Why America's Money Printer is About to Break (And What Comes Next) | Balaji Srinivasan

It's just setting it up for this crazy kind of supply shock. The current strategy is reducing in my view the life expectancy of the dollar. You don't become global number one in every category unless you are intentionally going and setting up the global empire in return for maintaining that they had the right to put money. And in that printing dollar inflation was global taxation. Billions of people were basically taxed in order to pay for the upkeep of this giant empire. That arguably was a net benefit to them. That's way more profitable than working for a living. They bought $1,249,999,990,999.39 worth of mortgage backed bonds. So to make 1000 do in profit on a billion people in a second, that's what push a button and get a trillion dollars is. December 2024, I saw for the first time Americans thought of the world as their competition and wanted to protect their home market. Seemingly easy solutions of like imposing 45% tariffs have not been in my view thought through. And what that did is it undercut the pro American voice in every single one of these countries globally. Been too long.

It's good to see you, sir.

Good to see you too. Yeah.

We were just talking about jumping off points. You have one here. I had one that I wanted to pull up. We'll pull it up in post. But just referencing your tweet from last night about your sympathy to the white American conservative. And I think, I think this is a good jumping off point because I think this particular topic sort of involves everything that we've been talking about.

That's right. I mean, so as context, you know, five years ago I moved to Singapore and India. I basically split my time between them. And I was public about that. And you know, I was just talking to some of my friends. And the thing is there's, there's a zillion different mixed emotions, some of them contradictory or what have you. It's kind of like that people have about state of the world and say the US now. And there's some fraction of people who are like, oh, everybody who's an immigrant should just go home, blah, blah. And then another group is like, I can't believe you left. Why didn't you stay and fight? And sometimes it comes from like the same person, you know, like in different conversations where they've got a different mood. You know, it's like I'm thirsty now and I'm not thirsty at this, you know, later point almost. Right. And that post was sort of by way of explanation why. You know, I. I grew up in the U.S. i spent 40 years in America. I have obviously many American friends, I have an American accent, I built many American companies, I employed many Americans, I invested in married Americans, blah, blah, blah, blah, Right? And it was really a great country. And I know I'm saying was in the past tense. I know, right. But basically, I totally get where a lot of people who are MAGA or Trump voters and so on are coming from. And I'm not even saying that as like, a leftist who's, like, condescending or something like that. I'm saying that as I would consider myself a centrist or classical liberal. Ish. Libertarian. Ish. Sympathetic or whatever. So I totally. I think I totally get where they're coming from. You know, one of the things I have in there is, like, especially for somebody who was born in, like, the year 2000, right? You and I are a little bit older than that. So we remember, like, actually, when were you born? You born in the 80s? 90s?

91.

91. Okay, fine. So if you remember the 80s, remember the 90s, remember the early 2000s, it's a pretty amazing country. But for a kid who was born, let's say, in the year 2000, who's now 25, right. They're 1 year old when 9, 11 happened. They're 7 years old when the financial crisis happened. When they came of age, 18 years old was like, in the middle of me too. Right. You know that thing where the guy walks in the room and everything's on fire? That meme. Mm. Right. I can only imagine growing up with, like, ubiquitous social media surveillance and everybody trying to cancel you and yell at you, and all the teachers saying, like, as a white male, you're super evil and all this crazy stuff through your formative years, you know, and, you know, you're just like, looking back if you're like, what happened? Right. They don't even have a memory of what, like, the good times were, right?

It.

And so. So I get all of that, and I get why people are angry, but being mad is not necessarily the same thing as implementing the optimal strategy, if that makes any sense. Right. And being mad may give you the courage or energy to do something, but is it the optimal thing? And, you know, in general, I think you can emotionally align people against something, but economically align them for something. Like, as. As a. I may have mentioned this before, but if you took a hundred people and you said, go and burn down that building, they could do that. Easy, right? It completely paralyzes. One guy, you know, grabs a rock, the other guy grabs some matches, it's dust in, you know, a few hours. That's like a lot of stuff happening in la, San Francisco, other places around. But if you say to those hundred people go and build that building, that's much harder. They may not have the skills, right? Because, you know, you need a foreman and you need an architect. You need even forget like, even regulations and code and permissions or whatever, even without any permissions, even just moving the speed of physics. Is there a crane to lift the, you know, the wood? That's a very coordinated serial process where those hundred people may not even have the skills. Right? You, you know, you have plumbers, you have electrical work and stuff. So it's like a million X easier to destroy than to build. And also less obviously, the people who are destroying don't have to coordinate with each other. This guy smashing a window or whatever, their guy is like beating the side of the brick. They could hate each other as well. They just hate this other thing more. You know what I mean? Right. So a big chunk of the, you know, Trump or MAGA coalition are people who are against what Trump is against, but not necessarily for, but he's for. And it's like they're all against wokeness, which maybe does deserve to get blown up. Not maybe it does, but then what are they for? Right? And the close analogy that I had was right after the election, in fact, was to the fall of the USSR because in 1991 there was a libertarian and nationalist coalition. Both the capitalists and the nationalists were against the godless communists, right? The capitalists, the nationalists, the religious patriots and all these different people. And it was an economic thing because communism was economically inefficient. We know that part. What people don't know is that the Russians actually had gotten down to 51% of the Soviet Union in the year two years before. Do you know that?

No.

Yeah. So in 1989 there was a census that was published that showed Russians, wait a second, they're down to 51% of the Soviet Union. Because the Soviet Union, the USSR was a lot like the USSA. It was an officially multi ethnic, celebrate diversity, global empire that even stretching across Eurasia. It had like everybody from Central Asian, like, you know, Kazakhstan, like, you know, kind of types to, you know, Middle Eastern types to Eastern European types, to, you know, Russians. Right. And Russians, when people refer to it as Russian, that was the majority ethnicity, but it was just becoming, it was dropping below 50%. So that, among other things, was one of several factors that led to the ethnic dissolution of the Soviet Union. Long repressed ethnic nationalisms bubbled up after Gorbachev had allowed for plasnos, which was free speech, and perestroika, which was free markets. And the Russians felt that they were being exploited by the non Russians because they were the ones who were bleeding in all the wars and so, and so forth. And the non Russians felt they were being exploited by the Russians because the Russians were taking over their territory and imposing the Russian language on them over their local language. And so both parties felt they were getting a bad deal ethnically as well as economically. And the whole thing burst apart into smithereens. But for a small period of time, everybody was super happy. And it reminded me a lot, just that period, just reading the contemporaneous accounts reminded me a lot of the honeymoon from right after Trump's win to a few weeks later, right. There's a period where there was like the most positive spirit I had seen on Twitter and X in a long time. The left was just. Even if it was a one point victory, 49, 48, it was like a 50 point victory on vibes, right? And so it was something where it was just a remarkable, remarkable thing. And the tech guys and the. Everybody was high fiving, back slapping everybody was great. But I knew that wasn't going to last because people had just such a very different vision of what America was, what the world was, what the future was going to be and so on and so forth. And just to talk about that for a second, one of the things that happened was right around the time that the Luigi left arose. And by the way, you know why that was predictable?

Why?

Because what once the left. Well, blm, yes, but BLM was on a. Was on a leash, right? Luigi's not on a leash. And that's the difference. The thing is, blm, the BLM riots were organized by, you know, basically the leftist establishment and they could be told to stand down. Like there's that article in Time magazine where they actually told the rioters stand down, right? So they were like, you know, rent a, rent a mob or whatever. But after the Democrats lost control of the state, they basically have two options. A, Luigi leftism and B, what's coming next, which is Chinese communism, right? So you've got the violent anarchists who are just shooting and blowing things up. These are like the Tesla fire bombers, the Luigi left, right, who are just schizos, right? And that's decentralized, violent Anarchism because they can't do their violence through the American state anymore. And then you have like, Gavin Newsom and Tim Walls who are going to be siding with Chinese communism. Right. Like, Nome went to China, said he wants to be China's long term stable and strong partner, and Walls asked China to intercede in the Iran dispute. So after, around the time that happened, actually, all the Democrats went to blue sky off of X. And that actually had an underappreciated result, which is that it meant that X, because the left moved to blue sky, the center of mass on x shifted like 25 or 30 points to the right. And you saw that with the Vivek tweet in December 25th. Right. When a tweet that would have been considered like a seemingly pro merit tweet or something like that a few months earlier was seen as now an attack by the right. And whereas, you know, when. When the left had been there, it would have been seen as a centrist kind of thing. But then it got seen as something that was actually on the left because the spectrum had moved over so many points. And the thing about it is, we have to recalibrate sometimes because as we were just talking about before we got online, we're in this weird superposition of all of these exponentials going through to the sky at the same time, and nothing ever happens. So it's a bizarre combination of, like, you have AI and you have Bitcoin and you have. You have things like, for example, from. I think it was June 2023. Okay. So just about two years ago, if I'm not mistaken. Let me just double check. June 2023. Elon had to personally intervene to allow what is a woman to be asked on X?

