➡ Rafi Farber from the Endgame Investor and Phil Lowe discuss various topics related to money. They talk about the progression of money from barter to its current form, arguing that money is an organic process that came out of barter, not an invention of the state. They also discuss the concept of liquidity in trade and the potential for remonetizing gold, silver, and possibly copper. Lastly, they explore the idea of a society where the definition of money is changing, with people looking for alternatives to the dollar.

➡ The text discusses the concept of economy and monetary exchange, focusing on the use of physical silver. It suggests that the form of silver (official coinage, rounds, or bars) doesn’t matter as long as the denomination is small. The text also debates the origins of money, challenging the idea that it emerged from barter and suggesting that money is a natural development, not a state creation. Lastly, it warns against counterfeit silver and advises on how to avoid it.

➡ Money evolves from barter, where the most liquid commodity becomes the standard for trade. This commodity’s value remains relatively stable, allowing people to plan their needs. People prefer to hoard money, as it provides security and flexibility to meet future needs. Misunderstanding this concept can lead to flawed economic theories and practices.

➡ The text discusses the concept of savings and investment using a desert island analogy. It explains that savings are necessary for investment, but they are not the same thing. The text also criticizes the idea that savings equals investment, as taught in many economics classes, and argues that this is a misunderstanding. It further discusses the importance of wisely choosing investments and criticizes the idea that burying gold (a form of savings) is destructive to the economy.

➡ Investing gold in unproductive ventures can lead to a decrease in resources and a misallocation of resources. This can make the gold less valuable as there are fewer resources for it to buy. This concept is illustrated through a hypothetical scenario of two villages, where one discovers a gold mine and neglects other industries to mine gold. Eventually, when the gold runs out or is no longer desired by the other village, the gold mining village is left in a poorer state as they have forgotten how to produce other goods and services. This scenario is compared to the current state of America, which is seen as relying on ‘fake gold’ and not producing quality goods and services. The text also discusses the potential impact of China having a large amount of gold, suggesting that it could lead to a similar scenario if they use it, or have no significant impact if they don’t.

➡ The power of a country isn’t determined by the amount of money it has, but by its ability to control inflation over gold. America gained this power over centuries and used it extensively after World War II, but this has led to a loss of reputation. If America falls, the world will also fall and a new base of gold and silver will be established. The country that proves to be the most honest and productive may then have the opportunity to control inflation. However, it’s unlikely that China will take over as they tend to copy rather than lead, and their economy is likely to collapse harder than America’s due to their state-driven economy.

Foreign. Hey, guys. Raf here from the Endgame Investor. And we’re on a new episode of the Bitter End Game draft with my friend Phil Lowe, who has his own Rumble Channel, and he’s a star on Liberty and Finance. Now Phil’s up and coming, and he’s gonna probably replace me when I retire. Maybe. No. Okay. I’m looking forward to retirement. I don’t know what I’m doing after the end game, but I might travel some and, you know, become a real estate mogul or something like that. Get a monocle. I’ll have two monocles. I already have two monocles.

In fact, I think I better put on a monocle. It’s even better than one monocle. You’re so wealthy, you can afford both eyes. Yeah. Yeah. This is the proof that I’m already. I’m already set. I’ve got two monocles. Wouldn’t two monocles be bifocals, though? I think those are like quadrifocals because they have two vocals in each eyeball. Yeah, they’d be quadraphocal because it’s one eye each and then two. Anyway, we’re getting off track. This is a derelict. Totally on track. So Phil’s going to introduce the show. He said he was going to be late because he had to shave.

So I hope he looks nice and. And smooth. I trimmed my beard slightly just to be on his level. Smooth as a baby’s behind. Papa. Papa. Papa. You can’t really notice it because I did the highest setting, but I think it looks better. Anyways, the show. So, Phil, what are we talking about this week? All right, so we have three subjects for today. The spectrum of money with regards to barter. How the logical understanding of money walks a very specific path, and straying from that path even slightly leads to crazy town understandings of money. And then the third one is the boomtown phenomenon, when gold and silver gets flooded into certain areas.

How it acts like a massive inflationary pulse. And why that doesn’t mean that gold and silver are flawed monies. All right, so the spectrum of money. As someone who might be on the spectrum, I. That’s what people tell me. I don’t know. I think everyone’s on the spectrum these days because of the bad food, whatever it is. So what’s. Tell me about the spectrum of money? I think we talked about this because somebody sent you a question of what happens if all the gold is gone or we can’t mine any more gold. And the. Basically, the point being that the point that I wanted to hammer home on this is actually very important that there’s no qualitative difference between barter and money transactions other than the degree of liquidity.

And what we want when we trade is more liquidity, then we want directly the thing that we want to trade for, because liquidity ensures that we can eventually get the thing that we want, whereas getting the thing we want directly is very difficult. But the, the progression of money, the logical progression of where money comes from is very important to understand because we have two camps, we have the status camps, the Keynesians and all their other ilk that want to imagine that money is an invention of the state and therefore without the state there’d be no money.

