 Jeff, welcome to the show, how are you doing? Great, thanks for having me. So recently you came out a book called The Price of Tomorrow and the number one thing that you're hammering in that is deflation. And right now we're in a very peculiar environment where a lot of people are talking about inflation, some people are talking about deflation, but I think a lot of people have kind of a cognitive dissonance or an issue understanding the two differences. And so if you want to kind of just spend a second and kind of diving into like what is inflation or I would say real economic inflation and what is real economic deflation? Sure, and I think you'd point out, we've been taught to think deflation is bad, right? So we grew up and inflation is a good thing and that's how economies grow. And so I think we've accepted that. But if you look deeper, inflation is really simple. Inflation is when the value of your money is eroded and goods and services in relation to that go up in price. And deflation is the opposite. The value of your currency is enhanced as goods and services go down in price. And so there isn't a good and bad, it's who wins, who loses. So it's really as simple as that. But if you have an economic system that is built for inflation and highly levered, if you have deflation, the debt can't be repaid because it gets more expensive in real terms. If you borrowed a house and then you get paid less the next year and all costs go down, the cost, the real debt explodes in value. So if you over-leveraged that and you haven't deflation, you have to reset the debt. There was one of the famous economists, I don't know if it was a Keynesian economist, but they said in the future things will be so cheap that we wouldn't have to have the wages go up. Yeah, John Maynard Keynes. Keynes had that, yeah. He didn't predict that. So in 1930 he wrote an article that said the economic possibilities of our grandchildren. And in that he predicted a 15 hour work week. And so you would have all the abundance with a 15 hour work week. And I don't comprehend why that is a bad thing. So if you could have the same lifestyle and prices went down and they kept going down and you could work less and you could have more free time, I don't see why we're fighting so hard to stop that from happening. But we've lived in an inflationary environment all our lives and governments are trying to stop at all costs, including breaking the structures of what made capitalism work, including breaking the structures, making capitalism and eventually breaking their currencies to stop deflation. Well, I think there's two types of world we're living in, very similar to 1984 in George Orwell. We have the stock market, which is not the real economy. This is an inflationary pseudo economy. And then you have the real economy, the street economy. And inflation helps the people on top, the people who have these quote on quote, they call, you know, they're a paper value, not liquid casual paper value. And inflation propagates, we've seen it since 08, the stock buybacks, an exponential rate. They're doing everything today. They've printed north of $7 trillion a Fed and who knows when that's gonna stop. So they're printing money and they're trying to propagate the stock value as much as possible. But for them, this is good. They wanna propagate the stock market. But for you and I, let's say a regular working class person, say nine to five that has inflation hitting their salary on a day-to-day basis, no deflation, definitely Vancouver and Toronto, real estate prices are skyrocketing since who knows the 1990s. And so I literally see in parallel this two different universes living. Yeah, it's way bigger than what you think. It is, it's exactly what you said, but it's bigger than, it's far bigger than that. So in the world today to create, in the last 20 years, to fight against the natural forces of deflation, governments have printed or when you say printed, created debt in excess of $185 trillion, right? In the last 20 years. And that has only produced GDP growth of 46 trillion. That's a really important step and that would all be for COVID. Right now, now it's massive more easing, right? And the economy is going to be smaller. So the debt to GDP globally is so staggering. If you create that much debt, it becomes a drag on future earnings, right? Future, paying back the debt with interest has to make GDP go down over time, right? Just like if you borrowed money, and then couldn't pay that money back when you borrowed more, and then you borrowed more, and then you borrowed more, eventually the time comes to do that you owe that money back, right? And when you have to stop pulling demand forward and pay the money back with interest, you're purchasing power, well, it looks high while you're borrowing money, and it looks like you have an internal economy that looks really great. It has to go down later with all of that debt. And so globally, that much printing or that much debt creation creates that problem, but it's worse than that. So, and if that debt could be repaid, it would slow the economy down, right? It's essentially you're borrowing from the future to pay