Saifedean Ammous - Civilisation Depends On Capitalism But Fiat Money Destroys Everything: Why Bitcoin is the Answer

Full transcript: Saifedean Ammous on London Real

2:21 This is London Real. I am Brian Rose. My guest today is Safidin Ammous, the entrepreneur, economist, and author. You were the professor of economics at the Lebanese American University for 10 years before you began teaching the economics of Bitcoin in the Austrian school tradition. In 2018, you wrote the best-selling book, The Bitcoin Standard, the decentralized alternative to central banking, and in 2021, The Fiat Standard, the debt-slavery alternative to human civilization.

2:57 You’ve recently been named as economic advisor to El Salvador’s Bitcoin office by President Nayib Bukele, and you are the host of the hugely popular podcast, The Bitcoin Standard. Your latest book, Principles of Economics, explores in detail how human civilization depends on capitalism. You believe that Bitcoin is a tool for freedom that acts as a form of protest against the predatory policies of governments and central banks. Safidin, welcome to London Real.

3:25 Thank you so much for having me, Brian. That introduction basically says everything. Thank you. Fantastic. Really excited to have you on and go deep on these.

3:35 We’ve talked to a lot of people over the last couple of years, deep into Bitcoin, and it feels like you’re kind of the missing piece. It’s going to be great to hear. I saw pictures of you at Bitcoin Miami hanging out with Mr. Sailor and a bunch of the other people that have been on the show. And I really liked a bunch of the things that you say.

3:52 I wanted to kick off and just say this appointment to El Salvador, can you tell me what it means to you and what El Salvador is doing that the world should understand? That’s kind of what I’m curious if you could explain to people. Yeah, so in the Bitcoin Standard, I make the case for Bitcoin as a monetary asset. And I think a lot of the early analysis of Bitcoin was focused on understanding Bitcoin as a payment network. So people thought Bitcoin was here to replace Visa, MasterCard, Western Union, PayPal, these kind of essentially payment technologies.

4:27 And the argument that I make in the Bitcoin Standard is that Bitcoin is not competing with these things in as much as it is competing with the underlying monetary assets that can be run on these things. In other words, you could actually have Visa, MasterCard, PayPal, and Western Union use Bitcoin. They are not competitors. They are orthogonal to each other. Bitcoin is out there competing with the currencies of central banks and with the payment rails of central banks for final settlement.

4:55 And the other aspect, of course, is that Bitcoin is competing with national currencies and national bonds as the asset that people hold for saving. So historically, people used to use gold for saving. Then they used to use gold-backed currencies. Gold-backed currencies became highly inflationary and the alternative is bonds. And people thought that bonds offer a yield that allows you to beat inflation.

5:18 But I think recently this has become pretty difficult to achieve because bonds’ yields don’t beat inflation in real terms. And so I think Bitcoin offers an excellent alternative to that because it is an asset that is strictly scarce. In other words, there’s no ability for anybody to make more than the 21 million that will only ever exist. And so therefore, it’s something that resists debasement. And I argue that in the long run, you’re likely to be much better off just holding Bitcoin without a yield than holding government debt even with yield because governments, obviously, they finance themselves from that spending.

5:55 So they’re going to get it from you. You are the product, effectively. You are what’s being monetized when you hold their bonds. So El Salvador’s decision to make Bitcoin a part of its treasury to hold Bitcoin is what I find the most interesting and most important aspect of it because I think the long-term effect of this, I would argue, and I expect is that over time, this is going to turn out a much better decision than holding onto government bonds, holding onto U.S. treasuries and other governments’ bonds, which is what central banks usually hold onto.

6:32 So I’m extremely excited about this experiment that I’ve been following it closely for the two years that it’s been going on. And yeah, so recently I got invited by Max and Stacey. You know them, our common friends, the legends. They’re working with the Bitcoin office in El Salvador, and they invited me to go there and give a lecture to young El Salvadorians who are working on developing their skills as Bitcoin programmers. So I gave a lecture, and I also had the pleasure of meeting President Nayib Bukhale, and they offered me the chance to work with the Bitcoin office to be an economic advisor for them.

7:13 So I, of course, jumped on the opportunity because it’s watching my ideas come into life is an extremely exciting thing, and I’m really looking forward to it. And I think, you know, El Salvador is an extremely exciting country at this point. It’s astonishing what this president has achieved. You know, he’s got something like 92% approval rating because, primarily not because of Bitcoin, I would say. Bitcoin’s effect is still barely felt in the country, and I think it’s a much more of a long-term play.

7:44 But he’s managed to fight a war against the gangs, and, you know, you hear about wars against gangs, but usually these things are turned into intractable bloody affairs. But it was an incredible decisive victory, and the result is that El Salvador now is one of the safest countries in North and South America, in all of the Americas. And it’s truly exciting, and it’s amazing when you go there, you know, people would not leave their homes. People had no social lives.

8:17 People could not walk in the street. The downtown was a war zone, a deserted place where people wouldn’t want to venture at night. And now people walk around. People have their kids out. Somebody was telling Max that they have a problem now, just that their house is too big.

8:35 Back in the days of the gangs, everybody was always stuck at home, and now everybody’s always out enjoying the weather and the mountains and the beaches of this amazingly beautiful country. And so it’s a really exciting time to be there, and I’m really looking forward to working and trying to help them out with their Bitcoin policy. Yeah, that’s an amazing success, and those gangs down there are no joke, so the fact that he’s had that success is incredible.

9:02 And if you’ve ever gone to a place like Dubai, you know, you can see how much the citizens and the visitors there, they cherish. I mean, the thing about Dubai is that everybody who visits there, it feels like they’re employed by the tourism board because they all tell you how safe it is, and you can plug your mobile phone in and no one’s going to steal it a day later, which is all true, and it makes it just a nice place to be good for families. And, look, I was at Consensus in Austin, Texas, and I can’t say walking downtown there was the safest place in the world, so you make a good point.

9:35 Maybe it’s safer than even places in North America these days. So, no, that’s exciting. And to watch, you know, a president, you know, really enacting out some policies and economics that you talked about in a book, that’s pretty surreal, isn’t it? Maybe we are living in a simulation, after all, for you to be working there, so that’s excellent. Yeah, 10 years ago, Max Keiser came on my show to talk about Bitcoin, and it was weird because at the time, we were always looking to talk about the latest issue and Bitcoin was on the mind, and I didn’t know who to talk to, so I asked Twitter, and they all pointed me to Keiser, and I wasn’t quite sure, so we kind of got into a little war on Twitter, and then he just showed up to my studio, and I didn’t know if we were going to get into a fight or what, but I ended up becoming good friends with Max and Stacey and got my first Bitcoin at like, you know, $80, $89 or $100 at the time, and it’s fascinating to look back on those interviews now and just to see, you know, how far we come, and I guess maybe how far we have to go to a certain extent.

10:41 You know, you wrote Bitcoin Standard in 18 way before COVID printing, way before inflation skyrocketing. What’s that been like for you to watch this take place in real time because, you know, Michael Saylor is the first one to admit that it took the COVID money printing for him to finally get it. You know, you were calling this years before that. What’s that whole experience been like, and do you get a lot of people now that really come up to you and thank you for being an early adopter of this mindset?

11:11 Yeah, I mean, I think from where I stood, COVID was not such a unique departure from business as usual. This is what was going on before. So in the Bitcoin Standard, I look at the money supply growth over the period from 1960 to 2021. In the fiat standard, I run the data set up until 2020. And you find that the average national currency or the total of all national fiat currencies has grown at around an average of 14% per year over 60 years, which is a very high supply growth rate.

11:48 The best currencies, you know, the best-run currencies with the most responsible central banks achieved something like 7% or 8% annual growth average. So Switzerland, the US, Sweden, and Denmark, I think are the four top countries, and their annual supply growth rate is about 7%, 8%. So every year, you’re increasing the supply of money by 7% and 8%. Now, most people are told, well, you know, you buy bonds and then you invest in stocks, and you’re able to beat inflation.

12:18 And up until 2020, that was kind of a tenable lie because inflation was given as CPI, and CPI is, I believe, a completely broken metric. It’s not wrong. It’s invalid. And if I were to summarize, the problem with it is, with CPI, you’re trying to measure price inflation based on people’s expenditures. But of course, people’s expenditures themselves are determined by inflation, by the purchasing power of their money.

