Saifedean and seminar regular Peter Young discuss what price indeces such as CPI tell us about inflation. They discuss whether ageing demographics lead to inflation or deflation, whether inflation measurements are even theoretically possible, and the historical failure of central bank attempts to manage the economy based on price index data.
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Peter Young: There was one question I was thinking about earlier, that's been on my mind recently. I don't know if you have a strong opinion on it, Saif. But it relates to demographics again, but a different question than what we discussed a couple of times ago. And it's whether or not aging is deflationary or inflationary because people tend to say, the consensus is that as people get older, that's deflationary.
[00:04:08] Because older people spend less, but from an Austrian point of view, that shouldn't be the case. It should be the case that, because elderly people are not producing things that feed into CPI. And in order for people to be employed in production, you would expect people to be generating more than they get paid in salary, because otherwise it wouldn't be profitable for their employers to hire them.
[00:04:33] So you would expect people working, to be contributing to deflation. And you expect people who are working, but are drawing on resources by spending money to be inflationary. And there are a couple of people that argue that aging is deflationary. There's someone called Charles Goodhart.
[00:04:52] There's also a paper by two authors called Julius and TaskUs who argued that it's inflationary to have an aging population. But the vast majority of people say it's deflationary. I just wondered whether that was something you had an opinion on, and whether that might be something to discuss.
[00:05:12] Saifedean Ammous: Hmm. Well, it's not something I've thought about extensively. So, if I do have an opinion, I'm not very confident in it. I think perhaps depends on how you're thinking of it.
[00:05:27] Peter Young: So the way I'm thinking about it is that people take rightly or wrongly - we would argue wrongly, but... people use CPI as their measure of inflation, the vast majority of people. And CPI does mean something. It doesn't account for everything, but it does have some meaning.
[00:05:43] And people are saying that because we're now going into a period where the global population is aging, China's aging, Western populations are aging. We should expect that to have deflationary implications. So we should expect there to be less high CPI rises than we would otherwise expect.
[00:06:01] And I think it should be the opposite because logic would dictate that if you've got all these elderly people, okay, they spend less, but it doesn't... what matters in terms of driving CPI is not the aggregate level of spending. It's where the spending is greater than production. And so, because you've got more elderly people, you have less production relative to spending.
[00:06:22]Rather than just thinking about in terms of spending, which is what most Keynesian men tend to do.
[00:06:30] Saifedean Ammous: I'll also add that maybe one other thing that maybe matters more than the spending and production is credit. I think the effects on the credit cycle and credit creation might be more significant for thinking about the impact on price inflation or price deflation.
[00:06:45] So, old people generally are at the stage of their life, where they're running down their loans. They're not taking on new debt. So if you're in your sixties, seventies, you're less likely to be taking on new debt than if you are in your twenties and thirties. Sixties and seventies is when you pay off the debts that you took on in twenties, thirties, and forties.
[00:07:06]So, you would expect that would be deflationary. They pay off the debts and that leads to destruction of the money that they had taken out as debt. So an aging population would be taken out fewer loans and would be paying off more and more of the loan so that it would be causing the money supply to contract.
[00:07:25] What do you think?
[00:07:27]Peter Young: Makes sense to me, but it somehow doesn't feel. Somehow doesn't feel right. Because if you think about it in extremes, like if you had half the population that were elderly, say like, surely that's like a sheaf burden. So everyone that's producing has got to produce not just for themselves, but they've got also produced the elderly part of the population.
[00:07:58] So that's going to mean that real resources are much scarcer. And I suppose even if, if you're thinking about just the credit, right? The scarcity of resources, the higher price of resources would drive further. Incentives for people to invest in producing more resources. So what you would expect, like you wouldn't expect necessarily their overall volume of credits creation, to be determined by the number of people that are actually taking on loans, it should be determined by the actual volume of investment opportunity overall.
[00:08:39]Obviously if like 10 people are taking out loans, 10,000 pounds, that's more important than, like 20 people taking out loans for 1000 pounds and in an environment where resources are scarce, you would expect prices of resources to be going up. And then that drives more investment opportunity into the production of resources.
[00:09:00] So you still have the incentive to create more credit because there is demand for resources that you have actual, you have people who are basically idle, economically, who are consuming, who are drawing on resources that aren't producing. And so to me, I feel like it should be.
[00:09:17] I mean, intuitively it feels like it should be inflationary right from the fact they're not producing, but they are consuming even though they're consuming less than they would if they were at an earlier stage in their life.
[00:09:27]Saifedean Ammous: Yeah. So let's try and tally up the scores. So consumption. If you're older, you're consuming less, lending you're borrowing less, production you're producing less. So consuming less is deflationary, borrowing less is deflationary. But producing less is inflationary. So I guess it's about which direction those trends would play out in.
[00:09:56] Peter Young: Yeah. But you'll still, even though individually, you might be borrowing less. The way I'm thinking about it is that like, in order to employ someone, if I'm an employer, I need to be paying them less than what they actually produce. Otherwise it's not profitable for me to employ them. The idea is that they're generating a surplus through that labor and that is then adding to the total sum of goods and services in society.
[00:10:23] So if you're working, if you're working age population, on net, you should be contributing to deflation because labor in general is production and it is lowering the price of goods. If half of us didn't work, price of goods would be higher because there would be fewer goods, goods would be more scarce. And so relatively to the supply of money there would be a high price for goods. So the more people that work, the more deflation there should be in general. So even though as an elderly person, you borrow less and you consume less. Although actually that final thing, I'm not even sure that you consume this. Cause if you talk about someone who's right at the end of their life, they can end up consuming a lot in medical expenses.
[00:11:05] Just like if you look at actual medical expenditure in the UK, it's like we spend like 80% or some ridiculous percentage on people who are in the last month of life or something. It's really skewed. I don't have the exact figure, but the key thing is that you're just not producing. So anything you do if you're not producing.
[00:11:26] Should be inflationary because you're drawing on the pool of resources producers are creating and you are therefore driving up the price of those resources.
[00:11:37]Saifedean Ammous: Yeah. Yeah. I mean, honestly, it's these kinds of questions. I don't find to be all that interesting because ultimately the CPI is not really meaningful measure in any real way.
[00:11:50] And, the money supply is just going up and the question of how this is affecting prices is not something that can be easily quantified. I think I much more prefer the Saylor idea of understanding inflation as a vector rather than as a scalar.
