The Natural Order of Money ｜ Roy Sebag ｜ EP 330 (BHu5h26c4nc)

https://youtubetranscript.com/?v=BHu5h26c4nc

If you believe in God, then you believe that the world was created. And if the world is created, then, you know, ipso facto, the natural order itself is imbued with the order in the natural order, the regularity and the vagaries, they’re imbued with a sense of morality. The material world is a lot more spiritual than we might conceive. Well, one of the ways you could think about that, practically, because it sounds like a strange abstraction, is that if you and I decide that we’re going to do a joint venture in relationship to mining, and we don’t treat each other fairly and honestly, the probability that our mining endeavour is going to be successful is pretty much zero. Because we’re going to run into so many entanglements over time that it’s going to make the practical operations impossible. And so you might say that in order to come to some concordant grip with the vagaries of the natural world, there’s an ethic you have to manifest. And that seems to be part and parcel of your sense, too, that to operate morally also means to align yourself with the proper rhythms of nature and to pay attention to the proper ratios of scarcity. And there are principles of the natural world that you have to abide by in order to play a productive game. Hello, everyone, watching on the YouTube platform and associated podcasts. I’m here today with Roy Sabag, who I met about a year and a half ago, continuing my investigation into the field of economics, I suppose, in monetary policy, monetary conceptualisation as well, something I’m woefully undereducated in relationship to. Roy’s had a remarkable career as an entrepreneur, businessman, and as a thinker. He’s recently published a book, The Natural Order of Money, which is what we’re going to talk about today, trying to puzzle through just exactly what constitutes money and how it might be productively contemplated psychologically, biologically to some degree, at least in terms of its potential biological implications, economically, sociologically, philosophically, theologically. We’re going to try to cover all the bases as Roy’s book does. And so I thought we’d begin this conversation by having Roy talk about his background so that all of you who are listening have some reason to understand why he’s doing what he’s doing and perhaps why his ideas might be regarded as compelling and credible. Yeah. So, Roy, we met a year and a half ago. You started to talk to me about the thought that you’ve put into the idea of money for really for, what, decades, really. And then you handed me this manuscript, which was an early version of the book. And we’ve been talking about it to some degree ever since, our variants of it. And so let’s walk through the history of the development of your businesses so people can get an idea of the range of activities that you engaged in. So what did you start with on the entrepreneurial front? The first thing I started with an entrepreneurial front was actually buying and selling physical mines. So iron ore. And you did that at how old? Probably 25. Yeah, 25, 26. So that gave you a taste for real world engagement because there’s something very concrete about mines. And from what you’ve told me, you went and visited a number of mines. And so how did you get involved in investing in something as complex as the mining industry at such a young age? And why did you pick mining? It’s actually a good question. So when I started in finance, I was what you might call a value investor in the Graham and Dodd method, which is the method espoused by Warren Buffett and a lot of the famous investors. So the idea was that you were looking at a share of stock as a piece of a actual business. And your task as a security analyst was to essentially value the business, come up with an estimation of value known as intrinsic value. And then you would seek to capitalize when the price in the market was at a discrepancy or a delta from that estimation of intrinsic value. So you had to learn to investigate something like intrinsic value conceptually right from the beginning. Right from the beginning. That started you thinking about what intrinsic value might actually constitute in some deep sense, I would presume. Absolutely. But in this case, the method is simply an abstract one. I mean, you’re looking at financial statements. So you’re analyzing filings that companies that are publicly traded have to make, such as 10K filings, 10Q filings, or annual reports in other countries. And then you’re learning to study basically three statements, the balance sheet, the income statement and the cash flow statement. And you’re building models either in your mind or in actual spreadsheets. And you’re looking to see if you can make an estimation of intrinsic value. Now, normally what you’re doing is you’re taking the sum total of potential cash flows that the business might earn and then you’re discounting it back to the present at an appropriate discount rate. Now, this becomes very important. So you’re actually, what you’re really doing is you’re valuing time. But I don’t want to get into that just because it’s a bit of a complex issue. But the other aspect of this theory or method of investing is Benjamin Graham, the founder, he had this view that the stock market had evolved into a kind of dual nature beast. On the one hand, there were speculators that were just trying to buy something and sell it for the sake of, you know, like a hot potato. But the actual owners… And for a quick profit. For a quick profit, right? They were like the merchant in the bazaar that was just turning over their inventory. But on the other hand, there were the business owners, the large shareholders, the proprietors. And to them, the machinations in the market, the daily movements were meaningless. So the way they looked at a business was actually what was the profitability of the business? What would the potential dividends be? What would the sum of parts of the business be in a liquidation? And what he noticed was he called it Mr. Market. You know, Mr. Market shows up every single day and tells you that your share of stock is worth this or that. And he’s kind of a schizophrenic. You know, one day he says your shares are dear and the other day, you know, they’re not. And your job as a security analyst is to disregard those daily machinations. The only thing that’s important for you are the actual business results. Right. So you’re trying in some sense as a value investor to put yourself in the seat of a legitimate business owner and to see what the productive potential of the business is over time. That’s right. Right. Right. And so in some sense, you have to get down to whatever the fundamentals are. And it’s not so obvious what the fundamentals of a business might be. That’s right. So you have to familiarize yourself with a few things. But on the surface, the idea behind the method is that you would take the financial information that’s available to everyone. You would come up with an estimation of intrinsic value. You would use, you know, your discounting mechanism, whatever it is. And then you would go out into the market and look for these situations where there was a large discrepancy. Right. So you’re looking for a good purchase. Yeah. You’re looking to buy a dollar for 15 cents or for 50 cents. Now, here’s the problem. As Benjamin Graham famously said, in the short run, the market is a voting machine. But in the long run, it’s a weighing machine. That long run, we never truly know how and why it happens. But mysteriously, eventually, in time, companies will trade at their intrinsic value. And what often happens is they’ll overshoot their intrinsic value or they’ll undershoot their intrinsic value. Now, this idea… Because the short term is trying to estimate that within parameters of error that are indeterminate. That’s right. So as you stretch the arrow of time, you find that the kind of volatility that you see in the short run somewhat disappears. But there’s a problem here because there’s nothing guaranteeing that the share of stock, which is basically a security, it’s a claim, especially for a minority owner with no rights to just take control of the business, shut it down and cash out the intrinsic value. There’s not necessarily a forcing mechanism that would cause a share to appreciate its intrinsic value. And oftentimes, or as would be believed in modern economic theory, the market is so efficient that if investors decide that a share of stock should trade below intrinsic value, there’s a reason for it. The market’s sensing something in the future, whether it’s… There are hypotheses in some sense, correct me if I’m wrong, that value investing of that sort is in some way impossible to do consistently. That would be the efficient market hypothesis, right? That all actionable information is in some sense already priced into the stock. And then the hypothesis would be that even people who routinely outperform the market are doing that not because of any of their intrinsic wisdom, but because they’re statistical outliers. They’ve got lucky in some statistical sense and sometimes even consistently. Or the corollary that they’ll tout is that those people are just providing liquidity at certain moments. That’s kind of the newer way of arguing it. But that position is just plain wrong. I mean, I wouldn’t be where I am today if it were true. Well, the problem I have with that position is that if that’s true, it sort of invalidates the idea that intelligence is useful because the world is about as unpredictable as the stock market. And yet we seem to be able to use our intelligence to negotiate through it. And so I have some, what would you say, sympathy for the proposition that an intelligent analyst might be able to get an edge on the perturbations of the market. Anyways, you did do that. And you were quite successful. And what do you think made you successful? And you’ve continued to be successful financially and in other ways. But what do you think it was that you brought to the problem, especially at such an early age that enabled you to be successful? And what did you learn by actually going to the mines and so forth? Well, we’re not at the mines yet. So this would be me just basically picking stocks in a vanilla way, both long and short, but employing this method, which I definitely internalized at a very young age. I would meet Warren Buffett and write him letters and have lunch with him and things like that. There was nothing wrong with the method. In fact, I think the method is the only way to outperform the market over time. And that’s why all the great investors are generally value investors. For the last 15 years or so, 10 years or so, value investing has gone out of vogue. But all of those investors are now making a comeback, many of which have produced really positive results in the last year in 2022. So if you’re going to try and generate alpha, as it’s called in hedge fund parlance, you need to be a value investor, in my opinion. And alpha is the differential between the actual price and the assumed intrinsic value. Outperformance over the index. Oh, it’s OSOR. I had that wrong. It’s overperformance over the index, which is the average performance of the market. That’s right. So you need to prove that you’re able to generate a return that a monkey throwing darts can’t generate. Because there’s the famous experiment where they had a monkey throwing darts at various stocks and he basically produced the same. Right. And the idea is that you can’t beat random sampling in some sense. Fooled by randomness. So no, there’s nothing wrong with value investing. But for me, I think it reached a point where it was no longer satisfying intellectually to just sit there and constantly analyze businesses. Abstractly. Abstractly. Although I did enjoy learning about different industries. And that’s another very important thing. Value investors need to be versatile enough to learn about the economy itself. And one of the issues I had with the method intellectually, or the school of value investing some of the mentors that I had, was they genuinely believed that they didn’t need to care about the economy at all. Their job was just to look at individual stocks and construct a portfolio of individual stocks. So they had detailed focal knowledge. And there used to be these outages in the community all the time. I remember even as a young kid that nobody can understand macroeconomics. That stuff is just a fool’s errand. But importantly, you can’t actually value a commodity. Because a commodity has no balance sheet. And they were kind of starting to… How do you distinguish a commodity from a stock or another financial asset? Well commodity is something that’s physical. So its possessor is using it as an input. So if you buy wheat, you might buy it electronically, but then you take delivery of it and you use it to make flour, to produce bread. So we think of those as raw materials. They’re natural resources. That’s right. You’re not buying it to sell it onwards. You’re buying it to consume it. So it’s an input into another process that generates value from those initial raw materials. That’s right. In fact, it’s the fundamental input as I’m sure we’ll get into. A stock is basically a contract, a note, a piece of paper that says that you’re entitled to a share of a corporation. And corporations themselves are these interesting entities which are relatively new in the history of humanity, joint stock companies. The idea before that