TFTC: A Bitcoin Podcast - #211: Dr. Saifedean Ammous

Episode Date: November 29, 2020

Join Marty as he sits down with Dr. Saifedean Ammous, Author of The Bitcoin Standard, The Fiat Standard and Principles of Economics, to discuss: - The Fiat Standard - Principles of Economics - The University system - "The Science" - Lockdown hysteria - Unexpected externalities from lockdowns - much more Follow Saif on Twitter Checkout Saifedean.com and pre-order The Fiat Standard & Principles of Economics Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse when you download the app.

The Fiat Standard and Principles of Economics extrapolation on the bitcoin standard but this time focusing on the ills of the fiat standard how it came to be and comparing it and its functions its stakeholders to the stakeholders in the bitcoin network whether it be miners full nodes devs users i think it's a very genius way to to compare the fiat standard to bitcoin i think you guys are really going to like this This episode was brought to you by our good friends at the motherfucking Cash App. Cash App. Cash App is how we send sats, receive sats, sell sats, if you so please.

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Woo! owls lacrosse hope you guys enjoy this episode and enjoy your day you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin.

If you're not paying attention, you probably should be. What is up, freaks? Welcome back to Tales from the Crypt. It's your boy Marty here. day before thanksgiving last interview before before a long weekend here very excited for this uh considering the content that's going to be covered and the books that will come after this interview is released uh in discussion of these books i'd like to reintroduce you freaks to dr safe adina miss safe welcome back to the podcast thank you for having me marty it's a pleasure to be here it's a pleasure to have you here big week for you relaunched uh your site revamped looking new uh you've got a couple books on the way in the fiat standard and principles of economics and

i'm excited to get both i've already pre-ordered uh your economics textbook looking forward to getting that but uh have had access to the first chapter of the fiat standard and especially excited for that as well i think it's very uh important that this type of information gets out to the masses at this particular point in time considering everything that's happened in 2020 so um let's jump into it uh how have things been uh what are you looking to get out of the launch of the new site and let's jump into the fiat standard a little bit all right so things have been good i've been pretty busy building this website was a lot of work um you know i had the first website that i built last year was when i uh was kind of still

trying things out and just focusing on trying teaching online so the website was a little bit of a um you know a first iteration it wasn't all that elaborate but now we've built up a whole learning platform which is much more interactive and there's a forum and everything so uh it took a lot of time and effort to build this up um but i'm glad that it's finally over now and it's up and running um and the books have been a project that i've been working on for past two years roughly i taught a course based on uh principles two courses based on principles of economics which you can get if you sign up for uh membership in my new website now you can get access to all of these and i've also signed up for um i've also um i've been working on the fiat standard for

about a couple of years which is on the uh which is now really coming together it's a little bit strange to be working on two books but you know um inspiration is a fickle bitch um you can't time her and you have to obey her um so these two were how i've been uh uh working on this and um they just came they matured around the same time so i expect them to both be finished around uh next uh summer roughly yeah imagining it's a good pairing right the principle of economics is a good way to understand the first principles of how to avoid the woes of the fiat standard. Yeah, pretty much. And this is why really the two books came together. If I'm being honest, I wanted to teach a class in economics. I wanted to teach the two courses

of economics so that I could review my knowledge of economics and get a clearer idea about how I think about all of these issues before writing a textbook on economics and before writing the fiat standard which is an exploration of the fiat monetary system so that's been that that's really helped writing the fiat standard was helped a lot by rehashing my knowledge on economics and generally the best way to understand something is to explain it so writing that book was the test of me just making sure that i have my hands around this thing properly yes so i guess with the fiat standard specifically i think it's very interesting because you started out with um i hope i'm not spoiling too much here but a quote or just the

decree from the bank of england about 100 years ago that probably nobody paid attention to at the time but uh started the the transition to a fiat standard basically allowing the government to exchange notes with the postal service instead of gold and now fast forward 100 years later based on everything that's happened since then particularly in 1971 completely going off the gold standard having a pure fiat standard for the last 50 years you feel like now there's enough time that has elapsed to do a retrospective and really dissect the effects of this transition yeah and it's something you know you academics and economics don't really like to talk about this um it's just something that happened and it's it's not mentioned and so um there isn't really

any kind of systematic examination of the question of how did this monetary system uh upgrade work out you know it's been a hundred years it's long enough to pass judgment like if you're if your system has failed in the first 100 years you can't ask for another 100 for it to improve it's 100 years is long enough to be able to pass judgment on it and i think you know the parallels when i started thinking about fiat in terms of bitcoin i started i structured almost everything in the book and i think this is almost like an an easter egg hunt that the reader will go through and seeing the parallels between the bitcoin standard and the fiat standard and the parallels between Bitcoin and fiat in that the things that were the characteristics of Bitcoin that

help us understand how Bitcoin works, apply them to fiat and you actually get a very good insight about how fiat works. And I explained that in the introduction because, well, Bitcoin is a free market monetary system. And so if it works on the free market, that means it works. That means that it can succeed in performing the functions of a monetary system. It has all the basic properties. So with that, we can get a good idea about what these properties are. And then we can look at an earlier, more primitive monetary system like fiat and then examine it by analogy.

