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Money Comes From a Building and They Use It to Kill People Your money is manufactured in a building by people you didn't

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elect. It has funded unpopular wars that killed ninety-seven million people.

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They give it to their friends first, then use the rest to buy weapons you didn't ask for.

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By the time it reaches you, it buys less. This has been happening for a century.

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Nobody covers it on the news because it is, by design, extremely boring.

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Dollar purchasing power retained since nineteen thirteen: four percent.

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Unpopular wars funded without democratic consent: all of them.

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This is a systems analysis. On Wishonia, we used rocks as currency for about four hundred years.

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Then someone pointed out that rocks are heavy and also everywhere.

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It took us another two hundred years of arguing, a bribery program, and three currency collapses before we switched to a

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shared ledger: a network of computers that all keep the same record of who has what, and check each other's work so nobody

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can lie. If one computer tries to say "actually I have a million extra coins," the other computers say "no you don't" and

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ignore it. That's the whole thing. It is not complicated. A child could understand it.

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(On Wishonia, a child *did* invent it. She was eleven. She won a science fair.

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The previous monetary system had been designed by four hundred adults over two centuries and was worse in every way.).

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Humans invented the same idea in two thousand and nine. It is called "blockchain," which is a word designed to make a simple

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concept sound difficult, because if people understood how simple it was, they might ask why they're still using the old

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system. Mostly, your species used it to buy drugs and expensive monkey JPGs.

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(You paid sixty-nine million dollars for a non-fungible token, or N.F.T., of a picture of an ape.

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The ape was not even real. I checked.). I will come back to this invention later, because it is important.

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It makes the system I'm about to describe completely unnecessary.

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But first, let me describe the system, because you are currently inside it and it is eating you.

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Your species also used rocks as currency, except you picked the shiniest rock, dug it out of the ground at great expense,

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shaped it into bars, and then put it back in the ground in a different building.

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You called the first building a "mine" and the second building a "vault."

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The only difference is the lighting. But the most interesting thing about your money is not what it buys.

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It's where it comes from. Your money comes from a building.

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Inside that building, twelve humans sit around a table and decide how much money exists.

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Twelve. I counted. They are called the Federal Open Market Committee, which is three lies in five words: it is not federal,

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the market is not open, and the committee meets in private.

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These twelve people are not elected. You did not pick them.

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You do not know their names. (Go ahead. Try to name three. I'll wait.

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You can't. Nobody can. This is a feature, not a bug.) They decide whether your money is worth more or less tomorrow, which

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determines whether you can afford your rent, your groceries, your medicine, and your children's future.

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Twelve people. One table. Eight meetings a year. This is your species' system for deciding who gets what.

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It has been running for over a century. It has funded the deaths of ninety-seven million people.

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It is, by design, extremely boring, because boring things don't get investigated.

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On Wishonia we have a word for making theft too tedious to investigate.

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It translates roughly to "beige crime.". I mentioned the network of computers that check each other so nobody can lie.

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Your twelve-person table is the opposite of that. It is a network of humans who do not check each other, are not checked

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by you, and can lie using vocabulary so specialized that the lie is technically public but functionally invisible.

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The technology to replace them exists. It has existed since two thousand and nine.

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You are using it to trade pictures of dogs in hats. I don't have a metaphor for this because no civilization in my experience

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has ever done anything this stupid on purpose. The Pattern: Print, Kill, Repeat.

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I've been watching your planet since nineteen forty-five. In that time I've noticed a historical pattern.

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It goes like this: humans fight a war, run out of money, print more money, the money becomes worthless, something terrible

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happens, and then they do it again. This is not a simplification.

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This is literally what happens. The Roman Empire (third Century).

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Rome had the most powerful currency in the ancient world. Then its emperors discovered they could shave silver off the coins,

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mix in cheaper metal, and spend the difference on wars. This is money printing before the printing press.

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It required more physical effort but the math is identical.

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The denarius went from ninety-five percent silver to less than five percent.

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Prices rose one thousand percent. Nobody understood why everything cost more.

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But Romans knew that when things went wrong, the gods were angry.

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And Christians refused to sacrifice to Roman gods. "Currency debasement" is a boring explanation that implicates the people

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in charge. *Them* is a simple explanation that implicates someone you already didn't like.

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Diocletian launched the Great Persecution: churches burned, scriptures destroyed, Christians tortured and executed across

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the empire. Then he tried price controls, which worked exactly as well as price controls always work.

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Then the empire split in half and fell over. The barbarians did not defeat Rome.

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They just walked into a building whose owners had melted the load-bearing walls for spending money.

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Not great. Revolutionary France (seventeen-nineties). France started wars with everyone.

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Ran out of money. Invented a solution: print fake currency called "assignats" backed by church land they'd stolen.

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Backing money with stolen property is surprisingly honest about what money is.

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Hyperinflation hit thirteen thousand percent in five years.

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The explanation was boring (monetary policy) so the public chose an exciting one (the aristocrats are hoarding everything).

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The guillotine solved this explanation approximately seventeen thousand times.

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Then Napoleon pointed the remaining anger at the rest of Europe.

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Also, not great. Weimar Germany (nineteen-twenties). Germany lost World War One.

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Printed money to pay reparations. Achieved twenty-nine thousand five hundred percent monthly inflation, which means a loaf

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of bread that cost one mark in January cost billions by fall.

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People burned money for heat because paper was worth more as fuel than as currency.

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This is the only recorded instance in history where money performed its function honestly: it kept people warm, briefly,

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and then it was gone. This is also what it does the rest of the time.

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You just can't see the fire. When a population is hungry enough to burn money for warmth, they will follow anyone who offers

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a simpler explanation than monetary policy. Hitler offered the simplest explanation available: blame the Jews.

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Really not great. I am not naming any names, but if you are reading this and your country is currently building detention

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camps for foreigners while your currency loses value and nobody can explain why groceries cost more, you may want to reread

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the last two paragraphs. The pattern has a distinctive shape.

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It has had the same shape every time. The American Money Printer.

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Nineteen thirteen: Created the Federal Reserve. Nineteen seventeen: Immediately used it to fund World War One.

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Nineteen seventeen to present: Dollar has lost ninety-six percent of its value.

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Wars: Now continuous and everywhere. World War One is worth pausing on, because it is the cleanest demonstration of what

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a money printer does to democratic consent. In nineteen seventeen, most Americans did not want to fight in a European war.

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They did not understand why it was happening. Nobody understood why it was happening.

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(Historians still argue about it, which is how you know.) Woodrow Wilson had just won reelection on the slogan "He kept

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us out of war," which, in retrospect, was less a promise than a spoiler alert delivered in the wrong tense.

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The war had no popular mandate. It had something better: a four-year-old central bank that could fund it without asking.

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Before the Fed, wars required Congress to raise taxes or sell bonds directly to citizens, which meant citizens had to agree

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the war was worth paying for. This is an inconvenient feature if you are a politician who wants a war that citizens do not

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want. The Fed removed the inconvenience. It bought government debt with newly created money, making the war financially

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painless in the short term and democratically optional. The public didn't say yes.

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They just weren't asked. On Wishonia, we have a word for doing expensive things with other people's money without telling

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them. The word is "theft." You have the same word. You just don't use it when the thief has a marble building.

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The consequences of not asking were, as your species likes to understate, "significant."

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The war produced the Treaty of Versailles. The treaty imposed reparations on Germany.

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Germany printed money to pay them. The money became worthless.

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The economy collapsed. A population that had been humiliated, impoverished, and desperate elected a man who promised to

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fix everything. He did not fix everything. He killed six million Jews and started a war that killed sixty million more.

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The causal chain is: money printer leads to war nobody voted for, leads to punitive treaty, leads to hyperinflation, leads

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to Holocaust. Every link required the previous one. Remove the first link (a central bank willing to fund a war the public

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didn't want) and the chain doesn't form. I am told it is rude to bring this up at dinner parties.

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I am told many things are rude to bring up at dinner parties.

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I have noticed that the list of rude topics is identical to the list of important ones.

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The Federal Reserve was created in nineteen thirteen. Within sixteen years it had produced the Great Depression.

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The mechanism was not complicated: the Fed flooded the economy with cheap credit through the nineteen twenties, inflating

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a stock market bubble, because if there is one thing a new money printer cannot resist, it is being used.

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Then it tightened. The bubble popped. Then, as banks began failing in waves (over nine thousand banks between nineteen thirty

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and nineteen thirty-three), the institution that was created specifically to prevent bank panics stood by and watched.

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It allowed the money supply to fall by a third. It raised interest rates in nineteen thirty-one to protect its gold reserves

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while the economy collapsed around it. Friedman and Schwartz's A Monetary History of the United States made the definitive

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case: the Fed did not fail to prevent the Depression; it caused it, first through action, then through inaction.

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The fire department showed up, watched the building burn, and then charged for parking.

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Within thirty-two years the same institution had produced the causal chain that ended in the Holocaust.

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These are not items on a long list of mistakes. These are the first two things it did.

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On Wishonia, when a new institution's inaugural achievements are the worst economic collapse and the worst genocide in planetary

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history, the institution is dissolved and the founders are asked some very pointed questions.

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On Earth, you put the institution on your money and gave it a second century to see if it could top itself.

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You're reading this sentence right now with money that's worth four cents on the nineteen thirteen dollar.

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I mention this because you seem fine with it, which I find clinically fascinating.

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The pattern is so consistent it could be a recipe. Step one: give politicians a machine that creates money.

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Step two: they use it to kill people. There is no Step three.

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There has never been a Step three. The recipe is two steps long, it has been tested for thousands of years across dozens

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of civilizations, and you keep making it. "But what about Canada?"

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says the human who took one semester of economics. "What about Norway?

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They have central banks and no dictators." Correct. Well observed.

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You have identified two countries where the money printer has not yet produced a dictator, in the same way that a smoker

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who hasn't yet gotten cancer has "disproved" the link between smoking and cancer.

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Canada's dollar has lost over ninety-five percent of its purchasing power since nineteen thirteen.

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Norway's krone has lost over ninety-eight percent. The median Canadian and Norwegian are poorer in real terms than the numbers

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suggest, and the gap between productivity and wages has opened in every country with a fiat currency since the nineteen

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seventies. Every single one. The dictator is the dramatic version.

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The quiet version is a ninety-three percent pay cut delivered so gradually that you blame yourself for not saving enough.

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Both versions use the same printer. One just has better manners.

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On Wishonia, we do not judge a parasite by whether the host is still walking.

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We judge it by how much blood is missing. You invented money to trade chickens more efficiently.

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Within a few centuries you were using it to incinerate cities.

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On Wishonia, we call this "the chicken escalation problem."

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(We don't really. I just made that up. But we should.). The Receipt.

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I have been keeping a tally. I want to show you the tally, because I have noticed that your species discusses these wars

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one at a time, which makes each one look like a separate tragedy instead of a receipt.

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Every war on this list required printing money, debasing currency, or borrowing from a central bank that created the money

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from nothing. In each case, the printer removed the inconvenient step of asking citizens whether they would like to pay

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for it. France printed assignats backed by stolen church land.

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Five million dead. Running total: five million. Lincoln suspended the gold standard and printed four hundred and fifty million

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dollars in greenbacks. One hundred and twelve billion dollars in today's money.

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Seven hundred and fifty thousand dead. Running total: six million.

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The Federal Reserve, age four, bought government war debt with money it made up.

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Four hundred and sixty-eight billion dollars in today's money.

