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 we're going to 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, just kind of frame it in that context.
	And 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 a resources perspective, what is it, you know, how many resources does it take to take care of these people at this older age?
	I mean, just look at, say, assisted living or memory care communities.
	Okay, so 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 going to come from?
	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 think that's an 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 healthcare resources, the actual labor resources, the actual housing resources, whatever, 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, and we could continue making in the future, is that the government can always afford it and that the repercussions, which is usually inflation, right?
	Aren't as bad as usually indicated.
	So, I think I understand what you mean, just to sort of translate it to the genpop.
	So, we can print more money, but we can't print more people.
	So, if the constraint is labor, there's not an easy solution.
	Outside of some automation, but it would be kind of weird to see the 87-year-old granny being cared for by the Terminator.
	It would just be kind of strange.
	There's a new movie right there.
	Well, yes, but on the other hand, if 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, when 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, and if we try to optimize for it, then we will shortchange ourselves.
	We won't achieve the objective of whatever it is that we're trying to solve.
	And so, sorry, just to back that up for a sec, because if we're going to do MMT, we're going to assume that people don't know what we're talking about or what you're talking about, since you guys are much more.
	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 proposes that 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 federal government deficits are not a 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 a demand for that currency and then proceeds to spend that money into the population.
	And then the money it 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 exports surpluses.
	Okay.
	And by the way, MMT stands for modern money theory.
	You forgot that part at the beginning.
	Sorry, Stephanie.
	No, don't apologize.
	It's a combo.
	Yeah, yeah.
	Okay.
	So we can sort of get into criticisms, which we've sort of done before.
	But so tell me how MMT deals with the graying of the population.
	Do you mind if I take a stab at that one first?
	Just to kind of set a foundation here.
	So I think it's important to point out that MMT doesn't actually suggest anything.
	It's just a description to say, okay, this is how we think the system is working.
	To propose a solution is to say, okay, I am a particular MM tier and here's my political views on I'm more right-leaning or I'm more left-leaning or whatever.
	And based on that, and based on my understanding of the MMT, this is what I think we should do.
	And 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 the physics, I think we should do this.
	Because you could have someone.
	Hold on.
	Okay, go ahead.
	Well, let me finish this point.
	You could have someone who's a eugenicist who says, well, the way we deal with the gray population is kind of like we just described before, which is we just need to kill them all because I don't like them.
	And here's the MMT, because I underestimate MMT.
	I know we need to turn these dials on the economy in order to make that happen.
	Right.
	Now, I do appreciate the intellectual hubris of saying that MMT is as proven and as objective as physics.
	Sorry, sorry, sorry, sorry, sorry.
	No, that means I did not mean to say that.
	But 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 going to base my rocket ship on anti-gravity.
	It's going to fail, right?
	Because you'll just assume that you actually have to restrain it from flying away from the earth and so on.
	So I think it does matter.
	If the theory's wrong, 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 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 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 your earlier question.
	I don't know.
	But I think it's just important to point out.
	MMT, in my opinion, is not opposed to what you just said, to 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, you remove concerns.
	No, no, but I mean, 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.
	So that's why we go back to real resources are a constraint.
	So if the deficits get too large, they start bidding too much resource out of the private sector, then we start seeing significant inflation.
	That's also in line with MMT.
	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 would have less crime, less alcoholism, less domestic abuse, less single motherhood households, all these things if we could create an economy with true full employment.
	And it could happen with a tiny federal government, with a tiny federal budget, with very low taxes, as long as we're not worried about deficits.
	But if we worry about deficits, then we're going to start imposing an arbitrary constraint because we feel good about a number that looks good.
	We feel good about balanced numbers because we're used to that as households.
	But then it becomes a personal esoteric endeavor for people in power.
	For example, Elon Musk was an example that he really wanted to pay off all the government debt, which, by the way, the federal government debt is the private sector's net savings.
	So do you want to just make that connection for people, to make sure that people follow this?
	Well, because the p public sector deficit adds to the bond holdings of the private sector.
	Whether domestically or overseas, right?
	Like say huge Japanese bondholders in the American debt.
	So basically if you've taken the the national debt is held as assets by people either domestically or a foreign, and so it's it's simply just private sector savings if the debt can ever be paid.
	Largely the domestic private sector.
	There's also some foreign holders because we have a trade deficit, but largely the private sector, yes.
	And some of it also the Federal Reserve, which I'm against.
