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Ladies and gentlemen, welcome to another episode of the Hell Money Podcast. I am
Casey Rodimore,

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as always, joined by Aaron Redwing, your hosts for a very special episode,

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because today we are joined by the inimitable, legendary, unique Paul Sztorc. How
are you, Paul?

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Guys, thanks for having me.

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It's actually really our pleasure. My pleasure, at least. I don't want to speak for
Aaron. I

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don't know. Maybe she's over there seething. Well, we already kind of had you as a
guest,

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because we had an episode where we had pictures printed out of you and put on the
wall.

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Yeah, I remember this. I thought this was the greatest thing ever, with Nassim
Taleb, question

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mark. So we met for the first time, I think, at Scaling Bitcoin in Palo Alto many,
many, many years

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ago at Stanford. Oh, I don't remember that. Yeah, he's got me with that gotcha,
because I thought

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he was going to say Nashville, and I was like, no. And I specifically remember the
interaction,

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because I have a bunch of ideas. I'm like a guy who has ideas. Goddamn it, my
fucking phone,

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what's going on? Oh, my God. Oh, no. Oh, no. Okay. Whoops. Oh, no. Oh, God. Oh,

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God. It's a fucking mess. Could everybody do a mic check? Yeah, okay. Anyways, we
met at Scaling

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Bitcoin in Palo Alto, and I'm an idea haver, and we were talking, and I was having
some ideas.

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I'll tell him his ideas suck or something. You know yourself too well. Yeah, I said
some idea,

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and you're like, oh, no, that's a terrible idea for reason X, Y, Z. What was the
idea?

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I don't remember, but I didn't do anything, because they were bad ideas.

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They never went along. So, in a way, I helped the ordinal filter to the top.

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Yeah, exactly. You helped filter. Yeah, I would have had to go through two or three
more bad

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ideas. And then the second idea, you were like, oh, that's a bad idea. The third
idea, we were

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like, Casey, this is your worst idea yet, which I found- I have no memory of this,
and I really

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usually have a great memory for conversation, I think. And usually he has a terrible
memory

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for conversation, so this is a real- Well, I guess this is like a traumatic
experience.

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Yeah. No, no, no, no, because I actually think that this made me like a Paul Sztorc
fan,

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because you said everything in a very charming way, you know what I mean?

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Oh, that's good. People do give me that. A lot of people say, oh, if you follow Paul
on Twitter,

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he comes across as a deranged, bitter person. But then if you meet him, you realize
it's all

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like a joke, and it's all sarcastic, and it's very irreverent.

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You're good-spirited.

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This was the advice that I was going to give you. I think you should only post
videos of yourself.

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Other people have said that exact thing.

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And there are other people who post videos that shouldn't, they should only tweet,

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but you're in the special category that you should post videos-

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No, I've gotten this exact-

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Yeah, because you are deranged and hostile on Twitter, and you're like,

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let's argue about Drivechain, let's go, motherfuckers. But then you were telling me

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my days were terrible, but you were laughing, and it was like a very funny-

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I wish I knew what they were, so we could have history judge the ideas,

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and see if they actually were terrible. We don't know, he's not telling us, but then
he could have

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pulled out the piece of paper, and it's like, oh, you know, 22 million Bitcoin.

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He has a lot of bad ideas, though.

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Yeah, it's true. It's true.

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Occasionally, they hit.

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How do you pronounce your last name?

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Sztorc.

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Sztorc.

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Polish C is a T-S, unless it has the squiggle, in which case it's a C-H.

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I don't really know if my family dropped the squiggle when they kept the original
Polish spelling.

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They left the squiggle on Ellis Island.

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It could have. It's possible.

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So then it would be Sztorc.

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More like that, at least.

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It's very hard to pronounce anything in Polish.

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No, yeah, the Polish people, they struggle with it as well.

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We call you Paul Sztorc.

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What's long and hard that a Polish woman gets on her wedding night?

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A last name.

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A new last name, that's right, yeah.

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Anyways, moving on.

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They do a Polish wedding ceremony where one person gets vodka and the other person
gets

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clear water, and they mix it up, and then they take a shot, and whoever has the
vodka

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wears the pants in the household. It's like the leader of the household.

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But the joke is that they both get vodka.

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I see, yeah, yeah, yeah, yeah.

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Is it true, I've heard a rumor, is it true that you have red bedsheets?

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Why am I doubting this type of thing?

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That is true.

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I changed all the color in my house.

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There's no red in the entire house except for the bedroom.

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That makes you sound like quite a sensual, erotic person, having red bedsheets.

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It's not a good color.

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It takes a lot of attention.

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Right, but why the bedsheets red then, in that case?

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It's just like, how many things do you actually really pick the color for?

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Is that your favorite color?

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No.

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In fact, I have moderate red-green color blindness, so it's not as easy as red.

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So they could be green.

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Interesting.

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Yeah, I mean, I got them at Amazon from the drop-down menu.

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Right.

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But you never know how high the conspiracy goes.

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That's right.

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You were induced to buy them by the lizard people, you know?

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That's definitely possible.

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Now I'm so curious who knew this and told you.

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I can't say anything.

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It's the kind of thing I would do is make a joke about the colors.

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So I would tell it off and joke to someone.

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I'll just try to figure out who it was.

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Yeah, I'll be impressed.

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It's probably like a tab-conf orbit person is my guess.

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Can you tell us about the young Paul Sztorc?

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What kind of young adult were you?

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Can you be more specific?

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No, no, I can't.

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Describe yourself.

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Were you a brooding young man?

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Were you a loquacious young man?

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One interesting thing that happened was in my city that I grew up in,

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some people get the same group of like the way the school districts work.

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Some people have like kindergarten, middle school and high school in the same group.

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But then other people get split off constantly.

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So I was getting more split off.

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So it's kind of difficult because you lose like half of your friends.

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Was that because you were like gifted?

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No, but I was in the gifted program.

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Real gifted or the short bus gifted?

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No, it was the real gifted.

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And you know, they like take all the smart kids away.

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Bust them off.

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Yeah, like hang out with each other, like play chess for a while.

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So I was in that.

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But then the way it works, like you lose some friends.

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And so and then in high school, you kind of like, you know,

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I still had some friends that I had known like one or two since elementary school.

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You that was an interesting like some people had

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like every single person in their elementary school.

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Oh, yeah.

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Still at the high school.

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So then like freshman year, I kind of didn't have high school.

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I didn't really know that many people, but I kind of liked it that way.

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I spent a lot of Warcraft three.

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Yeah, and then at some point I decided that I wanted to become more popular.

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And then by senior year, I was like very popular.

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What was your strategy to get popular?

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Well, you know, throw parties and just buy a lot of, you know, alcohol.

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Yeah, yeah.

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Like a cheat for that.

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But but it was one interesting thing that happened was that

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people formed their little cliques early on and people were very clicky, as you
know.

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And then, you know, like all the then people take things for granted

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and there's drama within all the cliques.

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And then they want a new want to bring a new person or they want, you know,

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it's like everyone started to want to do that.

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It kind of at once, like halfway through the plan.

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And you're like the one that's really helped a lot.

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And then, you know, a lot of people kind of become like,

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I don't want to say like Peter Baylis or something,

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but you know, a lot of people.

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I don't know who Peter Baylis is.

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Oh, that's weird.

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I don't either.

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From Game of Thrones?

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Oh, yeah.

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Is he the short one?

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No, that's no.

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That's

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well, this is throwing my brain off a little for analogies that I plan to use,

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but I think all this Game of Thrones analogies lead it.

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Yeah.

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And another thing is I did join a band in junior year.

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So those people are very nice.

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What did you what did you play?

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I played the trombone.

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My grandfather played the trombone.

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Yeah, he was a sort of middling Chaucer scholar by day.

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And really liked to play the trombone at night.

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And I think he probably would have been a happier,

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less miserable person if he played the trombone more and studied Chaucer less.

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Was this a Pennsylvania one?

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Yeah, yeah.

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Penn State professor.

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Yeah.

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Right.

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I mean, I don't know.

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I think my childhood was pretty good, honestly.

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Okay.

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What was your first contact with microeconomics?

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That's a good question.

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I feel like in a way I was really interested in it my entire life,

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like sort of consciously or something.

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Because you would play...

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So if you wanted to play a game like Starcraft or Warcraft 3,

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that is like a...

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Or even a game like...

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I had like SimCity 2000 growing up,

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and I had like other games like that, Sim Theme Park.

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So these are inherently like microeconomic games, really.

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You know, like you got to manage the city,

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or you could run out of money play Sim Theme Park

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and start like deleting your stuff.

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You play SimCity 2000, you change the transit budget,

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you click it down a little bit,

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and then they're like the people, the guys look angry.

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Yeah.

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You do this, all the roads like start to fall apart.

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But then we did have...

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The high school had AP econ.

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Oh, that's really cool.

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So you could take it when you were in high school.

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And me and a couple other friends, we really liked it.

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Then I started it in college.

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The college gave you placement and credit.

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I could take intermediate microeconomics

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as a fresh fall semester as a freshman.

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And that was also kind of cool,

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where you're kind of like just thrown into like

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one of the most advanced classes.

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That kind of like sets you on a path maybe

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to like be more determined about it.

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Huh, interesting.

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I had kind of the same experience with programming,

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like a little bit, not totally,

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but like I went to community college,

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and there was this C++ programming class.

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And you were recommended to take the C programming class first.

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And so I just took the C++ programming class.

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And I like had to like bust my ass really hard

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from the beginning.

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And maybe that set me on a sort of more determined path.

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Yeah.

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I do think there is like,

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people have these like forks in the road,

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where you kind of like, you meet something like that,

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and you either say, oh, this isn't for me at all.

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I'm just going to give up on it.

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Yeah.

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Or you're kind of like, oh, I like this,

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and I want to do it.

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I want to do the higher level thing.

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I had a similar experience with the game like situation.

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My own self, and I knew a lot of young women like this,

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got really into Neopets, which had a stock market on it.

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And so like you learned how to like create a stock portfolio

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on Neopets, like at age like eight to 10.

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Yeah.

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I mean, start everyone, start your kids early.

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Give them SimCity or whatever, you know,

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if you want them to actually know about debt

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or what it's like to go into debt.

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Yeah, yeah, yeah, yeah.

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Same theme park.

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This is like the only way, if you just played the game,

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like you just had a lot of fun.

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But if you took out a loan,

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that was like the only way you could like lose.

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And it would just like delete the whole theme park.

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My brother and I, we would have to go back.

241
00:11:24,640 --> 00:11:26,160
We'd go back to like an earlier stave.

242
00:11:26,160 --> 00:11:26,720
Yeah.

243
00:11:26,720 --> 00:11:29,600
But we had saved it after like taking out the loan.

244
00:11:30,640 --> 00:11:32,240
But it's kind of like, you know,

245
00:11:32,240 --> 00:11:34,960
a Groundhog Day or that other movie with Tom Cruise,

246
00:11:34,960 --> 00:11:36,560
where it's like you fight the war every day,

247
00:11:36,560 --> 00:11:39,520
and you have to like try to pay off the loan in time.

248
00:11:39,520 --> 00:11:39,920
Yeah, yeah.

249
00:11:39,920 --> 00:11:41,520
And we were like, we regret ever doing this.

250
00:11:42,080 --> 00:11:42,880
But there you go.

251
00:11:42,880 --> 00:11:45,600
Like, you want them to learn when they're like,

252
00:11:45,600 --> 00:11:46,720
you know, 10 or 12.

253
00:11:46,720 --> 00:11:48,720
Tiny domino, like theme park delete,

254
00:11:49,600 --> 00:11:52,320
big domino, like adult credit responsibility.

255
00:11:52,320 --> 00:11:53,200
Absolutely.

256
00:11:53,200 --> 00:11:53,920
Yeah.

257
00:11:53,920 --> 00:11:55,440
And people, the other thing is,

258
00:11:55,440 --> 00:11:56,720
a lot of stuff is much easier to learn

259
00:11:56,720 --> 00:11:58,240
when you're young, obviously.

260
00:11:58,240 --> 00:12:00,320
But it's like, people get older,

261
00:12:00,320 --> 00:12:01,840
they have like their weird little hangups

262
00:12:01,840 --> 00:12:03,360
or they're weird, like they've decided,

263
00:12:04,240 --> 00:12:05,520
it's too late for me, you know?

264
00:12:07,200 --> 00:12:09,520
They're like, oh, I'm not good with money or something.

265
00:12:09,520 --> 00:12:10,800
Yeah, they're like, I hate math.

266
00:12:11,520 --> 00:12:11,760
Yeah.

267
00:12:11,760 --> 00:12:13,840
And they've just decided that they're that type of person.

268
00:12:13,840 --> 00:12:14,720
Yeah, yeah.

269
00:12:14,720 --> 00:12:15,520
It's true.

270
00:12:15,520 --> 00:12:16,000
It's true.

271
00:12:17,760 --> 00:12:20,640
Would you say that you're part of any particular

272
00:12:21,600 --> 00:12:24,880
house of economics, you know, like Slytherin, whatever?

273
00:12:24,880 --> 00:12:25,600
That's a good question.

274
00:12:26,240 --> 00:12:27,680
Well, I wrote a huge post,

275
00:12:28,800 --> 00:12:30,880
and I feel bad because I've never published it,

276
00:12:30,880 --> 00:12:33,840
but it's like 99% done.

277
00:12:33,840 --> 00:12:35,440
I wrote it in 2017,

278
00:12:35,440 --> 00:12:38,480
called Austrian Economics Dash,

279
00:12:38,480 --> 00:12:39,440
Join It Then Leave.

280
00:12:41,120 --> 00:12:43,200
Because you should join,

281
00:12:43,200 --> 00:12:44,880
and then you should get out

282
00:12:44,880 --> 00:12:46,960
because it is a weird cult, of course.

283
00:12:46,960 --> 00:12:48,160
But the problem is,

284
00:12:48,160 --> 00:12:50,480
mainstream economics is also a weird cult.

