July 19th 2021.
- The Little Bitcoin Book
- Mises Institute article on Nicole Oresme
- The Ethics of Money Production by Guido Holsman. Reference to “reverse transubstantiation” is made on pages 162-164
- The Bitcoin Standard Podcast episode with Harris Irfan
- Fiat Fuels chapter of The Fiat Standard, passage on per capita energy consumption
- Website with metrics on economic and social changes that have taken place since the Nixon shock
- Saifedean Ammous’ 2017 paper on technological regression in the aviation industry including, Federation Aeronautique Internationale world flight speed records
- Jeffery Tucker: article on dishwasher
- Edward Gibbon: The History of the Decline and Fall of the Roman Empire including the five signs of civilizational decay
- The Fate of Empires and Search for Survival by Sir John Bagot Glubb
- The Devil and Karl Marx: Communism’s Long March of Death, Deception, and Infiltration
[00:03:40] Saifedean Ammous: Hello, and welcome to another Bitcoin Standard Podcast seminar. Today’s guest is Jimmy Song, a Bitcoin developer and author who’s written two books. One is called Programming Bitcoin on the technical side of Bitcoin and how to program Bitcoin applications and how to work on Bitcoin as a programmer.
And the second he co-authored with a group of authors and it is called Thank God for Bitcoin, the Creation and Redemption of Money. Jimmy is also a good friend of mine and he’s been in Bitcoin for quite awhile. So I’m sure he’s going to have a lot of interesting stories to tell us about his diamond Bitcoin.
So Jimmy, thank you very much for joining us today.
Jimmy Song: Thank you for having me. There is a third book that maybe I should put out there. It’s The Little Bitcoin Book. I also wrote that with a bunch of other people,
Saifedean Ammous: Oh that’s right, yes. He also co-wrote The Little Bitcoin Book, which is a great little intro to Bitcoin with a bunch of authors that gets to the core of the main value proposition of Bitcoin.
[00:04:40] It’s a good book. Also, I highly recommend it. To begin with, Jimmy tell us about how you found Bitcoin and what attracted you to it. And I don’t even think you’ve told me that story before.
Jimmy Song: Yeah. So 2011, I was working at a startup and I was reading a website called Slashdot. And for those of you that don’t know, it’s a tech geek website. You go there to see what new tech news are, here’s a new Mac laptop, or here’s the new S Linux distro, and here’s these patent trolls that are doing something weird or something like that.
And there was a story on there that I saw them and I didn’t know anything about, and it was Bitcoin reaches dollar parity. And I couldn’t even parse that sentence at that point. I was like, what’s dollar parity and how can something have dollar parity.
And it was only when I read the story and started understanding it that I was like, oh wow, this is something crazy. And almost immediately after learning that it had a 21 million limit, I immediately [00:05:40] wanted more. I wanted some, and this is, I think, driven by a human instinct for something that is scarce.
And I tried to buy some using PayPal or any credit card or anything like that. And I couldn’t find a single place that would do that. The only place that I could find where I can actually acquire Bitcoin at the time was Mt. Gox. And of course, it wasn’t easy to get money to an exchange in Japan at the time. What you had to do back then was transfer money to a money transmission service called Dwolla using your bank account.
And then after three to five days, they would link your account with your Mt. Gox account. And that would take another three to five days. And I thought it was just, I started on creating the Dwolla account and it just seemed like too much work, so I just said forget it, I’m not going to buy it, let me try to mine some.
I wasn’t successful in mining. I decided to use like an AWS server that I had access to as a startup guy. But of course that was nowhere near enough. I [00:06:40] think by then, GPU’s were dominating. So like CPU’s were not going to be near enough.
That was my first introduction to it. And later that summer it went from $1 to $30, and at that point I was like, okay I really need to get in. All of my instincts about this thing are correct. It is scarce. It is not controlled by a central government, so I should go and buy some.
I decided to buy some right around then and that’s my origin story I guess, of Bitcoin.
Saifedean Ammous: Nice. and when did you shift to programming on Bitcoin and shifting to Bitcoin professionally, not just buying and holding?
Jimmy Song: Yeah. So 2012-2013, I had just moved to Austin. We had some real estate transactions that we had to do from the previous place that we were at, which was Boston, Boston to Austin.
But there was a condo that we had in Boston and I was like, okay what do I do with all this money? After paying back [00:07:40] my parents, cause they helped us out and check to get interest and all that. We wanted to do something with the money that we would be getting.
Where do we put the money? So I looked deeper into Bitcoin because it was starting to rally again. And I decided, okay like there’s some money, let’s go put it into Bitcoin. You know, I should really learn how this works. So I started digging a little deeper, a few more of my friends by then had started getting interested in Bitcoin.
They weren’t programmers, so they were asking me questions. I’m like, I don’t know, but I’ll go find out. So I started looking into all of that and that April bubble of 2013, where it went from more or less like 10 bucks all the way to 266 and then back down to 50 again.
That was when I started to read a lot of the technical underpinnings and stuff. And I started contributing to some open source projects that weren’t Bitcoin related. So I had some idea of how those [00:08:40] things work. So when it started rallying again in October, I was like, okay, I really need to do some programming with this stuff, if I can.
And there was a subreddit called Jobs4Bitcoins. And there was a guy that had posted, okay Python developer wanted. And I’m like, I’m a Python developer and I would love to make money in Bitcoin. He was based out of the Ukraine. He wanted help on his open source project and he wasn’t getting enough interest.
So he was like, I’ll just pay you in Bitcoin to work on this open source project. So I was like, okay. And it was Bitcoin related. It was something called colored coins, which I worked for from like October to like March, something like that, five months. And still to this day, probably some of the best per hourly rates that I’ve ever received because I was of course getting paid in Bitcoin.
But that’s how I got into it. And I contributed to some other stuff. There was a project called BTCD, which is a Go-based full node implementation. The best [00:09:40] way for me to learn at least, is to be forced into it. And, I had to learn about HD wallets and bit32 when I was implementing colored coins and stuff like that.
I had to learn how to figure out inputs and outputs and what UTXO’s are. And when I was doing the BTCD stuff, I had to learn elliptic curve cryptography and finite fields and what all of that meant. And learning it at like a very basic level. And that ultimately led me to teaching other people the same thing, because it turns out that there wasn’t a good resource for learning the best stuff.
Like one of the hardest things about programming Bitcoin is knowing where to start. And I was very frustrated as a developer, trying to learn that stuff. And that ultimately led me to doing my seminars and writing my book Programming Bitcoin, because I was just so incredibly frustrated and teaching, it turns out that others were too, and teaching them ended up being a thing. Yeah, [00:10:40] and it worked out.
Saifedean Ammous: Yeah, probably those Bitcoin rates, the hourly rates will maybe be your kid’s annual salary at some point in the future.
Jimmy Song: It might already be, I don’t know. Yeah it’s hard to say.
Saifedean Ammous: Number go up technology works in weird ways.
So tell us about your first book, Programming Bitcoin. What what is the case for learning to program Bitcoin? Most Bitcoiners don’t know how to program and I think arguably that’s going to always be the case, maybe not, but primarily I think money, the world’s going to have more money users than programmers.
That’s just the nature of money. Everybody needs money, but not everybody needs to program, I think, at least for now. So for the majority of Bitcoiners that don’t know how to program, why should they learn to program? What’s in it for them?
Jimmy Song: The main thing for me is being able to level up your game. And you might not be at the [00:11:40] point where you’re able to program a light node from scratch, which is basically what I teach in the book.
But the ability to level up your game and learn more about the internals is a crucial part of what keeps me going decentralized. A lot of altcoins, for example, have code bases that are completely unintelligible, and you basically just have to trust whoever is in charge.
The ability to audit the code and see what’s going on and understand how everything works, that’s a key part of keeping Bitcoin decentralized because if only a few people know what’s going on then in effect it becomes centralized because they’re the ones that decide everything and they could do a hard fork or whatever.
Because Bitcoin is software, it’s very tightly integrated with the monetary policy and making sure that, for example that monetary policy does change.
