00:02 The presentation is called the tale of
00:03 two systems because I want to compare
00:05 the US dollar fin uh monetary system to
00:09 the bitcoin monetary system because
00:11 bitcoin is a money but it’s also a
00:12 monetary system. Okay. So why do we use
00:15 money? We use money because it makes it
00:17 easy to trade. That’s why we use money,
00:18 right? It’s uh hard to trade a cow for
00:20 eggs, hard to trade a cow for a house.
00:23 Hard to trade a house for eggs. So we
00:24 use money, right? We use money. We work
00:26 for money. We get the money. Then we use
00:28 the money to buy stuff. So all modern
00:30 economies use money, not bargain. Okay.
00:33 So money is also a system. It’s not just
00:35 the physical things we touch. It’s also
00:37 a system. So for example, the US dollar
00:39 is a system that includes banks. It
00:42 includes a central bank. We’ll talk
00:44 about what that is. It includes the
00:46 government and of course taxes. It’s
00:48 April 15. Taxes. That’s part of the US
00:51 dollar money system. A money system has
00:54 a bunch of purposes, but the two most
00:56 important one are who owns what money
00:59 and the total amount of money that is in
01:02 the system. Those are probably the two
01:03 most important things that a money
01:05 system or a monetary system controls.
01:08 So, how does the money monetary system
01:09 work and how does it matter to your
01:11 money? Well, since this is Rotary in the
01:14 sort of business flare, right? So, we’re
01:15 going to use a spreadsheet, the world’s
01:17 simplest spreadsheet to understand how
01:19 the US dollar money system works. So in
01:22 this spreadsheet my dollars. Now this is
01:25 literally the only number most people
01:26 think about when you ask them about what
01:28 money is is how much do I have? Like
01:30 literally their understanding stops
01:31 there. Maybe they would say and I have
01:33 to pay some taxes. Okay. But there’s a
01:37 there’s another number that is just as
01:39 important as the number of you have
01:41 which is how much money there is which
01:44 almost nobody thinks about but it’s
01:45 super important. It’s super important
01:47 because your purchasing power is divided
01:50 by one divided by the other. So just as
01:53 important of how much money you have is
01:55 how much there is because it determines
01:56 what you can buy. Okay? So if you have
01:60 10% of the dollars, if you own $100, the
02:02 total dollars in the system are $1,000.
02:04 You can buy 10% of everything that money
02:06 can buy right now. Okay? But if somebody
02:09 moves that number up to 2,000, suddenly
02:12 you can only buy 5% of all the things
02:14 that money can buy. Even though your
02:16 $100 didn’t change, your ability to buy
02:19 stuff dropped in half due to factors
02:21 outside of your control. If that doesn’t
02:23 seem fair, it’s not. Okay. So, how many
02:26 dollars are there exactly in the system?
02:29 Well, right now for the US uh US
02:31 dollars, it’s called M2 money supply. I
02:33 won’t try to explain that, but there’s
02:35 about 22 trillion $22 trillion in the
02:38 system, which means if you have $100,
02:40 your purchasing power is $100 of 22
02:43 trillion, which will buy you about uh
02:46 you know, a gold set of earrings about
02:49 that one gram set of gold earrings.
02:51 That’s about how much $100 will buy you.
02:54 Okay. So, the problem is the US
02:56 government prints out of thin air about
02:59 7% more money every year.
03:01 Now you can see where that would be a
03:03 problem over time, right? And so back
03:05 here, back in 1960, the total dollars in
03:08 the system was 286 billion. So your $100
03:11 was divided by 286 billion. But today,
03:14 it’s 22 trillion. So there’s 75 times as
03:17 much money, meaning your dollars have
03:19 been divided by 75 times as much money.
03:22 Basically, it’s been diluted, right? You
03:24 have your drink, somebody pours 70 times
03:25 as much water in your drink. It’s, you
03:28 know, 175th as potent. Okay? So back in
03:31 1960 when the Beatles were around, the
03:34 same $100 would have buy you 88 gram of
03:37 gold instead of one gram of gold. 88
03:40 gram of gold. Okay. So when that number
03:43 rises, that number falls and your
03:46 purchasing power goes down. Now you may
03:48 be thinking, “Yes, but the wages have
03:50 gone up.” The problem is the wages have
03:52 only gone up about as half as much as
03:53 the money printing. So it means if
03:56 you’re living on a Campbell soup and a
03:57 burgerer every day, you buy you can buy
03:59 half as much today as you could back
04:01 then for the same for the same hour of
04:03 work. So why don’t we feel wealthier
04:05 when we have more money? Because wealth
04:08 does not consist in money. It consists
04:10 in what money can purchase. We’ve known
04:11 that since 19 1776 with the wealth of
04:14 the nations, Adam Smith. Okay. So what’s
04:16 going on here? Who manages the system?
