Why Centralization Always Fails with Nick Hudson | Bitcoin Infinity Show #196

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Nick, welcome to the Bitcoin Infinity Show. Nice to have you here.

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Wonderful to be here. Thank you, Knut.

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Yeah, you haven't been here before and I hardly know you.

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I got a tip from Efrat that I should interview you.

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So I will require a long TLDR on Nick Hudson, what you are and what you do.

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And yeah, what we're going to talk about today.

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Yeah, old Efrat was one of the first people amongst the COVID skeptic community that I met in real life. When the travel bans were all lifted, we started moving around the world and linking up with all the fellow dissidents that we'd met online for the first time.

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And so we had an enormous amount of fun in Bath, I think it was, in the United Kingdom. That was certainly for me my first sort of trip to meet all these new friends, you know.

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But the potter history of Nick Hudson is not too complicated until about 2020.

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So I was, and I still am a private equity investor.

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I run a couple of private equity funds in Cape Town, South Africa.

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And I've always been a sort of a student of finance and epistemology, the theory of knowledge.

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I like reading a lot and I'm a generalist, so I cover a lot of fields and have done so my entire life, which amounts to a fair number of books and so on.

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And I kept to myself, really, I didn't have any kind of significant online presence.

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Every now and then I'd be invited to speak at some or other conference, but normally on pretty dry financial topics, nothing that would have gotten anybody excited.

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except perhaps when I was saying something critical of stakeholder capitalism or some

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other Davos nonsense. And that all changed. I had my annual investor conference coming up in February

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of 2020. And I thought, oh, you know, one of the questions my investors might ask me is,

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what's going on with this thing they're calling COVID? You know, is that going to impact the

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investments. So I thought I better look into this thing and check whether the media is talking

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nonsense or whether there is something real to it. And I started scratching around for the actual

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underlying information that was available at the time and very rapidly came to the conclusion that

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this was nothing more than a media hysteria with a possible niggle in my mind that there might be

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a grand state overlay to the whole story. In other words, that it was active state propaganda.

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And the reason I came to that conclusion was very simple. This was not a matter of detailed analysis.

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I noticed that there was propaganda that was being presented as emerging from China,

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but there was no counteracting or countervailing message from Western

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intelligence community assets. Nobody was trying to address this purported Chinese propaganda.

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The falling man videos and all these ridiculous things that we were exposed to in the early

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months of 2020, they were quite patently fabricated. That's not how people die of

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respiratory illnesses, walking down the street and then suddenly fall over dead. That doesn't

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happen and it never happened and nobody ever saw that, but those were clearly frauds at the time.

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And I surmised that the fact that there was apparent Chinese propaganda and no counteracting material meant one of two things.

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Either that both were in on it or that the Chinese definitely weren't involved and it was Western intelligence communities faking the Chinese propaganda in the first place.

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And that very rapidly confirmed, you know, to my own degree of satisfaction, that this was very much a Western phenomenon and not a Chinese story.

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Wuhan, etc., etc., was all showboating.

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And I took immediate exception to everything that was happening.

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And when talk of lockdown began, my private observations to investors and to my colleagues

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began to feel to me to be insufficient.

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I saw the scope for a humanitarian disaster of vast proportions.

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Lockdowns in Western countries were one thing where you have welfare systems and what do

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they call that?

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payment that they were making in the UK that kind of stipend. I've forgotten the name. It starts with

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an F. But in a country like South Africa, you have no such safety net. So locking down was

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basically condemning people to complete economic obliteration and possibly even

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death and morbidity from the economic consequences. I kept on seeing this kind of tagline in the media

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saying, you know, it's lives versus the economy. And anybody with half a brain knows that that's

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completely false, that the economy mediates life. And so I became increasingly uncomfortable with

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the sort of tension between having seen and understood what I'd seen and not speaking out.

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And when I found a couple of like-minded individuals in my own country who for one

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reason or another had developed similar perspectives, we grouped together and

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wrote a letter to the state president pointing these things out. And we put some PR agencies

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to work promoting that material. And this was before the whole machinery of censorship had

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been set up properly. And so we actually got our articles published in some quite

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significant newspapers. And I was interviewed on television and on radio in South Africa.

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That very rapidly became impossible as the censorship dragnet closed down.

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I would say August of that year, 2020, there'd been a significant tightening and I was the object of quite intense censorship and also smear campaigns at the hands of Western intelligence community assets.

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That little organization that was set up to write that letter was very swiftly put together.

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We quickly chose the name Pandemics Data and Analytics, which was shortened to Panda.

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Had I known the association with the creepy world of pedophilia, I would never have chosen the name, but we were in a hurry to get things done.

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So we launched it.

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And because it was very early to move, we were one of the first organized groups to mount a resistance to the whole COVID phenomenon, but specifically initially to lockdowns.

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We developed a following very quickly.

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Scientists all over the world who were skeptical reached out to make contact with us.

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And we actually put together a very serious scientific advisory board, including people like Scott Atlas and Srinathya Gupta, Martin Kuhldorf, Jay Bhattacharya, Senator Johnson.

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And yeah, they're not all coming to me right.

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Of course, yes.

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Mike Eden.

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I shouldn't forget him.

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and the organization then became quite prolific and began to be attacked in western media in

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particular the times of the uk started coming after us and accusing us of being all manner of

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things you know anti-vaxxers and the intelligence community assets started writing articles

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attempting to connect me to nigel farage and david ike who were people i didn't know at all

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and had no connection with.

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In fact, at that stage, I hadn't even heard of David Icke.

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So it all got quite creepy.

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There I was, I thought of myself as just this private equity investor

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with a slightly different way of approaching the private equity world

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and maybe a little bit of a contrarian financial approach,

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but certainly not a person who any intelligence asset

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would be interested in fabricating stories about.

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And all of a sudden, this was happening to me.

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I had my, by profession, I'm also an actuary.

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which in the United Kingdom and South Africa is a sort of designated professional body and you get a qualification, a fellowship.

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And so I was a fellow of the Institute and Faculty of Actories in the UK and a fellow of the Actuarial Society of South Africa in South Africa.

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And both of those professional bodies mounted completely fabricated disciplinary attacks against me where, you know, the complainants were people on the inner circle of the whole COVID fraud in South Africa.

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And in the UK, it was actually, you know, nobody's complaining about completely false things.

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And those cases continued for, you know, four or more years in both cases and cost me a lot of money to defend.

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And in the one case, I was not exonerated.

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They don't exonerate you.

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They just dropped the case eventually after four years.

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And in the other one, they're found guilty by a complete kangaroo court in the UK for offensive speech.

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Whereas the original complaints against me had been for, what was it, likening vaccination to rape, which I never did,

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and for murdering lots of people by encouraging them to think twice about the risk reward profile

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before taking a vaccine. And the third one was for bringing the actuarial profession into disrepute

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by questioning the COVID narrative. Those three charges never went anywhere because they were

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without basis, but they then proceeded to search through my trash cans and look through every

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aspect of my life to try and find something that they could pin on me. And eventually all they

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arrived at was five tweets in which I criticized a major South African political figure in quite

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harsh terms who happened to be a brown person. And for that day, they found me guilty of

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breaching the professional code of conduct by using offensive speech. That person had never

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been a complainant. No complaint had ever been made about those tweets, but they found me guilty

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and sentenced me to a monetary fine, which I duly had to pay.

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And I resigned from the organization,

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calling them the bunch of pathetic offense Olympic athletes that they were

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and pointing out that the whole trial had been a sham

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to try and get me to stop acting as a political dissident.

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So very serious stuff.

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Freedom of speech in the UK is completely under attack.

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And this is just one tiny example of legion ways

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in which the ability to voice dissent as a private citizen is being threatened.

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So that's my story.

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I mean, as the COVID phenomenon began to be displaced by other media narratives, also

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mostly false, I then found myself looking at the world with a new set of eyes, and I

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began to read more widely in the deep history of centralization.

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And that's an important part of the story. I think it's one that many people miss. There's 150 year trajectory of Anglo American establishment billionaire bankers promoting and funding institutions that are all about a massive degree of centralization, even at a global scale.

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And there's a continuum over that 150 period and a continuum of development and a vast institutional infrastructure that has been gradually accruing in the background, largely out of the public eye.

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And this is all a matter of completely verifiable historical fact.

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And so I've spent a lot of time getting my head around that trajectory, trying to work out who it is who's really behind it, to what extent such events are planned and to what extent they're emergent. Can we attribute them to groups that we can characterize in any particular way?

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Does it matter whether we can or can't attribute blame or root cause?

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And thinking a lot about what can be done about it.

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And I think that's where I intersect with the Bitcoin community.

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I've got a lot of friends in the Bitcoin community.

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I myself have no expertise because all my investment energy goes into private equity life.

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But a lot of my talking themes and investment themes are, I think, very compatible with the personal philosophies of a lot of Bitcoin investors.

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And I think that's how I end up speaking to you today.

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That's a fantastic introduction.

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So a couple of thoughts here that come to mind.

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You said if it's centrally planned or emergent, I find that particular, whatever you call it, dichotomy, like to be super interesting.

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what we see play like the way i view the world now and what we're seeing playing out is like a

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crossover between brave new world 1984 and the emperor's new clothes if you read those three

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books you can see through like pierce the veil of of all the bullshit that's going on

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but my favorite part of 1984 is the ending of it where where it turns out that there is no big

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brother. It's just incentives and just

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people doing these bad things

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to one another. So in 1984

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it's all emergent.

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And I also

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like to paraphrase

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what is it, Occam's Razor?

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Something like never attribute to

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5D chess which can be

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explained by retardation or something like what the original one never attribute malice That that which can be explained by incompetence So what I very curious about is like how much of this is just trickle down stupidity

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and how much of it is an actual cabal sitting on top in an evil, you know,

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Dr. Evil type lair and really controlling the world.

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And what are your thoughts there?

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What have you found?

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Okay.

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Okay. In the first place, I think the important thing to accept is that there will always be emergent features.

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And as long as humans are involved, there will always be planned features.

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And the emergent events affect the plans and the plans create emergent events.

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And some of the emergent events are intentional and some of them are accidental.

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I'm a great student of complexity theory. And when you exert significant pressures on complex systems, so when you perturb them in, let's call them catastrophic ways, the impact of those perturbations has a fundamentally unpredictable component.

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and that's part of emergence. It's something that isn't planned for. And so I think I would

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not take anybody seriously if they said it's all emergent and I would not take anybody seriously

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if they said it was all planned. The question is then, the next question I think that's of

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interest to you is, okay, well, to the extent that there is planning going on, what are the plans and

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And who are those plans by?

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And I've pointed to the, I mentioned 150-year history of planning of centralization around the Anglo-American establishment, or some people call it the transatlantic financial complex.

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The TFC is another term.

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Why 150 years?

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It's roughly speaking where you begin to see firm documentary evidence of large-scale investment and mobilization around what was essentially to become institutional socialism.