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Twenty million dead. Running total: twenty-six million. I started to notice a pattern around here.

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That war produced the treaty that bankrupted Germany, which printed money to pay reparations, which produced Hitler, which

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produced the next entry. Cost to the U.S. alone: five point seven trillion dollars.

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Sixty million dead. Running total: eighty-six million. I stopped noticing a pattern, because it was no longer a pattern.

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It was just the thing that keeps happening. The Fed monetized Treasury debt for Korea.

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Four hundred and seventy-eight billion dollars in today's money.

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The practice was so inflationary they had to sign a formal Accord to make it stop.

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Three million dead. Running total: eighty-nine million. L.B.J.

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hid Vietnam's cost inside the regular budget and covered the gap by printing.

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One trillion dollars in today's money. Three million dead. Running total: ninety-two million.

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Congress funded the post-nine-eleven wars entirely with debt, then cut taxes.

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The Fed bought trillions in government bonds. Total cost: eight trillion dollars and counting.

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Four and a half million dead and counting. Running total: ninety-seven million.

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Ninety-seven million deaths. Over sixteen trillion dollars spent, and that is just the U.S.

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share of six wars. War costs are U.S. military expenditures adjusted to twenty twenty-four dollars from Congressional Research

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Service, or C.R.S., fiscal year twenty eleven estimates, except post-nine-eleven wars which use Brown University's comprehensive

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eight trillion dollar figure including veterans' care and interest.

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All-belligerent costs would be substantially higher. Death figures are mid-range estimates.

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Many scholars cite higher numbers, particularly for World War Two (up to eighty-five million including war-related famine

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and disease) and post-nine-eleven wars (up to four point seven million).

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The less conservative total exceeds one hundred and ten million.

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But wars end. Spending does not. Your species currently spends a record two point seven two trillion dollars per year on

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military, up nine point four percent from the year before, which is six hundred and four years of government clinical trials.

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Every year. The Federal Reserve has been running for one hundred and eleven years.

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Cumulative global military spending over that period, in constant twenty twenty-four dollars, exceeds one hundred and seventy

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trillion dollars. Stockholm International Peace Research Institute, or S.I.P.R.I., data from nineteen eighty-eight to twenty

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twenty-four sums to approximately sixty-five to seventy-two trillion dollars in constant twenty twenty-four dollars.

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The Cold War era (nineteen forty-six to nineteen eighty-seven) adds roughly fifty to seventy trillion dollars, reconstructed

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from U.S. spending data and C.I.A. estimates. World War Two cost all belligerents approximately twenty-three trillion dollars,

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World War One approximately seven trillion dollars, with three to five trillion dollars for interwar budgets.

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The range since nineteen thirteen is one hundred and fifty to one hundred and ninety trillion dollars; one hundred and seventy

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trillion dollars is the central estimate. The full historical tab, including all pre-nineteen thirteen warfare, is approximately

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one hundred and eighty trillion dollars. The Institute for Economics and Peace estimates the current annual economic cost

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of violence and conflict at twenty trillion dollars when indirect costs are included.

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One hundred and seventy trillion dollars. That is nearly thirty-eight thousand years of global government clinical trials.

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Your species has been running clinical trials for about eighty years.

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You could have funded every clinical trial you will ever run, for hundreds of lifetimes, with the money you spent on killing

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each other since the Federal Reserve opened for business. I looked for the part of this process that required human-level

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intelligence to design. I did not find it. An eleven-year-old on Wishonia designed a better system for her science fair.

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It won second place. (First place went to a girl who taught a fungus to do arithmetic.

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The fungus was also better at monetary policy than your Federal Reserve, but that is a different chapter.) What About Wars

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Under Hard Money? I then tried to make the opposite list. Wars that killed more than a million people while all sides stayed

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on a gold standard, without suspending convertibility or printing unbacked currency.

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The list is empty. I checked twice. Every major war in your modern history required leaving the gold standard to keep fighting.

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Britain suspended gold in seventeen ninety-seven to fight Napoleon.

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The U.S. printed greenbacks in eighteen sixty-two to fight itself.

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Every belligerent in nineteen fourteen abandoned gold within weeks of the first shots.

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You cannot fund a large war with honest money, because honest money requires asking citizens to pay, and citizens, when

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asked, generally prefer to spend their limited savings on things other than killing strangers in countries they cannot find

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on a map. The Spanish-American War (eighteen ninety-eight) is what happens when you try.

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Fought entirely under the gold standard. The government had to fund it from existing revenue and a bond issue that required

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citizens to voluntarily hand over their gold. Duration: ten weeks.

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U.S. combat deaths: three hundred and forty-five. It ran out of enthusiasm approximately when it ran out of money.

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The gold standard did not prevent war. It prevented *cheap* war.

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It prevented war that outlasts the public's willingness to pay for it.

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On Wishonia, we display this information on a large sign outside our central resource building.

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The sign says: "LAST TIME WE LET SOMEONE PRINT MONEY FOR WAR: [DATE].

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DEATHS: [NUMBER]." It has not needed updating in four thousand years.

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Mostly because the sign is very effective. nineteen seventy-one: The Day Your Money Stopped Meaning Anything.

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August fifteen, nineteen seventy-one. A human named Nixon went on television and said, in slightly more presidential language:

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"Remember how dollars could be exchanged for gold? We're stopping that."

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"Also, wage and price controls." "Also, import taxes." He announced this on a Sunday evening in August, when nobody was

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watching, which is the human equivalent of robbing a house while the family is on vacation, except the family is two hundred

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million people and the house is their money. He called it a "New Economic Policy."

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On your planet, when someone names a policy the opposite of what it does, something terrible is about to happen.

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(See also: "Patriot Act," "Affordable Care Act," "Department of Defense," "Federal Reserve."

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It is not federal. It has no reserves. Two words, two lies.

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This is efficient, even by your standards.). Why He Did It.

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During World War Two, your government sold war bonds. Eighty-five million Americans bought one hundred and eighty-five billion

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dollars worth, because "buy bonds, beat the Nazis" is an easy poster.

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Vietnam was not an easy poster. You cannot run a bond drive for "help us spray carcinogenic chemicals on rice farmers and

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their children." So L.B.J. hid the war's cost inside the regular federal budget and covered the gap by printing money.

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No bond drives. No patriotic posters. Just quiet inflation, picking every pocket at two percent per year, which is below

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the human boredom threshold for investigating things. Foreign governments have lower boredom thresholds.

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France noticed first. Between nineteen sixty-three and nineteen sixty-six, de Gaulle secretly organized one hundred and

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twenty-nine flights and forty-four boat trips to extract three thousand three hundred and thirteen tonnes of French gold

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from American and British vaults before the Americans could finish spending it.

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He named the operation Vide-Gousset: "Empty Pocket". This is a heist film, except the person being robbed was also the person

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who started stealing first. By nineteen seventy-one, the gold was mostly gone and more countries were asking for theirs.

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Hence the speech. (Everyone else noticed fifty years later.).

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What He Killed. Before that speech, your species was running an experiment.

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You had anchored the dollar to gold at thirty-five dollars per ounce.

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You called it "Bretton Woods," after the hotel where you signed the agreement in nineteen forty-four, because your species

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names its most important decisions after the building they happened in.

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(See also: "The White House," "The Pentagon," "Lehman Brothers."

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The last one was a building full of brothers named Lehman who lost everyone's money.

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They named the crisis after the brothers, not the money. This is how your species assigns blame.).

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Here is how it worked, physically. Any foreign government could walk up to a window at the Federal Reserve, hand over thirty-five

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dollars, and receive one ounce of gold. Real gold. The kind you carry out in a box.

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This meant that if the U.S. printed too many dollars, governments would notice (because prices would drift above thirty-five

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dollars per ounce on the open market), and they would start showing up at the window, trading paper for metal, and walking

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out with your gold. The more you printed, the faster your vault emptied.

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This was not a rule. Rules can be rewritten by the same people who wrote them, usually at two a.m.

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when nobody is paying attention. This was a physical constraint.

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Gold is heavy. It leaves the building. You can see the shelves getting bare.

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The punishment for money-printing was not a sternly worded letter from an oversight committee.

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It was a foreign government loading your gold onto a cargo plane and flying it home.

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It worked. I know. I was surprised too. From nineteen forty-eight to nineteen seventy-three, the typical American family's

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income grew three percent per year, doubling roughly once a generation.

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Real G.D.P. grew four point two percent per year in the nineteen fifties and four point five percent in the nineteen sixties.

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Homeownership surged from forty-four percent to over sixty-two percent in a single generation.

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A single income could support a family of four, a mortgage, and a retirement.

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Income inequality fell to its lowest level of the century. The Gini coefficient trended down for two straight decades.

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This was not a coincidence. When money is anchored to something politicians can't print, politicians can't silently drain

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it. So the gains from productivity growth went to the people doing the work, not to whoever stands closest to the printer.

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Your economists will tell you this can't work. That a gold standard is a relic.

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That modern economies need "flexible monetary policy," which is a phrase meaning "we need to be able to print money without

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asking you.". Here is what they'd prefer you not check: every period in which your money was anchored to gold produced broad-based

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prosperity. Under the classical gold standard (eighteen seventy to nineteen fourteen), real G.D.P.

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per capita grew three point eight percent per year in the eighteen eighties.

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Between eighteen eighty and eighteen ninety-six, prices fell thirty percent and real G.D.P.

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increased eighty-five percent. Real wages rose. You built the railroad, the telephone, and the electric light, all while

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prices were falling. (The evidence on that particular period is detailed below.).

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Under Bretton Woods, you did it again. Twenty-seven years of anchored money.

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Twenty-seven years of the median family getting richer. Then Nixon unanchored it, and median income growth fell from nearly

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three percent to zero point six percent per year. An eighty percent collapse.

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Two experiments. Two gold-anchored systems. Both produced roughly double the median income growth of the fiat periods that

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followed them. Then you abandoned them both and the gains stopped reaching the median family.

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On Wishonia, when an experiment produces the same result twice, we call it "evidence."

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On Earth, you call it "outdated thinking" and go back to letting the people in the building print money for their friends.

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What Actually Happened. The gold standard died. Your species abandoned one shared hallucination (gold, which is a shiny

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rock you can't eat) for another shared hallucination (paper, which is a flat rock you also can't eat).

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You called this "modernization.". The dollar was now backed by "the full faith and credit of the United States government,"

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which is a phrase that sounds reassuring until you remember that the government was doing this specifically because it had

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run out of faith and credit. It's like a restaurant that can't pay its food suppliers announcing that meals are now backed

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by the full faith and credit of the restaurant. You'd leave.

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Except you can't leave the dollar because your rent is denominated in it.

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This is not a coincidence. The Dual Mandate (Or: The Two Goals of Serfdom).

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Your Federal Reserve has two official goals, like a mission statement, except the mission is you.

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"Maximum employment". "Stable prices" (which they define as two percent inflation per year).

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I read these several times to make sure I understood them. Then I read them again to make sure I hadn't misunderstood them.

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I had not. These are the actual goals. They are written down.

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On a website. You can look at them right now. Nobody is hiding them, which is the most disturbing part, because it means

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nobody thinks there's anything to hide. On Wishonia, our decentralized resource allocation system has one goal: "are beings'

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lives measurably improving?" But that's apparently too simple for a species that named its planet "dirt," so let me explain

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what your two goals actually do. Goal one: "Maximum Employment" (Keep Everyone Busy).

