Freedomain Radio - Stefan Molyneux - HOW CAN WE AFFORD THE BOOMERS? The Freedomain MMT Debate...

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Oct. 2, 2025 - Freedomain Radio - Stefan Molyneux

01:26:34

HOW CAN WE AFFORD THE BOOMERS? The Freedomain MMT Debate...

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	I think that this is the interesting segue to talk about if if we're ever gonna get to MMT here is when will the government not be able to afford the boomers?
	Let's just kind of if you're okay with it, you just gotta frame it in that's in that uh um context.
	And uh on one hand we would argue, me and Nima, that they will never not be able to afford the boomers.
	The money will always be there.
	But on the other hand, not looking at the money, just looking at at a resources perspective.
	What is it, you know, how many resources does it take to take to take care of these people at this older age.
	I mean, just look at say um assisted living or memory care um communities.
	Okay, so we've we've drastically reduced the number of population at the low end, and thus the population we literally need to work in these elder care facilities.
	Right?
	Where are they gonna come from?
	I I I mean, maybe there's enough people to work in all these facilities and I mean I don't have the math in front of me or something, but I I think that's an interest uh uh interesting way to look at it, which is again just forget the money for a second.
	Let's just look at the actual resources, the actual health care resources, the actual labor resources, the actual housing resources, whatever, to to be able to care for this elderly population.
	I think that's the constraint more than whether or not the government can actually afford it, because I mean the argument that we've made before, we could continue making in the future, is that the government can always afford it and that the repercussions, which is it's usually inflation, right?
	Um aren't as bad as usually indicated.
	Um I think I think I understand what you mean.
	Just to sort of translate it to the gen pop.
	So we can we can print more money, but we can't print more people.
	So if the constraint is labor, uh there's not an easy solution.
	Is it uh outside of some some automation, but it would be kind of weird to see the 87-year-old granny be being cared for by the Terminator.
	It would just be kind of strange, right?
	Yeah Well well um yes, but on the other hand, if if the the money constraint isn't a seriously vital constraint, is there a way that we could say can we have a conversation of a solution from this angle instead of going, oh, wait a minute, there's not enough money.
	Yeah, I know what you're trying to say.
	Basically the the um when we we want to solve this problem as a matter of policy or whatever, the fiscal deficits are not a variable to optimize for.
	They're not um and if we try to optimize for it, then we will um shortchange ourselves.
	We won't achieve the uh objective of whatever it is that we're trying to solve.
	And so it's sorry, just to back that up for a sec, because if we're gonna do MMT, we're gonna assume that people don't know what we're talking about or what you're talking about, uh, since you guys are much more than a lot of people.
	So let's just give the brief overview on MMT and then we'll talk about how that could solve or not solve these problems.
	Yeah, MMT basically uh uh proposes uh that the uh uh federal the federal government that issues its own currency can never run out of that currency and always has the money to do something, and that uh uh federal government deficits are not a um constraint on their activities now or in the future.
	And it basically proposes that the reason money has value is that this money-issuing government imposes a tax on its population, which creates the demand for that currency and then proceeds to spend that money into the population, and then the money at taxes out of the population is deducted from whatever the private sector keeps, and the deficit is what the private sector gets to keep at the end of the day.
	So literally the public's net private savings come from the federal government deficit, and also by the way, if we assume trade export surpluses.
	Okay.
	So by the way, MMT stands for modern money theory.
	If you you forgot that part of the beginning.
	Sorry, Stephanie.
	No, don't don't apologize.
	It's a combo.
	Yeah, yeah.
	Okay.
	we can sort of get into criticisms which we've sort of done before but uh so tell me how mmt deals with the graying of the population can i do you mind if i take a stab at that one first just to kind of set um
	uh a foundation here so i i think it's important to to point out that mmt doesn't actually suggest anything it's it's just a description to say okay this is how we we think that the system is working to
	propose a solution is to say okay i am a particular mm tier and and here's my political views i'm more right-leaning or i'm more left-leaning or whatever and based on that um and based on my understanding of the mfd this is what i think we should do and uh it's i mean imagine it kind of like physics physics doesn't say you should do any doesn't say you should do anything it just describes stuff and an individual physicist might say well based on
	on the physics I think we should do this well because you you could have someone hold on okay go ahead.
	No well let me finish the point.
	You could have someone who's a eugenicist who says well the way we deal with the great population is kind of like we just described before which is we just need to kill them all because I don't like them.
	Right.
	And uh look here's the MMT because I understand MMT I know we need to turn this these dials on the economy in order to make that happen.
	Right.
	Now I I I do appreciate the intellectual hubris of saying that MMT is as proven and as objective as physics I did not mean to say if your theory is wrong then it does matter right so if you say well I want to build a rocket ship and I'm going to assume not that mass attracts mass but that mass repels mass I'm gonna base my rocket chip on anti-gravity uh it's gonna fail, right?
	Because you'll just assume that you actually have to restrain it from flying away from the earth and so on, right?
	So I I think it does matter if the theory's wrong then then everything that comes out of it is BS.
	Right.
	So I would say from sort of the Austrian economics argument, and obviously I'm far from a rigorous expert on Austrian economics, so forgive me where I go astray, but from the Austrian economics perspective, they would say that government money creation really does matter.
	And of course, they would say, well, we understand that you create demand for the money that you print because you require it to pay taxes and you can siphon off excessive money from the economy by raising taxes or something like that.
	But the problem is, is that when money is not released into the free market, but rather is created under the wing of politics, that it is interfering with market signals by taking money out of the free market and putting it or creating it through government, you end up with the money being spent on political ends rather than economically productive ends.
	And that's a negative, even if we sort of overstep the significant moral problem of giving a small group of people the violent monopoly power to to create and destroy currency.
	That's quite an awesome power.
	It's a big ring to put on somebody's finger, so to speak.
	But there is going to be massive distortionary effects of simply having the money politicized, no matter what, that's going to harm the economic productivity of the system.
	I think it's really important to point out that I support MMT, and I agree with literally everything you just said.
	So I don't think that there's a conflict between MMT and a prospering private sector heavy economy with a small tiny government.
	In fact my whole point is that MMT would make that economy given the constraints of the fiat money system let's say we accept we don't live in Ankapistan all that that MMT makes that possible by eliminating this deficit obsession constraint because it would allow us To literally cut our private sector taxes to near zero and would allow for the flourishing of a big private sector,
	a big free market, lots of employment, and maybe that would even solve this whole graying of the population.
	Because now you have people who can easily afford homes, easily find jobs like they used to be able to in the economy at full employment when wages were rising and all that stuff.
	And maybe that would solve the graying of the population, even to uh your earlier question, I don't know.
	But uh things just important to point out.
	Um MMT, in my opinion, is not opposed to what you just said, to uh eliminating the public sector as much as possible and enlarging the private sector substantially.
	Well, but if you give the government the power to create and spend money at will and you remove to some degree remove concerns.
	No, no, but I mean if if even the theoretical concerns are constraints.
	If the general population is led to believe that deficits don't matter and the government can create as much money as it wants, do we really think that's going to end up with a reduction in the size?
	I'm not saying that deficits don't say deficits don't matter.
	Right, right.
	So that's why we go back to uh uh real resources are a constraint.
	So if the deficits get too large, they start bidding uh re too much resource out of the private sector, then we start seeing significant inflation.
	Um that's also in line with MMT.
	Um what we're saying is that the variable to optimize for can't be the public sector deficit.
	It has to be something else, in my opinion, it's employment, because with full employment, so many of society's problems would be solved.
	You could get rid of welfare.
	You could you wouldn't you would have less crime, less alcoholism, less uh domestic abuse, uh less single motherhood households, all these things.
	If we could uh create an economy with full with true full employment.
	Um it could happen with a tiny federal government with a tiny uh uh federal budget with very low taxes, um, as long as we're not worried about uh about deficits.
	But if we worry about deficits, then we're gonna start uh imposing an arbitrary constraint because we feel good about a number that looks good.
	We feel good about uh balanced numbers because we're used to that as households, but then it becomes a personal esoteric endeavor for people in power.
	Such for example, Elon Musk was an example that he really wanted to uh to pay off all the government debt, which by the way, the federal government debt is the private sector's um uh uh net savings.
	So just make that connection for people to make sure that people follow this.
	Well, we because the public sector deficit adds to the bond holdings of the private sector.
	And um, whether domestically or overseas, right?
	Like say huge Japanese bondholders in the American debt.
