Brett Scott - Cloudmoney

30:40So, by the way, first off, I think the Oyster card system sucked too, just so we're all on the same page. So, let me ask you this. So, there are, as you talk about in your book, there are incentives that like a credit card company, to your point, or Apple would have for me to go use Apple Pay or tap my credit card to go into the London underground, okay? Now, let's say I was going to use cash, okay? there are structural costs to cash that we might not pay attention to but are present in other words i can give them money but once the machine loads up with a bunch of cash someone's got to draw that cash out and so here in the united states a company like loomis would show up to collect all that cash with like former military people former police whatever they are i think you touched on this a little bit in particularly other countries how they have to do this in more cash-filled societies, but there are costs to cash too.

31:38I guess my question is which cost is greater? Is it greater to power data servers with electricity to store the information for the cashless transactions, or is it more expensive to have the armored vehicle pick up the cash and take it to its destination? Okay. Well, there's a, like a superficial way of answering this and a more like a more surface level way of answering this. Right. Well, for a start, this idea around the cost of cash is heavily debated. Okay. All right. So if you're an anti-cash person, you will try to argue that cash is highly costly because the infrastructure required to uphold the cash system, for example, those Loomis trucks and stuff, is relatively costly compared to, for example, the fixed costs of providing digital systems.

32:28But like many things that cost a lot, there's often a reason for that and often it's because they have better quality. If I've got like high jeans that cost more than my polyester shirt, it's because the jeans are better. So there's a reason why it's useful to keep the cash system running. Because if you do not have the cash system running, fine, you might have the slightly lower fixed costs, arguably, of the digital systems, but suddenly you unlock a ton of way bigger sort of societal costs, which I guess economists would often euphemistically refer to as externalities. Basically you have, and this is where all the sort of negative sides of the cash of society comes out, And I can go through those from you have like societal surveillance, censorship, huge resilience problems in your monetary system, like exclusion.

33:32But perhaps most profoundly, the actual digital money that we use, and this is where having a knowledge of the monetary system starts to become important. The actual quote unquote cashless systems themselves are both psychologically and legally dependent upon the cash system. Agree. So this is where this becomes very complex because let's say you have some economist who comes in and says, okay, well, we've done a cost benefit analysis and actually on net the digital systems are cheaper. Therefore, get rid of the cash system. In so doing, they will undermine the cashless systems. All right. The two are tethered together.

34:14Let me interject because I agree with where you're going, but let me give you an example. Okay. I have a fear. here's my fear Brett I am afraid I will forget how to write okay now here's why because I know that the brain's activity is higher when you're using your hands and therefore can we have great writing if we don't have someone writing to your point right in other words they're integrally tied to each other the power of the hand and your thinking with your writing is actually superior to typing and the question is will we damage our thinking by typing sure yeah well look if you want you know i think it's an interesting an interesting example and actually there are sort of um it's a it's almost a paradox or a contradiction i don't know which one yeah i mean it was one one sort of like side point to make about this which is you know I don't want to go down this this this like rabbit hole necessarily but a large part of digital ideology is if you hang around in Silicon Valley you see this all time there's this kind of like disgust some extent of like the human body all right and and like a lot of the sort of like sci-fi around this is sort of imagines like you know detached minds that sort of like exist in cyberspace singularity etc yeah yeah yeah and this is basically just like a new formulation of like mind-body dualism which has existed for a very long time right and you know mind-body dualism imagines is like a fundamental separation between like the mind and the body and that somehow the mind is better often correct that which was which is how the greeks viewed the world they thought the mind was better if you were a laborer you were worse etc yeah yeah and it's it's kind of like bs but like it's very prevalent right um and if you ever look at like ai rhetoric it's all about basically this they sort of like hyper they sort of like you know romanticize like the mind and then the perfect rational mind and as you look at all if you go and google images you type in ai you see all these pictures of these like blue brained networks you know it's always really weird like space kind of like thinking right yeah actual actual human beings are not like this yeah right and and actual human beings are tactile all right a large part of our um our intelligence actually comes from our body all right it doesn't come from our mind it comes from like feeling things and so on and emotions and this is very unpopular if you in sort of like tech circles or even in economist circles you know like so so the important point you know one of those there's a big case we made just the fact that the tactile nature of cash and these various things has important psychological effects all right you know actually if you go if you hang out if you go into like a visa's website You know, Visa obviously benefits massively from a decline in cash usage because they coordinate the digital systems.

37:10You know, Visa actively has a website called The Benefits of Going Cashless, where it tries to basically convince shops to stop accepting cash. And one of the reasons it gives is precisely that human beings basically spend a lot more with digital money, up to 20 % to 40 % more. And there's a bunch of studies that actually show this. All right. And part of the reason that people struggle to conceptualize what's happening when it becomes digital. Right. So you have these in some ways it accelerates spending processes, which is if you're a person who's trying to promote endless growth, maybe that's something you want.

37:47But from an actual individual human beings perspective, it's like how you become deeply indebted. All right. And this kind of stuff. So there's a big one of the big approaches I take when I'm looking at this issue of cash versus digital money is to try and move away from the dualism. Right. And so like, you know, many of our systems that we value in society actually have multiple or multimodal. For example, the transport system, the mere fact that Uber happens to be convenient to you doesn't mean that you get rid of your bicycle system, for example. Bicycles are technically slower and so on, and yet people love bicycles and they're actually incredibly efficient and convenient in many situations.

