What is Money? No, srsly.

Adam Keily: [00:00:52] Hello and welcome or welcome back to comedian versus economist. We demystify the world of money and help you and hopefully, I get a handle on the bigger picture. My name's Adam and I'm joined, as always by my older brother and real-life economist, Thomas. Welcome, Thomas. [00:01:09][16.4]

Thomas Keily: [00:01:09] Thank you. And it's great to be here. [00:01:10][1.4]

Adam Keily: [00:01:12] All right, good. We are trying a new a new studio set up today, so hopefully you might have noticed a few little audio issues sneaking in last week. So I think if we if the audio makes it through this week, it should be crystal clear. But there is a strong chance, given the complexity of what we've cobbled together here, that there'll be no audio at all. So if you're hearing this, congratulations and welcome. We're in the homestretch now of our introductory series where Thomas helps all of us, I think hopefully explains to us the world of macroeconomics, the world of money, what makes it tick. We've covered off really the basics. In the first few episodes, we had Economics 101 really for the to get us started. We've covered off things like the economics dashboard. You know, if you're interested in any of that, you can always go back. And I would encourage you to go back and start at episode one. In the last couple of weeks, we got into how macroeconomics affects things like share prices, how macroeconomics affects the property market. And so we're really now we're into episode seven into the home stretch, as I say. And I'm actually really excited about this episode today because it's a topic that's close to my heart. We're talking we're talking cash. And Thomas, I want to ask you the question, is cash dead? [00:02:28][76.2]

Thomas Keily: [00:02:29] Oh, provocative, wow, we're just going to jump straight there. Wow. Um, no, it's not dead, but it may be dying. Right. Yes, it's becoming, you know, being replaced by digital currencies, digital versions of money that's [00:02:46][16.3]

Adam Keily: [00:02:47] as in as in cryptocurrency or is in just sort of not paper anymore. [00:02:52][4.7]

Thomas Keily: [00:02:52] Now, just not paper. Not paper. I mean, cash. What we call hard currency has been in decline for a while now with the rise of credit cards, particularly in countries like Australia. It's you know, we're pretty advanced, you know, pretty much the way where I live. Every shop, everywhere I shop has a card reader. Yeah. I don't really actually carry cash around anymore. [00:03:12][19.8]

Adam Keily: [00:03:13] It's annoying cash now, like I mean, for me, I don't like it. I don't like having to carry cash. But there are a few things I still need it for which just become annoyances in my life. So like I played I played social indoor soccer last night and the the cash bag that we have to collect the funds needs cash. And so it's always this stuff at the service station on the way to the game to be like, I'm I've got to get twenty dollars out of an ATM at a service station. And they're the only ones still that that charge the two-dollar fifty fee, you know. So yeah. Annoying is what cash has become. [00:03:48][35.5]

Thomas Keily: [00:03:50] Yeah, yeah, that's how they get you and. I mean, like there are some people who are very alarmed at the death of cash and the push for a cashless society. There are holes in [00:04:04][14.0]

Adam Keily: [00:04:04] Harvey Norman, Illinois. And this guy was like, I had to print some photos for my kids and I needed a print, like two photos. [00:04:13][8.7]

Thomas Keily: [00:04:14] That's all I needed. [00:04:14][0.4]

Adam Keily: [00:04:15] And I get to the corner and the guy's like, we're like 18 cents. And I said, come up with that with card. And he's like, no, because it's 18 cents. And I just can, you know, just give it to me for free because I think let's not squabble about 18 cents. Right. And he's like, well, no, I can't do that either. And I said I said, what kind of car is it? Because it's a two-dollar minimum. And I'm like, well, this I that kind of breaks the whole model. Like unless everything can be paid for in cash, then it's already broken. But I also made the comment to him, I'm like, man, I can't wait until cash is gone. And he was like, what? Not me man. I'm staying with cash forever. And I did get me thinking, I'm not sure that's the guy working behind the counter at Harvey Norman's call that we're going to stay with cash forever. I don't know. Will we be able to use cash forever? [00:05:08][53.2]

Thomas Keily: [00:05:12] Yeah, I mean, it's an interesting question. So there's sort of two elements like is the technological side of it, like is it ever going to be practical to fully have everyone using digital, like, versions of the currency like cards? So, you know, like I've got an uncle who, you know, doesn't have a phone. So for him, paying on a phone or a credit card is not really practical. He's still very reliant on cash. And it's very unlikely, given his age, that he's going to be able to go cashless. That's going to be difficult for him. So this is like a technological barrier there. But that's probably, you know, surmountable the in the near term. And you've got to carry your phone around. You've got to carry cash around. You got to carry something around that reality hasn't changed. [00:05:53][41.4]