was that you would normally create a partnership pool capital. Then when you died, your other partners would have to buy you out. But with stocks, you’ve created these entities that essentially live on forever with just the shares changing hands. Right, a more abstract form of ownership. But what that… It allows it to be more distributed. It allows risk to be more distributed. That’s right. Zoom allows people to diversify more easily. That’s right. But what that achieves is a kind of illusion where once a stock is traded on a public account, and it has shares slushing around every single day, investors begin to impart a sense of timelessness or entropy resistance to a share of stock. Like it’s a thing. Yeah, you can’t conceive that Apple will not be around in 100 years. Right. Well, and that ties into our psychology very interestingly because if you plot a stock and you see it going up, if you see a physical entity going up, it’s still moving at a pretty decent rate, you assume it’s going to continue to go up. It’s very difficult to shake that when you’re looking at a stock chart because you have this built in embodied proclivity to assume things like inertia. It’s going down very rapidly and things going down rapidly tend to go down rapidly to continue that. And there’s no reason really to assume that that’s the case at all with a stock because, well, if you could, then you could predict the stock and then of course you could make a lot of money. Yeah. And that’s actually an even greater problem, which is a historical fact that if you stretch time none of these stocks ever survive. So when Charles… Right, they hit zero at some point. Well, they actually disappear. They go bankrupt or they get reorganized. So when Charles Dow, who worked at the Wall Street Journal, or sorry, at the Dow Jones Company in the 19th century, formulated the initial Dow index of 30 companies, it’s the same Dow index you have today. Right. However, there is not one constituent. I think US Steel, US Steel is no longer in the Dow. Yeah, there’s not one constituent in the Dow today from 130 years ago. Right. So you’re trying to measure something that’s, you’re trying to measure something whose constituent elements are transforming constantly. That’s right. But the double illusion there is that the index value itself becomes an object. Right, yes. It becomes a security unit of itself. So people like all… I mean, you know, some of the greatest economic thinkers, Nobel laureates, will make this error. But the whole industry makes this error. And what they do is they’ll say, the value of the index has gone up this much over this many years. But the problem is that the index from 100 years ago was an entirely different group of stocks. And every time you need to get rid of some stocks, there’s costs associated with it. And many times… Can you make an index that’s large enough so that you overcome that problem statistically? No. No, because I suppose it would take just longer for it to transform entirely if it had more entities. And I know most corporate entities don’t last that long, even if they’re highly successful. It’s about 30 or 40 years. And that turnover is probably increasing. And that’s a good thing as far as capitalism is concerned, because there’s creative destruction and failure is an integral component of capitalism. But going back to the switch, there was nothing wrong with value investing. It was fine. But there was a kind of intellectual… I became a little disinterested in the whole way of going about it. And I had this problem that… You were making money doing it. How old were you when you became financially independent? I’d say early 20s. Early 20s, okay. So despite the fact that you were making money, something was pulling you to investigate something different. Yeah. And did you know at that point what it was? Was it just a diminishment of your interest? Or could you see interest in something specific, otherwise making itself manifest? I actually do remember one of the things it was. It was me trying to purchase property and bidding on a few properties and learning about the real estate market and seeing the price of houses change nominally. And at some point, asking myself the question, what exactly is driving the price of the house up? I know it drives the price of a stock up. I know that ultimately, a stock is a share of a business, which generates income. But what exactly is a house? Why is a house worth more today versus yesterday? And I remember thinking very clearly, wouldn’t the house actually be decaying over time? Wouldn’t it cost money to upkeep the house? And so that was when I realized that value investing was insufficient for understanding economics. And that what I was really interested in was trying to answer certain questions I had about how the economy works in and of itself. And I also had this real problem that commodities were somehow excluded from the value investing method. And so I started learning a lot about commodities. And I was just fascinated with the periodic table and the fact that we had… So it sounds like to some degree, you were starting to become interested in basic, like really basic philosophical notions of value per se, right? Remember when I was a kid, 17 or so, I read this book, Zen and the Art of Motorcycle. Oh yes, wonderful. It’s a great book. Yeah, well, it’s really an investigation. He called it an investigation into quality. What is it that makes something of higher quality than another, which is really an investigation into value. And my career was driven in large part by an investigation into value. And that might be maybe why our interests parallel to some degree, because you were interested in value very practically, but then you also became interested in the idea of value abstractly. What constitutes value? Why does it dynamically shift and change? What drives that? Is that merely a consequence of human interaction? And that’s something that Persig investigated in Zen and the Art of Motorcycle maintenance, right? Because we could assume that value is no more than what we say it is, right? It’s merely a matter of human agreement. But the fact that there are commodities, for example, and this is something your work points to, indicates that while it’s not merely a matter of human agreement, because there’s something basic about basic commodities, right? There are some things that we cannot do anything at all without. And I suppose water would be the most basic of commodities or air in that particular case. So there’s some fundamental relationship between human subjectivity and the objective structure of the world. And so maybe that’s lurking at you underneath. I think that’s exactly what it is. I would just change. I don’t love the word value. I would say I was searching for truth. And I think that there was always this inherent intuition that there is objective truth. And what I couldn’t reconcile… Even in economic analysis. Absolutely. Economics is reflecting the real world. And so my issue, I think, was that the commodities were objectively true. These were real entities that were at the heart of all human activity and cooperation. But then when it came to the sort of sophisticated financial analysis, commodity trading was seen as a kind of inferior art form. The people in the Midwest did that in the futures market. The real intelligent people were hedge fund managers in New York City. What do you think accounted for the prejudice, so to speak, the elitist prejudice against commodity trading? Because you’d assume that if the goal was to understand and to make money, and maybe with the latter primary, that why would there be any elitism in relationship to the methods of trading? Was the idea that somehow it was simpler to analyze the commodities markets? You think that would make it more attractive though? Well, the fact is it’s not simpler because if it were, you would have incredible investors in that space. Right. But they’re a very small group of investors that have done, well, primarily building and operating mines. But in terms of trading the commodities themselves, there aren’t, there’s maybe a handful of good investors. No, it actually has to do with… It’s a mirror reflection of the state of our society and our economy. So our economy became more abstract, more service oriented, and the velocity of activity was increasing, the tenor of activity. If you just take a basic example of how publicly traded companies used to report their financials once a year, now they’re being forced to report every 90 days. Now they’re making projections every 90 days to what they’re going to report in 90 days. So we’re building an abstraction hierarchy on top of the commodity base. And status as an analyst seems to depend on your operation at the upper levels of the abstract. I wonder if that’s partly because… Well, it’s where you’re going to make money too. So you’re going to make money in all of these frontier so-called industries, whether they’re in STEM or whether they’re in high finance, financial engineering, derivatives, complicated things. There’s a novelty contribution there, is that the commodities trading, that’s an ancient business. Yeah, that’s a physical business, physical clearing. So remember the issue with the stock is you buy it and you never know if the stock will be weighed. Benjamin Graham claims that it does over time. But as I said, it might, and it does over time, but you never know exactly when. Physical markets are entirely different. They clear. Right, well if you buy a pork belly’s future and you don’t trade it in, eventually you get the pork belly’s. Exactly, and once you get the pork belly, the transaction’s closed. You no longer own anything. If you want to buy another pork belly future, you have to decide what month and delivery you want so that the farmer who’s producing it will sell into that contract and settle the trade. So the fact that you have full clearing and settlement in physical commodities is very interesting from a financial lens because it means that you always have that objective arbiter of truth. You know, you can’t just defer things indefinitely. And I think that also attracted me very much to the industry. But basically what I did was… That’s a fundamental corrective in some sense. Yes. A fundamental reminder of your union with an underlying structure that isn’t arbitrarily, in some sense isn’t arbitrarily ordered by human beings. That’s right, that’s right. And I think that for me, I was trying to express what I had learned in value investing through the world of commodities. And so this brings us back to the mining chapter. What I ultimately estimated was that if you take a mine in a stable geopolitical jurisdiction, so say in Canada or in the United States or in Europe, depending where in Europe, and the mine had already been geologically explored and thus there was an ore body which was delineated. In other words, we’ve drilled holes into the ground. We know what exists underground. And you bought that mine, but you didn’t actually mine. You just bought the land. What you were essentially doing was buying a call option on future weight of commodities in the future, which you could always extract from the ground. Okay, explain that a bit. Call option. So you’re leaving it like it’s a bank. Yeah, it’s a vault in the ground. You’re betting that the future value will be higher than the present value. Otherwise you’d mine now. That’s right. There’s a reason why you don’t want to mine now. And the reason is that you’re estimating that there’s going to be more money floating around. And so the price of the commodity will rise over time. But you’re also betting that the cost of extracting the commodity will not rise as fast as the price. Or decline even, possibly. That’s right. Well, they don’t normally decline. They rise with inflation, just like everything else. Because you’ve got basically three inputs in mining any commodity. Like you have three inputs in doing anything in the economy, which is energy, labor, and time. And labor in inflation always rises and energy always rises. And when you actually have inflation, you have to raise interest rates, then you’re basically increasing the cost of time as well, the price of time. But that was my idea. It was a novel idea. There were a few people that had done it successfully that I looked up to. I had the idea of kind of building an aggregation of these deposits. And so I raised money from some investors. I cashed out some of my own money. And I did that. And I chose a few commodities that I thought would be integral to society. I was trying to make a prediction over my lifetime. And I used to say to my investors that I’m trying to imagine, right before I die, which commodities are still going to be the ones that are most important. And so I chose copper, which is one of the most important metals that we have in the periodic table. It’s antimicrobial. It conducts energy. It’s just a fascinating metal. There’s no end to the mysteries of copper. I chose silver, which is the most reflective of metals and is also an incredible conductor of energy and antimicrobial. And I chose zinc, which has medicinal properties and is used in a variety of applications. So the periodic table, just so that everyone is following this, is the layout of the structure of the elements of the cosmos, essentially. And so if you decompose material structures to their most fundamental elements above the subatomic level, then you end up with about 116 fundamental elements. The top 15 or so mostly are man-made, short-lived. So there’s a