Debt Culture & When Money Destroys Nations

Hi,

you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Have you ever wondered what happens in hyperinflation, what contributes to it, and how do governments let it get that bad? What do people do to protect themselves, and what should we expect in that kind of environment? Well, this episode is for you. Phil Haslam and Russ Lamberti joined me to discuss their Book "When Money Destroys Nations". This show brought to you by Swan Bitcoin. If you're in the US, absolutely get your auto-stacking on with Swan. The process is so simple even a no-coiner could do it. One, autofund USD from your bank account. Two, auto-stack your Bitcoin. And three, auto-withdraw your Bitcoin to your cold storage. Swan doesn't charge withdrawal fees, they want you to follow Bitcoin best practices and hold your own keys. Swan crushes Coinbase's fees for recurring buyers by up to eighty percent and Cash App's fees by up to fifty percent. 7% set and forget, enjoy your life, just swan and chill. Get over to swanbitcoin dot com slash livera to start auto-stacking with swan today. Be sure to use my ref link, swanbitcoin dot com slash livera to get ten dollars of bitcoin dropped into your account when you start stacking with swan. Have you backed up your bitcoin private keys? Look into cyphersafe dot io producing the cypher wheel product. So if you've invested in a bitcoin hardware wallet, are you keeping that bip thirty nine seed backed up? Is it fireproof? Is it waterproof proof, pet proof, and tamper evident. The cipher wheel comes in a wheel shape and it masks the words of your seed, and you slide in the tiles for each of the words in your seed, and it's also got a padlock tamper evident seal so you know if it's been opened. Make sure that you or your loved ones have access to your bitcoins if an accident occurs. Go to ciphersafe dot io and use the code levera for a discount. Knox is a bitcoin custodian dedicated to ensuring their insurance protection covers the full value of their customers' assets. For example, suppose a To hold two hundred and fifty million dollars of Bitcoin with Knox, Knox will seek to obtain two hundred and fifty million dollars of insurance dedicated exclusively to that account and adjustable to volatility, no fractional coverage or narrow scope, insurance for what it's worth, a tool to transfer risk. If you are a Bitcoin company, investment fund, trust or family office, check out Knox for your insured custody, and also see my recent interview with Alex Daskalov from the team. Go to knoxcustody dot com. And finally, Unchained Capital, Bitcoin native finance. services. Multi-signature is really getting popular right now, and Unchained are helping people do it in an accessible and easy way. So why not consider going from zero to multi-sig with Unchained? They've got a Vault Concierge onboarding package where you can have hardware wallet devices mailed to you and have guided setup calls to build your vault together, and you can get a discount if you use the code Livera. Also, when Coldcard next week, so keep an eye out for that, and I'll be chatting with the guys from Unchained again. Again soon. So go to unchained dash capital dot com to find out more. Philip and Russ, welcome to the show. Great to be here, Stefan. Thanks for having us.

Thanks, Stefan.

So guys, do you wanna just tell us a little bit about yourselves? Philip, let's start with you.

Thanks, Stefan. my name is Philip Haslam. I'm the author of the book When Money Destroys Nations. I live in South Africa, passionate about sound money. I'm currently working as the head of communications at a, a crypto project in We called Zimbo Cash.

Yeah, Stefan, it's really good to be here. I joined Full on the, on the book project, Full brought me in as a co-author, and it was, it was really exciting to, to write the book and just be a part of that process. And, so I, I'm a professional economist. I've been a professional economist for about the last fifteen years. I run a my own, consulting business where I provide macroeconomic, research and, and, and strategy, advisory to professional investors. Well, more than predominantly, I strongly come from a, from a, an Austrian, school perspective, and I apply that to, to kind of real world finance and macro and business cycles and so on. So that's my kind of background, and, was a co-author with Phil on, on the book.

Fantastic. And now, gentlemen, I've had a chance to read the book, I really enjoyed it. I think there were a lot of interesting insights in there that I'm sure my listeners will really enjoy. I'd love to just start with, perhaps Philip, you

thanks, Stephen. Russell and I were going around doing talks, around South Africa, actually around the world. We, we, had, had, set up a presentation. It was, two thousand and eight and, and after that we were, were doing these talks. And basically our message was, "Look, we're really concerned about money, money printing as a solution for governments." And, we, we were presenting, I think it was actually to a, a organization that represented one of the reserve banks of, of, one It, it, it was at that talk that, Russell actually turned to me and he said, "You know, we've actually got a country right next door to us that, is an example of what happened when a country printed money on a large scale." And, and I'm telling you, there are stories there that people have never heard. And, and I thought that was very interesting. And, I, I have a lot of Zimbabwean friends, and I thought, "Well, why don't I just go and interview those Zimbabwean friends?" And, and idea of what it looks like or what it feels like to live through hyperinflation, and these were ordinary people that had come out of hyperinflation, and, and just had really, really interesting stories. So I went to, to Zimbabwe, I, I, I traveled there and, and just thought I would, and learn more, and ended up just packing my days interviewing people, you know, ac-across the, the kind of breadth of society, just hearing their stories. And yet, I mean, the interesting thing was that we would start, we'd typically start, people You know, I can't really remember, remember the, the stories, I've kind of forgotten them. You know, but as I would ask questions like, you know, what happened when the stores emptied? Or what did you do when you couldn't get any fuel? Then the stories just started to come and, you know, the, the interviews would last sort of up to two hours typically, you know, I'd be scribbling down as, as, as much as I could, and it gathered the, I mean, the material just grew and grew and grew, and it there was a lot of material and it would be perfect for a book. And, and, and then Russell joined me on, on, on the team and, and together we, we created the book and, and, you know, raised this issue, I guess.

Yeah, fantastic. And, I think the thing most people would think about here is they would say, "Oh, look, that can't happen here," right? And yet there are many countries this has occurred in around the world. Perhaps Russ, do you wanna offer any comments on that?

Is, is that there is this theme of it, it, it can't happen here, and yet it happened in, in, you know, a, a developed modern, country, like, like Germany. you know, it's happened in, it's happened in, in all kinds of economies and countries across, across the world. it's not something that just happens overnight, and it's not something that you, you know, you click your fingers and suddenly, you know, Australia is suffering a hyperinflation. This is a process that, that does take time An inevitable process, but if you keep making bad monetary decisions, if the central bank continues to bail out the banking system, continues to drop interest rates to zero, continues to print money, continues to provide liquidity and, and debase the currency, there's, you know, considerable risks that you move, that you move towards this path. Now, it doesn't have to end up in, in full-blown, you know, million percent hyperinflation, but, but, high or, or, or kind of low hyperinflation, possibilities are, are really a threat for, for just about any currency, for any country on a, on a, on a fiat government run, you know, money system. And so, I, I think people have to be vigilant and they have to hold, you know, politicians and central bankers to account. And one way that that's being done is through, is through decentralized, cryptocurrencies. So, that's very exciting, but certainly, it is one of those things where, where people do believe that it's always gonna happen in some Far off country, and, and, w-w-when central banks misbehave, when politics starts to control the supply of money, all bets are off, Stephan. This, this can really, unleash some, some terrible forces.

