WBD252 Audio Transcription

WTF is Happening in 2020? With Guy Swann, Ben Prentice & Heavily Armed Clown

Interview date: Wednesday 12th August 2020

Note: the following is a transcription of my interview with Guy Swann, Ben Prentice and Heavily Armed Clown. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this episode, I talk to fellow podcaster Guy Swann, as well as Ben Prentice and Collin, creators of WTFhappenedin1971.com. We discuss Modern Monetary Theory, Austrian economics, and MicroStrategy buying Bitcoin.

“It doesn’t matter if the world is ready for Bitcoin, because it is coming like a freight train.”

— Heavily Armed Clown

Interview Transcription

Peter McCormack: Sometimes I think you just have to shoot the shit.

Ben Prentice: What was your idea for bringing the four of us together?

Peter McCormack: Well, so originally I was going to do it with Guy... By the way we're recording, so fuck it, we've started. Guy is well overdue coming on the show, so welcome Guy. Good to see you, man!

Guy Swann: Yeah, thank you! It's awesome to be on the show.

Peter McCormack: It's been well overdue. So I was going to do it with Guy and talk about the Stephanie thing, but because I brought up the 1971 stuff during the interview probably very badly, I just thought, "You know what? I need to do a 1971 revisited" and I just thought I'd get us all three together and just shoot the shit on this.

But I think what I'll do is I think I'm going to take the role of Stephanie Kelton in this. You're going to like throw out my objections or things I think she possibly could have been right about to see a different argument. Just try and break down your arguments, I always liked doing that.

Guy Swann: Try to steel man it.

Peter McCormack: Try my best but I know it triggered Ben especially, I know it triggered you all but I'm going to let Guy have the first word, because first time on the show, you're not a big fan of Stephanie Kelton's work, are you Guy?

Guy Swann: Not so much. When I went down the economics rabbit hole a handful of years before Bitcoin was a thing... Oh by the way, I'm Guy Swann by the way, I host a Bitcoin Audible podcast and particularly for economics, but literally about anything on Bitcoin at all.

I've read Murray Rothbard's stuff, I've read Hayek's stuff, I've read Nick Szabo's stuff, Pierre Rochard's, Jimmy Song's, I'm getting close to 450 reads, 550 some odd episodes but if you want to read or dig into any piece written about, around Bitcoin economics, game theory, cryptography, any of it, I probably have it in audio on the show. If not, just hit me up, let me know what you wanted to read and I'll have audio of it in short order.

Peter McCormack: People know who you are!

Guy Swann: Well, just in case.

Peter McCormack: Hey, you just listed all the people who have me blocked on Twitter.

Guy Swann: So going down the economics rabbit hole, I actually bumped into Modern Monetary Theory first and it actually appealed to me because there is something inherently logical about it from the monetary perspective. It did make me realize... An analogy that they use a lot is about the sports board, it's just points kind of thing and that made a lot of sense to me because that was true. In a sense, the deficit doesn't matter, it is just a tally system for things supposedly that have happened in the economy.

But after about two or three months of exploring it and a big person in the MMT school is an economist named Warren Mosler, my brother and I, we had been digging into economics and we had a lot of conversations with him, he was actually nice enough to debate with us over email. After about two or three months of digging into it, there were just some painful contradictions that I couldn't get around and then we bumped into Austrian theory and it was like, "Finally it makes sense."

But the one fundamental across the board mistake that Modern Monetary theorists make is conflating money with value. The money isn't value, it's an accounting system to allocate the actual stuff. We all have a million dollars, but we have no valuable stuff. We have no houses, we have no TVs, we have no cars, nothing that we can do anything with the money is the meaningless. It's only when somebody produces actual value that it becomes worth something because you can now exchange it for a thing that makes your life better.

The money itself is completely pointless, it's like a container with or without water in it. If you have water, it's useful, but if not then it's just the container and they constantly think that if you just print a whole bunch of money and make it look like on the accounting side, we ran a surplus, well then things will be great, but all you're doing is cooking the books.

You're just lying about what actually happened because what really mattered is where the resources went and you just gave resources to somebody who's not producing anything. I could go down that rabbit hole for a very, very long time but the fundamental misunderstanding is that money is value and it's not, it's a ticket to redeem real value somewhere else in the economy.

Peter McCormack: Collin, you looked like you wanted to jump in there, were you getting triggered?

Heavily Armed Clown: There's a lot of that could be said on these things, I think that a lot of modern academia conflates spending and productivity with wealth creation and Guy kind of touched on that in terms of the unit of account of money. Saifedean explains this really well, and it was soundbited it into the Hard Money documentary where he says, "If all that mattered was consumption, well, then let's sell our houses and sell our cars and sell all of our stuff and throw the biggest party the world's ever seen tomorrow consumption and productivity will go through the roof and then next month we'll have nothing."

I think Modern Monetary Theory is based on a flawed premise, which is the premise that employment, maximum employment and stable prices are the desirable goals in an economy and when you think about productivity, at least from the Austrian perspective, you hear this phrase "Productive Use of Capital". You hear it all the time where people say things like, "Oh, we know the velocity of money has to be kept high in order to maximize the productive use of capital." That's what the Modern Monetary Theory banking system that we have today is designed to do, it's designed to take as much of the money as possible and keep it re-circulated back into the "greater economy.

 That's why you have a debt leveraged as assets that's used to borrow more debt, that's used... And it's re-hypothecated over and over and over because the Keynesians believe that maximizing the productivity of capital is what makes us wealthy. But that in an economic relationship where you have acting individuals and an entrepreneur, the entrepreneur creates a wealth by satisfying individual's demands, not just by producing more of things. If those things just so happened to coincide with demand of acting individuals, then yes, that creates wealth because now the entrepreneur makes a profit if he's doing that competitively and the individuals have their needs met.

But productivity for the sake of productivity, if there's no demand there to support, we could put every man, woman and child on the planet on their hands and knees in the fields and make them fill buckets with dirt. We would maximize employment, we would maximize productivity, but is that productive use of capital? You could force every single person to always invest every single dollar that they earn.

You could make it so that you can't save money in your bank account, or it would disappear the next morning when you wake up, but is that money going to be invested productively? According to the Keynesians, yes, but according to the Austrians, only if that capital is used to satisfy the demand of acting individuals.

Peter McCormack: So what you're basically saying is that it comes down to the quality of what is being produced, satisfying the demand and a real demand, not just like a frivolous demand, because if you have to...

Heavily Armed Clown: Not just the quality, Peter. The most important thing is that it's profitable because if it's not profitable, then it's malinvestment. The market is ruthlessly efficient at determining what entrepreneurs are producing value and which ones are not, it rewards those who satisfy the needs of consumers with profit and it punishes those that malinvest by liquidating their assets, by liquidating their...

Peter McCormack: But that's not always true.

Heavily Armed Clown:Yes it is.

Peter McCormack: I was going to say on some certain timeframes. So for example, if you were to create a business and you were to borrow capital to start that business, you could maybe run at a loss for a time being to grow market share. So that's not...

Heavily Armed Clown: It's a trend. It's an incentive structure that reveals itself across the time. So it's not always any one static point in time that it just is true, but generally to run a profit means that the market has told you that you've produced more value than you have destroyed and to run a deficit means that you have destroyed more value than you have produced and you need the market.

Peter McCormack: Yeah, sorry, the other thing I was going to say there on, Collin, what you're also saying is it's also that I am purchasing things that I want to purchase rather than being forced to purchase because I quickly need to spend the money. You're saying, if you had to spend it, you may be buying things that you don't need and creating artificial demand.

Heavily Armed Clown: Naturally. Anytime you have more time to accumulate resources and gather information and make informed decisions, those decisions are generally going to be better. I think that that's a pretty fundamental idea that most people could agree with. Take the economics out of it, if I give you 30 seconds to make a choice, and I give you three weeks to make a choice, which scenario do you think you're going to make the better choice?

