Fake News, Fake Money

The title of today’s talk is: “Fake News, Fake Money:
Living in a World Without Authority.” “Fake news” has been in the news a lot lately.
You have all of these accusations swirling around. The established media — The New York Times,
the Washington Post — are pointing fingers and saying, “These [are the] purveyors of fake news!”
Primarily at internet-based, [alternative media]. [The internet] is pointing right back and
[asking], “Do you remember Judith Miller?” Who remembers Judith Miller?
“There are WMDs with aluminum tubes in Iraq!” Bullshit. ‘Fake news’ happens on both sides, right?
That is really the perplexing thing. How did we arrive in the world when we
can’t even tell what is true and what isn’t? Well-established backbones of “authority” and “truth,”
like the Washington Post and New York Times, or even CNN, Fox News, and other [television stations
like] CBS and ABC, and what are they doing? They are cheer-leading for war based on false premises.
And that was just last week, again! Not Iraq, but Syria this time! Did we learn nothing?
We didn’t learn anything. How did we arrive at this world?
Why do we have this debate over fake news? Part of it has to do with the rise of the internet
in the early ’90s. Work with me here. Let’s walk through the steps. The internet didn’t disrupt newspapers and television
companies by “stealing” their audience for news; that came much, much later. First, the internet disrupted their
sources of most profitable revenue. For newspapers, that was the classified advertising
section, where they made most of their money. Small business advertising in the classified section. The internet came along and Craigslist-ed
that shit, just completely undermined it. Now you can do all of that [online,
almost] free and instantaneous. Boom! Suddenly, all of their most profitable revenue
disappears and the newspapers have to adapt. Then it happened again with television. They started losing advertising revenue to new popular
websites that were [attracting] more eyeballs. First they lost the local and small advertisers, who were
able to position ads to target specific demographics… and audiences, because they could [gather]
much more fine-grained information. Television is a one-way thing, you have [little to]
no idea who is watching. So what do they do? Trim the fat. In newspapers, that’s journalists.
“We don’t really need them. No foreign desk, cut that.” “Investigative journalism, cut that.” What is selling more papers? ‘AskJudy’, the astrology section, infotainment,
cartoons, sensationalist news… “If it bleeds, it leads.” Inexorably, the long downtrend
of the news industry started. They gutted their foreign desks, gutted their
investigative journalism, gutted their fact-checking, gutted their copy editor desks. What was left? A bunch of interns, running around
copying press releases from powerful corporations… and presenting them as fact; taking notes when
someone seemingly important said something. Not questioning any of it, just writing it
down and publishing it as “the truth.” “Fake news” happened because the very basis for
producing truth was removed from the institutions… whose job it was to produce truth. This caused a very weird situation.
Until that time, how do you know if something is true? Well, the New York Times said it.
The Washington Post said it. It was on CBS. Surely, they have fact-checked it?
Therefore, it is the truth. The fundamental basis for discovery
of truth was to examine the source. When you go to college and write essays,
they ask, “What are you basing this argument on?” “Give me citations.” “Source your argument.”
“Where are the facts?” If you took a headline from the New York Times
and sourced it, they would say, “Okay, great.” “That is a citation from a valid source.” We used the issuer to determine
the quality of what they issued. We looked at the authority of the news based
on the authority of the institution that said it. Because that was a good model, a good heuristic.
It gave us a good false-positive, false-negative ratio. It was a bet, a way to say, “I can’t fact-check all [of
these claims], but these people have, so if I read it… I will become not only educated but informed.” Now we are in the situation where the people who watch
the most television and read the most newspapers… are [often] the least informed part of the electorate. How did that happen? The institutions are still standing.
Their authority is still standing in some eyes. The basis of credibility is still there. They still have
the big buildings, circulation, and big names. But the mechanism that delivered truth, that ensured
quality, is no longer there or significantly eroded. What is their response to that? “We will try harder”? No.
They turn to the internet and shout, “You’re fake news!” Arguably, a lot of the stuff on the internet is fake news,
because it never had any of these mechanisms. But the internet that had none of the mechanisms,
and newspapers that no longer have the mechanisms, are now producing truth on a relatively equal basis. Every now and then, some blogger uncovers
some incredible story that nobody’s noticed; it is the truth and the news networks pick it up. Every now and then, the traditional institutions
fall flat on their faces and deliver bullshit to us, packaged in a fancy name. People start questioning whether they should
believe anything. What is the other option? Where do you go from here?
Must you evaluate every fact for yourself? Do you have to build into your critical thinking
the fact-checking department that they fired? How do you go about evaluating every
piece of knowledge as fact or fake news? Well, there is one easy heuristic… If the esteemed leader of your political party
says it is fake news, then it is fake news. Now we outsource fact-finding
to the tribe that we belong to. If the tribal leader says those guys are lying,
we just go along with it. This happens in Bitcoin, too. Tribalism is part of the human nature. What has just happened in news, leaving an entire
