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This week's guest is the inimitable
Francis Coppola, she's an outspoken writer and speaker on banking finance and economics
She's a well-known critic of cryptocurrency the author of a book called the case for people's quantitative easing and
Recently, she had a pretty high profile run in with
British politician Nigel Farage when he claimed his bank account got closed for political reasons
We'll get into that a little bit in this conversation. Let's get right to it with Francis Coppola
Okay, Francis, thanks for yeah. Thanks for joining me today. I'm a bit
I'm actually a big fan of yours, even though I disagree with like
Like 98% I would say
That's okay, there's 2% we can work with that right I think I first came across you
Because of your your outspoken views on Bitcoin. Yep, and then I
Explored deeper, you know some of the things you're talking about with with regard to banking and you spent time
Working in the banking industry, right?
Yeah quite a few years
And so I got deeper and realized you have a deeper philosophy here
You know than any one topic. So that's why I wanted to talk to you
I wanted to find out more about how you think and
How it relates to some of the topics that are going on today like, you know, like things that concern me like CBDC
Technology and and things like that that ultimately, you know my major concern was
Stuff like that is government micromanaging my life in the long term, you know, and so
But but like I wanted to get first a sense of what you think
Like how do you define money? What is money to you?
Fundamentally to me money is
Is is a medium of exchange. It's how we transact is how we trade with each other
And money is the means of trading with people. We don't know
People we don't trust that is the purpose of money. We're
Doing transactions with people we know and trust we don't use money
If you know if with family members, for example, we don't necessarily use money
We use money when we're dealing with people who are more distant from us who maybe we don't entirely know
Or who may be and the other reason we use money is to do with what they call the double coincidence of wants
Which means that say if the problem with barter everybody thinks it will come from barter
So if I've got like two kilos of potatoes and you've got
A kilo of carrots or something we can do a trade
Except that we've kind of got an implication that assumes I that at the same time. I need carrots and you need potatoes
But if we don't
If I say need carrots in a couple of weeks time you you need to do a trade
Next time you you need potatoes now then
if you see what I mean, then we've got a we've got a
Timing problem and money solves the timing problem. It's like it is we can use the correctly use the term token
About money but money is a token. It's a representation
Right of value. It's a value that can be cashed in at a future date for something real
Okay, I think we're on the same page here like it money represents to me almost it's like
Human energy in a way, you know because it represents I
have something that I obtained either through my work or by trading something else that I had to obtain it and
You're interested in that thing and I can trade it to you for something else
but then you take money as a concept and it can substitute for any of those things and it becomes this thing that everybody
wants because it stands for that
Human energy that's required to obtain
Things things including food and water and everything or another way of looking at is that it is that it represents our obligations to each other
Right. That's a good. That's a good point, too
Yeah, and so but at its core like I think we agree that money is a
Concept right. It's a
It's a an idea and that everybody needs to
Agree on that idea in order for it to be worth anything, right? Oh, absolutely
You know, I'm one of the one of the features of money
It's not just that people need to agree on what money on that they are all prepared to use these tokens as
Money as a means of exchange, but they also need to agree on what they're worth
You know money is as a means of accounting for things
For measuring value and what did that's one of the functions of money is is what we call a unit of account
Whereby we agree that
Two kilos of potatoes are worth this much in monetary terms and that enables us actually to deal with
Or resolve some of the issues that come out of where i've got two kilos of potatoes, but you've only got a kilo of carrots
You know, what is the relative value of potatoes and carrots if we're doing a one-for-one exchange there?
So carrots are worth twice as much as potatoes in monetary terms
Right
so
Money has to be more to you though. I think based on some of the stuff that i've heard you talk about
I think that um, it's one thing to say money is you know, this tool for exchanging value that you've earned
But it's another thing to to say that money
Should be controlled by government right and used as a tool to incentivize certain things or to
To cause certain behaviors to happen
So doesn't that expand the definition a little bit?
Beyond what you just said? Well, I think it depends what you consider the role of a government to be
You know and we can get into at this stage the nature of government and what its role in in in in in society is
That you can have private money. I mean I don't myself
I mean, it's interesting you seem to think i'm very much a kind of a centrist government control type person
But i'm really not and quite a lot of what i've written has actually been in the past
And one of the things that happens when governments become too controlling around money is you start to get private monies developing people find
Start using other things as money money is not fundamentally
In that respect when you consider money as a medium means of exchange the means of as a
Representation of our obligations to each other and and representation of value
It's not fundamentally a government construct that's more social construct if you see what I mean you could have community
Which doesn't have a government but it does have some form of token that everybody agrees
It represents value for them and obligations for them. I mean the famous examples and things like the apstones
So but there's a second there is another way of looking at it, which is that I think money also
Conveys a sense of identity of who we are as a people who we are as a nation who we are as a community
And if you are part of a community that has a government even if it you know, never mind what kind of government that
Government that is doesn't have to be a democratic one in you know back in the olden days. It was often theocratic. So money was often issued by temples
But it kind of rep it it was it it kind of represented who we are our identity
As a as a nation or as a or as a community or as a state or
Whatever and people become very very attached to it
This is why for example in my own country, we we really really like the pound and we don't want to give it up
So when you say it represents, you know the the the people in a way or the identity of a nation do you mean
That money can be used to mold
The identity of a nation through its supply through restrictions on it through
Creating new money. Is that what you're talking about?
Or am I missing that partly? Um, it's more um, it's it's kind of related to also governments mandating
What makes what weights and measures will be used that type of thing?
So again, we've come back to my own country the uk a great deal of debate following our departure from the eu about whether we stop using
Measures and measures that we use that type of thing. So again, we've come back to my own country the uk
Great deal of debate following our departure from the eu about whether we stop using metric measures and go back to
Britain's unique set of imperial message measures that we used to use
um
When I was a child
And that in some parts of our economy we still use and there are people who really really want that to happen because for them
It's an expression of our sovereignty as a nation. It's who we are. It means we are different from them
We use a different set of weights and measures. We use a different money. It's part of our identity
I guess part of why i'm asking these questions is because i've heard you and seen you
talk about
um the idea that new money should be
created to to solve social issues right and to solve wealth inequality and
Quantitative easing and all that kind of stuff which which indicates that
and that's what I was alluding to before too is that that type of
policy
Those policies basically go beyond just and they almost to me they they nullify the idea of money as that
Symbol of of your time and your energy, you know
And they turn money into a tool for government to manipulate the behavior of people whether or not
It's for good or for bad is a different story
But it is about how can we incentivize and manipulate people into doing what we want them to do?
Because we think it's for the better for the greater good like to me that changes
The definition of money to a certain extent almost mutates it
It can do and I don't rule that out and when we talk about cbdcs
There are issues around that that concern me greatly but but fundamentally if you are seeing money as simply a means to an end
What is the means to an end that we want? We want people to be able to transact with each other
We want people to agree on what what the value of value of things is we want people to be able to to
To build up wealth those are the three functions of money
And if you are and if you want that to happen if you want people to be able to do that
Then you have to have enough money now your community may
may
Create enough tokens itself to be able to do that
itself just organically
um, but in in
countries and
States that have governments historically money has always been created by government
And the question is then how much of it do they should they create?
And who should have it?
um, and i'm actually not very into governments
necessarily
Being totally in control of um, either of those
So you're how would you describe yourself politically?
Center
Okay
I'm very pragmatic, but i'm kind of politically neutral really right now in the uk
I i'm probably a little bit lefty, but that's only because my government is
Everybody here is lurched so far to the right
Um, which is and in america you're even further to the right
So I guess i'm probably a bit lefty but but i'm certainly not this kind of sort of center and
I think perhaps a more helpful way of looking at it. I've found found more helpful is how authoritarian are you?
