Dominic Frisby, comedian, author, financial writer and libertarian joins me on the show to talk about his latest book, Daylight Robbery.

We chat:

• How taxes have impacted society
• Low taxes for more prosperous societies
• Bitcoin Citadels and patronage
• Bitcoin’s impact on taxes
• Bitcoin Nomads
• Surveillance and Platforms

Dominic links:

• Twitter: @DominicFrisby
• Book: Daylight Robbery – How Tax Shaped Our Past and Will

Sponsors:

• Swan Bitcoin
• Unchained Capital (code LIVERA)
• CompassMining.io
• Hodl Hodl Lend
• CypherSafe (code LIVERA)
• CoinKite.com (code LIVERA)

Stephan Livera links:

• Show notes and website
• Follow me on twitter @stephanlivera
• Subscribe to the podcast
• Patreon @stephanlivera

Podcast Transcript:

Stephan Livera:

Dominic welcome to the show.

Dominic Frisby:

Thanks very much, Stephan. It’s late at night here and early in the morning there, I think.

Stephan Livera:

Yeah. 8:00 AM for me. So Dominic, I had a chance to read your book and I really liked it, but I guess first I know you’re a man of you’re one of those guys who wears many hats. So tell us just for people who don’t know, you tell us a little bit about yourself.

Dominic Frisby:

Well, I’ve got a mixed background in that. I started out as a voiceover artist of all things. I always wanted to be a writer, but in order to become a writer. I went to drama school. And then when I was at drama school, for some reason, I was the best at radio. And I got a voiceover agent when I left drama school. This is in the early nineties. And so just found myself, always doing voiceovers. And then you get, you know, voiceovers only last about an hour or two. So you tend to get quite a lot of free time in between jobs. And so while in between jobs, I wrote myself a standup act and became a comic. And then by the sort of mid noughties, I’d spent a bit of money and I was listening to all these people on the internet talking, and I was trying to work out how to invest the money.

Dominic Frisby:

This is way before Bitcoin ever existed. And all these people about talking about gold and I thought, well, that’s interesting. And then from gold, you quickly start to learn about money. You know, gold is a very political investment and because it was once money, you start reading about the history of money. I learned all about Fiat money and suddenly I understood why house prices were so ridiculously expensive. And just, it was one of those kind of, I wouldn’t call it a light bulb moment, maybe a light bulb year or something like that. But everything just gradually became clear about how broken our economies are. And then there were all these interesting people talking about gold and commodities, and I wanted to find out a way of meeting them and basically getting free, financial advice off them without having to pay for it.

Dominic Frisby:

And so I started a podcast you know, it was using my audio experience and this is in 2006. And, you know, sort of almost before podcasting became popular, I started this podcast. I remember you had to sort of explain to people, no, you get the thing and you download it on from the MP3 off the internet, and then you drag it onto your phone. You plug your phone into a computer, then you drag the podcast onto your phone, and then you can listen to it. You have to sort of explain to people how to listen to podcasts back then. But anyway, the podcast was quite popular. And then one of the people I interviewed on the podcast was this woman called Merryn Somerset Webb. I mean, I interviewed like I did looking back now, they were amazing interviews, but the second person I interviewed was Jim Rogers, who is a famous commodities guru.

Dominic Frisby:

He was George Soros’ partner. And I quickly discovered that, you know, anyone who’s promoting themselves, their brand is quite happy to talk to you on a podcast. Same as I am now, I’m promoting my books. I’m quite happy to talk to you on a podcast and talk to anyone that wants to listen to me. But yeah. And so, and it’s a really good way to meet people podcasting because, you know, if you, if you sit down and have a cup of coffee with somebody, you get through so much, but if you do an interview with somebody, you just get through so much more in an hour. So it’s a fantastic way to meet people. And it’s a sort of heightened conversation, really a podcast. Anyway, one of the people I interviewed was this lady called Merryn Somerset Webb, who was the editor of a magazine called money week.

Dominic Frisby:

The UK’s best-selling weekly financial publication. And she said to me, Ooh, we need people like you to come and write for us. And I said, well, I don’t really know what I’m talking about. And she said no you’ll be great. And so she offered me colon and and that was in 2006, 2007. And I’m still writing that weekly column now. And since then, I’ve gone on to write books. And I wrote a film called four horsemen, which was very popular a few years ago and various other things. And I think the secret is that because I’m a comedian first and foremost, if the audience doesn’t understand what you’re saying, they don’t laugh. And so that forces the discipline of clarity onto the comedian. And so in finance, I think are almost deliberately obfuscatory, they deliberately talk in a language that is alienating because they don’t want to be black and white about something.

Dominic Frisby:

And, you know Alan Greenspan used to call it purposeful obfuscation. But anyway, I think one of the reasons why my podcast and my column was popular is because I just put it all in layman’s language. And anyway, so that’s me, I’m a sort of financial writer, Goldbug, Bitcoin bug. I mean, on the course of the many things I’ve written, I wrote a book about Bitcoin in 2014, and I think it was the first book on Bitcoin from a recognized publisher. It wasn’t the first book on Bitcoin, but, you know, from a proper publisher, I remember I wrote it at the beginning of 2014. It wasn’t the end of 2014 until it came out. It just takes so long. But anyway so yeah, that’s me this sort of mixed bag of comedy and finance.

Stephan Livera:

Yeah. That’s very cool. And I think there’s also,

Dominic Frisby:

There’s quite a bit of crossover in the Venn diagram between the two.

Stephan Livera:

Of course. Yeah. And I think there’s also a crossover also in kind of the libertarian world as well. Right. So you’re kind of doing stuff in the libertarian world. Also, you kind of, chat with some of them, some well-known libertarians.

Dominic Frisby:

Yeah. I mean, you know, I didn’t even know what a libertarian was until about till I was about 35, you know, and now I’m, you know, I’m sort of a hardcore libertarian, anarcho-capitalist classical liberal, I sort of waiver a bit, depending on who I’ve been hanging out with. But yeah, I mean, I was sort of grew up to believe that anyone who wasn’t a communist was a Nazi. That was my sort of university education.

Stephan Livera:

Yeah. And so obviously writing a book about tax there’s a lot of, for any libertarian person, that’s very interesting, right? Because it’s like we see this as a problem. And I mean, obviously normal books about tax are very boring. They’re very dry. But this is more about the stories and also understanding just how badly we’re all being screwed over here. So I think from that perspective libertarians are quite interested in this book, at least when I was reading through, I thought it was quite an interesting one. So maybe we just want to start with what gave you the idea to start writing this book about tax?

Dominic Frisby:

It was when I got into gold and then Bitcoin, I was convinced that our system of money was the root of all evil, Fiat money is the root of all evil. And you know, when you hear people saying Bitcoin solves, this, it really does. I mean, it just, solves so many things it is just the most fantastic invention ever. And the beautiful thing about Bitcoin is that, you know, I was having this conversation today is, you know, I was just getting into an argument about state healthcare with somebody on Twitter. One of my idiot, comedian, friends who doesn’t know any better. And I was just like trying to explain to him that, you know, if you had, he was trying to argue that private health care can’t cater to minority needs. And I was trying to say, well, look at the, you know, if you have just state media or just state clothing, then would there be one TV channel.

Dominic Frisby:

We’d all dress exactly the same. It’s because clothing is provided by the free market. We have this huge range of expensive, cheap. You can wear pretty much whatever you like. And, you know, because we have the internet, you know, the internet is catered for niche interests in a way that no amount of government planning ever could in a million years. And so I was trying to have this thing and then, and then somebody, and then I just suddenly realized, you know what, I don’t need to have this argument. I’ve had this argument so many times I own Bitcoin. I can just opt out and you can have your argument. And so, you know, Bitcoin really does just solve everything. It’s beautiful. You can just go, Oh, do you know what if you have your state healthcare and I’ll have my Bitcoin and everyone can live happily ever after, but anyway, fiat money, all our problems stem from Fiat money was my theory.

Dominic Frisby:

And then I started my I’ve sort of evolved that, and this actually started with the comedy shows. In fact, even though money is the blood of a society. And so it’s essential that, you know, blood is healthy and clean and pure and all the rest of it, the design of the society, the sort of structure of a society, you design a society by the way you tax it. And money is a part of that. And inflation is obviously a huge tax, and so I started to evolve this idea that in fact, almost more important than, than our system of money is our system of tax. And I just started to read a bit and think about it, you know, when I was walking the dog. And so, and then I suddenly, the more I read about it and you, once you start to look at the world through this prism of taxation, suddenly everything becomes clear and you realize that there has never been a society at any time in all history, without taxation of some kind.