And this is right around the last time we recorded.

Right? Exactly. Like, it took $44 billion and the personal intervention of the wealthiest man in the world because his first round of firing people at Twitter wasn't sufficient. He needed to go in and personally fire the people who were censoring the question about what is a woman? Right. Like, he had to personally intervene. That's how far gone the whole thing was. That was controversial two years ago on X. Right. That was the. That was where the center of mass was on controversy. Okay. From that to now, over two years is a move of 51. I don't even know how many points. You know, you'd have to actually quantify that. But it's like 50 points to the right. I can't even, you know. Right.

I mean, you had Grok unleashed a couple nights ago, Right?

That's like off. That's like way off out there, right? So the. So we're in this weird time where, again, you have to kind of study historical times, where, for example, there's a woman. I think she. It's a book called. I think it's like Four Germanies or something like that. Yeah, four Germanies. Four Germanies. And it was like, hold on, let me see if I can find it. Yeah. So essentially, there's a book called Four Germanies and there's another one which. Whose name I'm forgetting now. But, you know, essentially, if you lived in a certain part of Germany during the 20th century, right, you lived through the Weimar Republic and then Nazism and then East Germany, and then, if you live long enough, through German reunification and liberal democracy, right? So you just experienced it all, you know, you just had the same territory, had just these radical shifts in ideology on top of it, right? And that's kind of how I think about, like, X, where it kind of, you know, Or Twitter, right. Actually, Twitter no longer exists. Twitter, the Tower of Babel moment is there. It's actually very fitting that it got renamed X, because Twitter has gotten shattered into a bunch of pieces. And there's Blue sky and Mastodon and Truth Social and TikTok and Threads and so on on the left. And then there's X and Gab and Truth and Noster and what have you on the right. Right. And anyway, that concept of the same territory and having different ideologies sweep across it, nowhere more so than Germany in the middle of the. Through the 20th century. And in a real sense, formerly Twitter, now X is kind of like that. It's like this central point around which the angle phone Internet swivels and turns. And so whatever the next transformation is, it'll probably be seen there, though it's also in some sense, losing some influence to other sons of Twitter around, you know, the world. Anyway, there's more I can say, but I just want to, like, nothing ever happens yet. We're also in the middle of the singularity. It's a bizarre superposition of those two things. Actually, that's a great tweet, right? The singularity is happening, but nothing ever happens. Yeah. Okay, come on. I'm going to. I'm going to push. I'm going to do that one in real time. Go, go, go. Real time.

And I'll you tweet that. Because I've been thinking a lot about this. Like I was telling you before we hit record, I wrote the newsletter a few weeks ago about nothing ever happens. And it was right before the US bombed Iran. And while we were bombing Iran, I was like, oh my gosh, is something happening now? Let's wait a few days. Nothing's happening. But to your point, we do have the superposition. And I think through my reflection on this, this juxtaposition, it's really, I think nothing ever happens at the political level like you want. Like, obviously, like you mentioned this election, people were very optimistic. In November, December, Trump gets in. In January, we get Doge, we're uncovering USAID grift and waste. And there's a lot of fervor around the potential to fix that. And then eventually it's like, no, we're going back to business as usual. And I think a big driver of that is just the debt situation. There's no way out of it, and the politics has to stay that way. But what's happening with AI Bitcoin? I've resigned myself to, like, nothing ever happens in that world. I'm just going to focus on Bitcoin, building tools, investing in companies, writing about it, and hoping that something happens outside of the political system where nothing ever happens.

And I can give, I can give a lens on that if you want that suggest why this is probably the right thing to do, which is here's a couple of. Well, so first, let me close that original thread, that original thought. Right. Essentially, I am really, I'm sympathetic to a number of the conservatives and libertarians and so on who are maga, especially the ones who feel they have been forced to be meaner than they want to be. Right. They didn't want to like, they tried being Mr. Nice Guy, they tried playing by the rules, they tried being charitable and empathetic and seeing their guy. And what it get them, it got them just more and more abused by all these crazy wokes. Right, fine. So I get all that. However, I think that the current strategy of a throwback, I'm not sure there's any strategy that could work honestly, because of the debt. But the current strategy is arguably, not arguably, it is reducing, in my view, the life expectancy of the dollar and thus the empire. And just to give you my quick mental model, dollar inflation is global taxation. And so what that means is over the course of the 20th century, the US set itself up as American empire. And why did it do that? There's actually a great book by Stephen Wertheim called Tomorrow the World that documents the exact moment that with memos that the US made The decision to go for empire. And it was not actually what, what people would think it is. It was not 1945. It was actually 1939, 1940, when the Nazis appeared on the verge of completely winning in Europe and the Battle of Britain. Britain seemed on the ropes because up to that point, America was fine with letting the British go and do the empire thing while America was at home just building its strength because empire is expensive. They understood, they were smart. They understood what a, what a cost and time sink global empire was. Right? But then they also understood, wait a second, if we don't do it, well, the Nazis will do it or then maybe the Soviets will do it and then they will capture all this territory. They'll cut us off from trade, they'll cut us off from natural resources, they'll choke us out. And okay, well, we don't want to do it, but they were almost forced into it. That's how they saw it, right? You can agree or disagree with that, but there was actually a decision that was made and that's how the US started playing for global. I mean, here's the thing. You don't become global number one in every category by accident. You don't have a McDonald's on every continent. And like the FDA setting regulations for, you know, Myanmar and Uruguay with harmonization. You don't have like the dollar as a reserve currency and Harvard Kennedy School training, dozens of foreign heads of state and the UN headquarters in New York, NNN, the World Bank, 500 other things that all got set up. That just does not happen by accident unless you are intentionally going and setting up a global empire. And while it's, it's very common on the left to say empire was bad because Americans were oppressing others. And it's increasingly common on the right. Like the Buchanan argument, we want a republic, non empire. We say empire is bad because Americans were dying in Iraq for no reason. Right? So the left argument is, you know, empire is bad because Americans were oppressors. The right argument is empire is bad because Americans are being exploited. Right? Very similar to the end of the Soviet Union where the Russians felt that they were being exploited and the non Russians felt that they were. The Russians were exploiters. And there's some truth about this and some falsity as well. But the counter argument to that is actually empire for a time was good both for the world and for Americans because the US military was the greatest military the world had ever seen and it maintained order on the high seas and, and eventually beat down the communist menace that Killed so many people. And actually the American left, the State Department were the greatest diplomats the world had ever seen. And just to give them their credit, because they definitely do a lot of stuff terribly or last 10, 20 years. But when they were working, I mean, it's hard. Look, you've. You've done investments, right? You've like, you've got companies, you've had investors, if I'm not mistaken, right? Yes. Okay, like, think about how hard it is to do a deal where there's like 10 people signing. It's hard, right? Now imagine there's 196 people signing. Okay, that's even harder. Now imagine it's 196 countries signing. That's the level of. Right. That's the level of skill of the American diplomat. They got 190 plus countries to sign on the line that was dotted for things like, you know, the World Health Organization or something like that, right? When these organizations are working, when that was an absolutely unprecedented level of global nonviolent cooperation. And of course, you want that 99% of the time, 99.999 whatever percent of time, you want diplomacy rather than the military force, right? So to give the State Department their due when they were functional, that was actually genuinely amazing. And you can understand it from the business negotiation standpoint how difficult that was to get those deals done, right? And because those deals, you had global market access for Americans everywhere. And, you know, one of the things that actually it took me a while to like, put my finger on, that I thought was so surprising to me about December 2024 is for the first time, like, you know, my whole life, all of the Americans, especially the white American men that I'd worked with and built big businesses with and expand, like, essentially our question was only, okay, when do we expand into Turkey, when we expand into Brazil, when do we expand into Japan? Right? When I work with Armstrong at Coinbase or, you know, all the people I worked with, as in venture capital, startups, tech. The world was America's market. That was just obvious, right? The Glo. You know, it was not even considered to be something where you were afraid of overseas competition, right? December 2024, I saw for the first time a critical mass of people after. Especially after the vague tweet where Americans thought of the world as their competition and wanted to protect their home market rather than obviously think that they would be able to expand into global markets. And it took me a while to realize, oh, wow, gravity had inverted and they feel insecure and they don't feel they can win a global competition. So they want to exit that. Right? But we have to understand that the US built that game of global techno capitalism, right? Like that is all these multinationals, all that stuff was built by America and that American empire was monetized with the dollar. Because if we ask the deep question of. So the shallow question. Well, actually you can ask the question a few different ways. So take Trump and the tariffs, right? Let's take Vietnam. Vietnam is sending its shoes to America. America is sending back basically printed database entries for those shoes. That's what the trade deficit is. And it keeps going into further debt. And those are IOUs. But why does the world accept that? The world accepts it because America was the center of the global empire. And as the database administrator, as the CEO of the world, they have root access. And in return for maintaining the global financial system with both all the diplomatic agreements and financial agreements from the left and all the military safety and seal and security on the right, in return for maintaining that, had the right to print money. Because basically they managed the ledger and that was how they monetized this enormously expensive global apparatus, right? And in that printing dollar inflation was global taxation. Billions of people were basically taxed, diluted in order to pay for the upkeep of this giant empire that arguably was a net benefit to them because it kept the sea lanes and it kept the peace and countries didn't invade each other and they all had access to these giant markets, phones and later Google and all this kind of stuff. Fine. So you have to kind of make the case for it before you can make the case against it, I think. And one of the things that happened though is that empire is not the way that people talk about it. Right. Most Americans. The best way I can prove it is, have you seen the map of the 750 military bases the US has globally? That's not the posture of a people who just want to sit behind their borders. Right? That is like the conservative today is only really seeing like one side of the puzzle. They're not really thinking about, in their own way, they're kind of ahistorical, right? They're not thinking about the enormous benefit that America got from taking essentially a slice of every transaction globally. To be clear, they gave value as well. Maintaining the stability of the world is no small thing. To build this global common market is no small thing. I mean, again, think about how hard it is to just get like a deal done between two parties, let alone 190 countries. So all that peace and prosperity, they monetize it with dollar inflation. But then of course, that's the greatest business model of all time. And they started abusing it and they found that they could push it much farther than anybody thought, after 2008 especially. And so it went from this unprecedented 787 billion print, something that was highly precedented. 2000, it was unprecedented, but then it was highly, highly precedented, right? And the mechanism of printing was set up similarly, by the way, with 2020, you know, like COVID lockdowns and like, you know, there are lots of crazy things happened during COVID like hard borders between US states, you know, like Rhode Island, New York checkpoints and stuff like that. Or like April 2020, the US stopped issuing passports in case accepted emergencies. LA Times. So all that stuff is actually set up for like a digital loc down in the future. It's now precedented when it was unprecedented. But anyway, so the point being that once you kind of see dollar inflation's global taxation, what America's business model was, well, that's way more profitable than working for a living, right? Like, one way of putting it is the US did at one point work for a living. It manufactured all this stuff. There's this great cartoon of you might bring it up. It shows uncle Sam in 1897. It's like the Philippines are a stepping stone to China. You might Google that and bring that up, right? So you go to Google Images, you'll see that it shows Uncle Sam laden with all these goods. He's going over to China. And China then is the passive market. It's like we want 40,000 trains and 10,000 planes or whatever, right? And. And America is a manufacturing superpower. And America grew, starting as a, as a trade superpower, right? And then because it exported so many goods, all these countries used the dollar to buy those goods. And then gradually it went from a trade to a trade and finance superpower and then purely a financial and tech superpower, which is what it's become. But the thing is that that is a way more profitable business model.

