#Bonus  – Exploring the banking crash with Grace Rachmany, in which I ask all the questions I never asked before…

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All you ever wanted to know about banks, crashes, the weaknesses in the predatory capital system and quite how completely we’re being lied to.

Following our podcast with Grace Rachmany, we stayed online and talked about the banking crash. At the time of recording, we only knew about Silicon Valley Bank – Credit Suisse hadn’t gone down yet – but we talked about the nature of finance, of cryptocurrencies, of the totally unsustainable nature of the economy. This is the kind of conversation that I often have with guests after the podcast is over. Usually it happens off-air and I wish we’d captured it. And this time, we did. So if you’re interested in the two of us riffing in a rather less structured way than the usual podcast, this is it.

In Conversation

Manda: With any luck at all, you have just finished listening to the first part of my conversation with Grace Rachmany, where we explore the Priceless DAO, what it is, how she got to the thinking that brought it about and where it might go. And if you haven’t, I totally recommend that you do because this is the bonus podcast. This is the extra bit where we held the conversation afterwards and for once I had the intelligence or wit or forethought or whatever you like to call it, to hit the record button while we were just jamming, really. Just actually throwing ideas around, which is what I think I’m doing in the podcast. And it’s amazing how much more fluent it becomes when I’ve stopped recording. So this one really is me exploring the depths of my ignorance with someone who really gets it and who knows where we’re going.

Manda: It’s quite geeky. It’s taking us quite deep into ideas of finance and economics, but we’ve explored those a lot on the podcast because I genuinely believe that the current financial system, together with the current governance system and the current media system, are at the heart of the system. And if we’re going to change the system, we need to replace them with something better. So this is me trying to get my head around stuff that I’ve spent quite a lot of time previously reading about, but never had the opportunity simply to sit down and talk with someone who really knows what they’re doing. So this is it. People of the podcast. Please welcome someone who really does know the heart of cryptocurrency and has views of how we can step forward with it and without it. So here’s Grace Rachmany of Priceless DAO.

Manda: So you said just as we closed that maybe the collapse of the crypto banks is important, and I didn’t know that it was. So just for my own interest can you can you fill me in on why why that might be the case?

Grace: So they’re saying it’s the crypto banks. But first of all, the crypto banks that imploded are actually centralised organisations. They’re companies that are handling crypto, which is very different from the way I handle crypto, which is if I were to send you crypto from my wallet to your wallet, there would be no bank in the middle. Okay, so these already are banks that are using government structures to exist. The second thing is the bank that collapsed Friday is Silicon Valley Bank. That is not a crypto bank. That’s just a bank bank.

Manda: Okay. I’ve never heard of Silicon Valley Bank. Is it quite a big bank? I mean, Silicon Valley, it’s probably got a lot of people with a lot of money.

Grace: It’s got a big industry using it and it’s one of the top 20 banks in the US, which, I don’t know, like the top three are enormous. So I don’t know, if you’re number 4 or 5, if that’s big. But that’s big, right? One of the top 20 banks in the United States. They’re not a small regional bank. That’s big. If you’re a Start-Up and you’ve got your money there, now you can’t make payroll. Now, how many start-ups in Silicon Valley can’t make payroll next month? Okay. So this is not a crypto bank.

Manda: So this is why I was seeing things floating past on Twitter saying we have to bail out that bank, because otherwise large proportions of one of the big states in the US are basically going to have no money. 

Grace: And it’s not just them. I mean, I read a Twitter thread from a Start-Up founder in Ohio. She said she had kind of seen it coming and she had made a bank transfer on Thursday, which somehow did not arrive in her new bank.Oops.

Manda: But okay. Grace, let me take a step back on this, because I do exist in an MMT world. I became a kind of modern monetary theorist while I was going through the regen economics at Schumacher. It really restructured my idea of how money exists. So current money. Let’s just talk in dollars because it is a fiat currency. It’s no longer linked to a gold standard and it’s a very, very tiny, like 1 or 2% of it is actual circulating physical bits of money, and the rest is all people with cards and or money shifting backwards and forwards between banks. And it’s all imaginary. They make it up, they made up billions, they loan it into existence, and then they charge interest. So they’re basically making money out of nothing and then selling it to us at a profit. And that’s why the the economy needs to keep growing, because that interest has to keep being made to come back. Seneca didn’t understand that when he loaned 26 million Sesterces to Britain and then wanted it all back with interest. Because where do you get the interest unless you’re pouring more sesterces in. And so there was a revolution, because basically he was taking people’s kids as slaves in lieu of money. And the banks don’t take people’s kids as slaves in lieu of money, quite. We could argue that, it’s a bit close. But I don’t understand first of all, how a crypto bank, because the point of crypto is that it’s decentralised. So can we take a step back and look at what is a crypto bank doing if the point of cryptocurrency is a decentralised organisation. And then how does a bank collapse these days? They could just make more money. 

