WBD391 Audio Transcription
Gradually then Suddenly Pt 4: Bitcoin & The Money Printer with Parker Lewis
Interview date: Monday 30th August
Note: the following is a transcription of my interview with Parker Lewis. 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 interview, I talk to Parker Lewis, Head of Business Development at Unchained Capital. We discuss the fraying of the fabric of society, money printing and the wealth gap and why politics are ineffectual.
“The Central Bank can control the supply of its currency; it cannot make people value it. And, if I know that the central bank can print trillions of dollars at zero cost, I will stop valuing that, as will everyone.”
— Parker Lewis
Interview Transcription
Peter McCormack: Parker, hello, mate.
Parker Lewis: Good to be here in Houston.
Peter McCormack: In Texas again where you're recruiting a lot of people and trying to get me to move too.
Parker Lewis: Everybody should move to Texas!
Peter McCormack: Everybody should move to Texas! All right, good to see you. Have we done this in person before?
Parker Lewis: I don't think so.
Peter McCormack: We've only ever done remote?
Parker Lewis: Yeah, I think we've done three or four, but they've all been remote and good to be in person, especially here.
Peter McCormack: Yeah, here in my hotel room.
Parker Lewis: We're setting up the Bitcoin meet-up in Houston, so we're going to be heading there from here and getting to do it in person. We've done a few Bitcoin meet-ups in Houston, but they've haven't been well-organised; this is going to be the first one that is really well-organised and cool to get all the energy folks here in Houston, oil and gas industry that are starting to really turn on the Bitcoin mind to get more engaged.
Peter McCormack: We're going to be heading to Dallas tomorrow.
Parker Lewis: Dallas tomorrow; BitBlockBoom this weekend. So, it's Texas week; we had BitDevs in Austin last week and then we had pleb.fi/Austin, which was a hackathon, a Bitcoin and Lightning hackathon over the weekend that Jeremy Rubin and Buck Perley organised. So, a lot of things going on in the Bitcoin world in Texas.
Peter McCormack: Yeah, man, Texas and Bedford!
Parker Lewis: That's why you're moving to Texas at some point in the future, to be determined.
Peter McCormack: Well, I'll tell you what the plan is; I'll tell you what's going to happen. I've been talking to my audio producer, Danny, who's been with me now for two and a half years, crushed it for two and a half years, we've never actually met because he's based in Australia, but he is English, we're meeting in New York in September; we're going to do a week together of producing shows in person and then what we're going to do is, early next year, we're going to do a month in Austin. So, we're going to come out, we're going to get an Airbnb or something, set up a studio and we're going to do a month of shows, get as many people in as I can and fly them in; it's like a test run.
Parker Lewis: You won't have to fly them in; they'll already be in Austin.
Peter McCormack: Not everyone; I might have to fly a few in. It's a test run for Austin, basing the show out of Austin; that is in the plans. A lot of things are changing next year which means I can do it. So, anyway, man, good to see you. Everything you're doing for Bitcoin and Texas is amazing. We don't want to have all the bitcoiners in Texas, because we want to decentralize people so let's not get everyone here.
Parker Lewis: Bitcoin's going to be globally adopted, so no matter how many bitcoiners I get in Austin, more are created every day. So, just naturally, as a function of the way that Bitcoin works and the way that Bitcoin's adopted, that's not a real concern. But right now, here and now, and a lot of people working on Bitcoin, it creates a really good environment to have people around each other and talk about ideas and that's how the network grows.
Peter McCormack: I think we're going to birth a bitcoiner right now; Alex here, who's come in to shoot this for us, he's not a bitcoiner, he's learning about Bitcoin right now, so we're going to birth a bitcoiner during this, hopefully.
Parker Lewis: While we're talking, we'll also be specifically red pilling or orange pilling Alex.
Peter McCormack: Yeah, we're going to orange pill Alex into this one. So, all right, we've done a series, and it was meant to be three shows based on your Gradually Then Suddenly series, which is excellent; everyone knows how good it is. So much great feedback. Then, at the end of the last one, you said you wanted to do one more; you wanted to talk about the money printer and the central banks, etc.
I also have been at a time when I'm really rethinking everything personally in terms of my show and where I'm going with things and my role in supporting Bitcoin, so I think there's a good cross-section here. We talked about a few things beforehand. I told you I'm thinking of selling my Bitcoin; we're going to have to go into that, because you're going to tell me not to and I'm going to tell you why. But there's a lot happening, so I'm here with a blank sheet; I haven't got my notes.
Parker Lewis: I'm going to need to know the why before I convince you out, so I need to know what I'm working against.
Peter McCormack: Well, we'll come to that. Like I said, it's a blank sheet, all the notes are on the computer, but I don't like to have a computer in front of me when we talk in person; you just find it distracting. Let's talk about the money printer, because you feel like that's a part of the series we didn't properly get into. So, if you want to explain why you want to get into that bit and then we'll start digging.
Parker Lewis: Yeah. I think that there's an idea that we didn't talk about which was a core part of one of the pieces that I wrote, which was Bitcoin is One for All. I think oftentimes, there's a question about is Bitcoin too concentrated amongst a few people and how will 7 billion people be able to adopt it? It won't be fair. Does it make sense to have a fixed monetary supply and what are the consequences of that?
I think one of the other things that is apparent within our country here in the United States, but also just globally, is that in many ways, it feels like the fabric of society is fraying --
Peter McCormack: Just a bit!
Parker Lewis: -- just a bit, and that pretty much on every single issue, current issue, whether it's pandemic and COVID response or whatever the next one might be, or if it was Trump, every single thing that happens is a Lightning rod, and that for all the ills in society, people are always looking to political solutions; left has its views of how to properly orchestrate society and right has its views.
The way that I really think about it is that any political differences exist at a fundamentally higher level, and that the actual economic structure and the monetary structure being broken is a lot of what is creating not only the division, but also why either political parties or political end of the spectrum, whatever views are proffered politically, can't actually solve the problem, because the root problem that must first be solved is one that's monetary in nature.
If we look at, again, regardless of political views, when Trump was president, trillions of dollars were being printed; when Biden is president, trillions of dollars are being printed. The only thing that enables the governments to run massive deficits is the central bank printing dollars to support it or, whether it's in Europe, the ECB, digitally creating, printing euros, to wherever it might be, it's the same story.
When people look at these problems and try to switch people in power and wonder, "Is that a definition of insanity where you keep doing the same thing and expecting different results?" only, in this case, it's both parties taking their own crack at it and getting the same solution and it's not working. In my view, that is fundamentally a function of the real problem.
There are political problems and political problems need to be resolved, but it is so much driven by, if you think about the orders of effects, it's you have to fix the money first; then there will naturally be a lot of problems that are solved as a derivative of that, but you're not going to solve, and this is a key part of the post that I wrote, is that the actual monetary structure that exists that is centralised, the Fed, the ECB, the Bank of Japan, the Bank of England, PBOC in China, that actual structure is what causes imbalance.
Oftentimes, people talk about the growing wealth inequality, and I would fundamentally argue that that expanding wealth gap, that exacerbation of wealth extremes, is principally a function of central banking; when you remove that fly from the ointment, that's when things can begin to heal. But they can't begin to heal until the actual monetary structure because the inherit problem in our entire economic system that's causing that is the current system in place, and Bitcoin is the option to opt out of that system into something that affords equal rights amongst everyone. Ultimately, when people can start to save in a form of money that holds its value, then that is what will actually cause balance to be restored.
