Home > Uncategorized > Runaway Money and Overconsumption, or… the Story of Monetary Mischief in Madagascar (Episode 42 of Crazy Town)

Runaway Money and Overconsumption, or… the Story of Monetary Mischief in Madagascar (Episode 42 of Crazy Town)

May 20, 2021

Way back when money consisted of iron pieces, if you wanted to buy a horse or some spices to season your horse meat, you practically had to carry an olympic weightlifting set with you. Early bankers figured out how to clear that obstacle (and prevent a lot of hernias and back injuries) when they invented paper money. Over time all-too-clever financiers cleared more and more obstacles that kept people from accessing and spending money. Today’s world of online purchases, easy credit, and cryptocurrency represents a huge ramp-up in the speed and ease of economic transactions. Yes, some of the inconveniences of yesteryear are gone, but this ramp-up is partly to blame for our problems with overconsumption, climate change, and habitat loss. Join the Crazy Townies as they swap stories around the virtual fire about spending virtual money in the virtual world. And  get advice on how to do the opposite from Nate Hagens, expert on energy, ecological economics, and finance. For episode notes and more information, please visit our website.

Transcript

Jason Bradford  

Hi, I’m Jason Bradford.

Rob Dietz  

I’m Rob Dietz

Asher Miller  

and I’m Asher Miller. Welcome to Crazy Town, where the sanist guy around is protesting the local gas station in a Santa suit. 

Rob Dietz  

The topic of today’s episode is runaway money. And please stay tuned for an interview with Nate Hagens.

Asher Miller  

Did I ever tell you about the time where I had to spend five nights sharing a bed with a 6’9” guy?

Rob Dietz  

No, I thought that was Jason’s story.

Asher Miller  

No, Jason’s story if I recall correctly is he was up on top of a mountain and he was spooning with two guys. 

Jason Bradford  

Yeah. 

Rob Dietz  

Okay, that’s right. Okay, so this is similar. But let’s let’s hear your story.

Asher Miller  

Well, we have to a call back, you know, to season one, maybe

Jason Bradford  

I don’t remember when we talked about that. 

Rob Dietz  

Yeah, you gotta be careful. You know, we’re getting old. We could be repeating ourselves over and over, and we wouldn’t even know it.

Asher Miller  

As long as it makes us laugh. No. So I was traveling around Europe. I was backpacking with a friend of mine, who happens to be 6’9”. And we’re staying in some hostel in I think southern France or something.

Rob Dietz  

Wow, southern France. Must be nice.

Asher Miller  

Yeah. And our money got stolen. Our passports, all our cash, got stolen. And we were just like up shit creek,. The only thing we had left was a credit card that I had. And I was able to get a little bit of money out of a bank machine with that. And so we had to take a train back up to Paris to try to get our passports reissued. And we had to wait five days or something like that until the passport could be ready.

Rob Dietz  

So you’re like scrounging out of the train dumpster trying to get –

Jason Bradford  

Yeah, how do you survive in Paris without money for five days? 

Asher Miller  

We had just a little bit. So we found a hotel that was the scuzziest fucking place I’ve ever probably stayed. 

Jason Bradford  

Where was it? 

Asher Miller  

Oh, it was just some weird neighborhood in Paris. It was this place where they had they had carpets, disgusting carpets, but there were holes in the floor of the hotel room. And you didn’t know where they were. You like step and your foot would kinda go – And you didn’t fall all the way through because thank god, there’s this carpet, right? But you were always like, ready for a surprise. Right? And we can only afford this like one room. So Seth and I would have to sleep in this bed together. It was really hot. It was so great. This guy’s huge. I’m getting elbows in my face. And all we did was – we could only afford to buy like baguettes. So we ate bread for like five days. 

Rob Dietz  

So you’re talking about difficulty with money and your inability to –

Asher Miller  

I’m talking about difficulty sleeping with this 6’9” guy.

Rob Dietz  

Well, I’m gonna still interpret it my way because I want to tell you a story with a with a little bit of a money problem. Okay, check this out. So I’m a little kid and we used to every summer go on vacation in the Outer Banks of North Carolina. This was like a highlight of the year for me. I loved going there. Adventure, you know, the Outer Banks. That’s where you got the Wright brothers and Blackbeard the pirate and the lost colony. All this history. 

Jason Bradford  

Warm water. 

Rob Dietz  

Yeah, warm water. We’d go fishing and catch these awesome flounder and speckled trout and stuff. And in go ride the waves, all that. So the whole trip was, like I said, a highlight except except for the drive to get there. So the way we would do this is my dad would go to work on Friday, but he would come home early. So he’d only work half a day. And then we’d load up the car. And we’d take off. And we could only get about halfway there because it was like a 10 to 12 hour drive. And my family was not like a van family. We had like a Toyota Corolla, which – 

Asher Miller  

Oh, so you didn’t have like one of those station wagons with eats in the back?

Rob Dietz  

No, no. This was 80’s, like little sedan, and me and my sister crammed in the backseat. And it was just a kind of miserable drive. And we’d typically get to the border of South Carolina – North Carolina late at night and sleep at a Holiday Inn. So we’re driving, and I could stomach it because I’m excited to go to the beach, but also both my parents were smokers. And, it was summer so they’d be like, “Keep the windows rolled up while I’m sucking down this cigarette here.” And so I’m like just dying in the backseat. 

Asher Miller  

Literally dying. 

Rob Dietz  

Yeah. So we get about I think two or three hours into the trip. And my parents start sort of panicking. And I don’t know what they’re yapping about, but it turns out they left the checkbook at home. And they’re like, “what are we gonna do?” Yeah, they like pull over and they’re like well, we can’t pay for them. We can’t pay for that, we can’t pay for this, and we turned around and drove all the way back home to get the checkbook. Driving all the way back with of course it was late at night so you gotta smoke even more to stay awake, right? 

Jason Bradford  

That is good. 

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Rob Dietz  

Just horrendous, like, you know, think of how easily that problem could be solved. You didn’t bring your checkbook. When was the last time you brought your checkbook anywhere? 

Asher Miller  

I bring it to the grocery store all time just to piss people off

Rob Dietz  

I only bring the giant sized ones like you get for winning a golf tournament or something.

Jason Bradford  

Well, I got a story I think is gonna beat this one. I’m trying hard. I’m pulling. I’m going to  to go even more exotic that your Outer Banks, Madagascar baby. 

Rob Dietz  

Oh, you guys and your world traveling. I thought I was exotic going up the East Coast there.

Jason Bradford  

So Madagascar, this island off the coast of East Africa, incredible place. I was there for a month in November of 1997. And I’m in my late 20s at the time, and I’m doing these botanical expeditions. And I’m in the capital on a kind of repo. And I have to go to the big bank downtown to use my traveler’s check.

Rob Dietz  

Wow, traveler’s checks, there’s a blast from the past. 

Jason Bradford  

And I have to pull out enough cash to live for three weeks in the wilds of Madagascar, paying my way to get there, buying all kinds of food for an expedition, and then paying porters and people to help me along the way cuz I’m going to go climb a mountain in the north of Madagascar. Literally, I’m going from about sea level to an about 2000 meter peak and back down again with like, people carrying my shit. And so I budgeted I said, “I need $1500 in cash. The only problem is the largest denomination bill in Madagascar. And each bill in Madagascar is huge. I mean –

Jason Bradford  

It’s like a towel?

Jason Bradford  

Yeah, it’s like yeah.

Jason Bradford  

It’s like one of the checks I was talking about that you get for winning a tournament. 

Jason Bradford  

Yeah. And they’re beautiful. They’re all artsy and oh my god, colorful and stuff. But they’re gigantic bills. And the largest denomination was worth $5.

Asher Miller  

So I get a wheelbarrow . . . 

Jason Bradford  

Right. So I go by myself into this bank and I write these traveler’s checks out, and I like slide it to the teller and the teller starts counting out these bills. And – 

Rob Dietz  

17 hours later. 

Jason Bradford  

I get this giant wad. And I’ve got like a T shirt on. It’s hot. I got like a T shirt on. And I’m like, Oh, god, what do I do? So I just stuff it into my pants. So  I look like a panda. It’s like this huge, like full? Like my guts are just gigantic and distended. 

