Lesson 3: Jack Mallers Explains Inflation

[0:00] Bitcoin 101 inflation. An inflation from
[0:02] first principles, not jargon, not
[0:05] nonsense, not garbage. Really, what is
[0:08] this thing? How does it work? Why is it
[0:10] here? And if we all adopt Bitcoin, will
[0:13] it still be here? Can we solve for
[0:15] inflation? Okay, it's felt necessary for
[0:17] me.
[0:18] Firstly, let's start with the experience
[0:20] of inflation because people get lost in
[0:23] definitions, which really pisses me off.
[0:26] It's just like, "Well, technically,
[0:27] according to Harvard, inflation No. How
[0:30] about [ __ ] you? How about let's just
[0:32] talk about the experience of inflation.
[0:35] I've experienced inflation. Everyone
[0:37] listening to this has experienced
[0:38] inflation. Don't mansplain me. Don't
[0:41] treat me like a [ __ ] like an idiot,
[0:43] like a peasant. I know what it is
[0:45] because I've lived it. This is what
[0:47] inflation is. $100 of groceries used to
[0:50] get you a full cart of groceries. $100
[0:53] of groceries today only gets you some of
[0:55] a cart of groceries. The same monetary
[0:58] units, the same $100 gets you less
[1:01] stuff. That's what inflation is. That's
[1:03] the experience of it, and it doesn't
[1:05] matter how educated someone is, what
[1:07] their religious beliefs are, what their
[1:08] political beliefs are, what their
[1:10] demographic is. It does not matter.
[1:13] We've all experienced it, and I don't
[1:15] need to go to Harvard or actually
[1:17] understand what the technical definition
[1:18] is.
[1:19] You. That's what inflation is. We all
[1:22] know it because we've all lived it. Now,
[1:24] on this screen for the podcast
[1:26] listeners, this is the cost of living in
[1:29] 1970. What's the relevance of 1970?
[1:32] Well, it was the last full calendar year
[1:34] before the dollar divorced itself from
[1:36] the gold standard, which allowed
[1:38] politicians and the central bank to
[1:40] print unlimited amounts of it. In
[1:42] theory, you weren't allowed to print
[1:44] dollars when $1 represented a specific
[1:47] amount of gold. You can only have
[1:49] outstanding dollars that backed the gold
[1:51] you had in the vault. But when you sever
[1:54] the relationship between the dollar
[1:56] notes floating around in our pockets and
[1:58] the gold that's actually in the vault,
[2:00] then you can create as many dollars as
[2:01] you want, which results in inflation.
[2:04] So, let me read to you guys what the
[2:06] cost of living was in 1970.
[2:09] A new house was $23,000.
[2:13] $23,450.
[2:15] The average income was at $9,400
[2:19] in 1970. A new car was $3,450.
[2:25] A movie ticket was $1.55.
[2:29] Gasoline
[2:31] was $0.36 a gallon.
[2:34] A postage stamp was $0.06.
[2:37] Bread was a quarter, $0.25.
[2:43] Now, fast forward to today.
[2:45] Same dollars, same country, same
[2:48] everything, same everything. We didn't
[2:52] move.
[2:54] We didn't change nations. We didn't
[2:56] change currencies. We didn't We the
[2:59] people didn't do anything wrong. We
[3:01] didn't do [ __ ]
[3:04] And the
[3:05] Now, the problem is, well, what's
[3:07] everything cost today? And I'll get more
[3:09] into this in a second. Well, what's a
[3:10] new house today, Jack? It was $23,000 in
[3:13] 1970. What is it today? Well, it
[3:15] depends. What type of house do you want?
[3:17] Do you want to live on Miami Beach or do
[3:20] you want to live in rural Kansas?
[3:24] Well, Jack, what's a new car cost? It
[3:27] used to be $3,400.
[3:29] Well, it depends. Do you want to drive a
[3:31] used Toyota Camry or do you want a
[3:33] Rolls-Royce?
[3:37] You see?
[3:39] So, let's first start back to inflation.
[3:42] Man, this topic gets me wound up. I
[3:44] apologize, but holy moly, it just Once
[3:48] you understand basics, which I really
[3:51] hope this show gives you guys.
[3:53] It should infuriate you what these
[3:55] people have done. Infuriate you.
[3:59] So, there is a group of people
[4:02] that think inflation is good. I This is
[4:05] not This is not satire. I swear to God.
[4:08] Okay?
[4:09] Mainstream economists say inflation is
[4:11] good. And this is what's called
[4:13] Keynesian economics.
[4:15] Now, this is their legitimate claim. And
[4:17] by the way, this is what they teach in
[4:19] school.
[4:21] They teach this in school. This is like
[4:23] if you pay $40,000 of tuition a year to
[4:27] learn economics, this is what you learn.
[4:30] They claim that if money were to hold
[4:32] its value, you would wait to buy things.
[4:37] And they think that's a bad thing. They
[4:39] think delayed gratification and low time
[4:41] preference is bad.
[4:44] So,
[4:45] prices must rise a little bit, which is
[4:48] another way of saying erosion of your
[4:51] purchasing power and erosion of the
[4:53] value of your money
[4:55] must happen a little bit to keep you
[4:57] spending all the time.
