QUESTION: On a global BTC standard, what type of economic policy could replace fiat economic policy?

00:00 If the entire world switched to a
00:02 Bitcoin system, a Bitcoin standard, what
00:05 would monetary policy be? What would be
00:08 the policies of money? Well, that’s the
00:10 beauty. There aren’t any. The only
00:13 policy is there’s 21 million Bitcoin and
00:15 you get to use it as money, which means
00:17 there’s nobody manipulating interest
00:19 rates. Interest rates go up and down
00:22 based on human time preference, which is
00:24 the way it should work. Jerome Powell
00:26 and the Federal Reserve should not be
00:28 deciding the cost of capital, the cost
00:31 of money, what it costs to loan someone
00:33 money. That should be entirely dependent
00:36 on the supply and demand of people’s
00:38 savings. So, if people are saving a lot,
00:41 then you can borrow money cheaply
00:43 because interest rates are low because
00:44 there’s lots of savings and lots of
00:46 people willing to lend money. If
00:48 people’s time preferences are high,
00:51 meaning they want stuff fast and now,
00:54 well, then interest rates will be high
00:56 because not a lot of people will be
00:58 loaning money. But what that keeps h
01:00 from happening is it keeps the boom by
01:03 bus cycle from happening because the way
01:04 the boom bus cycle happens is the
01:07 Federal Reserve keeps interest rates
01:08 low. Lots of people borrow money for
01:10 stuff that the consumers don’t have the
01:13 future spending power to buy and then
01:15 ultimately the business is unsustainable
01:17 and you go through these booms and busts
01:19 and booms and busts and booms and busts.
01:21 Those booms and busts would not happen
01:23 on a Bitcoin standard. Now that doesn’t
01:25 mean you might not get a little bubble
01:27 around AI or something like that, but
01:29 it’d be very localized to specific
01:31 technologies and anticipation of how big
01:33 of an an impact they would have. you
01:35 would not get these 2008 recession sort
01:37 of level events because those are only
01:40 possible when the Federal Reserve is
01:42 manipulating interest rates. So beauty
01:44 of what is monetary policy on a Bitcoin
01:47 standard? There isn’t one. It’s entirely
01:49 based on supply and demand of
01:51 individuals based on whether they want
01:53 to spend their Bitcoin now or save it
01:55 for later. And if they want to save it
01:57 for later, at what interest rate are
01:59 they willing to loan it out to other
02:00 people at? It’s that simple. And that’s
02:02 the way the entire economy should work
02:04 and that’s the way it will work when the
02:06 world’s on a a Bitcoin standard. And
02:08 then all of the manipulation goes away.
02:10 The Federal Reserve goes away. There’s
02:12 no more manipulation of interest rates.
02:14 There’s no more adjustable rate
02:16 mortgages that jack up after the first 5
02:18 years. Like all of the shenanigans, all
02:21 of the insanity, all of cheap the cheap
02:23 credit that drives booms that result in
02:25 bust. All of that is no longer part of
02:27 the economy when we’re on a Bitcoin
02:29 standard. Now the second part of this
02:31 person’s question is what about wealth
02:33 inequality caused by people who were
02:36 early to Bitcoin? That is not a problem
02:38 because when people are wealthy they
02:40 spend their money. Nobody just sits
02:42 around hoarding money forever. So yes,
02:44 there are a small number of people that
02:46 are a lot wealthier because they were
02:48 early in Bitcoin. And you know what
02:49 those people are doing? They’re doing
02:51 exactly what every other wealthy person
02:53 does, which means they are spending
02:55 their wealth. The wealthier people get
02:58 by being early in the adoption of a
02:60 technology, whether that’s Bitcoin, AI,
03:03 the internet, no matter what technology,
03:05 the wealthier they get, the more they
03:07 desire to improve their quality of life
03:09 and the quality of lives of their
03:11 families. Uh, and same with generations.
03:14 Usually, no matter how wealthy someone
03:15 is, it is rare that there’s any money
03:18 left beyond their grandkids because no,
03:22 no matter how prudent they are and how
03:24 much they try to, you know, they
03:26 accumulate wealth, their kids spend most
03:29 of it and their grandkids spend the rest
03:31 of it and there’s nothing left. So, um,
03:34 wealth has a way of distributing itself
03:36 naturally, which has happened with
03:38 Bitcoin as well. The very early adopters
03:40 of Bitcoin bought stuff. They improved
03:43 their lives. They paid off apartments.
03:45 They bought houses. They went on nice
03:48 vacations. They they did all of the
03:50 things wealthy people do who bought
03:53 $1,000 of Bitcoin that ended up being
03:55 worth a million dollars. Well, most of
03:58 those people on the way up, they sold
03:60 that Bitcoin little bits at a time to
04:02 buy things to improve the lives of
04:03 themselves and their family. So there is
04:06 shockingly little wealth inequality in
04:09 the Bitcoin ecosystem because everybody
04:12 in the Bitcoin ecosystem had to work for
04:14 the Bitcoin they owned. They either had
04:16 to recognize the technology uh early and
04:20 be willing to take the risk of being a
04:22 very early adopter in technology which
04:24 is again the same way a bunch of people
04:26 got wealthy on the internet and
04:28 investing in internet companies because
04:30 they recognized it was going to be a big
04:32 deal and they were willing to take the
04:33 risk. So everybody who has a lot of
04:35 Bitcoin, unless they bought it recently
04:37 with US dollars that they earned
04:39 somehow, they got in earlier and they
04:42 benefit from the price appreciation. But
04:44 all of those people like clockwork, as
04:47 the price of Bitcoin appreciates, they
04:50 suddenly alter, not suddenly, they
04:52 inevitably alter their lifestyle to
04:56 improve the lives of themselves and
04:57 their families. And they do that by
04:59 spending Bitcoin, which results in their
05:01 percentage of the 21 million Bitcoin
05:04 going down over time. And the higher the
05:07 price of Bitcoin goes, the more the
05:09 people that own that early Bitcoin
05:12 distribute it. You’ve seen that every
05:14 single cycle in Bitcoin where the higher
05:17 the price goes, the more the OGs, the
05:19 originals, the early adopters, the more
05:22 they can, you know, buy stuff with their
05:24 Bitcoin. And someone who didn’t have
05:26 Bitcoin anymore now has some Bitcoin.
05:29 And yeah, all of those people look back
05:30 and think, well, I could have had more
05:33 Bitcoin if I hadn’t spent any of it. But
05:35 you know what? Life is short. So
05:36 everybody who owns Bitcoin eventually,
05:39 once their wealth has increased enough
05:41 as a result of the price appreciation of
05:43 their Bitcoin, everyone eventually goes
05:46 and spends some of their Bitcoin to
05:48 improve the lives of themselves and
05:49 their families, which is the way all
05:51 money works. And the difference in the
05:53 world of Bitcoin is there’s not a bunch
05:55 of shenanigans with it. There’s nobody
05:56 printing money out of thin air and
05:58 giving it to their cronies. It’s just an
05:60 entirely different, more fair, more
06:03 equitable, and more just world than the
06:05 one we live in today. And I look forward
06:07 to the world on a true Bitcoin standard
06:10 worldwide.