← THE Bitcoin Podcast
THE Bitcoin Podcast
AUSTRIAN ECONOMICS & BITCOIN vs FIAT ECONOMICS | Rahim Taghizadegan (THE Bitcoin Podcast)
01:41:31
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- [00:00]
Raheem Tagizaragan
Why would you, like, own the debt of another country, of another sovereign country that's not yours, that you have no direct link with? So I think it's the better asset. Even though I don't think that bitcoin needs debt. It's just a symptom of its adoption. And politicians realize that they need bitcoin now or may need bitcoin. And that's really the story here. I don't think it's really like Trump pushed bitcoin. It's like it was going there anyway. And Trump realized for every reason, okay, that's why it's something that's not hurting my chances of winning an election. That's helpful. And a lot of politicians are realizing that. We have quite a few politicians in Switzerland who are explicitly pro bitcoin even now, like the chairman, former minister of finance, who was about to drop out of the parliament, now much too late, realized, okay, maybe I give it a last shot. Now he's pro bitcoin. Now he's claiming Germany should have a strategic bitcoin reserve. So that's quite some momentum here already. It's like it's a gradual adoption process. And I think everyone goes to the world with open eyes and asks this question as real the responsibilities. Like, now there's this bunch of money. How would you allocate it? What are you doing? And let's look five years later, how have you been doing? We gradually understand that it's not just such a crazy bet to have some in bitcoin.
- [01:25]
Walker
Greetings and salutations, my fellow plebs. My name is Walker and this is the bitcoin podcast. The bitcoin time chain is 880535 and the value of one bitcoin is still one bitcoin. Today my guest is Raheem Tagizaragan. Rahim is a professor, entrepreneur, investor and the last Austrian economist of the Austrian school in the direct tradition. And he was one of the first to teach about bitcoin at university or college, as we say in America. He's also the author of 15 books and the founder of Scholarium, where the Austrian school can be studied in its original interdisciplinary form. This conversation was streamed live on Noster, which is the only place you can watch this live streamed. So if you want to check out the live stream next time, head over to primal.netwalker and primal.net titcoin and if you're not on Noster yet, what the heck are you waiting for? Before we dive in, do me a quick favor and subscribe to the Bitcoin podcast wherever you're listening. And make sure to subscribe on YouTube or rumble as well by searching Walker America. And if you find this show valuable, consider giving value back by giving it a zap on Nostr or a boost on Fountain. Without further ado, let's get into this bitcoin talk with Raheem. So, Rahim, great to have you here. Excited we're able to make this happen. You're coming from Europe. You don't have to disclose where, but if you want to, of course you're welcome to give a general country, but I don't know about you, it's very, very cold where I am in America right now, so we have the sunshine today, but it's not so hospitable outside. I hope it's not quite as brutal wherever you are.
- [03:11]
Raheem Tagizaragan
I'm in Switzerland, actually, but it's not that bad, so it's pretty good weather. I'm just above the clouds.
- [03:21]
Walker
Okay. Okay, that's nice. Last time. I've really only been to Switzerland through the airport until I went to Lugano a couple years ago for the first Plan B conference there. And then now, of course, you and I'll both be at the Plan B conference that they're hosting in El Salvador. Definitely two different climates, but I enjoyed Lugano very much. It's a fascinating city, just with the. I've never seen so many different languages displayed on each product. It was quite fascinating.
- [03:52]
Raheem Tagizaragan
Yeah. That's the great thing about Switzerland is, like, very old diversity, not the newer, recent, very artificial one.
- [04:02]
Walker
Yeah, it's definitely, like, actually diverse, not just diversity for, you know, dei's sake. But, yeah, I was. I wish we could have gone back there again. I very much enjoyed that conference. Thought they did an excellent job with it. But it'll be nice. At least we get to escape some of the cold and go to El Salvador, so can't complain about that. Have you been to El Salvador before?
- [04:25]
Raheem Tagizaragan
Yes.
- [04:25]
Walker
Okay. Okay. When did you go? Or when was the most recent time, I guess.
- [04:31]
Raheem Tagizaragan
Oh, the most recent time was adopting bitcoin conference, I think in November, so pretty recently.
- [04:39]
Walker
Yeah. Carl and I went the first time in 2022. We went there in the summer, just kind of like to, like on a vacation. Basically, we were just like, let's go to bitcoin beach. Let's hang out. We ended up meeting some great people, going to some schools and doing some cool bitcoin stuff. But then we're like, oh, can't wait to come back. Hope we get to do it. Soon and then we ended up going to adopting bitcoin a couple months later. So got to go twice that year, which, which was fantastic. And the first time was about one year after the legal tender law went into effect. So it was interesting how much it had changed already from what I'd heard. I obviously wasn't there before that, but now it's been a couple of years. I'm very excited to explore San Salvador a little bit more than I've gotten the chance to at this point and yeah, see how things are going down in bitcoin country.
- [05:28]
Raheem Tagizaragan
Yes, beautiful there. Yeah, small country, fascinating place.
- [05:33]
Walker
It's, it's amazing to see too. Just kind of this, this underdog success story that El Salvador has had because obviously when they came out with the bitcoin law, they got so much pushback from the, let's say international, you know, legacy media. They got so much pushback from the imf, you know, even getting pushback from some, you know, bitcoiners who were thinking, oh, you know, I don't want the, the state to be, you know, there shouldn't need to be legal tender laws, et cetera, et cetera. But I mean, in terms of their people and the changes that they've seen, I think it's hard to argue with the results that Bukele's gotten. Maybe one could argue with do the ends justify the means? You could make that argument. But from everyone I talked to while I was there, granted this was a couple years ago, people were happy, they were excited, they were glad the gangs weren't running the country. Turns out if you live in a state of basically terror, law and order is something you desire, which should not necessarily be a surprise to people, but apparently it was to a lot of folks in the so called developed world. I don't know.
- [06:37]
Raheem Tagizaragan
Yeah, it's pretty odd. I mean, even in Europe now people have forgotten that. I mean if governments have one function, it's like locking up criminals. We have enough political criminals running around, but now if they don't even do that, then of course it becomes absurd. So we have heavy government in Europe and pay a lot of money for that, but they don't even lock up the criminals. And then of course everyone else feels locked up. And that was also one of the reasons I left Austria is more and more the feeling they are controlling people on the streets. Like, do you carry a knife and stuff like that? Which of course feels like you are the prisoner now. Yes, your liberties are taken away to keep you safe.
- [07:29]
Walker
The classic old trope of, you know, don't worry. It's for your safety. It's for the. For the greater good. Yeah. It's. So you. Maybe a good place for us to start is just. You're. So. Were you born in Austria? Are you. You're Austrian originally?
- [07:43]
Raheem Tagizaragan
Yeah, my first one and a half years I lived in Iran, actually. Okay, Iranian by birth. But I've grown up in Austria and Vienna from age 1 and a half as a baby. So I've become an Austrian, the Viennese, but always had a little bit of the outside perception on Austria as a son, an immigrant, and that helped a bit. And not become too Austrian in everything, still keeps some critical distance because modern Austria, unfortunately, is very different from the old Austria where the Austrian school emerged back in the days.
- [08:28]
Walker
So maybe you can give a little bit more background, too, just kind of on who you are, what you're doing now, but also just how you got here. You're an Austrian economist. And one of the things that it says in your bio is kind of of the direct tradition and one of the. You were very early to Bitcoin as well. So can you kind of just walk through that journey of how you got into the Austrian School of Economics and then found Bitcoin and then ended up here today?