[5:00] Therefore,
[5:03] the economy, this whole thing called the
[5:05] economy,
[5:07] can be acting and behaving to our
[5:09] standards.
[5:11] That I Guys, I'm not This is not a joke.
[5:14] I swear to you. This is Keynesian
[5:18] economics on inflation.
[5:20] They say if your currency was hard and
[5:23] held value, well, then you wouldn't wake
[5:25] up and spend all of it every single day.
[5:29] And in order to keep the economy humming
[5:31] and keep keep all of the economic data
[5:33] churning through,
[5:36] we have to inflate things just a little
[5:38] bit so that you're incentivized to spend
[5:40] it today rather than save it for
[5:42] tomorrow.
[5:43] And so,
[5:45] as a result of all of this, someone has
[5:47] to sit at the dial and set the cost of
[5:49] money.
[5:50] That's why Kevin Warsh is there. How
[5:52] dare I disrespect Kevin Warsh?
[5:55] Kevin Warsh is sitting there looking at
[5:57] all this data and analyzing to the
[5:59] perfect tune what the cost of money is
[6:02] and how much my life should be inflated
[6:04] away just so that if I wanted to save
[6:07] money, I shouldn't and I should go out
[6:09] and spend it on on dumb [ __ ]
[6:12] Guys, I I'm not joking. This is quite
[6:15] literally the economic reasoning for
[6:18] inflation. Because you Everyone have
[6:21] heard this. 2% is the inflation target.
[6:23] The target? How about the target is
[6:25] zero? No, no, no. Zero would be too low.
[6:29] Then you would have a low time
[6:30] preference. Then you'd have delayed
[6:31] gratification. Then you would save a lot
[6:34] of money for your future. We can't have
[6:37] that.
[6:39] This is the claim. Now,
[6:42] what is the hard money theory? What is
[6:44] my opinion? What is the opinion of a
[6:46] Bitcoiner? Okay? The opinion is that
[6:50] nobody asks me how badly I want to
[6:54] spend. I want to spend because I'm
[6:56] human. As a human, I naturally want to
[6:58] consume. Kevin Warsh does If Kevin Warsh
[7:02] raises or lowers rates in September, I'm
[7:04] still going to be hungry. I'm still
[7:06] going to want a car rather than walk.
[7:08] I'm still going to want to fly United
[7:10] rather than kayak to Europe. I'm still
[7:12] going to want a penthouse rather than a
[7:14] [ __ ] condo. I'm still going to want to
[7:17] live on Miami beachfront real estate
[7:19] rather than a [ __ ]
[7:22] apartment in in Midwestern America.
[7:26] I want to consume
[7:28] the what I've earned, no matter what
[7:31] Kevin Warsh decides in September. It is
[7:33] so offensive for these people to make
[7:36] the claim that my desire to consume what
[7:40] I've earned is based on their economic
[7:43] phenomena of data analysis that they do
[7:46] in private unauditable.
[7:48] What an what an offensive
[7:52] thing to claim?
[7:55] That they understand the quality of life
[7:58] that I want.
[8:00] No, things need to be inflating in your
[8:02] life, Jack, because trust me, you
[8:05] wouldn't want to be saving for your
[8:06] future. How the [ __ ] do you know what I
[8:09] want?
[8:11] You have no idea if I want to get
[8:13] married next year, how many kids I want,
[8:16] if my family is sick, if I want to move
[8:19] to the suburbs, or if I want to live in
[8:20] an urban city. Who are you to determine
[8:24] my life, my consumption?
[8:27] It's It is It is outrageous.
[8:31] But this is the problem This is the
[8:32] problem that we have
[8:35] from government getting too big and
[8:37] money being essentially planned entry in
[8:40] a database.
[8:42] Sorry, this topic it gets me so wound
[8:45] up. It really bothers me.
[8:48] So, anyways,
[8:50] >> [sighs]
[8:51] >> I that my my claim, the hard money
[8:55] claim, is the opposite of my money
[8:58] should hold the value. Things around me
[9:00] should get cheaper over time, and it is
[9:03] a good thing for me to be saving. It is
[9:06] a good thing for me to have delayed
[9:08] gratification. It is a good thing for me
[9:10] to place a premium on tomorrow. It is
[9:14] It is of a high-functioning society for
[9:16] me to have the belief that tomorrow
[9:18] could be and should be and will be
[9:20] better than today. That is necessary, or
[9:23] else I've made this point a million
[9:25] times, I would just eat donuts and get
[9:28] fat tonight, because who cares about
[9:30] tomorrow? I would get blackout drunk
[9:32] tonight, because who cares about
[9:33] tomorrow? I would spend all my savings
[9:35] tonight, because who cares about
[9:37] tomorrow? And that's a lot of what goes
[9:38] on in society is a discount to tomorrow,
[9:42] an inability to lower their time
[9:43] preference, an inability to delay
[9:45] gratification, high time preference
[9:47] spending, and it just devastation of
[9:51] value today, of health,
[9:54] of wealth, of capital,
[9:56] of family, of everything.
[9:58] It's It's utterly preposterous,
[10:01] honestly.