very finite set of elements, and all the elements have quite spectacularly different properties. Intrinsic to their nature, which is very important because there’s really nothing else like that. Everything else reduces back to these elements, these material constituents of reality, essentially. They’re like the alphabet of reality in some sense. Yes. Except that human beings didn’t invent them. I used to say they’re like Legos. They’re pre-given Legos, and then you can rearrange them and do more than just rearrange them, but essentially what you’re doing is you’re rearranging them. And so it was silver, copper, zinc, iron ore, which was a lot more interesting back when I was doing it. These days it’s less interesting as we’re not building as many things, but obviously iron ore is an input for steel or any kind of metal production. And then it was good. Why did you focus on metals particularly? Well actually there was a flaw in my thinking that was only corrected in the last six years. I had thought always in terms of longevity, stretching time. How can I buy as much time as possible? And my problem with the soft commodities or livestock was that I was thinking that they diminish faster. So you’re looking for permanence. That’s right. And you associated that with metals. Absolutely, because if I have a hundred tons of wheat, I have to store it somewhere and it’s literally decaying as I’m storing it. That’s right. And even oil, if I try to store it, is evaporating at two or three percent a year. You have to store it in salt caverns and inject water and then that costs loads of money. But with metals, you mine them once, especially the precious metals. The precious metals are the most unique ones, but you mine them once and what’s cool about owning the mines is they’re in the ground so they’re not oxidizing yet. It’s only when you get them out of the ground they start to oxidize. So they don’t decay more further than they have already. That’s right. And so that was the general idea. And so I did that for a few years and I learned so much about geology and the natural world. And I was just shocked to see that there were these intrinsic relationships, not only in the natural attributes that each of these elements possessed, but in terms of the relationships of the natural attributes to the other elements. So in other words, there’s an important metric called crustal abundance. And that’s basically the average rate at which an element exists in the Earth’s crust. And it’s obviously an imperfect standard of data because you might go in your backyard and drill a hole and you will not find that material content. It’s not uniformly distributed. It’s not uniformly distributed. However, when you’re talking about ore bodies, something that is actually being mined for the sake of extracting the resource, that is generally the average. And you can infer and measure something like comparative rarity as a consequence, even if it isn’t homogeneously distributed. So one of the features of the periodic table of the elements is that all the elements are not equally distributed. That’s right. There’s an intrinsic inequality in the building blocks. That’s right. But actually it turns out that they are all relatively equally distributed on a continent or nation basis, almost at a country level. So if the geographic territory is large enough. Yeah. And this is important for later when we get into the notion of scarcity and people always have qualms with, but isn’t it fair? It’s not fair that one country has this. It turns out that pretty much every country has what they need in terms of the important elements. And if they don’t, they have something else that they can exchange for the important elements. But so I learned a lot about that world and was fascinated by it and spent quite a bit of time with geologists. Yeah, well, you told me a funny story last night. You were talking about a Nobel laureate in economics that you had talked with who was convinced that the value of money was not attached in any fundamental sense to the structures of the real world in the manner that you claim it is. And you told me that he didn’t know that there was genuine natural variation in crustal abundance of different metals. That’s right. So yeah. Yeah. So this was a Nobel laureate who said, and it is recorded somewhere, that the reason that copper is valued at X and gold is valued at Y is just subjective. People have decided to value copper at this level and gold at that level. And I responded by saying, but don’t you think it’s a bit mysterious that the price of copper reflects the same crustal abundance of copper? In other words, copper is 5,000 times more abundant than gold in the Earth’s crust. And if you look at the price of copper per ton in the market, it’s roughly 5,000 times. Right, right, right. Well, this is a key point. Sorry, gold is 5,000 times more expensive. Right. Well, this is a key point, right? Because that was part of what clued you into the idea that value per se, including financial value, was not merely something that was subjectively determined. It also bore a relationship to something like abundance and ease of access. Now, there’s an interaction between the two, but the fact of that abundance, in your hypothesis, places an intrinsic constraint on the parameters within which pricing might vary and is a data point that should usefully be taken into account both practically and conceptually. And it’s important here because partly what we’re trying to understand is what is the relationship between human systems of value that would be pricing and the actual natural world as such. And that’s like an investigation into the relationship between brute empirical reality and the domain of philosophical value, right? So it’s a crucial issue. And practically, it might help you invest better and then you’d know what to do with your money, but it’s also crucial conceptually. And so, okay, so now you also said to me at one point that there is a rough equivalence in the ratio of the value of metals to one another across time in relationship to the relative abundance. And so with silver, you see the same thing with silver in relationship to gold that you see with copper in relationship to gold. Silver is rarer than copper. Yeah, we never wake up one morning and see that an asteroid really did hit and these relationships were upended entirely. We never really see that all of a sudden zinc becomes the rarest element or aluminum becomes the rarest element. We go back in history and what we see is that something like gold was always understood for its intrinsic natural attributes, but also as being extremely rare. And that there are certain things that are more abundant than gold and yet closer to gold and rarity than they are to something like oxygen. So I see that as a kind of natural order, a natural law. It’s a limit that’s imposed on us. You think that there’s a natural reason why people, for example, gravitated towards gold and silver and bronze often, but that’s copper essentially, as hallmarks of monetary value, right? That that was an attempt, what would you say, practical and conceptual to tie the system of abstract value to some underlying natural phenomena to keep the value system paid to the structure of the world? I would say it a little different. I would say that there was no notion of abstract value, that basically you would have these different commodities that were produced for their utility, for their usefulness. And as they were being produced, rather than having a coincidence of wants or barter or some kind of inefficient system, people recognized that each one of these commodities were a common measure and a reward of the other ones. In other words, I can trade you two bushels of corn for one gram of copper. And that wasn’t an abstraction. That was an even trade of intrinsic value. It’s literally a balance scale that’s weighing the weight of these two different commodities. And then eventually what happens… So that’s not precisely only social contract dependent? No, it’s not. This is basically just, I would say it’s metabolization at some point. It’s you have some energy that I need and I’m going to give you something that you need. And we’re basically helping each other, we’re nourishing each other’s souls. But the thing is that at some point, one of these things begins to be the de facto measure for all the other things. And so that is what you see with metallic money, whether it’s gold or silver or bronze or even iron in some civilizations. But it’s important to remember that every civilization that deserves the name civilization in the historical record would have had a metal as money and would have had a monetary unit which had a weight rather than some abstract nominal value like a dollar or $5. It would have been something like a pound. So a pound in this country, sterling means silver. A pound is a weight of silver. That’s what the pound would have been. So I was figuring all of this out and it actually led me to a real appreciation of the exemplar qualities of this one element which was gold. With the start of the new year upon us, what better time than now to start building a habit of prayer? 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And then how did that inform your decision to focus more particularly on gold? Well, actually, I did something quite novel even in regards to that. I figured that as long as the mind truly had the material wealth embodied in the mind, because it was drilled out and it was audited and it was basically tested through a public disclosure file that has to go through a securities commission or something like that, it was worth owning that mind even if it wasn’t necessarily clear how you would get that mind permitted. And so I was buying minds that some people might say would have a difficult time of being permitted. And I felt that over time the communities would work these things out as the value of the wealth. That’s an intrinsic values perspective to begin with. Because your notion there is that because that has intrinsic value, the market, which would be the regulatory environment in some sense, is going to converge on appreciation of the value. You can see that now in the UK where you’re burning coal again. Exactly. That would be a perfect example. So someone like me, I never invested in coal, but someone like me might have purchased a coal mine six years ago for pittance, because people told them this will never be permitted again. Right, but it’s coal. Yes, exactly. And you can burn it. Yeah, and I would argue that with coal the argument isn’t so clear because you don’t necessarily need… Coal is a great source of energy of course in terms of its energy density and in terms of the UK having a lot of coal nearby. Cheap too. Yeah, but with metals it’s easier to make that estimation. So just to give you a very basic example, if the world truly wants to electrify the global fleet of cars, we basically don’t really have enough copper to do that based on what we know today, the reserves, the economic reserves. So at the very least we’re going to be taking down a lot of mountains around the world if we want to get just the amount of copper that we’re estimating to sell 100 million cars a year. And the same is true of something like nickel, which is… We can just solve that by forbidding people to have cars. Well that seems like what might happen. But with nickel it’s even easier. And with gold it’s the easiest. Easiest in what way? In terms of… You’re always at a shortage of gold. It’s the hardest thing to get out of the ground. And it just keeps getting harder and harder and harder. So there’s this difficulty curve. It’s almost like… Is it harder than uranium? Is it harder than even the head? Oh yeah. Uranium is quite abundant actually. The thing about uranium is it needs to be enriched into U2O8 or whatever U2… And so that’s the real cost in it. There’s quite a bit of uranium around the world and its crustal abundance is not special at all. Why is gold particularly rare? That’s a why question. We will never know. There are theoretical physicists that postulate about neutron starics colliding and things like that. But I don’t think we know the answers to these questions. I think it’s a mystery why it is that we have this pre-given set of Legos. And they seem to be in use since time immemorial. And in my book there’s appendices where I try and identify sort of the beginning of the use. It’s kind of like when someone asks you when was the wheel invented? When was the plow invented? When was writing invented? I don’t think we know because in the extant texts that we have, the oldest, we already see a society pregnant with this activity. So we see in museums and in archaeological discoveries just not only this knowledge of the elements, the metals, but we see the techne, the ability to craft wonderful objects from these elements that have kind of moral significance. And so I think when you take a step back, which was what was happening to me in my 20s, when you look at the natural world with a sense of wonder, in terms of my biographical arc, I was starting to come back to the natural world. I was starting to see that the theoretical physics and those explanations of reality weren’t going to satisfy my desire about the truth. But the natural world was. There was still that sense of wonder. Just like that question you asked that I can’t answer, I don’t know why gold is the way it is. It’s just a pre-given reality. And so I became quite fascinated with gold and also invested in gold mines. And at this point, I