- [08:56]
Raheem Tagizaragan
Originally, I studied nuclear physics, economics and sociology and a few other subjects. And there was still some of this interdisciplinary spirit left in Vienna. It was mostly very old professors, but I was lucky. And I was also actively seeking out the last few interesting people in Vienna at the time when I was a student. So most of university, of course, was boring, and most of Vienna also was boring, I'd say, when I was growing up. So the Internet wasn't already there. So that was one of the first lifelines, was I was a very early Internet user in the 90s already, and I was always an avid reader, but it was really a big change. So I was reading a lot, had a deep interest in all kinds of disciplines. And then it was very surprising. I had studied economics at the University of Economics as well in Vienna, and never heard about the Austrian school as something that's alive. Of course, I'd heard about Hayek, the Nobel Laureate that you may or may not be proud about in Austria, but it was never clear to me that it's actually a living tradition that would, like, have anything meaningful to say about today. And it was only when, as a physicist, I went to the US For a while, and there I discovered that there were still Austrians, people claiming to be Austrians. And that was of Course odd for me as an Austrian, it was odd for someone who had a deep interest in the sciences and the history of ideas and economics as well. And then it turned out that the last remaining Austrians in the direct tradition, a direct tradition means that they are students of students of students. It all started with Carl Menger in the early days. And Carl Menger had a few practical students who I consider more important. But then he had more famous academic students, Berman, von Bawer and Wieser. And they had students again like Hayek. And Mises are the best known. And Mises eventually went to the US Also Hayek spent quite a while in the US And Mises in the US Then more or less made sure that the Austrian school survived as its own tradition. So it was really only in the United States that it survived as a tradition. And most traditions disappeared. In old Europe it was just war, totalitarianism. Everyone who was able to was trying to flee the country. Many went to Switzerland first. Also Hayek and Mises went to Switzerland. And then Mises continued on to the US and in the US he found new students. He was never a professor. He was not a professor in Austria, he was not a professor in the U.S. because I mean, the academic system is also already at the time, was not inclined really to open minded discovery. You have a lot of intrigue, political interests, careerists. And Mises was between the chairs. But in the US he found a student called Murray Rothbard who produced a lot of works in very different disciplines. And he was incredibly hard working and he had quite a reach and he leaned over into politics as well. So it was one of these earlier overlaps between modern realist politics, I'd say, and Austrian economics. But it became a very different tradition, I think. So in the US it survived as a kind of counter reaction to Roosevelt and centralization in the U.S. kind of U.S. fascism. I think it's a brand of fascism that emerged in the US as well, because fascism is just like make the state more powerful and try to have a kind of corporate economic structure and try to find meaning in a collectivism of a nation. And that happened everywhere. It didn't go fully totalitarian in the U.S. fortunately, it went fully totalitarian in most parts of Europe. And in the US Then people were looking out for different ideas that had some like scientific underpinnings. It wasn't just like opinions. And in particular entrepreneurs found it interesting that there's an economic tradition that actually understood entrepreneurship and wasn't negative about it or ignored it, that was more open to A dynamic economy. And that helped this American Austrian school tradition to flourish, emerge and be kept alive on a threat. Really was a bare threat. I'd say it's just a few people. So it's this kind of lie hands of people passing it on. And Rothbard's most important student was Hans Hermann Hoppe, who was a German actually. And it was at the time when I went to the US Then Hans Hermann Hoppe was teaching there. And interestingly he then went back to Europe and he became one of my teachers. And in Europe also there was one last Austrian economist who was writing in German on Austrian economics, who was a student of Hayek, who was called Roland Bader, who was an entrepreneur, he was never a professor and he became other teacher. And so then I devoted more and most of my life since then to like learning again this tradition and passing it on and making sure that it somehow survives in Europe at least. And I could connect these other traditions that I had learned as a young man in Vienna. And I was mostly interested in this interdisciplinary overlap. And over time I saw that the original Austrian school was quite interdisciplinary. It wasn't just economics. I think the high point of Austrian economics was the Mises seminar in Vienna. And interestingly it was only a minority was economists taking part. You have philosophers, political scientists, psychologists, but also entrepreneurs and bankers and so on. And I think that was kind of the surrounding context in which the Austrian school emerged. There was a very interdisciplinary project and its main line is a realist understanding of a society in crisis, I'd say. And that's where a lot of the value comes from. It was a reaction against German idealism, which is big ideas. And then later on within the Mises seminar even people realized that something like political theology as a kind of religions of pseudo religions that fill the vacuum that the traditional religions have left with people becoming secular. They didn't really become secular, they just changed the religion to a kind of statist religion. So it's a very, I mean most of politics basically is pseudo religious identities and pseudo religious ideas. And it's also part of this very realistic approach of the Austrian school. I'd say to Demask the big ideas and go back to common sense in a way and just get rid of all the big illusions and big promises that can fulfill the purpose because they are even transcendent. They are just interest based rationalization of all kind of stupid stuff that you can imagine. So I found this tradition to be very valuable in particular in its practical branches and those are much lesser known. It was the two favorite students of Menger, he advised not to go into academia and one went into banking in Switzerland and the other one went into diplomacy and also spent a lot of time in Switzerland. So I'd argue that there's actually a kind of Swiss branch of the Austrian school that is much lesser known, but I think had more impact on the real world. And I think Satoshi Nakamoto is one of those practical Austrians.
- [17:34]
Walker
It blows my mind that there are bitcoiners out there who are not on Nostr yet. Seriously, what are you doing? People just like you shouldn't need to ask permission to use your money. You shouldn't need to ask permission to speak freely. But unfortunately that is exactly what you are doing. If you are still stuck on central centralized social media platforms on Nostr, you can't be censored, you can't be banned, and you can't be deboosted for saying words Elon Musk doesn't like. The vibes are just better there as well because there's nowhere else you can end up having a casual conversation with the likes of Jack Dorsey or Lynn Alden. Noster also has bitcoin payments built in thanks to the Lightning Network. So when you post a meme, a hot take, or just a photo of your stake, people will zap you bitcoin to show you they like it. You can find me on Nostr by going to primal.netwalker and you can check out this podcast on Nostr@primal.netcoin Primal also has a built in bitcoin wallet so you can literally get zapped by people for your posts. Then use those sats to buy, I don't know, a cup of coffee or whatever you want all from the same app. Search for Primal in the App store, go to primal.net or check out any of the hundreds of other Nostr apps out there because you can freely switch between them all whenever you want. So come join the largest bitcoin circular economy in the world and start zapping sats on Noster. I would agree with that completely and there's a lot to, a lot to kind of unpack here. But I think starting just where, where you've ended up with, with Satoshi. I do find it so interesting because there's always the debate between, you know, store of value, medium of exchange, you know, which is kind of more important. And I think that kind of somewhat misses the forest for the trees in the sense that of course they're both important and you're not going to have a long lasting medium of exchange without establishing it first as a premier store of value. But I'm kind of curious when. So when was your entrance kind of to. To bitcoin? What exposed you to this? And when you found it, did it kind of immediately click for you that, like, this was the sound money, that, you know, this was the sly, roundabout way that had been, you know, kind of foretold that this was something that was really going to kind of change the game? From an Austrian perspective, I stumbled upon.
- [19:59]
Raheem Tagizaragan
Bitcoin very, very early, but it did not click, unfortunately. It should. It should have clicked. And of course, there was a reason why I stumbled upon it that early. I was a student, of course, of money and also very interested in the practical aspects. I got a bit involved in E. Gold and all, like the precursors of bitcoin. And I considered myself a cypherpunk. I was an early Internet user, so it was on my radar and was fully on my radar. So I expected there I was looking for something to emerge. But when bitcoin emerged, it really had a great way of concealing itself to me because it appeared to me within libertarian circles. So libertarianism mostly is kind of like ideological branch of what the American Austrian school developed into. A lot of great people that really cherish liberty, but they turn it into a kind of ideology, which is, again, a big idea, and it's not so much about understanding things. So my approach from the outside was, oh, my gosh, like, libertarians found their own money and they just give it value, and it's like trading cards of libertarians. And then I knew, unfortunately, I knew from economics, money is for enemies. It's not for friends. It's to bring together people that don't trust each other because there's no problem to be solved between people that share the same ideology or the same religion or same identity. They don't need money. You can trust each other. You just write it down, and no money is really there to solve that issue. So that was like the initial thing that turned me a little bit away. So I was always friendly. I was always, like, neutral and said, okay, it's great that there's this experimentation. And I really, even early on, I asked cryptographers their opinion. And unfortunately, the experts always give you the worst advice. Like the cryptographers I asked told me, no, it's not an elegant solution. That's not the thing they would expect to be really the solution to the problem. So I took that at face value. And of course, economists, none of the economists really got it and what's really saddening, I mean, none of the Austrian economists got it and most haven't got it yet. So I think I'm the only academic Austrian economist teaching at university who is a bitcoiner or early bitcoiner, at least in this academic tradition. So all the other professors of Austrian economics I know and intercourse with, they may say now that they are neutral at least, or friendly, but haven't really gotten bitcoin. Because the issue is, and you mentioned it a bit earlier, you say, well, obviously it's like two functions of money and it's got to be a spectrum or something. It's not. It can be black, white. But a lot of academic thinking, because it falls into, like having neat categories is black and white. It's like you've got one definition of money and then you interpret it in a way and then you're saying, is it or is it not? And if it's not like a hundred percent, then it always falls into the whole of it's not. And I find a big misunderstanding. I think that that's one of the obstacles to understanding Bitcoin is what would it look like if something emerged from zero. And zero really means you have no clue. You can't know in the beginning. So because I was bitcoin, I had no way to assess that it has a non zero value. It seemed, I mean, in the initial contact it seemed obvious it has zero value or some very idiosyncratic value to a few people maybe who want to collect the digital stuff or take a kind of nerdy interest and things like that. And I only realized it has non zero value with Silk Road. And of course also I came to Silicro for an interest in like cypherpunky stuff. And not really as a customer there, I'd say as an economist, sure, sure. But it also, I mean, at the time I knew it had non zero value also. Again, I thought that's going to kill it because, I mean, you can't start a currency in a black market for drugs. No one's going to allow it. It'll be, if it catches on, they'll outlaw it immediately. So that was the initial thinking, which I think is a very realist approach. So unfortunately, I'm quite realist. I'm very skeptical. So it took a long, really long time. I mean, it was a gradual process. So it clicked gradually, I'd say. But to be at the stage where you recommend other people to add it to the portfolio, even a few years ago, I was still reluctant Even though I, of course, I had it myself for quite a while. It's just, what can you claim to know about things? And that's the humble approach of the original Austrian school is really, you want to look into reality and then it's a kind of entrepreneurial assessment for yourself. But as an academic or scientist, you want to say the things SDR and really separate your own opinions and expectations of the future from what is and what's proven to be. So I was a bit reluctant to be a missionary for Bitcoin, but I think I was the first economist to mention it at the university. I think I was the first one to write about it in an investment book. So I've looked at it for quite some time. So fortunately I had enough time to, I think, understand it. I won't say I've understood it completely. That's a great thing about Bitcoin. There's always something new to learn. So it's humbling as well.