Peter McCormack: Also holding Bitcoin forces you to make those decisions now, where certainly I hadn't in the past. I'm pretty crap at saving and things like that but my Bitcoin, I'm very precious about, I'm very protective of. I very, very rarely spend it, I actually give it away probably more than I spend it but I'm always conscious of what future value am I giving away. So when I spend it, I really want to spend it, which I guess is kind of proof of this theory.

Heavily Armed Clown: Back to your analogy, talking about how you might spend it a whole lot better if you wait three weeks versus being forced to do it like tomorrow or today, is that that's actually the very thing that money, the core role that money provides in society to give us that incredible benefit of efficiency. It's the double coincidence of wants, it's that today I might not have a good place to invest something or I might not have a need that I have to meet right now.

Maybe my need is in three weeks, when my air conditioner broke, which my air conditioner is broken right now, so I'm potently aware of how it might just happen at any time and so I hold that value over time to when it's actually needed or when there's actually a good, useful, productive, valuable place to put it. In the meantime, I can actually get around this huge problem of the double coincidence of wants that maybe nobody has what I need right now, or what's going to make my life better too.

It's literally to uninvent the role of money to just kind of obliterate it, if you're trying to force everybody to just dump it somewhere immediately. Well we might as well just try to exchange shoes for cars, why have money in the first place if you're not going to have a place to store value across time for when we actually need it?

Peter McCormack: All right, before we dive into a bit more detail, Ben, you should chime in as well, because I know the interview triggered you a little bit. So throw your hat in the ring right now, and then I'll start framing some different ideas and questions.

Ben Prentice: Thanks Peter. I reached out to you after the interview because to me it's clear as an Austrian, that she makes logical errors. So I'm a big proponent of critical thinking and avoiding logical fallacies and one of my favourite Austrian economics books that I read was the first one that I read and it's called Economics in One Lesson by Henry Hazlitt

 I really recommend even just trying to start reading it because right at the beginning, Hazlett goes over what he calls a network of logical fallacies that are required in order to arrive at the conclusions that Keynesians and arrive at and we're mentioning Keynesianism here, it's not in contrast to MMT. MMT is kind of like an evolution or more of a propagandist actually, version of Keynesianism in my view. So you'll notice the theme here that both Guy and Collin pointed out is the logical breakdown in arriving at the conclusions she did and then that's what I wanted to go over.

He goes over in the book, the broken window fallacy, the seen and unseen. I like to talk about the miracle of prices, so you can look up the miracle of a pencil, but the prices are set in aggregate on a free market. But one thing I think was touched on briefly is that price inflation, see I think this is where one of the biggest misconceptions comes around, you listened to the episode, you listened to Kelton talk and Ms. Kelton is talking about, well, we may not see prices rise, even though we're printing money. Then she does talk about inflationary pressure versus deflationary pressure.

But I believe as Collin mentioned, that stable prices aren't desirable, that 2% inflation aren't desirable. In fact, we should be expecting from the natural course of economic progress for prices to be lowering, this is simple to understand. If I am in a competing firm with you, I'm going to constantly increase the productivity and we do that a lot through computers and technology these days and through automation and when I do that, that means I can compete with a lower price and therefore garner more business from the market, I'm going to try to undercut you.

This is economic competition. So decrease in costs leads to decreasing prices. However, if we target 2% nominal inflation, it doesn't matter how quickly we are actually decreasing these costs, we guarantee that the prices will rise because inflation is always in everywhere, a monetary phenomenon, something that Stephanie kind of nodded to. But just to finish out this thought here is that not only is creating this 2% inflation, a terrible goal, that we expect the prices just to be falling. The fact that they're.... AI argue that trying to measure prices is impossible and I think you try to push back on her on this, I actually think you did a fantastic job, Peter.

Peter McCormack: I agree.

Ben Prentice: I thought you would, I thought you did really well at pushing back on some of these things. You said, "Why do we focus on aggregate price inflation? You're saying it balances out," you asked Ms. Kelton this and she said, "I don't know if it balances out, it's hard to say." She doesn't even know! These people are just twisting knobs on the economy, like a child twisting knobs on a toy, but in this case, that toy is the aggregate machine of all human activity. So I don't mind pushing back on this, but pretty hard.

Peter McCormack: Well, I thought I did well, I thought I was doing okay, I was sort of holding my own. It's about the last 20 minutes and...

Ben Prentice: No, that's the best thing Peter. That's when you had the best thing.

Peter McCormack: I know but what I didn't do, I didn't...

Ben Prentice: I was about to say, I think towards the end, you hit a lot of really great points actually.

Peter McCormack: Well, so I was going to just say, I thought I was right. I think the problem was I felt so logically right and that she couldn't see it, that I must be being an idiot, I must be being wrong here and I just didn't have the conviction to hold and now say, "No, hold on. You're definitely wrong here."

Ben Prentice: At the beginning of the episode, she mentioned that she loves Twitter because it's a great place where she can test out ideas, right?

Heavily Armed Clown: That's the only thing I agreed with her on.

Ben Prentice: But she's testing out ideas for what I call propagandist economics, where she's trying to find what sticks with people so that she can keep printing money. Peter, you asked her, savings increases the value of the dollar and she said, "No." And you said, "This is wrong?" And she said, "I think so, why would it increase the value of the dollar?" And you said a bunch of stuff, but then you said "Basically because of supply and demand," she goes, "I don't think it works that way."

Peter McCormack: I know and that's where I was like, "Oh, I must be out of my depth here" and I should have had my conviction. I should have had a lot more conviction and said, "No, you're wrong here." But I just don't have conviction in economic ideas because look, if I had them, people would invite me on their show to discuss economics. They don't because I'm a fucking moron, but that's why I get people like you one, but I just didn't have the conviction.

But I was like, "Okay, I know with Bitcoin, there is a limited supply and I know the Hodl meme basically means the value relative to other currencies, it goes up, the more it's saved. I know this and the fact that she couldn't see that I was like, "Oh, perhaps I'm wrong, perhaps I'm wrong." Let me ask you another thing then Ben. Why do they do it? Because I don't believe Stephanie Kelton's a horrible person. I don't believe she's sat there thinking, "I just want to print money because I want to get out of this situation."

I do believe once you've nailed yourself to a cross and you've got a book, it's very difficult to turn around and go, "You know what guys? I'm a fucking idiot. I got this all wrong." I think that's a very hard thing to do. But I believe when she wrote the book, I think she believes she was right and I add to that Keynesians themselves, why is it they do this? Because reality is, there's lots of different economic theories that we have Keynesians, we have Austrian, we have fucking Marxism.

The economy will operate with any of them and collapse or have issues, but it's still a structure it operates under. So for me, the main difference between Keynesian and Austrian is fairness, what is fair and what isn't. It feels to me Austrian is just a much fairer economic system, which rewards the individual in a more fair way, that's the way I've always felt about it. What do you think is going on here, what do you think it is they believe and why they prefer Keynesian?

Ben Prentice: I think there's a lot of things going on here, Peter. I agree with you that Ms. Kelton is probably not some evil person, that's not what I'm trying to get at. I think A, this idea of logical fallacy is very important. If you're not familiar with logical fallacies for the audience, they sound like sound logic but they will lead you to the wrong conclusions because they're incorrect at their premise and therefore anything that you draw afterward will lead you to the wrong place. I also believe that... 

So government funds economists and they won't fund Austrian economics because it doesn't give them the power to print. I also think that because of this, basically 50 years of inflationary regime, we're stuck in a very hard place. I don't envy the people that are at the head of the federal reserve because there's no good option. If they stop printing money today, there will be lots of pain. If they print more...

Peter McCormack: But they don't always print money. There are times where the deficits have been reduced.

Ben Prentice: They target 2% price inflation Peter and I told you earlier that we should be expecting prices to go down, therefore they're always printing money, they're always running deficits, right? They're always printing money, they're always running deficits.

