The Bitcoin Standard Podcast

64. Fiat economic models

June 20, 2021 Dr. Saifedean Ammous
The Bitcoin Standard Podcast
64. Fiat economic models
Show Notes Transcript

This seminar discusses the problems of economic modeling, using examples from environmental, energy, and macro economics. Saifedean explains how his graduate school experience trying to model energy markets led him to appreciate Mises' calculation problem and the problems of complex quantitative predictive models. What are the problems with attempting to quantify economic and environmental impacts of different fuels? Are the models being applied to bitcoin mining useful? As these absurd models bring fear-mongering to bitcoin mining, will they change bitcoin, or will their flimsy foundations be exposed by the kind of people who like to use a technology built on 100% verification and 0% trust?

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[00:03:39] Saifedean Ammous: I think it's a good exposition. I like what Bitcoin is doing in this regard, because it's really forcing people to ask themselves very hard questions about this entire question of environment and sustainability and the environmentalism. And I think it's shaping up to be quite the litmus because first of all, sorry to dissapoint Warren, but she's not going to be able to change a Bitcoin or shut it down.

Although I look forward to her trying, but Bitcoin's just going to continue and anybody who wants to use it is going to continue to use it. So it's going to be absolutely fascinating watching people contort themselves into knots as they realize their impotence to stop Bitcoin as Bitcoin continues.

But I think putting that aside, putting the operational aspect of it, I think the interesting discussion here is what is the purpose of energy consumption? This is the question. So for people like Elizabeth Warren it's as if the world has a fixed amount of energy, it's like there's one electric socket that we're all [00:04:39] connected to. The entire planet is wired into one big giant electric socket. And there's only so many electricity units that that socket can give out at any particular point in time. And so anytime somebody is consuming something, they must necessarily be taking it from somebody else. And so, it's of course the same kind of extension of the silly leftist idea that if rich people are rich it's because they are taking it from poor people.

And if poor people are poor it's because the poor have taken it from them. And it's the same stupidity, but applied to the question of energy, it's the same stupidity transferred to thermodynamics. Equally invalid in that if you're able to run your washing machine, then you're only able to do so by preventing poor people in other places in the world or in your same place in the world from running their washing machines.

And the reason you have a washing machine is that other poor people in the world are having to wash with their hands. And capitalism is not fair because it allocates the washing machines to [00:05:39] only the people who are rich. Whereas the poor people don't get washing machines. And of course the answer is to ban poor people and rich people from having washing machines, because then we'll have happy equality.

So there's this one perspective, which is a perspective of scarcity. It's a perspective that looks at at natural resources like energy views them as if they are a fixed resource when in fact there's nothing fixed about the quantity of energy that exists in the world. In fact, it's practically infinite.

The world has a lot of energy sources. And the key thing, the point that I think breaks the minds of these people is that we're not all locked into the same socket. We can all generate energy independently from one another. Anybody with a place that can have sunlight can put a solar panel and get some measly energy out of it.

Anybody who's got a place with wind can run a wind turbine and get some energy out of it. Anybody can dig and try and find themselves some [00:06:39] oil. And then it can make oil, which is going to contain a lot of energy in it. Gas, nuclear, power, hydroelectric, anyone who's got a river, even tidal wave and geothermal energy.

All of these things exist all over the world. Every place in the world will have some of them, at least, and people who live there can figure out by using human labor and human capital, how to build things that will then generate energy for us. And that can allow us to direct power toward meeting our needs.

I think the way people misinterpreted is, the one universal socket people think that it's a fixed pool of energy that we're all drawing from when anybody can create energy. Anybody can make more energy. And the quantity of energy is immaterial. It's irrelevant to everything that we do.

The total quantity of energy is similar to the quantity of water in the sea. We're never going to run [00:07:39] out of water. The sea is always going to have water. There's always going to be lakes. The question is how we can have that water arrive to us in a portable format. And similarly with energy, it's not about the total amount of energy that exists in the world.

It's about  the ability to channel energy into a particular place at a particular time at a particular intensity per period of time. In other words, it's about power. So it's just adding up all the energy consumption in the world and let's look at how much energy the world consumes. The entire practice I think is kind of silly because that's a meaningless number. If we arrive at a total number of this much ExaJoules or whatever it is, I forget what's the total energy consumption in the world. I think it's Penta watt, something like that. If we arrive at that total number, it's a meaningless number.

It's an aggregate  number like aggregate GDP or aggregate demand or aggregate spending where you're adding up a million different unrelated phenomena together just because [00:08:39] academics like to do those things. There's no meaning to the total amount of energy that's consumed because that's being produced by completely independent bodies from many, many infinitely many sources all over the world.

So it's not really going to make an enormous difference in anybody's life, how other people in other parts of the world are using energy. So once you think about it this way, you realize all that we are doing, all that human beings do when they consume energy is actually produce energy.

We're not consuming energy. You have to produce it before you consume it. Energy is not something that's just given to us from heaven, even though it kind of is, the sun shines down and it brings down energy. That's not the energy that we need for our life. What we need for our modern life, for a life in which surviving winter is taken for granted, in which we can have modern buildings and we can have infrastructure that survives and we can stay warm and we can move around. 

In order for all of that to happen we need high [00:09:39] power. We need a lot of power. And power is just not something that exists in nature available for us to exploit and use and utilize and direct towards our needs. It needs to be channeled. It needs to be processed and channeled. And all energy consumption really is energy production, the production of places and areas and systems was where we're able to channel that energy into meeting our subjective needs.

So these are the two ways in which you can think about energy. And I think what I like about the Bitcoin energy debate is that it's forcing people to ask this the question in a very, very direct way, because Bitcoiners like their corn, they've seen number go up, they enjoy it.

They don't want to give it up. And then when they start getting guilt tripped into, well, you know, you're boiling the oceans and all of that, they're likely to stop for a second and be like, Hmm, am I really boiling the oceans? And that's why I think Bitcoin, isn't going to go anywhere, it's not [00:10:39] going to be banned by these people.

We're going to continue to have people who want to mine because Elizabeth Warren or the US government, nobody can control all the energy on earth. There are so many rivers out there and you can just put a little turbine and connect it to a bunch of miners and then sell the hashing online. You can mine Bitcoin anywhere. There's a lot of isolated areas in this world where you can hide very effectively and mine your Bitcoins. So the idea that we're going to figure out how to stop Bitcoin mining, I think is ridiculous. So what's going to happen is people are just going to have to keep asking themselves, you know, if this is such a bad thing, why does it keep happening?

