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Speaker: Welcome to the Honest Money
Show a big thanks to our sponsor.

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Shop Bitcoin Australia for
making today's episode possible.

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Anja: Joining me today
is Robert P. Murphy.

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Robert is around renowned economist.

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He's a Chief economist and Infinio
group, a senior fellow at Meas Institute,

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and he's authored a number of books,
probably the most famous of them

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Being Choice, which I'm still reading.

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Robert, welcome to to Honest Money.

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Robert: Thanks so much
for having me, Anya.

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Anja: Yeah, you're very welcome.

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Um, so I'm so happy to
have you here today.

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Um, obviously as a Bitcoin, I'm quite
new to Austrian economics and feel

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very lucky to have you as a guest on
the show today to talk about this.

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Um, because my journey into this has
been some, sometimes backwards or

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even scattered, and I would love to
have sort of the experience of a.

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First year grad student, um, just,
just to yeah, get to understand

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this wonderful topic from, from
scratch and in a more linear way.

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So, um, how would you
describe Austrian economics?

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What, what is it?

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Robert: Sure thing, and I should probably
make the obligatory joke at the front

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end, that what happens occasionally
and happened, like my friend Tom

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Woods, he was giving a, I think he was
debating somebody on Aus Economics at

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one point in the United States, and,
and he went and gave his thing and

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the other guy got up and it was clear.

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The other guy thought it
was Australian economics.

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And so, anyway, that was kind of funny.

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Um, so the, the name obviously
comes because the original

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founders were from Austria.

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Um, so Carl Manger in 1871 wrote what's
translated as Principles of economics.

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And that ushered in it, it was
called the marginal Revolution.

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If, if some of your, uh, viewers are
familiar with that term, a phrase it

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having to do with, like the old classical
school, they thought of things like as,

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as aggregate classes, like, you know,
diamonds and water and things like that.

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And, and it was hard to explain
market prices with that old paradigm.

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And so it was the so-called
marginal revolution that had

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people thinking on the margin.

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That's what's where that term comes from.

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So when you go into the store,
it's, you know, when you're trying

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to decide, oh, should I buy this
many bottles of milk or not?

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It's not, do you like milk more
than you like bread or something?

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You know what I mean?

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It's no one more bottle of milk or one
fewer, so it's thinking on the margin.

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So that, that's where the name comes from.

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The Menger and bba.

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Um, were from Austria and so that's,
that's where the title comes from.

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But nowadays, when we talk about the.

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The Austrian School, obviously, as
you can tell from my accent, I'm

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not from Austria, you know, a lot
of them are from the United States.

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Um, so it does tend to be very free
market oriented, like it's opposed to

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government intervention, but it really,
it's, that's not it's essence, right?

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It, it really is an
objective school of thought.

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And you said you're working
through my book choice for example.

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And you can see it really is a
scientific enterprise where it just

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talks about this is the way that we
approach the study of market prices.

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This is what we think
causes the business cycle.

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This is how banking works and so on.

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Um, I guess I, I'll just give a
few of its characteristics and,

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uh, you can take the, you know, the
questions, however you want to go.

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To elaborate some of the defining
features of the Austrian school

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is, it's very, it's what's called
methodological individualism, right?

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So they don't try to explain the economy
in terms of aggregate statistics, like,

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you know, aggregate demand or, uh.

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You know, the price level
and things like that.

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Instead, they really try to start from
individuals and what motivates them

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and how do they make their decisions.

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And then you can build that up and, you
know, the Austrians do have a theory

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of the business cycle, for example, but
it, it really is grounded in, you know,

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with individual underpinnings, um, as
opposed to some of the other schools

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of thought where just from the get go
when they try to explain what's going

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on in the economy, it's like using
aggregate, um, statistics or variables.

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Um, I, I guess the other defining
feature, lemme just mention this.

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So the Austrian school that even
distinguishes it from like the Chicago

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school is the Austrians are tend
to be very big on like applying the

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standard principles of the benefits of
market pricing to money and banking.

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And so most economists, if you
said, Hey, should the government

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be picking the price of oil?

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You know, should there be a group
of experts who every month come out

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with their meeting and they announce.

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Going forward, you know, the price
of crude oil that we're gonna target

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between this many, you know, per barrel.

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Most economists would
say, no, that's socialism.

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You can't do that.

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But yet, even in the so-called capitalist
countries, they have central banks where

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they have a group of experts who come out
and periodically give announcements about

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what the interest rate target is gonna be.

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Right.

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And so that seems kind of weird.

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And so the Austrians, I think, are
the most consistent on that to say no,

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the, just for, for all the same reasons
you would want to have freely floating

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market determined prices for oil.

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Likewise, with interest rates, you,
it doesn't help the economy to have

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a group of experts in charge of the
money stock or, you know, the, the safe

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interest rate and things like that.

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So again, I'll, I'll let you take
the conversation, but that's, I,

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I guess I'll, I'll stop there.

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But that's part of the defining
characteristic of the O School, and again,

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they, so they tend to be very hard money
and in favor of laissez-faire in banking.

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Um, and that even that distinguishes
even from a lot of the Chicago school

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economists who also typically are
free market compared to Keynesians.

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Anja: Yeah, absolutely.

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And, and I would love to know like, what
is the scope of economics and is this also

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where the different schools of thought
diverge in terms of what that scope is?

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Like what should an economist
deal with and not deal with?

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Robert: Okay.

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Yeah, that's a great question.

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So I did spend, uh, some time in the
beginning of that book choice, like

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just defining that, like what you
we're, we're here, this is a book

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about economics, but what's the,
you know, what is the boundaries

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of this science or this discipline?

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So I can, I can tell it exactly the way
that, like Meeses, so Ludwig Van Mes was

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one of the giants in the Austrian school.

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Um, he had many accomplishments.

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He sort of unified what you could call
micro and macro point it this way.

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So Carl Manger and the other pioneers
in the marginal revolution, they came up

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with a way to use subjective preferences
to explain the price of like, you know,

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apples versus oranges, things like that.

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And they said, oh no, it's not about the,
it's not about the labor theory of value.

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It's not about the cost of production.

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It's, it starts with subjective valuation.

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And you can build up, you know,
pricing from that bedrock.

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But once that, you know, started to
take over the profession, still there

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was a log jam with explaining money
prices because it seemed like to say,

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oh, the reason, you know, how do we
explain the purchasing power of money

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is just by its subjective valuation.

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It look like you are
arguing in a circle, right?

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Because why do you value money?

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Oh, because you can buy things with it.

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As opposed to like, you know,
why do you value apples?

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Well, 'cause they satisfy your hunger.

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You like the way they taste, you know,
you can, you can make pies with them.

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Um, but with money, it seemed like, no,
the whole function of money, the utility

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it gives you is from its purchasing power.

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And so to try to explain that by
subjective valuation seemed like

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it was arguing in a big circle.

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So me has solved that problem.

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I'm so, I kind of went on a detour
there, just explained like mes had a

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bunch of theoretical accomplishments.

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So anyway, in his work when he's
explaining the history of the science of

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economics and, and its, its boundaries,
he said historically, you know, it people,

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social science, you know, people who
wrote on, on lots of things, you know,

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like the back in the day, you know, the
medieval scholastics and things they wrote

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on all sorts of, like a, even going back
to Aristale, wrote all sorts of stuff,

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including what we now would think of as.

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The scope of economics.

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And he said, so humans noticed there was
this irregularity and market phenomena.

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Like, it seemed like there
were some patterns there.

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And they were trying to figure
out, you know, what are the rules

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governing how prices behave?

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So that was clearly always
part of the subject matter.

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But then Meis said, um, with this new
marginal revolution that there, it

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wasn't just, we came up with a better
theory to explain market pricing.

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He said once they made that switch and
they went from looking at like how many

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labor hours went into something or what,
what were the costs of production, right?

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'cause those were the two like sort of
classical modes of trying to explain

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like, you know, why does a stage coach
trade for 10 times as much as this cow.

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You know, and the classical school
would try to look at like, well, what

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are the things that went into them?

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And like, do it that way.

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And the subjective marginal approach
did it the other way around.

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And it'd say like, no, the services of
a stage coach are more valuable than,

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you know, what the cow can give you.

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And that's why, you know,
so that's kind of the thing.

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And so Mees said, once that innovation
occurred, which at the time was just

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sort of like a, just coming with
a better way of explaining market

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prices, that kind of revolutionized
the subject matter of the field.

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Because now you were talking about, you
know, the, the human mind psychically or,

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you know, subjectively evaluating things.

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And that was the bedrock starting
thing of, to explain market prices.

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And so he said, once they made that shift,
now the paradigm was like rational action.

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Okay.

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So, and that's why the, the title of me's
magnum opus, it's not, you know, economics

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or it's not, you know, how does the
economy, where it's, it's human action.

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Yeah.

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And so that's, you know, what
he, and so he called that pology.

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So he, he called that the
science of human action.

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And so the idea was anything where it
involves a human who has goals and tries

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to rationally, you know, choose means to
achieve them, that's what ology studies.

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And then economics proper is part of
that where, you know, you have private

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property and money prices, right?

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So that's kind of the way
Mises thought about it.

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The, like the, the tools we
use to analyze that stuff.

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Really it's, you know, the
whole field is purpose of action

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or, or purposeful behavior.

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And then if you have certain
prerequisite institutional prerequisites,

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like private property and money.

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Then, you know, there's
like a subset of that.

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That's what we, we now call economics.

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So that was kind of
the, the way he did it.

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Um, you're asking about like,
do other schools of thought?

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Do they, if you read and in, in that, you
know, that first chapter of choice, I give

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quotes from other schools of like Chicago
school people or, and they, they'll say

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things like, um, trying to maximize your
wellbeing under conditions of scarcity

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or something, you know what I mean?

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They'll, they'll, or using, uh, you know,
limited means and unlimited desires,

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and that's what economic studies, you
know, so they, they say things like

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that, um, or choice under constraint.

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So they're all kind of groping
around that same idea where people

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have a bunch of goals that they
subjectively pick, but there's

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limitations imposed by nature on them.

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And then that's kind of the,
the subject matter of economics.

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Anja: Yeah.

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So assuming, well, not assuming
we know the dominant school.

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Of thought today in economics
is Keynesian school and mm-hmm.

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I'm very keen to understand, like you've
already touched on a number of things,

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how the Austrian School differs from
other schools of thought, but what

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are the main, kind of like the top
three, um, things where the Keynesian

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School and the Austrian school differ?

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Robert: Okay, so the big one is, um,
like what, what causes recessions, right?

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And so for the Keynesians,
it's a shortfall of what they

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would call aggregate demand.

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And so the idea is that if, um, the
economy can be in a situation such

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that the revenue that the employers,
that the firms are getting from selling

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their product is not enough to, to
justify or support full employment.

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The economy can just be stuck in this,
in this, you know, odd position where

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there's a, you know, it's equilibrium,
meaning like, like the economy's

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not gonna quickly move outta this.

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It can be kinda stuck in this rut.

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And yet there's large scale unemployment,
even though, you know, those workers

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are eager to work and they're just as
skilled as the people who have jobs.

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00:12:42,477 --> 00:12:42,627
You know?

221
00:12:42,627 --> 00:12:46,197
So it's not like a matter of that they,
they don't have good skills or something,

222
00:12:46,887 --> 00:12:48,807
and the economy's just stuck like that.

223
00:12:49,587 --> 00:12:49,767
Right?

224
00:12:49,767 --> 00:12:54,417
And so in the Austrian and in
the old classical view, that

225
00:12:54,417 --> 00:12:56,067
shouldn't be possible, right?

226
00:12:56,067 --> 00:13:00,567
That it should be, well, wages should
fall and until the point at which,

227
00:13:00,627 --> 00:13:02,547
you know, so as wages come down.

228
00:13:03,072 --> 00:13:04,902
Employers wanna hire more workers.

229
00:13:05,712 --> 00:13:10,032
And the lower the wage gets, you know,
workers are less eager to get a job.

230
00:13:10,092 --> 00:13:12,912
And so at some point, you know,
the wage should fall such that now

231
00:13:12,912 --> 00:13:16,602
anybody who's still not working, it's
because they say, yeah, that's not,

232
00:13:16,602 --> 00:13:17,802
that's not a big enough pay for me.

233
00:13:17,802 --> 00:13:18,852
I, I'd rather not work.

234
00:13:19,122 --> 00:13:22,452
And so, you know, so that's, so
that's like the old classical story.

235
00:13:22,452 --> 00:13:24,372
And the Austrians largely
agree with that too.

236
00:13:25,182 --> 00:13:29,502
And the keynesians say that, no, that
the economy won't fix itself like that.

237
00:13:29,982 --> 00:13:33,132
And they, and they have a, you know,
and Keynes in his book, the general

238
00:13:33,132 --> 00:13:37,632
theory goes through the argument
as to why that might not happen.

239
00:13:37,872 --> 00:13:38,202
Alright.

240
00:13:38,232 --> 00:13:44,262
Um, part of like, intuitively the story's
like, well, because as the wages are

241
00:13:44,262 --> 00:13:49,752
falling, well now, like the business,
like the people have less money to spend

242
00:13:50,082 --> 00:13:52,812
and so like, now the revenues might
fall from the employer's point of view.

243
00:13:52,812 --> 00:13:53,232
You know what I mean?

244
00:13:53,232 --> 00:13:56,022
So it's, it's not like you can just
hold everything constant and just

245
00:13:56,022 --> 00:13:57,342
have the employer cut the wages.

246
00:13:58,032 --> 00:14:00,432
Which is kinda like the way the
old classical people were thinking.

247
00:14:00,672 --> 00:14:04,152
So that's, that's kind of the argument
Keynes gives us to why it can get stuck.

248
00:14:04,422 --> 00:14:08,322
So related to that, then, if, if
they're diagnosing the problem

249
00:14:08,382 --> 00:14:13,302
differently, it's not surprising that
their solution is different also.

250
00:14:13,662 --> 00:14:13,902
Right?

251
00:14:13,902 --> 00:14:17,922
So for the keynesians they'll say
the, you know, the first thing that

252
00:14:17,922 --> 00:14:21,942
happens should happen is the central
bank should cut interest rates, right?

253
00:14:21,972 --> 00:14:24,972
'cause that will
stimulate spending, right?

254
00:14:24,972 --> 00:14:28,992
Because the, the whole point is in the
Keynesian view, the private sector's not

255
00:14:28,992 --> 00:14:33,372
spending enough if we're in a recession,
either on a consumption or investment.

256
00:14:33,792 --> 00:14:36,762
And so the first thing to do is, you
know, have, have the central bank cut

257
00:14:36,762 --> 00:14:39,372
interest rates, 'cause other things
equal that will stimulate spending.

258
00:14:39,582 --> 00:14:44,052
You know, people will borrow more if
interest rates are lower, and, uh,

259
00:14:44,052 --> 00:14:46,092
households will save less, right?

260
00:14:46,092 --> 00:14:47,442
And so they'll, they'll spend more.

261
00:14:48,162 --> 00:14:51,342
But it could be that
even that's not enough.

262
00:14:51,402 --> 00:14:54,522
And even if the central bank
cuts interest rates to zero.

263
00:14:55,272 --> 00:14:57,462
Still, what if you have
this shortfall on demand?

264
00:14:58,092 --> 00:15:02,472
And then they say that's now the, the
time where it's auspicious for the,

265
00:15:02,922 --> 00:15:06,852
the central government to run a budget
deficit to, you know, to just add

266
00:15:06,852 --> 00:15:10,812
aggregate demand that way to jumpstart
the economy and get outta the rut.

267
00:15:10,812 --> 00:15:13,962
So the Austrian disagree with all that.

268
00:15:14,502 --> 00:15:18,282
And so on the, you know, the deficit
spending stuff, they, they would

269
00:15:18,282 --> 00:15:22,032
say, look, the government, when it
spends money, it's just diverting

270
00:15:22,032 --> 00:15:27,312
resources from the private sector
into political outlets in general.

271
00:15:27,882 --> 00:15:29,592
Why would you expect that
to be an improvement?

272
00:15:29,982 --> 00:15:32,382
So that's, you know, one avenue of
just saying that's not fixing it.

273
00:15:32,682 --> 00:15:36,852
But then more generally, they're gonna
say, the reason the economy finds itself

274
00:15:36,852 --> 00:15:41,382
in a recession in the first place is not
just an act of God or a natural disaster.

275
00:15:41,802 --> 00:15:46,722
It's because of prior episodes of
government artificially pushing

276
00:15:46,722 --> 00:15:50,292
down interest rates and causing
this, you know, false unsustainable

277
00:15:50,292 --> 00:15:52,422
boom that then leads to a crash.

278
00:15:52,422 --> 00:15:53,592
So in the Austrian view.

279
00:15:54,252 --> 00:15:59,082
It's the Keynesian, you know, medicine
that's actually keeping the patient sick.

280
00:15:59,892 --> 00:16:03,132
And so like these recurrent boom bust
cycles, the osters say that's not

281
00:16:03,792 --> 00:16:05,652
just a natural feature of capitalism.

282
00:16:05,952 --> 00:16:10,962
That's because you have this government
banking, you know, money system laid on

283
00:16:10,962 --> 00:16:15,432
top of, you know, the underlying market
economy where they keep artificially

284
00:16:15,432 --> 00:16:19,332
pushing down interest rates that fuels
this unstable boom that then busts.

285
00:16:19,872 --> 00:16:23,412
Uh, so, you know, that's
obviously two big things.

286
00:16:23,802 --> 00:16:26,142
But then more generally in terms of
the differences of the school, like I

287
00:16:26,142 --> 00:16:29,952
said, it's not merely, you know, policy
prescriptions that they on, which

288
00:16:29,952 --> 00:16:35,262
they differ, but even just the, their
whole approach, the, um, the Keynesian

289
00:16:35,262 --> 00:16:40,362
school, uh, you know, fancies themselves
to be very empirical and scientific.