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I'm not by any stretch of the imagination denying that there weren't evil bankers involved in the Glorious Revolution and that kind of thing.

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I know. I've read that history, too. I know that those theories are there.

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I know that there are theories going around about the Illuminati and the Freemasons and various sects of Judaism and the Talmud and, you know, what else?

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The Black Nobility and the Prite-Boran Guards and so on.

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Everybody has their…

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Yeah, sorry for interrupting because I think you said, yeah, this whole COVID skeptic community, of course, intersects with the Bitcoin community.

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which in itself intersects with the libertarian community.

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And I think we're all coming from the same thing.

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There's always a mistrust in institutions,

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and that's what we all have in common, right?

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Because we're sort of seeing through all of this.

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And I think for most Bitcoiners and probably most libertarians too,

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it sort of starts with World War I and the pound going off the gold standard.

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That's sort of like a starting point.

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And then there's another tipping point

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in 1971, of course,

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where Nixon detaches the dollar

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from gold completely.

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And after that is basically

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all Soviet-style central planning

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because they have a money printer.

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So it is centrally planned.

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But still, so that's why I'm wondering

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about the wonder,

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what happened 150 years ago?

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Because in my mind,

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it's more like 120 years ago

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that this whole thing starts.

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In the 19th century,

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you have the roots being laid

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for what was eventually to become the movement called Fabian Socialism.

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The groupings prior to that, funnily enough,

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had a very important part of that story played out right here

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where I stand in Cape Town, South Africa.

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There was a fellow by the name of Lord Milner who was, to a degree,

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the handmaiden of a mining magnate called Cecil John Rhodes.

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Rhodes was a miner and politician who had financial backing from the Rothschilds family primarily.

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And he was a great architect of empire for the British.

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This was his nominal political role and a great monopolizer of the South African gold and diamond mining industries.

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gold emerged slightly later than diamonds with the discovery of gold in one of the

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then Transvaal republics, which was separate countries that were occupied by people of

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Northwestern European origin and French Huguenot origin. They occupied interior provinces of South

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Africa that had been of no interest to the British, but they then discovered the largest

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field of gold that had ever been seen in the world. And the British became immediately

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interested in conquest. And so in addition to having kind of crept their way across the

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Kimberley diamond fields in the Northern Cape area of South Africa, they then fought a three-year

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war against the Boers, as they were called in the Anglo-Boer War from 1899 to 1902,

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gain control of the gold fields of the then Transvaal, a geopolitical entity that no longer

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exists since the new dispensation in South Africa that's been called Gauteng, which is a bit hard

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for foreigners to say. It's a much smaller province than the original Transvaal, but the

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gold fields are, of course, still there, still producing gold. 20, 130 years later, that grouping

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of the Rothschilds, Rhodes, and Milner had massive global political and economic ramifications.

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At about the same time as all of this, what happened was a political insight was obtained.

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Power is always seeking control, and control requires centralization. And what these powerful

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bankers worked out is that if they could persuade people that assets should not be owned by private

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individuals, but by the state, well, the state was very easily infiltrated by them. And so that

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effectively meant that the assets would be controlled by them and that they could become

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phenomenally wealthy if they could get their hands on those assets. And they packaged it all as if it

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was some kind of workers' movement, socialism, workers and communism, workers of the world unite,

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something that was going to mean that the assets, instead of being controlled by what they termed

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capitalists, which means private individuals, would be controlled by the state, and the state

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would somehow be in the hands of workers. But the mechanisms by which the workers would control

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the state were never articulated. This was never laid out. And the idea that workers' rights would

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be enshrined and that something other than greed or profit motive would be pursued was never

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demonstrated in the theory. All that was merely a promise, merely a marketing slogan.

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And of course, the first efforts to roll out socialism really failed. There was absolute

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devastating economic consequences because for reasons we can get to if you wish to,

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very solid intellectual reasons and empirical reasons as well. But the efforts to roll out

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socialism failed terribly. And they sort of went back to the drawing board and started again.

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And one of the conclusions they reached is that the sort of Marxist idea of revolutionary socialism

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that would then lead to the communist state was wrong and that they should abandon the

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revolutionary approach. And there's an important thing that most people don't understand. People

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have this idea that communism has been tried somewhere. It really hasn't. Maybe for a couple

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of weeks, people might have declared something communist. But Marx's idea was that socialism

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was an intermediate state. So you'd go from a market capitalist economy or a free market economy

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to a situation where the state owned the assets.

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They would sometimes just quite falsely say

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this was going to be the proletariat who was owning the asset,

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but there was no mechanism by which that was the case.

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The state would own the assets,

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but that was an intermediate step towards the total dissolution of the state

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and the community or the communitarian organization or polity

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would be in charge of the allocation of labor, resources, wealth, and income.

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So socialism represented the gradual destruction or revolutionary destruction of the market,

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and then communism would represent the destruction of the state.

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And so although you have the Chinese Communist Party in power, there's nothing communist about

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China, it's socialist, and it's less socialist now than it was 30 years ago or 50 years ago by a

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massive degree. And in fact, one of the arguments I make in a presentation I gave recently was that

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the West is now significantly more socialist than anything in Russia or China, just by sheer weight

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of the quantity of assets commanded by the state. So that's the kind of story. They spotted the gap.

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They said, we can pretend that there's this political phenomenon called socialism, and it's wonderful for the worker, and we can get the majority of the population to get behind the socialist objective if we market it properly.

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And we'll do it by gradualist means. We'll infiltrate education establishments. We'll infiltrate large corporations. We'll infiltrate charitable organizations and foundations. We'll infiltrate governments. We'll infiltrate NGOs. And we'll gradually proselytize under this new religion of socialism.

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and when our work is done, it will then be a simple matter.

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The population will have voluntarily voted for the ownership of the assets by the state

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and we will never have lost control of the state apparatus.

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And that is exactly in my mind what has played out over the course of 150 years

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with remarkable success.

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And to your point about planning, there are plenty of signs of continued intergenerational involvement of the same families of kind of divide and conquer strategies being played out.

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Different family members are represented in different countries.

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Different family members looking after different parts of the agenda, different elements of the agenda.

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and that's been a sort of stable configuration

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without much perturbation, as I say, for a century and a half

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and that's why I had that early date.

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I know very well that bankers were involved

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when the Dutch basically took over the British crown

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in the 17th century, 1688 I think it was

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and I know that the whole idea of the financiers

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having been behind the Roman Empire's loss of its republic and the gradual reduction in the meaningfulness of the role of the Caesar.

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So, there are ancient historical, let's call them trends or indicators about which you can wrap a million interpretations and stories.

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But in terms of solid documented history, I think that's where it's all located.

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Once you go above the level of these families, many people say, oh, there's a hierarchy, there's a cabal.

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But the evidence base becomes quite thin.

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You can talk about people wanting such a cabal to be in place and wanting to be in control of that cabal.

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You can read strange eschatological texts where they have their own set of millenarian fantasies and predictions, prophecies that entail a world very similar to what I've described.

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So those things are all there.

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I don't deny them.

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And I'm a very interested listener when it comes to people who have well-researched theories on these.

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But I kind of have stuck to the areas where there's very strong documentary evidence and where I can walk around in the business community and see evidence of that control structure in place, influence on government, influence on central banks, influence on large corporations, where I can see those, and very importantly, influence on media, where I can speak to the journalists who wrote smear articles about me and they will tell me why.

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their organization behaves the way it did.

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Yeah I mean it fascinating and depressing at the same time how these things play out You said you were interested in epistemology I am too very interested in epistemology And that why I fell down the Austrian economics rabbit hole a couple of years back and wrote a book on praxeology

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Because with socialism and, you know, the whole notion of real socialism hasn't been tried.

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Well, you said real communism hasn't been tried, but real socialism has definitely been tried.

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Both Karl Menger and Ludwig von Mises laid out very solid a priori proofs of why it doesn't work.

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And contrary to what most people think, they think it's an incentive problem.

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But when you have a gun to your head, you will work.

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Like, it's not that people won't work.

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The bigger problem is economic calculation, which becomes impossible when you have a central planner.

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So the famous example is from the Soviet Union when the state orders 300 tons of screws and they make like three screws of 100,000 tons each or whatever.

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I'm exaggerating here, but without the free market, there is no way to signal to producers what people want.

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And, you know, a common pen or pencil like Milton Friedman's example that can never materialize because you don't let it.

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So what I find more fascinating than whether socialism has been tried or not is that a real interventionist, free capitalist, free market with sound money, that's what has never been tried, like not even remotely.

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There's always degrees of interventionism.

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And interventionism is always done by an aggressor like the state or a criminal organization or a psychopath who wants to take other people's shit.

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And like if we didn't have that, we'll be pretty well off as a species because without aggression, we wouldn't have any of the bad stuff, right?

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So I'd like to pick your brain on epistemology to begin with here and see where we end up.

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Like, what are your insights and what are your views on Austrian economics and praxeology in general?

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Yeah, well, I mean, I'll answer that very quickly.

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So in Austrian economics, I mean, I agree with you.

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For me, you know, von Mises, von Hayek and Rothbart are the three giants.

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Friedman, also an important one, as you mentioned.

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Happy birthday, Rothbard, by the way. He turned 100. He would have turned 100 yesterday.

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Okay. Now, these guys were, as you said, the analysts of, it's not just of markets,

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it was of complexity in general, I would say. These were broad enough thinkers that they didn't

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just confine themselves to thinking of along political theory and economic theory and market

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theory lines. They were very deep thinkers. And what they were engaging with was complexity.

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You know, the epistemological insight when it comes to dealing with complex systems

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is there is no potential for analytic solutions to complex problems. There is no way in which you

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can calculate your way out of complexity. And this has massive ramifications. So what can you do

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in the face of complexity? Well, the answer there is that instead of using inductive and deductive

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processes, you use trial and error, conjecture and criticism processes. So you can make a change,

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a small change on the margin as a certain type of experiment. The origin of that change is never

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a logical process. It's a creative process and a process of inspiration and intuition.

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So basically, we're using our complex minds in ways that defy logical analysis to propose

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potential solutions to complexity. And then in a process of trial and error, we identify

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those ones which we think or suspect are working, and we do more of them. And that's how what I'm

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describing there is the general framework of evolution. And I'm not referring to biological

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evolution. Biological evolution would be one subset of the general framework of evolution.

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And to my mind, it has been proven beyond any reasonable doubt that the only way forward in the face of complexity is by way of evolutionary mechanisms.

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And I think this is very compatible with the thinking not just of von Mises and von Hayek and Rothbart and Friedman, but a great many thinkers in the areas of geopolitics and economics.

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Just a quick comment on that. A couple of things.

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First of all, I wouldn't categorize Friedman as the same as the others, because the Chicago school is slightly different because he's not this hardcore, everything has to be a priori in economics.

