#143 - Emmanuel Maggiori: The Money Printing Scam: How the Government Loots You

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Emmanuel Maggiori joins me to explain how inflation, incentives, and broken monetary rules quietly reshape behaviour inside an economy. From Argentina’s black markets and capital controls to money printing, MMT, saving vs spending, and institutional credibility, we explore why inflation destroys trust long before it destroys prices — and why countries don’t collapse overnight, but drift into dysfunction as rational people adapt.

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• #161 Lyn Alden: The Silent Financial Collapse
• #162 Mike Green: The Great Financial Reset Has Begun
• #153 Luke Gromen: Navigating the Age of Debt and AI
• #148 Jeff Booth: When AI and Money Collide

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• Transcript

  Peter McCormack

  Hi morning. Manuel, good morning. How you doing? Good? Good. I'm good. I'm good. So you sent me an email. Yeah. You think the UK is making some of the same mistakes that Argentina has made?

  Emmanuel Maggiori

  Well, I don't know if to put it that way, but I've heard a few things that are a bit concerning, you know, that sound a bit too familiar, I would say, is almost like, you know, this is getting a deja vu in some ways. Yeah. Well, you grew

  Peter McCormack

  up in Argentina. I did, yeah. When you look at the UK economy, and you look at the decisions our government is making, does it look like we are sleepwalking into some kind of disaster?

  Emmanuel Maggiori

  I mean, maybe so. I think we may be on that path, but it's early stages, you know, and I think it's, it's early days, there's, there's, there's a chance to stop that, for sure. But you know, before we speak about money, because I think you'll want to speak about money and inflation. About money and inflation, I can tell you something about Argentina that upset me a lot when I was still living there. That kind of even pushed me out of the country. That was the, you know, Argentina became bad for business. Many decisions were made that told people, this isn't a good place to do business, and I think that was very bad for the country. So it's not just inflation. There were lots of things that you know. I'll give you one example. They they evicted an airline out of the airport right after the airline signed a lease for 10 years and built a hanger at the airport or restored a hang so they invest millions into the facilities, to to maintain the planes, and then the government decides to kick them out, right? Because they nationalized the airline, the Argentinian airline. They don't you know, it's terribly unprofitable. So the way to make it competitive is to, let's just kick out other businesses. And the government celebrated this. They posted on Twitter accounts, you know, tweets that would say, like, official Twitter accounts of the government, saying it's only 30 days until we kick them out, you know, with very nasty language. And you see people celebrating this, I told myself, well, who's going to want to do business in Argentina when the rules can change like this, when you can get evicted this way, right? And this anti business sentiment is very tempting in the beginning, right? There's a rhetoric of, let's protect our national industries, let's protect the national airline, but then you can sleepwalk into turning your country into a place where nobody wants to do business, and then what you get is stagnation, right? And there seems to be a little bit of that in the UK, right?

  Peter McCormack

  Malay said the opposite this week. He invited competition into Argentina Yeah. And it was questioned about what impact would that have on Argentinian businesses. And he said, you're thinking about it wrong. We need to think of the Argentinian customer that will bring prices down, because competition brings prices down. That puts more money in the pockets of Argentinians, who can spend elsewhere, which will lead to entrepreneurs creating other businesses, another opportunity.

  Emmanuel Maggiori

  Yeah, I think, look, I've been over the past few years, I've understood, I think, the meaning of economic growth a lot. I've traveled a bit to Eastern Europe or Central Europe. While to give talks and stuff. I know when there's this little airport in the middle of nowhere, right, with Wiz air flights, or Ryan air flights to London, Luton, right? I went to this place in Romania, a little town. You can get there so easily. It's kind of it's connected to the world. They didn't say, we don't want foreign airlines stealing or flights. Right in Argentina, it was illegal to even have low cost airlines until 2018 the government set a floor on the price of flights, and this was to prevent competition against the bus industry like long distance coach travel. So imagine this in 2018 the average British person has been on 1000 holidays, and you know, Benidorm or whatever. You're just so grateful for jet two for Ryanair. But not just that. Ideas travel around. You can bring a professional from another country to give a talk, to do some contracting work, the world becomes connected. So, yes, perhaps that wasn't great for British Airways, but this competition helped the country develop because people can move around, they can go to places, they can bring in people, right? Argentina is kind of locked away from the world, you can't travel. You know, travel is for the super rich. You want to go anywhere in the country, 20 hour bus ride. You know, the country has 3000 miles long, and they're actively preventing the development of, you know, connectivity in the country, just because they want they don't want competition, right? So, I think the it's not just about the prices going down for the locals. It's about the economic opportunities that come with, you know, with having different products, with knowing different things, with traveling to different places,

  Peter McCormack

  when the government in Argentina is hostile to business. Do you believe that is a lack of understanding of economics, or do you think that is corruption?

  Emmanuel Maggiori

  It's probably a mix of the two. But I also think there's a political ideology in Argentina that started in the 1940s that became very dominant in the peronista. Yes, yeah. Yeah. So you can't blame everything on this, but there's a sort of almost uni party, you know, because people who have, or when there was a hiatus from the Peronist government, they kind of did the same, maybe to a lesser extent, or few things differently, but there was still corruption or military dictatorship. It was never, they never got out of that scheme, let's say, but Peronism, famous because there's a music hall where Evita sings, Don't Cry For Me Argentina, even though she never said that. But anyway, there's this whole ideology. I don't know if it's corruption or if it's lack of knowledge about economics, but it's almost as if they had an alternative explanation to everything, right? So inflation is because of evil businesses, or it's greedflation. You know, another thing that was a bit familiar with the last couple of years, I started hearing people talk about greedy supermarkets. Yeah, so greedy supermarkets increasing prices that. I've heard it all before, but when you see this political ideology in Argentina will have an explanation for inflation. We'll say why we should be. Some people call it protectionism. I would say it's more isolationism. It's not even, let's protect an industry that's good and prosperous, it's like, let's disconnect Argentina from the world, and let's just do our own thing. Have our own industries to sell stuff to ourselves. It's all very isolationist, I would say, right? And when you say they're anti business, I think that it's very self serving to the political class, right? Because when you when you protect the bus industry, right, you get lots of votes, potentially, from melding bus drivers.

  Peter McCormack

  When I was in Buenos Aires, I was taken on a walk around the city center, and at one point we came across a street that was being repaved. They were putting down new paving stones. And he said to me, these are relayed every year or every couple of years. I said, what he said, because it keeps people in work. And when you keep people in work, they keep voting

  Emmanuel Maggiori

  for you, right? Yeah. I mean, that sounds very familiar, and I would have to say I would sympathize with that view. I think I feel like, when you speak to anyone from Argentina, there will always be two versions of the same story that are very different. So, you know, I'm inclined to agree with you, but a lot of people won't, you know, and that may be changing now. I. Make people got tired of this alternative explanation. But something I always say about inflation is that in Argentina, it's almost as if every episode of inflation happened for different reason. And it was always very unfortunate. There was something external, a drought. People have blame inflation on a drought, and I compare that to a story of one of my British friends who lost his passport four times in a row within two years, right? And he has a perfect explanation for each time. So one time it was stolen, another time the jeans, like the pocket was a bit shallow, or whatever, there's always and they're all technically correct these explanations, but you think I people don't lose their passport four times in a row, so you're probably doing it wrong. So the alternative explanation of inflation in Argentina is that, yeah, there are triggers. Maybe the drought initiated inflation, but then they have a tendency to print money pretty much automatically. Whenever they find themselves in that situation, right? This is, there's a good academic article on it, and it seems it's been the you know, it happened in Venezuela too. There's a period of bonanza. We expand the government when oil prices are high in Argentina, it happened in early 2000 when soy was exported at very favorable prices, and the government was collecting a lot of tax from that, and they expand the government to pretty much twice the size. So it wasn't, it wasn't a minor expansion of the government, right? And then when this the good times ended. What do you do? Do you scale back on the government? Do you know, do you balance your budget? Not really. What they tend to do is just print money if you want to put it in an informal way.

  Peter McCormack

  And what if your job as a government, if your primary job is to defend your position as a government and defend power. Yeah, you will use those levers of power, one of which is money creation, yeah, and job creation and vote harvesting.

  Emmanuel Maggiori

  This is, you know, the political cycle, and this is why most people, most economists, think that giving a government the power to create money to fund its spending is a bad idea, and it's a political question, you know? And you had Stephanie Kelton on the show, and, you know, she kind of advocates for doing that, let the government have more power of when and how money is created. And I'm say, I mean the Treasury, right to which is, that's how it worked in Argentina, right? So the Treasury would tell the central bank directly, I want a loan. Give me a loan. Right? The central bank would create money and put it in the bank account of the Treasury, right? It's a loan. That's not really a loan, because it's it was always repaid by getting a new loan. But that would be illegal in the UK, right? And in a context of high inflation, the central bank would not want to do this, right? It's not, I'm not going to help you spend more, you know, because, but in Argentina, despite inflation picking up, this continued to happen, right, more and more. And it's, it's, you know, it's, it's political, and it's, it's, I think everybody knows this. There's almost like a movement now to kind of forget about the political risk of letting governments create money, right?

  Peter McCormack

  Well, I think inflation is the most important thing that voters need to understand right now in the UK, when I went out to Argentina, I found that people understood inflation considerably better than people in the UK. I think inflation is one of those things that you hear about on the news. Maybe there's a report that the government has just missed its target of 2% inflation. It's 2.2 or it's beaten hit at 1.8 but you don't really have a need to understand it until it materially affects your life. In Argentina, with inflation so high, you could see your money melting, yeah, it's like icicles, yeah, yes. But in the UK, at 2% it's quite cynical, and so you don't really understand it, especially if your wages are going up, maybe your kid gets a slightly smaller house. You go out to dinner and it's slightly more expensive. It's, it's really, it's kind of like a dark shadow. But I think now in the UK, people are starting to question it, because inflation is really starting to impact people. Lots of people are saying, Now I am getting towards the end of the month. Haven't got any money left. I can't believe the price of a cup of coffee. It cost 15 pound for a stake in a supermarket. A year ago it was 10 pound. Hmm. And so now we're at the stage where people in the UK are starting to ask and question inflation, but in the UK, I think we're dealing with about somewhere between seven to 12% inflation a year. I ignore the CPI in Argentina, and you have lived through 100% inflation? Yeah. Can you try and explain what that means to people who are living through 10% inflation? Yeah? Well, it's, it's pretty chaotic.

  Emmanuel Maggiori

  What I would say the first thing that happens is that things start to the prices increase at different rates, and there's winners and losers. So not everybody loses with inflation or, I mean, probably everybody does, but not at the same rate. So there's a relative of mine who bought a flat as a as an investment, right, a retirement kind of plan and at one point, because, you know, you sign a contract for, like a for a year, at least for a year at a certain price. And it was a student in the in the in the flat, and do you want to how much do you update rent, buy every year, you know, and at one point, she was collecting the equivalent to 30 pounds a month from rent, which is nothing, but she was paying 30 pounds a month for her internet subscription. So imagine it's like Virgin Media. I pay 30 pounds and I own a flat and I collect 30 pounds, right? Doesn't make sense. It doesn't make sense. And it's this chaos. And there's a question, do people become poorer over time or not? Or who becomes poorer? What does this do to economic growth? The last question, but the adjustment is very chaotic, and prices are all over the place, and people don't even remember the price of things anymore. It's like, it's pointless to even store in your head the price of things. You know, you just go to the supermarket and you see what's going on, right? So there's a lot of chaos. It causes lots of issues with anything long term. So if you want to, I mean, mortgages are pretty much non existent in Argentina, they're picking up now. But if you want to buy a house in Argentina, first of all, US dollar cash. And this is how a legit transaction, you don't need to be a drug lord. A legit transaction is you go with a suitcase filled with, you know, maybe $60,000

  Peter McCormack

  I was told a story when I was in Argentina or somebody buying a house, and they said they saved in dollars, and then when they went to do the transaction, the money was taped to their body because they didn't want to have it in a bag, because they didn't want to get it stolen for them, they take the money to their body, and they went to the house, went to meet the person, and they paid in cash, dollars.

  Emmanuel Maggiori

  Yeah, that's the way it's done. I got once I called a friend who was in Argentina, right? He was, Oh, what are you doing? How are you? And he's, oh, I'm waiting in the car because I escorted my other friend to the real estate agency because he didn't want to go alone, because he had $60,000 in a bag, you know? And so I kind of went with him, and now he's inside doing the, you know, the transaction to buy a house, yeah?

  Peter McCormack

  So high inflation doesn't just steal your purchasing power. It causes chaos.

  Emmanuel Maggiori

  It causes a lot of chaos. Yeah, a lot of chaos. And I've seen like I have a relative who has a cushy job for a very good company, let's say, and her salary gets updated every three months, indexed to some good index. She doesn't suffer as much as other people, right? Because every three months, automatically, paycheck goes up. Other people, they work cash in hand jobs, which is very common in Argentina. There are no rules there, you know. And they do increase how much they pay because they have to. But there, you know. You never know when that's going to happen. If you are a solopreneur, you have your own small business. You don't know what to do. You have your clients. You know of 15 years, what are you going to do? How much do you increase your services? Because you don't know their situation. You don't know if they have seen pay raises that match inflation or not, right? But then the other kind of chaos that is absolutely insane is that when people have any spare cash, if you're lucky enough, you need to get rid of it ASAP, right? Because it's it's like having icicles, right? So what do you do when you want to save money in Argentina, and that's something I saw firsthand when I was still living there, right? This desperation to buy US dollars, right? Argentinians are very dependent on the US dollar. There's, there are reasons for this, historical reasons, but the first thing people want to do is this started. I think. In 2007 2008 I was in high school, prices start going up. People notice this, right? The government starts lying about inflation, right? The stats are tampered with. This is well known now, and what they did exactly to kind of falsify the statistics. So you live in a society where everybody accepts that the government is not publishing truthful inflation metrics, which means you also don't trust you know, anyone to even tell you what the inflation is or will be. So any spare cash, I want to get rid of it. So I want to buy US dollars, and that makes inflation worse, right? Because the currency is devalued when everybody wants to get rid of it, and that makes imports more expensive. It kind of compounds the problem. So 2011 I was still living there at the time, the government makes it illegal to buy foreign currency, right? You can buy your dollars. You need an authorization from the tax bureau. So you go to think of HMRC, and based on your income, they allow a certain amount of foreign currency you can buy, but sometime later, they just make it completely illegal for the goal of saving. So unless you actually need to, you need to travel, for example, and you can go and with your tickets and get this authorization, but only seven days before your trip, and they will give you potentially, a limited amount of money that you can buy. Right? I went with a friend to who had an authorization for a trip to Brazil. Right? He was going to going across the border, and we went to the to the bureau de change, you know, to the to the foreign exchange desk, and it was, I would like to tell you the story, because it's just insane. So people are queuing up before it even opens right, like an hour earlier, and people from the office, they walk out the street and tell people this is the situation. The IT system we need to use to run your authorizations, you know, type them in and kind of approve them before we can give you money. It works 10 minutes a day. So the market opens after 10 minutes. It crashes every day, right? So what we're going to do is no operations, no money will be given to anyone. We're going to collect the stack of papers of everybody in the queue right when market opens, we're going to try to approve as many transactions as we can, because we want all the manpower to do that. And then once the systems crash, we're going to start giving you the money, right? And it's quite I was pretty young, so imagine what that does to a person when pretty much everyone says the government's doing something shady like this is obviously, it's been programmed. It can't just randomly crash every day after 10 minutes, right? So he's like, you live in a place where people don't trust the government and they're doing essentially illegal stuff. Or maybe they could say, you know, we do let people exchange money, but there was just an IT issue, right? So we when this starts that they have a stack of paper and there's chaos everywhere, like, it's very interesting to see everybody trying really quickly to approve those transactions. And the stack of paper kind of falls over. There's a mess. And my friend, who was in the middle of the queue kind of ends up at the bottom, and the system crashes before he gets his approval, so he can't get the money. So he was, you know, I'm gonna give up. So he did what most Argentinians did at the time, which is to go to the black market, called the Blue market, right? People called it the blue market, the blue dollar, the blue dollar, and the blue dollar is the exchange rate of the blue dollar is advertised on TV. You open, you know the news channel will say the weather in Buenos Aires tomorrow, and this is the price of the official dollar, and this is the price of the blue dollar. It's a very official, unofficial market. It, I think it also spoke to the corruption that there is in Argentina. Because you walk down the street in Buenos Aires and people are just yelling, change, change. I just go to an office and you just so it's very visible. So if they wanted to stop that market, they could, but it's probably some commissions being paid. I don't know what's going on, but there's a very overt black market, and that's how Argentinians do it. And I moved out of the country in 2014 and sometimes when I when I traveled back, you know, people would tell me, Francis, I bring some cash and I'll just, whenever you're in Argentina, you want to spend money, because you will want to, you know, buy stuff during your trip. Just sell me your foreign currency. I don't care what it is. If it's Euros, it's dollars, it's British pounds, just bring me currency and I'll buy it for the blue rate. Uh, and then I could, you know, I could spend. People were desperate to get a hold of foreign currency. They started traveling to Uruguay to take a ferry to withdraw money from an ATM, right? This became a problem, so the government added a tax to withdraws of cash abroad of 30% then they added another 35% on top. That is, it's kind of a tax on account of your like an advance of your income tax. So at the end of after a year, when you settle your income tax, you'd be able to kind of offset what you paid. But essentially you need to wait a year to get that money back that you paid. So it's like 30% you can't recover it. Another 30% of 35 that it's kind of you're not going to get it back, or inflation is going to eat it away. So the mental gymnastics, you know, in Argentina, there's a I was speaking to my parents the other they actually were still in Argentina, and I wanted to understand a bit more how they felt, you know, about inflation, what they what it did to their daily lives. And my dad says something. He doesn't know anything about economics, but he says something that's literally an economic theory, you know, it's called the shoe leather. Cost is people, they run around so much to do extra things that their shoes get worn out. He was saying we had to do all of this. And your people walking around going to try to get cash from an illegal they call them the caves. You just go to this place and but they don't have any more cash. So then you run to the other one. You know, it's like all of this effort made that benefits no one, right? That's not, we don't waste that energy in the UK, right? You're not running around trying to convert your past. Maybe now there is inflation picking up and stuff, but the idea that your life revolves around, you know, running around to get rid of your cash and so much energies, not yet.

