Why Deflation is Key to an Abundant Future w/ Jeff Booth (MI134)
Clay Finck (04:34): Hey, everyone. Welcome to the Millennial Investing podcast. I'm your host Clay Fink. And on today's episode, I have the great honor of being joined by Jeff Booth. Jeff, welcome to the show. Jeff Booth (04:45): Thanks Clay. Thanks for having me. Clay Finck (04:47): So you wrote a wonderful book called the Price of Tomorrow. Why Deflation is the Key to an Abundant Future, and you have been on a ton of podcasts talking about this exact topic. And I must say
that your book has had a huge impact on how I think about my own portfolio and how I think about the current market environment that we live in today. So before we dive to talk about the ideas behind your book, tell us a little bit about your background and the companies you're working with today to give the audience some sort of vantage point for what you've done up to this point. Jeff Booth (05:21): I've been the technology entrepreneur most of my life, and starting out as an entrepreneur, but then seeing how in the building industry largely... But then seeing how technology could play a huge role in our lives and moving into the technology space and created numerous technology companies throughout that ride. Today, I sit on 10 different technology related companies' boards, and founder of probably five of them. So all
different spaces, largely technology. And from that vantage point, have been able to see a front row seat of what is happening in technology to change our world. And so effectively technology is being utilized to deliver more value to people. And as a result of that, you would think that more value would be driving lower prices all over the world. So that's what led me to write the book. Clay Finck (06:10): You talked a lot about the macro forces that are at play in the economy, and the force is of inflation versus deflation. And you just mentioned the force of technology should be a force that is forcing lower prices, but that's not really what we're seeing in many industries today. So could you give an overview of what's happening
in our economy today and why it's important? Jeff Booth (06:34): It's probably the most important thing. Most of the other things people are talking about are second order consequences of two systems colliding against each other. And those two systems are one, exponential technology moving faster and faster and faster wanting to deliver us more value. And
if anyone looks at their phone, they could see all of that value, that it's getting cheaper and cheaper and cheaper in apps coming to them. And what a lot of people falsely believe is that that is being driven specifically because of advertising. And that's why the apps are free. That's not what's happening. What is happening is when you enable something with technology because
of the competition, it moves to its marginal cost of production. And the marginal cost of production is essentially free. Nobody is going to create another new calculator app because you can't sell that calculator app and you can't make money. Jeff Booth (07:28):
So the trend moves these things to free. And that's happening in a base layer of, it's not just on your phone. It's everywhere. Energy is moving into that space. Our base layer of everything is moving into embedded technology. And on top of that, you're moving into AI and robotics that
change the meaning of work forever. As technology enables more and more industries you would think would be happening against that force. You would think prices would be dropping everywhere. Our time would be going up. We wouldn't need to work as hard. That's what you would imagine would happen if the natural forces, if that would be allowed to happen. And keep in mind. Most of the deflation, most of that natural force of technology isn't behind us, it's in front of us. So most of it is in front of us. Jeff Booth (08:18):
The technology's moving faster and faster. It's an exponential function. So now let's look at the other system, the one competing against that technology force, and what it's doing. So you have one force trying to drive prices down. And the world we live in based on a credit-based system
must drive prices up forever. And because if it allows deflation to happen, you can't pay back, and the credit unwinds. And if the credit unwinds and every bank is based on that same credit, and every system we use today is based on that credit, everything fails. So what you have is these two giant forces colliding against each other. One, a natural force driven by essentially
entrepreneurs, people... Jeff Booth (09:04): Actually ourselves as well as we vote with our time to get more value in our lives. So we vote for technology, giving us more value with our time and a different force, essentially, a monetary policy that must create inflation against that force, or you have a system collapse. And so why house prices are going up? Why prices are going up? Why we see inflation is that monetary force essentially is stealing your time or stealing money from you through inflation. Creating more monetary units is fighting against that technology. Because we measure the system from the system, most people believe that you require inflation for a productive economy.
So let's look at inflation for a second. What is inflation? And nobody votes for inflation. Jeff Booth (09:52): So inflation is theft really, that somebody can print money and destroy your money over time. And when you realize it is actually a theft and it has to grow greater and greater, most people, they don't question the theft, they question the rate of theft. 2% theft is good. 5% is bad or 10% is bad. But when you have theft built into a monetary layer that has to expand to offset the natural force of technology, you can see every derivative around the world, all of the second order effects playing out naturally.