moved to Canada, to Toronto, where you’re from, because that was kind of the mecca of mine finance. Toronto is the world’s most important financial market for mining. And unlike in the United States, where the great majority of companies, at least before the last crash, are service industry companies, in Canada, the great majority are real mining companies. And all the best engineers and geologists and banks that know how to deal with these companies are based in Canada. So I learned a lot about that. I invested in it. And at some point, I made the mistake of trying to mine the gold because I felt like some of the mines were ready to go or I invested in some companies that had mines that they had developed and were ready to mine. And that was when I realized how hard it was to actually make a profit mining. I yearned for the days of value investing that my mentors used to tell me about. And it hit me one day just seeing these continued losses and unexpected vagaries of nature. All of a sudden, something just goes terribly wrong that you weren’t predicting. All of a sudden, there’s a flood. And I realized you’re actually better off just buying the gold and then holding on to it or using it than trying to get it out of the ground. It’s cheaper if you consider all of the costs. It’s probably cheaper to do it that way. And this was also interlaced with me shifting my intellectual area of focus from finance to economics and monetary history. And I realized that a lot of the questions I had about the inner workings of the economy centered on the question of what is money, how do we cooperate, what makes that cooperation sustainable. And no surprise here in terms of the ARC, it became clear to me that the money had to be rooted in nature and it had to be one of these physical things. Now that puts you at odds with most modern economists. And value investors. Okay, so why modern economists and then why value investors as well? Well, basically the word economics, economica or economia in Aristotle’s politics, it means household management. So it was something that was rooted in the family, in the land, in the house. And over the course of 2,000 years, around the 19th century, the whole study of economics becomes denaturalized with people like Mill saying that the whole purpose of our activities is to conquer nature. And figures such as Stanley Jeevons who began to postulate that every exchange of goods and services is just a ratio of two numbers. There’s no limit to human desires. And so what happens in economics is a kind of mathematization of economics. It becomes the study of the abstract over the study of the real. And economics, for most of its history, was a branch of natural philosophy. Now it kind of becomes a social science or a science. It’s like a postmodern revolution on the mathematical side. Yeah, exactly. It’s exactly that. And decoupling, because the whole postmodern revolution in some sense decoupled meaning again in the same way from the world. Meaning is just an arbitrary social construction. Just like identity, it’s only encoded in the relationship between concepts. It’s exactly the same idea operating in a different sphere. Well, perhaps it was the economic turn that also influenced a lot of that. And I think when I look at Austrian economics, for example, which is very popular, and it’s loaded with this language of subjectivism from that philosophical turn that takes place, I definitely think the seeds were planted with the denaturalization of the economy. But the economy was always viewed. There’s nothing new in my book. There’s some contributions and perhaps a reminder. And some rediscovery. There’s some perhaps some minor rediscoveries, but really it’s a reminder of what we always thought about the economy. And what we always thought was that if you were even going to use the word wealth, you were referring to something physical and something material. And the reason for that is that if you observe reality objectively, the only place where you see growth is in that physical world of either biology through reproduction, or when you plant one seed in the spring and you reap two in the fall. And so you’re only really… You’re an interesting thinker in that regard because you have a very materialist view of value, but you also have a philosophy that extends into a theology. And you also believe that there is such a thing as spiritual wealth. And I suppose in some sense, the idea of spiritual wealth is also an abstraction of the idea of wealth. And how do you conceptualize the relationship? We haven’t talked about this at all before. How do you conceptualize the relationship between spiritual wealth that’s abstracted, say, given that it’s spiritual, and the material wealth that has to do with the actual tangible like grip on physical substances? Well, if you believe in God, then you believe that the world was created. And if the world is created, then ipso facto, the natural order itself is imbued with the order in the natural order, the regularity and the vagaries, they’re imbued with a sense of morality. So you can’t separate… The natural law itself encompasses both the moral realities, but also the material realities. So for those who are listening… Sorry, but what that means is that the material world is a lot more spiritual than we might conceive of. One of the ways you can think about that, practically, because it sounds like a strange abstraction is that if you and I decide that we’re going to do a joint venture in relationship to mining, and we don’t treat each other fairly and honestly, the probability that our mining endeavour is going to be successful is pretty much zero. Because we’re going to run into so many entanglements over time that it’s going to make the practical operations impossible. And so you might say that in order to come to some concordant grip with the vagaries of the natural world, there’s an ethic you have to manifest. And that seems to be part and parcel of your sense too, that to operate morally also means to align yourself with the proper rhythms of nature and to pay attention to the proper ratios of scarcity and to take into account the limits that the natural world… They’re not so much limits. They’re principles of the natural world that you have to abide by in order to play a productive game. And then you’d say there’s a concordance between that bottom-up morality, which is practical, and the top-down morality, which is more spiritual and abstract. The term in the 18th century was used by French economists, a term that now has come to dominate the libertarian economic thinkers of the day was laissez faire, laissez passer, which meant let nature take its course. And so you don’t want to do anything that prevents nature or inhibits nature. You don’t want to dam up the river. You don’t want to manipulate the material reality in this alchemical or gnostic way. You want to let nature take its course, just like you want… So there’s a harmony there. That’s right. And so you see nature as a gift. You see the wealth that arises from nature as a gift. And you see any kind of growth as being correlated to the material realities. And the first thing that arises from that kind of a worldview, which again was first nature. The first principle of economics until this denaturalization is the importance of the farmer. You know, a natural economy is predicated on the activity of the farmer. Well, then that would be another potential reason why this denaturalization occurred. I mean, what, how in 1880, what, 90% of people were basically employed on the farm. Now it’s like 3%. And so you could imagine that there’d be running away from the boundaries of nature that parallels urbanization and because it’s an abstraction process in some real sense. Absolutely. But, you know, the importance of the farmer is key. And remember when I said earlier, when you asked, why didn’t you invest in some of the soft commodities? I had missed this in my 20s. I only rediscovered this in the last few years where I myself returned to my roots and began farming again. See, what I missed was that the land that the farmer is tending to, coupled with the farmer’s wisdom, the farmer’s toil, the farmer’s ability to respond to failure and change to the caprices of nature, that that coupled with the land produces a kind of yield, a kind of return, which over time does multiply. So if you have a flock of sheep and you have a hundred sheep, well, you know, you’re usually going to get two and a half sheep per annum for each pregnant sheep that you have. And so you will produce more than you had at the beginning of the year. And it just becomes a function of how many sheep you can fit per acre of land to feed them. But the excess sheep that you’re producing, which you sell, allows you to purchase more land, which allows you to then expand your farming activity. And so livestock, it literally means, you know, a capital stock of biological organisms that are reproducing. It’s not exactly the same with crops. But what is true of crops is that the land that you have and the work that you’re doing is going to guarantee you a kind of material abundance from which you can at least sustain yourself. But in most likely cases, you’ll have a surplus which you can then trade on for the things that you don’t produce. And again, there’s nothing new in terms of my ideas in the book here. Up until Givons, the economy was always viewed to be broken into two classes, the productive class and the unproductive class. The unproductive class were generally called the artisans. You know, they even had a nice name. It was never an issue of like mutual hostility or elite versus inferior aristocracy. It was just about there are people that work with nature to produce these physical things, which then get traded on to this other group of people that use those things. They improve them, they change them, they consume them. But at the end of the year, those productive people have to go back and negotiate with nature, whilst the other group of people has that option. They can either revert back to that activity or they can wait and hope that the service they’re going to render, and this includes manufacturing. Anything that requires the input from the land would be in the second category. And so in my book, I call it the real economy versus the service economy. So okay, so the real economy, the more you’re in the real economy, the more you’re dealing directly with non-human nature. That’s right. And the less you’re dealing with non-human nature, so the more your financial transactions are only dependent on social relations, the more you’re in the secondary economy and the service economy. And so part of your hypothesis in some sense is even though there is a disconnect between the real economy and the service economy that grows with time as more and more people are in the service economy, if the service economy doesn’t bear the mark of the relationship with the underlying natural order, it’s going to be all the ways that are eventually unsustainable and counterproductive. Well, then it’s just parasitic. So it’s demanding, it’s dominating a class, a group of people that’s providing… Right, but it might also be exhausting them. Well, and also exhausting… And exhausting the natural… Well, because it’s not heating the signals as well. Yeah, but that’s a whole other thing. I mean, I deal with that briefly in the book. For me, what was important was just to see that the activity, every exchange of goods and services, whether it’s taking place at the real economy or at the service economy, ultimately needed to be measured in the same way that the farmer’s activity is measured, that the miner’s activity is measured, that the coal miner or oil rig worker’s activity is measured. And that that measure is not a human construct, that it’s part of that natural order, that the measure itself… And you thought that was embodied or still think that that was embodied in some real sense in metal and best embodied in gold. It’s actually embodied in anything that’s natural. Right, sorry, any commodity. Yeah, it can even theoretically be embodied in a rock. But the thing that it’s going to be embodied best in is going to have two or three qualities First, it has to outlast time. It has to be something that retains its material existence without change over time. That makes it a reliable storehouse of value. Or a reliable measure. Or a reliable measure. It’s an inch that never changes. It’s an inch that’s always an inch. So a gram of gold will always… It’s a constant. It’s a constant, right? The other thing that it has to have is it has to have a sense of difficulty. And if possible… That’s like proof of work in Bitcoin. Well, we all know that Satoshi was mirroring the process of gold mining. Of course, with Bitcoin, there’s forgibly scarce proof of work bits. With mining, you have the physical gold that you get out of the ground, which you can then pass on to anyone. So that difficulty, though, is not just how rare something is. It also has to do with what are the attributes of the thing. And so if you lay them out, you’ll find that because these commodities are a common measure and a reward for each other, that you can have one commodity act as a proxy for another. Okay? Now… Sort of like the idea of an essence of commodity itself. That’s right. So you’d say that gold is the essence of the idea of commodity itself. That’s… Yes, exactly. And it doesn’t mean that gold is more important. Obviously if you’re stuck in a room… It’s just a better measure. Yes. So if you’re stuck in a room and