And if it's such a bad thing, what are the bad things that it is actually  causing. I don't know, in the last seminar we were discussing, uh, the cost and benefit of Bitcoin. So this is going to start seeping into people's brains. That there's a trillion dollars. It was worth of Bitcoin out there being held by people or 800 billion at this point.

And all [00:11:39] that was paid for these $800 billion in Bitcoin was about $30 billion in Bitcoin. This is how much people have paid to mine this, as we calculated it in the last seminar, if you remember. So we paid about $30 billion for all of the expenses that were needed to mine Bitcoin, roughly a good estimate of how much money has been spent on mining Bitcoin and securing the network from day one, it was about $30 billion.

What has it given us? It's given us $800 billion of savings. So that's, I think what's going to start to sink in, because Bitcoin is not going away. It's not just something that you can shut down. And so people are going to start realizing, yeah, there's a trillion dollars of saving on there. And actually it didn't cost that much money to make these savings.

It's not that big of a resource spending. We made a trillion dollars out of $30 billion of spending, which isn't that much. So, then I think the other side of the question is, so what are then the costs? Okay. $30 billion were paid by people who want this. People who [00:12:39] enjoy it.

People who are happy to do it because nobody forced anybody anywhere to mine  Bitcoin or use Bitcoin. So people have done this voluntarily. So, where is the damage? What exactly is the damage? I think this is really where Bitcoin is going to come in and shine a very strong light on the incoherence and just complete nonsense on which the environmental hysterical movement is built because Bitcoin has grown as this cult of people all over the world who don't take trust at face value. 

The whole way in which the network functions is that everybody's free to do whatever they want, but everybody's always verifying what everybody else is doing. So we are constantly verifying what other people are doing, and we're constantly running numbers.

Everybody has their node. Everybody has built an entire global monetary and financial system on their laptop, just because they don't want to deal with 2% inflation at the central bank. So people are willing to go to extreme [00:13:39] lens in the Bitcoin world in order to run their numbers and verify things.

So, the more the environmental scheme pushing on the Bitcoin button, I think the more they're going to realize that they have fucked with the wrong digital currency because it's just going to force a lot of very, very, very, very rigorous people to run the numbers on exactly why should we shut down Bitcoin again?

Because it's boiling the oceans. Can you please show me where on the face of the earth the oceans are boiling? Can you pinpoint an actual ocean that's boiling or can you pinpoint an ocean that has risen or an ocean that has fallen? Can you pinpoint a place that has become uninhabitable because of temperature changes?

Can you show me where on the world's map, do we have a place that today is experiencing temperatures that are completely unprecedented by historical standards?  If you try to [00:14:39] make those testable claims, if you try and ask what is actually going on, you'll realize there's basically nothing.

There's just Al Gore and a bunch of hucksters with their PowerPoint presentations saying that in 10 or 15 or 20 years, maybe this is going to happen and maybe that's going to happen. And maybe the ice caps will melt, or maybe the polar bears will go extinct, or maybe the Maldives will disappear or maybe this or that will happen.

It's just an endless stream of horror stories that may or may not happen in the future. There's usually a lot of fudging. Like particularly if you look at the good propaganda, like they usually will never say definitive statements, like the ice caps will melt by that year.

They'll say, according to this simulation, if we don't stop, then we may witness the entirety of the ice caps melt, and then the earth will just be flooded and only places 

Track 2: I'm obviously remembering. I think, as reported in the guardian? they obviously just slip over that part. 

[00:15:39] Saifedean Ammous: Yeah. The guardian has kind of the lower level of propaganda for the sort of highly trusting population that will just believe whatever is written in the press release in the Guardian.

But if you try and get the cult leaders, people like Al Gore, it's a little trickier because all their sentences are always, you know, it may or may not, you know? And so they're never exactly wrong because maybe the ice caps melt, maybe it won't. So we're correct.

Maybe we'll have an apocalypse and maybe we won't. So give me money in case we have an apocalypse and then when we don't get the apocalypse, then you know, well, aren't you glad that we didn't anyway, and that was a small price to pay and pay no attention to my $3 billion Villa while you are enjoying your poverty with all of the new energy sources that you are being forced to So I think it's really important what's happening for the environmental movement, because they're coming up against people that can't really be bullied with stupid math. [00:16:39] That's essentially the modus operandi of the hysterical cult. And it's also the modus operandi of the coronavirus hysteria cult, which is run a bunch of scary simulations and maybe we're going to have 50 million people die.

Maybe not, maybe we're just going to have the same number of people that die from respiratory illnesses pretty much every year. But as long as you make enough of a scare story out of it, then you can get people to agree to all kinds of absurd things. But with Bitcoiners it's a little bit different and as they keep trying to press this button with Bitcoiners, it's just going to lead to more and more critical questions being asked about what are the costs of not using the energy sources that they want us to not use. And what are the costs of using them? What's going to happen? Let's exactly compare the benefits and the costs of all of these aspects of energy. And  it's a no brainer of a comparison.

If we stop using hydrocarbon energy in any sense, any meaningful sense, beyond just the silly virtue signaling of let's  just paying money to [00:17:39] people like Elon Musk and Al Gore so that their companies make a lot of money. And then we'll pretend that we're making a movement to sustainability because that's what the newspapers told us.

But in a meaningful sense, if you try and actually live without hydrocarbons, and I urge my listeners not to try this at home, if you're one of the people who's constantly harping on about the evils of hydrocarbons and fossil fuels, then yeah. Maybe go ahead and try it.

And hopefully you'll be able to learn the lesson very quickly before it gets really dark, but lesson is: if you want it to survive without these things, you're going to have a very, very, very rough time. You're going to have a very small chance of survival.

So what they're asking us, and in a sense of, you know, let's just stop in making emissions. A lot of these people talk about it as if it's like quitting smoking, Hey, you're just smoking and it's needless and it's killing the planet. So please stop smoking.

It's a bad addiction, bad habit. We need to kick the [00:18:39] addiction habit of fossil fuels. And if that's the case by all means, go ahead and try it. You'll see, you have very little chance of survival. So on the one hand giving up fossil fuels and giving up hydrocarbons is going to basically take you back to the stone age, not exactly the stone age to the 1400's, because 1500's is when we started really using coal.

So you go back to the 1400's living standards of the 1400's and the technology of the 1400's. You can't afford pretty much anything that was invented in the last 500, 600 years. And most of the technologies that we have are not going to be affordable for you. You're going to be living in existence of bare subsistence, unless you manage to get yourself a couple of hundred slaves that will work for you.

You are going to be living in bare subsistence. And you will be on the precipice of death every day of your life. Your existence will be precarious. So good luck with that. That's what is one side of that ledger. On the other hand, if we keep using those fuels and we keep carrying [00:19:39] on with emissions the way that we are, it's really not clear what can happen.

