In today’s video podcast, money and monetary policy expert Lyn Alden explains how our system of money is failing and why the next few years are shaping up to be exceptionally turbulent and risky.
What is money, really? At its core, money is a facilitator, a tool that makes trade not just possible but efficient. It’s a gigantic leap beyond the limitations of barter, allowing us to bypass the need for a ‘double coincidence of wants’ – the unlikely scenario where two people each have what the other desires.
But money is more than just a trading tool; it’s a social construct deeply entwined with trust and fairness, a ledger controlled by nature or community consensus, from small tribes to central banks. What happens when a system of money becomes unfair? You get angry monkey hurling cucumbers, that’s what!
As we navigate through the intricacies of our modern financial system, it’s crucial to understand how money evolved – not as a successor to barter, but as a simultaneous development. This evolution was critical in shaping our societies. Early forms of money, like shell beads, were not just mediums of exchange but also symbols of wealth and social status.
Lyn Alden is truly a master of this subject and a gifted communicator. Tune in with an open mind…
I’m always amazed at Lynn’s ability to take the complexities of a broad sweep view and lay it out in an understandable way. Her thoughts on BTC may be enough to for me to re-dip a toe in that water. Well done!
(I looked at BTC when it was in the $3-5 range and thought I’m not investing in something that’s doubled in the last month. Sigh…)
Lyn obviously Highly intelligent, lays out logical arguments, etc. While she acknowledges structural issues with US debt, I got the impression she doesn’t see imminent collapse, just continued money printing. Doe she say anything in book about approaching point where borrowing can’t keep up with debt payments? How about CBDC digital jail - sounds like she believes in peoples ability to find work arounds. (How many shell bead necklaces you want for those organic vegetables?)
Also don’t know how to reconcile her more financial (?) view of peak oil vs @Chris Martenson /Peak Prosperity master resource view. Discussion on Germany energy and de-industrialization very interesting.
Lyn is amazing. And it’s refreshing to hear both gold and BTC discussed in a positive light, as opposed to the all too often overly-charged and emotional battles between the two. Gold and BTC are on the same team!
Very interesting interview. I completely agree it should the the markets (or better, the “little people”) decide what is money and therefore allow competition. Concerning Bitcoin however I have one main issue, among some others, which is it s DEFLATIONARY nature.
To my surprise this is never brought up in any of the Bitcoin discussions, while very often the case is made for it s anti-inflation quality, as when all coins will be mined no other can be added. But it s downside is whenever any Bitcoin owner losses his/hers access code to mentioned Bitcoins, they are gone forever. Sudden death, memory loss/ictus, ect are not taken into account, ever.
From what I ve read Bitcoin`s mythological creator (the famous Satoshi) has a balance of roughly 2 million BC which has never been touched since it, which might as well be gone.
Warm greetings from Italy
Scattering of notes taken during Chris & Lynn ‘cast
I’ll finish Lynn’s excellent book today. She (also Dr. Amous’ The Bitcoin Standard) provides deep-dive foundation to Mike Maloney’s recent The Great Gold and Silver Rush of the 21st Century (& classic Hidden Secrets of Money)
Most Central Banks are stacking Gold, while forcing the collapse of the century-old fiat USD system. (The Fiat Standard by Amous)
BTC is sound money like Gold. Both are gone if you loose them (also that penny or Benjamin you dropped) BTC is easier to secure & transport privately across time & space. Gold is Old-Wall (HT McCullough) see: https://app.hedgeye.com/insights/143402-real-conversation-market-risks-opportunities-how-to-make-money?type=guest-interviews%2Cmarket-insights
Those attempting to control individuals will ultimately fail, but do great damage (Afganistan, Iraq) Put asside some reserve to help those less prepared … they will repay your gift.
My copy of
“Broken Money” for sale: 42k sats.
I agree. She doesn’t come at this with an agenda, does extensive research, and clearly listens to all sides before forming any assessments. Her book gives an excellent history of monies including how and why they formed and died as evidence for her thesis.
Hi Larry, if every year a certain number disappears from circulation it is simple math that it will not last the test of time. Satoshi’s 2 million already represent 10% of total BT which might be lost in one go.
