The Canadian Bitcoiners Podcast - Bitcoin News With a Canadian Spin - The CBP - David St-Onge - Hyperinflation, Currency Debasement and Canada's Way Out (Bitcoin Podcast)

Episode Date: October 3, 2024

FRIENDS AND ENEMIES We're thrilled to welcome David St-Onge to the show for a discussion centered on inflation and the history of currency debasement. David is a developer, author and enjoyoorrrr of handing out defunct currencies at Bitcoin conferences around the world. His recent book, Bitcoin: Everything You Need to Know, released in English in 2023 and is a great beginner guide to Bitcoin. David's Book: Bitcoin: Everything You Need to Know: St-Onge, M. David: 9782856083857: Books - Amazon.ca From a couple of Canucks who like to talk about how Bitcoin will impact Canada. As always, none of the info is financial advice. Website: ⁠www.CanadianBitcoiners.com ⁠Discord:   / discord   A part of the CBP Media Network: ⁠www.twitter.com/CBPMediaNetwork This show is sponsored by: easyDNS - ⁠⁠https://easydns.com/⁠⁠ EasyDNS is the best spot for Anycast DNS, domain name registrations, web and email services. They are fast, reliable and privacy focused. You can even pay for your services with Bitcoin! Apply coupon code 'CBPMEDIA' for 50% off initial purchase Bull Bitcoin - ⁠⁠https://mission.bullbitcoin.com/cbp⁠⁠ The CBP recommends Bull Bitcoin for all your BTC needs. There's never been a quicker, simpler, way to acquire Bitcoin. Use the link above for $20 bones, and take advantage of all Bull Bitcoin has to offer. D-Central Technologies - https://d-central.tech/ Your home for all things mining! Whether you need a new unit, a unit repaired, some support with software, or you want to start your own wife-friendly home mining operation, the guys at D-Central Tech are ready to help. With industry leading knowledge and expertise, let the D-Central team help you get started mining the hardest money on Earth.

Friends and enemies, welcome back to the Canadian Bitcoiners podcast. The Tuesday interview rip. I'm here tonight with David St. Ange. He's being described to me as a legend in the Quebec Bitcoin scene. He's laughing in the green room there. I think he might be. I mean, even before I knew who David was, when we were just starting the podcast and I was just kind of getting into the Bitcoin community here in Canada, I mean. Everyone has seen videos of this guy doling out failed currencies at conferences.

Some people think it's a gimmick. I think it's foreshadowing. And we're going to talk about what Dave thinks about all this. But first, as always, the sponsors, EZDNS. Man, the friendly neighborhood registrar that you need in your life for your website, your company, your business, whatever your hobby, maybe you want to, uh, start a blog, start a, you know, a place where you can sell pictures of your feet, whatever startup, sort of, you know, website for podcasts, anything you want, Mark and the team will help you. Uh, they have a great, great set of standards over there. Not only will they make sure that you get everything up and running, no sweat, no hassle,

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want to be in a position as a Bitcoiner where you are not relying on these huge corporations that are, in my opinion, easily influenced in terms of censorship and other things that are detrimental to the network. So go over there. There's no promo code. Tell them we sent you if they ask and get started with your mining today. There's no reason to wait. Okay. With no further ado here, Mr. St. Ange is in the chat. He's coming to us from parts unknown. I was saying to him before the show that I dig the vibe in his office mine is like the my wife calls this the doctor's office because there's like big studio lights here that's like much more of a warm vibe and uh although i don't think you're going to be so warm to government policy

tonight at least we can start on a positive note what's going on buddy welcome to the show first thank you joey thanks for having me hey I'm really happy to be here. Absolutely, man. So tell people if they somehow, Dave, don't know who you are, what you're about, give me the brief intro here. And then we got a lot to talk about tonight, buddy. give out those bills at every conference I go. So, yeah, so I'm the one who give out to people saying, like, free money. And I actually gave some in Quebec City at a, not a Bitcoin conference, at an ACKFest, you know, in like a computer security event in Quebec, a city full of geeks and programmers and security guys. And they were really happy to receive free money. And I was able to pack the room at the Bitcoin village there to talk about inflation and hyperinflation

because I was giving out those bills. So it's really a great marketing thing to interest people to the subject. And so basically, I'm the author of the Bitcoin Everything to Know book. I wrote it in French first in 2021. And we got it translated in 2023. So yeah, so now my fellow Canadians can read it. It's a great book for your parents or for anyone who wants it. You know, if you're tired of answering those questions,

always answer the same question from your families and friends. Just buy them my book for Christmas, and it's going to answer all their questions. Before I forget, because I mentioned the book in the video description, but I was going to tell people to go to Amazon to get it. Is that the best place to get it or is there a better place to get it? Yeah, it's basically the best place

because you can get free shipping. That's the thing because like shipping books because somewhere like from $8 to $10 or something like that, I think it's pretty expensive when it's like $25 or $30 books. And you know what? Yesterday it was really on sale on Amazon. I don't know why.

I'm just going to look that up right now. Amazon putting things on sale without telling you. It is on sale, $20 instead of $30. So go on Amazon Canada and order it for 20 bucks. It's 35% deal. Right now, it's a coincidence. Amazon doesn't tell us when to do that. So it's so cool.

So it's your chance to get it for cheap for all your family for Christmas. That's a no-brainer. I'm going to buy one after the show. I love supporting the Canadian guys. Like I said, even before I kind of knew you, I've been a fan of the money thing for a long time. I think that is good guerrilla marketing. Now, we should talk about why you do it.