- [26:00]
Walker
You know, I'm curious what you think is the primary sticking point, like, what is the roadblock for many of your contemporary, like, let's say, academic Austrian economists to really fully understanding Bitcoin or accepting that this could be kind of that sound monetary solution that they've been looking for. Is it because they're still just. They think of sound money as gold and that. That's kind of like it's stuck in their head somehow, or is it something else that they. That they bring up as kind of their. The reason why it doesn't fit the bill properly.
- [26:36]
Raheem Tagizaragan
Yes, there's something else. It's the classification of Mises, which is a very useful one, but very tricky in that regard. For Mises originally, fiat is not a moral judgment. He thinks, and he calls this in German zeichengelt, which is a kind of token money. So he distinguishes commodity money, credit money, and token money. And obviously, if you look at it that way, it's not at all clear that Bitcoin is not a token money because it's a token. As a digital token as well. It has these features of something you'd expect to be a token money. And that's very challenging to understand that there can be something like a synthetic commodity money, that. Something as digital as that and as fleeting. And even being a ledger, a ledger would be obviously something that's linked to either credit money or token money. No one would expect a ledger to be a commodity money. So it's very hard if you have this conception, of course, analogies, what you expect things to look like. It's very hard to grasp conceptually. And then in particular, if it's like, if it has this moral load on it, and you may be a gold bark, and you say like, commodity money is good money, fiat money is bad money, and everything is a token. It's bad because it's not like physical. And then it gets even more challenging. So I think there are reasons for it, and it's a surprising story. It's not that easy to understand. And I think the best way to understand it is for empathy is trying to understand Bitcoin is understand people who use it. That was also my approach, and that's, I think, how it helped myself. Long before I saw a use case, I tried to understand people who had use cases for that. And that's not how economists and not how academics usually think how they approach the world. And they are not at all incentivized to do so. And I can tell you, as working at a university, I have to judge students, I have to grade them. So I imagine someone who already understands Bitcoin comes to you as the economic expert and you have to grade him. And it's a new phenomenon to you. You can only take what you've already read and seen. And then in your whole teaching at accredited universities, you have to go through an accreditation process of curricula. So everything you teach basically has to be fixed five years in advance because that's the textbooks that are assigned to the students. That's like the headlines of the curricula. It's all like common knowledge of at least five years ago. Usually it's like 50 years ago in many fields. In particular economics, which really doesn't have like the technology or engineering at least has a direct relation to reality. In economics and the social sciences, you can be very far away from reality. And then it can be that you keep repeating yourself for decades, even though the world changes and no one realizes that it's just not meaningful. So you have a lot of wrong concepts, even not useful concepts that you still have to teach because they are in textbooks. And then we had, in Europe, we had this process of aligning all the curricula so you could always like move from one university to the other to make it all like flexible and open and such. But that has led to a great alignment of what you're teaching. So every university you use maybe a different language, but even now you mostly teach in English and they all teach the same thing because otherwise it'll be difficult to spend one term here and another term at another university. So even that has become more challenging and boring. And I think that's one of the reasons it makes it really difficult. If you're in academics, you have a teaching load, a research load that's in a niche area usually, and it's not really conducive to understanding new phenomena because that will mean talking to someone outside of these university bubbles and understanding other people, talking to other people than academics, which are all state employees in Europe or mostly. This is a very particular kind of group of people.
- [31:08]
Walker
You know, one thing you mentioned just about that economics is, you know, not like a hard science. You know, it's not, it's not, it's not physics, it's not, you know, chemistry. The interesting thing is I feel that a lot of modern economists that are basically of a Keynesian bent, they treat it as though it is as though that, as though they can, you know, they have their fancy equations and they can model the economy perfectly and they can come up with the perfect centrally planned way, the exact right amount of money to print, the right way to fix interest rates. They treat it as though they are themselves, these, you know, scientists. They take away the human element of it. They take away subjectivity, they take away human action. And I think maybe it's worthwhile spending a little bit of time to just kind of, let's, if you don't mind going through some of the kind of problems with modern economics of the Keynesian tradition. Just because I think that's, it's so sad that that has, what has become known as economics and the Austrian side of things is somehow that's just a fringe group of nutty libertarians or whatever, you know, names they want to throw. But really it's like there's not this, this 100% consensus that all of their modern Keynesian models work. And we look in the real world and we see that they don't work. So can you kind of break down how you as an, an Austrian economist kind of regard the, the Keynesian tradition and how that has become just the forefront of, of the face of economics?
- [32:43]
Raheem Tagizaragan
Yeah, I think Keynes was better than the Keynesian tradition. That was also his. He wasn't a good guy. He was a very intelligent one. And that's always dangerous, in particular if you have wrong incentives. And so I'd say economics is a kind of white collar crime. And it works based on the illusion of the white collar. It's like you're the doctor, you're the expert, you're the scientist, and it takes all this prestige from the medicine and the natural sciences. And of course, prestige means power. And it has become very valuable to have that kind of power. And that's also why economics has turned out the way it is. Just look at who's paying for economists. The largest amount of economists that had a job worked in the Soviet Union. That tells you everything you need to know about economics. When you have planning, you need experts to rationalize what are you doing. And that's why now most economists work for banks or central banks or interest groups, or even directly politics. So that's what economics is for. And as a question, if there's in reality, is there anything like economics? And the Austrian economists had a hard time discovering that the discipline they were thought to be representatives of doesn't really exist. There is nothing like economics. There's no way to delineate in the real world economic phenomena from other phenomena of human action. And that's why Huygen and Mises proposed to use different terms. And for Mises, it was one very interesting subclass of phenomena. And that's everything related to human action, because there's a difference. Human beings have a purpose that's very different from the causality in the natural sciences, is when we throw a stone, it's not like a dominant effect because something has hit it. And so we decide to do so, and we do it based on the purpose. And for me, it wasn't a metaphysical speculation. It just say it's the best way to have a useful prediction about what's happening. You're not looking at the outside environment to understand what's happening. You can ask people, you can understand people because you are a human being. And it's a much more sensible approach than trying to model other human beings and trying to calculate their property, inclination to do something and stuff like that. It's much better to try to understand human beings. And he thought there's the two ways of understanding. One is a kind of emphatical understanding. You try to figure out the motives of people. And that for him was part of history. It's like the history of human moods and how they change your human preferences. And then there's a way to conceptually grasp something about human action. There's a logic about human action, and that's the same for everyone is that we have ends and we employ means, used it ends. And these means are within space, time. And you have to rank your preferences. You can't be at every place at the same time. You can't have everything. You can have your cake and eat it all the Kind of stuff that's ingrained logic in how the world works and how we work as human beings. And that's the larger and more interesting part. And then within that, the most developed branch was called Catalactics. And that's understanding human beings that cooperate with each other as a kind of exchange economy. And their cooperation takes a different turn. It's not just your preference for other people, as you understand that other people can be a means to your end and you can be a means to their end. And it leads to this kind of win win cooperation, which is again a whole new order of complexity because you have these feedback processes between people. And we already know from the natural sciences that once you have feedback processes between a few agents, it becomes very complex and you can't use simple physics and simple statistics to get anywhere. It's much better to understand the core principles. And that's the approach of Austrian economics. Treat human beings as real, as real human beings as they are, don't think that you can predict as though they were automatons. And that of course lends itself to more respect, I think, to this kind of open endedness of human endeavors, of you are more respectful, because no one can know with certainty. We are all trying as best as we can and we can learn from each other and we can adapt to that. And all this dynamic feedback processes that help us get along better by cooperation. And that's why also Austrian economists cherish entrepreneurship and money as crucial phenomena. Everything that links human beings together and allows this kind of cooperation is responsible for the largest part of wealth. There would be abject poverty. And of course even the humankind would never have survived without this crucial inclination to be able to cooperate with other people. And that's really the essence of it, I think. And the other approach, and that's the interesting thing, a lot of like Keynesian mainstream economics has nothing to say about the entrepreneur and nothing to say about money really, because they are looking at equilibrium phenomena and very simplified aggregate models of stuff. And I think it's driven by the incentive. If you are the expert and you can bluff yourself through this kind of expert filtering, then you're able to organize. That's how Mises called it. So other than you're not cooperating, you're organizing top down, you can tell other people how to do it. Like you look at Bitcoin, you say, oh, let me tell you how to fix it. That's the kind of typical approach of an academic. I tell you why it won't work, why it doesn't work. But the main reason I haven't designed it top down, I haven't exerted my power. And also in a lot of the criticism you see about Bitcoin is like, who has allowed it to use that energy? Who has allowed you to give it that value? Who has protected you or not protected you from paying that much money? It's all this idea of someone who knows what's best and there's like a true objective value of stuff and you just have to do it by decree. And that's frustrating. Those kind of top down experts, when something happens that's surprising and that's outside of their control, that's basically it. So I think a lot of economics is a science of control, a pseudoscience of control, rhetorics of rationalization of control. And I think that's the main issue with economics. And there's only part of the blame lies with Keynes. So almost every tradition has similar faults there. And I think, I mean we haven't really seen it. If an Austrian academic, Austrian economist had all the power, who knows what would have happened? You know, it can be very corrupting as well. Menge was the mentor of the crown prince but he seemed to have been so realistic that unfortunately he had no practice, practical impact because the Crown Prince committed suicide. Because she follows like, it's hopeless, I can't do anything.
