123. Adventures in Late Stage Fiat: Libya with Nasr El-Hadi

In this seminar, learners at saifedean.com discuss the current state of the fiat monetary system as the world experiences the dollar strengthening and other fiat currencies weakening. Regular seminar attendee Nasr El-Hadi discusses the history and the current state of the Libyan monetary system, where the central bank has split into two central banks each issuing the same currency with a different signature, with hilarious and disastrous consequences. Find out what happens when fiat 'hard forks', and how bitcoin and stablecoins are serving as a lifeline for Libyans who have no functioning monetary or banking system in this incredible adventure in Late Stage Fiat! Nasr El-Hadi is a Libyan bitcoiner living in London, and his twitter is @NasrElhadi.

Transcript

Max: [00:02:51] I was wondering what to take about what's happening with the dollar right now, cuz like I heard a lot of takes with the dollar milkshake theory and stuff like that one or two years ago or something. And yeah, it seems that now the dollar is moving quite rapidly and yeah, just curious what your thoughts on this are.

Saifedean Ammous: Yeah, I said this in The Fiat Standard and I've said it many times before on Twitter, the way that I see fiat currencies as essentially they're all either the dollar or the dollar plus country risk. Every other currency out there is just a crappier dollar. Every other currency is just a dollar with less liquidity and more country risk and more inflation risk. This is all national currencies. 

Perhaps, there are a few marginal cases that you could say have a little less inflation [00:03:51] risk than the us dollar perhaps, but for the vast majority, and you could argue maybe not - because they have more systemic risks in other ways, but fundamentally for the vast majority of national currencies, they're all just crappier dollars. And they're less liquid dollars, so they have less of a market and they're less spendable abroad.

To use the analysis of The Fiat Standard, they're less saleable across space and time. It's harder to send any national currency across the world than it is to send the dollar. The dollar is the easiest currency to send. If you wanted to transact between two different people in two different countries, you're more likely to do the transaction with dollars.

Even if you are going to [00:04:51] have two countries that don't use a dollar, they would likely both make a transaction in the dollar, because let's say Brazil wants to trade with Indonesia, it's far more convenient for both of them to have a dollar balance and exchange the dollars.

And so domestically in Indonesia, you exchange the Indonesian rupiah for the dollar, and then you exchange the Brazilian shitcoin, I can't even remember what it is now. I think it is real. They've gone through so many, they had cruzeiro and novo cruzeiro, and then they had cruzado and novo cruzado.

And now I think they're real and novo real, I have no idea. Yeah, you can't keep up with all of the hard forks of the fiat shit coins. It's almost as hard as regular shit coins, free market shit coins. So [00:05:51] the best way to get rid of your Brazilian money to buy things from foreigners is to sell your Brazilian money for dollars.

And the best way to get rid of your Indonesian money is to sell it for dollars. So it's the most liquid money. And so when there is a financial crisis, when there is a shortage of liquidity, this is the time when people don't want to take risks. This is the time when people want safety. This is the time where people are not looking to increase their wealth. They're just looking to preserve their wealth. 

In these times the demand increases for the thing that is the most liquid, that is the most salable. This is really the money. And in this world today, of course it is the us dollar. It's still the us dollar because it's got far more liquidity than anything else.

And it's got far more saleability across space than anything else. It's easier to send it across space than anything else in fiat, at least. Bitcoin arguably has better saleability across space and better [00:06:51] saleability across time because nobody can increase its supply. So this is the long term proposition for Bitcoin is that it's ability to hold onto value in the long term and its ability to move across the world.

Salability across pace and across time are going to give it an increasing share of the market for money over time. But at this point we're still, at its all time high Bitcoin was still roughly around 1% of all of the world's money. Currently it's closer to 0.4% of all the world's money.

So we're still a long way off from being the most liquid money, the one that people would run to. And so that's why they all run to the dollar. And so that just means everybody around the world is buying dollars. So really if you wanna understand just how bad things are, Americans are complaining about 9% CPI print, now [00:07:51] clearly obviously inflation in the us is much higher than 9%. 

The inflation in the correct definition is the increase in the money supply, which is running at around 20% a year these days, I think. Who knows though, cuz we lost count at this point. Nobody really knows how much money there is.

But it's running on somewhere around 10, 20% or so. And the increase in the prices of the desirable goods, not the goods that are included in the CPI, is much higher than the goods that are in the CPI. Because the CPI is selected by the people who have a very strong vested interest in showing that the number is not very high.

Because of this, you can see that things are getting very bad for Americans. In spite of the fact that all of the world is buying dollars, people in Turkey and Brazil and China [00:08:51] and all over the world are trying to get around capital restrictions in order to buy more dollars.

And that's increasing demand for treasuries and increasing demand for dollars and increasing the value of the dollar. And so then think about what is happening to all of the fiat shit coins, the dollar plus country risk fiat shit coins. The Turkish liras and the Brazilian whatever it is, and all of these things. The people in those countries are trying to dump them as much as they can in order to move to the dollar. And the dollar is still losing value at somewhere around 10, 20% per year. So imagine how bad it is for people who are holding onto the fiat of the rest of the world.

It's terrible what's happening. It's so terrible that it makes the dollar look good. [00:09:51] Americans have it good. Americans are sad about their money, but for people in Lebanon, if you managed to have had dollars for the last 2, 3, 4 years, instead of the local shit coin, you did very well for yourself.

And of course, dollars doesn't mean dollars in the bank system because dollars in the banking system are as good as your national currency basically. Overall, yeah I think it's gonna mean a lot more money going to the US dollar, but in the long run it still doesn't change the dynamic.

We have these at the beginning of financial crises and recessions where the dollar strengthens, because inflation in the dollar declines, people will fly to safety. You have [00:10:51] oscillations, but the long term trend cannot be reversed. Thanks to the inspired political leadership all over the world, but also in the US that has achieved levels of Keynesian understanding should not even be legal.

They have managed to convince themselves very well that so far with all of that's happening, there's very good consensus among economists that - oh this inflation so far has been a freak, nobody expected it, and it wasn't caused by our policies and it was because of Russia and respiratory illnesses and all kinds of different things that just happen from the sky and nothing to do with your money, your money isn't losing value, it's just [00:11:51] things that happened. 

No matter how much the world wants to buy dollars in the long run, they are no match for the ability of the US government to print money. So just yesterday we heard there's a new news item where, and they're saying apparently the us government wants to give $650 billion to the IMF, or essentially the IMF wants to give out $650 billion to developing countries to because of the impact of the war between Russia and Ukraine, and I think the pandemic relief and so on. 

And this is a courageous enormous step forward in the level of this kind of support. It's just basically adding 10 X. I don't really have the statistics on me, the last time this kind of thing happened, [00:12:51] I would imagine, when the when the US Congress voted to give the IMF a lot of money to help out the developing countries, I don't even remember when this would've happened.

I can't even guess a year, but I'm going to guess that it was roughly 10 X smaller. So right now we're talking 650. I wanna guess the last one was about 45 or something like that. 

Seminar participant: Is that number a coincidence, or does that just happen to be what we seized from Russia in their reserve? 

Saifedean Ammous: Oh, interesting. Is that what it was, 650? 

Seminar participant: Maybe it feels like blood money to us and we're gonna now, yeah.

Saifedean Ammous: Oh, interesting. I did not know that. 

Seminar participant: Yeah, I feel like that's the number I've heard thrown around is that's what we seized from there. 

Saifedean Ammous: Yeah. In a sense it's worth thinking about the dilemma of US policy makers at this point.

And this is the catastrophe that is the US dollar. It's just such a terrible thing that just doesn't work. In order for global monetary system [00:13:51] to work in order for people to be able to trade internationally, everybody needs to have dollars, but then they issue their own currency, and then because they do inflation like the dollar does, they don't have the global reserve currency.

