The Peter McCormack Show

Luke Gromen is the Founder and President of Forest for the Trees (FFTT). In this interview, we discuss how governments can navigate the first busting global debt bubble in 100 years. We talk about historical precedents: namely the Weimar Republic in the 1930s and Israel in the 1980s, and how governments may be forced to allow for a compressed period of triple-digit inflation. - - - - Israel in the mid-1980s faced an existential economic crisis. After a decade of stagnation and rising government expenditure fuelled by money printing, commercial banks started to buckle. Further, the inflation rate was skyrocketing. In 1979 it had reached 111%. By 1984 it had grown to 450%, with fears it could exceed 1,000% by the end of 1985. Despite the real risk that the sovereign debt bubble may soon burst leading to unprecedented levels of inflation, those in the west have become inured to a belief that very high rates of inflation only happen in developing countries. And yet, the experience of hyperinflation in an advanced democratic country was felt much more recently than most people think. It is important therefore to consider the lessons from Israel’s inflationary crisis of the 1980s. The policies enacted by Israel to mitigate the situation were socially bruising. Markets were liberalised, government spending was significantly cut, wages were controlled, the Shekel was sharply devalued, and interest rates were raised to punitive levels. The result was a recession in the 1990s with high unemployment. But inflation was tamed. And Israel did not fail as a state. Nevertheless, the taming of inflation in Israel benefited from various fortuitous factors: high levels of cheap immigrant labour, the technology boom, and the peace process opening up new markets. There aren’t any such obvious pressure-release valves for the west. Furthermore, will those in the West feel as culturally tied to their home nation to stick through such periods of pain? In essence, is Israel a useful case study, or a distracting aside? We may hope it's the former. Otherwise, we may be entering a period for which the precedent goes back to the 1920s Weimar Republic. Or, even more worryingly, we may experience a crisis for which there is no historical precedent. Prepare accordingly.

Matthew Mežinskis is the creator of the Crypto Voices podcast and Porkopolis Economics website. In this interview, we discuss why free banking has always failed due to central bank interference, and how Bitcoin changes the rules of the game. We also talk about how credit is a natural economic phenomenon, and why narrow banking is centralising in nature. - - - - The history of free banking goes back over 1,000 years and it has existed in over 60 countries. It was widespread in the 19th century, but from the early 20th century onwards it was supplanted by central banking in modern economies. However, despite some common narratives, it’s demise was more to do with pressure from governments to create monopolies for currency issuance, than inherent weaknesses in the free banking system. The idea of free banking is re-emerging as a response to the failures of central banks. It is well documented that monopolies often result in market failure due to their constraining of efficiency and innovation. Further, without competition, those running monopolies distort prices and capital through subjective and misaligned priorities. A sovereign debt spiral is a symptom of such centralising control. Matthew Mežinskis is able to bring colour to this issue through his peerless analysis of the different types of money flowing through the economy, and how these are currently out of kilter with the economic system they are intended to support. At the root of the problem is that central banks control both the base money (i.e. the money supply) and the credit supplied to the economy through commercial banks. These tools have been abused. Further, commercial banks have been allowed to get around the rules of the system for decades. As a result, bailouts for commercial banks are happening with alarming regularity. As Matthew asserts in the show: “In the last 100 years, the central bank, the premier banking institution in the United States, has gone to three extremes; [this] never ever has happened in recorded history.” Thank god we have Bitcoin.

