Episode 123 – Defining the World of Crypto and the Digital Commons with Rohan Grey

Macro N Cheese – Episode 123
Defining the World of Crypto and the Digital Commons with Rohan Grey
June 5, 2021

 

[00:00:02.820] – Rohan Grey [intro/music]

A lot of leftists think of technology as a Silicon Valley thing. Think of money as a Wall Street thing. Yuck, right? They’re not lefty things, but the kinds of questions we have today are not ‘just do we want Facebook to run everything,’ it’s if we don’t want them to run everything, but presumably, nobody is clamoring that we all put our cell phones in a bonfire and then go back to communicating on pen and paper. Then what does the alternative look like?

[00:00:28.570] – Rohan Grey [intro/music]

One of the reasons MMT succeeded and we’ve teased this out with Bill Mitchell and others at MMT conferences is because it embraced the Internet as a direct mode of reaching out to people at a time when the traditional media and academic structures would have probably continued to exclude MMT from the discourse.

[00:01:35.210] – Geoff Ginter [intro/music]

Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43.100] – Steve Grumbine

All right, this is Steve with Macro N Cheese. Folks, it’s a digital world. And with news about the crypto rise, the crypto crash. We’re hearing about central banks looking at adopting digital crypto-based currencies and blockchain technologies and all the different uses. And ultimately, what we hear typically is about the speculative nature, about these coins that are floating around.

And I’ll be honest with you, I keep getting asked to be on shows and programs to talk about crypto. And as much as I like talking about MMT and things like that, I’m probably just as nascent as you guys when it comes to this stuff. And so I said, all right, I’ve had enough. I’ve talked to guys like Brett Scott who are geniuses of the fintech world. I’ve talked to various people like Rohan Grey, who I’m about to talk to today.

But ultimately, there is so much going on in the space that if you can keep up with it, you’re a better person than I am. But I’m going to try to make this podcast useful for you and a learning experience for me so that we can get to the bottom of what the crypto space even is, what the new fintech space is, and get a basic understanding of where this technology is going from a public perspective and a private perspective.

So with that, I’m going to bring on one of my good friends and probably and I say this not gratuitously at all, one of the smartest people I’ve ever met in my life, Rohan Grey. Rohan is also the president and co-founder of the Modern Money Network and has done some amazing work over the years and we’ve had him on many times. Without further ado, let me bring on my friend and guest Rohan Grey. Rohan, welcome to the show, sir.

[00:03:29.360] – Rohan Grey

Thanks for having me, Steve. Nice to see you again.

[00:03:31.520] – Grumbine

Absolutely. Well, you know, we’re hearing each other this time. There’s no visuals, but I still I have this memory of…

[00:03:37.730] – Grey

Nice to feel you out in the darkness, you know.

[00:03:41.680] – Grumbine

Let me ask you. We talked a little bit offline before we got started, and I basically tried to lay out the framework for what the average person that I speak to anyway kind of thinks of in terms of the crypto space. And obviously, it’s a lot bigger than this, it’s a lot more varied. It’s just a huge and growing space. But we talked about the divide, the decentralized financial systems. We talk about the coins.

We do talk about the blockchain underlying technology that enables a lot of other possibilities. And then there’s the public space in terms of what state governments and other institutions are looking at in terms of how to leverage this technology within the public good. So I guess before I go rambling too far down the road. What is your understanding, if you could net out the space and this is a big ask? Boy, do I know it’s big, but what would you call the space? How would you frame it? What are the dimensions of this?

[00:04:40.480] – Grey

Yeah, take a deep breath. I think the first thing is I teach a class or I’m going to be teaching a class in the fall called Law, Money, Technology. And that’s a sort of, at least to me, a good starting point to understand the different technical dimensions at play. And I use technical there not to mean just computers and machines, but things that have an institutional, systemic dynamic that requires a degree of understanding of those systems to then work out what’s going to happen.

There’s a lot of lawyering that is an art form, that is politics by other means, et cetera. But there’s also a kind of lawyering that is being a manipulator of systems. Somebody comes to, you know, they said, “I’ve done this thing, what can I do?” And your job is to know how to navigate the legal system. Same with money and finance. Someone comes to you, says, “I’ve got this problem, I want to do this thing,” and you can design contracts or navigate existing systems of credit and payments to make that kind of thing happen to a greater or lesser degree.

And the same is also obviously true of technology. People say, I want to be able to do this function and then you write software, or you build a machine to do that. And when I use technology there I try to start usually with a big history framework, thinking back to the time when we actually started to develop writing as a tool of accounting, the development of systems of records that began with counting all the important animals and bushels of wheat and those other things that might exist within a jurisdiction all the way through to modern accounting and systems and valuation and how you get your house appraised or how someone works out how much to pay someone in damages if they hit them with their car or something like that.

So it doesn’t mean that anybody who isn’t a trained lawyer or hasn’t become a computer programmer can’t have thoughts or informed opinions about these things. But it’s important to understand we’re not just talking about pure speculation. We’re not just talking about sci-fi in the absence of a political theory or of a legal theory of understanding how social governance works.

And if you put those things together, then you can look across history and say, look, it mattered when we created the written word and stopped building societies around oral communities where they passed things down through word of mouth. It matters when we had the printing press and created a system by which information could be developed, stored, mass transmitted to large numbers of people.

It mattered when we built the telegraph in the 19th century and started to connect the Atlantic to the new world and to be able to send wires across the world in a matter of minutes that used to take months to send through ship messages and things. And then it mattered when we built telecommunications and the Internet and put a mobile phone in the pockets of four billion people or have them anywhere up to now in a way that is the largest single connection of human beings in history by several orders of magnitude.

So if you start from that point of view and look at that long history of different kinds of technology, obviously law and money play a big role in. It matters who funds these things. It matters what the commercial logic of those systems are. It matters how states respond and regulate. It matters how we understand those things to fit into existing systems of property and contract and important constitutional law and public budgeting, et cetera.

So if you start from that point of view that at any particular point in history, people who control the technological medium of information and governance, whether that’s ancient palace scribes or the shaman in a tribe that claims to speak directly to God or the Catholic Church, that claims to speak directly to God or modern telecommunications companies, or even the railroad companies who are basically setting the pathways through which the mail carriers and the Postal Service then deliver everything from political pamphlets to news of new inventions.

Then you look at the modern age and what we see is that technology is once again reshaping the landscape. It’s not necessarily a radical democratic force, not necessarily a radical equalizing force, although it can be. But people and institutions and actors and political coalitions that used to be in power, that used to have a dominant role from a different era, are being shaped and giving way to new coalitions and alliances and institutions.

What might have been the world of the railroad owners and then the world of the coal and steel owners and then the world of the oil barons is now the world of technologically oriented 20-year-old hacker dudes or something. And that changes the kinds of politics that we see in the kinds of policies. So there’s a blockchain consortium in Congress, the Blockchain Caucus now that all of these tech companies make sure to have their voices in the ear of to shepherd through these new companies, becoming massive and building systemically important infrastructure.

There’s a global coalition of fintech companies, payments companies, UN policymakers, et cetera, who decided that connecting billions of people in often rural places with a cell phone that’s connected to a bank account is a critical step to bringing them into, quote-unquote, a “market economy” that we’ve built around. And so against that backdrop, against that world of people wake up and there was a fax machine, now there’s the Internet. It was a mobile phone. Now there’s the iPhone or whatever.

Digital currency comes in and for various reasons, partially, I think, to do with that hardware revolution that happened really before Bitcoin was happening in the early 2000s with mobile phones, mid-2000s and partially because of the global financial crash, et cetera, that awakened the public interest in how money works and things. This stuff is part of the leading edge.

This stuff is the kind of thing that during the 80s you’d be reading about the Internet. Now, this is one of the areas that is very exciting. It has its own culture, etcetera. And in that respect, I think it’s good, I think it’s an unalloyed good that average people are starting to ask questions about what money is, how it works, who’s creating, etcetera.

But as is often the case in these moments of social transformation, there’s a lot of cranks, and there’s a lot of people with very, very different views on how all of that should go, and a lot of them are not good Samaritans or politically oriented democratic activists. A lot of them are just selfish, greedy people that want to make money or see this as the new gold rush and want fame and glory and a position in history.

And as a result, the conversation around what money is, what necessary public digital financial infrastructure looks like reflects the ideologies and the interests of all kinds of people in the same way as conversations around law and political economy have for hundreds of years. So what we’re seeing now, I think, is a period where there’s a new vocabulary being built, there’s a new agenda being set, there are new battle lines being drawn, and there’s a new framing of old problems with old wine in new bottles.