	I don't think the Fed should be buying away bonds from the private sector and to hold them.
	But generally speaking, to the dollar, the public sector 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, financial assets, they always come with some kind of bank debt or a debt to a stockholder or a bondholder.
	So that's basically you issue a bond.
	Now you 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 hard to think about.
	If you imagine we cut all our taxes to 1% or 0.5% or whatever, how much money would you be able to keep in your pockets after that's done?
	So it's a very practical way of looking at the monetary system, in my opinion.
	I'm sorry, I thought there was something else coming, or if anybody else has anything else I want to add, that's good.
	Yeah.
	No, that was, yeah, that was my thoughts on that.
	Okay, so the bondholders are saving the money that the government creates, and then when-Sorry, Steph, I'm having a delayed reaction to what you just said in terms of adding something to it.
	I think I might be able to add a little bit of clarity.
	Please.
	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 we set that confusion aside for a second and we recognize the fact that the U.S. government is the sole issuer of U.S. dollars, they can't come from anywhere else.
	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 existence.
	I'm sorry.
	If the federal government doesn't issue reserves, there's no reserves for the private sector to have, which Nima corporate, 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 specific type of money is so vitally important to the economy.
	The private sector has a 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 bad things.
	Well, but they save in order to invest.
	Is that the general argument?
	No, just to hold as a 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 just want to keep.
	Don't want to put it in a factory or in a house or whatever, right?
	Well, 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 allocate some of your savings to stocks, and those will 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.
	They went over 5% for 30-year bonds recently.
	And also, if a big bad crash happens, then those bonds will do very well.
	So, yeah, you obviously.
	Sorry, and I agree.
	I agree with all of that.
	Sorry to interrupt.
	But I'm just saying the average person.
	Like, you know, we're all, I guess, fairly well-versed in some financial abstractions and so on and like to manage our resources.
	But the average person, like 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 they're 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 got to invest because you're going to lose 4% of the value of your money every year and it's all going to evaporate.
	So people don't want to, in generally, 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.
	But most people don't.
	Most people don't want to.
	They just want to go to work.
	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 half a gunpoint now because otherwise the value of their money is just going to evaporate over time.
	I don't know what it's like in Canada, but in the US, there's actually a very broad culture with a 401ks of even just the average worker, you know, he will have some money in stocks just because the employer is offering it.
	Yes, but why does the employer have to offer it?
	Because without the 401ks, it just goes up the tax smoke chimney.
	Also, 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, hand.
	Sorry, just I get Nima's point, which is Joe Schmo doesn't want to deal with it.
	Yeah, I think Steph was agreeing with you, Nemo, which is that 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.
	They want to get an account and just save 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, that is what inflation does.
	And so I was just talking about ways to protect yourself against that.
	There's no other solution that I have to offer to the individual.
	I think practical solutions are important.
	But yeah, so I guess the net assets injected through federal deficits are the safest assets, only the safest of the savings assets, but they constitute a net savings that does not come with a debt associated with it.
	Unlike other executive money.
	Like for example, a bank money which comes through a bank loan.
	If I buy a house from someone, the seller of the house banks a bunch of chunk of money, but I borrowed money from the banks.
	So in aggregate, the private sector does not achieve net wealth.
	If I buy a stock, same situation, like 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 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.
	And I'll sort of give you a personal example, which I think is generally true, excuse me, which is when I first co-founded a software company back in the 90s, 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 we went around hat in hand to doesn't sort of really matter who, private individuals, and we raised $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 know you guys know this, but I just want to clear it up for the audience.
	I don't view stocks as a debt.
	I view it as an asset because it gives you the money to improve and create more.
	And so it's an asset for the stockholder, right?
	But from the company's, literally from the company's balance sheet perspective, it's a liability to the shareholders.
	It's a profit share that you have to send over to the shareholders.
	It's not a fixed payment, like with a bond, but it is a variable profit share liability to stockholders.
	But if you sell shares, not because you want to just go around creating liabilities, but you sell shares because it gives you capital to improve, expand our computer business.
	Like if you look at the cosmology of the economy and you add up all the plus ones and minus ones.
	No, not literally as a company.
	If you sell shares as a company, you incur a liability to the buyers of your stocks.
	Now, I understand it comes with benefits, of course.
	You have now cash to invest, expand.
	And obviously also you can issue additional stock.
	So if your stock price goes up a lot, now you have some sort of uncreated asset on the back burner that you can sell to more shareholders by committing to more profit share to more people.
