We went into this world where governments are always able to finance themselves because they just have this fiat system where everybody has to use the government's money, everybody has to use the government's banks, and then the government prints more money and then you're stuck.

And so you're constantly witnessing your wealth devalued.

So people have no ability to save and governments have no restraints on their spending.

And that's the 20th century.

And that's, In my opinion, the destruction of civilization.

They need your money and they need you to be a slave and they need your kids to be slaves.

It's not the financial stability of gold that they're worried about.

It's the financial stability of their Ponzi scheme that would collapse if people had the alternative of using proper money.

So if Bitcoin goes up 100x from where it is right now, if we're at $9 million or $5 million or something like that, Bitcoin is the biggest monetary asset in the world.

The cash balances in Bitcoin exceed everything else.

Bitcoin is the world's money.

That's it.

It's game over.

Let's go.

It has been a long time since you've been on What Bitcoin Did.

I have indeed.

How are you?

I am good.

Welcome back.

I think you've probably written three books since the last time you were on.

I'm pretty sure it was only the Bitcoin Standard.

Probably, yes.

Yeah.

And since then you did, was Fiat Standard before Principles of Economics?

Yes, Fiat Standard was first, second, I should say.

And then Principles of Economics was the third and the Gold Standard now number four.

So what's the idea in the Gold Standard?

The gold standard is an alternative history of the 20th century where fiat money dies in 1915.

It's the century we could have had.

It's what fiat took away from us.

Okay.

It's imagining what the world would have looked like in the year 2000, had we not been on government money for 85 years, had government money died in 1915.

And then we went on a gold standard.

But it's not just the gold standard as it was in the 19th century.

It's a modern gold standard.

imagining how a gold standard would have functioned with modern 20th century technology.

So clearance happens frequently via a decentralized system of airplanes that move gold around.

It's similar to BTC, essentially.

It's applying Bitcoin technology, applying the essence of Bitcoin with 1915 technology.

Okay, so can we start by going through what actually happened in 1915?

So when did we properly break with the gold standard?

Because I know it was different for different countries.

When do you see the end of the gold standard?

Yeah, I put it as 1914.

And most people think of 1971, which is the point at which the last link was severed with the gold standard.

So you could make a case for it being 1971, because up until 1971, the US dollar was, to some extent, redeemable in gold.

Central banks could redeem their dollars for gold, but normal people could not.

but that process really started in 1914 with World War I.

And I discussed this in detail in the Fiat Standard and then I discussed it again in detail on the Gold Standard.

I think it's an enormously important story that very few people know about because it was only revealed in 2017, which is really incredible.

The war started in 1914 and the way that Britain got into the war had always been shrouded in mystery.

And there was always debate in Britain about why we got into the war and should we have gotten into the war?

But the people that had argued, we shouldn't have gotten into the war, their position I would say has just continues to get stronger and stronger over time because over time it just became clear that there was no reason for Britain to get into the war.

And then in 2017, the Financial Times, well, actually it was a bunch of people at the Bank of England who dug in the basement and found this old report.

And then they read the report and then they published it in 2017, 103 years.

after the events happened in 1914.

And in that report, it was revealed that the reason that Britain got into the war was the treasury sold a bond auction.

They made a bond auction to fund going into the war.

And they offered a good interest rate.

Interest rates at that time were around 2.5%, but this was, I think, around 4%.

And they thought they would sell it.

Britain was the richest country in the world, and people liked their country.

and countries at war.

So they're clearly going to be selling the bonds.

Well, they didn't.

They sold less than a third of the bonds.

People didn't buy them.

I think this is to the eternal credit of the British people that they didn't buy that.

It's really a point of pride.

Were these literally called war bonds at the time?

Yeah.

Yeah, so they were specifically to go and fund the First World War.

And so I remember seeing this Financial Times piece probably a few years after it actually came out.

But the fact that they had actually gone out and told the public that was massively oversubscribed, but in fact, they hadn't filled it.

And so then, was that the first case of printing money to fill that gap?

Well, I mean, I'm sure it has happened before in the past, but I think this was really the birth of the fiat standard because it institutionalized and standardized the way that this operated, wherein the central bank lends to the government and the government enforces the bank's monopoly on money, which makes sure that the banks don't get rugged and the government doesn't get drugged.

So what they did was they got two-thirds of the bonds to be purchased by two guys, two guys who worked at the Bank of England who got a credit line from the Bank of England, and they just went and bought two-thirds of the bond auction for the war, which is incredible.

There was just two guys who funded Britain's entry into World War I, which is what destroyed human civilization, arguably.

And it was, there's no way of understating just how important that was because the entry of Britain into World War I was what made World War I possible.

Because you'd look into the detail, and that's what I get into in detail in this book.

If you look about what was going on, essentially, Britain, France, and Russia had a secret alliance going into World War I.

And you look at the details after these details are revealed hundreds of years later, Another very important bit of detail which was revealed was that the king at that time, King George V, had told his foreign secretary, Edward Gray, that he must find a way to go to war with Germany.

And this is just flying in the face of all of the conventional history about Britain being dragged into war or diplomatic miscalculations or sleepwalking into war, which was the sort of narrative that I used to find more convincing.

that diplomacy went wrong, bluffs were called in the wrong way, and then everybody found themselves inadvertently in a five-year mass carnage in the middle of Europe.

It seems pretty clear when you look at the evidence.

After 100 years, you know, you can lie, but you can't lie forever.

Truth comes out.

And so the grandnephew of Edward Gray, who was the foreign secretary at that time, he revealed his uncle's diaries or a bunch of letters from his uncles where he was saying, I met with the king and the king was very firm.

You need to find a way to get us to war with Germany.

So it was the fact that Britain wanted to go into war with Germany that made Russia and France confident about taking on Germany.

And that, I think this is where, you know, I don't really have solid evidence for this, but it seems pretty convincing that the assassination of the Archduke of Austria.

Franz Ferdinand.

Franz Ferdinand.

Which was what we learned at school as being the like pinnacle point of the start of World War I.

Yeah, and it was, but it's usually portrayed as just this random assassination that happened and then tensions escalated and people sleepwalked into war.

But, you know, the Serbian government was pretty well connected to the terrorist organizations that carried out that assassination.

It wasn't just some random dude with a gun.

If his gun had jammed, there would have been other ambushes.