And the bottle shape and design really matter. And it’s an exciting time in the sense that we’re making decisions now, I think, that will be as foundational to a whole generation of financial questions and issues as the cell phone network or the Internet has been in prior generations. So it really matters. And it’s much broader than just look at this cool app or look at this cool private currency, it’s value is going up. I put money in. I’ve got more money now than I had a week ago. Isn’t that cool?

It’s much more foundational about what kind of society we want to see in the 21st century, what kind of economy we want to build and what our relationship is going to be with the technologies that govern our lives. There were hundreds of years of battles about who owns the printing press. We’re going to have those kinds of battles again, although they might be on a more compressed time frame.

[00:12:52.320] – Grumbine

The co-founder of Ethereum,  Vitalik Buterin, and I don’t know him well enough, but he seems to have some admirable traits. And one of the traits that I saw in him was he said, “I’m not really interested in the coin. I’m really interested in the underlying technology, the way that this can transform society into the future.” And he basically said the crypto market, the way it is structured right now, is really a bubble and that it’s going to burst.

And he has no doubt that it would always do that. And I’m just curious, based on Ethereum’s rise and fall, just like Bitcoin’s rise and fall, from his angle, what do you think is the angle of those individuals who are fighting more so for the technology than the coin?

[00:13:39.830] – Grey

Yeah, that’s a good question. There’s a couple of ways there. First thing is I think there’s a decent chance that Vitalik is a true believer in pretty much everything he says. I disagree with him on a lot. I wouldn’t have made a lot of decisions he’s made, etcetera. But I think unlike some of the others, he’s not a purely cynical scammer. I think there’s a sort of revealing element in that idea of the coin is just a means to get to what we’re building.

And remember, it’s important to distinguish here. Bitcoin is a currency versus Bitcoin as a platform or is a system, in the same way, Ethereum as a system is different from Ether (ETH) as the underlying currency that it creates or that maybe runs on. And there are interesting questions about well, we’re going to have to build the new world. It’s going to overcome resistance.

Part of that resistance is going to be where the money comes from. So new ways of raising money, even if those ways themselves are distasteful and unethical if that gets us to a better world then the ends justify the means. I can understand that logic, even if I think there are some Faustian bargains baked into the way that that space has embraced this anarcho-capitalist model of what money is and therefore how financing works.

But I think his vision has always been that Ethereum will be a computing platform for all kinds of things to operate for which that payments layer is really just part of the architecture, not the main focus. But at least from my point of view, you build a house with a faulty foundation, and that’s always going to define everything that goes on in that house. And so I think that monetary layer is really important and that there are going to be increasing [inaudible]  that come from the decision to try to finance and fund this through this pay for use model or for a long time has been what they call proof of work.

Now they’re trying to talk about moving towards proof of stake, both of which I think are important to understand our theories of government, alright? They’re not theories of market, they’re theories of who gets to make decisions. And it’s one thing to say, what we’re going to do is put the magic decision-making button at the top of a mountain and make the mountain really hard to climb and make it really treacherous so that if you get to the top, you’re the kind of person that really cares.

That probably implies that the kind of person that wants the thing to continue to function, so there’s a self-interested self-selection process that comes out of that. Now, of course, the flip side as well, if that button’s very powerful, a lot of people are going to want to try to access it for whatever selfish purposes they want. And maybe your answer is, well, that’s fine, or maybe your answer is that’s going to fundamentally corrode the goals and the mission of the broader system.

And now that kind of idea of proof of work that we’re going to make it expensive to perform computations to validate the system is being proposed we replace what we call proof of stake, which is much more, at least to me, in terms of governing analogies, like a landowner democracy like, well, only the people who pay taxes or who’ve got a kind of vested interest in the system it built – us white men for 200 hundred years, whatever it is – we’re the ones who care about maintaining this good thing.

So the more you invested, the more you have a stake. I think that also has its own governance problems. But notably, I think those conversations and conversations about different theories of legitimate governance. And that’s the right approach. That’s certainly better than the stable coin model, it’s certainly better than we’re going to completely take over the entire economy. We don’t need governments, we don’t need wars, et cetera, which Pieter and others have also peddled into this smart contract stuff to an extent, although I don’t think him as much as some others.

But at least you can get to that point, OK, you’re building a private ecosystem or platform, you want to work out some theory of stakeholder governance. People have been talking about this in corporate governance and other spaces for decades. And you’re using new technologies to come up with new combinations. But to the extent that’s true, I think it’s also simultaneously less revolutionary than it sounded at the beginning. There’s a lot of fanfare and then you wait for the dust to settle and it’s like a slightly more interesting shell or something.

[00:17:53.210] – Grumbine

So when you look at what a traditional leftist might say about equality and democracy, where does this fit into a leftist model? Does it shatter the leftist view of looking backwards to get forwards? Is this a completely new paradigm? What does this do in terms of framing future debates within the left space?

[00:18:22.450] – Grey

Yeah. I think it doesn’t negate the value of history, I think it’s important just as much as it’s important to understand the forces of history in the rhyming aspects of historical process. It’s also important to understand how specific historical contexts are unique and have their own path-dependent dynamics. Certainly, I would say the era we’re in now is an era of rapid transformation of pretty fundamental aspects of the human existence.

I don’t think that negates the ability to learn any lessons from primary folks, but it certainly, I think, requires an openness that things could function differently. Not always in the way that a lot of those crypto people advocate, but I think from a leftist point of view, it is important, I think, to understand how the change in what’s available to individuals and to groups, vis-a-vis the broader collective – and by that I mean the planet – is quite different.

I think we are more connected. Things move faster. The level of information that we are dealing with, managing the level of culture, the media saturation. For most of human history, the biggest problem for people who wanted to read was that there wasn’t enough stuff available for them to read. It’s like having one CD as a kid and you listen to it over and over and over.

[00:19:46.060] – Grumbine

We don’t have that problem.

[00:19:47.440] – Grey

Yeah, we don’t have that problem, something we’re dealing with other kinds of problems. And I don’t think anyone who’s looked at history would say, you know, the developing the written word or the printing press or other things like that are not transformational. And then you look at the modern moment and there’s research about how it changes babies’ brains to be connected to the Internet and screens, there’s the kinds of coordinated activity that people are developing across networks now and the kinds of collaborations.

I mean, even if you look at stuff like Tik Tok, people are making collaborative dynamics with each other in ways that were just unheard of throughout most of history. You can do a duet right now with Louis Armstrong and you’ll be able to do a duet with Louis Armstrong for the rest of history. That wasn’t even true of most people that were alive when he was alive. And in fact, it was pretty much true of almost nobody else alive when he was alive. And that kind of thing really does, I think, change what we understand to be fixed and what we understand to be fluid, what we understand time to mean.

And the kinds of identities that we consider to be more or less salient. One of the groups I’m sure you’ve talked about before, maybe you’ve had them on, the Debt Collective, who have been pushing really amazing work around student debt cancellation, medical debt cancellation, et cetera. I talked to them, I think I first met them mid-2010s, and I was really struck because they said in an industrial age it was the common identity of being a factory worker that really built the industrial proletariat consciousness.

You’re sitting there doing the same thing as people next to you. And you’re like, hey, we’re pretty similar. Nowadays, 70 percent of Americans are in debt for one of three or four creditors. And that kind of relationship creates a different kind of class identity. But so does the fact that everybody has a damn cell phone. So does the fact that everybody has a Gmail account, or whatever the hell it is.

Those create other kinds of class identities and identities with respect to larger systems. And I think scholars of the 20th century have written about this as well. When FDR starts blasting radio broadcasts into your bedroom every day, that changes the relationship of average people to the presidency just as much as it did in Italy or Germany at the time. When you can have pictures of people on TV and you get to see that shit eating grin that JFK had, that changes your relationship to the president as a symbol.

And nowadays, when Trump can tweet, it changes the president’s relationship to the entire media apparatus and his own political party, etcetera. So there are all kinds of ways that this era is different, but I think when it comes to leftists and crypto, specifically the unresolved tensions about different views among the left, about what money is where it comes from, I think they’re going to be brought to the fore even more.

Some of those tensions are going to be brought into relief and resolved in one way or another. And I think it also forces people to reorient maybe some of their energy towards things that were previously easier to disregard. A lot of leftists think of technology is a Silicon Valley thing. Think of money as a Wall Street thing. Yuck. Right? They’re not lefty things. But the kinds of questions we have today are not just ‘do we want Facebook to run everything.’

It’s if we don’t want them to run everything, but presumably nobody is clamoring that we will put our cell phones in a bonfire and then go back to communicating on pen and paper. Then what does the alternative look like? Is it the Postal Service? Is it the public library? Is it the Bank of North Dakota? Is it paper money that you store under your mattress but in a little tiny digital server or something? Those questions are ones that cannot be avoided.