[00:12:06] If you want to say that inflation is three or four or 10 or 20% per year, you're having to amalgamate all kinds of goods and there's no good way of there's no objectively good and reasonable way of amalgamating all the goods that people are consuming into one single basket, and then continuing to adjust that basket as people's consumption, continues to change with time because you know, new goods come along.
[00:12:33] So it's trying to talk about price deflation and the price inflation in the aggregate in my mind, there's just a flaw of Keynesian economics and of the aggregate way of thinking about Keynesian economics. It's kind of a dead end for economists to be going down that path of trying to figure out what CPI should be and whether CPI is too high or too low.
[00:12:54] I think the correct answer is just don't print money and prices will sort themselves out. And if you're printing money, you're doing something bad and it's going to be destructive economically, regardless of the effect that it has on prices. And this is one of the very common misconceptions that monetarists, monetarist economists in particular have about Austrian economics.
[00:13:18] This isn't like if you're trying to argue Austrian economics with Keynesians, obviously it's hopeless. They have no idea and they just, they do the standard routine of people who believe in the mainstream stuff, which is when they hear something that's a little bit different. They roll their eyes and they start laughing and making snarky stupid jokes.
[00:13:36] So it's impossible to get anywhere with Keynesians. But if you're trying to talk to a monetarist about Austrian business cycle theory, they have successfully managed. I'm not sure who's responsible for this. I think it might be Friedman himself. Uh, well, whoever it is, they've successfully managed to convince themselves that the Austrian theory is wrong, irrelevant and not worth paying attention to because in their mind, the Austrian theory says there needs to be price inflation for the business cycle to start.
[00:14:07] But if you studied Economics 12, which we have on the website on saifedean.com you'll remember in the last lecture we studied, last or next to last lecture, we studied the Austrian business cycle theory and the cause of the business cycle is not price inflation. It is money supply inflation.
[00:14:28] It is supply inflation. It's an increase in the money supply. And whether that is reflected in the CPI or not is completely, well, not completely irrelevant. Obviously, if you had a higher CPI rise, then you are obviously going to be witnessing quite a bit of inflation, but it's perfectly normal and expected that you could get the Austrian business cycle theory without getting price inflation during the 1920s.
[00:14:55] In fact, there was this, monetarist economist from Chicago. His name is Scott Sumner. And back in 2009, he became the sort of superstar of modern economics during the financial crisis. And he was presenting some kind of Chicago perspective, which of course, like the Chicago and the Keynesians, they disagree about the analysis and they disagree about the reasons why they believe the things that they believe, but somehow and magically, they always come back to concluding that the answer is more money printing. For the Keynesians, as I mentioned to the Bitcoin standard, the money printing the Keynesians provide the excuse for the money printing during the good times when things are fine, when there's no financial crisis, the Keynesians offer you the excuses for why you need to print money because of GDP and unemployment and raising the operating capacity of the economy, so there are all these silly Keynesian reasons for why you want to be engaging in inflation when things are fine.
[00:15:53] The monetarists become popular when things go bad, when there's a crisis, the monetarist framework is the most conducive for government to and the central bank to interfere after the crisis in order to reflate the banking system and re-inject liquidity into it and bring back the liquidity. It's the good times you see that the Keynesians are more popular and the, monetarists are kind of sidelined because they might be... They're still inflationary, you know, even in the good times the monetarists believe you need to be doing 3% CPI, which in the Austrian perspective, this is just inflation.
[00:16:32] Even if it's two or 3% CPI, we would likely be having two or 3% deflation rate drop in prices every year. Just because of economic growth. But when you target two, 3% CPI, that allows a lot of high margin of money printing and inflation to take place. There's still a margin, but obviously the Keynesians are much more conducive to money printing during the boom phase because they always have reasons for why you should print more money.
[00:17:01] So then we move to the crisis phase where the money supply is beginning to collapse. And then at that phase, that's when the monetarists are very useful because they are offering the Friedmanite perspective, which is that the cause of the crisis is the lack of liquidity in banks. We don't know why that we don't care why the lack of liquidity happened.
[00:17:21] We don't care about the deeper causes. We just know that banks are short on money and good banks are being hurt along with the bad banks. And this is not the time to be fiscally or monetarily responsible. This is the time for the central bank of the government to turn on their bazookas and give everybody all the money that they need unconditionally forever, because otherwise, you would hurt the GDP and things would be nasty.
[00:17:47] So anyways, Scott Sumner was pretty popular at that time because he was going on about, NGDP targeting what he calls nominal GDP targeting. We need to continue to make sure that nominal GDP grows at a set pace. And so if you have high price inflation, then you reduce monetary policy in order to make sure that nominal GDP growth remains at the pace that you want, which let's say 3% or whatever. And if you have a low inflation or if you have a money supply destruction, where you have deflation because of the financial crisis, because of banks going under, in that situation the job of the central bank to top up the money supply until it gets the nominal GDP that it requires.
[00:18:32] So if this sounds like crazy voodoo then you're beginning to get it. It really is crazy voodoo. So the idea is that the economy needs to be progressing at a nominal GDP value of say 3% per year, 4% a year. And that nominal GDP growth can be achieved either through real GDP growth or through inflation, or essentially it's the sum of the inflation and the sum of the GDP growth.
[00:18:59] And the idea is that as long as you ensure that the NGDP is proceeding at this pace, then the economy will figure itself out and arrange itself in a way that allows for the best outcomes. It's complete voodoo obviously because there's no magical number by which the economy needs to grow.
[00:19:14] And all that you're doing is just allowing for a large margin of inflation. In the good days and then a very large margin of inflation in the bad days when you get these deflationary corrections. So, all of this is a little bit of an aside to get back to the original point that I was trying to make, which is that, I got into a discussion with this guy's Sumner on his blog at that time. And I remember, he's being lauded and very happy that everybody's listening to him on his NGDP targeting and he's bringing up the Friedman explanation of the business cycle of the 1930s of the great depression. And I just tried to explain to him that, well, what caused the depression in the first place?
[00:19:54] And I tried to give him the Austrian perspective, which is it was the inflation of the 1920s. And then you get into the wall banging your head against the wall phase, where you are trying to explain to them that there was inflation in the 1920s. And they're trying to say no, look at the CPI. There was no rise in the CPI in the 1920s.
[00:20:17] Therefore there was no expansionary monetary policy. You Austrians are crazy. You are just crazy extremist free market fundamentalists. And you just want to blame the government for everything because you're ideologically inclined, but us Chicago people, we are scientists and we are not, I mean, I'm not quoting him here obviously, but this is generally the impression that you get from Chicago people, which is that this isn't ideology, this is just science.