You are the, not to use the term that is being thrown around for Kamala next door, but you might be the hyperinflation czar, David. Everyone is familiar with this idea that the currency is dying. Debasement is accelerating. We have historical examples of hyperinflation, most frequently discussed, probably Weimar, though there are others. You mentioned Zimbabwe a number of times in recent presentations and stuff that you've written. Tell me about, maybe let's start from square one here. What is inflation and what is hyperinflation and what is the road between the two? Yeah, that's a subject that is really difficult to talk about because everyone who knows the

subjects learned it from different schools and they use different words, different terms for different definitions. So if you go, if you talk to a mainstream economist and you say that, I don't know, like inflation is linked to the monetary mass, they will say, no, no, it's not linked at all.

Look, look, we printed tons of money in 2008 and there was no inflation in the 2010s. Like no inflation at all. So it's a proof that inflation is not linked to monetary mass. And it kind of makes sense for people who didn't dig that subject. They're like, yeah, true.

I remember in 2008, they printed a lot of money and there was no inflation in the 2010s. But when you dig in the subject, they're like, yeah, through. I remember in 2008, they printed a lot of money and there was no inflation in the 2010s. But when you dig in the subject, you just understand that when we talk about a monetary mass that causes inflation, you need the money to reach

the economy. That's basically it. They can print as much money they want if it stays on private banks, well, retail banks' balance sheet. Well, the money is not reaching the economy. It will not cause inflation. That's just what happened in 2010. That's it.

And now we got 2020s, the COVID and all that. And boom, all of that money that was saved, that was on the balance sheets of banks, got into the economy. And we see what it does now. So when you talk about that with credit money theory, like people who believe that money originates from credit and that the government should print enough. Like M&T guys, you know, the modern monetary theory. They're like, yeah, no, printing money doesn't cause any inflation at all. It's impossible. And when you dig the subject, you just understand that it's just a matter of what the money is used for. So if it goes to the stock market, it won't cause inflation because the stock market is not included in the CPI.

And if it goes in the housing market, it will not cause inflation. Not because prices are not going to go higher, just because housing is not included in the calculation of CPI. So it does cause inflation. It costs more to live. The rents are going up. The mortgage are going up. But they don't calculate that in CPI. So they're like, no. Well, I mean,

inflation is like just 5%. But they don't calculate how rent went up and how your mortgage went up. It's like a trick. There's three folds there. There's the CPI trick so they don't calculate all that. The money

stays in the bank and can stay in bank's balance sheet and if the money goes to the housing market, well, it's not calculated and the stock market as well.

So that's basically why you can print money and not have CPI inflation because we don't calculate everything and money go to some markets that won't inflate retail prices. This is part of the reason I think, you know, we've talked about this on the show and I am sure that you've given this a lot of thought. The actual sort of shelter component in CPI is rents. It's not the price of housing, right? And price of housing is important because as currency fails, it's a continuum. It's not a single moment in time when a currency fails.

As the currency fails along this continuum, there is a moment where other assets are monetized. And we've seen this in the stock market, as you mentioned. I think nowadays you'd be, you know, you wouldn't get any raised eyebrows in a room full of Keynesians. If you said that Apple stock is a better use of idle money than cash, right? That's, that's one way things have been monetized. And here in Canada, you wouldn't raise any eyebrows if you said to somebody that buying real estate was a better way of parking money than idle cash.

And what I think what a lot of people here, maybe the uneducated, I don't want to say uneducated, but maybe the uninformed crowd, right? The university educated crowd, let's say. What they will say is, yeah, those are quote unquote productive assets in a way. And this is a sort of a natural way to invest and grow wealth. The Bitcoiner would say, what we have here is a failure of money to serve its key purpose, which is preserving purchasing power into the future. Right. And so what, what happened in, uh, what happened exactly in some of these examples that you've cited and you've done a great job with this. I will, I will add, uh, some of the articles that you sent me to the show notes before I posted the podcast. But in some of these examples you've talked about, what happened that

these countries just simply could not control the outcome? There was a stock market during Weimar Germany's hyperinflation event. Zimbabwe, different story for a number of reasons. Maybe we can start with Weimar. Where were the failures of the government? Was there anything the government could have done differently to prevent this, apart from obviously major policy decisions along the way? But in your view, what was the big difference between then and now? And are there any similarities, Dave? I'm almost afraid to ask.

Yeah, there's similarities, but there's also key differences here. So what happened with Waymar and any hyperinflation I've read about, and I have bills from 40 hyperinflation out of 52 in my collection right there. 40 countries? Yeah, 40 countries out of 52. Sorry collection right there. So 40 countries. Yeah. 40 countries out of, of, out of 52, but I don't,

sorry, 50, 58 now, 57, sorry, 57, including Venezuela now and since 2016. So,

yeah, so I'm, I'm 16 left to, to find on eBay. And I, I've, I've, I've,

I've, I've, I've not just collecting bills. I've studied it on. I got it. Let me ask you something. I have, I have this weird, this is off the beaten path a little bit.

Behind me here, there's like eight footballs. I started playing quarterback last year for my beer league team. So I've been buying a lot of footballs. My wife gives me a weird look when another football shows up at the house. I can't imagine the looks you must get from people

when you order yet another bundle, another skid. Yeah, nobody knows. Nobody knows. I work from home yet another bundle, another skid of failed currency. Yeah, nobody knows. Nobody knows. I work from home and I receive a mail and I put it in the right there. Smart. And my wife doesn't know about that.

That's how. Yeah, and I always bring it to conference, Bitcoin conference. So it's people that are interested by that. That's fine. But I don't, with my normies friend i don't i don't open it uh in uh dinner for sure they won't be interested so so be back to the to wire yeah so so basically what happened there and um and it's exactly the same thing for every hyperinflation you need to finance the whole government with money printing.