So then when there's a bank run, people run on their currencies to the dollar. And so at that point, the us policymaker is just witnessing the value of the dollar go up and the value of everything else in the world crash. If the US wanted to be sadistic about it, they could just starve the entire planet by just watching as everybody else's currencies get destroyed while they force them to stay on the dollar based system and force them to move away from any kind of other working alternative around, gold or something else.

Fortunately, they're not that sadistic about it. So they force them to stay away from alternatives, they force them to [00:14:51] stay in the US dollar, they force them to sit on this sinking ship because it's profitable for them. But to their credit, when the ship comes sinking, they will send some lifeboats.

And so when the fiat dollar Ponzi comes crashing down, as we see right now, and everybody's running to try and get dollars and get out of all of the dollar backed instruments, the US government has an enormous amount of dollars that it can use and pay loyal central banks and help countries that are in financial crises.

It's not entirely the case that it's just the US is being benevolent and it's helping out all those poor countries because the US is rich and all those poor countries are dysfunctional. A big part of it is that these countries are suffering from the dollar based monetary [00:15:51] system, which means that their monetary sins are unforgiven.

Whereas the US' monetary sins are easily forgiven. Because of this, I think it's possible for the US to have a large margin of helping out the rest of the world. So this is what we see right now. And then if you wanna see how US power is exercised in the world, it's in these moments. It's the same way that central banks and banking oligopolies get to essentially become extremely powerful.

It's in the financial crisis. It's when there's blood in the street. When the market is collapsing, when the fiat Ponzi has collapsed, when all the credit has been spread out and the fiat money has collapsed, at that point everybody's over leveraged and anybody who manages to have the ability to make money out of thin air, so if you're a banking cartel [00:16:51] in your local third world kleptocracy, or if you're a global banking cartel in your global federal reserve based cartel for banks, in both of those systems, which is the US government effectively, in both of those systems you become the big boss when the liquidity crashes, because you're the one that everybody needs to turn to.

Because you're the one who has the magic money printer that can absolve them of all of their monetary sins. So your bank is broke because you made bad loans, and sometimes it's not even that you made bad loans, they were good loans, but then when interest rates rose and the monetary policy changed and the inflation hit and all of those things, because of the monetary policy, your business goes out of business or many of your borrowers go out of business and so they can't pay you back.

And that same thing happens with central banks. A global monetary [00:17:51] policy does this and then they find themselves short dollars. So at that point, that's when you get to sign people up for lifelong debt slavery. This is really the point where you move in for the kill, basically. 

This is when people are desperate. This is when businesses are struggling, businesses that had been built over years and decades and generations, maybe even centuries will be struggling to make ends meet for their daily payments and they'll need anybody who'll give them credit and they'll give up equity for credit.

And so you get to buy enormous amounts of equity at huge discounts. If you happen to have liquidity. And of course, if you happen to control the magic money printer, and you happen to be the political power behind the magic money printer so you decide who gets to have the money printer run for them, then basically you turn all of the economic system of capitalism [00:18:51] into pretend play. 

In that - you go around kids, everybody run around for 5, 6, 7, 8 years, whatever, everybody start a business, everybody serve customers, make money, invest, borrow, lend, whatever it is, and then we're gonna be relaxing monetary policy, and then when we tighten monetary policy, once monetary policy tightens a bit, doesn't matter everything that you did, we get to discount everything as we want. 

You then all have to go to the central bank and all need a bailout. And so therefore the central bank gets to decide essentially everything. 

It can revise everything. It can say - all right, you're a business and let's see what do you do, you sell ice cream in that mall, we already have too many ice cream shops in that mall. And you have too many payments coming up and you have too many staff, you know what? I don't think you're gonna make it. 

And so your business [00:19:51] is out and then the other ice cream shops get to make it. Think of that in terms of ice cream shops, but also applied for central banks and for governments. And you can see how US politics just has this amazing superpower where every year and periodically every decade, there's one big cycle.

So every year there's a random country somewhere where people are literally starving because of the dollar shortage. Literally people can't get fuel. People can't get food, people are suffering because the government can no longer pay for its fuel bills. And Sri Lanka today, Lebanon last year, Zimbabwe before that, Venezuela every year seemingly, we see this happen incredibly frequently.

And I think it's sad to see, but it looks like it's going to be happening at a larger scale for more countries over the coming months and years. So when that [00:20:51] happens, all of these countries are desperate for dollars. And this is the time when basically US foreign policy can get whatever it wants from them.

And not just US foreign policy, but also all kinds of us interests. So this is the time when US corporations that want something from Sri Lanka, this is the good time. This is the time to be really going into Sri Lanka and buying up assets cuz people in Sri Lanka are desperate right now.

You can get factories and businesses and proper capital for an enormous discount because of the shortage of the dollar. It means that these businesses will use the US government in order to facilitate their entry and their ability to buy at a cheap rate.

And so they will exercise influence on US government [00:21:51] domestically here in the US. When you're betting out thes Sri Lankan government, include that they're gonna give us access to this or that for this corporation, and that's where the asset stripping happens.

This is where forests and mines and oil fields get handed over to foreigners. Because your government is playing in a stupid casino, stupid monopoly financial system that is more akin to a casino. So yeah, it looks bleak to answer your question. And what complicates things, of course so far everything that I've discussed is just the way that things have worked so far, but perhaps this time is different.

We always get people saying this time is different and in many cases it isn't, but perhaps now [00:22:51] things are different because of the Russia Ukraine war and because of Bitcoin and because of, well I think more specifically, really the fact that Russia was able to maintain the value of its currency, and in fact have its currency appreciate over time after the war is a huge indication that we may really, it may actually be different this time. 

It might be different because there's a possibility for you to exist outside of the dollar system, even after they take your dollar reserves, you can still continue to operate and trade with the rest of the world.

And It seems to be working. The rest of the world seems to care more about being able to secure energy from Russia and China than about being engaged in the Russia Ukraine conflict. And it's aggravating for American foreign policy, [00:23:51] and they don't like it. 

India can't afford to starve its people of energy, or neither can Germany. Nobody can afford to just give up on energies. And perhaps a smarter thing to do would be not to have spent the last three, four decades being hysterical about CO2 and destroying the entire capacity for industrialized nations to produce the energy that they need instead of doing that perhaps, that would be a more sane strategy and that would've left the west far less dependent on Russian oil and protected their fiat dollar status more.

But this is the redeeming thing about fiat money, is that it makes the people who use it so high time preference that [00:24:51] eventually they just degenerate into high time preference idiots that cannot think in the long term. So we've had decades of fiat authorities dismantling the industrial capacity of their societies because they believe CO2 is going to boil oceans or some stupid nonsense or the other that they taught them at fiat universities.

And the result of that is, again whatever you think about this, whether it's nice or bad or ugly, the result of it is that we do have seemingly a viable alternative for the US dollar system outside of the dollar system. Where Russia seems to be trading with the rest of the world, and it seems to be working out fine.

It'll be interesting to see. I think we might be heading towards something similar to what was called the Plaza Accord in the 1980s. Where there was something [00:25:51] similar to this happening in the 1980s when Volcker was chairman of the FED. And the same thing was happening where you had this kind of rebalancing where Germany and Japan are constantly exporting goods to the US.

And the US is exporting treasury bills basically, and dollars to buy them, and so you're building up a trade imbalance. This was the case back then with Japan and Germany, they were exporting and the US was importing and that led to just a devaluation of the dollar because it led to the dollar appreciating because of this compared to those other currencies.

