Cloudmoney with Brett Scott

Brett Scott joins Money on the Left to discuss his recently published book Cloudmoney: Cash, Cards, Crypto, and the War for our Wallets (Harper-Collins 2022). A committed advocate for financial heterodoxy, Scott grounds his perspicuous critique of “cloudmoney”–the conjoined efforts and outcomes of Big Finance and Big Tech’s drive to go “cashless”– in his anthropological training and work as financial derivatives trader in the midst of the 2008 financial crisis.

Through our conversation we explore the possibilities and limitations of different metaphoric frameworks for understanding money, paying special attention to the pitfalls of figuring money as blood-like fluidity. Scott’s own comparison of financial operations with the functioning of the central nervous system prompts further discussion of the temporal and physical realities of modern money. We also discuss how awareness of the principles of monetary design clarifies the need for physical cash and the perils of privatized and surveilled forms of digital money.

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Music by Nahneen Kula:


The following was transcribed by Mercedes Ohlen and has been lightly edited for clarity.

William Saas: Brett Scott, welcome to Money on the Left.

Brett Scott: Good to be here. Thanks for having me on.

William Saas: It’s wonderful to have you. It’s been a long time coming. Last time we saw you was at the first international MMT conference at UMKC in 2017. And before that you worked in finance and had been writing about money and crypto for a while. Could you share a bit about how you ended up at that MMT conference and maybe catch us up on what you’ve been up to since then? 

Brett Scott: Sure thing. It’s actually quite a funny story about how I ended up at the conference. I was invited to another conference in Delft in the Netherlands. It was called Reinventing Money. And it was run by these… I want to say quite libertarian Dutch monetary reformers. And I don’t know how much time you guys have spent in the Netherlands scene, but there’s actually quite a long tradition of this quite conservative monetary reform people there. And I think the Netherlands in general has this vibe, which is… it’s one of the first capitalist trading nations. So it has this long tradition of liberal economic thinkers. 

And anyway, I ended up at this conference, one of these Dutch managed monetary reform people, some of whom were quite right-wing. Quite like “gold bug” types. And I ended up on this stage and I was super jet lagged. I had very low blood sugar, partly because I’d actually been blocked from buying a Coca-Cola from this cashless vending machine that refused to take my card. So I decided to start talking about this on stage. But how this machine had stopped me from engaging in a market transaction. And so I kind of ranted on the stage. And right in the front row was Stephanie Kelton, who had also been invited to this since the first time, I guess, she had seen me and then we spoke over dinner. And then she said, “hey, come to this event that we’re doing”. And that’s how I ended up at the MMT conference. It was great. That’s a really cool event.

William Saas: So how’d you end up in the Netherlands at that conference, talking to the “gold bugs” and sharing your market grievances?

Brett Scott: Yeah, so actually in monetary reform circles, there’s a bunch of different traditions, as I’m sure you guys have come across. A lot of the anti-fractional reserve banking, sometimes an anti-credit creation of money people like that sort of one tradition and monetary reform. And so I think that’s quite a sort of strong tradition in the Netherlands. There’s groups like ons geld, which campaign against banks being able to create money. And so I think that Netherlands scene I was… I had new people in that scene, and also new people in the crypto scene. So there’s also this kind of crossover between the anti-bank creation of money, people with this sort of crypto currency, Bitcoin people. 

So yeah, the guys who got me there are kind of in the middle of that world. And actually, the guys who arranged the conference had tried to start the first full reserve bank in the Netherlands. And we’ve kind of, I think it failed, it hadn’t managed to get a banking license, but there was quite an interesting effort. They were trying to create this fully backed bank. They also made a board game about the evils of bank creation of money. So it’s quite an interesting scene. And actually, I remember actually once going into the MMT conference, and some of those anti-fractional reserve people turned up at the MMT conference as well. And so there’s an interesting political dynamic between the MMT movement and the sort of… what would you call those? What do you call those guys? Like the sort of…

Scott Ferguson: Positive Money?

William Saas: Positive Money? 

Scott Ferguson: Yeah, although they’ve… certain Positive Money groups have really changed, I think in relationship to the MMT movement. 

Brett Scott: Yeah.

Scott Ferguson: So I don’t want to blanket call them all the….

Brett Scott: You know, I knew Ben Dyson, who started Positive Money in the UK. [He] sort of then moved away from it and actually became a central bank digital currency researcher at the Bank of England. But, Positive Money has always had this kind of interesting dynamic in the UK where it actually was trying to position itself as a left-wing monetary reform group, but would often attract these people from the sort of political right. You had these conspiracy theories about the banking sector. And I know Fran, who is still the director of Positive Money has always had this trying to sort of distance herself or distance the organization from the more right-wing elements that often crowd around monetary reform.

 But, that’s what partly what makes monetary reform quite an interesting area politically is it actually does attract these different ideological groups who sense that there’s something in the monetary system that needs to be addressed. Yeah, I guess I kind of span between these. But I’ve noticed over the years, there’s been more sort of Positive Money type of community getting into MMT is getting more on board with it.

Scott Ferguson: Yeah, that we’ve definitely noticed that as well. So we brought you here today, we invited you here to speak with us about your new book, which is titled Cloud Money: Cash Cards, Crypto, and the War for our Wallets, which is just out last month with Harper Collins. But before this book came out, you published a regular newsletter that was called Altered States of Monetary Consciousness. And you, even before that, were blogging about finance. And I guess, just to kind of frame our conversation, we’re wondering if you could talk to us about, really, how did you come to be thinking about money and publishing about money and advocating in these various kinds of circles? And how has your approach or your rhetorical strategies changed over time?

Brett Scott: Sure, there’s a lot I could say there, actually. The kind of broad brushstrokes of my trajectory, as it was, I have a background in Anthropology and History. But also quite left-wing politics. And I decided to do this experiment. Well, let’s say adventure. I like to call it an adventure, where the side I’ll go into the financial sector and sort of explore it. Or perhaps embody it. I like to experience things with my… to feel the emotions of things. And so I went, in the midst of the financial crisis, I went and worked in this derivatives brokerage. And so for a while, I was actually involved in high finance and over the counter swap contracts. So basically exotic derivatives in the midst of the financial crisis. But coming from this left-wing political background, and that made… it was quite an interesting experience, learned a lot of stuff about the high finance world. 

But also realized how little people knew about the monetary system in high finance, often because you don’t actually need to know anything about the monetary system, often when you’re working in very specialized finance. And after that experience, I went and I wrote a book for activists, which is called The Heretic’s Guide to Global Finance: Hacking the Future of Money, which is basically a sort of simple guide to finance for people who had some intuitive concerns. And people, for example, got involved in the “Occupy” movements, I was actually asked to write it in the wake of the “Occupy” movements. And you know, that was kind of published by a small left wing press, Pluto Press, a London based publisher. 

And since then, I worked in lots of financial reform campaigns and these other types of financial activism, you might call it, but also got involved in alternative finance, which is thinking about alternative currencies, alternative banking, and so on. But fast forward, you know, into the present day, I also got heavily involved in looking at the intersection between tech and finance, big tech and finance. And my newsletter, which is what you mentioned, Altered States of Mandatory Consciousness, I actually started that amidst the pandemic. 

And it’s still going on, it’s temporarily been paused. Because my book right now, Cloud Money… my new book is taking up lots of my time. But yeah, Altered States of Monetary Consciousness, the basic idea was, I was tired of writing. I’d written for many journalism outlets, or big media publications and so on, but I always find them quite constrained. And what I can say in those publications, they always want some sort of… you have to attach everything to the news, and you have to spin everything in a certain type of way. And what I was actually more interested in was writing for an audience who was more interested in sort of meditating upon the monetary system without having to have it attached to current events.

 And the newsletter basically enables me to do that. And one of the big things I was trying to do in the newsletter is to help people visualize systems that are invisible. Sometimes by literally trying to draw them. And sometimes by using metaphor, because metaphor is seen as a kind of like visual technique, in a way, it’s like you have an invisible system. So, you create a visible metaphor, that person can picture in their mind as a way to sort of help them to grasp this otherwise intangible type of thing. And the monetary system in the financial sector more generally, often very hard to conceptualize, which often is why people feel so alienated. 

And so I’m very highly motivated to do the newsletter precisely because I’m interested in, how can you kind of de-alienate, help people to sort of feel these systems more, picture them more, and then, from that perspective, be able to perhaps do more effective action on them? But if nothing else, just be able to understand their position in the economy better.

William Saas: Subscriber to your newsletter, here. I’ve appreciated it for multiple reasons, but one in a kind of academic and pedagogical sense as somebody who teaches and thinks about rhetoric, it’s, what you’re describing is a project of teaching, through different and adaptive, rhetorical strategies. And I think that that’s part of what has drawn me in and I think lots of others, to the MMT project, which is the insistence on… there’s almost a kind of resistance to metaphor. I mean, it never really works. 

There’s always metaphors running throughout the financial system, and the way that people are thinking about things, but the creation of concepts and systems that are deliberately resistant to popular understanding, esoteric, and so the process of translating that stuff and making it apparent like that bringing before the eyes making visible the structures and systems.

Brett Scott: And metaphors are quite… I find metaphor very fascinating, because it’s also quite dangerous. There’s limitations to metaphors. And what I’m often doing in the newsletters is experimenting to see how certain metaphors work and where they fail as well. And with the monetary system this always becomes an interesting task. So actually, talking about MMT, I did a piece, which was called MMT is a Language of Ants, Not Squirrels. And I was talking about how you got to understand the worldview of a squirrel is like, you’re racing around trying to find acorns. And this is the kind of like, sort of “money user” mentality. The person who experiences money just manifesting in front of them and trying to grab it.

Scott Ferguson: It’s very Lockean. 

Brett Scott: Versus the experience of the actual oak tree or these ants who issue these acorns, and actually want them to spread. And I like this metaphor, to some extent. It kind of shows us the dynamic between users and issuers, but then it has all these other limitations to it. So, in my book, Cloud Money, I’m using a variety of different metaphors, but it’s always like, trying to sequence metaphors together in the right order and not let them clash with each other, is always an interesting artform.

William Saas: But there can be something telling or instructive or constructive about mixing metaphors in a way that you might mix chemicals and see what happens. Some kind of reaction to it. So you mentioned the squirrels and the ants. Is what we find in Cloud Money, sort of representative of your best efforts and successes in this sort of metaphor, experimentation that you’re doing in the newsletter? Or do you feel like you might have hit upon something new that you could share with us now?

Brett Scott: Well, Cloud Money has a very particular agenda. I’m talking about the politics of the states or government cash system versus the commercial bank, digital money systems, and what it’s focused on and the crypto world. It doesn’t necessarily go super deep into some of the more… just more generalized understanding of money, perhaps. So in my newsletter I want to do is these deep dives. And I know you’ve probably seen these nervous system metaphors I use. So, my editors in Cloud Money, I had these whole sections, but I’m just trying to do this huge, like nervous system metaphors for the monetary system. 

And they cut it down quite a lot. Because it’s an I can go into the metaphors but… I think Cloud Money has some great metaphors, but it doesn’t have my entire repertoire. I think I’d like to do another book where I go way, way deeper into some of the kind of different approaches to understanding monetary systems, and particularly this nervous system metaphor I’d like to build upon.

Scott Ferguson: So maybe we can pause here and give you an opportunity to talk about the key contrast of metaphors that you put in the beginning of the book. And that’s the blood metaphor, which is very, very old. You can find that in Hobbes. And then this nervous system metaphor and understanding that no metaphor is perfect, and that you are always experimenting with metaphor. What is that contrast help you argue and help you make visible for the reader of Cloud Money

Brett Scott: Sure, yeah. So at a deep level for monetary systems, in general, I’m using this metaphor of money as a nervous system, rather than a circulatory system. So in many typical economics discourse, there’s this idea of the financial system as some kind of circulatory system, money is blood. And actually, when I used to work in finance, you’d actually find many financiers had the self image of the financial sector as a kind of heart of the economy. So it’s like then they’ll say things like, “without us, these industries wouldn’t wouldn’t get funding, they wouldn’t get the lifeblood that they need to live as it were”. So there’s lots of this idea that money itself has some kind of substance of value that sort of pumps around, and I’m not claiming to be some expert on the human circulatory system.

 But you have this idea of these little blood cells that carry nutrients or carry things to tissues and you can have the same sort of metaphoric understanding of money. This idea of money is somehow carrying value to people. This is the very typical sort of what I often call a commodity orientation to money, it’s sort of like the imagination of money as some kind of mystical substance of value that flows around. Which he finds very typical in many… basically, I’d say the mainstream economics is very typical. 

Implicitly, it’s the underlying kind of mental model of monetary systems. Then I think that blood metaphor is deeply flawed, because in my worldview, nothing can actually, I would say… in the MMT worldview, as well, but more generally, in people who understand the concept of money as credit. It’s understood the actual underlying value and an economy, the underlying sort of substance, as it were, resides in human beings and the natural ecosystem. This is what all economies are is human beings applying themselves to the earth, and building things. And that’s where your value it.

 And it’s not like, the unit of money is carrying that around somehow. But what units of the monetary system is often doing is activating people and particularly people who are locked into very large scale into interdependent meshes. And so if you sort of zoom out, the nervous system metaphor is much more accurate in the sense that nervous impulses activate tissues. But if I’ve been rock climbing all day, and my arms are exhausted and I’ve basically just totally pumped out my arms, no amount of me sending impulses to my arms is going to make them work. And this is like quite a useful thing to be thinking about sort of monetary systems. If you’ve just maxed out the actual labor and resources, new economy, no amount of like issuing money is going to sort of make them work. 

