Defi

Fixing the Global Financial System With Crypto

May 26, 2021

Share this article:

HOST:  Hey everybody.  Welcome back to the Unstoppable Podcast.  I'm your host, Diana Chen.  And I'm back today with my favorite co-host and your favorite co-host to listen, Matthew Gould. He's the CEO and founder at Unstoppable Domains.

Today, we are here to talk to you about fixing the global financial system with crypto.  And we're going to be talking all about how crypto is going to have a really big impact on our global financial system and how it's going to increase productivity and prosperity for all people around the world.  And this is something that Matt is super passionate about and interested about.  He has a lot of great things this say, so I'm very excited to have him here with me today to talk to me more about this and educate me more about some of the things that are broken in our current financial system and some of the ways that crypto can really improve this for everybody moving forward.

So welcome, Matt.  Thanks so much for joining me with this episode.

MATTHEW GOULD:  Oh, I'm glad to be here.  It's an exciting topic.  We've got lost to cover; we'll try to do it justice.

HOST:  Awesome.  So I think a good place to start is at a very high level; let's start from the basics.  What is money?  What is it used for?  Let's just start there.

MATTHEW GOULD:  Yeah.  So there's a couple things that people use money for. And one is just to save, right?  And you put your—if you go and you make a wage and then you spend everything and you've got some leftover, you use your dollars to store it.  You don't store money as like finished products or like for anything from barter or anything like that.  We switched over from using those types of physical goods to store wealth, to using money in a lot of cases.  And when it's used like that, money is being used as a reserve asset.

Then the other thing that we use money for is in trade.  So we use money to make it a lot easier for people to agree on a price for things.  And it's called the coincidence of wants. And basically what that means is, it's a lot easier for us to come to an agreement or some sort of contract if we have a standard pricing system across the economy.  So that I can say, hey, how much per hour are you going to charge me for doing this?  And you can say 35 bucks, and we can go say, great.  We know how much that is; we can agree to it, we can sign it.  And then, yeah, I can hire you no matter where you live on the planet.  So it's great for trade and it's great as a reserved asset.  And those are the two primary use cases for money.

HOST:  Got it.  And so when money first began, it wasn't—the fiat currency that we know about today, it was gold.  And so what was gold all about?  Like what, what was the gold standard?

MATTHEW GOULD:  Yeah.  And there's actually a lot of people who debate like the origins of money.  And so that's—they people who wrote books on that and that's for a different podcast.  But in our most recent history, we've had essentially two different ways of running the global economy.  And one of those was the gold standard that was before the 1970s.  And the gold standard's gone in and out of fashion, several times over the past several hundred years or even gold's been around for thousands of years.  But in the modern monetary system, it's gone and out, in and out of fashion.  And then the other one that we live by, is the dollar standard.  And these things could not be more different.  

And it's just kind of interesting to me as Americans, we're in the US and we view them interchangeably.  And that's not the case so much elsewhere, like internationally people understand that there's a difference between holding gold and holding dollars.  But here in the US, everything's priced in dollars, and no one really thinks about owning gold, I mean, some people do, but it's not a very popular to do to store your wealth that way, because the dollar just been a reasonable currency to use for buying investment products or goods.  So it's function both as a reserve currency and then also as a trade currency.

HOST:  Got it.  So this is probably different for every country, but let's to speak to the US at least.  When did we switch from gold to fiat, the US dollar and why?

MATTHEW GOULD:  So the big switch actually happened during the Nixon presidency.  And there were a lot of considerations for why we had to go off the gold standard, but it basically it came down to United States, didn't have enough money.  And so we didn't have enough—we didn't have enough gold to back up all the dollars that we had created.  And there was a whole bunch of different things that came together.  And basically our government had been spending way more money than it had. We had all these external world wars that we were fighting. There were issues with the economy not performing as well as it could.