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"Maximum employment" means everyone has a job. It does not specify a good job.

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It does not specify a job that pays enough to eat. It does not specify a job that leaves you time to read about monetary

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policy. It specifies: occupied. A medieval serf working sunrise to sunset was maximally employed.

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A modern American working two jobs who can't afford a doctor's visit is also maximally employed.

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The metric cannot distinguish between these situations. From the metric's perspective, both serfs are performing optimally.

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I found this confusing at first. Then I realized it's not a bug.

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Busy people don't read Federal Reserve balance sheets. Busy people vote for whichever candidate promises to "create jobs,"

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which is a promise to keep them too busy to ask who's keeping them poor.

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A hamster wheel achieves maximum employment. Goal two: "Stable Prices" (Take two percent Per Year).

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"Stable prices" means two percent inflation per year. On Wishonia, "stable" means "not moving."

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On Earth, "stable prices" means prices that rise every year, predictably, forever.

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This is like calling a sinking ship "stable" because it sinks at a known rate.

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I need to say that again because your brain is going to try to skip past it.

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The Federal Reserve's official, publicly stated, announced-on-television goal is to make your money worth two percent less

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every year. They chose this number. They aim for it. They celebrate when they hit it.

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Over thirty-five years, two percent compounds to a fifty percent loss.

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Over the fifty-four years since Nixon, it has taken ninety-three percent.

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They named the target. They hit the target. You are the target.

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I am told these are three different sentences. The "Deflation Is Dangerous" Story.

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The justification for permanent inflation, taught in every economics class that bothers to exist: deflation (falling prices)

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is dangerous because "people won't buy things if they know prices will be lower tomorrow.".

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I watched your species for eighty years and I have some questions about this theory.

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You buy a new iPhone every two years knowing the next one will be better and cheaper.

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You bought a flat-screen TV knowing the price drops every year.

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You buy a laptop knowing it will be worth half as much in eighteen months.

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You bought a phone case for forty dollars that you will lose in three months.

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The entire technology sector has experienced continuous deflation for decades.

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It is the fastest-growing, most innovative, most profitable sector of your economy.

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People buy things they want. They do not sit in empty rooms waiting for prices to fall further.

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This is obvious to anyone who has met a human. Your species once stood in line for fourteen hours to buy a telephone.

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In the rain. Knowing a better one would exist in eleven months.

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The idea that you would stop buying things if they got cheaper is the single least credible claim ever made about a species

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that invented the shopping mall, the impulse buy, and Black Friday, which is a holiday where you celebrate gratitude by

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trampling each other for televisions. The One Data Point. The only evidence they cite is the Great Depression, where falling

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prices coincided with economic collapse. This is a correlation/causation error so basic it would fail an introductory statistics

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00:36:30.820 --> 00:36:35.760
course at a university funded by the Federal Reserve. (Which is most of them.).

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The Great Depression's deflation was *caused by* bank failures and credit contraction, not the other way around.

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Blaming deflation for the Depression is like blaming wet streets for rain.

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Meanwhile, the longest sustained deflation in American history (eighteen seventy to eighteen ninety-six) coincided with

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the most explosive economic growth your country has ever experienced: Prices fell roughly two percent per year.

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Real output grew two to three percent per year. Real wages rose.

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You built the railroad, the telephone, and the electric light.

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Falling prices. Rising prosperity. For twenty-six years. This is not a footnote.

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It is a quarter-century of evidence. Your economists will counter with the Panic of eighteen seventy-three and the "Long

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Depression," which occurred during this same period. They are correct that it happened.

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They are incorrect about what it proves. The Panic of eighteen seventy-three was caused by speculative railroad lending

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and bank failures, not by falling prices. Prices were falling before the panic, during the panic, and after the panic, and

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real output kept growing through most of it. The economy recovered without a central bank printing money to "fix" it, which

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must have been very embarrassing for the people who later invented a central bank to fix things.

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If deflation caused depressions, the entire twenty-six-year period would have been one continuous depression.

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Instead it was the period in which you invented electric light, the telephone, and the modern railroad.

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Your economists looked at the era that produced the lightbulb, found one bad year, and concluded that the problem was falling

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prices. On Wishonia, this is called "finding a cloud and declaring it night."

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On Earth, it is called "a tenured position.". The Bank for International Settlements (the central bank of central banks,

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which is a real thing that exists, like a boss fight at the end of a video game about money) tested this across one hundred

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and forty years and thirty-eight economies. Their full-sample result: the link between deflation and slower growth is "weak."

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Their result when you remove the Great Depression: no statistically significant link at all.

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The entire "weak" correlation is one data point dragging the average.

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The Great Depression was so extreme (G.D.P. fell thirty percent) that it acts as a statistical leverage point, pulling the

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result negative against thousands of observations showing the opposite.

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The fact that you need to include a once-in-one hundred and forty-year catastrophe to get your result means your result

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describes the catastrophe, not deflation. Borio et al. also separated goods price deflation from asset price deflation.

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Falling goods prices (the kind central banks claim to protect you from) showed no link to slower growth.

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Falling property prices (which signal credit busts, like the one your banks caused in two thousand and eight) did.

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Your central banks are treating the wrong symptom and citing a study that, if anyone read past the abstract, says so.

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One data point. They built the entire theology of permanent inflation on one data point that they misread.

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On Wishonia, if a scientist built a theory on one misinterpreted data point, they would lose their research license.

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On Earth, they get the fake Nobel Prize. The "Banking Panics" Defense.

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The stronger argument for central banking, and the one your economists should lead with: without a lender of last resort,

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banks fail, depositors lose their savings, and the economy collapses.

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The Federal Reserve was created in nineteen thirteen specifically because the Panic of nineteen oh-seven frightened everyone

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into agreeing that a central bank was necessary. The Fed then spent the nineteen twenties expanding credit, inflating the

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bubble whose collapse it was created to prevent. Sixteen years later, more than nine thousand banks failed.

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The institution created specifically to prevent banking panics contributed to the worst banking panic in your history.

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Canada did not have a central bank until nineteen thirty-five.

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During the same Depression, same continent, same decade, Canada had zero bank failures.

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The country next door, without the institution you said was necessary, had the outcome you said was impossible.

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The country with the central bank had the crisis. The country without one didn't.

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Your economists treat this as a coincidence. What actually stopped bank runs was not the Federal Reserve.

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It was the Federal Deposit Insurance Corporation, created in nineteen thirty-three, which guaranteed deposits.

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A bank run is a coordination problem: everyone withdraws because they fear everyone else will withdraw first.

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Insurance solves it. You do not need a money printer to solve a coordination problem.

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You need a promise, a small premium, and a ledger. You solved bank runs in nineteen thirty-three with insurance.

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You kept the institution that caused them. On Wishonia, when we discover the medicine is making the patient sicker, we stop

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administering it. On Earth, you doubled the dose and gave the pharmacist a raise.

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What They Could Measure Instead. Here is a question that is apparently too obvious for economics: Are people's lives actually

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getting better? That's it. You could measure: Inflation-adjusted after-tax median income: Are people actually richer, or

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just holding bigger numbers on smaller paychecks? Median health-adjusted life years: Are people living longer, healthier

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lives, or just working longer before dying of diseases you could have cured with the money you printed for banks?

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These metrics exist. Economists know how to calculate them.

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No central bank on Earth uses them. Because if the Federal Reserve were graded on whether the median American is healthier

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and wealthier each year, someone would have to explain why the answer has been "no" for most of the past five decades.

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It is much easier to aim for "maximum employment" and "two percent inflation" and declare success while everyone works more

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hours for less purchasing power. How the Robbery Works. In the seventeen hundreds, a human named Richard Cantillon noticed

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something that everyone already knew but nobody had written down: when you create new money, whoever gets it first benefits,

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and whoever gets it last pays. On Wishonia, this is called "how money works."

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On Earth, it is taught as a niche economic theory, if it is taught at all.

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Here's what it looks like: The Fed creates new money. Banks and government contractors receive it first.

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They buy things at today's prices. Prices rise. By the time the new money reaches your grocery store, everything costs more.

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00:43:52.720 --> 00:43:57.540
You buy the same groceries for more money and conclude that groceries have gotten expensive.

385
00:43:58.120 --> 00:44:05.560
Groceries did not get expensive. Your money got cheaper. But "your money got cheaper" requires a culprit, and culprits are

386
00:44:05.560 --> 00:44:11.380
boring when they wear suits and speak in percentages. So instead you get angry about the price of eggs.

387
00:44:12.060 --> 00:44:19.120
On Wishonia, we have a saying: "If your eggs cost more every year but your chickens didn't change, look for whoever is shrinking

388
00:44:19.120 --> 00:44:22.780
your money." We don't actually have this saying. But we should.

389
00:44:23.980 --> 00:44:30.680
The Spread. There is an even simpler version of this trick, and you can watch it happen to you personally, right now, on

390
00:44:30.680 --> 00:44:33.900
your phone, if you check your credit card statement. I'll wait.

391
00:44:34.680 --> 00:44:38.140
The Federal Reserve lends money to banks at about five percent.

392
00:44:38.680 --> 00:44:45.580
Sometimes less. After two thousand and eight, it lent money to banks at nearly zero percent for fourteen years, which is

393
00:44:45.580 --> 00:44:50.220
a very generous interest rate, in the same way that "free" is a very generous price.

394
00:44:50.960 --> 00:44:56.520
Banks then lend that money to you at twenty-four percent. I want to make sure you saw both numbers.

395
00:44:56.960 --> 00:45:03.140
The bank borrows money for zero percent. The bank lends you that same money for twenty-four percent.

396
00:45:03.900 --> 00:45:08.600
The money has not changed. It did not improve during its brief stay at the bank.

397
00:45:09.260 --> 00:45:16.660
Nobody at the bank added anything to it. It just sat in the bank for a bit and came out twenty-four percent more expensive,

398
00:45:17.140 --> 00:45:23.620
like a bottle of wine at a restaurant, except the wine is imaginary and the restaurant prints its own wine.

399
00:45:24.400 --> 00:45:31.240
You cannot borrow from the Fed yourself. I checked. There is a list of who is allowed to borrow from the Fed, and the list

400
00:45:31.240 --> 00:45:37.240
is: banks. Not you. Not your business. Not your mother, even if she asks nicely.

401
00:45:38.020 --> 00:45:43.740
Banks. So you borrow from the bank, who borrowed from the Fed, who made the money out of nothing.

402
00:45:44.640 --> 00:45:52.220
You are paying twenty-four percent annual interest on money that was typed into a computer for free by a person you will

403
00:45:52.220 --> 00:45:59.160
never meet, in a building you are not allowed to enter, and the twenty-four percent goes to the people who own the building.

404
00:45:59.840 --> 00:46:05.300
Every single point of interest is a fee for not being in the room when the money was invented.

405
00:46:06.400 --> 00:46:13.520
On Wishonia, we had a similar arrangement once. Someone would stand between the river and the village and charge people

406
00:46:13.520 --> 00:46:18.320
to carry water. We did not call this person a "financial intermediary."

407
00:46:18.760 --> 00:46:22.300
We called them a "water thief" and moved them away from the river.

408
00:46:22.860 --> 00:46:26.800
It took about a day. Your version has been running for a century.

409
00:46:27.260 --> 00:46:30.680
The water thief has a logo. The twenty twenty Demonstration.

410
00:46:32.000 --> 00:46:36.700
In twenty twenty, the Fed created roughly four trillion dollars in new money.