	So basically you've you've taken the the the national debt is is held as assets by people either domestically or uh a foreign uh and so it's it's simply just private sector savings if the debt can ever be paid off.
	Largely the domestic private sector.
	There's also some foreign holders because we have uh uh trade uh uh deficit.
	Um but largely the private sector, yes.
	And it's some of it also the Federal Reserve, which I'm against.
	I don't think the Fed should be buying up buying away bonds from the private sector and to hold them.
	But generally speaking, to the dollar, the public sector uh debt is the private sector's net savings.
	That is savings that do not come against bank debt or stock debt, because all other private savings, uh financial assets, they always come with some kind of bank debt or uh a debt to a stockholder or a bondholder.
	So that's basically you you issue a common uh you issue a bond, now you uh uh borrow money from the bondholder, but you owe money to the bondholder.
	That is a wash in the private sector.
	But federal government deficits are a net injection into the private sector of money with no strings attached.
	And it's not even really necessarily that theoretical or or hard to think about.
	If you imagine we cut all our taxes to one percent or 0.5% or whatever, how much money would you be able to keep in your pockets after that's done?
	Uh so it's a very practical way of looking at the uh monetary system, in my opinion.
	Um Sorry, I I don't I thought there was something else coming, or everybody but if anybody else has anything else I want to add, that's good.
	Yeah.
	No, that was yeah, yeah, that was my my thoughts on that.
	Okay, so the uh bondholders are saving the money that the government creates and then when sorry, Steph, uh uh I'm having a delayed reaction to what you just said in terms of adding something to it.
	I I think I might be able to add a little bit of clarity.
	Please.
	Uh which that there's this confusion between the bonds and the reserves that Nima's really good at explaining.
	I think I'm 50% good at explaining.
	But if if we set that confusion aside for a second and we recognize the fact that the US government is the sole issuer of US dollars, they can't come from anywhere else.
	They've got they've got a monopoly on the currency.
	Now, philosophical arguments of whether that's bad or good aside, that's the situation as it stands right now.
	So if the federal government does not issue dollars, there's no dollars for the private sector to have.
	That's actually not true because private banks can also loan dollars into existing.
	I'm sorry, I'm sorry.
	If the federal government doesn't issue reserves, there's no reserves for the for the for the um uh private sector to have, which um Nima correct me if I'm wrong, that would mean there would be no private sector net savings, which we haven't gotten into part of the conversation of why that that specific type of money is so vitally important to the economy.
	The private sector has the desire to net save.
	They want to accumulate more and more financial assets every year.
	And if they don't, we run into problems.
	They stop consuming, they stop investing, and you know, bad things.
	Well, but they save in order to invest.
	Is that the general argument?
	No, just to hold as a um financial asset to have available if something bad happens, if and yeah, also potentially to invest, of course.
	But people also have the desire for a safety buffer that they're just wanting to keep.
	They don't want to uh uh uh put it in a uh factory or in a house or whatever, right?
	Well, I think I think most people would actually rather not invest their savings.
	It's just that they have to because the inflation is constantly eating away at their capital.
	Well, no, because you can you can uh uh allocate some of your savings to stocks and and those will uh benefit from inflation, generally speaking.
	You put some of it in gold, which is obviously a real asset, but then somebody else gets your money.
	You can put it in bonds, which interest rates are not you know not terrible for uh they went over five percent for 30-year bonds recently.
	Um and also if a big bad crash happens, then those bonds will do very well.
	Uh uh so yeah, you obviously.
	Sorry, and I I agree, I agree with all of that.
	Sorry to interrupt.
	But I'm just saying the average person, like you know, we we're all I guess fairly well versed in some financial abstractions and so on and uh like to manage our our resources.
	But the average person, like you know, the average person that I worked in doing manual labor when I was a teenager or in my early 20s, the average person doesn't care, doesn't know, and doesn't want to have any of that sort of stuff.
	They just want to put their money in the bank and save it for a rainy day and spend it when they need to.
	But but they kind of forced into learning about this stuff or handing over their money to a bunch of dubious financial wizards who say, oh, you know, you gotta invest, because you know you're gonna lose four percent of the value of your money every year and it's all gonna evaporate.
	So people don't want to in generally, but they don't want to invest.
	They want to have stable currency that they can manage.
	Now there's some people who are like, yeah, I'm a hungry Wall Street shark and I want to invest and make a zillion dollars, and you know, but but most people don't.
	Most people don't want to, they just want to go to work, they want to have they want to pay their bills, they want to drive their kids a little eager, they don't want to get involved in the stock market, but they're kind of almost in a sense forced to uh half at gunpoint now because otherwise the value of their money is just gonna evaporate over time.
	Well, I don't know what it's like in Canada, but in the US, there's actually a very broad culture with a 401k of even just the average worker, you know, he will have uh uh some money in stocks just because employer is offering it, you know.
	So why does the employer have to offer it because without the 401ks uh it just goes up uh up the tax uh up the tax uh smoke smoke chimney.
	No, and also it like I said, I think investing in stocks is one good way for the population to protect themselves against inflation, but because among the beneficiaries of inflation are the corporations who get to charge those prices that go up.
	Okay, so hang on hang on.
	So sorry, go ahead.
	I get Nima's point, which is Joe Schmo doesn't want to deal with it.
	Yeah, I I think Steph was agreeing with you, Nemo, which is that they they want to get their savings, they want to stick it into account, and I mean unless they really have to through their 401k garbage or whatever from their employer, they don't want to jump on and figure out all the stock stuff.
	The safe daising to get an account and just shave it and forget about it, and then the inflation eats away at that, which is the I guess the dynamic pressure going back and forth here.
	Sure.
	No, d that that is uh what inflation does, and so I was just talking about ways to protect yourself against that there's no other uh solution that I have um to offer to the individual.
	I think practical solutions are important.
	But yeah, so I guess um the net assets injected through uh federal deficits are the safest assets, uh only the safest of the savings assets, but they constitute a net savings that does not come with a debt associated with it, unlike generated money.
	Like a uh, for example, um a bank uh uh uh bank money which uh comes through a bank loan.
	If I buy a house from someone, the seller of the house, you know, banks a bunch of a chunk of money, but I borrowed money from the banks, so an aggregate, the private sector does not achieve net wealth.
	Um if I buy a stock, same situation like uh the stock is a debt for the company, a bond is a debt for the company, but federal government deficits inject net savings which don't come with strings attached and add to very safe uh a very safe asset buffer for the aggregate private sector.
	If that makes sense.
	Well, I would argue that a stock is not a debt for a company but is an asset.
	Uh in and I'll sort of give you a personal example, which yeah, I think is generally true.
	Excuse me, which is when I first uh co-founded a software company back in the 90s, uh, we went around hat in hand.
	We couldn't get any institutional investors because I had a history degree, and I was saying, no, I'm a great programmer.
	They're like, come on, man.
	And so uh we went around hat in hand to doesn't sort of really matter who private individuals, and we raised uh $80,000.
	So we owed $80,000 or you know, whatever it is at the beginning.
	But that created a company that was worth a lot of money.
	And so I wouldn't view, and I I I know you guys know this, but I just want to clear it up for the audience.
	I don't view uh stocks as a debt.
	I view it as an asset, uh, because it gives you the money to uh improve and create more, and so it's an asset for the stockholder, right?
	But from the company's liter literally from the company's balance sheet perspective, it's a it's a liability to the shareholders.
	It's a profit share that you have to uh send over to the shareholders.
	It's not a fixed uh uh payment like with a bond, but it is a variable profit share liability to stock up.
	But you sell a stock.
	You sell shares, not because you want to just go around creating liabilities, but you sell shares because it gives you uh capital to improve, expand our computer business.
	Well, but it's the individual versus Nima's talking about like if you look at the cosmology of the economy and you add up all the the plus ones and minus ones.
	No, not the literally as a company.
	If you sell shares as a company, you incur a liability to the buyers of your stocks, right?
	Now I understand it comes with benefits, of course.
	You have now cash to invest, expand, and obviously also you can issue additional stock, right?
	So if your stock price goes up a lot, now you have some sort of some sort of uh uh uh uh uncreated asset uh uh on the back burner that you can sell to uh um to more shareholders by uh committing to more profit share to more people.
	But at the end of the day, my point is just uh a stock is a form of financing instrument like a bond is with different characteristics and only in that sense am I referring to it as a liability well and I I want to sort of differentiate and I hope this isn't overly nitpicky and just tell me if it is but I want to differentiate between liabilities that are negative and liabilities that are a net positive and I would not view those in particular as liabilities.