There were apparently 10 ambushes in Sarajevo at that time to try and get him.

And it seems pretty clear that the Russians knew what was going on.

This was their attempt to provoke the Austrians and, by extension, the Germans into the war.

And they were playing that game because they knew they had Britain on their side.

And the really pernicious thing here is that they didn't have a formal alliance.

They didn't have, you know, Britain didn't sign a formal alliance with France and Britain.

with France and Russia because of it, they did.

The British people would have rejected it.

They would have voted them out.

We don't want to be in an alliance with France and Russia.

We don't want to go into a world war.

And if they had a formal alliance, even if they managed to have a formal alliance and the British people had kept the cabinet and agreed to it, then Germany would have been a lot more careful about going into war with Austria against Russia and France, knowing that it would involve Britain.

So they would have let it slide.

So they had to set things up in this way so that the alliance was real and that the British would fight.

But the Germans wouldn't think that the British would fight so that they would go into a war.

And the British people didn't know that the alliance was real so that they can just be dragged into war inadvertently, accidentally, and not be told about it.

And that's why the British people didn't fund the war because they saw no reason for it.

There was nothing threatening Britain, and there was nothing even threatening Britain's interests.

It was, you know, all of Britain's empire was pretty much isolated from the war.

There was nothing that was going to threaten British control over India because of Germany or Russia fighting with each other.

So it was very difficult to convince British people to do that, and that's why they refused to finance the war.

But fiat fixes this.

That's what fiat does.

So the Central Bank, the Bank of England, issues a bunch of money to a couple of people in the bank.

They buy the bonds, that finance is going into war and then the war starts.

And then, and I've discussed this in the fiat standard, the Bank of England keeps collecting all of the gold from the hands of British people and uses it to, and ships it off to the US in order to get credit for the war.

And that's essentially what destroyed the British empire.

That's why Britain was bankrupted.

It was an incredibly stupid thing to do.

On top of it being immoral, on top of it causing carnage for tens of millions of people and the destruction of European civilization.

On top of this catastrophe, it was just a very stupid thing for Britain to do because it stood to gain nothing.

And it was just, the king was angry at Germany and they were afraid that Germany was going to take over.

And it was completely nonsensical.

Germany had, Germany's stuck behind Britain.

So any attempt at growing the German empire is under British mercy because the German boats need to go out from British waters if they are to go into the rest of the world.

So it's not a threat, and it shouldn't have been treated as a threat.

And trying to defuse this abstract threat ended up costing Britain everything.

And now you see Britain is a failed state.

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And when you say this was the death of civilization, do you mean because of the ramifications after World War I, which was obviously a terrible war.

It then led to like economic despair in Germany, which led to the rise of Hitler, which led to World War II.

Is that the way you're thinking about it?

Like the second, third or fourth order consequences of this?

Yeah, that's part of it.

But I think it's, I mean, this is one aspect of it, but I think it's just, for me, I believe the real problem was in 1914, because once we went off money, you know, everything for me is all about money and money's supply's growth rate.

And just because I'm obsessed with it doesn't mean I'm wrong.

But once the money stopped being gold, and then the different thing about 1914, you know, before that individual countries would go off the gold standard.

But this was when all of the major economies went off the gold standard at the same time.

And they all restricted the movement of money.

They all restricted their banks.

So you had no alternative.

If you were in those countries, you had to use your local national currency, which was constantly getting devalued through inflation.

So we had inflation.

We destroyed the ability of people to save.

We destroyed the value of money.

And then you look at the economic problems of the 1920s and 30s.

They were all a consequence of the inflation of World War I.

It's not taught that way because we live in a world where everything is inflation propaganda.

propaganda, but it was all the ramifications of the inflation of the World War I.

That's what led to the problems of the 1920s in the US and Europe.

And that's what led to more inflation to try to fix those problems, which eventually led to the Great Depression, which led to World War II, which then, you know, and World War II, of course, is a huge part of this.

But even just beyond World War II, we went into this world where governments are always able to finance themselves because they just have this fiat system where everybody has to use the government's money.

Everybody has to use the government's banks.

And then the government prints more money and then you're stuck.

And so you're constantly witnessing your wealth devalued.

So people have no ability to save and governments have no restraints on their spending.

And that's the 20th century.

And that's, in my opinion, the destruction of civilization, because civilization is a process that happens because people are able to think about the future.

We plan for the future.

We sacrifice the present in order to get a better future.

That's what makes civilization possible.

In fact, we could say the entire process of civilization is the process of us lowering our time preference.

So we save more, we think about the future more, and then that's reflected in all manner of our behavior.

We become more cooperative, more peaceful, more understanding because we recognize that if we cooperate peacefully with each other, the benefits in the longterm far outweigh any benefits that we would get from being aggressive against each other.

And I argue in the fiat standard and in principles of economics and the Bitcoin standard and the gold standard in all my books, I argue that one of my key points that I keep bringing up in all my work is that you could think of the hardness of money as being like a control knob for time preference When money is very hard when money is difficult to produce then it holds onto its value in the long So it allows people to think about the long-term, it allows people to provide for their long-term future, and that makes people more future-oriented and more likely to think of the long-term.

Whereas on the other hand, when money's easy to make, it gets produced at increasing quantities, it holds its value badly.

And so it's a terrible way of providing for your future.

So without an easy way of providing for your future, your future becomes more uncertain and you start discounting the future more, you become more present oriented.

And as a result, you essentially reverse the process of civilization.

So I think, and you know, in my work, I discussed this in a lot of detail, but I really think 1914 was the turning point.

And it's not just me who brings this up.

You know, there's a great book by a philosopher called Jack Barzun.

And he wrote a great book called From Dawn to Decadence, 500 Years of Western Civilization or The Rise and Fall of Western Civilization or something like that.

I forget the exact title.

But he also says basically the fall of Western civilization started in 1914.

He doesn't really link it to money.

He doesn't have a monetary explanation for it.

But I think he looks at it from a cultural and political perspective.

And I agree entirely.

And I just think the money, fixing and ruining the money is a massive control knob for this process.

So one of the things that Bitcoiners like to talk about is the fact that Bitcoin can prevent wars because of things like you need to raise money through war bonds that the people need to go out and buy.

But the gold standard did a similar thing.

But the gold standard obviously failed at that.