Because when you have corruption and money itself as a byproduct, you must have corruption everywhere else in society. Clay Finck (10:37): Could you briefly explain to the audience why, if deflation were to take hold in our economy and the government and central bankers didn't act on that in force inflation, why would there be a system collapse? Jeff Booth (10:51): So when people think they have money sitting in the bank, it's actually not money sitting in the bank. It's a credit facility and there's a counterparty on the other side of that. And if you allowed deflation to happen, you can't pay back the interest on the money. So it needs an interest rate to be able to pay back. You need to grow, to be able to pay back your interest rate. Maybe a simpler example is this. If you have a huge mortgage and you lose your job and you can't pay back mortgage, then this mortgage goes into default and they take your home. If you allow credit to fall,
if you allow deflation to happen, all of those debts become unpayable because they explode in value because you don't have enough growth to be able to offset them. So they are already defaulting. That whole system is defaulting, but we're pretending it's current by changing the monetary units to be able to cause inflation. Jeff Booth (11:44):
So what that does is if you can change the monetary units and nobody notice, and if you can, real rates are negative for a long time. So you drive inflation, then you're paying back the debt in cheaper terms. And so that's what governments are trying to do to try to offset this. And it has disastrous consequences around the world. Clay Finck (12:07):
So some industries have continued to get cheaper and cheaper and avoided this massive inflationary pressure, such as TVs, cell phones, and software. While other industries have continued to get more and more expensive, such as healthcare and education. Why do you believe there is such a huge disconnect between certain industries? Jeff Booth (12:27): Yeah, and that's really important question that I think a lot of people have confused as people because they're measuring a system from a system. And so what is happening in these technology embedded industries is this, they are still going up based on the inflation, but they're automating so fast that they're offsetting it. When what's happening with housing and things that are more scarce, they're going straight up with it. Now, all of those industries, eventually
housing will be probably last to happen. But all of those industries will be automated as well. What you're having is fewer and fewer areas to push on inflation, and you're driving this. Jeff Booth (13:03): And so what are those areas that you're driving inflation in? The things we need most. So when you have inflation, if you just look at it,
two sides of the same coin, inflation is the same thing wage deflation, or you're losing money in your savings. So when you drive inflation and you drive... And let's first look into the numbers to prove that thesis, and you know this from my book. So I wanted to know why prices weren't falling everywhere. And so I looked at, it's because you'd expect that there had to be an offset number on the other side of the ledger to stop that a great force of technology, delivering us more value in our lives. Jeff Booth (13:39): And so when I looked in the 20 years preceding COVID you had $185 trillion of stimulus to grow global [inaudible 00:13:51] by 46 trillion. So $4 of every debt for an extra debt to of GDP by $1. Imagine you're a homeowner trying to do that. And then you're
trying to pay back your debt with more debt, more debt, more debt. It wouldn't seem to work. Could you get a loan like the federal reserve? Probably not. And so something has to collapse at some point. And again, these are just offsetting formulas. One system's trying to push down, and in counter balance to that, the other system has to print more money, and they feed back against each other. So if prices are moving up because they're unnaturally caused to move up, and us as population needs lower prices because prices are moving up. Then what would a business do in that environment? Would they automate faster? Because if they don't automate faster, they'll go broke. Jeff Booth (14:39):
So what you have is both trends are accelerating against each other, causing for an exponential movement on the trend. So you could predict the response if you saw the hundred 85 trillion to 46 trillion growth preceding 20 years, otherwise you would've massive deary spiral. So you're constantly injecting more and more and more, and you have to do it exponentially. So you could predict what was happening out of COVID, and you could predict what's yet to come. And then, because people were measuring a system from a system, underneath that people don't ask the question. Jeff Booth (15:16):
They think their house is going up forever, but they fail to ask the question, would my house have gone up in the last 20 years without $185 trillion of stimulus? And the answer simply, no it wouldn't have. Or would education go up at that rate without a hundred or $185 trillion of stimulus? And answers simply, no, it wouldn't. So if you think houses are going to go up at that rate, then you must believe there needs to be that much stimulus to get way more exponentially, more stimulus, to keep them going up. Clay Finck (15:45): As well as these two trends, colliding and fighting each other in an exponentially increasing manner, things really started to click for me when I realized that they're keeping interest rates artificially low, which allows these mega corporations like apple and Amazon and Tesla to borrow billions of dollars at say 2% interest, which allows them to invest just massive amounts of money into new technology, which feeds on the deflation that you're talking about. Jeff Booth (16:14): And it is creating those monopolies, making them bigger and bigger and bigger.
