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Foreign.
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Principles of Economics. My complete guide to Understanding Economics is now available in hardcover, audiobook and ebook from seifeddin.com, amazon and many more booksellers worldwide. And now I am also teaching a course based on this book on my website seyfeddin.com Principles of Economics will run the whole academic year from September to June and will have a new lecture every two weeks as well as weekly live online discussion seminars open to learners from all over the world and from all walks of life. Whether you're a student, a professional, or a retiree, you are making economic decisions every day and this course will arm you with the wisdom of centuries of economists to improve your economic decision making. You'll also get a free book of Principles of Economics. If you sign up for the course, go to safedin.com and sign up now.
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Hello and welcome to this episode of Block Party. I'm Nick Carey, co founder and Vice Chairman of Blockchain.com today I'm joined by Dr. Saifuddin Amou, Economist, educator and author of the Bitcoin Standard, one of the most influential books ever written about Bitcoin and sound money. It's one I personally gift to many people that are sort of curious about Bitcoin and hard money. Extremely great educational resource. He's also the author of the Fiat Standard, Principles of Economics, the Gold Standard and Fiat Food. Safedin has become one of the most influential voices in Bitcoin by arguing that money is not just a financial tool, it's a civilizational force. It shapes how we save, build, eat, learn, govern, and think about the future. Now, a lot of people are always obsessed about the volatility of the price in Bitcoin. Safe's work asks a much deeper question and that question I think is more relevant today than ever, which is what kind of money does our world need to create and what are the trade offs and consequences of different decisions in those designs? So Saif, welcome to the Block Party. We're excited to host you. You and I have shared spaces at FII at other events around the world and your book is literally one of the first things I hand off to both new employees and also friends and family that have said I just don't get it yet. So I'm so excited for this interview. But before we get jumping into things, you've sort of tied together, you know, writing about monetary theory, history, politics, government and food. How do you do that? What's your central idea that you're really trying to tie together in all of these books that you've written.
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Well, first of all, thank you for having me. And I just want to begin by saying thanks for the introduction. That was really kind of you. And I should. I wanted to say that yours was the first bitcoin wallet that I ever used. I downloaded blockchain.infox way back in the day. Yeah, Very, very old school. And I'll tell you how old school I was. I think maybe this is the first time I confessed to this in public, but I was so clueless when I first downloaded it that I remember I backed up my seed phrase by emailing it to myself in plain text on my email. And it took me a few months to figure out that that was a stupid thing to do. But fortunately nobody managed to take the bitcoins that I had there. So thank you for building that and thank you for being my first bitcoin wallet. Now, to get to your question. Well, I think the issue ultimately is the fact that money is something that is permeating every aspect of life. When you buy food, when you build a house, when you save for the future, when you pay your taxes, when the government wants to launch a war. All of these very important things that pertain to your individual life and the life of your society are heavily linked to money. Money is one half of every transaction in society, and therefore, when you mess with the money, you mess with every transaction in society. And so I think if you want the secret of the trade, perhaps the reason for my success is that the majority of academic education and research in economics about money is financed by central banks and it's financed by government. And so it must tiptoe around the giant elephant in the room, which is the problem of inflation. And therefore, especially student loans. Yeah, especially student loans, of course, is a big part of it. So that creates an enormous blind spot and it creates an enormous amount of green fields of research that people haven't looked into. So if you look at academic research, I mean, there are tens of thousands of people who have PhDs in economics, and they're out there publishing all kinds of research on all kinds of obscure things. I mean, there are so many bitter economic debates lasting decades between professors about the marginal impact of increasing the amount of proteins that they give to people in poor areas. And it's, you know, they do so much research on this, but there's not a lot of research on the impact of inflation. Because if you were to actually open that Pandora's box, you're going to see that it is so influential, so important, so disastrous, and there's no escaping the conclusion that we should probably not give the government a central bank and a money printer and allow them to increase the money supply so radically and life would be a lot better. But if you come up with that conclusion, you know you're not going to make it very far in academia.
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You're here. Yeah, yeah.
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And so I've just embraced that. And what allowed me to embrace that is Bitcoin. But by writing about Bitcoin and finding an audience of bitcoiners, I could talk about those things, feed my family, still make money from selling books. And it just meant because I was into this world, because I could talk about the issues of inflation, it meant that I had just an enormous amount of topics that I could explore from a perspective which most people do not explore because they try and steer away from the issue of inflation. And so you think about wars, you think about the impact of inflation on war. I mean, obviously I'm not the first to come up with this idea that inflation funds war, but a lot of people have spoken about it. Ron Paul has spoken about it, A lot of the Austrians have spoken about it. But it's not very common in academia. Then you think about the impact of inflation on savings, on the ability of people to afford houses, and you think about it in terms of the impact that it has had on our food, on why governments continue to promote all of these food, foods that are very bad for people. And they keep finding all of these reasons why you shouldn't eat the foods that are actually good for you. And I think it's really, really compelling. Once you see it through the lens of inflation, you see that this has had an inflation aspect to it. It's been many years in which, as inflation gets worse, you see the government messaging on food shifts toward, hey, you should probably eat this cheap industrial crap that is going to not make you feel so poor, because the foods that make you feel poor because you can't afford them. No, no, no, actually, they're bad for you. And so we have all this research about all of the reasons why you shouldn't eat meat and all the reasons why actually, you know, industrial lubricant is actually good for you. You should drink seed oils every morning. But they don't quite say that. But there's a lot of seed oils in nutrition science, they're constantly promoting inferior foods because I believe those inferior foods are cheaper and they help understate inflation. And you see this in the US you see it all over the world. You see governments are always moving into this kind of direction. And this is, I think, what has made my work salient to a lot of people, particularly among bitcoiners, is because once you shift to bitcoin, your money is no longer losing value and you're able to accumulate wealth over time. Your perspective on money and society and inflation is changed. And this helps you understand this. Well, once you see how the impact of inflation pervades everywhere, you can't unsee it. And that's that, that's, I would say, the theme that permeates throughout my work.
