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Nov. 22, 2006 - Freedomain Radio - Stefan Molyneux
46:17
523 Anarchic Money (video available)

How money could work in a truly free society

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Good morning, everybody. Hope you're doing well.
It's Steph. It is minus some horrible degree in Canada here, and I don't turn the heat on when I am running these podcasts because the roar of the Volvo furnace is rather intense, so it's hard to tell if I'm Doing a podcast or forging a girder.
And so I have decided to keep myself warm.
This is what I do for you, my dear, dear listeners.
In order to improve the audio quality of the car show, I am willing to freeze my capitalist cojones off.
So I hope that that sacrifice is appreciated.
So I wanted to talk this morning, get an excellent question from a long time and Dear brilliant listener, regarding...
Oh yeah? Well, if the Fed doesn't work...
Well, it wasn't quite that way. But it was something like, what would an anarchist economy look like?
And that's a great question for me.
Because, you know, we love the questions that are not verifiable in any way, shape, or form.
We have no problem with those questions.
And... So, I generally like those.
It brings out the novelist in me, I guess you could say.
So, for me, it's a great deal of pleasure to talk about these kinds of theoreticals.
Without further ado, the central question of money in a free market economy is a very important one.
One of the things that occurs generally in the history of thought is that the government does something for so long that then what happens is people just make up reasons why the government should do it.
I mean, it's very important to understand that when you're arguing with people about philosophy or economics or politics or whatever, That the vast majority of what people are doing is simply making up excuses for the status quo.
They're just making up excuses for the status quo.
That is a very important thing to understand.
They're not thinking things through.
They're not reasoning things from first principles because, man, that's a bitch.
I mean, that's really hard.
I find it really hard.
Anyway, maybe I'm alone in that, but I doubt it.
But most people are just making up excuses for the status quo.
Do you like my tassels, for those of you who are watching this on YouTube?
So when people say, well, we need to have the government run the money supply, they're not saying that because they've thought at all about The issue.
They're just apologists for state power, right?
In the same way that somebody who grows up in a slave-owning society is going to say, well, you know, they have to be slaves because they're not as intelligent, because they're not Christian, because they're this, that, and the other.
And, of course, it's a totally circular argument, right?
Which is why... that they have to be slaves because they're not well educated or economically capable or this or that or the other and of course the reason that they're not educated or economically capable which actually I would even doubt but let's just say is because they're slaves right so basically they have to be slaves because they're slaves So the very nature of that which is defined is used as justification for the circumstance.
The circumstance breeds the justification.
That's the kind of closed-loop, hellish logic or anti-logic that social scientists like to use.
And there's lots of ways of examining that sort of logically, right?
Because the first thing, and I know that a lot of libertarians like doing this sort of, you know, hunt the Fed, the origins of the Fed and so on, right?
Because one of the things that generally occurs when people are justifying brutal and evil power is that they say, well, but the people were crying out for it and the government had to come to their aid, right?
This is standard state speak, right?
And this is always the case with, ooh, see the breath, with war.
It's like even when Germany invaded Poland and Czechoslovakia, it was because the poor Germans in Czechoslovakia were crying out for the aid of the Rhineland and there was disorder and out of the goodness of his heart, Hitler went in to free these people from the tyrannies and the disintegration of the society around them and so on.
And, of course, the reality of it is that Hitler was in there fomenting this dissidence, and, of course, they said, well, we have to shut down democracy for a little while because anarchists are burning down the Reichstag, and, of course, it was a Nazi who burnt down the Reichstag.
So it's very common, and people just provoke these kinds of problems all the time and then say, well, we had to rush in and help this situation.
So then when people look back at history, they believe that all of that was the case, right?
So, you know, people say, well, we had to go into World War I because of this, that, and the other, with sort of no knowledge of the absolute opposition of the American population to World War I involvement, and also with no sort of basic knowledge of the fact that, you know, American financial institutions had lent about 35 times more money to the British than they had to the Germans.
And, of course, if the British lost, they'd never get paid back.
We don't even really think about these things, right?
Or, as somebody pointed out on the board this morning, and I have no idea whether any of this is relevant, but it's interesting that there were two presidents who were going to change the nature of interest payments to the banks.
One of them was Lincoln, and another one was Kennedy, and neither of them quite made it to the end of their term.
