. But on 555 00:27:48,920 --> 00:27:51,720 Speaker 1: the gold standard you can't do that. In fact, the 556 00:27:51,760 --> 00:27:54,480 Speaker 1: FED raised interest rates because they were afraid that people 557 00:27:54,480 --> 00:27:57,000 Speaker 1: would start, you know, turning in their money for gold. 558 00:27:57,040 --> 00:27:58,440 Speaker 1: And they're like, well, we can't have that, so let's 559 00:27:58,520 --> 00:28:02,000 Speaker 1: raise interest rates, and they they made it worse. They 560 00:28:02,040 --> 00:28:05,680 Speaker 1: basically turned a bad recession into the depression. And it 561 00:28:05,720 --> 00:28:09,919 Speaker 1: was only a couple of years later. UH Britain first 562 00:28:10,040 --> 00:28:12,440 Speaker 1: was forced off the gold standard. Basically they because they 563 00:28:12,600 --> 00:28:14,879 Speaker 1: the Bank of England essentially ran out of gold, and 564 00:28:14,920 --> 00:28:18,399 Speaker 1: the US it wasn't quite so uh so die or 565 00:28:18,440 --> 00:28:21,000 Speaker 1: the Feds still had gold. But when Roosevelt, when Franklin 566 00:28:21,080 --> 00:28:24,040 Speaker 1: Roosevelt became president in the which was really the worst 567 00:28:24,080 --> 00:28:29,080 Speaker 1: of the depression, he was influenced by these sort of 568 00:28:29,119 --> 00:28:32,199 Speaker 1: marginal economists. I mean, at the time even sort of 569 00:28:32,240 --> 00:28:36,560 Speaker 1: mainstream economists still believed in the gold standard. You know, 570 00:28:36,560 --> 00:28:39,520 Speaker 1: the gold standard was such a such a central way 571 00:28:39,560 --> 00:28:42,680 Speaker 1: of people thought about the world, Like just what money 572 00:28:42,920 --> 00:28:46,040 Speaker 1: was was a fixed amount of gold, and like changing 573 00:28:46,400 --> 00:28:48,440 Speaker 1: going off the gold standard would be like changing the 574 00:28:48,520 --> 00:28:50,200 Speaker 1: laws of physics or something. I mean, I think this 575 00:28:50,280 --> 00:28:53,040 Speaker 1: is the peak moment of this confusion that is kind 576 00:28:53,080 --> 00:28:56,280 Speaker 1: of really interesting to me, right where people think that 577 00:28:56,400 --> 00:28:58,840 Speaker 1: money is some fundamental physical thing in the world instead 578 00:28:58,840 --> 00:29:02,560 Speaker 1: of the set of choices. And Roosevelt doesn't believe the 579 00:29:02,680 --> 00:29:04,840 Speaker 1: sort of mainstream economists, and he says we're going to 580 00:29:04,920 --> 00:29:07,600 Speaker 1: go off the gold standards so that we can break 581 00:29:07,640 --> 00:29:10,040 Speaker 1: out of this deflationary spiral and and you know, get 582 00:29:10,040 --> 00:29:11,920 Speaker 1: prices back to where they were a few years ago. 583 00:29:11,960 --> 00:29:14,479 Speaker 1: And one of his advisors when he says this, literally 584 00:29:14,480 --> 00:29:17,680 Speaker 1: says this is the end of Western civilization. Like that's 585 00:29:17,720 --> 00:29:21,200 Speaker 1: how fixed in the gold Standard they were. But the 586 00:29:21,240 --> 00:29:24,200 Speaker 1: advisor was wrong and Roosevelt was right. Like clearly that 587 00:29:24,480 --> 00:29:28,360 Speaker 1: moment spring of was the worst of the depression. Things 588 00:29:28,400 --> 00:29:30,200 Speaker 1: started to get better. I mean, there were other mistakes. 589 00:29:30,320 --> 00:29:33,240 Speaker 1: Roosevelt certainly made other mistakes. The depression didn't really end 590 00:29:33,320 --> 00:29:35,400 Speaker 1: until World War two, but that is clearly the turn. 591 00:29:35,480 --> 00:29:37,240 Speaker 1: And in country after a country going off to the 592 00:29:37,400 --> 00:29:40,320 Speaker 1: going off the gold Standard is the turn when things 593 00:29:40,320 --> 00:29:42,480 Speaker 1: start to get better, right, Yeah, I mean just the 594 00:29:42,520 --> 00:29:45,560 Speaker 1: concept of the ability to just you know, create more 595 00:29:45,560 --> 00:29:48,120 Speaker 1: money is something that is difficult to wrap your head around. 596 00:29:48,160 --> 00:29:50,640 Speaker 1: But one of the results. Yeah, the sounds like a 597 00:29:50,720 --> 00:29:54,120 Speaker 1: bad idea, right, like the sound on his face like 598 00:29:54,200 --> 00:29:57,240 Speaker 1: a good idea, But I but I believe that it is. Yeah. Well, 599 00:29:57,280 --> 00:29:58,600 Speaker 1: and then you know one of the results of that 600 00:29:58,760 --> 00:30:01,400 Speaker 1: is is growth. Right. And so one of the points 601 00:30:01,440 --> 00:30:02,880 Speaker 1: in your book, I love how you talk about the 602 00:30:02,880 --> 00:30:06,960 Speaker 1: productivity gains of specifically of artificial lights, that the technology, 603 00:30:07,200 --> 00:30:08,920 Speaker 1: but you talked about it in financial terms. You know, 604 00:30:09,160 --> 00:30:14,120 Speaker 1: you had some you had an amazing chart there that Yeah, 605 00:30:14,160 --> 00:30:18,000 Speaker 1: so like there's this basic idea, Maybe the basic idea 606 00:30:18,000 --> 00:30:20,680 Speaker 1: and economics is when you have productivity games, when you 607 00:30:20,720 --> 00:30:24,240 Speaker 1: figure out ways to get more stuff for better stuff 608 00:30:24,280 --> 00:30:27,680 Speaker 1: for the same amount of work, everybody can get richer, right, 609 00:30:27,720 --> 00:30:30,080 Speaker 1: the pie can get bigger. It's a positive sum game. 610 00:30:30,160 --> 00:30:33,280 Speaker 1: And that's another thing that I think. It's like deeply 611 00:30:33,680 --> 00:30:37,800 Speaker 1: not intuitive. It really, I think feels in our bones 612 00:30:38,480 --> 00:30:41,240 Speaker 1: like the world is a zero sum game, and if 613 00:30:41,280 --> 00:30:44,200 Speaker 1: one person is getting more stuff, somebody else is getting less. 614 00:30:44,360 --> 00:30:46,479 Speaker 1: And to be clear, sometimes that is the case. Right, 615 00:30:46,520 --> 00:30:48,880 Speaker 1: there are times when somebody gets rich by screwing over 616 00:30:49,040 --> 00:30:51,640 Speaker 1: somebody else, but it doesn't have to be and in 617 00:30:51,680 --> 00:30:53,600 Speaker 1: the long run it has not been right. In the 618 00:30:53,640 --> 00:30:58,200 Speaker 1: long run, people have become profoundly, profoundly better off as 619 00:30:58,240 --> 00:31:01,040 Speaker 1: a whole. And that's that's like a central idea to me. 620 00:31:01,080 --> 00:31:04,880 Speaker 1: I think it's a really underrated idea. Yeah, there's also 621 00:31:04,920 --> 00:31:09,680 Speaker 1: too though, a flip side to increase productivity mechanization and technology. Right. 