So, one of the things that I tried to lay out and we can discuss, is people talk about wealth inequality, wealth inequality, wealth inequality. Well, inequality is perfectly consistent with economic balance. If you're Steve Jobs and you create the iPhone and a billion people use it, that person should be holding more money than someone that hasn't contributed value to anybody else; that’s the function of an economic system working.
So it's important, I think, to lay out from that start that it's not so much you're solving for economic equality, what you're solving for is economic balance. What you get in the Fed system or the ECB system, any central bank system, is it definitionally takes a world of imbalance, allows that imbalance to be sustained and then be exacerbated, and that's what Bitcoin will really solve.
Then, once it solves that core monetary problem, then we can have the debates about what is the role of government and the scope of government? There might be certain things that people disagree about, but everyone should really be focused on fixing the monetary structure, because everything else will fall apart if that falls apart.
Peter McCormack: Is wealth inequality the problem itself or is it the second order of effects of wealth inequality that certain people get pushed out of, being able to afford certain things, like the squeeze of the middle class that people talk about? Is that actually the issue, rather than people seeing a visual difference in wealth?
Parker Lewis: Well, I think that's one of the problems with the language, when everyone says "wealth inequality", it's these wealth extremes. In every economic system with balance, you're going to have a distribution, you're going to have inequality. So I think it's important that when we talk in those terms, it's understanding that distinction; basically, there's a wealth imbalance in a way that is not sustainable.
There are two few interests or people controlling too much of the economic share in such a way that, if the Fed didn't exist or the ECB didn't exist, that imbalance that is allowed to be sustained -- it's like if you take a structure or you think about it, and I go back to the 2008 Financial Crisis, because I think it's helpful to define what I mean by imbalance, you have a system where it has unsustainable home values; those home values are starting to come down and correct and people who have savings in dollars and are on the lower part of the economic structure, houses actually become more affordable as that’s happening. But what the Fed basically does is they step in and they say, "No, we need to target asset prices or we need to target price stability", because it's core to their mandate.
What that does is, as that imbalance is self-correcting in the economy to be eliminated, it takes this unsustainable imbalance and says, "No, we're going to stay right here and actually, we have an economic view that is we need asset prices to be driven higher". Then, what happens is you are in a position of imbalance. The economic structure was saying, "We need to right-size this; we need to eliminate imbalances", and that's what happens naturally as prices fluctuate and prices correct.
So, when we talk about wealth inequality, I really think about it as inequities that are created as a function of the monetary system, not so much is wealth inequality a problem? Wealth inequality is a very natural state. It is, if you've acquired wealth in a system that is fair, that’s not manipulated on the monetary side, in that world imagine a fixed supply of 21 million Bitcoin. If you've got a lot of Bitcoin, that means that you definitionally delivered a lot of value to others; if someone delivers less value, then you will ultimately have fewer Bitcoin.
Peter McCormack: That's not necessarily true right now, because some people could hold a lot of Bitcoin because they've exploited the current system. Are you talking about in the future?
Parker Lewis: Well, I'm talking about as an economic system, because I think about Bitcoin as an economic system. As 7 billion people adopt Bitcoin, in the Bitcoin system in order to get Bitcoin, you have to transfer value to some other existing Bitcoin. There are 18.7 million Bitcoin that exist today, there will only ever be 21 million, so if anyone that's coming to adopt Bitcoin, whether they've profited off of the flaws and the legacy system or not, they have to transfer value to somebody else to acquire that. There's always somebody willing, voluntarily on the other side saying, "Here, I'll give you my Bitcoin for this price".
When I think about that conceptionally, it is in order to get Bitcoin, you have to deliver value in the free market, regardless of who principally has Bitcoin today or not; that key concept that, if you were to acquire money in this monetary system, you must deliver value to somebody on the other side. In the Fed system, 80% of all dollars that have been created have been created since 2008. So, in the dollar system, that is not fundamentally true; you can either get dollars by delivering value to somebody else and be compensated, or the Fed will step in and allocate dollars.
What it ultimately does is it gives people that have benefited from that imbalance a second bite of the apple and a third bite of the apple and a fourth bite of the apple; because necessarily, if there is imbalance and you come in to stabilise asset prices, you're stabilising assets that have benefited the people from the system being significantly weighted or skewed from people that are trying to rise up in the economy that don't have assets.
Peter McCormack: It's essentially the Fed is fighting against what Ray Dalio talked about. I did an interview recently with Dylan LeClair, because he wrote an article referencing that video, that famous Dalio video which I'll include in the show notes, about allowing the system to self-correct.
Parker Lewis: Correct, yeah. I think about money, because it's the economic good that coordinates all other economic activity essentially, I think that the most fundamental aspect of it is -- and this is something that there are few pieces by Hayek like we mentioned them on past podcasts. One is The Use of Knowledge in Society, where he talks about the wealth of a price system. And everyone, if they walk around their daily lives, the price of food at the grocery store, the gas at the gasoline station, everything in life there are prices and they're communicating economic signals. They're taken for granted, but they only exist because the world converged on a single form of money.
As the world converges on a single form of money, a price system begins to emerge from that. Once the world converges on one money, they're essentially all pricing their own goods and services and that is how they then communicate economic value; it's this idea that value, as a concept, is inherently subjective. Money is one of the key parts that helps us objectively evaluate or value things that are subjective in value.
So, if you start to think about it that way, that it's concept of price and changing prices which are ultimately an aggregate of human preferences, if I demand a lot of gasoline either someone has to go and get more gasoline or the price of gasoline going's go up, but then as that price changes, it sends a signal to the rest of the market and people might decide, "Hey, it's really beneficial if I'm in the business of helping get gasoline to the gas station"; but then, as more people do that, then prices come down because supplies increase because people react to price signals.
So, it's this idea that as prices change, that is the entire process of an economic structure finding balance. So, if I go back to the 2008 Financial Crisis example, when the housing prices are coming down, that's the market economy, all the people in the market saying, "Actually, I prefer other things", or, "I need dollars for other things and housing needs to come down because there's an imbalance". So, that is actually the market taking an imbalance and trying to eliminate it; the preferences are changing, and we only know that as a function of prices.
So, I think about money as that governor; it's basically, as people speculate and pursue essentially games of trial and error to say, "What do other people value?" they're doing that based on changes in prices; that's the input to their behaviour. It's essentially like a cheat sheet, "What are the things that I want to pursue? Well, there's podcasting. Well, if I do this, people will pay me X". Well, you're only concept of X is because you know what everybody else values in terms of what those prices are and you see other podcasts, you see an opportunity, so you follow it.
Then, if a bunch of people get into podcasting, it's not going to be valued as much. But maybe as a whole it is, but only the top people that have the highest quality get paid. But it's that appreciation for, as prices change, that guide individual decisions, then as they correct it's a very natural function, it's a very precise function, I'm not going to say precise, but it's a function of taking imbalance and eliminating it to find an equilibrium or balance.
What the Fed does is it takes those imbalances and as that housing market comes down to correct, it says, "No, we can't have that, because we need 'stable prices'". That's where it's the exact opposite of what you would want; it's there is imbalance, we need to find balance and in Bitcoin, because you can't manipulate the money supply, you can't manipulate price signals. If you can't manipulate price signals, what that means is that whenever imbalances exist, they will far more quickly correct, because there is not an exogenous market force to step in, like the Fed, and print $3 trillion to keep prices right where they're at. If the market economy is swimming downstream, the Fed and its actions are causing everyone to turn around and swim upstream, basically.
Peter McCormack: So, it's absolutely essential to have a fixed monetary supply; it can't work without this?
