Lyn Alden The Collapse Is Here Nothing Stops This Train

TITLE: Lyn Alden: The Collapse Is Here, Nothing Stops This Train CHANNEL: Proof of Thought Podcast DATE: 2026-04-25 ---TRANSCRIPT--- All right, Lynn, welcome. Welcome to the show. This is uh this is incredible. We’ve come so far. [laughter]

Thanks for having me. Happy to be here. All right. Uh well, there’s a lot to talk about today, so let’s just get right into it. I I want to start with um have your book here, Broken Money. Um and I want to start with uh the thesis from chapter 19 of your book. you know, you talk about how in the 2000s, the 2010s, and the 2020s, uh, that how these these periods are economically resembling, um, the 1920s, the 30s, and the 40s. And I really love how you explain that by saying, I just want to quickly read this here from the book. Uh but you talk about that in the um you know 1920s uh we’re having these uh cycles that led into the you know the the 1930s the 1940s that’s resembling the periods we’re seeing today. And you said that this is not because cycles magically happen but ultimately that there are incentives within the system that are causing um these different periods to lead into another. So, if that framework really holds and we’re currently living in, let’s say, the 1940s today, what comes next? Can you take us into the 1950s and what we should be expecting going into the 2030s? Uh, sure. So, great great set of questions. Uh, to back up a little bit before I answer that question, kind of the the main uh punchline here is that debt bubbles usually have two phases. So there’s usually some imbalances and incentives that cause a or contribute to a private debt bubble building really significantly. Uh in you know back in like the 20s you had kind of post World War I uh you know like uh uh gold pegs that are trying to kind of still be in place even though they printed all this new money. So you have these kind of new imbalances in the system and then those imbalances kind of get pushed and show up in certain places. Um and you know now and you know and whereas here uh you know we had um you know super low interest rates uh and a tech boom which then contribute to to a housing bubble and and things like that. So you have you have basically a handful of incentives you lead to a private sector uh debt bubble and that eventually hits a peak and generally hits a peak when you know in every cycle when you have when you have more and more debt building up and then uh you have some sort of recession. Uh usually policy makers come in they lower interest rate they they they try to get that kind of that credit uh cycle going again. The problem is when they get all the way to like zero interest rates um there’s really not a lot more they can do from a private sector debt bubble standpoint. And this, you know, in 1929 and in 2008 in the US, that was kind of peak bank financial leverage, meaning that, for example, the percentage of bank assets uh that were cash compared to like all the loans they were making were at like record lows at those times. Um, and there’s really you start to kind of have this like uh moment where you have all these IUs built uh on a on a pretty tight monetary base and it starts to unravel. uh and in any regime where they they can print their own currency, uh they say, “Okay, instead of letting this whole thing collapse nominally, uh they start basically shifting that from the private sector more to the public sector, there’s there’s kind of a a public sector debt bubble that builds afterward. Um, and that’s where you get, you know, more of the 1930s and 1940s environment where they, um, you know, you you print a lot of money, expand the monetary base, uh, start shifting resources around, uh, and you kind of, uh, uh, disinflate the private sector debt bubble, uh, but you start building it more on the public ledger. Um so to get to your current question of what happens next uh the challenge is that so when a private se sector debt bubble uh kind of pops that tends to be more disinflationary. Uh even when you print some money it’s more anti-dflationary because you’re kind of offsetting uh loans that are that are being defaulted on which which destroys some broad money. So, uh, we we didn’t really see, for example, despite all the stimulus in the in the post 2008 environment, we didn’t see a big uptick in broad money supply. Um, uh, because you’re just kind of transferring where that debt is more so than just kind of creating a lot of new, uh, debt in the system. Uh, whereas in when you kind of already get to the point we have a a public sector debt bubble, uh, it tends to be more inflationary uh because there’s really nowhere else for that to go. the the last phase that it gets diffused throughout the currency. Normally what happens is when a government gets very indebted uh they start doing various financial repression tactics. So they hold interest rates below the inflation rate uh they run these really big uh monetized fiscal deficits and then they end up devaluing a lot of their debt relative to to more scarce assets and how far that goes largely depends on how kind of productive that country is. Um uh so in in in back in the kind of the 40s and 50s you had almost the best case scenario the US still had very good demographics at that time. Uh they were a rising power. Um and so uh you know they were able to kind of do all that transfer financial oppression all the negative consequences that come from that. But then by the 50s they shifted more toward austerity uh and they shifted more toward growing their way out of it more than just continuing the debasement. Whereas in a more negative scenario, uh they never really get the the the wheels back on the track properly and you keep spiraling and spiraling and you get a more prolonged, more inflationary, uh more stagflationary type of environment where you keep devaluing the debt, but you’re not really getting the system rebalanced in any sort of reasonable way. And that that’s that’s the more negative scenario to worry about. Quick word from our sponsors. We spend a lot of time on this show talking about broken financial systems. As we all know very well, traditional healthcare is right up there with it. That’s where Crowd Health comes in. It’s a peer-to-peer healthcare crowdfunding platform. Here’s how it works. 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Is this are we at a place where we can get back to more austere practices and where you think that’s feasible or are we heading in the direction of continued debasement and you know trying to shift the burden to the future even further. I think all the signs point to continued debasement. Um because we’re we’re this this phase we have way worse demographics than back then. um uh and just a bunch of other factors are different. I think we’re more in that persistent debasement camp. Um with the caveat that uh if you avoid major energy crises uh at least you know over prolonged periods of time if you if you avoid uh the most extreme types of war basically things that really destroy productivity um then you can make that process feel less painful than than say something like the great depression or something like a wartime environment. um you know it’s easier to go through basement when you have modern technology right than than you know when you’re in a more an environment that’s more inherently strained in terms of resources. Um so I I think that it’ll be prolonged but the magnitude can be controlled depending on how you know how well society sticks together and how well um some of the details are handled. Mhm. And uh to your point about debasement, there’s obviously been a lot of uh in inflation that we’ve seen in in the system, you you you started to talk a little bit about broad money. Um so if we were to go a little further back before the 1920s and the 19 in 1913, uh you highlighted this in your book when the Fed was actually created, um there was about 19 billion in broad money in the US and that was roughly $200 per person. Um today that number is over 22 trillion in broad money. uh which is well over a thousand times more money um in terms of fraud money. So that’s basically been compounding at about 6% per year. Um on a per person basis that looks like 325 times more per person. So now roughly 65,000. Um this is quite you know shocking or just like you know crazy numbers to kind of kind of look at. I’m curious what was your reaction uh the first time you know you kind of pieced those numbers together? Yeah, these numbers often come out bigger than you’d expect uh at starting point. I think a lot of that is because people are trained to think about inflation through like the CPI or through prices going up. Um but when you look at something like over a century of time, um you have these cumulative productivity increases that actually do a lot to disguise the debasement. Um and so even though for example you know per capita money supply say goes up 300 times um it doesn’t necessarily mean that the aggregate prices go up 300 times because we’ve generally gotten more efficient at making uh at least most types of things. Um and so uh we get way more abundant goods and services but also this increased money supply and so you get moderately increased prices again over over a long enough time even those numbers are still huge