WBD679 Audio Transcription

The Pragmatic Apocalypse with Balaji Srinivasan

Release date: Tuesday 4th July

Note: the following is a transcription of my interview with Balaji Srinivasan. 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.

Balaji Srinivasan is an angel investor, tech founder, and author of ‘The Network State’. In this interview, we discuss the idea of starting new countries ("network states”), based on social networks built around a shared ideal that can monetize effectively. We also talk about how and why the media ignores major global news stories, and how to prepare for the coming collapse.

“What’s to come, is, I think, very different than 2008 because 2008 was just a financial crisis… and the central bank was able to print and bail out the banks. With this fiat crisis, there’s no other level to bail it out. That’s why it’s a self-bailout. It is a mass seizure of assets. It makes the entire hidden part of the government come out and show its truncheon.”

— Balaji Srinivasan

Interview Transcription

Peter McCormack: Balaji, how are you, man?

Balaji Srinivasan: I'm good.  Good to be here.  What is this my third WBD appearance?

Peter McCormack: So, we did our first one together in San Francisco.  I think then we did a second one, just you and me.  Then we did one with Glenn Greenwald.  So, this is our fourth. 

Balaji Srinivasan: Fourth or something like that.  Yeah, but it doesn't feel like -- it feels good, good cadence.  It's not that frequent, but yeah.

Peter McCormack: We get to chat privately a lot, so I get to pick your brain on this crazy world and I go get my Balaji take.  If I'm confused, I'm like, "Balaji, what, how the fuck, how do I interpret this?"  So, I feel lucky to get that privately.  But listen, look, the show you made with Marty, I'm not being hyperbolic here, it's the best podcast I've heard all year, maybe for a couple of years. 

Balaji Srinivasan: Wow!

Peter McCormack: Well, it answered a lot of questions for me, or it rationalised some things I don't completely understand because we live in this super-polarised world of tribes and sticking with your tribes and people not giving any ground.  And as somebody who's trying to understand the truth between tribes, it becomes difficult.  So, it either answered questions for me or pointed me in the direction of things I was trying to understand.  It took me about a week to get through it because I listened to podcasts when I was walking, so it was over about four walks, but I loved it and big shout out to Marty for that as well, congratulations, great show.

So, we don't want to re-walk that one and anyone listening should probably go and listen to that before this.  My first question might be --

Balaji Srinivasan: Is this the sequel? 

Peter McCormack: Well, no, that's not fair on Marty, because Marty should do the sequel for his review.  But there are questions we've got.  But as best as you can, and I don't know how long this will take you, can you TL;DR that show so people understand what we're going to talk about? 

Balaji Srinivasan: Yes, okay.  So, the show is called The Fiat Crisis, it's on the TFTC podcast, and it is a survey of kind of where the world is as of right now.  And fundamentally the two premises, if I reduce to just two premises, can the US print infinite money; and, does the US have an invincible military?  If you believe one or both of these premises, that puts you on kind of one side where you think that the current order has a lot of hit points, it has a lot of energy, it can keep going for a while, it has a huge lead, and so on and so forth; it can tolerate all the mistakes it's been making.  If, however, you don't believe either of those points, that puts you in a totally different world.  That puts you in a world where we're on the brink of very serious changes to the world order and it's important to kind of prepare for that.

Now, of course, this being a Bitcoin show, a lot of people will trivially agree with the first point, okay, that the US can't print infinite money.  It's actually the second point though, which is interesting there, because a lot of, certainly not all, but a good chunk of Bitcoin people are conservative, they supported the military or something at some point, and often they haven't heard a story about why the US Military might be weaker than it looks.  They've only actually, in fact, heard the opposite.  They've seen Transformers, they've seen Independence Day, they've seen all these movies where GOV is portrayed as GOD, right?  The government is portrayed as literally God.  Whether you dislike or like the US Military, whether it's portrayed negatively or positively, it's always portrayed as powerful, right?  And that is an implicit thing that shapes your worldview. 

If, for example, it was the Bolivian Military that was called on to save the day or if the decision went to the Bangladeshi leaders' desk for the for the big decision in the movie, it would break the suspension of disbelief, because wait, they can't project power and so on.  Nothing against those countries, they're perfectly fine people.  But that that second point on the US Military maybe not being infinitely powerful, not saying it doesn't have power, but that being infinitely powerful, if you take both those two things together, you get into a different world. 

You know why actually those two premises are equivalent, that being able to print infinite money and having an invincible military?  They seem different, but arguably one is sort of the left statist and one is the right statist, right, in the sense that the left statist believes that you can print infinite money for domestic programmes, the right statist believes in the strong father model that the US Military can go and beat up anybody abroad.  But these two are almost like two different pillars that support each other because if you can print in for money, well of course, you can buy all the guns and weapons and soldiers and so on that you want. 

Conversely, if you have an invincible military, then no matter how much you devalue your currency, others will be forced to accept it.  No matter how many sanctions, freezes, etc, you have no option because you could also frame in a positive way, the defence umbrella is worth the cost of everything else, right?  With the invincible military on your side, no one can invade you and that's worth more than even losing half your savings over time.  And so the thing is that I actually put up a poll on this.  And you know what it came out as?  I was surprised at the results.  Here, I'll bring it up.  But why don't you guess?

Peter McCormack: What?  Poll of both of those questions?

Balaji Srinivasan: Yeah.

Peter McCormack: Well, your audience is going to be skewed.

Balaji Srinivasan: Yes.

Peter McCormack: So, I would have loved to have seen that poll from you, but maybe a couple of other people.  But I would have thought, my expectations are people would have thought, "No, they cannot print infinite money, but no, the US Military cannot be defeated".

Balaji Srinivasan: So, here's the results, which were actually -- I thought this was going to be an obvious poll, but it turned out that I felt I hit the nail on the head.  This is the branch point philosophically.  So, do you see the results here?  25% of my followers said infinite money.  Now of course, what I really mean here is print infinite money without consequence.  Does it have an invincible military?  Practically invincible relative to everybody else, right?  But the results were surprising to me, where 10% roughly of my followers said invincible military, and a full 55% said yes to one or the other, and 45% said no to both.  That's surprising because -- go ahead.

Peter McCormack: Well, because I would have voted no to both, because I think they're intrinsically linked.

Balaji Srinivasan: Yes.

Peter McCormack: I don't think you can have an invincible military with infinite money because you weaken your state.  But even more importantly is, does anybody want to test the invincibility of the military?

Balaji Srinivasan: Well, Russia and China kind of do want to test the invincibility, right?  Or rather, what is happening, I mean, and so I don't want to recap the entire TFTC podcast, but I'll just show you a couple of graphs, okay?  So, here's just a couple of graphs on that.  The thing is that people have to just be realistic and you should know, the greatest strength is to know one's own weakness.  And if you're operating from a position of reality, you'll do better than not, right? 

So, for example, take this graph, okay?  This tweet over here, I thought it was totally obvious, it got 3.3 million views because this is not part of the narrative, right?  Basically, people think the US is just completely dominant and it can force countries to decouple from China.  Here is a graph showing, in the year 2000, which country was a bigger trade partner, and China only had like African countries and Central Asia and so on and so forth.  By 2020, that had completely flipped.  The vast majority of the world has its primary trade partner being China, and this has only accelerated in the last three years.  So, if the US pushed the country to decouple and to choose the US or China, the country probably doesn't want to decouple, but if it's forced to choose, it may not pick the US.  Okay, number one. 

Number two is, this is a graph of steel production.  Okay, can you see that on screen?  And lots of people are like, "Oh, the US, it'll turn it around like it did in the 1940s or the 1950s.  Don't you remember we did World War II scale production?"  I'm like, the world is completely different from that era.  We recognise how different it is socially, okay?  All kinds of social change has happened since then, but it's also different geopolitically, industrially.  This just puts a figure on it where over there, this x-axis is time.  That's about 1967, 1968.  And the US to China ratio of steel was like about 10 to 1 in the US favour that way; China's just a thin sliver of red. Now, today, China makes more steel than the rest of the world combined, and it's a 10 to 1 ratio the other way.  So, if it went from 1 to 10 to 10 to 1 that's like a 100X turnaround in steel production.  

It's just a completely different world, right?  You cannot assume that the US is effortlessly dominant, because any kind of conventional war is about who can crank out more ships and planes and bombs and drones and whatever, right, and the scale of what China can do is just so insane that people don't realise it.  Just to give one more.  You know people will say, "Oh, China doesn't have a blue-water Navy, therefore the US --" this is like Zeihan's line, right, "China can't build a navy", or whatever.  You've heard that before?

Peter McCormack: Yeah.

Balaji Srinivasan: Yeah, okay.  Again, to put some numbers on it, the ratio of China's merchant shipbuilding to US tonnage is on the order of 100X to 300X.  They built 23 million gross tons of shipping.  And if you've seen these shipyards, they're just these gigantic things.  And US yards built like 70 to 200,000.  This is reality that we're talking about, right?  This is basically a 100X turnaround, and of course, that makes sense, it comports with our general observations.  The West de-industrialised it, it shipped all of its low-margin things overseas, and for 45 years, the Chinese were grinding in sweatshops while Americans were watching Friends in the 1990s, right?  And that was a good trade seemingly at that time, for both parties. 

But it's like the concept that you could just turn around the US and turn it into what it was in 1945 and have cranking out boats and ships and planes and so on, and then beat China in a war.  The analogy I made in the TFTC thing, and just to wrap that up, is it's like an 80-year-old guy who remembers that he could bench press 225, 300, okay, and he walks over to the rack because he remembers that was him 60 years ago, and he walks over and he tries to do 225 for reps.  What's going to happen if he hasn't worked out in 60 years?  Yeah, exactly, right?  That is the mental model of all these guys who have been raised on World War II movies and stuff, and they think the 80-year-old man version of the US is the 20-year-old man version. 

Now, I'm not saying there can't be rebirth and regeneration, there can be.  That's what, when we have a child, that child is somebody who in their teens is strong and healthy, just like the old man or whatever, right?  But that's a whole thing to regenerate and rebirth a civilisation.  India has done it, China has done it, arguably Russia did it to some extent after the Soviet Union, not great.  Poland has done it, Estonia has done it.  It is possible to have a civilisational rebirth, okay?  I'm not a doomer in that sense of it's over forever.  Sometimes it's over, the Assyrians aren't around, the Chaldeans, all the guys that got slain in the Bible, whatever, right?  But it doesn't have to be over, you can have a rebirth, but not unless you're realistic about it. 

So fortunately, some degree of realism is starting to filter in on this a little bit.  People aren't as in denial on this stuff like a year-and-a-half ago, okay?  I'd say over the last six months, there's a great degree of realism on the foreign policy side of, "Wait a second, China's actually a formidable force, they're not going to zero". 

But the reason I say these two things is it leads to a totally different world.  And it requires a lot more words and graphs to describe that world, and here's why.  To just say the world will continue as it is, I don't need to update your role model.  You know where the borders are, you know where the laws are, you know who's in charge.  One of the reasons that something like the attempted Russian mutiny, coup, whatever you want to call it, attracted so much attention is, everybody understood that if that happened, it would have ripple effects for the whole world order.  All kinds of things could break and change quickly, and it's still an unseeable situation, who the heck knows what happens?  That's what I would call a rational thing to pay attention to as opposed to, let's say, the Titanic sub thing.  I know that dates us to exactly when this discussion's happening.  But the Titanic sub thing, I feel bad for those people, but it doesn't really matter in the grand scheme of things.  The coup or whatever, that really matters. 

So, the issue is that if the world is going to change, first of all, it could change in a lot of different ways; and second, it requires a lot of words to describe that.  But first, I do think that those two premises, (a) that the US can't print infinite money, and (b) that it doesn't have an invincible military, now let's go into that direction.  With me so far?

Peter McCormack: So, where I'd want to focus in on that is that we're clearly seeing a shift in the world order and certainly on the side --

Balaji Srinivasan: You're on the outside, you're Brits so you can see it.  But the closer you are to the US, the less they want to see it, the more than denial they are about it.

Peter McCormack: Yeah, so I mean to us or to me, it's really obvious, travelling between Europe and the US and seeing what's happening.  And I even was at lunch with Robert Breedlove this week, and even just his experience of coming into Europe and spending time in the UK, I think he can see a different world, even though we speak the same language, a different world.  The way he referred to it, he said what he believes is that the US is like a petulant child.  It's in some ways an immature country, it's like that petulant teenager, whereas we've got a more mature, grown-up, wise society. 

I think that's a fair way of explaining it because I see this changing world order and definitely, we've all seen it on the financial side of things.  We've seen what's the rise of the BRICS nations, we've seen Saudi pulling away from its relationship with the US, we've seen countries discussing different ideas, maybe a different global reserve currency, we've seen people move into Bitcoin.  I think Balaji, most people listening to the show, in the end, what they really care about is, "What is going to happen to me?  If this world order shifts, what is going to happen to me?  What is going to happen to my money?  What is going to happen to my savings?"  That's in the end what they're going to care about. 

I care about one slightly different thing.  You talk about the infinite money printer and the invincible army.  We've had probably two decades now of proxy wars that we've seen, Syria and now in Ukraine. 

Balaji Srinivasan: Very expensive also. 

Peter McCormack: Very, very expensive. 

Balaji Srinivasan: Trillions and trillions and trillions of dollars, yeah, and lots of people dead, obviously. 

Peter McCormack: Yeah, and to achieve what?  It's almost like some of it seems like posturing to show that they still have a military or they still have influence on the world.  But I think what I'm trying to get to is that when you talk about an invincible military, I don't want to see that tested.  If there's a change in the balance of powers, so be it, but I don't want to see a world where the US has to, on a global scale, prove the invincibility of its military.  Because World Wars to me is something that happened in the past, something in the history books.  Even yesterday, me and my son were looking for a film to watch.  He said, "Do you know what, Dad, I've never seen Saving Private Ryan".  I was like, "Well you need to see this film".  And so I want him to understand the context of a World War, but to me that's history, that's in the past.  I don't want to live through a World War.

Balaji Srinivasan: Sure. 

Peter McCormack: And so, if there is a changing of the world powers, how's it going to happen?  Or, is there anything America, as a country, can do to walk back its current position?  Sorry, there's a lot there.

Balaji Srinivasan: Yeah, there was a lot there.  So, a couple of thoughts on that.  One is, have you been to Asia recently?

Peter McCormack: No, when's the last time I've been to -- no, I haven't been for probably about four years.  Three years, maybe.

Balaji Srinivasan: Okay, all right, so you've been like three years ago, right? 

Peter McCormack: Yeah. 

Balaji Srinivasan: But which parts of Asia?

Peter McCormack: I've been to Cambodia, Vietnam, Thailand, and Japan.

Balaji Srinivasan: Okay, so, all right.  So, that's a wide variation because Cambodia is a lot poorer, right, but Vietnam is doing quite well nowadays, you can feel the energy on the ground.  And in general, it's funny because I think there is -- so, the UK versus the US is tricky right now because the UK is, along with Germany, going to be hit by this upcoming fiat crisis first and very hard.  You know, living standards, I don't have to tell you guys you're living through that now. 

But your infrastructure and other things are better, you have a greater sense; that's, I think, the sense in which you mean by maturity, where there is a greater sense of the public good, there's less acting out and crazy things happening in public.  There is more of that than there was in the old posh Britain, but it's not as bad as the fight club that a lot of, unfortunately, the US has become.  And, you see that streamed on Twitter, but I don't think it's atypical.  That's an unfortunate part, right?  You see a lot of World Star type fights in many places, in the middle of San Francisco, in downtown, it's not just a few people, it's actually a larger and larger thing in society.

Conversely in Asia, you see order for the most part, you don't see for the most part random fights.  And in general, I think, I mean this to me is completely obvious, but it's also controversial I guess, but let me say it anyway.  If the 1800s was the European century and the 1900s was the American century, this is the Asian century and the internet century.  Those are the things, like what am I at a very, very high level, what am I bullish on?  Technology, India, China, Asia, and individual Americans.  There are individual Grey Tribe Americans, like tech Americans, who I still think are world class. 

What I'm bearish on is basically the western world order.  The closer you are to the G7 and so on, that's what I'm bearish on.  And I can give a ton of graphs, and so on, on this, but that's a different world.  And one way of thinking about this is there are plenty of individual Indian people and Chinese people who did well over the 20th century.  But did their countries, did their regions do well?  Not really.  They were under socialism, they were under communism, wasn't a great century for Indian and Chinese people as a whole in terms of their country.  Individuals did fine, some of them, if they could make it to stable jurisdictions.  There was Singapore and there was Taiwan and there was Hong Kong.  And it wasn't easy to found Taiwan, but broadly speaking, it wasn't a great century for them. 

I think that that's unfortunately what's going to happen with the G7 countries.  It's almost like a flipping of the 20th century.  This is my thesis of history running in reverse.  Again, I'm not going to recap the whole TFTC podcast, you can listen to that.  But now to your question is, what do people do next?  Again, I could be totally wrong.  I'm just giving my worldview and this is how I see it and you can totally ignore me and so forth.  So, with all the disclaimers and caveats up front, here's at least how I think about it, okay?  Allocation, location, organisation.  Allocation is kind of obvious in the sense, if you're watching this podcast, or whatever, you're in -- what episode are you guys on? 