If I could add to, to what Russell just said, in the last hundred years, there's been, fifty-six instances of hyperinflation. That's on average more than one every two years. It's a regular event, so, you know, standard thing that happens when, when countries print money. Few people know that in, in, in terms of, kind of the, the cultural aspects of hyperinflation, America has had hyperinflation twice. i-i-it's happened in, in, in many developed countries of the world, and it's happened in many, rural,

Undeveloped, countries of the world. It, it, it's indiscriminate in its, application. You know, money printing taking place over a long term leads to inflation, and if that's unchecked, it leads to hyperinflation. It, it just happens. And, and, and yet very few people are talking about it because countries around the world are printing money on a huge scale.

Yeah. And, what would you say are some of the typical preconditions? From reading the book, one of the preconditions that I saw was essentially That governments run up very large debts.

Yes, I mean, money printing's always driven by debt consumption. So, you know, i-i-in a normal economy, people work hard, y-y-you work hard for the goods that you, you, you, you get, okay? And, and then, you know, there's this, this idea that maybe you could borrow from other people and, and, and consume, okay? And, and borrowings are, are, are great while you, you have, access to credit, when It's, it's not so great. Governments have a unique third option. So they can, they can, initially they can, they, they can have a, a, a productive society and get taxes and, and, and, and spend money on, on, on things, from tax revenue, or they can borrow. and that's typically what they do, they borrow and they g-- and they, they rack up s-s-significant amount of, of debt. And then at some stage, they begin to realize that they can print money To, to continue cons- consuming and, and print money to, to, repay their debts. And there's typically a major, pivot moment, and that pivot moment is when lenders who are lending money to the government begin to, to get concerned that the government is going to, isn't gonna be able to, to repay its debts, okay? And, and that lending moment is typically a credit crisis of some form or, or, or a banking crisis. So- A, a, a crisis of confidence where people suddenly stop, stop, investing in bond markets, and, and the government now is suddenly faced with a significant, decision. Does it, does it tighten its belts? Does it allow the, you know, the, the It, it, it basically has a, as, as, a much shorter rope in terms of its spending, and does it actually sta- you know, retrench its, its, its people, its employees, all of those sorts of things, or it could continue spending, and it can continue spending by accessing the money printing press and, and, and, you know, bailing itself out using, using the, the central bank.

Also curious as to whether you, either of you have any reflections on whether it matters that it- Primarily public sector debt versus, let's say, private sector debt. Let's say that there's a country and a lot of the private companies are, are running up high debts. How would you contrast there? Would we say here it's basically about mostly public sector debt that matters in, in this case?

Yeah, Stefan, I think, I think that's a good question. I, I think what we see historically is that, is that public sector debt Is definitely a very strong driver, but I don't think it has to be exclusively that at all. I think it's, it's the entire sort of political economy around, around debt and around credit, and when you have large corporations that get excessively indebted They have a lot of political influence to, to curry favor with the authorities and with the central banking authorities to, to monetize those debts. So it's, I think, I think the, the better way to think about it is that you get to a situation, where, where debt needs to be monetized politically, politically speaking, there's an imperative to monetize the debt, to basically make the debt go away. and you do that by, by printing money, you do that by By, replacing the credit instruments with, with cash. and so, you know, I think this is an important point because a lot of people who, who don't see high inflation as a plausible scenario, they, they keep bringing up the specter of debt deflation, which is essentially when the banking system will call in credit and, and money supply, fiduciary media, broad money supply will contract, and that will be this kind of deflationary event. And that's mechanically, and theoretically correct. That is certainly what can happen in an economic crisis. You will get banks calling in loans, and you can get this kind of deflationary event. And to, to a large extent, the, the lack of manifestation of inflation in the, in the major economies of the last ten, twenty years is partly explained by this, this, this ongoing kind of, debt deflation imperative in a debt saturated system. So that is, that is there, but the political imperative That continues to push back against that, that debt deflation is the, is debt ma- is the debt monetization imperative, and you can con- you know, you know, it doesn't matter how big the pile of debt is that wants to deflate, if you like, where it doesn't matter how many loans banks want to call in to, to, let's say, restore their, the, the health of their balance sheets or, or become more prudent, the central bank can always just press control P, and, and create more digital And create more money. And, and so, so the, the extent of the deflation threat in, in this unstable credit system is really the, also the extent of the inflation threat. It's the other side of the coin, where you have this economic imperative for deflation, you've got this political imperative that matches it, and I think exceeds it in many instances for, for inflation. And, and, and quite right, it, it's, it's a monetization not just of, of government debt, but of corporate debt. And I think in the final analysis, probably of household debt as well, it, it becomes a sort of bailing out of, of everyone via the printing press, but of course, everyone ultimately pays a terrible price for that because it's, it's, it's shortcut economics, it's not a real solution.

excellent comment, sir Russ. one other question I've got that comes to mind on this whole question of printing money. Now, some people might be thinking, "Oh, well, see, Zimbabwe, they were like the basket case. See, they were doing print and spend, whereas in the other countries of the world, maybe the ratio is a little bit different, right? Because you have central bank-created money, and then you have the money that's created by private banks ba- on the basis of reserves created by, you know, by, central banks. So And spend. So I'm wondering whether you, whether you guys have any comments on that, like does it matter which kind, or does one eventually become the other?

I wouldn't mind jumping in there, and then Phil, Phil's welcome to, to pick up from where I leave off. But, what you saw in Zimbabwe, from the mid-eighties through right through the nineteen nineties, you know, people think it's a basket case, this, this poor African country, but Zimbabwe had quite a sophisticated banking system. It was a banking system that was very much based on Was very much an offshoot of the British banking system. These were, these were pretty sophisticated, fractional, you know, reserve banks. And what you saw through the eighties and nineties, was actually not so much central bank print and spend, but you-- it was actually a loan and spend, kind of system. And, and you actually saw the Zimbabwe dollar de-depreciating substantially through, through that sort of ten, fifteen year period. bank credit was really the, the main game in town, aided and abetted of course by easy monetary policy from, from the central bank. But it was really a huge expansion of bank loan assets and bank balance sheets. and I think that goes precisely back to my previous comment is that, is that the, the print and spend tends to be preceded by the loan and spend model, and once the loan and spend model is, excuse the pun, you know, spent, once, once, once it's, once it's- Hired and, and, and, and, you know, once it's run out of runway, that's when the print and spend model, so, yeah, the, the print and spend model kind of takes over from that loan and spend model, and that's precisely why we, we have that imperative, that political imperative for debt monetization. So, so this is, this is a process that you see through, through, through most systems And it's very much something that we can see happening in, in the major economies now. You, you've had a few decades now of extreme loan and spend, policies by the private banks. But for the last ten years, I mean, you know, really longer, but certainly for the last ten years, you've had, you've had kind of direct print and spend. yes, it's accompanied by all kinds of, you know, financial repression, all kinds of middlemen through, you know, the Fed using primary dealers and, Sizing the debt, but, but going via a primary dealer and buying, buying the, the, the treasury securities and so on. But basically, it is a, it's becoming a print and spend system more and more. And in fact, you've seen that very much through, through the corona crisis. the checks that have been sent in the mail to, to people in the United States, are indirectly, but only slightly indirectly, you know, funded by the Fed. the US government has created these special purpose vehicles so that it looks like it's the, It's the US Department of the Treasury that's, that's doling out this cash, but really we know that the Fed is just printing it up, in the background. So, so, we are, we are at a situation where loan and spend is, is bleeding now into a, a kind of print and spend model, and I think that's really important for people to understand. Zimbabwe was not just a case of, Robert Mugabe came, came to power and he just started, you know, rolling off these, these, you know, reams and re Almost a, a, a problem of unsound banking that then, a, a-and, and public sector management and, and, and fiscal management that then graduated into this big print and spend problem.