38:35The way I would talk about cash is like the public bicycle system of payments. right I'm not going to use it for certain types of like you know international transfer or something yeah it's incredibly useful and it keeps a balance of power in the monetary system and this concept of a balance of power is extremely important to understand with money because when many people are thinking about for example the US dollar or the pound they imagine that it's a single currency but it's not a single currency it's an ecosystem of currencies that have the same name, issued out in different layers by different players in different forms.

39:12So the US dollar system has thousands of issuers. The core issuers are the Federal Reserve and the Treasury. But then there's a whole second layer of money issued out by the banking sector. And in the book, I'm using the metaphor of digital casino chips. Basically, what those banks do is they will take in state money, all right, but issue out casino chips, basically. Digital casino chips, which is what you see in your bank account, right? Your record of account, yeah. Yeah, your so-called cashless society is basically a society where you become dependent upon bank-issued digital casino chips, all right?

39:53And there's a third layer of players that plug into the bank system. So, for example, PayPal, it issues a third layer of money. All the so-called stablecoin systems right now basically plug into the banks, or at least a bunch of them do. And so you've got to see the money system as having these multiple layers, and each layer is built upon the previous layer. The most important politics, if you're interested in monetary politics, is between layer one and layer two. Because most people imagine that the state is in control of the money supply, but it's not really. The money supply is largely controlled by the banking sector.

40:31The state, via institutions like the Federal Reserve, have some ability to, they can issue money, but largely it's the banking sector that issues most of the money via the process of extending loans. And that's the sort of second form of money, which is these kind of digital casino chips. Well, Craig, and also when you think of the term shadow banking, that was excess capital being created out of credit outside of even the banks, but was still under the purview of the Federal Reserve. Yeah, and you could sort of think about the shadow banking sector as a kind of fourth layer of money. This is a stylized account I'm giving, but it's quite useful to think about money in layers like this, right?

41:13And some of the best thinkers of money do think about it in layers. So let me ask this question because you touched on it earlier, and I don't want to leave it too far. Talking about credit cards and debit cards, can you explain the type they get? What is the fee amount that's typically drawn on a transaction from a credit card or a debit card? And like you pointed out, the UK is much more prevalent in digital payments. What would you tell people are those fees as a percentage of transaction, let's just say? I mean, I don't actually know the specifics. It sort of shifts to different platforms in different countries, right?

41:46And it also depends on how big your business is. And it's like, so offhand, I can't really tell you exactly what those are, but they can be like a number of percent. Right. And the question is, like, does your cash handling, if you're a small business owner, this is of importance to you. Right. To some extent, you're like, well, the credit card company takes a certain amount. But, you know, having to get like, you know, deposit cash into the bank is also is a type of cost. Right. And you get widely different perspectives on which is the most costly. by depending on what type of business you're looking at.

42:21But I don't have all these different figures to hand right now. One of the important things, again, looking at that resilience question, is that, let me give you a very crude example of this here to just illustrate this. I was at a music festival in the UK recently where it was supposed to be a cashless festival, right? They put a bunch of people into a field, all trying to use their mobile phones, It's like 10 ,000 people all trying to use their mobile phones with the local mobile phone tower and stuff. And, of course, it cut down the whole system. So all the cashless systems, which basically involved trying to communicate with the banking sector, failed.

43:06The beer tent, which would have been making thousands and thousands of pounds per hour on stuff, was turning away hundreds of people because it couldn't process their payments. Now, technically speaking, they might have said to me, well, you know, my cost of, you know, my card transactions was, you know, X. But in reality, it was 100 % was the cost in that situation. So if you're a business owner, contingency planning is very important, which is why many businesses actually have these multiple forms. But also many business owners actually fear that they're going to exclude customers if they start to refuse cash, right?

43:44And so you'll notice that especially among working class populations and sort of poorer neighborhoods, people would never refuse cash. All right. And this is why the whole kind of like vanguard of like cashlessness is often these kind of yuppie sort of like bougie places where basically they're able to exploit the fact that people, one, won't rebel and two, basically abort into the big tech and big finance. Right. Well, by the way, you use the term bougie. It's one of my favorite terms. But to your point, I mean, I touched on this earlier. I think of like a bougie 32 year old single male or female in the UK who is has no kids, has no responsibilities.

44:24What's going to happen this weekend? That's all I really care about. And that's like your perfect cashless consumer. You know, it's not like they got to take kids to school or do anything outside of like, what am I going to do at my work in my home? And but then as you add complications, like I think you talked a lot about when hurricanes come, what do people do? they go get cash quickly it's like the old saying is like there's no atheist in a foxhole um there's also no cashless person in a hurricane yeah if you want a quick rundown of all the basic like problems it's quite it's i can i can do it you know like the first the first thing to like get in mind with this is to start to think about this balance of power question right um and because this this basically enables you to understand all the problems of cashless society All right.

45:11So let's use that bicycle versus Uber metaphor. All right. The typical digital ideology tells you that what cash is, is a horse cart. All right. And that what digital systems are is some kind of sports car. Right. There's some kind of natural upgrade occurring. Right. Really, the way to think about it is that cash is a bicycle and the digital systems are like Uber. If you look at the difference between those two systems, one runs on public infrastructure, the other one runs on private infrastructure that's built on top of public infrastructure. One you have autonomy, with some limitations, and the other one you have dependents.

