Mentally Unscripted

You've seen the headlines. Bitcoin is gaining in value, and the sky's the limit. Of course, you're wondering if you need to jump onto the gravy train before it's too late. But you're a logical, thinking person. You've wondered why anyone would pay money for something that doesn't exist? Not in a physical sense, anyway. And what's the likely future for bitcoin? Will it keep its value? What are the risks facing bitcoin and the crypto market?

Those are all excellent questions. And they're questions a rational person should ask in our new financial landscape.

U.S. government spending is through the roof. MMT is growing in popularity. And the political strategy of the moment is buying votes in exchange for promises of free stuff. Add those together, and you get unabated government spending.

Despite protestations from the government, the Fed, and the deficits don't matter crowd, inflation is real. And it's happening right now.

You may be looking at bitcoin as an inflation hedge. But the idea of paying money for a bunch of electronic 1's and 0's is unsettling. After all, you have to save for your kids' exorbitant college tuition. So, what do you do? The answer is that you start by building a foundation of knowledge built on rationality and not hype.

In Mentally Unscripted's second bitcoin episode, Paul and Scott discuss where Bitcoin gets its value. Then they move on to discuss the risks facing bitcoin and the crypto market.

Paul and Scott start by talking about subjective value. Then they discuss extrinsic vs. intrinsic value. For risks, they talk about the adoption of bitcoin and the likelihood of future government regulation.

Resources mentioned in this episode:

Positive feedback loop
Fear of missing out
Grisham's law - good money pushes out good money
Friction
Security - Freedom tradeoff
History of the income tax

Image by MichaelWuensch from Pixabay

The Fed says there's low inflation. The data seems to support that point. But try telling that to anyone who's been to the grocery store in the past week. So, what gives? Is the Fed lying about inflation?

In this episode of Mentally Unscripted, Paul and Scott discuss the basics of inflation. And they assure you that you're not crazy. There's a reason why the government is telling you there's no inflation. But your grocery store bill says there is.

They begin by discussing the definition of inflation and the various forms inflation can take. Then they discuss the causes of inflation. And Scott explains why it's not those greedy capitalists.

Next, they talk about asset price inflation vs. consumer price inflation. And they explain how government money printing contributes to the growing wealth disparity. And for a little extra fun, they discuss the difference between capitalism and cronyism. True to form, Scott doesn't miss an opportunity to rant about the need to limit government power.

Next up is a discussion of transitory inflation and who inflation hurts the most. Paul and Scott close the episode with a criticism of the Consumer Price Index (CPI).

Note: Scott says in this episode that inflation will exist in a free-market economy. This is an example of his mouth moving faster than his brain. While there may be inflation in a free market, deflation is more likely.

- The Ultimate Guide to Inflation, by Lyn Alden
- There's another side to the story. Look at the bigger picture.
- Define your terms. Beware of shifting definitions and moving the goalposts.
- Complex systems
- Base rates
- The map is not the territory
- The Cantillon effect (this is a more critical take in the Cantillon Effect)

Image by Foto-Rabe from Pixabay

Can bitcoin free us from government overreach? Can it restore the financial stability we've been losing since the creation of the [[https://www.federalreserve.gov/][Fed]], on December 23, 1913?

Even if you've been living in a cave for the last five years, you've heard of bitcoin. But most of us only know about it from the hype surrounding this new "digital currency." It's true that bitcoin offers an exciting and risky investment opportunity. 

But, there's another side to it.

In 2008, during the worldwide financial crisis, [[https://nakamoto.com/satoshi-nakamoto/][Satoshi Nakamoto]] published a famous white paper, [[https://bitcoin.org/bitcoin.pdf][Bitcoin: A Peer-to-Peer Electronic Cash System]]. In it, he provided the technical details for a new peer-to-peer cash system. 

But his intent wasn't to create a new way for college students to pay for pizza on the Internet. Nakamoto had an ideological motivation.

Nakamoto saw the financial crisis as evidence that the current financial system had problems. Powerful governments, banks, and other institutions controlled it. And the average person had no choice but to trust those in control to do what's best for everyone else.

The following quote from Nakamoto sums it up best:

The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. - Satoshi Nakamoto

In the financial crisis, Nakamoto saw that we can't trust the politicians and financiers.

A philosophy of trust forms the foundation of bitcoin and other cryptocurrencies. It's freedom, transparency, and credibility that creates that trust.

It's the foundation of trust that has many believing that bitcoin can replace the Fed. Or at least offer a competing system. One that gives us the ability to insulate ourselves from the Fed's poor monetary policies.