[10:03] So, to the mechanics of inflation.
[10:06] We must understand this. More money does
[10:09] not create what I call wealth. And by
[10:12] wealth, I mean what's the difference
[10:14] between monetary units and the things
[10:16] that they actually are purchasing. So,
[10:18] what I describe wealth in this slide is
[10:21] food, housing, energy, machinery, labor,
[10:24] software, medicine, transportation.
[10:27] These are the things you can't actually
[10:28] print. Now, monetary units like dollars,
[10:31] you can print. So, what I'm calling is
[10:33] money are claims used to command these
[10:36] resources. So, I have dollars
[10:39] as a as a means to command more food or
[10:42] more housing or more energy. The more
[10:44] dollars that I have, the more I can
[10:46] command these resources. But, by
[10:48] printing more dollars, it does not
[10:50] automatically create more stuff. Meaning
[10:53] this, if I have let's let's take a very
[10:56] simple economy for the sake of the math.
[10:59] If I have 10 real resources in the
[11:01] economy, and I have 10 monetary claims
[11:04] on those resources. Now, let's say I
[11:06] increase the monetary claims by 50%,
[11:10] meaning
[11:11] I go from 10 monetary claims in the
[11:13] economy to 15 monetary claims. I still
[11:16] only have 10 real resources. I cannot
[11:19] print doctors, buildings, cars. I can't
[11:22] print these things.
[11:24] Yes, I can print monetary claims on
[11:27] these things, but I can't print the
[11:28] things.
[11:30] Therefore,
[11:32] here's the the the main point of this is
[11:35] that inflation creates the illusion of
[11:39] productivity and the illusion of growth
[11:42] and the illusion of innovation, but it
[11:44] is no it is not real.
[11:47] It is not real, which causes these boom
[11:49] and bust cycles.
[11:52] Because you can't print all of the
[11:54] things that the money has a claim to,
[11:56] which is what causes the prices to rise.
[11:59] So, I give you this example. Let's say
[12:01] you have 10 bushels of corn, okay?
[12:05] Let's say you plan to eat six and plant
[12:08] four
[12:09] so that you can produce more corn.
[12:10] That's your total of 10.
[12:13] Now,
[12:14] if I could inflate real things,
[12:18] I would say, "You know what? I'm a
[12:20] little more hungry than eating six, but
[12:22] I still want to plant four. So, I've
[12:24] decided to eat seven bushels of corn and
[12:27] plant four." Yeah, but jackass, you
[12:31] can't because that would mean you have
[12:32] 11 bushels of corn, but you don't have
[12:35] 11 bushels of corn. You have 10.
[12:38] So, that's not an option. You have to
[12:40] and we've talked about this in one of
[12:42] the earlier 101 episodes. You have to
[12:43] make these decisions at the margins. You
[12:45] have to decide how hungry are you versus
[12:48] how much do you want to optimize for
[12:50] your future? You can either eat seven
[12:52] and plant three or eat six and plant
[12:54] four, but you have 10 bushels of corn,
[12:58] period. Sorry. And you we must
[13:01] understand the difference between real
[13:03] resources and their inability to be
[13:05] inflated and printed out of thin air
[13:08] versus paper claims that we use as a
[13:11] means to command these real resources.
[13:14] A piece of paper cannot create the 11th
[13:17] bushel of corn. I've talked about this
[13:19] before. One of the things that's
[13:20] happening right now is there's a serious
[13:22] demand for commodities because AI
[13:24] infrastructure is being built all over
[13:26] the world. And guess what you cannot
[13:28] build an AI data center with? You can't
[13:30] build it with silver futures contracts.
[13:33] Turns out you need real silver.
[13:37] And so we've created the illusion
[13:40] that there's an abundance of silver. But
[13:42] when people actually need the real
[13:44] silver,
[13:46] well, there goes the price. There goes
[13:47] the price of gold. There goes the price
[13:49] of Bitcoin.
[13:51] Do you understand?
[13:53] >> [snorts]
[13:53] >> So credit can change who gets the
[13:55] resources, but it cannot create
[13:58] resources themselves. So more credit in
[14:01] the system cannot create another worker
[14:03] in the workforce, it cannot create
[14:05] another acre of land, it cannot create
[14:06] another power plant, it can't create
[14:08] another GPU for AI, it cannot create
[14:10] another barrel of oil.
[14:12] It can create another claim to command
[14:15] these resources, but on a relative
[14:18] basis, this these resources remain
[14:20] relatively fixed.
[14:22] So, this is what happens
[14:24] when they create more money and more
[14:25] credit.
[14:27] That creates more bidding for the same
[14:29] things.
[14:31] So if I have 10 resources in the economy
[14:34] and 10 paper claims against those
[14:36] resources, there's one paper claim per
[14:38] resource.
[14:40] Now if I create 15
[14:43] res- uh paper claims to only 10
[14:45] resources, well now I have more than one
[14:48] paper claim per resource.
[14:51] So, a resource will now be worth more
[14:53] than one paper claim. The price of the
[14:55] resource went up when denominated in
[14:57] paper claims.
[14:59] That is inflation. That's how prices
[15:01] rise.