And so the choice for the politicians was actually, like do I have to raise taxes and cause a recession and make a lot of voters angry at me, or can I just let us go off this gold standard and then devalue dollars internationally?  And now I'm spreading out the pain, not only to US consumer, but also to international holders of dollars.  And maybe it's a little less painful for us as a country to go that way.  And that's ultimately what we did.  And at the time it was radical. Nobody knew if it would work or not.  And people were actually wondering like, hey, if the United States is not backed by gold anymore, will people still take it?  And it turns out that if your currency is not backed by gold, but you have the world's largest military, that is a good substitute. And that worked for us in the United States starting in the 1970s to kind of establish it as a global trade currency, even though it was no longer pegged to the gold standard, where you could actually change in a set amount of dollars for a set amount of gold.

HOST:  And so when we compare gold with fiat currency, what are some of the pros and cons to using each?

MATTHEW GOULD:  Okay.  So there's a lot here.  So I'm going to try to go through; I'm going to try to highlight what I think are some of the more important ones.  So one of the great things about gold on an international or so, and I should actually abstract this a little bit.  So gold is a hard asset, meaning there's only a limited supply.  So if everyone agrees on having a hard asset, as the like reserve asset for trading with each other, everyone can feel pretty confident that the value of that is going to stay the same or go up over time. And so everyone chose gold, because it was pretty easy to ship around and high value, dense, last forever type thing. And so gold was the product that we decided to use as that reserve asset prior to the 1970s.

What this did, was it at as like a break or a constraint on anybody in the system getting too far outta whack.  So like I was saying earlier, the United States had racked up too much debt and was in a bad financial position and they couldn't afford to pay people back with gold.  Well, if they had chosen to pay people back with gold that meant that they would've—that the United States would've had to made some changes in the way they at its economy was structured.  And what are those changes?  Well, we would've had to become more productive, interest rates would've gone up, that we would've taken less risky loans.  We would've had to invest in ourselves, increase our personal savings rates; all sorts of demographic things would've happened in the United States economy in order to make us more responsible.  Essentially, small business, everyone would be like essentially running better balance sheets like their home economic balance sheets that you're taught in eighth grade home EC class.  And instead we chose, oh, we're not going to go on gold standard.  We are allowed to be much more irresponsible with our spending.  

So one thing that's really good about having a hard currency standard, is that all these countries are all these different groups of trade with each other. Nobody can get too far outta whack.  Okay.  So that's step one.  So, okay.  

What else is happening?  Well, I just said that things can get outta whack on a fiat currency standard.  What do I mean by things getting outta whack? Well, if you look at the United States right now, we have a tremendous amount of debt spending, and there are other countries around the world too, who have this problem.  And what's also interesting in the United States, if you look at like the middle of the country, there's a lot of people who are unemployed, a lot of factories that have gone out of business.

And there's a lot of opportunity that's been shipped overseas and we've kind of decimated our supply chains.  And so like, how is it possible that we're buying all these things from these other countries where at the same time we have all these people here who could be making them, and why hasn't the global economy adjusted to make that shift?  Well, because we're no longer required to be financially disciplined by having a hard money asset.  We're allowed to issue a bunch of financial products in order to borrow money, to buy more goods from other countries like China.  And instead of if we were on a hard currency standard, we wouldn't be able to do that because we just wouldn't be able to issue more debt and we would have to produce these things internally.

 So the second thing that that happens when you're not on a hard currency standard is, because you don't have the financial discipline instilled by a hard money asset.  You can finance huge changes in your economy by borrowing from others that result in things like certain sectors of your economy being overlooked.  And in the United States, it's our manufacturing industry.  Basically we sold out our entire manufacturing base across the middle half of the country, shifted over to these other countries and just use our—went to Wall Street and wrote some bonds, borrowed some money, and then bought it back.  So that's the second thing that I think is really bad is that it, it leads to global trade imbalances which affect real people in real life.  There's a lot of unemployed people in the United States today because of the way that our global monetary system is structured.

 So and then thirdly, and this is the last one, and this is me putting all my libertarian that, it's that we, you get wacky incentives in the economy.  And specifically you get wacky interest rates, incentives; and we're going to touch on this a little bit later, potentially.  But one of the things that I just like to point out to people is that I think the interest rate right now to borrow for the country of India is 31/2%, and the interest rate for me on my mortgage is 2.65%.