The one that Satoshi set out from the very beginning continues to be on the network. That’s a crucial part in [00:12:40] understanding things like what the difference between a software and a hard fork is what the benefits are, and so on.
Those are also very important for users to understand too, so they know what they’re ultimately running when they’re running their own node. And if you’re running your own node, you’re validating everything, but you need to know what you’re actually validating and how you’re validating it.
One of the most important obviously is the 21 million limit and making sure that isn’t violated in any way, shape or form, but there’s a lot of other network rules too that you want to make sure aren’t violated. And you had to kind of understand them to know that they’re not being violated, or if you don’t care about a particular rule, say somebody, a very small minority tries to soft fork or something like that.
You might not want to run that software and knowing why and what’s going on, that’s I think a big part of what keeps Bitcoin decentralized.
Saifedean Ammous: Yeah. And you’ve also run the programming Bitcoin workshops where you have in-person workshops where you teach [00:13:40] people how to code in Bitcoin. And I guess of course the other more selfish perhaps motivation for programming is that you could get a job in Bitcoin and make the case to our listeners who haven’t considered this.
Why should they quit their fiat jobs and learn to code and get in on Bitcoin? And why it’s surprisingly, make the case for why it is actually much better than most fiat careers.
Jimmy Song: Yeah. So the nice thing about a lot of Bitcoin companies is that they’re in Bitcoin. So of course they’re growing very quickly.
Especially during bull runs like we had from January to April or something like that. You get a lot of enthusiasm, you get a lot of investment, you get paid very well. And I’ve taught over 500 developers and many of them work for some of the largest Bitcoin companies in the world.
Some of them have started it. Some of them are CTOs now. Some of them are core developers. I would say that if you own Bitcoin, the case I would make is that by contributing to it, by understanding it, [00:14:40] by being able to write software that uses it, you’re growing the Bitcoin ecosystem and it’s very good for your investment.
So it might be rational enough to do if you have enough Bitcoin. The other case I would make is that if you are in a fiat job and you’re tired of the rent seeking political nature of a lot of these corporations. You do get some politics and some Bitcoin companies I’m sure.
But it’s certainly a lot better just because of almost like the presence of Bitcoin is like a sanctifying thing for the company itself. The values that Bitcoin represents, which is liberty and freedom and self sovereignty tend to permeate companies that have Bitcoins in them, although altcoins bring that right back down. Try to go for Bitcoin only companies.
But I would say it’s definitely refreshing to be at a company that does value those things. And if you have those values, I would say that would be the other case I would make.
Saifedean Ammous: Yeah, I’ll also add, my perspective on [00:15:40] this is that if you’re working in a Bitcoin company, the culture is very different because of the absence of fiat, when you’re working in fiat based companies.
I think The last year made this so clearly obvious all over the world where you are not sovereign over your company. You think you own the company, you think you own the capital. When push comes to shove, government says shut down and make everybody in your company put a diaper on their face if they want to come into the office and keep everybody six feet apart.
It doesn’t matter what you think, this is what you need to do. And it’s quite amazing to see how this worked out over the last year. And of course, Bitcoin companies have to do things like that as well.
You’re not above the law if you’re a Bitcoin company, I guess that might be a bit of a bad example, but in general, what happens is that because fiat financing is the lifeblood of fiat companies where they’re continuously needing to roll over debt and continuously needing access to good lenders.
There’s very little room for free thought, free speech [00:16:40] and bucking the trend of what the finance people want from you and what the bureaucrats want and what the regulators want. And Bitcoin kind of flips that around because the value comes from the money itself. So you don’t need a constant stream of money to be coming to you from a financial institution.
The money you have appreciates. The money you have has its own value. That’s the whole point of money, that it’s different from credit. And that credit is contingent on other people performing certain obligations in order for your assets to continue to have value, whereas money has its own value in it, regardless of what other people do from it.
Regardless of what other people do, if you get paid in gold or in Bitcoin, you get paid, you get the gold or Bitcoin in your pocket, and then it works as a gold coin or as a Bitcoin coin without anybody needed to continue to perform liabilities. And I think this kind of a finality of settlement and the fact that [00:17:40] money is a present good, just gives everything much more honesty and makes people much more likely to be honest and work hard and be productive and not waste their time on stupid inconsequential bullshit, which you see a lot of in fiat companies.
Jimmy Song: Yeah. And that’s the thing, this past year it’s been like a contest between people to see who can be the best rule follower. And this is what we’ve realized is that the fiatization of the economy has ultimately made nearly everybody in the economy strict rule followers. Because as you said, If you’re taking on debt you’ve have to follow the rules if you don’t follow the rules that line of credit, that line of debt, that central controller that approves or disapproves of whatever money is flowing your way, can shut it off at any time.
So you’re very much dependent on that central controller instead of Bitcoin, where you’re actually in control and you can do whatever [00:18:40] you want with it. So you don’t have that dependency. And those are some very different values and it does encourage a lot better behavior, a lot more hard work and so on, a lot of which we point out in the book, Thank God for Bitcoin.
Saifedean Ammous: Yeah. And I think, in general programming is essentially like a superpower. And machines and engines gave us superpowers because you click a button and then the machine will do a hundred men’s work for you in an hour in moving stuff or pumping stuff, or all of those wonderful things.
And yet programming is an even higher level of leverage because you write a few lines of code and then you’ve programmed a million machines to do a hundred million men’s work for many hours. So the amount of leverage that you can exact on economic processes with programming is enormous.
And so I know many cases of people who had normal careers and even successful careers in cases, and [00:19:40] even in their twenties or thirties or forties, they just quit, learn to program. And it’s not easy, but within a few months, or a couple of years, you’re achieving much higher productivity in your work because you’re being able to leverage much more powerful tools at the jobs that you’re doing.
Because fiat work involves a lot of rituals and wasteful stuff. Programming in Bitcoin can be different in that regard. So it’s something that I really encourage people to look into. You’d be surprised at what you can achieve with six months of dedicated focused learning of programming Bitcoin.
You could achieve a lot. After six months you could get a job and do very well. Would you agree?
Jimmy Song: Yeah. And I have a really good example. There was a guy that was a cop in New Zealand and he decided he wanted to become a programmer. He learned programming, then took my course and then started working for an exchange soon after. I think the whole process [00:20:40] took them roughly about six months.
He’s now working for a different company. I think he found one that pays better and is more aligned with his values and so on. But yeah, those are the success stories and they definitely are out there, but I’m not gonna sugar coat it, it’s not easy and it does require a lot of hard work.
Just like anything in life where you actually have to do stuff. I know fiat, people like to make it sound like it’s going to be easy and you’re not going to have to do much, which in the cases of a lot of rent seeking jobs, it really is like that. But if you’re actually contributing to civilization, you’re going to have to work hard and use your talents to the maximum, to their maximum.
Saifedean Ammous: Yeah. And I guess the point is you’re going to suffer one way or the other. Either you work hard and you suffer upfront and then you reap the rewards or you don’t work hard, and then you suffer gradually in a way that compounds into the future as you reap the rewards of not working hard initially.
So pick your [00:21:40] poison.
Jimmy Song: Yeah, I would go with the low time preference option.
Saifedean Ammous: Absolutely. which brings us nicely to the topic of the other book, Thank God for Bitcoin. Most people wouldn’t really associate a piece of software with God and they wouldn’t really see that there’s something religious about it or that there are religious connotations to this.
And yet you are part of, or I think you formed a group called Bitcoin and Bible Group. So what is the inspiration behind that and what is the connection between Bitcoin and the Bible and God, where do you see that connection come from?
Jimmy Song: Yeah the real connection point for me is morals and ethics.
Cause that’s really what the book is about and the argument that we make. But basically when you think about money, it’s hard to understand it without having some sort of moral framework to go with it. So we know for example that fiat money is extremely corrupt.
They’re [00:22:40] expanding at insane rates, there’s a Cantillon effect. There’s a lot of ways in which that leverage can be abused for the benefit of those in power or those that are favored instead of everybody else. And that’s the cause of a lot of societal strife. There’s stealth taxation through inflation and things like that.