but they’re you know they’re more like an order of magnitude rather than like two orders of magnitude uh during that time. Uh and so those those numbers that kind of are before any sort of productivity increases always tend to be bigger than than one would think. And they show also I mean inflation doesn’t show up evenly. it shows up more so uh in assets that that are kind of truly scarce. So over the long arc of time uh you know grain prices because we’re fairly good at making more grain when there’s when there’s shortages of it or after a season or two um you don’t really see grain prices for example keeping up anywhere near close to the growth of money supply. Uh whereas gold prices especially when adjusted for the minor debasement that gold has something like 2% a year um that actually does keep roughly up in line uh kind of the the estimated market cap of gold compared to the you know the the money supply um they’re pretty close numbers o over the over time and so you do see you know gold used to be you know it used to be um uh uh a much much different ratio than it is now. I mean, basically, you know, that that uh $2067 peg uh equivalent. Uh and now, of course, gold is is been knocking on the door of 5,000 uh above and below. Uh and so you really do get that 100 or 200 times uh uh shift uh in price level uh on something that’s more truly scarce. The same thing would be true for high quality waterfront property. like there’s a particular property I cited in the book that that you know had a growth rate that was kind of fairly close to money supply growth uh during that time and that’s pretty that’s pretty standard among uh kind of uh just the the the scarce types of property. So properties that are in a very valuable part of a city or a very valuable coastal area that you can’t really create a lot more of. Um and that’s where a lot of that debasement shows up and that’s where you do see those price increases that do kind of keep in line with those huge numbers. Mhm. And this is very important because as you mentioned, you know, not everything has inflated equally. Scarce things have have have gone up and have uh you know, dramatically risen in in value and price. Uh you know, but one thing that hasn’t for sure are are everyday wages for the everyday person. Um which is really why, you know, if you don’t hold assets in this country, especially scarce assets, you you feel like you’re just running in place. Um and we we all know the Federal Reserve, you know, they have their 2% inflation target. Um, you know, you you sort of call out in the book that um and mentioned that Janet Yellen, you know, in her final press conference, she said that one of her, you know, biggest failures or I think her single biggest failure actually um was or disappointment was failing to get inflation up to 2%. So you you take the opposite view on this and argue price deflation is actually a good thing. Um can you explain why that is and who it’s actually good for, consumers, businesses, governments? Sure, good question. I mean uh in in a very indebted system uh deflation doesn’t work because it you know you have all these IUs way more IUS than there is like a a base money and so if you do get deflation the pe the reason that so many economists and just so many people uh considered a bad thing is because they think of it in terms of these like debt busts that happen uh that that’s that’s generally when we get kind of deflation at least in in the broad sense. So people like you know they’ll think obviously that’s bad we don’t want to have that. Uh whereas when you have deflation in a more equity based system so when you have less leverage uh throughout the financial system uh it’s good for prices to go down. It’s good that for example televisions cost like the same as they did like 20 years ago uh because we’ve benefited from Moore’s law and just way better productivity over time that help keep a lot of those prices down. Uh tech deflation is great and and yet tech companies are some of the most valuable companies in the world even though they’re constantly kind of either holding prices flat for for long periods of time or even cutting prices uh especially on a on a quality adjusted basis. Uh and that’s all good. Uh and yet central bankers uh you know will do everything in their power to kind of make sure that prices keep going up uh despite the fact that we’re getting more productive in it. when you phrase like that, it’s more it’s funnier. Um, and and you know, in order to get say 2% average price increases over the long term, if you have an average of say 3 to 4% productivity growth per year, um, that really means you’re growing money supply by, you know, five 6% per year, uh, just to hit those kind of those 2% price targets. Um and because that deflation that that inflation does not diffuse evenly, right? So that’s when you have you know what what is the average 2% figure like? It’s like on one hand you had like manufactured toys and computers and textiles literally go down in price in many cases. On the other side of the spectrum you have like hospital services, education services. uh the price of those truly scarce things I mentioned, you know, high quality real estate, gold, art, like things that you don’t you don’t really automate or get better at making uh you know, way more than other things. Um that’s where almost all that that money supply kind of shows up uh in the prices of those things. Uh and when it comes to wages, who wins and who loses in this? We often think whenever we think of debasement, our first thing is that we usually think of our savings getting getting debased, right? So what do you store value in to avoid that? But the other side of it that is just as important is uh wages getting debased and more broadly any contract getting debased. So any anytimes uh a business sets prices uh anytime a employee has negotiated with an employer to be paid a certain number of units uh over a certain amount of time. uh the government can put their thumb on the scale and just create a lot more of those units which means that everybody who has those contracts in place has to now re renegotiate to try to keep up with the debasement that’s happening. They’re not just their savings but their income is getting debased. It’s getting it’s becoming a smaller share of the pie if they’re not on a very rapid treadmill to try to uh keep up with those growth rates. And if you have a slower growing money supply, um, uh, it it kind of basically whoever has the status quo in a negotiation usually has somewhat of an advantage. [snorts] Um, so, you know, someone, uh, is getting paid a certain amount and the money supply is not really growing a significant amount and they’re and they’re getting a little bit more experienced, a little bit more senior over time, it’s very hard for an employer to come in and say, “Hey, we’re actually going to cut your wages because, you know, deflation’s happening.” So um you know it’s just it’s the onus really is is uh the status quo has the the upper hand whereas when when money supply is growing by 7% per year an employee has to go to their employer every year and say hey um you know I know you want to give me like a 3% raise but I mean money supply grew 7% this year uh you know getting debased out of this if if you add this up over 5 10 years it’s significant and then it leads to things like when people stay at a current job, uh they often kind of fail to keep up, uh with that growth. And only when they kind of go out and re negotiate a new job somewhere. Um are they able to kind of recoup and kind of get paid what they’re currently worth, which is unfortunate because I mean some people just they didn’t want to change jobs. Um there’s an inefficiency in changing jobs if it was already a job that they’d liked and but there’s that lock in status quo effect. Um and then the same thing’s true. I mean, you know, I I I live part of each year in Egypt, so all the numbers are amplified, right? So, it’s you’ll have 20% money supply growth on an average year. [snorts] Uh, and I know, for example, small business owners. And if you go to them and say, “Hey, what are you doing with prices every year? Are you boosting prices by 15 to 20% per year?” And they’re like, “Well, no, that’s really hard to do.” And it’s like, “Well, all this money supply is getting created. It’s not going to them. It’s not going to that small business owner um or or the people they’re paying. Most people are not getting 20% wage increases. Most most businesses are not increasing their prices by 20%. And so you have that kind of treadmill effect where every contract is just harder to operate kind of the faster that dial is turned up. You Yeah. You you you also make this this point uh you know speaking about the the you know the the treadmill that folks are on um that um you know the current system is designed and currency policy framework is designed to constantly sort of discourage uh excess savings. you know, keep people on this treadmill of consumption and borrowing and, you know, this might support continual growth and, uh, you know, economic growth. But, um, it kind of reminds me of like, you know, ask not, uh, what your country can do for you, but what what you can do for your country. [laughter] Yeah. And I mean, that’s that’s part of like all these policy makers