But if you haven’t, if you have a bunch of sort of excess capacity or the sort of underlying substance, you actually can. I think nervous system as the metaphor is good. And also particularly for the financial sector, when you start to think about large scale financial institutions, what they often are doing is… I kind of think about them as a sort of motor cortex. So again, I’m not like a neuroscience expert, but very crude terms, the motor cortex is the part of your brain that translates thoughts into action. So I think, “I want to move my arm” and the motor cortex will translate that into action. I think the financial sector can often be thought about that. 

We’re doing large scale financing of big projects, you’re kind of activating 1000s of workers into action. And those workers are what creates the thing, but the financial sector is able to sort of coordinate that action. And this sort of turns the financial narrative on its head to some extent. It’s not like those workers are unable to… the source of value comes from those work. That’s not from the financial sector. But certainly in an interdependent economy where you’re dependent on money, the financial sector has the ability to activate them. That’s basically the metaphor. And I don’t know how well I explained it. But that’s kind of it.

William Saas: I think it’s great. And it calls to mind, there’s a particularly grisly metaphor that’s sort of in the ether right now around inflation. And it recalls the actions of Paul Volcker and the Volcker shock in the early 80s, as breaking the back of inflation. I don’t know how considerate that metaphor is, but they talk about it as thinking, will Jay Powell now break the back of inflation, just like Paul Volcker? But in a way I don’t think it’s thoughtful in the way that you’re thinking, but it lines up nicely with what you’re talking about. What are they talking about in breaking the back of inflation? They’re talking about deactivating all these circuits and modes of action.

Brett Scott: I mean, I think this sort of stuff becomes very important. I haven’t necessarily thought huge amounts about inflation metaphor. But, certainly, for example, one of the things you’ll find in the commodity imagination of money, this is where you’re imagining money is somehow metaphorically carrying stuff with it. A lot of the inflation scare mongering stuff imagines it almost evaporating out of space. You have this idea that it’s almost a gas leaking out into the atmosphere, some other money is disappearing, it’s floating away. So again, it carries the implicit underlying idea that somehow something is inside the money itself that’s escaping. And it’s not thinking about the full sort of circuitry of an actual interdependent network, where all the actual value lies in human beings. 

So this is very partial descriptions of complex systems. And this is often how you do scaremongering or misinformation around what’s going on. I mean, you see this all over and monetary systems, it’s a big, big thing. During another completely different example, during Brexit in the UK, there was all this kind of scaremongering with them saying, “now we’re spending all this money on the EU”. It’s almost like they had this idea that money was sort of evaporating away or floating away, like some substance. And this idea is well, what do you get for that thing? These are complex systems with these multi-directional flows. It’s not like you just find these singular… 

Yeah, I haven’t explained it very well. But I think there’s a huge amount of this very partial sighted descriptions of monetary systems. And often what I’m interested in doing is showing people like the interconnections and interdependent nature of monetary systems.

Scott Ferguson: Yeah, the blood metaphor. There’s a version of blood speak here too that sees money as hemorrhaging. Which is such a misleading way of understanding. Like we hemorrhage money and we hemorrhage jobs and free trade contracts or whatever. I think of Ross Perot you know, on the campaign trail, and these are like you know NAFTA might be a problem, but it’s not because of hemorrhaging. It’s not because of this unstoppable outflow. 

Brett Scott: Another fascinating one and monetary speak is when people talk about money going into things, for example, when people say huge amounts of money are going into the crypto market and…

Scott Ferguson: They’re getting pumped.

Brett Scott: They’re getting pumped into the crypto market and I’m like… So what are you saying? Because this is quite bizarre because you’re basically handing money to somebody else to buy a token from them, but now it’s exiting. So, this is a very strange idea that somehow it gets captured inside something rather than it’s within an interdependent system that’s moving around all the time. So we had this very strange partial vision idea, you know modern economics is full of this kind of bizarre sort of partial vision on monetary systems.

Scott Ferguson: Yeah I really appreciate your reflexive experimental approach to metaphors and money because it is so taken for granted and it’s a constant challenge. I think we find and you know we often need to appeal to physical things and physical perceptible entities that we can that we can understand, but they very often run us in all these problematic directions.

William Saas: We start to forget that they are metaphors. That’s part of the reason why you can tell the success of a metaphor, by how few people actually recognize it as one.

Brett Scott: Yeah. I think those machines are made to sort of show a Keynesianism that’ll be like water wheels, and… have you guys seen those machines that they use?

Scott Furguson: Yes.

Brett Scott: Who’s the guy who designed that? But that’s all water metaphors for money and weirdly, the Bank of England has also used water metaphors which isn’t actually that far from the…

William Saas: Filling the tub. 

Brett Scott: Blood metaphors. And again, it’s a useful… it’s an easy kind of one, but it carries with it the oldest dangerous sort of commodity imagery for me.

Scott Ferguson: Yeah it’s so fascinating just to kind of keep going down this path. You’ll find those metaphors even in MMT as a popular explanatory strategy. I believe it’s this guy who writes into the pen name JD Alt. Who created all these diagrams of these bathtubs being filled up with you know fiscal spending. I think there are deep limits to those metaphors, but it just goes to show that you can tweak liquid metaphors and they can have a different valence. Even if I would say that I don’t really like them, they’re certainly a lot better than mainstream economics or the financial sector.

Brett Scott: ​I’ve also used them. Actually that’s my concern about my MMT article that I did about squirrels and ants was precisely… it was somewhat acorns it was just commodity imagery. So I’m dealing with these things that have an actual inherent sort of… and I know that I say this in the article, this is the limitation of this… can show you the difference between an issuer and the person who is a user of money, but it will give you the wrong… give you a commodity metaphor of money at the same time, so that’s that’s a kind of trade off on that metaphor.

William Saas: When you’re also with the ants too, there’s the whole… the rest of the baggage of the narrative of the story…of the Lord of the Rings and the Hobbit and all that stuff. Okay, so if the ants are… where are they in the cosmos of the Lord of the Rings universe relative to others?

Brett Scott: We should start a mandatory metaphor school or something.

William Saas: I think so! Or at least we have a publishing space on our website, if you want to riff or whatever, but what I like too is that… so talking about breaking it down to there’s a circulatory system which is ultimately a fluid metaphor, that that can be talked about in sort of bathtub terms, as I think JD Alt does, but what we get with the nervous system is another kind of physical system in electricity. And neurons and impulses and things like that, that are coordination at a distance almost simultaneously as possible in a way that the physical water fluid metaphor there’s a slowness to it. One of the things– talking about metaphors– I gotta shout out Scott’s when we’re talking about the central nervous system.

 We were writing about University currency system, and he talked about the Fed as a “choreographer of credit” in one of the things that we wrote together. And it strikes me as like there’s all sorts of modes of performance available if we think about the system as a set, a nervous system there’s clumsy coordination and then there’s fluid coordination, choreography.

Brett Scott: One of the reasons why I call my newsletter Altered States of Monetary Consciousness is that it has multiple meanings. On the one hand, it could just mean helping people think differently about money. But actually, it is sort of deeper meaning when you go into that sort of more nervous system metaphor. I’m actually literally thinking about manifests as a type of planetary level consciousness. An actual sort of… one of the big things many people intuit about, if you have to imagine the economic system as a kind of super organism, that we’re all connected together and an interdependent mass. In a sense we are the body of the economy. And then the sort of monetary systems, are sort of embedded in that as a kind of nervous system. 

And then the financial system, you can almost think about as more a central part of the nervous system is able to activate stuff. And if you think about critiques of the financial sector, often one of the biggest critiques is how sort of numb it is to its body, as it were, if you think about the superorganism concept. During the financial crisis, you’ll find this extreme disconnection between the actions of the financial sector and the reality of what’s happening on the ground. 

So if you sort of think about this metaphor, seriously designed to think about literally, how kind of like disassociated the sort of system is, and then if you think about alternatives, you start with thinking about how do you make the monetary system more responsive to the reality of its actual… the underlying body of the economy as a world terms of resources, and people? Now think, for example, the MMT movement, in listening to the mainstream policy circles, thinks far more about that kind of stuff, saying, “you guys are fixating upon this abstract stuff about how much money there is, or whatever”. But in reality, we should be thinking about what’s the underlying reality of the economy? 

Scott Ferguson: Yeah, and people and employment and suffering and ecological collapse. Yeah. So let’s pivot and really get into the key critical argument that you’re making in Cloud Money. So, you’re positioning your book and yourself against this dominant and largely taken for granted narrative, that’s surprise surprise, coming out of the banking sector. About digital finance, and that we’re moving kind of in this inevitable evolutionary progressive way, from this old bad thing that we call physical cash to this clean, efficient digital payment system? What’s wrong with that narrative? Descriptively, politically, and whatever else you had to say about it, and what are you sort of offering as an alternative or a counterbalance?

Brett Scott: Yeah. So in some ways, what I’m… there’s a few different things I’m trying to do in the book. But, one of the big ones is to cut through the inauthentic narrative about why we’re seeing declines in the cash system around the world. Now, the typical narrative is very much this idea that it’s something that we’ll want, and we’re driving it through our ordinary everyday actions. And it’s also driven from the bottom up. It’s very, very typical, you’ll find this language if you look at a newspaper article, which says something like, “customers move towards digital payments”. There’s all these articles, you’ll see them in the store. Well, they’ll say “banks shutting down ATMs as people move towards digital payments”. 

The agency is always imagined to exist in the sort of small individual. Everyone’s just collectively acting like this and this is why this is happening. And all the big institutions are then following what the everyday person is doing. So the bank is shutting down its ATMs because all of its customers don’t want the ATMs anymore. All right. Now, that’s a very, very typical narrative. Whereas what I’m doing is sort of filling in the other side, the top down part of that story, saying, “actually, if you look at this, what’s been going on, there’s been a huge amount of top down pushes against the cash system”. 

And actually, the move away from cash is frequently far more in the interests of very large tech and finance companies than it is in the interest of everyday people. And if we go back to the more broad points we were making earlier about an economic system being a huge interdependent network of different players. One of the political questions you ask yourself is who has the most power In the economies that we find ourselves in? We’re all dependent upon each other. And we’re also locked in these huge webs with each other. But also, we’re often operating via these sort of huge corporations. And actually, their economic actors as a collective, they often have a lot more power than ordinary people do. 

So if, for example, you got oligopolies or banks and tech companies who are moving in a particular direction, they’re able to actually alter the whole nature of the overarching economic system. What’s called “the War on Cash”, sometimes, about these types of top down actions with these oligopolies of players are all moving against the cash system at the same time, and pulling people along with them. Now, it’s true that there might be some people who willingly go along with that trend or perceive themselves as you know that it’s in their interests. But in the long term, that’s sort of irrelevant.

 What’s most relevant is that these players are going to do it anyway. And their main job is to either initially convince enough people through sort of ideological techniques and marketing techniques. But they don’t need to convince everyone, they just need to convince enough people that they can set in motion the changes that will then force everybody else to make the change. And if you imagine in some sort of hypothetical future state, it wouldn’t… in countries like Sweden right now, where this process has gone far enough ahead, it’s no longer a choice. These companies no longer have to sort of spin stories saying, “oh, people are choosing to do this”, because they know people no longer have a choice.

 So Cloud Money, I’m basically looking at the… cutting through the spin of why these changes happen. And also pointing out that if you zoom out and look at the trajectory of corporate capitalism, what’s happening is, big tech and big finance are fusing together. Increasingly, Amazon, all these players are saying they can’t operate unless they are fusing with transnational digital finance infrastructures. And then the capitalist system, when you try to maximize profit, your overarching sort of impulse is going to be towards increasing scale speed, interconnection, complexity, acceleration. And cash basically is antithetical to that. Cash is a thing that sort of slows stuff down and creates friction. 

So even if individual human beings who are physical and on the ground actually resonate with the cash system, the overarching economic system they find themselves within, those corporate players doesn’t. Alright, so this is why people will often have this the story in their head, that the end of cash is inevitable. And for that matter, the end of anything that’s not automated or not sort of digitized. That’s the sort of the basic overarching thing in the book. And then I’m also looking at then how the cryptocurrency movements perceive themselves in relation to that growing tech finance vortex. That’s the broad brushstrokes.

Scott Ferguson: Can we dig a little bit deeper into what we might say is your defensive cash? Why cash? Why cash at all? What do people resonate with when we are talking about physical cash? Why is the narrative, the mainstream corporate narrative that is destined to be outmoded. Why is that so problematic?

Brett Scott: Sure bear in mind, cash is still the most widely used one payment in the world. Yet the narrative in the sort of public domain imagines that it’s some kind of thing that’s just obviously destined to disappear. So in terms of actual everyday usage around large parts of the world remains the biggest form of payments, but definitely the ideological tide is against it. And so that’s just one sort of meta point to make. But in terms of it’s the appeal of cash, I’m not saying people have some sort of self conscious love of the cash system, often these are unconscious types of systems. 

But either way, I will describe the cash system as a public utility, or I can describe it as the kind of the public bicycle system of payments. It’s got this public utility aspect to it. It doesn’t require any type of interaction with large formalized institutions. It just works, has immediate finality. A lot of people when they are asked on the Central Bank’s surveys about why cash, there’s a kind of hierarchy of reasons why they prefer cash. One of the immediate ones is that you know the transactions done. So this concept of finality, this immediacy to the transaction. Another big one is budgeting purposes. So there’s a very, very big correlation between the use of cash and income levels. So, and there’s lots of interesting studies about this. 

But cash basically slows down spending. And for people who are already on low incomes, this is important. So it’s in terms of… many people will cite it as an important budgeting tool. They know how much they have, they’re not getting into debt. And actually, one of the things that visa will actively market to businesses is that people will spend more with digital money, so they can spend up to 25% more actually, often. So in terms of going to that point about acceleration in economic systems, you spend more digital money systems on digital systems in general. So in terms of the overarching capitalism possible, more profit accumulation, digital systems were just far more ideologically aligned. 