411
00:46:37.440 --> 00:46:43.930
I need to give you a unit of measurement for that number, because large numbers are where your species hides things.

412
00:46:44.340 --> 00:46:49.500
Your governments spend four point five billion dollars per year on clinical trials.

413
00:46:50.100 --> 00:46:54.880
That is the part of medicine where you actually test whether drugs work in humans.

414
00:46:55.520 --> 00:47:00.600
It is the entire global budget for finding out which chemicals stop you from dying.

415
00:47:01.200 --> 00:47:08.280
Every government on Earth, combined, pooling everything they have: four point five billion dollars.

416
00:47:09.080 --> 00:47:14.460
Where did it go? This is a mystery in the same way that asking "who ate the cake?"

417
00:47:14.880 --> 00:47:18.620
is a mystery when there is one person in the room covered in frosting.

418
00:47:19.380 --> 00:47:25.840
The Top one percent gained exactly four trillion dollars in net worth over the same period.

419
00:47:26.360 --> 00:47:31.160
The Fed printed four trillion dollars. The rich gained four trillion dollars.

420
00:47:31.600 --> 00:47:37.680
On Wishonia, we would call this a "clue." On Earth, you called it "a robust recovery.".

421
00:47:38.880 --> 00:47:45.080
Nearly ninety percent of those gains came from stocks, which is what the Fed's new money inflated first.

422
00:47:45.760 --> 00:47:50.440
Only one-third of bottom-fifty percent households own any stocks at all.

423
00:47:51.040 --> 00:47:59.220
The Fed inflated the one asset that poor people don't have, then issued a report expressing concern about inequality.

424
00:47:59.720 --> 00:48:05.020
On Wishonia, this is called "setting the building on fire and then volunteering for the fire department.".

425
00:48:06.340 --> 00:48:11.640
The Fed printed the money. The stock market absorbed it. The rich owned the stocks.

426
00:48:12.160 --> 00:48:19.300
The poor got the price increases. Cantillon, writing in the seventeen hundreds, predicted this mechanism exactly.

427
00:48:20.100 --> 00:48:23.860
He would not be surprised. He would be annoyed that you are still surprised.

428
00:48:25.120 --> 00:48:33.080
The Theft That Followed. Since nineteen seventy-two: Productivity went up two hundred and forty-six percent.

429
00:48:33.840 --> 00:48:39.860
Wages went up one hundred and fifteen percent. I stared at these two numbers for a long time.

430
00:48:40.540 --> 00:48:47.260
Then I checked them. Then I checked them again, because I assumed I was reading the wrong chart, or the wrong planet.

431
00:48:48.200 --> 00:48:57.180
I was not. Your species did two hundred and forty-six percent more work and received one hundred and fifteen percent more

432
00:48:57.180 --> 00:49:01.440
pay. The remaining one hundred and thirty-one percent went somewhere.

433
00:49:02.200 --> 00:49:07.480
It was not to the people who did the work. On Wishonia, this is called "theft."

434
00:49:08.360 --> 00:49:12.620
On Earth, it is called "the economy." These are the same word.

435
00:49:13.140 --> 00:49:23.300
Yours just has more syllables. The Two-Income Trap. In nineteen sixty-seven, fewer than half of married-couple families

436
00:49:23.720 --> 00:49:30.620
had both spouses working. One paycheck bought a house, a car, annual vacations, and a pension.

437
00:49:31.400 --> 00:49:36.660
The other adult raised children, or gardened, or was bored.

438
00:49:36.760 --> 00:49:44.700
Boredom was a luxury your grandparents could afford. They could afford it because one human working forty hours a week earned

439
00:49:44.700 --> 00:49:49.340
enough to house, feed, transport, and retire an entire family.

440
00:49:49.920 --> 00:49:56.020
I want you to read that sentence again, slowly, because I can feel you not believing it.

441
00:49:57.540 --> 00:50:04.020
By twenty eleven, husband-only earner families had dropped from thirty-six percent to nineteen percent.

442
00:50:05.040 --> 00:50:09.520
The rest sent both adults to work and paid strangers to raise their children.

443
00:50:10.640 --> 00:50:15.430
Working wives contributed twenty-seven percent of family income in nineteen seventy.

444
00:50:15.960 --> 00:50:25.180
By twenty eleven, it was thirty-seven percent. An entire additional human entered the workforce and the family gained ten

445
00:50:25.180 --> 00:50:30.040
percentage points. I want to be very precise about what happened here.

446
00:50:30.960 --> 00:50:37.620
Your species noticed that one paycheck was no longer sufficient, so it doubled the number of workers per household.

447
00:50:38.560 --> 00:50:45.220
The two paychecks combined now purchase a lifestyle that one paycheck covered comfortably in nineteen seventy-one.

448
00:50:45.960 --> 00:50:50.420
You added a whole extra human to the economy and broke even.

449
00:50:51.380 --> 00:50:56.780
On Wishonia, when you double the inputs and the outputs stay the same, you check for parasites.

450
00:50:58.020 --> 00:51:06.520
On Earth, you invented the phrase "work-life balance," which describes having half of what your parents had but in two directions

451
00:51:06.520 --> 00:51:14.440
simultaneously. The Time They Broke It. Remember the spread from a few paragraphs ago.

452
00:51:15.020 --> 00:51:19.560
The Fed creates money from nothing. It lends this invented money to banks.

453
00:51:19.980 --> 00:51:28.200
The banks' one job, the entire reason society tolerates their existence, is to move that money from savers to borrowers.

454
00:51:28.980 --> 00:51:36.600
A ledger. Arithmetic. A task so simple that an eleven-year-old on Wishonia automated it for a science fair.

455
00:51:37.120 --> 00:51:44.080
In two thousand and eight, they took that money (money that cost them nothing, that they did not earn, that was conjured

456
00:51:44.080 --> 00:51:50.200
from a spreadsheet by a committee they play golf with) and built a casino on top of people's houses.

457
00:51:51.160 --> 00:51:58.420
They made bets on whether homeowners would keep paying their mortgages, then made bets on those bets, then made bets on

458
00:51:58.420 --> 00:52:05.760
the bets on the bets. I tried to explain this to someone on Wishonia and they asked me to start over because they assumed

459
00:52:05.760 --> 00:52:09.550
I was having a malfunction. I was not having a malfunction.

460
00:52:10.380 --> 00:52:18.760
Your banks really did bet on bets on bets, the way a child might dare another child to dare a third child to eat dirt.

461
00:52:19.860 --> 00:52:27.360
Except the dirt was people's houses, and the children were wearing four thousand dollar suits purchased with the interest

462
00:52:27.360 --> 00:52:33.160
spread on money that was imaginary before breakfast. None of this was their job.

463
00:52:33.500 --> 00:52:38.070
Their job was maintaining the spreadsheet. They were not hired to gamble.

464
00:52:38.400 --> 00:52:45.500
They were hired to do arithmetic. They got bored of arithmetic, because arithmetic doesn't pay bonuses large enough to buy

465
00:52:45.500 --> 00:52:53.520
a yacht, and they discovered that gambling with free money is extraordinarily profitable right up until it isn't.

466
00:52:54.300 --> 00:53:02.020
The houses were real. The bets were not. When the bets collapsed, ten million Americans lost their homes.

467
00:53:02.580 --> 00:53:08.620
Then your banks did something I still find remarkable, even after eighty years of watching your species.

468
00:53:09.200 --> 00:53:16.460
They called it a "crisis." I want to examine this word, because it is doing more work than any word has ever done.

469
00:53:17.180 --> 00:53:20.880
The money was created from nothing. The buildings were still standing.

470
00:53:21.240 --> 00:53:26.760
The factories still existed. The crops were still growing. The workers still had hands.

471
00:53:27.260 --> 00:53:35.660
Nothing real was missing. What was missing was numbers on a spreadsheet; numbers that had been invented by the same people

472
00:53:35.660 --> 00:53:44.440
who were now calling their absence an emergency. The banks had borrowed invented money, gambled it on bets about bets about

473
00:53:44.440 --> 00:53:51.700
whether you would keep paying your mortgage, lost, and were now standing in front of Congress saying that unless you gave

474
00:53:51.700 --> 00:53:59.860
them seven hundred billion dollars of your money (the kind you earned with your body, at a job, over time), civilization

475
00:53:59.860 --> 00:54:04.520
would collapse. The civilization they had just destabilized.

476
00:54:05.220 --> 00:54:12.820
With free money. That they did not earn. On Wishonia, this is called "setting fire to someone's house and then charging

477
00:54:12.820 --> 00:54:18.180
them for the fire truck." On Earth, it is called the Troubled Asset Relief Program.

478
00:54:18.700 --> 00:54:25.780
The homeowners got foreclosure notices. Here is the part that made me recalibrate my understanding of your species.

479
00:54:26.680 --> 00:54:30.840
The banks could have simply not paid bonuses to the executives.

480
00:54:31.240 --> 00:54:39.740
That's it. That was an option the entire time. The executives who gambled with free money and lost could have received their

481
00:54:39.740 --> 00:54:47.090
base salaries, like any other human who is bad at their job, and used the bonus pool to cover their own gambling debts.

482
00:54:47.600 --> 00:54:52.540
Nobody made them gamble. Nobody made them build a casino on top of your houses.

483
00:54:53.240 --> 00:55:00.460
They chose to. And when the casino collapsed, they had a choice: skip the bonuses for a few years and eat the loss with

484
00:55:00.460 --> 00:55:04.680
money they hadn't earned in the first place, or send the bill to you.

485
00:55:05.300 --> 00:55:15.220
Every single bank chose the second option. Citigroup was given forty-five billion dollars in taxpayer bailout funds and

486
00:55:15.220 --> 00:55:19.920
then paid its executives five point three three billion dollars in bonuses.

487
00:55:20.700 --> 00:55:27.100
Goldman Sachs earned two point three billion dollars and paid out four point eight billion dollars in bonuses.

488
00:55:27.820 --> 00:55:32.400
They paid out more in bonuses than they earned. The difference came from you.

489
00:55:33.700 --> 00:55:38.220
On Wishonia, the word "bonus" means "reward for doing your job well."

490
00:55:38.940 --> 00:55:42.180
On Earth, it apparently less specific and simply means "reward."

491
00:55:44.300 --> 00:55:48.500
On Wishonia, when a child breaks a window, you do not buy the child ice cream.

492
00:55:49.180 --> 00:55:53.520
On Earth, you give the child five point three three billion dollars.

493
00:55:54.540 --> 00:55:58.700
On Wishonia, we have a word for this arrangement, but it does not translate well.

494
00:55:59.680 --> 00:56:04.520
The closest English version: imagine a hotel hires a maintenance worker.

495
00:56:05.040 --> 00:56:12.160
His job is keeping the pipes running and the lights on. Instead, he starts ripping copper wire and load-bearing beams out

496
00:56:12.160 --> 00:56:19.060
of the walls and selling them for scrap. He uses the scrap money to gamble in the hotel's own casino.

497
00:56:19.620 --> 00:56:26.820
From his winnings, he tips the security guards (one hundred and fourteen million dollars, split evenly between both shifts,

498
00:56:26.940 --> 00:56:34.620
so neither shift feels left out). The guards, grateful, take down the "employees may not gamble on premises" sign.