And we have, we have to thank the state for all the amazing that we have. Because we have the state, we just be reduced to barter. And our side, the Austrian side and other allies hold that money is an organic process and everything starts with barter. And money came out of that. And therefore we have to thank the free market for money and state. The state came out of the wealth that the free market where money came from was invented and then started stealing everything. So if money is a spectrum, there’s obviously a clear delineation when something becomes a money, because everyone’s like, oh, I want money.

And when I say I want money, they know what you know. Wherever you are, they know what that means. So if you’re in a caveman society that’s using seashells and you say I want money, they know you mean I want seashells, as we would say right now. I want, when I say I want money, what I want is green paper notes for, for gold. So what is like is, is there an effect that causes the clear delineation or does it. The spectrum remains fluid throughout. Like, does something click and become a money? I don’t think there is ever a click.

There’s. There, there’s, there’s no one click. It’s like when you. The date counter on your watch, right? As you get closer and closer to the 24 hour period, it slowly rolls over and then does it roll over 1155, there’s a rollover at 1205. I mean it. Or 1 and 12 o’clock exactly. No, I don’t think there is one point there. It becomes generally accepted. And the more generally accepted then the more it’s known as the money. But theoretically, even now someone could say like, I want money for I’m going to sell my house for money. And they could theoretically even say I want bitcoin or I want gold ounces and they don’t mean dollars.

We’re already starting to see, we’re entering into a society where when people say money, the fact that we’re having this discussion and, and, and people are watching it and we’re discussing what the definition of money is, means that it’s already starting to fray because people see that the dollar isn’t really working as it’s supposed to. Yeah. And they’re looking for alternatives. Yeah. So the, if the liquidity. So this is where this silver. You know, I’ve heard lots of people say there’s not enough silver to re monetize. You know, that, that silver’s, you know, the above ground, I think is what, nine to one to go? No, the in ground is coming out nine to one to gold.

And the above ground available is I think actually less than right now. So the question then is if there’s not enough silver, what happens? And people are worried about zombie apocalypse. I’m much more confident that the, if you follow the Austrian school, you understand that a money will always form. So that means we’re talking about, I, I think we’re talking about remonetized copper as well. So we’re going to have remonetized gold, silver and probably copper too. What do you think? Yeah, I think the amount is totally irrelevant to anything. What makes something liquid. Part of what makes something the most liquid commodity is that there is enough of it to go around.

Whatever that amount happens to be doesn’t really matter what I would. What I’m more interested in is that that tweet that you sent that I, that I quote tweeted. I’m going to see if I can pull it up, but if there’s, I mean, if there’s not enough silver. So the benefit of silver is that you can actually trade coins. Like if I want gas, I can go give them some coins for the gas, whereas gold is just too high power for that. But if there’s not enough silver to make coinage, then you, the only way to use silver would be to have credit derivatives like we do with gold.

And so that I’m thinking if people, you know, if we’re in a, if we’re in a period of time, especially right at the end game when people do not trust notes at all and you have to hand over money, you’re going to have to hand over silver. Or if there’s not enough silver, I think people are going to regress back to copper. Yeah, well, they will. If there’s not Enough silver, They’ll have to. Yeah, I mean, silver. And for the viewer, silver will absolutely still be money. It will stay monetized, but it’s going to be so valuable that like, you’re.

It’s going to be so rare, at least temporarily, until they can get more into circulation, that it’s going to be too. Val. You know, you know, a couple silver coins might buy 10 gallons, 10. 10 tanks of gas instead of, you know, filling up your gas tank. So you don’t want to give the gas station attendant 10 tanks of gas worth of coinage. So people might use copper instead, just to fill that. To fill that need. Right. But once non monetary silver, there’s not enough silver. Once non monetary silver gets melt down into monetary usage, then the price of silver should go down to a point where it becomes the perfect or around the perfect value for retail transactions.

And then you use silver again. Then after you have. People have to understand this, like after the end game, after the monetary system as we know it ceases to be. We’re going to have to. We’re going to have to circulate physical raw money, not. Not data for it, not derivatives of it. I can actually take the thing and give it to another person, and they’re going to have to give you something else. That’s going to be the closest thing to barter is one real thing for another real thing. Right. Instead of data representing a thing or backed by a thing, you’re going to have to have the raw physical money.

And after that, once there’s enough raw money going around the economy, there’s big enough base, then you can start building a credit derivative system again. And hopefully this time it will be honest, but it probably won’t be, but it’ll start off that way. And then we’ll go through this whole process again. Unless the, you know, the Mashiach comes and, you know, God circumcises our heart and we become different beings, which it’s possible. I don’t know. I don’t know what the plans are. I didn’t know the heart could be circumcised. I think it’s figurative. And if it’s literal, we’ll all have, you know, serious problems.

So let me ask you this. What was I going to ask you? I had. I had a very important question, but I can’t remember what it was. Okay, don’t worry, I’ll edit this out. Okay. Or maybe I won’t. You’re going to leave this and cut. So I have a question for you, Rafi. If the, if we need to hand over physical silver and we go back to monetary barter or monetary exchange, I should say not direct monetary exchange, does it matter if it is official coinage in the Austrian sense? Doesn’t matter if it’s official coinage or if it’s, you know, rounds or bars.