And so then they needed to keep stacking more dollars in order to maintain the currency. And so they found themselves in this situation where the currency is just oscillating [00:26:51] and they needed to basically agree on central banking swaps in order to manage the exchange rates. Because ultimately you can't run them as independent central bank in a fiat monetary system if you don't have an independent money. 

That's really the problem. If you had gold, you can have independent central banks. Then you can have central banks that are out war with each other, but can still settle with each other. There's a battlefield where our soldiers are killing each other, but somewhere else our central bank meets with your central bank and hands in a big chunk of gold so that we can continue to trade with one another so that we can both continue to eat.

It could happen. You could have an independent central banking system around the world if the money was neutral, because then nobody decides what is gold. Nobody can print gold and I don't have to trust you, and I don't have to be your ally and friend in order to take payment from you.[00:27:51] 

I take a gold bar from you and I weigh it and test it and say it myself, ensure it's authenticity, and we can continue to trade with one another. But in this current world where money is not neutral, money is produced by one of the central banks, the other central banks have to work for the one that makes the money.

It has to be. It has to be a hierarchical relationship. That's why in The Fiat Standard I say it's a system with one full node. There really is only one full node - the federal reserve. So the other nodes, they either follow the rules or they don't get to play, they get kicked out.

They get they get kicked out of the system. It's a centralized system and there's one full node. So the Plaza Accords back then, where the way in which basically the German, Japanese and US central bank got together and tried to fix and exchange rates. [00:28:51] And essentially the US government would print dollars to give them in order to stabilize the value of the currencies whenever the need arose.

And they would try to manipulate the value of all of these currencies. And since the 80s, to be fair, I have to go wash my mouth after I say this, but they've relatively done a good job of maintaining the value of the fiat shitcoins compared to one another. 

This becomes obvious when you look at the last few weeks or months where we saw the dollar rise against the Euro significantly. Yet still, we're still talking about a 20% move. The dollar and the euro have always been around this range of 1:1.2 or something like that.

So it's still a relatively narrow range. and that's not something that has emerged on the free market. If this was left on the free market. [00:29:51] It would've been far more complicated. The way that has been arranged is that the central banks have direct swap lines with one another. And the US central bank is out there basically ensuring and intervening in foreign exchange markets and in monetary policy markets and with other foreign central banks and with the banking system all over the world to ensure that shit doesn't get too crazy, things don't go too wild. 

That people in Europe and people in the US can have this general range for exchange rates. So I think we're gonna be getting this kind of new financial monetary world order soon. I think the political moment is very much conducive for this kind of extremely insane grand planning and grand historical vision moments.

[00:30:51] Now is the time for a great reset and fixing capitalism and we just had a pandemic and we need to rebuild and build back better. All of this stuff has been getting a lot of prominence and I think that's going to go into the monetary, we're gonna start hearing about we need a great monetary reset soon. I think that's going to be the big one. That's going to be the culmination. 

And I think the real, and we've had a whole discussion in one of the podcasts on this, the real difference, the real Implication that this is going to have is that the Chinese Yuan is gonna have a bigger role to play in the future global monetary system.

Unless we get into some kind of World War III, realistically we're going to still end up having one global monetary system where everybody uses it. Ultimately, no matter what happens, people [00:31:51] in China and the US are going to want to trade with one another. And people in China are gonna wanna trade with the Russians and they're all gonna end up using most likely one monetary system.

We could end up with two. I don't know, perhaps two, but I think it would be catastrophic if we do two. 

Nasr El-Hadi: Sorry to cut you off, the BRICS thing, is that what you're trying to say? They're trying to make an Alliance altogether, all of these countries like India, Russia, Brazil, and is that what you're trying to say? 

Like a kind of a scenario that we see with the BRICS what's happening could be the global thing. Since it's not a global thing at the moment, it's only countries that don't like America. Or don't like the current system. 

Saifedean Ammous: Yeah, I don't know. They've been talking about this stuff for many years, the BRICS and getting off the dollar and so on.

So I'm cautious to say this is it, there's an entire industry of people on the internet who have been saying this is [00:32:51] it for 50 years now. So who knows? We've had many false dawns, but yeah again, the fact that the Russian ruble is strengthening outside of the dollar suggests that there's something there.

But I just think in terms of monetary economics. I think if we end up with different monetary systems around the world, that's just shitcoiners barter fetishism. It doesn't make sense. So what are people in China going to do? People in China are still gonna wanna trade with the US. There's no way around it.

If you stop trade between the Chinese and the US, you're gonna starve maybe a billion people between China and the US. They're both utterly reliant on trading with one another and no amount of politics is gonna stop that unless there's some nuclear war, something absolutely terrible. Barring that kind of scenario or even assuming after that scenario happens, after the rubble, [00:33:51] eventually whatever politics is taking place anywhere, whatever is going on, the world is interconnected, people are going to want to trade. 

So people in China need to trade those people in the US and they wanna trade with people in Russia. So the idea that they're going to have two wallets, two monies, internationally I don't see it as very practical. I see it as, this is one of those things where it's a good bargaining chip and it's a good negotiating card to have with you.

So I think of it from the perspective of the Chinese, what the Chineses are doing essentially is rallying these countries together and saying - Hey, look, the ruble can survive outside the dollar. We don't need you. And we can get the Saudis and the Iranians, and we can get the Brazilians and Argentina and India, and all [00:34:51] of these other countries, lots of oil, lots of money, lots of resources, and we can just build our own monetary system, and then we'll have an exchange between us and, the Western fiat monetary system. 

With that kind of fallback position you can drag the US into a negotiating table about changing the way that the US dollar system works. So it's good to have, this is the kind of battalion that you prepare knowing that it's not going to fight, but you have to still prepare it because you need to demonstrate the strength.

If you prepare it, then they're not gonna need to fight. In a sense I think that's a more likely scenario, particularly when you keep in mind just how friendly global politics is at the top level. Just look at the influence that China [00:35:51] has had globally and how much influence they have across Europe and the US and how much reliance the world has on them.

I think they're able to come out of this with a very big win monetarily by making the yuan the big winner from this rather than an alternative, perhaps. Although who knows? This is all speculation. Perhaps it's just my intuition that we're gonna have two separate systems is not workable, but who knows, maybe we will get it, then it will take decades for it to stop working. 

Many bad ideas have survived for decades before, this might not be the last. 

Nasr El-Hadi: Yeah. I think when you hear, they mentioned this a lot, especially I don't know if you paid attention to the Putin speech where he keeps saying like the one world order where like [00:36:51] one country rules the all system doesn't work for us anymore, or that it's not actually how we should be.

So they keep throwing this idea that it needs to be multiple countries bossing everybody around rather than just that we're all under whatever the empire at the moment, America I guess. 

Yeah, I see the thing is I've heard once that China might not be interested to put her currency as the country for standard or to be adopted adopted by other countries.

And the reason why, because they wanna be the industrial force. And I had this conversation that, where they were saying they wanna be industrial and they wanna produce stuff if their currency becomes in demand by other global countries, it might [00:37:51] make their country fluctuate and they have to focus on two things. Like the economics of it, while also wanting things to be cheap to produce in China so everybody kind of orders it from there.

I don't know if that's still a relevant thing. 

Saifedean Ammous: Could well be actually, they are communists and they have moved from communism to essentially Keynesianism. So it might well be the case that they believe the Keynesian bullshit about - it's actually good for you that you're currency devalues. 

Maybe. In a sense, they are pressed into a world in which their currency appreciates because in this dollar system, the money is not neutral. And so when the US dollar keeps printing, they keep stacking dollars and their money appreciates next to the dollar.