And what may seem like an obvious progressive position may intersect with other things, with other considerations in ways that a lot of workers haven’t considered yet. And it’s very easy to say health care for all. It’s very easy to simultaneously say that and say all of these tech companies that are monitoring your heart rate through your cell phone are stealing data. It’s a lot harder to say, hey, we should have like a public bank account for everybody.

But it’s fine if the government takes all of our financial data and puts it in a big digital data vault, because when’s that ever gone wrong? That kind of thing is not as persuasive, I think, because people are aware that there’s a whole lot of ways in which that data can be misused, but the left hasn’t articulated a strong position on that. They haven’t articulated a clear framework. If someone says, oh, digital currency, people that otherwise would know that Medicare for All is a good thing, a Green New Deal is a good thing, and things, are not instinctively or culturally primed to come to what I think would be the left response.

So in that respect, I think there’s a lot of consciousness-raising, there’s a lot of education, there’s a lot of political organizing that needs to be done very quickly around digital currency issues on the left because otherwise the agenda both within the left and more broadly is going to be defined by others. And it’s going to be very hard to unwind.

[00:25:11.040] – Grumbine

So, Rohan, when I talked to Marxists when they talk about MMT, for example, they see it as furthering capitalism, an extension of capitalism that keeps them tethered to a system that prevents them from having their class-based revolution.

What is this new world look like from that perspective? From an organizing perspective? I hate to say the word revolution, but it is a form of revolution. How does this impact a revolutionary leftist movement, or are we being left behind because other people in the anarcho-capitalist world are taking it by storm?

[00:25:54.480] – Grey

I think the obvious starting point here is just to have an intersectional view of what being a left revolutionary is. I think, nowadays some of those tensions that were being discussed and were salient, but also were not necessarily resolved or successfully resolved in other generations about whether a labor movement has to simultaneously embrace racial justice and emancipation and gender justice, emancipation and environmental concerns, and indigenous concerns and anti-colonialist concerns and imperialist concerns.

I think it fits into that framework that at least for me, you know, I consider myself as a leftist, someone that still thinks that a worker movement is very important, a worker-centered movement, because I’m enough of a Marxist, that I think that the means of production and the central place in which the fight over control of society happens, and that is the logical starting place for building a power-based political movement.

But nowadays, that isn’t just the factory floor. There were Bolsheviks and others writing about seizing the money machine as one of the commanding heights of the economy, as part of the Russian Revolution things, but I think that’s even more salient today. That any political movement, full worker of power needs to have a macroeconomic dimension, if only because so many other similar movements were dashed on the rocks of the struggle to maintain full employment and deal with the macroeconomic instability that comes from that but that then undermines broader solidarity and support for more militant action and transformation.

But there’s also that idea that nowadays, in addition to generating output of real goods and services, however defined, there’s also data and information and that kind of post-modernist, I guess, understanding of how our lives are mediated and the way in which, whether your in a grand scheme talking about cultural hegemony or looking at it from a more technologically determinist sense that there’s a way in which a lot of the different systems of social control are being collapsed into a much more clear dividing line in the way that a lot of systems of feudal arrangements were collapsed into capitalist relations.

And so, if you had a good pension and a guaranteed job and free health care and free housing and free higher education, but the government got to spy on every single thing you ever wrote on any computer ever, anything you ever typed into a search bar, ever, any transaction you ever made, and knew every single person that you’ve ever talk to and interacted, an exactly when, exactly how, that wouldn’t be, I think, a worker’s paradise, and I think it’s possible to refine and deepen our understanding of what worker rights mean in this age to accommodate.

Part of the eight-hour workday was not just having to work less, it was also making clear that there was a time in a worker’s life that didn’t belong to the boss. You’re not on a plantation, you’re not seconded to the mine for 12 months at a time and they own you 24/7. Your private time is your private time. They can fuck right off. And that idea exists today in a lot of employment law.

My father represents a lot of injured workers, for example, in individual cases involving worker’s compensation and things like that. And one of the things that comes up a lot there is how much oversight and how much micromanagement is acceptable in the workplace. If you do your job, can they tell you what shirt to wear as long as you’re doing your job well?

If you are taking breaks, but you’re still keeping up with your expectations, is that something they should be able to tell you not to do? If you want to not share every single person you speak to on a phone, does that mean that you should be allowed to use the company phone to do that? Those are the kinds of questions that I don’t think when people say we’re going to focus on class are really being thought about.

They’re not outside the realm of class issues, but they do change where you might focus on in the system as the place for political pressure or building resistance and oppositional identity and those kinds of things, just in the same way as the fact that people are massively in debt now, it doesn’t also change the fact that they will have relationships to employers or to the system of employment, identifying people as sites of data governance and of digital surveillance and control that doesn’t obviate their identities as workers or anything else.

But the flip side is to go back to why it can still be a useful and productive framework, if you want these systems to monitor you less, then there has to be something else that’s being built, right? If you want the labor relation not to be the one we have now, we have to construct a different one. If we want systems of production not to be built around hyper billionaires and 40 people with 10,000 robots, and the rest of us are just sort of passive consumers of Amazon and Netflix, we have to actually articulate what a democratic culture, a democratic production system is.

And so that’s where, again, the power of the working class to say we’ll build our own damn thing and your systems of control and oppression can be left outside from day one is far more powerful than centering our identities as consumers or as citizens of a republic or whatever.

[00:32:10.680] – Grumbine

So you guys have a couple wonderful podcasts that you support, Money on the Left and Superstructure, and these are usually philosopher’s philosophy. This is not entry-level conversations usually, and I’m curious. I have not heard this, and it doesn’t mean it doesn’t exist and I may not be capable of understanding some of it, to be fair.

But I am curious, given the nature of Modern Monetary Theory and the origins of so much of the work that you’ve done and that we’ve tried to support, this creates a new future, a new angle, looking at monetary relations and relations with people and technology. And I know that there is a lot going on in terms of whether it be pushback on dialectical materialism or Hegelian-type logic. What does this new technology do to that?

I know MMT is a study of macro, it’s not something that has to be implemented, it is a growing, evolving body. Where would you say in the general framework of our current world and the way that we’re advancing MMT within the current construct, where does that diverge?

Sovereignty is a word that we are working on, trying to figure out a different way of saying things and… Sovereignty means different things, especially in this digital age, it can mean different things, and it’s probably a very deep, broad topic that we could spend hours on. But I am curious, what does that look like?

[00:33:55.340] – Grey

So I think the first thing is the push back at this and other areas publicly, so this isn’t some new thing, but I don’t find that it’s just descriptive versus prescriptive to be particularly helpful. Part of which is because I think from my professional background as a lawyer, I consider law to be an applied theory. It’s experimental in the way that performing science experiments is experimental.

You do things and then you see what happens. Then you react to those and you adjust. But the act of constructing ideas and putting them out into the world and using them to structure political coalitions and to advance strategies and things is a fundamentally interventionist approach, in my opinion. I don’t think the production of ideas, the production of knowledge, the production of specialist technocrats and bureaucratic expertise and things is outside of prescription.

Even the act of calling something a description is trying to position it in a certain light and with a certain priority. Somebody says, describe this house, you could choose to describe where it’s located, you can choose to describe its valuation, you can choose to describe the materials it’s constructed with, you can choose to describe the esthetic layout of it.

What you choose to describe there is going to have a pretty big impact on what you’re choosing to value and in fact may affect how the people listening respond and engage. So, you’re outside of doing something when you describe or choose to focus your description. The reason I start with that is because that goes into this idea of well, is MMT just macro.

And again, I think that’s a relatively limited framework because there’s a whole range of things that understanding money this way and understanding history and diagnosing contemporary and historical political dynamics a certain way, open up. And I wouldn’t say even something like legal realism as a body of legal thought is only about law; it affected a whole bunch of other things.

And if MMT’s impact is only within the narrow realm that macroeconomics currently defines for itself, I think that’s going to be overly limiting. Because macroeconomics as a field is already defined in relation to these other spaces. Bill Black would say a lot of the work that he’s done around fraud and things is the micro theory of MMT or at least the micro-component to a larger MMT theory.

I would say a lot of the legal work we’ve done is part of MMT, and I don’t think… You can call that the MMT project more broadly defined. Then you can say this is macroeconomic discipline-specific part of MMT. Fine. But I don’t think a lot of the historical work Michael Hudson was doing was just macro so much as economic history.

And I think a lot of the integration of African-American ecological considerations that Mat Forstater was doing, etcetera, encounters purely macro, purely informed by all the disciplines and other methodologies and paradigms and sets of questions that other groups would think more important than macroeconomists maybe.