And you don't have to be a genius to think that it's kind of weird that an individual in the US can borrow money at a lower rate than a country, the size of India with one billion people.  And this is because these outta whack financial incentives have resulted in this weird interest rate regime where people in wealthy rich countries have access to financial capital at much lower rates than people everywhere else across the world.  And it leads to unfair incentives, which ultimately decrease productivity globally.  So basically the future happens slower, because people are incentivized to do the wrong thing with the current fiat standards.  

So that was a long answer for the difference between gold and other hard money standard.  And I think we can have a Bitcoin hard money standard or an Ethereum hard money standard, or a name your crypto currency hard money standard works just as well, as long as it's hard money.  That's the difference between a hard money standard and then our fiat system that we currently are running.

HOST:  Yeah.  And we will get to the Bitcoin or the crypto piece of it, but another thing I want to talk about is inflation. Okay.  So this is obviously, something that I think a phrase that everybody has uttered at some point in their lives, is remember back in whatever year when this only costs whatever. So the other day, like we just got a car last summer, because we live in the city, there's like no need for a car.  So we haven't had a car in like 10 years and just got one.  And I was trying to find in a car wash, which is like impossible to find in the city, but the car wash was like eight bucks or something, which I guess is like pretty standard nowadays. But I remember when I was in high school and drove a car, it was like you could get a $1 car wash anywhere like that wasn't even cheap.  That was just like the standard.

And so I was like, remember when car washes were only a dollar or like back when movie theaters were still a thing, pre COVID times, and we'd go see a movie.  And movies cost like 20 bucks now, or something.  You get like an assigned seat, the seat reclines, it's like super fancy.  And I was like, remember when movies cost like a $1.50 and they were all super dingy and just like scary places to be, but like awesome because it cost a $1.50.

So like why does inflation happen?  Why are things getting more and more expensive?  And is this ever going to end?  Is there a light at the end of the tunnel or are we just always going to be faced with this; things are getting more and more expensive for the rest of our lives?

MATTHEW GOULD:  Yeah.  So I will say there is no light at the end of the tunnel, as long as we continue to use the current money system like which we're doing now.  And just so people know, we've only been on this money system that we're currently using since the 70s.  So it's only around for 50 years, right?  So don't let people trick you into thinking that these things can't change.  And that money system that ended in 1970s was actually established in 1910.  So that one only lasted for 60 years.  So these monetary regimes, they change every 50 years.  And the reason they change is because they typically break.  And like I said, that we change the 1970s because the US, we had our—we were funding the Vietnam War among other things and had domestic problems.  And it's because we had a lot of problems that the system was forced to change.

And unfortunately, I think we're going to have the same thing or I mean, a similar thing.  Like this system is going to change because we have problems and here we are in the pandemic.  And I would say fortunately though, on the positive note, we'll get to it.  I think crypto is an outlet for that potentially going that making it an easier transition and a much better transition, we'll get to that. Okay. So yes, I think things are going to keep getting more expensive.  The one that strikes me all well, this to one I'm a fast food junkie.  So I remember dollar menus used to be a thing and I would go and I'd spend three or four bucks and I would be full.  And if I go and eat fast food now, I'm spending $13 to $20, and that's a lot of money to spend on fast food, but you know, I'm eating the same amount.  I'm the same human.

And I was actually younger and eating more back then so I'm actually eating less now and spending three or four times more.  The other one is gasoline.  And my wife will tell you this, I complain about this every time we go to the pump; why is gasoline creeping up on $4 and $5 in some places depending on where you live?  Gas was 79 cents, 50 cents; when I was in high school, I can't remember.  I could fill up the whole tank with a 20 and like have some change left over.  So gasoline, and we're in the middle of a pandemic where last year, at least demands picking up again in now, but last year demand was down; everything was down and we still had really high gas prices.  So no, I don't think this is going to stop.

And I think that it's ultimately, you know, it's going to, it's going to just keep happening as long as we're on this regime.  And I do think it's bad for everyone.  And it's actually—inflation is really complicated at one level.  If you want to know, if you're trying to predict what the inflation rate's going to be, you're going to have a hard time because it is dependent on both supply and demand.  It's like how much do people want, plus how many dollars are there available?  