Adam Keily: [00:05:53] I don't understand that argument. Like, it's not that hard. Does he not bank? Could he not go into the bank and they could give him. He doesn't have to have a fire, it doesn't have to be like [00:06:03][9.5]

Thomas Keily: [00:06:04] he's still using a checkbook. [00:06:05][0.9]

Thomas Keily: [00:06:07] A checkpoint for our younger listeners out there. That's a bit of paper where you can write down the promise of the money and give it to someone [00:06:16][9.4]

Adam Keily: [00:06:17] and then take it into a bank, and then the bank will hand over the passing of the money. That's more or less ridiculous when you put it like it's a write-down, I promise you some money. [00:06:29][12.5]

Thomas Keily: [00:06:35] to go in the coworking space the other day, who works for Square for this great company, and he sang in America like people still pay rent with checkbooks. Really? Like he laughed when we got there and in July, I don't need a checkbook, but then couldn't pay rent unless he had a checkbook. [00:06:52][16.4]

Adam Keily: [00:06:53] Well, guess how much money you've got when someone gives you a check. [00:06:55][2.6]

Thomas Keily: [00:06:57] None. You've got absolutely nothing until you go to the bank and the bank validates that and goes, yeah, that's legit. We can now move some money. [00:07:05][8.0]

Thomas Keily: [00:07:05] This is very interesting because that gets to the heart of what money is. The money is effectively a promise. That is money itself has no intrinsic value. You know, if you melt down the coins, you might get like a fraction of something, some kind of value out of it. But the polymer notes, like they are effectively worthless outside of a system that supports a shared understanding of what the value of that money is. [00:07:31][25.5]

Adam Keily: [00:07:31] Yeah, but that's a much bigger system with much more rigor and control around it than the check system, where someone's just writing some ink on a bit of paper so that they can go and get the money that's in a controlled system. [00:07:45][13.4]

Thomas Keily: [00:07:46] Well, yeah, but this is it. That's the point. It's what is the mechanism that enforces that collective belief in the value of the currency. And this is sort of where Bitcoin is interesting is because Bitcoin has stepped away from the institutions that help anchor the understanding of what money is worth. So typically in you know, in the Australian context, that's the government and the Reserve Bank of Australia. They're helping people understand what the value of a fifty-dollar note actually is and what can be exchanged for that fifty-dollar note. And that's supported by these sorts of social infrastructure. Bitcoin has sort of and the cryptocurrency movement has stepped away from that. So we don't need a centralized body determining what helping us understand what the value is will determine it for ourselves. It can be determined collectively by the people is sort of the argument that. Right. [00:08:43][56.7]

Adam Keily: [00:08:44] But you can still. But it's still a store. It's a store of value. Right. That's the thing that I've heard about Bitcoin. It's still a store of value in the sense that it has a price attached to it. But you're saying it's not controlled by the government and whoever else that is, which is enforcing the value of the store like it's a store of money in the same way that the paper notes the store money, isn't it? [00:09:04][20.6]

Thomas Keily: [00:09:05] Yeah, that's right. Or check is a store of value [00:09:08][3.8]

Adam Keily: [00:09:09] or and it helps [00:09:10][0.6]

Thomas Keily: [00:09:10] carry. Yeah. Or an IOU or just. Yeah. Me just saying I'll pay you fifty dollars later. One day I'll get it. I'm getting around to it. Is it is a promise or money like you think about money as well? I think about it at Crystalize Labor. Energy, so you do some work and magical you [00:09:33][22.8]

Thomas Keily: [00:09:34] yeah, it is it's kind of it's a lot more energy. He carried atmosphere in the palm of your hand like some floating orb. What you got there, fella? Oh, this is crystalized labor energy that I've harvested from the energy mines in Harbourfront seven. I mean, this is it's yeah. You're making some good gags, but this is kind of the get to the [00:10:07][33.2]

