Seeing crypto for what it is and how to live with contradiction with Brett Scott

In this episode I spoke with Brett Scott, an independent scholar, writer, and defender of physical cash from a left point of view. Brett was involved in the early Bitcioin communities and one of the first guests of the podcast back in 2020 so it was nice to be able to talk to him again after so many years and since his latest book Cloudmoney was published.

During the interview we discussed how the monetary system actually works, the contradictions of libertarian money fantasies, and his recent writing on crypto titled Zero is the Future of Money. Be sure to check out Brett's great Substack to learn more about his work on money.

If you liked the podcast be sure to give it a review on your preferred podcast platform. If you find content like this important consider donating to my Patreon starting at just $3 per month. It takes quite a lot of my time and resources so any amount helps. Follow me on Twitter (@TBSocialist) or Mastodon (@theblockchainsocialist@social.coop) and join the r/CryptoLeftists subreddit and Discord to join the discussion.

Chapters

• 0:08 Exploring Money and Bitcoin's Ideological Wars
• 9:12 Contradictions in Anthropology and Finance
• 15:29 Understanding Political Differences and Emotional Resonance
• 22:20 Exploring the Politics of Money
• 29:39 The Monetary System and Cryptocurrency
• 38:40 Libertarian Thought and Money Creation Contradictions
• 45:11 Banking's Role in the Economy
• 1:00:04 Bitcoin as Counter-Trade and Digital Collectibles
• 1:12:09 Layers of Money and Token Categories
• 1:21:14 The Future of Money and Combining Monetary Systems
• 1:30:19 Debt and Mutual Credit Systems
• 1:39:29 Individual Imagination and Mutual Credit Systems
• 1:49:26 Politics and Metaphors of Money

Transcript

Speaker 1: 0:08

I'm here in Berlin talking to Brett Scott on the podcast. If you don't know Brett Scott, brett Scott was like one of the first people I think that I had on the podcast and I was like I was like fanboying really hard whenever I was like oh my gosh.

Speaker 1: 0:26

I was like 20 or 20 or 20 or 21, I think, 2020, because it was fairly early and it's during the pandemic. But yeah, I mean, you're known for being like at least for me like one of the you know, one of those very good writers when it comes to money, from a left-wing perspective, and it also like had a lot of space for writing about cryptocurrency. So I think you're also, for a long time, like one of the few people that were writing about cryptocurrency to any extent from a more kind of like progressive point of view which is very difficult for me to remember.

Speaker 1: 0:59

Before I started the podcast, I was like no one's doing it until, like, I found like a I think maybe a talk by you at one point about it. I was like, oh, he did. He wrote like this guy wrote something that was like I don't know. The only kind of other things were maybe like very academic or just like very like hyper critical in a way that I just like didn't resonate with.

Speaker 2: 1:19

So yeah, I used to try and go and like hang out in the Bitcoin scene a lot and explore it. I have like an anthropological impulse so even when I sense there's like a political dynamic that I don't necessarily resonate fully with, I still like to immerse myself in the scene and see what people are experiencing. Yeah. So, like early Bitcoin, I used to like hang around a lot in that crew. I explored it a lot, wrote pieces about it and stuff, and at some point a lot of other left wing people like this tend at least at least in the left wing intelligentsia tend to just reject stuff, yeah, kind of dismiss it, not all, but you know quite there's a significant tendency.

Speaker 1: 2:03

Yeah, but so from what I remember from talking to you before is that you were involved in a lot of the Bitcoin stuff in the UK and from my understood you at one point whenever there was like the split, the block wars between like Bitcoin and Bitcoin cash Actually, I was curious to hear about like as a veteran of the block wars and like and that splits, did you have any thoughts? I think when I look at it there is something to say. I think both sides were kind of silly anyways, but there was something. There's a certain veneer of like. It was like the, a point of like clash between like the two narratives of Bitcoin of Bitcoin being cash or Bitcoin being digital gold.

Speaker 2: 2:51

Yeah, yeah, I mean I wasn't heavily invested in that debate, bear in mind. I mean, you know, stuff like cryptocurrency was a sort of fairly small part of my overall work. Sure, my overall work has always been about the politics of finance more generally. I mean, I worked in the financial sector and stuff like that. So, you know, one of the reasons I was exploring stuff like Bitcoin is that I was exploring alternative finance and alternative money more generally so, and I would see Bitcoin as like one small subset of that topic. So I wasn't like a hundred percent immersed in it. I mean, if you're a hundred percent immersed in a topic, then small deviations seem like these giant, momentous events.

Speaker 2: 3:33

So people in the Bitcoin scene like stuff like the Bitcoin cash split was just like epic, like battle and stuff. To me it was a sort of like small, marginal difference of disagreement between people who basically agree with each other on some stuff, right Right. But because I was doing work on physical cash and the promotion, the protection of physical cash and the normal monetary system, people in the Bitcoin cash scene sort of, to some extent, saw me as a potential ally in their attempt to say, you know, like Bitcoin should be this cash like instrument to be used for commerce rather than this speculative object to be used for, you know, hoarding Right. So I was taken along to the first big Bitcoin cash international meeting, which they called Satoshi's Vision, and it was in Japan. You went to Japan, yeah, and Roger Vier, you know, and his crew got me there. I mean, I don't know if he personally really cared that much for my work, but like he had to sign the letter to get the Japanese visa Right.

Speaker 1: 4:42

Okay.

Speaker 2: 4:44

So you know. So I was brought in to try and give maybe they thought I was going to give maybe ideological support for their bid to be seen as the most cash like instrument or the sort of true Bitcoin. But again, I wasn't particularly vested in that debate. I to some extent would see both Bitcoin cash and Bitcoin as suffering from many of the same flaws, albeit I actually resonated more with the Bitcoin cash community in the sense that I kind of appreciated what they were, at least theoretically trying to do, right so, but you know, I don't, I wasn't like a heavy a heavy participant in the blockbuster.

Speaker 2: 5:20

No, not saying that necessarily it's a good idea, yeah, but I mean socially very interesting scene being a part of the history and going back to this kind of like anthropological stuff I mean for me I have an anthropology background and hanging out in places with all these like hard line libertarian C-Steader types who like desperately wanted to believe that the world could be run using Bitcoin cash, I mean it's like it was very interesting slightly sad sometimes as well, you know, see people's beliefs or desperately, desperately hoping for something to change in the world. And yeah, I'm sure you know there's lots of kind of like quasi religious elements in the crypto world, for sure.

Speaker 1: 6:04

For, sure I mean there are religious elements to capital, For sure I think I would.

Speaker 2: 6:10

I mean, I suppose the whole Bitcoin cash versus Bitcoin thing is very interesting because, you mean, roger Vier was originally considered, you know, bitcoin Jesus Right Right In the original community, and then he kind of became this like charlotte and Judas to the original Bitcoiners, and then he became a prophet for a new breakaway and they're all trying to like gain legitimacy by pointing to the white paper and like claiming that they, so it became very like religious wars, yeah.

Speaker 1: 6:36

But now he's. Now. I don't have no idea where he is or what he does.

Speaker 2: 6:40

Yeah, well, that community then splits into a bunch of other communities. It was like, yeah, probably my most enduring memory of the bit, the first Bitcoin cash conference was Craig Wright coming to do his big keynote address to an opening song of Metallica, enter Sandman. But he ran down the sort of like aisle to the stage with this Enter Sandman playing and then kind of like jumped on and then was like waiting for the music to be turned off and like sort of like standing there while people trying to figure out how to turn the music off.

Speaker 1: 7:17

I hope that's recorded. Yeah, I think so, like one of the things that is very interesting that you, I think, are kind of a rare breed of someone who is like willing to enter into kind of like intellectually trespass into other types of political, ideological dominated spaces, I guess including the Bitcoin one as like part of your research and money kind of generally. But I was interested to know more about like why, what is your interest in money comes from and, yeah, how you got to this point, to yeah, sure, you're, like a metaphor, master of money.

Speaker 2: 8:04

Yeah, I have to use metaphors because that's like how my brain works. I have to try and explain stuff to myself through metaphors. But yeah, money. I think I probably a few different roots to becoming interested in money. First one is like I come from an anthropology background, and anthropology actually has a much deeper tradition of thinking about money than economics does, largely because anthropology, you know, if you think about the sort of colonial times when anthropologists were first emerging, they were often connected to colonial exploration, right. So you'd be sent out to places that basically were not capitalist economies, all right. So you're coming from some capitalist country and you're going out to somewhere that doesn't necessarily share your same perceptions in the world and often has very different economic structures. So from the very beginning anthropology has had this engagement with non-capitalist or pre-capitalist societies, or at least societies that are only partially integrated into capitalism. There's lots of problems with early anthropology, lots of ethnocentrism and so on, but there's still the strong traditional anthropology of not assuming that market economies are the norm, right, whereas in economics they tend to just assume from the very beginning that market economies are sort of universal in the default mode of human operation, and that makes a big difference to how you then analyze money. So economists tend to just assume a way, a bunch of stuff. They've got these very crude ideas of money that emerge from their underlying assumptions, whereas anthropologists have had to grapple more with, you know, different forms of money non-monetary exchange, even stuff, for example, like shell money, which is often, you know, if you're hanging around the crypto scene, you'll constantly find people like talking about shell money and stuff, or like the stone money of the island of Yap, right, right, but they'll often apply a highly marketized way of thinking about these things, whereas an anthropologist would often, for example, like David Graber you know there's many anthropologists who would actually, you know, look at how these types of money operate in their own contexts and, for example, stuff like shell money wouldn't be used for commerce. It'll be used for stuff that actually, like normal money, can't buy, like calling up the spirits of the dead or compensating them somebody for insulting their honor. You know, these types of things which you wouldn't ordinarily be able to pay somebody for, Right? So there's very, lots of differences. So anthropologists have a lot more interest in that kind of stuff.

Speaker 2: 10:47

So I come from that background, but then I also actually worked in finance and in sort of high finance, partly as a kind of experimental adventure to kind of immerse myself in that world. And one of the shocking things in high finance or mainstream finance is just how little people understand about the monetary system, like people who work in high finance. Yeah, yeah, and that's what was really fascinating that actually you really didn't need to know anything about the monetary system in order to do highly complex financial instruments. Actually, most traders and stuff have very crude ideas of what the monetary system is. They're not required to know because it's all these specialist tasks that they.

Speaker 2: 11:27

You just assume that money works and actually that was became very interesting. So I learned a bunch about, you know, sort of high finance stuff, but no actual when I was working in finance very little stuff about the actual monetary system. So I started to delve more into that and then also became involved in alternative finance and alternative monies, actually prior to the crypto world. So stuff like mutual credit systems, local currencies and things like that. And if you engage with those systems, you're also forced to engage with money more generally.