[00:20:42] And so the science says we need GDP to grow at a specific, and then we need nominal GDP to grow at a specific amount. And then, if we don't get that amount, then we just need to be printing money. And so trying to explain to them that look nominal GDP was growing at the pace that you want before the crisis.
[00:21:00] And that's what led to the crisis. They can't accept that because inflation was low because CPI was low, but of course CPI was low because the inflation was manifesting itself in asset prices. 1920s were similar to 2020s and the 2010s in that the real inflation was in the asset prices.
[00:21:21] Things were just getting more and more expensive every day. Sorry, not things, things, but, assets. So housing and stocks in particular in the 1920s were in a massive bubble. And that's where the inflation was. So in the Keynesian and Chicago perspective, these are completely unconnected mysteries, and we can't draw the connection between them.
[00:21:41] We can't connect the dots here. In other words we don't know why the recession happened in 1929. We don't know why there was a stock market crash in 1929. And also we know that there was no inflation because there was no CPI rise. And the rise in the stock market was just, stock markets are rising.
[00:22:00] That's what stock markets do number go up. And then the problem was that stock market numbers stopped going up and once stock market numbers stop going up, then, that's the problem. So we can't draw the connection between all the inflationary monetary policy and the asset price inflation the increase in the asset prices.
[00:22:19] These are unconnected because the CPI was fixed and they're also unconnected to the crisis which started in 1929. So when you've established that as a framework and you obsess over CPI and you obsess over these metrics, then it's easy to see how Chicagoites and the Keynesians arrive at the conclusion that the way to fix this is to print a whole bunch of money and hand it out to the banks.
[00:22:45] And this in my mind explains the popularity of Chicago ideas. It's basically free markets everywhere, so it's not, well, it's not free markets everywhere. It's free markets to some extent. If you read actually people like Milton Friedman or other Chicago scholars, they're far more interventionists than they let on.
[00:23:05] And it's not just that they want intervention the money market, they believe in all kinds of other interventions. They believe that the market can be improved by government intervention, which is, I think the fundamental difference between them and Austrians who understand that government intervention is just a fancy word for coercive, imposition on the market, which is inevitably destructive.
[00:23:26] If you're forcing people to do things that they wouldn't do otherwise, you cannot be improving on their outcomes. They are looking out for themselves and they're trying to do what is best for them. And if you force them to do something else, you're definitely leading them towards something suboptimal by their subjective valuation, which is ultimately the only subjective valuation that matters.
[00:23:48]So I guess this is a long roundabout way of saying that I don't find that the obsession with what's going to happen with the CPI to be useful. In fact, I think it can be counterproductive. It's not very telling whether the CPI is two or three or four or 5%. There are lot of problems with the way the CPI is constructed.
[00:24:07] But also obsessing over it can hide the underlying dynamics. So if you think that CPI is just going up by two, 3%, you would think there's no inflation, but there could be a lot of inflation taking place and a lot of assets inflation and in particular.
[00:24:23] Peter Young: Yeah. So my position on it is I think the CPI is problematic.
[00:24:28] I don't think it's meaningless. I think it represents a specific selection of goods, which admittedly changes to an extent over time. But I do think it does tell us something meaningful about the price level. And we can talk meaningfully about whether things are getting more expensive or whether they're getting cheaper in general.
[00:24:48] And I think the question regarding elderly people... so I don't think the explanation I gave as to why they would be inflationary from a price level point of view doesn't necessarily have anything to do with CPI specifically. And how that particular measure is compiled. It's more about looking at whether goods and services that people demand go up in price or go down in price and you can come up with, I think you can meaningfully talk about price. So for example, let's say the money supply was the same, was fixed. And you have a billion dollars in the economy. And then suddenly there was like an earthquake or a natural disaster. And half of the production capacity of the country was destroyed. You would expect in that scenario, assuming money supply didn't change for prices in general to go up.
[00:25:43] You don't know by how much exactly, but you would expect prices to go up a lot and I think you can meaningfully talk about prices going up, even though you might say, well, this is this CPI, isn't the right measure for this or this like steak dinner, Bitcoin conference index that I value more is going up at a different rate or whatever it happens to be.
[00:26:06] You can all construct like an index of things we value, but I would just hesitate to say that it's not meaningful to talk about price level going up and going down. I completely accept what you've said about the great depression and Murray Rothbard sets out the case very well as to why the price level remained steady and how all the assets in the 1920s went into the stock market and to a lesser extent real estate.
[00:26:32] And then that led to the market crash. And I agree that CPI is incomplete. But the interesting question for me is... Because a lot of people have been forecasting inflation or deflation. And I do think that even though it's imperfect, there's some relationship between the CPI and whether it's attractive to put your money into fixed assets, such as gold or Bitcoin or real estate, like relatively scarce assets.
[00:27:06] And I think in higher inflation environments, you'll have more of a demand for the scarce assets. So do you agree with that? Do you think that there is an extent to which CPI is meaningful? And even if we think that the thing that it measures is.
[00:27:23] Saifedean Ammous: Not really no, because, you can look at the same economy and construct two very different CPIs, depending on what goods you choose and how much you weigh the goods.
[00:27:33]I think Saylor's analysis here is excellent. If you want to look at CPI where you are it's the aspirational poor CPI where you want to be poor and you want to stay home and eat the bugs and just watch TV all day, Netflix and soy sludge and bugs.
[00:27:53] If that's your basket of goods, if that's where you want, if you want to live in a tiny, micro little apartment in a gigantic city. Not just in a gigantic city, actually even better, tiny little house in the middle of nowhere, if that's what you aspire to, if that's what you want, you're always going to get very low CPI.
[00:28:11] In fact, even in cases of hyperinflation, like if you go to a place like Lebanon today, and I've been recently, you'll see that things that are cheap, things that poor people buy have not kept up with inflation as measured in terms of the exchange rate of the local Lira to the dollar, right?
[00:28:29] So the local Lira to the dollar has lost about 80% of its value. But if you go, when you try and buy the cheap things that poor people buy, bread and basic, very, very basic commodities, they have not gone up in price by that much. So in fact, if you come to the country with dollars from outside, and then you buy your Liras , you'll find that the cheap things are basically cheaper than they were before the hyperinflation, because they've gone up in Lira terms, but they haven't gone up as much as the dollar has gone up in Lira terms.