So all that is to say contemporarily what I think of the MMT project is it is a group of practitioners and thinkers and learners and political activists and the body of work. Just like the law is judges and written pieces of paper right?

[00:37:23.800] – Grumbine

Sure. Yeah.

[00:37:25.240] – Grey

It is both the materiality of the ideas. It is the fact that they exist in certain journals. It is a fact that was popularized through the Internet and outside traditional channels of academic dissemination, etcetera. And it’s the fact that it’s specific people, it’s the fact that for a period of time it was a narrow number of English speaking people with certain personality traits, etcetera, and now it’s a different group with a different set of traits.

All of those things matter. And so when it comes to Money on the Left and Superstructure, [inaudible 00:37:55], I think they’re speaking to new audiences, they’re bringing in new thinkers, they’re challenging certain parts of the paradigm that were previously less scrutinized or considered to be less in flux or less evolutionary. There was a lot of stock-flow consistent modeling work that was done over a 20 year period, things that were developed and deep in that framework.

There wasn’t that much on sovereignty. Now there is more. And people like Fadhel Kaboub and others are doing. And I think a lot of them have been thinking about questions of technology and media. I think Money on the Left has had a number of technologically oriented people. It’s had a number of sci-fi-oriented people. It’s had people from the media studies.

Scott is doing his film series right now, etcetera. Because historically, the humanities and media studies had to take technology seriously, you can’t live through Marshall McLuhan in the 60s and 70s or Neil Postman and not take what technology is doing to our culture seriously as a force. So, that’s how I see this broader framework.

Now when it comes to specifically the new dimensions being opened up, I’ve found personally that when you add the word tech in front of things or when the discussion becomes about the flow of, or the change of technology over time, over historical periods, people become a lot more open-minded to those big philosophical questions. What is money sounds like the kind of thing you and a bunch of mates discuss at two in the morning when you’re all kind of high as shit and trying to tackle the big questions. Right?

And for most people, that’s where it ends. Right. OK, it’s a fun conversation, but like, I’m not going to actually go out tomorrow and change my retirement savings based on the insights that we all kind of spitballed on the couch with Cheetos and stuff. Obviously not. Right? It’s fun and interesting in the way that, like, man, imagine if we could, like, live forever and like go to cryo-sleep and go to other solar systems.

Unless you’re Elon Musk, you don’t structure your life around that as a serious consideration. But technology is moving and we are being affected by it, and increasingly, I think it’s becoming visible to people that these are questions that aren’t purely in the realm of speculative sci-fi, but are ones that are being addressed and somebody is addressing them. And the more you get to see into that space, you realize that those people aren’t always brilliant, insightful futurists.

Half the time, they’re dumb hucksters, half the time they’re just well-intentioned people trying to do the best they can, but only maybe two steps further down the learning process than you are. So adding tech into the mix, I’ve spoken with central bankers, I’ve spoken with policymakers and politicians and others and things that MMT wants to talk about, fundamental questions, reorientation that might have been a nuisance to put on their agenda are now already on their agenda.

And we’re coming in with something to add with a perspective that’s more than just “Hey I learned how to computer code in college. Now, I think I should be able to design the twenty-first-century financial system.” Having that deep grounding in economic history and more in monetary theory in macroeconomic policy history allows us to connect the dots between different spaces and in some respects, it’s a comparative advantage – the interdisciplinarity, the freedom of the methodology, the wide-ranging and often intimidatingly comprehensive aspect of the paradigm construction – because central bankers who spent years convincing themselves and everyone else that their very narrowly focused on this set of hypertechnical questions around interest rates or doing regressions on the physical databases, are kind of almost, by their own admission, not well equipped to imagine this sci-fi future and all the possible law enforcement and privacy and all these different issues.

So there isn’t anyone in the room that can really claim with a straight face, that they’re on top of the law, the money and finance and the technology and such a degree of sophistication, that they have got it all mapped out and that the answer is continuation of neoclassical bullshit. If they want that answer, usually they cut corners because it’s just a hell of a lot to master. But politicians and the public can see that. They can see that the Silicon Valley guys don’t really know this shit about the money.

They can see that the guys on Wall Street are on the back foot when it comes to technological innovation. And they can see that all those law enforcement regulators that say, “oh, God, we can’t have purely private money,” or “what about money launderers?” and “the only thing crypto does is evil.” They sound like the same fuddy-duddies who wanted to put v-chips in everyone’s heads and regulate the internet.

So there is a kind of general public skepticism towards a lot of these different things, which opens up a space to articulate a vision that combines an MMT understanding of law with a progressive understanding of production and political organizing and with the kind of left libertarian anarchist, whatever you want to call it, libertarian communist view of individual freedom.

Whether that is from the state or from private concentrated power. We found that, I think, to be quite an effective entry point and have, I think, got a lot of people interested in fundamental questions that are important from an MMT point of view in ways that we wouldn’t have if we’d come through the door saying, hey, we want to talk to you about macroeconomics.

[00:43:41.750] – Grumbine

Great point. I want to bring up a funny kid show, Wreck It Ralph, the second version, Ralph Wrecks The Internet. They bring in the arcade owner. They break this game and they want to figure out how to get the new steering wheel and the owner brings the Internet to the arcade, the old drop a quarter in, play the game kind of arcade. Now, all of a sudden it’s connected. And the gatekeeper to the Wi-Fi is like, “No, this is new. It is scary and it is bad.”

And that is the mindset of the guardian there. But ultimately, a lot of people are terrified of this. And with good cause, let’s be fair. We watched the current system, shadow banking and the like, take down the entire economy in 2008, 2009, which many of us are still suffering through… À la, myself. And the idea that laws haven’t really fixed that, in fact, the control fraud is still going on and you already didn’t understand the machinations by which they destroyed your life, took your home.

Everything you ever thought you knew fell apart in one fell swoop, the facade was lifted and there’s been no real meaningful work done to control that. Now we’re going to enter into a new era where you’ve got these new elected people, many of which have no real understanding of the economy to begin with, much less the technology.

And then you’ve got once again, these folks rushing in there to talk to these committees, to these people, try and make sure that their voice is heard in terms of legislation and how we make the laws of the future, how we design these systems and build the protections. Politicians have done a miserable job regulating the economy and they have allowed a lot of people to really be hurt – and quite frankly, killed – by austerity and other poorly written pieces of legislation.

What is your informed feeling, because I know you’re in the middle of this with where the legislation on DeFi. The central banks are trying to get involved in terms of controlling the payment systems. Where do you think the legislation is heading? What is the state of law right now?

[00:46:08.110] – Grey

Yeah, I think it’s probably worth, not to question your initial premise, but I think often people say, like with the criminal justice system, it’s failed or it’s broken. Well, on some level, yeah. But another level, it’s kind of working exactly as planned, right?  It’s performing exactly the functions.

[00:46:22.680] – Grumbine

Yes.

[00:46:22.680] – Grey

You describe the financial fraud space, but there’s also the other side, which is the rise of the surveillance state and the data mining borg that covers everything from Amazon to Google to Facebook to even privacy loving, friendly company Apple. And I think that narrative that everything before and after Edward Snowden, is also, I think, the prime defining part of our era, and there’s a way to tell that story that doesn’t obviously begin with, but I think is part of the same story as 9/11 and the Patriot Act.

I think progressives understood during the Bush years that on one hand, you have the hot war in Iraq and Afghanistan arenas and things, but on the other hand, you have this Cold War of, well, if you’re brown or if you’re a Muslim now you’re on a registry, you can’t fly, or if you’re affiliated with these people, you’re going to come in and be interrogated.

The Red Scare may have taken a temporary break, but the McCarthyism is still always just around the corner. And as much of the quote-unquote, “failure” as the 2008 crisis was, and I think in many respects it was the logical endpoint of the self-regulating narratives that everybody from Bob Rubin and Larry Summers over further to the right, convinced themselves were inevitably to be true for a long time, there’s also this other intentional policy of, well, yeah, we should probably just give up a little of those civil liberties.

We probably need to make sure that we control this thing in the future, that we surveil these systems. We are going to build a central nervous system for the whole human race, we need to make sure we have that back door so that American interests are protected and “America first” recovery and all that kind of thing. So to me, at least, that is very complicated and I often stay out of commenting too much about foreign relations stuff just because unless you’re really on top of the material and the sources and things, it just becomes incredibly murky to talk about all that stuff, given the nature of the intel and the data coming out.

But even notwithstanding how complicated this stuff is, there’s still an alternative that’s a relatively clear picture, which is do you want an Internet that can discriminate how much bandwidth you get access to based on whether you’ve signed up to the right package of services or whether they think you’re a good consumer profile for the partners they want to sell stuff to? Or do you want an Internet that’s dumb and works like the tap – you just turn it on and it provides you with bandwidth.