[15:02] You create more money and more credit,
[15:04] there's more bidding for the same
[15:05] things. That means real supply grows
[15:07] slowly if at all.
[15:10] Sometimes more paper claims will grow
[15:12] the supply of the real stuff because
[15:13] there's more money to produce more. But
[15:15] take Bitcoin for example, you can't make
[15:17] any more Bitcoin. So more paper paper
[15:20] claims just make Bitcoin's price go
[15:22] higher.
[15:23] So, then at the very end, you get
[15:24] adjustment in pricing.
[15:27] Which is Guys, this is why inflation
[15:30] reduces your purchasing power. One
[15:32] monetary paper claim gets you less of
[15:35] the goods it's competing for, the more
[15:37] units that they create.
[15:40] Now, we must understand that inflation
[15:42] is uneven.
[15:44] Okay? This is critically important.
[15:47] Inflation is not spread evenly. Like,
[15:49] okay, we're going to devalue the
[15:50] dollars, but at least everyone feels it
[15:53] evenly and benefits from it evenly. That
[15:56] I wish that was the case. That is not
[15:58] the case. So, first, they create new
[16:00] money and new credit in the system.
[16:02] Then,
[16:04] asset prices rise, government spending
[16:07] increases, lending increases at the
[16:09] fundamental level, like banks are giving
[16:11] out more loans.
[16:12] Only later after that, do wages get
[16:16] impacted, rents get impacted, services
[16:19] get impacted, and then only after that,
[16:22] way after that, do consumer prices get
[16:25] impacted, like the cost of your food.
[16:29] But, let me put it to you guys this way.
[16:32] Let's say the US government is going to
[16:34] print all sorts of money, which they
[16:36] kind of have already started to do.
[16:38] Now, if I was a hedge fund that got
[16:40] access to some of these So,
[16:43] let me Hold on. Let me slow down.
[16:45] Slow down for a second.
[16:48] One way the US government can print
[16:51] money
[16:52] is making it easier to create credit,
[16:54] create loans. So, they can go to the
[16:56] banks and say, "Hey, you can take
[16:58] certain collateral from hedge funds and
[17:01] from Wall Street folks, and treat that
[17:03] collateral as in the money good, no
[17:06] matter what. So, treat all of their
[17:08] treasuries, all of their bonds as in the
[17:10] money good, unlimited leverage against
[17:12] it."
[17:13] Okay, now banks are they're to issue a
[17:15] lot more credit, and that's going to be
[17:17] highly inflationary, and they're
[17:18] creating a lot more monetary claims on
[17:20] the stuff in the economy, right? Like we
[17:21] just went over. But, who gets access to
[17:24] those loans?
[17:26] Does your neighbor? Does your old high
[17:28] school classmate?
[17:31] No.
[17:32] The normal person doesn't get access to
[17:33] that. Who gets access to that? Hedge
[17:35] funds, Wall Street.
[17:38] So, who gets to buy Bitcoin with
[17:40] unlimited leverage with freshly printed
[17:42] currency because of government
[17:45] to buy Bitcoin at 60K? Who gets access
[17:48] to that? Now, by the time all of this
[17:51] spreads through the economy so that your
[17:53] neighbors got the got the
[17:56] inflation-adjusted promotion. Like,
[17:58] "Hey, we gave you a bonus, or we gave
[18:00] you a raise, or we gave you a promotion
[18:02] because inflation." But, they got that
[18:04] promotion 1 year later, 2 years later.
[18:06] Bitcoin is at 250K.
[18:09] So, the hedge funds on Wall Street got
[18:11] to buy Bitcoin at 60K the day that
[18:13] Besant made that announcement.
[18:16] And your neighbor gets to buy Bitcoin
[18:17] with their new promotion bonus, but
[18:19] Bitcoin's at 250K.
[18:23] Well, who got to benefit from inflation?
[18:26] The guy with unlimited leverage at 60K,
[18:28] or your neighbor who's buying the top?
[18:33] You see?
[18:35] So, that's what I I put on this slide.
[18:37] Everyone's money and prices don't reset
[18:40] at the same time. So, your salary once a
[18:43] year, your rent once a year. But, how
[18:46] often do your food prices change?
[18:49] More frequently.
[18:50] How often do home prices change? Every
[18:53] single day. How often do stock prices
[18:55] change?
[18:57] Between market and close. How often does
[18:59] the Bitcoin price change? 24/7/365.
[19:04] You see? Inflation is not even.
[19:07] This is why it's not fair, and this is
[19:09] why everyone must own Bitcoin. Bitcoin
[19:11] is the most sensitive instrument we have
[19:14] access to to monetary liquidity. As soon
[19:18] as money starts getting printed, Bitcoin
[19:20] reacts immediately. So, we all get
[19:22] access to own the thing that performs
[19:25] the best in the face of all of this.
[19:27] Like our neighbor can own Bitcoin, can
[19:29] be DCA'ing even if it's a dollar a week.
[19:34] So,
[19:35] I made this point earlier and I have to
[19:37] reiterate it.
[19:38] Now we get on to well, what's the rate
[19:40] of inflation? When Kevin Warsh says,
[19:42] "Our target is 2%." What is he talking
[19:44] about?