Dominic Frisby:

And even if that taxation is voluntary and you could even take something like, you know, Bitcoin, you know, even though we all participate in Bitcoin in a voluntary manner, there is a tax in Bitcoin, which is the transaction cost and the money that goes to the miners. That’s your, your feudal tithe, if you like. And so even within Bitcoin, and it’s not taxed, you know, coerced income tax or something, but it is still nevertheless a form of tax and you design a society, the way you tax it. And so I’ve evolved this idea that, you know, there are good taxes. Tax is like a measure of freedom. You can have me to Margaret Thatcher. She used to say, you can’t have freedom without economic freedom. And, you know, all these arguments we’re having about free speech and, you know, with COVID free movement and free minds and free choice and free markets as well, and tax is like the core part of that.

Dominic Frisby:

And so you sort of, you know, on one end of society, you’ll have the extreme totalitarianism North Korean thing where a worker does not own any of his own labor and that sort of 100% taxation, or even worse slavery when you don’t even own your own body. You know, and then at the other extreme, you have an anarchy, which is no taxes, and 100% freedom. And in the social democracies that most of us live in today, where somewhere between about 45, 50, a bit more than 50%, if you include the inflation tax and debts and so on. So we’re sort of halfway between those two extremes and, you know, I’d like to see us get back to the sort of 15, 20% level, because I just think that’s a much healthier place to be. And so, and then you look at history I’m sorry, I’m rambling a bit so I’ll stop after this, but just more on the importance of taxation is once you start looking at history and you realize there’s never been a society about taxation, then you go, actually every war in history was funded by some kind of tax. And in fact, the tax made the war possible, but the Wars made the tax possible. You know, a lot of the time leaders try and enact new taxes and they can’t, they need some kind of crisis in order to enact them. But every revolution was some kind of rising up against some kind of injustice perpetrated by the tax system. Every conquest is about taking control of the tax base, the land, the labor, the produce, the profit, even things like the birth of Christ. Mary and Jesus were in Bethlehem to pay taxes. And non-payment of taxes was the crime for which Jesus was crucified.

Dominic Frisby:

And the first men on the moon were put there by a tax funded operation. And you suddenly, you look at the world through this prism and you go, well, what’s the tax story behind that event? And you suddenly realize that there’s a tax story behind everything. And you define a nation’s destiny, by the way you tax it, how prosperous it will be, how rich, how poor, how free or subordinated the people will be. And so I’ve come to this new idea that basically tax is everything. And my aim was to try and retell the entire story of civilization through this prism of tax. And that’s quite a big undertaking and I was, I was planning to write it in three months, ended up taking me three years. But the ultimately hopefully I’ve done it in an entertaining way. It’s not just some boring economic treatise. I’ve tried to do it by telling stories.

Stephan Livera:

Yeah, for sure. And I think that really comes through in a few areas where you help outline, as you’re saying, it’s kind of like a revisionist view of history to try and go back and understand where was the tax implication or what was the tax that then created this downstream impact? And examples in the book, I recall there’s one talking about a window tax, and then literally that changes the way buildings were built or the way people were living their lives. And potentially even had a health impact because poor people couldn’t afford to pay the window tax. So they would be living in houses without windows, and then less exposure to the sun. And it’s like a really funny almost cruel impact of taxes.

Dominic Frisby:

That’s where we get the expression daylight robbery from. And yeah, it was often the tax. They, they, they, they thought by taxing windows, they were taxing the rich. But in fact it was the poor who ended up paying the biggest price because they lost their daylight. In those days, there was no electric lighting. There wasn’t even gas lighting. It was, you know, rush lights and candles, tallow candles and things. So do you use your lose? Your daylight was no small sacrifice. Even our surnames, Stephan we have because of taxes, whether in Asia, in China or in Europe typically, you know, until the poll taxes of the 12th, 12 and 13 hundreds, you’d just have one name unless you are noble, you’d be Steven or John or whatever it was. But then they had to distinguish between, you know, Stephan who lived by the Hill from Stephan, who’s a Smith from Stephan, John’s son from Stephan, you know, with the crooked nose or whatever it is. They’re often people in Celtic cultures, a lot of people are named after defining characteristics. So things like Cameron means, I think Cameron means Valiant and Kennedy means shaggy hair. There are all these weird or maybe Cameron means crooked nose. Anyway, I can’t remember, but you’d be named after some defining characteristic, either your job or your parentage or some geographical feature where you lived. And it was all for the purposes of collecting poll taxes. And we think, Oh, well, that’s just a European thing. The same thing happened in China about 500 years earlier

Stephan Livera:

That the government wants to own you. And we are in some sense, treated like tax cattle and they need to brand their cattle.

Dominic Frisby:

That’s exactly what it was. It was branding. It was your capital branding, your name.

Stephan Livera:

But I think it’s also interesting as well earlier in the book, you talk a little bit about how there were some voluntary examples of giving and funding, and you talk about how Aristotle would mention this idea kind of paraphrasing, but this idea that poor men could never be magnificent and that if you wanted to be one of the great heroes, you either had to be like a warrior or you had to be a patron of society, and you were doing some kind of undertaking to build something for the other people in your community, right?

Dominic Frisby:

Yeah. This is a wonderful thing. And it was something Dostoevsky said, something similar. He said, what’s the point of me giving this poor man, my coat or me giving him half a coat, half of my coat, because then I won’t have a coat and he won’t have a coat. I’m much more capable of going on to great things. If I keep my coat and I stay warm and I earn the money to pay for this guy to get warm, you know, that was the sort of Dostoevsky thing. And Aristotle was saying something similar. And that’s why this sort of pursuit of riches and wealth is not necessarily such a bad thing because once you’re rich and powerful, you’re better able to do great things. And this was the idea of our Aristotle’s magnificent men. And, but yes, in ancient Greece, until the Peloponnesian war, taxes were voluntary in ancient Athens, and it was considered the, you should pay them, but you weren’t actually obliged to pay them.

Dominic Frisby:

And they had a system called liturgy and it was thought that the rich of the city, because they shared an unequal amount of the wealth should, if they needed a new bit of infrastructure, new bridge or a new warship, or a new, some games putting on or a new building, whatever it was, it was considered that the rich should undertake this duty. And not only should they pay for it, they should carry out the work as well. So rather than having some, you know, Bureau taxes taken from somebody and then some bureaucrat allocates them, the rich guy carried out the work. So not only was his wallet on the line, his reputation was on the line as well. And that tended to mean that the work was carried out to a high standard. And everyone enjoyed the benefits of this public work being carried out to this high standard, whether it was a games or now somebody will come along and say, yeah, well that got manipulated and powerful people use this liturgy as a system to vie for power.

Dominic Frisby:

Well, yes, they did. But so what, because the ordinary people in the sort of crossfire of these people vying for power got better services and better buildings and better warships. So it was a bit like Satoshi designed Bitcoin in such a way where the incentives of you to keep contributing. And everyone who buys Bitcoin becomes a cheerleader for Bitcoin in some way. So there’s the self reinforcing prophecy going on the whole time. The tax system worked in a similar way. One of the problems I have with the tax system we operate today is that there’s no relationship between the person who gives and the person that receives because of this sort of unaccountable machine government thing in the middle. And, you know, in the charitable process, the giver has needs as well as the recipient.

Dominic Frisby:

And even if it’s just somebody saying, thank you, but you don’t even get that. And often, you know, taxes are paid to provide welfare. Most of the, you know, in one form or another, but different circumstances require different forms of welfare. If you know, some guy, some bum might just need a kick up the backside where somebody else might need care and guidance and somebody else might need, but with a sort of one size fits all system, it’s just, you don’t get that thing that you would find in a free market system of tax. So, yeah, but the ancient Greeks proved that liturgy, that voluntary taxation can exist. And I think Bitcoin proves that voluntary taxation can exist. You participate in the Bitcoin network, you pay your fees, you pay your taxes.