That was a net neutrality conversation. And then there’s this conversation: Do you want a computer that Microsoft puts a chip in for the Department of Defense to be able to backdoor into? Or do you want a computer where you can see everything that’s in there and build one that fits your specifications, including privacy? That was a free and open hardware debate.

Do you want software that will lock down your computer and other people can control it, or do you want software that you can read, you can modify, you can share, you can make. You can inspect the source code, those kinds of things. That was the free software. Fine. Do you want a world where culture and knowledge is paywalled and those paywalls are built into the technology? So unless you have the right deal, the right device, you can’t access.

That was the debate over copyright and patenting and we’re seeing that play out right now with everything from insulin to the covid vaccine. And so if you kind of put all that stuff together and then add the monetary layer, you get to a view of, well, maybe what we want is a way that people can communicate with each other. Like we could in face to face societies, but now at very large distances where other people can’t listen in, and if I want to call my mother in Australia, I can do that.

And that’s between me and her. Where you don’t generate data that can be sold to third parties and things unless you choose to. And even then, there are limits for ecological harm in the way that there are limits on littering because you’re doing damage to other people when you make digital data exhaust trails, not just yourself. And should there be a way to do that kind of communication, not only with your face and your words and sound and text, but also with payments, just like with cash.

The government issues cash. We use it. There can be situations where we’re required to report things or where things are not allowed and police can do old fashioned police work to try and catch people to do those things and get search warrants, but that fundamentally the money exists as a neutral technological medium. And we don’t try to break into that medium – forms of control that have negative harmful effects. I think you can tell that story to average people.

I think you can understand the best impulses in the DeFi space as trying to preserve that. We want an Internet that’s open. We want a communications network that’s open, and we want money to be part of the communications network. Now, how that actually plays out is an entirely different question, because a lot of those DeFI people don’t trust fiat currency, so they immediately give up on that whole project and they only focus on these other private systems.

They don’t want to develop a broader theory of how to build political power around this other than get rich, become a sustainable industry where capital is backing in, and then use the power of that capital to try and influence regulators. They don’t think about these issues from a three-legged standpoint of money, technology and law, so they think if you build the technology, then you might compromise with existing capital, then you can overcome law.

So it’s sort of a scissor, paper, rock kind of thing. And I think they’re wrong on that. I think you build political power across all of those different dimensions, but that if you make compromises with private capital, then your politics and the legal approaches and the technology build is going to be shaped by that. If you think that technology can supersede law and then regulation and legal definitions and the slow grinding of the wheels of justice show you to be wrong about that, then you’re going to have wasted a lot of time, maybe made some seriously unfixable path-dependent mistakes.

And if you think that the biggest enemy in all of this is the government and that its markets are the engines of freedom, you’re going to let in bad actors through the back door and you’re going to close the front door to potentially valuable allies or ways of addressing the problems that you’ve correctly identified that may be a lot better because of your ideological blinders.

So I think the state of law around DeFi is much more like the Wild West and much more like a land grab or a gold rush than it is a concerted movement for political freedom. And the fact that they sound or look somewhat similar, if you squint from a distance and don’t look too hard, doesn’t mean that they’re going to have any hope in hell of achieving the goals of what an actual intentionally organized movement around that would achieve.

And that I think the legal and policy debates reflect that. The debates around why the central bankers want to have 60 percent surveillance or 80 percent surveillance and whether they should partner with banks to provide digital currency or with banks and Fintech to provide digital currency. The debate isn’t do we build a public system that’s anonymous and respects people’s privacy and then how do we deal with the messy questions of terrorism and child pornography and all those? Right.

Which is where we’re at now with the internet, or at least where we were for a period before bringing closure and surveillances back to the forefront. We’re not doing that. We’re doing that other – licensing private fintech, and looking at how to create markets that will attract massive investors and how to keep a public-private partnership model whereby public infrastructure both doesn’t have to do certain things and isn’t responsible. Those kind of questions. But I’m not particularly optimistic.

[00:54:55.090] – Intermission

You are listening to Macro N Cheese, a podcast brought to you by Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube, and follow us on Periscope, Twitter, and Instagram.

[00:55:44.050] – Grumbine

I feel like we’re at that headwater right where you’ve got that one green water coming in and you got the blue water coming in. And there’s that long line where the two sides are clashing and something’s going to give because people are dumping money in desperation in one hand and another hand, just pure exhilaration, gambling, so to speak, within the Bitcoin space.

And Brett Scott did a great tweet the other day I thought was just amazing, where he basically said, for all of you who think that this is this great new monetary system, you need to maybe accept the fact that you just had a 44 percent hyperinflation. And watching people in this gold rush throwing everything they’ve got, hoping and praying. And just overnight, millionaires and then people losing everything they invested. I am curious as to what your thoughts are.

Many of these people really do believe that these coins will displace other state currencies, but in other things that I’m reading, central banks and governments are talking about, indeed, creating their own version of this. You’ve got varying things going on in China. I’m just curious as to the geopolitical nature at a state level versus the current private look. What do you see in terms of regulating investment and what is the difference, if you will, between what these external coins are versus the state currency and why or why not are they a threat to the other and I guess the non-fungible tokens that are fueling so much of the speculation?

That’s a big, broad question, almost resent myself for asking it like this. But I guess, where do you see that part of it going, the more speculative nature and the desires of governments to, in fact, enter into this space?

[00:57:53.800] – Grey

Yeah, again, not to try to challenge your premises, I think it’s a good question, but I think the idea of the government entering this space, I think is already giving up too much. I have this debate among digital fiat currency people where nowadays the overwhelming term of art is central bank digital currency. I think this is a bad development because I think it immediately frames the possibilities as an extension of what central banks do, not the extension of all public monetary functions, whether that’s Treasury markets or what the Department of Education does with student loans or whatever else.

I think it’s totally overly narrow. It’s also institutionally biased, right? Central bankers are not neutral actors. They have a particular perspective, a particular set of interests, a particular set of strengths and weaknesses relative to other agencies, bureaucrats, etcetera, relative to other stakeholders in the financial system, and saying that the future of digital currency should be up to central bankers to decide, or should be exclusively or primarily administered through central banks is, I think, a conclusion, not a presumption of how these conversations should go and probably a conclusion I would challenge on its merits.

So to me, at least, that’s a big part of the framing problem is governments getting into digital currency is not like, well, bitcoins got one, Facebook’s got one now we get to have one. When the government digitizes public money, it’s a fundamentally different process than a private actor/ private currency has, a fundamentally different relationship to systems of private and public law of nominal valuation, legal settlement of interoperability with other public administrative systems, things like that.

And obviously, at some level, it’s hardware, there’s software, there’s a network, there’s clients, that kind of thing, there’s a commonality, but maybe a good analogy here, a good comparison would be I was living in New York in 2010 and saw the rise of Uber there and Lyft and other things. And I remember at one point being like, I wonder why all the yellow taxis there don’t just quit now, almost like they do have an app. Really? I looked it up and downloaded and it worked very well.

You just call them and wherever the nearest one is, they come to you and it’s the fixed fare model. It just is a hailing app for yellow taxis. It’s not this surge pricing model where there’s a single centralized actor that’s keeping all this data and engaging into contracts with individual drivers, etcetera. You get the car, you have relationship directly with that cab driver. The ride-hailing process is over, you know. And on one hand, you could say, look, New York City cabs got into the uber game, well, kind of, but also not really.

What happened is there was a point where there were mobile phones and technology that everybody was using on mobile phones and a medallion network created an app, and it created an app. One got extremely famous in part because of the massive marketing campaign and venture capital that was pushing it. And the other one didn’t, and so when people came across the latter, they immediately associated it with as a downstream derivative of the former.

But it isn’t. It works differently. It has a different function, has different politics, etcetera. So I think that’s the first starting point is. The public digital currency conversation is not reducible to a sort of response to these private currency actors. Now, in terms of why there’s so much excitement, why there’s so much energy and what’s going on there, I think on one hand there are different tropes.

There are different motivations. And some people may have some combination of these examples and archetypes or something like that. There are people that are in it purely as gamblers and traders, if it wasn’t these assets, it would be other assets. This just happens to be what’s hot right now. They go to the casino every weekend. This is the new slot machine or the new table they want to try out and see what the odds are and things like that.

Then there are people who got into it through this. This is the one thing they’re excited by. And people have done this forever. You know, this is how Kickstarter kind of operates, is to get you excited about being on the ground floor of this one hot new thing, or this is how people find initial investors in their community and stuff and convince them that their thing is one venture that ‘you’ve never backed a horse, this could be your chance to be part of something,’ that kind of narrative.