generation unable to discern truth from fiction… and easily manipulated by propaganda — I’m about
to suggest today that this [will] happen to money. This is about to happen to money.
How do you know if money is valuable? I am asked this question every time
I do a seminar about bitcoin, especially if there are new people in the audience. They say, “But bitcoin isn’t backed by anything.” “[Whereas this piece of paper] I have in my pocket says
[it is backed by the] ‘Central Bank of Blah Blah.'” It is backed by “the nation” / “the Queen” / “the King”
/ “the Parliament” / “the GDP of my country”… or “the gold that we have in our vaults.” You don’t have any gold in your vaults! [Laughter]
They still think there is gold in the vaults. Many people do. It is a common misconception. Most of our understanding of money comes from myth.
It is just barely removed from the level of Santa Claus. We have this constructed fantasy about
money that we received as children. As adults, when we notice inconsistencies, we shore it
up with some rusty nails and planks to keep it in place. We try to keep the illusion. As part of that, we adopt these preposterous
ideas such as, “Oh, there is gold in the vaults.” “It kind of works, I don’t know… Go make your room,
don’t ask me any more questions, honey.” I don’t understand money either.” We had a heuristic: if a stable democratic government based on some broadly free principles… sanely manages the economy —
if they say it has value, then it has value. That’s a great heuristic. That removes the necessity for us to independently
evaluate every note that comes into our hands. Will this [note] still be worth $20 tomorrow? Okay, not this one because it was counterfeit,
but this other ‘real’ one? Yeah, it will be worth $20. Maybe it won’t buy you $20 worth in today’s money;
maybe it will buy you $19.80 [worth of goods] in a year. You don’t really notice that, it is okay.
You trust that it will still be there… Unless you’re Greek. Or Cyprian. Or Venezuelan.
Or Argentinian. Or Brazilian. Or from Zimbabwe. Or from the Ukraine. Just keep adding to
that list, it has happened so many times. One day, you wake up and you
discover the banks are closed. The bank governor is on TV and they say,
“People, don’t panic! Everything is under control!” When a government official says that, you know… panic!
[Laughter] That is the time to panic. It is about who is first to line up in front of the bank.
They will not open again next week as they promised. The temporary emergency measure
becomes a permanent emergency measure. Guaranteed, every time. So line up
and run for your money in the bank. Suddenly, the institution of money
has crumbled. Now what do you trust? You go back to basics, things you can examine
and validate for yourself: gold, chicken, rice, salt, sugar, whatever you can get your hands on. Or that other country’s money.
The U.S. dollar is hard currency, right? Money is one of those things that primarily
holds value because we attribute [value to it] as a direct result of its issuance by a trusted authority. We outsource our own determination
of value to this trusted third-party. What happens when that trusted third-party
stops delivering on that promise? On purpose? By accident?
Through mismanagement? Who knows? But one day, that phrase which seemed
so meaningful and strong and satisfying… “The full faith and credit of the United
States government.” America! [Laughter] “The full faith” — not just ‘some’ of the faith —
and credit of the entire United States of America! Satisfying! Okay, compare it to this one: “The full faith
and credit… of the national bank of Zimbabwe!” Do you cry? Do you laugh? Do you run?
What do you do at that point? That sentence no longer has much weight
to it, that thing that you put all your faith in. They give you their full faith and credit,
and in return you give your full faith and credit. Every time you receive one of those bills,
you are giving credit. You are giving them a product or a service
in return for the bill — that’s credit. You are giving faith, your full faith and credit. Your full faith and credit is based on absolutely no
rational thinking, other than you somehow believe… in [these worlds] printed on it: “The full faith and credit.” I have a prediction. This sentence will become
increasingly untenable; not just in the hotspots, not just in the backwaters, not just in developing nations
and the ‘Third Worlds’ as we used to call them, but in many places simultaneously. That $220 trillion dollars of debt says “the full faith
and credit” is ringing hollow all around the world. What happens when they can no longer shore it up? Bitcoin is not going after replacing national currencies.
Oh no, it is doing something far more dangerous. [Bitcoin] is encouraging people to
put their savings outside the system. That is the worst thing you can do to a system
based on full faith and credit. We’re taking away the faith by presenting
an alternative that people will find more useful. In some places, where the full faith and credit
of the national currency has been damaged, they will flock to bitcoin as a valuable alternative,
because they know that it is safer. We saw it happen after November 8th in India,
when Modi demonetized 86% of the country’s money. Where is the faith now? No full faith. Can you print on the money “the 14% faith
and credit of the National Bank of India”? [They] took out 86%, so that leaves 14%. “This money is backed by the 14% faith and credit of
the National Bank of India.” Doesn’t sound so good. People flocked to bitcoin. Just as it wasn’t bloggers challenging the truth of news
that created this dichotomy of fake news, it wasn’t better news gathering that undermined the
newspapers, it was undermining advertising revenue. Cutting off their feed, cutting them off at the knees,
forcing them to adjust their news gathering… to the new level of income they had. What happens when Bitcoin does that to banks? Because when they say “close all the doors and keep
the money in,” there is one door they can’t close: bitcoin. The money keeps leaking and leaking.