Stephan Livera:

Yeah. I think that’s a, there’s a lot in that I’d love to unpack because I think, well, first of all, if we look at examples like David T Beito From Mutual aid to the Welfare State, I think if you look at that, the comparison of like private welfare versus government welfare, and it shows how it was a little bit more tailored to that situation. And the incentive was a little bit better because you cared about your, it was about your community as opposed to the government, which is just sort of faceless. They just, they just take your money tax money. And then it goes off into the ether and they waste it because the government faces no profit and loss test, but moving into a Bitcoin world, maybe we’re going to be moving into, you know, the Bitcoin Citadels notion. And now the wealthy, you know, Bitcoiners in that Citadel might fund an important work or some kind of great artwork or a big cathedral or some great maybe some defense against the Keynesian nocoiners out there out in the, in the Keynesian nocoiner wastelands.

Stephan Livera:

And I think maybe that this idea of Bitcoin bringing about an era of patronage, right? This idea of funding, great art or great community infrastructure.

Dominic Frisby:

Yeah. I think, I think the Bitcoin citadels may well look like that. You look at somebody like Roger Ver, you know, and I know because of Bitcoin cash and all the rest of it, Roger’s reputation is mixed, but I am doing, Roger’s a great guy. And he was a great early champion of Bitcoin. But I mean, you know, he’s made an absolute fortune by being an early adopter, but boy, he gives money away. He supported Ross Ulbricht, all these various charities and economic think tanks. He gives so much money and there are plenty of other you know, Bitcoin whales who are similarly generous with their support. And a lot of them do it anonymously. But yeah, I think that voluntary liturgy where you put your name on projects it’s going to be a huge thing in the Bitcoin Citadels. It’s what’s going to make them happen.

Stephan Livera:

Yeah. They might sponsor certain projects or sponsor development into certain software or even hardware, other projects that help give more freedom for people.

Dominic Frisby:

Liberland project is relying totally on donations. I’m not sure how far I once heard that guy do a presentation. It was one of the best presentations I’ve ever heard in my life. I was just pissing myself. “We are going to build the world’s biggest tax haven.” It made me laugh so much, but I’m not sure, how evolved that particular project is. But yeah, I mean, it will be built on voluntary taxes.

Stephan Livera:

And I think also historically, and maybe not even that far back into history, but looking at examples like Hong Kong, as you mentioned in the book, I think this is another common one, amongst those of us in the libertarian world. We talk about Hong Kong because well, up until recently, obviously with the recent kind of CCP aspect of it, it’s probably not as good an example now, but at least from the point of view of having a small tax code and having very low taxes and intentionally not keeping statistics so the statist bureaucrats couldn’t come in and try to fiddle and tinker with the system, at least in that time, Hong Kong started out being poorer than Britain and then now, and then became richer on a per capita basis, which is a really incredible example when you think about it.

Dominic Frisby:

Yeah. I mean, Hong Kong is just the most wonderful economic story and it was all built with this chap called Cowperthwaite who was a John James Cowperthwaite who grew up reading Adam Smith. And it said he slept with a copy of Adam Smith by his bedside. And he became the financial — the event first, the assistant financial secretary, and then the financial secretary. And this was in the immediate years after world war two and on a per capita basis, Hong Kong’s per capita GDP we don’t actually know because one of the things Cowperthwaite insisted on doing, as you say was, it was abolishing the national, the office of national statistics. It would not have been possible with Cowperthwaite in charge for this sort of COVID or authoritarianism to take hold, because they would have been no office of national statistics going, look, we’ve got this amount of cases just wouldn’t have been possible because he, one of his big things is he’s people said, if you want to make a country as a third world country, as successful as Hong Kong, what should you do?

Dominic Frisby:

And he said, the first thing he should do is abolish the office of national statistics because interventionists use them as a means to get involved and Cowperthwaite thing is that in the aggregation of individual decisions in the free market results in a better outcome than one decision taken by a bureaucrat with no skin in the game, I mean, he would have loved Nassim Taleb woulid Cowperthwaite, if he was still with us. But anyway, yeah, in 1945, Hong Kong’s per capita GDP was on a par with most of Africa. And it was about a quarter to a third that of the UK and within a generation, maybe a generation and a half by the 1990s, Hong Kong’s per capita GDP had overtaken the UK. And by the turn of the century that overtaken America, and it was just an extraordinary success story.

Dominic Frisby:

And at the same time, its population went from something like 700,000 to 7 million. So its population went up by 10 times and it still overtook those countries on a per capita GDP basis. Its education was better than ours. It’s health people live longer. They’re healthier and it has better public transport. And what was so beautiful about this system is that tax as a percentage of GDP, never, never exceeded 15%, you know, which is a sort of never exceeded 14% actually, which is sort of like a tithe, basically the old tithe, the Christian tithe, you pay one 10th of your earnings. And by the way, the tithe predates Christianity by several thousand years, it goes all the way back to ancient Mesopotamia. And I think most other cultures have their own equivalence at the time.

Dominic Frisby:

But anyway, so tax was roughly at the level of the time, 14% of GDP, there was no income tax except for higher earners like today in the West roughly 50% of government revenue comes from income taxes. There was none in Hong Kong except for higher earners. And the majority of taxation in Hong Kong came from land value tax not from income taxes and land value taxes, which we can talk about if you, like, I think are a really good way to keep a healthy balance between government and taxpayer between government and citizen through a land value tax, the, to keep each other in check. And it’s the idea of Henry George the, who was a best-selling author in the late 1800s, in the United States. And he had this idea that land value tax should be the single tax.

Dominic Frisby:

And it’s the only tax you pay. And we’ll talk about it in a second, if you like and relate it to you know, the principles of taxation is theft and so on, but in any case, you know, Hong Kong operated this, it relied largely on land value, tax at very low levels of taxation. And it was the economic success story of the second half of the 20th century. It was so successful. Singapore copied it, Taiwan started copying it South Korea, copied it to a certain extent Japan did as well. And, you know, it had a huge role to play in the Asian miracle, all down to this one guy, Cowperthwaite from Scotland, a remote part of Scotland who was an Adam Smith addict, acolyte wants to do abolish their office of national statistics. The English kept set and it was, it was a colony. It wasn’t a democracy, there was no vote. People couldn’t vote. He was basically that he was, you know, it was his own little fiefdom, but he, because he ran it benevolently rather than malevolently the outcomes for the people of Hong Kong were wonderful. And people wanted to go there because they knew they could make their fortune there.

Stephan Livera:

Yeah. And that also comes into the whole topic of democracy, socialism versus just private property ownership. Right. And so I think that’s also another thing because people tend to conflate democracy with freedom, but then in reality, it ends up being a more socialism ends up pushing a lot more socialism or in that pathway, whereas those of us in the more free market, private property side, believe more in just like, but I guess it can, it can be a bit awkward in some ways, because then we’re sort of saying, Oh, look, Hong Kong is a good example of say Singapore, even though Singapore has certain aspects on which obviously socially they’re not necessarily libertarian, but that’s at least from a tax point of view, they are very like low tax. They’re one of the low tax nations of the world. So it’s interesting I guess.

Dominic Frisby:

Yeah, I think those countries are not, perhaps, maybe it’s just a basic human respect thing, but there is not as much free speech there, as there is say, it’s not, you know, free speech isn’t entrenched maybe cause it’s a lot of, because a lot of the immigrants that have come from China and they’re like, Whoa, we better watch what we say, but so yeah, and they’re not, you know, you probably have more fun in Berlin or somewhere, but the you know, Berlin in the 1920s was probably more fun. I mean, but economically they are extremely free and you know, the the Hong Kong tax code is one and a half percent the length of the UK is tax code one and a half percent. So if the UK is tax code is a hundred pages, Hong Kong’s tax code is just one and a half pages. But in fact, the UK tax code is 20,000 pages.

Stephan Livera:

And then it just creates this whole system that feeds on itself. What starts as cottage industries, then morphs and metastasizes into these. You need an army of tax lawyers and tax accountants to now navigate this morass of regulation and taxes and how do I structure things to, you know, and essentially I think that’s also part of the,

Dominic Frisby:

It’s not, it’s not productive. It’s just reallocation. It’s not productive. And you know, what’s so beautiful about is, you know, people wanted to go to Hong Kong. So they went there voluntarily and because it was low tax and the system was clear and the system was honest, it generated tremendous loyalty and, you know, ancient Athens was like that as well. And Bitcoin’s like that there’s a huge loyalty to the Bitcoin cause because it is transparent immutable and all those things, everything you pay, you see it. And you know, it was like the armies in the early Roman Republic the soldiers went to war voluntarily and they got their pay in looted conquest and all the rest of it. But they were also incredibly loyal citizens to Rome. And Bitcoin’s a bit like that people go to war on Bitcoin’s behalf, you know?