Eric Wall is a researcher and investor, and in this interview, we discuss how Eric became a notable critical voice within the HEX community, his ongoing fight with prominent Bitcoin maximalists, and Taproot Wizards. - - - - What Bitcoin stands for and should be is a debate that has been raging since 2009. Bitcoin’s unique characteristics have drawn many people into its gravity. The realisation that its immaculate conception may never be replicated has resulted in many of those same people guarding Bitcoin’s development with uncompromising zeal. The result has been the rise of Bitcoin Maximalism. Maximalist ideology can be a fuzzy concept: there are no clearly agreed rules or principles; there have been various iterations with different priorities over time. However, it is clearly characterised by conservatism over the development of the protocol, and intolerance for those with differing attitudes. Nevertheless, that is not to say that Bitcoin development can forever remain in stasis. There are and have been pressures requiring upgrades both to the base layer, and in the development of additional layers. This means there is always a creative tension on what changes are required, and how quickly these need to be implemented. Further, as Bitcoin has no leader, it has engendered an ecosystem where advocates organically emerge, who can gain traction and have an outsized influence on the community. This creates further tensions as Bitcoin’s purpose is being proselytized using competing and sometimes muddied beliefs. Thus, it is important that Bitcoiners enable an open dialogue where all ideas are questioned, scrutinized and tested. And such debates should be open to all Bitcoiners, without fear or favour to any powerful interests. Is the question therefore how intolerant we should be of those with differing views? And, can we live without trolling, or is this a necessary defensive tool?

Ahmed Gatnash is an author, activist and co-founder of the Kawaakibi Foundation. In this interview, we discuss how the hope of the Arab Spring has been ruthlessly suppressed, meaning the middle east is further from democracy than ever. It’s a breathtaking story of brave activists fighting Twitter’s exploitation, Jamal Khashoggi’s murder and the blackmailing of Jeff Bezos. - - - - The history of the Middle East is a modern tragedy: the cradle of civilisation has been exploited by powerful Western interests that have enabled corrupt and cruel authoritarian rule to dominate the region. Democratic movements have long struggled to gain any traction. However, a wave of optimism spread through the region in 2011 as the Arab Spring saw numerous popular uprisings. The ruthless response indicated that the region's path to freedom will be a long one. Every action has an equal and opposite reaction. Except in the Middle East. The wave of protests predicated on the pent-up anger at decades of corruption and economic stagnation heralded an era of extreme brutality against citizens throughout the region. The cruel irony is that the Western social media technology that enabled the coordination of demonstrations, has now been effectively harnessed by those seeking to protect the established centres of power. The cruelty lies in the knowing actions of those directly involved in the violent repression of dissent. It also lies in the wanton ignorance of those living in the West. Those who marginalise a continent of people. Those who prioritise profit over other considerations. Those who talk of freedom but know nothing of those who are staking their lives for freedom in today’s world. This is a tale about brave activists fighting for the rights we in the West take for granted to be provided to their peers in the Middle East. It is a story of an outsized fight where those fighting for democracy are facing entrenched and ruthless authoritarians, self-interested Westerners and a largely indifferent media. It is an interview you need to hear. We all need to check our privilege.

Dan Tubb is a podcaster and former venture capitalist. In this interview, we discuss the problems with fixing the sovereign debt problem in the context of broken media, broken politics and broken international institutions. We talk about the general ignorance of the problems facing society, and how this compounds the difficulty of resolving the situation. - - - - The last show with Dan Tubb was extremely popular. Dan set out in clear terms why the current economic system is at a crossroads: continuation of the accumulation of debt without rebalancing fiscal commitments is unsustainable; equally, there are no easy solutions. But when debt payments become one of the main government expenditures it’s well past the time to act. In this follow-up show we discuss the causes, ramifications and potential mitigations with Dan. How did the boomer generation unintentionally fuel the current economic problems, and why are they reluctant to change tack? Why is government becoming increasingly dogmatic and coercive in their policy application? Can AI provide a source of growth for the economy that averts the debt spiral? Should we expect the government to resolve all these issues? These aren’t theoretical concerns; there is evidence abounds that society's relationship with the state is shifting: Macron’s difficulties in reigning in state spending in France; the growth in power of the Dutch farmers; Brexit. For too long those in government have taken the electorate for granted, whilst feathering their own nests. However, the issue is whether this break between the people and power will only exacerbate problems. The solution surely has to be in more direct engagement between decision-makers and citizens. States rights in the US have long served as a beacon of governance for other parts of the world: bottom up democracy that provides for competition and innovation. It’s not that we need less government, it's that we need more representative and localised government. Further, if we want a functioning democracy, we need to entice the best back into government.

