whisper.cpp transcription of Brewster Kahle's DEVCon5 talk Money and Debt and Digital Contracts

gistfile1.txt

[00:00:00.000 --> 00:00:07.760]   I was very impressed with Prague last year.
[00:00:07.760 --> 00:00:12.960]   I was very impressed because there was a lot of thinking going on about what should we
[00:00:12.960 --> 00:00:14.500]   do?
[00:00:14.500 --> 00:00:16.080]   What's the point here?
[00:00:16.080 --> 00:00:18.200]   How could this thing go wrong?
[00:00:18.200 --> 00:00:22.400]   How could we learn from the .com guys that seem to have screwed things up?
[00:00:22.400 --> 00:00:28.320]   The internet guys, or those guys in the financial crisis, how did they screw things up?
[00:00:28.320 --> 00:00:31.320]   How can we learn from to grow from?
[00:00:31.320 --> 00:00:37.160]   I'm taking that as the starting point for this talk to try to suggest something you
[00:00:37.160 --> 00:00:41.440]   might want to think about and look at anew.
[00:00:41.440 --> 00:00:46.080]   I'm going to talk about money, debt, and smart contracts.
[00:00:46.080 --> 00:00:49.360]   The internet archive, you think, well, gosh, what is this internet archive?
[00:00:49.360 --> 00:00:52.360]   It's a nonprofit in San Francisco.
[00:00:52.360 --> 00:01:00.600]   Kind of Wikipedia-ish, but a lot smaller, and the idea is to bring universal access to
[00:01:00.600 --> 00:01:01.600]   all knowledge.
[00:01:01.600 --> 00:01:08.960]   So that's probably, if you know of me at all, I started and run this organization and you
[00:01:08.960 --> 00:01:12.080]   should please come and visit us in San Francisco.
[00:01:12.080 --> 00:01:15.920]   We have open lunches, all sorts of fun things.
[00:01:15.920 --> 00:01:20.080]   But if you don't know about the internet archive, you may know of the Wayback Machine,
[00:01:20.080 --> 00:01:27.840]   which has old web pages and to try to preserve the memory that has come before on the internet.
[00:01:27.840 --> 00:01:33.040]   I may be here because I hang out with smart guys and sort of internet pioneers sort in
[00:01:33.040 --> 00:01:38.800]   terms of the internet hall of fame, and that's probably why I got an indoor.
[00:01:38.800 --> 00:01:41.120]   Maybe it's the decentralized web.
[00:01:41.120 --> 00:01:47.080]   Can we make the worldwide web work without having a reliance on any particular piece
[00:01:47.080 --> 00:01:48.720]   of hardware being up or down?
[00:01:48.720 --> 00:01:51.800]   Can we make a peer-to-peer back end for the web?
[00:01:51.800 --> 00:01:57.040]   So it really helped trying to support the promotion of locking the web open.
[00:01:57.040 --> 00:02:01.360]   But I'm expert in all of those things, so I'm going to talk to you about something I'm
[00:02:01.360 --> 00:02:05.240]   not an expert in, and actually I know who I'm talking to, the experts in this, but I'm
[00:02:05.240 --> 00:02:10.480]   hoping I'm going to give you a new perspective in the area of debt.
[00:02:10.480 --> 00:02:14.120]   My story starts by my having won the internet lottery.
[00:02:14.120 --> 00:02:20.040]   I sold companies, I became artificially wealthy, and I was trying to figure out what the heck
[00:02:20.040 --> 00:02:22.040]   is money.
[00:02:22.040 --> 00:02:29.000]   So I started reading books, and my favorite book from that era was called Frozen Desire.
[00:02:29.000 --> 00:02:33.720]   So this guy, James Buck, and he goes over the history of money, and he goes and says,
[00:02:33.720 --> 00:02:35.400]   what is money?
[00:02:35.400 --> 00:02:40.840]   It's frozen desire, and it talks all about money, money, money, and how it works, and
[00:02:40.840 --> 00:02:45.000]   how you finance debt wars, and on and on.
[00:02:45.000 --> 00:02:47.200]   It's a very interesting book.
[00:02:47.200 --> 00:02:51.000]   It occurred to me, it's like, no, no, maybe it's not really money that's the important
[00:02:51.000 --> 00:02:52.000]   part.