- [40:33]
Walker
You know, it's fair to not put all of the blame on Keynes because obviously there are others who have carried on this tradition and further just taken it to the extremes. And I think we see a lot of that now. And you know, you mentioned just kind of these appeals to authority which I think are so crucial. And that's something, you know, Rothbard would also argue in like Anatomy of the State, that these academics, these, you know, the intelligentsia, they are so crucial for the state to maintain its monopoly on the use of force. Because you need those people who are there to, with, you know, nice, nice voices to go on TV and tell you, well no, what they're doing is totally necessary and it's actually good for you without any. But they put up, you know, some, some fancy equations and they give them Nobel prizes for it, like Paul Krugman and you know, aren't they brillian? And they're published in the New York Times. But they're ultimately just, they're just full of shit. Like there's nothing that they do has any basis in fact or in reality or in how human beings actively operate. And there was the reason when you came on my radar And I wanted to get you on the show. It was back in October and Jurgen Schaf, who is like an economist for the ecb, right him and what's the. Ulrich Binzel. Yeah, they had written a paper and this was, you know, back again in like the last couple months of 2024 as Bitcoin's price was starting to really tick up. And this, their paper I think kind of exemplifies what we will see as the primary round of attacks on Bitcoin this cycle, which to basically to slightly summarize and maybe I'll even just. I'll read the short abstract from their paper just for everyone that's out there because I think it's. Try not to laugh as you hear this because I think it's quite hilarious. But these are central banker economists. They are coming with this attack. And as the price of Bitcoin continues to do what it does in these four year cycles, we will see more of these and it will be used to just justify all kinds of things that will not be in the interest of the people or in the interests of bitcoiners specifically. So this, the paper is called the Distributional Consequences of Bitcoin. And the abstract is the original promise of Nakamoto 2008 to provide the world with a better global means of payment has not materialized. Instead, the focus has increasingly shifted to Bitcoin as an investment asset promising high capital gains. Promoters of this investment vision put little effort relating Bitcoin to an economic function which would justify its valuation. While most economists argue that the Bitcoin boom is a speculative bubble that will eventually burst, we analyze in this paper the impact of a Bitcoin positive scenario in which its price continues to rise in the foreseeable future. What sounds intuitively promising, or at least not harmful, is problematic. Since Bitcoin does not increase the productive potential of the economy, the consequences of the assumed continued increase in value are essentially redistributive. That is, the wealth effects on consumption of early Bitcoin holders can only come at the expense of consumption of the rest of society. If the price of Bitcoin rises for good, the existence of Bitcoin impoverishes both non holders and latecomers. While previous discussions on the redistributive effects of Bitcoin assumed that badly timed trading was a necessary condition for losses, this paper shows that neither poor timing of trades nor holding Bitcoin at all are necessary for impoverishment under a Bitcoin positive scenario. And you read that. And my first thought when I read this last year was are they basically saying if you don't own bitcoin you're going to have fun staying poor? Like were they just kind of making the meme into a paper? Paper. But this is kind of wild. So I'd love to get your take on this because you wrote a great rebuttal that I thought just broke this down really well. But some of the things I'd love specifically for you to comment on here are this idea that somehow it's a zero sum game, right? That, oh well, if some people get rich from bitcoin, that means that everyone else gets poor. They don't even take economic growth and productivity and efficiency gains into. I don't know, where do you even start with this? When you read this, were you just kind of rolling your eyes? I mean, how did you even decide to tackle this? Could you not help yourself?
- [45:14]
Raheem Tagizaragan
Basically, yeah, I tried to understand where they're coming from and then I think the funniest thing about this is that it's not the first time they've committed on bitcoin. And if you look back you see how they changed. It's like of course before it was all the experts telling you it's going to zero, man. It's like it's a speculative pump and now they're actually coming to senses, oh my God, it was all wrong. It may actually increase in price eternally and perpetually and we may have not so much fun staying poor. And that's the distribution of course to worry about. Now it's not about you being an expert and having a well paid job at the ECB and that's all funded from distribution. That's is that important. It may be that even like regular citizens making investment decision without being ordered to do so or being told by their experts and betters may out compete the ECB expert. And I think it's just paradoxical. But in a way I feel sorry for them as well. It's like the, obviously their track record is really bad. So it's not the first time they write about it. They have shown that they were wrong in predicting what's going to happen. And that's what economics claims more or less that it's like the expert science that helps you know better what's happening because that's why you give advice if your predictions are always wrong. And that's one of the interesting things about economics. If you can look at predictions from economists and rank them and see how they fit like the reality and you find out that it's better to roll the dice than ask an economist. So there's no empirical track record whatsoever of economists being right. So obviously, I mean, it's even worse being an economist and having no clue about economics. If you have no clue about economics, you'll make better investment decisions usually because you go for the kind of recency bias. And it's like you buy what everyone else is buying and that's better than buying what the expert tells you to do. So so you may buy some Trump coin and who knows what, but still better than the kind of expert portfolios. So it's a kind of inverse Kramer. We all know that this big problem Kramer is like the prototypical economics guru. And so if you even, even differentiate, like how well known are economists is the better known, the worse is they rank on this kind of track record. So. So the same with those people. And then they fall back to a very sad and typically European position. It's like not at all positive. You see the windows and you start hating the winners. It's like a lot of like anti Americanism in the past, of course, what was hating? Just a more successful economy. And a lot of that is really just hate for entrepreneurs that's coming, that's driving regulation and hate in the sense it's really, you want to be the people deciding about what's happening. You want to feel important. Even though you can produce anything of value, you can contribute anything of importance. And it's really sad for economists. I mean, you dedicated a lot of your life to study difficult stuff. No one has told you that it's actually not useful, it's not valuable. It adds no real value to the world. It's used for rationalization. It's paid for by interest groups. That's what you do. It's a kind of rhetorics that you provide and that you get your salary from. And you have to rationalize now what is it that you're actually doing and how does it have some value? And then it becomes this kind of moral political stance as at least we are fighting the bad ideas kind of stuff that also groupmen, of course did a lot in the past, like kind of preacher becoming a preacher. If you can provide anything useful, you want to at least be a preacher and tell people even if he's successful, he's successful for the wrong reasons, like because he's a bad guy, because being poor is better, is morally superior, being stupid is more or less superior. And then of course leads to kind of this stupid, wrongly egalitarian or perceived to be egalitarian diversity nonsense that we have in Europe as well these days, which is just basically just a facade or a way to conceal particular interests. Those are all well paid jobs that are different from real work. Is that even if they provide no value, there's no consequence. And then you have in politics. Politics is like the central occupation where even if everything you do is wrong and has the inverse results of what you claim, you get sometimes even more power and money. If you see education fail, then of course you need more money for education. I mean more power for politics to engage in education, spend money on education. And we see that in every field. And economics unfortunately is pretty close to politics. The more wrong you are, the higher the chances that you'll end up with pretty good positions somewhere because someone needs you. Because they really need this kind of rhetorics. Because if reality isn't going your way, you need to make a point and be loud and cry about how it's all unjust and it's wrong. It's like kindergarten politics. I'd say if your stuff is ugly and fails, you gotta shout how everyone else is unfair and it's unjust and everyone else is to blame for your errors. And unfortunately that's a lot of the European mindset of they. And it has driven me away from my home country Austria. It has really receded in this kind of mindset. It had the post war economic development which was very strong, became one of the richest countries in the world, but then tried or fell to the idea that you can solve every problem by spending government money on it. And the population became dependent on that and it created a whole bubble of people that really live in a parallel world. They never had any check any reality check in their life and think, but they think they should decide what's happening. They have no clue. They wouldn't be able to run a small shop anywhere. But they want to manage the economy and they want to save Europe and save the euro and all this kind of nonsense. If you look at the people who claim that they are like saving Europe, it's just, it's mind boggling. It's mind bogglingly stupid. People that end that make you end up with stuff like the cookie regulation in Europe and stuff that's like obviously, you know, like the cookies on the websites, like the cookie warnings on websites, like obviously stupid stuff. No reason whatsoever. Takes a lot of effort and money to do, has no consequence. It's just, it's laugh, it's international laughter. I mean everyone is laughing about this stuff these days. But that's what you end up with. People who have no clue about reality, couldn't, wouldn't be able to produce anything of value, but have their well cushioned jobs where they tell how everyone else is wrong and they got to decide and regulate.