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And I'd say the trial and error process and the evolutionary process of economics, I'd call that economic assessment done by individuals to assess the market.

325
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But I wouldn't call that economics because to me, like my definition and the Austrian definition of economics, it's just a study of what we can and cannot.

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It's very close to epistemology in that sense.

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It's all based on all else being equal scenarios and deductive reasoning, and empiricism has nothing to do with it.

328
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There's a great section on epistemology in Hans Hermann Hoppe's Economic Science and the Austrian Method, where he points out that the empiricists claim that we cannot know anything to 100% certainty.

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All we can do is approximate and get closer to the truth, that that statement in itself is an absolutist statement.

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so it cannot be true because you're saying that you know with 100 certainty that we cannot know

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anything to 100 certainty so how can you be certain of that so it's sort of a gotcha there

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and and this is why the rationalists view um or um whatever you may call it objectivist uh

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why a priori knowledge and deductive reasoning uh is more of an appropriate tool for to

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to come to conclusions about economy and the free market that have to be true,

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that cannot be argued against without running into a logical contradiction.

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I mean, that's the basis of the whole a priori Austrian method way of thinking,

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that these things can be proven without evidence.

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It only requires a set of irrefutable statements or first principles, and then you can draw your conclusions from that.

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For instance, saying that a minimum wage, with all else being equal, a minimum wage law can never increase people's well-being,

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because all that will happen is that fewer people will get jobs.

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In order for those people to get other money, you will have to take it from somewhere else.

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So it can only do nothing or do worse.

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it can never do any good.

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So, and you can prove that

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without any need for evidence.

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Evidence would not deny

347
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nor confirm the thesis

348
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more or less

349
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because it's reasoned

350
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and not, you know, observed.

351
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Yes, but what you've done there

352
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is reduce a complex system

353
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to a simple one

354
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with the little phrase you used,

355
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Ceteris Paribus,

356
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and then logic becomes very compelling

357
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and useful for didactic purposes, which is what Austrian economics is about. It's a fantastic

358
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story. And yes, I devour it. And yes, I deploy deduction to a great degree when trying to

359
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understand it or indeed trying to advance it. So I agree with you there. As far as the sort of

360
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assertion of the point about evolution is concerned, the way I prefer to put it is not

361
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in that kind of absolute way, but that as a conjecture that I'm prepared to live by.

362
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And so the conjecture is that any explanation for reality is bound to be replaced by a better one.

363
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I mean, that's very interesting because it's sort of in line with the empiricist's claim that

364
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Yes.

365
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We can only.

366
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So, so do you, you don't believe in absolute truths then that there are certain things that we couldn't?

367
00:36:49,115 --> 00:36:53,895
No, I believe, I believe in a unitary grounded reality.

368
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So there's one reality, but our descriptions being imperfect and only ever getting closer to accurately describing that reality and its full richness and complexity.

369
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Yeah, I would say that, sorry, but for a praxeological axiom, for instance, like human action is purposeful behavior, you could say that you could refine that by improving the language and having better definitions of the words used in the sentence.

370
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But the sentence itself is sort of self-explanatory and kind of very hard to argue against because you need to act with purpose to argue against it.

371
00:37:37,595 --> 00:37:44,295
Yes, but then it also invites questions which must be part of your theory like what are the purposes?

372
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And that's where I think we can't know what the purposes are because everybody has their own purposes.

373
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And that's one of the reasons why we can't centrally plan and why we can't allocate resources, why we shouldn't centralize our economies is those purposes are as varied and infinitely malleable.

374
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They're changing all the time in ways that we can neither measure.

375
00:38:06,935 --> 00:38:13,615
Even the person possessing the purposes doesn't know exactly what they are from time to time.

376
00:38:14,695 --> 00:38:17,615
No, but there's no Austrian economics claim.

377
00:38:17,855 --> 00:38:21,015
Austrian economics do not claim to know that.

378
00:38:21,635 --> 00:38:24,995
Like there is, it admits that we cannot know.

379
00:38:25,715 --> 00:38:28,575
One plus one is two is absolutely true.

380
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but it's not a description of reality in the sense.

381
00:38:34,195 --> 00:38:35,435
And I'll give you another one.

382
00:38:35,475 --> 00:38:37,975
I'm happy to accept, for example, that I'm sitting in a chair,

383
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that this is a chair underneath me.

384
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So all of those specific instantiations,

385
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I accept they're definitional,

386
00:38:48,975 --> 00:38:50,755
that wet stuff is called water.

387
00:38:50,955 --> 00:38:52,895
All of those definitional things are right,

388
00:38:52,895 --> 00:38:55,675
that water boils at a regular temperature

389
00:38:55,675 --> 00:38:58,195
and that it can be defined to be 100 degrees centigrade.

390
00:38:58,195 --> 00:39:00,415
and so on, you know, no problem.

391
00:39:00,535 --> 00:39:02,255
I'm not like some kind of relativist.

392
00:39:02,955 --> 00:39:05,255
And I don't, you know, the claim,

393
00:39:05,955 --> 00:39:07,795
and I don't like labels so much.

394
00:39:07,955 --> 00:39:12,275
The claim that a philosopher like I would like to make

395
00:39:12,275 --> 00:39:14,575
is really one to humility,

396
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to being continually on the lookout

397
00:39:18,475 --> 00:39:22,055
for better ways to think about aspects of reality.

398
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And fully, you know, it's a hopeful,

399
00:39:24,495 --> 00:39:25,995
it's an optimistic framework

400
00:39:25,995 --> 00:39:28,655
where I fully expect

401
00:39:28,655 --> 00:39:30,795
that my very best theories

402
00:39:30,795 --> 00:39:31,515
about the world

403
00:39:31,515 --> 00:39:32,615
will be improved upon

404
00:39:32,615 --> 00:39:33,755
by somebody else.

405
00:39:33,915 --> 00:39:34,335
And in fact,

406
00:39:34,455 --> 00:39:35,375
every now and then

407
00:39:35,375 --> 00:39:35,855
you realize

408
00:39:35,855 --> 00:39:36,895
if you read a lot,

409
00:39:37,255 --> 00:39:38,535
oh, they already have been.

410
00:39:39,215 --> 00:39:39,555
I just,

411
00:39:39,715 --> 00:39:40,995
I was looking

412
00:39:40,995 --> 00:39:41,755
in the wrong place.

413
00:39:42,715 --> 00:39:43,735
And I love optimism

414
00:39:43,735 --> 00:39:44,535
and hope.

415
00:39:44,615 --> 00:39:45,135
I think hope

416
00:39:45,135 --> 00:39:46,315
is a rational choice

417
00:39:46,315 --> 00:39:47,275
because without it,

418
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without it,

419
00:39:48,295 --> 00:39:48,915
we are bound

420
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to become institutionalized

421
00:39:50,455 --> 00:39:51,095
and we are bound

422
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to build our own prisons

423
00:39:52,135 --> 00:39:53,855
and not escape them.

424
00:39:54,195 --> 00:39:54,915
You need hope.

425
00:39:55,135 --> 00:39:55,595
Which is,

426
00:39:55,995 --> 00:39:57,835
We're bound to be extinct without that.

427
00:39:58,675 --> 00:39:59,535
Yeah, yeah, exactly.

428
00:39:59,535 --> 00:40:04,975
The will to be free is absolutely necessary for human survival.

429
00:40:06,655 --> 00:40:12,295
So one of the perspectives I have that gives me great hope and why I don't, when I, you

430
00:40:12,295 --> 00:40:16,815
know, at the end of that section, when I described the history of the Anglo-American establishment

431
00:40:16,815 --> 00:40:23,055
and its role in the foundation and propagation of socialism, you said that was depressing.

432
00:40:23,055 --> 00:40:28,395
I can see why it is because it presents a problem and the problem seems daunting.

433
00:40:28,755 --> 00:40:42,315
But one of my philosophical sort of, let's also call it an explanation that I'm prepared to live by, is that overly centralized systems have failure as an inevitability.

434
00:40:42,315 --> 00:40:56,295
It's not, you know, no amount of information or data processing capacity or algorithmic complexity can get them away from that problem that centralization is doomed to fail.

435
00:40:57,235 --> 00:40:58,855
No, I love this.

436
00:40:59,615 --> 00:40:59,775
Yeah.

437
00:41:01,055 --> 00:41:04,615
And so I think that, sorry, you go.

438
00:41:05,335 --> 00:41:07,375
No, I was just going to say, and for that reason, I'm hopeful.

439
00:41:07,375 --> 00:41:13,255
and people counter that by saying, yeah, but the amount of destruction that can be caused when they

440
00:41:13,255 --> 00:41:18,995
attempt to implement these centralized systems could be immense. I say, yes, it could cause

441
00:41:18,995 --> 00:41:26,055
a lot of people to die earlier than they otherwise would have. And I certainly don't applaud that,

442
00:41:26,055 --> 00:41:50,142
but that in itself problems are not things to be afraid of Problems are things to be celebrated Life would be in my opinion not worth living without problems problems are what make us tick our creativity would have nothing to do were it not for problems when i say problems i don mean

443
00:41:50,142 --> 00:41:54,722
you know they're problems that cause you anxiety and they're problems that just provoke interest

444
00:41:54,722 --> 00:41:59,602
so like a mathematics problem or uh the problem of how to make a more beautiful piece of music

445
00:41:59,602 --> 00:42:06,302
you know i talk about problems in that non-valent sense i'm not giving it uh an ethical or moral

446
00:42:06,302 --> 00:42:12,022
overlay it's just just a thing out there that where that where the world would be improved

447
00:42:12,022 --> 00:42:18,682
if we had an explanation for it you know how to topple trillionaire bankers uh from positions of

448
00:42:18,682 --> 00:42:24,782
power is a problem and that's worth thinking about and and all problems have solutions they

449
00:42:24,782 --> 00:42:31,622
really do at a fundamental level. So those are my beliefs that give me optimism.