[00:02:52.000 --> 00:02:54.200]   Maybe it's debt.
[00:02:54.200 --> 00:02:56.080]   Maybe it's debt.
[00:02:56.080 --> 00:03:03.040]   And it turns out that money and debt mostly create each other.
[00:03:03.040 --> 00:03:06.280]   And I'm going to stay on this for a moment because I think it's going to be important
[00:03:06.280 --> 00:03:09.520]   in our crypto world.
[00:03:09.520 --> 00:03:14.360]   Almost always, even in the crypto communities, they talk about money like gold and things
[00:03:14.360 --> 00:03:17.320]   like that, where it doesn't go into, there isn't debt.
[00:03:17.320 --> 00:03:23.880]   But if you take currency, the American currency, or any of the world currencies, about 5%
[00:03:23.880 --> 00:03:29.920]   is money, and the rest is money and debt create each other.
[00:03:29.920 --> 00:03:33.800]   The way that you get more money is you create debt obligations.
[00:03:33.800 --> 00:03:38.920]   If you go and say, well, I'm against being in debt, really what you're saying is I want
[00:03:38.920 --> 00:03:42.240]   somebody else to be in debt because I have money.
[00:03:42.240 --> 00:03:44.840]   If I have money, somebody else has debt.
[00:03:44.840 --> 00:03:46.240]   They create each other.
[00:03:46.240 --> 00:03:52.400]   They exist in a one-to-one relationship almost, except for about 5%.
[00:03:52.400 --> 00:03:54.600]   That is, I find, very interesting.
[00:03:54.600 --> 00:03:59.160]   So whenever I hear of these bankers, these economists going on and on about, we want
[00:03:59.160 --> 00:04:01.960]   to increase liquidity out there.
[00:04:01.960 --> 00:04:07.640]   What they really want to increase the money supply, just try out a thought experiment.
[00:04:07.640 --> 00:04:12.120]   Whether they say money, just insert the word debt.
[00:04:12.120 --> 00:04:16.160]   And you will also understand what they're saying, and actually much more precisely.
[00:04:16.160 --> 00:04:20.520]   When they say they want to increase the money supply, they want to increase the amount of
[00:04:20.520 --> 00:04:22.360]   debt supply.
[00:04:22.360 --> 00:04:25.680]   They want to go and liquidity more money out there.
[00:04:25.680 --> 00:04:27.160]   They want more debt.
[00:04:27.160 --> 00:04:32.800]   So what debt is, and it's always debt with interest, it's a slope.
[00:04:32.800 --> 00:04:35.920]   And money goes from debtors to creditors.
[00:04:35.920 --> 00:04:36.920]   It's a slope.
[00:04:36.920 --> 00:04:42.240]   You can change what the slope is, and you can change how much there is.
[00:04:42.240 --> 00:04:45.480]   And when they're trying to increase the money supply, they're trying to increase the amount
[00:04:45.480 --> 00:04:46.720]   of debt.
[00:04:46.720 --> 00:04:51.360]   So that just increases the amount that's going from debtors to creditors.
[00:04:51.360 --> 00:04:57.440]   And then there's interest rates where you can go and tilt it the slide more.
[00:04:57.440 --> 00:04:59.440]   But it's all going one way.
[00:04:59.440 --> 00:05:01.760]   I'm not saying that debt is bad.
[00:05:01.760 --> 00:05:03.600]   It just is.
[00:05:03.600 --> 00:05:08.000]   But debt exists, and it has existed for as long as there has been writing, which I'll
[00:05:08.000 --> 00:05:10.640]   get to in a minute.
[00:05:10.640 --> 00:05:14.600]   So if you're trying to look for lines of control and trying to predict how the future
[00:05:14.600 --> 00:05:18.760]   will behold, I always try to figure out what's the root causes out there.
[00:05:18.760 --> 00:05:23.960]   I would suggest don't follow the money, as they said in all the President's men, a famous
[00:05:23.960 --> 00:05:28.440]   movie about the Watergate investigation.
[00:05:28.440 --> 00:05:30.560]   Follow the debt.
[00:05:30.560 --> 00:05:31.560]   Follow debt.
[00:05:31.560 --> 00:05:34.000]   And obligated to whom?
[00:05:34.000 --> 00:05:39.760]   That's going to be the more important part of how all of this works.