Speaker 2: 11:58

So yeah, I guess these are different routes I've taken to exploring money and then more recently I've specialized, to some extent at least, in my public life and being a defender of the physical cash system, and that often requires having to build out a bunch of ways to describe money and stuff so people can understand the politics. And also, you know, money holds the entire capitalist system together. So it's quite a useful thing to explore if you want to try and understand capitalism more generally.

Speaker 1: 12:31

Yeah, I want to get into that. But first I kind of want to ask talk a bit about like. To me it seems like actually anthropology is like a good kind of maybe like academic practice in order to like analyze contradiction In many ways, and I think a lot of your work and you've said this before, I can't remember where, but you talk about how you suggested people to be more comfortable with contradiction or to be able to learn how to live with contradiction rather than necessarily dismissing things because of a contradiction, and I imagine you probably come across that a lot because a lot of your work on the war on cash without protecting the physical cash system, it attracts a lot of people on the right, or there are people on the ideological right who would say similar things but then kind of like veer off into like a right wing politics. How do you kind of deal with these contradictions in the months?

Speaker 2: 13:33

Yeah, I mean, this is probably to have a whole discussion by itself, but there's a strong tendency, at least in, I guess, like maybe Western standard philosophy, of seeking non-contradiction or sort of these kind of pure views of the world. I have quite a strong existentialist kind of vibe and maybe an existentialist tradition is there is more grappling with the fundamental contradictions of existence, like, for example, you perceive yourself as an individual and yet you cannot survive without other people. You know that's like a contradiction itself, right? So all these angsty discussions about whether a person's an individual or not, there isn't really an answer, right, you're kind of like both. So you know it's kind of a bit pointless trying to search for the answer, right, these things don't the belief that there are these either, or things like are we selfish or altruistic? I mean, these questions are slightly pointless, right. Right To me, yeah, we're many different things at once, right, and I think that is actually something that you do find also echoed in anthropology, at least in sort of more modern anthropology to some extent, which is partly comes from encounters with people who have the same emotional and genetic makeup as yourself and yet hold very different ways of being in the world, not only different like views on the world, but also entirely different like practices and stuff, right?

Speaker 2: 15:12

So at some level there's a core like shared humanity in the world, in the sense that we all are these creatures on a planet trying to survive and we all share the same sort of angst to some extent. But then we have got very different ways of expressing it. Right? So I do. I do think that our political discussions would be a lot more interesting if we accepted that basic starting point that all human beings at some level are sharing and some common experience, but then have totally different strategies and means of making sense of that. So when I'm, I even try to not say like right wing person or left wing person.

Speaker 1: 15:56

Sure sure.

Speaker 2: 15:57

So there's stuff like person who has these tendencies that we call right wing, you know, because human beings, like not defined by you know their political beliefs right, and they can channel different political beliefs at different times. So many people that you currently call right wing are actually just people who happen to be an influence in a particular direction or happen to be emphasizing a certain part of themselves, but that's not the only part of themselves, right. There's many other parts of themselves, right, that we actually share. So I think that's important in politics is to just recognize that. You know, even the obnoxious, like anarcho-capitalist, like racist guy at the Bitcoin Cash Meetup who tells me that, like you know, like white people should be, the are the only like, should be like the gods of the world, I mean these people, this guy like she would say stuff like that I still have to try and bear in mind.

Speaker 2: 16:56

It's like there's some reason and some context that he's formed this belief in right. I don't understand it personally, I don't have any emotional access to it, but to him it somehow makes sense, and I don't quite know how it makes sense, but it's like something I could try to uncover and try to work out and try to sort of figure out and that sort of helps me to maybe be in different ideological scenes at different times. I also come from South Africa, which has got a lot of like crazy stuff going down. So in South Africa you kind of have to be to some extent like open to the fact that people have crazy beliefs.

Speaker 1: 17:30

Yeah, it's like yeah, to me it's almost like I don't know, like keeping in mind that you're talking to a human who has, like, like, the reason that they are speaking in a certain ways because they have some sort of experience that has led them to believe that, rather than kind of like, I think, when that's forgotten, you end up treating that person as like an object to disconnected existence, and there's also sorry, no, go ahead.

Speaker 2: 18:00

There's also like a terrible bias in modern thought of imagining that people come to ideas through rationality which is just like a kind of an absurd belief, right, right.

Speaker 1: 18:13

You're not along with the rationalists To me.

Speaker 2: 18:15

It's just like people and I don't mean that we don't have rationality, it is maybe like an element of our being. We do have ability to rationally abstract thought, but like the reason why certain ideas resonate with us is that they emotionally resonate, right, and often, like battles of ideas are sort of proxy warfare. It's like a proxy way of like emotions battling. This is also why I'm not always that interested in sort of pedantic accuracy, right, because I mean you can rock up in an academic department or like the world's best universities and you'll find extremely smart people who have exactly the same information, who will come to totally different positions to each other, right. So there's no sort of even the world's most intelligent people will disagree, which is, and the reason why they'll disagree is precisely because they got different emotional and political impulses Right and they're going to use to sort of curate their the information in the world. And I think you got to take that seriously and try to sort of meet people there, all right, and yeah, so that's the kind of vibe I have.

Speaker 1: 19:25

Yeah, that's fair. I mean definitely. But I think, at least if I think about myself, like for sure, my politics is obviously like going to be heavily influenced by my personal experience and like I'm going to read things through the lens of that. So like I can't, you know, I can't like think of myself, I was like some, I don't know, completely logical computer that has like found the answer.

Speaker 2: 19:49

And even if you had found the answer, nobody would actually necessarily care. Because you know if you went to everybody and you say I have discovered the ultimate truth, they would look at it.

Speaker 1: 20:00

Fuck off yeah.

Speaker 2: 20:02

Well, there's actually a different one there. I kind of prefer, you know, and again, not that we should give up the attempt of trying to have integrity and thought, but I think it's a bit of an illusion to imagine that, like, stuff that makes sense to you should necessarily make sense to everybody else, because the reason why something would make sense to you is it's sort of like, you know, it's aligned to some kind of experience and emotions that you yourself only have, probably, or you and a shared group of people, but it's you can't assume that somehow everybody else should resonate with that same thing. And that's what you know, that's what the hard thing of dealing with. Like you know, for example, far right to people and stuff like that, it's like okay, like what's going on here, like what's the, what experience are they having of the world, that the stuff makes so much sense, you know, to them, and same for all the political groups.

Speaker 1: 20:51

Yeah, sure, I think I liked what you said earlier because we were on the panel for circles entropy a few days ago and they were kind of looking, I think the phrase like putting privacy in by default kind of the thing that he said and then I think you mentioned, you said like putting contradiction yeah, yeah, yeah.

Speaker 2: 21:08

I was asked on this other podcast like if you had one political wish and you were kind of like you could have it fulfilled, what would it be? And I actually just said I'd love to see everybody appreciate contradiction, because I think it would help so many things right In terms of like having productive debates about how to solve global problems. You know, if people had some basic appreciation that like there are fundamental contradictions in the world that can't be resolved and that's going to probably express itself in conflicting thoughts, we'll probably be a lot more empathetic towards each other. I'm probably more prepared to work together. All right, it's the sort of the absolutist types of positions or the assumption that there's universal things that tends to make politics really really hard, right?

Speaker 1: 21:58

Is that? Do you think that has to do, maybe as well, with like the? I mean particularly just the things that you are advocating for? That just happens to be a lot of like, more right leaning tended people, and so then you have to kind of like yeah, what are? You to like put forth.

Speaker 2: 22:13

Yeah, and a lot of my work that I do, I'm forced to engage a lot with people on the right. This includes money more generally. There's a long tradition, if you're looking at monetary systems, of people who will come from the right who also are concerned about monetary systems, often for different reasons, but they will turn up at my events. They'll tell me things that, like, the reason why we're all screwed is because there's fractional reserve banking, and that the Rockefellers are behind it, for example, whereas from a left-wing perspective, you might say, well, the banking sector is an extension of, like corporate capitalism and its shareholders, right, which are like pension funds, right, you might have actually similar critiques of something, but you come in from very different perspectives. But specifically, more recently, in the realm of, like I'm doing, defense of the cash system, there's a quite a strong contingent of I come in from.

Speaker 2: 23:13

I have a very left-wing position on why we should defend cash, but there's a very strong contingent of right-wing thinkers now who've taken it on as part of that kind of suite of ideas, right, so a lot of political groups work with. They kind of curate issues into bundles. So it's like if you're a right-wing, if you want to signal that you're part of a particular political group, you've got to be like anti-work, you've got to be like anti-CBDC, plus you've got to be anti-Lac vaccines. So there's a whole kind of like series of things that they'll kind of curate as being sort of a part of a bundle that you take on, and being pro-cash has been included in the current right-wing bundle. I'm trying to get it included into the left-wing bundle as well, but it's a bit of a takes a while.

Speaker 1: 24:03

If you had to, what kind of bundle do you think? Pro-cash, pro-like? I feel like urbanism would go well with that.

Speaker 2: 24:10

I don't know yeah there's actually different bundles you can have, like in the centrist bundle. You can actually you can also insert a pro-cash position into a centrist bundle. It's quite tricky to do it, but a lot of my arguments for the defense of cash right now for centrist, involve talking about balances of power. You need to keep a balance of power in the monetary system and one of the ways to do that is to keep physical money and actually centrist resonate with that message a lot Because it doesn't involve having to throw out digital, which is politically unassailable for the sort of standard kind of mainstream person. So that's how you try to include into the centrist stuff and the sort of left-wing camp, at least the more kind of radical left camp. The cash position is anti-corporate, it's pro-public, so that's a way of doing it. In the right-wing camp it's all about protecting real money from the sort of like clutches of the digital state. There's a lot of contradictions in the right-wing position actually and it's quite interesting to sort of engage with that.

Speaker 1: 25:22

So yeah, cash is a big. I think by advocating for a cash system, you're able to open a door for them. I feel like to invite them into your mind palace.

Speaker 2: 25:33

Yeah, yeah, a lot of my work right now on, and this is my book Cloud Money was all about. The original title of Cloud Money was for the hardback cover was. The subtitle was Cash Cards, crypto and the War for our Wallets, but for the paperback they actually changed it to why the War on Cash Endangers Our Freedom, which is actually quite a sort of a libertarian right-wing style of language actually. And what's quite interesting in the current version of Cloud Money or the paperback version, is that actually on the front cover I've got an endorsement from Yanis Verifakis and Kate Rayworth, who are both left-wing thinkers, but then I've got this very coded right-wing subtitle and I'm kind of intrigued at how those two interact with each other. When the sort of lefty looks at it and then the sort of person who's so I'm finding it interesting sort of engaging in this debate with different political groups.

Speaker 1: 26:35

Yeah, I mean, yeah, I tried to take a similar thing with my book. The subtitle is a bit more how capitalism ruined crypto how to fix it. If you're the average person in crypto, I mean, I guess in this particular moment we are in a bear market and there has been a pretty big decrease in interest and capital flowing in. So I think a lot of people who still really believe I think it's a chance to help them question their ideas about capitalism Interesting.