Peter McCormack: Yeah, but just to play devil's advocate, there are those people that believe that small amount of inflation is required because deflation is dangerous and that deflation potentially leads to recession. There are potentially sound arguments behind that and I've heard the arguments for why deflation, we should be scared of it, but in an inflationary based economy to then switch to deflation does feel to me kind of risky, but I don't believe every single politician and every central banker is thinking, "I just need the ability to print money" because some will reduce the deficit, some will try and target reducing the deficit. So I think there must be a little bit more to it than that.

Ben Prentice: Have you had Jeff Booth on the podcast yet?

Peter McCormack: I have, and he makes very sound arguments. But there will be people who will turn around and disagree with his arguments on deflation. I'm just again, playing devil's advocate.

Ben Prentice: I don't think you should think about it as switching to deflation versus being on inflation. I think that...

Peter McCormack: Natural order.

Ben Prentice: Yes, it's just try to understand what the function of money is and how the different properties of money affect our use of that tool in society, and that the form of money we have now tends to allow inflation and I believe in the long run, despite the short term pain, that switching to a form of money that doesn't allow unprecedented and undue inflation, which disrupts economic activity, that we would be better off and it's that simple. There's no other perspective that I can see and I can't unsee this perspective.

Peter McCormack: Well what about the economists who don't even work in the government and aren't funded by government, just economists out there who believe in Keynesian theory? What is it? You can throw in that one, Collin? What do you think? There must be people who of their own independent thought believe in an inflationary economics.

Heavily Armed Clown: So I think it's just based on observation. I think that they look at the last 50 years and they say, "Well, it's worked pretty well." The world is better off today than we were 50 years ago, 100%, nobody could deny that. Nobody could deny that the lowest level of extreme poverty is gradually, that floor is coming up. Yes, the middle class is being hollowed out in a sense. The wealthiest are becoming more wealthy at a disproportionate rate to everybody else. However, the general standard of living continues to rise, our dollars go further, our productivity goes further and I think perhaps there's a mis-attribution of the cause and effect of our prosperity today.

I think it's largely a product of technology, not a product of our monetary policy. I think it's often happened in spite of our monetary policy because of things like computers and the internet. But at the same time, I would say that the biggest driver of these monetary policies is government spending. Government spending is the most powerful tool of capital allocation in the current paradigm. Government picks winners and losers. Long before the Fed was bailing out companies that were failing, the government was picking winners and losers in the form of regulatory capture and in the form of spending contracts.

You have to look at this from the perspective of the incentives of the politicians. There's a reason that today, we have two political parties in America and neither of those primary political parties are fiscally conservative, they're both economically almost identical. They are based on deficit spending towards whatever their flavour of political ideology special interests are and oftentimes, they make compromises and they throw bones to the other side of the aisle to curry political favour in the right circumstances. 

But at the end of the day, the only tool that a politician in a democracy has to increase his or her broad range of appeal is to increase spending towards special interest groups that can represent voter basis for them. They can do that by one of two ways. They can either increase tax revenue by raising taxes in any form, whether that be income taxes or sales taxes, or excise taxes or tariffs. Whatever it is, it doesn't matter. It all comes down to taking money away from the productive members of its society to line its coffers to allow it to spend more or it can finance its deficit spending via money expansion.

It can borrow from this private organization that it created to print its money because of a constitutional loophole because Congress was never supposed to be allowed to create its own bills of credit and then lend to itself via its own organization that it created and to which it appoints board members. But it created this private institution that allowed it to deficit spend continuously and then borrow from itself from the money which it creates. You have a feedback loop where it becomes what are the incentives for any politician to turn away from that model? You're only going to be doing yourself, your own political career a disservice, and with the revolving door of Washington and Wall Street, you want to curry as many favours as possible.

You want to build up as many relationships and set as much stage for regulatory capture and government contracts as you can because you're setting yourself up for a great career in the private world once you leave the public sphere of influence or vice versa. Maybe you're in the private sector, you want to get buddy-buddy with the legislators so that you can turn right around into a career in Washington. These things are all about incentives. Nobody is ever going to be better than their incentives and in a democracy, politicians are always going to be incentivized to satisfy the majority through a tyrannical manipulation of the economic means.

Guy Swann: Yeah, I actually wanted to put in a point on this because this is where I actually think Peter did a really good job of pushing back and then Kelton totally just kind of dismissed the whole point, was that you brought up during the interview, that doesn't this just enable all of the corruption that the incentives of government and control over other people would lead to? Isn't that the consequence of basically just giving them an unlimited tool to soak up however many resources they want to use for whatever purpose?

Then she dismissed it with like, "Well, that's a policy issue." It's like well, no, it's an MMT issue! You create a system that ... It's like you see this little kid running around in a playground and just jabbing a spoon into all the other kids and then if you take the spoon away and give them a 10-inch butcher knife, and then they keep doing the same thing, like yeah, the consequences are going to be horrible. You're giving them a bigger tool to do far more damage, but the incentives are terrible and there is no bigger power...

Peter McCormack: Sorry to interrupt, but she said, didn't she, that "Well, I've got a whole chapter in my book dedicated to that point." I think it's where I came to the conclusion, but I said, "Look, if people were good, if humans weren't greedy, corrupt and power hungry, then perhaps in certain times, I could buy into the MMT theory." We're in a pandemic, we all agree that we should probably lock ourselves down because we're all a very cohesive society and believe this is best for us.

We know that this is one of those scenarios where we may have to print some money and we all agree to do it. You have a Constitution in the US because you understand the flaws in humans, you understand the flaws in humans and that is a great ... In fact, I'm so jealous of your Constitution, but the problem is humans are flawed. We are greedy, we are corrupt, power does corrupt and that is the problem and she couldn't get around that point.

Guy Swann: Yeah and she's giving... To promote MMT is to basically give such a potent tool for that corruption, is to change the incentives and make the reward so vastly greater than anything it ever could be otherwise, to be able to hide how you're just consume... Like the ability to print money that you have, that you are also able to force the economy to use is the godlike power to consume all resources and produce nothing in return, except for a ticket, just a paper ticket. A ticket is useful because it buys you a seat in an auditorium.

If there are a thousand seats, you need a thousand tickets for the ticket to actually be worth something. If you print 10,000 tickets, it doesn't mean we get to go see the show. It doesn't mean that everybody has another seat. It's only worth anything if there's a seat in the auditorium. There has to be real value behind it and if the government just buys up a thousand of them, well, then they get all the seats. If they just print all the tickets and give it to all their cronies, all their corporate buddies, all their subsidies, all their political friends, well then they fill up the theatre and everybody else is stuck outside with their worthless tickets.

Peter McCormack: There's no incentive for any ... All the people who benefit from MMT are the decision makers or the people who finance the decision makers. There's no incentive to move away from the model, which we saw during this pandemic. We've seen how I think the wealth gaps increased, during this pandemic...

Guy Swann: Oh yeah, hugely.

Peter McCormack: All right, listen, Collin, I give you the big red button, I give you the special power, you get the big red button. You can press that, you can change anything you want here. What changes?

Heavily Armed Clown: So if I could change anything, it would be people's willingness to ignore reality or people's desire to... See, this is the problem with democracy and I don't want to come out and say that I'm anti-democracy. In some ways I probably am, but I don't want to say that I'm anti-democracy because I like the idea of democracy, but there's a reason that America, anyway, is a constitutional republic and not a democracy. The reason for that is because democracy is tyranny of the majority and we know this.

The majority tends to be uninformed about a lot of things and that's a natural product of a society. People specialize and if I could change that, if I could make it so that people would only seek to reform aspects of society on which they were already well-informed. How do you change that? I don't know that you can. But this problem that we're facing today, it isn't new. Roll the clock back a hundred years to the panic of 1907, we were going through a lot of the same problems.

There was huge concentration of wealth, there was massive mal-investment happening and there was a liquidation that occurred and a huge stock market crash. It was called the panic of 1907 and this financial crisis laid the groundwork for something called the Aldrich bill, which was ultimately what led to the creation of the Federal Reserve. The narrative back then was, "Oh, we need to break up the money trust. We need to give the government more power to control the monetary system, to take power out of the hands of the wealthy elite in Wall Street."