12:50 So it’s a circular way of measuring things. It’s like an infinite loop in Excel where you’re referring one cell to the other. So the problem basically is, if your money is devalued, you can’t just increase your spending. People’s expenditure doesn’t go up to match the devaluation and they don’t have enough money to spend it. So let’s say if you’re buying beef every day, and you say you pay $10 for the beef that you buy every day, and then there’s a ton of money printing and then the price of beef doubles.

13:26 Well, when the price of beef doubles, your income is not going to double immediately. So you’re still earning the $10 that you are going to spend on buying the beef. But now you can’t buy beef because beef is doubled in price. So what do you do? You have to make do with cheaper substitutes, soy, or some other inferior substitutes, and you still spend the $10.

13:49 So the basket of goods, the amount of money that you spent has not changed. And so for the last 50 years since 1970, we’ve had this phenomenon where people have been substituting cheaper substitutes for the things that they want. And I argue in the fiat standard in more detail. I get into it that a lot of the pseudosciences that we see promoted in modern universities that tell you fossil fuels are going to burn the planet and eating meat is bad for you. I argue, and I believe a pretty compelling case in detail, that what motivates that, obviously all of that science is government funded, and what motivates that is to try and get people to accept that the reason that you’re substituting soy for beef in your basket of goods is not that you can no longer afford beef.

14:40 It’s because beef is destroying the planet and it’s bad for you, and that soy somehow is better for you. And so we are constantly being forced to substitute cheaper alternatives, and that makes the CPI look better. That makes the CPI look much better than it is. It looks like we only have 2%, 3% inflation per year. Well, it’s not true.

15:00 It’s only 2%, 3%, because people can’t afford to buy the same things that they were able to afford to buy earlier. And of course, another aspect that goes into the CPI is that technological innovation somehow brings down inflation. So if they print a ton of money, prices of things go down, but your computer gets faster than the CPI is adjusted to make, to say, well, you know, and you can now buy more processing power with your money, so therefore that’s eating up the inflation.

15:26 So effectively, we’ve always had inflation, and I think it was possible to cover it up up until COVID, and for the majority of people, it seemed like it was acceptable, because you got a little bit of a good yield on your treasuries. You made a good return on your stocks. Occasionally, of course, you got wiped out. There was a default. The government that you lent money to would default, and you would get wiped out, or the stocks you bought would get wiped out, and companies would go bankrupt.

15:58 So there was an element of casino, and you can’t save properly, but the idea that inflation was the problem was pretty much under control for most people. Most people imagine that inflation was under control, but yeah, 2020 is when it became impossible to hide, because the amount of money printing, and this is just the normal course of events. If you look historically, money printing is like an addiction. It’s like a drug where you start off with low doses, and then you need a much bigger dose every time, and so you keep upping the dose over and over and over again, and it’s very hard to quit.

16:34 It’s very hard to stop at a low dose, and so it’s natural that money printing was going to continue to escalate, because once you get into the mindset, which is essentially what universities teach, which is that money printing fixes things, then you get into the extremely dangerous dynamic of money printing causes problems, and then your economists, the government-paid economists, are paid essentially to always conclude that money printing is what fixes things, so you start printing money to fix the consequences of money printing, and this is really the inevitable outcome. So if you look at hyperinflation in Zimbabwe, I remember there was the central banker of Zimbabwe was talking about how he was boasting about the fact that we’re out there, and we’re able to provide the market with all the money it needs to fight hyperinflation and to prevent economic collapse.

17:27 This is the kind of mentality that you get into, and I think Zimbabwe, for most Westerners, they like to think of Zimbabwe as just, you know, it’s a backwards African country. I think Zimbabwe is just a much more advanced economy than the U.S. They are way ahead in the logic of this. They’re taking the logic of the fiat system to its natural conclusion. So 2020, you know, you had this massive problem.

17:54 It required a lot of money printing, and that, of course, led to a decline in interest rates. So yields on government bonds essentially went to zero and went negative, and people became well aware of the fact that, yeah, you can’t meet inflation, and that’s what I believe drove a lot of people to Bitcoin around 2020. Michael Saylor is one of those people. You know, he talks about how up until 2019, it was feasible that you could, or, you know, maybe 2015, 2016 or so, it was feasible that you could save by buying a bond and then live off of the bond.

18:28 You could retire by buying bonds and then just live off of the yield. But then when the yield disappeared, inflation keeps going up, prices keep rising, and you have to start eating into your principle, and you can’t live off the yield anymore. So that kind of, the fiat bargain broke down in 2020, and I think it’s been breaking down further since then. You know, they’ve raised interest rates, but I don’t think it’s still enough to beat inflation. Yeah, one of the beautiful things about Bitcoin, and I mean, I had Jeff Booth on talking about this as well, is that for the first time ever, it’s like this parallel universe, like those old Star Trek episodes where you can actually really see, as Jeff would say, you know, everything priced in Bitcoin in the future, it’s lower, it’s deflationary, and yet in dollars, it’s inflationary, and yet we were all taught these things.

19:23 I was taught this in economics at MIT, and when I got to Wall Street, they said, oh, this is what the Fed does, and this is why it does it, and you just kind of accept it as a fact, right? Just like the kids these days probably- They can’t all be wrong, right? Yeah, just like probably the kids at school, yeah, accept the fact of climate change is caused by this and the meat eating and the nah, nah, nah, nah, nah. And so, but it takes maybe someone like you to step back and say, wait a second, maybe none of this is true, and it’s great to have Bitcoin as a practical parallel universe where you can actually see how in this world, it’s actually weirdly not- It doesn’t have to be that way.

20:01 And then when Jeff starts saying things like, well, look, technology should make everything cheaper in the future, a lot cheaper. Look at your iPhone and et cetera. It’s a great way to look at this. I’d say more and more people are opening their eyes, but I would just say still probably the majority of the public is still not aware of about their money. And if you’re in a lower income or maybe a lower educated population, you still think that the government sending you checks is the best and only way out.

20:30 Absolutely. I think, but the beautiful thing about Bitcoin, as you said, is that it’s a parallel universe and it’s just out there. And it makes it, for me, the good thing about it is that we no longer need to convince people. So I used to believe those things before I got into Bitcoin. And in 2014, 2015, I was a gold bug.

20:49 I thought gold was the answer. And I was going around trying to tell people that the Fed is doing something bad and inflation is bad. You don’t need inflation. We don’t need to print more money to get richer. If you print more tickets to a football stadium, you can’t increase the capacity of the football stadium.

21:09 You have to actually build it. And all of these things before Bitcoin, they fell on deaf ears because, all right, so what is the actionable conclusion of this? If I tried to tell this to somebody and I convinced them, well, the answer is, all right, well, you know, vote for somebody who’s going to reinstate the gold standard. And that’s just a completely dead end. It’s impossible, perhaps not impossible, but it’s very difficult to imagine the democratic process which gives the winner, the money printer, being won by somebody who’s going to not use the money printer.

21:47 I mean, it’s really like imagining the 100-meter race being won by somebody who’s got their legs tied up because the way you win elections is you make promises about what you’re going to do with the money printer. This is political and economic debates in the 20th century are all about how I’m going to print money and give it to the right causes, whereas you are going to print money and give it to the bad causes. I’m going to destroy the currency to give everybody healthcare and pink unicorns, whereas you are going to do irresponsible things.

22:24 And at the end of the day, of course, as we saw with the whole debt ceiling kerfuffle over the last couple of weeks in the US, at the end of the day, they reach a historic compromise where they agree that, all right, well, you get to print for your thing. I get to print for my thing. And we both bravely destroy the currency together. And of course, in the context of the US, the Republicans want to print to invade other countries and enrich the military industrial complex.

22:52 The Democrats want to print to buy votes domestically. But eventually, there’s always enough money to go around because it’s a money printer, and there’s no opportunity cost. And that’s the key essential concept that I try and explain in the video. Government money destroys the concept of opportunity cost in politics. And so it’s very difficult to get the political process to produce somebody who’s going to say, we’re not going to destroy the currency.

23:20 We’re going to protect the currency. And that’s going to result in something that can vindicate the ideas that I have. So up until Bitcoin comes about, it’s a very lonely, desperate struggle. And then Bitcoin comes about, and you no longer need to convince people. And as a lot of Bitcoiners on Twitter like to say, have fun staying poor.

23:46 If you don’t want Bitcoin, if you don’t agree with Bitcoin, if you don’t like Bitcoin, yeah, continue to use your local government’s scam money. Continue to hold government bonds. Continue to get wiped out. Put your money in banks that go under. Put your money in the fractional reserve Ponzi schemes and enjoy poverty.