[00:29:02] So let's say it used to be that $1 could buy you a bag of bread. Now let's say $1 could buy you 1,500 Liras and one bag of bread. Now the dollar buys you let's say 15,000 Liras just to simplify it. I don't think it's 15 yet, but let's just simplify it. Say it's 10 X. The dollar will buy your 15,000 Liras.
[00:29:23] And the bread is at 3000 Liras or four or 5,000 or something like that. So $1 now we'll buy you three bags of bread instead of one bag of bread. So you see this distinction there's difference in the change in prices is always going to be there. And the CPI is, is a far more accurate measure of what you put into the basket of goods than it is a measure of anything else.
[00:29:50] So if you make it, and now let's snap out of the hyperinflation example, and look at the example of a modern economy that doesn't have hyperinflation. If your basket of goods over the last 10 years was soy and Doritos and industrial sludge and Netflix and YouTube, all of that stuff is getting cheaper.
[00:30:13] Or if it is getting more expensive, it's getting very, very slightly more expensive. So yeah, you'll see that your basket of goods if you have low quality housing in cheap neighborhoods, you'll find that the CPI has been very low. But if you were thinking about being rich and you were considering the basket of goods of aspiring to be rich.
[00:30:36] I want to be able to live in the nicest apartments in the nicest streets of the nicest town. And I want to go to the best university and I want to eat at the finest restaurants. Well, then you're going to find a much higher number for the CPI. So on the one hand, it's not entirely useless obviously, because still, if you look at it, like for instances in a place like Lebanon, or right now, even if you're measuring you're still going to get a very high CPI with any goods.
[00:31:03] So even though the bread is less expensive in dollar terms, it's more expensive in Lira terms. And so yeah, the price of bread has gone up 200% or 500% in a couple of years. So there is high price inflation. It will show up in the CPI. So it's not entirely useless because it is indicative. When it's very high it tells you that there's definitely very fast inflation, but if it's not very high, then it doesn't tell you much. It tells you that the people running this thing chose this basket of goods, which is not very high in its value. I think the deeper point you were saying is that we want to think about the impact on prices rather than CPI itself.
[00:31:45] And in that sense, again, like, yes, you do. But again, the way that the modern economy is structured, and I think there's an enormous amount of central planning involved in the basic commodities and basic goods. And I discussed this in the Fiat's standards chapter on Fiat food, which was sent out a couple of weeks ago.
[00:32:03] Once price inflation began to hit the food industry, then governments started to take on a much more hands-on role in the food industry, telling people to eat junk instead of meat, telling people that meat is bad for you and telling people to consume all of these inedible forms of junk that the US government promotes.
[00:32:23] So there's an enormous amount of leeway in terms of changing the prices. And in my mind if you were to think about the business cycle impact, you're better off trying to think of I'd say analyzing sectors and analyzing asset prices within sectors then prices because prices can be massively distorted by government intervention. And I think changes in asset prices might be more useful as an indication of the bubble.
[00:32:54] Peter Young: Interesting. So why do you think it's possible to measure asset prices as some sort of index, but not consumer goods as some sort of index.
[00:33:06] Saifedean Ammous: Well, because with asset prices, you're looking at one constant metric, you're looking at the stocks of these 500 companies over a year. And so that's a very, that may change as well, like in CPI the companies can change.
[00:33:21] So, yeah, but I mean, the changes in the companies are not that drastic in terms of... or actually, right in terms of you're looking at indexes, but if you're looking at individual companies, if you do an index where you don't take out companies and you just keep them, that is a constant phenomenon you're measuring, which is the trading price of these stocks on that market over time.
[00:33:44]You can draw a line around those things. Stocks of these companies are traded in this place and at that price. And this is how much they yield. So this is how much the price of these stocks has changed over time.
[00:33:56] That's a very clear and distinct metric. Whereas with with consumer prices, it depends entirely on what people are buying and what people are buying depends to a very large extent on what is happening
[00:34:11] Remember the discussion in the Fiat standard on it's the prices that determined how this is going to work.
[00:34:17] Peter Young: Yeah. So do you think, theoretically, it would be possible to construct a kind of consumer price index that had fixed goods within the basket that don't change that had like more specific definitions like this good will always have, the price of grassfed steak make a certain way to grass fed steak or, and this basket will always have the price of this kind of fish, this weight, this quantity.
[00:34:54] Do you think it would be possible in theory to construct such an index for consumer prices? And then could we use that in my thought experiment about aging, if there was such a better metric out there that didn't have substitution effects?
[00:35:10] Saifedean Ammous: Not quite, I don't think you can, because again, first of all, tastes and preferences change over time.
[00:35:16] So people will stop consuming certain things for other things. Prices will go up in this neighborhood because of inflation, but they could also go up because the factory that was in this neighborhood has shut down and now the air is much cleaner.
[00:35:29] And so the value of the factory has gone up. I guess what I'm saying is that the price itself is the way that we measure things in economics and then measuring the change in prices is like trying to measure an elastic ruler. If the money's messed up, it's like that example of the ruler that is elastic. If the money is being inflated, then prices are constantly being distorted and our ability to make, like, to like comparisons with the prices is gone.
[00:35:58] In other words in a Bitcoin economy, if we had a world economy that was running entirely on Bitcoin, you can't have such a thing as a CPI, then it's a ridiculous idea. Then you look specifically at individual goods and you can see how they've changed over time. You know, the money is fixed. Let's say, and specifically let's say there's, this is after the point where we have all 21 million and now we don't have any more inflation.
[00:36:20]Then you can look at the price of a house and you can see, the house used to cost a one Bitcoin, and now it costs 0.95 Bitcoin. So in the last 10 years, the price has dropped in value by 5% in terms of Bitcoin. That's the only thing that you would be able to make in terms of analysis of money.
[00:36:40] CPI is fundamentally unworkable because what you're doing is you're looking at the price and because the money is broken, the price is changing and going up and down. And you're trying to measure the ruler by measuring the different measures in the ruler. So. I guess here's how to think about it.
[00:37:01] Like you've got a table or you've got a child that is growing and you're measuring them with a measuring tape that is elastic. And you're saying, if I keep measuring the child over time, I'll be able to disentangle the changes in the height of the child, from the changes of the length of the measuring tape, because it's elastic. But you can't, you can't discern the two, unless you have a proper way of measuring the height of the child.