And those monopolies are essentially today in control of artificial intelligence and the growth of artificial intelligence. And so when you think about that trend and that artificial intelligence, eventually, if you looked at Boston robotics 10 years ago, versus Boston robotics today, and you see these robots doing incredible things, you would've never predicted that 10 years ago. If you run the trend of artificial general intelligence and emerging of those two trends, it won't look like the Boston robotics dog. It could be miniaturized, it could be the trend. Those things merge, and you have to ask yourself what jobs are protected from that trend. If you cascade all wealth and power in very few organizations, because of a system that's doing it, who controls artificial intelligence and robotics controls all of us.
Jeff Booth (17:07): And so you start to see these mega trends on where the world's going and underneath the existing system, it turns into a very dystopian world. But also, a lot of people would go and blame people in the system, which is pretty natural. And in the book I talk about game theory and why that's natural. Because when people look at somebody else that has everything, and they wonder why they don't. And more and more of the population is losing out, because you're transferring wealth to those companies, you're transferring wealth from the middle class and poor to those people. And the other people,
their rents are going up, food prices are going up. They're working two jobs to try to stay solvent. They're getting more and more mad. Jeff Booth (17:48): You can see what ends up happening around the world through that lens. And essentially they're going to either tear the game board down through Revolution or war. That's what typically happens. Or you need a new system that can transfer value to a new system. If you just say,
"Let's use doors." Door number one on the existing monetary policy is it has to keep inflating. No one will get elected. And remember, nobody gets... Most of the government's revenue comes from inflation. It doesn't come from taxes. And nobody tells you that. Nobody says, "Most of government's
revenue comes from a theft from people." And there is no one that's going to stand up and say, "I'm advocating for truth." So ask any politician to say, "Will you advocate for stopping inflation?" And they can't because the whole system would collapse if they did. So they advocate for, "I'm
going to promise you more things and steal more from you by doing this." That's door number one. Jeff Booth (18:47): And that corruptions spreads through society. And if you're closer to that corruption, you gain more of that. If you have more assets, you win more from it. But there's lots of losers from it who then typically go back to government and say,
"This new person can solve this. I'm going to take it back through a new person who's going to tell me something different, but still continue the same theft." So that's door number one. And if you look through the long arc of history, it leads to revolution, war, global conflict. But again, wealth inequality is first. You can see it around the world today.
Because of that wealth inequality, they haves get everything and the have-nots get nothing. And there's more have-nots that leads to them electing different people to take that back. So even though the wealthy think they're safe from this system, and they're getting wealthier from this system, they are not safe from this system at all. Jeff Booth (19:41): And if you want to see a recent and historical example of that, look at Germany in the '30s. What happened out of that does not stay like that for long. Door number two, governments allow deflation and everything resets, and into that void there would not be food on the shelves, banks would close. It would look horrific. There is no escape from
it. So you have a system that there is no escape from, unfortunately. And that's why I think about in Bitcoin specifically is a door number three. It provides a transition from one system that has to fail in one of two ways, to a different system that allows the productivity, or gains to be transferred broadly to society. And that transition is still going to be messy.