But there’s also a lot of… there are some people, like libertarians, who like the privacy aspect of cash, right. So this idea that you don’t need to watch what I’m doing. But as you know, many people like that. I’m in Germany right now, and Germany has a big historical tradition of valuing privacy. Especially in the context of the Stasi, lacks surveillance by states and sort of valuing financial privacy. So that’s one aspect, but also distrust of institutions. You’ll find very high cash usage in places where institutions are distrusted. So by contrast, in places where institutions are very highly trusted, you will find quite high digital payments. 

So for example, in Sweden and Norway and places where basically everyone finds it massively surprising that you might distrust the banking sector or the state, this is where they sort of find it feel that it’s somehow obvious that you should want to transition and have been absorbed into large institutions. And you’ll see this in the States probably politically, I haven’t done any sort of detailed ethnographic research. But if I was guessing, I’m going to say, kind of like your urban yuppies are going to find digital payment systems, un-problematic because they’re sort of steeped in this institutional mentality. 

You get easy access to credit, you’re basically viewed as a high status member of society. Whereas if you’re not in that demographic, you’re probably much more likely to use cash. And I’m imagining this goes from like your libertarian rancher doing farming through to your kind of ethnic minorities who don’t trust the banking sector who don’t feel that Bank of America represents them. So there’s lots of…

Scott Ferguson: Or they can’t afford the fee. 

Brett Scott: Yeah, there’s also a bunch of these sort of more immediately practical things like the fact that some people can’t get these accounts or actually, they will get them on detrimental terms. But I think that’s fairly well known in some ways. But so in some ways, I push this idea about the sort of cultural dimensions more because it’s less thought about. In much of the debate around cash, you’ll find this idea that, at least in the mainstream, that if only people could get access to the digital systems, they would obviously want to transition to that. But they face barriers, and that’s the only reason why they don’t. Whereas I feel it’s important to push out this idea that actually within many parts of society, there’s an inherent distrust of formal banking institutions and so on. 

And this is actually one of the things that’s going on underneath the surface if you think about gentrification. This is one of the things you immediately noticed with gentrification is gentrified places automatically are the ones that are most prone to being quote unquote “cashless”. AKA being dependent upon using very large corporations for their payments. So yeah, there’s lots of the sort of cultural dimension. I could go into this further, but you know there’s… does that resonate? Does that make sense?

William Saas: Totally. 

Scott Ferguson: Yeah. Resonates.

William Saas: Yeah. And in what you’re describing with the certification, sounds like it’s probably very similar in most countries.

Brett Scott: I was on NPR Wisconsin a few days ago and it was quite interesting taking calls from listeners who called in and they said a lot of the stuff. The idea that the tangibility is important to me, the budgeting. Also fears about the system going down in length. This is one thing that’s seen in the States is quite important for weather events. This is you know, this is kind of the sort of black swan events. But a lot of people intuitively have this realization that offline forms of money are more resilient. And this is why this metaphor, which is a different metaphor now because the cash is the public bicycle system of payments, actually is very effective. 

Because often what people are told when they’re being shamed for using cash is they’re told you’re using the horsecart of payments, you’re using this old stupid form, what’s wrong with it? Where as soon as you switch to this bicycle metaphor, suddenly it’s like, oh, this makes sense. Actually, bicycles are actually a pretty advanced form of transport, even though they’re technologically simpler than, say, the Uber system. And digital payments are very much like the Uber of payments. And I think this is like a great way to get people to think about this. There’s reasons why we value simple system operators because they just work.

William Saas: Do they have public bicycle systems in Wisconsin? I don’t think we have any down here in Louisiana.

Brett Scott: I don’t know. I mean.

William Saas: Sounds great.

Scott Ferguson: We have lots of privatized bikes…

William Saas: Yes, you can rent them. But you have to use a card usually.

Brett Scott:  Yeah. But also what’s interesting about the cash system for me is politically, it actually appeals to a whole bunch of different players. So if you zoom out and look at the current state of global capitalism, there’s actually a sort of weirdly anti-capitalist element to the cash system. And what I mean by that is in an earlier phase of capitalist systems, cash would have been at the leading edge. It would have been the thing being used to expand market systems.

Scott Ferguson: This is why Marxists say they formulate their critique in terms of the Cash Nexus. The cash Nexus is like the cradle of evil.

Brett Scott: Imagine an early pre-capitalist society, and then there’s some kind of sovereigns trying to sort of move in. One of the first frontiers is going to be the issuance of these units of cash. That slowly infiltrate the communities and break down their local networks and integrate them into a larger economy. So it’s one point in time relation, yeah, the cash system would have been this on the frontiers of capitalism. But in the current phase, it’s this thing that slows it down. So in a weird way, it’s become this break upon the system. And in this context, it has a sort of anti-capitalist element, especially because it actually enables all the many sort of marginalized people in the system to participate without getting watched by the main institutions of capitalism.

 So this is what’s called the black economy or whatever, the sort of the margins of the economy. So that’s one. So it has this kind of anti-capitalist part to it, but also from a centrist perspective, you speak to these various sort of like policy wonk types, they realize that the stability of the monetary system kind of depends upon people having access to government money. So this is a very center political argument. And then also on the right, you’ll find all this sort of nationalist type stuff, where it’s like, I want my national money, and I don’t want to, screw the banks, and give me the actual dollar and so on. And it’s quite fascinating from a political spectrum perspective, seeing who resonates.

William Saas: One of the things that I like, and I think it might be the final paragraph or so of your book, you sort of insist on and defend and advocate for cash precisely because it is dirty and inefficient. And you want to maintain the right to that sort of thing. And I love this idea of cash as anti-capitalist. Part of our project is at Money on the Left and Money on the Left Editorial Collective is to sort of recover democratic public potentials of money. And so I guess I want to say that one of the interesting things about reading your book and engaging with your work, is that it seems like you’re into that, too. 

But you’re also– correct me if you think that I’m wrong– like somebody could read Cloud Money and think that you’re sort of after a post money world, you’re partisan for cash, you’re defending it. That’s not necessarily saying money itself is good and could be used and mobilized in an affirmative ways. 

Scott Ferguson:  And just to clarify, we’re not saying money is good. 

William Saas: Oh, yeah. 

Scott Ferguson: Or that the system now is good. But we’re saying that it is certainly not just flatly evil. And that it is a powerful and capacious medium for collective transformation and democratization. 

Brett Scott: Bear in mind, I don’t have a sanctimonious take on monetary systems like many monetary… they’re are parts of the sort of monetary reform community who had this almost visceral sort of puritanical disgust about money and so on. I don’t have this at all. I see the world in contradictions. I understand that we’re stuck in systems that often we don’t quite know how we’ve ended up in these systems. And there’s trade-offs built into these systems. So for example, in large scale monetary systems, one of your trade offs is that you’ve increased the scale of your economy, and thereby actually gives you access to more and more stuff, but simultaneously increases your alienation, your distance from each person. And you can even imagine, the opposite of this is extremely small scale economies, where you might not even have monetary systems where you have very low amounts of stuff, because you’ve got very low labor pools we’ve connected together. But you have a very, very strong idea of who you are and where you are in the economy. If you picture your sort of quintessential hunter-gatherer type of setting you’re under no illusion as to what your position in that economy is and how you survive. Whereas of course, if you go to an extremely large scale economy, held together by large scale monetary systems, you’re in this much more sort of alienated state, and yet, you have access potentially, to incredibly high end things because you’re tapping into gigantic pools of global labor that you can’t see. 

And this is a sort of contradiction we find ourselves in modern economies. And so I’m not really trying to say that we could live without the monetary system at all. But you know, kind of going back to the nervous system metaphor, there’s a part that didn’t actually make it into the book. That was extending the metaphor. Actually, it did make it in a little bit of a conclusion. But what am I arguing in terms of the cash system and the nervous system metaphor, as I say, in the human body, the nervous system is split into a central nervous system, and the peripheral nervous system. The central nervous system is a realm of like the brain and like the spinal cord,  it’s a very conscious part of you. Whereas the peripheral is a sort of well, as the name says, is peripheral, right. 

And I’m kind of arguing that if we’re taking this metaphor, seriously, the financial sector, and all these kind of digital systems that are connected into it, are part of the sort of central system whereas the cash system can be understood as a the peripheral nervous system, is the movement of this money depends on the sort of person to person contact. Now, I don’t have to go deeply into that metaphor, but the basic idea is that if you’re interested in creating a balanced monetary system, you’ve got to think about how all these different parts intersect. 

And if you think about alternative forms of money, like the mutual credit system that you’re mentioning, the sort of rippling credit systems or local currencies, you can almost imagine those as kind of an…I don’t want to go like too deeply into this nervous system metaphor, but part of the autonomous nervous system is kind of like semi autonomous things that like act by themselves, and I kind of like only partially integrated into the central system. And so I’m interested in future… to think about, okay how do you know, because what we call the “cashless society” would essentially be a type of system where you’re completely always plugged into the central system. 

You’re always going by the banking sector, and the sort of big tech companies. And the cash system actually is maintaining this kind of lack the ability to stay out of that central system whilst remaining within the overarching economy. And that’s what’s kind of the political dynamic of it. But then in terms of the actual political message of the book, the main message is to protect the cash system. But there is a part of me that’s maybe this is for a different book, which is arguing for people to build different systems entirely the sort of like alternatives, and you know, I can go into those if you’d like me to.

Scott Ferguson: Well, maybe we’ll have you on again to talk about that future book. But I think we would be doing a disservice to this book if we didn’t ask you to talk about cryptocurrency. But so what’s your… Yes, crypto tokens, not currency. What’s your experience with crypto tokens? What’s your assessment of crypto tokens? And also, what are your thoughts about the recent cascading crashes in those crypto markets?

Brett Scott: Yeah, I mean, crypto, I could say so many things about crypto. Well, the first thing I’ll say is that actually I was involved in early, early Bitcoin back 2011, 2012, 2013, 2014, which was quite a different time in the modern world where it was far more innocent in a sense. It hadn’t turned into a giant, grotesque, speculative marketing/grifter scene. It was an interesting moment to be in it. I kind of got involved in that, because I was… I’d written this other book, the other The Heretic’s Guide to Global Finance that was coming out back in 2013. But I was interested in general in people’s attempts at building alternative forms of economy. And obviously, crypto was one of these attempts. So my inner anthropologist was really fascinated by this, and as you know, doesn’t have any potential. But what became very, very apparent to me, and that’s the crypto world or the Bitcoin world in particular, was that you had this sort of political problem, which was that the actual underlying technological architecture was quite radical. 

The core technological feat is basically that it enables large networks of people who don’t know each other to coordinate action between themselves without a central player. Now, that politically is interesting. And actually, a lot of groups can agree that that’s interesting. And, in particular, it was about these people being able to issue tokens, or at least for the system to issue tokens. And then for them to be able to move those tokens between themselves. And this is where all the problems started to emerge, because that was a sophisticated technological architecture, but a very, very crude token system implemented on it. But many people who had no training in any kind of like monetary stuff, visually the token sort of like superficially resembled monetary system. 

And actually, in many ways the imagination that Bitcoin is a monetary system was created through linguistic hacks and visual hacks. So the very term cryptocurrency was the first one of those, but the fact people just started calling it crypto currency. And journalists would report on it as if it was this currency. And then all the visual imagery that was pasted over it as being a monetary system, and many people just sort of took it for granted. They’re like “well, this is a new monetary system”. And what was particularly interesting with it, when it started getting $1 price, the thought of getting price, this in a way kind of just confirmed for people somehow that this was a monetary system, which is very, very fascinating. Because many things that have prices, people don’t perceive as money. 

So it’s not like if I have a ceramic vase, and it gets a price on the market, I don’t fully think about it as a monetary system. But if I take that ceramic vase and I paint monetary imagery all over it, and make it very small and sort of like a disc shaped, suddenly you can be like, “well, it’s money, isn’t it?” And this is actually sort of psychologically literally what was happening in the Bitcoin world, you had these digital objects, which were kind of pasted with this monetary branding and which had a price, and which then superficially, kind of started to resemble a monetary system. And since then, I started writing this about how crypto counter trade works. I don’t know if you guys have sort of seen me doing that. 

But it’s basically saying, well, what’s happening in the crypto markets is you basically have these digital objects that are created, that are then traded on speculative markets, and which get a price on those markets. And once I have a price, you can then swap them with other things that are prices. Which is essentially a way of clearing that sort of money priced things against each other which is counter trade. Now, if I did that with two objects that obviously weren’t money… so for example, if I took a $500 vase and I swapped it for a $500 guitar, nobody would say to me, “oh, the vase is a monetary system”. 

What they would say is you’ve swapped something that’s worth $500 for something else that’s worth $500, implicitly, what you’ve done is you’ve sold the vase to the person who has the guitar, and then you’ve given them the money back to buy the guitar from them. So you’ve had these separate monetary transactions that have been superimposed over each other, giving rise to the barter-like scenario. Okay. I don’t know how clear that is. But that’s concentrated and the whole Bitcoin world works like that. And I know this, because I used to do. I used to buy, quote, unquote, “buy things” with Bitcoin. And this is exactly what you do. You take its current dollar price, compare it to the price of the thing you’re trying to, quote unquote, “buy”, and then you would work out the ratio from that. And this is countertrade. 

And I think this is really, really fascinating actually, because what the Bitcoin system effectively is, is a type of parasite. It’s a kind of monetary parasite. And if we, you might want to think about the US dollar system as being like a host, in a sense. It can’t actually survive unless it has this pricing. The ones that have it, it’s able to sort of do the sort of money-like kind of thing within that system. And I actually think that’s an incredibly interesting design and in a way, that’s not even a critique. I’m sort of saying, well, kudos in a sense. You’ve designed a monetary parasite. That’s very interesting.