And I think it's impossible to put a price tag on it because it's all these scary scenarios that are just completely outlandish. And none of them has materialized. We've had 20 years of this hysteria now and pretty much everywhere in the world in terms of weather and climate looks indistinguishable from what it was 20 years ago, from what it was 50 years ago, from what it was a hundred years ago.

Sure. Every year somewhere gets a record in something because records are always being made and records are always being broken. That's what they're for. Doesn't mean anything. There's always a highest year of rainfall. There's always a lowest year of rainfall. So there's no clear way of illustrating what the cost of all these things are going to be, how we're going to actually be made to pay and suffer if we continue to use those hydrocarbons. Meanwhile, if we stop using them, we're going to basically be living back in the 15th century. So I think the more they continue to press [00:20:39] the button on Bitcoin, the more it refuses to yield. And the more Bitcoiners begin to ask these questions, the more Bitcoiners begin to understand it.

A lot of Bitcoiners like to justify it, well we're going to have renewables and renewables are good and Bitcoin's going to utilize renewables and to a very large degree, this is true. Bitcoin is going to actually really reduce emissions, because it's going to run primarily on things like hydroelectric power and flared methane, which when you flare methane and you use it to mine Bitcoin, you're reducing the amount of methane that goes into the atmosphere. So you are really doing solid favor for the people who are afraid of carbon dioxide getting into the atmosphere for whatever reason.

But that's really kind of beside the point because all human activity will require emissions of carbon dioxide. All living things are emitting carbon dioxide at all time. The reason that we can't buy into that frame, even though it's probably accurate that we have a lot of renewables in Bitcoin is that it will never be enough because the point is not to save the planet.

The point is to shake you down. That's what it really comes down to. So it doesn't [00:21:39] matter what you try and tell the extortionist, he's going to only be convinced by the argument that requires you to give him money. And so it doesn't really matter what kind of energy mix Bitcoin users and how much emissions Bitcoin is going to emit.

Ultimately, if we get more and more of this kind of regulation into Bitcoin mining, it's going to be done in order to benefit the kind of people who promote these regulations at the expense of the people who don't. And so they'll find the correct numbers that they need in order to get the right people paid.

And so people like Elon Musk will get paid from this. This is their entire business model in Tesla is trading with these scam tokens. So they will get paid from these things, and if they do implement something like this it's going to be a transfer of money from efficient Bitcoin miners to inefficient Bitcoin miners, more likely.

I think the more that these things are tried, the more it's going to expose the vacuity of those things. And I really think, yeah, they fucked with the wrong digital currency. 

Allen Farrington: Saif, can I just make two points on that? Neither of these are really questions, but I don't know, if people can [00:22:39] follow up on them if they want. But just on the thing about being able to track any statistics about the effects of potential environmental change. This isn't exactly disagreement, but it's a slight subtlety that I'd encourage people if they're interested in this to look up. 

And following Bjorn Lomborg.  He's famous for having written the skeptical environmentalist, which is basically like one sentence blurb. He used to be crazy environmentalist. And now he's an entirely reasonable environmentalist, but this is like 20 years ago. 

I've heard him make this point a lot more recently. Like right now  basically on Twitter several times that you can be a bit more precise about cost of these things. And you actually need to be really careful how interpret this, because there's an obvious explanation for what I'm about to say that isn't perhaps intuitive. The cost purely in monetary terms of basically environmental whatever, it doesn't even really matter what you're talking about, that tends to go up over time.

But only because wealth tends to go up over time. So If it's something like the effect of a hurricane season in Florida or whatever. That goes up maybe [00:23:39] not every year, but like there's clear trend. You can't however point to that say, oh, see, the hurricanes are getting worse. It's like, well, no, there's just more to destroy now. 

But the interesting comparison to that is that basically anything that's less tangible in monetary terms, but clearly about human wellbeing that goes down over time. So things like deaths from whatever he called, stuff like illnesses caused by whatever, they all go down over time.

Which is also basically because of wealth. That was thing number one. Do you wanna respond to that Saif? I don't know. I had something else to say about Warren, which is more just a joke. 

Saifedean Ammous: Yeah, no, I think this is a great point. All of these statistics, a lot of them are based on the fallacy that when you start measuring things from a small baseline, then you will always get a very large rise. And so 200 years ago, very few people lived in Florida because it was very hot and had a lot of mosquitoes and illnesses and tropical places are very difficult to live in without modern technology.

Then 20th century, we have air [00:24:39] conditioning and we have all of these modern technologies for draining swamps and for fighting mosquitoes and so on. And now we've got tens of millions of people living in Florida. So guess what. A hurricane today is going to ruin a lot more things in Florida that 200 years ago.

But you can see how that can be very conducive for panicking and being hysterical about things. So all of these things continued to get promoted like that, but the clear answer, which I think Lomborg also says is that if you're worried about Florida and worried about places suffering from environmental damage, the best thing you need is more development.

And in particular, more utilization of high power energy sources, because that's how you protect from it. That's how people in Florida are able to survive because they build modern houses with modern infrastructure that can withstand the storm. And if you make these things expensive because, oh, no, you know, let's raise the taxes in order to protect the environment so that we protect Florida from hurricanes. [00:25:39] I mean, you're not going to stop the hurricanes. You are just going to stop people in Florida from being able to build houses that can withstand hurricanes. You're going to make it more likely that their houses are going to be cheap and rickety and not survive hurricanes. 

Peter Young: From a kind of Rothbardian and like pure private property society perspective, you would expect  full private property and everything to be kind of calculated in an entrepreneurial fashion. But in the world as it exists today, there are obviously kind of public domains where it's possible for there to be environmental damage caused from various things like emission of pollutants. So I wondered whether you think that the project of trying to calculate exactly what the environmental impact of a particular energy is. Like what's the impact of solar energy and the rare earth's mining versus the pollution caused by coal particulates for example.

Do you think there's any way from an economic perspective, that you can come up with numbers that attempt to quantify which of these [00:26:39] is worse. If you're looking at particulates or harm to health and things like that, or is this just a completely blind alley for economic pursuit? 

Saifedean Ammous: Well, there's a short answer and the very, very long answer. So I'm going to start with the short answer, which is yes, it is a blind alley, but the very long answer is actually quite an interesting story because that blind alley was... getting lost down that blind alley was what eventually turned me onto the Austrian highway, which then shot me down the Bitcoin rabbit hole and into the intergalactic journey that we have been on for the past few years.

Really my first interaction with Austrian economics perhaps came through looking precisely at this question as I was doing my PhD. And, this is where  I pull my PhD card. No, I don't pull my PhD card. Don't listen to me because I have a PhD on this. Generally I would discount anybody's opinion with a PhD [00:27:39] on this very heavily.