Grace: Okay. So those are two completely different things. So what’s a crypto bank? So here’s the thing about crypto, right; I’ve got a wallet like here on my phone. If I lose the passwords or the keys to it, it’s lost. It’s lost.

Manda: Or if somebody steals your password and keys, they have it.

Grace: It’s gone. Now, what if I go to a crypto bank? Okay, I got to give them all my identification like a normal bank. But if I lose my password, they take care of me. That’s one. The other thing is, if I want in and out of dollars in fiat currency, the Fed wants to regulate me and so they go through these crypto banks.

Manda: Okay, So they’re kind of exchange centres for Bitcoin to dollars or whatever. Ethereum to dollars, whatever. 

Grace: Right. And I accept cryptocurrency from my clients, obviously, I’ve been in this industry for five years and I report it. I write an invoice from my company and my company can’t accept it, so I have to accept it as a person. So that’s always like my salary is the crypto, because there’s no really good regulations of what it means for a company to hold crypto.

Manda: Because nobody accepts taxes in crypto. If they accept taxes in crypto, then it becomes a fiat currency.

Grace: Mostly because regulators are really slow, like they just haven’t figured it out. You know, here in Slovenia I actually had for a while a business account and they’d be like, Yeah, but the number of euros in there isn’t what it should be. And it’s like the accounting system in the European Union can’t quite figure. What do you do if I’ve got more? Like I held it in Bitcoin and I’ve got more than they paid me even though all the invoices were okay. The regulations just didn’t keep up. It’s nothing malicious. It’s just like the regulation didn’t keep up. I mean, there is a malicious side of it that I’m very happy to talk about, but it sounds like conspiracy theory. But part of it is is the other conversation. So that’s that’s about that. Now the crypto bank that went bankrupt, FTX, a couple of months ago, how did they go bankrupt? So they’re a little bit like BlackRock. I don’t like to say this, but when other cryptocurrencies were having trouble, they bought them up. Just like when when a lot of companies on the stock market were having trouble, BlackRock bought them up. So if you want to look at what’s similar to FTX, it’s BlackRock, it’s not Coinbase. Coinbase is one of the most organised centralised organisations. They keep their reserves, they’re very careful. They’re a bank. They operate at a higher level of integrity than most banks, because they’re in the crypto industry and they try to be really careful. But BlackRock, they can invest in all kinds of junk stocks and that’s what FTX did and that’s why they went bankrupt. And I hate to tell you who’s next. But if you look at the stocks that BlackRock is holding, some of them are really solid, like, you know, like the energy stocks. But the energy companies have been losing money. So what’s BlackRock holding? I’m a little worried.

Manda: Ok, but let’s get back to…

Grace: That’s what a crypto bank is. Yeah. 

Manda: And then so Silicon Valley Bank has gone down. Has it gone down related to crypto then, or am I just seeing this in crypto threads because it’s in Silicon Valley?

Grace: You’re seeing it in crypto threads first of all because it is in Silicon Valley, but also because there are a lot of people in crypto who are quite joyful about it, because if the dollar tanks, your Bitcoin is going to be worth a lot. And the bitcoiners in particular, and you know I can’t say that I don’t have some small amount of glee, because here are these banks that have been corrupt forever. And they take out, you know, the Silicon Valley Bank in particular, money was cheap in terms of interest rates. And then these start-ups would borrow all this money. And if you didn’t give them a better deal, a better valuation, than the other neighbouring bank, then they took the loan from the neighbouring bank. And so there’s a whole inflation of the kinds of loans that Silicon Valley companies could get, because there’s competition between the banks, because the interest rates, you know, they want to get a better interest rate, right? So that’s what happens. It’s just a regular bank loaning money to the most dicey types of businesses in the world. And one of the things that I think happened, again, I didn’t really get all the details because I wasn’t super interested. But they they took out a lot of government bonds, or mutual funds, something like that, that are very low risk, but they pay back not right now. And so there’s a cash flow issue. You need the cash now, but that bond doesn’t pay back for a year or two. So you might have very low risk investments, but you don’t have the cash flow if the money is needed right now. Which I believe is one of the things that happened there. And it also affected one of the Stablecoins, which is Usdc. And I’m not sure exactly what the correlation there is, but there’s a correlation between the Coinbase Usdc or a Circle Usdc and Silicon Valley Bank. Maybe they did their banking there. So there’s something that started disrupting what’s called the Stablecoins in the crypto. So everybody’s banking with everybody and so one falls, the other falls. Anything that is in the centralised group is going to be dependent on that. Bitcoin isn’t, because it’s not banked, there’s no bank of Bitcoin, there’s nobody holding your Bitcoin deposits. So that doesn’t get influenced the same way.