285
00:12:50,480 --> 00:12:53,440
And Henry Hazlitt figured it all out with his book,

286
00:12:53,440 --> 00:12:55,120
Economics in One Lesson.

287
00:12:55,120 --> 00:12:56,720
He has it right at the beginning.

288
00:12:56,720 --> 00:12:58,240
He has this little paragraph about,

289
00:12:59,120 --> 00:13:02,400
well, economics is hard as anything else.

290
00:13:02,400 --> 00:13:05,360
It's as hard as chemistry or whatever.

291
00:13:05,360 --> 00:13:08,800
But it has a special problem,

292
00:13:09,760 --> 00:13:11,440
which is that everyone is pleading,

293
00:13:11,440 --> 00:13:13,280
especially, he called it the special pleading

294
00:13:13,280 --> 00:13:14,800
of special interests or something,

295
00:13:14,800 --> 00:13:17,040
or special pleading of selfish interests.

296
00:13:17,040 --> 00:13:19,840
But basically, in economics, everyone is thinking,

297
00:13:19,840 --> 00:13:22,080
oh, if I argue a certain way,

298
00:13:23,040 --> 00:13:24,800
then I can get more money.

299
00:13:24,800 --> 00:13:26,640
I can get more status in society.

300
00:13:27,280 --> 00:13:28,640
So everyone is kind of deranged,

301
00:13:28,640 --> 00:13:30,320
psychologically deranged themselves.

302
00:13:30,320 --> 00:13:30,800
You know what I mean?

303
00:13:31,440 --> 00:13:33,200
Who are the people who are into Austrian economics?

304
00:13:33,200 --> 00:13:34,480
People who don't want to pay taxes,

305
00:13:34,480 --> 00:13:35,680
people who are doing okay.

306
00:13:36,640 --> 00:13:40,880
So it's hard to tell real or just the self-delusion.

307
00:13:41,440 --> 00:13:43,200
And then the Keynesian people are people

308
00:13:43,200 --> 00:13:45,760
who work for the government, like West Wing people.

309
00:13:45,760 --> 00:13:47,920
They love paying taxes for some reason.

310
00:13:47,920 --> 00:13:50,880
And maybe they get more in taxes than they pay,

311
00:13:50,880 --> 00:13:52,640
because if they work, a lot of these people,

312
00:13:52,640 --> 00:13:53,920
if you work for the Fed,

313
00:13:53,920 --> 00:13:56,400
the other thing is if you work in academia,

314
00:13:57,360 --> 00:13:59,520
do you want it to be simple,

315
00:13:59,520 --> 00:14:02,320
or do you want it to involve some crazy econometric model?

316
00:14:03,520 --> 00:14:04,640
The last thing you want is-

317
00:14:04,640 --> 00:14:06,720
Yeah, you want the research budget.

318
00:14:06,720 --> 00:14:09,840
You're like, we have to build a model in Fortran 77.

319
00:14:09,840 --> 00:14:11,920
It's going to take 40 million lines of code.

320
00:14:11,920 --> 00:14:14,960
We need $80 million instead of like,

321
00:14:14,960 --> 00:14:17,280
yeah, I just draw the supply and demand curves

322
00:14:17,280 --> 00:14:18,560
on the board and call it a day.

323
00:14:18,560 --> 00:14:22,800
Or like so many things we don't teach to the public.

324
00:14:22,800 --> 00:14:24,160
I'm just thinking like the profession.

325
00:14:24,160 --> 00:14:28,240
Like imagine there was a world where everyone,

326
00:14:28,240 --> 00:14:30,000
you had a chemistry profession,

327
00:14:30,000 --> 00:14:31,120
and you had like Walter White,

328
00:14:31,120 --> 00:14:32,640
you had all these people who are great chemists.

329
00:14:32,800 --> 00:14:34,800
Walter White, that's freaking bad, dude.

330
00:14:34,800 --> 00:14:35,600
Nobel Prize winner.

331
00:14:35,600 --> 00:14:37,200
I'm just, you guys are killing me with these.

332
00:14:37,200 --> 00:14:38,560
I'm trying to come up with cool metaphors.

333
00:14:38,560 --> 00:14:40,240
You guys are like, I don't know what you're talking about.

334
00:14:40,240 --> 00:14:44,160
I just love the idea that he's like noteworthy chemist.

335
00:14:44,160 --> 00:14:46,960
He's like a noted financier Jeffrey Epstein.

336
00:14:49,120 --> 00:14:51,120
He's like a building,

337
00:14:52,880 --> 00:14:56,480
it looks like meth, but it's actually close to the wall.

338
00:14:56,480 --> 00:14:57,760
So I'm talking like you live in a world

339
00:14:57,760 --> 00:14:59,280
where these people exist,

340
00:14:59,920 --> 00:15:02,800
and yet the normal person like has never heard

341
00:15:02,800 --> 00:15:04,240
of like temperature or pressure.

342
00:15:05,120 --> 00:15:06,640
That's basically the economics world.

343
00:15:06,640 --> 00:15:09,920
The politicians talking on stage,

344
00:15:09,920 --> 00:15:11,760
they don't know about efficient markets hypothesis,

345
00:15:11,760 --> 00:15:12,960
supply and demand.

346
00:15:12,960 --> 00:15:16,080
Sometimes this happens with friends that I'm talking to

347
00:15:16,080 --> 00:15:18,800
where they're making some like political point,

348
00:15:18,800 --> 00:15:21,360
and then I like drill down to the very bottom.

349
00:15:22,000 --> 00:15:24,880
And then I'm like, oh, they don't think

350
00:15:24,880 --> 00:15:28,480
that like a payroll tax is borne by the employee.

351
00:15:28,640 --> 00:15:30,960
They think, well, the employer pays the tax,

352
00:15:30,960 --> 00:15:31,920
the tax incident.

353
00:15:32,880 --> 00:15:35,760
So that's, I mean, that is in econ 101.

354
00:15:37,200 --> 00:15:40,240
But that's not, and the minimum wage is not the best way

355
00:15:40,240 --> 00:15:41,920
to help the poor remotely.

356
00:15:41,920 --> 00:15:43,920
So there's many other ways that are better.

357
00:15:43,920 --> 00:15:45,520
If you want to help the poor, then you should do it.

358
00:15:45,520 --> 00:15:49,200
But the minimum wage is often hijacked by unions or anyone.

359
00:15:49,200 --> 00:15:50,960
If you can have like a high skilled person

360
00:15:51,680 --> 00:15:54,320
get $15 an hour for a certain job,

361
00:15:54,320 --> 00:15:56,160
and you don't want three people to come in,

362
00:15:57,040 --> 00:16:00,080
you know, getting $4.90 an hour, $4.90.

363
00:16:01,840 --> 00:16:03,760
So we live in this bizarre, bizarre world.

364
00:16:03,760 --> 00:16:04,720
Why should you?

365
00:16:07,280 --> 00:16:09,360
Why should you enter Austrian economics?

366
00:16:09,360 --> 00:16:10,320
And then why should you leave it?

367
00:16:10,320 --> 00:16:11,920
Well, because you have to get out of there

368
00:16:11,920 --> 00:16:13,120
because they're all cults.

369
00:16:13,120 --> 00:16:14,640
And so actually it's a very good training

370
00:16:14,640 --> 00:16:17,680
for like the crypto industry, where everything is also called

371
00:16:17,680 --> 00:16:20,000
and for the same reason, because everyone's a bag holder.

372
00:16:20,800 --> 00:16:23,200
Do you think that economics is a pseudoscience?

373
00:16:24,160 --> 00:16:27,280
No, but I think it's haunted by this cult issue.

374
00:16:27,280 --> 00:16:31,280
It's haunted by many bizarre issues where

375
00:16:33,280 --> 00:16:35,360
if you allow the cult part to win,

376
00:16:35,360 --> 00:16:37,040
then it is a pseudoscience.

377
00:16:37,040 --> 00:16:38,320
And this is a constant danger.

378
00:16:38,320 --> 00:16:40,400
And you can see that some of the Austrian people

379
00:16:40,400 --> 00:16:42,640
are in the cult and some of the neoclassical

380
00:16:42,640 --> 00:16:44,560
and the Keynesian people, they're just in the cult.

381
00:16:44,560 --> 00:16:45,760
And then there's others like, you know,

382
00:16:45,760 --> 00:16:47,760
Paul Krugman's column is terrible.

383
00:16:47,760 --> 00:16:49,360
But when he writes all these other books

384
00:16:49,360 --> 00:16:52,560
that are like very well respected about exchange rates

385
00:16:53,360 --> 00:16:55,040
Well-respected good or well-respected bad?

386
00:16:55,040 --> 00:16:57,040
Well-respected normal econ books.

387
00:16:57,040 --> 00:16:59,840
So when he addresses, when he has to do peer review

388
00:17:01,200 --> 00:17:02,160
Keep, if you can keep

389
00:17:02,160 --> 00:17:02,720
I'm sorry.

390
00:17:02,720 --> 00:17:02,960
Yeah.

391
00:17:02,960 --> 00:17:03,920
You don't like a fist away.

392
00:17:03,920 --> 00:17:04,880
You don't need to throat it.

393
00:17:04,880 --> 00:17:09,120
When he, it's just depends like the temptation

394
00:17:09,120 --> 00:17:11,680
to write it, to sneer at everyone via

395
00:17:11,680 --> 00:17:14,720
Yeah, via your little dunk, your New York Times

396
00:17:14,720 --> 00:17:19,280
Is enough to destroy the merit of the content.

397
00:17:19,280 --> 00:17:19,520
Yeah.

398
00:17:20,160 --> 00:17:24,720
So it's just, if you let that, if you let the temptation win

399
00:17:24,720 --> 00:17:26,320
then it will become completely fake.

400
00:17:26,320 --> 00:17:26,720
Yeah.

401
00:17:26,720 --> 00:17:27,280
Yeah.

402
00:17:27,280 --> 00:17:29,840
Can I complain, can I complain my pet peeve

403
00:17:29,840 --> 00:17:31,920
about the Austrian economists?

404
00:17:31,920 --> 00:17:32,080
Yeah.

405
00:17:32,080 --> 00:17:34,320
We can go down a little, the article is huge.

406
00:17:34,320 --> 00:17:36,720
It contains a whole thing of like crazy things

407
00:17:36,720 --> 00:17:39,920
that they won't stop, you know, talking about

408
00:17:39,920 --> 00:17:40,800
that are incorrect.

409
00:17:40,800 --> 00:17:41,920
Maybe mine is pretty mild.

410
00:17:41,920 --> 00:17:43,840
It's that I think it's a reaction

411
00:17:43,840 --> 00:17:46,560
to like mainstream economists where they're like

412
00:17:46,560 --> 00:17:47,520
the Austrians are like, well

413
00:17:47,520 --> 00:17:50,160
you can't actually go out and measure anything.

414
00:17:50,160 --> 00:17:52,160
You've got to be in a dark room

415
00:17:52,160 --> 00:17:54,880
in a sensory deprivation tank.

416
00:17:54,880 --> 00:17:56,880
And then you do praxeology

417
00:17:56,880 --> 00:17:58,800
which is just like figuring things out.

418
00:17:58,800 --> 00:18:01,200
And then you emerge from the sensory deprivation tank

419
00:18:01,200 --> 00:18:02,880
knowing things about the world.

420
00:18:02,880 --> 00:18:05,280
And it certainly seems like these kinds of economic

421
00:18:05,280 --> 00:18:08,880
like get Duncan experiment and are like a good idea,

422
00:18:08,880 --> 00:18:09,600
you know, and can work.

423
00:18:09,600 --> 00:18:10,720
And there's merit to that.

424
00:18:10,720 --> 00:18:12,320
But the world is also really complicated.

425
00:18:12,320 --> 00:18:13,840
It seems like measuring it sometimes

426
00:18:13,840 --> 00:18:15,200
would probably be a good idea.

427
00:18:15,840 --> 00:18:17,040
Well, I mean, you're absolutely correct.

428
00:18:17,120 --> 00:18:19,680
Like that this is one of the main flaws

429
00:18:19,680 --> 00:18:22,640
and the over-reliance on praxeology is

430
00:18:23,360 --> 00:18:24,800
I go into this in enormous detail

431
00:18:24,800 --> 00:18:26,160
in this giant article, but like,

432
00:18:26,160 --> 00:18:28,000
That will never be published.

433
00:18:28,000 --> 00:18:30,560
You know, I think I slowly getting

434
00:18:30,560 --> 00:18:32,320
I really just got to, maybe I just push it

435
00:18:32,320 --> 00:18:33,360
because the issue is

436
00:18:33,360 --> 00:18:35,360
Put draft in red letters over the top.

437
00:18:35,360 --> 00:18:37,440
I could, because, you know, the issue is

438
00:18:37,440 --> 00:18:38,880
when you've put out something like this

439
00:18:38,880 --> 00:18:40,880
everyone will take it as a big challenge.

440
00:18:40,880 --> 00:18:42,080
I mean, as they should.

441
00:18:42,080 --> 00:18:43,840
And then you're going to get all this weird,

442
00:18:43,840 --> 00:18:45,200
you know, attention from people.

443
00:18:45,200 --> 00:18:48,080
There will be like, whoever, you know,

444
00:18:48,080 --> 00:18:49,520
like Alan Farrington or whatever,

445
00:18:49,520 --> 00:18:51,600
or they will want to like do the debate,

446
00:18:51,600 --> 00:18:53,360
which they should, or even Eric Bosco.

447
00:18:54,560 --> 00:18:55,840
And those guys are great.

448
00:18:55,840 --> 00:18:58,080
But Austrian economics is just like

449
00:18:58,080 --> 00:18:59,040
bad for your mental health.

450
00:18:59,040 --> 00:19:00,320
Yeah, yeah, yeah.

451
00:19:00,320 --> 00:19:01,680
But you're right.

452
00:19:01,680 --> 00:19:03,280
Praxeology was because

453
00:19:03,280 --> 00:19:04,800
And praxeology is this idea

454
00:19:04,800 --> 00:19:06,480
that you just need to noodle on things.

455
00:19:06,480 --> 00:19:08,320
You don't need to look at the world at all.