290
00:16:40,362 --> 00:16:43,182
They think they're like
chemist or physicists.

291
00:16:43,182 --> 00:16:46,842
It's just they study the economy and
we come up with hypotheses and we have

292
00:16:46,842 --> 00:16:49,332
testable predictions and we go get
the data, you know, and so they think

293
00:16:49,332 --> 00:16:51,642
they're being real scientific and modern.

294
00:16:52,347 --> 00:16:56,967
Whereas like, so here, not all
Austrians embrace this, but the ones

295
00:16:56,997 --> 00:17:02,397
who follow in the maan tradition
do where they think economic law is

296
00:17:02,937 --> 00:17:08,067
apriori, like it's, it's almost like,
like Euclidean geometry in that sense.

297
00:17:08,637 --> 00:17:11,907
And so they say that, yeah, you
start with basic axioms and then

298
00:17:11,907 --> 00:17:13,407
you logically deduce things.

299
00:17:13,617 --> 00:17:17,097
Now to apply in a given situation, you
have to, you know, use your judgment and

300
00:17:17,217 --> 00:17:19,587
rely on empirical measurements and things.

301
00:17:19,917 --> 00:17:25,167
But the, in terms of like just basic
underlying economic law, they say

302
00:17:25,167 --> 00:17:27,957
that that's actually, you largely
get that through introspection.

303
00:17:28,797 --> 00:17:31,557
So that's just another, like,
that's a methodological difference

304
00:17:31,557 --> 00:17:32,607
between the two camps too.

305
00:17:34,587 --> 00:17:35,907
Anja: Yeah, it's interesting.

306
00:17:35,907 --> 00:17:39,297
I know this isn't quite the same, but
like my background is in marketing

307
00:17:39,297 --> 00:17:43,557
and, and recently I find in the
last 10, 20 years, there's just

308
00:17:43,557 --> 00:17:47,637
been this really push towards, you
know, data driven marketing and you

309
00:17:47,637 --> 00:17:49,077
need to have results for everything.

310
00:17:49,077 --> 00:17:51,177
But marketing has always
been like a science of.

311
00:17:51,867 --> 00:17:53,697
Human psychology in a sense.

312
00:17:53,697 --> 00:17:56,817
And sometimes, you know, even if
something performs really well,

313
00:17:56,817 --> 00:18:01,467
you still need to understand what
aspects of human psychology made

314
00:18:01,467 --> 00:18:03,177
that certain thing perform well.

315
00:18:03,267 --> 00:18:04,797
Um, yeah.

316
00:18:05,787 --> 00:18:06,057
Um,

317
00:18:06,237 --> 00:18:07,467
Robert: yeah, just to give a ape.

318
00:18:07,467 --> 00:18:07,677
Yeah.

319
00:18:07,677 --> 00:18:08,847
So, so, right.

320
00:18:08,847 --> 00:18:12,537
And it's, I hesitate to, to say that
because I've, you know, for some of

321
00:18:12,537 --> 00:18:16,227
your listeners who aren't familiar with
this, I, I know if I say that, it's

322
00:18:16,227 --> 00:18:19,767
gonna sound like, oh, this is like me
medieval scholasticism or something.

323
00:18:20,307 --> 00:18:24,927
And it, like, for example, like to, for
people to learn how to build bridges and

324
00:18:24,927 --> 00:18:28,167
things, you have to study geometry, right?

325
00:18:28,167 --> 00:18:31,947
And to learn pyt, aism, you know, the
Pythagorean Theorem or whatever, it's

326
00:18:31,947 --> 00:18:35,877
not that people go measure a thousand
triangle or, you know, a thousand right

327
00:18:35,877 --> 00:18:38,487
triangles, and see, and we, it's like,
you know, you're missing the, that's

328
00:18:38,487 --> 00:18:40,107
not how you do proofs in geometry.

329
00:18:40,107 --> 00:18:41,697
Like it's a logical, deductive thing.

330
00:18:41,817 --> 00:18:44,697
And then, yeah, you go apply it and quote
the real world and everything, but you,

331
00:18:44,697 --> 00:18:46,497
you're armed with these basic things.

332
00:18:46,497 --> 00:18:47,427
And I would just say.

333
00:18:48,087 --> 00:18:51,717
Like when people are arguing about
tariffs, you know, free trade versus

334
00:18:51,717 --> 00:18:57,507
tariffs or other things, usually
they resort to pretty simple fables

335
00:18:57,507 --> 00:18:59,277
to try to get the intuition across.

336
00:18:59,277 --> 00:19:01,887
And like, it's like once you see the
principle, then it's like, oh, okay.

337
00:19:01,887 --> 00:19:03,357
And that kind of helps you sort through.

338
00:19:03,747 --> 00:19:05,967
'cause the real world is
really messy and complicated.

339
00:19:06,267 --> 00:19:11,532
And the last example I'll give is, um,
like with, with with, in the United

340
00:19:11,532 --> 00:19:16,737
States, president Obama was elected
in, you know, the fall of 2008, right

341
00:19:16,737 --> 00:19:18,447
when the global financial crisis hit.

342
00:19:18,717 --> 00:19:21,357
And then there was this thing
called the Obama stimulus package.

343
00:19:21,657 --> 00:19:26,997
You know, that they passed in early 2009
and they predicted, you know, the, when

344
00:19:26,997 --> 00:19:31,707
they were trying to sell it, um, they
were warning that unemployment at the

345
00:19:31,707 --> 00:19:33,687
time was like 7.5% or something like that.

346
00:19:33,687 --> 00:19:35,727
And they were saying, Hey,
if we don't pass this thing.

347
00:19:36,387 --> 00:19:41,877
Unemployment might get up to like 9%,
but if we do pass it, we'll contain it.

348
00:19:41,877 --> 00:19:45,027
And unemployment, you know,
we'll get to 8% and change,

349
00:19:45,027 --> 00:19:46,167
but it won't break into nine.

350
00:19:46,707 --> 00:19:48,087
So they went ahead and passed it.

351
00:19:48,087 --> 00:19:51,627
They got the stimulus package and then
real actual unemployment went above 10%.

352
00:19:52,467 --> 00:19:52,677
Right?

353
00:19:52,677 --> 00:19:55,587
So unemployment was worse
with the stimulus package than

354
00:19:55,587 --> 00:19:57,927
what they were warning might
happen if we don't do anything.

355
00:19:58,437 --> 00:20:01,857
So in terms of an empirical
refutation, you would say

356
00:20:01,857 --> 00:20:03,237
what more could have happened?

357
00:20:03,687 --> 00:20:07,467
And yet the way the Keynesians
handled that episode was they

358
00:20:07,467 --> 00:20:10,317
said, woo, it's a good thing we
passed that stimulus package.

359
00:20:10,317 --> 00:20:12,627
'cause the economy was in
worse shape than we realized.

360
00:20:13,437 --> 00:20:13,737
Right?

361
00:20:13,737 --> 00:20:15,807
So from their point of view,
they're being consistent.

362
00:20:16,287 --> 00:20:19,887
But, but so again, and it's, and they
even had, you know, ex post studies

363
00:20:20,667 --> 00:20:24,297
showing this is how many jobs were saved
or created by the stimulus spending.

364
00:20:24,297 --> 00:20:28,437
And when you went and looked at
the way those models, you know, or

365
00:20:28,437 --> 00:20:29,727
those, those measurements worked.

366
00:20:30,447 --> 00:20:35,457
There was no empirical outcome that
would've made them say this was a failure.

367
00:20:35,667 --> 00:20:40,197
Like the, the very assumptions they
built into their analysis, us, you

368
00:20:40,197 --> 00:20:44,997
know, made it have to be the case that
government deficit spending created jobs.

369
00:20:45,087 --> 00:20:45,357
Right?

370
00:20:45,357 --> 00:20:50,487
So I'm saying they're being just
as dogmatic or ideological as Mees

371
00:20:50,487 --> 00:20:52,857
is, but they're fooling themselves.

372
00:20:52,857 --> 00:20:55,767
They're pretending they're being
real empirical when it's like, no,

373
00:20:55,767 --> 00:20:59,307
their whole framework assumes the
outcome, and then they just calibrate

374
00:20:59,307 --> 00:21:00,567
it to come up with specific numbers.

375
00:21:00,567 --> 00:21:04,257
But it, you know, it builds in the
way they think the world works.

376
00:21:04,287 --> 00:21:04,617
So,

377
00:21:06,057 --> 00:21:06,267
Anja: yeah.

378
00:21:06,612 --> 00:21:06,812
Interesting.

379
00:21:07,032 --> 00:21:13,377
And I'm curious to know, Bob, what's
your, what is your opinion on like, why

380
00:21:13,767 --> 00:21:15,747
Sian School is the dominant school today?

381
00:21:16,017 --> 00:21:19,047
What is it, what is it about it
that's appeals to the masses?

382
00:21:19,107 --> 00:21:23,937
Robert: So, um, the, the most Austrians
would would tell this story, and it,

383
00:21:24,507 --> 00:21:28,827
it is a bit, I guess, self-serving, but
you know, I think it's true, is that.

384
00:21:29,247 --> 00:21:31,617
There was a, a healthy debate.

385
00:21:31,617 --> 00:21:37,047
So a co the economics profession
used to be more free market oriented.

386
00:21:37,527 --> 00:21:40,797
They weren't all completely dogmatic,
but you know, they, they were generally

387
00:21:40,797 --> 00:21:42,897
very, you know, free market oriented.

388
00:21:43,407 --> 00:21:47,247
And then, um, you know, in the
early 30, you know, the gr the

389
00:21:47,247 --> 00:21:48,777
Great Depression happens, right?

390
00:21:48,777 --> 00:21:52,227
And it looks like something seriously
wrong with the capitalist economies.

391
00:21:52,647 --> 00:21:58,887
And so then John Maynard Kanes comes out
with the general theory, um, and in that

392
00:21:58,887 --> 00:22:03,417
book, you know, and he's a very smart
guy, and the book was, it was kind of a

393
00:22:03,417 --> 00:22:08,037
mixture of like really detailed arguments
and like some, you know, math in there

394
00:22:08,037 --> 00:22:09,597
that made it look real sophisticated.

395
00:22:09,897 --> 00:22:11,907
But also he had a lot of
observations on things.

396
00:22:11,907 --> 00:22:13,227
He just seemed like he knew a lot.

397
00:22:13,227 --> 00:22:15,267
And so it was an impressive work.

398
00:22:15,867 --> 00:22:20,427
And he, it was very
well done rhetorically.

399
00:22:20,727 --> 00:22:23,847
The re, the reason he called
it the general theory is he

400
00:22:23,877 --> 00:22:25,377
was sort of making like, uh.

401
00:22:26,127 --> 00:22:29,337
An analogy to, to what was
going on with in physics, right?

402
00:22:29,337 --> 00:22:34,227
So in physics, you know, Einstein
comes along and his relativity, he

403
00:22:34,227 --> 00:22:37,737
didn't say that the whole Newtonian
framework was wrong, right?

404
00:22:37,737 --> 00:22:39,207
He didn't say, oh yeah, Newton's an idiot.

405
00:22:39,207 --> 00:22:43,822
And all the, all the physicists that
came before, what he said was, oh, the,

406
00:22:44,157 --> 00:22:47,127
the more, and, and by the way, don't
get, I'm not talking about general

407
00:22:47,127 --> 00:22:49,977
versus spousal, relative, I'm just
like, in general relativity, like the,

408
00:22:49,977 --> 00:22:55,182
you know, the equations about things
like mass and whatever, when you, you

409
00:22:55,187 --> 00:22:59,757
use Einstein's equations, those are
like more general, but then for low,

410
00:22:59,997 --> 00:23:04,227
you know, for velocities that aren't
high relative to speed of light, it

411
00:23:04,227 --> 00:23:06,387
reduces to the old Newtonian lost.

412
00:23:06,837 --> 00:23:09,027
So the idea was, oh, what Newton.

413
00:23:09,447 --> 00:23:14,997
Described was just a special case where
things aren't moving very fast and you

414
00:23:14,997 --> 00:23:16,497
know, and their masses aren't very big.

415
00:23:16,617 --> 00:23:16,917
Right?

416
00:23:16,917 --> 00:23:19,407
So that was kind of the way he
handled, it's like I'm giving you

417
00:23:19,407 --> 00:23:23,127
a more general framework that's,
you know, can cover more scenarios.

418
00:23:23,487 --> 00:23:26,427
Whereas, you know, Newtonian
mechanics only covered the, so

419
00:23:26,427 --> 00:23:27,717
that's what Keynes was saying.

420
00:23:27,747 --> 00:23:31,257
He's saying, oh yeah, those
classical economists, they're right.

421
00:23:31,767 --> 00:23:34,917
That, you know, if the government
spends more, then that means

422
00:23:34,917 --> 00:23:36,327
the private sector spends less.

423
00:23:36,327 --> 00:23:39,237
And if the government's gonna
build a bridge, those resources

424
00:23:39,237 --> 00:23:40,287
had to come from somewhere.

425
00:23:40,287 --> 00:23:43,617
So that means there's fewer, you
know, resources for radios or whatever

426
00:23:43,617 --> 00:23:47,607
elsewhere, he said, but only in
the special case when we're at full

427
00:23:47,607 --> 00:23:52,347
employment, he said, if we're stuck
with, you know, high unemployment

428
00:23:52,352 --> 00:23:54,087
in, in like spare capacity.

429
00:23:54,687 --> 00:23:57,267
Then the old classical wisdom is wrong.

430
00:23:57,687 --> 00:24:01,497
And in that world, if the government runs
a deficit and spends a hundred billion

431
00:24:01,497 --> 00:24:05,757
dollars, GDP goes up by a hundred billion
dollars because you're just putting work.

432
00:24:05,757 --> 00:24:08,187
You know, you're workers who are
sitting at home doing nothing.

433
00:24:08,187 --> 00:24:09,297
Now go to the factories.

434
00:24:09,897 --> 00:24:12,177
So that was the way he
rhetorically handled that.

435
00:24:12,177 --> 00:24:16,107
So it, it was very clever that, you
know, in other words, he wasn't just

436
00:24:16,107 --> 00:24:17,697
saying everyone else was wrong before me.

437
00:24:17,697 --> 00:24:19,467
He was saying, oh, they were
studying this special case.

438
00:24:20,007 --> 00:24:24,657
And then, and here's like where
the cynicism comes in, it's very

439
00:24:24,867 --> 00:24:29,517
popular or, you know, very palatable
to say, we can fix this tomorrow.

440
00:24:29,547 --> 00:24:32,667
Just the government needs to start
spending money like a drunken sailor.

441
00:24:32,877 --> 00:24:36,927
Whereas in the old view, that would've
been very irresponsible and like

442
00:24:37,497 --> 00:24:40,407
it might be politically popular
to just start handing money out.

443
00:24:40,407 --> 00:24:41,337
But No, no, no.

444
00:24:41,337 --> 00:24:42,417
Don't be naughty boys.

445
00:24:42,732 --> 00:24:47,112
Whereas Keynes is giving them permission
and saying, no, the, the smart the wise

446
00:24:47,112 --> 00:24:50,802
thing to do is to just start handing
out money and, you know, just buy stuff.

447
00:24:51,162 --> 00:24:52,482
And so who doesn't want to hear that?

448
00:24:52,482 --> 00:24:55,092
You know, if you're a politician
and the economy's bad, that's

449
00:24:55,092 --> 00:24:56,322
music to your ears, right?

450
00:24:56,322 --> 00:24:58,602
So that's the, the cynical story.

451
00:24:58,602 --> 00:25:03,042
And I, again, it, it's, Keynes
did have a bunch of intellectual

452
00:25:03,042 --> 00:25:04,452
firepower behind what he did.

453
00:25:04,452 --> 00:25:09,672
So I'm not saying Keynes and his disciples
were all consciously lying, but in terms

454
00:25:09,672 --> 00:25:15,012
of explaining institutionally, why,
you know, all the, the big universities

455
00:25:15,012 --> 00:25:19,122
now that get tons of funding from the
government, their economics departments,

456
00:25:19,122 --> 00:25:20,382
are they filled with Austrians?

457
00:25:20,382 --> 00:25:21,612
Are they filled with Keynesians?

458
00:25:21,672 --> 00:25:23,292
And you know, they're
filled with Keynesians.

459
00:25:23,292 --> 00:25:25,422
I think that's not shocking.

460
00:25:25,542 --> 00:25:29,592
That or the central bank employs,
you know, the Federal Reserve

461
00:25:29,592 --> 00:25:31,122
employs hundreds of economists.

462
00:25:31,722 --> 00:25:34,632
Most of those economists don't
think the Fed should be abolished.

463
00:25:34,992 --> 00:25:35,352
Right.

464
00:25:35,352 --> 00:25:36,252
Isn't that shocking?

465
00:25:36,552 --> 00:25:40,482
So I'm just saying that, you know,
there, there is that, that element to it.

466
00:25:40,902 --> 00:25:41,922
Um, and.

467
00:25:42,492 --> 00:25:48,882
Again, but prima fascia it, I think people
thought capitalism failed in the thirties

468
00:25:49,212 --> 00:25:50,832
and Keynes was giving them an alternative.

469
00:25:50,832 --> 00:25:53,082
So I, you know, I dunno if
you wanna go down that path.

470
00:25:53,682 --> 00:25:57,012
I've written a whole book on
the depression and I, I think

471
00:25:57,012 --> 00:26:00,042
that, no, it was, ironically,
it was the exact opposite.