  Unknown Speaker

  But these are warning signs for the UK,

  Peter McCormack

  and you can see the early signs. So anybody who has significant savings in a bank account at the moment is essentially melting away at a much slower rate than maybe was in Argentina. But people aren't keeping large amounts of money in a standard interest bearing account. People are thinking about, where do I put my money for the long term? We also have a government that is increasingly looking at different places to tax. You can I take it from your isa benefit? Okay? So you can't save for the long term as much. Can I take it through your employer? Can I take it from your farm? They're increasingly looking for more places they can take money from at a time where we don't have growth, right? So I feel like Argentina, what happened in Argentina should be a significant warning for voters in this country.

  Unknown Speaker

  Yeah, look, I,

  Emmanuel Maggiori

  I saw a Reddit thread once someone asking, Why are Argentinians so miserable when they're not poorer than other neighboring countries? It was a person who went on a tour of South America and, you know, technically, Bolivia, Peru, they are poor in terms of GDP, but Argentinians seemed more miserable. This was the question this person was asking. And I've noticed that too, people are so upset in Argentina and I think I understood some of this from a book I read a few a few weeks ago, British guy, you may want him on your show called Stephen D King, and what he says is that sometimes so when the pie is growing, which is the case in Bolivia, right? So they may be poor, but there's a typical path of growth that developing countries or emerging countries are going through, right? There's a sense of someone can become richer, and it's not at the expense of someone, you know, becoming poorer and stuff like that, when the pie is shrinking, which has been the case in Argentina since 2010 so the depending on how you look at it, either flat GDP or even negative. So it's a country where the pie is shrinking. Let's think for a second what GDP means, right? Because I think, you know, people use the word GDP a lot, and sometimes we don't understand what it means. It means the amount, or real GDP means the amount of stuff that is produced in an economy. When an economy shrinks, fewer things are being produced, right? So there's literally less stuff. Like, we can think in terms of everything, like doctor's appointments, like coffee, you know, if we aggregate all the activity of in terms of things, it's there are fewer things available, right? So the pie is shrinking, and that causes a lot of misery, because people feel like, I mean, you're literally getting poorer, and if someone gets richer. Where someone needs to get even poorer, right? And I think that was, that was a big problem for the morale, you know, of people in Argentina, yeah,

  Peter McCormack

  well, so I think that's what's happening in the UK. I think the pie is staying about the same size, but its distribution is unfair. So inflation is very good for me. I'm an asset holder. I think it's vile, and I don't want it, but I benefit from inflation, because more of that pie is coming to me, but the cost of that is less of the pie is going to maybe working people or middle class people. And so I think even with the pie stay in the same size in the UK, I think it's making people more miserable, and I think there's an impact on hope and ambition and consideration for opportunity. And I know in Argentina, and your evidence of this, that there was a significant brain drain of young people, because young people felt like, well, this I can never own a house. I can't there's no opportunity. And Argent young Argentinians went to America, to Europe, to Australia. We have the same here now. Bright and ambitious young people are maybe going to America or Dubai and other places apart from the UK. Yeah.

  Emmanuel Maggiori

  So I, you know, most of my friends left the country. A lot of my relatives have left the country. I know someone who they did a high school reunion sort of party, and they did it in London because it was more convenient to everyone. Yeah. So, I mean, in Venezuela, the situation has been a lot worse, but,

  Peter McCormack

  but Argentinians don't really want to leave Argentina, right? There's a very strong family culture. I've been there. I've had the barbecues, yes, what do you call those barbecues? Asado?

  Emmanuel Maggiori

  Yeah, barbecues, yeah. That's very, yeah. I think people are very sad to leave. It depends on the person, right? And how old you were when you left and but I feel like Argentinians leave not because they want to leave or because they don't like the country. They love to travel around. There's lots of natural wonders in Argentina. There's, it is very, I think it's very Italian. I think that thing of the family together and gather. Yeah, that's very important Argentina.

  Unknown Speaker

  So one of my relatives brought

  Emmanuel Maggiori

  a German boyfriend. So it's a relative who moved to Germany. She has a German boyfriend. Brought him to Argentina, and he went to, like, a family gathering. Oh, you're back. Let's, let's have dinner. And this guy, the German guy, he had to leave at one point. He was like, I can't cope with it, with a noise, with the mess people are. So they love those gatherings with 20 people. They're loud. They love that. You know, there's a sense of, like, we get together. This German guy was like, Oh, my God, this is so people are. You know, it's the stereotypes of love. You know, Latinos being very family oriented, very spontaneous. That's, that's all pretty true. And they're very informal. I think that they love that. They love that. And to them, it's sometimes a bit of a shock to move to places where things are a bit more, you know, you don't have spontaneous barbecues. You don't, you

  Peter McCormack

  know, I had a barbecue every evening when I was in Argentina, yeah. How did that go? It was amazing. I mean, the barbecues are amazing. The food I had, meats that I didn't have, had, never had before. What's that been? That's the part of the intestine of the Yeah, the white, it's like a white meat, yeah, incredible. It's literally the intestine, yeah? But there's a name for it. I can't remember. We call it chinchuli, yeah. It's, like, a very odd name. So good, yeah. But that family nucleus was there, but it was explained to me. The family nucleus, it was attacked by inflation. I mean, we see it here. So comments just brought this up. Who's leaving Britain? Look at the two big spikes there, 16 to 24 and 25 to 34

  Unknown Speaker

  Yeah, yeah. And I think,

  Emmanuel Maggiori

  yeah, the Argentinian situation was very similar. I think that's the age gap. I mean, I left when I was I was 21 I was pretty young. I was I was 21 when I left, 22 when I arrived. It was a very interesting birthday.

  Peter McCormack

  How old were you when you started thinking about leaving?

  Emmanuel Maggiori

  I think I was probably 1718,

  Peter McCormack

  because I think if people haven't done it yet, there's a lot yeah on their mind,

  Emmanuel Maggiori

  yeah, that can tell you something. Look, I had been lucky that I'd been abroad a couple of times when I was younger. I think I was 14 when I went to France, because my mom had a friend who lived in France, and I just stayed at her place. It was very uncommon for people in Argentina to be able to travel, you know, we had free accommodation. I came to London at the time, for the first time, and I saw that there was a different kind of life here, you know. And it was. Small things. So it wasn't about trains running on time and everything, because sometimes Argentinians think at Europe is like everything runs perfectly. It was more about people being connected, people being from different places. When I when I arrived in London and I saw people from everywhere, and I remember just a guy singing on the street randomly. And to me, that was like, why is this guy singing? And nobody, even you know, flinched or anything. And to me, that was fascinating. And I was lucky to be able to see that. And I think when I you know, after that trip, I kind of kept thinking, you know, Argentina will live in a different way. But I think I started considering leaving Argentina when there was this government that did all these odd things, like, as I said, expropriating businesses and stuff. Because my feeling was it wasn't even just about inflation, which it didn't. It didn't seem like a good thing, right? But I got the impression that they were making lots of very odd decisions. And I can share another decision that was, to me, very odd. And I thought, What's going on here? After, after another attempt to expropriate some land by the government. They so essentially this, I'm going to keep the story short, of the people who were whose land was about to be expropriated, perhaps it was a good idea to expropriate the land, I don't know. But they issued, they had got a judge to issue an injunction, right? They essentially said, You can't touch our land until this is settled in a court of law. Pretty much expected, right? So the President gets very angry. No, she had tried to do lots of things, and judges stop her. So she tries to reform the justice system. So I see an erosion of institutions, right, which I think we need to be very careful about in the UK. Which is happening? I mean, hopefully not, but, yeah, what it is happening? Yeah, like, what?

  Peter McCormack

  Like Charles is just a perfect example. Yeah.

  Emmanuel Maggiori

  So as a cautionary tale, in Argentina, there were attempts to reform the justice system, and one of them was injunctions. No longer possible to issue an injunction against the government, except maybe in some circumstances, and even when you're able to do that, it will last six months, the protection, but no court case is settled in six months. So essentially, again, this is very bad for business because it means I don't have a protection against the government if you're doing something unfair. But there was another part of this law that was pretty insane, which said the following, the committee that appoints judges. So this committee will now be elected in the general election. So you literally have people who will be campaigning with political parties, right? So you will elect, let's say, a conservative member of this committee, or a, you know, a labor member of the committee. So it's essentially a political election of justice, right, which violates, if you want the independence of the justice system, right? But you say, of course. But again, Argentina, there's always two narratives. All the people who say, This doesn't make any sense. And then you got, you have all these other people who build all these or create all these stories of why that's a good way to do things, why we shouldn't be looking at what Europeans do, what Americans do. We need to do it our own way, you know. And and they had a lot of support, and the law passed, and then parts of it were blocked in by judges themselves, so that this is unconstitutional, right? Which it came to an advantage to have a written constitution, which there isn't in the in the UK, right? So I saw this assault of institutions that I thought, this is very bad for business, right, for economic growth. Because who wants to do business in this place? Would I want to launch a business in Argentina where, you know, so you were compelled to leave. I was compelled to leave because I felt, you know, I think I felt like an outcast, because I thought so many people around me think that all of this is

  Peter McCormack

  right, but this is happening here in the UK as well.

  Emmanuel Maggiori

  I mean, maybe it's starting to well, I'm trying to be positive, yeah,

  Peter McCormack

  but yes, starting to be happening. Happen, which is why statism is such a dangerous position to hold, which I've held myself, personally been guilty of. Because when you are revolting against the government, you're not just revolting against the MPs, but you're revolting against the people who will vote for them and defend the decisions they're making. And so we're seeing this in the UK.

  Emmanuel Maggiori

  Yeah, I feel like I want to remind the British people of how this country has a history of solid institutions, and I don't want them to be eroded. I'll just give you one. Good example, there's lots of countries in the world that they hold, they store their gold reserves at the Bank of England, right? Venezuela, does it? I think Argentina, too.

  Peter McCormack

  Now, yeah, Venezuela, and we refuse to give it back to the Maduro. Okay, yeah, so Maduro tried to reclaim the gold, and we refuse to get back.

  Emmanuel Maggiori

  But that means that there's a lot of trust in the in the Bank of England and the institution of the Bank of England. Because, would you store your gold reserves in Argentina? Probably not. Because you will, you know, one day they will change the rules and they will keep it. That's I would be afraid to keep the, you know, my gold reserves in Argentina. And that's that tells me that people trust this country. And look, there's another thing that

  Unknown Speaker

  I've been thinking a lot about, you know, the,

  Emmanuel Maggiori

  you know, there was an episode of inflation in the 80s, late 70s, 870s Thatcher, yeah. So this is also in the US. It was in just the UK. There were actually a few developed countries where inflation picked up. And one of the most, let's say, accepted theories of why inflation wouldn't go down. We're talking 14% I think again, there are different explanations, but one of the most accepted ones, let's say the neoclassical explanation, is that there weren't clear rules of how inflation would be managed. So people thought there would be discretionary actions that were taken by the Central Bank, let's say, a little bit of surprise inflation when unemployment goes up, to try to inject some money into the economy and create more employment, at least for a little at least for a little while. And but what this told people was that when you can do whatever you want, like when there's discretion over monetary policy. There's an inflationary bias. Everybody knows the actions that could be taken. They're not going to try to reduce prices, they're going to try to increase prices. So this called self fulfilling inflation, right? Because people expected that discretion. It couldn't go either way. It would probably go the inflation way. Right? Disinflation took place when there were clear cut rules. This is how we're going to operate, right? This is inflation goes up, we increase interest rates. So there were very clear rules in the US. There was a famous Paul Volcker, disinflation, right? Very tough. So the guy's like, you can kick and scream, and yes, there will be unemployment, but this is the rule that we will follow, right? And it seems that clear rules help tame inflation, because people know what to expect, but you need to be credible. It needs to be unwavering rules, right? What I see, which in Argentina that until recently, that didn't exist. And even now, people think, you know, how long will the rules last? But anyway, in the UK, I heard Liz truss, I think she was on this chair, yep, kind of complaining about central bank independence. And in the UK, and I thought that was a little bit dangerous, a bit way because, when they said it should kind of be accountable to the Treasury, right, the central bank and I think that's kind of dangerous, right? Because, if I mean maybe Liz trust that she thinks that she would make good use of this, the power to intervene the central bank. But do you trust the if we let Rachel Reeves tell the central bank I want a loan and pay this interest rate for it, give it to me, I wouldn't trust Rachel Reeves with a piggy bank. Okay, yeah, that's how it worked. In Argentina, the Treasury would tell the central bank I want there's an Excel spreadsheet where you can literally see how much money was created directly and put in the bank account of the of the, you know, in the in the US is Donald Trump saying he wants to fire Jerome Powell, and because his interest rate policy, he should lower interest rates. So there's this idea, and I'm hoping this doesn't become very popular, that central bank independence is not good, that the government should be allowed to intervene the central bank more. And I think what's dangerous is that the moment you allow some discretion, there's this inflationary bias. People believe that discretion will you will be used in a chaotic way, and it will produce inflation, right? And people start increasing prices preemptively. And you know, chaos starts even before the rules are implemented or the change regime is implemented. Just to explain what happened the other way around in the disinflation the 20s in Eastern Europe, Hungary, Germany, Poland, you know, there was hyperinflation that stopped abruptly. Austria, also a good example inflation. If you look at the prices, it's like the curves going up like that, and then it just collapses immediately. The inflation stopped when the new. Rules to have, let's say, more sound money when they were announced, not when they were implemented. And there's a very good paper on this. So the moment people saw that there would be a regime change, even if not right away, prices stopped increasing. So there's this question of the credibility of the rules that are, you know, used. And there's a, there's a very good paper by Thomas Sargent, and he quotes experiences of people, you know, saying what happened at that time. And it was so similar to what Malay has been doing. If I read a passage from that paper to you where it says, We, you know, government civil servants, it was slashed in like, I don't know how many public servants were laid off, you know, a lot of it sounded like, you know, getting your budget in order, you know, and making very tough decisions. And that brought inflation down at that time, you know.

  Peter McCormack

  And I think the chaos is already here in the UK. Do you think so? Yes, but not everyone's realized, okay, so we're seeing significant numbers of businesses start to close down, seeing employment, unemployment rates go up and for every business that is closing down, I don't know how many are there that evening looking at their books and going, can we get through next month? Can we get through the next three months? Maybe we can get to the summer, or maybe we can re mortgage the house at the same time, others are just leaving the country. We've seen young people, but we use it losing 45 millionaires a day. And I think there's a myth that millionaires are anti tax. I think they are anti high tax with no benefit to the country. I know lots of rich people who would happily stay in the UK, we are seeing chaotic budgets. We are seeing many we've had so many U turns from this government that I think the government is at the point now where they are struggling to maintain and control the debt, and they're not willing to change the rules of which they operate, which is why we've got ever increasing attacks on businesses. That's why we've got ever changing increase in bureaucracy. We've got infringements on our civil liberties. And so I think the chaos is already here, sadly, because of the way the government is rather than try and fix this, which would be painful, they're going for the least painful route, which is just a little bit more heroin, right? Don't want to get off drug. Yeah.

  Emmanuel Maggiori

  I mean, I've heard, you know, people have asked me, Do we need to hit rock bottom like Argentina in order to make a change, right? Or can that be done before that happens?

  Peter McCormack

  Right? It's like an but it is like an addiction. Yeah, it's much easier just every day just to carry on with your addiction.

  Emmanuel Maggiori

  Yeah, I heard someone say, once you know how it's very asymmetrical. So when you grow the government, that's easy. Shrinking the government. Not easy, right?

  Peter McCormack

  Not if your primary goal is to maintain power, yeah.