Manda: But FDX was holding Bitcoin, was it not? FDX was a bitcoin trader?

Grace: Yeah, they’re holding FDX, but it’s not something you can default on. It’s like whatever its value is, like a dollar is a dollar. If you’ve got $1 as your deposit in the bank, let’s say your Silicon Valley bank, you’ve got X billion of dollars or million of dollars. Those are dollars that you’ve actually got. Banks don’t usually have the dollars because they’ve invested them. They’ve got a bond, not a dollar. But if you’ve got a Bitcoin, a Bitcoin is a little bit more like a dollar because you could sell it right now.

Manda: And also bitcoins have to be mined and that takes huge amounts of energy. Whereas as far as I can tell, and feel free to correct me, banks basically make up money out of nothing. All they need is a reason to loan it. We believed that Company X was going to make 100 billion, so we made up 100 billion and we gave it to them and oh, they went bankrupt. Never mind. That’s okay. We’ll just write that off and make up another 100 billion. I mean, it’s like money is only tangible when you’re much, much lower down the food chain to the point where the money in your account is the money. You and I cannot make up more money out of nothing, to get ourselves out of a financial hole in the way that the banks can. So I don’t understand how a bank goes under now, when it could just create more money. There doesn’t seem to be any restriction on how much they can create. The loan to holding ratio was abandoned a couple of years ago, I thought, under Trump, 3 or 4 years ago now.

Grace: Well, they can’t just make up money and give it to you, they have to loan it to you. So if you go to the bank and you make a deposit, you deposit your money in the bank. You give them 100 beans, whatever type of bean you’ve got, they call it a deposit. They don’t hold that in the bank, they loan it out or they invest it or whatever. And when you go to ask for that money back, it may or may not be liquid. Probably not. Because they’re not holding your money. You think they’re holding their money, but they’re not.

Manda: But I recently got a book by a guy called Paddy Le Flufy, who’s going to be on the podcast. And he’s created a How we can change our currency, which is lovely. It’s called Beyond Tomorrow. But he points out, and I remember because I was reading it yesterday, banks have not been limited. We all think I loaned my money to nice, friendly Toytown bank up there. I give them my 100 beans. They then lend out ten lots of beans to ten different lots of people, get in some and get it back. That stopped happening in about 1686 when the Bank of England was set up.

Grace: Correct.

Manda: Now they take my 100 beans and they go, Thank you. And it vanishes into a great pool of 100 million beans that they’ve created out of nothing because they’re not actual beans. They’re just numbers on a spreadsheet to loan out. They’re not limited by the savings of the people who save with them.

Grace: That’s correct. But if I go and I want those beans, okay, they’re my beans. I’m not asking for a loan. I put 100,000 beans in there. Give me my 100,000 beans. I saved up. I carefully saved up. I’m ready to buy a car or a house. Please give me my 100,000 beans. They’re not holding those beans.

Manda: But they don’t need to be holding them because they’re not actual physical beans. Yeah, but you come and say, I want my 100,000 tokens that I gave you. Why not?

Grace: No, they can’t. They can’t. They’re not allowed to do that. They’re allowed to invent beans. That’s where the hard part is. This is why your GDP is so important. They can’t give me beans they don’t have. They can only give me the beans they have, or they can give me a loan. Now, if I say I don’t have 100,000 beans, I want to buy a house. Can you loan me beans? Then they can make them up out of nowhere and put them on their balance sheet as a loan, which is like, I owe them money. It’s like actually an asset that they’ve got. Now they have 100,000 beans. Actually, they’ve got 110 or 120,000 beans that they didn’t have before because they’re charging me interest. But if I say give me my beans back that are my beans, they are not allowed to write that up. They cannot make that up.

Manda: But there used to be a limit. Every bank was limited by you can only make up a percentage of the amount that you’ve taken in as savings. And that limit was broken before the financial crash. In fact, I listened to a number of people who say that it was one of the causes of the financial crash, which was a long time ago now. So banks have not been restricted to multiples of the savings. Such that it is likely, as far as I understand it, that less than 1% of the money flowing in the banks circulatory system is actual savings. How can they possibly run out, to the point where ten people come and go, I want my 100 beans back and they go, I’m sorry we’re out of beans today. How can that happen?