So we are, in our modern society, we do print money to finance the government, like the liberals here in Canada are doing it. But they're not financing the whole government with money printing. So in Weimarimar that's that's what happened they basically they were the money was depreciating so fast that um when you were collecting the taxes the money would will not worth zero so let's say at the end of the year

you you owe a thousand mark uh to the weimar government Well, at the end of that year, a thousand mark may be worth like one mark or half a mark or 20 pefning, it's cents in Germany. So that's why. So they didn't have any revenue from the real economy. So they had to print. So they were printing exactly the same thing in Zimbabwe. So the whole government financing was from money printing. So that's one key to have hyperinflation,

is just that they're just financing the whole thing with the money printers. And you're asking yourself, so what's preventing hyperinflation here, right here, right now, or in the United States because they have

a big, big deficit there. I mean, their debt is like 30, 35 trillion, something like that. Yesterday,

it made it to $35.6 trillion. And deficit is like, what, something like a few trillions? It's enormous. Yeah.

That number is, the numbers are just getting bigger. That clock is working overtime. Yeah, exactly. But they receive, they finance themselves, they still finance themselves with some taxes that they collect in the real economy. So we're not in hyperinflation territories yet. So what really happened when you get to hyperinflation

is that you mentioned that a bit earlier, that people stopped to use money. They use anything else as money. So in Zimbabwe, they were using cars. They were buying cars and buy it for, I don't know, $6,000. And they were sending it back five years later. Well, not five years, sorry. A year later for $30,000. So the price of cars would keep go up because-

That sounds familiar, Dave. We just went through a similar, that's crazy, man. Yeah, okay, sorry. Keep going, keep going. And the stock market too. So you mentioned that earlier. So they had the stock market. So why didn't people would just buy stocks and protect themselves?

Well, they did that in Weimar and Zimbabwe. But the problem is when you're in hyperinflation, your economy is crushed. I mean, there's no more economy at all. So every company that are listed in those stock exchanges, they just die. They can't. Well, and actually, the funny part is that in Germany, because of the money printing, they were able to create a lot of industrial properties and a lot of yeah, some rich people there would take the free money and just build industries and pay people like

nothing because they were paying them with printed money and when they had to pay back well their loans well the loan would not work anything so it was it was super great for them so at some point in Weimar that there were some pressure from the industrial guys say, no, no, I don't want the mark to get back to normal. I want it to, I want it to stay that way because I can, I can like create more industries for free. So that's something that is a bit like now. So the zombies company, the zombie company that can just keep that we keep alive just because there's

cheap credit and, and they don't like provide some real value to the economy that would make profit of if we had some sound money they just live out of uh government subsidies or from free credit so like zero percent zero zero percent or near zero percent loans so it was it was happening at uh and some people even in the like mnt yeah uh theory like the mnt guy people uh they would they would argue that it was great for germany they created a love industrial zone at the time when you when you read that you're like what are you talking about? They destroyed the country.

So, yeah, maybe they did constrict a few industrial zones, but we don't care. They just destroyed. People were dying in the streets because they weren't eating enough. And at some point, I mean, the farmers would stop to sell their, their, their culture, their, what they, what they would. And they wouldn't sell it for cash.

Yeah. Because they wouldn't accept cash. So, so that's what happened. And, and, and the last thing is that is the monetary substitution. So, so during Weimar, France experienced a lot of inflation too, you know, in France, they had the new franc in the 60s, I think. The new franc. Because before that, you had like 100 franc bills at the time. Because they had a lot of inflation back in those days. So the bills had more zeros on it. And they created the new franc,

I think in the 60s. And the franc were, I think it was, you needed four franc to make $1 after the revaluation. So disinflation went down at that time, but they were not that much affected by it because they could go to uh germany uh to

weimar um across the border and and and uh enjoy their uh the power of their currency even if it was uh there was a lot of inflation for them too so people were exchanging money. So the mark was undervalued even if it had more inflation. Right. And the franc was overvalued even if it had a lot of inflation. Yeah, like everything is relative, right? The relative strength is what matters.

That's what I wanted to express. It's just a matter of relativity. And it's just a matter of in every hyperinflation, the money is undervalued. As weird as it sounds, it has to be undervalued for hyperinflation to occur. Yeah. So that's it. Quite a story there. There's some things I want to pull on here. I wrote a couple of things down where you were explaining that fantastic explanation from you you mentioned the the you know split between you know what you what you call the productive economy in terms of the establishing a tax base and funding government operations and printing funding government

operations i i don't know where we are here in canada or maybe in the modern world we don't have to talk about canada yet but we should at some point. What is the meaningful split that we should be looking for? Is it 20% printed money and 80% taxes? I mean, we're way under that. I think I said on the show last year that the United States tax base from actual productive economic activity is closer to paying for the sewer grates than it is to funding the entire government. And that's probably not far from the truth. But I'm curious, have you given that any thought? In your research, have you come across what is the split that you just can't come back from? Great question. I don't think I've stumbled upon this number, but one number I can give you is the difference we talked about with the Bonnie substitution, the difference between, let's say, France and Weimar back in the days. The difference, a guy called Bernal calculated the difference and he said that the difference would must be like something like 20 so so like the over value or

the under value the difference between the two currency uh so i guess that the frank must be overvalued by 20 percent or 10 and the mark by 10 percent something like that and it could create a feedback loop i guess and and and and um and that is undervalued in hyperinflation. So that's a number I know about. But what part of the government needs to print? How many percentage of the budget the government needs to print to go in hyperinflation? I don't think there's a real number that you need to reach. I think it's just that if you keep, let's say you start by printing 10% of the money.