when they’re dialing around their knobs, um, a lot of it is trying to pull forward from the future as much as possible. you’re kind of optimizing quarter by quarter, year by year. Uh, and you’re kind of saying, well, let’s let’s get people consuming more. Let’s keep people uh on that treadmill more. Um, and after years and decades, I mean, I think that accumulates a lot of negative things in society. I mean, part of it is anything ranging from like environmental factors like the fact that we just have cheap cheaper, more um replaceable things now, things don’t last as long as they used to. um uh to just you know financial stability uh that people kind of like you keep kind of debasing wages, keep debasing savings um have that kind of very opaque system and then people constantly feel like they’re they’re being left behind and mathematically they are. H how do you think people should think about this predicament that we’re all living in then? And how could they respond to improve life for themselves and their family? Uh well the hardest part is going from zero to one in a sense that uh once once you have assets uh you’re more the beneficiary of the system because when you have a system where cons increases the number of currency units in the system by a pretty significant amount. Uh generally speaking the wealthier or or more connected you are your borrowing rates are lower. So for example the government has very low borrowing rates a top tier corporation has very low borrowing rates. A wealthy person has moderately low borrowing rates. And then as you get to the say the poorest person their borrowing rates are are awful and that’s normal. Uh but the problem is you know in a sound money system uh that has a certain amount of effect which which which you know is limited. But if you’re in a system where you have all that is true but then you’re constantly debasing the monetary unit very quickly your borrowing rate is super important. Uh so the once you have a once you have a system where uh you you’re you’re constantly growing money supply by let’s say 7% in the US and and 20 you know 15% in a developing country um uh you what you want to do is own scarce assets and then basically short the fiat currency right so people take out 30-year mortgages on their house they they re you know they they have business equity and then the business kind of decapizes itself by by issuing bonds they don’t need to issue with with the primary purpose of shorting the currency and buying back their own, you know, more scarce equity or making acquisitions and things like that. Um, so once you get on that asset treadmill, uh, the system really kind of rewards that and gets that flywheel going. The hardest part of course is when people are are starting a position where they don’t have a ton of assets, they’ve got to invest in themselves, uh, in terms of education or training. Uh, they usually have to grind really really hard, uh, to, you know, because you have all these just regular expenses, you have an income. uh we’re in a very pretty global competitive world now. Uh and so you have to kind of do something to to get ahead, boost your savings rate. Uh and after a number of years, you you can find yourself in a position where you do have those assets, then you’re you’re kind of starting that flywheel. Um but compared to a a system where like the money unit itself is sounder, uh they’re just more stacked against that kind of zero to one moment. Let’s talk a little bit about what central banks around the world have been doing in this uh environment. I think that’s really interesting. So, we’ve seen, you know, gold’s price has had this massive run up last year in particular. Uh central banks globally have been increasing their gold reserves since 29 uh 2009. You point that out in the book. Um show a nice really nice chart with that. Um you you argue that you know since 2008 you know central banks have been moving quietly toward uh this multi-olar neutral reserve system. Um is gold in fact the neutral reserve asset the world is starting to converge on and does that help explain the sharp runup that we’ve uh seen gold’s price recently uh around the margins? Yes. Um and if if you go back in history people will often point to prior reserve currencies before the dollar. Uh but it’s a little bit of a misnomer because back in those eras it was precious metals that were actually like the reserve currencies and other kind of paper instruments were really like the layer on top of it. What makes the current system different is that the treasury secretary uh that the treasury bond uh treasury security is the actual kind of unit uh that that the reserves are based around. It’s not tied to precious metals in any direct way. And so for a multi-deade period uh in in kind of the the say the the second half of the uh 20th century and in the early years of the 21st century you had this kind of growing dominance of the dollar um where uh c central bank tonnage of gold was like gradually going down uh and they were they were instead you know holding a lot more treasuries over time. And at the time you reached like the early 2000s that was kind of like the peak era of gold price was super low. The UK famously sold a lot of gold like roughly right at the bottom. Uh you had kind of peak uh exposure to treasuries. That was also a time of peak US demographics. Uh kind of our you know some of our best economic figures were happening in that kind of late 90s early 2000s environment. Um and so that was kind of the most dollar focused the world got. Um then when you had the global financial crisis uh and the aftermath of all that you started to see a a gradual change where central banks were no longer reducing their tonnage of gold in aggregate. They started to over over many years gradually increase their tonnage of gold. Uh and then by 2014 or so uh you had countries kind of go on a little bit of a buyer strike and and not really be accumulating treasuries at least on the official reserve level. So the private sector was still accumulating them not as fast as they were being issued and so you have you know overall international ownership of treasuries is down over say a 10-year period but especially in the official kind of the the reserve sector it was like flattish for like a decade uh a lot of that was China they they literally came out publicly in 2013 or 2014 and they said it’s really no longer our interest to keep accumulating treasuries. [snorts] Um uh so they didn’t it’s not like they fire sold the treasures they had. They just said okay any additional surpluses we’re getting we’re going to put into like belt and road initiative loans and you know gold tonnage and things like that. Uh and that you know they were obviously the the biggest player to do something like that but you have a many of other countries doing the same thing. Uh and then we started to see a rise in the price of gold. Uh and so the combination of increased tonnage of gold owned by central banks as well as not really accumulating a lot more treasuries by central banks. And then when you when you add the the price increases, um gold is now a much larger share of reserves than it was 5 10 15 20 years ago. Uh but historically when you go back far enough that’s normal. um uh you know it’s normal for there to be kind of a neutral reserve asset uh that is you know that countries can self-custody of themselves uh that is very resistant to debasement uh rather than all countries primarily converging on one country’s fiat bonds as their primary reserve asset. So, we’ve kind of we kind of shifted back to this. And to answer your question, the world has converged on gold really as kind of the best uh like largecale neutral reserve asset. Um but that’s I mean it’s not like they it’s like a new thing. They’ve kind of reconverged on it. Uh it’s almost like it never fully left and they kind of rediscovered it as the you know the main kind of competitor that the Treasury bond as that’s kind of our country’s you know slowing down demographically. uh it’s more indebted than it has been pretty much any other time since World War II. Um uh and so there’s this kind of renewed interest in the benefits of gold. Now, Bitcoin is an interesting one because it’s both a settlement rail and a storage asset. Um so that is like a new one that they really should be looking at. Uh but the challenge is that you know it’s it’s like a 20th of the size of the gold market, right? So you you know the the the assets that function on this level pretty much have to be huge and liquid. Uh so Bitcoin is more of like an emerging um possibility there rather than something that they have the choice to kind of converge on today. No, that’s great. And I definitely want to circle back to that quickly, but before we get there, I was going to ask you like how do you think this ties into the US government uh using asset freezes as essentially a sanctioning tool? uh you know most prominently uh recently we’ve seen that with Russia in 2022. Um what does this practice sort of imply for the US relationship in particular with Saudi Arabia that prices all of its oil and dollars um and then also China um which uh you mentioned there briefly which you know is the the world’s largest exporter of uh manufactured goods um and they also just hold you know lot lots of uh of