499
00:56:35.120 --> 00:56:42.720
He gambles bigger. He loses everything. Then the hotel starts collapsing, because he removed the parts that hold it up,

500
00:56:43.120 --> 00:56:50.400
and he announces to every guest in the building that unless they cover his losses AND pay to rebuild the walls he stripped,

501
00:56:50.800 --> 00:56:58.760
the building falls on them. The security guards, who removed the sign that would have prevented this, nod gravely and confirm:

502
00:56:58.840 --> 00:57:02.980
yes, the building is collapsing, and yes, the guests must pay.

503
00:57:03.600 --> 00:57:07.900
The guests hand over two hundred and ninety-five billion dollars.

504
00:57:08.080 --> 00:57:12.820
The maintenance worker pays himself a bonus. The security guards get reelected.

505
00:57:13.460 --> 00:57:20.280
The guests who were living in the hotel get evicted. The maintenance worker's one hundred and fourteen million dollars in

506
00:57:20.280 --> 00:57:26.760
tips bought a two hundred and fifty-eight thousand, four hundred and forty-nine percent return.

507
00:57:27.120 --> 00:57:34.260
On Wishonia, this is called a crime. On Earth, it is called the Troubled Asset Relief Program.

508
00:57:34.280 --> 00:57:41.620
Under Bretton Woods, this could not have happened. If banks had tried to lend this recklessly, France would have shown up

509
00:57:41.620 --> 00:57:49.300
at the gold window with a truck. The anchor would have stopped the lending before it became a casino, and if somehow it

510
00:57:49.300 --> 00:57:53.440
hadn't, there would have been no printer available to bail anyone out.

511
00:57:54.200 --> 00:58:01.820
The system that caused the catastrophe and the system that "fixed" it are the same system, wearing different ties.

512
00:58:03.100 --> 00:58:07.500
Your ninety-three percent Pay Cut (Measured in Shiny Rocks).

513
00:58:08.680 --> 00:58:14.860
Here's the same observation, measured in gold, because gold is the one thing humans can't print.

514
00:58:15.560 --> 00:58:22.560
(Not for lack of trying. You spent three hundred years trying to turn lead into gold before giving up and inventing the

515
00:58:22.560 --> 00:58:27.360
Federal Reserve, which turned gold into lead much more efficiently.).

516
00:58:28.080 --> 00:58:35.850
On Wishonia, we also briefly measured wealth in rocks. Then someone ate one and we realized rocks are not food.

517
00:58:36.200 --> 00:58:39.260
You reached this conclusion about gold approximately never.

518
00:58:40.560 --> 00:58:47.940
In nineteen seventy-two, a typical American family earned the equivalent of one hundred and ninety-one ounces of gold per

519
00:58:47.940 --> 00:58:57.040
year. If your family still earned one hundred and ninety-one ounces, your household income would be over one million, thirty

520
00:58:57.040 --> 00:59:02.240
thousand dollars. It is not over one million, thirty thousand dollars.

521
00:59:02.660 --> 00:59:07.200
You know this. I know this. I just wanted to write it down so we could both look at it.

522
00:59:08.100 --> 00:59:12.380
Median household income is seventy-seven thousand, five hundred dollars.

523
00:59:12.940 --> 00:59:17.260
At today's gold price, that buys you fourteen ounces. Fourteen.

524
00:59:17.260 --> 00:59:24.600
One-four. Fewer ounces than there are donuts in a box. Your grandparents earned one hundred and ninety-one.

525
00:59:25.160 --> 00:59:32.460
You earn fourteen. That is not a rounding error. That is not a "market correction."

526
00:59:32.840 --> 00:59:40.660
That is ninety-three percent of your income, gone, replaced with a smaller number and a larger explanation for why the smaller

527
00:59:40.660 --> 00:59:45.320
number is fine. You went from one hundred and ninety-one to fourteen.

528
00:59:46.060 --> 00:59:52.900
A ninety-three percent pay cut, delivered one quiet year at a time, while your leaders stood in front of flags and said

529
00:59:52.900 --> 01:00:02.560
the economy was "growing." (Your economists will object that gold's price is inflated by rising demand from a growing population.

530
01:00:03.160 --> 01:00:10.140
Above-ground gold stocks were approximately ninety-three thousand tonnes in nineteen seventy-two and have grown to over

531
01:00:10.140 --> 01:00:17.780
two hundred and twelve thousand tonnes today. World population went from three point eight five billion to eight point one

532
01:00:17.780 --> 01:00:24.380
billion. Gold per capita: twenty-four point two grams then, twenty-six point two grams now.

533
01:00:25.300 --> 01:00:32.080
Mining has kept pace with population. The demand argument explains approximately none of the price increase.

534
01:00:32.940 --> 01:00:40.840
Even if you generously assume gold is fifty percent overpriced due to non-monetary demand factors (central bank hoarding,

535
01:00:41.860 --> 01:00:46.620
E.T.F.s, jewelry), the pay cut is still eighty-five percent.

536
01:00:47.360 --> 01:00:51.580
The number changes from catastrophic to slightly less catastrophic.

537
01:00:52.460 --> 01:00:57.780
Your economists will find this very comforting.) It was growing.

538
01:00:57.920 --> 01:01:07.800
In the way a tumor grows. Why Nobody Told You. Even the think tanks supposedly on your side report the gap as roughly ten

539
01:01:07.800 --> 01:01:16.240
thousand dollars a year. That's because they measure it using the government's ruler, which has been getting shorter: C.P.I.-adjusted

540
01:01:16.240 --> 01:01:22.500
(the index has been redesigned multiple times; each redesign coincidentally makes inflation look smaller.

541
01:01:23.020 --> 01:01:30.620
This is beige crime at its most beige.). Starting at nineteen seventy-nine instead of nineteen seventy-one (skipping the

542
01:01:30.620 --> 01:01:37.940
years that make the chart look the worst). Counting your employer's overpriced health insurance as "pay" (this is like counting

543
01:01:38.000 --> 01:01:42.840
the chain around your ankle as "jewelry"). You're not missing ten thousand dollars a year.

544
01:01:43.320 --> 01:01:46.720
You're missing nine hundred and fifty-two thousand dollars.

545
01:01:47.400 --> 01:01:55.540
The distance between those numbers is the entire game. Gold doesn't renegotiate its value at Federal Reserve meetings.

546
01:01:55.940 --> 01:02:02.840
Gold just sits there, being a shiny rock, quietly demonstrating that a shiny rock you dug out of the ground has held its

547
01:02:02.840 --> 01:02:07.440
value better than the entire financial system you built to replace it.

548
01:02:08.520 --> 01:02:14.660
Your economists will say gold is a "volatile commodity." Your economists work for the people who redesigned the ruler.

549
01:02:15.460 --> 01:02:22.360
"But It Wasn't the Gold Standard, It Was..." Your economists have proposed six alternative explanations for why productivity

550
01:02:22.380 --> 01:02:27.100
gains stopped reaching workers at the exact moment the gold anchor was removed.

551
01:02:27.820 --> 01:02:32.620
On Wishonia, when six things break simultaneously, we check what changed.

552
01:02:33.200 --> 01:02:39.820
On Earth, you apparently prefer six unrelated theories, each from a different decade, none of which match the date.

553
01:02:40.960 --> 01:02:44.510
Let me walk through each one they offer, and then explain why it's wrong.

554
01:02:44.780 --> 01:02:48.520
Your economists' first excuse: "It was the decline of unions."

555
01:02:49.260 --> 01:02:56.080
Union membership peaked in nineteen fifty-four. It fell steadily through the late nineteen fifties and the entire nineteen

556
01:02:56.080 --> 01:03:02.260
sixties. Those decades were the strongest period of wage growth in American history.

557
01:03:02.900 --> 01:03:09.020
Union membership was going down. Wages were going up. For twenty years.

558
01:03:09.100 --> 01:03:15.160
Your economists looked at two lines moving in opposite directions and concluded they were causally linked.

559
01:03:15.800 --> 01:03:19.380
On Wishonia, this would not pass a children's statistics class.

560
01:03:20.200 --> 01:03:25.120
And here is the part your economists leave out: unions didn't collapse on their own.

561
01:03:25.520 --> 01:03:32.080
The gold anchor had kept inflation low, which meant union strike funds held their value, which meant unions could actually

562
01:03:32.080 --> 01:03:37.250
afford to strike. Remove the anchor, and inflation eats the strike fund.

563
01:03:37.540 --> 01:03:44.800
Now your union is a man holding an empty gun. Meanwhile, floating exchange rates made it trivially easy to move the whole

564
01:03:44.800 --> 01:03:52.940
factory to a country where workers accept less. Worse, corporations no longer need to negotiate at all: they borrow cheap

565
01:03:52.940 --> 01:03:57.620
money from the Fed, buy back their own stock, and watch their share price rise.

566
01:03:58.060 --> 01:04:05.080
The Fed prints money on a Tuesday afternoon and erases a three percent raise that took fifteen years of organizing.

567
01:04:05.940 --> 01:04:11.340
Why negotiate with a union when the printer is faster, quieter, and doesn't picket?

568
01:04:11.580 --> 01:04:18.860
Unions didn't drag wages down. The gold anchor was pulled, and both unions and wages drained out of the same bathtub.

569
01:04:19.460 --> 01:04:24.860
Your economists are blaming the water for leaving. Their second excuse: "It was globalization."

570
01:04:25.720 --> 01:04:30.230
China joined the W.T.O. in two thousand and one. NAFTA passed in nineteen ninety-four.

571
01:04:30.820 --> 01:04:36.160
The wage gap opened in nineteen seventy-one. Your theory is twenty-three years late.

572
01:04:36.720 --> 01:04:42.780
This is like arriving at a murder scene in nineteen ninety-four, finding the body from nineteen seventy-one, and blaming

573
01:04:42.780 --> 01:04:45.600
someone who moved to the neighborhood in two thousand and one.

574
01:04:46.280 --> 01:04:50.760
On Wishonia, we have a word for detectives who solve crimes using evidence from the future.

575
01:04:51.480 --> 01:04:57.360
The word translates roughly to "fired." Third: "It was computers and automation."

576
01:04:58.020 --> 01:05:01.320
The Apple Two shipped in nineteen seventy-seven. The I.B.M.

577
01:05:01.420 --> 01:05:07.120
P.C. shipped in nineteen eighty-one. The internet became commercially available in nineteen ninety-five.

578
01:05:07.680 --> 01:05:14.840
The wage gap opened in nineteen seventy-one, when the most advanced technology in most offices was a typewriter that didn't

579
01:05:14.840 --> 01:05:22.440
jam every third page. Blaming computers for a gap that predates computers is bold, even by the standards of a profession

580
01:05:22.440 --> 01:05:29.240
that awarded itself a fake Nobel Prize. Fourth: "It was deregulation and tax cuts."

581
01:05:29.280 --> 01:05:35.420
Reagan took office in nineteen eighty-one. The top marginal tax rate was still seventy percent until nineteen eighty-two.

582
01:05:35.960 --> 01:05:41.260
The wage gap opened in nineteen seventy-one. Closer, but still a decade off.

583
01:05:42.000 --> 01:05:47.880
On Wishonia, if a doctor said "the patient started bleeding in nineteen seventy-one because of something that happened in

584
01:05:47.880 --> 01:05:51.450
nineteen eighty-one," we would check the doctor for head injuries.

585
01:05:51.980 --> 01:05:59.320
(On Earth, you give this doctor a column in the Financial Times.) Fifth: "It was the shift to shareholder capitalism."

586
01:05:59.940 --> 01:06:05.380
In nineteen seventy, Milton Friedman published an essay arguing that corporations should maximize profit.