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Yeah.

And I think just to build on that, I think going back to the angst of the white conservative, which, yes, yes, certainly fall in that bucket.

Sure.

I think it's like the lack of diversification of that resulted from that empire where you have high finance, high tech, and then you watched middle America get completely hollowed out in the process. And I think the cost of the quality of life of a large portion of the country is what's driving this sort of struggle that we're going to right now.

Yes, that's right. And I'll show you some graphs that actually somewhat speak to that. So see if you can put this on screen. Yeah, so that was like when Uncle Sam was just exporting stuff all over. Right. And look at that, that's 1897. And the Chinese guy is portrayed as just stereotypical Chinese guy. But see, it says wanted 100,000 bridges, engines, cars, rails. China's portrayed as just a passive market. Amazing history running in reverse aspect of things. Right.

Bringing in education, steel, rails and.

Yeah, exactly right. So now of course that's, that's run completely in reverse. And so what, what happened was to take like a century and a half the. Oh, here's the NPR article. And then let me show you one more thing. Right, so this is a rare article where they actually like admit what, what's going on. How to spend 1.25 trillion. Is that a plugin that you have?

Yeah, it's a plugin I built called opportunity cost.

Hilarious. Unbelievable stuff. Was funny. That's only half amount of BCC. Okay, so that's August 2010. Okay. Now this is basically how the Fed did these mortgage backed securities. So if you scroll down, keep going, blah, blah, blah, blah, blah, keep going. Okay, wait, so can you zoom in on this? Yeah, just top left, right. In the end, they came very close. First of all, these guys are just like hitting buttons. But this is amazing. Quote, in the end, they came very close to their target. They told us they were just 61 cents short. In other words, they bought $1,249,999,990,999.39 worth of mortgage backed bonds. Incredible. The Fed was able to spend so much money so quickly because it has a unique power. It can create money out of thin air whenever it decides to do so. So Xena explained, the mortgage team decided to buy a bond. They push a button on the computer and voila, money is created. Okay, Just a level set. What's a trillion dollars by the way? Even in 2015, 2025, rather like that was 15 years ago. So that's like two or two and a half trillion or whatever it is today. Okay, but like just take a trillion dollars. That's an insane amount of money. Okay? That is. Imagine you sold a thousand dollar iPhone to a billion people in China. Okay? That's what a trillion dollars is. You know, hard. I mean, you know, it's insanely hard to sell something that's worth a thousand dollars to one person, right? Sell it to a billion people for. That's also just revenue, right? You know, you're going to have. There's no discounts, you know, like what's your profit margin on that? Maybe you're making 80 bucks per iPhone or something, whatever, 200 bucks. So to make a thousand dollars in profit on a billion people in a second, right? That's what push a button and get a trillion dollars is. It's an absolutely. It is the most insane business model ever invented of all time. In terms of when people talk about a money printer, you know, like your business is printing money, right? Like there's a reason that it's very hard for America to diversify off of the money printer. Because it is the greatest business of all time, right? A trillion in pure profit by hitting a button. That's crazy. And they tax the entire world to pay for it. Dollar inflation is global taxation. Right now you can start to see why I'm very skeptical that the Trump 2 strategy of re industrialization is going to work. Because how many screws do you need to sell to make a trillion dollars? A lot. I mean like a screw is what, Like I don't know, a cent? Actually it's going to be fraction of a cent depending on maybe it's like a big bulky screw, like some of these drywall screws. How many screws, how many bolts, how many nuts, how many, you know, ships, planes, tanks, trains, like you're talking. Absolutely. Gargantuan manufacturing, which only China really has a scale for now at this point, you know, there's only 77 million MAG of 1.4 billion China. And the thing is that the US is accustomed to office jobs and retail jobs. They're not accustomed to like working in the mines and working on the factory assembly. There's a reason. Look, I'm not saying that you can't do those jobs without pollution. I'm not saying you can't do those jobs without injuries. I agree that you can automate and so on and so forth, but they're physical jobs. So they're going to have a higher level of risk than hitting keys in an office, right. And sipping coffee in office. There's a reason that lots of people who are blue collar, they're happy that their children became white collar, right? So there's an honor in blue collar jobs. I'm not saying they're bad. I agree there's, you know, I actually did a lot of stuff not in the factory exactly, but the clinical laboratory with robots and stuff like that. So I've been very hands on. I do a lot of real estate nowadays. I do think there's a lot of good in working women's hands. I grant all that. Nevertheless, those are tougher jobs in many ways that pay less. Often back breaking jobs, even repairing robots is actually not that easy to do. So the romanticization of the 20th century Economy without realizing just how much more profitable the push button economy is is a point of extreme unrealism. Right. It's a little bit like somebody who's inherited some gigantic fortune and is accustomed to a certain standard of living and then sort of envies the, you know, like the Vietnamese worker who's like grinding away making, making Nikes, right? It's, it's like a weird eat your cake and have a two kind of thing. And sometimes people will say to me in comments, oh, you don't get it. We, we're, we love these high paying factory jobs. I'm like, high paying? Why would you say they'd be high paying? Like they have to do them at, they have to be high quality. They have to be at a competitive price globally for you to be able to export them to the world in a neutral market. When you can't impose tariffs in Turkey, in Uruguay, in Hungary, Japan, when American products are on the shelf next to the Chinese product and the German product and there's no ability to coerce somebody into buying something or not. They just have to compete on value, same as on the Internet. By the way, anybody can click to anything else. In such an environment, which is actually 96% of the world because most of the world is not American. Only 4% is American. In such an environment where it's a genuine competitive market, high pay is only going to be useful insofar as it results in high quality and high competitiveness. And the cost of living is so high in America, again thanks to all the inflation and money printing that's very hard to do relative to places that are much lower cost of living. So there's like a boxing in over here where the sort of seemingly easy solutions of like imposing 45% tariffs to get back to 1945 have not been in my view thought through at all. I mean, there's 50 other things I could say about these tariffs or whatever, and I think they're just radically under discussed. It's one of these weird things where you know, what people detect is change. Not like for example, Dropbox today is used way more than the early 2000 and tens, but it was probably talked about way more when it was rising than when it's just used all the time. You know, like Uber is probably used a lot more today than it was in 2015, but nobody really talks about Uber anymore.