treasuries. So asset seizures and asset uh confiscations and freezes those are like it’s a tool where like the more you use it generally speaking the less powerful that tool is going to be. Uh and so for example when years ago when the US say does it to like you know uh a tiny pool of reserves in like Afghanistan for example uh the rest of the world kind of looks at that and says I don’t really care about that. That kind of makes sense. Um, but when you do it to something like Russia, a much bigger entity, uh, there’s a lot of players in the world that say, “Well, if they’re going to do this quite a bit, uh, I have to be careful about how much of my reserves I hold in in treasuries.” I mean, if in theory, if you had 100% of your reserves in treasuries, then literally, you’re not really a sovereign country at that point. One country that’s external to you can just for if they if for whatever reason they want to pressure you, they can just shut off your reserves. They can just freeze or take your reserves. Um and so countries say well okay we have a couple options. One is we can diversify you know we can have some in the US some in in Europe some in in China some in in others. Um uh in Russia’s case for example the if they were holding euro ones they also ran into to the similar issues because the US and and euro were kind of on the same page there. Um so it really kind of limits options uh for a lot of these countries. So that’s why a lot of them will say well no one can just freeze my gold unless they are going to invade and take my gold which is expensive and and you know politically costly to do. Um it it really puts you know just more sovereignty back in the country. So it kind of for them kills two birds with one stone which is one uh it’s debasement resistant so you don’t have to worry about the solveny of of a country’s bond system and then two you don’t have to worry about that that instant confiscation factor or that instant freezing factor. Um and so as you see a more multi-polar world, I do think it it makes more sense uh that that that you know there’s more entities ex interested in self-custody uh at the sovereign level. One follow-up question I had about this is like why do you think um you know countries are holding other still continuing then to hold other countries currencies at all? Like why not just hold their own currency the neutral reserve asset or a neutral reserve asset um and acquire other currencies when needed? Uh good question. I would say there’s two probably two big variables there. One is is sort of existing political relationships and tradition which is you don’t really want to rock the boat by changing things very rapidly. Uh you know if you’re China you can probably make big things decisions like that and get away with it. Whereas if if you’re in any way relying on good relations with the country that you’re holding a lot of bonds of uh you don’t really want the optics of of just rapidly changing your reserve practices. Uh so that’s where like around the margins they’ll say well we’ll kind of keep what we have but we’re going to add elsewhere over time. So it’s just these things tend to be gradual for kind of these these geopolitical reasons. And the other one is um so the vast majority of crossborder debts are denominated in dollars and when a when a central bank is trying to hold reserves um there’s two main there’s a a handful of things that they can do with them. one is they can uh you know buy back their own currency uh if their currency is weakening significantly. They can sell reserves, buy back you know their own currency uh and and you know kind of take some of the pressure off of it and the lower volatility the thing that they’re holding is the better for that purpose. Right? So you know gold can you know has in the past gone down pretty significantly. Um and so they want to know that that that those numbers are going to be there. But then two, the other thing they can do is you’ll see a you’ll see like a lot of dollar crossborder dollar loans or dollar securities uh kind of the broader Euro dollar system. It’s something like an $18 trillion crossber US debt system. Uh even more when you look at derivatives and stuff. Um and this is okay. All of our banks in our country, we’re an emerging market. All of our banks owe dollars uh to to various other foreign entities. Ironically, usually not to Americans, usually to like European lenders, Chinese lenders, whatever the case may be, but they owe dollars. Um, and if you have a dollar shortage, like let’s say uh, you know, a pandemic comes along, you lock down, the economies, the flow of dollars just slows down dramatically, but you still have these dollar debts uh, that you that are pretty inflexible when you owe them. uh uh the central banks is well we want to hold some dollars on hand uh because that matches the liabilities that a lot of our our uh place has. It could be that the so sometimes a sovereign has dollar denominated debt. Uh sometimes big corporations and banks uh in their jurisdiction have dollar dominated debt. So they want to try to match assets to liabilities to reduce a kind of a liability squeeze and the US because we have like I mentioned something like 18 trillion in crossber uh dollar debt. the US has a pretty significant kind of option they can do at any time is they can really disrupt the the flow of dollars globally uh and really spike the dollar at least temporarily and that does start to have very rapid negative ramifications for the US when it happens uh but but the the most fragile countries will generally break first. So if a country does not have almost any dollar reserves but does have dollar liabilities they can be in trouble very quickly. um whereas one that does have more dollar reserves uh and is kind of matching their assets to liabilities is more protected uh against kind of uh rapid changes in in currency fluctuations like that. So it’s I said I’d say the reason they that they still hold fiat currencies as all is one because of those existing geopolitical relationships and two because they really do need that kind of low volatility asset to liability matching for at least a you know a significant part of their reserves. maybe not 100% like they were kind of almost shifting to. Um and it’s almost like gold is like the the part of the reserves that they hope to never touch. Uh it’s it’s slow to sell. Um it’s uh you know it doesn’t directly match your liabilities in the current system. Uh that’s more like your longer term storage. Uh whereas dollars uh they can sell them very rapidly uh and they they generally match the types of liabilities that that entities in their country have. Well said. No, that makes a lot of sense. and you started to hint at the potential of Bitcoin uh becoming the neutral reserve asset in the future. I think many people watching this show would like to see that happen um and that neutral reserve asset to be Bitcoin, not gold. Do you think uh Bitcoin will be the world’s reserve currency one day and widely held by central banks? And if so, what would it take for Bitcoin to actually clear that hurdle? I I think it has the potential to be in in the sense that it is designed in such a way that it that it has that capability. Uh right now it’s I mean it’s a 17-year-old asset. Um it’s I mean currently under a two trillion market cap for at the at the higher end of its price point it was over two trillion market cap asset. So it’s still even even on its on its best day it’s still fairly small in the global sea of capital. Uh you know at the best it was like 10 times it was like a tenth the size of the gold market. Now it’s like a 20th the size of the gold market. rough numbers. Um uh and so uh but the what what’s interesting kind of for it is that like I said before one it’s a store of value. Uh gold gets debased by 1 and a.5% or 2% a year on average. Uh Bitcoin has no long-term debasement uh after it it’s it’s kind of finite uh block subsidies kind of hit their their ceiling. Uh you know by the 2030s we’ll have like 99 90% of Bitcoin’s min. And two, uh, when countries want to have these alternative payment systems, they can’t be shut off by external entities, uh, Bitcoin’s a fast settlement. Instead of literally just flying, you know, planes of gold to each other or relying on a credit based system, which again can just be frozen or or confiscated in many ways, um, a Bitcoin transaction can be sent and audited, uh, depending on the size and how many confirmations you’re looking for. I mean, within the hour. Um uh and so uh there’s a there’s basically both a settlement and a store of value aspect that’s really valuable. I think the headwinds against it one is still too small. Uh it’s something that as an as you know some countries can dabble in to a varying degrees. Um but no countries can say this is like our very few countries say this is our primary reserve asset when it can go up and down by 80%. Uh in a very short period of time. Um I think there’s they want to see it operate for longer, right? So there’s always kind of new technical FUD in the way. Like there people say, “What about minor centralization? What about quantum? What about this and that?” When a system’s run for 17 years pretty well, they’re like, “Okay, you have my my attention, but let’s see what it looks like at the 30-year