As long as the domination is small enough, I think it does not matter. And I’m curious what you have to say. On principle it shouldn’t matter enough for it to really matter because as I was saying before and as we should all understand, money predates the state. I have a, I have a very important post on this on Endgame Investor on Substack. I’ll put a link to it in the description where I explain the. The evolution of this. It could matter in a very minor way that if you hand somebody like an old dime or a half dollar and it’s recognizable and they see what it is, then they won’t have to check it or you know, so it’ll make checking cheaper.

But you know, a lot of it could be that a lot of fake half dollars or quarters will be going around also. So you may have to check it anyway. So it might not even matter at all. But it’ll matter in terms of just emotional comfort that people will see this old money and they’ll understand that it used to work and it might have a little bit of a premium over around that somebody doesn’t recognize. In that sense it could matter. But in terms of the, from the fact that that silver as money predates the state, it shouldn’t matter all that much.

If you have rounds or, or constitutional US Silver, it will make a difference if you have like you know, a fork or a spoon or something that’s going to be less of a premium. So that’s, that’s why people would be melting these things down into monetary shaped things to, to capture that premium. But it shouldn’t matter that much. A friend of mine brought, bought a silver, a silver silverware set at a garage sale for like four or five bucks. And he thought, he thought I, he’s like, man, I really lucked out. So I went to his house and we magnet tested him and they all just went, it could be, it could be plated, could be played.

Yeah, it’s play. It’s plated is what it was. So he did not luck out, at least not much. There is some silver in there, but not very much plated silverware is, you know, it’s nice. I have, I have a set that we got from Some garage sale that somebody gave to me. I didn’t go to the garage sale. But you should know that you shouldn’t put these things in the dishwasher. You got to wash them by hand or the plate will, will dissolve. So the, I think as far as counterfeiting, I think official coinage is much, much more likely to be counterfeited than around or a bar.

Because you can get the pre. Like right now, you know, what is it? What does a, what does a Silver Eagle go for? 50 bucks right now? Something close to 50, right? I don’t think so. That much is it. It’s not. Or maybe 40. But there is, there is a significant premium over, over, around, over a cheap round. So if I’m going to go to the trouble of making a press and making, you know, a tungsten, a silver plated tungsten coin, I’m going to go, I’m going to go for the moon and go for the silver eagle rather than just make a generic round of plated plate tungsten, because I can get more dollars for that.

I see an eagle, I see that an eagle hovers over you, but I also see that you yourself are the eagle. And in the end game, I can still, the premium will probably still exist to some level so I can get more stuff. Trying to pass off a fake, fake, fake money. Okay, I wanted to share this screen. This is the tweet that you sent out. Oh yes. And this, this is actually very, this is very important for getting down to the base of what the Keynesians and other fake economists are trying to make us believe.

And this is, this is like, like religious tenets, even as close to that. It’s not religion. But you have to understand that they’re trying to get down into the base of the understanding of money so that they can justify stealing from you. And this is what you have to be careful of. So as long as you understand this point, you won’t be fooled. So it says from an old Atlantic article, right? And the Atlantic we know is full of crap. Everything they said about COVID was full of crap. And they’re full of ideological leftist nonsense. And this is just another iteration of that, but it’s a lot more insidious because it doesn’t sound like it, but it definitely is.

So he quotes this part from the Atlantic article. Phil says, quoting, no ethnographic studies have shown that any present or past society has used barter without any other medium of exchange or measurement. And anthropologists have found no evidence that money emerged from barter. Nevertheless, economists, since the time of Adam Smith often imagined pre modern society is examples to use the inefficiency of barter to explain the emergence of money, of the economy and hence of the discipline of economics itself. So before, so I’ll read Phil’s response to this and then I’ll give my own comments on what this is trying to do and the insidiousness of this comment from the Atlantic.

So Phil says, my question is, how would anyone know if 15,000 years ago I traded you a bushel of berries for a goat? What evidence would there be that we ever made this trade? Forget about making it without a monetary medium. And Phil, you’re right, this is all a bunch of crap. There, there wouldn’t be much evidence of barter because it’s not recordable that well on a ledger, which is why you try to get away from it as fast as possible with any good that is more liquid than the one you’re trying to trade for. Right? So, so even in the after, in the immediate aftermath of a terrible end game, we, money would emerge very, very quickly, first of all because it’s available.

And, and second of all because nobody wants to trade directly for anything because that means everyone’s going to die. So the, the only, only time when, when barter would have been the least bit extant for any respectable amount of time would be at the dawn of human civilization where no come, almost no commodities are available at all because people haven’t even invented shovels yet. And how long ago was that we’re talking about Bronze Age, like what evidence would there be for any barter? There wouldn’t be. So the point is here, that this, this quote is trying to prove that, that, that the people that think, are trying to show that the people that think that money is natural are all, they’re all wrong.

And money must come from the state. And therefore if money comes from the state, the dollar is money and therefore they have the right to print it and seniorage and government theft becomes part of the economy. And without the state there would be no economy. That’s what they’re trying to justify, right? But the fact is, logically speaking, if you have a bunch of people, they’re not going to come into an agreement and say look, we can’t trade unless we give all the power of trade to this one guy who’s going to make all these tickets for all of us and then we’re going to trade the tickets and then you’re not going to starve and I’m going to have my house and you’re going to have your berries and I’m going to have my goat.