Thomas Keily: [00:09:51] the essence of what money is like. It's the creation of money was a revolution because it allowed us to carry value through time that I could go and create something, create some labor and then lock that the value of that labor down into something that I could then use at a later time. So like, if you grew some fresh vegetables, for example, your ability to harvest the value of your labor from growing those fresh vegetables was limited to the life of the vegetables. Yeah, but when you exchange those vegetables for money, you can now then use, you know, to deploy that value at any time in the future. Yeah. Okay. So it sort of allowed humanity to sort of like transcend time to a degree, to a [00:10:54][62.5]

Thomas Keily: [00:10:54] degree using crystallized labor energy. Like we think there's little time. [00:10:57][3.8]

Adam Keily: [00:10:59] There's not a science fiction podcast for those listening at home. [00:11:01][2.1]

Thomas Keily: [00:11:01] This is no economics. [00:11:02][1.0]

Adam Keily: [00:11:03] So, yeah. So it's storing the value. So then it's storing the value and it's it's enforced by the government. The government saying it's going to its sort of guaranteed to be worth a certain amount. You've still got things like inflation, which if you're keeping cash under a pillow, then you say it's you know, it's used to store value over time. That's going to be eroded, presumably because of inflation, which we kept covered off in earlier episodes. [00:11:27][23.9]

Thomas Keily: [00:11:29] I mean, it does it doesn't have to be government. I mean, the key point for money to work, it needs to function as a social construct. It needs everyone to have an understanding of what that money is worth now. A government, the government, and the RBA can help, you know, that the construction of that social construct and the maintenance of that social construct. So the RBA has an agenda for the stability of the currency, which in practical terms means that inflation doesn't get out of control. Because if inflation got out of control, then if I give you fifty dollars today, you might be like, well, I don't know that this is going to be worth all that much in a year. OK, now this map, [00:12:12][42.8]

Thomas Keily: [00:12:16] hopefully, the audio quality is better, but maybe someone's just carried the rate on the electricity. We must be pumping out some heavy-duty podcasting at the moment because we're looking at a spike in the energy markets [00:12:31][14.9]

Thomas Keily: [00:12:35] and that's the government that is trying to shut us down as soon as you start talking Bitcoin to cryptocurrency. [00:12:39][4.0]

Adam Keily: [00:12:40] Yes, I just. You know what? You know what? It's all of that. If you gave him some cash. [00:12:43][3.1]

Thomas Keily: [00:12:45] He would have no more questions, I guarantee it's 50 bucks, right? You I, I think to say. So, yeah, I could always say, yeah, [00:12:59][13.6]

Thomas Keily: [00:12:59] I guess so the RBA is trying to anchor the shared value of it. So like, if you got fifty dollars, you know, and there's inflation's rampant, you don't know that the fifty dollars is going to be worth fifty dollars a week from now or a month from now. And so your faith in the currency starts to break down and you'll be like, I'm not willing to exchange my labor or my goods or services for this money because I don't know that it's going to be worth what it's supposed to be worth. And so that you need that faith in money. Money only works if everyone has faith in the money. And that faith is generated in our context by the Australian government and by the Reserve Bank of Australia, by the Reserve Bank trying to stay on top of inflation and making sure it has a stable value. And by the government saying, like, this is what it's worth, we can enforce that. This is legal tender. Shops need to accept the legal tender and you have to pay your taxes in this currency. Right. And so that guarantees its value. And then everyone just accepts that you don't need to hear the government making that promise all the time. Most people don't actually even think to remember that the government is making that promise. And that's what supporting the currency. They just accept that that's what it is. But it's not until you've lived in a place where a currency is breaking down that you suddenly realize how important that is. And it's why Bitcoin is really interesting because Bitcoin saying, well, we don't need that stuff. We can step away from that infrastructure. We can we don't need a centralized body telling us what the value of the currency is worth. We can collectively determine that we can decentralize that process. To me, I'm not sure that that it actually functions like that. Like, to me, that's a bit of a long box. [00:14:35][95.7]

Adam Keily: [00:14:36] All right. I've got more questions, but we're going to pause there, grab a quick word from our sponsors, and then we'll come back to talk more about cash, what's happening with cash and bitcoin [00:14:46][10.1]

Thomas Keily: [00:14:47] banking with Virgin money has never been more rewarding. Earn rewards on your everyday spending and pay zero monthly fees with the Virgin Money Go transaction account and with point perks and epic experiences tailored to you, you can manage your money easily on the go, smash the savings goals, get money fit and be rewarded for it. Thanks to your own beat. Virgin Money terms and conditions and monthly criteria apply. Now let's get into the show. [00:15:13][25.9]