And other people have made this case before. That was what what we were studying as the inspiration for this book. We were studying two books, The Ethics of Money Production by Jörg Guido Hülsmann and Honest Money by Gary North. And they’re both Austrian economists that come from a Christian background.
I believe Jörg Guido Hülsmann is Catholic, and Gary North is Protestant. He’s written a lot of homeschooling books for people in the US and was an economic advisor to Ron Paul. So they both have like the right idea in the sense that they’re showing unethical nature of the central bank fiat system. But in order to talk about whether or not something [00:23:40] is unethical or ethical, you really have to have a moral framework. And it’s really hard to have a moral framework without God in it. You can, and Hoppe and Rothbard have both written their books on how to come up with ethics of liberty.
Even they recognize that there’s like a bootstrapping that you need to do in order to have some moral premises by which you can judge the current system. They go kind of around it by arguing that you own yourself, therefore even if you’re speaking, you’re acknowledging that you have property over your own body.
And they build off of that, which I think is a little bit of a, if you do have sort of like morality based on God, it’s a lot easier to argue. And that’s what this book was meant to be. It’s meant to be an argument for people that already have these morals and say, okay you know what, the current system, you’re kind of like a fish swimming in water, so you don’t really recognize how filthy the water is.
That’s what we point out for [00:24:40] the first seven chapters. And we don’t really talk about Bitcoin until the last two and saying, hey you know what, Bitcoin fixes a lot of these moral problems with fiat money because it is sound money.
And because it is unconfiscatable and because it is digital, it’s a lot more convenient and it’s a lot harder to cease and all that stuff. That’s ultimately the connection that I’ve made between God and Bitcoin, essentially.
Saifedean Ammous: Yeah. And you argue that deficit spending and the inflation art theft from the community, and basically that they’re immoral.
Obviously I’m not going to pretend you need to convince me, I’m sold. But I’m nonetheless going to ask you to make the case, what is the Christian Case against inflation and against fiat money?
Jimmy Song: Yeah. So I think Nicole Oresme who’s a 14th century French Bishop who also did a lot of other things.
He’s the one that discovered that the harmonic series is divergent from mathematics, and that’s one of [00:25:40] the fundamental things you learn as a math major, if you’re into that sort of thing. But he made the argument in De moneta about money that is diluted by a prince.
Essentially if a prince takes a one ounce silver coin and dilutes it by some amount, that he is essentially stealing from the community. If he wants to do that, he needs the consent of the entire community in order to do so. Clearly he’s not getting that by diluting it because they’re doing it oftentimes secretly and without anyone knowing which is reminiscent of the fed today. That in itself is on just because you are diluting what everyone else is having. Its theft in a very different form because it changes the supply of something instead of actually taking directly from somebody.
And that argument I think holds pretty clearly because if I promise you that this has [00:26:40] one ounce of silver and it only has half an ounce, that’s clearly lying and it’s theft because I’m defrauding you of money. It’s interesting though with fiat money because ever since 1971, it’s become like pure fiat money.
And this is what Jörg Guido Hülsmann calls reverse transubstantiation, where it used to be backed by gold, and then all of a sudden it’s like free-floating and like worth nothing. There’s an argument to be made there too, because in a sense it becomes something that, money doesn’t mean anything.
And because it has no base by expanding, it’s essentially completely controlled by the central bank and they can steal with impunity instead of at least having some form of reality in the form of a coin, now it’s just numbers in a database that can be manipulated at will. It’s like that much easier instead of having them to melt and dilute and recoin things and things like that.
Ultimately it’s theft because it changes the [00:27:40] supply and you don’t have the purchasing power that you thought you had. It’s not the same portion. It’d be the same thing as if I bought like 10% of your business and then you just issued more shares, like without my consent, that would be fraud and the same thing is true with money.
Saifedean Ammous: Yeah. And you also talk a lot about time preference in your book and this is all something that I discussed in The Bitcoin Standard and it’s something that’s really fascinating to me. Give us the Christian perspective on time preference, why it resonates with you as a Christian and how Bitcoin fixes this.
How Fiat ruins it first, obviously, and then how Bitcoin fixes it.
Jimmy Song: Yeah. High time preference, low time preference, those are the words that we use in Bitcoin. They’ve been part of the Christian tradition for a long time. It’s one of the four cardinal virtues, prudence is what we would call it.
It’s like planning for the future. And another translation of that concept is wisdom, right? It’s being wise about things and not just sort of [00:28:40] doing things now or out of impulse or something like that. And that is one of the virtues classically in Christian tradition, along with the three three spiritual virtues, charity, faith and hope.
And that’s a part of what develops character. And what fiat money has done particularly through that is bring consumption forward. And this is one of the most corrupting things to character that I think can happen because, you have kids, I have kids. If I say, okay all right, you tend to have this a toy right now.
And you’re going to owe me washing dishes for the next week. That’s just gonna make them resentful. It doesn’t develop character at all. Cause you’re essentially indulging them in their impulse and then enslaving them for awhile. Whereas if they saved up, if you said, okay I’ll pay you 25 cents every time you wash dishes, after you save up, you can go get that toy.
That’s a lot better for your [00:29:40] character. It teaches you about working hard and it’s a different mentality instead of being enslaved it’s you are working for it, and you have control, you have sovereignty over your work almost as a result.
The sad reality of fiat money is that it’s brought consumption forward, not just for governments, but for everybody. Its companies, they just get whatever they want now and just finance it and then they’re enslaved, or they have to keep paying it off on like a continual rolling basis and bankruptcy is when they can’t pay it back.
People are doing that with credit cards, mortgages, everything is you get what you want now, but you have to be enslaved for however long the term of the loan is. And I think that’s a very different mentality. There’s a verse in Proverbs that says the debtor is servant to the lender.
And that’s true. You have some obligation to the lender. And in many ways that can be seen as like a monetary master slave relationship, that’s not healthy. [00:30:40] We’re meant to be free. We’re meant to be people that are doing something other than the will of the bank or whoever is lending the money to you.
And sadly everything in this economy works that way. I see funding from VCs or whatever as forms of that. Just different forms obviously. They say it’s equity, but really they run the show and they tell you what to do. In that way I think it’s not good for character.
It’s not good for development and it’s not good for anybody really. And ultimately, fiat money is de-civilizing. Whereas because of that consume first, pay it off later mentality, whereas, save first and then build, so that you can build something, that actually builds up civilization.
That’s good. Not just for civilization itself, which is obviously getting built, but for the people in it, because it teaches them work ethic and discipline, and it’s not degenerate to be [00:31:40] frank.
Saifedean Ammous: Yeah. So what is in your view, what is the Christian perspective on debt? It’s not explicitly forbidden for people to take on debt as Christians, but it’s also not encouraged.
Could you tell us a little bit more about how you think of that from a Christian perspective?
Jimmy Song: Yeah. So a big controversy through most of Christianity has been the topic of usury, which is how much interest is too much on debt. Unfortunately the money puts a wrench into all of those calculations because none of that takes inflation into account, which obviously changes what the definition of usury could be.
And at various points different people have said, okay this percentage is too much, this percentage is too little and so on. But all that goes out the window if say, you’re living in Venezuela. You would take out loans at almost any interest rate because it’s inflating so fast.
So like later on to pay it back so cheap. [00:32:40] As a lender, what a Christian would say is it is listed to or it is legal or it is approved by God to lend out to people as long as you’re not trying to enslave them. That does happen.
And to this day, there are people in India, for example who are lent some small amount of money because they’re really hungry and about to die. To pay it off, they have to work on a farm, but then they have costs on the farm that they have to pay and they can’t outrun that debt.
And that’s like a form of monetary slavery. That’s fairly extreme, that would be something that would be illicit under Christian morals. What would be licit would be lending out not out of, ex nihilo like the fiat loans are.
If you’re getting loaned a mortgage, that money does not come from somebody’s savings, it is printed on your behalf. So that I think is illicit. I’ve had to come to that conclusion [00:33:40] after writing this book and I speak as somebody that has a mortgage. So I’m in sin at the moment. But I try to correct that.