Jan Čapek and Pavel Moravec are the co-founders of Braiins, a Bitcoin Mining company. In this interview, we discuss Braiins update to their updated Stratum V2 protocol software for pooled mining, how it helps solve Bitcoin mining’s centralisation problem, and why Braiins has given the Stratum software away to the community as open source. - - - - The development and growth in pooled Bitcoin mining has been a critical part of maintaining Bitcoin’s security. The synergies of scale were always going to affect Bitcoin as it transitioned into a more mature technology. However, centralisation is an existential threat to Bitcoin. Mining pools, started in 2010 by Jan and Pavel, therefore enabled small-scale miners to continue to gain value from limited hash power, which thereby strengthened the network's security. Nevertheless, just as the rise of the mega miners concentrated the hashrate, so did the rise of major mining pools. In February over 52% of the hashrate was controlled by just 2 mining pools (Foundry USA and Antpool). This is not to state that these mining pools have malevolent intentions. But Bitcoin must always guard against an attack through trustless mechanisms. Marathon’s flip-flopping over filtering non-OFAC-compliant transactions in 2021 was a warning. The solution to the problem lies in the communication protocol used to connect miners with mining pools. The existing protocol, Stratum V1, was developed and distributed as open-source software by Braiins in 2012. Whilst it has successfully supported Bitcoin mining pools since then, it was in need of an upgrade for a series of reasons. Such an upgrade enabled this centralisation issue to be tackled head-on. Stratum V2 transfers the power for writing new blocks from the pool operators and into the hands of individual miners. This is enabled by a sub-protocol within Stratum V2 called the “Job Negiotator”. The incentive for adoption is that the other updates enable faster (i.e. more profitable) and more secure communications. It is an elegant solution built with the same technical and community-facing ethos as Bitcoin’s open-source code. Děkuji Braiins!

Lyn Alden is a macroeconomist and investment strategist. In this interview, we discuss the recent run of bank failures: the causes, the impacts on the banking sector, federal support and exposure, and the likelihood of continued stress in the system. We also discuss a coming decade of recurring inflation and the emergence of reserve currency competition in a multi-polar world. - - - - “The vast majority of commercial banks that have ever operated in the U.S. have disappeared… the slow and steady decline in bank numbers continues.” This 2021 analysis by a St Louis Federal Reserve economist is as applicable now as then. Whilst the dramatic decline in bank numbers (from over 30,000 in 1921 to circa 4,000 now) mostly occurred in the 1930s, the past 3 decades have been characterized by a continued contraction that shows no sign of stopping. There are obviously inherent risks in banking centralization. As we have seen in recent years, governments are delegating more regulatory authority to private banks, bypassing democratic norms in the process. As banks require central bank permission to operate, they have no incentive to resist such demands. Nevertheless, banking centralisation is a symptom of a more fundamental issue: a fiscal spiral that’s creating an increasingly volatile economic environment. Unsustainable levels of debt are hampering central banks' ability to address growing inflation. Restraining economic growth decreases the ability of governments to reduce deficits. Further, the political cycle results in difficult but necessary policy decisions around fiscal constraints being deferred. The result is a yo-yo-ing of rate rises and bailouts. This increases the risk for all types of investment, even traditional safe havens. Banks struggle, and depositors run. A situation that begins with investors seeking safer banks, if not resolved, can lead to investors seeking to divest themselves of sovereign currencies. This is where capital controls kick in. The fundamental issue is that governments will seek to protect the system, not the individual. The denial of licences for narrow banks is part of the same toolbox that includes gold seizures and potential restrictions on Bitcoin. Prepare accordingly.