People that are actually in Bitcoin and actually driving Bitcoin, it's an emergent phenomenon, getting stronger and stronger all the time. Jeff Booth (20:30): Effectively what they're doing and whether they know it or not is they're building a bridge to the other side. And as that bridge gets stronger and stronger, more people are walking across that bridge. And that's what's happening into a new system. It's more congruent
with where we're going with humanity. Clay Finck (20:48): Incredible explanation. Could you give the audience one or two modern day examples of deflation actually happening today. Jeff Booth (20:57):
Within the iPhone? So think about the cost structure of what it looked like for cameras, film, developing film, and how many photos you took 10 years ago, 20 years ago. So I drove to the store, I bought film, I drove back to the store to develop film all of this processing. Then I looked at my 12 photos on my camera roll, and like, "Ah, I didn't get any decent photo. And I missed that window." And we took a very small number of photos and there was scarcity in photos. And the whole thing drove because of that scarcity. And there was a cost, an entire
infrastructure of people, supply chains, people around physical goods, and a photo was physical. And then it changed. By the way the camera on the iPhone, now 3D enabled everything that used to be effectively as $600, you couldn't buy that with an artificial intelligence that makes that sharper and sharper and sharper today. It's now a technology solution. And that is a $5 bill of materials on the new iPhone. Jeff Booth (21:59):
So all of that power is dropped in costs by a staggering amount. And now we take billions or trillions of photos. We don't even think about it. There's no cost to it. The marginal cost of production has come to zero, and a lot of the jobs it used to... Kodak was a monopoly for a
long time. It no longer exists, but photos still exists. Editing software is free. We can do with those, and we can take as many as we want for free. And so thing is happening. The same thing is happening in music. Same thing has happened in a whole bunch of different industries. Yet,
and this is a problem with most people that is really hard to predict where technology is going forward because it's on this exponential trend. Jeff Booth (22:44): So what we typically do is we predict our present forward. So a lot of people, even Bitcoin are predicting what Bitcoin looks like right now forward, instead of what it will look like. Same
mistake a lot of people made when the internet came into existence. It was in 1997, and you had a dial up modem that went [inaudible 00:23:02], and it took 10 days to download a cat video. So people in that time in 1997... Remember, 1997, there was no Google. There was no Facebook. There's no YouTube. People made that same mistake. And a lot of the monopolies at the time don't exist anymore because technology changed the rules, technology advanced and advanced and advanced and all that innovation came on top of it. So that's what's happening today, and it's everywhere. Clay Finck (23:29):
Why do you think so many people, including all the governments around the world are missing the fact that deflation and this technology deflation is too big of a force to be stopped? Jeff Booth (23:41): Because all of the interests of the entire world rely on a different system. And that monopoly over money is a different system, and it's a credit-based system. And so they cannot see... And by the way, it's normal for people not to see where technology moves. It's normal not to see how fast technology is moving. If you looked at most of the government officials, most central bankers, are they technologists, or are they old white people that have seen a different movie? Even in technology, a lot of people can't see how fast technology is moving. And so how would somebody understand how fast technology is moving
if they've seen a different system than your entire lives and their beneficiary of that system? They probably wouldn't see it. And it's not bad people, again. It's a system that is literally unstoppable. Because what does technology do? Jeff Booth (24:31): And by the way, this is actually probably a good framework for where we are in the system, in comparing technology to any other system. What technology does to monopolies is it changes the order of magnitude so much in cost and value that the monopoly has no way to compete. So if you think about Blackberry at the time, when everybody thought a phone needed buttons, many people listening to this podcast wouldn't even remember Blackberry. But everybody had a sense of a phone competing against a phone. And then iPhone came out. And iPhone was way more than a phone.
It was an everything device that everything moved to the phone. But when iPhone first came out, Blackberry thought it was a toy. A lot of people wouldn't get rid of their phone because they liked their phone with buttons. Jeff Booth (25:15):
And that's what I'm getting at. We don't see where this is going. And if we don't see where this is going and how fast these new ideas change in industry, by giving way more value, how would any central banker see it? Clay Finck (25:29): I think many people today, maybe the common person would tell you that inflation is a good thing and necessary for a healthy economy. Why do you believe that inflation isn't necessary and maybe give a counter to that idea. Jeff Booth (25:46):
At first, again, these things are really hard to deprogram in our brain, because if you believe that I keep asking why. And so if you believe inflation is critical, then why? And people won't even think about why, because what you're saying is there needs to be a theft of money that's hidden from me for a society to function. Why? And what likely is the next answer is, "Because people won't buy things." And then so let's investigate why people won't buy things. And let's investigate that today because there's a lot of industries where you get more value each year, if you wait. So there's a lot of industries that are deflationary right now, like entire computer industries, phones. If you wait five years, don't buy a phone, you'll get more value five years from now in your phone. Are you going to buy it today or wait five years?