it back, right? And later on, our kids would have to pay way more in slower growth and taxes and everything else to be able to pay that back. But because this is a structural change that's happened because of technology, the debt can't be paid back. And so governments are turning to printing money out of thin air, which is debasing currencies and changing currency values all over the world. So, if China comes out and they have to lower their currency value to keep people employed, and everybody knows in China that they have to, then what the citizens of China will try to get their money outside of China and stick it into our real estate, right? And then the real estate goes up. So, anytime you do this, you're artificially creating winners and you're artificially creating losers. The greater irony is then government has to step in and protect both, right? So, it's socialism for the rich and letting, and instead of letting capitalism work and letting things fail, but then because the prices are artificially manipulated higher, housing is an example, then rents are artificially higher. And then you have to bail out society with social programs to pay for those higher prices that you created in the first place. So, a colossal waste of money. But, see, a couple of thoughts I have here. You mentioned very basic stuff. So, we're talking about taking from the future what to pay for today, but you're stealing from the future. You've mentioned $185 trillion has been printed only and he said key fact has produced $46 trillion of GDP growth. And keep in mind, the $46 trillion is per year. Per year, yeah. Yeah, so. And I'm 100% agreement that the middle class is getting completely squeezed out. It's not really capitalism going on. We have socialism for a select few people, elite socialism, but at the end of the day, no one's gonna be able, like you can make taxes higher as all you want, but there's no production. There's no economy. How are you gonna pay back any of this stuff? So, that's the point. When you're artificially juicing an economy, so real estate goes up and essentially it's a chase for assets that are not gonna be eroded by monetaries. That's what people are doing. But if you understand the structure of those assets too, they have to be taxed at a way higher rate in the future to pay for what you're doing now. And that becomes the rub. So, you've artificially created winners by pushing this up. And a lot of those winner who were the winners aren't created because they're ingenuity. It's because they were in the right time in the right place when governments decided to go in all in and when printing money, right? And then a lot of the other people that have left out of that game is not because they're lack of ingenuity. They just didn't get in the game early enough when asset prices were under this tremendous rise. And both parties, both sides of that, if you wanna, what's causing the dislocation of almost the polarization of society, right? You have, on both sides of the political spectrum, people yelling at each other and the conversations are hard to even listen to because they're both fundamentally flawed, yelling at each other on an existing structure that can't work in the future. And so, and neither side realizes that one got a gift and one got their pocket picked, right? So that ends if you keep doing that, if you keep on baking that into society, it ends in revolution. The only way I see this being solved are there's a couple of ways, but I don't see how we can escape a debt jubilee. Like there's no other way. Like you can keep, especially if we enter MMT, well, whatever the classifies MMT, I just don't see how they can continue. Even if we have, which we are heading into more of a localism versus globalism and there will be an increase on supply, if you can't get the same production from China, I just don't see how they're gonna be able to keep on taxing people like this. Yeah, so let's first explain to the audience what a debt jubilee is, right? It's forgiving of all the debt. But okay, so let's imagine me in that. Let's say I'm one of the winners. I have a whole bunch of debt and I have commercial malls and rents, tie everything else. By doing that, you just baked in my win forever, right? Whether you do it at a government level, whether you do it is so. I would do it at citizen level. I wouldn't do it at government. The banks, I would have elimination like one simple way in the United States is no income tax. Yeah, but if you carry these conversations forward and you understand how the system, the structural system works today, you can't just kind of artificially do that because it breaks every other connection. Everything's connected, yeah. Everything's connected. Remember in 2008 when, so in my business in 2008, when we were giving out letters of credit around the globe, there was a time in about a week period where banks wouldn't accept on either side. They didn't trust the exchange rate. They didn't trust that the other bank had the money even though they said they had the money. So you had a breakdown of world trade globally. And it all started, and remember when it started, oh, it's only