Cryptonomics & the potential for a new “digital gold” standard

Transcript

um hello everyone is this can you hear me oh um so today i'm gonna be talking about crypto economics and the potential for a new digital gold standard um i hope i didn't rug too many of you because i know cryptonomics tends to have a different uh connotation in crypto spaces but this is more of like a conventional economics approach to the origins of money uh a lot of stuff going on in the fed and sort of the the role that crypto could play in mitigating a lot of the damage that the federal reserve is doing a lot of

central banks across the world are also doing just for a little background on myself maybe you've seen me from twitter i'm a phd student in economics at george mason and i hold a master's degree and a bachelor's degree in economics as well i'm block works economic strategist and i work with the quantitative research team at tantra labs prior to block works in tantra i was a consultant for a few large financial institutions that worked on unilateral and bilateral lending to developing countries so a lot of my work was in productivity and growth which is both areas that we've seen a lot of interest in this year due to the covet pandemic

um so i just wanted to start on sort of the origins of money like the economic origins of money and the development of money uh from the barter system to the gold standard to now um so carl menger is an economist who's known for sort of founding what's known as like the rules of money so obviously there's no formal rule set for what money is or what money can be there's no government that has a rule book for how money should look and so when carl menger wrote on the origins of money he talked a lot about coordination and sort of the lack of coordination and how money is actually the result of a social phenomena so he talks about money as an enigma because it's not the government didn't

come in and say oh here's you know a dollar and this is what you're all going to use it was the result of a bunch of uncoordinated individuals coming together and trying to find a solution when barter systems no longer worked and when the industrial revolutions sort of took over everything and people no longer had the means to uh when portability no longer worked for lack of better terms um so the general parameters for money are it's transactional ability it's transportability and it's time constraints in modern era we don't worry too much about transportability because we have plastic money we have dollars we have cryptocurrency we don't we don't have to worry too much

about carrying around gold coins or gold bars uh places where you do see a lot of worry about transportability are places where hyperinflation is rampant i think venezuela where there is uh no strong institutional structure and you have you know a piece of reds 10 000 venezuelan boulevards in terms of its parameters a little bit more in depth you have the saleableness and spatial limits so in terms of saleableness you're talking about transactional ability and what really matters is demand purchasing power supply divisibility the market for it and regulatory constraints where government is supposed to intervene is just in terms of regulatory

constraints so they're not supposed to artificially change demand or purchasing power or supply or divisibility or even enter the market all we should see government do is facilitate regulation so that we can trust that when you go to the grocery store your dollar will work just as well as it would at the mall so essentially by accepting coins or fiat money as legal tender however in the modern era they tend to intervene in all of these categories in terms of the spatial limits or transportability you have division cost development arbitrage and restrictions or regulations affecting trade again the only area in which government

is supposed to intervene is on these restrictions or regulatory uh parameters affecting trade so what we're seeing now a lot especially in terms of the united states and in terms of the fed uh is this issue of time constraints where people are starting to worry oh my dollar is not going to be worth the same tomorrow as it is today because the government is inflating the money supply through the federal reserve need permanence just refers to the fact that we need it we need something to transact with with each other durability isn't too much of a worry anymore now

that we have plastic money and in terms of dollars an actual like currency the government does uh change and update coins and dollars as they wear out cost of storage isn't really a worry what is a worry is the rate of interest or depreciation so the depreciation of the dollar is a direct result of the government intervening in one of the other parameters i just talked about which is the supply and with our time preferences being constrained meaning that we can't really say okay well i want this dollar to have value tomorrow we don't get to set those limits the government intervenes there and sets those for us as well so this is going into a bit of a sound money argument

the physical properties versus the economic properties the key economic property here is scarcity so you want your currency to be scarce in some respects because you want to have value scarcity is what gives things value and if you have an infinite supply of something it's not going to have value so this is a direct comparison between commodity monies and fiat particularly golden fiat because the very common sound money argument is that gold is sound money gold was sound money and that what ended up happening wasn't the result of gold failing during the gold standard era was the result of governments not being able to

constrain their spending and gold just not working as a mechanism or a constraint it was simply a tool for the governments to push off their spending into the next period and i'll talk a bit about a bit more about that later sorry our ability to know that it is money sorry so the whole enigma of money is that it isn't it isn't a product of government or by government it's a product of social interaction so we don't trust in our governments necessarily we trust in each other right so you can trust that you're going