45:52So you're dependent upon a third party entity to get you somewhere. Now if those are in balance, they can both be positive. This is what balance of power is about. It's about preventing the worst parts of different systems emerging by sort of balancing them off against each other. So if you're interested in creating a resilient system you want balances of power because it sort of prevents negative stuff emerging. It's when you have a lack of that balance that it becomes a problem. So actually if for example you live in a totally cash economy it might actually be desirable to have digital systems come in because it'll sort of create some new forms of resilience in that system.

46:32But if you totally get rid of cash, now you have the opposite problem. You've got new and dangerous forms of problems that emerge. And you can easily work these out through the simple thought experiment of imagining if Uber was the only way to move. You would have a massive centralization of power. You'd have colossal resilience problems in your society. If that system goes down, your entire ability to move basically collapses. Well, yeah, you'd have never-ending peak pricing. Yeah, you have huge exclusion problems. All right. If you can't access the system or if you don't want to access the system or if you pushed off the system, you can basically be prevented from moving.

47:12All right. And you also have an attack on localization. And this is one of the most things that's often not appreciated. You know, this kind of goes back to your point about your tire change. That thing you did there was a very localized interaction. Correct. If you and most digital systems involve centralization, right? You have to go via some distant entity to deal with somebody who's right in front of you. So basically every single local interaction becomes a way of empowering some distant centralized entity. In this case, whatever that entity is. And similar with these cashless systems, the digital systems, is basically if you are forced into those systems, and that's the only means of payment, you've got massive surveillance problems, you've got massive censorship problems, You've got massive resilience problems.

48:01You've got a huge attack on economic localization. And these are the main problems that emerge when you don't have that balance of power in place. So a large part of my book is I'm not saying, hey, you've got to constantly be using cash all the time. Sure. I'm saying you've got to maintain that balance of power, otherwise serious problems are going to emerge. The main problem though, and this is awkwardly, I won't go on too long about this, but going back to that thing I said earlier, the sort of like Marxist term, the contradictions of capitalism. One of the problems that private firms, for example, the banking sector and Amazon, etc., they all have individual incentives to pursue automation.

48:46All right. Correct. Yeah, they can make a lot of money from it. Yeah, no question. Exactly. They cut their costs. They can boost their revenues, etc., which, you know, take market share investment model looks positive. Right. So for them and their individual myopic perspectives it makes sense for them to attack the cash infrastructure close down atm stop small businesses using the using you know branches say you have to use digital banking etc right it makes sense for them and their basic job is to sort of convince people to do that and if you're a bit slow they kind of like try to like you know slowly wean you off or nudge you onto the digital systems right yeah and that's what they all do um and because they all move in that same direction they feel emboldened they don't feel like they're actually going against something They'll be like, well, you know, all the other companies are doing it, so we also feel entitled to do this as well.

49:31All right. But what they do in the process is they undermine that balance of power. All right. Which if you go back to my structural description of money, which has these layers with each layer built on top of the other layer, you'll see that the digital layer. All right. Is these sort of digital casino chips issued up by banks. All right. And if you know anything about a casino chip, you'll know that if you remove the ability to redeem that casino chip for cash, right, the casino chip ceases to have any meaning, right? So if I go into a casino and I know I hand over cash and they give me those chips and then I come back later in the night and say, can I have my cash back?

50:13And they say, you know what? No, I just keep the chip. I'm going to start to have serious doubts about what that chip is. Okay, so actually legally and sort of psychologically the digital units are predicated upon people believing they can be redeemed back for state money. Now when you have all these individual firms who are slowly undermining that ability to do that, it actually ends up screwing them over, right? Because the very basis of the stability of the financial sector is partly predicated upon the public believing in the second tier money. And this is the reason right now why there's a bunch of debates emerging about the so-called central bank digital currency, which is basically the central banks have worked out that there's a huge structural problem emerging in the monetary system because of the decline in the cash system.

51:02And they're having to now experiment with issuing a kind of new form of layer one digital money, which is causing a bunch of consternation because the banking sector does not want the state to compete with it via a new form of digital money. Well, let me add one more thing on this, because I think you're I think you do a good job of this throughout the book where what works in the UK doesn't necessarily work in India, doesn't necessarily work in Bangladesh. So I grew up in Seattle. I was born and raised in Seattle. And in downtown Seattle, they had this idea that because Europe widely adopted bike lanes, that Seattle should too.

51:46And so they did. They took a lot of the downtown city streets, put in bike lanes, got rid of roads. Now, to your point, it made the system more dependent on bike lanes. Now, here's the great irony to this quote unquote deemed transition, call it a carless society, kind of like a cashless society, right? What ended up happening is no one goes to downtown. It's a ghost town now. So in other words, we did all this work to make it carless and there's no use. So to your point, does the model that we're pushing cashless, is it, you know, this local aspect that you talked about is so important to the transactional nature of our economies?

52:28Yeah, I mean, in my metaphor, I'm using bicycles to refer to cash, right? Correct. Because remember the balance of power thing, right? If you have an all-cash economy, you have problems. If you have an all-digital economy, you have problems. Correct. So the interesting thing is to try and create the balance, right? So you're now pointing to the opposite extreme, like you've somehow destroyed the entire like motor industry or something. Correct. Seems implausible, but like it's a possibility, right? Well, it's a possibility, but because to your point about diversification, this applies to other like analogous things.