So, but you know, I think the experience is quite interesting because this is really how I became an Austrian, this is how I started to think in terms of Austrian economics. I did my PhD in sustainable development and I was supposed to be writing my PhD. Well, I did write my PhD on biofuels, which is another environmental scam that is heavily promoted as an earth savior.

But it's really just a massive, massive, massive boondoggle for corn farmers and for the ethanol industry, which makes a lot of money and continuously produces shitty products that nobody wants, but they  have the political ability to continue to push these terrible ideas through.

And so these ideas continue to be pushed through. And the way that they're pushed through first obviously there's the political aspect of it. Then there's the journalists talking about the emotional aspect to manipulate the kind of people who read newspapers and watch TV into thinking, oh, well, you know, [00:28:39] wouldn't it be nice if our cars didn't have to run on ugly, dirty, horrible oil, and instead ran on wholesome, clean, wonderful corn.

And it sounds like it's clean. You know, we don't have to dig for dirty oil. We can just take all these pristine corns and put them into the car. And then the But then intellectually and academically, the way that this is done is that you'll find a bunch of  academics who will run a bunch of studies to give to the politicians and to the special interest groups to explain how actually, well, no,  giving tens of billions of dollars to corn farmers and the ethanol industry in the next five years  is actually a very good idea, even though what they produce is just the very expensive replacement for oil and an inefficient replacement and an inferior replacement to gasoline.

Somehow this is better because CO2 or, you know, cow farts or methane or whatever is the buzzword of the week. [00:29:39] And the way that that was done, and my background  was in mechanical engineering, so I came at this question with an engineer's mindset, which is we need to think about society's consumption of energy in the same way that we think about an engineer designing a car. And so when an engineer wants to design the car, you get the smartest engineer and he gets his smartest engineers. They get together, they figure out what's the best way to design the car with the characteristics that we want.

We want this car to have high speed, luxury, whatever. We think about all of those things, all of the factors. We want it to be large or small. We want it to be fast or slow, and then we optimize for them. And then we come up with them. And there's this engineer's mentality, which is really admirable in engineers and something that I really love.

And I genuinely think engineers are the smartest people in the world. I think, on average, I'd go with the engineers over any other profession and it's a very admirable way of looking at the world, which is this thing is not how we want it to be.

Here's how it would be [00:30:39] better. And then let's design the way to make it better and then let's carry it out. It's an amazing part of the human experience that we can do engineering. That we can think of a problem, devise a solution, and then go and implement it. It's amazing. And then the dangerous thing of course is when engineers turn that from looking at designing physical objects, and just try to turn that into designing society.

And that's what effectively I was doing with my PhD. And that's how I came at this realization in a very profound way because I spent years digging into these mathematical equations done by engineers on how to centrally plan the energy markets in order to achieve the specific goals that were required by policy makers of low emissions and reducing dependence on foreign oil or whatever it is.

And so in the case of most energy studies and this is very similar to macro economics, and this is how I came to realize that macro economics was a stupid [00:31:39] scam because  I'd seen the scam play out in what is called the life cycle analysis. And that's what is used in these energy studies.

And the idea here is trying to do a sophisticated assessment of the costs and benefits of a specific energy source. And this comes from the complications. We  had many years with, they would do very simplistic analysis, you know, in the eighties and nineties, a lot of the analysis was of the sort: when you burn the oil, it emits this much, whereas when you burn the ethanol, it emits that much. So this is better. But then of course, that's not a fair comparison because the production of the ethanol and the production of the oil is also part of the process and their transportation. So you want to include all of the emissions involved in the lifecycle from, as they call it from well to wheel.

So from the point that you dig the oil out to the point where it moves the wheel and burns into the atmosphere. [00:32:39] You're trying to calculate all of the emissions or costs or oil consumption or whatever metric you're interested in. So that's kind of like how it works. And this is very similar to what is called dynamic stochastic general equilibrium modeling in macro economics, which is something where a lot of macro economists have wasted a lot of years of their lives over the past 50 years or so building these gigantic models where they try and simulate the economic system entirely using a bunch of equations where each industry will have it's inputs and its outputs, and you measure the impact of changes and policy proposals that you have. You can look at the impact that they're going to have on the world by extrapolating it, by analyzing according to this giant calculation. And it's just an enormous, enormous amount of calculations that are being done in order to basically calculate, as it becomes more and more complex, essentially the question [00:33:39] boils down to if you ran the world with 0% ethanol and 100% gasoline, how much emissions would you get versus as if you run  the world with 10% ethanol and 90% gasoline versus 50% and 50% for instance.

So you'd stimulate the entire world economy in all of these scenarios and then measure the emissions from everything in all of these scenarios. And it's similar to what macro economists try and do, but macro economists do it with inflation and unemployment and GDP and aggregate demand and all these metrics.

But energy people do it with energy systems. People do it with energy expenditure with emissions and with trying to minimize things like dependence on foreign oil and so on. So you run all of these simulations and then this is the blind alley now. We're getting deeper and deeper into the blind alley. So initially you think let's see if this biofuels thing works or not. I had my reasons to be skeptical because I had studied mechanical engineering and I understood the basic concept of power. And [00:34:39] that you needed high amounts of power to be concentrated in order for a car to run.

And I just couldn't see how corn could compete with oil in that regard. But nonetheless, I went along and I started studying it. Then I started thinking, this is a simple engineering question. So all we need to do is just run the numbers and calculate it. So you start thinking about how to run the numbers and then the plot thickens and suddenly you're talking about life cycle analysis, where you're looking at the entire planet on 5% oil versus the entire plant is on 10% I mean corn, and then you're trying to think about all the things that you need to include in your calculations. And that's when it starts to get really, really dark very quick, because you're thinking, okay, well, where are they getting the corn from?

So what's happening to the land that is now being farmed for corn. What was it doing earlier? So what's happening to the impact on emissions from land use change. What is happening to the impact on emissions from corn changing. What happens when the price of corn shoots up because people are [00:35:39] putting it in their cars and then people who depend on corn to eat have to pay triple the price, and then they start starving and cutting down forests.

What happens when you raise subsidies on biofuels and then people start chopping down the Amazon in order to grow sugarcane and corn and soy in order to make all of these things. How do you calculate that? And of course, the more you think of those things, the more you start spontaneously discovering Mises's calculation problem without having studied it.

So this really was Mises's calculation problem, or Hayek's knowledge problem. And it was beginning to dawn on me without me having ever heard about the Austrians. Well, not entirely true. I'd heard a little bit about Hayek. . But then around that time I was listening to a podcast called "Econ Talk", which had a lot of free market economists come on.