And we’ll just trust this guy not to screw with anything. That’s a whole, that’s a bunch of nonsense that never, ever happens. What happens is there is one commodity, people start trading, it doesn’t work very well, and then more, and then other liquid commodities come in and people start trading for the more liquid commodities because it’s, it’s much easier to trade for a more liquid commodity than it is to find what you need directly. And this is logically, this is how it has to happen. And, and then a state comes in and says, well, give me the liquid commodity and I’ll give you paper for it.

And then you can trade my paper. And he prints more paper than he has the commodity and he starts stealing. That’s what happens every time. That’s, that’s how theft evolves. You have to understand this and that, that money has to emerge from barter whether or not we have evidence of it. We wouldn’t have evidence of it because nobody wants to do it, do it, do it, do it. The only evidence I can think of was be. Would be something that’s like, you would not normally be able to get yourself. So like, if you’re in like, you know, medieval Poland and you have like, silk from China, somehow, that’s China, mate.

Somehow that silk made it all the way over. But that, that just means you traded for it. That doesn’t mean you bartered for it. You still could have given them money. So you’d have to find the Polish coins in China to say they did money. But I mean, I, I, there’s no, I have no way to show that you traded a goat for those silks, you know, because it’s a logical point. It’s not an. Yeah, I know, I know, I know. Yeah, yeah. This is my, my next video is on this very topic. Yes, it is absolutely a logical point that the money, the money must spring from barter.

There is no other place it could spring from. It’s not a conscious decision that we’re all going to sit around and agree on what a money is. Yeah, yeah. So that’s, that’s why the very reason, the very difficulty in defining what a money is and that everyone disagrees on it is itself evidence that it’s a spectrum. Right. There are more and less liquid commodities in an economy, and when someone says he wants money, he’s saying that he wants the most, the, the most or the. Among the top liquid commodities. You can have two monies. You can have a.

Gold and silver money circulating at the time. We’ve had that before. Where you have two most liquid commodities, and copper, you can have three at the same time circulating. You can, you can in principle have any amount. But the. But money is going to be the one. One commodity or a group of commodities that are generally considered the most liquid. Why? Because if you can. If you can get some of that liquid commodity, you can be relatively certain that its value will not fluctuate so wildly that you can make a basic calculation of how much of this commodity you need in order to meet your needs.

Not only tomorrow, but two days from now, a week from now, a month from now, a year from now, and more or less it’ll have a similar value. Not exactly as it is today. It’s always going to change. But the reason why we want the money is because we want to know with. With a fair amount of certainty how much stuff we can afford to get for ourselves with this thing that is liquid. Whereas we won’t be able to do that with an illiquid commodity which would be like a house or a cow or, or a grapevine or, you know, a field of grapevines or whatever it is.

What we’ve established is there is no qualitative difference between a barter economy and a money economy other than degree. And a. Money will always emerge because it’s. It’s by def. It’s actually definitionally because it is whatever the most liquid commodity is. So as long as you have multiple commodities trading in a system, the most liquid one is by definition, the money. Yeah. So you just have to recognize as human nature, we want liquidity more than we want what we want directly. I mean, that’s like people. People want to hoard money. Why? Because it gives you a certain amount of emotional comfort knowing that you can, in theory, acquire xyz.

And it’s much more comfortable having that than having all this stuff, all of your needs now and, and then, and then, you know, not having any money at all to buy anything with. You’ll have to sell what you have. If there’s an emergency, you’ll have to sell some of what you have in order to buy other things that you need later. So you need some money because you don’t know what your needs are going to be. But at least you know with a fair amount of certainty that this commodity isn’t going to change value that much relative to anything else that I might need.

I don’t even know what that’s Going to be. So this flows directly into our second topic. I almost said septic topic, but we could talk about septic topics too. Parker flushed the toilet in the den, so the septic tank is overflowing. The how the logical understanding of money walks a very specific path and straying from that path even slightly leads to crazy town understandings of money. And I got this inspiration. A viewer sent me a heresy financial video and said, what do you think of this? And I’ve watched Joe Brown many, many times. I disagree with him on his understanding of money.

But he starts. So I started, I watched. It was a 15 minute video. He starts exactly first seven minutes. He sounds just like you and me. It’s like gold was money. People traded gold. Dollars are derivative of gold. There’s too many dollars in the system. Went off the gold window and then at the seven minute mark, and then we took away the gold and now the dollars are money directly. Yeah, yeah. No. And so, and then really everything after that seven minute mark was, was. Went straight into crazy town. And, and people, and people don’t realize how, how pernicious this is.

Milton Friedman is probably the best example of this because Milton Friedman. You know what, When I went to George Mason University, a lot of the Austrian school people there did not like Milton Friedman. And I, I did not understand. You know, I was, Yeah, I was 18, 19, 20. I didn’t understand. I didn’t even really know what Austrian school was. I just was getting my degree to get a degree to get out, you know, and the stuff was getting in. But I wasn’t like a passionate Austrian economist at the time. So, you know, I’d listen to Milton Friedman.

