«Under the fiat system, it makes sense to be an idiot»

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As the author of the books «The Bitcoin Standard» and «The Fiat Standard», economist Saifedean Ammous is one of the most influential intellectuals in the Bitcoin community. The books of the declared opponent of the fiat money system have already been translated into 36 languages, his podcasts enjoy great popularity, and he has over 270,000 followers on Twitter. I meet him in Zug on an October evening in 2022, which is also his 42nd birthday, on the sidelines of a Global Liberty Institute event. We decide on an unprepared spontaneous interview, and since Ammous lives exclusively on meat, we head for the Burger King, where he orders a bottle of water and six fire-grilled burgers, plain and without bread. During the conversation it turns out that he is a big fan of Switzerland.

 

Saifedean, why do you like Switzerland?

It’s the long-term orientation of the country and its low time preference. When I am walking through the streets here, I see a lot of buildings that have been built for the long term. It’s probably the most libertarian place in the world.

 

What is the best form of government?

The best form of government is no government.

 

And what is the second-best form of government?

Monarchy.

 

Why?

Also because of low time preference. Currently, the democratic governments are made up of a bunch of bores, who have to win an election every four years, so their time preference is four years at a time. They only think in terms of four years: how they can get what they want now, and then win the reelection in four years. The maximum time a politician usually stays in office is eight years, maybe ten or fifteen. What is beyond, doesn’t matter. The rational strategy to deal with this is to do everything you can to win as many elections you can. And then leave the country dead after you’re done.

 

And in monarchy?

A leader in a monarchy wants his grandkid to be able to rule the country. So he wants the country to be rich and prosperous in 100 years, when the grandkid will be king. Therefore, his incentives align with the interest of the people; they also want to be rich and prosperous in 100 years.

 

Which monarchy is a good example of that?

All the great European empires, the Japanese Empire, and Islamic civilizations have been monarchies. Most human civilizations developed under monarchies. Everything used to be a monarchy – except for the last 100 years, when we got democracies that ruined everything and fought wars and destroyed people’s lives.

 

There was a lot of war before democracies were important, wasn’t there?

There’s always going to be war. But the modern version of war is a product of high time preference and easy money, both of which come together. In most «democratic» countries people have one president who becomes very popular as a consequence. He wins elections and then starts taking people’s money to buy boats and fight wars, and if things go bad, he ruins the country for a century. To avoid criminals like Hitler or Mussolini taking over, you want to have a king. There are kings who do bad things, but mostly not as bad as these criminals.

 

Switzerland is a very democratic country and has not actively partaken in a war for more than 175 years now. The last war was a civil war, which lasted for six weeks in 1847.

I like the idea of self-determination, how Hans-Adam II., the Prince of Liechtenstein, defines it. Switzerland is like that at the local level. The ideal is like that: you’re part of a very small community, but you’re able to trade with the whole world. People at the local level can choose to join or leave monarchies and it’s the job of the monarch to perform the best government.

 

As an economist, you are a follower of the Austrian school of economics. Who influenced you the most?

Murray Rothbard and Ludwig von Mises. Of today’s economists, I like to read Hans Hermann Hoppe and Joe Salerno.

 

You used to teach for ten years at Lebanese American University, and then you quit and started writing books…

I wrote books first and then I quit.

 

You don’t have a very positive view on the standard universities. What is wrong with them?

The same thing that’s wrong with everything in the world: Fiat money.

 

Everything bad in the world is due to fiat money?

Yes, you can summarize my two books that way: Everything I hate is caused by Fiat money and fixed by Bitcoin. Some people might think that’s an argument against the books. It’s not.

 

When did you discover Bitcoin?

I heard about Bitcoin very early, around 2011, as a very dedicated gold bug. I’m not a coder, but I was certain that Bitcoin was not going to work. That was the most expensive and stupid mistake of my life which I see people repeating today. A lot of people think they are smart and know why Bitcoin can’t work, so they don’t bother to read about it. That was me from 2011 until 2013.

 

And then?

Then I started thinking about it seriously, and really became convinced of it around 2016. It took me a long time to develop the humility to sit down and read and learn about it and stop being a smartass who thinks he knows everything. It can take a lot of time to understand: Nouriel Roubini has been laughing at Bitcoin for ten years. And Nassim Nicholas Taleb still has no idea how Bitcoin works.

