AUSTRIAN ECONOMICS & BITCOIN vs FIAT ECONOMICS | Rahim Taghizadegan (THE Bitcoin Podcast)

Why would you like home? The debt of another country, of another sovereign country, that's not yours, that you have no direct link with. So I think it's the better asset. Even though I don't think that Bitcoin needs that, just the symptom of its abruption and politicians realize that they need Bitcoin now or may need Bitcoin. And that's really a story here. I don't think it's really like Trump pushed Bitcoin. Okay, it's like it was going there anyway.

And Trump realized for every reason, okay, that's why it's something that's not hurting. My chances of winning an election, that's helpful.

And a lot of politicians are realizing that we have quite a few politicians, Switzerland who are explicitly pro-Bitcoin, even now like the chairman, former minister of finance, who was about to drop out of the parliament, now much too late realized, okay, maybe I give it a last shot now, his pro-Bitcoin, now his claiming Germany should have a strategic Bitcoin reserve. So that's quite some momentum here already. It's like it's a gradual option process.

And I think everyone goes to a world with open eyes and asks this question, has real the responsibilities like now there's this bunch of money. How would you allocate it? What are you doing? And let's look five years later, how have you been doing? We gradually understand that it's not just such a crazy bet to have some in Bitcoin. Readings and salutations, my fellow plebs. My name is Walker and this is the Bitcoin podcast.

The Bitcoin time chain is 880535 and the value of one Bitcoin is still one Bitcoin. Today, my guest is Rahim Taghizaragan. Rahim is a professor, entrepreneur, investor, and the last Austrian economist of the Austrian school in the direct tradition. And he was one of the first to teach about Bitcoin at university, or college as we say in America. He's also the author of 15 books and the founder of Scalarium, where the Austrian school can be studied in its original interdisciplinary form.

This conversation was streamed live on Nostra, which is the only place you can watch this live streamed. So if you want to check out the live stream next time, head over to primal.net slash Walker and primal.net slash TIT coin. And if you're not on Nostra yet, what the heck are you waiting for? Before we dive in, do me a quick favor and subscribe to the Bitcoin podcast wherever you're listening and make sure to subscribe on YouTube or Rumble as well by searching Walker America.

And if you find this show valuable, consider giving value back by giving it a zap on Nostra or a boost on Fountain. Without further ado, let's get into this Bitcoin talk with Rahim. So Rahim, great to have you here. Excited we're able to make this happen. How's it? You're coming from Europe. You don't have to disclose where, but if you want to, of course you're welcome to give a general country. But I don't know about you. It's very, very cold where I am in America right now.

So we have the sunshine today, but it's not so hospitable outside. I hope it's not quite as brutal wherever you are. I'm in Switzerland. Ah, okay. Actually, but I thought that pants was pretty good weather. I'm just above the clouds. Okay, okay. That's nice. Last time I've really only been to Switzerland through the airport until I went to Lugano a couple of years ago for the first Plan B conference there.

And then now of course, you now both be at the Plan B conference that they're hosting in El Salvador. Definitely two different climates, but I enjoyed Lugano very much. It's a fascinating city just with the... I've never seen so many different languages displayed on each product. It was quite fascinating. Yeah, that's the great thing about Switzerland. It's like very old diversity. Not the newer, recent, very artificial one.

Yeah, it's definitely like actually diverse, not just diversity for DEI's sake. But yeah, I wish we could have gone back there again. I very much enjoyed that conference, thought they did an excellent job with it. But it'll be nice at least we get to escape some of the cold and go to El Salvador. So can't complain about that. Have you been to El Salvador before? Yes. Okay, okay. When did you go? Or when was the most recent time, I guess?

Well, the most recent time was adopting Bitcoin conference, I think in November. So pretty recently. Yeah, Karl and I went for the first time in 2022. We went there in the summer just kind of like on a vacation. Basically, we were just like, let's go to Bitcoin Beach, let's hang out. We ended up meeting some great people, going to some schools and doing some cool Bitcoin stuff. But then we're like, oh, can't wait to come back. Hope we get to do it soon.

And then we ended up going to adopting Bitcoin a couple months later. So got to go twice that year, which was fantastic. And the first time was about one year after the legal tender law went into effect. So it was interesting how much it had changed already from what I'd heard. I obviously wasn't there before that. But now it's been a couple of years. I'm very excited to explore San Salvador a little bit more than I've gotten the chance to at this point.

And see how things are going down in Bitcoin country. That's a beautiful area. Small city, a very fascinating place. It's amazing to see too, just kind of this underdog success story that all Salvador's had. Because obviously when they came out with the Bitcoin law, they got so much pushback from the, let's say, international, you know, legacy media. They got so much pushback from the IMF.

Even getting pushback from some, you know, Bitcoiners who were thinking, oh, you know, I don't want the state to be, you know, there shouldn't need to be legal tender laws, etc., etc. But I mean, in terms of their people and the changes that they've seen, I think it's hard to argue with the results that Bukele's gotten. Maybe one could argue with, you know, do the ends justify the means? You could make that argument.

But from everyone I talked to while I was there, granted this was a couple of years ago, people were happy. They were excited. They were glad that gangs weren't running the country. It turns out if you live in a state of basically terror, law and order is something you desire, which should not necessarily be a surprise to people, but apparently it was to a lot of folks in the so-called developed world. I don't know. Yeah, it's pretty odd.

I mean, even in Europe now, people have forgotten that, I mean, if governments have one function, it's like locking up criminals. We have enough political criminals running around, but now if they don't even do that, then of course, it becomes absurd. So we have heavy government in Europe and pay a lot of money for that, but they don't even lock up the criminals. And then, of course, everyone else feels locked up.

And that was one of the reasons I left Austria and more and more the feeling they are controlling people on the streets. Like, do you carry a knife and stuff like that, which of course feels like you are the prisoner now? Yeah. Yeah, it's just a taking away to keep you safe. Yeah, the classic old trope of, you know, don't worry, it's for your safety. It's for the greater good. Yeah, so maybe a good place for us to start is just, were you born in Austria? Are you Austrian originally?

My first one and a half years, I lived in Iran actually. So, Iranian by birth. But I've grown up in Austria and Vienna from age one and a half. I was a baby. So I've become an Austrian. I'm a Lebanese, but always had a little bit of the outside perception on Austria as a son, an immigrant. And that helped a bit and now become too Austrian. So it keeps some critical distance.

Because modern Austria, unfortunately, is very different from the old Austria where the Austrian school emerged back in the days. So, you know, maybe you can give a little bit more background to just kind of on, you know, who you are, what you're doing now, but also just how you got here. You're an Austrian economist and one of the things that it says in your bio is kind of of the direct tradition, you know, and one of the, you were very early to Bitcoin as well.

So can you kind of just walk through that journey of how you got into the Austrian school of economics and then found Bitcoin and then ended up here today? Originally, I studied nuclear physics, economics and sociology and a few other subjects. And there was still some of this interdisciplinary spirit left in Vienna. It was mostly very old professors, but I was lucky in like, and I was also actively seeking out the last few interesting people in Vienna.

I had a time when I was a student, so most of the university, of course, was boring. And most of Vienna also was boring, I'd say, when I was growing up. The internet wasn't already there. So that was one of the first lifelines was I was a very early internet user in the 90s already. And I was always an avid reader, but it was really a big change. So I was always reading a lot, had a deep interest in all kinds of disciplines. And then it was very surprising.

I had studied economics at the University of Economics as well in Vienna and never heard about the Austrian school as something that's alive. I had heard about Hayek, the Nobel Laureate, that you may or may not be proud about in Austria. But it was never clear to me that it's actually a living tradition that would have anything meaningful to say about today. And it was only when as a physicist I went to the US for a while and there I discovered that there were still Austrians.

People claiming to be Austrians and that was of course odd for me as an Austrian. It was odd for someone who had a deep interest in the sciences and the history of ideas and economics as well. And then it turned out that the last remaining Austrians in the direct tradition, a direct tradition means that they are students of students. It all started with Karl Manger in the early days and Karl Manger had a few practical students who I consider more important.

But then he had more famous academic students, Böhm von Baarwerk and Wieser. And they had students again like Hayek and Mises, the best known. And Mises eventually went to the US, also Hayek spent quite a while in the US and Mises in the US. Then more or less matured the Austrians course, survived as its own tradition. So it was really only in the United States that it survived as a tradition and most traditions disappeared in all the Europe.

