Spencer and Jeff dissect fiat currency’s debt-driven mechanics—central banks loan $49.2B to Canadian businesses during COVID, fueling inflation while Spencer defends immigration as a growth tool. Jeff argues it enables modern imperialism, like China’s leverage over Africa, and exposes crypto’s Ponzi-like reliance on new buyers, contrasting its zero-sum speculation with gold schemes. The episode reveals how speculative assets drain productivity, undermining stable economic expansion tied to real-world labor and innovation. [Automatically generated summary]
And we're back with Truth Unrestricted, the podcast would have a better name if they weren't all taken.
I'm Spencer, your host, and I'm back again today with Jeff.
How are you doing, Jeff?
Not too bad, buddy.
How about you?
Pretty good.
I keep forgetting, so I have to remember right at the start of the episode, if anyone has any comments, concerns, they want to tell us how good, how bad we did when we did this episode.
Place to send that email is truthunrestricted at gmail.com.
Spencer's favorite thing is for people to tell him that he's wrong and explain why.
Oh, yes.
Yes.
Please do.
It's a personal favorite of mine.
So what's on the menu today, buddy?
Today will be currency.
Seems super boring.
We're going to try to not make it boring.
So I would also like to register my objection at the top of this, as we discussed before we started recording.
The original plan for this episode was for it to be on currency and debt, which I thoroughly support because as we will reveal in what you're about to dive into, currency has really not existed except as an expression of debt, like since forever.
And the two issues are the two concepts have been hopelessly intertwined since they were first dreamed up.
And I find it personally really difficult to discuss currency without also discussing debt.
But you did make a fair enough point that like combined, that's a behoenth of a subject, an absolute behoenth.
So we've, you've, I know, I keep my objection.
You decided to split this into two episodes, which I support only because it's not my show and I have no creative control.
So I will do my best to play along in the interest of keeping it to the typical 30 to 45 minute time length for the podcast.
But we may stray afield and you might have editing work.
And for that, I apologize in advance.
Yeah.
Mr. doesn't have any creative control.
Just try to have me stop him from creating things for this.
Plus, I'm surprised you didn't just openly call it a bait and switch.
Clearly, you were here to talk about debt and I just went, nah, currency systems.
I was really excited to discuss debt.
I'm not going to lie.
Yeah.
But we'll see how things go with just keeping it to money.
Right.
So money, currency.
And debt.
Right.
So let's just write from the top, we got to do some basically Wikipedia stuff.
Lay the groundwork.
Lay the groundwork.
Fiat currency system is the name for what we use in Canada and what they use in the United States.
And actually, most of the Western democracies, at least, and actually also pretty much most of the developed world.
Yeah, almost every country now uses fiat currency system.
Now, what the hell does that mean?
It means that money is just, people say it's just imaginary and it is sort of.
So here's how it works.
Money is created by the central bank in the form of loans to brick and mortar banks.
There are a few other steps involved involving bond contracts and a whole bunch of other things that aren't really that important to people who aren't actual bankers or economists.
The interest rates that they loan this money out at is known as the prime lending rate.
That's the rate that the brick and mortar banks will pay the central bank.
So the banks, the brick and mortar banks, will then lend that money out to actual borrowers, like people and businesses.
And usually you'll see some nomenclature about this that it's you're getting the prime rate plus some amount, like prime plus one or prime plus 0.5 or whatever.
And all of the, you know, the quality of your loan is based on that.
It's based on where it is in relation to the prime rate.
See how quickly, see, like you were three sentences in, and we're already talking about loans.
Oh, this is what I mean.
Yeah, right.
So the borrowers, the people in the businesses who borrow that money, then use the money that's borrowed and then pay back the money with interest.
And everyone knows this about him.
I mean, I'm not saying anything drastic and it's not news to anyone, but this literally means that at any given moment in time, there is more money that is owed to the bank than there is money available in the system with which to pay the bank, because what you owe the bank is the principal plus the interest.
And all we have available to pay the bank with is just the principal because that's all that we got from them.
So already this seems to be leery.