There is something wrong about taking loans ex nihilo, because you are essentially diluting everybody else, by a small amount obviously, but still diluting everyone else and in essence, stealing from them. So that would be wrong always. That somebody lends you, that isn’t meant to enslave you, that isn’t trying to screw you over by putting you into like a perpetual debt where you’re continuously a slave, and cost them something right? Has opportunity costs where they won’t be able to allocate that capital somewhere else, but they’re allocating it to you. I think that could be licit.
That could be fine. The interest rate, I don’t know how much is too much, but I think the metric there is whether or not you’re being enslaved for the betterment of the person that’s lending it to you.
Saifedean Ammous: Yeah. I don’t know when I have discussed this, but we’ve discussed it in the seminar with [00:34:40] in the seminar with Harris Irfan on Islamic money, on Bitcoin as Islamic money.
And I tend to fall on the view that anything above zero is too much. And I think this might be one of my crazy ideas, but it’s one of these ideas that just doesn’t go away. I keep thinking about it and it keeps popping up. My intuition is that if we did have a money that was as good as Bitcoin, and that was the only money in an economy and we didn’t have inflationary monies and we didn’t have monopolies on banking because of the limitations, as I discussed in my two books. In In the Bitcoin standard, the focus is on saleability across time and in the fiat standard the focus is on saleability across space.
And gold has great saleability across time, but terrible saleability across space and fiat is the opposite. It doesn’t hold its value across time, but it’s decent for moving value around across space. Bitcoin beats them both on both [00:35:40] counts, which is in my mind is why it’s essentially the perfect money.
Whereas the other two are the analog imperfect versions that we had to make up. It’s like the Abacus was the primitive computer that we had. You can’t run complex programs on your Abacus, but if it was much better, it would be a computer and you would.
And so my inclination is to think that the ability of lenders to charge interest is a function of either the ability of a central banker to print money and provide them with money, or a function of their spatial monopoly, wherein everybody in a certain town or a certain country has to deal with one specific instance that they have to go through, which effectively allows that institution to make money, to turn its own credit into money.
And so that puts it in a position where it can issue debt without having full opportunity cost for it. They can make more liabilities than they have asset [00:36:40] on hand because everybody has to use them. Everybody needs to settle their trade through them, and there’s no alternative, there’s no other central bank that you could go to.
And I think if you had a free market in central banking, even without Bitcoin, if you just had a free market with gold and fiat currencies, I think you’d end up with the market overwhelmingly choosing the bankers that run full reserve banking on the hardest monetary asset. But when you have a monopoly, then everything is disfigured.
And I think historically, gold never lent itself very well to busting monopolies because it’s centralizing. You’re always centralizing the gold reserves because moving gold around is expensive and insecure. You’re always centralizing the gold reserves. And as a result, you are giving the people who have these reserves, the ability to more or less inflate the money supply, and therefore be able to lend at an interest.
But I think I don’t see how you could lend at [00:37:40] an interest in a perfectly hard money economy. I don’t see how, you have Bitcoin and you want to give it to somebody, I don’t see how you would be able to get away with giving it to them for a fixed interest rate, because you would want to take on, it makes more sense for both of you to just have an equity deal where you share with them on the upside and the downside.
And the assymetry of giving somebody debt where they’re liable for everything on the downside, if they lose, they still have to pay you, but if they make a profit, they only pay you a specific maximum. I think that’s a luxury that’s only afforded through inflation. And I tend to think we wouldn’t get this in a Bitcoin standard, but I could be wrong.
Jimmy Song: Yeah , it would be interesting to see cause what are we talking about here? Is it a backed loan or an unbacked loan? If it’s backed by something, then I could see a zero or very small interest rate making sense because you have the value of whatever it is backed by. [00:38:40] So if it’s backed by say your house or something can always sell the house and depending on the fluctuations of the value of the house the loan needn’t make that much cause you always have that backup.
But an unbacked loan. Yeah, I’m not even sure that’s a thing.
Saifedean Ammous: It’s called equity.
Jimmy Song: Yeah. It would have to be something equity-based and ultimately what I think what you’re doing with your scheme is basically make paying back that a lot more like saving. Because you’re having to work to get something and instead of being enslaved per se, you’re doing things together, they have the same upside and downside.
So yeah, I think equity may be ultimately how it goes. I don’t know, like savings I think becomes a lot more attractive anyway. If you’re saving in Bitcoin, you could probably save up to start a business in a few years right now. Whereas if you’re saving in [00:39:40] fiat, you might not ever get there because you have more than inflation. That may be a large part of making debt unattractive enough that it gets to 0% or something to that effect.
Saifedean Ammous: Yeah, and also the fact that you are rewarded for saving means that we’re likely to get a lot of saving.
And that just means a lot of capital lying around. So your ability to charge an interest to lend out your capital continues to decline because a lot of other people have capital. So the metric by which you can get somebody to give you capital is not the interest that you pay. It’s your credit oiliness.
It’s your trustworthiness. It’s if people think that you are good for the money. So I believe people would still lend each other, and if somebody is in trouble, somebody needs surgery, somebody needs it. But think about a world in which, imagine if the last 100 years we didn’t have easy money where everybody was getting into debt, then instead we had a hundred years of capital accumulation where everybody was accumulating their savings and the savings were growing in value at [00:40:40] 2-3%.
This kind of stuff sounds outlandish and it’s like Bitcoiners being delusional, but really I don’t see how we wouldn’t be living in a world today where the majority of people would have the equivalent of millions of dollars of savings in cash today. And it would probably be hundreds of dollars in that world.
The price of a house would probably be $5 in that kind of world or $50. Imagine, 100 years of the dollar rising in value, instead of dropping in value, do the compounding the other way around instead of losing 2-10% per year, it’s gaining two to three, 4% per year.
We’d probably be looking at a world in which a house is worth a hundred dollars and everybody has a thousand dollars of savings, at least perhaps, or maybe a little less. But I think we’d have a world in which people would have an enormous amount of savings and that would just be a good thing.
Everybody’s got savings that they always can fall back on. And people are rich. People are secure [00:41:40] and people have money and if somebody needs money and you know that they’re credit worthy, that they’re trusted, that they have a good reason for why they need it. You don’t need to charge them an interest, particularly because they would find a lot of other people who have a lot of capital lying around.
And also if you think about it, in that kind of world, keeping your money on hand carries a cost. There’s a cost to storing your money, no matter how small it is and keeping your money on hand involves a risk. If you’re the one holding your money and you lose it, it’s gone. So giving it to somebody else alleviates those two costs, removes those two costs.
You don’t have to worry about storing it and you don’t have to be responsible for it getting stolen. If it gets stolen from him, he’s the one who’s still going to be liable for it, for you. So there is a benefit that emerges without having to charge an interest, which is just the nature of lending.
And I suspect we might be moving to a world like that, but who knows?
Jimmy Song: Yeah. The hard thing in [00:42:40] that sort of scenario is that the character of society would need to change quite a bit. You would have to have a lot of people that are prudent that are low time preference that are looking to get the latest of everything and FOMO or Yolo into things.
And that’s a very different mentality than we have now. But then again, if we had a hundred years of two to three, if we stayed on the gold standard for example, we might have a situation where houses are worth very, can be done with very few dollars, because the units don’t expand they’re fully backed.
And people might have a lot more savings, and they might be a lot more prudent and they might be not so materialistic or concerned about, I don’t know, doing whatever right now and instead planning for a legacy and trying to set up their kids and their grandkids for the future.
Saifedean Ammous: Yeah, absolutely. As I was writing The Fiat Standard, I focused on several of these aspects of the implications [00:43:40] of easy money and just how it leads to degradation of people’s time preference to focus on the present. You see it in economic decision-making, you see it in savings, you see it in family.
And to just imagine, what would have happened to this world, if we hadn’t had a hundred years of that, and we continued to have another a hundred years of the gold standard, which is what was going on for the previous hundred years before that, it’s absolutely amazing. I think we’d have a very different world.