There was just war, totalitarianism, everyone who was able to was trying to flee the country. Many went to Switzerland first, also Hayek and Mises went to Switzerland and then Mises continued on to the US. And in the US he found new students. He was never a professor, he was not a professor in Austria, he was not a professor in the US. Because the academic system is also already at the time, was not inclined really to open minded discovery.

You have a lot of intrigue, political interests, careerists and Mises was between the chairs. In the US he found a student called Murray Rothbard who produced a lot of works in very different disciplines. And he was incredibly hardworking and he had quite a reach and he leaned over into politics as well. So it was while this earlier overlaps between modern realist politics I'd say and Austrian economics. But it became a very different tradition I think.

So in the US it survived as a kind of counter reaction to Roosevelt and centralization in the US. Kind of US fascism, I think it's a brand of fascism that emerged in the US as well. Because fascism is just like make the state more powerful and try to have a kind of corporate economic structure. And try to find meaning in the collectivism of a nation. And that happened everywhere. It didn't go fully totalitarian in the US fortunately. It went fully totalitarian in most parts of Europe.

And in the US then people were looking out for different ideas that had some scientific underpinnings. It wasn't just like opinions. And in particular entrepreneurs found it interesting that there's an economic tradition that actually understood entrepreneurship and wasn't negative about it or ignored it. That was more open to a dynamic economy. And that held this American-Austrian school tradition to flourish, emerge and be kept alive on a threat. Really was a bear threat I'd say.

It's just a few people. So it's this kind of lines of people passing it on. And Rothbard's most important student was Hans-Hermann Hoppe who was a German. Actually and it was at the time when I went to the US. Hans-Hermann Hoppe was teaching there and interestingly he then went back to Europe. And he became one of my teachers. And in Europe also there was one last Austrian economist who was writing in German on Austrian economics. He was a student of Hayek. He was called Roland Bader.

He was an entrepreneur actually. He was never a professor and he became a teacher. And I devoted more and most of my life since then to learning again this tradition and passing it on and making sure that it somehow survives in Europe at least. And I could connect these other traditions that I had learned as a young man in Vienna. And I was mostly interested in this interdisciplinary overlap. And over time I saw that the original Austrian school was quite interdisciplinary.

It wasn't just economics. I think the high point of Austrian economics was the Miesse Seminar in Vienna. And interestingly it was only a minority. It was economists taking part in the philosophers, political scientists, psychologists, but also entrepreneurs and bankers and so on. And I think that there was kind of the surrounding context in which the Austrian school emerged. There was a very interdisciplinary project. And its main line is a realist understanding of a society crisis, I'd say.

And that's where a lot of the value comes from. It was a reaction against German idealism, which is big ideas. And then later on within the Miesse Seminar even people realized there's something like a political theology, and there's a kind of religious, pseudo-religions that fill the vacuum that the traditional religions have left with people becoming secular. They didn't really become secular, they just changed their religion to a kind of status religion.

So it's a very, I mean, most of politics basically is pseudo-religious identities and pseudo-religious ideas. And that's also part of this very realistic approach of the Austrian school, I'd say, to demask the big ideas and go back to common sense in a way, just get rid of all the big illusions and big promises that can fulfill the purpose because they are even transcendent transcendents. They are just interest-based rationalization of the kind of stupid stuff that you can imagine.

So I found this tradition to be very valuable, in particular in its practical branches. And those are much lesser known. It was the two favorite students of Menge. He advised not to go into academia. And one went into banking in Switzerland, and the other one went into diplomacy. I spent a lot of time in Switzerland, so I'd argue that there's actually a kind of Swiss branch of the Austrian school that is much lesser known, but I think had more impact on the real world.

And I think Satoshi Nakamoto is one of those practical Austrians. It blows my mind that there are bit-coiners out there who are not on Noster yet. Seriously, what are you doing, people? Just like you shouldn't need to ask permission to use your money, you shouldn't need to ask permission to speak freely, but unfortunately that is exactly what you are doing if you are still stuck on centralized social media platforms.

On Noster, you can't be censored, you can't be banned, and you can't be deboosted for saying words Elon Musk doesn't like. The vibes are just better there as well because there's nowhere else you can end up having a casual conversation with the likes of Jack Dorsey or Lin Alden. Noster also has bit-coin payments built in thanks to the Lightning Network, so when you post a meme, a hot take, or just a photo of your steak, people will zap you bit-coin to show you they like it.

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I would agree with that completely, and there's a lot to kind of unpack here, but I think starting just where you've ended up with Satoshi, I do find it so interesting because there's always the debate between store-of-value, medium-exchange, which is kind of more important, and I think that kind of somewhat misses the forest for the trees in the sense that, of course, they're both important,

and you're not going to have a long-lasting medium-of-exchange without establishing it first as a premier store-of-value. But I'm kind of curious, when was your entrance to bit-coin? What exposed you to this? And when you found it, did it kind of immediately click for you that this was the sound money, that this was the sly roundabout way that had been foretold, that this was something that was really going to kind of change the game from an Austrian perspective?

I stumbled upon bit-coin very, very early, but it did not click, unfortunately. It should have clicked, and of course, there was a reason why I stumbled upon it at early. I was a student, of course, of money and also very interested in the practical aspects. I got a bit involved in e-gold and all the precursors of bit-coin,

and I considered myself a cyberpunk. I was an early internet user, so it was on my radar and it was fully on my radar, so I expected there I was looking for something to emerge, but when bit-coin emerged, it really had a great way of concealing itself to me because it appeared to me within libertarian circles. Libertarianism mostly is kind of like an ideological branch of what the American Austrian school developed intro.

A lot of great people that really cherished liberty, but they turned it into a kind of ideology, which is a big idea and there's not so much about understanding things. My approach from the outside was, oh my god, libertarians found their own money and they just give it value, and it's like trading cards of libertarians. Unfortunately, I knew from economics money is for enemies, it's not for friends, it's to bring together people that don't trust each other.

Because there's no problem to be solved with people that share the same ideology or the same religion or identity, they don't need money, you can trust each other, you just write it down, and money is really there to solve that issue. So that was the initial thing that turned me a little bit away. I was always friendly, I was always neutral, I said, okay, it's great that there's this experimentation.

And then I really, even early on, I asked cryptographers their opinion, and unfortunately the experts, I was giving the worst advice. The cryptographers I asked told me, no, it's not an elegant solution, that's not the thing they would expect to be really the solution to the problem. So I took that at face value and of course economists, none of the economists really got it. And what's really saddening, I mean, none of the Austrian economists got it and most haven't got it yet.

So I think I'm the only academic Austrian economist teaching at university who is a bit coiner or early bit coiner. At least in this academic tradition, so the other professors of Austrian economics, I know, and in the course with they may say now that they are neutral, at least, or friendly, but haven't really gotten bitcoin because the issue is, and you mentioned it a bit earlier, you say, well, obviously it's like two functions of money and it's got to be a spectrum or something.

It's not, it can't be black and white, but a lot of academic thinking because it falls into like having neat categories is black and white. It's like you got one definition of money and then you interpret it in a way and then you're saying, is it or is it not? And if it's not like 100%, then it always falls into the hole of it's not. And I find a big misunderstanding.

I think that that's one of the obstacles to understanding bitcoin is what would it look like if something emerged from zero and zero really means you have no clue. You can't know in the beginning. So because I was early to bitcoin, I had no way to assess that it has a non-zero value.

It seemed, I mean, in the initial context, it seemed obvious it has zero value or some very idiosyncratic value to a few people, maybe, who want to collect the digital stuff or take a kind of nerdy interest and things like that. And I only realized it has non-zero value with silk growth. And of course, I also came to silk growth for an interest and like cypherpunk is down and not really as a customer there, I'd say as an economist.

Sure. But it also, I mean, at the time I knew it had non-zero value also again, I thought that's going to kill it because I mean, you can't start a currency in a black market for drugs. No one's going to allow it. It'll be if it catches on, they'll outlaw it immediately. So that was the initial thinking, which I think is a very realistic approach. So unfortunately, I'm quite realistic. I'm very skeptical. So it took a long, really long time. I mean, it was a gradual process.

So it clicked gradually, I'd say. But to like be at the stage where you recommend other people to edit to the portfolio, even a few years ago, I was still reluctant even though I, of course, had it myself for quite a while. It's just what can you claim to know about things. And that's the humble approach of the original Austrian school is really you want to look into reality and then it's a kind of entrepreneurial assessment for yourself.