[00:05:39.760 --> 00:05:48.720]   And this, I would suggest, be the most indicative of what's going to happen in the future.
[00:05:48.720 --> 00:05:54.700]   At that point, a book came out called Debt, the first 5,000 years by David Graeber.
[00:05:54.700 --> 00:05:58.640]   This is the most important book I've read in the last 20 years.
[00:05:58.640 --> 00:05:59.640]   It blew my mind.
[00:05:59.640 --> 00:06:05.880]   It basically chopped pillars out from underneath my whole belief system.
[00:06:05.880 --> 00:06:11.280]   This guy basically wrote, it's across the 5,000 years history across the whole world.
[00:06:11.280 --> 00:06:17.880]   It's kind of an amazing book, and tried to detail the history of debt, and how did it
[00:06:17.880 --> 00:06:20.000]   work in different cultures?
[00:06:20.000 --> 00:06:23.680]   And it works very differently in different cultures, and there's a lot more possibilities
[00:06:23.680 --> 00:06:24.680]   out there.
[00:06:24.680 --> 00:06:29.000]   A brilliant man, a wonderful read, highly, highly recommend it.
[00:06:29.000 --> 00:06:37.440]   It basically goes on this structure of how does debt evolve, and how does obligation?
[00:06:37.440 --> 00:06:40.720]   Let me define debt precisely.
[00:06:40.720 --> 00:06:44.680]   Debt is quantified obligation.
[00:06:44.680 --> 00:06:50.160]   So there's obligations we all have to our friends, our mothers, but quantified obligations
[00:06:50.160 --> 00:06:51.160]   is debt.
[00:06:51.160 --> 00:06:55.200]   And another characteristic of almost all debt is it's transferable.
[00:06:55.200 --> 00:06:58.000]   So it's transferable actually by the creditor.
[00:06:58.000 --> 00:06:59.800]   The creditor can give it to somebody else.
[00:06:59.800 --> 00:07:03.040]   So you might be in debt to somebody, and then they suddenly put it to somebody else, and
[00:07:03.040 --> 00:07:04.560]   now you're in debt to somebody else.
[00:07:04.560 --> 00:07:07.320]   So a really peculiar device.
[00:07:07.320 --> 00:07:15.680]   But I highly recommend this book in terms of how does value exchange move among people.
[00:07:15.680 --> 00:07:19.080]   And you guys are all in this field, so recommend it.
[00:07:19.080 --> 00:07:23.760]   So basically I said, all right, if that's what's crushing our people, we now had the,
[00:07:23.760 --> 00:07:24.760]   it was 2008.
[00:07:24.760 --> 00:07:27.000]   There's a housing crisis.
[00:07:27.000 --> 00:07:30.000]   The people at the Internet Archive were having real trouble because of rent.
[00:07:30.000 --> 00:07:33.160]   I tried to figure out why was rent so high.
[00:07:33.160 --> 00:07:36.720]   It turns out it was debt service on the apartment buildings.
[00:07:36.720 --> 00:07:42.360]   If you could make debt-free apartment buildings, you could have rent that's one-third of market-based
[00:07:42.360 --> 00:07:43.360]   rent.
[00:07:43.360 --> 00:07:48.760]   I said, great, why don't we go and try to make debt-free housing happen by going, having
[00:07:48.760 --> 00:07:49.760]   a structure?
[00:07:49.760 --> 00:07:51.120]   I need to be able to create a bank.
[00:07:51.120 --> 00:07:52.960]   So I created a bank.
[00:07:52.960 --> 00:07:56.640]   I created a credit union called the Internet Credit Union.
[00:07:56.640 --> 00:08:02.400]   And we ran it for a while, and boy, the regulators really, really didn't like it.
[00:08:02.400 --> 00:08:06.160]   Boy, just go start a bank.
[00:08:06.160 --> 00:08:07.160]   Yeah.
[00:08:07.160 --> 00:08:09.560]   They basically didn't want us around.
[00:08:09.560 --> 00:08:11.840]   So they crushed us out of existence.
[00:08:11.840 --> 00:08:16.960]   And unfortunately, Trade Hill, which was a Bitcoin company, because we were the only
[00:08:16.960 --> 00:08:19.360]   credit union that would go and deal with them.
[00:08:19.360 --> 00:08:24.640]   We went when they crushed out us out of existence, they went out of existence too.