to go to the barber and he's going to cut your hair and that you can give him your money for that and the service he's giving you you're exchanging for your money and you can take that money and you can go to the grocery store and you trust that the farm is going to produce your goods and you trust that the government is going to continue to to uh qualify your currency as a legal tender so that you know that you can use it you don't necessarily trust that your va your government is giving it intrinsic value you trust that the value comes from the from individuals who make up the market and the economy and so again their role should simply be to regulate and facilitate the dispersion of it but that role has changed into the actual manipulation of money

so the gold standard is often used as like the closest sort of relative to what a crypto standard would be and so i'm going to focus a bit on the united states it is the around the anniversary of like the the bretton woods era or the end of the bretton woods era so in 1792 congress first established the mint and in the constitution congress gives an entity the power to create currency just to create and mint coins and to deem them legal or illegal and then they established the first bank of the united states which is terminated and then the second

bank of the united states which is also terminated and so around the beginning of the classical gold standard we were actually on a bimetallic standard and so the what we saw up until world war one was actually a pretty solid gold standard people were able to transact there wasn't too much worry about whether or not like there was no central entity to interject but what happened during world war one was that deficits ran high so because deficits ran high especially abroad germany had to pay back war debts in order to pay off the deficits they gave away all of their reserves so again this issue is that when

an exogenous shock happens something external happens and governments are required to spend money they don't look to raising revenues they don't look to [Music] generating revenues and elsewhere they look to just spending whatever solid currency they have and then creating a new one to inflate the supply there's no real constraint it's a it's a systematic issue not a like a matter of the tools that we have um so yeah jeremy left the goal training after world war one and the beginning of the end of the u.s gold standard began at the onset of the great depression so at the onset of the great depression fdr

was worried about the iran banks so he essentially froze the spending of gold reserves because he didn't want what happened in germany to happen in the united states um so for a few years you could still redeem u.s dollars for gold well for more than a few years from the great depression until 1970 you could still redeem us dollars for gold and then president nixon officially removed the united states off the gold standard in 1971 when he ended convertibility what followed after is known as the nixon shock and that was a period of stagflation and high unemployment that lasted for several decades so another idea that was reflected in

the early days of the gold standard is gresham's law so as i mentioned we were kind of on a bimetallic standard where we had some silver coinage and some gold coinage i think it was at first it was a 15 to 1 ratio and it was a 16 to 1 ratio but the general principle is that bad money drives out good money and so if you have something that's worth less you're going to transact with it and you're going to spend with it because you're going to want to hold or hoard what is worth more right so because gold was worth more than silver people held gold saved gold didn't spend gold and therefore it was driven out of circulation uh so this is an argument that's brought up a lot today uh regarding like the relationship between whether it's you know cryptocurrencies

being put against each other or uh cryptocurrencies versus the dollar and the the general sentiment is that we will continue to use bad money in transactions because we're going to want to hold what is worth more as a hedge so now going into a bit about the federal reserve and finance today uh interesting fun fact the fed was never supposed to be an actual central bank it wasn't supposed to be the central monetary authority wasn't supposed to have as much power as it has today it was originally created in order to inject liquidity because of the run on banks and the in the crisis the panic of 1907.

today its dual mandate has changed a lot so it operates on a dual mandate of price stability and maintaining maximum and full employment what it can do is intervene in commercial and private credit markets lend to private banks and private businesses and directly control the supply of money and the rate of inflation um so there are pros and cons to some like to having a natural rate of inflation the issue with what we're seeing now is

that there's no such thing as a natural rate of inflation because the fed controls everything uh i had somebody ask me an interesting question the other day uh regarding you know raising the interest rate because the the typical tool for combating inflation is for the fed to just raise the interest rate and the person asking well if you know they raise interest rate then banks are incentivized to lend out more right because they're making more money so why wouldn't they want to to lend out more even if you know to some degree consumers can't afford it there still could be a greater level of profit there and there could be a greater level of inflation if uh more lenders chose to to to actually borrow from banks the issue is that the federal reserve