Excellent. Now, Philip, anything to add there?

Yeah, I think, I think I, I would add, you know, your, your previous question to this was, you know, i-is it, government debts that drive money printing or is it personal and household debts that drive, money printing? And, and, the answer is it's, it's, it's all debts because there's this, layer of the economy that facilitates all debts, and, and that's the banks. And, and, the banking system effectively, you know, is linked, links all debts to, to one another. And, and so you, you, you get this loan, as Russell said, this loan and spend, thing. And then when the banks, when, when, when the banks are, are, are shown to effectively be, insolvent, the, the government has no other opportu-- no, no other, solution other than to print money. And, and so, you know, what, what we wanted to do is to take Zimbabwe as a, as a template and, and to really, break it down, but it's a template that applies to all nations. You know, there's this, this lie that goes around, you know, with, s- for instance, with communism, people say, you know, com- communism works, it just wasn't implemented properly in these other countries, okay? And- And it's the same thing that, that we hear with, with money printing. They say, "Yeah, like Zim-Zimbabwe was a banana republic, and so of course it was gonna go into hyperinflation." But we, we're special. We can create money from nothing. And we'll do it in a very sophisticated way, and we'll, we'll avoid the consequences of hyperinflation. But unfortunately, the economic, consequences of money printing are the same everywhere. And, and, and so what, what you see, what we're seeing out in the world today is, is, perhaps a, a more sophisticated version of what happened in Zimbabwe, but, but it's the identical sort of process, that, that, that happened in Zim.

yeah. And also, I'd love to hear if you've got any insights in terms of what were the motivations of the government of the time? I mean, perhaps from your interviews, there's some insights there, 'cause I, like, surely maybe from an outsider Just keep doing it.

Phil, I'll, I'll go quick. You, you, you interviewed a lot of people on the ground. I mean, my, my perspective, Stephane, is just that, that Slightly bad political decisions can snowball into very bad political decisions, you know, and you, and you get this kind of vicious spiral. Bad policy begets bad policy, and, and, you know, dirigiste, governments who make bad decisions think they can then get out of those bad decisions by making even worse decisions, and I think that, to a large extent, sort of explains a, a lot of what we saw in Zimbabwe. When, when Robert Mugabe came to power in nineteen eighty I think there was a lot of goodwill, there was a lot of good intentions, we talk a little bit about that in the book. you know, there was this historical kind of racial animosity, there was also tribal animosity amongst, amongst the, you know, indigenous African groups. So it was a, it was a divided country, but, there was, there was goodwill and there was a lot of international kind of goodwill towards Zimbabwe. and then what you started to see was this kind of gradual institutional unraveling. And you started to see things, things deteriorating, and you started to see political pressure groups getting, getting, like the war veterans, for example, getting, very frustrated that they weren't moving ahead economically and financially. And, you had these, these major political, sort of forces putting pressure on the government to, to make conditions better. And, And so it was just, you know, one after another, just small bad decisions that started to mount up. It was, it was, you know, death by a thousand cuts through the course of the eighties and nineties, and, and by the time you got to that Black Friday event in nineteen ninety-seven, you know, the floodgates were kind of ready to, to burst open. And, and once that happens, I think, I think the politics takes on a life of its own. the, the social political dynamic of this thing really comes to the fore I mean, yes, we, we know now with hindsight that Robert Mugabe, you know, turned out to have, to be a, a kind of dictator of, of sorts, and, and, you know, ended up grabbing hold of the country with, with quite an iron fist. I don't think that was necessarily always the intention. I think, I think we got there through a series of bad decisions, the political incentives that, that then, that then sort of are created around all this, and once the floodgates had opened and once this, once the horse had bolt I'm throwing in a lot of metaphors here, but, but, you, you just saw, you just saw the, the politics really get ugly. and I think that's-- there's another lesson there, in this, because we, we look at the major economies of the world, we look at sophisticated developed countries, and, and they've historically had, had kind of fairly orderly, politics, but we're actually seeing really disorderly politics starting to take shape as we've got- You know, more and more money printing, as we've got, you know, we're now a full decade, well, we're actually about twelve years into, to the, the, the, you know, the really extreme money creation by, by global central banks, since the financial crisis, isn't it, isn't it interesting that the politics is also getting uglier? As we create these ridiculous asset bubbles, as we, as, as we, as house prices move away from young people trying to form families, as income inequality grows because of the, the can Mental effect of, of all this money printing. Isn't it interesting that the politics is getting more and more volatile? It's getting uglier and, and, and the politicians are, are increasingly being compelled to respond in, in more and more, irresponsible ways using, using, monetary policy and fiscal policy in more and more irresponsible ways. That, that, that is, that is something we saw in Zimbabwe as well. It didn't start out, as a banana republic, it got there through, through a thousand cuts.

Yeah, really. Interesting comment, sir. and also, so go on, go on, Philip.

I, I, I, I, I must say I, I was smiling at your question. I think it's a, it's a funny question 'cause your, your question basically was, you know, Surely the, the government would have known how silly it was to print up a whole lot of money, okay? In a nutshell, that's your question. Yes. And, and, you know, and let's sit in the context of a, of a world environment where, where governments are printing trillions and trillions of dollars. And we could say the same thing. We could say the same, same thing. Surely they would know. Surely they know that no one can just create money from nothing. And try and stimulate an economy. And the bottom line is that it's driven by a debt culture, where, where debt, if you don't print money, the debts are gonna come due, the banks are gonna go insolvent. Okay? So there's an imperative that, that you've got to, to fix a broken system. And, and it's also driven by an entitlement culture where people are beginning to say more and more and more, "No, what about, what about me?" with my money. And the government say, "Yeah, we can rescue you, we can rescue you." And that's all driven, so this debt, debt consumption, debt, debt entitlement drives the money printing process. It's what drove the money printing process in, in 1997 with Robert Mugabe and with everyone then. It's what's driving the money printing process now.