Peter McCormack: 680?

Balaji Srinivasan: 680, okay.  If you're watching the 680th episode of a Bitcoin podcast, I mean you're probably allocated somewhat into Bitcoin, okay?  And if you're not, you should get on that, or whatever.  But allocation is kind of the easy part in some ways, but let me go a little more depth in that.  If you saw what happened with the Russians or the Canadian truckers, that I think is just a preview of what's to come. 

I mean, think about the 2010s, okay?  At the beginning of the 2010s with social media, Twitter was called -- they were calling themselves, "The free-speech wing of the free-speech party".  It was so outside of spec to believe that they'd do censorship, de-platforming, all the kind of things that became not just standard but endorsed by huge swaths of society towards the end of the 2010s.  It was a total U-turn on the social contract.  You had gone and built up a bunch of followers within this network, and then you'd built up political or social capital, and then suddenly it was weaponised against you.  And there were reasons for that, because in the middle of the 2010s, social media went from a completely unimportant thing, a fad, a bubble, etc, to threat to democracy.  And so because of that, "Well, to protect our democracy, we must restrict your speech", you know?  Like to protect the votes, we must restrict the upvotes.  And I think that's funny.  And so there was an institutional defence and push on this. 

In the same way, it took a long time for people to realise that the legacy media had been weaponised against them, that social media had been weaponised against them.  People are going to need to learn faster that the legacy of financial system is and will be weaponised against you.  When I say weaponised against you, I mean all the stuff that sort of like in test, freezing Russian assets, justifying seizure of Russian assets, freezing Canadian truckers, unbanking dissidents, unbanking sex workers and so on and so forth.  It's happening actually across the political spectrum and it's basically that group that doesn't have social support that that financial system is no longer impartial towards them.  And of course this Fed now, I know they're calling it "not a CBDC", but that's just a linguistic thing.  It is centralised, central bank digital control, even if it's not a central bank digital currency; that's crucial. 

So basically, one way of seeing that, and I have a visual on it, what they do is they often will change the words to make it seem okay, "Oh, it's not a CBDC, therefore it's okay".  You know a CBDC is bad, it's not a CBDC, therefore it's good.  Well actually, here, central bank digital control is not the same as CBDC.  And I can just show you, just look at this visual.  Can you see that image?  Yeah, okay, every payment is centralised through FedNow.  And what do they say?  Zoom in on their own freaking documentation, what does it say?  "The FedNow service validates payment message and sees that it complies with applicable controls".  Okay, meaning, what does that mean?  That means that they are figuring out whether they can block the payment. 

Then over here, when you look at their marketing collateral for this, okay, what do they talk about?  All the different kinds of transactions, person to person, consumer to business, etc.  Here, let's focus on this, consumer to government, meaning drain your account.  Government to consumer, stimulus money.  So, now, I'm not saying these things can't be used for good, but they will be used for bad.  And it's kind of like a gun in the hands of a police officer versus the hands of a robber.  It's a tool that can be used for good or evil.  I mean, there's many other things that are like that.  But in theory, if you had a government that had earned a lot of trust, if it was, for example, I don't know, the US Government of the mid-century or something like that, maybe you'd trust them with this.  If you could leave with your money or something like that, just like you might put some money on a crypto exchange, they can freeze the funds, but you trust them for that time period with that fraction of money, you're taking a risk in return for the reward, the benefit.  These are not like high-trust societies anymore. 

So anyway, the point is, the financial system is going to be weaponised, and that's step two.  So, first, the legacy media, social media is weaponised; then the financial system is weaponised; and the third system will be unfortunately, probably military.  So, it will be media, money, military.  And how does that work?  Well, media, they're lecturing you, they're telling you you're a bad person and so on.  Now people don't trust the media.  So, if you notice that head of the Hydra has kind of retreated.  It's no longer hissing at people and trying to cancel them and going after them every day on Twitter.  There's a fallback order where that head of the Hydra has retreated.  And there's like a period of, I don't know, six months or whatever, and suddenly, another head of the Hydra just comes hissing out, and that's the Fed and the Treasury and so on and so forth, with the banking crisis, but much more is going to come, in my view, if you look at this. 

Then, if they can't do soft power and get you to submit that way, and if they can't use the monetary system against you, because you're out with Bitcoin or something else, then it'll be hard power.  So, that is kind of how I see things playing out, media, money, military, because money is somewhere in between.  It's not totally soft power, it's not convincing you, but it's not as in your face as hard power.  The ability to freeze somebody's account is not just trying to convince them otherwise or cancel them.  You no longer can cancel them.  And what's fundamentally happening here, you want to jump in?

Peter McCormack: Well, so what I'm thinking is, what are the decentralised counter attacks?  So, when you talk about money, military and media, I think Bitcoin, Second Amendment and Joe Rogan.

Balaji Srinivasan: That's part of it, yes.  I mean, that's like an American response. 

Peter McCormack: Yeah. 

Balaji Srinivasan: But I think at least the way that I visualise this, here's how I visualise this.  You can take the domestic theatre and the foreign theatre and you actually visualise them as the same thing.  Why?  You visualise them on a network.  And I know it sounds trivial, but it's not.  At the centre of that network right now is called Blue Tribe.  Blue Tribe is the US establishment, mostly Democrat but also some Republicans.  And Blue Tribe, for the last ten years, has been at war with Red Tribe, the Conservatives, Grey Tribe, the tech guys, okay, and those are different.  The Conservatives want a return, they want to go back to the past; the tech guys, tech libertarians want to push the future; the Blue wants to hold on to the present.  So, it's the present against the past and the future.  And that's actually an interesting way of thinking about there are genuinely different groups.  You can go to a four-tribe or five-tribe model, but let's say there's three tribes. 

Then outside, obviously Blue Tribe is at war with the Russians, now hot war; they're at trade war with the Chinese; but also, there's a lot of criticism of India, Israel, France, Hungary, and then even like lots of centrist members of Blue Tribe, who may not be even red or grey.  And so Blue Tribe is basically fighting a global battle against almost everybody that's a threat to its power.  And in 2021 or 2022, it kind of looked like it was winning all of those battles, maybe until basically about, let's say, late 2022.  Late 2022, it feels the momentum has really shifted.  With Elon taking over Twitter, that was a crucial, crucial thing, because now speech is free.  And with speech free, you can feel the Overton window very rapidly moving in the other direction, with a velocity to it.  Things that you couldn't even say two years ago or three years ago, you can say and get much, much more support for it.  You know Timur Kuran, Private Truths, Public Lies, are you familiar with that? 

Peter McCormack: I know the title, I don't remember his name.

Balaji Srinivasan: Well, this is a good book okay, it's worth reading.  It's basically about -- here, pull this up.  So, Private Truths, Public Lies, The Social Consequence of Preference Falsification.  So, preference falsification means people believe something in private, but they say something else in public, and they don't know what other people believe.  And so because of that, people can't align and coordinate properly, because the control of speech and beliefs in the public square, they have a hidden belief that is not the same as public belief. 

This is what happened in the Soviet Union.  Once they freed up speech, once Mikhail Gorbachev did glasnost and allowed free speech and he allowed free markets with perestroika, then everybody could speak freely and find out, "Oh, you don't trust regime, I don't trust regime either.  Oh my God, well, he doesn't trust regime".  And so there was a preference cascade and then the whole thing fell apart within a few years.  And I think that the law on Twitter and social media more generally is digital glasnost and cryptocurrency is digital perestroika.

Peter McCormack: I know, I absolutely love that take.  There was a moment I was out walking, I listened to that and I paused it, and I just had this moment of like, "Whoa, Balaji, man.  My mind is blown right now".  No I thought it was brilliant, it was genuinely brilliant.  I don't know if it's your take, or somebody else. 

Balaji Srinivasan: I think it's my take.

Peter McCormack: Man, it was very powerful. 

Balaji Srinivasan: What did you like about that?  Because the thing is, many people don't know what glasnost and perestroika are, so they don't have the emotional resonance of that.  So, you want to explain that?  Go ahead. 

Peter McCormack: It was just the fact that you -- well, so it was two things.  Firstly, is that you'd created that comparison between the US, essentially the fall of the US Empire and the fall of the Soviet Empire, which it's hard to -- if you try and compare the US Empire and the Soviet Empire, it's quite a difficult comparison to make, because you're talking about one which was a closed empire, which was a communist, which had full control over the population; and then what you've talked about is like a western liberal democracy.  But actually it is completely true because we have a different kind of restrictive speech.  There are views I hold that I don't say publicly because there is a career risk to me across my football club and my business, and it's not that I'm scared to have those conversations, it's just to have those conversations you need to be nuanced about it and have the time to make them.  So, there are certain times where I hold back on my views.  So I'm like, "I don't have complete free speech".

Similar on the financial side of things is that, we believe we have free money, but we don't have free money, we have a collection of IOUs.  And so it was just that analogy, which just, I don't know, it was a real moment of like, "Whoa, okay, I think I know where we are right now".

Balaji Srinivasan: Yeah, exactly.  So, to just extend your points there, what the West had, so obviously there's dissimilarities between the US and USSR, many dissimilarities, okay, communism, capitalism, gulags and so on.  In general, I think the western side was better during the Cold War, I don't think any of that is super-controversial.  However, there are actually similarities, and then let me go to the speech point.  Both of them were multi-ethnic, ideological empires.  People don't realise maybe the extent to which the Soviet Union was a multi-ethnic thing, because they say the Russians.  But they have people of Turkic ancestry and Central Asian ancestry and Europeans and so on and so forth, all as Soviet citizens.  So, if you think about it, it spans seven time zones or something like that, and it has Central Asia and whatnot.  So, it was also a multi-ethnic, ideological empire knit together by essentially a proposition of communism, an abstract creed, that evangelised it all over the world, much like the West evangelises democracy, the East evangelised communism, and also had nuclear weapons and thought it was an ideological showdown between good versus evil, and all of these kinds of things. 

Moreover, what has happened more recently is that there's kind of a holiday from history, a honeymoon in the 1990s, and maybe you just say it's the 1990s.  And beginning with the war on terror, the US establishment felt more and more and more under threat again, and under threat from first, terrorists, and then domestic people and then foreigners again, and so on and so forth.  And so the general direction I see them going, and I think many things in the world are going in this way, is more power over fewer people.  That's to say, DC is actually gaining way more power, it is the power to freeze your funds and eavesdrop and so on, but only for those people who don't get out of the blue network. 

If you get into the red network or the grey network or your foreign country and so on and so forth, there are more and more places in the world that are outside of the blue network where, yeah, it's a different ruler, it's got different rules and a different ruler; it's not all positive, so you're going to have trade-offs.  But this concept of blue receding, but also becoming more authoritarian within the blue terrain, I think is a useful metaphor, or not a metaphor, it's a useful visualisation, because it reconciles two things, that they are becoming more authoritarian; but they're also losing soft power and they're losing people in the consequence. 

On the speech thing, I think a crucial thing that I had to understand was like, "Oh, why are we complaining about speech?  Why are we complaining that speech is being restricted?"  Well, one way of thinking about it is that during basically most of the Cold War, and the 1980s and the 1990s and early 2000s, freedom of speech in the West was an abstraction because you didn't really have it.  Let's say you could talk to your neighbour, but you needed a radio license or a TV license or a newspaper, you needed to inherit a newspaper.  The cost of the printing presses and all this type of stuff, the trucks to distribute the physical paper, that was all so substantial that you didn't practically have broadcastability, and so your opinion didn't matter.  You have freedom of speech, but who cared.  You could talk to your neighbour.  And have you heard the term like a beggar's democracy?

Peter McCormack: No.

Balaji Srinivasan: But you could maybe immediately get it.  Okay, because you're a beggar, yeah, you can say whatever you want, but you don't have any impact on what you're saying.  So, it wasn't just freedom of speech, it was the cost of speech, of practical speech, was actually very high.  Then the internet brought that down and gave all these people social media accounts, and at first they were just used for tweeting your breakfast and Facebook friending, and so on and so forth, all through the 2000s.  Even as late as 2013, journalists were writing why Facebook will never make a significant profit.  This whole internet era is actually very new.  It's just the last ten years.  And it was really only after 2016, that was maybe the first Twitter election, because it's really Twitter that elected Trump, Twitter that elected Bolsonaro, Twitter that elected Orbán, and Twitter that did Brexit. 

Twitter was upstream of all of those things, because Twitter essentially meant, you may think these are bad things, you may think these are good things, I'm just saying that Trump himself is caused by technological change, because he could get his voice out, he could build his follower base, he could tweet disintermediated, and that was a totally new thing over the last 70 years of media consolidation, or whatever; that that was a breakthrough.  It was kind of a return to the past when it's easier to speak outside of the mass media era.  It's more like the 1800s than it is the mid-20th century. 

Peter McCormack: Well we're seeing it again right now with Robert Kennedy.  I know he's a Kennedy, which would give him a platform, but we're seeing a rapid growth in the awareness of him, of his views, and I don't agree with everything he says but he's certainly an interesting character.  But he's caused a social media storm.  He's spreading like wildfire through social media because he has a message that resonates with people and he has a delivery method. 

Balaji Srinivasan: Yeah, and I mean I tweeted a bit about RFK.  I was on this Twitter spaces with him and Elon and Sacks a few weeks ago.  And certainly there's many positions of his that I disagree with, but fundamentally, he's not a hater.  That sounds like such a low bar, but it's actually an important thing.  You just don't get the sense that he wants to use the state against the other people like a billy club, you know what I mean, which is a huge part of the tribal warfare in the US right now.  I think that's part of the appeal. 

Peter McCormack: Is he grey? 

Balaji Srinivasan: No, it's interesting, he's difficult to classify.  He's kind of at the intersection of blue, red, and grey.  Because clearly he's Democratic, one of the biggest names ever in Democrat politics basically, so he has a built-in blue base.  There's a lot of people who will just vote on name recognition, or what have you, and actually in fact, many of his positions are conventional Democrat positions.  But certainly he has Republican support and certainly he has tech support, so to speak.  Tech support, lol!  So, that's interesting.

I mean, the thing is that in a sense, I'm less interested in US presidential politics than I ever was, because I feel it's this weird transitional era where it's like being interested in the Soviet Union, it's still there, but will it be there in a few years?  I don't know.  And what I mean by that is, so let me explain that, because I know that's a lot right there.  The financial situation right now, I kind of flapped my arms a few weeks or months ago to try to get people's attention on it, and maybe we should have a conference or something like that, but it's so insanely serious that the best way I can communicate in words is the Wile E Coyote thing, where Wile E Coyote walks off a cliff and he just hasn't looked down, he hasn't seen that there is just the air below. 

To give you a sense of that, did you see this Financial Times article on the Bundesbank self-bailout?

Peter McCormack: No.

Balaji Srinivasan: Oh, okay, here we go, ready?  This is all in financialese.  But here, take a look at this.  So, the Bundesbank is Germany's central bank, all right so, "Bundesbank may need recapitalisation to cover bond buying losses".  First of all, this is saying Germany's central bank, the number four economy in the world, may need recapitalisation, means an infusion of new money; the central bank has run out of money?  To cover bond buying losses, wait a second, aren't bonds supposed to be the safe asset?  How'd you have such massive losses on them?  And fundamentally, whether this is recognised in 3 months or 6 months or 12 months, I don't know how long they're going to kick the can.  But eventually, you're going to hear that Treasuries were the new toxic waste, that bonds blew up the economy, that the thing that everybody thought was the safe asset actually turned out to be the risky asset. 

Just like in 2008, when the mortgage-backed securities were sold as AAA and they actually weren't and everybody who bought them was a sucker, everybody who bought long-term government bonds in 2021, they were devalued in 2022 and so that's why banks are popping up dead in 2023.  It has nothing to do with tech investments or anything like that; it has everything to do with basically the massive and rapid hike in interest rates.  And some of these paragraphs here in this article are so amazing, and they're just written in this financialese.  By the way, if you want to believe my interpretation, take this and put this into ChatGPT, and you ask it if it's a reasonable interpretation. 

Do you see this paragraph here?  Okay, basically if you take that paragraph from the Financial Times, depending on how closely you nitpick it, I think it's basically diplomatic understatement as to, I mean, you know how Milton Friedman used to say that if communists were running the Sahara, it would run out of sand?  You have the central bank running out of money.  Okay, what?  It's actually insane that that's happened.

Peter McCormack: And scary in Europe with it being Germany.

Balaji Srinivasan: Yeah, because they're the most reliable, they're the centre of the whole thing.  And of course, the British were also known for many generations for their financial acumen, and you guys were the inventors of the joint-stock corporation and all kinds of stuff.  So, if the UK and Germany, which are pretty important engines of the West, are conking out, and of course you just spent €800 billion on the energy crisis, and what have you, the point is, I actually did a whole pinned tweet on this.  If you look at my pinned tweet now, "I've burned a million to tell you they're printing trillions", I go through a bunch of headlines on this.  The thing is that -- actually, let me actually give you an analogy.  With the Financial Crisis, okay, you ever watch The Big Short?

Peter McCormack: Of course, love that film.