But when people are talking about, well, we need the government to run money, what they basically think, and this is the amazing effect of propaganda, and it's not really thinking, but this is the story that they tell themselves.
Well, things got out of control, and so the government had to step in and sort it out, right?
I mean, this is the basic idea that The general population is a sort of squalling, complaining, nagging, whiny, aggressive bunch of immature toddlers whacking each other with plastic shovels and screaming and crying, and that the government is the parent who has to step in and get things organized, right?
And that's That's the basic paradox of what we call the state, right?
That we say it's government by and for the people, and the people should vote in their elected representatives, but at the same time, people are considered to be so irrational and incompetent that the government has to keep stepping in and organizing themselves.
Or they say that there's this layer between the people and the government, which is the special interests, the robber barons, the evil gates, or whatever.
And then they say, well, the government has to step in and sort out.
Because Lord knows the government is never in the control of special interest groups.
And Lord knows the government and the civil service and all the people on welfare and all the people with unemployment insurance and the military and the police and the politicians, that they're not special interests themselves.
That's just the kind of fairy tale that people tell themselves.
So that's just an important thing to understand.
People just make up reasons as to why things are the way they are.
Statism and religion are exactly the same.
Statism and religion at the root are exactly the same, as philosophies, right?
Because people just look at stuff and, you know, you have a storyteller and you have a scientist, right?
And in the social realm, right, you have a statist or a propagandist and you have a philosopher.
So we talked about this in the history of philosophy.
Why are there stars in the sky?
Well, the storyteller will just make something up that's convincing and believable and resonates emotionally, and he'll keep tweaking the story until he gets more and more people to believe it and so on.
And the philosopher will actually look, or the scientist will actually look for reasons and start working from first principles and compare the knowledge with everything else that's been learned and look at the history and deal with the facts and so on.
So, of course, when people look at, well, why does the government control the money supply?
Was it the people who were crying out for it?
Well, of course not. I mean, why on earth would the people be crying out for the government to take over the money supply when they had experienced over a century of falling prices with no boom-bust depression cycle?
Why would you conceivably want to do that?
It's like somebody ends up being force-fed medication when they're perfectly healthy and say, well, they were desperate for this medication.
It's like, but why would they be?
They didn't have any problems.
Now, of course, there are certain elements within society who desperately and continually want control.
Of a national bank, right?
The military-industrial complex, the international bankers, the lenders, and the banks, of course, who want to be able to do things like...
You can make an enormous amount of money at a bank if you do fractional reserve, like for every dollar that you have in the vault, you lend out $10.
That gives you 10 times the profit, really.
In fact, it could be said that a rational form of banking would be to lend out less than you have in your deposit vaults.
But that ratio would be determined by the free market and people's level of risk and comfort with that risk.
But, of course, remember, when you have a stable currency, you don't have inflation.
You will likely have deflation.
And so your money is going to make money just sitting in a bank.
You deposit $100. In a bank with 5% deflation a year, then your dollar is worth like $105 the next year.
The bank doesn't have to loan anything out, right?
So remember that the banks love interest, too, because interest erodes the value of people's money, which means that people have to put their money to work somehow, right?
Which means that they get more money to lend out and screw around with and profit from.
So inflation is the banker's friend and the people's enemy, right?
I mean, what did the socialists call them?
The banksters. I almost like that phrase.
I think that's pretty good. And of course, there's nothing wrong with the free market institution of banking.
It's just like all things when you unite it with the smoking, sulfurous, bloodthirsty hand of the state.
Bloodthirsty hand? Boy, there's a mixed metaphor that just doesn't work.
Spanking, bloodthirsty hand of the state?
Do not try these metaphors while driving.
I am not a trained professional.
So people just look at what is and just make up stories as to how it came about.
And you see this with parents all the time as well, right?
When you talk about your history and your past with your parents, they'll just make up reasons as to why things were the way they were.
And those reasons are all sort of self-serving and we're good and all that sort of stuff.
So you're dealing with storytellers.
You're dealing with fundamentally religious people.
When you're dealing with statists, right?
And they say, well, the government has all this power.
And it must have this power for a good reason.
And they don't care to examine the causes.
They don't care to look at the ethics of why only one set of people in society have the right to print all the money they want and why everyone else gets shot for trying it.
They just say, oh, well, the power's there, and here's the reason why.