  Emmanuel Maggiori

  Look, that's what's was so surprising, of what the campaign led by Malay in Argentina, right? Because he said something that people hadn't heard before in Argentina, and I think maybe in the world, which was, this is going to be tough. I'm not going to sugarcoat it, this is going to be awful, and there needs to be an adjustment, as he called it. And yeah, it's going to be horrible, but after a while it's going to get better, you know, and Argentina needs a long time before it becomes a prosperous country whenever there was an alternative, let's say in Argentina, to the Peronist regime. It was never like that. It was people saying, we can, we can implement gradual policies, trim things a little bit here and there. This is boiling the frog. Yes, pretty much, and it didn't work. So there was a from 2015 to 2019 there was an alternative. So after 12 years of the government of the Kirchner family, there was people elected, let's say an alternative. It was the government of Macri at the time. And I think he was a bit of a wuss in the way he acted, to be honest, if you want to put it bluntly, he started publishing real statistics of inflation. So he did a few things that you know were improvements compared to what and he. Also made it. He opened up the currency exchange market. So there were a few reforms in the good direction, but then he didn't do the things that were probably necessary to fix the issue, and inflation kept going up. Money printing did not stop at that time. In 2018 I think when it became clear that he was going to lose he was going to lose the election, like the re election, that there was a drop of 30% in the peso in foreign exchange markets, because people thought the old regime was going to come back. And it did right, and the new regime came back. And, I mean, people, I think, thought at the time, it's a lesser of two evils. These people, we know they're not good, but the alternative was even worse. So let's just go back to the thing that doesn't quite work, but we'll be fine. And, you know, they kind of, they gave up, I think, right? And, but things got so bad afterward, right? So the inflation and I left the country at that point, and inflation went to 100% and 200% right?

  Unknown Speaker

  Closed down the banks.

  Peter McCormack

  Which banks? When was the carolita? No, that was in 2001

  Unknown Speaker

  Oh, that was earlier.

  Peter McCormack

  That was early. That's when they just stole everyone's money. Pretty. Close down the bank said, we're having your money.

  Emmanuel Maggiori

  That was very dramatic. Was very dramatic. I remember seeing, watching it on TV, and seeing the protests. And I remember vividly I was, I don't know how old I was, like, nine. Yeah, I remember a person throwing a sink like, you know, from the balcony. They probably did some renovation, and they had like, a spare sink, like a tap, and the sink just threw it on the people, right? And it didn't hit anyone. But, and I'm a child watching this, and I know there's been more drama in other places in the world. It's like, maybe, you know, not as bad as other types of upheavals, but it is, you know, when you were challenged, and my family was very affected by the crisis in 2001 I have relatives who open a business. They borrowed money for the business, all US dollar denominated, and then all of a sudden, your debt is multiplied by multiple times because it's converted to Pesos at a certain rate. That was very unfavorable. It was absolute chaos. Yeah, it was. There were, I don't know how many presidents. Within a span of a few weeks, because they kept resigning. You know, it was, like, it was very recent. That was 2000 right? Okay, okay, so, yeah.

  Peter McCormack

  I mean, look, I trust Argentinians as much as anyone, on an understanding of inflation, not just a definition, but the lived experience of inflation, what it does to a country, what it does to the people, to hope. But you've been here in the UK for a while now. Your spidey senses regarding inflation have been

  Emmanuel Maggiori

  I've been living abroad for what is it 1112, years now, and I feel like, is it deja vu feeling in some way? So what I would tell you, the deja vu for me is in terms of institutions. Yes, that's the deja vu with inflation. Specifically, what happened in 2001 I think there are different explanations of why that happened, and I think it's probably half and half. There's probably some truth to a supply issue, and there's also some truth to the overdoing QE kind of thing, right? Overdoing quantitative easing. So the latter part sounds more familiar to me. The first one we could say, okay, one off energy supply. My biggest fear is the narrative of gridflation. Gridflation. This is supermarkets. We need, you know, price controls. That was tried in Argentina. It never worked. It leads to empty shell. So rent controls, rent controls, which were just lifted and the supply of property went up by a ridiculous amount, something like 150%

  Unknown Speaker

  I couldn't believe that. So it's the

  Emmanuel Maggiori

  institutional rot. The institutional rot, it's it's very deep. It goes very deep in Argentina.

  Peter McCormack

  But that is a strong signal here, when you see the institutional rot here, yes, that's a strong signal.

  Emmanuel Maggiori

  That is my fear. And I'm afraid people may be complacent about the role that institutions have had in making this country rich, and they're going to forget why that's important. I was at a house party a few weeks ago, a friend's birthday, and there's this guy, and I've never met, and we start talking, and he tells me that, out of the blue house, you know, Angela Rayner, there was this issue with the tax she didn't pay. Get the trough, yeah. So she said he, this guy said, just out of the blue, he was telling me, You know what happened with Angela Rayner, poor woman. It was only 40k that she owed, and the only reason she was scrutinized is because she's a woman. So my feeling, I don't, I don't, I don't want to make a stick. Even specifically on what happened with Angela Rayner or the attacks, but this attitude of trying to excuse corruption, greed or some sort of wrongdoing, you know, because he sympathize, sympathizes with the party, right? Because if it was, I think if it was a Tory minister, he would definitely denounce it, regardless of the gender of the person, but it's, you know, we're protecting potentially some sort of wrongdoing, because it's the party that we like, and it's my team, it's my team, and they're the good ones, because it's, you know, the labor is the one who wants to do stuff for people, right?

  Peter McCormack

  And who wants to be labeled a misogynist, right?

  Emmanuel Maggiori

  Yeah, yeah. Well, now this guy clearly, and he was excusing, and excusing Angela Rayner and I smelled it was a bit familiar from what in Argentina. Corruption runs very deep to a ridiculous level. I think they even need to make Netflix shows on this. Do you know the story of the nuns in this convent? And so the I don't remember the year there is in the middle of the night these people, there's a convent next this house, and people who live in the house, they call the police because the guy jumped over the fence into the backyard of the convent. There are three nuns living there, and they're what's going on like, and the guy is bringing in bags into the backyard of the convent. So they call the police, the police arrive, and they detain the guy, and he has $8 million in cash wrapped in bank of Argentina, kind of official envelopes that only the bank has access to or something like that, and he has a gun illegally obtained, so they detain the guy. And he is a he works for the ministry of the Department of Public Works. He's not a very senior official, but he's a bit like, kind of, let's say, mid level ranking official and a big corruption scandal, and you would think that the entire government would collapse. It didn't the guy, when he was being questioned, he said it was related to the president at the time, it had to do with money that was going to go to the hands of the president, who is now in jail. Right? So the President is has been convicted of corruption, and she's in house arrest at the moment, but at that time, and there's a saying in Argentina, very sad, which is, well, they do steal from us, but they do stuff. They or they get stuff done.

  Unknown Speaker

  I know you can Laugh all you want,

  Peter McCormack

  but it's, yeah. It's not a haha laugh. It's a like, Fuck sake.

  Emmanuel Maggiori

  Yeah, yeah. I think the institutional rod goes so deep that people don't believe that it is conceivable to have a politician who isn't corrupt. So it's a question of, let's get the least corrupt one right. And corruption is pretty overt. I think that the President's gardener owned a helicopter and a transportation company, the guy who was trimming the hedges around her house, right? So, yeah, lots of very shady stuff going on, and people kind of turn a blind eye to that because they don't see an alternative. And corruption seems to be at every level. Now, there's a big scandal with a Football Association, you know, going on. So it's private thing, but there's still a lot of, apparently, a lot of money got missing, and the director got very rich, and I think, yeah, and I don't think we have that level of corruption in the UK. Or I want to believe, do you

  Peter McCormack

  think maybe the case of that in Argentina is that everybody has to find a way to survive. So I remember I went to a restaurant and they gave me my bill, but they also gave me another prize for cash, dollars, right? Which subverts the system, which doesn't work for them, yeah, and so that you know, if you've got zero trust in the system, because everybody is corrupt within it, why should you participate? Yeah, and so it's, it's almost like the entirety of Argentina became a kind of gray market. And so I know this is starting to happen here in the UK, people are trying to find ways to do things when they run their business in cash, because otherwise their business will fail, right? So it becomes part of, I guess, different levels of subvert in the system and corruption become normalized, because if they're doing it, why can't I do it? And now I'm doing it, I'll excuse them.

  Emmanuel Maggiori

  Yeah. But even beside corruption, this thing of making it difficult to do business, right, it's also probably not good for the country in the long term. I remember when corporation tax. Tax was increased. I remember Rishi Sunak, he said something like, well, but it's below average, right? And I was like, Well, isn't that a good thing, that it's below average, so do you want to increase it to have an average, you know? And I think, you know, it's very tempting to increase taxes, and because, I mean, there's a whole narrative of why that's a good thing, but in the long term, I think you know, you can, you can see why it's it's no longer an appealing place to do business.

  Peter McCormack

  Our country is openly hostile to entrepreneurs. It's openly hostile to entrepreneurs. It's attacked medium sized, small, medium sized businesses. Now for I mean, I can't put a time scale on it, but I would say over the last decade, it's openly hostile. And if you're openly hostile to entrepreneurs, you're openly hostile to wealth creation, you're open hostile to job creation, and you're openly hostile to your own country, yeah.

  Emmanuel Maggiori

  And maybe people have forgotten how economic growth is accomplished.

  Peter McCormack

  I don't think some people know. They don't know Yeah. I just don't think they know Yeah. And this is a problem with the party like the Labor Party, is that they are a party made up of student politicians, lawyers, charity workers and union members. They're not a party made up of people who sat there on a Friday night looking at their take and singing, how do I make payroll next week? How do I drive growth? They don't understand wealth creation. They only understand wealth extraction. They don't understand the consequences of this. That's why none of them should be anywhere near government.

  Emmanuel Maggiori

  So one of my friends, I'm quoting someone here, he says that labor is the party of the public service. So it's not the party of the working people, it's the party of the public service.

  Peter McCormack

  They weren't once the party of the working people, the working class. They're now the party of the non working class.

  Emmanuel Maggiori

  Yeah, yeah. And that was, you know, in Argentina, that was pretty much the case. So what happened during the Kirchner administration was that the government grew enormously, right? And even senior officials were paid enormous salaries, right? That's actually one of the ways in which Malay cut down government spending was reducing the salaries of people at the top of managers. They were even exposed that because people didn't know you had all these people at the tax Bureau making, let's say, the equivalent to 10,000 pounds a month after tax, which would be enormous in the UK, in Argentina, that's ridiculous, right? All these people making all that money, right? And the public service became very big, right? You have all these, all these ministries. They did some crazy things. There was they handed laptops to every student in the country for free. So though, and teachers, so I think there were about 10 million, if I remember correctly, or a few million laptops that were just handed out to people, right?

  Peter McCormack

  Here's a laptop vote for me. Sorry, here's a laptop vote for me.

  Emmanuel Maggiori

  Yeah, well, I mean, that's, that's how I see it. Obviously, you have the other parallel reality where that's good for education. The program was called ConnectED equality, right? So you can see the appeal to that, you know, social justice, social justice. And, yeah, they, you know, their public service grew a lot.

  Peter McCormack

  We should talk about MMT yes and why it's a scam. Okay, you have a book coming out. I wrote an article where I called it modern Marxist theory. Yeah, was a bit provocative, yeah. Stephanie Kelton wrote a book called The deficit myth. I think she's a scammer, okay, personally, yeah, and I think she's economically illiterate, or she's literate in a version of economics which suits government money creation, but ultimately makes the rich and the poor. Your book is to those

  Unknown Speaker

  I hope you say the anti go to her book, yes,

  Peter McCormack

  but MMT is justified, particularly by the socialists or the social justice warriors of the country, the people from the left. I'm pretty sure Zack Polanski will be a big proponent of MMT. Do you want to she's

  Emmanuel Maggiori

  already been like, he's spoken. He's definitely learned things from MMT. I read someone say that he's been learning MMC. So he didn't use the words MMT himself, but he clearly kind of endorsed, well, he talks about money multipliers as well. Yes, that's very Keynesian. Yeah, yeah, no. I mean, he's but he said the public debt was something like, it's just, I don't remember the words, if it's a number, or it's just made up, or it's just a concept. He said something in the lines of that,

  Peter McCormack

  yeah, he said something that, if he doesn't understand it, he doesn't understand why people may maybe were stopped buying our bonds. He doesn't understand what it would do for the value of our currency. I mean. Think he is a dangerous individual, dangerous because he's stupid, but we should talk about MMT, because there are people out there here about this. Yeah, hear about magical ideas that the government can just create money, and when they can create money, they can create jobs, and that multiplier. So it's really important, yeah,

  Emmanuel Maggiori

  I think MMT is a lie. Okay, personally, but can you explain to the listeners and the watchers and the viewers what MMT proposes? Yeah, so, but in simple terms, in very simple terms, MMT, I think it says pretty much three different things. But the first thing is that the government doesn't have to worry so much about money, right? So debt is not quite the problem we think it is like a burden to future generations and stuff like that. Saying things like the country is broke, it doesn't make sense. All of this is because countries like the UK or the US, they have their own currency. So if we change the rules, because the current rules wouldn't allow it, but if we change the rules and let the Treasury take control of central bank and let's say, wipe out the debt, we could literally just at the click of a button, say we're going to create x billion pounds to pay off the bonds that the government owes, right? That is technically possible, so we shouldn't worry so much about money. And all this narrative of the there's no not enough money to pay for this or that, or debt is a burden. All of that is a bit of a mirage, that's what they say. But again, all of this only makes sense if there's something you can do with that information, and this is perhaps the most important part of MMT that says that if we loosen the purse strings a little, we let the government spend in a different way, create money in a different way. We can achieve things that we can't right now. We can virtually eliminate unemployment and poverty, and poverty, we can eliminate poverty, we can eliminate unemployment, we can transition to zero carbon emissions, all of these things. We can all be millionaires. We could all be million. I mean, I mean, maybe I don't know whether we have to say about that, but this is a free lunch. So what they're selling to you as a free lunch, because they're saying there's something that is unutilized, there's an opportunity, low hanging fruit that is not being used. And very importantly, there's a trick to not cause inflation by doing this. Because otherwise, you know, people would argue, this is the Argentinian recipe, but no MMT says government can print money to do things like eliminate unemployment without causing inflation, right? So that would be from a point of view of policy prescriptions, what MMT says, right? So let's relax about money, right? There are quite a few issues with MMT, but let me tell you something that makes MMT pretty dangerous, because I think they're very sly in the way they communicate

  Peter McCormack

  and hold on, there's an implication there that they know they're wrong, and they're promoting something they know is wrong. It makes sense. Well, if you say they're sly, yes, they'll have to tell a lie

  Emmanuel Maggiori

  to convince Stephanie Kelton, for example, she says a literal lie in her book that she has been, she's been, she's been made aware of. So in addition to all this, mm tears, often analyze institutions. They say this is how the Bank of England works. This is how the Fed works. And many of the conclusions are wrong because they've analyzed institutions incorrectly. They believe they have the best analysis out there. But for instance, they made a really stupid mistake. And Stephanie Hilton made this mistake in a paper in 1998 I think, where she said that tax receipts that the government collects in the US disappear. The money disappears. It is destroyed. So it's impossible to actually use taxpayers money to fund government spending. It's physically impossible, because the money disappears. Well, the money does not disappear. It's just recorded in a bank account with a different name. She just got confused. People have told her you're wrong. There was a paper that was published saying you're wrong because of this, and she replied, she published a response to that was completely incorrect. There would you know it was not a good response. So she's been made aware of that mistake, and in her book The deficit myth, she literally echoes that, and she repeats the same mistake years, 20 years later, after so they do when I say they're sly, I think,

  Peter McCormack

  well, hold on incentives here. Does does the argument destroy her argument? And if so, does it destroy her place in society as seening as the most. Prominent, or one of the most prominent people promoting MMT, which gets her invites on podcasts, which means she sells books, which means she has an income.

  Emmanuel Maggiori

  I think if we want to give them the benefit of the doubt, a lot of people don't even do that. But if you want to give them a benefit of the doubt, you can divide MMT into different compartments. Okay, some of them, you can discard them, like all of their analysis of current institutions, you can just say, let's let the government print money. Let's assume that's possible, instead of analyzing what the current situation is. So just you cross out that box of institutions. So we do a hypothetical exercise. So that's and I do that in my book, so I give MMT the benefit of the doubt. Let's say, Okay, let's accept. We let the government print money. Can we eliminate unemployment? How do you explain inflation? How do we explain how you're not going to cause inflation by doing that? Is your theory of inflation? Good, because the onus is on them. You know. How are you going to not turn this into Argentina? They have an explanation for it, so let's scrutinize that explanation.

  Peter McCormack

  So I think we can. And the explanation is, what? How do they not drive inflation?

  Emmanuel Maggiori

  It's fascinating. The explanation is the following, there are lots of idle resources in the economy. There's a lot of productive capacity that is unused, right? And if you print money to reactivate that part of the economy, you have more production of things, right? So you have more money chasing more goods, so inflation does not occur.

  Peter McCormack

  So they're saying that it's not inflation, it is the mechanics of supply and demand, yes, which raises the prices.