Okay, let's say that. And the next year, you need 20 because you have less revenue and you have more expenses because the money is worth less. And the next year it's 30 and on and on and on. That's a loop. So I guess that's how it starts. It's that you have a deficit that you cannot fix and you don't do any measure to correct it. So, well, I can tell you something how to get out of hyperinflation.

It's really simple. There's two choices. You dollarize or you create a new currency and people just need to believe in it. That's it. So you can create a new currency that is sound money, like, I don't know,

really backed by gold for real. And it could fail because the people who are going to use the money don't trust you and it will fail and you can you can have a fake money fake a fake new money that is back not backed by anything if the people of the country believe in it it will work they will they will buy in on the money and say, yeah, there's no more inflation because there's anticipation in inflation, right? There's a psychological aspect there.

One story for that. In Zimbabwe, a guy who was selling shoes, at one point, his supplier would stop to accept credit. I mean, normally he would pay 30 days later, you know. So at one point, they would not accept to be paid 30 days later because in 30 days, the money was not worth anything.

So to compensate, it would say, yeah, you can pay us in 30 days, but you will pay that price. So instead of $4 million for a pair of shoes, it would be $80 million for a pair of shoes. So what happened there is that the guy would set right now the shoes for $80 million. Well, maybe $100 million because he had he will pay 80 millions to his supplier in 30 days so they will buy it right now for uh 100 million so you accelerate the inflation because you're you're selling right now the price of in 30 days just because of the supplier will release in shit so there's uh it's not. So that's a great point. That's a really good point. Inflation didn't even happen.

It's just anticipation of it. Yeah, that's a fantastic point. Actually, I hadn't, again, like I said to you earlier, when you're in this kind of environment, you think about this stuff often, but it's not so often that it's broken down for you so succinctly. This idea that anticipating inflation will cause inflation at an elevated clip is serious. Now, I want to ask you about the Eurozone. The Eurozone is an interesting kind of experiment, right?

You have a number of countries, varying economic success, varying economic strength, varying, you know, I would say economic capacity, thanks to commodities, thanks to sitting governments, thanks to whatever, thanks to sitting governments, thanks to whatever, right? The Eurozone is in a weird spot because they are sort of competing with the dollar implicitly, explicitly, some combination of the two to be this leading currency on the planet, while at the same time time they rely on the dollar to stabilize their economy thanks to trade and you know you have these these like i said mult this multitude of countries that needs different levels of support in terms of printing and there's

no state level government to do it what do you what do you make of that is there is there like anything you know what what comes to your mind when? I'm so glad you bring that up. That's super interesting because for France, okay? So earlier we talked about if hyperinflation could happen in Canada and explained to you why it could, why it would not be as Zimbabwe or Weimar right now, because it's different. We're not financing the whole budget with printing money and all that. But there's also that we have monetary sovereignty. We owe the money to ourselves. So France doesn't have this power.

When they have a deficit, they borrow the money to foreign uh powers so they owe the money to someone else that's that's that's that's one other thing that those country that have hyperinflation have in common is that their debt are in dollars like u.s dollars because when you get to hyperinflate well when you try to finance your budget and you're not doing well, people won't accept your money. So if you want to import, you need foreign dollars. You need foreign money. So you're going to get your debt in.

You have an external debt. And in Canada, we don't have that. We don't have those external debts. We print our own money and we can buy things in the world. Well, we have a nice exchange balance, you know, so we sell a lot and we buy a lot, but it's balanced. So we're fine with that and we can print our own money. So that's another thing that can help us with hyperinflation. So back to Euro.

Europe, that's so weird i guess i mean i i don't really understand why they did that uh back in those i guess it was like to make the whole continent um more uh economically efficient to trade with each other i guess it makes sense but the problem is now is is that you have Germany that should have a sounder money, like a harder currency. And France that should have a softer money because they're like they're socialist. So they want to like pay the. There's more risk in that currency. There's more risk in that currency for sure. They need to print more.

If they would have. It's not even at that point. It's not even a risk thing because they won't borrow money. They will print it themselves. So they need a soft money that is elastic so they can finance all their socialist dreams. And that's fine for them. They will have a lot of inflation. That's it. So they want to pay, uh it's you know what

you know when you're old uh you call that sorry pensions pensions they want to they don't capitalize their pensions can you believe that their pensions are not capitalized here in canada our pensions are capitalized i mean we have some money somewhere in the government and they will they pay us they pay pensions with that money so and And you receive a form every year. Not every year, but you have the amount you contributed. Yeah, and CPP issues a report on the investment strategy. So it's capitalized. In France, it's not capitalized.

It's just the government that pays for it. So people who are paying pensions, send money to government, they're not sending the money to have it back someday. They're sending the money to pay the people that have their... Right now. Right now.