24:05 That’s really the only working alternative to Bitcoin, as I like to call it, is poverty. The only working alternative to Bitcoin is that you’re going to have your money destroyed by a government that can print it. And we no longer need to convince people of this anymore because now Bitcoin does the talking for us. Bitcoin today, of course, for the Bitcoin haters, Bitcoin is always crashing because it’s always not, or for the vast majority of its life, it’s not close to its all-time high.

24:34 And so they’re always looking from the bottom, from the top down and saying, well, it was a 69 and now it’s a 27, so it’s failed. Yeah, but it was a 69 for a few days that it was in the 60s and 50s and 40s for a few months. But for the 14 years of its existence, the vast majority of the 14 years of its existence, it was way under 27,000. So for the vast majority of people who had bought Bitcoin at any point, they’ve done much better than any other alternative.

25:02 So if you look at any kind of timeframe that’s longer than three, four years, basically Bitcoin outperforms pretty much everything. You know, some exceptions and some points like at the earlier part, at the later part of last year when it was down over four years or so. But for the vast majority of its life, over a five-year period, it’s outperformed pretty much everything. So even when people are gloating about how Bitcoin’s down, Bitcoin’s, the bubble has burst, the dream is over and they’re laughing at Bitcoiners, you know, all you got to do is just still admire it.

25:35 Show me what you’ve done with your portfolio, with your bonds, with your stocks over the last five years and how has it outperformed Bitcoin. And of course, you know, it’s not just that they haven’t outperformed Bitcoin, it’s that they haven’t outperformed Bitcoin while essentially doing nothing with their life but trying to outperform inflation. So you’re on CNBC every day, you’re reading books and reading articles and paying subscription to newsletters and hiring experts and hiring fund managers and following all the latest fads and trying to develop an investment thesis and investing in all kinds of different companies and jumping around from one to the other and following fundamentals but also following technical analysis.

26:18 It’s a full-time job and it’s a full-time job and people with PhDs in economics and giant supercomputers do and still can’t be Bitcoin. And so, you know, what hope does the average dentist or doctor or athlete or engineer have? Basically, it’s very, very, very difficult. And I think it’s just, what I try and express in my book is that this is just a better technology for money. Your technology for money is a broken technology that is optimized for your government to steal from you.

26:48 It’s optimized for the government to be able to finance its operation. That’s why we have a central bank. The central bank is not there to help you have money. We’ve had money without central banks so we can have money without monopoly central banks. It’s entirely possible to have a free market monetary system on any form of money.

27:05 And the free market will choose money on its own. You know, gold was not chosen as money because governments passed laws saying gold needs to be money. Gold was chosen as money before all of the world’s current existing governments existed. And all of the governments that chose gold as money chose it because it was money and it was chosen by the market. And if they wanted to operate as governments, if they wanted to operate, they needed to acknowledge the market’s choice.

27:32 So it’s the market that determines what money is and the market is perfectly capable of providing money. And the 20th century, in the Pia Stan, which I discussed in my second book, it was just this complete destruction of the concept of money by turning it from the output of the free market into essentially a government cartel for governments and banks to operate this thing in a way that is optimized for them to finance their operation at the expense of the users, unfortunately. How much longer do you think the dollar has left, honestly?

28:08 You know, I don’t know. I don’t have a crystal ball. I don’t believe, as an economist from the Austrian school, I don’t believe you can make quantitative predictions in economics because ultimately, economics is about human action. And it’s not possible to just predict how humans react to stimuli. You know, humans are not a physical object.

28:31 So if you throw a ball of a certain weight with a certain speed, you can make a very accurate prediction of how far it’ll travel and where it’ll land and so on. You can’t do that with humans acting. So I don’t really have a crystal ball to tell me that. But I think, you know, to paraphrase John Lennon, the dollar is over if you want it to be. For me, the dollar is over.

28:56 It doesn’t matter anymore. Whatever happens with the dollar. And I think, you know, I used to live in Lebanon when the hyperinflation happened and because of Bitcoin didn’t matter to me when the Lebanese currency’s Ponzi scheme blew up. People think, you know, places like Lebanon and Zimbabwe are just exceptional places and exceptionally corrupt governments that have destroyed their currencies. I think it’s an extremely common thing.

29:22 If you look at it realistically, all currencies are in hyperinflation at slow motion. They’re all losing value. And, you know, obviously there’s a lot of money to be made if you can predict those things. Like if you knew when the Lebanese currency was going to collapse, then you could have taken out a big giant loan in the Lebanese lira and used it to buy hard assets and then paid it off at a very cheap price. So there is perhaps an art and a science to trying to predict the mortality of national currencies.

29:58 But I prefer to live my life and just hold Bitcoin because you end up doing it much better. I think, you know, you may be right, you may be wrong when you’re trying to time these things, but in the long run, Bitcoin is the short on all those currencies and in the long run, Bitcoin’s scarcity is just going to enforce itself. So for me, one of the real appeals to it is the fact that once you buy Bitcoin, you know, you’re just, you’re trusting in the software.

30:27 When you’re not really trusting, you’re verifying, and you run the software on your computer, you can see the code, and you know that there’s not going to be more than 21 million and you know that nobody can make more of it and you know nobody can take away your points. So then that means you can go and live your life. You can go and be productive, you know, write a book, be a doctor, be an engineer, paint people’s houses, drive a cab, whatever it is, do a productive thing for society, spend less than you earn, save the rest of Bitcoin, and live your life.

30:59 And this is what it was like under the gold standard before everybody had to be a part-time fund manager in order to be able to keep the wealth that they’ve earned. As I say this in the fiat standard, under the fiat monetary system, you have to earn your money twice. Once when you work for it and then once when you take it to the fiat capital market casino and try and win it. It’s like we work in, this is like you work in a factory and then you’re not allowed to take your pay home from the factory.

31:26 You know you’ve worked all day but before you go home you have to go to the factory’s casino, gamble your money and hope that you make more and some people can get wiped out, some people can lose all of the work that they do. This is sort of what it is like in the fiat world and honestly I pity people like this. Like I see them on Twitter, I see the financial analyst on Twitter like having nervous breakdowns over what the Fed is going to do and is the Fed going to do this and what’s the Bank of Japan going to do?

31:55 And really it’s insane to imagine that your own family’s well-being, your own wealth, the money that you’ve already worked for can be taken away from you if you guess incorrectly what the Fed or the Japanese Central Bank or some geopolitical thing. If you think Russia is not going to invade Ukraine and then they do, your portfolio could get wiped out. Everything that you’ve worked for all of your life could be lost and that’s because you’re essentially for your money you’re using casino chips.

32:30 You’re using casino chips and the only way that you can spend that money is you have to go through the blackjack table and you have to go through the roulette and you have to go through all of those games and you have to master all of those games. It’s like an obstacle course to try and keep your money because it is optimized to take your money away from you and Bitcoin fixes all of that. That’s for me the appeal here because look there’s 21 million and if you have one of those 21 million, that’s it.

32:57 You’re always going to have one out of 21 million of all the coins and you don’t have to worry about somebody taking it away from you. You don’t have to worry about somebody devaluing it by printing more of it. That’s what it ultimately comes down to. That’s a great explanation. I’ve never heard about that where you got to pass through the casino on your way out from work but it’s really well said.

33:15 You said these days you really have to be an expert in finance to even have a chance of keeping your money and if you look at the probability spectrum, a lot of people don’t and some people make it out just with the money they have or a little less and some make some money depending on what number they put it on, I guess you would say. I want to ask you about this big statement in your latest book where you say that civilization depends on capitalism. You’re going to make a lot of enemies at universities.

33:44 My daughter just started a university in America and she just came back and I said, is this Marxism thing? Is that like a thing there? And she’s like, oh yeah, it’s a thing. People are to celebrate in Lenin and I’m like, but what about the 20, 30, 40 million people that died? And she’s like, no, no, it’s a real thing there.

34:00 And I was like, wow, that’s flabbergasting to me. Tell me about this assertion and why are there people in America having conversations that a non-capitalistic system might be right? Yeah, well, I mean, I think universities are increasingly irrelevant to the real world. There are places where people sell credentials and it’s essentially, the education there is becoming increasingly unhinged and detached from reality. So it doesn’t really matter what people say at universities.

34:35 All these professors have these amazing titles and these amazing jobs. But our future leaders are going there, many of them. I know some aren’t, but many of them are, right? I don’t think so. I think it’s more of a propaganda idea that the leaders are going there.