Rob Dietz  

Can we put a word of gratitude out to the porter who not only carried your stuff, but had to accept bill from out of the front of your pants? Hope you dried them out before paying.

Jason Bradford  

I hadn’t thought of that. Anyway, everything went well. But it was a little nerve wracking to walk around with that much cash knowing that like the average Malagasy at the time earned about $2 a day. Right? If they’re a wage earner. Yeah.

Asher Miller  

Yeah. Somebody should have bumped you off.

Jason Bradford  

Yeah, yeah, I was pretty conspicuous walking out of that bank.

Asher Miller  

Well, waddling out of that bank.

Rob Dietz  

The good thing is that people don’t really have to go through these, let’s just call them the sufferings of the privileged, that three of us experienced. 

Jason Bradford  

Yes. I think that’s what I want to talk about today. That our hidden driver for today is money, but not just really not money, per se. But the fact that the barriers to the use of money have just been getting lower and lower. It’s getting easier and easier to get money and to spend money.

Rob Dietz  

It’s like the spending money used to be running the 110 meter hurdles, but now it’s like the hurdles just been cleared away and you just run 100 meter dash no problem. Or you drive the 100 meter dash, right.

Jason Bradford  

Right. It’s a lot easier. So, and this, of course, though, you know, is accelerating consumption of goods and services in our economy.

Asher Miller  

Yeah, it’s funny. You mentioned  the removal of these barriers, making things easier and easier. But money itself was actually an invention to help remove barriers. Right? I mean, before that, it was always, you know, barter, right. It was a direct exchange of goods.

Jason Bradford  

I mean, I think we were living in tribal communities. And it’s like, whatever, okay, people are just living in their extended families. But yes, as soon as you get to a situation where you got to trade with another group, you have to barter, right?

Asher Miller  

Yeah. And you could get things from far away, but it had to go through all of these exchanges of goods in order to get to you, right? And so the the creation of money allowed people to not actually have to exchange those things. Especially imagine exchanging things that are, if you’re trying to exchange something that was really valuable and might be large, heavy, cumbersome, whatever, right? I mean, so money  itself was removing removal of a barrier. Right?

Rob Dietz  

Right, right. But then, you know, as money got invented, it went through all these stages. And we don’t want to sit here and go through the minutiae, the history of money. Actually, in prep for this I read a really nice book by Jacob Goldstein called “Money: The True Story of a Made up Thing,” and I would recommend that if you want to do the history of money. I think we’ll put a podcast episode in in the show notes that reviews the history. But there were some things along the way that were dropping these barriers that I think we want to hit. And one of the ones I wanted to bring up is the movement from coins, or other things that are made of metal or shells or whatever to actual paper money. And Goldstein actually has a really nice anecdote in his book. He talks about how Marco Polo after he went on his adventuring he wrote his memoir. And in that he had the story where he’s like, “Okay, guys, you’re not gonna believe this shit because this is some crazy shit. But prepare yourself this really happened. Over in China, they were using paper for money.”

Asher Miller  

Right. 

Rob Dietz  

“Can you believe this?”

Asher Miller  

That would be mind blowing.

Jason Bradford  

Right. So in Europe, they’ve been exchanging gold coin. Precious metals, right? Heavy stuff. But they’re precious. And they have an intrinsic value, and they’re shiny. And they’re like, no, we’re just using paper.

Rob Dietz  

Yeah, well, and of course, the way this came about is in China, they were using precious metal as well, sometimes not so precious metal, like iron. And if you wanted to go buy something that was valuable, you know, you basically had to carry an Olympic weight set of iron with you in order to pay for this.  Yeah, I mean, you know, not everybody, you know, is all that strong. So what ended up happening is you could store your iron or whatever your precious metal in what essentially became a bank, but with somebody who would then write you a receipt on paper that said, “Hey, you have this much money.” And then, you know, it wasn’t very far along from that, that people started trading those paper receipts and saying, “Here, you can have this. And now let me have some food or, you know, an actual good that I want to consider.” 

Jason Bradford  

Yeah, so paper money, but it’s backed by this deposits of these metals or whatever. Precious things in a vault somewhere. And that has stuck with us for a long time. And this exchange within your own country is interesting. So the fact that you’re within China, they recognize this paper, but – 

Rob Dietz  

Well, I mean, let’s go back to what was happening there. I mean, it was basically under threat of death and violence. You know, this story in Goldstein’s book. He talks about when Kubla Khan had invaded and was ruling China and saw that this paper exchange, this use of paper money, was working well. And he’s like, “Everyone here will accept this paper money or we’re just gonna bury you alive.” Yeah. So it’s like, yeah, it  it was imposed.

Jason Bradford  

Yeah. Okay, got it. But it works within that society. But then if you wanted to trade outside the society, they still use gold. And so I was looking up the Louisiana Purchase in 1803.

Rob Dietz  

Really, you were in 1803? Looking this up?

Jason Bradford  

Oh, sorry. No, I was a couple days ago. Okay? On the internet. And I was saying to myself, “How much was the Louisiana Purchase? And how did they pay for that?” And it turns out the US bought – the Louisiana Purchase is  not just Louisiana, but a lot of Western territories from France in 1803. Because Napoleon was like, “I need more money for wars,” and gold was what he needed. And the US said –

Rob Dietz  

He wanted a better battle plan as well, I think. But that’s another story.

Asher Miller  

He was alright with himself for a while. 

Jason Bradford  

Yeah. And he got to retire on an island. Anyhow, it was $11.5 million worth of gold the US had to transfer to France. Now the logistics of that it is there was some complications. So what actually turned out is the US didn’t actually put gold that they had in North America on a ship. That was considered too risky. But they had sovereign gold reserves in Europe. John Adams figured out how to do this. And so they transferred it from the banks that the US already had money and in Europe into the banks that Napoleon wanted.

Asher Miller  

So instead of having to put it on the ship, they put it in a carriage or something.

Jason Bradford  

Right, but it was 36,000 pounds of gold is what they needed. That’s a lot. 

Rob Dietz  

Yeah, I was kind of blown away by the 11 and a half million dollars.

Jason Bradford  

Yeah. That’s pretty good deal.

Rob Dietz  

Yeah, you think of like Jeff Bezos. How much land could he buy at those kind of prices?

Jason Bradford  

It was a few bucks an acre or something. Yeah, you know, but I think since that time, there’s really been an acceleration of making it easier and easier to create money and to spend money. And one of the big ones was getting off this gold standard. Sort of deciding money doesn’t have to be represented by these precious metals. Why? We don’t have to do this. And this started happening in the early 20th century, during the Great Depression. Now, there were these theories from economists that said, you know, we don’t have to be tied to gold, etc, etc. But it was really in the Great Depression, and Roosevelt that said, “Fine, we’re not on the gold standard anymore.” And that allowed the government to sorta create money, without having to have more gold reserves. You think about it to expand the money supply prior to this, more gold had to be mined. Or silver, silver was precious. 

Rob Dietz  

Or stolen. 

Jason Bradford  

Or stolen. Yeah, exactly. Or found in the bottom of ship holes that had sunk down in the Caribbean.

Asher Miller  

Wait, so just so I’m getting the history, right. I don’t think Roosevelt took us off the gold standard. It’s just that the government basically bought up all the gold.

Jason Bradford  

It was kind of a start. It was a process that you know, was finished in Nixon era. But it ended up sort of breaking that complete tie to gold. And confiscated the gold that people were – people were basically making runs on banks and trying to get out gold.

Asher Miller  

And people were agitating, I mean, before the Great Depression even hit, people were agitating for this. Because I think farmers in particular, were getting hit really hard with the gold standard. I think that these are major campaign platform positions for for candidates. And I also, I wonder how much of it also had to do with basically ratcheting up consumption basically, you know? Allowing people to to purchase more things, more things to be created,

Jason Bradford  

Yeah, totally. It’s an invention. Because if the barrier is like for the money supply to increase, we need to have more gold in our vault. It’s a little bit absurd. If you’re in this industrializing economy, which has this huge capacity for production. But suddenly, it’s like, why do we have to go out and mine a bunch of stuff to allow us to do these exchanges? 