But as an academic or scientist, you want to say the things as they are and really separate your own like opinions and expectations of the future from what is and what's proven to be. So I was a bit reluctant to like be a missionary for Bitcoin. But I think I was the first economist to mention it at the university. I think was the first one to write about it in an investment book. So I've looked at it for quite some time. So fortunately, I had enough time to, I think, understand it.

I won't say I've understood it completely. That's a great thing about Bitcoin is always something new to learn. So that's humbling as well. You know, I'm curious what you think is the primary sticking point. Like what is the roadblock for many of your contemporary, like let's say academic Austrian economists to really. Fully understanding Bitcoin or accepting that this could be kind of that sound monetary solution that they've been looking for.

Is it because they're still just they think of sound money as gold and that that's kind of like it's stuck in their heads. Or is it something else that they that they bring up as kind of their the reason why it doesn't fit the bill properly. Yes, there's something else is the classification of Mises, which is a very useful one. But very tricky in that regard for Mises. Originally Fiat is not is not a moral judgment. He thinks and he causes in German Zeichengeld is a kind of token money.

So he distinguishes commodity money, credit money and token money. And obviously, if you look at it that way, it's not at all clear that Bitcoin is not a token money because it's a token as a digital token as well. It has these features of something you'd expect to be a token money. And that's very challenging to understand that there can be something like a synthetic commodity money. That's something as digital as that and as fleeting and even being a ledger.

So a ledger would be obviously something that's linked to either credit money or a token money. No one would expect a ledger to be a commodity money. So it's very hard if you have this conception of course analogies what you expect things to look like. It's very hard to grasp conceptually. And then in particular, it's like if you have this moral load on it and you maybe a gold bar and you say like commodity money is good.

If you have money is bad money and everything is a token, it's bad because it's not like physical. And then it gets even more challenging. So I think the reasons for it and it's a surprising story. It's not that easy to understand. And I think the best way to understand it is for empathy is trying to understand Bitcoin is understand people who use it. That was also my approach. And that's I think how how it's helped myself long before I saw a use case.

I tried to understand people who had use cases for that. And that's not how economists and not how academics usually think how they approach the world. And they are not at all incentivized to do so. And I can tell you as a university working at a university, I have to judge students. I have to grade them. So I imagine someone who already understands Bitcoin comes to you as the economic expert and you have to grade him. And it's a new phenomenon to you.

You can only take what you've already read and seen. And then in your whole teaching at a graded university, you have to go through an accreditation process of curricula. So everything you teach basically has to be fixed five years in advance because that's the textbooks that are assigned to the students. That's like the headlines of the curricula. It's all like common knowledge of at least five years ago.

Usually it's like 50 years ago in many fields, in particular economics, which really doesn't have the technology or engineering at least, has a direct relation to reality in economics and the social sciences. You can be very far away from reality and then it can be that you keep repeating yourself for decades, even though the world changes and no one realizes that it's just not meaningful.

So you have a lot of wrong concepts, even not useful concepts that you still have to teach because they are in textbooks. And then we had in Europe, we had this process of aligning all the curricula. So you could always move from one university to the other to make it all flexible and open and such. But that has led to a great alignment of what you're teaching. So at every university you use maybe a different language, but even now you mostly teach in English and they all teach the same thing.

Because otherwise it would be difficult to spend one term here and another term at another university. So even that has become more challenging and boring. And I think that's one of the reasons it makes it really difficult. In economics you have a teaching load, a research load that's in an Amish area usually.

And it's not really conducive to understanding new phenomena because that would mean talking to someone outside of these university bubbles and understanding other people, talking to other people in academics, which are all state employees in Europe or mostly. Because this is a very particular kind of a group of people. You know, one thing you mentioned just about that economics is not like a hard science. It's not physics, it's not chemistry.

The interesting thing is I feel that a lot of modern economists that are basically of a Keynesian bent, they treat it as though it is. As though they have their fancy equations and they can model the economy perfectly and they can come up with the perfect centrally planned way, the exact right amount of money to print, the right way to fix interest rates. They treat it as though they are themselves, these scientists. They take away the human element of it. They take away subjectivity.

They take away human action. And I think it maybe it's worthwhile spending a little bit of time to just kind of let's, if you don't mind, going through some of the kind of problems with modern economics of the Keynesian tradition, just because I think that's it's so sad that that has what has become known as economics. And the Austrian side of things is somehow that's just a fringe group of nutty libertarians or whatever, you know, names they want to throw.

But really, it's like there's not this 100% consensus that all of their modern Keynesian models work and we look in the real world and we see that they don't work. So can you kind of break down how you as an Austrian economist kind of regard the Keynesian tradition and how that has become just the forefront of the face of economics? Yeah, I think Keynes was better than the Keynesian tradition that was also his approach. So he wasn't a good guy.

He was a very intelligent one and that's always dangerous. In particular, if you have wrong incentives. And so I'd say economics is a kind of white collar crime. And it works based on the illusion of the white collar. It's like you're the doctor, you're the expert, you're the scientist and it takes all this prestige from the medicine and the natural sciences. And of course, prestige means power and it has become very valuable to have that kind of power.

And that's also why economics has turned out the way it is. Just look at who's paying for economists. The largest amount of economists that had a job worked in the Soviet Union that tells you everything you need to know about economics. When you have planning, you need experts to rationalize what you're doing. And that's why now most economists work for banks or central banks or interest groups or even directly politics. So that's what economics is for.

And as a question, if there's in reality, is there anything like economics and the Austrian economists had a hard time discovering that the discipline they thought they were thought to be representatives of doesn't really exist. There is nothing like economics. There's no way to delineate in the real world. It's a kind of a economic phenomena from other phenomena of human action. And that's why Hayekin and Mises proposed to use different terms.

And for Mises, it was this one very interesting subclass of phenomena and that's everything related to human action. Because there's difference. And the beings have a purpose that's very different from the causality in the natural sciences is when we throw a stone. It's not like a domino effect because something has hit it. So we decide to do so and we do it based on the purpose. And for Mises, it wasn't a metaphysical speculation.

He just said it's the best way to have a useful prediction about what's happening. Looking at the outside environment to understand what's happening, you can ask people. You can understand people because you are a human being. And it's a much more sensible approach than trying to model other human beings and trying to calculate their pro inclination to do something and stuff like that. It's much better to try to understand human beings. And he thought there's two ways of understanding.

One is a kind of emphatic understanding. You try to figure out the motives of people and that for him was part of history. It's like the history of human moods and how they change human preferences. And then there's a way to conceptually grasp something about human action. There's a logic about human action. And that's the same for everyone. We have ends and we employ means, used ends and these means are within space time. And you have to rank your preferences.

You can't be at every place at the same time. You can't have everything. You can't have your cake and eat it. All that kind of stuff that's ingrained logic in how the world works and how we work as human beings. And that's the larger and more interesting part. And then within that, the most developed branch was called catalactics. And that's understanding human beings that cooperate with each other. It's kind of exchange economy. And their cooperation takes a different turn.

It's not just your preference for other people. You understand that other people can be a means to your end and you can be a means to their end. And at least this kind of win-win cooperation, which is again a whole new order of complexity. Because you have these feedback processes between people. And we already know from the natural sciences that once you have feedback processes between a few agents, it becomes very complex.

And you can't use the simple physics and simple statistics to get anywhere as much better to understand the core principles. And that's the approach of Austrian economic streets. Human beings as real as real human beings as they are. Don't think that you can predict as though there were automatons. And that of course lends itself more respect, I think, to this kind of open-endedness of human endeavors of you are more respectful. Because you know no one can know with certainty.

We are all trying as best as we can and we can learn from each other and we can adapt to that and all these dynamic feedback processes that help us get along better by cooperation. And that's why also Austrian economists cherish entrepreneurship and money as crucial phenomena. Everything that like links human beings together and allows this kind of cooperation is responsible for the largest part of wealth.

There will be abject poverty and of course even the human kind would never have survived without this crucial inclination to be able to cooperate with other people. And that's really the essence of it, I think. And the other approach and that's the interesting thing a lot of like Keynesian mainstream economics has nothing to say about the entrepreneur and nothing to say about money really because they are looking at equilibrium phenomena and very simplified aggregate models of stuff.

And I think it's driven by the incentive if you are the expert and you can bluff yourself through this kind of expert filtering then you are able to organize, that's how Mises called it. So other than you're not cooperating, you're organizing top down, you can tell other people how to do it. Like you look at Bitcoin and you say, oh, let me tell you how to fix it. That's the kind of typical approach of an academic. I tell you why it won't work, why it doesn't work.