34:54 If you look at a lot of the people that have shaped the world around us today, they did not finish university or they did not even go to university. In particular, you look at the most important entrepreneurs of the last 10, 20 years, the people that have built the most incredible, most successful products. So just off the top of my head, the Google guys, Mark Zuckerberg, I think he dropped out of Harvard. Dropped out of Harvard, yeah. Yeah, so just a very large number of people who didn’t finish college and ended up doing enormously well.

35:27 And I think that’s going to just continue to accelerate because college is becoming increasingly irrelevant. And this is why I left my job at university because first of all, you look at academic publications, nobody reads academic publications. Nobody should read academic publications. They’re completely unreadable. It’s essentially putting people through, making people jump through hoops to just write things that are politically correct, dramatically correct, and running through the correct methodology of whatever field and discipline exists, and then rewarding them with a job.

36:03 That’s it. The function of academia is not to inform students or teach students. It’s to provide jobs for academics. And you get that job by essentially promoting the right narrative by going along with the narrative that people want to hear, or, well, not people want to hear, but that government’s finance. Ultimately, whoever pays the piper calls the tune.

36:26 And universities are primarily paid by governments. And I discussed this in depth in the Fiat standards. There’s a couple of chapters on what I call fiat education and fiat science. It’s fiat science because it is financed by fiat. So you can’t be a university today.

36:45 You can’t be considered a reputable expert by being a university unless you’re getting government funding, government research grants, and most importantly, subsidize student loans. That’s the real way that universities are beholden to governments. If you are a university that doesn’t toe the correct line, well, then your students don’t get to take out low interest rate loans to get into it. So the entire thing is financed by government and it is run to the benefit of government.

37:19 So it comes up with the conclusion that governments want to hear. And that conclusion, of course, is that governments need to be spending more money, need to be printing more money, and that you need to be spending less money and that you need to be buying cheaper things and that it is better for you to eat industrial waste than real food. You know, all the food that your ancestors have eaten for thousands of years is bad for you, but the modern industrial waste is what’s good for you.

37:46 That all the oils, all the fuels that have given us industrialization and taken us from darkness and doubled our life expectancy, all of these things are actually bad for us and we need to go back to primitive pre-industrial energy sources of wind and solar and just go back to pre-industrial societies. All of these things are being promoted at universities and increasingly more and more people are beginning to realize this is nonsense. And so people don’t read what professors write, people don’t care, and people are getting out of the real world thanks to the internet and finding useful information.

38:20 You can learn whatever you want on the internet for free or for very close to free. So for me, I left my university job, I teach at my online university, my online learning platform, I’ve got five online courses, I’ve had thousands of students from all over the world sign up, I’ve taught many more students than I would have been able to reach if I was at a university, and I charged them a fraction of what they would pay for the university and I obviously make more by teaching many more of these students. So I think the future is moving away from these institutions of credentialism and these kind of anointed priests that talk down to us and inform us what we need to do, whether you look and people arrive at these conclusions from all kinds of different ways.

39:08 People who have looked at the topic of diet and nutrition realize that there’s something extremely wrong with nutrition departments at universities that are out there telling people to eat garbage essentially and telling them to keep eating the same garbage that is making populations extremely unhealthy. There’s something clearly wrong with the economists that are out there telling you that yeah, what you need is more government money printing in order for us to fix the consequences of money printing. And so from various fields, people are arriving at the same conclusion and I think that the importance of the university is becoming less and less and less.

39:49 And for me, I’m not interested in reforming the university system. I’m not interested in debating university professors. University professors themselves, of course, are also not interested in debate. They are not effectively the way to succeed as a university professor is not to be part of any kind of intellectual, any honest intellectual pursuit or any attempt to try and arrive at truth. The way you succeed as a professor, the way you make it to the top, the way you become the recognized authority is to toe the party line, churn out unreadable garbage papers that nobody reads but that arrive at the same conclusions that everybody wants.

40:25 And so there’s very little to the interest in engaging with this. So very few people from academia have attempted to critique any of my work. Even though my book, the Bitcoin Standard, might be the economics book that has the highest number of ratings and reviews on Amazon. So it’s got something like 6,500 reviews, which is, I mean, I’ve looked around. There might be a few other economics books.

40:54 Obviously, in business, you have a lot of books that have a lot more, you know, how to make money and those things. Obviously, these will outsell this. But you would imagine if my book was, you know, if these people were interested in honest intellectual debate, they’d want to take on this book that is achieving this high level of popularity and try and argue with it, try and debunk it, try and embarrass it, try and show the world that I am a crack. But there’s very little interest in it.

41:21 There’s very little interest in honest intellectual debate. And that’s fine. You know, I love that quote by Buckminster Fuller that you don’t destroy something by arguing with it. I forget the exact quote. But you’d play something by building something better.

41:39 So I’m not interested in arguing. I’m interested in just writing to readers. I’m not interested in getting jobs at prestigious universities and winning awards and any of that nonsense. I like to write for readers and I like to teach students directly. And so, well, that’s sort of an answer to a small part of your question, which is why about the universities.

42:06 But do you want me to get into the topic of the book? Yeah, it’s a shame about university because I had an amazing experience. I went to MIT and I got to learn all these great engineering concepts and fluid dynamics and I took some finance courses at the Sloan School. And for me… What kind of engineering did you do?

42:25 Mechanical engineering. Oh, I did mechanical engineering too. Oh, there you go. Great minds, right? But like, I still remember learning thermodynamics and fluid dynamics and you know, from some of these amazing professors and I lived in a fraternity house with a bunch of guys and, you know, there was no agendas being pushed back then or at least at MIT.

42:43 So I got out and I felt like I had really been learning in a place… It’s engineering too at the end of the day, so you can’t really divert it too much. And so it’s a shame that people can’t get that experience these days, but maybe you can’t anymore in a university, you know? Yeah, but you can do it online. And I mean, I think this is really why the reason the university is becoming more and more unhinged in a sense is because it’s becoming more and more exposed and so it’s difficult to maintain the standards, the narratives and so people switch away from them.

43:22 But you can learn whatever you want online. So, you know, kids today have it much better than we did because they can learn anything online almost for free. I mean, for instance, look at the example of Saylor University, Michael Saylor of Bitcoin fame. He’s got, I think, 50 years from now, Michael Saylor will likely be remembered more for his website, Saylor.org, which I believe is an absolutely amazing website, which is a university, essentially an online university that offers university courses for free for anybody in the world.

43:57 And if you pay a small fee for somebody to proctor you, you can get a degree. And this essentially allows people to get a degree for a tiny fraction of the price of a regular university by utilizing online education. So, if the goal of the university is in terms of education, I think people today have a much better deal than we did back in the past. But if the goal is the country club experience, as I like to call it, well, you know, I think it’s much better for people to just focus.

44:31 When you’re young, when you’re 18, it’s not the time to be getting into the country club. It’s the time to be working hard, learning, acquiring skills, earning money. And then once you’ve made it, once you have the money, that’s when you go into the country club. So, you can recreate the country club experience in actual country clubs and you can get the education online. Yeah, point made.

44:52 All right, why does civilization depend on capitalism? When my daughter goes back to uni in a couple of months, how can she tell her friends on the dorm that, you know, Mark says it doesn’t work. Why? Well, I mean, look, this book is pretty thick. It’s 420 pages, Principles of Economics.

45:11 It’s just fresh off the printer. And that’s kind of the punchline. Like, it’s 420 pages to lead up this punchline. So, I’m going to take a deep breath here, try and summarize the whole thing, and I hope I do it justice. So, what I try to explain in this book is the process of economics from the perspective of the Austrian school, as understood from the Austrian perspective, which is that economics is human action.

45:39 Economics is about humans acting. And once you analyze economics from the perspectives of how humans act, I believe it’s a much more powerful way of understanding economic phenomena. So, within the university way, within your university courses, economics is thought as if it is a natural science and these aggregate measures of economic output and all these aggregate things are treated as if they are physical phenomena that we try and find scientific relationships between them.

46:14 So, you know, in physics and chemistry, you have a container and if it has the, you know, there’s a law that links the pressure to the volume to the temperature and there are constants, there are natural constants that you could use and you can calculate these and you can run these numbers on any gas in any container and the ideal gas law, as it’s called, will always hold. And so, modern economics that start at universities attempts to apply that to economic phenomena by measuring aggregates and by then trying to establish those relationships with hilarious consequences, obviously, because it never works. You’ve never been able to establish an ironclad rule of economics that says, you know, if unemployment goes up by 3%, then inflation will go down by 2% and GDP will go up by 0.15% or whatever it is.