And they don't like this in a sense. So they just keep stacking treasuries in order to try [00:38:51] and not make the currency appreciate so much. But I don't know. I can't tell you what the communist party genuinely thinks on this, but I would say there is the kind of Keynesian idea that yeah you wanna devalue your currency, but there's also the very kind of primitive idea that you want to make people use your money so you can print your money.

They may be Keynesian but they're not stupid. Yeah, difficult to say. And generally, if you are a Keynesian, let's face it, you're not very bright. So maybe they're not very Keynesian. Maybe this is just the kind of the ruling, they understand what they're doing.

If you could look at how they act, it's not entirely Keynesian, they are accumulating reserves. They're preventing their currency from depreciating preventing from depreciating, but they are accumulating reserves, which [00:39:51] is fine. Doesn't necessarily mean that they're Keynesians, you might not necessarily need your currency to appreciate, well no.

No, obviously their people would be better off, Chinese people would be better off if the currency was appreciating because then Chinese people would have more money to buy things and things would be more expensive for Americans to buy. Americans would have more expensive goods to buy because their currency would be weaker.

But yeah, I don't know. What do you think? 

Nasr El-Hadi: My argument is always that I think if we see what China did, especially in Africa, like they basically they've been working there for the last 15, 20 years and they've been like slowly and steadily building their dominance. And I always feel like they've expanded very well in Africa [00:40:51] and they own most, or all the majority of the ports.

And they basically moved a lot of their industry into these countries. And I feel like they have a plan where they will produce whatever the world needs, not just from China. It could be done anywhere else in the world. And they saw Africa as the perfect kind of environment for them to like - let's move some of our production into these countries.

So we can I don't know, create this balance, whether it's happening in China or happening outside of China. Meanwhile, the currency is in demand and also obviously fluctuates up and down. So I don't agree with the theory that they have no intention to do so because they wanna keep their currency very low, so people can buy from them against others, or especially against the dollar.

And we have to notice the [00:41:51] expansion that they have been doing in Africa. Pretty much they've owned everything now, or as much as they can at the moment. And meanwhile, everybody else like France and everybody's like - oh wow, China's moved in already, and we've been like stuck in this situation for so many years and we haven't done as much as they did.

So yeah time would tell I guess. My theory is just based on what I've seen. 

Saifedean Ammous: Indeed. 

Nasr El-Hadi: I wanna ask you something else, if you know any example that same thing, I might change the topic for a bit, but like in Libya at the moment we have two central banks. I always wonder has there been any country in the world that has suffered from the same situation where basically what happened, 2014 or 13, somewhere around there, the [00:42:51] governor of the central bank that used to be in Libya, basically his term was about to end. But he didn't give, wanted to give power, so he stayed in his seat, and his deputy basically was chosen by the parliament to overtake, but he didn't want to hand out the office and he protected that by his militia.

So like that guy basically, the deputy went to the other side of the country to Benghazi and set up his own central bank. And now we have two of them and each of them are basically like trying to print money and trying to do all of this stuff. Most of the stuff they talk about, we associate things with history.

Have we ever in history had this issue like what we have right now? One country, two central banks. We are technically, we're still [00:43:51] one country but kind of we have two of everything. So if anybody gets mad or being told to hand over the ministry, like for example Tripoli, he will leave or somebody else will set up another ministry in Benghazi, but we're still under the same country.

And that's why we, most of the time will have two governments. Like right now we have two governments, one in the east side, one in the west side. But that's, I've heard about that. I think it happens mostly in Africa. But central banks is the first time I've seen, or I keep researching and never find anything that is similar to that situation.

Saifedean Ammous: Yeah, I can't think of anything. I haven't heard of any of these examples where two central banks exist. There would be like many cases where one country central bank is having its currency used in another country, but a central [00:44:51] bank hard fork. I've never heard of one. 

Nasr El-Hadi: And the thing like, they use the same print in the note, but it has a different signature because below like you would have the governor actually sign it.

So we have this huge issue that you'll have this, obviously we do everything in cash, so for example, if you need to make an exchange on a land or a house that would be like, let's say a million. That would be like a big chunk of money. And you have to like look at every signature at every note because 

Saifedean Ammous: Oh my God.

Nasr El-Hadi: Yes. If you had someone or this money mixed up, nobody's gonna accept it. For example, in Tripoli if it came from Benghazi, nobody's gonna take it, and then you're gonna end up with money that is not used and you have to send it somewhere at the other side and exchange it for less and all of this stuff. It's a huge mess. I'm trying to understand if anybody in the history of a human being have lived the same way. So [00:45:51] verifying like signatures in each note is such a stupid thing to do. 

Saifedean Ammous: So they're both just printing money, and what about like the banking system? Who has the banks? 

Nasr El-Hadi: They're divided. They're basically, the one in Tripoli because when the other guy went to Benghazi and set up the bank, he cut off the infrastructure between the two.

So we're not allowed to, like you cannot deposit money in Benghazi and use it in Tripoli. You have to switch or have two banks at at different regions. Yeah, it's a whole messed up situation. 

Saifedean Ammous: So you didn't happen to get an airdrop, like if you had an account in one bank, you would get money from the two banks, from two central banks, no? Or it's just one?

Nasr El-Hadi: Yeah, it's just you have to get two. Yeah, so you have to get one in there and one in there and do business with that one that is separated from this one, with the separate notes that have a different signature and all of this [00:46:51] stuff. So yeah, it keeps going in circles really. 

Recently the guy from Benghazi also just like last month, he's trying to print like another 4 billion. Because that side of Libya is controlled by Russia. But I guess the Russians said - this is not the right time to create this stuff. And the money got stuck in Malta actually. He actually made it happen.

He printed it, but it was made in Switzerland and was traveling through Switzerland Europe and then Malta, and then they basically stopped it over there because with the oil situation and whatever is happening, they don't want to create more problems in Libya, yeah. 

Saifedean Ammous: Fascinating. And what's the Lybian dinar like these days, where are we at the exchange rates? 

Nasr El-Hadi: At the moment it has been stable for a year, exactly. At 5 dinars for [00:47:51] $1. So throughout the last 11 years, we've been going up to 11, 12 dinar for $1 and then back to five, and then we go up again and all of that.

It depends on the printing. So for example, now it started to go up, I think it's 5.2 today, because of the recent news as well. Oh yeah, today what happened is the government of Tripoli have decided to change the guy the chairman of the oil ministry, but he didn't want to give office.

So they were fighting each other for the last two days. And finally today, they managed to overpower him and take office. The thing is because we haven't been producing oil for the last, since the Ukraine thing. I think I've told you about that, since the Ukraine thing happened, they didn't want Libya to produce because everybody else can make more money [00:48:51] because of that shortage.

But as of today, they've put another guy in. And yeah, I think for a year we've been at five, which is great, but we still have a governor that is not elected, but only there because of his powers and stuff. We can't trust that guy. 

Saifedean Ammous: Yeah. The good news is it's not, you haven't had a lot of inflation so far.

The bad news is you have a lot of inflation up front, coming up.

Nasr El-Hadi: Yeah. 4 billion back in Malta could be here in a matter of hours.

Saifedean Ammous: What was the exchange rate under Gaddafi? I think the dinar was more than the dollar, wasn't it? 

Nasr El-Hadi: No. It was one 1.2 to the dollar. So every 1.2 dinar is $1.

Saifedean Ammous: Okay, so slightly less than a dollar. 

Nasr El-Hadi: We were at three [00:49:51] at the beginning years of Gaddafi, but for last 15 years of Gaddafi, which is say from like 2000 or just before that until 2011, we were at 1.3. 

Saifedean Ammous: Before that it was three Libyan dinars per dollar? 

Nasr El-Hadi: Yeah. 

Saifedean Ammous: So he revalued it and increased the value?

Nasr El-Hadi: Yes he did. 