Because... There was all of this chaos and the government had to step in.
Regretfully, the government had to step in and take all this power to aggrandize government members and to give them all the money in the world.
Regretfully, the government took the printing presses for money.
Sadly and regretfully, and of course this all goes back to their parents and how their parents resolved disputes between themselves and others when they were a kid.
But they just make up stuff.
They just make up stuff.
And that's really 99.9% of who you're dealing with.
And this is not relative to education because our good friend Milton Friedman also made up stuff to justify his own theories and his own approach and so on.
So that's the first thing to understand when you're talking about this kind of stuff with people.
When you look at money in a capitalist environment, the thing to remember is that money is not magic.
Money is nothing separate from anything else in the free market environment.
Money is both sort of a good and a service.
It's a good and a service.
So if we imagine some ridiculously named currency like Steph Bucks, then Steph Bucks, like PayPal, is simply an exchange medium.
There's nothing magical about being the conduit or the facilitator of an exchange medium.
It's like saying that there's something magical about the truck that delivers the goods from the factory to the store.
Well, it just facilitates the exchange.
And so it's important to look at money as just another good and just another service.
There's nothing radically different about it.
You get all these myths made up about money so that the government is, you know, in the same way that you get all these myths made up about education and the drug war and war and poverty and so on, so that they're fundamentally different from the free market, right?
Because, of course, when you're talking with people about and they say, well, the government is really good at stuff, Then one of the questions I ask them is, well, if the government's really good at stuff, then surely what the government should do first and foremost is take over the food supply.
The government should run all the farms.
And people, whether or not they know about the tens upon tens of millions of people who starve to death gnawing their own feet off in government-run agricultural systems in Russia, And in Ukraine in particular, in China, and in Cambodia, and all these other places, they feel vaguely queasy about it.
But surely food is the thing you need more than education, right?
I mean, you can live without education, but you can always educate yourself in your spare time, but you can't live without food.
And you can't live without shelter, right?
So if you're interested in the government taking over things for the benefit of the people, the first thing that you should suggest is they take over the housing sector.
And they take over the food sector, and that's how it should all work.
And people, of course, make the same thing up about roads, right?
They make up market failure in hindsight when, of course, it was just a power grab from the government to take over things like the roads and the money and the education.
And it had nothing to do with the demands of the people or the desires of the people.
Because, of course, if the desires of the people were to have better schools or better roads, then a capitalist would have been more than happy to provide that, right?
So money is just another medium of exchange.
Many things have been tried throughout history, from garden hose to fishhooks to salt to just about anything you can think of has been tried as a medium of exchange.
Now, people have often and generally settled on gold and silver for its obvious properties of gold.
The fact that it's divisible, that it's easily recognizable, that it's transportable, and so on.
And you can divide gold without losing its value, right?
If you cut a diamond in half, then you've reduced its value by like three quarters.
So people like gold and they like silver.
They also like the fact that it's difficult to get, right?
That's why copper is not really a money because it's pretty easy to get.
Gold is pretty hard to get. Now, there are certain people who believe that gold is the be-all and end-all of monetary stability, and that's just not the case.
That's not the case at all, because gold fluctuates in its entrance to an economy to begin with.
And for the biggest example of that that I know of, you can simply look at what happened to Spain after the conquering of the New World and the murder of many of its inhabitants.
They shipped all of the Aztec gold over to Spain, which caused a massive hyperinflation.
It drove most of the competent and skilled artisans and people out of the Iberian Peninsula.
And Spain then became literally the economic sick man of Europe for about 400 years.
So this was a gold-based economy wherein the gold was debased with a massive kind of inflation ship and all this gold over.
And the first people to get their hands on the gold did really well.
And then as it spread through the economy, it diluted the value of everyone's gold.
People didn't do quite so well.
And it eventually, you know, destroyed and undercut the rigor and vigor of Spanish capitalism or the Spanish market for, you know, hundreds and hundreds of years.
And those old people who lived and died were totally destroyed by this.
Gold is not the be-all and end-all.
It's almost infinitely better than fiat money, but I would not say that in a free market economy that the medium of exchange would be necessarily gold.
For me, that's because things like computer wire transfers and so on have all And debit cards and credit cards, they've all grown to the point where there is No need to carry money.
Fundamentally, there's no need to carry money.
People carry money now for the sake of convenience and time and for small purchases and so on.