622 00:31:09,720 --> 00:31:13,080 Speaker 1: Some people kind of reject that you talked about that 623 00:31:13,120 --> 00:31:15,840 Speaker 1: in the book too, Oh, the Luddites. You're talking about 624 00:31:15,840 --> 00:31:17,840 Speaker 1: the Luddites. I haven't talked about the Luddites and ages. 625 00:31:17,880 --> 00:31:22,040 Speaker 1: I'm delighted that you're interested in the Letta. They essentially 626 00:31:22,080 --> 00:31:25,480 Speaker 1: got left behind. Yeah, so the Luddites are a great story. 627 00:31:25,520 --> 00:31:28,480 Speaker 1: So you know, we have this word luddite today that 628 00:31:28,560 --> 00:31:31,360 Speaker 1: basically means like whatever, somebody who doesn't have an iPhone 629 00:31:31,440 --> 00:31:36,560 Speaker 1: or something, right, Yeah, but the original Luddites are really 630 00:31:36,600 --> 00:31:39,240 Speaker 1: interesting and I feel like that that word, it's contemporary 631 00:31:39,240 --> 00:31:41,280 Speaker 1: meaning is not fair to the original Luddites. So the 632 00:31:41,360 --> 00:31:47,040 Speaker 1: original Luddites were workers artisans in England in the early 633 00:31:47,080 --> 00:31:50,600 Speaker 1: eighteen hundreds and the early eighteen hundreds in England. Is 634 00:31:50,680 --> 00:31:54,640 Speaker 1: this really central, fundamentally important moment in the whole history 635 00:31:54,640 --> 00:31:58,560 Speaker 1: of of money, history of economics, because it's it's when 636 00:31:58,560 --> 00:32:01,720 Speaker 1: the Industrial Revolution is just getting going. So up until 637 00:32:01,760 --> 00:32:05,200 Speaker 1: this time, like with the exception of you know, China, 638 00:32:05,320 --> 00:32:09,120 Speaker 1: around the year a thousand, people really didn't get much richer. 639 00:32:09,160 --> 00:32:12,120 Speaker 1: The world didn't change that much. You know, generation after 640 00:32:12,200 --> 00:32:16,360 Speaker 1: generation people pretty much did the same thing. So the 641 00:32:16,360 --> 00:32:18,760 Speaker 1: the Luddites kind of got the bad end of the 642 00:32:18,800 --> 00:32:23,360 Speaker 1: stick because the first big change that drove the Industrial 643 00:32:23,400 --> 00:32:26,480 Speaker 1: Revolution was in the textile business, in the cloth business, 644 00:32:26,920 --> 00:32:30,080 Speaker 1: and the Luddites were these skilled artisans who would do 645 00:32:30,200 --> 00:32:33,680 Speaker 1: things like cropping the fuzz off of wool right there. 646 00:32:33,800 --> 00:32:37,600 Speaker 1: The shearers were one or at various various stages of 647 00:32:37,600 --> 00:32:39,760 Speaker 1: of making cloth and they would do it, you know, 648 00:32:39,760 --> 00:32:42,280 Speaker 1: out of their homes. They were their own bosses. Uh, 649 00:32:42,360 --> 00:32:44,240 Speaker 1: they was. They had a thing called sat Monday where 650 00:32:44,240 --> 00:32:47,160 Speaker 1: they get super drunk on Sunday and take Monday off. 651 00:32:47,240 --> 00:32:48,720 Speaker 1: You know, they show up at the pub with like 652 00:32:48,760 --> 00:32:51,880 Speaker 1: a five pound note in their hat as just like dumb, 653 00:32:51,960 --> 00:32:55,560 Speaker 1: conspicuous consumption. Like they were doing well for themselves by 654 00:32:55,600 --> 00:32:58,920 Speaker 1: the standards of the day. And then along come these 655 00:32:58,920 --> 00:33:03,720 Speaker 1: new machines that are incredible, you know, productivity enhancing machines 656 00:33:03,720 --> 00:33:07,280 Speaker 1: that are creating the industrial revolution, that are making the 657 00:33:07,320 --> 00:33:10,640 Speaker 1: people who own the machines richer. And these machines are 658 00:33:10,680 --> 00:33:14,360 Speaker 1: really bad for these artisans because the machines are doing 659 00:33:14,440 --> 00:33:19,880 Speaker 1: their jobs more efficiently. So the artisans are basically losing work, 660 00:33:20,040 --> 00:33:22,680 Speaker 1: they're losing money, and they decide they're going to fight back. 661 00:33:23,560 --> 00:33:27,520 Speaker 1: And so, uh, there is this series of attacks in 662 00:33:27,640 --> 00:33:30,640 Speaker 1: England and the industrial you know districts of England where 663 00:33:30,640 --> 00:33:34,960 Speaker 1: people are attacking factories with sledgehammers, and these these letters 664 00:33:35,000 --> 00:33:38,320 Speaker 1: and notes started appearing that it wasn't just random one 665 00:33:38,360 --> 00:33:41,360 Speaker 1: off attacks. It was this. It was this like underground 666 00:33:41,480 --> 00:33:45,520 Speaker 1: army being led by this mysterious general called ned Lud. 667 00:33:45,560 --> 00:33:48,320 Speaker 1: And so because these guys were following ned Lud, they 668 00:33:48,360 --> 00:33:51,120 Speaker 1: came to be known as the Luddites, which is like 669 00:33:51,600 --> 00:33:55,560 Speaker 1: exciting and dramatic. Right Now, it turns out ned Lett 670 00:33:55,600 --> 00:33:58,280 Speaker 1: didn't exist, right, He's like a Robin Hood for the 671 00:33:58,320 --> 00:34:00,400 Speaker 1: industrial age or something. And in fact he's he's at 672 00:34:00,400 --> 00:34:02,960 Speaker 1: one moment he's in Nottinghamshire or just like Robin Hood. 673 00:34:03,600 --> 00:34:07,719 Speaker 1: But but the attacks were real and the people you know, 674 00:34:07,960 --> 00:34:10,799 Speaker 1: running England at the time were terrified, right The French 675 00:34:10,840 --> 00:34:14,120 Speaker 1: Revolution had happened not long before, and they're thinking it's 676 00:34:14,120 --> 00:34:17,480 Speaker 1: gonna happen here now. And so they actually come together 677 00:34:17,520 --> 00:34:21,360 Speaker 1: in Parliament and and propose passing a new law to 678 00:34:21,480 --> 00:34:24,920 Speaker 1: make machine breaking. It was called, you know, destroying machines, 679 00:34:24,960 --> 00:34:27,279 Speaker 1: to make it a capital offense, to make it punishable 680 00:34:27,400 --> 00:34:30,879 Speaker 1: by death. And Lord Byron, you know, the poet, he's 681 00:34:30,880 --> 00:34:33,080 Speaker 1: actually in Parliament at the time, and he gives this 682 00:34:33,160 --> 00:34:36,080 Speaker 1: speech opposing it, saying, you know, this is a terrible thing. 