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It is, it is completely insane and unrealistic stuff. It is magical thinking. It is. Okay, let me, I could, I could say like 10 things about the tariffs in particular. The first is a lot of these tariffs are on like raw materials. They're on inputs, not outputs. So you're talking about materials that may not exist in some quantity in the US or number two is what should have happened was deregulation as opposed to tariffs. Deregulation reduces costs for American producers. Tariffs increase costs. So basically tariffs are like taxes they have to pay at the port or your goods are seized, right? And there's surprise taxes which you can't budget for in advance. And it's like a cash expense that went from zero up to like, you know, on a million dollar shipment, it might be $490,000, some crazy amount of money. There's no like lawsuit where it might wait for a year or something like that. That's a tax you have to pay right now. Or your shipments are impounded at the port. And in many ways it's kind of like imagine I like increase the price of your iPhone by like 45%. Then I said, now you have an incentive to go and build Apple. I mean, in the sense you do, I increase your prices by 45%. Now you have an incentive, but in a sense, of course you don't because the capital cost to go and do that is so extreme and that many of many of these American companies are just, they just want a little bit of maple syrup. They don't want to go and plant a whole ton of maple trees, right? And to do that for everything in the economy at once in this broad brush blunderbuss kind of thing, it's really this crazy, crazy thing. It's, it's like completely divorced from reality. And it's also having really important effects abroad that people are understanding. Like basically the guys in like Malaysia or in Uruguay, whatever, you know, just name whatever neutral country you want. Spain, anywhere, right. That were exporting to America. Those were some of the most Pro American people in those countries, Those were like CEOs, entrepreneurs, right? Businessmen who had American friends, American customers, American contacts, understood, you know, they must have flown back and forth to set up, you know, like business relationships. And every single one of those guys globally just got like a bullet in the head, right? Basically, they were just rocked. They thought this was going to be like a free trade, pro capitalism administration and, or even, you know, basically like Trump won. They were just completely taken off guard by this and many of them were just bankrupted, destroyed or really harmed. And what that did is it undercut the pro American voice in every single one of these countries globally. And so, you know, who won the argument is winning the argument instead, unfortunately, China, the pro China voice in all those countries. So what China did, you can go and look headline after headline. China went to Malaysia and they lit up the Twin towers in Chinese colors. China went and signed all. They made China look like the global champion of free trade. The communists were able to appear to be more capitalist. Now, does that have a, a stinger in the tail? Of course it does. You know, there'll be, what, our debt trap diplomacy or something like that? You know, there'll be some, there's some price you have to pay for entering the Chinese economic union in the future, no question about it. But in the short run, these countries, which many of them, for example, especially Southeast Asia, places like that, they had courted them and said, hey, you know, we're, you should be with us. They were like a swing vote between China and the U.S. right? They had plenty of issues with China with like, you know, local regional disputes and so on. And this is like a rubber band snap where they just had to go flying in their direction. They understood their economy couldn't depend on the US Anymore because the reciprocal tariffs basically say they punish countries for exporting to the US and they also start a fight with every country in the world at the same time. Right, Go ahead.

Do you find any credence in the idea that's just a purely a bargaining tactic, get people.

No, because they're actually, it's not a bluff, right? These are actually imposed. You know, there's some, there's some skew up and down. And it's true that like it was only at the end of the day, it was only 10% on some countries. But that's a lot, right, to go from. When you go from 0 to 10% on a shipment. You know, the thing is also, people don't understand how these supply chains work. You'll import, you Know this piece from here and this piece from there. Like, you know, I know this with, with, with biochemistry. It's not uncommon to have a test tube where you have, you know, some reagent from the UK and some reagent from Canada and something from like, you know, the Philippines. Like you could have a lot of different than something from New England biolabs. You all, you have that all in one test. T. Right. And if you're tracking country of origin of all of this stuff, first it's a huge amount of overhead and second is you can just radically make it much more expensive. And then all kinds of things break in ways that people don't understand. Like lab tests become more expensive, just spare parts become more expensive. Everything becomes more expensive at the same time that you're, you know. But they want to cut rates to 1%. I mean, it's just setting it up for this crazy kind of supply shock, you know. On the other hand, I don't know, I, I think point being basically that the, the idea of replacing the money printing economy with the manufacturing economy has not like with the idea that that's going to increase US living standards is I think simply not quantitative. The only reason like you, if the US is no longer accepting foreign trade, if it's no longer accepting foreign talent, not even foreign tourism, if it's also not letting remittances go out because there's a tax and remittances that's coming, if it's not, it's very lukewarm about foreign military intervention and keeping its end of military commitments that's made over decades in treaties, you know, NATO and other kinds of things. If it's threatening to invade Greenland and you know, fighting with Canada, if it's sending form letters to Japan and Korea imposing arbitrary tariffs on them when there's got 0% the other way Europeans, they need to deal with Russia on their own. And it's while at the same time the administration is fighting with the Democrats and the tech guys domestically and even to the point of like the Canadian conservatives are alienated. Like Pierre Paul Ivray was basically undercut and you know, Canada went to the left over the last, you know, four or five months. Right. I don't think that's a good setup. Right.

When you put it like that. No, no, go ahead. And again, going back to the juxtaposition of the singularity and nothing ever happens. It's so much opportunity. I feel like that extension that I just showed you, I vibe coded that in an afternoon that was one of the most exciting, like, revelations I've had since bitcoin. It's like, oh, my gosh, cool thing. You use Replit and ChatGPT.

And I'm a seed investor in Replit.

Well, Amjad is.

He's really great.

He's immense. He's an incredible dude. And that's like, Amjad's like a perfect example of the type of immigrant we want came from Jordan, I think, so doing something incredible.

And I think, I think Replit is just this amazing contribution that really has genuinely expanded the scope of what people can do on the computer. And it's really given a sense of delight again to, like, kids and people who weren't coders. And you can just prototype anything. You can kind of, you know, it's really. I think it's really cool. Go ahead. You're going to say, I mean, Scotty, no.

But to that point, it's like, it seems like the opportunity set is so wide, wider than it's ever been, to go and be productive, particularly on the tech side. And it would be a great shame to just shoot ourselves in the foot with all this domestic squabbling.

Well, that's the thing is, I think both are happening at the same time. Like, that's to say, to reconcile those two lenses. The Internet is to America what America was to Britain. And you can even go, you know, you can say Greece, Romeo, Britain, America, Internet. And the analogy, I think, is pretty strong because America started out British and obviously owes a huge debt to Britain, but it became something else. It became something about 10x bigger with people from all of Europe, not just Brits. And you can have a progression where the Internet started out American, but it's like 10x bigger. And in many ways, for example, Britain pioneered the Magna Carta and Equal Rights reveal, but also pioneered capitalism. America was simultaneously more progressive and more libertarian. It pushed both democracy and capitalism further. It went from the common law, British common law, to the Constitution. And now we go one more step. So the Internet is even more progressive and more capitalist than America. Everybody from every race, religion, et cetera, is on the global Internet. Anybody can speak to anybody, say anything, encrypt their messages, essentially do whatever they want for the most part on the Internet. But at the same time, it's the most capitalist thing to ever exist. More capitalist than any country. You can accumulate arbitrary amounts of money, you can own cryptographic property, you can start a business, become a zillionaire, trade whatever you want. So it's actually even more America than America, just like America was More Britain than Britain. And it was born out of America. And if I say, is the Internet American? It's like saying, is America British? Well, on the one hand, of course it is. It started in America and like, you know, grew out of DARPA and all that kind of stuff. Big tech companies are American, many of them. And you know, Silicon Valley's in America. And so of course, what do you mean, is the Internet American? But on the other hand, you can also talk about the non American Internet. For example, there's the Japanese Internet and there's the Russian Internet. So they have their own zone. So that's one piece. But a second big piece is, are those American tech companies? Are they actually staffed by Americans? Actually, depending on which one you look at, more than 50% of their employees are usually non American or they're immigrants that are naturalized. Certainly most of their users are non American. When you've got something like Facebook or Google with billions of users, there's only 300 million Americans. So definitionally, 90 something percent plus of their users are non American. You've got 3 billion users, only 300 million Americans. Most of the revenue depending on the company is non American. Most of their traffic is non American. Their data centers are non American. Their offices are mostly non American, et cetera, et cetera. They started out there, but they become something else. Similar with bitcoin. That's also Satoshi. I would not be surprised if Satoshi was an American. He could have been something else as possible. But it certainly feels like American culture in many ways. But then it's also something which is greater than because the big thing is the Constitution, as amazing as it is only scaled to the US but bitcoin scales to everyone. And this is a really amazing thing where there's so much argument over the judges and are the judges biased for this group or that group. But you know, you go to a crypto conference in Dubai and people from Africa, Latin America, the us, Europe, Asia, India, nobody's arguing bitcoin's biased against them, right? That's a really big deal, right? We've managed to achieve global rule of code. That's a huge deal. Enormous, enormous kind of thing, right? And you know, with smart contracts, with identity, we have property rights, we have encryption, encrypted messaging, we have capital formation. That's actually the basis for economic union and Internet economic union. That's comparable to the European Union or the United States. In the fullness of time, there's a lot that has to be built. But once you've got payments on chain, you can do accounting on chain. If you do accounting on chain, you can have companies on chain because you also have contracts on chain. If you have companies, contracts and accounting on chain, you can have a stock market on chain and you can have trading on chain. All that stuff is happening, right? And that's what I mean by the Internet is what comes after America. Because it scales in a way. Like, you know, it's funny, you know, I'm not an open borders person in the physical world, but and even the digital world, I think you need to have digital borders. Like, you know, for example, your. If there's some kinds of things that are social networks, messaging, apps, for example, you're not going to let every single person into every group, chat or whatever, right? But again, to argue against something before you argue for it. Do you want the steel man case for open borders?