Why would Bitcoin succeed where the gold standard failed?

Yeah, that's a great question.

And that's ultimately a central question in all my books, trying to draw the distinction between gold and Bitcoin.

And the answer in this book is that, you know, the way that gold avoids failing in 1915 is that it is made to look like Bitcoin.

So, you know, the premise of the book initially was I was trying to introduce some kind of Bitcoin into the story of the 20th century and then see how it plays out.

And at some point, you know, I did consider maybe they could use telegraphs and telegrams and newspapers or something to make a quasi Bitcoin, proto Bitcoin thing.

But it seemed a little too far-fetched.

We didn't have the technology.

We needed to wait another century before Bitcoin could be possible, or at least another 80 years or so.

But I thought about the next thing, which is how to make gold more like Bitcoin.

And ultimately what it comes down to is the availability to the central banking system for clearance.

And that's what something that Bitcoin has, but gold does not have.

So today even, and back then, you can't just trade gold.

You can't say, all right, I don't wanna use my bank and my central bank.

I'm going to set up a gold bank account and I'm gonna trade with my suppliers in China and Brazil with gold.

I'm just gonna send them ounces of gold and they're gonna send me back goods.

That's not going to work.

You can't do that.

There are no gold banks.

You can't get a license for a bank anywhere in the world if you run it on gold.

And your central bank, you can't be a member of the IMF if you're on a gold standard.

It's one of the conditions of joining the IMF.

So if you wanna join the modern global monetary system, if you as a country want to trade with the rest of the world, you more or less have to join the fiat dollar system.

There's no alternative to it.

And there's no easy way of physically moving gold around.

It's very expensive to move around.

And it's very expensive to verify it.

The only way that you can tell for sure that a gold bar is real is you have to actually melt down the whole thing and recast it, which is pretty expensive.

So moving gold from one country to the other on an airplane is expensive.

And then melting it and recasting it in order to verify its purity is also very expensive.

So that practically means that if your central bank tells you you have to deal with this currency and you can't redeem it in gold, you're stuck.

You have no alternative.

In this book, I introduced an alternative.

Before the war, a bunch of aviation enthusiasts set up a gold clearance business with airplanes.

They want to scare airplanes.

They're looking for a commercial application for airplanes in order to finance their investment in airplanes.

That's how they use the Spitfires instead of the war.

Exactly.

So they decide that, you know, airplanes are too expensive at this point to move people around.

You can't build a commercial business out of moving people around.

and it's too expensive to move most goods around.

If you're going to be moving something around, it's going to have to be something that's extremely valuable per unit of weight.

So they realize, all right, there's only one thing and that's gold.

So we can use significant amount, we can move significant amounts of gold in an airplane and that would be economical because it's very valuable.

We're saving people from having to rely on 19th century banking technology and waiting for their bank to clear with their central bank and the central bank to clear with the other country's bank and then the local bank takes time for payments to clear across borders in the old gold standard system.

But now with an airplane, you can just move the gold across borders, permissionless, decentralized, yes, and censorship resistance.

At that time, they didn't have anti-aircraft guns and airplanes could take off from any field and land anywhere.

So by the time border patrol would see them, they would be very high in the sky and you can't stop them.

So it was in a sense permissionless and the censorship resistance.

So you build this essentially Bitcoin network.

And then that allows people to take their money out of this banking system.

It allows people to not hand their gold over to the banking system.

And, you know, there was a quote from Keynes because Keynes was in on this scam.

And that's why I bring him in in this book and he's also a protagonist and spoiler alert, I get him executed.

But, you know, he was in on this And he said, you know, he wrote a letter that was also uncovered in 2017.

And in that letter, he said he called it the masterly manipulation.

He was so happy about that.

The fact that they lied about the bond sale.

And he said, you know, this is high risk because we have a lot of credit outstanding, but only a limited amount of gold.

And the success of this move depends entirely on how willing people are to keep their gold at the bank during these times of crises.

And so in my book, people become a lot less willing to keep the money at the bank.

So what happens?

So the Ponzi's fall apart.

And then you get a banking panic across the world.

All of the countries that are at war, people withdraw their gold.

People take their gold out and the banks can't give them the gold.

So everything falls apart.

Currencies collapse, the war ends, and then they have to negotiate a peace based on the fact that they are broke.

And who has all the gold at that point?

All the gold is in Switzerland, Holland, and the US, the neutral countries.

And the neutral countries don't want to be at war.

They don't want the war to expand.

So they set up a new global monetary and political order built on free trade, movement of capital, and self-determination so that we don't get all of these stupid fiat empires fighting over borders for the rest of the century.

Everybody can just vote their way into whatever political arrangement they want.

So government becomes a very competitive service provider.

And the century is very different.

Everything is very different.

So you said before that the IMF won't let you join if you're running the gold standard.

And obviously El Salvador's had problems with the IMF because of their Bitcoin stuff.

Why is that the case?

I mean, I'm sure they have some kind of general explanations they might give for that, which you can ask them.

But I'm going to give you my interpretation of why I think that is the case.

And I just think it's because if you have a gold-based alternative to the fiat system, the fiat system collapses.

In other words, they'll usually tell you something about, well, we're doing it for financial stability.

And you think, oh, wow, how kind of them.

Very nice of them to prevent things that are undermining of financial stability.

But it's not the financial stability of gold that they're worried about.

It's the financial stability of their Ponzi scheme that would collapse if people had the alternative of using proper money, which is gold.

So if people could just use a banking system that held their money in a non-inflationary money and charged you a small little fee for taking that money or offered you a very tiny interest rate, then an enormous amount of all of the money that is in the world's capital markets and bond markets in particular would go to that.

So much of the money, if you look at the last year, bonds have been getting destroyed.

So people who have their money in bonds, if you tell them now, put that money in a bank account and that bank account will offer you 1% real appreciation per year, that's going to eat a significant chunk of their bond holdings because their bonds are down 50% or so over the last five years.

So if you were to put some of that money instead in a bank account that gives you 1% real appreciation per year, that's a lot better than putting it in bonds.

So that's going to just collapse the bond market.

This is why recently, you know, in the Federal Reserve, they rejected the application of a bank called the Narrow Bank.

What does the Narrow Bank do?

They have a very simple business model.

They're going to take deposits from customers and they're going to put the deposits at the Federal Reserve.