[00:37:36] If you have a real ruler or a real measuring tape that you could use measure the height of the child, then you could compare that to the measuring tapes and you can see what has happened in the measuring tape. But once the measuring tape itself is broken and once the measuring tape itself is varying, then it's impossible to disentangle the changes in the price of the goods that are caused by market conditions.
[00:37:57] Because people switch from eating one thing to the other, a neighborhood used to be hip. Now it's no longer hip and this neighborhood used to have a crime problem. Now it's crime problem has been fixed that other neighborhood didn't have a crime problem in the. Crime. And now it does.
[00:38:13] So prices are going down. There are so many other moving parts in this equation that you cannot do it. In my mind it's like when you're running Excel, it gives you an infinite loop error where you're referring to a cell where the value of the cell is dependent on the cell that you're referring from.
[00:38:33] And so you're saying, calculate that value and then that cell is giving it to that value. So is it referring back to the cell from which you're calculating it? And so, because you can't disentangle that then you can't disentangle the effect. You can't really measure the changes in the money, supply the changes in the value of money.
[00:38:51] I think it's just completely meaningless to keep trying to measure the value of money. Well, not completely, but I don't think it's mathematically. I don't think it's mathematically valid. That's the key point. In order to measure things, you need a constant, this is the key point that we'll always go back to. You need a constant in order to perform measurement.
[00:39:08] And if there is no constant, then your measurements are just punches in the dark.
[00:39:13]Peter Young: Yeah. I think in theory, you can never have a perfect measure of that encompasses everything so it's an index, but I think where I disagree is with the idea that there can't be. You seem to think that it's almost like.
[00:39:30] You seem to say that there is some meaning CPI, but it's very, very limited and it's telling us virtually nothing. Whereas I think that even though the CPI is imperfect, I think it does tell us something that's reasonably meaningful in the sense that it tells me what kind of, or let's stick with my theoretical basket, fixed things for a month, rather than talking about the actual CPI, where there are substitutions.
[00:39:57] If I want to plan for the future, I need to have some kind of forecast of what I think price is going to be. So that I can know how much I want to save for my retirement. And so when I go to make my forecasts as a kind of individual saver, or as an entrepreneur, I look at the things that I'm waiting to desire in the future, such as accommodation, such as food, such as transport, such as entertainment.
[00:40:21] And I make a estimate of what I think the prices of those individual things are going to be. And then I make a forecast for how much I need to save for those things. And people are all unique. They all have their own individual preferences, but there are lots of things that a very large proportion of the population will desire and will compete with me to acquire.
[00:40:45] So if I'm someone who's trying to save, there are people that will compete for me to acquire accommodation and food, because these are all things that are not just valued by me. They're valued by the rest of the population. So I think it is meaningful to try and come up with some sort of measure. And I think de facto, we do that when we make economic calculations, because otherwise we wouldn't have any basis to put money aside for our retirement because we wouldn't have any kind of sense as to how much we need to set aside and then how to value the future consumption over present consumption and calculate time preferences. So I think in that sense, we do tend to make rough and ready assumptions about what prices are going to do.
[00:41:28] And there are lots of things that are common to humans that are meaningful to a vast proportion of a population, like accomodation, food, transport, things like that. It seems to me like you're quite dismissive of the meaning that we attach to it. And if you're saying there is some meaning, from where does that meaning derive?
[00:41:47] If you're saying that there, there can be no theoretical foundation for any sort of price index, then why not just say it has no meaning whatsoever.
[00:41:57] Saifedean Ammous: No, it does have some meaning because, like when you are going to have very high inflation, like the situation in Lebanon right now, there's no way you can splice and dice the CPI without it showing up very high inflation.
[00:42:12]There's no way. The price of bread is five times what it was a few years ago. The price of meat is seven times what it was. So there's no way of hiding that, in that case, I guess if the measuring tape might be elastic, but when you're comparing between something, that's 100 meters long and something that's three meters long, you will not get precise, scientific, accurate measurements of both because your rubber band is elastic, but there's just no way that you will cut it in which the length of the very big thing will come out smaller than the small one.
[00:42:47] So if something goes from three to a hundred then whichever way you measure it, no matter how broken your measuring tape, you're going to come up with a bigger value for the after than the before.
[00:42:59] Peter Young: Yeah. So I don't know how you think about it, but I'd think about it as it's like having a rubber, a measuring stick that can fluctuate between the distances of 90 and 110 centimeters.
[00:43:12] And, and it's got a range to it. That's how I think about it. I acknowledge all the things you're saying that there can be no objective measurement of price and economics, but I think you can do this is subjectively. You can say I subjectively value these particular kinds of goods and services.
[00:43:28] And I know other people do, and I wanted therefore plan for my future and know what the price of those goods and services is likely to be. You can construct a reasonable index based on that. So, what it seems to me is that we both agree the CPI has some new thing,
[00:43:46]Saifedean Ammous: I think you're right on, you touched on something very important, which is that when you're doing it around your goods, you have introduced the concept, the constant into the measurement.
[00:43:57] And what is that constant? You, you are the constant, you are the measuring rod at this point. Because you are the one who's comparing, you're comparing the things that I want to buy today with the things, what I want to buy next year. And let's assume that they are the same things. So now that's the constant.
[00:44:16] So now all of your preferences and all of your opinions and all of your subjective valuations are taken as a constant. So you need to be buying this much of this good and that much of that good every year. And you're looking at the variation in the price of those goods over the years.
[00:44:33] So now we're holding you as the constant and we're finding out what's happening to the prices of those things. So, yeah, that is going to be meaningful because you're taking them as a given. But, if you see the trend over the last three years was that my stuff gets 10% more expensive every year then it might make sense to factor that into your decisions for spending for next year and for earning and spending for next year.
[00:45:00]But it doesn't tell us about what's happening to the money supply. We know your goods are going out by 10%, but that depends on where your goods fall on the spectrum of price elasticity response to changes in the money supply.
[00:45:16] So it could be that we have higher inflation in other goods, we have lower inflation than other goods than yours. And we're just looking at a snapshot using one measuring tape and that measuring tape is your fixed preferences, which we're assuming are remaining fixed across the year in order to make a, like, to like comparison.
[00:45:37] Peter Young: Yeah, my fixed preferences are unique, but they're not completely independent of everyone else's. So if I have a friend who they wanna retire as well, they may place more emphasis on their house and less emphasis on entertainment. Then I have another friend who places more emphasis on food and less emphasis on what kind of house they live in.