Scott Ferguson: But you can expand this out and say, from an MMT framework, at least, there are degrees of moneyness that exist in all kinds of credit systems. So we often will refer to airline miles, which have different degrees of receive ability and liquidity. So, to a certain extent, you can kind of de-exotisize size, if that’s even a word. De-exotisize crypto, it’s just sort of another, dependent system that depends on this larger system. And then it becomes a question of, but how does this system work? What are its values? What are its social and ecological consequences?

Brett Scott: In my newsletter, I do a lot of analysis of these different types of… if I’m looking at a voucher, for example, let’s say. Airline miles kind of have a sort of voucher-like vibe because they’re redeemable back for a particular thing. So let’s say I have a voucher for a store for a particular thing. Like, I don’t know, a Starbucks voucher or something. In a sense, it’s tethered into the actual monetary system, right? It’s like you and you kind of like it has an issuer, it has a redemption process. You know what you’re gonna get if you hand the voucher back, so it’s very easy to kind of integrate that, and it’s quite easy to describe how it works. 

Scott Ferguson: And the production system, I think as well. It’s tethered into the production system of coffee and of airline vouchers. 

Brett Scott: Vouchers are a credit system. There’s an issuer, there’s a redemption process, and particularly, maybe be able to transfer them. So all credit type systems or IOU type systems have this sort of three part process as an issuance process, some of the issues and out as a kind of promise, then they might be able to be transferred depending on what the nature is, and then they’re redeemed back for the thing that they can supposedly can get. Vouchers are like that. Bitcoin is nothing like that. There’s no ability to redeem Bitcoin. It doesn’t actually even have an issuer. 

If you look at how it’s structured, what happens is you could sort of argue that the miners and the system are kind of like issuers. But they’re issuing it to themselves, they’re not issuing it as a liability. So what happens, they basically exert energy and then write out a number as an asset for themselves. So they’re basically… it’s literally numbers written out off the exertion of energy, which then are then branded in a particular way. But they’re written out as assets to the person who is successful at maintaining the system. And then it has no redeemability. There is no liability side to a Bitcoin token, it’s just this object. But it superficially has the visual appearance of what you would see in a bank account because it has this number. 

So it kind of looks like a bank account, sort of, but it has no actual liability structure. So this is what’s quite interesting. So really, what it ends up being is it’s kind of like branded collectible. With the monetary price which you can swap for things and that does actually have a certain degree of moneyness in the sense of it’s highly swappable. So it’s actually quite like liquid in the way it moves around in a sense. So this is why Bitcoiners get very angry with me when I say it’s not a monetary system. And I don’t have any problem with that. I’m just like, well, it’s not used for pricing. And it very, very clearly… one of the easiest ways to sort of see this like… El Salvador is currently being used as an example of a place where Bitcoin is used.

 But if you go into an El Salvadorian restaurant right now, I would love to see an El Salvadorian restaurant where they put up a fixed menu on the wall with fixed prices in Bitcoin for things. They won’t do this because actually the stuff there is priced in US dollars to work out the quote unquote “Bitcoin price”, they’re always gonna have to constantly check what the US dollar price of Bitcoin is, and then work out a countertrade ratio. So actually, if you go to eat a meal in this restaurant, the price of a meal, you’ll quote unquote, “Bitcoin price” of this meal will change constantly. Because the actual price is in US dollars and it’s constantly being refracted through Bitcoin. That’s a kind of complicated way of saying it. This is a very good example of… clearly the US dollar system is being used here. But you’re kind of disguising it via Bitcoin transaction.

Scott Ferguson: We actually have an episode of one of our other podcasts coming out that’s going to come out before this interview, actually, where we’re interviewing a professor and journalist named Ricardo Valencia, and he is reporting on this Bitcoin situation in El Salvador. And there are protests against this. The president of El Salvador is becoming increasingly authoritarian and wedding his authoritarian politics to this Bitcoin adoption. Bitcoin is not being adopted well in the country. They’re trying all kinds of things, like offering discounts to make it receivable, and people don’t use it. People don’t want it.

Brett Scott: I mean, he’s obviously heavily invested. And actually, it’s quite interesting. I mean, he’s an interesting character, because he’s clearly working the US libertarian scene to get forms of financing and funding, but, probably is doing it with a sort of… probably my intuition was well, we got nothing to lose, we might as well just try and work this angle. I think, in a sense, him aside, the Bitcoin community has quite a lot to lose from backing him. 

And I think a lot of them sort of threw themselves into this kind of euphoria, it was like, “ah, it’s become a legal tender, it’s now the official money” and ignoring all these… not only the protests, but also the fact that in reality, it’s the US dollar that is being the actual… it’s happening since this countertrade process. But now it’s becoming politically difficult to the Bitcoin community, because the whole sort of rhetoric has always been around this like stateless money and this whole kind of thing. So the reality of backing this increasingly authoritarian leader is an interesting one.

Scott Ferguson: So do you have a read of the most recent failures in the crypto markets?

Brett Scott: Not really. Actually, I’ve kind of got bored about following all the specifics of it. A lot of my focus has been on critiquing the ideology of Bitcoin, because… and so the broader crypto scene is going out, a lot of people are being involved, and I know lots of people in it, but the actual sort of downturns I don’t follow. I used to work in financial markets. The way I often see these crypto tokens is  in typical financial markets, you can do fundamental analysis, and you can do technical analysis. Fundamental analysis, you’re looking at the reality of something or trying to look at the reality of something and saying, “well, this is, this company is overvalued, for XYZ reason, they haven’t actually built the factory that they said they were going to build, nobody’s gonna buy their products”. 

So you actually make these little arguments, but it’s actual prospects in the world. And then work out from the projected income streams, and you can sort of work out a theoretical price for a share. That’s a fundamental analysis. And then there’s technical analysis, which is like you watch what other people do, basically. Abstracted through graphs. But basically, technical analysis is just watching what other people in the market are doing. Now, whereas in the crypto world, often the only thing you can do is technical analysis. There’s no way to do fundamental analysis of these objects because they’re not redeemable for any particular thing. 

They’re not legal claims upon anything. There’s no way to work out if they’re overvalued or undervalued. They’re just floating objects, which makes them highly prone to these breakdowns. So I’m never surprised when there’s like a massive spike in the price or crash in the price either. Precisely because they’re untethered to slack. But in terms of the stable coins that were breaking down recently, I suppose that’s a slightly different situation. But like yeah, I didn’t… What’s your take?

Scott Ferguson: I don’t have one. I appreciate your blase attitude. I think you you have your eye on the structural, larger anthropological, political, ideological, 

Brett Scott: Gets boring.

Scott Ferguson: Yeah, rather than following the roller coaster ride and pretending that that’s actually…

Brett Scott: I think what’s probably the best way to analyze it is probably through religious studies. Or like, yeah, a lot of what’s happening in the crypto markets is you have these… And I think there’s interesting sociological ways of analyzing it that are far more interesting than trying to have some economic analysis of why the price has gone up or down. There’s many, many people who feel sort of forms of existential despair in the world who have come to believe that somehow the crypto thing represents some way to escape that and then engage in this fantasy where you can make returns whilst also bringing down the system somehow. So no, actually I empathize with that to some extent. 

There’s part of me that has a certain degree of empathy for people who are caught up in it. Because I have a lot of friends who are caught up in it and they can see this as hope where you can engage in political activism through speculation.

Scott Ferguson: And there’s also a lot of pain and suffering. There are suicides. There are people losing a lot of state money. 

Brett Scott: Yeah, and the main concern in the crypto world because… look, bear in mind that speculation has been going on for a very long time of the capitalist system, this has nothing particularly new. And so I could do a critique of speculation. But I’m not that interested in doing that. Other people can critique the mentality of speculation, it’s well established as a phenomenon within capitalist societies as people trying to get rich quick and escape their situations and so on, whatever. My main concern is that in the process of marketing the speculative objects, a particular narrative about money is projected into society. So the Bitcoin community, those objects… the Bitcoin tokens are not actually a monetary system. 

They’re this collectible, almost like digital medallions branded as money with a monetary price. But in order to get them to compete upon a market against other assets, like shares, or whatever else you could potentially buy with your disposable income, the proponents of it have to market it as a competing monetary system. So its marketing pitch is that some are competing against the dollar. And in order to market that story, they have to create this conservative story about money where they sort of say, money should be this constrained thing, this commodity that’s held taut and rigid. And so it has a sort of weird, puritanical, hard money ideology that goes along with it, which is very heavily associated with libertarian ideology. 

Which is all about engaging in the fantasy that markets exist independently of states. Which requires this fantasy of apolitical money. But you have to have this… the monetary system is somehow natural. And markets are natural, and the states a parasite upon the market, rather than the thing that actually underpins the market with monetary systems. So a lot of the sort of fantasies in the crypto world are about projecting this conservative notion of money, which my concern is that the debt then becomes a big… that’s become the foundation or mandatory training for young people right now. 

Interestingly, the MMT movement is one of the counter narratives in terms of like trying to create a different narrative around money, but there’s lots of 16 year olds right now who basically sitting on crypto forums because they believe it’s technologically exciting, and so on, who sort of imbibing like Murray Rothbard, and stuff like that. You know, if you think about if you’re a conservative strategist from the 19th century, you will like be like, “wow, this is like a really amazing way of projecting ideas into society without actually having the monetary system disrupted”. So it really empowers the Conservatives within the ordinary monetary system. So that’s my concern. Long answer, sorry. 

William Saas: No, that’s perfect. I love the fundamental versus technical analysis. And I think that that’s… it’s almost like if you have the fundamental mental analysis that I think we all share here, then it sort of makes the technical analysis irrelevant. It’s like okay, this is just going to be a carnival. It’s something to watch. And people are gonna suffer. But they have… there are contending fundamental analyses that do kind of seem to… I don’t know, I guess you can be suspicious here and wonder how many people are actually invested in the fundamental analysis that would enable them to think cryptocurrency is actually a viable alternative to existing monetary systems. What’s your read on how many people are actually sort of wedded to that now versus at the sort of speculation side if we’re not going to speculate about speculation.

Brett Scott: Well, I think it’s contradictory because… actually I actually wrote this piece for CoinDesk, which is one of the big crypto publications, possibly the biggest one, actually. And that CoinDesk actually has… there’s a couple of editors there who actually are quite reasonable, critical and want more critical voices. And I did this piece was just called How to Win a Bitcoin Street Fight. And it was based on the old arcade game Street Fighter. And I basically talked about walking into an arcade, an old arcade game. There’s on the one side, you got Street Fighter on the other side, you have Mortal Kombat now to old school like fighting games, and each one has its own universe. Each one has its own like characters in it. All right, so you know, Street Fighter has… I forget the names of the different people. 

William Saas: Ken, Ryu, Blanka. 

Brett Scott: Yeah, exactly right. And then you know, more you can do Mortal Kombat, Mortal Kombat got Raiden and all these other characters. But once you pick a game you can’t use a player from one of them in the other game. So they were sort of sitting in separate paradigms, and they’re in their own universes. And I think in the Bitcoin world, you find this a lot of the argumentation is based on this sort of trickery, paradigm switching trickery. Because on the one hand, it’s marketed as being that who it’s competing against is the dollar. So this is like the monetary story. So this is like one arcade game, right? That it’s like somebody’s competing monetary system. On the other hand, it’s marketed as an asset within a monetary system that has a monetary price that you could trade to get more money. And in that sense, it’s actually competing against things like the Gamestop shares, or the world or whatever else. Because if I’m spending my $5,000 in savings on Bitcoin, I’m not spending it on Gamestop shit, right? So they’re in a sense competing each other. 

But what happens in the crypto world is that they often try to blend those two arguments together. They’ll say things like, “well, when the price of the asset is rising, it’s a symbol that in the future, it will sort of invert and become the monetary system”. Which is… I’m like, how did you work that out when other things rise in markets, that doesn’t mean that becomes a monetary system. So there’s lots of this sort of justification. And because the actual object being traded has monetary imagery branded over it, it’s quite easy to actually sit with that cognitive dissonance. And many people in the world constantly sit in the state of cognitive dissonance, where they have a sort of almost millenarian story that at some point, it will invert, and everything will become priced in it. 

But in the meantime, we’re trading it for US dollars, and clearly perceiving it in terms of US dollars. And when I say this will happen, you’ll meet some of the hardcore Bitcoiners will be set will say stuff like, “well, I price everything in Bitcoin”. And I’ll be like, well, it’s interesting, because those prices will be constantly fluctuating, right? And what often will say to them is if I’m sitting by a tornado, and there’s like things flying around the tornado, you know, whatever it is… people’s bits of debris, I can psychologically choose to believe that actually, the tornado is flying around the pieces of debris. 

I could imagine the pieces of debris being like fixed points and then perceiving the tornado flying around. But that’s like a mental illusion. You can choose to believe that everything is priced in Bitcoin, but it’s a total mental illusion, right? It’s actually priced in the dollar. And if you’re just choosing to try and see it in this way. And this is a lot of what’s going on in that community. Just another metaphor there.

Scott Ferguson: Well, I think that’s a really… let’s finish this conversation on that mind whittling metaphor. Where do our listeners find you? Where Where should they look for you?

Brett Scott: Well, my newsletter is Altered States of Monetary Consciousness. My book is Cloud Money: Cash, Cards, Crypto, and the War for our Wallets. And my Twitter handle is @SuitPossum: S-U-I-T P-O-S-S-U-M. I always get asked how that one came about.

Scott Ferguson: Are you gonna tell us?