And they're going to get interest from the Federal Reserve.

And they're going to pass on that interest to their customers and take a small cut.

And they're not going to do anything else with it.

They're just going to put all of their money at the Federal Reserve.

They're going to offer the safest bank account, the safest money really, because it's backed by the Federal Reserve, and sell it to their customers, essentially.

Selling them an allocation at the bank account of the Federal Reserve and taking a small cut.

And it was not approved.

This is what Caitlin Long was trying to do with Custodian.

It's what Caitlin Long as well was trying to do, and that was not approved.

Why?

Is it because it's unsafe?

I mean, how can it be unsafe?

They're just putting the money straight to the Federal Reserve.

It's certainly more safe.

Yeah, it can't be safer than that in the fiat system.

The only way this collapses is if the entire Federal Reserve collapses.

They are not withholding to any business model.

They don't have to sell any kind of things in order for their business to operate.

They just put the money in the Federal Reserve.

But the problem is that it's too stable.

It's so stable that everybody would move their money there, and then all the rest of the financial markets would come crashing down.

So I think it's something similar with gold.

If you were to have countries that use gold as money, their currencies would be strong, and everybody would want to move their capital there.

So that's what the situation was like with Switzerland from the 1970s, really, when inflation took off.

Switzerland really remained the least inflationary country, and everybody was moving their money to Switzerland.

Everybody wanted a Swiss bank account.

That's why in the 1990s, Switzerland had to be essentially taken down financially.

They made them sell half their gold.

They made them get into all kinds of inflationary nonsense and money spending.

They introduced all kinds of restrictions onto the banks and they extorted the banks to pay a lot of money.

And then they imposed sanctions on the, well, not imposed, they threatened sanctions on the banks and they got rid of banking secrecy.

So they shitcoinified the rest of Switzerland and the Swiss economy, basically.

So, and it's not because Switzerland was dangerous for the depositors in Switzerland, it's because it was dangerous for everybody else.

I mean, it's insane that the idea of just wanting your money to retain value, not even increase in value, just retain your purchasing power, that that's an extreme position to take is wild.

Yes.

I know.

It's like, how dare you want to keep your own money?

It's so selfish of you.

It's antisocial.

It's sociopathic.

Your money belongs to us.

It's probably racist somehow.

It's probably racist, definitely.

Definitely sexist and misogynist.

I mean, you can see how it's just built on the idea that your money is not yours.

your money belongs to society and the government decides how it allocates it to society.

And we, in our infinite wisdom, have decided that it is more safe.

It is safer for you to keep your money in the fiat Ponzi scheme so that a lot of people are moving it around back and forth and we get a lot more GDP, which is just basically cover for we're going to devalue your wealth and take it.

Yeah.

And from the very early days, so 1914, like you said, Keynes was at the heart of this.

Do you think any part of them was like, we can just print a bit of money now, get through this war, and then we'll be fiscally responsible, we'll pay back that debt, and it'll all be okay, and then we won't do that again?

Do you think that's the way they were thinking about it, rather than it escalating to what we've got today?

I would imagine so.

I think that's how it is.

I have no hard evidence on this, because we don't have recordings of the exact discussions they were having with them.

We only have a few letters here and there that survived.

but I think, you know, just knowing how inflation goes, it's the kind of, it's the kind of mentality where it's always just take one hit, you know, one more hit and then I'm gonna go clean.

Just one more night of getting drunk and then I'm going to stop drinking.

It's the addict logic.

And I think, yeah, it was world war.

It was huge.

We had to defeat the Germans.

We can't let the Germans win.

If Germany wins, then they have all of Europe and that's terrible.

So we must do everything we can.

but these things just snowball out of all proportion.

You know, it's just been going on.

Here we are 111 years later, and the pound is still being devalued.

And in that addict analogy, at some point when you press the button one more time, game is over.

You'll either overdose or whatever it is.

Yeah, you run out of money and you can't get more drugs, or you overdose and you die.

So basically hyperinflation or...

And how close do you think we are to that?

I don't know.

It's a very difficult question.

I mean, a lot of people would have thought it should have already happened in the 1970s, and it looked like it was very likely to happen in the 1970s.

You know, the level of inflation that we had back then was outstanding, like nothing we've seen since then.

But it's stuck through.

So maybe it can survive longer.

And in the fiat standard, you know, I look at this question in depth and I make the case for why, you know, the steel man case for why fiat can continue to survive and what that means.

And I think the same things that we've had for the last 50 years or for even the 111 years of kicking the can down the road, it can continue.

But I think what is interesting about Bitcoin is that it can continue to grow even if that is the case.

And I think this is, this was perhaps a little bit of an original contribution in the fiat standard in that most people think Bitcoin rises and takes over when fiat dies and Bitcoin has to kill fiat and that fiat has to die if Bitcoin is going to rise.

But it's entirely plausible in my mind that we just continue with the same trend that we've had over the last 50 years with fiat and over the last 15 years with gold, sorry, with Bitcoin.

And that Bitcoin continues to depreciate, fiat continues to depreciate.

The fiat economy becomes smaller over time because inflation is destroying value and because people move from fiat to Bitcoin and the Bitcoin economy gets larger over time.

Extrapolate that over another 10, 20 years, 30 years.

Eventually the Bitcoin economy becomes bigger and we have a Bitcoin economy that dominates the world and fiat continues to become a less and less significant part of the world economy.

In a sense, this is what's been going on over the last 10 years.

You know, we're repricing everything in sats and we're re-denominating the entire world in Satoshis.

So you know, they just need to, everything else needs to drop another 90% and in Satoshi terms and the Bitcoin economy grows another 100 X or so.

And then the world is effectively on a Bitcoin standard.

So I've stopped waiting for fiat to die and I'm just enjoying Bitcoin growth.

You're enjoying Bitcoin winning.

So this reminds me, we were doing a panel yesterday at the conference, and you said the Bitcoin price is the only thing that matters.

And I guess this is why.

Is that right?

Yeah, absolutely.

It's the scoreboard.

I mean, it's a lot of people have this kind of, it's the anti-capitalist mentality, as Mises calls it where people think that wanting to be financially secure is morally dubious that you a bad person if you care about securing your kids If you don want your kids to be debt slaves then you're a selfish, evil, sociopathic person.

