"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.