Transcript of the above video:

As the title of this video suggests, we are discussing so-called "tokens". While on one level, I could see where someone could level the accusation at me that the title of this video is somewhat hyperbolic, I really don't think so based on the analysis I'm going to get into here. First things first, bear in mind as noted, I do have a legal background. I kind of think of myself maybe to one degree or another as something of an amateur, not Economist, I would never go so far as to say that but I like economics. I especially like the intersection of political economics maybe what some would call technocracy, technocratic methodologies, I find those things interesting. That being said, many of the things I have read over the years on technocracy, economics, public administration, sort of geopolitics, geo-economics, all of those things, a lot of the folks that I have read on these things who I find rather brilliant on one level, especially in the sense of their technical knowledge or maybe sort of tactical approaches to dealing with certain types of problems. At the same time, some of those same people seem to have an overarching philosophy if you will that is very much not in line with my basic philosophy which is one of maximized personal freedoms where possible. I don't say this coming from some kind of for lack of a better term libertarian, although I don't like that term, but it's not one of these philosophies that I view as sort of affirmatively proactive. In short I like being left alone, that is kind of where my default position is. If things are operating in such a way that I am being left to my own devices, and I am not hurting anyone, no one else is hurting me, to my mind however that society is set up, it is working pretty well. Quite honestly, one of the reasons I fell in love with Thailand is because it very much has a "Live and let Live" attitude. I believe that many of the institutions in Thailand, many of the structures societally in Thailand, even the informal ones or intangible ones, are set up in such a way for not only maximal utility but also minimal confrontation and minimal conflict between individuals, and I love that about Thailand, I really, really do. It's very much a society that is very cohesive while at the same time allowing the individual to make their own decisions about how they live their own lives. In short, in my opinion, it's the most structured polity if you will of "Live and let Live" that I have ever found in the world. So when I make videos like this, I make them because I am concerned about the country that I have come to love and again that is why I am making this video. 

So I thought of making this video, I have been thinking of this, I have talked about this on my personal channel. I have talked a lot about so called Central Bank Digital Currencies especially how they are shaping up in sort of an international trade context. And if you are interested in that go over and check out Benjamin Walter Hart, my personal YouTube channel, it is just kind of me. Sometimes the videos, I have been accused of being far too 'stream of consciousness' because quite honestly sometimes I make the videos simply to organize my own thoughts on some of these really complex issues especially in terms of geo-economics. That said, this video specifically is dealing with something I am coming to worry a little bit more and more about as the days are going forward here in Thailand specifically. So I thought of making this video after reading a recent article from the Bangkok Post, that is bangkokpost.com, the article is titled: Handout set to be based on tokens. Which this is sort of, the title itself, again I don't wish to be hyperbolic but I noticed that there was an economist the other day and I am forgetting the names, but there have been some that have actually, there have been some Thai Economists that have come out and said "hey, this notion of handouts, monetary handouts needs to be looked at with extreme caution because it can have substantial impacts, (negatively presumably) for the currency." From the standpoint of just pure monetary policy when you just create a bunch of currency out of thin air without concomitant goods and services created sort of in tandem with that currency, it leads to real problems. For anybody that has any doubts about that, look no further than the West right now which printed tons of money, the US arguably being the primary "culprit" if you will with regard to this, in printing depending on what you read, but orders of magnitude more money than existed in the system prior to let's call it quarter one of 2020, creating orders of magnitude more money without the concomitant creation of goods and services. So again you can't just look at this and say "well it's just money and all of these notions like modern monetary theory", which I have tried to read up on it, it makes no sense to me other than the underlying theory being that “Well, Governments can determine what money is because they have the ability to dictate how taxes are collected or the medium of exchange in which taxes will be collected.” Okay yeah, okay I get that. Governments can say "we will only accept tax payments in this form of currency." Yeah, there's something to that, that yes that creates some inherent value to it but when you use that as a basis for sort of infinite money printing, I lose the plot on how that is an effective strategy. 