That was the narrative. The narrative was that the source of all of our problems are these greedy corporations and these greedy business owners and we have to give the government more power to intervene on our behalf and "break up the money trust." This was a continuation of Theodore Roosevelt era, anti-trust law, that was his platform was breaking up the "monopolies," which if you study history carefully, you'll see that very often, those monopolies are enabled by governments. But now fast forward a hundred years and what's the narrative?

The narrative is that these economic planners don't have the power that they need to make our lives better and we have to give them more. But the same problems are happening and they're exacerbated, and the government has more power over the monetary system than they've ever had probably in the history of human existence today and yet we're hearing it's not enough. They need the ability to manipulate it more, but the problems haven't gone away. The problems just are the same.

Peter McCormack: I'm going to push you harder on this. So I'm going to give you back the big red button. You can do anything, you can dismantle government, you can change the Constitution, you can have certain rules in place financially about... You can get rid of government entirely. We can go to an anarchist society. What is it you would do? Because we're talking about what the problems we have here with government are. So I'm trying to get to the how would you solve it?

Heavily Armed Clown: I think if you take away the government's ability to expand the monetary base, given enough time, the rest of the issue sort themselves out, because it realigns the incentives back to sound economics, back to fair participation in an actually productive society. Bureaucracies are no longer able to subtly skim wealth because that's what inflation is, is a subtle tax. It's an unseen tax and it's a regressive tax that affects the poorer at a greater proportion than the wealthy. So I think if you could take away the government's ability to print wealth because we're always going to have organizations that are in charge.

There's always going to be somebody that has more power than you and maybe you're the guy at the top. Good on you if you are. But these things have always existed all throughout human nature and as much as I'd love to see an anarco-capitalist society exist, if it were to happen tomorrow, the power vacuum would be enormous and we might end up in a worse place than we are today. That said, I think if you take away, if I could hit the button and just simply stop the ability of the governments to create money and finance debt, I think that a lot of the problems would sort themselves out within a generation.

Peter McCormack: So back to a gold standard or perhaps a Bitcoin standard, but a standard?

Heavily Armed Clown: Yes and a willingness or at least a general understanding amongst the average person that that is a principle which must be upheld because it only took a generation or two for the importance of sound money to completely disappear from the public consciousness and history repeats itself. There's nothing new under the sun so we've been told and I think if we went back to a gold standard, it'll only be a matter of time before we ended up exactly where we are now.

Peter McCormack: Guy, the same to you. What would you change?

Guy Swann: So prices aren't arbitrary. The price of something in an open market economy is the most information-dense metric you could possibly find anywhere. It accounts for millions of trades, probably trillions, if you just start extrapolating out the second, third, fourth order trade, like Ben been brought up I, Pencil, the miracle of a pencil and how there's literally nobody in the world who could possibly create a pencil, which is so cheap and freely available as to basically be socialized.

Nobody really cares if they lose a number two pencil, yet read a Leonard Reed's piece, I, Pencil or whatever is one of my favourite episodes on the show and then Hayek's The use of Knowledge In Society is another one that just really expands on this topic. Prices are the most important thing in the market economy and there is no boardroom of politicians or whatever that can replace, no set of experts that can be like, "Okay, well this is where the market should go.

This is where we should put our investment. This is the direction we should push things." We need a market to even tell us how to compare one thing to the other. There's no way to know without an actual market to aggregate all of that information. If I had a big red button, it would to be eliminate any central control over prices and money. My big red button would be Bitcoin. It would be force and eliminate the ability to control it because all you can do is destroy the function of that thing, which is why society works in the first place.

Peter McCormack: Okay and Ben yourself, just to be fair.

Ben Prentice: Yeah, so obviously, I'm not going to disagree with these gentlemen. So I would try to build on it by saying I would abolish all patents and legally enforced monopolies. I would also take the tax benefit that corporations receive through paying healthcare in the form of wages, which is not taxed and the monopoly on the healthcare industry as well, and restore choice and competition to the market.

Peter McCormack: Okay, so I think you could kind of group all three of you under the idea of separate economics and state, especially Collin, you have the acceptance of there will be a state. I kind of have that acceptance when I talk to the anarcho-capitalists. I kind of have this idea that if you had the big red button, dismantle the state, it would rebuild itself because I think humans organize themselves, then you have leaders and followers and you end up building structures and groups, and we've had tribes and warlords and leaders in all different geographies, all around the world. I just think it's a human thing to organize ourselves.

I think you always end up with some form of governance, but the separation of economics and state I think is an interesting idea, but what are the consequences of doing that? Because one of the things that, especially when I talk to libertarians, like someone like Erik Voorhees, and they'll talk to me about his desire for a society and it kind of scares me a little bit, but I agree directionally for the idea of dismantling the state in that I think we need to kind of wean ourselves off the state, if that makes sense, because I think there are unintended consequences of suddenly say removing all social welfare.

If you just suddenly remove it, what is the unintended consequences of that? But to wean yourself off step by step I think is something that logically makes sense. Do you understand what I'm saying there, Ben?

Ben Prentice: Yeah and I think Collin alluded to that, that if you rip out the power structure and then there's a power vacuum. So I think that's why both of these gentlemen said instead of just dismantling everything and deleting the government with the backspace key, that fixing the money first and this whole meme about fix the money, fix the world, just that society will then... The incentives are aligned. The tool by which we collaborate now functions probably the best it could have ever functioned in society because we all believe that, or at least the people here believe that Bitcoin is the best form of money that has ever existed and may ever exist.

So fix that first and then, build a society from that. I argue with one of my friends, and he's like, "Well, I think like libertarian socialism might work in a really small scale" and I'm like, "Dude, listen, most of the youth today that are arguing for any kind of socialism or welfare are pissed off about how capitalism is broken." But the youth in this country was not pissed off about capitalism not working in the '40s and '50s when Ms. Kelton said "We did a good job managing inflation and managing finance.

It seemed to be working pretty well back then when we were on the Bretton Woods system and we had some kind of tie, some anchor to reality." So fix that and then, let's see what happens. Let's wait 10 years for it to work, and then we can talk about maybe making some adjustments.

Peter McCormack: So I agree, but I also think there is something else we have to throw into the mix. It's a very different society in the '40s and '50s to what it is now. I think information technology has changed everything. It has created a wider awareness of the haves and the have not and I think if you add into that, we've just become a more liberal society, which means we've probably, especially youngsters have grown up with I'd say a larger ability to complain and be heard and make a noise, and I think you can throw that into the mix as well, because there were times where people were pissed off.

I interviewed Keith Levene who was a founding member of The Clash and he talks about when the punk movement started and he said, "We were pissed off and we were angry." But I just think their anger was kind of like in smaller circles, they weren't able to find allegiances where people all over the planet and get into groups on Reddit and start bitching at each other. I think we have to think about that a little bit as well.

Ben Prentice: Maybe I misunderstood you, Peter, but you said something about technology and it's created a wider information gap between the haves and have nots?

Peter McCormack: No, no, no, not a wide information gap. What I'm saying is I just think we lived in smaller circles.

Ben Prentice: Oh, okay.

Peter McCormack: I think we stayed in ... Well, I don't think we, because I wasn't there, of course, but I remember as a kid like, and my parents, their circle of geography was a lot smaller than mine was.

Their geographic circle was mainly our town with perhaps a visit a bit further to some friends maybe, in the next town and one trip away a year. Whereas, my circle is global and I've travelled globally, before the pandemic at any point and we've got information technology, that means we can, the four of us, in different parts of the world, can talk. So I just think there's been societal changes that have created different expectations that people have.

Ben Prentice: We're at the very beginning Peter and I think the effects of the internet and technology are just starting and our society is trying to adjust to it, and I think there's a lot more change coming. Part of that is what Jeff Booth talks about, in massive, massive deflation, making everything cheaper if we just embrace it and the information, the tools that we have today to share information and to have logical debate with the people that are willing to do so, I think that makes things better.