450
00:42:32,862 --> 00:42:38,842
Yeah, and absolutely, I'm on the side of optimism. I just wish that we had fewer problems that are

451
00:42:38,842 --> 00:42:45,082
caused by humans shooting themselves in the foot and like the washing machine has broken. We need

452
00:42:45,082 --> 00:42:50,922
to fix it. That's a problem I can live with. But as I tell my wife often, you don't need to invent

453
00:42:50,922 --> 00:42:56,342
problems you that they will come trust that they will come there is an abundance of problems

454
00:42:56,342 --> 00:43:04,222
already and i think like uh a good example of this uh like totalitarian systems not being stable is

455
00:43:04,222 --> 00:43:09,282
of course the soviet union but it's also an example of how long people will have to suffer

456
00:43:09,282 --> 00:43:16,762
before it crumbles on before it implodes it took like 70 years for for the whole east block to they

457
00:43:16,762 --> 00:43:22,042
fucked around for for 70 years and then they finally found out that this doesn't work so that's

458
00:43:22,042 --> 00:43:30,162
what i'm afraid of it's not like i view it when a system is based on an ideology of envy and

459
00:43:30,162 --> 00:43:36,002
aggression then nothing good can come out of it like aggression is what we want to get away from

460
00:43:36,002 --> 00:43:42,402
and if it's okay to take people's stuff regardless of it's via the tax bill or by printing money

461
00:43:42,402 --> 00:43:49,102
it is inherently immoral and not desirable so like we have to defend ourselves from that and

462
00:43:49,102 --> 00:43:54,062
like that's of course why i fell deep down the bitcoin rabbit hole because all of a sudden there

463
00:43:54,062 --> 00:44:00,542
was a a way for a peaceful revolution to exist where you didn't need guns to defend yourselves

464
00:44:00,542 --> 00:44:07,262
against aggression you could use clever mathematics to bypass all of these uh a-holes and their their

465
00:44:07,262 --> 00:44:12,462
ways of expropriating your stuff like that's that's what that's the idea i fell in love with

466
00:44:12,462 --> 00:44:19,382
that and and and this number that couldn't be copied allowing for absolute finite thing to exist

467
00:44:19,382 --> 00:44:26,602
and even though like i truly believe they exist in our heads mostly it's it's it's a way of

468
00:44:26,602 --> 00:44:32,462
communicating that allows us to be sovereign and and not have to worry about what anyone else

469
00:44:32,462 --> 00:44:37,222
thinks what we should do with whatever the fruits of our labor but yeah but that's a bit of

470
00:44:37,222 --> 00:44:43,642
i got sidetracked here where were we yeah um look i mean the one thing i should mention

471
00:44:43,642 --> 00:44:49,942
is that in understanding the the work of von ajak von mrs and rotbart at the level of uh

472
00:44:49,942 --> 00:44:56,322
economies and economic systems my personal commercial insight was there was no reason

473
00:44:56,322 --> 00:45:01,802
why you couldn't apply that thinking to the corporation it's a deep field um but i built

474
00:45:01,802 --> 00:45:10,602
my career on it. I run a private equity fund where our emphasis is on how to exploit the

475
00:45:10,602 --> 00:45:17,882
utility of decentralization within the institution of the corporation. And it's been a very stably

476
00:45:17,882 --> 00:45:23,742
successful approach. So we do a lot of things differently from typical corporations. And when

477
00:45:23,742 --> 00:45:30,362
I say typical, I mean like the 99.999% typical corporation. We're really divergent in important

478
00:45:30,362 --> 00:45:36,482
ways. So there are things that are regarded out there in the commercial world as best practice

479
00:45:36,482 --> 00:45:46,062
that we regard as complete anathema. And there are ways of doing business which cause other

480
00:45:46,062 --> 00:45:55,982
practitioners of the private equity trade to clasp their heads and shriek when they hear what we do

481
00:45:55,982 --> 00:45:57,882
and how we run things.

482
00:45:58,742 --> 00:46:01,242
And when I say it's been stably successful,

483
00:46:01,462 --> 00:46:05,102
my last fund had no assets that performed

484
00:46:05,102 --> 00:46:08,002
at less than a 27% internal rate of return.

485
00:46:09,382 --> 00:46:12,882
And some that performed way above 100%.

486
00:46:12,882 --> 00:46:18,642
And they're not sexy businesses in growth industries

487
00:46:18,642 --> 00:46:19,622
or anything like that.

488
00:46:19,622 --> 00:46:24,862
I haven't got any investments in any of the flavors of the day

489
00:46:24,862 --> 00:46:29,682
of the last 10 years, no cannabis investments, no AI investments, no fintech investments.

490
00:46:30,362 --> 00:46:36,202
I invest in some companies that haven't grown for 10 or 20 years, businesses that have been

491
00:46:36,202 --> 00:46:43,622
around since the 1960s, that kind of thing. And our experience is that by altering the

492
00:46:43,622 --> 00:46:49,822
governance approach, you change the culture. And when you change the culture, you change the people.

493
00:46:50,322 --> 00:46:53,822
And when you change the people, you get more creativity. And when you get more creativity,

494
00:46:53,822 --> 00:47:00,582
you get more innovation and that innovation is without limit it can carry on forever and that

495
00:47:00,582 --> 00:47:07,922
is an enormous way of a very powerful way of creating wealth so would you say that there's

496
00:47:07,922 --> 00:47:18,182
an inherent flaw in hierarchical systems per se or or do you have an example of what you're doing

497
00:47:18,182 --> 00:47:23,122
differently here i'm so glad you asked me that question because you know a lot of people who are

498
00:47:23,122 --> 00:47:28,782
in our camp, the people who like to be labeled as libertarians or Bitcoin maximalists or whatever,

499
00:47:29,402 --> 00:47:34,882
like to think very dichotomously. They don't like to think about optima on a spectrum.

500
00:47:35,822 --> 00:47:43,922
And there is indeed utility to hierarchy. And there are some people in the, let's call it in

501
00:47:43,922 --> 00:47:50,342
the broader church of the Austrian view of the world, who have specialized in explaining how

502
00:47:50,342 --> 00:47:56,822
hierarchy can be of great utility. And they're very interesting people to read. The one that

503
00:47:56,822 --> 00:48:05,642
comes to mind right now is the economist Ronald Coase, who had the dubious distinction of having

504
00:48:05,642 --> 00:48:12,382
to wait the longest from the time he did his work until the day he eventually won his Nobel Prize.

505
00:48:12,902 --> 00:48:18,522
It was some stupendously long period, like 50 years or something, ridiculously long period of

506
00:48:18,522 --> 00:48:26,042
time. So in his 20s or 30s or something, he comes up with his book on the firm, the market,

507
00:48:26,142 --> 00:48:32,742
and the law. And in his dotage, in his late years, he eventually wins the Nobel Prize.

508
00:48:33,622 --> 00:48:38,642
But I can mention a couple of interesting aspects of his work. I can't go through it exhaustively.

509
00:48:38,642 --> 00:48:47,002
That would take many podcasts, but just enough to give people a flavor. So he locates the

510
00:48:47,002 --> 00:48:55,922
appropriate use of what we can call hierarchy or corporate institutional structure in things such as

511
00:48:55,922 --> 00:49:03,442
the frictional costs of contracting. So because the world is complex, and at the beginning of the

512
00:49:03,442 --> 00:49:09,022
year as a business owner, I don't know what I'm going to have to do in order to build value in

513
00:49:09,022 --> 00:49:16,022
my firm over the course of the next year. What I do is instead of contracting with Knut to say,

514
00:49:16,022 --> 00:49:23,102
look Knut, I want you to do that and that and that. Or I'm going to measure you on the following

515
00:49:23,102 --> 00:49:29,822
dimensions. The business owner doesn't know exactly what to measure Knut on or what Knut

516
00:49:29,822 --> 00:49:34,502
should do as a result of what we've been talking about earlier. We can't navigate complexity in

517
00:49:34,502 --> 00:49:40,042
this analytical fashion. So what he does is he says, Knut, I can't contract with you, but what

518
00:49:40,042 --> 00:49:45,422
I'm prepared to do is to offer you a salary and you come and work for me. And this is more or less

519
00:49:45,422 --> 00:49:50,842
what we're trying to do. We're trying to, in this marketplace, in some definition of our

520
00:49:50,842 --> 00:49:58,642
sphere of influence, which can be geographically and product market and demographically defined,

521
00:49:59,302 --> 00:50:04,442
will you come along and help us do this? And I want you to look after this part of the business.

522
00:50:04,442 --> 00:50:12,162
And so there's an implicit contract that is in place and it displaces the alternative,

523
00:50:12,162 --> 00:50:19,282
of which is to contract individually along certain dimensions. And at a low level of

524
00:50:19,282 --> 00:50:26,842
fidelity or at a high level of granularity, the frictional costs of that kind of contracting

525
00:50:26,842 --> 00:50:34,562
become overwhelming and it becomes easier to deal in the domain of intuition and implicit contracts.

526
00:50:34,562 --> 00:50:52,182
There's implicit contracts and intuitions are very tightly bound to the idea of hierarchy, where no reason can be given, where no explanation can be created.

527
00:50:52,182 --> 00:51:11,522
Then we are dealing in this domain where whether it's bottom-up kind of hierarchy where we choose a leader and we have a person who we follow electively, you know, the leader amongst our friends or the business leader who we most respect and most listen to, whose talks we all go to or whose lunch invitation we all never decline, you know.

528
00:51:12,122 --> 00:51:20,062
Whether it's that kind of bottom-up emergent leadership or the top-down leadership, it all results in hierarchy.

529
00:51:20,062 --> 00:51:28,922
and as soon as you accept that, you are in the domain of realizing that there is an optimum

530
00:51:28,922 --> 00:51:35,362
degree of centralization, that infinite decentralization is as much a fantasy

531
00:51:35,362 --> 00:51:41,722
as infinite or extreme. I should say extreme, not infinite. Extreme decentralization is

532
00:51:41,722 --> 00:51:50,242
as much a fantasy as extreme centralization. So that's one type. I'm just giving you a flavor

533
00:51:50,242 --> 00:51:57,802
by using the employment contract as an example. There's another one. In the domain of human

534
00:51:57,802 --> 00:52:06,222
interaction, most of our decisions proceed by unobservable mechanisms in our own heads. So a

535
00:52:06,222 --> 00:52:14,302
very small proportion of our decisions and the basis for our decisions is even

536
00:52:14,302 --> 00:52:26,942
reducible to words. Most stuff is what we call ineffable. We may not even be aware of ourselves

537
00:52:26,942 --> 00:52:32,802
making the decisions or selecting the content that we're using to make those decisions.

538
00:52:32,802 --> 00:52:46,162
When a good salesperson is sitting in a room in a negotiating setting, his eyes and sense organs and his mind is being bombarded with signals.

539
00:52:46,162 --> 00:52:53,202
and he's selecting from those signals and acting by what he says and how he behaves

540
00:52:53,202 --> 00:52:58,842
in response to those signals in ways that he will, the moment he walks out the door,

541
00:52:59,462 --> 00:53:03,142
be unable to describe to his boss or to his colleagues.

542
00:53:04,222 --> 00:53:10,482
He makes innumerable minute decisions, decisions about his posture and his bearing and the

543
00:53:10,482 --> 00:53:15,122
expression on his face, whether he's going to be manipulative or transparent, what it

544
00:53:15,122 --> 00:53:20,862
that the other person really wants. All sorts of processes are going through his mind and he could

545
00:53:20,862 --> 00:53:26,202
never write them down on a piece of paper. And this is the vast majority of human processing

546
00:53:26,202 --> 00:53:33,802
and decision-making and where I believe most of the quality actually lies. And I'll give you an

547
00:53:33,802 --> 00:53:40,002
example of that in my business of how we use that insight. We believe that it's a complete disaster

548
00:53:40,002 --> 00:53:45,122
to have a human resources department in a business. One of the things that human resource

549
00:53:45,122 --> 00:53:50,082
departments do is they try to centralize the recruitment process in order to make it fair

550
00:53:50,082 --> 00:53:57,462
and compliant with diversity requirements. They don't trust the guy, the line manager,

551
00:53:57,642 --> 00:54:03,242
the head of the team or whatever to make that decision without his implicit biases emerging.