Grace: Well, where do you think those beans are? They’re not holding them in the bank, they’re holding them in a stock. So if I went in and 20 people went in and asked for all their beans. But there are no beans in the bank. They’re in long term bonds, like I was saying. They bought these government bonds that are supposed to pay them that money back in two years time. Okay?

Manda: But you want your beans today.

Grace: I want my beans today. Right. It’s just like if you bought a house with that money and I’m like, Listen, give me the money back. You’re like, I got to sell the house before I can give you the money back. It’s the same thing. They’ve got these bonds.

Manda: Okay. So they have no liquidity.

Grace: They’ve got these bonds and they have no liquidity. And those bonds might get defaulted on, which is what happened with the housing crisis. Like they’ve got these municipal bonds that are completely safe, right. What happens if the US government isn’t completely safe? What happens if that bond is in a company that goes bankrupt? That bond could go to zero, right? So they have a bond which is theoretically worth some money sometime in the future.

Manda: So the government as the lender of last resort, I certainly saw stuff coming out of the UK government going, right, we need to rescue this bank. Like the UK government needs to rescue the Silicon Valley Bank. Let’s not worry about why they think that’s necessary, but they can. It’s a government. Governments can make money out of nothing. They do. They did it in the pandemic. They did it in the financial crash. And they might have done some fancy accounting, which, if we look at it in detail, was incredibly stupid. Some of our government managed to make money by selling itself bonds on which it then charged itself interest which was beyond stupid. And then they realised they didn’t have to, So they decided not to charge themselves interest and thereby got a few more billion. But leaving aside that the accountants are clearly quite linearly thinkers, the government can make money out of nothing, give it to the bank. So the bank, provided we get to the point where there are too big to fail.

Grace: So that’s not exactly true. Okay. That’s almost true. 

Manda: Okay. Count me through the bits that aren’t.

Grace: They can and if they do that’s called the inflation rate. So the government is allowed to print a little bit of extra money. I don’t know if they have to go through legislation, but that’s the inflation rate. So any money that the bank actually prints out of thin air is inflation. So that money is printed beyond and that is less than 5% a year. All that other money that that your banks printed out of thin air is loans and bonds. So the banks lent the government money, if you can believe that.

Manda: The Bank of England.

Grace: At interest rates. Or the Chinese lent the money or they got bonds from other. So all of that money that they printed out of thin air, 95% of it, they didn’t print out of thin air. They took a loan just like you and me have to take a loan, from the bank, that doesn’t have any money, which is really weird.

Manda: But yes, and we get to the idea that inflation is happening because we’re on this weird pyramidal Ponzi scheme. Because I now live in a house that if you look back through the deeds 30, 40 years ago was sold for £500. And I’m telling you, we did not pay £500 for it. But the house is the same house. You know, the GDP of the entire world is in trillions now. There’s not more stuff, particularly of actual value than there was 30 or 40 years ago when the GDP of the entire world was in billions. So we’ve created a lot more money than we have actual stuff. So the government, if it chose, could buy its own bonds back off the bank and then the bank has liquidity tomorrow and the government just has bonds back, which it then either sells to somebody else or just hangs on to.

Grace: So you understand this is all one big Ponzi scheme. It’s like I lend it to you and you lend it to me. We lend it to each other. We pretend it’s there. Now, in some way that’s great because money is just a symbol system and people can print their own money, whether it’s the Bristol pound or the Brixton pound or you know. There’s a really hysterical story about Ireland in the 70’s, when the British said no more banking system. And so all of the companies in Ireland would just pay people their paycheques in denominations, like instead of £100, they would be like ten, 20, 30, and the pubs would act as the cashiers for all of those funny things. And if they didn’t have exact change, you got a pint! Which was fine.

Grace: The economy just kept going. And then eventually the Brits let the let the Irish have a bank again. But anyway, some people say it was the best time.

Manda: Because they saw it was working without. And there’s nothing worse than a country that doesn’t need a banking system because you can’t control it anymore.