Adam Keily: [00:15:15] Welcome back to comedian versus economist. We're talking cash on the show today, Thomas, is Cash dead that you didn't really answer the question, to be honest, before the break, ducking and weaving in, waving as as you've tended to do so often throughout this this podcast series so far. But we we talked a little bit on Bitcoin, but I want to know if if cash goes out of society, let's say we could get rid of it. What takes its place? Is it just digital currency, is it is it crypto currencies, because the big concern for me is if we get rid of cash, there's a whole economy that relies on cash being around. There's a whole swag of people that use cash every day. That's their preferred method. The Harvey Norman guy that I mentioned before, you know, it's his preference. He wants to pay for everything in cash. Can we get rid of it? Is it dead? [00:16:08][52.8]

Thomas Keily: [00:16:09] Yeah. I mean, it's an easy question about why people prefer cash, like they might be just trying to avoid paying tax because that's a fair trial. And, yes, a high chance probably. Most people currently just want to avoid paying tax. And, you know, like there's a you know, it's a collective decision that we have to make. Like, do we want to continue to support people who don't want to pay tax? You know, do we want to enable that as [00:16:33][23.9]

Adam Keily: [00:16:33] someone who's not on the receiving side of that transaction? More often than not, it doesn't bother me if we get rid of cash. But I know a lot of people who it would bother. Let's just say that not naming names, of course, but not. But there are. But but I think what would happen to society if you took it away, if you took away that ability? I don't know. Maybe people are maybe people are surviving by virtue of the fact that they don't have to pay cash, pay tax, or do we want to support? That's a good question. [00:17:07][34.2]

Thomas Keily: [00:17:08] I think a question. I mean, we have we have tax free threshold. So, like, if you're, you know, really poor and not earning very much and you're working in a cash industry, you know, you should be protected to a degree that you don't pay tax until you're earning a particular amount. But if, like, you know, I went to a specialist and they only accepted cash and and this is a yeah. [00:17:28][20.1]

Thomas Keily: [00:17:29] And these medical [00:17:29][0.6]

Adam Keily: [00:17:30] professional, like a [00:17:31][1.0]

Thomas Keily: [00:17:31] the medical profession, would like for people at the counter. Yeah. Not like knee surgery for old people on had to go to the Gold Coast and they're only accepting cash. And I was a bit like, come on, seriously, you guys aren't paying tax, [00:17:43][12.4]

Thomas Keily: [00:17:45] you know, so like the type of surgery. You sure you're [00:17:49][3.3]

Adam Keily: [00:17:49] on the Gold Coast and not somewhere in the [00:17:51][1.9]

Thomas Keily: [00:17:51] Philippines? My. Yeah. So I don't know. So there is that and yeah. [00:17:57][6.0]

Thomas Keily: [00:17:57] I like I mean, I'm not going to get too angry about it, but like I don't think that's that's for me. That's not a strong reason not to go cash. I do have some sympathy for the argument that it's probably what you're made of. Harvey Norman was worried about is that if all your money's in the bank, that you can get switched off at some point. That's the sort of the phrase that they use, that the government just seizes all your digital assets and then you're cut off from society. [00:18:22][25.1]

Adam Keily: [00:18:23] I think he was also worried about the traceability. Where it if your bank, if your money is all, is all in digital form, then everywhere you go, everywhere you spend is traceable and trackable. So I think he was maybe coming at it from a maybe a privacy standpoint as well and saying, like, if I pay with cash, I can make anonymous transactions all over the place. Nobody knows my buying habits, for example. And that information that's really useful to you know, we've seen it with Facebook and Googles of the world where it's proven to be incredibly valuable information to have if you know what people are buying and what they're interested in. So I think that was maybe his other concern. [00:19:05][42.5]

Thomas Keily: [00:19:08] Yeah, and I think that's legitimate. Yeah. And but I think probably most people aren't thinking about it, and I think convenience will win in the end. Yeah. You know, like, like I just say it's kind of a hassle at the moment, you know, even to sort of have cash around. [00:19:22][14.4]

Adam Keily: [00:19:23] Yeah. But it's so getting back to them. Bitcoin is Bitcoin potentially the the replacement for cash in that sense where it's not traceable if if if vendors start accepting Bitcoin payments, if you can, I don't know, pay for things without, you know, anonymously using Bitcoin, then is that is that the use case for Bitcoin? [00:19:46][23.7]

