Jeff Booth on technology, deflation and the price of tomorrow

0:19background on yourself and your current philosophy on investing and wealth preservation before we dive in my background is a tech entrepreneur that's probably the easiest way to say it so most of my time it goes into either founding or sharing technology companies that have so i'm very involved in i'm an author or best-selling author now but that was a

0:43i'm a reluctant author i didn't want to write the book and so how that talks about into philosophy of investing i find if you understand the macro kind of but from a first principle understanding really deep on certain issues you it makes you also a better investor so in fact that's what you do in a technology company as well you're investing your time to be able to

1:08try to create a whole bunch of value and you have to really understand the problem you're solving and how to solve it in a specific way definitely and the technology industry is just moving so quickly you talk in your book about how technology is a deflationary asset and you know we see this curve where computers are getting so much faster and

1:28cheaper every year and the dichotomy of the markets and the way that they're designed to grow with inflation versus technology as a deflationary asset doesn't really compute because everything seems to be getting more expensive because of the way that the economy is working right now with all the stimulus that is happening and we'll talk about

1:49that a little bit later but can you elaborate on you know this dichotomy where we have inflation in the markets and the way that the markets have been structured has been around for a long time and now technology is starting to catch up and it doesn't really equate to how the markets work in terms of growth well so there's a fundamental of

2:11misunderstanding most people have and that's why i wrote the book and you know from reading it plays out like a like a tarot card so it's saying exactly what's happening in the world today and it also predicts what's going to happen next that came from understanding this and i it also made me a reluctant author it came from understanding that

2:34technology provides exponential efficiency and in all the technology companies that i'm involved in so i'm at the front edge of all these technology companies in different industries and i'm watching how fast things are moving and so it would blow people away how fast technology is moving if they really understood how fast it's moving and how

2:59how much efficient efficiency that brings to our lives and is therefore deflationary it makes prices go down right because it saves labor right it reduces labor there isn't a ceo i work with there isn't a ceo and technology in a technology company that it puts in technology to make their prices go up you do it to save time to make things better for

3:22cost less for and you get more as a result it's actually why on your phone if you look at your phone all of the apps everything is free on your phone and next year you could use to buy that same phone you could get it for free with a plan right now it's your camera it's your ai assistant it's google it's waze it's a millions of other things it always

3:45is in the layer of technology for free and that layer is moving into every part of our world right every industry every everywhere so you would you would naturally as a byproduct think why aren't prices getting cheaper everywhere i'm getting more power more abundance in my phone i'm getting my tv is getting bigger and more powerful but why am i not getting

4:07that everywhere why are some prices going up and if you follow that logic and look deeper you'll find this the global global debt in the world has was pre-covered 250 trillion to run an 80 trillion dollar global economy and you could say okay well maybe if taxes went up over time or growth growth went fast enough we could pay back global debt at some

4:33sort of time but when you look deeper into that what you realize is 180 trillion dollars of that global debt has come in the last 20 years and it's come as a byproduct of this technology driving prices down and an inflationary monetary policy that requires prices going up and so all of the second order effects politics everything else wealth divide is actually a function of

5:00that battle between technology and monetary policy and in the end monetary policy will not win this battle yeah it's super interesting and you touch on the fact that the market and the way that we need inflation to grow has been around for you know since the industrial revolution and the way that things are growing now with a techno technological revolution is different

5:27and something is going to have to change so that these things can equate and all the other assets that we see aren't getting more expensive and sort of technology integrates into those industries so that they can also become cheaper and faster and make our lives better can you touch on you know what needs to happen for this to merge these two different you know industries

5:53they won't un unfortunately those two industries won't merge it's there's too much political stuff it's almost like saying a big business can change everything about that big business to create a new business that's actually why it typically doesn't happen it comes the change comes from the outside when i wrote the book i was hopeful that economists politicians would see

6:19what was happening because it if you actually understand what's happening it's actually a good thing for society right you use technology to free your time right so you shouldn't have the same shouldn't need the same amount of jobs if you let the natural course of if you let gravity happen on technology because things would get lower and lower cost and our time would be freed