And so the whole book is almost an analogy to Bitcoin. you know mining thinking about bitcoin mining in terms of fiat how does mining in fiat work how does new fiat get issued it get issue gets issued through lending so once you think about it that way it opens up an enormous amount of analytical power that you can apply to this question where you see hang on a second mining fiat is lending that makes sense that's why everybody's trying to always borrow because that creates new fiat just like there's a big reward to mining in bitcoin there's a big reward to mining in gold issuing a loan in fiat is an example of that and so i took this as i was studying fiat in this way i took this almost

to absurd lengths even with the beginning you know the first paragraph in the bitcoin standard is satoshi's email to the cryptography mailing list where he says i've been working on a peer peer network before and so on the famous email and i i went you know the first paragraph in the introduction of the fiat standard is what in my mind is the equivalent of that letter when the treasury and the bank of england told i made an announcement telling everybody in england that let me read it in view of the importance of strengthening the gold reserves of the country for exchange purposes the treasury have instructed the post office and all public departments charged with the duty of making cash payments to use notes instead of gold coins whenever possible

the public generally are earnestly requested in the national interest to cooperate with the treasury in this policy by one paying in gold to the post office and to the banks two asking for payment of checks in notes rather than in gold and three using notes rather than gold for payment of wages and cash disbursements generally that's i think you know that's basically the email letting us know of hey there's a white paper coming and there's a new uh monetary system that's going to be installed you know we're somehow everybody for all of human history had been using gold and silver as money and now somehow you know somehow because it's a wars for some reason we need to use paper it's not entirely clear how that helps it's not entirely

clear why uh this is the case and it's not entirely clear operationally how this is going to actually be made to work so this was you know the announcement there was there was no white paper um nobody ever designed this this thing this is this was like a bastard child of government's rape of the gold standard that nobody really designed it they made it up as they went along and i think you know the the full implementation in the case of bitcoin it came a few months after that email but in the case of fiat it really wasn't 1971 so almost 50 years later that this system actually got implemented that we we had the working we had a working system for people trading things without gold 1971 was really when it first came into place so it was really 50 years

of trying to install this software you know downloading core in fiat took about 50 years from this announcement until 1971 55 years 56 years because 1915 i think it was yeah 1915 to 1971. so 56 years to download core fiat and uh 50 years now since we've had fiat running so i think yeah it's time to pass judgment on it right i mean in that 50 years between the bank of england decree or announcement whatever you want to call it and the in 1971 at 56 years you mentioned it in the introduction to many world world wars a lot of blood spilled just to get this not just to but the product of of these wars is the fiat system and i guess you dive into it in the book too like how adverse of an effect has a transition to a fiat standard had on society over the last

hundred years in your opinion i think it's pretty drastic and i try and look at it systematically in uh using two main frameworks the first one is that um fiat is uh well you know what before we get into the bad side, let's do the good side. Because one thing that I have to admit, you know, and Bitcoiners may not like this, but I think you got to admit that fiat does have some operational advantages over gold. It sucks in many ways and has a lot of problems. And we're going to talk about the problems. But I think before we identify the problems, we need to talk about the good side of fiat or, you know, what fiat fixes. And fiat does fix a real problem, which is um gold's saleability across space so if you remember in the bitcoin standard uh the main

analytical lens i used to look at all monetary systems was hardness or the supply growth or stock to flow and so i argue that gold is money because it has the highest stock to flow so it's the thing that is the hardest to inflate and that's what made it become the money that killed all the other monies and uh with national government money you'll also see that that it's the stock to flow and of course then bitcoin is important and interesting because it also has a very high stock to flow and it's overtaking gold currently in the fiat standard the analytical framework that helps us understand the rise of fiat in my mind is saleability across space rather than saleability across time in other words saleability across time is a measure of how much

your money will lose value if you send it into the future so with every year it'll lose maybe three or four or five percent in terms of real purchasing power um that will arguably be measured or captured in the long run by the stock to flow saleability across space refers to how much it will lose value as you move it from one place to the other so if you're going to be moving money 1 000 kilometers from one country to the other how much value are you going to be losing with gold if you wanted to actually move physical gold and maintain you know the scarcity of gold and the fact that it is a monetary asset that is free of encumbrance, of debt, of credit obligations,

if you wanted to move the actual physical gold, it's extremely expensive to move it around. Moving things around today is, in general, very expensive. And so moving physical gold around would have been expensive. On the other hand, fiat fixes this because it has very high salability across space, so you can move it around very quickly because it's essentially fiat.