456
00:19:08,320 --> 00:19:09,840
Yeah, it doesn't make any sense.

457
00:19:09,840 --> 00:19:11,440
But it was a reaction to something

458
00:19:11,440 --> 00:19:13,520
called positivism that was in vogue

459
00:19:13,520 --> 00:19:14,720
in the 1930s.

460
00:19:14,720 --> 00:19:15,680
What's positivism?

461
00:19:15,680 --> 00:19:17,920
It's this positivism is an idea that

462
00:19:18,480 --> 00:19:20,560
it's an extreme form of empiricism.

463
00:19:20,560 --> 00:19:23,440
So empiricism was this idea that

464
00:19:23,440 --> 00:19:24,400
let me just take a step back

465
00:19:24,400 --> 00:19:26,000
because I don't want everyone to lose their minds.

466
00:19:26,000 --> 00:19:27,440
And I want to give them the normal

467
00:19:27,440 --> 00:19:30,480
this is the real way things are.

468
00:19:30,480 --> 00:19:32,480
I mean, anyone can be wrong, including me.

469
00:19:32,480 --> 00:19:34,240
But just the real way things are

470
00:19:34,240 --> 00:19:36,720
is that there was a philosophy

471
00:19:36,720 --> 00:19:37,760
at a certain point in time

472
00:19:38,480 --> 00:19:40,000
and it was not good enough.

473
00:19:40,000 --> 00:19:41,200
So people rejected it.

474
00:19:41,200 --> 00:19:42,640
So in the Enlightenment

475
00:19:42,640 --> 00:19:43,760
there was this idea of knowledge

476
00:19:43,760 --> 00:19:44,800
comes from authority,

477
00:19:44,800 --> 00:19:45,680
comes from the king,

478
00:19:45,680 --> 00:19:46,800
or comes from these books,

479
00:19:46,800 --> 00:19:47,520
comes from priests,

480
00:19:47,520 --> 00:19:48,720
comes from the Bible.

481
00:19:48,720 --> 00:19:49,680
The knowledge is coming from

482
00:19:49,680 --> 00:19:51,120
the authoritative book.

483
00:19:51,920 --> 00:19:54,080
And then during the scientific revolution,

484
00:19:54,080 --> 00:19:55,040
people rejected that.

485
00:19:55,040 --> 00:19:55,840
They said, you know what?

486
00:19:55,840 --> 00:19:57,920
We contest the theories with experiments.

487
00:19:59,040 --> 00:20:00,640
But then people got a little carried away

488
00:20:00,640 --> 00:20:02,960
by the time von Mises had been born.

489
00:20:03,680 --> 00:20:04,240
And they thought

490
00:20:05,360 --> 00:20:07,600
I'm talking about when he started to write

491
00:20:08,720 --> 00:20:09,680
as a serious person

492
00:20:09,680 --> 00:20:11,920
to reject positivism in the 1930s.

493
00:20:12,880 --> 00:20:14,880
And at this time,

494
00:20:14,880 --> 00:20:17,040
positivism was this idea that

495
00:20:18,080 --> 00:20:19,440
it's difficult to explain

496
00:20:19,440 --> 00:20:21,120
exactly how it all shook out.

497
00:20:21,120 --> 00:20:22,400
But basically it was the idea

498
00:20:22,400 --> 00:20:25,200
that it's experience and experiment

499
00:20:25,840 --> 00:20:27,440
that justify all knowledge.

500
00:20:28,880 --> 00:20:31,120
There was an extreme form of empiricism.

501
00:20:31,760 --> 00:20:33,200
And that was also incorrect.

502
00:20:33,920 --> 00:20:35,600
And one of the reasons why

503
00:20:36,160 --> 00:20:38,000
is that you actually cannot experience

504
00:20:38,000 --> 00:20:39,360
anything directly without

505
00:20:40,000 --> 00:20:41,760
having a theory attached to it.

506
00:20:41,760 --> 00:20:43,040
And many times we don't even realize

507
00:20:43,040 --> 00:20:43,680
we have many of the work.

508
00:20:43,680 --> 00:20:45,200
We have the optical blind spot.

509
00:20:45,200 --> 00:20:46,400
We have optical illusions.

510
00:20:46,960 --> 00:20:48,720
Or you don't even realize

511
00:20:48,720 --> 00:20:50,560
like your eye doesn't actually see

512
00:20:52,480 --> 00:20:53,920
like anything it might detect.

513
00:20:53,920 --> 00:20:55,200
So if you run an experiment

514
00:20:55,200 --> 00:20:56,400
and you're looking like on your computer

515
00:20:56,400 --> 00:20:57,600
or you hold the litmus test up,

516
00:20:57,600 --> 00:20:58,960
you see it's either red or blue.

517
00:21:01,120 --> 00:21:03,040
You never actually see that.

518
00:21:03,040 --> 00:21:04,480
The red and blue is like

519
00:21:04,480 --> 00:21:06,640
different wavelength light

520
00:21:06,640 --> 00:21:07,840
that crashes into your eye.

521
00:21:07,840 --> 00:21:08,880
And then your eye produces

522
00:21:08,880 --> 00:21:10,560
an electrical signal

523
00:21:10,560 --> 00:21:12,560
that is interpreted by your brain.

524
00:21:12,560 --> 00:21:13,920
It's a hallucination.

525
00:21:13,920 --> 00:21:15,040
And so yeah, your brain

526
00:21:16,320 --> 00:21:18,000
has running like a kind of program

527
00:21:18,000 --> 00:21:19,840
to generate virtual reality

528
00:21:19,840 --> 00:21:21,040
that you experience.

529
00:21:21,040 --> 00:21:21,840
And so that's why you have

530
00:21:21,840 --> 00:21:23,200
like optical illusions.

531
00:21:23,200 --> 00:21:24,960
And you can do like a magician's trick

532
00:21:24,960 --> 00:21:27,200
where your eye can only see

533
00:21:27,760 --> 00:21:29,280
the part of your eye that can read

534
00:21:29,280 --> 00:21:32,000
is only the area of your thumb.

535
00:21:32,000 --> 00:21:33,680
Yeah, the fovea.

536
00:21:33,680 --> 00:21:35,040
And you actually can't see everything.

537
00:21:35,040 --> 00:21:35,840
And actually you can't see

538
00:21:35,840 --> 00:21:36,640
anything else in color.

539
00:21:37,280 --> 00:21:39,040
But your brain renders it

540
00:21:39,600 --> 00:21:41,120
like you look around the room

541
00:21:41,120 --> 00:21:42,080
and your brain like renders

542
00:21:42,080 --> 00:21:43,360
a room in your mind.

543
00:21:43,360 --> 00:21:44,880
So you think you can see

544
00:21:44,880 --> 00:21:47,120
that you're in a room full of color,

545
00:21:47,120 --> 00:21:48,000
but the part of your eye

546
00:21:48,000 --> 00:21:49,200
that can detect color

547
00:21:49,200 --> 00:21:50,560
is only very, very small.

548
00:21:50,560 --> 00:21:51,760
And your eye will dart around

549
00:21:52,320 --> 00:21:53,520
and your brain will stitch it

550
00:21:53,520 --> 00:21:54,800
all together later.

551
00:21:54,800 --> 00:21:55,680
But that's how a magician

552
00:21:55,680 --> 00:21:57,200
can do something with one hand.

553
00:21:57,200 --> 00:21:58,400
You look over there,

554
00:21:58,400 --> 00:21:59,200
they move their hand

555
00:21:59,200 --> 00:22:00,800
or what they do like something else.

556
00:22:00,800 --> 00:22:01,920
You're not looking.

557
00:22:01,920 --> 00:22:02,720
And then you think,

558
00:22:02,720 --> 00:22:04,080
how did they, how did they,

559
00:22:04,080 --> 00:22:05,200
you know, they pick that card

560
00:22:06,480 --> 00:22:08,080
through the table or something.

561
00:22:08,080 --> 00:22:09,360
Of course, that's not really what happened,

562
00:22:09,360 --> 00:22:13,040
but they exploit deficiencies

563
00:22:13,040 --> 00:22:15,280
in how your brain perceives things.

564
00:22:15,280 --> 00:22:16,720
So this is a long winded way

565
00:22:16,720 --> 00:22:18,960
of just saying positivism was wrong

566
00:22:18,960 --> 00:22:20,240
and he created praxeology

567
00:22:20,240 --> 00:22:23,040
to put reason back in and say,

568
00:22:23,760 --> 00:22:27,760
well, if you have an experiment

569
00:22:27,760 --> 00:22:28,560
and it goes one way,

570
00:22:28,560 --> 00:22:30,080
there's actually an infinity number

571
00:22:30,080 --> 00:22:31,200
of ways you could interpret

572
00:22:31,200 --> 00:22:32,320
the results of the experiment.

573
00:22:32,320 --> 00:22:33,040
So for example,

574
00:22:33,040 --> 00:22:34,400
what if you have a thermometer

575
00:22:34,400 --> 00:22:35,760
and you test two things,

576
00:22:35,760 --> 00:22:39,440
you heat one like beaker or liquid

577
00:22:39,440 --> 00:22:40,240
and you heat the other

578
00:22:40,880 --> 00:22:41,680
and you hold the temperature

579
00:22:41,680 --> 00:22:44,640
and one says like 95 degrees Fahrenheit.

580
00:22:44,640 --> 00:22:45,600
The other says,

581
00:22:45,600 --> 00:22:48,080
like it's like 3 million degrees Fahrenheit.

582
00:22:49,040 --> 00:22:49,520
You would be like,

583
00:22:49,520 --> 00:22:50,960
well, this thermometer is broken.

584
00:22:52,320 --> 00:22:54,080
So that's kind of what

585
00:22:55,920 --> 00:22:57,680
the praxeology stuff was getting at

586
00:22:57,680 --> 00:22:58,480
when he was trying to say,

587
00:22:58,480 --> 00:23:00,400
oh, the minimum wage hurts the poor

588
00:23:00,400 --> 00:23:02,480
or the minimum wage sets a price ceiling

589
00:23:02,480 --> 00:23:04,160
and it will cause the stock out or something.

590
00:23:04,160 --> 00:23:04,880
He's saying like,

591
00:23:04,880 --> 00:23:05,600
we kind of know

592
00:23:06,880 --> 00:23:09,120
that if we held up heat to the thing,

593
00:23:09,120 --> 00:23:10,000
it would get hotter.

594
00:23:10,000 --> 00:23:11,200
But we also know that it won't,

595
00:23:11,200 --> 00:23:12,000
it can't get to,

596
00:23:12,000 --> 00:23:13,840
you know, 3 million degrees

597
00:23:13,840 --> 00:23:15,760
without the room bursting into flames,

598
00:23:15,760 --> 00:23:16,400
killing us all.

599
00:23:17,760 --> 00:23:19,120
So that was kind of what

600
00:23:19,120 --> 00:23:20,880
he was trying to steer it back.

601
00:23:20,880 --> 00:23:22,320
Then all these crazy Austrians,

602
00:23:22,320 --> 00:23:23,680
of course, because it's a cult

603
00:23:24,240 --> 00:23:26,000
and they just take it and run with it.

604
00:23:26,000 --> 00:23:26,960
And they say, well,

605
00:23:27,520 --> 00:23:28,640
and then of course,

606
00:23:28,640 --> 00:23:30,080
best of all for any cult,

607
00:23:30,080 --> 00:23:31,200
praxeology says,

608
00:23:31,200 --> 00:23:32,160
what does it say?

609
00:23:32,160 --> 00:23:33,760
If you start from a premise that's true,

610
00:23:34,320 --> 00:23:36,000
then your conclusion is absolutely

611
00:23:36,640 --> 00:23:39,280
100% has the epistemic status of being,

612
00:23:39,280 --> 00:23:41,040
the whole column is perfectly true.

613
00:23:41,040 --> 00:23:42,240
You can never be proven wrong.

614
00:23:42,240 --> 00:23:42,720
Right.

615
00:23:42,720 --> 00:23:43,920
Well, you know, that's,

616
00:23:43,920 --> 00:23:44,960
so then you can see how

617
00:23:44,960 --> 00:23:47,040
you get to some closed minded people

618
00:23:47,040 --> 00:23:47,600
who are just like,

619
00:23:47,600 --> 00:23:48,400
I'm right about everything.

620
00:23:50,800 --> 00:23:53,760
So then eventually you started to work at Yale.

621
00:23:53,760 --> 00:23:54,240
Is that right?

622
00:23:54,240 --> 00:23:54,720
That's true.

623
00:23:54,720 --> 00:23:54,960
Yeah.

624
00:23:54,960 --> 00:23:58,240
And you were a research economist at Yale.

625
00:23:58,240 --> 00:23:58,640
That's right.

626
00:23:58,640 --> 00:23:59,760
What did you research?

627
00:23:59,760 --> 00:24:00,480
Were you trying to like,

628
00:24:00,480 --> 00:24:01,760
grow their endowment or something?

629
00:24:01,760 --> 00:24:02,400
No, no, no, no.

630
00:24:02,400 --> 00:24:03,200
I did real,

631
00:24:03,200 --> 00:24:04,400
I worked for a Bill Nordhaus.

632
00:24:04,400 --> 00:24:05,200
So this is very funny

633
00:24:05,200 --> 00:24:06,480
because William Nordhaus

634
00:24:06,480 --> 00:24:08,080
is the inheritor and coauthor

635
00:24:08,080 --> 00:24:09,440
of the Samuelson textbook,

636
00:24:09,440 --> 00:24:12,240
which is the most mainstream textbook ever.

637
00:24:12,240 --> 00:24:12,800
Yeah.

638
00:24:12,800 --> 00:24:14,400
And I got the opportunity to work for this guy

639
00:24:14,400 --> 00:24:16,720
who's very, very, very well respected.

640
00:24:16,720 --> 00:24:18,640
He became president of the AEA,

641
00:24:18,640 --> 00:24:19,920
American Economics Association,

642
00:24:19,920 --> 00:24:21,680
while I was working for him.