Jeff Booth (26:36): So I don't buy that people won't purchase and everything else. We purchase, we decide based on value. We make a decision based on value over and over and over. So we used a phone example, a TV example, a whole bunch of different things. So we would still purchase. What about food? Would you still purchase if food got cheaper next year but it was more expensive this year? I think you'd still purchase. You wouldn't change those habits.
You might not purchase a whole bunch of trinkets that you don't need, you might save more. But if you believe in inflation, the only reason you purchase more is because of inflation. Then you also, consequently must believe that, "I should lose money all the time.
And the only reason I'm purchasing more stuff is because governments destroying my money." Jeff Booth (27:24): And so when you look at that argument through that lens and you keep going down to why? Why? Why? You realize it's not true. We believe it's true, but there's nothing, nothing that says a productive economy needs inflation, nothing. Now from a financial architecture system. And this is, if you go a little bit deeper on this, I understand why that belief is persistent. Because in historic times, if you had gold, if you had hard money in the centralization of that gold, you typically built a credit system on top of that so you could get velocity of money. And that credit system had to expand and expand.
And that's what ends up happening. It expands and expends, and it then it has to reset and collapse. That's historically through the lens of war and revolution. And then there's a new monetary standard where people say, "We promise we won't do it again." And it gets away on itself again.
Jeff Booth (28:18): But that's actually why Bitcoin's such an incredible innovation as well, because you can get the velocity of money through 10 minutes window. You can over and over and over again, it doesn't need a system on top of it managed by humans to be able to get velocity of money and have the world to function. So I understand how if that credit-based system on top of gold needed to keep expanding, then you had to have a whole bunch of people telling other people that inflation was a must for that credit-based system. Because inflation is a must for a credit-based system otherwise you have that inflation on spiral. Clay Finck (28:55): You've been very vocal about climate change as of late, and the inflationary environment that we currently live in essentially requires growth for ever to continue to operate, which isn't good for someone that is an advocate for climate change. And on top of that, when you have money that's
losing value, whether you realize it or not, essentially everyone is incentivized to spend that money because they're going to be able to buy less a year from now than they are today. Whereas on the flip side, if your money's deflationary, you're only going to consume what is necessary. Jeff Booth (29:32): And remember the existing system couldn't just do that because you'd have a system collapse. You need a new system to be able to allow that transfer to happen. If you believe in climate change, then there is no way to solve climate change through a system that must grow forever. And think about that growth forever and what it does to huge parts of the population. People are working two jobs, driving two cars
back and forth to the two jobs, all to try to take their money, to be able to save enough money to escape the system so they don't have to work so hard. Well, the system is constantly making their money worth less and less and less. So you're trapped. Everybody's trapped inside the system, working harder and harder and harder. It's on an ever expanding wheel, but inflation equals climate change. Jeff Booth (30:20): It is climate change, in a different system. But again, the problem is that existing system can't be stop it. And by the way, some you asked earlier on about some of the companies
I'm involved in. I'm involved in agriculture technology companies. I'm involved in a bunch of different technologies that I cannot believe... Or what's happening from that point of view. I'll give you an example of one of them. One of called CubicFarm. It produces greens,
lettuce and others at a way lower cost and allows it to localize. It is containerized farming. So it's already priced to the point where it's way cheaper at massive scale production. And what's happening is now instead of having agriculture travel from us buying in Canada, us buying lettuce from California, you can put these facilities in and you can have way higher quality lettuce that last for a lot longer, more nutritious. Jeff Booth (31:10): So it is essentially abundance. It allows prices to come down. Now let's just look at that in the overall climate example that you [inaudible 00:31:21]. So it's localized, it's technology,
it gives us abundance, and it brings prices down. Higher quality, more, more. But what ends up happening to that innovation is in the macro picture because it gives us so much value and brings prices down, the offsetting system has to print more money to be able to offset that innovation. Now, what does that do? That innovation gets stronger because transportation costs go up, labor costs go up. In the existing system everything goes up in price and this innovation moves faster because of that delta. So that's just an example of this. And so when I say inflation is climate change, you can see through that example, that happening. And all of
those things have to keep on reinforcing against each other. They're opposite sides of the coin. Clay Finck (32:09): I wanted to talk a little bit about the Federal Reserve's recent announcement. They essentially stated that they'll be doing more quantitative tightening in 2022, which means that they'll taper off their asset purchases and raise interest rates. My question to you is, can the federal reserve take these actions without crashing the markets? Jeff Booth (32:33): It's what I talked about in the deflationary spiral. You're going to start to see a sell off in equities if they try. You're going to start to see it a sell off on equities. After the selloff in equities, the US dollar will get stronger, or it will get along the way.
