Welcome to the Bitcoin Infinity Academy, brought to you by Plan B Network and Bit Box. I'm Kwano and I'm here as always with my partner in, victimless crime, Luke de Wolfe. How are you today, Luke? I'm Greg Knu. How are you? All good. We're doing another chapter today. Yes, we are. Next chapter of Sovereignty Through Mathematics, the Gullible Collective. I'm excited about this one. Definitely some interesting takes on collectivism. Absolutely.
If you, if you don't know what this is, I mean, go to bitcoin infinity.com and you can get the book. You can go to a geyser page and sign up for the academy and all of that. So, but let's just dive into it. Shall we look? Let's do it. I'll start by reading the first paragraph, the Gullible Collective. Chapter three of Sovereignty Through Mathematics, we humans are biased by nature. Everything we think we know is distorted in one way or another by our cognitive shortcomings.
The human brain has been forced to evolve and adapt to whatever environment it found itself in over millennia. Having a brain that is capable of setting aside personal aims for the sake of the collective has proven to be advantageous for the evolution of our species as a whole. is true for every other social form of life. However, letting these parts of our brains guide our political judgment can lead to disastrous results in the long run.
Not because of bad intentions, but because of the simple fact that a few individuals will always thrive by playing every political system for personal gain. From an evolutionary perspective, an army of as sayers and martyrs, regardless of whether we're talking about an army of humans or an army of ants or bacteria, has an advantage over a less disciplined one.
From an individual's evolutionary perspective, though, it is better to appear like you're a martyr, but to run and hide when the actual battle happens. This at least partly explains the high percentage of sociopaths in leadership positions all over the world. If you can appear to act for the good of the collective, but dupe your way into more and more power behind people's backs, more likely to succeed than someone playing a game.
Yes, It's a, a, a bit of a, a strange paragraph to some maybe, but, uh, I think this is alluding to incentives being, uh, the driving force for, for human beings and being super important. Uh, so, uh, yeah, that's, that's what the paragraph means. Uh, uh, why the sociopaths are where they are is because it's beneficial for them to, to be there. Uh, political leaders in particular have a high percentage of sociopaths among them.
Yeah, I think the distinction between the individual and the collective is a theme that we explore a lot, that you explore in your writings and that we have explored in the inverse clown world and in many of our conversations. So I think this is one of those cases where. People might have the wrong idea. I think about collectivism in general. It's currently the, it's the thing that in the western world, you're supposed to be a little collectivist somehow, right? We're all in this together.
We live in a society. This is just the way things are. We live in these nice welfare states that provide for people, but there's a, there's a dark underside, right? Exactly. And, uh, you know, there's nothing wrong with human beings grouping together and doing things together. The, the, the wrongness of it comes, uh. When, whenever there's, uh, violence or threats thereof involved, so we are primed to, to cooperate and help one another.
It's just that, uh, some people think it's okay to do that at the expense of a third person or ex at the expense of another human being. And, uh, uh, as we will learn through these books, that that is never the case. The, the, the free market and, and consensual interactions are way, way more powerful than people, think, uh, and, and collectivism and, and market interventions are, are way worse than people think.
I definitely found it interesting here, getting to the evolutionary side of this also, because it's also interesting to look at. Reasons that explain individual's behavior, right? Like we talked about a little bit in the last episode, the, the financial atheism chapter. well, maybe, maybe I'm drawing a different conclusion here, but there is a, there is an evolutionary explanation to us as a species.
Basically, if you believe the scientific consensus that such as it is, and evolutionary behaviors for what individuals do I, I, I think it works perfectly well because there are things hardwired in our brains that get us to lean towards doing certain things and different brain configurations result in different individuals who behave differently. So I find it really interesting to dig into these reasons. For why people do certain things, it certainly helps to build empathy. Yeah, absolutely.
I mean, this is on evolutionary. This is, this goes super deep and it's straight out of, uh, I don't believe you need to believe anything to, uh, to, to buy this. Uh, um, we are our bodies and our, and our brains are just a collection of cells, cells who all act in their own self best interest. So they have a, they do what they do because they're primed for survival. The, the cells that behaved in a certain way, had a higher likelihood of surviving that than cells that didn't.
So that's at the core of our very being and we're just a, a great hive of, of cell cellular organisms that, found out over time that cooperating was better than fighting one another. That's what we are. what we do as a collective, uh, may be good for, uh, the human being, but not necessarily for the cells in the human being.
So if we get a tattoo, for instance, to, to, uh, attract a woman, uh, that might be good for the collection of cells, but not maybe for the individual cells in the arm that got the tattoo. Like there's, you can, you can take this to, to absurd levels. Uh, it's just, uh, to distinct between, uh, between the, the what's good for the individual, uh, what's good for the collective is not always necessarily good for the individual. That's what I'm trying to say with the paragraph, I think.
And, uh, maybe let's, let's continue and to explore this a bit further Sure. onto the next one. Story of banking and fiat currency is a story about collective madness. Historically, rulers have tricked people into killing each other through the promise of an afterlife. I. Central banking, the rulers of the world wars could trick people into building armies for them by printing more money. This is seldom mentioned in history classes because it still goes on today.