But the main reason I haven't designed it top down, I haven't exerted my power. And also in a lot of the criticism you see about Bitcoin is like who has allowed it to use that energy? Who has allowed you to give it that value? Who has protected you or not protected you from paying that much money? It's all this idea of someone who knows what's best and there's like a true objective value of stuff and you just have to do it by decree.

And that's frustrating those kind of top down experts and something happens that's surprising and that's outside of their control. That's basically it. So I think a lot of economics is a science of control, pseudo science of control, a rhetoric of rationalization of control. And I think that's the main issue with economics. And that's only part of the blame lies with Keynes or almost every other tradition has similar faults there.

And I think, I mean, we haven't really seen it if an Austrian academic Austrian economist had all the power. Who knows what would have happened. It can be very corrupting as well. Manger was the mentor of the crown prince, but he seemed to have been so realistic that unfortunately he had no practical impact because the crown prince committed suicide because he follows like it's hopeless. I can't do anything.

You know, it's fair to not put all of the blame on Keynes because obviously there are others who have carried on this tradition and further just taken it to the extremes. And I think we see a lot of that now. And you mentioned just kind of these appeals to authority, which I think are so crucial. And that's something Rothbard would also argue in like anatomy of the state that these academics, the intelligentsia, they are so crucial for the state to maintain its monopoly on the use of force.

Because you need those people who are there to with nice voices to go on TV and tell you, well, what they're doing is totally necessary and it's actually good for you without any, but they put up some fancy equations and they give them Nobel prizes for it like Paul Krugman. And you know, aren't they brilliant and they're published in the New York Times, but they're ultimately just, they're just full of shit.

There's nothing that they do as any basis in fact or in reality or in how human beings actively operate. And there was the reason when you came on my radar and I wanted to get you on the show, it was back in October. And Juergen Schaaf, who is like an economist for the ECB, right, him and Ulrich Binzel. Yeah, they had written a paper and this was, you know, back again in like the last couple months of 2024, as Bitcoin's price was starting to really, you know, tick up.

And this, their paper, I think, kind of exemplifies what we will see as the primary round of attacks on Bitcoin this cycle, which to basically to slightly summarize, you know, or, you know, and maybe I'll even just, I'll read the short abstract from their paper, just for everyone that's out there because I think it's, try not to laugh as you hear this, because I think it's quite hilarious, but it's, these are central banker economists. They are coming with this attack.

And as the price of Bitcoin continues to do what it does in these four year cycles, we will see more of these and it will be used to justify all kinds of things that will not be in the interest of the people or in the interest of, you know, Bitcoin or specifically. So this, the paper is called the Distributional Consequences of Bitcoin. And the abstract is the original promise of Nakamoto 2008 to provide the world with a better global means of payment has not materialized.

Instead, the focus has increasingly shifted to Bitcoin as an investment asset, promising high capital gains. Promoters of this investment vision put little effort relating Bitcoin to an economic function, which would justify its valuation. And most economists argue that the Bitcoin boom is a speculative bubble that will eventually burst. We analyze in this paper the impact of a Bitcoin positive scenario in which its price continues to rise in the foreseeable future.

What sounds intuitively promising or at least not harmful is problematic. Since Bitcoin does not increase the productive potential of the economy, the consequences of the assumed continued increase in value are essentially redistributive. I.e. the wealth effects on consumption of early Bitcoin holders can only come at the expense of consumption of the rest of society. If the price of Bitcoin rises for good, the existence of Bitcoin impoverishes both non-holders and latecomers.

While previous discussions on the redistributive effects of Bitcoin assumed that badly time trading was a necessary condition for losses, this paper shows that neither poor timing of trades nor holding Bitcoin at all are necessary for impoverishment under a Bitcoin positive scenario. And you read that and my first thought when I read this last year was, are they basically saying if you don't own Bitcoin, you're going to have fun staying poor?

Like were they just kind of making the meme into a paper? But this is kind of wild, so I'd love to get your take on this because you wrote a great rebuttal that I thought just broke this down really well. But some of the things I'd love specifically for you to comment on here are this idea that somehow it's a zero sum game, right? That, oh, well, if some people get rich from Bitcoin, that means that everyone else gets poor.

They don't even take economic growth and productivity and efficiency gains into a... I don't know, where do you even start with this? When you read this, were you just kind of rolling your eyes? I mean, how did you even decide to tackle this? Could you not help yourself, basically? Yeah, I tried to understand where they're coming from. And then I think the funniest thing about this is that it's not the first time they've committed on Bitcoin. And if you look back, you see how they changed.

It's like, of course, before it was all the experts telling you it's going to zero man. It's like, it's a speculative pop. And now they're actually coming to senses, oh my God, it was all wrong. It may actually increase in price eternally and perpetually. And we may have not so much funds, they're in poor. And that's the distribution, of course, the worry about it. Now it's not about you being an expert and having a well-paid job at the ECB.

And as well, fund it from distribution that is that important, it may be that even like regular citizens making an investment decision without being ordered to do so, or being told by their experts and betters may outcompete the ECB expert. And I think it's just paradoxical, but in a way, I feel sorry for them as well. It's like, obviously, their track record is really bad. So it's the first time they write about it. They have shown that they were wrong in predicting what's going to happen.

And that's what economics claims more or less. That it's like the expert science that helps you know better what's happening because that's why you give advice. But if your predictions are always wrong, and that's one of the interesting things about economics, if you can look at predictions from economists and rank them and see how they fit like the reality, and you find out that it's better to roll the dice than ask an economist.

So there's no empirical track record whatsoever of economists being right. So obviously, I mean, it's even worse being an economist that having no clue about economics. If you have no clue about economics, you'll make better investment decisions usually, because you go for the kind of reasons he buys and it's like you buy what everybody else is buying. And that's better than buying what the expert tells you to do so.

So you may buy some Trump coin and who knows what, but still better than the kind of expert portfolios. So it's a kind of inverse Kramer. We all know that this big one. Kramer is like a prototypical economics guru. And so if you even differentiate like how well-known our economists is, the better known, the worse is they rank on this kind of track record. So the same with those people. And then they fall back to a very sad and typically European position. It's like not at all positive.

You see the wind lows and you start hating the winners. It's like a lot of anti-Americanism in the past. Of course, what was hating just a more successful economy. And a lot of that is really just hate for entrepreneurs that's coming, that's driving regulation. And hate in the sense it's really you want to be the people deciding about what's happening. And you feel important even though you can't produce anything of value. You can contribute anything of importance.

And it's really sad for economists. I mean, you dedicated a lot of your life to study difficult stuff. No one has told you that it's actually not useful. It's not very able. It adds no real value to the world. It's used for rationalization. It's paid for by interest groups. That's what you do. It's a kind of rhetorics that you provide and that you get your salary from. And you have to rationalize now what is it that you're actually doing and how does it have some value.

And then it becomes this kind of moral political stance as at least we are fighting the bad ideas kind of stuff. That was a group man, of course, did a lot in the past. Like kind of preacher becoming a preacher. If you can provide anything useful here, well, at least be a preacher and tell people even if he's successful. He's successful for the wrong reasons. Like because he's a bad guy, because being poor is better, is morally superior. Being stupid is morally superior.

And then of course leads kind of this stupid, wrongly egalitarian or perceived to be egalitarian diversity nonsense that we have in Europe as well these days. Which is just basically just a facade or a way to conceal particular interests. Those are all well paid jobs that are different from like real work is that even if they provide no value, there's no consequence.

And then you have in politics, politics is like the central occupation where even if everything you do is wrong and it has the inverse results of what he claimed. You get sometimes even more power and money. Like if you see education fail, then of course you need more money for education. I mean more power for politics to engage in education, spend money on education. And we see it in every field. And economics unfortunately is pretty close to politics.

The more wrong you are, the higher the chances that you'll end up with pretty good positions somewhere because someone needs you. Because they really need this kind of rhetoric. Because if reality isn't going your way, you need to make a point and be loud and cry about how it's all unjust. And it's wrong, it's like a kindergarten politics, I'd say. If your stuff is ugly and fails, you got to shout how everyone else is unfair and it's unjust. And everyone else is to blame for your errors.

And unfortunately, that's a lot of the European mindset of day. And it has driven me away from my home country, Austria. It has really receded in this kind of mindset. It had the past war economic development, which was very strong. It became one of the richest countries in the world. But then it failed to the idea that you can solve every problem by spending government money on it. And the population became dependent on that.