The current financial system is an opaque, closed system that benefits insiders. At the same time, it's making the lower and middle classes more dependent on the government. Nakamoto's vision of bitcoin is that of an open system beneficial to all.

In this episode of Mentally Unscripted, Paul and Scott start a discussion of bitcoin. They do so by looking at the philosophy of liberty underpinning its creation. They discuss whether we need bitcoin, the conditions necessary for its widespread adoption, and the risks to adopting it.

This episode only scratches the surface of the bitcoin discussion. It's an excellent place to start learning about what Paul and Scott think about bitcoin. You'll hear about their attitude toward government monetary policy. And the value and necessity for liberty in our lives.

This episode won't be the last about bitcoin and cryptocurrency. Paul and Scott guarantee more will follow soon.

Image by VIN JD from Pixabay

Modern monetary theory may not have won the fiscal policy debate. But its promise of free money has more politicians listening.

Stephanie Kelton, the author of The Deficit Myth, appeared on Bloomberg's Odd Lots podcast. Paul and Scott were hopeful that Ms. Kelton would answer some of the questions they had about MMT coming out of their review of The Deficit Myth.

Guess what? Ms. Kelton left them disappointed.

Paul and Scott continue their discussion of MMT in this episode of Mentally Unscripted. They cover a range of topics, including:

• Whether MMT has indeed won the fiscal policy debate?
• More politicians are boarding the MMT bandwagon. But do they understand it? Or is the MMT refrain of "deficits don't matter" catnip to policy-makers who want to buy votes?
• Does MMT destroy the incentive to innovate?
• Is MMT shifting the conversation surrounding fiscal questions without solving any problems?
• Is MMT devoid of concrete steps to achieve its goals. Is the lack of a framework and objective measures a problem? "It's descriptive" and "we have to look at the situation when we get there" will only go so far.

Image by kalhh from Pixabay

Attention is the new currency. And news outlets will do anything to get it. That includes doling out biased information lacking context or straight-up deception. Critical thinking is your weapon to cut through the noise. But how? The New York Times presents a method, called SIFT, in the article, Don't Go Down the Rabbit Hole.

In this episode of Mentally Unscripted, Paul and Scott dissect SIFT. In doing so, they render their judgment on this model.

To borrow a phrase from data processing, garbage in garbage out. That means the output of any model is only as good as the data you put into it. SIFT is no exception. It's only as good as the effort you put into it.

While it seems like the authors are presenting this model in good faith, it only works if you use it in good faith. If all you're doing is looking for information to confirm your biases, this model is perfect for you.

To put it another way. SIFT is much more apt to give biased, agenda-driven people the illusion of critical thinking than it is to help them get to the meat of an argument. Thus, it will only reinforce the notion that they're correct. 

Think of it as "How stupid people can make it look like they're thinking without having to think."

Listen to the podcast to hear the flaws in the model and how you can improve it.

Resources mentioned in this episode:

• The Madness of Crowds: Gender, Race and Identity, by Douglass Murray
• Paul Graham

Mental models, biases, and fallacies mentioned in this episode:

• Incentives matter
• Consensus and social proof
• Steelman
• Confirmation bias
• Disconfirming evidence
• Cognitive dissonance
• Probabilistic thinking
• Bayesian updating
• Halo/Horn effect
• Triangulation
• Prioritization
• Low information diet
• Availability heuristic
• Silly/serious syndrome

Image by John Forster from Pixabay 

Focus on building your health, wealth, and relationships to improve your life. It's often a gap in knowledge or an inability to communicate that causes problems in these areas. Mental models are a way to improve both.

Imagine being able to have a productive, enlightening discussion with friends and family. A debate where everyone understands and accepts that differences of opinion exist. And those differences are a feature, not a bug, of a vibrant, rational world.

Or, imagine looking at yourself in the mirror. And in your reflection, you see a confident person—someone who knows that they're making the best decisions possible. You're free from worry and second-guessing. And you know that if something terrible happens, you'll stand up and deal with it with the calm and control of James Bond.

That's the power of a mental model.

In this episode of Mentally Unscripted, Paul and Scott discuss their top mental models.

You'll notice that Scott's mental models are foundational principles. As such, they're helpful in many situations. Paul's, meanwhile, are less ubiquitous but more powerful. You may not use them as often, but they pack more of a punch.

After listening to this episode, you'll understand the power of mental models.