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It's so interesting you say that because I think so many families that feel like the world's changing quickly have this conversation around the dinner table, like, why is everything so expensive today? You know, olive oil's up, meat's up, a hamburger now is, is more expensive than it was when my grandparents. So that everyone's feeling the consequences of this addiction to inflation. And this is actually kind of a recent trend. Human beings went through various economic systems trying different technologies to facilitate the exchange of wealth over time. They used to barter, they've tried gold coins, they've tried paper backed hard assets, commodity currencies. And then, you know, we sort of entered this era over the last 70 years of this experiment of an inflationary currency system promoted by central banks and the cabal of, you know, approved banking syndicates that can basically get free money from the central banks and then indebted everyone in the world. And so, and when I think you're right is that everything's gone up in price. You know, education, health care, a Big Mac is cheaper than an organic apple. And that makes no sense if you just fundamentally think about it. So I wanted to hear your perspective. Do you think it's more dangerous for people to not understand Bitcoin or not understand fiat? And how do you teach your students about this sort of insidious nature of inflation and how it's really this kind of hidden tax as everyone's wealth is slowly destroyed over time.
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Yeah, well, it's a difficult question to answer. I think understanding fiat is very important so that you are able to protect yourself from inflation and then you understand how the world works. And I think it's something that I only understood after I understood bitcoin. In my case, it was only after I wrote the bitcoin standard that I. Yeah, and then I decided to really write the fiat standard. And the idea behind writing the fiat standard was that I was going to, you know, with bitcoin standard, I wrote a book aimed at somebody who is Completely ignorant of how bitcoin works. You're trying to explain it to somebody who's alien to the world of bitcoin. And then I thought, let's bring this kind of fresh first principles perspective on the question of money to examining fiat money rather than just bitcoin. And that's what I did with fiat. And so I thought of fiat money as if it was a digital currency. What's the supply cap? How does it work? Who runs the nodes? And when you think about it in those terms, it's actually incredibly powerful as an analytical tool. Which is why I sometimes think maybe the fiat standard might be my favorite book. Because it's been attached to money over hundreds of years because of the political and social institutions that have evolved around it. So you really whittle it down to its very basic fundamental ways in which it works. And then that exposes the way in which inflation comes along. It exposes the way in which debt creation effectively creates money. And then when you understand that, and that really might be the most powerful idea in the fiat standard, which is that in Bitcoin we have a mining process. You know, how it works in gold. You also have gold mining. That's how gold comes into circulation. But in fiat, you've got credit creation. That's the mining process. Fiat mining is the creation of credit. Every time a bank issues a loan, they're making no money, they're mining fiat. And once you understand that from that perspective, you then realize, okay, that's why everybody on earth is up to their eyeballs in debt. Because when you take out debt, there is a bank out there that has created money. They're not just lending you their money, they're not lending you their clients money, they've created money. They devalued everybody else's money by giving you a loan for your home. So obviously they're going to have a very strong incentive to try and get as many people into that as possible. And then you see the flip side of the coin is that, yeah, they devalued your money to issue a loan for you. For me, let's say. So that means that your savings are worth less and less over time, and therefore you are unable to afford to buy the house. So then how are you going to buy a house? You're going to have to also get into debt because you can't just save your way into acquiring the house. So being able to understand that was really revolutionary. And you know, it happened to me at the time when Michael Saylor showed up. That's when I was writing the fiat standard and him explaining basically how rich people work, which is that what you do as a rich person is you don't hold, you know, you don't have a billion dollars in a bank account. Rich people are in debt. Rich people. The richest people are the people who have the largest negative fiat balances. In other words, it's counterintuitive. You think, you know, you want more money, but in the fiat game you want more negative balances of money. You want to acquire as much debt as you can so that you can acquire hard assets. And you want to have hard assets on your assets side of your balance sheet. And then, yes, and you want to have the fiat on the liability side of your balance sheet. And the rich people that have figured, well, the people who have figured it out, that helps are the rich people. It's not necessarily the rich people figure it out. If they don't figure it out, they stop being rich. Because if you, you know, if you inherit a billion dollars or if you inherit a significant portion and you put it in the bank account, you're just going to be losing and bleeding purchasing power every year. But if you decide that you're going to use that to buy a hard asset that is worth, use that as the down payment for a hard asset, well, now your money is secured a significant asset that appreciates over time, whereas your debt depreciates over time. So understanding that is really the hack toward understanding fiat. And I only understood it after I wrote the fiat standard. And I think it's extremely useful. And I wish I understood it earlier because before I got into Bitcoin, I