Stephan Livera:

Yeah. That’s a funny analogy. I mean, it’s a bit of a loose one, but yeah, you’re right. I think the other interesting thing will just be to talk about the impact over time, because I think, well, probably you and me and many of my listeners we’re bullish on Bitcoin. We think it’s going way higher. So many more people are going to adopt this thing. What does that do to government? And in some ways, and this is another point I think you touched on in the book is that to some extent what used to be only available to the very rich, right? The people who can go live in Monaco, for example, now Bitcoin is helping maybe make that accessible to people who aren’t necessarily at that super rich level. And so then it’s that question of what’s the impact of that going to be in terms of the state and government taxes that they try lever or try to impose on us. And I think I’ve speculated for a while that I think they will not be able to tax in the same way and they may have to move more towards a property tax kind of model. As in physical property model. What do you think?

Dominic Frisby:

Yeah, well, inevitably, and I’d love to talk about property taxes, but I just want to address this first government has got a huge problem on that. Huge because you know, even before COVID they had these ridiculous spending obligations that their tax revenue just couldn’t meet and they were paying, they were meeting their obligations by debasing money and debt and inflation all the rest of it. As well as high levels of taxes and fiddling the books. But with COVID that obligation has increased by even more. Now we tend to think of nation States as you know, Italy, Germany, these places have just existed forever because we’ve grown up with them. But actually Germany is not even 200 years old. Italy was only became a unified country under Mussolini. It started in about the 1870s, but it only began, you know, so the nation state, as we know, it is only a relatively modern model and it rose up partly because of the industrial systems, the industrial revolutions of the, you know, 18th, 19th centuries, this physical economy where labor went to a certain place.

Dominic Frisby:

And there was the clear movement of labor and clear movement of goods. And it was easy to tax this physical economy and the nation state, tax is power, whether it’s King or emperor or government, if they lose their tax revenue, they lose their power and tax is a system of control. You control, you regulate an economy by the way that you tax it. And the nation state is built up around these tax systems, which tax the physical economy, and that applies to workers as well. An ordinary worker goes and works for the same company, works 10 years for that company. And his income tax is deducted at source. Now 50% of government revenue, as I said, derives from income tax. Well, the economy has changed. Now all the growth is not in the physical economy. The physical economy has grown. It’s grown at three, four, 5% a year, depending on this or this, that and the other, but it’s the digital economy where all the growth is.

Dominic Frisby:

And if you compare Silicon Valley in 1990 or 2000 compared to Silicon Valley today, you just can’t compare the two. And the reason is the scalability of digital. You know, Google can workout a brilliant search algorithm, and immediately it can make that algorithm available to the entire world. I can invent a brilliant app and upload it to the app store, and it can be downloaded a billion times. There’s a scalability to digital that doesn’t exist in the physical economy and as a result because things grow quicker they attract more investment. And so you have a self fulfilling cycle. Now, if you do one other big comparison between the four biggest companies in Silicon Valley in 1992, the four biggest companies in Silicon Valley. Now, I think the market cap of those companies is something like a hundred times higher now than it was in 1990, but those four largest companies employ a quarter as many people.

Dominic Frisby:

So now just think about that. That’s a quarter as many people that is, but it has created employment. It’s created work for millions, thousands, hundreds of millions of people, but not in full-time employment, they’re freelancers small businesses, entrepreneurs, and so on and so forth. Now, tax systems have built around this physical economy have not been able to adapt to the digital economy. And the digital companies have run rings around them. You know, Starbucks has got its premises here, but it’s, you’re hiring the Starbucks trademark. And that’s in Holland where there’s no corporation tax. And, you know, do you know what Apple that well-known American company is actually an Irish company because there’s low, and Google is based in and they just run rings around and it’s all completely legal. It’s not tax evasion. It’s tax avoidance — it’s completely legal, but the nation state economy, the tax systems have not been able to adapt to this new digital economy.

Dominic Frisby:

And that is where the wealth is. That is where the growth is. Now on top of that, the nature of work itself is changing. So where before they relied on income tax, because people more and more people are becoming freelance, the gig economy, contingent workers in that with remote working. And COVID, that’s only accelerated more people are doing multiple jobs. They’re not working for the same company. And when taxes are paid after the event, there’s much less compliance. There’s much more error, income tax is not the easy thing to collect in the large levels. It’s been repeatedly proven that people, two people doing the same jobs, one doing it on a freelance basis, the other working for a company, the guy that does it on a freelance basis, pays much lower levels of tax. So already it’s getting harder. But the next thing is, and this is what Bitcoin and the internet generally has made possible is non-dom status.

Dominic Frisby:

If I’m working remotely on the internet, why do I need to live in London and pay London house prices? and London taxes? I can go and live in Cornwall or Yorkshire, which, you know what I can go and live in a Portugal or Greece or Malta because they’ve got much, you know, they’re trying to get me to move there. They’re giving me loads of incentives. And so you’re seeing the rise of non-doms and you don’t have to be, in fact, you can go to Portugal and earn less than you would if you lived in London, but actually have a better style of life because you take, the big expense in your life, the government is removed. And so we’re seeing the rise of the digital nomad. It’s, what’s his name? Rees-Moggs Sovereign Individual. It’s the digital nomad is the sovereign individual.

Dominic Frisby:

And obviously that the remote working thing is accelerated because of COVID the movement moving around, things slow, but that’s not going to last forever. 5G is becoming more and more commonplace around the world and travel. You know, you assume you have to fly from Asia to China in — sorry, from China to Europe in four or five hours with these new jets that are coming. And it’s not just, you know, European or North American people going to Thailand or Colombia, it’s South Americans, Africans, Asians its everyone. Then you internet middle classes, and you’re just going to see those that can move well. And so you’re going to end up with this two tier system where the physical economy is going to be taxed really hard. And you’re going to have all these people working in the digital economy who are going to be like, as he calls them sovereign individuals.

Dominic Frisby:

And they’re going to be like a sort of a class above, and it’s much easier to grow your wealth when you’re not constantly having to pay taxes on it. And certain jurisdictions will design themselves to be more attractive to these new sovereign individuals. And those jurisdictions will do well. And other ones won’t. And eventually a lot of those nation states are not going to be able to pay for their outgoings. And so they’ll debase the currency even more they’ll get even more socialists. Their aggressive tax collection will get even more aggressive and those that can, will vote with their feet and leave. And those that can’t will stay. And then the biggest clincher of the whole lot is over 50% of digital nomads already operate at to some extent in the crypto economy. That’s not to say they’re necessarily designing coins, but they make and receive payments at least some of the time in cryptocurrency. And as soon as you start operating outside of the banking system and using non-fiat money, non-government money, well, that economy is even harder to tax and regulate. And so that is the world that we’re going into and COVID has accelerated.

Stephan Livera:

There’s a lot to unpack in there. And certainly I think the whole trend of nomad capitalism, or Bitcoin nomadism, whatever we want to call it, that is, I think that is going to grow because there is so much opportunity there. And in some funny kind of way, it’s like the more people go into that, it creates this feedback loop because the more people who start becoming Bitcoin nomads, or even, even if they’re not going nomad, they’re at least earning money in Bitcoin, it’s sort of, it leaves more and more of the inflation and the taxes to the people who haven’t gone Bitcoin. And so it just over time, it just, it’s going to be like a seesaw where everyone just kind of runs over to the outside because Hey, I can get a better return that way, or I can get a better deal that way.

Stephan Livera:

Now I guess the counter argument, and I think broadly, that’s correct, that is the trend we’re going on. But I think there is some level of government counter argument here. Obviously I’m a libertarian, I’m not saying I want this, but I’m just saying, this is a reality that a lot of governments are doing things like data matching and they are trying to capture the platforms on which people are using these things. So for example, if eBay, or some of these other platforms are out there, then the government will say, no, give us your data eBay because we want to go and track these people down. Or they might go to the Bitcoin exchanges as they went to Coinbase even and said, Hey, we want data on who’s got Bitcoin and things like that. So how do you sort of see that dance going?