552
00:54:03,962 --> 00:54:08,702
And so they all do the screening. They will look at words on a piece of paper,

553
00:54:08,702 --> 00:54:14,802
the person's resume and decide which people are going to be eligible for appointment to a

554
00:54:14,802 --> 00:54:20,042
designated role in a designated team. And that first layer of screening is a complete disaster

555
00:54:20,042 --> 00:54:27,062
because the first and most important story is the intuition of the team leader. He should be the one

556
00:54:27,062 --> 00:54:31,682
looking at the bits of paper and deciding which person he'd like to interview. And he should be

557
00:54:31,682 --> 00:54:37,722
the one assessing the fit. That his assessment will be made on the basis of things that can never

558
00:54:37,722 --> 00:54:44,362
be written down and is much likely to be to be sound much more likely to be sound than than the

559
00:54:44,362 --> 00:54:52,342
dolly bird in the hr department i i absolutely love that i used to believe it or not but i i was

560
00:54:52,342 --> 00:54:58,602
once an hr manager in a previous career at a shipping company and i i identify with that so

561
00:54:58,602 --> 00:55:02,762
much we would have been better if there was no one there at all like we would have been better off

562
00:55:02,762 --> 00:55:11,842
So because I think one of the most misused words in modern media lingo is discrimination.

563
00:55:12,342 --> 00:55:17,602
It's labeled as a bad thing, but discrimination is the key to everything.

564
00:55:18,062 --> 00:55:21,782
Like that's what you do when you employ one person rather than another.

565
00:55:21,922 --> 00:55:26,402
It's that you discriminate based on who you think is more fitting for the job.

566
00:55:26,442 --> 00:55:28,222
And it's not a bad thing.

567
00:55:28,222 --> 00:55:32,942
Yeah, the other thing I wanted to explore here is the

568
00:55:32,989 --> 00:55:35,329
like decentralization.

569
00:55:35,509 --> 00:55:39,909
I just wanted to offer you my take on the whole notion of this.

570
00:55:39,909 --> 00:55:45,589
So I believe there's nothing inherently wrong with hierarchies.

571
00:55:45,749 --> 00:55:48,789
I believe they're very useful if they're based on merit.

572
00:55:48,949 --> 00:55:50,689
The thing I am against is aggression,

573
00:55:51,189 --> 00:55:53,669
like being of anarcho-capitalist roots.

574
00:55:54,389 --> 00:55:55,189
That is the thing.

575
00:55:55,289 --> 00:56:00,649
As soon as there's involuntary enforcement involved in the hierarchy,

576
00:56:00,649 --> 00:56:04,169
then it's not a hierarchy that I like.

577
00:56:04,589 --> 00:56:08,329
But of course, there's usefulness in centralizing certain things.

578
00:56:08,989 --> 00:56:15,309
In Bitcoin, in particular, I think decentralization is super misinterpreted

579
00:56:15,309 --> 00:56:18,729
because people think it has to do with everything else,

580
00:56:18,829 --> 00:56:20,949
but the important aspect of it being decentralized.

581
00:56:21,229 --> 00:56:27,189
So in Bitcoin, I view decentralization as an unfortunate means to a greater end.

582
00:56:27,189 --> 00:56:30,549
And that greater end being absolute sound money.

583
00:56:30,649 --> 00:56:40,949
So 21 million supply cap that is enforced through decentralization because we cannot trust a human being with a money printer.

584
00:56:41,129 --> 00:56:42,889
That's why we need the decentralization.

585
00:56:43,229 --> 00:56:51,109
It makes the system much slower and much more inefficient than it would have been if we hadn't needed that kind of decentralization.

586
00:56:51,709 --> 00:56:55,449
But most people frame the decentralization as the end in itself.

587
00:56:55,449 --> 00:57:14,049
And I say, no, we need decentralization here, unfortunately, so we can have sound money. And when we have sound money and money that the state cannot take, and it's very hard for a burglar to take if they don't know that it's there, then we can achieve decentralization in everything else. Then we reach the sovereign individual thesis and then people.

588
00:57:14,049 --> 00:57:25,229
So decentralization in Bitcoin is unfortunate, but it can, through sound money, lead to the fortunate version of decentralization in the rest of society.

589
00:57:25,229 --> 00:57:43,409
And also when you have this world where you don't have any state interventionism or taxes, if you think of that as the utopian vision of everyone being in charge of their own money, then a company is not a legal entity or whatnot.

590
00:57:43,929 --> 00:57:45,169
And you don't need accounting.

591
00:57:45,529 --> 00:57:47,949
It's just a group of people doing things.

592
00:57:48,369 --> 00:57:49,129
That's what it is.

593
00:57:49,189 --> 00:57:50,329
And you can divide the plunder.

594
00:57:50,329 --> 00:57:54,129
You can even program it to be divided fairly amongst.

595
00:57:54,129 --> 00:57:56,989
But it doesn't have to be anything but a signal group.

596
00:57:57,989 --> 00:58:01,849
And there are businesses in Bitcoin operating that way already.

597
00:58:02,629 --> 00:58:11,529
Like you often have one foot in the legacy world and one foot in the new world where you don't need all the other stuff because it's permissionless.

598
00:58:11,629 --> 00:58:12,789
You can just do things.

599
00:58:13,329 --> 00:58:14,649
So that's the beauty of it.

600
00:58:14,889 --> 00:58:14,989
Yeah.

601
00:58:15,349 --> 00:58:15,709
Thoughts?

602
00:58:15,809 --> 00:58:17,309
Now, that's very interesting.

603
00:58:17,629 --> 00:58:21,489
And I'm going to, with your permission, put forward a surprising idea.

604
00:58:21,489 --> 00:58:23,649
I think it'll be surprising to you and to your listeners.

605
00:58:24,129 --> 00:58:28,349
and see whether you can spot the similarity

606
00:58:28,349 --> 00:58:31,389
between the logical framework you've just described

607
00:58:31,389 --> 00:58:33,649
and what I'm going to,

608
00:58:33,929 --> 00:58:35,989
the assertion or the conjecture I'm going to make.

609
00:58:37,649 --> 00:58:39,389
The conjecture is quite simple,

610
00:58:40,229 --> 00:58:42,849
that the world would be better off without stock markets.

611
00:58:45,009 --> 00:58:45,569
Okay.

612
00:58:46,189 --> 00:58:48,849
And let me explain why I think this is the case.

613
00:58:49,089 --> 00:58:52,609
Fragmentation of ownership is not neutral.

614
00:58:54,129 --> 00:59:04,209
Can you accept that point? The moment ownership of a complex asset becomes too disseminated,

615
00:59:04,509 --> 00:59:12,529
too fragmented, nobody cares about the asset. Nobody is a custodian. It's not worth your time

616
00:59:12,529 --> 00:59:20,609
to guide that organization properly. And you may say, well, that's easy. I spot the trick here

617
00:59:20,609 --> 00:59:25,869
because Nick is a private equity investor and he likes to control businesses. He likes to have at

618
00:59:25,869 --> 00:59:33,169
least negative control. You know, 25 up to even 80% of a business is good for me. But what I observe

619
00:59:33,169 --> 00:59:40,749
in the real world time and time again is that the businesses that have concentrated ownership

620
00:59:40,749 --> 00:59:48,989
are much better stewards of society's resources than the businesses that have diverse ownership.

621
00:59:48,989 --> 00:59:55,269
and that is yet another insight that I get to put into practice in wealth creating fashion every

622
00:59:55,269 --> 01:00:01,389
year. You know, our favorite type of transaction is to do what? To buy a division from a listed

623
01:00:01,389 --> 01:00:07,389
company because it is like shooting fish in a barrel. You initially, all you have to do is stop

624
01:00:07,389 --> 01:00:11,969
doing the stupid stuff and then you're already making lots of money and then you start doing

625
01:00:11,969 --> 01:00:17,789
the smart stuff and you make even more money. And that stuff is very beneficial to everybody

626
01:00:17,789 --> 01:00:24,549
in the ecosystem. So, for example, over a period where we have doubled profit per employee,

627
01:00:25,069 --> 01:00:31,709
which is the period starting 2016, over that time, we have doubled real profit per employee

628
01:00:31,709 --> 01:00:41,189
across our portfolio. We've also grown employment by 150%. So, they're two and a half times as many

629
01:00:41,189 --> 01:00:46,349
people working for the businesses we look after, even though we've increased the profit per employee

630
01:00:46,349 --> 01:00:48,049
by a factor of two.

631
01:00:48,469 --> 01:00:51,429
I promise you we haven't been cutting salaries.

632
01:00:51,929 --> 01:00:53,149
I've never done that analysis,

633
01:00:53,349 --> 01:00:54,729
but it's quite a tricky one to do,

634
01:00:54,789 --> 01:00:55,889
and it's just not worth the effort

635
01:00:55,889 --> 01:00:57,429
because I know that the answer is,

636
01:00:57,909 --> 01:00:59,509
yeah, the salaries have been going up

637
01:00:59,509 --> 01:01:00,589
a little bit above inflation.

638
01:01:01,089 --> 01:01:03,109
Now, so what's going on there?

639
01:01:03,189 --> 01:01:04,209
Why is this the case?

640
01:01:04,369 --> 01:01:06,089
Why does fragmented ownership matter?

641
01:01:06,369 --> 01:01:07,509
Well, yeah.

642
01:01:07,589 --> 01:01:10,269
Can I attempt to dissect it?

643
01:01:10,269 --> 01:01:12,329
Because I find it endlessly fascinating.

644
01:01:13,169 --> 01:01:14,809
So, yes.

645
01:01:14,809 --> 01:01:21,949
First of all, the disclaimer here is like we have to talk about the stock market on an absolutely free market.

646
01:01:22,089 --> 01:01:29,689
We cannot talk about the current stock market where there's interventionism everywhere and artificial interest rates and so on and so forth.

647
01:01:29,969 --> 01:01:36,369
So let's rewind the clock to the East India company in Europe before central banks.

648
01:01:36,429 --> 01:01:37,689
Everything is on a gold standard.

649
01:01:37,689 --> 01:01:40,949
And this is sort of where the stock market starts, right?

650
01:01:40,949 --> 01:01:46,089
because all the ship owners realize that they're taking a huge risk

651
01:01:46,089 --> 01:01:50,389
if one of their ships sinks, they're out of business.

652
01:01:50,389 --> 01:01:56,269
So instead, they form a cabal and they share that risk among one another

653
01:01:56,269 --> 01:02:00,589
so that if one ship sinks, it hurts everyone equal.