[00:45:58]Maybe he'll have a CPI that's 10%. Maybe I'll have a CPI that's 5%, maybe another friend will have a CPI that's 7%, but they're not going to be just completely independent variables. There is enough in there I think you can meaningfully talk about. You can make statements if you qualified them in the right way about what the price level is going to be insofar as it meaningfully relates to people's actual preferences.
[00:46:24] And by the sounds of it, that's what I think. I think that's more of the way I think about CPI. And I think fundamentally that's the way you think about CPI as well, but it just seems to be a qualitative difference in that I'm more like it's a very imperfect measure but it does tell us something meaningful.
[00:46:42] Whereas you seem to be more on the qualitative side saying it's imperfect and it tells us very, very little amount of what's happening in reality.
[00:46:49]Seems to be a qualitative difference.Saifedean Ammous:
[00:46:51] I guess, I guess I'm going to turn the tables on you here and say, when you're trying to quantify the difference between you and me, you said, uh, I can't remember the exact phrase you used, but you said it tells us something useful. And then for me, you said it doesn't tell us much that's useful. Again, we fall into the same problem here, which is that we don't have a measuring units to measure usefulness of the index. And so maybe we have the same exact opinion of how useful CPI is, but in my mind, that's inadequate. Whereas in your mind it's less inadequate, but we can't compare because we don't have an objective unit of measuring usefulness.
[00:47:31]It's an interesting question in general, whether you go with a broken measure or an imperfect measure or no measure, what's better. I tend to lean more toward the, no measure is better than a broken measure. I don't see much value in obsessing over what's happening to CPI and what's happening to all these measures that are not very useful.
[00:47:52] And I think in economics we see a lot of examples of people using measures in inappropriate ways and in largely useless ways. And I think, I dunno, maybe it's my experience. Maybe I'm taking my experience way too far, but in my mind, I start being able to, at least in my own estimation, I started being able to understand the world better when I stopped obsessing over this enormous multitude of stats and numbers that are constantly being thrown at you, started treating that as noise and started focusing on the underlying reality that's driving it. So I don't follow CPI.
[00:48:30] I've not ever cared to see what's happening with CPI and what's the CPI number going to be tomorrow or next week. It just doesn't interest me. It's not entirely clear whether this is the case, that this is a good idea given the fact... It has worked out great for me over the past few years because I've had Bitcoin and that just frees me from having to think about the Fiat world and all of its useless metrics, because, we have one metric that we care about, which is Bitcoin price and number go up. As long as number go up then, who cares about what CPI does and who cares about all these other things do.
[00:49:03] But maybe if Bitcoin wasn't around, maybe not paying attention to CPI might be expensive. Maybe you were right. It's not perfect, and it's not scientific, but it does tell us a little bit more about how the world works.
[00:49:15] Peter Young: Yeah. I mean, when you say Bitcoin is fine as long as number go up, like obviously if Bitcoin goes to a million dollars and then there's hyperinflation and a million dollars is worth like $10 today, then it would have turned out to be a bad investment for Bitcoin, because you could have put it in a house and then still have the house. Right. So we do have a conception of price level that is meaningful. And it has quite profound implications because if you've told me CPI is going to double next year, then that would have really profound implications because it would mean that I'd be able to do a lot less stuff next year, because all the stuff that's currently in the CPI and 90%, it's not going to change.
[00:50:01] That stuff that I need to live, the lifestyle I live. So if it all went up in price that would have very profound implications, I'd have to change my lifestyle, I'd have to change my spending habits. I have to plan. I might have to stop our things. So I take what you're saying about all the imperfectness of the measure, but it still strikes me as being quite a consequential thing to look at.
[00:50:21] Saifedean Ammous: But I mean your example for offering why it would be a consequential, useful thing to look at is assuming that you are able to predict the CPI for next year.
[00:50:30]Which is another order of magnitude of essentially bogus math. We can't calculate the CPI for today with any real measure of precision. The notion that we are able to predict CPI for next year, I think is far more difficult. We're not going to be able to predict this for next year.
[00:50:46] So it's not like the government is going to issue a statistic telling you, brace yourself next year. You're going to get a 15% increase in your basket of good prices.
[00:50:55] Peter Young: Hmm. I suppose that central banks can target it though. And they can say things like we're not going to try and hit our CPI targets for next year.
[00:51:04]Yeah. And what is going Saifedean Ammous: to happen when they targeted is that they're going to hit their target always by hook or crook. They're going to rebalance the basket. I mean, obviously they can't, if there's hyperinflation, very fast inflation, they won't be able to just hide it. But just because they tell you that it's the target, that doesn't necessarily mean that they're going to hit it.
[00:51:21] So yeah. I mean, I think ultimately, I go back to the point of view, thinking of yourself as the constant in this calculation. I think you're better off rather than looking at CPI and trying to look at what, economists are prognosticating for the CPI for next year. I think you're better off looking at the things that you are buying and trying to see the trends in that on a micro scale.
[00:51:40] So you're planning on buying a house next year, and you're thinking about buying it in this area. I think far more consequential than spending the next 12 months going over CPI reports and research reports about predicting the CPI. I think far more consequential for you is to go to that area, talk to real estate agent and talk to land owners, try and figure out what the trend is with prices and how things are going, put in a few bids for a few houses and see how that goes.
[00:52:07] I think that kind of thing where, you know, you're looking at the thing that matters and you're concerned with it, that's probably going to give you a much better implication about the things that matter to you because the price of the house in that neighborhood is going to be affected by a million things that are not related to the money supply.
[00:52:24] And you don't particularly care about what is causing this price to go up or down. What you care about is how many pieces of green paper do I need to bring in order to get that house that I want. And I think micro level analysis is going to work much better than a CPI there. I don't see the value in obsessing over a government aggregate metric.
[00:52:50] Peter Young: Yeah, I agree with that. It's better to construct your own index based on what you value for your own planning.
[00:52:57] Lyn Alden who were having in a couple of weeks, she has mentioned that aging is deflationary. So she obviously is more involved in making financial forecasts and is like a Bitcoiner she's on the side of a lot of similar thinking to Austrian school people, but, she does look at these other metrics as well and tries to work out what are good investments based on where the metrics are going.
[00:53:22] And one of the things she said was that aging is deflationary rather than inflationary. So, that's actually where the original question on aging was coming from, from my perspective, because I thought, that would be an interesting thing to discuss with her, why she thinks that it has this impact on the CPI.
[00:53:40] Saifedean Ammous: Yeah. It will be interesting to get her perspective on this. I presume, if you're trading markets daily, if you're in the hedge fund or money management business in these cases, I'd imagine this is going to be more useful, as a metric because, for better or for worse, it's the best thing that people have.