Balaji Srinivasan: Okay, so it's worth going back and watching The Big Short, Margin Call, Inside Job, Too Big to Fail.  They're good movies.  They all give a different view, but they don't actually give the most important view.  So, The Big Short is the view of the outsiders who are shorting the system.  Margin Call is a view from within a bank where they're offloading these assets and trying to screw somebody by selling it as if it was valuable and not telling them it's not valuable.  Inside Job is kind of like a left-wing argument for more regulation and so on and so forth.  And then Too Big to Fail is like a centre-left west wingification of the whole thing, where the heroic government comes in to try and put the whole system together and even the bank CEOs are portrayed as mostly good and just there's one bad apple, like the Lehman guy failing. 

What isn't portrayed is that the government actually caused the financial crisis.  And what is that?  So, basically, I'll show you just two articles, and you can sometimes get, I mentioned this on the other pod, and then we'll get to next steps, but let's see.  There we go.  So, sometimes if you read both the and the left, you can get stereo vision, where often their criticisms of each other are correct.  So, here is an NYT article, from 2008, when the Financial Crisis was still, "Bush drive for home ownership fueled housing bubble".  How about that?  Part of it is encouraging, "Working together as a nation to encourage folks to own their own home".  Essentially, they pushed a bunch of policies that got loans to folks who couldn't pay them back.  And they justified the name of anti-redlining and so on and so forth, and this basically blew up the whole thing.

Peter McCormack: But hold on, that started under Clinton.

Balaji Srinivasan: Yeah, exactly, "The Clinton-era roots of the financial crisis".

Peter McCormack: Yeah.

Balaji Srinivasan: See, so I got you, bro, I got you!

Peter McCormack: Yeah, but that started under Clinton.

Balaji Srinivasan: No, so you didn't see the other tab.  Here, I just went to the tab, "The Clinton-era roots of the financial crisis".  That was the other tab I brought up. 

Peter McCormack: Yeah, okay.

Balaji Srinivasan: Okay, so it's both.  It basically was a project, it was started under Clinton, continued under Bush, and made 28 million high-risk loans to be made, because the regulations were essentially, they thought that it was a good thing to get people of colour or people who had not previously gotten loans into the system, and they justified getting somebody into debt as like a moral imperative.  Now, a debt that one guy can't pay is actually bad for both sides, because the lender is booking it as if it's this great asset, and it's not, and the guy who can't pay is having their wages garnished.  And then, of course, every third party who kind of thought this part of the economy was doing well is also screwed.  So, it actually screws everybody.  And this is a consequence of having just fundamentally wrong beliefs and then justifying them of, "No, you must want to redline people". 

The point is, that was a bipartisan failure, and to my knowledge there hasn't been a movie made on it.  It's only blamed the banks.  And to be clear, sure, the banks have tons of blame, but they're fundamentally downstream of the central actor, which is the government that put the regulations that made the banks do these things.

Peter McCormack: It would be difficult to make a film that at any point would blame Clinton or a Democrat era, because essentially Hollywood is blue.

Balaji Srinivasan: True, but we have AI now.

Peter McCormack: True.

Balaji Srinivasan: You could totally do it on the internet now, I think.  And to be clear, it's bipartisan, but yes, you're right.  Part of it is because Hollywood is mostly Democrat and wouldn't want to put something out there.  But now, Hollywood doesn't even matter.  What does Hollywood make?  Hollywood doesn't make serious movies.  What's it making?  Superman 19?  Go ahead. 

Peter McCormack: Yeah, Marvel, It's making Marvel. 

Balaji Srinivasan: Yeah, it's all comic book stuff.  So, they have just abandoned the field and serious content has moved to the internet.  And now with AI, you can do reasonably high production value things, I mean, probably just from news articles.  See, that's the thing, is often the story is there.  It's just the emphasis and what gets repeated and echoed down through the -- you still remember the Financial Crisis maybe a little bit, just kind of within the range of what people remember.  But you go and watch those movies, the reason I say to watch those movies is you're like, "Oh, yeah, those bankers, they really did screw everybody".  Right?  Because we're now 15 years in and people are like, "Why wouldn't I trust the banks with my money?"  "You remember the Financial Crisis?  All the same people are still in power". 

Peter McCormack: Nobody went to jail. 

Balaji Srinivasan: Yeah, there's one guy who went to jail. 

Peter McCormack: One guy.

Balaji Srinivasan: Yeah, but the reason for that, by the way, is the school of fish strategy, in my view, I mean, like basically, what's his name?  They got guys like Bernie Madoff, but it wasn't really housing-related.  So, you see this 20 October, "Yellen feared housing bust but did not raise public alarm".  Okay, she was President of the Federal Reserve Bank of San Francisco, "A massive real estate bubble is building in the vast nine state-area that are overseas.  Her staff alerted her that banks were overinvesting, but she conveyed two starkly different messages".  So the point is, she's the Treasury Secretary now.  She understood that if you're like a major financial regulator, you can't come out and say, "Hey, we all screwed up.  Hey we crashed the economy again.  We destroyed the economy again".  You can't say that. 

Actually, let me show you an article that I haven't discussed, I mean I published it, but I just haven't discussed it on video.  I'm going to show you this one, all right?  I think this is a really important article.  And so it's called, Too Fake to Tell.  Get it?  Like Too Big to Fail.  Too Fake to Tell, "US Government stats aren't reliable.  More importantly, neither are US Government bonds.  Okay, so you can read this and it's kind of about how Sacks and I were basically sceptical of the jobs report from a while back.  There was a whole thing on social media, people lost their minds, "Oh, my God.  How dare you question US Government statistics, especially by making your own personal observations.  Don't you know, these are our brave civil servants, you're anti-American", etc.  But of course, public trust in government is at historic lows and people believe that news organisations mislead them, so you want to actually be able to look at it. 

You can talk about the jobs data specifically, that doesn't matter to me that much other than even the defenders of the jobs data said, "It's hard to get accurate, real-time data on something as complex as a country's job market, which is why we shouldn't put too much stock in one month or even one quarter of data".  Yeah, but that data is being used by the Fed to set interest rates.  But here's the point though.  The trust issue generally, I'm just going to go through just to give a sense of all of the lies of the financial system over the last 20 years.  So, here is Bernanke, and actually let me screen-share in a different way, so I can just show slide-by-slide. 

Bernanke on the Great Moderation.  This is 2004, The Great Moderation, "One of the most striking features has been a substantial decline in macroeconomic volatility.  Reduced macroeconomic volatility has numerous benefits".  In other words, we've solved macro, we're never going to have recessions or anything like that anymore, a few years before the Financial Crisis.  They actually think this, that macro, as they do it, is a science, even though they can't do replicate experiments.  Here's Cheney around the same time saying, "Deficits don't matter, deficit spending can go on forever".  I just did the Bush and Clinton helping blow the mortgage bubbles.  Here is Bernanke in April 2008 saying, "We might have a mild recession".  Okay, 10 April 2008.  What happened a few months later?  They acknowledged it was a Global Financial Crisis that required the largest bailouts in US history.  They either can't forecast or they won't forecast, just like the Yellen thing. 

Here are the ratings agencies in 2008.  And why did they do such a bad job rating subprime securities, they just completely failed?  They issued AAA ratings to these things.  Why'd they do it?  Well, partly because of corporate pressure, because they wouldn't get business from raters, but partly because of government pressure, because here we saw what would happen if you did downrate things from AAA.  You know what happens when you downrate things from AAA?  The US Government sues you.  S&P in 2011, they downgraded US debt from AAA, and basically they said that the US Government had retaliated against them for stripping the country of its AAA credit rating. So, that shows you why the ratings are screwed, because all these government agents will yell at you or even sue you for billions of dollars if you say that their debt isn't perfect. 

Here's Bernanke in the 2010s explaining why QE is not money printing.  Okay, this was their narrative then.  And then here is Jerome Powell saying, "Simply flooded the system with money".  "Yes, we did, that's another way to think about it.  We did".  "Where does it come from?  Do you just print it?"  "We print it digitally.  So, we as a central bank, we have the ability to create money digitally and we do that by buying Treasury bills or bonds".

So, they deny that it was printing during the thing.  And then years later, Powell's like, shrug, "Yes, we did.  We print the money digitally", after Bernanke saying it wasn't money printing.  Here is Greenspan again basically saying that, "The US can pay any debt it has because we can always print money to do that, so there's zero probability of default", "The United States can pay any debt it has because we can always print money to do that.  So, there is zero probability of default".  And then, you can see it's funny when he says this, because you'll see the expression on this guy, Austan Goolsbee's face; he says, "We can print the money, who cares?"  And he's like, "Oh…"

Peter McCormack: Yeah, look at that face!

Balaji Srinivasan: Look at that face!  Because he's like a slightly more -- I mean, he's also on the Federal Reserve Board and so on, and he's like, "I wouldn't say it quite that way.  You're saying it too explicitly".  Okay, here are the projections.  Whenever the macro guys make projections, here, can you see that unemployment rate with and without the recovery plan? 

Peter McCormack: Yeah. 

Balaji Srinivasan: Okay, so here they said, "The recovery plan is going to reduce unemployment rate, it's going to recover like this", the thick blue line.  And they said, "Without the recovery plan it's going to be the light blue line".  But actually it was the red dots! 

Peter McCormack: Okay. 

Balaji Srinivasan: Okay.

Peter McCormack: Balaji, I was going to say, so all this lying, because I don't believe it's they're just completely terrible at making projections, is all this lying a little bit like parenting, in that you kind of tell white lies to your children because you don't want them to know the reality, because the reality is sometimes a little bit too scary?  Like, if my daughter starts asking me about the Ukraine-Russia war, I won't tell her everything and only as she gets older, maybe I will.  But you keep things from children, you tell these white lies.  Are they almost treating us like children, or is it something more evil; what do you think is going on? 

Balaji Srinivasan: It's a combination of several things at the same time, and by the way, I actually want to go through all of these.

Peter McCormack: Okay, sure.

Balaji Srinivasan: No, I'll answer your question, then let's resume going through.  Because the full scope of 20 years of total financial deception, I don't think people have actually seen it all in one place like this.  This itself is a useful clip that you could probably put out there, because it's just the same people, Bernanke and Yellen and Powell and the FDIC and the Fed and so on, it's not like a short-term thing, it is 20 years of complete rug pulls.  This is the thing, like all these Bitcoin maximalists, by the way, and I'll come to your question, they're all like shitcoin shitcoins.  I'm like, the ultimate shitcoin is the US Treasury bond, and you need to be putting a lot more -- if they're not saying Fed and Treasury and specifics 50 times a day, they're basically, I don't know, it's like complaining about some petty vandal when your country's ruled by the cartels or something like that.  It's a total -- but anyway, coming back to your point. 

So, it is a combination of all of the above, okay, because I actually say this in this Too Fake to Tell article.  So, what's going on?  20 years of economic fakery.  It's a mix of error, revision, spin, tribalism, pseudoscience, and outright fraud.  So, sometimes it's error, where they're actually making a technical projection like the stimulus impact.  Sometimes they make an error and they revise it and they say, "Oh, hey, we make errors, but we fixed it, so therefore we're good".  So, first of all, you're terrible for questioning it, and then they fix it, and say you're terrible for saying that they wouldn't fix it, but they wouldn't fix it without you saying something.  Okay, sometimes it's spin, sometimes it's tribalism, that the debt ceiling doesn't matter, or whatever.  Sometimes it's Keynesian pseudoscience, like the Great Moderation. 

The AAA securities were outright fraud, and the current fiat crisis, or the transitory inflation, which basically helped cause this, is all of the above.  It's error, revision, spin, tribalism.  So, it's kind of like the Keynesians are like the communists, where they have a pseudoscience which they believe in, which gives incorrect predictions, but maintains their power.  It's not about making predictions for them, it's about political power.  Have you noticed all these people who got the forecast wrong are still in political power?  They don't pay a personal price.  If as an investor you make a wrong prediction, you lose money.  When Yellen and Powell and Bernanke make wrong predictions, everybody else loses money, they don't personally lose money. 

So, one aspect of it is, they're just caught in this stupid Keynesian pseudoscience; another aspect is, they've got political motivations; another aspect is exactly what you just said, which is that they think it's a noble lie.  A great example of this, a simple one, is during the pandemic where at first, people stopped buying masks.  Masks don't work.  And they were lying and saying this because they thought they needed the masks for hospital personnel only.  Why they didn't just say that, "Masks work, but we're going to ask you to not buy them because we need them for first responders" or whatever. 

In the early days of the pandemic, when we didn't know how severe the virus was going to be and/or it was actually most severe because it was hitting those people who were the least naturally immune at the beginning, they could have said that.  Instead, they lied, they said, "Masks don't work".  And then masks became mandatory.  And there's so many things like that, where it's like a moustache-twirling, transparent lie.  But you know what it actually reminds me of?  It's like the Solzhenitsyn thing.  But this is the state of the regime that we're at now, "We know that they are lying; they know they're lying --"

Peter McCormack: Yeah, I know this! 

Balaji Srinivasan: "-- they even know that we know that they're lying; we also know that they know we know they're lying; but they are still lying".

Peter McCormack: Yeah! 

Balaji Srinivasan: That's it, right!  So, it's complicated because they're lying to themselves, they're lying to others.  And then what happens is, and this is a crucial thing, they're not individuals.  You know the NPC thing, have you heard the NPC meme!

Peter McCormack: Yeah.

Balaji Srinivasan: The NPC meme actually, it cuts them deep, but it actually is also a big part of their strength.  Why?  Another thing of the NPC is they're part of a school of fish.  And a while ago, I talked about -- this actually relates to what we do next, so I'll explain.  The school of fish strategy is basically, "Just repeat what everyone else is saying.  If it's proven wrong, well, everyone is wrong together, and so you can't be individually punished.  So, basically it's a guaranteed way of achieving a mediocre outcome.  So, I tweeted this a few years ago, "School of Fish Strategy: repeat what everyone's saying, it's proven wrong, everyone was wrong together.  The establishment's consensus algorithm", just like Bitcoin as a consensus algorithm, this is how they come to consensus, "it works until falsified by the outside world". 

If you think about this strategy, it works incredibly well.  This is how all these people promoted the Iraq War, and they're all wrong together, so there's no one person to single out; maybe Bush.  One guy maybe gets a ceremonial whack, but all the same people are still in the Department of Defence and the foreign policy establishment, and nothing happens to them really, the blob continues.  And when you think about this, it's so deep, because this is why singling out Fauci or some journalist doesn't matter, because it's like an organism that has 1,000 or 10,000 heads.  It's a network, it's a blue network of establishment figures, and they all say the same thing at the same time.  And then they switch to saying something different, "Inflation is a right-wing conspiracy; inflation is transitory; we were always fighting inflation.  Masks don't work; masks are mandatory.  The Iraq War is ridiculously important, and WMDs are in Iraq; okay, there were no WMDs, but we meant well".  You can come up with 500 other examples like this. 

The issue is that you as an individual, if you go and you take a dissident position, you can be singled out.  If you are an individual.  And so this is actually why one of the big themes of the Network State book is it's not just about centralisation and decentralisation.  You know what the most important and most unpopular word in the world is right now, in my view? 

Peter McCormack: Tell me. 

Balaji Srinivasan: Recentralisation. 

Peter McCormack: Okay.

Balaji Srinivasan: Why?  Because the people who are centralised, who run the current establishment say, "Why would you want to bother with the recentralising?  That seems like the new boss same as the old boss, you're not even making a moral argument against?"  And the decentralising guys will say the same thing, "Why would why would we ever want to recentre?  We just saw the problems of a centralised system", and so on and so forth. 

But if you think of like my helical theory of history, where yeah, there's some things that run in cycles, rise and fall of civilisations.  But technological progress has kind of being ascending, you know, the torch, it's like the Olympic torch.  It's like, the Indians invent zero and the Arabs invent algebra, and then there's Isaac Newton, then the US puts a man on the Moon, and now China and India are rising and so on and so forth.  It's like an Olympic torch getting passed and even as one civilisation falls, it can write down and advance science and technology enough that there's a genuine secular rise long term. 

So, the reason I say that is, if you think about that in the context of societies, you've got a society and it goes through a cycle of rise and fall and collapse, but then you need to build a new society.  And that will also rise and fall and collapse.  And then you build a new one and a new one.  And it's circular in one sense, you're coming back to where you started; but it's progress in another because ancient Rome was then exceeded by Britain, was exceeded by the US, and then will be exceeded by whatever the successor is.  And what that means is, another word for recentralisation is tribalisation.  Find your tribe, build your tribe.  This is a huge part of what I'm working on and working on next.  So, now, okay, we just finished the introduction to the podcast!  Now let me get to the meat of it.

So, I mentioned earlier allocation, location, organisation.  Okay, so allocation is just take care of your financial position.  The reason I mentioned all the weaponisation of the financial system is, I think the closer you are to blue states, the more will be seized.  And what I mean by that is, your stocks on an exchange can be frozen and they can be sold for you.  Just like for example in Robinhood, they just market-sold your Solana; Russians, they just froze their assets.  Any ledger you don't control, those assets aren't yours. 