Um, and i'm not very despite although I believe in in sort of things like equality and social justice and so forth. I'm not
Very authoritarian. I'm not very into government sort of state mandating things
um, so when it comes to money, for example, we've had
at intervals since the
Intervals since the 2008 financial crisis we've had people proposing that got that banks should lose their money creating powers
And all money should be created by governments and i'm going no
No, actually what we have believe it or not is actually a decentralized system whereby money is created by commercial banks in respond to demand for loans
and the only and the interference if you like with that from government concerns the the
Um provision of the underlying means of of settlement between banks, but it doesn't affect
Um what banks do but we do interfere with how banks do that because banks can be
Really very criminal things and that's all to do with the rule of law
Right
Yeah, the whole left and the right thing in in america is is so hard now to it's hard to to
put these things on a scale
uh, or on a spectrum because
um
you know
The most the people who are most authoritarian
When it comes to money and social issues
Are actually the people who believe that they're least authoritarian a lot of times, you know when we're talking about
you know
and you force
Somebody to make you to officiate your wedding if they don't want to like if you say yes, that's
Authoritarian you're telling somebody they have to do something. They don't want to do
Uh, can can the government force somebody to undergo a medical procedure?
Uh, if you say yes, then I mean, yeah, even if you think it's for the greater good, you're still authoritarian
You know, but they would never think that
No, and i'm actually very surprised how
Authoritarian some people who consider themselves to be libertarians are
Um, and they don't seem aware of it. I mean in my own country for example
We are now with a very really quite right-wing government
supposedly firmly wedded to free markets and
and
freedom of speech and
all of these things
centrally planning the labor markets completely
um and dictating to banks who they must do business with
How is that consistent with this kind of belief in free market and freedom of speech freedom of expression?
The freedom to do business with whom you please
It's completely inconsistent. I personally
um as a as from philosophical point of view more on the point of you know, there are limits there must be limits because
Otherwise, we do get unacceptable practices like, you know discrimination on grounds of nothing but race or something like that
Um, but within those limits which are kind of mandated by human rights legislation really
Um businesses people so we should be free to transact with
Whoever they want to transact with and if that means saying I actually don't want to give you a bank account
Then that's okay
Yeah, so you you had that run in that memorable run in with nijal faraj
Yeah on a news program
I don't know what it is because i'm american and don't watch british tv
But when it's you and it pops up on twitter or youtube i'm going to watch it and I watch that and um
Just to summarize what I understood from it was his bank account was shut down these memos came out that showed
That people in the bank were concerned about his political views
But also
he sold
His house where he closed the mortgage and that that
Um disqualified him from continuing at the bank, right? It was something like that and you were pointing out that that's the
That was the actual determining factor not the not the political concerns, but the the financial just the black and white
Rules say he was disqualified from having that bank account
The point I was making which was totally supported by what was in the
information he obtained from his bank
Um was that the decision had been made on the grounds that he no longer met their published financial criteria
It's you know, it's uh, kootz is a is an elite brand
Um that offers banking services to very rich people and you have to have really rather a lot of money
Either that or borrow an awful lot
Or both in order to qualify for an account with them
So when his account fell below those criteria they decided to close it now the question was more to do with
Is did they give him did they a warning they were going that that paying off his mortgage would have that effect?
And b did they give him the opportunity to bring his account up to commercial viability and the answer seems to be no
Um, they simply decided that he they didn't really want to miss a customer anyway
And from the dossier it appears that really because they reckoned he just posed this massive reputational risk to them which in the event
Um proved to be the case
So like everything that I read and I I heard what you had to say about it
You know and and I read about it
And uh saw what you were posting on twitter about it
And to you it's it's a very black and white issue
You know with regard to why they closed it
um, but but
I mean first of all you can clearly see
Why he would make this argument right like you can understand that point of view
At its core right even if you don't agree with it
I can understand the argument. I just think it's wrong and I think it's based upon a misunderstanding of banks
I mean I
If you actually should look at banks, I I I don't I don't hold a torch for banks
You know, I am not a shill for banks. I I know what they're like and banks fundamentally unmotivated by money
They will take on
Um the most awful people if they think they'll make money from them
um
But if they've got somebody who is not earning them very much money
Um, and who is a reputational risk to them to them, which means that some of the things he do given he had actually
Disclosed to the press his banking relationship with kootz
He'd done that in 2019. It's in the times
So it was a matter of public knowledge that he banked with kootz
And they were concerned that something he did
might
Cause them reputational damage by which they would mean drive away customers that they want drive away
Shareholders cause the bank's share price to crash cause them to lose um revenue in terms of um,
You know income from lending or just or income from deploying people's um,
Their high net worth customers' um wealth
In productive ways so from their point of view
They would have been looking at it as the risk to their revenues to that that he presented
He wasn't earning them enough and he was a risk and he was creating risk that they would drive other people away
And you have to look at it like that because this is how banks
Um, this is how banks work even the risk
Um, you know when we're dealing with money laundering risks and things like that
In banks banks will launder money and they do if they think
That the amount of money they'll make from money laundering
Is more more is enough to justify the risk of being heavily fined if they get caught
Right. Yeah
Okay, and all banks think like that fines are a cost of business, right?
The problem it where they got caught out in in
The last 10 years or so was that the regulators
Ramped up the fines. So when bmp paribas got hit with a 9 billion fine by the federal by the fed
Um, it sent shockwaves around the world because suddenly all these banks that was for sanctions busting suddenly all these banks are going
Oh my god, that's a much bigger fine than we're used to
Right, so right immediately started thinking actually some of the study stuff
We've been involved in we'd better get out of because if they hit us with a fine like that we're in trouble
It's no longer worth their while
doing
Dodgy things, right? So it's not yeah, it's all to do with with banks core business, which is to make money
So you're not you're you're not saying that his political views the fact that he's conservative and and led
The brexit movement, etc
You're not saying that that didn't play a role you acknowledge that that played a role in the situation
You're just saying that it wasn't about the actual
Political views it was about the fact that they could cost the bank customers and hurt their reputation
in the long term
but
I guess the next question would be
I hear what you're saying and I agree
I agree with you like capitalism
That's the rule the rules are capitalism, right? And we're going to thanks our banks are capitalist institutions, right? Right?
So you would expect capital institutions to behave
But on a social level on a societal level
Don't do you think that there's
A problem with that kind of precedent where a bank can
Um, and i'm not saying that there should be laws against this or anything like that. I'm just thinking like on a sort of a philosophical
Level and let's substitute because in my head. Okay, we can substitute
nile nijil faraj for for um
Anybody, you know on the on the left, right? It's like or anybody who's a minority, you know
Or anybody let's say all of a sudden transgender people become persona non grata for whatever reason
And if you are banking a transgender, um, or leader activists, right?
Somebody who's who's out there, you know pushing for for transgender rights and a bank decides
that
Having that now the the tides have turned and people don't like transgender people anymore, right?
And it's like, okay now we're going to that. This is a reputational negative for us to be banking this person
uh
Do we start to get into dangerous territory where?
Money starts to act as a sensor in a way, you know and capitalism starts to act as a a
control mechanism for
tyranny of the majority
Yeah, we absolutely do and that's why we need safeguards around this
So i'm not saying that banks should always be able to do exactly what they please
um
We have human rights legislation
Um, which um, we have human rights legislation and we need it
So there are groups certainly like, you know in in uk that have protected rights that includes transgender people
um and
People can't have their bank accounts closed because they are trans or because they're black or because they're jewish
Or because they're women or all all of those only because they're conservative men
Uh, no, no, no, no, they can't be they can't have their bank accounts closed because because of their political beliefs either
and and and it's
But it's this kind of nuanced thing about what is the effect on me of this particular person who has an extremely high profile
Who shouts his views from the rooftops?