472
00:26:00,042 --> 00:26:03,162
Like what was different in the
thirties was for the first time,

473
00:26:03,162 --> 00:26:07,542
the, you know, various governments
were doing a lot of helping in

474
00:26:07,542 --> 00:26:09,342
peace time that they previously had.

475
00:26:09,342 --> 00:26:12,912
So it's, um, you know,
put it to you this way.

476
00:26:13,842 --> 00:26:18,312
In, in the US at least the way the
history is taught is that Herbert Hoover,

477
00:26:18,522 --> 00:26:22,392
you know, who was the guy who was, you
know, in office from 28 to 32, he's

478
00:26:22,392 --> 00:26:25,152
the guy that sort of gets blamed for
the depression in the United States.

479
00:26:25,482 --> 00:26:28,602
And, and the, the complaint against
him is that he didn't do anything.

480
00:26:28,602 --> 00:26:33,852
He just sat back and it was like,
okay, but the standard story isn't

481
00:26:33,852 --> 00:26:37,662
that before Hoover, all the other
presidents in the United States

482
00:26:38,322 --> 00:26:39,942
had been big interventionists.

483
00:26:40,002 --> 00:26:40,242
Right.

484
00:26:40,242 --> 00:26:40,962
They were, you know what I mean?

485
00:26:40,962 --> 00:26:41,952
So it's kind of weird.

486
00:26:42,372 --> 00:26:44,562
That all the presidents
up to Hoover did nothing.

487
00:26:45,342 --> 00:26:48,852
But on his watch we had the
worst depression in history.

488
00:26:49,152 --> 00:26:50,802
And then thank goodness FDR came in.

489
00:26:50,832 --> 00:26:51,102
Right?

490
00:26:51,102 --> 00:26:55,032
So that's kind of, it's like the
joke I say, it's if a plane crashes

491
00:26:55,037 --> 00:26:58,872
and you and someone says why, and
you say because gravity, right?

492
00:26:58,872 --> 00:27:01,932
Like so Well, well yeah that, but
gravity applies to little other one.

493
00:27:01,932 --> 00:27:03,402
Ones like there must have
been something more specific.

494
00:27:03,402 --> 00:27:06,552
So the same thing with Hoover, whereas
what is different is Hoover was the

495
00:27:06,552 --> 00:27:10,092
most interventionist when the, you
know, stock market first crashed

496
00:27:10,392 --> 00:27:13,992
and he told all the labor unions and
big businesses don't cut wage rates.

497
00:27:14,532 --> 00:27:17,802
And so the, you know, I argue in my book,
that's what, why unemployment went up

498
00:27:17,802 --> 00:27:19,722
so much is because prices were falling.

499
00:27:19,992 --> 00:27:23,112
'cause they were still on the
gold standard, but wage rates

500
00:27:23,112 --> 00:27:24,192
were not allowed to fall.

501
00:27:24,192 --> 00:27:26,652
And so labor got
artificially more expensive.

502
00:27:26,772 --> 00:27:29,112
You know, 31, 32 when that's
why unemployment went up.

503
00:27:30,492 --> 00:27:30,792
Anyway.

504
00:27:30,792 --> 00:27:34,572
So I'm just saying that there
were lots of things that changed

505
00:27:34,632 --> 00:27:35,832
and it looked like the old.

506
00:27:36,417 --> 00:27:38,247
Policies were failing.

507
00:27:38,577 --> 00:27:41,907
And so it looked like, oh yes, our
old faith in capitalism is wrong.

508
00:27:42,297 --> 00:27:47,247
And then Keynes comes along and says,
here's a technocratic fix that happens

509
00:27:47,247 --> 00:27:51,477
to give a lot more power to, you
know, central banks and politicians.

510
00:27:52,137 --> 00:27:56,277
And so, you know, to me it's not shocking
that, you know, that that swept the day.

511
00:27:56,487 --> 00:27:56,907
Anja: Yeah.

512
00:27:56,907 --> 00:28:00,477
I didn't read the book, Robert, but I
watched, um, a talk that you did at the

513
00:28:00,477 --> 00:28:03,297
MEUs Institute on, on this subject matter.

514
00:28:03,297 --> 00:28:03,387
Mm-hmm.

515
00:28:03,627 --> 00:28:07,587
I think back in 2011 or
2014, somewhere around there.

516
00:28:09,297 --> 00:28:09,897
It's really good.

517
00:28:09,897 --> 00:28:13,167
So I'll, I'll link it to the podcast
notes as well for those who wanna learn

518
00:28:13,167 --> 00:28:17,217
more about the causes of the Great
Depression or the alternative view.

519
00:28:18,657 --> 00:28:23,607
But I'm very curious to know, do you
see in this century, a world where

520
00:28:23,607 --> 00:28:27,087
the Keynesian School loses popularity?

521
00:28:27,147 --> 00:28:27,597
Robert: Sure.

522
00:28:28,257 --> 00:28:33,087
So, I, I should perhaps, you know, give
a, a little bit more of a, some more

523
00:28:33,087 --> 00:28:34,737
of the history of economic thought.

524
00:28:35,757 --> 00:28:38,127
So what I'm gonna say is definitely
what happened in the United States,

525
00:28:38,127 --> 00:28:40,977
but I think it also happened,
you know, in Europe for sure.

526
00:28:40,977 --> 00:28:45,057
And then, you know, el elsewhere too, is,
is in terms of, you know, the profession.

527
00:28:45,717 --> 00:28:49,197
So it, it's true that standard people,
you know, there was, there was like

528
00:28:49,197 --> 00:28:53,037
a debate, like, uh, in the thirties,
Lionel Robbins, who was at the London

529
00:28:53,037 --> 00:28:58,527
School of Economics, invited Friedrich
Hayek to come give a series of lectures

530
00:28:58,527 --> 00:29:00,687
there in the, I think it was in 31.

531
00:29:01,317 --> 00:29:03,837
Um, and you know, so Friedrich
Hayak is a member of the Austrian

532
00:29:03,837 --> 00:29:05,757
School, you know, a disciple of me's.

533
00:29:07,047 --> 00:29:10,797
And so Hayek was one of the pioneers
in the Austrian theory of what

534
00:29:10,797 --> 00:29:12,027
happens in the business cycle.

535
00:29:12,417 --> 00:29:15,627
And so I'm saying there was a lively
debate in the early thirties and Hayek

536
00:29:15,627 --> 00:29:16,917
came and gave, you know, his lecture.

537
00:29:17,007 --> 00:29:21,177
And unfortunately Hayek is,
was, is difficult to understand.

538
00:29:21,177 --> 00:29:25,557
Like, like, you know, he is very smart,
but it's, he's not a very clear presenter.

539
00:29:25,557 --> 00:29:28,257
If, if you, if you know you, you can
get lost in what he's trying to say.

540
00:29:28,887 --> 00:29:30,807
And so, um.

541
00:29:31,837 --> 00:29:35,832
Pierro Raffa reviewed Hayek's book
called Prices in Production, which

542
00:29:35,832 --> 00:29:39,402
was like adapted from those lectures
he gave to try to, you know, to give

543
00:29:39,402 --> 00:29:42,162
the, the Austrian v view of like,
what the heck just happened, right?

544
00:29:42,312 --> 00:29:45,402
You know, the world is mired
in this terrible depression

545
00:29:45,852 --> 00:29:48,522
and here comes the Austrian and
telling what they think happened.

546
00:29:49,062 --> 00:29:52,212
And Raffa reviewed and, and Keynes
was the editor of the journal

547
00:29:52,212 --> 00:29:55,332
where this review and they just,
it was just a scathing review.

548
00:29:56,112 --> 00:30:01,692
And so, um, I can understand why
mainstream economists now who like, go

549
00:30:01,692 --> 00:30:04,182
back and read that stuff would say, oh
yeah, these Austria, what the heck are

550
00:30:04,182 --> 00:30:06,342
they even like, it was complicated.

551
00:30:06,342 --> 00:30:07,182
What are they talking about?

552
00:30:07,962 --> 00:30:13,902
Um, and so, so yes, the Keynesians kind
of won that battle, at least on paper.

553
00:30:14,517 --> 00:30:18,117
For a while, but then there was
the keynesians were discredited.

554
00:30:18,327 --> 00:30:18,507
Right.

555
00:30:18,537 --> 00:30:19,707
So I, here I'm answering your question.

556
00:30:19,707 --> 00:30:23,247
Like, could the Keynesians school that
I'm saying intellectually in, in among

557
00:30:23,247 --> 00:30:30,597
economists, Keynes or the Keynesians
suffered a pretty big defeat in the 1970s?

558
00:30:30,627 --> 00:30:30,807
Right.

559
00:30:30,807 --> 00:30:33,867
So there had been like
theoretical objections to their

560
00:30:33,867 --> 00:30:36,927
position, their modeling and
whatever that had been coming.

561
00:30:36,927 --> 00:30:39,867
You know, people like Robert Lucas and you
know, Milton Friedman, people like that.

562
00:30:40,257 --> 00:30:45,507
But where like things really got bad
for them was in the seventies because

563
00:30:45,507 --> 00:30:49,767
there was what's called stagflation
where there was high price inflation

564
00:30:49,767 --> 00:30:52,107
and high unemployment at the same time.

565
00:30:52,587 --> 00:30:57,447
And in the sort of crude Keynesian
paradigm that kind of, you know, ran

566
00:30:57,447 --> 00:31:01,557
the world in the 1950s and sixties,
that should have been impossible.

567
00:31:02,037 --> 00:31:02,127
Yeah.

568
00:31:02,127 --> 00:31:02,277
Right.

569
00:31:02,277 --> 00:31:06,567
And that kind of crude Keynesian
framework, the idea was, oh, if

570
00:31:06,567 --> 00:31:08,817
you have high unemployment, that's
'cause there's not enough demand.

571
00:31:09,582 --> 00:31:12,492
So just go ahead and, you
know, lower interest rates and

572
00:31:12,642 --> 00:31:14,502
stimulate spending that way.

573
00:31:14,832 --> 00:31:17,892
And if that's not, if that
doesn't work, the government

574
00:31:17,892 --> 00:31:19,122
can run a big budget deficit.

575
00:31:19,182 --> 00:31:21,072
So, but just get enough,
throw enough spending at the

576
00:31:21,072 --> 00:31:22,362
wall and that'll fix things.

577
00:31:23,022 --> 00:31:27,102
And then the idea was, oh, if you overdo
it, if you're spending too much money

578
00:31:27,582 --> 00:31:31,332
such that, you know, unemployment falls
and now everybody's at the factories,

579
00:31:31,332 --> 00:31:34,002
and the factories are humming, and now
if you just keep printing too much money

580
00:31:34,002 --> 00:31:38,052
and spend and having, you know, too much
deficit spending, what will happen is

581
00:31:38,382 --> 00:31:41,862
there's too much aggregate demand and
then prices will start rising rapidly.

582
00:31:42,762 --> 00:31:46,272
And so, so then in that case, oh,
then you, you pump the brakes, you

583
00:31:46,272 --> 00:31:49,092
know, you don't spend, you cut,
you raise taxes, you cut spending.

584
00:31:49,722 --> 00:31:51,702
But the idea was you were
supposed to get one or the other.

585
00:31:51,702 --> 00:31:54,702
You either have an economy
with high unemployment, but low

586
00:31:54,702 --> 00:31:59,592
inflation or you can overheat and
yeah, you'd have full employment.

587
00:31:59,592 --> 00:32:03,762
You know, everybody's got a job, but
geez, you know, eggs and gasoline

588
00:32:03,762 --> 00:32:04,842
keep getting really expensive.

589
00:32:05,637 --> 00:32:09,327
But in the 1970s, you had both at
the same time, like you had high

590
00:32:09,327 --> 00:32:13,437
unemployment and prices at the grocery
store were rising really rapidly.

591
00:32:14,007 --> 00:32:16,197
And so like, what was the
central bank supposed to do?

592
00:32:16,467 --> 00:32:18,447
It seemed like whichever way
they moved, they were gonna make

593
00:32:18,447 --> 00:32:21,057
one of those worse and you, that
wasn't supposed to be possible.

594
00:32:21,057 --> 00:32:26,967
Whereas the, like Chicago school
kind of people, um, had been giving

595
00:32:26,967 --> 00:32:29,877
an answer all along to that to
say, well, this, this can happen.

596
00:32:29,877 --> 00:32:31,077
You, you guys are thinking about it.

597
00:32:31,107 --> 00:32:34,227
So they, they built in what's
called expectations, right?

598
00:32:34,227 --> 00:32:39,567
And the idea was just real quickly, one,
like, yeah, if, if people don't expect

599
00:32:39,567 --> 00:32:42,237
inflation, you can kind of fool them.

600
00:32:42,237 --> 00:32:45,267
And if the, if the central bank
prints a bunch of money and goes and

601
00:32:45,267 --> 00:32:48,987
spends it, then you know you can get
by and you can reduce unemployment.

602
00:32:48,987 --> 00:32:50,127
Everyone can go back to work.

603
00:32:50,697 --> 00:32:55,227
But once labor unions start realizing this
pattern, then they're gonna say, oh yeah,

604
00:32:55,227 --> 00:32:58,977
we wanted $15 an hour for our workers.

605
00:32:58,977 --> 00:33:02,337
But now that we know the central
bank's printing a bunch of money.

606
00:33:02,967 --> 00:33:04,197
We want $20.

607
00:33:04,197 --> 00:33:07,797
And so the fact that the central
bank inflates isn't gonna all of a

608
00:33:07,797 --> 00:33:10,257
sudden get everyone to go back to
work because they're just gonna raise

609
00:33:10,257 --> 00:33:13,947
their wage demands knowing that, you
know, we gotta keep up with inflation.

610
00:33:14,457 --> 00:33:16,587
And so then you get into
this vicious spiral.

611
00:33:17,157 --> 00:33:18,357
So that's kind of what happened.

612
00:33:18,357 --> 00:33:21,477
And so then, you know, there was
a revolution in economic modeling.

613
00:33:21,892 --> 00:33:25,467
It, it kind of goes back to what
I said at the beginning about how

614
00:33:25,467 --> 00:33:29,517
the Keynesian models can be really
simplistic, whereas the Austrians have

615
00:33:29,517 --> 00:33:34,137
like individual moorings and you know,
so in the old school models there,

616
00:33:34,167 --> 00:33:37,527
there was no one in there to guess
what inflation was gonna be like.

617
00:33:37,527 --> 00:33:38,817
People weren't even in the model.

618
00:33:39,357 --> 00:33:41,907
And so then that was part of the
revolution, like in the late seventies,

619
00:33:41,907 --> 00:33:46,587
going into the early eighties, that
now to get your paper published in

620
00:33:46,587 --> 00:33:50,817
Economics journal, you had to have
agents in the model that understood how

621
00:33:50,817 --> 00:33:55,287
the world worked and they made rational
forecasts about inflation and things.

622
00:33:55,287 --> 00:33:56,967
Whereas before, that
wasn't even in the model.

623
00:33:57,777 --> 00:34:01,647
I'm saying that there already is
a sense in which the old school,

624
00:34:01,707 --> 00:34:05,487
like sort of crude keynesianism of
the fifties and sixties is dead.

625
00:34:06,027 --> 00:34:06,747
And now there's more.

626
00:34:06,747 --> 00:34:10,377
But, but still you're right
that the people now, you know,

627
00:34:10,377 --> 00:34:11,757
they're called new Keynesians.

628
00:34:11,787 --> 00:34:15,267
Like you just slap a, a, a new in
front of it and now it that fixes it.

629
00:34:15,747 --> 00:34:20,877
So in terms of, you know, that stuff, I
not, I'm not merely saying this because of

630
00:34:20,877 --> 00:34:25,737
the, the podcast venue here, but I really
do think Bitcoin changed a lot because

631
00:34:25,737 --> 00:34:30,237
it showed, for one thing you can have a
private sector money, whereas like, like

632
00:34:30,237 --> 00:34:34,287
for some people that was just kind of,
they just assumed that, oh yeah, money

633
00:34:34,287 --> 00:34:36,237
is what central banks are in charge of.

634
00:34:36,717 --> 00:34:40,497
And so just to have Bitcoin is
this possibility out there, I

635
00:34:40,497 --> 00:34:42,207
think challenges that paradigm.

636
00:34:42,207 --> 00:34:46,497
And then, you know, things like, oh,
and it's max units, it's 21 million.

637
00:34:47,127 --> 00:34:49,527
And so that forces people
to have the conversation of.

638
00:34:49,902 --> 00:34:52,932
Well, can you have a, you know,
a monetary system where prices

639
00:34:52,932 --> 00:34:54,822
kind of fall every year and Yeah.

640
00:34:54,822 --> 00:34:55,302
Why not?

641
00:34:55,302 --> 00:34:58,482
And so I'm just saying it
kinda shatters those old views.

642
00:34:58,482 --> 00:35:02,832
'cause like the standard Keynesian
framework, they want prices to rise every

643
00:35:02,832 --> 00:35:06,522
year because they need to have room to,
to cut interest rates in case the economy

644
00:35:06,522 --> 00:35:08,742
gets into a, you know, a rough patch.

645
00:35:09,222 --> 00:35:13,332
Because if you had 0% inflation,
then oh, we can't cut interest rates

646
00:35:13,332 --> 00:35:15,702
too much because we'll hit the,
what they call the zero lower bound.

647
00:35:15,942 --> 00:35:19,392
So that's why they like prices to, to,
you know, go up and up every year at

648
00:35:19,392 --> 00:35:23,592
the grocery store to give them room to
cut if there's a, so I'm just saying

649
00:35:23,592 --> 00:35:27,132
everything about Bitcoin in the kind of
world that would produce, if people use

650
00:35:27,132 --> 00:35:30,222
that as the money is very anti kasian.