That includes, by the way, real estate and blue states, that could just get seized; any asset which either you have to carry it on your person or it's on a ledger that you trust, like Bitcoin, or it's on a fiat ledger that you trust, in a country that you trust.  For some people, that's a red state, potentially, if it's got its own ledger; for some people, it's Hungary or Poland; for some people, it's India, because I saw for the first time, Indian founders actually going back to India and storing their money in Indian banks after the SVB thing, something I had never seen in 40-plus years on this planet, were very sophisticated Indian tech guys, who it's their entire treasuries at risk, making the calculation that Indian banks were more stable than American banks with all their downsides. 

Peter McCormack: Crazy! 

Balaji Srinivasan: That's insane.  And by the way, India's payment system has actually gotten quite good now with UPI and other kinds of things, but that's quite a flippening.  And that propagates out to the rest of society, because you have all these tech founders who are the early adopters, early adopters.  They're the ones who influence all kinds of other people, think about it.  You're a founder, even if you're not a tech founder.  I'm sure people in your family or immediate network will kind of ask you for tech support, kind of things, and what to do and so on.  So, they're very influential nodes that have flipped in this way.  So, allocation is just getting as far away from blue-controlled ledgers as possible, blue states as possible. 

That's related to location.  Getting away from blue states.  The more G7-controlled it is, probably the worse off it's going to be.  You can kind of think of DC and New York and so on, San Francisco maybe being the worst hit.  And then you can go away from that in different directions.  In terms of red states, you can go away from it; then in terms of India, you can go away from that; there's Chinese immigrants who have gone back to China, and so on.  And you can go away from that in terms of Bitcoin.  And you go away from it in terms of blank, the coin that will be mentioned on your guys' pod, we're fine!  The point being that there are other avenues, people will move in different directions. 

That gets you to the third, which is organisation.  So, allocation is purely financial.  Location, you start thinking about physical risk.  And this, by the way, is so different.  2023 and what's to come is, I think, very different than 2008 in that sense, because 2008 was just a Financial Crisis, and the central bank was able to print and bail out the banks.  With this fiat crisis, there's no other level to bail it out.  That's why it's a self-bailout.  It is a mass seizure of assets.  It makes the entire hidden part of the government come out and show its truncheon.  Because what is inflation?  Inflation is dilution.  Inflation is dilution is taxation.  It's basically taking some portion of your assets invisibly. 

For example, if we all had $100, the three of us, and then the government prints another $300, we've all been diluted down 50%.  You have 50% of your purchasing power, but you don't see it.  What happens instead is the government, with that new $300, starts buying stuff and then your prices go up as a consequence because they're crowding you out, they're outbidding you, but it's not visible to you.  And in fact, actually, did I show you that graph on who paid for 2008?  This is a really important graph.

Peter McCormack: No, show me it.

Balaji Srinivasan: So, this I also talked about in the Marty podcast, but I think it's one of these things which is so important.  Okay, so, Did Republicans Pay for 2008?  Let me just explain this graph, and there's an animated version of it.  Basically, this is US congressional districts.  Each thing there represents a little patch of land, and this is their GDP.  So, this is a poor district, this is a rich district.  And in 2008, the solid outline, okay, if you see the solid outline, you can see that the outline of red and blue in 2008 is very similar.  Here are some of the poorer districts, here are some of the richer districts.  And in 2008, blue and red tribe were equally matched in terms of their district's wealth. 

But by 2018, the solid dots are the 2018 distribution, blue had become much wealthier than red.  The median for the blue distribution by 2018 is like $50 billion GDP and the median for the blue distribution is somewhere around $30 billion GDP, and all of the richest districts are blue.  How did that happen?  Well, all the printed money went to blue regions first, because they were coastal regions, they were connected to the banks and so on.  And the bankers knew people on the East Coast more than they did in Oklahoma, or whatever.  So, that Oklahoma cashier was silently diluted, and everybody thought they were doing a good thing at this time.  The Fed saved the world and the Financial Crisis, and so on and so forth.  And basically what it was, was just this gigantic tax on Republicans but it was invisible. 

Of course people will deny this, because basically maybe it's just a coincidence that 2008 to 2016 was the Democrat Administration and during this period Republicans were pauperised. 

Peter McCormack: So, the Cantillon effect isn't just, well, there's a political bias. 

Balaji Srinivasan: There's a tribal aspect of the Cantillon effect.

Peter McCormack: Yeah.

Balaji Srinivasan: Exactly.  This is the tribal Cantillon effect, that's exactly it.

Peter McCormack: Yeah, wow!

Balaji Srinivasan: Holy crap, right?

Peter McCormack: Yeah.

Balaji Srinivasan: Because, I don't know if you remember this, but 20-something years ago when I was growing up at least, you remember how the stereotype of Republicans was that they were suit-and-tie-wearing toffs.  They were like upper class where the democrats were the fight-the-power rebels, or whatever.  And now, the Republican is wearing a trucker hat and they're poor.  How did that happen?  Well, in ten years, they went from essentially parity with Democrats to much, much poorer.  And maybe it's just a coincidence that this happened, but it certainly does seem like the cost of the print was imposed on the political opposition in a deniable and invisible way, unconscious even to those doing the imposing. 

Now, here's another version of this.  Basically, there's another group that got hit by the print.  You know who that was?

Peter McCormack: The poorest?

Balaji Srinivasan: Yes, and especially the Arabs.  Arab Spring was triggered by food prices, and all of these riots and revolutions and all of this uncertainty, countries are still in chaos ten years after Arab Spring, ten years of war.  I mean, people are like, "Oh, the world didn't end after the Financial Crisis".  Well, it did for them.  The cost of that inflation, the level, because you're seizing wealth, and now somebody who was able to have their daily bread now can't.  That cost of that inflation was -- and how much of it caused the Arab Spring?  I mean, it's not like we've got a ledger where we can track everything; it's not like Bitcoin where it's all public.  You have to just kind of guess at the impact and it's like tidal waves moving on an ocean of money, it's really hard to see this stuff. 

Still, if even 20% of the Arab Spring was caused by the print of 2008, that's 20% of a lot of deaths and a lot of chaos and a lot of instability.  That's guys with AKs on trucks because society is broken down in some places.  So, that's why it's not correct to say, "2008, it was fine, not a big deal.  The result, it was basically something where Republicans disproportionately paid for it, seemingly, and many Arabs paid for it with their lives.  And so now the question is, will 2023 be like that, or will it be different?

Peter McCormack: Well, it's like the end of The Big Short.  I've referred to this a bunch of times in the shows.  The really interesting thing about The Big Short is, it kind of romanticises the Financial Crisis, it makes it exciting.  It's like, there's a guy listening to Masterdom, playing his drum kit, figuring out where to short the market; there's people looking at opportunities.  And they make it entertaining with Margot Robbie in a bath, drinking champagne.  But then you get to that very end moment and you see that family pack up their car because they've lost their home.  But actually there's another layer to that.  You could have also had another layer where you show people in the Middle East losing their lives.

Balaji Srinivasan: Yes, exactly. 

Peter McCormack: Tell the real story. 

Balaji Srinivasan: That's right, exactly, and that movie should be made.  This thing is still within our memory but it's 15 years ago.  And the thing about Twitter and the thing about our modern environment is that's like 3,000 current things ago, do you know what I mean?  What happened just this last week?  I mean the Russian coup or mutiny, or whatever, is already sort of receding this massive world.  It's like the dopamine shock from that is already receding and people are like, "Oh, yeah, that thing", which is like this huge event.  So, the memory of this is like a distant memory, but it should be brought up. 

Here's the big thing.  So there's The Big Short, but also Margin Call.  The Margin Call mindset is, when there's only $50 on hand to pay $100 in debts, when the Bundesbank has negative equity and its liabilities exceed its assets, which is part of what that means, then you should withdraw first.  It's Uncle Sam Bankman-Fried.  I mentioned that before, but basically it's like their liabilities exceed their assets, and it's a huge, complicated financial system where they're denying it, denying it, denying it.  It's just like lockdown.  They denied it, "No, it's not going to happen", etc.  Everybody in California is under house arrest.  That came in 45 days, by the way, from when all kinds of people were swarming me and attacking me on Twitter in January 2020, to total lockdown of the largest state in the union by early March of 2020.  That came in less than two months, that huge transition.  And they were denying it until they did it.  This is actually, you know Jean-Claude Juncker, the European banker, you know his big saying? 

Peter McCormack: No. 

Balaji Srinivasan: Do you know this guy, have you heard of him before? 

Peter McCormack: I know the name, yeah, of course.  Yeah, he says, and this is kind of relates to your earlier point also, "When it becomes really serious you have to lie".

Peter McCormack: For fuck's sake!

Balaji Srinivasan: Yeah. 

Peter McCormack: But it is that point, but then they do question though, Balaji, that you talked about two decades of lies but has it really always been lies, but two decades ago we had an internet which could fact-check and we had social media that could start fact-checking people; is it just the fact that it's getting harder for them to lie because it's like we have community notes now.  I mean, what a wild world where we see the President of the USA having community notes against him, explaining he's lying. 

Balaji Srinivasan: I know, incredible stuff.

Peter McCormack: I mean, I was talking about it with Danny yesterday.  We had Rishi Sunak in the UK came out this week because interest rates are getting so high, lots of people's mortgages are coming up for renewal.  If they're going from previous 2% to now 6.5% variable rates, some people cannot afford their mortgages, it's a massive increase in their payments.  And they were questioning, will there be help for homeowners?  And he came out and said, "No, our job is to halve inflation because if we halve inflation, that will give people more money in their pockets".  I was like, that is a straight up lie!  Reducing inflation doesn't mean more money in their pockets.  It still means less money in their pockets, you've just reduced the amount that you're taking away. 

But even if you reduce inflation, you're still leaving them less money in their pockets.  Inflation isn't going negative.  If we go from 9% to 5%, you've just reduced the impact of that inflation.  But people will not have more money in their pockets.  So, either he's straight up lying --

Balaji Srinivasan: It is true that, here's the thing, it is true that 5% is better than 9%.  So, you could argue that he's saying it relative to 9%.  But I understand, you go ahead, yeah.

Peter McCormack: Yeah, but the net impact is you're still going to have less money in your pockets.  He said, "This will give homeowners more money in their pockets".  That is a straight lie.

Balaji Srinivasan: Sure, okay, so it's true that it's not more money in their pockets in an absolute sense.  It is more money relative to 9%.

Peter McCormack: But it's a straight lie.

Balaji Srinivasan: Okay, but go ahead.  I understand your point.  Finish what you're saying.

Peter McCormack: But I guess where I'm really going with this now is that we do have this rise of, I call it the Rogan era, the fact that we can challenge, we have community notes.  We're getting away with it less and less.  You talked about it with Marty saying cancel culture is kind of dead, which is a good thing, and so is it like turning an oil tanker; is it just this slow transition away where their ability to lie to us is getting like they have less and less ability to lie to us, and what we're going to see is this transition where maybe we're going to start to get new politicians come in who won't lie to us?  Will we see more Trumps; will we see more RFKs, people who recognise the public aren't buying this shit any more?

Balaji Srinivasan: So, this is very complicated and I think about this a lot.  But my current mental model is that it's like the heads of the Hydra thing, where that head of the Hydra of media basically was hiss, hiss like this, and it's pulled back both because it won and because it lost.  Why did it win?  Basically, media spent down all of their trust, and I've seen the graphs, there's like a total calamitous, collapse trust.  The US media, and more generally, the western media spent down all their trust in return for recapturing the US establishment and capturing many of the big tech companies, and staffing them with NPCs and wokes, and so on and so forth.  So, it traded it in.  It took this declining asset, which was the US media, and just suicide-bombed, in a sense.  It did like a kamikaze attack.  It blew up the credibility of the US media in return for grabbing the levers of hard power over the establishment and over tech companies. 

Now, in doing so, it lost many of the tech founders, it lost Elon, it lost Glenn Greenwald, some of their most brilliant writers, Matt Taibbi, Bari Weiss, all the personalities it lost, and it lost a lot of the most brilliant entrepreneurs.  But it did grab the centre, the central mass of western society, all of the three-letter agencies, all that stuff is back under their control.  So, one answer is, cancel culture isn't happening because they're strong enough that they don't care what you're saying any more.  You can say whatever you want, they're back in control of the Fed, they're back in control of this, back in control of that.  Whatever, you can yell, knock yourself out, you're going to go away in two days and we're still in control of the Fed. 

The other version is, cancel culture has gone away because they're too weak, they don't have enough troops.  The Rogan-Spotify thing was a crucial turning point.  There's different kinds of things, you could probably graph it, but some of the fights with the journalists during 2020, and I actually do sometimes graph these things.  And the thing is, back in the 2010s, when someone was getting cancelled, to even like a tweet defending them would get you cancelled as well, which meant that you were outnumbered like 99 to 1 and there was just Gestapo looking over everything you were saying. 

With the Rogan Spotify thing, it was interesting because they were only able to grind out a 51/49 victory, they couldn't cancel the defenders as well.  So, even though it was still a cancellation and he still had some economic impact and censorship or whatever from it, it was a much more hard-fought victory, which meant that if you look at the dynamics of it rather than just analysing every incident in itself, you look at dynamics and plot over a larger time, I could see their power decreasing.  And now we're at the point where because Elon freed Twitter, they're too weak, they don't have enough troops, to do it.  However, they do -- so it's a mixed bag, it's a Pyrrhic victory where they captured the institutions, but lost a lot of people, especially they lost a lot of their best people, the Greenwalds and Elons and so on. 

I think the next step after cancel culture is confiscation culture.  How's that for a soundbite?  Okay.  Do you understand what I'm saying?  Confiscation calls you out to pay -- basically, think of it like this.  When your liabilities exceed your assets on a civilisational scale, when western civilisation has been living on its credit card for a long time and credit card debt's at $1 trillion and the US national debt's at $30 trillion and the German central bank may have negative equity, and everybody who bought Treasuries has massive underlying losses, and then add like 5,000 things; it's auto loans, it's student loans.  Everybody, both personal and corporate and at the government level, with the exception of a few tech companies, is basically insolvent on a mark-to-market basis.  I shouldn't say everybody, but a lot of people are, and a lot of institutions are.  And you can look at my pinned tweet for more on this. 

But when it happens, eventually the correction is like a black hole.  Think about FTX or something.  Everything is just dragged into the maw of that bankruptcy.  And then if you're still near that, you're lucky to get 10 cents on the dollar or something like that on your assets.  If you're smart, you pulled out your assets way before and you got free before the thing imploded and became a black hole, pulling in every chair and table and piece of real estate and so on.  By the way, I mentioned this on the TFTC podcast, but what's the justification for seizing blue state real estate?  Well, didn't the Fed bail out your mortgage with buying mortgage-backed securities, therefore it owns a slice of your house.  Therefore, you need to allow these newly homeless people to go and live in your house.  And didn't they pump up your house during the whole mortgage boom?  Now you have to give back to the state that which you owe.  This is just one possibility, one justification. 

But the thing is that everything must go sail.  The thing about it is, if you don't want a repeat of 2008, in 2008, the Republicans, the Arabs, all these people didn't see it coming, they still trusted the system.  And again, is the system lying; is it lying to itself; is it in error; is it pseudoscientific?  God only knows.  Some combination of all of these.  Is it lying to you; is it a noble lie where it thinks it's taking care of you; is it lying to you because it wants to abuse you?  Who the hell knows?  Point is, get to the exit first.  I'm not saying every single dollar.  You probably need some to keep going.  You don't know when this fiat crisis is going to hit, so I'm not saying like liquidate everything, get into -- but what I am saying is allocation, location, organisation, reduce your allocation as much as you can to things that they…

Anything they could seize from the Canadian truckers or the Russians is something that can be seized from you and will be seized from you, in my view, if you're in a blue state.  Location, get to a red state or get to El Salvador or get to wherever you think is stable.  Basically for me, India, because I know the country, I think it's on the general upswing.  I don't really have a huge need for possessions, or whatever, and it's actually done quite well recently and it's great, a great place.  Singapore I think is a great place, UAE is a great place.  Actually Australia and New Zealand I think are air-gapped relative to the rest of the G7 in terms of their financial management. 

Peter McCormack: Can I just point out a strange kind of paradox here, is that bitcoiners who espouse about freedom, some of the safest places for them to go to protect their assets are more authoritarian states.

Balaji Srinivasan: Oh, well, so the thing is, obviously the conventional wisdom is Democratic states versus authoritarian states, and so on and so forth.  I would push back on that in the following way.  First is, most of the people who are saying that are American Democrats.  And so I talked about this in TFTC, but let me kind of elaborate on this a little bit.  If you ask an American Democrat whether they'll vote for a Republican, nowadays, the vast majority of them will say no.  Why?  Because a Republican is against democracy.  So, they have put themselves into this state where democracy means a one-party state.  To vote for the other party is an attack on democracy, therefore you need a one-party state.  And that's what California is.  That's what actually a lot of blue states are.  That's what it means in practice, is just a total Democrat hold on everything. 

What is a real election?  The real election is, who is endorsed by the party for the primary position.  So, it's like the communist smoke-filled back room where it's all internal party manoeuvring for that person who gets to run as a Democrat party candidate and win with 67% of the vote against a totally useless Republican.  See what I'm saying? 

Peter McCormack: Sorry, Balaji, but I hate to interrupt, but there are Republican versions of that as well. 