It's just harder because we're trying to adjust to the information asymmetry and having it all level out, and it's a somewhat painful process, I suppose. But I don't have all the answers.

Peter McCormack: No, no, definitely not. Collin, do you want to jump in here?

Heavily Armed Clown: I think it's tough. This is a hard conversation to have, but the reality, in my opinion, is that the standard of living will have to adjust for the transition to happen. I think that the West in particular has become so accustomed to getting something for nothing because of deficit spending, because of inflationary economics and that even to try to wean them off of it, I think, is almost an impossibility. It almost has to happen suddenly and painfully, as much as all of us hate the painfulness of liquidation, nobody wants to see liquidation, and this is not a new concept, this was a problem long before the arguments of MMT came about.

This was being talked about in the '30s, when they wanted to do whatever they could to ease the pain of the Great Depression. But in reality, all they were doing was pumping the bubble back up, preventing the liquidation of malinvestment as such. If you had a friend who was living off of credit card debt, and every single day they were going out to fancy restaurants and enjoying expensive meals, and they were haemorrhaging their living standards for the sake of today, they were sacrificing their future.

They're also sacrificing their children's future as they pile more and more debt on top of more and more debt to finance the lifestyle to which they've become accustomed. Would you say to them that the best course of action is to wean off of that lifestyle, or to just quit tomorrow?

Peter McCormack: Cold turkey!

Heavily Armed Clown: Yeah, it would be painful and it would be a difficult adjustment. They'd wake up and feel miserable, they'd be like, "This is awful. I had it so good. Why can't I go back to that?" But for the long-term health of their life, not just their finances but their long-term wellbeing, you would want them to stop that behaviour immediately and really that's what this is, is we're looking at a circumstance where our behaviours are so destructive to our long-term wellbeing, that the sooner they stop, the better for everyone in the long-term.

If we're looking at what life will be like for us in 50 years or for our kids, the sooner we put a stop to this, the better. But it's going to hurt! It's going to really be painful and it might cause a lot of schisms in society. You think the riots happening in America now are a big deal? Boy, just wait.

Peter McCormack: Well, listen, there's three nicotine addicts on this discussion right now, and all three of us know you can't just wean yourself off it. You've just got to stop cold turkey, that's the only way and you've got to go through that painful first day, then first week, and then first month. I agree with you on that. Guy, are you there?

Guy Swann: Yeah, can you hear me?

Peter McCormack: Yeah, your video has cut out. What about you? Do you want to throw yourself into this one?

Guy Swann: Yeah, I think the analogy of weaning off credit card debt or whatever, is a good one. It's a question of, how quickly should we stop drinking the poison? Well, no, we should just stop. In fact, I think deflation is actually the best possible thing that we could want for coming out of this, because it means that everyone's life gets better. What deflation is in the economy, particularly for people who are on wages and who have produced real value into the economy and saved, deflation means they are actually splitting all of that production fairly among them.

The people who produce... To save a million dollars means that I produced a million dollars worth of services, or help, or goods or whatever it is into the economy, and that I didn't take anything back yet. That all I did was give and produce a whole bunch of favours and great stuff for other people, and I didn't take anything back. That's a great thing! We want to incentivize saving and if we could get everybody who can afford to produce extra and not consume, to do that, that would be the most... The market is screaming that that is exactly what we need. It's trying desperately to liquidate all of the poison that is just draining us of value and drowning us in debts and it's not allowed to.

We're feeding the cancer when the body is trying to evict it as quick as possible and yeah, it sucks. But there was a point you made, that actually ties right into this, is that the Fed isn't always printing money. Well, the fractional reserve system is. It's always creating new debt and that's why we have inflation, and in fact, the CPI and all the government indexes are garbage. If you look at something like the Chapwood Index, which is just a blanket, what are the top 500 goods that everybody purchases and what are the prices of those goods? Go to chapwoodindex.com.

You'll see the average per year in all the major cities around the country is about 10%, somewhere between 10% and 12%, and it's been that way for a long time. That is the real inflation and that's because that inflation is based on the fact that we continue to issue new debts based on no production. We are inflating the money supply, always. The monetary system that we have does it naturally and constantly. What the deflation is, when we have a credit crisis, is that the market is trying to undo it because it was all unsustainable. If we're expecting an 80% crash in prices and housing, and corporate stocks and education and healthcare, it means that we were 80% over the real sustainable price, and we should come back down.

That's actually great for anybody who is poor right now, because now housing is 80% less expensive because all the people who were taken up all the houses because they just wanted to sit on luxury apartments in New York for five years, just to park money, no longer get that benefit, they no longer get to take the money from them. Imagine if we never ever, ever had to care about raising the minimum wage again. If prices just fell and we could just mark that off as like, we're done. Wages will always just increase in value because we produce more every year.

We're a good efficient economy and we have real prices and we have real money. It would suck so bad because of all the damage we've already done, and we have to correct it. Just like if I built a house wrong, if I build it on a crappy foundation and all the framing was garbage and I used nails that were made out of plastic that just degraded after a couple of days. Yeah, it would suck to have to start back over, but it would also be really a terrible idea to try to live in the house and pretend it's not happening, because then I would just die. At least if we let it correct...

I think the best thing is cold turkey. Cut it off, let the defaults happen. Let the people who were actually saving and producing all of this time, all of the responsible people, to buy up the assets at 10% of their prices. Let somebody who actually knows how to run a surplus, buy the airline. It's been running a deficit for 12 years, and let them get it at fire sale prices. We turn around employment like that. It'd be 6 months, 12 months, before we were actually on a productive forward path again, because we let prices tell us the truth about the economy. If we just keep believing a lie, all we do is keep building the same house that we know is going to fall on us.

Peter McCormack: So therefore Guy, obviously it's a really fucking strange year, I don't think any of us really know what's going to happen next now because it's been such a strange year. I was talking to my son about this, I've mentioned this on the show before, but I said to him, "We're living in historic times. When you're my age and you have kids, you're going to tell them about the year 2020 and everything that happened.

You're going to explain to them that you had a lockdown, you couldn't go to school, that you didn't finish your exams, that you were stuck in the house for months, that people were forced to wear masks and potentially, maybe it's this year or next year, there's going to be some massive economic changes." But I was explaining to him that you're living through historic times. But Guy, do you also see this economic times as an opportunity? I guess it's an opportunity and a threat.

It's an opportunity for this great reset that obviously you're a proponent of, but do you fear that we won't get the reset in the way... There's obviously the logical reset, the acceptance, and then there's the, I guess, print your way out of it reset, whereby currencies fail. How do you see it playing out?

Guy Swann: Well, I would be completely... I would be depressed and hopeless if it weren't for Bitcoin, genuinely. I would think that we were going to go the way of Japan, which I thought was funny that Kelton actually brought that up in your interview, is that she was like, "Well, Japan's been trying to have inflation for decades and they can't hit their target." It's like, well, yeah! Japan's economy is a bucket of garbage. Japan has absolutely destroyed themselves and they've literally done every single thing that we're doing right now.

You actually see, it's actually such a great example of exactly the Austrian theory. They ran huge, huge deficits and massive debts up into the early 90s, and then they had their collapse, and what did they do? They tried to print their way out of it and you see the way the actual correction is. If the Austrian theory is correct, and what they did was a debt bubble that was collapsing, what you would see is a shift toward a service and retail economy, and a shift away from a production economy. When the crash hit, you would see those higher order goods hit the hardest.

You would see mining and the top order productive, like commodities and things get hit, and then it would be manufacturing and then it would be retail and front facing business, and then it would be services. Services would be hit the least, mining would be hit the worst and it would be in that order and that's exactly what we saw. That's exactly what happened, one after the other, fourth, third, second and first place. What did they do to get out of it? I think they did 10 stimulus packages all the way into 2004, 2005. They had a decade of a bleeding economy.