I think modern developed world standards of living would be easily attainable for seven, 8 billion people in the world. I think it’s absolutely insane when you think about it, you know what you need today in order to live modern life. Think about sanitation plumbing, a modern house and electricity and running water.
Today, to have a house that has all of those things costs at least tens of thousands of dollars. But imagine if the value of money was [00:44:40] appreciating throughout all that time and people could save and imagine if all of the inflations and hyperinflations of this century didn’t happen.
Think about how much more affordable all of these things would be. It’s astounding to me that we’ve had running hot and cold water for so long, we’ve had the electricity for so long and there are still parts of the world that can’t afford to get it. And that makes no sense, except when you understand the impact of fiat money and the impact of government interventions.
It’s something that increases people’s productivity massively. So no matter how rich or how poor you are, you’re going to be much better off if you have electricity, if you have a pump, if you have heating, if you have a house that protects you from the rain. It’s just a much more productive way to live.
And so you’ll be able to produce much more. So if it raises your productivity, you should be able to pay for it. And these things just continue to get cheaper. Like these essentials that we need continue to get cheaper year after year in real terms. I think the world would be a very different place, would be [00:45:40] far richer.
And yeah, I think the implications on people’s morality as well would be very different. We’d live in a world where people expected abundance around them. And it wouldn’t be a world in which everybody is constantly feeling robbed, and everybody’s constantly trying to take it out on everybody else because they think everybody else is out to get them.
And in a sense, in a fiat world, it is, everybody out there is trying to print more money so that they can devalue the money that you have, which isn’t a problem in a gold or Bitcoin standard.
Jimmy Song: Yeah. And that’s the thing that really gets me mad is thinking about the productivity that we should have and where did all of that go?
They went to red seekers, they went to governments, they went to wars. They went to stupid things like enforcing diapers on your face or whatever. That’s where all of that productivity went, where human flourishing could have happened with people putting that effort into creating businesses, goods and services that the market would want. That could have [00:46:40] all happened.
And I actually think it would be way better than what even your optimistic scenario would have been, where 7-8 billion people have the quality of life that Western people enjoy. I think we would have planes that are like traveling from LA to New York in one hour and, space travel to Mars and all sorts of stuff like that.
But it’s because of this friction that’s introduced into the economy through money printing, through government programs that really don’t do anything. It’s all this inefficiency that’s introduced because of this black hole of monetary intervention that’s available that governments end up spending and rent seekers expend so much time and energy into getting, that could otherwise be used so much better.
One of the things that I point out to people is, think about the last 50 years, where have the best and the brightest people, like the people that graduate from MIT or Harvard, Stanford, or whatever, what industry [00:47:40] have they been going to? They’ve been going into investment banking.
It’s not because they have a passion for investment banking. It’s because that’s where they can get the most leverage in a fiat system. That’s where you can make the most money very quickly without having to do much.
Saifedean Ammous: It’s where you can borrow the most.
Jimmy Song: Yeah, exactly.
They can leverage the hell out of the monetary system. Those are the people that in 1870 would have been, building new infrastructure or inventing new ways of doing transport or something like that.
These are entrepreneurs, potential entrepreneurs that have all been sucked in by essentially a fiat morality. And it’s really sad because we’ve been held back essentially by this great evil of fiat central banking.
Saifedean Ammous: Absolutely. I think I also discussed this in my fiat chapter, in my fiat energy chapter, annual consumption of energy worldwide was growing at around 2% per year per capita [00:48:40] since the beginning of the industrial revolution. At the beginning of the 19th century, up until the 1970s.
Now what the F happened in the 1970s is a very good question. I urge you to check out WTF happened in 1971, wtfhappenedin1971.com. It’s a website that compiles a whole bunch of graphs of things that started changing in the 1970s. And yeah, this was one of them. We were growing in our consumption of energy, which is I think a very good thing.
Energy is how we have been able to conquer diseases and live safely and protect ourselves from nature. And then that growth stopped in the 1970s. And you also see it with aviation in the 1960s, we have the Concorde and it was operational in the 1970s, but then no other supersonic airlines were built.
And then in 2000 it was taken off the air and it’s astonishing. People don’t like to think of technological [00:49:40] regression, but this is clearly technological regression. My grandfather flew in a Concorde. I didn’t, and my kids are going to grow up hearing about an ancient civilization where their great grandfather could cross the Atlantic in three hours while they’re sitting in a subsonic flywell.
Who knows, by the time they’re grown up, we might not even have aviation the way things are going. We had all of aviation shut down the last year. So who knows, maybe there’ll be taking kayaks across the Atlantic by then.
Jimmy Song: Here’s a scary thought. What if in 1969, when Neil Armstrong landed on the moon, that was like the peak of civilization and we’d been in decline since then.
I think there’s an argument to be made that if Bitcoin didn’t come along. That’s exactly where we would be. A declining civilization never admits to their decline or never thinks of themselves in decline. But honestly, what have we done since then? Has there been anything really?
I don’t know.
Saifedean Ammous: It’s interesting [00:50:40] that all of the major innovations that have happened since then have happened in the virtual world, because that’s the one world where you can make a couple of news without the government taxing you and regulating you out of existence with every step.
Th the internet has just moved way faster than bureaucrats can catch up with. Online communities develop and websites develop, and these things continue to grow way before anybody could put a hand on them. I remember when they were talking about regulating MySpace and then MySpace was out of business and it just continues to evolve very quickly.
Interestingly enough you think about it, other than that, in terms of physical stuff. Yeah. Our airplanes today are crappier than airplanes in the 1960s objectively. And I’ve written a paper on this, which I also mentioned in The Fiat Standard. For that paper, I went through the 10 most popular routes in the U.S. today or a few years ago.
And then I looked at how long they take on average, so the 10 most popular airline routes. [00:51:40] And then I looked at those same routes in 1960s and 1970s. And in fact it was faster in the 1960s and seventies. You could go from New York to Chicago or New York to San Francisco or LA to San Francisco, all of these major routes.
They were something like 10, 20, 30% faster back then than they are right now. And it’s astonishing when you think about it. And that’s not even counting the supersonic flight, just looking at subsonic flights, and then you look at the SR-71, the fastest airplane that has ever been invented, the last time it flew was in 1991, that was 20 years ago.
It was built in the 1960s and seventies, and it broke the speed record in 1976. And that’s it. That record has stood since 1976, it’s amazing. I have a chart in that chapter, in The Fiat Standard where it shows the aviation speed record, I got the data from the Federation for International Aviation, [00:52:40] FIA or something like that.
And it shows you from the Wright brothers all the way up to the Concorde and the SR-71. It’s just constantly growing and improving. There’s a little bit of a resistance around the speed of sound, where it takes us a few years to cross that barrier. It takes us a few years to cross that barrier, but then they cross that barrier and then we just continue marching on until the 1970s happened. And then it’s like we took a civilizational arrow to the knee and our airplanes just can’t fly anymore, as fast as they could.
So there’s the speed record that has stood since then. There’s also the altitude record. There’s still not been an airplane that can fly higher than the SR-71 and all the modern airplanes that they make right now can’t challenge it. It’s amazing.
Jimmy Song: Yeah. Jeffrey Tucker has this great article on something a little more mundane – dishwashers.
And how in the sixties, a [00:53:40] cycle took 45 minutes. But because of all the regulations on now, like dishwashers take three, four hours and they don’t clean as good. So it was like, we’ve regressed there too. Because in a sense like there’s a lot of friction involved with regulation and things like that, which ultimately make things worse.
Saifedean Ammous: Yeah, I think you could probably make a case that 1914 was the pinnacle. And then 1914 was like the pinnacle of human civilization and then it all started to decline. However, technology continued to advance from 1914 onward because, we had just invented all these incredibly powerful, amazing things, airplanes and engines and all that stuff.
And so just simply spreading that all over the world and slowly tweaking it and improving it caused the most significant improvement in living standards in human history throughout the 20th century. But then that seems to have petered out by the 1970s. It looks like that [00:54:40] was the end of the industrial and technological, not end but perhaps the pinnacle or the peak was in the 1970s. But since then, we’ve been living off of the leftovers. I get the feeling honestly sometimes, it’s like a bunch of kids who live in a giant mansion and then the parents die or the parents leave. And then the kids are in charge of the mansion.