mark or the 40-year mark. And if at 30 or 40 years Bitcoin is much larger just because more and more private entities have decided to hold it and around the margin some uh sovereign wealth funds and central banks have decided to hold it, it can become more self-reinforcing over time as as kind of if it if it continues to not be truly disrupted by technical threats. Um it kind of gets more and more lindy that the Lindy effect kind of increasingly kicks in as well as that self-reinforcing size and liquidity uh over time. And it it makes sense they would show up in sovereign wealth funds generally earlier than central bank reserves because a sovereign wealth fund the the purpose of one of those is is more more for longer term investment. Um and so when you have a very volatile asset like Bitcoin, it doesn’t match any of your liabilities. Uh it can it can go up dramatically in price or it can fall dramatically in price. it’s generally not the the asset you’re going to keep on hand for like working capital reserves where you’re going to like sell some to backs stop your currency. Uh instead you’re you’re more looking at as a longerterm investment. Uh so you stick into something like a sovereign wealth fund. Uh whereas the the central bank reserves themselves, they’re generally meant to be lower volatility assets, you know, treasuries and gold and things like that. Uh even currency deposits. Um, and so I think it has to it has to kind of climb that ladder in terms of how widely held it is, how much is that over time, increase the market cap, increase liquidity, reduce volatility, uh, keep proving that it can survive various technical questions or or challenges. Um, and then the more it does that that I think the more it can be attractive as a as a reserve asset. Mhm. And to better understand how we potentially get to this um you know new reserve asset, it’s important to also understand you know how we got to this current system in the first place. I think a lot of people um view the current dollar-based system that we live on dollarbased fiat system as you know just how money works. Um but you know it’s actually quite young you know barely 55 years old. Um, and you you argue in the book that the system that preceded it, the Brettton Woods system, uh, was destined to fail from the start and ushered in this new modern fiat system that we live in today. Why do you think that failure was inevitable? Uh, because they backed the dollar by gold. Uh, but they didn’t have any mechanism that slowed down the creation of new dollars. Uh so and it’s almost like a tragedy of the commons because if you go if you go back earlier to say a free banking system where the money is gold and silver and uh banks are holding gold and silver sometimes they’re holding other assets like other other you know uh securities from other banks and stuff like that. You have to kind of cross ownership. Um but they have to be kind of very careful about how much loans they’re making compared to how much they’re keeping on hand. Uh whereas when you have a multi-layered system like when you have um uh commercial banks that are holding no gold uh they’re making loans and by by making loans in a fractured reserve system they’re creating broad money. They’re built on a central bank that is ironically not holding gold anymore either. That’s been shifted to the treasury to the executive branch. Um and they can increase their monetary base over time. So you have a a growing kind of broad money supply built on a growing base money supply. uh and all that is untethered to the amount of gold that the treasury holds. Uh so all these banks are making loans, all these things are happening and no one’s saying well what’s the current ratio of all these loans outstanding to how much gold is in the treasury’s vault. Um and so so during that kind of Bretton Woods environment uh let’s say 1950 to 1970 kind of a 20-year chunk of it. I use that as one of the data points in the book. uh you’ll have like broad money supply tripling uh and gold’s not doing that. And so more and more entities around the world are redeeming their dollars for gold uh because it’s just way more dollars uh than there is gold. Uh and so without a mechanism that slows down dollar creation uh and keeps it roughly in line with with gold creation, uh a peg will inevitably break. Uh and it did. And with our current financial system, uh, fiat system that we’re in today, do you think we’ve given up control of our money to the banking and financial system in a way that’s irreversible, um, at this point? And, you know, or is there something that can be done to sort of reverse this? I think in the long arc of time, nothing’s truly like irreversible. Um, I think it would take a quite a while to to reverse the system. One of the things I focus on in the book is that you can kind of divide um like finance in a in a few different eras. So there’s the era before the widespread telegraph uh which was information could not really flow any faster than people could could move around. There’s really no there’s no way to send high bandwidth information. I mean you could send it on pigeons or like fire signal stuff. Those are extremely low bandwidth ways of of sending fast information. Um, so any sort of like pretty high bandwidth information could only go about as fast as like a human on a ship or a horse. Um, uh, and but once we invented and then more importantly widely deployed the telegraph. So you’re starting to look at that point the late 1800s and really even the early 1900s for kind of the broader world especially the you know the Pacific. um you have all these cross ocean crosscontinent telegraphs and we’re now in an environment that’s like the second age where we can send information around roughly at the speed of light globally. Uh and but if you can send information it means you can do transactions rough at the speed of light because a transaction is as simple as an IOU. Um so all these all these transactions can now move around at the speed of light. Financial agreements can move around at the speed of light. Commerce has rapidly accelerated like the the time and space that it operates in. And yet you still have gold as a settlement layer. Uh which means that in order to kind of use that um we we rely on intermediaries. We rely on major commercial banks and central banks to hold the gold and beam all these IUs around back and forth. Uh- which kind of gives them a lot of power compared to what they had in in kind of that pre-telecom environment. Um, and when you live in that sort of mismatch where you have fast transactions but slow settlements, um, there’s not a lot of ways out. Uh, it’s it’s one of those things where like for thousands of years, humans settled increasingly on gold is money because it’s like the it’s like the the commodity you can increase the supply of the slowest relative to existing supply. Uh but for the first time once we entered the telecom era speed became a really important variable in money rather than just kind of scarcity durability and all that. Um and the the kind of the newest age is when you have Bitcoin uh we’ve actually invented uh fast settlement. Humans have you know they they’ve kind of for the first time been able to find a way to make irreversible transactions. So final settlements happen roughly at that speed of light scale. You know maybe not instantaneous but within minutes uh you know within the hour. Um and so that kind of uh over time can reduce the importance of intermediaries. Uh you you become less reliant on having one big entity hold a big pot of gold or just run a big ledger that we all have to use. You’ve actually kind of found a way to create this more decentralized way of doing things. And then the problem of course is you know that had a bootstrap from literally zero. Um uh it had to go through all these technical tests. So it’s not something that you can just snap your fingers in and then it just it’s you know it’s just everywhere now. Uh so that has to be kind of tried uh and grow for decades before it becomes a true alternative. So, you know, potentially the kind of the way out of this is, you know, when you have Bitcoin be a large enough system, uh, and you say we don’t really need intermediaries as much as before. They’re more optional. Uh, we can get certain efficiencies from having intermediaries. Uh but at at a core level, kind of like how central banks can hold gold in their own vaults, uh you can have a lot of pretty large entities uh just transfer things uh through this more decentralized network rather than rely on intermediaries. Uh so when you have a money that’s you know as fast as dollars but as as durable as gold uh it really challenges um I think the current system and this reliance on intermediaries um particular banks um you know this this loss of control really shows up uh in very concrete ways like when banks fail uh we saw this uh you know a few years ago with um Silicon B is probably the the the clearest example um but you know we’ve also seen versions of this before and since then. Could you maybe walk us through how our modern system is, you know, systemically designed to repeat these sort of crisises that we’ve seen with uh these uh bank failures? Uh good question. I mean ultimately it comes down to fractional reserve banking uh which is a confusing term