53:05So for example, and you touched on, I think you almost touched on this and I'd love to ask you this question. Can a, let's use your yuppie because your yuppie is a good picture, okay? That yuppie believes in a cashless society. At the same time, that yuppie believes that carbon is terrible. Aren't those antithetical statements? They actually have a huge logical disconnect, don't they? I mean, people are always contradictory, right? I mean, not all yuppies think that. There's lots of like right-wing yuppies. There's an embarrassment... Not in the UK. I mean, they're not even really left-wing. I mean, they're kind of like sort of centrist liberals, right?

53:46Yeah. So they're not like Marxists. Yeah, I agree. They're kind of like center left, right? which is what in the US you'd call liberal. So I mean there's an interesting thing going on politically like with my position is left-wing, straightforward. Yes, very obvious. Now interestingly though there's a very strong conservative support for pro cash stuff so actually a lot of my work has a cross political ideal. Actually like tomorrow morning I'm supposed to be going on to like GB News, which is one of the most right wing like news stations in the UK. Right. We're considered part of the new populist right.

54:32Right. And what's interesting that there's been these types of reshuffling going on into the political ideologies. Right. Where a lot of like topsy turvy stuff is happening. Right. And so a lot of kind of your sort of urban middle class. who are often on the sort of vanguard of technology tend to be sort of like centrist liberals, to some extent. Not talking about Peter Thiel, who's massively right-wing. But he's part of the Silicon Valley establishment who is very pro-digital payments. And very libertarian, to your point. In other words, there's this kind of big lie in tech that we're libertarian, we don't need the government.

55:14But again, if someone reads your book and thinks about the power structures and the incentives, No, no, they're very beholden to the government. In fact, they like the government system because it's a power structure that works for them. Isn't that fair? I mean, all of Silicon Valley is built upon government funding. I mean, it's basically part of the military industrial complex, right? And that's always been the history of Silicon Valley. But they would never admit that though. It's all their own ingenuity. No, of course not. It's not part of the ideology, of course. That's inconvenient, right?

55:39Yeah, I agree. But de facto, all the research that gave rise to technologies comes from radar research for military stuff. Exactly. All that kind of thing. So the reality, this is quite standard in most capitalist systems, is that the state and the market operate in complex symbiosis. I come from a more anarchist way of thinking of the world, which also partly comes from anthropology, which is that in sort of standard, like old school 1980s thinking, they try to make this distinction between the state and the market. it. But it's largely like an illusion, right? The states and markets operate in very complex interrelationships with each other, and they often can't exist apart from each other, at least at a large scale.

56:25So Silicon Valley has all this complexity. A lot of these guys who claim to be libertarians in Silicon Valley are basically more than happy to work for the state. Well, that's Palantir. You did a good job in your book explaining Palantir. It's government funded, They bought the equity. They got the client. I mean, it's all government funded. This is why politically, when you're looking at the cash system, it's quite complex because actually there is a lot of sort of, let's say, people from more humbler parts of the economy who at some points might be considered, you know, quote unquote, left wing, depending on the situation.

57:01But other points become what's called right wing, depending on the situation. Right. Sure. I don't like to sort of label people as being somehow having an essence, a political essence. Often what people have is like a situation that they try to respond to with by taking on a particular ideology. Sure. All right. And what's been happening recently is that lots of people who are actually quite sort of historically more on the left have been sort of drawn more into the kind of populist right. Right. And so my cash work, I would I see a lot of that happening. You have lots of people who are basically don't like big tech and big finance and stuff.

57:33right but have kind of now taking on lots of the sort of more like conspiracy way of thinking and they're like taking in lots of the memes that follow up or go around the sort of right and so actually a lot of people who are you know pro-cash have sort of taken that on and that's i got to work with that right um interestingly what's been happening recently if you're interested in this debate as a sort of updated version is that because many governments now are being pushed towards experimenting with CBDC, the traditional political right has suddenly got a new kind of vigor towards being pro-cash because they suddenly see this possibility for a state version of digital money.

58:19Whereas the historical thing we refer to as cashless society is actually a private sector. Correct. Outcome. So there's an interesting, like a weird mixing going on right now. So if I go to London and I see these, there's lots of these pamphlets you find being left around, but people who are concerned about cashless society because they can't use cash. And so they'll see these pamphlets that have been put out, which says, hey, it says lots of stuff that I say, right? Hey, this is a big problem. It's dangerous and so on. But then it will have a link to a website that tells you that the world's run by like a cabal of Illuminati and stuff like that, right?

58:58And that's what's happening, though. The conspiracy opportunists are very, very good at exploiting public fears, right? Without giving very coherent structural accounts of what's actually occurring, which is, again, this is politics. And so, because I think it's really interesting. Like, I think you're striking at an incredible thought in your book. As I walked away asking myself, back to the yuppie, it's like, okay, the yuppie wants to go cashless, but as you point out so well in your book that cash to society is effectively a massive accounting ledger you know recording the credits and the debits of the system overall that's ultimately fed in the dollar system to the fed and what that is stored with is it sits out on servers as you very well pointed out that are heavily guarded might add um but what powers those servers are energy and the most readily abundant form of energy in the world is carbon based so the person wanting to go cashless is actually like a carbon bull and they might be really worried about climate change at the same time.