683 00:34:36,160 --> 00:34:37,680 Speaker 1: We already have enough blood on our hands. But they 684 00:34:37,719 --> 00:34:39,560 Speaker 1: don't listen to Byron. They passed this law so now 685 00:34:39,560 --> 00:34:43,400 Speaker 1: it's punishable by death to break machines, but the attacks continue. 686 00:34:43,719 --> 00:34:46,719 Speaker 1: There's actually this one incredibly dramatic attack that I talked 687 00:34:46,719 --> 00:34:48,920 Speaker 1: about in some detail at the book where the owner 688 00:34:48,960 --> 00:34:51,040 Speaker 1: of the factory is like lying in wait because he 689 00:34:51,040 --> 00:34:53,120 Speaker 1: knows there's going to be an attack, and he has 690 00:34:53,200 --> 00:34:56,600 Speaker 1: like you know, barred the door, and he has sentries 691 00:34:56,600 --> 00:35:00,440 Speaker 1: with guns there and like they've got like sulfuric acid 692 00:35:00,520 --> 00:35:02,160 Speaker 1: and bats that they're going to pour down. It's like 693 00:35:02,200 --> 00:35:05,919 Speaker 1: this wild it's like Game of Thrones or something. Yeah, 694 00:35:06,360 --> 00:35:08,880 Speaker 1: and and the Luddites attack and they get killed, and 695 00:35:08,960 --> 00:35:11,319 Speaker 1: then they flee and they don't make it in and 696 00:35:11,360 --> 00:35:15,480 Speaker 1: then there's this great like man hunt and eventually a 697 00:35:15,560 --> 00:35:18,279 Speaker 1: bunch of them are convicted and sentenced to death, and 698 00:35:18,280 --> 00:35:21,279 Speaker 1: they actually have this public execution where they build that 699 00:35:21,440 --> 00:35:24,120 Speaker 1: the gallows two or three times as high as usual 700 00:35:24,160 --> 00:35:26,839 Speaker 1: so that these uh Bloodites who are getting killed can 701 00:35:26,840 --> 00:35:30,200 Speaker 1: be you know, seen for whatever miles around. And that 702 00:35:30,360 --> 00:35:32,719 Speaker 1: is basically the end of it. I mean, you know, 703 00:35:32,840 --> 00:35:37,480 Speaker 1: the state killing the Luddites basically ends the Luddite uprising. 704 00:35:38,239 --> 00:35:41,520 Speaker 1: But the you know, it's really interesting too from the 705 00:35:41,560 --> 00:35:45,520 Speaker 1: point of view today, when obviously we have similar anxieties 706 00:35:45,560 --> 00:35:50,200 Speaker 1: about new technologies displacing workers. Look at the Luddites because, 707 00:35:50,239 --> 00:35:53,759 Speaker 1: on the one hand, clearly, in the long run the 708 00:35:53,800 --> 00:35:57,520 Speaker 1: industrial Revolution was great for England and good for the 709 00:35:57,560 --> 00:36:01,080 Speaker 1: world at least in terms of material wealth, foundly good. 710 00:36:01,880 --> 00:36:04,799 Speaker 1: But for the Luddites it wasn't, and it wasn't just 711 00:36:04,880 --> 00:36:07,400 Speaker 1: like for a year, it was bad. Like what you 712 00:36:07,440 --> 00:36:11,680 Speaker 1: see in England is for several decades really until the 713 00:36:11,719 --> 00:36:15,319 Speaker 1: middle of the eighteen hundreds, wages don't go up for 714 00:36:15,400 --> 00:36:18,279 Speaker 1: lots of workers. It takes a long time between the 715 00:36:18,320 --> 00:36:23,120 Speaker 1: time when the technological and industrial advance comes and when 716 00:36:23,160 --> 00:36:27,440 Speaker 1: you see gains for many or even most workers. And 717 00:36:27,480 --> 00:36:31,879 Speaker 1: so that gap is really scary, right, I mean, on 718 00:36:31,920 --> 00:36:34,360 Speaker 1: a on a fundamental level, the Luddites were not wrong. 719 00:36:34,520 --> 00:36:37,920 Speaker 1: They were acting in their own self interest. Yeah. No, 720 00:36:38,080 --> 00:36:41,560 Speaker 1: And and that's something that still as we are economy 721 00:36:42,000 --> 00:36:45,600 Speaker 1: modernizes and things change, and especially like when we're talking 722 00:36:45,640 --> 00:36:48,279 Speaker 1: about the next industrial revolution in the United States of 723 00:36:48,520 --> 00:36:50,400 Speaker 1: increased technology self driving cars, there are a lot of 724 00:36:50,400 --> 00:36:52,880 Speaker 1: concerns on that front for people who drive a truck 725 00:36:53,120 --> 00:36:55,680 Speaker 1: or you know, work at a factory that or or 726 00:36:55,719 --> 00:36:58,160 Speaker 1: even you know, work at a fast food restaurant where 727 00:36:58,280 --> 00:37:00,640 Speaker 1: a computer might take their job. All the those concerns 728 00:37:00,640 --> 00:37:03,759 Speaker 1: exist today in similar fashion. Um, Jakob, we want to 729 00:37:03,760 --> 00:37:07,200 Speaker 1: talk some more about bitcoin and digital money, and we'll 730 00:37:07,200 --> 00:37:09,359 Speaker 1: get to some of our questions for you on those 731 00:37:09,360 --> 00:37:21,000 Speaker 1: topics right after this. All right, we are back from 732 00:37:21,040 --> 00:37:23,880 Speaker 1: the break and we're talking with Jacob Goldstein about money. 733 00:37:24,560 --> 00:37:26,479 Speaker 1: And Jacob, before the break, you know, you were telling 734 00:37:26,480 --> 00:37:29,160 Speaker 1: the story of the Ludites, essentially how they were left 735 00:37:29,160 --> 00:37:31,600 Speaker 1: in the wake of technology, and so let's talk now 736 00:37:31,640 --> 00:37:34,319 Speaker 1: then about kind of technology and money where things are 737 00:37:34,320 --> 00:37:36,520 Speaker 1: going now. Obviously digital money is a part of that. 738 00:37:36,640 --> 00:37:39,799 Speaker 1: Most of us don't carry checks or cash these days. 739 00:37:39,800 --> 00:37:42,320 Speaker 1: We're using digital wality. People who are twenty like even 740 00:37:42,320 --> 00:37:45,239 Speaker 1: know what a check is. We've actually explained it on 741 00:37:45,280 --> 00:37:47,000 Speaker 1: the show before as far as like like what a 742 00:37:47,120 --> 00:37:50,880 Speaker 1: check ledger is. Yeah, but uh, you know, we use 743 00:37:50,920 --> 00:37:53,000 Speaker 1: apps on our phones, you know, like cash management apps 744 00:37:53,000 --> 00:37:55,600 Speaker 1: like Venmo. That has has just made things so much 745 00:37:55,640 --> 00:37:58,920 Speaker 1: easier for lots of folks. What other impact do you 746 00:37:59,040 --> 00:38:02,279 Speaker 1: feel that the the digitization of money is going to 747 00:38:02,840 --> 00:38:06,240 Speaker 1: have on us personally? I mean, that's an interesting question. 