You know, just like people who want to keep the value of their money.

These things are pathologized in modern fiat society because that's government propaganda.

They need your money and they need you to be a slave and they need your kids to be slaves, to pay taxes and to suffer from inflation.

So if you try and find a way around this, you get a lot of social disapproval.

You get a lot of hate.

So I think ultimately it's just, I think the propaganda is what continues that, but I think in the real world, people are just going to continue to behave in a way that benefits them.

And the real measure of how Bitcoin succeeds or fails is just how big the market capitalization of Bitcoin is.

It's, you know, if you're thinking about the market for shoes, there's a total addressable market, 16 billion feet on earth that you have to cover with shoes roughly.

And if you have a chunk of that market, somebody else doesn't.

And it's how much of that shoes can you take in that market.

And then Bitcoin is in the market for money.

And money is the biggest market of all.

People don't think of it that way, in the same way that fish don't understand what water is.

but money is a market itself.

We don't think of it that way because government generally wants us to think of money as just being the neutral layer of a market.

A market is something that is happening.

It's built on top of money.

It's built on top of money, but money itself is a market.

And that's the powerful Austrian idea.

And once you think of money as a market, you realize it has a total addressable market, which is all of the world's cash balances.

All of the money that people hold for the sake of money, not as investment and not as, you know, the wealth that people hold not as consumer goods and not as investments and as capital goods, as money, as liquid wealth, things that they hold so that they can spend later.

And that's about $300 trillion.

If you count physical money, checking accounts, savings accounts, and government bonds, which I would count as well, and gold, that's about $300 trillion.

So Bitcoin is already at 2 trillion.

So it's less than 1% of the total addressable market.

But if it's at 50%, if it's at 60, 70%, then it's one.

And then, you know, it doesn't matter what people think.

So if Bitcoin goes up a hundred X from where it is right now, if we're at $9 million or $5 million or something like that, Bitcoin is the biggest monetary asset in the world.

The cash balances in Bitcoin exceed everything else.

Bitcoin is the world's money.

That's it, it's game over.

And that's just about the price.

So the harder we pump the price, the more Bitcoin is winning.

And you know, it offends people that somebody could write a book and be so intellectual about Bitcoin and then just sound like a total moon boy cheering on the price.

But that's ultimately what it is.

Bitcoin is a price technology.

It's really all about that number.

Because the higher that number goes, the larger the size of cash balance is in Bitcoin, the more successful Bitcoin is as money.

And the more you are able to use it as money, the more wealth is stored in it.

and the less wealth is being devalued through government inflation.

So we need to move all the world's wealth into Bitcoin in order to really kill fiat.

That's the long, painful way of doing this.

Initially, when I first got into Bitcoin, and I think a lot of people, when they first get into Bitcoin, they imagine that, because figuring out Bitcoin and understanding the process is so mind-blowing that you imagine, all right, now everybody's gonna get this and everybody's gonna dump their fiat and everybody's gonna go into Bitcoin and Bitcoin is gonna moon overnight, you know, million dollars of Bitcoin tomorrow.

But then over time, you realize people are a lot stupider than you give them credit for.

So it's gonna take a lot longer.

And they're gonna need to get poorer before they figure it out and understand it.

And we're gonna take the long, scenic, ugly road toward a world where Bitcoin dominates cash balances.

So it's gonna be a while, unfortunately, which is sad because the world needs to get rid of fiat.

But, you know, Rome was not built in a day.

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So when we look at getting to 50% of all cash balances, how does Bitcoin do that?

Is it as a store of value for most of the way?

Or when do you think Bitcoin becomes an actual medium of exchange that people use very regularly?

I try and use Bitcoin as much as I can.

I just bought this book off you with Bitcoin.

But how does that transition happen?

Yeah, it happens through, again, increasing cash balances.

Currently, as I said, you know, about less than 1% of the world's cash balances are in Bitcoin.

So when you're buying something, whatever thing you're buying on the other side of that purchase, or when you're selling something on the other side, the expected size of that other person's cash balance globally is about 1%.

So the average person you deal with has 1% Bitcoin.

And 1% Bitcoin is essentially not a cash balance.

It's almost a rounding error.

It's almost like an investment position.

So if you are holding 1% Bitcoin, you're not going to be conducting daily transactions in Bitcoin.

You're going to be conducting daily transactions in the thing that you are holding of in significant quantities.

If you want the 1% portfolio allocation to Bitcoin, then if you're buying and selling things with Bitcoin, you're going to go up or down very quickly.

You're going to go to zero or you might go to 5% if you're doing that.

So if your intention is to have a small position in Bitcoin, then you can't really trade with it.

You trade with the thing that you have in abundance, the cash that you hold in abundance.

That's the one that you buy and sell extensively.

And that's the one that is going to, that's the one that's going to be the money that you're going to be using.

So currently around the world, about the majority of the world's cash balances are in dollars or in dollar denominated currencies, currencies that are backed by dollars, the vast majority.

So when you're going to be conducting trade with somebody, you're going to be conducting it in a dollar because that's the case.

Now in the Bitcoin world, so for instance, my website is a good example.

I have a lot more than 1% of my portfolio in Bitcoin.

So Bitcoin really is my cash balance.

I'm very happy to be buying and selling with Bitcoin.

And if I could buy everything with Bitcoin, it wouldn't be a problem for me because my cash balance is in Bitcoin.

So I'm spending effectively from Bitcoin, whether I'm spending Bitcoin or fiat, because everything is essentially ultimately denominated in Bitcoin in my mind, the cash balance is in Bitcoin.

So I'm like that.

And then a lot of my readers and the people who buy my courses and my books on my website, a lot of them are Bitcoiners.

So they also have significant cash balances in Bitcoin.

So they're also likely to be spending their Bitcoin.

That's why my website does about one third, maybe close to one half of the volume these days in Bitcoin.

And I also offer a discount on Bitcoin because I prefer Bitcoin.

So in this situation, when you are, you're seeing people who have significant cash balances in Bitcoin, it's highly likely that we'll trade in Bitcoin.

That's why a lot of people buy my books with Bitcoin.

So that's what the rest of the world needs to do.

You know, when the rest of the world has more cash balances in Bitcoin, when the rest of the world's cash balances in Bitcoin are similar to the cash balances of me and my readers currently in Bitcoin, then you're going to see a lot more trade in Bitcoin.