643
00:24:21,680 --> 00:24:23,360
And he won the Nobel prize later.

644
00:24:24,320 --> 00:24:25,680
And he, but he was working on,

645
00:24:25,680 --> 00:24:26,320
he worked on actually

646
00:24:26,320 --> 00:24:27,280
quite a few different things,

647
00:24:28,720 --> 00:24:29,680
for which he is famous.

648
00:24:29,680 --> 00:24:30,480
And so my, you know,

649
00:24:30,480 --> 00:24:31,520
I helped like do,

650
00:24:32,480 --> 00:24:33,920
you know, supplementary research

651
00:24:33,920 --> 00:24:35,840
and I did programming,

652
00:24:35,840 --> 00:24:37,680
like program models and things.

653
00:24:37,680 --> 00:24:40,080
Is that how you started to do programming?

654
00:24:40,080 --> 00:24:41,840
No, I was interested in programming

655
00:24:42,960 --> 00:24:44,240
when I was much younger,

656
00:24:44,240 --> 00:24:46,320
around like maybe 11 or 12.

657
00:24:46,320 --> 00:24:47,760
I started with Python,

658
00:24:47,760 --> 00:24:49,120
just on the home computer.

659
00:24:49,120 --> 00:24:49,360
Okay.

660
00:24:49,360 --> 00:24:50,880
So it was way earlier

661
00:24:50,880 --> 00:24:52,160
and I had never studied it.

662
00:24:52,160 --> 00:24:56,320
I did not take a single programming class in college,

663
00:24:56,320 --> 00:24:57,760
although some of them are related.

664
00:24:57,760 --> 00:24:58,560
Like you have to take,

665
00:24:59,032 --> 00:25:26,032
statistics, which puts you in contact with R, and you have to take econometrics to
major in economics, which puts you in touch with like various other things, SPSS,
data, NAS, which have like command line operations. I also had one or two friends
who were really interested. Like I had one friend who did a bunch of PHP web stuff.
So we had, we had like, he had set stuff up like in middle school, so that we could
like play Doom on the school board. And he was like, I want to play Doom on the
school board.

666
00:25:26,032 --> 00:25:35,032
And we would play it on the school computers and like share files, synchronize with
his like server and stuff. It was kind of funny. Yeah. So let's see, where are we?

667
00:25:35,032 --> 00:25:37,032
Yeah, you really have a whole agenda.

668
00:25:37,032 --> 00:25:39,032
Oh, yeah, yeah, of course. It's Paul.

669
00:25:39,032 --> 00:25:41,032
He's leading you slowly to some trap.

670
00:25:41,032 --> 00:25:47,032
Yeah, no, no, there's no trap. There's no trap. Also, I still call you Paul Sztorc.

671
00:25:47,032 --> 00:25:51,032
No, this is a nickname that I received in like middle school, high school.

672
00:25:51,032 --> 00:25:54,032
Oh, I thought it was from that podcast.

673
00:25:54,032 --> 00:25:56,032
They independently came up with it somehow.

674
00:25:56,032 --> 00:25:58,032
Yeah, it's just floating in the ether.

675
00:25:58,032 --> 00:26:00,032
All roads lead to Rome, you know.

676
00:26:00,032 --> 00:26:03,032
But it's difficult to pronounce last name. So this puts people in like a...

677
00:26:03,032 --> 00:26:06,032
Have you ever considered changing your last name to be more phonetically obvious?

678
00:26:06,032 --> 00:26:13,032
I have like thought like, or like, I have thought of like, what if I just did
something weird like that? But you know, what are you gonna do? Like, that's the
kind of thing where you...

679
00:26:13,032 --> 00:26:15,032
I'm so jerking. What are you gonna do?

680
00:26:15,032 --> 00:26:24,032
You're sitting on a couch with your friends and you're like, oh, this would be a
funny idea. But then, you know, what am I supposed to like decide and then explain
this to my family and then go to City Hall or whatever?

681
00:26:24,032 --> 00:26:25,032
Yeah, right.

682
00:26:25,032 --> 00:26:26,032
Like this is the kind of thing you would never really do.

683
00:26:26,032 --> 00:26:27,032
Absolutely.

684
00:26:27,032 --> 00:26:29,032
Like you and your friends are on a couch and you're like, oh, we'll start a band or
something.

685
00:26:29,032 --> 00:26:30,032
Yeah, Rod Armour.

686
00:26:30,032 --> 00:26:31,032
Rod Armour.

687
00:26:31,032 --> 00:26:34,032
What do you think about Nicholas Nassim Taleb?

688
00:26:34,032 --> 00:26:35,032
Well...

689
00:26:35,032 --> 00:26:38,032
First, can you describe for the audience Nicholas Nassim Taleb?

690
00:26:38,032 --> 00:26:39,032
Those at home who may not know.

691
00:26:39,032 --> 00:26:40,032
Yeah, those who may not know.

692
00:26:40,032 --> 00:26:44,032
He is an independent statistician.

693
00:26:44,032 --> 00:26:45,032
He's a flaneur.

694
00:26:45,032 --> 00:27:00,032
He is a very interesting guy and author. And I would say I really have a lot of
respect for him, although it has like, you kind of, some of it does, you kind of see
through the magic trick after a while.

695
00:27:00,032 --> 00:27:08,032
Well, he's pursuing the barbell strategy, which is like 50% of the things he says
are really smart. And 50% of the things you say is like dumb as fuck.

696
00:27:08,032 --> 00:27:15,032
And it's not good because normally I think a reasonable way to interact with someone
is to like extend them a little bit of trust for a while.

697
00:27:15,032 --> 00:27:25,032
And then when they screw one thing up, you're kind of like, well, wait a minute,
this person is not really, you know, completely reliable, you know.

698
00:27:25,032 --> 00:27:27,032
Not a serious thinker necessarily.

699
00:27:27,032 --> 00:27:33,032
I got to go back in time and tag all those other times and think like, oh, could I
really, should I really rely on?

700
00:27:33,032 --> 00:27:40,032
I think it's good to like say things and people not know if you mean them or not and
kind of always keep people guessing and always have plausible deniability.

701
00:27:40,032 --> 00:27:43,032
He's definitely done a little bit of that.

702
00:27:43,032 --> 00:27:48,032
I mean, Alan Farrington, I think he wrote the, you know, How to Kick the Addiction,
which I was like amazed.

703
00:27:48,032 --> 00:27:50,032
That was the most amazing piece of writing I've ever seen.

704
00:27:50,032 --> 00:27:58,032
He wrote like a fake response to Taleb that is like in the style of Taleb.

705
00:27:58,032 --> 00:28:01,032
He's like Primo, Mansoor, whatever, like blah, blah, blah.

706
00:28:01,032 --> 00:28:07,032
He's throwing in all these like French, Italian, et cetera, Latin words in his
books.

707
00:28:07,032 --> 00:28:10,032
But yeah, he's a very interesting guy.

708
00:28:10,032 --> 00:28:15,032
He did do something that was amazing after the financial crisis.

709
00:28:15,032 --> 00:28:23,032
He presented to Congress about how generalized method of moments, which is this
thing in econometrics, we're doing like linear regression.

710
00:28:23,032 --> 00:28:26,032
Basically, linear regression is like you have these points and you kind of fit a
line.

711
00:28:26,032 --> 00:28:28,032
There's a little more to it than that, but –

712
00:28:28,032 --> 00:28:30,032
I don't think – I actually don't think so.

713
00:28:30,032 --> 00:28:31,032
I don't think so.

714
00:28:31,032 --> 00:28:38,032
Well, for multivariate regression, it's – for multivariate regressions, you've got a
bunch of points hovering in space and you fit like a sheet of paper.

715
00:28:38,032 --> 00:28:40,032
And then you can do it for any dimension.

716
00:28:40,032 --> 00:28:43,032
You just get the wackiest, most bullshit polynomial you can come up with.

717
00:28:43,032 --> 00:28:44,032
Yeah.

718
00:28:44,032 --> 00:28:45,032
You're like, oh, yeah, this is definitely it.

719
00:28:45,032 --> 00:28:58,032
The nonlinear regression is something that only someone who has carefully studied
actually knowledge and like stuff like empiricism and like the arguments of the
past, I think only someone like that can safely use.

720
00:28:58,032 --> 00:29:00,032
They've spent some hours in Plato's cave.

721
00:29:00,032 --> 00:29:01,032
Yeah.

722
00:29:01,032 --> 00:29:05,032
You need to study like Karl Popper and whatever and –

723
00:29:05,032 --> 00:29:08,032
Then you get like a second-degree polynomial.

724
00:29:08,032 --> 00:29:10,032
They will allow you to use the nonlinear.

725
00:29:10,032 --> 00:29:16,032
It will give you like the chip or something that allows you to use the nonlinear
regression because you're right.

726
00:29:16,032 --> 00:29:20,032
Plenty of people just say, oh, I want the R squared to be as high as possible.

727
00:29:20,032 --> 00:29:26,032
I don't – you know, which is like you want to get the thing to fit the points as
much as possible.

728
00:29:26,032 --> 00:29:30,032
And you can get the computer to fit the points perfectly if you just don't care
about what you're doing.

729
00:29:30,032 --> 00:29:34,032
You're going to make a weird shape and it will fit.

730
00:29:34,032 --> 00:29:37,032
All Loch Ness fucking monster bullshit.

731
00:29:37,032 --> 00:29:38,032
You know?

732
00:29:38,032 --> 00:29:41,032
And you can see how not – if you have like height versus weight.

733
00:29:41,032 --> 00:29:44,032
You have height versus weight and it's like a cloud.

734
00:29:44,032 --> 00:29:45,032
You have like a line.

735
00:29:45,032 --> 00:29:46,032
Yeah.

736
00:29:46,032 --> 00:29:54,032
And you can see how someone – you can see how deranged you – like how disappointed –
like if a child of yours comes to you, how disappointed you would be if they're
like, oh, I've got an even better line.

737
00:29:54,032 --> 00:29:57,032
And they just drew like a squiggled line through each point.

738
00:29:57,032 --> 00:30:00,032
You'd be like, oh, that's nice, son.

739
00:30:00,032 --> 00:30:04,032
And then you'd be like, we've got to keep him away from economics.

740
00:30:04,032 --> 00:30:08,032
You've got to get him on the short bus, you know?

741
00:30:08,032 --> 00:30:14,032
But then there's other things, you know, like experience versus wage that hits
diminishing returns.

742
00:30:14,032 --> 00:30:16,032
So you wouldn't want to hit the straight line.

743
00:30:16,032 --> 00:30:18,032
You would want to have the tapered curve, one curve.

744
00:30:18,032 --> 00:30:19,032
Right, one curve.

745
00:30:19,032 --> 00:30:20,032
Yeah.

746
00:30:20,032 --> 00:30:21,032
But not two curves.

747
00:30:21,032 --> 00:30:23,032
But then, of course, there are some cases where it's –

748
00:30:23,032 --> 00:30:24,032
Some cases indeed.

749
00:30:24,032 --> 00:30:25,032
Yeah, some cases.

750
00:30:25,032 --> 00:30:26,032
Yeah.

751
00:30:26,032 --> 00:30:27,032
This is the fucked up thing is that sometimes –

752
00:30:27,032 --> 00:30:28,032
Right.

753
00:30:28,032 --> 00:30:31,032
So every – this is exactly right that every single thing has an exception.

754
00:30:31,032 --> 00:30:32,032
I think –

755
00:30:32,032 --> 00:30:33,032
Because the real world is the real place.

756
00:30:33,032 --> 00:30:34,032
Yeah.

757
00:30:34,032 --> 00:30:35,032
It doesn't reduce itself to one little sentence.

758
00:30:35,032 --> 00:30:39,032
I think economists should have colored belts like they do in martial arts.

759
00:30:39,032 --> 00:30:40,032
I agree with that.

760
00:30:40,032 --> 00:30:47,032
And each additional belt gets you another degree in the polynomial you're allowed to
use in your point fitting, you know?

761
00:30:47,032 --> 00:30:48,032
Absolutely.

762
00:30:48,032 --> 00:30:49,032
Yeah.

763
00:30:49,032 --> 00:30:51,032
At people's height over time, you grow when you're young.

764
00:30:51,032 --> 00:30:52,032
Then you're stable.

765
00:30:52,032 --> 00:30:54,032
Then it shrinks a little.

766
00:30:54,032 --> 00:30:57,032
How do you tell that an economist has a sense of humor?

767
00:30:57,032 --> 00:30:58,032
I don't know.

768
00:30:58,032 --> 00:30:59,032
They're dead or something?

769
00:31:00,032 --> 00:31:06,032
They use figures after the decimal point.

770
00:31:06,032 --> 00:31:08,032
That's kind of funny, right?

771
00:31:08,032 --> 00:31:10,032
I was going to say I don't get it.

772
00:31:10,032 --> 00:31:11,032
No, no.

773
00:31:11,032 --> 00:31:13,032
It's like because everything is so imprecise.

774
00:31:13,032 --> 00:31:16,032
So if you're like, oh, the GDP is 35.8, then –

775
00:31:16,032 --> 00:31:17,032
Okay.

776
00:31:17,032 --> 00:31:19,032
That's – I thought you meant figures like a shape.

777
00:31:19,032 --> 00:31:20,032
No.

778
00:31:20,032 --> 00:31:21,032
Like a graph.

779
00:31:21,032 --> 00:31:22,032
No.

780
00:31:22,032 --> 00:31:23,032
Like a graphical figure.

781
00:31:23,032 --> 00:31:24,032
Okay.

782
00:31:24,032 --> 00:31:25,032
Since that one didn't land, let's do –

783
00:31:25,032 --> 00:31:26,032
You meant like significant figures.

784
00:31:26,032 --> 00:31:27,032
Yeah, that's right.

785
00:31:27,032 --> 00:31:28,032
Yeah, okay.

786
00:31:28,032 --> 00:31:29,032
Let's go for another –

787
00:31:29,032 --> 00:31:30,032
Yeah.

788
00:31:30,032 --> 00:31:31,032
They say they put GDP at like eight decimal points.

