The Papers

Every passage, on the record.

1. 00:00Claim

   We've got some interesting developments finally happening in Bitcoin, the people that don't have Bitcoin are realizing just how in trouble they actually are, and they're going to try and take steps to rectify the issues they themselves have created. I'll save you time: the answer is no, they're not going to be successful.

2. 00:32Claim · condensed

   The only way non-holders can avoid what's coming is to switch teams. It used to be very, very difficult to switch teams; now it's never been easier.

3. 00:32Idea

   It used to be very, very difficult to switch teams. Now it's never been easier to switch teams. Now will it always be like that? Will the on-ramps to Bitcoin always be open?

4. 01:06Reference

   These are the papers we're going to be directly quoting from, one from the European Central Bank titled "The Distributional Consequences of Bitcoin," the other from the Federal Reserve of Minneapolis.

5. 02:09Reference

   We got Peter Dipshit on Joe Rogan talking about how it was completely overvalued.

6. 01:36Reference

   That Gandhi quote: first they ignore you, then they laugh at you, then they fight you, then you win. We got the ignore them, we got the laugh because I was going to go to zero.

7. 02:11Reference

   The Federal Reserve of Minneapolis paper, which is entitled the unique implementation of permanent primary deficits.

8. 02:09Claim

   If that doesn't give you pause for thinking about just how in trouble you were before you found Bitcoin, it certainly should.

9. 03:22Claim

   The level of gaslighting is astronomical: you blame the problems of the fiat world, which is anchored by the central banks themselves, on the existence of an alternative to it.

10. 03:22Reference

    Who was it? I think it was Lagarde that came out a couple of years ago now and said that we have to close off all the exits because if there is an exit, that exit is going to be used.

11. 03:57Reference

    The president is Neel Kashkari. This is the guy that went on 60 Minutes and said all you have to do to make more dollars is just hit a button in the Excel spreadsheet and you can create an infinite amount of dollars.

12. 04:42Event

    This same week that this paper comes out from the Federal Reserve of Minneapolis, which he's in charge of, he goes on to some conference and says that Bitcoin is worthless, twelve or fifteen years on, has no value.

13. 03:57Event · condensed

    This is two days after... this paper came out October 17th and October 14th Kashkari, the president, goes to some conference that says Bitcoin is absolutely worthless.

14. 05:15Claim

    It has to be true because Bitcoin exists: because in their paper, they say that if Bitcoin doesn't exist there is one outcome, and if Bitcoin does exist there is a whole other outcome, and if that other outcome is possible we have to do X, Y and Z now.

15. 05:47Quote

    The guy just looks straight at the camera and says, 'The world would be over. It would be over. The whole thing would burn to the ground.'

16. 05:15Open question · condensed

    Instead of breaking down the ECB paper today, I just want to talk through the abstracts; I'm going to do a whole series on all the papers.

17. 06:18Reference

    The abstract is: the original promise of Nakamoto to provide the world with a better global means of payment has not materialized. Instead, the focus has increasingly shifted to Bitcoin as an investment and asset promising high capital gains.

18. 08:30Claim

    The problem with Bitcoin going up forever, for people that don't hold Bitcoin, is your shitcoin is going down forever. You gave the power to someone else to permanently and at will dilute your energy reserves, and now the gig is up for that business model.

19. 09:33Idea

    What they did was just outline my milkshake boy theory, right? I drink your milkshake. We need people like Neel Kashkari, that's why it's going up in value as rapidly as it is.

20. 09:33Analogy

    I drink your milkshake. We need people like Neel Kashkari, that's why it's going up in value as rapidly as it is. That is why we are at the bottom of the energy reserve gravity well.

21. 14:38Claim

    The real value add of Bitcoin is you don't have to go searching for the person most enthusiastic about your now-energy; you just go to the market, whoever gives the most sats has by definition decided they need that energy more than anyone else in the system.

22. 13:34Claim

    Bitcoin finally puts a border, a perimeter, albeit one that can grow or shrink, around the total amount of accessible energy available to the extended order at any given time; because you have a fixed percentage of that, your pie stays the same size relative to the whole but grows as the pie overall increases.

23. 15:48Analogy

    The yacht maker has a bonus off the gap between what it costs him to make the yacht and what he sells it for; now he has reserves not needed for daily requirements, so maybe he puts it in soybeans or oil, or maybe he's got half a brain and puts it back into Bitcoin, and now more energy has come back into the system.

24. 17:19Quote

    You cannot get out of Bitcoin as soon as you get out of Bitcoin, you're taking the energy from everyone looking to get into Bitcoin.

25. 17:19Claim

    You cannot consume more than you transform and plug into the system and still have more sats than when you started; there's no way to finesse the system, you have to continue to contribute energy or you will have reached your set peak and continually diminish your stack until you have zero.

26. 17:51Claim · condensed

    How you measure whether you were a net positive or a net drain on the extended order over your life: look at the total number of sats you start with versus the total number you finish with. If you finish with less, you have been a drain regardless of whether you increased others' holdings.