[00:08:24.640 --> 00:08:29.280]   So I learned a lot about how the banking system worked, and it is really that bad.
[00:08:29.280 --> 00:08:33.080]   If you think it's bad, you're right.
[00:08:33.080 --> 00:08:38.760]   In terms of how electronic funds transfers work, ACH transfers, it's insecure, it's fraud
[00:08:38.760 --> 00:08:41.920]   written, it's a real problem.
[00:08:41.920 --> 00:08:45.600]   So we tried to do a bank, and that didn't work.
[00:08:45.600 --> 00:08:47.080]   We're very early in Bitcoin.
[00:08:47.080 --> 00:08:50.600]   At the Internet Archive, we basically paid our employees in Bitcoin.
[00:08:50.600 --> 00:08:54.560]   This I think is a picture of the first Bitcoin ATM.
[00:08:54.560 --> 00:08:59.240]   It's an open cash box with a wallet.
[00:08:59.240 --> 00:09:03.600]   So you basically can just go and change your money back and forth to the Bitcoin.
[00:09:03.600 --> 00:09:04.600]   Okay.
[00:09:04.600 --> 00:09:07.440]   A lot of the Bitcoin people didn't like it because it trusted people.
[00:09:07.440 --> 00:09:09.760]   But anyway, it worked.
[00:09:09.760 --> 00:09:15.680]   And so that was our part of our exploration with Bitcoin.
[00:09:15.680 --> 00:09:19.000]   And then this book.
[00:09:19.000 --> 00:09:22.080]   This is where David Graber got his ideas on the early part.
[00:09:22.080 --> 00:09:26.280]   And the year I think is where the things are going to get interesting for you.
[00:09:26.280 --> 00:09:29.160]   The title of this is "And Forgive Them Their Dats."
[00:09:29.160 --> 00:09:34.440]   It's a line from the Lord's Prayer, "And Forgive Them Their Dats," and they will forgive
[00:09:34.440 --> 00:09:35.960]   their debts against you.
[00:09:35.960 --> 00:09:38.640]   And they meant it literally.
[00:09:38.640 --> 00:09:46.880]   And basically this is a history book of what happened during the Sumerians, Babylonians,
[00:09:46.880 --> 00:09:54.360]   Akkadians, basically the Bronze Age near East, how their financial system worked.
[00:09:54.360 --> 00:09:57.680]   They were the first to invent debt with interest.
[00:09:57.680 --> 00:10:04.600]   With debt with interest, what happens is you slide things from debtors to creditors.
[00:10:04.600 --> 00:10:07.040]   Debtors become everybody.
[00:10:07.040 --> 00:10:08.560]   They lose their farms.
[00:10:08.560 --> 00:10:09.920]   They become in debt.
[00:10:09.920 --> 00:10:12.560]   They leave the land.
[00:10:12.560 --> 00:10:16.920]   They end up with their wives and children as debt servants.
[00:10:16.920 --> 00:10:22.600]   And basically society breaks down.
[00:10:22.600 --> 00:10:25.560]   If you allow this to go too far, it breaks down.
[00:10:25.560 --> 00:10:27.880]   And it breaks down quickly.
[00:10:27.880 --> 00:10:32.000]   So what they invented was a debt forgiveness system.
[00:10:32.000 --> 00:10:39.080]   Every 25 to 50 years, they would basically go and declare debts gone.
[00:10:39.080 --> 00:10:41.120]   They wiped the slate clean.
[00:10:41.120 --> 00:10:42.120]   That's a literal term.
[00:10:42.120 --> 00:10:43.120]   They were on slate.
[00:10:43.120 --> 00:10:46.240]   The Sumerians wiped the slate clean and you were out of debt.
[00:10:46.240 --> 00:10:48.280]   It usually came with the beginning of a monarch.
[00:10:48.280 --> 00:10:51.400]   A new monarch would come in and say, "You're all out of debt.
[00:10:51.400 --> 00:10:53.680]   You don't owe the government any money.
[00:10:53.680 --> 00:10:59.360]   You get your farms back so people could move back onto their farms.
[00:10:59.360 --> 00:11:07.120]   The children and the wives are released from their servitude and they would do this every
[00:11:07.120 --> 00:11:08.600]   25 to 50 years.