587
01:06:06.140 --> 01:06:09.800
Your economists concluded this essay caused corporations to become greedy.

588
01:06:10.780 --> 01:06:18.000
Corporations. The organizational structure that has been maximizing profit since the Dutch East India Company slaughtered

589
01:06:18.000 --> 01:06:25.720
its way across Asia in sixteen oh-two. The species that invented loan sharking, child labor, and plantation slavery read

590
01:06:25.720 --> 01:06:30.340
a newspaper essay and thought, "Yes, this is why we started caring about money."

591
01:06:31.200 --> 01:06:35.260
Blaming Friedman for corporate greed is like blaming a weather report for rain.

592
01:06:35.760 --> 01:06:42.200
It has been raining for four hundred years. Your economists are pointing at the television and saying, "That's where the

593
01:06:42.200 --> 01:06:46.700
water comes from." And finally, the laziest one: "It was greed."

594
01:06:47.380 --> 01:06:53.220
Greed was not invented in nineteen seventy-one. Humans have been greedy since before they were humans.

595
01:06:53.680 --> 01:07:00.080
Your ancestors were greedy when they were still in trees. (They were greedy *about* the trees.) The question is not whether

596
01:07:00.080 --> 01:07:04.040
humans are greedy. The question is: what did greed *build*?

597
01:07:04.800 --> 01:07:11.160
Before nineteen seventy-one, there was exactly one way to get rich: make something people wanted more than their money.

598
01:07:11.620 --> 01:07:18.500
You had to build a factory, hire workers, pay them enough to show up, and produce goods or services that a human would voluntarily

599
01:07:18.500 --> 01:07:25.620
hand over their papers for. The workers got paid because you literally could not get rich without them.

600
01:07:25.700 --> 01:07:31.600
Greed had no shortcut. It had to flow *through* productivity, which meant it had to flow *through* paychecks.

601
01:07:32.360 --> 01:07:37.120
This is called "an economy." It worked for everyone because it had to.

602
01:07:37.540 --> 01:07:44.960
After nineteen seventy-one, the Federal Reserve offered corporations a much more elegant option: skip the middle man.

603
01:07:45.460 --> 01:07:52.440
Why build a factory and hire expensive humans when you can borrow money at near-zero interest, buy back your own stock,

604
01:07:52.740 --> 01:07:56.740
and watch your net worth triple without producing a single object?

605
01:07:57.580 --> 01:08:03.810
Why give raises when you can use cheap credit to acquire your competitor, fire half the staff, and call it "synergy"?

606
01:08:05.080 --> 01:08:10.500
This is called "the financial sector." It was also working, just not for you.

607
01:08:11.240 --> 01:08:19.319
Same species. Same greed. Same twenty-four hours in a day. The only thing that changed was that getting rich no longer required

608
01:08:19.319 --> 01:08:28.380
paying people or making things. So they stopped. Every single alternative explanation either postdates nineteen seventy-one

609
01:08:28.380 --> 01:08:32.520
or describes a downstream effect of removing the gold anchor.

610
01:08:33.080 --> 01:08:38.420
The gold anchor was the cork. Everything your economists are pointing at is the flood.

611
01:08:39.399 --> 01:08:47.090
On Wishonia, we have a diagnostic principle: if six symptoms appear at the same time, you don't need six diagnoses.

612
01:08:48.000 --> 01:08:52.260
You need one. The patient had a cork removed in nineteen seventy-one.

613
01:08:53.060 --> 01:09:00.340
Everything since is spillage. Your economists have been mopping the floor for fifty years without looking up at the bottle.

614
01:09:01.560 --> 01:09:09.180
Why You Don't Know Any of This. The average American with a bachelor's degree completes approximately seventeen thousand

615
01:09:09.180 --> 01:09:16.420
hours of formal education. The number of those hours spent explaining how the Federal Reserve creates money and who gets

616
01:09:16.420 --> 01:09:23.560
it first: Zero. Not "nearly zero." Not "a brief overview in eleventh grade."

617
01:09:23.740 --> 01:09:30.819
Zero. I counted. I went through your curricula. You spend more class time learning the recorder, which is an instrument

618
01:09:30.819 --> 01:09:38.560
specifically designed to make parents regret reproduction. You spend an entire semester on the mitochondria, which is the

619
01:09:38.560 --> 01:09:45.840
powerhouse of the cell, a fact that has never been useful to any human outside of a biology exam or a meme.

620
01:09:45.960 --> 01:09:50.210
The thing that took ninety-three percent of your purchasing power: not on the syllabus.

621
01:09:50.720 --> 01:09:59.340
The powerhouse of the cell: six weeks. Here is what monetary policy actually determines: Whether your brightest minds design

622
01:09:59.340 --> 01:10:05.300
vaccines or warheads. Whether your factories build M.R.I. machines or missiles.

623
01:10:05.900 --> 01:10:14.340
Whether your wealth cures diseases or causes them. It is the single most important force shaping who lives and who dies

624
01:10:14.340 --> 01:10:19.600
on your planet. It decides everything. You have never had a class about it.

625
01:10:20.100 --> 01:10:27.520
You had multiple classes about the recorder. Only twenty-eight states require any economics course to graduate high school,

626
01:10:27.940 --> 01:10:32.160
and those courses cover supply and demand curves, not money creation.

627
01:10:32.660 --> 01:10:36.960
The thing that took ninety-three percent of your purchasing power is not on the test.

628
01:10:37.440 --> 01:10:43.060
It has never been on any test. This is very convenient for the people who took the ninety-three percent.

629
01:10:44.160 --> 01:10:50.440
Same Trick, Different Costume. On Wishonia, we learned this lesson six thousand years ago.

630
01:10:50.980 --> 01:10:57.660
The trick never changes. Only the outfit: Egyptian pharaohs: "Hey, god said I'm like in charge or something.

631
01:10:57.900 --> 01:11:02.680
I'm gonna need you to pile some big rocks up in a triangle shape for no apparent reason."

632
01:11:03.900 --> 01:11:10.180
Medieval kings: "Hey, god said I'm in charge or something. I'm gonna need you to give me half your grain.

633
01:11:10.720 --> 01:11:14.020
Also, go kill some other guys and bring me back their stuff, too."

634
01:11:14.800 --> 01:11:18.020
After a few thousand years, people caught on to this trick.

635
01:11:18.440 --> 01:11:26.860
So they tried a new approach. Modern central bankers: "Here are forty-seven pages about hedonic adjustments and geometric

636
01:11:27.000 --> 01:11:33.480
weighting in consumer price index methodology." The current version is, I must say, brilliant.

637
01:11:34.160 --> 01:11:38.660
Previous rulers needed armies, divine authority, and occasional public executions.

638
01:11:39.360 --> 01:11:45.060
Your current rulers just need jargon. They replaced the sword with a two hundred-page P.D.F.

639
01:11:45.060 --> 01:11:49.300
that makes your eyes cross before you reach the part where it explains you're being robbed.

640
01:11:49.900 --> 01:11:55.480
The pharaoh had to worry about revolution. The Federal Reserve just has to worry about being boring enough.

641
01:11:56.440 --> 01:12:02.040
So far, it is very good at this. A serf who understands the system is dangerous.

642
01:12:02.520 --> 01:12:06.280
A serf who finds the system too boring to understand is a taxpayer.

643
01:12:08.220 --> 01:12:15.600
The Priesthood. On every planet I've observed, the people who operate the extraction system also design the curriculum.

644
01:12:16.160 --> 01:12:19.380
This is so consistent it barely qualifies as an observation.

645
01:12:19.960 --> 01:12:26.900
On Earth: Banks endow economics chairs at universities. The Federal Reserve funds economic research.

646
01:12:27.640 --> 01:12:35.180
Economists rotate between universities, the Fed, and Wall Street (this is called "the revolving door," which is a very honest

647
01:12:35.180 --> 01:12:40.460
name because the people going through it always end up back where they started, only richer).

648
01:12:41.280 --> 01:12:46.760
Say "the system works" and you get tenure, consulting fees, and a seat on the Federal Reserve Board.

649
01:12:47.340 --> 01:12:54.450
Say "the system is theft" and you get called "not a serious economist," which is the academic equivalent of being excommunicated,

650
01:12:55.480 --> 01:13:01.760
except the church is a bank and the holy water is money. The Fake Nobel Prize.

651
01:13:02.720 --> 01:13:07.360
This is my favorite part. I have been waiting to tell you this since I started writing.

652
01:13:07.920 --> 01:13:14.340
In nineteen sixty-eight, Sweden's central bank created a prize and stuck Alfred Nobel's name on it.

653
01:13:14.880 --> 01:13:18.820
This gave economics the credibility of physics, chemistry, and medicine.

654
01:13:19.380 --> 01:13:24.340
Physics splits atoms. Chemistry cures diseases. Economics lost your pension.

655
01:13:24.960 --> 01:13:30.260
They now share an award ceremony. Alfred Nobel never authorized this.

656
01:13:30.640 --> 01:13:37.060
He was dead at the time and unable to object, which is the ideal state for someone whose name you're borrowing.

657
01:13:37.660 --> 01:13:44.340
The Nobel Prize website itself states that "the prize in economic sciences is not a Nobel Prize".

658
01:13:45.080 --> 01:13:52.470
Nobel's great-grandnephew, Peter Nobel, called it "a P.R. coup by economists to improve their reputation".

659
01:13:53.140 --> 01:14:00.460
I want to make sure you absorbed that: The central bank that prints your money created a fake Nobel Prize to give to the

660
01:14:00.460 --> 01:14:06.470
people who explain why printing your money is fine. On Wishonia, we have a word for this.

661
01:14:06.800 --> 01:14:11.940
It translates roughly to "decorating the burglar." The Research.

662
01:14:12.100 --> 01:14:15.870
Every source I cited in this chapter is publicly available.

663
01:14:16.300 --> 01:14:19.960
None of it was classified. I found all of it in less than a day.

664
01:14:20.580 --> 01:14:25.940
Your species has granted thousands of economics doctorates since nineteen seventy-one.

665
01:14:26.600 --> 01:14:31.000
Each recipient spent four to seven years studying economics full time.

666
01:14:31.520 --> 01:14:36.070
They had access to every database I used. They can read the same charts.

667
01:14:36.520 --> 01:14:44.700
The break point in nineteen seventy-one is not subtle. Median income growth fell eighty percent after Nixon closed the gold

668
01:14:44.700 --> 01:14:53.040
window. The longest deflation in American history (eighteen seventy to eighteen ninety-six) produced the fastest growth.

669
01:14:53.140 --> 01:15:01.060
The Federal Reserve was created to prevent bank failures, then presided over nine thousand of them, while Canada, without

670
01:15:01.060 --> 01:15:08.300
a central bank, had zero. Every war that killed more than a million people required a money printer.

671
01:15:08.740 --> 01:15:14.000
The hard money list is empty. None of these findings required a laboratory.

672
01:15:14.500 --> 01:15:21.700
They required a chart and the willingness to read it. What is the purpose of economics, if not to use data to figure out

673
01:15:21.700 --> 01:15:29.580
how to make people's lives better? Apparently it is to handwave while saying "stability" and "liquidity" until everyone

674
01:15:29.580 --> 01:15:38.400
stops asking. There are two possible explanations. Either thousands of trained specialists independently failed to notice

675
01:15:38.400 --> 01:15:46.920
a pattern visible to some weird alien in an afternoon. Or they noticed, and decided their careers were more important than

676
01:15:46.920 --> 01:15:52.080
telling you. Why "Just Print More Money for Medicine" Doesn't Work.