On a massive scale, inflation might no longer be paying tank factory workers, but it is the main mechanism that funnels wealth into the pockets of the super rich and away from everyone else. Inflation is the mechanism that hinders us from transporting the value of our labor through time. It makes us avoid real long-term thinking. We hardly ever consider this a problem because none of us has ever experienced an alternative to it. Yeah, it's, this is the core of the problem that Bitcoin solves.
Many people think inflation is a natural thing that just happens, but at the end of the day, it's always because someone is printing more money, giving it out as debt to people. This has been going on for centuries. Uh, humans have never been able to resist enriching themselves at the expense of others by, by, uh, printing more money if they've had that power. And it still goes on today.
and, uh, the, the, what, what I don't believe is like that there's a cabal of, of, uh, evil masterminds like Dr. Evil, um, types in a layer somewhere is like figuring out this way of mass control over people. It's just the incentives are there. Short term incentives to make people do stuff. So even uh, Nixon in 71 when he went off the gold standard, I think that was a very. High time preference decision.
Like he didn't think of the consequences because the consequences weren't of consequence to him. He only had to think about the next couple of years and winning the next ele election and stuff. So, so high time preference and, and us, not us having urges that we can't control, is, is even behind the money being corrupt, which leads to even more high time preference decisions and even more stuff we can't control. So, high time preference in this sense is the enemy here.
Totally agree, and I think it's great that you got into a couple of topics here in this paragraph. I think the, the point that you referenced in terms of the. Ball. This is a set of ideas that gets explored quite a bit more in, for example, the creature from Jekyll Island. I forget the author's name off my head, but that's an easy one to find. I really enjoy that read because it's a very good history of inflation and money and, and all this.
But it, it's definitely, got some controversial elements, put it that way. and, and I think even through that one too, the Nixon example, it's funny to take any kind of devil's advocate on Nixon taking the US off the gold standard in 71, but the one argument I've heard that holds a little bit of water here on why not to blame Nixon specifically is more that the. Countries were already operating as if they weren't on a gold standard basically.
And if it hadn't have been Nixon, it would've been the next guy. Instead of Nixon in 71, it would've been Carter in 79 or whatever. I don't know. But it's, it's, it's just one of those things where that un, unless you absolutely are drained away from being able to do the high time preference thing, it's going to happen eventually. Something like that. Someone is going to have too much temptation to do the thing. Uh, I don't know. Is, is that in line with what you were getting at here?
Yeah, absolutely. I mean, uh, it's, uh, it's called Hanlon's Racer, and it's a bit like Gresham's racer, uh, uh, it's, never attribute to malice that that can be explained by stupidity, uh, uh, is one of my favorite razors. Uh, and this one in particular is, it's totally true, like the, the reason, One reason Nixon went off the gold standard is to keep funding the Vietnam War, which was, uh, costing a lot.
But like, uh, running up to that, just as you say, there had been a lot of fractional reserve going on already. So, so they didn't have backing for all the gold receipts, AKA dollar bills that they had given out to people. So they were printing money before, before they let go of the gold standard.
Letting go of the gold standard was a way of, of making that work short term, but it's like it was a sacred principle that had to be sacrificed on this altar because of other high time preference decisions that came before. And it's just. tragic is the tragedy of the commons, if you will. Like it's, uh, unfortunate that that happened. Then again, if that had not happened, we might not have had Bitcoin, so we would still be on a gold standard with, uh, um, semi fake fiat receipts for gold.
Uh, I kind of prefer a world where Bitcoin exists because it's, uh, way, way, way better and more hopeful than gold ever could dream of being. So, so yeah, we are where we are. Uh, history is what it is, and, uh, all we can do is like think of the fu future and move forward and learn, learn by studying the past. Yeah. And to tie this back, I think to the central point, just to emphasize this a little bit, is the, where you say it is about collective madness.
Yeah. The thing here is I. We have social structures that empower individuals to make decisions for the collective. I think that's the central point here, is that the individuals are giving up their freedom, their sovereignty to other individuals who have their own motives. And having money in control of that is really the, the problem. As illustrated by examples given such as 1971. Yeah. And uh, people in power who.
Got into those positions, not because of merit, but because of, uh, theft and, uh, other like, uh, malicious mechanisms, uh, that put them in power.
Now, the, the, uh, so this is the thing, whenever, whenever you say that you want the government to do anything or that you think that there should be a law forbidding this, you are also saying that you are okay with theft and you are okay with one human being deciding what's best for another, you, you are, as you are okaying people to put themselves on a pedestal. And I think people in general underestimate how dangerous that notion is. Like why is, why, why people aren't libertarian?
Like it's, It's super dangerous to say that you, you, you believe that people should have, uh, that there, that there should be positions of power that are not the result of merit. yeah. I'm stumbling on the words here, but, uh, you get the point. I think look. I do and, uh, continue on these points as we continue. So, let's go on. Money is still vastly misunderstood by the lion's share of the world's population. In most parts of the world, banks do something called fractional reserve lending.
This means that they lend out money that they don't have conjuring up new money out of thin air and handing it out to their customers as loans. Loans that have to be paid back interest. Interest that can't be paid back with thin air, but has to be paid with so-called real money.
Real money of which there isn't enough around to pay back all the loans so that a constant need for new credit becomes a crucial part of the entire system to mention central banks, which do the same and worse for governments, so used to it by now that every country is expected to have a national debt. All but a handful of ridiculously rich ones do debts are also loans that have to be paid back with interest backed by nothing. Think about that. Your taxes are paying someone else's interest.