was hostile to debt. I thought debt was a terrible thing. One day all of this is going to blow up. And it's, you know, it's ideological in a sense, and it's more of a moral perspective than it is an economic perspective. But from my economic perspective, as somebody who understood that there was something called inflation, you should have understood that that is the way out in the fiat world. The way you beat inflation is you get into debt and then inflation works for you. And it's a terrible thing because it means that the more you can borrow, the more you can protect yourself and the more you externalize the costs of inflation onto others. And that's one of the many ways in which it is very immoral. And so, yeah, it is terrible. But then on the other hand, I think maybe understanding Bitcoin is more important because if you understand Bitcoin, then you just stack bitcoin. And now you have a hard money that appreciates over time. You don't need to get into debt, you don't need to worry about inflation. Your wealth is preserved in a thing that appreciates over time. And I think, you know, given that Bitcoin goes up, there's an enormous opportunity cost involved in this. So you're better off maybe understanding Bitcoin than understanding Fiat. It's difficult. I mean, if you understand both. Of course you do the Michael Saylor strategy, which is you accumulate Bitcoin and you accumulate debt and your debt continues to drop in value, your Bitcoin continues to appreciate. It's a no brainer in a sense. But I mean, well, maybe not a no brainer because yeah, debt is risky and dangerous and you could lose your collateral. So you want to be careful when you do that. But yeah, both of them are important aspects of understanding economics. Now for a quick word from our sponsors. With fiat money constantly debasing, preserving your wealth isn't an option or luxury. It's a financial and moral imperative. If you're familiar with my work, you know the only financial advice I ever give is to buy and hold Bitcoin for the long term. This has never failed anyone. If you want to buy Bitcoin, I strongly recommend using Swan, a group of hardcore bitcoiners laser focused on making Bitcoin easily accessible. While most scramble to react to each new crisis, Swan Private clients are already positioned in the only monetary asset with absolute scarcity, Bitcoin. Swan Private partners with families and institutions who share a principled conviction in Bitcoin as the foundation for multi generational wealth. With concierge service, deep expertise and uncompromising security, the Swann team helps clients exit the crumbling Fiat system and secure their future in sound money. Today, Swann Private serves more than 5,000 high net worth clients who have purchased more than $4.5 billion of Bitcoin and put it into cold storage. If you're ready to move beyond the false promises of Fiat, start your long term Bitcoin strategy at Swan.
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Now.
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Finally, Daylight have delivered a fantastic full function tablet with a paper like screen that's easy on your eyes and great for outdoor use. I've been using the Daylight computer to write my next book and it is absolutely fantastic and it has led me to invest in this company myself. Check out my interview with Anjan katta in episode two. 4. The Bitcoin standard podcast is brought to you by Coinkite. Coinkite are my favorite makers of Bitcoin hardware. They produce the Legendary open dime, the first bitcoin bearer asset, as well as the reliable cold card hardware wallet, the excellent stainless steel seed plates for storing your seed phrases and the block.
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I have to say that, you know, you had mentioned how you would work with some students, and I occasionally get the opportunity to spend time with young people, and I began to explain to them what you've described as the fiat operating system. This sort of nebulous where does the money come from? And everyone takes it for granted. They go, the central bank makes some of the money, or the mint makes some cash. And somehow, like, that's the only instrument of money in the world. And so the financial literacy is very low in our academic and even, I would say, more prestigious institutions. But when you look at it, and I think the way you describe it is like, this is a system and operating system. Let's look at the functions of it. What are its purposes, its designs, where are its bugs? And you will begin to understand that the fabrication of currency out of thin air, that then gets lent to banks at basically a free rate. And those banks then issue credit to the economy. And that is done at a wild level that through something called the money market, that basically money multiplier effect, wildly increases the amount of currency that exists yet year on year. And so once people start to see that, they go, wow, this thing seems to have the ideology of a cancer cell. And, you know, people feel it, but they don't actually know how it works. And when every year they're doing the responsible thing, they think by saving a little bit, putting it in their bank account, earning 1 to 2% interest. But in reality, everything else is getting more expensive. Their ability to purchase basic commodities, energy for themselves and heating their homes, you know, and more, just is deteriorating at such a rapid rate. I think this is such an interesting moment to introduce the alternative financial system that bitcoin really promises. So one of the things that bitcoiners always, I think, left a rally around, which is, you know, fix the money, fix the world. And if you see that fiat is basically causing, you know, I would say, malalignment in market incentives, globally, across everything, then by fixing the way your money works, you could arguably, you know, solve a lot of the big challenges in the world. And I wonder if you'd spend a little time maybe helping people. Imagine what a world where bitcoin was a predominant financial operating system, and what could people expect in that world that would be different from what they're experiencing today?