pays on reserves for banks so when they raise the interest rate they also raise the ioer and the iorr and the irb all of the interest rates on reserves for banks the federal reserve directly pays banks to not lend when they raise the interest rate because it's more profitable to pay them on excess reserves so they can also change the the reserve ratio there's a certain amount of uh reserves that banks are required to hold after the great depression and the run-on banks and the fed can alter that a bit and then alter the rate at which they're actually paying interest on those reserves um what we're seeing now is

well what we're seeing in march was more of sort of this like inflation was getting back to normal right we saw a deflationary period from march to may of 2020 because people weren't spending and inflation only incurs occurs when people are circulating the money in the economy and so earlier this year when we were just seeing a return to like sort of the normal uh rate of inflation um it was just it was correlated with economic growth and it was just a sign that things were getting back to normal however now it's it's running a bit rampant and we're seeing things go out of control because the fed is focusing so much on maximum employment and obtaining employment as it was pretty pandemic deflation also has a lot of negatives i

see deflation talked about a lot as this very very positive thing because it is it increases your purchasing power it tends to increase purchasing power but in terms of business cycles and the way that the financial system works today it's typically associated with recessions and depressions and correlated with low growth and productivity and it causes the the real cost of borrowing to increase as interest rates rise both real and nominal interest rates usually rise and decline in prices can also result in lower productivity as producers are no longer incentivized to produce at their maximum the application to us monetary policy

today is interesting because something that a lot of people neglect is that the velocity of money is uh rapidly falling and so the velocity of money is the rate at which people are actually using it to spend transactionally domestically in the united states so what i have up here is fischer's equation of exchange which is mv equals py whereas mainstream economic defines inflation with pi m is the money supply v is the velocity of money p is the price level and y is output growth the amount of revenues it's also denoted as t and q quite often but what we're seeing is that since 2010

there's been a stark drop in the actual transactionality of the us dollar in the united states this could be going into assets this could be going into foreign investments but regardless people are not spending as much money right so when we look at the level of the money supply and how it's increased drastically this year but inflation hasn't matched up with it it's because people aren't actually circulating it through the economy um so a bit more about like velocity um so as i said mv equals py pq pt uh money supply velocity of money price level and real gdp uh both sides of the equation are supposed to equal nominal gdp

the left side is supposed to be what's bought by buyers and the right side is supposed to be what is sold by producers so economics is a little they like to hold things constant to simplify but that's not what happens in the real world right so a lot of times velocity is held constant and real gdp or output is also held constant or stagnant because it only changes by two to three percent per year um so going into that a little bit more here where one over v equals m over p t is the actual uh it's i'm trying to sorry trading space in non-math terms it's the rate of transactionality and the actual

amount of money needed for one transaction whereas if you look at where m equals k p y and k equals 1 over v we're assuming that k and y stay constant which allows us to assume that any increase in the money supply is directly proportional to an increase in the price level which is clearly not what we're seeing today because if we were truly seeing you know low uh real capital in the economy and low productivity we would expect to see this high level of inflation that we're just not really getting and again this is because the uh the money demand curve is not moving

so we're we're shifting over the actual supply of money we're increasing the supply of money but the demand for money isn't changing is actually falling and so tying this into inflation there's two types of inflation there's cost push inflation there's demand pull inflation cost push inflation is the result of aggregate supply shocks so if there was like a fire at a lumber mill that directly reduced the supply of lumber and the price of lumber went up because of that that would be cost push inflation demand pull inflation is what we're seeing now in economies where people are resuming spending and suppliers just don't have enough supply to keep up with it

during covid the beginning days of covid uh that was like masks and hand sanitizer right it wasn't an actual issue with the supply of masks or hand sanitizer the optimal level of those things existed it was that individuals wanted to purchase more and the prices were driven up because of shortages this is everybody's favorite chart it seems the the m2 money stock um with a recession shaded and we can see this drastic increase um so in 2008 during the the great recession the first financial crisis of the 2000s the fed began the purchasing of

real assets and it began holding them on its balance sheet it's pretty new but since the time the fed was created they had open market operations so they could still inject liquidity into the economy but they began real asset purchasing essentially in order to suppress the level of inflation by holding these assets and paying out interest so as you can see the the biggest the biggest jump uh occurred in 2020 uh in the summer but we saw deflation then and that's because people weren't spending people had nowhere to go this is also relatively overlooked i think