Everyone gets a little uneasy at this point where they, when they first learn this and go, wait a minute, what's really happening?
I'm just going to interject briefly here.
Sure.
What this concept of debt and interest stemmed from, there's a great book out there called The Ascent of Money by Neil Ferguson.
My father was one of the bankers of which you speak, and he took it during his economics degree.
He read this book as one of the textbooks for his economics degree at university.
He pushed me to read it when I was in my, I think, early 20s.
So I don't remember a lot of the details, and I won't try to quote it because I will horribly butcher any attempt to reference it directly.
But I do remember one of the chapters he discussed was in early, going to sound super racist because I can't remember which country exactly, but an Arabian nation, way, way back in the day, The earliest proven written contracts of money and debt were centered around shepherds and goatherders who would lend their flock to another herder and write up an agreement.
Like we all know that like, the females are going to give birth and this flock is going to come back to me with more heads in it than when I gave it.
Some of those heads will be yours because you took care of the flock for me, but some of those heads and the principal are still mine because it's my flock.
So this, this idea that that uh, that nobody trusts that money needs to constantly be growing, and it's so.
David Suzuki has made several viral short videos talking about how stupid and broken the system is because it needs to be constantly expanding in order to stay healthy.
But it was actually based on a perfectly natural concept of the natural expansive expansion of a given market or commodity, just based on livestock breeding.
So the money that's borrowed is meant to generate economic activity.
Yeah, and this economic activity in turn adds value to products that are made or enhanced, which is part of what allows for an Increase in value at a future time at which the loans will be paid back with interest.
And this is how the system works.
David Suzuki is right that it's meant to grow and it's expanding all the time.
We'll get to that later, actually.
I have a specific part to say about that.
So the first criticism of this is the very simple criticism based upon first learning the very basics of how it works.
The very concept that more money is owed to the bank than exists, like blows some people's minds.
And some people say that this doesn't work and it's doomed to fail.
And I've even been told personally in some conversations by people who are attempting to mock this situation that one plus one doesn't equal three.
And they're right that one plus one doesn't equal three.
Except when the one plus one is a mated pair of sheep.
Right.
Eventually, two sheep will become three sheep.
Exactly.
So what I usually compare this to when I'm explaining it to people is imagine that you're looking at, you're at a circus and you're watching a circus act.
And in the circus act is a guy on a unicycle.
Okay.
This scenario has to happen in the circus because the circus is the only place where anyone would ever ride a unicycle.
Okay, right, right.
But you're watching a video of someone riding a unicycle, and then you're seeing pictures from the video, just still photographs from the, and in every single one of the photographs, every single one, it looks like the guy on the unicycle is about to do a face plant, is about to fall in any one slice of time that's not moving.
It looks like it's about to fail.
So this is why it looks like it's about to fail, except that unicycles aren't meant to sit still.
And neither is the fiat currency economy.
It's meant to be moving, specifically forward.
And a unicycle also works best when it's moving forward.
You lean forward and you cycle and you push the wheel under yourself as you lean forward and you keep it under yourself.
And the same is true of a fiat currency system.
It's not meant to sit still.
It's not meant to have a fixed amount of money.
It's meant to have a changing amount of money.
And that's the sort of mystery as to why it works is because it's changing, because it's expanding.
And that's the reason why, as soon as someone tells you that in this scenario, you're doomed to fail.
Well, they're wrong.
And here's how I know they're wrong because we've had a fiat currency system for, generally speaking, about 100 years.
And not only has nearly every currency that's on that system not failed, they've all done spectacularly well.
I mean, this has been the century with the most growth in history, and it's not close.
It's not like it edged out some other period in history, not even close.
We have done so much more development with the fiat currency system than we ever could have with the gold standard, which is always what's mentioned.
We need to go back to the gold standard.
The gold standard was so much better.
We had something physical that we could rely upon.
Ask the Incans and the Mayans how they felt about the gold standard when Spain and Portugal came to North America.
Yeah.
Yeah.
Right.