Balaji Srinivasan: Exactly.  So, that's right, yeah, so I'm coming to that.  So basically, this is a model of democracy as ruled by American Democrat.  Just like in China, communism is whatever the Chinese communists say it is.  What I mean by that is, think of the Chinese Communist Party as again being at the centre of society.  And they're against the tech libertarians ,like Jack Ma, who's actually very similar to a tech founder of the US.  They're against the left, like Bo Xilai.  He was trying to do a Maoist revival.  They're against Falun Gong, which is religious, and they're kind of conservative.  They're against, actually, even extreme Chinese nationalists who are pushing for war with Taiwan.  Those guys also get de-platformed if they get out of line. 

So the point is, communism is whatever the Chinese Communist Party says it is.  It can be having capitalists in the Communist Party, that's communism.  But if you're Bo Xilai and you're pushing for Maoism, that's not communism.  So, it's just whatever they say it is.  It means communism is whatever the Chinese Communist Party says it is.  It's like capital C, Communism, whatever they say it is.  Similarly, democracy is whatever the American Democrat Party says it is.  Whether there's surveillance by the NSA, whether you're inflating the currency and seizing assets, whether you're bombing a country, whether you are censoring, doesn't matter.  That's all to protect democracy.  But if someone else wins an election they don't like, that's an attack on democracy.  Bolsonaro, Modi, etc.

Now, what's happened is Reds have now adopted this.  They've said, you know what, we're going to do the same thing in Florida, we're going to do the same thing in Texas.  Just like you built a one-party Democrat state in California, in Washington, one-party Democrat state and call it democracy, they're going to build a one-party Republican state and call it a republic.  And that's why even NYT is acknowledging this.  Blue states here, I've been talking about this for some time, but basically blue states are becoming bluer and red states are becoming redder.  Make America States Again.  See, red states got redder and blue states got bluer.  What this is, is it's not exactly civil war.  The best analogy is it's American partition. 

Peter McCormack: Well, because I feel like this, for me, where this kind of started was Bush-Gore in 2000.  When you explain it in terms of blue states, I can objectively see red states doing the same. 

Balaji Srinivasan: That's what I just said, yeah.

Peter McCormack: Yeah, but I would say that Democrats would say that 6 January was an attack on democracy.  I think it's going on in both sides.  The analogy for me is actually, as somebody who's divorced, this feels like the end of a relationship where you just cannot agree on anything, you fight on everything, and really you just need to be divorced and go and live in separate houses. 

Balaji Srinivasan: Yeah, so that's actually why I say American partition.  Some people have talked about a civil war, some people have talked about national divorce.  I'm going to show you a couple of things here.  So, this is a book from 15 years ago, 14 years ago, The Big Sort, Why the Clustering of Like-Minded Americans is Tearing Us Apart.  15 years ago, these trends were visible.  It's not The Big Short, The Big Sort.  And basically, why America's so culturally and politically divided.  And the thing is, you can see this in graph after graph after graph.  So, this is this thread I did where it's like, it's not one country, it's two parties.  And this is a 70-year trend where the Uniparty that FDR built, where -- and that's the thing is, the functional America, when America was ostensibly a democracy in the middle of the 20th century, but it was basically a Uniparty where the partisan differences weren't that much.  So, they were coloured differently, I'm not saying it was zero, but for the most part, they voted with each other on lots of things.  And then various kinds of things contributed to breaking this down. 

For example, the fairness doctrine repeal and also the end of pork barrel spending meant that you couldn't just trade money between one guy and another and the Mississippi guy and the New York guy didn't have any shared interest with the deal anymore.  So, it's funny, like I'm not praising pork barrel, but pork barrel was actually a way that you had a more unified republic because they could both trade things with each other that weren't supposed to be traded.  Now, you've got just totally polarised kinds of things.  And this is as of 2011, by the way, and what's being shown here is, an edge between two nodes is if they vote together on a bill.  And you can see Democrats probably just don't vote.  It's all party-line votes.  This was as of 12 years ago.  And a totally different graph is the graph on -- so this is votes at the leadership level. 

This is a totally different graph.  This is in social networks, and this is showing who follows who, or who shares what on social networks.  And even by 2017, the population was separated into blue and red this way.  And so when you see it completely, I mean the same phenomenon reoccurring in a totally different data set over and over again...  Here's another one, in this study only 4%. 

Peter McCormack: Yeah, that's mad.

Balaji Srinivasan: This is crazy. 

Peter McCormack: Crazy. 

Balaji Srinivasan: This means, as I've said, ideology becomes biology in one generation; Democrats don't marry Republicans.  Going further, Democrats don't hire Republicans either.  And so that's what's happened, they've partitioned at the level of both network and state.  First, the partition happened at the network level over here, the separation.  And now, it's being manifested in the physical world, Make America States Again, where they're diverging on gun laws, on abortion laws, on marijuana laws, on homeschooling laws.  And basically, all the things, in fact both wokeism and nationalism, are in my view failed attempts to kind of put the country together.  Wokeism is Democrats trying to get Republicans to knuckle under by accusing them of being insufficiently anti-racist.  Nationalism is Republicans trying to get Democrats to knuckle under by accusing them of being insufficiently anti-China.

Peter McCormack: And your great analogy here, which really resonated with me, you said they're essentially Sunnis and Shiites.  And I was like, "Oh, yeah, it is". 

Balaji Srinivasan: That's right.  And here's another way of seeing that.  You remember during the pandemic, everybody switched sides like four times?  For example, at first, it was Republicans that were concerned about the virus, in early January, China virus.  Then Trump was like, "Oh, we need to stop the testing" and it flipped.  So now, Democrats were concerned and they wanted lockdowns and Republicans were against it.  Then Democrats did the BLM riots and were like, "This is the actual threat to public health, it's racism", and after just saying that you die from being on the beach, they have these massive crowds of everybody close together.  And now it's Trump that's pushing Operation Warp Speed to develop a vaccine. 

Kamala Harris actually said then that she wouldn't trust Trump's endorsement of a vaccine and many Democrats were vaccine-hesitant because it was coming from Republicans.  Then that switched and Democrats became the biggest proponents of a vaccine after the election, and so on.  And the thing about this is, it's a mistake to call that ideology.  Because, I mean you can retroactively say, "I was on the side each time as new information came in", or whatever.  But I think it's really just, "I believe what my tribe believes, and I sided with my tribe, and my tribe has moved from the valley to the mountains, so I'm up in the mountains".  Like if your tribe moved in physical space, you'd follow your tribe.  And so what happens is when your tribe moves in ideological space, you also follow your tribe.  That's actually the key thing.  Go ahead.  

Peter McCormack: And so that points me to what I wish I could know, and you can never know, but if Trump had won that election and Russia had invaded Ukraine, how would the US Government have reacted under a Trump Presidency?  Would they have supported Ukraine; and if so, would they have provided weapon support?  And would the Republican commentators and the more conservative or libertarian influencers been like, "You have to do this, you have to stop the danger of Russia"?  And then would it have been the Democrats saying, "Why are you interfering in this?"  You know, what would have happened?  And ignoring the fact that Trump said the war wouldn't have happened under him, because we don't know that, but I'm just so intrigued to know that.

Balaji Srinivasan: Okay, so let me give actually an interesting maybe third view on that.  I don't know what would have happened.  But before I show you this, name the top three events of 2017. 

Peter McCormack: Oh, 2017?  God, you're asking me a lot there.  The launch of What Bitcoin did as a podcast!  2017, I just, it's hard, I can't. 

Balaji Srinivasan: Okay, how about like just military events? 

Peter McCormack: I don't know, I just don't have that recall by year. 

Balaji Srinivasan: Sure, okay, you're just basically drawing the blank.  It's not like there's some obvious thing that you're saying. 

Peter McCormack: Yeah. 

Balaji Srinivasan: Guess what?  All right, ready?  The Battle of Mosul, from October 2016 to July 2017, the most gruelling urban warfare since WWII prior to the war in Ukraine.  482 SBV IEDs, meaning Suicide Bombing Vehicles, blew up.  This is basically the war against ISIS, was this massive military conflict in 2017. 

Peter McCormack: Wait, this video is horrendous. 

Balaji Srinivasan: It's crazy!  Just like literally include this clip, because it's put to music and so on, every single one of those things is a gigantic suicide bombing attack that's killing whatever number of people, and just look at how many of them there are.  All this is caught on high-def.  Normally, you'd say that if it bleeds it leads, but you guys were completely unaware of this.  It wasn't like you were like, "Oh Mosul, obviously". 

Peter McCormack: Yeah.

Balaji Srinivasan: If I said, "2016, what happened?" you'd say, "Trump got elected".  That was covered to an infinite level.  Mosul wasn't covered at all, despite being this enormous conflict.

Peter McCormack: I mean I feel like I have some vague awareness that IEDs were a thing and things weren't going well, yeah.

Balaji Srinivasan: Yeah, you kind of knew ISIS existed vaguely, but this is the difference between, first of all, just to know that something that big could happen that we were completely unaware of, or I shouldn't say completely; let's say on a 10 scale you were aware of it at a 0.1. 

Peter McCormack: Yeah. 

Balaji Srinivasan: You did know that ISIS existed, but how did ISIS get beat or whatever?  Point is, that's another option besides the two that you mentioned.  A is, it's mass coverage and there's a giant military operation; B is, many people oppose it like a rock; C is, something as insane as 2017, where you have a World War II level military operation with a media blackout.  Like, what?  That's possible to do.

Peter McCormack: Why; What's the reason not to?

Balaji Srinivasan: I think in 2017, what happened, I'm just surmising here, I'm not an expert in the particular coverage decisions and so on, but the first thing to understand is, editorial decisions are real.  There's a million events happening in the world.  What you put on the front page, it's just like the ranking algorithm for a social media network.  You're picking from all these posts and picking something and putting it on the front page and making it big font or putting it on page A3 or whatever.  And in this case, I would argue that in mid-2017, this was the first Trump year, Democrats didn't want to make Trump into a wartime hero.  And Trump, for whatever reason, didn't stress the Middle Eastern conflict because he may have not known if he was going to win or he had inherited it from Obama, but basically it was just like this giant military campaign that he inherited.  So, neither side had an incentive to talk up this old storyline politically.  So, thus it just got totally suppressed. 

Peter McCormack: It's also the 14th year of a 17-year war essentially, Iraq, which has -- ignore the early days where it was relative, like the US had a lot of success in Iraq, the kind of first year; it then became urban warfare, guerrilla warfare, different factions, different groups.  It's not a clean war to explain.  Whereas Russia, one of the two old superpowers of the world, invading another country in Europe, it's a cleaner thing to explain.  It's a cleaner thing to identify who the enemy is.  And so to me, it's only natural why one's more newsworthy than the other. 

Balaji Srinivasan: I don't know.  I think that's retconning it, because Iraq was very newsworthy in the late 2000s when it was something that was useful against Bush.

Peter McCormack: But isn't news also entertainment?

Balaji Srinivasan: I mean, those explosions are like any Jerry Bruckheimer film. 

Peter McCormack: But when you put them all together it's horrific to see.  I'm seeing them over and over. 

Balaji Srinivasan: Yeah, but there's one happening every single day.  Basically, do you remember a time when every terrorist attack got a lot of coverage?

Peter McCormack: So, when you say every terrorist, I mean there's different types of terrorist attacks.  There's London underground bombings, there's 9/11, there's the Embassy in, was it Kenya?  I can't remember.

Balaji Srinivasan: Okay, but just in your perception, I think your perception is true, have terrorist attacks had more or less coverage than the 2000s and the early 2010s as of today?  I think it's a lot less. 

Peter McCormack: Yeah, but I think it's a tricky thing.  I mean, do you think it's become normalised?  When you first hear of suicide bombers, somebody driving a car outside an embassy and blowing up and 200 people being killed, it's kind of new, or the USS Cole; these things are new at the time and then it becomes normalised, which itself is terrible.  But every time you put a suicide bombing at an army recruitment barracks in Iraq, it's the same story being retold.  So, the problem with news is news is entertainment.  So, how much of it is control of the news; how much is it just giving what people want to hear?

Balaji Srinivasan: Well, I mean one way of looking at this is, think about what happened with wokeness.  Basically, that was literally something that was an editorial decision.  Here, you see the screen there, "New York Times Word Usage Frequency".  And basically, everything just went vertical in 2013.  Mansplaining, toxic masculinity, those just went vertical.  They started using the language of an Oberlin graduate then.  Whereas the controls like let's say Amazon or China, those show a more organic trend where it's like a real thing.  Intersectionality, all the stuff went vertical.  And now, now that they've recaptured institutions, they don't need the same level of race hatred.  So, it has all come down.  And here is actually a good graph of that.  Basically, the transition is from wokeism to statism.  So, here.

Peter McCormack: How much of that is the pendulum's swung too far?

Balaji Srinivasan: Well, it's like in the 1990s there was political correctness, in the 2000s there was war, in the 2010s there was another political correctness thing like wokeism, and the 2020s it's war.  It's very cynical, but it's like every ten years, they swap it out and they have a left-wing narrative or a-wing narrative, you know.  And here, take a look at this, see, like all race, racist, racism, they've just stopped dumping that poison into the water supply to the same extent.  Instead, it's no longer in the establishment's interest to say that the US is systemically racist and institutionally racist, and so on and so forth.  Instead, it's the champion of democracy.  And African countries and India all needs to get behind it in its glorious crusade for democracy against the authoritarians. 

It's a complete reversal of what they were saying in 2020, when Joe Biden himself was saying that the US is institutionally racist.  Now, African countries are supposed to trust it.  What?  Wait, if it's institutionally racist, you're telling me that was solved in 18 months?  No, institutionally racist means fundamentally bad, but now suddenly it's the champion of democracy.  So, it's like, this is the same thing as are they lying, or what's going on?  And the answer, if you want to be very cynical about it, or I think realistic, is that in 2020, Blue Team, their primary enemies were Republicans and they wanted to win the domestic battle and so they called them racist.  And then in 2022, their primary enemies are now Russians and so they need to win the foreign battle so they have a totally new script. 

It's like Orwell where they're like, "We're at war with this, we're at war with that", and they just have enough distribution that they push that script through.  But they're losing that distribution because there's enough sceptics.  The fact that you and I can talk, the fact that we can broadcast this and so on means they've lost a lot around the edges, and only the most NPC of NPCs, the centre of that school of fish, goes with them through every one of these turns back and forth and actually with the memory of a goldfish, "Oh, of course, we're the champions of democracy".  They don't even remember 2020.  They're surprised when you bring up 2020.  They're surprised by that.  Go ahead. 

Peter McCormack: That works for America. 

Balaji Srinivasan: Yes. 

Peter McCormack: But how do you explain the case for Europe and the UK, where we are also reporting in the same way and we don't have that blue-red divide. 

Balaji Srinivasan: You do, but not to the same level.  It's kind of proximity to DC.  For example, on the front page of your newspaper, do you have US news?

Peter McCormack: Occasionally, yes we will.  A huge US story will make it to the front pages.  But not always.

Balaji Srinivasan: So actually, it would be good to get five of your newspapers and just put them up there, see how many things reference America, and then see how many US newspapers reference the UK on a daily basis. 

Peter McCormack: Well, so what I will say is, I am aware of things going on in the US from UK publications.  When I'm in the US, I never hear anything about the UK. 

Balaji Srinivasan: Exactly, that's right.  So, it's asymmetric in that sense, which means that G7 countries are culturally downstream of the US.  They have more awareness of the US than vice versa.

Peter McCormack: Sure, but at the same time, I don't believe we're downstream in terms of, "Oh, this is how the US is reporting, so we're going to report on that".  I don't believe the BBC or Sky News works in that way.  I think there is genuine concern in the UK and Europe for Ukraine and there's genuine support for them and it's genuinely newsworthy.

Balaji Srinivasan: Right, sorry, let me be more clear.  You know, I've mentioned this multiple times but I was actually one of the first Estonian eCitizens.  I completely understand.  The thing about this is there's more than two views, there's not just the Russian view and the American view.  There's a Western European view, there's Eastern European and especially the Ukrainian view, there's the Indian view, there's the Chinese view, there's a Middle Eastern view.  Everybody's got a different view on this giant fight.  And I'm very sympathetic to all the Eastern Europeans and the Ukrainians and Estonians and so on that don't want to be forcibly reintegrated to Russia.  This is a disastrous mistake by Putin, both for Russians, for Ukraine, all of that stuff is true.  I mean, even if he thought Ukraine was going to become a Russian satellite, he's basically turned Russia into a Chinese satellite, in the sense of he's only afloat because he…  

With that said, there's lots of wars happening on the planet, and this is something which got the level of attention it did, yeah, because it's in Europe and whatnot.  But I feel like for example, with Taiwan, in 2011, there was an article in The New York Times that appeared, I think I showed you, which was like, basically, "Why don't we sell Taiwan to China for $1 trillion?  Did you see that? 

Peter McCormack: No! 

Balaji Srinivasan: Oh, you didn't see this? 

Peter McCormack: Oh, it's insane! 

Balaji Srinivasan: Amazing stuff.  Here, it's like -- again, just even recent history, the past is a different country.  "To save our economy, ditch Taiwan", did you see this?  10 November 2011, Paul V Kane, NYT. 