And price kind of fixes that because for anyone who has a 1% allocation to Bitcoin, that's soon going to become 5%, 10%, 15% allocation.

And that changes the dynamic.

Exactly.

So the no coiners can do this the easy way where they just dump their shit coins and get into Bitcoin and make a lot of Bitcoin and live happily ever after.

Or they can do it the hard way where they keep their shit coins, their shit coins go to zero.

And then eventually they get into Bitcoin with very few Bitcoins and have fun staying poor.

Yeah.

I want to just go back a little bit to something you said earlier, which was the 70s being like a really tough period, really high inflation.

It seems like central banks and countries around the world are waking up to some of the instability in fiat currency.

Like we see China stacking loads more gold.

I'm sure Russia is.

And maybe, in fact, when the US sanctioned Russia, which seemed like a very emotional decision, not a very rational decision, like that was kind of the shot that everyone heard.

Do you think that these other central banks, like the polarization of the world, the rise of BRICS currencies, this is the start of people realizing maybe we shouldn't have everything in the US dollar?

I think so.

I think it's, I mean, people have been saying this for a very long time, since the 1990s even.

In the 1990s, it was very fringe, few voices saying, you know, the dollar and the problem of the dollar.

And then in the 2000s, after the financial crisis, that grew more and more.

and the Chinese awareness of the problem of the dollar and the inflation of the dollar and all of the dollar printing increased.

And clearly, the Chinese, in 2008, they had about a trillion dollars in treasuries.

Now they have about, I think, 700 billion or 800 billion.

So 18 years later, they've got a little bit less.

But when you factor in the real devaluation, it's significantly less.

Yeah, especially with the increased trade that's happened with China and the US over the last decade.

So China's a lot richer and the dollar's worth less.

And so when you factor those two things in, China's effectively decoupled a lot from treasuries.

But they moved over the past 15 years, primarily instead of holding treasuries, they were moving toward holding investment assets.

And they were particularly investing in the third world, in Africa and Latin America, building seaports and infrastructure and so on.

And that was a way for them to channel all these extra savings because it's difficult to find a place to put savings because everything that you buy with your savings, you pump the price up to stop it from being attractive.

But now I think they are stepping up their gold purchases.

And I think really, as you said, the confiscation of the Russian reserves was a huge wake-up call because it just made it very clear to anybody that you never know when the Americans are going to kick you out.

And it's quite interesting that even before that, that the Russians had not sought to exit the dollar system.

I mean, it just shows.

They must never have seen that coming.

Maybe, or maybe it was just, I mean, unthinkable for them.

How do we manage without this?

I don't know.

But I think it's very telling that for all the talk about people wanting to break out of the U.S.

orbit, that the Russians had not even taken their reserves out even when they invaded Ukraine.

So I think more and more countries, and then, you know, remember with this entire shit show around the tariffs over the last year, it was just so hilarious and so misguided and so idiotic in the way that it was conducted.

And so completely and utterly clueless, clearly done over chat GPT over 15 minutes, that there's a capriciousness to the current US government.

And you can tell, you know, it's just a very busy Donald Trump who just thinks that he doesn't need to get into the details of things.

So, you know, he thinks it's all a negotiation and you're just bluffing and you're calling the first terms.

And that's just not, it's turned out to be an extremely stupid stunt.

You know, they went and signed with the Chinese basically to take things back as they were before Trump's stupid stunt.

And that's all that it's achieved.

I think he vastly overestimated his leverage on China.

He vastly overestimated how much he could get them to compromise.

And they are in a much better and much stronger position than him.

But in any case, all of that just shows that really, whether through incompetence, erraticness, capriciousness, or just downright plain evil, the U.S.

is not something you want to count on.

I think a lot of the world is coming to that realization now.

And, you know, also the wars are really the gusto with which America funds its wars and the way in which the insane lunatics at the U.S.

government clap for Netanyahu, for instance, when he shows up and they all jump like prostitutes to do the tricks that they're paid to do.

It's really disgusting for the vast majority of the planet because the vast majority of the planet don't take pleasure in mass murder and in robbing the rest of the planet in order to finance mass murder.

So, yeah, I think a lot of the world is waking up to that.

And I think, you know, we could see more pumping in gold.

The gold's had an incredible run so far.

We could see more.

We could see more purchases on an individual level, on a governmental level.

I think we could see it continuing.

I do have my skepticism about the success of gold because it will be centralized.

Governments can't control it.

They can't stop it.

But, I mean, the question is, can the Chinese and the Russians in particular, can these governments figure out that the advantages of moving on to a gold standard outweigh the drawbacks of losing their inflationary prerogative?

That is the question.

And it's a difficult one because I think the people who run the Chinese and the Russian government, they've had a money printer which they use.

To be fair, they're not as dependent on their money printer as the U.S.

is because they can't export their inflation.

But still, they like their money printers.

So the question is, do they like the money printer enough that they would forego the opportunity to essentially hurt the US or not necessarily hurt the US, just get out of the US orbit because they want to keep their money printer?

Or will they decide, you know what?

No, we don't need the money printer.

We need to get out of the US orbit first.

Because China runs such a trade surplus and they're a very wealthy nation, do they need inflation in the same way that the US does?

No, they don't.

And in fact, I think it's actually quite remarkable that if you look at the exchange rate, the Chinese yuan is practically flat against the dollar long term.

It not pegged but they done a pretty good job of maintaining the value of the yuan and not devaluing it too much So therefore I don think they benefit enormously from inflation I don think the Chinese government is relying on inflation as much as the US government does because the Chinese government can't export its inflation.

So if it engages in inflation, it just devalues its currency, which is not an international currency.

Its currency drops against the dollar.

but they you know they hold dollar assets that are devaluing as the dollar is devaluing their treasuries are devaluing and so therefore in a sense they are exporting they are importing inflation they are financing the u.s by holding on to the u.s's bond bags but they're not benefiting from inflation and another very interesting fact is the chinese central government actually has very low levels of debt.

And the Chinese government, the central government, doesn't spend as much money as the U.S.

central government.

China is actually a lot more politically decentralized than the U.S.

In other words, most government spending happens at the local level.

So the local governments don't have a money printer.

They're a lot more fiscally responsible because they can't just print.