Saifedean Ammous: So hang on, so it was at 33 cents for a dollar and then it became 80 something cents a dollar? 

Nasr El-Hadi: Yes. Exactly. 

Saifedean Ammous: So suddenly the value of your money went up double?

Nasr El-Hadi: Yeah, double. And mainly because of the huge production of oil that really kicked in at the end of, cause we had an embargo. We had an embargo for most of the years that Gaddafi was there by the Americans, and were not allowed to basically do anything for I think the first 15 years of his life or from him [00:50:51] becoming the leader.

And then that, because of the issue with Lockerbie bombing, I dunno if you know the case. 

Saifedean Ammous: Yeah. From the eighties, from the mid eighties, not from the beginning of Israel, from the mid eighties. 

Nasr El-Hadi: No, not from the beginning. Yeah. When they were like not happy with him and he decided to be a bit rogue, they did that so they can put him in place and boss him basically, or control whatever is happening in Libya.

And that continued, I think until at the beginning of the 2000's and he paid about 4 billion to the families and couple of more billions to America and all of that. But the condition was to allow the American oil companies to come in, and do deals in Lybia. 

And that excelled very fast and very quick, until basically he went a little bit more mad and they got bored with him and they decided that he needs to leave and they used us to get rid of him. That created that [00:51:51] lawless state, basically that until today it's just like a big mess.

Saifedean Ammous: Yeah. My father went and traveled there. My father's a surgeon and he traveled to Libya I think maybe three times since 2011. 

Nasr El-Hadi: There was big support for Gaddafi, yeah. Of like whatever Arab nations come into Lybia, working in Libya have an opportunity. 

Saifedean Ammous: He went after Gaddafi was removed.

He went after the war started. He went three times on like voluntary missions. 

Nasr El-Hadi: Oh, okay. Yeah, all right. 

Saifedean Ammous: But he was, I have to admit he changed my perspective on this. Like you watch you think - all right look, Gaddafi is just a desperate tyrant, awful horrible person, and of course he was crazy and he was a lunatic and he did insane things.

And he did [00:52:51] insanely hilarious things that you would not believe. The stories about him, you can't even tell what's fact from fiction. Because it's the fact that is usually stranger than fiction with him. It's amazing. But my dad went there and he told me - I spoke to all the Libyans and they said, like he went to the hospitals, my dad just went and worked at hospitals that he didn't see anything other than the hospitals, and he said everybody said, look at all these amazing hospitals that were built under Gaddafi now. The country's gone. Everything's gone. 

Nasr El-Hadi: Yeah we thought basically, I was against Gaddafi because of the way he behaved like madly at the last five years, six years of his life, like too much drugs or too much, like his persona had gone into him. And we were seeing money, but [00:53:51] we were not seeing the level that we saw Dubai, Emirates Advance and all of that.

We were hoping to see ourself similar to that scenario. But I guess 

Saifedean Ammous: Yeah, you thought you would get Abu Dhabi and Dubai and you ended up becoming Mogadishu. 

Nasr El-Hadi: Yeah, Somalian Mogadishu, all of these scenarios, yeah. 

Saifedean Ammous: Yeah, I think it's a great tragedy and just the thinking, this idea that we can just have an election and have a democracy and then everybody falls into place. It just doesn't work. It doesn't work anywhere really. 

Nasr El-Hadi: Yeah. I hope somebody like figures out a new governance system. We keep pushing for the democracy thing, and it doesn't work. 

Saifedean Ammous: I think the solution is to bring the Senussi's back to Libya. I think the solution for all countries is to bring back their legitimate Royal family.

The Senussi's were [00:54:51] fine. Really. If you think Gaddafi was better than now, the Senussi's were better than Gaddafi. If the Senussi's could manage the oil, they would've allowed private companies to exploit it. They would not have been financing terrorism like that insane lunatic Gaddafi, and they would not lead the civil war against anybody.

They would just be legitimate that everybody would support them because they're just a Royal family and they're descendant from the Hashemites, so they had that legitimacy. 

Nasr El-Hadi: Yeah, just the guy that is there, Prince Mohammed, he's weak. He's just, he comes out every once a year for the Royal day of independence of Libya and wishes everybody well. He lives here in London, but when I was asked about whether he's serious about his position or whether he would be interested to gain back his [00:55:51] Royal Status in Libya, he says - if the Libyan people want me, I'll come back, but I have to see signs from the street. Nobody's gonna come out in the street now and face weapons and bullets and go through this drama again, because we want to put the Royal guy back.

Like he needs to figure it out. I don't know how. 

Saifedean Ammous: The thing about Kings is he's very different from all of these militia leaders that you guys have. All of these basically high time preference soldiers of the bureaucracy, or the military people who just grew up in the institution and are fighting to the death to be able to become in power. So you climb up in this. 

And this guy's from different, he's not going to be fighting, he's not gonna start a militia. He's not gonna go shoot people. He's not gonna take sides. [00:56:51] And I think the only way that things will happen is that you need popular support. We've discussed this when we had the prince Philip from Serbia and we also had we discussed Liechtenstein, the Prince Hans-Adam II of Liechtenstein, he's written a book The State in the Third Millennium. And he says essentially democracy and monarchy can work together through self-determination at a local level. Every local community gets to decide whether it wants to succeed and be independent, or whether it wants to join any political entity.

And it's the job of princes to appeal to them. Yeah, this is what he needs to do. He needs to just start saying if parts of Libya want to come and join me, I am happy to make them independent [00:57:51] princehoods, sheikhdoms. 

Nasr El-Hadi: Yeah. I agree with you. He has people that talk about his support and want him back and do all of that.

But they always face a lot of militias, a lot of bad things happen to them. So I don't know. 

Saifedean Ammous: Yeah. The royalists are not out there fighting the militias, that's the good thing. Nobody hates them at the very least. The militias are fighting each other. They're not out there shooting at the royalists.

It might take a while. It might continue to be horrible, but if there's a way out, it's going to have to be somebody who's not, it can't be a way out that gives one part of the country complete dominance and control over the others. You need some kind of neutral party to be the winner.

And that's what a king is. [00:58:51] 

Nasr El-Hadi: Yeah, I agree. I agree. We'll see.

Saifedean Ammous: I think the stable monarchies of the region need to start working on this. I think they need to just make it the policy objective to install Kings in all of these failed dysfunctional socialist republican shitholes of the Arab world. This would be a really smart thing.

If the Moroccan, Jordanian and Gulf Kings would get together and decide we need to find adult to take over Libya and all these places that are just completely dysfunctional, falling apart, where people are dying, it's terrible. Libyans and Syrians and Iraqis are just gonna end up everywhere else in the Arab world. Everywhere else. Yeah, they're gonna just become refugees everywhere. And the refugee problem continues to exacerbate. 

It's not like it was just a one off thing where [00:59:51] you had refugees and they were kicked out. There's still 20, 30, 40, 50 million people in Iraq and Syria that could leave over the next five, 10 years.

And something needs to be done about this. 

Nasr El-Hadi: Yeah, I just came back from Libya and summertime is the high season time of all of these dinghies leaving the Libyan shores heading for Italy and Malta and rest of Europe and stuff. So I was surprised because I didn't feel like it's still a thing. I felt like maybe now it's no longer an issue, but I saw my own eyes like it's still happening.

Druglords and warlords are still making like thousands and thousands of money. I actually witnessed which witnessed a sale of a SIM card number which went for several millions. And the catch [01:00:51] is you are like - why is a SIM number that is not even like something special, why has it been sold for like a million plus?

And the reason is because this phone number is spread around Iraq and Syria, and families would would pass it along, and if you come to Libya or make it to Libya, you basically call this number, and somebody's gonna basically answer and come and pick you up or prepare like a whole trip for you.