	So uh to take a an example uh if some guy goes and and takes uh out a loan hopefully from the bank maybe from some shady guys in a soprano back alley but if a guy goes and takes out a loan for ten thousand dollars and goes and blows it at a casino uh now he has a liability but without any I mean the casino's made some money but it's not the most honorable way to make money and it's really just serving hedonism.
	But now he's got a liability of ten thousand dollars that he has to pay back and he has nothing uh to show for it, right?
	He's I mean other than well I guess one anxious evening at the casino whereas a liability for company that sell shares in order to raise money in order to open a new factory or do some marketing campaign or hire talent away from its competitors or whatever that is sort of net uh positive and of course yeah so I just I want to I don't want to sort of put liabilities in one big uh bucket or debt in one big bucket.
	Uh somebody who owes a bunch of money to their drug dealer is technically in debt but it's not driving much economic growth if that makes sense.
	But the same could apply to a company issuing shares and then using that money to buy you know casino beanie babies or tulips and then that all goes belly up then they're sitting on bad stock just as the gambler said on the No but the gambler is is I mean praxeologically sitting on bad debt.
	The company has to basically defraud in a way uh unless it just makes mistakes which obviously you know there's all these calculations in in business that you can make errors in but by definition the debt to the loan shark is a bad uh debt and the company sure it can make mistakes it could be full of cheats but that's not praxicologically sort of baked into the entire interaction.
	But you can make a good bond you can you can uh uh um get a loan and invest that money properly and then that can turn out to be a good debt too from the bondholder bank's perspective.
	No I I sorry and I I agree with that.
	If you if you borrow the $10,000 and you invest in Dell in the 90s, whatever, right?
	Okay, good.
	Uh then then you've made some some money.
	But I'm just saying that there are liabilities that are automatically negative.
	Now negative is simply from an economic standpoint if you had the greatest night of your life playing you know I'll remember it forever it will bring a smile to my face for the rest of my you know I was up fifty thousand dollars.
	I was down twenty thousand dollars I ended up only being down ten thousand dollars it was the wildest most exciting night of my life everybody was chill so there may be some uh you know pleasure benefits like if you go on a cruise uh it's not like the money is being invested in something that that grows it's being consumed in pleasure and that's fine.
	I mean, we have to consume our resources in pleasure, but there is a difference between loans that will not generate additional productivity in the economy.
	And then there are loans that will.
	And I'm sorry to be, again, so nitpicky, but I really want to differentiate these things.
	You're 100% correct, Steph, but I think we got kind of lost in the weeds because taking a step back again, really looking at like the whole picture of saying, okay, well, where do dogs, dollars come from in the first place was was what we were talking about.
	And we were talking about the national debt and whether or not is that a you know what what do we is it a debt?
	If if it's a debt what do we mean by that is a debt because here's these weird guys coming on saying it's actually uh good for the the the private economy because now they have money.
	What does that mean, right?
	Um you're saying that the government is transferring money to the private sector.
	I'm sorry I was sorry I apologize so the government by by creating uh currency by by selling bonds and so on is transferring resources to the private sector.
	And I'm sorry if I've over oversimplified that.
	But it's actually resources to the public sector because it's creating fake nothingness out of out of thin air.
	No, no it's literally resource to the private sector Steph is correct.
	Well let me finish my point because the because the the government creates the nothing, the money, and then buys resources from the private sector and the pro and the government gets the real resources.
	yeah.
	So the reason the private sector gets money.
	The financial asset move to the private sector okay, financial assets.
	But then also they they also um hire people, send out STIMI checks where they don't actually move any resources to the private sector.
	But most definitely they're moving financial assets to the private sector when they deficit spend money.
	Okay, so they move assets to the private sector and then the private sector mm may sell stuff to the government, in which case it would be a transfer of labor or materials or something to the government, but by creating debt, it's putting resources in the hands.
	So uh of the private sector by by creating the in quotes debt, and and the we're part of the argument here is we're saying that the debt from the money issuer is categorically different from the debt of a money user.
	Right.
	I agree with that.
	Um remember the so the the the stock conversation we went into, like the the you know, whether it's liability or an asset with with the person buying the money of the stock, whatever that's all predicated on the fact that there's some money to buy stocks with to begin with.
	Right.
	And that money has to come from somewhere, and right now it comes from the sovereign monopoly issuer of the currency, in which if we're talking about the United States, is the United States government.
	So at at like the beginning of like it, you know, in the beginning there was nothing, and and God said let there be light and let there be light.
	It's kind of like, well, in the beginning, there was the government and the government said, let there be money.
	And there was money.
	Let that be a wallpaper of Andrew Jackson's.
	Yeah.
	Okay.
	So then there's something to work with.
	I th I think I mean Nima, correct me if if you think I'm I'm coming at this from the wrong angle here.
	But I think that's why I want to hear what's uh uh Steph uh what keep going, keep going.
	I'll I'll hold my thought.
	Okay.
	So so that that's kind of the first step.
	Now, whether that's good or that's bad, I think is a very important conversation to have.
	But we're but me and Nemo were coming on here going, okay, before we have that conversation, let's just describe the situation as it is right now.
	And the situation as it is right now is that's how money gets created.
	Is it it it gets created through this thing that we call national debt or national deficit?
	And then the government or excuse me, then the private sector has something to work with in order to make an economy from.
	Sorry, in order to make an economy what I didn't get that last word.
	From from the haven't okay, sorry, I was expecting a different word in my brain assembled the wrong jigsaw piece.
	Sorry, go ahead.
	Sorry.
	Yeah.
	So so that that is the lifeblood that the private sector needs, and historically speaking, you know, what it it's funny that that we when I compared MMT modern market theory to t to physics, you're like, well, you're you know there's a big leap there, which on one hand is true, but on the other hand, what uh we we want to always point, okay, what's the evidence backing up what we're saying?
	In United States history, ignoring COVID for a second, because that was bizarre, there have been seven recessions slash depressions.
	Every single one of those uh um depressions slash recessions had depression.
	What about the Great Recession of 2008?
	It's a great recession.
	Okay, if we count that.
	Okay, whatever.
	Bad economic downturn.
	Okay, go ahead.
	Yeah, yeah.
	But all bad economic downturns were preceded by either a uh a surplus in the government or paying paying off or trying to pay off the national debt.
	And from the MMT perspective, this totally makes sense because basically what you're doing is you're destroying the net savings of the private sector, and then the private sector goes, there's we don't have enough air.
	And it crashes.
	I I I I can get more specific than that, but uh I thought that was an app metaphor of the moment.
	Uh I don't mind more specificity, and I'll I'll give you the Austrian approach to that.
	And again, I'm not it's not just MMT versus Austrian, but uh so go ahead and I'll I'll sort of give what I think the Austrian.
	I mean, there's there's really historically speaking two places where the money generation can come from.
	It's it's the the the uh sovereign issuer with the mop monopoly control over the currency and the in quotes private banking system, and we say that in quotes because it's really like this private public partnership because the banking system receives license from the government to do what it does.
	Um I think most people on the show by now, I think, know that when a g when a bank makes a loan, they make that money out of it.
	It just comes out of thin air.
	Yeah, they just type it into a an account.
	They just type it in and poof, it appears.
	And um was something like 97% of money or in in of US dollars or whatever are consists of actually that the that bank money.
	Right.
	So we should have lost my train of thought.
	I'm sorry, Steph.
	No, no, I apologize.
	So you we were talking about uh more details about why these seven uh depressions have again.
	Yeah, thank you.
	Okay.
	So what happens is the when the federal government starts pulling back its private sector net savings, or this is the arc the MMT argument, starts pulling back its private sector net savings in order for the economy to continue pushing, the only place it could go to is the in quotes private banking system, in quotes, because for reasons I described before.
	But because the private banking system, it it the net liability and um asset is zero in the aggregate, and what I would even argue is negative because it comes with an interest rate as the economy keeps moving in order to service its own debt,
	it has to continue to borrow from the private banking system, which creates an even bigger debt to service, so it has to create you, it has to keep pushing that forward until one little Jenga piece finally slides out and the whole thing comes crashing down.
	Austerity.
	Yeah.
	Yeah.
	Austerity caused government budget balancing or surpluses always go hand in hand with uh excessive private sector leverage, interestingly.