6:42stopping that by printing money is actually robbing from society's most so robbing from society is most unable to pay and putting it in the hands of the wealthy and they don't know that they got they got a gift nor do the poor realize that they got their pockets picked and so socialism is pretty easy to understand rise out of what's happening as a whole bunch

7:09of people can't afford to pay their bills and actually if you think about this so individually individually it's very hard to see an overall connected system by looking in an independent part of the system so if you think about look at everybody believing housing always goes up they don't ask the other side of that question would housing go up if there wasn't 185 trillion dollars of

7:34stimulus in the last 20 years nor do they ask the question will there be another 185 trillion dollars of stimulus over the next 10 years to keep it going right because if you don't believe that's going to happen the natural pricing and there is no such thing as a free market right now it's all manipulated so natural pricing would collapse but if the if the pricing about all your assets

7:58collapsed the existing system would reset so what's happening is governments are trying to because if you let deflation happen now with this much debt the debt explodes in real terms so governments are trying to stop central banks all over the world are trying to stop that happening and what they're doing is they're manipulating the currency by doing it

8:19and that manipulation means you're the real value of your purchase your dollar is going down and so and that'll break currency after currency because they can't stop technology from advancing in fact what they're doing is actually ironically making it happen faster because if you think about yourself if you were a ceo and the government said that it said

8:44we're going to make your currency worth less would you hold it would you hold cash on your balance sheet you wouldn't right would you in turn instead the only way you knew you could actually make money or deliver profits is to drive technology into your business faster right so you drive technology and your business faster and destroy those jobs faster and

9:05it's just so work we're your question about these two forces are they can they overlap they're diametrically opposed they can't and so we're going to have a reset to the world currency order one way or another yeah in some time in the near future and it's hard to look you know past three to five years from now but right now seems to be a pivotal

9:31time and we were talking about the amount of stimulus and the debt that's being printed and the federal reserve has said that they're going to keep interest rates really really low and it was you know 2022 and now it's 2026 and who knows how long they're going to continue with that i laugh at that comment right so since 94 they've said that

9:54like look at look at look at the projections look at the economists that what they said inflation would be and why they can't get growth and we'll look at the path on interest rates lower and lower and lower and every time that they try to raise them the economy collapses right if the interest rates are going lower interest rates are going negative

10:15fundamentally because it's a structural problem the u.s had a trillion dollar more than a trillion dollar deficit prior to covet right if you remove that deficit if you remove any sort of semblance of free markets if you don't keep stimulating the whole thing unwinds so stimulate they will so yeah well a lot of you know this all of this news throughout 2020 is

10:41getting a lot of retail investors and just you know middle class and lower class people interested in how to preserve their wealth because they're starting to hear that you know the dollar may not be the best spot and that has them going into things like the stock market and gold and silver and bitcoin but at the same time it seems like the stock market is also

11:00you know not a very safe place as opposed to the dollar you know do you have any thoughts on the choices that these people in the middle class are making so i understand all the choices right so if and so people are trying to get their money into something that system a relative store of value technology stocks are a relative store of value in

11:24this because they don't have debt they're they have tons of cash their work on a network effect they're growing really fast they might be overpriced and they're certainly overpriced if you let a free market decide what would happen but it's a relative store of value and what's happening but what ends up happening and why people are so fooled by this and look

11:47throughout history as the pendulum goes back and forth through the sands of time of history is people denominate their wealth all in their own currency they buy housing they buy stocks they buy everything else and it's all one denominated in their own currency and as that currency is destroyed actually some people win out of that right stocks go up because that really what's happened is

12:09currency value has gone down and the stock has gone up in relation same as housing housing goes up but when when it really breaks all of that wealth is denominated in the current currency and the reset is horrific for those people you ask i always ask why didn't people in this kind of nazi germany leave as they saw this happening they don't leave because

12:33because a lot of people are getting actually very wealthy as a result of it but they don't know that they're frogs boiling in a pot and all that wealth is going to be stripped from them so that leads into i think where you where you're going in that bitcoin is a lifeboat into away from the economic storms that are coming and i actually don't think it can be

12:57stopped right now you asked my investing philosophy and everything else now i might be wrong there about bitcoin but i've gone down the rabbit hole in a whole bunch of different areas trying to find out where this where this is from and what i would say is there's a way more chance that bitcoin is totally underappreciated as a safe asset and a store of value