- [53:12]
Walker
One of the, one of the mind blowing things about that Jurgen said in his, in his Twitter thread specifically was that just like the last thing he said made me think of this. He said the societal impact is real. Missing out on bitcoin is different than just a lost opportunity. It means actual impoverishment compared to a world without bitcoin, and then goes on to say, though this wealth redistribution could destabilize society, latecomers, though unable to pinpoint the cause, will feel frustrated as their purchasing power erodes. And this part is just so ridiculous because it's like Jurgen, this is what we live in right now. You're just describing the current state of the world without the non bitcoin world, the fiat world. You're describing it. Most people live in an actual state of impoverishment compared to those at the top. Fiat is a, you know, essentially a redistribution mechanism. Like he's essentially taking all of the negative things about fiat that these sort of, you know, legacy economists never talk about and projecting them onto bitcoin like this. This is insane sound. Money doesn't destabilize societies. Broken money destabilizes societies. Like it's this insane game of projection where it feels like he maybe was going through some sort of like a mental break where he's like, okay, bitcoin's not going away. Because to your point, he'd written many things in the past about how bitcoin was going to zero speculative bubble, you know, bubble again, bubble again. And now he's thinking, okay, well I've got to find something to throw at this that'll stick. And it just blows my mind because there are still many people who will read that and think, oh yeah, that's right, why are those greedy bitcoiners impoverishing me, stealing my purchasing power? It's like your purchasing power is not being stolen by bitcoin. It's the only thing that has a chance to protect your purchasing power. Your purchasing power is being stolen because the ecb, the Fed, every central bank in the world creates money out of thin air that you have to work for. And this to me is just, I mean, what do you think it takes for people in the, like, let's say not everybody is going to care about economics, right? But they do care about how much their money buys. They care about what they're able to do for their family. They care about if they're able to take a, a vacation and put food on the table and live a modestly comfortable life. So they may not care about economics as a discipline, but I think they do care about the real implications and to me, and certainly the bad implications of terrible economic policy that we see right now. But to me it seems that Austrian economics is really this natural thing that should appeal to more people because it is based, in fact, it's based in you, the individual, your human action. Why do you think it's so difficult? Or why do you think the Austrian school still remains so much of a fringe, kind of a fringe movement in the grand scheme of things? Because it just to those of us who have started to study it for many more years than I have, obviously. But when I started getting into Austrian economics a couple of years ago because of Bitcoin, because I read Seifudine's book and that sent me down a whole rabbit hole, I said, oh my God, this is the first bit of economics that I, I've ever encountered that actually makes sense. But it's still just this small group of fringe extremist people with their kooky ideas. Why is that? What does it take?
- [56:49]
Raheem Tagizaragan
Well, there's a large reason to it. And also for the Shah of Bintai paper, the main discrepancy is of course, in the one world, the FIAT world, they are ECB economists. In the other world, there are no coiners. So from their perspective, it's really interest, I'd say. And that's what Rothbard called true class theory of interest. And Rothbard had shown that it was. Most people think it's Marx who came up with class theory, but Marx just got it wrong. He put the problem between the rich and the poor, which is nonsense. And Rothbard showed that class theory is much older than Marx and goes back to French thinkers like Charles Dunoyer and Comte. And this kind of class theory is of course powerful and less powerful and those who are beneficiaries of a power structure and beneficiaries of distribution and those who are not, those who are paying for that. And of course, what most people care about is their own interest and how to perceive that. Unfortunately, in a lot of Western countries, and that's true in particular in Europe, in Austria, for example, more than half of the population is dependent on government. So that's their boss, that's the hand defeats them. So it seems against their interest to pursue anything that would minimize the role of this distributive classes like Schaff and Bintile who tell you what's the right distribution and then who should have how much, then it would be fair because it's a way for people to get their share without any merit. And I think that's a part of it that's behind it, unfortunately. I think if Austrian economics comes along as too ideological, it doesn't help the adoption. So I have respect for that and I understand that of course liberty is a powerful idea and of course it's great. You have a lot of people who really have an interest in more freedom because they are not beneficiaries. But for the rest, it then seems like an ideology is like, oh, that's like those people, they're opposed to myself, I'm not wealthy, I'm not an entrepreneur, I'm not mobile. I gotta take the other ones because I'd rather get from some ECB grant trickling down or some handout. It's more likely for me to achieve than be successful with a new enterprise or an investment decision. I don't know, I don't care. No one has ever told me that I could be responsible for debt, that I could achieve something on my own. And it's this kind of mindset, of course, it's the perception of people that they tend to benefit from the institutions. But that's also the reason why Austrian economics gets much more traction these days. So when I started in Austrian economics, I was the only one in Austria. I think at the time there was so few people interested and even in the US it was a very niche phenomenon, so you really had to seek out the people. Now it's more of an Internet phenomenon. There's even word of like presidents falling, the Austrian school. So I'm not too much into politics. It just shows you as a symptom that more and more people turn towards ideas that are not just like legitimizing the existing institutions because they think that they may not be the beneficiaries. And that's dropping in every Western society. The median voter, like the one in the middle that's decisive for change is figuring out that maybe he's not the beneficiary of all that's happening. Maybe he gets that handout here and that handout there. But overall he thinks relatively it's not getting better. People are very pessimistic about their children and next generations invest in Europe. That's also a reason why they don't have children anymore. And I think that's the reason why the institutions are really in trouble. And that also means, of course, institutions like academia, the media, mainstream media and so on. And that's why outside ideas that seem outside Austrian economics actually was at the time the mainstream of economic thought. It was the leading economies of the time. It somehow was relegated to the fringe. But not because Austrian economics changed so much. It was that the world changed. Unfortunately, in Europe first, it was really in the diary of Goebbels, there's this line where he writes, there are no people into liberty anymore. We don't have to worry about them. They have disappeared. And basically in Austria and Germany at the time, it was, you only had fascists, socialists and national Socialists. So the fascists are something else. Only Stalin told everyone that fascists are National Socialists. They were a distinct group. They were in Austria, they were fighting the National Socialists. But every Austrian was either a fascist or national Socialist or a Soviet style socialist. And why did it happen? I think it was really, it was a kind of ersatz religion. We say substitute. People were looking for orientation in a time of dynamic change. And intellectuals really didn't fulfill their responsibility. They misled the people. They really liked this, like being kind of secular preachers now and getting all the power that the church had before and really abused. That was a great betrayal, I think. And that somehow relegated the truly old European ideas to the French. And now if they're coming back from the French, is because this, this institutional structure is becoming faulty and it shows and it's fragile. And people are realizing that maybe those ideas are not in their best interest.
- [62:58]
Walker
It's really interesting, I think, that as you look at, okay, you look at Austrian economics and to your point that, okay, it's making a resurgence because of all of the problems within the current system. Like, people are seeking out solutions because the problems have become so acute that they say, okay, something here is clearly not working. The lines that I've been fed must be false. Maybe there's something else out there that explains this. And I think that's, you know, it's similar to Bitcoin with just. At a monetary level, right? People see, okay, what? You know, I work hard, I try to save my money. Even if my investments perform, you know, at whatever 8% a year, I still don't feel that I'm getting ahead. I'm still just keeping my head above water, treading water, you know, trying to stay, trying to stay afloat and not drown. What's wrong here? Is there an antidote to this? And I think that's how a lot of people are starting to come around to bitcoin again, because they feel something is so broken. And all of the explanations they get that it's the greedy corporation's fault that you have inflation or that it's, you know, it's actually the ultra wealthy not paying their fair share or whatever. Whatever explanation they received, it's not satisfying them anymore. At least it's satisfying some. But a growing cohort of people say, no, that doesn't smell right. There must be something else at play here. And so while perhaps the whole world isn't going to come around to Austrian economics, I think Bitcoin is a great tool by which people end up adopting kind of an Austrian view of economics, at least as it relates to sound money and hopefully to human action. But I'm curious if you see that Bitcoin and Austrian economics is kind of this natural synergy where you have ultimately sound money, but you also have a free market for that money. We don't have a free market right now because the market for money is controlled by central parties. Right. So does is this something that you see as kind of the, like these two things go hand in hand like that and going forward you start to see an evolution in how we interact with the state or the role of central banks. Like how do you see this relationship and then how do you see it starting to play out as we get into the future?