Brett Scott: It’s kind of a weird story. I had a musical act, Apocalyptic Possum and then from that a nickname developed called Soul Possum for me. And then when I went to work in the financial sector, I had this girlfriend at the time who said, “now you’re super awesome”. So that’s how it developed but when people see it nowadays, I have no idea what it is. It’s just weird…

Scott Ferguson: Right. That’s great. Well, now all the Money on the Left listeners who have made it to the end of this interview are all cued in. Well, thanks.

Brett Scott: Thanks a lot. Nice chat.

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mercedes Ohlen (transcription), & Meghan Saas (graphic art)

Money on the Left: History, Theory, Practice

In this special episode, Billy Saas, Maxximilian Seijo and Scott Ferguson announce the launch of the collective’s new scholarly journal: Money on the Left: History, Theory, Practice.

Click here for the journal’s inaugural publication, “Food, Money, and Democracy: Cultivating Collective Provisioning for Resilient and Equitable Communities of Work,” co-authored by Benjamin C. Wilson, Taylor Reid, and Max Sussman.

As Billy, Maxx and Scott explain in their conversation, Money on the Left: History, Theory, Practice is a peer-reviewed, open access journal of scholarship in the humanities, arts, and social sciences. The journal places money’s public origins and capacities at the center of left inquiry and action. It cultivates interdisciplinary approaches to past and present, aesthetics and politics. And it advances intersectional forms of research and practice in service of a just transition from social and ecological devastation. During their dialog, Billy, Maxx and Scott discuss the journal’s key aims and publication schedule, while offering advice for prospective authors. 

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Music by Nahneen Kula:

If you are interested in submitting or pitching an essay to the journal, see our Instructions for Authors page.

Food, Money & Democracy

Money on the Left: History, Theory, Practice
Vol. 1, No. 1 (2022)

ISSN 2833-051X

“Food, Money & Democracy: Cultivating Collective Provisioning for Resilient & Equitable Communities of Work”
By Benjamin C. Wilson, Taylor Reid & Max Sussman


Coordination rights, or the right to coordinate, is an emerging concept in law and political economy that establishes who is permitted to engage in economic coordination and who does not. Coordination rights are fundamental to the process of building resilient communities and determine whether social provisioning systems are “collective” or “concentrated.” In concentrated provisioning systems, decision-making is consolidated in the hands of a few actors who tend to prioritize profit-seeking over environmental and labor concerns, leading to inequality and ecosystem degradation. Collective provisioning systems instead involve rich human experiences that foster cooperation and a holistic approach to production that improves environmental and social wellbeing. We demonstrate these differences through comparative analysis of industrial agriculture and alternatives such as the La Via Campesina movement for Food Sovereignty, the Black Cooperative Movement in the U.S., and restaurant reactions to the early days of the COVID-19 pandemic. Unfortunately, what is also displayed is that without reliable access to monetary resources collective provisioning systems are vulnerable to financial crisis and collapse. Alleviating these vulnerabilities requires that monetary systems themselves also adopt collective coordination principles. Accordingly, we present small and medium-scale monetary experiments that use food systems as a way to build community capacity. These experiments challenge the exclusionary nature of the dominant profit-driven mode of financial coordination and illustrate the potential of community-driven and socially beneficial frameworks for increasing resilience, equity, and health in our communities.

Click here for PDF.

Benjamin C. Wilson is associate professor of economics at the State University of New York College at Cortland and Research Scholar for the Global Institute for Sustainable Prosperity.

Taylor Reid is an Associate Professor of Applied Food Studies at the Culinary Institute of America in Hyde Park, New York.

Max Sussman has been a chef for over 20 years. He was formerly the chef de cuisine of Roberta’s in Brooklyn, New York. With his brother Eli he has co-authored 4 cookbooks and owns Samesa, a fast-casual Mediterranean restaurant in New York City. With his wife Kate he founded Bog & Thunder, a regenerative food travel company based in Ireland.

See our Instructions for Authors page, if you are interested in submitting or pitching an essay to the journal.

Medium: Femme – 7 – Abortion (Part 1)

In the first of a three part series following the overturning of Roe v Wade, cohosts Naty (@orangeasm) and Charlotte (@moltopopulare) discuss the ongoing fight for abortion access and rights taking place in both the US and the rest of the world. 

Using the framework of reproductive justice, they contextualize abortion rights within a broader struggle for reproductive autonomy, touching on histories of reproductive control ranging from abortion restrictions to forced sterilisation, colonialism and incarceration. In doing so, they also highlight interconnections with concurrent right wing assaults on trans people, gay parents, drug users, refugees, and others marginalized groups.

Touching on  histories and movements from Australia to Chile, Ireland, Brazil, and the border of Ukraine and Poland, Naty and Charlotte defend the right to free safe and legal abortion without apology, drawing out various trends and intersections to make a positive case for reproductive justice and autonomy.

Visit our Patreon page here:

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.
Twitter: @actualflirting

Monetary Modernism

In this special episode of Money on the Left, the MotL Collective shares an audio recording from a conference panel titled, “Monetary Modernism.” Including papers by Scott Ferguson (University of South Florida), Rob Hawkes (Teesside University), and Maxximilian Seijo (University of California, Santa Barbara), the panel was presented at the Hopeful Modernisms conference organized by the British Association for Modernist Studies (BAMS) at University of Bristol, June 22 – 25, 2022. 

The conference sought to revive hopeful and more generative impulses in modernist art and literature, challenging a persistent view of modernism as relentlessly bleak and angst-ridden. It did so, moreover, for a present moment similarly burdened by dead-end accelerationist and pessimist imaginaries. 

The panel begins with Rob Hawkes. He introduces the BAMS audience to the wide-ranging contributions of the Money on the Left Editorial Collective. He also makes the case for reading Georg Friedrich Knapp’s early twentieth-century chartalist approach to money as a modernist project deeply entwined with myriad other aesthetic modernisms. 

In the first presentation, Scott Ferguson explores how Len Lye’s Rainbow Dance (1936), a short experimental promotional film for British public postal banking, embraces the abstractness, publicness, and heterogeneous plentitude of both money mediation and avant-garde cinema. In the second talk, Rob Hawkes uncovers how tensions between fixed and fluid understandings of identity formation and history inform John Maynard Keynes’ chartalist-inspired writings on money as much as Nella Larsen’s 1929 novella Passing and Ford Madox Ford’s 1933 novel The Rash Act. Lastly, Maximilian Seijo’s presentation carefully works through metaphors for money in Virginia Woolf’s book-length feminist essay, A Room of One’s Own (1929), complicating the text’s appeals to monetary substances and fluids by teasing out its experimental approach to imagining non-patriarchal infrastructures for provisioning aesthetic work. 
If you are interested in the texts and images that accompany some of the presentations, see here for Rob Hawkes’ slides and here for Scott Ferguson’s PowerPoint deck.

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Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.
Twitter: @actualflirting

Superstructure 33 – Mediation is the Fourth Estate

Analyzing recent events at The Washington Post, Will Beaman (@agoingaccount), Natalie Tabb (@orangeasm), and Maxximilian Seijo (@maxseijo) develop a theory of media accountability in which heterogeneous institutions and social infrastructures are variously implicated as political participants.

Visit our Patreon page here:

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.
Twitter: @actualflirting

Superstructure: Bitcoin in El Salvador (NEW TRANSCRIPT!)

Ricardo Valencia joins co-hosts Andrés Bernal and Scott Ferguson to discuss recent protests against Bitcoin in El Salvador. Adopted as legal tender by the authoritarian President Nayib Bukele in September 2021, Bitcoin has become an emblem in El Salvador for U.S. corporate imperialism, public mismanagement, and anti-democratic rule. Whereas mainstream accounts of cryptocurrency tend to flatten stories in Latin America to matters of success and failure, Ricardo draws upon rich critical approaches in Cultural Studies developed by the likes of Stuart Hall and Paul Gilroy to situate current events in El Salvador within histories of global governance, political conflict, and cultural identity. During the conversation, Ricardo weighs the fraught legacy of left politics in and beyond El  Salvador. He analyses the conspicuous convergence of “tech-bro” boosterism coming from the U.S. with right-wing regimes in vulnerable countries across the Global South. He considers tensions between imperial domination and quotidian safety that attend El Salvador’s dollarization in 2001, including the large role that remittances play in the everyday lives of the Salvadoran people. Finally, Ricardo contemplates the future promise of left politics in El Salvador. This promise, he explains, hinges upon feminist, queer and environmental movements, which are now demanding democratic and just uses of public money. 

Dr. Ricardo Valencia is an assistant professor of public relations in the Department of Communications at California State University, Fullerton. Between 2010 and 2014, Dr. Valencia was the head of the communication section at the Embassy of El Salvador to the United States. He has also worked as a reporter covering international and domestic politics for Salvadoran and global media outlets such as La Prensa Gráfica, German Press Agency (DPA), and El Faro. Follow Ricardo on Twitter @ricardovalp.

Visit our Patreon page here:

Transcript: Mike Lewis

Andrés Bernal: Hello Money On The Left listeners. This is Andrés Bernal, and as you may know, cryptocurrency has been a recent hot topic in our culture. Whether that be its presence across media, led most notably by celebrities, or the crisis that it has undergone given its major drop in dollar-denominated price. We recently provided a lens into the politics of crypto at the city-municipal level, more specifically, the resistance and the alternatives that have been cultivated in places like Austin, Texas. In this episode, Scott Ferguson and I take a look at an international case and speak to Professor and journalist Ricardo Valencia about crypto in El Salvador, given President Bukele’s adoption of Bitcoin as its national legal tender. There’s a few things that stood out to me personally that I think can help provide some context for our conversation and its connections to a broader set of political conditions. For one, Ricardo’s insights reflect a Latin American, or more Global South experience, that destabilizes political categories away from neat, conventional definitions of left and right, reminding us of the importance of values and ideas if we are to advance the project of a just democracy. Also, contrary to the cryptocurrency industry’s branding, which presents a technology driving liberty and freedom, we see its explicit association to colonial authoritarianism. Then there’s the vacuum created by a crisis in macro economic thought which has left fertile ground for agendas like cryptocurrency to move in and take hold of seemingly forward-thinking propositions. Lastly, we take a look at the protests against cryptocurrency and their alignment with a rising wave of heterogeneous and intersectional progressive politics in El Salvador and Latin America, more broadly. Without further ado, here’s our interview with Ricardo.

Scott Ferguson: Ricardo Valencia, welcome to the show.

Ricardo Valencia: Thank you. Thank you for having me. Greetings from sunny California.

Scott Ferguson: So I’m here with my colleague, Andrés Bernal, you should probably say hi, Andrés.

Andrés Bernal: How’s it going, everybody?

Scott Ferguson: And we reached out to you because we were seeing some reports about the political situation in El Salvador, and specifically, the way that an increasingly authoritarian government is backing and working with cryptocurrency and Bitcoin in particular, is that right?

Ricardo Valencia: Yes.

Scott Ferguson: And we were interested in what’s going on. And we did like anyone does nowadays, and we searched Twitter. And we found that you had what seemed to be the most informed, critical account that was tracking what’s going on, and providing important context and analysis. And that’s why we brought you on the show. So thanks so much for joining us.

Ricardo Valencia: Thank you very much. Thank you for those words.

Scott Ferguson: I guess maybe to begin, it would be helpful to start with you telling us and our listeners a little bit about yourself: Where do you come from? What’s your what’s your background? Where have you worked? Where have you trained? What’s your research all about?

Ricardo Valencia: Yes, right now I’m an assistant professor of communication, Cal State Fullerton, California State University of Fullerton. I teach classes on global media, public relations writing, and multicultural communications. I mean, I teach a lot of those screens as I’m interested in looking at specifically the race and class globally, and the connections with globality, pretty influenced by Stuart Hall and the great work of I don’t remember his name, but the Black Atlantic, which is a great book about describing African heritage in the flat Lake and in the world, that will be very influential in me. And also, what to do, right? I’ve been trying to look at those, those theories. through examples of communications, public relations, public diplomacy, strategic communication. I’m trying to understand why those organizations, why movements use the type of strategy they use, and how that reflects larger trends in the economy, politics etc. I’ve been trying to use the tools of cultural studies, but a lot of history. I love history and I think it explains a lot; more than people give credit. And if you want to understand what’s happening now it’s super important to go to the past and understand it. And also I’ve been a journalist. I’m very involved in the world of journalism related to Latin American journalists, Central America journalism. I was a reporter for El Faro for many years, one of the first reporters they have, and then I was working for the La Prensa Gráfica, one of the most important newspapers in El Salvador. And it means, when I talk about crypto, money, and El Salvador and Bukele, I always look at it from the communication aesthetic; why that communication reflects, what are the larger trends that are reflected. I have a PhD in Communications from the University of Oregon where I had the pleasure to meet great political economists, especially political economists of the media, like Janet Wasko, who was my teacher. And, before that I was a diplomat for the El Salvadoran embassy, I was involved in public diplomacy between 2010 and 2014. And before that, I have a Master’s from the University of Hamburg, and I have always been writing about things, right? But I tried to look at the connection within politics, global issues and now the relations with the United States. And that’s what I came from. I was interested in crypto not because of crypto itself, but what it means, right? Especially for a poor country, like El Salvador, and especially why an authoritarian who comes from the left, we don’t have to have to forget that, right? Bukele comes from the left. He’s using a tool that is closer in ideals from cyber libertarian, right? Why does that make sense or doesn’t make sense, right? That’s why I encountered crypto and I started understanding it. And a lot of things happened, also. After the legalization, the making of Bitcoin as legal tender in El Salvador in 2021, in September, and after that, a lot of demonstrations and how Bitcoin has also become a symbol of, in a lot of ways, authoritarianism in El Salvador. And also a symbol of poverty, a symbol and inequality, a symbol of colonialism. And that’s why I think, I believe we have the first anti-crypto demonstrations and protests in El Salvador in 2021 in September to celebrate the independence of El Salvador from Spain. All the speeches are addressing activism, policy, public diplomacy, and especially for Bukele, who has a really global communication machine, right? And he doesn’t want to be only a president of a Third World country; he wants to be known globally as a hero.