Kutz said themselves in that in that bundle of documents that they had other customers with very similar views
Who were not posing the same risk because they were much quieter
It was the the public nature of his views. It wasn't his views. It was how he manifested them. It was his behavior
And that's actually quite a nuanced point legally about at what point does it become your is it does it
Stop being about what you believe
And become about how you behave
Behave and odd banks just justified in closing accounts because of your behavior
um
And you know in much the same way as you know
A barman can chuck you out of the bar if you if you if you're drunk and disorderly and you start swearing at the other customers
Right
They have the right to do that
Well, why wouldn't a bank have the right to close an account with somebody whose behavior was alienating other customers and and and putting their revenues at risk?
Yeah, there's a direct connection between in my head and they're totally different issues
But the way I think about this stuff is is the way that um, I think about how twitter during the pandemic was
Um was was censoring
conservative voices and you know, obviously kicking trump off of the
the platform and using um the whole january 6 thing as as the
Excuse for it
But in reality as we all know and as we've seen
You know in leaked documents and stuff. It was really about
Uh the same kind of thing reputational risk to the platform like what kind of liabilities does this create for the platform?
Is it worth it? You know, do we there's a reason that that um, you know
They kept a lot of left-wing voices that were
Just as violent, you know just as insightful
As uh as trump was and but they got rid of trump, you know, and so it's it's kind of there's this movement throughout the world
to
try to extinguish
Um, what's perceived as as conservative voices?
Uh, you know and conservative is is a broad term, you know, but it's more like non-traditional
Um, I guess nationalists to a certain extent
Well, I would say actually they are traditional and that's the point actually is that the is is that
That to the extent they're being extinguished is because people don't want
Those kind of very traditional views coming back
Um, do you think they should be extinguished?
No, actually, I don't um, I think within reason
All people should have the right
Everybody has the right to their to their to their beliefs
um and
Within reason
And like I said, this is about behavior. What do you mean within reason though? What is that?
I'll explain what I mean. Okay, um, i'll explain what I mean that people have the right to express those beliefs as well
And the limit to that for me is actually when expressing those beliefs starts to um
Trample on the rights of others. For example, if it's abusive, that's not okay
so, you know, um
And it's it's at what point is this just
rather assertive expression of my legitimate beliefs
And at what point does it start becoming
Abusive to other people and that that I think is the distinction
I do think the zeitgeist is changing actually that we have went through a period when it was conservative voices that were being cancelled
And I actually had an issue with that. I don't necessarily agree with those voices
But they have the right to hold their hold and express their opinions as long as they do so politely
And I follow a number of right wing accounts myself is I don't know if you're aware of that but I do
And I talk to them if they're polite
You know if we can have it, we don't have to agree. It doesn't matter
Um as long as we we can engage respectfully
Respect each other's respect the fact that we don't agree and not resort to to insulting each other and being rude. I think
It's in the old maybe this is very british of me, but I do actually think that
Maybe this is to do with the fact that we are a relatively small island and fairly crowded island nation
Um, so if we don't get on with each other, then we tend to get sort of major brawls
Which isn't good. Um, so manners have always been quite a british thing as interestingly
They are in japan as well, which I think is for similar reasons
um
Yeah, um, you know
um, great, yeah, um, you know getting along with people
And engaging in robust debate. Yeah, but respectful debate. I think it's really important
It's how we develop new ideas. It's how we how we move society on in in good ways
Sometimes it can be in bad ways as well, but we need that. I wouldn't want to see that stifled
I just would like people to be
More open to other people's ideas and other people's beliefs
More willing to listen more willing to think unless we need to resort to abuse and um kind of um echo chamber type
um
Pylons, you know where where
Um people just pile in and you know the broken record effect where they just keep it where everybody piles in and says it's like this
You know and I keep saying but that's not what the facts say
um
You know we we do seem to have reached a point where if enough people say something it must be true
Even if it's not actually what the facts are and that bothers me enormously
You said before that you're skeptical about government having complete control over the money supply, etc
um, but do you think that
That money should be used as a tool to keep that speech
In check, you know and to prevent abuse and to prevent those those human rights violations through speech specifically
That you're talking about no, I I don't think that's an appropriate use of of money actually
um
As i've said that that money is a tool of the law
so
um if you have a bank that is um facilitating money laundering for example, and it gets caught then it will be fined
And so it will suffer a monetary penalty and that will hurt its shareholders who ultimately it is responsible responsible to
Um, and so that is a way of imposing a sanction on a bank that breaks the law but within the law
No, I don't think money should be used to control speech. In fact, it worries me hugely
That actually some very rich people are trying to do exactly that use their their their money their wealth
to silence people who
disagree with them
And are much poorer than them when i'm seeing the i'm seeing the the courts used in that way
the courts used in that way, you know the defamation suits
Used to silence people who are poorer
And who are dissenting voices and that's not right
And I don't think the government should do that either by the way, but I I see it as more of a problem of very rich people
Who may be in government or may not be in government?
Um, basically abusing the law
Um because they have money monetary power and that's not not right
And you know justice should be available to everybody is the situation in britain similar to the us with regard to banking
The us banks are are heavily controlled. They're heavily regulated obviously and they're practically at this point
I like to consider them as branches of government as as agents of a government basically because
They're enforcing the monetary rules of the government. They're they're completely controlled as far as what they can do how they can act
Uh, and they they have to comply with regulations with with kyc aml bank secrecy laws
They have to reveal information to the government about their customers
Um, are britain's banks in the same boat as far as that goes?
Yes. Yeah, and actually banks are worldwide. There's very few places that are not operating that kind of
of control of of banks
um
really because
And and it's fair to say the certainly kyc aml industry has grown up in the last
um decade or so
really because
Otherwise we have got a problem
as societies
with um
Criminal activity and and um
Kind of law breaking really
um
And so all jurisdictions control their banks because if they don't banks can be used to facilitate law breaking
So do you um
I mean all businesses to some degree are controlled by the law
And all businesses therefore
Um and all businesses can suffer monetary penalties if they break the law so in that respect that also is
Using money to control what businesses do
It's not necessarily just banks banks are heavily controlled for sure one of the issues
I think with banks though and the reason why i'm a bit concerned about the the creeping over the the creeping
The kind of sort of philosophical attitude to banks
And it bothers me
And i'm seeing this actually quite a lot in the crypto world of all places
All the banks that are associated with the crypto world with this idea that banks are
Agents of the state, I mean they are in the sense that they create in in that they create money
They are licensed to do that
They create money they are licensed to do so by the state to create money through lending and to accept deposits
And when a bank accepts the deposit it's actually converting it into its own money. So they are licensed which is
Because of their license
Deemed to be equivalent to the money created by the state, right?
And they are licensed to do that in that sense
They are an arm of the state, but i'm increasingly seeing the argument that banks individually and this is an important point
Our public are our de facto public utilities because of their role in the payment system and I
Fundamentally disagree with the individual banks or anything of the kind the banking system
collectively in western countries because of its dominates and domination in the payment system because of the way in which
Electronic payments and bank accounts have become so important to us
um
is
Um, essentially is to all intents and purposes of public utility, although but you should be aware public utility doesn't necessarily mean
mean state controlled
But individual banks are not so when we're talking about people who
Have had their bank accounts closed because the bank decides it doesn't want to deal with them
um as long as
They have banking
Services available to them from other banks
The banking system collectively is meeting its obligation towards them as a public utility
Where we need to have a backstop?
Potentially if we are to regard the banking system as a public utility is what do we do if we have people or companies?
that no bank
Will service what is our what is what is the the state's obligation?