1:00:02And it almost seems like it's, you know, it's, uh, it, it, it's not paradoxical. It comes off as though it's ironic, doesn't it? Sure. Yeah. But again, bear in mind, people have compartments in their brain that have different ways of processing different information. Sure. So, and this is why the same types of of like cognitive dissonance occur all over the political spectrum, right? So it's not particularly surprising. And there's often different sources of those sort of belief systems. Sure. So let me ask you a question on the card side, because I think this debate, it hits at exactly what you're getting at.

1:00:42So I don't know if you've seen this, but I want to mention it. So are you aware of what Bill Ackman's been doing with Visa and MasterCard here in the recent year where he's out funding a lawsuit against Visa and MasterCard for taking payments for porn websites, so like Pornhub, for example, because he's arguing that they are exploiting women and they're profiting from the exploitation of women. And I found this like an interesting case study in reading your book because on one hand I could argue that I could see how people could be censored or survey, like this is surveillance because ultimately the government could come in and say, I can see the transactions you're doing on your credit card.

1:01:24At the same time, on the other side of the coin is this exploitation of women that Ackman's pushing against. And it's interesting also because like Visa and MasterCard are involved, but American Express will not take payment for that. So how do you look at something like that where, you know, to your point, it's a very sensitive subject. There's obviously people that are gonna have views on both sides. How would you fall on a subject like that where there's this surveillance and yet at the same time humanitarian issue? Yeah, I mean, like, again, most things in society have these types of, like, contradictory elements to them, right?

1:01:58And this is partly why the balance of power arguments are important. How do I fall on that question? I mean, I personally don't have a particular, I'm not, like, a massive porn fan, but like I'm not like sanctimonious or like moralistic about it. Sure. It's not my thing that causes me the most like you know consternation in society. Yeah you don't wake up in the middle of the night worrying about it. If you're a person for example that's the thing that you really like exercises you then of course you could try to apply pressure to the monetary system or the payments process to try and stop that thing and historically people from all over the political spectrum could try to do this.

1:02:43This doesn't only apply to payments. It applies to divestment campaigns of all sorts. There's lots of moral groups that will try to stop companies buying tobacco companies, people buying shares of tobacco companies, or if you're more environmentalists, to stop people buying fossil fuel companies. The same principle applies. You can basically use these large-scale structures to try and strategically cut off flows of capital to particular parts of the world that you don't like. Sure. And that's the kind of debate that's like part of normal politics, right? And so on the porn one, I'm not going to have a particular...

1:03:20You don't got a dog in a fight. Yeah, yeah. Well, let me start asking another question. Yeah, but it's like part of the question is like, and again, this is tricky, right? In society, the reason why big monoculture digital systems are a real threat is that most societies, what we call at least social progress, depends on there being a zone of deviance, a gray zone. All right. So for example, let's take South Africa where I'm from. There was a time when, for example, interracial marriage was technically illegal. So if you are having an interracial relationship, you're thrown in prison. Now, from my perspective, that's a pretty damn massive case of overreach on the part of a moralistic, racist government.

1:04:20Sure. So in that case, the legal system does not represent my morality. So in many cases, people have legitimate reasons to stand against what is technically legal. But if you have these huge digital systems, what you tend to have is a kind of like this black and white. You suddenly have this power to monitor, at least you have a far greater power to monitor whether the current version of morality as encoded in the legal system is being followed. to sort of stamp out all that gray area stuff. But if you think about what's happening, you know, historically, a large part of what we call progress entails legalizing parts of those gray zones, right?

1:05:04This is kind of a long, long and turgid way of saying you want to keep a degree of like informality in your society. You don't want everything to be running through giant formal systems. Sure. Right? Because if you end up being on the wrong side of the people running the formal systems, And that could both be, you know, a kind of like right wing dictatorship or a sort of left wing dictatorship, depending on, you know, what your vision of a nightmare is. You basically don't want any of those parties to have that ability. Right. And this is why this whole balance of power stuff is important. Well, it makes me think of like Napster as an example.

1:05:38Right. Napster was a deviance in the market in the early 2000s. Right. It was effectively handing out free music via the internet. And to your point, that deviance was allowed for a season, then was prosecuted and put to bed. But interestingly, the deviance did cause people to ask the question, what if I could get my music from the internet? And today, we do. So to your point, that deviance had its path and had its ending. So let me ask you another question because, again, this gets into the incentives, structures, power structures, government, private sector, etc. How do you look at something like Section 230 then, right?

1:06:16Which effectively takes all the liability off of the hosting businesses or any business hosting internet content and pushes that away from them. In other words, the government's saying you're not liable. It's putting the government and them together. In effect, how do you look at something like that in this power structure? I don't have enough knowledge of that to have a particularly coherent opinion. Give me some more detail. Well, Section 230, it's a law that was written years ago, to your point earlier, where it protected Internet businesses from the content posted on their websites. Now, why?