So it's a Ponzi. It's literally a Ponzi. So, but I don't care. They can do that if they want, but they need soft money, like an elastic money to do that. And they will have inflation. And on the other side,

you have Germany that is more productive and could have a sounder money, a harder money. And so the softness or the hardness of money should fit your productivity. So it will help those two countries to have money that fit more their needs. So they would have less inflation in Germany for sure. So now it's just a melting pot of money that is too hard for France and money that is too soft for Germany. So that's a big mess. It's such a fascinating topic. Are you familiar with the dollar milkshake theory? No. So dollar milkshake is, I think, it's from Brent Johnson or Brett

Johnson, this American guy. And I think it's in the same vein as some of the stuff you're saying, Dave, but you tell me. This idea that as currencies sort of become difficult, they become unpalatable to invest with or in. So not only are you not holding euros, you're not investing in European countries anymore because the situation is not as sound as it should be, right? Like you mentioned, the pension is a good example. And so the risk of those currencies in those countries faltering has to be expressed somehow. But since it can't be expressed in those currencies, what you actually see is money from Canadian markets, European markets, African markets, Asian markets, Indian markets, whatever, all going into the US. And so the value of the US dollar

spikes as sort of the last gasp of the modern economic system. Yes. Is that possible in your view? Yes, of course. I mean, it's always the better money that wins. So that's where we're bullish on Bitcoin, right? Right now, we know all Bitcoin is a good money. It's a hard money. And during the old history, it's always people turn to the best money they can have. And I think right now, even if the government, the U.S. government is really unresponsible and having a large deficit, the U.S. dollar is still the reserve

currency. So I guess it's safer to, well, the whole economic system is based on treasuries, U.S. treasuries. And I know that countries right now are dumping them and they're not buying them as they were in the past. Because, I mean, the US government did get some countries out of the switch. It was the unthinkable, yeah. Yeah. So I guess that some countries said, oh my God, I don't think it's the reserve currency anymore.

So there's cracks in this system, but it's still, well, I mean, you saw when we saw some problems on the horizon a few months back, the gold went down. I think Bitcoin went down and the US dollar went up a bit. And that's when people say, well, I think the asset we use when there's problem. Yeah, the safe haven.

It was the US dollar at that point for some, I don't know, macro reason. And now we see the gold is going up and Bitcoin had a rally. And now I don't know what's, well, I guess it's what happened today. I guess that it's its price. But yeah, so the dollar is still a tool that has its utility because it's the world reserve currency.

So, yeah, of course, people want to invest that believe in fiat system will prefer US dollar to Canadian dollar to Euro, of course, because it's a better system, but it's not it's not that is a better system but it's a system that is still uh it's the cleanest 30 shirt we say yeah yeah exactly yeah exactly so so i guess that's the dollar will still be king for uh for uh i guess a long time until it really it we really have serious serious problem and then then I guess Bitcoin could be like a lifeboat or something that it will not be correlated to those markets. That depends. So, yeah, you know, one point, Joey, right here.

You know how the United States can experience hyperinflation? Yeah. I saw a once on Twitter. As we mentioned, if the dollar is World Reserve Currency status, imagine that all the US dollar that exists come back to the USA. Because if the US dollar is not the World Reserve Currency and you don't trade oil with it you don't trade deals with it

it'll be on short again all the dollars will go back to the United States because it's the only place that it's useful it's the only place that you can pay your taxes with it so all the dollars in the world will go back to the United States what happens if that happens well maybe not

hyperinflation but very high inflation at least, because there will be, let's say, three times too much money, three times just a number I invented. But as we talk, the volume of U.S. dollar is okay for the whole world. It's being used for the whole system, right? Exactly. So if you shrink that just to the economy of the United States, well, there's going to be way too much.

It's a bit much. The cup might be a little over full. Exactly. That's where you're going to get inflation for sure. So I want to ask you a couple more questions, then we'll get into the Canadian situation. This is more of a comment than a question, but as you're talking here,

I'm kind of thinking about some of the things that we look at for the show when we're kind of deciding, are we going to raise a red flag tonight about X data point or Y data point? There's oftentimes these economic reports from governments and from banks and from sort of independent investors or hedge funds or you name it about the consumer savings rate. And it's how much cash does the consumer have? You know, in times of prosperity, what you see is that savings rate tick up a little bit. People have a little more cash because they're flush with money. Job is good. Bills are, you good, everything is kind of going along. And in times of decline,

it ticks down a little bit. That's kind of been the case for a long time. But recently, what you've seen actually is just the general kind of ticking down, both for people in the upper tier of earners, the middle tier of earners, lower tier of earners, so all the same. And it makes me wonder if what you're seeing there is not actually people spending their cash on food, but rather realizing that they have to put their cash somewhere to watch it grow. And as you mentioned, they're sort of in the same vein as the guy who buys the shoes for next month's price, understanding that if they take debt now in a year, the debt will be more manageable just because of dollar debasement. That's a comment.

I don't have to respond to that, but I was thinking about that. What I do want to talk about, though, is the pensions here. They are capitalized at some level. I don't know exactly what level, but thanks to unfettered immigration, thanks to our currency maybe not producing in terms of its monetary purpose at the level that it should. And I think also, Dave, probably if I had to put a third point on that, I would also say that Canada is no longer a productive economy. And that risk is going to be expressed in currency value at some point in the future. Are pensions really as safe and as capitalized, well capitalized as the CPP wants me to believe?

Or is there really a greater risk for people, you know, you and I are around the same age, for people in our age group, you know know when i turned 65 in 20 years whatever it is that that money's just not going to be as valuable as it would have been if i was able to invest it in something today you're going to get what you're owed nominally for sure there's no problem with that but what that what that money is going to be worth so i was talking to a friend uh this weekend and he's a teacher and his pension will be 86 000 per year um and uh he was saying that basically he's a millionaire if he reach um 80 years old okay so if he reach 80 years old his pension would have like worth a million more, I guess.

So what I made him realize is like, do you realize that like any teacher in Quebec is a millionaire? So how easy it is to be a millionaire. Any boomer that bought a house at the right time is a millionaire. So now everyone is a millionaire. So I guess it doesn't mean anything now to be a millionaire. So that's the first point. So I guess it doesn't mean anything now to be a millionaire.