To those people and individuals and does it have a responsibility to step in to make sure those people are served in the uk?
the big banks the high street banks
um because they are
Not just licensed by the state but explicitly
In effect guaranteed by it because they're too big to fail
They have a statutory duty a legal duty to provide basic banking basic banking services
to anybody
um with
Though there are certain exclusions from those and the exclusions are people who can't prove their identity people whose immigration status is dodgy
And people who've committed financial crimes
um, but everybody else they are obliged to give um
basic banking services to and that actually
Is is why nat west offered najm faraj?
a bank account
when
When right because night of our said that he had gone to nine other banks and they had all turned him down
for accounts
They're not they can't they didn't give didn't give reasons why and they're not obliged to because if if if
But if customers or would-be customers fail
Um, and anti-money anti-money laundering checks or something like that the bank's not allowed to tell them
Um, because it constitutes tipping off
So the bank's not obliged to give a reason
um
And we don't know whether any of these banks did give reasons for turning him down because he hasn't disclosed that which is fine
That's his prerogative
To keep that to himself, but nat west then offered him
a personal bank account because as
Nat west and coots you're probably aware of this
Um nat west and coots are all part of the nat west group, which is nearly 40 owned by the uk government
um
and so nat west
PLC the uk bank
Nat west group had an obligation to ensure that closing najm faraj's coots accounts
Didn't mean he became unbanked. Does that make sense?
It does yeah, I mean that's all
Well, he had options is what you're getting to he had an option saying is that he yeah
They gave him an option when it became apparent that other banks weren't going to give him
Options and there was a risk that he would simply end up without a bank without without
Banking at all and that's what that's what I mean by safeguards
And we do need to make sure we have safeguards in the system because banking has become
so essential
We do need to make sure there are safeguards in the system so that legal businesses businesses
Aren't engaging in illicit activity or something and individuals subject to the things I mentioned potentially
Although even there that's a little bit some of those a little bit dodgy
Do actually get the banking services that they need
um, and this kind this actually kind of touches on on a few things that have been going on in
in stablecoin world, um to do with custodial bank and um
Um, it's one that came out to do it today and pay services limited
Who are claiming fed federal reserve is obliged to give them fed master accounts?
And that kind it kind of touches on that that you know as a bank
um, it's very difficult to operate if you don't have a fed master account and so
It can cripple your business
um, and therefore arguably the fed has a statutory duty
to provide master accounts to um
banks and payment institutions
The fed is a kingmaker. They they decide who's going to be in business and who's not
As a bank. Well, no, that's exactly what the lawsuit's about
Is saying actually the fed doesn't have that right
But they do I mean they do it they turn down like they do it and it's being challenged in court
The I just want to challenge some of what you said before it kind of ties into this about
Banks being private businesses and and not being agents of government
When they are just first of all when historically for decades
Uh, if not over a century
Banks have been
Made hope, you know created to a certain extent by the federal reserve
Uh and given authorization to operate by the federal reserve and federal reserve, you know is is like they turn down um
a bank called anchorage, I think it was called a few months ago, which
You know try to to create a bank. I believe it was in wyoming that would sort of opt out of fractional reserve
You know to a certain extent and be fully backed
That's exactly what i'm talking about. That's the case i'm talking about right? Okay
Let me talk it through because in america, it's different from the uk, right in america. You can have you have state chartered banks
Right, so custodial bank paid services limited. Um, and and so on are
Are are are licensed banks, but their licenses are issued by the states
That was also true of the bank banks that failed. So silicon valley bank was a california chartered bank
Um, signature bank new york was new york chartered bank, right their licenses are issued by the states
um some of them are also
Federally supervised federally regulated banks the bigger ones are
Um, but when you're dealing with these state chartered banks, the problem you've got is that the state chartered they are banks by virtue of having their state charter
their state license
And the argument is that the fed is that if they are licensed banks
Um, but not members of the federal reserve system the federal reserve doesn't have the right to turn them down for a master account
That's essentially the argument that custodia is making and pay services making
um
And and the argument they present some kind of risk because they've got a non-traditional banking model they're doing
Um full reserve banking or whatever they're doing doesn't wash
Because it has an obligation
And the only i was looking at this earlier and there is a a
Contested case is with the three split three wages in its decision
The courts really don't seem to know what to do about this yet. They're basically saying, you know, there are that it's a very fast moving
Situation facts are developing so they can't give a full statutory
interpretation at the moment, um, but there is a contested case
involving a credit union
Um, which was turned down
for a fed master account on the grounds that
Under its state laws
It could deal with the state's state
It could deal with um
um mariana businesses
Dealing with mariana
um under federal law it couldn't
and it was turned down because it the
um companies because it couldn't guarantee that it wouldn't deal with companies who were legally within its state
Dealing with mariana, but illegally
federally and that's a peculiarity of the u.s
legal system that you can have this conflict between states and
Federal law we don't really have that here
Yeah, it's a feature by the way, not a bug
Oh for sure. It's a feature. Actually your states have a considerable degree of independence
And yeah, and you know and in a way it's a check on on federal power that states have that
Um, but it does create for some very complicated
Lawsuits. Yeah. Yeah, let me um just
Take this out of the weeds just a little bit and reframe it because
The way that I I like to approach this kind of stuff specifically like with this anchorage custodial thing
Where they want to create a bank that's fully backed
Does not have this situation that every other bank in america has where they don't have the cash
They don't they can't honor every deposit. They want to create this bank that offers people
Full security full, you know, peace of mind that the money is there if you deposit money, it's there
And they want to do that because there's demand for it. Obviously people want that
Um, so there's two ways to look at it though
one is
from the government's point of view from the government's point of view and
When I say government include federal reserve because it's all connected and to say it's not as nonsense
No, no, that's absolutely correct. Like the you know money creation policy interest rates. It's all
Coming from the government. So um from their point of view, it doesn't fit it doesn't fit it breaks the puzzle
it exposes the system to a certain extent right because
Having even one bank
Connected into this system that's fully backed breaks the system
I don't think it does. I don't think it does i'm going to disagree with you there because we need diversity in our banking system
Um, it's perfectly okay to have full reserve banks. It does not mean
that
Of all other forms of banks will die historically full reserve banks actually don't tend to last very long
And the reason for that is that they're fundamentally unprofitable
Unless they start doing things that they really shouldn't be doing and then they get stamped on
so
I'd be interested to see if this time is different but
Um, but there is no reason why you can't have a banking system that has fractional reserve banks in it and full reserve banks in it
Let me give you an example
back in
In the history of the uk in scotland. We had things called trustee savings banks
They were set up. They were non-profit institutions actually that were set up to enable poor to save
And they were mandated by law
to back all of their
All of the deposits solely with government debt and gold
Right, they were full reserve banks
Bank reserves a long time ago bank reserves kind of were gold then so this is full reserve, right?
um
They coexisted with fractional reserve banks
The problem you have when you have full reserve banks coexisting with fractional reserve banks and particularly for reserve banks
That don't pay interest on deposits
Now these ones actually did because these were savings banks. They did pay interest on deposits, but the ones that
These new types that are popping up don't pay interest on deposits and actually we saw with with
The banks that fell silicon valley bank signature bank, new york silvergate bank all of them were actually operating a similar model
within
A fractional reserve bank which is like like a part of their business that was full reserve or supposed to be
Or supposed to be um, the problem you've got is that that's all fine when interest rates are low
Because there's not a great deal of incentive for people to move their their savings out of a savings bank
a full reserve savings bank
Into a fractional reserve bank such as doing lending and therefore can offer some higher rates
But as interest rates starts to rise start to rise that changes
And we the trustee savings the savings banks in the uk died in the 1970s when interest rates rose
Okay, so why wouldn't that happen
I mean what I was saying before when I said it was break the system I meant
Like not that they would just defeat fractional reserve banks
But but that the full reserve banks just don't fit into the puzzle that the government is trying the the policy they're trying to implement
But my point but my point is that actually that doesn't matter because um
It's I can't answer for what the fed is doing
Um, I might disagree with what the fed is doing. I might say this is ridiculous
Just let them just give them a mask out and let them have a go at doing this
And we'll see whether they survive right?