748 00:38:06,719 --> 00:38:09,440 Speaker 1: I'll say a few things. One maybe the most surprising 749 00:38:09,480 --> 00:38:13,560 Speaker 1: thing to me in this context is the amount of 750 00:38:13,560 --> 00:38:18,240 Speaker 1: paper money in the world is increasing. It's growing even 751 00:38:18,360 --> 00:38:23,000 Speaker 1: faster than the economy, which is shocking, right, because the 752 00:38:23,040 --> 00:38:26,480 Speaker 1: amount of paper money in my world is decreasing. And 753 00:38:26,600 --> 00:38:30,120 Speaker 1: so I do want to sort of put a caveat 754 00:38:30,160 --> 00:38:33,240 Speaker 1: around the end of cash idea, which is what's happening 755 00:38:33,239 --> 00:38:35,719 Speaker 1: in the world is the opposite. And you know, I 756 00:38:35,760 --> 00:38:38,600 Speaker 1: think I think a lot of the growth of cash clearly, Well, 757 00:38:38,600 --> 00:38:40,799 Speaker 1: first of all, it's mostly hundreds, right, Most of the 758 00:38:40,800 --> 00:38:43,359 Speaker 1: money in the world by value is hundreds, and even 759 00:38:43,640 --> 00:38:46,120 Speaker 1: just by number of bills, like there's more hundreds than ones. 760 00:38:46,200 --> 00:38:48,640 Speaker 1: It's extraordinary how many hundred dollar bills are in the world. 761 00:38:49,280 --> 00:38:52,040 Speaker 1: Forty forty or so, hundreds for every man, woman and 762 00:38:52,120 --> 00:38:55,560 Speaker 1: child in America. So, like, weird things are happening with cash. 763 00:38:55,640 --> 00:38:58,120 Speaker 1: I mean, some of it is just that people outside 764 00:38:58,120 --> 00:39:00,960 Speaker 1: the US use paper money as a store of value. Right, 765 00:39:00,960 --> 00:39:03,920 Speaker 1: If you live in a country where the currency is unreliable, 766 00:39:03,920 --> 00:39:06,160 Speaker 1: where the banks are unstable, you know, lots of people 767 00:39:06,239 --> 00:39:09,000 Speaker 1: keep their life savings and hundreds, and like that's nice 768 00:39:09,040 --> 00:39:11,120 Speaker 1: for them. And it's also like America gets to sell 769 00:39:11,160 --> 00:39:13,080 Speaker 1: a piece of paper for a hundred dollars, so that's 770 00:39:13,120 --> 00:39:15,920 Speaker 1: like nice for us uh, and then also just crime, 771 00:39:16,320 --> 00:39:19,680 Speaker 1: it's still the best way to move lots of value 772 00:39:19,680 --> 00:39:22,520 Speaker 1: around without getting caught. We can talk about bitcoin and 773 00:39:22,600 --> 00:39:24,960 Speaker 1: also pretty good. But I would still do hundreds over 774 00:39:25,000 --> 00:39:27,000 Speaker 1: bitcoin if I were trying to move a million dollars 775 00:39:27,000 --> 00:39:30,960 Speaker 1: in secret. So like cash is still there. I mean. 776 00:39:31,000 --> 00:39:34,360 Speaker 1: The other thing that's striking to me is if we 777 00:39:34,400 --> 00:39:36,239 Speaker 1: set that aside, I think, okay, what is how does 778 00:39:36,239 --> 00:39:38,960 Speaker 1: the cash less world look different? I think of a 779 00:39:39,040 --> 00:39:41,000 Speaker 1: people who don't have bank accounts. Right, there is a 780 00:39:41,040 --> 00:39:44,319 Speaker 1: surprisingly large, sort of shamefully large number of people in 781 00:39:44,320 --> 00:39:47,200 Speaker 1: America don't have bank accounts. And for people who don't 782 00:39:47,200 --> 00:39:50,600 Speaker 1: have bank accounts a cashless world, it becomes more difficult. Right, 783 00:39:50,680 --> 00:39:54,919 Speaker 1: So that is solvable. You can basically make banks. Banks 784 00:39:54,960 --> 00:39:58,239 Speaker 1: are highly regulated. You could make banks offer essentially you know, 785 00:39:58,520 --> 00:40:02,359 Speaker 1: no fee bank accounts. It's largely solve that problem if 786 00:40:02,400 --> 00:40:05,600 Speaker 1: you do that. I feel like, to be honest, the 787 00:40:05,640 --> 00:40:07,920 Speaker 1: cash less world isn't that different from the world I 788 00:40:07,960 --> 00:40:09,680 Speaker 1: live in now because I already mostly live in the 789 00:40:09,719 --> 00:40:15,200 Speaker 1: cashless world, right, and so most money is already digital. 790 00:40:15,239 --> 00:40:17,440 Speaker 1: I mean, people talk about central bank digital currency, and 791 00:40:17,440 --> 00:40:20,279 Speaker 1: they mean a sort of particular kind of sibling of 792 00:40:20,280 --> 00:40:23,920 Speaker 1: cryptocurrency kind of thing. But like, already the Federal Reserve 793 00:40:23,960 --> 00:40:27,880 Speaker 1: creates trillions of dollars, not by printing trillions of dollars bills, 794 00:40:27,920 --> 00:40:31,360 Speaker 1: but just by changing the you know, changing the numbers 795 00:40:31,360 --> 00:40:34,520 Speaker 1: and the computers to represent the you know, banks reserve 796 00:40:34,520 --> 00:40:37,560 Speaker 1: accounts at the Fed. Like it's already virtual, Like we're 797 00:40:37,600 --> 00:40:41,360 Speaker 1: already there. Let's let's talk about bigcoin for a second. Like, uh, 798 00:40:41,520 --> 00:40:44,279 Speaker 1: I feel like to be called money, it has to 799 00:40:44,280 --> 00:40:46,920 Speaker 1: be a stable currency, right, And like, I know what 800 00:40:47,000 --> 00:40:49,640 Speaker 1: my dollar was worth yesterday is essentially going to be 801 00:40:49,640 --> 00:40:52,600 Speaker 1: what it's worth tomorrow. And I know, you know, inflation 802 00:40:52,680 --> 00:40:56,000 Speaker 1: over time, very slowly will change the value of my dollar. 803 00:40:56,320 --> 00:40:59,360 Speaker 1: But when it comes to bitcoin, they're just huge fluctuations, 804 00:40:59,400 --> 00:41:02,799 Speaker 1: as we've seen in recent months. I think there's one 805 00:41:02,880 --> 00:41:05,040 Speaker 1: dude that traded ten thousand bitcoin for two pizzas back 806 00:41:05,080 --> 00:41:07,040 Speaker 1: in the day. I'm sure he's he's beating his head 807 00:41:07,040 --> 00:41:09,200 Speaker 1: against the wall. And I will say I've been covering 808 00:41:09,239 --> 00:41:11,320 Speaker 1: bitcoin for so long that in two thousand and eleven, 809 00:41:11,400 --> 00:41:14,680 Speaker 1: I used two bitcoins to buy lunch for for me 810 00:41:14,760 --> 00:41:17,319 Speaker 1: and my colleague you know, like smoothies and falafel. So 811 00:41:17,360 --> 00:41:20,839 Speaker 1: that's like a hundred thousand dollar falafel, right, I don't 812 00:41:21,080 --> 00:41:24,120 Speaker 1: that good of fal level? Yeah, So, so could bitcoin 813 00:41:24,239 --> 00:41:27,040 Speaker 