Yeah, excellent comments there. And also, I'd love to hear a little bit about the time periods that we're talking about because, you know, people might be like, Printed a lot of money, does that mean inflation's happening tomorrow? Well, no, it takes time for that to play out. So, if, if you've got any comments you can offer from, you know, like a rough timescale for listeners to think of, you know, roughly when the, let's say, the point at which the government debt started to rise a lot to the eventual hyperinflation, like how many years are we talking?

The, the, the, the, the Black Friday moment was in nineteen ninety-seven, and the, the currency finally collapsed,

2008, beginning of 2009. So, you know, eleven, twelve years. I think, just to, to add to that, Russell, I get this qu- we get this question often, and, We, we, we wanna be very humble in our abilities to forecast. We just, we think that there's some basic principle qualitative, comments around these things. The first is that it takes time. It takes time. No one just sort of slips into hyperinflation, you know, you start printing money and the next day you're in hyperinflation. It actually takes time. And, and the next thing is that, that money reflects, is, is the, the other side of, of, of, of transactions in, in an economy, and so it reflects like Like, it makes extremely chaotic, kind of embedded, economic, system. And, and, and the way those m- that, that money flows in, in, in an economy is, is, is nuanced and it's different in every economy. So, so we, we, we are humble in our abilities to predict, predict But, in a nutshell, it takes time.

Yeah, sure. Yeah, I, I would just, I would just add to that, it's a, it's a very, very good question, it's very important, and I, and I think, you know, I, I think that there were a lot of people in two thousand and eight when, when they saw the quantum of what was happening and they saw, and they saw the word that starts with a T, you know, the trillion word, They, they kinda got a huge fright because trillions historically have only been associated with, with hyperinflations, typically. and, you know, be-before that, the world dealt in, in millions and billi-and, and billions and maybe hundreds of billions, but, but suddenly trillions were being thrown around, and I think that, you know, a lot of, a lot of Austrian economists, a lot of, a lot of kind of people who are, who are, who are more monetarist In their, in their focus, they saw that and they said, "Man, hyperinflation in the US is around the corner." and, and I think they-- what they didn't factor in was a couple things. The first was that a trillion dollars adding onto the, the existing US money supply, isn't actually that much. It's not, it's not anywhere near the, the sort of quantum of monetary misbehavior, if you like, that would be required to generate, you know, serious inflation dynamics. I think the second thing that was missed was the, was the debt That was happening on the other side of the ledger, and I think, the third thing was probably that because of sophisticated financial repression, a lot of this money printing can be channeled into asset prices, and it gets into this, this asset price vortex almost, where it, it doesn't spill out into obvious- Consumer price inflation. Now, I do think you have rising cost of living, I think there's systematic ways in which the CPI indices underestimate inflation and so on, but, you know, let's be honest, you haven't had high or hyperinflation in, in, in those economies, and I think for the reasons I explained, what you've got right now going on in, in the US is, is just a major, massive quantum of money printing. You've got, alternative kind of Austrian defined money supply Growing at about, probably forty percent year on year, maybe thirty, thirty percent year on year, in the US. So they've added about a third to the money supply just over the last, over the last six, nine months, which is, which is astonishing. So, that doesn't mean, ag-again, that doesn't mean hyperinflation is imminent, but to Phil's point, it does take time. I think the final thing I would add on this is that, if you, if you, consider the, the size of the capital base of these major economies. You know, Zimbabwe was, it had a sophisticated banking system, but it was, all things considered, a poor country with a relatively low capital per capita, sort of base. these, these major economies are wealthy, they've got tons of capital, they're consuming a lot of capital, they're eating into their, their savings, the, you know, the, the, they're in-- they're creating the, the, the makings of a very, very big crisis, which I to, to a large extent, upon us and now starting to unfold. but if it takes, if it takes, you know, it took, it took twelve years or so in Zimbabwe from, from the Black Friday event, it really took about twenty years of, of real financial mismanagement and misbehavior. So, you know, in, in a developed economy with more sophisticated systems, with, with more means and mechanisms of, of financial repression and with a more accountable political system that, that sort of holds, the, the, the monetary poli- Policy together a little bit more tightly than it, than it did in a place like Zimbabwe. this is going to take longer, so, so this isn't an overnight process, but I think what's interesting and what's important is that you can see the negative social and economic effects of money printing long before you get hyperinflation, and I think we're experiencing that now in the US and many other places.

Excellent, and, I'd love to now discuss a little bit about some of the process and actually what happens, and you, you mentioned even like this, we might talk about even this idea of the culture of inflation. So in the book, you've got the six gorge moments, and so I guess each of these are kind of Good milestones or things that listeners can think about to try and look out for these signs of inflation. And so the first one you mentioned is this idea of past inflation becomes future inflation, i.e. instead of people calculating based on, you know, the inflation CPI for the last year, they now start to expect inflation in the future. Can you elaborate a little bit on that idea?

Sure.

So, so the, what happens with money printing is, is as you print money, it filters into the economy and it causes prices to rise. And, and it typically does that in a delayed way. So, so you print money And the person who, who prints money can buy real goods and services for himself or, or, or for themselves and, and, and, and, and use that, that, that money that they printed. And that, newly printed money then filters all the way through and slowly people begin to experience these, prices beginning to rise. But you can't fool people, on an ongoing basis forever. After a while, they begin to realize that prices are gonna rise. That Oh, there's some money printing that's happening, is, that's gonna result in prices rising? And the, the time lag for those prices, rising begins to shorten. And then, you know, we, we call these gorge moments in, you know, they're, they're cultural shifts that happen in an economy, on the way towards hyperinflation. But as the, the, the government begins to print money, the time lag between the printing of the money and, and the, and the prices rising shortens and it gets shorter and shorter and eventually an important gorge moment happens where people begin to raise prices in expectation of the money printing. Okay. Now, money printing, is, is following the, the, the prices rising rather than causing the prices to rise. And that's an important moment where inflation begins to accelerate.

And then following from that, we see the next stage, which is money shortages. So what does that look like? Perhaps Russ, you wanna take this one?

Yeah, well, as, as Phil said, so as people start raising prices in expectation of money printing, one of the risks that starts to emerge is that, prices rise at a faster rate than, than new liquidity is actually being injected into the system. and so you get You get this experience of money shortages. It's this very, kind of absurd paradoxical thing that goes on during hyperinflation. Where you're actually printing so much money, you get this, you, you get what feels like mon-money shortages. Now of course what's-- That, that's the moment that really should be where the, the, the liquidative painful recession takes place and you reset the economy, you have a big deflation And, you kind of clear out the malinvestments, you clear out all the mess, and you kind of move on. but s-so prices are rising, faster than new money's coming in. the, the, a-and what's going on there is that the standard of living is going down. You're actually starting to feel the bite of the real resource constraints that are, that are now manifesting in this, in this breaking economy, if you like. And again, the, the political imperative there is to, is to, alleviate the money shortages and the- The way you do that is you print even more money, and this is how you get this, this kind of vicious cycle of printing and prices going, in-inflation going up, prices going up, and an accelerated imperative for new printing. So the great irony of hyperinflations is that for a lot of the time, it feels like you've got a tremendous shortage of money. Not a lot of people realize that, but it's a really interesting feature of hyperinflation.