Asher Miller  

And gold is finite. 

Jason Bradford  

Right. There’s only so much gold.

Rob Dietz  

It’s really a psychological game, right? Like you think about the idea of coming off the gold standard is scary. Because if you are sitting on a big pile of cash, it used to be you could go trade it in for gold, which of course has value. That’s weird, too, because gold has value because we’ve we decided it had a psychological value to that, right? I mean, maybe it has some more value because it’s an interesting metal. 

Asher Miller  

What are things you could do with gold? I mean, there –

Rob Dietz  

Yeah, but it feels like it was a big leap, psychologically. But in reality, it’s the same leap that had already been made. So maybe it’s not that big a deal?

Jason Bradford  

Well, it’s hard. I think we created a currency that could no longer be traded in. So you no longer could trade in your dollar for gold. That broke that and it said, “No, now it’s these central banks, it t’s the government.” Money then was backed by essentially the society in general, and the faith in a well managed central bank and financial system.

Asher Miller  

Now you could exchange that currency for another currency if you’re like, “This government, I’m concerned it’s gonna fail. It’s not gonna be able to, you know, hold up to its promises.” You can buy currency in maybe another government.

Jason Bradford  

Yeah. So that’s why governments can’t just hyper, you know, just create all the money they want. Because then they get hammered in the exchange market for currency trading. 

Rob Dietz  

Yeah. Well, you’re talking about money creation, I think there’s another really important barrier that was removed around how money is created. Most people think of money creation is happening in, you know, some federal printing press office somewhere. And you know, some money does get created that way. Coins get minted, bills get printed, but most money comes into the economy when banks loan it into existence. And the way this used to work is if I’m a commercial bank, I’m accepting deposits from the public, they’re bringing them in, and I’m allowed now to loan out a fraction of that. That’s called the fractional reserve rate and tells me how much money I’m allowed to loan out based on how much I’ve got sitting in the reserves. 

Jason Bradford  

But it’s actually a multiple. So it’s like you can loan out like 10 times what you’ve got on deposit or something.

Rob Dietz  

It used to be a relatively, aa small reserve rate. And over time that’s been getting chipped away, chipped away at. Now banks, there is no fractional reserve rate. If a bank wants to make a loan, it just makes a loan. And how does it do that? It just says, “Oh, I just put money in your account.” Where did that money come from? Nowhere.

Jason Bradford  

Right. So where the banks basically are looking at, like the local banks are looking at what the central bank is doing to set the interest rate, the base interest rate. And then it’s also looking at if someone walks in, are they creditworthy? Do, I think that they’re going to be able to pay it back? And they make that judgment call. And what kind of collateral they may have.

Asher Miller  

And this may be obvious for some people, but it may not be and that is that when banks create that money, these are debt based, this is debt based currency, right? So they’re loaning it into existence. And that debt needs to be serviced, right? There’s an interest on it. So you have to return the principal, what you borrowed, plus the interest on top of that. Which we can get into, but it reminds me of a couple of other barriers that have been removed. One of them actually has to do with computer technology. I mean, very little of the money that’s in circulation right now is actual paper money right let alone, you know, coins or whatever.

Rob Dietz  

Except in Jason’s case where his pants – 

Jason Bradford  

I still find a bill now and then.

Asher Miller  

You might want to wash your clothes sometime.

Rob Dietz  

He’s paying at restaurants with that money.

Asher Miller  

He hasn’t changed clothes since 1997. So being able to actually store ones and zeros on computers, basically. And in loaning money to existence electronically.  

Jason Bradford  

Yeah, a lot easier than writing it in the ledger and having to file that. 

Asher Miller  

I mean, so forget the checkbook. Now, forget anything. I mean, you don’t need anything. It’s just all stored on a computer somewhere. Another one I think is that’s interesting, and maybe I haven’t thought about very much is this. This also happened because we’ve seen with financial crises, banks being unable to pay out, right? There’s a run on the bank, people are asking for their money, because there’s a lot of uncertainty in the economy or the financial system. And banks can’t do that. Right? Because they were loaning out more than they had. Then the government has stepped in and now we’ve gotten Federal Insurance, right? So you know, you’re insured up to what $250,000 of money that you have in the bank. And so the government’s in the sense, saying, “Go for it banks.”

Jason Bradford  

Right, it reduces the risk for a bank to kinda extend more credit than it probably should.

Rob Dietz  

I remember seeing the scene in Mary Poppins where there’s the run on the bank. It’s like the little kid, he doesn’t want to give his tuppence up. And his dad’s like, “Come on, give me the tuppence.” He’s like, “No, I don’t want to,” and then everybody’s like, “They’re not giving him his money” and a big run on the bank. And I didn’t have one clue what was going on in that scene when I saw it.

Asher Miller  

Did they start dancing?

Rob Dietz  

Probably. And singing, and then they jumped into a sidewalk, and floated to the ceiling. 

Jason Bradford  

But I think that was written by an author who grew up during the eDpression or something. That’s what the deal was.

Asher Miller  

The other thing about the government, just to point out, is regulation of money. . . Well, first of all, I mean, we’ve given the right to print money to central banks. It’s not actually government doing it. That’s one thing, but the other is our regulations, or the policies, we have laws that we have on the books, you know. And it was, again, I think, in reaction to the Great Depression, we said that banks that wanted to invest money and commercial banks that were loaning money out had to be separate. And then we did away with that.

Rob Dietz  

So you’re talking like the difference between, say, a Goldman Sachs as an investment bank that’s doing deals for buying and selling companies and stuff like that. Versus a commercial bank that’s taking deposits from the public, making small loans. 

Asher Miller  

Yeah. That was, you know, Glass–Steagall was this landmark legislation we had to kind of separate these things. And then we just decided, fuck that. And we got rid of it.

Jason Bradford  

Like, 10 years later.

Asher Miller  

Yeah, that was 1999. 

Rob Dietz  

Was that the name of the bill? Ah, fuck that?

Asher Miller  

No, they, they probably called it something like “Protecting Consumers.” You know, like –

Rob Dietz  

Economic Bliss Bill.

Asher Miller  

Exactly.

Jason Bradford  

Yeah. Well, it’s nice for us to say, Hey, life is easier now because we don’t have to carry travelers checks around. Or if our parents leave their checkbook who cares, they’ve got credit cards and  their ATM will work in any bank. Right? And that’s a nice convenience for us. But I also would acknowledge that for some people, this has been revolutionary. There’s parts of the world you know, outside the major cities, outside highly developed countries with  the big banking systems where they really didn’t have access to banking services until quite recently. Where if you’re in a rural village somewhere, and Kenya is a good example, they developed a system called the M Pesa. Which allows people from their cell phones to basically do banking. To deposit money, to send money, to accept payments. And imagine how that changes somebody’s life. And you  don’t need to be a big player. You know, it’s like this micro credit system. 

Rob Dietz  

Well, you know, like any of the things that the three of us tend to dive into, it’s always a mixed story. So, you know, the removal of barriers has definitely some positive things going on for a lot of people and some negative things. I mean, like, you were talking about the repeal of Glass-Steagall act, and how that maybe ended up freeing up a lot of money to be invested into places where maybe it shouldn’t have been. 

Asher Miller  

Like fracking. 

Rob Dietz  

Yeah, so you get like the fracking boom out of out of some like that.

Jason Bradford  

Like the housing crisis. 

Rob Dietz  

And then, you know, Jason, you’re talking about people living in a rural setting being able to maybe access some really important services they need to. There’s always nuance, and I know, Asher, you often talk about the messy middle that we sort of inhabit and try to wrestle with. And I think that’s one of the things that we keep revisiting. If you’re thinking in systems, if you are exploring how the world works, you come back to realizing, “Wow, there’s a lot of complex systems at play, and there are benefits in some cases and costs and others.”