you’ve got a glass of water, it’s the famous diamond water paradox, but I’ll use gold, and you’ve got loads of gold and you’re locked in the room, you’re obviously going to choose the water over the gold. But that’s not how a society that advances from subsistence, where it’s just producing the things it needs, which it then consumes, to post subsistence, where there’s a market economy that is developed, where there’s different people engaged in different specialized skills, and where essentially the goods and services are exchanged. In that post subsistence society at that point, everything is exchanged for everything else. There’s very few people… And so you need an emblem of that exchangeability. Yeah, and the point is that in that society, people still have the right and the option to revert back to subsistence. This is another thing that no modern economist really understands, is there’s always the option to pull out of the economy and go back to the land. It happens. On YouTube, you can see it’s quite trendy with… It’s a lot harder than people think, generally. It’s a lot harder, but it’s more rewarding. And I think a lot of people talk about that infused morality that comes with that process. But the point is that you may hate gold because it symbolizes something, but you can’t dispute the natural properties of gold. One of the things that really troubles me is when I see people automatically label gold as some kind of a right-wing conservative thing. And I think that’s just so ridiculous. It’s an element on the periodic table, and it’s part of nature itself. It’s a beautiful element that’s used in art, and it’s used in your cell phone, and it’s used in so many applications, whether you’re going out to space and there’s only one thing… It doesn’t corrode, for example. Yeah. And so you can’t say that gold or any commodity belongs to a class or a group of ideas. What you can say objectively, and if you speak to any chemist or geologist, they’ll all tell you this, that there are just exemplary properties to this element. And so as a result, the property of being rare and outlasting everything else, the tomatoes will have to be reproduced, the sheep are going to be eaten and reproduced, the oil is going to be consumed for movement. We have to produce more oil. The gold is produced once, and then it begins to serve as a measure and a reward for everything else. And how universal was that among archaic societies, that gold was a standard of value? It’s basically every single society. You go to Mesopotamia and you look at Hammurabi. It was primarily silver in Hammurabi. You look at all of the Hebrew Bible. I have an appendix where I go through the Hebrew Bible and just the amount of passages where the Israelites are required by God in law to have honest balance, honest scales, honest measures. Obviously, King Solomon famously says, all things were made by God according to number, measure, and weight. And weight is very important here. Weight is not like number. There’s a distinction in kind between what weight is and what a number is. And so things definitely have to be weighed. And there’s many examples. And weigh always means comparison of one thing to another. Well, I actually think, yeah, and I think weigh is just almost saying like justice. It’s like, what is the justice? Well, we use the scales as a measure of justice. Yeah. So there’s examples of Abraham buying a field and literally using the silver earrings of Sarah to pay, putting them on the balance scales, weighing them. So there’s another misconception in economics and economic history and monetary history, which is parroted all the time, is that somehow gold coins were just used from the time of King Quoesis in Lydia in the year 700. And that’s not true. That’s just when a king decided to basically get into the business of minting the money. But before that, people would just actually weigh the metal. And they would just go somewhere and say, this is how much metal I have. I’m weighing it. And in many cases, they might just not be weighing, they may not just be weighing metal. They’re weighing other commodities that they have. But the idea that you would give someone something, some kind of product of your toil or render a service and not get anything in return, this is a famous idea of David Graeber, the late anthropologist who I deal with in the book. I just don’t think that’s true. I think that that might be true in a subsistence society where the bonds of kinship and just a sense of altruism to your neighbor are kind of familial bonds. I think that… Yeah, but you forget. Like even then, like I’ve noticed in contracts I’ve made with people, we’ll be discussing weighty financial matters. And you think, well, this will burn it in on your memory. And then six months later, a dispute comes up. And you think, well, we all knew what we were talking about six months ago. But you forget. Your memory itself decays. Exactly. You need a marker that’s independent of the transitoriness, even of memory when it’s motivated by goodwill. That’s right. And that’s, I think, what’s really interesting about jewelry. And I also have a jewelry brand which produces 24 karat gold jewelry. We sell it by weight. Not a coincidence. It’s called mene, which is the ancient Aramaic word for a weight of gold or silver. But one of the things that I learned in starting the jewelry brand was just that the role of jewelry itself and the choice of precious elements for jewelry expresses something that essentially what you just said, where you’re trying to wrap a moment in time or memory. In this case, you know, I am betrothed. I’m marrying you. It has to not decay. It has to be portable. It has to be hideable. That’s right. It has to be memorable. It has to attract attention. Yes. The glitteriness would be part of that. Yes. It’s almost like, you know, its purpose is to do this. Right. And it’s a token. That’s why we call it a token. So we’re wrapping some kind of event that’s fleeting because time is always moving us forward. Now, it’s interesting. In the case of gold, you have this perfection of the element, which is its incommensurability with other elements. The alchemists regard gold as noble morally because it didn’t mate promiscuously with other metals. Right. And you can you can derive that as a kind of primordial superstition. But it’s not because part of the reason that gold was admirable was because its lack of proclivity to alloy or to corrode makes it permanent. And then in the case of precious stones, there’s a there’s a perfection to them, which is the absolute regulation of their crystalline structure. And it’s the fact of that regularity that allows them to reflect light. And that idea that something precious reflects light has a spiritual element because you say, well, that’s what it means to be illuminated. Because you reflect light under those circumstances. So there’s this weird mythological parallel between the molecular or the atomic structure, let’s say, of both gold and of precious jewels that isn’t just arbitrary. It’s got this it’s got a metaphorical reality that’s overlaid on top of its physical reality. It’s almost like a semiotic claim. Yeah. But you know, it’s important just to stress, though, that the gems are much different from elements, because they’re compounds of elements, human oxides and things like that. And so they’re actually not as rare as people think either. They’re not that rare. And because they’re basically a crystal of carbon, you know, you can also produce them by compressing carbon. But it is interesting to note that, you know, Isaac Newton was obsessed with alchemy and tried for, I think, almost a decade to transmute other elements into gold. And it was when he finally recognized that this wasn’t going to be possible, that he was made the master of the mint of the Bank of England in 1694. And one of his first acts was establishing a gold standard. And so it’s almost like he tried to hack gold for so many years. And then failing to manage it. And then gave up and recognized, you know, this is how I’m going to get create monetary order out of the chaos of an economy that doesn’t have one. So he became convinced of the immutability of gold. And that made him a good candidate for someone who is establishing the foundations or in charge of, what would you say, guarding the foundations of the monetary system itself. Yeah, there’s a curious passage in the optics. I don’t think I can recall it because I read it many years ago, but it’s something like in the beginning, it’s clear that in the beginning, God formed all matter in such a way where it was truly indestructible. And then he says something about gold shortly thereafter. But yeah, I know, I think that that and remember, like Newton is someone that appreciated the laws of nature helped advance humanity’s knowledge of those laws in ways that are just unfathomable today. But he recognized that this was an element that was exemplary and that money needed to be something that was physical, rooted in nature. We’ll be back in one moment. First, we wanted to give you a sneak peek at Jordan’s new documentary, Logos and Literacy. I was very much struck by how the translation of the biblical writings jumpstarted the development of literacy across the entire world. Illiteracy was the norm. The pastor’s home was the first school and every morning it would begin with singing. The Christian faith is a singing religion. Probably 80% of scripture memorization today exists only because of what is sung. This is amazing. Here we have a Gutenberg Bible, Bible printed on the press of Johann Gutenberg. Science and religion are opposing forces in the world, but historically that has not been the case. Now the book is available to everyone. From Shakespeare to modern education and medicine and science to civilization itself. It is the most influential book in all of history and hopefully people can walk away with at least a sense of that. So prior to this conversation we’ve talked about the advantages and disadvantages of decoupling the monetary system from the underlying principles of or constraints of reality. People who are late followers of Keynes have made the proposition, if I have it correct, that one of the advantages to bringing the monetary system under only human control is that you can inflate or deflate the money supply to smooth out business cycles and that would be the oscillation between bust and boom that can otherwise be somewhat destabilizing and upsetting. Now there’s plenty of controversy about whether it’s even possible to de-oscillate the business cycle. It’s not obvious to me that it is, but also there are the advantages, a little bit of extension of political and voluntary control, but the disadvantage is, or one of the disadvantages is the production of devaluation of the currency, inflation essentially. And so let’s talk about that a little bit and then let’s turn specifically to the order of the topics in the book. Sure. Well let’s look at a few examples. In the natural world you have cycles of generation and degeneration. So that means that production has to come before consumption. In an inverted economy we see that consumption is brought forward before consumption. That’s debt? No, just in the sense that we’re trying to stimulate the economy as though if we stimulate consumption, demand, we will somehow produce more. But in the natural world you first have to produce so that you have the privilege to consume. The farmer has to produce his crop first. In the natural economy we see that these cycles also breed growth and decay. So we don’t see anything like infinite growth in the natural economy. Whereas in the inverted economy we look at these abstract metrics like GDP, nominal growth, and we become obsessed with this idea that we’re not only temporally exceptional, we’re constantly just piercing through reality itself and growing and growing and growing. In the natural economy, in the natural world, frugality and savings is a function of your cooperation with nature. You absolutely have to produce more than you consume and you have to reserve a surplus of seed for the following year so that you can sow the seeds and reap them again. It’s this cycle where you first have to sow, then you reap. In the inverted economy we see that people are incentivized to consume first, again, just like in the previous example, but not necessarily save, not really look out for the future, to do as much as they can to increase the velocity of their activity as much as they can and sort of pursue this limitless growth. In the natural economy we see that people have a respect for the land and that they basically want to work in the land and follow in the activity of their ancestors because we see that to have an economy in the first place we have to produce these material things. In an inverted economy you see everyone being told they have to go to university or become in service of the power structure. It’s idealized to work at Google. The farmer’s daughter is told that she should go to university. She shouldn’t stay and work the land and produce things. How can that be true if everyone worked at Google, we wouldn’t have the things that we need to produce? There’s also this sense of prestige that’s lost in the inverted economy. Then there’s also this feature of the natural economy where people have to cooperate in a decentralized way. If you just look at a community and the plots of land that’s surrounded, different farmers doing different tasks and cooperating, then you have a blacksmith and a metalsmith and a barber