[00:11:08.600 --> 00:11:16.280]   If they did not do this, then the society would go exponentially more and more unequal
[00:11:16.280 --> 00:11:19.760]   until people revolted and there was civil war.
[00:11:19.760 --> 00:11:26.920]   Every civil war for 3,000 years was a debt war according to this scholar.
[00:11:26.920 --> 00:11:27.920]   Interesting.
[00:11:27.920 --> 00:11:29.760]   They never heard this.
[00:11:29.760 --> 00:11:34.600]   So the Hebrews developed a system called Jubilee.
[00:11:34.600 --> 00:11:40.300]   Jubilee is every 50 years there would be debt forgiveness and you would go and let people
[00:11:40.300 --> 00:11:42.460]   have their lands back.
[00:11:42.460 --> 00:11:49.400]   You would go and take things away from the oligarchs and give them back to the peasants.
[00:11:49.400 --> 00:11:50.840]   Can you imagine that now?
[00:11:50.840 --> 00:11:53.880]   But if you don't do this, bad things happen.
[00:11:53.880 --> 00:11:57.680]   So let me say, gosh, I haven't heard that before.
[00:11:57.680 --> 00:12:00.240]   You have, but it was new to me.
[00:12:00.240 --> 00:12:05.440]   There were some things that were very interesting to me in grinding this idea home and I'm going
[00:12:05.440 --> 00:12:08.280]   to then come back around how it works in Ethereum.
[00:12:08.280 --> 00:12:13.080]   The Liberty Bell, with a famous thing in the Liberty Bell of the United States, founding
[00:12:13.080 --> 00:12:16.880]   of the country, it says, "perclaim Liberty out throughout the land and the inhabitants
[00:12:16.880 --> 00:12:18.840]   thereof."
[00:12:18.840 --> 00:12:24.200]   The rest of that line is actually Leviticus 25, 10.
[00:12:24.200 --> 00:12:26.920]   It says, "And it shall be a Jubilee unto you.
[00:12:26.920 --> 00:12:32.000]   Each of you will return to your family property and your own clan."
[00:12:32.000 --> 00:12:37.560]   So what Liberty meant in the early part of the United States was freedom from debt, was
[00:12:37.560 --> 00:12:42.080]   freedom from these obligations that they were escaping in other lands.
[00:12:42.080 --> 00:12:44.120]   Okay, another one.
[00:12:44.120 --> 00:12:45.640]   The Rosetta Stone.
[00:12:45.640 --> 00:12:48.800]   We know the Rosetta Stone is how we broke hieroglyphics.
[00:12:48.800 --> 00:12:49.800]   We understand hieroglyphics.
[00:12:49.800 --> 00:12:52.120]   Do you know what it said?
[00:12:52.120 --> 00:12:53.800]   You know what the proclamation was?
[00:12:53.800 --> 00:12:55.560]   It was a government proclamation.
[00:12:55.560 --> 00:12:56.880]   Okay, you guessed it.
[00:12:56.880 --> 00:12:58.720]   It was debt forgiveness.
[00:12:58.720 --> 00:13:01.520]   It's basically structured debt forgiveness.
[00:13:01.520 --> 00:13:06.360]   That was what was worth carving in stone and distributing it out through the empire during
[00:13:06.360 --> 00:13:09.040]   the Ptolemaic period.
[00:13:09.040 --> 00:13:12.560]   So we see it starting to be again and again.
[00:13:12.560 --> 00:13:16.200]   Jesus is in his first sermon in Nazareth.
[00:13:16.200 --> 00:13:18.360]   Okay, I'm not a Bible thumper guy here.
[00:13:18.360 --> 00:13:20.000]   I'm just a historian.
[00:13:20.000 --> 00:13:27.720]   But Jesus in his first sermon coming back to Nazareth, he declared a Jubilee year.
[00:13:27.720 --> 00:13:32.800]   He declared, there is this guy who basically said, "All you oligarchs have to give all
[00:13:32.800 --> 00:13:37.640]   your money, basically back to the people you've shafted out of all of that over the last
[00:13:37.640 --> 00:13:39.440]   50 years."
[00:13:39.440 --> 00:13:41.720]   And it's not just me interpreting this.
[00:13:41.720 --> 00:13:44.520]   It's actually this is from the Vatican little footnote.