654
01:02:01,089 --> 01:02:03,589
So why would that be a bad thing?

655
01:02:04,289 --> 01:02:09,389
Well, the answer to that would be that you are no longer incentivized

656
01:02:09,389 --> 01:02:17,489
to care about your specific ship as much as you were had you not collectivized the losses.

657
01:02:17,789 --> 01:02:23,749
So this is sort of like the start of centralizing profits and collectivizing losses, right?

658
01:02:24,029 --> 01:02:29,609
It's basically an insurance scam because you can even, you have the opposite incentive actually.

659
01:02:29,609 --> 01:02:36,849
you have an incentive to make your ship as cheap and to get away with your ship being

660
01:02:36,849 --> 01:02:45,249
not as secure or safe as the other ship owners ships because then they have to spend more money

661
01:02:45,249 --> 01:02:52,189
and you spend less so therefore because you know that you you won't be that hurt by one ship sinking

662
01:02:52,189 --> 01:02:53,429
even if it's your ship.

663
01:02:54,329 --> 01:02:55,289
In fact, there's...

664
01:02:55,289 --> 01:02:57,709
So yes, I do buy that thesis.

665
01:02:57,969 --> 01:02:58,809
I do buy that.

666
01:02:58,929 --> 01:03:00,289
It's a bit of like,

667
01:03:00,389 --> 01:03:02,649
there's some collectivist trap there

668
01:03:02,649 --> 01:03:04,509
in one way, shape or form.

669
01:03:04,569 --> 01:03:07,329
And it also reminds me of this Friedman-ish,

670
01:03:07,489 --> 01:03:10,129
how many fucks you give about your money.

671
01:03:10,169 --> 01:03:11,929
If you're spending your money on yourself,

672
01:03:12,489 --> 01:03:24,618
you worried about both quality and price Spend your money on someone else You more worried about price and quality spend other people other people money on yourself you prioritize quality over it and if

673
01:03:24,618 --> 01:03:28,458
you're the state you're spending other people's money on other people and then you don't give a

674
01:03:28,458 --> 01:03:33,858
shit about anything so like there's there's an aspect of that too so i think the more absolute

675
01:03:33,858 --> 01:03:38,638
the ownership which is also by the way why i don't buy this whole nft crap that you can own

676
01:03:38,638 --> 01:03:45,818
art and then send a portion of when you sell it goes to the artist and all of that that's all

677
01:03:45,818 --> 01:03:50,698
bullshit to me because if i buy something i don't want anyone else not even the artist to have a

678
01:03:50,698 --> 01:03:56,638
portion of it i want absolute ownership because that's where i take full responsibility for it

679
01:03:56,638 --> 01:04:02,658
and that's when it's actually mine and yeah i think this this ties in very well to the whole

680
01:04:02,658 --> 01:04:08,318
bitcoin narrative here if you view bitcoin as the only thing that you can actually 100 percent own

681
01:04:08,318 --> 01:04:15,578
which is not true for you know a villa that you have to pay property tax on for instance that

682
01:04:15,578 --> 01:04:20,278
you don't actually own that you own it by permission from the state and you you have to

683
01:04:20,278 --> 01:04:26,998
pay your captors every so so yeah i i do understand that i'd buy that the the world would be better

684
01:04:26,998 --> 01:04:31,918
without the stock market there there would have to be but then again the stock market wouldn't

685
01:04:31,918 --> 01:04:56,518
Yeah, yeah. Anyway, because I agree with your point about the benefits of sharing certain outcomes, which is really a point about diversification is good. But the benefits of diversification in most settings run out very quickly. So in my business, eight portfolio companies is more than enough diversification. And there are eight companies in a single geographic area.

686
01:04:56,518 --> 01:05:04,458
how much of my personal wealth do i place outside of that not much really because i look around the

687
01:05:04,458 --> 01:05:09,418
world and i say in no ways am i investing in shares at those prices or government bonds at

688
01:05:09,418 --> 01:05:16,658
those prices i'd like real property i'd like to own some trees somewhere um and uh you know that

689
01:05:16,658 --> 01:05:25,798
that kind of real asset is stuff i'll buy i don't i don't like to have my money for the long term in

690
01:05:25,798 --> 01:05:30,018
things that don't produce income, you know, commodities and things like that.

691
01:05:30,438 --> 01:05:35,558
From time to time, they're just safe havens compared to the overpriceness of everything else.

692
01:05:36,178 --> 01:05:39,698
But the benefits of diversification in most settings run out very quickly.

693
01:05:40,758 --> 01:05:46,178
And so, yes, I can see how for a very large corporation, it might be beneficial to have

694
01:05:46,178 --> 01:05:54,938
10 or 20 owners, but not 10,000, not 100,000. That doesn't help at all. And you would,

695
01:05:54,938 --> 01:06:08,398
I think I would say also you want the person who's the biggest owner to be overexposed in his personal capacity to that company because then you get the alignment of interest and the minority shareholders all benefit.

696
01:06:08,838 --> 01:06:15,278
So to me, it's not just the fragmentation of ownership that's harmful from a custodial point of view.

697
01:06:16,178 --> 01:06:17,378
You see how I use that word.

698
01:06:17,458 --> 01:06:19,758
I see myself as a custodian of assets.

699
01:06:19,758 --> 01:06:24,698
are not there to strip them or to squeeze them for cash

700
01:06:24,698 --> 01:06:25,898
or to make them more efficient.

701
01:06:26,058 --> 01:06:27,238
I never use this term efficient.

702
01:06:27,378 --> 01:06:30,318
Efficiency is a bloody stupid idea most of the time.

703
01:06:30,318 --> 01:06:34,718
But there's that aspect of the fragmentation of ownership.

704
01:06:35,118 --> 01:06:41,378
But there's also an aspect of things changing hands too fast.

705
01:06:42,898 --> 01:06:47,358
You know, that is just the only people who that suits are criminals,

706
01:06:47,358 --> 01:06:55,658
People who have found a way to pull off little shavings of your value each time the thing changes hands.

707
01:06:56,258 --> 01:07:00,638
But this is what's wrong with John Maynard Keynes' idea of velocity of money.

708
01:07:00,918 --> 01:07:02,158
This is the big scam.

709
01:07:02,398 --> 01:07:10,038
The theory is that every time a $100 bill changes hands, you produce $100 worth of value.

710
01:07:10,458 --> 01:07:12,698
But that's only true if there's no inflation.

711
01:07:12,698 --> 01:07:14,358
Because otherwise, that's not $100.

712
01:07:14,738 --> 01:07:16,198
It's $98 and then $96.

713
01:07:16,198 --> 01:07:17,898
and then like it shrinks.

714
01:07:18,458 --> 01:07:21,178
So, and there's also the wrong type of shit

715
01:07:21,178 --> 01:07:21,958
is being produced.

716
01:07:22,138 --> 01:07:23,278
It's over consumist,

717
01:07:23,458 --> 01:07:26,878
like throw away quantity over quality products.

718
01:07:27,358 --> 01:07:29,378
And if you have sound money, it's quality.

719
01:07:30,058 --> 01:07:30,098
Yeah.

720
01:07:30,198 --> 01:07:30,918
Before you know it,

721
01:07:30,938 --> 01:07:32,818
you've got somebody being paid to dig holes

722
01:07:32,818 --> 01:07:33,898
and fill them back up again.

723
01:07:34,638 --> 01:07:35,458
No, yeah, exactly.

724
01:07:35,658 --> 01:07:38,718
It's like a junkie being like getting the next hit,

725
01:07:38,798 --> 01:07:40,598
which might feel good in short term,

726
01:07:40,598 --> 01:07:43,418
but you'll have to pay the price later on.

727
01:07:43,418 --> 01:07:48,558
So it's a monetary junkie behavior, I'd say.

728
01:07:49,458 --> 01:07:49,598
Yeah.

729
01:07:50,158 --> 01:08:01,698
So to the extent that I believe there, because I am talking again in the world of a spectrum and an optimum on the spectrum, I'm not an extremist kind of guy.

730
01:08:01,838 --> 01:08:05,418
I just sound like a lunatic when I say things like we should shut down the stock market.

731
01:08:05,418 --> 01:08:12,938
To the extent that I believe we do need government at a local level, how would I like to experiment with levying taxation?

732
01:08:13,418 --> 01:08:15,438
I would like to do it by way of a transaction tax.

733
01:08:17,698 --> 01:08:20,338
So only VAT and nothing else?

734
01:08:21,298 --> 01:08:23,018
My dad liked that idea.

735
01:08:24,738 --> 01:08:27,018
Not even just on sales.

736
01:08:27,278 --> 01:08:32,698
So like what I'm saying is you have a very small tax that's based on transacting.

737
01:08:33,638 --> 01:08:36,698
And so if you sold a share, that tax would apply.

738
01:08:36,878 --> 01:08:39,318
And it wouldn't have to be a big one, just a tiny little one.

739
01:08:39,858 --> 01:08:41,578
Slow all the transactions down.

740
01:08:41,578 --> 01:08:47,558
I absolutely failed to see how that would result in economic contraction.

741
01:08:48,278 --> 01:08:51,178
You're so close to just describing Bitcoin.

742
01:08:51,758 --> 01:08:52,598
You know that, right?

743
01:08:52,718 --> 01:09:03,718
Because Bitcoin has a transaction fee and it's super small and it gives money to the people securing the network, which is the miners.

744
01:09:04,098 --> 01:09:06,638
The miners do not create the Bitcoins, by the way.

745
01:09:06,638 --> 01:09:13,158
they get employed by the users to, and they get paid in Bitcoins for the work they do, right?

746
01:09:13,218 --> 01:09:16,298
So the dynamic is different than what people think it is.

747
01:09:16,938 --> 01:09:20,038
No, yeah, it makes sense if you frame it like that.

748
01:09:20,518 --> 01:09:25,678
And I'd say there are so many parallels to what I already see in Bitcoin

749
01:09:25,678 --> 01:09:27,278
with all of these things that you're saying.

750
01:09:27,538 --> 01:09:31,298
For instance, the ownership, as soon as you divide ownership,

751
01:09:31,858 --> 01:09:36,498
it gets diluted what every single owner thinks about the thing he owns.

752
01:09:36,638 --> 01:09:40,198
Like the responsibility is reduced accordingly.

753
01:09:40,578 --> 01:09:44,358
So in Bitcoin, it's very hard to share custody.

754
01:09:44,498 --> 01:09:46,918
You can do it in multi-sig solutions and whatnot,

755
01:09:47,138 --> 01:09:50,918
pretty tricky technical solutions to it.

756
01:09:51,198 --> 01:09:54,698
But for the most part, if you know the private key,

757
01:09:54,838 --> 01:09:55,858
you own the assets.

