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Chapter 1: What is the main topic discussed in this episode?
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To understand the economy, you have to understand human nature. How are you doing there? It is time for the podcast, and today on the podcast, we're going to be talking all about money. Now, not how much you make of it, where you get it, if you don't have it, where you get easy money.
If you have it, how do you protect it and get feckers away from you who actually want it, but you don't want to give it to them. None of that. We're going to talk about the genesis. Well, that's true. I mean, most people don't think about money. When they think about, John, it's like, you know, we're thinking conceptually about money, but most people say, look, I have it, now you feck off.
I'm not giving any of it to you.
Or if you don't have it, it's like, how do I make money? And more importantly, how do I make it easy?
I want easy money. As little effort as possible, please.
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Chapter 2: What is the significance of the dollar's power beyond the Fed?
We ended up talking, you know, in detail about Martin Luther's silver investments in ways that I think was actually generative for both of us.
a generous for both of us and b led me to speculate that so mark just for before we start on the almighty dollar martin luther's uncle uncles and fathers were speculators and silver mines in what is silesia in germany and they like most speculators won a bit and lost a bit and having lost a bit and having gone bankrupt luther himself
is sitting there thinking, hmm, who is making all the easy money here? Certainly not my dad and my uncles who are investing and throwing all their capital, other people's capital at silver mines. It's those guys in the church. we've got this little scam going called selling indulgences.
And I was wondering, was Martin Luther's hatred of the Catholic or the established Christian church in some way related to the fact that his family kept going bust with silver mines? I threw it out there and it has been one of the speculative punts that has generated most discourse. So thank you, Brendan. I robbed it from you.
No, you very cleverly in the works that we were both discussing and sharing, pick that out as a story thread. And his family, they were investors in what we might think of as a joint stock company. The early silver market in Germany explains a lot. Engels thought that it was the first proto example of what we think of now as capitalism.
the very sophisticated financial organization that pooled capital and sent it down the mine to bring silver back up. I think that you can, you know, that's a load-bearing structure for a lot of ideas.
Well, I tell you, you heard it here first, and then you read it in Money, a Story of Humanity, that in actual fact what sparks the Protestant Reformation was not some...
religious conversion to part of Martin Luther, but what made him such a cussed, obnoxious, little, angry shite was the fact that his parents had lost a fortune on money and the church was making easy money and he took it out on them and fuck it, did he take it out on them.
Anyway. Sounds like a fellow with a big chip on his shoulder.
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Chapter 3: How does Brendan Greeley define the genesis of money?
New country, they should have had their own money. The 1776 problem is America claims its own political sovereignty, and it adopts as its currency the dollar, which is a Spanish coin made out of Mexican silver with a German name. That is a problem, but it's also an opportunity. If you, once you're willing to abandon the assumption of monetary sovereignty and think, okay,
In America, at the very beginning, it was monetary chaos. They were not creators of a currency. They were takers of a currency that came in from the outside. Now, we're sort of starting to pull on a very interesting thread. What is the actual story of this dollar?
That's what led me to spend the same amount of time that you did in the mountains of Bohemia and Saxony looking at these very early capital structures. But- The basic point for me of the starting point for the book is we didn't create our own money. And in fact, America succumbed to an existing global dollar zone. And once I knew to look for that, I started to see monetary chaos everywhere.
I think monetary sovereignty exists. I went through an adolescent period where I was like, there's no such thing as monetary sovereignty. It's bullshit. And now what I've started to think is you can win monetary sovereignty over the chaos, but it takes a lot of work and it's constantly slipping out of your grasp and you have to constantly watch where monetary sovereignty is being eroded.
I think that's true right now in the United States. It's definitely true in 1776.
So let's go to right now, and then we'll go back to history. Why do you think American sovereignty over the dollar is eroding right now? Because what we hear is all sorts of speculation. Is it the end of the dollar? Is it the beginning of the dollar? Is the dollar the global reserve currency? Yes, it is. Do people want to? Do the Chinese want to do it? Do the Germans want to do it?
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Chapter 4: What does Greeley mean by saying money is not solely sovereign?
What happens if the dollar falls? So there's these relentless questions about the dollar. And what you're saying is those questions should or could have a basis, in fact, a reality because things are getting messy. Explain that to me and then we'll go back again.
Yeah, absolutely. So I think that once we have a history of how the United States claimed sovereignty of its own dollar, we sort of understand that it's not just levitating on its own. But if we start right now with the global dollar system, what we're taught is that money comes from the Fed, the dollar comes from the Fed, and then the banks take it and play with it. That doesn't seem to be true.