Then there are people that just are really crudely bottom line never grow up. Right? I don’t really give a shit about anything else other than these returns are way better than everything else. And whatever risk you’re telling me may exist, I’ve already pocketed so much in this that I’m already up. There’s no way in hell this could be fully unwound. You’re missing the value at.

And then there are people who I think are kind of closer to true believers, right? There are people who are technologists already, and they got into money, people who are libertarians, anarcho-capitalists that were people who were freedom fighters, and this is a way for them to get around certain things that otherwise might be more difficult to get around other ways. And then there are people who sense the winds of history and this is the new gold rush, et cetera.

They want to be there because this is how you become the next Carnegie, you know. Elon Musk himself got big on what? PayPal. Ahmadiyya, who’s now funding half of these sort of tech nonprofits and things. How do you get there? PayPal? So when Alexander Graham Bell was, leaves Bell Labs behind, or Bell Telephone, right, Carnegie, Rockefeller, et cetera. So you own these things, you get in on the ground floor. Your children have a last name that gets you into Ivy League schools for a few generations.

So there’s all these different kinds of motivations and people have different combinations of them all. But because a lot of those motivations are not really separable from the flaws in the way that those traits exist, it’s not really easy to say, “Oh if you just understood MMT and stop doing that.” Well, maybe, but also probably not, because if you want to MMT, that wouldn’t help you at that three times leverage or it wouldn’t help you come up with a way of feeling like you’re engaging in revolutionary politics that allows you to actually avoid dealing with mass social movements or class-based analysis or whatever else.

And there are people out there who claim that it is this force for emancipation may work for human rights foundation stuff and then they say things like, “Well, what we’re trying to build is a world where everybody can engage in commerce and transact and there’ll be respect for property rights. And America is a great example in this regard.” Well, sure, if you think that America’s history is one of freedom and

[01:04:33.790] – Grumbine

[laughter]

[01:04:33.790] – Grey

Commercial. Exactly right. The American dream is a real thing, not a kind of white supremacist, settler, colonialist, blah, blah, blah, then it stands to reason that you’ve convinced yourself that this kind of digital imperialism is also a good thing because your politics suck. And so your theory of political revolution sucks, even if you may genuinely believe yourself to be a revolutionary.

So I think there are some people that can say that it is important part of this discourse, I think there are some people that are genuine true believers and some in that it might even have otherwise decent politics, but. You know, we’ve seen a similar thing with the UBI crap, right, that there are people there who are good leftists in many respects, but who have either traumatic scarring about what they have given up on, trying to push through certain theoretical or conceptual or experiential barriers about thinking more nuanced beyond, you know ‘fuck the boss, fuck work, less work,’ all of which I’m sympathetic to.

But they don’t translate into a sophisticated theory of political revolution. And if that can happen for a very good kind of welfare liberals and leftists, well, of course, you’re going to see shitty politics coming out of the space that’s 50 percent libertarians and white dude tech programs.

[01:05:47.740] – Grumbine

Obviously, the environment is of great concern and the way that you earn coins currently, I know we talked a little bit about this earlier with stake versus trying to earn coins, but there’s got to be some sort of a theory of energy as it pertains to any kind of new economic world, especially given the existential crisis we face within our current climate situation.

And I think that the Green New Deals and things like that are important concepts. But then you start thinking about this digital framework that goes alongside of it. It is screaming along at breakneck speeds. While we’re screaming along to flooding and coastal destruction and climate refugees, I can see a world where having a currency that is not tied to a geographic area, that if my area suddenly underwater, I’m still able to survive.

These are hyperbolic scenarios, but there’s potential for this as an MMTer trying to understand how that fits into this new space, how you might present that to someone that’s first hearing this.

[01:07:05.050] – Grey

So this actually gets us back to something I didn’t pick up on earlier but want to make sure I pick up on now that when you said this space is a bubble. Nathan Tankus just had a good piece out on this substack behind the paywall, but if you can afford it, I encourage people to subscribe. It’s obviously good stuff. But he was saying in his view, Bitcoin isn’t a bubble, in part because bubble dynamics often imply liquidity failure, a failure to honor certain commitments, which would definitely be the case potentially for something like stable coins, which promise redemption to fiat.

But Bitcoin isn’t promising redemption to anything else other than itself. So it may very well experience price volatility and may very well be in an unsustainable upwards spiral. But that doesn’t necessarily mean that its price is artificially valued now relative to some fundamental price, and also that its fundamental price isn’t necessarily zero, but it is rather socially and culturally determined.

And as long as there’s a bunch of true believers that believe in it in the same way as people like trading cards, as long as people like baseball, there’s going to be some value there. And the value of that industry is going to be directly proportional to the community around it and the culture the same way as when you have thousands of screaming kids obsessed with Beanie Babies.

It doesn’t matter what you think the intrinsic value of them is, other people are going to value those things. The reason that’s important here is because I think in the same way as tribal identities in general and political identities in general often become reflexive. That is to say, they end up reflecting feedback loops of themselves as much as external forces, that you have a situation where this community is bought into this set of symbols, this constellation of groups and competencies and technologies and historical stories.

They tell each other and reinforce each other and spaces, these big conferences, certain media channels, etcetera. They identify, right, they identify not just in a transactional sense, but in a cultural ideological sense, as part of a movement, and that movement is organic in the same way as an MMT movement is organic in the sense that it can evolve, it can change.

The common part there becomes preserving the symbols and working out what things are more or less fundamental at any point in time. You don’t have to go back to Philosophy 101, all those stories about all the human cells in the body getting replaced every seven years or whatever it is. But you take away this piece and replace it with another one to upgrade over time.

You take another piece away and then before you know it is more machine than man or whatever, but you may have replaced a considerable amount of what you started with and at no point in time did it stop having a continuity with previous iterations of it. And so there was a period for a long time where the proof of work, the idea that you have to engage in excessive computational exercises to mine blocks that then give you claims on the currency that empower the network.

It was a good thing because that stopped any person, their dog, coming in and trying to launch an attack on the decentralized consensus mechanism. You have to pay to have a chance of doing that, and it would be expensive to try to go to the extent it would take to actually succeed with an attack like that, although a few people tried, obviously. Nowadays, of course, you’re starting to hear other arguments coming out of those spaces, people saying, well, we’re actually moving away from proof of work, so whatever the energy costs now, they will change over time, they will become less.

In fact, we’re looking for other ways to make it less costly rather than more costly over time. That’s one response. Another response is have you seen the other guys? Are you telling me that the current fiat system is good and I don’t think any of us need to defend the current extractive fossil fuel-intensive economy. But that’s very different from saying, “Look, a trusted digital monetary system could achieve the same transactional frequency with far less overhead, far less energy wastage. Which is an argument that is also made in the privacy context, right?

When you are taking in every piece of data, right, you go to a website and then the website tracks you, and then your browser tracks you and the software system tracks you. Suddenly the act of sending a request for a 10-kilobyte web page and then getting that 10-kilobyte web page served to your computer from the webserver is megabytes worth of data. It’s significantly more traffic because it’s sort of like sending a very small thing in a massive package with styrofoam and full boxes and all that kind of stuff, you know?

[01:11:49.370] – Grumbine

Yeah.

[01:11:49.370] – Grey

You’ve turned a very lean transaction into a very convoluted one because you’ve added all this tracking and bloat so suddenly now there is more energy and saying, OK, we’re trying to change. Also, they’re even worse. And then you start to see some of these more creative arguments, whereas, well, actually, the energy that we’re using wasn’t going to be used by anyone else anyway. So we’re subsidizing potentially clean energy investors to be able to sell their energy more so that they have more money to invest more in clean energy.

It’s sort of like somebody needs to buy up the farmer’s surpluses so that they don’t go out of business so they can keep making food for us. You know, it’s that kind of logic. We’re buying up the leftover and then others are saying, well, you know, actually China just cut down on Bitcoin mining and that’s a good thing, because now that energy interest is going to move to other jurisdictions that have better energy practices.

Actually, one of the energy companies are partnering with cryptocurrency to make green projects and to fund their research and development. So there’s all these narratives coming out. But the important thing, at least to me to remember, is that ex-post rationalization. This is a community that’s starting with the idea that crypto, bitcoin, Ethereum, whatever is good. It should exist and any problems are outweighed by the benefits.

And so if there are problems, well, we’ll just take that hand off and replace it with a different hand. And we’ll just take that leg off and place it a different way. We’ll just patch over that gaping wound there. And it can’t fail. It can only be failed by us if we let it fail. So we have to keep trying. And if some of these concerns may be bullshit and we’ll push back against them. Some of them may be legitimate. We’ll probably push back against them, too, but eventually will concede.