They say, “Put the Minister on television!” “Tell them everything will be fine.
The yuan will not be devalued any further!” “The full faith and credit of the People’s
Bank of China is behind this currency!” Then a month later, it is devalued another half percent.
That has happened eight times in the past year. At some point, you [realize], “That [excuse] doesn’t
count any more. I am taking my money elsewhere.” A few people do. A trickle of billions of
dollars has fled into bitcoin from the yuan. The damage that is doing is not in offering
a better way for Chinese people to buy things, to invest in companies, to transact with each other. It is undercutting the very source of revenue,
value, and stability of a national currency… by removing “the full faith and credit” of the people
and putting it into an alternative currency. Instead of putting their savings in a deposit account, where it becomes the basis for fractional reserve
lending, they are sucking liquidity out of the economy. That is the worst thing you can do with an
economy like that. What will they do next? What the hell can do they now?
Drag the finance minister on TV. “Dear citizens… drug dealers! Terrorists!
Pornographers! Criminals! And most importantly… those really nasty people who
live in the country next door!” “They are undermining our nation through
this fake currency! Bitcoin is fake money!” “They are in a criminal conspiracy to
damage our economy! Don’t trust it.” “Don’t invest your money in bitcoin. It is fake money.
It is backed by nothing! Fake money! Fake money!” “Fake money!” they cry, and scream, and protest.
“Fake money!” You think that is not happening? It is happening right now. Watch or translate what
Venezuelans said about bitcoin just a few months ago. “Fake money!” In fact, they said,
“It’s the Colombians doing it!” [Laughter] [“The enemy”] is always the weirdos next
door who speak with a funny accent. Soft tacos instead of hard tacos. Abomination! And so the cry starts, slowly at first:
“Fake money, fake money, fake money!” Bitcoin is considered fake money in a few places in the
world. Where do you think it is considered fake money? Not here. Nobody has [really] called bitcoin “fake money”
here, certainly no [government] official did that. They would [prefer that] it remains in obscurity. But in Venezuela, bitcoin is “fake money.” In Zimbabwe,
bitcoin is “fake money” and they write articles about it. In China, they have tried it a few times;
it hasn’t played very well with the audience. In the absence of institutional authority, there is no
basis for evaluating whether money is real or not. Or is there? What is fake money and real money?
Who knows? Are we back in the same conundrum? Are we back in the same situation,
where we can no longer tell the difference? Is this just like fake news?
[Must] we all discover the truth for ourselves? No, because money has markets and markets
discover truth. That is what a [free] market does. If you want to know if bitcoin is fake money,
if the bolivar is fake money, you have an easy test. You take your bitcoin, you take your bolivar,
and bring them to someone on the street [in India]. Ask them, “How much will you give me for this?” If the official exchange rate for the bolivar is
five times less than the unofficial exchange rate, and if bitcoin carries a 20% premium [to buy],
the market is telling you exactly which money is fake. The market discovers truth. No matter how many pronouncements,
currency controls, bank bans, bank holidays, and demonetization incidents you do… No matter how big you try to make that wall, once the
dam has a pin prick hole and water is flowing through, it will make that hole bigger and the truth will come out. The truth will be evaluated by the market.
You can call bitcoin “fake money.” The market will say, “Well, I would rather take
that fake money than your fake money.” On November 8th in India, the price of bitcoin went up
and maintained a 22% premium against the rupee… over any other currency in the world. I was asked when I went to India,
“Why is bitcoin so expensive here? Are the exchanges making obscene profits?
No, they’re not. They’re not allowed to do arbitrage. Individuals are doing the arbitrage.
I explained, “It is not bitcoin that is expensive.” If I go down the street with
U.S. dollars and [try to] buy bitcoin, the price [will be about the same]
as what I can get in San Francisco. Bitcoin’s price is exactly the same. But if I give
them rupees, they will want 20% more rupees. It is not bitcoin’s price that went up
— it is the rupee discount that went up. The rupee price collapsed by 22%. Bitcoin can be moved across borders to settle the
arbitrage difference, but then you are stuck with rupees. You can’t move them, [which] immediately imposes
a 22% discount because that money is not portable. ‘Portable’ is one of the three characteristics of
what makes it currency. You just lost one of them. Actually two, because you demonetized most of it. Rupees are trading at a discount against bitcoin.
Bitcoin is the stable price. The market is telling you, ‘This [money] is more real than
that [money].’ The market discovers truth and it tells us. Be ready. We will start hearing this again and again
as economies collapse, as currencies go into crisis. It is happening even in developed nations.
It is happening in the European Union. It could happen here in the U.S. dollar, who knows?
The markets are trying to correct the situation. They will create a flow of money into bitcoin. People will remove their “full faith and credit” from
the system, put [their savings] in safe-haven assets: gold, silver, bitcoin, etc. As soon as that happens, you will
see articles in the the news media. The fake news telling you about the “fake money.” Maybe you can’t tell what is “fake news” and what
isn’t “fake news,” but you can tell what isn’t real money. The easiest way to find out, is to go out on the street
and ask the market. The market will tell you the truth. Thank you. [Applause]