Yeah, you hear of stories where, people don't have the right change or the right coins and notes and things, and so then they're like rushing back to try and make sure they've got the right change so they're not dramatically overpaying and/or that they've got enough and that sort of thing. and even speaking of being at the stores, I think that's the next gorg moment, right? So some of the stores start to empty out. So what does that look like?

Yeah. So, so the businesses at this stage are, are, undergoing a lot of pressure. And, and the pressure is, is very subtle, very difficult to, to, measure or to actually,

It's, it's very, very difficult to pin down. because, you know, you as a business person, you sell some goods and, you make a profit, but now to restock your store, you need to go buy new goods, and the prices have already risen by the time that you, you buy the goods, and by the time it's, it's delivered to you and you have to pay, then, you know, your, your, your effective margins have begun to shrink. And then, so you, you, you, you raise your price, in, in response, and you sell, your goods in the store, but by the time you, you restock your store, the prices have risen, risen again, and, and, and so your margins just, you get this margin creep, and, and, your, your input costs get higher and higher and higher relative to your, your, selling prices. And, and so the, the, the The next gorg moment is, is the moment where, businesses begin to experience real losses, even though the selling prices, the, the, the selling prices of their goods are rising on a daily basis. And at that moment, stores begin to empty, you start to get shortages across the, the country, in, in, and, and, you know, it, it, it typically affects your, your manufacturing sector first, and then your, your retail sector. and, and, and, you know, it affects the, the, the, the moment of, of, businesses becoming unprofitable is a different moment for the different types of industries, but you're basically getting, you get the industries begin to shut down at, at that stage.

I, I would just add quickly that, what's going on here, as Phil's, what Phil's pointing out is that what's actually going on here is a real, is a decline in real resources, and, and you could bring in Say's Law here. Assume what we've actually produced, right? and you, you just, you, you, you can't produce, as much because the economy is actually in a hyperinflation going through a major depression event. all the nominal variables, GDP in nominal terms, the stock market in nominal terms, these are all going up, but in real terms, the economy is contracting ten, twenty, thirty, forty percent. I think the Zimbabwean economy probably contracted about seventy or eighty percent at its, at its peak decline. So you've, you've got this major real resource constraint going on. So part of the reason for the empty shops is just that there's not enough stuff being, being produced. The other big one that, that does almost always come in in a hyperinflation is price controls. So the price controls are critical because as you put price caps, these are politically motivated ways in which you try and pretend to your population that you're, that you as the government are, are stopping the inflation, so you put price controls on. Well, that's gonna cause empty shops, you know, almost immediately because you're gonna get an overconsumption of goods and undersupply relative to the market price, which is now hurtling much higher. And so a huge black market develops, a huge illicit market develops outside of the stores for, for goods and services. But the, the, the official sort of state-regulated businesses, they, they just run out of products. And, and you had a, you had a draining out of products in, in Zimbabwe and supermarkets, very, very similar to what you've seen in Venezuela in the last few years.

Yeah, it's a really good point about the price controls. I've definitely heard of that, phenomenon also. and then we also reach a point, well, next, next phase is, end of lend. So banks stop lending. Why do they stop lending?

It's, these are all, all dynamics that, that happen, because the currency is getting weaker and weaker. effectively, what's happening with, inflation is that the currency unit actually is losing its buying power. It's becoming less and less is valuable. So people, stop wanting to hold the actual, currency unit. And if they lend it, i-if you, if you have, debts, Assets that, that are, are, are, are debts. We've lent money to, to people. It's, it's the same sort of thing, isn't it? You, you, you're, you're denominated your, your debts in, in, in, in the currency, and the currency is losing value, and you're gonna get paid back less and less in buying power. You'll get paid back exactly what you, you, you're due in terms of that, that currency, but the buying power of that currency is reducing. And, and, and so in response, what you do is you increase your interest rates. So in, interest rates typically, rise. But, but, the way that the, the inflation process works is that it becomes m-m, more and more unprofitable to be lending money to people, you end up losing more in the inflation than you can get in interest. And, and at that stage, that's the moment where, where capital markets, basically stop, shut down. People don't wanna lend anymore. It's very difficult to get any, any, credit from, from, from, the retail banks, from, you know, credit lines on, on, say, for instance, your, your supply credit, those sorts of things. Those, those get, get, get shut down at, at that moment.

Yeah, and a-and again, I would just add that, that it's because you've got this huge real resource collapse, and you've got this huge real economy implosion, and so, and so businesses are, are not, you know, businesses and people are, are not good real credit risks, you've got businesses failing, you've got households, losing their jobs, and this is another way, just to link it back to something we said earlier, this is another way that, that the disappears and becomes the print and spend economy. i-i-i, this is part of, this is, this is all part of that process. So, yeah, absolutely, it becomes unprofitable to lend, it be- the, the, the credit markets become fairly chaotic, it becomes very difficult to price credit. And of course, the other thing that happens is that the central banks, a-and the governments will typically regulate a little bit like, like price controls in the shops, they will regulate the price of credit, and so they will try and squash interest rates and limit the The, the amount of interest that can be charged on a loan, and of course, as a lender in hyperinflation, if you can only lend at, say, let's say, let's say they, they cap out the interest rates that you're allowed to charge someone at a hundred percent, which is a very high interest rate, but if inflation is running at three thousand percent, then a hundred percent interest rate is simply not gonna cover your, your inflation risk, let alone your, your, your credit risk. So, yeah, you, you basically get this huge drying up of

Any real lending that's gonna take place at that point is politically favored access to the banking system, where the banks are compelled to lend to, to favored sort of cronies. or you're gonna get, you're gonna get real lending that'll take place in a different currency plane, either in a gold plane or a foreign currency plane, dollar lending. in a modern context, you might get some crypto lending, some, some decentralized finance, that kind of stuff. but yeah, lending in the hyperinflating currency just, just dries up.

Yeah, very scary stuff. All this is going on socially, you know, people aren't able to buy the things they need and, and another point you touch on in the book is that essentially people really needed to have a good network of people, of friends, because they wouldn't be able to just buy things, they had to rely on having these networks and relationships, right?