	That is the process that you're describing there.
	Yes.
	Okay, so the Austrian answer, as far as I understand it, again, not being much of an expert, but I think the Austrian answer is that the more government interferes in voluntary free market exchange, the more distorted and misallocated they always say, sort of misallocated resources.
	And so if the government decides to subsidize a whole bunch of agricultural development, you know, we're gonna pay you a million dollars per acre of land that you turn to farm, then yeah, what will happen is you'll end up with a massive excess of farming with no particular place to sell goods that inevitably spoil,
	and you will end up starving by by redirecting capital away from say industrialization or savings or education or whatever it could be, and subsidizing like crazy farmland, then you end up with a misallocation of resources, and then the resources have to be reallocated more rationally because it's unsustainable, and that reallocation process is called a depression.
	And that's that I I think again, forgive me if I've gone astray, but I think that's a general Austrian answer, and their evidence, of course, is that these things hit uh the uh business-to-business or the hypercapital sector long before they hit the um consumer sector, which is because there's resources being artificially uh applied.
	If governments subsidize massive amounts of housing, which of course they have in various times in the West, if they subsidize massive amounts of housing, then you'll get a huge number of houses built, then there won't be as much demand.
	And then I know it's hard to imagine these days, right?
	But there won't be as much demand.
	And then about China and their and their massive massive cities, or of course the 0708 uh crisis, which we can sort of get into the causalities instantly of that one.
	But basically the idea is that the government interferes in the free flow of capital, usually diverting capital towards its political favors, uh its political favorites and usually getting some kickbacks under the table and so on.
	And they'll build a whole bunch of white elephants or brickabracks or you know, monuments to itself, and then uh it's unsustainable, and then like like you're holding you know 20-pound barbells above your head, you can't do it forever, and then that sort of sudden drop is when the capital has to be reallocated because it is there's no demand for the products of the excessively stimulated capital environment, if that makes sense.
	Yeah.
	What you described uh just now is um uh called the Austrian business cycle theory that one Mises.
	And I mean, you didn't describe it 100% accurately, because Mises.
	No, please correct it.
	Yeah, please correct it where I've gone astray.
	It's been a while since I've studied this stuff.
	Yeah, yeah.
	No, I I read all basically everything from Mises, so I I I remember it pretty well.
	Um in human action, uh he describes the process, but he doesn't talk about government deficits causing this process.
	He talks about artificially low interest rates changing the private sector's time preference.
	That is the author in business cycle theory.
	He suggests that changing time preference makes it look to the uh savers uh and to investors as though there is um more demand for long-term capital goods than there actually is.
	So they start investing excessively in long-term capital goods at the at the expense of the consumer sector, and when it turns out that there was no real demand for those capital long-term goods, then the the investment sector collapses and the depression ensues.
	That is Yeah, so I think the argument is that if the price of money is going up, it's because people are saving, and saving is deferred spending, so then people settle into longer term projects.
	And so if the government suppresses interest rates, then uh you are um you are you're you're also saying people are spending now and and want to lend their money now because the price of money is cheaper.
	So I yeah, you're right.
	And and thank you for the bringing that a very important bit point is that the interest rate signal the relationship between saving and spending.
	And I mean, I remember this in the business world, there were certain times where it was just very hard to sell stuff.
	You know, uh summer was tough to sell because everyone's on vacation, and Christmas, forget about it.
	A lot of businesses kind of at the high level shut down for a week or two over Christmas and New Year's, so uh so but but you expect that there are going to be more sales.
	Uh or people would say, well, it's not in my budget for this year, but I'll put it in my budget for next year uh and all of that.
	So yeah, the the what you invest in, if you're expecting a whole bunch of sales down the road, you have to build your infrastructure now to produce the goods.
	And so, yeah, by messing with interest rates, it does dial up and down to the preferences and gives the wrong signals.
	But sorry, go ahead.
	Yeah, there's in my opinion, that's one giant defeater for this whole theory, and that is sorry, which theory, MMT or Austrian?
	Austrian business theory.
	And that is the fact that the Federal Reserve never artificially lowers the interest rates.
	They always artificially raise the interest rate above zero.
	Because if the Federal Reserve were to not intervene in the interbank lending system, if they actually allowed for the banking system, the interbank lending system to be as free a market as possible, the interest rate would always fall to zero.
	So all their efforts are attempts to jack up the interest rate from zero to some other level.
	And to the extent that they don't do anything, the interbank lending rate would naturally fall to zero because banks always have an incentive to lend out reserves.
	They have no incentive to hold reserves other than statutory requirements and cash withdrawals and interbank clearing and tax payments.
	So sorry, why would they lend money at zero percent interest rate?
	Because it's labor involved in lending the money, wouldn't that be a loss?
	It would be maybe zero point one because they want to uh uh economize on their reserves.
	It would be easier for them with a push of a button to uh uh to loan out a reserve to another bank that happens to need it than to actually holding on to reserves restrains a bank's ability to lend, especially because of the stupid Basel regulations, they actually count reserves as assets, even though reserves as risky asset, even though reserves are uh completely safe asset.
	So they prefer to economize on their reserves and loan them out to other banks who are short reserves at the moment.
	Oh, so you're doing like the sort of 30-day, 60-day, 90-day lending windows overnight.
	Overnight.
	Okay, overnight.
	Yeah, so overnight, yes, of course.
	Sorry.
	I so it's the shortness they they wouldn't do it for zero, but they do it for 10 bucks on 10,000 because you might as well get that rather than nothing, especially if it's automated or some sort of computerized system, right?
	Yes, it would tend towards zero is is my point.
	Okay, sorry.
	Um and then he was if you could piggyback off this, that whatever rate that the Federal Reserve turns is arbitrarily and politically, not economically turns its dial toward the interbank lending rate is always just a smidge above it.
	Yeah, yeah, yeah.
	So this is actually uh so understanding this whole process is very helpful in predicting interest rate movements and investing your money wisely and all that kind understanding long-term short-term rates because I just explained to you the ultimate cause of the short-term rates Fed policy, the ultimate cause of the long-term rate is the investors' expectations of all the individual short-term policies of the Fed within the individual three-month periods of the term for a 10-year bond for a third-year bond, whatever.
	It is a market bet on what the Fed is going to do.
	If the Fed chooses to not do quantitative easing or they could just choose to do interest yield curve control like they do in Japan and just declare the the interest rates uh on the entire uh term of the yield curve.
	And the but my point is just the whole defeater for the notion that the Federal Reserve artificially lowers the interest rate is that the interest rates actually always artificially elevated.
	My second uh point is that um as Dylan was just telling us earlier these periods of excessive private sector leverage have always occurred with a government attempting to balance the budget or generate surpluses not with the government trying to deficit spin.
	So much rather the business cycle was encouraged by um public sector austerity policy to where the private sector now is incentivized to go to the banking system and to go in debt to get the cash that they need.
	And that leads to excessive private sector to to income private sector debt to income leverage empirically.
	So something you said and I appreciate that explanation something you said earlier I just wanted to circle back on oh God I've gone full gen Pisaki.
	Anyway but you were talking about Yeah well but you actually answer the question.
	So maybe well maybe let's see.
	So in general the government in my view the government pretends to add value through debt.
	So if the government goes and spends 10 million dollars on some waterfront development but it borrows that money then it looks like the economy is growing.
	But who did it borrow that money from well I think that the general argument would be that it borrows its it's uh it borrows the money against future tax receipts.
	But but where would who could pay those tax receipts if the government didn't create the money to begin with no I understand that.
	So yeah the but the government is is going to create the money or even if it has a I mean the government has income based upon tax receipts.
	So it's going but it's gonna it's going to borrow against future tax receipts.
	In other words if the government stopped taxing at all like had zero capacity to tax tomorrow, who would lend it money, right?
	I mean the argument would be well nobody because they'd have no income from which to pay it back.
	I just FY so first of all I'm for zero percent interest rate so that would solve little interest uh payment problem uh uh immediately you wouldn't have to pay interest and the federal government I don't know if you know this but the US federal government regularly repays hundreds of trillions of dollars of debt every year.
	year there was a year recently they literally repaid 120 trillion
	dollars of uh federal government debt because i mean that's just that's just the bond turnover every year there's three month bonds there's one there's six month bonds they constantly cycle through them without raising any taxes for any of this so just as just that as an objection okay so how does it uh i is it just like shuffling more bonds or how does it pay this hundreds of trillions of dollars and this this might provide some bank accounts it's the federal reserve
	types it into uh bank accounts basically i'm sorry and i think this might provide some clarity let me interject this is that when you understand or if you could think about it that a reserve from the federal government and a bond from the federal government are both money one just pays an interest rate and a half of the
	interest rate and one doesn't it's kind of like a savings account at a bank or a che versus a checking account at a bank.