And they have a lot less debt.

Sorry, the federal government has a lot less debt.

But if you add the federal and state debt, in the US versus the national and provincial debt in China, the US is a lot more indebted.

So I think in terms of fundamentals, China is just in a much stronger position and they don't need the US as a trade partner.

Even the US is about 2.8% of.

How is that all?

I didn't realize it was that low.

Yeah, exactly.

The Chinese economy is just, most people are still stuck in the West.

people are still stuck up thinking of China as if it's still the cheap workshop of the world in the 1990s.

And it's not.

It's the world's superpower.

It's the world's industrial and economic superpower.

And it's in a league of its own.

It's really, there's China as the first world now.

It's the industrial epicenter of the world.

They produce pretty much around 50% of pretty much everything.

You know, steel, cars, electronics, whatever it is.

China is somewhere in the range of 50% of all the world's production.

And the rest of the world combined is in the range of 50%.

So they are far, far ahead of everybody else.

And they don't need anybody else.

The US market is a nice to have for them, but it's not an essential.

It's only 2.8%.

I mean, it's all of their exports, I think.

The exports to the rest of the world are increasing.

At this point, I think Southeast Asia is the biggest trading partner for China.

It's bigger than the US.

There's a lot more people.

A lot more people, not quite as rich as the US, but they're very close to China, so it's cheaper to ship there.

And the US is just, it's only 300 million people.

There are 8 billion people on earth.

And it's entirely becoming clear that the Chinese are thinking more and more about not relying on the U.S.

because it's not a stable country.

Yeah, it's interesting because I would be very shocked if China and Russia, the BRICS nations, like most of the world, I think, is thinking about Bitcoin in some degree.

But the U.S.

obviously stepped in under Donald Trump and started talking about Bitcoin far more seriously.

Do you think that's because they see this risk of China?

No, I don't think so.

My honest opinion is that I think it's just Trump figured out that he could make money from this thing.

And he's retrofitting explanations to try and justify that it's good for the dollar.

It's taking pressure from the dollar.

It's going to help.

He's just making money from it.

And he's coming up with rationalizations for it.

I don't think that that is the case.

Because I don't think, you know, he's not looking to move away from the dollar.

And there are a lot of people that try and, with Trump, whatever stupid thing he does, there are always people that want to tell you that this is complicated, sophisticated 5D chess.

And we saw that with the tariffs.

You know, every day, all of his fans were convinced that he was being a genius, whatever he does, when he does something and then when he does the opposite.

So he puts the tariffs on China.

Wow, what a genius move.

Then he removes the tariff.

Oh, wow, what a genius move.

He scared them, but now he moved the tariff.

Then he puts them back on again.

Oh, wow, genius.

Now he's putting the pressure.

And just these rationalizations.

If we put the tariffs, then we're going to re-industrialize.

If we remove the tariffs, then we're going to open access to the markets, and we're going to get free trade.

So free trade or industrialization, exact opposite goals, but he's doing both, and whichever one he chooses is going to be right about it.

This is just basic politics fanboyism.

I think he's just made billions of dollars from his shitcoin and Bitcoin ventures.

And he likes making billions of dollars.

He's a businessman.

I don't think it's more sophisticated than that.

So you think by the end of his term, nothing interesting will happen out of the US with Bitcoin?

Yeah, probably.

I think the momentum behind getting something serious done, I think, is gone.

And I think at this point, it's probably becoming politically expensive.

I think the combination of tech bros and crypto bros making a lot of money, Trump making a lot of money, and the economic problems in the country combined together, I think is going to make for a toxic mix when the election comes along in the midterms.

And I think crypto is going to be something that the Democrats are going to focus on.

Yeah, I'm sure that's true.

Especially like the Trump and Melania coin, all that stuff is just like so toxic.

The interesting thing is like before the US made this announcement, I think the general consensus amongst Bitcoiners was this movement was going to happen at the fringes, like the El Salvador's of the world, the Bhutans of the world.

So do you think that's actually still true?

And the US was kind of a red herring in this?

Yeah, I guess so.

I mean, if I were to look at how I thought about Bitcoin over the past 10 years or so, I'd say I was surprised that over the last few years, we witnessed a lot more corporate and government adoption.

El Salvador, Bhutan, MicroStrategy, BlackRock, ETFs, all of those things.

I, in my mind, if you asked me in 2018, when I wrote the Bitcoin standard, how it would play out, I would imagine that by 2025, we'd have more random, normal average Joes with wallets and we'd still not have ETFs and we'd not have MicroStrategy and we wouldn't have El Salvador.

And I think that would come later after more people did it.

But, you know, the last few years we saw that trend, but I think, yeah, the government, the US government getting in, I don't think is going to stick.

I think in fact, if the Democrats get in, they may make it a point to sell the coins that they have because I can see it becoming a popular point for them in the election.

And I can see it, it's just such great marketing.

You know, you can't afford your home, you can't afford this, but Trump and his tech pros have done great from their shitcoin investments, bought them out.

It's just unbeatable marketing, I think.

So I don't think that's going to stick.

I don't think the US policy on this is going to stick.

And I think, you know, I was talking to the Africa Bitcoin Corporation and I've just become an advisor for them.

And they keep telling me about how in South Africa, They're really witnessing grassroots adoption.

A lot of people have just skipped on the entire fiat payments technology and just accept Bitcoin.

They have a phone, they download a Bitcoin wallet and they use these wallets for day-to-day transactions.

It's pretty popular apparently in South Africa.

So this kind of reinvigorated my hope that we'll maybe see more and more grassroots adoption.

And hopefully the US government continues to do its shitcoin things and leaves the Bitcoin for the rest of the world.

Yeah, well, if they sell their Bitcoin, it's just more Bitcoin in the hands of actual Bitcoiners.

But I was just in Kenya before I came here.

And I think it might be the best country in the world to be a Bitcoiner.

Oh, really?

So I went to Kibera, which is the largest slum in Kenya.

There's like estimate seven to 900,000 people live there.

It's huge.

And there's Afrobit or a company that are going around just trying to onboard merchants to accept Bitcoin.

And I think they have over 65 merchants all in like quite a concentrated zone in Kibera.

And the cool thing was it's not just Bitcoiners using it.

Like I'm always a bit skeptical of Bitcoin circular economies because it's just like Bitcoiners paying Bitcoiners.