So this idea that the gold standard would allow us to stabilize the economy is ridiculous.
The gold standard limits the amount of currency you can have based on how much gold you have.
And in that way, worldwide, you have to compete with the other nations to expand your currency because if a gold is found somewhere, either it has to be in your country and you get a boom, or it's in some other country and you have to buy the gold from them.
Yeah.
With that system, you can, but if you happen to be a country that is poor now and doesn't have any gold, you'll be poor forever.
Versus with a fiat currency, you can develop, you can build an economy based on that.
It's just a set of ideas.
And people say about this that it's, it's only just a bunch of pieces of paper moving around.
And they try to minimize the value of that.
But what's written on those pieces of paper is very important.
It is the most important part of this because your nation is backing that up.
Your nation's military, your nation's integrity is backing that up.
Well, technically, actually, it's your nation's workforce is backing that up.
Well, right.
But what we're about to get to is the idea that the gold standard, under the gold standard, as soon as another nation conquered you and then they took your gold away, they wouldn't even have to hold on to you.
They could just come in, take your gold and leave.
And then you're kind of screwed.
And that's more or less how conquest worked a long, long time ago.
They could come in and take all your stuff and leave.
But if your stuff wasn't in, you know, gold bricks and instead was in, you know, furniture or, you know, computer parts or like a real economy where you're building real things.
It's a lot harder to take that stuff away.
And even once they leave with that stuff, you can build more.
So we used to have these wars of conquest in this way because primarily because in order to become more rich, you needed another nation's stuff.
And people still do this, that there are still wars of conquest and you can still conquer another nation and take their stuff, whatever that is.
But that stuff isn't usually a big pile of gold.
No, it's usually petrochemicals now.
Well, okay, right.
But the petrochemical is still in the ground and they still need people to run an economy to bring it out and all that stuff.
Yes.
Right.
So already this idea of moving from the gold standard to fiat currency has changed the shape of the world because we used to have megalomaniacs who would be in charge of nations.
And I, right, everyone's thinking used to have.
We still have some megalomaniacs in the world.
But when you get an unreasonable person in charge of a powerful nation and they get to thinking to themselves, all I need to do is go to that other nation and take their gold.
I mean, that changes their set of ideas.
They start thinking about it and they start planning it.
If they know there isn't any gold over there to take, they make different decisions.
Typically, in the past hundred years, we've had fewer of these.
We've had a couple world wars from the unreasonable.
Because we were producing tanks.
Yeah, I would argue that.
I mean, like, I don't, I don't entirely disagree with your thesis here, but I do think that the argument that moving from gold to fiat has reduced the amount of wars of conquest.
I don't believe that's true.
I just think that under the new imperialism that we see now, like the old system was, you know, go find the new world, find their stuff, take it.
And now it's go find the new land, occupy it, and work its citizens.
Well, it's more involved for sure.
And a lot of times you wind up with More diplomatic relationship between conqueror and conquered, but it's still imperialism, objectively, right?
Like, you know, there's there's no shortage of the number of countries we could point to that are solidly under the thumb of one of the major three superpowers in the world.
Um, fiat currency hasn't protected them from that.
I would argue that fiat currency has enabled that because it's by and large not the militaries of those most powerful nations that is uh moving the needle most for people.
It's trade, it's the production of goods with which to trade.
And that's the thing that most people like when uh say Australia is concerned about uh China and they have to do negotiations with China, the thing they don't want is to break off trade with China.
They also don't want a war with China, but they're less worried about that than they are about losing trade with China.
And the same is true of every nation that's not as powerful as one of the big three, right?
With the exception right now of Ukraine and Russia have this situation.
But if you're an African nation, you don't want to piss off the United States.
You don't want to piss off Russia.
You don't want to piss off China.
And not really because you think their troops are coming, because you don't want to interrupt whatever trade is happening between you and that nation.
And that's the real key.
Or because you're enslaved by debt to that nation, but we're not talking about that tonight.
Yeah.
National.
Yeah, that's different.
But that's also trade.
That's also trade.