Grace: Plus, they’re Irish and they’re all drinking all the time, having a good time in the pubs. You can’t have people laughing and having a good time either. But let me get back to this thing about the bailing out of the Silicon Valley, because this is where it gets interesting, right? The bailing out. I haven’t been following perfectly, but there were some folk speaking about 1 to 1 backing. We’re going to bail out the people, not the bank, with 1 to 1 backing. 1 to 1 backing of what you might ask. Now, I’m not sure that the infrastructure is in for this yet, but this is what people have been talking about with central bank digital currencies. And I think Australia had a rollout of a trial, central bank digital currency is more or less what you have in China. And the idea is like this. Right now, when you spend money on your credit card, like you said, it’s not real. It’s just these digits. Now, when you spend money on your credit card, your credit card knows everything you do, where you go, your phone knows it, Google knows it. Like all these corporations know everything that you do all the time. And guess who doesn’t like that? The government doesn’t like that Google knows more than the government.

Manda: But Google sells the information to the government anyway, so why are they worried? But yes, yes, technically.

Grace: Yeah. Right. Well, of course. And they’ve got this going on. But what if the government could get that directly? What if the government issued the money to the banks? What if the government didn’t issue the money to the banks? What if the government gave you a crypto currency in your phone and you didn’t need a bank? And now the government is the bank? The government would owe all that interest to the bank. The government would have just as much money as Google or as your credit card company does. That would be nice for the government. That’s what a central bank digital currency might be, if the government said, look, we’re going to issue central bank digital currency, $1 of central bank digital currency, for every dollar in circulation. Everybody in a bank account, tomorrow it all magically moves over to this new thing, 1 to 1. Okay, What’s wrong with that? In fact, you should trust your government more than you trust Google.

Manda: Other than the government now knows everything that you’re doing.

Grace: You might not.

Manda: I don’t trust either of them as far as I could throw them.

Grace: Well, I wouldn’t trust Google as far as I could throw them. Right. 

Manda: No, exactly.

Grace: Okay. That’s surveillance. But surveillance is interesting. They could know everything you’re doing. But what if you could have programmable money, which is what blockchain is. What does that mean? Now, tracking you is one thing. It’s another thing to say, Oh, I’m sorry, that transaction doesn’t pass.

Manda: We don’t want you to buy X.

Grace: And like, let’s say that you needed to ration fuel or you wanted everybody to be vegan. Not that that’s anything that the World Economic Forum has publicly stated.

Manda: No, but you can imagine it would come in. Yeah.

Grace: And so now I’ve got a programmable money, that the government controls and you go to the thing and you want to buy such and such and they’re like, I’m sorry, we don’t have an agreement with China and you can’t buy that thing on Alibaba that you wanted to buy, because we don’t allow you to ship things from China, because we’re protecting our local producers.

Manda: Or we’re straight into Handmaid’s Tale where, I’m sorry, you’re a woman, you have no economic power. You just have nothing left to spend. We just decided to stop that thing happening.

Grace: Or you’re this colour or you said something politically incorrect or whatever it is.

Manda: Or facial recognition decided that you were looking quite angry this morning. So we decided not to give you any money because you’re going to get much calmer when we’ve done that. Right. Okay. This is not good.

Grace: And so that’s why I’m worried about, like as soon as I saw that, we’re going to back it 1 to 1 thing, I’m like, that does not sound good. Because they don’t have the money in their treasury or in the FDIC or anywhere. And if they say we’re going to back it 1 to 1, that may mean reissuance of the currency.

Manda: Right. My worry with Bitcoin and Ethereum in both cases, and I may be wrong in either, is that each of them requires significant input and therefore excludes, in Bitcoin it excludes anyone who hasn’t got a computer of the size that can mine bits. And in Ethereum you don’t have proof of stake, you don’t have Ethereum. And I’m aware that Reiki and others are looking at systems of currency that have different creation criteria. If you were to design a currency tomorrow, that would actually work, it would be reputationally based. Did I understand that correctly from what we were talking about with Priceless?

Grace: Well, again, I don’t like to confuse the money and the reputation. Like when you say currency, if you mean money, to me the whole idea of this exchange thing is it’s really a bit inhumane, but we need it for now and we’re probably going to need it for some transition period. And I would say it doesn’t really matter how you issue your currency. If you think about money or any currency, it’s born, it has a lifetime and it dies. And if it has an exchange rate to any of the other fiat currencies, it doesn’t really matter as long as for the lifetime that you need it, it works. It really doesn’t matter.

Manda: It matters how it’s created, though. Because I can’t make up Scott currency and decide that one one Scott pound is worth 100 English pounds and that I have a million of them. Because nobody else is going to agree with me on that. So it matters how it’s created, how you establish the linkage and who has it and who decides how you get it. Yeah.