651
00:35:30,282 --> 00:35:34,992
And so, you know, I, I think that, you
know, both the theoretical problems

652
00:35:34,992 --> 00:35:39,162
for people who are like, you know, in
economics proper, but just in terms of

653
00:35:39,162 --> 00:35:42,972
the financial sector and the people who
are out there doing stuff, I think, you

654
00:35:42,972 --> 00:35:46,212
know, blockchain-based finance in general.

655
00:35:47,097 --> 00:35:50,007
Kind of showing that yeah, these
keynesians don't really have a good

656
00:35:50,007 --> 00:35:51,297
model that can explain everything.

657
00:35:52,527 --> 00:35:53,067
Anja: Yeah.

658
00:35:53,577 --> 00:35:58,017
And one thing I've, I've observed, and
I'm curious to know this has some merit,

659
00:35:58,017 --> 00:36:02,907
but like if I look at the Keynesian
economists versus the Austrian economist,

660
00:36:03,267 --> 00:36:07,227
even though there is some disagreement
within each school amongst, you know,

661
00:36:07,227 --> 00:36:11,817
Austrians don't always agree with other
Austrian on everything, but it just seems

662
00:36:11,877 --> 00:36:16,917
to me that there's a lot more disagreement
between Keynesians, um, internally

663
00:36:16,917 --> 00:36:18,657
as to why certain things happen.

664
00:36:18,657 --> 00:36:22,527
It's almost like the explanations
of things are so elastic.

665
00:36:22,617 --> 00:36:23,127
Robert: Yes.

666
00:36:23,217 --> 00:36:26,667
So I I, I agree with, you
know, your observation.

667
00:36:26,667 --> 00:36:27,627
I, I endorse that too.

668
00:36:27,627 --> 00:36:27,927
You're right.

669
00:36:27,927 --> 00:36:29,307
I, I think that's a true statement.

670
00:36:29,757 --> 00:36:32,427
And then I can think of at least
two reasons why that would be.

671
00:36:33,147 --> 00:36:39,267
Um, so one is benign and, and
one is like malign malignant.

672
00:36:40,167 --> 00:36:42,117
Um, so the, the one that you know is more.

673
00:36:42,342 --> 00:36:44,562
It is not like a, a knock on the can.

674
00:36:44,562 --> 00:36:48,972
It's just because they are the
dominant, you know, the sort of default.

675
00:36:49,632 --> 00:36:49,812
Anja: Yeah.

676
00:36:50,082 --> 00:36:54,882
Robert: It makes, in other words, I think
probably a lot of mainstream economists

677
00:36:54,882 --> 00:36:58,212
today, you know, if you and I tried to
classify them, we'd say, oh, they're,

678
00:36:58,272 --> 00:36:59,772
you know, new Keynesian or whatever.

679
00:37:00,522 --> 00:37:03,042
They might not be walking around
thinking I'm a new Keynesian.

680
00:37:03,042 --> 00:37:06,282
Like to them that might just be
like, I believe in supply and demand.

681
00:37:06,282 --> 00:37:06,462
Yeah.

682
00:37:06,462 --> 00:37:06,972
I'm an economy.

683
00:37:06,972 --> 00:37:07,302
You know what I mean?

684
00:37:07,302 --> 00:37:08,682
They might just think,
no, that's just economics.

685
00:37:08,682 --> 00:37:09,432
What are you talking about?

686
00:37:09,432 --> 00:37:09,702
Right?

687
00:37:09,702 --> 00:37:14,772
So in other words, it's so mainstream and
such the default position, they might not

688
00:37:14,772 --> 00:37:16,392
even think that that's anything special.

689
00:37:17,022 --> 00:37:21,012
And so in their mind when they're like,
when you and I would say, oh, look at

690
00:37:21,012 --> 00:37:24,312
the keynesians are all arguing with each
other, I think they would just think.

691
00:37:24,732 --> 00:37:27,282
Yeah, we're economists and we have
different opinions on things, what

692
00:37:27,282 --> 00:37:28,032
you talk, you know what I mean?

693
00:37:28,272 --> 00:37:33,282
Whereas if you are in one of these more
niche subgroups, like the Austrians

694
00:37:33,282 --> 00:37:36,102
or the, you know, there's things
like the post kasians or maybe for

695
00:37:36,102 --> 00:37:41,142
modern monetary theory or you know,
Marxists are still around there.

696
00:37:41,142 --> 00:37:43,842
Like the reason you're leaving the
mainstream and joining one of these

697
00:37:43,842 --> 00:37:46,632
subgroups is because they appeal to you.

698
00:37:47,172 --> 00:37:50,742
And so there almost is this more
inbuilt homogeneity in your views.

699
00:37:51,522 --> 00:37:52,332
You know what I mean?

700
00:37:52,332 --> 00:37:55,242
Like if like with religion, you
could do a similar thing, right?

701
00:37:55,242 --> 00:37:59,112
That you could have Roman
Catholics could be arguing about.

702
00:37:59,112 --> 00:38:02,532
So, but if someone goes and joins
some very particular religious

703
00:38:02,532 --> 00:38:05,652
sect, they're gonna be very much
in agreement because that's the

704
00:38:05,652 --> 00:38:06,852
whole reason they joined that thing.

705
00:38:06,852 --> 00:38:07,242
You know what I mean?

706
00:38:07,242 --> 00:38:10,212
They had a bunch of print doctrines
that separated them from everybody else.

707
00:38:10,212 --> 00:38:14,322
So, so there, there is that element,
but I do think there's more to it than

708
00:38:14,322 --> 00:38:18,222
just that, like to, you know, explain
the phenomenon that you observed.

709
00:38:18,552 --> 00:38:21,312
And I think it is, you know,
I'm an Austrian, so I must

710
00:38:21,312 --> 00:38:22,182
must've picked them for a reason.

711
00:38:22,182 --> 00:38:23,202
I think they're just more rigorous.

712
00:38:23,787 --> 00:38:23,967
Right.

713
00:38:24,207 --> 00:38:28,497
A lot of the stuff that mes does in
his work, I've heard other economists

714
00:38:28,497 --> 00:38:31,947
try to read it and they say what
it, it's like, this is philosophy.

715
00:38:31,947 --> 00:38:33,027
This is, what the heck is this?

716
00:38:33,027 --> 00:38:38,877
Like, he spends a few chapters explaining
what's the scope of our field of study

717
00:38:38,877 --> 00:38:42,807
and what are the, you know, the logical
foundations of economics and what

718
00:38:42,807 --> 00:38:44,457
assumptions are we making and stuff.

719
00:38:44,697 --> 00:38:48,807
Whereas other econom, you know, book
one, chapter one starts measuring

720
00:38:48,807 --> 00:38:51,387
GDP or something, or, you know,
here's the production function.

721
00:38:51,387 --> 00:38:51,897
You know what I mean?

722
00:38:51,897 --> 00:38:55,557
So I'm just saying it's like mees take
some time to really think about like,

723
00:38:55,947 --> 00:38:57,537
what is it that we're doing here, guys?

724
00:38:57,537 --> 00:39:01,437
And, uh, other economists think
that that's, like I said, philosophy

725
00:39:01,437 --> 00:39:02,487
or waste of time or whatever.

726
00:39:02,487 --> 00:39:07,167
So it's not surprising to me that that
yeah, like you're viewing and seeing

727
00:39:07,167 --> 00:39:12,447
the sey and seeing more open-ended
and just, hey, anything goes, whereas

728
00:39:12,447 --> 00:39:14,787
the Austrians have some more inbuilt.

729
00:39:15,582 --> 00:39:16,272
Discipline.

730
00:39:16,272 --> 00:39:19,692
I guess I would say that kind of, you
know, anything that's published in an

731
00:39:19,692 --> 00:39:25,062
Austrian journal is gonna adhere to a
certain set of principles more so than in,

732
00:39:25,122 --> 00:39:26,802
you know, a standard economics journal.

733
00:39:26,982 --> 00:39:29,382
I guess except for like
the math stuff, right?

734
00:39:29,382 --> 00:39:34,722
Like the, the eco, the more mainstream
economics journals would say, oh,

735
00:39:34,722 --> 00:39:37,032
you gotta have a model and it's
gotta, you know, you gotta have

736
00:39:37,032 --> 00:39:39,732
proofs and things as there's gotta
be some mathematical rigor to it.

737
00:39:39,732 --> 00:39:41,442
Whereas the Austrians it's more verbal.

738
00:39:41,982 --> 00:39:43,572
So I guess that's the, the distinction.

739
00:39:43,572 --> 00:39:47,652
But the, the Austrian say, right,
ours is more logically, internally

740
00:39:47,652 --> 00:39:51,192
consistent, whereas you guys like,
yeah, you, you make a math model and

741
00:39:51,192 --> 00:39:54,012
we just think the model isn't really
capturing what the economy does.

742
00:39:54,162 --> 00:39:54,612
Anja: Yeah.

743
00:39:55,152 --> 00:39:59,142
One day I will read human action,
I'm gonna work my way up there.

744
00:39:59,172 --> 00:40:03,942
'cause I know it's like 900 and something
pages and it's very like difficult read.

745
00:40:04,062 --> 00:40:07,182
Um, I'm reading your book very
slowly 'cause you know, each time

746
00:40:07,182 --> 00:40:07,922
I read over something I'm like.

747
00:40:08,442 --> 00:40:10,002
What, what, what does he mean by that?

748
00:40:10,152 --> 00:40:11,292
And then I'll go read over it.

749
00:40:11,292 --> 00:40:11,382
Mm-hmm.

750
00:40:11,382 --> 00:40:13,392
Again, to try absorb it better.

751
00:40:13,692 --> 00:40:14,202
Um, well, you,

752
00:40:14,207 --> 00:40:17,922
Robert: well you might, you, maybe you
caught this, but like the, the point

753
00:40:17,922 --> 00:40:21,612
of that book Choice, the way the it
was commissioned was somebody said, you

754
00:40:21,612 --> 00:40:25,692
know, the guy commissioning a David Thore
said, undergrads can't read Human Action.

755
00:40:25,692 --> 00:40:29,172
We need something that's like
300 ish pages that covers all

756
00:40:29,172 --> 00:40:30,372
the material Human Action does.

757
00:40:30,372 --> 00:40:32,802
But it's one book and it's
accessible to an undergrad.

758
00:40:33,162 --> 00:40:38,352
So, so yes, the choice was explicitly,
I went through, you know, section

759
00:40:38,352 --> 00:40:40,842
by section of human action and
then distilled it down into choice.

760
00:40:40,842 --> 00:40:43,722
So that's, that's what
choice is, is doing.

761
00:40:44,952 --> 00:40:49,572
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765
00:41:04,632 --> 00:41:04,962
Anja: Yeah.

766
00:41:05,112 --> 00:41:05,442
Yeah.

767
00:41:05,682 --> 00:41:08,742
So yeah, step one, it's
read choice step two.

768
00:41:09,417 --> 00:41:10,377
Read human action.

769
00:41:11,817 --> 00:41:15,267
Um, but I wanna know your, uh,
like the Austrian perspective

770
00:41:15,267 --> 00:41:17,217
on common resource problems.

771
00:41:17,307 --> 00:41:20,787
Um, this is something that's
always discussed in Australia.

772
00:41:21,087 --> 00:41:25,047
Um, another thing as well that
I, I never knew until getting

773
00:41:25,047 --> 00:41:28,737
into Bitcoin, and you just feel
so silly to say now in hindsight,

774
00:41:28,737 --> 00:41:33,957
but I didn't realize how closely
economics is li linked to politics.

775
00:41:34,107 --> 00:41:37,917
And you can almost, you know, guess
someone's political views based on

776
00:41:37,917 --> 00:41:39,747
what their economic beliefs are.

777
00:41:40,197 --> 00:41:43,467
Um, so yeah, let's talk about
common resource problems and

778
00:41:43,467 --> 00:41:45,207
what the Austrian view is on that

779
00:41:46,017 --> 00:41:46,467
Robert: Sure thing.

780
00:41:46,737 --> 00:41:50,097
Uh, so I'll, I'll give some like
standard results and then, you know,

781
00:41:50,097 --> 00:41:52,797
if, if there's particular things that
people in Australia are worried about,

782
00:41:52,797 --> 00:41:54,177
you know, obviously let me know.

783
00:41:55,167 --> 00:41:57,957
So this might surprise some
of your listeners to hear.

784
00:41:57,957 --> 00:41:59,607
'cause you know, they
hear, oh yeah, this group.

785
00:42:00,357 --> 00:42:01,767
These people, they're very free Martin.

786
00:42:01,767 --> 00:42:02,697
They don't like the government.

787
00:42:02,697 --> 00:42:03,867
They're, they're pro business.

788
00:42:03,867 --> 00:42:07,042
They probably are fine with businesses
dumping chemical and, and no, that,

789
00:42:07,047 --> 00:42:08,277
that actually isn't it, right?

790
00:42:08,277 --> 00:42:12,627
That, so here, I wanna be clear,
this is sort of merging into

791
00:42:12,627 --> 00:42:14,037
what's called libertarianism.

792
00:42:14,817 --> 00:42:19,467
So, so Austrian economics is a
science, it's not a political ideology.

793
00:42:19,827 --> 00:42:23,637
But in practice, certainly in the
United States, most people who

794
00:42:23,637 --> 00:42:27,747
are fans of a economics are also
political libertarians, right?

795
00:42:27,747 --> 00:42:30,747
So again, it's not like a logical
connection, but in practice

796
00:42:30,747 --> 00:42:31,827
that tends to be what happened.

797
00:42:32,127 --> 00:42:36,837
And partly for what you just said, Ona,
that if, if your economic analysis is,

798
00:42:36,837 --> 00:42:38,817
oh, what causes the business cycle?

799
00:42:39,447 --> 00:42:41,547
It's government intervention
and money and banking.

800
00:42:41,547 --> 00:42:45,057
And so most people would say, if
that's how I think the world works,

801
00:42:45,897 --> 00:42:48,627
my political views are, I don't
want the government doing that.

802
00:42:48,627 --> 00:42:50,277
'cause I don't want recessions.

803
00:42:50,307 --> 00:42:50,757
You know what I mean?

804
00:42:50,757 --> 00:42:53,457
So it's kind of like that, that
it, it's not shocking that those

805
00:42:53,457 --> 00:42:54,747
two things tend to go together.

806
00:42:55,407 --> 00:42:57,147
So anyway, Murray Rothbard.

807
00:42:58,107 --> 00:43:01,797
Was one of the giants in the Austrian
school, and he also wrote a lot on,

808
00:43:02,007 --> 00:43:04,977
he's like one of the founding fathers
of the American Libertarian movement.

809
00:43:05,427 --> 00:43:12,927
And so his take on, you know, things like
pollution and stuff like that, where most

810
00:43:12,927 --> 00:43:16,857
mainstream economists say, oh, this is
an area where the, the free market fails

811
00:43:16,857 --> 00:43:18,177
and you need government intervention.

812
00:43:18,717 --> 00:43:22,107
And Rothbart takes that standard narrative
and kind of flips it on its head.

813
00:43:22,587 --> 00:43:27,987
And he said, no, the old, you know,
common law, property rights tradition

814
00:43:27,987 --> 00:43:31,257
from Great Britain that, you know, that
the American Colonist brought over.

815
00:43:31,827 --> 00:43:34,977
That's what all you need
for a lot of this stuff.

816
00:43:35,367 --> 00:43:39,357
And so, yes, if, if there's some factory
and they're dumping chemicals in the

817
00:43:39,357 --> 00:43:44,757
river, and then people downstream, you
know, are getting sick under the old,

818
00:43:44,757 --> 00:43:47,727
you know, common law tradition, they
could go ahead and get an injunction

819
00:43:47,757 --> 00:43:50,367
against, they say, Hey, you're,
you're violating our property rights.

820
00:43:51,042 --> 00:43:54,822
And he said it was, what happened in, you
know, during the industrial revolution

821
00:43:55,362 --> 00:43:58,242
was that a lot of the big businesses,
you know, they had a lot of political

822
00:43:58,242 --> 00:44:04,242
power and they were wealthy and they
would influence the judges to not enforce

823
00:44:04,992 --> 00:44:06,552
those, you know, those complaints.

824
00:44:07,002 --> 00:44:07,212
Right.

825
00:44:07,212 --> 00:44:12,732
So other words, the, the, or if there's
some factory that's putting smoke in

826
00:44:12,732 --> 00:44:16,182
the air and then like, you know, the
people who have their laundry out, you

827
00:44:16,182 --> 00:44:20,472
know, to dry, they're getting city,
you know, just 'cause there's stuff.

828
00:44:20,862 --> 00:44:25,092
And then those people, you know, they
should be able to use the, the courts to

829
00:44:25,092 --> 00:44:28,512
stop the factory 'cause they're, you know,
harming, they're damaging their property.

830
00:44:29,052 --> 00:44:31,242
But the courts wouldn't enforce
that because they didn't wanna

831
00:44:31,242 --> 00:44:32,922
impede the industrial revolution.

832
00:44:33,642 --> 00:44:33,972
Right.

833
00:44:33,972 --> 00:44:36,882
But, you know, I'm talking like in the
late 18 hundreds, early 19 hundreds.

834
00:44:37,332 --> 00:44:40,182
And so Rothberg was arguing,
saying so far from this being,

835
00:44:40,932 --> 00:44:42,072
you know, the free market.

836
00:44:42,792 --> 00:44:43,422
Problem.

837
00:44:43,422 --> 00:44:46,812
It's showing that it was actually,
you know, the, the government run

838
00:44:46,812 --> 00:44:52,032
judicial system that they just made
the, the calculation that we're gonna

839
00:44:52,032 --> 00:44:56,232
favor, you know, the big business
owners versus these, you know, dinky

840
00:44:56,232 --> 00:44:59,292
little homeowners who are complaining
about their water, their air quality.