And for the first few weeks they can get by because they remember what the parents used to do. And they just do the same things that they used to do. Turn on the lights and milk the cows or whatever it is, secure food from the supermarket. And they can keep the mansion running for a few months.
But then when the serious problems begin to show up, these kids have no idea how to fix the plumbing. They have no idea how to do all of the complicated things that require that are required to keep the mansion running. It’s an incredibly powerful and amazing mansion with insanely advanced technological capabilities that’s being used as [00:55:40] a woodshed essentially by a bunch of kids because that’s as good as they can do.
They can’t use all the extremely sophisticated technology anymore. They’re just using it as a roof and walls. Basically, they’re staying under the roof and the walls and everything else is falling apart.
And you look at places like California and New York and Texas having power outages and the issue is not just that they have the outages, the issue is, what’s tarnishing for me is how it’s completely normalized. Like people aren’t out rioting in the streets about the fact that their power companies are just simply telling them, hey you should stay, you should turn down the AC today and you shouldn’t charge your electric car today and you should do this and you shouldn’t do that.
It’s astonishing because these places had 24 hour electricity many decades ago. And now it’s no longer possible anymore because people are insane. People are getting into all these crazy fiat cults.
Jimmy Song: Yeah. They’re denying nuclear [00:56:40] energy in particular. And that’s a big one. But to further your analogy, it’s not just that the kids don’t know how it’s that they don’t want to. They think, ah, this is good enough.
They don’t have the character to want to maintain the house, to learn about all of the sophisticated things that a house can do. Instead they’re happy just like living as a woodshed. And that’s the attitude of a lot of people in society today.
Oh, we don’t want to do anything further. We just want to save the planet or whatever. They have almost a, I don’t know, like a moral the laziness about them. They don’t want to think through all of the consequences. And like 1914 and 1971 are also significant from a moral sense. 1914, around them was Freud’s whole thing.
Like the sexualization of anything that’s mindful. 1970s that’s right after the sexual revolution and the [00:57:40] moral decline of the country in many ways. I think all of these things are correlated. I don’t know if it’s all fiat’s fault, but I would probably place a significant amount of blame on fiat money just because of the way that it encourages very high time preference, which is ultimately what, just having Freudian sexual gratification and the sexual revolution, which the consummation of that was. Yeah there’s a really interesting book by this guy that I can’t remember, but he studied all these cultures and the sexual mores of that civilization versus how long it’s, like the level of technology and things that they were able to achieve.
It took three generations basically to decline completely from a level of high civilization to very low civilization where people are just like killing each other. I think that’s where we’re headed. And Bitcoin is having to bite that wave a little bit.
Not just a little bit, a [00:58:40] lot. That seems to be like the salvation of the monetary part at least. Because of its role in high time preference and reducing high time preference.
Saifedean Ammous: I think the book you’re referring to is by Edward Gibbon. I’m trying to, I think I’ve heard about it, I haven’t read it.
Jimmy Song: There’s a 22 page summary that I read, I haven’t read the whole thing, it’s 600 pages and he goes through many different civilizations and categorizes them by the sexual mores around that civilization. And that tends to correspond actually pretty well, I suspect.
Low time preference behavior versus high time preference behavior. People that want to do whatever they want sexually tend to be very high time preference. And it’s the low time preference people that build civilization.
Saifedean Ammous: Yeah. And I think it’s tempting to put everything on fiat money because, you should always blame everything on fiat money.
It’s a winning move at all [00:59:40] times, but I think reading this and also reading, there’s a great book by Sir John Glubb. He was a British military man and he was also essentially the founder of the Jordanian modern army. And he worked with King Abdullah I and King Hussein.
And he was actually also an intellectual and he wrote about the rise and fall of civilizations. And essentially this seems to be a cycle that has happened throughout history. And fiat money or inflation is almost an inextricable part of it. Now, whether it is the cause or if it is a symptom of the deeper moral decay is an interesting question.
But I think it’s not as interesting as the correlation. I think people can sometimes get too hung up on whether something is causal or not missing the extremely important signal that there is there, in just merely the correlation. In other words, it doesn’t [01:00:40] really matter if it’s the money that’s causing the morals to decline, or if it’s the decline of the morals that is causing the money to get broken.
But it’s interesting that those things come together and that’s a very valuable and very high quality signal to tell you about the state of the world where you are and how things are going and how we expect things. And I think to go back to the analogy of children in the mansion.
It almost seems to be an inevitable part of, as the mansion grows, there comes a point where the kids in the mansion lose track between the connection of the work that is needed in order to make the mansion happen, and the services that the mansion renders. It just becomes, after enough generations with enough money, that idea of we need to build the mansion is gone because the mansion is there because you’re born with a golden spoon in your mouth.
And so life becomes about how do we enjoy the mansion? [01:01:40] And the work, the hard work is something that the servants do, and it’s not something that we do. And it’s just, we move toward this kind of perspective where it’s not about how much work we can put in it’s how much we can enjoy.
And as a result, initially the roof starts leaking and the plumbing stops working and then you’re using it as a glorified woodshed. But then, you can’t even keep a woodshed without work, even in which that requires work and maintenance. And it’s an interesting question to figure out when, at what point in the demise of that mansion, people snap out of it, figure out okay maybe we should stop partying all the time and start thinking about our future.
But yeah, it’s interesting to think whether we have hit rock bottom right now or not. I think there is a good case to be made that the last 20 years or so was rock bottom in many ways. And Bitcoin might really be the reversal of this. Bitcoin is causing a lot of people from all over the world from all kinds of cultures and civilizations [01:02:40] and religions and traditions to make this connection.
To wake up and realize, oh hang on a second, building this mansion took a lot of effort by my grandparents and I need to live up to it. And you see this happening with so many people across Bitcoin. Maybe it’s the internet. Another part of it, maybe it’s not Bitcoin, maybe it’s the internet allowing people to read all kinds of different sources about the past that won’t really usually fit into the dominant propaganda of the present, where everything is the best that it has ever been thanks to our glorious leaders.
I think people are beginning to question that kind of stuff. And Bitcoin might just be the, again going back to the question of causality, is Bitcoin causing this or is Bitcoin a consequence of this or is Bitcoin’s growth a consequence of the fact that we’re getting this? But I think the causality is perhaps not as important as witnessing this kind of transformation taking place.
Jimmy Song: Yeah. Traditionally I think a rock bottom tends to be at the end of a war with when everything is [01:03:40] destroyed. Your wood shed is completely gone and then you appreciate it. Okay all right, that’s what it took. Hopefully we don’t have to go down quite that far, and we can reverse things before that happens.
And maybe Bitcoin is the way in which that happens, but I do fear that maybe that’s what’s required for us to really appreciate it, is to lose it all. And this is something that I’ve learned from some people from Europe in particular, who are talking about like class differences and for them it isn’t about money, right?
That difference between an upper class person and a lower class person isn’t the amount of money they make. There’s plenty of lower-class people that make a lot of money. Many of them are like soccer players or something like that. The thing that makes at least for them, and this was from I think somebody that was upper-class, is that for an upper-class person, the work ethic is what’s different between you and somebody else is that you are always willing to work hard.
And that was what was instilled in them as an upper class person. And that wasn’t a perspective that I had heard [01:04:40] before, but it makes sense. If you are going to perpetuate wealth with a legacy and be able to do that on a continual basis.
Yeah you have to have the mentality that you’re always going to be maintaining the house in your analogy. That you’re always going to be trying to improve it. I believe this is what happened with the great families of the past that often were around for hundreds of years and made great buildings and cities and things like that.
It’s passing down the values, which is ultimately what needs to happen in order for a civilization to continue.
Saifedean Ammous: Very much so. Speaking of families, you happen to have a big family of six children. And in your book, you also mentioned that you think as people lower their time preference, they’re going to have larger families.
What is your case for having six kids?