But over the long run, I actually think inflation is quite simple, and it's just how many dollars are there, right? Divided by the number of goods.  And if you make twice as many dollars and then you have the same size economy, then things are going to tend to be twice as expensive like that.  It should have just kind of gravitate towards that over time as everything kind of gets sorted out and it's dependent on demand and the supply.  So it doesn't work perfectly.  

And just a real quick example, there, let's say that we have an economic shock, like a pandemic.  So the economy's at a hundred, there's a pandemic, all of a sudden economic productivity or economic output drops by 30%.  Now we're only 70%.  If you print 30% more money on top or whatever to add up, so if we get back to a 100, right?  So now you're still at a 100, you're fine.  But if you keep that money in the system, and then the economy grows back to where it was, you're going to be in a situation where now prices are going to be higher.  And so that's kind of what we just saw in this pandemic, but it's in the US and other countries with the current fiat system, we've just kept printing money at every time we have any kind of price crisis.  And then we leave that money in the system and that's just going to make prices higher tomorrow than they are today.  

So I believe that empirically just based on what I've seen, I'm willing to have economists argue that point, but for real world people, look at the prices in 1970, in 1980, in 1990, in 2000, 2010, and look at prices today, they're up and to the right.

HOST:  Yeah.  And so another thing that I found to be really interesting and surprising as I was researching for this episode is that the rate at which our wages have been going up has been a lot; is a lot less than the rate at which inflation goes up.  And so, okay, if you were like, well, inflation goes up X% a year, but then our wages go up X plus 1% a year, then I'm like, okay, fine.  Maybe I can accept inflation being a thing forever, but if inflation's going up X% and then our wages are going up X minus however many percent, then I'm sort of not okay with that because then essentially like everybody is going to feel like they're getting poor and poorer, and things are costing more than they're able to afford.  

And that's sort of scary to think about long term, like as the gap widens more and more between the rate at which inflation goes up and the rate at which our wages go up.  So you know, what's up with that?

MATTHEW GOULD:  Yeah.  And as a millennial you've experienced that, right? Because you're not in as good a position or at least your generation is not as good as position as their parents were. And it's actually—I'm not exactly the word, but I think some people refer to it as like a silent tax on people, because over time it does.  It pushes up the prices for everything, but labor.  And that has to be—that's actually kind of a weird outcome of how investing works.  And what happens is when new money is created in the system, the people who get access to the money first are people who already have assets.  And then what they're able to use that money for is to fund new businesses and new capital, or they can buy existing capital before anybody else does.  And then earn higher returns as the value of that capital goes up, because now there's more money in the system.

So what I'm trying to say is when new money enters into the system, it's not going to your pocket.  Now, we had an exception to this last year when they mailed checks to people, right.  And everybody likes getting mailed checks in the mail.  But like that was like the first time in history where they created new money.  And then they actually put it into the pockets of normal consumers first, because you got that check like a week later if you had direct deposit set up.  And so that's pretty quick.  But typically what happens is when new money is made, the first person who gets that new money are landlords and people who own a bunch of real estate property or big business owners.

And then they can use that money to buy up a bunch of different assets and then create new investments, and so that's why you'll see the stock market go up.  You'll see real estate prices going up to the right and you see all sorts of esoteric assets like art go up into the right as new money is created in these systems first.  And what does that do, is it just makes people who already had art real estate and stocks even more wealthy.  And then they can use that additional wealth to buy even more assets.  So the reason why wages don't go up as fast as capital assets is because when new money's created, it goes to people with capital assets first.  They use that money to buy more capital assets, which pushes up capital assets prices.  And then, and then their original amount of money is worth even more, which they then used to buy even more capital assets.

So you get like this, you get this nice little cycle of housing, for instance, going up in value.  And then people borrowing money against that housing to buy more housing, which then pushes it up in value.  So you have this like recursive feedback loop on, on the capital side that labor just doesn't get.  And labor just becomes more and more desperate, because the prices of everything they buy are going up and they can't get a toehold.  Like the number of people in the United States who own stocks is actually quite low.  Like the percentage of people who own 90% of the stocks, it's a very small portion of people.  And then the number of people who can afford to get houses is also at all-time low.  I believe it's like a 50-year all time low right now, even though everyone's going out and trying to buy a house right now, other than the percentage of homeowners is lower than it normally is because the prices are higher.  So these people are getting cut out of even getting on that financial treadmill for improving their lives.