So I was like very amazed by the idea that there is phone numbers of Libyan SIM cards of these smuggling guys that are being sold, and you can start the business off of that SIM card. So for example, if I want to go into the smuggling industry in Libya,

Saifedean Ammous: You just buy one of these.

Nasr El-Hadi: Exactly. So find one of these numbers, buy them. Why? Because this number is gonna receive calls because it's already in Iraq and [01:01:51] Syria and also Africa as well. Somebody will call and be like - ah, I wanna make it from here to there and how much it is and what are the dates and what I need to do.

And you would give them instructions and of how to come here. And then from the day that you are in Libya, they'll take over and and get you sorted. Yeah, for a couple of thousands a person. Wow. 

Saifedean Ammous: Yeah. How long is the dinghy ride from Libya to Malta?

Nasr El-Hadi: About a day or less. Depends on how steady the sea is. Malta is about 300 miles away. But the dinghy is, it will take you like a good day or a little bit less to get there. But the thing is, what they do is, [01:02:51] you'd have a dinghy where all of the people get in and you have the smuggler who has like an actual boat.

And he would basically pull you to a certain distance where they know this is where Libya ends in kind of the neutral water area starts. Where EU and Italy boats, rescue boats roam around that area, and they would give them a small radio. They would give them a radio and they would tell them from here, just like start asking for help until somebody picks the signal.

And if you will end up in the sea for about seven hours, eight hours, and somebody will come and pick you up from EU or from these areas or, if you are gonna be unlucky, you might face a bit of hostility in the water where basically [01:03:51] EU will try and push you back to the Libya shores, where they call Libyan coast guards, and they would come and pick you up and bring you back to Libya.

It depends on the connection. 

Saifedean Ammous: Does that happen often, or do they usually take them to Italy? 

Nasr El-Hadi: Yeah, because what happens is they have deals, so EU or whoever is in there will have deals with different Libyan smugglers. So some of them, they will accept it, but some of them, if they don't know where these boats are coming from, or they have no idea about it, they would send it back because they want few smugglers to actually make the money.

Not anybody can go in the business. So if I wanna start this business, this is the thing that I'm gonna struggle with. My boats are gonna be intercepted by the Libyan coast guard, because I'm not connected with that kind of ring where I'm a smuggler, I know about Europe boats, and they know I'm releasing two boats this morning and they know the signal [01:04:51] of these boats, so they'll allow them to be in Europe. 

But if I'm new and I'm not connected my boats would be sent back, yeah. 

Saifedean Ammous: I see, so the living coast guard is running the oligopoly on this. That's the cartel that's handling that business. 

Nasr El-Hadi: Exactly. And they basically get the supply from from Europe.

They get the boats, the guns, everything else. 

Saifedean Ammous: And are the Europeans, why don't the Europeans just turn everybody back? 

Nasr El-Hadi: That's the thing about I think the international laws, and basically if a human is in need or kind of escaping a civil war country, legally they can't send them back.

Saifedean Ammous: So what's the Europeans criteria for whether they turn you back or they let you in? 

Nasr El-Hadi: Unstable. Basically for me as I am in London are right now, I can apply for asylum. 

Saifedean Ammous: No, for the boats, not the legal status, like why did they decide that this [01:05:51] boat of refugees we're gonna take back?

Nasr El-Hadi: That's why they put a mixture of kids or mothers and older people and all of that. So if the boat has that mixture they rarely or ever send them back. But if it's just cause just few men or couple of men, they will fight them and they will send them back. So it's always, you have to get a boat of a mixture age.

Saifedean Ammous: I presume the cost for children and women is much lower than the cost for men, because they're valuable to keep the boat go through.

Nasr El-Hadi: Yeah. And you are actually, if you are a guy or a man trying to travel, you might be stuck in Libya for several weeks because they can't find the family to actually be in the boat.

And that would be another issue. Yeah. And that could, I don't know, a week, two weeks until they find someone who's with their kids and older mother or whatever, and they're ready to go and they can do it. Obviously you have these [01:06:51] situations where they wanna risk it.

A couple of men, they wanna risk it. Sometimes they make it, sometimes they don't, but it's a risk that they have to take. 

Saifedean Ammous: Does it happen that you could just keep going with the dinghy and not get interrupted and actually land on the shores of Malta? 

Nasr El-Hadi: Rarely. Yeah, they'll find you. It's a short distance, so it's very easy for them to cover. It's very easy for them to figure out whatever is happening. There's two things that would happen. Either you would die halfway there because of, I don't know, failure with the dinghy, panic, and there is lot of fighting between these refugees that happens in a way, because to the law, if they catch you, what they do sometimes is if it's a man, a couple of men in a boat, they would take a picture of whoever is leading the boat, and once you are in the shore, they would put you in jail because they would regard you as the smuggler of [01:07:51] the operation. And you would end up in jail for several years in Europe, in Malta, Italy, whatever you end up with. 

It's a lot of issues when when that happens, but there's also, if you then get caught there's several of them that end up drowning because, I kid you not, I think 80% of those people don't know how to swim and they just take that risk in an unbelievable way. Like it's just mind blowing for me that it continues to happen and they know about this risk and they know that they would die or they would end up being this, but they still do it.

Yeah. It's desperation. Desperation. People are desperate. 

Saifedean Ammous: It's desperation, that's what it is. 

Nasr El-Hadi: Yeah. And these countries along with Libya, everybody's desperate. 

Saifedean Ammous: Yeah, this is another thing when you think of the evils of Gaddafi, it's something to keep in mind, that [01:08:51] industry did not exist when he was there.

And it goes without saying it also did not exist under the Senussi's.

Nasr El-Hadi: Yeah, he said that. He When they were trying, back in 2011, he said - I'll open the beaches and all the shores, Libya shores, and the floods from Africa is gonna go through all of Libya. But they didn't. I don't know if they didn't care. I guess they didn't. They knew it was gonna happen and everybody knew it was gonna happen, and he made it not happen for as long as he was there, but he didn't care at that point. They promised the democracy, but. 

Saifedean Ammous: Yeah. Look how well that worked out, huh? It was a great way to introduce me to the work of Hans-Herman Hoppe, watching all of these democratic projects turn into exactly what he says and realizing that that's not that's not accepted.

That's just what democracy is. And [01:09:51] it's just if you have a rich society that has already developed and industrialized and you add democracy, then it takes time for the democracy to work and destroy it. But it still does. Look at the modern Western democracies as they've bankrupted themselves.

They're highly inflationary and they're in enormous amounts of debt and the chickens seem to be coming home to roost now. Hard to make a case for democracy with all of this going on. 

Seminar participant: So how does somebody get out? Even, let's just say like in the most idealized case where wealthy Bitcoiners want to get these guys out and the resources are there, but there may be a limit to what can be done here if the government is monitoring every possible exit route. 

Nasr El-Hadi: And yeah, I think [01:10:51] at the moment, nobody cares really for the first five years, since 2011, 2016 and 17, it was a huge thing. But as soon as Libya became so like chaotic and a lot of fighting going on between de Libyan themselves, crossing Libya is a risk at that point.

So it's not like the same amount. For example at the beginning we used to have even people from Syria, Iraq and all of these countries that Libya's not geographically in their way, but they're made their way around there to just to get access to Italy or to Europe let's say. Cause they're closer if they want cross from Turkey. But Libya was safe, it was okay and all of that, we were not sure what's gonna happen, even between us Libyans we had no strong militias that overtaken everything now. But now like the whole situation [01:11:51] got very crazy that we only see that real desperate people from Africa that wanna get across.