Dominic Frisby:

I got a thing from my YouTube channel only three or four days ago demanding saying that my earnings are going to be withheld and paid to the U S government. You know, it’s exactly what you said, YouTube are doing it. And you know, the, behemoths the eBays, the YouTubes, the Amazons, they’re all in cahoots with the government, because one makes the other possible. Yeah, that’s going to be one of the battlegrounds and, you know, data is the digital world is the enemy of government, but data is also, you know, this is about how the government will track you and it will try and track you. But if you’re a non-dom, you’re a non-dom.

Stephan Livera:

Yeah, of course. And so there’ll be a bunch of people who go and legally lower their taxes by going overseas. And I mean, they’ll have to structure things appropriately and so on. And look, I mean, I’m sure there’ll be a range. There’ll be some people who do it on the kind of legal way. And then there’ll be others who just do it, whatever.

Dominic Frisby:

I know there’s a huge class of digital nomad who, who literally do not know to whom they should pay tax. They, you know, they don’t spend more than 183 days a year in any given country. So they’re no longer domiciled. This doesn’t apply to Americans by the way, because Americans, if you want to stay American, you keep on paying taxes to America. That’s a thing that Abraham Lincoln brought in because he was trying to protect union revenue in the American civil war and never went away. But the yeah, but elsewhere. Yeah. And there’s a, there’s a lot of people who would like to pay taxes somewhere, feel they ought to, but literally don’t know. And then the admin just get becomes too burdensome. And they’re like, you know what, forget it. And, but there is a lot there’s a large class of people who feel no loyalty to the country.

Dominic Frisby:

They came from, they’re not using that country services. They found that that country exiled them basically. And so why should they pay that country taxes? There are a lot of people who feel like that. And I have a lot of sympathy with that with I’ve sympathized, with both views, you know, everyone has got their own little opinions. Here’s a pitch. I heard cause an argument that gets used against me a lot is, Oh yeah. But as people get older and they have kids they’ll settle down somewhere. And I don’t agree that they necessarily will because firstly COVID has accelerated home learning again, more and more. I think something like 10% of UK parents, so they’re not sending their kids back to school. The internet is the most fantastic learning tool ever invented in all of history, but I heard a pitch the other day.

Dominic Frisby:

Do you know what WeWork is? Okay. So I had a picture of a company that’s trying to do WeWork, but for schools, so you become a member of WeWork and while you’re in Cartagena you send your kids to, you know, WeWork school in Cartagena but if you’re in Chiang Mai, well you send your kids to WeWork Chiang Mai?

Stephan Livera:

Very clever. I like that idea.

Dominic Frisby:

So again, we’re seeing, yeah, it’s a solution to the, to the education. You know, it makes schools, education will adapt to this, to the new reality. It probably already has.

Stephan Livera:

Yeah. So there’ll be a whole range of options. There’ll be some parent to do all their own education for their children. There’ll be some who may be, go and get, let’s say Ron Paul homeschool curriculum, there’ll be some who use this new kind of WeWork system and others who may be just go send their kid to a local school, just like a normal kid would. And they’ll just move around with their families. Now that is not always feasible for everybody, but I can see that as the direction that more and more people who want more freedom, they kind of go down that pathway.

Dominic Frisby:

Well, boarding another option is boarding schools. You know, the boarding school, the English boarding school rose up because people who’d been sent out to, to to run the empire in India or wherever wanted to send, give their kids and English upbringing. So they sent them all to boarding school in England. And it’s probably the most famous education system in the world, English boarding school, you know, it’s provided the inspiration for Harry Potter. But you know, that, you know, we might see boarding schools make well, I mean, boarders, there’s loads of Asians, Chinese and Korean families sending their kids to boarding school in the UK. So, and you know, we’ll maybe we’ll see boarding schools more and more boarding schools.

Stephan Livera:

Yeah. And so then I guess bringing it back to where the taxes will be put into the system, I guess it will probably shift more into, well, I think those of us in the anarcho capitalist camp would rather it be like an upfront fee for service, right? Like maybe you move to a Citadel and they say, Hey, this is your fee for the year. You just pay this upfront and that’s all your kind of government services or like, you know, local services. But I think a lot of places will try to still do taxes. And right now it’s just like, it’s difficult because there’s all these, they get entrenched, right. These different taxes. So some governments will have to, they’ll have to compete on that and be like, well, we’re going to strip away some of this overtaxation in these areas. And maybe we’ll just move more to like a property tax model and move more to like a Hong Kong sort of style. I wonder if that’s the direction it goes, at least in the larger States.

Dominic Frisby:

Would you describe yourself as an ancap? Or a libertarian, sort of proper ancap? Okay.

Stephan Livera:

Yeah, I believe that would be the ideal, although obviously I’ll take whatever incremental steps to less regulation and less tax that I can get.

Dominic Frisby:

Okay. So just, I’m just asking you this question for fun because I know the answer, but is taxation a form of theft or is our taxes the price we pay for a civilized society?

Stephan Livera:

Oh yes. Obviously I’m more in the theft or if you want to get really technical it’s extortion, but whatever, like tax is theft. Yeah.

Dominic Frisby:

Okay. So I tend to agree. But I also understand that taxes are the price we pay for civilized society argument, even if I don’t agree with it.

Stephan Livera:

of course.

Dominic Frisby:

But as an ancap, let me, let me pitch land value tax to you. I know you’ve read my book, but we’ll just pretend for the sake of this interview that you haven’t, maybe you didn’t get to it yet. Okay. So the philosophy of land value and I call it, I don’t call it land value tax. I call it location usage tax. And I don’t think it’s likely that this tax will become commonplace, but that doesn’t mean that I can’t argue for it because it’s just quite difficult to explain short of it. It might be able to exist if a new civilization is founded somewhere, but I don’t believe, you know, it’ll get implemented in the UK.

Dominic Frisby:

Anyway, let me argue for it now that, so the, the philosophy goes back to the group of philosophers in the enlightenment called the physiocrats. And their idea was that there’s two forms of wealth. There’s the wealth that is manmade, the wealth that you’ve made. You know, you’ve designed this brilliant computer program. Well, that’s a man made, and it’s made everyone’s life better and you deserve to be rewarded for that. So there’s wealth that is man made, you know, a brilliant house or something is man made, but there’s the wealth that nature gave us. So that might be the land, you know, fertile land or a beautiful sea, or with lots of fish in it or oil under that, whatever. These are all forms of wealth that have arisen as a result of nature, not because of human endeavor, there is human endeavor in exploring for the oil and extracting it, but the oil was already there.

Dominic Frisby:

And the idea of the physiocrats was that the wealth that nature gave us is owned by everyone. It’s owned by the community. The wealth that you created should be yours to keep. So if you are a worker and you work and you are paid to do that work, you should be able to keep all of the work. But if you have a house and it’s on a plot of land and you know, the government builds a railway station at the end of your road. And as a result, everyone wants to live near this railway station. Cause there’s a really good line that goes into the middle of London and you can get there in 20 minutes. And so your house triples in value as a result, well, your house tripling in value is not tripling in value as a result of anything that you’ve done.

Dominic Frisby:

You’ve just got lucky. It’s tripled in value because the land that it’s on has suddenly become really desirable because of the needs of the community. And so the philosophy of land value tax is that it is the only tax you pay Henry George called it the single tax. And you are not taxed on your property. You’re not taxed on the house that is on the land. You are taxed on the land in its unimproved state. So if there’s gold under the ground, you know, that land is worth a lot, but somebody’s still got to build a mine to extract the gold. And that takes a lot of effort, a lot of endeavor, a lot of risk and all the rest of it. And so if a mining company does that, then they should be commensurated for that. But nevertheless, the gold still has a value. And so for example, the physiocrats, the land value tax would never have had it that the wealth of Saudi Arabia went to a few princes, that wealth should have been shared among everyone.