	I put my money into into the checking account.
	I can access it easier.
	Typically I don't get an interest rate.
	I put it in the savings account.
	You know, there's some stupid federal regulation.
	You can only make six withdrawals a month or some wet whatever the heck it is.
	And uh it's theoretically harder to access, but they'll they'll get an interest rate for it.
	Right.
	And because it's a bond, and we think oh bond means debt, and the government's got to find the money somewhere to pay the debt, um uh uh really causes this confusion when in reality the government is just issuing two separate securities.
	One is they call reserve, and that's the money that you need, you know, need to pay debts with uh are actually taxes with, and and the banks need for various to shorten this those things.
	Steph, on our call in 2021 summarize it perfectly.
	Because Steph, you said back then, I think MMT is just like screw bonds.
	Yeah.
	MMT says that we don't actually need uh bonds at all, in fact.
	So um we could just generate the reserves and leave them in the banking system as reserves.
	Um it's a choice to sell bonds and to suck up those reserves back out of the banking system, but no necessity to do that.
	Right.
	Okay.
	So to answer sorry, to answer the the this idea that okay, in order for the government to buy this or spend that or build this the you know, the statute to itself or whatever, um uh future generations have to pay off that money.
	Again, I I was I was trying to get at it from well, where did that money come from in the first place?
	Because in order for anybody to pay anything, that money had to be created, and that there's this confusion between the the money and the bonds, and I'm saying that if we consider it all money, which we're making the argument that you should, because it's just that they issue the the reserves just the same way that they issue the bonds, which is they just type numbers into bank accounts, it's all just money that they issue out of nowhere.
	And that the taxes that come in is just money that's just destroyed.
	Yeah, let me let's hear Steph because I don't think that addresses uh his concern.
	Right.
	So the liability that is created in the future, in my mind, is that the government spends 10 million dollars creating some waterfront property or something like that, which is you know, it's it's very inefficient.
	It's to some degree you would argue taken from the private sector, because it is created for political purposes, usually to bribe friends and punish enemies and so on.
	Wouldn't disagree.
	Yes.
	So can I mathematically go through that transaction you just described there, and then you can continue?
	So the government builds a waterfront property.
	So what happens uh literally for the individual actress involved, the federal government types money into the waterfront property builder's bank account, and he builds a waterfront thing and now has reserves in his bank account that he can go spend in the grocery store,
	spend at Walmart, spend all over the place, which basically creates consumer demand or investment demand for other businesses to generate profits and income and hire people.
	Well, sorry, sure.
	I mean, but that's looking at the demand uh side, but not looking at the destruction of the supply side.
	So when you uh build spend 10 million dollars to build this waterfront museum or whatever it's gonna be, then resources are diverted.
	I mean scarce resources, right?
	Labor, uh, I guess capital is it's part of the infinity glitch here, but we're talking about, but labor and materials are taken from elsewhere in the economy.
	And so the fact that he goes and buys sorry, go ahead.
	But now that there's unused resources.
	Yeah, I was about to bring that up.
	So I agree with you, but um industry capacity utilization, for example, in the US, right now it's I don't know, 70% or so.
	There's unemployed individuals as we all know.
	So those um factors counter the argument of we're we're bidding um uh uh necessary resources out of the private sector.
	No, they're idle resources.
	And the reason why they're idle in our argument is because the government has imposed a tax, the entire population Has a constant tax liability that they have to satisfy in US dollars.
	That creates unemployment.
	So in order to fix that unemployment problem, the federal government needs to spend that token into existence in order for people to pay the tax to begin with, and then have the safety cushion to have the meaning of exchange, et cetera.
	Sorry.
	No, that's fine.
	I'm and uh I'm I think that certainly tax liabilities is a big issue for uh capital, but I mean, I'm sure you're aware, and I'm just really just saying this for the sake of the audience, but there is uh uh you know what is it, 150,000 pages of federal regulations, let alone state and local and municipal.
	So the amount of of interference in the free flow of capital and the price signals of supply and demand is you know legendary and almost I mean, there's no one person who understands it all because it's just too big and too complicated.
	Um the reason why there's this idle capacity is you know, it's just a wide variety of massive amounts of government interference.
	And so uh I I think that you and I, well, I think sorry, we all would agree that what we want to do to reduce the amount of unused capacity is to remove the barriers to the free flow of capital and price signals so that these resources could be used more effectively and efficiently.
	We're saying that's a component of it.
	And we're actually emphasizing that's a secondary component.
	Because the primary component is again, if the currency doesn't exist to begin with, there's there's no currency to earn or spend or invest or anything like that.
	Now, we completely agree with you, which is the tax code is is just completely utterly insane.
	Give them given most of the example.
	It'll probably be easier than anything else.
	What with the with the with the business cards?
	Yeah, yeah, yeah.
	Yeah, okay.
	So um think about it.
	Uh this uh this is a very simple example.
	Let's say I don't have I don't have a business card in front of me.
	Uh I got a sticker from one of my kids.
	So uh this is uh this is an airplane.
	So Steph, are you willing to clean my house for this airplane sticker?
	Uh I would say no.
	Okay.
	All right.
	So uh let's say you're over at my house and I ask you that same question, you say no, I say, okay, there's a guy outside with a nine millimeter who will not let you leave unless you give him this sticker.
	I I feel that the value of the sticker has increased considerably in my mind.
	Correct.
	That's for the sticker, but you don't have it, so you're unemployed, basically.
	Right.
	And so now let's say there's ten of us in the house, or ten I'm the government, and there's ten of the people in the house, and I say, okay, in order to earn this sticker to leave the house, you have to work for me.
	There's ten of you, but I'm only going to issue five stickers.
	Right.
	Five five people are left out.
	Five people, five people can't participate.
	They were rotten in your house until they're well, uh, but but but the of course, um again, I'm sure that we're all aware of this, but the additional wrinkle, of course, is that you can either work for these five stickers or I can give you even more money to not work.
	Because I mean, a woman on the welfare state with two kids is earning the equivalent of well over a hundred thousand dollars.
	Uh or she'd have to earn the equivalent of over a hundred thousand dollars just to get all the benefits she gets.
	Which is a terrible policy.
	Oh, it's a policy because even left-wing MMTers are against uh uh welfare payments, they would prefer put people to work than to send them money for nothing.
	Well, I mean, it's not money for nothing.
	Uh, usually I mean, sometimes it is, of course, right?
	And of course, the um uh the uh disability system is wildly abused as well.
	But uh for the a woman who's got you know three kids and and no dad in the picture or no no provider in the picture if she's you know raising the kids and all of that, it's not for nothing.
	And you know, but I would say that the unused capacity is also because the market system is not allowed to function in that, you know, and and and maybe this is just growing up poor, but I don't have to saying that that that's step two.
	Step one is you've got to have enough money in the system to pay the tax.
	All important I completely agree with you.
	If uh I mean, well, let's say we're in the Soviet Union and they print a bunch of money, well, we don't have the freedom to do anything with it anyway.
	Right, well, we can't start a business with it.
	We can't make more wealth out of it.
	We can't, you know, uh extract resources with it.
	We can only do what the state tells us.
	So in a similar fashion, we got you know 15 to 150, whatever bazillion number of pages of the IRS code.
	Um totally agree that screws up um where the money could go totally sends mixed signals, and that that's why, as we call ourselves right wing MMP here, right?
	Uh we would say the the easiest thing to do out of all the things that could be done is is completely gut the tax code and for example, and and I know this will like it set libertarian and cap ears on fire when I say this, put a small national property tax over the whole country.
	That would eliminate the need to chase individuals and to track their money.
	And it and what's unique about a property tax is it's not transactional.
	Currently, with the the income tax and the self-employment taxes that we have in the United States and pretty much every other country that's modern or whatever, is that I get as a business owner, I get punished for starting a business.
	As an employee, you get punished for getting a job, and the more that you work, the more both of us get punished.
	Because the more you work, the more the more taxes come out.
	So in that in that sense, similar to a sales tax, it's transactional.
	The more the transaction occurs, the more you get punished versus a property tax, and I guess you you could have like a head tax where it's just like Steph, you just owe a hundred dollars a month in taxes because you exist.