and a baker. In the inverted economy we see prosperity is coming from a centrally controlled spigot top down. It comes from the center to the periphery instead of from the periphery and building up into a center. When you get into something like the rate of interest, in a natural economy your rate of interest, if you had one, if that was how the society wants to organize itself, it’s not the only way through lending, but if it does, it would be a function of the material prosperity, the harvest that season, the amount of capital you produced from the earth. In the inverted economy, a bunch of people sit in a room and decide arbitrarily what the rate of interest should be. As we see, they can be coerced by political interests to bail out political failures or folly. So just take another copy. So you’re saying in some part that as you abstract away from the natural order, you introduce an increased possibility of merely human manipulation for purposes that have nothing to do with the maintenance and stabilization of the productive natural order. So you’re devolving away from the natural ethic that’s imposed on you by the principles and constraints. Now, how do you distinguish that from just a romanticization of the state of nature? Are there echoes of that in some sense in what you’re saying? Well, I’ll give you an example. So let’s look at a live example. We see that in Europe there’s a war and we see that politicians are saying that the issue with the war, economically speaking, is it’s creating an energy shortage, a shortage of energy. And so our job as politicians is to solve this problem so that we can steer the economy back to the track that it was before. And so my question would be, what exactly is that track? Like were we on the right track before? In what data set were we on the right track? In the fact that over the last 30 years, we just see rich people getting richer, the fact that it’s harder to buy a house, harder to pay for education, for health care, inflation run amok, the quality of our products diminishing, the craftsmanship. And so, really within the technology bubble, we might argue that we’re seeing some phenomenal things. And that may be true. It may be true that materially, as regards to material technological peripherals, things are incredible. But in almost everything else, the quality of your clothes and the quality of your actual artifacts that are made by hand, they’re terrible. And so I don’t think that we have observed this system working in the sense of producing material abundance or prosperity. I’ve said this before, but the whole notion of prosperity has become divorced from the tangible side of it, which is basically food on the table, a warm place to live, knowing that if I work hard, my children will have an opportunity to do better than me. But more people around the world seem to be experiencing that proportionally, say, than 50 years ago. And so that’s sort of what I meant by the romanticization. Oh, you think more people are doing better today than 50 years ago? Well, proportionally. I don’t think that’s true. Yeah. I mean, maybe in the developing nations. No, that’s what I meant. I meant in the developing nations. Yeah, but they’re doing that because their economies are more oriented towards the real. So they’re the ones producing all the things that we in the West are producing. So you think we’ve hit a kind of asymptote in some fundamental sense in the developed countries that’s reflected in such things as the ever escalating price of housing for young people. Yeah. And just, you know, it also expresses itself in society and just, you know, this, the decadence of the Western society and the individualism and selfishness and the subjectivity that’s creeped into our objective disciplines in school and academia. And you also think that’s a consequence of being decoupled in some sense from the natural order. Absolutely. Anything that’s contrary to the natural order of things is going to find itself at the center of our culture. Well, it’s an interesting philosophical claim because you could imagine the Western culture is really an intermixture of two ideas of logos, right? So there was an objective logos idea that was primarily Greek, which was the idea that there’s an implicit order of things and that there’s a moral structure to that that’s implicit in the world as such, right? And then on the more Judeo-Christian side, the idea of order was exemplified more particularly on the spiritual and personality side. And then the West, in some sense, is the laying of the personal logos on top of the objective logos and the proposition that there’s an isomorphism between the two. And your argument seems to be to some degree, so the Nietzschean argument is that we’ve dispensed with God and are floundering about in nihilism or ideological possession as a consequence. But your argument is, well, we’ve done the same thing from the bottom up. We’ve divorced ourselves from the implicit order of the actual world. And that’s also destabilizing us while morally and practically. Is that a reasonable? Absolutely. I think that I don’t make arguments to that extent in the book. I give hints at it. And I actually have a footnote where I say I think this would be profitable for other people to do. But I certainly think that the relationship between that natural standard of measure and reward, which the real economy is subject to, and the rest of society having that ability to temporarily forget about that standard, decouple from that standard, it’s a fact of nature. So at some point, the natural order exerts its force. You know, I’ve often liked, I like dealing with real scientists. I like dealing with engineers. I like dealing with craftsmen and high quality workmen. And I think the reason for that is that they’re always testing their abstractions against something that isn’t merely arbitrarily human. So they pop themselves out of the postmodern bubble. And their orientation in the world isn’t a mere consequence of their rationality, right? It’s got this empirical element to it. And within that empirical element, there’s a kind of an ethical logos. And so it keeps the conversation honest. Let me turn to your book, okay? So we’ll just, so again, for everyone watching the book that Roy has recently published, and he self published it for reasons we may get into later, perhaps on the daily wire side of this, the book is called The Natural Order of Money. It’s quite a beautiful book. It’s very elegant. It’s a very short book, and it’s very tightly edited. Although it’s also a book that for me indicated, you know, one of the ways that you can just distinguish high quality thought in some sense from low quality thought is that you can tell in high quality book that every sentence has been thought through using multiple sentences that aren’t in the book, right? So there’s a depth of idea that has been compacted into the concepts. And there’s an elegance of presentation. And it’s a beautiful book. And so that’s also extraordinarily interesting. But it’s very straightforwardly written. It reminds me in that sense of Matthew Pagel’s recent book called The Language of Creation, which is about this long and is analogous to this book in some ways, although more on the theological side. So this book has eight chapters. And so I’ll start, there’s little chapter summaries at the beginning, and I’ll just throw them at Roy for now, and he can comment on them. So chapter one, what makes cooperation possible and sustainable between people in the natural world? This book is an exercise in natural philosophy that is occupied with the synthesis of the living breathing economy. Now we probably covered that, okay? Time is the fundamental superseding law of nature. It moves forward and is irreversible. Human action is beholden to the requirements of the present. Contemporary economics tends to ignore the condition of our temporality. There’s one. We haven’t delved into that particularly. So what do you mean by that? Contemporary economics tends to ignore the condition of our temporality. So the moment that you take the moment of production or activity and you abstract it into some kind of symbolic value, you’re representing something. There is some truth there. But as you aggregate those values and you begin to refer to them in the way that you refer to either a stock index or a GDP graph over time, you’ve completely stripped that measure from anything real. So you’re adding layers of abstraction. Yes. And it gets more untenable as the abstraction layers multiply. It’s measuring nothing. At the very least, everything has changed since the time you’ve published the measure. At the very least, that’s one problem. But the real issue is that you’re lying to yourself. You’re saying that somehow I can quantify all of this multifarious economic activity. And you also allow yourself to have another party, in this case the government, run deficits or spend money and get the G in the GDP by growing it. And so it’s just a false metric. It’s kind of like grading your own paper. If you could conceive of the best… We had started to talk a little bit about the dangers of abstraction away from the fundamental economy and one of the dangers there is the danger of government-produced inflation. One of the things that governments can do, they’re supposed to be printing money, let’s say, to smooth out the business cycle. But the problem is, of course, that when you’re using a fiat currency that isn’t grounded to something fundamental is that you can print money more or less at whim. And then you rob the people who are saving, essentially. And as you print fiat money, the GDP increases nominally. Right. So your measure looks good. Yeah. But it doesn’t reflect the underlying sustainable reality. It reflects nothing. You want to look at more tangible measures. If you’re looking to measure the health of an economy, start with the fertility rate, because that’s going to be where your real growth comes from. Or start with the amount of weight of products that you produce. Right. So we should just point out for everyone who’s listening, that’s actually a pretty radical proposition because the ethos of our time is that a low birth rate is better because there’s too many damn people on the planet anyways. And you just made the proposition that a more fundamental measure of human flourishing would actually be a positive birth rate. Absolutely. I don’t think we even know if we’re at that limit or not because we don’t compare the fertility rate to what our productive capacity is in the nation. You know, we’re mixing services with real economic activity and then we’re measuring them. And so the services can be measured. There’s a lot of really incredible analyses and products that central banks and academic economists come out with, which I think do shed light on a lot of very interesting questions within the service economy, within the subjective side of the economy. But they cannot be the national lodestar. You know, it just goes back to what I said. The majority, I mean, I actually think the majority of the people should probably be in the real economy. I think it’s bizarre that you have this situation where a great majority of the people are not working in the land or are not involved with the extraction of these fundamental things. And I think that what ends up happening in a recession of the kind that we’re facing now, but also of the kind we’re going to keep facing, given where we are in this overall arc of the Western development of the economy since the suspension of the redeemability of money into gold in 1971, is people will revert back to the natural economy. You know, they will recognize that it’s becoming a fool’s errand trying to live in a city and make ends meet and have terrible air quality and all of these things when they can literally buy a plot of land somewhere and start a homestead and live off their land. And so I think that that’s literally what happens in a recession that’s a natural recession if the government doesn’t get involved and try to stimulate and try to keep all the cogs in the machine. You think it decomposes the excess levels of abstraction. Yeah. And the objector will respond and say, well, what are you talking about? Look at the Great Depression. What were people supposed to do? They were standing in line for their bread. Where would they go? And the answer is that, well, but what was the government policy leading up to the Great Depression? You know, the government incentivized stock market speculation. Millions of people own stocks. There were bucket shops on every corner of the street. Well, it is an open question always how much of that cyclical activity you actually want to suppress, right? So the idea would be to suppress the cyclical activity and produce a linear growth. The idea would be to let nature take its course. Well, the problem with that is that even within us, our life is actually a very, very delicate balance between proper death and proper regeneration. So any cell lines that you have that don’t die are cancerous, right? So I mean, the only reason you’re able to live is because you’re dying optimally all the time. Yes. So the idea that life is nothing but growth, that’s what cancer is, is life that’s nothing but growth. So it has to be death and replacement as a precondition for life in some real sense. So if you flatten that out of the economy, there’s no, your point I think is that there’s no signal that you’ve gone astray if you artificially suppress like a recession, because a recession is a form of death