But, of course, the cash economy is largely kept alive by organized crime, by drugs, prostitution, gambling, by people working in the black market and the gray market, right?
I mean, the black market and the gray market combined are like 15 to 20 percent of just about every Western economy.
That needs a lot of cash, right?
It's one of the reasons that governments are so hostile to cash.
But governments' hostility to cash is limited by the fact that governments also like to hire cheap labor as well, people in government.
So, to me, the need for gold as a validator of somebody's solvency, right?
So if you put your money in a bank, the last thing that you want, whatever that money for me, let's just say gold, right?
The last thing you want is for the bank to use that gold as collateral for massive loans to go and build houses in the Mallorcas and the British Virgin Islands and then find out that your money has been entirely absconded with, right?
So, first of all, remember that To me, there's no particular reason why in a free market economy you would necessarily even need to put your money in a bank.
Here's just one possible example.
Because banks are overhead, right?
And remember, the market wants to eliminate overhead all the time.
All the time. All the time.
The market wants to eliminate overhead.
And so are banks really a necessary third party to getting things done?
Well, I'm not sure. What about a debit card that had thumbprint or retina scan technology on it?
What about a card that was embedded in your skin that contained all of your net worth, which you would then transfer using your eye muscles?
We just transfer at some point or another.
These are just ways of getting rid of the middleman, right?
So if you just got paid directly into your credit card, and your credit card, if it was lost or stolen, would be useless to anyone.
It's like those hotel keys, right?
They just change the combination and nobody else can use it.
Because I always think when I do business travel that it used to be the case that if you didn't leave the key, then you would have to get charged, they'd have to change the lock so you weren't lurking in the basement and then come and steal stuff the next day.
But you don't have to worry about that anymore.
I've absconded with more, and I apologize to all the hotel owners here, not due to malevolence, just due to being late.
I've absconded with dozens of hotel keys, and they could care less, just a little piece of plastic.
So there's no reason to me why...
Your financial information could not be stored electronically.
And could it be hacked?
Well, I'm not sure because the database is in your card, right?
The database is on your person.
And of course, if it was embedded in your skin, you'd never even have to worry about losing it.
This is a possibility. And again, I'm not saying anybody's going to want to wear their money around their neck or under their skin or their earring.
This is just a possibility. I'm just looking at playing around with ways in which the banking system can be bypassed or eliminated.
And then what happens, of course, is that people who need capital will put out bids for capital, right?
I mean, so if somebody wants to borrow $10 million to start up a factory, Then, you know, you could put your money on eBay and sell it out to the highest bidder.
Or you could give it to a third party to do that for you, somebody who had a trust or a reputation.
So, yeah, they'll still be...
And this could be a bank, right?
It's certainly possible. But the capital that's needed for investment may come from other areas.
It certainly won't come from government giving subsidies or money like that.
But, of course, your money will be accruing in value simply by sitting around, because in a free market situation, deflation is the norm, right?
So your money accrues in value every single year.
And so you'll be buying, and of course you'll be buying a bunch of stuff, and as you buy that stuff, The people will get your money, and that money will accumulate, and maybe that's how people can fund their own expansions.
That's certainly a possibility.
For people who need more capital, yes, there'll be banks, there'll be institutions, there'll be a bunch of people who aggregate other people's capital, like the sort of Templeton Funds kind of thing.
So if you do want to get involved in investing, then you can release a part of your capital to the care and maintenance of other people, who will then invest it on your behalf and give you returns, and yeah, that's certainly all possible.
But, of course, the requirement for that will be far less because, as I said, you won't need to worry about your money losing value every year, which is how it gets herded into one of the reasons, one of the many ways in which you get herded into the predations of the stock market to the benefit of others and not you, generally.
So that's another possibility.
A gold-based economy, it could be possible.
But, you know, at some point somebody might come up with a way of manufacturing gold or counterfeiting gold so that it's almost indistinguishable.
People aren't going to want to carry around gold coins.
Gold coins can be stolen.
So there's going to have to be some electronic mechanism by which you can transfer funds.
Now, the other question that arises, what is going to be the standard?
Well, first of all, there is great economic value in having a standard.
I mean, there's no question of that.
There is great economic value in having a standard, assuming that an economy overlaps.
So, there is great economic value in having a standard.