So that's the first point. And the second point is that his $86,000 is going to be retiring in, I don't know, 10 years maybe. So in 10 years, he gets his retirement. So $86,000

will be a lot because he won't have all all that those expenses is sure the mortgage et cetera yeah exactly so but in 30 years when he's going to be uh well in 30 years when it's going to be 80 even with a two percent inflation target uh that that would be worth i don't know 40 50 40,000 or $50,000 current dollar. So $86,000 seems a lot right now. But in 30 years, it will not be worth. In normal inflation, don't count hyperinflation or high inflation or anything.

Just normal inflation, the target. It will be worth a lot less. So I made him realize that, yeah, it sounds like a lot. But actually, it told me that it's linked to the inflation. See, that's a bullshit stat, though, because unless you're just eating fucking Cheerios, you know. That's what I said earlier. CPI is a number that they fudge. They play with it.

So yeah, of course. But yeah, so it will be his retirement will be adjusted a little bit. But it won't fix everything. So it is capitalized. The money is there. there, but we don't have any as if we continue to print money as we do, it's not going to be worth it at the end because we're going to have all the value

the money we saved. So something that people don't realize is that if you don't print money, if you have a fixed monetary system, you're going to have deflation. Anytime you have productivity gain, you're going to have deflation. Anytime you have productivity gain, you're going to have deflation. And so economists will say, oh, my God, deflation.

Everyone's going to die. It's going to be the 30s again. We're going to have a big crisis, economic crisis. Everybody's going to die. But there's two concepts here. There is a growth deflation and the fiat deflation. So fiat deflation is what happened in the 30s. It's a credit bubble that burst.

And then you have deflation. It's normal. And it's a crisis. But it's because of the credit bubble. It's not because of deflation. The problem is the credit bubble, not deflation. Deflation is the consequence of it. But when you have growth deflation, it's basically because you have a fixed amount of money.

Let's say gold. It happened in the 19th century. The whole 19th century in the United States, besides of the Civil War, there was growth deflation. There was economic growth and the price were going down. If you say that to any Keynesian economist, he will say it's not possible. Which is unbelievable because these people all buy TVs, they all buy computers. They can see that production is becoming cheaper and cheaper. The quality is increasing every year, every six months, whatever, and they can't connect the dots.

It should be like that for everything. It should be like that for everything. So, and it's, they're not adding it. They don't want the, well, central banks have a target of 2%, but it's not, people sometimes think that they try to control the inflation not going up, but no, that's not that. They try to control the inflation not going up but no that's not that they try to control the inflation going down that's that's the thing if you if if people that are listening

right now have to learn something from this podcast is that center bank are not controlling the inflation uh not they don't they're not trying to stop inflation going up. They're trying to stop inflation going down. That's why they print money. Because if they don't print money, the price of everything is going to go down because we have economic growth. So you have more people, more production for the same amount of money. It's mathematics. The price is going to be go down so their argument is that well people don't will not want to have their salary go down yeah i know that's one of the problem that uh

all those guys back in those days were talking about that uh the real problem here is that these economists would say yeah well people won't and that's actually one of the reasons there was child labor in the 19th century. That's one of the reasons because the price were going down and it was deflation. And the people who were paying the workers were like, well, we have to, the opposite of pay raise,

what's that pay? Pay cuts. Pay cuts, yeah. We have to get you pay cuts. And people that? Pay cut. Pay cuts, yeah. We have to get you pay cuts. And people said no. So they were hiring children, literally, to have the labor. Yeah, the labor work less.

So that's one of the arguments that people don't want deflation because they, well, we're going to have to hire children. Well, actually, we are hiring children right now in Tim Hortons because there's nobody that want to work. And by the way, you may be hiring children here, but in Myanmar where your Nike shirt is made, it's a kid. It's a kid doing that. And these people are just – they are the absolute worst, man. They are the worst because they know that what they're saying is plain old, not true. And they have to fudge the numbers and fudge the data and fudge the theory because of what they want the GDP to look good. So that somebody can tweet out where one of the best in the G who the fuck cares, who the fuck cares. You can't afford anything. You know, I'm I'll be sure to, uh,

you know, warm, warm my body when I can't afford heating with the burning pages of Maclean's magazine proclaiming that I'm living in one of the best countries in the world. I can't wait. It sounds like a real treat. Yeah, it's kind of crazy. I mean, we think we're like rich countries, but we're kind of forgetting that what makes rich countries rich, it's productivity. And when we create great value, it's not just something like oh now we're rich we can pay for everything no it's every

year we have to produce more and offer services and producing goods to have an economy that's what make a rich country rich yeah so so so so if we would just not mess with the monetary mess, price should go down. And according to a guy who wrote the book in defense of deflation, I don't have his name right now. But anyway, a great guy. I've read some of his work, and that's why I learned about growth deflation compared to fiat deflation. And what he said is we may not have to even cut the salaries because with higher productivity and technology advancement, maybe people can keep their salary and we're going to give more job to robots, AI, and be more productive. So maybe we can just stay with the salary we have. And you know what?

At the end of that, maybe we would prefer to accept pay cut and have more purchasing power with the money. That's just what we have to learn. If you get a pay cut of 10%, but your money, your salary and all your savings is worth 20% more, well, you're still winner even if you got a 10% take it. So it's just a learning thing. So it would make sense. It's a bit of a mental game. And I know I said we go an hour. We might go a little longer here, if that's okay with you. I want to talk about Canada because I think a lot of Canadians now, for the first time, are really looking at their finances. They're looking at economic policy. They're looking at social policy. To your point, there's a lot of things that sound good on paper

that if they were free would be fantastic. Things like healthcare, dental care, childcare. And what we're seeing now in Canada, acutely, I think, for the first time, is that everything has a cost, explicit or hidden. And I look at the grocery store, like I said to you earlier, unless you're eating Cheerios and granola bars for every meal, things are more expensive than just 3% a year or 5% a year or even the 9% and 10% that we admitted to sort of in the back end of the pandemic. What we're actually seeing is stuff like ground beef doubling in price, milk doubling in price, eggs doubling in price, all while government does its best to protect the profits of the oligopolies that produce these things.