841
00:44:59,862 --> 00:45:03,642
And so that's, you know, the way he's,
Roth Bar said that's actually like, you

842
00:45:03,642 --> 00:45:07,302
know, strict adherence to property rights
would solve a lot of these problems.

843
00:45:07,302 --> 00:45:11,052
And it was only the government ignoring
property rights from, you know, small

844
00:45:11,052 --> 00:45:15,282
property owners that l led to, you
know, these environmental problems.

845
00:45:15,852 --> 00:45:19,992
Um, and then another like standard
kind of thing would be, I'm sure

846
00:45:19,992 --> 00:45:23,532
you've heard of this, the, like what's
called the tragedy of the commons.

847
00:45:24,762 --> 00:45:28,422
And so, yeah, it, it's a well-known
problem that if you have a common

848
00:45:28,422 --> 00:45:32,652
resource that you know, like you've got
a, a, a lake and there's a bunch of fish

849
00:45:32,652 --> 00:45:37,242
there, if anyone can just show up and
just fish as much as they want, that's,

850
00:45:37,332 --> 00:45:38,562
that's probably gonna be too much.

851
00:45:38,562 --> 00:45:40,182
It'll deplete, you know, the resources.

852
00:45:40,827 --> 00:45:44,577
So that's why people say, oh, you
need the government to have, like,

853
00:45:45,297 --> 00:45:47,667
I dunno if you have it in Australia,
but here we have like fishing seasons.

854
00:45:47,667 --> 00:45:49,167
Like you can only fish between this time.

855
00:45:49,437 --> 00:45:51,057
And they even have kind of crazy rules.

856
00:45:51,057 --> 00:45:54,537
Like you can't use engines on the boat.

857
00:45:54,537 --> 00:45:57,597
It's gotta be just a boat where you,
you know, have paddles or something.

858
00:45:57,597 --> 00:46:00,537
Or you can't have nets that are
bigger than such and such, right?

859
00:46:00,537 --> 00:46:05,217
So like they're artificially hindering the
productivity of the fishing operations.

860
00:46:06,057 --> 00:46:08,997
But that's only because they
still have this weird system

861
00:46:08,997 --> 00:46:10,227
where it's like nobody owns it.

862
00:46:10,887 --> 00:46:15,567
And so if you had just a privately owned
fishery, which, you know, those do exist,

863
00:46:15,957 --> 00:46:17,337
they could set whatever rules they want.

864
00:46:17,337 --> 00:46:20,457
They could just say, oh, if you catch this
many fish, we charge you such and such.

865
00:46:21,027 --> 00:46:21,327
Right?

866
00:46:21,327 --> 00:46:24,417
So, um, and that solves all the problems.

867
00:46:24,417 --> 00:46:27,387
Or it, you know, back in the day in
England they had the enclosure movement.

868
00:46:27,387 --> 00:46:31,587
And so the, you know, when they had
grazing, if anybody could just take

869
00:46:31,587 --> 00:46:35,337
their cattle and graze, then there
would be too much grazing, right?

870
00:46:35,337 --> 00:46:37,467
And the, you know, the land wouldn't
be able to replenish itself.

871
00:46:37,467 --> 00:46:40,047
But once they invented barbed wire and.

872
00:46:40,977 --> 00:46:44,367
And said, Nope, here's property
rights and you own this land.

873
00:46:44,367 --> 00:46:48,867
And then people knew, so if I don't
have my cattle graze in this plot

874
00:46:48,867 --> 00:46:54,267
of land, and then other people can't
just come in and and take it and let

875
00:46:54,357 --> 00:46:57,237
you know, let the grass replenish,
well then that solves the problem.

876
00:46:57,237 --> 00:47:01,167
So with, with all these things,
economists in the Austrian school would

877
00:47:01,167 --> 00:47:06,267
tend to say, the problem is ill-defined
prop or ill enforced property rights.

878
00:47:06,267 --> 00:47:10,587
And once you just specify who owns what,
then if there's some kind of weird outcome

879
00:47:10,587 --> 00:47:15,507
happening, people have the ability to
just make con contractual arrangements

880
00:47:15,507 --> 00:47:20,127
and, you know, rearrange things and,
and it'll, and to avoid that outcome.

881
00:47:20,127 --> 00:47:22,857
'cause it's, if, if there's
some resource being depleted,

882
00:47:22,857 --> 00:47:23,907
that's not good for anybody.

883
00:47:23,907 --> 00:47:26,697
So if you could just get somebody
to be the owner of that, they

884
00:47:26,697 --> 00:47:27,837
can take steps to protect it.

885
00:47:27,957 --> 00:47:28,257
Anja: Yeah.

886
00:47:28,257 --> 00:47:31,827
And this touches a little bit on what
I wanna, the direction I wanna go

887
00:47:31,827 --> 00:47:35,517
into next, and that is like central
planning slash central banking.

888
00:47:35,877 --> 00:47:36,087
Robert: Sure.

889
00:47:36,117 --> 00:47:36,477
Anja: Um.

890
00:47:37,872 --> 00:47:42,012
You know, even when I asked charge GPT
charge, GPT is quite direct and brutal.

891
00:47:42,012 --> 00:47:44,922
And if you just put in a very
simple prompt, like what's the

892
00:47:44,922 --> 00:47:46,242
problem with central banking?

893
00:47:46,242 --> 00:47:50,292
I was quite surprised just
how direct the response was.

894
00:47:51,222 --> 00:47:56,172
Um, sometimes it does tend to have a bit
of a bias where it's trying to protect

895
00:47:57,282 --> 00:47:59,652
institutions or established norms.

896
00:48:00,312 --> 00:48:01,782
It wasn't on this occasion.

897
00:48:02,472 --> 00:48:03,942
Um, but yeah.

898
00:48:04,362 --> 00:48:08,112
Let's, let's talk about the problem with
central planning and central banking.

899
00:48:08,802 --> 00:48:10,362
The kind of one in the same.

900
00:48:12,192 --> 00:48:12,972
Robert: You just want me to go?

901
00:48:13,512 --> 00:48:13,977
Anja: Yeah, go

902
00:48:13,982 --> 00:48:14,037
Robert: ahead.

903
00:48:14,042 --> 00:48:14,532
Okay.

904
00:48:14,532 --> 00:48:14,542
Okay.

905
00:48:14,542 --> 00:48:14,712
Yeah.

906
00:48:14,712 --> 00:48:16,542
I didn't know if you, if you
wanna get more context to it.

907
00:48:16,542 --> 00:48:17,022
Yeah, sure.

908
00:48:17,322 --> 00:48:22,722
So, uh, and here again, the, the
Austrian school is, they have a special

909
00:48:22,722 --> 00:48:26,262
place in history when it comes to,
well, on both topics actually, but

910
00:48:26,262 --> 00:48:30,432
in terms of central planning, you
know, meaning like outright socialism

911
00:48:30,582 --> 00:48:34,662
in the, in the old school tradition
and, and I should be clear nowadays.

912
00:48:36,087 --> 00:48:39,987
People use the word socialist, like just
somebody who wants a big welfare state,

913
00:48:39,987 --> 00:48:41,247
and it's say, oh, that's socialism.

914
00:48:41,727 --> 00:48:43,977
And I understand, you know,
why someone could say that.

915
00:48:43,977 --> 00:48:47,097
But you know, historically, I mean,
socialism had a very particular

916
00:48:47,097 --> 00:48:51,687
meaning as in the government owns
the means of production or at

917
00:48:51,687 --> 00:48:53,307
least a large scale, you know?

918
00:48:53,847 --> 00:48:57,987
Um, and so Ludwig von Meese is every,
you know, people, the Marxist as

919
00:48:57,987 --> 00:49:01,172
well as, you know, the fans of the
free market agree that Ludwig Van

920
00:49:01,177 --> 00:49:07,137
Meese has advanced one of the most
powerful critiques of central planning.

921
00:49:07,227 --> 00:49:10,557
Obviously the Marxists think he was
wrong, but they acknowledged that

922
00:49:10,557 --> 00:49:13,467
yes, this guy's attack was, you
know, one we had to grapple with.

923
00:49:14,907 --> 00:49:18,867
Where Mees argued that Yeah.

924
00:49:18,867 --> 00:49:19,617
Up till now.

925
00:49:19,617 --> 00:49:22,737
So he wrote this, uh, I guess
this would've been what, 1912?

926
00:49:22,857 --> 00:49:23,157
Uh,

927
00:49:23,907 --> 00:49:24,687
Anja: is that when he first came?

928
00:49:24,957 --> 00:49:25,287
Robert: Yeah.

929
00:49:25,707 --> 00:49:27,237
Um, I'm thinking of the
theory of money and credit.

930
00:49:27,417 --> 00:49:30,417
1920, I think, is when, you
know, he had this first broadside

931
00:49:30,417 --> 00:49:33,597
come out and he, he argued that.

932
00:49:34,422 --> 00:49:36,642
Up till then, yes.

933
00:49:36,642 --> 00:49:41,802
Like the conservative critics of
socialism or communism, everything they

934
00:49:41,802 --> 00:49:43,512
wrote was, was fine insofar as it went.

935
00:49:43,512 --> 00:49:46,062
Like they would say, Hey, there's
an incentive problem, right?

936
00:49:46,062 --> 00:49:49,542
That if, if you're paying people
according to their needs and taking

937
00:49:49,542 --> 00:49:53,082
from their, according to their
abilities, the high productivity

938
00:49:53,082 --> 00:49:54,522
people aren't gonna work as hard.

939
00:49:55,062 --> 00:49:58,092
And you know, the other people
aren't gonna work as hard too, that

940
00:49:58,127 --> 00:50:00,702
are, are getting paid based on how
many kids they have or whatever,

941
00:50:00,702 --> 00:50:03,402
not in terms of how much, you know,
time you put into the factory.

942
00:50:03,792 --> 00:50:04,842
And so there's that issue.

943
00:50:05,292 --> 00:50:08,112
And then there's also like the,
you know, power corrupts, right?

944
00:50:08,112 --> 00:50:09,282
The people recognized.

945
00:50:09,852 --> 00:50:13,212
Having a group of experts in charge
of where everyone goes to work.

946
00:50:13,932 --> 00:50:17,352
You're probably not gonna be in a position
to criticize the government if they

947
00:50:17,352 --> 00:50:19,572
can just send you to Siberia, right?

948
00:50:19,572 --> 00:50:22,632
You know, say, oh, that's where your
labor hours are needed, comrade, right?

949
00:50:22,632 --> 00:50:25,662
So people, or if the government
owns all the newspapers.

950
00:50:26,427 --> 00:50:29,397
Do you think they're gonna publish a
bunch of criticism of the ruling elite?

951
00:50:29,457 --> 00:50:30,027
Probably not.

952
00:50:30,027 --> 00:50:30,237
Right?

953
00:50:30,237 --> 00:50:34,287
So it was, and me's you know, said, yeah,
these are all valid criticisms, but he

954
00:50:34,287 --> 00:50:38,667
said it's overlooking the fundamental
economic problem with central planning

955
00:50:38,667 --> 00:50:41,487
as such is that it lacks market prices.

956
00:50:41,517 --> 00:50:46,257
And he said the central planner, like, if
you really had full, full-blown socialism,

957
00:50:46,737 --> 00:50:50,727
then you're not gonna have market prices,
you know, for the, for the land, the

958
00:50:50,727 --> 00:50:54,897
farmland, or for the factories or for
tractors and things like that because

959
00:50:54,902 --> 00:50:56,217
they're, they're all owned by the state.

960
00:50:57,087 --> 00:51:01,887
And he said the problem with that
is there's a million different ways

961
00:51:01,887 --> 00:51:05,727
you could produce things, you know,
in terms of technological recipes

962
00:51:05,727 --> 00:51:10,257
and ways to use more land or less
labor and, you know, so forth.

963
00:51:10,797 --> 00:51:13,887
And so how would the central
planners know what to make?

964
00:51:14,217 --> 00:51:15,297
He's saying, 'cause they
could go ahead and do it.

965
00:51:15,297 --> 00:51:17,877
They could come with a five year plan
and everyone can go out and do it.

966
00:51:18,462 --> 00:51:22,242
And Misa said, even if we just stipulate
that, suppose all the comrades are

967
00:51:22,242 --> 00:51:25,122
enthusiastic and they work, you
know, there's not a shirking problem,

968
00:51:25,122 --> 00:51:26,022
there's not an incentive problem.

969
00:51:26,022 --> 00:51:27,012
They just do what they're told.

970
00:51:27,792 --> 00:51:31,572
And, um, you know, assumed that
we're not worried about corruption.

971
00:51:31,572 --> 00:51:35,172
Imagine the central planners really are
angels and they just wanna do what's

972
00:51:35,172 --> 00:51:36,612
in the best interest of their people.

973
00:51:37,002 --> 00:51:38,892
His point was they
wouldn't know what to do.

974
00:51:39,492 --> 00:51:40,662
They could go ahead and do something.

975
00:51:40,662 --> 00:51:43,332
They produce a bunch of cars and
a bunch of houses and diapers

976
00:51:43,332 --> 00:51:45,702
and, you know, ships and so on.

977
00:51:46,182 --> 00:51:47,982
But then how would they know X post?

978
00:51:49,002 --> 00:51:52,452
Should we do that again next cycle,
or should we tweak what we did?

979
00:51:52,902 --> 00:51:56,652
And he's saying there's really, it's
a difficult problem because you don't,

980
00:51:56,682 --> 00:52:00,402
you don't, the, the issue is you
don't know what the cost is, right?

981
00:52:00,402 --> 00:52:03,822
Like the economic cost because
there's so many thousands of different

982
00:52:03,822 --> 00:52:08,502
interrelationships, um, to say,
should we use this ton of iron ore

983
00:52:08,862 --> 00:52:10,602
in this project or in this one?

984
00:52:11,202 --> 00:52:14,922
And it's really difficult to, you
know, pin down the implications of

985
00:52:14,922 --> 00:52:16,452
using it in one line versus another.

986
00:52:16,817 --> 00:52:21,252
And he, and he said the way this
is solved in a market economy is

987
00:52:21,252 --> 00:52:23,502
through the profit and loss mechanism.

988
00:52:23,502 --> 00:52:27,552
Like once you have genuine ownership and
all those things, you have market prices.

989
00:52:28,122 --> 00:52:32,052
And then you can look at an enterprise
and say, did it make good use of

990
00:52:32,052 --> 00:52:34,182
society's resources this last cycle?

991
00:52:34,632 --> 00:52:35,922
And you just say, did it turn a profit?

992
00:52:36,072 --> 00:52:37,902
And so what does that mean
if they turn to profit?

993
00:52:38,292 --> 00:52:43,512
It's that their customers paid them more
money than the money they had to spend

994
00:52:43,512 --> 00:52:45,072
getting the inputs from other people.

995
00:52:45,522 --> 00:52:50,502
And that's the sense in which they
added value to those resources, right?

996
00:52:50,562 --> 00:52:53,442
And so if something's profitable,
you want it to continue.

997
00:52:53,442 --> 00:52:59,292
And if it's suffered a loss, that's like
society's way of saying Uhuh society

998
00:52:59,292 --> 00:53:02,382
has a higher use for those resources
than what you're doing with them.

999
00:53:02,502 --> 00:53:03,462
You're squandering them.

1000
00:53:03,882 --> 00:53:07,572
And so businesses that keep suffering
losses eventually go under, right?

1001
00:53:07,572 --> 00:53:09,702
So that was Me's explanation of.

1002
00:53:10,632 --> 00:53:14,562
You know, the problem with central
planning is that they lack what he

1003
00:53:14,562 --> 00:53:16,632
called economic calculation, right?

1004
00:53:16,632 --> 00:53:19,602
So that's kinda just the full blown
critique of outright socialism.

1005
00:53:20,472 --> 00:53:23,772
So then, you know, central banking
is like one element of that.

1006
00:53:24,912 --> 00:53:27,252
And, and there, I'll
just be real quick here.

1007
00:53:27,342 --> 00:53:31,632
He, the specific problem with
central banking is that it

1008
00:53:31,632 --> 00:53:32,892
fuels the business cycle.

1009
00:53:33,762 --> 00:53:37,722
And so in ME'S framework,
prices serve a function.

1010
00:53:37,722 --> 00:53:40,182
They help communicate information,
you know, just like I just said,

1011
00:53:40,182 --> 00:53:43,512
with the profit and loss and, and
guiding entrepreneurs to be good

1012
00:53:44,052 --> 00:53:49,212
stewards of society's resources and
the interest rate and that framework,

1013
00:53:49,842 --> 00:53:51,432
what, what function does it serve?

1014
00:53:51,882 --> 00:53:53,772
It helps coordinate stuff over time.

1015
00:53:54,342 --> 00:53:59,112
And so, you know, real intuitively, if, if
the households become very future oriented

1016
00:53:59,112 --> 00:54:03,102
and they want to, you know, not consume
as much today to be able to consume

1017
00:54:03,102 --> 00:54:04,872
more down the road, they save more.

1018
00:54:04,872 --> 00:54:06,342
That pushes down interest rates.

1019
00:54:07,002 --> 00:54:11,262
That gives entrepreneurs the green light
to invest in longer projects, right?

1020
00:54:11,262 --> 00:54:14,442
'cause there's more savings available
and the lower interest rates, lower

1021
00:54:14,442 --> 00:54:15,972
cost of borrowing and so forth.

1022
00:54:16,872 --> 00:54:19,572
But what if the reason the interest
rate fell isn't 'cause households

1023
00:54:19,572 --> 00:54:22,812
saved more, but because the central
bank just printed more money.