1: be called currency? I mean, you know, I don't want 814 00:41:27,040 --> 00:41:29,680 Speaker 1: to get into the semantics too much. It doesn't seem 815 00:41:29,719 --> 00:41:32,520 Speaker 1: that much like money to me. I mean, yes, to 816 00:41:32,600 --> 00:41:35,160 Speaker 1: your point. Like, so, if the value of bitcoin doubles, 817 00:41:35,280 --> 00:41:37,400 Speaker 1: what that would mean, if it was actually money, is 818 00:41:37,440 --> 00:41:40,440 Speaker 1: the price of everything would fall in half, which sounds 819 00:41:40,480 --> 00:41:42,839 Speaker 1: good superficially, But then he realized, well, then wages would 820 00:41:42,880 --> 00:41:45,080 Speaker 1: also have to fall in half. And then if you 821 00:41:45,160 --> 00:41:47,719 Speaker 1: had a debt, your debt, if it was you know, 822 00:41:47,840 --> 00:41:50,879 Speaker 1: fixed and fixed debt, it would all it would remain 823 00:41:50,920 --> 00:41:53,440 Speaker 1: the same. So suddenly it would take twice as much 824 00:41:53,440 --> 00:41:55,360 Speaker 1: work to pay your mortgage or to pay your student 825 00:41:55,360 --> 00:41:58,920 Speaker 1: loan bill. Right, so it would be profoundly bad as 826 00:41:58,960 --> 00:42:02,600 Speaker 1: a currency. And you know, for that matter, people basically 827 00:42:02,640 --> 00:42:05,680 Speaker 1: don't use it to buy stuff, right, it doesn't. It 828 00:42:05,760 --> 00:42:08,440 Speaker 1: doesn't seem like money. I don't know, it's interesting to me. 829 00:42:08,480 --> 00:42:10,239 Speaker 1: You know, bitcoin has been around for a while now, 830 00:42:10,360 --> 00:42:15,239 Speaker 1: right for twelve twelve years to twelve years um. And 831 00:42:15,440 --> 00:42:18,480 Speaker 1: on the one hand, people are willing to exchange a 832 00:42:18,520 --> 00:42:20,520 Speaker 1: lot of money for it, but on the other hand, 833 00:42:20,880 --> 00:42:24,000 Speaker 1: they're not doing much with it. I mean, like hackers 834 00:42:24,080 --> 00:42:27,080 Speaker 1: use it for ransom. H people use it some I guess, 835 00:42:27,120 --> 00:42:29,160 Speaker 1: you know, in countries where there's capital controls, if they 836 00:42:29,160 --> 00:42:30,480 Speaker 1: want to get money out of the country, that's maybe 837 00:42:30,520 --> 00:42:34,040 Speaker 1: the most sympathetic use case. But it's remarkable the combination 838 00:42:34,120 --> 00:42:37,040 Speaker 1: of how how valuable it is and how limited its 839 00:42:37,080 --> 00:42:39,840 Speaker 1: uses are so far, right, Yeah, So, I mean I 840 00:42:39,880 --> 00:42:41,799 Speaker 1: guess then to that end, like it doesn't make a 841 00:42:41,800 --> 00:42:43,400 Speaker 1: ton of sense to use it as a currency, right 842 00:42:43,440 --> 00:42:45,600 Speaker 1: because like, yeah, why would you spend it on some 843 00:42:45,719 --> 00:42:48,080 Speaker 1: falafel if you expect it to be worth twice that 844 00:42:48,160 --> 00:42:52,760 Speaker 1: tomorrow or or well that's that's part of the deflationary spiral, 845 00:42:52,840 --> 00:42:54,840 Speaker 1: right If you go back to the depression, part of 846 00:42:54,840 --> 00:42:57,560 Speaker 1: what happened was because prices were falling, which is the 847 00:42:57,560 --> 00:43:00,160 Speaker 1: same thing as the currency getting more valuable. People were like, 848 00:43:00,280 --> 00:43:02,600 Speaker 1: I'm not gonna buy something today if I don't have to. 849 00:43:02,640 --> 00:43:04,200 Speaker 1: If a car is going to be cheaper in six 850 00:43:04,239 --> 00:43:05,719 Speaker 1: months and I can wait six months, I'll just wait 851 00:43:05,760 --> 00:43:08,759 Speaker 1: six months. Uh, And and that was you know, I 852 00:43:08,760 --> 00:43:10,840 Speaker 1: don't know ten percent a year deflation or something not 853 00:43:11,120 --> 00:43:15,399 Speaker 1: eight year deflation, right, Like, it clearly is not set 854 00:43:15,480 --> 00:43:18,960 Speaker 1: up to work as money now. I mean, you know, 855 00:43:19,080 --> 00:43:23,359 Speaker 1: they're like boring use cases you could think of for blockchain, 856 00:43:23,719 --> 00:43:27,160 Speaker 1: like uh, doing something like what credit cards do but 857 00:43:27,200 --> 00:43:29,400 Speaker 1: with lower fees, or doing something like what you know, 858 00:43:29,480 --> 00:43:32,239 Speaker 1: money transfer services that people used to send money back 859 00:43:32,239 --> 00:43:34,680 Speaker 1: to their home country do, but for lower fees. Like 860 00:43:34,920 --> 00:43:37,840 Speaker 1: I can think of like really useful, boring, you know, 861 00:43:38,120 --> 00:43:41,560 Speaker 1: non world historical uses And it's kind of surprising to 862 00:43:41,560 --> 00:43:43,360 Speaker 1: me that we haven't seen more of those. And I 863 00:43:43,360 --> 00:43:45,919 Speaker 1: don't really know why. I guess it's just that those 864 00:43:45,920 --> 00:43:48,400 Speaker 1: are harder problems to solve one and then they're also 865 00:43:48,880 --> 00:43:51,960 Speaker 1: pretty highly regulated as the other. Right, Uh, you have 866 00:43:52,000 --> 00:43:54,640 Speaker 1: anti money laundering rules, and there's a reason, you know, 867 00:43:54,719 --> 00:43:57,640 Speaker 1: banks are largely creatures of regulation. What banks are really 868 00:43:57,640 --> 00:44:00,440 Speaker 1: good at is like dealing with regulation. And so you 869 00:44:00,520 --> 00:44:03,520 Speaker 1: do have this you know fintech industry now sort of 870 00:44:03,560 --> 00:44:05,879 Speaker 1: trying to figure out what they can do, and it'll 871 00:44:05,920 --> 00:44:08,560 Speaker 1: be interesting to see. But it's surprising how long it's 872 00:44:08,560 --> 00:44:10,440 Speaker 1: been and how little there is to show for it 873 00:44:10,480 --> 00:44:12,080 Speaker 1: other than a bunch of people who got rich just 874 00:44:12,120 --> 00:44:14,759 Speaker 1: by buying bitcoin low and selling it high, right, right? 875 00:44:14,760 --> 00:44:17,600 Speaker 1: So may yeah again less than as a currency, but like, 876 00:44:17,640 --> 00:44:20,799 Speaker 1: what is your view of of bitcoin and other cryptocurrencies 877 00:44:20,840 --> 00:44:26,319 Speaker 1: then as investments? I mean, I'm not here to give 878 00:44:26,320 --> 00:44:29,040 Speaker 1: investing advice to put you on the folly. I personally 879 00:44:29,800 --> 00:44:33,439 Speaker 1: would not like sink my retirement in big like, yeah, 880 00:44:33,640 --> 00:44:35,840 Speaker 1: we know that you're in the index, end up investing. 