Thomas Keily: [00:19:47] Yeah, it could be. It could be. I mean, I think that's that is one of you know, it's an argument for Bitcoin, whether that's enough of an argument for, you know, for replacing the currency, which, you know, the sort of the Bitcoin proponents say there's going to happen. We're going to overturn the global currency and just live off of Bitcoin if that, you know, people wanting the privacy of their transactions is enough of a motivation to overcome all the barriers and the hurdles to adoption. I don't see it, I don't have that much faith in it, but it is one of the potential pitfalls. I think it's early days. [00:20:21][33.9]

Adam Keily: [00:20:21] I mean, someone's going to make it easier, like. I picture this kind of world potentially where everyone's just got a Bitcoin wallet on their phone, just like their normal wallet and they can and they're just slinging Bitcoin around. And, you know, you go out for dinner with friends and you're like that just point to bitcoins each thanks table. So it's like there are technology barriers, I think, at the moment. But it's very early days. And a technology perspective, too, isn't. [00:20:48][26.7]

Thomas Keily: [00:20:49] Sure, sure, yeah, yeah, no, totally, but it's also, you know, like what's to stop people having End-To-End encryption, like, if that's the only. If that's the only rationale, like, [00:21:02][13.0]

Adam Keily: [00:21:03] well, you then you're then trusting people to keep that information secure, you know, I mean, the far as I know, people should have end to end encryption already. It's about [00:21:14][10.8]

Thomas Keily: [00:21:19] getting to not only getting the encryption but, uh, [00:21:21][2.8]

Adam Keily: [00:21:22] but if people are not doing that, then there's a strong recommendation for them, but I'm pretty sure they are. So it's not really. Yeah, it's not really about the security of the transaction. It's more the privacy and who's looking after it. As soon as people are involved, whether they're going to end encryption or not, they know what you're doing. [00:21:40][17.4]

Thomas Keily: [00:21:40] So, yeah, someone. Someone. [00:21:43][2.5]

Adam Keily: [00:21:43] Yeah, yeah. Whereas at the moment, you know, some guy comes around and marries my law and I gave him 50 bucks or whatever it is, nobody knows it was here. [00:21:50][7.3]

Thomas Keily: [00:21:53] He's a ghost or cool. [00:21:58][5.4]

Adam Keily: [00:21:58] So yeah. So Bitcoin's probably not going to be the replacement for cash in the short term, but cash is probably not going to go away in the short term either isn't. [00:22:07][8.6]

Thomas Keily: [00:22:08] I don't imagine it's a short-term thing. No, no, no. We still need that. Still enough people, you know, who are reliant on it. It'll just sort of phase-out. I mean, we kind of like a one and two cent coin, like the way that they got phased out. They just stopped being useful and people stopped using them. And eventually, you know, there's a handful of people still using them. And the government just says, I will just phase it out and just deal with a few people being upset about it. I'd be more than happy. [00:22:32][24.5]

Adam Keily: [00:22:33] I'd be more than happy for coins to go that route. Now, I feel like, yeah, it's a [00:22:37][4.3]

Thomas Keily: [00:22:37] slippery slope coin. Oh, I don't know. [00:22:40][2.8]

Adam Keily: [00:22:40] Even if I might like bring back the two dollar note. That's right. That's what I'd like. I've got one of these like I've got one of these wallets that's just like a bit of metal that holds some cards. Coins are just annoying. If someone gives me coins and I wonder what to do with these, I just give to the kids. Um, in exchange for labor. [00:22:58][18.4]

Thomas Keily: [00:23:04] All right, so [00:23:05][0.3]

Adam Keily: [00:23:05] before we finish up, I just want to touch on. Macroeconomics and how that relates to currencies, I suppose, and just if we could just touch a little bit on currencies and what are we thinking about if we're thinking about investing in currency? I know like there's a lot of, say, forex trading and stuff that goes on, which has always been scary to me. I've seen that. And I'm just like someone mentioned the word leverage and I'm just like, so you could [00:23:33][28.2]

Thomas Keily: [00:23:33] potentially be on the hook for like [00:23:35][2.1]

Adam Keily: [00:23:36] a million bucks and write to me put me right off. But anything, in particular, we're thinking about in terms of investing in currencies? [00:23:42][6.5]

Thomas Keily: [00:23:43] I think I think probably. Yeah. Go in with your guard up. Definitely. Like, I don't think currency trading is something I would recommend to people like yourself, for example. [00:23:55][11.4]