[19:46] Don't even I've already displayed enough
[19:48] emotion on the show. Don't even get me
[19:50] started. Listen, there is no such thing
[19:53] as the inflation rate.
[19:55] Because again, these a-
[19:58] are implying that they know what you
[20:00] want.
[20:02] I'll tell you the inflation rate, but
[20:03] you have to tell me what you want. Do
[20:05] you want to live
[20:07] on the beach in Miami?
[20:09] Or do you want to live in an apartment
[20:11] in rural Kansas?
[20:14] Totally different inflation rates. Do
[20:17] you want to be eating grass-fed ribeyes,
[20:19] or do you want to be eating porridge
[20:21] slop? Totally different inflation rates.
[20:26] Do you want to be driving a Rolls-Royce,
[20:28] or you okay walking?
[20:31] Totally different inflation rates.
[20:35] So, the notion that there is an
[20:37] inflation rate that they can measure
[20:39] implies they know how I want to live.
[20:42] You guys don't know me. You didn't
[20:44] consult with me. You have no right to
[20:46] tell me
[20:48] how I should be saving and how I should
[20:49] be living.
[20:51] Garbage.
[20:53] Manipulative tactical garbage.
[20:56] Sorry.
[20:57] And And you guys don't know, there's a
[20:59] lot of people out there that will ping
[21:00] me and say, "Hey, you got to be careful
[21:02] about how you talk about government on
[21:05] your show, or who you're calling out.
[21:08] That ship has sailed, brother.
[21:11] I'm a man of the people
[21:15] through and through at this point. I've
[21:17] made that decision. That ship is gone.
[21:19] I'm going to call it how I see it. It's
[21:22] garbage. And I'm not saying it's the
[21:24] Trump administration's fault. It's not
[21:25] Besson's fault. It's not Worst's fault.
[21:27] This is decades in the making, but I
[21:29] call it how I see it, garbage.
[21:33] So, what I have here on the slide.
[21:36] How How about learning math? What's the
[21:38] inflation rate for learning math? Well,
[21:40] learning math has gotten
[21:42] incredibly cheap. You can talk to your
[21:44] AI agent in your phone, and you got that
[21:47] app for free. You can look it up on
[21:48] YouTube. So much productivity. There's
[21:51] an abundance of accessible information
[21:54] that can teach you base-level math.
[21:57] That's incredible. Amazing. What about a
[21:59] Caesar salad? Well, a Caesar salad is
[22:03] There's not really inflation. I don't
[22:05] expect there ever to be inflation for a
[22:07] Caesar salad, because that's pleb slop
[22:09] food. That's not real nutrition. If you
[22:12] If what you want to do for the rest of
[22:13] your life is cut leaves off a tree and
[22:15] put dressing on it and call that dinner,
[22:17] then yeah, no inflation. So, if what you
[22:20] want out of your life is to learn math
[22:22] and eat leaves off a tree, no inflation.
[22:24] You're good.
[22:26] What about things like college tuition?
[22:28] College tuition could be considered
[22:30] learning math. No, no, no, no, but I
[22:32] mean, I wanted to join a fraternity, and
[22:34] I wanted to go to football games, and I
[22:36] wanted to learn more than just
[22:37] mathematics, and I wanted to build
[22:39] towards a career, and I wanted to have
[22:40] relationship with professors, and I
[22:42] wanted to meet who my future wife and
[22:44] the future mother of my children is
[22:45] going to be. That's what I meant by
[22:47] learning math. Oh, that learning math?
[22:49] Oh, well, this is why you must be
[22:51] specific.
[22:52] If you want to learn math, go on
[22:53] YouTube. Oh, you want to go to college.
[22:56] Oh, yeah, no, no, no. The inflation rate
[22:58] of that is
[22:59] tens of percent a year.
[23:01] Okay. What about health care? Well, if
[23:03] you just eat salad every single meal and
[23:06] you don't give yourself proper nutrition
[23:07] and you get disease. Oh, okay. So, you
[23:10] are willing to eat salad, but you're not
[23:12] willing to just be malnourished and die.
[23:14] Oh, yeah, well, health care that that's
[23:16] that's really really expensive. So, you
[23:18] tell me what you want and I'll tell you
[23:19] the inflation rate. So, anytime anyone
[23:21] says, "Oh, I know the inflation rate."
[23:23] Liars. Liar, liar, liar. They don't know
[23:26] what you want. They don't know what you
[23:27] want to consume. I'll tell you the
[23:29] inflation rate. The inflation rate is
[23:30] very easy to measure. Think about
[23:32] Bitcoin. I want Bitcoin.
[23:34] What's the inflation rate of Bitcoin?
[23:36] Well, it's its CAGR. Bitcoin goes up 40%
[23:38] a year on average.
[23:40] So, unless I'm getting a 41% raise every
[23:43] single year
[23:44] in Bitcoin terms, I'm not going to be
[23:46] able to acquire the same amount of
[23:47] Bitcoin every single year.
[23:50] When I got into Bitcoin over a decade
[23:51] ago, I was able to buy a lot more
[23:54] Bitcoin than I can today.
[23:56] Of course.