And I started reading some more and more free market perspectives on things. And then I started reading, I remember Karl Popper and that's when it [00:36:39] really began to click that yeah, this is particular Karl Popper's "Open Society and its Enemies". That's when it started to click to me that, yeah, this is just megalomania.

My PhD is just me being a megalomaniac, thinking that I can run the entire planet. That I could just tell the world, you know, I figured out what would happen if you did this and what would happen if you did that. And so everybody in the world now, listen to what I have to say and run your cars on 28% ethanol concentration, whatever. exactly what Popper describes in that book, "The Enemies of Open Society". In that book, he discusses Plato. He discusses H egel and he discusses Marx and he explains how their ideas are these top-down ideas, which want to remake human society and supersede human will in order to impose the visions of above. And when you start thinking about it this way, you start seeing it in your PhD, you start seeing it in the work that you're doing, and you realize that this is nonsense. 

There's no way to tell what the world is going to look like when you [00:37:39] think about all the knock on effects, all the complex second and third and fifth and hundredth order effects of moving to a world in which something so drastic as 10% of oil consumption comes from corn, it's going to have an enormous amount of consequences and to be able to figure out what those consequences are, you need to get into the individuals. You don't know what people are going to do. You don't know what Indonesians are going to do when they're being offered triple the price in order to buy palm oil.  They're going to start chopping down trees. 

You don't know what all of these individuals all over the world, how they're going to react. So trying to simulate what's going to happen and to put numbers on it is impossible. And the more you think about it, eventually, so then you read Popper and then you read Hayek. And my PhD at that time, it was still at the Hayek stage so I was still obsessed or fascinated by Hayek and the knowledge problem. Over time I've come to see that I think that Mises critique is more powerful and more coherent than Hayek's. And they're quite similar in many ways, but I think there are some distinctions that make Mises's [00:38:39] better critique. And I think ultimately to go back to answer your question Peter, the only way in which calculation happens as Mises explains is with money and with prices and by the individual concerned. Other than that, you're not doing calculation.

You're just basically making guesses in the dark. In order for a person to be able to figure out what they want to do, how they want to act, what is the better course of action, there's no central body that can decide for all of us if this form of energy is better than that one. 

It's an individual calculation that each person takes themselves. And no other kind of calculation is possible other than individual calculation, because only when the individuals are able to calculate the costs and the benefits of their actions, only when they are the ones who experience the opportunity cost of their decisions, only then can they know what the decisions will entail. And the calculations that were being done by somebody like me sitting at a university and running a laptop, are just completely irrelevant because no individual anywhere is [00:39:39] ever going to make their decisions based on these general overall macro assessments.

 I mean, maybe they will say that they will want to do it like this. A lot of people think, oh, well, this new study shows that sniffing glue is more environmentally friendly than eating food. And therefore I'm going to go on a diet of glue from now on.

There are people who think like that, but most likely they virtue signal about this but when push comes to shove, they're not just going to go and eat the glue or sniff the glue. They're going to eat actual food, most people at least. And ultimately what's going to shape economic reality as the Austrians explain is the action of individuals and not the plans from above. Society is not a car.

It can't be designed. And if you try and design it, you're not going to be able to put people into place like you can put parts of a car into place because people have their own wills and they're going to, at any point, at every point they're economic calculating [00:40:39] machines, they're going to look at all their options and all of that opportunities and all that you're doing is just distorting these calculations for them and making life more difficult for them. But just because you make life more difficult for them, doesn't mean that you can run them like chess pieces. You can't just treat humans like that in a system and expect them to function like that. So all of this is essentially centralized calculation and it doesn't make sense because only individual calculation works because only, and I think this is perhaps my own twist on it, based on my analysis of reading Mises, when Mises says, you can't have calculation in economics, he says, there is no calculation in economics because there are no constants in economics, then he says it's only the individual who can calculate. And I think the way to reconcile those two sentences is that the individual is able to calculate because the individual themselves is the constant in the calculation.

In other words, when I am the one thinking about making a choice between A and B, I am the constant. I am the constant, because I'm the one who's going to experience A or experience [00:41:39] B. And I can compare the two and I can know according to my own subjective measure of utility, my own subjective preferences, I can distinguish between A and B and between whether I like this one or that one more.

So when I am the constant, I know what is better for my life. I know what is better for the things that I care about. I hold my preferences as the constant in the analysis. And then I analyze everything else in the world. Now, when you're doing calculation from a central planners perspective, there's no constants and the individuals themselves are not constant because you're not any of those individuals or you're just one of those individuals.

So you can't figure out all of the things that they balance. And  don't have any constants on which to base your calculation. And so, as a result, I'm entirely and 100% convinced that all of these studies mathematically are just bunk. And the only way you can take them seriously, is if you're paid to produce them, and then you have a vested interest in taking them  seriously.

Or if you're one of the people who reads about them in press releases and assumes that [00:42:39] under the hood professionals know how to make that car work. They know how to run their models to come up with the right answers. But in fact,  it's very different from a car engine. And I think there's an enormous distinction between people who are working on engineering actual things that people use and people who are trying to engineer human society. The first are able to produce things of value.

The second are essentially just parasites finding justifications for why to try and impose their will on others. That's what it really comes down to. So I think there's no place for these kinds of centralized calculations and modern economics, of course has built a lot on this, not just in terms of energy, in all kinds of things.

For instance, the Environmental Protection Agency, they are supposed to regulate the environment, which is another wonderful hubris tech meme from the Fiat century, that as if the environment needs a government body in order to take care of it. And what they do is they'll decide whether they want to let you have a license for your factory or not by [00:43:39] measuring the cost and benefit.

And when the cost and the benefits include killing people, they just put a number on people's lives. That's how they do it. And last I checked, I think the value of a human life was around six and a half million dollars, but that was back when I was in grad school. So I presume, well, I shouldn't say that human life has gone up.

I should say the dollar has gone down. So currently the value of human life is probably higher. So what this means is that if you submit a project that says we're going to be polluting the air, to the extent that we're going to be killing 10 people a year in this neighborhood, and we're going to cause a few people to lose this many years of life expectancy, they'll measure the years of life lost in terms of their value,  and they measure the value of the human life in terms of the average lifetime earnings of the individual.

And so if you kill somebody who's young and then you have lost all of the six and a half million dollars, because [00:44:39] that's somebody who hasn't worked yet, hasn't earned any of his six and a half million dollars. But if you kill somebody who's old, then that's okay. So it's not a big price tag. So if your project is going to kill a few old people with pollution but it happens to generate money to the city because tourists come in or whatever, you export stuff.