And so this is, I think, a lead-in to a question that we have to tackle here. Is Canada heading toward a hyperinflationary event? As long as we have demand for our products, our natural resources, our services, as long as there's country that are willing to buy our currency to buy what we produced, I don't think we couldn't get to hyperinflation. We can still have medium inflation, high inflation. Well, not high inflation. High inflation is almost as bad as hyperinflation. It's when the monetary substitutions happens.

So that's the key here. So as long as there's enough demand for our currency to prohibits, well, to protect us from monetary substitution, we're good. We could have medium inflation, like, I don't know, two digits, like 15%, 20% inflation per year. In your view, is that hyperinflation? I know it's not officially.

We were talking before the show how there's like these, you know, sort of ceremonial checkboxes. 50% is the number everyone uses. 50% per month. Or 100% over three years. Is that the... Yeah. So the official definition, I think it's a stupid definition.

It's 50% per month. It's 12,000% per year. 12,000% per year. It's stupid. Iinflation happen. It's exact same process that hyperinflation. And it just happened when there's monetary substitution. So there's no real number.

And there's another standard that is from an accountant, international accountant association. And they say that people stop, there's criteria, and people stop using money for storing the value as a medium of exchange. The salary are indexed. Every key thing in the countries are indexed to inflation. And yeah, so this definition, it's 100% in three years. So 24% per year.

So we were close to that at some point. But we still use our money as money, even if there's medium inflation. So for me, hyperinflation happens. There's no percentages. It's just when there's monetary substitution. And if I can conclude that subject with this, this is bills from 1962. It's a Confederate dollar. Okay. So this money hyperinflate.

It was about 40% per month in, I think, 1962 or something like that during the Civil War in the United States. But it's not on the list because it didn't reach hyperinflation. The United States said, oh, we didn't have hyperinflation. It's false. The colonial, the continental dollar also hyperinflated. It reached 47% in one month. The continental dollar also hyperinflated. It reached 47% in one month. But it's not on the official list because it didn't reach the 50% per month.

But there was definitely monetary substitution. So for me, it's hyperinflation. Okay, so I want to just back up a little bit. This idea of everything being indexed to inflation, that piques my interest because I think in Canada, the official number is like 26% of people work for the government. All those salaries are indexed to inflation. Then on top of that, there's probably another 25% or 30% and growing, the boomers, who have a CPP or pension also indexed to inflation paid by the government. Then on top of that, you have welfare recipients, baby boomer recipients, social security recipients, disability recipients, all indexed to inflation. Dave, that's a lot. That's got to be... Are you waking up with cold sweats thinking about that number? That's got to be like... It's like 70% of the population has some percentage of their income coming from

the government printed, or I mean, it could be funded by a tax base, but it ain't fully funded by a tax base, indexed to inflation. And it's just, it's infinite, unlimited. It's untouchable. Joey, I saw that precisely in Quebec. So before what we experienced, all the tariffs, all the price for a driving permit, all the price of the government was like decided for each. Every three years, every five years, it would say, oh, so we need to to charge more and stuff. And they would announce like, oh, we're going to it's going to be a little bit more expensive this year and they would they would uh announce it and we would pay a bit more but uh

during this the term of uh of the government we have here uh they just indexed everything like the hydro quebec price are indexed uh to inflation so every every two, they had to go to the energy council or whatever and ask for a raise. And they would evaluate their cost and their profit and stuff. And they would say, oh, you need to make the price like 1% more this year. They would like an institution that would decide that. But now they just said, fuck that. We're going to just index that to inflation and they capped it to three percent that's incredible because when you had the six

percent inflation everybody was freaking out like we can't get they were like yeah we'll just cap it to two percent so so inflation maximum three percent for the so what i mean is that they just they just remove all those decisions by the government. They said, we're going to index everything. That's it. This is why I worry about the wage price spiral thing. Even if they massage CPI to the point where it's 3% or 4% and it's capped. I know in Ontario, the OMERS pension, the Ontario Municipal Employees Pension is

capped at 6.5% per year. So they did lose on a year there basically, right? Over the course of probably 21, I guess it would have been, or 22. So they lose in that year. But eventually that pension will catch up, right? They may not do it in one year, but they will try and make up for it. If you only have 10% of your population indexed to inflation and inflation is running hot, you don't have that big a problem. But when 70% of your population is receiving government payments,

transfer payments, salaries, or some combination of the two, you run that risk. So I know you said that Canada is not a candidate for hyperinflation, but is there a country that's in a worse, have an external debt that they owe money to uh in another currency that their own are uh worse than canada that that's what we have here our our debts are in canadian dollars so when inflation comes our debt go down you know so every time we have inflation the value of our debt go down so So any country that has its debt in US dollars, they're fucked. If they have inflation in their own currency, their own currency is worth less, but their debt is worth more because it's valued in a foreign currency. So that's one of their ingredients to have hyperinflation and being a serious problem. So what we have here in Canada is just a risk of, I guess, we won't have a debt crisis

because all we have to do is inflate our currency a little bit every year and the weight of the debt will go down. And we're going to be okay. But we're going to have to take all the value of the saving, the whole Canadian, to save the debt crisis. So there's a price to pay, but it won't break. It's just bad. But for some countries, it can break because at some point, they cannot pay the interest

on the foreign debt they have to pay to foreign country so so that's that's a different problem uh but we're not we're not in a good situation i guess because we're printing too much money but we're in a better situation than countries that have to and you know why those countries are borrowing money is because they cannot buy anything from other countries with their own money. Exactly. Yeah, so that's why they have to borrow money. That's what happened in Zimbabwe. They were producing a lot of vegetables and food for their population and exporting. And when they seized all the farms from the white people to give them to the population, the people that were taking back the farm didn't know how to run farms.