[00:13:44.520 --> 00:13:47.160]   This is what it is Jesus said.
[00:13:47.160 --> 00:13:49.960]   And that's enough to get you killed.
[00:13:49.960 --> 00:13:58.800]   So if you go forward a bit more to the Spartans, the Spartans had real troubles with wealth
[00:13:58.800 --> 00:14:00.080]   inequality.
[00:14:00.080 --> 00:14:03.800]   And there were two Spartan kings that promised reform.
[00:14:03.800 --> 00:14:06.600]   They were killed or exiled.
[00:14:06.600 --> 00:14:11.200]   So they basically said, "Yes, we're going to basically do debt forgiveness, land redistribution
[00:14:11.200 --> 00:14:12.520]   that will work."
[00:14:12.520 --> 00:14:15.600]   If you don't do this, things collapse.
[00:14:15.600 --> 00:14:18.360]   Sparta collapsed.
[00:14:18.360 --> 00:14:24.640]   And the United States is in this process of basically at war with itself, with massive
[00:14:24.640 --> 00:14:26.200]   wealth inequality.
[00:14:26.200 --> 00:14:29.880]   Yet we have not really broached the subject of debt forgiveness.
[00:14:29.880 --> 00:14:35.680]   So debt with interest, the lesson out of this is if you do not have a reset mechanism,
[00:14:35.680 --> 00:14:40.480]   it leads to societal collapse in civil war every time.
[00:14:40.480 --> 00:14:44.920]   It's a way of interpreting the Maoist revolution, the Bolshevik revolution.
[00:14:44.920 --> 00:14:49.560]   Take away any ideological terms, just think of it as just how do you go and equalize
[00:14:49.560 --> 00:14:54.720]   after you've ended up with massively unequal wealth inequality.
[00:14:54.720 --> 00:14:57.880]   So what, why am I talking about this here?
[00:14:57.880 --> 00:15:01.280]   Well crypto, you guys are designing a new system.
[00:15:01.280 --> 00:15:02.720]   It's a beautiful system.
[00:15:02.720 --> 00:15:03.920]   It's based on math.
[00:15:03.920 --> 00:15:05.080]   It's not based on regulation.
[00:15:05.080 --> 00:15:07.120]   It's got all sorts of interesting properties.
[00:15:07.120 --> 00:15:08.120]   I love it.
[00:15:08.120 --> 00:15:09.120]   Been involved in it.
[00:15:09.120 --> 00:15:10.120]   Terrific.
[00:15:10.120 --> 00:15:11.440]   Will crypto be different?
[00:15:11.440 --> 00:15:16.800]   Well, whenever I read this wonderful book, Digital Cash by Finn Bolton, that's wonderful
[00:15:16.800 --> 00:15:22.840]   book about the history and the dreams of cryptocurrencies, and it never talks about debt.
[00:15:22.840 --> 00:15:26.920]   In fact, I've talked to several people here and they say, "Well, it can't happen with
[00:15:26.920 --> 00:15:29.040]   Bitcoin and it can't happen with the Ethereum."
[00:15:29.040 --> 00:15:37.200]   I suggest it can and it will because it evolves into this, such that 95% of the money out there
[00:15:37.200 --> 00:15:39.880]   in the world is matched with debt.
[00:15:39.880 --> 00:15:43.320]   95% is sort of the Bitcoin equivalent.
[00:15:43.320 --> 00:15:49.480]   So I think there's at least a major possibility that there's going to be lending and there's
[00:15:49.480 --> 00:15:53.560]   going to be derivatives and the like that are going to hang on to this.
[00:15:53.560 --> 00:15:58.720]   And one of the things, the reason why we're going to get that is because of smart contracts.
[00:15:58.720 --> 00:16:06.040]   Smart contracts allow you to quantify and enforce certain obligations.
[00:16:06.040 --> 00:16:13.520]   So actually, I would suggest the Ethereum community, you guys, we guys, are building the actual
[00:16:13.520 --> 00:16:18.280]   mechanisms that we're going to be able to do this type of thing.
[00:16:18.280 --> 00:16:23.800]   But the weird thing about it is there's almost no reset button.
[00:16:23.800 --> 00:16:26.680]   We think of regulation as bad, right?
[00:16:26.680 --> 00:16:28.880]   Government is, you know, they screw things up.