Peter McCormack: Is it an opinion piece? 

Balaji Srinivasan: It's an opinion piece, but that doesn't get published without a lot of copy editing or whatever, right, It's serious. 

Peter McCormack: Of course.

Balaji Srinivasan: So, "… proposed that the US sell Taiwan to China for $1 trillion in debt forgiveness", and basically, "… write off the $1.1 trillion of American debt in exchange for a deal to end American military assistance and arms sales".  So, the US didn't care about Taiwan in 2011?  And to just give you a sense, even in 2019, Obama made a documentary called American Factory, which was positive on China.  Even in 2019, Democrats were ostensibly pro-China, at least Obama was.  And in 2015, 2016, everyone was making fun of Trump for saying China, China, China.  And then here, in 2016, when Trump spoke with Taiwan's leader first, this is phrased as, "Trump speaks with Taiwan's leader, an affront to China.  This is a change of historic proportions.  The real question is, what are the Chinese going to do?" 

So, relatively recently, there's a completely different posture on Taiwan and China.  Essentially, it was something which was, "We don't care about Taiwan.  We don't want to anger China.  Trump's crazy for doing this.  China is a trade partner", and so on.  Similarly, on Russia, do you remember the Russian reset?

Peter McCormack: Remind me.

Balaji Srinivasan: Oh, so this is something where -- it's this here.  I don't have all of the links there, but here.  Russian reset was basically Clinton and Lavrov in 2009 saying, "Let's hit this reset button to reset Russian relations, and go back from the Cold War era type stuff".  Obama and Romney on Russia was basically, at the time, Obama made fun of Romney for saying that Russia was our enemy in 2012.  The 1980s called, here it is.  Flashback, "Obama's debate zinger on Romney's 1980s foreign policy".  And it's basically, he said, "Romney said Russia's our number one geopolitical flow", and Obama said, "No, the 1980s called, wants their foreign policy back".  That was as late as 2012.  And so in the early 2010s, it was a completely different world.  Even Crimea in 2014, when Russia took Crimea in 2014, did you care?  Did you even remember when that happened?

Peter McCormack: Yeah, I did, actually.  So, that was pretty widely reported here.  And that's the thing.

Balaji Srinivasan: It wasn't in the US. 

Peter McCormack: Yeah, and when you travel between the two, you get to see both.  And you know, I take a lot of flak for some of the positions I hold with Americans, and I get a lot of thanks for Europeans for having them, because you get to see both.  And there's a proximity thing here, Balaji.  The closer you get to Ukraine, the more support you see for Ukraine, and more rejection of Russia and the further away.  So, if you speak to anyone in Lithuania, Latvia, Estonia, there's universal support for Ukraine, universal hatred towards the Russian establishment, let's say.  And then as you get into Europe, it's western Europe to the UK, there's pretty strong support for Europe.  Then you will find some people who are just kind of weary of it all. 

It's only when you start to get more towards America that you start to see actually people almost sympathetic to Putin or repeating Russian propaganda, and that proximity thing exists, and I can't explain why. 

Balaji Srinivasan: Here's why, actually I do disagree.  The reason is 85% of the world is not sanctioning Russia.  Most of the world GDP is not sanctioning Russia, you're aware of that, right? 

Peter McCormack: I'm talking about the general public, I'm not talking about foreign policy.

Balaji Srinivasan: What I mean is, if you go, so I think a big part of what you said is correct, and then there's a part that I disagree with. 

Peter McCormack: Okay. 

Balaji Srinivasan: The part I agree with is, the closer you get to Russia, the more you are encountering Eastern Europeans, people in the Baltic States, that have direct experience of living under the Soviet boot and just got their independence 30 years ago.  And even during peacetime, Russia was messing with Estonia with a -- go ahead.

Peter McCormack: And look at look how they've flourished.

Balaji Srinivasan: Totally.

Peter McCormack: Look how Estonia, Lithuania, Latvia have flourished. 

Balaji Srinivasan: Yeah, that's right.  I mean, they've had a better life on their own.  So, as I said, I am very sympathetic to that.  The thing is that, what's the right way of putting this?  Okay, how much do you care about India versus Pakistan? 

Peter McCormack: That's a good point.  A little bit. 

Balaji Srinivasan: Exactly. 

Peter McCormack: A little bit in that -- 

Balaji Srinivasan: That's my point. 

Peter McCormack: Yeah, but when I hear about it, you hear about these conflicts in Kashmir, and I live in Bedford; where I am, it's a very multicultural place.  We have a large both Pakistani and Indian community, and we've also seen hot spots flare up in the UK with these, I think Leicester there was, a couple of years ago, Danny might remind me of that, where there were these flashpoints of these kind of both side violent protests, British Pakistanis against British Indians.  I'm aware of it, I just want peace everywhere.  So, I'm aware of it and I care. 

Balaji Srinivasan: Totally.  Okay, okay, but just take that.  Now take that.  That's the Indian perspective on Ukraine-Russia.  They're aware of the flare-ups between these guys beating each other up, they just want peace everywhere.  That's the first order, the Indian perspective.  It's a faraway thing.  They recognise there's an issue, but it's a conflict and everybody's shooting each other, so we just want peace. 

The second order, it's something where India would say, "Well, the West literally funded Pakistan.  It set up this", I'm not saying -- I'm going to say this in a more aggressive way than I actually probably would describe to you, but let's say if you talk to an Indian nationalist, they'll say, "The US funded Pakistan, this terrorist state that funds terrorists, that kill Indians, and did the Mumbai massacre.  And it's not even in American interest because they were harbouring Osama Bin Laden.  They've propped up this rickety nuclear weapons terrorist state on our border and caused us enormous problems.  It's a huge part of our military budget for years and years.  They wouldn't even be functional without this western aid.  And now they're telling us that the grand champions of global democracy and India is bad for not going and getting involved in this Ukraine-Russia War, when all India wants to do is basically just continue trading with people and it's not taking a side in this conflict".  And that's like the Indian perspective. 

This is what I meant where on every kind of fight, something like this, you have the Russian and the American and the Eastern European and Western European, but India is a player now.  People care about India's view in a way that they didn't ten years ago, since India has risen.

Peter McCormack: Well, can I interject there?  Can I interject there on one more point?

Balaji Srinivasan: Please.

Peter McCormack: So, this conflict between India and Pakistan is mainly fought over Kashmir, right.

Balaji Srinivasan: Well, that's part of it, but it's more than that.  It's like Pakistan funding terrorism within India, there's a long list of stuff. 

Peter McCormack: Of course, but when you say how much do I care, in 2008 we did care, the world cared because the fight was taken onto the streets of Mumbai.  It was an awful terrorist attack. 

Balaji Srinivasan: Sure.

Peter McCormack: But if you talk about Russia and Ukraine, look, 2014 mattered when they annexed Crimea.  But from 2015 to just over, say, 18 months ago, there was still border conflict, probably similar-ish, comparable to border conflict, but people didn't care.  But now we're at the point where if you switch on the news, I mean, only two days ago, a missile was hitting a restaurant, people are killed, children are being killed. 

Balaji Srinivasan: Oh, totally.

Peter McCormack: Children are being, against UN conventions, are being taken across borders.  And so I think that's why we care because it harks back to that things that happened in World War II.  I mean, this matters.

Balaji Srinivasan: So, here's the thing, look, let me separate out a few things.  I'm actually sympathetic to Ukraine as I said, I'm not saying you shouldn't care about Ukraine.  I recognise, of course, it's in your backyard, of course you're going to care.  I think what I'm essentially pointing out is, number one, huge wars like the Mosul thing have been totally memory-holed, that people didn't care about or even know about at all; massive wars that the US caused in the Middle East, number one. 

Number two, huge conflicts that the West has fuelled on the other side of the world, like India, Pakistan, also people don't really care about in the West, even though they helped cause them in many ways, from partition itself and so on.  And you do point out, it's true, that the attention of the world came with the Mumbai massacre of several years ago.  But it's not like everybody suddenly unified behind India and India threatened countries with a cutoff of trade unless it sanctioned Pakistan and immediately the bombing started in five minutes.  It wasn't like that.  It was like, "Oh, I'm so sorry for you.  Okay, what's next on TV".  That's different, that's more disconnected. 

The reason I brought the Taiwan example is until very recently, Americans didn't care about Taiwan.  And by the way, you know what?  They didn't care about Ukraine either, and I can prove it.  You know why?  How many people know who Walter Duranty was?

Peter McCormack: I don't know.  I mean, how do you answer that question?

Balaji Srinivasan: Do you know who he is?

Peter McCormack: Again, it's a name I know, but I probably know if you remind me.

Balaji Srinivasan: Okay, so Walter Duranty is the correspondent for The New York Times company who covered up the intentional starvation of millions of Ukrainians by Stalin.  Okay, five million people were starved out.  They literally won a Pulitzer Prize for these lies. 

Peter McCormack: I remember that.

Balaji Srinivasan: And the same family that made money from literally helping to choke Ukrainians to death has now reinvented themselves as a cheerleader for Ukraine.  And it's basically, I mean we're literally talking you want children dead, they got starved to death on the streets.  And there's all this stuff about addressing historical transgressions, you know, Dutch firms paid for the Holocaust.  New York Times is $4.8 billion in market cap.  Ukraine needs $7 billion a month in aid.  Why not liquidate The New York Times for its historical transgression of literally causing the Holodomor, which was the Ukrainian famine, and give that money to Ukraine. 

Instead, what you have is something where that role in basically helping subjugate Ukraine in the first place, which is part of the reason this conflict is even happening, has been totally whitewashed.  And when I bring it up, when I used to bring it up in the past, and I talked about the Ukrainian famine and so on and so forth, this is before 2022, you know what people told me when I brought Walter Duranty or whatever?

Peter McCormack: Go on, tell me.

Balaji Srinivasan: "Balaji, no one cares about Ukraine", that's what they said, "No one cares about what The New York Times did to Ukraine".  And now you see my point.  Basically, for The New York Times to have reinvented itself as a cheerleader for Ukraine is like Der Stürmer reinventing itself as a cheerleader for Israel.  I mean, they were the most anti-Ukrainian outlet in the entire world.  They literally caused the genocide of millions of Ukrainians.  They lied about it, they covered it up, they won a Pulitzer for it, they made money for it.  And you never even hear about this, you never even see a story like, "Troubled history of the West in --" you know, "Troubled history of The New York Times in doing this".  They should be paying reparations.  It just has a completely different light on the whole thing than what it currently is.  It's a very selective view of history and a very selective setup of events that erases everything other than the parts that make it a very clean kind of thing. 

Peter McCormack: Yeah, but look, listen, I'm no fan of The New York Times.  I think it's absolute garbage propaganda. 

Balaji Srinivasan: Sure. 

Peter McCormack: But that was 1932 and we're nearly a century on. 

Balaji Srinivasan: Oh yeah, but what did they publish about in 2020? 

Peter McCormack: I don't know.

Balaji Srinivasan: 1619.  They went 400 years ago.  1619, that was a live event with thousands of articles on it that the United States was supposedly founded on slavery, 1619 Project, you remember all this?  So, if 1619 is important still, it's a pressing issue, why isn't 1933?  And frankly, why isn't -- look, the fact that you didn't know Walter Duranty's name, but you do know --

Peter McCormack: Oh, I know the story, I know the story, yeah. 

Balaji Srinivasan: Okay, so I'm not attacking.  But what I'm saying is, I still think actually most people on Twitter or whatever who now know the Dnieper River or whatever, they know places in Ukraine, but many of them don't know Duranty, they don't know.  I mean, it's just a totally different kind of thing.  What it is, is you are made to care about something in proportion to how much the establishment cares about it. 

Peter McCormack: Sorry, that's the thing I want to push back on. 

Balaji Srinivasan: That's what you disagree on.

Peter McCormack: Yeah, that's the thing I want to push back on.  But like I said, I cannot stand The New York Times.  It's a propaganda hellhole.  But Walter Duranty was 1932, it's nearly a century ago.  What are we expecting the current editors and journalists to do?  If they believe that Russia is an evil empire and that it has illegally invaded Ukraine and is sending missiles into homes and restaurants and killing children and blowing up trains, why not report on that as being an evil act?

Balaji Srinivasan: I didn't say not to report on Ukraine.  I am saying, why aren't there 500 articles talking about the western press's complicity in putting Ukraine in this position in the first place? 

Peter McCormack: Yeah, I mean, look, sometimes people don't want to dig up old things, because it's embarrassing.

Balaji Srinivasan: Okay, so now we're getting to the thing. 

Peter McCormack: It goes back to that list of things.  Remember you talked about, it's the same as Jerome Powell.  Why are they doing this?  It's the same list of reasons.  It's fraud, lies, whatever.

Balaji Srinivasan: Sure, but let me give you another example.  Have you heard about, this is something that's big in China, most people in the US don't know about it; do you know what the Eight-Nation Alliance was?

Peter McCormack: No, tell me.

Balaji Srinivasan: It was basically the US allied with a bunch of other countries to invade China.

Peter McCormack: Okay.

Balaji Srinivasan: Do you know that, that the US invaded China?

Peter McCormack: No, I never knew. 

Balaji Srinivasan: All Chinese people know that.  Right?  So, that's like an example of what I mean.  Like, if there's a piece of history that's foremost in your mind, and it's a motive, so now that -- just when you know the US helped invade China, the US helped subjugate China, then the entire US defence posturing around democracy, authoritarianism, etc, it gets blown up as a narrative within China.  It's like, "This is all just bullshit.  It's basically the Americans justifying imperialism against us like they did in the past.  They were also democracy back then.  They imperialised us, they're imperialising us".  That is a Chinese narrative, see what I'm saying?  So, the thing is that I'm not saying that they're good guys, I'm just saying that that is their domestic narrative. 

I find that the global conflict of democracy versus authoritarianism really just means Blue Tribe dominance, because Republicans are supposed to be against democracy, Russians are against democracy, Chinese are against democracy, Indians are against democracy, Israelis are against democracy.  Now France comes in for a pasting, South Africa, because it said something nice about Putin or whatever, they're finally getting negative reporting on South Africa.  You're seeing more negative stories on South Africa than I've seen in a while.  So, what it is is, let me see if I can be concise with the point on this, have you heard that saying, "Find me a man, I will find you a crime"? 

Peter McCormack: Okay.

Balaji Srinivasan: If you apply the magnifying glass closely enough to somebody, "Find me a man, I will find you a crime".  Or Richelieu said, "Give me three lines written by the most honest of men and I will find something in them with which to hang him".  Or, "The federal prosecutor can indict a ham sandwich".  So, have you heard that one also? 

Peter McCormack: No, I love it! 

Balaji Srinivasan: If you're an enemy of the regime, then they'll find something.  I mean, of course, Putin gave them an enormous thing, and he's in the wrong on this.  Okay, here's a good example.  The Yemen War.  How much have you heard about that?

Peter McCormack: A lot, and this is --

Balaji Srinivasan: Oh, you have?  Okay.

Peter McCormack: Yeah, and this is the problem.

Balaji Srinivasan: But Americans haven't.

Peter McCormack: Yeah, and this is why I think I push back, and look, people listening to this are going to get pissed off, but this is why I push back, is the BBC has covered the Yemen War a lot. 

Balaji Srinivasan: Okay. 

Peter McCormack: A huge amount.  And we've even had a lot of questioning in our Houses of Parliament because of our support for the House of Saudi.  We've been weapons suppliers to Saudi and it's an horrific war in Yemen.  So, that has been covered and this is why it's very difficult being in both camps.  When I've got one foot in America and one foot in the UK, I see both worlds.

Balaji Srinivasan: Okay, I would say 90%, I don't know what percentage, it's just a guess.  Okay, now it seems to have wound down, China seems to have helped bring peace to the Middle East, which is insane, Saudi and Iran, the Yemen thing winding down.  But I would say 90%, maybe 95% of Americans weren't even aware that the Yemen War was happening, or that the US was indirectly assisting it.

Peter McCormack: They probably don't even know there's a country called Yemen!

Balaji Srinivasan: Right.  So that's what I mean about, like, Mosul totally wiped -- that entire war, we didn't even know about it; the Yemen thing, just not even on people's radars, kept away; Taiwan was a non-issue and discussed in a completely different tone just ten years ago; Ukraine, when I brought up Walter Duranty before 2022, people would say, "Who cares about Ukraine?"  That's what they tell me. 

So, what I'm just trying to get at is, that's quite a few different examples there of essentially something where there's giant wars or famines or conflicts that are underplayed because it's not in the interest to play it up of the regime.  And that's not to say that these crimes aren't real crimes or that Putin's, I mean, of course these things are bad, but what attention on what badness is -- what badness gets your attention, or is given your attention at every given point, there are folks who are literally at the sluices on that, just like the wokeness graph I showed you.  There's a few editors-in-chief that can control where your attention is going. 

Now that it's starting to change, with decentralised social media, they are losing the grip.  And so you're seeing, like, the Overton window has moved more in some ways in the last six to nine months than it's moved in a long time.  Lots of new things are pumping up on Twitter and that's why it's digital glasnost, or what have you.  Anyway, with all that said, like should Putin withdraw to the pre-war borders?  Yeah, of course, that's obvious.  And here's the other thing.  If you're actually in the middle of a war in Eastern Europe or something, you're like, "I don't care about this meta stuff.  Let me just win the war", or whatever, totally.  I'm totally sympathetic to that.