Why not?

Let's give it why not? Okay, so the steel man case is when you set up a tech startup like Facebook or Google or something like that, you want a billion users, you want everybody from the X, wants every single person from the whole world to use X. Right? They in a sense have open borders. Anybody from anywhere can go and sign up. Right? And what they're relying on is the fact that their state, which is this digital, you know, the set of algorithms can scale up enough to give everybody their plot of digital land, their account, to mediate their interactions between people, to tax them when they do commerce there, to do dispute resolution and so on and so forth. Right? So you start thinking about these giant tech companies as like digital states with open borders. You can start to see, well, certainly, you know, they've managed to get to billions of users and be functional despite the fact that they're pulling them in from all over the globe. They sort of managed to get the libertarian ideal of tough but fair law, or at least close to that. Go ahead.

And when I think of Twitter too, I've been using Twitter for 14 years now. You can draw your own borders with things like list. That's what I do. That's how I consume Twitter, is list. I have lists. Finance, oil and gas, energy, comedy. Those are the borders that I've set for my consumption of Twitter.

That's probably good. It's funny. It's funny to put it this way, for all the time one spends on Twitter, it's actually effort to make the lists, but that's actually people do make lists. You can share lists. But anyway, so let me show you a couple of graphs just to anchor why I Think the Internet is what comes next. So if you can put this on screen. Yeah.

And while you pull these up, while you're saying that, I want to say, ironically, bitcoin being the way it is, and Americans having adopted bitcoin in the way they have in its first 16 years, ironically, Bitcoin may be the saving grace for. For America or Americans, at the very least.

Bitcoin? Well, yes, for sure. And the reason is. Okay, let me show you this. Can you see the screen there? Yeah. Okay, so I'm going to show two graphs that are part of my kind of role model. Right. There's two simultaneous disruptions. And then let's get back to how bitcoin is a saving grace. So if you click into the first one, so that shows that essentially blue America, and it's more than just the media, but let's use the media as one of the most important pillars of Blue America, basically was doing fine up until the year 2000. They made almost $70 billion. And then they fell after the dotcom crash, it was okay. And then starting in essentially the late 2000s, their revenue just fell off a cliff, right, from 67, $60 billion down to $16 billion, like a drop of like 75% at the same time that Google and Facebook were just going vertical. Right. So the Internet disrupted Blue America. Now, if you go to the next graph, at the same time, almost the same time, China suddenly rose and disrupted the Republicans. Right. If I reverse the colors on the graph, they disrupted red America. So starting in the late 2000s, right after the financial crisis, the Internet disrupted Blue America and China disrupted Red America. And what that led to, if you think about the world as not just Democrat, Republican, but four factions, Internet, Democrats, Republicans and China. So like a four group thing. Well, the Democrats got radicalized by the Internet's disruption of them, and they, they felt a shrinking pie, say, lashed out at Republicans with wokeness, and they lashed out at the Internet with the tech lash. Okay. Starting in early 2010s, around 2013, the Republicans were mad, understandably. So they elected Trump to lash out at the Democrats and also lash out at China with the trade war. Right. So it's actually a forefront conflict that erupted in the mid 2010s as a consequence of the disruption of blue America by the Internet, disruption of Red America by China. And now we're like 10 years into that conflict. And essentially what happened was the tech guys were taken aback because they thought that Democrats like them or whatever. Right? And it took them a while to understand what was going on. But eventually they toughened up and, you know, they, they started hitting back, right, and disrupted media. It took about five years to adapt and so on. A lot of guys were canceled, a lot of companies are bankrupt. And then they realized, okay, they're not Democrats are basically fighting, trying to kill, right? Because they're, they feel they, they can't build search engines or scale social networks, but they can write stories and shape narratives. They're making the tech guys into the bad guys. Okay, fine, we're going to build our own media. And that culminated with Elon taking X, which is like flipping Istanbul to Constantinople. It was like, you know, X day was like D day, you know, it was like, boom, we got all of our forces, all the tech. Because it wasn't just Elon, right? $44 billion. That was like Larry Ellison. It was like every centrist center, right, center, left guy in tech and finance all threw in. I mean, 44 bill is a lot. So for a lot of people, a mill was a lot. But everybody just threw in into that ticket and they were like, okay, put it all behind Elon. That was like, boom, D day, right? X day, X day, open up this beachhead like the invasion of Normandy. And then troops started moving out and actually uncensored Facebook and an uncensored Instagram unset, you know, Right. And you notice those different things because X is like the center of the English language Internet, right? So the Internet basically did strike back and it took some time for them to adapt, reorganize, and go on hit and actually, unfortunately, probably for freedom. China also was actually completely taken aback by the trade war. You see, there's this graph that shows Chinese FDI and under Obama and Clinton and so on that basically it was just soaring, ramping, right? Here, let me show you this graph. You click that. Merrick's, by the way, is a very good think tank. It's a German think tank. It's got good graphics. Merics.org so going into 2016, Chinese FDI was just going whoop, like this, right? And then Trump began the trade war. And just in tech, you generally bet on individuals and exponentials. And once in a while you have an individual that stops an exponential rather than starts one, right? So like Altman basically started an exponential with AI, but Trump arrested an exponential over here with Chinese fdi, right? Anyway, so China was actually totally taken aback by this. Just like the tech guys, China had thought America was their partner or whatever. They had just. They didn't think Trump was going to win or what have You. And so they just took a bruising for a while, but then what they did was they eventually changed their revenue mix and now basically they are. Let me show you this. Scroll down. So you see that if you click into that, that, that graphic, right? Notice North America go down a little bit. North America is like further down, a little bit further down. Yeah. See 16%, right? So 84% of China's revenue is not from the U.S. so entire con, even if they lost 50% of their revenue to the U.S. i mean like it hurts but doesn't kill them, right? So the entire concept that you can just tariff the US to stop China is incorrect. Because what they did was after 2016, they, that's why they did all the belt and road stuff. That's. They've been signing all these deals, they've been building up these other markets, right? They intentionally reduce their dependence on Red America, just like the Internet tech guys reduced their dependence on blue America. They basically built their own markets, just like, you know, the, the tech guys built their own media, right? So now you have Blue America fizzing mad at the tech guys. They hate Elon. They hate us so much, Much you can't even imagine. And you also have Red America, understandably more sympathetic, fizzing mad at China, right? And so Blue America is trying things like. Well, first they tried Gensler to block the Bitcoin ETFs and all this kind of stuff, and now actually relatively underreported. All of these journalists have these unions which are anti AI Unions, right?

Are they really?

Do you know?

No, but it doesn't shock me at all.

Yeah, so they have these unions at many of the major publications which are being on. They're falling on hard times. Their traffic is falling off a cliff since Elon has choked off links and so on and so forth, among other things. But these publications, the journos, are really concerned that their jobs are going to get wrecked by AI. So they have unions that are banning their editors from using AI and so on and so forth. Right? Of course, AI used well as a major workflow optimization, used poorly. It makes things bad. But like anything toolless tools. So they are in their own way trying to impose protective tariffs, right? In their own way. They're like, no, you can't bring AI into our controlled zone. We will ban it from our zone. Right? But they're losing control of media to AI and they're losing control of money to cryptocurrency. Right? Especially Bitcoin. On the other side of things, the red America is trying to stop China's incursion with this trade war and the tariffs and so on. But as I said, I think that's not likely to work for all the reasons we just got into. Right. Like if it the real version. And just not to be a negative person, I published a bunch of stuff. I mean, you don't have to listen to me or whatever, but like A, you do deregulation, you'd reduce costs as opposed to increasing costs. Right. B, you. For those things that were really critical, you could, you'd identify the 10 customers, for example, in the US of some Chinese part and then you'd say, okay, what factory is making that? Okay, then we make our own factory. That was the so called Sematech model, which worked in the 80s and 90s when Japanese competition was ramping up. They made an American second supplier alternative to the Japanese one. And everybody liked it because it brought down the price of that component and it brought it into the U.S. right. So there's like a smart way of doing this that is not simply just attacking. You don't need to have. If China's a national security threat, you don't need to put tariffs on Canadian maple syrup and French wine. You know what I mean? It's a completely untargeted nuking of everything. Anyway, point is, China's scaling up in robots on the manufacturing side and drones on the military side. And I can show graph after graph. It's depressing, but it's like if 200 to 300 shipbuilding capacity and the world's largest navy and Tomahawk missiles have Chinese parts and the US military is made in China by this Govini study that the U.S. military Commission with 400 million and on and on. Like Raytheon says, you can't decouple from China. The CEO of Raytheon said that and the Secretary of the Navy, Carlos del Toro 2023 said China's, you know, one shipyard has more ships than the entire U.S. navy combined. And Hegseth, who's a defense secretary on the Sean Ryan podcast said something like, China's hypersonics can sink all US aircraft carriers. And you can show each of those things. But putting that all together, that means that unfortunately, China's going to win versus right America. In fact, it's already won. I mean, just this one alone will kind of make the point.