- [65:19]
Raheem Tagizaragan
Yes, I mean bitcoin on face value is very different. It's a tool. Whereas Austrian economics, it's meant to be a tradition of understanding the world, but they are more closely linked than it may seem. And one thing was that this open minded way of trying to understand the real world leads you to real problems and real needs of people. And then you are interested in tools and available tools. And I think that's this kind of practical tradition of Austrian economics I mentioned before. So already in the second generation it led to the kind of solution of private Swiss banking was a kind of very important underrated financial layer at the time where you had really anonymous bank accounts where you just had to have a number. So your own number was the custody you had like a password, a passphrase, and that enabled you access to wealth and you were able to transfer it, a real barrier instrument. That was what it's like. And that has disappeared, of course, and a lot has become worse which had opened up the possibility of Bitcoin being a tool or some better tool actually addressing those needs that governments all around the world were trying to make it more difficult to transfer wealth around the world. And that was already a crucial insight of the early Austrian school when they left Austria, when they moved to Switzerland, in part, he realized, okay, that's the biggest issue if we want to avoid impoverishment. And it was really the richest part of the world fell into such a deep poverty that in Vienna the children were starving at the time, which unimaginable impoverishment to the stupid ideas of the time and the destruction caused by those stupid ideas. And that's why, coming from Switzerland, their efforts and diplomacy started and in finance started to reintegrate the world to find new rails for wealth and goods. And that fortunately worked out in a way. So we saw the level of globalization again merge. Of course, we had then this wrong kind of globalism, the same with the eu. So Mises was very early in proposing some kind of economic cooperation in Europe. But of course this idea was hijacked later on. So there was some great ideas about the free movement of goods and people in Europe, which was then hijacked in this kind of Euro EU ism by bureaucrats. And the same has happened with globalism. Of course, a lot of bureaucrats pushing that one world kind of stuff. But this kind of really free interaction of people led itself to try to solve practical problems there. And I think that led Hayek to the insight that he was trying to think about private entrepreneurial offers of money or of monetary nature, his denationalization of money. And then his prediction, he gave in an interview of this slight roundabout way. Everyone, every Bitcoin, I hope, knows that one, that line, which I think is one of the greatest predictors. And Hayek had a heavy influence on two writers who wrote the Sovereign Individual, which was also like, it was traveling entrepreneurs looking around the world. And they were looking actually to find a new place somewhere where they could buy sovereignty from a government, potentially, because they realized again, just from being open to the world and embracing this kind of mobility, that new opportunities will arise and new tools will be available, in particular the Internet. And so the sovereign individual interestingly predicted this kind of Internet money. They didn't know what it would look like, but they talked about, I think, even a cryptographic Internet money. And that was, I think, one outgrowth of the practical tradition of the Austrian school, this kind of trying to figure out where this will come from. And it goes back to Menger. He thought that all the interesting things come through discovery. It's a bottom up process. It's not someone knows it all. And he organized it it's top down. It's all the interesting things like money, like language are bottom up discoveries. We want to communicate with someone and then we figure out, okay, you understand me, you don't understand me, I have to change something. It's a bottom up discovery procedure. No one can set in advance what are the right words. And the same with money. So I think the original Austrian approach lend itself to like being open to discover something emerging. And of course bitcoin fits the picture pretty well for now. We can never be sure. And I was very, unfortunately, far too long, too skeptical because it was something new and we got to figure out and see, okay, I'll try it out, you try it out. I will never force anyone to try out something new because that's this humble approach you got to figure out maybe we are all wrong, who knows? But that's, that's. This kind of discovery procedure is a very important concept in Austrian economics. And it's more entrepreneurial as you try it out. And the better, the more people try it out on the wrong cost. It's like entrepreneurial way. If it fails, you fail with it, you lose the money you put into it. And it's very different from. And there's also one part of the critique that Charv and Binside don't get right. Even if, if we are wrong about bitcoin, it's not like there's a system constructed like the Fiat system. It's like, okay, we'll fail with our investment decisions. And that's why they get it so completely wrong that they think it's like the early bitcoiners had a privileged advantage. And it's so stupid. I was an early bitcoiner. It was so difficult, it was so immensely difficult to now have. Like, I bought bitcoin at zero and now it's 100,000. It just starts. That doesn't happen. No one really huddled from 0 to 100,000. Very few people did. Which was so immensely difficult to understand. It not because people are stupid, it's due to something real about the world. That's uncertainty. The Austrian school of economics was the first tradition that really embraced uncertainty. There is fundamental crucial uncertainty. We have to risk things. We have to try out things no one knows. We have to learn. That's the great thing about our existence. And by not having any place for uncertainty in the models, economies fail ever and ever again because they only look at the winners. It's like, oh, you're right, that's unfair. Now you have so much now it's 100,000. And it's just so, so, so odd. You don't see the risk you've borne through uncertainty and hodling through like more than 15 years. So almost impossibly hard.
- [72:21]
Walker
It's amazing how, what of a goldfish memory these types of central bank lackeys have, where they were literally during the depths of the bear market. Just this last bear market, we only have to go back a couple of years. Bitcoins, it's very easy to dunk on bitcoin when it's just gone from 69,000 down to 16,000 or 15,000, whatever it got down to. And they're saying, we told you you were stupid. We told you bitcoin was going to go to zero. You are clearly an idiot. You should have listened to us economists. We were right, you were wrong. You know, haha, like, you know, you deserve what you got. And then just a couple years later, it turns out all those people who ignored the central bankers and their economist lackeys at the depths of the bear market are up many multiples.
- [73:08]
Raheem Tagizaragan
Right, but all the professional investors, yeah.
- [73:12]
Walker
You'Re beating, beating everyone. But then is there any moment of self reflection of saying, huh, you know what, we got that wrong. Maybe we should take a different look at this. No, no, no, we're still right. It's that we just weren't right in the exactly correct way. And now we're going to change it to, well, this just proves that bitcoin is going to impoverish everyone because look at how much money you've made. And it's just insane because it lacks any sort of like critical thinking at all. It's just this. And then to say like, oh, you got, you just got lucky that, you know, you've made this money off of bitcoin. And first it's like number one, bitcoin is the money. I'm not trying to make fiat off of this. I just hold this new money. Now that is better. I have the money. I'm not. My bitcoin stack is still the same or, you know, growing with my dca. But then the other thing is, it's like you just got lucky. What do you mean? You and all of your Keynesian contemporaries have been telling us how stupid we are this entire time. That's not easy to deal with until you realize that they're just completely full of shit.
- [74:17]
Raheem Tagizaragan
But I think it also comes from academia. That's what I meant before. I have two grade students, so I cannot be wrong. I mean, it determines their careers. I can't go back like two years later and say, sorry, I was wrong, you were right, you got to change the grade now. It's just, I work that way. I think that's why it's not a very conducive climate to really understand something new, because everyone will be wrong some of the time and in some aspects it's just uncertain, it's just new.
- [74:50]
Walker
One thing, this is a slight switch in gears, but I'm curious of your thoughts on this as we go forward. Do you view that bitcoin will essentially continue to coexist with Fiat central bank money, with state money in a just sort of a hybrid way like that? That hybrid system is basically inevitable. Fiat is going to stay around. You know, maybe there's more responsibility with the Fiat because there's this other thing that people can flee to if Fiat is mismanaged. Or do you foresee more of a complete replacement? Like, is that what, what is, I guess, you know, hyper bitcoinization? What does that look like to you?
