 This is Jeff Deist and you're listening to the Human Action podcast Ladies and gentlemen, welcome back once again It's the Human Action podcast where we are not afraid of books and reading books and talking about books and promoting books And we have a special episode today in which we do just that. We're very pleased to be joined by Jeff Booth Jeff is someone with whom I'm fortunate to be connected to via my good friend Stefan Lavera in the Bitcoin air end of things and Mr.. Booth is the price is the author of the price of tomorrow Why deflation is the key to an abundant future which came out earlier this year in 2020 and Jeff I have to guess that When you were writing this book and it came out early earlier this year that seems like a lifetime ago now with COVID Yes, it certainly is and then a lot of the predictions in it. Obviously ended up coming true But yeah, yeah a lifetime ago Well as we get into some of this predictions Does anything about COVID and government responses to it strengthen or challenge the central tenets of the book? No, they only they only accelerated maybe so so strengthen it by Accelerating what's was happening already with technology by a number of years So so just accelerating the response to that from central governments central banks Let me make a couple of quick comments and get your takes on those first of all Because I'm sort of in the finned twit financial Twitter and econ world And you come from the tech and entrepreneurial world your name was perhaps not instantly familiar to me even six months ago So I think that's in many ways a good thing because the way because the result of that is this book from my perspective Anyway is completely free of jargon. It's free of politics. It's free of ideology. It's it feels like a very Applied book. I really appreciate that Jeff. I tried to write it in a balanced approach I tried to say I tried to look at first principles. What is true? What is not true? and instead of I I completely understand why there's so many sides and divisiveness and politics today Today, what's that what's happening to society? But I tried to look at it from a first principles Why is that happening rather than rather than sit on top of a system? When you went to your publisher, what did they think about having deflation on the cover? That's a bit of a boogeyman Yeah, no kidding. I just um, I wanted to Think about what an entrepreneur does they um in if they're right What an entrepreneur does is looks out at the world and says why does this work like this? And and tries to build a better way better most trap better and so Most entrepreneurs have a view on the world and they try to build to that I couldn't see After I got through this and the more I dug what kind of went down the rabbit hole the more I realized This might be the only solution and nobody's talking about it. No, but there is just a void of conversation The people are talking about how inflation is a good thing and without questioning the root of that and so so They you're right publisher said why don't deflation on the title, but I said I'm going to go up against send this quote and do it anyways Well, it's not just an inflation is a good thing in the minds of many people It's actually the express policy of the central bank in canada and the united states exactly as a matter of fact exactly And supposedly burnaki is going to talk about that tomorrow thursday We're recording this on wednesday supposedly he's going to talk about that in jackson hawaii oming tomorrow And say that maybe a range of inflation from zero to four percent or something is going to be acceptable to the fed rather than some sort of Two percent target so they might look at the average Over a longer period and that that suggests to me that they are perhaps setting us up to Be a little more comfortable psychologically with some actual price inflation Yeah, and and and you're deep unless you know this I don't think most people do though The the inflation is just a hidden tax, but it's a hidden tax on the on the population That's most unable to pay that hidden tax and so so as you as you concentrate wealth from that hidden tax so it's some profit few profit Many others are hurt and as you concentrate wealth from from that you You get divisive politics and you get a rise of socialism and all of the things that are Predictably happening today, which will get worse As you know kind of articulated in the book tech Government central banks have no way of stopping what's happening. It's going to unfold short of Eventually destroying the currencies through hyperinflation and then after that you'll get inflation again Because because technology wants to make prices cheaper And it wants to do it exponentially so and Any any stop of that Is yeah through inflation. It's just kind of filling a hole that'll never be It's just wealth concentration So so in the end technology is a is a much stronger force than than government's ability to stop it And and so so you're going to see you're going to see this Unfortunately play out and it's not going to look it's not going to look pretty for societies over the next 10 years because Because we're already past the point of rescue Because governments and central banks are jealous mistresses and they'll fight it Well, they they have to know right so so they don't have to know but but if you if you let deflation take hold You have a you have a multi-year you have a depression that makes The 30s look like a cakewalk Because the problem is so much bigger today than the 30s and so so so short of And here's the irony of the whole thing The thing they hate the most the thing they're trying to stop the most They're empowering When you have it when you have a policy designed to penalize savings Do you think any ceo in the right mind is going to hold to cash on the balance sheet? Right. So so if you have a blip then they're forced to bail out those same things So you have we you and do you think why do you think host prices rise? Why do rents rise along with