47:05 We’ve never been able to establish any of these things as a law like you can in the natural sciences. And for mainstream economists, this is approached from the perspective of, you know, well, we’re trying and we’re getting better at it and we want to make economics more like physics and it’s, you know, hopefully in 50 years we’ll be able to do that. From the Austrian perspective as null, this, no, we can’t do that because as I was saying earlier, economics is about humans acting and it’s not about material things.

47:38 What drives economic phenomena is the action of human beings. In fact, all of economics is about value. It’s about how human beings make decisions about the value of different things. And value is a completely psychic phenomenon. And the most pivotal moment in economics as a science, in my opinion, was the work of Carl Menger, who was the father of the Austrian School of Economics.

47:59 And his idea, his big idea is that value is subjective. Value does not exist outside of the human mind. And the best example I like to give of this is oil. Before 1850, oil was literally the scum of the earth. If you had oil on your land, it was a disaster, it was a problem because you couldn’t grow food on the land.

48:20 And so you had to actually pay people to try and take that oil out, throw it somewhere else so that maybe you could fix the land and grow oil in it. Then once we’ve discovered engines that can run on oil, oil became extremely valuable and now people fight wars over oil. So it’s the same thing, it’s the same material. It went from being scum to being the most important liquid on which literally the world runs. The world economy runs on oil.

48:49 And all of that is because of our ability to understand it and our ability to value it. So from that perspective, we start to analyze the economic processes and we start to analyze how humans economize. And I look at the ways in which human beings economize and the ways that human beings try and improve. What I think of as economizing is trying to improve the quality and the quantity of our time on earth. How do we make our time on earth better?

49:17 How do we increase the value of our time on earth and how do we extend our time on earth? So we’re constantly economizing, trying to live longer and trying to live better as we subjectively imagine it. And so to do that, this is the summary of the first three chapters, laying the groundwork, the fundamentals of how we think about economics from the Austrian perspective. And then in the second part of the book, I introduce ways in which human beings economize.

49:41 So how do we economize as human beings? Well, we work. The most obvious one is labor. So you’re out there, you see an animal, you want to hunt it. You hunt the animal, so you work to hunt the animal and then you get the animal and then you eat it.

49:56 You sacrifice leisure, you sacrifice lying down on the beach, enjoying yourself in order to run around for a couple of hours. Not because you enjoy running around after animals for a couple of hours, but because you enjoy the output, that’s what labor is. So that’s one way we do it. Another way we do it is through developing the concept of property. We start owning things and then we improve them and then we keep them and then that helps us achieve things.

50:19 So you take property in an arrow or in a bow or in a stick that you use to catch animals, you build a house and that’s another concept of how we economize. And then another way in which we economize is we develop capital, which is a specific kind of property which we use for production. And that for me is, I think, the essence of understanding economics and I think it’s a massive disservice to humanity that modern universities don’t teach enough about capital accumulation.

50:51 That economics textbooks don’t cover the concept of capital accumulation as much as they should be, in my opinion. I believe there’s probably an agenda behind that. They don’t want you to have capital. They want to have all the capital themselves. But really that’s ultimately what it comes down to.

51:10 So if you look at me and this is why the cover of the book is the evolution of this tiny little dinky boat to this big fish boat, this big sailboat to this gigantic modern shipping container’s vessel which carries thousands of tons of goods and moves them around the world, this is what capital accumulation is. And it’s just the progression of the increase in our productivity. We’re increasing the value of our time because when you have one of these you can move, say, 100 kilograms or 500 kilograms of stuff and one person can work for a whole day and move 100 kilograms of stuff or let’s say 10 kilometers.

51:50 With one of these you can move maybe 5,000 kilograms of stuff for 10 kilometers in a day or more than 10 kilometers probably. And with this you move thousands of tons. And so the productivity of our work increases as the capital increases. And that’s, I think, a very, very, very important concept. And it’s ultimately down to the fact that we can accumulate capital that our life improves.

52:14 Of course, other important concepts then follow. Trade. And usually, you know, economics textbooks today focus on trade and focus on the importance of trade in the division of labor. And, of course, I believe that is an enormously important concept to understand. The division of labor, comparative advantage, and the benefits that accrue to people from engaging in trade are enormously important.

52:32 However, I think capital accumulation is more important because without capital accumulation there’s very little room for people to even develop the surplus that allows them to trade with one another. There’s very little room for us to develop any kind of rationale for us to trade with one another unless we develop capital. In other words, you know, I’m not necessarily born endowed with the ability of better producing a specific good while you are better endowed with producing the other good.

53:06 The reality is if I accumulate the capital for this good and you accumulate the capital for that good, I become highly productive in this good and you become highly productive in that good. Because, you know, what drives comparative advantage and what drives the division of labor is the ability of different parties in a market economy to be able to accumulate capital. So, as a simple example, you know, you build a fishing boat and a fishing rod and that allows you to catch a lot of fish.

53:35 But I build, you know, arrows that I throw and catch and traps and that allows me to catch deer and rabbits. So, that’s what develops the comparative advantage that allows us to trade with one another. And without capital accumulation, we go back to a very primitive existence wherein I’ve spent all the time trying to catch fish with my own hands and trying to catch rabbits with my own hands and obviously usually failing miserably and, you know, if I fail for a few days in a row, I could die and starve.

54:05 And in that kind of world, there’s very little room for you and me to trade with one another only when we develop capital and when we accumulate capital does my living standard increase, your living standard increase and the opportunities for us to trade with one another get amplified to allow us to trade well and gain that. So, these are kind of the basic ideas of how individuals economize. Then the next section of the book discusses economizing in the context of a market economy.

54:35 So, this is, you know, we’re not just individuals that are improving the way that we live our lives. Once we live in a situation where each individual is able to accumulate capital and able to trade with one another, once we accept the concept of property rights, you know, again, going back to the individual concepts of economizing. So, you work, I work. I respect your right to have property. You respect my right to have property.

55:00 I develop a capital stock which I use for production. You develop a capital stock to use for production. And then once we have an extended social order where we trade with a lot of people that do the same thing, we all work and we all respect each other’s property. We all accumulate capital. Well, that gives us what is called a market economy.

55:19 And that is our superpower as a human species. That is what separates us from animals. And that’s what makes us so powerful. That’s what makes us able to defeat all other animals on earth. This is why lions are much more powerful than us.

55:34 Gorillas are much more powerful than us. And yet we put them in cages. They don’t put us in cages because we have a market economy. We specialize in producing things. We accumulate capital.

55:46 And we get better at economic production over time. And we keep accumulating more capital and increasing our productivity. And that’s what makes us so powerful. That’s really ultimately the application of our reason to the process of economizing within a social order in which we accept each other’s right to property and we accept each other’s right to accumulating capital. That’s what makes us a super species essentially.

56:11 That’s what sets us apart from the rest of the animals. And that is what capitalism is, to come back to the punchline essentially. That’s what capitalism is. So people generally have all kinds of weird definitions of capitalism and generally today. Capital just means everything that I don’t like for most people who go to universities.

56:30 But that’s not what capitalism is. Capitalism is an extended economic order in which people are free to accumulate capital and own capital. And so that depends on people’s ability to save, people’s ability to respect each other’s property rights. And only when we have that are we able to build a human civilization. And once we start undermining that, once we get to a point where we undermine the right of people to work, the right of people to have property, and that’s really the big one, once we start, you know, once we get taken over by that mind bug that says, your property is not legitimate, we should not have property, we should not let people have property, we should actually just get rid of the concept of property, or we should take other people’s properties and have all the property managed by one person.

57:20 That’s when we destroy that capitalist system. We destroy people’s ability to economize individually and increase their capital stock and increase their productivity. And that’s when civilization falls apart. And that’s why, you know, this is really the problem with socialist economic systems. And that, you know, of course, as you said, you know, you mentioned 20, 30, 40 million people.

57:41 It’s actually probably much more than that. It’s probably more than 100 million in the last century or so. But, you know, these people weren’t necessarily always just gone down because of dictators. In the mind of your average socialism fan, you know, these people were killed because it wasn’t real socialism. It was supposed to be socialism and then it got taken over by bad guys and then the bad guys started killing people.

58:03 So if we just make sure that the good guys take over this time and they don’t kill people, then we can have all of the amazing, nice fantasy land of socialism. But the really powerful thing about the Austrian School of Economics, and this is where it, in my opinion, is completely incomparable to all the garbage that is taught at universities, is that it is the only one that offers a clear understanding of what socialism is and a clear critique of why socialist economic systems fail. And it explains what you see in places like Venezuela and the Soviet Union and Cambodia and all these actual examples of real suffering and socialism as an inevitable economic outcome of a system that undermines people’s ability to hold capital.