No, yeah, yeah, no, I, I wanted to go to University of Virginia and they turned me down. So I ended up at George Mason purely. So you’re like one of those, you’re like one of those Talmud that, that went to yeshiva. Didn’t really like it. Didn’t really. But you got really good at Gemara and then you ended up like an amazing rabbi, like genius. But like, you didn’t really like, you know, you were just, you know, trying to get good grades at the time. But now like, you’re really close to God or whatever. Yeah, okay, that’s.

That’s almost exactly right. I just was like, you know, oh, okay, this is, I guess this is economics, you know. But what’s funny. Well, what’s funny is I got the Austrian education. Then, you know, I hear non Austrian speaking economics. I said, what are you? What are you. But what, what what are you people talking about? So the. The. The Austrians at the school did not like Milton Friedman. I would, I would listen to him. I was like, he sounds exactly like us. What are you people talking about? Yes, but the flaws are underneath, and they are pernicious.

Yes, they’re very deep. And you. You wouldn’t. A normal person could never understand that. You have to. You have to put in like, the 10,000. You know that you have to put in 10,000 hours to get good at something. You have to put in the 10,000 hours to understand the difference between someone like Milton Friedman and someone like Murray Rothbard. And the problem is Milton Friedman was the one on tv. Like, they could have. They could have dug Murray. He was on TV for a reason. But you know what? There’s a shortcut. There’s a shortcut. You can know that he’s not kosher.

Why? Because, you know, this is what the Austrians say about him. Just, look, he’s the one who came up with the withholding tax. Don’t you understand there’s something wrong here? Yes, yes, exactly. So you don’t have to understand exactly what went wrong, but you know that anyone who could come up with a withholding tax, there’s something wrong with his principles here. This isn’t right. Yeah, yeah, yeah. And he, he was, as I said he is. He was absolutely no threat to the system once you understand him. Because he would get up there and be, oh, we need freedom, we need small government, we need, blah, blah, blah, blah, blah.

But the Federal Reserve needs to be in charge of the money, right? Yeah, that’s exactly what he would say. So what’s. What is the problem with that? And. And what. Why does that make him crazy Town? So if you leave. So there’s a logical path. We just talked. And you could start with Crusoe Economics, right? You’re trapped on a desert island. You know, you can. You can pick berries or watch the sunset and you need to eat. So you pick some berries, and then you spend the rest of your time in leisure watching the sunset, and you decide, you know what? I want a house.

But to build a house, I need to put aside some. I need to say I need to save. I have to, because I can’t. If I’m. If I’m not picking berries all the time or watching the sunset, then I’m going to star. I can’t build a house unless I have a savings of berries. So you have to pick extra berries, watch the sunset less, and then save those berries to the next day. So you can work on the house that is savings, the Keynesians. And you can read any textbook in high school, any, any AP Economics or Econ 101 class and it will say savings equals investment.

And that is not true. The reason it’s in the textbook is because they want people to invest. The Keynes thought if you buried gold in the back in your backyard, you were create, that was destruction. Say that kind of savings was, was destruction. So you needed to invest it in the stock market to, you know, keep, keep the, keep the wheels, keep the grease going. Right. He thought it’s completely wrong. But yeah, yeah, I understand that, I understand that. So the, the, the textbook, once you leave that savings of like, you know, once you leave that chain, once you step off that, you end up in very weird dimensions where, you know, money, money, it makes no sense basically.

And then, and then people abandon it because they said this is not, this is not working for me. So the problem is we are dealing because so many, because the inflation has lasted so long and hasn’t blown up in our faces. We are dealing with a lot of people with a fundamental misunderstanding of money that has proliferated for a very long period of time. For three generations now. Yeah, three generations now. So I’ve talked to, I’ve tried to, I have family members who, you know, they go to bed wrapped in the American flag. They believe all the principles of the Constitution.

You know, they’re very liberty minded. But when I try to explain what money is, they just, they, they, they, they just say, no, money is. Money is the note for the production power of the country. That’s, that’s what his. Yeah. And you know, confidently says it, you know, calm down, Phil, you’re wrong. There’s no such thing as an in game. You know, money is based on the production power of a country. And look, we’re doing fine. Everyone wants our dollars. He’s not, he’s not interested, right? He’s not interested in what I have to say at all.

So, because the, because these other ideas are out there and the dollar is not dead yet. These ideas have nourishment and are able to, to proliferate and for some reason they’re able to proliferate better than ours in most cases. That should be a topic for another day is why, why is it like the, why does the lie get around the world while the truth is getting its shoes on? As Mark Twain said, when, when I say savings equals investment, why is that wrong? What is savings and what is investment and why are they not Equal. Okay.

So savings is a prerequisite for investment, but it is not investment itself if I take the berries. So let me, let me, let me. Instead of using the berries, let me use a stick, because this is what Rothbard used in his book. So to build a house, I need an ax, right? So I take the berries and I set those aside as savings, and then I’m going to take a piece of wood and I’m going to put that aside as well. And then. And I could. I could burn that wood for firewood, but I’m going to put that aside as savings, and then I’m going to take a.

A piece of stone, another piece of stone. I’m going to make a rock ax and then attach it to the wood. The savings was not sitting on the beach, you know, eating berries, you know, watching the sunset. And then the investment was working, and then eating the berries while I’m working on the ax so I can build the house. Right. So taking the stone, putting it on the. On the axe head did not give me any immediate joy. I got no utility from that because that was time I could have spent sitting on the beach eating berries, watching the sunset.