Parker Lewis: I would say that, if there is a mechanism that is exogenous to the economy, which is the Fed printing money, there's a current set of dollars that exist, and everyone's out there working and pricing their business services in dollars and then the Fed can just unilaterally change the game and double the money supply, then that currency that underpins the economic structure and the economic coordination function, it basically sends false price signals. When you have false price signals, it causes economic distortion and ultimately economic imbalance; that literally is the root of these massive wealth extremes.
So, it’s not to say that you need a fixed money supply. There is a reality, and it might be a subject for another day, there is a reality that a fixed money supply is the optimal supply of money when it doesn't change, because it eliminates the supply of money as a function that's creating distortions in the function of price setting, which are preferences, which are constantly creating imbalances and then eliminating balance, creating and eliminating. So, I'd say it's a reframing of the comment; your question would be, "No, you don't need a fixed money supply, but you do need one that can't be created arbitrarily".
Peter McCormack: So, consistent. I know some people would disagree with this entirely, that any form of inflation in the money supply of Bitcoin is completely not acceptable, but I think what you're saying is if it exists, as long as it's consistent, that would be fine, but it's the arbitrary ability to go in and just suddenly have a massive change because somebody wants to make that decision?
Parker Lewis: Well, I would frame it a little bit differently. The ability to arbitrarily create money is a fundamental problem; it's the worst possible scenario that you could ask for. If you were evaluating five options of money, one where somebody in a far-off land can come in and immediately double the money supply and most people in the economy have no concept of that, 99% of people don't know that the Fed printed $3 trillion or what the implications will be; that's the worst end of the extreme.
So, it's the difference between the ability for arbitrary money to be inserted into the system by people that are very few in number versus the other end of the spectrum, which is having the predictability of something being fixed. It would be to say that, if you had a form of money where you could reliably count on the fact that it only increased 1% a year, that would be better than the Fed being able to come in and print trillions of dollars, but money is ultimately an AB test.
So, if there was money that increased 1% a year and there was this other money that had a fixed money supply, each individual economic actor would be rational to opt in to the form of money that didn't have some marginal amount of inflation, because ultimately that inflation is exogenous to the actual functioning of a monetary system or a price system.
The price system, what you're learning from it is relative value, value of individual goods, value of money itself, what its purchasing power is, but then also literally how many cars you have to build to buy a home or how many apples you've got to produce to buy a car. The information that's actually of value is that relative price signal and the changes in prices.
So, the fixed money supply is the polar opposite of one that can be arbitrarily increased, but anywhere in between those, you're always going to be making AB decisions. You can't think in aggregates and think, "What's best for society", you have to think about, "What would an individual do if they had the opportunity to opt in to a form of money that couldn't be debased?" because that debasement does not benefit the holder of the currency.
Oftentimes, people will think about, "Oh, well, there's really risk, and people have made 'millions of dollars', that they just own Bitcoin, a fixed share of a money supply that can't be altered", they immediately think to wealthy people and they think that system doesn't benefit them. One of the tweets that I included in my piece was a quote from Vitalik Buterin where he said, "The idea of owning a fixed supply of all the world's money indefinitely into the future seems very oligarch". But the thing that's actually true is that, by creating that environment, you can essentially ensure the same rights for the poorest people on the spectrum versus the wealthiest people on the spectrum.
So, if you are somebody in Nicaragua, the second poorest country in the Western Hemisphere, and you deliver some good or service and got paid in Bitcoin, you have the same rights within the Bitcoin network as Paul Tudor Jones in New York. In the legacy financial system, the billionaire class has massive preferential benefits from the way that that structure is created versus most people, to the fact that everyone is incentivised, if you can just opt into a system where there cannot be inflation, that means that the value you've delivered to the world can't be artificially or arbitrarily debased based on somebody else's incentives.
So, in that regard, it effectively levels the playing field by ensuring equal rights, because the other scenario is, well, what is the mechanism by which inflation isn't introduced; who gets to do that; by what function? Clearly, well I don't want to say "clearly" because most people don't understand gold, but if we're comparing gold to the current version of central banking, you actually have to go mine gold out of the ground, you've got to perform work to do that; you can't do it arbitrarily, it costs something to do. In the case of the Fed, it costs literally zero to print $3 trillion, it costs zero to print $10 trillion, or zero to print $20 trillion.
Peter McCormack: Do you ever think about the trade-offs though and some of the benefits that exist by having the money printer? So, in times of crisis, the governments had the ability to put their hands into the money printer and be able to help society or help groups of people as a whole? I'm only doing this, not because I fundamentally believe the net benefit is to have a fixed monetary supply, but do you also think about the fact there are certain things that maybe have advanced quicker because of the money printer?
Maybe medicine's advanced quicker, as with everything else, because there has been more money that's been able to be put towards those things; do you every think about that and the trade-off? What do we lose?
Parker Lewis: Yes, absolutely. Addressing the last part of the question first, it's like, "Well, how would Venezuela feel?" They might have accelerated some advancement in certain technologies that could be in hospitals, but then if your monetary structure breaks down and you can't deliver energy to the hospital and it's unsustainable, then did you do any economic good if you ended up in a worse spot ultimately?
So, I would argue that you could look at individual technological advancements and would say, "Hey, we actually got that quicker", whatever might be, medical devices or whatever it might have been; but there is a reality that the end game of printing money, if the government can print trillions of dollars, there's a very fundamental truism I would say, which is the central bank can control the supply of its currency, it cannot make people value it.
If I know that the central bank can print trillions of dollars at zero cost, I will stop valuing that, as will everyone. Not everyone has to be rational economic actors, but ultimately their time is scarce, their time is limited on Earth, and they're not going to go put in 10 hours, 14 hours a day of contributing value to somebody else for a unit of currency that can quickly be debased at zero cost. So, I think that the right perspective on that latter question is thinking about it from the concept of, you might have accelerated something, but if you can't use it into the future because it's unsustainable, it's ultimately no good.
Peter McCormack: But is there anything we lose where you're like, "Okay, there is a benefit to having the printer here but, as a net effect, it's not worth it?"
Parker Lewis: I think the only benefits are short term; it's trading the long term for the short term, which is not a great winning strategy. It's going to make things feel good on a very short-term, interim basis, and it's going to cause massive economic disruption over the long term. I would look at it, because when you get into the fundamentals, you're like, "Oh, well, we got all of this great medical device equipment because we made money basically costless, but these massive wealth extremes and the poorest people on the economic structure can't access it; how great is that?!"
So, I would say in no scenario, for fundamental reasons because I acknowledge the end game and I acknowledge that it ends in ruin, we wouldn't ever want to trade the short term, or accept a short-term benefit at the cost of the long term, because in this scenario, the long term event of a currency hyperinflating is cataclysmic; it's also, when we look back at history, the marginal cost to produce any good is where its value will trend.
I think, when people start to get into the economic fundamentals of saying, "Why, if I go to work and produce value for somebody else, can the government just decide to award money to somebody else because they think that that's what we, collectively, or at least our country and believe Britain as well, is founded on the individual, at least the United States is", and we're not trading the interest of individual over the collective; we ultimately are, but it's also when you think about organising people, if you allow each individual to make their own decision, the aggregate of those will add up to a greater collective whole too.
But you have to just focus on the individual and their individual rights, and that is something that you're stripping from them when you put the government printing press in the hands of 12 people sitting in Washington DC that are entirely disconnected from people in Kansas and people in Texas and people in Florida and people in California.