@madmilo
Just thinking out loud here in response to your questions about BTC. doesn’t really change anything, but I believe the “satoshi” wallet holds 1 million BTC. Anyways, regarding deflation….
If inflation is your wealth being “stolen” at an admitted 2% intentionally, leading to the value that you hold to be less and less causing you to have to work more and more or join the rat race in trying to keep up with your ever devaluing dollar. Then would the opposite be true for deflation? If deflation caused everything in life to get cheaper and cheaper over time, would that not be a good thing?
Jeff Booth states that everything falls to the marginal cost of production. With technology growing more and more, shouldn’t everything become cheaper and cheaper over time? But for some reason, it is not. I am having to work harder and harder and having to get creative with my currency just to keep up with inflation. The things I am having to do are risky because of this situation of my dollars becoming weaker and weaker.
I think about these things all the time. What say you?
Dan
Hi Dan,
For sure I’m not a fan of inflation, and reasoning in currency terms it would make sense that deflation would make things cheaper. What I’m getting at, is that with a finite amount as BTC has programmed in its code, and inevitable loss overtime it becomes a matter of time before the amount might eventually come close to zero. It will also not guarantee a stable value over time, like is the case with its opposite, inflation.
I hate fiat currencies, and am fed up of trying to survive in the rat race which you mentioned, but for this and other reasons I honestly don’t see how BTC can be THE answer in the long run.
I would love to be proven wrong and live in a world where free and open competition concerning money and currencies would be possible, with s multiple payments possible like cryptos or gold or even back to seashells to whoever will accept that payment instead of Central Bank issued IOUs.
Before you blast me as being a skeptic. Far from it. I am irrationally and irresponsibly long.
One thing I never see in these conversations
and one that I dont understand is all the folks touting the money, currency, payment use cases. And how this use case is tied to overall adoption.
Aside from the volatility aspect there is the tax component.
Buying a Tesla or other large ticket, one time, purchase is one thing. Even that is stupid in my view but I see people sending small amounts to frens, buying coffee and other small ticket uses.
Are they honestly going to keep track of their basis (long term and short term, FIFO, LIFO, HIFO) for each of these remittances? I’m not.
Maybe transfer lumps out of BTC into a stabil coin then spend that down? Convoluted. I can just use Venmo or Cashapp with cash and no record keeping nightmare.
I don’t want to spend any BTC anyway. It defeats my main purpose for having it.
The IRS considers it property, not money or currency. The SEC considers it a commodity not a security, money or currency. Both require tracking a basis and paying capital gains.
Probably something simple that I’m missing but someone help me out.
Bitcoin is a global phenomenon with multiple use cases depending on the user’s needs. In the USA, it makes no sense to use it as a medium of exchange, exactly as you outlined. Its use there is perhaps better suited as a store of value and a collateral asset. At least at the moment.
In emerging markets / developing countries, bitcoin definitely serves as an efficient medium of exchange. Having been in Tanzania, Rwanda, and Kenya not long ago, I can tell you that some locals there are absolutely using bitcoin and other cryptocurrencies as a medium of exchange every day. They could care less about the SEC, the IRS, HIFO, or any other components of the nightmarish American alphabet soup. They wish to transact in a socially accepted way using a currency that doesn’t rapidly inflate. There are similar reports from South America as well, although I have not been there recently to see it first hand.
Most importantly for some, It serves as a critical lifeboat to preserve wealth when fleeing oppressive regimes. The Human Rights Foundation has documented scores of such cases.
Back to your primary question: For 340 million Americans and 450 million in the EU, payments with bitcoin is not the optimum use. HODLers and satstackers will drive adoption there. For some of the other 8 billion on the planet, using bitcoin for payments does makes sense. Mothers and fathers providing for their families may drive adoption there. For still others, it is easily portable crucial seed money carried during a flight to safety. Refugees may drive adoption. Bitcoin doesn’t care. All will drive adoption.
Alden provides a comprehensive view of global economic conditions, explaining the factors contributing to monetary systems undertale yellow and their potential vulnerabilities. This knowledge helps readers comprehend the complexities shaping financial markets.