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Yeah, well, the topic of my last book, the Gold Standard is precisely this. I think I've invented a new genre of books, which is economic fiction. And it is a story, it's a novel history book, economics textbook which describes the 20th century. If Fiat Money had died in 1915 during World War I. And then we go back to a gold standard. Basically, airplane entrepreneurs invent a gold clearance system called btc, similar to Bitcoin. That's the thought experiment. It's what would have happened if we had had Bitcoin in 1915. And what would have happened is that because people can take their gold out of their local bank, which means they take it out of the central banking system. As soon as the government started to print money in 1914 to finance their war, the monies, the value of their currencies, collapsed. And so then that means there's no more war. World War I ends in 1915 because all the soldiers desert the battlefield because they don't have food and they don't have weapons. And then we go back to a world in which government money doesn't work, everybody needs to use physical gold as money. And then the whole book is a thought experiment of what the century would have looked like. So I'll try and summarize the main ideas. I think perhaps the most important one is just simply the aspect of the devaluation of money. And if you think of it, since 1914, when the world really went off the gold standard, every single person that's alive Today, the last three, four or five generations of their family, have lived for the last 112 years now have lived under a system where the value of their money has constantly gone down. And so you, your parents, their parents, and their parents have all suffered from inflation over the last 112 years. And just think about the implication. If each one of these people had not suffered from inflation, if the value of their money had actually gone up every year by around 1 or 2%, how different would the world have been then? Think about all of the hyperinflation that takes place. Think about all of the banking collapses, all the bank confiscation. I mean, these things have happened so frequently throughout the 20th century, in the century of fiat. And ultimately, the thing that is driving them all is the ability of the central bank to create money, which is devaluing the currency, which is creating all these business cycles, creating all the financial failures and destroying people's savings. So the first thing that happens is you get rid of that. So now imagine all eight of your great grandparents having had the ability to save and then hand over Their savings to their grand, to your grandparents who hand them over to your parents, who then hand them over to you. Your life's going to be very different because in the real world, they've just been constantly getting robbed, either slowly or quickly in various speeds. So that's the first aspect of it. And then the flip side of that is, well, I'm getting to keep all of that purchasing power. I'm not getting robbed. So who took that purchasing power? Well, in our world, that purchasing power went into the hands of the governments and the banking cartels that run the central banks. And what have they done with it? How would the world have looked different if they didn't have all that money? And the answer is, all these wars, all the death and the destruction, was financed by this money. There's a reason why the 20th century was the most violent century per capita, and that's bucking a trend that had been going on for hundreds of years. If you look historically, wars were becoming less and less deadly, and the civilized norms of war are becoming more and more common all the time. You know, thousands of years ago, war meant murder. You just went and murdered everybody and you took their woman as slaves and you took their children as slaves or whatever. That's what it was. But over time, we as humans became more and more civilized, and we understood that this is just not a good way to go about things. And by the 19th century, wars, particularly in Europe, in the most civilized place in the world at that time, wars became a truly civilized thing. So France and Germany would be fighting each other in a battlefield where, while the cities of France and Germany continued to operate normally. And then at the end of the war, they sit together and they make the deal, and you take this piece of land and then you pay us this indemnity, and they sort it out. And throughout this whole thing, people in Berlin would be trading with people in Paris. And the civilized life continued. And war changed the person, changed the political authority that was collecting taxes. It changed the sovereign, but it did not overrule private property. You continued to own it. So when Germany and France fought over Alsace Lorraine, at no point was the private property of the people of Alsace Lorraine in question. If you were German there or if you were French there, you. You still owned your house. Whether the government was German or French was only consequential toward whether you were able to pay your taxes or not. But that all goes out of the window in the 20th century. We get back into the world of total war, and that's, you know, it began in World War I, but it then got worse toward the end of World War I. And then by World War II, we got back to the. You know, they started using airplanes for bombing civilians. And it was. I think it was the British who first used that in World War II. And since then, this has become increasingly normalized, because the reason for that is that ultimately, once you are able to print money, once you're able to control the currency, the ability to finance the war is no longer contingent on the government's own finances. So in the 16th, 17th, 18th, 19th century, increasingly, you were restrained as a sovereign from fighting wars. And you had to be responsible politically, economically, and militarily about how you conducted the war, because you had a stash of gold in your treasury, and you needed to manage that wisely. And if you ran out of gold coins, you ran out of military. You were no longer king, and then you lost your throne. So that made you a lot more careful, that made you a lot more responsible. And in a sense, it isolated the people of the country from the war. The wars were fought by professional armies. You hired soldiers, so soldiers were expensive. You didn't just enlist people like slaves, and you didn't enlist people's wealth as if they are your slaves. They kept their own gold coins, and their gold coins continued to work regardless of what the government did. So France and Germany are fighting each other. Your bank account is safe, your checking account, your coins, your gold coins are still going to work. You are German. You go to France, you go to Italy, you go anywhere. You can spend your money. It doesn't matter now when we go to the totalitarian war of inflation in the 20th century, now everybody is conscripted, either financially or militarily or usually both. And the reason for that is that now your government is not just fighting until it runs out of its own stash of gold. They're fighting until they run out of purchasing power in the hands of all, all of their citizens, all of the people who use their currency. So if you're living in France, the people that are in France are all using French francs. They're paper francs now, and the French francs are being devalued. So you may not be interested in the war against Germany, but the war is interested in you. Your prices are going up, and you're not quite sure why it happens this way. As soon as we started fighting the Germans, my breath is more expensive. But, you know, my grocery store that's next to my house has nothing to do with the war in Germany. But why Is my bread becoming more expensive? It's basically taken more than a century and still the vast majority of people don't draw the connection. I mean, you know, you look at the war in Iraq, the majority of Americans don't