Andrés Bernal: So before we kind of dive deep into the geopolitics of Bitcoin and President Bukele, can you tell us a little bit more about your connection with El Salvador and maybe situate and historicize El Salvador’s place in Central America and in Latin America, more generally? What is kind of leading up to this moment?

Ricardo Valencia: Perfect. At first, I was born and raised in El Salvador. I went to school in El Salvador. I got my bachelor’s in journalism from the Central American University, a Jesuit university, who, very contradictorily, are the ones fighting directly to Bukele, because the National University, that’s kind of been co-opted by Bukele. And then the Jesuits are fighting a new government again, in El Salvador, which, as you know, six Jesuits were killed in El Salvador in 1989 by the army. I was born during the war. All my childhood was happening during the war, the Civil War 1980-1992. But when I became a teenager, it happened through what we call the post-conflict. Then I was the first generation who got the police who weren’t militarized police. It was a civil national police, who I never really personally encountered violence from the police. They were very, in that time, heavily influenced by human rights. They were really training human rights, and part of the police at that time — a third came from the military, a third came from the civil side, and a third came from the FMLN, from the former guerillas. It means I was able to see how this very limited democracy improves daily life of people in terms of being able to say whatever they want, publish whatever they want, and have any political party they want, which is very contradictory. And I say it before: the left has always been trashing democracy until you have a government that is close to fascism, right? Then you kind of appreciate democracy because in El Salvador, that tiny small democracy was built by 12 years of war, but also years of oppression and political repression, right? And I think that is coming now is when I have this grandiloquent vision of trashing democracy, especially from the left, I always put it in context of El Salvador. Because sometimes when you focus when you are trying to dismantle democracy, what you find at the end is not democracy bad. Not a better democracy, as the left thinks, but fascism, right?

Scott Ferguson: It’s really fascinating, then. So your own career, your own interests in communication, and the politics and the cultures of communication seem to come out of your own experience of this burgeoning El Salvadoran democracy?

Ricardo Valencia: Yes, because in a civil war, you have family from both sides. I have family from close to the left. Guerrilla, very close, very militant, but I also have family who are close to the right wing, government and with the army, right? Then you find out, democracies are sort of the better way to deal with issues, rights and problems and instead of people killing each other. And that’s something for me very functional, and good. Of course, the reason that Bukele is in power is because that answer wasn’t enough after thirty years, right? The answer of just dealing with political peace wasn’t enough. And in a lot of ways, one of the ones who had to be blamed by the emergence of Bukele is the left, because they empower figures like this to win elections. And at the same time, people were expecting a lot from them, right. And in a lot of ways, we have to understand that the generation of people who got into power by the left wing party between 2009 and 2019, was a generation who was very cautious. And I think Andrés can know about what happened in Chile in 1973, which, I believe is a collective trauma for the Latin American left still. I think Boric is moving beyond that, but even Petro is part of that generation that they have to be so cautious and afraid of their army, that they prefer to agree on something practical, like political openness and democracy and they forget what people wanted to do is more economic reforms. And I think that’s what happened. That’s where we are here. That the answers that small democracy, limited democracy wasn’t enough for many people in El Salvador, and the system falls apart. The political system falls apart. It didn’t happen like in Brazil. Like, yes: Bolsanaro won, but the PT put up a big fight, right? I mean, they might win. Lulu might win again. It didn’t happen. The left imploded in El Salvador, which, that’s another thing if you want to talk for another show, but that’s why it’s happening now. Right? The small democracy that we have — talking small “d” democracy — very basic things, the beginning of any political discussion is in jeopardy and it cannot only be explained by the forces of reactionary right. It should be also understood as a consequence for one part of the left who was complicit, pleasing just electoral gains over values. And other things like I think, in the case of Chile, brings a new left that is trying to talk about human rights abuses in Cuba and Venezuela. You cannot ignore that. Maybe a generation before, you can be able to get away with it. But now, right, you have to have a position on that. Because beyond ideologies are basic things like protest. And that’s where we are.

Andrés Bernal: Yeah, I think that’s really fascinating and really important because sometimes in the United States, people, especially either academics or activists have an idea of left and right politics that’s very neat. Neat categories. And the story of Latin America over the last 100 years kind of throws that into disarray. It’s not very neat. It’s very complicated and complex. Can you unpack that a little bit? Because I think, kind of working through what is complicated about this left then the critique that I think you’ve been, from a progressive perspective, and as somebody that is obviously very critical of reactionary forces in El Salvador, you nonetheless put a lens into a left that failed, in many ways, to meet what it was what he was proposing for the public. Can you briefly touch on some of that lineage of this left that you’re critiquing?

Ricardo Valencia: Yeah. First, I believe it was a left coming from too constrained by Leninist politics and ideas of the party of cameras. That means they never allow people to participate. But at the same time, it’s like a Vanguard party theory, right? There’s only one body who can advance everything, and then we have to kill all the competition. And they kill, and these bitter feuds between the left. Which I find fascinating because many of the people who were called the Social Democrats are the ones who are fighting for democracy and social justice. And while all these super radical revolutionaries are with Bukele, right? And I think that’s why it’s contradictory. That’s the left that inherited, that gave birth to Bukele, right. The left was trapped in the 70s. And that’s another thing that you realize is that the same people who in the 70s were super open, super advanced, they become bad when they turn 60 and 65. And we tend to think they become more conservative. I would love them to become more liberal, maybe more conservative than ultra blind authoritarianism, right? I think Pepe Mujica, the former President of Uruguay, used to say he prefers kids to be involved in conservative politics than not involved in politics at all. And that is the theme that we inherited. That kind of vision of only having one foreign policy vision of being completely aligned with being friends of Daniel Ortega, being friends, and saying yes to everything that happened in Cuba. The same is saying yes to everything that happens in China. And that is something that we inherited, like in El Salvador, and Bukele took advantage of that. That’s why he created a big division because he was able to criticize Venezuela. And criticize other countries, right? At the same time, criticize Peña Nieto in Mexico. The left in El Salvador wasn’t able to have a new breed of people or minds and ideas. And I’m not talking about ages. It’s more we change, reshape, transform our thinking and thinking beyond the party and just thinking that the party can solve everything and heal social movements because it can be critical of politics, electoral politics. I think that’s where we came from, exactly from that. But, good or bad, that was the time to discuss a lot of things right. Now is the time to be less constrained with that left and being able to say other things that were unable to be said. And also, the fear, I think there was a lot of fear from the Tankies we call it the Tankies Left.  Exactly. They stop basic weaning discourses like social democracy, like welfare state, all those basic things. Remember the Social Democrats in El Salvador, they believed social democracy was a revolutionary thing. Right? It was! Calling clean elections in the 70s, right? And calling for a welfare state and subsidies and unions, autonomy, and all those kinds of things were revolutionary in the 70s. But the whole point with the left is they weren’t able to transition from a social democratic message, for the big apprehension from the past, but at the same time, they get stuck in the past when the Soviet Union existed, right? And I agree with a strong criticism against social democracy, European social democracy failures, and social democracy as a movement, the Socialist International, but I mean, the left was unable to move beyond all statements that means nothing for a generation, and that don’t bring people’s daily life improvements, economic improvements, if you want to call it. Security, safety, all those kinds of things.

Andrés Bernal: The Tankies, yeah.

Scott Ferguson: Tankies, yeah. Stalinists. So we usually think of Bitcoin as this kind of high tech, Cyberlibertarian, Global North project. How does Bukele rise to power? He has an interesting story, right? I mean, he’s mayor and then he’s trying to run with certain parties, but then those parties are dissolved. So he’s taking this kind of zigzag pattern. And then at what point do the crypto folks get in touch with him? And how does he even frame or leverage that rhetoric for his political platform and political gain?

Ricardo Valencia: Perfect, we have to understand where he’s coming from. He’s a rich kid. Rich family. Went to a bilingual University, a school in El Salvador, who dropped out of college in second year. But his father was close to one of the members of the Communist Party. And then that’s why he was able, with these resources, to fund his first campaign as a Mayor of a small municipality in El Salvador, right. That’s why he tells you pretty much the importance of relations of ideas between the United States and El Salvador. All of this. The Crypto thing is a great example of how ideas what happened in United States happen in El Salvador. But also the relations between elites. Between economic elites in El Salvador and economic elites in the United States. And that’s why he came to power after he was moved to San Salvador, the largest municipality, by the left and he won. And then he wanted to become a President, but the left didn’t want him to become a President because he was always his own mind before, criticizing the left, the FMLN leadership, the Frente Farabundo Martí para la Liberación Nacional, Farabundo Martí National Liberation Front, the inheritors of the guerrilla. And then he had an issue with one of the councilwomen, and then he was expelled from the party. He tried to run with a different party and he was rejected, the party was indeed canceled. And then he ran for this right wing party who was founded by people from the right wing party ARENA; the conservative anti-communists. He never mentioned crypto in his platform, but he has been flirting with the idea since 2018. And what we know is that the one who was into crypto was his brothers, because the way Bukele governs is like a clan. His friends from high school, and his friends and his brothers are part of the small group of people who are close to Bukele. And I know his friends, one of his brothers, was got a BA in economics. Indeed, if you read his brother’s thesis, BA thesis, he talks plenty of Marxist economics. Then you see how complex it’s becoming. How contaminated the whole ideological concepts are becoming. And then what happened is that not only–because people think it’s only because Bukele is a cultist, that he’s into the cult. I think now he has to pretend or at least pretend. But I think it was a n accumulation of three things that makes crypto happen. One is his relationship with the United States. El Salvador relies on the United States: the largest income we got is from remittances from the United States. The major exporter to the United States and the major importer from the United States. I think the exports are going more to Central America than to the United States. But, in general, politics, culture, and EV technology depends on the United States. Right? Then he fights with the United States, he has a big strong feud with the Biden administration, as they’ve been super loyal to Trump. Well, said that Trump can sell the TPS, Temporary Protection Status, of Salvadorans. And also he can sell foreign aid. But for whatever reasons, Bukele feels himself reflected in Trump, right? Then after a deal with the IMF failed, Buekele started getting more worried about what to do. He can’t print dollars. He can’t print his own coins. Then, the only option, what I think was a Hail Mary, was seeing if this whole Bitcoin thing happens and works. And that’s when he adopts Bitcoin. And that’s why you see his Twitter account, when he tweets in English, it’s mostly to talk about crypto. And when he tweets in Spanish, it’s to talk about gangs and trashing people and against human rights organizations. And that’s what I think set the stage. Also the majority. He won the supermajority in Congress, and he can do whatever he wants. That is an accumulation of the things, I think. I don’t know if I’m answering your question. But yes, that’s what happened. That’s what allowed crypto…My argument is always that crypto adoption, mass adoption, can’t happen in democracy. It has to happen in authoritarian regimes. Weak states. Because in a healthy democracy, we will be able to discuss this. When authoritarianism, you just impose it right? And you fail! $425 Million at least spent on that failed Bitcoin adoption. People only focus on the coins he allegedly buys. But that’s only a quarter of what he has invested in a country with a national budget of $7.9 Billion, and GDP of $24-$27 Billion. It has been criminal.

Andrés Bernal: Ricardo, you mentioned that before this Hail Mary move to adopt Bitcoin as the official currency. Right? He couldn’t issue US dollars, and he couldn’t issue Salvadoran currency either. Can you say a little bit about the kind of macroeconomic conditions around their monetary system before Bitcoin? I mean, were they pegged to, for our viewers right, what was what was going on in El Salvador before, in terms of their currency?

Ricardo Valencia: 2001, at the beginning, was sold as a monetarism, a colón, are like the national currency and the dollar. But eventually, they take hold of the dollars. The dollar became the de facto national currency in 2001. The idea behind that was the relationship with the United States, but also prevents inflation and takes advantage of a free trade agreement that was later approved, and allows the possibility of increased revenues through Exports-Imports. But that has, for some, advantages of keeping inflation, which even Bukele has benefited from. I think El Salvador has one of the lowest inflation. But at the same time, it’s a big, complicated issue. It ties your hands. And they have been always discussing the benefits of dollarization. The left, in 2004, promised to banish the dollar and bring back the colón. Year by year, it’s becoming more complicated, right? And especially because there’s a cultural element with the dollar. Whatever we want to say about the United States, people prefer to have a dollar than having any other coin. And in a lot of ways, Bitcoin is like a shitcoin for many Salvadorans. Why do I have to have shitcoin? I don’t need an intermediary to have dollars because my family sends me dollars, I get dollars, and with dollars, you get the money in remittances in seconds. It’s a lie that it takes three days. I send money to my family and they have it in three seconds? And they don’t need to have a bank account. Yes, but Bukele sewed with Bitcoin an excuse to try to print money. Then, he created the Chivo Wallet. The Chivo Wallet was a token used that the goal was that everybody has Chivo Wallets, and then people don’t have to use anything more. And they can be only electronic payments and things like that. They say it was backed by Bitcoin. They were created at the same time…I don’t know how to say it in English. It’s a change box exchange mechanism, in which $150 million were used to exchange Bitcoins to dollars and dollars to Bitcoin. But the goal, and also the Bukele administration thought we were going to create, perhaps at the beginning, they were thinking of creating a stable coin. But I think stable coins are a complicated concept because of the reason I’m telling you. When you talk to people who are in the political economy in Venezuela and Argentina, they tell you, once you take the local currency out of the equation, it doesn’t make sense. Because all these people in Venezuela, in Argentina and high inflation countries, they want the dollar, right? Everybody’s fighting for the dollar. In Mexico, my family lives in Mexico, and they want dollars, right? They want an account in dollars because it’s more stable. And then what he thought was, well, we’re going to create this token called Chivo Wallet, which is a private company funded by public money. But they are not accountable for the procurement loss. Then, we will be able to print money by buying Chivo. Then the tokens become the de facto currency. What happened is nobody used it. But the goal was that eventually they will be able to pay wages, and they were able to pay contractors and people can pay pension through the printing tokens without any back. Backed by nothing. More than as Athena Bitcoin revealed in this SEC Form, they revealed that they were backed by just the word of the President. They weren’t even backed. Chivo Tokens weren’t even backed by dollars. Thankfully, for Bukele, nobody really cares. Then he didn’t have a bank run. It wouldn’t have happened, what he planned with a crypto crash, it would have broken the government completely because it would have been a bank run. Because every Salvadoran was entitled to get $30 bonuses that you can use in this wallet. Now that’s worth $11, right? But it didn’t work. People don’t care. They don’t really want and they never use it. What I can tell you is it’s trapped in this dilemma. And now you see how macroeconomics is connected with your politics. He doesn’t have a political back. You can say whatever you want about Ortega, but he has a political back. Maduro has a political back, a geopolitical back. He has a place to ask for help, economic help. Bukele is trapped by himself, isolated from the world, and he doesn’t know what to do and then they only Hail Mary was Bitcoin and crypto. But it doesn’t work now. The next step is short term loans to local banks, which eventually might break the banks. I think he’s in a bank conundrum that there’s no way to go out with an agreement with the IMF, who he doesn’t want to agree. But, eventually, that situation is so complicated. It’s like he built his self-fulfilling prophecy.