58:50 This is what it comes down to. Socialism comes down to the fact that you cannot own capital. Capital goods need to be owned by a government. And the really powerful idea, this is Mises’ idea that he’s written about exactly a hundred years ago, a hundred and one years ago, in 1922 he wrote a book called Socialism. And the socialists have never been able to answer his critique.

59:12 And his critique, most people, and this is pretty unfortunate, most people who think of themselves as being enemies of socialism, when they present their critique of socialism, and most socialists who think that there is a critique of socialism, they think it goes down to the issue of incentives and they think economics is all about incentives. And they think, you know, the reason the socialism fails, or the reason that people think socialism fails, is because you don’t get rich under a socialist economic system, so therefore if you’re not going to get rich, why are you going to work hard? Why are you going to take out the trash?

59:45 You know, who wants to be the guy who takes out the trash if we’re all going to live in the same house, if we’re all going to live the same quality of life? Well, everybody wants to have a cushy job in air conditioning, typing on a computer. Nobody wants to take out the trash, nobody wants to become the brain surgeon, nobody wants to work hard, nobody wants to do anything, as long as you take that reward. And obviously this is true, but that’s not the economic critique of socialism.

1:00:07 That’s the incentive critique of socialism. This is independent of the real economic issue, which I discussed in this book, which is Mises’ critique of socialism, which is calculation. That’s the key point. Socialism cannot calculate the best uses of economic resources, because under a socialist economic system, there is no market in capital resources, because capital resources are all owned by the same entity. And this is the kill shot for socialism.

1:00:39 This is why it cannot work. This is why that’s real socialism. This is why every time you see socialism fails, it’s not because Stalin was a bad guy or Chavez was a bad guy or because it wasn’t real socialism. It’s 100% real socialism. This is what always has to happen by definition.

1:00:55 The definition of socialism is that you have a single authority, a single entity that owns all the capital. So if one entity owns all the capital, that means there is no market in that capital good. There’s no market for iron. What do we do with iron? Should we use the iron to build cars?

1:01:13 Or should we build trains? Well, the entity that owns all the iron also owns all the car factories, also owns all the train factories, also owns all the possible uses for iron. And that entity decides everything. So in a capitalist economic system, the iron producer is independent of the car producer or the train producer or all the other uses of iron. And each one of those people has to bid for the iron, and the iron will go to the person who uses it most productively.

1:01:43 So if the car maker is able to make more money by selling cars, because cars are a better thing than trains, in this context at that time, given the current technology, given people’s tastes, then the car makers will be able to get the iron, and then the iron makers will be producing iron and it will go to cars, and then we don’t have trains. Or the other way around. This is just an example, obviously. But the point is, if you have a market in capital, wherein everybody is able to own their capital, then you have a rational basis of calculating the most appropriate uses of capital and how to allocate that capital to meeting the ends of people as demonstrated by people’s own consumption decision, because people own their own capital, and people make money from that capital and then they spend it on consuming things.

1:02:28 So when you take that away, when you take the ability of people to consume and produce and accumulate capital, and you make that all centrally planned, and you have just one single authority that is in charge of determining what gets used where, you are going to arrive at the inevitable outcome of socialist economic system, which is economic collapse and the destruction of capital, this really key thing, that the capital stock itself collapses. And this is why, you know, if you look at the collapse of the Soviet Union, it was not an incentive problem, because the incentive problem, as we mentioned earlier, was solved very effectively. Yeah, you wouldn’t get rich by not working hard in a communist system, in Russia and the Soviet Union, but guess what?

1:03:13 If you didn’t work hard, you got sent to the Gulag. That’s a very, very strong incentive. So it wasn’t absenteeism that destroyed communism. You know, it wasn’t that everybody stopped going to work. It wasn’t that everybody was lazy.

1:03:26 People were going to their factories, because they didn’t go to the factory. They’d get shipped off to the Gulag. People were going. They were turning up. But what were they doing there?

1:03:34 Nothing. Why? They were playing with rust, essentially. The capital stock itself rusted because the iron that was given to the train factory could not be used in the train because they miscalculated the amount of rubber or nickel or whatever it is that they used with it. And so they couldn’t make the trains without those things.

1:03:53 And then the iron rusted. And so the car factory was falling apart. The train factory was falling apart. The iron mine was falling apart. And all of that was falling apart, not because Stalin was a bad guy and not because there was bad incentives, because without the ability of people to own capital and without having a free market for the allocation of those resources, you are unable to allocate those resources properly.

1:04:17 And capital is a living thing. It’s good to think about it as a living thing. It’s like a fish in water. If you take it out of a market economy, it stops being capital. It’s like taking the fish out of water.

1:04:26 It’ll die. And once it dies, it just becomes rust. It falls apart. And so that’s, I mean, I don’t have gone on for long, but this is a lot shorter than the very elaborate case that I tried to make here, that really if we want to live in a life that is different from basically monkeys slinging our feces at each other in a jungle, our only hope to do that is through the system of an extended market order in which we accumulate capital and in which we have free market and capital.

1:04:59 Yeah, that’s really well said. Funny enough, I actually just finishing Homo Deus by Yuval Harari and that’s just one of his final conclusions is that these are information processing is what these different types of governments do and exactly the capitalistic one allocates everything efficiently. But I love your concept of everything rusting because it’s all going to the wrong places and not only is it not useful, it actually just decays and then you have a complete loss of capital.

1:05:29 So in a long enough timeline, all of these things will fail and that failure might manifest itself in all sorts of different scenarios and oppression and famine and whatever, but it’s going to fail because of the information. You’re not getting the real-time correct information at the end of the day. I’m really hoping all these university students will watch this. Unfortunately, I guess if you’ve never seen that happen, and you’ve grown up in a world, in the Western world, where everything is always there, maybe it’s a different scenario.

1:06:00 Whereas if you maybe lived in the 80s somewhere behind the former Iron Curtain, maybe you don’t need convincing of what happens in this system. Yeah, I think it’s going to be a lot easier to sell these ideas to people who are, say, in Poland or in Hungary than in the US. But the way things are going, I mean, look, you’re graduates from MIT this year. Like, put yourself in the shoes of somebody who’s just graduating MIT with the same degree that you got. I mean, it does not look good for them.

1:06:32 You know, the interest rates are very high, and house prices are very high. And so how many years does the MIT graduate need to work in order to be able to afford to own his own home now? I think we are getting to the point where we’re seeing the breakdown of the economic system, of the capitalist economic system, and people are beginning to suffer the consequences of it. And I think, you know, I should say here, I focus on the aspect of capitalism, but the deeper discussion is after discussion capitalism, I guess it’s discussion of money, discussion of the monetary system.

1:07:10 And I think the way that the threat of capitalism is really being materialized, is really materializing in the modern world, is through the central planning of money. It’s socialism in capital markets themselves. It’s socialism in the money market that is at the root of the problem. It’s really the fiat monetary system that is the threat to our civilization. And so generally, you know, people tend to think that the enemies of capitalism is these Soviet regimes or whatever, and the party that is going to support capitalism is Western governments and the US government.

1:07:58 Well, this book is kind of the argument that I make is really, it’s modern central plans and modern governments in the West, in supposedly capitalist economies, that are actually the real threat to capitalism because the central planning of money is slowly creeping into the central planning of everything. And it’s destroying our ability to have a market economy. And that’s essentially destroying our ability to have civilization. And you see this in the civilizational breakdown you see around the world.

1:08:30 We see conflicts increasing. We see people’s quality of life deteriorating in many places. And I think there’s a lot to be pessimistic about. But I end the book on a positive, optimistic note, which is that ultimately, capitalism, I believe, wins because the people who adopt capitalism are just going to have infinitely superior technologies and tools to fight others. Effectively, if you go to destroy capitalism, I mean, the only end state that you could get to is essentially, and if you really want to be truly an anti-capitalist, the only way that you can do that is to, if you hate capitalism, you can’t own any tools.

1:09:20 You can’t even own a spear to hunt rabbits because that’s capitalism. If you take a tree branch and you sharpen it and you make it sharper, then you throw it at a rabbit, that’s a capital good. You’re a capitalist. So if you really want to be consistent and honest about your opposition to capitalism, effectively, the only way that you could do it is you need to go back to essentially being a monkey slinging your own feces at other people. That’s the only kind of weapon that you would have to fight capitalism if you wanted to really be consistent about it.