789
00:31:31,032 --> 00:31:32,032
Another economics joke.

790
00:31:32,032 --> 00:31:33,032
So let's – so, Paul.

791
00:31:33,032 --> 00:31:34,032
Okay.

792
00:31:34,032 --> 00:31:40,032
So there's two economists walking the forest, okay, and John and Bob.

793
00:31:40,032 --> 00:31:44,032
And they walk by a pile of bear shit.

794
00:31:44,032 --> 00:31:49,032
And John says to Bob, I'll pay you $300 to eat that bear shit.

795
00:31:49,032 --> 00:31:52,032
And they – Bob is like, well, okay.

796
00:31:52,032 --> 00:31:54,032
I mean, if economists, they need the money.

797
00:31:54,032 --> 00:31:55,032
So he eats the bear shit.

798
00:31:55,032 --> 00:31:56,032
He's a graduate student.

799
00:31:57,032 --> 00:31:58,032
Two graduate students, yeah.

800
00:31:58,032 --> 00:32:01,032
So he eats the bear shit and he gets $300 from John.

801
00:32:01,032 --> 00:32:03,032
And they keep walking, keep walking, keep walking.

802
00:32:03,032 --> 00:32:07,032
And Bob then sees a pile of bear shit, another pile of bear shit.

803
00:32:07,032 --> 00:32:13,032
And Bob says to John this time, I'll pay you $300 if you eat this bear shit.

804
00:32:13,032 --> 00:32:15,032
And John, well, he's a grad student.

805
00:32:15,032 --> 00:32:16,032
Grants are running out.

806
00:32:16,032 --> 00:32:17,032
So he does it.

807
00:32:17,032 --> 00:32:18,032
He takes the money.

808
00:32:18,032 --> 00:32:20,032
They can afford to pay $300, but they really need the $300.

809
00:32:20,032 --> 00:32:21,032
Yeah, yeah, yeah.

810
00:32:21,032 --> 00:32:23,032
I don't know if this story is totally airtight.

811
00:32:23,032 --> 00:32:24,032
It's airtight.

812
00:32:24,032 --> 00:32:27,032
And so then he eats the bear shit and he gets $300.

813
00:32:27,032 --> 00:32:28,032
And they keep walking.

814
00:32:28,032 --> 00:32:35,032
And then John says to Bob, I can't shake the feeling that we both just ate bear shit

815
00:32:35,032 --> 00:32:37,032
and we didn't get anything out of it.

816
00:32:37,032 --> 00:32:39,032
We just have as much money as we had before.

817
00:32:39,032 --> 00:32:44,032
And Bob says, well, we did grow the GDP by $600.

818
00:32:45,032 --> 00:32:46,032
I mean, I don't know.

819
00:32:46,032 --> 00:32:47,032
Is that like a joke?

820
00:32:47,032 --> 00:32:48,032
It's a joke.

821
00:32:48,032 --> 00:32:51,032
You're fucking busted by balls over here.

822
00:32:51,032 --> 00:32:52,032
Come on.

823
00:32:52,032 --> 00:32:56,032
You know, they wanted the entertainment value of seeing the other person do that.

824
00:32:56,032 --> 00:32:59,032
It's like they go to Blue Man Group or something.

825
00:32:59,032 --> 00:33:00,032
They go to the sphere.

826
00:33:00,032 --> 00:33:03,032
Extra level of analysis where the absurd situation actually makes sense.

827
00:33:03,032 --> 00:33:07,032
It's quite an important thing because, you know, in the command, the reason, this is

828
00:33:07,032 --> 00:33:11,032
the other thing, is the Austrians are right about like communism is a huge scam and
will

829
00:33:11,032 --> 00:33:12,032
just kill everyone.

830
00:33:12,032 --> 00:33:13,032
Yeah.

831
00:33:13,032 --> 00:33:18,032
So like in those scenarios, you don't have the feedback where each single
transaction

832
00:33:18,032 --> 00:33:21,032
is like actually approved by the buyer.

833
00:33:21,032 --> 00:33:22,032
Yeah.

834
00:33:22,032 --> 00:33:25,032
You know, like in capitalism, if you want to sell some hamburgers, people actually
have

835
00:33:25,032 --> 00:33:26,032
to buy.

836
00:33:26,032 --> 00:33:27,032
Yeah.

837
00:33:27,032 --> 00:33:28,032
They say, well, I'll actually pay for this hamburger.

838
00:33:28,032 --> 00:33:29,032
Yeah.

839
00:33:29,032 --> 00:33:31,032
You don't get the Gestapo forcing the hamburgers down people's throats.

840
00:33:31,032 --> 00:33:32,032
Forcing you to eat the bear shit.

841
00:33:32,032 --> 00:33:33,032
Right.

842
00:33:33,032 --> 00:33:34,032
Yeah, the bear shit.

843
00:33:34,032 --> 00:33:35,032
Exactly.

844
00:33:35,032 --> 00:33:39,032
So it is actually an important distinction that in one, both of the two parties
consented

845
00:33:39,032 --> 00:33:42,032
to say, I'll pay 300 for this entertainment value.

846
00:33:42,032 --> 00:33:45,032
So is there some sort of communist version of this joke where they're forced to eat

847
00:33:45,032 --> 00:33:46,032
the bear shit?

848
00:33:46,032 --> 00:33:47,032
Maybe.

849
00:33:47,032 --> 00:33:48,032
I don't know.

850
00:33:48,032 --> 00:33:49,032
I know a bunch of communist jokes.

851
00:33:49,032 --> 00:33:53,032
But so the 300 is the market clearing price.

852
00:33:53,032 --> 00:33:54,032
No one really knows.

853
00:33:54,032 --> 00:33:55,032
Yeah.

854
00:33:55,032 --> 00:33:56,032
It's in there.

855
00:33:56,032 --> 00:33:57,032
It's the market clearing price.

856
00:33:57,032 --> 00:33:58,032
No one really knows if it's too high or too low.

857
00:33:58,032 --> 00:33:59,032
Right.

858
00:33:59,032 --> 00:34:00,032
Well, they're getting, they also produced important information.

859
00:34:00,032 --> 00:34:01,032
Information.

860
00:34:01,032 --> 00:34:02,032
Price discovery.

861
00:34:02,032 --> 00:34:04,032
So this is why I'm just trying to, I'm just trying to defend GDP a little bit.

862
00:34:04,032 --> 00:34:06,032
Because GDP is always, people make fun of GDP.

863
00:34:06,032 --> 00:34:07,032
It's a lie.

864
00:34:07,032 --> 00:34:08,032
Yeah.

865
00:34:08,032 --> 00:34:11,032
But you know, hey, the GDP per capita of Haiti is a lot lower than Japan.

866
00:34:11,032 --> 00:34:12,032
Right.

867
00:34:12,032 --> 00:34:13,032
Right.

868
00:34:13,032 --> 00:34:15,032
So, and it's like, oh, we just, people are like, we just, we don't care.

869
00:34:15,032 --> 00:34:16,032
Because GDP is fake.

870
00:34:16,032 --> 00:34:17,032
I mean, maybe like Eric Bosco says the same thing.

871
00:34:17,032 --> 00:34:21,032
He says if two people trade back and forth like a million times, GDP goes up.

872
00:34:21,032 --> 00:34:23,032
Therefore, that proves GDP is fake.

873
00:34:23,032 --> 00:34:28,032
Eric Bosco told me that at the same event where I told you three ideas sucked.

874
00:34:28,032 --> 00:34:30,032
November 2017.

875
00:34:30,032 --> 00:34:38,032
But, you know, I just disagree that that, you know, that's not fair because each
thing

876
00:34:38,032 --> 00:34:40,032
is a voluntary exchange of the people.

877
00:34:40,032 --> 00:34:41,032
Agreed.

878
00:34:41,032 --> 00:34:42,032
Yeah.

879
00:34:42,032 --> 00:34:44,032
I mean, if two guys just keep trading $300 back and forth and eat bear shit in the
woods

880
00:34:44,032 --> 00:34:47,032
for years, that sounds like a beautiful life for them.

881
00:34:47,032 --> 00:34:49,032
With a lot of shareholder values being created.

882
00:34:49,032 --> 00:34:52,032
Well, obviously, as an absurd example, that wouldn't actually happen.

883
00:34:52,032 --> 00:34:54,032
You never know with some of these grad students.

884
00:34:54,032 --> 00:35:00,032
But in a sense where they're trading it back and forth, they have, the realistic
version

885
00:35:00,032 --> 00:35:06,032
of that would be, they think, one of them thinks, oh, I need this, you know, shirt
or

886
00:35:06,032 --> 00:35:07,032
something.

887
00:35:07,032 --> 00:35:08,032
They're like going on a date or something.

888
00:35:08,032 --> 00:35:10,032
There's only one nice shirt.

889
00:35:10,032 --> 00:35:12,032
And one of them thinks, oh, I need this shirt.

890
00:35:12,032 --> 00:35:15,032
And then the person cancels the date or the person doesn't show up or something.

891
00:35:15,032 --> 00:35:16,032
Then they have new information.

892
00:35:16,032 --> 00:35:18,032
They sell the shirt back.

893
00:35:18,032 --> 00:35:19,032
$600.

894
00:35:19,032 --> 00:35:23,032
The other person who thinks they have a date and then they get more, I think this
person

895
00:35:23,032 --> 00:35:24,032
is stringing their balls along.

896
00:35:24,032 --> 00:35:25,032
I think you need to workshop this a little bit.

897
00:35:25,032 --> 00:35:26,032
Okay.

898
00:35:26,032 --> 00:35:27,032
I know one or two communist jokes.

899
00:35:27,032 --> 00:35:28,032
Would you like to hear a communist joke?

900
00:35:28,032 --> 00:35:29,032
Yes.

901
00:35:29,032 --> 00:35:30,032
Hell yeah.

902
00:35:30,032 --> 00:35:31,032
Hell yeah.

903
00:35:31,032 --> 00:35:32,032
Two people are walking down, I'll do a two-person, you know, two people are walking
down the

904
00:35:32,032 --> 00:35:38,032
streets of, you know, I mean, it was St. Petersburg or whatever, but you could say
North Korea

905
00:35:38,032 --> 00:35:40,032
or whatever, Pyongyang or something.

906
00:35:40,032 --> 00:35:41,032
Yeah.

907
00:35:41,032 --> 00:35:44,032
They're walking down the streets of Moscow, whatever.

908
00:35:44,032 --> 00:35:52,032
And one of them says, comrade, do you think we have succeeded in achieving true
communism

909
00:35:52,032 --> 00:35:53,032
here?

910
00:35:53,032 --> 00:35:54,032
Is this it?

911
00:35:54,032 --> 00:35:57,032
And the other man responds, oh, hell no.

912
00:35:57,032 --> 00:36:00,032
Things are going to get a lot worse.

913
00:36:00,032 --> 00:36:01,032
Okay.

914
00:36:01,032 --> 00:36:03,032
A communist joke is like food.

915
00:36:03,032 --> 00:36:05,032
Not everyone gets it.

916
00:36:05,032 --> 00:36:06,032
Uh-huh.

917
00:36:06,032 --> 00:36:07,032
That's pretty, yeah.

918
00:36:07,032 --> 00:36:08,032
Okay.

919
00:36:09,032 --> 00:36:15,032
Three dogs talking about life in their country, a capitalist dog, socialist dog, and
a communist

920
00:36:15,032 --> 00:36:16,032
dog.

921
00:36:16,032 --> 00:36:19,032
A capitalist dog says, oh, life's not so bad.

922
00:36:19,032 --> 00:36:25,032
You know, you bark and you bark and eventually someone comes along and throws you
some meat.

923
00:36:25,032 --> 00:36:28,032
And the socialist dog says, what's meat?

924
00:36:28,032 --> 00:36:32,032
And the communist dog says, what's bark?

925
00:36:32,032 --> 00:36:35,032
I don't know if I get that one.

926
00:36:35,032 --> 00:36:38,032
Because you can't complain in a communist country.

927
00:36:44,032 --> 00:36:48,032
And then someone sees two people are talking, a Muslim and a Syrian.

928
00:36:48,032 --> 00:36:51,032
And one of them says, you know what I like about America is I can go right into the
Oval

929
00:36:51,032 --> 00:36:57,032
Office and I can go, I can bang on Donald Trump's desk and I can tell him exactly
what

930
00:36:57,032 --> 00:37:01,032
he's doing wrong to ruin America.

931
00:37:02,032 --> 00:37:04,032
And the other person says, oh, you know what?

932
00:37:04,032 --> 00:37:08,032
We have exactly the same thing in Soviet Russia or in North Korea or whatever this
fictional

933
00:37:08,032 --> 00:37:09,032
person is from.

934
00:37:09,032 --> 00:37:15,032
I can go right into the Kremlin and I can go up to Vladimir Putin's desk and I could

935
00:37:15,032 --> 00:37:21,032
bang on the table and I can tell him exactly how Donald Trump is ruining America.

936
00:37:26,032 --> 00:37:28,032
You really came prepared.

937
00:37:28,032 --> 00:37:30,032
I didn't know that.

938
00:37:30,032 --> 00:37:31,032
I should have known.

939
00:37:31,032 --> 00:37:35,032
I should have been like, I should just write a bunch of jokes.

940
00:37:35,032 --> 00:37:37,032
Those are old communists.

941
00:37:37,032 --> 00:37:38,032
Those are bangers.

942
00:37:38,032 --> 00:37:39,032
Those are classics.

943
00:37:39,032 --> 00:37:41,032
I don't think I know any communist jokes.

944
00:37:41,032 --> 00:37:42,032
Now you do.

945
00:37:42,032 --> 00:37:43,032
Yeah, now I do.

946
00:37:43,032 --> 00:37:44,032
Yeah, you've got a few now.

947
00:37:44,032 --> 00:37:46,032
How did you get into Bitcoin?

948
00:37:46,032 --> 00:37:50,032
Well, I read the Wired article about Silk Road.

949
00:37:50,032 --> 00:37:51,032
Oh, interesting.

950
00:37:51,032 --> 00:37:52,032
When was that?