HOST:  Yeah.  And then sort of like another side note too, is another stat I found is that since we switched from gold to fiat, which was like 50 years ago or so.  Productivity in the labor force has increased 250%, but wages have only increased 30%.

And so I think this is like the classic burnout that everybody has probably experienced at some point in their lives.  And I mean, maybe can also partially—at least partially be blamed for the increase of people suffering from mental health issues nowadays as compared to 50 years ago. But yeah, I just thought that was interesting as well and very surprising when I found out about that.

MATTHEW GOULD:  Yeah.  And there were some good books about this talking about how—and I think its Pickett.  But they're talking about how the people who are getting the advantage of all this productivity increase.  Because if you think about it, if the people working for you are 250% more productive, like 2.5 X better, then show and they be paid 2.5 X more, right? Or something, right?  Like maybe there should be some distribution there.  But what you're pointing out is that they're only being paid 30% more, even though they're two and a half times, you know, 250% more productive.  

So what's happening is because capital is just advantaged in capital systems.  Capital is capturing a much, much, much larger share, and it's not real capital.  What do I mean by real capital?  I mean like it's this created funny money that they're printing more dollars into the system and they're using that created money to spend on more capital assets to increase productivity and then capturing the majority of that return and not giving very much to labor.

Whereas if they're subjected to a real interest rate, they may not have that same—they may not be getting that much of—they may not be getting the majority of those increases, because they would have to pay higher interest rates on their capital.  I'll try that one more time.  What I'm trying to say is because the US government is printing a bunch of dollars.  They're keeping the price for borrowing money really low, because if there's more dollars, then my mortgage is 2.65%, right?  So like they're making the price of capital really cheap.

So as a capitalist who deploys that capital, I'm getting a lower interest rate than is natural.  So because I get that lower interest rate, I'm able to keep a higher percentage of the returns on that asset.  So I would potentially say that could be contributing to that, because we give this subsidy to people who make investments, they end up getting more of the pie than they would get otherwise.  And the worst part is, they didn't earn that subsidy.  That's the part that's upsetting, totally fine with capitalist making return on capital.  That's great.  That's the incentive structure of work.  But the problem is that the interest rates are paying for that capital is a lot lower than it should be.

HOST:  So basically what you're saying is that people with assets benefit from the system and then everybody else doesn't?

MATTHEW GOULD:  That is a very—and I don't think anyone would disagree. Like if you just look out there, it feels wacky, and this comes from somebody who has assets. And even just within my own family and friend groups units, it is incredible the difference that being able to have, you know, just have stocks, have real estate, what that can do to you over a very short; 10 to 15 year period.  You just end up shooting way, way far ahead of all of your peers in terms of wealth.

HOST:  Yeah.  So now that we've had this sort of very depressing conversation about everything that's wrong in the system, let's talk about crypto and Bitcoin.  You alluded to this earlier, but let's go deeper into why is crypto the solution to all of these problems?

MATTHEW GOULD:  So and I'll be careful here, because it's not going to solve all the problems, and I'm sure crypto's going to create a few problems.  But the thing that it does is, it's going to instill discipline into the financial system that we haven't had in a long time.  So what happens is, if there's a way for normal everyday people to buy hard money assets like crypto assets like Bitcoin and its super easy, you can just do it from your cell phone in your living room, or you can even do it at Charles Schwab, Coin-base or where ever you buy your crypto, if it's super easy for you to that.

What's going to happen is, people are going to realize that hey, it's a good idea for me to hold some of these crypto hard asset, because it's going to keep up with the pace of prices of everything else.  And not only is going to keep up, it probably going to actually increase in value, and this is not financial advice by the needs; this is just, I would projector, the crypto is probably going to increase in value faster than the rate of overall inflation, because crypto is a extremely hard asset. 

And what I mean by that is like Bitcoin has a supplied gap of 21 million.  There's only ever going to be a 21 million billion—sorry, there's only ever going to be 21 million Bitcoin, and there's not going to be one more than that.  And so there's no way to like make an extra one or something like that.  You know it is built in a house or you know, if we say prices go up there's going to be a new houses and suppliers then comes in.  But that's not the case with Bitcoin.