Scott Ferguson: What is El Chivo? Is there a translation for El Chivo?

Ricardo Valencia: Chivo is Cool.

Scott Ferguson: Yeah, that’s what I thought. It’s just cool, right?

Ricardo Valencia: Chivo is equivalent to Chido in Mexico. Something chivo is something cool.

Scott Ferguson: And so it turned out not to be the least cool thing.

Ricardo Valencia: The least cool. Because Bukele thinks it’s cool, right? And now that’s what happens when he has bad press, and he’s not cool anymore in the United States. He suffered a lot. He’s very thin-skinned. But he wasn’t cool. Because if you are upper middle class Salvadoran with all these tech jargon, you think why is the solution. Like the Cyberlibertarians and crypto people in the United States, but people don’t want that. People don’t want tokens in general, they want money. They want dollars that they can spend. In El Salvador, it doesn’t make sense. But all of that was obvious, and he was warned. And that’s when you have all the power. You can do whatever he wants. He has that power center and a person and five more people around him.

Scott Ferguson: Who are some of the key players or companies that Bukele is attached to here?

Ricardo Valencia: Good question. First, Jack Maller’s from Lightning Network. He was, at the beginning, the one who’s supposed to work in the Chivo Wallet, to create a governmental wallet. But what happened is still a mystery, why they decided that the government should build instead of loan a network. Yes, and that they decided to make their own base created mostly for…the whole Chivo adoption is a constellation of companies. The one who has since created the app was Athena Bitcoin. And there’s a video about when they launched, and it’s known that Bukele never hired Salvadorans. They hired foreigners who have big NDA signed with them. The second part of that was the launch, the electronic part, but also the people who do people’s explanations. He hired teenagers to recruit people for Chivo. And that strategy was mostly driven by call centers. Many people who came, some of the people who work in crypto companies in Venezuela, and they moved to El Salvador to try to replicate the success that they have. There’s a constellation of people. Now with the Bitcoin bonds, a great idea — another Hail Mary — is Bitfinex. Bitfinex, through Blockstream. Samson Mao is involved with that, in the design of Bitfinex. Then, the people who are involved with Bukele are the Bitfinex people: [Max] Keiser, Stacy Herbert, and the guy Michael Peterson, who was the idea of Bitcoin Beach. An American from San Diego. He used to sell sausages here in the United States, who wanted to build a stable coin from Bitcoin Beach in El Salvador; he was more aligned with Jack Maller’s. But Jack Mallers went out from the project for reasons that we don’t know. And Bitso. It seems that Bitso is involved with crypto in El Salvador. I don’t know if they provide the service of buying the coins that Bukele says he buys. And Bukele is really upset with Biden but he loves American technology. And he loves American crypto people, which I find amaze, like a guy who seems very aware of geopolitics, builds all this infrastructure based in the United States that you just need a subpoena from the Department of Justice and all the things will be revealed. Because I don’t think these people will fight for Bukele. You know that right? If that affects the bottom line, Bukele is gone. Simple as that. And that is the constellation of people behind all the big experiments. And what’s happening is the Bitcoin experiment affects the traditional bond market for El Salvador. Since El Salvador approved making Bitcoin a legal tender, the risk went out. The default risk went up, exponentially. It’s the largest or second riskier country in Latin America that’s closer to the fold after Venezuela. And it’s completely correlated. And maybe there’s no even correlation is a causality that the Bitcoin approval caused the bond markets of El Salvador, the bonds are depreciated fastly. While he tries to solve with one hand what has been struggling for years is the yield they get from the bonds, right? And, that’s why we are in this conundrum. There was a good article in the Wall Street Journal that said that even the hedge funds are not given any hand to Bukele. I think he thinks Bukele is too crazy for them. Hedge funds! These are not human rights people who we all understand. That he’s too…And the ratings have been going down now. They’re lower than junk bonds. Right? And I don’t believe it’s only the microstructure of things. I think these agencies believe you have a little chip who’s unhitched, that they don’t have any freaking idea of running the country. And El Salvador is not Saudi Arabia or a country with more political, geopolitical power or oil. That means that they don’t, I don’t think they’re going to save anything. I mean, it’s very marginal what they can make out of El Salvador. It’s not like the relationship that they might have with Mexico, or even Colombia, or even Venezuela, which has the power of perfect consciousness, efficient in terms of energy. And I think that is, that is a constellation of people around El Salvador. Yeah, the weakness, geopolitical weakness of El Salvador doesn’t allow them to do more than at the end, getting us saved by the IMF. I don’t see any other option, right. The IMF, in the end, will do the same that they haven’t done until now.

Andrés Bernal: It almost sounds like what you’re saying is, amidst this kind of political, ideological crisis, this rich, spoiled kid from an elite family takes power and through his kind of connections with all the weird crypto bros in the United States tries to circumvent the complex macro and structural issues that El Salvador has

Ricardo Valencia: Exactly.

Andrés Bernal: And kind of forced this new approach. I was gonna ask, how was cryptocurrency marketed to the public? And you kind of answered that when you mentioned, right? Like, they tried to make it like a cool thing. On one hand, on the other hand, it seems as though they really didn’t try to win public appeal, they just forced it. Is that correct?

Ricardo Valencia: They forced it, and they will run it like a bad company, like a marketing company. They started giving vouchers, discount vouchers for gasoline. They couldn’t get people over. The whole point is, there were a lot of transactions at the beginning because people wanted to get the money out of Chivo, right? And there was a big…it was a haven for scammers. I have never even used a Chivo Wallet, even though I’m Salvadoran. I am entitled for the $30, which are now $11. But I wouldn’t be surprised that somebody else took the money from me. And there has been a lot of fraud that has taken the money from people. They tried to get the money, and there’s nothing there. And they tried to do that, like use it by giving you a $30–you can use it and pay things. But it didn’t work. Because people don’t want to have it. People love cash. And they want to have it in their hands. And that’s why in a country where people love cash, they didn’t see anything useful. Why do they use it? Why do they have to use it? Very basic questions, even from the business perspective, right? Is it sustainable or not? He wants to build a whole infrastructure in three months. The transformation of our society in three months, that won’t work. I think I heard that it took two years to change from the European national currency to the Euro. Three years! I mean, it was a cheap effort. And I think they didn’t see the point. I always try to understand the view of Salvadorans from how my grandmother, who’s now deceased, would see it. Like my mother. Why would she use her cell phone instead of getting the money out of the bank? When everything they can buy in the public markets is in cash. Happening in cash. Doesn’t make sense. I think that’s why it’s never appealing. It was at the end, used as a reward card, not as a payment system. I don’t know if that answers your question.

Scott Ferguson: Can we talk a little bit more about the details of Bukele’s authoritarianism, and what shape is it taking? And how is it related to the history of El Salvador? But then specifically, contemporary issues around gangs, I know, and also Bitcoin?

Ricardo Valencia: Well, the shape is a personal authoritarian. Which, aiming at what I think political scientists call authoritarian electoralism. Pretty much what is closer to Bukele, I think, is Fujimori. In Peru, in the 90s. Power is based on one person in which surveillance increases and the harassment of journalists. But at the same time, as Fujimori used terrorism in the 90s as a scape goat. The Shining Path, Sendero Luminoso, and MRTA, the other Peruvian rebel organization, Bukele is using the gangs as a scapegoat for things. Losing the battle of Bitcoin, he is focusing on that. The whole contradiction again, as you know, you love contradictions, as I love because it explains everything. The big contradiction is: for this authoritarian government to work and reduce the numbers of homicide, it has to arrest as many people as possible, but at the same time, they have to negotiate a deal with the gangs. And that’s what he’s working on now. These big contradictions between arresting people without any judge order. But at the same time, negotiating under the table with gangs. And that’s what I think the shape is happening. It’s a heavily authoritarian government that has increased internet and electronic surveillance, but at the same time, using the regular controls of political repression, which is arresting as many people as possible, and sending a lot of people into exile. And I think that’s the shape it’s going to take. And every time, I believe, the electronic jargon is a way to just show you are a typically authoritarian government, which is pretty similar to what happened in Peru. An increasing public relations and propaganda machine, right? And, that’s increasing, but also at the same time, Bukele is getting more paranoid because people might be finding him popular, when you ask them if they like the President. But if you look at his policies, some of them are very unpopular, right? And eventually, it will go down because nothing stays forever up. And that is the big fight, he has to keep popularity up. And the big first way to do it is to, perhaps, get reelected illegally because the Constitution prohibits re-elections by his people around wanting to run again. But I don’t know. That is a poison candy, because he’s gonna face a lot of issues after 2024. The experts said that they might be able to pay the debt by 2023, but they are way more skeptical about El Salvador paying the debt by 2024 or 2025. That’s the shape that has a very strong popular, but at the same time with interest of an international actor which has now privileged their relations with the hardcore right wing politicians in Washington DC because he doesn’t have any connection. But the thing is that even Breitbart has been critical of Bukele. He loves Brietbart now. What else does he have? Even Cuba has more friends in Congress. Yeah, even Russia. But that is the shape, the political shape there, and also shows you that authoritarianism makes things worse economically. It doesn’t solve anything. Now he’s been exploiting the pay that people have to traditional political parties. But eventually, that fades, right? You can forget things.

Andrés Bernal: A lot of people in the United States, a lot of the public hear in the media about the gangs and, you know, crime in Central America right now. And this led to mass migration. Can you spell out where the formation of many of these gangs and whatnot, kind of all originate from in El Salvador, and maybe tie that back to what you were mentioning earlier about some of the war that was experienced in the late 80s, early 90s?

Ricardo Valencia: Yeah, I think gangs are really a great product of the, in a lot of ways, from the American culture. All these people who left this country in the 80s, went to very disadvantaged, low income communities in LA, in Washington DC. And then they enter a culture that was a gang culture here in California. And then they form the first gangs here in the United States. Eventually, the United States started deporting people back to El Salvador, and they began to flourish after the Civil War, because of the situations of inequality, lack of opportunities. And also the United States conducted a high level of deportations. For El Salvadorans, many of them were in gangs. I mean, that is also producing mass immigration to the north now, right? That is like a circle happening again. The United States, these kids in the 80s came to the United States, they joined gangs, they enrolled in gangs, they participated in gangs. They are deported out of the United States, they are destabilizing the situation in El Salvador, and now all mass immigration, in large part, is due to gangs in El Salvador. I mean, it’s a circular situation that is happening again. And the problem is, it has a solution, but politicians don’t want to deal with long term solutions, right? And also, there’s a big resentment from the population against gangs and the ability of the extortions they are having, and they extort small business, but there’s no solution. And the only solution that Bukele is selling them is pretty much wiping them out from existence. The problem is they are taking a lot of people who are civilians, right? And also, they are vulnerable, like they are breaking human rights. Human rights were important in El Salvador because it prevented people from finding violent solutions, right? And that’s what happened this time. How do you solve a long term issue when politicians are only looking to win elections in three years. And Bukele started with this speech that was based more on prevention, but after the spiking homicides, he went back to stress in highlighting his strategies; an iron fist strategy that depends on a secret deal with the gangs. But in the United States it’s pretty important to understand El Savador, you cannot understand El Salvador without the United States, for better or for worse. And what you see in macroeconomics, and the debt issue in El Salvador is the same that happened in terms of safety. Mass migrations, increase in immigration. In the 80s, also, the diminishing of many…I think a lot of the things are also inherited from the 80s when all this political violence indeed destroyed a lot of social institutions and created a society where there is very little safety net. And that is something that has to be in a way responsible for the United States. The United States has some responsibility for what happens. Not all the responsibility, but a strong responsibility to what happens with El Salvador and Central America, generally.

Scott Ferguson: So you’re also tracking the geopolitics of crypto and Bitcoin elsewhere, and making connections not only from El Salvador to the United States, but all around the world. Can you talk about the role that crypto is playing in other countries right now?