subprime. It's only the bad borrowers, right? But that subprime then connects to, it just connects to the entire system and the entire system is overpriced because of that leverage. And trying to stop that overpricing, it takes it down like a falling knife, right? And so last week, the Fed printed or took $2.3 trillion of highly leveraged loans off the balance sheets of banks and PE funds. And the reason they did so is because those highly leveraged loans can't be paid back. It's oil is minus $37. All of the entire industry there, would you buy that industry and buy that debt, right? It's over, right? It's the business, and instead of resetting it and having new operators come in and let capitalism work, they're bailing out the existing operators. But if they don't bail out the existing operators, then, and that's connected up to the banks, then the banks fail. Banks fail and you lose your savings in a bank. You have bigger problems. So we've entered a time where there are no easy solutions and policy makers are in a really difficult time in what is the transition? So every day, Trudeau in our country comes out and announces $2 to $10 billion more in some stimulus, right? We're gonna have deficit this year or somewhere north of $200 billion. And all of that stimulus money is going into propping up the existing system, right? When it is super clear that the super highways of the future are all digital in nature, right? So when you used to build roads, you used to, if economy's spattered and you needed to get people back to work, you used to build roads and highways and the efficiency of that because people drove to their work, created GDP gains north of what you spent on the roads and highways, so it carried on. Today, by spending that, when Zoom went from 10 million users to 300 million users in a period of 45 days, right? And those 300 million users aren't gonna go back to 10 million after this, right? Which means commercial real estate's overlaveraged, which a lot of the infrastructure products, all of those people reduced demand for commercial real estate and actually speed up of the rate of the rate that technology's moving. And so you mentioned a lot of times before with the correlation or the connection between technology and deflation. And you mentioned it's very difficult for policy makers to create some type of plan to get out of this, but hypothetically, let's talk about this, like what would you do to get us out of this sticky situation? I would first admit that we were, that technology creates abundance, right? And look at your phone. So the phone or your smartphone is 13 years, not quite 13 years old. And ask yourself how many of the apps you actually pay for. You don't pay for a camera anymore. I don't pay for my cartoon or anything. Information, it's all free. Technology drives a price and it gets cheaper and cheaper and cheaper. So the thing that's sitting in your phone that gives you all of that abundance, if that's moving into every corner of society and it's expanding that rate, it's moving in that rate. AI is making it move faster, data collection. And that's a good thing, right? I'm sure you don't want to give up your phone, right? It gives you tremendous abundance and when I bought my first phone, it was $1,200 for the phone, $2,000 for my first month of phone calls and all of it for my phone calls. Today, it's a supercomputer in my hand and it gives me massive abundance and I could buy last year's phone for $50 a month on a plan and not pay for anything else. So you can see it in your phone, right? But that same thing is happening throughout society. So if that's going to advance across society, then it means we should be getting prices coming down everywhere and more abundance. And these are hard concepts to grasp because we've grown up in a world, there's a lot of people that think economics is a science and economics is about value. Economics is not about value, it's about scarcity. And I can prove that really easily. If economics was about value, then the most expensive thing around would be the area you breathe. Yes. But it's abundant, so you can't charge for it. Technology creates that abundance everywhere and it's going to do so more and more. So the problem is it competes with jobs, because it takes out jobs. And so governments are asking the wrong question. They're trying to prevent job destruction by printing more money and they're actually making it worse. When they really should be saying, how do we design a solution that takes advantage of technology and doesn't have people working as hard? Have the same lifestyle while working? My issue with, and you're correct, it's been a deflationary trend since 2010 on iPhones, on computers, even the nanometer size for chips that are making it smaller and smaller. And so we've seen a deflationary price on technology. Like I remember the first time I bought a big screen TV, I think it was like $5,000. I walk in Best Buy now, you can buy something ridiculously cheap for like 700 bucks, it's like insane. But if we're looking at the cost of living, like mass low hierarchy of needs, housing and produce, that's exponentially gone up. Like ridiculously. But