think that the economic problems that the US suffered in 2008, 2009, and the inflation that it has had over the last 20 years, they don't draw the connection between that and the war in Iraq and the trillions of dollars, dollars that the war cost. The connection is very real, but it's very difficult to see. You just see prices rising and you can't really draw the connection. But take away the ability of governments to inflate the money supply, and then suddenly war becomes a lot more expensive, governments have to become a lot more responsible citizens, become a lot less involved in the war, and wars become more civilized in the sense of we're fighting over territories, we're fighting over who's going to be the sovereign. But it's insane for you to violate people's property rights if you're the winner of a war because you're destroying the goose that lays the golden egg. It's better for you to keep Alsace Lorraine peaceful, let people keep their property and take them over. You know, switch the language in this, in the school, switch the name of the on the municipality, switch the flag, whatever, do all of these things. But you want the people there to continue to farm and produce and work as productively as possible so that you can skim the tax from them. And that's just completely different. When you are able to essentially take all of their wealth in a few weeks through inflation, it changes the calculus. If you have the ability to just expropriate all of their wealth through inflation over the next few months. Months, then yeah, that actually sounds attractive compared to the alternative of letting them remain peaceful and prosperous so that you can skim off a little bit of money in taxation over the coming decades. And so the war is a big aspect of it, the inflation is a big aspect of it. But then these are the kind of more obvious implications, but then the more deep implications, the ones that I discuss in depth in the fiat standard and in principles of economics and in the gold standard and the Bitcoin standard. Let's face it, I'm always talking about this. It's just the implications, the second order effects. And that's okay. It's not just that your grandparents would have been richer and you would have been richer if you hadn't been robbed through inflation. Your government would have Been poorer. But how would everything else have changed? And I think the most important aspect here is what I call. I don't call it that, it's time preference, I didn't invent it. But the concept of time preference, which refers to the degree to which you discount the future. So people are always discounting the future compared to the present. You always prefer the present to the future. If I told you, would you rather have this house today or wait 10 years? You prefer to have it today? Right. You could get 10 years of living in it, and you may die during those 10 years. So you miss out on the house. So if given the choice between two identical goods today or tomorrow, you'll always prefer, prefer to have it today. So therefore, people always have a preference for the present. But what distinguishes us as human beings from animals is that we lower our preference for the present because we become more and more future oriented. And the more future oriented we are, the more civilized we become, the more we're able to delay gratification right now in exchange for gratification in the future. Once we're able to make that mental leap from think, from going from instant gratification toward future provision, that's the beginning of the process of civilization, as my favorite economist, Professor Hopper calls it. That's the initiation of civilization. So if you look at most animals, they don't have that identity. If they are hungry, they eat. Yeah, exactly. You're hungry. You just keep walking around until you see a deer and you grab it and you eat it and that's it. And then you chill for another couple days and then you're hungry again and you do it. You don't have the ability of, hey, let me set up a deer farm so that I always have a steady supply of deer. We don't have that, but we as human beings, we can do that. We can think, all right, let me build a spear so that I can catch the deer. So instead of hunting today, I'm going to go hungry today because I'm going to spend the time building a weapon so that tomorrow I can hunt faster. That's civilization. And maybe my original contribution to economics is to explicitly tie time preference to the hardness of money. So over time, if you look at historically, I think human time preference is constantly declining. Not constantly, it's generally declining, but it goes up when there's a war, when there's a natural disaster, when catastrophic things happen. We have to become more short termist.
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Right.
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If you're stuck in a war zone right now, then, yeah, you might Want to spend all of your life savings to get out of the war zone. And it might sound like it's you're being financially responsible, you're being very short termist, but it's very rational. Yes, you're going to lose everything, but you're going to save your life. So it makes sense. So people become a lot more short termist in their approach when they're facing problems, when they're facing uncertainty, when they're facing violence. And the flip side is, the more secure you are, the more secure you are in your property and the more secure you are in the future. And the less uncertain the future is, the more you're able to provide for your future self, the more you're able to sacrifice in the present. And therefore the more you save, for instance, so the more capital you accumulate, so the higher your productivity goes. And that's the process of civilization. And I think this process is inextricably linked to the hardness of money. So as we develop money as a good, we suddenly open a whole new avenue for future provision. Because now we don't just provide for the future by accumulating stuff. We don't just build, say, arrows and weapons and things that we use for hunting. We don't just accumulate land and homes. We can also accumulate a liquid good that can be converted into everything else. So I don't have to save food for next year by having actual food sit in my house. I can just keep money. And then next year I could take that money and exchange it for food. And what's really powerful about it is a obviously money lasts better than food. But what's even more powerful is that money gives you the optionality with food. Next year you're stuck with the food. You only have the food, but you might not need the food. You might need something else, you might need shelter, you might need clothes. Money is the optionality. And so money allows you to save for the future and allows you to provide for the future with a lot less uncertainty. And so therefore, the better our money is at holding its value for the future, the more future oriented we become. And that's why as civilization advances, we see that our money gets harder. Because as our money gets harder, as our money becomes better at holding onto its value into the future, as we move from say, seashells to copper to silver to gold, we keep watching our money get better at holding onto its value. And that makes us more and more future oriented. And that's essentially the process of human civilization that was going on for thousands of years. And I argue that that process essentially took a giant U turn back to decivilization in 1914 because we went from a form of money which is gold, whose supply increases every year at around one and a half to 2% per year, very limited. To a form of money whose supply increases every year by about 7, 8%. So if you look at the last 60 years, government currencies have gone up in supply by about 7, 8% per year. And that's a huge difference. It doesn't sound like it's a big thing yet. Going from 2 to 7 might not sound like a big deal. It is if you understand how compound interest works. Yeah, it's huge.