	But at the end of the day, my point is just 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 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 to take an example, if some guy goes and takes 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 $10,000 and goes and blows it at a casino, 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 $10,000 that he has to pay back, and he has nothing to show for it, right?
	He's, I mean, other than, well, I guess one anxious evening at the casino.
	Whereas a liability for a company that sells 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 positive.
	And yeah, so I just want to I don't want to sort of put liabilities in one big bucket or debt in one big bucket.
	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, Dinie babies or tulips, and then that all goes belly up.
	Then they're sitting on bad stock, just as the gambler said on the gambler is, I mean, praxeologically sitting on bad debt.
	The company has to basically defraud in a way, unless it just makes mistakes, which obviously, you know, there's all these calculations in business that you could make errors in.
	But by definition, the debt to the loan shock is a bad debt.
	And the company, sure, it can make mistakes.
	It could be full of cheats, but that's not praxeologically sort of baked into the entire interaction.
	But you can make a good bond.
	You can get a loan and invest that money properly.
	And then that can turn out to be a good debt too, from the bondholder, the bank's perspective.
	Sorry, and I agree with that.
	If you borrow the $10,000 and you invest in Dell in the 90s, whatever, right?
	Okay, good.
	Then you've made 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 $50,000.
	I was down $20,000.
	I ended up only being down $10,000.
	It was the wildest, most exciting night of my life.
	Everybody was, so there may be some, you know, pleasure benefits.
	Like if you go on a cruise, it's not like the money is being invested in something 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 this thing.
	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 dollars come from in the first place?
	Was what we were talking about.
	And we were talking about the national debt and whether or not is that, you know, what do we mean?
	Is it a debt?
	If it's a debt, what do we mean by this?
	It's a debt.
	Because here's these weird guys coming on saying it's actually good for the private economy because now they have money.
	What does that mean?
	Right.
	So you're saying that the government by creating debt is transferring money to the private sector.
	I'm sorry.
	I was.
	Sorry.
	I apologize.
	So the government by creating currency, by selling bonds and so on, is transferring resources to the private sector.
	And I'm sorry if I've oversimplified that.
	But it's actually changing resources to the public sector because it's creating fake nothingness out of thin air.
	No, no, it's literally resource to the private sector.
	Steph is correct.
	Well, let me finish my point, Neba.
	Because the government creates the nothing, the money, and then buys resources from the private sector and the government gets the real resources.
	Yeah, yeah.
	So the reason the private sector gets money.
	The financial asset move to the private sector.
	Okay, financial assets.
	But then also they also hire people, send out STEMI 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 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 of the private sector.
	By creating the in quotes, debt.
	And 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.
	Remember, so the stock conversation we went into, like whether it's liability or an asset with the person buying the money of the stock or 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 like the beginning of like, you know, in the beginning, there was nothing 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.
	The government said, let there be money.
	And there was money.
	It can't be a wallpaper of Andrew Jackson's.
	Yeah, okay.
	So then there's something to work with.
	I think, I mean, Nima, correct me if you think I'm coming at this from the wrong angle here.
	But I think I want to hear what Steph, what's the point?
	Okay, keep going.
	Keep going.
	I'll hold my thought.
	Okay.
	So 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 me and Nima were coming out 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 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.
	They have.
	Okay, sorry.
	I was expecting a different word.
	My brain assembled the wrong jigsaw piece.
	Sorry, go ahead.
	Sorry.
	Yeah.
	So that is the lifeblood that the private sector needs.
	And historically speaking, you know, it's funny that when I compared MMT modern money theory 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, 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 depression slash recessions had a depression.
	What about the Great Recession, 2008?
	It's a Great Recession.
	Okay, if we count that.
	Whatever.
	Bad economic downturn.
	Go ahead.
	Yeah.
	But all bad economic downturns were preceded by either a surplus in the government or 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, we don't have an affair.
	And it crashes.
	I could get more specific than that, but I thought that was an app metaphor at the moment.
	I don't mind more specificity, and I'll give you the Austrian approach to that.
	And again, it's not just MMT versus Austrian, but so go ahead and I'll sort of give what I think the Austrian is.
	So basically, I mean, there's really, historically speaking, two places where the money generation can come from.
	It's the sovereign issuer with the 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.
	I think most people on the show by now, I think, know that 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 an account.
	They just type it in and poof, it appears.
	And was something like 97% of money of US dollars or whatever consists of actually that bank money.
	Right.