Leaving that aside, not to go too deep down this rabbit hole, the only thing I want to get across just in talking about the title alone of the video or of this article, is the notion of handouts and that that should be looked at very, very, very carefully, cautiously. And look, I get it. People are having hard times; I'm not arguing against helping the poor; I am not arguing against charity; I am not arguing against being kind to your neighbour. I have sympathy, a lot, for people that are having a hard time but history has proven inflating and debauching currencies has the opposite long-term impact especially for the middle and lower classes. It does not have a positive impact. In fact long term inflation hits the poor the hardest due to a bunch of different things not least of which is something called the Cantillon Effect which in which results in people at the top of a given system have the first opportunity to spend inflated money and thereby acquire hard assets and thereby mitigate the negative impact of inflation comparative to lower classes, people further down the "hierarchy" of a given society. So basically, in a sense to simplify it, rich people have first dibs on a bunch of newly printed money. They go out and use it to buy up a bunch of hard assets: houses, real estate, gold, anything, companies, factories, stocks, equities, whatever and then as the velocity of that currency continues through the system, there's diminishing returns on that newly created money because again there's been no concomitant, there has been no tandem creation of goods and services. It's just new paper chasing after the same amount or even presumably, or even possibly I should say, fewer goods and services within that economy. So again at the end of the day, I think one could on a very basic level argue that handouts in terms of printing money and then handing it out, actually has a long-term negative effect on especially the poor. Inflation is a really nasty kind of for lack of a better term, "tax", because it takes away purchasing power over time but it does it very subtly to the point where you only see it once it's really hit a critical mass where you are at the end of the spiral if you will and it is very hard to arrest it. So this is why again I say when we are talking about tokens or handouts or whatever, we need to be very, very careful to not just start handing out money willy-nilly especially where we just print it and just hand it out. That has got real problems. 

Secondly, again going back to the title, quoting again: "Handout set to be based on tokens. So "tokens"? What are we talking about here with regard to tokens? I will get into quoting this but as I've discussed in my own personal channel, and I've been looking at it, this notion of tokens itself; the other problem I have with it so, one is a debt issue and I will get into that in further depth, but the other one is this sort of normalization of the notion of these sort of digitally created units that can stand in place of money. And I know talking about money it gets rather deep and in certain senses kind of esoteric in the sense that it involves banking; sometimes I often wonder if those in the banking sector, the financial sector, aren't happy for it to be opaque in its complexity, but long story short, a solid monetary system is based on fundamentally sound principles of exchange, fundamentally sound principles of finance and notions of hard assets and then debt creations that use those hard assets as collateral. With tokens, a lot of that gets attenuated at best. The other problem I have with the notion of tokens is the totalitarian nature of all transactions being tracked, traced and surveilled. That in and of itself is a reason to be concerned about tokens taking the place of standard currency. 