And when we concede, we’ll integrate them in and say, OK, this is just further impetus to reform and improve. This isn’t proof of a fatal flaw or fatal failure. So that’s how I see those kinds of things coming together. I think it’s undeniable they have a massive energy usage right now. I think it’s undeniable that one of the reasons for that energy usage is that they’re trying to build systems that require no trust in the monetary system. And I think that’s a failed endeavor.

And if they gave up that, they might have moved to a very different path of technological development. So in that respect, I think they are culpable and can be very widely criticized for their energy consumption. And I think when you stop assuming that every argument they come up with is in good faith and spending the 25 hours to debunk every claim that takes 10 minutes to make and accept it as a form of motivated reasoning, it helps you situate the responses coming out a lot more realistically.

[01:14:31.200] – Grumbine

OK, so I guess the final patch to this, I mean, there’s so much more I want to ask you, but in the spirit of time and the fact that I will definitely beg you back again in the future for part two of this. The question for me is, knowing what we know and what we’ve known and what we’ve advanced since I’ve known you, we’ve known each other now for over a decade.

It’s probably 13 years. I’ve known you. What is the state of MMT with the understanding of this convergence with crypto? You mentioned what MMT is with a bunch of different voices. In terms of the advances in this space, where do you see the two worlds combined because they seem to be at loggerheads because of the hatred for fiat. Where does MMT fit going forward in this?

[01:15:24.660] – Grey

I think in terms of two cultures, there’s not going to be much overlap because the two cultures differ much more on basic political ideology about the role of public and private collective action, about skepticism versus cautious optimism, about the what the capacity of public dominance to achieve good ends, not just uniformly bad ends. Those kinds of things are the bigger dividing line then just crypto or fiat and those aren’t going to be resolved.

There are people that make conversions from being right-wing or left-wing, but they’re very rarely political coalitions that actually successfully create some sort of politics that transcends left and right – even if they may be temporary alignments of interests. So I wouldn’t frame it as the two houses, meaning what is this super thing that comes out of the middle.

I think the more interesting question is how is the MMT paradigm and the MMT project as a research program, as a scholarly program, reacting and addressing and leaning into and providing useful information and knowledge and analysis and insight and policy prescriptions and political support for a monetary politics that embraces the future, that embraces what is good about digital, about being appropriately skeptical and oppositional, about the things that aren’t.

So I don’t consider myself torn between two parents, between crypto and MMT or something. I think of MMT as something that was born in part out of a very deep respect for institutional operations and mechanics, and that that depends on the state of the world and the state of these systems, right? I think it was borne out of a deep respect for historical and sociological and anthropological research.

And I think anyone that thinks that what Michael Hudson is saying about ancient Babylon is important today should also be able to equally recognize that the monetary politics of today don’t work exactly like they did in the world with clay tablets and priest-kings.

[01:17:40.090] – Grumbine

Right.

[01:17:41.170] – Grey

So there is a difference between the monetary system and the operations in 2021 and than there was in 5000 B.C. But there’s also a difference between 2021 and 1968 or 2021 and 1935. And so the upgrading and reorienting of the research paradigm, the political strategy, etcetera, towards embracing some of these digital issues is about keeping MMT at the forefront of what made it powerful in the first place.

I think it’s also important, as I mentioned earlier, that one of the reasons that MMT succeeded and we’ve teased this out with Bill Mitchell and others at MMT conferences is because it embraced the Internet as a direct mode of reaching out to people at a time when the traditional media and academic structures would have probably continued to exclude MMT from the discourse.

So in that respect, the potential populist democratizing capacity of quote-unquote “decentralized networks” is something that is baked into MMT’s DNA. Now, there’s a reason why at the very first MMT conference in Kansas City had Bret Scott as a keynote speaker to talk about privacy and the poor in cash and that was my request and suggestion because his vision was both, I think, MMT consistent in understanding the nature of money and credit, but also was really opening a door into an entirely different space other MMTers hadn’t gone into up until that point.

I don’t think Bill Mitchell, Randy Wray, or Warren would be particularly pro surveillance state if you ask them, but probably hadn’t spent that much time considering the linkage between that and some of the stuff they were talking about. But now there are people doing that. There are people doing that work. There are people connecting with other scholars to synthesize that work with MMT and to come up with policy recommendations and prescriptions that are MMT-informed on those topics.

And that, to me, is the natural, logical extension of Minsky understanding shadow banking and Warren understanding reserve operations and things. Of course, it doesn’t hurt that it fits into his broader question of renewal of public infrastructure at a time when that’s also something MMT has had a lot to offer more broadly. We do have thoughts about when public banks can and can’t be useful.

We do have thoughts about what the difference between an insured bank deposit and a note of cash is from a monetary perspective that is only strengthened by understanding their differences from a technological payment system perspective. And I think the politics of monetary democracy and individual emancipation that’s implied by the job guarantee and changing taxpayer money to public money, et cetera, is the same politics that informs the views that we’ve developed now about what the future of digital money is from an MMT informed point of view.

There’s no point, as I said before, talking about worker empowerment, of giving everyone the right to a job is the right to a job comes with the obligation to be permanently surveilled and controlled through technology all the time. So if you care about a job guarantee, one of the first papers I ever wrote on a job guarantee was who owns the intellectual fruits of job guarantee labor. Right?

If we had a job guarantee corps doing home science and one of them came up with a vaccine to coronavirus just randomly, is that public? Did they get to privatize that? Did we pay them a wage? And then they get to spin that off as a private good and what Google does with Stanford-funded research or something? Those are questions intrinsic to the design of a job guarantee.

It’s not good enough for MMTers to say it’s a moral necessity to give everyone a job, but I don’t have any opinions about what work conditions should be like or what the relationship should be between the worker and the output. Or that we need to create a system where everybody can earn money because money is necessary to survive, but also I don’t have any opinion on whether that money should fundamentally discriminate against undocumented workers, sex workers, marijuana businesses, or should be a neutral technology that allows people to use it regardless of their purpose. I think those are pretty fundamental questions of monetary theory and monetary design.

[01:22:11.440] – Grumbine

I guess as a piggyback, the fundamental nature of currency issuer, currency user was probably the very first aha moment I had in this journey. And with many folks giving up on federal legislation and we’ve talked about alternative currencies like the uni project. We’re watching folks like Whole Washington try to advance basically Medicare at a state level and Cal Care and New York Care or whatever it’s called.

And in talking with these individuals, trying to explain that currency issuer, currency user paradigm and trying to explain the inherent race to the bottom that is going on not only in the United States, but if you want to transport it to Europe, you can see the northern countries in the eurozone doing quite well as net exporters. And the net importing nations down south are largely struggling.

They’re austerity-driven. And you see a similar construct here in the United States where you have certain states that they’re bringing the big businesses down to their areas with sweetheart deals. You saw it happen in Kansas with Brownback and you saw it in Texas to bring these companies and ultimately those tax revenues dry up in those states. I’m curious as to what the nature of these type of digital conversations would do in terms of that funding model.

Clearly, our Constitution still sort of, whether you like it or not, whether it’s good for people or not, is another story for another day. But the point is the currency issuance from the federal level versus at the state level and trying to understand what any kind of change in philosophy here might do to that arrangement. You brought up public banks and the right role in the wrong role.

But it feels like there’s this convergence, whether I’m just envisioning it in my head or whether I’m straddling too many things at once, I don’t know. But I feel like there’s something there because from the old paradigm, when I talk to people about what if we had this pandemic and you were trying to pay for health care at the state level, what happens to your pensions?

In Pennsylvania, we’re watching a revenue shortfall continue to push us now, whether this is a political ploy or not is another story, but we’re endorsing fracking so that we can have tax revenue from that, using that as a means of funding the state. Fracking – something we all want to stop. Transfer that out to the states that are trying to advance state-based health care.

All those payments would have to come from the state. Is there a correlation here or is there something that would substantively change in terms of currency issuer, currency user dynamics, or is that for another podcast?

[01:25:04.540] – Grey

Yeah, obviously, I think the issue of user distinction is very important. It’s often one of the first things I bring up when I talk about how to understand money differently. But I think in this context, at least when a lot of the digital conversations, when it comes to actually the design of the technology, implementation, etcetera, there is a related but somewhat distinct dichotomy, which is between designers and users rather than the issuers and users, right?

Issuers, the focus is on the number of points and to whom they go to. Right? If you’re thinking about the umpire as the issuer of the points, it’s because you want to get points in the game and then a person that chooses who to give them that. Designer is somewhat different. Designer, you’re thinking not just the conditions of issuance, but the conditions of use once they’ve got them and the actual modes of communication by which they are transmitted to people who we’ll use to transact, et cetera.