Speaker 2: 27:07

yeah, you probably have quite a good time.

Speaker 1: 27:08

And then I put the italic at the top, yeah very cool.

Speaker 2: 27:13

Yeah, that's interesting actually.

Speaker 1: 27:14

That's why I'm thinking similarly to try and invite people into my mind palace.

Speaker 2: 27:19

Yeah, to be like okay, you're having a moment of reflection or something, and here's an alternative take.

Speaker 1: 27:25

Yeah, yeah, that's cool, but so money, can you explain? I know you've done it probably a million times in your life, but for someone who's listening, who does not know very much about the monetary system, do you want to go through how you would explain the monetary system to people who I don't know, someone who's like yeah, but I like my credit card because I don't like to carry cash with me and that's a very convenient thing for me to have. How would you present the monetary system and its politics to someone like that?

Speaker 2: 27:59

Well, the first thing to say is that there's a difference between sometimes you'll find this debate people will say, like what is money? All right, it's always this big existential question and I sometimes find that question a little bit it's like asking what is art. It's not a real singular thing. We have historical examples of what these things are. What we currently call money has a particular structure to it. So our current monetary system has a very specific multi-layered structure and there's a big problem in society where people often don't recognize that multi-layered structure. They also just generically refer to it as money and they'll I sometimes call this the atomy, the one type of money illusion where people will think, for example, that the British pound or the euro or the dollar is a single currency, when in reality it's a whole sort of ecosystem or constellation, that sort of orbits around a center, as it were, and actually there's multiple difference issuers of, for example, the US dollar, issuing money in different forms, in different kind of layers. And so, yeah, like I, when I'm trying to highlight the politics of money, it helps to have a first ever kind of like an appreciation of those layers. And, yeah, one of the core metaphors I try to use, which I think you've already heard before. Where I'm trying to sort of help a person to get a sort of initial step into understanding the current structure of the monetary system is.

Speaker 2: 29:47

I will ask them to think about casino, you know, and casino chips, right? So, like you know, if you walk into a casino and you hand over cash to a casino, they're going to push out chips to you and you can make a very strong mental distinction between those chips and the cash. Right, you know that the casino now owns your cash behind the counter and you have these chips and you can pass these chips around inside the casino and then, if you happen to have them at the end of the night or not, or whoever has them at the end of the night, can go back to the cash year and can redeem those chips back for cash and leave the casino. Now, most people have a very strong understanding of what's going on there. They can say, oh, there's two types of things here. There's the cash behind the counter and then these chips that are that are hold, and they also understand that when they hold the chip, they don't actually own the cash. All right, they can only claim the cash that they hand the chips back in, all right, and it's actually quite a good sort of opening way to start thinking about the monetary system more generally, because the banking sector does a related thing to that. If you hand the banking sector cash, they're going to issue out the digital equivalent of a casino chip to you, basically, and that's what will often very confusingly be called bank deposits, but you can also just call it bank money or digital casino chips. So there's the units in your bank account or these digital casino chips, and the banks have taken ownership of your cash.

Speaker 2: 31:20

And so once you sort of grasp that metaphor, you can immediately start to see some things about what's called cashless society. And then cashless society is a society where you're dependent upon these bank issued digital casino chips and not only bank issue. You then have sort of third layer on top of that where there'd be like players, like PayPal, for example, who are going to take your bank money and then issue their own money on top of that. And so these are sort of these three chained layers to the monetary system. There's a lot more complexity to that and there's some problems with the metaphor, but at some basic level that's a good starting point to start to understand. So cashless society is when you lose access to that first layer of money and are forced to use the second and third layer of money in digital form, under the control of corporations, and there's a bunch of structural problems that emerge from that.

Speaker 2: 32:20

The other important thing to like bear in mind is that in the sort of second layer of our monetary system, which is controlled by the banking sector rather than the state, the banking sector, unlike a casino, has the ability to push out a lot more of these digital casino chips, as it were, than it has in layer one reserves and the old days. These are called as fractional reserve banking. It's more accurately referred to as credit creation of money. They just can create these new units of second layer money in order to and they'll do it when they're giving out loans. So if you rock up and you have whatever you're trying to get a mortgage, or you're trying to get whatever, or you're trying to start a business, they'll just issue out this new layer to money to you, and that's a political process. The banking sector gets to decide what parts of the economy they're going to mobilize or not. They're highly prepared to say, you know like, mobilize the mortgage markets because they can take your house as collateral, but they might not want to do it for stuff that's more socially useful, for example.

Speaker 2: 33:34

And so one of the big critiques that emerges of the banking sector is that they have this power to create money and mobilize whole sections of the economy, but they selectively choose to use it for only certain things, and that's political. That affects the composition of your economy, that affects, you know, who's getting what right. So there's a bunch of politics and in the cashless society, you're basically totally captured by that second layer of the money system and you know, this is why I would go into sort of protect the cash system to say it's super important to keep this balance of power such that we are keeping, you know, balance between these different layers and different issuers. But it also, this sort of scenario also played into the origins of Bitcoin, right, because, bear in mind, in the 1990s and stuff, people were looking forward into the internet age and they were saying, you know, if we end up in this scenario where we don't have access to physical cash, we're going to basically be captured by these big digital players.

Speaker 2: 34:32

Now, people in the crypto scenes didn't necessarily have a sophisticated vision of how the monetary system was operating. They didn't necessarily think about the layers. They might have had these sort of crude mythology of thinking about money, but they basically insured certain thing which is digital money. Fairly correct, requires a bunch of intermediaries who can see what you're doing and they can choose to stop what you're doing. So there's the underlying intuition behind stuff like Bitcoin is basically sound, but rather than saying we should protect the physical cash system, the intuition in the crypto world was like digitization is inevitable. Therefore we must build a kind of sort of decentralized version of a digital cash in order to to.

Speaker 2: 35:15

So it's quite interesting looking at the crypto world, because often they'll contest certain aspects of the money system and you know saying like okay, we should have not have the central players, but they won't contest other elements of capitalism, for example, acceleration and automation, all right. So they'll be like we cannot stop automation and you cannot stop acceleration, so let's go with it. And that's like a difference of me, for example. So, like when I'm doing work on protecting the physical cash system, you'll have people in the crypto scene who like oh, that's kind of interesting, but don't you think it's futile to try to hold on to some sort of analog, non automated, non digital thing, right, and that's, you know, for example, a point of divergence that I start to have with them.

Speaker 1: 36:00

Right, I mean, I think this particular view probably comes, I mean it comes from like the contradiction of, probably, like the techno utopianism of, like you know, or is it like the sovereign individual, with like, maybe, like I mean, understanding of, of it's like you want to be, you want to have your own individual power. At the same time, the internet is a bit of a surveillance machine or like it's something that we are not digital beings and therefore you have to rely on some sort of digital infrastructure in which they can see everything. So you have to like, how do you deal with the contradiction of keeping your, you know, personal liberty on a technical, on this of course, communications mechanism? And so, yeah, they have this whole, yeah, they create then this narrative about all this stuff.

Speaker 2: 36:45

Sure, yeah, yeah, Of course. And then there's lots of from an ideological perspective. There's very, very fascinating stuff going down in crypto land. You know, like he says like, yeah, like these sort of fantasies of the individual and stuff like this.

Speaker 2: 37:02

And you know, and I suppose that's what one of the interesting kind of parts of crypto is like, you have these like, for example I mean, this is a bit of an aside, but like one of the things I find most fascinating in the crypto world is like the underlying libertarian position has a contradiction in it, right, which is that I'll have a sort of a kind of a statement about human behavior, which is to say that, you know, humans at some level are fundamentally selfish.

Speaker 2: 37:32

All right, at least there's a version of that argument going on there somewhere saying you know, not only are people selfish, but actually there's a virtue in pursuing your own egotistical ends. So there is, at least in some parts of libertarianism, this like ethical egoism, which is to say, the only truly correct thing to do is to follow your own interests, all right, and that this is like a kind of it's like a variant of utilitarianism, except like applied to like your own interests. So you should do what maximizes your own self-interest rather than what maximizes the collective interest, and that's basically like economics has that position sort of embedded into it at some level as well, right, but it creates these sort of like problems, for example, you know, like, like they'll be like a lot of libertarians won't know if they've sold out, if they start pursuing their own interests by working for the government or, like you know, like Pellenter. You know a classic example that's like run by these like libertarians, but they like sell states surveillance software, right and services and they're like. You know I'm going on a bit of a random, random aside here, but who's the guy who runs Pellenter? Again, peter Thiel. Peter Thiel, no, yeah, this is Joe Lonsdale, his protege.

Speaker 2: 38:52

You know I've watched Joe Lonsdale being on a stage once and I was at Singularity University in the US and Joe Lonsdale rocked up there to talk about Pellenter for the students and he went on this long thing about how he supports the seasteading movement right, building stateless cities on the sea, and this is like he says this in the same breath as he's like selling state level surveillance equipment or like expertise right.

Speaker 2: 39:18

He didn't see a contradiction in this right. It's like isn't there? Like a massive ideological contradiction, but in his mind, like he's like a businessman, so he's like it's as a businessman, it's in my moral interest, what's morally correct for me, to pursue a profit, and if that means working for like the government, then fine, but like here's other compartment in his mind for being like anti government and I think you find this like loads and cryptos, these strange, like like contradictions and libertarian thought. Yeah, of course, we're actually sort of like highly pro capitalism, but we kind of like want to reject the idea that capitalism involves like centralization of power and mass corporations who take stuff over and anywhere.

Speaker 1: 40:01

I mean like yeah, I've noted it before just like there's a. I mean now there's a bit of a, it's a bit of a meme, but there's a pipeline between like you start off as like a hyper or individualistic libertarian and you end up coming like really far right into like authoritarian kind of fascism. Oftentimes yeah for sure, and that's a big trend, I think that's when you over time deal with the contradiction, depending on which side of the thing that you like of the contradiction you are more into, you can veer into like this authoritarian ism, where then you just like reject, kind of the other half of the contradiction, just go full in.

Speaker 2: 40:37

Yeah, for sure.

Speaker 1: 40:40

But so the money system I think you know, in case people are trying to keep up like from, based on my understanding right, there's often this incorrect notion that it's the governments that makes money per se or like adds money to the economy. Usually it's retail banks who create credit and that's like a big majority of the money that gets added into the economy. That's something that's often missed and is part of, and so it's often ignored and like the the libertarian kind of narrative and therefore the original crypto narrative or the most common one about, like you know, money printer go burr. It's really like retail banks take, take, like like central banks kind of incentivizing retail banks to take out loans from them and credit it to the economy.

Speaker 2: 41:29

Yeah, and then there's a symbiotic connection between the different layers in the money system, but actually, operationally speaking, most of the money creation takes place by commercial banks. You know, like so, and yeah, you think, if you think about it, I mean I'm trying to think of, like how you explain this like the monetary system was always expanding and contracting constantly. Right, there's always new money being created and destroyed, as people destroyed via taxes.

