https://youtubetranscript.com/?v=fypugmAXvBA
Okay, so let me ask you guys a question about what happened in 2008. I may be completely wrong about this, but my understanding was that the 2008 crisis was fundamentally produced by a technological revolution. The technological revolution was something like the realization that you could take investments of a certain risk level, let’s say substandard mortgages, and by bundling them together in huge tranches and huge groups, you could quantify the risk. As a consequence of quantifying the risk, you could discount, you could make the group of investments more valuable than they would be as the sum of the individual investments, which I thought was a brilliant innovation. Now the companies, banks traded these huge tranches of subprime mortgages because they could quantify the risk, and that means that that could be accounted for financially. And so the risk was ameliorated, and the flaw was, well, no one realized that doing so en masse would increase the probability that housing prices would become correlated across time, across huge geographical regions, for example, across the entire United States. And so the housing market could collapse all at once. But so you could make the case that that was actually a flaw in the free market computing prowess because a technological innovation came along, warped the entire system, and then what had to happen was the political system had to rescue it. And so I watched that and I thought, well, was the political system embedded in the economic system, which is, I think, the argument you guys are fundamentally making, or is the economic system embedded in the political system, is what’s wrong with my analysis of what happened in 2008? Wasn’t it the case that the market was rescued by the political actors? Is that incorrect? The arson is putting out the fire. Sorry, go ahead. No, I could start and you guys feel free to jump in. So I would first encourage you to look into what’s called the Euro dollar system, which is essentially these, we control the pyramid scheme in the US, the domestic dollar supply, but there’s this offshore derivative system where everyone’s trying to peg the dollars that the central bank doesn’t control. That’s actually been considered to be at the root of the 2008 crisis. And then this was kind of a cover story. But if we just get back to error, so we could say risk is error, right? So there was this embedded risk that we thought we had calculated and contained. But what was actually happening is because we have centrally planned money, it’s pushing hidden risk into the economy, because the free market distributed intelligence, intelligence being defined as error correction, it’s mitigated by the central planning of money. So these hidden risks accumulate. And that’s why we’ve had increased volatility since 1971. We have these huge economic booms. We print a bunch of money, inflation runs hot, but so do assets. Everyone thinks they’re doing really well. And then we have these catastrophic retracement back to economic reality. And actually- Because incremental reaction to risk is not being implemented. That’s what you’d expect, right? We’re diverging perceptions from reality, effectively. So even the correction in March 2020, that was the sharpest liquidity collapse in the history of markets. It was faster than 1929. So we would expect as more fiat currency, which is artificial liquidity, is pumped into the system, it’s further distorting this economic perceptual faculty and creates even more volatile boom and bust. This is the Austrian business cycle theory in a nutshell. And the only way to resolve this is to let the free market clear errors. That’s what it does. That’s what consciousness does too, by the way. So you can think of the free market as our interconnected consciousnesses mediated by the price signal. When you disturb the price signal, our consciousnesses become divided and we have increased errors and blowups. Well, that’s why I suggest to people that they don’t engage in deception because they distort the value signals and they warp their own consciousness. It’s a very dangerous thing to do. That’s right. Because you only use deception to- That’s exactly what money does. That’s exactly what fiat money does. Fiat currency is a living lie. That’s it in a nutshell. And maybe to bring this home, the question you asked could also be rephrased to pick a more like an example that people might be familiar with. You could also ask like, was the drug addict or the person suffering from alcoholism saved by alcohol because he suffered withdrawal? And that’s a very similar question. And then you could argue, yes, we gave him the substance and he survived. So it was a good thing and he made it through. But what would actually be necessary is that’s not the cure. You would need to quit cold turkey. And that’s what Bitcoiners are arguing, or just in general, people advocating for sound money are arguing that we need to get off the fiat standard that can be arbitrarily manipulated and manipulates the price signals, manipulates the whole economy. Okay. So that’s a fundamental tenet of Austrian economics is essentially that central planning in relationship to the monetary supply that isn’t informed by incremental free market decisions produces error that accumulates and produces cyclical booms and busts. That’s very interesting because there is a psychological analog to that. That psychological analog to that is failure to react to error when they’re committed incrementally to store the errors up, which compound across time and to collapse. And the oldest myths, some of which I talk about maps of meaning talk about, for example, the reemergence of Tiamat in the Mesopotamian myth, which is the consequence of corruption accumulates and produces catastrophe. It’s the flood myth idea, essentially. So the business cycle theory in Austrian economics is a recast of the flood myth and the tower of Babel. Is that right? Because those are the two parallels, the two mythological parallels. Tower of Babel is administrative overload, essentially, and the corruption of systems and the flood is, you know, the catastrophe, the downside of the natural catastrophe, I would say. So I think you hit on one of the main points of this discussion generally, is that truth is represented across scales. Maybe that’s a part of the definition of truth, is that you can see it across scales. It’s represented in different forms. It’s certainly part of the definition of deep truth. Right. And so when we look at maps of meaning, you know, I think this is part of the reason why we’re so interested in talking about it, is because we take those truths that are seemingly entirely unrelated to markets and money. You know, it’s all about mediating the forces of nature, the structure of reality in conjunction with the social relationships that constitute life and trying to figure out what behavior is the most optimal balance between the two. And I think we could carry that over to money and markets. And it’s funny because, you know, maps of meaning could have been called maps of value. And obviously money is a map of value. But I hadn’t drawn the analogy between a map of value and money. Although in retrospect, that seems like an obvious thing to do, which is why I got interested in your idea about incorruptible money. And so you think of incorruptible money as computationally advantageous, essentially. That’s the basis of the idea. Yeah. And I think, again, to pursue this, I think Bitcoin is the regenerative hero in different form. It takes the forces of nature. It digs into chaos, into pure entropy, into pure energy, and let’s say mathematics, and spits out the greatest form of order that we as human beings use in the social realm, which is money. And it does so in the archetypal way, in the maximal possible way of doing so. And it does so in an incorruptible manner. And so if you take a lot, you know, if you take those things, you could easily, you know, that could easily have been talking about the regenerative hero as described in maps of meaning. And I think it’s represented in Bitcoin. It’s instantiated in Bitcoin. And that’s why it’s having such a revelatory effect on me. It provides a really weird bridge between the objective world and the world of value too, doesn’t it? Because all the computation occurs in objective, like that’s objectively real. And that objectively real incorruptible computation produces an unerring signal of value, or that’s the theory at least. Okay, so let’s talk practically for a bit. So then we’ll return to the central discussion. I mean, Elon Musk has recently objected to Bitcoin on the basis of, and maybe this is, is this a flaw? Bitcoin becomes more and more expensive to produce as we proceed through time. And the consequence of that is that we do in fact use up more energy, or at least that’s in one form, which is computational energy. Maybe we gain that back and, you know, efficiencies within the market itself, you could argue that.