Why the only reason why any nation is ever propping up another nation is to facilitate trade and in some cases, get a better deal with trade.
Usually extraction of resources.
Right.
And often the most egregious of those is happening with the dictatorship, which is really the worst part of that is the dictatorship part.
The thing with fiat currency is that, yes, it's backed by the countries, but really what it's backed by is the labor and purchasing power of the citizens of that country.
You serve two roles in your country under a fiat system.
One is as a gear in the wheel of production, a person who puts input into GDP and creates wealth for the country with your labor.
And the other one is as a consumer who buys products and generates economic activity by purchasing goods and services with the fiat currency that you earn through your labor.
So the easiest way for an economy to expand, like you say, is for there to just be more people in it.
The more workers you have, the more you're producing, the more customers you have for your products, the more economic activity you have.
But there's other things that the central banks and the big banks do to try and control that rate of inflation or rate of growth that can throw horrendous monkey wrenches in the works.
Yeah.
I'm not that well versed in all the many little things that banks do and can do with all that stuff.
The two other major heavy-handed things that central banks and governments and bankers have at their disposal is one, the prime lending rate, which you touched on earlier.
Adjusting that lending rate has a tremendous effect on the state of the economy because like you said, debt generates economic activity.
A lot of entrepreneurs and businesses rely on debt.
They can get started with nothing.
They've got a big idea of a big product or widget or thing that they're going to make or do to introduce to the market and make buckets of money on, but they need capital on the front end because we don't work with gold standard and because they don't have buckets of gold in their pocket.
They need currency.
They need a loan to get that business started.
And like I have several friends that are very successful contractors.
And yeah, if it weren't for access to loans and debt, they would not be where they are.
But the other thing that the central banks, well, mainly government, yeah, central banks have, is something called quantitative easing, which is something that the U.S. government did at the last mortgage meltdown, the subprime lending crisis in 2008.
They bought their way out of that with quantitative easing.
And we saw it during COVID.
They called it CURB and the Canadian emergency business benefit or whatever the.
All kinds of Canadians were getting $500 a week in free government money because there was no work because we were shut down because of COVID.
Like the production of the Western world ground to a halt.
And the government just threw money at the citizens so that people wouldn't starve in the friggin' streets because of it.
They also threw a bunch of money at businesses.
I read an article just before I got on this call about how there's a bunch of small businesses in Canada.
What did they say?
Over 900,000 businesses in the country during the course of the emergency recovery benefit received a total of $49.2 billion in interest and interest-free loans.
Those loans are coming due.
They need to be repaid.
But everyone who received one was told if you pay off your entire loan, we'll give you $20,000 back.
So $20,000, $20,000 times $900,000 is $18 billion that just got chucked into the economy by the government as free money and went to, and this is the important thing, didn't go to individual citizens.
It went to businesses.
And all of the stories we hear in the media are about the poor starving small businesses, but you can bet your ass that Loblaws and Walmart and all the other big shops, they all got their money too.
Oh, yeah.
Yeah.
They have teams of lawyers working on it.
Yeah.
Yeah.
When you introduce quantitative easing, you really run the risk of a runaway economy because you basically just, you're, you're pulling the green curtain back as the wizard of Oz and revealing to everyone, hey, guess what?
We can shit out as many of these pieces of paper as we want to, chips down.
Yeah.
Right.
So you introduce all of this new money into the economy, and we've seen it happen in the, like everybody in the West, Canada, United States, Britain, France, everybody.
Everybody's talking about fears of inflation and like all the interest rates have been raising.
And again, this is why this is difficult to tear this apart from debt.
But the inflation that we're dealing with in Canada is due to all three of those things happening at once.
So we were at historic, like historic low interest rates for like over a decade.
Money was so cheap to borrow.
So you get lots of economic activity out of that.
You know, it served all kinds of people very well, myself included, to be able to leverage yourself to buy more things whose value appreciates faster than the interest rate on the loan.
That's everybody's dream is to get rich off the spread between what you borrow the money for and what you make off of it.
That's every entrepreneur's goal in life is to cover his costs and make more on top, right?