1:06:57Because back then, the government wanted the Internet to proliferate. To your point, it was in the U.S. best interest. It was in many people's best interest, but the government could get information out to people a lot quicker by reducing the cost of proliferating data. Now, as we talked about, like say porn, for example, there are a lot of externalities to a rule like that, which is that now someone has a lot of power, a lot of cash, and not a lot of liability. Is that, to your point on kind of the discussion of cash versus non-cash, is that the balance that's needed in society? And I mean, even though like you pointed out, you know, you consider yourself a Marxist on some level.

1:07:37I mean, to be completely fair, Brett, I consider myself like your classic right wing evangelical Christian. And yet I would agree with you that the balance of power is out of whack, which is to your point earlier about this idea where you're finding people on the left and the right agreeing. Yeah. I mean, look, people are always going to disagree because the world is contradictory. and basically at some level everybody's right and wrong right so and that's a kind of a hard point maybe like convey but at some level I'm I'm not just like a Marxist I'm probably I probably have quite strong sort of like Buddhist types of principles or existentialist kind of principles which is basically like the world is fundamentally contradictory sure as a default starting point yeah right now in a lot of a lot of Western philosophy that's sort of kind of like people that weird people are out they don't quite know how to deal with that they're like well that's either one thing or something else isn't it it's like no the fundamental reality of the world is contradictory now if you really believe that right you might have political ideologies but you also prepare to understand that they don't represent the whole and everlasting truth of everything all right now in our current sort of like state of debate in politics you're kind of like disincentivized from having any kind of nuance or like contradiction in your thinking, right?

1:09:03Correct. Yeah. But that's how I see reality, right? And so I come from a Christian background and stuff. I'm not a Christian now, but like I come from a Christian background, right? I understand the dynamics of like Christianity. I understand the dynamics of conservatism and stuff. But I can understand in certain positions those things make sense, right? And sometimes it's useful to have that. And what I'm interested in when you're looking at systems level stuff is, again, how do you enable human beings to be contradictory human beings? And a lot of that entails basically creating these types of balances of power and not attempting to try and create final states of being.

1:09:50Now, if you think about, for example, like Silicon Valley ideology, a lot of it's about creating, if you like, sort of a singularity thinking. Like Ray Kurzweil, for example. We will all become a gigantic kind of like super intelligence that will somehow like transcend all boundaries. I mean, it's total BS, right? It's like a unhinged... California is the model for the world. Yeah, it's an unhinged ideology. technology all right and it will very quickly butt up against the reality of of humanity which is that we are not um sort of like digital gods existing in a cloud we're like physical beings that walk around the streets i agree well not only not only physical beings but to our discussion just a second ago we're physical beings that are spiritual which is what the technology can't ever be which is part of its problem so so i'm gonna i'm gonna quote a line from your book because i This is touching right at what you're getting at.

1:10:45I mean, this is just perfect. The dollar or cash allows for humanity. Quote, the notes roam without concern for what neighborhood they find themselves in. They can be rolled up to snort cocaine in a fashionist's soiree or be used to buy nappies in a corner store. The note is non-judgmental, a kind of every man serving rich and poor alike. for anyone who distrusts institutions that do not automatically protect them, cash offers some breathing room, end quote. Now I'm teasing when I say this, but were you speaking from experience on all these things? I mean, I'm personally not really a cocaine fan.

1:11:24Um, but yeah, I mean, I'm, I'm, I'm like, uh, to some extent, yes. Um, I'm also, I'm not very sanctimonious about, I'm not very moralistic about most things in society. Interestingly, if you want to get real about this in the public debate, a lot of the anti-cash people who are a typical innovation journalist or whoever it is, that sort of has taken it on, those people love to have the ability to use cash to buy illegal substances. Correct. Correct. They work great in black markets and gray markets. Yeah. They basically, people like black markets, right? And you can be as moralistic as you want about it, but it's a reality.

1:12:13You can try to stamp out black markets, but they'll just spring up somewhere else. For example, they're springing up heavily with all the crypto systems, right? So a lot of these types of ideas, the ideological ideas, are often sort of like out of touch with not only the reality of human society, but the reality of the very people who channel them. And that's kind of like a subtle point. A lot of people who claim to believe in digital ideology, often when you watch them and how they actually act, they don't. They actually like a lot of non-automated stuff and they rely upon a lot of non-automated stuff.

1:12:50but they happen to have some kind of incentive or some kind of like a way of thinking about things that cause them to romanticize sort of the digital world and so yeah I'm not there's definitely a bunch of like gray activity that occurs with the cash system just like with any systems like the digital systems as well and I'm not I'm not out there to be like I don't believe that society should try to eradicate all of that. You can try to minimize that, right? But you never want to try to eradicate that because when you try to eradicate, um, all forms of deviance, it's basically like, you know, you know, you, you try to get rid of some kind of like bacteria in your stomach by, you know, dropping some, you know, trying to nuke it with some very powerful antibiotic.

1:13:38And then you like destroy all the positive bacteria in your stomach as well. Yeah. Well, it's a, it's a, it's, it's Newton's third law for every action. There's an equal and an opposite reaction to your point yeah and to finish that metaphor actually the toxic bacteria then just mutates into a new form so you're not you don't even achieve what you're trying to achieve all right and this is what the kind of stuff you know i often come across these people you know i once for example in like an fbi agent um in italy was going on this big like rant to me about like how the scum in society use cash all right um and in his vision like you know um digital systems who could be like a kind of like cleansing agent to clean the scum out of society well because he has no sin obviously he's sinless right yeah he's basically like it's like a fascist viewpoint right but like he you know he is it's it's not only is it wrong but it wouldn't even work right and this is this is let's pick up on that because you're i think you do a really good job explaining that this is different in different hands and different governmental hands um how do you see a cashless society in America versus your view of a cashless society in, say, China?