those host prices because you have policy designed to penalize savings savings? And so what does it do it encourages more death more leverage and makes the system ever ever more fragile And in the system is ever more fragile today And combined with Technology wanting to make everything's cheaper. So so as you print more it's just racing into technology companies valuations It's just it's like a direct pipeline to be able to because those technology companies are removing jobs They're doing more with less. Why do we use technology in the first place to do more with less? There's no ceo that says hey, I I'm going to Take technology. I'm going to use drive a whole bunch of technology into my business. So I make my cost go up Right point of it is it's deflationary And it's just it's it's deflationary to rate that Our policymakers have never seen before it's a structural change To To the way the world has worked so they can't There's no way they could stop it now Sort of destroying the currencies, which is the path we're on Well, I was pleased that your section in the book on ai was optimistic. I mean there's we all survive software We all survive the automobile we all survive Horses and then cars and then you know tractors instead of plows all kinds of things and I suspect for most of us Let's say our great-grandfathers Did a long day of physical manual labor? So this is a happy thing to be celebrated not something to be feared What so so that's the point that is exactly the point The the economics is about what you know this the economics is not about value. It's about scarcity Right the error we breathe is free because it's abundant and technology creates almost everything to the point of abundance So if we embrace technology We would have an abundance of time our most important asset is our time instead of trying to work 50 years to be able to retire for the last uh for the last 10 or 15 and the relative comfort chasing ever higher prices The policies that were designed To make prices higher So the only here's a better way to say it the only way That the broad benefits of technology technological benefits Get out to a broad section of society or through depletion Other what every other road is a concentration of love which eventually turns into revolution And and war if you let it persist Well, it's interesting because peter till points out that a lot of things have gotten better With respect to software with respect to computer science But some of the more old-fashioned analog world our planes our rockets our cars Haven't sort of kept up with this and you and I think well, you know a dvd player back in 1990 cost 500 bucks or whatever And now it's 40 bucks at target if there's I don't know if dvd players are even available But why it seems like why can't I go get a cool car for three grand? Why is that 35,000? It seems like this has been not uniform this happy deflation Yeah, because some of some of the industries haven't been so think about what is happening With tesla and what will happen for you know this because you've read the book But think about what how many industries that destroys People are looking just at the first industry and and cars and everything else They're not looking at the subsequent change when when self-driving cars And all the car companies that don't utilization of a car is six percent Right capacity utilization so the amount of cars that are made in the world changes dramatically when cars drive themselves And you just don't have to store two cars in your yard or at work all the time everything else changes And and when capacity utilization of a car could go to 50 percent Business models where you derive value from completely change And so some of these industries Are just just changing now or just about to change the most of the deflation Most of most of the effect of deflation is in front of us not behind of behind us And again, you know To stop that force it took 180 visit before COVID it took 185 trillion dollars of global debt Decoration to create 46 trillion dollars of global GDP growth to stop that force So that force is is coming to it's coming to a town near you is coming to every industry It's it's unstoppable And so governments can continue to print money and create debt at the rate at an ever higher rate But eventually that'll break too Well, you talk about sort of the polarities in this book of planned economies and lots of fair economies So there's an argument in my circles about AI as as regards information Some people say AI is going to give us such good insight into information that that makes central planning more feasible Uh, you know look at walmart. That's a giant company It's the size of some countries and yet they have central planning managers within walmart and then other people say no No, no no no no matter how much information you have That walmart manager has skin in the game Because it's it's a private company that you know a bureaucrat the governor of california, for example, will never have So do you have any thoughts on on AI and and government? Oh, yeah, the geopolitical game going on Yeah, so if you want that to look like that in the u.s It looks like a lot of what china is doing with their social credit score And for a deeper dive on that read my book or or go to look at what's happening And if you want the government in every single thing you do Then uh, then then celebrate that I I do not believe that that is a path Yeah, it is scary right because all this tech is is presumably available to Government but here's this sort of the cyberpunk dream And I think your book speaks to this in a sense Which is that we have this this idea that technology manages to outpace even the most voracious state And there's just that and as you say deflation is so inevitable that we we can view them as a nuisance rather than a threat Is that maybe a hopeful way of looking at it? Yeah, and and what I would say is if if governments didn't know you Some of this stuff i'm talking preaching the choir, you know right