And because of that, it's hopeless. There is nothing much. There is like rescue boats and people that are trying to do stuff, and they just spend like the whole summer in the sea, roaming around and listen to radios and all of that with a bunch of lawyers like in their stuff. 

Seminar participant: When did the governments go bankrupt, and it's just a bad deal for them to restrict, they just have better things to do than restricting. 

Nasr El-Hadi: Yeah. I dont know, that's a tricky question isn't it? It's like how can you get them buying crop really? 

Seminar participant: We talked in the beginning when I was here about the US and how the endless ability to print money, and I'm trying to think through, when does it end. Think about Bitcoin going where it's [01:12:51] needed and that's really like people are using it in those situations, but then you still have a lot of these situations where they're not even able to even get off zero, to move that hardship, to change that situation.

This is gonna take a long time. I just feel like this is 

Nasr El-Hadi: No, to be honest in terms of Bitcoin, and what it's doing to a country like mine, I think it's changing massively like the opportunity that we have at the moment. Even for me, like I moved to the UK, I had no way of moving my money or value to come and give another country because I cannot use the banks locally.

Obviously I cannot withdraw my money because they don't allow you to withdraw your money. Plus you can't even send the money to like a UK bank account, even if it's not it's your bank account and it's your name on it. And that's basically how I discovered Bitcoin back in 2016. And from there on you see all of these people in Libya that have access to [01:13:51] a lot of value that they can unlock and they can transact with the rest of the world that local banks don't offer them.

Earlier I was saying that we have two central banks and we don't have a way of financially exchanging with the other side of the country, but we use Bitcoin now. We use USDT and stablecoins, and that kind of escalated and smoothed all of the issues that were there.

They tried to fight. We have a big mining community in Libya because our oil is subsidized, so generators cost nothing to generate power and mine Bitcoin. Our electricity is actually subsidized, it's less than 4 cents a kilowatt. So it's really cheap. And that kind of spurred like a whole like community of miners in Libya and having access to Bitcoin.

And yeah, Bitcoin has changed many people's lives in Libya, [01:14:51] many, endless, including mine. I'm a live example here. So yeah. In terms of other issues, I as, as soon as we move, yeah, sorry.

Seminar participant: It's fascinating. Thank you. 

Nasr El-Hadi: Yeah. As soon as we like the awareness about Bitcoin moves, the less power that they have across us. Because in Libya, like the governor, the banking system, the government, and all of these people, they're not sophisticated enough to defeat such a thing like Bitcoin. For example, in America, Europe, they have many ways of trying to stop it, slow it down, they control it, they can do many things. But our governments and our people in power they're not that smart, and they don't have the time, all the knowledge to control this movement.

Saifedean Ammous: And as soon as they learn about what Bitcoin does, they are gonna wanna buy every last Satoshi they can get their fingers on.

Nasr El-Hadi: Exactly. And hopefully that's a bit too late for them to actually do all of that. [01:15:51] 

Saifedean Ammous: Yeah, but it's gonna mean that they're gonna need the local Bitcoin market that's already out there, they're gonna be out there reaching out to the miners and the dealers and being like - hey, give me all the Bitcoins. 

Nasr El-Hadi: Like Iran. Yeah. Iran can do the same thing. So it could be like that scenario if they get their head around it. But yeah.

Saifedean Ammous: I really think the game changer as we discussed in the session with Paolo Arduino from Tether. I really think the game changer is adding stablecoins on Lightning.

Once that happens, I think all of these third world despots are gonna be bankrupt. All of these people that have starved their countries and sent their money to the Swiss bank account, that gig is gonna be over. You're gonna need to go tax people and taxing systems in the developing world are generally extremely inefficient and ineffective [01:16:51] and primitive.

So they all rely on an inflation generally. Not all obviously, but they predominantly, they rely on inflation to finance them. So take that away, once you give people the ability to send dollars and buy and receive dollars at a fraction of a cent for transaction cost, who's gonna be using any of these currencies in places like Libya and Lebanon or Turkey or Brazil, or why? This option is just so much better.

And then, once you make that move and you're using it all on Bitcoin, then why don't you similarly, like going from the Libyan dinar to the dollar, you go from the dollar to Bitcoin and you get better saleability across time. I'm really hopeful this will happen quickly, because I can see the WhatsApp moment. I can see the [01:17:51] moment where this turns into something really global, where Tether could 10 X and not in value, 10 X in volume, meaning we have hundreds of billions of dollars. We get a trillion dollars of Tether around the world, traveling at lightning speed for tiny little fractions.

Tether becomes the biggest central bank in the world after the federal reserve. At a few trillion dollars, it becomes the second biggest, I think. And then with that happening, yes, it adds demand for the US dollar, but that's no match for the ability of the US government to continue to spend.

So the US dollar will continue to decline and value as bit Bitcoin continues go up in value, I think. 

Nasr El-Hadi: Yeah, I've I was with this guy, I consult for him. He has, if you can call it an exchange over there, but it's not [01:18:51] licensed or anything, so he sells and provides a crypto or let's say Bitcoin and other cryptocurrency. Recently in the last three months, the volume that he does in USDT locally, and what I mean by that, he set up like a couple of offices in different cities and lately he's just been like basically providing what the actual banks are not providing anymore because we don't have a system where the infrastructure, where the banks in Libya trade with each other or can have a transaction between each other.

So he's actually doing that for Libyan customers around cities where USDT is being transferred in Libya, and that's two times the amount of people that are actually buying Bitcoin or buying USDT for trading. 

Saifedean Ammous: Wow. 

Nasr El-Hadi: Yeah. It's kind of amazing. 

Saifedean Ammous: So you're saying if I wanna send, you're referring to people who are sending money like within Libya, [01:19:51] but instead of going through banks?

Nasr El-Hadi: Yeah.

Saifedean Ammous: They're sending it through USDT exchange shops? 

Nasr El-Hadi: Yeah. So he has an office in Tripoli and he set up four offices in different cities. One of them is Benghazi and another one is Misrata. So basically in a daily transaction he would have around half a million of USDT kind of transact between each city, just inside of Libya. 

So he'll have someone with the cash and basically want to hand over cash to someone in Benghazi, and that avoids the issue as well of the signature that I told you about. Because if you have someone in there instead of bringing the money and all of the money get mixed up and you have to check it and all of that.

So now what they do is like you stay there, we'll send you USDT or we'll receive USDT and we'll exchange in cash here and also happens with the rest of the country, which is, it blew my mind when I witnessed that when I was there. I was like, wow, these guys are taking over the [01:20:51] actual banking infrastructure without needing to, they only needed a stablecoin. And basically the belief that the dollar is stable. 

Saifedean Ammous: That's the tragic thing about it. That's the tragic thing about stablecoins. It's obviously a huge upgrade over what they've used, but it's still the US, the US isn't exactly a utopia running on the dollar. But yeah, but I think on the plus side, I think perhaps, the average Libyan and Venezuelan and Turk is going to be far better equipped for making the jump to Bitcoin from the dollar than the average American, because they're gonna have to get into these alternatives as their local currencies continue to disintegrate.

Nasr El-Hadi: Yeah. That's where we see the value. The thing that they talk about is - oh, there's no use case [01:21:51] in all of that. No, come to these countries and see the actual use case here. It's multiple different ways and different use cases for it, for all of that stuff to happen. But I guess if you don't live it, you don't experience it. 

Saifedean Ammous: And this is the thing that the critics of Bitcoin and Tether don't get. You can sit there in your Ivy tower and pontificate about how Bitcoin's monetary policy is not ideal, and if I could I would've made it this way and I would do it that way.