What did you think of our mental models? Agree with our choices or disagree? Any mental models you think we missed? Let us know in the comments.

Resources mentioned in this episode:

• Thinking Fast and Slow
• Harrison Bergeron

Mental models, biases, and fallacies mentioned in this episode:

• Confirmation bias
• Fundamental attribution error
• False consensus effect
• Illusion of control
• Unintended consequences
• Entropy
• Inertia
• System 1 / system 2 thinking
• Second-order thinking
• Opportunity costs

Image by Tumisu from Pixabay

In this episode of Mentally Unscripted, Paul and Scott critique Stephanie Kelton's The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy.

When it's over, you'll understand better MMT's basic concepts. And you'll hear arguments about why it's not the cure-all its proponents claim.

Does it seem that the last several elections were a contest to see which candidate can promise more free stuff? If so, you're not alone.

Free healthcare, education, and money dominated recent elections.

In the past, one central question concerned us when it came to such promises. That is, "how is the government going to pay for all this free stuff?"

Then, Modern Monetary Theory, known as MMT, exploded onto the scene. And when it did, it pushed that fundamental question to the back burner. The reason is the central principle of MMT: the U.S. federal government can print as much money as it needs. You see, under MMT, the government can support massive spending programs. All with no concern for pesky things like deficits and debt.

No doubt you have friends and family who like the idea of the government paying for healthcare and education. And they may not know anything about MMT. But they likely heard politicians like Bernie Sanders, Elizabeth Warren, and Alexandria Ocasio-Cortez claiming that the U.S. can afford these massive programs. And it sounds good. After all, everyone has the right to healthcare, education, and a living wage.

But your argument that the U.S. government needs to operate its finances the same as a household doesn't convince them. "Deficits don't matter," is all your friends and family say.

Armed with the knowledge from this episode, you'll have better conversations with friends and family about MMT. You'll understand its shortcomings and where we need more explanation. And you'll know why we can't use economics to solve moral problems.

Resources mentioned in this episode:

• The Deficit Myth, by Stephanie Kelton

Mental models, biases, and fallacies mentioned in this episode:

• Falsifiability
• Reversibility
• Root Cause Analysis / Don’t Only Treat the Symptoms

Image by Markus Winkler from Pixabay

What exactly are these two idiots trying to do here? In this episode, Paul and Scott discuss their higher purpose. In other words, why they're doing this podcast.

Paul and Scott explain their approach to critical thinking using the accusations that Tom Brady is racist for winning the Super Bowl as an example.

Resources mentioned in this episode:

• Idiocracy: People Now Calling Tom Brady “Racist” For Winning Super Bowl During Black History Month
• Tom Brady Called ‘Racist’ on Social Media for Winning Super Bowl During Black History Month

Mental models, biases, and fallacies mentioned in this episode:

• Falsifiability
• Cause and Effect
• Second Order Consequences
• Hanlon’s Razor
• Ad Hominem

Image by Gerd Altmann from Pixabay

Paul and Scott dive into the World Economic Forum’s “Great Reset.” We discover what they want to achieve, the cost of change, and possible risks of adopting these policies. 

Resources mentioned in this episode:

• Davos 2021
• World Economic Forum
• The Great Reset
• The Tom Woods Show ep. 1814
• What Is the Great Reset? Part I: Reduced Expectations and Bio-techno-feudalism
• The Great Reset, Part II: Corporate Socialism
• The Great Reset, Part III: Capitalism with Chinese Characteristics
• The Great Reset, Part IV: “Stakeholder Capitalism” vs. “Neoliberalism”
• The Great Reset for Dummies
• World Economic Forum’s Great Reset is raising eyebrows
• From Lockdowns to “The Great Reset”
• Rationalizing “The Great Reset”
• Introducing the ‘Great Reset,’ World Leaders’ Radical Plan to Transform the Economy

Image by OpenClipart-Vectors from Pixabay

Paul and Scott attempt to make sense of the “Big Tech Censorship” debate. In this episode, they discuss the nature of censorship, why it’s difficult to moderate speech in the digital age, and ways of making it better.

Resources mentioned in this episode:

• Manhattan Community Access Corp. v. Halleck
• Knight First Amendment Institute v. Trump
• Trump v. Knight First Amendment Institute – SCOTUS Blog
• Regulate Tech Like a Utility
• Stratechery Article on Moderation
• David Sacks Digital Bill of Rights
• Charles Hoskinson Discussion on Big Tech Censorship

Image by Gerd Altmann from Pixabay