Let me give one more other point, okay.  The war on terror was, for ten years, just this completely dominating event in the US psyche.  All the coverage was around Islamic terrorism as the big problem of our age and obviously 9/11 showed us a real issue, and our boys are fighting over there so they won't have to fight them over here.  And you heard all of that, and now it's just so gone, it's like ten current things ago.  But $8 trillion were spent, huge amounts of the Middle East were just totally blown up, places plunged into civil war, and it's just on to the next war, with Russia.  And then, some people want to go on to the next war with China.  And so, I mean, you go from fighting the Middle Eastern wars and losing.  And by the way, the US's loss in the Middle Eastern wars is very, very dramatic. 

Peter McCormack: When did they last win a war?

Balaji Srinivasan: Well, that's the thing is, here, let me show you this.  Just to do a retro, you know what a retro is, it's like, "Okay, we blew up all these things".  "War on terror, a retrospective: $8 trillion spent; Iraq is now trading in yuan; Assad won the Syrian Civil War; Afghanistan is controlled by the Taliban; Saudi and Iran aligned against the US; Millions dead and displaced.  Conclusion, let's fight Russia and China next". 

Okay, so $8 trillion dollars and like 900,000 deaths, that's probably an underestimate, but fine.  Iraq to allow trade with China in yuan, so even the country that was invaded has kind of flipped to the other side, not yet for oil, but for other things.  Right.  Here's Assad shaking hands.  And even though the US threatened sanctions on the whole Middle East for doing this, relations have been normalised.  Here is the Taliban controlling Afghanistan and Blinken is fruitlessly calling on them to reverse abandoning women.  Here is China brokering peace between the Saudis and the Iranians, three very different cultures that are now unified by basically being non-US.  Here's the tens of millions of people, including Syrian refugees that came to Europe, that are displaced by the war on terror. 

After all of this, we are suddenly taking on China and Russia at the same time.  What?  And by the way, that war was faked.  Iraq's alleged weapons of mass destruction, that was a government conspiracy.  This is literally fake stuff that convinced people to go to war.  So basically, why bring up the trillions spent, the millions displaced, the soldiers killed, the countries destabilised, or the total strategic failure that delivered the entire region to Russia, China, and Iran?  I mean, are you trying to undermine support for the next war? 

That is a broader context of, in a sense, you can argue that after the retreat from Afghanistan in August 2021, that's actually part of what caused Ukraine 2022, because Russia and Putin thought the US was weaker and they said to roll the dice and take a chance.  And the US Military was smarting after that defeat, and they wanted to show that they were tough, arguably.  And actually, the combination of those two things, Putin thinking the US is weak and the US wanting to sort of prove a point, I think led to this.  And you'll find people talking about that, because if Russia had just waltzed in and taken it, then then the US world order is over. 

Who the hell knows how it's going to play out?  I think as of a week or two ago, it looked like the counteroffensive had failed and that Russia was gradually winning.  And I remember I was just saying this and I'm like, as long as Putin doesn't set off a nuke or something dramatic doesn't happen, then it's on track.  If you just track the public support, it's just like a gradual decline in public support and Ukraine isn't going anywhere relative to -- I mean, it's physically located there, but the US will eventually turn its attention to something else, just like it turned its attention away from the war on terror.  So, if Russia can just keep it going at a slow burn, then eventually, the US will probably pull its attention.  It might take five or ten years, who the heck knows, but it eventually will because it's not going anywhere. 

Then, of course, this whole coup thing happened and that was like a giant surge.  That was the worst thing for Russia that could have happened, in some ways, besides a nuke blowing up, because now there's a huge surge of attention, so that, I don't know, has added whatever number of years to this conflict, who knows.  I may be wrong, it's very unpredictable as to what happens.  But in a sense, actually, the biggest winners just -- we got into the Ukraine thing, and we've talked about that for a long time.

Peter McCormack: Yeah!

Balaji Srinivasan: But the biggest winners of the war in Ukraine are arguably everybody who isn't in it.  It's in Asia, it's the Middle East.  Asia's got an example of what the China-Taiwan War might be like, and that's cooled everybody down.  And China's strategy is just to win a cultural victory.  You know what I mean by that?  Two out of the three parties in Taiwan are actually not for independence.  Or, it's complicated, there's very fine gradations there, let's say, whether they're pro-Chinese reunification or at least pro-Chinese détente, and they've been gaining on the DPP, which is the party that's like pro-American.  And the thing about this is China is next door to Taiwan, they speak the same language, China is Taiwan's biggest trade partner, they're wildly dependent on China for a bunch of things, and they're an island, so it'd be really difficult to supply them.  And China's right next door with the biggest manufacturing build-out in history, maybe.

So, what China's strategy is, is just flip Taiwan culturally.  They might not be able to do that to, I don't know, like Alabama or something like that, which is very different culturally.  But Taiwan is right next door, speaks the same language, same culture, same history, really the same people in many ways.  And so their goal is basically probably to get like some referendum or some vote for unification in a few years, as opposed to an invasion.  And that's talked about over there.  And also the Taiwanese recently -- because basically one of the questions is, just like with Iraq, with the Middle East, was the US interest in the rights of Middle Eastern women.  That was a huge thing that they talked about in the 2000s.  Is that a big issue right now?

Peter McCormack: Yes, it is still in Iran.

Balaji Srinivasan: No, but I mean in American press. 

Peter McCormack: It's hard, because I don't see it.  So, you might say it isn't, but all I know is it's still a big issue in Iran itself.

Balaji Srinivasan: Well, in Iran, but sorry, I should be clear.  What I mean is, I'm not saying that Middle Eastern women have a great time of it, though the region has secularised.  I'm saying, is this made into a human rights issue on the front pages every day in the western press? 

Peter McCormack: No, because we can only really have one, maybe two current things. 

Balaji Srinivasan: That's right, okay.  So basically, as heartfelt as that was back in the day.  As heartfelt as, "Oh, yay --" or BLM just a few years ago.  People were really fist-bumping about that, and they were really fist-bumping about COVID vaccines, so now they're fist-bumping about Ukraine.  They'll fist-bump about something else.

Peter McCormack: But it depends on the news cycle.  There was, I'm going to look her up, the murder of, what's her name, Mahsa Amini, who was beaten by the morality police in Iran, and that did bring up the news.  So, it's hard to keep so many stories in the public eye.

Balaji Srinivasan: No, I know.  But okay, let me show you something else also.  So, this is something.  TSMC, there was a US guy who said they were going to blow up TSMC if the Chinese attacked.  And the defence minister of Taiwan said they will shoot down US planes, or they're not going to let the US blow up TSMC.  This is a great example of the difference between what's in actually Taiwan's interests and Taiwan being used for proxy war with China. 

Basically, the ideal would have been deterrence.  Ukraine is now blown to smithereens, and there's people who will, on the one hand, admit that Ukraine is a way to kill Russians, and so on and so forth, but then on the other hand pretend that they're really concerned about the Ukrainians, who they didn't even know about a few years ago.  This is not to say that Ukraine's cause isn't just, but it's like the Iraqi women.  There's all kinds of news coverage on their plight, their plight was a real plight, and now it's forgotten because they're just a justification for the use of force or justification for what the establishment wanted to do at that time.  It wasn't something -- they didn't actually really care about the human rights, they cared about might is right, you know. 

So this kind of thing, which it shows the gap there, where Taiwan doesn't want to be used as a tool against China, they've got their own interests.  And so what are they saying now?  They're saying things like they're going to produce most of the valuable chips still in Taiwan; they're not going to send all its technology to the USA; they're basically -- here's a few things.  Actually, I won't get to all these articles.  The point is that Taiwan doesn't want to be used for proxy war against China, at least there's factions within Taiwan that don't.  So, that's why the biggest beneficiary of, in a sense, Ukraine, Ukraine sacrificed itself or Russia blew itself up so that Asia could have peace.  Because it's like an example on the other side of the world of what you definitely do not want.  Not to say, maybe we'll all be stupid and sleepwalk into another war, but it feels like a deterrent. 

All right, let me pause there.  Why don't we recurse back up because we've talked way more about that. 

Peter McCormack: Yeah, we need to circle back here, back to the money! 

Balaji Srinivasan: Coming back up, because I don't have particular insight on the Ukraine war, or whatever, relative to -- I mean, I know a little bit about it, but certainly don't speak Russian or Ukrainian, don't have sources there or anything like that.  Coming back to what I think, at least at the macro level: allocation, location, organisation.  So, allocation is, get out of blue states financially; location is, get out of blue states physically, and actually Ray Dalio also talks about this.  You know, he's like, "Location is a risk".  That's really, it's funny.  Hold on, I'm going to find you this.  Ray Dalio.  Yeah, here we go.  This is so abstract and it's hilarious.  I have a lot of respect for Dalio, but just the way this is said in this article is funny, which is not, I think, his phrasing.  But see, this is saying, "Why billionaire, Ray Dalio, thinks another economic disaster is coming and how he recommends preparing for it", do you see that?

Peter McCormack: Yeah.

Balaji Srinivasan: Okay so, "One risk, for example, could be location, meaning the physical place where you live and work.  The health index that rates a dozen nations…  So, moving is a hassle, but it's worth considering under financially worrying circumstances.  Measure your financial risk in inflation-adjusted terms".  And so the thing is, by the way, this is a way of saying something without actually raising -- I mean, translation, "Where you live may become physically unsafe.  BLM and Jan 6-like mobs may accompany asset seizures in your jurisdiction if it's running out of money".  That's the translation of what that's saying.  It's the most abstract, desiccated way.  It's like saying, "Mortgage-backed securities were impaired in their value, which may cause financial shocks to the economy".  Okay, yeah, that's true, but that's a massively understated way of saying what the Financial Crisis was. 

So, saying location is a risk means 2023 onward isn't like 2008.  2008, you could basically just trade it and stay in the same place.  2023 and whatever comes, you basically don't want to be caught in a blue government's black hole.  Yeah.  And it may turn out, by the way, the Ukraine war has been very costly to Western Europe, the energy costs.  We will see what happens there because it looks like Western Europe has taken a massive economic hit for this.

Peter McCormack: Massive.

Balaji Srinivasan: Right, go ahead.  Actually, what is your perception on the ground there?

Peter McCormack: Yeah, no, absolutely.  I mean, like our energy prices here have gone through the roof and people having to choose between heating their homes and feeding their families.  It has come down a bit, I think the energy cap dropped by 17%, so it's starting to reset. 

Balaji Srinivasan: But how much demand destruction was there for that?  Like were businesses going bust and that's how, you know?

Peter McCormack: There was some, and you got news reports that say some cafés that couldn't afford, but I don't think there was -- I think the fear of it was more than reality; I think a lot of people have survived.  But there is a counterpoint to this, is that there is now a push for energy sovereignty and I think I saw the other day that Sweden is going back towards nuclear, and the UK is.  And so, look, there is a positive that's coming out of the back of that, the realisation that you need energy sovereignty, because even with their crumbling infrastructure, France was essentially the saviour of the UK at certain points, because they were able to supply us with energy that we didn't have. 

So, like I say, the fear was worse than the reality that definitely impacted some people, but energy prices are dropping, and a time when we're heading to the summer, which is fortunate; and there has been this focus on energy sovereignty, and you were seeing nuclear growth across Europe.  So, that's summary. 

Balaji Srinivasan: Sure, so it's good it's good that nuclear is happening in some places.  The thing cost almost $1 trillion, by the way.  I saw a headline that €800 billion was spent just on energy compensation.  That's pretty expensive, by the way.  If Iraq and Afghanistan, and so on, cost $8 trillion over 20 years, this is easily costing more than $1 trillion per year just on that number.  It's probably more than that, we're not even talking arms and other stuff.  So, I mean, $1 trillion here, $1 trillion there, but after the world was just recovering from COVID and supply chain shocks, this stuff starts to add up.  And not everything is immediately obvious.  Some of the consequences of COVID and the printing that happened, it's like the thing gets destabilised but only collapses a few years later.  The feedback effects in such a large system are not as instantaneous. 

But the thing I wanted to say about this is, and then I'll get to the last point on location, is if I just go back to that Too Fake to Tell thing.  Okay, so the big thing about this is, you're basically just not going to get a warning.  Here is, "Yellen feared housing bust but to not raise public alarm".  Here is Yellen saying, "No new financial crisis in 'our lifetimes'".  Here is Powell and Yellen saying they're downplaying inflation risk.  So, this is when they're saying inflation isn't going to happen.  Here is Kashkari saying, "Rates would be held near zero through 2023", this is in mid-2021, and as a consequence, all these bonds got bought.  Here is Gary Cohn saying that the public has more --  You're seeing this on screen, this video just now? 

Peter McCormack: Yeah, I've got it. 

Balaji Srinivasan: I almost think you'd scare the public if you put this out, "Why are they telling me this?  Should I be concerned about my bank?"  I'd be careful about the unintended consequences of starting to blast too much of this out in the general public.  FDIC, 9 November 2022, just a few months before the bank failures began, and they're basically arguing for not telling people.  He even says, "We might have more confidence in the banks than the general public", everybody laughs.  You should watch that video, it's like out of a movie, honestly.

Here is Powell in March -- oops, once this goes…  The point is, that clip shows Powell in March 2023 saying, "US banks have strong capital", three days before the banking crisis started.  Here is the Vice-Chair, Michael Barr, he's saying, "The banks they regulate are well protected from bank runs", on the morning the bank run started.  Here is Biden saying that the US has never defaulted.  But of course, it's defaulted multiple times, including the gold seizures.  Here is, basically this is like a small thing, but the BLS like revised its hourly compensation numbers.  They were saying that people gained 5% in hourly compensation, but actually fell by 0.7%.  And so they had totally wrong data, where they're saying people are making money; no, they're actually losing money.  That's a huge revision, by the way.  That's like saying we made 5% profit, but actually, no, we made a 0.7% loss.  Massive, massive change, underreported.  This actually guided all decisions, "Oh, the economy's so great".  No, it actually isn't. 

Then here is Krugman from a few weeks ago saying that a $1 trillion dollar coin would be totally fine, but the reason that you should not talk about platinum coins, you should talk about premium bonds, it's because they're harder to understand, which because it's harder to understand, then people can't argue against it, so they feel dumb, they don't understand what a premium bond is.  So, the system is optimised for opacity, it's meant to be hard to understand.  And that's like a natural selection thing.  If it's easy to understand, you see exactly how they're scamming you.  When it's hard to understand, with lots of gimmicks and stuff, you can't see it. 

The reason I just brought up all this stuff is that is 20 years, and those are pretty big things.  We're talking about the Financial Crisis, we're talking about transitory inflation, we're talking about the stimulus act.  That's 20 years of the same macro guys and the same macro names either not warning you intentionally, or not warning you because there's an error, and so on and so forth.  So, one fine day, a trap door is just going to open.  And, whether it'll be announced or acknowledged -- go ahead.

Peter McCormack: Well, I'm just recognising that they're essentially kicking the can down the road, no one wants to admit it.  At some point, there's going to be a collapse and who gets out first?  It's like FTX, it's like Prime Trust.  I'm out, I'm out now, I've got my protection, I've got my Bitcoin, I've got my physical cash hidden in different parts of the country for in case I need it.  I don't have any gold but I'm thinking of getting some.  You know, I'm seeing the FTX collapse before it's happening.

Balaji Srinivasan: Yeah, exactly, Uncle Sam Bankman-Fried.  Now, what time scale it happens on, God only knows because their core competency is can-kicking and obfuscation.  You know, Michael Burry thought the Financial Crisis was going to happen April 2007.  And there's a famous clip on this from The Big Short where he's saying, they just won't pay mortgages, they kick in then because the defaults are spiking.  So, he thought that was when the crisis was going to happen.  But because rating agencies and the big banks and so on kind of controlled their own reports in a sense, the crisis wasn't really acknowledged until September 2008, almost 18 months later.  And so during that year, he had to pay $80 million, $80 million in premiums per year, basically to keep his big short alive.  And then he made a ton of money at the end of it.  But the point is that he looked dumb before he looked really, really smart.  But he looked really dumb for a while before he looked smart.

Peter McCormack: Because he potentially faced the market being irrational longer than he could stay solvent.

Balaji Srinivasan: That's a famous saying, correct, that's right.  So, right now, I mean, if it took 18 months from it being obvious to somebody who was looking to being obvious to people who weren't looking, God only knows.  It's funny, just like Bernanke said, it was going to be a mild recession, April 2008, then the economy collapses, or it's acknowledged to have collapsed by September 2008.  Similarly, Jerome Powell, almost 15 years to the day after the Financial Crisis opening bars of April 2008, he also said it's going to be a mild recession in April 2008.  So, is it September when it all blows up?  Who the heck knows?  Is it next year during the election year?  Could be anything.  I kind of have a feeling that the election year is going to contribute to this because there's actually an incentive for people to bring up these issues.  And now there's decentralised social media.  So, it's possible that you get out first. 