  Emmanuel Maggiori

  And this is technically true. So if you increase the economic capacity of a country, right? And at the same time you increase the amount of money, and if you write down the equation with a couple of assumptions, you will see that, yeah, it you don't expect prices to go up when there's more supply at the same time that there's more demand, right? So this is technically true, what they say, but they make a few mistakes in the analysis. So first of all, they seem to overestimate the actual amount of slack, as they call it, that exists in the economy. There's an MMT er who recently said, in Europe, there's 25% slack. That seems crazy to me. Do you believe that Europe could produce 25% more stuff, right? And I think sometimes they just look at unemployment as a sign of slack. To them, any level of unemployment beyond, let's say, a minimal one 2% frictional unemployment, anything above that is a sign of total idleness. But they forget that economic production also requires other things. If the government will build a hospital, it will need workers, let's say unemployed workers. That's more, you know, idle resources. But what about the materials? You know, you would have not to compete with a private sector for the same material. So you would have to have piles of concrete sitting idle. You know? The other thing that MMT doesn't do is explain why there is so much idleness in the economy, right? And even how, in practice, they will only mobilize idle resources and nothing else, right? So it's pretty bad in theory. It's pretty bad in practice to trust the government that I'll let you print money and you will carefully only be able to pinpoint things that are magically unused, machines that are turned off, unemployed people that will never get a job. They have no place in the private sector, because otherwise you're competing against the private sector for the same jobs, right? So it's almost like there needs to be a whole parallel unused economy where they can go and grab those resources. Now another problem that MMT has is that, theoretically, you can do this as a one off thing. Let's say I print this much money. Let's assume that increases economic production right at the next period of time, if that level of production has been restored, and it continues at that level. That's okay. But mm, tears. Say that you need to constantly keep doing that, right? And that doesn't work. You know, if you do it in a one off way, let's say because there was some sort of recession, and you inject a bit of money in the economy, and that's it. But if you're constantly, every month, printing more and more money, then it cannot production, you can't just, you know, if you exhausted this alleged 25% of idle resources, there's not another, what do you do afterward? There's not another 25% that's gonna pop out of the blue, right? And then they start contradicting themselves. You know, some people, some men, tears, say that. They say crazy things. I look at one of them, if you let inflation pick up, you let inflation go up without any let's say monetary policy, or interest rates or whatever you do to try to quench inflation, this will motivate producers to invest in increasing capacity. Let's say invest in new. Machines, because they see demand going up. People want to pay more for my stuff, so I will just invest in new machines, and that will increase the pie. So we'll create economic growth. So inflation will run its course naturally, because of, I mean,

  Peter McCormack

  it's so they think so. They believe that inflation will drive productivity.

  Unknown Speaker

  Yes, some of them, some of them say inflation will

  Emmanuel Maggiori

  there is a tiny bit of truth to something they say. Because what they and I will tell you why they're sly, because they often use something that is at least partially true. So there is even in mainstream economics, people agree that when you have high unemployment, that fosters more unemployment, because people, they lose their skills, they get demotivated, right? So it's not good to be in a in a state of unemployment, right? So if you try to reduce that unemployment, then you avoid that path of kind of decline, of more and more self fulfilling kind of unemployment, right? So to them say, let's print money to reduce unemployment, and that will stop this path of increased unemployment. So it kind of Yeah, so they're saying it will foster productivity, but it hasn't worked in Argentina, right? So they know we haven't seen investment machines the economic capacity of the economy grow.

  Peter McCormack

  I think there's two other things that particularly concern me with the MMT crowd.

  Unknown Speaker

  The primary one is the

  Peter McCormack

  belief and faith that politicians act altruistically for the net good of the country, when I think it's provably right, they act in the best interest of the party. Every politician's job is to win power and defend power, and if we give them free rein to create money, they will, of course, direct that money towards the unions, the special interest and the voters who will re elect them. So that's the first thing that you cannot trust government to direct that money in the correct way. Should we deal with that one first?

  Emmanuel Maggiori

  Yeah, yeah. I think one of the main criticism of M and T is effectively how naive it is in terms of the political economy, right? Look, I there's an example in my book that because, MMT, they want to give the central government the power to do all this, but not the local government. So why don't we actually let the Southwark council or Westminster Council will also create money or NGOs, right? Everybody knows. It has been known for a long time that when you give someone the power to create money, they may not use it very wisely, right? And politicians, they want to get reelected, like this is very old, like the fact that we're going back to this discussion, right? The reason why we've moved to central bank independence, you know, hopefully that will persist, but it is because we don't trust politicians to do that, right? This is very old, and let me tell you why I said MMT is kind of Sly, because sometimes they say things that are technically true but economically ridiculous or even false. So MMT basically says, If we let the government print money, it can't run out of money. Everybody knows this, and their mother, everybody knows nobody has ever questioned the fact that if you let someone create money, they can run out of money, right? The question has always been, is this a good idea? Most people think it's not right. I actually, I did a sort of poll, I think on LinkedIn, because I think I asked money. I asked people, if we let the government create money as much as it wants, can it run out of money? And people just immediately said, That's ridiculous. It will cause inflation. It will cause a mess. Nobody said, Oh, wow. This is, I hadn't thought of this. This is the sort of nugget of wisdom, of newly found wisdom, that actually, the government can be broke and stuff, you know. Well, you

  Peter McCormack

  can't run out of money, technically, but it can run out of good money, useful money.

  Emmanuel Maggiori

  Yeah, and that's why, when I say they're sly, is because they often say something is technically true and economically doesn't make any sense. I'll give you another example from Stephanie Kelton on your show, she said something like government, the government can be bankrupt, can be broke. Now let's unfold that a little bit, because technically, the government can be broken in terms of it can no will always give you the amount of money that it borrowed from you, if it's allowed to create money. That is a fact. But now domestically, only domestic. And if you have your own currency now, that could still be a default on their payment economically, because the money could be worth less than what it was before, right? So you can pay your debt technically and not economically. And let's, let's do a phenomenal game. It's another so let's do this thought experiment. I Peter, I borrowed money from you 10 years ago, you gave me a million Argentinian pesos, right? And we agreed that I was going to pay you back. Now, 10 years later, 10 years later, 1.5 million Argentinian pesos, and let's say I technically pay my debt to you, right? What? Economically, I'm still defaulting on my payment, because what you can do 1.5 is a lot less than what you had in mind.

  Peter McCormack

  Yes, just for people listening, you're playing. You're paying back the nominal plus interest. Nominal, exactly my purchasing power is a lot lower.

  Emmanuel Maggiori

  Exactly your purchasing power is a lot lower. So a country can be broke if it can fulfill its promise that once it pays the debt to people who lend the money to the government, they will be able to do with that money what they thought they could do, right? So, if a pensioner buys a government bond, and they think, in 20 years, I will use this bond to, you know, to buy this and that, and then they can buy that, you're essentially economically, you are defrauding these people. You're defaulting on your debt, not technically. I just give you your money back. And what mm tears do. It's just a bad deal. It's a bad deal. And mm tears. The way they're slight is that they always say things that are technically true, so people feel like they've been lied to. I saw this on Twitter. A lot people say they believe that my government has been lying when they said they didn't have money. Because we have our own currency. We can create this is ridiculous. Yeah, technically, they can. They can pay whatever they want if they're allowed to create money that this doesn't mean they can pay their debts economically. You know that, and this is how it's so sly, because it's so seductive.

  Unknown Speaker

  Let me talk about the second problem,

  Peter McCormack

  because it's a contradiction of those who promote MMT, who often discuss inequality and poverty, but with MMT, the newly money created money isn't distributed evenly, there is the cantillion effect of those closest to the spigot benefit the most. Yes, and you will get inflation with, I mean, not according to them, but yeah. Well, some argue that you will, but as long as you've got growth, you know, but you will get inflation. They're just factually wrong, and inflation will make the rich richer and the poor. MMT will drive inequality. It will make inequality worse.

  Emmanuel Maggiori

  So let's pretend I'm an MMT here. So I'm Stephanie Kelton, so I will tell you a few things. It's always the same story. They will tell you first that they want to use that newly created money for a job guarantee program. The government will give a job to anybody who needs a job. So it will actually use that money to eliminate unemployment, right? Lots of issues with this proposal, but it was like, No, the money is going to go to the hands of the people who need it most. They will use it for all sorts of well. And there was a proposal in the in the US to use MMT to implement this green new deal that would, you know, there would be energy transition, socialized healthcare, like single payer healthcare, so it's all for the people you know. And another thing that I'm I can assure you, they would bring up straw man sort of thing, they would say, but look at Japan there. They have been trying to get inflation up, but they can't. Look at the UK and the US, they've been trying since 2008 to get inflation up, and they can't. Our economies are suffering. Inflation is not going to happen. So from we're going to create money to reactivate the economy, you know. So they will dismiss the inflation problem, and they will tell you that the money is going to go to the hands of people who need it the most. I'm playing devil's advocate here.

  Peter McCormack

  Yeah, yeah. But if they have a job guarantee program, there's no guarantee of productivity behind that job. Well, I mean, so there's no

  Emmanuel Maggiori

  value creation. I think you would have a lot of fun reading their proposals, because one of the things they literally say is that, well, what kind of job will this person do visiting the elderly in care homes. So that's kind of the kind of job they propose. And then they say that productivity is going to go up because people are no longer unemployed. So employers will be more willing to hire these people because they haven't been unemployed. There's an economist, Richard. Murphy, I'm pretty sure. Robert Murphy, yeah, Bob Murphy. He says something like, who will want to hire these people who've had the cushiest job ever? It's like, you don't believe that they're not unemployed. They're kind of almost, you know, according to them, this is all productive work. It's, you know. And funnily enough, I'm gonna tell you something I find really funny of because Has this ever been tried? You know, the sort of job guarantee program, and they cite as an example of a successful program, one that was run in Argentina after the 2001 crisis. It's crazy that they're citing Argentina as an example of anything. And I do remember this program vividly, because it was after the 2001 crisis, and it was very different. So this is not they didn't give a living wage to people. It was kind of pocket money only to one person per household if there was a pregnant woman in the household or a disabled person in the house. So it wasn't like a universal job scheme like mot wants to do, but I think about 70% 60% of people never actually did any work because the government couldn't actually put that together. It's very difficult to have this pool of job guarantee people and then actually get organized to give them productive work to do right? And they never met. So what did they do? What did they do after? Well, they converted that into a sort of unemployment benefit sort of thing without any type of work. It's just giving the money to the people. So essentially, it's a failed example of a job guarantee program. But mm, to your cite this as an example of how the job guarantee program really is just welfare. I mean, I'm inclined to say that in practice, it would work like that, yeah, but that's not

  Peter McCormack

  what they will tell you, because there's no productivity behind it. There's no wealth creation. Oh, well, look, this is

  Emmanuel Maggiori

  another funny thing. This is, you know, this is a funny thing in one of their articles, an mm tier says there are so many things these people could be doing, the people in the job guarantee program. And there's a paragraph that I found really funny, something like, have you seen the state of our public swimming pools and parks or something like that. And I thought, wow, first word problems is this like, I don't know. I found it really funny, because it seems like this person thinks we're going to put all these people to make our swimming pools nice. I thought it was completely detached from reality. From a poverty actually looks like, well, I just

  Peter McCormack

  don't think these people understand what the creation of value really means?

  Emmanuel Maggiori

  No, probably not. Yeah, because the So, what does that mean to you? What does the creation of value mean?

  Peter McCormack

  It means that somebody would voluntarily want to purchase something with their own Yeah, wealth. It's the private sector. It's the free market. The free market creates wealth. It creates prosperity. Yeah, I I attribute very little value creation from the public sector, because it's mandated. Yeah, the private sector, the free market is our decision, either to hold something of value or exchange something value, of value for value?

  Emmanuel Maggiori

  Yeah, so when you look at economic theory, right? What is in standard economic theory? What is economic growth? Right? How does that happen? And one way in which it happens is more investment in capital. So this is stuff that helps us produce stuff to understand what capital means a machine, right? A house is actually a newly built house is capital because it helps produce a service, which is shelter, right? Another way to grow economically is to know how to better use that capital. This is no as known as human capital, right? Do we know better techniques, better methods to use those machines? And Malay has, there's a government department that he merged lots of departments into one, and he called it the Ministry of Human Capital, right? It's no longer, I think the Ministry of Education is like human capital. So he borrowed this from standard economic theory. What you could see, in terms of the government, there could be potentially a role, I'm not speaking politically here, and what you'd like or do not like the government to do, but there's, there's an there's a case for there could be infrastructure investments by the government that help produce stuff, right? Again, economic growth is growth is producing more stuff, right? So if the government helps build roads or motorways, you could potentially think of that could be conducive to economic growth, because it's easier to produce things when you can, you know, transport things more effectively. Then you could argue like. More libertarian person would argue this could be done privately, right? But infrastructure has a role to play. You know, some other people would say health, you know, if people are unhealthy, then they can produce, you know, so. But I think it's, it's important to remember where economic growth comes from, like, you know, machines, techniques, ingenuity, to produce things more quickly. That was what the better, faster, cheaper. Exactly. That was what the Industrial Revolution did, right? It was, you know, I remember when I moved to London, I went to the I lived close to the region's canal, and they have this little museum called the canal Museum, and I learned so much about the canals. And back in the day, it was a very sophisticated piece of technology that they built across England to transport goods, because pulling them along, pulling them on a barge using a horse. That's why they were called the tow paths right next to the canals, because it was a horse that was used to pull the goods that was much more efficient than carrying them by land and but then, when the steam engine appeared, the all the canals were, you know, they became obsolete, let's say, because it was much more efficient to use railway to I mean, in Argentina, they would probably want to protect the canal industry, right? That's what they do, right? But I think it's important to remember, yeah, what, where economic growth comes from. And I don't think, mm, tears, understand any of this, or they promote the thing that having, they have a very Keynesian view of things, of, let's, let's, if you hire a person to dig up a hole, you know, and another person to cover it up. You know, that will make people happier, and they will be more employed, so they'll have more income, and that will foster growth, grow the pie, and that will grow the pie somehow. And I mean, if these people were digging up, they were building a road, you could perhaps argue that somehow it could contribute,

  Peter McCormack

  but they're not creating something of value. No, when a cup of coffee is created, will create a something of value that I want to consume and I'm willing to pay for. Yeah, and when we create a mobile phone, we're creating something of value. And you know, some of these things lose value over time. There's a leakage, but some of them increase in value over time. When you pay a guy to dig a hole, another guy to fill it, no value is being created because nobody wants to buy that service in a free market. Yeah, there's nothing to own. Then there's nothing to appreciate in value.

  Emmanuel Maggiori

  Yeah, I mean, all these theories are related to the work of Keynes, right? That's even

  Peter McCormack

  Kane said Money Creation should only really happen in emergency scenarios.

  Emmanuel Maggiori

  Yeah, yeah. I think to, you know, to MMT, years we live in a constant state of emergency. I think Stephanie Kelton says the only time in the 20th century where we had full employment was during war and peace time. There's never full employment, right?

  Peter McCormack

  But there's a really interesting point there. If we have full employment during war, what happened to a country after the war? What was the state of the UK? The UK was unproductive and heavily in debt to pay for that war, because these people weren't creating something productive?

  Emmanuel Maggiori

  Yeah, it's a very naive way of analyzing economic issues. I don't think they understand value well. I think they, a lot of them, align to maybe the Marxist theory of value, potentially, where you know any entrepreneur is kind of stealing or the values created by workers like I wouldn't be surprised if they said something like that,

  Peter McCormack

  yes, where's the economics and politics of envy? That's where it comes from. Yeah. But if they were right, we could abolish HMRC in the IRS. We wouldn't need to tax people

  Emmanuel Maggiori

  well, and that's the title of my book, right? It was. The title of my book is, if you can just print money, why do I pay taxes? That's a fair question. Why am I paying questions? And actually, MMT has a good answer to that, I think. Is it to control inflation? That's one of the what? Yeah, so one of the there are at least three different reasons why taxes would still exist. The first one is it can be used to control inflation. Obviously, from a political point of view, this wouldn't work. I mean, which politician would increase taxes because they fear inflation would go up, and it's even impractical to increase taxes. But anyway, so there's a role.

  Peter McCormack

  But also we have an election in three years, somebody will come and say, Hey, we're going to get rid of all taxes. Yeah, we don't need taxes. Yeah.