Adam Keily: [00:23:56] That's okay because we're not here to give any financial advice. So you don't have to worry about recommending anything to anyone. [00:24:01][5.1]

Thomas Keily: [00:24:02] So I think the thing about currency trading is that, yeah, you know, you don't invest in currencies, you speculate. So you're not you know, currencies don't offer you a return. You just hope that you invest in one side of the currency pair and it goes up relative to the other side. And then you bring it, bring the money back and you've made more money. So it's a speculative play. Thing is, I used to work on a foreign investment foreign exchange trading floor. And so this was one bank and there were 60 people who just watched the currency market and try to understand where currency prices were going and they were trading on the ship. So it's like, you know, so the Aussie dollar is seventy point seven for US cents or whatever it is. And they would try and trade, try and, you know, use huge leverage and then try and make money on the dollar moving from seventy point seventy-four to seventy point seventy six. Yeah, well, well. Or something. And, you know, so they like so there's a lot of very smart people highly trained with sophisticated technology at their fingertips in this market, trying to trade it. And so you need to be aware that if you've got it downloaded an app and you're just going to get in on that market, that's who you're going up against. Yeah, and they are notoriously hard to predict. They are because they are they move with so many different sorts of factors. Yeah. And the actual like the use-value of the currency relative to the sort of speculative trading that goes on in the trading floors is sort of about like five, 10 percent or something like people actually I need to buy some Aussie coal, so I need some Aussie dollars. Like people who like that account for a very small fraction of Day-To-Day volume. [00:25:48][106.0]

Adam Keily: [00:25:48] Right. It's mostly just people buying and selling the actual currency to try and make money on the trade, not Nasserite. [00:25:54][6.0]

Thomas Keily: [00:25:54] Last time I looked. I think that's true. So, yeah, if if you're getting into a market like that, where it's a bit of a casino like in, you know, you're treating it like a casino because you don't actually have any vested interest in what happens to the currency. You just want to get on the right side of the trade and make some money. [00:26:11][16.9]

Adam Keily: [00:26:12] So but if you if you're going into it like any other investment, if you're you might have some fundamentals, you might be like, well, I'm forecasting, say, Joe Biden winning the US election recently, for example. You forecasting that going to that to happen. And because of that, you know that his policies, along with certain whatever, and that's likely going to lower the value of the US dollar, for example, relative to Australia. So with some of that information, you might go, well, I'm making this call to buy some currency or to invest in the currency with a similar sort of analysis on you to what you would go into. I mean, I think we should overestimate how much analysis I put into my share. Boring. [00:26:55][43.6]

Thomas Keily: [00:27:00] Yeah. Yeah. You mentioned a casino. I immediately thought about my share portfolio. Yeah, well, [00:27:10][10.4]

Thomas Keily: [00:27:11] look, I mean, you can do that and you might get it right. You might. Yeah, I think it's its degree's difficult. More difficult. This is my luck. This is just my subjective opinion now. But it's degrees more difficult to pick currency movements reliably than it is to find a good company. Invest in a good company. [00:27:28][16.8]

Adam Keily: [00:27:28] Yeah, fair enough. And so when we're thinking about currency investments, are we thinking about bitcoin, is that a currency or we're thinking is that is that more of is that more akin to gold, for example, which seems to be the most obvious parallel that we've already got, which is [00:27:44][16.0]

Thomas Keily: [00:27:45] so I worked at the Central Bank of Australia and the Reserve Bank of Australia. I studied game theory at university and I wrote for I wanted to understand the crypto space. So I wrote for a [00:27:56][10.7]

Adam Keily: [00:27:57] let's not turn this into a bragging session. I think everyone's [00:27:58][1.8]

Thomas Keily: [00:28:00] just laying out the context. Yeah, we like a fair bit of context. I can't help it if we get it. You're an economist. I know, but. [00:28:09][8.4]