 

Basically, you think all academic economists are totally wrong. Why do you think that?

They start with the conclusion that government should print money, and then they figure out how to justify it. Or they start with the conclusion that we can fix things by manipulating monetary policy. They find a problem, and they think about how monetary policy can fix it. For me, that’s just starting the wrong way and inevitably leading to the wrong answer. They are not even considering the possibility that maybe the government shouldn’t be printing money in the first place.

 

For many people, it seems to be hard to get out of their standard mindset. They are not flexible enough to see something in a new way.

They’ve been trained for this. Under the fiat system, it makes sense to be an idiot. If the central bank says «The sun rises in the West», it makes sense for you to just believe that. Because you’re going to get paid to repeat that, and you’re going to make a good career out of it. It doesn’t matter how wrong or how destructive it is for the world. As long as the central bank is paying people to behave, the sun rises in the West, and the rational smart thing to do is to believe that the sun rises in the West. Your job as an economist is to justify what central banks are doing.

 

Do you have evidence for this?

Let’s take the economists in the 2008 financial crisis, who were making analyses and giving advice about how to behave in the future, like they always did. But then, within weeks, all kinds of crazy things happened, which they never expected: Lehman Brothers and Bear Stearns collapsed, the Fed bailed out Goldman Sachs and Morgan Stanley. Yet if you look at the economists, they always repeated their support for whatever the Fed did, even after they themselves would have said the opposite was needed a week earlier.

 

How will Bitcoin change this?

Bitcoin is going to punish those people, it’s going to destroy their credibility, it’s going to destroy them financially, because they work fake jobs that depend entirely on a money printer that Bitcoin breaks. I experienced this in Lebanon, with my colleagues at university, whom I told to buy Bitcoin for a long, long time. They laughed at me, and told me that it doesn’t pay interest, and it is not protected by a central bank. Look how it worked out: Their interest is gone, their banks are gone, their money is gone, their currency is gone.

 

The situation in Lebanon is very bad, it’s one of the worst examples of central banks doing everything wrong. The situation in Argentina and in Turkey is not much better.

All of the people living there are suffering and could be saving themselves with Bitcoin.

 

Still, many people seem to be waiting for something better than Bitcoin.

The main issue we need to solve with money is inflation. Bitcoin solved that problem; you can’t solve it again. Sure, the Federal Reserve could make the US dollar less inflationary than Bitcoin or start using gold as money – still, you have to trust them. In Bitcoin you don’t have to trust. You can verify everything yourself.

 

Some say that after the separation of church and state, people now want the separation of money and state. Is Bitcoin going to be the end of government as we know it?

Yes, it’s going to be the end of the 20th century state and its central bank. But it will not necessarily end government completely. The victory of Bitcoin will be the collapse of the managerial state, the warlord state, the nanny state. Let’s remember that all of these bad developments of the state are only possible because of uncovered fiat money. If the state is a tiger now, it’s going to be a little puppy in the future. Maybe we’ll get rid of it completely.

 

Would you recommend buying Bitcoin to a central bank?

I hope they don’t do it, I hope people do it. My hope is that central banks all go out of business. It’s encouraging that central banks are built to be the last people to understand Bitcoin.

 

The responsible people at the Swiss National Bank read about Bitcoin and thought about it. But they didn’t buy it yet.

Someone once asked me, which country was going to adopt Bitcoin first. My guess was Switzerland, because in the Swiss central bank there are people who still remember the gold standard.

 

In your books you wrote about Switzerland leaving the gold standard.

Switzerland had to go off gold in the 1970s. And then, in the 1990s, they joined the IMF, in the 2000s they sold a lot of their gold. An extremely important book for me was «Gold Wars» by Ferdinand Lips, who used to work for the Rothschild Bank in Zurich. This book was the biggest influence for the history part in «The Bitcoin standard» about the fall of the Roman Empire, how it led to the collapse      of European trade and the rebirth      of European trade and civilization with Florence and capitalist city states all around gold, and finally to the rise of the gold standard.

 

Are you still a gold bug?