- [75:31]
Raheem Tagizaragan
Bit of a scary scenario. Hyper bitcoinization would really mean a collapse of all fiat currency and that's a collapse of a world order. And so far in the west it hasn't been too much to general disadvantage that world order. I say we could be in much worse places on the planet. So it means uncertainty and we can't tell if it's for better or worse. It shouldn't be a hard time. So usually processes are gradual, but that doesn't mean that they have always go the same speed. So you can have a rapid change happening, but it's hardly ever 01 replacement. So I don't think we'll have the big crash advertised on tv. And then that's hyper bitcoinization. Everyone drops everything and all Fiat disappears into zero. No, I think we still have to figure out then the layers and what part bitcoin plays. And some will try to keep it away. And you still have places where you don't have access. And so it'll be gradual and it takes a while, but it can be fast at times. It can switch like from. And it has already happened incredibly fast in the last 16 years. Incredibly fast change from being something so stupid that I even thought I was not taking it serious to something that I would now recommend. Everyone should have it in its portfolio as a very like down to earth, skeptical, very careful, conservative one. When consulting other people, it's like just look at the track record, calculate it for yourself, figure out what's the proportion and that's more or less entering a mainstream perception that at least it's something that every. You don't have to be crazy to have bitcoin in your portfolio. It's just not a question how much. And you still considered crazy if it's a very high or 100% allocation. That may change gradually as well over time. So what does hyper bitcoinization mean? I think one aspect would be yes, this breakdown of a world order. I think we're going into a more multipolar order. And I think bitcoin could be the kind of neutral money which for western people will be difficult times in some places at least. And bitcoin will be more prominent, but it will also be reviled more for that reason being the neutral money between blocks that are enemies. The thing that an American or Russian and a European could still use and the Chinese while there's war between those fronts. So a bit like the Swiss franc or gold of course was in the past. And that doesn't mean that everyone uses everyday bitcoin. I still think I believe in this concept of layout money. And of course just alone for scaling bitcoin, we know we're happy. At least there's lightning. I'm pretty bullish about ecash and stuff. I believe there's also be other layers. There'll be credit can be denominated in bitcoin, but it can be denominated in anything you like. It's just the numerator. So I think that's people figuring out and trying to find out. There can be new financial instruments that use bitcoin but take away a lot of the volatility and there'd be a place for financial instruments doing that, giving you some of the upside or most of the stability and stuff like that. So I think it's still a discovery process where it ends up. I think if we look at a now and then later point where bitcoin is more prominent, I think it has geopolitical implication. It means there was a need for bitcoin to play a more prominent role. And that means a more multipolar order. And certainly it means that it's not the unipolar order of the dollar being the old dominant settlement layer. But for a while it could remain a very prominent one. Of course and there's still a lot of country that are way behind and they'll just go through the phase of dollarization before they go to bitcoinization. So there's still some more dollarization to happen in the world. Even though we are going toward A time when bitcoin may be more prominent in international settlements.
- [80:20]
Walker
One thing just speaking of the geopolitical implications, one thing we haven't covered yet is, I mean, we're very much seeing things play out now at this nation state level. Right. At least in the US And I know in Switzerland as well, I believe there's these proposals for strategic bitcoin reserves. This is obviously a huge shift. Now, El Salvador we mentioned earlier has been leading the charge. They're a dollarized economy, but they've been accumulating bitcoin. They've been stacking sacs a lot more sats sats than I stack every day. You know, they're putting like a full bitcoin up there or occasionally more, which is great to see. But now we're talking about, you know, El Salvador. This isn't a knock against them, but it's, it's a very small country. I think they're punching above their weight class for sure. But when you look at the U.S. that's, that's huge. You look at Switzerland, that's a big deal for countries like that to be seriously considering it. But I'm curious what your thoughts are on this, you know, or is this something you view positively? I mean, we discussed earlier also, you know, bitcoin is money for enemies. Anyone's free to use it. That doesn't an individual, a company, a nation state, a dictator. Although a dictator probably doesn't want his people having, having bitcoin. But where do you fall on this? As we start to enter this very fascinating era of nation states looking to put bitcoin on in their treasuries, seemingly with haste.
- [81:46]
Raheem Tagizaragan
Yes, it's a risk for bitcoin, of course, but my experience tells me that bitcoin has turned up be antifragile. There are a lot of things that seemed like risk for bitcoin have helped it in the long run. And so I'm pretty optimistic that that's just a symptom of adoption. And I can tell you from Switzerland, where adoption is pretty high, but mostly in asset allocation. That's of course also where bitcoin has worked really well. There are lots of wealthy people in Switzerland, so a lot more people. And there's a lot more of a culture of investing. So everyone more or less invests. And every bank here around myself, where I am in central Switzerland, publicly promotes bitcoin as part of the allocation, opens it up to the people. And now if you look at the Swiss national bank, they have to weaken the Swiss franchise because there's so many Europeans who'd rather than hold onto or take refuge in the Swiss franc than in euro if they haven't discovered Bitcoin yet. And in order to weaken it, they buy all kinds of assets. The Swiss national banks, they have to buy dollar assets, they have to buy euro assets to relatively weaken the Swiss franc and they think ensure the competitiveness of their export industry. I don't think it's a slight like it's correct or morally right what they're doing, but still they try to manage the frank this way. That's why they have reserves. It's not to back the franc, it's to weaken the frank in a way. But if you look at what they have to do, they have to buy so many dollar assets and euro assets and they try to do it in a way that they don't buy the worst assets. So they had Meta shares at one time the Swiss national bank was one of of the biggest shareholders in Meta Facebook.
- [83:39]
Walker
I didn't know that.
- [83:40]
Raheem Tagizaragan
That's just crazy. Why would a national bank have a reserve in Meta stock? And the reason of course they have to buy all kinds of dollar assets and then they rather buy dollar assets that potentially pay dividends. And then of course if you compare now Facebook Meta shares to bitcoin, it's much less odd than just thinking all these reserves like gold and vaults and stuff. It doesn't work that way. So most of the gold has been sold off in Switzerland as well. There's still some for historic reason because the psychology of it, they don't want people lose trust in their money, but they don't buy any gold anymore. They buy dollar and euro assets, which means shares of stupid companies which is not always sure that they produce value. And it's no reason whatsoever for a Swiss central bank to own, own some U.S. company stocks. They just do it because they have to. And so that's why there's this initiative now to say at least, I mean the constitution still tells the central bank to at least buy gold or have gold. Part of the reserves should at least be gold. So the initiative only tells, okay, let's change the law a little bit to just say that the reserve should include gold and bitcoin without telling how much bitcoin should be just to open it up, up. And if you look at it this way, it doesn't look at all like a fringe idea. It's like of course, yeah, if there's a central bank and it buys assets because it produces Swiss francs to weaken it and then buys off some assets. Why not buy something that in the long run may have more value than some company share somewhere in the US Or Europe? So I think it's part of the symptom of a gradual process and you just compare. I think it makes a bit more sense to have it in a kind of sovereign wealth fund, if you look at it from the point of view of a politician. So I think that's also where the strategic bitcoin reserve comes from initially the idea. It comes from the strategic petroleum reserve where you claim, okay, let's buy oil when it's abundant and have it in store stock when there's a big crisis or a war or whatsoever to make sure that our tanks are able to drive to ride. And so I think if I was in charge for a government, and I'm at the moment only consulting one presidential candidate in Suriname who wants to do that, implement that strategy of having bitcoin actually in a sovereign wealth fund. And I think it makes sense. If you have royalties coming to a country like from oil or other resources, and you don't want to spend everything now and distribute it immediately to the electorates, which I think is always a good idea, then for sure it's a very neutral approach. Okay, what should we do with that money? Should we hold the dollars? I'd say, okay, I'll save some for future generations. That makes sense. And of course, I advise everyone to include bitcoin in debt. And I think it's the more moral asset than just owning US Treasuries. Why would you, like, own the debt of another country, of another sovereign country that's not yours, that you have no direct link with? So I think it's the better asset, even though I don't think that bitcoin needs that. It's just a symptom of its adoption. And politicians realize that they need bitcoin now or may need bitcoin. And that's really the story here. I don't think it's really like Trump pushed Bitcoin to 100k. It's like it was going there anyway and Trump realized for every reason. Okay, let's write something that's not hurting my chances of winning an election that's helpful. And a lot of politicians are realizing that. We have quite a few politicians in Switzerland who are explicitly pro bitcoin even now, like the chairman, former minister of finance, who was about to drop out of the parliament, now much too late realized, okay, maybe I give it a last shot. Now he's pro bitcoin now he's claiming Germany should have a strategic bitcoin reserve. The former minister of finance in Germany. So that's quite some momentum here already. But I don't think it's like some evil bitcoinness in the background like Schaff and Binsale would claim, pushing their bags. It's like it's a gradual adoption process. And I think everyone who goes to the world with open eyes and asks this question has real. The responsibilities. Like now there's this bunch of money. How would you allocate it? What are you doing? And let's look five years later, how have you been doing? We'll gradually understand that it's not just such a crazy bet to have some in bitcoin.