And in fact, the way we produce almost all of the dollars in the world is that commercial banks, private entities, mark up their own balance sheets with brand new deposits denominated in dollars. When a bank makes you a loan in America, it just marks up your account with brand new deposits. They didn't get those from the Fed.
Chapter 5: How does cryptocurrency compare to traditional banking?
Nobody arrived with a briefcase full of dollars, $100 bills. They just created it. The act of lending from a bank is the act of creating brand new dollars. Okay, so we know that that happens domestically. That's also happening internationally. This is so hard to grasp if you assume that the dollar is sovereign, that it inherently comes from America.
But since the 1960s, banks all over the world have been marking up their own balance sheets with brand new dollar denominated deposits. This is exactly the same thing as banks do in America. The problem with sovereignty is they do this without any permission from the United States.
foreign banks create these offshore dollars, we sometimes also call them euro dollars, without any permission from the Fed, without any permission from the United States Treasury, certainly no permission, nobody asked me. And they do this because it's useful for them. These dollars are useful for these banks. And so the Federal Reserve is actually chasing these dollars.
It's not pushing these dollars out into the world. It's protecting these dollars, but it only realized that they were fragile, you know, over the course of the 80s and the 90s. And what the Fed does is it offers swap lines. Again, this sounds complicated. It's pretty straightforward.
The Fed will, in an emergency, lend for a short period of time its own dollars to other central banks that it trusts. Those central banks, in turn, can then provide those dollars, again, short-term loan, to their own commercial banks in case they're worried about the strength of their own balance sheets. This happened in 2008 during the financial crisis.
It happened again in 2020 during the pandemic when you and I were desperately trying to figure out how to write these books about money. The Fed didn't generate these dollars. In fact, it's chasing them down, trying to figure out how to protect them to make sure that they're secure after private banks outside of our own borders created them. That to me doesn't feel like a story of sovereignty.
It feels like a story where people are creating their own money because they want to and it's because it's useful. And then we collectively as democracies have to figure out how to make sure that money is safe.
So in a way, this is the push and pull approach. So listeners, if you have suffered monetary economics, you will have suffered this view, which is that the central bank create the money and they push this money into the system. What you're saying is that in actual fact, something much more interesting happens is that the central banks are pulled around
by the commercial banks who create dollars out of nothing with no permission. And of course, we hear about all these guidelines and these Bank of International Settlements and this, that, and the other. But in actual fact, the system is quite chaotic.
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Chapter 6: Why is the euro-dollar system critical in understanding the dollar's dominance?
But also, when you're talking about the weaponizing of the dollar and these swap lines, it's an act of extreme aggression then, isn't it?
Well, it's both aggression and kind of stupidity. So what he's saying is that the Treasury and the Federal Reserve are two very distinct organizations. So the Federal Reserve is an independent bank, which is apolitical on paper. The Treasury is basically the Department of Finance of the United States. And that comes under the control of your friend Scott Besant, who is working for Donald Trump.
If you think about it, right? So Scott Besant... has now said, look, there is another source of these dollars, which are our dollars, and we will give them to you. So, for example, the great example was Millet, right?
Yeah.
They said to Millet, if you win the elections, we will give you, I think it was $20 billion. I can't remember the figure, right? Yeah, I thought it was $40, actually. Maybe it's $40. So suddenly they're making... the provision of American dollars in Argentina contingent on a certain side winning the election. Now that is financial warfare on a monumental scale. Yeah.
Because what they're saying is if we want your guys to win, but if our guys don't win, we will penalize the country by precipitating the currency crisis in Argentina. That is very dangerous stuff. And that's where, and I think we might even leave it here. I mean, that's what I think. But Brendan's book, it's fascinating in a whole variety of areas. But I think what it does is it shows us
A, how almighty the dollar is, i.e. how ubiquitous it is, and how hard it is going to be to ever replace it, or at least replace it in the next 10 or 15 or 20 years, no matter what the Americans do. That's number one. But the second idea is how a politicized Fed could highly, highly, highly supercharge American foreign policy through their monetary policy, which they haven't done before.
They haven't said, look, The dollar is our dollar. If you want it, you do what we say. What they've done thus far is always said, look, the dollar is non-political. You can use it and we'll help you along the way. The Trump administration or whatever comes after it could make the dollar highly politicized. And that would be the beginning of the end for the dollar.
Because I think Brendan's big point is that the dollar is almighty because it's beyond politics. It's just this creation of credit. It's a currency that people accept. The minute you put strings onto a currency, for example, I think that that's the end of the currency. So what he's just saying is a warning sign.
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