[23:57] I'm not making as much money in Bitcoin
[24:00] terms than I was years ago. Hundreds of
[24:02] thousands of Bitcoins was the average of
[24:05] was the was one average home when I got
[24:07] into Bitcoin. Now, an average home's
[24:09] like three Bitcoins.
[24:12] So, right?
[24:14] I'll tell you the inflation rate. Tell
[24:16] me what you want. Oh, you don't want to
[24:17] save in Bitcoin. You want to save in
[24:20] pleb slot bonds. Oh, inflation rate's
[24:22] not bad. You're good.
[24:25] You're good.
[24:27] So,
[24:29] who gets the money This is the
[24:30] Cantillion effect. Who gets the money
[24:31] first matters, obviously, because if
[24:34] they're going to create new currency,
[24:35] whoever gets it first wins, cuz they get
[24:38] to spend it before the prices have
[24:39] adjusted. They get to buy Bitcoin at
[24:41] 60K. They get to buy all the eggs before
[24:43] the price goes up. They get to hoard all
[24:45] the beef before the price of beef goes
[24:46] up. Whoever gets the money late
[24:49] has to consume the adjusted prices.
[24:52] This is why it's so unfair and it's so
[24:54] uneven.
[24:56] So, if you owe a fixed amount of
[24:59] dollars, weaker currency can help. This
[25:01] ties it back to the macro section.
[25:04] If my debt is fixed in dollar terms, and
[25:07] the dollar is getting weaker, well, then
[25:09] it's easier to earn that amount of
[25:11] dollars to pay the debt back. You
[25:12] understand?
[25:14] Let me go all the way back to the 1970
[25:17] slide.
[25:18] In 1970, the cost or the average income
[25:22] was $9,400,
[25:23] guys.
[25:26] Crazy.
[25:28] So, meaning
[25:31] And today, what's the average income? I
[25:33] don't know the answer. But, how easy is
[25:35] it to make $9,400 today?
[25:39] It's not that hard, right?
[25:42] Relative It In 1970, it took you a whole
[25:45] year to make $9,400.
[25:47] Today,
[25:49] it takes you less than a year to make
[25:50] $9,400. So, by making the dollar cheaper
[25:54] and devaluing it and debasing it, it's
[25:56] easier to pay back debt. Let's say I
[25:58] owed someone $9,400, and that's been
[26:01] fixed since 1970. Well, it used to take
[26:04] me a year to earn that and pay them
[26:05] back. Now, it does not take me nearly a
[26:07] year. You understand? So,
[26:09] that is why governments try and have
[26:12] their expenses fixed in dollars and then
[26:15] devalue the dollar, it's easier for them
[26:17] to pay it back. That's that whole
[26:19] debt-to-GDP concept. We've already went
[26:21] over that.
[26:22] Um so,
[26:23] in this situation,
[26:26] where the dollar is getting inflated,
[26:28] and inflation is happening in our lives,
[26:30] and especially when they're fixing the
[26:32] cost they're willing to pay on their
[26:34] debt,
[26:35] who loses? The lender and the currency
[26:38] holders.
[26:39] Your claim You lent them money, and they
[26:41] owe you money back. What the The claim
[26:44] that they owe you back is going to get
[26:45] you less stuff by the time they pay you
[26:48] back, because they're going to have
[26:49] inflated it away, and the inflation's
[26:51] going to be rising faster than the yield
[26:53] that they're paying you.
[26:55] So, in this era, I cannot stress enough
[26:59] and I know and I know people are saying
[27:00] you can't say that, the government's
[27:02] going to be pissed if they hear you. I
[27:03] don't care.
[27:05] I just I'm telling the truth. This is
[27:07] either freedom of speech or we're not
[27:09] living in the America I thought.
[27:12] Do not own bonds.
[27:14] Do not own the dollar.
[27:16] This is why we own Bitcoin.
[27:19] They cannot Think of Bitcoin like a bond
[27:22] that has zero yield but infinite price
[27:25] that no one can control. That's what I
[27:27] want to own. Your yield. I don't give a
[27:29] [ __ ] about your yield. You're not going
[27:30] to pay me the yield of the inflation
[27:31] rate anyway. I'm not expecting you to
[27:33] make me whole on yield. I want something
[27:36] that floats truly in a free market in
[27:38] the dollar price.
[27:40] So, that when you print money and it
[27:41] goes up 25% in 3 days, just like that.
[27:44] That's what I want to own.
[27:46] So, I will not own dollars and I will
[27:48] not lend you guys money. 0% chance. And
[27:50] the people that that's continue to hold
[27:52] dollars and continue to lend the
[27:53] government money, those are the losers.
[27:56] Now, quickly to end this whole episode,
[27:58] let's talk about what would the world
[28:00] look like on a Bitcoin standard? Can
[28:02] living on a Bitcoin standard fix this?
[28:04] The answer is yes.
