Investment strategist Lyn Alden discusses a wide range of financial and social topics including wealth inequality, the Fourth Turning, broken money, and market updates. She explores the causes of wealth concentration, the potential consequences of the US losing reserve currency status, and the role of Bitcoin in the future of finance. Alden also delves into the macro and market update for the fall of 2023.
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Quick takeaways
Bitcoin is seen as a credible way to break away from the current centralized financial system and solve various challenges.
Technology has the power to change things globally and permanently, whereas politics and governance structures are temporary and localized.
The book discusses the history of money, including the era of free banking in the 1800s and the transition to centralized banking influenced by technological limitations and the desire for stability.
Deep dives
Bitcoin's Revolutionary Promise to Boost Economic Prosperity
Bitcoin is seen as the only realistic method to change the current monetary system and solve various challenges. The speaker is increasingly optimistic about Bitcoin the more they learn about it. Bitcoin's scarcity and fast settlement speeds make it a credible way to break away from the current centralized financial system. The concept of technological determinism is explored, suggesting that technological advancements like Bitcoin can have a global and permanent impact. Politics may bring temporary changes, but technology can reshape things permanently.
Technology's Ability to Change Global Systems
Technology has the power to change things globally and permanently, whereas politics and governance structures are temporary and localized. The speaker highlights the examples of running water and refrigeration, which have become permanent parts of human experience. Technology can disrupt the current monetary system and change how we interact with money. The book discusses the emergence and dominance of fiat currencies and the factors that influenced their widespread adoption. Bitcoin is presented as a potential solution for the current limitations and instabilities of the financial system.
The Evolution of Money and the Challenges of Free Banking
The book delves into the history of money, including the era of free banking in the 1800s. Free banking had varying levels of success in different regions, with some countries experiencing stability and others facing challenges. The United States, being an emerging market at the time, had a complex banking system with different state rules, which hampered the success of free banking. The inherent instability of Fractional Reserve Banking is acknowledged, but efforts to reduce the frequency and severity of financial crises were made. The transition from free banking to centralized banking was influenced by technological limitations and the desire for stability.
Wealth Concentration, Inflation, and the Impact on the Middle Class
Wealth concentration and its relation to the gold standard era are discussed. The speaker highlights that the current level of wealth concentration in the United States is similar to or even larger than what was observed in the Gilded Age. The impact of different monetary systems on wealth concentration is explored, emphasizing that wealth distribution is not solely determined by the monetary system. The role of inflation and constant currency manipulation is outlined, which can gradually siphon value from workers to asset owners. The book also touches on the challenges faced by developing countries in building capital due to reliance on external units of account.
Bitcoin's Difficulty to Change is a Good Thing
Bitcoin's resistance to change by design is seen as a positive attribute, as it ensures the network's strength and decentralization. While some improvements can be made, they often come with trade-offs. The difficulty in adding direct improvements to the network is seen as a safeguard against hasty and potentially detrimental changes.
Bitcoin's Potential for Improvements in Higher Layers
Despite the constraints of Bitcoin's base layer, there are still opportunities for improvements in higher layers. Solutions such as custodial environments and federations provide new possibilities for private and secure custody. Additionally, technologies like trauma in mince and potential soft forks like covenants offer potential avenues for better access to the base layer without compromising decentralization.
In this episode, investment strategist Lyn Alden returns to discuss her new book, Broken Money, and a wide range of financial and social topics including:
Are we in the Fourth Turning?
How did wealth concentration and living standards in the era of 'free banking' compare to the wealth inquality we see today under central banking?
What causes wealth concentration today? Is it QE?
Why are workers making 300x less than CEOs today?
Could the U.S. losing reserve currency status be a good thing?
Will there be credit on a Bitcoin standard?
Bitcoin vs. crypto and alt tokens
Macro and market update for fall 2023
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Lyn Alden is a full-time investor and independent financial analyst. She has been performing investment research for over 15 years in various public and private capacities, and founded Lyn Alden Investment Strategy in 2016. Lyn has a Bachelor’s degree in electrical engineering and a Master’s in engineering management. She went from intern to lead engineer at an aviation facility before retiring with financial independence at 33. Her goal is to provide institutional-level research in plain English, so institutional and retail investors can benefit. Follow Lyn on X: https://twitter.com/LynAldenContact
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Subscribe to Lyn's newsletter at www.LynAlden.com.
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This podcast is for educational purposes and should not be construed as official investment advice.