But because I’m able to see into the future and say, I want a house, this axe, while giving me no immediate utility, is providing me with the opportunity to chop down trees faster to assemble the house. Okay, the axe. Yeah. So basically, so very simply, the savings are the berries. The investment is the axe. Yes, exactly right. And the materials, the materials to make the axe were. The, Were the. Were savings as well, because I could have buried. I could have burned the wood and just not touched the stone. Right. So the stone did require investment.

The, the berries, they give you units of time because they keep you alive. Now, where you want to invest those units of times, you. Those units of time at the berries give you. You can invest them in leisure, but that would be consuming them, really. Or you can invest them in create. Invest that time that the berries give you into creating the axe, and then, then you can move up and create a house. But that’s not investment. It can’t be Another, Another idea in a market economy if we’re not trapped on a desert island in a market economy, right.

If I am paid in gold and I just keep the gold, I have not invested the gold, but I have saved it. Right. It’s. It’s right here, you know, this pile of gold right here in my hand, and I’ll bury it in my backyard. That is savings. It’s not investment. Now Someone could say, you know, my neighbor could come to me, phil, I want to, I want to start a butcher shop. Would you want to be invested in this? And I’ll give you returns, you know, I’ll give you some cut of the profits or whatever. Then I could take my savings and give it to him and offer him to invest.

Right. That savings is a prerequisite for investment, but it is not equal to investments. S is not equal to I. That is, that is a fundamental mistake that is in the textbooks. Okay, so also, why isn’t it that Keen’s thought and people like him thought, I don’t know if they actually thought this or they just wanted to, to say things like this because they wanted to get in the good graces of the government and the government wanted to have a justification for printing more money. And it came up with. And Keys came up with, oh, yeah, of course you want to print more money because it makes everyone richer.

Do that. And oh yeah, you’re the best economist we’re going to hire. So the, the reason that burying gold in your backyard is not destructive is specifically because it is the most liquid commodity, that the liquidity of it gives you time to be, to be able to look into your investment options and pick the wisest one. Right now, if Keynes is saying that if you bury gold in your backyard, you just leave it there, you’re destroying the economy because you’re hurting investment and you’re hurting production, well, that, that puts everyone into a frenzy, like, oh, I don’t want to have any money reserves.

I just want to invest everything into capital immediately. And so, you know, Crusoe is building his ax and he’s like, well, well, you know, and he gets too much, too many suggestions on, on the best tools to build a house. And he’s like, well, why don’t we, you know, try to make a self chopping ax that powers itself. And we’re going to put all that, I have all these berries, like take all of them as long as you can get me a self powered ax that floats and chops its own. Wouldn’t have to do anything then, you know, that’s good.

And then you invest all these berries into it and you don’t get anything. Yeah, it doesn’t work. Right. So, but, but like everyone’s thinking, oh my God, I got to get these berries out. Well, you know, the berries do go bad, but imagine they’re like, you know, freeze dried or something. You know, they don’t go bad, but gold doesn’t go bad. So the fact that it is liquid and that it will not go bad, give is, is essential for being able to pick and choose which investments are worth putting your savings into and which are not because they will destroy them.

And even the gold itself doesn’t get destroyed. I’m not saying that the gold gets destroyed, but if you invest the gold in a waste of time, you end up with less resources than before because instead of creating something that, that is worth something, all these guys were trying to make a, you know, a flying axe and now there’s nothing. And they, in the meantime, they have to consume food, which led to nothing. And there’s less resources now. And so the gold is worth less because they’ve mal. Invested it, because there’s less resources that exist for the gold to buy, not because the gold changed value it because there’s less stuff.

That’s right. Yeah. It does lead to the misallocation of resources. Absolutely. So the misallocation of resources is much worse than leaving gold in your backyard. Totally unproductive, which at least is a safe thing because everyone else is busy creating stuff while your gold is sitting there and gaining value because other people are creating more things and the gold is sitting there, meaning its purchasing power will slowly increase over time, which is why it’s a good money. So the reason Kane’s, I mean, I, I, I disagree with the intellectualism behind it, but the, the only, the, what they saw, and this is, I guess it’s an empirical analysis, what they saw was the deflationary crash.

They said, oh, money is disappearing and people aren’t investing and they’re, you know, all this deflation is happening for several years and if we can get that gold out of the backyards and into the system, the deflation will stop. That was sort of the, the intellectual under money. That’s, it’s not money that’s disappearing, it’s money derivatives that are disappearing. Yes, yes, the overprinting of the derivatives themselves. Okay, let’s move into the other side of that, which is the boomtown phenomenon. And I was, I tried to explain this on Liberty and Finance and I got a lot of static back and I think, I miss, I did not explain it well because I was trying to explain it in the sense of China.

I said, because China maybe has something like 30,000 tons of gold in their central bank vaults or something. And I said, it doesn’t matter. It really does not matter for the rest of the world. You’re just, you’re just going to live your life and, you know, either the Gold will leave China and will. It will export to China or the gold will stay in China. And we’ll just pretend that that gold doesn’t exist. But let’s go into the boomtown phenomenon to explain what I’m talking about, because even now people are probably confused. So if you imagine two villages, right, let’s go to two caveman villages.