That's my general philosophy is let them unless they're doing something that is actually illegal
Or they're facilitating something that is actually illegal like money laundering
Um, or you know marijuana
Breaking federal drug laws. Well, right, of course. Yeah, then let them do it
I I don't actually have a problem with that at all, but if they don't it's it's it's almost
What you're saying is there's no technical or fundamental reason that they can't have this exist within the u.s monetary system
So it must be political
um
As I understand it having looked at the federal reserve's criticisms of both custodia
And pay services limited what the federal reserve seems to be saying with both of them is that it's not satisfied that their risk management
Frameworks are robust enough and that is a legitimate criticism
Which needs to be heard and i'm not sure that taking this kind of rather antagonistic attitude saying you are obliged to give us an account
We shouldn't have to go through all this stuff. It's entirely reasonable
I'd prefer to see them actually take you on board the criticism saying well, okay
Let's work with you to see what what we need to do to to make you feel happy about this
Um, I I just I feel we may have gone
to legal action too soon
And not pursue the negotiate but then on the other hand custodia said they and pay services both said they issued their
request for master account kind of like over a year before and and
And which is you know, why the custodia took them to court to try and force them to give an answer
So, you know the fed did sit on its hands a lot about that and I don't think that's very good either
You know, i'm not certainly not saying the fed's behavior in this has been been been right at all
But as a principle
I would say yes if people want to to create a full reserve bank
That doesn't pay interest on deposits that provides fast efficient pay services payment services that backs
all of its assets with central bank reserves and um
short dated
short-dated treasury bills or
Equivalents right because you don't want duration risk creeping in as we had with silicon valley bank, right?
Then I have no problem with that my own personal view is that these things are
Fundamentally unprofitable in a high interest rate environment
And they will lose lose depositors in a high interest ratio if they would they they only really work at scale because your if your
reserves are all entirely
central bank reserves and
Short and t bills then a the amount of interest you will earn on those is determined entirely by the central bank
You do realize that right?
And secondly and the central bank can simply say I don't want to pay you
Um and reduce your reduce the payment on interest rate on reserves down to zero and then what you do
um
and um
Anyway, it's kind of hoovering up pennies the spread between
um spread between your deposit rates
your and and and
You're really um
Your assets the asset side of your balance sheet is the lowest lowest earning assets
Um, you see what it means in that interest mark. It's not going to be very good
You're going to offer zero interest rates to depositors and depositors might say actually there's a bank over there
That's offering me higher offering me some positive interest on demand deposits. Why wouldn't I go there?
So that's actually what happened to the trustee savings banks was the people went to the fractional reserve banks because
The fractional reserve banks could um give them higher interest rates, right?
Right now now whether or not it'll work is one thing but the the demand is coming, you know in this case from
Bitcoin type people right? So the whole connection here with this bank and the the idea and the concept behind it
is coming from people who are
Who are working with and are interested in bitcoin
so
My view is if if there's a need for this type of bank to service that type of customer
Then the system should accommodate it. I honestly don't see
That we need to be this antagonistic
Okay, so the the idea here, you know, obviously was
Let's take some control out of the government's hands to a certain extent. Let's have a fully backed bank
Um, let's have some peace of mind and that's coming from the mentality that bitcoin
tends to offer people which is
you know, um
this
Sound money idea, you know this hard money this out of the hands of the government
Money that exists. It's not fiat. You know, it's it's completely separate and programmatic
now
where
How would you summarize your view on bitcoin these days?
Well
I think it's where it always was really which is I don't
I I i it's quite sad really. I mean when I first encountered when I first encountered bitcoin
Back when the animals could talk. Um, you know only about a year or so after it first emerged when it was only worth pennies
um, it was
Um,
Widely believed then that it was like going to be a faster cheaper more secure way of doing payments
particularly international payments
and then we had the scaling problems and the block size wars and all the rest of it and it morphed into this store of value and
Valuation hits guys and I think where we've ended up now
Is that it's tend seems to be regarded as some kind of risk asset?
Um, which I think is a little unfair
But my view on bitcoin is we do need monies like this
We do because you know governance should no government should ever have complete control of money
So we do need private monies and bitcoin is is is a good a good money for people who are in
Repressive regimes. There's the quote
Bitcoin is a good money. I've got it. I've got the sound bite. I'm going to be using that on twitter later
under some
Circumstances it's a very it's a very niche
Okay
Okay, there is has a certain good uses and i've said this before this is nothing new about this chris
I've said this before that actually
And and it's shown by the evidence that people who are in
um regimes where the government
Is is playing a fast fast and loose with the value of money? So hyperinflation
Inflation very high inflation bitcoin is is is a place you can escape is a money you can escape to so what's wrong with it?
um
and in in regimes where
The government is is denying some people the means to transact
Deciding who can and who can't get access to this to the to the payment system
For example again bitcoin is a good is an alternative
I i've never ever disputed that you know financial inclusion in some countries bitcoin is a good choice
But it's a niche use
It's never I don't think it's ever going to be
the worldwide
Uh mainstream money
That I think big many bitcoiners wanted it to be the bitcoin standard
That people went on about I don't think is ever going to happen
So just as a as a tool for
holding value as a tool for
separating some part of your life from the control
of a fiat money supply
Yeah, you believe it has use in those cases
It has in some cases have has a use I mean you have to look at the alternatives
What alternatives are there that people can use?
Under those circumstances and the biggest alternative in places like venezuela is the u.s. Dollar
Is the u.s dollar so it might well be they seem to use bitcoin as a bridge to dollars
Um, because what they really want is dollars, right? Even that's a legitimate use
Right, right, right. Do you think that?
um
Like how much do you can you because I know in the past I think we've even had exchanges about the technology
that supports and and makes bitcoin work and
And the decentralization of it. Do you see value in the in the idea that this type of technology is actually?
Decentralized do you believe it's decentralized like do you believe that?
It's sustainable in that way. Okay. I think the problem
It was kind of an unforeseen effect in satoshi's original design because he didn't envisage
the creation of mining pools
You know, I know they're kind of cooperatives, but when you have um
um cooperatives like that, um groups of people banding together, um, then your decentralization
Is effectively reduced
Because they're banding together and operating together as one
um
By virtue of being in the pool if you see what it means. So your entities
Are you've got a much smaller number of actual individual entities?
Entities is not as atomized as it ought to be and that is a concern that said bitcoin is probably
More decentralized than a good many other things
Where you know decentralization is in name only what somebody called it?
um, and I think that bitcoin is is is more decentralized than many other
Thing things but but I do think it is not as decentralized as satoshi envisaged and that we all hoped it would be
Do you think it's the most decentralized form of money in the world though?
No, frankly, I don't what is
This is going to blow your mind but taking across the globe as a whole remember
I'm not talking about individual countries here. I'm talking about the world
As a whole the most decentralized form of money is actually the banking system
Come on no, I'm serious do this in the last few minutes of the podcast. Yes, I really can
It's a decentralized form of money
Decentralized form of money the banking system. So but is the banking system a form of money?
No, but but banks create money
right
See, this is I think I I i'm when i'm discussing with crypto people
They can't get their heads around it saying bitcoin is not equivalent to say visa or mastercard or or um jp morgan
It's not it's more like the federal reserve
um
Because it's creating base money what banks create?
Is a layer two
Above that and they do so in a way that responds to demand
They're not doing it because governments are telling them to produce this much money
governments kind of influence it with with
central banks influence it with interest rate policy, but
Central banks aren't telling them
How much to create no, but central banks are controlled by a few people in each country or whatever
That meet up every year and decide on what they're going to do
Yeah for sure, but bank they're not controlling what the banks do
In fact, one of the hilarious things about
Is how difficult it is for them to control what banks do right?