	So, holy shit, I lost my train of thought.
	I'm sorry, Steph.
	No, no, I apologize.
	So, we were talking about more details about why these seven depressions have occurred.
	Thank you, thank you, thank you, thank you, thank you.
	Okay, so what happens is the when the federal government starts pulling back its private sector net savings, this is 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, the net liability and asset is zero in the aggregate, and 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 keep pushing that forward until one little Jenga piece finally slides out and the whole thing comes crashing down.
	Austerity 2008.
	Yeah.
	Austerity government budget balancing or surpluses always go hand in hand with 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 going to pay you a million dollars per acre of land that you turn to farm, then 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 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 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 the business to business or the hypercapital sector long before they hit the consumer sector, which is because there's resources being artificially 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 there's think about China and their massive city.
	Yeah, China and these massive cities.
	Or, of course, the 0708 crisis, which we can sort of get into the causalities 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, 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 brick-a-bracks or monuments to itself.
	And then it's unsustainable.
	And then, like you're holding 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 there's no demand for the products of the excessively stimulated capital environment, if that makes sense.
	Yeah.
	What you described just now is called the Austrian business cycle theory by Ludwig von Mises.
	And I mean, you didn't describe it 100% accurately because Mises.
	No, please correct it.
	Yeah, please correct it where I've got it.
	It's been a while since I've studied this stuff.
	Yeah, yeah.
	No, I read basically everything from Mises, so I remember it pretty well.
	In Human Action, 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 Austrian business cycle theory.
	He suggests that changing time preference makes it look to the savers and to investors as though there is more demand for long-term capital goods than there actually is.
	So they start investing excessively in long-term capital goods 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 investment sector collapses and a depression ensues.
	That is yeah.
	So I think the argument is 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 you are also saying people are spending now and want to lend their money now because the price of money is cheaper.
	So yeah, you're right.
	And thank you for bringing that.
	A very important point is that the interest rates 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, 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.
	But you expect that there are going to be more sales.
	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 and all of that.
	So yeah, 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 preferences and gives the wrong signals.
	Sorry, go ahead.
	Yeah, there's, in my opinion, there'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 0% interest rate?
	Because there's labor involved in lending the money.
	Wouldn't that be a lot?
	It would be maybe 0.1%, because they want to economize on their reserves.
	It would be easier for them with the push of a button 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 a risky asset, even though reserves are a 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 talking like the sort of 30-day, 60-day, 90-day lending windows?
	Overnight.
	Yeah, so overnight, yes, of course.
	Sorry.
	So it's the shortness.
	They wouldn't do it for zero, but they do it for $10 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 my point.
	Okay, so maybe 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, so understanding this whole process is very helpful in predicting interest rate movements and investing your money-wise and all that kind of understanding long-term and 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 30-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 interest rates on the entire term of the yield curve.
	But my point is just the whole defeater for the notion that the Federal Reserve artificially lowers the interest rate is that the interest rate is actually always artificially elevated.
	My second point is that, 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 spend.
	So much rather the business cycle was encouraged by 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 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 Jen Psaki.
	Anyway, but you were talking about...
	Yeah, well, but you actually answered the question.
	Yeah, yeah.
	So maybe.
	Let's start.
	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 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 the money against future tax receipts.
	But who could pay those tax receipts if the government didn't create the money to begin with?
	Right.
	No, no, I understand that.
	But the government is going to create the money, or even if it has, I mean, the government has income based upon tax receipts.
	So it's going, but 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 would have no income from which to pay it back.
	Just FYI.
	So first of all, I'm for 0% interest rate.
	So that would solve the whole interest payment problem immediately.
	You wouldn't have to pay interest.
	And the federal government, I don't know if you know this, but the U.S. federal government regularly repays hundreds of trillions of dollars of debt every year.
	There was a year recently, they literally repaid $120 trillion of federal government debt because, I mean, that's just a bond turnover every year.
	There's three month bonds.
	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 is it just like shuffling more bonds or how does it pay this hundreds of trillions of dollars?
	And this might provide bank accounts.
	The Federal Reserve types it into bank accounts, basically.
	Sorry, you mentioned that.
	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 one doesn't.
	It's kind of like a savings account at a bank versus a checking account at a bank.
	I put my money 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 whatever the heck it is.
	And it's theoretically harder to access, but 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 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, or XV taxes with, and the banks need for various statutes.
	Steph on our call in 2021 summarized it perfectly.