So, when I bring it back to maybe the first part of your question which was, "What about times of crisis?", and that's a question that I honestly get quite often, but I also think that it's a false dilemma. There's nothing about Bitcoin and there's nothing about a fixed money supply that prevents the ability of a government to step in in time of crisis; there's also nothing that effectively prevents a central bank. The only thing that has to happen in a system where there's a fixed money supply, if you want a central bank or you want the government to be able to spend a certain percentage of the economic share, is you actually have to fund it.
In a world of Bitcoin, you can have a central bank, you can have a lender of last resort, you would just have to capitalise it. The only way to capitalise it would be to actually capitalise it with Bitcoin. The way to do that would be to tax people. That way, you put it all out in front on the table where you say, "We think that it's important that we have these pools of Bitcoin or pools of monetary capital to be able to save for a rainy day, and we want these public institutions to allocate it". That is not what you have today; you have the worst kind of that.
You don't tax people, you print it in a way that they don't actually have representation over it, and that is the fundamental problem; it basically strips the people's right to decide how they're going to be organised.
Peter McCormack: What do you think has changed though, because when I look back at, certainly in the UK, economic history, there are times when the governments have run a surplus and times where they've run a deficit, but it felt like they were always trying to balance over time. But it feels like this last decade, two decades, that idea of balancing the governments' books seems to have gone out the window; it's just like we can run a permanent deficit and that deficit will grow to any level we want. The debt ceiling has no meaning anymore in the US; it was a thing and now it isn't. What do you think's changed?
One of the things I think about, I've mentioned it a few times, I wonder if it's got anything to do with the fact that we are now a global economic system and the first country to blink loses.
Parker Lewis: No. I would say that it stems from the Financial Crisis. The Financial Crisis happened in the eyes of the Fed, or central bankers all over the world, or politicians all over the world.
Peter McCormack: But that was a global financial crisis.
Parker Lewis: Sure, but something fundamentally changed from 2008 going forward and that it was the world, in their mind, was collapsing. If the Fed hadn't stepped in, every Wall Street investment bank would have filed for bankruptcy.
In many ways, because of the way that the Fed system works, the banking system has gone from rather than just being another sector of the economy, it's basically centralised where everything has to go through the banking system. I think the perspective was, "Well, if the banking system collapsed, everything's collapsed", but the reality is there's actually a real-world economy; there's actually infrastructure that exists.
But what happened was, in response to that financial crisis, the Fed printed $3.6 trillion. It was crazier than anything that they have ever done, and because of the way the system is actually constructed, because people don't understand it very well, what they saw was trillions were printed and we didn't see hyperinflation. They didn't understand why but they then assumed, "Well, we can do this for ever"; they can't do it forever.
The reason why they can't do it forever is that that fissure that was opened in 2008 never went away and it was actually that fissure which was an unsustainable credit system which dictates, and it exists in every major developed economy, it's not specifically the United States, that the central banks and the governments had to continue to print money to prop up the crisis, otherwise that system will collapse. If that system collapses, it will create instability, but again that is trading the short term for an adverse long term.
Peter McCormack: But it feels like that could be happening now.
Parker Lewis: Right, but, when they saw actions being taken, trillions of dollars being printed and they didn't immediately see the inflation show up, they thought, "Ah, we can do this; we can play God". But it wasn't so much that they could actually play God, it was that they didn't understand the cause and effect of what the Fed was doing.
Peter McCormack: Why do you think they did get away with it economically, why they didn't see hyperinflation?
Parker Lewis: The reason is that, at the time of the Great Financial Crisis, this is just specific to the US, there was about $52.5 trillion worth of dollar-denominated debt. In the banking system, there are only approximately $350 billion, so every dollar in the system had essentially been lent out more than 150 times.
Also, because of that dynamic, because the size of the credit system, which had only gotten to that point because of 30 to 40 years of every time there was an economic slowdown, think about every time there was an economic slowdown, think about that as economic imbalance, and when the Fed would step in to put more dollars in, it would prevent that imbalance from being eliminated.
Peter McCormack: It kicked the can.
Parker Lewis: It just slowed, kicked the can down the road. But more than that, it would actually cause an imbalance to grow, bubbling up under the surface, massive wealth extremes where you don't have an economy that can function in a symbiotic way, where too few people are contributing and owning the productive assets of society, and the people on the lower end of the economic spectrum just continue to fall further and further behind; that whole thing came to a tipping point in the Financial Crisis.
But if you think about that dynamic of $52.5 trillion worth of dollar-denominated credit, and what I reinforce for people is, oftentimes people hear about the Financial Crisis and they hear about strippers having five homes and CDSs and CDOs and whatever it might be, that's not derivatives, that's not unfunded pension liabilities that people oftentimes quote about the Federal Government; the $52.5 trillion is just vanilla debt, or least what existed at the time; so, think mortgages, student loans, credit cards, federal debt, state debt, local debt, corporate debt.
Fixed liability fixed maturity debt, at the time of the Financial Crisis, was $52.5 trillion; there were only $350 billion. So, when the Fed steps in and inserts $3.6 trillion from 2009 to 2014, the amount of debt, the system is still far too many dollars short, so, they're essentially buying credit instruments to put new dollars in. Essentially, what that does on a very short-term basis, is it de-levers the credit system by putting more dollars in that can support all the debt.
That combination of factors is why, because the credit system is so large, it is the marginal price setter and, when you put those dollars in, all you were doing was putting dollars in to ensure that the credit system didn't immediate collapse. Then, what happens is, inflation starts to appear, and the purpose of putting of those dollars in is to allow the credit system to expand, because that credit system is so much larger than the base money supply; that is how inflation ultimately comes through.
So today, we're at a point where, in 2008, the credit system was $52.5 trillion; today approximately, I did not check though the last quarterly report, it's about $85 trillion. So, as the credit system expands, it always needs more dollars otherwise it will collapse. But it is that amount of debt, which is essentially future demand for dollars, that creates short-term stability in the price of dollars, because the entire system wide is today still $80 trillion short.
So, that debt system, or the credit system, is what creates relative scarcity for dollars such that you can put in another trillion and the whole thing doesn't immediately collapse. But as you do that, each individual person starts to figure it out slowly. They figure it out initially for those that don't know that the Fed's printing money, through their local prices; cost of bread goes up, cost of cars goes up.
Peter McCormack: Which we're seeing now; we're seeing a lot of evidence of that now.
Parker Lewis: Yeah, but it happens through the credit system up until the point where everyone figures out that it's actually a game of musical chairs, and it's not five people walking around with only four chairs, it's 20 people walking around with 1 chair.
What happened in 2008 was governments, central bankers, looked at it, they fundamentally did not understand; they do not understand that dynamic. They don't understand why it didn't immediately cause prices to double or triple. Effectively, the Fed increased the money supply by 8 times over 16 years. People looked at it and said, "Well, we didn't see inflation so therefore let's keep going, boys". Ultimately, everyone who has any common sense, or a lick of common sense, will look at it and say, "This is crazy; it's not going to end well"; then the political elite look at it and say, "But we had to do it".
I think that, if you're actually in the market dealing with the implications, then you will look around and you will say, "It was crazy; it's not going to end well". As those people in the market look around and say, "If the governments keep doing this, I, out of self-preservation and as a survival instinct, I have to find a path to opt out".
Peter McCormack: Well, it's politically not popular.
Parker Lewis: What's politically not popular?
Peter McCormack: To solve these financial problems.
Parker Lewis: Well, I think it's politically palatable to kick the can down the road.