- [88:44]
Walker
Yeah. One of your points that I want to emphasize is that bitcoin doesn't need governments. It doesn't need politicians. Politicians and governments need bitcoin. Bitcoin will be fine without them. I mean, we've. Most governments have been, if not, if not downright hostile. They've been very antagonistic toward bitcoin for its entire life. It is only now they're beginning to warm up and bitcoin still exists, despite the antagonism from various nation states around the world. And so clearly they need bitcoin. Bitcoin doesn't need them. And I think they're slowly coming to that realization that, that, oh, wow, this thing that maybe our country, depending on what country it is, tried to stamp out, that it tried to kill. This thing's not going away. We can't kill this thing. Okay, wow. This thing is becoming an increasingly massive asset. It's a global asset and there's nothing we can do to stop it. So it's kind of like, okay, either we pretend it doesn't exist, which is going to be very difficult and it's going to be very tough to justify pretending it didn't exist, especially in the years to come. Or you get on board because there is a massive advantage in being a first mover, especially when it comes to these larger nation states who do have the power of the printing press. You have a massive advantage there. I'm curious though, do you see the adoption of Bitcoin by central banks, by governments building strategic reserves? Do you see that, you know, prolonging the life of those, you know, the early adopters, let's say the Swiss or the United States? Maybe Switzerland's actually a better example because the US has the reserve currency. There's other complexities there. But let's talk about Switzerland, does that end up prolonging the, you know, basically making it a longer and better functioning central bank than it would be without it? Does that actually give the central bank more Runway into the future? Because they now are holding an asset, not backing their currency by it, but they're holding it as a reserve asset. But does that keep them alive longer in this fiat game?
- [90:53]
Raheem Tagizaragan
Yes, it could be. I mean, the only reason why they are considered reserves is not because they're back in currency, is that in case your currency comes under pressure, you can sell it off again to buy up your currency on the market. So if anytime in the future, people doubt the viability of the Swiss state. And of course, Swiss politicians are not much better than politicians elsewhere. It's not a utopia. It just inherited so much historical capital and was so lucky in avoiding not only the world wars already, a 30 years war before, and was lucky to be small enough for two stupid ideas and truly diverse for stupid ideas of collectivization and stuff. So it was really lucky. But if Swiss politicians continue in the direction they're continuing, that's just like everyone else. It's just much later and with much more Runway and eventually they run out of this Runway. But they figure out, oh my God, some stupid people in the past decided to have Bitcoin as our S and P reserves. Yes, they'll buy them quite a few more years, I think, eventually.
- [92:09]
Walker
Yeah, it's gonna be interesting maybe. Yeah, no, I mean, ultimately that, that will, you know, if, if that happens. Now, this is not to say, oh, you know, we need these central bankers, but the reality is that we have them operating in, you know, most countries in the world that have their own currency. If your currency is mismanaged, it fails. And when it fails, your country is thrown into upheaval and disarray and chaos. Ultimately, that's, you know, who does that hurt? It doesn't hurt the people that are closest to the money printer. They're already. Okay, they've been, you know, you know, cantillionaires, excuse me, since the, you know, the beginning. But it hurts the normal people who were struggling to get by already. And then there are basically anything they managed to scrimp and save is completely destroyed. Throws you into chaos. It opens you up to all sorts of negative externalities down the road as you try to look for a solution to this. So it's like, and again, Bitcoin doesn't care if you're a central bank or a government or a corporation or an individual. We're all treated the Same if you have the private key. I want to be conscious of your time, Rahim. But one other thing I did want to ask you about, which I think throws some people for a loop, is just, just. I think there's a lot of misconceptions about inflation and deflation. Certainly there's a lot about inflation because of the way that governments talk about it, as, you know. Well, inflation's just prices rising for your groceries and it's caused by greedy corporations price gouging. I think there's also a lot of confusion about deflation because when we talk about deflation usually, or when mainstream legacy economists talk about it, they talk about it in the context of fiat money. And in fiat, in order for fiat money to work, you have to keep expanding. Right. You have to keep the hamster room going. But in a bitcoin world, deflation is a very different thing. It's a very good thing. Right. So can you break that down a little bit, just in a way that maybe makes it more accessible to people and kind of why that distinction is important?
- [94:13]
Raheem Tagizaragan
Yeah. As always, there's a problem with the terms. They denominate two very different phenomena. And I'm not saying which one is not the right one to use. It's just so different phenomena, you use different terms for it. Originally, the Austrian school used inflation for an increase of the money supply or basically unpacked money supply in the old systems and deflation as the shrinking of the money supply. And of course, one of the reasons why money supply can shrink is a kind of crisis. So that's why deflation has this kind of wrong, bad sound to it. So of course, big crisis situations usually mean a collapse of the money supply because you have to write off credit and everything is like, no one can pay back the credit. That's usually a bad situation if it's out of the sudden happening. But then prices rising and prices going down is something very natural always happens. So the ostrich school always knows, like there's no stable price level whatsoever. But there can be correlations. If on average all the prices are going up, that must mean a loss of purchasing power. It must mean impoverishment because you have to work more for the same goods. And one way to look at like wealth increase in history is of course looking how much time you have to work for the things you can afford. And there were very great statistics on that, like how much do you have to work to have one hour more of light. Now it's deep dark here. Of course, being able to afford the light. One of the reasons light has become very cheap. And that of course is a kind of deflation of light prices, which just means we are wealthier. And that's how wealth arises usually is you work less for the same or better results. That's wealth. And that means lower prices if, if you go for the unit that your work is priced in. So it's really conflating two things. So of course some idea, there was no bad intent. I'm not so convinced about that. I'm okay if we decide that now inflation means increase in the price level and deflation means a decrease in the price level. Be it so. But then stop arguing that deflation is a monster. Like the ECB did this, they did propaganda for children painting like there's a monster deflation weighting if your money is not losing 3% a year. Of course only official because actually the money supply was increased 10% per year. And they did some measurements on like the estimation of citizens how much they got poorer. And it's like the felt inflation and it was much closer to the real increase of the money supply. But of course the experts argue, no, we've measured the ignorance of the population. They don't know it's actually only 2%. They claim it's like this, this approach. And now they did this propaganda for kids drawn like cartoon of the deflation monster coming when your money is not losing at least this like 2%. And now they've of course increased that. What's the right amount of inflation and the proper amount of, of inflation for stable money. That's just crazy. That's just crazy. And that people are too stupid to cope with things getting cheaper and not realizing if everything got cheaper and your salary doesn't go up, that doesn't mean that you're poorer. I mean that was one of the arguments of course from Keynes was like, oh, people are too stupid. If you want to lower wages, you have to just make everything else more expensive. So people won't realize that the wage is going lower so they think they're having more money. That was really just the argument for inflation back then in Great Britain. It's like, oh, our wages are not competitive, they are too high so we can sell at that cost and people will lose their jobs. So let's just like make everything more expensive and reduce real wages without people realizing it and without the unions realizing it. That was really the argument. And I think that's just such an approach to human nature. I mean if you pertain it, if you continue looking at human people like that, of course they start to behave like that. And then you say, oh, we can. We have to protect the people. They couldn't cope with things going cheaper. And then realizing, okay, maybe I can also lower my salary expectations because I want to be. I'm working to be able to afford a good life and not to have some arbitrary number. Number in my account. Yeah. So it's like, think about deflation and the risk and the threat of deflation.
- [99:12]
Walker
It is just crazy. And I know one moment that really clicked for me too was reading Jeff Booth's the Price of Tomorrow where he talks about, look, technology itself is naturally deflationary. Like all else being equal, technology makes everything cheaper. Each. With each industrial revolution that we've had, each level of that revolution across the past few hundred years, it's made things cheaper. The reason, and there's a reason if you look back at historic price levels. Before the creation of the Federal Reserve, for example, in the US things were pretty steady and many things got insanely cheaper. But now it's like everything gets more expensive all the time, despite how much more efficient we are, despite the fact that, you know, Amazon has, you know, you know, fully autonomous warehouses that are shipping you things that are, you know, are able to do just in time to, like, it's insane how efficient we've gotten. But those efficiency gains, those productivity gains are not passed on to people because they. The rate of monetary inflation is still eclipsing the rate of technological deflation. And it's just such a sad thing to think about that most people have just come to accept prices going up as completely normal and natural, but it's not. It's not normal and it's unnatural. It is. It is a forced state of prices going up. They shouldn't be doing that. Maybe in some, you know, prices are going to fluctuate. Yeah, they may go up and down, but the general trend should be down because that's what happens when you get more productive, you know, and it's just, it's wild to me, but I'm very hopeful that so many more people seem to be waking up to this. I really, I appreciate your time here today. I could ask you. We're going to have to do this again. Maybe when we're in El Salvador we'll find some minutes for it. But I've really appreciated your time here. Where do you want to send people? Where should they find you? I'll make sure to link it all in the show notes.
- [101:10]
Raheem Tagizaragan
Thank you. I can follow me on x.com there. I usually write in English, and I have a website, Scholarium, at. That's how you can reach me.
- [101:22]
Walker
Fantastic. Well, again, really appreciate your time. This was a pleasure. And I will see you in El Salvador.
- [101:28]
Raheem Tagizaragan
Yes. Looking forward to that. Thank you. Okay.