Elon was tweeting about this yesterday. I think one of his frustrations with the defense budget. It's like we're spending money on manned flights when you need to be building drones. And I think Ukraine's attack on Russia a couple months ago or last month was like a sort of obvious moment where it's like, oh, this is asymmetric. Drone warfare is here.

That's right. And so if you look at. If you look at the tweet I just shared, right, Just put that on screen. If you zoom in on that. So famous US Armaments, like the Tomahawk missile or the jdam, you click in the supplier. Supplier is in China, right? So China can just hit a button and when it wants to, it can just essentially shut down the US military, or at least big parts of it. We don't know how many parts, by the way, because, like, if you look at how many click into that next one, that's like, look at all those things, right? So anyway, point being that in a sense, it's kind of all kfab. It's almost like if you're really cynical, you'd say the defense contractors are getting money out of this for a possible war with China when they've already lost, Right? Like they're just getting the spend on it. But the weapons will never or can ever be used. Not that, you know, not that war would be good, obviously, or it'd be terrible. But like, there's no. There's no realistic deterrent because China knows that it's got all the parts and all the screws, and it can just cut off the screws and you can't make anything that could screw you on the screws. Anyway, point being, that means that the pie is going to keep shrinking because, like, the disruption of blue America by the Internet has only just begun, and China's really ramping on the robots and drones. So blue and red America are going to see their pies shrink further, unfortunately, and that's going to radicalize them. And the other piece of it is losing the reserve currency. Bitcoin is appreciated by 100 million x against the dollar. Did I share that calculation with you?

Yeah, I mean, I thought you tweet about it, I think.

Yeah, that's right. I just hadn't seen that number quoted in that way. But Marty Malamy had the first trade, which is 0.1 cents per bitcoin, in 2009, late 2009, and now it's $100,000 plus for bitcoin. That's 100 million x. That's actually insane. Did you see my thing on super bitcoinization?

I don't think so.

So normal inflation is defined as like 2% a year, right? Which is like 0.2% a month. Right. And hyperinflation is defined at 50% a month. But that's a big gap. What if you define super inflation as 5% a month? Okay, so if you take the hundred million x appreciation BTC to USD and you take the 16 years over which that appreciation happened from 2009 to 2025, and you work out the compounding rate, it worked out to about 10.41% devaluation of the dollar against Bitcoin month over month, every month for 16 years.

That's insane.

That's insane. Right? You know what that is? I mean, you're a business guy. So that means super inflation is already here, right? Bitcoin is this. It's this incredible thing because it's invisible. People really don't understand what it means for something to go up 100 million x in 16 years. It means like, you know, I think I've said this before on other pod, but it's like, you know, future historians will have to tell children that bitcoin did not arise overnight. It wasn't just a step function that just went up. That it was actually, there are lots of setbacks and stuff in the middle, but on a historical timescale, it's just like as soon as bitcoin appeared, the dollar collapsed. That's what future historians will say.

That's why we built this extension to help people internalize this as they're going to the Internet. It's like you should be pricing things in bitcoin and observing how they're changing over time.

And observing how they're changing. Exactly. That's why your hat says sats, Right? The sats hat. Right. So, yeah, like it's something where as soon as bitcoin appeared on the scene, the hardest money around started attracting the smartest money around. Right? Smart money has been going into Bitcoin for 16 years in larger and larger and larger quantities. And it's still, you know, it's still going to go. So if you combine the Internet disrupting blue America with China disrupting red America with the loss of reserve currency and bitcoin going to the moon, you have a situation where, man, the blue Americans will be really mad. They'll be really mad because they'll say, and I actually don't love this framing, but I'll just say they'll say AI took all the jobs and bitcoin took all the money and the tech guy should take all the blame. Right? And the, you know, a lot of the Republicans, former Republicans, I Do think after maga, maximalism, after Orange Man, Orange Coin. Haha. Okay, I think that's funny. Whatever. Right. And you know, the, the reason for that is that's not, you know, being anti Trump or anything, but it's just basically saying Trump is such a unique figure that I don't think you're going to be able to hold that coalition together after Trump. Right. He has such a unique charisma that appeals to people of all different ethnic groups and men of all different stripes and, you know, what have you, that whatever comes after him, I think will be actually a bunch of different leaders who are essentially pro bitcoin leaders of different kinds, like Desantis or Elon or, you know, like folks like this of different kinds. Right. And I think that a lot of the fighting is going to be over, you know, like, do you have to surrender your bitcoin to what's left of the federal government? You know, and so that's why like being in like my. That's. That'll be what it is in the U.S. i think, I think actually it's worth doing, you know, it's worth actually thinking this through. And then let me talk about, you know, NS or whatever. You know, there's tons of movies you've seen on like aliens invading the Earth and like killer robots and stuff like that. And those are like popcorn, you know, there's like, they're post apocalyptic scenarios on one level. Zombie movies, alien movies, killed robot movies. There's genres in their own, right? Oh, that's a killer robot movie. And you can kind of look at those kinds of scenarios with some degree of detachment because you've seen them before a few times. Right. And you're like, oh, it's a twist on the killer robots, but you've actually never seen a fictional thought process on how like the devaluation of the dollar could unfold. To my knowledge, I don't think I've seen a movie on that. I may.

If you've seen it, Mandibles is a book.

The Mandibles is a good book. That's right. It is a good book. Right. So that actually should be turned into a film. Right. But still, like, people have to use some, you know, mental model on that. Right. And you know, the, the way I think about this is if you visualize the surface of the Earth, do you know what a neutron bomb is? Yeah. So neutron bomb was invented supposedly to kill people, not buildings. Right. Like, okay, so a financial neutron bomb doesn't kill people or buildings, but just kills like fiat Currency, right? So imagine you're like an alien. You're looking down surface of the earth. You see all these people walking around there. They've all got a little dashboard above their head, which is their score in fiat currency, cryptocurrency, et cetera, et cetera. Okay? And what happens is then like the dollar either goes to zero or it's hyperinflated or super inflated, whatever, over time to a valuelessness nature. And it's tricky to forecast when, because the thing is that you have stable coins which are expanding the scope of the dollar. We have tariffs are contracting. It says it's like springs with where you know, you don't know when. Okay, fine, but let's just say that does happen. And then bitcoin becomes a larger and larger, larger percentage of the purchasing power. Well, if it happened overnight, what would happen is like, like, you know, Biden was, you know, he was, it was the President. The president. President. And then he was finally judged senile. And it just, you just mark to market overnight. So that's, that's the overnight. Because it could also be gradual, right? So if it happened overnight, what happened is all those people on the surface area, like ants, it just suddenly stopped moving. Because every package that was midair, every person who's going to work was like, wait a second, I'm not being paid anymore because I'm being paid in dollars. This contract is no longer valid. You know, every dollar denominated contract, implicit reciprocity. And by this I include Canadian dollars and jpy. Lots of things that are indirectly dollar dependent and probably lots of fiat currencies are indirectly dollar dependent. If they're holding US Treasuries, all kinds of economic relationships, coordination, relationships just break down and people are like, what do I do next? How do I put food on the table, right? And lots and lots of things break at once. But then what is not zeroed out, right? So the knowledge in your head remains, right? Your house or your, your physical goods remain. Like the shirt on your back remains. You know, if you're in China, China's factories remain, right? If you have Bitcoin, your hard currency remains in a deep sense. What remains are like BTC and ccp, right? Like that's to say like hard money and you know, hard power, like factories, you know, and then hard currency. And the good thing about BTC is lots of Chinese people, they, they don't respect or fear America anymore, but they do like Bitcoin. And they actually think of bitcoin as a protection in part against their Government, because the Chinese government will just use like a local company's bank account as like a piggy bank. You just take money out of it, like lawlessly or what have you. Because they've got root. Okay, you know, I just need something to pay for these roads. This, you know, the government will take the money out. So Chinese people, Chinese people, their protection against communism is the strongest form of capitalism ever known. And property rights ever known, which is Bitcoin. So BTC also being intangible. It's like a cloud. Whereas China is like the land. And that's how I see things shaping up. Like the cloud and the land. The Internet versus China. That's what I see happening after this whole very predictable meltdown that Dalio sees coming, that Elon sees coming, that everybody sees coming. It's like this weird thing where the singularity happens and nothing ever happens. It's like this superposition, as we were saying.