Grace: And that’s connected to your supply chains. It used to be the local market would write down on a piece of paper and when payday came, you paid them. And so it really depends how badly your supply chains are destroyed. Bitcoin is probably the most reliable at this point. And the transaction fees with the Lightning Network aren’t very high and you can use it instead of money. And if I were going to just tell a regular person what to do then, Yeah, probably Bitcoin is your best bet. Get a Bitcoin wallet on your phone, right.

Manda: Just buying bitcoin with actual fiat currency. But actually mining bitcoin is a way of making money out of nothing, but it requires huge amounts of power, as I understand.

Grace: Yeah, it’s just for big companies at this point. Now you’ve got things like Ethereum, which I think is going to end up being the infrastructure for the central bank, digital currencies. I don’t think that that is going to be a censorship free coin, long term. And the Ethereum transaction fees are the highest transaction fees of all of the currencies. And it’s not very practical for day to day use. If you’ve got to buy your groceries and you’re paying, you know, two bucks or seven bucks extra, okay, But if you’ve got to buy a cup of coffee, Ethereum, there’s no way. Bitcoin you can do that now, Ethereum, you can’t. So Ethereum is probably the least practical. And any of the other ones, you know, if you want privacy, you use Monero. Also very practical. You can put it on your phone, you can use it. I don’t think it matters. It matters not at all to the average user. Cardano works, Cosmos works. It doesn’t matter.

Manda: How are these created? Because it seems to me that at the moment the banks create dollars by just typing them into a spreadsheet, by technically loaning them to somebody who’s got something valuable. Bitcoin is mined by solving, the rest are proof of stake, which is basically I’ve got enough money to prove that I have enough money. And if you haven’t got enough money, you can’t be part of the creation. You just have to then have enough money to buy some. So it’s all requiring that you have money to get money.

Grace: Yeah, that’s correct. I mean, look, that’s the way money works. You have to earn money to get money. That’s how money works. And whatever money is being used in your town. Look, there was this crazy thing. It was wonderful and crazy. And during the pandemic, a lot of remote workers went out of work. And there was this thing which you may have heard of called Axie Infinity, which was a play to earn game. And so it was a cryptocurrency that was invented by this game, that if you played the game and you sit there, you know, with your little things on your phone all day long and you’d be playing it all day long, you’d earn these cryptocurrencies. And then you could exchange them for Bitcoin and use them for money. Okay? Now you could earn $15 to $30 a day. Even in England you might be able to get your groceries on that. So where did this take off? In Vietnam and in the Philippines. It took off. And this is just funny money invented out of thin air. You know, it went up and up and it crashed eventually, but it’s still in use. And okay, now let’s say you live in the Philippines. How much do you trust your government money?

Manda: Not a lot.

Grace: Not much. So the supermarkets were happy to take it, Right. All the local shops are taking these axis. Now. If you’re living hand-to-mouth, you don’t really care as long term savings. Long term savings, maybe you put it in Bitcoin, maybe you put it in Land, maybe you put it in gold. Maybe you buy a couple more sheep for your farm. Very good long term savings, right? But if you’re living hand-to-mouth, you don’t care about the proof of stake, proof of work, how long that money is good. You care that you’re going to have it this month to pay your bills and your savings, you’ll have to figure something else out. And so that’s how most people live. And so these SLPs became real money.

Manda: How did the guys who created this or the people who created this, though, at some level they’re making this currency and people with bitcoin are accepted. This is making money out of nothing. What were they doing to get the bitcoin to make it worth Bitcoin? Otherwise you might as well just pull leaves off a tree and go here, have a leaf and more growth.

Grace: They don’t have to. If you’ve got a something, like this piece of money, whether it’s a euro or a peso or whatever it is, and your supermarket will accept it, It’s money.

Manda: That’s the whole point about fiat currencies.

Grace: And if you’re just moving it in and out of Bitcoin. And if people are willing to buy and trade it, it doesn’t matter what it is. That’s what nfts are. If people are willing to buy and trade it, for as long as people are willing to buy and trade it, it’s worth that many bitcoins.

Manda: But okay, so I create Scott coin tomorrow and I go to the Bitcoin guys and I go, Hey look, I just made a million Scott coin. Do you want some? And they go, No, thank you actually, because why would I?

Grace: There’s no Bitcoin guys. It’s just me. And let’s say I go to Scotland. 

Manda: But then you, with bitcoin are suddenly being nice to me with my Scott coin because I’ve got this stuff. And so fundamentally at that point, people with bitcoin are supplementing the salaries and the income and the welfare of people in the Philippines for free, because the stuff that they’re getting in return?