It's a command. With the invention of the telegraph, fiat could basically travel at the speed of sound at the or was it telegraph working speed of sound or light not sure it's pretty fast anyway um in any case it's seven huh he said i would imagine sound i'd imagine so yeah so in any case much faster than gold um so fiat does have that advantage and so i think obviously the government's benefit from it banks benefit from it it does have these advantages as well which is what helps them continue to agitate for it and to continue to make sure that it continues to operate but you know ultimately the the thing that keeps the thing

running is the fact that you just can't set up a gold clearance system to compete with it because clearing gold is extremely expensive and complicated and risky and essentially non-viable without government legitimacy and government letting it take place. So that's what fiat fixes. So effectively, in order to gain saleability across space, we compromise saleability across time because now the supply of fiat is essentially fiat. It's the order of the sovereign,

and the order can be increased every minute. The way to think about it, the way that I like to think of it is imagine that fiat's blocks are, you know, fiat had blocks where they cleared every 10 minutes or every minute or every second at any block time the central bank can essentially create new tokens and bring them in to meet anybody's obligations so they can do this by borrowing from future obligations or they can just you know make uh make tokens for payment today so somebody needs to make a payment the central bank can step in and make the payment on their behalf and you know they won't need to take

tokens from anybody else it's just the magic of fiat there's no proof of work there's no there's no pierre rochard there who can run their numbers and verify the supply for them and so the central bank can just do whatever it is it's it's it's just another shit coin like ethereum in that regard um so in this regard the supply so the two causal mechanisms i think that really screwed over the world on fiat are number one the fact that the supply can be increased arbitrarily and that in practice, whatever the propaganda that fiat enthusiasts like to use, the reality is we have 100 years of data from all over the world. We've got a very good idea about what the supply of fiat does on a fiat standard. In the Bitcoin standard, I ran the

numbers from 1960 until 2015, and the average fiat currency increased at a rate of 32% per year for that period obviously that includes a lot of examples of hyperinflation where the supply was increasing very quickly so yeah so this is this is roughly how fast it increases so when you're doing that you know over a century that is going to be drastically different from a society that runs on a hard money where the money increases like gold for instance where the supply increases by one or two percent per year rather than the 30 average that the world has had to deal with over the past 50 years so if you think of it this way you know the occasion of that the fact that money supply increases um it decreases the ability of people

to save for the future and therefore it reduces the certainty of the future and increases uncertainty about the future and that in my mind leads to the rise in time preference and that's one causal mechanism to see it and then the other one is the other causal mechanism of fiat is the fact that it allows government to distort any market by intervening through basically allocating their fiat tokens to anybody in that market for whatever reason and i think the amount of government distortion in the economy is something that is purely a product of government's ability to make their fiat tokens without any proof of work and so in the second part of the book fiat life i examine several fields of life that have been in my mind disfigured by fiat by the influence

by these two influences of a high time preference because you don't have that reliable store of value that you can buy your future with you know you can't just um like under the gold standard people would collect small amounts of gold small gold coins from their childhood until they grow up and they're adults and they can use it to buy a house you can you know from small little coins they'll accumulate value over time you stack little gold coins stacking grams or whatever they used to call it and eventually they could add up because it appreciated just slightly every year that's gone today people don't think about the future as much because you can't save and in order to really try and maintain your purchasing power into the future you need to invest and

that's almost a full-time job that basically precludes you from doing anything else almost if you wanted to do it properly so that really reduces the ability of people to save and raises the time preference yeah it's like you mentioned it permeates all points of life and the one i like to think of most commonly because i just think it's too obvious not to point out is the the effect of the fiat standard on the university system both from the price of a college education and its quality, which is why I'm very happy to see you actually getting out and creating educational content around economics specifically that's separate of the university system that I was subjected to, unable to. I'd read Robert Mishkin's book, which was really nothing

comparable to the type of first principles economics that's described via the Austrian in school so um i think we could dive into that like how the fiat standard corrupted the university system specifically and um i think there's an argument not even the university system permeates throughout the whole schooling system from kindergarten through college uh it seems that we're breeding uh dumber individuals that are more susceptible to to shutting down the global economy because of the standard yeah absolutely i think that's uh there's definitely something there i think the corona hysteria of 2020 is definitely the crowning achievement of public education and public universities i think i have to say it occurred to me a couple days ago and i've been

meaning to tweet it um maybe i should even write a blog post about it or maybe a paper but it's generally on my twitter i've generally been shitting on people who watch tv and read newspapers as being the people behind the most hysterical reactions to corona hysteria. But I think, to be fair, I really don't think it is so much TV and newspapers. These are easy targets. And yes, of course, they repeat that stuff. But I think this one is a higher level of idiot that we're dealing with here. It's a much more accomplished kind of idiot. It's a university specific idiot. I think the level of education that is required for people to fall into all of the idiotic pseudoscience that is entailed in this hysteria

is beyond just newspapers and TV. It's a lot of university education. So you'll notice that the most hysterical people, I think you'll find a very, I would bet you'll find a very strong correlation between how hysterical people were in 2020 and how highly educated they are. I would imagine it's an enormously strong correlation.

I think in general, with the issue of education, and you see this over and over with fiat, is that because there is this infinite checkbook standing behind it, because you have the ghost of Neil Kashkari with his bulging eyes telling you we have infinite cash, infinite cash, that kind of specter haunting any kind of institution is going to have profound impacts on how the institution is run. Like, if you tell anybody, I got infinite cash for you, the most predictable being, you know, they're going to spend a lot of cash.