to a lot of people but you can think of it more as like liquidity mismatch banking uh which is that if you have a hypothetical full reserve system it doesn’t mean loans are not being created. uh it means that loans are backed by savings of similar duration. Um and so the the the primary kind of issue with the modern banking system that that leads to these is that um they’re borrowing uh deposits from consumers and businesses. The vast majority of those are demand deposits rather than time deposits. Meaning that that the the lender the you know the depositor can take their money out at any time within normal banking hours. So they can take them out on demand and the bank is taking these what are effectively very very short-term duration loans or like unknown duration loans and then they’re making a variety of loans with on average longer terms. In the extreme sense, they’re they’re borrowing from a checking account and they’re they’re lending for a 30-year mortgage. Uh but even in the less extreme sense, I mean, they’re they’re making a 5-year business loan, for example. They’re they’re making a uh car loan. they’re making some other type of of uh basically less uh like a longer duration less liquid uh type of loan. Um and that one it increases the the the broad money supply when you’re when you’re making fractional reserve loans. So it kind of leads to that debasement we talked about. than two. It means that a bank a bank can do everything right in terms of make loans that rarely default and yet through no fault of their own they can find themselves inoperable if say 20% of their depositors just flee for whatever reason. Um uh they’re kind of they rely on like just just the the you know the the good graces of their lenders uh as well as other banks being able to come to the rescue. Um and so you have that kind of more inherently fragile system uh which is occasionally prone to these crises and often the way that they put out a fire when some of these uh things happen is they they increase the base money um because that’s the system we live in. They can increase the base money uh pretty easily. And so usually uh instead of a a bank uh you know defaulting on deposits uh instead we kind of diffuse the problem more broadly uh through the money system. And in Silicon Valley Bank’s case, I mean B, yeah, they so they had a rapid uh growth in their deposit base uh large on the back of of kind of the inflation that happened. Uh but then also because they were operating in a in a space that was pretty hot. Um so they take all they have a massive uh increase in deposits. They take those they they buy longer duration treasuries and mortgage back securities. Uh then the Fed rapidly raises interest rates. Uh so the value like the the the price level of those treasuries and mortgage back securities goes down significantly um and the bank finds itself on paper insolvent. Now if they could just hold those to maturity uh they can eventually recover from that insolveny. Um but if if after that happens a number of investors kind of notice what’s going on and they start pulling their money out. um you know they made all these like longer they they bought these like more ill more um uh illlquid or or you know longer term or or types of of securities or loans that can lose uh uh price levels. Um they get forced to sell at a loss at an inopportune time and can’t meet all the deposit redemptions. Uh and that’s that’s an artifact of the current system. And why do you think it is that when you know these crises are taken to the extreme and entire currencies fail uh citizens of those countries tend to turn to you know a newly issued fiat currency or use another country’s fiat currency so the dollar uh rather than looking to to hard money. Uh I I mean I think there’s a number of factors. I think one is that speed is still an issue uh that they want a system that operates very efficiently. um uh whereas you know uh gold at the base layer is slow and sluggish that that’s kind of its main limitation. That’s why kind of the fiat currency system is able to grow around it. Um is because for the first time speed really mattered uh and and the physical movement and auditing of precious metals uh is just a lot harder than uh uh settlement with securities and other kind of fiat settlement systems. Um uh and so Uh yeah, when those when when a developing market has a currency failure, uh they often find themselves dollarizing for a period of time and then potentially restarting their own fiat currency, uh rather than saying, “Hey, we’re going to run some full reserve gold gold back system that the Austrian economist would love.” That’s that’s just gen that’s not what happens in practice. It kind of reverts just resetting the the current system. And I think that’s probably going to keep happening unless or until uh technology is good enough that that that there’s just you have scarcer money that’s just as fast, that’s low volatility, that’s liquid. Uh and you need something like Bitcoin with an extra zero on the market cap or more uh to have something like that. No, that’s that’s that’s fair. That’s fair. Um there’s there’s a line in chapter 13 in the book where you write that over the past 50 years the United States the empire grew while the United States the country stagnated. Um if we could have a little bit of fun here now if you could take one seat for a full term president uh treasury secretary or Fed chair uh which seat do you think would give you the most leverage to actually fix what’s broken? Uh, and what key policies would you change and what new ones would you put in place? Well, president’s the most powerful because you also get to put in place the Treasury chair. Um, uh, so you kind of get two for one, uh, with that deal. Um, uh, the I think the the answers are really unintuitive to a lot of people because, you know, part of being the reserve currency, you get massive benefits, but it does come with pretty massive costs as well. and those who benefit and those who pay the cost are two different groups generally speaking. Uh so who gets the benefits of being the global reserve currency? Well, I mean primarily what the global reserve currency means is that most currencies they trade on a couple main things. Interest rate differentials, uh how quickly their money supplies are growing, what their trade balance looks like. So, you know, if you have a a country that’s low on many of those metrics, it’s it’s not paying an interest rate that’s that’s attractive to to foreign entities that want to hold that. They’re running a trade deficit, uh their currency is often going to weaken. Uh and and a country that has the opposite factors is likely to strengthen its currency. Um in addition to things like how much reserves they have, so the market sees that they could defend it uh if they wanted to. Um these these factors all matter for the the global reserve currency. All those factors still matter, but then layered on top of it, there’s this extra demand that’s pretty inflexible for for dollars in this case for two main reasons. One is because almost every central bank in the world is holding uh a lot of just treasuries for the long term just as a core savings uh unit. Uh and two, because you have all this crossber dollar debt, there’s all this inflexible demand for dollars. Uh and so you have you have this kind of relentless bid for dollars. Um if the and so that then the challenge there is if the dollar is going to be the global reserve currency it means entities around the world have to have a lot of dollars. Uh you can’t have a global reserve currency where all the dollars are in the US. Uh if if if people are using it if if if the international market is using it for crossber lending crossber savings and all this it means we’re getting a lot of dollars out into the world. And then the question is what is the mechanism for which we do that and primarily is through trade deficits. Uh and the mechanism for that is that the whole world kind of structurally overvalues the dollar because in addition to all the normal reasons why a trader might want to hold a currency for a period of time, there’s this extra bid for dollars. Uh it boosts our uh import power. It hurts our export competitiveness, especially on lower margin stuff like manufacturing. Uh and so as a result, we spew dollars out into the whole world year after year after year. Uh and uh so who benefits from that system? Well, if you’re the US government and pretty much everyone in the world is using your currency, um you get major like uh uh uh transparency and surveillance into what’s happening. Uh and you get that sanction ability we talked about before which is that you you know in a targeted sense you can you can block or freeze any entity you want. Uh so the the government has a lot of power. In addition the currency is very strong. So they’re able to go out and have more foreign military bases. Um they’re able you know the commodities are priced in the currency they can literally print. Uh so during a crisis they can often print more money with less disastrous effect than if a non-reserve currency tried to print that ratio of new money. Um and so it kind of gives the the the issuers of that money a lot of power. It also benefits um securities issuers right because the whole world wants to hold dollars but they