Peter McCormack: Yeah, of course, because you want to win your next election and keep your seat, keep your party in power. It's not going to be politically popular to turn around and say, "Do you know what, we can't print any more money. We're going to go through a massive economic shock; we've all got to ride this out together". It's not politically popular.
Parker Lewis: It's absolutely not. One of the things that I did on my path to Bitcoin was, I went back and read the transcripts from a lot of Fed meetings and you start to understand the psychology of people in power. There might be a scenario where these people are just incredibly evil and they're just trying to fuck over poor people; that's a scenario.
Peter McCormack: I don’t buy that.
Parker Lewis: I don't buy that either, but I also do very firmly hold that they do not understand the consequences of it, their actions, and you can't judge people by their intentions but by the results of their policies.
When I was reading those transcripts, there was a particular quote from Ben Bernanke; it was in 2011. The Financial Crisis was in 2008, 2009, the Fed inserted about $1.6 trillion into the system between 2009 and the middle of 2011. So, they had increased the base monetary supply in the banking system by about 5X. Things started to recede back; basically the world was going back into another financial crisis and there was the European Debt Crisis. It went from recovery to shit was getting bad quickly.
Ben Bernanke had a quote, I believe it was in August 2011, a Fed meeting, and one thing I reiterate for people is that the Fed transcripts don't come out for five years, so what was happening in 2011 doesn't actually come out until 2016, so nobody knew about this at the time. He basically said, paraphrasing but close to verbatim, that he was willing to accept that monetary policy wasn't the solution and that the problems were a combination of fiscal and structural but, "We must be palatable". What he was basically saying, "I can recognise that we're not the solution, but we must do something".
There's a reality that common sense people have that inaction is an action; if you keep doing something and it's not turning out well for you, you don't just keep doing it. In the case of the Fed, the problem is that they keep doing things that don't work, but they also have the power and ability to keep doing it in a big way to say, "Yeah, we're going to create $1 trillion today, [or] we're going to create $3 trillion over three months", and everybody else has to face the consequences.
If anybody knew or had that knowledge, they would opt out of it if they could. Not only would that not be how they behave in their current lives, because they're constrained by market forces and the consequence of trial and error, but they would say, "Stop, let's re-evaluate. I can't keep ploughing money into this thing that loses money or I get fired from the same job five times; I can't be pursuing this job". They'd have to stop and re-evaluate. In the Fed's world, it's like, "No, we can just keep going".
The beautiful thing about Bitcoin is that we just eliminate that ability; we eliminate the ability for people, essentially outside of an elected government, because technically the Fed is a private entity, from screwing with our money.
We basically said anybody who opts into Bitcoin and says, "I'm willing to opt into a system voluntarily where nobody gets to print money, including myself, but that is a better alternative by opting into a system, which is a Fed system, that is somebody gets to print money, it's just not me; I don't know who it is and I know why they do it. They might think that they're acting in my best interest but I'm the person that decides what my best interest is".
Then, when you add up all those individual decisions of hundreds of millions, if not billions of people doing the AB analysis, which one of those two things do I want to opt into? If I contribute value to other human beings, and they pay me in a form of money that somebody else can't arbitrarily devalue the amount of work that I put in?
Peter McCormack: Yeah. So, have you gamed this out? I'm asking if you have; I'm sure you have, but how this plays out. Because I can imagine for a long time, we're going to be in this dual position of sovereign currencies and Bitcoin. You see a future on a certain timescale where perhaps we end up not having the Fed or the ECB and government changes, but have you gamed out how that actually happens? It is a shock to the system; is it a slow collapse? How do you see this playing out?
It's really hard to imagine a world where we don't have governments controlling the money, because we've always had that in our lifetime and my parents' lifetimes. Have you gamed that out?
Parker Lewis: Timing is the hardest thing to predict. I would say that I try to go down to micro decisions, individual decision points, economic incentives. Every individual has the opportunity to contribute value into the world for the benefit of others and to determine what form of money they want to store the value that they're not immediately spending in. They have an incentive to choose the best form of money, the form of money that is going to give them a combination of a range of access to purchase things from other people, as well as assurances that that money will be accepted by people into the future.
The greatest assurance of that is that the value that's stored in it is held over the future; that creates the greatest incentive for other people to adopt it. So, I can't game out exactly timing; I can partly game timing.
Peter McCormack: Time's not important, more what actually happens.
Parker Lewis: Yeah. So, I would think about it behaviourally, as more people, as knowledge distributes, as more people learn about Bitcoin, as more people learn about money for the first time -- like you said, money has always been a function of government. For anyone who's alive today, it is true that that has always been the case. And for the first time that is not the case or it's not the only option. The more people evaluate that question, the more will opt in to Bitcoin.
If all value is subjective, there are objective ways to evaluate what is going to be a more functional as money. It's very clear in the AB test between Bitcoin and the dollar, Bitcoin and euros, Bitcoin and the yen, Bitcoin and gold, in my view, because of properties that have emerged in Bitcoin, its fixed supply, the ability to transmit it over the communication channel, the ability to divide it into very small or large units, or aggregated in large units, that in that AB test, 99 out of a 100 will choose that.
But adoption, just because I have that perspective, doesn't mean that the path to adoption isn't a hard one; people have to pursue that on their own interest. You'll never be able to explain Bitcoin to someone that isn't curious about knowing about it. But there's also a reality that, as more people adopt Bitcoin, it becomes easier to adopt, not just because there's more infrastructure, even though there is, not just because there's more educational content; it's because more people have looked at this equation, stared, been perplexed by it and then come to understand it, oftentimes thanks to your podcast.
But then, as that happens, there's a virtuous feedback loop. As more people have adopted Bitcoin, the value of the monetary system is larger, it can afford more capital to build more infrastructure to make it easier to use and more people can contribute to content around it to package ideas; those ideas, over time, just as a function of the market, determining what is good content, what is bad and it being refined, becomes easier to earn. But then, at the end of that day when there are 100 million people that have Bitcoin, number 100,000,001 is a lot easier to adopt than when there we 1 million people and the 100,000,001st.
Peter McCormack: Well, Greg Foss said it to me recently, he said, Bitcoin is a better buy at $35,000, I think I was surprised when he said it, than it was at $1,000. Obviously, if you bought it at $1,000, held it up to $35,000, that's great for you, but if you're talking about the safety of an investment in it, it's a safer bet at $35,000 than $1,000 because there are more participants in the market, there are more people you can pay for things from or receive from; it's just a whole bigger infrastructure.
Parker Lewis: Yeah, and there's also a function that, as Bitcoin is adopted by more people, its value rises. The value of a monetary network that has 10 million people is less than the value of monetary that has 100 million people, and it's not just 10 times more valuable. That is because the number of potential trading partners doesn't just go up one yearly; it goes up exponentially.
Peter McCormack: Like the telephones.
Parker Lewis: Yeah. But also fundamentally, as more people adopt Bitcoin, the network itself becomes further and further decentralised at many different layers and, as that happens, the credibility of its fixed supply of the core rules that ensure there will only ever been 21 million Bitcoin, they're not static. There are a core set of rules that don't change but, as more and more people adopt Bitcoin and as the network becomes more decentralised, it becomes functionally harder to change those rules.
So, the credibility of Bitcoin's fixed monetary policy of 21 million gets more and more credible when it's 100 million versus 10 million, and it will be when it's 1 billion. So, those are the incentives that dictate how this happens, but I also think that, to that question of sequencing, while the timing's unpredictable, there is a way to think about if there are 365 days in a year and there are a certain number of people, how many people come to learn about Bitcoin every day?