They're going to find a lot of great reasons for why you need to spend more of that infinite cash on them. And so if you look at what fiat education has done in the 20th century, whether it's in schooling level or university level, So it's turned the process of education or the process of schooling, I should say, it's turned the institution of schooling into the goal. You know, it's not so much about the children learning. It's about us delivering this process of education because that process of education has infinite cash behind it. And it has infinite cash behind it because, you know, people can very easily be emotionally manipulated about education and these issues. So we always, you know, we always need to give the children a better schooling. We always need to give children better school so we can always get people to vote for better schooling.

So practically, we have infinite cash for schooling. And therefore, that means that schooling just becomes this industry that is really optimized for getting funding, getting more funding. How do we get more funding? It is not optimized for satisfying the customer because the actual customer is not the student and it's not even the student's parents. It's the government that provides the infinite cash. That's ultimately, I think, the main driver of how to think about what is going on with education. That instead of children's parents paying and children's parents being able to judge, what the 20th century has done is given a lot more power to the government that pays for an enormous number of the students and sets the curricula and finances the professors and finances the research at the universities. so it's entirely focused on the institutional aspect of it you know it's it's it's infinite

cash for the institution of education and unsurprisingly that leads to the institution of education finding ever more expensive ways of delivering education while the quality of the education declines on the other hand on the free market and we're seeing now the internet is routing around this in an excellent way you know now because of corona hysteria all these universities are teaching their students on zoom and so you have people paying something like sixty thousand dollars a year to sit at home in their basement in their pajama watching a zoom call and you think about just how much waste is involved if you can deliver that education with a zoom call you know how much money the professor is getting paid on the one hand and how much money the students are

paying on the other hand and then think about just how much waste is going in in the middle and how much more efficient you could make this. And in my previous appearance on your show, we spoke about this and we spoke about why is it that we don't see Steve Jobs in education? Because universities have no use for Steve Jobs. A Steve Jobs that improves their product by 100x is essentially useless.

Well, not useless, but it's nowhere near as valuable as somebody who can write a good research grant. Yeah, it's counterproductive to get those funds flowing, right? Yeah, I mean, it wouldn't hurt to be able to deliver a good education, but it doesn't matter next to being able to write a good research grant. So playing politics and being able to write the correct research grants is a much more profitable strategy for universities. And that's why they're so political institutions.

They're just completely gone in this game of politics because that's where their money comes from. So now think about the implication of that on the quality of education, but also on the quality of research. Research is motivated by being able to tap into government's infinite cash. And so, you know, one hypothesis I want to propose in this book is that this funding mechanism is highly incentivizing for hysterical panic, basically. because think about it if i were to write research about anything in the world um and my research is going to conclude that well you know well here let's say let's write about um the mississippi river basin so you go you do research and you collect some very useful information you put it in the book and a few people who are working in that field will read it and they will benefit from it that's one way of doing research but then if you go and you say well you know the

mississippi is going to flood or climate change is causing the mississippi to turn purple or you come up with some story where the world is going to end and things are going to be terrible if you do that the most important occasion of your research is we need to look into this more we need more research into this and who better to look into this than me the man who uncovered the great danger of the purple flooding river or whatever it is and so you know naturally the process selects for funding toward panic for funding for panic so you start off with 100 honest scientists in 1970 and the one whose conclusions are more uh uh panicky in their nature is more likely to get funding into the future so i'm even assuming you know there's

absolutely no uh ill intention on the part of anybody to lie or anything just simply the one whose findings are more likely to be concerning and dangerous is more likely to get funding. So over time, over 50 years, you're going to see that that kind of mechanism is just going to lead to more and more reward for panicking and being hysterical. So that's one aspect of it. And then another aspect is that basically, you can't do wrong. So on the one hand, you have an incentive to panic on the other hand you have absolutely no disincentive to be wrong there is no type 2 error basically you can't be wrong about a threat that was not there and bear any consequences for it so if you tell the world well you know the mississippi is going to flood

and it's going to kill 50 million americans and it's going to destroy the homes of 50 million americans this weekend and then it doesn't happen nobody is going to ask you why didn't it happen you know why are you being a chicken little why do you do this there's no accountability you face absolutely no consequences toward being wrong because there's no market out there paying you it's just bureaucrats who don't care they're not paying you out of their own pocket they're paying you out of taxpayer well not even taxpayer money they're paying you out of thin air fiat tokens and um you know their incentive is to just keep the jig going their incentive is to find more scientists to finance that's you know everybody who's involved in government has an incentive to

spend more because that gives them more power more ability to spend so on the one hand you have a motivation for people to panic on the other hand you have no mechanism for correcting them so no matter how wrong you are you bear no consequences and you have an incentive to publish so i think if you add all these three institutional motivations where your entire job depends on getting published getting published is more likely if you panic getting funding is more likely if you panic and uh you face no consequences for being wrong would you be surprised if you found that an enormous amount of bullshit research comes out of academia when you add all these three factors together no not one bit we've seen that play out time and time again this year who was