Other currencies will start to fail like what's happening in Turkey today, as this explodes around the world and the Fed will have to come in with more easing. Because if they don't, they'll have to nationalized banks. Jeff Booth (33:00): And when I say that, it is a cascade of errors. But if this got too far away on itself, that credit collapse that would happen and that credit collapse is everything. It is the economy that we live in today. It would keep on spiraling. It would make
The Great Depression look like it was on steroids. It would be so cataclysmic. So there is no way they will keep tightening. Clay Finck (33:22): Now let's talk a little bit more about Bitcoin specifically. You've stated that Bitcoin is both an asymmetric bet and one of the safest places to store value. Could you expand on why you believe both of those to be true simultaneously. Jeff Booth (33:39):
Let me go back to that other question because I think it's for a lot of your listeners. If they're looking at that tightening on a narrow timeframe, they're going to get confused. Because I understand why the Federal Reserve is saying that. And you could have some whip
sawing of asset [inaudible 00:33:56] in this. So specifically you need to zoom out to see, what is the larger picture at play here, and can they tighten for very long? The answer is no. If they tighten for very long, you're going to want to hold some cash. You also might want to buy an off grid house and get out of the cities, but they cannot tighten for long. You'll see more easy.
Jeff Booth (34:17): Now to the Bitcoin question, the greatest asymmetric bet in our lifetime, and maybe in history, greatest asymmetric bet. Choose those doors, I said before. Door one, they tighten. Then Bitcoin is an asset without counterpart risk. So the entire credit-based system has counterpart risk all the way down to the [inaudible 00:34:41], everything. And so if they tighten and they kept tightening, then
a new system is going to emerge really quickly that is on a system with no counterparty risk. Now, if they kept tightening, Bitcoin will fall too, at least for now. Because everybody would be selling anything to be able to get dollars or whatever they could get to be able to live. And so if that really got away, which is, I would say a very low probability option, Bitcoin would fall in the near term as well. And actually probably why Bitcoin's falling a little bit right now is because of that. Jeff Booth (35:15): On the other side, when the higher, way higher probably, way more easing comes in.
It's a safe asset than not. But more importantly to the whole thing at the larger macro picture, it is the bridge, it's... Bitcoin is like TCP/IP. It's the network protocol. It is like being able to invest in the internet itself. And then on top of Bitcoin, layer two, is all of the innovation that's going to happen on top of that network. The Jack Mallers' Strike, a whole bunch of different companies and a whole bunch of different ideas of value exchange that are being built on top of that is going to happen on layer two. And it's moving really fast. So you have these two network effects
that are reinforcing on each other that are growing faster than the internet was in 1997. Jeff Booth (36:02): So if you think about that emergent rate of adoption, and then you zoom out... Remember back to the internet itself, remember in 1999, there were a lot of experiments on the internet. Some of those experiments failed. And then when I'm saying layer two companies on top of the internet, but it didn't change the internet itself. All of them made it stronger and stronger and stronger. And so what's happening today on Bitcoin is a primary layer of money. And all of the experiments, whether you look at El Salvador's bond, whether
you look at all of the innovation that's happening on top of it, the Lightning Network and everything else, those are experiments and every single person joining that system is actually making it stronger for every other person. Now that's what I'm talking about the bridge that you're building, it's actually... Jeff Booth (36:48): And while many people wouldn't see that today, but people should look up in game theory, a shelling point, it moves the shelling point of humanity from competitive destruction, essentially nuclear war, and everybody needs nuclear weapons to be able to stop somebody else from using that, to a shelling point based on global cooperation. And it's a big deal, and that shelling point based on cooperation. You could yell at Bitcoin all you want. You could scream at, you could hate it, but you keep it in the news. And what ends up happening is every single person, what everybody
who hates it, every who likes it is actually making it stronger and stronger and stronger, and actually bringing more people to Bitcoin. And those people holding Bitcoin now being able to trade Bitcoin with each other is getting stronger. The UX, all of the innovation that's happening on top of that. Jeff Booth (37:38): Now imagine zoom this out to say why this system is so much more important. You hate Bitcoin,