the federal deficit has been growing a lot and has essentially the spending like government spending as a proportion of gdp is at its heights rate since the 40s so the government is injecting a lot of fiscal stimulus into the economy because it's focusing so much not on price stability but on maximum employment or what it thinks should be maximum employment right but the fed the government nobody has perfect foresight so we don't actually know we can actually measure in real time whether or not people are wanting to go back to work you can you can survey people but you don't know for sure whether or not

people are actually wanting to go back to work or whether people have found other occupations that maybe don't count as typical employment right so by spending so much and focusing so much on employment we're driving up the deficit in a way that is uh potentially detrimental and could result in economic overheating and in the meantime the fed is inflated and trying to inflate away this debt um so here's what i was talking about a bit this is a cpi and m2 if you look at april of 2020 you can see that they are at opposite ends of each other that's because that's

that that money holding by individuals just not having anywhere to go um typically we see sort of these periods and then a spike in cpi because the the fed isn't increasing the money supply on a regular basis right so it expects around three percent money growth but we're seeing a lot higher than that so what really sorry oh the consumer price index uh so this is for all urban consumers and all items in u.s city average is a measure of prices non-agricultural prices because it's typically the reason why it's just for urban consumers is because

prices tend to be lower in general in less dense areas and that's a skew so um but in general it's just an index of things not not utilities um some foods are excluded uh no electricity but just a general bundle of prices of goods so it shows the changing fluctuation in the price of goods but there is a lot excluded from it rent is excluded from it like i said utilities are excluded from it some really random foods are excluded from it because traditionally they were seasonal so they didn't want any of these like seasonal aspects to affect the cpi but the fed doesn't really

update indicators very often so there's definitely a lot missing from it but it's probably one of the closest measures in addition to pce does that this is percent change per year yeah yeah but it was 15 inflation but this is a this the percent change per year you guys want to talk you need to talk okay so yes inflation i was actually around 20 but this is just its year to year change so because it was already high

the year-to-year change wasn't as drastic if that makes sense so this is what a lot of um economists the federal reserve the united states president joe biden are using as a measure of the health of the economy so employment and unemployment there they are indicators of growth but you can't use one statistic to forecast the actual health and success of the economy in the actual trajectory what they're saying is that uh we've started to exhibit a v shaped recovery and thus we need to bounce back to where we were but this isn't really a v-shaped recovery uh the line is flattening

which is indicative of a real change so the the big debate was whether or not you know we were going to see a nominal change or a real change whether or not nominal income nominal productivity was going to be affected or real income and productivity were going to be affected and now as time goes on it's starting to look increasingly like we are seeing a real change which would mean that the level of employment will actually stay a bit lower until the economy catches back up to its real growth path right so we can't expect for it to jump back up and uh injecting a lot of money into the economy playing a lot of fiscal stimulus it's all just going to result in overheating and increase inflation if we're actually miscalculating where employment should be and we're

continuing to inject money fiscally so as i mentioned here's a little inflation calculation for you it's actually super simple to calculate inflation which is funny because the fed acts like it's very difficult and that they never know but if you know what the money supply is going to be growing at uh you can use this equation of exchange and v equals py uh in order to actually get what you can expect inflation to be in the long run right so the main issue is that the fed isn't going to be open about what it thinks the money supply is going to grow at because it expects panic earlier this year they took away um the the graph and the indicators for m2 the

m2 money supply but they kept m2 sl right so there's a lot of panic because everybody was like oh why'd you take away m2 what'd you do what they did was change the frequency because they didn't want it to be as volatile which is interesting so powell the fed is they're very aware that people are looking very closely at inflation at overheating concerns and they don't want to show as many uh changes in the actual volatility of the money supply so they change from weekly to monthly and they're not going to come out and tell us what they think that the like growth of m is going to be so you can use this calculation based on what you think the growth in the my supply is going to be

and i think by a lot of estimates uh this summer was between three to eight percent is what a lot of economists were forecasting inflation-wise depending on how quickly people were going to go out depending on how quickly the vaccine was distributed uh and now i think we're we're starting to see uh we're inching towards six percent um so just a quick quick summary of the global economics i've talked a lot about the us um in the past we were in a deflationary period right we had a lot of recessions especially in latin america venezuela aside venezuela and it's sky high inflation aside we're seeing inflation now because many countries are doing uh participating in