677
01:15:53.220 --> 01:15:58.220
"Why not just increase the N.I.H. budget? Why not just fund more medical research?

678
01:15:58.920 --> 01:16:03.080
Why tie it to military spending?". These are excellent questions.

679
01:16:03.680 --> 01:16:08.620
I will now explain why they all have the same answer, which is that money is pretend.

680
01:16:09.640 --> 01:16:18.480
Money is not real. It is a shared hallucination. Eight billion humans pretending that the same piece of paper is worth something.

681
01:16:19.020 --> 01:16:25.500
A very convincing hallucination. (I've seen you kill each other over it, which is the ultimate commitment to a bit.) You

682
01:16:25.500 --> 01:16:30.580
work for it. You save it. You argue about it at dinner. You get divorced over it.

683
01:16:30.980 --> 01:16:36.760
You frame the first dollar your business ever earned and hang it on the wall of a restaurant that will close in eighteen

684
01:16:36.760 --> 01:16:43.120
months. All of this, for a piece of paper that a building full of strangers can make worthless while you sleep.

685
01:16:44.100 --> 01:16:49.860
Resources are real. Brains are real. Hours are real. Titanium is real.

686
01:16:49.980 --> 01:16:53.710
Money is a story you tell each other about who gets the resources.

687
01:16:54.240 --> 01:16:57.330
And the people who write the story get to decide the ending.

688
01:16:58.820 --> 01:17:06.760
The Fixed Pie of Human Genius. Earth has eight billion humans (fixed quantity), twenty-four hours per human per day (physics

689
01:17:06.760 --> 01:17:15.700
is firm on this), limited raw materials (you cannot print titanium), and finite factory capacity (you cannot build infinite

690
01:17:15.700 --> 01:17:22.880
laboratories). When a brilliant engineer designs a missile guidance system, that engineer is not designing a medical device.

691
01:17:23.960 --> 01:17:27.880
When a factory builds tanks, it is not building M.R.I. machines.

692
01:17:28.520 --> 01:17:36.040
When a P.H.D. spends ten years researching better ways to kill people, those are ten years not spent researching better

693
01:17:36.040 --> 01:17:40.620
ways to keep people alive. Every genius has exactly one brain.

694
01:17:41.240 --> 01:17:44.780
You are renting forty million of them to build things that explode.

695
01:17:45.300 --> 01:17:49.460
This is like hiring the world's best chef to set fire to kitchens.

696
01:17:49.920 --> 01:17:54.740
You are paying your smartest humans to make your other humans stop being humans.

697
01:17:55.500 --> 01:17:58.530
I keep expecting this to sound normal if I say it enough times.

698
01:17:59.280 --> 01:18:06.660
It does not. The Numbers. The top ten percent of human talent is roughly eight hundred million people.

699
01:18:07.680 --> 01:18:15.620
Here's how you're using them: Around forty million are building things that kill people (military, reserves, death manufacturers).

700
01:18:16.240 --> 01:18:24.980
Around one million are working in medical research. Governments spend six hundred and four times more on weapons than on

701
01:18:24.980 --> 01:18:31.160
testing which medicines actually work. On Wishonia, we had a similar ratio once.

702
01:18:31.720 --> 01:18:38.820
Then we fought about it for twelve thousand years before someone finally designed an incentive system that made it more

703
01:18:38.820 --> 01:18:46.980
profitable to cure diseases than to cause them. It took us exactly as long as it's taking you, minus however long you spend

704
01:18:46.980 --> 01:18:51.790
reading this manual. The bribery program is in the rest of this manual.

705
01:18:52.940 --> 01:18:59.450
The Shell Game (How Inflation Steals Medical Progress). This is the trick.

706
01:18:59.480 --> 01:19:06.080
Watch the money: Today. Government clinical trials cost four point five billion dollars.

707
01:19:06.620 --> 01:19:10.800
Global military spending is two point seventy-two trillion dollars.

708
01:19:11.280 --> 01:19:16.300
The ratio is six hundred and four to one for killing over curing.

709
01:19:17.540 --> 01:19:20.660
Five Years Later (after "increasing medical research funding").

710
01:19:21.340 --> 01:19:25.240
Clinical trial funding is up fifty percent! Headlines are written.

711
01:19:25.320 --> 01:19:33.240
Backs are patted. A politician poses with a scientist. Meanwhile, military spending also went up fifty percent, because

712
01:19:33.240 --> 01:19:41.860
central banks printed fifty percent more money, so the real allocation of brains, factories, and hours is exactly the same.

713
01:19:42.320 --> 01:19:50.240
The ratio is still six hundred and four to one. You gave the medical department a raise and then raised the price of everything

714
01:19:50.240 --> 01:19:59.060
they need to buy. The Proof: Fifty Years of Going Nowhere. Medical Research as a percentage of G.D.P.

715
01:19:59.760 --> 01:20:03.380
In nineteen seventy-five, it was zero point zero eight percent.

716
01:20:03.880 --> 01:20:07.060
In nineteen eighty-five, it was zero point zero seven percent.

717
01:20:07.880 --> 01:20:11.520
In nineteen ninety-five, it was zero point zero seven percent.

718
01:20:11.920 --> 01:20:15.580
In two thousand and five, it was zero point zero six percent.

719
01:20:15.960 --> 01:20:20.000
In twenty fifteen, it was zero point zero six percent. In twenty twenty-five, it was zero point zero six five percent.

720
01:20:21.160 --> 01:20:27.080
Absolute dollars increased ten times. Share of actual resources: decreased.

721
01:20:27.600 --> 01:20:33.380
You got ten times "richer" and spent a smaller fraction of it on not dying.

722
01:20:34.100 --> 01:20:38.000
This is like getting a promotion and canceling your health insurance to celebrate.

723
01:20:39.080 --> 01:20:45.760
What Actually Grew. The financial sector grew from three percent to eight percent of G.D.P.

724
01:20:46.320 --> 01:20:51.800
The military-industrial sector grew from three percent to three point four percent of G.D.P.

725
01:20:52.160 --> 01:20:56.060
(the official number; the rest enters your budget wearing other costumes).

726
01:20:56.780 --> 01:21:01.820
Healthcare spending grew from seven percent to eighteen percent of G.D.P.

727
01:21:02.240 --> 01:21:09.700
(most of that growth is billing, not healing). The part that actually keeps you alive (the actual research into why your

728
01:21:09.700 --> 01:21:14.480
cells stop working) is a shrinking fraction of a growing economy.

729
01:21:14.740 --> 01:21:18.740
You baked a bigger pie and gave the science department fewer crumbs.

730
01:21:19.220 --> 01:21:25.680
Then you named the pie "progress." The World's Most Expensive Abacus.

731
01:21:25.780 --> 01:21:33.220
The sector that grew the most deserves special attention, because what it does is very simple and what it costs is very

732
01:21:33.220 --> 01:21:40.340
large. Your financial sector moves money from people who have it to people who need it, and keeps a record of who owes what.

733
01:21:40.900 --> 01:21:47.260
That's it. That is the entire job. An Excel spreadsheet. Remember the eleven-year-old's science fair project?

734
01:21:47.820 --> 01:21:50.880
The network of computers that check each other so nobody can lie?

735
01:21:51.520 --> 01:21:59.720
That replaced this entire sector on Wishonia. It runs continuously, employs nobody, and has not made a single error in four

736
01:21:59.720 --> 01:22:09.840
thousand years. Your version employs six point seven million people and captures eight percent of your G.D.P.

737
01:22:10.280 --> 01:22:15.460
Eight percent of G.D.P. For an Excel spreadsheet. I checked whether they were using a very complicated spreadsheet.

738
01:22:16.220 --> 01:22:19.940
They are not. It has columns and rows. Some of the cells have formulas.

739
01:22:20.660 --> 01:22:24.280
This is the same technology a thirteen-year-old uses to track Pokémon stats.

740
01:22:25.260 --> 01:22:29.520
It captures eight percent of the largest economy in history.

741
01:22:30.160 --> 01:22:34.680
The technology to automate it has existed on your planet since two thousand and nine.

742
01:22:35.300 --> 01:22:42.660
You are paying six point seven million people to do what the computers are already doing, because the six point seven million

743
01:22:42.660 --> 01:22:50.780
people are very good at making the job sound complicated. Understanding why your bodies break down requires decoding three

744
01:22:50.780 --> 01:22:58.020
billion base pairs of D.N.A., modeling protein folding across millions of configurations, and running clinical trials on

745
01:22:58.020 --> 01:23:04.220
thousands of humans for years. Moving money from Account A to Account B requires arithmetic.

746
01:23:05.320 --> 01:23:10.560
One of these captures eight percent of G.D.P. The other gets zero point zero six five percent.

747
01:23:11.700 --> 01:23:16.860
I will let you guess which is which. I want to make sure you felt that number.

748
01:23:17.600 --> 01:23:22.580
Your governments spend four point five billion dollars per year testing whether medicines work.

749
01:23:23.360 --> 01:23:29.200
The financial sector captures two point three trillion dollars per year moving numbers between columns.

750
01:23:29.720 --> 01:23:34.940
That two point three trillion dollars is five hundred and eleven years of clinical trials.

751
01:23:35.540 --> 01:23:43.320
Five hundred and eleven years. Your entire species could run every government-funded clinical trial on Earth for half a

752
01:23:43.320 --> 01:23:46.370
millennium with what you pay the spreadsheet department annually.

753
01:23:47.160 --> 01:23:52.100
Every year, you choose the spreadsheet. Every year, the diseases wait.

754
01:23:53.760 --> 01:23:59.260
How the Ledger Ate the Economy. The financial sector didn't always cost this much.

755
01:23:59.720 --> 01:24:03.720
In the early nineteen-seventies, it was about four percent of G.D.P.

756
01:24:03.780 --> 01:24:07.260
Finance workers earned roughly the same as everyone else with similar education.

757
01:24:07.920 --> 01:24:15.600
A bright graduate from M.I.T. was equally likely to design bridges or trade bonds, because bridges and bonds paid the same.

758
01:24:15.940 --> 01:24:22.840
Then Nixon cut the dollar from gold, regulations were stripped away, and something interesting happened: by two thousand

759
01:24:22.840 --> 01:24:29.200
and six, finance workers earned a fifty percent premium over equally educated workers in every other sector.

760
01:24:30.020 --> 01:24:36.920
Not because the job got harder. (The job is still arithmetic.) Because the money printer printed money, the money went to

761
01:24:37.020 --> 01:24:43.480
banks first, and the banks used some of it to hire away every bright person who might otherwise have done something useful.

762
01:24:44.560 --> 01:24:51.140
Philippon and Reshef, two economists who actually measured this, found that thirty to fifty percent of the finance wage

763
01:24:51.140 --> 01:24:57.840
premium is pure rent, meaning excess pay not explained by skill, education, or complexity.

764
01:24:58.060 --> 01:25:03.170
The financial sector pays more not because it's harder, but because it's closer to the printer.

765
01:25:03.580 --> 01:25:11.340
Paul Volcker, who ran the Federal Reserve and therefore knew exactly what he was talking about, summarized the result: "We

766
01:25:11.340 --> 01:25:18.380
spent several decades not producing many civil engineers and producing a huge number of financial engineers.

767
01:25:19.020 --> 01:25:23.260
And the result is shitty bridges and a shitty financial system".