Yeah, I mean, what, what, what you're, you're, you're, what, what really is happening in a, hyperinflation is that an economy, is imploding on the back- Of a currency falling out of use. Okay? And, and so your entire, economic framework, that's based on trading using money, trading using a banking system, trading using, a credit system, that entire framework disappears. And, and people are forced to find alternative ways To engage in normal trade, and that's, that, that, that, means, descending into a barter type, Economic system. And that means that you need to actually have connections into, to Barta networks. Who, who in your network do you know that would have, access to fuel? How would you get food in, in, in, in an environment where you couldn't get it in the stores? if you, if you couldn't get to, to work, what, what, what, you know, what alternative, work arrange-arrangements would you make? You know, these are all simple questions that, that every person faces in their ordinary life. And they don't realize that they, that they've answered all those questions using a system that if, if taken away, make, puts, makes them very vulnerable. And, and so in Zim, in, in Zimbabwe, in, in, in, in the first hyperinflation, people had to really rely very deeply on their relational networks, and, and it became a very, undercover black market, barter network that, that, that was, developing the supply for, for People's food

and goods. I think, I think that's also how you, you transition into this, this Gorge moment number five, which is the, the flight to real value. So the currency's disintegrating, you wanna get hold of something that, that holds its value longer than, you know, ten minutes. Haha. I think, I think we, we might have mentioned something in the book where people were even buying milk because milk, milk lasts longer than, than the value of the currency. but, but having that, so- So a flight to real values is this, is this rush for, for getting hold of things that are gonna help you survive, you know, and, and that's where this community net-network comes in. That's where you, you can't be an atomistic, isolated, individual sitting behind your laptop, sipping a latte, you know, in your, in your, in your, you know, twenties, tw- twentieth floor apartment, you know, in, in a city somewhere, you've actually gotta be engaged in, in building real resource networks. and so that's very much part and parcel of what happens in this flight to real value is, is a kind of almost community effect where people can come closer, it can also disintegrate into, into tremendous chaos and disorder. In, in Zimbabwe, you, you certainly had a bit of both, but the predominant, thing that Phil picked up, you know, from, from Zimbabwe was that the community kind of generally came closer together. In, in Weimar, Germany, if you read, Adam Ferguson's When Money Dies, there's, there stories of social disintegration. So it kinda can go either way, and it, it depends on the underlying, I suppose, cohesiveness of that particular society.

Yeah, really a good point there. and s- that "When Money Dies" is a phenomenal book, also, a-and that's actually the next, gorge moment, isn't it? you see, well, in, in that case, it was dollarization. So what drives that decision?

Ultimately, no one wants to, hold onto a currency that's depreciating. And, initially, you know, people stop using the currency, and then, will continue using the currency because the government forces them to use the currency. Now we're talking about legal tender laws, government makes it legal to, to use other, types of currencies, you know, places very restrictive, laws around the banking system, and actually- Forces people to, to, make transactions through the banking system so they can monitor it, okay? That's the standard thing that happens in hyperinflation. but a time comes when the pressure of money printing is so substantial, it is so impoverishing On people, that it doesn't matter how, aggressive or, or, or,

how, how suppressive the government, rules are, people just won't use the currency, okay? And, and, you know, it, it- It, it goes, at multiple levels in the society, and ultimately it's embraced by the government, because government has to, is gonna have to s- spend money to pay its staff, it's gonna have to, spend money to, to import fuel for its, its military and, and, and all those sorts of things. And a time comes when it's just, you know, the hyperinflation pressure is just too much, and even the government begins to, let go of, of, its currency. And it's the moment that the out of use, that, that it becomes a relic, it becomes a historical, thing, that, that people don't use it anymore for a currency, it's now just a piece of paper that, that's not recognized anyway. Becomes,

becomes a collector's item, and that's, that's, that's the kind of wheelbarrow money, that's the money blowing around in the wind on the streets, and you can go pick up, you know, Zimbabwe dollar notes at a, at a local, you know, market that sells, artifacts Pick up these notes, but yeah, that comes from, from that currency just, just totally crashing out of use, and, and it's a culmination of just, just unbearable hyperinflation, and I think probably also the political class finally getting to the point where even they can't game the system anymore, because what you see through all hyperinflations is, is a favored class uses these price distor-distortions, uses the, the distorted fixed exchange rates to, to, to, to do arbitrage trades where they- Where they essentially scoop up the, the last remaining bits of wealth, in the economy. And I think what you saw in Zimbabwe was that even, even they couldn't carry on with that kind of activity anymore, it had all just kind of gone to, to virtually ground zero and, and, and it all just crashes out of use. And then they adopted the dollar, but also the rand, and eventually, Phil, Phil might know this a little bit better, but you had, you had about five or six currencies at one point circulating as, as sort of legal tender. I think the Australian dollar It was s-surely the rand, the US dollar and, and probably the pound and a couple of others. so you had this, you had this, this kind of eclectic monetary system which- Could have, you know, graduated into something like a bit of a, bit of a free market for money, and you, and you certainly had aspects of that going on in Zimbabwe, but, but the government has once again enforced a kind of repression, and that's a lot of what Phil's work is trying to, to achieve is to, is to use, crypto technology to, to move to a place where, where Zimbabweans have, have, you know, have better options, in the face of this tremendous monetary, monetary oppression, and of course- Of course, Bitcoin and other cryptocurrencies, for, for many people around the world, offer that kind of opportunity, and I think it takes us into a very exciting new direction in the future because when Zimbabwe's hyperinflation happened, there wasn't a good decentralized, distributed, online money, you know, and, and now we have those options. So that's gonna also, I think, change the complexion of what hyperinflation looks like in the future, which is, you know, I suppose a whole nother topic that, would be fun to

have. Of course, yeah Essentially, people will be struggling to get their money out of the country or perhaps people who had, let's say, trusted the government system of thinking, "Oh, just put it in cash and bonds," or, in Australia, it's called superannuation, or in the US, it's the 401k or whatever the retirement savings accounts were, the, the pension accounts basically, those accounts just get destroyed, right? So what are some of the things that people do to try and, get their value out? It's

a, it's a great question What, what you're asking, is, you know, what's the solution? What can we, what can we invest that, based in that will retain its value or, or, or, or grow in value as a result of, of, of money printing? And i-i-it's a very difficult, q-question to answer because of, of several things. The first is, is that money printing is very, very difficult to, put your finger on. Okay. It's been a lot of money printing happening in the last several years

Clearly where that money printing went and, and, and, you know, you know, how, how, how has it actually affected them? The, the lives have changed, the, the, the whole broader economy has changed, significantly, but, but, but people wouldn't be able to say to you, the reason that house prices have increased is be-because of money printing, or the reason because of stocks, stocks have increased is because, because of money printing. You know, everywhere you look, people are, are giving e-every other reason for- Prices rising, but not money printing. So it's very difficult because people, you, you, you actually can't see it that easily. You can't see the effects of money printing that easily. but that's it for us. we believe that, sound money alternatives are, are the, of the future. We believe that wh- when you have a, a, an economy that's printing money on a large scale, people will naturally move from a- from a weak currency to a strong currency system. or said another way, would move from a, a, a money printing environment to a sound money environment. and, and that's certainly what happened in Zimbabwe, you had people trying to take their money and putting it, into, foreign currencies that were relatively sound. You, you had people, taking money and putting it into commodities that were sound, specifically fuel, and, fuel and food. And, and then in, in, in other types of-

Yeah, and I'd love to, you're gone. Yeah.