1:09:55 And, you know, that’s not something that you need to do in order, I’m not asking you to do that because, well, hey, you know, if you’re anti-capitalism, then you should really not use the products of capitalism. It’s not a choice. If you’re destroying capitalism, if you’re fighting capitalism, you are going to end up being a monkey slinging your feces in the jungle. You’re going to destroy your ability to build anything more sophisticated than swinging feces at other monkeys.

1:10:27 If you don’t have the ability to live in peace in a civilized system with other monkeys, where you respect each other’s rights to maintain your spears, respect each other’s rights to accumulate capital, you’re not even going to have spears, and you’re going to be slinging shit at each other. And the only, and that’s going to make you very, very, very easy prey for anybody who, any group of people that are able to continue to live in a capitalist system where they let themselves accumulate spears, accumulate computers, accumulate modern machinery and modern weapons. So that’s why, you know, ultimately I’m optimistic about it, and that’s why really Bitcoin is the punchline of this, or the final punchline of the book is that ultimately, I think, you know, we’ve faced threats from bears, from lions, from nature, from storms, and we’ve managed to, as a species, as a civilization, we’ve managed to defeat those things because of our ability to accumulate capital, and because of our ability to come up with ideas and technologies, another topic I get into in depth in the book, and I believe we currently face a similar, much more formidable threat than bears and monkeys and rain and storms, and that threat is a monetary system that’s destroying our ability to have economic calculation, that’s destroying our ability to accumulate capital, that’s destroying our ability to save.

1:11:51 But guess what? We also have a lot of machinery, we have a lot of brains, and we have a lot of ways of figuring things out, and we are figuring out a way around it. I think Bitcoin is that way around it. Is Bitcoin then the true embodiment of capitalism somehow? I absolutely think so.

1:12:08 I think the biggest problem that capitalism has faced over the last century since 1914, since World War I, has been the fact that the entire planet has had a centrally planned monetary system. We’ve had monopoly banks and monopoly central banks in charge of money, which is one half of every economic transaction. So we’ve had essentially 50% capitalism at most because we have capitalism in the goods and services, but all these goods and services are traded for a form of money, which is centrally planned.

1:12:41 And sometimes it’s centrally planned very badly, and sometimes it’s centrally planned only slightly badly. But over time, as I was saying earlier, the natural progression is that it just continues to get worse and worse and worse. And that’s socialism in disguise, basically. Any kind of central panning is socialism. Exactly.

1:13:02 Okay, got it. So the pure capitalism from 1914 has been slowly diluted over the past century to where now it’s 50-50. Who knows? Yeah, I mean, it’s a difficult question to answer in terms of where it is. And I think the more central banks matter, the less of a capitalist economy we have.

1:13:24 I think it’s absolutely absurd that on that Tuesday when Powell comes out and makes his announcement and announces what he’s going to do with interest rates, I think the fact that that exists is just absolutely insane. And I think one day people are going to look back. Once we’re through with this insane nightmare, people are going to look back at this as being the equivalent of child sacrifice. It’s just insane. Why do we have an economy of 8 billion people trading with one another, buying and selling things?

1:13:56 And all of that depends on this guy in Washington or New York or whatever he is. I don’t even follow that as a spectator sport anymore. This guy deciding if it’s going to be 0.25 or 0.5 or 0.75 or if it’s going to keep it constant, if he’s going to take it down. It’s insane. Why should my life be affected by this?

1:14:20 Why can’t I choose to opt out? And with Bitcoin, you can. Before Bitcoin, you couldn’t. Before Bitcoin, you couldn’t for very real technical reasons. The money is not just something that you use to get rich.

1:14:33 It’s a tool, as I was saying earlier, for economic coordination. So you wanted to trade with anybody outside of your country. If you wanted to send money abroad, the only way that you could do that is to go through your local central bank. That’s it. Before Bitcoin, there was no alternative.

1:14:47 You had to go through your central bank. And if you wanted to use banking services, you had to go through your central bank. And so you had no alternative, but now we do. And I think it’s just, it’s really, I think Bitcoiners are going to be the forefront of this revitalization of human civilization, not for any reason more sophisticated than the fact that we have a functioning technology for money, whereas everybody else is using essentially primitive slavery system for money.

1:15:24 And correct me if I’m wrong, but your book kind of asserts that capitalism will always prevail. In a long enough timeline, it is because it’s an expression of the DNA of humans. And so in some way, shape, or form, the emergence of Bitcoin or something like it was almost inevitable. I mean, I don’t use the term an expression of the DNA of humans, but I think it’s, I mean, I wouldn’t say inevitable, but I think, you know, I like our odds. One of the simple reasons that as I was saying earlier, capitalists have capital on their side, and anti-capitalists have the destruction of capital.

1:16:03 I mean, if this centralized planning of money is not processing the information in the most efficient way, then you would argue that it’s going to break down and not function correctly at some point in time. And something more true will replace it. And in this case, it seems as if that’s Bitcoin. I think so. I mean, ultimately, you know, look at the Soviet Union, they spent a lot more of their wealth as a percentage on weapons and on building their military capabilities than the US did.

1:16:35 And yet the US was doing a lot better because it had a capitalist system. And in general, you see this, I think it’s a very common thing, that a three-year economy is so much richer that they need to spend a smaller percentage of their wealth on weapons in order to defeat a capitalist and non-capitalist economy, because the socialist economy itself shrinks in size and doesn’t have a lot of resources and can’t mobilize them. So I think you see this across nations, conflicts between nations.

1:17:10 And in the current world, you know, where I don’t think it’s a country versus country conflict. I think it’s an international conflict between the global monetary system as it exists, as it’s kind of a cartel monopoly system, versus free human beings, who just want to be free, civilized, productive and peaceful. Yeah, people always forget. One of the most important ways humans communicate with each other is by transacting with each other. It’s actually a form of culture as well, or the procreation of culture.

1:17:43 Look, since I got an amazing economist with me, I’ve got to ask you about artificial intelligence, which in my opinion should be your next book, but that’s another story. I’ve been going pretty deep on AI, getting all my old MIT professors on and having all sorts of people on the show talking about it. I must say, the deeper I go, the darker it gets. But, you know, a lot of these men and women that have been in this field for 10, 20, 30 years have kind of game planned this out.

1:18:11 And a lot of them are very, very concerned and worried about super intelligences and what it’s going to do to replace humans as workers or maybe even what you’re talking about. If intelligent beings, unlike human beings who make a subjective view on value are making the decisions, did a lot of these economics go out the window? And so I’m just curious what you see coming forward in the next two years, maybe 10 years, 20 years. How does artificial intelligence affect everything?

1:18:40 The labor force, capitalism, information processing, all of it. I don’t share a lot of the fear that a lot of people have from this. I don’t think it’s something to be worried about. I think it’s just going to cause a massive increase in productivity. And this is kind of the silver lining of everything that’s going on, is that we’re constantly coming up with new technologies.

1:19:08 And this one seems to me, I should say it’s not something that I have looked into in depth. I have not truly understood the capabilities of what this is going to be doing, but it does seem like it is going to increase productivity significantly. And generally, whenever you see economically illiterate people talking about jobs being replaced and they’re afraid that jobs are being replaced, that’s a great sign that things are going to be great, actually, because the replacement of jobs is economic progress.

1:19:41 We didn’t have job replacement. We’d all be slaves lugging around things for the one tiny little family that owns all the rest of us. But we continue to develop more advanced technologies by accumulating capital, and that obsolete jobs. So the wheel has put a lot of people out of work, right? And a lot of slaves lost their jobs in terms of carrying heavy things around once the wheel came about.

1:20:09 And then the engine was even more devastating. And the computer was more devastating. All of these things, obviously, they weren’t devastating. They did not destroy jobs. They increased the productivity of jobs.

1:20:22 And so now we have an infinitely larger number of jobs than we did back in the past, but people who do those jobs are much more productive. So it used to be that if you worked in transportation a thousand years ago, that meant that you had to carry people on your back, and that’s how you carry people and stuff on your back and walk with your own legs. Today, you work in transportation. You drive one of these giant shipping vessels, and you move enormous quantities of things at a much, much, much, much higher productivity.