also want to hold you know US equities and things like that uh US bonds and credit instruments. Uh so if you’re in New York and you’re in the issue of uh selling securities, it’s pretty good. So basically if you’re in the dollar export business or the security export business, uh you’re in pretty good shape. If you’re in part of the country that wants to manufacture stuff, um you’ve now been put on hard mode. Um because those dollars are going to get into the rest of the world. uh there’s a structural bid for them and they’re going to come through the trade deficit and they’re really going to start with the lowest margin stuff first and eat its way up. So, if you work in tech or healthcare, you might not notice because you say, “Well, um, you know, you you’ve got kind of unique enough assets, uh, high margin stuff where you can, you know, you can still be US-based and and do great, but if you’re in that lower margin area, um, it’s much much harder for you than it is, let alone compared to other developed countries, but especially compared to developing countries, but even even in countries of a similar level of wealth, um, just that they don’t have that kind of structural bid for their currency that forces that trade deficit open. Uh and so it’s a long way of saying that we a after many decades we’ve we’ve really built up a really huge imbalance which it means our industrial base has really stagnated uh because starting new new manufacturing in the US has just not been the winning strategy for for most uh entities. Um and so the I think the goal of a president is to say okay how can we start reversing that? Um and ironically it it involves giving up a portion of the global reserve currency. It’s basically saying we actually support having a more multipolar world uh in terms of neutral reserve assets being popular. Um stop storing excess value in our currency and our bonds and our in our equity market. Um which allows our currency to trade at a fairer value uh and boost the power of our manufacturers. Um the the problem though is that when you’re the policy maker, you’re you’re basically saying we’re going to give up some of our policymaker power for our private sector. Uh which is why it almost never happens. Um but yeah, if it was me, I would kind of more shift toward that more balanced approach of encouraging other countries to hold neutral reserve assets. Um and so that you know you become a one major currency instead of like the de facto currency that that excess savings are stored in uh because that would help relieve the burden that we have to just issue trillions in trade deficits every year. All right, Lyn, this this has been a great discussion diving deep into uh your ideas from the book here. Um you know, which many people, you know, credit to changing their views on Bitcoin and helping them understand what’s going on um in you know, our our our current system and how we got here. Um but were there any ideas in the book that you wish you could rewrite? Um are there any you’d add now? Anything you regret adding? ones you think uh were commonly uh misinterpreted? I don’t think so. I think it I think it hit roughly how I wanted it to. Um the book’s been wellreceived. One of the one of sometimes people have criticism of it which is the first half is like, you know, very macro finance and then it dives pretty heavily into Bitcoin and to some extent other digital assets. Uh so some people find it a little bit jarring, especially if they come in kind of a very opposed to that second half. Um uh but I don’t think I’d necessarily change it. It’s just that that’s that’s the the challenge of writing a book like that. Um when I think about what I might write in the future, I have thought about you know that it would be useful to have a more streamlined financial text. So I mean Broken Money is a 500page book roughly. Uh it’s a pretty comprehensive read. Um it’s it’s accessible, but it is kind of long. Uh, and so I I think that there’s certainly room for a more streamlined version of it that focuses it’s able to kind of focus on more specific aspects rather than try to build the whole foundation. So that’s kind of like the that one’s like building the foundation from literally like hunter gather times like the what is money uh and kind of building up that full stack uh which takes time. uh versus saying, “Okay, well, so if you want the super comprehensive treatment, go to that one. Uh but if you want a more actionable uh readable, concise one that’s maybe half as long, uh I think there’s a room for that in the market.” Yeah. And it was very, very, very, very well done and like you said, very wellreceived. Um folks can see that online through all the reviews and things like that. Um but just was curious there about that. with the rest of the time that we have together, I wanted to spend it on talking actually about, you know, why, as Michael Sailor would put it, Bitcoin is hope. So, with Bitcoin as the um potential solution or a potential solution to our broken money and financial system, um you know, why why why is it do you think that it came up during 2008 during the heat of the financial crisis? Is that a coincidence? I actually partially probably yes. I think the interesting thing about Bitcoin is that it came about as early as it could have technology-wise, right? So, uh it needed the world needed to have a certain amount of bandwidth for Bitcoin to work properly. Um in addition, it had to have the right types of encryption. So, the encryption that Bitcoin uses, I mean, it was invented in like 2001 or something like that. Uh so, a lot of these a lot of these pieces had had kind of just fallen in place. And in fact, when Satoshi, you know, in his initial um mailing list when he’s like, “Hey, I I have this this paper here uh and he’s he’s almost like it’s almost like a thesis defense when you read those early emails before Bitcoin was launched, but when the white paper was out and he’s discussing it, the the the other than how Finny, the response in that uh mailing list was pretty lukewarm or pretty skeptical uh because a lot of them were like, “No, the scaling on this is is rough. uh the the the bandwidth you’re talking about is so constrained and you’d imagine I mean if someone tried to make that 10 20 years earlier it’s like the the the bandwidth the amount of transactions you could you could settle in a period of time would just be super low um and a lot of the world just wouldn’t really be able to even use it properly. Uh so I think it kind of came roughly as early as it could have like within a few years of how early it could have come. Um, but I do think that, you know, the when you have the global financial crisis and you have other factors, it really does help sell the idea. I mean, the the fact that he’s able to uh time stamp a bank bailout into like the genesis block. Uh, that’s I mean that’s like immortalized, right? Um, and then in the aftermath as you have, you know, throughout the 2010s and 2020s, people increasingly they they have lower confidence on average in their government. They have lower average confidence in major media, lower average confidence in the banking system, especially I mean the whole bank bailouts of the global financial crisis. You got the rise of the Tea Party on the right, Occupy Wall Street on the left, just this more and more kind of push back against the the kind of the establishment system. Um, and I think that a lot of that did fuel Bitcoin. uh if things were working great uh and this technology came out, I think it probably would have had slower adoption uh then then the fact that the tech level and the kind of where we were in that long-term debt cycle we talked about kind of coincided. That’s probably the part that that’s pretty lucky. And just for the people in the back, could you sort of hit on why Bitcoin is the right solution uh to uh our broken money system? I I mean at the core of it I think it’s because it’s the invention of fast settlements. Uh so it it’s it’s most technological innovations are layers on top of the current system. Uh which is that almost every friction in finance gets solved by another layer of centralization. Right? So if if two people are having frictions doing finance, they say, “Okay, we’re going to go we’re going to use this banker.” And so whenever I want to uh whenever you sell me stuff, I can just say, “Okay, subtract from my account, put it in his account, and vice versa.” Uh now, if we have m if there’s multiple banks in a region and we’re getting annoyed by the frictions of what what if you use a different bank than I use, um then they they start establishing kind of a central bank that kind of connects a lot of those banks and allows those to settle very quickly. Uh and then when you have international uh operations, you say, well, we kind of need like a super central bank that a lot of ours can kind of connect to. Uh and so you get you get like four layers deep of increasing centralization. Um and what’s interesting about Bitcoin is I mean a lot of that is basically gold is slow. Any sort of like just settlement is slow. Uh transactions globally want to be very fast. So like I said before, we we became increasing reliant on these centralized intermediaries. Um, and Bitcoin comes along and says, “Okay, you’ve had a century and a half of a technological