Your tax money is not paying for your grandmother's bypass operation, paying interest bank. Yeah, we started to get into some of the ideas from this paragraph here, but uh, we're going deeper. Yes. Uh, there was a, uh, back when I first got interested in money, uh, and how money functions at all, there was a short YouTube series called Money as Debt.
Uh, I can highly recommend and, and it explains fractional reserve banking and how it started, like, so, so there was a, some guy in the city who had a vault or is the equivalent of a vault where he could keep people's, Valuable goods. And he gave out receipts for mostly gold because that's what, uh, people use to store in vaults. So, so here's a receipt for this and that much gold.
Uh, and pretty soon the, that guy realized that he could print out more receipts than he had gold in his vaults, because the only time he would need all the gold is if everyone, uh, tried to withdraw the, their gold at the same time, also known as a bank run.
That's how the term bank run was born, because when people started to figure out that the, the guy was counterfeiting receipts, they, they re uh, responded by, by all withdrawing their gold at the same time, which is when the bank went bankrupt and the banker was exposed as the fraud.
He was until the invention of the central bank, which it was like invented to prevent the runs But by bailing out the bank that was supposed to, uh, go bankrupt, uh, they, they avoided a short term problem by postponing it and snowballing it into way bigger problem way later down the line. And that's what we're living in now. We're living in this per perpetual debt cycle that just grows and grows and grows as you have to pay interest up on interest, up on interest.
All, all the field currencies turn into a istic curve, hyper inflating things. Sooner or later, inflation's just hyperinflation in, in slow motion. So yeah, this is what this paragraph is about and what my books are about. Definitely. And I think the core concept here that everyone getting into Bitcoin has to gr at some point is mechanism that inflation has. Why fractional reserve banking just doesn't work and requires that inflation.
I, I think it's really well explained, uh, in this paragraph here. Money gets loaned out at an interest rate and must be paid back. It, it's, it's a game of musical chairs, something like that. Unless more, yeah, unless more credit is getting added into the system, which is now the current system we're in and central banks to backstop banks from, from fractional reserve. There, there are good.
Explanations of why fractional reserve banking, particularly, I think Lynn Alden makes this argument that fractional reserve banking is not all bad. It's just the amount of it, and it doesn't necessarily even need to, uh, hit the money supply something like this. I don't, I don't know enough about this specific thing to agree or not.
I say maybe keep it simple and, and just don't have that, uh, but not, but having a lender of last resort is the thing that, that is a lender of last resort that is required under a threat of violence. Uh, definitely makes the system worse. That's, uh, my take on it anyway. it is also important to stress that, fractional reserve is possible on Bitcoin, but much harder to pull off since everyone can audit everything at, at any point in time.
So, for instance, uh, a custodial wallet, like Wallet of Satoshi for instance, could theoretically do fractional reserve banking already, as long as, uh, not everyone was taking out all the Bitcoin at the same time. They could pretend to have more Bitcoin than they actually have because they only need that much in circulation at any point in time. But it's, it, it's the, the, they have checks on it, like they can't do too much of it.
Uh, with fiat you can literally do it forever, uh, until people lose faith in the currency and, and you go into civil unrest. So, and which is what all fiats, all fiat currencies are on that trajectory. They. They've all died the same way. They, they get printed into oblivion and lose all their value. And it's, it's, it's tragic, uh, that, that it goes on. And hopefully now Bitcoin is the remedy to all of that. Yeah, hopefully completely agree.
And, and you know, is isn't it really the case that I, I've tried to think through this problem multiple times that you can't really give someone a loan in Bitcoin terms and get interest back in Bitcoin terms without someone losing.
Or maybe to extend that slightly, because I think we also talk about how it's not a zero sum game, but whoever is doing the, uh, whoever is taking the loan needs to get more value back than the amount of the interest rate basically, for it to make sense in Bitcoin terms. When we're denominating in fiat, it's an entirely different matter, but. When it's in Bitcoin terms, in order for any kind of lending and interest rate to work, someone has to be doing something with that investment, right?
Yeah. And it's pretty hard to get above that threshold. Uh, so the, but the, the opposite is also true, like in fiat. Someone always loses like you cannot have, uh, inflation without there being a looser somewhere. Like it's impossible. Uh, and this is true for every, uh, as soon as there's market interventionism or market interventions, someone loses like someone is making a trade they wouldn't have made if that intervention wasn't there. So, so it's always at the expense of someone.
All inflation is theft. All taxes are theft, all interventions are theft. There's no way around this. There's always a looser when, when any of these things are, are prevalent in society. The the only way for the market to be the win-win mechanism that it is, is for there to be no interventionism. Like, uh, if, if I exchange something with you on a black market, so-called black market voluntarily with consent and no third parties involved, then we both win. Or at least we perceive we both win.
Whenever there's any intervention, including inflation, someone loses the, the guy that got that, uh, dollar bill at some point. Is being, there's a breach of contract whenever a single new dollar bill is put into existence because it dilutes the value of that, that dollar that the first guy had. Like, there, there's no way around this. And this might be where I disagree with Lynn. I don't know her exact position, so I'm not gonna pick this battle here.
but, uh, I'm very Roth guardian in my thinking around this, that it cannot be done without, uh, a winner and a looser scenario. Like, uh, it's fiduciary media, uh, fractional reserve. the only, uh, time I could think It's okay. It's as if. Everyone involved was aware of the fractional reserve banking going on, which would defeat the very purpose of fractional the reserve banking. So that cannot happen. It is fraud. Like that's what it is.