But to say the banking system is decentralized is is kind of like talking about banks not about central banks
banks, okay, but even with banks, you know if you can get a
One conference a year where you get all these bankers together. I mean the difference between
So you have multiple conferences in the year when you get all these crypto people together
Oh, come on, let's compare it back to bitcoin though. I mean
Can you?
like
Bitcoin has nobody who you can go and meet with and change the supply right? They have nobody
You go and talk to block stream
You think that block stream can change the bitcoin money supply?
No, actually, I don't because it's programmed in but I i'll tell you bitcoin as I just said to you
Bitcoin is not equivalent to a commercial bank. It's equivalent to something like the federal reserve
So you're not comparing like with like here
But I asked you what's more decentralized form of money than bitcoin and you went to the banking system
I
I i'm
I was taking it as the crypto world as a whole. Okay, the banking system is more decentralized
Than the crypto
Taken as a whole
Yeah, and I guess what I was trying to get to was I can't I can't fathom it
I won't compare banks with bitcoin because they're not equivalent
Okay, i'll compare banks with the crypto ecosystem as a whole
I'm taking the two taken together globally. I would say as it stands at the moment that um
Banks are actually more decentralized than crypto. Do you think that this cbdc thing is is a real uh
Thing or dear do you think it's like decades away still?
No, they're gonna do it
They're gonna do it and they'll do it quite soon and then it will all shrivel and die because it's a
Bit of a joke really anyway
I mean, I mean I I keep coming back to the same thing which is actually people with people understood
um a little bit more about central banks and and the kind of kinds of money they create and what's actually going on
Then they would see this is the nutting burger it actually is
um so
If you look at the kinds of money that central banks create as opposed to commercial banks
We've distinguished between those two what we call base money. It consists of physical cash
Notes and coins and bank reserves now bank reserves are the money are deposits at the central bank
They're the money that banks use to settle
Settle transfers between themselves, right?
Um of those two bank reserves are much much more than physical notes and coins
Um, you and I never touched them
um
and um, but they are
Electronic
They are digital money. Okay, so they're not on a blockchain. Does that matter?
When you're talking about a cbdc central bank digital currency, it doesn't have to be a blockchain based
Money does it so what is the difference between a cbdc and and bank reserves?
The difference is who can get at it
So at the moment at the moment you could say the banks have a cbdc already
They've had it for 50 years actually because it goes back to the 1980s electronic reserves
um
1970s 1980s round about then
um
Right. That's been in existence for a very long time
um what the cbdc argument about debate is about is whether
Central banks should extend access to central bank digital money
to
businesses and individuals and if so in what way should they do it by allowing businesses and individuals to have accounts at central bank?
as banks do
Or should they do it by issuing a bearer instrument equivalent to physical cash?
So an electronic version of physical cash, that's the debate that we're having I personally
Would prefer the physical the equivalent to physical cash version
Um, but and and it seems to be foundering on a lot of political issues, which annoy me a lot
Because you know if people are to have access to the digital economy, they need digital money
um, so
Central banks historically have produced physical cash, which is anonymous. It can't it's difficult to trace it
Um, it's it's government money that government does
Really can't control
We need something equivalent. We we need something equivalent arguably if you're going to go down the cbdc route
Then what you should be doing is something equivalent
Um digital money that is anonymous and can't be traced
It could be produced by government, but it's foundering on political issues
And that's really where the need for private money has come in because if government can't do that can't you can't have an an anonymous?
Did on anonymous digital?
Form of money well you can because governments are trying to control it
Because governments are terrified that it'll facilitate money money laundering or something right you need private monies to to to plug the gap
and because uh
Seems to me is where crypto falls it comes in because we live in a world where everybody
Has to be treated like a criminal just in case you are a criminal
Right, isn't that what it boils down to with money?
It is what it boils down to but but we have also have to accept the fact that actually a proportion of society are criminals
And the rest of society need to be protected from them
I think that the cbdc isn't that called rule of law. No, I don't agree with uh
I don't agree with anything that starts with you know
There there may be some criminals so everybody should be treated like a criminal. I mean this all you know
This is this is the what we go through at the airport is what we go through at the bank
I just saw a story yesterday that
Uh in order to turn on your the a new vaping device. It's coming out. You can vape nicotine or whatever
You're gonna have to connect it to your phone through bluetooth and scan your driver's license. I mean
for me to um
When I go to i'm in tennessee, but then you need to argue about your your federal laws
Well, I mean, you know, it's federal and state. I mean it's it's if I go to buy a beer here in tennessee
I i'm an old, you know, i'm i'm in my late 40s
I have gray in my beard, but I have to show my driver's license
I always say to the cashier who's like 18. I'm like, you need to you need to you you you
Cracking you you lot of control freaks aren't you here in the uk if I go down to my supermarket and I buy a bottle of wine
Right, and I take it to the self-service till
um, and I scan it and a little light will go up and a attendant will come over and she will um
um get her her
Signing with her account and there will be a button on there that says
The the customer is obviously over 21
Well, they can't do that here anymore because
Press that and I don't have to show anything. She would just do it on the basis of what I look like
But some people may get offended
You see so we now have to check 80 year old's driver's licenses
But we don't see you you you not need to you see we're much more libertarian than you are
It seems because we don't do that people in the uk. It's coming soon
No, it's not. It's not yes. It is. Honestly. We don't even have identity cards
You get all of our social problems just a couple years later. We just don't anyway
Yes, i'm very aware that we have this kind of sort of creeping control
And I don't like it either
Um, but that's not to say we shouldn't have any control
I think that's the difference and one of the things that's bothered me hugely about crypto is how incredibly infested with criminal behavior
It's become and when they say criminal
Behavior that hurts people behavior that robs people
That takes away their money
Are you talking about crypto or the us dollar talking about crypto? Oh, not the us dollar not cash
Not no because i'm talking about crypto which has become one of the most fraud infested spaces on the planet
Cash right you're talking about cash. No, i'm talking about crypto. Oh because I thought you were talking about cash
No, i'm talking about crypto because cash is used in way more crimes around the world
But there's much more of it
That's true relative to the size of the industry as a whole
Crypto is way way way
more criminal
And what is this?
What is this uh backup by?
Just for this stuff. I've been just just what i've been looking at. Yeah, I don't think it's true in this space a long time
Chris and honestly and it wasn't like this to start with but it has become so
And that I think is a lot of the problem and you look at the kind of frauds and scams and and and i've gone on all the time
constant rug pulls people, you know hacks
um exploits
Even the mev stuff that keeps
Popping up all over the place is that's fraud
um
Well, I I can agree with you on that
There's a lot of systems that that doesn't happen as much. Uh, you know, that's more of uh, ethereum and other
Block chains. I know you're talking about bitcoin and bitcoin is relatively
Insulated from it to be fair
Fair enough talking about crypto as a whole not about bitcoin specifically and you might want to say well
You shouldn't have bitcoin with the same brush as that and I say yeah, i've met with an average person in the street looking
Looking in it's all crypto
and what they see is the frauds and the scams and rug pulls and the hacks and the and the
exploits and they see they don't people don't see bitcoin as fundamentally different from from that
um bitcoin as a technology
I think has proved itself robust
To hacking and exploits and what have you but i'm not talking about technology
I'm actually talking about how people use it. So even if you're underpinning is something like bitcoin
um
then
Um, it's a question of to what extent?
Can it be used?
I mean, I I think what you're actually technologies ever no technologies ever watertight
What you're actually talking about though is the government's ability to control
It as a form of money. Yes, you are. I'm really not
Not but that's what it boils down to that's how you can screen out crimes and etc, right?