	Steph, you said back then, I think MMT is just like screw bonds.
	Yeah.
	MMT says that we don't actually need bonds at all, in fact.
	So we could just generate the reserves and leave them in the banking system as reserves.
	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 this idea that, okay, in order for the government to buy this or spend that or build this, you know, the statue to itself or whatever, future generations have to pay off that money.
	Again, 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 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 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 his concern.
	Right.
	The liability that is created in the future, in my mind, is that the government spends $10 million creating some waterfront property or something like that, which is, you know, 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.
	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 literally for the individual actors 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, sure.
	I mean, but that's looking at the demand side, but not looking at the destruction of the supply side.
	So when you spend $10 million to build this waterfront museum or whatever it's going to be, then resources are diverted.
	I mean, scarce resources, right?
	Labor.
	I guess capital is part of the infinity glitch here 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 industry capacity utilization, for example, in the U.S. right now is, I don't know, 70% or so.
	There's unemployed individuals, as we all know.
	So those factors counter the argument of we're bidding 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.
	And I think that certainly tax liabilities is a big issue for a 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, you know, what is it, 150,000 pages of federal regulations, let alone state and local and municipal.
	So actually the amount of interference in the free flow of capital and the price signals of supply and demand is legendary.
	And almost, I mean, there's no one person who understands it all because it's just too big and too complicated.
	So the reason why there's this idle capacity is there's a wide variety of massive amounts of government interference.
	And so 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 in a future.
	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 no currency to earn or spend or invest or anything like that.
	Now, we completely agree with you, which is the tax code is just completely, utterly insane.
	Give him Mostler's example.
	It'll probably be easier than anything else.
	With the business cards?
	Yeah, yeah, yeah.
	Yeah, okay.
	So think about it.
	This is a very simple example.
	Let's say I don't have a business card in front of me.
	I got a sticker from one of my kids.
	So this is an airplane.
	So, Steph, are you willing to clean my house for this airplane sticker?
	I would say no.
	Okay.
	All right.
	So 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 feel that the value of the sticker has increased considerably in my mind.
	Correct.
	That's when I'm not going to sticker, but you don't have it.
	So you're unemployed, basically.
	Right.
	And so now let's say there's 10 of us in the house, or 10, I'm the government, and there's 10 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 10 of you, but I'm only going to issue five stickers.
	Right.
	Five people are left out.
	Five people can't participate.
	They will rod in your house.
	Well, but, of course, and 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 $100,000 or she'd have to earn the equivalent of over $100,000 just to get all the benefits she gets.
	Which is a terrible policy.
	Oh, it's a terrible policy because even left-wing MMPers are against welfare payments.
	They would prefer to put people to work than to send them money for nothing.
	Well, I mean, it's not money for nothing.
	I mean, sometimes it is, of course, right?
	And of course, the disability system is wildly abused as well.
	But for a woman who's got, you know, three kids and no dad in the picture or no provider in the picture, she's raising the kids and all of that.
	It's not for nothing.
	But I would say that the unused capacity is also because the market system is not allowed to function in that, you know, and maybe this is just growing up poor, but I have just saying that that's step two.
	Step one is you got to have enough money in the system to pay the tax.
	And I completely agree with you.
	I mean, 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.
	We can't start a business with it.
	We can't make more wealth out of it.
	We can't extract free sources with it.
	We can only do what the state tells us.
	So in a similar fashion, we got 15, 150, whatever bazillion number of pages of the IRS code.
	Totally agree that screws up where the money could go, totally sends mixed signals.
	And that's why as we call ourselves right-wing MMPs over here, we would say the easiest thing to do out of all the things that could be done is completely gut the tax code.
	And for example, and I know this will set libertarian NCAP 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 detract their money.
	And what's unique about a property tax is it's not transactional.
	Currently, with 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 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 taxes come out.
	So, 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 could have like a head tax where it's just like, Steph, you just owe $100 a month in taxes because you exist.
	That'd be a head tax, right?
	Or you could have a personal property tax, but with a real estate tax, you're not tracking anybody.
	And we track the property, but not in tracking a particular person.
	And you could say, well, here's a number, and that's what it is.
	And if we recognize the fact that we don't need to pay off the debt, we don't, you know, we don't need to get this money in order for, you know, future generations to pay for the waterfront dorkiness that we built.
	That's just, you know, there's a certain amount of money in existence that we extend forward, and we have to tax at least some of it out in order to make the money valuable to begin with.