If there's more content about it, if the price is going up, if it's talked about on the news, if congress is starting to give it credibility by saying, "We need to legislate certain things", more people learn about it. So, the actual distribution of knowledge accelerates and the propensity to adopt, because the hurdle rate is now lower as more people adopt, it will accelerate. What will ultimately happen is people will be looking around and they will start to convert things that are monetary substitutes into Bitcoin, like bonds, stocks, real estate.
There are a lot of things that people have started to store their wealth in that's intended to be passive as a way to outstrip or outrun the central bank printing money. When they realise that they can opt out of that whole game, they will sell those assets for Bitcoin, because they've found a superior alternative to do what they were always intending to do.
As they do that, as they start to sell bonds to buy Bitcoin, why own a US treasury that yields 50 basis points when the government is 2X or 3Xing the supply of currency? That essentially will accelerate, it will impair the credit impulse at the same time that it's inducing the credit system to contract which, because it's as leveraged as it is, it will induce basically the credit system to collapse, not because of Bitcoin, but because the system itself is so fragile and so unsustainable. As that happens, it will actually accelerate the "need" of the central bank to print more money to keep the system propped up. So, it will actually feed on itself and accelerate.
Whether the critical mass of Bitcoin holders is 10% of people, or 20% of people, it's unclear, but I think psychologically once it gets to that point where it's like 1 in 10 people have adopted Bitcoin, or 2 in 10, 1 in 5, things begin to really accelerate; the marginal cost to adopt Bitcoin and the uncertainty about it becomes lower and lower and its value proposition is inversely related to that.
Peter McCormack: Yeah. It's really interesting, because it feels like we're a lot closer to that point than I thought we would be doing this run. I didn't expect to see companies coming and buying the amount of Bitcoin they were. I certainly didn't expect to see a government making Bitcoin legal tender which is, what are we, two weeks away from that; 7 September that happens. I think that is going to be a very interesting, essentially, project for Bitcoin; we'll see how that plays out in El Salvador, or see what actually happens to the country.
How much of your eye is on that as almost like a testbed for a lens into the future of what Bitcoin can mean for a country where it is legal tender there, where it is essentially taking them away from their own government for the things they can do? We know they don't have their currency as it is, but it's putting them in a very different situation.
Parker Lewis: Yeah. I think that it will do wonders for El Salvador ultimately. I think that in terms of the grand scheme of Bitcoin, what its most important function is is that it normalises it, it re-anchors what is this, because one brave soul or a group of brave souls were willing to be early in that. But the same thing is true of virtually everything.
So, Michael Saylor, the first person to come out and say, "I'm shifting over my corporate balance sheet to Bitcoin to the tune of 90%", to the tune of maybe now it's 95%; always, definitionally, somebody has to move first. But I do agree with you that I wouldn't have expected a company like MicroStrategy to come out and do that as early as they did, or El Salvador.
But to that question of it feels functionally different today than it did 24 months ago, and a critical thing happened which was there was a massive imbalance in the credit system. People attributed it to COVID; COVID might have exacerbated it, but when the Fed came in and printed $3 trillion in three months, that took people from being a frog in a pot of water that slowly boils versus throwing a frog in a boiling pot of water.
It was everyone had been lulled to sleep by the decade that happened after the Financial Crisis and we were returning to some level of normalcy. Then, when that fragility started to reappear, that day in March, 12 March, and the Dow Jones was down 10%, high yield and investment grade credit were both down 25% in a matter of a few weeks, then the Fed came in and basically said, "We're going to print all the dollars in the world. There are no limits", Neel Kashkari got on 60 Minutes and said, "There's an infinite amount of cash at the Fed". There are people in the market, like Michael Saylor, the president of El Salvador, Paul Tudor Jones, whoever it might be, that otherwise would not have woken up out of a trance, and they were like, "Holy shit, this is real!"
It was the Band-Aid being ripped off. Now that they're paying attention, because they can't not be because it was like they were just punched in the face versus death of a 1,000 cuts, now each incremental action that the Fed takes, I think they printed $150 billion in June alone, that was nearly 2X, or maybe it was $160 billion, it was 2X the height of the prior QE programmes; each time they do it, people are more cognisant of it. They know now that there's an alternative, or at least more people are figuring out that there's an alternative.
So, next time the Fed steps in and prints $1 trillion, and it won't be long before the next trillion comes in, in my view, everyone is at the front of their seats and they're actively searching out. At that same time, the propensity to adopt Bitcoin is becoming greater and greater, because more people have crossed over that path. They've looked at the equation, they've had to ask the fundamental questions and while there is a lot of speculation, the signal that they find is that 21 million and they figure out that that is the solution to this very problem that's staring at them square in the face, which is their government printing money, putting their business at risk, putting their families at risk, putting their livelihoods at risk, because they know that it won't end well. They're not willing to sit back and just accept somebody in a far-off land fucking up their lives.
Peter McCormack: So, do you think much about what this means, because I've talked to you about one of the things on my mind at the moment is governance and political instability and the polarised society politically on every specific issue, and I'm constantly trying to imagine a Bitcoin world but also just a world where people are bit more cohesive? How do you have anarchists and libertarians and people on the left, on the right, and apolitical, how do they all coordinate and work together? I know Bitcoin is a tool for this, but I can't get my head into the place where I think, "Well, what will this world actually look like?"
A certain amount of power was taken away from the government with this; they become a provider of services, which we all know is something which would be a preferred way the government operates, but I can't actually picture this world. What is the role of government; how will it exist? What does it mean for police forces; what does it mean for medical services; what does it mean for fire services; what does it means for conservation or protection of parks or protection of areas of natural beauty, all different things that governments do?
Look, I know they're shit on a lot of other things, but there are other things I think they do better, will be done better centralised. How do you think about all that? It feels like a really different world, and I don't even know if it will happen in our lifetime.
Parker Lewis: I expect it will.
Peter McCormack: You think it will?
Parker Lewis: Yeah. So, the good thing is we'll get to see them, and we can come back and talk about it. But the way that I would frame it is that, whether it's all of the division and the role of government, I think keying in on an individual problem or circumstance that I think everyone agrees on, which is there are exacerbating wealth extremes, and that is a problem. What people disagree about, again there are a lot of things that people are divided about and a lot of people have problems about, but just keying in on that one, about 50% of the people in the United States don't have $500 of savings; I think, whether someone's on the left side of the spectrum or the right side of the spectrum, that's a problem. I don't know any logical person that would look at it and say it's not.
They may not understand the extent of the problem, and it's actually their own problem because it's going to result in economic instability or we already have economic instability, and everyone has an interest in finding economic balance; where the extreme comes in is what the right solution is. The beauty of it, as well as the problem is, it's not something that they can fix. The only way that they can then come back and have a discussion to think about problems at a higher level is once the money supply gets fixed.
The solution is not political. It's both the blessing and the curse, because the curse is they all think that it's, they, whoever thinks that there's a political solution to something, thinks that there must be one. But I think the analogy that I use is trying to clean the windows on the 100th floor of a skyscraper when the bottom 10 floors are a Jenga set with only one square left. What's the purpose of working on the 100th floor to fix a problem that is so much higher up in the order of effects versus fixing the foundation? The blessing is that the foundation has been fixed, everyone else just has to figure it out in their own time.
So, I don't think that it's so much what is life like without government, and it's not that we're not going to have parks and it's not that we're not going to have EMS and Fire, it's that we're just going to have to pay for it via taxes, and that when you do that, you'll find out what people actually value in government performing. Because, government either performs the function or somebody else does. If it's of value and people value it, they will figure out a way to get that value delivered. My own personal philosophy is there are ways that people decide to organise themselves; we have a republic.