the guy uh from london uh oh yeah neil ferguson yes guy was boinking somebody uh during quarantine yep he still gets on the bbc and they still interview him and he still gives his opinions about um needing to make another lockdown a quick summary this guy uh at imperial college wrote this uh fantastic model of what would happen if the coronavirus was allowed to spread and there were three scenarios or two scenarios well three do nothing

and if we do nothing you know then I think it was three million dead people in the US and half a million in Britain or something like that

and it would be just tens of millions of deaths all over the world and it would be horrific and hospitals will be overrun and people will be dying in the street

and you know it would be apocalypse basically unless you listen to him in which case you would get a pretty bad uh epidemic but not as bad and then um you know within a week the entire planet was blanketed

with press releases um and and media repeating this and this is why of course yes it is tv and it is newspapers who promoted this but like ultimately this was a college uh grade stupid you know this is this was this was a bunch of idiots pontificating about oh but it's an exponential curve that's why we have to stay home you see you don't understand exponential it's the people who are dumb enough to think that them understanding exponentials means that the world has to abide by the formulas concocted by some fucking moron in some college in london that is seen by an expert by many though so 2020 is this the year of expert delegitimization the expert class delegitimization if you will i hope so um but i mean i don't know

we've thought this would happen many times before like for instance people who are into like who've managed to fix their health by finally not listening to what

their government doctors millions of people doing this for years and every one of them thinks well next year everybody's going to find out and people will stop listening to the experts on diet but no harvard nutrition school still teaches that you need to eat uh kibble uh every day and all of that garbage they still teach it yeah well i don't want to say maybe this time is different

but i think one thing that's very evident about the the lockdowns of the economies throughout the world is the uh inability of the people who are mandating the lockdowns to take into consideration and negative externalities and economic costs. And maybe those costs becoming more obvious as time goes on and people continue to be out of the workforce, do people finally realize, like, whoa, this was a terrible decision. So I think that's a good topic to jump into. Like, what are the negative externalities of these lockdowns?

What effect is this having on society? Economic effect that's not really seen by the experts that shut us down? Oof, where does one start? Well, I think in my mind, the thing that I was stressing the most at the beginning of this hysteria, back in March,

I kept tweeting an article by Hayek on macroeconomics and on the complexity of society and the complexity of economic systems and just simply trying to explain to people that, and this is, again, this is the stupidity of the college-educated which is that you know hey this guy said we can uh flatten the curve if we just stay home for a

couple of weeks so let's start flattening the curve by staying home and then you know somehow you know everybody stays home and then we pick up it's just like you know you're playing a video game you save the settings you go do lunch come back and resume and then sim city just continues all over again everything was posed and i was always trying to explain to people that economics and an economy is not like that an economy is a living ecosystem so you can't take a jungle and freeze an entire jungle and then come back three months later uh unfreeze it and then expect everything to resume as it was that's just not how living things work and i think the you know the the devastating impact on businesses um is is is going to be well it has been enormous

I mean, I think even in my mind, I did not expect that you would get this many businesses going out of business and this many people becoming unemployed and losing their jobs. It's been absolutely amazing. And what's even more amazing is how it's just completely normalized. Like the unemployment numbers that came in in March and April were 10 times higher than the previous highest number ever. It's insane. I think the highest number ever was 600,000, and then we got something like 6 million in March in just one week. So 50, 60 years of data, and then in two months, you break that. And we haven't gone down beneath that number since then.

So we've been over the highest week ever for every week since March. Now it's been eight months. Every week has been above that, above 600,000, 700,000, something like that. So it's absolutely incredible what's happening and how devastating it is. And, you know, the destruction of capital, I think, is probably the most gruesome aspect of it. Of course, you know, the humanitarian aspect is obviously the most concerning. But I think in economic terms, thinking about what is happening to the stock of capital that just gets frozen and then is lost. This, in my mind, is like the biggest catastrophe here because it leads to humanitarian catastrophe.

And the way that I like to think of it is, you know, any shop, any business anywhere, in order for your local pizza place or your local computer repair shop or whatever little shop you have in your neighborhood, But in order for that place to have been there and be operating and have customers or you're dry clean or whatever it is, it's, you know, for the college educated idiots looking from a computer, it's just a business that's there. You know, it's just people go work and clients come in. And if you stop them, you know, you stop a laundromat from working for a few weeks, then, you know, people just have to wear their clothes a few times extra and then life goes on. But actually what ends up happening is that as an economic living thing, you've got to understand that for that to have been there, that's an enormous number of years of experience and learning and education and capital accumulation that went in to make this happen. Somebody had to save the money or had to have a large amount of money in order to be able to buy that shop and buy the capital that needs to go into it and train the workers that are working in it. all of that is embodied capital that is in that shop and as long as that shop is operating let's say it makes in ten thousand

dollars of revenue every month and that helps them pay off their bills and they keep a few thousand dollars extra every month as long as this is running then that ecosystem is living but then you shut it off for a couple of weeks or a couple of months then you know say the workers can no longer afford to keep living in the city so they have to move back so now you need to get new workers The machines, you couldn't maintain them for a few months because they weren't working, the quality of the machine degrades,