Then they run the cost benefit analysis and then figure out yep, 10 people a year dying is a price well worth paying for all the extra tax revenue. This is kind of, if you're making centralized decisions, this sounds grotesque and criminal and it is. But I think it's important to understand that it's not grotesque and criminal just because it's a bunch of weirdos being grotesque and criminal, it's grotesque and criminal, because that's the inevitable outcome of putting yourself in a position where you run the numbers for everybody.

And you want to tell the world how to live their life. And you want to tell the world what is best. And you want to be the one who runs the calculations for the world on what they should do and what they shouldn't do. [00:45:39] So it's the inevitable outcome of this that you're going to be in a place where you get to decide who dies and who lives and you get to pull the trigger.

And here again, if we had a free market system where we didn't have these government bodies, it's not like the factory would just be able to go ahead and kill everybody. No, they can't. If their factory is polluting other people's property, then it's transgressing against other people and that's just considered the form of aggression.

And so people would be justified in fighting back and people would have a legitimate right to fight back against this and they would be able to pull it off, to prevent it from happening. When you impose these kinds of centralized  bodies to protect the environment, inevitably, they're just going to run a bunch of stupid numbers that makes no sense. And guess what they're going to conclude. They're going to conclude whatever these special interests who happens to pay them the highest amount wants. So all of this centralized  environmental math, I think is just complete garbage. [00:46:39] Ultimately, the only mechanism for making decisions is individual.

And the only mechanism for making economic calculations is individuals, whether it's an individual person or a firm. And that's really the only thing that we've got. And people keep coming up with stupid problems that require collectivists solutions because they want the collectivist solution. There's an agenda there to have the collectivist solution. That begs the question that leads to that conclusion always. Yeah, so I hope that answers your question, Peter. 

Peter Young: Yeah, it's very difficult. And I was kind of laughing there when you were talking about dynamic stochastic equilibrium models because the time that I ended up doing a sort of deep dive into that subject was around the UK's Brexit vote. Because I don't know if you remember that there were all of these like, institutions coming out with various different models showing that Brexit was going to be this huge disaster for [00:47:39] GDP and huge disaster for unemployment and was going to result in masses of inflation. 

And I ended up looking into all of these models and looking at their forecast. And you mentioned earlier in this podcast that people like Al Gore are quite clever in that they don't actually make specific forecast and say, this is going to happen. But this is one instance where they made pretty falsifiable conclusions. It's pretty rare because when you look back it's all probability of this probability of that, but because there was such political establishment so pro-EU they were really keen to show that this was going to be a disaster. So a lot of the practices that they normally have about making predictions kind of went out the window. 

And there was this UK treasury report that was based on one of these stochastic general equilibrium models that you mentioned. A specific kind of model called a vector auto regression model. And they modeled two scenarios.

One was called a shock scenario. One was called a severe shock scenario. And in this shock [00:48:39] scenario which was supposed to be like the least bad outcome after two years they predicted that unemployment would increase by 500,000 people, that we were going to have a GDP four by four in four quarters.

And the inflation was going to be 2,13% higher or something after a year. 

And they actually said, like, this is all going to happen within two years. 

So you can go back and you can look at the data and it's all just like spectacularly wrong. Like it says that unemployment was going to go up by 500,000, it actually fell by 290,000. 

They said that there was going to be a fall in GDP every quarter for four consecutive quarters. And there was strong growth in every single quarter. And the CPI inflation rate was just way lower than they forecast. So. That was a bit of a tangent, but I just think it [00:49:39] demonstrates something that you were saying about how people tend to not pin themselves down too much regarding what these models will actually predict. 

But then when they, on the rare occasion, they do and there's a lot riding on them sounding convincing they just spectacularly fail. 

This data is all available for everyone, but of course, no one talks about that forecast and the fact that it was completely wrong.  People aren't really interested in these sorts of stories where the August's institutions have spectacularly come up with a wrong answer based on their modeling.

Allen Farrington: I think there's a, there's something else in there too Peter, which is maybe like, trust is the best way to frame this, that whether it's the boiling the oceans and Saif predicting that that meme on its own will orange pill people who are curious about it, or whether you with Brexit or whether like anybody with anyone of these ridiculous models.

What red pills, them or orange pills them is the one time they actually look into [00:50:39] it. If you make what you stop trusting people and you try to understand it or say for this PhD, right. As soon as you actually make the effort to understand it, you inevitably conclude is bullshit. 

Peter Young: Yeah. I mean, 

I went down a similar road with this definitely. I was in a very different place in 2015/16 when all of this was being discussed. 

And this was one of the key debates that really changed my mind in a kind of similar way to Saif story with energy. So I think that's a good insight. 

Saifedean Ammous: Yeah, absolutely. It's like a car that all the owners, whoever opened the hood returned the car immediately. Like If you've ever opened the hood, you see that there's radioactive snakes in there and you just don't want it in your garage and you just return it. But as long as you don't open the hood, you just find yourself decaying and you see all of your life falling apart because of all the radioactive stuff, but you just don't know why.

It's quite shocking actually. And it's very common in macro [00:51:39] economics. There's so many stories about just how pathetic macro economic predictions are and in energy markets predicting oil prices is particularly good one. So if you look at the international energy association and I have this in my PhD, when I was trying to explain... 

So for the lifecycle analysis, I'm trying to compare the world over the next 20 years given we run on gasoline versus a world over 20 years where we're running on 20% ethanol and just one tiny little factor, one out of millions of different factors that you would need to include to have a proper calculation of this is the oil price.

And just think about what the oil price has done in the last 20 years. And think about trying to have predicted it over the last 20 years. In 2008, the oil price was $140 a barrel. And in 2020, it dropped to $0 a barrel. So now imagine me sitting there in 2004, 2006, trying to predict the next 15 years of oil prices [00:52:39] and saying, yep.

You know that it, can you imagine somebody coming up with a predictive model that says yep,  1 40 in 2008 and then zero in 2020? Uh, obviously absurd and you look at the US what's it called the department of energy or energies authority or something, energy information authority.

One of these bureaucracies that get paid a lot of money to write a bunch of reports that nobody reads. If you actually do read their reports, you'll see every year they make a new projection for the oil price for the future, and then somebody got them all together and plotted them. And it's, it's absolutely amazing, you know,  it's like a, just the big, giant flower of arrows in every direction.

And then the price is always managing to avoid all of their predictions, just going exactly where they don't think it's going. So this is just one tiny metric and the oil price. Imagine thinking about all the millions of other things that you want to include, of course, it's completely unworkable.

And of course, [00:53:39] there's a part that where you start thinking, oh my God, we will never be able to calculate this. And humanity is doomed. We are never going to find out what's better; oil or ethanol. And then you start understanding why you can't do it. And then you start understanding economics, which is ah well, we can't do this because only individuals can do the economic calculation.