100 thoughts on “Fake News, Fake Money”

  1. Going to restaurant in Greece: impossible to pay with credit card, suddenly they only took cash. So the market tells us: currency in the banking system is worth much less than printed money.

  2. gold and silver in physical form is the money without counterparty risk….since 5000 years, i went to India, they buy gold…..

  3. Sorry Andreas, but i need to correct you on a metric you used at minute 22:05… the official exchange rate versus unofficial of the Bolivar is not 5 times less, it is 583 times less, yup, as crazy as it sounds.

  4. But there is one more doubt in regulation because until Anti money laundering comes into existence most of the people like to use this for dark web cases compare to normal and we are seeing daily every day hackers are demanding money in Bitcoins only
    Can you comment on this

  5. there is a old WWII pilot saying, you don't take flack until you are over the target. Alternative media is over the target and getting very close to the truth and that is why they are under attack, I will not watch or read anything from mainstream media. best news comes from alternative media, they are not always right, but we know there is not some big corporation telling them what to report

  6. I have done the math, the US government can keep printing money adding 500 billion to our national debt every year for another 40 years before this ponzi scheme comes crashing down, at which point we will live like in the movie Hunger Games, the top 1% will have keep all their wealth while the rest of us must fight for our daily bread

  7. what's to stop bank from filling bitcoin with fake debt ridden fiat? how does bitcoin tackle that?

  8. Both the dollar and bitcoin is fiat money not backed by anything gold and silver is really money they did a swap right out from under us in 1971

  9. Watch every Andreas video, eat, sleep, repeat:) The best of the best in terms of bringing understand-ability to masses.. I truly appreciate what you do sir.

  10. Thank you Andreas for your great insights. I sincerely hope that you can find the energy and motivation to keep up this important work for all of us. Greetings fromhere in the Netherlands.