Grace: So let’s go back to the dollar. You know that some people do forex trading, right?

Manda: Oh, I see. Yes. Foreign exchange trading.

Grace: Which means they might hold dollars or Swiss francs because they think the dollar isn’t so stable. So they might hold their money in Swiss francs, right? So they might hold Swiss francs, same bitcoin, same axie infinity coin, same Scott coin. If people think you’re Scott coin is going to go up, they’ll play with it as a gambling game. And it’s a little bit of a gambling game at this point. Now why are people playing that game?

Manda: It’s a total Ponzi scheme at this point. I am selling you leaves off a tree. Oh, wow.

Grace: No kidding. And so is the fact that the pound and the dollar are not backed with gold. It’s all a big Ponzi scheme.

Manda: But they are backed by my government demands that I pay tax. And, you know, in the end, fiat currencies are backed by the fact that that’s what the government takes in tax. And the government has certain physical repercussions if you don’t pay the tax. You know, it used to be we’ll come and chop your head off and now it’s we’ll put you in prison. And that’s what makes a fiat currency a fiat currency.

Grace: Up until a point.

Manda: Okay. Okay.

Grace: But the thing is, like this, you could look at it this way. Here’s here’s a way to look at it. This is the first time Dogecoin, which is like one of these crazy dog coins, right, made sense to me. Somebody said to me, look, there’s these young people in, you know, the younger generation and there’s no hope for them. They’ve got hundreds of thousands of dollars in student loans. They’ve got an economy that’s tanking. They got nothing. And they see these Wall Street guys playing the game that you and I just described. They want to play the game. Cryptocurrency allows them to play that game. And as long as you get out in time, you’re okay. Like you’ve made more and you have no hope in life anyway.

Manda: You’ve got nothing to lose.

Grace: Yeah, it’s funny, right?

Grace: It’s funny and it’s tragic and it’s like, screw those Wall Street guys. I could do the same thing. And that’s what’s going on. And this axie infinity, it saved people’s lives for a couple of years. People were able to buy groceries. It’s no joke. Because at the end of the day, it doesn’t matter what I trade in. If I have a simple system, whether it’s a piece of paper that you pay me when you get your paycheque, or it’s a Bitcoin or it’s an axie or it’s a dollar, it doesn’t matter to me as long as we’re measuring the trade between us. And that’s why I think that it doesn’t matter what cryptocurrency you’re using, as long as it’s what’s accepted by the people around you. And in the Philippines, people are very sophisticated. I mean, people in the UK and the United States are the most conservative in the world about this. And the Swiss. Because they have a currency that hasn’t changed over their lifetime. But anybody in Slovenia who’s my age has had four different currencies over their lifetime.

Manda: Right, Right okay. So you get used to it. I remember a quote from Cory Doctorow in Walkaway where he said, It’s all about power. Money is just a way of keeping score. And I’m also remembering Douglas Rushkoff and his book Survival of the Richest, Escape Fantasies of the Tech Billionaires. And they had got him into his little green room to help them plan out how they were going to control their private armies when the dollar lost value. And so it seems to me that we’re right on the edge of that moment when the entire Ponzi scheme is going to fall over. Because it only survives because people believe in it. And the more you have four currencies in your lifespan and/or you just watch the Ponzi scheme become more and more transparent, the less even the conservative people will consider that it’s valid. It seems to me that Liz Truss got chucked out because she said the quiet part out loud, rather too loud and rather too soon. She was Yeah, come on, just make money. We’re going to make lots of money and give it to the banks. What’s wrong with that? We’ve done it before! And everybody went, Oh, no, you can’t say that. Not oh, we haven’t done it before. Just you’re not allowed to actually say that. And we’re going to tread on your head if you do. And we’re going to bring in somebody who looks much more like they pretend we don’t do that at all. But she did say it out loud and even the BBC began to notice. So at that point then I think, as you said earlier on, you eat the food that’s in your fridge, you make your decisions based on the ideas that are lying around. So in leaving, it seems to me the big change we need to make, this is back to Thrutopia and changing the narratives. If we could get the central nervous system, the media, to consider the alternative options that aren’t collapse into complete feudalism, then the change could happen quite quickly.

Grace: Well, you mentioned Walkaway. That’s what we’ve got. That’s what we already have. And we don’t just have one place you walk away. Like the cryptocurrency is one part of the walk away. The government almost certainly will start issuing UBI on these central bank digital currencies. So if you’re not at a place where you can step off the treadmill, they’re going to make it easier for you to stay on the treadmill and become vegan etcetera and get whatever vaccines they tell you to get and send your children to the schools that they tell you to send them to. 