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You have your savings account every seven, eight years, your purchasing power is dropped by 50%.
- [35:17]
B
Exactly. Yeah, 7% is. Yeah, it's about 10 years to drop by half with 7%. And that's just the best fiat currencies. That's the dollar and the euro and the yen or so on. But the average fiat currency is going up in supply at around 14%, which means that the purchasing power drops by half in five years. So now this means that your ability to provide for the future is compromised. So if you want to think about the implications of that, look at a country that's going through hyperinflation. That's the most extreme form of it. If your currency collapses, you look at places like Zimbabwe or Venezuela or Lebanon that have gone through hyperinflation recently. When your currency collapses now, everybody's just living day to day. Everybody's just trying to make ends meet until the end, end of the week, the end of the month, and fewer people are able to make plans for the long term. You can't really think about what are we going to be doing for the future, what am I going to be doing five years from now, ten years from now? You can't save for the future. You can't plan for the future. You're struggling to just make ends meet to the end of the week. And then how does that get reflected in everything? Well, you become a lot less moral because you're much more desperate and you have a less of an incentive to behave in a way that rewards you in the long term. And you have more of an incentive to take advantage of people and to behave in a way that rewards you in the short term because you may not be here in the long term. If you're starving and you're hungry, you may not be alive in a year. So what difference does it make to you if you're going to compromise your reputation by engaging in theft? Well, if I steal money right now, I'll be able to survive until next year. And it's better to survive with a bad reputation than to die with a good reputation. Well, I mean, some people might disagree, but a lot of people will take that.
- [37:05]
A
Most people would make that trade.
- [37:06]
B
Most people would make that trade. So you see, that's why crime becomes more prevalent and people become more short termist. So inflation is essentially hyperinflation on slow motion. But it's a similar process. Yes, you see more criminality, less morality, less long term provision. And I think it's reflected through everything. It's reflected. And you see this everywhere. I mean it's why we, you know, you see it in architecture. In the 19th century and 18th century, houses were built to last. When you built a house, you built it so that it could. Yeah, exactly. And if you walk around any city today, all the nicest buildings are 19th century buildings. And you look at 20th century buildings, they were built essentially for one generation. You build the house and 20, 30 years later you need to knock it down and rebuild it. And you know, 100 years from now, you look at a city like London 100 years from now, I think there will be more houses built in the 1900s surviving than houses built in the 19. Sorry, in the 1800s. There'll be more houses in the 2000s surviving from the 1800s than from the 1900s. Because a lot of the 1900s stuff was just disposable that was meant to be used for only a few months because you can't think long term enough to justify spending money for a house that's going to last 100 years. Who cares about what happens 100 years from now? It's me, me, me, me, me. And then you could just see this kind of short termist, high time preference behavior reflected on all aspects of life. I think you can see it in morality, you can see it in how people deal with their families and how little importance they give to family as opposed to what it was like in the future, in the past. I think this is just a. It's an endless rabbit hole. And I've written four books going down that rabbit hole and I think I've got another four in me. Now for a quick word from our sponsors. The Bitcoin Standard podcast is brought to you by the safehouse.com my independent publisher and bookshop selling the best bitcoin books and high quality cloth hardcovers built to last for generations. Most books these days are Pretty fiat. They're flimsy and they fall apart quickly and I did not want that for my books. So I set up the Safe House especially to provide you with beautiful, long lasting classic cloth hardcovers you can proudly pass down for generations. You can get copies of my three books, the Bitcoin Standard, the Fiat Standard and Principles of Economics. And you can also get copies of Lyn Alden's Broken Money, Parker Lewis Gradually Then Suddenly and Matthew Lishiak's Fiat Food to which I contributed a few chapters. We now offer bulk discounts so you can buy books for yourself and for the friends and family you'd like to learn about bitcoin. Buy any two books for $50, any five books or more for $20 per book and for more than 50 books, it's only $15 per book. Go to the safehouse.com thesaif house.com where you can get all of these books in high quality cloth hardcovers delivery delivered worldwide and get 10% off for paying with bitcoin. This podcast is also brought to you by the Bitcoin Way, your professional Bitcoin IT team offering you personalized, secure and comprehensive solutions for every step along your bitcoin journey. The Bitcoin Way offer live concierge service to guide you with your bitcoin cold storage, running your node, privacy best practices, inheritance planning, corporate strategy and and multisig solutions. They don't touch your coins. They guide you through the process of acquiring your coins and securing them. If you'd like to make your setup safer and more reliable, book a consult with them and see what they have to suggest. If you want to give someone the gift of bitcoin, get them this professional service that will ensure they start off knowing exactly how to manage their coins and not lose them. Go to thebitcoinway.com and start bitcoining more more confidently.