[00:53:57] And, so a lot of people follow it and a lot of people decide on it. And so it's one of those things that is a self fulfilling prophecy. The fact that people are obsessed with the CPI means that you should find out what's going on and follow it. I can see the case for why traders and hedge funds and macro people will find more value in it.
[00:54:17] Having said that, for as long as I've been around, the CPI has always been within the very narrow range and that is politically optimal. It's not entirely clear that, would have made such a big difference. If you just assumed that it was all going to be two to 3% every year, then you know, you're going to get two to 3% every year.
[00:54:38]Not sure how useful that is.
[00:54:39] Peter Young: So do you think they changed the statistical way they were measuring it after the 1980s?
[00:54:44]Saifedean Ammous: Yes, they did a whole bunch of... this is basically how they ended inflation. I'm trying to remember where I read about this, but, I can't remember it right now, but there was an analysis on how the measurement of inflation changed after the 1970s, when inflation was very high.
[00:55:00] And that was really the most important way for bringing inflation down was, well, one of them is they took out energy because they said, well, energy prices are too volatile and you know, who needs energy? Anyway, it's a tiny little, non essential, good that nobody needs. It's not like anybody wants to survive the winter or move around or stay warm.
[00:55:23] Nobody really cares about those things. So you take out energy. And then you take out food. There's a lot of aspect of taking foods out of the, uh, I think what they took out is basic commodities. So they'll take out the price of commodity foods, but they'll keep the processed manufactured food. And so the natural commodity unprocessed is more likely to be affected by inflation because it's scarce and it takes time to make it, whereas the end product, the processed plastic junk that has put on supermarket shelves.
[00:55:59] A lot of the price of that thing lies in the industrial production process and the patents surrounding it and the intangible aspects of it, which aren't as affected by inflation. So that's one way. And then I think perhaps the most ingenious way in which they messed up the CPI is that they took out the price of houses and then anybody know why they took out the price of houses from CPI?
[00:56:28] Peter Young: I think it was, I think the official reason in the UK and you're, I don't know about other countries, but I think the official reason was just that it didn't, it wasn't an end consumer good. And they try to focus just on end consumer goods. And you also have problems with how you price something that's an asset when it's not consumed, whereas rent is consumed on a monthly basis. And therefore,
[00:56:57] Saifedean Ammous: basically the way you said it is it's not a consumer good, because it's an investment good. So they've reclassified your housing as an investment. They took away your savings because inflation destroys our savings.
[00:57:08] So nobody has the ability to save now. And now your only way of saving is to put your money in a house. And that's what created the big, giant housing orgy that we have, where everybody thinks of their house as their saving account. And so everybody wants houses to become more expensive because that means that my portfolio is doing better.
[00:57:30] Of course, in reality, houses are not a saving account. Houses are a consumer good and houses are consumed. You live in a house, you are slowly degrading it, you are slowly consuming it. A house has a life expectancy and it needs constant maintenance. And so if you're living in it, you are consuming it, it is a consumer good, you're reducing its value and requiring it to have more maintenance.
[00:57:56] So you need to spend more money on it in order to maintain it in working shape. So it is a consumer good. And if you don't think houses are consumed, try and not invest in a house and see what happens eventually it'll fall apart then will become unlivable. If you don't keep investing in a house, it's going to fall apart, it's going to be consumed.
[00:58:13] They know houses built today. It's in tip-top shape, but if you went and lived in it and you didn't invest in it, it's going to be consumed. And eventually it's going to be worth zero. It's going to crumble and fall apart, a pipe breaks and then the water starts to flood the foundations of the house.
[00:58:30] And then the house starts crumbling and it becomes unlivable. The roof one tiny little leak in the roof. If you don't fix it, it'll keep leaking more and more and more. And then the whole thing would come crumbling apart. So houses need constant maintenance. They are a consumer good. And they get consumed.
[00:58:46] So take them out of the consumer good index, make them into the only saving account, have them as the only, well, or the prime way for people to escape inflation. And then everybody's cheering for houses to rise and it works great for the people who bought their houses early into people who bought their houses 20, 30 years ago, when this scam began. It works terribly for people who want to buy houses right now.
[00:59:12] You look at how impossible it is for a young person to buy a house today, compared to what it was like 30, 40 years ago, like in the 1970s, it was extremely normal that a working man didn't even need a working wife. I'll just one man had one paycheck, could afford to buy a house.
[00:59:30]And they could get a normal house, but today, you know, the house prices are so high and they don't count in CPI so that means that when your wages are being adjusted for CPI, they're not being adjusted for the increase in house prices. And so that's where all the inflation is reading. Uh, not all, but that's what a lot of the inflation is being smuggled in.
[00:59:49] Your wages are not keeping up with the price as it's going up of the house. And so the result is today, young people graduate and have decent paying jobs and still, they need to kill themselves for many years in order to just be able to afford to make the down payment for the house.
[01:00:05] That's because the housing prices have gone up. So, I mean, this is not a conceptual problem with CPI in that you could make a better CPI by including houses in CPIs. It would show a much higher rate of inflation over the past few decades. But the fact that you can get away with things like this is the conceptual problem with the CPI, which is that you're measuring things with no unit.
[01:00:29] And if you're measuring things with no unit, you're basically asking for the person who's doing the measuring to do whatever the hell they want with the units that they want and treat them the way that they want. I could argue this and I'm convinced of it, other people might be convinced of it, but it doesn't really matter if it's correct or not in an objective sense because ultimately there's going to be one guy who's going to be deciding it and, you know, guess what it's going to be the person who's going to be doing that is going to do it according to the interests that they have out of this and the things that they want from it.
[01:01:02] Peter Young: Yeah. It's a very, very formatic measure. And you have to be very careful what you use it for. And I certainly don't agree with talking about it as if there is a objective rate of inflation, which a lot of people do. Something you said reminded me of a statement from Christine Lagarde. I think it was when you were talking about investments and what constitutes an investment and how we need to encourage investments.
[01:01:28] I don't know if you saw, there was a speech by Christine Lagarde over the last few days. And she was kind of justifying why they have negative interest rates in Europe. And she was saying that we need to have a holistic view of the whole economy. So lots of savers are very upset about the fact that we have negative interest rates, but we have to bear in mind that if we have negative interest rates that will spur more investment and that will mean that people will grow the economy.