The Nikkei fell from 50,000 to 15,000, and they started buying stocks, loaning out corporate debts, trying to pump everything back up and again, everything shifted towards the retail, towards the service. It is a cookie cutter 30 year experiment of exactly how horrible it will be if we just keep doing this. So she gave the perfect example of A, proving the Austrian theory right, and B, that this is the dumbest possible course of action that we could have. So I thought it was just hilarious that she brought that up. It's like, "They weren't able to hit their inflation targets." So it's like, who cares? It's a disaster! We do not want to copy that regardless of what inflation numbers that your board of experts pops out.

Heavily Armed Clown: Japan also had the advantage of international debt arbitrage, something that we, at least in the United States, likely would not have, being the economic leader of the world, or certainly being the country whose economic policy tends to drive, or certainly have ripple effects to the economic policy of the rest of the world. Our Central Bank policy tends to be what everyone else mirrors, with certain exceptions, depending on unique circumstances.

The debt arbitrage that happened in Japan ate up a lot of the pain that was happening on their ability to prop up their failing economy and then look at the second order effects of Japan, on the Japanese society. You have a shrinking birth rate, people aren't getting married anymore, the young men sit at home by themselves, resigned to a life of loneliness. Why? What's the point? Why go out and work hard just to try to get a job that doesn't pay them enough to start a family? To buy a house, to do the things that people want to do in life to feel successful and satisfied. They can't do those things.

That's been taken away from them by their monetary policy and I wanted to expand a little bit on what Guy said at the beginning of that there, about the inflation. CPI is so hilariously bad and of course it is because it's a government metric, and it's designed to obfuscate the real inflation and Shadowstats is a step in the right direction. But in my opinion, the only way to accurately measure inflation is to measure the expansion of the monetary base. Go and look at the M2, because Peter, you said that they don't print money every year.

Go and look at the M2 on a year over year basis, and you'll see, over the last 50 years, with the exception of a few years here and there right after depressions, when there was severe deflation, severe credit liquidation, the M2 has expanded year over year for the last 50 years and that's the only accurate way to measure inflation. This whole idea of weighted basket of goods and hedonic adjustments, it all comes back to the acting individual. Peter, you might drink twice as much coffee as me, or maybe it's tea over there, I don't know.

But you might drink twice as much tea as me and if tea goes up 10%, but I buy half as much tea as you, well now that inflation has disproportionately affected your purchasing power, and the preferences that you have when you go to the grocery store. So this idea of a basket of goods being an accurate representation of...

That our purchasing power in a society is completely foolish and completely out of touch with the fact that expansion of the monetary base means that your slice of the pie becomes relatively smaller. It's amazing to me that people push back on this at all. The people that say that printing money doesn't cause inflation, it absolutely does by the core definition of inflation, is increasing the money supply, and of course that's going to make your purchasing power decrease. Your relative share of the aggregate wealth is now smaller.

Peter McCormack: I think I drink way more than double the amount of tea than you and I think you pay a lot more for the tea because you keep fucking throwing it in, is it Boston Harbour?

Heavily Armed Clown: Yeah, we do!

Peter McCormack: Yeah, we don't even give you the good shit anymore.

Guy Swann: Well considering we're just going to pour it in the port, it makes sense to give us the cheap stuff.

Peter McCormack: Fucking waste that is!

Heavily Armed Clown: Speaking of which, inflation is taxation without representation.

Peter McCormack: Yeah and I found out recently, if you live in Puerto Rico, you can't vote, because you don't pay tax.

Heavily Armed Clown: Well, that isn't completely true. It depends on... So they do have a congressional representation. I don't believe that they can vote in the presidential election because they don't have an electoral college vote, but they do have congressional representatives.

Peter McCormack: That was what Peter Schiff was talking about. I can't remember if it was on mine or Rogan's show, but he said about that, because he's based in Puerto Rico. But I think maybe he can vote because he also has a place somewhere else. But yeah, I heard about that. Ben, what about you? Then I'm going to throw this into the mix and I think all three of you are going to want to answer this. But Guy talks about Bitcoin giving him hope, and I know all of us are Bitcoiners here. You three probably understand it a lot more than I do, but are we ready for a Bitcoin based economy or is it a bit too early?

Ben Prentice: Maybe this goes back to this whole... I like the way that Bitcoin was released on the world. That those that do the diligence to verify its viability as a means of exchange and store value, then continue to verify that, defend it, promote it and then risk their capital, disproportionately in earlier times with much higher inflation and much more risk, stand to gain more reward in the eventual monetization of this thing.

The late comers, the more skeptics stand to benefit less, and this is a very, very large range, the people that finally come in, let's say hyperbitcoinization takes another, what was it? Three years, according to Bitcoin Tina or whatever, or 10 or 15 years according to some of us more conservative people. The guy that decides he no longer wants to use the euro or the yen or the dollar, on that last year, he doesn't stand to benefit monetarily from the monetization itself.

He's not going to gain more purchasing power just from... Because he didn't help bootstrap the thing. So I think the incentives just work out. Does that make sense? Is that a good answer to that?

Peter McCormack: Well you tell me? All I know is, every year, apart from my year where I attempted to trade and mine, where I was a complete moron and lost most of my Bitcoin, every year I just accumulate more Bitcoin and I'm very scared to spend it and its relative value to the pound and the dollar keeps going up.

Ben Prentice: Yeah and like last year, you were still giving some voice to... I think it got a lot of flack for giving some voice to some of the... What was it? Bitcoin Cash or some of these other alt coins or whatever and you have grown more in your conviction through the growth of your understanding of this thing as a monetary asset, and maybe your understanding of monetary maximalism, and that's grown the amount that you're willing to risk in the potential monetization of this thing.

Peter McCormack: Yeah, but also, more recently, I increased my Bitcoin position by over 10% in the last month because of fear over my cash holdings, genuine fear. I also wanted to buy gold, because I still think there's a role for gold and Bitcoin. I think there are still certain limited risks to Bitcoin that could see the value get hit, like a US attempt to banning Bitcoin, if that ever happened, which it isn't zero chance.

So I felt like I've got half of my wealth in Bitcoin, maybe I'll put 5% in gold, just as a backup and it ended up becoming just a fucking pain in the ass, I just bought Bitcoin again. But I went up 10% in the last month just because of fears over... Actually, it's about 12%, just because of fears over the cash I'm holding, and I'm thinking of buying more.

Ben Prentice: This goes back to, I think what Guy was saying. That it doesn't really matter, incentives are aligned and if the governments print more money, people are going to be more incentivized to buy more Bitcoin because it's a hard asset. If their government prints less money, then society will be better in general. So I have more hope than I ever had before when I was a young guy.

I've said this on podcasts before, the more I tried to understand the world, the more confused I got about why everything was so messed up, because we were making so much progress from a technological perspective. I felt like there was social progress of some kind, but I never really had hope that things would get enormously better and I finally do, because I understand that it doesn't really matter what happens, that now that this thing exists, the implications of it existing just make the hope real.

Peter McCormack: I throw another thing in there Guy. Obviously we all saw the MicroStrategy thing yesterday, and that was breathtaking in some ways, because it wasn't like, we've allocated 10% or 15%. I don't know what the percentage allocation was, I don't know if it was 100%.

Ben Prentice: It was a 30% of their cash.

Peter McCormack: 30% allocation, $250 million and they ended up buying just over 0.1% of the total supply. Firstly, the fucking balls on the guy to do that, fair play, because there is risk in doing that. In a number of different ways, there's a price risk, there's also a regulatory risk. Like I say, if Steve Mnuchin ever said "ban Bitcoin" and it became a serious option for the US government, that would hit the price, severely. Short term, we know, but it would still hit it.

Heavily Armed Clown: Peter, just so you know, when the government banned Bitcoin in 1933, the price skyrocketed.

Peter McCormack: Yeah, but I remember when China banned Bitcoin two years ago and the price crashed and it came back. All I'm saying is, there's a lot of different risk factors and the fucking balls of the guy, to allocate 30% into Bitcoin, I thought was pretty incredible. But also, the other interesting thing there, is this swallowed up 0.1% of the supply.