There’s one here and one there, and they’re about equal and everything’s fine. And they all work and trade together and everyone’s friendly. And then village two just discovers a gold mine, a big gold mine. And so they start mining gold. And everyone, you know, all the villages around are using gold as the, the medium of exchange. So they start digging up the gold and prices go way up in Village 2 because there’s a lot more gold fluctuating around Village 1. The prices are still very low in gold terms. So village two, the, the villagers of village two start importing stuff from village one and exporting gold, right? And so pretty soon, and village one is working, you know, they’re slaving away, they’re working harder to get those gold.

I mean, it’s all voluntary. It’s not slaving. I shouldn’t use that word. They’re working hard to get, you know, build more stuff to export to village two. Village two, basically the, the entire town becomes a gold mining town. So they’re, they’re, you know, all the other industries kind of shut down. Everything’s focused on getting gold out of the ground and exporting it to village one. So village one can, can get them supplies for, for cheaper than they could have done it themselves. So village two falls into complete indolence. You know, they forget, they forget how to farm, they forget how to build houses, they forget how to blacksmith.

The only thing they can do is mine gold and then, you know, lay down in wallow in obesity while village, Village one sends them stuff. It’s. Let me just interject here and continue. It sounds a lot better than the situation we’re in now where the experts are expert in trying to get government favors and government money. And that’s what they’re really good at in poisoning people in the process. And they forgot how to do anything else. Yeah, at least they’re. Yeah, at least they’re mining actual gold out of the ground. That is true. Now eventually the mine, you know, runs out, or there’s either the amount equilibrates so village one has enough.

You know, they have, they have gold so that the prices are roughly equal to Village 2 and they don’t want to export any more to Village 2. And so now Village 2 has a problem because they can’t import anymore because no one else wants their. No one wants the. The gold is deep enough now that it’s kind of expensive to get to. It’s hard to get to. And, you know, the. The stuff is equilibrated, but they’ve forgotten how to farm. They’ve forgotten how to do anything. So now in terms of real goods and services, they’re in trouble because they forgot how to do that stuff.

They have to start from scratch. So it ends. They end up in a poorer state. Now they do have. They do have all the stuff they’ve imported, but in terms of making new stuff, they are starting at a much lower level than they were at before. And this will happen to. This happened to the. What? We are behaving the same way. America is behaving exactly that way. Right now. We’re just using fake gold. We’re pretending we have all. We’re writing notes for the gold and sending that out and importing all the stuff. And so we’re not manufacturing anything.

We’re not producing good movies. We were just discussing ideas of what to do with the new Prince Eric movie. Put a chicken in, make her gay. Indiana Jones. Put a chicken in, make her, name it gay. We’re not, you know, making good products and services anymore. We’re just sort of, you know, write another check, have another pina colada. I can practically taste those pina coladas already. Right, sweetheart? Help. It’s time to kidnap me. You know, go into debt a little more, you know, and so when this. When this stops, we’re going to be at a much lower level of production than we were used to.

We don’t even know how to stop fires anymore. Yeah. Oh, good Lord. All right. And we’re gonna have to work our. We’re gonna have to. As a society, we’re gonna have to work our way back up from a much lower level. If China has the gold that they say that people say they have, the same phenomenon will happen to them. They’re going to say, geez, washing machines are expensive here. Those Americans are. They started making washing machines again, and they are dirt cheap. I’m going to import an American washing machine instead of paying sky high gold prices for this Chinese washing machine.

And so the trade flows are going to reverse until. Until the gold. Until all the excess gold flows out of China. And then the system equilibrates during that process. All the Chinese companies are going to go bankrupt because they have, they have the gold. So all everything’s sky high and they cannot, they cannot sell to their domestic market and they cannot export because the prices are rock bottom on the export markets. So China, now if China, if the government says, you know what, we’re, we’re not allowing international trade, we’re going to keep the gold in China, then that’s fine.

Prices stay in gold terms, prices stay low in the rest of the world and prices stay high in China. So the only difference, because the only value gold has is for jewelry, the only non monetary value. The Chinese will have a lot more jewelry, there’ll be a lot more gold necklaces and gold watches and stuff in China. But that’s really it. And we can live with less gold watches and gold. It’s not, you know, you know, your life will not be really critically hampered in any way by not having access to that quantity of gold. Yeah, yeah.

So look, bottom line, if they have all the gold, either, either they will use it or they will not use it. If they will not use it, it may as well not exist. If they will use it, then we will trade our stuff for their gold and then we will have what they have now and then we’ll be able to use that to invest further production. I don’t. Why is everyone so concerned about the amount of gold that China has? I, I, I understand why they’re concerned because, because they have this sort of spiritual, weird idea of what money is and it represents power to them.

And so they kind of like make a bridge between, oh, they have 30,000 tons, they’re going to be in charge of the world, but no where. The thing that I try to clear up is it’s not the amount of money that, that gives you the sort of power that America has over the world now, which is waning. What gives you that power is the power to inflate over that gold. And in order to have the power to inflate over that gold, you have to demonstrate that you have it first for many years and you have it and you’re good for it.