27. 19:00Claim · condensed

    Saying Bitcoin doesn't increase the productive potential of the economy isn't a little bit wrong, it's the exact opposite of true: it's the greatest tool ever discovered for transforming energy, and it increases productive potential more than anything else ever has.

28. 20:09Claim · condensed

    More efficiency leads to more energy reserves, which lets us create more order by generating more information, which turns into knowledge because it has causal power; we take that knowledge and build more technology, and technology makes life better.

29. 20:45Reference

    This comes back to a back and forth with someone about the guy that did Sapiens, Yuval Harari, and his horrible takes on Bitcoin, fumbling through a couple of Instagram posts about Bitcoiners.

30. 20:45Claim · condensed

    Harari's argument that we have to trust institutions or the whole extended order falls apart gets Bitcoiners' gripe exactly backwards: the gripe is that institutions have broken trust and continue to break it, in every example, in the way necessary for maximum flourishing inside the extended order.

31. 20:45Reference

    When Harari says institutions, he's basically saying organizations, companies, groups of individuals and their ability to share the load of information required to generate order, like building the starship exceeding human byte capacity.

32. 23:34Claim · condensed

    If I have to trust you, building that trust is the costliest part of the exchange; remove the need for trust and you have more energy reserves, and you actually trust the institution more once you know it can't screw you.

33. 24:06Claim · condensed

    The ones that survive in this post-bitcoinized world are the ones that should be trusted by default, because if they had tried to break trust they would have become unfit and unsuccessful and lost their energy reserves.

34. 26:45Reference

    This sort of coincides with all of the work we've been doing looking at David Deutsch's work and his definition of what a good explanation is: a good explanation is hard to vary, and the fewer arbitrary variables there are, the better the explanation.

35. 26:45Claim · condensed

    It's like the Pareto principle for knowledge: even if the central bank is correct that fiat is the better way to organize the extended order, that doesn't solve the individual's problem of how to maximize their energy reserves, they still have to navigate all of the fiat world's steps to be successful.

36. 27:50Claim · condensed

    You cannot get wealthy just by doing your job as an economist and saving in fiat, you will by definition get poor over time even if you're completely right that fiat wins.

37. 28:53Claim · condensed

    If I'm right, all I have to do is hold Bitcoin and I get the benefit, because I'm at the bottom of the energy gravity well; that frees me to spend all day checking whether the alternatives are actually correct, which the economists on the other side can't do because they'd end up poor.

38. 29:24Analogy

    It just soaks into this giant TASOE, this total accessible supply of energy, which I am a part owner of, so this sponge at the bottom of the gravity well.

39. 29:24Idea

    It just soaks into this giant TASOE, this total accessible supply of energy, which I am a part owner of. So this sponge at the bottom of the gravity well.

40. 30:27Claim

    If I'm right, I don't have anything to do, which means I can spend all of my time looking to see if the other alternatives are actually correct; they can't do that, because if they spend all day doing that forever they'll eventually be dead broke.

41. 32:11Reference

    In an economy with incomplete markets and consumers who are sufficiently risk averse, we show that the government can uniquely implement a permanent primary deficit using nominal debt and continuous Markov strategies for primary deficits and payments to debt holders.

42. 32:45Quote

    But this result fails if there are also useless pieces of paper (Bitcoin for short) that can be traded.

43. 32:45Claim · condensed

    The second sentence of a Federal Reserve paper calls Bitcoin 'useless pieces of paper' while the entire rest of the paper treats it as the thing that breaks their model; that's the whole game, in think-boy speak.

44. 34:33Claim · condensed

    If there is trade in Bitcoin, per the paper's own math, there is no continuous Markov strategy for the government leading to unique implementation; instead there's a continuum of equilibria in which the price of Bitcoin converges to zero, or the government hits a balanced budget trap where real interest rates minus growth cannot equal zero.

45. 35:16Claim

    A legal prohibition against Bitcoin can restore unique implementation of permanent primary deficits, and so can a tax on Bitcoin at the rate of negative (R minus G), where R is real interest rates and G is growth.

46. 35:50Claim · condensed

    Stripped of the jargon: the paper says the government cannot continue to run a deficit if Bitcoin exists, because people will flock to it, so it can't keep increasing its debt, and it will be forced to balance its budget unless it bans Bitcoin or taxes it with their formula.

47. 39:40Analogy · condensed

    Fast forward to 2028: instead of seventy hundred thousand dollars, say Bitcoin is five hundred thousand dollars, so Bob's 10 Bitcoin is five million dollars, and the 2 percent tax is now a hundred thousand dollars a year, which becomes a hundred and twenty thousand once he sells and triggers 20 percent capital gains to pay it.

48. 41:17Claim · condensed

    There's already the ETF, so how are they actually going to ban it? They haven't really thought through the ban part of the thesis; the tax is the more plausible lever.

49. 42:27Prediction

    We're right on all time highs, heading into an election in a halving year; the timing couldn't be more perfect for an absolutely crazy end to this year.

50. 42:27Event

    We are right on all time highs, we're heading into an election in a halving year; these next six months is essentially what everyone waits for every four years.

51. 42:27Quote

    We are well ahead of the competition, I think, if this is the best and brightest that they're sending. We are looking pretty, pretty, pretty good.