Asher Miller  

I’m gonna be glass half empty for a second about this because this is just a theory I’m speculating. The motivation to remove barriers and to enact the removal of those barriers, I think often comes from people who have money and want to make more money. Right? So it’s wonderful when you open up opportunities for exchange to happen, for people to borrow money. Like a small business to borrow money, or imagine somebody who’s doing something that is very much geared towards addressing sustainability crises that we talked about, you know. Being able to borrow money in order to do that is a positive. But there is something that happens when these rules change, these barriers are removed, that seems to benefit those who already have.

Rob Dietz  

Yeah, those bills in Congress that pass, they’re usually authored by guys who are funded by those corporations, by those banks. I mean, you know, not to get overly cynical, but you know, you can buy some pretty good legislation these days.

Asher Miller  

Well, and you see, going back to fracking, for example, you could see like the role of these investment banks who would help tout these fracking companies their value to try to get investors to come in. They make money off of those transactions. Yeah, when they’re putting out a corporate bond or something like that, to raise money to go drill in North Dakota or whatever, the banks that are facilitating that are making money off of all those transactions. And then when those companies go bust, because they’re completely over leveraged, they’re totally in the red on cash flow, then they get acquired by the large oil companies, right? And then the banks are making money off of that transaction as well.  And so there’s a gaming of the system. I just want to point out.

Jason Bradford  

Yeah, well, they’re creating all these services. And anytime you create services, you can charge for them. And so you know, I think, in some ways, some of these services and you could say for like a lot of consumer level being quite nice, and maybe our cost is lowered. But again, also what they’ve done is they’ve packaged all this big money that is being flung around the world and maybe doing a lot of damage as well. So yeah, I think it’s these barrier removals is really a mixed bag. But you know, I can’t say there’s a mixed bag with cryptocurrency, though. I think it’s all shitty. And so I want to talk about that, because that’s a barrier that’s been removed recently where it’s like, the libertarians which, you know, I’m not totally anti-libertarian by any means. I understand, you know, civil liberties and individual rights, fine. But they’re so anti-government that they just want a money system that is not tied to government and not tied to banks. Which I kind of get. But what they did was they created this monster where these computer networks are just churning out these cryptocurrency tokens with an enormous amount of energy use.

Rob Dietz  

This whole topic of crypto currency drives me kind of nuts. I don’t want to sound like the old man who just doesn’t understand anything. But like this blockchain-y, and that’s related to Dick Cheney, probably. But like a blockchain, the NFT’s, the way Bitcoin algorithms work, I just don’t get it.

Asher Miller  

It’s a classic example of maybe good intentions, interesting idea. Maybe some of the motivation for some people comes from the fact that they maybe want to democratize and ascend. They don’t want to have to go through these intermediaries or, you know, counting on these banks or governments.  But then be careful what you – and it’s a wild west right now, I think that we’re also seeing. And people are trying to figure out how to –

Rob Dietz  

We’re quite a few years in though, right? I mean, Bitcoin came out?

Asher Miller  

How many cryptocurrencies are out there?

Jason Bradford  

Yes, there’s hundreds, but there’s like a handful of really big ones that dominate. And, and if you were looking at the energy use of those, it adds up to 10s to hundreds of terawatt hours per year of electricity consumption. And no one knows for sure because how efficient are the computers on each of these networks? It’s hard to tell.

Rob Dietz  

We talk about energy pretty often on this podcast, but terawatts? Like what are we talking about here?

Jason Bradford  

Well, we’re talking about like the energy consumption of fairly significant nation states. So on the lower bound, we’re talking you know, maybe like a Kuwait.

Rob Dietz  

Okay, so let me back this out a little. So you’re saying to create a cryptocurrency, you know, the computers that are running in the background to make that happen, we’re consuming as much electricity as –

Asher Miller  

I think you have to back it up even further, which is for people who are not familiar with cryptocurrencies. Like they need to have some kind of value. So what they’re doing is that they’re actually what’s called mining, right. And I guess they’re doing these really complex equations or something?

Jason Bradford  

They’re actually doing random number generation. So there’s an algorithm which is a secret algorithm, which generates a random number. And the computers have to guess. And if they match it, by chance, they win. And they get to add to the blockchain, and they get a token. It’s crazy. It was just like, literally, random number generation

Asher Miller  

Someone just came up with this random way of being able to create this money. 

Jason Bradford  

And they have to make it hard. Because by making it hard by doing a lot of work, there’s value. But of course, it’s not adding any value to the world. 

Asher Miller  

And that value comes from computers churning the stuff, which consumes electricity. 

Rob Dietz  

It reminds me of like playing Super Mario Brothers where Mario is running, and he jumps and smashes the bricks, and then a coin goes into his –

Asher Miller  

That’d be a lot easier. 

Rob Dietz  

Why don’t we do that? Can we make it a video game instead of a math problem?

Jason Bradford  

But you know, there’s 200 nation states on the planet. And right now these cryptocurrencies are in the top 50. You know, maybe the top 30. In terms of like the ranked cryptocurrency energy use. 

Asher Miller  

And they’re growing exponentially. 

Jason Bradford  

Yeah. I mean, so it’s like, you know, you extrapolate very far. It’s like, Oh, it’s the size of India, the United States in terms of energy consumption. It just gets absurd, so fast.

Rob Dietz  

It’s awesome. Pretty soon we’ll all be like shivering in the dark. But there’ll be a lot of Bitcoin lying around out there.

Asher Miller  

Let’s be clear. It’s not even energy consumption. That’s just electricity consumption. Yeah, you were not counting into that the sort of full lifecycle of this because all the servers or computers that need the hardware,

Jason Bradford  

Yeah. And the disposal, the waste. Now there’s cryptocurrency farms,. It’s like, “Well, we bought these eight years ago, and now you know, too slow, buy a new set,” and they just e-waste. So they’re destabilizing electric grids. And they’re destabilizing, of course, the computer manufacturing industry is now having trouble keeping up with other demands. 

Asher Miller  

Not to make this more complicated, but like, so on one level, you could look at this as like, this is a craze, like why is this growing so fast? Why is this happening? Why are people motivated to get cryptocurrency instead of whatever? And I think a lot of it is, this is a speculative market, right? These are growing in value. There’s a limited amount of them, right? When things look either uncertain economically –

Jason Bradford  

Yeah, they don’t trust government.

Asher Miller  

Yeah, they don’t trust government. They’re worried about, you know, the solvency of whatever. Or we have a situation that gets really complicated with monetary policy, but if interest rates are really low, it doesn’t make any sense to save money, right? Because if you put money, I mean, we grew up saying, you know, put your money in a savings account, grandma’s birthday money.

Rob Dietz  

Any penny saved is a penny earned.

Asher Miller  

Exactly. It will slowly grow over time. Like no, now you’re actually fucking losing money because the interest rate on a savings account is like negative 12%. It’s not really, but it’s less than inflation. So people are trying to make money out there.

Rob Dietz  

You realize if you were putting together the book of pithy sayings on money. . . . it used to be a penny saved is a penny earned, but in Asher, his book, it would say, “No, you’re fucking losing money.”

Asher Miller  

Yeah, well, it’s true. I know from experience by the way.

Jason Bradford  

But that’s what’s happening right now is that the people that have money are like scrambling to find something to do with it. And the problem is there don’t seem to be a productive outlets, right? It’s just fucking around with shit.

Asher Miller  

So, to me this gets to – we’re talking about this a little bit. And you know, what’s the problem with all of this removal of these barriers? Like what’s really the the consequences? And you talked a little bit, Jason, about sort of the energy consumption of cryptocurrency for example. But what are you know, what are the other issues? 

Rob Dietz  

Well, that’s a really good example of what’s happening when you talk about, okay, the barriers are being removed. And that means there’s more and more and more money available, and that money can grow exponentially without bounds, right? Because – 

Asher Miller  

it’s not tethered. 

Rob Dietz  

It’s not tied to anything real. And we’ve essentially said, “We’re all behind this. We agree that it has value.” Even cryptocurrency is that way. I mean, a Bitcoin has value because we believe it has value. So you can have money growing exponentially. And a lot of times you think, “Oh, well that’s wealth. Like you know, Jason, when you walked out of that Madagascar bank, and you had a wad of cash, you’re like, he’s wealthy. He’s got that Yanis of doom. But, the reality is that’s not wealth. That’s a claim on wealth. You can use that to actually get real things, real goods, real services in the real world.

