Interview with Jeff Booth, Author of The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future.
Posted On March 4, 2021
Jeff Booth is a visionary leader who has lived at the forefront of technology change for 20 years. He led BuildDirect, a technology company that aimed to simplify the building industry, for nearly two decades through the dot-com meltdown, the 2008 financial crisis, and many waves of technological disruption. Jeff has been featured in Forbes, TechCrunch, Inc.com, The Globe and Mail, BNN, Fast Company, Entrepreneur, Bloomberg, TIME, and The Wall Street Journal. In 2015, he was named BC Technology Industry Association’s (BCTIA) Person of the Year, and in 2016 Goldman Sachs named him among its 100 Most Intriguing Entrepreneurs.
In his downtime, Jeff can be found at the lake playing his guitar around a campfire with his family and friends, enjoying watersports or skiing at local Vancouver mountains. He is also dedicated to learning and reads about 50 books a year. I reached out to Jeff via email. After exchanging a couple of emails, we were able to do a phone interview on March 2, 2021 (Tuesday @1500). The duration of this interview was about half an hour.
Bitcoin Has Won (BHW): Hi Jeff, you don’t need much introduction so let’s jump straight to your book – The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future. I read a lot of books but this is one of the best books I have ever read. It was so good. You have mentioned in your previous interviews that you didn’t want to write this book, you don’t need the book sale, you just had to write it. Why did you feel you had to write this book?
Jeff Booth (JB): For my kids probably is the best answer. I couldn’t believe that people were not able to put the pieces of the puzzle together and couldn’t connect the dots. And I worry about those worlds that my kids would grow up and what that would look like. I would say that actually was the main driver of writing the book.
BHW: Got it. Let’s start with the basics. To the average person or especially I know so many people around my age 25-35, you know millennials, they get confused between inflation and deflation. What is inflation and what is deflation?
JB: In simple terms, inflation is when the value of your money goes down. Your money is losing value. And what that does is goods and services cost more in that money. That would be inflation.
The exact opposite side of that coin is deflation. Your currency is worth more because goods and services are going down in price relative to your currency.
BHW: Understood. Most people assume inflation is a good thing and deflation is a bad thing. How do you respond to that?
JB: We have been taught that. And, things that are generationally believable, we grew up in a system that inflation is a good thing. We don’t typically question why. So, how I answer it is, explain to me why Inflation is a good thing? Why is your money worth less each year? And, when I ask the question that way, the argument falls down and they look deeper. Inflation is good for some things. If you have debt, inflation is good because you pay back the debt with cheaper dollars tomorrow. Inflation is good for some assets, it’s good for housing because you borrow for a house today and the house goes up in value with inflationary and you pay back the debt with cheaper dollars tomorrow. So, it’s good for some things, but the opposite side of that coin is it’s really bad for other things.
If you have cash, that cash gets devalued. If you are working for wages, those wages are going down relative to everything else. Inflation is good for some things, bad for other things. But, we have grown up in a world where we generationally believe that inflation is good and we don’t even question why.
BHW: In your book, you use the example of folding a piece of paper 50 times in relation to the speed of technology that’s taking place right now. Can you double click on this idea?
JB: Sure. The bigger idea here is we have two systems that are fighting against each other today. One system that requires deflation. In other words, technology is driving prices lower and lower and lower and removing labor. You can see that in your phone and you can see that in TVs’ cost coming down lower every year. But technology has not been only those things, it’s becoming a base layer of our lives. It’s in everything. That’s one system. It should cause deflation and as it causes deflation, it should allow us to get more abundant out of life or need work less because that’s the point of technology anyways. That’s what it should allow us.
It’s not allowing that to happen because of the other system. We live in a world that requires inflation or central banks require inflation. Those are colliding against each other and it’s pushing asset prices way higher. Well, prices should be coming down. So, the divide, especially your generation is getting killed by this despite it causing the divide of the world. That’s why the political system seems broken, inequality and it’s part of climate change as well. It’s a huge part of a whole bunch of things people don’t talk about. It’s actually a result of essentially this fight between these two systems.
The paper fold example that I use in the book is if I fold a piece of paper 50 times, that piece of paper will reach to the sun. Most people when they guess the answer, they get it totally wrong. And, I’ve asked the question tens of thousands of times to audiences. Most people guess on 50 folds, the piece of paper will be about two inches thick. And, what that says is humans misunderstand exponential patterns. Look what’s happening with COVID-19 right now, it shows why people misjudge how fast it’s moving. It’s just an exponential pattern. Exponential patterns are really hard for human minds to understand. Technology is moving exponentially. It’s backed by Moore’s law. We are on fold 33 going to fold 34 and what that means is we can’t even comprehend how fast technology is moving. And so if you or your readers didn’t actually understand what I just said what it means, neither will central bankers, neither will our government institutions. They will think we live in a different world and they will keep on driving essentially what they are driving currently looking backwards instead of forward. Most of the deflation or most of the technological led deflation is in front of us, not behind us.
BHW: Got it. I was reading one of your articles on The Globe and Mail where you mention – “We need a new set of rules. Policy response is required and justified. People are hurting”. You are involved with Canada’s policy response team. What do you think are some of the potential solutions to our current system?
JB: Unfortunately, the current system is going to break. I suspect it’s going to break pretty violently because I haven’t seen any policy response that gives me any sort of belief that the existing system will change themselves. And maybe that’s warranted because if you actually looked at the existing systems, there’s nothing backing it. It’s just debt. The notion that we require inflation is built on a lie. That lie is a pile of debt and because deflation makes the debt more expensive, it can’t be paid back.