1024
00:54:23,502 --> 00:54:26,082
So now you're like giving the
green light to the entrepreneurs

1025
00:54:26,082 --> 00:54:29,952
to have longer term projects, you
know, more grandiose projects.

1026
00:54:30,522 --> 00:54:32,442
They're bidding away
workers from other lines.

1027
00:54:32,442 --> 00:54:34,362
So wages are rising, everybody feels rich.

1028
00:54:34,992 --> 00:54:38,052
It's a boom, but it's
based on quicksand, right?

1029
00:54:38,052 --> 00:54:39,732
Because it's just the central
bank printed up money.

1030
00:54:39,732 --> 00:54:41,082
There actually wasn't more saving.

1031
00:54:41,592 --> 00:54:44,652
And so that's, you know, that's the
problem with, with central banking, that

1032
00:54:44,652 --> 00:54:46,992
it, it fuels these boom bust cycles.

1033
00:54:47,142 --> 00:54:47,442
Anja: Yeah.

1034
00:54:47,442 --> 00:54:50,712
And you've mentioned the
business cycle a number of times.

1035
00:54:50,712 --> 00:54:54,972
I'm very keen to know, like, what's
the definition of, of that theory?

1036
00:54:55,737 --> 00:54:56,502
Robert: Well, well, sure.

1037
00:54:56,502 --> 00:54:59,922
So, so by business cycle, I just
mean the, um, you know, the,

1038
00:54:59,922 --> 00:55:02,922
the, the seemingly natural ups
and downs in the market economy.

1039
00:55:02,922 --> 00:55:04,722
That seems like there's periods so.

1040
00:55:05,442 --> 00:55:08,502
Over long stretches of time, the
standards of living go up, right?

1041
00:55:08,502 --> 00:55:14,682
Like g real GDP per capita, if you wanna
use that metric, tends to be higher than

1042
00:55:14,682 --> 00:55:18,162
it was, you know, 10 years ago for just
about every place you can look on earth.

1043
00:55:18,972 --> 00:55:23,502
But it's not just a smooth, you
know, constant rate of increase.

1044
00:55:23,802 --> 00:55:25,932
There's wild upswings and then crashes.

1045
00:55:26,382 --> 00:55:29,742
And so, you know, and so that's what
people mean by the business cycle.

1046
00:55:29,742 --> 00:55:31,752
And then they have different
theories as to what causes it.

1047
00:55:31,752 --> 00:55:36,582
And I'm saying in the Ian view, me meaning
little van me's what his explanation was.

1048
00:55:37,062 --> 00:55:41,472
He thought it was, it was actually banking
per se, that what you may have heard is

1049
00:55:41,472 --> 00:55:43,152
called his fractional reserve banking.

1050
00:55:43,482 --> 00:55:47,682
So the idea of banks, in a sense,
lending out more than their

1051
00:55:47,862 --> 00:55:49,662
customers have put in a deposit.

1052
00:55:50,982 --> 00:55:54,132
And so that makes interest
rates artificially low and gives

1053
00:55:54,132 --> 00:55:55,812
this, you know, false stimulus.

1054
00:55:56,082 --> 00:55:59,052
And then the, the problem with
the central bank is it comes

1055
00:55:59,052 --> 00:56:00,552
in and just exacerbates that.

1056
00:56:01,062 --> 00:56:04,452
So in the in me's view, if banking were.

1057
00:56:05,517 --> 00:56:11,997
Uh, limited to, uh, lending that was
close to a hundred percent reserves, you

1058
00:56:11,997 --> 00:56:13,557
wouldn't have these boom bust cycles.

1059
00:56:14,577 --> 00:56:16,887
And so that's, you know, that,
that's kind of his, his vision.

1060
00:56:17,007 --> 00:56:17,517
Anja: Yeah.

1061
00:56:17,607 --> 00:56:23,997
And one thing I'm very curious to know
is, you know, recently I think a lot of

1062
00:56:23,997 --> 00:56:28,677
people have obviously been very burnt
by what happened during the pandemic.

1063
00:56:29,367 --> 00:56:33,987
Governments worldwide printed a lot of
money to respond to the crisis, and I'm

1064
00:56:33,987 --> 00:56:38,097
very curious to know how the Austrians
would've handled that situation.

1065
00:56:38,247 --> 00:56:40,617
We have a Black Swan event,
something unforeseen.

1066
00:56:41,487 --> 00:56:43,677
How, how do you solve that responsibly?

1067
00:56:44,337 --> 00:56:44,757
Robert: Right.

1068
00:56:45,477 --> 00:56:46,917
Um, okay.

1069
00:56:46,917 --> 00:56:55,287
So here it's tricky because, you know, I
know a lot of Austrian in practice would

1070
00:56:55,287 --> 00:57:00,477
say, oh, you know, the, the governments
of the world really fed into the hysteria

1071
00:57:00,477 --> 00:57:02,427
and they exaggerated the problems.

1072
00:57:02,427 --> 00:57:03,867
And, you know, may, it may either.

1073
00:57:04,827 --> 00:57:07,827
Out of ignorance or malice, you know,
like they had other reasons for wanting

1074
00:57:07,827 --> 00:57:10,047
to exert their control and so, so forth.

1075
00:57:10,047 --> 00:57:14,067
And plus, the more we learned
about this was a government funded

1076
00:57:14,067 --> 00:57:16,137
project that, you know, whatever.

1077
00:57:16,137 --> 00:57:19,767
So a lot of that you could just see,
hey, if we just had smaller limited

1078
00:57:19,767 --> 00:57:22,107
government, this wouldn't have happened.

1079
00:57:22,677 --> 00:57:25,407
And I, and I think that's true,
but I think the more interesting

1080
00:57:25,827 --> 00:57:28,197
question is, okay, yeah, sure.

1081
00:57:28,197 --> 00:57:31,077
This particular case, you could say
that, you know, government kind of

1082
00:57:31,077 --> 00:57:35,247
created the problem and the lockdown
certainly exacerbated everything.

1083
00:57:35,937 --> 00:57:37,707
But like, what would happen, you know?

1084
00:57:38,277 --> 00:57:43,317
But if there really were a genuine crisis
of, you know, some virus that breaks

1085
00:57:43,317 --> 00:57:47,607
out that really, you know, is extremely
contagious and very fatal, right?

1086
00:57:47,607 --> 00:57:49,857
Like, you know, something from a
Stephen King novel or something.

1087
00:57:50,367 --> 00:57:57,417
Um, and, and so there again, with
all this stuff, it's, uh, I, I think

1088
00:57:57,477 --> 00:58:00,747
just allowing for the more concrete.

1089
00:58:01,797 --> 00:58:05,217
Definition and enforcement of property
rights is the way to solve this stuff.

1090
00:58:05,727 --> 00:58:07,317
That's strictly speaking.

1091
00:58:07,647 --> 00:58:10,377
So, so you wouldn't need government
to enforce things, is is what I'm

1092
00:58:10,377 --> 00:58:16,557
saying, that I I think that the,
the correct policy regime, just

1093
00:58:16,557 --> 00:58:20,367
as you know, businesses can set
whatever policies they want, right?

1094
00:58:20,367 --> 00:58:26,697
And so in, in practice, um, yes,
the, I I think people took things

1095
00:58:26,697 --> 00:58:29,667
way too far with this, you know,
with, with CID in practice.

1096
00:58:29,667 --> 00:58:34,377
And there've been lots of studies to
try to show, you know, those areas or

1097
00:58:34,377 --> 00:58:39,387
those countries that were very aggressive
didn't have better outcomes than the

1098
00:58:39,387 --> 00:58:41,037
ones that were very lax and so on.

1099
00:58:41,067 --> 00:58:42,567
You know, to say things like that.

1100
00:58:43,197 --> 00:58:47,427
But again, in principle, what if
there was some, you know, really

1101
00:58:47,427 --> 00:58:48,897
serious virus that came out?

1102
00:58:49,377 --> 00:58:54,057
Even in a situation like that, I
would not favor giving the government

1103
00:58:54,057 --> 00:58:57,087
the power to determine, Hey, are you
allowed to leave your house or not?

1104
00:58:57,642 --> 00:59:00,642
But the, but the flip side is I
think you sh you do need to give

1105
00:59:00,642 --> 00:59:02,802
businesses that flexibility, right?

1106
00:59:02,802 --> 00:59:06,942
That a business, I think should have the
right to say, if you want to come into

1107
00:59:06,942 --> 00:59:10,752
this store, you gotta have a mask on,
or you gotta show proof of vaccination.

1108
00:59:10,752 --> 00:59:15,822
Or, or an employer could have the right
to say, if you wanna work here, you

1109
00:59:15,822 --> 00:59:19,812
need to do whatever, you know, type
things they, that the employer wants.

1110
00:59:19,992 --> 00:59:22,992
Because I think you, you gotta
have, you gotta be consistent

1111
00:59:22,992 --> 00:59:24,282
with is what is what I'm saying.

1112
00:59:24,642 --> 00:59:27,672
Because if you're not, if you're just,
'cause because the reason I'm saying

1113
00:59:27,672 --> 00:59:32,382
this is, I know a lot of libertarians
in the United States were so vehemently

1114
00:59:32,382 --> 00:59:38,382
opposed to even businesses like, you
know, voluntarily insisting on masks or

1115
00:59:38,382 --> 00:59:44,712
whatever, that they applauded when the
Florida governor and the, I think the

1116
00:59:44,712 --> 00:59:48,222
Texas one as well, they said it's illegal.

1117
00:59:48,222 --> 00:59:49,152
They were saying, in other words.

1118
00:59:49,647 --> 00:59:54,087
If you're a business in our state, you
can't insist that people have masks

1119
00:59:54,087 --> 00:59:57,777
on or you can't, you know, insist
that people show vaccination status.

1120
00:59:58,587 --> 01:00:02,397
And I thought that was the pendulum
swung too far the other way right there.

1121
01:00:02,397 --> 01:00:03,897
So that's what I'm saying.

1122
01:00:03,897 --> 01:00:08,607
I think the consistent libertarian
position is, you know, private

1123
01:00:08,607 --> 01:00:09,717
property rights let people do.

1124
01:00:09,717 --> 01:00:13,077
And then in terms of like, well, how
does that relate to the Austrian school?

1125
01:00:13,527 --> 01:00:17,007
Again, I think the, I just like central
planning doesn't work and you sort

1126
01:00:17,007 --> 01:00:19,947
of, you know, leave decentralized
decision making up to the people

1127
01:00:19,947 --> 01:00:23,547
who are in the best position to have
all the relevant information and

1128
01:00:23,547 --> 01:00:25,077
who like, who have skin in the game.

1129
01:00:26,037 --> 01:00:30,207
Likewise, I would say who cares the
most about whether the workers at

1130
01:00:30,207 --> 01:00:32,217
this particular factory all get sick.

1131
01:00:32,817 --> 01:00:35,997
The owner of that factory, or I mean
the workers themselves, but also

1132
01:00:35,997 --> 01:00:40,677
the owner of that factory is the
one who is really in a position to,

1133
01:00:40,857 --> 01:00:44,007
you know, assess the trade offs of,
well, geez, if we just closed down.

1134
01:00:44,457 --> 01:00:45,717
We're not making any product.

1135
01:00:46,197 --> 01:00:48,627
But on the other hand, if there's
a serious virus going around,

1136
01:00:48,627 --> 01:00:50,937
everyone comes in and they all
get sick and half of 'em die.

1137
01:00:51,357 --> 01:00:52,827
We're not making any product either.

1138
01:00:52,917 --> 01:00:53,247
Right.

1139
01:00:53,247 --> 01:00:57,807
So, you know, I, as opposed
to the governor just deciding,

1140
01:00:57,837 --> 01:00:58,317
you know what I mean?

1141
01:00:58,317 --> 01:01:04,362
Where if if they just, you know, shut
down, then they get applauded for doing

1142
01:01:04,382 --> 01:01:07,887
the, the smart, healthy thing, but
they're not suffering the losses from all

1143
01:01:07,887 --> 01:01:09,747
that lost output as much as, you know.

1144
01:01:09,747 --> 01:01:12,777
So anyway, that, that's kind of my
view that, again, with all this stuff,

1145
01:01:12,777 --> 01:01:18,087
just like with the environmental
issues, if there is some weird

1146
01:01:18,087 --> 01:01:21,942
problem, I think ultimately giving
people property rights and giving them

1147
01:01:22,227 --> 01:01:25,677
the decision making ability, that's
the, the best thing in practice.

1148
01:01:25,677 --> 01:01:29,277
'cause the, the politicians aren't
gonna have the right information and

1149
01:01:29,277 --> 01:01:30,417
they don't have the right incentives.

1150
01:01:31,677 --> 01:01:37,032
Anja: Yeah, it's interesting because
like Australia's got a very different

1151
01:01:37,032 --> 01:01:40,692
culture to the US and I think a
lot of that comes from our history.

1152
01:01:40,692 --> 01:01:42,882
Like the US was born out of a revolution.

1153
01:01:42,882 --> 01:01:45,432
It was built on libertarian principles.

1154
01:01:45,972 --> 01:01:51,822
Um, whereas Australia's got a very
like egalitarian, um, societal values.

1155
01:01:51,882 --> 01:01:58,002
And definitely during COVID that came
out even more that we are somewhat a

1156
01:01:58,122 --> 01:02:02,442
collectivist society more than most
people would've thought prior to COVID.

1157
01:02:02,892 --> 01:02:04,212
Robert: Can I stop you real fast though?

1158
01:02:04,422 --> 01:02:07,572
What's funny is, and, and this is
partly just because Americans are so

1159
01:02:07,692 --> 01:02:12,432
ignorant, but the stereotype, at least
that I have here of you, is that you

1160
01:02:12,432 --> 01:02:14,352
guys are real rugged individualists.

1161
01:02:14,982 --> 01:02:17,202
You know, you just, just tough
guys and you go out and you

1162
01:02:17,232 --> 01:02:18,672
fight crocodiles and stuff.

1163
01:02:19,152 --> 01:02:19,392
So

1164
01:02:19,902 --> 01:02:21,582
Anja: that's one or two characters.

1165
01:02:21,582 --> 01:02:22,002
Just one.

1166
01:02:23,532 --> 01:02:26,022
But no, no, that's, that's not the case.

1167
01:02:26,022 --> 01:02:28,842
'cause even as you, as you're
speaking, I'm, I'm listening and

1168
01:02:28,842 --> 01:02:30,552
I'm like, I'm curious person.

1169
01:02:30,552 --> 01:02:34,632
I love learning, but I can just totally
sense that there will be listeners

1170
01:02:34,662 --> 01:02:39,762
from Australia who think, um, that, you
know, the government is the trustworthy

1171
01:02:39,762 --> 01:02:41,712
party and the private sector's bad.

1172
01:02:41,712 --> 01:02:46,242
And I just, to me, like it doesn't
really necessarily make sense because

1173
01:02:46,242 --> 01:02:49,452
why would you trust one group of
people over another group of people?

1174
01:02:49,452 --> 01:02:50,802
They're all just people.

1175
01:02:50,862 --> 01:02:54,672
Um, but it's very interesting 'cause
yeah, they definitely would trust

1176
01:02:54,942 --> 01:03:01,362
something like that to be outsourced to a
government rather than the private sector.

1177
01:03:02,082 --> 01:03:06,072
I cannot see a reality in Australia
where people feel comfortable

1178
01:03:06,282 --> 01:03:08,652
saying, let the corporations decide.

1179
01:03:08,892 --> 01:03:10,392
I just can't see it.

1180
01:03:10,392 --> 01:03:13,482
Robert: Yeah, and I appreciate that and
I, I like the way you phrased it too.

1181
01:03:14,772 --> 01:03:19,062
Because there is a stereotype that like
libertarian ties, especially like outta

1182
01:03:19,062 --> 01:03:23,622
the United States, I'm sure have this,
you know, this stereotype of, we, we think

1183
01:03:23,622 --> 01:03:28,692
that businesses are, are good and that oh
yeah, entrepreneurs are good, are hero,

1184
01:03:29,502 --> 01:03:31,422
and it's those dastardly politicians.

1185
01:03:31,422 --> 01:03:33,942
And some people do talk like that.

1186
01:03:33,942 --> 01:03:35,892
But I think like you, you just
kinda hit the nail on the head.

1187
01:03:35,892 --> 01:03:40,722
The, the more correct thing is that
people in general are fallible and

1188
01:03:40,727 --> 01:03:42,702
you, you gotta be careful with them.

1189
01:03:43,152 --> 01:03:47,562
And so they, it's not so much that,
oh, the, the businesses are, um,

1190
01:03:47,952 --> 01:03:52,392
better than the politicians, but rather
you're, you're just limiting the scope

1191
01:03:52,392 --> 01:03:53,862
of, of how much damage they can do.

1192
01:03:54,522 --> 01:03:54,792
Right.

1193
01:03:54,792 --> 01:03:57,732
And so just like with a, with a
government, like in the United States,

1194
01:03:57,732 --> 01:04:01,692
we have the phrase checks and balances
where, you know, the idea is, oh,

1195
01:04:01,692 --> 01:04:05,472
you don't want the president to just
be able to do whatever he wants.

1196
01:04:05,472 --> 01:04:05,957
He's not a king.

1197
01:04:06,967 --> 01:04:10,662
Like, like in theory, at least, the,
the Congress is supposed to raise taxes.

1198
01:04:10,902 --> 01:04:13,632
In theory, at least Congress
is supposed to declare wars.

1199
01:04:13,632 --> 01:04:17,082
Again, the executive has really
usurped those privileges over the

1200
01:04:17,082 --> 01:04:19,122
years, but that's kind of the idea.