So if you get historic low interest rates and then on top of that, we dump $50 billion new money into the economy in a goddamn year.
And we also have, once COVID tied off, the Liberals restarted a very aggressive immigration policy, which to be fair, I support.
I'm not an isolationist.
I think there's plenty of room left in Canada for more people.
But as we've already discussed, more people means more money, means a bigger economy, means more inflation.
In Canada right now, we're having a great big housing crisis.
There aren't enough homes for everyone.
So we need more workers so that we can build all these houses that we need.
Well, guess what?
Every one of those workers, every person we bring across, they need a place to live too.
And they also come with their own money.
They come with a fiat currency from their home country because very few people are coming to Canada dirt poor.
A lot of the immigrants that we're getting are middle-class or better immigrants that are coming with lots and lots of money.
And we have exchange rates on these fiat currencies.
So if a guy comes into the country with $20 million Canadian that was converted from the British pound or whatever nation they came from originally, now that's a bunch of new money in our economy.
And now our economy is going to get bigger.
And a bigger economy is the same thing as inflation.
It is the definition of inflation.
So it's really easy for like the biggest danger with, in my opinion, with the fiat currency system is runaway inflation.
That's your number one thing that every central banker is terrified of.
Yeah.
Is you put too much, like you put too much gas in and the engine doesn't flood and stall.
It runs away, like just absolutely runs away until it explodes.
Yeah.
I read an article online the other day.
Venezuela apparently hit 1 million percent inflation in 2018.
Their economy was so broken.
Here's, I think, the tipping point here is that the actual activity and the number of produced goods and everything else has to increase along with the amount of money available.
When it doesn't, that's when you get like if you just print money and you're also not producing anything like we did during COVID, that's when you get the inflation.
We had several decades of fairly low interest rates.
In the U.S., it was very low for several decades.
All of the Allen Greenspan years that we talked about in another episode, he had very low interest rates for several decades.
It sort of worked out generally for him because that money was being invested to produce more and more things all the time.
So the money, the new money in the economy was being used to buy more things for a household, buy an additional household, have that extra cottage on the edge of the city or in the other, you know, vacation home and all those things.
Because there was more things to buy.
If you have more money, but everyone who has more money has to compete for the same number of resources and products, that's when everyone's going to pay more for each of those products and everything's going to cost more.
That's when you get all the inflation.
But if you're increasing the economic activity, you're producing more things for people to buy, then you're still sort of okay in that.
It's a very, it's a large set of equations.
It's not one equation.
I simplify it by saying it's just one equation, but any banker that hears this is going to say, oh, really?
Just one, eh?
You know, a stack of books with all those equations in there.
We were talking about population earlier.
So I want to circle back to that.
Yeah.
So when you have a currency that's increasing the way fiat currency does, and you have that in a nation where the population is also increasing at roughly the same rate or, you know, thereabouts, then each generation, within each generation, the average citizen in that economy doesn't have to be that much more productive than the generation before.
It doesn't provide that much strain, generally speaking.
But nearly all the first world countries have declining birth rates.
And, you know, most of them offset that with immigration.
We have some that have almost no or really none, no immigration, like Japan that has no immigration at all.
They don't let anyone in, generally speaking.
And they have a declining population now.
Their first big problem is going to be, you know, what are they going to do about making sure all their aged population is still cared for.
But then after that, they also have this issue that all the people that are alive in 10 years are going to have to be that much more productive than all the people now, even if the population doesn't decline, even if it stays the same, because the economy will have to have grown that much and they have to make up that difference.
They have to be more productive, which means, well, in Japan, it's, I don't know what they're going to do.
They're kind of, I don't know, maybe they're screwed.
It's hard to say.
But they have to be, usually this means that you have to be more educated or more innovative.
You have to develop new products.
You have to make old products in a more efficient way.
You need people, citizens who are educated.
They have degrees.
They are improving society to a much greater degree when they have an education.
And this is a big reason why we need to make sure that people in our societies are educated because we might need to be more productive in 10 years than we are now.