So all this industry crashed and they were not producing anything. So they were not exporting, having all the money from farming countries, and they were not producing for their own needs. So they had to import wheat, actually actually from everywhere to feed the people. And that's one of the ingredients that made them go to hyperinflation. That's okay. You've been an outstanding guest. I want to ask you one more question, sort of half related to hyperinflation,

inflation, all this stuff. You've obviously done a lot of reading. I was reading some of the stuff you wrote today. I've watched a couple of your presentations, including the one you did in 23 and 24 at the conferences. What books or resources would you recommend for somebody in Bitcoin or even not in Bitcoin who wanted to learn more about this? I think it's going to impact a lot of people. And as we were talking about before the show, our friends, I think our normie friends were saying, don't understand that the failure of a currency is a continuum.

There's not a single moment where things just suddenly are dire, but there's a number of sign posts along the way. And I don't think there's anybody we've had on the show who's better equipped to give some resources to people who want to find out more so they kind of know what to look for or can talk about what they're seeing um in a competent way so i mean what what have you read what do you recommend people read on the subject so what got me into that is the the 100 trillion dollars from zimbabwe i was i was you know at in 2018 something, all the big corners had those $100 trillion bills. And I was really interested. It's the first time I saw a bill like that. So I found two books about Zimbabwe and I've read them back to back. And one is from a banker, a

farming banker in Zimbabwe. And the second one is a CEO of a retail company in zimbabwe and the second one is a ceo of a retail uh company in zimbabwe and both guys are are telling their story of the uh of the hyperinflation so those books the first one is uh uh zimbabwe warm heart ugly faces. And the second one is the boiled egg index. So because one of the great index in Zimbabwe was the price of boiling eggs, six boiling eggs in the market. It was a great index of the hyperinflation. And there's also the book about Weimar.

It's called When Money Dies. That's a great book. But When Money Dies is a bit, it's a great book, but it's a bit difficult to read. The two other books in Zimbabwe are very interesting because it's personal. Because When Money Dies is a guy that read a lot about, you know, Weimar. He didn't leave it. It was not there. So he's telling a story.

But the two other guys are telling their own story with family pictures and their trip to South Africa to kill lions or stuff like that, you know. And no, no, they were fishing, actually. They don't kill lions.

They were fishing somewhere in South Africa. And yeah, great, great books. Very interesting. So that's the two books I would recommend. If anyone listening to this podcast wants to dig deep in hyperinflation, how it feels, what happens. Just one example.

One of the guys paid his house with a bill in his pocket he he paid his house like 300 000 in my wooden dollar oh my god and three years later something that three years later he had a 500 000 bill in his pocket it was worth like 50 cents and he could he could have paid his, his whole. That's a nominal debt, right?

Yeah, exactly. It was nominal debt. So said, so that's kind of examples. I think you're that, what, how could that happen?

So it was really great. So, and that's how I can speak about inflation, what happened, what it does, because I have all those stories in my head. It's not just numbers or, you know, I've not just read some Wikipedia pages and stuff.

I dig deep in those stories. So, yeah, I recommend those two books. You can read that at the beach and enjoy it. It's not a hard. Oh, and the other book I would recommend is Broken Money, Lynn Alden. That's the best book about everything related to money and finance and economy. I really like this book. I don't think it really covers hyperinflation, but it does cover inflation.

I guess, well, money printing at least. And there's a great history about the history of money, the difference between credit money, commodity money, all those origin theories. It's really, I don't know if you read it, Joey, but you have to. It's a great book. I should do it. Dave, you've been a great guest. Tell people where they can find out more about you,

see some of your presentations, some of your articles. The floor is all yours, buddy. Yeah, you can have me on Twitter. It's at David St. Ange. So yeah, St. Ange, it's S-T-O-N-G-E. Some people here It's at David St-Ange. So yeah, St-Ange, it's S-T-O-N-G-E. Some people here, I guess, St-Ange. It's funny.

And French people cannot even write my name correctly. They always write Saint. S-A-I-N-T? Yeah. My name is St-Ange. So they always write S-A-E-N-T. That's weird.

So when I go to France, all my tag names, all my names on the sheets they give you at the conference, it's always wrongly spelled. Anyway. Yeah. So on Twitter, I have a website, Bitcoin Everything You Need to know, where you can have information to, if you want, if you're interested in getting my book. And I said earlier that it's for newbies, but some,

some of the corners, I know that are really into Bitcoin for, for many years, read it and, and they learned a few things that we don't know everything, you know, and in there I wrote on every subject. I, I stumbled upon when I was doing my research when I was a newbie.

And I've got it all verified by great big corners at the time. So everything in there is true. But I could not even write this book right now. I'm somewhere else, you know. That's a cool thing. I've wrote it when I was kind of a newbie still, and I was thinking as a newbie. So I was able to explain what I learned, you know, in my journey.

But now I could not even write this book again because I'm somewhere else. I could write a book about the history of money, but not a book about Bitcoin. I could not find the words to explain it to a newbie as i was back in those days yep that's outstanding um thanks for listening watching everybody full house tonight as always and uh we'll see you next time here on cbp