Like why would anyone agree to having less back than they put into the bank? That's a very bad investment. If you, if you put something away in an account or, or, or invest in something, you want a return on your investment. You don't want less purchasing power when you get the thing back. Money is not a producer good nor a consumer good. It's a good sue engineer is meaning that it's only reason for existence is being a medium exchange.
And if that loses value, in other words, if it's a bad medium exchange over time, then. some theft is going on somewhere. There's no way around this. So Bitcoin is the first and only probably the last, instance where, where money functions in a way where this is not possible, uh, which makes it completely different from everything else. Much bigger deal than people think it is.
Another funny idea along these lines that I've heard is that custodians, because to a certain extent, banks are fancy custodians that just do a ton of extra stuff. Basically with the money deposited, uh, they'll turn into paid custodians. In other words, you pay someone to hold your Bitcoin for you basically. Which is an interesting thought, but it might work for some people. In other words, you don't trust yourself to hold your own keys 100%.
So you pay someone else to take the risk for you essentially. And in the absence of other ways of making money off of that service, basically the custodian is just going to charge a fee. And we actually see that these days already with, with, uh, multisig solutions, like, uh, the, there's a charge to use one of the other keys that is being held by someone else, for example.
So maybe it's not necessarily the, the case of someone holds your Bitcoin as in the UT XOs with all keys, but these multisig solutions, it's, it's sort of a model like that. I think it's an interesting one, basically. No. And there's nothing wrong with custodians in general. Like if you want to have someone custody your stuff, then that's fine.
The problem is when it's, when there's fraud involved and, and the concept of a bank just using the money you put in your account to invest in other stuff and lend out that money. No, not to invest, but to lend out that money to other people to make a return on the investment. And, you know, one interest rate paying for the other.
Uh, it's not inherently wrong as long as, uh, both par it's completely transparent and both parties are aware of all the risks with a contract because there's no risk free lending like the. It doesn't work. You, you don't automatically get interest without there being a risk involved. You, you, you, you should be aware that whenever you have an interest on something paid by someone, it's because someone else is taking a risk with your money. uh, otherwise there's fraud.
Like I, uh, I don't think I can explain it better than that. The only, uh, thing I'll add to this is basically we've spent longer than I anticipated we would on this section, but it's so important. And also it's just this is working so great. I'm, I'm really, I'm really enjoying digging into the, the specifics of these things so much. Uh, but there are, there are other interesting things in this chapter. This wasn't even the point of this chapter, basically.
So, shall we continue Yes, this is a show of tangents. show of tangents? Yes. Is that a, is that a, well, let's put that aside for Yeah, you were thinking Proof of work. Proof of results show tangents. Right. Something like that. Yes. Very good. Yeah, let's get on with it. Good stuff. Alright. Onto the next one. When the ideas at the Catholic Church ruled Europe. People who didn't believe in God were few and very seldom outspoken. had good reason for this.
Since believing God was virtually mandatory throughout society since 1971, when famously dishonest American President Richard Nixon cut the last string that tied the US dollar to gold. Our conception of what the world economy is and ought to be has been skewed by an utterly corrupt system. We are led to believe that we're all supposed to work longer and longer days in order to spend more and more money bury ourselves in more and more debt to keep the machine running.
duped into thinking that buying a new car every other year is somehow good for the environment, and that bringing a cotton bag to the grocery store will somehow save the planet. Stores manipulate us all the time through advertising and product placement, but we are led to believe that if we can be climate smart, we are behaving responsibly. Somehow gross domestic product is supposed to increase indefinitely while politicians will save us from ourselves.
Carbon taxes, fortunately for us, and unfortunately for them, there now exists a way for unbelievers of this narrative to opt out. Life finds a way Jeff Goldblum once so famously put. I would say that this paragraph is the TLDR of, uh, the inverse of Clown World, wouldn't you? Very much so. It's, um, it's about how, uh.
Yeah, the effects we talked about after the last paragraph with, you know, ever increasing exponentially worse problems through ever increasing interest rates, leads to more and more clownish political decisions and narratives. And we, we end up in this society where we don't take any responsibility. We just want to virtue signal that we do, and we end up with clown world. Um, that, that's it. Totally agree.
And, uh, I think what's funny here is we, we basically said most of what is in this paragraph earlier in our discussion here, not every single detail, but the rust of it. And, you know, just the funny little details in the middle here. Things, things like a gross domestic product. I, I really, really, like having figured out that gross domestic product is just the thing that has to keep going up. That a fixed denominator would turn into deflation Gross.
Gross is such, uh, such a good, uh, word to describe it. It is gross, Yes. vulgar, even. Uh, and not a number to be taken seriously. It does not measure progress that you ca you can't measure progress because value is subjective. Like the, this, it's all made up to rationalize stateism. all of these figures are like the official inflation, inflation numbers, the basket of goods. It's all bullshit. Don't fall for it. No, don't fall for it.