Jimmy Song: Oh, my case for having a lot of kids, first of all, once you’re past like 75 or so if you study older people, almost always their [01:05:40] happiness largely dependent on their relationships with their kids. It’s clearly, if you have no kids, then you’re generally going to be much more miserable because all your friends are dying around you.
You don’t have kids, so there’s no real connection to the rest of the world. And if you only have one kid, that’s a lot of burden to put on one person, and you’re really putting all your eggs in one basket, because if that kid doesn’t work out or doesn’t have a good relationship with you or doesn’t continue to line or something like that.
It’s going to be very difficult. But if you have lots of kids, then it’s a lot easier. Even if you screw up with a couple of them or a couple of them get screwed up you at least have some of the other ones and hopefully you can at least have a good relationship with some of them.
So in a way, I would make that as like the selfish argument for having lots of kids, because in your old age, you are much more likely to have a good relationship with at least one of them. The other argument that I would [01:06:40] give is that you are going to be able to leave a legacy.
And I read a blog post by Philip Greenspun a while back. And he’s a fairly famous professor at MIT and he was mentioning that, like he’s had literally thousands of students and he’s known a lot of people, very important people, a lot of his students have been important and so on.
He’s like, you know the only people I actually call are my parents and my kids. And I was like, huh. And I haven’t received a call from any of my students in the last week, but I’ve called my mom like three times. And I called my children five times. But people that you affect the most aren’t like abstract that you might affect in some small way.
The people that you affect most deeply are the people that are your family. And if you want to leave an impact in the world, that’s the way to do it. That would be my [01:07:40] other argument.
Saifedean Ammous: Yeah. And I’m going to add another thing you taught me, which is that after three they’re free, right?
Jimmy Song: Yeah. A lot of people recognize that you go from man to man with two kids and then you go to zone defense with three, which makes it quite hard. What a lot of people don’t know is that at four, you go back to man to man cause the oldest one starts helping.
So that’s why they’re free.
Saifedean Ammous: Yeah. So basically after, your fourth kid is essentially a self-correcting problem. In fact, it takes away from you because now your older kid has something to do. They’re fascinated with this new little thing, they’re old enough to be able to help. And they relish the responsibility of being able to help.
And so now, you have less things to worry about. One less person to entertain at least.
Jimmy Song: Yeah, I think it was you that told me that it’s the parents that learn more than the kids when you have kids. It’s also the kids that learn the most when they’re having to take care of other kids [01:08:40] too.
Saifedean Ammous: Yeah, absolutely. I think the kids raise the parents. Because until you have kids, this might piss some people off, but I think until you have kids, you’re more or less playing life on demo mode.
You’re living your life, you can do a lot of very difficult and very important things, but the stakes aren’t high, there isn’t a child that’s going to starve if you mess up. And it’s just another totally different level of responsibility. Before you have a child that is dependent on you, you can do stupid things, and the worst thing that can happen is that you die.
Which is tragic for you and for people who love you. But I think it’s another level of tragic if you leave behind a starving child or you leave behind a child who is not going to have a parent. So it really teaches you responsibility in a very real way.
You have to up your game and you have to deliver, and you have to have food on the table every day, and you have to have everything working out. The kids need to be clean and fed, [01:09:40] and to do all of those things. And honestly that’s the only time most of us will ever mature. Before then, you can get away with a lot, but when you have a kid you can’t.
I really think that’s when you mature, the kids will raise you, but they will grow really by force of nature. You just need to put food on the table and then they’ll eat it and they’ll learn to talk, they’ll learn to walk and then they’ll soon be on the internet and they’ll discover everything that they want to discover.
You don’t have to do much for kids in order to grow, but you have to take responsibility and that’s what makes you grow and mature.
Jimmy Song: Yeah. I you’re the gardener, they’re the plant or whatever. Yeah, it really is like that.
Saifedean Ammous: Yeah. All right, Peter has a question for you.
Peter Young: Thanks for sharing your insights today, Jimmy that was really interesting for me.
I had a question on a Medium article you wrote last year called The Moral Case for Bitcoin, which kind of ties it into some of the [01:10:40] conversation we’ve been having around the Christian ethical case. And in that article, you made this distinction between natural rights and positive conceptions of morality and build up an argument to say that if you’re someone who supports a natural rights conception, then it makes sense to support sound money that can’t be confiscated.
And my question was, can you talk us through a little bit, what these two conceptions of morality are, and do you think that most people these days tend to have a more positivist conception of morality?
Because it certainly seems that more and more particularly as we move into a world dominated by, governments with certain prescriptive policies regarding how we should deal with coronavirus. People tend more and more just to accept that there are rules that the government has decided on. And therefore, this is what we need to do from an ethical perspective. Do you worry [01:11:40] that the positive conception of morality is getting stronger amongst the general population and how should we make a stronger case for natural rights?
Jimmy Song: Yeah. And that article was written while I was writing the book with my coauthors and it’s something that I wanted to write as, if we remove Christianity, what other basis can I make this argument? And natural rights versus positivism turned out to be a pretty good one.
So just to review, natural rights is the idea that we have rights already, right? Freedom of life, freedom of liberty, freedom to pursue happiness, freedom of property. These are rights that we already have and if anyone violates them, including the government that they are in the wrong, this was why, for example America declared independence from Britain, that was their argument is that you are violating our natural rights.
Therefore it is legitimate for us to declare independence. The positivist sort of morality or the role of government in that case is basically the government [01:12:40] defines what is right and wrong. So they are the definers of morality in that sense.
So if the government says it is illegal for you to cut hair for money, then it is wrong for you to do it without that license. The thing I point out in that article is that every government that has been the most evil in the world, all of them have been completely positivist This is Nazi Germany, Stalinist Russia, Mao’s China, and many others where you had the government defining for the people what is right and wrong.
And that tends to lead down a slippery slope of the governments can take away the right to your life because they say you’re not worth keeping alive or whatever. So that I think is just completely immoral, but it does have some easiness for governments because it is very easy to enforce.
If you just have a positivist mentality and I count a lot of intellectuals on the left, like their argument ultimately comes down to that’s the law and you have to obey the [01:13:40] law. Then they’re not thinking from a natural rights perspective. They’re just saying you might not like it, but that’s the law and we have to obey the law.
If you want to change it, then you have to get a majority to agree or something like that. That’s not a real argument, that’s just, okay that’s the status quo. And you have to obey the status quo because it’s the status quo, it’s circular. And you need some sort of basis for natural rights again, Hoppe and Rothbard try very hard to do it without God.
I find them a little wanting but it is possible. And you don’t have to believe in God in order to believe that we have natural rights. But that’s at least for me, the most natural way to arrive at having natural rights is by believing in God. But if you don’t, that’s okay too, it’s still possible.
But there is a tendency for governments to go in that positivist direction. And that’s essentially what we’ve seen for the last year and a half, is that most governments are very much positivist and they are willing to say you can’t do [01:14:40] that, and forget about your right to assembly, which I think is a natural right.
Your right to Liberty, right? Going wherever you want. That if somebody invites you to their home, you should be able to go to their home. Even if there’s 10 people already there, whatever. These are the things that I would view as natural rights, which the government has violated.
So these should be legitimate laws. And that’s how English Common Law for a long time was judged was, okay what are your natural rights, and then, what makes sense in that way? And English Common Law is one of the greatest things for civilization and all over the world, right? Hong Kong thrived on the English Common Law and their various parts of the world, including the U.S. that thrived under it.
That kind of a way of jurisprudence I think is much more effective for civilization. Positivism leads down some really bad paths. And I think, unfortunately we’re headed that way right now. And a lot of people are just really used to rule following and wanting to [01:15:40] do whatever the government says, because they’re in that mindset.
Whatever the government says I have to obey. And it’s kind of sad that I’ve seen this, especially with Christians where churches are having a who can be the best rule follower contest, rather than actually thinking about natural rights or what God might want. But that’s the unfortunate reality, but then again, it might be good because then you purify and you have a remnant that is more dedicated towards the protection of liberty and doing the right thing instead of doing the convenient thing, which is follow the rules.