	That'd be a head tax, right?
	Or uh you could have a personal property tax, but with a real estate tax, you're not tracking anybody.
	Um we track the property, we're not in track of it in particular person, and you could say, well, here's a number, and that's what it is.
	And if we recognize the fact that like we don't need to pay off the debt, we don't, you know, we we don't need to to get this money in order for uh you know future generations to pay for the waterfront dorkiness that that we built.
	That's just you know, there's a certain amount of money in existence that that we extend forward and we have to tax at least some of it out in order to make the the money valuable to begin with, then that entire bullshit tax code could go away now.
	Well, and of course uh we're all aware that power corrupts.
	So uh if we have a head tax, they'll just import people to to raise to tax base, and if there's a property tax, they'll simply tax tax is the argument that we're making.
	No, but what I'm saying is that if if any any kind of tax is going to distort the economy, because if if it's a property tax, then the governments will do everything they can to raise the value of the property to tax more.
	I I gotta push back on the distortion thing, and I mean th this kind of really gets down kind of to the root of it, where the the Austrian argument stems from accepting the barter theory of money, which is that okay, you know, uh back in the day the what you know you had chickens and I I had fish and it you know uh I want fish but you don't want chickens.
	I don't even remember if I I said it the the right way based on what my example that I said before.
	And so at some point we we figure out some sort of medium exchange because that starts getting used more and more, and historically speaking, that's been silver or gold because of the you know blah, blah, blah reasons it's fungible and and doesn't corrode and you know it's easily transportable and all whatever whatever the reasons are, and that's where money came from.
	And when the government comes in and says, okay, well, we you know we need to uh violently move resources over here and we need to subsidize that and whatever, that's distorting the flow of that was happening before.
	And what we're arguing is that that's not where money came from.
	Money came from the state, historically speaking.
	And that it's always been you could say it's always been a distorted process.
	We're trying to work.
	We're not saying the state is good.
	We're not saying the state is good.
	We're just seeing historically distinct.
	Yeah.
	Yeah, yeah, that that money, as far as we can tell, appears to be a unit of state, not a unit of market.
	Which is terrifying.
	I agree.
	Right.
	But if money is a unit of state and not a unit of market, what when we start well, well, you're distorting the market, you're distorting the market, it's like, well, I don't really know what that means because if we don't put the money into existence, there's no market to distort so I think you were talking about how you have government intervention distorts the market.
	I don't think there's any disagreements on this point.
	Um we're just trying to make the best of it.
	I guess.
	No, no, I can and again I I know that and I remember this very vividly from our conversation for a couple of years ago, the emotional investment and optimism, which I don't discount.
	The emotional side of life is really, really important.
	That that the emotional uh uh uh investment in having optimism for the future and not looking at the massive debt and saying we're doomed.
	Uh so I I get all of that.
	And listen, I mean uh having having optimism and being able to get out of bed with a song in your heart and a smile on your face is really important, so I'm not gonna just discredit that as a whole.
	But I I mean the Austrian argument I think is not that there's no state involved in money.
	I mean, even if you look at if you count sort of primitive tribes as as even worse than modern governments, which I think they were in terms of dominance and authority, and I did this whole speech on on aboriginals in Australia.
	I would much rather live under a modern Western government than a quote non-state government uh or non-state authoritarian tribal system like the Aborigines.
	But I think the argument from the Austrians is something like well, look, the w the the government was at one point restrained by a gold standard, you guys will know all of this, right?
	And so it couldn't just create money out of thin air because the money would lose value relative to gold and the hyperinflation and all of that.
	Whereas if the government is not constrained by tying its money creation to any fixed resource or limited resources, then you get uh uh massive amounts of spending and and and listen, I mean the argument don't want to argue both sides, but the argument against that is, and I I think people have said this, and I think it's a fair question towards the Austrians, is like okay, so like 40% of all US money that's ever been created has been created since COVID.
	Where's the hyperinflation?
	Now people say, well, inflation is high, it's like, yeah, but it's not Weimar high.
	And so that is an old question.
	And and I've heard the Austrian arguments since the eighties about how, you know, well, all of this money creation, we're off the gold standard, Nixon, 1971, and and it's the hyper hyperinflation is right around the corner, and you've got to get some food in the basement and so on.
	And while there certainly has been inflation, my gosh.
	I mean, it's no question, right?
	When I first came to K. Yeah, it's not it's not Weimar or Zimbabwe and the uh the Austrians uh I haven't delved deep into their arguments, and I'm sure that they have arguments against that, but the amount of money that's been created has been truly staggering.
	The amount of debt is truly staggering.
	And yet now they they can say, yes, well, the fact that you haven't got lung cancer yet doesn't mean lung cancer isn't bad for you, and it's like but that really wasn't a prediction as much.
	The prediction was that inflation was going to follow 18 months or so after the money creation, the money has been uh created in levels that von Mises could scarcely conceive of, and yet the hyperinflation has not hit.
	And uh I think that may be um a flaw in the general theory.
	I I uh yeah, so uh I think that the MMT's uh theory and theory on inflation is more nuanced than that.
	So for example, when we were on our call in 2021, I did say that because of these large deficits, the MMT theory would uh tell us that we're probably gonna see higher levels of inflation.
	And I I think I even called the I said about five to ten percent for the coming years.
	Um I also have to add that I did not know that the Russia uh Ukraine conflict was gonna break out in February.
	That was a huge inflation factor.
	These are always uh there's way more than monetary factors that cause uh inflation.
	Uh inflation, by the way, being defined as a increase in the aggregate price level, just to be clear on my definition.
	Which is not the Austrian, right?
	The Austrian is increasing.
	Uh you started um by saying that the Austrians uh uh believe that uh uh that the Austrians disagree that the Austrians agree with the state theory of money to some extent.
	And I don't think that is the case.
	The original regression theorem by uh von Mises and I think Bim Bavik also, it does not have a state in the origination theory of money.
	It has atomistic individuals bartering with one another.
	Yeah, whether they're using seashells or salt like there's some medium.
	Exactly.
	And no, and and I I accept all of that, but uh but the uh all modern economies it's state-based.
	Sorry, go ahead.
	Yeah, you know, so so that is a big uh a fundamental uh difference between the MMT approach to money and the Austrian approach to money, and a lot of the ensuing disagreements stem from this huge difference in the respective theories on the origins of money.
	But sorry, why would that matter insofar as it's all controlled by the state now in every square inch on the planet except maybe Antarctica.
	So help me understand why that would make a big difference.
	Because the Austrians have a theory as to how do we go back to the most best possible free market money system, let's do a gold standard, because as we all know, money came from individual exchanges and people chose to use gold in the free market of money.
	And so the best reflection of that system would be a national gold standard.
	That is the theory that is where they end up by uh starting with this uh money regression theorem uh theory, and that is the theory that I that I complained.
	Oh, so it's sort of like I hate to sort of put it this way, but it's sort of like a noble savage theory that uh we originated with gold and silver and we need to get back to that.
	Uh I I don't I mean, personally, I don't care as an ANCAP, I don't care how money is defined.
	I just don't want it to I don't care who gets married, let's just not rape each other, right?
	And and so for me, it's like I don't care how the money is solved or sorted, whether it's a biometallic thing, I don't think it would be.
	I think it would be some combination of maybe commodity-backed digital currency or Bitcoin, of course, which we should touch on before we stop talking.
	I don't care how currency is is maintained, because I I would never in in my wildest dreams imagine that I knew how uh a currency should be best created, maintained, transferred, I mean uh uh protected uh from inflation and yet at the same time, you know, stable and fungible and all of that kind of stuff.
	I have no idea.
	Uh I've I mean obviously we all have some ideas, but uh, you know, one of the fundamental things about uh ANCAP is you you are a vainglorious fool if you think that you can replace the combined genius of the free market with all these brilliant souls searching for ideal solutions.
	You can't do it.
	It's not possible.
	It would be like me saying I'm gonna build my own computer, and not from components, but from like raw materials like sand and water and stuff like this is not gonna happen, right?
	I mean, I can't even make a pencil as that sort of famous old article goes.
	And so uh if they say, well, you know, this is the solution, uh, I think that that would be a violation of basic market principles.
	The whole point of because gold silver would be central planning and saying this is the best way to do it.
	And of course, you know, there was no such thing as digital currencies or even really computers back in von Miser's day.