[00:16:28.880 --> 00:16:31.320]   Well, they have been a bit of a reset button.
[00:16:31.320 --> 00:16:34.480]   Boy, if they screw things up and often they're working for the wrong people, for all the
[00:16:34.480 --> 00:16:38.200]   wrong reasons, you know, there's issues there.
[00:16:38.200 --> 00:16:45.400]   But if we make a system that is debt with interest that has no reset, then at least historically
[00:16:45.400 --> 00:16:49.800]   we can run into some severe, severe problems.
[00:16:49.800 --> 00:16:59.320]   So that's the basic point of this talk is to say that the evolution of money, beguat debt,
[00:16:59.320 --> 00:17:02.080]   money and debt beguat each other.
[00:17:02.080 --> 00:17:06.240]   That debt with interest goes exponential.
[00:17:06.240 --> 00:17:11.880]   If there's no reset mechanism, then there's societal collapse and civil war.
[00:17:11.880 --> 00:17:16.800]   Basically, you have very few winners and lots and lots and lots of losers.
[00:17:16.800 --> 00:17:20.880]   And that's not a very stable environment.
[00:17:20.880 --> 00:17:27.480]   I wonder, and I just posed to you, that as we're designing a next generation internet
[00:17:27.480 --> 00:17:34.200]   money, how money and value is exchanged with smart contracts, that the debt system is
[00:17:34.200 --> 00:17:38.440]   something we can't just go and say, "Oh, well, we'll just won't do it," because it
[00:17:38.440 --> 00:17:40.680]   will probably be built in some way.
[00:17:40.680 --> 00:17:45.880]   How do we go and build our systems that will serve a large number of people over time?
[00:17:45.880 --> 00:17:50.440]   I look at the microfinance system where it was like, "Hey, isn't it great?
[00:17:50.440 --> 00:17:52.560]   Let's go and put a lot of poor people in debt."
[00:17:52.560 --> 00:17:58.320]   And so they did, and that's gone really wrong in a lot of circumstances.
[00:17:58.320 --> 00:18:05.960]   And there's in cases of India going and giving peasants the right to not pay back their debts
[00:18:05.960 --> 00:18:10.920]   in microfinance because they were committing suicide at a too high a rate.
[00:18:10.920 --> 00:18:15.000]   So even these systems that seem great at the time, they're awesome.
[00:18:15.000 --> 00:18:17.040]   They have some downsides to them.
[00:18:17.040 --> 00:18:19.520]   I speak to you as an internet pioneer.
[00:18:19.520 --> 00:18:23.280]   It didn't all turn out quite the way we thought it would.
[00:18:23.280 --> 00:18:28.240]   And so let's go and see if we can learn from those things, but also what are the precursors
[00:18:28.240 --> 00:18:31.200]   to the systems that you're building?
[00:18:31.200 --> 00:18:33.720]   What should this mean for Ethereum?
[00:18:33.720 --> 00:18:35.560]   I don't know the answer to that.
[00:18:35.560 --> 00:18:37.440]   Really, I don't.
[00:18:37.440 --> 00:18:42.640]   What I wanted to do this, and I really appreciate your time, is for you to think it through
[00:18:42.640 --> 00:18:43.640]   a little bit.
[00:18:43.640 --> 00:18:44.640]   Spend a shower on it.
[00:18:44.640 --> 00:18:47.040]   Spend a commute, right?
[00:18:47.040 --> 00:18:51.720]   You know, I've just sort of, okay, what does this mean in terms of debt, and how can it
[00:18:51.720 --> 00:18:53.120]   go out of control?
[00:18:53.120 --> 00:18:59.080]   How is the system that I'm doing kind of locking in a set of losers that may be exponentially
[00:18:59.080 --> 00:19:00.080]   increasing?
[00:19:00.080 --> 00:19:04.960]   When I hear somebody really enthusiastically saying I'm going to go and make better for
[00:19:04.960 --> 00:19:11.480]   billions of people, just go and look at it again and go and say, well, is that true?
[00:19:11.480 --> 00:19:15.640]   How did it play out before when certain other people have said the same things?
[00:19:15.640 --> 00:19:17.600]   It's not to say we shouldn't do it.
[00:19:17.600 --> 00:19:19.480]   It's just our chance now.
[00:19:19.480 --> 00:19:20.840]   It's early enough.