So you're saying that we shouldn't have any screening out of crimes
i'm saying that using the money the rules of the money supply using
legal
uh
Tools to actually affect the way the money works in order to screen out crimes
What it does is it treats every it treats all the billions of people on this planet as criminals
In order to to catch the very very few who actually are criminals. So you don't think there should be any control
I don't think that's screening any screening any protection for people against fraudsters and scammers and hackers
those who would
There's a there's an old quote
Those who would give up liberty to get a little security or safety deserve neither liberty liberty nor safety
Okay, so so so you're so so so an l so if you have have an say in a
50 year old man who has put his life savings into um some crypto and
The crypto gets stolen
And why did he put his money into crypto because it was sold to him by charlatans and scammers
Okay, so
The crime is that he was lied to he was lied to absolutely
You said who's going to who's going but you're saying there should be no control. How do you control control people be it stop people being lied to
I'm not saying that you shouldn't control
Lying to people is right
In that's actually what went on with all the collapses last year was people were lied to
Okay, by the way, this is already a crime
Like so if I go out there and I I get somebody to give me
$50 in bitcoin and I lie to them in order to get it, you know
I'm committing some sort of some sort of fraud. I'm committing the fraud right? We don't need to have
KYC AML involved in order to to figure that out, you know, so there's we do actually we do
Yes, we do because because if people are using a bank
to
Commit a fraud and the bank doesn't know who they are. How are you going to detect that fraud?
In a perfect world if it's all anonymous it's all anonymous everybody can lie to everybody and you'll never find a default everybody and you'll never find out
Because it's all anonymous the way it used to be right
No, it was never like that. It was never like that in the whole of my lifetime. People have always had to provide identity
That's not true. That's not true. Not to the extent you have to today
You didn't even have to show an id to get on a plane 20 30 years ago. Yes, you did
Not to the extent it is now with respect Chris. I was there 20 30 years
I I was you know, I was I was getting on planes 20 30 years ago and you did have to show id
Yeah, but you can't dispute the fact that over time, especially since 9 11
It's been increasingly intrusive like to the point where the example I just gave with the vape
Okay, let's talk a little bit about that because that did change everything right? Okay
I'll tell you shall I tell you where I was on 9 11 sure
Well, you see I live in Rochester in Kent which is in south of south of England and on 9 11. I was in Scotland
At work. I was working for RBS
at the time and I because I was commuting from London to Scotland and
I was leaving the office in the afternoon
to go
To the airport to get on the plane to fly home to fly back south
Right and as I left here as I was just about to leave the office. Somebody said to me
Um, have you heard the news and I turned around
And the twin towers were on the rocha screens
I still went to the airport and got on a plane and it's very interesting to see
How things have changed these were internal flights within the uk, right?
Okay, so it was there was there were no security checks. It was but you still had to show id
We used to get on a plane with a driving license, right?
And that flight that I got on then still had no security. It was completely normal because I hadn't put anything in place then
So I just walked onto the flight using a driving license
I walked off at the other end with no security checks anywhere
Got in my taxi and went home, right?
Within a week or two later that had all changed and we got all the security things in place on these internal flights that we hadn't had before and it was because
Absolutely because of what happened on 9 11
We suddenly woke up
To a threat that we didn't realize existed
Um now the response to that may have been disproportionate certainly some of the
Things that were put in place then can I just back that up one sec? I don't mean to interrupt you restrictions about what you can take on planes
Are gradually being restricted and but you said being relaxed. Perhaps they should be we do tend to overreact to things as
Humans do tend to overreact to things and get totally draconian about things that with a bit more sense
You might not be I mean you could say we did that over covid as well
Yeah, yeah, yeah
So but but you said that you woke up
after 9 11
Realizing that this threat existed that you didn't know existed before I say we as a as a
As human beings as right west now. I me personally
I say we did know the threat existed before I don't think ordinary people did know
People knew that our plane could get hijacked people knew that planes could get bombed
People knew things could happen on planes. No, no, no, let me talk this through people. It had not occurred to anybody
Or that's not true. It had happened hijacks. Yes, but we had never ever had
Um planes hijacked and used as the difference here was we'd never been terrorized to this extent
We'd never been this afraid we had never had the media show us these kinds of pictures
I don't think that's true so bad
I don't think that's true. It was it it was the way it was done
It was the way it was done it was done in a way to capture the media
It was done in a way and it was done in a way that was unprecedented
It certainly was unprecedented. There had never been
commercial airlines
Hijacked and used as flying missiles like that flying bombs like that not in that in a civilian. Yeah
Yeah, so but but but the fact that it was uh that it was civilian
mattered
Yes, but the controls that were added immediately like you're saying they weren't added only because we suddenly discovered that could happen
They were added because
People were afraid and they were they were able to see it
They were if this had happened a hundred years before
Nobody in england would have cared for you know, at least a few days
Maybe weeks because they wouldn't have had access to the tv, but we still would have had the restrictions when they caught up with it
I don't think that's that's debatable. You can assume. I don't think you can assume that we'd not have those restrictions
I don't here's where i'm going with it. I think that 911 was was one of the first times where we had a global
sort of panic a global fear based situation where
Oh, no, we've had those multiple times in the past multiple times. It's ridiculous to say that was the first one
Global instantaneous, you know where you have access you didn't have access
We've had news wires since the 19th century
Yes, but you didn't have access to those types of images
How long do you think it took for images of of for news about about the titanic sinking to get back?
Right, but when the titanic saint did the titanic sink
Right, but when the titanic saint did the whole world within two days suddenly institute new ship regulations
Or did people stop taking cruises immediately upon that happened? No, it you on 911 you had access to those images
It took a little longer that doesn't matter. You still had changes to shipbuilding regulations as a result
Okay, so but regardless of that one of the important one of the important
Changes that happened as a result as a direct result of the titanic disaster was and remains in place to this day
Is that ships must now have enough lifeboats for all the passengers on board before titanic they didn't have to
Did you know that?
That was a change made as a result of the titanic disaster and the change is still in place today
right, so the difference between that
and
911
covid
Every other situation we're talking about right now
Is that now it happens the same day?
If the titanic sank today tomorrow every ship would have the lifeboats the back when the titanic, you know
Maybe it happened over a period of years, right?
Where you know, it's speeding up the change was much faster than that
The reason i'm even in this debate right now is that I wanted to loop it back to cbdc
because the idea
that um
You know and by the way cbdc
Is like being used in so many different ways. The way i'm using it right now is
the concept that eventually
We're going to do away or minimize the role of private banks
Every citizen of the us or the eu whatever is going to have an account with the central bank
Then the central bank obviously is going to be an arm of the government in controlling what's in your wallet at any given time
Can add delete, you know, whatever
That that that's the the big long-term fear of a lot of people
They don't want government to micromanage them through adding and subtracting money
from their account
my point with this conversation
is that
911
covid everything else in between
And the access to instant data instant images instant media the ability to
Freeze everybody's and we saw it already with covid. I mean with covid like I mean
I mean to be able to lock down an entire nation in like a week or less. Yeah, it's like
Unbelievable, you know, so with cbdc
They'll you know, if they could wake up one day something happens say, okay
Nobody has access to money today or you can now spend three dollars
And what i'm and they and they did that in greece, of course
They did it but ineffectively they couldn't do it as effectively as they'll be able to do with digital cash
They do it did it completely effectively. They shut all the banks
All of them and the only and all people could get out per day was in a particular allowance of cash, right?
Yeah, and if you didn't have any already you were kind of screwed, right? That was all you could get in
But the difference with the cbdc is that
There is no cash. You only have that account and they can just wipe it out
Right there and it's like to just evaporating the money out of your wallet
That's that's the fear
Yeah, and it's like
There's no reason it's not going to happen is basically the end game here. It's like everything is trending that direction
I don't think it is the end game to be frank
I don't think we are seeing gos bank seeing the resurrection of gos bank
But i'm i'm not not not as much of a conspiracy theorist as that but
But i'm just a realist
I'm that's not realism. It's conspiracy theory
I I I can see the argument. I don't think that would happen to ordinary people
But I do think it is a risk for some minorities
That I don't think the government should have the power to shun
to lock people out
right of a of a financial system so completely that they don't have the means to live and
That's in my view why we need private monies
Including conservative white men, right?