why? Now go back, you know why, right? Because you're making things scarce through money supply. So when you're printing money and the store of value becomes a house, then the store of value is what's scarce and people are trying to make money on something else and it's driving that price up. Host prices would not be, we've become diluted into host prices always go up. Oh yeah, for sure. Just ask this question. If there wasn't $185 trillion of stimulus over markets over the last 20 years, that's $185 trillion is a lot of money. Would house prices be higher? And the answer is simply no, they wouldn't. That breaks people's thought pattern because they say, well, my house has to go up because that's my retirement and then I can live off my house. And that is true, that's the world we lived in. But it can't go on. So- No, I always bring this up. Like my parents bought a house in Toronto, well, multiple, the house that I grew up in, they bought it for 180. Right now it's like 1.9, 1.8. And so, okay, in context matters, economy was different, the dollar was different, everything's completely different. It's day and night, it's like living on Mars, like completely different. And so people still have the same mindset. I'm gonna buy this house for $1.5 million and I presume the house is gonna be worth $3.5 million in 10 years. By the way, it will be. If it will be under this, if we explode debt that much more in the next 10 years, the only way it will be. But if that happens, then taxes are gonna go up on it equally as much to make- But they're gonna hollow out the city, the fuck's gonna afford to live $3 million shipbox house. But the only reason they can afford to do it is because you devalued the value of the currency to do it, that's the point. And that picks a pocket of savers and gives it to, picks a pocket of stomach and gives it to the other. Again, deflation isn't a good or bad thing. Inflation isn't a good or bad thing. Just different winners, different losers. That's it. I see though a problem like, okay, Vancouver and Toronto and you have the, we're both Canadian. So you have the average Canadian household income is around 60K combined, give or take. And you have the average house in Toronto, Vancouver, a piece of shit house is a million dollars, no garage, no nothing. I'm talking about garbage house for a million dollars. First time home buyer is 20%, that means $200,000 liquid cash. I don't know about you, I don't know too many regular people walking around $200,000 liquid cash. Not to mention the mortgage very high, insurance, yada, yada, yada. Okay, fast forward 10 years from now, property values go up 20, 30%. Let's say classical 46% per year. Who's living in these cities? Yeah, so that's a point, at some point, right? If you've made a real estate a bank and it's just a protection of wealth. Let's look right now, in Airbnb, there's a whole bunch of people on Airbnb that bought real estate because they could rent it on Airbnb and leverage that. And so if you had enough capital, if you had that 200,000 times a whole bunch of places, you went in and created a new business on Airbnb and you rent out those. And now there's no one renting those, right? And so prices have to fall materially. And government, but if they fall materially to be able to support the new realities, right? All of the people owning that get wiped out as do the banks on top of them because the reset is so massive that the banks actually end up failing too, right? That's why it's all... I know about one point you have to pull the band-aid. So I'm not disagreeing with you, like in my book, the band-aid, you cannot add more debt to a debt problem and think you're going to fix it. The wealth poor gap is accelerating by the because of the same function we're talking about. And the real, the bigger problem that anybody is talking about is that's going to break societies. It's going to break currencies, it's going to break societies. And once you go too far down that road, you cannot unring that bell. Hitler rose to power because of the same thing because bread lines with people trying to pay for bread and somebody who rises to power in that because they blame the asset holders. And they say, it's not your fault, it's their fault. So if we go too far down this path, it's very predictable what happens next. I agree with you, right? And this isn't an if, technology is deflationary. Technology is moving to every corner of our society. And that means that a new economic model is required. It is, I get like, I really hit on real estate because majority of your income goes to housing and food. And the dirty politics that I've seen, like for example, you're not allowed to have microsweets in Toronto because it's against some stupid bylaws, like the property I own, I can't build a little house in the back, like really, really dumb bylaws. I just don't see how going into the future working class people can create a family. So just, and I hate to jump on to prejudices and everything else, be a policymaker today. It is a hard decision right now because right now, the entire system, it's a structural change. And it's hard to make that shift on a