And it created a whole bubble of people that really live in a parallel world. They never had any check, any reality check in their life. And they think they should decide what's happening. They have no clue, they wouldn't be able to run a small shop anywhere, but they want to manage the economy. And they want to save Europe and save the Europe and all this kind of nonsense. If you look at the people, I could claim that they are saving Europe. It's mind boggling.

It's mind bogglingly stupid people that make you end up with stuff like the cookie regulation in Europe and stuff. Obviously, the cookies on the websites, the cookie warnings on websites, obviously stupid stuff. No reason whatsoever takes a lot of effort and money to do. It has no consequence. It's love, it's international love. Everyone is laughing about this stuff these days. But that's what you end up with. People have no clue about reality, they wouldn't be able to produce anything of value.

But have the well-cushioned shops where they tell how everyone else is wrong and they kind of decide and regulates. One of the mind-blowing things that Jürgen said in his Twitter thread specifically was that just like the last thing he said, maybe the thing he said is that the societal impact is real. Missing out on Bitcoin is different than just a lost opportunity. It means actual impoverishment compared to a world without Bitcoin.

And then goes on to say, though this wealth redistribution could destabilize society, latecomers, though unable to pinpoint the cause, will feel frustrated as their purchasing power erodes. And this part is just so ridiculous because it's like, Jürgen, this is what we live in right now. You're just describing the current state of the world without like the non-Bitcoin world, the fiat world. You're describing it. Most people live in an actual state of impoverishment compared to those at the top.

Like fiat is essentially a redistribution mechanism. Like he's essentially taking all of the negative things about fiat that these sort of legacy economists never talk about and projecting them onto Bitcoin. This is insane. Sound money doesn't destabilize societies. Broken money destabilizes societies.

It's this insane game of projection where it feels like he maybe was going through some sort of like a mental break where he's like, okay, Bitcoin's not going away because to your point, he'd written many things in the past about how Bitcoin was going to zero, speculative bubble, bubble again, bubble again. And now he's thinking, okay, well, I've got to find something to throw at this little stick.

And it just blows my mind because there are still many people who will read that and think, oh yeah, that's right. Why are those greedy Bitcoiners impoverishing me, stealing my purchasing power? It's like your purchasing power is not being stolen by Bitcoin. It's the only thing that has a chance to protect your purchasing power. Your purchasing power is being stole because the ECB, the Fed, every central bank in the world creates money out of thin air that you have to work for.

And this to me is just, I mean, what do you think it takes for people in the like, let's say not everybody is going to care about economics, right? But they do care about how much their money buys. They care about what they're able to do for their family. They care about if, you know, they're able to take a vacation and put food on the table and live a modestly comfortable life. So they may not care about economics as a discipline, but I think they do care about the real implications.

And to me, and certainly the bad implications of terrible economic policy that we see right now. But to me, it seems that Austrian economics is really this natural thing that should appeal to more people because it is based in fact, it's based in you, the individual, your human action. Why do you think it's so difficult or why do you think the Austrian school still remains so much of a fringe, you know, kind of a fringe movement in the grand scheme of things?

Because it just, to those of us who have started to study it, you have for many more years than I have, obviously. But when I started getting into Austrian economics a couple of years ago because of Bitcoin, because of, you know, Red Safedin's book and that sent me down a whole rabbit hole. I said, oh my God, this is the first bit of economics that I've ever encountered that actually makes sense.

But it's still just this small group of, you know, fringe, you know, extremist people with their kooky ideas. Like, why is that? What does it take? Well, there's a dark reason to it and also for like the Schaaf Binz paper, like the main discrepancy is of course in the one world, the feared world, they are ECB economists. In the other world, they are no coiners. So for that perspective, it's really interest, I'd say. And that's what Rothbard called the true class theory of interest.

And the Rothbard had shown that it was most people think it's Marx who came up with class theory, but Marx just got it wrong. He put like the problem between the rich and the poor, which is nonsense. And Rothbard showed that class theory is much older than Marx and goes back to French thinkers like Charles de Nouyet and then Comte. And this kind of class theory is, of course, powerful and less powerful.

And there's those who are beneficiaries of a power structure and beneficiaries of distribution and those who are not, those who are paying for that. And of course, what most people care about is their own interest and how they perceive that. Unfortunately, in a lot of Western countries, and that's true in particular in Europe, in Austria, for example, more than half of the population is dependent on government. So that's their boss. That's the hand that feeds them.

So it seems against their interest to pursue anything that would minimize the role of these distributive classes like Schaaf and Bintzahl, who tell you what's the right distribution and then who shall have how much. Then it would be fair because it's a way for people to get their share without any merit. And I think that's a part of it that's behind it, unfortunately. I think if Austrian economics comes along, it's too ideological. It doesn't help the adoption.

So I have respect for that. And I understand that, of course, liberty is a powerful idea. And of course, it's great. You have a lot of people who really have an interest in more freedom because they are not beneficiaries. But for the rest, it then seems like an ideology is like, oh, that's like those people, they're opposed to myself. I'm not wealthy. I'm not an entrepreneur. I'm not mobile. I got to take the other ones because I'd rather get from some ECB grants, trickling down or some handout.

It's more likely for me to achieve them be successful with a new enterprise or an investment decision. I don't know. I don't care. No one has ever told me that I could be responsible for that, that I could achieve something on my own. And it's this kind of mindset, of course, it's the perception of people that they tend to benefit from the institutions. But that's also the reason why Austrian economics gets much more traction these days.

So when I started in Austrian economics, I was the only one in Austria, I think at the time there were so few people interested. And even in the US, it was a very niche phenomenon. So you really had to seek out the people. Now it's more of an internet phenomenon. There's even word of like presidents falling of the Austrian school.

So I'm not too much into politics. It just shows you as a symptom that more and more people turn towards ideas that are not just legitimizing the existing institutions because they think that they may not be the beneficiaries. And that's dropping in every Western society. The median water, like the one in the middle, that's decisive for change, is figuring out that maybe he's not the beneficiary of all that's happening.

Maybe he gets that handout here and that handout there, but overall he thinks relatively it's not getting better. People are very pessimistic about the children of next generations in Western Europe. That's also a reason why they don't have children anymore. And I think that's the reason why the institutions are really in trouble. And that also means of course institutions like academia, the mainstream media and so on.

And that's why outside ideas that seem outside, Austrian economics actually was at the time the mainstream of economic thought. It was the leading economies of the time. It somehow was relegated to the fringe, but not because Austrian economics changed so much. It was that the world changed. Unfortunately, in Europe first, there was really in the diary of Goebbels. There's this line where he writes, there are no people into liberty anymore. We don't have to worry about them.

They have disappeared. And basically in Austria and Germany at the time, it was the only had fascist, socialist and national socialists. So the fascists are something else only Stalin told everyone that fascists are national socialists. They were a distinct group. They were in Austria. They were fighting the national socialists. But every Austrian was either a fascist or national socialist or Soviet-style socialist.

And why did it happen? I think it was really a kind of a satiric religion, we say, a substitute. People were looking for orientation in a time of dynamic change. And the intellectuals really didn't fulfill their responsibility. They misled the people. They really liked this being secular preachers now and getting all the power that the church had before. And really abused that. That was a great betrayal, I think. And that somehow relegated the truly old European ideas to the fringe.

And now, if they're coming back from the fringes because this institutional structure is becoming faulty and it's fragile. And people are realizing that maybe those ideas are not in their best interests. It's really interesting, I think, that as you look at, okay, you look at Austrian economics and this, to your point, that, okay, it's making a resurgence because of all of the problems within the current system.

Like, people are seeking out solutions because the problems have become so acute that they say, something here is clearly not working. The lines that I've been fed must be false. Maybe there's something else out there that explains this. And I think that's, you know, it's similar to Bitcoin with just at a monetary level, right? People see, okay, what, you know, I work hard. I try to save my money.

I even if my investments perform, you know, at whatever 8% a year, I still don't feel that I'm getting ahead. I'm still just keeping my head above water, treading water, you know, trying to stay, trying to stay afloat and not drown. What's wrong here? Is there an antidote to this? And I think that's how a lot of people are starting to come around to Bitcoin.

Again, because they feel something is so broken and all of the explanations they get that it's the greedy corporations fault that you have inflation, or that it's, you know, it's actually the ultra-wealthy not paying their fair share or whatever explanation they receive, it's not satisfying them anymore. At least it's satisfying some, but a growing cohort of people say, no, that doesn't smell right. There must be something else at play here.

