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In this episode of Bitcoin Magazine’s Fed Watch, Christian and I are joined by Jeff Booth. It results in a show that’s unlike any other interview with Booth you may have seen. Most listeners are familiar with his book, so we spend most of our time discussing what a timeline of events looks like from Booth’s perspective, and then some of the potential limitations of the technology-driven deflation theory. In the usual Fed Watch style, we end up trying to understand how Bitcoin affects these arguments and what Bitcoin means to the world.
Not only did Booth take bitcoin by storm in 2020, but he caught up with all macro investments with his book “The Price of Tomorrow: Why Deflation is the Key to an Abundant Future.” In it, he outlines a new way of looking at monetary policy and economics through the lens of a technologist. Technology has a huge deflationary effect in the sense that it lowers prices through the economy. Technology is also multiplicative, meaning its effects are exponential, not linear. When we approach the monetary economy from this angle, deflation becomes inevitable and, most troubling of all, very near.
Booth’s deflationary arguments fit in well with the broad discussion macro currently has about inflation versus deflation, but with a new twist that’s hard to deny. Fed Watch has mainly explored this topic from a financial angle. Are the actions of central banks inflationary? Is the money supply increasing or decreasing? And so on. We have argued that credit is shrinking, which means there is deflation, but central banks can adjust bank balance sheets, which is like inflation.
Booth’s approach cuts right through these academic arguments, down to the jugular vein. Humanity is approaching the vertical part of the exponential deflation curve. This technological deflation will force central banks and governments into a predetermined path of money printing and centralization, which in turn will drive people and capital into bitcoin.
During the podcast we ask several questions to test Booth’s theory. Most importantly, could inflation be driving technology instead of technology driving deflation? You will have to listen to hear how Booth expertly answers that question. It leads the interview into an in-depth conversation about Bitcoin culture and our deflationary future.
Overall, this is a very thought provoking episode of Fed Watch. Booth is an optimist behind a bearish view of the near future. Technology deflation will beat centralization and central banks, leading us to a more prosperous future with new money designed for deflation. Thanks to Booth for coming to the show.