Ricardo Valencia: I believe that crypto is playing a role in the way that they are. I think in terms of Latin America, they’re focusing on countries with high inflation: Venezuela, Mexico, perhaps Argentina. I think that Latin America would be the most important country to provide upper middle class people that ability or middle class people the ability to think they have money in dollars. Remember that’s the most important. They won’t change. They want to give the impression that money’s in dollars. But at the same time, I believe crypto has given authoritarian governments the ability to bypass sanctions. And also it’s becoming the usual Hail Mary that they are doing. In the case of Russia. In the case of Cuba, for example, in Cuba you can use crypto, but at the same time, you have to register in a database. The same is happening with Venezuela. And now in countries in Africa, it means because I think, they’re trying to achieve two things, geopolitical and global, to be used by authoritarians, and weak states, as a way to provide money for the states and getting money and liquidity. And at the same time, provide a service for upper middle class rich kids and people in those countries, right. That, I think, is the goal. And the third goal is producing a larger number of customers in the global north, that can help to replace the users they have lost in the United States, right? I think it’s about finding, in short, it’s finding globally new money, fresh money, that keeps the world running. And that’s why El Salvador is an example. You’re gonna see all the same people who are working in El Salvador working in other places like Samson Mao, the Mallers, Bitfiniex. All these people want cash. $30 Fiat, that’s what they want. But it’s not enough in the United States, because I believe they see the regulations that are coming. But you cannot go through El Salvador where people make only $300 a month. You need the states because the states are what Bukele shows, the state can invest half a billion dollars in whatever scam. And then these keep the wheel running and running and running.

Scott Ferguson: It reminds me as a kind of second time as farce version of the Chicago Boys, the economists out of University of Chicago, coming in and advising the Pinochet regime, right? You can only do neoclassical, neoliberal free markets with dictators backing them.

Ricardo Valencia: Exactly.

Scott Ferguson: But in this case, it’s not even using the powerful tools of the state, but rather it’s about, you know, startups and private enterprise. Yeah.

Ricardo Valencia: Exactly. Which, in a lot of ways, reduces the scope and makes it so weak. The Chicago Boys have the United States, right. And their geology and their theory, but I believe the whole crypto thing is that a lot of people want to make money fast. Not the dedicated neoliberals of the 80s, because I don’t think those authoritarians, the authoritarians of the 70s were not per se neoliberal, right? They were authoritarians, and close to fascist, but they were not neoliberals. Right? Velasco in Peru was a kind of social democrat, economically. Authoritarian as hell, but I think when they convinced Pinochet, it ruined a lot of things. But in this case, the scope is smaller. It’s pretty much cash. In that way, what’s happening now is the crisis with Ukraine makes everything be read through the eyes of geopolitics, and crypto is in a very difficult position. Binance is not judged by how many people are losing the money, but because they’re making deals with Iran, and Russia, and that’s why Bukele got trapped with the Bitcoin bonds, right? He thought, oh, man, I’m gonna have Bitfinex, who’s not allowed to make business in the United States, then maybe we can have some money from Russia and the Ukrainian crisis came! Where are you going to sell the Bitcoin bonds? You can’t sell it in the United States, with the largest market being three times larger than any other market. Then you’re going to sell it to Russia? Then you’re going to get sanctioned? That’s from the state perspective. From the startups, crypto companies, they just want the money that Bukele gives them. They provide an exchange scheme to exchange crypto to dollars, which I think, at the end, is one of the goals of these companies. Having a pile of cash, and places they can exchange what they have for the currency. And El Salvador is precious because it’s the dollar. But that amount of dollars that Bitcoin is costing, that crypto is costing El Salvador is making the whole public healthcare system falling apart like this education system.

Andrés Bernal: So in a way, what’s making El Salvador particularly vulnerable to this culture of crypto vultures is its dollarization in the first place.

Ricardo Valencia: The dollarization and having a President who has a pile of money, public money, available. Yeah, dollarization. Yeah, but I think why now the whole situation is making it more difficult even for crypto influencers to deal with Bukele because Bukele is in a big problem and crypto won’t solve it. But I think it’s so attractive, having a country with the dollar as a legal tender, because it provides you an automatic exchange without question asked. And that goal, the goal of the Bitcoin adoption law in the US Congress, right? The, again, the Salvadoran Bitcoin adoption law in the US Congress, which is gonna focus pretty much on money laundering. But that’s what happened. You can ask who wins in this deal? The people of El Salvador? No. The national state? No. Bukele paid $425 million in a PR campaign that made him popular among cultists about the Bitcoin cult. But that won’t solve…The deal, as you were mentioning before, the deal is systemic issues. They won’t because they are not made for that. They don’t, I mean, you’re asking crypto too much. Even if you believe that crypto has a utility, you’re asking too much. Yeah.

Andrés Bernal: So to kind of wrap it all up, so many critical insights. Tell us about the protests that are going on right now in El Salvador, and where you see pathways leading and what the potential of these protests presents both for El Salvador and then also for a kind of a resistance to private money or crypto politics in general?

Ricardo Valencia: Well, crypto provides a symbol for a very large number of grievances. Right? Bitocin summarizes the position of authoritarianism and also using scarce public money to fund something that people find exotic and strange. And that’s why it was the perfect example to, in a lot of ways, exert and call for a more nationalist tone of those protests, right? Before, for the people in the 2000s, it was against the dollar. Now, the protest is against Bitcoin. Like this foreign money that tries to own the country and impose an authoritarian regime. And it has a symbol and a logo. That’s amazing, right? What else do you need? That creates the possibility to frame the discussion, annoy the precedent and build a coalition between people. Why social movements go from people who are environmentally, women’s rights, LGBTQ rights…LGBTQ has been one of the most militant elements of El Salvador, right? They have been fighting for democracy since the beginning. Womens, too. The feminist organizations. But at the same time, maybe the more traditional unions, and more traditional social justice in El Salvador, and along with Catholics, and progressive Christians. That was the ability, the symbol that we’re able to find was the anti-Bitcoin. And that’s why they crystallize it. It allows us the interaction between young people with all people to change repertoire of strategies and tactics. Yes, and that’s why it became so important: the symbol of anti-Bitcoin was a symbol of pro-public money. We need the money to be for the public. You cannot invest the money in something that is not for that. You cannot privatize money. That’s the symbol. The dollar was not. We cannot rely only on America, on the United States policy. The script is we don’t have to rely, we don’t want our money to get privatized. And that is a powerful symbol, that there’s a lot of meaning behind. Yes, it’s a diverse coalition. Contradictory as always. But it was very symbolic that the protests happened exactly during Independence Day in El Salvador, September 15. Independence from crypto. Independence from Bitcoin. And the power of the state. Then, what do I think the demonstrations, the first demonstration against crypto in the world, perhaps? I think there have been more people doing that. But on a national scale, perhaps. What it’s showing you is the uncomfortable reality that any democratic movement in El Salvador needs to go beyond going back to the past. You can’t go back. Bukele destroyed the past already, right? Anything that needs to be built is in the future. And that’s the question that hasn’t been answered. And it will be complicated. And it wouldn’t be easy, it would be contradictory. And that is what is happening now. Some people are worried that the parties, they are very weak parties that can fight for democracy in El Salvador. And some of us, like myself, think it’s very healthy that this starts as a movement. Because many things that become parties later start as a movement. And also it has begun to think, a kind of a national message beyond polarization. And I think there’s a lot of people in both conservative circles and lefty circles in El Salvador, progressive circles, to think that the country is more important than our ideological difference. And that is something that has been really found in the last years and reevaluation of the word democracy, but at the same time, the word of unity. And that’s difficult for many in very extreme positions in both left and right. Like how you can build a national movement that goes beyond those differences and deals with a new reality. That’s a lot to ask. Right? And I don’t know if even the United States has it, but that’s the thing, how you move forward in the future. You cannot be stuck. You cannot be stuck with the past. You cannot be stuck with a generation who did the work and you have to move forward in a way that people in El Salvador have a solution until now they find there’s no other alternative than Bukele. And that is the reality. But I believe El Salvador always surprises me, and there will be a way that we will build a more democratic future with more inclusion, and sometimes you don’t see it until you see it. And you think sometimes that you’re going to lose the game, and in the ninth inning, you hit a homerun, you never know.

Scott Ferguson: Oh, Ricardo, thank you so much. This has been so illuminating. We hope to keep in contact with you and have you back on and keep us informed. 

Ricardo Valencia: Yes, thank you very much. If people want to follow me, I’m on Twitter, too. @ricardovalp is my Twitter handle, if you want to follow me. Thank you very much. I really appreciate this time. For trying to complicate the situation because I believe the whole discussion of Bitcoin and crypto in El Salvador has been focused on if the people are using crypto, or if the people are not using crypto and the default, economic default. But nobody is trying to arrange that crypto is just a byproduct of authoritarianism. That the only way that Bitcoin could be established there is through authoritarianism. It couldn’t happen in a functional democracy. And because they don’t want public legitimacy. They want power legitimacy to allow them to do whatever they want.

Scott Ferguson: Great. Awesome. That was fantastic.

Andrés Bernal: Great.

Ricardo Valencia: Thank you very much.

Monetary Austerity as Social Conflict

By David M. Fields

Monetary austerity, like fiscal austerity, is a top-down offensive. A monetary assault on working people is being waged in the name of fighting inflation. In similar fashion to the demagoguery that surrounds government expenditure cuts that lead to significant losses in social provisioning, a political climate of inflation hysteria has engulfed the US Federal Reserve, engendering a reactionary policy stance of protecting the wealthy at the social cost of maintaining a precarious working class.

The Fed has concluded that inflation is now its biggest challenge, but admits having no control over the actual factors underlying the current inflationary surge. Nonetheless, it defends raising interest rates as necessary “preemptive strike” to excessive price distortion, whereby severe “market imperfections” in the long run could undermine the dual mandate of price stability and maximum sustainable employment. In central bank jargon, such so-called forward-looking acumen conveys the message that anchoring inflationary expectations is the primary means to ensure market confidence or “credibility” for effective macroeconomic balancing.

The notion of an independent and knowledgeable technocratic Fed constitutes naïve faith. Monetary policy choices support some interests over–even against–others. So, contrary to what we are told, contractionary monetary policy is NOT a conventional tool to soothe market confidence in light of unpredictable inflationary expectations; it is an embodiment of social conflict, a coordinated attack on the working class to protect and maintain profit extraction. Raising interest rates, thus, is not “sound” policy in the truest sense of the term; it reduces consumer spending and economic activity at the behest of the rentier to insulate this social group from any possible unsavory transgression that may arise from economic uncertainty.

I am sure this seems like heresy to many, but let me try to convince you. The economy, as determined by the need to expand output depends on banking; the capacity for firms to purchase necessary amounts of labor and material inputs necessary for satisfying expectations of profit and for workers to receive wages is assigned by the availability of credit. Without banking, economic growth comes to a halt, since business investment expenditures stem from the need to borrow in excess of any pre-existing amount of financial resources. Credit provides deferred payment, which allows firms to manage sales, and, thus, facilitate long-run operational expansion. If there is a restriction on credit, as a matter of course, any attempts for increased production are futile.

Credit allows firms to pay out money for materials and wages to keep production and distribution going in advance of receiving profits from expected sales of goods. The implication is that firms will have to deduct interest payments from profits, which will be relegated to the banking sector. The cost of available credit from the banking sector is set by the rate of interest, which is determined by the Fed; this, by definition, determines the parameters of firm profit. A high rate of interest, for instance, would induce firms to forgo productive investment because access to credit is expensive. This would encourage firms to suppress wages, e.g. layoffs, which triggers recessionary pressures resulting from decreased production — this raises the level of unemployment, which is antithetical to working-class interests.

The decision by the Federal Reserve to raise interest rates by the largest percentage point since 1994 is, therefore, quite treacherous for working people. US Economic growth is well below full employment. The economy confronts headwinds from developments that constitute cost-push-markup inflationary processes, so we are not seeing the manifestations of so-called demand-pull inflation, that is, too much money chasing too goods, or too much wage growth, resulting from an overheating economy or overspending for which monetary austerity is requisite. There is an economically destructive rationale at play, wherein interest rates are hiked to the point that they depress wages to compensate for causes outside of the direct reach of the Federal Reserve, to put a stop to workers from taking advantage of unique historically-specific social circumstances to effectively bargain for receiving their fair share.

***This post is heavily drawn from my entry on ‘Credit Money” in the soon to be published Encyclopedia of Post-Keynesian Economics, edited by Loui-Phillipe Rochon and Sergio Rossi, see here.***

***Republished from the Monetary Policy Institute Blog***

Superstructure: Plato’s Republic (Part 3)

Historian and philologist Brendan Cook joins Scott Ferguson for the final installment of their 3-part mini-series devoted to Plato’s Republic. (See Part 1 and Part 2, if you are new to the series.) In Part 3, Brendan and Scott take up the vexed and largely maligned role of money in Republic. Weighing the fact that there is no linguistic equivalent for the modern English term “money” in Attic Greek, Brendan and Scott nevertheless align the text’s negative treatment of money-related activities with Plato’s impoverished univocal thinking. Next, they consider the limits and potentials of Plato’s well-known taxonomy of political regimes in Book 8 of Republic, noting how unfavorable invocations of “money loving” throughout the text’s latter sections abet a fatalistic and anti-democratic politics. Brendan and Scott then ponder the ironies of Socrates’ second paradoxical argument against poetry. And lastly, they explore the celestial “myth of Er” that closes Plato’s Republic. On their reading, this concluding myth not only implicitly betrays Socrates’ injunction against poetry, but also encapsulates the text’s key contradiction between expansive provisioning and zero-sum trade-offs.

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Varn Vlog with Scott Ferguson

Scott Ferguson joins Varn Vlog to discuss his approach to critical theory, aesthetics and politics. Special thanks to C. Derick Varn for permitting Money on the Left to re-publish the interview here.

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