And so, you know, while perhaps, you know, the whole world isn't going to come around to Austrian economics, I think Bitcoin is a great tool by which people end up adopting kind of an Austrian view of economics, at least as it relates to sound money and hopefully to human action. But I'm curious if you see that, you know, Bitcoin and Austrian economics is kind of this natural synergy where, you know, you have ultimately sound money, but you also have a free market for that money.

Like we don't have a free market right now because the market for money is controlled by central parties, right? So is this something that you see as kind of the, like these two things go hand in hand, like that. And going forward, you start to see an evolution in how we interact with the state or the role of central banks. Like how do you see this relationship and then how do you see it starting to play out as we get into the future? Yes, when Bitcoin on the face value is very different.

It's a tool where it's Austrian economics. It's meant to be a tradition of understanding the world, but they are more closely linked than it may seem. And one thing was that this open-minded way of trying to understand the real world leads you like to real problems and real needs of people. And then you are interested in tools and available tools. And I think that's this kind of practical tradition of Austrian economics I mentioned before.

So already in the second generation, it led to the kind of solution of private Swiss banking was a kind of very important underrated financial layer at the time where you had really anonymous bank accounts where you just had to have a number. So your own number was the custody. You had like a password, a passphrase, and that enabled you access to wealth and you were able to transfer it, a real barrier instrument. And that was what it's like and then has disappeared, of course.

And a lot has become worse, which had opened up the possibility of Bitcoin being a tool or some better tool actually addressing those needs. That governments all around the world were trying to make it more difficult to transfer wealth around the world. And that was already a crucial insight of the early Austrian school when they left Austria, when they moved to Switzerland in part. They realized, okay, that's the biggest issue if we want to avoid impoverishment.

And it was really the richest part of the world fell into such a deep poverty that in Vienna the children were starving at the time. Unimaginable impoverishment to the stupid ideas of the time and the destruction caused by those stupid ideas. And that's why coming from Switzerland, their efforts and diplomacy started and in finance started to reintegrate the world, to find new rails for wealth and goods and that fortunately worked out in a way. So we saw the level of globalization again merge.

Of course, we had then this wrong kind of globalism, the same with the EU. So Mises was very early in proposing some kind of economic cooperation in Europe. But of course, this idea was hijacked later on. So it was some great ideas about the free movement of goods and people in Europe, which was then hijacked in this kind of EU-ism by bureaucrats. And the same has happened with globalism, of course, a lot of bureaucrats pushing that one world kind of stuff.

But this kind of really free interaction of people led itself to try to solve practical problems there. And I think that led Hayek to the insight that he was trying to think about private entrepreneurial offers of money or of monetary nature.

And then his denationalization of money and then his prediction he gave in an interview of this slide round about way everyone, every Bitcoin, I hope knows that, one that line which I think is the greatest predictors and Hayek had a heavy influence on two writers who wrote the sovereign individual, which was also like it was traveling entrepreneurs looking around the world and they were looking actually to find a new place somewhere where they could buy sovereignty

or government potentially because they realized again just from being open to the world and embracing this kind of mobility that new opportunities will arise and new tools will be available, in particular the internet. And so the sovereign individual interestingly predicted this kind of internet money. They didn't know what it would look like, but they talked about I think even a cryptographic internet money.

And that was I think one outgrowth of the practical tradition of the Austrian school, this kind of trying to figure out where this would come from. And it goes back to Manger. He thought that all the interesting things come through discovery is a bottom up process. It's not someone knows it all and he organized this top down. It's all the interesting things like money and like language are bottom up discoveries.

We want to communicate with someone and then we figure out, okay, you understand me, you don't understand me, I have to change something. It's a bottom up discovery procedure. No one can set in advance what are the right words and the same with money. So I think the original Austrian broads lend itself to like being open to discover something emerging. And of course, Bitcoin fits the picture pretty well for now.

I would never be sure and I was very unfortunately far too long to scape the goal because it was something new and you're going to figure out and see, okay, I'll try it out. You try it out. I would never force anyone to try out something new because that's this humble approach. You got to figure out maybe we are all wrong. Who knows? But that's this kind of discovery procedure is a very important concept in Austrian economics and it's more entrepreneurial as you try it out.

And the better the more people try it out on the wrong cost is like on the real way. If it fails, you fail with it, you lose the money, you put into it and it's very different from and there's also one part of the critique that Scharfen-Binstein don't get right. Even if we are wrong about Bitcoin, it's not like there's a system constructed like the fiat system.

It's like, okay, we'll fail with our investment decisions and that's why they get it so completely wrong that they think it's like the early Bitcoiners had a privileged advantage. And it's so stupid. I was an early Bitcoiner. It was so difficult. It was so immensely difficult to now have like I bought Bitcoin at zero and now it's 100,000. It just doesn't happen. No one really hodled from zero to 100,000. Very few people did.

It was so immensely difficult to understand it. Not because people are stupid. It's due to something real about the world that's uncertainty. The Austrian school of economics was the first tradition that really embraced uncertainty. There is fundamental crucial uncertainty. We have to risk things. We have to try our things. No one knows. We have to learn. That's the great thing about our existence.

And by not having any place for uncertainty in the models, economists fail ever and ever again because they only look at the winners. It's like, oh, you're right. That's unfair. Now you have so much. Now it's 100,000. And it's just so odd. You don't see the risk you've borne through uncertainty and hodling through like 15 years. So almost impossibly hard.

It's amazing how what of a goldfish memory these types of central bank lackeys have where they were literally during the depths of the bear market. Just this last bear market. We only have to go back a couple of years. You know, bitcoins, it's very easy to dunk on bitcoin when it's just gone from 69,000 down to 16,000 or 15,000, whatever it got down to. And they're saying, you know, we told you, we told you, you were stupid. We told you bitcoin was going to go to zero. You are clearly an idiot.

You should have listened to us economists. We were right. You were wrong. You know, ha ha. Like, you know, you deserve what you got. And then just a couple of years later, it turns out all those people who ignored the central bankers and their economists lackeys at the depths of the bear market are up many multiples. Right. I'll be a professional investor. Yeah. You're beating, beating everyone. But then is there any moment of self reflection of saying, huh, you know what, we got that wrong.

Maybe we should take a different look at this. No, no, no. We're still right. It's that we just weren't right in the exactly correct way. And now we're going to change it to, well, this just proves that bitcoin is going to impoverish everyone because look at how much money you've made. And it's just insane because it lacks any sort of like critical thinking at all. It's just this and then to say like, oh, you got, you just got lucky that you know, you've made this money off of bitcoin.

And first it's like number one, bitcoin is the money. I'm not trying to make fiat off of this. I'm, I just hold this new money now that is better. I have the money. I'm not, my bitcoin stack is still the same or, you know, growing with my DCA. But, but then the other thing is, it's like, you just got lucky. What do you mean? You and all of your, you know, Keynesian contemporaries have been telling us how stupid we are this entire time.

That's not easy to deal with until you realize that they're just completely, you know, full of shit. But I think it also comes from academia. That's what I meant before I have to grade students. So I cannot be wrong. I mean, it's all it determines their careers. I can't be right. I can't be like two years late and say, sorry, I was wrong. You were right. They got to change the grade now. It just worked that way.

I think that's why it's not a very conducive climate to really understanding something new because everyone will be wrong some of the time in some aspects. It's just uncertain. It's just new. One thing this is a slight switch in gears, but I'm curious of your thoughts on this. As we go forward, do you view that Bitcoin will essentially continue to coexist with fiat central bank money with, you know, state money in a just sort of a hybrid way?

Like that hybrid system is basically inevitable. Fiat is going to stay around. You know, maybe there's more responsibility with the fiat because there's this other thing that people can flee to if fiat is mismanaged. Or do you foresee more of a complete replacement? Like is that what, what is, I guess, you know, hyper Bitcoinization? What does that look like to you?

Bit of a scary scenario. Hyper Bitcoinization would really mean a collapse of all fiat currency and it's a collapse of a world order. And so far in the West, there hasn't been too much to general disadvantage that we're, or I'd say we could be in much worse places on the planet. So it means uncertainty and we can tell if it's for better or worse, it shouldn't be a hard time. So usually processes are gradual, but that doesn't mean that they have always got the same speed.

So you can have a rapid change happening, but it's hardly ever zero one replacement. So I don't think we'll like have the big crash advertised on TV and then that's hyper Bitcoinization. Everyone drops everything and all fiat disappears into zero. No, I think we still have to figure out and the layers and part Bitcoin plays and some will try to keep it. Keep it away and you still have places where you don't have access. And so it'll be gradual and it takes a while, but it can be fast at times.