We can take a metaphor of something that's much more complicated but still works along the same lines, which is operating systems for computers.
So if you think of money like a common medium of exchange of goods, then operating systems represent, assuming that you're going on the internet sending email or sharing files, then operating systems represent a common medium of exchange for information.
If operating systems are working within a closed environment, like all the servers at a bank, right, that don't exchange information with anyone other than each other, then it doesn't matter if they're all Unix or Linux or Mac or BIOS or whatever.
Okay, maybe not Mac.
I don't think there's a whole lot of bank servers that are all tandem or whatever it is that the operating system is.
As long as they're exchanging among themselves, it doesn't really matter whether they can easily share files with other systems.
Now, of course, you do then get something like XML or TCP IP, which allows disparate operating systems to transfer information between them.
And so where you have a closed economy, so it could be that the business-to-business dollars, which you and I never really see, could be different from the consumer dollars for a variety of reasons that they need to be more aggregated, that they may have a different rate of interest because lending to businesses is usually a little bit less risky than lending to consumers in general.
So, the business-to-business economy could have a different set of money, the investment community might have a different set of money, and they might do that so that it can't be stolen, right?
Because if you have an investment community has its own currency, then if you go and steal that currency, you can't use it to buy, you know, a six-pack and a pack of smokes at the corner store.
So that, you know, wherever there's going to be an economy that's dealing mostly internally, and that is pretty dedicated just to that particular activity, Then it seems to me that it would be the case that there will be possibly internal money.
The other thing that certainly will be the case, and this again is going to require a fairly sophisticated chip in your wallet or in your skin or tattooed into the front of your brain, But I can absolutely guarantee you that a store will give you more dollars that can only be redeemed at that store.
So when I was younger and traded CDs prior to the internet, so if you bought a CD in, you would get like six bucks If the guy gave you cash, but you would get a $9 store credit.
So this side of the two things would work.
Because, of course, if you had a store credit, all he had to do was to give you another CD. So he was only giving up the profit from one CD rather than multiple CDs in the form of cash, so he would give you more spending power if he knew that you were going to spend it in his store.
This would absolutely be the case.
With retailers. And, of course, this is, you know, you might say, well, when they give you gift cards or gift certificates, they don't give you any reduction.
But, of course, the reason they don't do that is because everybody would just buy those gift certificates and use them to pay for their own purchases, thus achieving an immediate discount so it would be timed over a certain period of time or maybe it wouldn't be valid.
It would be valid on your next purchase or something like that.
But people absolutely want repeat business.
And I can tell you that because I have the $18 a month sign up for Free Domain Radio, which I will give people books for versus $50 to $100 donations because then I know that I can actually start to build recognizable income that's pretty predictable.
And that's going to give me much more stability when I decide to make the leap to do this full-time.
So, stores will definitely give you a bonus for working with them.
And, of course, who knows if it's like some sort of flat screen foldable BlackBerry device where you can transfer stuff.
But, you know, certainly that's a possibility.
Whether people want to do that or not is going to be a different matter for every person, right?
Because at the moment you have to carry all these different cards and it's really tough to keep track of all of the incentives.
But if it's all on one card and it's all, you know, somebody's going to offer a service that's going to help you optimize your spending.
It's going to say, well, you spend 20% of your money in this location so I'd recommend shifting it to this.
It's going to give you this benefit.
That's certainly a possibility.
People will always try and make it as easy as possible, and it will always be optional.
But now that we have both got electronic storage and transfer and biometric readouts, I think that why should you have your money in a bank?
Why should you be paid into a bank when you can just sort of accumulate capital on your own person and it's going to gain value just from you continuing to breathe and even after you die?
I just can't for the life of me see why it would be absolutely necessary to put your money into a bank.
And of course what that means is that The efficiency of the economy goes up considerably because you don't have all of these stupid Doric column buildings with all of these surly tellers who are out for lunch whenever you want to do any banking.
That would be a massive release of investment of capital and labor to the rest of the More productive sectors of the economy.
Storing your money is not productive.
It's sheer overhead. It's not like investing in something that's going to provide a return.
It's simply protecting your own capital and cash.
Now, the real question then, of course, is what do you store this money?
Like, what are you storing?
Steph Bucks or, you know, U-Bucks or, you know, whatever.
Well, if we sort of go with the operating system metaphor, then there will be whoever can provide the greatest value and the greatest return, right?