[01:01:57] And, the thing that struck me about that was just that there's just no conception that people could invest based on savings. It's like, that's just not a thing that is even entertained anymore. You know, the whole idea is in order to invest in something you have to borrow money, you can't borrow based on the fact that you've saved.
[01:02:17]Just sort of tells me it's indicative of the paradigm in which we live, where it used to be the case that you would have to set aside actual resources in order to invest in a project and get people to invest in it. But now it's kind of assumed that you'll borrow. The money will be created and that's how the system operates.
[01:02:34] So I don't know if you saw that piece of news. And if you have any comments on what was said.
[01:02:39]Saifedean Ammous: Yeah, no, I think you got it. It goes back to the idea that you make people need to invest in order to keep their money. I think this is the fundamental scam of Fiat. People and Keynesians have spent the last century telling us that basically Keynesian economics is money printing without any cost.
[01:02:57] The government faces no opportunity costs for all of this and that government can always just do whatever it wants to the economy. And it doesn't face any restraints because it just can keep clicking buttons and making more money. But that are constraints. And the constraint is that you just can't save anymore and you have to earn your money twice if you want to keep it for the future.
[01:03:21] So you have to earn your money by working and getting job, serving people, doing something useful. And then you have to go and take that money and invest it and figure out a way for it to offer you a return that is higher than the devaluation that is happening. Which is insane if you think about it, because you're basically forcing people.
[01:03:41] It's like, if you were an employee at a firm, you get paid your salary, but you only get paid your salary in casino chips, and you have to go to the casino and you have to put them on the roulette. And then after you've played in the casino, if you win, you get to take your money home. If you don't, then you don't get to take your money home and that's it.
[01:04:00] You could lose your entire paycheck like that. Or you could triple it in one day. And that's basically how it works in the Fiat system. In a hard money system, you need to earn your money once. You earn the money and it stays earned, you take it and you save it and it just sits there and it appreciates.
[01:04:18] And with time it appreciates more and more, and then you don't have to worry about the casino. You don't have to think about what's going to happen with housing. What's going to happen with stocks. Should I get an index? Should I go into NASDAQ or S&P, should I buy bonds? Should I diversify into commodities?
[01:04:33] Should I buy emerging market equity? All of this stuff is a full-time job. And I think it's insane that doctors, lawyers, engineers, athletes, normal human beings, these are smart, highly intelligent human beings. It's not like it's impossible to figure out how to beat.
[01:04:49] Well, it's difficult, but it's not impossible to figure out how to get a decent return on the market. If you spend a lot of time studying it and learning it. But if you are going to be spending a lot of time studying and learning it, you're not going to be able to be a good surgeon or a good engineer, or a good lawyer.
[01:05:03] You know, these jobs require focus and dedication. And if you have to spend half of your day figuring out whether you should be buying emerging market bonds or emerging market equity, that's an entire job. That's an entire job. So everybody ends up spending half of their workday in the casino rather than just actually doing their job.
[01:05:20] So it's much less productivity taking place. Yeah. Yeah, Andrej saying you first have to pay tax. And then when you managed to get a return on investment, you have to pay capital gains tax as well. Yep. Again, you just need to keep being taxed as well. You don't just go to the casino. You also get taxed before you go to the casino.
[01:05:42] So yeah, it's insane.
[01:05:44]Peter Young: Yeah. This is something I've been reflecting on recently, as I've been going over some of Dominic Frisby's work that we're having on thursday, just how amazingly convoluted the modern nation States tax systems are compared to what they used to be. And the fact that, because we have this strange inflationary system.
[01:06:05]It would be so much simpler, so much effort would be saved and all the stuff that you're talking about regarding people who are not specialists in investment, being able to focus on what they're good at rather than having to become like moonlighting investors and all of the effort that goes into working out exactly what everyone's earning and exactly what the taxes for each individual activity would be.
[01:06:27] And in one of the things I took from Dominic's book, Daylight Robbery, which is about the history of taxation is that, in 1960, only one country had VAT and that was France. And now it's more than a hundred countries have VAT. There's also other stuff like in the UK, during the time of the first world war taxes used to be levied locally. About a third of taxes came from your local council.
[01:06:52] And so there was much more of a relationship between what was spent and like used to know your tax collector. So there was more of a sort of sense of reciprocity and what comes across in Dominic's work it's just how convoluted this entire system has become and how many different ways there are of taxing people.
[01:07:10] The fact that there's a VAT now, and that wasn't really a thing for the 1960s. The fact that there's now very high levels of income tax everywhere and income tax is such an important way of generating government revenue. And then you have capital gains tax that was mentioned in the chat and all these different things.
[01:07:28] It's just... the administration of it and the uncertainty and precariousness compared to what the alternative would be, which is the kind of free private city's model, which is the government basically provides you services and you, they would say, this is what we're going to charge you for these services.
[01:07:46] And then you pay a flat fee for them. And that's the model that people like Rahim Taghizadegan proposing. They're saying that we should just have a simple model because not only does that mean that people can plan for the future, businesses can make investments with confidence, but it just removes all of this hugely complex, bureaucratic machine that exists around keeping the inflation going, but also making sure you're administering taxes in the right way.
[01:08:15] And it's just sometimes worth reflecting on how amazingly convoluted the system we live in has become. And the fact that it didn't exist like this historically, at the time of the industrial revolution, it was much, in Britain at least, it was much simpler. And there isn't really any theoretical reason why it needs to be this way, but this is the way that it is most people will just accept that.
[01:08:37] Saifedean Ammous: Yeah. Also it's degeneration is just as time goes on, you just continue to collect the bad things and the bad things that are related to the government. There is no mechanism for eliminating them because there's no market feedback mechanism. And so, if a government was a market and it started introducing these stupid ideas, governments would fail quickly, but the response, the market's response on governments is far slower because they maintain the territorial monopoly and people are stuck there and people don't like to just move their entire lives. I mean, it's becoming easier to move your entire life now, but it's traditionally been much harder to move. So governments have a lot of leeway in terms of being able to impose something bad and not feeling any negative consequences for themselves as governments for many, many decades to come.
[01:09:25] But yeah, I look forward to the discussion with Dominic on Thursday, so that should be fun. We'll discuss all of these then. All right. Anybody have any other questions?
[01:09:34]Well, thank you very much guys, for joining today. Thank you, Peter, for all the stimulating questions and discussion and for the next seminar, we will be having Dominic Frisby to talk about taxes. So I'll see you on Thursday. Take care.