Jason Bradford  

Oh yeah. 

Asher Miller  

And if people didn’t accept that claim, it would stop being something that people agreed upon. What would it be good for? You could burn it like I did in Germany. You could wipe your ass with it. What else can you do with it?

Rob Dietz  

Jason can keep his waistband warm, I guess?

Jason Bradford  

Well, I’ve seen this in action. Like I was aware of a deal like several years ago, where the Central Bank of Japan created $15 billion dollars. $15 billion dollars. It’s out of thin air, the Central Bank of Japan created.

Asher Miller  

Just an inconceivable number, right? $15 billion?

Jason Bradford  

And then they gave it to some bank to go invest, and they show up in the US, and they start looking around at things like, you know, “oh real estate?” Let’s buy up real estate. So you know, they were interested in farmland. So I’m just going, “Holy crap. Some bankers in Japan decided to create a $15 billion, and then some millions, whatever just start sloshing around to buy farmland in the United States.” And we just accept that is like, yep, that’s the way the world works.

Rob Dietz  

Of course. 15 billion yen or dollars or whatever. I want a piece of that. 

Jason Bradford  

Yeah, so that’s it. It’s like, you can create this stuff infinitely. It’s just like computer spreadsheets or whatever. You know, databases, like I just created it, okay. But it has a claim on the real world. There’s only so much farmland in the world, but it you can create as much money as you want. And now they’ll start chasing those real world assets. And that’s scary. So the people that have the ability to create money, then have an amazing power. Because it gets accepted. 

Asher Miller  

That’s, I mean, I think we have to unpack that a little bit. I mean, so you create money, and people think . . . So when we talk about, for example, you know, Jeff Bezos, or Elon Musk, you know, being the richest person in the world, the wealthiest person. . . You know, I always think, well, what’s the real wealth there? Because a lot of that is just paper money, right? 

Jason Bradford  

Or stocks.

Asher Miller  

It’s made up value. It’s an assessed value, right? That could never be actually, you know, if they try to sell it all right way, you know, probably the price would go down. Who knows? Whatever. It’s not a true wealth. Now they use a portion of their wealth, of that financial wealth, for real wealth. Big ass fucking houses in Hollywood, buying land. You know, Bill Gates is now the largest individual landowner in the United States. I mean, you’re able to actually get true wealth. Land was always considered the real form of wealth out there. But that’s just a fraction, really, for them of that claimed wealth that they have. But what happens a lot, actually, and I think that’s true, probably, on a ratio basis, more for people who are not as wealthy is that that money is actually a claim – it’s used for consumption. 

Jason Bradford  

Yeah, right away.

Asher Miller  

It actually translates into real world impact.

Rob Dietz  

Yeah, I mean, with the barriers removed and more money circulating in the economy, you have more consumption. You know, if you have more to spend, you tend to spend it, and then that does have real world consequence. That gets back to what you were talking about, Jason. Like, money is there and then it’s chasing real resources. It gets back to what we were talking about with the fracking boom. You have investors saying, “Where can we buy something that’s going to give us something in return? Oh, let’s build some fracking wells.”

Jason Bradford  

So structurally, there’s a couple things that are very interesting then. We have this ability to create infinite amounts of money, that makes real claims on a finite amount of goods and services in the actual world. And then also is that when the money is created, all they create is the principal. So money is debt. Money goes into existence as a loan. Okay, so cash goes into your bank account, so you can buy a house, and now you have to pay the bank back. Okay? So there are two sides of the ledger. But when the bank created that money, so you could buy a house, they only created the principal, they didn’t create the interest. But what this means in totality over the society as a whole, is that in order for you to be able to pay that interest back going forward, the money supply has to increase. Because there needs to be more money in existence, in the future, so there’s enough circulating that you can obtain enough to pay back both the principal and the interest. And that’s mathematically embedded dependency. Structural dependency on growth is in our money system right now.

Asher Miller  

Right. It gets back to growth. which we’ve talked a lot about. And growth itself gets back to depleting natural resources and increasing pollution. It does have a real world impact.

Rob Dietz  

Well, we may have those real world impacts going on. But as long as you have Jason’s endless supply, we can pay for those no problem.

Asher Miller  

What’s interesting for me right now and thinking about this – I’ll take a moment. Think about this moment that we’re in right now with, I don’t even know how many millions of people around the world suffering economically. 

Jason Bradford  

Yeah. 

Asher Miller  

You know, in desperate financial situation, building off a lot of, I would say, we talked a little bit about the inequality issue. I mean, what percentage of equities, you know, stock financial assets do you think the the top 10% of Americans own? 

Rob Dietz  

Okay, so you’re saying the 10% wealthiest Americans?

Asher Miller  

Yeah, what percentage of like – 

Rob Dietz  

of all the stock ownership? Are they? 

Asher Miller  

Yeah. 

Rob Dietz  

4,000%. 

Asher Miller  

You’re good at math.

Rob Dietz  

I am always the best at these. 

Jason Bradford  

It’s gonna be most of it.

Rob Dietz  

Yeah, it’s a lot. 

Asher Miller  

It’s something like 88%, right. And in the top 1% are over 50%.

Jason Bradford  

Where’s Robin Hood right now?

Asher Miller  

So we we’ve had like, this growing inequality in the United States and in other places. And that inequality has been driven a lot by policies that we’ve had, and, you know, reducing tax rates for wealthy people and all these things. And now, we’re in a situation where people are really desperate because of the pandemic and the knock on effects to the economy. And we’ve got governments sort of stepping in to try to bolster the economy and to help people.

Jason Bradford  

Yeah, just putting money right into your bank account. Boom. Fast

Asher Miller  

And on the one hand I would absolutely say this is critical. Right now, there are, just here in the United States, there are 10s of millions of families who are desperate, you know. 

Jason Bradford  

Yeah, we’re gonna lift people out of poverty. 

Asher Miller  

So stimulus checks, you know, make a big difference. Raising the rate of unemployment or extending it, makes a huge difference. And there are people who’ve been arguing, again, for removal of barriers. You know,  one of the barriers that we’ve had is this idea of of the debt load, right? So governments just can’t spend as much as they want, can’t go crazy. Although governments have been doing that, and if you look at our total debt, it’s  been increasing astronomically. But, there’s always a risk. If your debt level gets so high, will people stop wanting to lend you money?

Jason Bradford  

Yeah, or your currency gets  hammered in the exchange market so then you can’t trade really effectively overseas? Right?

Asher Miller  

Right. So that’s  been one of these sort of barriers that people have looked to. But now we’ve got, you know, Modern Monetary Theory, which says, you know, the concern always also was around inflation. And so there’s this school of thought that says we don’t need to be worried about inflation. We’ve been in a deflationary period for a long time. We don’t have worry about that. We need to just create more money. Government, you know, should step in and spend a lot of money. Spend money on infrastructure, spend money on climate change, spend money on all the things that we need to. And on the one hand, I would say hell yes. On the other hand, we have to remember that you put money out there, it goes to real things.

Jason Bradford  

Yeah, every dollar spent, there’s a – there was a paper I read where they calculated the carbon dioxide emissions per dollar spent. Like you couldn’t really . . . It’s correlated by 98%. You can look at the amount of money that gets spent in a nation and its CO2 emissions. It’s incredible.

Rob Dietz  

I think as we move the economy into the virtual world with NFT’s that we can take care of that. We won’t have to worry about. It’s just gonna be an information economy. You and your real world troubles.

Jason Bradford  

Yeah, virtual. We’ll spend virtual crypto-money in our virtual crypto-world.

Rob Dietz  

Eating virtual food

Jason Bradford  

Yeah, and drinking virtual hot toddies and you know, curling up to the virtual fire, and then our fingers will freeze off when the cold front comes through a pipe burst. 

Rob Dietz  

You don’t need fingers to spend virtual money in the virtual world. It’s fine.

Asher Miller  

Stay tuned for our George Costanza Memorial, “Do the Opposite Segment” where we discuss things we can do to get the hell out of Crazy Town.