  11. They all government jackals are motherfucking liars ana always have been. A 0% trust to every government in every world country. Laught in their fat greedy faces and buy Bitcoin.

  12. Andreas, do you know about "Fofoa's Dilemma"? Looks like Bitcoin is taking a place in the monetary quadrangle over Gold BECAUSE it offers a savings space outside the system. So huge! Gold is still too entrenched in the manipulated fiat system.

  13. His example of demonetization in India is wrong. Currency was not devalued, just 500/1000 was taken out of circulation. We were all forced to deposit all the cash we had in 500/1000 bill to our bank accounts within 2 months. People were forced to use credit card, wire transfer and other digital payment methods until new bills in 500/2000 became available. The currency itself didn't lose any value.

  14. Theyre too fucking big to fail what the fuck dont you understand about that andreas????? hahahhaa fuck the banks. Let them fail. Bitcoin and the other digital commodities will save us. I truly believe that.

  15. I want to know who is downvoting this guy. Seriously, who are you people that still believe in cotton candy money?

  16. Wei Dai’s “bmoney” paper (a precursor to and referenced by the Bitcoin white paper) speaks on a government being “permanently forbidden and permanently unnecessary” when a decentralized crypto currency is introduced and these are exactly the points Andreas gets at with his impression of a government news source in the latter part of this video. A massive institution whos services of “protection” through violence are becoming less and less necessary as power is returned to the individual. Obviously governments should be afraid… but need to concede their obsolescence.

  17. Dec 21, 2017. BTC at a US exchange $16.5k. BTC at an Asian exchange $19.5k. Something is going on. There's some manipulation at work here. Am holding.

  18. Whenever you speak of the countries like Spain I wait for the name of Portugal
    Portugal is a country and not a province of Spain as some think

  19. this is why i am sticking with core developers and not bitcoin cash we are not ready for bigger blocksizes (yet) until the us dollar collapses 100%

  20. Great speech! LOL at 20:10. In Taiwan, the main stream medias said that Bitcoin is manipulated by China and it's dangerous.

  21. Journalistic integrity died. Since its demise, money finances reports to sway public opinion under the guise of news-reporting.

  22. The collapse of confidence in the Indian Rupee does not mean an individual should have confidence in Bitcoin. Bitcoin is traded as a commodity on the Stock Exchange while simultaneously purports to be a constant store of value – which is contradictory nonsense. Gold was monetised for decades at just over $35 per oz. After it was demonetised, it was traded as a commodity and reached $800 per ounce in the early 1980s before collapsing in price. The narrative of the growth of fake news is rational. The collapse of advertising revenue of the newspapers precipitated a collapse of journalistic standards because salaries could no longer be paid. One significant measure to gain confidence in currency is to take away the power of the banks to create money. The You Tube Money Creation and Society video is worth watching

  23. If you watch this when your high your mind will explode and your bank account will instantly become 0 and cop yourself some crypto! HAHAHAHA Me…

  24. I am from India. Thinking about teaching about Cryptocurrency to friends and relatives… You are the motivation. Thanks 🙂

  25. If everyone in a country start using only bitcoin , will it eliminate inflation ? I mean inflation is a local phenomena. Its possible the cost of living in this country will be more expensive in 10 year so you can buy less with your hard earned money. Also globalization and unity does not seem to work perfectly when joining different economize just like happened with the EURO. I mean Germany is doing great but other smaller countries are not doing so well after embracing the EURO. I'm a programmer but did some basic economy courses and we were told that the main bank is using local currency manipulation such as devaluation to support the economy and government . The idea of one coin for all sounds romantic but what will happen to main banks and governments and the people that did not invest it will be chaos.. My guess is governments and banks will make sure bitcoin is never stabilized bringing it up and down so it will never stabilized and therefor will not be considered as reliable coin. Unlike traditional markets you can't tell who is making most of the buying and selling to tell if my guess is real. P.S I been living in Ukraine for the past year and seen first hand the result of a money value dropping by 70%

  26. We should no longer look at the exchange rate of 1 BTC to the dollar.

    We should rather see how much BTC we still get for $ 1!

    This simply illustrates how the dollar price loses confidence!

    I admire Mr. Andreas M. Antonopoulos. Keep it up

  27. A full 3 years later Donald Trump cries bitcoin is fake money on twitter, surely a coincidence

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