structural change when all of your tax revenue comes from that and the same tax revenue that you're collecting from that is paying for service programs for everybody else. It's not bad people. It's a bad system. And it's the best analog I can come up with is this. This happens in business all the time, right? And we look at those businesses and we say, how didn't those CEOs understand, the executive team understand what was happening because we have hindsight of 2020, right? And so remember, businesses have some of the best minds running the businesses, right? They're not dummies. So let's look at Blockbuster. And we all know how the story ends, right? And because we have hindsight. But be the Blockbuster at the time where this was happening and you could have bought Netflix for $50 million. Yeah. And that's it. Everybody laughs. Who could people? Those stupid people. So the only thing they missed is how fast technology was moving. The only thing they missed because Netflix business at $50 million was a shitty business. It was DVD running back and forth through the mail. Yeah, people don't know it. It wasn't digital at the beginning. It wasn't digital. What changed is download speeds went from eeeeeeerrrr to overnight. And when that changed, 9,000 stores in Blockbuster became irrelevant overnight, right? The only thing that the executives missed was how fast technology was moving. And so what they did as a response to that was add more candy aisles to their stores, right? And so you, and because people want to want movie and can't ever want popcorn and candy when they watch a movie, like it's just, but again, that's why that's a good analog for what we're doing that governments are faced with right now is what they're doing is adding more candy aisles. Yeah. The technology has created a structural break in the way we've run society. And it's hard to see for people. I have two follow-ups. One, there are micro ways that we can remediate within the systemic risk. And I've said this before, I think we need to start focusing more on city states where they're the void of federal fingers. And so it's very difficult, no different than if you're going into a big billion dollar corporation and trying to rejig it from the ground up. Good luck with that. It's systemic, there's a culture there. You're not gonna really change anything. And so instead of trying to change anything, if you look at laws of nature, you don't really change nature. New technology comes into nature. A virus, for example, comes and does this thing. A bacteria comes, an alpha predator, like humans, we take over the whole world. And so we introduce a new technology that's far superior to the old technology. And so I don't see how we can just change a whole city where I'm more in favor of, and we have examples in North America of city states, which is native reserves. They're technically city states where they have their own constitutional laws and police force, and they can dictate how they behave on that sovereign land, where we can start from zero and create actual city states that have better systems in the pre-existing. Of course it's hard. Of course it's hard. I would say, when I say hard, I mean impossible, because what currency are you going to use there? And what facilitates global trade is a common currency that is exchangeable everywhere. And what breaks it down is every government trying to develop their own currency and changing and manipulating the currency rates underneath that to be able to influence world trade. So I use China's needs to devalue their won or the US needing to devalue their currency right now. Nothing I have to devalue, it's going to keep on going up. They have to, but what happens when that happens is you artificially make your labor cheaper versus the globe. And you repay your debts with cheaper currency. So if you keep doing that, you ruin trust in the fundamental exchange of value. And it's hard to do that. So it's hard for a city stage that needs to global trade to try to play that game in the global trade mandate. I don't know about global trade. I think the whole idea of globalization is how it's done. I think that story is over. It isn't over. There are certain supply chains that are going to change for sure. I'm involved in a number of different companies that help on that trend and make things more efficient and can localize supply chains. But as a byproduct of doing it, they also remove jobs because they make things more efficient. The whole point here is his technology makes things more efficient and that reduces jobs. And we're trying to artificially keep jobs by changing money supply. You know, Peter Drucker said a long time ago, we're entering more of a knowledge economy as opposed to production economy. But like for example, Canada, 10% of our GDP is oil production and I don't know how much real estate's in that GDP equation. And a lot of blue collar jobs in Alberta, Saskatchewan, even British Columbia, Ontario is more tech oriented, at least in Toronto it is. I don't know, call me naive, but like I said earlier, I just don't see how they're going to fix anything unless they pull the fucking band-aid. Yeah, as