Dominic Frisby:

And so if you have land value tax, you divide all the land in the country up into parcels. You work out who owns what, desirable land in the city center’s going to command a high rental value, remote farmlands, going to have a rental value of practically zero. And you take the annual rental value of that land. And let’s say the annual rental value of that land is a hundred pounds a year. And you say, right, land value tax is 5% or it’s 10%. And so if you want exclusive rights to that land and you want the government to protect your exclusivity to that land, then you have to pay the fee to the community for your exclusive use of that land. And that fee is a percentage of its annual rental value in its unimproved state. Now, why I think this will appeal to anarcho-capitalists is that fee that is payable to the government is totally transparent.

Dominic Frisby:

There are no hidden taxes, there’s no inflation, there’s no debt, there’s no stealth taxes, no VAT, and all the, you know, deduction at source and all the rest of it. And if the amount that government is levying to run its services is too high and everyone’s having to pay 20%. The taxpayer will feel the cost of those tax rises and he will say to his government, they will say the taxpayer will say to his government as one, no, we’re not paying that. And so it causes a very healthy, natural balance between taxpayer and tax collector. It also encourages, it stops like if you had two plots of land sitting next to each other on fifth Avenue, and one of them’s got Trump tower on it. And the other one’s just sitting vacant the amount of tax that those two plots of land would pay is the same. So it forces the owner of that land instead of just sitting on it and watching his currency get debased and watching the value of his land go up. No, you’ve got to pay a rent on that land. So it forces people to put land to good use it forces the efficient allocation of capital. And so I think that’s, that’s my pitch, Stephan.

Stephan Livera:

Yeah. So I think there are this kind of, it does remind me a bit of the typical arguments that we’ve seen now. It’s kind of like a Georgist idea, right?

Dominic Frisby:

It’s totally a Georgist idea.

Stephan Livera:

So Georgist idea. And I know that Murray, Rothbard and others in the Austrian camp have critiqued that kind of thing. But I think what I would say is more just like it’s preferable to what we have now, which is this huge, huge tax. And at least like, in that sense of like, Hey, it would be less bad than what we have now. Yeah. All right. Let’s do it right. But I think for me, I see it like longer term. I see it more just moving to like a straight fee for service model. And then that way it would be fully kind of people who might own, they might be the Citadel owner or manager, and then you just pay them a fee for service and they do the water and the roads or whatever. And that’s it. But I think certainly I think this whole land value capture kind of idea is preferable to what we have now.

Dominic Frisby:

Okay. Fair enough. Here’s the thing though. This is why it appeals to me is that it is that basic division. What is given to us by nature is shared, what is there as, as a result of your endeavor is kept and it’s that basic principle that I hope would appeal to even the more extreme anarcho capitalists listening to you.

Stephan Livera:

Of course. Well, I think, I think that in practicality there might be aspects and people talking about say nationalization of land, or how would you capture — what would the real value of that be? Would that be like, would that be another angle by which the system starts off getting more statism coming in and saying, Oh, see, you’re valued at this. And I’m valuing it at some other level, and now you’ve got to pay me this tax. And it just becomes…

Dominic Frisby:

There would be arguments. There would be arguments about what the rental value of that land is, but it would, it’s pretty hard. It’s pretty easy to prove.

Stephan Livera:

Yeah. Certainly.

Dominic Frisby:

And you know, we have, I’ll tell you why, perhaps why I am more in favor of it, but you should be as an, are you Australian?

Stephan Livera:

Yes.

Dominic Frisby:

Okay. So true or false. The queen is the largest land owner in the world, and she owns one sixth of the world’s land surface one sixth. Is that statement true or false?

Stephan Livera:

I guess so. Yeah. I don’t know.

Dominic Frisby:

Know. It’s true. And it’s because she owns, you know, most of Australia and most of Canada, as well as the UK. And if you look at like the richest family, the richest land owners in the UK, the large land ownership hasn’t changed since 1066, you know, a thousand years ago when we were conquered by William the Conqueror. And so, you know, so that land ownership has just, I think somebody was tweeting at me about the richest families in Florence are the same families that were the richest families 600 years ago. And that kind of entrenching and people tried to stop it with inheritance tax. And it just didn’t work because people put their stuff in trusts. And in [INAUDIBLE] tax ended up leading the middle classes inheritance tax is a horrible tax. Now I’m not attacking those families for being rich and wealthy and looking after themselves because fair enough, I would have done the same probably in their situation.

Dominic Frisby:

And their ancestors were very clever, but the overwhelming evidence of history is that the richest people in history have not necessarily got rich through some kind of breathtaking endeavor being breathtaking businessmen it’s because they managed to get laws changed that suit their business interests. And this applies even to people like Rockefeller, all the oil barons, it applies to Bill Gates. You know, Bill Gates genius — wealth is as much because his father was a brilliant patent lawyer as it is because of his own actual computer coding ability, and it goes all the way back to Marcus Crassus in ancient Rome is all by some kind of protectionist measure that whereby they keep their wealth and land value tax means that the value of that land is shared by all. But what you build on the land is kept by you. So it’s quite a sort of communist aim, but without the government, as a system, it’s a system, it’s a bit like Bitcoin, it’s a system, it’s a protocol rather than a government. Well,

Stephan Livera:

Nevertheless, I think the point really is that over time, it’s like this never ending dance. And I think that’s the point you make in the book as well, that it’s this never ending dance between the tax collectors and the taxpayers. And they are just, you know, it’s like constantly, one-upping each other in terms of, you know, the payer finding some way to either hide their income or kind of structure things in a different way. And then the collector trying to look for ways to surveil them and understand are what are your assets? What’s your income? And let me try and put in things that tax you at the source so that you don’t even see that money.

Dominic Frisby:

It is a never ending dance. Let me tell you an a proverb from Ancient Sumer. You may have a god, you may have a king, but the man to fear is the tax collector from ancient Mesopotamia.

Stephan Livera:

There you go. Yeah. So I think I’m also wondering if you’ve got any thoughts around just the concept of income versus capital taxation, right? So do you see it like that’s, it’s going to be that shift towards capital taxation. If the state is not as able to surveil your income or kind of take your income from the source?

Dominic Frisby:

I just think income tax is one of the great evils of modern society. We’ve always like the tithe is when you give a 10th of what you earn and that it was always paid in cash, you’d often pay the tithe, then your labor or in a share of your produce. So, you know, income tax is basically a sort of modern evolution of that. So it goes back a long way. We tend to think that income tax was only invented in the Napoleonic Wars in the UK, but really it goes back a lot older, but income tax, nevertheless in its current form is evil. And it is one of the biggest causes of wealth inequality. The two biggest causes of wealth inequality is Fiat money, debasing printing money and income tax. And those two evils combined have screwed over a generation. And they’ve got their revenge with Bitcoin and good luck to you.

Dominic Frisby:

If you start out with nothing, all you have is your labour. It’s all you’ve got. And yet you’re constantly taxed every year, 30, 40, 50%, whatever the rate is chipped away. So it’s very hard to build up a pot because you’re constantly having it shaved away. Whereas the guy, the thing you want to buy a house or whatever it is, an asset goes untaxed. And so the guy who owns the asset, the older generation, sitting there with his asset and the guy who’s starting out is constantly having his money taken away. And then the money he’s paid in loses purchasing power because of inflation. So the money he saved last year, buys him less this year. Meanwhile, the asset in question, the asset, he wants to buy normally a house actually benefits from inflation. And so the combined effects of inflation and income tax are the biggest source of wealth inequality in the developed world. And yet the socialist left thinks that taxation is the means to equalize society. And he believes in modern monetary theory and higher levels of income tax, please, they are the two things that have caused the wealth gap and more government is not going to solve it. Less government will solve it.

Stephan Livera:

Yeah, I was saying recently as well, some of this is generational in a way, so I was saying, Hey, millennials, and zoomers, you know, how your parent’s generation were able to buy stocks and property on the cheap, well, Bitcoin, is that for you right now. This is your opportunity.

Dominic Frisby:

It really is. And I mean, I mean, Bitcoin is obviously not the opportunity it was, but it’s still an exit, but you know, the, the opportunities like Bitcoin’s the gateway drug. And, and, but the opportunities that the, this new digital economy is springing up, you know, all these, altcoins, all these NFTs, all these new businesses starting up, and most of them will probably amount to nothing, but some of them, you know, it’s like dotcom the year 2000, but a million times more, and everyone’s trying out new stuff. And then people go, Oh, well, it’s a bubble. It’s a shitcoin, it’s a bubble. And I go, yeah, of course it’s a bubble, but we need bubbles because bubbles accelerate investment, bubbles bring things forward. Bubbles make things happen. People try shit out as a result of bubbles. And some of it works and some of it doesn’t, you know, people go, Oh, it’s tulips.