you can't stand Bitcoin, but the new system is pricing the free market and all of the innovation that's happening on top of it is actually driving price lower and lower and lower. So if you deliver value to society on Bitcoin, you collect more of Bitcoin, but the outcome of your work in time lowers prices for everything. And so it builds a system where the incentives are congruent with the best in us instead of the system today where the incentives are designed for the worst in us and cheats in competition. So that competition turns it global cooperation through this network. Clay Finck (38:22): Yeah, essentially it comes back to that idea that the inflationary system benefits the hands of a few. Whereas a deflationary system benefits everybody as they experience
lower and lower prices over time. Now, one of my favorite investing principles is ensuring that you stay in the game, and many millennials, whatever the reason may be, might not be in a position to have a substantial portion of their investible portfolio in Bitcoin. So I'm curious how else might they themselves to benefit from the current market environment that we are in? What are their other options? Jeff Booth (39:01): So dollar cost average in Bitcoin, put something in every week. You get a hard wallet, put something in every week, every two weeks. If you need to start small, start small,
and then just keep doing it. That's probably the highest priority thing you could do. I'm teaching my kids right now about lightning, about mining, because any disruption is a crazy opportunity for entrepreneurs and people to learn where to take advantage of markets. And we have the biggest disruption, potentially worlds ever seen coming to money. Because creative disruption has come to money and money is just an abstract concept for our time, right? We actually don't want more money. We want more of the things we
think money will get us. And so that's a big, big idea that has come into what we're talking today. Jeff Booth (39:47): Now, if you think about what's available in essentially a network like the internet that lowered the cost and changed monopoly power that used to look like... Sears used to have monopoly power. Walmart used to have monopoly power. They lost it because the internet opened the door, and what ended up... I use this example often. The first suppliers to Amazon were not the suppliers to Walmart. And what ended up happening because there were billions of products that couldn't find the market and the monopoly blocked those billions from seeing the market. And so all of those billions
of products could find shelf space on Amazon, and we couldn't decide. Same thing happened to music. Sony used to block access from musicians. By the internet lowering cost, who were the first people who went on YouTube or everything else? A lot of different musicians that couldn't get through Sony because of the cost structure of that market. Jeff Booth (40:45): So what ends up happening is when technology lowers the barrier cost, it is not the monopoly that join first. It's everyone else. And there's more of us. And so when I think about the millennials, when I think about that group, and I think about my kids, the opportunity on this network is staggering. There's so many opportunities on top of this
network because of that lower access cost and what it creates. And we're going to have a rebuilding of society on top of it. Clay Finck (41:10): Yeah, I agree. It's a fantastic opportunity in many ways. And my final question is in regards to
the boards you sit on. You sit on a number of boards for companies and you're very well connected and informed when it comes to the world of business and entrepreneurship. What are you seeing from private companies in terms of the adoption of Bitcoin on their balance sheets? Jeff Booth (41:34): I get asked this question every day I know some of those boards. It takes time, just like it takes time to come to this conclusion for a board to come to this conclusion. But right now on some of those companies, they're already putting Bitcoin on their balance sheet. But it's actually taken longer than I actually thought.
You can imagine, the companies are thinking about, "Okay, well, how do I deliver value?" They're thinking about that. They're so inside their own business that they don't think about the greater game that they're playing within very often until they realize, "Wait, my cash lost 15% last year. Okay, how do we stop this?" Clay Finck (42:09): Yeah, it makes sense. They aren't spending a ton of time studying economic policy and macro economic forces. Jeff, thank you so much for coming onto the show. Before we close things out, where can the audience go to connect with you? Jeff Booth (42:22): Probably best is just on Twitter at @JeffBooth on Twitter.
Clay Finck (42:26): Awesome. Jeff, thank you so much for coming on. I really appreciate it. And it's been a great honor to have you on. Jeff Booth (42:32): Any time, Clay. Thanks for having me.