Jason Bradford  

You don’t have to just listen to the three of us blather on anymore.

Rob Dietz  

We’ve actually invited someone intelligent on the program to provide inspiration. Hey guys, here’s a five star review on iTunes that we got recently. I’m assuming that’s graded on a 10 point scale or something like that. Maybe a 30 point. This is from nineblueone. Great names from our reviewers. Nineblueone says, “This is just a fantastic well produced podcast that allows you to laugh off the darkest, most difficult subjects imaginable. It turns out that at least three of the horsemen are also stand up comics. Just subscribe, put this in your weekly mix, you’ll end up smarter, better prepared, and surprisingly more sane. You’ll see.” So I like that we’re the horsemen.

Asher Miller  

Embarrassingly nice.

Jason Bradford  

I know. I’m kind of blushing.

Asher Miller  

Yeah. My immediate thought was he must be listening to a different podcast.

Rob Dietz  

Well, except that as a horseman, you spread death. That’s embedded in this really nice positive review.

Asher Miller  

That doesn’t make me feel better. 

Jason Bradford  

I have cowboy boots.

Rob Dietz  

What does that have to do with anything? 

Jason Bradford  

Horse riding.

Rob Dietz  

Oh, okay. Yeah. 

Asher Miller  

So hey, if you like the podcast, you should leave us a review as well. You need to be at least as gushing as that review was or else don’t bother.

Rob Dietz  

Yes.

George  Costanza  

Every decision I’ve ever made in my entire life has been wrong. My life is the complete opposite of everything I want it to be.

Jerry Seinfeld

If every instinct you have is wrong, then the opposite would have to be right.

Rob Dietz  

So if society is knocking down barrier after barrier, doing the opposite in your own life could mean actually putting some of those barriers back up. It sounds a little um . . . 

Asher Miller  

You could just lock yourself in your house. 

Rob Dietz  

Well, it’s maybe a little uninspiring, but

Jason Bradford  

“Alexa, don’t order the toilet paper for me automatically when I run out.”

Rob Dietz  

Seriously, I mean, you don’t have to put your credit card into every web browser that you find. You don’t have to make auto payments so easy. It really does help if you have some thinking going on each time you pay for something. Every time there’s a little barrier there it actually makes you a bit more circumspect, a bit more thoughtful about what it is you’re purchasing and do I really need this thing?

Jason Bradford  

So carrying around cash actually might make you hesitate.  I think there’s actually psychology there. 

Rob Dietz  

Yeah, it really is. Like you’re having to give up something to get something. So, I think having some little rules in your life about not making it so easy. And when you do that, you might even have a benefit of protecting yourself a little bit more from identity theft problems, too.

Jason Bradford  

Yeah, I think there’s a lot going on here with currency, a lot of ideas. And I think there’s a couple goals, we would want to have. You know, if our problem is we have this globalized economy that always has to grow, nd the solution is a more localized economy that actually has to live within an environmental footprint that’s bio-regional . . . Boy, there’s a lot to unpack there about what the money system would be like to support that. I mean, part of it is just like if you can trade favors with your friends and your neighbors and barter a little bit, that’s probably a good thing. But there are also some like tools available. So there’s a mutual credit system that’s very interesting. It was created in Italy. It’s now being applied in Wales. Where businesses can exchange with the e kind of credit holder. And so again, it gets over barter because you can provide services and get credit. And then you can receive services from a different company and cash that in in a sense. But you can’t exchange it for money. So pretty interesting. It helps focus local economies, helps build local connections that way. David Fleming passed away. But interesting thinker, he had tradable energy quotas, which is very tied to emissions. And it’s very good to – let’s get back a little bit to our episode on rationing from last season. Where, if we need to actually descend in terms of our energy consumption, use less energy each year, then this is a way to allocate that fairly. So if you’re thrifty, yeah, you can sell your energy quota. But  if you’re an energy hog, you have to go buy it. And so this is a way of actually reducing the amount of consumption. 

Rob Dietz  

Those Bitcoin miners are gonna have to o get some serious energy quotas.

Asher Miller  

So what we’re saying is, in a sense, we don’t have to go back to a gold standard, but having currency of exchange that was based upon energy would be – 

Jason Bradford  

Yeah, totally interesting. You know, because that’s one of the big things we do. We’re just like an energy Godzilla just trouncing through the world. 

Asher Miller  

And that would blow people’s minds. Or just even the idea of saying, let’s have currency that’s based on energy. You know what I mean? That’s such a foreign concept.

Rob Dietz  

It makes such good sense, though. Because, as we’ve noted, nothing happens without energy. So . . .

Asher Miller  

Yeah, just thinking. For us to get to the point where that was actually adopted would be a transformational moment in our collective understanding of how the world functions. The importance of energy.

Jason Bradford  

Well, there is also an interesting idea that was recently popularized by Kim Stanley Robinson’s book, “Ministry for the Future.” I read that book.

Rob Dietz  

Sci-fi, right? This is not like a how to change the banking system book, right? 

Jason Bradford  

Well, in that book, it kind of is. Yeah, it’s part of a lot of things he throws out there of these ideas. It’s all about international banking, and the big central banks. And they mint, so to speak. This is all digital, of course, but they mine a carbon coin. And the idea is sort of tied to Modern Monetary Theory that you can create money for whatever you want. But in this situation, the carbon coin is only minted and given to people who are demonstrating that they’re sequestering carbon or offsetting emissions of some kind. So that’s another interesting way of like, if the tradable emissions quote is about rationing the energy we use, this is about essentially sequestering or pulling carbon out of the atmosphere for projects like reforestation, etc.

Asher Miller  

Last thought for me would be in terms of thinking about doing the opposite. We talked about MMT. And the need to actually support people. The desire to put more money into circulation to support people to meet essential needs, which there are many, many people who need them. A lot of that is based on the fact that we’ve spent decades and decades and decades effectively taking away contributions from the wealthiest. There’s been this growing inequality and they’ve been paying less and less into the coffers of government and basically the collective need. And so if there’s a concern about putting more money into circulation, creating more money and debt in order to help people meet their needs, and that leads to more consumption. We still need that consumption of basic needs for people. But maybe we can pay for that by going back to taxing the wealthy the way they –

Jason Bradford  

Well, if all else fails, we’re just going to go back to bartering. Okay, guys, I got two private jets. What do you got to offer? 

Rob Dietz  

Oh, I’ve got a yacht and seven hummers.

Asher Miller  

All I have is Rob’s dog.

Rob Dietz  

You can’t barter my dog.

Jason Bradford  

I’m happy to interview Nate Hagens. Nate is an old friend of mine from the days on the Oil Drum. He also was a board member of Post Carbon Institute. Today he is very busy as the co-founder and director of Institute for the Study of Energy and our Future. He used to be in high finance with Lehman Brothers and Salomon Brothers. Then he shifted his focus to understand the interrelationship between energy and environment, finance, and the implication that synthesis has for human futures. He has a master’s degree in Finance from the University of Chicago and a Doctorate of Natural Resources from the University of Vermont. Okay, well, I’m really happy to have you here on the show. Nate’s been on the show before, so welcome back.

Nate Hagens  

Great to be here, JB.

Jason Bradford  

Well, you are now a part of this Do the Opposite Segment that we’re doing in Season 3. The idea being that if what we’ve been doing up to now hasn’t worked, should we do the opposite instead? And what does that look like? So what I want to do just set up our conversation is to get you up to speed on what Rob, Asher, and I have been talking about in this episode. The episode is about money. And what we’ve gone over are some of the properties of modern currency. And a lot of it related to the idea that we’ve been using different tools to overcome logistical barriers to using money, to exchange goods and services. And that nowadays, money is getting easier and easier to create, and easier to use. And the downside of this then is that the monetary system now is just part of the overall growth system of the economy. And actually, this growth of the economy and the the monetary system is actually required for its stability because debt creation, which creates money, also comes with future interest obligations. So we explain all that.