Of course, okay fair why would that why would why would I exclude them as long as we're treating everybody equally?
Then I'm happy. Why do you think I wouldn't because most people when they make these arguments?
Uh, they try to frame it in some
Concept of a power structure that they visualize where they see white men at the top and not deserving of any
Safeguards and actually that they deserve to be punished for the sins of their ancestors
You know and that's not how I see it. It never has been we need you over here
I really don't I really don't see it that way. I don't I
conservative
Conservative men should know no more be shut out of things than anyone else
Fair enough because he has equality has to mean equality and if that means that some people
It can't mean that some people are discriminated against because you're cross with them
Right because because there's things that have happened in the past
That's not that's not equality. It just isn't so no, I don't think it and for me if
No government should have the power
To deny someone the means to live i'm very disturbed by where my own government is going in in this respect
We already they already have the power to deny some people the means to live
And I don't think they should have that power
We're on the same page there
Um, well listen, I've kept you I'm really I told you I'm really quite libertarian that might surprise people you are see
Yeah, I mean I think um
There's plenty that that you and I have in common for sure I think um
There's certain areas where it goes off the rails, but I think that generally there's a lot
That matches up. So i'm glad that we're talking about
So i'm glad that we got to talk
Am I different from how you expected?
No, that's why that's why i'm kind of fascinated by you a lot because you um
You make
you make
Excellent points in a very pragmatic and realistic way
Um, I will say this though. I I wish that
um
we could
Get a little deeper. Maybe we can even do it again like, you know on the on the ideas of decentralization and whether
whether there's any
The one area where we seem to really diverge is like whether or not people should be treated like criminals just in case they might be
You know, and I think that that's
A general philosophical thing that affects all of money
I think i've i've already said that in general. I don't i'm gonna give you the example if I can go to my
local supermarket and yes, okay, I um
Um, my my the attendant will simply come and press a button saying she she's obviously over over well, it's actually over 25
um, you know, I don't think you need to make that assumption about people but
That store attendant is doing it on the basis of what I look like. So it's a bit of a
It's a bit of an identity. Yeah, that's that's a that's a benign example. Like it's about money. It's about bitcoin
It's about freedom to have money
And it's a question. There are an awful lot of kind of trade-offs
In all of this so the trade-off between freedom
freedom to do things
without
people having to prove who you are
um or pass all these tests or you know prove that you're complying with the law or something
versus um the protection of people
from people who
Don't comply with the law and it is a trade-off. It's not simple
If you have absolute
No one ever has to prove anything and it's all anonymous
Then you have no protection
No one has any protection the problem with financial systems and crypto is true
Is this is true in crypto is anywhere else is you get information asymmetry? So and and
Whereby there are people who have knowledge
That they don't share with other people the crypto world isn't transparent
Yeah, and saying you can go and look on the blockchain
Um, you know when you're dealing with smart contracts and stuff like that, that's not good enough
You've got to read the code
Um with the best one in the world most people can't
So there are information
Involved and those people people who are naive people who are ignorant
People who don't understand this thing people who just got into it because it was sold to them as a good as the next best thing
And they have no basis on which to make any decision. Otherwise people have been lied to
um, yeah, they have no way
Really an assist system like this and financial systems always end up like this one way or another
With information asymmetries because information is power and people will hold it to themselves
And you know, um, and things become jargons very easily
So something that ought to be understood by everybody actually isn't
Um, and then you end up having to put in place protections
To protect people who just haven't got enough information don't understand and are easily exploited
Yeah, and i'm with you on a lot of this stuff
I think we're i don't want to conflate bitcoin with what's going on on ethereum and defi and and that kind of because the smart contracts and that stuff goes
The other way but with bitcoin it is transparent. It's very clear what's happening at all times
You know the identity might not be associated with it, but you can see what's happening and where the real question is
Does a individual human being have a right to own value?
That they can use to buy food to buy water to buy shelter. Do they have a right to hold that value?
In their own possession without the permission
Of a government, right? That's what it boils down to for me
And to me the answer is yes, and of course they do if they want to and I don't think anybody's saying otherwise
That the governments around the world are trying to move in a complete opposite direction of that
There's just a fact that you can't even purchase bitcoin in america without showing an id and you can't legally sell it to another person without having a money transmitter's license
Like things like that are just
Just outrageous examples of how the government is trying to stifle. That's not true, is it? Because that's all to do with the gateway with the gatekeepers
If you're just transaction transacting um peer-to-peer with bitcoin, you don't have to have any any license
Yeah, but you need to bridge from the from the traditional system. Otherwise you have
Forced to use it and when you're bridging to the transitional system, then you are not dealing in bitcoin
You're dealing in dollars and you are subject to the gatekeepers and the checks and everything else that are in the dollar system
But we're forced to use the traditional system. If we don't use the traditional system, we go to jail
You can transact peer-to-peer in bitcoin without going to jail
Yes, but you have to use the traditional system to pay your taxes
You have to use the traditional system in a number of different ways. You have to earn your money
In you know in that yeah currency and if you and when you use the traditional system
Then you play by the traditional systems rules. No, yeah, but you're forced to use it or you go to jail if you don't pay your taxes
That's what it boils down to you don't have you can't opt out of fiat
Or you go in or you go well, why shouldn't you pay your taxes you live in you live in the country?
Um, if you don't want to pay taxes go and live in a different one
Yeah, but my point is
Every american and every european why shouldn't you pay your taxes? I'm not saying you shouldn't pay your taxes
I'm saying that you're forced to use fiat
That's what fiat means right? It's force. Yeah, so why should why should governments have to accept
What you want to use? Well, you're using fiat as the bridge from fiat to bitcoin as the justification for identifying every
Bitcoin holder, you know, it's like yeah
You can earn bit I could go to do a job and try to get somebody to pay me in bitcoin
You are working entirely in bitcoin. You don't have to identify yourself in the traditional financial system
You do so if you have to if you're using traditional financial system, you have to play by its rules. Yes. Yes, but businesses and
individuals are forced to use the fiat system and it's impractical to think that
Bitcoin can survive can it can live just from bitcoin would have zero value if you weren't able to bridge
Uh from the money that that the world is using but why should a government accept bitcoin as tax payment?
I'm not even saying that they should accept bitcoin as a tax payment. I'm saying that
They should allow people to opt out of the fiat system. I believe that
Not without not not no because that amounts to not paying taxes
So we're going in circles, so I think you know if you if you live in a country it's reasonable for you to pay your taxes
Yes, yes. Yeah, we're going we're going in circles where because this whole thing started right here because
My point was that the government should not have
the right
Or and it doesn't have the right to identify the movement of every dollar
That happens and that's what the government wants and that's what KYC AML is. It's the
Government but it does have that right. No, it doesn't it does. Yeah, that's where we diverge
That's where we diverge it has that right only because
people are forced to use the fiat system and
Those are the rules of the fiat system. If you use it you play by its rules
Yeah, but you're you have to if I don't use it I go to jail
You have you have a you have a choice of living in another country
Now we get into
Even if I live in another country, I'm forced to use i'm forced to pay american tax
Right, but that's a whole separate podcast isn't it? That's true. Actually, you know you are but
America's the only country as far as I know the only country in the world that makes people pay taxes wherever they are in the world
Yeah, so you'd have to relinquish your citizenship. We don't have to do that if I move to a different country
I don't pay british taxes. Yeah, i'm kind of jealous
but
Well, listen, I really appreciate you doing this. We're gonna have to do this again sometime
Yeah, yeah, it's pretty fun