Manda: So you get UBI as long as you behave in the way that we want you to behave. And if you don’t, then you just have nothing at all.

Grace: Well, you can only spend the UBI on what we tell you to spend it on.

Manda: That’s going to last a long time.

Grace: That’s what’s coming, I think.

Manda: I can’t see that having longevity, to be honest. But yeah.

Grace: But I think if we’re going to have Walkaway, we’re going to have that world, we’re going to have rich people’s world who’ve bought an island like Peter Thiel or whoever else. We’re going to have the crypto people who are going to come and probably be living in between the edges. And we’ll have people like yourself who are like, You know what, I live on my farm and I’m going to share with my neighbours and I think we’re going to have multiple parallel societies. I think we already do, but I think that’s what we’re seeing.

Manda: And it all works swimmingly, except I just spent four hours on Friday talking to Simon Michaux about the collapse of the material supply chain. And every single component of all of those options requires that I be able to get online or go to a shop and buy stuff. Even, we’re realising, trying to grow food for the the rest of the village here requires that we’d be able to get pipes to pipe the water. Or if something breaks would we be able to buy fencing materials. Or you know, the stuff that we can’t make here is quite large. And so it seems to me that what is going to survive is the stuff that has the most resilience, that is not dependent on the sixth continent just in time supply chain. And the government system, the buy what we tell you to buy, falls over on day two when there’s nothing left in the shops.

Grace: And that’s how it’s been for most of human history. It’s going to be tragic and and catastrophic and deadly for many, many people. It’s not a good outcome. To me, it’s about salvaging what we can, caring for one another for the time we have here on earth and doing the best we can. You know, talking about literature, right? It’s like the Asimov series. It’s like the foundation series, like we’re the mathematicians, trying to figure out how to shorten the time of the catastrophe, how to lighten the amount of catastrophe that there’s going to be. It’s not about making a smooth transition. It’s about making the shortest and smoothest possible transition in catastrophic circumstances.

Manda: And creating a framework that those who follow us can pick up and build on. And where it’s not just a steady decline that seems to me really, really important.

Grace: Absolutely. And preserving our knowledge. Preserving human knowledge is incredibly important at this time. And so whatever we can do to preserve human knowledge, even if some of these systems go down and we can’t transact with each other or communicate for a decade or two, if we can preserve human knowledge, when those systems come back online, we will be able to share with one another. So I am optimistic. It’s just it’s about preserving our human knowledge and our cultures.

Manda: Right. That’s a good time to end on part two. Goodness knows what we’re going to do with this, but we’ll do something because that’s been so interesting. Thank you. Thank you for engaging. I haven’t had anyone engage at that level.

Grace: Thank you. My pleasure.

Manda: And there we go. That is it for this week. With enormous thanks to Grace for the depth and breadth and radical nature of her thinking and for what she’s doing with it. Quite a lot of people think things, and there are some people who do things, but there aren’t many who think this deeply and this widely and then get together and make stuff happen in the way that Grace is doing. Honestly, you want to check out Priceless DAO, check out everything that Grace does. Her website is astonishing for the breadth of everything that she’s doing. I totally recommend that you head over there and it is in the show notes of this and the previous podcast.

Manda: And I don’t know where this takes you, but combining this with everything else that we do, but particularly with talking to Simon. And you haven’t heard the second part of that, but the edited highlight is that really isn’t an awful lot of stuff. And we are not going to be able to continue to power our civilisation at the levels it’s currently powered at. We are going to have to massively reduce our power consumption quite soon. Not just for ethical and perhaps some people would consider ideological reasons of wanting to leave a habitable planet to future generations. I don’t think that’s ideological, but hey, some people can’t see their own ideology. We’re actually going to have to stop because the supply chains are going to fall over. And so Grace is providing a model of how to go forward in ways that might work. And we’re getting to the point now where I think implementing those ways that might work is becoming the single most important and useful thing that we can do. To cushion ourselves and those we care for. Ourselves and those around us. Ourselves and those in our communities of place and of purpose and of passion. And the latter two need not be linked to a single piece of land. From what happens when the six continents supply chain falls over. So as we’ve said before, I am going away to think about what we can do to help. But in the meantime, each of us just needs to look at our intertwined sets of communities and find the places that make our hearts sing and find the ways that we can be the best of ourselves. And connect into the web of life, ask what you want of me and respond to the answers in real time. Easy? Okay, I know it’s not, but it’s worth it.

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