- [40:59]
A
Wow. Well, I think you've done a really elegant job of painting this portrait of just how insidious this conscription is that it's because money is basically growing in an extra extraordinary way, in an unnatural way. And any natural system would have corrective mechanisms for any type of thing that was doing this. And so, and we see it, like you said, in the proliferation of violence. We see it in the way everything becomes more expensive. The changes culturally in short term thinking versus long term investment in our communities and our society and our art and culture. And I think one of the most interesting thought experiments would be, you know, maybe a counter argument someone would say was like, well, the standard of living has increased a lot over the last hundred years. Like, people aren't, you know, as poor as they used to be. Well, imagine how much richer and how much more advanced and civilized we would be had it not been for this veil of confusion that was sort of cast over especially the. All the major economies of the last century. So absolutely very interesting and thought provoking. So I had a couple, maybe one or two last questions, and then we'll let you get on with your day. You know, for the listeners who are convinced that the current financial system is broken but sort of unsure what bitcoin could mean for their own lives, what is the mental shift you think they might need to make? And like, how would you encourage them to practice sort of learning more about bitcoin or using it or acquiring it? Like, how should they think about that? And what sort of words of wisdom would you, would you share with them?
- [42:28]
B
I think the. Based on my experience, I think the reason for the success of my book is that it answers the why of bitcoin. And I think a lot of the confusion comes from people stuck in the how without thinking about the why. There's a lot of technical detail to the way in which bitcoin operates. And, you know, I'm not going to lie and pretend that bitcoin's just very easy. You know, you just spend 15 minutes online, you'll figure it out. You need to understand what a private key is. You need to understand the technical aspects of how this thing operates. And it's. It does require some kind of effort, but people are not going to be motivated to put in that effort unless they're able to see why they need it. And the why, for me is just very simple. You know, put aside the technical aspects. The why is that your money is constantly declining in value. And you see this in terms of prices rising, and you think it's just natural because all of our lives, everybody who's alive today, their entire life, prices have been going up. And that's just completely normalized. And it doesn't make sense. If you understand the basics of economics is supply and demand. So if the supply of something increases, then you would expect that it becomes more abundant. So the prices decline. Now we have more cars, more apples, more homes, more oranges, more everything today than we did 10 years ago and 20 years ago and 30 years ago. And yet all these things continue to become more and more expensive over time. And the answer is, it's not that they're becoming more expensive. They are actually just. It's the money that's becoming less and less valuable. So these things actually are, if you think about them, in real purchasing power terms, in terms of the wages, no, things are getting cheaper, but they're getting more expensive in terms of the money. So your wages are kind of going up. They're not going up as much as most of the prices that you care about. But the real issue is that your savings are declining. And then you are put in this position where you can't just hold on to money and watch it and accumulate wealth with the money. You need to go out there and invest. You need to borrow in order to buy a house. So now you're going 5x leverage on real estate in your neighborhood, which you know, you're becoming a speculator on the value of the real estate in your neighborhood neighborhood as your saving account. You can't just have a saving account where the money just sits there. No, it's now tied in your. Your financial portfolio is now tied into your neighborhood. And so a bad neighbor moves in. It's not just that it's bad noise for you. It's now destroyed your bank account, basically, because it's destroyed the value of your bank account, which is your house. So you need to become now a real estate speculator. You need to understand stocks, you need to understand, you need to figure out all that stuff. You need to have a financial plan. And all of that stuff was not required for your great grandparents who lived under the gold standard, because under the gold standard, they earned the gold and they just put it under the mattress and they knew that five years later it was going to appreciate, it was going to have a higher purchasing power. Well, today you're having to get into a leverage on your house. You're buying stocks, you're buying bonds, you're trading Donald Trump tweets, you're buying the latest meme coin, and you're looking at the latest shitcoin projects, white papers, trying to figure out which one is going to be the next one to do a 10x. And you're out there, you know, speculating on the Iran war and the Russian Ukrainian war, and you're out there listening to Central bank of Japan. And then at the end of the day, if you look at it in terms of how much you're making, you know, probably you're not making 2, 3, 3% after taxes, the capital gains tax and everything. You're probably not making the 2% that your grandparents were able to make by just keeping their gold coin under their mattress. And now think about the cost of all of that time you are spending on essentially being a part time hedge fund manager just to keep the wealth that you've already earned. That's the travesty of fiat, I think I use this in the fiat standards is that essentially you have to earn your money twice. You go out there, you know, you work as a dentist or a car mechanic, you do a job, you've earned the money and now you just want to keep that Money so that 10 years from now when you're retired, you can buy food with it. But if you just keep that money under your mattress, 10 years later, it's going to buy you maybe half the food that you could buy today. So in order to be able to just keep that, you have to earn it twice. You got to spend 10 years being a hedge fund manager, which means that you are not going to be as good of a car mechanic or as good as the dentist or as good as a barber because you can't focus on your craft, your job as a dentist. So this is what bitcoin solves. Bitcoin brings back the peace of mind that your great grandparents had where you can just earn your coins, put them under your mattress, your digital mattress in this case, store your private keys. And you know, I always tell people bitcoin is a long term thing. It's not something that you're buying for the short term. You're just accumulating bitcoin and you're waiting for the, and you're holding onto it for the long term. Then you're likely going to practically outperform everybody. We're in the doldrums right now. There's always this period 18 to 24 months after the halving, where we hit the bottom and the no coiners come out of the woodwork to gloat and, and say, ah, bitcoin's down. But still, even with bitcoin down, you're still, if you've been accumulating, you've been dollar cost averaging, you've outperformed pretty much everybody.