If somebody wants to go out, because I think at a fundamental level, go through the FUD experiment of ignore that there's the United States, go out into the middle of the country, find a river and set up an encampment; then people will come along and they want to come and abide by your rules, or you set a certain set of rules, someone wants to benefit from some sort of economic structure that you've put in place, a water system or a waste management system or a telecom system. Somebody, if they want to come into your ecomics, then they've got to play by your rules, but you also tell them how those rules get set and how they change.
There's nothing about Bitcoin that fundamentally changes that, it just means that the government can't spend money that it doesn't have and that, through the function of having to actually pay for things via taxes is if the government right now, Congress, if they came out and they said, "Hey, Americans, we're going to tax you $5 trillion to pay for this budget", it would never get done; they'd all be fired.
Peter McCormack: That's why they have to print.
Parker Lewis: They do that because they can, because they don't actually have to do the unpopular thing which is to tax and pay for it. Any common-sense person would say, "Well, shouldn't it be fine that they can't print money to pay for all these things, because how do we know what we actual value if they're just printing money to do it? Put the bill on our table and say, 'Hey, we want to go do this thing over here; we're going to need to tax you to do it' and people would say yes or no". There will be an equilibrium, it will just be far smaller than what it is today.
Peter McCormack: Yeah. It's fascinating to watch. It's funny, when I talk to different people involved in Bitcoin about different things, with you it's primarily about the role of money and I think the first interview we ever did was that, but I think we should move on and talk to this point because I was saying to you before that I've been thinking about selling my Bitcoin, so we should cover this.
Parker Lewis: Blasphemy!
Peter McCormack: Blasphemy! I know what you're going to say, "Actually, you need to hold Bitcoin, have skin in the game", certain things like that, but I think we might even have had this conversation before.
Parker Lewis: I don't think so.
Peter McCormack: I thought we had.
Parker Lewis: Maybe.
Peter McCormack: I've been thinking about this a lot, thinking about governance, thinking about Bitcoin and I feel a certain sense of responsibility with producing content, and sometimes I wonder if I produce content which suits my Bitcoin. So, my last show, I was talking about the Willy Woo shows, which are all about trading and making more Bitcoin, which are really fascinating shows; I learn a lot about it, but actually, at the same time, is this about serving the good of everyone where they understand Bitcoin?
I'm repeating myself, but my interview, whilst it really impacted me, I have not been able to stop thinking about that question, what are we doing? I know Bitcoin Twitter isn't the real world, but it is fighting, yelling at each other, memes, being mean, whatever, and I'm a hypocrite myself sometimes, and I was thinking, "How could I be as subjective as possible, trying to be a semi-interviewer/journalist in doing this?" I was like, "I think I need to sell my Bitcoin".
Parker Lewis: Yeah, I would think that you have to look on this as two fundamentally different actions, because there's also the alternative which is, "Maybe I should not produce content for Bitcoin". If you start thinking about it that way, "I have two decision points and they're totally independent of each other; there's produce content for Bitcoin, not produce content for Bitcoin; or holding the best form of money that's ever existed versus not". Those are two independent decisions and they're independent of each other. If you say, "Okay, imagine that I did not report on Bitcoin".
Peter McCormack: There's no scenario where I sell my Bitcoin and don't make Bitcoin content.
Parker Lewis: Well, no, but I'm saying you'd have to go through the thought exercise to be able to understand why you're drawing a false dilemma for yourself.
Peter McCormack: We're doing your first principles here, aren't we?
Parker Lewis: Yeah. But it's, you don't produce content for Bitcoin. What is the right economic decision for you as an individual, and for you as your family? If you don't hold money that's going to preserve its value into the future and you're determined to hold euros or pounds, and your family becomes impoverished, was that a good economic decision?
So, you have to think about that fundamental question, and then you come back and say, "Okay, now I'm producing content, am I really being objective about how Bitcoin works or doesn't work, or my perspective of it?"
If you, on a personal level, have made that decision as an individual to say, "Okay, ignore the fact that, whatever I do in the world, I need to store my value in a form of money that is actually going to be functional in a future", otherwise this scenario is ruinous for you and your family, then you're like, "Well, if I come to that personal decision that that's what's best for me and my family", then there's nothing that exists at a higher level that is in conflict with a position that you take.
You wouldn't be sitting up here, and I think about it by what I do, building a Bitcoin company that helps people that secure their Bitcoin, producing Bitcoin content, having 90% of my wealth plus in Bitcoin, I am very incentivised to know about whether or not I've made the wrong decision.
Peter McCormack: That's fair, yeah.
Parker Lewis: Ultimately, each of us has to be making that decision. If we're wrong, we're the ones that are most incentivised to know that we're wrong and to get the hell out as quickly as possible. Maybe it'll be a little bit unethical if I came to that decision that Bitcoin is not the best form of money that's ever existed and sold my Bitcoin and then told everybody else about it, but so long as you hold that core understanding of Bitcoin and that that fundamental view is right, then it's a question of the quality of your journalism. It might be objective; "Well, did something come up that gave me a concern and I didn't say it because I want more people to view it?"
Peter McCormack: That is happening.
Parker Lewis: But that's a question of objectivity and then if you're conscious of it, then be more objective, not sell your Bitcoin; you're conscious of it already, so you've figured it out. It's just a matter of changing your behaviour, not selling your Bitcoin.
Peter McCormack: I'm selling my Bitcoin now, maybe a little bit.
Parker Lewis: You can hold your Bitcoin and be more objective if you need to be.
Peter McCormack: Yeah.
Parker Lewis: But I think the other side of it is that when I talked about the way that Bitcoin is adopted, if I step out of your role and into mine, if I, through my company, with my team, with our team, if we build a piece of infrastructure that makes holding Bitcoin more secure that people can store their wealth and in a way that they can sleep at night and know that it's going to be there and that it can't be lost, the actual network increases in value. More people can look at it and say, "Oh, I can have a larger percentage of my wealth in Bitcoin versus any other asset"; that doesn't mean over 50%, but the more secure it is, the more I'm willing to store in the network. Those two things are corelated with each other.
So, as I'm out there as a team, or as we're building as a team, that infrastructure, it's actually making the currency itself more valuable, not in totality, but because now there exists a piece of infrastructure, as is another company building some other piece of the infrastructure, that is not static. But as the infrastructure gets better and better, more and more people get brought along to benefit from it; it's not zero sum.
The same applies to content; if the fundamental is true, which is not the case with altcoins, the founders and people they benefit, they become super wealthy and all the other people get rekt. In Bitcoin, if you're building infrastructure, it literally allows for other people to more securely access those same benefits.
Technical people might have been able to do it five years ago; now we're making those same things that technical people did five years ago available to normal people that aren't as technical. So, that value transfers onto them.
Same thing exists with content; if you're working based on the right fundamentals that Bitcoin is functional, viable as money, is the best form of money that every existed, I hold this as a core understanding of the way that Bitcoin works vis-à-vis any other money, and then I'm producing content about it, then you also are contributing that value because it would be actually the opposite.
If you sold your Bitcoin and you were writing about it, you were producing content about how good or bad Bitcoin is, it would be incoherent. You would be like a profiteer; you would have the wrong incentive. You would just be doing things to "make money to get the most eyeballs", not necessarily align to contribute, because if you're producing bad content in Bitcoin, people will turn you off; it's a game of trial and error, and there's a very high market signal for that.