Speaker 2: 41:59

Yeah, not only taxes, but by, like, paying back loans, right. So you can kind of see that there's a sort of symmetrical processes going on. So there's, like in a normal monetary system, you'll have these different layers of issuance, so like, for example, the government's issuing money, but then the banking sector is also issuing money. The banking sector issues a lot more money than the government when it's when it's making loans, for example. But then there's the reverse processes as well. When people are paying back loans, money is being destroyed, right. And also when people are paying taxes, for example, or any kind of payment to the government, money is being destroyed as well. So there's these constant simultaneous issuances and destructions of money going on.

Speaker 1: 42:38

At different places of the economy. Yeah, yeah exactly.

Speaker 2: 42:42

So you know where, for example, you know you can even map this in your own life. You know if you have a loan with a bank and you like, well, let's even a credit card, all right, and you have to pay back your credit card, like every time you're pushing, you know, pay, you're destroying some money. Right, that was that money was created through the, through credit. Creation of money in the banking sector was sort of second layer. Money gets destroyed when you repay your credit card. Similarly, when you're about to, when you're like filing your tax return, you go into your bank account and you say, like, you know, you type in the government's bank account into your transfer box and you say, you know, send money. What's actually going to happen is that you know the bank is going to wait. There's a bunch of mechanics but in the end, the final analysis is going to manifest as money going into the central, the bank, the central bank account of the government, and that's where money goes to die. Right, right, like that. That money doesn't exist. That's like a kind of like a black hole disappears. It's the alpha and omega Exactly, exactly, exactly, right. And then so, so and people you'll end up in. This is one of the big topics you'll find in like communities, like the modern monetary theory, like MMT and stuff. They're focused a lot on these processes.

Speaker 2: 43:52

The basic point is that this, this money creation, is constantly going on and you know a lot of it's happening at the front lines of the banking sector. So you know like, for example, you're sitting in commerce bank or you're sitting in Barclays in London and I don't know some luck it's usually a cliched example like I don't know property developer comes and they're like we're going to, we want to build some new mall in the outskirts of Birmingham. There is land there, there's a labor market where we can ask people to work for us. We have all the various components available to make this thing appear out of the ground. But we need the money to do it Right and the banking sector will say, okay, here we go, we're going to issue a bunch of new second layer digital casino chips to you. Now they're in your account. Boom Right, that's a loan. Now you can use the payment system to send those to other people to make them turn up to build your building Right. So they all then use the payment system to transfer all those units and people rock up.

Speaker 2: 44:52

Contractors will get paid and the bet that's going on in the banking sector is that in the process of mobilizing that new, those new resources, which include, like, natural resources and human labor something is going to get created which will create new monetary flows right, which will in turn enable the thing to be paid back at some point. So in many ways, the banking sector is like creeping around mobilizing parts of the economy. If you have a romantic perspective on this, you'll imagine that they're doing some kind of like they're doing God's work. They're sort of helping people get employed and stuff, but as job creators job creators.

Speaker 2: 45:28

Well, they're enabling, like they're giving quite and quite liquidity I hate that term but like they're they're enabling the economy to breathe In the absence, because think about it in the absence. Imagine there's a bare plot of land and a bunch of people who want to work In an original human economy 20,000 years ago. If you have a bunch of people facing a bare plot of land, they don't need money to rock up there and do something. We're going to make food on this, yeah, they will just do it. They have the ability. It's like you have your body in the land, you're going to do something, whereas in the capitalist economy you basically cannot operate on your intuitions unless you have money to tie it into the process, because you're part of this vast, like interdependent organism. So the banking sector will like step in there and sort of provide the money to like enable that those processes to happen.

Speaker 2: 46:21

At least this is the sort of romanticized, theoretical vision of banking. So you know, in a healthy banking sector, if it was well-structured and it had good incentives and stuff, hypothetically you could imagine a productive banking system that said, hey, we're going to mobilize people to build renewable energy resources. It's not going to create inflation because they'll be building as we create new money. They'll be building useful things that will neutralize the inflationary effects, it'll help us to live better lives, and so on. And so the politics of like alternatives of finance and financial reform tends to be around. You know how do you steer those processes, how do you get better outcomes of it? You know what happens when your entire banking sector is controlled by these giant corporations who don't give a shit and they only want to serve their shareholders, and so on. You know that's the kind of yeah.

Speaker 1: 47:13

So then, like in this, so like because you know these assumptions and the structure exists in the banking system already, like my kind of my feeling about it, and I'm curious if you agree or disagree. It's kind of like that there is this yeah, there's a lot more power to retail banks because they're able to have direct access to central banks to get loans for them to then loan out to the economy. But usually what's kind of happened is that these banks are very I mean, they're conservative in many ways and so they're more incentivized to give out loans to other corporations that they kind of focus their clientele on big corporations because they're going to take out bigger loans and whatever they have more capacity to make good on those loans, they probably feel as well.

Speaker 1: 48:09

So as kind of like I don't know, as they become bigger, they want to deal with bigger customers.

Speaker 2: 48:14

Yeah, scale seeks scale.

Speaker 2: 48:17

Yeah, yeah, so then that's a story of capitalism actually, you know, and I suppose the sort of romanticized, libertarian visions of capitalism, they'll imagine somehow that it's a realm of these sort of small mom and pop shops who are all trying to like do their thing. But that's like a very marginal part of actual capitalist systems, actual capitalist systems. You have gigantic oligopoly structures where the oligopolies want to deal with each other. The banks are sort of in competition with each other, but they're mostly like collaborating, and this is a big part of cashless society. A lot of human beings actually like cash, but if you look at a big corporate retailer, for example, they hate cash. It's like Uber, for example, doesn't want individual customers rocking up saying like, oh, can I hand cash to your driver. They're like, no, no, no, you're going to send a message to your bank and tell your bank to transfer to our bank. That's what you're going to do and it's going to happen in an automatic fashion. We don't want to have to deal with you because, at scale, you want to automate everything and scale everything up, and that means dealing with other super large automated players, and so this is why big tech and big finance are always sort of fusing together. Too many costs involved. Yeah, yeah. So this is a big thing going on in the financial sector.

Speaker 2: 49:36

All the time is, these massive players are kind of like scratching each other's backs and stuff, or even when they're sort of trying to deal with small players like Lloyd's Bank or something in the UK giving out lots of mortgages to individual people, it'll try to automate those processes and standardize those processes such that it doesn't actually have to deal with those people as humans.

Speaker 2: 49:59

They say. You're not really humans. To us You're sort of this necessary evil that we have to deal with in order to make profits, but we're not going to deal with your idiosyncrasies as human beings. You're going to have to go through a bureaucratic process to interact with us, a standardized rule set. You're going to have to show us a bunch of things, have a bunch of automated credit checks and things like that, and then we'll decide based on essentially algorithms rather than a human banker who's going to sit there and decide if you could get a loan or not, and then, once we have your mortgage, issue it out. We're going to package that up into a big bundle and do super large scale risk management processes. We don't care about your individual mortgage. So this is a big thing in finance is that they're operating at such scale. They don't really care about individuals.

Speaker 1: 51:17

As a patron, you'll get a shout out on an episode and access to bonus content like Q&A episodes. You can submit and vote on questions you'd like me to answer and I'll give my thoughts in roughly 20 minutes. The current bonus episodes have so far explored plenty of topics, including how co-ops and dows relate, whether there is a socialist blockchain, a review of previous crypto events I've been to and, recently, a video reaction to an episode of the D program. Of course, I'll still be making free contents like this episode to help spread the message that blockchain doesn't need to be used to further entrench capitalist exploitation if we put our efforts into it. So if that message resonates with you, I hope you'll consider helping out. Sure, so the way I try to reframe the money question for a lot of libertarians is not that we need a hard money in order to make things more equal for people.

Speaker 2: 52:15

I think that's the thing that they love to get out.

Speaker 1: 52:17

Well, bitcoin is a better money because there's only going to be 21 million, so we all know how much it's going to be, and that makes it more fair.

Speaker 1: 52:26

And the problem is that governments prints all the money and therefore they have all the power. I'm sympathetic to large actors who have way more power in the system, but it's more like private actors that have special access to money creation than everybody else do not. It's really very anti-democratic, I kind of think of. The closer you are to the flow of money, the easier it is to make money. It sounds very obvious, but I think banks can easily make a lot of money because they're next to the spigots.

Speaker 2: 53:04

One of the most interesting things in crypto is that historically, something like libertarianism or at least, for example, anarcho-capitalism these belief systems are almost not designed to be actually implemented.

Speaker 2: 53:21

They're more supposed to operate as platonic ideals. They're kind of like an unachievable flair that sits there in the sky. People know they're never going to get there, but they're like it helps us to structure our actual world. A lot of libertarianism and stuff is like an ideal type rather than something that actually exists. You'll find versions of this in left-wing thought too these unachievable ideals that act as a beacon. What was really interesting in crypto is that there's one element, a kind of like broke, that maybe like a tacit agreement, that you're not actually supposed to try to act out the ideal. They suddenly had tools to try and literally code the ideal and then try to actually do it, and it hits up against the reality of what actually happens.

Speaker 2: 54:26

In some ways, you don't want to enact the ideal because you'll suddenly realize that it doesn't work. It's better to just have it floating there in the sky. So in crypto they'll be like okay, we're going to use Bitcoin to like encode the hard ideal of like a hard money. So like okay, well, what's going to happen? Well, the actual fiat money system will, like, run circles around you and eat your system. It'll turn your hard commodity money into an object to be traded in the fiat money system. That's what it's going to do de facto in the actual capitalist system. For you to not see that, you're going to have to engage in a bunch of cognitive dissonance to keep your belief alive, right, all right. So I don't know if that makes sense, but there's a very fascinating like innocence in the crypto world. They actually believe that the ideal was supposed to be achieved, right?

Speaker 1: 55:14

But I think it's in this, but it's like also as well. I mean a lot of people, I think in the past couple of years I feel, have been maybe a little bit delusioned or disenchanted by the fact that hasn't happened.

Speaker 2: 55:28

Yeah, yeah. Well, exactly this was what happens if you actually tried to enact the ideal and you realize that it's a kind of like it doesn't really exist, right, it's like you know, have you ever heard and I don't want to pick on people with libertarian tendencies here, but like you heard the word freedom, for example, in libertarianism, it's like position, as if it's supposed to mean something absolute. There is no such thing as an absolute freedom. Like it's a word, it's like an English word, that's all it is Right. Like what it actually manifests as in your physical being is very confusing because, like, if you think about it, like what is freedom supposed to mean? You don't even have freedom in your own body. You have to eat every day, right, you don't have freedom to decide that you're not going to do that.