  Emmanuel Maggiori

  Well, you know what that maybe this is a tension, but this textbook thing happened in the Massachusetts colony 1690 I think it's actually a very interesting story, because, mm, tears have told the first half of the story. So the colony needs to be, yeah, very slight the colony. He needs to pay the soldiers who just came back from a failed attempt to invade Quebec, I think. And there's no money. Literally, the colony has no money. So how do they pay the soldiers? Right? And they couldn't offer any land to the soldiers. That was kind of already, you know, they actually didn't have the right to do that. They didn't have any more silver, which was used as money. So they literally print pieces of paper, right? That says, they say, this is worth this many shillings. How do they get people to actually accept this? Because it's literally a piece. This is the first instance, I think, of fiat money in history, and they say we're going to accept this as payment for taxes in the future, instead of grains that were used or silver, and there will be a discount. So if you accept this money the day you have to pay taxes, you can pay like you can get a 5% discount, right? And it worked. And this is MMT says that taxes legitimize the currency. That's another role of taxes. They exist because they drive demand for money, because people have to pay taxes, right? So it's one of the main uses of taxation to them. But the second half of the story is actually quite interesting, right? The money is accepted and starts circulating around the economy. So it becomes, actually, you know, fiat money, the obligation to pay taxes. It was actually they said, whenever we redeem these bills, they were called bills, we're going to burn them. It's destroyed. So whenever we want to pay something, we create the money, then we would burn it. But people started complaining about the burden of taxation, so they kind of deferred tax collection, which means the money was not eliminated. So the government spending kept spending more and more by issuing more bills and not really withdrawing them. So there's more and more bills circulating. What happened? Inflation, surprise, up to the point that the you know, the British government said, Well, you're forbidden to use this paper money. You need to go back to the silver standard at the time. So it's essentially a story of, you know, using taxes to legitimize money, but because of political reasons, the taxes were not levied the way they should have been, and then inflation. This is literally what people would say, MMT could do, right? Is, you know,

  Peter McCormack

  I call inflation theft. I think you call it a tax. Some people call it an inflation tax, right? Yeah, hidden tax, yeah, I consider theft, but yeah, one of the things I don't think, why do you consider theft? Because I think it steals your time, because I think money is a proxy for time. And so what is the reason we have a pension? Or we save? Well, we save because, hopefully, worse, we can retire at 65 maybe 60 even 55 we're trying to buy time at the end of our life where we don't have to work, particularly if you don't like working. Some people like working, but let's assume you don't. But I consider money a proxy for time, and so the more money you have, the more time you have, or the more optionality you have on your time. Whereas if you know, if you if you're working three jobs just to try and get pie, you don't have much time to do the things you want to do, and if your savings are being eroded by inflation, what's actually happening is that's stealing time. That's taking time from you, yeah? And nobody would vote for inflation if they understood it steals their time. And so that's why I consider it theft. I consider it theft of a portion of your life, yeah, and nobody actually chooses to have that tax, right? It's not,

  Emmanuel Maggiori

  you know, people don't, don't choose to bear an inflation tax.

  Peter McCormack

  And that's the thing. I think that's the thing where it really got me, like, when I understood inflation as a devaluation, my currency is like, oh, that's fucking annoying. I can't buy that thing I want there or I can't. But when I realized actually, like money is a proxy for time, and it's inflation takes away my time, then I consider that theft, because you're you're literally stealing the free time I want in my life, or the free time my children will have. And so I always equate inflation to time. Now and then, to me, I consider it a crime. I would fucking throw all these people in jail.

  Unknown Speaker

  I mean, I can see that. And I

  Emmanuel Maggiori

  think, you know, I think Argentinians are more aware of this time phenomenon, right? Let's just do a thought experiment. You got like, you know, Alice from Argentina. She she gets her wage paid on the first day of the month, and she runs to the supermarket and spends it all at least as much as she can to stockpile things in home. And then whatever is like. Left, she goes and buys us dollars in the black market. Right? By the end of the month, she has this many supplies at home and this many dollars, right? And then there's Bob, another guy from Argentina, who decides to kind of buy things as he needs them. Throughout the month, he gets his wage, and at the end of the month, he month, he buys us dollars at the like, one of them is worse off at the end of the month, right? Because of the timing of the you know, because the person who doesn't you know run to the supermarket is worse off. And this is people find this very unfair right, because the timing of your purchase is that your capacity to even get a hold of us, dollars and all of that. It's a very strange tax inflation and or theft, if you want to call it that way, because it's essentially a fee charged to anyone who's stupid enough to have any cash or any money, right? Feared money. Feared money. Yeah, and it's different with Bitcoin. It's different with Bitcoin. It's the opposite. Do you think so?

  Peter McCormack

  No, I know. So, like, I've bought by over the last eight years, I've gradually moved my money into Bitcoin, and that is appreciated in value, because Bitcoin is scarce. It's like gold. It's just digital gold is scarce, whereas fiat money is not scarce. And so my bitcoin has appreciated the value of my savings, therefore it's bought me time, like, I could retire today, if I want, if after this, Emmanuel, I was like, you know, fuck this. Don't do this anymore. I could just retire. And it's only because of Bitcoin, because money should appreciate in value. Have you, there's a really great book by a friend of mine called Jeff booth, okay, called What is it, the price of tomorrow? Okay? And he explains that in the economy we have whereby we like technology being deflationary. Like, everything gets better. The first mobile phone we had could phone and text, and now we have maps and books and everything on it, and it's still relatively cheap. Like, technology is deflation, it makes everything better, cheaper and faster. Yeah. And so in an economy that didn't have debt, that would mean our money should increase in value, yeah, because we have to work less for it, okay, yeah, because we live in a debt based economy. We have a deflationary technology environment and an inflationary monetary environment. And so I think you should read this book. I think I think you would.

  Emmanuel Maggiori

  I mean, I think Have you heard of George seljan this? Yeah, he says the same thing. For a long time. He's been saying that the rule should be that when productivity increases, which is what you're saying, then things should become cheaper. Yes, right? Because, of course, yeah, they're easier to produce, right? Your phone is maybe not the best example of that, because the quality has become so impressive, TVs, or even what else is.

  Peter McCormack

  You know, 10 years ago, you would buy, say, you had 3000 pound for a TV. You could get, say, a top of the range, 52 inch high def one. You can buy that TV today it's 1000 pound. And then there's, like, this ultra high def one, because it's deflationary. Technology is deflationary. Okay, money's doing what it's meant to do there. Yeah, okay, but look at healthcare, food, I don't know. There's various things in it that have got, just like housing, it's got significantly more expensive? Yeah, there's no logical reason for all these things to get more expensive, apart from we have a debt, a debt to service.

  Emmanuel Maggiori

  I think with housing, you may also argue that there's a problem with supply. Okay, of course,

  Peter McCormack

  it's a problem separate, yeah, but there's a problem of supply, but there's also a problem whereby, because we've made the money infinite, and you can't store it in a bank, and it appreciated value. People bought second homes and third homes, and so they became a store of value. Yeah? Because what Jeff says is, when the money isn't scarce, everything else is

  Emmanuel Maggiori

  okay, yeah, I have to look into that. You'll like that book. Yeah. Do you think so?

  Peter McCormack

  Yeah, I think you'll really enjoy that book, and then you'll come back and go, Okay, I understand Bitcoin. I need Bitcoin because Bitcoin is scarce.

  Emmanuel Maggiori

  So I think some of the things you said there would be accepted by every mainstream economist. So it is known to every economist that when technology improves, if the money supply is kept constant, the Velocity of Money remains more or less the same, prices would go down, right? So pretty much everyone accepts that. When we say improvement technology, we spoke about this earlier, it's producing things more easily. You know, it could be human capital. It could be better machines. Means, you know, more machines and capital investments and stuff that is deflationary. Everybody knows that. The thing is that the status quo at the moment is that economists want a little bit of inflation.

  Peter McCormack

  Why? I can play devil's advocate again. I can tell you what they would say so and tell you, I want to know what you think. Okay, so what I think? I tell you what I think, yeah, go for it. This is why we can't have, I tell you why we can't have deflation is because the people who hold the debt, yeah, get to choose whether we have inflation or not. I mean, okay, yeah. And within an inflated like, for people listening, if you hold debt, inflation is good for you, especially if it's above the interest rate, because it reduces the value of that. But if we have deflation, as people experience when you said, in Argentina, you know, you bought the house, you know, and say, If you bought it in dollar terms and the peso is devaluing, you can't afford to pay that off. When the when we have a deflation, the government cannot pay off its debt, or the or all those people in the economic system, the money, men around the world, who control the money and the distribution of money, who basically rule the world. They leverage debt, and if we have deflation, they're not gonna be able to pay off their debt. So they want inflation. So inflation is demanded by the people who control the money, who have access to the debt.

  Emmanuel Maggiori

  It's mostly Yeah, people who owe money, yeah, people who

  Peter McCormack

  owe money, including the government and the people who owe the most amount of money, know use, how to use that money to collect assets. They know how to leverage. So I just want to go my soapbox is they know how to leverage that money to collect the assets, to own the properties, to own the houses, to own the gold, to own the Bitcoin, and they leverage the debt to do that, they get a depreciating currency, and they buy appreciating assets. Why are they? They're not turkeys. Aren't going to vote for Christmas people.

  Emmanuel Maggiori

  I think this is not new, even for I think one of the explanations you'll get for the 2% rule from even mainstream economists is that deflation would make people have negative equity in their houses. It could happen the price What if your price of your house goes down, right? And they're terrified of that. They're terrified that it will cause lots of issues, right? So they are indeed protecting debtors. So that's, that's not an a header, heterodox take on what's going on. It's pretty much, I think, accepted that they don't want people's houses to be cheaper.

  Peter McCormack

  I don't think they're thinking of people houses. I think they're thinking perhaps, of the catastrophe that deflation would cause in a in a debt based economy, that maybe debt is the issue.

  Emmanuel Maggiori

  Yeah, yeah. And I think they're also, they're also terrified of if there is deflation, people will just hoard their money, and they will not want to spend because they want to speculate that I will just buy this later on, when it's cheaper, right?

  Peter McCormack

  Why is that a bad thing? Well, because the opposite is true of the moment. I found this in Argentina, you know, blew my mind when I went there, known about the inflation and I went pre Malay, I expected to see abject poverty, miserable. I expect to see a like a just a terrible situation. And what did I see? I saw restaurants fall. And when I went, I went out to dinner every night, and I would always ask, I say, I can't believe the restaurants will fall. And they're like, well, there's no point saving the money. We might as well know for today. And so what happens is that people just spend the money. They might be nihilistic, or they might just be making a calculation that I might as well go out for dinner tonight, because this money is going to be worthless in a month or two months, three months, and so you are having to spend the money. And is it a bad thing to go? Do you know what? I'm not going to buy this car today. I'm going to wait a year. And, you know, maybe, if I save that money, I can buy something better. And then maybe that causes a shift in the economy that, rather than just produce, like we have places like h&m who just fast produce shit, like clothes that cost fuck all, and that people buy, and then throw in a, you know, and a skit that maybe we would have better quality things, because the quality of everything's gone to shit. You got for dinner, the ingredients are generally shit. You go and buy clothes in most places,

  Emmanuel Maggiori

  inflation, because you notice prices go I saw this in Argentina. Prices go up. But then also the container of the part of it's just gets smaller.

  Peter McCormack

  It goes to value creation, like, if you want, like, if you're producing something, you should produce the highest quality. Look at the buildings we used to build. You walk around London, look at the best buildings, the beautiful old architecture. Yeah, there's things that took time. If you go out to Barcelona. I can't remember the name of the Cathedral, the Gaudi cathedral. Yeah. I mean, they've been building what that for 300 years, beautiful, like time and effort into creating quality that people go General, I will give you my money rather than just, I'm just gonna buy all this shit.

  Emmanuel Maggiori

  Yeah, I think this is a contentious topic, right? And I think you actually asked Stephanie Kelton that question, why is saving a bad thing and I think it's a fascinating topic, right? Because, and I think economists sometimes they mean different things by the word saving, so it's very controversial. What does saving means? Right? It's deferred purchases, yes, but there's a difference between hoarding cash and saving and into, let's say, channeling your wealth into productive endeavors that help capitalize on economy, help the economy grow, right? So if you what it the, let's say the Keynesian famous paradox of thrift, right? Would say that everybody at the same time, they stop spending, but they keep the cash, right? It's not like I it's not I defer my consumption of holidays, but I use that money to help build factories, somehow, by buying stock or by lending money to businesses, if I just keep the cash. You know, the Keynesian explanation is that is not good. So hoarding cash is not good because economic production goes down, at least for a while. Because then you need to kind of pair that with sticky wages and sticky prices, right? Because if people start hoarding cash, they're not buying stuff, and then things become cheaper automatically, and wages go down. It's kind of the economy goes back to same place it was before. But what many economists will tell you is that wages and prices are sticky. Nobody likes to especially lower prices or wages because of it's difficult to do for societal reasons, due to contracts and stuff, and all of a sudden people hoard cash. Then the economy shrinks, right? So this is again, playing devil's advocate a little bit. This is what why central bankers don't like the idea of people hoarding cash. I think most you know modern economic models kind of say this, you know, they say it's just not good.

  Peter McCormack

  But hold on, in a full reserve system, you're not hoarding cash, you're saving it, and the bank can put that to use to create productivity.

  Emmanuel Maggiori

  Knew it would bring this up. Yeah. So the typical Austrian, let's say, rebuke of this line of thinking. It's like if people hoard cash, this helps channel more it helps banks issue more loans, and it kind of helps this, like you said, the real economy, building machines, right? Or, you know, building stuff of value, building stuff of stuff of value. The Austrian thing is, I hoard cash that helps the bank give a loan to a factory, and they will build a new machine, or they will expand their capacity. The problem with that is that we do not live in a world of full reserve banking, right? So we could do, I mean, it's a choice, yeah, oh yeah, absolutely, yeah,

  Peter McCormack

  the majority of inflation in a country like the UK comes from money creation in the banks themselves. Argentina, it's creation from the government, the central bank. But like in a country like ours, but that creates preference to those who have the credit to be able to get the loans, to be able to buy the properties and start the businesses? Yeah. I mean, I just think, look, we've tried this inflationary environment. What's happened? Look at wealth inequality globally. It's something isn't working. I mean, I would compromise and say, let's go back to a gold standard or a Bitcoin standard. I mean, look, you say about hoarding cash? People may say, I hoard Bitcoin. No, I don't. I defer purchases or I buy time for me, my children, my future grandchildren, we defer our spend to things of value,

  Emmanuel Maggiori

  yeah, yeah. That is, I think, the standard view is, I think most mainstream economists, they think that money has a role in terms of being a store of value for a little while. So they don't want 30% inflation, let alone 300% inflation, like in Argentina. They want people within a year to be able to kind of have the same amount of money, but they actually, by design, they don't want money to preserve its value over time, right? Because of this inflationary bias, because of their they're terrified of deflation. So what I would say is the following, you could disagree with those rules, right? And a lot of people do, like George. George Celgene, like I do, that's why I buy bitcoin, yeah, but then we could understand that they're probably doing a pretty good job at making that system work in terms of the 2% a year inflation, right? So they have a record of actually achieving that inflation that they want. So it's not like it's accidental, right? It's yeah,

  Peter McCormack

  but you say that because we maybe have periods of 2% inflation, but we always end back at periods of 15, 20% inflation or worse in other countries. So like, we kick the can down the road as long as we can, but we always come back to massive high inflation. And what happens in during those periods of high value wage ratio. Who gets fucked? It's the common man,

  Emmanuel Maggiori

  especially when surprise inflation, right? Yeah, it's like people weren't expecting this.

  Peter McCormack

  It's not the people, over that period of time who've collected the assets they benefit. They're good, and they leverage their assets, yeah,

  Emmanuel Maggiori

  but that's where inflation hurts the poor the most, because the poor, they hold their wealth in cash, because they need to use it to buy things, right? The rich hold a very small portion of their wealth in cash.

  Peter McCormack

  So, yeah, they hold it in scarce assets, which is why perhaps we should still be on a gold standard. I mean, why would we come off a gold standard? We came off before the US. But why was it? It's because the government wants to create money. Why? Because it can't live within its means. Now look, if you, as a private individual at home, suddenly had a magic money printer in your bedroom, you're going to use it. Take a little bit of money. Nobody knows. You can go and buy that Ferrari you want? Yeah? Great.

  Emmanuel Maggiori

  Yeah, yeah. I think to a lot of people, it's very hard to believe that a gold standard would be respected. So it is a little too tempting to because

  Peter McCormack

  it requires prudence and responsibility and discipline, yeah, all the things in life. Yeah, that the wisest people who've written the wise books from over the past few centuries would tell you, like, yeah, the discipline required. Like, if you want to, I'm not in good shape. I want to I'm not in good shape. I want to be in good shape. It requires discipline around food and diet and exercise and attending the gym.

  Emmanuel Maggiori

  I think there's a there's a narrative that discipline is not necessary. That's and this is what MMT does you know? And this idea that it's just so mean, you're so mean. Why don't you let the government spend more? Why have all these rules? You know, and it's all

  Peter McCormack

  look we have look at the poverty rate in the UK when we create so much. Because inflation isn't even it's unfair. It benefits the wealth. It benefits me. Inflation is fucking great for me. It's absolutely like, Bring it on. But I don't really want it on, because look at what it does to society. Look what it did to Argentina, hollows out the culture, destroys the family nucleus, and then what does government do? Have to do to protect it? They have to create social justice. They have to create the things you can say you can't say special groups like it just, it creates this bullshit. And I'm just like, I'm so over it. But because what we do with money creation is that we give it to the most unimpressive, spineless people that we produce, which is politicians who use it for their own benefit in the defense of power. You should not like money and power. There's like a magnetism between the two. Like, why would we give that to those people? I was we? Why did we separate church and state? Yeah, because it's pernicious influence. Well, we should separate money and state.