And we also explain that while money is created in the virtual world of bank ledgers in an instant with keystrokes and can theoretically grow infinitely, it makes demands on the real world. And this real world is finite. And so there are a lot of ideas out there, for example, in like progressive political circles about using modern monetary theory to inject money where governments believe is needed, maybe bypassing normal banking channels to do some of this. But that doesn’t by itself overcome this sort of problem that by boosting demand for real goods and services, we can boost consumption in the real world. And it could also cause inflation. So what we then talked about is that the money system isn’t solving some of our main long term problems. Which we, you know, consider ecological overshoot. And it is maintaining sort of this, you know, stoking growth business as usual. And so how do we do something different, do the opposite, to reduce the ecological footprint of humanity? Our material demands on the earth? And maybe use a money system to help sort of reverse course. So anyway, that’s kind of a long preamble to get you up to speed. Any initial thoughts on that, Nate?

Nate Hagens  

Yes, many initial thoughts. Do the opposite. I loved that Constanza, Seinfeld episode? I think it’s, it’s a real pithy soundbite for our situation because we are evolved organisms in a social species that found a bolus of fossil sunlight. And from ecology perspective, we’re maximizing power and the issuing of money allows us immediate, more access to power than if we didn’t issue money. So this is all consistent with our biological heritage. And it’s really hard to biologically do the opposite. In my class at the University of Minnesota, at the beginning of the human behavior section, I asked the students to think for 15 seconds and share something with the rest of the class that would reduce their standing, reduce their status with the rest of the class. And they all have this horrible look on their face. And I don’t actually make them do it. But to do things against our wiring is really difficult. And to do the opposite right now, to do the right thing for the environment, is almost the opposite thing that would be good for human populations, at least in the near term. So we’ve kicked the can for so long, that 50 years ago, we could have done things that made sense, and they would have hurt a little bit. Now the further that we get disconnected financially from the real world, the harder it becomes for anyone to even voice these crazy ideas. Because it’s a big old rip the band aid off, but it’s like a full body cast that we have to take off. Yeah. So that’s my initial thought.

Jason Bradford  

Yeah. A good example of what you just said was, for example, Modern Monetary theory, I think. This conundrum right of wanting to help out, but also maybe causing problems.

Nate Hagens  

I have a lot of problems with Modern Monetary Theory. There’s a lot of reality to it, but there’s a lot of huge glaring flaws. First of all, I think like many economic theories, it uses a money in, energy and materials out lens. Where you and I and our work has looked at energy and materials in, energy and materials out. Yeah, so we can print money, but we can’t print energy, we can only extract what exists faster. So my first point would be that MMT ignores the fact that private banks create over 90% of the money supply. This means that government ultimately has very little control over the amount of money spent into existence other than by managing interest rates. So if the government wants control, it should turn banking and finance into public utilities, like public banks at the municipal state and national levels. They don’t need MMT. That’s my first critique. Secondly, as long as there are surplus resources, meaning there’s unemployed people and excess industrial capacity, the government can spend as much as it wants. This they get right. But it ignores the fact that ecologically we’re running a major deficit. So most forms of government expenditure are making that deficit worse. So there is a way around that potentially. And that’s to fund projects like regenerative agriculture, ecological restoration, that would help reduce the deficit. And in that sense, MMT theorists are right.

Jason Bradford  

So we could we could maybe figure out if – so MMT kind of in some ways, is saying, we can expand the money supply, and then is trying to tie this to these, you know, these things that we say we need to do to deal with the climate crisis, let’s say. So you’re saying it could work in that regard. But is it just that you’re worried about spillover into just creating more money that doesn’t get used very efficiently, or it expands the money supply so much, that it spills over into other types of consumption, not just sort of planting trees, and restoring wetlands and etc.

Nate Hagens  

Well, that’s what’s happening now. First of all, let’s not forget that right now, as we’re recording this, the US government via stimulus and central bank support is paying for 36% of our national income. 

Jason Bradford  

Wow. 

Nate Hagens  

So 36% of our entire wages and salaries are covered in this nation by the US government. That is absolutely unsustainable. But the problem is, first of all, and we worked on this last year, is when people were offered to get $600 a week in stimulus, they’re not willing to go back to work to make $700 or $800 a week at some crappy job. They’d rather just sit at home making $600 a week doing nothing. So we have labor shortages on the lower income end. Number one. Number two, a lot of this extra stimulus is going into cryptocurrencies and Tesla options and all kinds of carbon intensive things. And I don’t think they can really control that. So yes, the ultimate problem, Jason, is you and I, and the people that we know, can say we should do this, and we should have the stimulus go to civilian land corps or young farmers. And those are good ideas, those are sound ideas. But the other problem with this stimulus is not only is it physically causing the problems that we just discussed, but it’s psychologically making people oblivious to the real risks. Like if we hadn’t done all this stimulus, and we were borderline in another Great Depression after COVID, then giving 25 grand a year to 20 year olds to go do ecological and community restoration around the country. . . A lot more people would have said, “Yeah, that’s a good idea.: But right now, you know, with the the sugar high that we’re experiencing, no one’s thinking about that. 

Jason Bradford  

Oh, interesting. 

Nate Hagens  

So I mean, where I was going with that is, we can talk about these great ideas. Politically, they just aren’t happening. The political situation is just so fractured and polarized that to get these ecological restoration ideas is really a tall order. But I still think we need to populate them, describe them, research them, and have a break glass in case of emergency plan for when they might become politically viable. So an idea would be, you know, the reason that governments have power is because we have to pay them taxes, and we pay them taxes in a currency. So it’s possible that they could have a currency, or a part of a currency, that you earn from doing carbon sequestration or something positive ecologically in your community. Now, the only way you can get these dollars, these ecological dollars, is if you do some work that benefits the environment. And then whoever has those dollars, that’s how you pay your taxes. So you could have – That could be at a state level or a national level – where there’s a project that needs to be done. And the only way that you can pay your taxes is if you contribute to that project. You know, things like that I think can happen in the future. And that’s a way to avoid using stimulus to buy Tesla options or whatever else.

Jason Bradford  

That reminds me a bit of the carbon coin idea that became popularized by that “The Ministry for the Future” book by Kim Stanley Robinson. So that seemed to get a lot of play. And what you’re describing sounds similar to what he describes in that book.

Nate Hagens  

It’s similar. But the problem I had with the idea in that book, is the same problem I had with the people that did the carbon bubble, is they only look at the fossil fuels. And they don’t look at the indirect carbon, that all the carbon in the stuff we buy at Walmart, and on Amazon, there’s carbon in all of that. So it’s not just coal, oil, natural gas. It’s the entire freakin system.

Jason Bradford  

You know, I think that book did talk about needing to pair this with carbon taxes or some kind of resource tax. So maybe that’s where we turn to. Right? If you’re going to then inject money, basically, into the system that’s directed towards work you want. Restoring wetlands, planning forests, training people to become local organic farmers, etc, etc, insulating homes. 

Nate Hagens 

Training people to be Jason Bradford. 

Jason Bradford  

Oh, that is so sweet. But I’m getting older. So I want young people to do this. So I can relax. But anyhow, so what I say on the other side is, how do you take money out of the system in a way that encourages labor, and discourages  the consumption of these resources?

Nate Hagens  

Well, okay, so big picture, here’s the problem, we’ve found this massive supply of fossil magic that has powered our goods and services, our riches, our population, for the last two centuries. We’ve used a half to two thirds of it. What’s remaining is both precious in what it’s able to do for us, but also environmentally toxic, especially at these scales. So in order to avoid facing the harsh reality of what I just described, we’re creating money at an accelerating pace to avoid facing the bill that’s been building for 50 years. So with that backdrop, I can’t say what might work the next two or three years. But in the next two or three decades, we have to make non-renewables more costly. And if we make them more costly, that will do two things. Number one, it will spur conservation. And number two, it will spur innovation. Because those inputs will get much more expensive, so they’ll want to make longer lasting products, and they’ll want to use more non-renewable inputs into the process. So right now, we did some research, 95% of the tax burden is directly or indirectly on labor, only 5% is on natural resources.

Jason Bradford  

Wow, that’s incredible.