[28:06] So,
[28:07] back to basics. What happens when demand
[28:09] for money rises? Well, in a soft money
[28:12] system, when demand for money rises,
[28:14] they can just print more money. So,
[28:16] right now, Scott Bessent really needs
[28:18] more money. People aren't willing to
[28:19] lend him money. What can he do? He can
[28:22] just print his own money. And what does
[28:24] that do? That results in inflation,
[28:26] which we just went over very
[28:28] straightforward from a first principles
[28:29] basis. And these guys are inventing
[28:31] metrics like the inflation rate, and
[28:32] they're telling you you need inflation
[28:35] or or else you'd save. How offensive is
[28:37] that? God, I can't get over that. We
[28:39] design inflation in the system or else
[28:41] you'd save for your future.
[28:44] you guys. So, they force you to spend.
[28:48] They they supposedly
[28:50] understand what quality of life you want
[28:52] and what goods and services you want to
[28:54] consume.
[28:56] Utterly and completely ridiculous all of
[28:58] that. That's what a soft money standard
[29:00] is. Now, on a Bitcoin standard, I'm not
[29:02] even going to call Bitcoin a hard money
[29:04] standard because it's a fixed money
[29:06] standard. A hard money standard would be
[29:07] gold. But you can still create more
[29:09] gold. A fixed money standard. Demand
[29:11] goes up and you cannot print the money.
[29:13] If what Scott Bessent needed was Bitcoin
[29:16] and not dollars, he'd have to go buy it
[29:18] from guys like me. He can't print
[29:22] Oh, you want Bitcoin, Scott?
[29:24] Offer me a good price and maybe, just
[29:27] maybe, I'll go into cold storage and
[29:30] sell you a little bit of mine.
[29:33] That's That's the money that I want. You
[29:35] can't just print it out of thin air. You
[29:37] got to go get it from the market.
[29:40] So, again, gold is hard
[29:43] because
[29:45] it's harder to produce gold than it is
[29:47] dollars, but it's not fixed. So, the
[29:49] gold price goes up, you have more
[29:51] incentive to mine gold, but mining takes
[29:53] time, it takes capital, it takes energy,
[29:55] it takes geology, it takes it takes
[29:58] humans collaborating and unifying.
[30:01] So, the supply of gold does respond
[30:04] and gold typically inflates at about 2%
[30:06] a year. So, the reason gold has been a
[30:08] great money is because 2% is reasonable
[30:11] and if the things around you are
[30:12] inflating 2%, then gold should be
[30:14] relatively fixed price. You know, it was
[30:16] it was like a flat rock for a very long
[30:18] time. But Bitcoin is even different than
[30:21] that because if its price goes up and
[30:23] its demand goes up and mining
[30:24] competition goes up, the issuance
[30:26] doesn't change. The issuance is
[30:28] determined by the protocol because of
[30:30] the difficulty adjustment when Satoshi
[30:32] started the network. It doesn't matter.
[30:34] None of that matters. So, life on the
[30:36] Bitcoin I want to talk about this. Life
[30:38] on the Bitcoin standard in the age of
[30:39] AI.
[30:41] So,
[30:42] AI is going to create an abundance of
[30:44] more stuff. Elon talks about this all
[30:45] the time, and it's true. Think about it.
[30:47] Housing. We're going to be able to build
[30:49] faster and cheaper housing because of
[30:52] AI, because of humanoids and robots.
[30:54] Medicine. People are coming up with
[30:56] cures to cancer already.
[30:58] Crazy. So, we're going to be able to
[31:00] create a lot of more drugs, a lot of
[31:02] more medical care, a lot of more medical
[31:03] solutions. We're all going to be way
[31:04] more informed on how to be healthy.
[31:07] We're going to know what to eat, when to
[31:08] eat it, how to work out.
[31:11] We're going to be able to measure our
[31:12] bodies much better. What about energy?
[31:14] We're going to have way more energy, an
[31:16] abundance of energy because of AI. What
[31:18] about education?
[31:20] We're all much smarter, much more
[31:23] educated. We have access to much more
[31:24] information because of AI. So, this is
[31:26] an abundance of real resources. Remember
[31:29] back when I said there's real resources,
[31:31] and then there's monetary claims on
[31:33] those resources.
[31:34] We're Humans are constantly innovating.
[31:37] It's actually a shame that we live in an
[31:39] in an era of inflation because we are
[31:41] constantly producing more resources for
[31:43] ourselves, but they're printing more
[31:45] money than we're making new resources,
[31:47] which is crazy. It's It's absolutely
[31:50] absurd. If we had a fixed money, then
[31:53] everything around you would go down in
[31:55] price because you're producing more
[31:56] resources than money. Think of it that
[31:58] way. Which one's growing faster?
[32:01] Resources for all of us or money? And
[32:03] creating more resources is just
[32:04] innovating, like using AI to make
[32:07] housing more affordable and more
[32:08] efficient and build it better, or more
[32:10] medicine, or more energy, or more
[32:12] education. That's creating more
[32:14] resources in the economy, but they're
[32:15] creating more money more than we're
[32:17] creating resources. But, on a Bitcoin
[32:19] standard, there's only 21 million, and
[32:21] that's it.
[32:23] So, as the world gets more productive
[32:25] and produces more stuff, that stuff is
[32:27] competing for the fixed 21 million sats.
[32:31] So, it's not Bitcoin competing for
[32:33] stuff, it's an increasing amount of
[32:35] stuff
[32:36] that's competing for Bitcoins.