758
01:09:55,858 --> 01:09:59,958
So there's no difference between knowing and owning

759
01:09:59,958 --> 01:10:01,778
or knowing and possessing.

760
01:10:02,478 --> 01:10:03,718
It's like a layer.

761
01:10:03,878 --> 01:10:06,278
If you have ownership on top, it's a legal...

762
01:10:06,638 --> 01:10:14,058
legal relationship between you and a thing. Possession is physical. You physically hold

763
01:10:14,058 --> 01:10:22,418
the thing. But in Bitcoin, it's yet one level deeper still because the knowledge is the ownership.

764
01:10:23,198 --> 01:10:28,978
So in that sense, it's the only thing you can actually own to that extent. And that's also

765
01:10:28,978 --> 01:10:33,578
another aspect of it I fell in love with. And it's so funny when you talk about these things

766
01:10:33,578 --> 01:10:36,578
and your insights about how companies should be run

767
01:10:36,578 --> 01:10:39,738
and decentralization and hierarchies and stuff,

768
01:10:39,818 --> 01:10:41,958
because I see so many parallels.

769
01:10:42,198 --> 01:10:44,138
So you're basically describing the system

770
01:10:44,138 --> 01:10:46,578
where we're trying to materialize here.

771
01:10:46,918 --> 01:10:49,938
I really enjoy this discussion for that reason.

772
01:10:51,078 --> 01:10:53,198
Like you, I'm seeing all these parallels

773
01:10:53,198 --> 01:10:54,278
and it's quite weird.

774
01:10:54,418 --> 01:10:56,578
Like I'm coming from a very conventional,

775
01:10:56,818 --> 01:11:10,887
unconventional private equity world but it an old economy kind of idea and you coming from the angle of the cryptocurrency or a blockchain and and their conclusions that we arrived specifically

776
01:11:10,887 --> 01:11:16,007
specifically bitcoin like that's also one of the insights that that's why i say that

777
01:11:16,007 --> 01:11:21,147
decentralization is an unfortunate means to a greater end and that and being this 21 million

778
01:11:21,147 --> 01:11:26,987
all the others are just cheap copycats of that and cannot work in the norm yeah i must tell you

779
01:11:26,987 --> 01:11:36,507
that when the Bitcoin phenomenon began to be a thing, I started thinking a lot harder about money

780
01:11:36,507 --> 01:11:41,887
and I started reading a lot more about money. And there was a time when I thought I understood

781
01:11:41,887 --> 01:11:47,207
money well enough to explain it to other people. But that time has long gone.

782
01:11:48,487 --> 01:11:55,407
The more I think about money, the more I realize that I'm an explanation or several explanations

783
01:11:55,407 --> 01:12:04,107
away from possessing what I would describe as an understanding adequate for the purposes of

784
01:12:04,107 --> 01:12:14,867
teaching somebody else. I find myself repeatedly stymied by some of the critical features of money

785
01:12:14,867 --> 01:12:21,967
as I see it, or let's not call them critical, let's call them key features of money. And so

786
01:12:21,967 --> 01:12:30,787
I retain a sense of great humility when it comes to discussions about Bitcoin,

787
01:12:31,587 --> 01:12:36,147
indeed other cryptocurrencies, about central bank digital currencies, about fiat currencies,

788
01:12:36,687 --> 01:12:45,047
about commodity-based currencies. I don't have a set of answers which I regard as

789
01:12:45,047 --> 01:12:51,067
a sort of framework I'd like to put forward. But at the same time, I have a sense that

790
01:12:51,967 --> 01:12:53,067
There is such a set.

791
01:12:54,467 --> 01:13:01,007
And Bitcoin, I would regard as a candidate explanation or, sorry, not candidate.

792
01:13:01,487 --> 01:13:09,747
Bitcoin is an explanation and destined to be replaced by a better one for intrinsic reasons to the nature of explanations.

793
01:13:11,287 --> 01:13:13,807
That's not a criticism of Bitcoin, by the way.

794
01:13:13,807 --> 01:13:21,427
that i'm as i say intellectually i don't feel i have

795
01:13:21,427 --> 01:13:31,407
had those flashes of insight required to to get me to the point of being able to

796
01:13:31,407 --> 01:13:36,127
look you in the eye and tell you i understand and this is what we should do and here's a suggestion

797
01:13:36,127 --> 01:13:42,827
and that kind of thing i'm just not there it's so sad i find that very honorable of you to to

798
01:13:42,827 --> 01:13:49,387
admit that to take the humble approach. I see that all too seldomly in the world today that

799
01:13:49,387 --> 01:13:53,847
people just say that I'm not knowledgeable about this. I shouldn't have an opinion on it. It's very

800
01:13:53,847 --> 01:14:01,407
rare. For me, just to wrap this part of the discussion up a bit here, for me, it sort of

801
01:14:01,407 --> 01:14:08,967
clicked when I stopped seeing store of value and medium of change as two different things.

802
01:14:08,967 --> 01:14:14,907
nowadays i see it as medium of exchange over time and space so it's four-dimensional medium

803
01:14:14,907 --> 01:14:20,567
of exchange over time when you trade with your future self and over space when you trade with

804
01:14:20,567 --> 01:14:27,887
other people for me that was it's just a like to tell you what what what made it simpler for me to

805
01:14:27,887 --> 01:14:32,827
explain it to other people i'm going to remember that sound right because a person who's thought

806
01:14:32,827 --> 01:14:38,907
deeply about things and gives that sort of subtly different uh framing that's often the key to spur

807
01:14:38,907 --> 01:14:44,907
creative thought in somebody else because you get locked in the tiredness of ideas otherwise.

808
01:14:45,667 --> 01:14:49,427
You know, and I have read some Bitcoin books, Safidian Amos.

809
01:14:50,647 --> 01:14:51,687
Safidian Amos, yeah.

810
01:14:52,707 --> 01:14:57,907
But that was actually one of the books which caused me to realize, I was about to say to

811
01:14:57,907 --> 01:15:04,387
understand money less, but that's terribly unfair. It caused me to realize that that book didn't

812
01:15:04,387 --> 01:15:09,387
contain what I needed to know, but it did shine a light on me needing to know something else.

813
01:15:09,687 --> 01:15:15,507
Yeah, it was a great book for me too, because it sent me down the whole Rothbard Mises rabbit hole

814
01:15:15,507 --> 01:15:20,087
as well. There's so many references to that. I've forgotten that he even referenced them.

815
01:15:20,347 --> 01:15:23,487
You know, that's funny. Because they were so familiar to me already.

816
01:15:25,107 --> 01:15:32,987
Yeah. Yeah. No, it's a really interesting space. And I think, you know, people ask,

817
01:15:32,987 --> 01:15:34,187
what would you most like to know?

818
01:15:34,347 --> 01:15:35,047
You know, what did you like?

819
01:15:35,127 --> 01:15:36,867
Where would you like your knowledge to be filled in?

820
01:15:37,547 --> 01:15:39,187
And they would expect me to say,

821
01:15:39,267 --> 01:15:41,427
oh, I'd like to know who rules the world, you know?

822
01:15:42,267 --> 01:15:44,687
I think more than that, I would like to understand money.

823
01:15:46,127 --> 01:15:50,347
Yeah, and that is, it is a deep, deep topic

824
01:15:50,347 --> 01:15:54,267
because the word has changed meaning so many times.

825
01:15:54,787 --> 01:15:56,287
I mean, when we think of money today,

826
01:15:56,307 --> 01:15:59,347
we think of fiat currency, which is not money,

827
01:15:59,947 --> 01:16:01,887
but we refer to it as money.

828
01:16:01,887 --> 01:16:05,687
but it's very far from anything just or fair

829
01:16:05,687 --> 01:16:08,387
since they can print more of it

830
01:16:08,387 --> 01:16:10,527
and conjure it out of thin air.

831
01:16:11,087 --> 01:16:13,067
Okay, here's a little mind game

832
01:16:13,067 --> 01:16:16,227
that I play when I do try and think about money,

833
01:16:16,307 --> 01:16:16,967
which I do often.

834
01:16:17,087 --> 01:16:18,487
I often try to think about money.

835
01:16:19,007 --> 01:16:21,167
But a mind game that I play,

836
01:16:21,327 --> 01:16:23,507
it's interesting that we use the term fiat

837
01:16:23,507 --> 01:16:25,887
only when the fiat,

838
01:16:26,327 --> 01:16:28,967
you know, Latin word for doing or making,

839
01:16:28,967 --> 01:16:32,287
is only when the fiat is...

840
01:16:32,287 --> 01:16:32,607
Sorry?

841
01:16:33,567 --> 01:16:36,447
By decree, I believe, is the one translation.

842
01:16:36,447 --> 01:16:36,607
Yes, let it be.

843
01:16:37,607 --> 01:16:40,287
It's, I think, a subjunctive.

844
01:16:41,347 --> 01:16:42,967
Latin is now a little bit stale,

845
01:16:43,087 --> 01:16:44,787
but it's sort of let it be.

846
01:16:45,287 --> 01:16:47,547
It's only when the state is decreeing

847
01:16:47,547 --> 01:16:49,967
that we call it fiat money,

848
01:16:49,967 --> 01:16:51,667
but in all other instances,

849
01:16:51,867 --> 01:16:55,707
individuals are decreeing when they use money.

850
01:16:56,707 --> 01:16:58,887
So there's always a fiat aspect

851
01:16:58,887 --> 01:17:07,707
to money in the literal sense of the word, in the sense that one of the important components

852
01:17:07,707 --> 01:17:10,907
of any monetary system is that it be recognized.

853
01:17:11,687 --> 01:17:13,327
Yeah, absolutely.

854
01:17:13,427 --> 01:17:18,567
Whether it's recognized by government or recognized by individuals, somebody has to do the recognizing.

855
01:17:19,587 --> 01:17:23,367
So the question is, what is it that we recognize?

856
01:17:23,367 --> 01:17:36,707
Yeah. And I think that the recognize that's the six properties of money are fungibility, scarcity, divisibility.

857
01:17:37,027 --> 01:17:38,387
I'm a bit too long into the conversation.

858
01:17:38,387 --> 01:17:38,947
Can't be fake.

859
01:17:39,767 --> 01:17:45,667
Yeah. All sorts of, there are these six aspects anyway.

860
01:17:45,667 --> 01:17:46,187
Yeah.

861
01:17:46,307 --> 01:17:50,567
Yeah. And the sixth one is acceptability.

862
01:17:50,567 --> 01:17:54,527
and I think acceptability is really a product of all the others.

863
01:17:55,007 --> 01:17:58,567
So you have to have the others first before you can't just say that,

864
01:17:58,947 --> 01:18:02,267
well, you can point guns at people and say you have to pay your taxes

865
01:18:02,267 --> 01:18:07,267
in nation excess currency and that's one way of getting acceptability.