I still think that gold is the biggest threat to Bitcoin. But less so with every passing day.

 

What would happen to Bitcoin in a blackout, would it collapse?

If there’s a blackout, the central bank is going to be collapsing much sooner. Bitcoin might stop having blocks for a few hours. But there’s always going to be the longest chain and people will move on with it. Also, the grids aren’t that centralized. Any generator can give you the electricity to run a server.

 

Some people feel uncomfortable with having the huge responsibility of storing private keys as Bitcoin requires it. Could banks help there, maybe?

People will want to use Bitcoin banks, so there will be a lot of custodial Bitcoin, it’s already inevitable. We don’t need everybody to own their own Bitcoin. We just need Bitcoin to be distributed enough, so that no single party can control it.

 

How will Bitcoin look in 20 or 50 years? Could it be that the first-level on-chain-payments will resemble the central banking payments of today, and the second-level Lightning Network is going to be used for everyday payments?

On-chain-payments are going to be used mostly for opening lightning channels. And even lightning channels might be custodial. But most people will not have their own channel, they’re going to have their money with a small lightning channel. I think we’ll move to a world in which every      few thousand people have a lightning node      – so basically a small village or big neighborhood      has its own node that handles all the transactions with the rest of the world. Instead of a central bank for a whole country, we’ll have one in each neighborhood, able to clear international payments, but unable to alter monetary policy.

 

What’s the difference to the current system?

In the current system, we basically have just one central bank in the world, the Federal Reserve of the USA – and 8 billion people who need to work with them in order to process their payments. The other extreme would be everybody having their own full node and their own on-chain-transactions – that would be 8 billion full nodes. This is not going to happen. But just because we don’t have 8 billion nodes doesn’t mean that Bitcoin failed. If we end up with every 1000 people sharing a node, then it’s still an incredible improvement. It’s not going to be like now, where you’re stuck with one central bank for the whole world, and if you don’t like it, you just can’t have transactions with the rest of the world, like Iran, Russia or North Korea for example.

 

And the person who controls the Bitcoin node can’t censor you?

If they do, you just leave them and go to another node. In Bitcoin it is impossible for a node provider to change the monetary policy. So, running a node becomes as interesting as garbage collecting or the sewage system. If your garbage collecting service decides to go rogue on you, and wants to charge you ten times as much as before, you just go to another one. As long as there’s nobody who’s forcing you to use have a specific node versus another one, it doesn’t matter.

 

In your opinion, how will society change in the next 20 years?

I’d like to see what happens. We’re going to have less industrial farming probably, and more small-scale-farming. Industrial farming is heavily subsidized by the government. As I discuss in detail in «The Fiat Standard», governments subsidize cheap industrial foods, and pay fake scientists to say that that food is good for you, whereas healthy expensive foods like meat are bad for you. If you replace steak with soy, inflation becomes a lot less of a problem for you!      They want you to eat cheap stuff, because that helps them with hyperinflation and it helps you stay quiet and dumb, which is very useful for them.

 

You have very clear preferences with food. What do you eat?

Beef, but I’m not picky. I’ll have whatever is available. As long as it’s red meat.

 

Is it true that you only eat meat, salt and water?

Occasionally I’ll have a little bit of fish, duck, chicken. But mostly I eat red beef, or lamb.

 

And no salad or fruit?

No, only meat. I usually eat twice a day. My blood tests are good, my testosterone level is very high, I don’t take supplements. I think the meat-only-diet is going to become more and more popular over time. It’s just so powerful. You feel like a completely different person with it.

 

What led you to this diet?

I started reducing carbs 12 years ago and I felt better, so I kept reducing until I was eating very low carb: meat and a tiny bit of vegetables, maybe some fruit, cauliflower or broccoli. I thought I had to eat that stuff. Then I saw people on the internet recommending to just eat meat. I tried it for a month and it was the best thing I’ve ever done. Who the fuck wants broccoli anyway? You were born a superman. Eating plants is your kryptonite.

 

Is the diet affecting your brain?

Since I started the diet I’ve had three children and I’ve written three books, did 140 podcast episodes and offer five online courses on my website. I would not be getting a tenth of this stuff done, if I was eating normally.