Student 1: Yeah. Jimmy I know this is a broad question, but could you share what your thoughts are on the current status of Bitcoin governance? Mainly I’m curious, you don’t hear much in the ligaments news regarding the motivation behind development, [01:16:40] what are the priorities and how strong is the current development community?
Jimmy Song: Yeah. Funny you mentioned that cause I’m about to release a podcast on Thursday with a core developer where we talk exactly about that. Which is what’s the development process like, who’s doing what? And I think once you hear you’ll recognize that it is very decentralized.
You have a lot of people with very different ideas. And the only things that get in or things that have consensus. That are approved essentially by a lot of people. And that the guy that I interviewed is called Johan (???), who’s who’s been a core contributor for quite a number of years now.
And the way he describes it is, you have in the court of (???) community, lots of people with lots of different values and lots of different even political perspectives. We probably have libertarians in there and socialists in there and all kinds of people. If we didn’t have Bitcoin to unite us, we would probably try to kill [01:17:40] each other.
I think that’s like a direct quote, something like that. There is no real governance, it’s just done by consensus and courage you to listen to the episode to get a full hearing on that. But it really is very much like, you propose something and you get people to review it and then if enough people review it and it’s the consensus and you’ve made the changes that they’ve asked you to make and everyone thinks it’s good then it gets (???)
And it’s backwards compatible. No one has to use it. It’s optional for you to use it. There is no. roadmap or anything like that. It’s not anything like traditional development where you say, okay we’re going to get these things done. And in six months or 12 months, which is what every altcoin does.
It’s instead, okay here’s some ideas that a lot of different people have, let’s see what the community wants and go from there. There’s a great part where we talk about the difference between taproot and drive chains. Taproot, how it came [01:18:40] about and all of the changes that Peter had to make because of some of the issues that were brought up by reviewers.
Whereas Paul Stork, he just refuses to exchange with the community. So of course it’s not going anywhere. Really interesting stuff, I would encourage you to listen to that to get a full overview of it.
Saifedean Ammous: Anybody else have more questions? There’s one question I wanted to bring up. In your book, you discuss the relationship between Marx and the Goethe’s Faust. Could you tell us a little bit more about that and why you chose to include it in a book on Bitcoin?
Jimmy Song: Yeah. So obviously Karl Marx is the founder of Marxism, communism, socialism, all of these terms come from his communist manifesto.
But yeah, the whole thing about Marx was that, I read this book The Devil and Karl Marx, and there were biographical things in there that were just absolutely astonishing. One of the things that he had [01:19:40] done as a person, was he memorized large passages of one Mephistopheles was saying in and Faust. Among them was, Mephistopheles basically telling the king, why don’t you sell claims to the gold that aren’t dug up yet?
This was like an early version of inflation. And he memorized all of that because he thought that the devil in a sense was the hero of the story. And it was a very good sort of connection because that’s directly in the communist manifesto where he says money controlled entirely by a central government.
And of course he was an ardent atheist and everything. Every communist since then has been an ardent atheist and they’ve of course acted like it to bring it back to the positivist versus natural rights. Marxists are all positivists, the government gets to tell you what to do.
The government defines what is moral. The government gets to define what your life should be. And [01:20:40] every communist government from Pol Pot’s Cambodia to you know, gosh, there’s so many Eastern European smaller ones, but obviously Stalin’s Russia and Mao’s China. Like they basically told everybody exactly what to do, right?
I believe in Cambodia, they even eliminated money, right? Like they literally had no currency during probably one of like, on a per capita basis, one of the worst democides of history period. They killed like 10% of their own people.
Saifedean Ammous: Yeah. Whenever communists, whenever a communist tells me real communism has never been tried.
I’d tell them. Yes, it’s true. It’s never been tried, but we have come close in Cambodia and check out how well that worked out.
Jimmy Song: Yeah. That, and it’s absolutely crazy to me that he’s still taken seriously by people. But that’s something that I wanted to point out in the book is how much of his ideas have [01:21:40] penetrated society.
One of the things I found out from that book, The Devil and Karl Marx, you could go look it up on Amazon is that, basically the Cominterm, which was Communist International which was out of the USSR, the first communist country. They penetrated a lot of different organizations starting in the thirties.
They would, for example, have a peace organization and they would cooperate with lots of other organizations and then get into the leadership and basically spew communist propaganda. And if that, it sounds familiar, that’s exactly what happened with black lives matter.
They made a slogan that’s very hard to be against but then they’re essentially spewing communist propaganda, but they were all of these organizations, they penetrated a ton of organizations including Hollywood, the media, academia, and so on, and one of the field operatives.
We only need 1% of an organization to be communists before we can take over their leadership. That’s how [01:22:40] effective that sort of pop campaign was. And unfortunately that lives to this day. And yeah it’s sad and we really need to fight against it because it really is a death cult, as some people like to call it.
It murders more people than anything else. And it is extremely decivilizing, just people for some reason refuse to see that whenever they talk about communism.
Saifedean Ammous: Very much so. I entirely agree with you on that, I think. Anybody else have any more questions for Jimmy?
Peter Young: I can go with a follow up one Saif if you’d like.
Saifedean Ammous: Yeah, go ahead.
Peter Young: So I wanted to ask you about your views on gold Jimmy, because in your book, Thank God for Bitcoin, you stated that the world has now moved beyond gold. You don’t think that it would be possible for the world to move back to a gold standard.
For example, in the event that Bitcoin somehow failed, somehow wasn’t successful, you don’t think we could go back to gold because we now live in a totally [01:23:40] digitized world. And so I wanted to just ask you a bit about that. Do you not think it would be possible for there to be some sort of like digital equivalent?
Whereby currencies were settled in gold, if Bitcoin, our preferred option was not successful.
Jimmy Song: All right. So I’m going to pull from the book that exact section. Why not return to gold? Like a dog that returns to its vomit. So it was a fool who repeats this foolishness. So this is Proverbs 26 11. And we put that verse there and it was a little controversial.
We argued about it for awhile as a group of authors. But we put that verse there because it really is like going back to something that ultimately ended up creating fiat money. I blame the centralization of gold for the creation of fiat money. It started with fractional reserve banking. It eventually ended up as like pure fiat money as a result of 1971.
When you know, all currencies essentially became fiat. If we go back to gold, [01:24:40] that temptation will always be there. Even gold vaults now, like the big one in London, they lend out gold that they don’t have. The fractional reserve (???) because they can, and not everyone is gonna go and redeem it at once.
So I don’t think it can work. As Saifedean points out in his new book, the saleability across space is a major advantage of digitization and you can try to settle it, but there’s no way to do it in a self-sovereign manner. And that temptation to go back to your own vomit and eat it, which is basically turning gold into fiat money will always be there.
And I don’t think that’s something that we can really get past. I really do think in a sense, like it’s either Bitcoin or nothing, I don’t know. Maybe there’s some other innovation that can come along that could make it give us a third alternative.
But to me that’s ultimately why the digitization in terms of trade, and this is something that we point out in chapter two, all of these monetary innovations, including coins [01:25:40] and bills and current paper currency that was backed by gold. All of that was ultimately done to make trade easier, to make saleability across space easier.
And if you don’t have that in today’s economy, you take a massive step back. The only way gold can really be self-sovereign is if you hold lighthouses of gold and then you like physically transfer it. I don’t think that’s practical in today’s economy. And so either you lose self sovereignty or, you have to centralize it in order to make it work, or you lose saleability across time.
And you need both in order for sound money to work.
Saifedean Ammous: All right. Thank you so much Jimmy for joining us. This was really eye opening and fun as always, as all discussions with you. Where can people find out more about you and your work and your podcast and all of your interesting stuff that you do?
Jimmy Song: You can find me on Twitter, @jimmysong. My website is programmingbitcoin.com, and I have a newsletter jimmysong.substack.com that you can subscribe [01:26:40] to. It comes out every Monday and yeah those are the places that you can find me.
Saifedean Ammous: All right. Wonderful.
Thank you so much. And I’m sure we’ll be having you again on this seminar. Take care.
Jimmy Song: Thank you.
Saifedean Ammous: Cheers. Bye bye.