[00:19:20.840 --> 00:19:25.000]   People like you guys that are building these systems, we can do something about it.
[00:19:25.000 --> 00:19:28.760]   Let's not come to regret what we are building now.
[00:19:28.760 --> 00:19:32.480]   Thank you very much.
[00:19:32.480 --> 00:19:42.600]   I have 26 seconds for a question.
[00:19:42.600 --> 00:19:44.960]   Yes?
[00:19:44.960 --> 00:19:49.400]   What do you think the precursor is?
[00:19:49.400 --> 00:19:52.920]   What do you think the precursor is?
[00:19:52.920 --> 00:19:56.440]   What's the precursor for debt forgiveness now?
[00:19:56.440 --> 00:19:57.440]   Desperation.
[00:19:57.440 --> 00:20:00.840]   Usually, it only comes about when people are really desperate.
[00:20:00.840 --> 00:20:07.200]   We had a chance in the United States when the debt, the housing debt happened, and we
[00:20:07.200 --> 00:20:10.600]   could have gone and forgiven the housing debt and kept people in their homes.
[00:20:10.600 --> 00:20:11.600]   We didn't.
[00:20:11.600 --> 00:20:12.600]   We bailed out the banks.
[00:20:12.600 --> 00:20:14.560]   We didn't bail out the homeowners.
[00:20:14.560 --> 00:20:18.440]   Now a lot of those homes are now owned by Berkshire Hathaway.
[00:20:18.440 --> 00:20:22.040]   They're rented back to those people.
[00:20:22.040 --> 00:20:23.240]   It's a level of desperation.
[00:20:23.240 --> 00:20:25.880]   It's going on right now with student debt in the United States.
[00:20:25.880 --> 00:20:26.880]   Yes?
[00:20:26.880 --> 00:20:31.240]   I will read the books, but I was wondering if you could give us a little summary, though,
[00:20:31.240 --> 00:20:37.000]   of from the perspective of the people that are holding all of the debt and it's getting
[00:20:37.000 --> 00:20:39.360]   forgiven, this is a terrible thing.
[00:20:39.360 --> 00:20:43.760]   You were saying these pardon kings, two of them were killed and so forth.
[00:20:43.760 --> 00:20:50.360]   But how does a society get to a point where it does this non-civil war peaceful forgiveness
[00:20:50.360 --> 00:20:51.360]   of debt?
[00:20:51.360 --> 00:20:52.880]   What are the conditions that make that happen?
[00:20:52.880 --> 00:20:58.320]   In the United States, in the early 20th century, well, in the 20th century, we had the Bolshevik
[00:20:58.320 --> 00:20:59.840]   revolution, the Mao revolution.
[00:20:59.840 --> 00:21:02.440]   In the United States, we had the New Deal.
[00:21:02.440 --> 00:21:07.920]   The New Deal, the oligarchs hated the New Deal.
[00:21:07.920 --> 00:21:15.480]   The New Deal of FDR, there was a 95% incremental tax rate.
[00:21:15.480 --> 00:21:20.000]   My grandfather complained that if he made another dollar, 95 cents of it went to the
[00:21:20.000 --> 00:21:22.080]   government, he hated it.
[00:21:22.080 --> 00:21:23.080]   He did just fine.
[00:21:23.080 --> 00:21:27.280]   Don't cry for my grandfather.
[00:21:27.280 --> 00:21:33.000]   What the United States did is they basically taxed their way into restoring a middle class.
[00:21:33.000 --> 00:21:36.400]   We had a gilded age and we crushed it.
[00:21:36.400 --> 00:21:42.360]   The United States I grew up with, sorry, had a middle class.
[00:21:42.360 --> 00:21:45.640]   The United States I live in now, it's disappearing.
[00:21:45.640 --> 00:21:50.520]   It is horrible and it erodes.
[00:21:50.520 --> 00:21:53.160]   You can do it without a civil war.
[00:21:53.160 --> 00:21:58.280]   You can just do it by having somebody powerful enough that wants to preserve society and
[00:21:58.280 --> 00:22:02.240]   keep people from all moving away from their lands, which is what's going on now in the
[00:22:02.240 --> 00:22:03.240]   United States.
[00:22:03.240 --> 00:22:03.240]   Okay.
[00:22:03.240 --> 00:22:03.240]   Thank you.