951
00:37:52,032 --> 00:37:55,032
That article came out in 2011.

952
00:37:55,032 --> 00:38:00,032
But at the time, I thought this is the stupidest fucking thing I've ever heard in my
entire

953
00:38:00,032 --> 00:38:01,032
life.

954
00:38:01,032 --> 00:38:02,032
Why did you think it was stupid?

955
00:38:02,032 --> 00:38:07,032
Well, I'm a huge believer in network effects and I knew a lot about econ and I'm not
saying

956
00:38:07,032 --> 00:38:08,032
that that is.

957
00:38:08,032 --> 00:38:12,032
I don't understand why more people, I don't know why we don't have more economist
people

958
00:38:12,032 --> 00:38:16,032
in Bitcoin because actually I think the more you know about econ, the more likely
you would

959
00:38:16,032 --> 00:38:19,032
be to be a Bitcoiner, but that's a separate, we'll come back to that.

960
00:38:20,032 --> 00:38:26,032
But I thought, I was a huge believer in network effects and I also a huge believer
in microeconomics

961
00:38:26,032 --> 00:38:31,032
and I knew about, there's like this divide the dollar game about coalitions that
just

962
00:38:31,032 --> 00:38:34,032
keep falling apart, which is basically live by the sword, die by the sword.

963
00:38:34,032 --> 00:38:37,032
Or it later became live by the fork, die by the fork with like the hard forks.

964
00:38:37,032 --> 00:38:41,032
You like Bitcoin Cash and you have Bitcoin SV and you have Bitcoin Gold or whatever.

965
00:38:41,032 --> 00:38:44,032
So a coalition falls apart unless people stay in.

966
00:38:44,032 --> 00:38:49,032
So I thought these crazy libertarians, even though I was a libertarian, you know, I
still

967
00:38:49,032 --> 00:38:53,032
am, but I was like, you know, libertarians are so stupid sometimes.

968
00:38:53,032 --> 00:38:57,032
So I was like, these crazy libertarians are like inventing their own currency and I
got

969
00:38:57,032 --> 00:39:02,032
emails, the Free State Project also is emailing me about it and they were like, come
to New

970
00:39:02,032 --> 00:39:05,032
Hampshire and you can get like 10 free Bitcoins.

971
00:39:05,032 --> 00:39:06,032
And I was like, I got to unsubscribe.

972
00:39:06,032 --> 00:39:10,032
I literally thought like, I think I may have unsubscribed to the Free State Project
over

973
00:39:10,032 --> 00:39:11,032
the Bitcoin email.

974
00:39:11,032 --> 00:39:14,032
And those are Roger Ver's Bitcoin he was just giving away, 10.

975
00:39:14,032 --> 00:39:17,032
And I was like, these stupid libertarians creating their own currency now.

976
00:39:17,032 --> 00:39:19,032
Like, this is so shameful.

977
00:39:19,032 --> 00:39:23,032
The stigma, the stigma of like, because money is very social.

978
00:39:23,032 --> 00:39:27,032
And also people always love to create their own currency in these really stupid
ways,

979
00:39:27,032 --> 00:39:30,032
like the babysitter dollars or like the local currency or whatever.

980
00:39:30,032 --> 00:39:33,032
Everybody wants to do it and it's so pointless most of the time.

981
00:39:33,032 --> 00:39:39,032
It has this subversiveness to it that is very upsetting to people, kind of as it
should

982
00:39:39,032 --> 00:39:40,032
be.

983
00:39:40,032 --> 00:39:43,032
If you think about it, you have some old people who have worked for a while and
they've saved

984
00:39:43,032 --> 00:39:47,032
some cash and a younger person comes along and says, you know what, I'm not going to

985
00:39:47,032 --> 00:39:48,032
honor this.

986
00:39:48,032 --> 00:39:54,032
This arrangement that touches all parts of society, you know, from the old to the
young

987
00:39:54,032 --> 00:39:56,032
to the wealthy and to the poor.

988
00:39:56,032 --> 00:40:00,032
And you're just like, I'm not going to do that because I've got everything figured
out

989
00:40:00,032 --> 00:40:04,032
at the age of, you know, whatever, 18 and I'm just going to do my own currency.

990
00:40:04,032 --> 00:40:10,032
And then obviously the problem is all the reasons for switching from, you know, the

991
00:40:10,032 --> 00:40:16,032
U.S. dollar to new currency A, those all apply double for switching again from A to
B and

992
00:40:16,032 --> 00:40:17,032
et cetera.

993
00:40:17,032 --> 00:40:20,032
It's like when they had the Brexit referendum and then they wanted to have like
another

994
00:40:20,032 --> 00:40:23,032
referendum and to ignore the first one.

995
00:40:23,032 --> 00:40:25,032
It's like, oh my God, like that, talk about horrible game theory.

996
00:40:25,032 --> 00:40:28,032
It's like now everyone's going to be saying the second one.

997
00:40:28,032 --> 00:40:30,032
People are going to be saying, well, that one wasn't real.

998
00:40:30,032 --> 00:40:32,032
And then why did you even do this in the first place?

999
00:40:32,032 --> 00:40:33,032
Crazy, crazy British people.

1000
00:40:33,032 --> 00:40:34,032
Yeah.

1001
00:40:36,032 --> 00:40:39,032
But the British political system usually works very well, but they interacted.

1002
00:40:39,032 --> 00:40:42,032
The referendum was this very rare thing they threw in.

1003
00:40:42,032 --> 00:40:43,032
Yeah, it screwed everything up.

1004
00:40:43,032 --> 00:40:47,032
It's also pretty crazy to me that a referendum like that is like based on such a low
percentage

1005
00:40:47,032 --> 00:40:48,032
like 51 percent.

1006
00:40:48,032 --> 00:40:51,032
Like, shouldn't if you're going to do something crazy, shouldn't you at least get
like 60

1007
00:40:51,032 --> 00:40:52,032
percent, 70 percent?

1008
00:40:52,032 --> 00:40:58,032
This is a very important question which we can get into, but it is it's like a very
different.

1009
00:40:58,032 --> 00:41:02,032
But actually the issue is you have these veto points.

1010
00:41:02,032 --> 00:41:06,032
So what happens if you have more than the threshold is higher than 51?

1011
00:41:06,032 --> 00:41:08,032
You have toxic limbo.

1012
00:41:08,032 --> 00:41:13,032
And this actually happened in Bitcoin with the 9 percent SegWit2x blockade guy, the
Viya

1013
00:41:13,032 --> 00:41:15,032
BTC guy leaving Scaling 3.

1014
00:41:15,032 --> 00:41:18,032
This program in Scaling 3 didn't have a lot to do with scaling.

1015
00:41:18,032 --> 00:41:23,032
And one of the miners just left, started signaling for Bitcoin Unlimited with 9
percent.

1016
00:41:23,032 --> 00:41:26,032
He was Viya BTC, which now has 20 something percent.

1017
00:41:28,032 --> 00:41:33,032
Meanwhile, the developers were coding SegWit and they wanted to release it.

1018
00:41:33,032 --> 00:41:35,032
It was sort of late.

1019
00:41:35,032 --> 00:41:39,032
You know, there was no, you know, with programming, everything takes much longer
than you think,

1020
00:41:39,032 --> 00:41:40,032
of course.

1021
00:41:40,032 --> 00:41:46,032
But because of the timeline, people had thought it would be done by April 2016, but
it wasn't

1022
00:41:46,032 --> 00:41:50,032
shipped until the hackathon after Scaling 3 in October.

1023
00:41:50,032 --> 00:41:52,032
So they were finishing it up.

1024
00:41:52,032 --> 00:41:57,032
Historically, stuff had used BIP-9 to activate, which is 95 percent hash rate
threshold.

1025
00:41:57,032 --> 00:42:00,032
So this is an example of what you wanted.

1026
00:42:00,032 --> 00:42:02,032
It's 95 percent.

1027
00:42:02,032 --> 00:42:04,032
The problem is it creates toxic limbo.

1028
00:42:04,032 --> 00:42:11,032
So this nine person person got like left the coalition like the normal and they ran
Bitcoin

1029
00:42:11,032 --> 00:42:15,032
Unlimited, which was not going to signal for SegWit because it's a completely
different

1030
00:42:15,032 --> 00:42:17,032
software.

1031
00:42:17,032 --> 00:42:24,032
But now you have a very difficult situation because you've got maybe like let's say
it's

1032
00:42:24,032 --> 00:42:29,032
a split 81 or excuse me, 91 to 9.

1033
00:42:29,032 --> 00:42:31,032
Now the 91, no one knows.

1034
00:42:31,032 --> 00:42:35,032
First of all, one issue with this is no one now knows exactly who to blame because
you

1035
00:42:35,032 --> 00:42:39,032
could say, well, we're going to blame this nine percent for doing the wrong thing.

1036
00:42:39,032 --> 00:42:47,032
But each of the people in the 91 percent, there could be many other coalitions of 12

1037
00:42:47,032 --> 00:42:51,032
percent or so that now say, well, you're going to give them.

1038
00:42:51,032 --> 00:42:55,032
OK, we'll give something to the nine percent in return for peeling four percent off.

1039
00:42:55,032 --> 00:42:57,032
Then we'll get up to 95.

1040
00:42:57,032 --> 00:43:07,032
You say we'll get four percent of the people out of the BTC in return for some
concession.

1041
00:43:07,032 --> 00:43:12,032
But this is this you've just like welcome to hell, because now everyone with four
percent

1042
00:43:12,032 --> 00:43:14,032
is going to be thinking, where's my concession?

1043
00:43:14,032 --> 00:43:16,032
And nothing will ever get done.

1044
00:43:16,032 --> 00:43:21,032
And no one will know like what to do about the situation, because now you have an
endlessly

1045
00:43:21,032 --> 00:43:26,032
rotating pie chart like kaleidoscope of these four percents that will appear.

1046
00:43:26,032 --> 00:43:31,032
Once you get, you could get up to an expected 95 percent, which is what you had at
the very

1047
00:43:31,032 --> 00:43:32,032
beginning.

1048
00:43:32,032 --> 00:43:37,032
But then a new person can always just say, oh, I've got nine percent or I've got 15
percent

1049
00:43:37,032 --> 00:43:40,032
and I'm just going to run Bitcoin Unlimited until I get what I want.

1050
00:43:41,032 --> 00:43:47,032
And so it's actually when you have a collective action problem, you are not
blessing.

1051
00:43:47,032 --> 00:43:49,032
You are not endorsing a choice.

1052
00:43:49,032 --> 00:43:53,032
You're not choosing a politician or a party or a referendum outcome.

1053
00:43:53,032 --> 00:43:55,032
You're actually disqualifying.

1054
00:43:55,032 --> 00:43:58,032
You're crossing off the list until there's one left.

1055
00:43:58,032 --> 00:44:01,032
And that is why it's really forty nine point nine.

1056
00:44:01,032 --> 00:44:06,032
If you can't beat that, you are deleted from the list.

1057
00:44:06,032 --> 00:44:09,032
Which is my point of view, although this is actually hotly debated in political
science.

1058
00:44:09,032 --> 00:44:12,032
But this is my view is that this is where and this is a Joseph Schumpeter view.

1059
00:44:12,032 --> 00:44:15,032
Also, he's sometimes considered an Austrian economist.

1060
00:44:15,032 --> 00:44:17,032
I think no one really knows exactly where to put him.

1061
00:44:17,032 --> 00:44:20,032
I mean, that's the other thing about Joseph Schumpeter.

1062
00:44:20,032 --> 00:44:22,032
Very enigmatic.

1063
00:44:22,032 --> 00:44:27,032
One other thing I wrote about my giant Austrian economics article is that that you
haven't

1064
00:44:27,032 --> 00:44:28,032
published.

1065
00:44:28,032 --> 00:44:29,032
I haven't published, but one day will.

1066
00:44:29,032 --> 00:44:33,032
Is that the Austrian school is not actually consistent.

1067
00:44:33,032 --> 00:44:37,032
You have Hayek and you have Rothbard and they are complete opposites.

1068
00:44:37,032 --> 00:44:39,032
You sound a little bit like Rothbard.

1069
00:44:39,032 --> 00:44:40,032
And you think so?

1070
00:44:40,032 --> 00:44:41,032
Yeah, a little bit, a little bit.

1071
00:44:41,032 --> 00:44:45,032
But I have a similar writing style to Von Mises, where I just break stuff into like

1072
00:44:45,032 --> 00:44:50,032
endless, like I have a huge structure, like parts, like a part a part one.

1073
00:44:50,032 --> 00:44:54,032
I like Rothbard, but only because I think he's very, very funny when he speaks live,

1074
00:44:54,032 --> 00:44:55,032
when he speaks extemporaneously.

1075
00:44:55,032 --> 00:44:56,032
He's very funny.

1076
00:44:56,032 --> 00:44:57,032
Yeah, he certainly is funny.

1077
00:44:57,032 --> 00:44:58,032
So wait.

1078
00:44:58,032 --> 00:45:01,032
So there's a lot about the government trying to.

1079
00:45:02,032 --> 00:45:07,032
I think Rothbard will probably go down in history for thousands of years as the, if

1080
00:45:07,032 --> 00:45:12,032
the government tries to break up a monopoly, it often completely like doubles the
monopoly,

1081
00:45:12,032 --> 00:45:14,032
like it doesn't work at all.

1082
00:45:14,032 --> 00:45:15,032
Yeah, yeah, yeah.

1083
00:45:15,032 --> 00:45:16,032
Totally right about that.

1084
00:45:16,032 --> 00:45:18,032
Well, usually they just entrench the monopoly.

1085
00:45:18,032 --> 00:45:19,032
Yeah, absolutely.

1086
00:45:19,032 --> 00:45:20,032
Like explicitly.

1087
00:45:20,032 --> 00:45:21,032
Regulatory capture.

1088
00:45:21,032 --> 00:45:22,032
So wait.

1089
00:45:22,032 --> 00:45:23,032
So, okay.

1090
00:45:23,032 --> 00:45:25,032
So you, this, you got this, this email kindly offering you 10 Bitcoin.