  Emmanuel Maggiori

  I mean, I understand where you're coming from. Yeah. Good luck. Good luck,

  Peter McCormack

  because I am trying it. Bitcoin separates money estate. You talked about gold and people trust in this is why I think you'll like Bitcoin. You can be sovereign with Bitcoin. You can hold it yourself.

  Unknown Speaker

  There's no middle man, yeah.

  Peter McCormack

  The thing is, about a Bitcoin standard. The problem with the gold standard is it's a policy choice. It has to come from government. It's a policy choice, okay? And storing large amounts and using smaller it's very difficult on a Bitcoin standard. It's a personal choice. I live on a Bitcoin standard. I priced it. Did it today, didn't we? On the way I price things in Bitcoin? Want to buy that house? No, I I think Bitcoin is going to go up. I think the government is going to keep printing money. So I'll, I'll defer that purchase. You know, I'm buying time and I'm buying, yeah, deferred. The thing is, like

  Emmanuel Maggiori

  the government will still collect like this is to the point of, you know what, MMT says the government will still collect tax using their own fiat money. So what? It's not like people can just choose to replace the Fiat standard with Bitcoin standards. But I have, yeah, but you know, hopefully it hasn't been the case in the last few months, though.

  Peter McCormack

  Dude. I again, discipline and prudence is about long time, like timescales. I went from 12 and a half stone to 16 Stone over nine years. Okay, it's a little bit, you know, 100 calories too much a day here, an extra beer there, too much. And I look, I look in the mirror every day, and I look the same. I look at a picture from 10 years ago. I look fatter because of ill discipline and money is the same.

  Emmanuel Maggiori

  Yeah, it's discipline. I'm inclined to agree with it. Sounds so mean when you put it that way, I I want to see unwavering rules, right? So Malay style, I mean, hopefully, but the question mark is still there, because Malay Malays government has two years left. So if he doesn't win the re election, what comes after him? So that's why he wanted to get rid of the central bank in Argentina. So at first I didn't get it because I thought he says money printing is what's causing inflation. So why don't you just stop money printing? That's it. Why do you want to go as far as getting rid of the central bank? And an economist from Argentina told me he doesn't want to let the next politician go back

  Peter McCormack

  to the money printer. He wants to go and get his ranch. He said, I want to. He doesn't want to be a politician. I mean, he just moved to the tool shed. Did you know that? I know. I didn't, but I read a thing where you were saying he wants to go and get his ranch and wants to write and teach.

  Emmanuel Maggiori

  Yes, and what's going to happen when he leaves? What if the next administration wants to go back to

  Peter McCormack

  the old regime? Well, they always will. There is a natural like but

  Emmanuel Maggiori

  that's why you need solid institutions. And he doesn't believe that. You know, his solution to that was, let's get rid of the Argentinian peso. Look, I'm gonna tell you a story. So how it happened in El Salvador in 2000 I've been, have been to Salvador, yeah, I've

  Peter McCormack

  interviewed the president to what I've interviewed bukele. Oh, wow. Because they were the first country that made Bitcoin, yeah, legal tender, yeah. Although they had to kind of pull back. But anyway, they're still, they're still accumulated, still Bitcoin country. So do you know why Hold on? Do you know why they had to pull back? IMF, yeah, those motherfuckers,

  Emmanuel Maggiori

  yeah, I've heard Yeah. So when they dollarized, it was in a period of low inflation. So inflation had gone down in El Salvador. That's why it's a fantastic case study, right? Inflation was high, they stopped the money printing. Inflation comes down, right? So he said, Why do they want to get rid of the currency? Right? And there's a guy, he was called Manuel Heinz. Kind of engineers a dollarization plan. And the reason was the following, despite inflation coming down, interest rates were super high. Banks were charging a lot of money for mortgage. And the reason for that is that pretty much everyone believed that the there would be a new administration that would go back to the money printing, so we're not going to give you a loan for like 5% interest. So it was like 25% so what these people thought was, let's dollarize the economy, let's get rid of our own national currency, because there won't be a chance to go back to the money printer, unless you go back to having a national currency, which is difficult. So during a period of low inflation, they got rid of the currency. Interest rates came down, and it hasn't had a national currency since then. So it's been 25 years, but I find that a very interesting case study of how expectations about the future matter so much, you know, and that's why it's so dangerous. When you know, Liz truss says, like, oh, the central bank. He complained that the governor of the central bank is appointed for is it eight years in the US? It's even longer. But there's a reason for that. They don't want your interference, yeah, they just want to be left alone. And I just find the story of El Salvador pretty interesting.

  Peter McCormack

  Yeah, I've got another great way to explain Bitcoin to you. Go for it. Why do Argentinians want dollars? Argentinians?

  Emmanuel Maggiori

  Well, this is simple. I will tell you a few, a few of the reasons, but one of them is the primary reason Argentinians want dollars. Argentina had its currency pegged to the US dollar for a long time. Yeah. So they have a history of thinking in US dollars. Houses are bought in US dollars, like we said, but also they want to be able to spend that money quickly. So when Argentinians, they save, they try to get rid of their pesos. Very often, it's because they want to go on that holiday to the beach, you know, at the end of the year. So what do they convert their pesos into? So they convert them into US dollars, and then they go back. Yeah, but why? Why do they why do they want dollars? Because compared to Bitcoin, and I think this is no, just, why do they want dollars? Because they can very easily convert it back, snow,

  Peter McCormack

  it back. That's not, that's not the answer. Why do they want dollars? Why? What if? If. I want to go on holiday in six months, and I got my pesos here, and I can have dollars.

  Emmanuel Maggiori

  Why do I want dollars? Because the value of the dollar is pretty much maintained over time, yeah. But they could choose others relative to the

  Peter McCormack

  peso, yeah. And then look, I know some people in Argentina buy bricks and they buy, like, roof tiles, and when they've got enough, they build on the house, yes. But you know, they want the dollars because they want that holiday, yeah, to be okay, so it's to preserve the value of their money. Yes, okay, well, we have inflation in the UK and we have inflation in America. Why does some Why do I choose to hold Bitcoin over pounds?

  Emmanuel Maggiori

  I mean, because you believe that the value of the Bitcoin will be preserved. But I would ask you, why? Because it's scarce. Is scarcity enough for something to retain its value?

  Peter McCormack

  No, there has to be utility. What's the utility of Bitcoin? Well, it depends, for me right now. It is a it is like all money, like we only use pounds, because we trust each other, still just a piece of fucking paper, right? Similar with gold? I mean, I know that people say, is you to look like bollocks? It's believed that it's scarce. Yeah, and so people hold gold because it's scarce. Well, Bitcoin is held because it's scarce, and we have a collective agreement that this is better form of money, that I trust Bitcoin as money more than I trust pounds, because I don't have to trust the central authority, but the pounds, I have to trust the central authority, who, for decades, fucking centuries, have proven that if you give them the ability to create new forms of Money, like to add money into the system. They're going to debase my currency and steal my time. Well, I don't have to trust the central authority on Bitcoin, because there is no central authority. And more and more people are realizing, well, I need a form of money. Well, if we collectively agree this, Bitcoin is a form of money, and there's no but we do, it's growing. Okay? I don't know anyone who's gone into Bitcoin, stuck around for a few years ago, and you know what I'm done? I'm out, yeah, but nobody's using it as a form of money. I'm using it as money I buy for things in Bitcoin. But also you can

  Emmanuel Maggiori

  there's a total number of transactions that can be performed that is pretty

  Peter McCormack

  low, I see. So this, that's the whole seven per second myth. Okay, so how do you how do you? So there's multiple ways. Firstly, you have something called the Lightning Network, which is the second

  Emmanuel Maggiori

  layer, lots of technical issues. It's failed multiple times. You're trying.

  Peter McCormack

  I use the Lightning Network all the time. I've never had a failed transaction. But even how Finney said, early on with Bitcoin, he said, If we have 8 billion people using this, do not expect there to suddenly be everyone transacting on chain. He said he had a belief that you would have Bitcoin backed banks, and so you could issue a currency off the back of it, but you'd have a Bitcoin stand. And the great thing about Bitcoin is you can verify the money. So say, with my bitcoin, say every one day is worth a billion I could open a bank, and I could back the currency I create by that Bitcoin, and you can verify, but this wouldn't be, this would be fractional banking again, right? No, it's not fractional because I'm full reserve and I can prove how much Bitcoin I have.

  Emmanuel Maggiori

  Yeah, yeah. I mean, hopefully that would work well, yeah. So I've heard this two layer sort of money, right? The Bitcoin is used to sell transactions, which is what happens today, right? So at the end of the day, banks settle transactions that took place during the day by using reserves, right? Which is a type of money that we don't have access to, yeah. So I see the argument. So my I am a bit skeptical of Bitcoin. As you can see, I'm listening to a lot of people, part of my skepticism is because, so what anchors, let's say, I mean, there's obviously this network effect that you're saying when the day everybody adopts Bitcoin, but let's say, we don't know if that's gonna happen. But what is, what gives Bitcoin, let's say a minimum value, right? We know that if you buy stock of a company, there is you're literally entitled to a portion of the dividends. And you kind of pretty much know that the price of the stock can go below a certain level, because you know you'd be it would be a free lunch, essentially, right? So there is a minimum value for a share of a business based on the dividends that you would collect. So this is literally you own a piece of the productive pie, right? Same, if you own property, right? You have the right to collect rental payments for people. So there is a minimum price of a house that is anchored on the the rental income that you collect. If somebody told me that tomorrow, the price of Bitcoin will go down to 10,000 right? I still don't know why that wouldn't happen. So why is 10,000 unimaginable, other than the fact that people have been paying, let's say, 80,000

  Peter McCormack

  Well, it could happen. It could if enough people went out to the market and sold their Bitcoin, then that could happen. But enough people went out on. Sold their Tesla shares. That could happen. If enough people went out and sold their gold, that could happen. That's just law of supply and demand, yeah.

  Emmanuel Maggiori

  But Tesla shares, you own the right to dividends, right? So at one point, if you start trying to sell fairly low price,

  Peter McCormack

  people aren't buying shares for dividends anymore. It's just equities have become a store of value themselves, because the stock market is a Ponzi scheme?

  Emmanuel Maggiori

  Well, it's the they very often they don't pay dividends, but they reinvest their earnings, right? This is retained earnings, and they grow the business and

  Peter McCormack

  or they do stock buybacks to increase the value. Yeah, the stock market has become a place where rich people save their money because they can't save it in a bank. But what I'm saying to you, missing the key point I'm saying to you, is the money we use is based on the faith we have in that currency. In Argentina, there was no faith in the currency because of the government. So they'll get the dollars. I've got a higher faith currency, which is Bitcoin, because there's no central authority that can debase it. And once I've realized that, and like I say, the more people that realize that, the more people realize that this is a better form of money, because it cannot be debased, because there isn't a central authority.

  Emmanuel Maggiori

  Yeah, I think the fact that it cannot be debased is a fascinating technological invention that I'm really impressed by. Yeah, because it's very we explain Bitcoin to people, right? You have all these computers at the same time performing a job that, unless you really have a lot of power to alter all of them at same time, you won't be able to change the amount of bitcoin in existence. So that's that's what makes it interesting, the whole actually, the blockchain technology, where it sits. So I'm with you on that. I think that it's very impressive to have the possibility of a digital good that who's that is scarce by design. It's impossible to alter, and I can see why that's valuable to a lot of people. Now, what Bitcoiners have, haven't been, haven't yet successfully convinced me of, is that this will achieve that great adoption that will make it the go to currency, you know, to So, because I want to see a utility of Bitcoin, the idea that Bitcoin is valuable because it's a store of value, because it's scarce, to me, that's a bit certain.

  Peter McCormack

  No, no, I need more than that. No, no, because there is no central authority.

  Emmanuel Maggiori

  Okay, that's it. That's yeah, to me, that's scarce because there is no it's permanent.

  Peter McCormack

  Scarcity is just one of the rules, often of the consensus, yeah, but it's there's no central authority. There are other cryptocurrencies,

  Emmanuel Maggiori

  so what about all the others? They also don't have a central authority, like Ethereum,

  Peter McCormack

  but they pre mind them, and then they change the rules after like, if code is law, then I have to accept finality. Transaction finality, if I send bitcoin to you by mistake that I meant to send to Connor, I accept it's gone. There's no I can't get that back. You I can come to knock on your door say, Can I have my bitcoin back? You can tell me, go fuck myself. Can't do any thing about that. Ethereum, there was a hack after it launched, and they rolled back the code, yeah, because it's not meaningfully decentralized. The great thing about Bitcoin coin is it's meaningfully decentralized, okay? And the incentives are that there's no benefit to anyone to increase. The only people who benefit from increasing the supply of Bitcoin are the people who don't own Bitcoin, because it will reduce the price.

  Emmanuel Maggiori

  And would you want governments to adopt bitcoin is that? What would you want?

  Peter McCormack

  I want governments to fuck off. I want to limit the power of government as much as possible. I want the smallest viable government that could defend life, liberty and property. Okay, that's what I want. That's all that government should do to me. I don't want government involved in redistribution and setting what morality is, because there's always weird incentives at play. We separated church and state for a reason, and we should separate money and state for a reason, because of the frailties of human decision making and the greed. So look, if government adopts Bitcoin, great. I mean, they're adopting Bitcoin, and they're self they're confessing that their own current currency sucks. Okay, great, but I just really want individuals to adopt Bitcoin, and you don't have to. You can just get a little bit, get yourself going. But the reason I own Bitcoin is because I'm separate from the government. Okay? I am sovereign. I custody it. They can't access it. They can't steal it from me. You put gun to my head. You can't get it off me. I can move around the world. It's with me. But there is no central authority who can debase that currency. So that to means to me, it's the best currency there is, because it cannot be centrally inflated. Name me another currency that can't be inflated even gold. The price of gold goes up, but suddenly, oh, we can get that gold at the bottom of the ocean. We'll be fucking mining it from asteroids at some point. There's a lot of gold in the universe. A lot of gold in this on this planet, Bitcoin is absolutely scarce. They cannot be more than 21 million. And so when I price things in Bitcoin over time, things get cheaper. The house I've got a mortgage on now, which I sold. In Bitcoin to pay the deposit. If I'd waited three years, I'd have no mortgage. So it's like, Who do you want to put your trust and faith in? I don't trust government. There's not a single government ever that deserves our trust. So I don't have to put trust in anyone with Bitcoin. And that's, I think that's the final piece of the puzzle for what you're doing. Now, look, I get it, but it's like, Bitcoin is like, this weird thing. It's like, the price goes up and down. It's all over the place. You know, the great invention of Bitcoin was to create something that was decentralized. It was like that slide, you

  Emmanuel Maggiori

  know, I studied computer science. Okay, so you understand, I am a software engineer by day, you know. And when I was a uni, there was this geeky classmate who was mining Bitcoin, yeah, with heavily subsidized energy prices, actually, yeah. What year was that a was, I think 2000 could it be 2011 potential?

  Unknown Speaker

  Care. So, probably, yeah, so 13, maybe 2011 12, I would say he

  Emmanuel Maggiori

  probably was mining with a GPU, his computer. Probably, yeah, I don't recall now, because it was a long time ago, but he did have this contraption in his home, you know, like it looked very geeky. Yeah, he was mining Bitcoin at home. And, yeah, but my

  Peter McCormack

  bitcoin bet is a is a gamble, like a lot of people think about Bitcoin now, and they look, they try and find faults with it now. And I try and say, Listen, look what the inventor of Bitcoin did is they came up with the perfect form of money, right? The best form of money, not perfect, but the best form of money. But they had to be distributed. And how do you distribute this form of money? You can't evenly give it out, so you just create the system this way of mining it, so it's distributed and it's front loaded. So the risk takers, the earlier you take the risk, the more benefit you have. I don't think Bitcoin is going to be global money in the next year or two, and it's going to be volatile, but I'm okay with that, because this is my bet. Is. My bet is on humans. Globally, it's the same bet that Argentinian has made on the dollar over the peso, that over time, people can get fucking sick of governments stealing their currency and stealing their time through debasement. They can say, I want an alternative. And you know what to start with. They might buy 1000 pound of Bitcoin, right? And in four years time, that Bitcoin might be worth, I don't know, 10,000 pound or whatever, and they're like, Wow, I saved that money in Bitcoin, and it's gone up in value. That's why, well, more people are not trusting government, and they're debasing the currency. By the way, you're in a room with three people who've been through this journey here. I don't know about Wilbur, but Kurt's been through it. Connor has been through it, and everyone like, I don't know a single person who has started accumulating Bitcoin, and they do their first tour of duty, which is like, four years afterwards, they go, oh, yeah, I was wrong. I'm gonna sell my bitcoin. Yeah, this table will be gold plated by them, yeah, and I will be carried in on a by my slaves, yeah. But I

  Emmanuel Maggiori

  think it's, I think it's fascinating to and making those predictions is good, because then you can go back in a few years, I have this, you know, wage going on. This guy on LinkedIn, he told me that software engineers would disappear as like, the job would disappear in two years. And I have the date on my calendar to kind of go back and see how it went. I think we're already one year along that. Because I say it's not gonna happen, like they will change the job market, but it's not gonna happen, but it would be great to see in 10 years, since you're saying this, what happens

  Peter McCormack

  to Bitcoin, you'll be able to say I told you, so we will, but I'm not

  Emmanuel Maggiori

  saying I told you, since I'm not taking here, it's more like, it's more like healthy skepticism. I want to understand both sides of the bad idea. What's your method to outpacing inflation? What do you choose personally?