if governments didn't have inflation They would have to tax that their proper rates to provide services Right, so all inflation is a hidden tax on society right that the people It's more politically feasible to do that and then you can build more and more government and everything else more and more Through that transfer of wealth the um What this will force and probably I'm going to take you out of the tangent here But but very rarely does a business ever do what they need to do to meet creative destruction Right, they always try to stop it right So codac invented the digital camera They didn't benefit from it all even though we have an abundance of photos in our lives today They couldn't see a business model that was so polar opposite to the way they made money That they capitalized on the invention they created right facebook did others did but they didn't um and and so, uh Netflix right blockbuster blockbuster put candy elves on their stores When digital download speeds were going faster and made their business We laugh at things like that now right and we laugh at things like that Why would a government be any different or why would a whole bunch of people in power be any different? So what they're trying to do through this the inflationary policies and everything else and the design Is protect the status quo at all costs The all costs is the political divide that you're seeing in society and the society They'll divide that you're seeing In and what's happening and and today we have some things like bitcoin That are people are are choosing that instead And as more and more people choose bitcoin, I I believe And I'm happy to be wrong here, but as more people choose bitcoin just like a new business Typically the change the change doesn't come from within the status quo changes forced upon the status quo from from the new And and and bitcoin because it because it's fixed because it's because it's deflationary in nature Is a forcing function that as more people trust that that medium I think it forces governments to to react We'll see when but uh, but but it kind of that change comes from with uh from outside the system typically instead of from within the system What do you think about Big tech companies like google supposedly has something like 90 some percent of worldwide search or amazon You know speaking just just off the cuff. Does that bother you? Do you worry about these companies? So so so again the structure that we have today Makes them bigger faster because because the network effects now I would advise all of your listeners to go deep and Understand what networks effects are how how they amplify power in a network in a network The simplest example is is a telephone one person on a new on a telephone system is worthless As you add another person the value increases for the network You add another person and over time that network is really hard to To beat because it's so so powerful To us currency as a network effect for a long time until a bit bitcoin has a network effect that's growing But network effects are 70 percent of the value of all technology companies if you have strong network if you I design companies to exploit high high network effects to to build networks and there's a certain way to do that um the and so But if you have policies of inflationary policies against that Actually, you're making them stronger faster You the the exact same thing you're trying to prevent as a policy You're you're you're increasing the wealth and the power at a crazy rate if you didn't Do what governments are doing Then more competition would open up and those kind of companies would take power slow more slowly and be forced to To share the benefits with More broadly with society. That's what that's what would happen So is the lynch pin at least for us anyway behind all this government money? Is that why crypto is so important? That's why it's so it's so important because there is no so so why do why does currency have trust? It's the underlying obligations that you believe that the government will pay those obligations As soon as that starts to erode Um currencies lose trust and we've you see it in other currencies and we believe that it'll never happen here It will happen here as sure as Is day turns in tonight Well, what I like about your book is there's there's kind of a blurring perhaps this is intentional between What we might think of as government policies and technology in other words, you aren't laying out policy prescriptions There's no tedium in this book But you know a lot of people in my world like to think of economics Choice scarcity exchange, you know win win And we like to think of the state as this big bad boogeyman and their their win-lose And yeah, right. By the way, and I think Jeff that's where I disagree. I don't think I don't I think Not all but I think many people And I'd encourage Many of the people in your world to think the same way I don't think these are bad people across the board. I think these are well-intentioned people caught in a system That they can't see their way out of and they don't even how many people question We've been so taught that deflation stopped deflation at all costs because it kills Kills productivity business and there's a deflationary spiral. We've been so ingrained to that nobody even Questions that anymore. All deflation is is goods and services going down in costs versus your money, right? What isn't that something that you would want to happen? I know personally it's something I want to happen So as you go higher and higher into this And so again, it's not bad people just like in In kodak. It's not bad people It's caught in a system trying to keep that system going that is a bad system for today's time There's been a structural change that they are not aware of and that's the structural change in business happens all the time That's what creates the new businesses Well, you're I believe it's the second to last chapter how we cooperate Do you mention that as we get into greater abundance