The administration even sees it, I mean, has shifted frame and is saying, we're going to grow out of it. They're sort of like hand waving, like we're going to turn.

Yeah, it's completely. I mean, the level of the problem is, first of all, it's not even possible because any growth would be swallowed up by this incredible spendthrift kind of thing. Right? So what happens is essentially like what happened with Weimar, right. Which is one of the precedents is the currency got inflated, but there was enough cohesion among the people that it was rebooted into a manufacturing power in the 30s, of course, for ill purposes, but it was rebooted. However, in other countries, the social fabric was not tightened enough. And so it all fragmented into pieces. Like what happened in South America and other places with money printing. And unfortunately in the US the social fabric of gender polarization, racial polarization, political polarization is so, so, so, so polarized. Democrats don't even marry Republicans. They don't vote for Republicans. They don't talk to Republicans on social media. They're in their own social networks. They've already digitally seceded. The only thing they do is they still trade with Republicans via the dollar. They're still economic in you for now, right? So when that last piece of fabric phrase. Then you have basically mutual denaturalization where blue Americans, just like debanking is like taking away your bank account, denaturalization is like taking away your passport or your citizenship. So that's what happened. Like, you know, north and South Korea, right. East Germany and West Germany. East Germany basically denaturalized those people who Went to West Germany and vice versa. So there's that whole messy, messy, messy process where the last strands holding it together. And I think that, you know, the like. Basically my diagnosis is, are you, how far are you from cars being lit on fire? Right. If you're, if you're within walking distance or driving distance of cars being lit on fire, which is happening in la, happening in San Francisco. If you're within distance of like the Luigi left, which is in New York and so on, that's bad. Right? Miami or Texas is probably better though. They're doing some firebombing of Teslas and so on there. It's probably like on balance here in the US Better. I think El Salvador will actually be a place where in a reversal of the 20th century, a lot of Americans are going to seek, you know, safety. Right. Dubai is becoming huge for Brits. More than 500,000 Brits have gone to the UAE, Abu Dhabi and Dubai. Lots of Chinese people have come to like the Chinese Capitalist party has come to, in a sense come to Singapore because there's people that G, you know, was trying to expropriate or persecute or whatever. Right. So those are becoming centers. There's various places that are, that are rising and you know, so that's kind of, that's, you know, pieces of how I see the world. Like the future will be China versus the Internet. And for a while China will be really, really, really strong because they just have this totally unified 1.4 billion person super state with this really powerful military and manufacturing base which ships all over tanks, planes, drones, robots. And the lesson they will take from this dollar collapse is that the Chinese system is the best. That's the lesson they will take. And the Bitcoin maximalist will take the exact opposite lesson, which is that centralization is a problem and we need freedom. And so CCP and BTC will take completely different lessons. Very similar to. By the way, the US and the USSR are taking different lessons from the fall of Nazi Germany. And then the world gets split between them. CCP and BTC are also in a sense, communism and capitalism. So it's like the 20th century again, right? Except this time the battleground isn't Europe, but it's America. And the Germans got split into the West German siding with the American capitalists and the East Germans with the Soviet communists. I think this time what happens is the democrats side with the Chinese communists. The Republicans become Bitcoin maximalists. So it's again communist versus capitalist, but in a different continent. Right. You can Already see that. As I said, Newsom and Wallace are siding with Chinese communists, but Republicans are Bitcoin Maximalists are much more pro bitcoin. So you can see the sort of foreshadowing of that happening. Let me pause there. I know that's a lot. That's like kind of forecast five, 10 years or what have you.

No, and I would just reiterate what I said earlier, that if that does become the juxtaposition or the polarization, the spectrum that exists after Orange Man, I again, I think it's a saving grace for. I don't know if it's America, Americans, individual states, because fortunately, Americans own, on a per capita basis, more bitcoin.

Hundreds of millions of dollars. Yeah.

And as the price goes up. It used to be talked about behind the scenes, but I think people are being more overt about it now. But there's a ton of bitcoiners, particularly in the United States, who are just waiting for the price to go up. And then that point, it's like we're so wealthy that we can begin to exude influence on the way things are happening here.

The thing about it is, I think so between Chinese control and let's call it American anarchy, what I want to help establish is the Internet intermediate or the international intermediate, because certainly of the two, I am more sympathetic to American anarchy than like, you know, Chinese communism. However, anarchy or crypto anarchy is worse than crypto civilization. Like, what you want is voluntary opt in societies. You don't want tyranny, but you don't want anarchy either. Yeah. And so hence network state. Right. Like, essentially, if bitcoin unbundles the world, then what rebundles the world? We rebundle the world in the same way that you find your friends online through billions of voluntary actions. We formed all of these online communities. We materialize those into the physical world. And crucially, we can, in a smart way, agree to disagree. You can have the vegan society and the carnivore society. They can both have a million people and they can both be internally consistent. As I may have said before, they're both better than the McDonald's diet, an improvement on that diet. And then they can just be at a distance from each other because obviously their moral codes are incompatible. But probably people are healthier in both of those things than eating McDonald's slop or whatever. And similarly, you could have the Sanskrit society and the Latin society, you could have the Scottish society and the Welsh and the French or whatever, Catalan and Basque. All these different cultures could have their own startup societies and then they could just trade amongst themselves. But they could have their old cultures or new cultures or what have you and you could have totally new concepts for things. For example, I think a society that was like 50% offline, where the Internet would just shut off for 12 hours a day, could be a very valuable kind of society where it's like sort of mandatory offline time. Actually a lot of colleges do that in Asia they shut off the Internet from I think it's like midnight to 8am or something like that. So students can't just play video games all night. Right. It's actually good. It's kind of like mandatory lights out. It's helps them with self control or whatever. Right. So, so that's kind of the concept of network state. Right. And maybe you can put that on screen if you want. Thenetworkstate.com so this book I think is, I think it picks up where like the bitcoin revolution is 16 years old and it's risen 100 millionx against the dollar and only has 10x more to go. What next? Well, we've started new currencies. Can we start new cities or even new countries? It starts with community. City, country. I talk about this in the network state book. Network state in one image. Basically this graphic shows what a network state looks like. It's like a physical social network. Right, And a physical social network. Let me just send a quick message to the next person, say I'll start.

While you're doing that, I'll mention too, something I've been passionate about thinking a lot about too is I think particularly here in the United States, the focus on the nuclear family needs to be really driven back home. I think that's a root, a root cause. One of the, a lot of the.

Strife is absolutely for sure. I mean you need to have like strong family ties, you know, but like the whole male, female bond has to be rebuilt and so on. Right. And that's obviously gotten crazily gender. I do feel bad for the young guys like who have just as I said, they just kind of came of age in this post apocalyptic social landscape. And so I'll come back to that point. So this is kind of the concept of the network state, which is a social network that is actually a real network of friends that crowdfunds territory. And it has in this case a million 729,314 people and it has piece of territory around the world. But those pieces of territory are separated by Internet. Yet just like for example Hawaii is not part of the mainland US but it's still part of the same country, right? You can have a piece of territory separated by ocean be part of the same country. So this is a piece of territory separated by Internet. They consider themselves part of the same country, the same community. And so this example shows something that's actually at the scale of a traditional nation state, just like bitcoin's at the scale or beyond the scale of most traditional fiat currencies. Right? And I have a visual here of how a network state builds out. So you start with like one, and then, you know, you go to 17, 172, 17,000, 170,001.7 million. And so you can literally start it from your computer and expand it out like this. Okay? Now this was the theory. And I was thinking about writing the second edition of the book, but, you know, I did instead. So I held a conference and then I was like, you know, theory and theory. Theory and practice are the same. In practice they are not. So I went and started NS.com and so that is a startup society, right? And so essentially what we have is, you know, we literally. That's Brian Johnson there with me. Right, so can you see the video on screen? Yeah. So this is something where we've basically taken over big pieces of a ghost on. Yes, it's Vitalik. I know you guys are bitcoiners, but he is a friend. Right? But I think I'm pretty more pro bitcoin than most. We've got a gym, we've got. We've got co working space. We've got, you know, folks basically from all around the world, more than 100 countries. We've got kids, we have talks, and we have this Ryan Peterson of Flex where we have guest speakers. And basically we have, you know, just like, you know, we have fun outside. We have beach, got a really beautiful, like kind of forested island here, right? And we have cafe. People play chess and just, you know, cool things happen, right? And essentially this is, you know, we've got like, you know, outdoor seating, we've got buffet, and it basically takes care of. That's why I call it like a startup society. Society as a service, right? And it is essentially, you know, we work hard, play hard, bonfires, parties, right? This is a cool drone shot. Boom. And it's calm, right? So basically the. The concept there is just like bitcoin. You know, we know how to do Internet companies and we know how to start an Internet currency. Can we start an Internet community?

Right?