1091
00:45:25,032 --> 00:45:26,032
Yeah.

1092
00:45:26,032 --> 00:45:27,032
And I was like, fuck those guys.

1093
00:45:27,032 --> 00:45:28,032
So stupid.

1094
00:45:28,032 --> 00:45:29,032
Yeah.

1095
00:45:29,032 --> 00:45:30,032
And then what happened later?

1096
00:45:30,032 --> 00:45:33,032
Eventually the Silk Road article, I had read that, that later.

1097
00:45:33,032 --> 00:45:35,032
Cause you're just like, how did you get into it?

1098
00:45:35,032 --> 00:45:39,032
So I had like, as you heard about it and hated it, but then I got back into it with
the Silk

1099
00:45:39,032 --> 00:45:44,032
Road article writing about, because one of the things that I was like interested in,

1100
00:45:44,032 --> 00:45:47,032
and this was in the Steam Teller's book also about like how like someone who's like
a drug

1101
00:45:47,032 --> 00:45:50,032
addict, it suddenly gains like tons of IQ points.

1102
00:45:50,032 --> 00:45:51,032
You know?

1103
00:45:51,032 --> 00:45:53,032
What the fuck are you talking about, Paul?

1104
00:45:53,032 --> 00:45:54,032
I'm going to explain it in a moment.

1105
00:45:54,032 --> 00:45:57,032
Because Silk Road sold people addictive drugs.

1106
00:45:58,032 --> 00:46:01,032
And so like when people need the next fix, they go from being like kind of
unremarkable

1107
00:46:01,032 --> 00:46:03,032
to suddenly becoming like super, super clever.

1108
00:46:03,032 --> 00:46:04,032
Yeah.

1109
00:46:04,032 --> 00:46:05,032
They figure it out.

1110
00:46:05,032 --> 00:46:06,032
They're like, we'll figure it out.

1111
00:46:06,032 --> 00:46:08,032
Oh, I need to get this money sometime soon.

1112
00:46:08,032 --> 00:46:13,032
And they suddenly, they're so motivated that they, they can like, they become like
hard

1113
00:46:13,032 --> 00:46:14,032
working and stuff.

1114
00:46:14,032 --> 00:46:18,032
You know, they get it together in order to get this thing that they really want.

1115
00:46:18,032 --> 00:46:23,032
And so I was thinking like, well, you know, these people who are buying drugs on
this

1116
00:46:24,032 --> 00:46:28,032
site, it must work because they would try to like, you know, hack the site more or
less.

1117
00:46:28,032 --> 00:46:32,032
Maybe not, maybe not computer science hack, but they would be trying to get money
out

1118
00:46:32,032 --> 00:46:34,032
of the, trying to get extra drugs out of this website.

1119
00:46:34,032 --> 00:46:37,032
It's like a drug website.

1120
00:46:37,032 --> 00:46:40,032
And so I kind of thought, well, it must work.

1121
00:46:40,032 --> 00:46:44,032
And then I also thought it already is being used.

1122
00:46:44,032 --> 00:46:45,032
This is an irony.

1123
00:46:45,032 --> 00:46:49,032
This is one of the many things that has flipped from then until now.

1124
00:46:49,032 --> 00:46:58,032
I thought it is already being used by real people like in commerce is already being
used

1125
00:46:58,032 --> 00:47:03,032
to like, like regular people are not investing in it.

1126
00:47:03,032 --> 00:47:04,032
They are actually using it.

1127
00:47:04,032 --> 00:47:10,032
They purchased the coin so that they can make this Silk Road transaction.

1128
00:47:10,032 --> 00:47:14,032
The merchant sells the good for this and then they dispense with the coin.

1129
00:47:14,032 --> 00:47:18,032
They swap the coin back to fiat currency.

1130
00:47:18,032 --> 00:47:21,032
So I thought I'm too late, actually.

1131
00:47:21,032 --> 00:47:23,032
I actually missed the boat on Bitcoin.

1132
00:47:23,032 --> 00:47:26,032
This was back in like 2012 or something.

1133
00:47:26,032 --> 00:47:29,032
But that was how I first got interested in it.

1134
00:47:29,032 --> 00:47:33,032
And I joined, you join the forum and you think, oh, this is actually a way more
serious project.

1135
00:47:33,032 --> 00:47:37,032
People think you learn about the history of the cypherpunks.

1136
00:47:37,032 --> 00:47:41,032
I learned about more like how mining worked because one, as you know, as I
mentioned,

1137
00:47:41,032 --> 00:47:45,032
one of the things that I was annoyed about is if we launch this and it's a great
success,

1138
00:47:45,032 --> 00:47:48,032
someone will just copy it later to the altcoin.

1139
00:47:48,032 --> 00:47:52,032
And then you'll just have this endless copying and there will be no moral glue that
holds

1140
00:47:52,032 --> 00:47:54,032
the coalition together.

1141
00:47:54,032 --> 00:47:57,032
But actually when I heard about mining, I kind of finally got an idea about why that

1142
00:47:57,032 --> 00:48:05,032
would not be true because mining was a way of delaying for at least the first four
years

1143
00:48:05,032 --> 00:48:10,032
so that still half of the coins would have yet to be mined.

1144
00:48:10,032 --> 00:48:16,032
So actually everyone, it was programmed into Bitcoin that everyone, no matter how
much

1145
00:48:16,032 --> 00:48:23,032
adoption there was, if you were in the first four years, you were by definition
early.

1146
00:48:23,032 --> 00:48:26,032
And so that helped me think, oh, the coalition will probably hold together long
enough to

1147
00:48:26,032 --> 00:48:28,032
attract this critical mass.

1148
00:48:28,032 --> 00:48:34,032
And then this was the original Bitcoin maximus point of view was that once Bitcoin
has reached

1149
00:48:34,032 --> 00:48:39,032
a critical size, it is the altcoins that will have these live by the fork, die by
the fork

1150
00:48:39,032 --> 00:48:41,032
issue, which of course they absolutely did.

1151
00:48:41,032 --> 00:48:45,032
You had Litecoin, but then you had Feathercoin, you had Dustcoin, you have whatever.

1152
00:48:45,032 --> 00:48:48,032
You have Ethereum, but then you have Solana, you have whatever.

1153
00:48:48,032 --> 00:48:51,032
So they have to fight amongst themselves.

1154
00:48:51,032 --> 00:48:54,032
Although there's obviously tons of nuance and detail to all that.

1155
00:48:54,032 --> 00:48:55,032
Fuck that shit.

1156
00:48:55,032 --> 00:48:58,032
Ethereum is the opposition party, so it's like the number two.

1157
00:48:58,032 --> 00:49:03,032
So it has a special point as the number one out of all the runners up.

1158
00:49:03,032 --> 00:49:08,032
So it has its own special advantage.

1159
00:49:08,032 --> 00:49:16,032
Are there any ideas, projects, or posts of yours that are totally unknown, but that
you

1160
00:49:16,032 --> 00:49:19,032
would rank among your best work?

1161
00:49:19,032 --> 00:49:24,032
I did write 46 pages about fraud proofs, and no one cares.

1162
00:49:24,032 --> 00:49:26,032
But in the thing I write about...

1163
00:49:26,032 --> 00:49:28,032
Did you write, is this post 99% finished?

1164
00:49:28,032 --> 00:49:30,032
No, it's actually been posted in like 2016.

1165
00:49:30,032 --> 00:49:35,032
And the irony is I think it will be the only use for the Lightning Network in like
20 years.

1166
00:49:35,032 --> 00:49:36,032
Interesting.

1167
00:49:36,032 --> 00:49:37,032
Can you spin that out?

1168
00:49:37,032 --> 00:49:38,032
What do you mean?

1169
00:49:38,032 --> 00:49:46,032
Because the fraud proofs was an idea about knowing that a block is invalid without
downloading the whole chain.

1170
00:49:46,032 --> 00:49:48,032
And Satoshi described this in the white paper a little bit.

1171
00:49:48,869 --> 00:49:57,869
And then Eric Lombroso and, you know, Luke Dashjr. were talking a long time ago on
the block size, where they said, well, if we had fraud proofs, we could just have
the block size be like unlimited, or we could make the block size much higher.

1172
00:49:57,869 --> 00:49:58,869
Oh, because...

1173
00:49:58,869 --> 00:50:07,869
So it was actually a huge idea. The concept was big. So I'm not saying that my thing
was... But yeah, I've never gotten any correspondence or any comments about this 46
pages.

1174
00:50:07,869 --> 00:50:09,869
No correspondence, no emails.

1175
00:50:09,869 --> 00:50:12,869
And yeah, like whatever, you know.

1176
00:50:13,869 --> 00:50:20,869
And I thought that was very interesting. But it speaks to like how no one really
cared about, you know, scaling Bitcoin.

1177
00:50:20,869 --> 00:50:31,869
Obviously, no one did. As you must know, there's like people represent themselves a
certain way. And then like the reality is like very different, of course.

1178
00:50:32,869 --> 00:50:43,869
Even in Bitcoin, but just like the rubric of a lot of this is just people want to
make money. That could be number go up Bitcoin, but that could also be, you know,
buy my book, or that could be buy my podcast.

1179
00:50:43,869 --> 00:50:52,869
Or that could be like, you know, the grant, like you get like the OpenStats grant,
or you get Foundry, gives one Bitcoin to someone.

1180
00:50:52,869 --> 00:50:55,869
You subscribe to the How Money podcast and you get weekly Twitter tweets.

1181
00:50:55,869 --> 00:51:01,869
And I've got to say, obviously, I'm pro-capitalism and I'm pro that people should
pay for things.

1182
00:51:01,869 --> 00:51:10,869
That's not what makes it... I'm not sure what makes it so like inauthentic.

1183
00:51:10,869 --> 00:51:21,869
I think it's partly because we inherently recognize that this is a network effect
project and we actually all have to... we have the moral glue holding it together,
which is like partly Bitcoin maximalism and partly, you know, just...

1184
00:51:21,869 --> 00:51:28,869
We want, you know, strength in numbers and, you know, that money doesn't... the
whole point of money is that it's not barter.

1185
00:51:28,869 --> 00:51:35,869
So you have barter is like, oh, we're all like swapping like, oh, one hamburger for
one back massage or something.

1186
00:51:35,869 --> 00:51:36,869
And it's like, that's...

1187
00:51:36,869 --> 00:51:37,869
Like you do.

1188
00:51:38,869 --> 00:51:39,869
And right, so that doesn't work.

1189
00:51:39,869 --> 00:51:47,869
The money is inherently something that is, you know, recognizability is one of the
properties of money.

1190
00:51:47,869 --> 00:51:49,869
So it's inherently social, it's inherently psychological.

1191
00:51:49,869 --> 00:51:53,869
Recognizability is a good one, because that's not usually listed in the top, you
know, durability...

1192
00:51:53,869 --> 00:51:56,869
Even though it's on Aristotle's list, but everyone forgets about it.

1193
00:51:56,869 --> 00:51:59,869
Interesting. Are there any other ones that people forget about? Properties of money?

1194
00:51:59,869 --> 00:52:04,869
Divisibility, durability, scarcity, recognizability.

1195
00:52:05,869 --> 00:52:11,869
The recognizability is interesting because you kind of almost see the full note as
something that it says, oh, you're actually getting real Bitcoin or not.

1196
00:52:11,869 --> 00:52:13,869
It does like the essay of like the gold.

1197
00:52:14,869 --> 00:52:17,869
Scarcity, divisibility, portability.

1198
00:52:17,869 --> 00:52:18,869
Portability, yeah.

1199
00:52:18,869 --> 00:52:19,869
Bitcoin, very portable.

1200
00:52:19,869 --> 00:52:20,869
Very portable.

1201
00:52:22,869 --> 00:52:25,869
Yeah. I don't know. What were there? I think there are five. Did we name them all?

1202
00:52:25,869 --> 00:52:26,869
No.

1203
00:52:26,869 --> 00:52:27,869
Got close.

1204
00:52:27,869 --> 00:52:28,869
Yeah.

1205
00:52:28,869 --> 00:52:30,869
If we forgot any, then I guess they can't be that important.

1206
00:52:30,869 --> 00:52:31,869
No, they don't matter.

1207
00:52:31,869 --> 00:52:32,869
Exactly.

1208
00:52:32,869 --> 00:52:34,869
What have you been most wrong about?

1209
00:52:35,869 --> 00:52:44,869
Well, okay, I think the sidechains thing I was most wrong about in general, because
I always assumed that the sidechain idea was so good that no one would even bother
doing altcoin.

1210
00:52:44,869 --> 00:52:47,869
So I was like so far theoretical equilibrium down the road that I was just like...

1211
00:52:47,869 --> 00:52:50,869
Oh, I think this is actually like a failure mode in your thinking sometimes.

1212
00:52:50,869 --> 00:52:51,869
Right.

1213
00:52:51,869 --> 00:52:56,869
You're like game-theorying things out, like 85 positions, and then you're like, oh,
that's definitely it.

1214
00:52:56,869 --> 00:52:57,869
Right, exactly.

1215
00:52:57,869 --> 00:53:06,869
But that's kind of an Austrian view. You just logic, logic, logic, logic, and then
you get to some premise, and all the steps are kind of supportable, but it's like...

1216
00:53:06,869 --> 00:53:21,869
I kind of noticed this in your post about deflation, where you posted about how
Bitcoin would be deflationary, and then you said that any non-deflationary coin
would be replaced by a deflationary coin.

1217
00:53:21,869 --> 00:53:26,869
Right. You're right about this. To me, it's just like a graph on a page.

1218
00:53:26,869 --> 00:53:34,869
But then you said, oh, Satoshi must have known this, so Satoshi did this, programmed
the coin to be deflationary, because he knew that a non-deflationary coin...

1219
00:53:34,869 --> 00:53:36,869
This is my view, but I might be wrong about that.

1220
00:53:36,869 --> 00:53:45,869
Well, the thing that I think you may be wrong about is like, well, maybe Satoshi
just programmed it for other idiosyncratic reasons, or just happened to make it...