Speaker 2: 56:09

I mean, at some level maybe you do, but like it's at some level. It's like slightly absurd to imagine that there's a pure essence called freedom or a pure essence called anything right, like and so so. Really, these types of like, these words are really these sort of abstract concepts that act that they're not there to actually be achieved, they're there to sort of like influence our behavior as like beacons, right, and you sort of will deploy these words to try and like influence behavior, right, but if you actually had to, you know, create a sort of like people who create sort of intentional societies, do this we're going to encode a very hard set of rules about how you supposed to behave, and then you suddenly realize that it's like just falls apart, right, so like the history of like libertarian, like free states and stuff like you try and like live by this ideal and then you realize that it actually is a giant shitshow, right, and then everyone's disillusioned by the ideal. So I think it's a bit similar to this in like Bitcoin. They'd be like okay, we've discovered the perfect money. It's like okay, and yet like why is it doing all this? Like really messed up stuff, and why hasn't everyone adopted it already? Yeah, yeah, and why is it that like it's priced in US dollars and like nobody in the banking center really gives a shit, right? It's like, well, because in the actual capitalist economy, this thing doesn't operate as the ideal thing you imagine. It operates. What it's operating is a commodity to be traded, all right, and that's, in a way, what it is right.

Speaker 2: 57:37

And so, yeah, this is one of the most fascinating elements in the crypto world is these sort of almost in the different ways of putting it like puritanical, innocent, naive beliefs that you can somehow enact, these types of like ideal type. You know the amount of time I mean. I was on Twitter or X, whatever you call it, yesterday and I saw Max Kaiser. Max and I used to like kind of have some level of alignment until he went like totally like you know, full Bitcoin and he had this whole weird long, long tweet rant where he's like Bitcoin is the perfect money and it's like that's so counterintuitive to me.

Speaker 2: 58:16

I would like never say something like this. I don't like the belief in a perfect form is like so abstract. It's so like platonic Like I use this word platonic ideals, but, like you know, if you don't know, like like like Plato and stuff, yeah, that's so. Yeah, you create this like this realm of like these like strange things that float beyond, beyond the human realm, right, and it's like there's like Max Kaiser saying it like Bitcoin is the perfect money and it's like, if that was actually the case, like why, why does it? You know?

Speaker 1: 58:47

I think it's also like. I think it's one of the questions like for who? Who is it a perfect money for?

Speaker 2: 58:52

Yeah, but again it's going back to this contradiction thing. It's like he's got a like a non-contradictory way of thinking. He's like there is a perfect way of being Right. It's like how on?

Speaker 2: 59:00

earth did you come to the belief that there's a perfect way of being? That's like and strangely like, it's so puritanical, it's so like, it's like desperately seeking some kind of certainty that doesn't exist, and that's what I find so counterintuitive in that. But I could also maybe empathize. I can say like, okay, there are some people in this world who desperately want some kind of certainty. They desperately want to be told that there is a perfect way of being and there's a, there's a perfect thing. And then Bitcoin perhaps for some people stands as the perfect incarnation of money. And then it's sad because you see the reality, which is that like it's just a commodity being traded in normal markets and you're like, wow, it must be like a weird way. Imagine having to live with that all the time. They're cognitive dissonance, where you constantly seeing that this ideal of yours is just treated like an asset to be traded by, like traders.

Speaker 1: 59:52

Anyway, I'm kind of walking, I feel like I'm just doing this long, like six straight, no, but they're great. But, brett, one Bitcoin is one Bitcoin.

Speaker 2: 1:00:01

So deep, it's so deep.

Speaker 1: 1:00:04

I didn't realize that, if you all, believe that Bitcoin is money, then Bitcoin will become. We just need people to believe that's true.

Speaker 2: 1:00:11

And you know, it's like also like, if you're driving in a car and you're and you're like you're looking at the window and you're like actually the car is not moving, what's happening is that the road below me is flying in the opposite direction. It's like, yeah, well done. Or like I mean, you know, I'm busy like being, is it? There's like a kite like whooshing around the vortex of a hurricane, and I'm like, actually the kite is staying static, it's the hurricane that's racing around it. That's what's going on here, you know. Then that's like how you protect your belief, right? So like you're like, oh, bitcoin is the single thing that's staying static, while the rest of the monetary system is racing around it.

Speaker 2: 1:00:52

It's like, wow, that's you know you can't choose to believe that if you want.

Speaker 1: 1:00:58

Yeah, so, like one of the the arguments that I kind of I took from you that I put in the book about money was your thing on counter trade, that's yeah, I mentioned this. I tried to spread the word to Vitalik whenever I was talking to him, but that oftentimes I mean people will say like, oh, but I can buy things with crypto, I can go online and you know, send them some crypto and then I get. I get my thing.

Speaker 2: 1:01:22

Yeah.

Speaker 1: 1:01:23

But what oftentimes happened is that you're paying crypto in the price of what is the actual money. So I'm paying like $10 of Bitcoin to buy this thing yeah. You're paying with its resale price yeah. So what we're essentially doing is a counter trade. We're using the commodity of crypto to trade for the other commodity I'm trying to buy. It's not exactly barter either. It's like we have an imaginary price in our head that is linked to the monetary system. It's like a yeah, and this is a way that we actually get around the actual monetary system, and this is like a good thing.

Speaker 2: 1:01:59

Yeah, I actually think. You know I do a lot of, at least when Bitcoin was sort of it's like most zealot, zealot what's the word? Mania, Zealotish phase, which a couple of years ago and stuff. You know I'd often have to have these sort of debates with people who are heavily vested in it. You know I'd raise this point that you know a large part of the crypto world operates through counter trade, which is basically the process when you're using something's monetary resale price as a guide for how much of it to exchange for something else that has a monetary resale price. Right, and you can do counter trade with any object in the world Right, you can use a computer, you can use a mug, you can use, you know, whatever, like wooden floorboards. Okay, I'm just randomly picking things up.

Speaker 2: 1:02:50

Anything that has a monetary price you can do counter trade with, right. You can say you know, these cushions here cost 50 euros, but your microphone costs, I don't know, 100 euros. I'll give you two cushions for that microphone. If you're an alien from outer space looking from this, looking at it, and you'd only seen this example, you might say, oh well, these people engage in barter. That's one way of perceiving it. Or else you might say, oh, they seem to use cushions as a currency, right, that person gave two cushions for that one thing. That must be the money system.

Speaker 2: 1:03:25

I got a lot of pillows in the bank account. Yeah, what was actually happening there was like, rather than reselling the cushions for a hundred bucks and giving you the hundred bucks, we just superimposed those two interactions over each other, cancelled out the money part of it and then, just like, handed each other the goods, which is a sort of a clearing process which makes it look like no money was involved, or else one of those things was the money. But if we're doing cushions to a microphone, it'd be quite easy to see that both of those things have some other utility beyond exchange, right, so we'd be like that's a sort of barter like type of interaction. But if I disguise the cushion with a bunch of like monetary branding and paint it with a dollar?

Speaker 2: 1:04:13

sign on it, for example it becomes very easy to say oh, that was a monetary transaction. That's very similar to the crypto world. You have these sort of very poorly defined digital objects which have a bunch of which themselves are just limited edition numbers actually. But you can. You can, as a sort of a side activity, you create a cultural field around them where you have a bunch of language and branding that sort of creates monetary imagery around these objects, and then you can counter trade those objects using their speculations of monetary price that you derive from like a dollar market. And then you can, through that process, you can engage in the illusion that what's happening is a monetary transaction and really what's happening is counter trade.

Speaker 2: 1:04:53

And this is very, very hard for people to grapple with. And actually when you show somebody that they desperately want to reject it, because if you're heavily vested in the crypto community, that's a sort of seen as an existential threat to actually recognize that what's happening is counter trade, whereas I would tend to say actually that's a very interesting feature of these systems and actually you should embrace it. You should just call crypto tokens, or at least lots of them, counter-tradable collectibles, digital collectibles, and actually there's nothing wrong with that and that's actually a useful property, and that's actually. If I'm a political dissident, for example, I can use a counter-tradable collectible as a way of bypassing typical monetary exchange. So it's a way of saying that Bitcoin doesn't compete with the money system. It rides on top of the money system. That obviously doesn't go along with the belief system of many, like Bitcoin. There's not only Bitcoin, there's many other crypto communities, but I personally think there's actually nothing wrong with saying it.

Speaker 2: 1:05:51

It's a very successful counter-trade system, probably the world's biggest counter-trade system that we've ever seen.

Speaker 1: 1:05:56

Yeah, that's what kind of the thing that I have had to come across a lot is that Bitcoiners or whoever crypto people will say that crypto is money, it's like or a better form of money or whatever the new money, and then someone who's skeptical, most likely from the left, will say like, ha, no, it's not, you're lying because it doesn't do this and that as money should do and therefore it's bad, had to scam and like. My arguments are like, well, it's not money and it doesn't really matter that. You know, the whole reason Wikibwe made a bunch of money or like people were able to donate is because they were, of course, financially blockaded and then they were able to take in Bitcoin to get around to subvert the monetary system, and that was like subversion of the monetary system is like a practical I mean, it's like a useful thing to do and tool to have.

Speaker 2: 1:06:55

One of the nuances of this, though and maybe this is why it's a lot of the politics of Bitcoin come in is that okay, de facto, it's a counter-tradable, collectible, a limited edition set of money branded objects that you can have a monetary price and you can use their monetary price to engage in exchange the resale price, essentially. So. If I'm in El Salvador and I'm in a restaurant, for example, in Bitcoin Beach in El Salvador, the you know, typically a restaurant will have set prices on a menu say, $20 for this thing and they don't change the menu every 30 seconds, Right? All right, If I asked to pay in Bitcoin and Bitcoin Beach, they don't have a set Bitcoin price because what's actually what they're actually going to use is a counter trade ratio. So they'll first have to check what the current going price of Bitcoin is on its speculative market. They'll then calculate a counter trade ratio to say, like, how much Bitcoin would have to be sold in order to equate to $20. All right. So they'd be like oh, you want to pay us, quote, unquote, pay us in Bitcoin for this meal? Okay, pay us this much, It'll equate to $20. It's a counter trade, Right? So you're basically paying with the US dollar resale price of the Bitcoin Right Now. That's, that's what's day factor going on.

Speaker 2: 1:08:15

But ideologically it's very, very hard to let go of the sort of mythology of it being money, because normally a counter trade object will have some other use beyond exchange. Right, For example, let's say I'm counter trading cushions for microphones. The cushion if I'm imagining it as a being, it doesn't have any existential anxiety as to what it is. It's like I am a cushion, I make things comfortable for you. The microphone doesn't have any existential anxiety. It's like I amplify your voice and put it onto the computer. Right, they don't have any sort of identity problems, Right?

Speaker 2: 1:08:52

They don't require that they're not.

Speaker 2: 1:08:54

They don't have any need to masquerade as being a monetary system Right, whereas if you take a, you know a invisible digital object that has no essence essence, beyond the fact that it's a number written out after a bunch of energy is expended, it actually has a lot of existential anxiety as to what it is Right. So the claiming to be a money system is very, very important part of how this thing tries to get a monetary price Right. And if you say you know what, you should just accept the fact that you're not a monetary system and just accept this role as a counter trade object. It poses a kind of existential threat, the same to the to this thing, right.

