How Capital Misallocation Warps Money with Steven Lubka - WBD574

Steven Lubka is Managing Director of Private Client Services at
Swan Bitcoin. In this interview, we discuss how the misallocation
of money by central banks distorts money, destroys capital, and
creates zombie companies. Steven calls for money to be left to
find its natural state within a free market.


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Society has become accustomed to the intervention of central
banks in the economy. The underlying narrative is that central
banks have the power to direct the economy through the
manipulation of money. A principle level is through the control
of interest rates: artificial adjustments to the cost of
borrowing money aimed at promoting or tempering growth.


You don’t have to be an economics expert though to know that
central banks' interventions seem to have become excessive. We
have had a decade of near-zero interest rates. In addition to
this, central banks have heavily lent on money printing to
maintain economic stability: one-fifth of all US dollars were
printed in 2020 alone.


These significant adjustments to the money supply set in train
damaging second-order impacts. Given rising debt levels and
recessionary forces, governments are seeking ways to stimulate
growth. However, the economy has not been allowed to function
normally for an extended period. We may therefore be in a
position where significant businesses aren’t able to operate with
a more natural cost of money.


Many businesses have developed in a period where the cost of
money has been artificially low. This has created zombie
companies, which need support to survive. This leads to a
cascading series of issues: such companies divert resources from
more efficient enterprises, but they are destined to fail, which
destroys capital. It effectively hollows out parts of the
economy.


The misallocation of capital is therefore counterproductive:
short-term stability is a mirage that hides long-term systemic
vulnerability. Steven Lubka’s thesis is that Bitcoin is the
answer. It is a real tangible asset with a fixed monetary policy
that enables price to be reflective of reality. The result is a
market that can make rational decisions, build robust companies,
and allow order to emerge In short, Bitcoin fixes the money.