fiscal programs and the effect of halting travel in latin america really stagnated their economy so this all resulted in huge changes in the debt to gdp ratio across the board so a lot of countries are having this debt to gdp ratio crisis where their level of debt is very very quickly consuming most of gdp if not more than gdp china is actually leading the front on that but this is i think just china's data was updated after this graph was created but the growing problem is that it's it's a pattern right so history doesn't repeat it rhymes but given the

face of external shocks governments will just spend right and some of the spending is necessary in order to to get the economy back on its path there were there was a huge level of unemployment and some people genuinely needed the rent assistance and but it becomes a matter of at what point is it too much and at what point are we not going to uh look at the economy and what we actually need to spend on and when is the economy or when is the government actually going to be constrained so for the potential role of of cryptocurrency is bitcoin digital gold no i don't think any cryptocurrency is digital gold i think they're they're better than that um they're and a lot of this comes from the fact that there's there's a lot

of with gold you have a lot of supply shock issues right so gold isn't fixed uh and in order for a currency to be truly sound you need to have some sort of fixed element right um so in terms of like the volatility in the in the price of gold like as a right because gold had already reached the point where it was transactional so it was already more stable you had issues with supply shocks you had issues with international trade you had a lot of government regulation constraints on it also because it had a dual use it's used in jewelry decor etc so it wasn't truly sound money which brings me to this point uh herbert hoover 1933

was very opposed to fdr's removal of the gold standard and said we have gold because we cannot trust governments which is proven to be very true um but even with gold uh like i said germany you know paid off all of their uh debt in their reserves and uh created their own currency and and inflated that and then we did the same thing paying other debts so it's the issue comes down to a very fundamental issue of institutions the problem isn't a new tool it's not that we need a new tool is that we need a new system no tool is going to constrain government it's just going to become a vehicle of

government procrastination uh of government monopoly right so any sort of mechanism that we try to adopt um regardless of how sound we think it is it can be sound but it can fail right because that's not a failure of gold or it's not a market failure it's a government failure right because government can change things in the long run um so that's where sort of the myth i think that economists talk about in terms of ultrasound money is that there is nothing more than sound money the money is either sound or it's not and having a deflationary mechanism is artificial

so the goal of sound money is for all other intervention to be removed right so you want a currency that operates completely soundly on its own and has no other mechanism by which anything artificial can be introduced i was talking to dan held of cracking the other day and he was describing the uh the economy in the federal reserve as a car right and the car is driving the fed's in the front seat and the fed can't see out the window because it can't predict into the future neither can the government right but the fed can use its imagination to think about what it's seeing in the future because it can look in its rearview mirror right so by doing that by using you know hindsight the fed can sort of predict

what it thinks is going to happen and act ahead of time but what we want in a currency is for it to just react to what's going on in the environment right i think he used the example of think about like an autonomous car it just reacts to the things around it it doesn't actually alter the path of the economy it lets the market freely uh regulate itself and and it is allowed to accurately respond so in terms of like inflation uh interest rates and stuff like that they would be able to adjust on their own um so when i first started putting together this presentation uh my like time horizons for uh adoption

or um even countries accepting it as legal tender was like way out in the future um so it was interesting because in the midst of all this el salvador came out and started accepting bitcoin as a legal tender and so i was a little hesitant to celebrate at first just because it seems very early and my issue again comes down to the the fundamental problem with institutions and distrust in institutions so if we have already crumbling institutions and there's no real incentive for them to change sure they can adopt things that perhaps make things more efficient on the margin and that perhaps help their citizens keep value in currency in other ways

but it doesn't mean that it's going to be efficient or effective or work so well because they still have the ability to inflate away their own currency um and they still have well they're dollar eyes but they still have the the ability to uh to alter their own money supply and to create fiscal policies and to spend there's no real incentive to not spend so i wanted to end with another carl maker quote uh which is one of my favorites still we are confronted by this phenomenon still we have to explain why it is that the economic man is ready to accept a certain kind of commodity even if he does not need it

or if his need of it is already supplied um i think it's a great quote because it really talks about human nature which is a beautiful thing right why would we just accept something it's not because our government tells us it's because we know that there's a need for it and it's because we trust each other and we want to exchange with each other it's because it makes our lives more efficient but when it no longer works it's very natural for humans to look for other systems and now the issue is convincing the greater public that this is no longer working especially after the covid period i think was a time in which a lot of people trusted more in government for some reason and a lot of people trusted less in government for