1201
01:04:19,122 --> 01:04:24,792
And so I'm saying by the same token, it's
just a matter of like power sharing and

1202
01:04:24,792 --> 01:04:28,572
checks and balances to say who should
be in charge of, you know, for this

1203
01:04:28,572 --> 01:04:33,282
factory if, if there is a a virus going
around, who should make the decision?

1204
01:04:33,282 --> 01:04:36,042
Should the people you know come into work?

1205
01:04:36,042 --> 01:04:37,362
Or should they just shut down?

1206
01:04:37,932 --> 01:04:41,202
And I'm saying it seems pretty reasonable
to say the owner of the factory is the

1207
01:04:41,202 --> 01:04:42,882
person to vest with that authority.

1208
01:04:43,002 --> 01:04:47,592
Again, he can't compel if somebody's at
home and says, no, I'm doing my research,

1209
01:04:47,832 --> 01:04:49,542
or maybe I have a lung condition.

1210
01:04:49,872 --> 01:04:51,192
I'm not going into work today.

1211
01:04:51,552 --> 01:04:52,752
And if you wanna fire me, go ahead.

1212
01:04:52,752 --> 01:04:56,712
But no, so the employer can't enslave
that person and say, no, you're coming

1213
01:04:56,712 --> 01:04:57,792
to work or we're gonna shoot you.

1214
01:04:58,287 --> 01:05:00,837
The worst the employer can do is
say, well, I'm gonna stop paying you.

1215
01:05:01,137 --> 01:05:01,377
Right?

1216
01:05:01,377 --> 01:05:04,797
Which again, that is perfectly
reasonable to say, you know, the

1217
01:05:04,797 --> 01:05:07,737
employee can't say, no, you gotta keep
paying me and I'm not going to work.

1218
01:05:08,037 --> 01:05:13,527
So I, I'm just saying, it, it, it
isn't that this sort of naive view that

1219
01:05:13,527 --> 01:05:15,417
people in the private sector are angels.

1220
01:05:15,777 --> 01:05:18,237
It's just rather everybody
is potentially a devil.

1221
01:05:18,597 --> 01:05:20,787
And so therefore you gotta
limit everybody's power.

1222
01:05:21,357 --> 01:05:24,657
And that yes, if you're afraid
of profit seeking business and

1223
01:05:24,657 --> 01:05:26,757
the bad things they'll do okay.

1224
01:05:26,757 --> 01:05:29,877
But, you know, the government has
printing presses and they start wars.

1225
01:05:29,877 --> 01:05:32,877
So it's not like government
has clean hands either.

1226
01:05:34,227 --> 01:05:35,637
Anja: Yeah, absolutely.

1227
01:05:35,937 --> 01:05:40,407
And you know, in hindsight now thinking
about how it would've panned out, the

1228
01:05:40,407 --> 01:05:43,947
whole thing had, had it been given
to the private sector, I imagine

1229
01:05:44,277 --> 01:05:49,107
you would've had some corporations
that had somewhat balanced rules.

1230
01:05:49,107 --> 01:05:52,587
Some would've been more strict, in
other words, would've been more loose.

1231
01:05:52,977 --> 01:05:55,797
Um, but I think in, in that.

1232
01:05:56,382 --> 01:06:00,942
You would've had some sort of competition
almost between the private sector where,

1233
01:06:01,242 --> 01:06:06,577
you know, you, you, you kind of naturally,
um, optimize based on what exactly

1234
01:06:06,687 --> 01:06:08,382
were doing and how they're responding.

1235
01:06:08,682 --> 01:06:12,282
And if you have one central entity
where you have no competition and

1236
01:06:12,282 --> 01:06:16,092
no point of reference, you know,
we, we did with other countries, I

1237
01:06:16,092 --> 01:06:18,252
guess, but Australia's so isolated.

1238
01:06:18,397 --> 01:06:18,817
Mm-hmm.

1239
01:06:18,897 --> 01:06:21,672
And we were possibly seen as one
of the strictest countries when

1240
01:06:21,672 --> 01:06:24,762
it came to lockdowns and things.

1241
01:06:25,272 --> 01:06:25,542
Robert: Right.

1242
01:06:25,542 --> 01:06:25,782
Yeah.

1243
01:06:25,872 --> 01:06:26,982
I'm, I'm glad you said that.

1244
01:06:27,012 --> 01:06:31,812
'cause again, that's a, another
huge virtue of decentralization and

1245
01:06:31,812 --> 01:06:35,352
not, you know, having the government
monopolized those decisions.

1246
01:06:35,352 --> 01:06:35,742
Is that Yeah.

1247
01:06:35,742 --> 01:06:39,852
Different companies would've tried
different things and they all would've

1248
01:06:39,852 --> 01:06:41,712
been watching each other and there
could, you know, there would've been

1249
01:06:41,712 --> 01:06:45,582
studies over time as to which things
were more effective and, and so on.

1250
01:06:45,582 --> 01:06:49,662
And that I think would've been better than
what happened in, you know, in practice.

1251
01:06:49,837 --> 01:06:52,007
Because, because I, I think.

1252
01:06:53,247 --> 01:06:57,477
Any honest person would have to say,
a lot of this stuff was just crazy.

1253
01:06:57,717 --> 01:07:00,897
Like, like it, it, in other words, it
didn't even follow from the science.

1254
01:07:00,897 --> 01:07:03,927
It was clearly just, you know,
to make the public feel like

1255
01:07:03,927 --> 01:07:05,337
something was, was happening.

1256
01:07:05,712 --> 01:07:08,307
Like, like, I don't know what they
did in, on Australia, but like United

1257
01:07:08,307 --> 01:07:12,777
States there were, you know, and all
the public areas, like all the water

1258
01:07:12,777 --> 01:07:16,347
fountains had like tape put in front of
them so you couldn't, you know, and they

1259
01:07:16,347 --> 01:07:21,327
were turned off, which what you don't
get COVID from, you know what I mean?

1260
01:07:21,327 --> 01:07:24,897
Like, you could go lick if someone
with who was, had COVID licked the

1261
01:07:24,897 --> 01:07:26,967
thing and then you went and licked it,
you probably wouldn't get it right.

1262
01:07:26,967 --> 01:07:28,977
It was from breathing
the air for a long time.

1263
01:07:28,977 --> 01:07:29,967
Like that was the issue.

1264
01:07:30,357 --> 01:07:34,407
And so I'm just saying, or people who were
out jogging on the beach were arrested.

1265
01:07:35,037 --> 01:07:37,227
It's like, that's just cra you know,
you're not giving COVID to someone,

1266
01:07:37,227 --> 01:07:38,337
you're out jogging on the beach.

1267
01:07:38,337 --> 01:07:39,807
That's just not how it transmitted.

1268
01:07:39,807 --> 01:07:43,737
So, whereas staying in shape and getting
out in the sun or whatever and keeping

1269
01:07:43,737 --> 01:07:47,367
your immune system robust, that would
be, you know, a good thing to do.

1270
01:07:47,367 --> 01:07:51,987
So I'm just saying it, it
wasn't, it wasn't as if.

1271
01:07:52,722 --> 01:07:56,892
Yes, there were a bunch of things that
a draconian enforcement could have

1272
01:07:56,892 --> 01:08:00,912
done, but you know, we have people's
civil, civil liberties or whatever.

1273
01:08:00,912 --> 01:08:04,512
That what I'm thinking, it's
not like, like with seat belts,

1274
01:08:04,632 --> 01:08:05,622
like that's a good example.

1275
01:08:05,622 --> 01:08:10,272
Where in general Yes, a a a a,
a large, you know, normal size

1276
01:08:10,272 --> 01:08:13,842
adult driving the car should have
a seatbelt on that's going in.

1277
01:08:13,842 --> 01:08:16,302
The overwhelming majority
of cases be a good idea.

1278
01:08:16,692 --> 01:08:19,272
And then you could have a question,
should the government force you to do

1279
01:08:19,272 --> 01:08:22,182
that, or you know, leave it up to you.

1280
01:08:22,302 --> 01:08:22,722
Okay.

1281
01:08:22,902 --> 01:08:25,032
But I'm saying the stuff that the
governments around the world did

1282
01:08:25,032 --> 01:08:27,222
during COVID, it wasn't like that.

1283
01:08:27,222 --> 01:08:30,522
They were enforcing things that made
no sense, even on their own terms.

1284
01:08:31,122 --> 01:08:36,732
And it was just clearly people, you
know, just going overloading with

1285
01:08:36,732 --> 01:08:41,292
it or just getting drunk with power
and just, they liked this, you know,

1286
01:08:41,442 --> 01:08:43,362
like in the United States, again, I
can't speak to what happened there.

1287
01:08:43,842 --> 01:08:46,782
It was things like they kept liquor
stores open 'cause they were essential

1288
01:08:46,782 --> 01:08:49,362
services, but you couldn't go to church.

1289
01:08:50,562 --> 01:08:54,282
And so it's just things like that,
you know, that seemed kind of, anyway.

1290
01:08:54,642 --> 01:08:54,882
Anja: Yeah.

1291
01:08:55,062 --> 01:08:58,752
The funniest example for me is, um,
on the airplanes, when everyone used

1292
01:08:58,752 --> 01:09:01,512
to have to wear a mask throughout the
whole flight, but when the food came

1293
01:09:01,512 --> 01:09:05,742
out, you take it off and you meal, it's
like, well, everyone's got masks off.

1294
01:09:05,742 --> 01:09:08,412
That's like, just made
no sense whatsoever.

1295
01:09:08,832 --> 01:09:11,112
Um, but that was a heavy discussion.

1296
01:09:11,112 --> 01:09:13,662
And I wanna pivot to
something a bit more fun.

1297
01:09:14,022 --> 01:09:17,232
Do you think meas would be a
Bitcoin or if he was alive today?

1298
01:09:17,982 --> 01:09:19,092
Robert: Oh, that's a great question.

1299
01:09:20,022 --> 01:09:26,637
Um, I, well, I think for sure he would
not want the government to, in, you know,

1300
01:09:26,637 --> 01:09:31,452
to interfere with people's ability to use
Bitcoin in whatever capacity they wanted.

1301
01:09:31,452 --> 01:09:36,492
And also to not have punitive taxation,
you know, that made it impractical to

1302
01:09:36,492 --> 01:09:38,382
try to switch to a Bitcoin standard.

1303
01:09:38,802 --> 01:09:43,662
Um, I'm not sure, as you may know, as.

1304
01:09:45,537 --> 01:09:49,497
Early on, especially, there were a lot
of people who were fans of Mees, who

1305
01:09:49,497 --> 01:09:55,617
were skeptical of Bitcoin because, um,
of what's called the regression theorem.

1306
01:09:55,617 --> 01:09:59,307
So I, I'll be real fast with this,
but when Mees was explaining the

1307
01:09:59,307 --> 01:10:04,197
purchasing power of money, one of the
moves that he made, actually, it goes

1308
01:10:04,197 --> 01:10:06,927
back to something I said earlier in
this conversation, if you remember that

1309
01:10:07,317 --> 01:10:12,417
there was this difficulty in taking the
subjective marginal utility explanation

1310
01:10:12,417 --> 01:10:14,337
of market value and applying it to money.

1311
01:10:14,422 --> 01:10:15,897
'cause it looked, you were
just going in a circle.

1312
01:10:16,167 --> 01:10:17,727
It's like, oh, why do you value money?

1313
01:10:18,237 --> 01:10:19,557
Because it can buy things.

1314
01:10:19,557 --> 01:10:20,967
Well how come money can buy things?

1315
01:10:20,997 --> 01:10:21,927
Oh 'cause we value it.

1316
01:10:21,927 --> 01:10:25,317
And it looked like you went in a big, it's
mees broke that up with the time element.

1317
01:10:25,317 --> 01:10:26,037
And he said, no, no, no.

1318
01:10:26,787 --> 01:10:31,617
It has purchasing power right now because
you expect it to have it in the future.

1319
01:10:31,677 --> 01:10:32,217
And why?

1320
01:10:32,277 --> 01:10:33,627
Well 'cause it had it in the past.

1321
01:10:33,867 --> 01:10:34,047
Right.

1322
01:10:34,047 --> 01:10:36,807
So he kind of broke the time
element, but then that like

1323
01:10:36,807 --> 01:10:39,987
invited, um, an infinite regress.

1324
01:10:40,527 --> 01:10:43,677
'cause it was kind of like he's
explaining gold's purchasing power today.

1325
01:10:44,457 --> 01:10:48,057
Partly by reference to our, our
knowledge or our memory of it.

1326
01:10:48,207 --> 01:10:49,767
Oh, it had purchasing power yesterday.

1327
01:10:50,427 --> 01:10:51,597
Well, but why did it have it yesterday?

1328
01:10:51,627 --> 01:10:52,767
Oh, 'cause the day before, right?

1329
01:10:52,767 --> 01:10:54,267
So it seems like you go back forever.

1330
01:10:54,957 --> 01:10:56,637
But he said, no, you
don't go back forever.

1331
01:10:56,637 --> 01:11:00,147
Because there was a point, you know, we
don't have records of it, but it must have

1332
01:11:00,147 --> 01:11:02,787
existed logically when there was barter.

1333
01:11:03,027 --> 01:11:07,107
You know, no money existed, but people
still would've used gold, you know,

1334
01:11:07,107 --> 01:11:08,817
for ornamental reasons or whatever.

1335
01:11:09,147 --> 01:11:09,357
Right?

1336
01:11:09,357 --> 01:11:12,387
Like, people must have liked
gold even before it was money.

1337
01:11:13,137 --> 01:11:13,317
Right?

1338
01:11:13,317 --> 01:11:16,077
And so that's kind of just like
logically how me's, you know,

1339
01:11:16,167 --> 01:11:17,937
made, made his explanation.

1340
01:11:18,717 --> 01:11:22,977
And so a necessary part of that story
was that the thing that right now

1341
01:11:22,977 --> 01:11:27,957
is the money must have served in a
past life is just a mere commodity.

1342
01:11:28,857 --> 01:11:32,607
So when Bitcoin first came on the
scene, a lot of fans of Mees said,

1343
01:11:33,327 --> 01:11:36,567
this can't ever be money because
you know, you can't eat Bitcoins,

1344
01:11:36,567 --> 01:11:38,277
you can't use 'em to build a car.

1345
01:11:38,907 --> 01:11:41,307
Bitcoin doesn't do anything
except it could be a money.

1346
01:11:42,477 --> 01:11:43,647
So how can that be?

1347
01:11:43,647 --> 01:11:47,787
And so they thought, you know,
it violated me's theories.

1348
01:11:48,417 --> 01:11:52,527
So at this point, most Austrians
have gotten over that, right?

1349
01:11:52,527 --> 01:11:55,797
Because in other words,
bitcoin's clearly been adopted.

1350
01:11:56,817 --> 01:11:59,427
People don't have a problem,
you know, pricing it right now.

1351
01:11:59,427 --> 01:12:03,417
Like we, we can remember what
Bitcoin's price was yesterday, right?

1352
01:12:03,417 --> 01:12:07,767
So in other words, if you thought that
story I just went through was gonna be

1353
01:12:07,767 --> 01:12:11,727
a pose, a difficulty for Bitcoin, it
should have never gotten off the ground.

1354
01:12:11,847 --> 01:12:15,627
But now that it is where it is
that hurdle's been passed, whether

1355
01:12:15,627 --> 01:12:18,387
it really was a hurdle or just a
misunderstanding of meses, right?

1356
01:12:18,387 --> 01:12:23,187
So, um, having settled that though,
like there are plenty of people who

1357
01:12:23,187 --> 01:12:25,887
are fans of the audit, like Peter
Schiff as being the, the most notable

1358
01:12:25,887 --> 01:12:31,197
example who still say, yep, Bitcoin's
intrinsic fundamental value is zero.

1359
01:12:31,227 --> 01:12:31,947
It's a bubble.

1360
01:12:32,637 --> 01:12:35,097
I can't understand why it's lasted
this long, but it's going to zero.

1361
01:12:35,187 --> 01:12:36,357
If it goes to zero next Tuesday.

1362
01:12:36,357 --> 01:12:38,067
Don't say I didn't warn you, right?

1363
01:12:38,697 --> 01:12:39,027
So.

1364
01:12:40,287 --> 01:12:43,737
Me is, you know, was an old
school guy, very conservative.

1365
01:12:44,517 --> 01:12:45,807
It wouldn't shock me.

1366
01:12:46,047 --> 01:12:49,617
I mean, for one thing he
would be astounded by color

1367
01:12:49,617 --> 01:12:50,607
television or whatever, you know?

1368
01:12:51,022 --> 01:12:51,957
So I don't, I don't know.

1369
01:12:51,957 --> 01:12:53,277
Well, I guess he, he, he lived longer.

1370
01:12:53,277 --> 01:12:58,767
He saw colored television, but I, I
think it's possible he might have just

1371
01:12:58,767 --> 01:13:01,257
thought this, this seems too weird.

1372
01:13:01,257 --> 01:13:02,367
This is too intangible.

1373
01:13:02,367 --> 01:13:05,307
No, a gold coin, like, you know,
a bar a gold, that's money.

1374
01:13:05,307 --> 01:13:05,967
That's hard.

1375
01:13:06,837 --> 01:13:08,757
The government can't,
can't print more of those.

1376
01:13:09,327 --> 01:13:11,757
So anyway, those, those are
the two things for sure.

1377
01:13:12,267 --> 01:13:15,327
He would be all for the freedom and go
ahead and let people use it if they want.

1378
01:13:15,687 --> 01:13:19,047
But whether he personally
would be a ler, I don't know.

1379
01:13:19,167 --> 01:13:20,457
Anja: Maybe he would get over it.