It can speech like from and it has already happened incredibly fast in the last 16 years. Incredibly fast change from being something so stupid that I even thought it was like taking it serious. It's something that I would now recommend everyone should have it in this portfolio as a very like down to earth skeptical, very careful conservative one when consulting other people. It's like just look at the track record, calculate it for yourself, figure out what's the proportion.

And that's more or less entering a mainstream perception that at least it's something that every, you don't have to be crazy to have Bitcoin in your portfolio. It's just another question how much and you still considered crazy if it's a very high or 100% allocation that may change gradually as well over time. So what does hyper Bitcoinization mean? I think one aspect would be yes, this breakdown of the world order.

I think we're going into a more multi polar order and I think Bitcoin could be a kind of neutral money, which for Western people will be difficult times in some places at least and Bitcoin will be more prominent, but it will also be reviled more for that reason being the neutral money between blocks that are enemies. And the thing that are an American or Russian and the European could still use in the Chinese while there's war between those fronts.

So a bit like the Swiss Frank or gold of course was in the past. And that doesn't mean that everyone uses everyday Bitcoin. I still think I believe in this concept of layered money and of course just alone for scaling Bitcoin, we know we're happy at least there's lightning. I'm pretty bullish about e-cash and stuff. I believe there's also be other layers. There'll be credit, can be denominated in Bitcoin, but it can be denominated in anything you like. It's just the numeral.

So I think that's people figuring out and trying to find out there can be new financial instruments that use Bitcoin, but take away a lot of the volatility and there be a place for financial instruments doing that, giving you some of the upside or most of the stability and stuff like that. So I think it's still a discovery process where it ends up. But I think if we look at now and then later point where Bitcoin is more prominent, I think it has geopolitical implication.

It means there was a need for Bitcoin to play a more prominent role. And that means a more multi-polar order and certainly it means that it's not the unipolar order of the dollar being the old dominant settlement layer. But for a while it could remain a very prominent one, of course, and there's still a lot of country that are way behind and they'll just go through the phase of dollarization before they go to Bitcoinization.

So there's still some more dollarization to happen in the world, even though we're going toward a time when Bitcoin may be more prominent than international settlements. One thing, just speaking of kind of the geopolitical implications, one thing we haven't covered yet is, I mean, we're very much seeing things play out now at this nation-state level, right? At least in the US and I know in Switzerland as well, I believe there's these proposals for strategic Bitcoin reserves.

This is obviously a huge shift. Now, El Salvador, we mentioned earlier, has been leading the charge. They're a dollarized economy, but they've been accumulating Bitcoin. They've been stacking Sats. A lot more Sats than I stack every day. They're putting like a full Bitcoin up there or occasionally more, which is great to see. But now we're talking about El Salvador, this isn't a knock against them, but it's a very small country. I think they're punching above their weight class for sure.

But when you look at the US, that's huge. You look at Switzerland, that's a big deal for countries like that to be seriously considering it. I'm curious what your thoughts are on this. Or is this, I mean, you view positively. I mean, we discussed earlier also, Bitcoin is money for enemies. Anyone's free to use it. That doesn't an individual, a company, a nation-state, a dictator, although a dictator probably doesn't want his people having Bitcoin.

But where do you fall on this as we start to enter this very fascinating era of nation-states looking to put Bitcoin in their treasuries seemingly with haste? Yes, it's a risk for Bitcoin, of course, but my experience tells me that Bitcoin has turned out to be anti-fragile. A lot of things that seemed like risk for Bitcoin have helped it in the long run. And so I'm pretty optimistic that that's just a symptom of adoption.

And I can tell you from Switzerland, adoption is pretty high, but mostly in asset allocation. That's of course also where Bitcoin has worked really well. There are lots of wealthy people in Switzerland, so lots more people and there's a lot more of a culture of investing. So everyone more or less invests and every bank here around myself, where I am in central Switzerland, all publicly promotes Bitcoin as part of the allocation that opens up to the people.

And now if you look at the Swiss National Bank, they have to weaken the Swiss franc because there's so many Europeans would rather them hold on to or take refuge in the Swiss franc than in Europe if they haven't discovered Bitcoin yet. And in order to weaken it, they buy all kinds of assets, the Swiss National Banks. They have to buy dollar assets, they have to buy euro assets to relatively weaken the Swiss franc. And they think ensure the competitiveness of their export industry.

I don't think it's like it's correct or morally right what they're doing, but still they try to manage the franc this way. That's why they have reserves, it's not to back the franc, it's to weaken the franc in a way. But if you look at what they have to do, they have to buy so many dollar assets and euro assets and they try to do it in a way that they don't buy the worst assets. So they had meta shares.

There were, one time the Swiss National Bank was one of the biggest shareholders in meta Facebook. I didn't know that. That's just crazy, why would a national bank have a reserve in meta stock? And the reason of course they have to buy all kinds of dollar assets and then they rather buy dollar assets that potentially pay dividends. And then of course if you compare now Facebook meta shares to Bitcoin, it's much less odd than just thinking all these reserves is like gold and vaults and stuff.

It doesn't work that way, so most of the gold has been sold off in Switzerland as well. There's still some for a historic reason because the psychology of it, they don't want people lose trust in their money, but they don't buy any gold anymore. They buy dollar and euro assets, which means shares of stupid companies. Which is not always sure that they produce value and there's no reason whatsoever for a Swiss central bank to own some US company stocks. They just do it because they have to.

And so that's why there's this initiative now to say at least, I mean the Constitution still tells the central bank to at least buy gold or have gold. That's part of the reserve should at least be gold, so the initiative only tells, okay, let's change the law a little bit to just say the reserve should include gold and Bitcoin without telling how much Bitcoin should be. We just open it up. And if you look at it this way, it doesn't look at all like a fringe idea.

Like, of course, yeah, if there's a central bank and it buys assets because it produces Swiss francs to weaken it and then buys off some assets, why not buy something that in the long run may have more value than some company share somewhere in the US or Europe. And so I think it's part of the symptom of a gradual process and you just compare. I think it makes a bit more sense to have it in a kind of sovereign wealth fund if you look at it from a point of view of a politician.

So I think that's also where the strategic Bitcoin reserve comes from. Initially the idea comes from the strategic petroleum reserve where you claim, okay, let's like buy oil when it's abundant and have it in stock when there's a big crisis or a war or whatever to like make sure that our tanks are able to drive to ride.

And so I think if I wasn't charged for a government and I'm any more and only consulting one presidential candidate and Surinam who wants to do that implement that strategy of having Bitcoin actually in a sovereign wealth fund. And I think it makes sense if you have royalties coming to country like from oil or other resources and you don't want to spend everything now and distributed immediately to the electorates, which I think is always a good idea.

Then for sure it's a very neutral approach. Okay, what should we do with that money? Should we hold the dollars? I'd say, okay, save some for future generations. That makes sense. And of course I advise everyone to include Bitcoin in that. And I think it's the more moral asset than just owning US Treasuries. Why would you like own the debt of another country, of another sovereign country that's not yours that you have no direct link with.

So it's, I think it's the better asset. Even though I don't think that Bitcoin needs that, just the symptom of its adoption and politicians realize that they need Bitcoin now or may need Bitcoin. And that's really the story here. I don't think it's really like Trump pushed Bitcoin to 100K. It's like it was going there anyway and Trump realized for every reason, okay, that's why it's something that's not hurting my chances of winning an election.

Let's say, a lot of politicians are realizing that we have quite a few politicians, Switzerland who are explicitly pro-Bitcoin, even now like the German former minister of finance who was about to drop out of the parliament. And now, it's much too late realized, okay, maybe I give it a last shot. Now his pro-Bitcoin, now his claiming Germany should have a strategic Bitcoin reserve. The former minister of finance in Germany.

So that's quite some momentum here already. But I don't think it's like some evil Bitcoiners and background like Schaff and Binzile would claim pushing their banks. It's like it's a gradual adoption process and I think everyone who goes to the world with open eyes and asks this question has real the responsibilities like now there's this bunch of money.

How would you allocate it? What are you doing? And let's look five years later. How have you been doing? We gradually understand that it's not just such a crazy bet to have some in Bitcoin. Yeah, one of your points that I want to emphasize is that, you know, Bitcoin doesn't need governments. It doesn't need politicians. Politicians and governments need Bitcoin.

Bitcoin will be fine without them. I mean, we've, most governments have been, if not, if not downright hostile, they've been very antagonistic toward Bitcoin for its entire life. It is only now they're beginning to warm up and Bitcoin still exists despite the antagonism from various nation states around the world.