in some sense, right? Yes. That line you mentioned, I’ve read it before somewhere, yeah, that the policy of a cancer cell is infinite growth. Right, exactly. The philosophy of a cancer cell. Yes, yes, yes. That’s a great line. Yes. Yeah. No. Well, and you can see that reflected in certain kinds of environmentalist fatalism, right? But remember, these are cancers on the planet, right? And this is they pursue this infinite growth policy. And we want people to be more prosperous. But that doesn’t mean that growth can, and this is where I think your work is so interesting. It doesn’t mean that growth can occur in a completely abstracted manner that doesn’t take into account the underlying fundamental principles of the principles of the natural world. And it does go back to time, though, with regards to this, because the whole point we’re trying to say is that time moves forward and is irreversible. So any of your actions are always taking place in what we call the present. You’re always living in the present. The past is available to you through recollection, and the future is coming, but it’s sort of always a present that’s becoming the future and becoming the present. But at some point, you do know that it’s finite. You know that you’re going to die and everything grows and decays. And so the idea of infinite growth is already an illusion in the sense that it’s lying to you as though you’re going to outlive your own life some way through economic contributions. And you’re not. And what’s going to happen is you can make a contribution to the economy and through your offspring, perhaps, bequeath something to them, which then imparts on them a sense of responsibility both to the land, to the community, to the state, et cetera, et cetera. But it’s really not all about that. In Latin, the word otium means leisure, and the word negotium means business. So business is defined as not leisure. And I think that’s another thing that we lose when we denaturalize the economy. We lose the fact that our goal here is to work for the sake of leisure. It’s not to work every single day for the rest of our lives. There’s a time for work and there’s a time for leisure. And I think that in general in modern society, most people are working all the time, even in the way that they… They may have forgotten how to have leisure at all. Yeah, even in the way that they’re ostensibly having leisure, it’s still this very quantitative, technical, work-based, gamified experience where there’s a zero sum. How many likes did I get? How many tweets did I do today? How many followers do I have? Did you see this person over here? Did you see that? Everything is just constantly being ranked in this quantitative way, which is actually entirely subjective and manipulable. Whereas what they’re really supposed to do is produce a surplus, which then allows them to either have a family, bequeath that surplus to the family, or live off their remaining days in pursuing some form of leisure. It could be playing golf or it could be coming closer to God. That is within their free will and rights to do. But this idea of constantly working or even a country just constantly working is so bizarre. This is actually what China does. China is a corporation disguised as a country. They’re basically generating a profit on the back of out-competing with the rest of the world. And so on an economic level, that’s a problem because it’s true and the West has to deal with that. But on a philosophical level, on a cultural level, that’s one of the advantages we might have in that they don’t really tend towards leisure in the way that I think we can, we used to here in the West. So that’s also part of the manner in which the ethic in some sense has gone astray. You have ever more work tracing, ever more growth, forgetting the fact that the purpose of work in some sense is, you said, to enable leisure and say to enable play. Play perhaps being the opposite of toil and that that’s a true loss of richness in life. Now we’re supposed to work, but there has to be a balance. So what do you mean by energy embodiments? So energy embodiments is anything that’s produced from the earth that can be weighed, divided and shared. And I specifically say anything that’s produced by the work of the human hand from the earth. So it can be salt, it can be cattle, it can be gold, it can be silver, it’s any commodity essentially. Well, it’s very interesting that you tied that into thermodynamics. I was talking to a neuroscientist recently whose name momentarily escapes me. Kristen. And we discussed the relationship of human emotion to entropy. So imagine you can calculate entropy by computing the distance between your goal and your current reality. And that’s a path length, right? So there’s a certain distance that you have to traverse to get to where you’re going. And that distance requires a certain amount of energy. And that energy, that distance is equivalent to the entropy of the distance between your vision and your goal. If that distance increases rapidly, that’s an entropy increase. That’s what happens when a tool fails, right? Because you don’t know how to use it in relationship to the goal. It makes you anxious. Anxiety is actually a signal of unexpected entropy increase. And then positive emotion, interestingly enough, is a signal of entropy decrease. So you feel positive emotion, for example, when you’re moving towards a goal, so decreasing entropy. And the movement works. So now you’re closer to the goal. So the whole emotional system is also thermodynamic fundamentally in its essence. And you’re making the point that the point of the primary economy is to produce the commodities that have an intrinsic entropy reduction. It’s not just entropy, right? Because it’s also the provision of material resources like direct food. I know that some of that’s energy, some of it’s the reconstitution of the material substrate as well. So I think I’m using energy and entropy, I think, in a different way from how a physicist might use it and perhaps even how you just used it. The way I think about energy and entropy after wrestling with this concept for a long time is I think energy is best described as the generative force in nature. And entropy is best described as the degenerative force in nature. Yeah. No, I’d say that’s the same. It’s the same. I concentrate on a different element. Yeah, of course. Yeah, but like so the rose blooming in springtime is energy. And that same rose withering, literally dying in front of your eyes, is entropy. But nature dies and then is reborn again. It’s the same nature, the same plant will die and then give birth all over again. It’s like it dies and renews. And I think that’s just really… Well, you know, Schrödinger, the physicist, basically defined life as an anti-entropic phenomenon. Right? So there’s something very fundamental about this. I’m going to read three chapters specifically and then I think we’ll close this out concentrating on what they concentrate on because this turns to the issue of money. Ecological accountability is a fact of nature and of all human cooperative systems. So the idea there would be if you transgress against the principles of ecology, you’re playing a non-playable game. You’re going to fail. Only the service economy is able to artificially and temporarily ignore ecological accountability. The environmentalists make a case like that, although it’s more of an explicitly anti-industrial case, right? When ecological accountability is manipulated or forgotten, so that’s the relationship between the economy and the underlying environmental structure, the relationship between the real and service economies becomes parasitic. Very interesting turn of phrase there, parasitic, because it means a parasite actually destroys the source of value while consuming it, right? While it’s feeding it, yeah. Yeah, yeah, yeah. So there’s nothing about it that renews and revivifies. The natural standard must be reified and extended to all members, ensuring that ecological accountability remains at the heart of cooperation. So the idea there in some sense, this natural standard to be reified means that the signal that it contains has to be propagated reliably through the abstractions of the system. That’s right. Okay. This is where it gets more practical. Is not an ideal or promise, but a lived reality. And then we switch to money. Money extends the natural standard. So that’s the key element of your book in some real sense, right? Genuine money extends the natural standard in an ecologically valid manner. That’s your claim. Because it’s taking that natural standard and it’s reflecting it in the object itself. It has two features. Any commodity has two features. It’s a measure in the sense that it’s a weight of something relative to other things, relative to the farmers’ harvest this season, relative to the amount of land that you’re putting. So it contains an intrinsic information. Yes, but this information is changing relative to the natural order, but the natural order is the arbiter. But then it’s also a reward in the sense that irrespective of whether it’s a good measure or a bad measure, it’s something you need as an input. You can do something with it. It’s useful. And so every commodity has that feature. And so when we use… So your notion with fiat money is that it’s stripped of its intrinsic information. It’s neither a measure nor a reward. Which is why the Nobel laureate would have been able to say, well, the only difference between copper and gold is subjective desire. Yeah, but you know, it’s funny because Aristotle in the politics says that money shouldn’t be pursued for its own sake. It has to be something that’s a good, that’s useful. And the fiat money is something that’s just pursued for its own sake. You don’t receive the fiat money so you can do anything. So that’s another place where it’s ethically uncoupled, because it doesn’t have that intrinsic value. Or usefulness. Right, usefulness. And remember, in the cryptocurrency space, they’ve been trying to tell us now, and you know, I have a great respect for the cryptocurrency space, but they’ve been trying to tell us that things can have utility by virtue of them just being a medium of exchange, by being a medium of exchange onwards. And they build scarcity into it. Yes, but I just don’t think that’s true. Right, right. I think that nobody, think about it even in financial markets, nobody just wants to have fiat money sitting in their bank account. They want to invest the fiat money to generate some interest. They want to buy a stock. They want to buy property. So nobody actually wants to just sit and own the fiat currency unless they’re buying it on leverage relative to some other fiat currency like the Japanese yen. Why can’t you say the same thing about gold? Because the gold always has that embedded optionality to its owner. I can sell it to someone that needs to turn it into jewelry, or I can sell it to NASA, which needs to add it to a rocket, or I can sell it to Apple, which needs to use minimum. Right, so minimum always has that fundamental utility. Your choice to take the gold and treat it as what’s called a storehouse of value doesn’t change its intrinsic natural utility. So then you say, money extends the natural standard, promoting cooperation while reflecting ecological accountability. That’s a very nice sentence, by the way. It’s a good example of the elegance of your writing, I would say, because that’s a very tight sentence. Promoting cooperation while reflecting ecological accountability. You can think about that ethically, because what that means is if it promotes cooperation, then it’s a medium of exchange that helps us play socially sustainable games. But if it can also simultaneously reflect the natural order, then not only does it help us play socially sustainable games, it helps us play the small class of socially sustainable games that are also environmentally sustainable. So then you get a balance of that logo, top-down logo sort of thing. What I’m doing there is I’m basically going back 150 years to the point at which William Stanley G. Vaughan in 1875 introduces these terms, unit of account, medium of exchange, to a lesser extent standard of value, which have become derigar in any discussion about money these days. And I’m trying to show that the main function of money goes beyond, it’s more than the function of just allowing the farmer who has a surplus of corn to sell his corn for money so that the barber can basically buy the corn with the money that someone pays him. It’s actually making sure that every single member of the economy is accountable to the real wealth that’s being produced. And I think that the whole notion of a store of value follows from that because today we’re told that anything can be a store of value. That’s why you say money is more than its incidental features. Yes. And today we’re told that anything can be a store of value if someone subjectively decides to just hold on to it. So we say art is a store of value. But when you think about it, the way that money was understood before this denaturalization of the economy was that it was a store of value not because I just subjectively want it and I don’t care what it’s worth, but hopefully it’s scarce and it’ll be worth more one day. It was that I want to hold on to this thing because I know that everyone else recognizes that this thing is something that they might need in the future. And that has a deep intrinsic value that’s tied to nature itself. Another anti-postmodern argument in some sense. So Chapter 7, this