1380
01:13:20,457 --> 01:13:22,122
Like all other Ians I,

1381
01:13:23,212 --> 01:13:23,562
Robert: maybe

1382
01:13:24,772 --> 01:13:26,577
Anja: first day they're
like, oh, actually.

1383
01:13:26,727 --> 01:13:31,527
But I'm curious to know like, what
actually made the MEUs fan get over it?

1384
01:13:31,767 --> 01:13:32,127
Like.

1385
01:13:32,577 --> 01:13:36,022
And, and become Bitcoin is like,
um, how did they get past it?

1386
01:13:36,262 --> 01:13:39,537
Robert: I, I mean, so I pointed out
early on, you know, the, I, the thing

1387
01:13:39,537 --> 01:13:43,887
I just said to you that, Hey, hey guys,
you're right, there is this prima facie

1388
01:13:44,937 --> 01:13:49,587
tension, but notice, and I, and I was
quoting from Mees to say, you know,

1389
01:13:49,587 --> 01:13:54,147
to just to show like very specifically
what he was saying is for something

1390
01:13:54,147 --> 01:13:58,797
to become a medium of exchange, it
must have first had some other use.

1391
01:13:58,827 --> 01:14:02,607
Because his, his argument was like,
how would, how would you know at

1392
01:14:02,607 --> 01:14:06,357
day one what its exchange ratio
was with all the other commodities?

1393
01:14:06,717 --> 01:14:06,987
Right?

1394
01:14:06,987 --> 01:14:10,287
Un unless it had previously just been
a mere commodity that was in barter.

1395
01:14:10,947 --> 01:14:15,477
And so I'm saying, you know, Bitcoin,
those 10,000 bitcoins for the two

1396
01:14:15,477 --> 01:14:19,707
pizzas, like, which is like the first
documented transaction they happened.

1397
01:14:19,707 --> 01:14:24,507
And so, you know, if, if me's story is
right, the way you guys want to use it

1398
01:14:24,507 --> 01:14:28,767
for Bitcoin, that first transaction, the
guy with the Bitcoins and the guy with

1399
01:14:28,767 --> 01:14:30,147
the two pizzas, they should have said.

1400
01:14:30,717 --> 01:14:32,187
How can we come up with a trade?

1401
01:14:32,187 --> 01:14:34,587
Because I don't know how many
Bitcoins trade for a pizza.

1402
01:14:34,587 --> 01:14:34,857
I don't.

1403
01:14:34,917 --> 01:14:36,267
We have no, no record.

1404
01:14:36,657 --> 01:14:39,717
We have no prior sales
of Bitcoins for pizza.

1405
01:14:39,717 --> 01:14:40,797
So I guess we can't do it.

1406
01:14:41,187 --> 01:14:42,207
Well, they did do it.

1407
01:14:42,447 --> 01:14:42,927
You know what I mean?

1408
01:14:42,927 --> 01:14:47,037
So my point was that's where it
would've stopped it once that happened.

1409
01:14:47,967 --> 01:14:51,027
Me's argument if you, if you're
trying to use it to stop Bitcoin

1410
01:14:51,027 --> 01:14:53,817
from doing anything is already, you
know, is already rendered impotent.

1411
01:14:53,817 --> 01:14:57,147
So I think, I'm not saying I
personally did, but other people

1412
01:14:57,147 --> 01:14:57,927
couldn't, you know, make similar.

1413
01:14:57,927 --> 01:15:01,857
So I'm saying intellectually, once
Bitcoin got off the ground, it really

1414
01:15:01,857 --> 01:15:05,517
was the case that if you were an
Austrian who understood what Mees was

1415
01:15:05,517 --> 01:15:09,807
saying, you'd have to realize that
you know this, this no longer applies.

1416
01:15:10,197 --> 01:15:15,117
And then also other points I was making,
like both Mes and Roth Bar said in

1417
01:15:15,117 --> 01:15:20,907
their writings that if in the future
for some reason gold should lose all

1418
01:15:20,907 --> 01:15:24,567
of its non-monetary value, right?

1419
01:15:24,567 --> 01:15:27,387
Like if nobody liked gold
jewelry anymore and nobody used

1420
01:15:27,387 --> 01:15:28,557
it for filling their teeth and.

1421
01:15:29,802 --> 01:15:32,112
Said it could still continue
to serve as the money.

1422
01:15:32,832 --> 01:15:35,472
And their argument was because
people still would've had the memory

1423
01:15:35,472 --> 01:15:36,972
of the gold price the day before.

1424
01:15:37,512 --> 01:15:37,752
Right.

1425
01:15:37,752 --> 01:15:40,302
So it's not like they all of a sudden
wouldn't know how to value gold.

1426
01:15:41,082 --> 01:15:43,392
And so, you know, I, I use that argument.

1427
01:15:43,392 --> 01:15:46,062
Think others could see that too, that
once Bitcoin got off the ground and you

1428
01:15:46,062 --> 01:15:50,652
had a market price as like an anchor
to guide you as to, well, how much do

1429
01:15:50,652 --> 01:15:52,092
I think it's gonna be worth tomorrow?

1430
01:15:52,482 --> 01:15:58,752
Then, you know, the fact that it
didn't historically serve as, you

1431
01:15:58,752 --> 01:16:01,032
know, some mere commodity and barter.

1432
01:16:01,602 --> 01:16:03,372
So what, you know, you don't need it to.

1433
01:16:03,402 --> 01:16:04,602
So I think there was that.

1434
01:16:05,022 --> 01:16:09,402
And also too, just, you know, the passage
of time and it keeps hitting all time

1435
01:16:09,402 --> 01:16:11,082
highs and whatever, like after a while.

1436
01:16:11,787 --> 01:16:14,847
Like, well, how many times is Bitcoin
gonna die before we stop saying that?

1437
01:16:14,997 --> 01:16:15,327
You know?

1438
01:16:15,327 --> 01:16:15,627
So

1439
01:16:15,867 --> 01:16:17,637
Anja: the frequency of that is dropping.

1440
01:16:17,637 --> 01:16:21,357
So few more years, few
more cycles at least.

1441
01:16:22,377 --> 01:16:27,927
Um, now final question I wanted to ask
you was, obviously the Austrians love

1442
01:16:27,987 --> 01:16:33,507
the concept of hard money, and it's
been said that the hardest money always

1443
01:16:33,507 --> 01:16:41,157
wins or has won out of most cases in
history, but maybe one, um, where a softer

1444
01:16:41,157 --> 01:16:45,777
form of money has won, uh, because the
government stepped in and made fiat like

1445
01:16:45,777 --> 01:16:50,487
legal tender and, and enforced everyone
to essentially use it, um, because

1446
01:16:50,487 --> 01:16:52,947
they prefer it for whatever reason.

1447
01:16:53,192 --> 01:16:53,392
Robert: Mm-hmm.

1448
01:16:54,012 --> 01:16:58,647
Anja: Um, I'm very curious to know,
do you think, or do you believe

1449
01:16:58,647 --> 01:17:04,047
that the concept of the hardest
money winning again, can overcome.

1450
01:17:04,662 --> 01:17:08,712
All the institutionalized
resistance there is against it.

1451
01:17:08,832 --> 01:17:10,122
Robert: Okay, so great question.

1452
01:17:10,182 --> 01:17:14,622
Um, yeah, and let me make one, one
point that I've stressed a lot is

1453
01:17:14,622 --> 01:17:18,642
that there's a, you know, once you
understand the virtues of, of hard

1454
01:17:18,642 --> 01:17:22,122
money, I said that what's cool about
Bitcoin is there's a sense in which

1455
01:17:22,122 --> 01:17:24,402
it's even harder than gold, right?

1456
01:17:24,402 --> 01:17:29,982
Because of the $21 million cap that,
you know, with gold in principle,

1457
01:17:30,372 --> 01:17:33,702
you know, they, they could go
and mine, you know, asteroids.

1458
01:17:33,702 --> 01:17:36,162
There's asteroids out there
in the solar and lots of gold.

1459
01:17:36,162 --> 01:17:38,712
And right now it wouldn't be
economical to go get them,

1460
01:17:38,712 --> 01:17:39,822
but down the road it could be.

1461
01:17:39,822 --> 01:17:44,712
And so the idea is at some point, or
you know, you know, when our technology

1462
01:17:44,712 --> 01:17:48,102
progresses to the point at which we
can just rearrange, you know, corks or

1463
01:17:48,102 --> 01:17:53,442
something and create new gold atoms out
of other atoms, like at that point, gold

1464
01:17:53,442 --> 01:17:55,242
isn't gonna be physically scarce anymore.

1465
01:17:55,812 --> 01:18:00,342
And so the idea is it would be good if
we had the ability to have a money that

1466
01:18:00,342 --> 01:18:04,392
was mathematically constrained, not
just physically, because those physical

1467
01:18:04,392 --> 01:18:06,282
constraints, again, might not be binding.

1468
01:18:07,602 --> 01:18:11,772
So that's, you know, a, a good thing
to, to have in our back pocket that

1469
01:18:11,772 --> 01:18:15,252
we've got this in principle, this
money that, that can't be inflated,

1470
01:18:15,252 --> 01:18:18,342
namely the Bitcoin or, you know, other
cryptocurrencies that are like it.

1471
01:18:19,812 --> 01:18:26,922
Um, I, I would caution people though that
even when we were on the classical gold

1472
01:18:26,922 --> 01:18:33,162
standard, there still was the problem
like of, you know, booms and busts.

1473
01:18:34,002 --> 01:18:37,812
And it, it had to do with like when
Mees developed his theory of the

1474
01:18:37,812 --> 01:18:40,962
business cycle that was on during
the classical gold standard era.

1475
01:18:41,202 --> 01:18:44,472
You know, he came out in 1912 with his,
you know, first it was like his doctoral

1476
01:18:44,472 --> 01:18:46,872
dissertation that, that made that case.

1477
01:18:47,532 --> 01:18:52,452
And so what was happening were
the banks were issuing paper notes

1478
01:18:52,602 --> 01:18:54,252
that were claims on the gold coins.

1479
01:18:55,107 --> 01:18:55,347
Right.

1480
01:18:55,347 --> 01:18:59,127
And if they issued more paper notes
than there were coins in the vault, then

1481
01:18:59,127 --> 01:19:00,477
you could get these boom bust cycles.

1482
01:19:00,507 --> 01:19:02,367
'cause you know, interest rates
would get pushed artificially low.

1483
01:19:02,367 --> 01:19:07,047
So I'm saying even if the whole world
adopted Bitcoin, and even if, you know,

1484
01:19:07,047 --> 01:19:10,617
when you went into the store, everything
was quoted in Satoshi's and you just held

1485
01:19:10,617 --> 01:19:14,997
up your phone and you had the private keys
and you were doing, you know, I'm saying

1486
01:19:15,987 --> 01:19:22,137
that even if that were the case, if there
were still third party institutions that

1487
01:19:22,137 --> 01:19:28,377
issued claims on Bitcoin and that those
things after a while, like imagine like

1488
01:19:28,377 --> 01:19:31,587
a stable coin that was tied to Bitcoins.

1489
01:19:32,007 --> 01:19:32,247
Right.

1490
01:19:32,247 --> 01:19:36,447
So the, the, the coin, the stable
coin itself was not Bitcoin, but

1491
01:19:36,447 --> 01:19:39,087
it just, you know, promised, oh,
we will maintain parody with it.

1492
01:19:39,627 --> 01:19:42,267
And then as long as, so after a
while, if the community started to

1493
01:19:42,267 --> 01:19:47,457
trust those 'cause they had a good
track record, then that would in a

1494
01:19:47,457 --> 01:19:50,817
sense be like inflating the supply of
bitcoins just in the way right now,

1495
01:19:52,017 --> 01:19:53,817
you know, you're checking deposit with.

1496
01:19:54,882 --> 01:20:00,402
Your bank is not, you know, there
aren't pieces of government currency

1497
01:20:00,402 --> 01:20:01,782
in the vault backing that up.

1498
01:20:01,842 --> 01:20:04,122
And so even though, you know,
your government says what the

1499
01:20:04,122 --> 01:20:07,692
currency is, the private banks can
kind of inflate on top of that.

1500
01:20:07,692 --> 01:20:10,272
So I'm saying that is still possible.

1501
01:20:10,272 --> 01:20:13,332
That could happen, in which
case, you know, you'd still

1502
01:20:13,332 --> 01:20:15,192
have these boom bust cycles.

1503
01:20:15,522 --> 01:20:21,012
But, and here's the, the final point
I'll make though is it's the reason

1504
01:20:21,282 --> 01:20:24,522
Bitcoin has an advantage and there's
more of a promise, or if it's not

1505
01:20:24,522 --> 01:20:27,252
Bitcoin, you know, something like it.

1506
01:20:27,672 --> 01:20:29,982
'cause I, I know there's, with the
block size and things, people are

1507
01:20:29,982 --> 01:20:33,972
saying it would be tough right now,
Bitcoin can't just replace all the money

1508
01:20:34,002 --> 01:20:35,412
in terms of buying a cup of coffee.

1509
01:20:35,412 --> 01:20:37,212
There had to be something, you
know, lightning or whatever.

1510
01:20:37,632 --> 01:20:44,652
But the, the point is, the part of the
reason people put their gold coins or

1511
01:20:44,652 --> 01:20:48,222
their gold bars in the bank to get the
notes was that it was just so much more

1512
01:20:48,312 --> 01:20:51,672
convenient to walk around town spending
the notes or writing a paper check

1513
01:20:52,062 --> 01:20:53,802
rather than carrying on a bag of coins.

1514
01:20:54,417 --> 01:20:58,947
But with cryptocurrency,
there isn't that issue, right?

1515
01:20:58,947 --> 01:21:02,937
Like, in other words, your online
banking is just as convenient as

1516
01:21:03,237 --> 01:21:06,717
holding your, you know, your private
wallet and keeping the private keys.

1517
01:21:07,107 --> 01:21:07,827
You get what I'm saying?

1518
01:21:07,827 --> 01:21:13,527
So, um, there is a reason that you
could expect more people to just hold

1519
01:21:14,427 --> 01:21:18,747
the, the digital currencies themselves
rather than giving 'em to another

1520
01:21:18,837 --> 01:21:22,407
third party who then, you know, could,
could have the temptation to inflate.

1521
01:21:23,007 --> 01:21:28,737
So that was my kind of long way of giving
the context to say there still is danger

1522
01:21:28,737 --> 01:21:30,867
even if everyone switched to Bitcoin.

1523
01:21:31,827 --> 01:21:36,057
But they're also the, the very nature
of Bitcoin does give it an inbuilt

1524
01:21:36,057 --> 01:21:40,137
advantage such that it's possible
people, enough people could be doing

1525
01:21:40,647 --> 01:21:44,817
quote the right thing that, you know,
the business cycle would largely be

1526
01:21:44,817 --> 01:21:48,477
contained or it be the kind of thing
where people could largely opt out of it

1527
01:21:48,477 --> 01:21:51,957
if they wanted to and say, yeah, with,
given the commerce that I engage in and

1528
01:21:51,957 --> 01:21:53,577
the people I found around planet Earth.

1529
01:21:54,087 --> 01:21:57,597
Who wanna deal with me in the
way that we think is appropriate.

1530
01:21:58,287 --> 01:22:01,737
We're kind of like, separate
from these other people who are,

1531
01:22:01,737 --> 01:22:03,267
you know, wildcat speculators.

1532
01:22:03,267 --> 01:22:03,327
Yeah.

1533
01:22:04,137 --> 01:22:04,707
Anja: Interesting.

1534
01:22:04,707 --> 01:22:06,327
And thank you so much for that answer.

1535
01:22:06,327 --> 01:22:11,277
I'm a bit sad I won't be around to
see, see it unfold for the, like,

1536
01:22:11,277 --> 01:22:14,397
I mean, I will for the remainder
of my life, but probably not for

1537
01:22:14,397 --> 01:22:16,017
the remainder of Bitcoin's life.

1538
01:22:16,497 --> 01:22:19,857
Um, do you have any final thoughts
that you wanna leave with the audience?

1539
01:22:21,027 --> 01:22:26,937
Robert: Um, I, I would just encourage
people that I know the wake economics is

1540
01:22:26,937 --> 01:22:31,437
taught in school sometimes is very dry,
but I would, you know, I would encourage

1541
01:22:31,437 --> 01:22:34,257
you to read up in the Austrian school,
there's a reason I was attracted to 'em.

1542
01:22:34,257 --> 01:22:37,317
I think they're very intuitive, but
just in general, you know, these

1543
01:22:37,497 --> 01:22:39,237
arguments over money and banking.

1544
01:22:40,062 --> 01:22:43,527
I, I think this is like with, you know,
cryptocurrencies and stable coins.

1545
01:22:43,527 --> 01:22:46,407
Like this is all money and
banking theory in action and

1546
01:22:46,407 --> 01:22:47,787
this is a very exciting time.

1547
01:22:48,237 --> 01:22:50,247
And so I just let people know
that, you know, you're living

1548
01:22:50,247 --> 01:22:52,797
through something that's pretty
special and try to appreciate it.

1549
01:22:54,207 --> 01:22:55,137
Anja: Absolutely.

1550
01:22:55,137 --> 01:22:56,757
Thanks so much for your time Robert.

1551
01:22:57,357 --> 01:22:57,752
Robert: Thanks for having me.

1552
01:22:57,752 --> 01:22:57,872
Ona.

1553
01:22:58,525 --> 01:23:01,765
Speaker 2: That's it for this week
on The Honest Money Show, a big

1554
01:23:01,765 --> 01:23:06,625
shout out again to shop bitcoin.com
au for making this episode possible.

1555
01:23:07,075 --> 01:23:11,245
Until next week, stay smart with
your money and stay decentralized.