And guess what? That's all we need anyway. We don't need a central planner. The central planner needs the world to think that the central planner can sit there and figure out what's the correct allocation, but the world doesn't need that. People just need to be able to make their own decisions and that's it.

And making your own decision will allow you to get to the best outcomes that you're looking for and will allow you to calculate and compare the costs and benefits of different choices and come up with the one that suits you best. It's a very, very different way of approaching the world from just resigning yourself and accepting the very freeing idea that you can't control the world.

And that in fact, the problems [00:54:39] of the world don't stem from the fact that people are unable to control the world. In fact, they stem from the fact that they are trying to control the world and failing. And if they would stop, that would solve the majority of the world's problems.

Allen Farrington: I have an even better example for you of the complete futility of trying to predict this kind of thing, because the only thing I dislike about yours is that I don't think anyone at the department of energy actually has a worthwhile incentive to get that right.

If anything, they probably have incentives to get it wrong. I don't know if this is really going to be that meaningful to most people, but I promise you, it is a fantastic example. So in equity markets, basically, which is what my profession is  investment banks do, what's called  sell side research. It basically just means that they write reports on companies that they then try to get investors to pay for. And they will always have a price target. And the funny thing about the price target is that you would think if this market worked well, well, you know, whatever that even [00:55:39] means, like your record of being accurate about the price would influence you know, it would have like a reputational benefit or cost and then people would, or wouldn't pay for your research.

But every now and then somebody does sort of like a meta study or something that is very similar to the one that you just mentioned. And looking back over like the past five years of a whole bunch of different investment banks predicting a whole bunch of different equities, blah, blah, blah. I mean, they they come up with this like glorious chart, which is exactly the same thing, which is just dots everywhere. 

And there's like no pattern. There's no nothing once that, like there's absolutely nothing you can read into any of their predictions and yet they're all still in business. It's crazy. 

Saifedean Ammous: Yeah. It's absolutely astounding. Like how these bodies continue to just get funding when just look at what they did five years ago. I mean, it's amazing, to make those reports happen. You've got teams of tens of very smart people crunching at keyboards all year long in order to come up with these estimates.

And then, three months later, [00:56:39] the model's completely been destroyed by reality because oil price has gone triple the highest estimate that they had ever put as their upper bound or a third of the lowest estimate, and then all of the complex things that follow just are completely invalidated.

But yet they try it again and they get more funding the next year and then the more funding the year after. And they keep making more and more of those reports and they keep putting them in the press releases and they keep influencing discussion. And in universities, and this is, it's an enormous leap of understanding when you realize, no, I'm actually just surrounded by a bunch of clueless people who are reading reports for living and writing and reading reports for each other for a living, with no tenuous link to reality whatsoever.

There's very little linking anything that happens in the reports to the real world. And there doesn't need to be, it's all fiat at the end of the day all these people live in Fiat world and in fiat world results are optional. 

Allen Farrington: That's a good point by the [00:57:39] way that I should have mentioned this. That is precisely the reason why this happens in investment bank equity analysis, because that is prime Fiat world. It is right next to the money pump. So it really doesn't matter in the end.

Saifedean Ammous: Exactly. Yep. It's not about being productive.

It's not about getting things right. It's about engaging in the rituals correctly. And if you do the rituals correctly, you get funded. It's amazing just how much junk there is in the world of academia and in science research and in all these government bodies that pretend to be all  scientific.

It's just an enormous amount of people that are just paper pushers really that are just continuously writing irrelevant stuff, but continues to getting promoted because that's what pays basically.

Allen Farrington: This is following on from my last example by the investment bank predictions. I remember so clearly. So just when I started, there was a very senior guy at the firm who explained in the way, the very simple way that I'm invited to explain why you can't take this even remotely [00:58:39] seriously. So let's see if I can like, okay, so this is what it looks like, right? So that's supposed to be like the price over time. So it starts in Iowa and then, you know, the bull case it goes up a bit the base case it doesn't really do anything. The bear case it goes down. Right. 

But then if you also show the previous price history, it looks like that. So this probably bullshit. 

Saifedean Ammous: Exactly, exactly. This is exactly what it looked like. There was always in the past is so noisy, but you cannot imagine the complexity of the future. And so all that you can come up with, no matter how complex your model. All that you can come up with are roughly straight lines sloping upwards, sloping downward, being flat somewhere along that, there's no way of being able to actually predict the things that are going to cause the price to spike in 2008 and the price to crash in 2009 and the price to go to zero in 2020, [00:59:39] these things are what ended up making the shape of the chart.

These are the things that end up destroying oil businesses, or making fortunes for people. And they are always unpredictable for these charts and for the people who draw them. 

Allen Farrington: I think it can actually be even funnier than that. If they're like, If they're really quite stupid, because what they'll say is they'll, they'll look at everything. They'll have like a backwards looking explanation of every previous spike. Right? They'll be like, okay. With this weird bet, like we know what caused that.

That's weird, but we know what caused that. And then, looking forward and be like, no, it's cool.

We got variables for all of them, so we've covered it. 

Saifedean Ammous: Exactly where we protected. We were fully protected from the dangers of the previous war. 

Attendee: If You don't mind, if I share something Saif this is kind of my first time here. I really loved your story of discovering Austrian [01:00:39] economics. Kind of through your phD. It reminded me of some years ago, I watched the interview of Walter Williams and he shared how he became more of a free marketer and to bank his story short, his first job, I believe it was after he got his master's or something like that was working for a government department studying economic trends in Puerto Rico and there was this change in employment and unemployment. That's kind of what he and his team were studying. 

And they were tracking this law I believe it was minimum wage. And unemployment was going up and his other coworkers for same well that's maybe because of this hurricane that went through and destroyed the crops. 

And something that Walter Williams later came up with is like, hey guys, I have the solution to know if it was the crops or not. Let's count the crops before that were standing, before the hurricane. And then everything that happened afterwards how many crops were left standing [01:01:39] after the hurricane. And he said that his research partners. I'll just kind of looked at him like, oh crap, this man just cost us are good jobs. 

Because, they had that economic incentive to reach a certain conclusion regarding the minimum wage law. And I don't know. I just, I felt like there's so many good people out there. I think it's crazy to think that there's so many economists who are persuaded by those things and just get kind of stuck in that thought.

I don't know what I'm trying to say, I guess don't think like you do and or like I said, I've reached the conclusion. Like all this is kind of bogus. We need to consider all the variables. I dunno, Saif you think as like what you're doing now, compared to what you could be doing if you went along with the, I guess more mainstream line of economists, do you feel like the economic incentives are so strong that they're able to build a better career than you can [01:02:39] doing what you're doing now? 