But what they'd done that was really interesting is they'd started paying.

One of the guys has a trash collection business.

He employs 25 people.

He's getting his payments in Bitcoin and then paying all his employees in Bitcoin.

And now there's 65 merchants in the local area where they can go and pay.

And so like real normal people who just live there who aren't, who don't really care about Bitcoin are actually using Bitcoin there.

And then on top of that, there's an app called Tando, which is like this really basic looking app, but you can, because they use Mpacer there, which is like mobile money, you can pay any bill, any merchant, you can pay your rent, you can pay whatever it is in, um, in Kenya using Bitcoin.

So you just like scan a QR code and you'll pay Bitcoin and it's then just converted to Mpacer and pays, pays the other person.

Um, so like you could live 100% on Bitcoin in Kenya today and you would have zero problems.

It was really cool.

Like seeing stuff like that, that's real Bitcoin.

So yeah, I'm bullish on that.

We're running out of time.

I know you've got a busy day.

I think you're going to have a tired hand from signing a lot of books.

But can we close out back on the gold standard?

Yes.

When you look ahead at the 100 years following the start of the First World War, what does it look like?

Is it utopia?

Yeah.

Pretty much.

Yes.

Yeah.

I mean, you know, it's, it's, it's a thought experiment and I try and extrapolate the trends that I believe would be positive and then try and think about what the world would have looked like.

And I think it's a, it's a powerful thought experiment because it illustrates these things in a way that we're not really used thinking of them.

So for instance, I guess this is a great example.

When we talk about the impact of inflation, the usual idea that is taught at universities is that you need inflation because that incentivizes people to spend and to invest.

If you don't have inflation, people will just sit on the money and then there wouldn't be economic activity.

Which is nonsense.

Which is nonsense, of course, because people consume not because their money is losing value, they consume because they need to consume to survive.

And if their money wasn't losing value, they would consume less stupid nonsense and save more.

And that means we have more capital because more saving means more capital.

That means we could deploy more capital in production.

So if you take the opposite of that, if you believe the propaganda, then growth happens because of inflation.

And the more inflation we get, then we get more growth because that incentivizes more spending and more investment.

So clearly Venezuela is the richest country in the world today, right?

Because they have a lot of inflation.

Well, no, it doesn't.

It's not true.

And in fact, the countries that have less inflation have more growth.

And historically, if you had less and less and less inflation, you'd have even more capital accumulation, more savings, more investment, more productivity growth.

So then let's step back and not believe that and then actually think about what the implication would be.

If we had a century in which we had no inflation, then you're accumulating more and more capital.

So the stock of capital that you have is growing and the value of the capital is increasing.

So people become wealthy, people become financially secure, people have significant savings that are constantly appreciating.

I mean, just think every family in the world today, the last four or five generations have had wealth stolen from them through inflation.

Imagine if every family in the world over the last five generations had had their wealth accumulate and grow in value at around one to two percent per year every year over the last 100 years.

The world would be very, very different.

People would be financially secure.

they'd have several years expenditures of savings saved up and then they take a lot of risk with the money that they have beyond that so you start saving when you're born you get gifts in terms of money and then they appreciate over time and then you work jobs as a kid and then you start working as an adult and you keep appreciate you keep holding savings and they keep appreciating and then by the time that you're 25 you can buy your own house with cash and house prices aren't as high because there's not a monetary premium on them.

Exactly.

Houses are not bank accounts.

So houses are just consumer goods.

So one of the key points, and I spent a lot of time thinking about the economics of this and the numbers of it, and I conclude the book with this almost, is to imagine what would have happened to the prices of houses.

So around the early 20th century, we see that there was a centuries-long trend of houses becoming more and more affordable in terms of income.

So the median house in Britain, as a function of the median wage, is constantly declining because we have more machines, more productivity.

We're making houses at a cheaper way and work is becoming more productive.

The average British worker went from an average destitute farmer in a few hundred years to becoming an industrial worker with a lot higher productivity.

So he should be able to afford more house with his salary, right?

So that was the case.

And it was continuously becoming more and more affordable.

And then after 1914, that trend reverses in the real world and houses become more and more expensive in terms of fiat, in terms of money, and in terms of wages as well.

So by the end of the 20th century or today, you need something like, I think, 12 years income to buy a house or something like that.

I forget the exact number.

So instead, what I do is we continue to extrapolate the trend that existed before World War I under the gold standard.

If we'd continued that, then the house would have become more affordable.

And by the end of the century, the average middle-class worker in a place like London, I use London as the example, would be able to afford a house with roughly one and a half years' salary.

So you work for a year and a half, the salary of a year and a half can buy you the house.

So basically you can save it over four or five years of work.

And now in London, you get a shoebox for 2 million pounds.

Yeah, and it's basically intergenerational debt that you pass on to your children to have that shoebox.

because you're competing with all of the world's billionaires and oligarchs who are looking for London as a place to save their money.

London houses are decent bank account replacements.

So you need a place to live.

They need a place to park their money.

They're gonna outbid you.

So you're gonna be left with a shoebox.

So you reverse that trend.

Houses are affordable.

People have a lot of savings and people are able to invest a lot more.

So there's a lot more investment, a lot more entrepreneurship, a lot more technological progress, more energy consumption.

And, you know, rather than take the defensive way of always trying to argue with the Keynesian saying, no, this isn't right, inflation is not good.

This is really seizing the frame and presenting the alternative as it is rather than arguing with them on their terms.

It's not that we're telling them that they're wrong, we're showing how it's wrong.

We're showing what would have happened if we'd had all of this capital accumulation over the century, how the world would have looked like.

And how much more peaceful the world would have been because governments wouldn't have been able to finance all of their carnage with the inflation that they're taking from you.

So think of all the money that's stolen over the century.

Give it back to its owners.

And imagine how much better the world would be.

We'd have bases on the moon, bases on Mars.

Well, the good thing is that we've got another shot with Bitcoin.

Yes, that's the moral of the story.

It is a Bitcoin book.

It's about gold, but it is a Bitcoin book.

Well, Saif, this has been amazing.

Thank you.

I could talk to you all day, but I know we've got stuff to do.

We'll have to do it again sometime.

Yes, absolutely.

Thanks for having me, Danny.

Thank you.

Cheers.