So let's get into this Bangkok Post article, again: Handout set to be based on tokens, that is Bangkok Post, bangkokpost.com, quoting directly: "The new government is expected to issue utility tokens." So first off, what is that? I mean “utility tokens”! I know what currency is, I understand what banknotes are. I did a video on my own personal channel where I talked about this new thing the IMF is trying to roll out called the "Unicoin" where they are calling it Commodity Money. These new terms and I think it was Henry David Thoreau, I think or Ralph Waldo Emerson he said "beware any enterprise that requires new clothes". Well "beware any new financial initiative that requires new words and phrases that you have never heard before". All of this stuff creeps me out. So, quoting again: "The new government is expected to issue utility tokens to support its digital wallet scheme, with the plan requiring the approval of the Bank of Thailand as tokens, (and this is key) are currently prohibited for use as payment by the regulator." So presently these things are not allowed to be used as payment by the Bank of Thailand. And I think we in Thailand as Thais should ask ourselves "why"? There might have been a pretty darn good reason the regulator said "no you can't just willy-nilly use all kinds of tokens or chits or slips of paper or something like this" because it can have a fundamentally, I imagine one of the reasons behind the original restriction was it can have a fundamentally detrimental impact upon the underlying confidence of a currency generally. When people know what a currency is, they know exactly what it is, they know how to use it, you have got a pretty strong currency. Confidence in a currency is key. When you have got all these tokens and things running around out there, and you have got restrictions against it, and now there's this major initiative to sort of upend that whole system, I want to know why. So quoting further: "Asia Plus Securities (ASPS) expects the Phue Thai led government to issue Type 1 utility tokens," (again, I don't know what these words mean - Type 1 utility tokens, what is that?), quoting further: "as digital handouts worth 10,000 Baht each to Thais aged 16 or older. The scheme is estimated to require a budget of 560 billion baht." I read that again: "The scheme is estimated to require a budget of 560 billion baht." First of all, is anybody really out there saying "oh man we really, really need digital utility tokens instead of the system we are already using." I don't see anybody clamouring for that major change and I especially don't see anybody clamouring for that in light of the fact that it is going to cost 560 billion Baht, okay. Quoting further: ASPS, (and this is key too) so quoting again: "ASPS said the government could borrow the money to finance the digital wallet scheme. Based on June 2023 data, Thailand's public debt-to-GDP ratio is 61.2%, and the government can legally borrow until the ratio exceeds 70%?" Well strictly speaking, that is correct. That said, there is a lot more context going on there because look 60% debt-to-GDP ratio is considered by many, pretty much all the Economist I know of, to be a healthy place for a Government to maintain a debt-to-GDP ratio. In fact going over 60% should set off warning signs as it did some time ago, which brings me to another article.

Again from the Bangkok Post, bangkokpost.com, but from a little over a year ago I think. This article is titled: Debt ceiling deemed ample. Quoting directly: "The Government recently raised the ceiling of the public debt-to-GDP ratio to 70% from 60%. This move followed the government issuing two emergency loan decrees over the last two years to allow it to borrow 1.5 trillion Baht to mitigate the impact of the Covid-19 pandemic on the economy." So let's talk about that. "Impact of the Covid-19 pandemic upon the economy"! That impact was from the Government shutting everything down and shutting it down for almost 3 years; so that was the impact. It's not Covid-19, it was the Government saying nobody could operate their businesses. So that's A. Then the Government said "well because of all these problems, we now need to up the debt-to-GDP ratio from a healthy 60%, to a much more concerning 70% and resulting in the ability to spend 1.5 trillion Baht that they weren't able to spend before and were only able to do so under emergency measures when this country was under extreme economic pressure due to all the lockdowns. So let's be clear about the timing of the events of how all this went down, okay? So now they are using this 1.5, or at least a third, some, again according to the original article I quoted, some 560 billion Baht out of this 1.5 trillion, so over a third of that 1.5 trillion now is being proposed to create a digital wallet scheme that would allow tokens that heretofore had been illegal for use as currency in Thailand and would allow for total surveillance, total tracking, as we discussed in another video and as it is discussed in those articles and I urge those watching this video, go check out both of those articles in detail. As they point out in the first one, the so-called utility tokens or whatever you call them, can only be used in a 4 km radius and if folks don't think that long-term there aren't implications for this where if this is fully implemented we could see currency that can only be used within a certain distance from where one lives and people don't think that that is concerning, I find it concerning, but again how this all came about where you put it all together, I really feel like it is, I think manipulation is kind of an understatement when you look at the chain of events here.

Long story short, I mean my big question is do we need, I really question the need to continue going any further above the 60% debt-to-GDP ratio. I think there are serious long-term economic repercussions for doing that. Meanwhile, next question is do we need to use the money we are going into debt for, to create a monetary system that would result in more surveillance of people and utilizing a monetary system that heretofore has been illegal. Again I don't fully know the answers to all of these questions but I know that they are deeply concerning questions and I will try to keep folks updated as best I can on this channel as the situation evolves.