Special Episode: The Fiat Standard by Saifedean Ammous
The Fiat standard:
https://saifedean.com/the-fiat-standard/
BUY THE BOOK:
https://saifedean.com/tfs-btc/
The Fiat Standard is Saifedean Ammous's attempt to explain the technology behind today's analog global monetary system. In the same way that The Bitcoin Standard explained the functional essence of Bitcoin and its potential social and economic implications, this book examines 20th century monetary technology and explains its pros and cons, as well as its many failure modes.
The origin of government control over currency came from limitations on the spatial marketing of gold, which required its centralization. Political control over central banks became effectively as effective as gold within the central bank, because gold could not be used for world trade without political control overseeing it. The mixture of political authority and monetary media within central banks has led to confusion between money and public credit, as well as a widespread misconception that credit can perform the role of money satisfactorily. But such a system cannot survive the test of the market, and it had to be implemented by government decree, or by decree, under penalty of violence. Like any violent intervention in the market, this one had consequences.
As the decree formalized and legalized debt monetization, it made debt issuance analogous to gold mining under the gold standard; each new loan increases the existing money supply. While gold has a high stock-to-flow ratio that protects its supply from sudden increases, the Fiat Standard has few restrictions on its ability to generate debt. The scale of the global debt bubble triggered in 1914 can only be understood as a consequence of the formalization of debt monetization.
The use of public credit as a substitute for money disrupts the normal functioning of the market system and price mechanisms. Rather than consumer sovereignty and choice dictating efficient suppliers and the most efficient technologies, it is government decree, embodied by favorable credit policies, that is sovereign in this matter. The book takes an in-depth look at several of these areas of life and economics and the disastrous impacts of this distortion.
Unlike government credit, bitcoin is a present good whose value does not depend on any counterparty. Unlike gold, bitcoin is highly salable in space, allowing it to be spent across international borders without requiring political oversight. As bitcoin rises while fiat currency goes through another of its periodic crises, the Fiat Standard juxtaposes the two technologies and presents some predictable scenarios for how they may or may not coexist in the future.
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Thanks to my sponsors, Bitcoin Conference and OKCoin.
BITCOIN 2022 will be the BIGGEST BITCOIN EVENT IN HISTORY taking place in Miami from April 6-9, 2022.
For 10% off your Bitcoin conference ticket, use code COINSTORIES – visit https://b.tc/conference
****
OkCoin's mission is to make crypto investing and trading easily accessible to everyone around the world. We're building the next generation of tools to help onboard investors and traders who are hesitant about crypto.
Okcoin, a globally licensed exchange with offices in San Francisco, Miami, Malta, Hong Kong, Singapore and Japan. We are a collective of global citizens with a common passion to help decentralize finance and level the economic playing field for everyone, everywhere.
Visit https://go.okcoin.com/natalie for 50 in Bitcoin when you sign up.
https://saifedean.com/the-fiat-standard/
BUY THE BOOK:
https://saifedean.com/tfs-btc/
The Fiat Standard is Saifedean Ammous's attempt to explain the technology behind today's analog global monetary system. In the same way that The Bitcoin Standard explained the functional essence of Bitcoin and its potential social and economic implications, this book examines 20th century monetary technology and explains its pros and cons, as well as its many failure modes.
The origin of government control over currency came from limitations on the spatial marketing of gold, which required its centralization. Political control over central banks became effectively as effective as gold within the central bank, because gold could not be used for world trade without political control overseeing it. The mixture of political authority and monetary media within central banks has led to confusion between money and public credit, as well as a widespread misconception that credit can perform the role of money satisfactorily. But such a system cannot survive the test of the market, and it had to be implemented by government decree, or by decree, under penalty of violence. Like any violent intervention in the market, this one had consequences.
As the decree formalized and legalized debt monetization, it made debt issuance analogous to gold mining under the gold standard; each new loan increases the existing money supply. While gold has a high stock-to-flow ratio that protects its supply from sudden increases, the Fiat Standard has few restrictions on its ability to generate debt. The scale of the global debt bubble triggered in 1914 can only be understood as a consequence of the formalization of debt monetization.
The use of public credit as a substitute for money disrupts the normal functioning of the market system and price mechanisms. Rather than consumer sovereignty and choice dictating efficient suppliers and the most efficient technologies, it is government decree, embodied by favorable credit policies, that is sovereign in this matter. The book takes an in-depth look at several of these areas of life and economics and the disastrous impacts of this distortion.
Unlike government credit, bitcoin is a present good whose value does not depend on any counterparty. Unlike gold, bitcoin is highly salable in space, allowing it to be spent across international borders without requiring political oversight. As bitcoin rises while fiat currency goes through another of its periodic crises, the Fiat Standard juxtaposes the two technologies and presents some predictable scenarios for how they may or may not coexist in the future.
—-
Thanks to my sponsors, Bitcoin Conference and OKCoin.
BITCOIN 2022 will be the BIGGEST BITCOIN EVENT IN HISTORY taking place in Miami from April 6-9, 2022.
For 10% off your Bitcoin conference ticket, use code COINSTORIES – visit https://b.tc/conference
****
OkCoin's mission is to make crypto investing and trading easily accessible to everyone around the world. We're building the next generation of tools to help onboard investors and traders who are hesitant about crypto.
Okcoin, a globally licensed exchange with offices in San Francisco, Miami, Malta, Hong Kong, Singapore and Japan. We are a collective of global citizens with a common passion to help decentralize finance and level the economic playing field for everyone, everywhere.
Visit https://go.okcoin.com/natalie for 50 in Bitcoin when you sign up.
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Time codes:
00:00 Presentation and sponsors
02:02 Why write Fiat Standard?
06:27 How Saifedean researches
12:42 Why are the facts not obvious
6:45 p.m. Wealth inequality in fiat
24:23 Why is it more difficult to afford
34:58 Michael Saylor
39:45 Fiat and food
47h00 Threats of transition to the Bitcoin standard
49:33 Could Bitcoin suffer the same fate as gold
52:18 Unanswered questions
56:44 Saif's reading and conclusion
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