Placeholder Image

Subtitles section Play video

  • like you said the gold somehow was, had a fixed supply.

  • And even he knew that.

  • And I've had this conversation before.

  • My wife's from Bulgaria and her mother, we call baba.

  • You look where baba keeps her money back in the day.

  • You know, and she she knows not to keep it in local currency.

  • You know the smart money goes into gold or maybe you know a dollar because it's maybe the next best thing.

  • And so again the pirate has it.

  • He knows he can't carry it with him.

  • He knows he has to hide it somewhere.

  • And that's also potential that contract with the future, right?

  • Um There's a lot of, there's a lot of deep questions there.

  • And so that's a great point.

  • There is that, you know, another definition of money, actually it's intended to be the trust minimized asset.

  • So it's the asset you can hold and store value end that you do not need to trust anyone else, It is the minimal amount of need to trust anyone else.

  • Which is to say you have minimal counter party risk.

  • And to hold physical gold, you knew no one in the world could counterfeit your supply, no one could expand the supply and dilute you.

  • And if you self custody, right as the pirate was doing or maybe as baba was doing, if they buried in their backyard, uh you cross the custodian because not only is it foolish to store your wealth and fiat currency where the issuer can just debase you think this, print money and dilute you.

  • But if you stored your physical gold with a custodian, that's equally dangerous.

  • Right?

  • They'll raid your safety deposit box or um any time the geopolitical situation gets too dicey, you could just lose your gold.

  • So um, it's been the destiny of money to be something that is encrypted either by a treasure map or by uh chemistry formula related to gold or both.

  • Um and it's been the destiny of money to be something that the individual can hold, right, that I can hold and possess and not need to trust anyone else that maximizes my individual sovereignty, uh an economic agency in the world.

  • And you've also called money our most brilliant idea.

  • And if we go from like hunter gatherer tribe and we try to zoom into maybe a century ago.

  • I mean when we're hunter gatherers, we didn't need it.

  • But soon it became like you said this water, this incredible way to kind of quantify value.

  • Um but then I've heard you talk about this before and you may be talking about now when we stopped moving around, we became agrarian, it then became an asset.

  • And then you go on to say as humans, we always want more of something.

  • And that's when things really started changing.

  • And I wonder if you could talk about that concept because I don't think a lot of people have really thought about some of those ideas.

  • Yeah, this is a great origin story actually.

  • Um So to your point where hunters and gatherers for a long, long time, right?

  • So just nomadic people moving around, eating whatever we can kill most the assets.

  • We had them mostly just tools.

  • Alright.

  • Mostly just bearer assets, the things we could carry.

  • But eventually, and the reasons why are a little bit debated, but I like the one theory that we settled down and became agrarian, so we could start growing wheat to make beer, like we think it was to grow food.

  • But there's a lot of thoughts out there that we actually, we figured out we could also eat the grain, etcetera, etcetera.

  • What we went down and became agricultural for the first time in human history, we started to create a real economic surplus, right?

  • We're growing more than we can eat.

  • So all, all of a sudden we need to store this food somewhere.

  • We also started producing these agricultural assets, right, plows and buildings and you know, all the tools necessary to grow food.

  • So this was the genesis of capital really, you know, beyond just bearer assets like your dagger and whatever.

  • So this um not only did government emerged at this time, because now we had assets that we needed to protect.

  • So we needed a protection producing enterprise, uh, such that plunderers did not take these, this economic surplus, but it also as as economic surplus has emerged, the emerging more, this is than one.

  • So these centers of agricultural activity became centers of economic activity, right?

  • one group would grow one form of plant, one group would grow another, they would trade and this is how we sort of organically discovered what economists call the division of labor.

  • And the easy way to think about this is, you know, there's the old adage.

  • Many hands make light work.

  • So like if you can do something that you're really bad and I can do something that I'm really good at then and we can trade, then we are both better off effectively.

  • Um but again, that trade, there has to be some intermediary, right?

  • Otherwise we're kind of stuck needing to match are once exactly right, you need to have the exact amount of bushels of whatever and I have the exact amount.

  • So yeah, money emerges through this process of trade as quite simply the most liquid asset, the most tradable asset.

  • So, and maybe an easy way to think about this is once people recognize that something is widely accepted in trade, right?

  • Say it's um, you know, for a long time it was salt for instance, then all of a sudden I don't need to necessarily demand salt for consumption.

  • All right, If I'm trying to trade um my farming tool for your fishing rod, I may very likely treat it into salt just knowing that you're gonna accept salt and trade.

  • Right?

  • So salt sort of becomes if you think about the trading in the world is kind of this set of concentric spheres and the top most sphere is the most tradable asset.

  • Once that recognition sets in with everyone, everyone is trying to trade for the most tradable asset because that gives you pure optionality, right?

  • I can take that asset and get anything I want.

  • No matter what I want, I have to satisfy.

  • I know that I could swap salt, it's all his money for that thing.

  • So this and this is very important because what are entrepreneurs doing right?

  • What is an entrepreneur?

  • An entrepreneur is a prophet effectively that is mapping his current action to anticipated future market data in pursuit of profits.

  • So the word profit and profit are very closely connected here to deal with the uncertainty that an entrepreneur faces.

  • What is the the ideal solution to uncertainty?

  • The answer is options you want as many options as possible.

  • And this gets into another definition of money, which is an instrument of pure optionality in the marketplace.

  • You can literally be redeemed for any good or service that any market actor can produce.

  • So I think that's I like that origin story about the agricultural age because it points not only to the emergence of the state, but also to the emergence of money more generally.

like you said the gold somehow was, had a fixed supply.

Subtitles and vocabulary

Operation of videos Adjust the video here to display the subtitles

B1 asset trade salt gold baba agricultural

MORE MONEY, MORE OPTIONS ? Robert Breedlove

  • 7 0
    林宜悉 posted on 2021/11/17
Video vocabulary