  Unknown Speaker

  So personally, what I would do

  Emmanuel Maggiori

  is I would buy real assets. I want to own a piece of the productive pipe. So I would own companies. I would own property. Potentially, I would be a bit skeptical of investing in property in the UK, specifically because I think there's property rights. It's a they want to like because of the whole housing situation, they will try to, you know, tax, second, properties, more and stuff like that. But I would invest in real assets. Because to me, the real economy matters a lot. And by real I mean the economy of stuff. So we always need to understand there's two economies at the same time. There's one is the production of stuff that people consume, like you said, value, right? I want to, I want, even if it's dumb, like, you want to watch a TV show that is stupid, but you actually pay for that, and that's okay. I want to own a piece of the production.

  Peter McCormack

  You, you're talking about physical assets, yeah. I mean, they can be like, if you own about virtual assets. What is a virtual asset? I don't know. Say you're playing some. Um, online multiplayer person game. I don't play them, see, I don't know there's a limited edition sort of Gelder that's like, somebody might want that, because within that game, yeah, that to them, has real value,

  Emmanuel Maggiori

  but still a real asset. It's not physical. But whenever someone wants to pay for stuff, it's, it's a real asset. So, yeah, a real asset gets cash flows. In the future, you have the right to a certain cash flow.

  Peter McCormack

  Why does that? Why does that sword give me a cash flow? I don't. So if I buy this virtual sword, what can you do with that sword? I can run around the game, and I'm the guy with the special one only, sort of gel dot.

  Emmanuel Maggiori

  I mean, unless someone wants to pay prestige, yeah. Do people want to buy the sword?

  Peter McCormack

  Yeah. So virtual assets are still real assets. They're just physical, absolutely.

  Emmanuel Maggiori

  And you think, if you work in software, you build a virtual asset. You're building a virtual product, you know, and then people want to buy that potentially. I'm going

  Peter McCormack

  to tell you something a great Argentinian told me, yeah, do you know John Pfeffer, no, okay, this is brilliant. Okay, so I've got how many boxes of CDs at home? Connor, a lot. I used to, I used to buy so much music, right? Okay, racks, a seat. I used to have these racks I got from IKEA, and it was just like this wall of CDs, and I put them all out better order. I was like, Cool. And then when Spotify came along, I stopped buying CDs, and now they're sat in a bunch of boxes, and they aren't worse shit. They're just not worth anything, right? And I don't know what to do with them, like my heart can't get rid of them. Some are autographed I want to keep, but they are. They're not worth shit, right? John feather said to me, he said, Yeah, in a couple of 100 years, when we're all flying around in our Millennium falcons, do you think a yellow rock is going to be a value? Do you think that's going to create base value, or do you think we will have a virtual version of that yellow rock? He's talking about gold versus Bitcoin. Like you would agree that gold has value and there's a reason to hold it. Hold it. Well, he's he said, We will not be transferring yellow rocks around, because it will not be efficient. All that Bitcoin has done is digitized scarcity into a world where we don't have scarcity with government issued digital money. So he's we've created better money.

  Emmanuel Maggiori

  I understand, yeah, it does consume a lot of electricity, though, the whole mining and

  Peter McCormack

  right, it's this is so interesting, because these are all, like, the arguments I've, like, heard for years.

  Emmanuel Maggiori

  I know both of the I've read, you know, the Bitcoin standard, like, I know both sides of the story.

  Peter McCormack

  I'm just being what is contrarian. What is wrong with consuming energy?

  Emmanuel Maggiori

  I'm not saying it's wrong, but it's wrong, but there's a limited amount of energy that you need to use it for other things too, right? It's not just for mining.

  Peter McCormack

  So isn't there incentive to create more energy?

  Emmanuel Maggiori

  That sounds a little bit like MMT. So let's when inflation,

  Peter McCormack

  because somebody's buying that energy, the mining, the miners are buying that energy in the market. They're paying whatever they pay. And so if there's a customer out there buying that energy, shouldn't there just be more energy creation? Because there's customers want

  Emmanuel Maggiori

  to buy it. Yeah, a lot of people want more energy, just, not just the Bitcoin miners, right? Yeah, but wish there was.

  Peter McCormack

  But what is wrong with Bitcoin miners? No, nothing wrong. It's just competing for a fixed amount of energy. So with Christmas trees and Christmas lights. It questions like, what's the argument there?

  Emmanuel Maggiori

  You said it was very inefficient gold, transportation of gold. Is it more efficient in terms of the energy, even I haven't seen the numbers, right? Is mining Bitcoin thermodynamically more efficient than the, you know, the all the power that's or, you know, is bringing gold from A to B more efficient from a physical point of view, more inefficient.

  Peter McCormack

  Have you seen gold mines, large gold mines, what that does? No, yeah, you should dig up some of those. One of the things you should look at is what the integration of Bitcoin mine has done at the ERCOT grid in Texas. Do you know about this? Now, this is fascinating. Okay. I mean, explain this very badly. Other people do it better. But demand response is very important. You switch on the light, and the light comes on, and you have to do all the predictions. But suddenly, if there's, like, I don't know, say a surge in requirement for electricity, like, how do you deal with demand response? And so the Bitcoin miners are plugged into the energy grid there and say there's a surge in demand, they can just switch off. So Bitcoin miners buy up the excess capacity, because you have to over produce electricity. You understand that, right? So like wind, you have to over produce to ensure you have the right about a capacity for the network. And so when you overproduce them, what do you do with that excess capacity? Well, you could. Sell it 1.5 billion, or something ridiculous, 7 billion, we could tell in the year, yeah. Well, the Bitcoin miners will go there and say, well, we'll buy that off you. So it makes the production of green energy more efficient, but also it makes energy grids themselves more efficient. And like, yeah, if you're, I don't know. I think traditionally, someone like ERCOT, they would go to, I don't know, a paper mill, or whoever is a large user of electricity, and say, Hey, we've got a lot of demand. We need you to turn off. And they have to power down. Bitcoin miner, flick of a switch and they're off. Okay? They actually pay Bitcoin miners to turn off sometimes, to balance the grid. Okay, there's utility for you. There you go, balancing the grid. Yeah, well, thank you for I didn't expect to finish this interview with a roundabout Bitcoin.

  Emmanuel Maggiori

  I'm sure that's great. I love the discussion, and it's good to have a productive discussion about those things. I think, yeah, I like to hear everyone,

  Peter McCormack

  yeah, like, I just come back. Look, I fucking hate the government. I don't trust politicians for shit. And you give me anything to subvert government, I wonder, and Bitcoin means I can subvert their debasement of the currency. A lot

  Emmanuel Maggiori

  of people assume that because, you know, I wrote this book on MMT, and I obviously don't like MMT. They think you're a Bitcoin I think I'm a bitcoiner and I'm and I'm not a Bitcoin er, I'm just still learning about all of this. Before I make a decision,

  Peter McCormack

  you can't learn it until you own it, you know, like, you know, if we had a game of poker, Here

  Emmanuel Maggiori

  is it. Just because you want to, no no, buy bitcoin, so your Bitcoin goes up, dude,

  Peter McCormack

  I'm already No, no. People say that. They're like, honestly, I can't spend the money I have now, like, I'm good, I could retire. I don't want for anything. Like, I just want to have a steak on a Friday and hang out with my kids, like, I don't need anything. If we had a game of poker, you me Wilbur Connor and Kurt, right? And we sat down, we put 100 quid each. No, no, let's say more. Let's say 10,000 pound each, right? You can know how to play poker. You're going to try and bring your A game, right? Yeah, yeah, you've won. That's 50,000 pound up for grabs. Yeah, all right. Replace that with matchsticks. Do you play the same game? No. Why? You know skin in the game, right? You can never really understand Bitcoin until you have skin in the game. You need some because it because there is a there's a need, then to understand it, you know every, everybody in Argentina is part time financial director, because they have to manage their money. Yeah, yeah. Well, when you're a bitcoiner and you own Bitcoin, you have to learn it. And so when you read the Bitcoin standard, or you read it differently,

  Emmanuel Maggiori

  I think that's one of the reasons that Argentinians haven't looked too much into Bitcoin.

  Peter McCormack

  Oh, they have. Dude, listen, when I was in Argentina, I met, you know, the money changes. No, you know, like, what you're Argentina, if you if you don't want to use the cash machine, because you get the shitty rate previous, like, one of the guys like, Oh, dude, we can get you cash. I had a guy come up on a motorbike, yeah. You were also visiting with the connection, yeah. Like, the

  Emmanuel Maggiori

  whole country, my hometown, smaller place. Think of a pensioner who wants to, or, you know, a person who wants to. They don't even know where to even learn about Bitcoin. Yeah, where to even buy bitcoin? It's still geeky to them. So the act of going to the cave, as they call it, literally around the corner, you go into this shady place, they just give you some and dollars. They can literally touch them and put them under the mattress. So the idea that they have to learn about this technology. Know how to use some sort of app or exchange, and you're asking effort from people who the dollar does it for them.

  Peter McCormack

  I'm not thinking about those. These are the these are the people that the only reason a high street bank exists for old people, really. Now, okay, I don't I use an app. Will we ever go to a bank? Yes, no. Okay, now I get that. So exists the future exists for the younger generation, right? And so I'm not here teaching all people. Some people have done it, yes, some people have done it, but it's not for them.

  Emmanuel Maggiori

  I think also in the UK, we're very digitalized. Nobody uses cash. I don't use cash, no. In Argentina, people still rely a lot on cash and like, you're speaking maybe for the position of a place where people they use banking apps. In Argentina, it's so arcane.

  Peter McCormack

  Like, sure, yeah, but do I've been to 55 countries, right? Where do you think I find it harder to explain Bitcoin? The UK, Argentina or Venezuela. Definitely the UK. It's the hardest, yeah, because we're still being bored as a frog. When I went out to Argentina and I was explaining Bitcoin to people, they're like, this is money the government can't steal, I was like, Yeah, fucking where do I get it? Okay, so when you've been stolen from, slowly, a little bit. Over time, you maybe don't even notice it when they're robbing you hard, but either way, they're still stealing from you. They're just they're just not stealing from me. I We should redo this in a year. Totally. I want you to read my friend vijay's book, and I want you to read send it over. Yeah, well, and I'll get you Jeff Booth's book. I think you'll enjoy it. I love reading books. Yeah, I've taken over this interview.

  Emmanuel Maggiori

  No, that's great. It's very entertaining. Yeah, is there anything we haven't touched on, but we should have, yeah, you got a book coming out in April? Yeah, I do. I do have a book coming out. It's called, if you can just print money, why do I pay taxes? You can pre order it, and you should. So everybody listening to this, just go, and I'm still a newish author, so I need help to, like, come on, yeah. I do have four books, yeah. This one, I think it's an important book for me. It's published by a very well known publisher. They says Wiley. They it's like, you know, they publish the Bitcoin standard actually. And I've learned a lot about economics myself. So, you know, it's, I'm very geeky, very nerdy. So, you know, it's great that a good publisher accepted me to write this book, you know, because I don't have a PhD in economics. So it was a lot of hard work. It was very fun. There lots of anecdotes about Argentina, and I will be debunking MMT point by point. And you should all get a copy. You can go to Amazon, to Waterstones, like any place where you buy books, it should be available.

  Peter McCormack

  I want to read your AI books as well my AI books. I think we should make a show on AI because I have so many questions, so

  Emmanuel Maggiori

  many questions. We should do a whole and you would love my book silicon, where I silicon, it's a critique of the technology industry, because I lived it from the inside. This, you know, this epidemic of idleness in the industry that was so working, where people didn't seem to be working hard. Most of my friend, I have a friend who had two jobs at the same time secretly because he wasn't doing much, paid very well. And a lot of people I know were in that situation. I was in that situation myself, reluctantly. You know, when you get a new job, you're excited, and then all of a sudden there's this team of people building some technology. That doesn't make any sense, but they got a lot of money to build it, and there's nothing to do, and people are just, you know, grasping at straws and that's got what got me into economics, because I started interviewing people, asking them, why is this happening in the tech sector? You know, some people were skeptical, and then Twitter fired 80% of the workers, and it goes later. I mean, perhaps, but it didn't collapse. And a lot of people say, like, you can't run the business with, like, 80, you know, with 20% actually 10% in the end of the workforce. So a lot of people started listening to me, yet perhaps as an epidemic of idleness, right? And when I spoke to people, I spoke to investors, you know, a lot, and the topic of interest rates came up repeatedly. People telling me interest rates have been very low for a long time, which means we can get good bank for invest investments. So we are pushed toward taking more risks, right? So you have all these VC funds getting a lot of money, you know, and they invest in startups. And I had the impression that a lot of this didn't make any sense. And when you look at mainstream economic theory, it doesn't have much to say about that. And then you look at their two completely opposite heterodox economic theories. There's the Austrians and the post Keynesians completely opposite. You had Steve Keenan the show. We would call it. Call him a post Keynesian. But both of them say that artificially low interest rates cause issues. In the case of Austrians, they will tell you it causes malinvestment. So people, they invest in stupid stuff, which I would anecdotally be inclined to say, kind of sounds very familiar, and then postcards and say it causes excessive credit, so people take more and more credit, and at one point it's like a sort of Ponzi scheme that collapses due to excessive credit taking. And I wanted to know what's what's happening and that's how I landed on MMT at one point, because it's okay. What are these people saying? So I wanted to know what everyone was saying about economics, yeah, but I think you know to your point of even what's going on in the UK, and we've had stagnation since 2008 so if you look at any graph, it's like there's a kink in the curve. It goes, it's going up, and then it flattens. When was

  Peter McCormack

  that 1971 that was 2008 after the financial crisis? Yeah. Well, they're like, we can just create money.

  Emmanuel Maggiori

  And I'm like, I wonder what happened. You could argue that a lot of the money creation and QE was a response to this Tech. Actually. So the stagnation was happening for some other reason. People don't want to invest anymore. They don't want to companies that are just reluctant to actually invest. So the central bank is trying to pump money into the economy, and even then, you don't get people to invest. So that would be a mainstream explanation.

  Peter McCormack

  What the fuck happened 1971 website, I'll show you brilliant. What happened? Weapon?

  Emmanuel Maggiori

  I'm gonna show you a brilliant one, yeah. Oh, it's when the gold standard was, yeah, you're gonna love it, yeah. I can imagine how it Yeah.

  Peter McCormack

  So look at this. This is net productivity, yeah, an hourly compensation. Stay up there. Like it started to there was, like, some deviation before there makes sense, right? Yeah, it's very interesting, because you pump this money, you come off a standard, you pump this money into an economy, and where does it go? It goes so asset.

  Emmanuel Maggiori

  My question from my this is completely anecdotal. My question is, when you see so many people, it's like in the technology industry, I have the impression that there are two choices sometimes open to you. Either I work for a big company where I don't do much, some people are going to get offended by this, because the oh, I work so hard, I've met so many people who don't act is very easy life. When you work for one, it's big companies, very little to do. Or your work for startup where you're building a product that doesn't make any sense most of the time, but investors still want to give it a go, even if the flaws are obvious, right? And so either way, you're not being very productive. So if the way to reactivate the economy, to get people to invest is to invest in things that don't make much sense, how are you going to generate economic growth? So I wonder, if I had time I would like to do like even mathematical models to try to see, can we model this sort of malinvestment, right? Those are issues with incentive. Let me tell you something I discovered during my research for my book silicon. You know, in the UK, there are incentives for private individuals to invest in sort of venture like innovative startups, and there's this tax rebate. Essentially, you can deduct your investment from your taxes, right? EIS, so you did, but it's you deduct the investment from your taxes. So it's essentially free for you. It's either, do I pay tax, or do I give money to a startup? If the startup goes well, and you ever make money from it, you're also taxed at a really low rate. So it's essentially what they create is a system where there's no downside for you. It's all upside. I've heard people say so I know a guy who works as a matchmaker, so he essentially gets people, he gets them investment opportunities. And you know what they tell him, I don't care where you put my money, just put it somewhere. Because, you know, worst case scenario, the same best case scenario. I'm going to make money from this. I feel like there's a whole this idea that we can create economic growth by randomly doing lots of things. Let's invest in all sorts of companies, because at 1.1 of them will be the new, you know, the new unicorn, Airbnb, or, yeah, I don't think that's calculated risk, you know. I'm all for calculated risk, you know, but I don't think that's what it is. It's, to me, it's almost like throwing darts, you know, at a dart board and hoping you'll hit the bullseye at some point, and with all these incentives, they just, you know, making people throw more darts. Seems like the dartboard is getting larger and larger. And I don't see economic growth being created by these companies. You know, if that's where the money is going, like, that's what I've seen personally, right? That the creation of no value for like, you know, there's a company, this was a few years ago. There's a company called juicero, yeah, I know, yeah. I met the guy who created it. Was his video, yeah, I don't remember the name, yeah, totally. On Instagram. Oh, I forgot his name, yeah, yeah. So investors gave them 120 million, yeah, to build in a product that a juicer, a juicer that costs $700 to buy, a

  Peter McCormack

  juicer with no mess, with no mess, yeah, because we, I got a juicer at home. You got all the pulp and shit. You just been in a pod. Yeah, it was like the Nespresso for juicers,

  Emmanuel Maggiori

  then espresso for juicers, but it had some obvious flaws, that, which is, coffee is kind of difficult to make a specialized machine was this juicer that was actually $700 a lot more expensive than an espresso machine, and you paid $7 per capsule, yeah? Doug Evans, Doug Evans, yeah, you can actually squeeze the capsule with your hand and the juice that came Yeah. But this is just like this explains a little bit this irrationality. And look in 2021 listen to this, because you're gonna love this. In 2000 love this. In 2021 it's that year where there was a lot of money creation, right? Yeah, 2021 was the record year of VC investment in history. That was insane. So we're talking twice the investment as the previous year, which was already twice the investment as the year before. There was. Is a spike of money going into startups, right? And in 2021 there were 700 unicorns, and there were new unicorns. So that's two per day, which doesn't sound right. Imagine having two new Airbnbs a day, like it's obviously, there's always there's obviously something weird going on, and this was a period of a lot of new money pumped into the economy. And I wonder how much of this, maybe perhaps overdoing QE ended up making it a little too easy, or the people just channeled so much money, perhaps newly created money, to all of these creative endeavors that were, in reality, just random, silly attempts of building products that did make sense, you know? And that's, I think that's very sad, you know. Well, there is a Bitcoin answer to this.