through deflation and that sort of minimizes The effect or incentive to cheat people have have more stuff and so that that suggests more of a win-win society Maybe down the road Well, that's what I believe will happen if you let this happen. No, no the transition period because We keep kicking the can down the road and we make it worse and worse the transition period is going to be really ugly Unfortunately, and I don't think there's a way out of an ugly transition period where a lot of people are going to lose their entire well and On on the way through and so that Those are hard for societies to bear, right? It's a it's a Or worse revolution and worse. Those are our first societies to bear and then they then are reset of the rules but but yeah, if you allowed deflation if you allowed the The abundance that is clearly there for the first time in human history. We actually have the ability to do that Where we can get off this crazy treadmill And it will get better and better if we allowed that to happen It does minimize the incentive to cheat And if you look for lens of game theory, it actually sets up a cooperative nature on To be able to get to to a better place And in the last chapter the simple solution you even say that we should embrace deflation is the natural order Well, that that was interesting phrase. Yeah, and and again Isn't it right if so if technology is exponentially improving And the only thing stopping prices coming down at that same rate Is monetary easing Isn't the natural order prices coming down? And and isn't anything stopping that A fight against essentially a fight against gravity It's not gonna there's no chance that it's gonna win So Jeff Booth declares central banks Against the natural order. I think that's what's happening here. I mean because that's what they exist to do is to fight it That's what they exist to do to fight it and and and you're gonna see crap more and more cracks You're gonna see so if you kind of from here, of course, they're gonna say we need to increase inflation rate higher Of course, by the way, if they just if central banks just keep doing what they're doing and and kind of Kind of manipulate balance sheets we could say but but Still there's an assumption that that debt has to be paid back through higher taxes Then that is further disinflation All all printing money or all that does right now in current form is adds to debt which which Adds higher taxes which Which reduces business growth which adds to deflation before the technology The only way to actually so the next step is they're going to change the rules Fed is going to change the rule and there's going to be a direct pipeline from government and politicians are going to be in charge of inflation I mean inflation and helicopter money And all hell is going to break loose that is a high likelihood a high probability of what happens next on this path Because there's no way that no way out of it So how does this knowledge or this perspective help you in and building companies or running companies? Well, so it's just again, you know this from I didn't write the book to become the best seller. I didn't care anything about the book I cared about the book was really a selfless action to look after my kids and the next generation saying It's we need to we need to look deeper Most of my time is focused on company formation Helping entrepreneurs get to where they want to get to And so they get I didn't need to be an author in fires or am a reluctant author the and and and so But I think it's such an important message that not It was like an entrepreneur you you look over the world and you look at this divide People aren't putting their finger on it. What's causing it and it kind of it made me mad. It was something I was talking about for 10 years and And almost essentially said I have to do something about it Well, I have to say outside of academic economists and they're mired in academic journals Nobody is saying in the popular space. What your book is saying nobody Yeah, I know and and everybody thinks you can get mmt everything else. It's a free ride There's a lot if you want to talk saphony kelton's book and mmt It misses such glaring glaring things that if you keep on go down that Question okay, it does that matter if governments can keep printing money and everything else And then and and it makes an important thing that well if you have a reserve currency Then it doesn't matter. Okay Okay, even if I just Discrete with a bunch of the other stuff in the business and that alone if you have a reserve currency Well, you don't have a reserve Did did uh, did rom have a reserve currency when they changed their Change the gold to 10 or right? So so reserve currency has changed and as soon as people lose trust in a currency You don't have a reserve currency. So what makes us believe that we have a reserve currency forever If other countries lose faith in that reserve currency and so so such glaring things like that but but but it's written in a way That would get a whole bunch of people to say oh, there's a free ride here Well ladies and gentlemen, let me just finish with this. I love this book I just read it this past weekend. It's called the price of tomorrow why deflation is the key to an abundant future Jeff Booth is the author. He's got a website called the price of tomorrow.com He's on twitter and I think you're just at Jeff Booth bo oth that's right and Again, I'm a little late to the Jeff Booth party, but I'm I got to tell you I really appreciate you writing this book. I think it's the right length pace I think, you know, 600 page toms are not are very, you know from a cost benefit analysis. Not a good thing necessarily And I really recommend it. I suggest people hop on amazon and get it So I want to thank you for your time today. Thanks very much. It was my pleasure The human action podcast is available on itunes soundcloud stitcher spotify google play and on mises.org Subscribe to get new episodes every week and find more content like this on mises.org