[32:39] All of human pro
[32:40] I I've said before I've now I don't know
[32:42] if I've ever been able to explain this
[32:44] quote, but I've had this quote that is
[32:46] owning Bitcoin allows me to be long
[32:48] humanity. And what I mean by that is all
[32:50] of human progress competes for a fixed
[32:52] amount of Bitcoins. Oh great, someone
[32:55] invented AI? Well, guess who gets to
[32:56] benefit from that? Me. I do. Because
[33:00] they can't print more money than humans
[33:02] are making cool [ __ ] with AI. So, all of
[33:04] this progress that's going to be made
[33:06] with AI is going to have to compete for
[33:08] the fixed amount of sats and I got mine
[33:10] and I buy my more every single day in
[33:13] cold storage.
[33:15] So, on a soft money world, you have a
[33:17] relatively fixed amount of resources in
[33:19] a growing amount of monetary claims. The
[33:21] money grows faster than the resources,
[33:24] which causes inflation.
[33:26] On a Bitcoin standard, you have a
[33:29] relatively growing amount of resources.
[33:32] So, on a relative basis, which one's
[33:33] growing faster? Resources grow faster
[33:35] than the monetary claims.
[33:38] So, you get to benefit from human human
[33:40] innovation, human productivity, from a
[33:42] growth in resources. That means prices
[33:45] fall. When I got into Bitcoin, my dream
[33:48] house was hundreds of thousands of
[33:50] Bitcoins.
[33:51] Today, my dream house is like five or
[33:54] whatever. I don't What's the price?
[33:56] 80,000?
[33:57] Your dream house is 10 Bitcoins.
[34:01] What are we talking about?
[34:03] So, every single year my life gets
[34:06] cheaper because of the money I use. You
[34:09] have to understand this. Not because I'm
[34:11] better than anyone else, not because I'm
[34:12] smarter than anyone else, not because
[34:14] I'm faster or I'm stronger, none of
[34:16] that. Simply because I use a money they
[34:19] can't make more of.
[34:21] As long as my money is not growing
[34:23] faster than the resources that I want to
[34:25] consume, I win. I win. It's that simple,
[34:29] guys.
[34:31] So, my life is getting cheaper because
[34:33] we as humanity got better.
[34:36] That's it.
[34:39] I get to benefit from human innovation.
[34:42] That's it.
[34:46] So, it's a fixed amount of Bitcoin and
[34:48] as humans continue to innovate and build
[34:50] cool [ __ ] more stuff.
[34:52] That's it.
[34:56] So, anyway, and [clears throat] I mean I
[34:59] already made this point, the dollar
[35:01] system can have rate changes and credit
[35:02] expansion and fiscal spending and
[35:04] buybacks and balance sheet and liquidity
[35:06] programs and all this nonsense. If
[35:09] Bessant wants more Bitcoin, there's only
[35:11] one place to get it, the market. The
[35:15] market. He can spin up as many miners as
[35:17] he wants. The difficulty will adjust and
[35:20] he'll get a block on average about every
[35:23] 10 minutes.
[35:27] That's it. That's the system that I
[35:28] want.
[35:29] That's the system we deserve, by the
[35:31] way.
[35:32] These people telling me, "Well, without
[35:33] any inflation, you'd save money." Yeah,
[35:36] I'd save money.
[35:37] And I'd have kids and I'd have a big
[35:39] yard and I'd have a nice car.
[35:43] You guys.
[35:48] So,
[35:49] that's what I'll leave you guys with. A
[35:51] little bit of macro, a little bit of
[35:53] one-on-one inflation from first
[35:54] principles, and then what what money
[35:56] would you want to own?
[35:58] And what money do you want your parents
[35:59] to own and your friends to own and your
[36:01] colleagues to own?
[36:03] And again, it ta- it takes time to have
[36:06] to build the conviction to go all in on
[36:08] Bitcoin like me.
[36:11] But owning zero Bitcoin to me is a
[36:13] bigger risk than owning any at all.
[36:17] You got majority of the world out there
[36:19] flying blind, sitting in dollars and
[36:22] government bonds, and they're going to
[36:24] get crushed. I just walked you guys
[36:26] through the math.
[36:27] These guys have to implement some form
[36:30] of yield curve control and let inflation
[36:32] run. I promise you. Or we're living
[36:35] through some form of austerity or
[36:36] something equally as insane. But it it
[36:40] seemed like this was always going to be
[36:42] the answer according to the math and now
[36:44] Bessent and these guys are effectively
[36:46] communicating it. That's why Bitcoin has
[36:48] started to move. That's why this bear
[36:50] market looks like it might be ending.
[36:51] And if this is what's happening, you
[36:53] guys think you've seen a bull market in
[36:55] 2025? I promise you you haven't. I
[36:58] promise you you have not.
[37:00] Cuz we would get real money printing. In
[37:03] 2025, the Fed was still shrinking their
[37:06] balance sheet. We were still living
[37:07] through monetary tightening.
[37:12] So,
[37:13] in summary, no man should work for what
[37:15] another man can print. That is the case
[37:18] for Bitcoin. Period.