Yep, by the numbers, only a thousand companies can buy 0.1% of the supply and then you run out of Bitcoin. But they can't do that really because there's too many other holders. So the smart thing there is first mover advantage. But what did you make of that? Because that gave me so much conviction.

Ben Prentice: They're going to be the capital allocators of the future.

Guy Swann: Exactly that.

Ben Prentice: And I want them to be.

Heavily Armed Clown: Yeah and what's funny is their reasoning. I read a piece in... I thought, I'm not going to stand behind this, just because Ben said it was 30%, but I thought it was 60%. I read somewhere it was 60% of their cash holdings?

Guy Swann: It was 50% of their cash holdings, it was 30% of their total assets, I believe.

Heavily Armed Clown: Total assets! Okay, I was comparing it to their decision to hold cash. I'll confirm it though, I'm going to be doing a "Guy's take" episode on this because I think this is a massive development.

Peter McCormack: But either way, it was a fuckload.

Guy Swann: It was a fuckload, that's exactly right! That is the way to describe it.

Peter McCormack: Yeah, let me tell you something funny first as well. So anyway, in the morning yesterday I get a message in my DM's on Twitter and I'm just ignoring it because you know when you get DM's and people just... They don't say, "Hey, hello." It's just you've got to do a view media and they've shared a Tweet and I look at it and I see something, "MicroStrategy Bitcoin", I'm like, "Yeah, whatever." 

Anyway, I go on my way and then I just start seeing through the day the news coming through, I'm like, "Wow, this is super interesting. I should try and get that CEO on the podcast." So I Google the company and then I Google the CEO and I Googled his name on Twitter and his page comes up. I hit DMs and he's the fucker who sent me the message! I was like, "What!"

Ben Prentice: Are you going to get him?

Guy Swann: Yeah, that's awesome. You scheduling it?

Peter McCormack: I expect at some point it will happen. I hope it'll happen, it'd be a great guy to talk to be very interesting and another thing to throw in there, I don't know if any of you saw, but somebody found a very old Tweet of his from 2013, where he dismissed Bitcoin. Amazing right? Like a full circle. He's not only gone from dismissing Bitcoin, to allocating a fuckload of money of their asset or their cash holdings into it. Anyway, sorry, that was just an interesting story.

Ben Prentice: That was great!

Heavily Armed Clown: I think that was Bitstein who Tweeted that and I've talked to Bitstein several times and when he posted that, I don't think he's doing it in a way where he's sharpening that and throwing it back at him, I think he's doing it in that Bitstein way where he's like, "This is how Bitcoin changes people, this is how it gets to you."

Because I think the vast majority of people in Bitcoin today, would have also dismissed it in 2013, obviously or else the price would have been a lot more than that...

Ben Prentice: I knew about it in 2011 and I dismissed it and 2012 and 2013. I was reading Slash Star articles probably once every two, three months and I was like, "That's interesting if it works."

Peter McCormack: I didn't see that as a criticism of him. I saw that as that, "Look, then he's dismissed it. He's not only..." There's a big difference between dismissing it and then going on buying a couple of Bitcoin and then dismissing it and allocating $250 million into it. That is a massive change in your conviction. It blew my mind!

Heavily Armed Clown: Who is it that says that Bitcoin is a game of transitional musical chairs and there's only so many seats before the music stops?

Guy Swann: That's good!

Peter McCormack: It sounds like a Dan Held thing.

Heavily Armed Clown: Could be. I don't know, maybe it's like BitcoinTina or something, I don't know. Somebody says that, and I really think it fits here. If you look at how much Bitcoin they just bought up and somebody keeps throwing around this metric, "Oh, there's only enough Bitcoin for 800 or so more companies to do this" and that number is going down by the day as...

Peter McCormack: But there isn't. There really isn't enough for 800 proprietaries because that's...

Heavily Armed Clown: Right! Theoretically there is, but we know that number is likely very much, a whole lot smaller and all it's going to take is a little bit of chase and this thing will be the sole focus of the entire world. You'll wake up one morning and it will be the only thing anybody can talk about.

Guy Swann: The only thing any of us can talk about.

Peter McCormack: Yeah, because if 10 companies want to do it, that's 1% of the allocation. A hundred companies do it, that's 10%. It will become difficult... Actually what'll happen is, they won't be able to get 0.1%, they'll have to get 0.05% or less.

Guy Swann: Well they won't be able to do it at the current price, that's for sure.

Peter McCormack: Yeah and that's the point. It also plays into PlanB's cross asset Stock-To-Flow, in that... Look, I know some people have run the numbers, some statisticians, that's not me and I don't fucking know what it is, but he did talk about evolutionary stages and actually this is an in-between stage because when I spoke to him, I was like, "Well, the next stage feels like nation state adoption" but actually no, this next phase is definitely corporate balance sheets.

Then perhaps there's another stage, which is nation state adoption and they could happen in parallel or staggered but it certainly backs up his thinking of these evolutionary stages.

Guy Swann: Yeah, I think it's moving towards cash holdings. Back to the original question of like, "Are we ready for this?" This is a great example of the incredibly long maturation process that we have to go to because it's not merely a, "Oh, are we now using Bitcoin?" It is the restructuring and rebuilding of an entirely separate financial system and getting companies that are outside of it, to allocate resources toward understanding, learning, and building on to a completely different infrastructure. It is an infrastructure change.

Same as the Internet and we had phone networks and walled gardens and AT&T monopoly essentially and then everything went to the internet. It's that same transition. We're moving from a centralized walled garden authority based network of money to an open decentralized permissionless infrastructure for money and that is going to take a very long time. Same as it took 30 years to get where we are on the Internet. You could see in '92, it was like, "Holy shit, we could have streaming Internet over TV." But we didn't have any companies that could do it and we didn't have the infrastructure that could handle it. 

But in that, the people who do adopt it, who do start to move into the economy and start learning first and start allocating capital first and start building first, the change in behaviour and frame of what's important and where to focus your energies. It's not just because the Bitcoin price went up, but just because of how it's changed my actions and what I should be focusing on, Bitcoin has massively benefited me. It has massively improved my life in the bear market, just in making me realizing where I should be pointing towards the future and giving me something to aim at.

Whereas I feel like I'm just in a spaghetti bowl of everybody fighting and screaming at each other, when I'm elsewhere. Like you said, you get scared when you're holding cash. If I have money in the bank, I start to have an aneurysm and I can't sleep at night. I'm like, "I got to get this out and put this on my Trezor or get this behind my keys" and the MicroStrategy thing is, this is the first step to realizing the financial infrastructure side of it. They did a long-term assessment of its scarcity...

Their whole little report thing that they announced on it, was amazing and they looked at like, "Okay, how do I compare this to my cash holding? Should we hold cash or should we hold Bitcoin?" They decided Bitcoin was a safer, better bet, with high potential in the future. Now there have been a lot of shaking and leaning dominoes in this mix. I feel like that is the first clearly fallen domino in this mix and the other major point, is that the price of their stock jumped 11%.

Peter McCormack: I know.

Guy Swann: Their price jumped! Any CEO, investment company, firm fund, anything that is looking at that and not thinking, "Holy crap, what are we doing here?" And not reconsidering Bitcoin, is totally stupid. They're absolutely leaving themselves in the dustbin of history. Everyone is paying attention to it after that. Everybody who is anybody, knows how to actually pull in for the future and wants an escape valve on this monetary madness that we are stuck in, is looking at a second time right now.

Peter McCormack: Do you know, that's funny. I'm sat here with a third of the... Essentially Bitcoin identifies as a media company, right? A third of my balance sheet is Bitcoin right now and I'm hearing you saying that and I'm thinking, "Right, I'm going to finish this. I'm going to take it onto 50%, fuck it."

No, because I am worried. One of the things I was thinking of doing, was buying digital dollars and just lending them out on something like BlockFi because I'm like, "I will get 8%, well will I outpace inflation?" But fuck it, I think I'm just going to go up to 50% Bitcoin allocation.