1:14:50Well, that's a big question. I mean, like the, I mean, in terms of how it would play out. Yeah. In other words, like, you know, what would be the government's interest in China that's different than the government's interest in the U.S.? Well, I mean, you've got fundamentally like different political structures in these countries, Right. Like, you know, both China and the US are part of the two biggest players in the global capitalist system. All right. One of them happens to have a much more centralized structure. Right. That has much more direct control over its corporations. And the other tries to sort of like pretend that it doesn't like the sort of separation between the corporations and the state.

1:15:30Right. But in reality, the US is constantly like promoting its corporations overseas constantly. Right. So both of them are locked in a kind of like kind of great power sort of struggle with strategically involves the state trying to promote the corporate interests at some level. Right. But do you look at surveillance and censorship the same way in each country? No, no. So what I'm saying is there's different part of the same overall structure. Right. I'm not like a I'm not like a kind of bog standard sort of libertarian that sort of somehow imagines the U.S. is a free country or not libertarians necessarily do that but sort of romanticize the u.s somehow and then look at look at china somehow being the sort of epitome of like everything that's wrong with the world they're part of the same structure overall right one has much higher levels of centralization at least explicit centralization um but then again the sort of morality or the population in china is very different as well all right so there'll be much higher levels of surveillance in china the de facto are much higher levels of surveillance in china um but But if you go to China and you sort of like poll people, they don't respond in the way you think they're going to respond.

1:16:39Right. There is be a certain sort of emergent kind of progressive part of the middle class that does have values similar to the U.S. perhaps. There's whole sections of China that basically say, OK, it's fine. Right. The government's kind of like a daddy that sort of like helps us progress in the world. Right. And so that's the situation right now. I think going forward in China, there's going to probably be an emergence over time of a kind of like democracy movement. But right now, there's a very heavy like state intervention. So they won't even admit Tiananmen Square. I mean, like you can't if you can't even find it.

1:17:13Of course. And so, yes, any kind of new digital technology offers new vectors of power for for the current government in play. right in china and this is one of the big concerns about digital technology more generally is that historically with states states are like you know kind of to some extent they're constituted by the people that make them up all right um yeah i mean so one of the one of the problems in like sort of very let's say crude libertarian thinking is that the sort of state is imagined almost like an alien invader that comes out of space and sort of enslaves you. All right. And it's imagined that it has - But you vote for him every year.

1:18:01Yeah. But you sort of imagine that it has an external power source. Like it's getting its power source from its home planet somewhere and then it's using that to like enslave you. Right. In reality, the state's power source is you. All right. And so there's a structure that you're part of and you don't perceive yourself that necessary have power within it. But of course, the politicians themselves often don't perceive themselves to have absolute power either. There's a big sort of structural process going on. And so to some extent, and even people like Machiavelli, and they're sort of writing about states, note this in the book, The Prince.

1:18:37It's like, you have power, but you don't have that much power. Don't overplay your power, because then your base will turn on you and remove your power. We could find out if Putin's doing that right now, for example. Yeah, exactly. Right. And so, so the, but you know, the question, and that's historically the case, you sort of believe that like to some extent, even with authoritarian systems, there are these sort of processes going on where there still has to be some degree of accountability going on. And one of the big concerns with the proliferation of digital tech more generally is whether rulers who happen to find themselves at the top of a kind of pyramid structure get new and far more powerful tools to maintain that position, which they didn't have in the time of Machiavelli.

1:19:23all right well to your point i mean like how is i mean think of these bitcoin transactions that the fbi or the u.s government are able to track now that they weren't three years ago or four years ago or five years ago yeah yeah sure lots of the you know this thing that goes back to the whole kind of like connection between state and market and in reality if you look at a country like the US, all the big tech firms and stuff benefit hugely from the sort of underlying structure of like the US and its military and stuff. Right. And where and the US government simultaneously benefits hugely from some of the new technologies of the tech firms are building.

1:20:08Agree. And a lot of those and a lot of those technologies are pushed forward, not because there's some avert agenda on the part of the tech company to like enslave you it's because they make profit right by kind of exploiting your short-term interest to the detriment of your long-term interest so they'll be like oh well you can save a little bit of time with this thing here and then you sort of become as you sort of adopt that and especially if you're in like a frenetic society you're very prone to sort of adopting these sort of short-term solutions but as you do that they ratchet up the level of dependence in the systems now you basically can't operate unless you use these systems and once that happens you then have this ability for example states to then exploit that right so all right now all the frontiers like smart homes and smart cities and like quantified self where you got like you know little wrist fitbits and stuff all of these are basically new forms of like digital technology reaching into the smallest parts of your life and once you become dependent upon structures like that.

1:21:13For example, imagine an insurance company says, you know what, we're going to up your insurance premiums unless you wear a Fitbit to give us data. It's such a pain to use those apps. I totally agree with you. It's just my mind blows. So because also you talk about like some of the tech libertarians, like the ideas of seasteading and kind of building your own civilization as though the US government's going to let you go out into their seawaters and, you know, let you put your island up, which you give an example in the book where someone tried to do that and that got shut down pretty quickly. Let me, let me, um, cause as you could probably tell, I could go on for hours on this.