As you say, we, we somewhat dig into a lot of this stuff in much more detail in future chapters, so I think, I think for now, maybe let's, let's get to the main point of this one onto the next one. Collectivism has ruined many societies. Those of us fortunate enough to live in liberal democracies tend to forget that even democracy is an involuntary system. It's often referred to as the worst form of government, except all others that have been tried.
But the system itself is very rarely criticized. We are so used to being governed that not having a leader seems preposterous to most of us. Still. We pay our taxes and an enormous cut of the fruit of our labor goes to a third party via inflation, taxation of every good and service imaginable. Institutions once in place. Always favor their own survival just as much as any other living thing does.
People employed in the public sector are unlikely to vote against policies that threaten their livelihood. This is a bigger problem than we realize because it's subtle and takes a long time, but every democracy is headed in the same direction, A bigger state, more complicated system, and fewer individual freedoms. Long term. It seems that all of our systems tend to favor those who know how to play that system and not those who contribute the most value to their fellow man.
Proponents of socialist policies often claim that failed socialist states weren't really socialists. Proponents of socialist policies often claim that failed socialist states weren't really socialist, or that that wasn't really socialism. What most people fail to realize is that we've never tried real capitalism. Since we've always used more or less inflationary currencies, this might very well be the most skewed narrative of our era.
We're all experiencing real, albeit disguised socialism every single day. True free market capitalism is what we haven't experienced yet, and it might turn out to be a very different thing. What we're told to believe that it is by almost all mainstream media. Yes, I. Yeah, a crucial point and, uh, uh, I think a thing that so many people miss.
I hear, uh, people blaming the free market for this and that all the time, uh, which is to, to me, it's, it's oxymoronic even to blame the free market for anything because how, how would you come to a consensus on what constitutes a problem? If not on the free market of ideas. Like everything, uh, all the free market is, is people doing things, uh, of their own volition, like, uh, with consent. Like, uh, they want to do the thing. They, everyone wants the free market.
There is no one that doesn't want a free market. If, if I've never heard anyone say, oh, how I wish that some third party came in here and made my life harder and, and stopped me from doing what I'm trying to do right now. which is what you want. If you don't want the free market to decide things. And, and this is so misunderstood. Like the free market isn't a thing, it's a process. It's the process of people doing things because they want to, not because they're forced to.
A funny thing here also is that these things are so subtle, it's easy to ignore them, right? You, you make the point here that all of this stuff is just slow. That's why it creeps up on us. It's the frog getting boiled in the pot, Yeah. Slippery slope. Every political decision is a slippery slope. and I, I think it's just because none of this stuff is that visible. We don't, we don't worry about it basically, but it, it does keep getting worse and worse and make life harder and harder.
I saw a wheat. That no one wants to work anymore, as being said in newspapers since the 19 hundreds. And I just think, I just think that's really funny because maybe, okay, it's a comment on attitudes that that which has been the norm for a long time is no longer fashionable. Like I think if people have a choice not to be coal miners, they might choose not to be coal miners.
But the thing there too is that it's a combination of advancing technological progress as a individuals aren't necessarily wanting to do backbreaking labor. If they can have a robot do it for them, instead program a robot to do the thing, for example. Or it's that you get less and less for your labor all the time. 'cause of inflation and because of so much getting siphoned away to this in that place. And I just think that it's so hard to convince that this is a problem.
And really it takes getting this, it takes getting what the problem is with inflation, what the problem is with collective is, and to eventually get to what the solutions are. And it's not that it's a bad thing on a micro level that some people are isolated from.
It's good that humanity is progressing in such a way that this isn't something on everyone's minds, but it is It is the case that many people are affected by inflation to such an extent that they should be thinking about it, but it's so hidden that they don't know. That's the problem. People direct their energy towards, yeah, let's fix the climate, or let's blame these millionaires. Something within the system is supposed to solve the problem for them when it's the system. That problem.
that's the tragedy and that's what I hope we can start to solve a little bit more. No, uh, Fiat ruins everything as Jimmy Song said, like, uh. All prices ought to go down forever and everything ought to be cheaper forever. It's the simple questions like what we ask in clown world, like if you practice doing something, do you usually get better or worse at doing that thing? Well, you usually get better. So why aren't all prices going down forever?
And if you use Bitcoin, they are, if you see the world through a Bitcoin lens, all prices are going down forever. Which is by the way, what, what saves people like the, from all the, all the fears about the jobs. Oh, they took our jobs from AI and stuff and all in industrial revolutions have had these fears. And technological pro, uh, progress does not. Make people more poor. They make people more wealthy.
The problem is like a, a minimum wage law, for instance, you can deductively reason that aa axiomatic thinking yourself into the position that minimum wage laws always lead to a worse outcome than if they weren't there on a, a completely free market. There cannot be unemployment, uh, because there's always someone willing to pay something, to have something done. Like, and, and in a world where all prices go down, this is not a problem for everyone. Like the the money, it's the money. Stupid.
Like if, if the money was working, we wouldn't need any of the other stuff. And the, the, the whole notion that we need someone to fix a problem is that's, that is the problem. I couldn't agree more. And uh, it's funny, I think where we're going next hits on some other political things here, so I think let's It's a very political chapter, isn't it? It is, it is onto the next one. The validity of the classic right left scale describing political viewpoints has been debated a lot lately.