So basically, there has to be a premium for using.
Somebody has to pay you to use their money in some method that is going to be, I don't know, maybe the money comes with advertising.
I don't know. I'm just making stuff up, but it's possible.
It's just another medium like television or roads and the Internet.
So, how do all of these things pay for themselves?
Well, in a variety of ways, right?
So, somebody is going to give you free or subsidized money transactions if you accept advertising or targeted emails or opt-in for this or that.
Stores are going to offer you to divvy up your paycheck in accordance to how your spending goes so that they can more carefully and accurately predict their own income.
It's all possible. Who knows, right?
It's just me playing around with a rough series of ideas.
I don't really see that people are going to get direct deposit pay into bank accounts, which they will then withdraw money from.
I just have never really quite understood the purpose of that, other than the fact that you can't really store your capital safely outside of a bank.
And, of course, it's far from safe in a bank, right?
But that overhead has never really made much sense to me, because your money can be perfectly protected.
I guess I just thought something hit my car, but don't panic.
It was just a stone that went up against the window from somebody going past.
No need to panic.
Hey, I wonder if this adrenaline is going to help me think more creatively.
Let's find out, shall we? You will have all of these options about how it is you want to configure your money.
The person who is basically going to provide you the greatest value, it's the currency that deflates the most, that people are most going to want to have their holdings in.
So you're going to be buying and selling currencies as much as you want, in the same way that you had a multiplicity of operating systems and then people generally settled on a standard, except for particular areas like graphic design and so on, which I think still are on the Mac for a variety of reasons.
Photoshop was out for the Mac first and so on.
But people are going to want, in particular segments, they're going to stay on the same operating system.
In particular segments, they might stay on the same money so that there's a little less possibility of theft and so on.
But it's the money, whoever can sort of come up with the money that's going to deflate the most.
Whoever is going to come up with the money that has the greatest number of We're good to go.
Or, of course, if there's deflation, you could actually have 0% interest.
You could actually have negative interest.
If money is deflating by 5% a year, anybody's going to be happy to give you money at 0% interest.
You just have to pay back the exact amount, which means that they've made 5%, right?
So all of this is certainly possible and probable.
But it's whoever can make the money provide you with the greatest returns, whoever's money is deflating the most.
Now, the money that is going to deflate the most, my friends, is the money that is not overprinted.
But neither is it underprinted, right?
Because if it's underprinted, then it's artificial deflation.
So, you're going to have to have enough money that there's, you know, that there's enough to go around.
Because, of course, if you only release one dollar, right, then the dollar has to represent the entire economy, which means that's not too, too, too efficient.
But if you just do my lane switch here.
If you end up with a dollar that is rationally expanding, because it has to expand as the economy grows 5%, ideally the money supply should also grow by about 5% because the money should represent a pretty stable reflection of the goods and services that are in production.
So, of course, there's going to be an enormous amount of research that's done into the actual growth of the economy, and there'll be firms who will say, you know, here's whether the economy is growing.
And it's not going to be political firms that just make up stuff to please the government.
It's going to be, like, real companies that do this, that come up with an accurate representation of this.
But these companies will then tell the money companies, you know, here's what's happened with the economy.
And then someone is going to figure out a methodology, and I'm no mathematician or economist, so I can't even imagine what it might look like, but somebody's going to come up with a methodology of ensuring...
That the money that is released, that is increased relative to people's holdings, is going to be accurate.
Because remember, it's optimal.
Because there's lots of people who have stakes in money.
The people who lend money, they want it to be relatively stable so that they can predict.
The people who've already lent money at a certain interest rate, they want deflation.
Right? So that the money that they get paid back with is worth more.
If there's deflation of 3% and you've lent at 3%, you're actually getting back 6% at the end, right?
So the people who are going to lend want it to be stable.
The people who've already lent money, they want deflation.
The people who are going to borrow money want it to be stable, of course.
The people who have borrowed money want inflation so that the money that they pay their loans back with is not worth as much, right?
So if you have a 3% loan and then you have inflation of 3%, then you're getting money for free, right?
So you want inflation.
And the people who've got large holdings of capital want deflation because that means that their money is going to become more valuable.
So there's lots of stakeholders.
In money. And so there's lots of things to balance.
And generally the way that things will occur is that money should reflect the total amount of goods and services in existence or in production or in trade, right?