So lot more people going to say to themselves uh-huh, I don't want to save my money in the bank account anymore, like I don't want to earn 0% interest.  You memorize I mention earlier, US Government is keeping interest rate low, right?  And this is great for investors, but this really hurts normal people's saving.  And the problem is that if you are a normal person, you like got a $1000, if you put into your savings account then it gives you a 0% interest and there's nothing you can do to do better than that.  But if you instead, you buy this hard money assets, Bitcoin, you could feel confident that Bitcoin is going to keep up with the rate of inflation over time, because you know in a long run that if they print twice as much dollars then there's only 21 million Bitcoin, Bitcoin should stabilize at the price twice what it is.  This is just theoretical, and that's what we see over the past ten years.  So I feel there's an outlet for normal people to express their opinion about not wanting to be a part of the current financial system that's not advantaging them, that's actually taking advantage of them.  So that's why I think crypto is great.

And the other cool thing is, it's global, and so earlier, we were saying we are just going to focus on the US.  But you know in the US, we have this system where they are devaluing our dollars which is bad for us, but we also get access to the dollar as to borrow in the dollars which is huge privilege; super cheap.  And people who can't get house on loans or Core loans, the interest rates are really low to borrow that stuffs in the US and that's because the dollars accepts it globally as reserve assets.  So American consumers benefits from it.  So we have benefits of having great dollar here in the US and we also have the laws from being inflated so our gas price is going up just like everyone else. 

But if you live at another country, right, you get none of the benefits and so you have no benefit from really low dollar loans, but you have all the negatives of this inflation.  And so I think for you in another country, it's a very simple decision to store your wealth or your savings in crypto.

HOST:  I got it.  And then just because we had that whole conversation about labor and wages; how will crypto impact labor and wages and productivity overall?

MATTHEW GOULD:  Yeah.  So this is kind of an interesting side note, and I don't think enough people have thought about this yet.  But if you have a new easy to store global hard asset that anyone can put their money in.  What that means is that as investors out there, they are going to saves themselves okay, I want to invest my money, am I going to invest it in this new factory or this new company or whatever?  Or do I want to just store it for the future, because I'm not really certain about making investments today.  And the problem—and they could buy Bitcoin.  And right now, before Bitcoin, their choice was, I can invest in this factory or this new real estate project or something.  Or I could buy US Treasury Bonds that earns 1% interest than where the interest rates are depressed.

So what I meant was as a financial adviser, their choices were, earn really low interest rate which don't really makes sense.  Or invest in these projects, some of which are quite risky and this were their own choices.  Now they have a third choice which is buying a global reserve asset like Bitcoin that is perfectly inflation hedge even better than gold has ever been.  And so when they choose that third option, or the Bitcoin option; plan B.  That's going to force everywhere on the planet to at least performance as good as Bitcoin as an asset. 

So if you are making investment in a company or real estate project or anything else you are thinking of doing, you are always going to think to yourself, can this investment do better than just quacking my money in Bitcoin?  And if it can't, then why would you invest in it, it's not worth it right, risky just it.  So what that's going to do it going to force real interest rates back up.  And we have--I've mention earlier, we have artificially oppressed interest rates in the economy to a really low level, by printing a lot of dollars and crypto currency also makes it so that there's an exit door, so you no longer have artificially oppressed interest rate on my opinion.

So what does that have to do with productivity?  Well, what it does, is it forces every projects that gets investors' money to be productive, and that's not the case today.  Because right now if I can borrow a money at 2% and then I can buy an asset, let's say that asset is only 3%, but inflation is running it 4%, that asset, investment project that I made is actually losing 1% year over year in real value, right?

But it's actually gaining 1% year over year forces the amount that I'm paying the loan for.  So as an investor, I can make - - have swift switch or I can make an investment that is actually negative in real world terms, but it's positive for me the investor because my interest rate is even lower than that.  And what I think crypto, hard money standards do, is they get rid of all those projects, and that's not a small number of investment rates now.  There are a lot of people I know and that you probably know and they buy just gaps of real-estate because their interest rates are so low.  And that does not mean that the return of that real–estate is good, sometimes the return of the real estate is bad and they even lose money every month paying the mortgage payment on it.  But they just know that the price of the real-estate is going to go up next year, so they buy it anyway.  And what kind of sense does that make? 