And then after that you can start inflating. And it took America hundreds of years to get to that point. And now that we’ve got to that point, around the 1920s, 30s, especially after World War II, we were there and ever since we’ve been printing up the wazoo and destroying that reputation. And when it’s gone, it’s not like China is going to be able to come back and start being the inflator in chief. Immediately after America falls first the entire world is going to fall and then we’re going to have a base of gold and silver and then whoever is the best at being honest and productive might end up having the opportunity to inflate later.

But it’s going to be a long time from now. Yeah. The other thing was Post World War II, like the rest of the world was pretty much in ashes. I mean, you know, Germany was blown back to the stone age, England was broke. Russia was, you know, the ussr. You know, China was in their Soviet control. I mean, you know, everything looked, everything was a basket case except the United States. So we had if right now there’s three or four different polar centers, right. There’s America, China, Russia, Europe, maybe the Middle east maybe if we’re all competing for that spot of the world reserve currency and none of us have some sort of, you know, clear cut advantage, then it will be a competitive and then there won’t be that inflationary pulse.

The inflation comes from one single party being, being the dominant power. Yeah, yeah. You know, no one’s going to trust the Chinese. Nobody trusts China. Oh yeah, these one are definitely good for, these yuan are definitely good for gold. But you can’t have it yet. Well, we’re about to open it, you know, six months later or whatever. Yeah. No, and the other thing is, you know people talk about our resources being misallocated. I. China has cities that nobody lives in and they have, you know, but they have high speed rail. Yeah, they have high speed rail to cities that nobody lives in.

And not only nobody lives in, nobody can live in them because those buildings start falling apart the second they’re. The only thing better than a bridge to nowhere is a high speed rail to nowhere. Yeah. So the, the thought that like we’re going to collapse and that China is going to, you know, the Chinese are going to rise up now is our moment in this. No, no, no, they’re, they’re collapsing. They’re probably going to collapse harder than us because the command driven state economy has never outperformed ever economy of freedom. Even as Ms. You know, even as non freedom as our economy is, it is still not, you know, communist state communism.

Right. So no, we’re not going to, we are not going to be replaced by China. If the CCP survives this, I will be, I will be quite shocked yet China does not the nature of the Chinese and I guess I’m saying this in a sort of racist way but I have no other way to say it because you know but the nature of a Chinese nation is not to lead anything. They always follow. They copy. They follow. They make bad copies of things. They make extreme copies of things. They copied the USSR and ended up with Mao’s great famine.

The, you know, they. They copy the US and they end up with these cheap goods or, you know, these like. Like cheap factories, which, you know, works now in the inflationary environment, but everything they do is essentially copying. There’s no originality in their culture. Is that a function of the culture? Is that a function of the. Of the fake money? I think. I think it’s a function of both. And they’re kind of like, twisting in on each other and making the. Making it stronger. But I’m curious. You know, I was having this conversation about the Congolese.

There’s this movie called the Empire of Dust where the Chinese are trying to build this, like, copper mine or something in the middle of the Congo. And it’s just this giant boon. It’s part of the Belt and Road Initiative. This is the part I was talking about with Donegan. It’s just a total boondoggle, right? The Chinese send these resources into the Congo, these investment resources to get this copper mine going, and it just disappears into the Congo, right? They got. They order 36 trucks full of gravel for the road, and two trucks show up, and they’re like, well, where are the other 34 trucks? Oh, I don’t know.

My cousin. My cousin drove. They’re having a gravel party. Yeah. And, you know, all the investment goods are just disappearing into the corruption of the Congo. And I said, you know, the. The African currencies are the farthest away from the dollar, so they are constantly in a state of hyperinflation. And if you live in a constant state of hyperinflation, you don’t save. There’s nothing to save in. There’s no way to save. So what do you do? You just consume. You live for the day. You know, you get your day’s wage, you go spend it on beer and women.

Then you go to bed and you wake up and you do it again because there’s nothing else to do, actually. Saving cattle. I think that’s what they. Cattle, yeah. You okay? You know, it’s hard. It’s hard to save, right? That’s the point. It’s hard to save. Yeah. And so I’m wondering if we are on a gold standard, if the whole world’s back on a gold standard, what these countries will look like. And I think they will look much better. It makes no sense that they would look worse. Yeah, you need someone to lead monetarily with a liberty mindset.

America has the potential, but they’re going to have to go through, like, a really bad flu before they get out of the other side. And, you know, as. As. As much of a basket case and as embarrassing as Israel is, we also have that potential to lead in terms of the ideas. And I’m. I’m hoping that in the end game, we have enough people over here to keep. Keep the ideas straight in our heads so that whenever society reorganizes itself, it reorganizes with the proper ideas, which is where I see my place here. I’m not. I don’t lead the world, but I’m hoping I can influence in the ideas to keep them straight.

So that when people are done with their monetary flu and they’ve had their convulsions and their vomiting and all that, I can say, hey, guys, now you might want to listen. How about this? All right, well, good luck, Rafi, and we’ll. You handle it over there, I’ll handle it over here. And we’ll meet somewhere in the middle of the Atlantic. The Azores. We go to the Azores meeting. The Azores. All right, that covers it for today. Yeah. Have a good day, Phil. Dude. Take care, man. Bye.
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