1:20:51 Or you design one of these boats, and you make a lot of money by designing it because it’s going to be a boat that’s going to operate for decades, and you’re building something that’s extremely valuable. So there’s always, amongst people who aren’t very good at thinking about things economically, there’s always this hysteria about increasing productivity, putting us out of work, and the famous Luddites who went around destroying sewing machines 200 years ago. And of course, the Luddites bought excellence, and the world champions of economic illiteracy are the Marxists.

1:21:30 Of course, Karl Marx himself was an idiot who thought that all these machines are going to cause catastrophe for society because they’re going to put workers out of business. Well, here we are 200 years later, and people in Britain where he was writing, I mean, quality of life and standard of living and productivity have increased enormously. And anybody who wants to find a job basically can find a job. If there is an unemployment problem, it’s a function of current monetary policy and current labor market things, but it’s not like the textile machines of 200 years ago really did create an unemployment problem.

1:22:10 So I am firmly in the camp that AI is just going to increase productivity enormously. And so, yeah, it might mean that your job is going to be destroyed, but if you want to think of it this way, it’s a very, very limited way of understanding, because your job is not going to be destroyed. The productivity of your job is going to go up 10, 20x, and your job is to figure out how to do your job with the help of AI so that you can increase its productivity. At the kind of more deeper philosophical level, I tend to just…

1:22:47 I also don’t worry about this being dangerous to us for the simple reason that all of these things are inanimate machines. And so we’ve had these kind of… all these kind of artificial landmarks in the progress of AI being placed. And at every generation, we hit one of these, and then people say, all right, well, the machines are going to take over. And then, lo and behold, the machines don’t take over, so we come up with another metric.

1:23:17 So passing the tourist touring test or deep blue beating Kasparov in chess, or recently there was the game of Go, the computer managed to win the game of Go. So there’s always these metrics that once a computer is able to do this, then they’re going to go terminator and kill us all. I don’t believe that is the case. And I think my argument for it is that all of these things are ultimately inanimate material objects that have a switch and a power plug, and somebody needs to plug it.

1:23:51 And I think the way that I like to think about it is that ultimately you need to have a will in order for these things to take over and to act on their own. And they don’t have a will because they are not living things. So you talk to chat GPT, and it looks like you’re talking to somebody. And obviously it’s much more capable of conducting a conversation because you can ask it any question and it will answer much faster than any human being. No.

1:24:25 So in a sense, it does just look like it is more intelligent. But ultimately, there’s no living thing there. And so it doesn’t have a will of its own. And that for me is extremely important because ultimately everything that is not a living thing that does not have a will of its own is just an inanimate tool in the hands of humans that have a will that are living things. So it’s all hammers and nails and machines and cars and computers.

1:24:51 And, you know, every stage of human advancement, people get freaked out by what machines do. We freaked out the car. We freaked out at the textile machines. We freaked out at the computer. We freaked out TV.

1:25:04 And now we’re freaking out at a chat prompt that can basically Google the internet and construct it into… It’s a language model, essentially, that can construct answers to you in a very direct way. I think over time that hysteria is going to subside. And I think ultimately my view, and my view ultimately comes down to the fact that since we are living beings, these things are not living beings. They are just going to always remain machines that are subject to our will.

1:25:35 They’re not going to take over. And the reason I say that, the reason I could say that with a certain degree of confidence is that ultimately we have never been able to invent artificial life. You know, we talk a big game about our technological progress. You know, one of the chat GPT can do this and it can do that, and the machines today do this and the computer does that, and the textile machines do this and that. We talk a big game about our progress, but you know what?

1:26:05 We have never been able to make an apple out of anything other than an apple seed. We’ve never been able to make any living organism out of anything other than the same living organism. There’s no way of making an apple. There’s no way of making an amoeba except from another amoeba. There’s no way of making a human being except from another human being.

1:26:26 There’s no way of making a tree leaf. Just a simple tree leaf. We can’t make it out of anything out of anything except on the same tree and you know ultimately you can take the tree leaf, you can take the apple, you can take the amoeba, you can take the human being, put it in a lab, you can study all of its contents, you can study all of its chemical ingredients and you can reformulate it but you can’t make an apple, you can’t recreate an apple, you can’t make a living apple that people can eat synthetically. Obviously there’s all these idiotic press releases all the time about making synthetic meat, it’s just garbage, it’s industrial waste and they’re going to trick you and tell you it’s synthetic meat, it’s just going to be another industrial poison that people are going to eat and get sick from and Bill Gates is going to get very rich from it but we’re not able to create artificial life and that for me is the key thing. Since we cannot make artificial living things, everything else is just an inanimate machine that has a plug that we can unplug. That’s ultimately what it comes down to. It’s not going to have a will of its own, it’s always going to be subject to connecting the thing into the socket and yeah you can program one of those machines to do evil things, to do bad things, you can make a weapon that can kill a million people, you can throw a giant bomb at a population set and kill people, you can program a machine to go around and perform some of these robots,

1:27:52 Can go around and kill people but it’s not going to be the robot that’s going around killing people anymore than it is the gun that shoots people, it’s somebody’s going to pull the trigger, somebody’s going to program that machine. So as long as it’s not a living thing, then it’s just going to be a tool in somebody’s hand and whatever damage it does, there’s going to be somebody responsible for it because as long as it’s not a living thing, it doesn’t have a will of its own and we are nowhere near inventing artificial living things. Even though we could take living things into a lab and break down their ingredients and study them very well, we can reproduce every single one of the ingredients that make an apple in a laboratory, we can mix them together in the same proportions that make an apple but we can’t make an apple, so I’m not worried. I see your points and I completely disagree but tell you what, I’ll let you go down the rabbit hole and maybe we’ll come back in another three or six months and we can go deeper on this stuff for sure. Tell me, what’s next for you? Are you moving to El Salvador?

1:28:54 Do you have any other books planned? I don’t know how you crank these out every two years, by the way. And what is next for you? You know, I’m not entirely sure. Honestly, the last, after I wrote the Bitcoin Standard, I had the idea for the two books and I was just head down into writing them. Now, I’m just coming out for air and I’m enjoying not having that pressing feeling of, hey, you need to go back and write, so I’m enjoying a few weeks of peace and I’m doing some interviews and trying to take things easy. I’m going to do another course, I’m going to do another online course based on this book on my website starting in September.

1:29:30 That’s my only kind of fixed project now, but I’m not moving to El Salvador, at least not in the foreseeable future. It’s a remote assignment where I’m just working remotely. But I don’t know, I do have several ideas for a few books, but I don’t want to think about them too much because once I start thinking about them too much, they’re going to start drawing me in and then soon enough my wife and kids are going to be complaining again about me spending way too much time writing. So I’m enjoying taking a little bit of a break. I’m going to focus on the course, on my website, my online course and I’ll see what comes up.

1:30:13 Well, I was told by Tim Ferriss who wrote the four-hour workweek that writing a book is the loneliest process in the world is what he once said. And so it’s impressive, especially 420 pages and the fact that you just done one two years earlier and three years earlier. But look, I really appreciate your thoughts. You can clearly articulate them because you spent so much time, obviously, going through and editing, etc. And I find your stuff really unique. I really do. And in the Bitcoin world, it’s nice to have that real strong basis of economics, because I think it just really makes it stronger. So thank you for what you’re doing.

1:30:50 What is the best way for people to go to your website, find out about your courses? I know you’re on Twitter as well. How can we follow you and support you, including the podcast? Yeah, sayfadine.com is my website, so you can take my online courses or buy my books there. Also, you can buy my books on Amazon or most booksellers. My podcast is the Bitcoin standard podcast. You can listen to it, whatever podcasts are listened to or also watch it on YouTube.

1:31:18 And I’m on Twitter. That’s where I do most of my prolific internet output. You can see me engaging with fiat people and fighting with them all the time. At sayfadine is my handle. Basically, sayfadine, the spelling of my name, pretty much on most platforms. If you just put that in, you will find me.

1:31:43 Be careful of impersonators. There are a lot of impersonator accounts that send out scam information. But yeah, my courses are on my website and my podcast and my Twitter, I guess. Fiat people. I like that. The book is Principles of Economics. They can find it at booksellers online, I’m guessing as well, and probably your website too. Really appreciate this.

1:32:07 If anybody out there knows someone that’s making arguments for communism or socialism, just have them listen to that 20 minutes that you talked about. I think it’s an incredible argument for it. So thank you for doing what you’re doing. I appreciate that. And we’ll see you in six months and we’ll have a deep conversation about AI.

1:32:23 All right. Appreciate you. Thank you. Awesome. Thank you so much, Brian. Take care.

1:32:26 All right. Take care, everybody. We’ll see you next time on London Real. Bye.