Speaker 2: 1:09:37

So actually, for the Bitcoin community, it's incredibly important to constantly try to differentiate it, as a sort of better form of money, to the actual system, and unfortunately, the main way they're going to do that is, by the main way to differentiate yourself is to resort to a bunch of extremely conservative monetary ideology about hard money Right Now, bear in mind it's not a monetary system, it's a counter trade object that needs a marketing pitch, right?

Speaker 2: 1:10:01

But the marketing pitch has to be drawn from conservative monetary ideology. So even if this thing ends up being useful as a counter trade object, as an ideological system, it ends up being like a kind of a, like a means to spread conservative ideology about money, and this is one of the most damaging aspects of the Bitcoin system is it's useful as a counter trade object, but as an ideological movement it's like spreads a whole bunch of extremely conservative thinking about what money is and what it should be. All right and yeah, like that's the kind of the main and this also puts off lots of like lefties, for example. They'll kind of like buy into these debates about, you know, the marketing community around Bitcoin's pushing out all this super like conservative thoughts about money, even though Bitcoin doesn't actually compete with the actual monetary system, right?

Speaker 1: 1:10:52

So so how about when it comes to stablecoins? I think that has maybe some people they may bring up like well, I couldn't have, I have dollar pegged coins that I can that are the same value of as the US dollar. Therefore, it is essentially the US dollar.

Speaker 2: 1:11:12

Yeah, and then it is. You know, and actually I hate that term stablecoin. It's kind of a slightly ridiculous term, and bear in mind the original reason why they called them stablecoins they were supposed to be like it's like Bitcoin, except stable. All right, so like this. Well, this was a taxonomical strategy, right, it's like it's. It's of the same class of object as Bitcoin, but it somehow has a sort of stable thing. It's like no, the better way to describe it is like it's like PayPal, except implemented on a decentralized, like you know, database rather than essentially.

Speaker 1: 1:11:47

That's one. I guess it kind of eludes to kind of like the reasoning why they thought it needed to exist as like a either getting more people in who are like more conservative about, like you know, exposure to volatility of markets or like, as a thing to traders that they can, like you know you can put it in a safe spots whenever you're getting out of a trade or something.

Speaker 2: 1:12:09

It's a totally different class of. If you're looking at tokens in the world, like, there's a bunch of different like primitives for tokens and you know you can split them into a bunch of like categories, like, for example, there's like the blank token these are the kind of words I use like a blank token is a token that has no characteristics beyond the fact that it's a token, you know. So, like a piece of plastic with like nothing written on it is like a blank token. It's sort of like an empty signifier, right? And Bitcoin is like a blank token In itself. It has no actual characteristics beyond the fact that it can be moved around, and then it has a sort of marketing apparatus that sort of pastes imagery over that token.

Speaker 2: 1:12:53

You then have, for example, like a badge. You know like a badge is a token that's handed to you when you do something in particular. All right, you know you were a good boy at school, you did well in your test. He has a badge for you. He has a gold star. The gold star represents something that you did, but you can't actually go and use that gold star for anything. Right, you can show your parents and say, look, I was a good boy, but it doesn't do much beyond that.

Speaker 2: 1:13:17

It doesn't guarantee you access to anything. You can't like rock up at a nightclub and say, look, I got a gold star, this means you have to give me entry. It'd be like, well, it means nothing to us, right? And then you have like access tokens, for example. Like access tokens are things that do explicitly give you access to something, and so, like a stablecoin, at least the sort of traditional ones, are in more in the realm of access tokens. And you know, and that's a very different thing, that's like most money operates as access tokens.

Speaker 2: 1:13:44

And so you know, and I was sort of saying earlier on like about how the monetary system you can sort of see it in these layers, the stablecoin systems at least, the sort of again like things like tether and circle and stuff. They're basically not that different to PayPal, which is a part of the third layer of the money system. It's like you hand them bank dollars and they issue you basically a voucher for those bank dollars and then you can move that voucher around. And with PayPal you're moving the voucher around using a centralized system. With a stablecoin, you're using some decentralized system to move the voucher around, but in the end they're both pegged or sort of tethered back to the sort of banking sector and in a normal monetary system those chained layers start to collapse into one right.

Speaker 2: 1:14:31

So you most people don't make this distinction between the different. You know I mentioned that the Atomi, the one type of money illusion before. Like they start to just say, oh, there's like another pound or like another dollar. They start to collapse the different layers into a singular term and start to basically see them as interchangeable, and often they are interchangeable right, directly. And so that happens with stablecoins too. Actually, people do see them as interchangeable with US dollars. They become part of the overarching network and sort of psychological structure of the US dollar system and so they operate far more like a monetary system than something like Bitcoin would. Actually, you'd probably use dollars and nominated stablecoins to price Bitcoin.

Speaker 1: 1:15:15

That's you know.

Speaker 2: 1:15:16

It becomes effectively the same. It becomes part of this the overarching dollar structure, and that is actually authentically probably interesting and quite subversive at some extent at least. Right Depends on the design, maybe. Yeah, and obviously the algorithmic stablecoins are a lot more like controversial because they're authentically attempting to un-tevour Right, but that would normally involve a bunch of like algorithmic trickery. That probably involves lots of weird counter trade moves.

Speaker 1: 1:15:46

And eventually will collapse and artificially synthesize the effect of holding a US dollar. Yeah, could you actually quickly, if you can like kind of deep, like or just like, name the layers of the monetary system up to like a stablecoin, like what's the Sure Like?

Speaker 2: 1:16:05

base, what economists would call M0? I don't like that term. This is called layer one money Easier for crypto people to understand.

Speaker 2: 1:16:14

Yeah, because layer zero in any economy is actually human beings and like the world and like ecologies, right, but like layer one money would be like, at least in our current system, issue, let's say, like you know, in the US, like issue by the Federal Reserve or the government, and there's a particular structure to government money, right, so it's issued out and pulled back in through taxation and other things and has a particular sort of logic to it. But then there's a sort of layer two money is bank issued money, or digital casino chips is another one of the metaphors for it. And layer two money is like much bigger in quantity than layer one money, because the banking sector is issuing out those money to when it's issuing loans and stuff, and that's what you see in your bank account, right, that's, those are the units in your bank account. Layer three money is players that will take your layer two money for themselves and issue them, issue their own units. So, for example, like PayPal, like what's PayPal's business model, it'll get you to make a bank transfer to it. So now, in its JP Morgan bank account, it has your previous digital casino chips, right, it now has, and now it can take the interest that you might have otherwise earned on that and can also scrape fees off you for moving its units around.

Speaker 2: 1:17:38

And, like the main business model of like players like Circle, usdc and stuff, is to take the interest that you would have otherwise earned on your layer two money. They'll get you to transfer money into their bank account. They'll then either like They'll probably go into like money markets and they'll use it to buy short-term government bonds or something. They'll make small amounts of interest off that and that's how they make money. You can also, and so stable coins will be part of that third layer. But then part of that third layer is also like any kind of what's called like an e-money provider or e-money institutions, which are basically institutions that have to fully back themselves with layer two money to issue their own money. So if you're like part of like an online poker community, for example, and you have like a little account that you go into and you can top it up with money, you're basically initiating a bank transfer into their bank account.

Speaker 1: 1:18:32

Kind of gift cards almost.

Speaker 2: 1:18:33

Yeah, and then they're going to credit your account with third layer money and they say oh look, you have this money here in your account. It's like that's a third layer of money, same with Amazon, all these players. And it's the same with local currencies, like many of these local currencies actually are sort of third layer systems where they'll basically issue out a sort of third layer voucher that can be used locally. There's also like a fourth layer to the money system, if you start to get really conceptual, which is like the shadow banking sector, where there's all these weird money-like instruments being passed around and stuff like that.

Speaker 1: 1:19:08

So it's generally layer three kind of. Because they don't have a banking license, they're technically not going to be ones who create credit.

Speaker 2: 1:19:16

Yeah, yeah, like. Layer three is like you're not a bank, you don't have an account at the central bank, you don't have the permission to do credit creation of money, which is the process whereby you issue far more digital casino chips than you have in reserves. And bear in mind what a bank does, like you always got to think about with all money issuers they each have their own reason for issuing money. When a state is issuing money, it's doing it to get resources, so it's getting stuff from you. Okay, that's how states provision themselves by issuing out money, but in the background they're getting, for example, like military service, whereas the reason why a bank issues out money in a second layer is to harvest loan agreements from the public or from people, right, so they issue out all these digital casino chips and then, on the other side, they're pulling back these loan assets to themselves, and that's a very risky process because they can backfire. But if they do that correctly, it leads, it kind of creates a sort of pressure differential over time, which will suck money back to them.

Speaker 2: 1:20:23

When it comes to players like PayPal, they're not allowed to do that process that banks do. So they're issuing out money to you to harvest your bank money and to get fees from you. All right, and so there's different sort of reasons why players will do it. An online, you know like gambling portal will say, okay, you know, load money onto your account. It's like because they want you to have a certain amount of money sitting there third layer money, so you stay in the ecosystem. So they will have to be regulated as e-money providers. Right, because it's like well, now you have to do sort of you know, anti-terrorism checks and stuff to see people aren't like using the system to launder, and so on.

Speaker 1: 1:21:12

So I wanted to get to one last thing. Maybe you recently wrote a piece called Zero is the future of money, which was super interesting and, I think, very interesting because it came from, I imagine, like partially, your experience at collaborative finance, like the event in the yeah, yeah, Kofi, yeah at the.

Speaker 1: 1:21:30

Common Tub Kofi is sort of like the new meme that they're trying to create, but I guess it was an attempt to kind of like synthesize the different aspects of different kind of types of monetary systems, being like the fiat kind of world, the mutual credit, like local currency world and cryptocurrency, and how they can be kind of synthesized into something essentially new Sure sure sure.

Speaker 1: 1:21:58

So I mean, I think what I respect, I guess, from you is that you are making this attempt at kind of like more directly trying to answer the question of money when it comes to crypto, like what does crypto actually provide, rather than, of course, it's like kind of complete dismissal. There seems to be some things that are interesting.

Speaker 2: 1:22:21

Yeah, so I wrote this piece. Zero is the future of money on my sub stack, so if you want to, maybe the people can read it.

Speaker 1: 1:22:28

That's probably the best way to do it, I'll link it, yeah.

Speaker 2: 1:22:30

Yeah, yeah. So and that piece was basically, it was intended as like a gateway piece to sort of push people in a new direction. It's not like a detailed exploration of like exactly what you should do, but it's basically was saying I set it up as a thesis and antithesis and a synthesis.

Speaker 1: 1:22:55

So number one yeah, well, that structure goes beyond, yeah sure.