and now they need a lot of money to be maintained, or some of them need to be thrown away. So the value of your capital declines. The amount of human capital that you have available has declined because your workers can no longer stick around. And it becomes much more likely that you shut down. And then once you shut down, the idiot way of thinking of it is, oh well this guy has shut down and all these other businesses were shut down well you know

other businesses will come in and the difference of course is that this is not a business that was unprofitable that shut down if it was an unprofitable business it's a good thing that it shuts down because then yeah the workers can go work somewhere profitable and the real estate can go to somebody who uses it profitably and all of everything gets reallocated but this was already profitable. And the fact that it was profitable means that making a profitable business is only easy to the idiots who never try it and are constantly working with reality on a computer. It took many years to be able to build that, for the owner to be able to have that amount of capital and to be able to provide his customers with that service in that location at that cost.

it's an enormous process of capital accumulation that is very intricate and it's constantly failing you know you have that one laundromat now but there was the one before it that tried these other kinds of machines that were too expensive and then it didn't work and that went out of business this new one came in so it's a very long process of constant trial and error in order to get to the point where this one business is currently serving the customers and then when you go and you suffocate that business for a couple of months you kill it and you kill all the capital accumulation and all the knowledge and now everybody has to start over you know the owner has lost his capital the workers have lost the place that where they could use their knowledge

productively they need to find another job the neighborhood has lost its laundromat and so now everybody's laundry is going to be more expensive for the next five years until another place comes along because everybody needs to lug it to the neighborhood next to them or whatever and so just an enormous chain of reaction, enormous chain reaction of implications from the fact that this was a living organism. This was a successful business that was adding value and it was strangled completely needlessly. There was absolutely no need for it to die. So all of that capital is lost. And so now I'm using the example of a laundromat just to sort of make it easy. But I think the more devastating thing to think about is not in laundromat. Think about

these businesses that are essential for food supply and businesses that are essential for all kinds of businesses particularly in the third world and you see you know the poverty and malnutrition and diseases are beginning to take an enormous toll on people in africa and in india and in poor countries because there you know people are on the brink of survival they need to wake up every morning and go and struggle all day in order to survive every day and so you stop them from working for a few months you're going to really really endanger their survival and also you're going to destroy all that essential capital that is built um and can and and and is providing them with their sustenance so the implications of this are going to be absolutely horrific i mean i

think you know the virus is going to eventually go away or if it hasn't already uh for the vast majority of humanity you know we've never had viral infections that have lasted very long it's going to go away and the implications of this are going to remain with us for many many many years i think right it's extremely messed up especially when you consider the the reaction to government shutting down which is like let's just print a bunch of money airdrop it it'll fix the problem and as you just described like it's really crushing the backbone of these economies which are small businesses which are arguably uh the most market information rich like the the small local community business is the market's reaction to price signals from that

local community and just suffocating that and trying to micromanage it from the federal level it seems like a very very very bad idea um and then you just allow people to to buy alcohol and get prescription drugs throughout all this too to to exacerbate some of the problems that are going on i don't think this has been well thought out at all and it's been it's probably been i mean i i know you you don't really sorry i got some static here my headphones i know you probably don't care about uh like what people think about what you're tweeting but you've been a staunch um stalwart and standing up against the lockdowns in a year in which that's been very unpopular so uh i think it's admirable that you've had the courage to to put your yourself out there and say

hey this is idiotic in in the face of uh a great majority of people uh cheering it on to an extent yeah it's been absolutely shocking just watching how many people um just turn to complete idiots because of fear and um yeah i mean this is quite alienating to people but um it's alienating to the right people i think being outspoken is an enormous time hack and productivity hack which i highly recommend because i am i've saved infinite number of hours from wasting time on idiots i don't respect by um you know getting in my insults early on twitter and alienating them and making them think that i definitely um wouldn't like them so um i mean yeah the internet twitter is not uh family gathering um it's a place for

strangers and you don't have to follow my account if you don't like what i'm tweeting and you come with my account to inform me that you don't like it you're just a fucking idiot who doesn't know how to use twitter go and find an account that has the things that you like and leave me alone But, of course, it speaks to the mental weakness of people who just can't tolerate the idea that somebody they know or somebody they like, somebody they respect,

somebody who wrote a book that they like, thinks different from them. And so it really triggers them because it's incongruent with their image of themselves as being intelligent. So somebody they like must like what they want, and if they doesn't, then we have to go hurl abuse at them. But it's okay. I don't mind it.