13:23in this than me being wrong i could be wrong but that is a bet i would play all day long and for me it's not about health protection it's about it's about a lifeboat it's a this is if you go through his history and you see what happens when when currencies get up this out of control by the way history tells you kind of what happens kind of to the world when this happens

13:53but it doesn't tell you what's happening now because today we have two different things that are happening technology is moving way faster way faster than people believe and that's going to be in a whole bunch less jobs right and we have an alternative in bitcoin where there wasn't ever an alternative so both of those things happening are going to provide i think this

14:16this what's going to happen it might accelerate the trends on all sides yeah i'm glad that you mentioned bitcoin and i was going to ask you about the deflationary nature of bitcoin's economics with a fixed supply and an asymptote towards less bitcoins being released each year and as well the fact that the governments have been talking about central bank digital currencies which is

14:41going to be you know a national currency but have some kind of blockchain technology built into it and that may not have deflationary principles but it's sort of a stepping stone towards using the underlying technology that bitcoin is built on and integrating that into the national currency do you see those as steps towards the right direction no i see them as opposite i see the

15:06the national currencies so i wrote in my book that i am out and there's a working paper i cite in the book that the imf said interest rates in the next crisis have to go to negative six percent to have a chance to avoid them right but to avoid what's happening and so we're there right now but why can't interest rates go to negative six percent because people take their money out of

15:27the bank and they put it under the mattress and therefore the bank would collapse and so we would see the emperor has no clothes right and it would all realize the whole thing's built on a ponzi scheme that's why they can't right now but in a digital currency if they can manipulate that and give you a negative answer and you're doing everything in a digital

15:47currency it's totally controlled that's so these are again i totally understand why central banks are desperate to have their own digital currencies i understand why the wa yuan last this week is giving people money in their digital currency so that they start using that digital currency so they have more control right i totally understand the game

16:13mechanics of this what i'm getting at is bitcoin is totally different it's completely different and any i don't think it can be stopped by central bank they will try some will try but everyone that tries creates more of an incentive for other governments to accept bitcoin and so just the game theory to build built into bitcoin into the model is

16:36is what i think will will drive out yeah it's super interesting especially with a lot of countries that have experienced you know hyperinflation a lot of those citizens are already moving to bitcoin and you know in venezuela the citizens that bought bitcoin at the all-time high at twenty thousand dollars are still ahead as opposed to holding their own

16:56venezuelan bolivar so that's super interesting and like like staggering ahead right yeah millions of times ahead right the boulevard doesn't does you can't buy anything right so that's what's happening in turkey right now that's what's happening and so a lot of times as this happens throughout the world like if you look at germany or for us on gold

17:19reserve before what ends up happening is the government comes and confiscates everything and forces you to revalue into that currency it's entire is it's impossible to do that on bitcoin that's that's what makes it makes it such a i would say such a life build such a critical life vote in what's coming a cool quote i can't remember again who said it but

17:41bitcoin price is the lagging indicator of people's understanding of money that is cool all right jeff we're running out of time but my last question is do you have any advice or suggestions for people that are looking to get ahead and preserve their wealth as they potentially lead to a bumpy road ahead i you know i'm going to change that question if you don't if you don't mind

18:05here's the advice here's the advice i would give in a world at work saying right now most people think it's something else most people think it's the republican party democratic party in canada would be different in world war but all of it is the same thing all of what is trying to divide you from somebody else is actually fundamentally way back over

18:27here a deflationary world or sorry technology driven world where technology is advancing frees our time and that requires a deflation or currency it requires it there is nothing that in an existing system that can stop that from happening so when people blame other people by looking at individual elements of the system don't bite to the blame

18:53right it's something way bigger than you know and so if you actually understand that from a first principle standpoint what is happening you'll be way better protected both in your life because as as as people divide on each other but also you'll be protected in your wealth because you can make some good decisions on where to put your law great advice

19:16jeff and where can others learn more about your work and your book the book is called the price of tomorrow why deflation is key to an abundant future you can look at that you can find that on amazon and follow me on twitter at jeff booth awesome thank you so much for your time jeff it's been a pleasure and all the best and let's follow up in the near future awesome thanks