And alternative scales like Gal Tan, the one with an additional y axis describing more or less authoritarian tendencies are popping up in various contexts around the web. After the birth of Bitcoin, there's a new way to see this. Imagine an Orgo zero point and a vector pointing to the left of that. All politics are arguably on the left because all policies need to be funded by taxes. Taxation can be viewed, theft, taxation can be viewed as theft because at its core, it's involuntary.
If a person refuses to pay his taxes, there is a threat of violence lurking in the background to mention inflation. Which Milton Friedman so elegantly described as taxation without legislation. What you do with a portion of your wealth that you have in Bitcoin is another matter altogether. If you take sufficient precautionary privacy measures and you know what you're doing, your business in Bitcoin is beyond politics altogether.
With the introduction of the Lightning Network and other privacy improving features, it is now impossible for any third party to confiscate your money or even know that you have it for that matter. This changes the political landscape of every nation on Earth. Bitcoin is much less confiscated than gold and other scarce assets, which makes it a much better tool for hedging against nation states. In this sense, Bitcoin obsoletes borders.
You can cross any border on earth with any amount of Bitcoin in your head. Think about that. Your Bitcoin exists in every country simultaneously. Any imposed limit on how much money you can carry from one nation to the other is now made obsolete by beautiful mathematics. Bitcoin is sometimes referred to as a virtual currency. This is a very inaccurate description. Bitcoin is just mathematics, and mathematics is just about the most real thing there is. There's nothing virtual about it.
Counterintuitive to some real nonetheless. Yeah. To me this is like, uh. These things are at the core of what Bitcoin is to me. Like, um, a complete reimagination of, uh, what money is and what money ought to be. Bitcoin has sort of pointed out to everyone in the world that money doesn't need to be anything but information. the Satoshis exist in every country at once, but the ability to move them exists within the owner's head. 'cause you don't really own your Bitcoin.
You just find the probability that someone else knows the same key to be so low, so that you practically o own them in, in a sense, because you are the one that knows the key. no, and it's gonna change everything. It, it changes how we interact. It changes the validity of the nation state as a concept. I think because like, the, the borders cannot stop this. Like, uh, guns cannot stop this. I mean, and I think this is all for good. I think this is all better.
And there, there are a couple of things here about Bitcoin and privacy. It's, uh, everything in this paragraph is only true if, if about non KYC Bitcoin.
So if you buy them, not on an exchange, but if you accept them for your goods and services and such, One of the technicalities everyone should know about on, on Chain Bitcoin that aren't, you know, coin joined or anything, is that, uh, the, the, the person you buy them from knows when you spend them, he knows when that Bitcoin moves to another address. You can, you can look that up. Not everyone is aware of that. The, the, the Lightning net Network makes privacy better. Other things do too.
And the more time that passes, the more the Bitcoins and their owners get mixed up. And this is a good thing. It makes, uh, it makes it harder for people who want to confiscate them to, to, to figure out what's really going on. Yeah, it's, the paragraph somewhat starts with another point about politics. Basically the, the taxation without legislation point, I think is a good sum up to that. There's a couple of interesting things here. One, first of all, the, the Altan scale.
I, I think the political compass would be more well known here, at least in the English speaking world. I, I actually didn't know what the Gal Tan Scale was, and when I looked it up, it has articles on both Finnish and Swedish Wikipedia, so, so I was able to read it, but it looks like it's only used in those countries. So it's a bit of a, a swish version of Yeah, I think it's slightly different, but it pretty much is this political compass idea where, where it More or less authoritarian.
Yeah. You've all seen it, I guess. Anyway, I. And, but I think your, I think your portrayal that it is from an origin point and all politics is left and upward basically, something like that. It's, uh, yeah, it's an interesting one because it, it certainly does capture the essence that all of the things that governments do, that politics do has to be funded by something and that funding has to come from somewhere.
I think this opens up interesting thought experiments that I don't want to dive into too deeply right now, but for example, we have had conversations about free cities, right? Like, uh, I, I think that's a concept that tries to, tries to get this done a little bit differently. Like, what if instead of taxes, you're paying a fee, and then what's the difference between the two? Right? If you live in a free city and you stop paying the fee, I. Are they allowed to kick you out?
Do you really own what you have there, your property? Something like that. It's interesting stuff. It's just more like, I think the point to get across is all things need to be paid for somehow, and by obfuscating where that comes from, where many of the problems lie. Is it, is it voluntary or not? It's very simple question, like the fee for the private city. You pay that voluntarily when you enter the city and when you buy a property in it, like, uh, the taxes not so much.
You pay them because there's a gun through your, to your head, and if you can avoid them, they do. I, I don't know any person who wants to pay that he should pay or, or she should pay more taxes. Everyone wants fewer taxes or less taxes for themselves, but that others should pay more for some odd reason. Well, there is also, I think there's a funny that says something like, oh, I don't mind paying so much taxes. I wouldn't even mind if I paid more taxes.
This is a very privileged group, I think, because the, they think that the answer to society's problems is, yeah, let the government take more money and figure it out. But instead, you could use that money to do something productive yourself, If you care about one of the many causes that is plaguing the world, homelessness is one of the ones that gets brought up a lot in the US because it's a big problem there.
Well, you as a private individual could donate time or money to helping some homeless people or help to alleviate some of the structural problems of homeless people. But, well, many government initiatives to solve that problem don't seem to be all that effective. So I think it's a bit of a fallacy, but it's a common one. And, and, and of course there are plenty of people that say that, that taxes are the price you pay to live in a society.