And so I'm trying to develop a template that can be used to bootstrap a community from the cloud, right. And if you are like a Presbyterian or you're Catholic or you are, you know, you're, I don't know, like you're into just about any subculture, you're Mormon or something like that, right? I know more than a subculture. You know what I mean? Right. So, you know, you could have a religious sub community. You could have something that was based on language, like French Canadians or something like that. Any kind of theme you have for a community, you could take this template that we're building at Network school and then you could apply it to your subculture. Now I'm, I think very clear about who I am and what I stand for and so that I'm a tech guy, right? But I'm sympathetic to many small c. Conservative values and so on. And so while what I care about is like human self improvement and nootropics and robots and drones and math and science and so and so forth, you can take many aspects of what we're doing and you can be like a cafeteria Catholic, you can take some pieces and swap out other pieces, you know, and you can turn that into a traditionalist seeming society that has minimum necessary technology and so on and so forth. Or you could, you could dial it up even further. You know that you could, you could make it speak a different language. It's like a chassis which you can customize. And so that's why I'm doing Network School. And so, you know, for those people who are watching, if they're in Asia or they want to visit, go and apply@ns.com and it's my way of trying to have a constructive solution for the disorder that I think is coming. And crucially, it's entirely voluntary. This is how we rebuild site. Bitcoin essentially takes away all the coercion of the fiat system, which you and I all know is there. So then once you're free men, once you're sovereign individuals, I think we want to start forming sovereign collectives. The reason is it's like there's a burning building, there's like a fire alarm and that's what bitcoin is. And we all get out and we don't die, right? But then you don't just stand out shivering in the rain forever. You want to rebuild that building or a building of some kind, maybe not the exact same one, maybe not one with exactly the same fire hazards and so on. We want to rebuild a building or a few buildings and so that rebuilding process is what I'm focused on and trying to build a template that then, you know, it's open source, anybody can clone and copy it. And, you know, I want to, I want to prove it out first before I say, hey, this formula works. But if we can get it even to, like, several thousand people, right? Several hundred already. So if we get to like several thousand people, let alone tens of thousands, that's a formula for creating a city from the cloud, which I think is a pretty, pretty important thing. That's what I mean. Look, you know, if you, if you're really wealthy from bitcoin, especially if you and a group of friends, really wealth of Bitcoin, that's a, that's a valuable thing to do. That's what the early Americans did, right? That's how the Massachusetts Bay Colony was founded. That's how the Virginia Colony is founded. That's, you know, Sam Houston. That's, you know, the land grant colleges in the Midwest, right? There's that pioneering spirit of building something from nothing where you have your group of guys and you go and do it. And it's actually all these abandoned ghost towns in the US that are being deindustrialized. There's all these abandoned college campuses in the US where this has happened. And then further in other places like Japan, because the declining population, there's all these abandoned farms in abandoned towns, right? So the falling population and the rising bitcoin mean that basically there's a lot of territory where if you're willing to go in with a frontier mentality and you have Starlink and so on, you can go and set up there. Now, I will say one thing. You know, the single most important thing that I learned in doing this.

What's that?

The network state is about real estate about as much as cryptocurrency is about fiat currency. What I mean by that is the USD BTC ratio is like the metronome of the whole space. Even though cryptocurrency is supposed to be sort of, in a sense, transcending fiat currency, that is also a metric of its progress against the legacy establishment and bitcoin exchanges and banking interface and all that kind of stuff, the political aspect was actually much a bigger deal than you thought. Right. And so the network says about real estate basically means that I'm an electrical engineer, but I'm also an electrician. I'm a chemical engineer, but I'm also a plumber. Like the amount of real estate stuff that I've had to do or last 15 months, 18 months is a lot, right? Which is great. I'm learning new stuff, but it's about. It was. In retrospect, it's not surprising, but it's kind of like when I was at Coinbase, I was amazed at how much time I had to spend on fiat banking and ach wires and so on and so forth.

Right?

That was necessary. Fine. We do it because it's necessary. We get pretty good at it, right? So. And also one other thing I'll say is that basically with NS.com, we're incredibly pragmatic. We don't need, you know, first you have a community, then maybe you have a Special Economic Zone, and then maybe some country somewhere, not necessarily on the first node, probably not in the first node. Maybe it's the Marshall Islands, maybe it's Palau, maybe it's Mauritius. Who knows? Some country somewhere has some deserted island, some peninsula, and they may sell it to you for however many Bitcoin. That's a dream. But that could take a long time, that could take years or decades. That's fine. First you just build up the community. You don't need to jump all the way to the end in one step. And crucially, this is a more friendly vision in some ways than the Citadel vision, because you're not talking about, like, defending a citadel against hordes of zombies like Mad Max, right? Or at least hopefully you're not. Instead, you're actually recruiting from the world over there, people who share your values. And there's a lot of people who share your values. The key thing is also that this is in a fundamental way just like I think we reclaim free speech, we can reclaim democracy. That's the last thing I'll just say there, which is, do you see what happened with Starbase?

They're right on the edge of the border. It seems like they want to. I mean, they made their own city.

They made their own city, but basically, are they seceding yet?

I heard rumors of secession.

I don't know if they're seceding, but they incorporated. So go in, go and click this and look at this. Right? So in Starbase Texas, you have a model for democracy that is 97% democracy, not 51 democracy. Right? Because they combined voting with the feet to move to Starbase, voting with the wallet to build up Starbase, and then voting with the ballot to incorporate Starbase. Right? So that is, you know, if you heard the term effort post, right? So that's an effort vote. That's like a real vote, right? That's not like a, okay, you know, let me, let me spend a lot of time online complaining and then hit a vote once or that's like, that's like the true, true, true vote where you are voting with your feet, your wallet and your ballot and that is how we start to move from the two party system to the thousand community system.

Yeah, no, and I, I really like this last sentence because it's something I read a piece a year ago and I've reread it like three times about like the great decentralization and return to borders like the Holy Roman Empire. Yeah, and I, I could definitely see that happen. I guess my, I'm gonna call it skepticism, but like my, like does that have to happen via the sort of creation of these digital communities that then go meet and meet space or going back to my point about the nuclear family and like local community and physical space going from there, Is it just having families, extended families, communities in the same physical location coming to the conclusion that they need to sort of not inoculate themselves but be more independent from the federal government, state government, get all the way down from the city.

I think there's a value to that decentralization. But I also think, and I'll close on this, which is in many ways bitcoin is a version 3.0 that combines the best of gold with the best of fiat, because it's got the best of gold in terms of the immutability and so on. But like fiat, it can be sent electronically, it's like liquid and so on. It's like global. Right. You've got a lot of advantages of both. And so in the same way I think we want to have for the network state, some of the advantages about city states and nation states and some of the advantages of decentralization where you've got local tribes, but some of the advantages of the global scale of massive markets and audiences. Right? Because you do ultimately you prosperity comes. There's many kinds of things where you know, there's maybe an audience of 100,000 people around the world for your product, but if you, your critical scale to produce that product, you know, if your limit is just one country, you know, or just one tribe, you wouldn't be able to produce that product, right? So there's lots of things that there's a, there's a value to scale and I think that we can sort of rebuild that with the concept of like a federation, a loose federation of startup societies and network states, what I call the network states of the Internet. And I think that could be like the vision for rebuilding over 10, 20, 30 years after this fiat crisis.

Yeah. No, I mean this. And it's crazy. It's all coming together like the sovereign individual thesis. And I think the Starbase example is one example. We got our own city. Like we want to ATT talent in this sense, if that begins to replicate. That's essentially what Rees Mogg and Davidson wrote in the 90s was eventually it's going to get to a point where you have cryptocurrency, you have asymmetric germ warfare, you have artificial intelligence, you have a hyper polarized population that's mad about immigration, all this stuff. And eventually what's going to happen? Capital is going to flee because it can, because it's protected by cryptography. And you're going to sort of have these concentrations of capital in physical locations that understand what's going on and try to attract that capital.

That's right. So on that note, let's wrap. This is really good.

You've got to go. We're 15 minutes over. So I appreciate you.

Okay, thank you very much, sir.

It's always been a pleasure. Peace and love. Okay, freaks, thank you for listening to the show. I hope you liked it. If you did like it, please make sure you subscribe rate, review the show. It helps us out a lot. And also if you like these conversations. I've come to realize that many people listen to the podcast. They don't know we have another sort of layer of this media company. We had the newsletter, the Bitcoin Brief. Go to TFTC IO, make sure you subscribe there. A lot of the topics that are discussed on this podcast I write about five days a week in the newsletter. We also have the TFTC Elite tier. If you sign up for that, become a member. We have a private Discord server for the elite freaks out there where we're dropping ad free versions of this show and having discussions about everything we talk about a day early. Logan wanted me to make sure if you want to get the show a day early, become a TFTC Elite member. You will get that. We have our Discord server. Right now it's conversation between myself and TFTC Elite tier members, but we're going to expand that. We'll probably do closed Q&As with people in the industry. I may be doing Macro Mondays, so join us, go to TFTC IO, subscribe, find the button in the top right corner of the website, become a TFTC Elite member. Thank you for joining us.