Speaker 2: 1:23:06

So yeah, like sort of the thesis is me describing the existing normal monetary system and that's like one minus one, which is the supposed antithesis, is like the mentality in the Bitcoin world, where I'm talking about how people in Bitcoin try to reject all the aspects of the so-called fiat money system, in particular, trying to reject both the hierarchy and the dynamism, because in our normal monetary system has both hierarchy, has always layers of these sort of chain players who have power, but it also has dynamism. It's not static, it's moving all the time right, it's contracting and expanding and stuff right. So in the Bitcoin world the antithesis was imagined to be like well, we'll supposedly have no hierarchy, but we'll also have this very rigid, static system. The main form of dynamism in a Bitcoin system is the fact that you can chance for the tokens around right, so the supply stays kind of static but you can move it around right. But that, compared to like a normal monetary system, that's incredibly rigid. It's incredibly like yeah, it doesn't have much dynamism at all and, as I said, it mostly operates as a counter trade system.

Speaker 2: 1:24:20

So, but it's quite interesting, you can take different aspects of those systems and start to synthesize them. That's what I get to zero. So like thesis one, antithesis minus one, synthesis zero. And that's looking at how you can sort of take the dynamism of credit money, which is what you find in the normal monetary system, and maybe combine it with some of these sort of ideals around decentralization that you get in the crypto community, albeit with a slightly different vision of decentralization, because, bear in mind, and standard crypto decentralization tends to mean taking one very large infrastructure that's controlled by particular people and making it controlled by like nobody. So like the ideal of decentralization is to have like a huge system that nobody controls.

Speaker 2: 1:25:14

That's a very different vision of decentralization, to say the original decentralization movements, which is to say you take one large infrastructure that's controlled by particular people and you break it down into much smaller ones that are controlled much more locally. So the original vision of decentralization, in sort of like anarchist movements or like local economy movements and stuff, wasn't to say that you shouldn't have anybody in control. It's just that control should be more localized and should involve have more democratic processes. So I'm taking some of the and then I'm sort of basically saying mutual credit and these sort of older, these older traditions of alternative currency, where people appreciate, essentially have a sort of way of thinking about money as a the means of means via which interdependent networks are formed and how people enter into, into and out of obligation with each other, how you can sort of take the sort of the wisdom of mutual credit communities and start to weave it together with the sort of technological infrastructures of crypto and start to find some very interesting things. And the main reason I'm writing this piece is that I want people who've got excited about crypto but who've subsequently become disillusioned to find a new direction, because there's lots of creative energy in crypto. There's lots of stuff people saying this is exciting technology we can work with. But then they've been pushed down kind of a dead end in terms of like the monetary thought into this very sort of like conservative way of thinking and stuff, all obsessed with sort of adversarial thinking and like kind of speculation and saying you know, there's a whole other world of currency experimentation that can be done if you start to move to this alternative way of thinking about money. And so in that piece I'm also going into sort of commodity versus credit thinking and money, which is like a whole big topic in itself as well. But yeah, I mean that's you know, and most people in the world maybe.

Speaker 2: 1:27:12

The last thing I'll say about that piece is most people in the world are very used to having what I would call a commodity orientation to money. And a commodity orientation to money doesn't mean that you think that money is a commodity. It's a sort of a mental model whereby you sort of metaphorically think of money as if it were a commodity. All right, so for example, take our normal monetary system. It isn't a commodity system and yet people will still in their heads talk about it as if it was a commodity. They'll imagine that there is something you've got to grab and kind of like store and hold and all this kind of stuff. So they have a very strong experience of themselves, of money as this kind of like a thing. That's just like kind of an asset you've got to somehow like, keep control of and that's a commodity orientation to money.

Speaker 2: 1:28:02

To have a credit orientation to money, you've got to see money as something that actually emanates from you rather than something that you have to try and grab towards yourself, right. So, and to understand credit thinking and money, you've got to understand that, like the central, this gets a bit like trippy, but, like in an interdependent system, it will tend to, at least in theory, always net out to zero. Okay, so like how would I describe this? Like, even in your own body, for example? Think about it, if you're like, even like you're a Robinson Crusoe kind of person, like you're always kind of fluctuating above and below zero all the time. Right, you eat some food, but then your energy runs down, you get tired and you've got to eat more food, right, so you're always like fluctuating, right, there's no stable point that ever exists, even within a single human body.

Speaker 2: 1:29:03

Right and similar with human communities, you're always entering into and out of obligation with each other and that's fluctuating around a kind of point of balance, as it were. Right, as a community you're always fluctuating around zero, right? One person has more energy, another person needs to get something from them. They're kind of like moving towards, they're moving in and out of obligation to each other, and actually that's a very good starting point for understanding monetary systems, because often monetary systems are intermediating in this process of interdependence and proper monetary systems have both asset and liability sides, right. So the sort of positive and negative sides and mutual credit, for example, is an attempt to create these sort of community run monetary systems where people explicitly recognize that all positive credits in the system are mirrored by negative credits, right, and they net out to zero, and so that's the sort of zero is the future of money concept, but it relies upon having a very strong understanding of like interdependence and stuff.

Speaker 1: 1:30:01

So I think-.

Speaker 2: 1:30:01

Have you made sense?

Speaker 1: 1:30:03

I mean, yeah, I think it's I've definitely like heard it before of like thinking. I mean, yeah, it's using like metaphors from ecology as a way to kind of like I don't know think about human social interactions before I think it makes a lot of sense. I think one of the things that is difficult to maybe wrap, for people to wrap their heads around is that usually I mean one mutual credit systems have this like plus or minus at least like kind of default, and this is a very generally we think of like if you're in the negative, that's really bad. You're like you're in debt and you owe someone something Like. I had a conversation with you know, a left-wing friend of mine and they were saying that, like in a mutual credit system it doesn't solve anything because then you're just in debt and you're stuck because you're going to be in this situation, because you're going to be negative, because Well, this involves the illusion that you're not always in debt anyway, and so this is what's fascinating about it Day factor, the human condition is you're always in debt.

Speaker 2: 1:31:08

You don't survive unless you have other people giving you stuff. And again, as I said, even in your own body you have this going on. You can try to like, not eat for a few days, but at some point your body's going to say you have to go do something now. You don't have this radical freedom to just override that, and so, as a sort of fundamental primitive, we're always in debt in some form. Right, and that's not negative. That's what it means to be alive, often right. One of the main reasons why this sort of negative perception of debt forms is that in a standard capitalist system, under a standard monetary system, we only experience the asset side of money, all right. So we experienced money as being these positive units that you've got to try and grab. But bear in mind, from the other side of that, a money issuer experiences money as a liability right. When banks are issuing out those digital casino chips, those are on the liability side of its balance sheet. It's stuff that it owes, right.

Speaker 2: 1:32:09

And same thing for the state. Actually, with those sort of units of state money, at some level they're actually kind of credits that can be redeemed back for stuff in the state. There are experiences as a liability, all right. So the only reason that we can experience money as an asset is that there's a hidden shadow side somewhere else that takes on the liability side. All right.

Speaker 2: 1:32:29

Now, when you try to build your own monetary system, you have to take on that responsibility for accepting that you're on the liability side, all right. And normally, when we're talking about debt, if you're in the position in a normal money system and you only experience the asset side you're normally talking about when you're borrowing money, right, so you're saying the debt is measured in money, whereas in a mutual credit system your debt isn't measured in money. It's measured in goods and services, all right, which is the sort of fundamental primitive state of being in state of independence. All right, like I mean, I'm telling you I think about being a baby, for example. Like you have to get actual things from your parents, right, you don't care about money, you have to get actual, real goods and services, right. And there's a kind of like an existential sort of like position there. You cannot get out of debt as a baby, yeah, and actually parents will not perceive, as what they're doing is like racking up credit right.

Speaker 2: 1:33:32

But at some level we have a fund. Basically, we do not survive as human beings unless other people provide goods and services for us. Right, and I think this is. So there's kind of like a type of primordial version of lots of sort of credit in society is actually for real goods and services rather than for money. Right, so like.

Speaker 2: 1:33:52

But yeah, because we only used to experiencing the asset side of money, we start to associate debt with becoming like indebted in monetary terms. I didn't expand it very well, but, like, this is one of the core things to kind of like grapple with. And so, yeah, if you're truly interested in forming monetary system, you have to accept debt. And actually, one of the most fascinating things you'll see in the crypto world is that people, because they're so steeped and only experiencing the asset side of money like most of us are they imagine that what a monetary system is is the act of creating a bunch of positively numbered objects that you dump on top of people and then you hope that there's somehow miraculously turned that into a monetary system. All right and so, but what will actually happen if you were, if you got a group of 100 people and you had a bunch of like objects that you said, okay, we have to turn this into a monetary system.

Speaker 2: 1:34:42

Now what will actually happen is that you'll have to find a way to zero those objects. So like if you gave everybody a thousand objects and say, create a money system, like that number of thousand will become the new zero in the system. It'll get neutralized, essentially, right, Like you'll have to start from zero, being named as 1000. And so, like you know, basically if you issue everybody a thousand units, it's the same as issuing them nothing, Right, relative, yeah. So in an interdependent system, what's actually gonna happen is that those units will get neutralized to a new zero point and you'll only measure deviations from that. So it's only when, for example, one person goes to 1,100, another person goes to 900, that a hundred units of money have been created in the system. So there is a negative.

Speaker 1: 1:35:33

You just like you see it as a positive.

Speaker 2: 1:35:34

Exactly and some of the dark arts of creating alternative money systems is that you try to trick people with positive objects or like positive number thinking. So you'll say you'll design a mutual credit system and you'll say, rather than calling the point of balance zero, we're gonna call it 1000. So that everyone imagines that they got positive credits in their account because they're used to being scared of being negative in the normal money system. All right, so we're gonna be like let's, as a trick, name zero as 1000. And then the person gets to zero and actually in reality they're minus 1000.

Speaker 2: 1:36:08

Yeah, yeah, but they're like oh well, I guess I've run out of money now and it's like no, what's actually happened is that you've gone into a point of debt in an interdependent system and you're required to go back to 1000 to enter balance again. The end of your credit line perhaps? Yeah, exactly, so you're basically naming the end of your credit line as zero rather than minus 1000. Right, so there's a lot of like trickery with, like, taking these sort of standard commodity imaginations of money which, again, most people suffer from, and so, yeah, all sorts of currency designs are really fascinating when you're trying to like work at people who use to another monetary system. Yeah, definitely.

Speaker 1: 1:36:49

But so, like I want to kind of this may be a little bit speculative, but like, if we think about like in a mutual credit system, like I can say, like it's probably this type of system that is less de-personalized than the current monetary system, as in like, the person who takes on the liability maybe knows you.

Speaker 1: 1:37:07

Like there was like a relationship between the person who has the asset and the liability, and so like there could be situations where, like you know, technically this person owes me or something, or like this person is like in the negative and we want to create a stable state again. Like I'll help my friend I don't know, maybe I don't, I don't really care about painting my wall, I could use like a paint job. So I'm like, hey, I want to paint my wall, here's some mutual credits and you're back in a more stable state. In a world where mutual credit scales, then there's a potential that things become more de-personalized, similar to the fiat system. Does that change the standard.