the block button is Twitter's killer feature. But I think the interesting thing about what you were saying is that fiat allows this kind of giant reset to happen where they put all these businesses out of business and then somebody gets to decide who gets to operate simply through the fiat allocation process, simply through mining. You know, everybody is always, every business is basically going to go out of business if there's

a liquidity crunch. There's a liquidity crunch and interest rates rise. Pretty much the vast majority of businesses are leveraged and would go out of business. Very few businesses have enough cash balances to last them through a liquidity crunch. And so in that situation, basically being able, being the central bank means that you can decide, you get to unilaterally decide which businesses live and die and that's ultimately what fiat allows because you know in order to move to the next block your coins are not in in the fiat system your coins are not there because you have the private keys your coins are there because the government and the central bank say that you get to keep them until the next block any block you know they could go in and pounce

and take your money take your business take your cash balance um stop you from operating so this you know it's in in the mind of the modern kind of democracy this is viewed as like a check on the market you don't want people to go too crazy so you want the government to have the ability to take money out of people's accounts if they do something illegal and you want the government to shut down businesses that do bad things because you know government is looking out for us so starts off with this nice kind of justification but effectively what we're seeing it devolve into now in this year i think this is truly momentous year in the history of the west because people most people today have absolutely no understanding

of just how out of the ordinary compared to the rest of the history of the West these measures are. Where now we're at a point where essentially all businesses are alive by the grace of their local government, basically. Well, local or national government, whatever it is. But effectively, you know,

no business can survive anymore without the monetary lifeline from government and the central bank by giving them QE or giving them business support or all that, and secondly, by the regulations of our health stars who have suddenly discovered that all these idiotic measures of wrapping people in face diapers and putting them apart from each other are the only way to protect from disease. None of these people had ever heard about any of these things

way to protect from diseases suddenly getting the seal of approval from the priests of this stupid religion yeah the expert class yeah don't you dare think about taking vitamin c vitamin d maybe exercising getting in shape that's no way i don't know i remember how many people laughed at us uh when we would bring that up in march and april like look at those idiots they think that eating healthy can protect them from a virus how does that do with anything the virus will kill you no matter who you are all right the fiat food leading to uh more susceptible to to a virus yes careful freaks yes exercise eat well it's i'm in just we don't have to focus on the lockdowns and all that i guess the last thing the lack of critical thinking that's been displayed this year

has been eye-opening, jaw-dropping. Absolutely. Absolutely. And it's, I think, the other thing that I want to mention in the chapter on fiat science, which I wanted to call fiat science, but I'm now, I'm probably going to change the name to fiat religion.

Because really, fiat science is not science. It doesn't serve the function of science to the individuals that believe in it. It serves the function of religion. It is a religion. And so, you know, if you know religious people, if you know people who are extremely religious, their sense of truth will go, will derive from religious authority. And so, you know, if you want, if you ask them a question, the answer is

what is in that authority. And that's exactly what science is today. And that has nothing to do with what science is about. The scientific method refers to experimentation. So it refers to, It's just a way of asking questions. You ask a question and you answer it scientifically. It's not a set of answers. It's not a set of scriptures. It defeats the whole purpose. There's no set of scriptures that are what the science says.

Such a thing cannot exist, will not exist. It doesn't make any sense. A method is separate from what answers you get from it. So you can apply it to any question and come up with any kind of different answers to a question. but the idea that science makes statements makes clear statements about what the world is is just ridiculous religious fiction from 21st 20th century religion of the state it's people who just think that religious authority yes so you want to say something no i was gonna say it's one of my favorite phrases just listen to the science bro just listen to the science exactly

listen to the science it's the new priest like how could you how could you suggest that the priest is lying it's the priest like if he's lying you know the whole church is wrong and we can't contemplate that so clearly you know if imperial college guy says that we are going to have three million people dead if we don't lock down then clearly he's right and of course you know amazingly you look at all the countries that didn't lock down you know we have evidence from indisputable evidence we see football games in belarus you know the belarus football league concludes this weekend it's been 30 weeks that they've been playing non-stop since march um every week and they've had the stadia open people have come in and out and the number of people that have died

in belarus is no different from what dies in belarus every year we've had all these demonstrations in belarus when they had a massive summer election and then demonstrations and all that stuff and a million people gathered in Minsk at some point. They had military parades. School was going on. Churches were going on, you know, churches where all the extremely dangerous, reckless singing takes place. They were still operating in Belarus and, you know, Belarus continues to survive. And it's amazing how none of these idiots will consider this. Like nobody will come along and say, well, maybe we were wrong about the fact of how severe this thing is because look at belarus no everybody wants to just ignore belarus and not even look at it or of course even sweden

you know they'll um ignore that but in in all countries in the world no matter what they did the number of people who died in this country is no different than what uh in this year is no different from the number that dies every year more or less that's ultimately what it comes down to regardless of what you did sure there's variation but the idea that there was some kind of deadly pandemic that would cause deaths and it was only these extremely expensive and extremely destructive measures that stood between us and complete mass destruction is completely idiotic hysteria it's it's it's not something that anybody serious could think yeah and yeah we're about to roll into it again it's a shame that i got very politicized too

it was just used as a political chess piece if you will uh but back to the topic at hand the fiat standard i guess we touch on fiat religion there a little bit but i think to touch on the structure of the book i really like um in the introduction you describe like just imagine it picking up from the bitcoin standard after chapter seven instead of describing bitcoin uh describing this this fiat standard um so i think describing the why and the how instead of um what is actually going in is is very important and i think this book will serve a similar purpose to the bitcoin standard of illuminating uh individuals about how things actually work and why you should be paying attention to this stuff and um i think now is a better time than ever to get this type of content