  Peter McCormack

  That's the year where Bitcoin, yeah, no, but just look when you when you make money so easy to access, and you devalue it so much, and you run a debt based economy, you're just going to find ways that people are going to grift it. You're going to get access to that low interest rate money from the government. No risk investor everywhere, and they do rounds of investment, and then they float in the stock market and there's like, No, there's no actual value been created like Snapchat. I'm still pretty sure Snapchat has never made any real Yeah, but it's made a lot of people fucking rich.

  Emmanuel Maggiori

  You just need to walk. Are you happy with we work? Right? So the founder of WeWork, you know, he there was the famous IPO of WeWork. It's a business that never made any sense from a business point of view, because they were trying to treat it like a tech unicorn when it was a real estate business, right? And there was an IPO coming up. And just two or three months before the IPO, the founder makes 700 million by making private deals with his shares, right? So cool, yeah, he sells. Half of that was selling his shares privately, and the other half was getting loans from banks using shares as collateral. And this happens kind of behind the scenes, and then the IPO is this famous, disastrous IPO that had to be canceled. But not just like there's another thing that's actually even more interesting about that story is that after that, he launched a new business, and he got some of the most. He was record high investment into his business from venture capitalists. I know why. I think that is, I think it's because the guy knew how to tell a good story, right? He did, clearly

  Peter McCormack

  because, but he also he, you know, he knows how to make early investors rich. I mean,

  Emmanuel Maggiori

  that's what the investors want. They want him to tell a good story so that, yeah, provided that people walk out of the investment early enough they make money from it, right? So it's like

  Peter McCormack

  a Yeah, but like, if you came to me and said, I want to start a business, I need 10,000 pound, and I'd say I had 100,000 pound in the bank. I'm like, Okay, go on and see what you do if I have to sell my bitcoin. I'm like, You got to fucking prove to me, when is the return? Five years. Okay? You got about perform Bitcoin in five years? Yeah? This Bitcoin is a very good at investing wisely, okay? Because they understand the value of their money. I see, yeah, we're gonna come back to this. I'm gonna, I'm gonna get your other book. So I want, I do want to do the AR one, because I've got so many questions. Cool, cool. We will do that again. Okay, where do people find you?

  Emmanuel Maggiori

  Man, they can find me on I'm on LinkedIn. I'm on X, yeah, so that's the two places where they can find me. I'm new to x, so I have, I've started posting very recently, I've been following you. Brutal, it's, I'm discovering it's very educational, because LinkedIn is very civilized. X is not civilized.

  Peter McCormack

  Well, x is the free market for conversation. And you know what? The I have had periods I literally, when it was Twitter, I came off because, like, I was fucking beat up. And all you have to learn is words mean, fuck all. Who cares? Everyone's throwing the shit out. Yeah, I don't take it personally, and then it's fine, no.

  Emmanuel Maggiori

  And I've been into, I've had lots of conversations with mm tears, people who support MMT, and I've tried to, and it was very educational

  Peter McCormack

  for me. Cold, they come out, they come at you. They're called, and I

  Emmanuel Maggiori

  feel it's so it's, again, it's very sly, because what they do is, you prove them wrong, and they come back with an argument that is technically correct, but maybe uses a word in a completely different way. So you're talking about something Yeah, you're right, but you're talking about something else. But they keep doing more and more of that, and they try to convince me that the UK, the current Treasury in the UK, the operations are such that the government could create as much money as it wants without changing any rules. With the Bank of England, I know someone who works with Treasury was telling me, Well, that's not quite how it works. And then I did some research, and the argument doesn't make any it's true that sometimes the. That the Treasury will get an advance from the central bank that is settled during the day and but to them, it's like, it's like, saying that I can create as much money as I want because I can use a credit card. Yeah. It's like, yeah, if I don't pay my balance at the end of a month, the bank is going to stop doing it. But anyway, they believe that no rules need to be changed. It's very easy to move toward an MMT world. And I tried to, kind of, and interestingly, I got a few replies from Warren Mosler, who was the financier, who kind of invented MMT. Okay, interesting. I think he thought I was supporting MMT because I was kind of, I had a few technical arguments about how things work and, but then he stopped replying when he noticed

  Peter McCormack

  the very simple answer is, they're socialists, and socialists are always wrong, always and everywhere. Have you sound like Malay? Well, they just, they just destroy everything. They just, they just, it's the politics and economics at envy. And I am a huge fan of heavy emulate I think his Davos speech the last three years is always the highlight. Wasn't there a new one? Yeah? Yeah, it's fantastic. And I wish, like, honestly, I wish I understood it and could speak like him. But how do you feel?

  Emmanuel Maggiori

  Tell me, as a person who hates the government and loves Bitcoin, how did you feel when even, when did you hear about Malay?

  Peter McCormack

  Well, that's I went there made a documentary because it was prior to him. So I went to make a doctor me and Kurt went to make a documentary about inflation. We interviewed his economic advisor. There was another woman. We interviewed What was her name, Catherine, Diana Medina, but we went out and we What year was this? This was the year before he was elected, and I just my view was, Argentina has tried inflationary economics for a long time, and it took it from what the sixth richest country in the world to wherever, whatever number it was, and inflation has just had a terrible impact on the country and on that. And the bit that hurt me most was just people saying their kids have moved away. And yeah, like that family nucleus was destroyed. And I spent time with families, and I live the evenings they have where everyone sits around, talks and drinks wine and eats barbecue, and I just, I love the culture, and I saw inflation as an attack on the culture. Yeah, it still was time, but it's an attack on the Argentinian culture, which is a strong culture. And so I left with hope for Malay. And I feel like was he campaigning? Yes, he was campaigning. Yeah. He was campaigning. He had his chainsaw out. Yeah, and, I want the UK to have its Malay moment. A lot of people seem to do, yeah. I want somebody to come into this country and just rip the band aid off and say, Look, this socialist nonsense is Yeah. So I think there's a narrative that ring that's kind of brewing in the UK that rings a bell to me too. I there was Robert jendrick. So when he defected to reform, first thing he brought up in his speech, what did he say? Well, so the first thing he stood up in did his defection speech, his press conference, and the first thing he talked about was economics, yeah.

  Emmanuel Maggiori

  So what caught my attention is that he said that the conservative party didn't have the stomach to do the things that actually needed to be done, which were more dramatic, if you and that's what Malay settled. So there was, I don't think reform has the stomach for it. I don't know. Yeah, I don't know what that yeah, do you don't think so?

  Peter McCormack

  No, I don't think so. I think once they get into power, it's gonna be the Yuri party again, it's gonna be the unit because, and then they'll do some things. I just think they change the pace of decay and who they pointed at. But I don't think they're going like Malay came in and said, Look, poverty will go up and then it will come back down. There will be a settlement period. And as I remember, like, the first couple of years, he was under a lot of pressure. Yeah, you know, it was tough, yeah. But what's happened? Like the supply of properties has increased and the prices of rents have dropped. Poverty is now dropped. Did he go up to like, 55 and it's dropped? Inflation steady.

  Emmanuel Maggiori

  Another interesting thing, I have a friend who he studies the fundamentals and publishes macro analysis, and he was saying that the exports are looking very good, right? So there's been a pretty big increase of exports, especially to India. It's like 60% up. So it's pretty dramatic. But something quite interesting happened is that the currency at the moment is not particularly favorable. It's not like Argentina. It's so cheap that people are buying and the way he interpreted this is that India feels like it's a good time to actually strike deals with Argentina because it's more stable, right? We import from Argentina because we believe that there will be more stability, right? And I. Think, you know, because it's not exports, because it's super cheap, so it's exports when it's not super cheap, you know. And that's new. That's pretty new, a new development. And so I can tell you, I'm very surprised about this conversation we're having today, because to me, Argent Argentina was, you know, a bit of a basket case. I had no hope for Argentina when I left the country, I left, yeah, there was inflation, but there was also the institutional decay where you and the support for that, people supporting having politically appointed judges. So when you're in that world, you're like, goodbye, right? Nobody ever spoke about Argentina except football. So if you were, you check in at the hotel and people tell you, Oh, you're from Argentina. I love Messi or Maradona. Before that, nobody would bring up the Argentinian economy, right, ever. And I remember, I think it was 2023, probably when Malay was campaigning, that I was I checked into this hotel, and it was in Austria, and the guy says, Oh, you're from Argentina. Is that the place with the crazy chainsaw? Guy, yeah, you know. And have a feeling that the world is looking at Argentina. And this is because a lot of people are terrified that it could go well, you know that they are

  Peter McCormack

  terrified, because they want, they want. So we've had, now what in the UK? Thatcher was probably the last great Prime Minister we had who understand economics. We've had decades of these morons, socialist or just incompetent idiots, but what we've allowed is the country to be looted. That's what happened. That's what this is. All it is, right? You know when you're on a debt based economy, you're allowing the hard working people of the country, the lower class and the lower middle class, to be looted. You haven't had money and their time stolen, and we've tried this, and the majority of people have got materially poorer because we've made the rich richer. Okay, that's what we've done. And so people don't want this shit anymore. You go to, you go to Davos, and you watch Malays speech, and it's, it's not, he's not talking. He's talking like an expert, like, I wish I was an expert. I'm just a dumbass from Bedford who's like, trying to figure the world out. He talks so well. He talks about the papers he's read and the theories, and he can explain what's gone wrong in Argentina. He can explain why socialism failed. He can explain the morality of entrepreneurialism, you know, he just and then you go and see our wet wipe Keir Starmer speak, and you're like, Just fuck off.

  Unknown Speaker

  I think to Argent for Argentinians.

  Emmanuel Maggiori

  I mean, he was an outsider when he was campaigning. I don't think a lot of people bought his proposal, like proposed policies, it was a lot about, let's give a chance to something dramatically different from the first time, the first time, you know, and last time I went to Argentina. It's been a while. I went there right after he took office. And my impression was that people had hope that things could change. That's it. And it was a question. I tell you what everybody told me it was. I mean, some people were against him, but a lot of people told me, Look, I don't know if I have no idea if this thing is going to work or not, but at least there's a chance that something could be done differently, because the alternative is to continue that kind of Venezuela path that we've been following for years so, and they were giving him the benefit of the doubt. And I will tell you something I found, I found fascinating to super fascinating, which was the, it was the midterm election in October last year, right? So, in Argentina, is a midterm election where you they renew half of, let's say half of Parliament. Imagine, like, you know, there's general elections and midterm elections, like in the US now, the narrative was, he's gonna lose horribly, right? And why? Well, first of all, because there was a local election where he didn't do well, like a by election, sort of by election. And the other thing is austerity, not necessarily with those words, and I'm not a big fan of the word austerity, but there's austerity. The typical story that the incumbent government, if they implement austerity measures, everybody hates it, and they're never re elected, and that's why it's impossible for a government to reduce the deficit, right? And a few weeks before the election, I'm at Waterstones, and there's this book called austerity, right? So I buy the book. It's a bit academic book by this Italian guy, Alexina, and the thesis of the book, and there's a few things, but he says that austerity in. Implemented as tax increases, historically, has been recessionary, but implemented as a reduction of government spending has not been recessionary, except like, maybe there's a little bump and then it goes up again. And another one of the things the book says is that beware of this idea that a government can be re elected, because there are many instances in history, and they're named in the book where a government was actually re elected, even though they implemented austerity, especially that meant government cuts, not tax increases, right? So I did read this book. Maybe there are exceptions to the rule that, you know you can't train the government because otherwise you're not going to get re elected. And a week later, there's the election in Argentina, and everybody expected Malay to lose. A lot of my relatives were actually almost clinically depressed with this, because they thought we're going back to the old regime. So this is again, decline, and our family members moving away, because that's, you know, my family is now a little bit like you said. There's, there are people in Australia, in the UK, Denmark, Germany, we're all over the place. So this very sad thing of decline going, you know, back to this decline, and they got very depressed. I think even if Malay has had, like, his own issues, there have been accusations he's a controversial guy and but everybody assumed he was going to lose, and then he won by a landslide. He not just, he didn't win by a little bit. He won the midterm election. It's not he like the party, right? Yeah, but, and to me, that was it told me, is this time different, right? Could Argentina have turned the tide? Is it? Now? Are people really electing change now, even if they don't like the guy, they really don't want the previous administration, the piranes, who've been, you know, managing the country since the 50s, maybe it's no longer an option, and I hope it isn't. And you know, there was, I had a conversation with entrepreneur from the US. He told me, will Argentina ever give us her money back? No, because he's he's speaking of this currency swap, very controversial sort of lifeline that the US gave to the to the Malay administration, and because Argentina has a history of not paying its debts, it's not exactly dead. But anyway, and this guy said, Will we ever see that money again? Because Argentina never pays its debt and stuff. I was like, you don't, you know, you know what? This time, I wonder if things may have changed, and maybe you will actually get your money. Yeah, not just, not just that. They actually, so they only used two and a half billion, two and a half billion, but they've already reconverted that. Yeah, so the currency swap is still on, so it can still be used. So it's not like it's over, but Argentina has literally just repaid that. I want to send a message to this guy and say, Hey, actually look at that like this is a bit unexpected. Again, institutions. We go back to the role what Malay wants to do is to fix institutions. He wants people to he tried, he passed a package of laws that kind of tried to say, will be easier to do business in Argentina in the long term, right? That's kind of the goal of his law. And he's trying to fix institutions, right? And we'll see what happens, because Argentina always has surprises.

  Peter McCormack

  We need it here. I hope someone steps forward, someone's smart. There's a chance of that. Yeah, I do, but I I worry that has to get really painful for people to actually want it this. You know, it has to get to the point where even the socialists don't want it anymore. Like, you've got the champagne socialists live in the nice areas who love immigration and who love wealth redistribution, because it doesn't really touch their lives, but we've seen people become more conservative as it touches their lives, but they find out how, like, there's this, there's this. Like, you know, I have these conversations with people, I can think of one person, specifically Connor, who, like you can tell they understand all your arguments, but they're worried what people will think of them if they act conservative. And I just worry that people, it has to get a lot worse for people. So we need that right charismatic figure who can explain things, economic concepts in the right way to help people understand, and then hopefully they'll come forward and like we will have to go through a period of pain to recover and build a strong, prosperous comment. I hope we get it. I don't know who that person would be. I wish I was smart enough to do it. I'm just a dumb ass, but I would vote for that person if they came.

  Emmanuel Maggiori

  Yeah, you know something I heard during Malays campaign. So in 2013 what people were telling me was that the people who traditionally benefited from the piranhas government, it's people who got government handouts, who work for the government. Right? When inflation went to, you know, 200% these people stopped trusting even themselves, even if they personally they were worse off. What I heard from the ground. You know, because I do speak to Argentinians a lot. They talk. I think even people who were traditionally benefited from this regime are no longer buying it. They want to change themselves.

  Peter McCormack

  There's like a morality to this, like I benefit from inflation, but when you if you're doing well, while everyone around you, isn't it's fucking shit. I don't want to do well at the cost of other people. I don't want to have my purchasing power increase but cause other people to have theirs decrease. I don't want to be able to buy a Ferrari because somebody can't buy their groceries. It's fucking gross. I want to make my money from building I like building things. I built this podcast, building a football club. I like building things. Yeah, I would want change, man, but hopefully we get it. Emmanuel, listen, great. This is great. I love this. Great to meet you, and it's good luck with the book. And I think we'll do this again soon. And good luck to you, man. And thank you to anyone who stuck around to the end. I think we've gone for nearly three hours. Nearly three hours fucking out, three hours right. See you all soon. Peace out. Thank you very much. Yeah.