And so clearly they need Bitcoin. Bitcoin doesn't need them. And I think they're slowly coming to that realization that, oh, wow, this thing that maybe our country, depending on what country it is, tried to stamp out that it tried to kill. This thing's not going away. We can't kill this thing. Okay, wow, this thing is becoming an increasingly massive asset. It's a global, it's a global asset.

And there's nothing we can do to stop it. So it's kind of like, okay, you know, either we pretend it doesn't exist, which is going to be very difficult. And it's going to be very tough to justify pretending it didn't exist, especially in the years to come. Or you get on board because there is a massive advantage in being a first mover, especially when it comes to these larger nation states who do have the power of the printing press.

You have a massive advantage there. And curious though, do you see the adoption of Bitcoin by central banks, by governments, building strategic reserves? Do you see that, you know, prolonging the life of those, you know, the early adopters, let's say the Swiss or the United States? Maybe Switzerland's actually a better example because the U.S. has the reserve currency.

There's other complexities there. But let's talk about Switzerland. Does that end up prolonging the, you know, basically making it a longer and better functioning central bank than it would be without it? Does that actually give the central bank more runway into the future because they now are holding an asset, not backing their currency by it, but they're holding it as a reserve asset? Does that keep them alive longer in this fiat game?

Yes, it could be. I mean, the only reason why they're considered reserves is not because the banking currency is that in case your currency comes under pressure, you can sell it off again to buy up your currency on the market. So if any time in the future people doubt the viability of the Swiss state, then of course Swiss politicians are not much better than politicians elsewhere.

It's not a utopia. It just inherited so much historical capital and was so lucky in avoiding not only the world wars already 30 years before and was lucky to be small enough for two stupid ideas and truly diverse, truly diverse first two people. First two big ideas of collectivization and stuff. So it was really lucky. But if Swiss politicians continue in the direction they're continuing, that's just like everyone else.

It's just much later and with much more runway and eventually they run out of this runway. But they figure out, oh my God, some stupid people in the past decided to have Bitcoin as our S&P reserves still buy them quite a few more years. I think eventually. Yeah, it's gonna be interesting.

Yeah, no, I mean, ultimately that will, if that happens, now this is not to say, oh, we need these central bankers, but the reality is that we have them operating in most countries in the world that have their own currency. If your currency is mismanaged, it fails. And when it fails, your country is thrown into upheaval and disarray and chaos. And ultimately, that's, you know, who does that hurt? It doesn't hurt the people that are closest to the money printer. They're already okay.

They've been, you know, can't can, can't, can'tillionaires, excuse me, since the, you know, the beginning. But it hurts the normal people who are struggling to get by already. And then there are basically anything they've managed to scrimp and save is completely destroyed, throws you into chaos.

It opens you up to all sorts of negative externalities down the road as you try to look for a solution to this. So it's like, and again, you know, Bitcoin doesn't care if you're a central bank or a government or a corporation or an individual.

We're all, we're all treated the same if you have the private key. I want to be conscious of your time, Rahim, but one other thing I did want to ask you about, which I think throws some people for a loop is just, I think there's a lot of misconceptions about inflation and deflation. Certainly there's a lot about inflation because of the way that governments talk about it as, you know, well, inflation is just prices rising for your groceries and it's caused by greedy corporations price gouging.

I think there's also a lot of confusion about deflation because when we talk about deflation usually or when mainstream legacy economists talk about it, they talk about it in the context of fiat money. And in fiat, in order for fiat money to work, you have to keep expanding, right? You have to keep the hands to room going. But in a Bitcoin world, deflation is a very different thing. It's a very good thing.

Right. So can you break that down a little bit just in a way that maybe makes it more accessible to people and kind of why that distinction is important? Yeah, as always, it's a problem with the terms. They denominate two very different phenomena. And I was saying which one is the right one to use. It's just two different phenomena. You use different terms for it.

Originally, the Austrian school used inflation for an increase of the money supply or invisibly unbacked money supply in the old systems and deflation as the shrinking of the money supply. And of course, one of the reasons why money supply can shrink is a kind of crisis. So that's why deflation has this kind of wrong or bad sound to it.

So of course, big crisis situations usually mean a collapse of the money supply because you have to write off credit and everything is like no one can pay back the credit. That's usually a bad situation if it's out of the sudden happening. But then prices rising and prices going down is something very natural. It always happens when the Austrian school always knows like this no stable price level whatsoever.

But there can be correlations if on average all the prices are going up. That must mean a loss of purchasing power. It must mean impoverishment because you have to work more for the same goods. And one way to look at like wealth increase in history is of course looking how much time you have to work for the things you can afford. And there were very great statistics on that. Like how much do you have to work to have one hour more of light.

Now it's deep dark here. Of course, being able to afford the light is one of the reasons why this light has become very cheap. And that of course is a kind of deflation of light prices. But just mean we are aware of there. And that's how wealth arises usually is your work less for the same or better results. That's wealth and that means lower prices. You go for the unit that your work is priced in. So it's really conflating to things.

So of course some idea there was no bad intent. I'm not so convinced about that. I'm OK if we decide that now inflation means increase in the price level and deflation means a decrease in the price level be it so. But then stop arguing that's like deflation as a monster like the ECB did this. Did it propaganda for children painting like there's a monster deflation waiting. If your money is not losing 3% a year. Of course only official because actually the money supply was increased 10% per year.

And that's they did some measurements on like the estimation of citizens how much they got poorer. And it's like the felt inflation and it was not closer to the real increase of the money supply. But of course the experts argue no we've measured the ignorance of the population. They don't know it's actually only 2%. They claim it's like this approach. And now they did this propaganda for kids drawn like cartoon of the deflation monster coming when your money is not losing at least this like 2%.

And now they've increased that what's the right amount of inflation and the proper amount of inflation for stable money. That's just crazy. That's just crazy. And that people are too stupid to cope with things getting cheaper and not realizing things. If everything got cheaper and your salary doesn't go up. It doesn't mean that you're poorer. I mean that was one of the arguments of course from Keynes was like oh people are too stupid.

If you want to lower wages you have to just make everything else more expensive so people won't realize that the wages going lower. So they think they're having more money. That was really just the argument for inflation back then in Great Britain. It's like oh our wages are not competitive. They are too high. So we can sell at that cost and people will lose their jobs.

So let's just like make everything more expensive and reduce real wages without people realizing it and without the unions realizing it. That was really the argument and I think that's just such an approach to human nature. I mean if you pertain it if you continue looking at human people like that of course they start to behave like that. And then you say oh we can't we have to protect the people. They couldn't cope with things going cheaper.

And then realizing OK maybe I can also lower my salary expectations because I want to be I working to be able to afford a good life and not to have some arbitrary number in my account. So it's like first thing about deflation and the risk and the threat of deflation. It is just crazy and I know one moment that really clicked for me too was reading Jeff Booth's The Price of Tomorrow where he talks about look technology itself is naturally deflationary.

Like all else being equal technology makes everything cheaper with each industrial revolution that we've had. You know each level of that revolution across the past few hundred years. It's made things cheaper. The reason and there's a reason if you look back at like historic price levels you know like before the creation of the Federal Reserve for example in the US things were pretty steady or you know and many things got insanely cheaper.

But now it's like everything gets more expensive all the time despite how much more efficient we are despite the fact that you know Amazon has you know fully autonomous warehouses that are shipping you things that are you know are able to do just in time to look like it's insane how efficient we've gotten. But those efficiency gains those productivity gains are not passed on to people because they the rate of monetary inflation is still eclipsing the rate of technological deflation.

And it's just such a sad thing to think about that most people have just come to accept prices going up as completely normal and natural. But it's not it's not normal and it's unnatural. It is it is a forced state of prices going up. They shouldn't be doing that. Maybe in some you know prices are going to fluctuate. Yeah they may go up and down. But the general trend should be down because that's what happens when you get more productive you know and it's just a it's wild to me.

But I'm very hopeful that so many more people seem to be waking up to this. I really appreciate your time here today. I could ask you we're going to have to do this again. Maybe when we're in El Salvador we'll find some some minutes for it. But I've really appreciated your time here. Where do you want to where do you want to send people where where should they find you. I'll make sure to link it all in the show notes.

Thank you. You can follow me on x.com. There are usually writes in English and I have a website. That's how you can reach me. Fantastic. Well I again really appreciate your time. This was a pleasure and I will see you in El Salvador. Yes looking forward to them. Thank you.