	Then that entire bullshit tax code could go away now.
	Well, and of course, we're all aware that power corrupts.
	So if we have a head tax, they'll just import people to raise the tax base.
	And if there's a property tax, they'll simply argue that we're making.
	No, what I'm saying is that if any kind of tax is going to distort the economy, because 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 got to push back on the distortion thing.
	And I mean, this kind of really gets down kind of to the root of it.
	Where the Austrian argument stems from accepting the barter theory of money, which is that, okay, you know, back in the day, you had chickens and I had fish, and it, you know, I want fish, but you don't want chickens.
	I don't even remember if I said it the right way based on my example that I said before.
	And so at some point, 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 blah, blah, blah reasons.
	It's fungible and doesn't corrode and it's easily transportable and whatever the reasons are.
	And that's where money came from.
	And when the government comes in and says, okay, well, we need to 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.
	This is historically distorted.
	Yeah.
	Yeah.
	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, when we start, 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 it.
	Right.
	So I think you were talking about how government intervention distorts the market.
	I don't think there's any disagreements on this point.
	We're just trying to make the best of it.
	No, no, and again, 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 the emotional investment in having optimism for the future and not looking at the massive debt and saying we're doomed.
	So I get all of that.
	And listen, I mean, 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 going to just discredit that as a whole.
	But 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 even worse than modern governments, which I think they were in terms of dominance and authority, and I did this whole speech on Aboriginals in Australia, I would much rather live under a modern Western government than a quote non-state government or non-state authoritarian tribal system like the Aborigines.
	But I think the argument from the Austrians is something like: well, look, the government was at one point restrained by a gold standard.
	You guys all 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 massive amounts of spending.
	And listen, I mean, the argument, don't want to argue both sides, but the argument against that is, and 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 U.S. money that's ever been created has been created since COVID.
	Where's the hyperinflation?
	Now, if you say, well, inflation is high.
	It's like, yeah, but it's not Weimar high.
	And so that is a real question.
	And I've heard the Austrian arguments since the 80s about how, you know, well, all of this money creation, we're off the gold standard, Nixon, 1971.
	And it's 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 Canada, it's happened in Zimbabwe.
	Yes, it's not Weimar or Zimbabwe.
	And the Austrians, 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 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 created in levels that von Mises could scarcely conceive of, and yet the hyperinflation has not hit.
	And I think that may be a flaw in the general theory.
	Yeah, so I think that the MMT's 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 tell us that we're probably going to see higher levels of inflation.
	And I think I even called that, I said about 5% to 10% for the coming years.
	I also have to add that I did not know that the Russia-Ukraine conflict was going to break out in February.
	That was a huge inflation factor.
	These are always, there's way more than monetary factors that cause inflation.
	Inflation, by the way, being defined as an increase in the aggregate price levels, just to be clear on my definition.
	Which is not the Austrian, right?
	The Austrian is increasingly.
	You started by saying that the Austrians believe 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 von Mises and I think Bumbarik 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 salts, like there's some medium.
	Exactly.
	And I accept all of that, but All modern economies, it's state-based.
	Sorry, go ahead.
	Yeah, no, so that is a big, a fundamental 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 that is where they end up by starting with this money regression theorem theory.
	And that is the theory that I come to.
	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 we originated with gold and silver and we need to get back to that.
	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 so for me, it's like, I don't care how the money is solved or sorted, whether it's a bimetallic 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 maintained because I would never in my wildest dreams imagine that I knew how a currency should be best created, maintained, transferred, I mean, protected from inflation and yet at the same time, you know, stable and fungible and all of that kind of stuff.
	I have no idea.
	I mean, obviously, we all have some ideas, but one of the fundamental things about ANCAP is 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 going to build my own computer and not from components, but from like raw materials like sand and water and stuff like this.
	It's not going to happen, right?
	I mean, I can't even make a pencil, as that sort of famous old article goes.
	And so if they say, well, you know, this is the solution, 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 Mises' 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 a gold standard creates an arbitrary objective of subsidizing a particular gold price.
	That is a very esoteric, unpractical, ideological objective to pursue.
	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 and 1900s has occasionally pushed for a gold standard because they thought that it would restrain the government from running deficits and keep inflation low.
	And they earn fixed income.
	And so they're interested in keeping inflation low.
	That's generally their bias.
	On the other hand, also, by the way, I don't know if people keep talking about Weimar Germany.