881 00:44:35,880 --> 00:44:37,359 Speaker 1: So I didn't. I didn't think you'd be like, yeah, 882 00:44:37,560 --> 00:44:40,520 Speaker 1: if you like, I don't know it is the price 883 00:44:40,560 --> 00:44:42,120 Speaker 1: of bitcoin going to be higher or lower in a year? 884 00:44:42,160 --> 00:44:45,560 Speaker 1: I don't know. Your life's your money, do whatever you want, 885 00:44:45,640 --> 00:44:47,920 Speaker 1: but don't I wouldn't, you know, mortgage my house and 886 00:44:47,920 --> 00:44:50,120 Speaker 1: put it in a bitcoin? All right? So, so, after 887 00:44:50,360 --> 00:44:52,799 Speaker 1: all you've written about Jacob here talking about money, the 888 00:44:52,840 --> 00:44:54,919 Speaker 1: origins of it. We've covered so much of it. Um 889 00:44:55,000 --> 00:44:58,319 Speaker 1: your book goes into fascinating detail. What do you see 890 00:44:58,400 --> 00:45:00,360 Speaker 1: kind of happening or what big change is do you 891 00:45:00,360 --> 00:45:03,520 Speaker 1: see happening to the way we handle and think about 892 00:45:03,600 --> 00:45:06,000 Speaker 1: money in the future. I mean, there's a few things 893 00:45:06,000 --> 00:45:09,320 Speaker 1: that could happen, certainly, Like I don't really think bitcoin 894 00:45:09,440 --> 00:45:11,000 Speaker 1: is going to be money. I think we can we 895 00:45:11,160 --> 00:45:12,680 Speaker 1: sort of just took that one off the table. I 896 00:45:12,719 --> 00:45:14,640 Speaker 1: feel like the government pretty much has a lock on 897 00:45:14,680 --> 00:45:16,520 Speaker 1: money and it's gonna be really hard to break that lock. 898 00:45:17,120 --> 00:45:19,120 Speaker 1: I feel like cash could go away. I mean there's 899 00:45:19,160 --> 00:45:21,960 Speaker 1: like boring little changes, Like there's this interesting economists who 900 00:45:21,960 --> 00:45:25,040 Speaker 1: talks about getting rid of the hundred dollar bill because 901 00:45:25,080 --> 00:45:27,520 Speaker 1: like you don't really need it to live an honest life, 902 00:45:27,520 --> 00:45:29,960 Speaker 1: and it's really good for crime. Can we get rid 903 00:45:30,000 --> 00:45:31,440 Speaker 1: of the pennies too while we're out. I'd love to 904 00:45:31,480 --> 00:45:33,799 Speaker 1: get rid of the pennies, pennies and Nichols. But like 905 00:45:33,840 --> 00:45:35,839 Speaker 1: maybe you could broke her some kind of deal, like, Okay, 906 00:45:35,840 --> 00:45:37,359 Speaker 1: we'll get rid of the hundred if we also get 907 00:45:37,440 --> 00:45:41,080 Speaker 1: rid of pennies. Um. The interesting thing to me in 908 00:45:41,120 --> 00:45:44,440 Speaker 1: the present of money, it's gonna sound boring maybe, but 909 00:45:44,560 --> 00:45:48,879 Speaker 1: I actually think it's hugely important is how low inflation 910 00:45:49,080 --> 00:45:51,680 Speaker 1: and interest rates have been for how long? Right, Like 911 00:45:51,960 --> 00:45:54,799 Speaker 1: the constant surprise of the last decade. You know, if 912 00:45:54,800 --> 00:45:58,480 Speaker 1: you go back again a year before the pandemic, unemployment 913 00:45:58,520 --> 00:46:01,839 Speaker 1: was below four percent. The government was running a big 914 00:46:01,880 --> 00:46:05,280 Speaker 1: deficit fund of you know that basically was funding tax cuts, 915 00:46:06,160 --> 00:46:08,279 Speaker 1: and like that is a setting where you should all 916 00:46:08,320 --> 00:46:11,720 Speaker 1: that money, all those workers having jobs, all that money 917 00:46:11,760 --> 00:46:14,560 Speaker 1: flooding into the economy, that should be driving up inflation. 918 00:46:14,640 --> 00:46:18,279 Speaker 1: That's a super inflationary moment. And yet we didn't have 919 00:46:18,360 --> 00:46:21,399 Speaker 1: inflation and interest rates didn't go up, And like, to me, 920 00:46:21,840 --> 00:46:25,160 Speaker 1: that's weird. It's kind of weird. And it's the essential 921 00:46:25,200 --> 00:46:28,200 Speaker 1: context for how the government was able to just out 922 00:46:28,200 --> 00:46:32,319 Speaker 1: of nowhere spend an extra several trillion dollars last year 923 00:46:32,360 --> 00:46:34,600 Speaker 1: to respond to the pandemic and is about to spend 924 00:46:35,040 --> 00:46:38,680 Speaker 1: trillions ish more. And like what should happen when that 925 00:46:38,760 --> 00:46:41,799 Speaker 1: happens is interest rates should go up. People should you know, 926 00:46:42,120 --> 00:46:44,120 Speaker 1: invest bond investors to say we're not going to keep 927 00:46:44,200 --> 00:46:47,160 Speaker 1: letting to the government at one percent for ten years 928 00:46:47,280 --> 00:46:49,480 Speaker 1: if they keep borrowing trillions of dollars. And yet it 929 00:46:49,600 --> 00:46:53,040 Speaker 1: keeps happening, And like that is a huge story. That 930 00:46:53,160 --> 00:46:56,000 Speaker 1: is Like it's a driver of government deficits. It's a 931 00:46:56,080 --> 00:46:59,399 Speaker 1: driver of like valuations in the stock market, right because 932 00:46:59,400 --> 00:47:02,160 Speaker 1: the lower interest straits are, the higher valuations are. It's 933 00:47:02,160 --> 00:47:05,760 Speaker 1: a driver of of investment in Silicon Valley. Like there's 934 00:47:05,840 --> 00:47:10,799 Speaker 1: just all this free money. Is like the great phenomenon 935 00:47:10,920 --> 00:47:14,640 Speaker 1: of this moment, and I don't think anybody really understands it. 936 00:47:14,680 --> 00:47:17,120 Speaker 1: There are various stories you can tell that explained part 937 00:47:17,160 --> 00:47:19,839 Speaker 1: of it. But I think when we look back on 938 00:47:19,880 --> 00:47:22,759 Speaker 1: this moment in history, it will be like the the 939 00:47:22,920 --> 00:47:26,239 Speaker 1: essential economic context or what's going on with money now? 940 00:47:26,280 --> 00:47:28,600 Speaker 1: And so to me, the interesting question about the future 941 00:47:29,200 --> 00:47:31,360 Speaker 1: is what's going to happen with that. It's kind of wonky, 942 00:47:31,400 --> 00:47:34,359 Speaker 1: but it's a huge deal. Yeah, yeah, it's It does 943 00:47:34,400 --> 00:47:36,480 Speaker 1: look like the thing that ten even you know, maybe 944 00:47:36,480 --> 00:47:37,960 Speaker 1: twenty years from now, that we can look back on 945 00:47:38,080 --> 00:47:41,439 Speaker 1: and see, Oh, that is what led to us being 946 00:47:41,480 --> 00:47:45,759 Speaker 1: here now. Yes, at good or bad? Right? How did 947 00:47:45,840 --> 00:47:49,440 Speaker 1: we think one percent interest rates? We're gonna go on forever? 