1:21:48Cause I think it's an incredibly fun debate, an incredibly awesome dialogue for thinking about like to our discussion earlier, it is human. Um, we're not algorithmic. We, we don't think of ourselves perfectly as we are. Um, and yet we're spiritual at the same time, which is an oddity in and of itself. So from your book, is there anything else that we haven't discussed that you do think should be mentioned to our listeners? Maybe in just very brief terms. Part of what the book is doing is to try and prevent a more dystopian version of our system emerging. Gotcha. So I have an inherently sort of critical view of these sort of large-scale corporate capitalism, right?

1:22:36But, and I'm not like romantic about sort of cash, for example. I don't presume that somehow it's all like holy and so on, right? What I'm interested in is saying, look, this is a system we have. How do we prevent a worse version of it emerging? All right. And part of that involves protecting these balances of power saying, you know what? Like protect the cash system. It's important for our humanity, right? But it doesn't necessarily have an idealistic part to the book. I'm not sort of like being like, oh, I have some utopian plan for how to make society like ideal or something. Right. I agree.

1:23:12And so, but one thing, if I was to channel some of my more idealistic side, which is maybe for a different book at some other time, I'd say one of the things I'm particularly interested in is, you know, the realm of alternative currency. And in the book, I do look at things like Bitcoin and the sort of crypto movements, but I'm very skeptical about, um bitcoin for various reasons what bitcoin sort of tried to do is to sort of set itself up as a kind of antithesis to the existing system all right and in broad terms the two key features of our multi-layered money system is that it's hierarchical um we might say centralized to some extent sure and it's also dynamic it expands and it contracts all right and if you look at bitcoin and it sort of set itself up to attack both of those.

1:24:05Say we're going to try to create some kind of non-hierarchical decentralized system, but it's also going to be static. It's not going to have an expansion and contraction. It's not going to pulsate. It's this very sort of static view of money. All right. You know, this is Veracca's hard limit on the number of units, and it's quite like puritanical, actually, right? It's got a very sort of like austere way of thinking about the world. and it's sort of set up as an apparent sort of antithesis to the normal monetary system in reality what's happened with bitcoin is it's sort of been just kind of absorbed into the standard system as an object to be traded like any other right um and i'm actually interested in the realm of like experimentation with money about how you sort of hybridize elements from both of those systems so to say like okay can we have um alternative currency that's moves away from the static vision of bitcoin the kind of hard money way of thinking but maintains the sort of decentralization aspect so so sort of more horizontal kind of like credit systems with people issuing ious and stuff and so my more idealistic side works on that kind of stuff to say you know um and then i'll have a piece coming out about that soon.

1:25:27And I think it's quite interesting. So I would encourage people to sort of get involved in sort of thinking about alternative currency, but I'd sort of also like warn them against getting maybe captured by the Bitcoin narrative, which has been quite sort of hegemonic in the alternative currency space. There's a lot more interesting things happening. To your point, there's a framework issue. And I think that's one of the better part of your books is your book is that you explain the just the pure framework shortcoming. And by the way, your use of the word puritanical, I find very interesting, because our dollar bill was created by Puritan Massachusetts to effectively step away from the coinage rules of the King of England at the time.

1:26:14Dror was speaking about that. So yeah, so I find that to be interesting. This has been just a fabulous conversation, Brett. I've totally enjoyed it. I was going to ask you, where can our listeners follow you going forward? I have a newsletter, which is brettscott.substack.com. The title of the newsletter is Altered States of Monetary Consciousness. So I basically use that to sort of, it's a kind of a, you know, a kind of quite fun, but focused newsletter on thinking differently about money. Sure. And so it has some quite big pieces on there where I help people sort of understand CBDC or understand, you know, cashless society and stuff like that.

1:26:57And I put out pieces from time to time, but sort of quite irregularly. But when I put them out, they're quite big and sort of well, quite deep pieces. so that's worth following I mean I'm also on Twitter Twitter's become pretty I feel like it's gone downhill what's your Twitter handle? it's called Suitpossum it's a bit of a long story behind that name S-U-I-T-P-O-S-S-U-M awesome but yeah I am on there and I do try to respond to stuff Brett this has been an absolute pleasure for our podcast listeners go buy a copy of Brett's book, Cloud Money, to think about the players and our current financial system and what their incentives are.

1:27:43Brett's book will teach you a lot also about other systems outside the United States via his experiences and people he's met. And he might even teach you who the bad actors may be. If you've enjoyed our discussion with Brett, go to Apple, Spotify, wherever you get your podcasts. Give us a review rating, a recommendation for other podcast listeners. For our existing listeners, If you have a great book that you'd like to recommend, email podcast at SmeadCap.com. That's podcast at SmeadCap.com. You can also send suggestions to us at Twitter on our handle at SmeadCap. Thank you for joining us for A Book With Legs podcast.

1:28:19We look forward to the next episode. Thank you for listening to A Book With Legs, a podcast brought to you by Smead Capital Management. The material provided in this podcast is for informational use only and should not be construed as investment advice. You can learn more about Smeet Capital Management and its products at SmeetCap.com or by calling your financial advisor.