you know good reason and the fact that this growing fiscal uh debt this growing fiscal deficit and this growing role of the federal reserve is not going to change anytime soon um and it's only going to get worse and there's going to become a point where it's inevitable that something happens with the deficit whether it's a debt default or whether we have to adopt a different sort of control mechanism there's a meme for you all um but uh yeah so thanks so much for coming um block works is hosting a bretton

woods event uh you cannot meet me there because i won't be there actually but you should definitely check it out definitely go we also announced our um but we also announced our another defy event actually um with more details to come for early 2022 um so yeah if there's any questions happy too thank you so uh what about ethereum instead of bitcoin as alternative uh for the

future of money so i think the issue that i've heard a lot and that i sort of buy into i know i like how i'm saying this at an ethereum conference i'm going to get like burnt at the stake after this but is that there there are changes to the monetary policy right and so the beauty of having something that's completely fixed or untouched is that there's no way for anything to be artificial so what i've heard like the common fear against it is that because some things are still up for debate it still allows room for artificial changes and that that is what we're trying to avoid in finding real sound money is inflation more cost of the federal reserve increasing the money supply or

by the increase of loans giving out by commercial banks so it's a bit of both um it's definitely a result of this drastic increase in the money supply but in addition it's coming from the fact that people are now spending in the economy again banks are loaning out a lot of money because the interest rate's super low and people are able to exchange really easily the velocity of money is still falling but relative to what's going on now the reason why we're seeing inflation is because spending is a lot higher than it was at this time last year and what matters with that is whether or not we'll see a change past this fall so for a lot of economists the indicator is going to be once seasonality of like travel slows down in

the fall which is also courtly you know employment will also sort of buffer down a little bit which is why it's slow growth is so concerning right now um a lot of it depends on what happens in the fall and so if things continue in an upward trend in terms of inflation in the fall we'll definitely see fed action and in their minutes they came out and said that they're thinking about tapering asset purchasing as early as a quarter four of this year uh thank you for your talk that's great and my question would be uh or i would start with a question uh whether you even consider bitcoin money would you call it money as it is now like as it is right now no i would say

that it's on its way to being money it could be on its way to being money but right now it's being used as primarily a store of value so like yes it is it embodies it can embody all the characteristics of money it is money but is it money that's being used transactionally i don't know i wouldn't want to use my bitcoin to buy a cup of coffee you wouldn't not right now not as it is and i think a lot of a lot of people in the bitcoin community still see it as this sort of well i mean you know it's been rough times lately but we're still holding on so uh so is it because of the gresham law or like you don't have to yeah okay yeah so the reasoning so when i like when

people who aren't maybe into crypto but are into economics ask me oh like why don't you want to spend it on things then like why don't you want to give it to me to split our uber ride or when i say well gresham's law you know i want to hold on to the currency that i think is more valuable and i'll give you my worthless fiat okay so but if you uh if you want to hold on uh better money you get your salary in crypto or bitcoin dan i've been trying okay uh because i've been trying you know if all my money is in bitcoin which for me it is i have to spend it i have to eat something so yeah no so that's the difference right you are creating the economy you know uh and the circle bitcoin academy i call it the parallel economy but

do i have to give you the microphone yeah sorry sorry uh yeah yeah no i've been trying but you know at block works based on like what he says it seems more like the bitcoin would be the commodity at least now um my question is like it seems that you are very against monetary policies in general but then like we have different economies so i mean how it will work that i mean the economist will lose any power to adjust to like different growth different situations and basically there will be would be a collapse i mean the economies can't function if they can't adjust to this differences yeah so i'm a proponent of like the free banking system

i don't know if you're familiar um so it's actually a system in which there's no central bank uh it's like a you know this is like a collection of banks who have a free floating interest rate and can actually have their own currencies that's something that was pretty successful in scotland um so it's not like the complete lack of any sort of system it's the lack of a central system like adjust the money supply the trade all of these things don't adjust the money supply then the economist can't grow well the idea is that like growth shouldn't come

from liquidity growth shouldn't come from increasing the monetary supply right but the economist they have like a different piece they have space they have different situations right and it would require the revolutionization of like all of these pieces together in all of these economies together it wouldn't work obviously on like us like a small scale like this requires like great institutional change from the ground up well yeah i mean we are the globalization i guess you can say it's a globalized argument [Applause]

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