Governments are trying to outrun that debt with more inflation. If you pull on that thread, the more and more printing they are doing to try to drive inflation is causing more and more of the second order effects and consequences to society of that printing. And that system, unfortunately, it’s going to spectacularly fail. Today, I believe Bitcoin provides the best path for a more orderly transition. But the transition is going to be messy.
BHW: Great, let’s talk Bitcoin. When did you first hear about Bitcoin? What is your Bitcoin story?
JB: I have been in technology for most of my life. When Bitcoin came out, I was interested in it. A bunch of my developers and different team members were interested in it early on. Maybe not on the white paper, but shortly thereafter. I didn’t look deep enough at that time. It was interesting but I had businesses to run. I probably started getting really interested and looking deeper at it around 2016, 2017. And then as I wrote the book in 2018, 2019 and published the book in 2020, I really came to a higher conviction that this could be a forcing function for good.
BHW: Do you mind sharing with us where you buy your Bitcoin and how do you store it?
JB: In Canada, I use Shakepay for smaller amounts. For larger amounts, I useSatstreet which is an over-the-counter dealer with lower fees. I use a cold wallet to store my Bitcoin. I use Trezor.
BHW: I use Shakepay and Trezor too.
BHW: I was in Clubhouse this past Sunday listening to Cafe Bitcoin. Lex Fridman was in the room and he asked about which books, podcasts, blogs should he consume to understand more about Bitcoin. Bitcoin Tina mentioned your blog post“The Greatest Game”. It was one of the recommendations. I know the blog post is quite long but can you give us a quick summary about the blog post?
JB: Sure. If you think about how technology or a new innovation comes to market, a new innovation comes to market typically by going after a very small part of the market instead of the big credit market. If you look at when Bitcoin started and where it is now, you could equate that to a better store of value than gold in a relatively small part of the overall market that goes unnoticed by a lot of people. And what has happened is Bitcoin has emerged as a network effect and is a better store of value than gold. If it goes unnoticed for long enough, then the coin could become currency on layer two of the monetary network and everything else. I use lots of examples of how technology comes to life through business. And then what the existing system does is try to block that technology or to counteract that. In this case, I use the example of by stopping creative destruction where the free market at the economic level, the government potentially moved creative destruction to the currency level.
Bitcoin is challenging currency regimes and monetary policy globally. I think it’s inevitable today. The currencies will be eventually tied to Bitcoin. I think that’s inevitable.
BHW: I have to admit I have not read the article yet but I have bookmarked it so I will read it asap. In the same clubhouse conversation, they were talking about Nassem Taleb Do you want to talk about why Taleb recently blocked you on Twitter? I am actually a huge fan of his work, especially his book – The Black Swan. I am long Bitcoin. You are long Bitcoin. I think Taleb was also long Bitcoin. Why do you think he has changed his view on Bitcoin?
JB: I am not sure why he would change his view on Bitcoin. He blocked me because he posted something about short term Bitcoin price or something, I can’t remember. And, I said something about his recency bias and he blocked me. We all have biases and we reinforced the biases. Naseem Taleb should know this better than anybody because a lot of what he writes about is that.
He came out and he put up a post and screamed about his recency bias so I just called it out. Oh sorry, that was the post. The post was that the Internet, everyone knew in 95, 96, that the Internet was a really big deal. Everyone didn’t know and I can tell you because I was building an internet company at that time and not everybody knew. So, I posted a quote by Paul Krugman that said “The Internet will have no greater impact on the economy than the fax machine.” And I said I am just illuminating your recency bias. That’s why he blocked me.
BHW: Got it. We are almost done here. I am being mindful of your time. Let me ask you this, a hypothetical question but I am curious to hear your thoughts. Let’s say we reach Hyperbitcoinization in ten years. Bitcoin is the world’s reserve currency. Use of Bitcoin and the price of Bitcoin has skyrocketed. What would that world look like to you?
JB: A lot of people do this thought experiment. It is not the price of Bitcoin though, it is the relative to how everything will be priced in Bitcoin. There are not a lot of people talking about it. Again, the price of everything will collapse. The point of technology is to lower the price. As the prices keep coming down, you don’t need to work as many hours to be able to get the things you want. That should be a natural consequence of technology. Instead, that’s being prevented. You should read my article,“The Greatest Game” article, it applies to a whole bunch of things that we believe even now should be priced really high.
I will give you an example. Education is already failing. We just live in a construct where we think it still costs a lot of money because why did we go to this school for that many years? That’s because we think we will get a higher paying job on the backend. You can get all the information right now with an internet connection and you can learn more faster. The construct that education that supports our jobs and supports our industries and everything else costs a lot of money. When I went to school, you did actually get paid more for going to Harvard or something like that. That’s changing right now. But nobody realizes that this is changing because technology is moving so quickly.
I have hired thousands of people. I know I would hire the curious, self-driven learner every single time. Because they will always learn like that. So, what you are seeing is if you think about all the jobs in education, there is one of the high cost industries but people can feel like they can’t get into those schools to be able to get jobs on the other side. The entire thing is about to change.
BHW: Before we wrap up, I know you are an avid reader. You read about 50 books a year. You make me look bad. I read maybe 15-20 books a year. This is a Tim Ferriss question but I will use it. What are one to three books that have greatly influenced your life?