Peter McCormack: Yeah, and that signal turns up in strange places, because the signal isn't on Bitcoin Twitter, that's the interesting thing; it's actually in my emails, that's where the signal comes. It's one of those interesting things. My content is driven by who writes to me and what they say, not what people shout on Twitter about, which is why recently I've been saying, "Actually, I'm going to start talking to people who are politically on the left, a bit more".
I'm getting a lot of people coming in just asking me questions, similar to the questions I asked you a moment ago about what happens about conservation and things, not to say that I am a lefty myself and not to say that I'm trying to push Bitcoin in a different agenda, but those questions are being asked. I think that's actually also a function of Bitcoin's growth this year, the amount of people it's expanded to.
If we got all the nerds and the weirdos and the crazies now involved in Bitcoin, and the radicals, this is permeating the mainstream; it's going to be people on the left and the right, which by the way are different wherever you are in the world. In the UK, we talk about the left and the right, it's very different from here in the US, but there is a lot of demand now from people who I think are a bit more in the mainstream.
Parker Lewis: Yeah, I do, and I think that there are people who will have those questions of like, "Well, how do we know this whole fixed supply thing is a good idea?" Those people are going to have to go through their own rigorous thought processes, and they're going to come in with a firmly held belief that this collective view of the world is a better world. As they get into the functional viability of money and how it works and what its consequences are, they will come to the conclusion that the Fed system has fucked over poor people. Now, in order to get there, they're going to have to work through a lot of biases that the opposite is true, but that is the point.
The Fed will come out and say -- there's a quote from Jerome Powell where he's like, "There are a lot of things that are… ", he was basically specifically asked, and I don't think that Jerome Powell -- I think that his policies are terrible but it's a function of the Fed more so than any individual, but he was asked, "Do certain people think that QE led to an expanding wealth gap?" and his response was something where he basically stuttered along and said, "There are a lot of things, there are a lot of theories about what's causing an expanding wealth gap, monetary policy isn't one of them".
Now, when each individual thinks about their own actions and their own incentives and then multiplies that out by every other person that exists in an economy, they will figure out that the Fed's function takes a world of imbalance, which definitionally says there is a skew that is unsustainable, and allows that to continue to exist into the future; it exists, £1,000 on people's shoulders who are on the lower end of this spectrum that are trying to rise up. Certain people are capable for doing that, but the deck is stacked against them.
Bitcoin will, ultimately, bring people together. Once they can come in and understand, "Hey, we agree on this as a monetary structure", then they can actually figure out what it is they disagree on, and I believe that there will be a lot less.
I was thinking about this political divide and how it's really important that Bitcoin not be political, because it isn't, it's monetary. Things of political organisation exist at a different functional societal level, but it's that Liberals are going to love Bitcoin when they figure out what it will do for people on the lower end of the economic spectrum and that have lower income levels, and Democrats are going to hate it. Conservatives are going to love Bitcoin when they figure out what it's going to do for government deficits and Republicans are going to hate it; we're going to figure out who are the real people and who are politicians, basically.
Peter McCormack: Are you orange pilled, Alex? Are you in; are you in Bitcoin? We've started you on the journey. I think we should go and get some barbecue, or some food anyway.
Parker Lewis: That's it!
Peter McCormack: Anything we didn't cover that you wanted to cover today, man?
Parker Lewis: No, I think we covered it all. Any questions, anything you need me to talk you out of?
Peter McCormack: No, I'm just in a phase and I do this. I think what it is is, three or four times in my life, I have self-sabotaged. It's very selfish on a personal level, it's like, "Okay, I've peaked. This is easy; turning up every week, having a conversation". If I interview you, I need five, six main questions and then a few responses and you will wax lyrical about Bitcoin and I'm fascinated; I just sit and I consume it all. But it's got too easy; I'm like, "What's the next level now; how do I level this up?"
So, it's just a period. I'm very transparent, as people know, and I'm happy to do it on camera, I don't have to hide who I am; I'm just saying I'm going through this moment, I've been a little bit disillusioned recently, and I'm just thinking, "What are we doing?"
Parker Lewis: I think, yeah, you need to step out of the, "What are we doing?" and get to your audience and see how it's delivering value to them.
Peter McCormack: Well the thing is they'll usually, on something like this, I'll get 10, 20, 30 emails that say, "No, you're doing a great job; carry on, carry on", but it's like, "I'm not sure if that's the right answer". So, I'm just thinking about what's next; where do we go next with this? How do we go from 1 million a month to 10 million and what is the conversation that needs to happen? It's on my mind, but this was very helpful.
Parker Lewis: One thing to think about, and it might get redundant for you, but when the next 9 million people, I think there are probably 10 million people that have any material exposure to Bitcoin, I've seen estimates of 150 million total people in the United States, let's assume that there aren't 10 million listening to Bitcoin podcasts. When they are, they're going to need to hear the same things.
Peter McCormack: I know, I know.
Parker Lewis: Then, people probably transition where, once they get Bitcoin, they probably consume less podcasts, but then there are going to be 10X more people that don't necessarily want to go back and listen to a podcast from two years ago, and you might be in a position of not wanting to recreate the same old content where it feels redundant. So, the question is how you continue to create a medium that communicates those messages and puts those same type of people out so that more and more people can understand it.
I think the goal, ultimately, being that -- I think Michael Saylor put out a tweet where it was, "How many hours have you spent studying Bitcoin?" rather the goal should be it takes fewer and fewer man hours to understand Bitcoin, to get to the point to understand why a fixed money supply of 21 million is a superior form of money, that it is credibly enforced, and that because it is, that that's going to obsolete all of the money, figuring out how short a timeframe.
That's the way that you align your incentive with your guests, because once that's done, once everybody in world has bitcoinised, you don't have to talk about Bitcoin anymore. Maybe you could stop before then, but your incentives are aligned with your guests. If your goal is to help people understand Bitcoin in as short a period of time as possible so that they can get on with the rest of their life, the benefit of it is once you have a form of money that can't be debased, at least in my experience, with a lot of people in my network, you actually think about money, you worry about money less. You can get on with your life; you can focus on doing the things that you actually value.
Learning about Bitcoin is only fun until the point that you get it, and then there's a period thereafter where you want to tell all your friends, but we'll get beyond this point, and it'll likely be in the next ten years, where everything's Bitcoin, and we've got to back to solving other problems. It's not that it's most important, because there are a lot of things in life that are more important than money, but if we don't have a working economic system, if you don't have money, the quality of lives that we live today are going to degrade significantly; that's what will work in the interests to preserve.
Peter McCormack: Well, I'll stick with it for a while anyway! Man, I always love talking to you, Parker.
Parker Lewis: You should start billing in Bitcoin to further align your interests and your audience.
Peter McCormack: Again, it's another thing I've thought about. So, I've done it a little bit. I had two sponsors pay in Bitcoin; one paid a whole year in advance back in February, great time. There becomes a problem if, at the end of this year, we go into a bear market and we have drawdowns. I've had it before where I've had sponsors pay in Bitcoin and I've held Bitcoin --
Parker Lewis: But just align yourself with your customers; stake Bitcoin. You've done very well, you're dealing with these internal, "Am I objective?" being paid in it.
Peter McCormack: It's a tricky one because I still have a lot of bills to pay in dollars, well pounds actually. Look, it's on my mind. I think I bill maybe 10%, 20% in Bitcoin, I might be up to 50% whatever, but it's definitely something I'm going to think about. Cool. We need to go and eat; I'm hungry.
Parker Lewis: All right. Let's do it, man.
Peter McCormack: Good to chat to you.