Not necessarily stuff, you know, if you bury 500 gold bars in your backyard, money may not need to cover that because it's probably not going to be in circulation until people find it in a couple of generations.
So, you know, there's money velocity and all these technical terms which you don't have to get into here.
But there seems to me no reason why, when you have a multiplicity of requirements and demands and preferences and so on, Whoever finds out a way to optimally satisfy the greatest number of people relative to inflation and deflation, and I think that people will generally settle on if it's fair, then that's okay.
They'll be happy. They'll live with that.
And fair is ideally that the money that is in existence or that is in circulation That represents the goods and services to some accurate degree, never be perfect, but to some accurate degree.
Of course, it's going to have to be validated by third parties and so on.
All of that stuff is going to have to be the case.
I mean, obviously, right? I mean, people will figure out mechanisms by which that can be achieved.
And of course, you know, the important thing to understand is that when I was going to buy...
When Christina and I were going to go buy our house, the reputation of the builder was very important, right?
You buy a house, you can live there for 30 or 40 years with any luck.
And so the reputation of the builder is very, very important.
And builders, of course, never have perfect reputations because, of course, people just get irritated at builders for whatever reason, and builders get bad employees.
But a builder, generally, has to work pretty hard to maintain the reputation of his firm.
And so the thing, this aspect of economic value called reputation, sometimes in business called goodwill, this is absolutely essential.
Money is going to have to have, dare I say it, a sterling reputation.
Money... Oh, British pound sterling.
Anyone? Jokes? Laughter?
Anyone? No? Okay. Well, I can't blame you.
Fairly obscure joke. Is it hard in here or is it just me?
So, the reputation of the people who are creating money is going to have to be incredibly stellar.
It's going to have to have absolute pure reputation.
I mean, if anything occurs that people are printing money for their own pleasure or creating money for their own pleasure, it's going to have to be so heavily audited and so heavily vetted that it's just going to be In a way that the Fed just doesn't have that kind of vetting.
In fact, quite the contrary. You are going to have to trust the person who gives you the money.
And the moment, of course, they're all going to be trying to undermine each other's reputation.
And that's good.
That's a service that you want.
The greatest insurer of integrity is the insults of your competitors.
So for a while, Mac was, you know, simply talking about how, yeah, Windows was great, but it crashed all the time, right?
So there were lots of jokes about, like, Mac is stable because, you know, we control the peripherals, we control all the code, and therefore you get, it's stable.
And, you know, the DOS is unpleasant and hard to use, and blah, blah, blah, blah, blah.
And so how did you find out about Microsoft's weaknesses?
Well, from the competition. Now, in a free market society, it seems unlikely to me that Microsoft You would simply be able to put out untrue statements about a competitor's product, right?
Like it will vaporize your cat when it actually aims at your dog, right?
You wouldn't want that.
I think there could conceivably be some market protections for reputation because reputation is an extraordinarily powerful economic good, right?
It takes a lifetime to build and a moment to destroy, as they say.
And, of course, reputation is very important when it comes to business as well, like just in your own career and so on.
And so, of course, if there's any kind of malfeasance or corruption within, you know, the Steph Buck company of infinite dollars, okay, maybe not infinite, but close to infinite, then the competitors are going to be all over it, right?
The competitors are going to be all over it.
They're going to be watching each other like hawks because the moment that a competitor can say, you know, this amount of money that they're, they say they produce this amount, but we found out that they actually produce this amount.
Well, that is going to be pretty catastrophic, right?
Because the moment there's even a whiff of scandal, like it's, you can transfer your money, and of course people will constantly be offering you, in the way that sort of banks in a more free market situation do, people are going to be constantly offering you incentives to transfer to their money.
Right? So, if Steph Bucks is out there, there's always going to be U-Bucks that say, hey, if you transfer from Steph Bucks to us, you know, we're going to give you 5%, boom, right on the spot.
And, you know, we've got arrangements with all these major retailers.
We'll get an additional 15% of this and that and the other, right?
And, you know, we'll figure out how they make profit.
That's going to be really their job, but they'll figure it out, right?
I mean, nobody wants to imagine how, before the rise of the Internet, nobody wants to imagine how everyone's going to make money on the Internet.
But it'll be some combination of investing for profit, of getting a cut of deals from the retailers, right?