Very likely will be.
Need to be more productive on average than we are now.
And you do make an excellent point on that that I think needs to be expanded on, is the idea of like the production of the workforce is kind of the backbone of GDP, which is kind of the backbone of what backs fiat currency.
So number of bodies in that workforce is obviously the easiest way to improve production.
But as we've seen in the massive and rapid industrialization of the world, it's really easy to make workers more efficient.
Like much more efficient.
Assembly lines did a lot of work.
Going back to the sawmills that we were talking about earlier.
Like I worked in those same sawmills when I was a teenager on weekend cleanup and like the headcount in that mill was in the hundreds.
And now there's maybe 30 guys on a shift because there's machinery to do virtually everything.
One guy watching a switchboard can do the work of what 20 men did 20 years ago.
Right.
So you have, as you say, you have automation, right?
Innovations that multiply the amount of production that these are ways that you can bolster your GDP and perhaps strengthen the value of your fiat currency, but it doesn't really benefit the people participating in that system when it's based, when the economic system is based on the concept that there's a small number of owners and there's a large number of workers.
And those workers are also your consumers.
And if those workers can't find jobs to earn the money that they need to buy your products, you kind of paint yourself into a corner.
Yeah, you get eventually the three trillionaire problem, right?
Yeah.
A lot of the sort of pocket dream of most entrepreneurs is like, well, I want to grotesquely underpay my own workforce and use as few people as possible and not have any of my own expenses.
But like, there's other people out there that employ workers that pay them really well.
Those guys are my customers.
So you're always relying on this mythical, magical third party of the wealthy consumer while giving no regard to creating a wealthy consumer within your own workforce who could afford to buy your products.
A trickle-down economy is usually predicated on the idea that someone else will let their money trickle down.
I don't need to let mine trickle down.
And that brings us back to another point with this sort of constant expansion of the economy.
One of the other things that really, really, really buggers up inflation is corrupt people trying to game the system.
Like we touched on it with this.
We touched on it before when we were talking about the entrepreneurs working spreads between costs and profits.
Everybody who invests, anybody who invests in the stock market, anybody who invests in mutual funds or term deposits or real estate or whatever, what they're trying to do with the thing that they are buying is to buy something that's going to inflate in value faster than the current rate of inflation and get wealthier because their thing is getting more valuable than the economy that it resides in.
Yeah.
But obviously, not everything can do that.
Because if everything is getting more valuable than the economy it resides in, then whatever that rate of inflation is of all of those things, that is your core rate of inflation.
Like it's impossible to have your cake and eat it too all the time.
If products are getting better and more plentiful than the amount of money that's in the economy, then the price of those products has to go down.
If the money that's being put in the economy is outpacing the number of products produced, then the price of those products will tend to go up.
So what you need is the money that's the investments need to be in things that people will actually purchase, goods and services that ordinary people will actually spend money on.
So investing in mutual funds is sort of okay, as long as the mutual funds themselves are then in turn investing in things like brick and mortar businesses that will actually hire people and produce things, sell services that are useful for people.
As soon as they're not doing that, as soon as the whole world is just, you know, wants to be investing in crypto, for example, crypto is not like crypto right now works as though it's a business that doesn't produce anything.
The more money that goes into crypto, the worse it is for the economy, really.
Unless we get to a point where the crypto is actually replacing the national currency, which it's not just, it's not just crypto.
It's any static investment.
Like term deposits are the same thing.
And this is another way that the prime interest rate affects the economy.
Like if the prime interest, just let me finish my point.
If the prime interest rate is super low, money is super cheap.
Everybody can take on debt to expand their business or experience financial growth, right?
We already covered that.
But the other thing is, if interest rates are shit, then term deposits and basic investments are not paying good returns because they're also based on the prime lending rate.
Like the prime lending rate sets how much the bank will charge you on loans and how much it will pay you on your investments.
Because the banks don't just take loans from the government.
They also take money from their customers and turn around and lend that money out.
And their spread between what they pay in interest on a term deposit and what they get on a loan is their profit, right?