Guy Swann: Yeah, I think this will be the situation where Paul Tudor Jones is like, "I allocated 3% or 5%" or whatever it is, where they're doing exactly what you're doing, where he's like, "Maybe it should have been 20%."

Peter McCormack: Shit man, what did you make of it Collin?

Heavily Armed Clown: I totally agree with Guy, on this kind of being the first domino. That the fact that you've seen with after Paul Tudor Jones and probably Raoul Pal, you're sort of seeing this shift in the greater macro environment, where people are... Their heads are turning, they're saying, "Hmm, best performing asset of the last decade, best performing asset in pretty much in this recessionary environment." At the beginning of 2008, the end of 2017, you started dollar cost averaging at the height, you're up almost 75%, 80% now. That's crazy!

Try do the same thing with the stock market. Go back to the height of the stock market, you started dollar cost averaging and it's nowhere even close. So the domino that I'm looking for... Because now that we're seeing these macro guys say, "Okay, this is better than cash." In our investment paradigm, the thing that's the next best step from cash, treasury securities, right? We're watching a world where treasury security yield is trending to zero. In real terms, it's already been negative for the last 10 years. 

How long until people start making the decision that they'd rather have Bitcoin and that Bitcoin is a safer bet than sovereign debt. It won't be long because if you can make that connection with cash, you can make that connection with negative yielding debt too. I would go on record to say that it doesn't matter if the world is ready for Bitcoin because it is coming like a freight train. The whole world is going to change more in a few weeks, than it's changed in the last 10 years. When it does happen, the whole world will change faster in the matter of weeks than it's changed in a decade. I really do believe it. It's a black hole, it cannot be stopped and it's coming.

Peter McCormack: Yeah, the interesting thing about that MicroStrategy thing is that there's going to be a lot of companies that are going to see that and then going, "Hold on, what have they done here?" Because it wasn't a small amount because it's $250 million, people are like, "Whoa!”

I imagine a lot of companies going to be looking at that because of their internal processes, procedures, it's going to take a little bit of time before other companies can suddenly go, "Right, let's put $10 million, $50 million, $100 million, whatever it is but I imagine it's coming and I imagine we've just got a lag now until that hits and then I think we're talking about... We've got a few small domino's here and then the big ones are going to be coming and the next 18 months I'm expecting, fucking crazy times. I don't know about you, what do you think Ben?

Ben Prentice: Yeah, I agree with actually both of them, but I think Guy in particular hit on some really interesting points. Guy who said that we're not ready for Bitcoin from a financial and infrastructure standpoint but I think this whole conversation highlights that... Let's just go back to 2015 for a minute and MicroStrategy says, "We're going to put $250 million into Bitcoin." They would have been laughed off the scene. Their board would have fired whoever made that decision and it just wouldn't happen.

That would have been the stupidest move and everybody knew it. Now, them doing that, "Oh, that's interesting." So we're getting there, not only from the infrastructure point of view and building the technology out and building the tools that allow us to do all these things and to protect our wealth but to be able to exchange it freely, but we are building liquidity from a monetary perspective and we're building liquidity from a mental perspective. It's just slowly happening.

I thought when Raoul started talking a lot about Bitcoin, it was huge and we're talking about Paul Tudor Jones, now MicroStrategy, who's next? How many companies is it going to be and at what percentage is it going to be? It's just a slow movement and then it gradually, then suddenly, like a freight train, like Collin said.

Peter McCormack: Listen guys, this session has made me even more bullish than I have been and very excited. Yeah, I'm going to get straight off here and change my allocation. It's made me very, very bullish!

Guy Swann: We do what we can for you!

Heavily Armed Clown: Disclaimer it, disclaimer it!

Peter McCormack: I got some fucking financial advice, buy some Bitcoin if you haven't got it. If you're listening and you haven't got it, you're a fucking moron. Listen, I've loved it, very bullish! Guy, great to have you on, we will do a solo show, you and I, one day because there's been well overdue. I knew the three of you together, I just knew it work. But Guy, do you have any closing notes?

Guy Swann: Yeah, dude, thank you for having me on the show. This is awesome and finally, to meet Collin and Ben like actually hang out and talk to y'all, this was great. So a huge thank you to everybody and check out Bitcoin Audible, is probably my closing notes. One thing, I'll leave with a thought on anybody who's still questioning MMT because Kelton had a comment early on that said that, "One person's deficit is another person's surplus" and this is one of those things where she just so painfully misses the point of, money isn't the value.

The ticket for the seat, isn't the seat in the auditorium, but she says, "When the government goes into a huge deficit, it means that somebody else ran a huge surplus." Well that is also true if I just counterfeit money. If we all just counterfeited money, we could all have deficits and everybody that we traded with, would have surpluses.

You could have a surplus, you could have a surplus, everybody could have a surplus, but is that going to make things better? If we all just stop producing houses, cars, TVs, everything, and we all just ran a surplus by counterfeiting money, is the economy going to get better? So that's what I'll leave with on MMT and then just buy Bitcoin, invest dollar cost average, Swan Bitcoin, Cash App, all the best stuff. Use those, they're absolutely the best in the business and listen to Bitcoin Audible.

Peter McCormack: All right, cool! Collin, your closing thoughts?

Heavily Armed Clown: Totally agree with what Guy just said. Do you want to see who's running the surplus? Go comb through the Central Bank's balance sheets, go see who's got trillions of dollars in assets, "excess reserves of the banking system." Where is the money going? Because it's going somewhere, it's going to the Central Banks. The amount that their assets have increased in the last six months is unprecedented, throughout their entire history so...

Certainly, I agree actually, with what Kelton said there. Our deficits are the Federal Reserves surplus. So go figure there. But yeah, Peter, it was cool coming on again. I love talking with these guys and you're a grateful host, so I really appreciate that. It's fun to come on and talk. Same stuff as before, you guys can find Ben and I on WTF Happened in 1971. Check out our newsletter, we do the Bitcoin Echo Chamber podcast from time to time and check out River too. River is a great way to get Bitcoin.

Peter McCormack: Yeah, man, I love having you on.

Heavily Armed Clown: You're welcome!

Peter McCormack: You're welcome on anytime, the two of you and it's especially been cool recently to see people like Eric Weinstein sharing out your website and the website's appearing more and more and I see it in the feed from people I didn't expect, that's very cool. Ben, from our first beer in Boston, when was that like 18 months ago then you came up to me and you were like, "Let's have a beer." From that to now, we've come a long way, so you can have the final words.

Ben Prentice: My final words are, again, I appreciate you getting us on Peter. I love what you do! We've been working on this WTF Happened in 1971 product for a while and I think why it's important, just to toot our own horns, is because we're getting the attention of people outside the space and that's the ultimate red pill.

As you mentioned, Eric Weinstein, he's shilled Bitcoin to a sitting U.S. Senator on his podcast, the Ted Cruz podcast and we're trying to see if Eric will have a conversation with us, but keep going out into the world folks, keep learning about Bitcoin, ask the important questions, avoid logical fallacies, use critical thinking, think for yourself, question authority and buy Bitcoin. Not financial advice!

Peter McCormack: Okay and when do you turn WTF Happened in 1971 into a book because that book will fucking fly. Tell me and we'll discuss that!

Guy Swann: And documentary. I'll do the audio book, I got you!

Peter McCormack: Yeah, documentary, cool. I'd help with the documentary unless you're doing it already.

Ben Prentice: Collin's been working hard on the newsletter where we just shared little titbits. It's tough because we like keeping the meme intact where it's literally charts and just questions and we're encouraging people to ask questions. So it would feel weird to just write an entire book about exactly how we think you should think.

Peter McCormack: Do a pop-up book just to do the charts.

Ben Prentice: Well maybe.

Peter McCormack: Listen guys, this has been awesome. You're all welcome on the show whenever you want. I love talking to you all. You help me try and navigate things that I find kind of complicated because I'm not an economist. But yeah, big thanks to you all and good luck and see you all soon. Let's buy Bitcoin and fuck MMT!

Ben Prentice: Oh yeah man! Thanks again guys.