1221
00:53:45,869 --> 00:53:48,869
Yeah, he could have wanted to fit it all in like a certain like...

1222
00:53:48,869 --> 00:53:49,869
Yeah, like a U64.

1223
00:53:49,869 --> 00:53:50,869
Yeah.

1224
00:53:50,869 --> 00:53:52,869
Yeah, but not overflow U64, you know what I mean?

1225
00:53:52,869 --> 00:53:56,869
But I do think it's such a serious choice to make, like it affects the future of the
system.

1226
00:53:56,869 --> 00:53:57,869
Yeah.

1227
00:53:57,869 --> 00:54:04,869
And he cared so much. He did care about equilibrium in other ways, so he knew the
way mining resets, difficulty retargets.

1228
00:54:04,869 --> 00:54:07,869
To me, that reminds me of the zero-profit conditions in economics.

1229
00:54:07,869 --> 00:54:08,869
What's a zero-profit condition?

1230
00:54:08,869 --> 00:54:09,869
Like you cannot make...

1231
00:54:09,869 --> 00:54:12,869
Oh, yeah, eventually you're going to get competition.

1232
00:54:13,869 --> 00:54:20,869
If you take into account the risk of capital and the opportunity cost of everything,
then everyone makes a zero-profit.

1233
00:54:20,869 --> 00:54:23,869
They just make like the rate, the growth rate.

1234
00:54:23,869 --> 00:54:24,869
So then...

1235
00:54:24,869 --> 00:54:26,869
But let's talk about how weirdly theoretical that is.

1236
00:54:26,869 --> 00:54:27,869
Yeah.

1237
00:54:27,869 --> 00:54:30,869
But that's like a core theorem in economics or something.

1238
00:54:30,869 --> 00:54:33,869
So then the sidechain thing, but like what...

1239
00:54:33,869 --> 00:54:35,869
Yeah, I can elaborate on the sidechain.

1240
00:54:35,869 --> 00:54:43,869
With Drivechain and stuff, I just thought only something that pays the miners will
survive as an L2.

1241
00:54:43,869 --> 00:54:46,869
I had this thought back like in 2014, 2015.

1242
00:54:46,869 --> 00:54:49,869
And I still think I'm right about this, but there has been no...

1243
00:54:49,869 --> 00:54:52,869
No one has caught up to this idea yet.

1244
00:54:52,869 --> 00:54:55,869
So your answer for what you're most wrong about is something you still think you're
right about?

1245
00:54:55,869 --> 00:54:56,869
Well, yeah.

1246
00:54:56,869 --> 00:54:57,869
So that's not...

1247
00:54:57,869 --> 00:54:58,869
But it's still...

1248
00:54:58,869 --> 00:55:01,869
I mean, I was absolutely wrong about like that would happen.

1249
00:55:01,869 --> 00:55:03,869
The trajectory is not matched at all.

1250
00:55:03,869 --> 00:55:05,869
I just assume that everyone would just not even want it.

1251
00:55:05,869 --> 00:55:06,869
Because how can you have...

1252
00:55:06,869 --> 00:55:08,869
Don't people want to make tokens and enrich themselves?

1253
00:55:08,869 --> 00:55:10,869
Isn't that why people mostly make these altcoins?

1254
00:55:10,869 --> 00:55:11,869
I think that...

1255
00:55:11,869 --> 00:55:12,869
Well, that is true.

1256
00:55:12,869 --> 00:55:20,869
But you would think if that was really the only reason, they would not have the
status that they do have, I think.

1257
00:55:20,869 --> 00:55:21,869
So because...

1258
00:55:21,869 --> 00:55:24,869
But then people, like they create them.

1259
00:55:24,869 --> 00:55:27,869
They create tokens, which they use to both enrich themselves.

1260
00:55:27,869 --> 00:55:31,869
And the sort of like gambling casino kind of thing that people also get into.

1261
00:55:31,869 --> 00:55:32,869
They pay for marketing.

1262
00:55:32,869 --> 00:55:33,869
Yeah.

1263
00:55:33,869 --> 00:55:38,869
But I mean it's that the users are getting something out of it, which is the users
are able to like gamble on.

1264
00:55:38,869 --> 00:55:41,869
Maybe they'll get rich on some like altcoin.

1265
00:55:41,869 --> 00:55:42,869
People do like gambling, of course, right?

1266
00:55:42,869 --> 00:55:43,869
This casino.

1267
00:55:43,869 --> 00:55:44,869
Yeah.

1268
00:55:44,869 --> 00:55:45,869
Wow.

1269
00:55:45,869 --> 00:55:47,869
And the people love gambling even though it has negative expected value.

1270
00:55:47,869 --> 00:55:48,869
There's a lot of degen gambling.

1271
00:55:48,869 --> 00:55:49,869
There's a lot of...

1272
00:55:49,869 --> 00:55:54,869
Like the sports betting with the apps has shown that if you...

1273
00:55:54,869 --> 00:55:56,869
And poker, you know, like online poker.

1274
00:55:56,869 --> 00:56:02,869
That has shown that if you bring gambling to people, many of them will enjoy it.

1275
00:56:02,869 --> 00:56:07,869
Many in a perfectly safe and reasonable way and others like in a deranged way.

1276
00:56:08,869 --> 00:56:18,869
So that is, I think, part of the value proposition of the altcoins and, you know,
other type, you know, BRC20, whatever.

1277
00:56:18,869 --> 00:56:19,869
Like that type of thing.

1278
00:56:19,869 --> 00:56:21,869
And even before that, we had MasterCoin.

1279
00:56:21,869 --> 00:56:22,869
We had like Omnicoin.

1280
00:56:22,869 --> 00:56:23,869
We had all this crazy stuff.

1281
00:56:23,869 --> 00:56:24,869
We had colored...

1282
00:56:24,869 --> 00:56:29,869
Before ordinals, there were colored coins from like 2012 or something.

1283
00:56:29,869 --> 00:56:30,869
And it's kind of mysterious to me.

1284
00:56:30,869 --> 00:56:31,869
It's always mysterious to me.

1285
00:56:31,869 --> 00:56:34,869
Why did ordinals take off and those things didn't?

1286
00:56:34,869 --> 00:56:41,869
I completely agree that it's an interesting question because there's very similar
ideas like in different eras.

1287
00:56:42,869 --> 00:56:46,869
And for some reason, some of them hit their time and others do not.

1288
00:56:46,869 --> 00:56:47,869
And I don't really know why.

1289
00:56:47,869 --> 00:56:52,869
But I do think part of it is that the audience gets bored with the current thing.

1290
00:56:52,869 --> 00:56:53,869
And then...

1291
00:56:53,869 --> 00:56:55,869
So ordinals had the advantage of...

1292
00:56:55,869 --> 00:56:58,869
There was a very, very boring period right before.

1293
00:56:58,869 --> 00:57:00,869
It was really, really, really boring.

1294
00:57:00,869 --> 00:57:03,869
And so then people are finally doing something.

1295
00:57:03,869 --> 00:57:05,869
And I think that was part of it.

1296
00:57:06,869 --> 00:57:08,869
So you have the ordinals and then you have like...

1297
00:57:08,869 --> 00:57:10,869
Are people using the ordinals for like gambling?

1298
00:57:10,869 --> 00:57:13,869
Are they using them for weird tax evasion schemes?

1299
00:57:13,869 --> 00:57:14,869
Probably all of the above.

1300
00:57:15,869 --> 00:57:21,869
And then with the altcoins, there is a dimension with some of the altcoins, such as
Ethereum,

1301
00:57:21,869 --> 00:57:26,869
that they aim to replace Bitcoin and take the number one spot and become 300
trillion.

1302
00:57:26,869 --> 00:57:28,869
So that you are, in a sense, betting on...

1303
00:57:28,869 --> 00:57:29,869
Just think of like...

1304
00:57:29,869 --> 00:57:33,869
What if it's a 1000th of 1% of 300 trillion?

1305
00:57:33,869 --> 00:57:36,869
Because if you beat Bitcoin, then, of course, the coast is...

1306
00:57:36,869 --> 00:57:40,869
It's not necessarily clear, but the way is paved, at least, to...

1307
00:57:40,869 --> 00:57:44,869
Okay, you flip Bitcoin and now you can flip fiat or whatever.

1308
00:57:44,869 --> 00:57:45,869
Because you could do it now.

1309
00:57:45,869 --> 00:57:50,869
So that is one element of giving a lot of these projects value.

1310
00:57:50,869 --> 00:57:56,869
You do have people like Monero, who took over the Silk Road use case, like the
Darknet use case.

1311
00:57:57,869 --> 00:58:03,869
So we have this combination of real use cases taking over the entire planet.

1312
00:58:04,869 --> 00:58:06,869
But yeah, I thought Bitcoin would do sidechains.

1313
00:58:06,869 --> 00:58:07,869
I thought everyone would drop...

1314
00:58:07,869 --> 00:58:09,869
These are many things that I was wrong about with sidechains.

1315
00:58:09,869 --> 00:58:11,869
I thought no one would really bother with altcoins.

1316
00:58:11,869 --> 00:58:17,869
And that the whole community would prefer sidechains as a solution to the scaling
war and all these other things.

1317
00:58:17,869 --> 00:58:18,869
I always just thought...

1318
00:58:18,869 --> 00:58:21,869
And I kind of have thought that continuously for like 10 years.

1319
00:58:21,869 --> 00:58:24,869
So in a way, I've been like very, very, very wrong about that.

1320
00:58:24,869 --> 00:58:26,869
But I still think eventually...

1321
00:58:26,869 --> 00:58:30,869
The end game is that you have all these fees up for grabs.

1322
00:58:30,869 --> 00:58:37,869
And if the miners don't get them, if they go to some other L2, if they go to a
roll-up sequencer, this will just create this conflict between the two.

1323
00:58:37,869 --> 00:58:39,869
This is not going to be in equilibrium at all.

1324
00:58:39,869 --> 00:58:46,869
Foundry will start Foundry LSP or Foundry roll-up to get this money back.

1325
00:58:46,869 --> 00:58:47,869
Because the money is a huge amount of money.

1326
00:58:47,869 --> 00:58:50,869
Because there's all these trillions of transactions per year.

1327
00:58:51,869 --> 00:58:54,869
And if you take 10 cents of that, that's hundreds of billions of dollars per year.

1328
00:58:54,869 --> 00:58:55,869
Way more than...

1329
00:58:55,869 --> 00:58:56,869
Tell me what you think about this.

1330
00:58:56,869 --> 00:58:59,869
But maybe one thing that's missing from that perspective is just...

1331
00:58:59,869 --> 00:59:03,869
It turned out that it's extremely difficult to build a good sidechain.

1332
00:59:03,869 --> 00:59:06,869
Like Blockstream was nearly...

1333
00:59:06,869 --> 00:59:07,869
Let me just say.

1334
00:59:07,869 --> 00:59:08,869
Blockstream was like nearly...

1335
00:59:08,869 --> 00:59:10,869
Basically founded to build a sidechain.

1336
00:59:10,869 --> 00:59:16,869
And then like kind of the best they could do was Liquid, which is this weird, you
know, HSM-based...

1337
00:59:16,869 --> 00:59:18,869
But why do you think that is?

1338
00:59:18,869 --> 00:59:20,869
Because I think it's very hard to build a sidechain.

1339
00:59:20,869 --> 00:59:22,869
I think the two-way peg is very, very difficult.

1340
00:59:22,869 --> 00:59:25,869
But you know, I wrote about it on Bitcoin Talk in 2014.

1341
00:59:25,869 --> 00:59:27,869
And then the Drivechain blog post in 2015.

1342
00:59:27,869 --> 00:59:29,869
I'm not saying that people have to adopt this idea.

1343
00:59:29,869 --> 00:59:30,869
This whole Drivechain thing, man.

1344
00:59:30,869 --> 00:59:31,869
I don't know, man.

1345
00:59:31,869 --> 00:59:32,869
I don't know about Drivechain.

1346
00:59:32,869 --> 00:59:35,869
Just like Drivechain seems like it's very...

1347
00:59:35,869 --> 00:59:39,869
I don't know if I would put Drivechain in the things that have been definitely shown
to work.

1348
00:59:39,869 --> 00:59:40,869
You know what I mean?

1349
00:59:41,869 --> 00:59:42,869
Well, that's true.

1350
00:59:42,869 --> 00:59:45,869
But we haven't exactly tried yet.

1351
00:59:45,869 --> 00:59:47,869
True Drivechain has never been tried.

1352
00:59:47,869 --> 00:59:49,869
Well, where would you say it has been tried?

1353
00:59:49,869 --> 00:59:50,869
Or even fake Drivechain?

1354
00:59:50,869 --> 00:59:51,869
No, I'm joking.

1355
00:59:51,869 --> 00:59:53,869
True Communism has never been tried.

1356
00:59:53,869 --> 00:59:54,869
Yeah, I know the joke.

1357
00:59:55,869 --> 00:59:56,869
But I mean like...

1358
00:59:56,869 --> 00:59:57,869
But how does it apply?

1359
00:59:57,869 --> 01:00:00,869
Because in the real world, there's many fake communists or whatever.

1360
01:00:00,869 --> 01:00:01,869
Yeah.

1361
01:00:01,869 --> 01:00:02,869
They say they're fake.

1362
01:00:02,869 --> 01:00:04,869
You got Bernie Sanders in the real world.

1363
01:00:04,869 --> 01:00:05,869
We got to get into Drivechain, Paul.

1364
01:00:05,869 --> 01:00:06,869
We got to...

1365
01:00:06,869 --> 01:00:08,869
Two hours later.

1366
01:00:08,869 --> 01:00:10,869
Alright, we got to fucking go, Paul.

1367
01:00:10,869 --> 01:00:11,869
Thanks for being on.

1368
01:00:11,869 --> 01:00:12,869
Let's do it.

1369
01:00:12,869 --> 01:00:13,869
Yeah.

1370
01:00:13,869 --> 01:00:14,869
Alright.

1371
01:00:14,869 --> 01:00:15,869
See you next time.