Oh, I was just gonna say, Stephan, quickly, that, you know, basically in, in a, in a traditional portfolio, cash and bonds in a hyperinflation go to zero. And so you wanna be, you wanna be out of cash and bonds. Now, what does, where does that leave you? It leaves you with options to go into gold, to go into crypto, to go into foreign-denominated, assets and instruments to the extent that you and then, interestingly, equities in that country can sometimes perform very well, provided you're buying real value stocks. And what you saw, a lot of companies in Zimbabwe, they changed their traditional business models, and, and some of them would just end up buying physical things on, you know, to hold on their balance sheet, like, like just buy tons and tons of bricks or, or raw materials, just, you know, even if they were like a service sector business, just to have something real On their balance sheet to, to kind of store and hold value. and so it's, it's, it's, it's all about the flight to real value in a time of hyperinflation, so getting away from the, the domestic cash and bond market. Now, that's where a lot of pension f-money actually does sit. And during, during crises like these, you get a lot of governments that try and force the, the pension funds to, to hold cash and bonds, particularly bonds, because the government's in a debt, in a debt spiral.

Consider what it, you know, the implications of taking the big tax penalties to, to get out of those pensions, before retirement age. you know, if you see, if you see your country going down this very, very perilous route, these are the sorts of decisions, hard decisions that have to be, have to be considered.

Yeah, that was, I mean, I was literally about to ask you because you touched on this idea of what companies do, because it's not just individuals, but companies have to look for a way to navigate this regulatory morass and try to A jurisdiction outside the country, or, you know, or if they're gonna go full micro strategy Michael Saylor style and just buy a bunch of bitcoins, I guess they have to look for some of these alternatives.

yeah, ver-ver-very much so. And, and, and what you get is, you get a range of, of strategies that get adopted. for most companies in an economy in a hyper-in- in a full-blown hyperinflation, they're, they're just gonna go out of business. They're gonna go bankrupt, they're gonna lose their, for, for the ones that are able to respond really smartly and early, they're gonna offshore some of their operations, they're going to change their business models, they're going to do different things with their balance sheets, they're gonna try and probably take out local currency debt so that they are essentially going short, you know, the currency if they can actually get hold of that debt early on in, in, in the process. there's, you know, so there's, there's various, there's various ways and means that people will try and navigate Gotta be, you know, from, from an asset allocation perspective and from the perspective of trying to figure out what's a good investment, you, you know, aside from the, the, the good old gold and, and Bitcoin and, and, and, and foreign, foreign-denominated assets, to the extent that you, you still need to invest something in the domestic economy, you gotta be honing in very keenly on companies that are exploiting, you know, real value opportunities amidst the crisis. So very, very tricky conditions to invest in.

Yeah, really interesting comments there. Also, A little bit about some of the things that the governments will do to try to keep you there. So for example, financial repression and transaction control. Can you tell us a little bit about what they do on that front?

Yeah, I think Russ, touched on, price controls a little earlier, but, the, the idea is there's really two focus, focus, points. You know, the one is price controls You know, prices are rising, interest rates are rising. you know, the government's response is to try and, and, and push those prices down or to keep them, limited in some way. The next is, is that what the government, doesn't want is for people to be transacting in alternative currencies. You know, if you think about, a currency, what, what a currency is, is it, is it the network of people who are- transacting in that currency. The currency has value to the extent that people are transacting in it, and as people begin to migrate away from the currency that's being printed, or that's, that's depleting away. the, the response of governments typically is to increase the control on the population to keep that network effect, to keep people transacting in, in, in the token, in, in the, the currency, and to, to keep prices low. And, and so, so, that increased control over, over transactions, begins to look like, forcing people to use a banking system that can, record all transactions, that can see what prices you're using. You know, I, I, I heard in, in, in Venezuela, in, in the hyperinflation in Venezuela recently, what they were trying to do, and they failed dismally at it, but what they were trying to do is to implement a system where you had to- You use your fingerprint, have, have fingerprint readers in the stores when you were purchasing goods and services, and, and then they would use some form of technology to be able to, recognize what price you were, you were paying and how many goods you were, you were paying You know, the obvious, other thing is that because there's shortages in the stores, the response is to, to, to try and limit the amount that some people can buy of some goods, a-and, And, and so, so you can allocate it to, to other people who are coming in. So for instance, bread. The shortages of bread, people need bread, the bread queues, and, and so you, you, the, the government says, okay, well, well, we have limitations on the amount of bread that people can buy. And so it's not, not only price controls, but it's also quantity controls. an-another example would be, you know, people trying to withdraw cash at the ATMs. the government would im-in-institute, withdrawal limits, and those withdrawal limits would get lower and lower relative to the amount of, of, relative to the purchasing power that people had, and, and, and so it forced people to use the banking system. And what that did was it actually meant that cash in hand became more valuable than, cash in the banking system.

to, to try and, and pass on the cost of money printing, what, what the banks would also do was, is they would delay the transactions, any transactions that, that, people would make. So if you, for instance, if you, if you si-- send some money to someone, in another bank account That would take a day, and, and, and, or a day or two, or however long, but in that two-day period, the inflation cost would have, would have eroded the value of that, that money, and it would have meant that the, the government could print more and more money. Those are just some of the things that they would do typically, but, but the, the basic concept is when a government prints money, they've got to force people to use that money, and, and so money printing results in a centralization of power. Both buying power and the centralization of control power to force people to give the government services, i-i-in exchange for that money.

And Phil, isn't, isn't it interesting, you know, you've set that out so well, and isn't it interesting how in the last twelve years since we've had the QEs and, and a real big push from, from the major central banks to, to create currency? How we've also had this, this ramping up in, in financial repression and transaction control and banking system oversight by the central planners. You know, we've had the pretty much blowing up of, of Swiss banking secrecy, over the last decade or so. we've got the potential for, for bail-ins, in, in European banks, the potential for negative interest rates, in a cashless system where you can essentially force people to keep funds on deposit in the banks, and then institute a, a, let's say a one sort of, you know, minus ten percent interest rate to, to act as an effective wealth tax. you've got increasing, it seems, rather than decreasing global financial mobility. ironically, at a time where you've got, you know, increasing people mobility across the globe, we seem to have a diminution, a diminishing in, in sort of financial mobility, and that's precisely why you're getting this- This explosion in, in, in fintech, right? This explosion in crypto technology, this explosion in, in efforts to disintermediate this increasingly repressive financial system, to w-which is being, which is being instituted to mitigate the, the obvious and emergent negative effects of, of fiat currency printing. and so it, it's a, it's a dark time in many ways, financially, but it's also in many ways a very Exciting time, and obviously, Stephane, I mean, you're, you're all over, all over this and you, with your podcast. and, and I think it's just a very, very interesting, time to, to kind of be, be studying and investing in, in alternatives to this, this clearly very, very corrupt system that we have.