	I don't know if they're aware that Weimar Germany was on a gold standard when it went through hyperinflation.
	So I think that's kind of a dispute that you optimize, you keep inflation low by having a gold standard because inflation is impacted by so many other important factors, resource availability, in particular.
	World War I. Yeah.
	World War I, exactly, and French coming in from the West and exploiting coal at gunpoint.
	These are things that cause hyperinflation.
	Zimbabwe doing a land reform that demolished 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.
	I looked that up recently because I had a debate on Twitter with someone about that.
	So let's sorry.
	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 governments start accepting Bitcoin.
	I know there have been some movements towards that.
	Government start accepting Bitcoin as a tax payment.
	So how does, 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, 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 challenge, I think.
	So Nima's got an awesome theory on this, but a couple of components here is that first off, 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 the tax being measured in dollars?
	Because if it's being measured in dollars, and then the Bitcoin is just like 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 a Bitcoin, you get a tax bill in both fiat and Bitcoin.
	But by the time you get the tax bill, couldn't the value have changed?
	Sure.
	But of course, I get all of that.
	Let's just say you get the tax bill.
	I mean, it would have to be electronically the same day.
	You've got to pay within a day or whatever it is, right?
	I mean, so let's just say 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 if tax bills are going to be denominated in Bitcoin, immediately there'll be about 10 billion industries that sprout up to normalize and stabilize the price of Bitcoin so that the government can have some predictability in what it's getting, that they sort of promise to make it a stable.
	So whatever, 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.
	The second thing I just wanted to bring up is the usage of the term fiat.
	I'm sure you're aware that fiat just means decree.
	Yeah, by force.
	Yeah.
	Right?
	So people often compare, okay, well, we can have the gold standard or 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 we're talking about in the interest of time.
	I'm sorry.
	Let's answer the question.
	Yeah, the payment is still commanded by the state.
	I agree with that.
	So sorry, go ahead.
	Right.
	So it wouldn't turn Bitcoin into fiat money.
	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 fiat dollars less from the economy.
	And it would be collecting some bitcoins from certain crypto whales and Bitcoin holders.
	And then it would have to do something with those Bitcoins, obviously.
	I think it would be a bit of a case of Gresham's law, where bad money drives out the good.
	I don't think most people would care to pay their taxes in Bitcoins, especially the people holding Bitcoins, right?
	So I don't think it would really fundamentally change much.
	Okay, and 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 government creates a kind of gold standard situation where they accept tax payments.
	And sorry, my battery is running low, so I have to.
	Okay, sorry.
	So if it's only Bitcoin, then the government basically 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.
	One thing.
	So 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 so I'm saying we can't, assuming we can't abolish the entire fiat money system tomorrow, right?
	That is our point.
	But no, I'm not opposed to the network state or capital 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 want to do Bitcoin transactions, they have to pay a small fee to the miners.
	So you have a similar flow 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, I know you're going to say taxes are forced.
	No, no, no, no.
	I'm trying not to 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.
	Yeah, but to conquer a territory and establish a government that's fiat also takes some time and resources, I could argue, right?
	So none of it comes without some initial degree of efforts 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 want, right?
	We wouldn't want excessive authority by the money issuer.
	Right.
	I'm just saying that the people in the government can get or create currency far easier than a Bitcoin miner can.
	Sure.
	Yes.
	And that's really the Austrian argument behind the gold standard: 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 can tell you from personal experience, it's a lot of work.
	I did that after high school, right?
	So, I think 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 the costs of tyranny are about to go down enormously, and 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 friction-free creation of currency removes a significant impediment to the expansion of state power.
	Right.
	So, then, how did Weimar Germany achieve the counter?
	Sorry, I'm going to get my network adapter with my keep talking, Bill.
	I have to get my charge.
	Uh, Steph, I want Nima to finish that point, so I don't want to step on that point.
	Was there another previous point you wanted to hit on while he's finding his computer charger?
	Well, if he wants to talk about the Weimar thing, I mean, the Weimar thing was subsequent to the most massive intervention to date in Western history of the government into the freedoms and free market of the society, which is the First World War.
	I mean, it's been 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 actors or citizens.
	And again, the argument is something like, well, if they'd been restricted by fiat currency, 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 this actually comes from reading Tragedy and Hope Care quickly, because he goes into some pretty significant detail on this, is that before World War I, roughly speaking, the gold to reserve ratio at a country was something like one to three, if I'm remembering this correctly.
	And by the end of the war, it turned into something like one to 10.