So I say to the Gap, hey, if you go with Steph Bucks, I'm going to offer my consumers, like, you're going to offer me a 10% reduction, and so I'm going to offer it to the consumers at 8% reduction.
And they don't want all the hassle of advertising and that, so, you know, I'll get my 2% from there.
You might take a small percent of each transaction, right, in order to, like PayPal does.
Okay, maybe not quite as large as PayPal's, but I think you sort of get the idea.
But that sort of money will be competing now in the same way that operating systems competed, and there will never be just one currency in the same way that there's never just one operating system.
But for sure, there's going to be a general...
A general kind of Comfort level and prevalence of a particular type or configuration of currency.
And there'll be constantly new offerings and so on, like if you buy your vacations with Steph Bucks, it's, you know, 10% off.
I mean, all those incentives for moving over.
But once people are sort of in and stable with a particular currency, it's not like most people sort of every day want to say, hey, maybe I should switch operating systems, right?
And although it's going to be a lot easier than switching operating systems because you just transfer stuff over.
But there's going to be a constant competition in the realm of money to keep customers and to keep whatever infinitesimally small percentage of customers The economy as a whole that you can hang on to is going to be an enormous thing for you to get a hold of, right? So there's going to be a massive incentive to be the money standard.
And there's going to be conversions, right?
I mean, cash registers are going to be able to say, oh, we give, you know...
A 2% reduction on StephBucks and a 3% reduction on U-Bucks or whatever.
But they're going to be able to convert, right?
That's not the end of the world. I mean, if cell phone companies can convert signals from each other overseas, I'm sure that a cash register in the modern age with a Pentium 9 million will be able to ping the internet, get the exchange rate, and it's going to be transparent to the end user.
So, stores aren't going to not say, I'm going to take your money.
They're going to reject your money, unless the money is at risk.
Unless the money is at risk, in which case they're not going to.
But of course, long before the stores don't Long before the stores stop taking your money, your competitors are going to offer you enormous amounts of incentives to switch to their currency with very heavily backed up and audited research about the nefarious nature of your own currency provider.
And so, I mean, this poaching is very, very common in business.
We'll offer you a better deal.
This occurs all the time. I remember there was some bank who even said, you know, if you want to switch your mortgage, we'll give you this, this, this, and this.
And... We'll even call your existing bank to cancel your mortgage because it's Canada, right?
So some people don't feel too comfortable.
They feel it's confrontational or whatever.
So I just...
Overall, it seems to me that money is a service that needs to appeal to the consumers with benefits, right?
Because it's a government monopoly, the consumers just get raped, right?
And so there's really no positive incentive that people put into place To make sure that the consumers gain from the use of money.
In fact, the value of the consumers' dollars just keeps going down and down and down, which forces them to put the money in the bank, which means it gets further preyed and raped and pillaged with capital gains taxes.
And service fees and so on, right?
So basically money is just getting pillaged these days.
The way that I see it working in the future is everyone's competing with you to get your capital into their currency.
There's going to be lots of exchange possibilities, but most fundamentally you're going to be wooed and there's going to be lots of independent auditing to ensure that all of this stuff It works nicely.
And yes, there will be overturnings and there will be changes.
But I think much like operating systems, once people settle into a particular pattern, once society is configured to use a particular kind of currency and mechanism and medium, it seems to me that it's going to work quite nicely and quite well.
And I don't think that it's going to consume an enormous amount of people's time and energy.
And people say, well, why would everyone want to manage their money in this kind of way and so on?
Well, you know, the basic reason, of course, is that people have to do a hell of a lot more to manage their money under the existing system, right?
Under the existing system, because of inflation, you have to invest, which means you have to track this stuff, which means that you're going to hand it over to some hedge fund that's going to shave 2% off your profits, and that's going to cost you a lot of money, fundamentally.
So, you know, I think...
It's going to be a lot less work to manage your money in a free market situation because, of course, you could just choose to not, right?
To put it in the most common and popular one and not worry about your money.
But it's going to be a lot less worry and hassle than things like doing your taxes and comparing hedge funds and investment strategies and having financial advisors and the whole cottage industry of people who are out there trying to protect your sheep, so to speak, from the wolves of the state.
Thank you so much for listening.
I look forward to your donations.
Send me your money, and I'll turn it into Steph Bucks.
And I will talk to you soon.
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