Paraphrasing, but It's unfortunate because the only option that you have to not do that is to leave. And then there are people that say that there should be exit taxes, that when you choose to leave a jurisdiction, you have to pay them to not get, I don't know, again, thrown in jail or violence again, something like that. It's all clown world. It's all, all that. I mean, the, the, the comment, I wouldn't mind to pay higher taxes.
Uh, yeah, there's a very Scandinavian thing to say for, to begin with, but I think everyone who says that is a liar because nothing is stopping them from paying more taxes. Watch what they do, not what they say. Like the, you can donate money to the government, not, not like no one is gonna stop you, especially not the government. So, so I, I simply don't buy that. Like, it's, it's, it's always a lie. It's virtue signaling and it's, uh, very disingenuous.
Yes, there was actually, uh, uh, there has been examples of voluntary tax funds. Like, there, there, there was, there was such a thing in Norway and, uh. After a year or so, they got the, the, the fantastic amount of, uh, uh, 1,700 euros from the entire country or something like that. That's what people were willing to give up. Uh, but so it doesn't work because no one wants to pay for something where they cannot know what they're getting back. Like if you pay for a car, you pay for the car.
Like if you pay for, if you pay taxes, you have no way of knowing how much worth you got for you, how much value back you got for your money. Like there's simply no way. So everyone prefers transactions where they know what they get. and everyone who says, uh, otherwise is a liar. Yeah. And another thing here too is that Norway of all places.
Norway has massive taxes already, even though it's got this massive sovereign wealth fund from its natural resources and then asking people to pay more anyway. It's just, it's just laughable. And I think it's also the case that another side to, to this fallacy really is that there's a complaint. Why don't people donate to charity more? Well, you're already giving so much of your money to the government if you have, if you have the resources to donate to charity in the first place.
And charities are another whole thing altogether. Honestly, most charities spend most of their money on, uh, internal administrative costs. And I think they're just as bad at the, as the government at actually doing things. So it's, there's something here. Solving the world's problems collectively or channeling the energy of many individuals into a shared group goal. So. Perfectly valid and worthy thing.
If it's all done voluntary and people have a stake in it and they want to see the thing succeed, and there are incentives for the thing to succeed, but when it's done through this mechanism of, oh, I'm just gonna throw money at it and let someone else worry about the problem, I think it comes back to the original point that sociopaths co-opt these mechanisms and ruin it without the sociopaths, maybe we don't really have so much of a problem here, but the sociopaths ruin everything.
Then again, uh, I think it would be ruined anyway, because, because, so this is a, a thing that me has pointed out in his book about socialism, that it's not an incentive problem, but a, uh, a price signaling problem because, uh, if, if you have, if the state takes control of the means of production. Which it's does to some extent by just taxing and inflating the, uh, the, the normal things a state does. It does skew the market signal.
Any intervention skews the market signal, and it makes it harder for producers to produce what consumers want. So you end up with the Soviet Union, whereas the, there's like kilometers of, uh, a line you have to, to wait in to get a loaf of bread because no, no one produces what needs to be produced. so the sociopaths is one part of the problem, but the, the bigger problem is, is the, the, uh, the price signals. Because money doesn't measure value, it signals value.
Uh, and this is what the, the main misconception of what money is, I think. Love it and the price signal is. Definitely another one of those concepts we'll dig more into at other times. So Absolutely. onto the next one.
The complexity of human social hierarchies and power structures is described perfectly in a classic children's book, the Emperor's New Clothes by Hans Christian Anderson see the world as the kid who points out that the king is naked in the tail and everything starts to make sense. Everything in human society is manmade. Nations leaders, laws, political systems, they're all castles in the air with nothing but a lurking threat of violence to back them up. Bitcoin is a different beast altogether.
It enables every individual to verify the validity of the system at all times. If you really think about it, morality is easy. Don't hurt other people and don't steal other people's stuff. That's the basic premise humans have, but two ways of resolving conflict, conversation and violence. In this sense, to hurt someone can only mean physical violence. This is why free speech is so important and why you should defend people's right to speak their minds above everything else.
It's not about being able to express yourself. It's about your right to hear every side of every argument, and thus not have to resort to violence should a conflict of interests occur. You can't limit free speech with just more speech. There's always a threat of violence behind the limitations code, which both Bitcoin and the Internet are entirely made up of is speech.
Any limitations or regulations that your government implements in regard to Bitcoin are not only a display of Bitcoin's censorship resistance, but also a test of your government's stance on freedom of expression. A restriction on Bitcoin use is a restriction a. Yes, this is, uh. This is an interesting paragraph. I've somewhat changed my views here, I'd say and say that, uh, free speech laws are a downstream of property rights.
So if, if we had absolute property rights, there wouldn't be a need for freedom of speech laws because freedom of sp speech is only applicable to public domains like a public, so public square or a public social media outlet. What, whatever it might be, public service, television. and those are all, uh, uh, preceded by an appropriation of someone's property. The government had to steal stuff because before they could make prop public property a thing. So, so, uh.
In this way, I think freedom of speech and property rights are inexorably linked and that you can't have one without the other. if you have absolute property rights, and I get to say, I get to dictate who gets to say what on my social media platform. I get to dictate who gets to say what in on my property, in my house. And I, I also get the right to throw people out to say things that I don't wanna listen to.