	Right.
	And part of the economic disaster that came into existence after that was the fact that everybody after World War I, 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's a different story.
	The point that I wanted to make is this.
	Wait, am I still on?
	Yep.
	Okay.
	Videos moved around.
	Nima's rebooting.
	The point that I wanted to make.
	I like how he's so identified with this tech.
	It's not even he's rebooting his phone.
	Nima himself is.
	Go on.
	He's merged.
	He's going to listen back to this, but you heard that monotone voice of his.
	Sorry.
	Sorry, Nima.
	Okay.
	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.
	Because they did have a gold standard in World War I, and they just kept stretching it out, right?
	And I mean, going back to the Nixon thing, I think this is an interesting point that Warren Mosul actually made is that everybody points to, I think it's 1971 that Nixon mixed the gold standard.
	That's why they say the wage stagnation kicked in and so on.
	Yeah.
	Well, he nixed the international gold standard.
	The domestic gold standard was nixed in 1933 by FDR.
	FDR, 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 nixing that.
	Right.
	So 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 out how, even if they like, we put some arbitrary restraints in yesterday.
	Let's get rid of them today because we want to go to war.
	The ultimate socialization is not of the money, but of the people through the draft.
	So if you have that, then just about everything else sort of falls into line.
	But of course, on a pure Bitcoin economy, that is functionally impossible because you can't just create your own Bitcoin out of thin air.
	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 would even say that there's actually a problem in a currency that can't expand and contract because 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, again, I don't care about makes sense.
	I care about the foundational ethics of it.
	And an uncompelled currency is really important.
	I wasn't talking about whether it was compelled or not.
	I was talking about whether to expand and contract or not.
	Right.
	But it makes sense because it won't be able to expand past a certain point.
	Yeah, but I think all that is voluntary makes sense, like morally.
	Like, I don't really care about the practicality of things.
	All that is moral makes sense.
	I mean, I don't know if you guys are sort of utilitarians or consequentialists or whatever, but voluntary.
	Okay.
	Certainly Bitcoin, the price of everything is going to drop because it's fundamentally deflationary because it hits its 21 million and then stops.
	But I don't care as long as it's not compelled.
	But sorry, go ahead.
	Yeah, I think 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 that 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, SUI, Aptos, and a bajillion other currencies, all of which allow for capital formation, some of which actually are inflationary.
	They're not completely capped.
	And you would have coins.
	I think 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 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 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 going to happen soon.
	And if you had a coin that was trying to denominate the value of goods and services, probably not capital, but goods 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 is going to be even tomorrow, let alone 10 years.
	But right now, there's not any particular incentive to try and figure that sort of stuff out because there's no mechanism.
	At least you could peg it, for example, to the inflation rate over the past year or something like that.
	Something like that, maybe.
	Or you could have a basket of commodities and track it relative to those price if they were sort of core business commodities.
	But 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, the woke pushes for various quota systems and immigration or not.
	And then immigrants sometimes have tax codes, regulations, who's in power, you know, and whether they're going to give money to their friends on their side of the aisle and staff their enemies and so on.
	So, but yeah, stablecoin would be absolutely fantastic for business as a whole.
	The power dynamics in an economy like that would shift from a state kind of authority to probably more mega corporate, chip producing and validator running authorities, because those would be the bottlenecks that this whole system would still be depending on to some degree.
	But it's impossible to predict exactly what is going to happen.
	But it could be kind of like a world as described.
	I don't know if you've watched the latest alien earth on Google, 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 free market, a truly free market society.
	People who are interested can check it out.
	It's a great, I mean, I'm a trained actor too, so like the audiobook reading, I think, is pretty good, but it's called.
	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 freedomain.com slash books.
	It's all free.
	And this is sort of my view of how an economy runs in the absence of state actors.
	And so you should check it out.
	I think it's really good.
	All right.
	Listen, a great conversation.
	And I have to 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 it's a worthy addition to the economic debate.
	And it's not as easy to wave away as some people think.
	And I 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 explanatory power, where would you suggest people go?
	Nevi, you want to take that?
	Yeah, come to so we actually have a podcast called Arida TV Irida.tv.
	We're on all platforms.
	IRIDA.tv.
	Okay.
	And you can find us on Spotify, Apple, all those platforms.
	Yeah, we'll put the link in the show notes.
	And 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 you having us on again.
	I might be sure.
	Take care, guys.
	Thank you.
	Bye.

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