Saifedean Ammous: No, I think Bitcoin has fixed this. I think this was the case up until a few years ago that without Bitcoin it was essentially submit or die and you just had no where to go, like you couldn't make it in academia if you were asking uncomfortable questions. I mean, the way that it works is it's not like it's,  some evil conspiracy is just...

It's like you go to the DMV and you go to the workers in the DMV and you try and tell them, hey you know, you should think about your job more seriously and philosophically. And you should think about the philosophy of what you're doing with the way that you hand out your licenses and fines and whatever.

And they're just a bunch of busy people who want to finish up work and go home. They don't want to stay afterwards to discuss the philosophy of things. They just want to do all the work that is required of them as quickly as possible, and they don't want to do much more.

And that's exactly what academics are like. Like it's just, they're out there, they're doing their job and their job is to get unreadable papers [01:03:39] into unreadable journals so that they can tick the boxes of their colleagues and then get promoted. And that's what it comes down to. So there's no intellectual depth to the job in any serious sense. You don't have people who are having a profound or important or life-changing debates in academia any more than you have it in the DMV, because it's just a bunch of people whose incentives are to produce these papers. And we've discussed this in detail in the seminar where it was me and Allen, Allen Farrington's adventures with fiat intellectuals. And I talk about it in the Fiat standard in the chapter on Fiat science, in that it's, under Fiat science has turned into a competitive sport for the production of academic papers.

And the content is irrelevant. It's just about  ticking the methodological, grammatical and politically correct boxes. And then you're good to go, your paper gets published and then you get promoted. So it's not like there's going to be an evil conspiracy to come after you and destroy you if you [01:04:39] don't toe the line. It's just highly competitive field of highly overworked slaves. And if you're going to try and ask them about  things that are above the pay grade of just churning more and more papers, you're just wasting your time and you're wasting their time and they have no interest in talking about it.

And you're not going to get anywhere. It's kind of pointless.   There's no way that you're going to get anywhere. You're not going to be the more successful person in the department. There's no question about it, and it doesn't matter.

There's no quality to the work that can make a difference. It's all political. So it's not like you know what's right. And then you can write the most brilliant PhD thesis and then prove them wrong.  That sort of shit doesn't happen in academia. Nobody proves anything in academia.

Everybody just writes a bunch of papers and everybody debates all of these things vigorously but then everybody agrees that everybody needs more funding. And then they go home and they get more funding and that's how it works. So if you play along with that, then you might be able to secure enough funding [01:05:39] to keep yourself going and pay your bills.

If you don't, you're not going to so that's how it is in academia, really. And it's only, I think that realization only sets in, I think in the last couple of years, when you're doing your PhD. Before that most people still have the kind of idealism where, I'm going to go in, I'm going to do something and I want to produce something of value.

And I'm going to discover something of value. I'm going to fix this or fix that. And then you're thrown into the deep end. And you just need to keep your head above the water. And that means churning out as many papers as you can, and not thinking about anything profound, you're not there to fix the world.

You're not there to save anything. You're there to get this many papers into this many journals in this time period. And the only way to make it is to have like an athlete's obsession with it. You're like an athlete that has to wake up every day and train on getting all of those papers.

So, there's really no place for intellectual debate or intellectual stimulation. And I'm not [01:06:39] saying this as if it's a Soviet system where they purge dissidents. It's just, the money comes from above. It doesn't come from value creation. So there's no value for the institution to encourage truth.

There's no value to encourage value creation. There's only an incentive to encourage paper churning. And I think that's the case across academia, more or less. And Bitcoin fixes this. Bitcoin is  the only way that you can fix this because basically well, I think it fixes it intellectually because it shows that another world is possible and it fixes it individually for individual people because individual people like me can just snap out of their jobs in the Fiat chump-a-tron and get into an actual productive business where you serve people, provide them value. You don't spend your life on publishing garbage papers in garbage journals that nobody reads. You write things that people actually read. And [01:07:39] you interact with people in a way that provides them value and they pay you money.

And then you can keep that money in Bitcoin and you can save it and it appreciates. It wasn't easy to do this before the internet, and it's not just Bitcoin. And a big part of it of course, is the internet, which is allowing us to have this seminar at this point. And you know that this is my substitute for having a university job is that I do this right now.

So the internet facilitates this. Bitcoin facilitates it in terms of facilitating payments, which in my case, I've moved a lot over the last couple of years. And there was a period in time in which I, my website was unable to handle Fiat payments. And I went along and I could keep the website going because I could charge Bitcoin only.

So there is an element of Bitcoin fixing it operationally, but it also fixes it intellectually by showing us that the world of Fiat is built on lies because fiat macroeconomics is all garbage. So what else is garbage out there? And of course it fixes it because it appreciates over time.

And so people who get into Bitcoin, people like me who get out of [01:08:39] Fiat and get into Bitcoin are in a very different position from people who are in Fiat who are constantly holding onto money that is depreciating and constantly need to continue to earn more money in order to maintain their standard of living.

When you snap, when you get into a hard money system, you have savings and the savings appreciate with time. And that makes you basically uncancellable. You are able to speak your mind because nobody can confiscate your savings. Nobody can kick you out of your job when you're working freelance and Bitcoin affords you this freedom, you know, and you're not going to get unbanked.

So I think it's going to be an enormous transformation in this, I think the last year with all the lockdowns that happened.  

I think it's far more likely that we're going to witness things change and improve over time and we're gonna see more and more efficient educational system where you don't have to get into a couple of hundred thousand dollars of debt in order to learn a useful skill. You can learn a useful skill for a few hundred dollars a [01:09:39] year online. I mean, all the knowledge that you want is available for free, and then you can get specialized instruction and you can hire specialized teachers for a few hundred dollars for a few hours whenever you need them. And you'll be able to get an excellent amount of instruction. So I think it's going to revolutionize education. 

It's going to extremely discredit, you know, Bitcoin and the internet in general, they're going to revolutionize education and they're going to extremely discredit the Fiat intellectual academic system because it's all built on bogus. And people are going to need them less and less because they're not... their credentials are valued less and less and less, the amount of money you need to get a Fiat degree is enormous. And the value of the Fiat degree is very, very low. And I think that's just... it's a recipe for irrelevance which the fiaters have been doubling down on, so good luck to them. 

 All right. Well, thank you very much guys for joining. This has been a lot of fun. Bringing back all the memories, I'll try and dig up the [01:10:39] graphs that I was mentioning from my PhD, if I still have them. And yeah, I'll see you guys next week. Take care.