Seeing crypto for what it is and how to live with contradiction with Brett Scott
Nov 12, 2023
auto_awesome
Brett Scott, defender of physical cash, discusses the contradictions of libertarian money fantasies, how the monetary system works, and his recent writing on crypto titled Zero is the Future of Money. They explore engaging with right-wing thinkers, contradictions within the crypto world, and idealistic beliefs. The chapter also delves into the role of retail banks in money creation and economic activity, and the concept of counter trade in the crypto world.
Understanding the multi-layered nature of the monetary system and the role of retail banks in credit creation.
The importance of maintaining a balanced power dynamic within the monetary system and steering resource allocation.
The clash between the idealistic vision of a hard money system in crypto and the reality of the existing financial system.
Challenging the libertarian notion of a fairer society and addressing power imbalances within the financial sector.
Deep dives
The Structure of the Monetary System
The monetary system is a multi-layered structure that involves the issuance and destruction of money. It is important to understand that money is not just a single currency, but a constellation of different types of money. Retail banks play a significant role in creating money through credit creation, which is the issuance of digital "casino chips" in the form of bank deposits. This credit creation is a political process that can shape the composition of the economy. The banking sector has the power to mobilize resources by issuing loans and selecting which sectors of the economy should be funded. This brings attention to the importance of maintaining a balanced power dynamic within the monetary system.
The Politics of Banking
The banking sector operates on a large scale and is often more focused on dealing with big corporations rather than individual customers. It seeks scale and automation, which leads to a standardized and bureaucratic approach. While large corporations benefit from this system, individuals may feel alienated. Additionally, the banking sector has the power to create and destroy money in the economy. It selectively chooses to mobilize economic resources for certain purposes, which can impact the composition of the economy and resource allocation. The politics of finance and financial reform revolve around steering these processes to ensure more equitable outcomes and prevent concentration of power.
The Fragility of the Ideal
The crypto world attempted to realize the ideal of a hard money system by coding it into cryptocurrencies like Bitcoin. However, they encountered the reality of the existing financial system, which has more power and can integrate cryptocurrencies into its operations. This clash between the ideal and reality has resulted in disenchantment and a reevaluation of the possibilities for achieving the ideal in practice. It has also highlighted the challenges of maintaining the integrity of the idealistic vision within the capitalist system and the need to confront the cognitive dissonance that arises when the ideal clashes with reality.
The Contradictions of Libertarian Thought
Libertarian thought often grapples with contradictions, including the tension between individualism and the power dynamics of capitalism. While libertarian ideals may hold that pursuing self-interest is morally correct, the reality of the banking and financial sector shows how power is consolidated among big players. These players, such as retail banks, have special access to money creation, which can be seen as anti-democratic. This challenges the libertarian notion that a hard money system would result in a fairer society. Instead, it highlights the need to address the power imbalances within the financial system and advocate for more equitable alternatives.
The limitations of absolute freedom and idealistic beliefs in Bitcoin
The podcast discusses the limitations of concepts like absolute freedom and perfect money in relation to libertarianism and Bitcoin. It highlights how these ideas, although influential, often fail to align with the complexities of real-world systems and interdependence. The speaker emphasizes the importance of recognizing the practical and nuanced nature of money and the need to move away from absolutist ideologies when thinking about alternative currencies.
The significance of counter trade in alternative currency systems
The podcast explores the concept of counter trade and its relevance in alternative currency systems such as mutual credit. It explains how counter trade involves exchanging goods or services directly without the use of traditional money, creating a more interdependent and community-focused system. The speaker emphasizes the value of counter trade in bypassing traditional monetary systems and fostering cooperative relationships within communities.
The complexities of debt and credit in mutual credit systems
The podcast delves into the nature of debt and credit within mutual credit systems. It challenges the negative perception of debt, highlighting that interdependence is a fundamental aspect of the human condition and that debt is a natural part of being alive and dependent on others. The speaker explains that mutual credit systems allow for a more personalized and community-oriented approach to debt and credit, where exchanges are based on goods and services rather than monetary units.
The importance of contextualizing alternative currency systems
The podcast emphasizes the need to consider alternative currency systems within the context of existing systems and political structures. It encourages a realistic and practical approach to exploring and implementing alternative currencies, acknowledging the complexities of the current monetary landscape. The speaker emphasizes the importance of understanding the limitations and potential of alternative currency systems and the need to engage with the existing financial ecosystem.
In this episode I spoke with Brett Scott, an independent scholar, writer, and defender of physical cash from a left point of view. Brett was involved in the early Bitcioin communities and one of the first guests of the podcast back in 2020 so it was nice to be able to talk to him again after so many years and since his latest book Cloudmoney was published.
During the interview we discussed how the monetary system actually works, the contradictions of libertarian money fantasies, and his recent writing on crypto titled Zero is the Future of Money. Be sure to check out Brett's great Substack to learn more about his work on money.
If you liked the podcast be sure to give it a review on your preferred podcast platform. If you find content like this important consider donating to my Patreon starting at just $3 per month. It takes quite a lot of my time and resources so any amount helps. Follow me on Twitter (@TBSocialist) or Mastodon (@theblockchainsocialist@social.coop) and join the r/CryptoLeftists subreddit and Discord to join the discussion.
ICYMI I've written a book about, no surprise, blockchains through a left political framework! The title is Blockchain Radicals: How Capitalism Ruined Crypto and How to Fix Itand is being published through Repeater Books, the publishing house started by Mark Fisher who’s work influenced me a lot in my thinking.
The book is officially published and you use this linktree to find where you can purchase the book based on your region / country.
Get the Snipd podcast app
Unlock the knowledge in podcasts with the podcast player of the future.
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
Save any moment
Hear something you like? Tap your headphones to save it with AI-generated key takeaways
Share & Export
Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