Thomas Keily: [00:28:09] So I wanted to understand the crypto space, so I spent a year writing for the crypto right for a crypto investor. All I'm saying is like, so I'm coming. I'm not I'm not just some like there's a lot of people go, I don't get crypto. It's there are bitcoins. Bitcoin is a scam. I don't get it. But like, OK, so that's not where I'm coming from. But I'm still highly skeptical about crypto and bitcoin in particular. And one of the things you get when I got into space is there's just a flood of garbage, people writing about cryptos who really don't know what they're talking about. And there's just a lot of fluff there. And one of the things that sort of comes out to me is there's a lot of good partial arguments for Bitcoin, but you can't stack partial arguments and make a single good argument. So, like, Bitcoin is kind of like this sort of thing. It's like some people say, yeah, it's digital gold, it's a store of value and it's a currency and it has transactional value. These things, these things are completely different just because they're part a bit of both of those. You can't stack that together or make a single good argument. So it doesn't function like gold. Well, again, like gold. Gold is gold. It rests on a social construct as well. Gold is only valuable because we all agree it's valuable. It does have some industrial use and Bitcoin doesn't have that going for it. But again, gold rests on a social construct. But it's it's millennia-old now that that social construct Bitcoin, does it rest on a social contract? It's building one. Is it how endurable is it? How durable is it? I don't know. Like, it's not it's not clear to me. [00:29:47][97.6]

Adam Keily: [00:29:47] And is that why we're seeing the volatility in Bitcoin? Because it doesn't have any of that underlying historical you know, you mentioned you know, the constructs around gold and whatever. Is that what that gold involves all too? [00:30:01][14.2]

Thomas Keily: [00:30:03] Yeah. Yeah, that's right. That's right. I mean, volatility is tricky to talk about with currencies because it's always in a pair. So, you know, so like if Bitcoin appreciates relative to the US dollar, is it that Bitcoin is going up, or is it because the U.S. dollar has gone down? And so with volatility, like if it's is it all over the place, is that because Bitcoin's all over the place or is it because the US dollar is all over the place because there's money printing and all this sort of stuff? [00:30:27][24.4]

Adam Keily: [00:30:29] I think it's fair to say it's because of Bitcoin is all over the place. [00:30:30][1.8]

Thomas Keily: [00:30:31] That would be my guess to actually, because [00:30:32][1.5]

Thomas Keily: [00:30:36] unless the US dollar [00:30:38][1.9]

Adam Keily: [00:30:39] having to increase by 400 [00:30:40][1.3]

Thomas Keily: [00:30:41] percent when I wasn't watching sorry but then I think Bitcoin is definitely the one that's swinging around like a [00:30:52][11.4]

Thomas Keily: [00:30:54] Yeah. So like so it's, it's a bit of a stretch to say to me that it's digital gold. But the thing about actual gold is we don't use it as a currency, you don't go and actually buy stuff with it. And a lot of people, you know, in the same breath say that the value of Bitcoin is that one day we'll all be using Bitcoin as a transactional currency. And so it's a bit like, well, which is it? Is it a store of value like gold or is it a transactional currency like the dollar? And just because it can possibly be both in some imagined universe doesn't mean that that's a solid argument for it. [00:31:23][29.2]

Adam Keily: [00:31:24] Hmm. Watch this space, I guess. [00:31:26][1.7]

Thomas Keily: [00:31:26] Hmm. Yeah. I mean, I guess the thing about Bitcoin is that it does look like all money is it does come down to a consensus. It's a social construct. It's only value what we all collectively think it's worth. And then you so you're talking about, you know, consensus, reality, a shared consensus reality. So could Bitcoin become the global dominant currency? I don't see a path towards it, but it's conceivable, you know if we all just decide Bitcoin is the thing, it's conceivable. [00:31:56][29.5]

Adam Keily: [00:31:58] Hmm, very good. All right, well, that does it for this week if you want to hear more of Thomas's credentials and some of his other qualifications. You can tune in next week. [00:32:06][8.0]

Thomas Keily: [00:32:06] I'm sure he's going to say, well, I'm going to be on my own podcast for that. [00:32:09][3.3]

Adam Keily: [00:32:13] Once again, thanks for listening. We are coming to the end, as I mentioned, of this introductory series that we're doing to macroeconomics. So I think we've got one more to go. We're going to talk about modern monetary theory, which I'm struggling to get my head around already, just hearing the title and then wait. And then we're going to Rufina some more general stuff and more topical stuff. So really appreciate you guys tuning in out there. Thanks for all your support. Of course, you can always e-mail us with questions. You can send an email to cve@equitymates.com. Also, check out the website at equitymates.com/cve. Shout out again to our good friends over equity markets for all their support. You should definitely go and check out their podcast too if you're enjoying this one. Head over to wherever you get your podcast and check out Equity Markets Investing podcast if you'd like to show. Be sure to leave us a review. Give us a rating and we'll see you again next week stop. [00:32:13][0.0]

[1783.8]