is where we turn to the nature of money itself as a signal and medium of exchange, but also as something that contains intrinsic information about the structure of the sustainable of the world and sustainability in the world. A superior money will be resistant to entropy, so that would be decay, so it’s permanent, a storehouse, and reliable and unchanging spatially as well, and rare or difficult to extract from nature because otherwise it would be so plentiful you can’t use air as a medium of exchange. True money will neither be food nor fuel because it’s consumable then, but rather an elemental substance. Elements are naturally scarce, meaning that each element exhibits certain unchanging qualities and then at the apex, gold is the apex element within the natural order of money. Expand on that a bit. Now that has to do with its scarcity and its nobility as a noble metal. But it’s important to state that when I say true money there, I’m saying in a post subsistence society. So as the society has matured and it’s become complex, there’s a division of labor and there’s a market, at that point it wouldn’t make sense to use the most necessary inputs, the food, not only because they’re subject to entropy, you know, lettuce lasts six days, but also because it’s better for the economy to use those inputs rather than just hold on to them for the sake of measuring rewarding. So gold’s got that weird balance where it has a utility, but the utility isn’t so overwhelming and so immediate that it can’t be used as a bank. Its utility as money is more important for a well-functioning post subsistence society than its utility as a commodity. That doesn’t mean that it doesn’t oscillate. It still oscillates. Yeah, well that’s a very interesting proposition, right, that gold has that strange balance. It’s not so useful that you have to use it. But it’s not so useless that it has no intrinsic value. That’s right. Whereas with silver we find that it’s a lot more industrial, it has a lot more industrial use, so even though silver might be embraced as money, you still need loads of it for industry. The thing about gold is it has, you know, there’s an aspect of elements called specific gravity. It’s one of these features, qualitative features. And gold has a specific gravity that’s so high, which means that as you condense more weight of it, it occupies a very small volumetric space. So if you were to take a sugar cube sized of pure silver or a sugar cube size of pure gold, you would find that the gold is just heavier, even though it occupies the same volumetric space. And so what I’m trying to say is that the amount of gold that we have… So it’s value density? It’s something like that? Yeah, you might say value density. Like energy density? You could say that. Definitely. I mean, in terms of the amount of energy that it took to produce the gold, the gold is representing in less space than anything else. So it’s an efficient estimate of… Yeah, and in my company, Goldmine, you know, we have a warehouse, let’s say we have a billion dollars of silver. Well that’s going to be warehouse upon warehouse upon warehouse of silver. You’re walking through aisles of silver bars. Whereas a billion dollars of gold would fit right here, in this little room. And so… So it’s also got that property of efficiency. That’s right. And that I think makes it also very efficient in terms of exchange as being something that pays for its own movement. It’s inexpensive to move. It doesn’t require as much energy to move. And easy to hide in some real sense too. Yeah, perhaps. Well, that could be real relevant when someone’s after your storehouse of value, let’s say. But the thing is there is that because of that feature of gold, you don’t need so much of it volumetrically for industry. What ends up happening is that we use, as a society, the lowest amount of gold, the smallest amount of gold that we need to do the things that we can’t do with any other element. So in your phone, there’s a part of your phone, there’s certain soldered connecting joints where we have to use gold. Apple doesn’t want to use gold. But it has to. So it uses just the bare minimum that it needs. But it’s still a couple of dollars worth of gold per phone. So we’re constantly using just kind of the lowest amount of gold that we need. So it’s interesting what you’re proposing in some sense. A good game is bound by rules, which isn’t really a good way of thinking about it. Because rules and laws sound like they’re walls. But that’s not really true. A good game has principles that enable a lot of activity. The best game has the best rules in some real sense. The best game, we’ve already alluded to this to some degree, the best game is one we both want to play and that can play for a long time and that maybe even improves as we play it. But that would also be a game that we could do that with that would allow us to stay in harmony in some real sense with the natural world. So we want a set of principles that enables cooperation. That’s the next thing you say here, Ashley. When money is gold, this is probably the key sentence, certainly to the introduction. And you repeat it. This is a repetition about an appropriate one. When money is gold, cooperation between people and nature is sustainable. Well, that’s the thesis of your book fundamentally in one sentence. And part of the reason I’m talking to you today is because I’m still trying to evaluate that thesis. It’s a bold thesis in some real sense. If it’s true, I haven’t been able to figure out why it might not be true. Because I do believe that obviously we can’t decouple our economic system from empirical reality any more than we can decouple our conceptual systems from biology. Or if we do, we’re going to pay a big price for it, I believe. Well, let me propose a solution to that, Kondri. Some of the greatest errors in history have begun as logical axioms that made sense at some level. But then after… Yes, like Marxism. Yeah, and then you conceptualize it and you realize it’s like that meme where you see the domino and you push one domino and then you end up… So the axioms sound good in principle. Yeah. So my response to that would be, well, if you’re on the side of what I just said, you’re essentially on the side of all of the traditional wisdom that has characterized the development of the Western world. And if you’re on this other side, you’re in a brief period of history to which we observe a great deal of issues. And then I would raise you and say, well, what is the other alternative? Because I’m not going to be convinced that the current system that we have is a valid alternative. I think it’s a terrible system. It’s a parasitic system. It has dyspeptic symptoms such as inflation and wealth inequality, and I think also environmental damage. And the germ in the environmental movement is coming from the right place. They’ve identified that our ways are antagonistic to nature. But their solution is arrogant in the sense that… It’s also top-down and centralizing and abstract and controlling. Exactly. They’re not letting nature take its course. And the real solutions to any potential… This is a bottom-up solution, right? In some real sense. This is decentralized. Well, that’s why you said… The thing I like about it, it’s got this fractal nature in some sense, right? So your notion is that if gold in some real sense reflects the natural order and you use gold as the signal of measure that permeates the entire system, the system is being corrected at all of its subsidiary level simultaneously. It’s not a top-down corrective. And I’ll give you a perfect example. If gold is money, when you have growth, you get deflation. Prices come down because the gold is always that rarest, longest-lasting thing. So when you produce more things relative to the gold, that means the price of those things declines. Conversely, when you have a slowdown in economic activity relative to a past point, prices are going to rise. But the prices rising are basically telling people that they have to go out and produce more real things. And it’s a concept that’s so hard to conceive of. We’ve lived with inflation for so many years now. It is possible to have inflation under gold standard, of course, but that would reflect a slowdown of economic activity or a shortage of certain things relative to gold. Right. Well, that wouldn’t be inflation exactly. That would be scarcity. Yeah. But doesn’t it sound amazing that you could live in an economy where, as you were prospering, prices were lower? And don’t you remember in the tech world where we saw that with flat-screen TVs, there was this productivity where, or even with certain vehicles, that used to be the way of the world for every industry. And that was the engine which actually allowed… Well, people still argue that that’s occurring. I interviewed Marion Tupi, who wrote the book Super Abundance, that makes some claims that are contrary to yours. But you’re concentrating more on the rise in asset prices like housing, very, very basic asset prices that seem to be, in some sense, escaping from people’s grip. Well, I would disagree with the methodology in his book. I’d be happy to talk about it, but I think… We’ll get the two of you together on a podcast at some point. On that, yeah, I’d love to. On that sense, if you talk to anyone on the street that’s over 30 years old, they will tell you that in their lifetime, the cost of everything has gone up. Every single person will tell you that. Now, when those people have to express that view politically, they’re being offered two kinds of responses, irrespective of the political party. One response is, it’s true, I’m going to help you, vote for me. But then there’s another… But that’s a centralizing control issue again there. But then there’s another response, which is, oh, no, no, no, you’re wrong, you’re wrong. Let me bedazzle you with quantitative abstractions. Let me show you why you’re wrong. Well, it is tricky, because we do have these remarkable cell phones, for example. It’s not easy to quantify their value, let’s say. Well, yeah, but what is the value of all the book shops that we lost because of Amazon? What is the value of the record shops that we lost? And the diversity that was there. And the diversity and decentralization… Well, this is an issue of measurement, isn’t it? In the Cold War, one of the great arguments for the superiority of the West versus Russia was that you’d go into a supermarket and you would see just so many brands. Diversity and abundance. But today, you go to a Western supermarket and it’s basically the same kind of packaging. Kraft Heinz owns half the aisles. Right, so your argument, in some sense, with DUPI is that because our measurements are wrong, fundamentally, none of the calculations that we’re making in relationship to abundance are actually valid. Yeah, and I would also have a quarrel with this metric of GDP per hour’s worked. I don’t think that that… Well, we’ll arrange this discussion at some point and see what we can hash out. I’m going to read the rest of the summary of Chapter 8 and then I guess we’ll bring this part to a halt. I’m going to talk to Roy for another half an hour. You all know this by now, or many of you who are listening, on the Daily Wire Plus platform. I often walk through someone’s life biographically. I might do that with Roy, but there’s other places we can take this, so I’m still deciding on that. Anyways, here’s the summary of the eighth and final chapter. When money is gold, and as I said, that’s the fundamental thesis of the book. When money is gold, cooperation between people and nature is sustainable. That’s a hell of a claim that. It’d be interesting to see what people make of that in the comments. When money is gold, cooperation between people and nature is sustainable. Gold money remains a stable measure and reward in both generative and degenerative cycles. And then he concludes with this. We live in an age of contrived monies, reflected, let’s say, in voluntary inflation, the printing of money, and parasitic economies. The definition there would be economies that are bubbling upward, but not replenishing the source. That’s a good way of thinking about it. A solution must be given by nature and not the service economy. And then the closing is gold. It’s quite a claim. Gold is the perfect mirror of ecological accountability. So well, it’s hard for me to evaluate the book, you know, because I’m not an expert in these topics. I’ve read a lot of books. This seems to me to be a very good book. It’s very clear. I found the argument very compelling. It’s very interesting argument, at least. There may be things wrong with it that I certainly don’t understand. There’s probably things wrong with it that you don’t understand. But I definitely enjoyed reading it, and it’s given me an awful lot to think about. And I do think it’s beautifully written and is also a beautiful book. So that’s the natural order of money. If you’re interested in this discussion, I would recommend the book. It’s pretty short read. It’s pretty damn clear. And I’d like to thank Roy for talking to me today. And for all of you watching and listening on YouTube and the Associated Podcast, thank you very much for your time and attention. To the film crew that’s here today, they came in from London suddenly and unexpectedly, let’s say. So that was very helpful to the Daily Wire Plus people. Thank you for facilitating these conversations. And I guess it’s not too late in the year to wish everyone Happy New Year one more time. Thank you for your time and attention.