Nate Hagens  

So we’re working on a project. And we’re teamed up with Imperial College of London to do the research. The website is called untaxed.org. But the idea is to put in a tax not only on carbon, but on all non-renewable inputs, like fossil, water aquifers, sand, copper, anything that’s depleting. And you know, sand right now is in a global shortage. We’re taking sand out of river beds, because of it’s needed for ore and silicone and fracking and everything. So if we tax natural resources, and then simultaneously remove the tax on human labor, what we’re doing is making labor much more attractive, and spurring conservation and innovation at the same time. And this is the way it used to be a couple 100 years ago, but we’ve moved far away from that.

Jason Bradford  

I think that’s incredible because you know, things happen nowadays, it just drives me crazy. Where I’ve been in places where there are cheap labor economies. Where like, if your lawnmower breaks, you basically push your lawnmower to a shop, then there’s somebody there who can fix it. And, nowadays, it’s you know, it’s impossible. You can’t even get a part because they think you’re just gonna scrap it and buy a new one.

Nate Hagens  

Well, I think this would help with planned obsolescence as well. 

Jason Bradford  

Right? You get rid of that. 

Nate Hagens  

And then basically we’ve had – and this is the do the opposite theme again. Energy has been so unbelievably cheap. 1000’s of times cheaper than human labor. That we’ve essentially had mulligan’s on just about every aspect of our life. Your lawnmower breaks down, you just buy a new one, or you bring it in, get it repaired. If people don’t think of, I need to spend a meaningful portion of my money on a lawn mower, maybe it’s better that I share my neighbor’s lawn mower, or maybe I should buy a machine that lasts me for 20 years. I mean that that thinking is kind of been thrown out with this era of unbelievably cheap energy. And as energy gets more expensive, which it will naturally because of depletion, with the exception of the fact there may be a financial reset at some point due to the number of claims that we’ve created. But as energy gets more expensive, a lot of the really energy intensive processes in the world will become less profitable or even unprofitable. Like airlines or aluminum smelting, concrete creation, things like that. So what we’re doing, I mean, if we can wave a magic wand and solve, quote – unquote, solve this problem, what we would do is say in the year 2030, gasoline is going to be $10 a gallon. Everyone get to work, and prepare for that reality. In reality, is we couldn’t do that because no one would believe that because of what’s happened in politics. No one would believe that that would ever happen. So we wouldn’t do anything. And then December of 2029, someone would come out and say, “No, we’re kidding.” But if energy was a lot more expensive, we would make better decisions that were aligned with our real future.

Jason Bradford  

Yeah. And someday, if you understand, you know, oil depletion, and all this, it will get, even if it’s not monetarily more expensive, but it will become harder to afford in general. So for the average person –

Nate Hagens  

I think it’s harder to work now. It’s just a stimulus is obfuscating that fact.

Jason Bradford  

One of the things that, you know, that I think it makes it hard to sell this is that, if you’re selling, “Hey, tighten the belt a little bit, work a little harder,” you’re asking a population that do this, who also sees such wealth inequality. And I’m wondering how important it is to figure out how to get a sense of social cohesion, a sense of shared sacrifice and fairness back. You just talked about an un-tax which is taxing non renewable resources, but not taxing labor. Would that help in this or is there other things we need to do to deal with the wealth gap?

Nate Hagens  

As far as un-taxed, we’re doing research on that it’s unclear how that would – because labor would become so much more attractive that people will want to hire people again. So I’m not sure how regressive a tax like that would be. But first of all, yes, we are approaching a Maria Antoinette moment for society because so many people have been left out. And that’s kind of a little bit of a biological power law, that 80% of the resources just eventually funneled to 20% of the population until it breaks. I think, personally, this is getting a little off topic, we will have a lot more equality in the coming decade, because the rich are going to lose 90% and the poor are going to lose 30%.

Jason Bradford  

Oh, interesting. 

Nate Hagens  

– when the financial hit comes, but the rich will still be rich and the poor will even poorer you know, just the relative divergence will narrow. But you know, here’s, you know, Wes Jackson. There’s a guy that works with Wes called Stan Cox who is kind of a world expert on the concept of rationing.

Jason Bradford  

We might have covered that in Season 2, actually. So yes.

Nate Hagens  

Well, he has a new book out called, “Any Way You Slice It,” and he points out that direct rationing would be far more equitable than price rationing. In other words, the market signals go up and that is indirectly rationing. Because energy demand is highly inelastic, the total value of carbon rationing coupons would increase as the supply decreased. And if everyone was assigned an equal ration, because of that power law of distribution of energy use I mentioned, most people would see their incomes rise and inequality fall as we reduce the ration. Which is why, if people were more biophysically literate, such a scheme would be way easier politically to do to reduce carbon emissions. So I don’t know. I mean, this is such a complex story that we’re talking about. But the biggest problem I see is we’re not going to be able to do anything really radical until there’s a crisis. I mean, even last year, I thought that was the moment to do a crisis. And I was involved in that and the discussions we had. If I would have brought up, “Excuse me, Mr. Congressman, Mrs. Senator, we need to do the opposite,” I would have been hung up on. To actually do the opposite is when you have no other choice. But to be honest, pr to be blunt, this untaxed idea is pretty freakin radical. And I think it would work.

Jason Bradford  

Yeah, I like it because it solves these problems. Like I think a lot of people realize we’re over consuming resources and we need to encourage work. And this  basically handles that, but it ends up being overall, your tax burden might stay the same or go down. It’s just that we’re reallocating where the taxes come from. Right?

Nate Hagens  

Right. And, and also, it gets rid of this Mulligan Monty Hall sort of structure. And if you have a job and you make $50,000 a year, you now get to keep all 50,000 of that. And with that, you might decide to save some or you might decide not to buy the iPhone that’s now three or four times as expensive. You might share and collaborate with other things. It would lead to decisions that are more aligned with reality. So . . . 

Jason Bradford  

Yeah, that’s great. Well Nate, thank you so much for coming on. Because this is a complex topic, and I know how much you’ve thought about it. So we really appreciate your insight. And there’s a website you have, is it untaxed.org? Is that right? Then people can learn more about that? 

Nate Hagens  

That’s one of them. Yeah. 

Jason Bradford  

Any others? You want to throw them out there.

Nate Hagens  

energyandourfuture.org 

Jason Bradford  

energyandourfuture.org? Okay.

Nate Hagens  

You know no, you should start a dotheopposite.org where you list kind of the 10 problems that we face and one day a month, like the 29th of the month, try to have ecologically pro-future people do the opposite in their own lives. Have a list of things that wouldn’t naturally come to them, but if they did that, it would be better for the future and better for the environment.

Jason Bradford  

That would be a good sort of maybe conclusion of this season. We kind of pull all that together and package it. Good idea. I’ll bring that I’ll bring that to Rob and Asher.

Nate Hagens  

Okay.

Jason Bradford  

All right. Hey, have a great week, Nate. Thanks so much, and good talk.

Nate Hagens  

Talk to you soon.

Nate Hagens  

Bye.

Jason Bradford  

Thanks for listening to this episode of Crazy Town. 

Asher Miller  

Yeah, if by some miracle, you actually got something out of it, please take a minute and give us a positive rating or leave a review on your preferred podcast app. 

Rob Dietz  

And thanks to all our listeners, supporters and volunteers. And special thanks to our producer, Melody Travers.

Rob Dietz  

We’ve got a great new sponsor here in Crazy Town. You know, the Beatles tell you the can’t buy me love 80s movies with Patrick Dempsey tell you the same thing, but turns out you can.

Jason Bradford  

I know that’s all bullshit nowadays. I mean, well, I don’t think people understand is how innovative humans are and how we solve any problem that comes in front of us. Okay? And there’s been a new breakthrough. And it turns out, money can buy you love.

Rob Dietz  

That’s right, with crypto-love. They’re mining a new currency, “can buy me love.”

Jason Bradford  

The only problem is it only works in VR.

Rob Dietz  

Well, Jason, you’ve bought three virtual wives with your crypto.

Jason Bradford  

Yeah. It’s good. I mean, I’m spending a little too much time with them. Honestly, it’s kind of affecting my real world relationships. But it’s interesting 

Asher Miller  

Don’t worry, pretty soon you won’t have one.

Rob Dietz  

It’s a better life.