Dominic Frisby:

Well, the tulip bubble was in 1637 and here we are in 2020, nearly 400 years later. And where is the center of the global flower industry? Amsterdam! Amsterdam has been the hub of tulips for 400 years. So don’t dismiss the tulip bubble, the tulip bubble made Amsterdam. And you can, you know, you look at railways, which still traveling in the UK on the same railway lines that will lay down as a result of the railway bubble of the 1830s and the same with the railways of America in the 1870s. And I’m talking to you on the internet through all this incredible wired and wireless technology as a result of the bubble that was dotcom and all the infrastructure getting built. So don’t dismiss bubbles. And I just, I mean, I can see, and you get all sorts of scams and nefarious things, and God knows what else in bubbles and stupid ideas.

Dominic Frisby:

And I’ve no doubt that, you know, everything that’s going on in like Bitcoin is like, it’s the most bubbly technology that’s ever been. You always get a bubble around a new tech, but Bitcoin is a new technology that’s money. It’s literally the most bubblish if Marvel comics designed, you know, the ultimate super bubble hero, it would be Bitcoin and crypto. And so, as I say, a lot of what’s going on in the crypto world, I can’t begin to understand half of it. And I get that most of it’s bollocks, but I also see that it creates, like who be staking real estate in a virtual reality game world, you know, how could a plot of real estate in a virtual reality game world, be more than a plot of real estate in the real world, but it is, I don’t get it. It’s insane, but that’s bubbles and it will amount to something. It means something to someone.

Stephan Livera:

Yeah. So I see it like, yeah, there’s a lot of just scams and shitcoins out there. Ultimately this really the tool to use is Bitcoin. And that’s, what’s going to enable people to, I think, change the game a little bit in terms of taxes and the way society is structured. And as you know, as we’ve been talking about, they might change the way taxes work and it ultimately enables and makes things accessible that was previously only available to the super rich. And now it’s in that sense, it’s giving that possibility to everyone.

Dominic Frisby:

No barriers to entry. It’s just open because the technology is so far ahead of the regulator and that’s fantastic. I sort of like, I’m very good friends with John Matonis, who’s a sort of early original gangster, early Bitcoin adopter, one of the early thought leaders in the space, and he’s a real Bitcoin maximalist is John. And so he sort of indoctrinated me with his Bitcoin maximalism and I have a lot of sympathy to it, but I can also recognize that, you know, for all the shitcoins, there’s a lot of great work going on. You know, for example, I’m really interested in privacy technology and some of these privacy coins are great. Haven protocol. I just think that what’s going on there is excellent Monero, you know, and you know, and then I’d get, you know, you want to like a lot of the time when I’m sending Bitcoins, I don’t trust the wallet. So I often like to send a small amount first just to check, it’s all working. And then you’re like, Oh, 10 quid, 10, five, or $10 just to test out if its working. You know? So, and sometimes, so some of those coins where the transaction fees are much lower, there’s a use case there. And so, you know, I wouldn’t, how many altcoins are there now? I think there’s 8,000 or 9,000.

Stephan Livera:

Oh, there’s thousands of them. I look, I think it’s not even like to me, I see it. Like…

Dominic Frisby:

I think I see Bitcoin as the gold, if you look at the role of gold in the 18th and 19th centuries, and that was the sort of bedrock of the money, I see Bitcoin as the sort of bedrock. And then the other is it’s the gateway drug. It’s the start.

Stephan Livera:

Yeah. I think, I think for the most part, like a lot of, even the transaction fee stuff, really people should just use Lightning, to be honest, like Lightning works. It’s here. It’s actually really easy to use now. There are lots of wallets that do it. I think it’s just kind of like people from 2017 days are still —

Dominic Frisby:

I wasn’t given the — I tried to send some money. How do you — I don’t even know how to use lightning.

Stephan Livera:

I’ll help you set up after of this. I’ll get you on a lightning wallet. We’ll get you some…

Dominic Frisby:

I just sent some money from an exchange to a wallet and then from a wallet to somewhere else. And I was never given the option to use lightning.

Stephan Livera:

So yeah, but it is coming now, a lot of big exchanges are supporting it. There’s like Bitfinex have had it for a while Kraken said, they’re going to do it. OKCoin are going to do it. I think, OKCoin is live with Lightning now. There’s others out there who already have Lightning as well, Bitaroo, one from Australia. They have it. So it’s coming and it’s a lot cheaper. It’s basically Lightning is way cheaper than all the quote unquote cheap shitcoins. So we’ll see.

Dominic Frisby:

And I’ve, I’m sort of reading from this Stephan that you’re a maximalist, and we used to say in the old, this is before Bitcoin, but we all used to say an ideal portfolio, before Bitcoin gold was the sort of the play on Fiat money. And you would, I would say to people have 80% of your portfolio, 70 or 80% of your portfolio in physical gold, and then have another 10 or 15% in producing gold miners and then have 5% in mining exploration, because you never know one of those mining expirations might come good. And then you can make a hundred times your money. And, you know, you could make a similar case and go, well, have 80% of your portfolio in Bitcoin, maybe 10 or 15% in Ethereum or, and over one of those ones, you know, one of the top 10, you know, maybe another 10% in the other, in the top 10 and then have 5% in coins because, you know, you run the risk when a bear market strikes, you lose all your money in the shitcoin as you do in the mining exploration play. But there is a chance you could make on times your money as well. So that’s, do you disagree with my portfolio allocation?

Stephan Livera:

Yeah, I’m basically a Bitcoin only. I just think of it. Like most of these shitcoins are ultimately, they’re just like helping these scam people scam like unsuspecting retail, unfortunately. And also we’ve got to remember taxes, liquidity, like there’s all of these other considerations. I think it’s one thing for people who kind of trade them around or whatever,

Dominic Frisby:

Are they all really scams? Are they’re not genuine? What about something like decred? Do you look at decred?

Stephan Livera:

Nah, complete shitcoin.

Dominic Frisby:

What about… Do you like Monero?

Stephan Livera:

I don’t use it myself, although, I mean, I could sort of understand why people might use it from a utility point of view, but even then, like, I’d rather just use coinjoin. Right? I’d use Samourai wallet and I dunno know you’re involved with cypherpunk.

Dominic Frisby:

Okay. Fair enough for wasabi. That’s what it’s like talking to Jon Matonis. What about what was the one I got, I’ve sold it now, but I had it a while ago. Did very well Phantom coin. Do you know that one? Is that just a BS coin?

Stephan Livera:

Yeah. I mean, I know of it. I never touched it. I like I’ve heard of it, but I never used it. I don’t even really know much about it, to be honest. Yeah. So for me, I just see it, like, there’s a movement here. Bitcoin is the movement. There’s a lot of these other shitcoins that are kind of trying to ride the coattails now. I think maybe stable coins is a different thing. That’s just crypto Fiat, right? People like, obviously it would be nice to be in the whole bitcoinised world, but some people still need like a way to interact in a less controlled way. And that’s where the stablecoin stuff. I could see a case for those things, but for me, otherwise it’s basically a Bitcoin. I don’t even use stablecoins myself, but I can just understand why other people would.

Dominic Frisby:

Do you have any Ethereum?

Stephan Livera:

No. No. I’ve never, like, I’ve never touched any of those altcoins. Even the other thing is even with these old coins, we’ve got to remember that just even if they’re use for a certain thing, it doesn’t mean value will accrue to them. Right. So it might be a utility token and then it’s still, and if you look at Monero in Bitcoin terms, it’s going down right over time. Yeah.

Dominic Frisby:

It’s been a disaster. You have to look at the altcoin to Bitcoin ratio. And it’s very rare to find an altcoin that’s rising. Like you get it. My observation is you get it at the end of cycles. So like Bitcoin was outperforming everything until maybe November, December of last year, and then suddenly something happened. And then the altcoins outperformed Bitcoin for a couple of months. And now I get the sense of the market’s turned again. And most of them are falling relative to Bitcoin again. So that little sort of fillet but yeah, so that’s why I advocate having the large percentage, majority of your portfolio in Bitcoin, but occasionally, you know, if you time it right, you can, you can, you can do okay out of it.