	So the idea that it would be gold and silver would be a throwback, and I think would be a substitution of individual preference based on noble savage routines rather than letting the market decide.
	So making uh a gold standard creates an arbitrary objective of subsidizing a particular gold price.
	That is a very esoteric, unpractical, uh ideological objective to pursue.
	Um by the way, also it's often been pursued by banking lobbies.
	If you read Carol Quigley's tragedy and hope he describes how the banking lobby in the 1800s uh and 1900s has occasionally pushed for a gold standard because they thought that it would uh restrain uh uh the government from running deficits and uh keep inflation low, and that they they earn fixed uh income, and so they're interested in keeping inflation low.
	That's generally their uh bias.
	Um on the other hand, also by the way, I don't know if people keep talking about YMR Germany.
	I don't know if they're aware that YMR Germany was on a gold standard when when it went through uh hyperinflation.
	Um so I think that's kind of a dispute that you could you you optimize or you keep inflation low by having a gold standard because inflation is impacted by so many other important factors, resource availability uh in particular.
	World War One, exactly, and French coming in from the West and exploiting coal at gunpoint.
	These these are things that cause hyperinflation.
	You know, Zimbabwe doing a land reform that that demolish its entire agricultural sector.
	That will give you hyperinflation, But not some And by the way, Zimbabwe's hyperinflation happened during years one of the few years where the government was running a surplus, you know, just to I looked that up recently because I had a debate on Twitter with someone about that.
	So let's sorry, I I just want to make sure in the interest of time, a topic I'd like to touch on, which of course is subject to vote, and you guys outvote me.
	But how would MMT work?
	Let's say government start accepting Bitcoin.
	I know there have been some movements towards that.
	Government's not accepting Bitcoin as a tax payment.
	So how does and and let's say that magical, you know, here a miracle occurs and the fiat currency system is displaced by a Bitcoin monetary system.
	And how would that work with MMT theory?
	So the government runs on Bitcoin.
	Well, can I take a stab at that first email with some basics?
	And I know that this is like Nima's specialty.
	Good, good.
	And it's a good idea.
	I think Chris, I'm so uh Nima's got an awesome theory on this.
	But uh I I couple components here is that first off, if if the government were to start accepting Bitcoin as taxes, which I believe somebody correct me, was it Arizona or some county in Arizona or something started doing that?
	Is the tax being measured in Bitcoin or is a tax being measured in dollars?
	Because if it's being measured in dollars and then the the Bitcoin is just like a uh a medium to get from point A to point C. Let's say that I think it would be better if it's measured, like you get you get a Bitcoin, uh you get a tax bill in both fiat and Bitcoin.
	But but how but by the time you get the tax bill, couldn't the the value have changed.
	Sure, but of course, like I get I get all of that, but just to say you get the tax bill, I mean it would have to be electronically the same day, you've got to pay within uh a day or whatever it is, right?
	I mean, so let's just say that the that somehow, and again, I know that this is a bit magical thinking that the price variability of Bitcoin can be minimized.
	Or let's say, of course, that uh if tax bills are going to be denominated in Bitcoin, immediately there'll be about 10 billion industries that uh uh uh uh that uh sprout up to normalize and stabilize the price of Bitcoin so that the government can have some predictability in what it's uh getting, that they sort of promise to make it a stable.
	So whatever that where there's a demand for the stability, the supply will emerge.
	So let's just say that the tax bill comes in dollars and bitcoin and you can pay either way.
	Okay, cool.
	Uh the the second thing I just wanted to bring up is is the usage of the term fiat.
	Um I'm sure you're aware that that uh that fiat just means decree.
	Yeah, by force, yeah.
	Right?
	So uh people often compare, okay, well, you we can have the gold standard, we could have fiat.
	Well, it's all fiat because it's just whatever the government decreed.
	So if the government decrees that we're now accepting Bitcoin at some level, it's still I know we're getting complicated because you're talking about the interest of time and all that sort of stuff.
	We're talking about in the interest of time.
	Oh sorry.
	Let's answer the question.
	Um that.
	So sorry, go ahead.
	So um it wouldn't turn Bitcoin into fiat money.
	Um but I don't think it would substantially change much in terms of the MMT system if the if the government gives you the option of paying in dollars and bitcoins, it would just be extinguishing some dollars less,
	some uh uh fiat dollars less from the economy, and it would be a uh collecting some bitcoins from certain uh crypto wheels and bitcoin holders, and then it would have to do something with those bitcoins, obviously.
	Um I think it would be a bit of a case of Gresham's law where you know bad money drives out the good.
	I don't think most people would care to pay their um taxes in bitcoins, um, especially the people holding bitcoins, right?
	So I don't think it would really um fundamentally change much.
	Well, okay, and I sorry, I agree with that.
	So let's go to the other scenario, which is it's all Bitcoin.
	Right.
	So if it's all Bitcoin, then now the the government um creates a kind of gold standard situation where they accept tax payments and sorry my battery is running low so I have to uh c I have to uh okay sorry.
	Um so if it's only Bitcoin, then the government basically ex uh relinquishes all its powers to issue currency and probably self-destructs in the process, which you know could be a good thing, could be a bad thing.
	Um one thing your argument is that MMT is CPR for the government.
	Yeah kind of yeah.
	Okay.
	So if it keeps that entity alive, so to speak, then the people who want less government won't be fans, right?
	No, but but so I'm saying but we can't assuming we can't abolish the entire fiat money system tomorrow.
	Yeah.
	No, I'm not a uh uh uh opposed to uh uh the the network state and Capstan or the Bitcoin economy or anything like that.
	One more thing I would like to point out about Bitcoin is that it ironically MMT kind of explains the reason why Bitcoin has value.
	Only in the transpose the fiat economy to the cycle of money in a fiat economy to a voluntary economy where the issuer of the money demands a fee in the form of Bitcoins.
	The equivalent is the government demands a tax in the form of dollars and spends that money into existence.
	That's the miners spending Bitcoins.
	All Bitcoins come from miners.
	and individuals, if they wanted a Bitcoin transaction, they have to pay small fee to the miners.
	So you have the same similar flow of money of money being as it were deficits spent into the economy by the miners and some being taxed back by the miners in the form of fees.
	So the difference is of course yet taxes I know you're gonna say taxes are um forced and no no no no I I I we all I'm not I'm trying not to you know cover ground that we all agree on.
	But the difference of course is that miners have to invest a fair amount of energy, resources, time and effort into the creation of Bitcoins as opposed to fiat currency being typed into a bank account, so to speak.
	Mm-hmm.
	Yeah but to to to uh conquer a territory and establish a government that's fiat also takes some time and resources I could argue, right?
	So d none of it comes without some initial uh uh degree of efforts uh to establish your and of course the miners are much less powerful in the Bitcoin economy at the end of the day than the federal government in the fiat economy, which is something we would want right we wouldn't want excessive authority by the money issuer.
	Right.
	I'm just saying that the the people in the government can get or create currency far easier than a Bitcoin miner can sure yes.
	And and then the limit and that's really the Austrian argument behind the gold standard is you can't just sort of snap your fingers and create gold like you have to go find it and all of that.
	So and I I can tell you from personal experience it's a lot of work.
	I did that after high school right so I think yeah they we we you want to have a barrier, you know this is one of the things that's of great concern about sort of digital IDs and AI that uh that the the costs of tyranny again are about to go down enormously and that's that's not good at all, right?
	So you always want some sort of cost resistance to the expansion of state power and I think the Austrian argument is that uh friction free creation of currency is uh removes a significant impediment to the expansion of state power.
	Right.
	So then how did Weimart Germany uh achieve the would be my counter sorry I'm gonna get my network adapter my my keep talking I have to get my chart on Steph I I I want I want Nima to finish that point so I don't want to step on that point where there's another previous point you wanted to hit on while he's fine in his computer charger.
	Well if he uh wants to talk about the Weimar thing, I mean the Weimar thing was subsequent to you know the the the most massive intervention uh to date in Western history of the government into the freedoms and free market of the society which is uh the first world war mean isn't fashion well no the first world war a first world war was a massive of course staggering expansion of state power and slaughter of state uh uh uh actors or citizens and you know again the argument
	is something like well if they'd if they'd been restricted by uh fiat currency if they hadn't been if they hadn't switched over to fiat currency sort of halfway through the war as happened in a lot of places to sort of make up money or selling bonds, then the war would have ended when they ran out of gold, which would have been a whole lot earlier than well my understanding and and this actually comes from reading Tragic quickly,
	because he he he goes into some pretty significant detail on this, is that uh before World War One, roughly speaking, the the at the like gold to reserve ratio at a country was something like one to three, if if if I'm remembering this correctly.