So, and this is great and on, on Noster for instance, uh, you, you get to decide, What to do with your posts. Uh, no one else owns them. Uh, if you use x, Elon gets to decide. Uh, and Elon is more expensive to bribe than many others, uh, which is a good thing. Anyway, the, the whole thing is money is just speech and, and, uh, and information.
And Bitcoin has pointed that out to us that there is no difference between a physical object and information in the sense that, that in the value sense, uh, value is entirely subjective like this. It's, it's all, uh, Austrian economics that, uh, that's at the base of it. And once again, I'd like to stress that if you are pro anything that isn't, uh, free market, that isn't sound money, capitalism, that isn't an arco consensual. Then you implicitly are pro violence.
You think that people, that it's okay for people to use violence and threat, their threats thereof to, to impose their will on others and I, I do not, I don't think violence is okay. that's at the core of why I have the values I do. Very good explanation. And you know, I think my best response is actually, I'm realizing that I should have just continued reading the, the very last paragraph here, because it, it might as well have been exactly what you just said.
So I think I'm just gonna read that and we'll see if there's anything else to say about it. Remember. The only alternative to speech that anyone has is violence Code is a language, mathematics is a language, and money is a linguistic tool, a linguistic tool we use as a means of expressing value to each other and as a way to transport value through space and time. any restrictions or regulations regarding how you can express value.
For example, making it impossible to buy Bitcoin with your credit card, prove that the money you have in your bank account is not really yours. When people realize this, the demand for Bitcoin goes up, not down. If you know what you're doing, there's no need to fear the regulators. They, on the other hand, have good reason to fear an invention that shamelessly breaks their spell.
Yeah, I mean, uh, this is a point that I think few people get, uh, politicians trying to ban Bitcoin and trying to stop people from using Bitcoin actually help Bitcoin succeed. I I, I think there's a under underrated point, like underappreciated point, uh, what they do is a, they, they show to people that they think Bitcoin is valuable, otherwise they wouldn't need to do anything about it.
Uh, and they, they limit the supply even more in that specific jurisdiction, making the bitcoins that are left even more scarce for other people. And thus, demand stays the same number goes up. Like, it's, it's very simple. You uh, it's like politicians trying to decide, uh, that the ocean shouldn't be there the day after, but the ocean is still there. Like they can't do anything about it. It's a force of nature.
I think this is just a fantastic summary and wrapping up exactly what you've been saying here about information and the freedom to do that and to do so. I think I'll echo just one thing that we, we keep saying whenever we talk about freedom, a lot of times when we talk about freedom is that the flip side of the coin to freedom is responsibility.
When you have the freedom to do the things you want to do, you also take the responsibility for your own actions and there could be consequences for actions. So sending money to someone in a way that is permissionless, you might never get that back, and that can be scary, but at the same time it is free. And so we have to take all the trade-offs as they are basically.
In order to get away from any kind of collectivism, the only answer we can ever have and the individual needs to take responsibility for itself. Sovereignty, all of the things, and this is something that Bitcoin promotes so well, but I think maybe it's a case of that it's part of the problem with Bitcoin's marketing, something like that. Why fewer people get Bitcoin is that maybe they're running away from that responsibility. It's hard role. Some people want to not have control, I guess.
Yeah, they want a shepherd to tell them what to do. I'd say, uh, as a final point here, uh, my final point to this is that don't steal is the core of both freedom and responsibility. It's, it's, it's what, uh, what it, it, the, the don't steal needs to be, be there for both sides of that coin, uh, coin to be there. So you need people around you to not steal in order for you to be free and you need to not steal in order to take responsibility. Stealing is not taking responsibility.
Taking responsibility is doing things is, is trading with other people and trading with a fool yourself and making voluntary transactions. If you're stealing it doesn't fucking count. You're not taking responsibility and other people around you can't be free if you are stealing from them. So, so don't steal is if, if I do, uh, if I were to do A-T-L-D-R on this specific chapter, it would be don't steal. I think it, it's actually A-T-L-D-R on, on all four books. Don't steal. Perfect summary.
Say we wrap it up there. I say we do. Thank you for this one, Luke. Yes. Thank you, Knut. And the, the next one is called an immaculate conception, so that will be interesting. Very much so. Okay. Well with that I think we should just remind everyone how to get involved. So the easiest way to do so of course, is via our Geyser campaign. This is how you can join the Bitcoin Infinity Academy, get involved with the discussions.
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So check that out. It's very user friendly and uh, an overall great hardware wallet. Absolutely. And finally, just a reminder of everywhere you can see us conference wise, first Knut is in Ireland in May, but then we're aligned for basically the rest of the summer here. So we're gonna be in Prague, then we're gonna be in Calgary for Bitcoin rodeo, then we're gonna be in Riga, and then we're going to be in Helsinki for BTC.
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Uh, you can do the Riga, Helsinki trip all in one go if you want to, if you've been holding off on this, if you've been, if you live, uh, somewhere really far away. So, uh, come see us in any conference you like, but really try to come to Helsinki if you can. Yeah, go to hell. There's a reason why there's a highway to hell and only a stairway to heaven. Perfect. With that, put a ribbon on this one. See you in the next one. This has been the Bitcoin Infinity Academy. Thank you for listening.