Stephan Livera:

Yeah. And then I guess then the question is you got to think about taxes, accounting.

Dominic Frisby:

Cause I think, yeah, you have to think about all that bloody nightmare. Cause I look at what happened in the early days and a lot of people early investors, Stephan, they sold their Bitcoin too early. This is before the whole sort of ethos of Bitcoin maximalism had taken place. And so a lot of guys were like, I am really into this, but I’ve made five times my money. You know, I bought Bitcoin a $5. It’s going to $50. I made $10 of my money. I’m out. Whoa. And then Bitcoin, you know, they sell their Bitcoin at $50, but what happened, you know, and you see this in stock market cycles, a lot of the time it will start with the large caps and make its way down to the small caps. So when it goes into the small caps, you know, you’re at the end of the cycle, but that’s often, you know, 90% of the gains are made in that last 10% of the cycle. And you see the same thing with the coins, you know, Bitcoin’s your, know, it’s the Dow, it’s the gold standard. And then the small cap there’s speculative plays. But they have their little time in the sun, but, but the, the, I suppose you just gotta be nimble. And it depends if you’re a speculator or if you’re just a holder, I suppose.

Stephan Livera:

Yeah. So certainly, I mean, I see myself more like a holder and I see it more like people try to play these gambling games and then they end, most people end up losing when they play those games. It’s like, if you talk to any gambler, they’ll tell you every time they had a big win. Will they tell you the times that they lost? Were they tracking all those times they lost? Did they track their taxes? Did they track their accounting? Did they do you know?

Dominic Frisby:

No, of course they didn’t. But here’s the point I was going to make is that the guy who bought Bitcoin at $5 and sold it at $50. Ethereum gave a lot of them a second chance. And you look at a lot of those early adopters, who’ve become, you know, multi millionaires and billionaires. A lot of them actually made them big money in Ethereum because Ethereum you know, Bitcoin moves first and then the other coins play catch up. And you know, a lot of people who made a thousand times their money didn’t make a thousand times their money in Bitcoin. They made it in ethereum and you know, you look at —

Stephan Livera:

Oh, I don’t even check.

Dominic Frisby:

So Ethereum’s at what, 1800 bucks now, something like that. And Bitcoins, I think I’m talking to the wrong person, but anyway, I’m just making the argument for fun. But so ethereum to 1800 and Bitcoins at what, 50, 55. I going to get loads of Bitcoin maximalists calling me…

Stephan Livera:

Yeah. They’ll be coming after you for this.

Dominic Frisby:

Well between that and land. I said, well, I want you to know before you destroy me on the internet. I’m a nice guy. Just – but so Bitcoin’s at what, 60, 55, $60,000, something like that. You know, I think a realistic target for 2021 is a hundred thousand. But if Bitcoin goes to a hundred thousand or even 200,000, so double or three or four times where it is now, I think Ethereum, and we’ll go to probably 10 or 15,000. So it will, it will go up by more. It will move later, but it will go up by more.

Stephan Livera:

Possible. But even then, I don’t know. We don’t know for sure. It could have some blow up in the system or we could see them try to transition to proof of stake and things screw up, or we might see some new competitor come along and that’s the other thing as well when people play shitcoin games, don’t forget. If you look at the top 10, shitcoins from five years ago, it’s way different. We don’t know that the top shitcoins now will still be around. So that’s the other thing people don’t understand the risks they’re taking when they play these shitcoin gambling games. Really. I think that for me is why I’m Bitcoin only I encourage people to just keep it simple, just buy a Bitcoin and hold it and secure it and like learn about it. And just do that.

Dominic Frisby:

They say Stephan, that you should judge a man by his deeds, not by his words. And if you look at my portfolio, it’s literally my crypto portfolio is literally 95% Bitcoin, maybe even more so I do, you know, I’ve got like, I’ve got, I’ve got a few ethers, but not many. And I’ve got a little bit of decred cause I like that team. And I’ve got a little bit of Haven protocol and I’ve got a little bit of a coin called secret coin. I’ve got a little soft spot for the privacy currencies.

Stephan Livera:

Yeah. I know. Cause you’re involved with the Cypherpunk holdings. Right. But I think at end of the day, like we have to remember which one of these is going to be the money, you know, and that’s what’s going to be important at the end of the day. I think so.

Dominic Frisby:

Yeah. It’s going to be Bitcoin, it’s got the a network effect. You never underestimate the network effect.

Stephan Livera:

Yeah. I also find it a bit odd that I think, I think a lot of people in the libertarian world got kind of confused, right? Obviously people like Roger Ver were very, in some ways negative. Like it may be in the early years, they were very big advocates, but then later they became massive kind of drags on the system because now they tricked so many libertarians who could have otherwise been really rich by holding Bitcoin, you know? And then they tricked everyone with Bcash and all these stupid things. That to me is a bit frustrating.

Dominic Frisby:

Yeah. He believes in it though.

Stephan Livera:

What can you do, right?

Dominic Frisby:

He believes in Bitcoin cash. He really does.

Stephan Livera:

Yeah. Well it’s the market is really punishing that anyone who believes that.

Dominic Frisby:

The market’s telling a different story and you can’t argue with it. Ultimately you will make your arguments, you stake your bets and then the market tells you who’s right.

Stephan Livera:

Yeah. Ultimately, that’s the way it goes. But probably a good spot to wrap up here anyway. So Dominic make sure you let everyone know where they can get the book. I enjoyed reading the book. I think it was a really interesting kind of look into taxation where it has been in the past and how it impacted society and then how things might change going forward. So where can people find you and find the book?

Dominic Frisby:

You can find me on the internet but the book’s called Daylight Robbery: How tax shaped our past and will change our future. And I’ve had a lot of praise for the audio book. I read the audio book myself. So yeah, if you’re into audio books, I’d recommend the audio book, but you can get it on Amazon or all good bookshops. And despite my wrong opinions about shitcoins, I would urge you to read this book because I spent years and years and years on it and I’m really proud of it. And you know, before, before Bitcoin came along, I was one of the biggest anti fiat money advocates. And it was a really hard narrative to explain to people how fiat money is robbing you and the damage it’s doing to the world. And, you know, I made videos about it and made that film Four Horseman and books and so I consider myself one of the sort of Knights of the anti fiat money crusade. And this is by far and away the best thing I’ve ever written. And I think it’s a good read. So enjoy it.

Stephan Livera:

Excellent. Well, yeah, and I think the other point I would make as well, is that getting more people to think about how much they’re being taxed is important. I think it’s important to have that conversation and to try to drive that conversation, even amongst people who are not libertarians. Right. And so maybe, hopefully if they can come down this pathway a bit more, then they can start to actually understand what the problem is and then understand why Bitcoin is part of the answer.

Dominic Frisby:

Oh, Stephan, I couldn’t agree more. This is what Bitcoin has done is it’s got the fiat money narrative out there. So more and more people are like, okay, I’m going to earn in Fiat and save in Bitcoin, you know, Michael Saylor, what a powerful voice that man has been in just getting that now. But it’s, you know, it’s whoever, this is the wonderful thing. It’s like the armies of the Roman Republic, all these people. And as soon as you buy Bitcoin, you become a cheerleader for it. And it has got that fiat money narrative out there wonderfully, well, everyone you don’t need like you used to have to explain what fiat meant. Everyone knows now. And it’s just been fantastic. It has exposed the narrative. And we said, you know, the truth is in the price. The fact that Bitcoin has gone from less than a dollar to 55, $60,000, whatever it is now, you know, the fact that it’s done that, it has proved that, you know, all the debasement of fiat money has manifested itself in the price of Bitcoin is it’s like a truth machine.

Speaker 1:

And it’s wonderful. And, but the next big argument we need to have in the story, the next big challenge we have in the, in the Lord of the rings saga is tax. How do we — now we’ve won the money argument. We’re building our citizen citadels. Now, how do we design them? And the way you tax a society is the way you design it. And when you go and build your citadels, the way you tax. It will determine how successful that Citadel is, how loyal the citizens of that Citadel are to it. And it will determine its destiny.

New Speaker:

Fantastic. Thank you for joining me, Dominic.

New Speaker:

My pleasure, Stephan. Thank you.