Yeah.
So when we have high interest rates, people stop looking at investing in stocks and mutual funds and specific businesses and entrepreneurial ventures because those are inherently risky.
They can fail.
They do experience bankruptcy.
When interest rates are 6%, your average Johnny homeowner investor who's saving for retirement or his kids' education looks at a government-backed term deposit that's worth 6% and is like, okay, in a year, my $10,000 is going to be worth $10,600.
And if the economy dies, it's insured.
Well, I'm going to put my money there.
But as soon as the money goes there, nobody's spending it anymore.
That money has been removed from the economy.
No, the bank is reinvesting it in other things.
That's money the bank then re-lends out to other people.
That's how the bank makes money.
Yeah, I guess so.
Yeah.
But my example of the money put into crypto, That's gone.
That's gone.
It's working exactly like a business whose stock price is moving up and down.
So you can buy low, sell high, or whatever.
But that's a zero sum game because some other sucker has to buy high and sell low, essentially, in order for you to make money on that.
And all the money that's put into crypto, the crypto is not a business.
It's not producing anything at all.
It's not a chip manufacturer that's going to also invest in innovation to make better chips next year.
It's not a restaurant that's going to feed people and provide them a good time in the evenings or whatever.
None of that's true.
So all the money put into crypto is money that is not driving the economy.
Like I'd love to see a calculation, and I don't have enough knowledge to know where I would start with that, but I'd love to see a calculation from an economist to see how much money, how much, what percentage of the currency of a nation is sunk into crypto before it negatively affects the economy.
Really, I don't know why anyone hasn't done this calculation or send me an email to tell me why I'm wrong about that.
Why it would be no problem at all, right?
Like, absolutely.
I don't mind being wrong about this stuff, but tell me why, right?
Don't just tell me I'm wrong.
So crypto has this other effect.
So we talked earlier about people trying to sell gold and silver where they say that the currency, fiat currency is doomed to fail because one plus one doesn't equal three.
And you should, you know, we should go back to the gold standard because it's more stable or you should just invest in this gold.
You should buy this gold from us.
It's a gold scheme.
And by the way, we're not going to send you the gold.
We'll hold on to it for you because you need to have it in a safe somewhere or whatever.
So you're just going to send somebody some money and hope they don't have gold.
It doesn't mean we don't actually have it.
We totally have it.
Oh, yeah, we totally have it.
Yeah.
Goat's on her.
Right.
Those same people will try to say that crypto is also better than fiat currency.
Now, try to imagine these two things at once.
One is that you need to have something that you can hold on to like gold, because fiat currency is just a bunch of things that are written on pieces of paper.
But if you can't buy gold, the next best thing to fiat currency is crypto, which is backed by nothing.
Nothing.
It's not even things written on a piece of paper.
The blockchain technology is interesting, right?
But it's not really going to, I mean, each of our national currencies has a central bank that's watching all the stats and being careful to tweak those numbers up and down as they need to to make sure that everything is going to come out right.
And they have computer modeling and they have.
Oh, you can bet your ass that every single interest rate adjustment we have ever seen was never once made lightly.
It was all still out of planning research because again, like if you tweak the interest rate too much, you can either completely stall the economy and throw us into a recession, which everybody's terrified of.
I don't know why.
Or you lower it too much and we get runaway inflation.
Yeah.
Right.
Right.
But crypto doesn't have that.
No one is watching the actual parts of the economy and how they're growing versus how quickly the crypto is entering the market.
No, crypto is just selling itself.
Yeah.
So you are then strapping your boat to a larger boat and just hoping that it's going where you want to go.
And if it hits a current and drowns you, crypto isn't going to care.
So the idea of ditching your national currency where you have a bunch of shepherds essentially tending the flock for, you know, just wandering through the woods alone.
Why would that be better?
Like, why, who thinks that's better for all of us as a whole?
Some people might be able to make some money on crypto, but everyone who did, for everyone who did, there was also other people who lost money on crypto.
And by the way, because there's more crypto now than there was last year, it's a growing currency.