And the kinds of questions that come up there are broader than just how many we should issue, what to issue. I don’t mean to say that everybody talks about currency issuers is only limited to that question, but it does sort of broaden out the framing a little bit because I think there are a lot of questions that in the same way, and I love Jakob Feinig, the sociologist’s term, monetary silencing, right?

We’ve all been taught to become docile, uncritically thinking passive users of the currency rather than to think about the currency as a space for political expression. You can get three pointy hat people here carrying around the US Constitution that might have completely ridiculous views about it, but they’ve at least felt empowered to have views about it because it’s their country, it’s their republic, rights, their constitution as much as anyone else’s.

People that have that view necessarily with money as much or that is one thing that this space is encouraged more people to think about. It doesn’t mean you always get the right answers, but that’s not really the point. But if you study from that point of view, there’s a lot of really important questions right now that people should be having an opinion. Those opinions might suck some of them.

But relative to leaving the decisions about those questions to technocrats or behind closed doors of certain interest-oriented actors is going to be a lot better, in my opinion. And so that idea of how could I possibly have a view on all of this complicated stuff, I don’t even know what the hell Bitcoin is. I don’t even know how the hell my phone works.

How am I supposed to have opinions on the future of the Internet and Internet money and all this stuff? Well, you don’t need to, right? You don’t need to become a Ph.D. financier, a computer biologist or whatever, to know that it’s better for oppressed people when their money doesn’t call the cops on them. That it’s better for average people when they don’t have to ask permission to Mark Zuckerberg or to Donald Trump about what they use their money for.

That it’s bad for human freedom and historically was a pretty big principle of anti-fascist politics to say that we don’t want to give up a list of everybody we know every time the police come knocking on our door and say that we’ve been accused of suspicious activity. You don’t need to know much more about the technology than to know that whatever kind of digital money we build needs to have those things baked in. It needs to have those considerations first and foremost. Right?

Enough people of our generation didn’t participate in World War II, but we had relatives who maybe we grew up with who did to know that we can’t let those flames go out. And the same is true, obviously, on the equity and economic justice side. There’s no point in designing another monetary system where millions of people still remain unemployed and the environment continues to suffer and public infrastructure continues to be disproportionately under-invested.

So when we design a digital currency system, we might as well make sure it goes to the right people as well as it’s designed the right way. In that respect, the issuer and the user distinction is also important. But to go to your other question, what does this do to the politics of being a user rather than an issuer, I think there’s that other very important idea in MMT that comes back to the Minskian line that anyone can create money.

The challenge is to get it accepted, which is that obviously currency and fiat currency has a unique position in the hierarchy of money and credit. And the distinction between the issuer and the user of that currency is incredibly important. But then there’s also the other question of what’s the relationship between the fiat currency and all the other forms of private money and credits that might exist in parallel, and what is the relationship between issuers and users of all of those other instruments that may exist in parallel.

And that’s where I think the, not simplification, because it’s obviously not simple, but the reduction of the infrastructural needs of digital currency. Once upon a time, if you didn’t own a computer the size of a small warehouse and happened to be one of the three companies in the United States that had transatlantic telegraph cables, you know, good luck designing a digital payment system between New York and London.

Nowadays, you need some template code and a $30 little box you can plug in that uses $3 electricity a year, and that code is all available with very easy walk-throughs to download and install on your computer. And then you modify a few things and put your name and suddenly you’ve got your own functioning, quasi currency system.

Now, whether it’s valuable, whether they want to use a different question, but technologically speaking, it’s the difference between having a printing press and having every individual book be handwritten by monks. It fundamentally changes the way in which monetary media can be created and disseminated.

That doesn’t mean they’re all good, but it does mean that suddenly city governments, state governments, nonprofits, weird identity communities on Reddit, can all experiment with building monetary layers to their social communities, their political community, their legal communities. And in that respect.

I wrote a piece called ‘Monetary Resilience,’ short little piece, more of an article, but basically what I’m arguing there is, there is this talk about the term resilience in ecological circles, and part of that idea is to be able to withstand and address crises and stress tests and things like that, right? If half of your species gets wiped out, will the other half survive or they collapse?

But part of it is also balancing the local and the global, right. How does your ecosystem fit within a larger ecosystem if the water lines in the United States get infected? Is your community going to be screwed or do you have an independent system? All the electricity goes down, right. Or conversely, is your sustainable community based on dumping the toxic waste 10 miles outside that community so that you survive at the expense of a larger system?

And part of the point that I was arguing there is there’s a lot of think global act local activist in ecological space who have harmonized or started doing the work to harmonize that kind of local action with a global vision like the Green New Deal, like climate justice. But in the monetary space, there is less.

There’s less of a clear vision of how to integrate local community, democratic social experimentation and money with a broader federal public global monetary framework. People like Ben Wilson, the economist at SUNY Cortland, we’re sort of shouting out there, there is more.

[01:32:59.090] – Grumbine

Love you, Ben.

[01:33:00.320] – Grey

Yeah, Scott Morris and others have thought about this question. But to me, at least one aspect of that is to think about some of the hierarchy of money that we have today and the hierarchy of credit and how we’re starting to understand certain things that we might have called more on the credit side of the spectrum as really more on the monetary side or we’re really starting to understand the monetary properties of all kinds of credit instruments now.

Whether that the franchise view of banking and say, “Hey, bank deposits really are what public currency,” and so if we transition to a digital currency system rather than having banks issue deposits, we could just give banks the authority to issue digital currency directly every time they made a loan. And we would still have to exercise oversight of things.

And maybe that would clarify the political stakes about the public-private partnership nature of banks in a way that would reduce support for that model existing but operationally wouldn’t stop them from being able to make loans, wouldn’t really change the degree of public guarantees provided to those loans or the deposit liabilities they create when they make those loans, etcetera, but it would be collapsing one layer of what we might consider credit now credit money into the currency layer.

And you could imagine the same thing happening with state and local governments. That’s what I was getting at. You can have a system of nested currencies where local government can tax in its local currency or in the US dollar, or they can tax and someone can pay in both. If you’re the state level, same thing, at the federal level and you have a system where there would be the ability to have a federated, nested, overlapping set of currencies that allowed a greater degree of autonomy and localism and experimentation and things, while simultaneously recognizing that they are never a substitute for global action or they are no substitute for the politics of the currency that operates at the widest jurisdiction, right?

New York City currency may be valuable, but it only exists within that larger US dollar, ecosystem, etcetera. And that wouldn’t be necessarily revolutionary overnight, but right now, states and cities do engage in a form of shadow monetary budgeting through issuance of municipal and state debt, through issuance of tax credits, which function kind of like money, right through the chartering of state banks and other things.

So what you’re doing is not necessarily creating a brand new power or exposing some sort of new tension in the hierarchy of money and credit, you’re clarifying a certain relationship, saying, “Hey, we have a world where the federal government provides aid to states and cities more. You think it should provide even more? We have a world where the Federal Reserve is created municipal lending facility.

We can get to do that kind of support more. Instead of issuing debt to bond holders and then having the municipal lending facility back up the bond markets, we could have the local entity issue its own currency and have the Fed back up those currency through currency swap lines like it does internationally or something like that.

And so there is a world, at least in my view, to allow a fair bit of experimentalism, a fair bit of pluralism, a fair bit of federated architecture, multilayered architecture, etcetera, that still acknowledges the fundamental public nature of money, acknowledges the fundamental importance of a hierarchy, but simultaneously builds more resilience so that if D.C. was wiped off the face of the planet tomorrow, a nuclear strike, New York City would have some other way of keeping on with its monetary infrastructure, wouldn’t be entirely dependent on the center, but also recognizing the limits of that in a world where there is a center.

[01:36:53.830] – Grumbine

Very good. I have so many more questions, but in the spirit of time, I want to thank you, Rohan, for joining me once again. I mean this when I say this, I have got already more questions ready, and I hope we can do this again soon because this is fascinating to me.

I feel the rewiring of my brain as we’re doing this podcast, so thank you so very much for your time and your graciousness, and I know how much time and effort you put in to learn this stuff.  And so for you to be able to synthesize that as you’re actually out there grinding it out in a pluralistic place. I just really appreciate you taking the time to talk to us, so thank you, sir. I really appreciate it.

[01:37:40.840] – Grey

Yeah, absolute pleasure. Thanks for having me. Happy to come on again.

[01:37:43.540] – Grumbine

You got it, man. All right, folks, this is Steve Grumbine, my guest, Rohan Grey, Macro N Cheese. We’re out of here.

[01:37:56.220] – Ending credits

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.