And you could pontificate about why Tether is bad and where the risks are, and of course it is centralized, and of course there are risks in tether and the company could go bankrupt, they could get hacked, things can happen. They could suffer all kinds of risks, and of course it's nowhere near as safe as Bitcoin from a technical perspective, Tether, because it is centralized. 

Yet, you're not, this is the thing people don't [01:22:51] get, you are not comparing Bitcoin and Tether to this ideal theoretical thing that your professor dreams up in their completely delusional lala land that is their university. In your university, in your silly econ textbooks that are completely irrelevant to the real world, you can come up with all kinds of perfect ideal monies and how you would do them. But for the guy in Libya, for the guy in Benghazi, they can't use that thing that you come up with. You can't use the stuff that people are coming up with in American universities for anything in Libya or in Lebanon.

And so then all of the shortcomings of Bitcoin and Tether have to be weighed against the actual alternative that people have. An actual alternative in Libya is your hard fork central bank, where you have two different central banks fighting with each other printing the same bill, but you have to verify which signature.[01:23:51] 

And obviously I'm pretty sure neither of those two central banks is very good at sending and receiving money abroad, right? 

Nasr El-Hadi: No, they don't allow it. Yeah, it's very bad. Yeah. 

Saifedean Ammous: So those are your options. This is the thing that I would like to enter into the heads of the Bitcoin haters.

Offer something better or shut up. 

I just think of myself, imagine if I was one of the people that would listen to moron fiat economists. Imagine if I was one of those people instead of having made my own mind up. Imagine if over the last 10 years, I'd continue to believe all the garbage that they say.

And then I was living in Lebanon and I listened to what people in the universities say in the US, which is - Bitcoin is stupid and it's gonna fail, and it's a Ponzi. What ended up really failing was my central bank money. And we're gonna get a lot more central banks [01:24:51] fail and Bitcoin continues to operate.

All of these Bitcoin haters can continue to come up with all kinds of self-righteous angry reasons about why Bitcoin can't and won't work. But the reality is. Everybody in the world is on actual sinking ships of these national currencies, the Lebanese Lira and the Libyan Dinar and the Turkish Lira and the Brazilian Real, all of them are circling the drain.

All of these ships are sinking. It's a sinking ship. You're watching the ship sink while you're on it. And you look around and you have a bunch of lifeboats and you have a bunch of fucking idiots who are just sitting there and telling you - oh, haha these life boats are not perfect, if you want nice lifeboats, you should make them pink with unicorns on them. My unicorn lifeboats will be so much better than your crappy lifeboats. [01:25:51] 

This is exactly what's going on. People are literally having their lives destroyed because of their currencies, and this is their way out. They can use Tether and manage to trade locally and internationally. They can use Bitcoin and manage to save and trade locally and internationally save for the long term successfully.

These are the options so they do them, and the people who do this benefit enormously. You look at the local Bitcoin dealer in Libya, as I'm sure in Lebanon and in all those places, the people who have gotten into Bitcoin and stablecoins in those places have done extremely well compared to everybody else who's having their lives ruined.

So there's no stopping this, everybody's going to want to copy it. You can be the most loyal supporter of either of those two Libyan central banks, but at the end of the day you want to eat and you wanna trade and you're self interested and you're gonna use the money that works, and you're gonna use those stable coins.

It's [01:26:51] it's very easy for them to scale. Everybody can download many different wallets that they can use for those things, and I think it'll scale in terms of Lightning, once it's on Lightning it'll scale very easily. So I think this is a very underrated trend that's gonna take over.

I think the dollarization of the world and the Bitcoinization of the world over Lightning network. That's where I see this going. It's the only network that can handle scale. All the shitcoins can only handle very small amount of stable coin transactions before the fees spike. So this kind of disintegration of stablecoins over shitcoins is is the thing that's holding it back, and the high fees. 

Once it goes on Lightning, I just see a giant super highway to hyperdollarization and hyperbitcoinization. Everything that's not dollar or Bitcoin is gonna be dumped. [01:27:51] There's no reason for anybody anywhere in the world to hold any of these other currencies. And over time I think the dollar as well will also be largely dumped.

Nasr El-Hadi: Yeah. I always joke around and say - I'm willing to give anybody like half a million Libyan dinar, and if you live in America, you have to come to Libya and take it, but you have to use a legitimate legal way of sending it back to America, and tell me how you're gonna do it. Without using Bitcoin or crypto.

Yeah. Find a way of how to get that money that I just gave you in Libya legally, without having to go all of the bullshit, like money laundering and all of that stuff that they say - money control, whatever. 

Saifedean Ammous: I'm wondering how much can you carry with you in USD out of the country ? 

Nasr El-Hadi: 10,000, 

Saifedean Ammous: 10,000. What about gold? 

Nasr El-Hadi: No, you're not allowed, yeah. 

Saifedean Ammous: You're not allowed to carry [01:28:51] any gold? 

Nasr El-Hadi: No, you're not. Smuggle it, yeah. But legally, no. 

Saifedean Ammous: Wow. 

Nasr El-Hadi: Yeah. Only not jewelry, yeah? You mean actual gold? Jewelry, obviously like you can have a lady wear a couple of things and all of that. 

Saifedean Ammous: Yeah, but I mean gold bars and coins. 

No, you're not allowed. 

You're not allowed, yeah. So I mean yeah, $10,000 of flight to Malta. 

Nasr El-Hadi: Yeah. 

Saifedean Ammous: So half a million dollars. You'd need 50 flights. 

Nasr El-Hadi: 50 flights, exactly. Yeah. And then from Malta, I have to find a way to seek it all the way. 

Saifedean Ammous: And then explain to the Maltese bankers.

Nasr El-Hadi: And the thing is both in Malta, Tunis and Turkey, they know about the money that is moving. They do so many things to take that money away from you. They like, even if you hand up like legal papers and all of that, if you get there in the wrong day, the day where they don't want any money to like from the government, or I guess like something in control, they'll do nasty dirty things [01:29:51] to rip off that document, take it away, hide it, whatever, so they can take the money. Cuz yeah, they know the struggle and they know you can't complain to anybody, so you just end up losing. Many stories of Libyans that basically travel with that money, with that document that is allowing them to travel with that money, and when you get the Tunis, they'll say - ah, can we see that document? Ah, it's fake. And you're like, no, it's not fake, it has a stamp, and has this and has that. No, it's fake. We have to take this money. We have we have to confiscate it and we're sorry, but you can't do anything. And you end up losing 10,000, just like that.

Saifedean Ammous: Bitcoin fixes this. Bitcoin fixes all of it.

It's just so depressing what Fiat has done to the world. And it's so uplifting to think that Bitcoin fixes it all. 

Nasr El-Hadi: That's amazing, yeah. 

Saifedean Ammous: And there's [01:30:51] nothing you could do to stop it. 

Nasr El-Hadi: Yeah. I have this friend of mine that has his son in London here, and a few years ago now gone into Bitcoin because every time he needs to send money to his son that is a student in a university, he has to like either take 10,000 and his son will spend it in like couple of months, or he has to pay like different people in, and because we have a black market in Libya, so it's an illegal market where for example, you give somebody money in Libya and they will bring you cash here in the UK. So I introduce him to like Bitcoin and USDT and stuff.

And now he just sits around in his app and he, instead of sending his son 10,000 that he just wastes in a couple of weeks or a couple of months, he just does a weekly amount that he knows, like it's enough for food and all of that because the cost is nothing and it happens very quick and it could happen any day in a week.

And he's just like, off of that he just [01:31:51] bought a few Bitcoins here and there just because he wants to send it to his son. When I was there, he was like - I think the Bitcoins that I bought will pay off all of the debt that my son needed for university and all of the money that cost me to put him in school. Which was an amazing story to see as well!

Saifedean Ammous: All right, I will see you guys next week! Take care.