an entrepreneur, I want to kind of, what's the first principle and what do you need to do to build to there? So I agree with you. As a policy maker, you have to build bridges to that new policy, right? So a way forward, and this is going to be, what I'm about to say now is going to be super, people will attack it. But if you're a policy maker and real estate makes up 20 or 25% of your GDP and you realize that it makes up 20, because you've incented that structure to run wild and it doesn't actually give you a whole bunch of added value down the road, then you have to increase the taxes on that to slow that growth down, right? Well, you create incentive structures the way that you want the industry to go. And so instead of piling $200 billion of new debt into existing industry, you need to take a portion of that and you need to put it into the highways of the future. But even that, if you project this forward, if every government did the right thing and drove towards technology faster, yeah, there would be more jobs in the short term, the jobs would come out faster anyways. So what you have to solve is, what you really have to solve is, you have to drive a mindset that increases the value of savings away from debt and allows deflation to happen. So the benefits are broader to society. And so this is a good segue because you've talked about this a lot before, but Bitcoin, how do you see this fit in the whole mix? So I'm a huge believer in Bitcoin and I almost can't believe I'm saying that, but I am from a structural reason and then a network effects reason. By the way, 70% of all technology value is driven because of a network effect. And the network effect is a basic premise to have your listeners go in and research it more. But if I have a phone, I'm the only one that has a phone that's worth zero. If you have a phone too, the network is more valuable. Every additional user to that network makes the network more valuable and it's why Google is valued as high as they are, it's why Amazon is valued as high as I are, Alipaba. The internet itself is a giant network effect and as are the biggest monopoly companies on top of it. Bitcoin works on a network effect. The more people that use it, the more valuable it is as a store of value and that's what's happening right now. So as governments in Venezuela a year ago, their inflation rate was 1.8 million percent. And so if you held their currency, you lost all of it. If you held Bitcoin that lost 30% that year, you lost 30% instead of 1.8 million percent. And so the more people that are doing that and then you could pay your bills or you could move it across borders seamlessly. And the more people that understand that are driving into Bitcoin and making it more and more valuable as they drive into it. Here's again, I actually don't know if I want Bitcoin to be successful because for it to be successful means governments have so lost the plot. So when people are talking about millions of dollars on each Bitcoin and how much that could go up, the social dislocation from what that looks like is terrible through society. So I would love to see governments get together globally, set a new standard that looked like Bitcoin and make a voluntary path to this, right? Or pegged to Bitcoin, one of the two and made a voluntary path to do that. I don't suspect in how trust looks around the world today that that's possible. So I suspect Bitcoin is a good hedge against that. Yeah, they've been talking of the SDR, the SDR type of currency they want to bring in. But then that's also a threat against the US sovereign dollar as well. So that's what happens. Everybody's protecting their own geopolitical kind of currency and everything else and by doing so everybody's racing for their own currency. Is there any probability that US brings some type of reserve back in, whether it's like semi-gold reserve or some type of asset correlated to Fiat? So that's actually what I would say that is the bet with Bitcoin. I suspect at some point a government is going to pig to Bitcoin or start buying up in the free market or buying some free market and then pig. And once that happens, all other governments will be forced to move really fast because of the network effect. Yeah, it's interesting to pay attention. We have a halving coming up in two, three weeks in Bitcoin where half the mining reward goes away. And so that could be a downward pressure on Bitcoin in the short term. Yes. But just because of, you know, understand the fundamentals of how it works, but then on the back half of that as miners become profitable again because of people falling out of market, there should be a massive acceleration. I always tell people, this is, Bitcoin is the millennial real estate. Yeah, it's probably, if you accept some of the things we're saying and you know the governments have to kind of debase their currencies to try to get out of the debt hole, then it's a logical step again. It's a logical protection of wealth against them. Yeah. Well, Jeff, I just want to thank you so much for coming on and sharing your thoughts. I know you have your new book out. Where can people get that? Amazon's probably best. Okay.