Aleks Svetski is an entrepreneur, author and Bitcoin advocate. In this interview, we discuss his upcoming book “The Bushido of Bitcoin”. We cover the negative impacts of wealth, how Bitcoiners can mitigate such negative influences by becoming virtuous and disciplined, and why famous warrior classes are examples to follow. - - - - It seems like we’re entering another bull run. If it is sustained and we enter another cycle, Bitcoin’s price appreciation will be matched by reappraisals of the hyperbitcoinisation thesis. Can it replace the role of stores of value? Can it become a new global monetary reserve? Will it become a prevalent medium of exchange? Whilst all these questions are important, there one area of discussion doesn’t get adequately debated: what do Bitcoiners do if and when their place within society becomes elevated? Material personal benefits will be offset by newfound responsibilities. If they are to be the flag bearers of the change Bitcoin promises, how should Bitcoiners behave? Aleks Svetski tackles this issue in his soon-to-be-released book ‘The Bushido of Bitcoin”. Bushido is the samurai moral code. The word literally means “warrior way”. The samurai were Japanese nobility, and Bushido adhered them to follow various virtues (honour, honesty, self-control, loyalty, compassion, respect, righteousness and courage). It has had a lasting impact on Japanese culture. The importance of Bushido in the modern context is that elites now operate outside of any moral code. Post war liberal society has developed a system of norms, where expected behaviours have not been codified into law. Increasingly, elites have exploited these norms: if it isn’t illegal, then it’s okay. The roots of societal decay can be extrapolated from this situation. What is needed is a new moral code. It could be argued that Bitcoin maximalists have been developing such a moral framework for Bitcoiners. But, it is important to take a step back and understand the tenets of a moral code first before defining which actions should be encouraged or discouraged. In essence, what should the Bushido of Bitcoin be?

Izabella Kaminska is a journalist and founder and editor of The Blind Spot. In this interview, we discuss the failure of current mainstream journalism to cover subjects properly, why the destruction of the middle class is dangerous for democracy, the endemic problem of corruption in politics, and the need for an honest economic orthodoxy. - - - - In a lot of ways, we are in a gold age of media. There have never been so many different ways to consume news and opinion. This has been triggered by many factors: deregulation, technology and the atomisation of modern society. But, this also creates a significant number of problems. Principally, whilst there is more freely accessible information, it is now harder to discern fact from fake. The commercialisation of news has resulted in a race for clickbait: polarising reporting, increasing sensationalism, and relegating in-depth examination. Conversely, those organisations seeking to remain impartial such as the BBC, end up getting lost in a sea of conflicting missions. This has resulted in the BBC failing in its main mission to inform, educate and entertain. This is why new media brands are becoming important promulgators of information, increasingly at the expense of traditional media organisations. Amongst all the noise, people are looking for honest and relatable brokers of news. Further, people are craving more intellectually curious, nuanced and detailed analysis. This is the demand Izabella Kaminska’s The Blind Spot media venture is seeking to fill. A demand that mainstream media is unwilling or unable to satisfy. It’s hard: building a new brand takes time. But, without such content, groups on both the left and right will continue to mischaracterize issues that require understanding, trade-offs and proportionality. This will exacerbate the problems of polarisation and the veiled promotion of corporate interests. We need more journalists like Isabella willing to report the truth.

Sergej Kotliar is the founder and CEO of Bitrefill. In this interview, we discuss enabling Bitcoin circular economies, the mission of Bitrefill to be a financial empowerment company, the risks and rewards of using zero-confs for processing transactions, and the many different cultures and communities Bitcoin has spawned. - - - - Bitrefill is the largest crypto e-commerce platform in the world. It aims to facilitate the development of crypto circular economies. Whilst Bitcoin makes up a significant portion of their business, they are not a Bitcoin-only company. The mission is aimed at empowering people to undertake transactions on the internet that would otherwise not be possible for them. To that end, they pragmatically enable the use of Bitcoin, stablecoins, and a limited number of altcoins. The argument in favour of their strategy is compelling. Not everyone will respond to ideological arguments in favour of Bitcoin. Whilst there are many who will get drawn in by Bitcoin’s compelling theoretical roots, there are many others who are more concerned with prosaic day-to-day concerns. To maximise efforts to increase adoption we, therefore, need to appeal to a range of visions for Bitcoin. One important vision is focused on Bitcoin’s dry technical utilities. In our discussion, Sergej refers to the increase in the use of the internet and other technologies such as VPN. The widespread growth in the use of such technologies occurs as a result of a practical benefit being provided to users, not because adopters are seeking to mitigate a certain political or ethical concern. That’s not to say that selling Bitcoin as freedom money isn’t critical. Rather, we need to augment it with other strategies.