04:18 It sounds like the system is broken and
04:20 it might not be fair. The question is
04:22 who manages the system? So before we get
04:25 to the central bank, thank you. Uh so
04:27 each bank records who who has what
04:29 money, right? Regions, trust mark, who
04:31 has what money. And the central bank
04:33 makes sure that two people don’t own the
04:34 same money. So it’s really the central
04:36 bank that controls that. Okay? So it’s
04:38 actually a big spreadsheet. It’s called
04:39 a database, right? But it’s really a big
04:41 spreadsheet at the central bank that
04:42 controls how much money is in the
04:44 system. Okay? And the dollars in the
04:46 system, the way they change it is
04:47 there’s a Federal Reserve Board of
04:49 Governors. There’s a group of people
04:51 that get together about every month or
04:53 two and they the the chair is Jerome
04:56 Powell and they basically double click
04:58 on that number and decide how much
04:59 dollars there’s going to be in the
05:00 system and they do they have a bunch of
05:02 complicated way ways of describing what
05:05 they’re doing but effectively what
05:06 they’re doing is they’re printing money
05:07 out of thin air. They’re just doing it
05:09 in very creative ways. Okay. So that’s
05:12 why that number has been on a tear. The
05:14 reason US dollars are being so diluted
05:16 is because a small group of people
05:17 control controls whether there should be
05:19 more of them. And magically, as
05:22 throughout the entirety of human
05:23 history, every time someone could make
05:25 money out of thin air, it was only a
05:27 matter of time till they found an excuse
05:29 and an emergency that required them
05:31 magically to go down in their basement
05:33 and make money out of thin air. Now, if
05:34 you and I do it, it’s called
05:35 counterfeiting. If the government do
05:37 does it, it’s called a bunch of fancy
05:38 words that mean it’s supposed to be
05:40 okay, but it’s not. Okay? So um so if
05:43 the dollar system goes up easily then
05:45 your purchasing power is going down
05:47 quickly. So politicians have to limit
05:49 how much money they’re going to print.
05:50 So as the number goes up your purchasing
05:52 power goes down. So this is the
05:54 purchasing power according to government
05:55 statistics. I didn’t make this up.
05:57 According to the consumer price index
05:59 CPI, this is like the inflation they
06:01 talk about in the news. Purchasing power
06:03 of the US dollar is down 95% since 1935.
06:07 So from the end of the, you know, the
06:08 sort of the heart of the Great
06:09 Depression to today, you got five cents
06:12 of your purchasing power left as
06:15 compared to what a dollar would buy you
06:16 back then. What?
06:20 Okay. So So the the idea throughout
06:23 history has been we got to got to fix
06:26 this problem. So people have the bright
06:27 idea, why don’t we tie that number to
06:29 gold? We’ll just the gold standard,
06:31 right? We’ve all heard of the gold
06:32 standard. uh the gold standard has never
06:34 worked and I’ll explain some of the
06:36 reasons why but so the the the promise
06:38 was what if the paper the paper money
06:41 that we can print out of thin air what
06:42 if it’s tied to gold then they sort of
06:44 can’t print it out of thin air. Um but
06:47 every time this has been tried the same
06:48 thing has happened. Okay so here’s what
06:50 it starts with. This is a $10 bill. If
06:52 you zoom in on that $10 bill, it says
06:56 this certifies that there have been
06:57 deposited in the treasury $10 in gold
07:00 coin payable to the bearer on demand.
07:03 Okay, that means you’re supposed to be
07:04 able to swap the paper for the gold
07:05 anytime you want. Now, every time humans
07:07 have ever done this in entire human
07:09 history, they print too much of the
07:10 money and eventually they stop being
07:12 willing to swap it for the gold. So, the
07:15 United States did this, in fact, I it’s
07:16 in my car. I didn’t take it in with me,
07:18 but I have um I I have a a bill that
07:23 says this certifies that they’re
07:25 deposited in the treasury uh
07:28 $10 payable to the bearer on demand. So
07:31 after this bill, they had a bill that
07:33 just said $10 payable to the bearer, but
07:35 it landed ambiguous in what? Like is
07:37 this not a dollar bill? Like what am I
07:39 supposed to be able to get for this? The
07:41 answer is nothing. But we don’t really
07:42 want to say that. But anyway, ultimately
07:44 in 1971 the government broke the promise
07:47 and they changed the words to Federal
07:49 Reserve note $10 and they took off all
07:52 the words about how you could get it in
07:54 gold coin anytime you wanted and all
07:55 that sort of stuff or in the case of a
07:57 $1 bill was in
08:00 silver. Okay, so that’s a huge problem.
08:03 So the dollar system, the US dollar
08:06 system runs on politics. And what about
08:09 different governments? Is this a problem
08:11 unique to America? Uh turns out not none
08:14 of these countries have a better dollar
08:16 than the US uh because they all print
08:17 money out of thin air. And believe it or
08:19 not, they’re actually less responsible
08:21 than the United States. So this is how
08:23 these other currencies in the world have
08:25 compared over the last 10 years to the
08:27 US dollar. Now let’s remember the US
08:28 dollar is already down 95% in 90 years.
08:32 In the last 10 years, these over here
08:34 are down an additional Venezuela 99% on
08:37 top of how much the US dollar is down.
08:40 So 90 85 99% even major currencies like
08:44 the British pound is down 25% compared
08:47 to the dollar which is already down. So
08:49 all of these currencies are worse the
08:51 Canadian dollar the Indian rupee all the
08:54 euro all of those are down an additional
08:56 20% just in the last 10 years as
08:59 compared to the US dollar which is also
09:01 down in purchasing power you know
09:02 precipitously. Okay so are there other
09:06 options? Is there a way to fix this
09:08 problem that has honestly plagued humans
09:10 from the beginning of