	And by the end of the war, it turned into something like one to ten.
	Right.
	And uh part of the economic disaster that that came um into uh uh into existence after that was the fact that everybody after World War One, for whatever reason was obsessed with getting the number back to one to three instead of one to ten instead of just accepting the fact that the world had moved on.
	But that that's a different story.
	The point that I wanted to make is this uh wait, am I still on?
	Yeah.
	Okay.
	Uh by the video's moved around, Nima's re rebooting.
	Uh the point that I wanted to make.
	I like how he's like he's so identified with this tech.
	It's not even he's rebooting his phone.
	Nema himself is I'm just thinking, go on.
	He's merged.
	He's gonna uh listen back to this, but you heard that monotone voice of his.
	Sorry.
	Sorry, Nima.
	Okay.
	Um the uh uh yes, in theory, that restricts the government, but for whatever reason, when a war happens, they always seem to figure some way around it.
	Yeah, yeah, yeah.
	Because they did have a gold standard in World War I, and they just kept stretching it out, right?
	Yeah and I mean the um going back to the Nixon thing, I think this is an interesting point that Warren Moser actually made, is that everybody points to I think it's 1971 that Nixon nicked the gold standard.
	That's why they say the way stay wage stagnation kicked in and so on, yeah.
	Well, that he nixed the international gold standard.
	The domestic gold standard was nixed in 1933 by FDR.
	FDR, yeah.
	He uh had the forced buyback, yeah.
	Right, and Mosler's argument is that was a much more impactful situation on the gold standard because between 33 and 71, no one ever internationally demanded money back until I think it was France demanded the money back or demanded gold back with further money, and that's when Nixon was like, we're not giving them that gold back.
	I'm I'm nixing that, right?
	So the the point that I'm trying to make is that when a government wants to go to war and kill everybody, they're really good at figuring it out how, even if they had like we put some arbitrary restraints in yesterday.
	Let's get rid of them today, because we want to go to war.
	Like that.
	But ultimate socialization is not of the money, but of the people through the draft.
	So uh if you have that, then um just about everything else uh sort of falls into line.
	But of course, on a pure Bitcoin economy, uh that is functionally impossible because you can't just create your own Bitcoin out of thin air.
	And but again, once we get to a full Bitcoin economy, the presence of the state would be somewhat in question anyway.
	Right.
	Well, and then I I would even say that there's actually a problem in a currency that can't expand and contract uh because you you can't access the capital when you need it.
	For example, well, you can, you just have to pay more for it.
	Yeah, but does it make sense in that case?
	Well, I again I don't care about make sense.
	I care about the foundational ethics of it and a non-compelled currency uh is is really I wasn't talking about whether it was compelled or not, I was talking about whether it could expand to contract or not.
	Right.
	But when you say it won't be able to expand past a certain point.
	Yeah, but all I think all that is voluntary makes sense, like morally.
	Like I don't really care about the practicality of things.
	Uh all that is moral makes sense.
	I'm not I mean, I'm I don't know if you guys are sort of utilitarians or consequentialists or whatever, but voluntary, okay.
	So let's certainly Bitcoin, uh the price of everything is uh is going to uh drop because it's fundamentally deflationary because it hits its 21 million and then stops.
	So but I I don't care.
	Uh as long as it's not compelled.
	But sorry, go ahead.
	Yeah, I I think we if discussing a Bitcoin economy is very difficult because we've never seen it before.
	So everything we say is some level of speculation.
	I don't know how the I think what Dylan points out is an important problem in a fiat money economy.
	But I don't know how relevant it would be in a Bitcoin economy.
	Also, a Bitcoin economy is not just a Bitcoin economy.
	Bitcoin economy is Ethereum, Solana, Suey, Aptos, and a bajillion other currencies, all of which allow for capital formation, some of which actually are inflationary.
	They're not completely capped.
	So you would have I think in in I mean I know that there are these sorts of things, but you would have a stable coin, which would grow relative to the economic productivity so that future quote dollar values could be predicted.
	I mean, wouldn't it be great if you were planning a 10-year business plan you had a 10-year business plan and you knew that the price of wood, the price of concrete was going to be the same in 10 years as it is now.
	So there would be definitely stable currencies.
	I I think Bitcoin would be more B2B and stuff would be more consumer-based.
	Yeah, without fiat because currently all stable coins are tied to a fiat coin.
	But it's conceivable to have a stable coin that um that runs on a smart contract for difference against the CPI index and the PPI index, for example.
	Something like that would be interesting.
	And it's gonna happen soon enough.
	Well, and if you had a coin that was trying to denominate the value of uh goods and services, probably not capital, but goods, goods and and services.
	If you had a coin that was attempting to make that as stable as possible, a whole bunch of other industries would sprout up to try and figure that problem out.
	Because of course it is impossible to know what the price of anything's gonna be, even tomorrow, let alone ten years.
	But right now there's not any particular incentive to try and figure that uh sort of stuff out because there's no mechanism.
	At least you could pack peg it, for example, to the inflation rate over the past year or something like that.
	Something like that, maybe or or you could you have a basket of commodities and track it relative to those prices if they were sort of core business commodities.
	But I I think that certainly one of the massive variables, I mean, there's so many variables you have to deal with in business now that you wouldn't have to deal with in a free market, like you know, massive regulations, uh uh uh the um the woke pushes for various uh uh quota systems and uh i immigration or not, and then immigrants uh sometimes have to be a good idea.
	Or there's a tax code, yeah, tax codes, regulations, yeah, who's in power, you know, uh and and whether they're gonna give money to their friends on their side of the aisle and and starve their enemies and so on.
	So uh but yeah, stablecoin would be absolutely fantastic for business as a whole.
	The power dynamics in an economy like that would shift from uh a state kind of authority to probably more uh mega corporate uh chip producing and validator running authorities, because those would be the bottlenecks that this whole system would still be depending on to some degree.
	Right.
	But it's impossible to predict exactly what is going to happen.
	But it could be kind of like a world as is described.
	I don't know if you've watched the latest alien, the alien earth on Hoogle, but it's kind of interesting because they envision a world where five corporations run the planet because governments they figured out governments weren't working.
	So the whole planet is run by six corporations.
	Well, except corporations are legal fictions created and maintained by the state as bribes to the ruling class to escape consequences for their criminality, but that's a topic for another.
	And I've actually written a whole novel set in a um uh a free market, a truly free market um society, people who are interested can check it out.
	It's a great I mean I'm a trained actor too, so like the the audiobook reading I think is pretty good, but it's called Is it uh what's it called?
	It's called the future, because I'm very imaginative when it comes to my science fiction names.
	I wrote a book about the future called the future, and then I wrote a book about the present called Well, I think you can probably finish that sentence for me.
	But free to main to come slash books, it's all free, and uh this is sort of uh my view of how uh an economy runs in the absence of uh state state actors.
	Uh and so you should check it out.
	I think it's really good.
	All right, well listen, uh a great conversation, and um I have uh to to uh move on to another appointment, but really do appreciate having the chance to chew this through again, and I do want to invite people, you know.
	I mean, I'm a big fan of the Austrian school, though I recognize that they have some limits in their explanations of what's going on at the moment.
	But the MMT is a good it's a good challenge.
	It's a good challenge and it's not easy to just wave a wand.
	You know, it's not like communism.
	You just wave a wand and say, well, there are no price signals, so it doesn't work.
	But uh it's it's a worthy um a worthy addition to the economic debate, and it's not as easy to wave away as some people think, and I'd really appreciate you guys bringing it to the attention of the listeners.
	If there are resources that you think people would want to pursue if they're more curious about MMT and its um explan explanatory power, where would you suggest people go?
	Nemo, you want to take that?
	Uh yeah, come to uh so we actually have a podcast called ire TV.
	I reada dot TV.
	We're on all platforms.
	Spell it in I R I D A dot T V. Okay.
	And you can find us on Spotify, Apple, um all these uh all those platforms.
	We'll put yeah, we'll put the link in the show notes.
	And uh I really do appreciate the time today, and I hope we can talk again.
	Hopefully it won't be a couple of years.
	Yeah, we appreciate having having us on again.
	Uh my pleasure take care, guys.
	Thank you.
	Bye.

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