mismatch of fast transactions but slow settlements. Here’s the invention of fast settlements. Uh, meaning that you can send value in a way that is irreversible. Uh, and that no one entity can just reverse that transaction. Um, uh, and uh, so then you you test it for years and decades. uh you see that it that that it works because I mean you could propose the idea and it works for a couple years and then some instability uh makes it not work. Uh this is the first one that kind of had a lot of pieces together um that really kind of made it work. Uh and that the difficulty adjustment in particular uh was a massive uh step forward. There were there were attempts before like the closest one would have been something like reusable proofof work tokens uh that Hal Finny uh had had kind of put forth. uh Satoshi kind of continued refining ideas that were like that and made the system that works. Uh and the significance of it is uh now people can can on a decentralized network store value that that can’t be debased. Uh and they can send value in a in a permissionless, you know, decentralized way. Um and to the extent that that grows over time, it’s a pretty big competitor uh to the current way of doing things. It’s at least an alternative. Um and I think it’s the right solution because when you look at the history of what of you know what makes one protocol win versus another uh you know generally when a when a protocol becomes solidified uh it’s very hard to disrupt and become self-reinforcing. It’s kind of like uh why do we have Ethernet as our kind of primary networking uh protocol? Uh surely someone could make a slightly better one. I mean it does improve over time. it gets faster. But the main reason is that no matter how good one you make, unless it’s like an order magnitude better, it can’t compete, it can’t compete with the fact that there’s like already 10 billion devices in the world that have Ethernet ports on them. Uh same thing with USB, same thing with uh you know building on simple mail transfer protocol or TCP IP. When you get these protocols in effect, they have network effects that are very kind of self-reinforcing. uh and Bitcoin uh it’s kind of the the the protocol of value transfer the protocol of of kind of digital money. Uh and the other thing that that protocols have in common first you know you have that early lead you kind of establish that that that dominance but then two the the best protocols are generally very simple uh and and they they generally scale through layers. So the the core thing that no one can control kind of has to be really dumb and simple. Uh because if it if it’s got to be changed a lot or there’s a lot of variables that are tweakable, uh that kind of implies there’s going to be a lot of governance there. Uh and there’s going to be kind of disagreements and and more attack surface for how to, you know, tweak those variables. Whereas when you have the core thing be like just elegantly simple uh and most of the complexity is pushed to the periphery uh to higher layers. Uh it allows that kind of core one to be very rarely changing in any material way and you can kind of have it operate in an almost anarchy type of situation where there’s there’s no one really in control of it because no one has to be in control of it because it’s not really something you need to change. It’s just it’s it’s doing a very simple core layer thing. Uh and I think kind of compared to other cryptocurrencies, Bitcoin really meets that definition. So the combination of early mover advantage, self-reinforcing network effect of liquidity and security, and then that really simple kind of dumb design are all features for why it can win. And what does Bitcoin still need to accomplish um at this moment in order to actually fix the money? I think it has to be an order of magnitude bigger. Um I mean right now I mean since inception it has served as an alternative, right? I mean going all the way back to when Satoshi was still active and Wikileaks got like their payment shut off by like PayPal and stuff and they could start accepting Bitcoin. um it it became known as like this alternative that if you’re if you’re debanked in any sort of way or or you know you want this alternative, Bitcoin is there. Um but as long as it is small, it’s that kind of more fringe alternative thing that that can be turned to in order to actually impact the the broader system. It has to be a pretty big mainstream alternative. um kind of like how gold is big enough such that central banks can say you know what we’re going to hold fewer treasuries and we’re going to hold gold at scale more um that actually that that moves the lever on the current system uh and so I think Bitcoin has to kind of reach that type of scale uh to to really have a a meaningful change and to get that scale I think one is just time uh so most tech can be adopted quickly the problem with a tech that has a price on it uh is that if you adopt very quickly price goes euphoric uh and then of inevitably people build leverage on it or they get overexposed. They get euphorically exposed to it and then you inevitably get corrections that really disillusion a lot of people uh break a lot of leverage and take years to rebuild from. Uh and so there’s naturally a zigzag pattern of adoption uh that something like this has to go through. And then two, I think it just needs decades to kind of prove it its technical security. I mean right now the the the the the kind of the concern of the season is quantum uh other times other seasons it was it was you know centralization questions around mining uh and kind of there’s always like the the question of you know how will security look like when the block subset gets very small uh you know if adoption hasn’t picked up by then and fees very low then maybe the cost to to the network won’t be very high and that could be a concern uh so I think it has to kind of it has to mature in terms in terms of kind of that that tech oification where concerns have just been around for decades and it’s still functioning uh and the adoption’s bigger and then it can really start I think chipping into the current system. It has to kind of prove itself through more tests. Great. Great. And maybe the last one here, you know, uh Sailor Strategy, they’ve been very visionary. Uh they’re buying up all the Bitcoin that they can. Um sometimes billion dollars a week. What value do you think Bitcoin treasury companies like Strategy actually provide to Bitcoin and the broader marketplace? Well, I think from a from a first mover advantage, it makes sense to have um I before they did what they did. So there there are no even spot ETFs when they when they began. So there were I mean I I bought it I bought this micro strategy lit in August 2020 when they started that strategy because even though I held Bitcoin I also had certain portfolios that literally there was no good way to get Bitcoin exposure. Uh the closest thing before then was GBTC. Um uh and so I could say okay well this is a way to express Bitcoin exposure in either a brokerage account or retirement account where it’s otherwise challenging me to use that capital for Bitcoin. So it kind of opened the door for more types of pools of capital that can access Bitcoin. Obviously the spot ETFs later uh did that as well. Um it it provides a way to have kind of like longerterm leverage attack attached to Bitcoin which which you know can be a double-edged sword. Uh but if someone is quite bullish on Bitcoin, uh having an entity hold a lot of Bitcoin and then hold various types of leverage or amplification that is not really like liquidatable on a you know it’s not like you get one bad price wick and they’re liquidated on a Sunday evening. um you have this this longer term types of liabilities attached to it allows people to express their kind of multi-year bullish view on the asset uh in in a way that is you know pretty safe regulated audit audited by a big four uh you know auditor uh trades on a major exchange uh holdable in almost any type of account uh I think that’s the service that an early mover like that provides um I think there’s a limit to how many pure play treasure companies they make sense to have because there is somewhat of a liquidity network effect with those as well. Uh if if you’re not kind of the first or second or third, you’re not really adding a lot at that point at least in that particular market. So it makes sense that any kind of big enough capital market the US, Japan, certain European countries, Brazil, it makes sense they have their their locally local uh you know kind of major treasury companies. [snorts] Uh but at a certain point um I think it’s it’s more interesting to have cash flowing companies that decide to hold some of their reserves in Bitcoin that are not just pure play Bitcoin treasury companies or nearly pure play. Uh so I I I do think that there’s there’s there’s room for a handful of those really kind of good and early ones. All right. Wonderful. Lynn, where should people go to find you? uh continue to follow what you’re working on and um you know stay stay up to date with your work. People can check out Broken Money uh wherever books are sold, especially online uh and they can go to lynalden.com and thanks for having me. Awesome. Amazing. Thanks so much, Lynn. This was a pleasure. at me as well.