Why will I want to buy an investment asset that is losing money?  And if I only think that's going to go up in value as the only reason why I'm buying it.  Well, the only kind of world that makes sense is that, if the interest rate the investors are paying is actually lower—sorry, if the interest rate the investors are paying is lower than the returns the investors are giving, but that's still lower than a real interest rate in the world.  So we have this situation going on the wrong side of the interest rate curve.

When we move over, so that's no longer available.  That means the other types of investment will be on the make up once there are actually productive, real world productive.  And when that happens, you will get higher productivity rate.  So one of the facts, that the most people maybe not know it's that since 1970, the productivity rate is actually been growing slower than it did historically. 

If we look back in prior to this rate 50s and 60s, the US was booming, and like it was totally normal to have 25% GDP growth in those years and the productivity rate will be running a two-and-a-half.  And if you look at since 1990, people have been—or sorry, 1970, people have been complaining productivity rate is growing too slow; rolling at 1% percent, so it's about half of what it was before.  And the amount of money peoples are making is less cause the GDP--the whole economy is not growing fast as real GDP. 

So we're making less money and we are growing slower, because we have mile investment, because we have artificially low interest rate which are just benefiting people wo already have a bunch of asset, which also create a bunch of social problems.  So when I say that I think the crypto has a chance to make a global impact significant.  I mean it's going to be trillion dollar significant compounded over the over 50 year banking period.  So if you can save trillions of dollars and GDP from mile investment every year over a 50 year period, and that money can be reinvested and making the economy more productive.  Even if it's a 1% change, over a 72-year period, you will double the size of the global economy income every year.  And right now if the global economy income is a hundred of trillion, that means I'm saying over 70-years-time period, crypto could double that output all have said constant just by getting rid of this mile investment we have, and people will be making an extra, double of their money every year because of those changes, so.  Sorry that was my so box; I went off there for a little bit.

HOST:  No.  I was going to say are you running for president in the next election 'cause I'm just going to write your name of you're not on the ballot.

[Laughter]

MATTHEW GOULD:  Yeah, yeah.  Well, you know, and you mention something there about politics and I think it's actually kind of interesting 'cause one of the things I really like about this, is that is a technical solution to what has become a political problem.  And what happen is, we had the situations before where we were trusting, you know, authorities or central government to be a good economic store.  And turns out that they run for office every two-four years and so they're going to do what helps them get votes, but that's not always inline of what's best for everybody. 

You know sometimes you got to take your medicine, and they just keep putting that off and instead printing this money and so this is the situation we ended up in.  But we came up—and this is the beauty of what Bitcoin Satoshi invented, it's that here is the way for us to solve this problem as a community without having to take on these political figures directly.  We can actually just obtain to another system by expressing our own freedom of choice.  And it is competing out there in the free market.  And the truth is, if the US dollar or any of these currency is under thread from crypto currencies, then they can just start doing a better job managing their economies and their currencies and you know providing real interest rate returns for investors and people will move right back out.  I mean, I'm guaranteeing you if in 30 year we're paying 5%, right, in the United States right now that Bitcoin will not be very high as it is.  Because investors would say I don't want to hold Bitcoin that does not have enough return when I can earn 5% on my T-Bill.  And they could also think to themselves, the US Government is doing a responsible thing with it's economy, and so they will think more comfortable about the future, but we're not.  And so this is an option for everyone to get out of it. 

And the other thing that I like again, anybody on the planet. So it's a people first not a bankers first initiative, and that's why I think it's important to tell people get out there, download a wallet and participate in the new economy, because it was made for you

HOST:  Love it, love it.  All right.  Well, you heard it here first from Matthew Gould.  Thanks so much for breaking that down for us, and hopefully, we do see more and more people adopt crypto, and we see this becomes the norm and we are able to fix a lot of the global financial issues that we see today.

So thanks so much for joining me for this episode and for sharing your insight with us.  I hope you all learn something new; I certainly did.  And thanks for tuning in to Unstoppable Podcast and we will be back again soon with another episode.

Join our community

Help Center