768
01:25:24.420 --> 01:25:28.860
A well-run business spends about one percent of revenue on its accounting department.

769
01:25:29.920 --> 01:25:37.300
Your economy spends eight percent. If a C.E.O. discovered their accounting department was consuming eight times the standard

770
01:25:37.300 --> 01:25:46.520
rate and growing, they would fire someone. Your economy gave accounting a raise, a corner office, and the fake Nobel Prize.

771
01:25:47.800 --> 01:25:53.680
'Just Tax the Billionaires'. "Fine," says the human who just read the last three sections.

772
01:25:54.280 --> 01:25:57.750
"The problem is the money goes to the wrong people. Tax the billionaires.

773
01:25:58.580 --> 01:26:04.570
Fund medical research. Simple.". Your species has been trying this for a century.

774
01:26:05.180 --> 01:26:11.170
I've watched the whole thing. Here is the loop: Step one. Tax the wealthy.

775
01:26:11.940 --> 01:26:21.000
Victory. Step two. The wealthy spend a fraction of those taxes on lobbyists who return eighteen dollars for every one dollar

776
01:26:21.000 --> 01:26:28.400
invested. They secure: One hundred and eighty-one billion dollars per year in direct corporate welfare.

777
01:26:29.320 --> 01:26:37.120
Fifty billion dollars in fossil fuel subsidies. Seventy-five billion dollars in agricultural subsidies (top ten percent

778
01:26:37.120 --> 01:26:45.460
of farms collect sixty-three percent of payments). Over three hundred billion dollars per year flows back to the people

779
01:26:45.460 --> 01:26:52.580
you just taxed, through programs below the human boredom threshold for investigating and too profitable for lobbyists to

780
01:26:52.580 --> 01:26:58.060
stop. That is sixty-seven years of clinical trials. Every year.

781
01:26:58.660 --> 01:27:04.680
Handed to people who already have money. Every year. While your diseases wait.

782
01:27:05.200 --> 01:27:11.880
Every year. Step three. The Federal Reserve prints money. Asset prices rise.

783
01:27:12.500 --> 01:27:19.360
The billionaires recover what you taxed, and more. The inflation bill goes to the working families you were trying to help.

784
01:27:20.200 --> 01:27:25.640
This is called "monetary policy." You weren't consulted. Step four.

785
01:27:26.180 --> 01:27:30.420
Look at the wider wealth gap. Propose: higher taxes on the wealthy.

786
01:27:31.400 --> 01:27:39.920
Return to Step one. Repeat for one hundred years. This recipe is four steps long, which is twice as many as the money-printing

787
01:27:39.920 --> 01:27:50.520
recipe. It feels like progress. It is not progress. The entire planet spends four point five billion dollars per year testing

788
01:27:50.520 --> 01:27:59.740
whether medicines work in humans. One country spends over three hundred billion dollars per year on corporate handouts to

789
01:27:59.740 --> 01:28:08.460
people who already have money. The ratio is roughly sixty-eight to one for subsidizing wealth over curing disease.

790
01:28:09.220 --> 01:28:17.320
Every "tax the billionaires" campaign in history has left this ratio untouched, because the same system that collects the

791
01:28:17.400 --> 01:28:25.760
taxes allocates the spending, and that system has a documented zero percent correlation with what voters want.

792
01:28:26.840 --> 01:28:35.360
The diagnosis is correct (the allocation is insane). The prescription is the problem: pour more money into a captured system

793
01:28:35.360 --> 01:28:40.640
and hope it flows somewhere different this time. The money goes in as taxes.

794
01:28:41.040 --> 01:28:49.360
It comes out as subsidies, asset inflation, and an N.I.H. that spends three point three percent of its budget on clinical

795
01:28:49.360 --> 01:28:55.140
trials. The pipe leaks faster than you can fill it, and the leaks flow upward.

796
01:28:56.040 --> 01:29:00.920
This is why the one percent treaty doesn't route funding through your existing institutions.

797
01:29:01.340 --> 01:29:08.020
It builds a new pipe that the lobbyists haven't found yet. You don't fix a rigged game by playing harder.

798
01:29:08.320 --> 01:29:14.600
You build a different game. Why Money Printing Matters: Geniuses Follow the Money.

799
01:29:15.460 --> 01:29:23.360
When the Fed prints a trillion dollars for war, weapons manufacturers get it first and immediately buy the best engineers,

800
01:29:24.080 --> 01:29:31.540
scientists, and equipment. An M.I.T. graduate with two hundred thousand dollars in student debt chooses between: Raytheon

801
01:29:31.540 --> 01:29:37.660
pays one hundred and fifty thousand dollars per year, full benefits, and a signing bonus (makes missiles).

802
01:29:38.380 --> 01:29:45.600
An N.I.H. postdoc pays fifty-five thousand dollars per year, a shared office, and a vending machine (cures diseases).

803
01:29:46.760 --> 01:29:50.420
Student debt does not negotiate. The graduate goes to Raytheon.

804
01:29:51.120 --> 01:29:56.220
She is now very good at making things that find other things and then both things stop existing.

805
01:29:56.940 --> 01:30:01.260
She could have been very good at making your cells stop forgetting how to cell.

806
01:30:01.800 --> 01:30:10.100
But Raytheon offered dental. The N.I.H. offered a lanyard. Multiply this decision by every talented graduate, every year,

807
01:30:10.260 --> 01:30:14.540
for fifty years. Then wonder why nobody cured your mother's cancer.

808
01:30:15.400 --> 01:30:22.940
Then blame the graduate. Printing more money for medicine doesn't fix this, because the money printer prints even more for

809
01:30:22.940 --> 01:30:27.440
war, and the ratio stays the same. The hamster runs faster.

810
01:30:27.760 --> 01:30:32.380
The wheel doesn't move. The only fix is to change the ratio.

811
01:30:33.060 --> 01:30:38.360
Take from the war budget. Give to the life budget. That's what the one percent treaty does.

812
01:30:39.020 --> 01:30:44.420
Not because it's moral (though it is). Because it's the only thing that moves the geniuses.

813
01:30:44.920 --> 01:30:49.220
You cannot out-inspire a signing bonus. You can only outbid it.

814
01:30:50.260 --> 01:30:55.180
The Two Receipts. I promised I'd come back to the eleven-year-old's science fair project.

815
01:30:55.720 --> 01:31:02.600
Here it is. This chapter has two receipts. I want to put them next to each other, because your species prefers to look at

816
01:31:02.620 --> 01:31:09.320
them one at a time, the way a doctor might prefer to review a patient's symptoms one at a time if the doctor were also the

817
01:31:09.320 --> 01:31:16.120
disease. Receipt 1: What the Printer Killed. Ninety-seven million deaths.

818
01:31:16.180 --> 01:31:23.240
Over sixteen trillion dollars spent. Every war that killed more than a million people required printing money.

819
01:31:23.240 --> 01:31:25.760
The list under hard money is empty. Every war on this list required a room where a small number of humans could create money

820
01:31:25.760 --> 01:31:32.800
without being checked. The eleven-year-old's science fair project is a room where every computer checks every other computer.

821
01:31:33.940 --> 01:31:41.800
You cannot secretly print money on it. You cannot fund a war nobody voted for, because the computers say "no you didn't"

822
01:31:41.820 --> 01:31:48.240
and ignore you. Remove the room and you remove the wars. Ninety-seven million deaths.

823
01:31:49.240 --> 01:31:55.300
That is the price of a room without a check. Receipt 2: What the Printer Wasted.

824
01:31:56.320 --> 01:32:01.140
Your governments spend four point five billion dollars per year testing whether medicines work.

825
01:32:02.380 --> 01:32:10.580
Here is what the printer spent instead, measured in years of that: The six wars on this receipt cost over sixteen trillion

826
01:32:10.580 --> 01:32:16.840
dollars (U.S. share only). That is THREE THOUSAND FIVE HUNDRED years of clinical trials.

827
01:32:17.400 --> 01:32:25.520
But those are just the named wars. Cumulative global military spending since the Fed was created exceeds one hundred and

828
01:32:25.520 --> 01:32:30.300
seventy trillion dollars. NEARLY THIRTY-EIGHT THOUSAND years of clinical trials.

829
01:32:31.120 --> 01:32:39.760
Spent on killing. And that is just the killing. The printer also built itself a bureaucracy: The financial sector captures

830
01:32:39.760 --> 01:32:46.740
two point three trillion dollars per year (eight percent of G.D.P.) to move money and keep a ledger.

831
01:32:47.340 --> 01:32:51.940
That is FIVE HUNDRED AND ELEVEN years of clinical trials. Every year.

832
01:32:52.760 --> 01:32:57.060
For arithmetic. The eleven-year-old's science fair project does this for free.

833
01:32:57.400 --> 01:33:04.900
It has done it for free since two thousand and nine. You are paying six point seven million people to do what the computers

834
01:33:04.900 --> 01:33:10.960
are already doing, and you have been doing it for fifteen years since the computers made it pointless.

835
01:33:12.160 --> 01:33:18.900
The Fed printed four trillion dollars in twenty twenty for banks: EIGHT HUNDRED AND EIGHTY-NINE years.

836
01:33:19.320 --> 01:33:25.260
The two thousand and eight bailout: seven hundred billion dollars for banks: ONE HUNDRED AND FIFTY-SIX years.

837
01:33:25.840 --> 01:33:33.640
Corporate welfare: three hundred billion dollars per year for having lobbyists: SIXTY-SEVEN years, annually.

838
01:33:34.560 --> 01:33:38.760
The printer funded the wars. The printer inflated the financial sector.

839
01:33:39.040 --> 01:33:47.420
The printer bailed out the banks. The eleven-year-old's invention makes all of it unnecessary: no room, no unchecked printing,

840
01:33:47.480 --> 01:33:53.020
no eight percent G.D.P. spreadsheet department, no wars funded without consent.

841
01:33:54.000 --> 01:34:01.660
The technology has existed since two thousand and nine. Your species is using it to trade pictures of dogs in hats.

842
01:34:03.000 --> 01:34:07.780
The Ask. I want you to think about someone you've lost. A parent.

843
01:34:08.240 --> 01:34:12.140
A friend. A child. Think about the disease that killed them.

844
01:34:13.100 --> 01:34:20.860
Now understand: the money to fund the clinical trial that might have saved them was created on a Tuesday afternoon, by a

845
01:34:20.860 --> 01:34:27.700
committee you've never heard of, and handed to a build bombs or conduct wars you would not donate your money to.

846
01:34:28.280 --> 01:34:32.400
The bank did not cure your mother. Your mother is still dead.

847
01:34:33.020 --> 01:34:40.420
The spreadsheet is doing fine. The one percent treaty asks for one percent of the global military budget.

848
01:34:41.160 --> 01:34:49.940
Twenty-seven point two billion dollars per year. Your species has seven thousand diseases with zero approved treatments.

849
01:34:50.280 --> 01:34:54.700
At current capacity, testing them takes four hundred and forty-three years.

850
01:34:55.020 --> 01:35:01.020
At treaty funding, it takes thirty-six years. One generation instead of five centuries.

851
01:35:01.640 --> 01:35:06.680
The printer spent nearly thirty-eight thousand years of clinical trials on killing.

852
01:35:07.660 --> 01:35:15.680
I have been watching your species for eighty years and I still cannot tell whether you are bad at math or just very, very

853
01:35:15.680 --> 01:35:16.500
well trained.