Speaker 2: 1:37:51

Yeah, but bear in mind it's important to never analyze an alternative money system in isolation. Yeah, you know, you can engage in the fantasy of like what if mutual credit system becomes the entire monetary system in the global world? I mean, but like, well, that's a fantasy, right, you have to think about what it actually is. What it actually is right now is an alternative system that exists on the outside of the actual main system. So in the earliest stages of mutual credit system, you got to be thinking about it as a type of counter power. Yeah, right, it's.

Speaker 2: 1:38:23

You know, going back to the Bitcoin world, there's a difference between analyzing Bitcoin for what it is versus the sort of ideal you know fantasy. In the ideal fantasy, you analyze it as being the world's monetary system. In reality, it's an object traded in the world's monetary system, right? So if you start from the reality, you get a better. You start to be more like practical about it. You're like, okay, given that that's the case, what do we do Similar with? Like, a mutual credit system which has a very different monetary ideology and sort of structure behind it? But, like, you got to think about it as being a counterweight to something else that exists. And how you got to think about how people in the actual sort of mainstream economy will interact with it, given that they're probably earning most of their money somewhere else, and yeah, so that's the kind of one of the fascinating things about mutual credit systems, though, is the scale makes a big difference because, you know, day facto, in any human economy we are interdependent. You know, even in our super large scale, you know capitalist economies.

Speaker 1: 1:39:23

We're. I'm a sovereign individual. What do you mean?

Speaker 2: 1:39:28

Exactly so like. The fascinating thing about sovereign individual imagination is that you essentially have lost awareness of your interdependence because of the scale of the system. You've come to engage in the fantasy that you're actually separated from everyone else. Okay, because in a large scale system it's very easy to do that. It's very easy to not be able, not see who you're dependent on, all right, but basically every single person you're doing a monetary transaction with is somebody who you're choosing to engage in an interdependent relationship with. Right, you don't have to choose everybody, but you, on average, you have to choose a subset of everybody, right. And so the monetary system basically enables these different routes, different sort of pathways you can take to fulfill your interdependence. Okay, and then there's politics in who you choose to fulfill that. You know you could choose your mate, or you can choose some you know, random stranger. Okay, but in the end you have to. You're interdependent and you have to find a pathway to satisfying that situation.

Speaker 2: 1:40:30

In a normal monetary system, because it's such a large scale, we can. Often it enables you to engage in the fantasy that actually you're totally separate and you're like quite a good financially independent and to solve an individual's blah, blah, blah. Whatever right, right, which is, you know, it's fascinating that actually a lot of libertarian thought emerges out of the context of super large scale capitalist economies that are underpinned by nation states. Because, actually, if you're not in that situation, you will never engage in the fantasy that you're an individual, right, you know, in a small scale economy, you're very, very aware that you're dependent on everyone else. So in a mutual credit system, it actually it's a monetary system in the sense that you're issuing these units and stuff. But because it's a smaller scale, you tend to have much higher awareness of the situation. That you know. Actually, economies are cooperative organisms, right, and so you tend to have a stronger kind of communitarian ethos in a mutual credit system, even though what's going on is forms of exchange, right.

Speaker 2: 1:41:28

But of course, if you scale the mutual credit system to like a massive size, you would start to have those forms of alienation creeping in where you stop seeing who you're dependent upon and you start to engage in this fantasy of independence, right, and so that's, you know, a fascinating element of these systems. And if you scale the mutual credit system to like a global scale, you would probably start to find financial institutions setting up on it as well. Sure Right, they'd be like oh, people have set up these self-issued credits and there's a central administrator for how it works. We can now take those credits and make our own credits on top of that. They'll start doing credit creation of money. They'll create their own, you know sort of second layer monies on top of that, and so on. So engaging with mutual credit systems is actually a very interesting way to engage with how the normal monetary system actually you know, it's a sort of it uses similar primitives in a way.

Speaker 2: 1:42:17

No, I don't think that answered your.

Speaker 1: 1:42:19

I mean, yeah, I mean I'm just thinking. Coming to mind is like the Circles UBI project. Since we were on the panel, like it's part of the application, they have, I think fairly recently, added the feature now the function that you can create like a joint entity that then takes part of the mutual credit system as well. So like there's going to be like this, you know the creation of institutions would still happen, even in a system that is like mutual credit, where rather than the creation of money being siloed at you know the central banks and retail banks, but even if it is amongst everyone, there's still probably a need for the creation of institutions.

Speaker 2: 1:42:55

that yeah, yeah. And again, I think it's the most important to like, just like, emphasize this point you have to look at these things. You can't look at them in isolation. It's like you have to sort of see how they interact with other entities in the economy. So, you know, in a way, sometimes, when I'm this, for example, go back to the Bitcoin debate, because you know like, have you ever seen these like YouTube videos where they're like, or I don't know, maybe like speculation online, where they're like shark versus crocodile. They're like what would happen if a shark had to take on a crocodile? Who would win? Oh yeah, and it's like, well, you know, I'm from South Africa. It's like, yeah, crocodiles live in fresh water, sharks don't, right, and so. And then you had this hypothetical, imagined battle between these two things that don't exist in the same universe, and it's like we could engage in the speculation, but in reality, if a crocodile had to swim out into the sea and be in salt water, it would be at a massive disadvantage against the shark.

Speaker 2: 1:44:01

Right because crocodiles don't? You know there are. I mean, there are some saltwater crocodiles but like, let's take a fresh water crocodile versus a saltwater shark. You know, to make this a realistic scenario, you have to actually imagine what the actual situation would be. And it's similar with like these sort of people engage in these sort of abstract debates about whether Bitcoin's a perfect monetary system or not. It's like who cares what it actually is? In the quote unquote, saltwater of the fiat system is an object that's traded and totally like the system runs circles around it. All right, in some hypothetical other universe where you set up, you could have this debate about what it could be, similar with things like you know circles, ubi or mutual credit systems and stuff. It's like you could engage in the thought about like what if it became the whole monetary system? But that's not the situation, right. So I think it's super important to think about any alternative economy project like that. It's like how is it influencing an overarching ecosystem of other players?

Speaker 1: 1:45:00

Right. So I guess your kind of stance maybe on that is like like it doesn't make sense to think about the mutual credit, like mutual credit, alternative currency systems, like before it even becomes like big enough to like I don't know to get rid of, like the current existing monetary system, because like might as well use it now and have it now that, rather than like imagining how bad it'll be if then that was a new dominant one, because we're not finding it. Yeah, you should be thinking about holding contradiction in your head.

Speaker 2: 1:45:33

Yeah, yeah, and also just like having ideas of counter power in your head. It's like the objective of the system isn't that it's gonna take over, it's that you create these sort of spaces of alternative action and stuff and sort of new possibilities. You don't have this like sort of absolutist, abstract position where you sort of isolated, vacuum, sealed thought experiments right, and many I often get sent because I'm I've spent quite a long time in the sort of alternative money space. I'll often get these emails from some, for example, like a retired engineer who I don't know used to work for British aerospace, who I'm just making this up. But this is the kind of person they'll be like Brett, I've seen your stuff and I've worked out the perfect money system and they'll show me these formulas and engineering schematics of like the perfect money system and they're like I need to popularize this idea.

Speaker 2: 1:46:24

Like you know, why aren't people taking it seriously? I'm like, yeah, have you thought about the politics of this? Like the actual world doesn't operate on perfect ideas. It operates on, like messy human beings who engage in political systems. So even if you believe you've worked out the hypothetical perfect idea, it's kind of like meaningless. You have to sort of think about how that interacts with, like actually existing human political structures. And so, yeah, we filled with all sorts of people telling us like the perfect money system, but like very few people who actually think about like you know who is like how are you gonna make that actually happen?

Speaker 1: 1:47:00

Yeah, yeah, Like first having some experience in trying to make a currency system in the first place publicly.

Speaker 2: 1:47:07

Yeah, I would like just have a degree of humility, you know where, which is like you know, and that'll probably help quite a lot in terms of like thinking realistically about these things. Yeah, yeah, maybe the final metaphor I'll share with you. Like you know and this is sometimes like, for example, the Bitcoin community there's this phrase, like in, at least in English, where you say you call a spade a spade, and in English that's normally assumed that you're sort of like just kind of calling bullshit on something. I mean, like I'm just gonna say what you actually are, rather than engaging in some kind of like you know, but actually, if you think about it, spades are very useful. There's nothing wrong with being a spade, you know. So when I go and say something like oh, bitcoin's a counter-trade object, like that's fine, like there's nothing wrong with that, that's useful right Like that could be useful.

Speaker 2: 1:48:01

The main people who like get antagonized by that are those who engage in the sort of fantasy thought experiment of it being like a golden sword. They're like no, it's not a spade.

Speaker 1: 1:48:11

And they think it's an insult?

Speaker 2: 1:48:13

It's like no, it's just a thing. It has a particular kind of structure and use and it's similar with like a lot of like other alternatives You'd be like, okay, well, what does it actually do? Like the fact that I don't engage in the kind of speculative fantasy of it. You know, being something else is not an insult. It's just trying to take its serace for what it is.

Speaker 1: 1:48:33

Yeah, I agree with that.

Speaker 2: 1:48:37

Thanks YouTube. I feel like I've been going in these long like ramping rants.

Speaker 1: 1:48:42

Agreed, I love listening to those rants and we've been, yeah, quite well, almost two hours now and I'm 45. So any like last things you want to leave with people. Thank you so much for taking the time for the second time again for talking to me and, yeah, I highly recommend people to read Brett's work. I have gained a lot from it and it's helped me a lot and sort of developed my own arguments and thinking around cryptocurrency.

Speaker 1: 1:49:10

So, yeah, I'm in debt to you, I'm at negative and I'm at negative and I'm at negative as well.

Speaker 2: 1:49:18

No, I mean, the podcast has been a great resource for many people you know, and also your book now as well. So thank you. But yeah, my stuff people want to like see more. There's my book, cloud Money, which is actually mostly about the politics of cash versus digital money. It also does go into crypto a lot, but you know it's about big tech meets big finance basically. So if you want to get a sort of insight into that like battle going on right now, that's what. But if you want my more kind of my work in all terms of currency and stuff like that, my sub stack, altered states of monetary consciousness, which is bretscotsubstackcom, is the place to check out my more like esoteric musings, perhaps, and sort of descriptions of money systems.

Speaker 1: 1:50:04

Yeah, more metaphors to be found.

Speaker 2: 1:50:06

Yeah, like play with metaphors see what's useful, what works, what doesn't.

Speaker 1: 1:50:11

Nice, well, cool. Thanks a lot.

Speaker 2: 1:50:13

Yeah, thanks, that's been cool, Finally, Lisa. Second question