Actually, in general, there's a loss there.
You have to put, if there's 10% more crypto now than there was a year ago, for example.
In order for it to be worth the same now as it was a year ago, the number of people who bought it needs to have increased by 10%.
Sorry, say that again.
Well, if, let's say there was a billion Bitcoins last year, and now there's 1.1 billion Bitcoins.
And last year was worth, I don't know, $1,000 of Bitcoin.
And now it's worth $1,000 of Bitcoin.
The only way that situation could have happened is if 10% more money was invested into Bitcoin to buy it.
Like if no one was buying more and they were producing more, the price of the Bitcoin would deflate for the exact same reason that the price of a car would deflate if people stopped buying as many.
If you're still producing them off the lot and no one's buying more of them, then you're going to have to sell them for less.
And the same is true for Bitcoin.
If it maintains its value, it's because more people put more money into it.
And so if it increased in value, that means that the rate at which they put more money into it was faster than the rate at which it grew.
And so the same thing was true when it falls.
It falls because you're trying to sell it and you can't find anyone to buy it.
So more is being produced even during that time and you can't find anyone to buy the crypto you have.
And so the price drops until people want to buy it again and it has this up and down cycle.
And so every year, more and more, as long as crypto is still maintaining price or increasing, more and more money is being put into this monster.
Well, and this is the thing is it's like it's it's a currency that is ostensibly backed by nothing, but practically speaking, it's actually backed by the fiat currency of the people purchasing.
Yeah.
It's backed by all the nation's currency.
It's backed by everybody else's money.
And anybody who gets rich off crypto, they got rich in fiat.
They didn't get rich in crypto.
They turned that crypto back into fiat to go buy shit.
So they're still very much tied to a fiat system.
It's just, it's another gold trinket that's that's being peddled is a Ponzi scheme.
And it's experienced rapid growth because we live in the information age.
So like you can spread a little bit of buzz about something and get a lot of people interested in it in a very short time and experience very rapid growth if you introduce something new.
Because there's what, six billion of us now?
Seven or so.
Yeah.
Yeah.
And a very healthy percentage of that world population is connected to the internet, does live within the first world and is accessible for hawkster marketing pitches, which is really what people selling this stuff are making.
Yeah.
So there's still plenty of new buyers buying in with fiat currency.
But like, that is the definition of a Ponzi scheme.
That's, that's how the original Ponzi scheme worked is he could pay profits to other people based on the new investments from new people who brought money in.
He didn't make anything.
He didn't build anything.
He didn't create any real wealth.
He was just paying his old investors with the money from his new investors.
And as long as new investors kept coming, he's fine.
But eventually the investors dry up and then the entire house of cards comes crashing down really quickly.
Yeah.
Well, that's a good note to end on.
The house of cards collapsing really quickly.
Because that's what the crypto guys say will happen with fiat currency.
And it hasn't happened yet.
And it won't.
I mean, like, as much as I spent a good portion of this podcast, and I hope you edit most of it out because it was off topic, but bitching about like globalist international trade.
That is the way of the world now.
Like, we are a global economy now.
And there's a lot of goods and services that are produced abroad because they're cheaper, but there's a lot of goods and services that are produced abroad just because it took a significant amount of investment to build the infrastructure to make those things.
And it physically exists at that place over there.
So they're going to build it.
They're going to make those things because they have the infrastructure to do so.
So we're just going to need, or they've got incredibly rare resources that are only geographically located there.
So it just makes the most sense to produce it on site there.
So we're always going to have international trade.
And as long as we have international trade, we need some form of fiat currency and an agreement on a rate of exchange.
We can't have trade without money.
Can you imagine running an economy of 7 billion people off the fucking barter system?
Yeah.
The people doing the international trade dream that maybe they would have one currency like a crypto that would work that way.
But for the reasons we've outlined, it's unlikely to really work.
Generally speaking, even now, people aren't using crypto to buy groceries.
No.
No.
They're treating it like another static investment, like a term deposit, and just sitting on it to turn it into real money to spend.