Two Big Themes Of 2023

Plus "polyworking" becomes a thing, an Arthur Hayes interview, Russia settles trade in Yuan, and more.

Where you store value might not be as secure as it once was. Should you be diversifying where you save?

Today's two "feature topics" are introductions to topics that i'll explore more over the next few months and years. They are central themes in the 2023/2024 main narratives that I see forming. I’ll start with simple introductions today and work in details and current event examples over time.

Why You Need To Think About Inside Vs Outside Money

Inside vs outside money is an important concept in a digitally transforming world because location independent people now constantly evaluate where they'll live, why, and how to extract more value from society.

But what does inside vs outside money mean? And why should you care?

Let me be clear - I'm not going to use an academic definition here. This is my own riff on a technical concept that I'm using to make sense of transformative trends taking place around the world. If you google inside vs outside money, you'll likely get some complicated central bank jargon. Instead of the academic definition, I'm going to provide my own definition of inside vs outside money that is relevant to self sovereignty in the digitally transformative era we find ourselves in today.

Diving back in, lets start by asking - what is money?

All forms of money are the representations of value in the economic systems that people interact with on a daily basis. (that includes both government and/or non-government systems) Money is also more technically a medium of exchange, a unit of account, and a store of value.

Some forms of money are better at each of these things than others and in a crude way - anything that fits those three boxes can be defined as money. But some forms of money are better at some of these functions than others.

Some forms and types of money are representative of national economies at large (like dollars and treasury bonds), other forms of money have importance to the international economy (global reserve assets like the Dollar, Euro, Yuan, as well as some commodities), some forms of money are representative of historical stores of value (like gold) and in growing cases, there are some forms of money that straddle digital and physical economies (like Bitcoin).

For the purposes of this newsletter, think of inside money as value stored within a national economy that is subject to government rules, regulations, policies and processes. The value of "inside money" and the assets denominated in the local currency are very aligned with the local Central Bank and government fiscal policies.

On the other hand, think of outside money as assets that are globally valuable and exchangeable at international levels. Outside money can be easily priced in other currencies, are easy to exchange (liquid markets) and are less subject to the manipulations and whims of a single national government and local politics.

Again, this is a crude and non-academic definition but it works to provide an important level setting.

Why am I bringing this up and where am I going with it?

Because the current banking crisis has raised a question about whether bank deposits (and other forms of inside money) are as secure as we once thought they were. (bank deposits should be considered "inside money" because deposits are heavily influenced by local Central Bank, fiscal policy, and regulations)

In the same way that there is deposit risk (the risk that you deposit at a bank that fails), there is also risk that money left in a certain country, at a certain institution, and in a location subject to rapidly evolving financial rules and regulations could be at risk.

This banking crisis highlights the value of having access to and possession of outside money that isn’t overly vulnerable to anyone one national economy.

And so this crisis also brings to the forefront the value proposition of Bitcoin. ie: whether Bitcoin as a form of outside money becomes more valuable specifically because it exists outside of direct Central Bank influences. (it has international value outside of the control of any single nation state system)

Said another way, the crisis has created a question about whether its a good practice to keep your savings exclusively stored in inside money vs diversifying with assets denominated in outside money as well (like bitcoin).

Bringing this question into frame for this newsletter, as an aspiring sovereign individual - do you only want to own assets that are directly linked to one economy? Or do you want to own a diversified portfolio of assets that can be denominated in other forms of money and that exist outside the influence of any single economy? Like gold, bitcoin, and commodities that are easily denominated in other currencies and not necessarily linked to one economy.

My point in raising this concept is to bring to your awareness how earning, storing, investing, and managing capital in a digitally transformed world simultaneously undergoing a multipolar transformation is something to seriously think about.

This topic builds on the growing social class divide that I talk about on a regular basis between location dependent and location independent people. Why? Because one group has an easier time accomplishing this diversification and one group has a harder time. One group is more vested in the success of inside money tied to a particular nation state while the other has a vested interest in investing in the money and assets most likely to dominate in a multipolar world.

Thinking about inside vs outside money from this new class divide creates a really interesting setup from a sociopolitical perspective. A new class divide that intersects at the harsh realities of inside money vs outside monetary policy and at flag theory and digital self sovereignty vs nationalism. These factors will influence policy preferences which will be molded along these two new social class dividing lines.

And this is all happening in a brewing financial crisis - leading up to the American 2023 Presidential election cycle - with lasting implications to global financial policy around the world. Saying it more directly, this US election will have a large impact on the US dollar’s global reserve status. We can expect people to vote for policies that support where they fall in the new class divide.

Bitcoin is a Neo-medieval Institution

To that end, you should think of Bitcoin as a neo-medieval institution.

A non-governmental entity that is siphoning power, control, and influence from nation states to a location agnostic community just as the church did to the ruling elite in medieval times.

Bitcoin causes divergent loyalties to form amongst communities that can now exist within a state and within Bitcoins growing ecosystem that exists outside of state control.

To those that say Bitcoin has no intrinsic value, I'd argue that it's value is derived from its ability to become a unit of account that exists outside of state control. It's value is that it is a highly liquid and easily exchanged outside money. It’s an "other" form of value created for the digital age. A means of exit from the era where nation states use control over money as a means of coercion.

Now when evaluating Bitcoin you need to evaluate it from the neo-medieval perspective. As an institution that enables location independent people to wrestle control from the state and provide a means to leverage outside money more easily.

What you should be asking yourself:

Can Bitcoin continue to exist as an outside form of money? Or will states try to end it? And if the world gravitates towards a multipolar power structure where America isn't as influential as it was over the past 75 years, does that mean that "other" forms of "outside money" become more intrinsically valuable simply because they exist outside of the control of these state powers using financial warfare for control of the global system?

These themes are setting up to be huge narratives over the next few years and I’ll be writing about them here.

Rapid Fire

Extras

17 Questions That Changed My Life - “If you stress-test the boundaries and experiment with the “impossibles,” you’ll quickly discover that most limitations are a fragile collection of socially reinforced rules you can choose to break at any time.”

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