- [48:07]
A
And if you just absorb everything you've said, none of those things are changing. The central banks are going to print more money. The short term is thinking is continuing. Everything is leveraged. And so what, you know, where do you turn to to find safe harbor? And grandpa was the original stacker, was the original hodler. These terms that we use in especially bitcoin land, which we sort of talk of as a joke, but are actually like very sound saving and principles around, you know, creating and stashing wealth and you introduced a concept called dollar cost averaging. For those that don't know, that just means taking a little bit and acquiring stuff over time, not trying to time the market and just building a position because you have a long term conviction that doing so will be, you know, sort of responsible over the duration of time. And one of the things I thought you did a really lovely job with today is one of the things, you know, there's this old phrase like money is the root of all evil. And especially if you look at fiat and the way you've articulated how it's changed culture and changed the incentives in our governments and worse, you can really sort of see how it's applied, sort of this nefarious instinct to our economy, to our culture. And I think it's really quite concerning and hugely problematic. And one thing I love about, you know, opting out of that and choosing Bitcoin on a voluntary basis is that you can bring whatever you want to that world. If you're an environmentalist, it's pretty obvious you could see how the old world system is burning the planet up. If you care about social and racial economic injustice, well, this is a way for you to find a different way to grab a piece of the future and build wealth in a, in a fair and equitable way. If you care about financial privacy, financial sovereignty, individual agency, you building a better mousetrap that allows everybody to participate in meritocracy, all those things. And so you can bring to it your individualism and your sort of imprint and sort of participate in this economy in a voluntary way, which I've always really been drawn to. So I just want to say thank you so much for sharing all this. Everyone should go out and buy the collection of books and stand with bated breath for the next four to come out. Hopefully it won't take as long as some other authors who take decades to write their, their seminal works. I don't know if you wanted to leave anyone with a closing thought around how to think about, you know, maybe an optimistic perspective for the next five years. I think there's so much doom and gloom in the world today, you know, what sort of a message you might leave to especially maybe younger people that are sort of maybe caught in this short termist trap and going, I'll just day trade my way out of it or I'll succumb to my weaker instincts and gamble and just kind of pray and spray. What's sort of maybe a perspective you would share with them to have a little more optimistic confidence about the State of the world.
- [50:43]
B
I think there's just so much terrible stuff happening in the world today. It's depressing and, you know, it's really painful, particularly in my part of the world. Every day we hear about dozens of people dying, and it's just. It's truly heartbreaking. And it's something that there's no easy way around processing it and accepting it. However, I think it's really important for your sanity and for your mental health to think about the future and think about how you're able to make your tomorrow better than today. And for that, I'm going to sound like a broken record. I don't care. It's. It's a good record. And I think the best thing to do is just bitcoin. And bitcoin is what allows you to opt out of funding a lot of the evil that is taking place in the world world, because now your wealth is not being devalued in order to finance all of that horrific crime. That's. You're not being conscripted, so you're not paying for it. And that's going to help you sleep a lot better at night. And secondly, by not paying for it, you know, you maintain your wealth. And then bitcoin appreciates over time, so you're able to secure yourself and you're able to think about that. And I think the real moon is not the gains that we make. It's the mental clarity and the freedom that you get when you no longer have to keep being anxious about tomorrow. That's the key thing. So if you're able to just accumulate bitcoin over time to get to a point where you've got enough bitcoin that it is, that changes the way in which you are living financially, then you're going to get a lot more clarity and a lot more peace in your life. And I think this is really, really powerful thing. And tell more people about it. The more people join us, the better the world becomes. And I think there's an old saying, the darkest hour comes before dawn. And I don't think we're quite at the darkest hour yet. I think we've still got more darkness ahead of us. But ultimately, I think you look at the path of the US debt, it's just gotten to the point where it's going up very quickly, it's increasing very rapidly. I think we're approaching the end game of fiat. It may take several years, but I think we are on an irreversible path to the world truly changing. Because the Fiat scam is no longer workable. And it's, you know, you got to understand it's like a Ponzi scheme. Initially, it works a lot better. In the 1950s and 60s, it would have been heretical for me to say some of these ideas because people were likely early entrance into a Ponzi scheme. You do great. If you come into a Ponzi scheme early and you leave early, you've done great. So you time tell somebody like that this was a Ponzi scheme, they're not going to believe you. But now our generation, we're the bag holders for our parents and our grandparents generation, they came in, they got the sweet end of the inflation deal. We are paying for it, we are the ones that are losing out. But hopefully our generation will get to experience what's next. You know, hopefully it won't be too long before this abomination of fiat money dies and we get to live in peace.
- [53:58]
A
And pursuing a currency of peace, I think, is the path. So, Safdien, thank you so much for joining us on Block Party today. Your work has helped millions see Bitcoin as more than an asset or a technology. Technology, but even a movement. And I've made the case that money shapes civilization itself. How we save, how we build, how we eat, how we think, and how we can imagine a better future. So for our listeners, please be sure to check out the books Bitcoin Standard, the Fiat Standard, Principles of Economics, the Gold Standard in Fiat Food, as well as this podcast and on YouTube. So until next time, I'm Nick Harry and on behalf of the entire blockchain.com team, thank you so much for tuning in.
- [54:36]
B
Cheers, man. Thanks.
- [54:37]
A
Nice.
- [54:38]
B
Thanks.