out to the world yeah i think you know um if we're going to be replacing the fiat standard over the next decade or two or who knows maybe over the next year or two um we need to know what we're going to be replacing um and i think we need to just take a very close look at uh at the operating system think about the monetary system is almost like the base layer of society like the operating system of society in that this is you know where all interpersonal interaction uh material interpersonal interaction flows and so that's an enormous amount of interaction society that has to go through this monetary system and if it you know if you study its properties and you study how it works you'll see different uh you'll see the impact that it'll have and i think

uh the the key insight is understanding the um understanding that in order to understand how bitcoin um acts so you know i think if you wanted to read the two together you'd read the first seven from uh the bitcoin standard then you'd read the first 15 chapters from the fiat standard then uh the last three from the bitcoin standard which discuss bitcoin and then you come to the last seven from uh the fiat standard fiat standard has twice as many chapters but they're shorter chapters um so in the fiat center then you come to the last seven which is uh the discussion of how bitcoin fixes this or can bitcoin fix this and effectively i think the monetization bitcoin is the deep solution to this because bitcoin is finally going to stop us from having to monetize debt

we've been monetizing debt for so long so now everybody in on earth basically is up to their eyeballs in debt anybody that earns a dime of money has uh essentially borrowed against it every dime of money earned by anybody anywhere has been borrowed against because it's so enormously profitable to borrow against it but now we can't make more debt anymore because nobody wants to borrow effectively and that means that we can't make more store of value for people because debt was what people used to store value in so now we can't make more store of value for them and we need something else and the the the problem with that is that you always need somebody to take the other side for it whereas uh in order for you to use it as a store of value whereas with bitcoin

you don't have that problem or with gold because it's just the value is in it it doesn't need anybody to do anything it's a hard asset and whose value is determined on the market free of any encumbrance free of anybody's liabilities nobody needs to do anything for your gold coin uh to shine and get its value on the market and nobody needs to do anything for your bitcoin to be liquid on the market um so i mean nobody has to well the miners need to mine and so on But, you know, nobody has to make a financial, pay off a debt or take on a financial liability in order for your asset to work. So I think Bitcoin is like an excellent, elegant solution to all of the problems of fiat because we, first of all, it gives us a hard money that fixes the issue of time preference. Remember I said the two causal mechanisms?

Fixes the issue of time preference by giving us a harder money so we go back to what we had under the gold standard. and then secondly fixes the problem of debt monetization fixes the problem of the entire world having to monetize debt so we start monetizing a hard asset we stop monetizing debt and then we stop having to all be in debt and we stop living in a world in which you know government being able to allocate credit is able to overrun everything in the market we'll have a free market in which the consumers who spend their hard-earned money determine what happens on the market that's the promise of bitcoin that's how bitcoin fixes this i think it should bring a better quality of life right you shouldn't uh life uh led by holding a hard asset instead of debt seems

much less stressful uh much higher quality to for the individual and then you think of the collective effects on society as each individual has a better quality of life and it's it makes a lot of sense and then you think about why we transitioned away from the gold standard to the fiat standard basically making that trade-off of saleability versus uh of in space versus time bitcoin allows us to to have both of those which is uh probably um will be the impetus for a transition to the bitcoin centers that is actually a better good that provides uh more utility than the fiat standard you don't have to make that time and space trade off anymore yes it's amazing it's uh it puts humanity back on track to continue to improve

and accumulate capital and lower our time preference to become more and more civilized because the 20th century was one giant detour away from that the barbarism of fiat yeah Well, thank you for doing what you do, writing this book and this content out there. I think it's very important. I think in a chaotic, frankly stupid world filled with bad information and noise, getting this type of content out there, whether it be the Bitcoin standard, principle of economics, or the fiat standard, I think it's important information. People are taking it, running with it.

You have billionaires in Mexico tweeting about you, reading your book. sharing it around the world what's in the 26 languages now 25 yeah 25 well um very excited to see uh the launch of your next two books where can we find out more about them i know we can pre-order them uh where can we find out more about what you're doing today yeah you can subscribe now to get chapters from the fiat standard uh every two weeks and a chapter from the principles of economics every two weeks so one chapter a week you'll be getting from me if you join saferdean.com fifteen dollars a month or one hundred dollars a year and that also will allow you access to all four of my online courses on saferdean.com economics 11 12 which is principles of economics

one and two and then my bitcoin standard course and my hard questions on hard money course which is effectively the genesis of the fiat standard the ideas of this course were to later grow up and become the fiat standard. So you can take all those four courses and see the chapters of the two books by joining on safedean.com. And I'm also on Twitter at safedean. Come say hi,

but don't talk to me about your shit coin or about, and don't tell me what I should be talking about. Block button is a very, a very useful tool on Twitter. Yes. Safe. Thank you for your time.

It's always a pleasure doing this. So congrats on the new site, and good luck finishing and releasing your books. Thank you so much, Marty. Thank you for having me. Have a good day. It's always a pleasure. Peace and love, freaks. Take care.