866
01:18:07,987 --> 01:18:11,947
But natural acceptability, like what's the case with gold, for instance,

867
01:18:11,947 --> 01:18:16,167
the free market figured out that gold had very suitable properties

868
01:18:16,167 --> 01:18:18,367
for being money all by itself.

869
01:18:18,367 --> 01:18:26,007
So, yeah, and so I wouldn't say that gold is by decree, since it's an asset found in the Earth's crust.

870
01:18:26,127 --> 01:18:38,847
And I wouldn't categorize Bitcoin as that either, since I would categorize that there are ways of seeing Bitcoin as like an informational element on the periodic table without protons or neutrons.

871
01:18:38,847 --> 01:18:43,267
It's just basically electrons, but it still acts as if it was an element.

872
01:18:43,267 --> 01:19:01,676
so yeah maybe a bit far but anyway no no it interesting with seven minutes to go I mean just the one observation I would make is that it exactly in that listing of the elements of money that I find conversations get very interesting very fast because people have different lists

873
01:19:01,676 --> 01:19:10,256
Many critics of Bitcoin would say, oh, but you guys always drop out the stability of monetary value.

874
01:19:10,716 --> 01:19:14,556
To which a Bitcoiner will say, well, how can you use the term monetary in that sentence?

875
01:19:14,896 --> 01:19:18,816
Because the Bitcoin is worth one Bitcoin.

876
01:19:19,356 --> 01:19:20,376
What are we talking about?

877
01:19:21,176 --> 01:19:29,336
But criticism is that yesterday I was able to pay for two children's school fees and today I can only pay for one.

878
01:19:29,336 --> 01:19:31,176
You know, that's not a stable value.

879
01:19:31,676 --> 01:19:40,676
the criticism we would give there is that the whole notion of stability is a lie like that's

880
01:19:40,676 --> 01:19:45,616
how they fool us into paying more and more for everything every year while we it seems like we're

881
01:19:45,616 --> 01:19:51,296
paying the same but the productivity of the human race is going up and still prices aren't falling

882
01:19:51,296 --> 01:19:57,096
so like the the the nature of the free market is deflation like the that's the natural state

883
01:19:57,096 --> 01:20:00,616
And if you think about it from first principles, it's super simple.

884
01:20:00,896 --> 01:20:06,776
Like if a human being practices doing something, do they get better or worse at doing the thing they're practicing?

885
01:20:07,396 --> 01:20:09,576
Like, of course, we get better at stuff.

886
01:20:10,056 --> 01:20:14,256
So the follow up question to that should be, so why aren't all prices falling forever?

887
01:20:14,756 --> 01:20:20,936
And if you denominate in Bitcoin and zoom out long enough, you can see that they actually are falling.

888
01:20:21,116 --> 01:20:26,196
Like my house is worth way fewer Bitcoin this year than 10 years ago.

889
01:20:26,196 --> 01:20:29,016
But you have to have a very zoomed out lens.

890
01:20:30,356 --> 01:20:42,576
For a while in my younger days, I'm talking in my sort of 20s to early 30s, I would be a guest lecturer in economics, in various segments of economics.

891
01:20:42,576 --> 01:20:51,036
and I used to start probably something close to all my lectures reminding people that everything

892
01:20:51,036 --> 01:20:56,916
that is worth saying about an economy starts with a simple picture of a factory and a household

893
01:20:56,916 --> 01:21:02,476
and that everything else that goes on in between is what we call intermediation

894
01:21:02,476 --> 01:21:13,696
and what we're interested in is how the household and the factory are able to interact and what

895
01:21:13,696 --> 01:21:19,016
they are competent and able to do. So all the stock markets and all the bits of paper and all

896
01:21:19,016 --> 01:21:24,516
the contracts are configurations of the institutional structure relating the household

897
01:21:24,516 --> 01:21:30,436
to the factory. And I found that the reason I always used to do that is the discipline of

898
01:21:30,436 --> 01:21:37,696
starting there had always been so useful to me in order to determine what was bullshit and what was

899
01:21:37,696 --> 01:21:42,776
not, that I wanted to impress it. And years later, I still get people coming to me saying,

900
01:21:42,916 --> 01:21:46,296
you know, I remember that time you put on the whiteboard that simple drawing and then spoke

901
01:21:46,296 --> 01:21:53,176
about it for 45 minutes. People don't forget that. And I'm not talking about people who became

902
01:21:53,176 --> 01:21:57,496
professional economists. I'm talking about people who were like maybe 10 years younger than me

903
01:21:57,496 --> 01:22:01,116
studying economics and going out into the South African business world, you know, and then you run

904
01:22:01,116 --> 01:22:06,036
into them and they remember who you are or whatever. Now they've seen you on a podcast or something.

905
01:22:06,156 --> 01:22:12,356
And I was taught by that guy, you know. But it's very, very often in that I get that feedback.

906
01:22:12,716 --> 01:22:24,476
And so for me, what I've noted is in some Bitcoin enthusiasts, first of all, a propensity to say

907
01:22:24,476 --> 01:22:31,196
totally absurd economic things and a failure to link back to the real economy often enough

908
01:22:31,196 --> 01:22:37,016
in their thinking. I'm not accusing you of that. I found our conversation very orderly and interesting.

909
01:22:38,016 --> 01:22:41,916
But it is a problem and a phenomenon. I've kind of been invited to Bitcoin

910
01:22:41,916 --> 01:22:47,956
conferences and I say, there are too many of those crazy guys. I've gone to one or two of them.

911
01:22:47,956 --> 01:22:48,376
I know.

912
01:22:48,596 --> 01:22:51,896
It's very hard. You've got to weed through all these absolute hooligans who say

913
01:22:51,896 --> 01:22:57,956
like the most foolish things yeah i just don't my life's too short for that so i don't go i try to

914
01:22:57,956 --> 01:23:02,716
find individuals and have lunch with them and and and ask them a bunch of questions like i want to

915
01:23:02,716 --> 01:23:07,916
come and have lunch with you in spain and and then if you're asking the questions i ask the questions

916
01:23:07,916 --> 01:23:14,296
because uh you know i i have this yearning to to have a more developed sense of money

917
01:23:14,296 --> 01:23:21,896
fantastic i mean yeah and if you if you widen that to the broader crypto space you get

918
01:23:21,896 --> 01:23:28,636
even more economic illiteracy i say but but it's very prevalent within within the bitcoin community

919
01:23:28,636 --> 01:23:34,996
as well i see bad takes every single day and and it's a horrible takes to be honest yeah there's

920
01:23:34,996 --> 01:23:39,716
there's a there's a fundamental one that you might enjoy that i realized the other day uh you know

921
01:23:39,716 --> 01:23:41,696
central bankers

922
01:23:41,696 --> 01:23:43,056
banned you about this term

923
01:23:43,056 --> 01:23:44,296
programmable

924
01:23:44,296 --> 01:23:46,796
central bank digital currency

925
01:23:46,796 --> 01:23:47,816
yeah

926
01:23:47,816 --> 01:23:51,356
straight away

927
01:23:51,356 --> 01:23:53,556
that thing is not money

928
01:23:53,556 --> 01:23:55,116
because

929
01:23:55,116 --> 01:23:56,796
the moment you make

930
01:23:56,796 --> 01:23:59,376
a unit programmable

931
01:23:59,376 --> 01:24:01,216
it becomes non-fungible

932
01:24:01,216 --> 01:24:03,416
exactly

933
01:24:03,416 --> 01:24:05,356
and it's programmable people

934
01:24:05,356 --> 01:24:07,056
that's what it is, that's the end goal

935
01:24:07,056 --> 01:24:09,316
and that's what they're trying to do, they're trying to program

936
01:24:09,316 --> 01:24:16,576
us. Like, why else would you want money to be programmable? Like, I don't buy that at all.

937
01:24:17,356 --> 01:24:20,736
And like, that's what we're reacting against.

938
01:24:21,476 --> 01:24:25,876
Trying to program business as well, operating through the Basel framework. If I see signs of

939
01:24:25,876 --> 01:24:29,516
it emerging in the South African banking world right now, and I'm pointing it out to the bank,

940
01:24:29,516 --> 01:24:34,656
because I'm saying, you're only doing this because of Basel 3.5. Think about how crazy that is.

941
01:24:34,656 --> 01:24:41,736
we must resist that with everything we got because that's uh that's the social credit score

942
01:24:41,736 --> 01:24:48,196
score on on steroids it will it will nibble away at your freedoms until you have a constant

943
01:24:48,196 --> 01:24:54,756
booth constantly stomping on your head that's what that is 100 you know this whole story the

944
01:24:54,756 --> 01:25:00,376
whole focus on digital id and and individual social credit i believe is a big distraction advice

945
01:25:00,376 --> 01:25:02,736
the time bomb

946
01:25:02,736 --> 01:25:04,776
the major threat is

947
01:25:04,776 --> 01:25:08,456
the Bank for International Settlements

948
01:25:08,456 --> 01:25:09,956
and the Basel framework

949
01:25:09,956 --> 01:25:12,396
we are running out of time unfortunately

950
01:25:12,396 --> 01:25:15,236
well thank you very much for your time so far

951
01:25:15,236 --> 01:25:16,556
been great conversations

952
01:25:16,556 --> 01:25:19,836
likewise great to get to know you Nick

953
01:25:19,836 --> 01:25:22,036
and before we leave

954
01:25:22,036 --> 01:25:23,976
where can people find you

955
01:25:23,976 --> 01:25:26,056
is there anywhere on the internet you want to send them

956
01:25:26,056 --> 01:25:28,996
of course pandata.org

957
01:25:28,996 --> 01:25:35,076
but other than that where can they find me a good place to find me is on twitter nick or on sub stack

958
01:25:35,076 --> 01:25:41,056
the handle is the same it's at nick hudson as spelt on the screen at nick hudson ct for cape

959
01:25:41,056 --> 01:25:46,896
town and depending on uh what i'm talking about at any particular time i may or may not be search

960
01:25:46,896 --> 01:25:51,296
banned so you might have to be very precise in typing that out otherwise you will find those

961
01:25:51,296 --> 01:25:55,516
horrible replica accounts you know the what do you call them the counterfeit accounts that

962
01:25:55,516 --> 01:26:02,576
have my picture and my background and talk some shit about whatever the time the day is so you

963
01:26:02,576 --> 01:26:07,996
got to be very careful there are no underscores there are no spaces it's at nickhudsonct and the

964
01:26:07,996 --> 01:26:14,036
same on substack where i write infrequently and and and repost occasionally so you don't get

965
01:26:14,036 --> 01:26:20,176
bombarded by nonsense um and i with anybody who i follow back there the gms are open and that's a

966
01:26:20,176 --> 01:26:28,416
good place to contact me as well. Fantastic. So with that, thank you very much for coming, Nick.

967
01:26:28,636 --> 01:26:34,616
And this has been the Bitcoin Infinity Show. Thanks for listening. Brush your teeth. Bye-bye.