948 00:47:49,760 --> 00:47:52,839 Speaker 1: Like what? I don't know? And that kind of makes 949 00:47:52,880 --> 00:47:56,240 Speaker 1: it interesting and exciting. Yeah, that's the big unknowns. Jacob. 950 00:47:56,280 --> 00:47:58,040 Speaker 1: This has been awesome. We appreciate you coming on the 951 00:47:58,080 --> 00:48:01,239 Speaker 1: podcast talking through money to talking about your book and 952 00:48:01,280 --> 00:48:03,520 Speaker 1: specific to your book, Yeah, where can folks learn more 953 00:48:03,520 --> 00:48:05,799 Speaker 1: about you and purchase your book? So you can buy 954 00:48:05,840 --> 00:48:08,200 Speaker 1: my book anywhere you want. I would be thrilled if 955 00:48:08,239 --> 00:48:12,239 Speaker 1: you bought the book from a giant internet bookseller or 956 00:48:12,320 --> 00:48:15,680 Speaker 1: from the tiny bookstore on your corner. Um You can 957 00:48:15,680 --> 00:48:18,759 Speaker 1: follow me on Twitter at Jacob Goldstein. That's basically it 958 00:48:18,880 --> 00:48:21,040 Speaker 1: mostly by the book. It's a good book. Awesome, Yeah, 959 00:48:21,040 --> 00:48:23,040 Speaker 1: it really is, Jacob. Thank you so much for putting 960 00:48:23,040 --> 00:48:25,400 Speaker 1: this out there. It's a fascinating history. And again, we 961 00:48:25,440 --> 00:48:27,600 Speaker 1: really appreciate your time today. Man, thanks so much for 962 00:48:27,600 --> 00:48:29,640 Speaker 1: having me. It was great. Thanks for asking about the Ledites. 963 00:48:31,400 --> 00:48:33,760 Speaker 1: All right, man, that was such a great conversation with Jacob. 964 00:48:34,040 --> 00:48:36,880 Speaker 1: Just so enlightening about the history of something that we 965 00:48:37,120 --> 00:48:39,160 Speaker 1: take her granted, that we use all the time, that 966 00:48:39,200 --> 00:48:40,839 Speaker 1: we talk about how to handle it all the time, 967 00:48:41,000 --> 00:48:42,600 Speaker 1: and it's just nice to have some context for how 968 00:48:42,600 --> 00:48:44,120 Speaker 1: it came to be that we live in a world 969 00:48:44,160 --> 00:48:46,359 Speaker 1: where money functions the way it does. Yeah. Plus he's 970 00:48:46,400 --> 00:48:48,440 Speaker 1: just a great storyteller, right, It's so good to have 971 00:48:48,520 --> 00:48:50,480 Speaker 1: somebody on here who can recount some of this history 972 00:48:51,000 --> 00:48:53,400 Speaker 1: talk us through how money was created and how it 973 00:48:53,440 --> 00:48:55,440 Speaker 1: to still be interesting and yeah, no doubt So. So 974 00:48:55,480 --> 00:48:57,359 Speaker 1: what was your big takeaway from this combo? Yeah, well 975 00:48:57,360 --> 00:48:59,480 Speaker 1: I found it really interesting. How so we we talked 976 00:48:59,480 --> 00:49:01,719 Speaker 1: about the lot. It's I'm glad Jacob was excited for 977 00:49:01,840 --> 00:49:04,920 Speaker 1: us for his ability to tell that story. But what's 978 00:49:05,040 --> 00:49:07,839 Speaker 1: really interesting about that is that that was a piece 979 00:49:07,880 --> 00:49:12,040 Speaker 1: of technology that dramatically changed their lives, right, and instead 980 00:49:12,040 --> 00:49:15,400 Speaker 1: of adopting it or instead of pivoting to, you know, 981 00:49:15,480 --> 00:49:18,480 Speaker 1: to maybe something else, they fought against it. And then 982 00:49:18,480 --> 00:49:20,719 Speaker 1: where did that leave them? You know? Yeah, a lot 983 00:49:20,719 --> 00:49:22,920 Speaker 1: of a lot of them were executed. And so like, 984 00:49:22,960 --> 00:49:25,400 Speaker 1: if you take that same way of thinking and think about, 985 00:49:25,640 --> 00:49:29,000 Speaker 1: you know, where money is today, whether it be with investing. 986 00:49:29,320 --> 00:49:31,239 Speaker 1: I'm even willing to say maybe even a little bit 987 00:49:31,280 --> 00:49:33,560 Speaker 1: with crypto, you know, as far as like bitcoin and 988 00:49:33,600 --> 00:49:35,520 Speaker 1: some of those things too. But I think it's important 989 00:49:35,520 --> 00:49:38,120 Speaker 1: for us to maybe look forward a little bit. To 990 00:49:38,239 --> 00:49:41,600 Speaker 1: me personally, it's a little bit uncomfortable to think through 991 00:49:41,640 --> 00:49:43,239 Speaker 1: what would it look like, you know when it comes 992 00:49:43,280 --> 00:49:45,520 Speaker 1: specifically to investing, what what like? What does it look 993 00:49:45,560 --> 00:49:48,120 Speaker 1: like to invest in a cryptocurrency? And even earlier in 994 00:49:48,160 --> 00:49:51,000 Speaker 1: their interview, we're talking about the ability of our belief 995 00:49:51,280 --> 00:49:54,320 Speaker 1: to sustain something. Right. Uh, it was the trust and 996 00:49:54,360 --> 00:49:56,720 Speaker 1: the belief that folks had in paper money that allowed 997 00:49:56,760 --> 00:49:58,919 Speaker 1: it to be a success originally. And so I guess 998 00:49:58,960 --> 00:50:01,080 Speaker 1: what I'm saying here is like I want to challenge 999 00:50:01,120 --> 00:50:03,920 Speaker 1: myself to think through the different things that are kind 1000 00:50:03,920 --> 00:50:06,080 Speaker 1: of coming down the pike. I'm gonna try to foster 1001 00:50:06,400 --> 00:50:10,239 Speaker 1: maybe more of an attitude of openness and acceptance of 1002 00:50:10,280 --> 00:50:13,280 Speaker 1: some of these new technologies of different ways of investing 1003 00:50:13,280 --> 00:50:16,000 Speaker 1: our money that haven't looked like what us looked like 1004 00:50:16,000 --> 00:50:18,040 Speaker 1: over the past number of decades. Yeah. I thought it 1005 00:50:18,040 --> 00:50:20,239 Speaker 1: was interesting too when he was talking about getting off 1006 00:50:20,280 --> 00:50:22,600 Speaker 1: the gold standard and how it was essentially a false 1007 00:50:22,640 --> 00:50:25,560 Speaker 1: belief that was something that the traditional economist thought was 1008 00:50:25,560 --> 00:50:27,799 Speaker 1: going to completely wreck the economy. Yeah, essentially that there's 1009 00:50:27,800 --> 00:50:30,680 Speaker 1: a fixed amount of gold that equals a dollar or 1010 00:50:30,719 --> 00:50:32,960 Speaker 1: twenty dollars or whatever, and that was a way of 1011 00:50:33,000 --> 00:50:35,640 Speaker 1: looking at money. But money is so much more than that, 1012 00:50:35,680 --> 00:50:38,960 Speaker 1: and money morphs over time. Involved, Yeah, and and also too, 1013 00:50:39,239 --> 00:50:42,799 Speaker 1: But I think my biggest takeaway was talking about money 1014 00:50:42,800 --> 00:50:45,240 Speaker 1: as time travel, and I think it's it's so true, 1015 00:50:45,280 --> 00:50:47,920 Speaker 1: like we we have the ability in some ways to 1016 00:50:48,440 --> 00:50:51,080 Speaker 1: take on debt to pay for something in order to 1017 00:50:51,120 --> 00:50:53,360 Speaker 1: get somewhere in our lives. Right, That's what going to 1018 00:50:53,400 --> 00:50:55,239 Speaker 1: college is all about. And many many kids taken on 1019 00:50:55,320 --> 00:50:57,160 Speaker 1: student loans and hopes that they will make more money 1020 00:50:57,160 --> 00:51:00,359 Speaker 1: in the future, and the exact opposite is true as well. 1021 00:51:00,440 --> 00:51:03,319 Speaker 1: That's what investing is right. It's saying, corporations, I'm going 1022 00:51:03,360 --> 00:51:05,719 Speaker 1: to give you my money because I believe that what 1023 00:51:05,719 --> 00:51:07,759 Speaker 1: you're gonna do with it is better than what I 1024 00:51:07,800 --> 00:51:09,520 Speaker 1: can do with it right now, and it's gonna benefit 1025 00:51:09,600 --> 00:51:11,279 Speaker 1: me in the future. And I think that's just an 1026 00:51:11,320 --> 00:51:14,239 Speaker 1: interesting and helpful way of looking at the way we 1027 00:51:14,320 --> 00:51:16,200 Speaker 1: handle money in the here and now, and actually, in 1028 00:51:16,239 --> 00:51:18,480 Speaker 1: my mind makes debt seem it makes me even more 1029 00:51:18,480 --> 00:51:22,120 Speaker 1: apprehensive to take on debt unless it's under the right circumstances, right, 1030 00:51:22,160 --> 00:51:25,200 Speaker 1: because you are sacrificing something in the future if you 1031 00:51:25,200 --> 00:51:27,400 Speaker 1: take it on now. But yeah, I think sometimes just 1032 00:51:27,480 --> 00:51:30,080 Speaker 1: that subtle mental shift in the way we think about money, 1033 00:51:30,120 --> 00:51:32,799 Speaker 1: the way we think about its attachment to present day 1034 00:51:32,920 --> 00:51:35,560 Speaker 1: and future us is it's just fun to think about. 1035 00:51:35,560 --> 00:51:37,880 Speaker 1: It's interesting. Yeah, just like Marty MCFLI learned back and 1036 00:51:37,880 --> 00:51:39,799 Speaker 1: back to the future, when your time travel too much, 1037 00:51:39,880 --> 00:51:42,759 Speaker 1: it messes things up. You know, you don't want to 1038 00:51:42,760 --> 00:51:45,200 Speaker 1: take on too much debt. I guess that's the financial 1039 00:51:45,280 --> 00:51:48,040 Speaker 1: lesson we can all learn from Doc Brown. But all right, 1040 00:51:48,200 --> 00:51:49,840 Speaker 1: let's let's shiftear. Let's get back to the beer for 1041 00:51:49,840 --> 00:51:51,960 Speaker 1: this episode. Uh, for this one, you and I both 1042 00:51:52,040 --> 00:51:54,879 Speaker 1: enjoyed a Roden Box Classic. I think just a few 1043 00:51:54,920 --> 00:51:56,600 Speaker 1: years ago they used to just call it Roden Box, 1044 00:51:56,680 --> 00:51:58,719 Speaker 1: but now that they've released a bunch of different variations 1045 00:51:58,719 --> 00:52:00,719 Speaker 1: on it, now it's Roden Box Classic, kind of like 1046 00:52:00,719 --> 00:52:03,640 Speaker 1: Coca Cola Classic. Well, it's like the drinking version of 1047 00:52:03,640 --> 00:52:05,560 Speaker 1: putting on a pair of Chuck Taylor's. You know, there 1048 00:52:05,600 --> 00:52:07,960 Speaker 1: you go. What were your thoughts on this beer? So 1049 00:52:08,040 --> 00:52:10,880 Speaker 1: it is just a little bit tart, and it was 1050 00:52:11,400 --> 00:52:15,359 Speaker 1: very oky and incredibly refreshing. The beer pours a light brown. 1051 00:52:15,440 --> 00:52:18,320 Speaker 1: It's got this distinct taste of like beers from that region, 1052 00:52:18,360 --> 00:52:23,080 Speaker 1: this like Flemish slightly vinegary kind of action going on. Um, 1053 00:52:23,120 --> 00:52:24,840 Speaker 1: some have more than others. This one is definitely a 1054 00:52:24,880 --> 00:52:27,759 Speaker 1: reserved version of that kind of beer. Yeah, yeah, but 1055 00:52:27,800 --> 00:52:30,160 Speaker 1: it's it's still delicious, I think. Yeah. Compared to a 1056 00:52:30,160 --> 00:52:32,279 Speaker 1: lot of the barrel aged showers that are like more 1057 00:52:32,280 --> 00:52:34,960 Speaker 1: state side, I guess that they tend to be more aggressive, 1058 00:52:35,280 --> 00:52:37,880 Speaker 1: and obviously, I mean they make more aggressive versions of 1059 00:52:37,920 --> 00:52:39,800 Speaker 1: this beer. But with this just kind of being the classic, 1060 00:52:39,800 --> 00:52:40,920 Speaker 1: it kind of makes me think of some of the 1061 00:52:40,960 --> 00:52:42,960 Speaker 1: beers that we have here, some of the more aggressive 1062 00:52:43,080 --> 00:52:45,360 Speaker 1: barrel aged sours, and it almost tastes like that. You 1063 00:52:45,400 --> 00:52:47,320 Speaker 1: take that and then you cut it with some apple juice. 1064 00:52:47,440 --> 00:52:49,880 Speaker 1: You know, it's it's kind of got like the sweeter, 1065 00:52:50,560 --> 00:52:52,560 Speaker 1: fruity nature to it. But at the same time, you 1066 00:52:52,560 --> 00:52:54,200 Speaker 1: can still taste the barrel, just like you said, and 1067 00:52:54,239 --> 00:52:56,480 Speaker 1: there's a touch of that sourness going on. If you've 1068 00:52:56,480 --> 00:52:58,960 Speaker 1: never had sours and you're maybe afraid of them, I 1069 00:52:59,000 --> 00:53:00,279 Speaker 1: feel like going to the Road and Body would be 1070 00:53:00,360 --> 00:53:02,760 Speaker 1: a good introduction to what baril Age sours are all about, 1071 00:53:02,920 --> 00:53:04,359 Speaker 1: no doubt. All right, So that's gonna do it for 1072 00:53:04,520 --> 00:53:07,320 Speaker 1: this episode for folks at one show notes and linked 1073 00:53:07,320 --> 00:53:10,319 Speaker 1: to Jacob's Twitter handled Jacob's book. We'll put that on 1074 00:53:10,320 --> 00:53:12,480 Speaker 1: our website at how to money dot com. That's right, 1075 00:53:12,560 --> 00:53:14,720 Speaker 1: and so that's gonna be it until next time, Joel. 1076 00:53:14,800 --> 00:53:16,520 Speaker 1: Best Friends Out, Best Friends Out,