All right, with that said, we've now discussed that a bit.  It's allocation, location, organisation.  The third part is the non-libertarian part.  You hit a fire alarm, then you run out of the building, and then you need a gathering point because it's a burning building, but you don't want to live on the street.  You want to rebuild a building.  That's what I mean by recentralisation or tribalisation.  So, the next step is to find or found your tribe.  Okay, so that's what I'm doing next.  And when will this episode come out?  Like in a week or two? 

Peter McCormack: Probably Monday.

Balaji Srinivasan: Hopefully you can get it out Monday.  The reason is that I want to get out a couple of articles before then, and the reason is that I'm going to start by funding 100 startup communities, like Culdesac, which is a car-free community.  Have you seen these?  Do you know what I'm talking about? 

Peter McCormack: No, but tell me.

Balaji Srinivasan: Okay, here, let me show you.  So, Culdesac, "The first car-free neighbourhood built from scratch in the US".  Okay, walkable community, looks beautiful, cheap studios built for remote workers.  700-plus apartments for rent.  And it's got a great gym and courtyard.  Basically, it's the place to live that you'd want to live.  Here's a totally different one called Kift.  This is van life.  So, you're in a community of folks who drive around and live in nature and save money and live in their van and have Starlink.  And here's yet a third one, which is Próspera.  So, Próspera, "Build new cities, maximise human prosperity".  And they've got their first one in Roatán near South America, Latin America, and they're building more.  And there's a whole, I've got a whole table of these at --

Peter McCormack: Well, you're recognising what's coming, and you're building or funding some first lines of defence for those who recognise it, who want to exit.

Balaji Srinivasan: Yeah, because here's the thing.  I'm sympathetic to the book, The Sovereign Individual, but I think people actually want sovereign collectives and startup societies and eventually network states.  And what exactly does that mean?  So, what is a startup community?  Well, we know what a startup company is.  A startup company is like the Y Combinator style model that's now being turned into an assembly line, an industrialised process for the last 20 years, which is you have a tech innovation, you come and you found like a US Delaware C-Corp, and you try to build it into the next Google or Facebook or Amazon or Apple.  And your business model can vary.  It can be software as a service, it can be other kinds of things, and fundamentally you've got a tech innovation, there's some flaw in the market, and you're trying to address it.

By contrast, a startup community is not the same as a startup company.  A startup community, you start with a moral or social innovation, for example, like what I just showed, car-free is good.  Or the opposite, living in a van is good, being free of everything but a car.  Or, let's say you want to build a self-driving car city.  Those are three different things just on cars.  Or you could do a keto kosher society where people are only keto.  You could have a society where the internet turns off from 9.00pm to 9am, like they do in some colleges in China to stop people from playing video games all night.  You could do a formal wear society where people are just always well-dressed, because they're showing respect for each other, and so on and so forth. 

You have some crazy idea of a social innovation that's as crazy as Elon saying, "Let's go to space".  You have some idea of what a social innovation should be.  And then you recruit people because you're a creator or an influencer, and you do meetups, and eventually you go from crowdfunding brunches to crowdfunding buildings.

Peter McCormack: Okay, let me throw this one in there and tell me if this works.  Could you do it based around a football team? 

Balaji Srinivasan: I knew you were going to say that. 

Peter McCormack: Because what resonated with me there is we went from a football team, now this season we have 56 teams playing under us, three senior teams, one men's, two ladies, 20 junior girls' teams, 7 to 16.  We have 30 junior boys' teams under 7 to under 16.  Our next thing is the infrastructure.  We need to build the ground, the training facilities, the academy where kids can leave school.  It is a social project within my community based around a sport, but we have meetups, we have shared ideas, and we're trying to do something for the community.  Does it fit within that? 

Balaji Srinivasan: So, potentially yes.  And first of all, I've got to say, I'm impressed with your logistical skills.  That's actually, you have an unusual thing there, Peter, where you have both the skills of a content creator, and the skills of a logistics person, or you can at least recruit that person, which means you indirectly have the skills.  And those are kind of the two things that you need.  You need to be able to inspire people and build a community online, and then you need to be able to organise them offline to actually do things in the physical world. 

So in a sense, what the community organises around, whether it's a football team, whether it's Bitcoin, whether it's a religion, whether it's X or Y or Z, success for a startup community is measured by how many paying subscribers you can get who will move to your community or one of the nodes of that community.

Peter McCormack: Because the thing is, the interesting thing about the network state is, we have these Bitcoin meet spaces and nodes building up.  We have El Zonte in El Salvador, we have the Pubkey in New York, we have the Bitcoin Commons in Austin, we have Bitcoin Park in Nashville, we have Real Bedford Football Club in Bedford.  What's happening, these are becoming pilgrimages.  People are choosing to go to the ones.  And we've had, I would say, probably over 100 people last year flew from another country to come to Bedford and watch a football match.  They would never have ever had a reason to even know it exists, but they have and that is a growing thing.  We have people coming for the meetups. 

Balaji Srinivasan: So, you managed to de-commoditise, in a very corporate way of putting it, your football club with the cloud.

Peter McCormack: Yeah, I mean we had 12 guys flying from Slovakia for one game.  They came to Bedford, they stayed in the hotel, they went out for dinner, got wasted, they came to watch us play football.  Last game of the season, we had about six, seven come in from America.  It's becoming a thing, and as the team grows and goes up through the divisions, more people will come.  I think a lot of people didn't get the project to begin with, Balaji.  Still, people are like, "Oh, I hate it when you talk about the football".  And I always say to them, forget the football, it's a Bitcoin project.  We have Bitcoin -- we have meetups, I have more people go to them than go to, say, BitDevs in San Francisco now. 

Balaji Srinivasan: It's a shame.

Peter McCormack: So, don't think of it as -- Ben Arc said it, he said, "I don't care about football, but I love what Peter's building here.  It is a Bitcoin community around football".  So I say, "Even if you hate football, do you surf?"  They might go, "Well, no, I don't surf", "But you care about El Zonte in El Salvador.  That is a Bitcoin project based on that". 

Balaji Srinivasan: Oh, I thought you said, "Serve"!

Peter McCormack: Yeah, surf.

Balaji Srinivasan: Okay, yes.

Peter McCormack: So, it's just a Bitcoin community around another idea, which is spreading the idea of Bitcoin and sovereignty to people through the lens of football. 

Balaji Srinivasan: All right, so, I'm going to show you something.  And this is basically just a five-minute network state overview.  So, because it sounds totally crazy, but I'll show you some slides and then let's come back, all right?  So, intermission, ready?  Can you see the screen?

Peter McCormack: Yeah.

Balaji Srinivasan: All, so here we go.  So, basically, "We've started new currencies, can we start new countries?"  And so I wrote this book @thenetworkstate.com.  I'm going to try and make the case very briefly that starting new countries is possible, preferable, and profitable.  So, let me start with possible.  So, why is it possible?  Well, we know that you can start new companies; Google started out of a garage.  You can start new communities; Facebook started out of a dorm room.  You can start new currencies; Bitcoin was started from a whitepaper.  So, can we start new countries?  Can we start what I call a network state?  And a visual of a network state is like this, where you have a group of people that are networked together around the world that have a population, an annual income and real estate footprint that's comparable to that of a legacy nation state. 

Just to see how something like this could actually be built, here is a gif of this starting from one guy in Japan, and going to 17 and then 172, 1,729, 17,000, 170,000, and 1 million people.  This is a visual of how you could recruit people from around the world, have them cluster in nodes, network those nodes together, and have them crowdfund buildings of increasing complexity until you basically are crowdfunding towns and cities.  And then because that's all cryptocurrency, you have assets that are outside the control of any state that surrounds you.  And because you've got dozens of these nodes around the world, if any one state persecutes you, you can have the people of your network state move to another.  Okay? 

This is just like a startup where it's hard, but it's possible to build something from one to a million people, I've seen that done many times.  And just to give you some more indexes on why this is possible potentially, so most countries are actually small countries.  The majority of countries in the United Nations, if you define a country as a UN member, have less than 10 million people.  38 of them actually have less than 1 million people.  And actually, the number of countries has just been increasing over the post-war era.  This was actually peak centralisation over here.  Think of it as like a valley where there were more countries going backwards and forwards in time. 

So, over here, there are only like 50-something UN members in the world, but as the British Empire, the French Empire, the Portuguese Empire, all these empires broke down, and then here the Soviet Empire, you got all these new independent countries.  And then it's flat, it's been flat for the last 30 years.  But if I'm right, and if the fiat crisis means that the US Empire breaks down, you're going to see a lot more microstates and network states arise.  So, just like currencies were flat over here and then they went vertical, similarly with countries.  And the thing about this is cryptocurrencies rank with fiat currencies.  So basically, we know that there's a fun cycle of fiat market cap that Bitcoin, at the time of this screenshot, was in between the Turkish lira and the Chilean peso. 

So (a) most countries are small countries; (b) lots of new countries have arisen actually; (c) cloud currencies are on par with land currencies, cryptocurrencies are on land with fiat currencies.  So, you put those together, could we have a crypto country that ranks with a fiat country?  And if you actually take the list of the countries of the world ordered by population, a hypothetical network state with 1,729,314 people would be in between Latvia and Bahrain, okay, so it would be a real country.  It would be an Olympic country.  And it would probably post a population growth rate faster than anybody else in the world or any other state in the world, because you have all these type-A personalities, say, both recruiting via immigration and reproducing the old-fashioned way.  This is how you solve the birth rate issue as well.  I say that jokingly, but also seriously, because you actually give them a reason for these motivated people to rank on the leaderboard.  Every birth pushes you up the list.  

This is like the new coin market cap; niche and real estate pump.  And your dashboard over here, that number over here is how you rank over there.  And you'd also rank by other metrics on your network state.  And the thing about this is, could these crypto countries actually be like real countries?  Well, that's a matter of diplomacy and negotiation.  But guess what?  Sufficient traction gets you diplomatic recognition.  Tuvalu, if you know Twitch.tv, all the .tv domain names were sold by Tuvalu through a deal it did with GoDaddy; the state of Nevada did a deal with Tesla for its so-called Geiger factory; El Salvador, of course, has Bitcoin as a national currency; and there's way more things like this.  There's Amazon HQ2 and its deal with Virginia; there's the Wyoming and Tennessee Dow laws; there's the mayors of Miami and New York accepting Bitcoin; actually, Columbia did a deal with GoDaddy for the.co domain name. 

So, the point is that whether it's a US state, whether it's a city, whether it's a sovereign country on one side, or if it's a company or a cryptocurrency on the other side, the land is already open for business and doing deals with the cloud.  So, if that's already the case, why couldn't a crypto community ink a deal for a special economic zone for when node of its network state.  So, that is why I think starting new countries is possible.  Why do I think it's preferable?  Well, right now we've got a situation where there's both a push and a pull.  So, if you're a powerless person in Sri Lanka or Venezuela or Panama, all of these food riots, there's lots of global instability, it hasn't been reported that much, but there's many bad things happening the world thanks to all the printing that's going on.  Powerless people now have an alternative to failed states.  

On the other side, the power user, the ambitious person, whether since moving out of Africa, since in expanding of Africa, going to the US, even landing on the moon, ambitious people have always wanted frontier societies.  And this is the same as a crypto coalition; it's the powerless and the power user, it's a person just trying to hang on to a bank account and the person pushing the limits of what a bank account even is.  And so those people who've seen their countries break down and those people who want to build new countries, that's actually a really interesting alliance.  And what it isn't is it's not the average, middle-class, western person who thinks everything is basically fine.  I think that person will change their mind in a few years, but I think that's not your market in a sense.  It's the people who are the power users and the powerless.  So, it's preferable for those people. 

Finally, why is starting new countries profitable?  So, I put this last, but not least.  You do need something -- economic feasibility is also an aspect of feasibility, but this is annual revenue per user of nation states, social networks, and network states.  So, it's kind of a fun thing to put them all in the same graph.  And here are the social networks.  That's  Facebook or Meta, WeChat, TikTok, LinkedIn, Snapchat, Twitter, okay, this is a Chinese Twitter, that's Yelp.  And these have hundreds of millions, billions of people.  And so, if you're Facebook, you've got like multiple billions of people, but you're only making on the order of tens of dollars per person per year.  Okay, so $20, $30 per person per year times three billion people, it's like $60 billion, $90 billion a year.  Look up the exact number, it's that order of magnitude.  And this is a log scale, of course, so these get really big out over here. 

Conversely, if you've got small nation states, we say their annual revenue per user per capita, what does that mean?  Their tax revenue per capita, just kind of mix concepts here in a fun way.  The tax revenue per capita of these small countries is like tens of thousands of dollars per person, but their scale is only at like a million.  With me so far? 

Peter McCormack: Yeah.

Balaji Srinivasan: Okay.  Now what's cool is in this graph, you see the US and China have the largest scale in people and large revenue per user, so that's why they're the two superpowers, and so on, out over here.  And then finally, you have here, you have the network states which would be small they're not necessarily as big as any of these, but they're monetising much more than a typical social network.  And if Twitter, if these are important businesses, and they are, then this which has one-tenth or one-hundredth the number of users but has 10X or 100X of monetisation per user.  And why am I saying that?  Well, you can charge $1,000 or even $10,000, I shouldn't say $10,000, but you can charge $1,000 or multiple thousands of dollars per month if it's like a community membership where you're paying rent to live in that community.  It's a new SaaS, Society as a Service. 

Peter McCormack: Okay! 

Balaji Srinivasan: Isn't that funny? 

Peter McCormack: Yeah. 

Balaji Srinivasan: And so, you can venture-back this.  And so that's why starting new countries is possible, preferable, and profitable.  And you don't need to get all the way to a new country, by the way.  You can basically have something like this and you don't necessarily need to do all the deals with other countries.  You can just have the scale of this kind of global network or even something less than that.  There's many different stopping points and intermediate points.  But this is basically the idea of the network state, and I think it's what cryptocurrency enables. 

Peter McCormack: Okay, so how do you build one within the regulatory environment of a country?  Like, say I wanted to build my own node and I wanted people to come here and we had housing, but we're still governed by the laws of the UK. 

Balaji Srinivasan: Totally, that's right, and in fact you don't need to change those laws until much later.  The short answer is, think about a political party.  A political party is intermediate between just a group of people and the government.  That's what a party is.  A party is a group of people that intends to seize the levers of power in part or in whole. 

Peter McCormack: Okay. 

Balaji Srinivasan: And there's different parties.  There's the SNP, that's the Scottish, there's the Pirate Party, there's a Communist Party, there's this party and that party.  Different parties have an ideological platform that they stand for.  So in a sense, you're like the founder of a party, and it's a really serious party.  Democrat and Republican aren't really serious parties, because they don't have applications, they don't have membership dues, and so on.  A really serious party is something where it's like, okay, you're showing up to Bedford, you're at all the games, you're paying your dues, you're helping clean the stadium afterwards, you're helping recruit new people.  You have duties that you're asking of them.  And they have rights and responsibilities.  Even if the nucleating point is, every week we've got a football game or a soccer game, or whatever it is, something like that, they're doing a lot of things.

Now the question is, is that too trivial?  Well, a lot of small towns in the US certainly revolve around American Football, so I think for the purpose of nucleating a local community, I think it's totally fine.  But it's kind of like any tech company.  You could have a tech company that's a pretty good company, but it's a $10 million company, or it's a $100 million company, or it's $1 billion.  It's really hard to be a $1 trillion company.  And the same, it's really hard to become a network state, as I define it, that actually has sovereign recognition.  But there's a lot of stopping points in between.  Just like you don't have to be Google to have a successful company, you don't have to be a state to have a successful community.  If all you succeeded in doing was getting 1,000 people to take over some physical region of the UK and live together and have your football pitch and so on, that would add probably massive value to their lives.

Peter McCormack: And the interesting thing about that is, the central component, like the unifying ideals, are based around Bitcoin.  And so, whilst you're part of this community, you can go to Bitcoin Park in Nashville and it feels like an extension.  They all feel like part of this same thing because of these.  And even though bitcoiners and Bitcoin maxis argue with each other about a range of things, they still feel like they're part of the same team.  So, that network is building up.

Balaji Srinivasan: Especially in person.  In person, it's harder to be as much of a troll as people are on Twitter.  Unfortunately, I have to go now. 

Peter McCormack: No, no, we've done three, three-and-a-half hours.  My final question is, you said you're funding these communities.  How much are you funding?  A hundred communities; how does it work? 

Balaji Srinivasan: TBD.  Let's say I'll put, I mean, ballpark, I'll probably put like 10 towards it.  So, like 100 at 100,000, something like that.  But I've kind of already been doing this over the years, with Culdesac, and some of them are starting to bear fruit.  And the key thing about this is, people can be left-wing, they can be right-wing, they can be vegan, they can be this, they can be that.  The measure of their success is whether they're practical enough to take their online community and materialise it into the physical world. 

Peter McCormack: Okay, all right, where do people find out more about this? 

Balaji Srinivasan: Go to balajis.com. 

Peter McCormack: All right, we will share that all out.  Amazing, Balaji, this is incredible.  I'm going to message you shortly, I've got another question for you, but thank you for this epic.  We will catch up with you very soon.  All right, great, thanks.