Yeah, really great comments there around the kinds of financial repression that governments will enact on their people, and also the kinds of surveillance that is required for them to conduct that. So, and we- We are seeing this in terms of additional surveillance, as you mentioned, on, in terms of central bank surveillance over banks and then KYC and AML and all these kinds of other s-way, forms of surveillance that are pushed out onto individuals. So I guess, my next question really is just about, do you see any differences that are coming this time around? Is it going to be more of a digital form of surveillance, that kind of governments try to use to try to keep the slaves on the reservation?

okay. So differences, you know, the, the, the, the, the core qualitative characteristics of money printing are the same. Okay. And, and, and, and that's why we're seeing this increased government control over the money and banking system. And it was the same in Zimbabwe. But of course, the, the more the government can control people and, and, and, and watch their transactions The more, the, the, the stronger the, the, the government, the, the, the, the higher the ability of the government to print money and to push on the inflation cost on the people. Or said another way, the stronger the ability of the government to impoverish people through money printing. You know, ultimately, the reason you want monetary freedom or the freedom to, to make transactions is that transactions, trade, is the very basis for your economic activity. And, and, and, and when you, when you tr-uh, trade with other people, you can accumulate goods and services and, and, and you can, supply for yourself the things that you need. And when the government restricts your ability to trade and, and, and, and make transactions and, and, and, and buy the things that you need, you actually become, significantly poorer. And so our concern is, is that as we see the, the ability for what we call total transaction control around the world, for, for governments to be able to, to control people very uniquely and, and, and specifically in, in, in the area of their transactions, i-it's, it's a concern that, that, we could see, money printing, ha-happening at a much higher rate. you know, there's this whole, philosophy of, of called mon-modern, modern monetary theory, and the idea is basically that you control everyone to, to use a, a digital money system, you'll be able to print as much money as you need, and you can inject it wherever you want in the economy. But, but, from our perspective, that, that results in, in, in, people in that network getting impoverished. And, and so us, it's a very big concern, and to us, it's, it's, it's an identical replica But they will be much more successful than the government was in Zimbabwe.

Stefan, Peter Thiel in his, forward to the great book, The Sovereign Individual, says he juxtaposes, AI and, and cryptography, and he says AI is the technology of centralization and cryptography is the technology of decentralization, and I think that's a great way, it's perhaps a simplistic way, but, but certainly a, a, a good way to view this kind of balance of forces that we, that we- We have now globally, yes, the, the rise of, of information technology, big data, surveillance technology and so on has enabled, in many respects, the state To be, hugely controlling of, of people, populations, financial trans-transactions and so on, but you've got this parallel increase using the same sort of base technology, that's actually figuring out ways to, to digitally decentralize, to create digital boundaries, to create digital security, to create, in, in effect, digital scarcity. So, so we've got this rush towards digital- the, the proliferation of, of let's call it electronic money by governments, where you can just press keys on a computer and, and, and generate ten trillion dollars in, in three seconds. but, but at the same time, you've got this amazing digital scarcity revolution that's, that's taking place. And so there's, there's, you know, in this respect, there's, there's differences to what we saw in Zimbabwe because the technology just hadn't, hadn't quite caught up yet, and- And so what you would see in a modern day Zimbabwe, in a repeat of, of the Zimbabwean hyperinflation, but say in the twenty twenties, which in many ways you're, you're exper- Zimbabwe is experiencing, you've, you've got this, this, this different mix now of, of surveillance technology, but also the rise of, of digital alternatives that, that's really exciting, and I think it may, you know, the, the, the advent of cryptocurrency and the ability to have digital scarcity may ultimately change the complexion of, of- Traditional hyperinflation is going forward. it's certainly going to be a, a, a check and an accountability on, on governments just doing what they want. Governments, of course, will continue to try and leverage the surveillance technology to leverage the repressive nature of what they do, but this, this technological, counter-revolution, if you like, this backlash is really exciting and going to create, I think, one of the most fascinating monetary landscapes, you know, that we've ever seen. Yeah,

really, definitely.

Yeah. Add to that, you know, it's, it's a, it's a really interesting time that we live in. You know, like we're getting the rise of, of, of the entitlement state across the world. You know, even if you look at the United Nations, they, they, they're introducing academic papers to talk to the idea of a universal basic income for everyone in the world funded by money printing. Okay. So on one side you get this sort of move happening in, in, in, in all the, all mo-most countries around this i-idea of, of money printing, on the other side You've got this entire move of people towards sound money solutions, and, and, you know, e-exploring what it looks like digitally. You know, we're, we're, we're involved with people who are, are, are trying to, to establish a decentralized national currency system. And, and, and, and so you, you, you've got this innovation happening on the other s-- on the one side, on the other side, you've got a whole lot of money printing happening across the world. It's a really interesting time to be

alive. For sure. And, I'm also curious as well. Now, this is a theme that came through, from When Money Dies. a-and, I can't recall if you touched on this in your book as well, but it probably did come up at some points. Is this idea Try to say there was like a social requirement for you to keep your money in the local fiat money, and then I guess the other part of that kind of related, was there any sort of resentment of people who did save their value by people who actually got their value out of the country or into something else? Was there like a resentment there from the people who lost value?

I think everyone began to realize that, the currency was, was losing value and no one wanted to hold the currency. And, and, so, so the, the answer, the answer to your first question is everyone tried to get foreign currency. Everyone did. And, And it got to the space where the government made it illegal that if you were caught holding any US dollars or, or, or in, in foreign currency, they'd put you in jail. And then they made it illegal that if, if you were caught recording books your books of account, in denominated in US dollars, they would put you in jail. They were trying so hard to stop people from using foreign currencies. but not that I, so the answer to your, to your, the answer to your second question, I didn't, I didn't, interview anyone that was resentful, about anyone taking money out of the country. You know, obviously the government tried to make it a, a, a, a nationalist, issue, but, you know Not, not, not specifically anyone who took money out of the country and put it into foreign bank, bank account, there wasn't that sort of, antagonism, not in Zimbabwe.

The one thing we, we talk about in the book, Stefan is, is we, we use this term monetary obfuscation, which is really just our fancy way of saying, outright propaganda. and, and I think what you, what you saw in Zimbabwe, whether it was nationalistic propaganda, whether it was obfuscating the nature of what was actually going on, the cause of, you know, and, and obfuscating the cause of the inflation, you know, oh, it's shortages, oh, it's, it's due to, to, you know, profiteering, you know, retailing firms or, or what have you, you get this tremendous ramping up in propaganda. And again, I, I find this fascinating parallel to what we're seeing in, in, in the West and a lot of the major economies, just as, as we go more and more into this, this kind Financial repression of zero interest rates, negative interest rates, the suppression of yield curves, the, the, the distortion of credit markets and, and the, the, the zombification of the banking system, you know, all the stuff that, that, that, that is entailed in this, in this modern monetary system, it comes with an immense amount of propaganda. The interesting one I've been seeing of late is inflation propaganda. I think it was, I think it was the, the, the, the Bank of International Settlements or, no, I think it was the World Bank That recently had a kind of very propag- propagandistic, short little thing on Twitter about inflation and how we need, you know, we need inflation and it's good to have some inflation, but not too much, but we mustn't have deflation 'cause it destroys the economy. and then the Bank of Jamaica, I think Stephan, I, I, I think you saw that on Twitter as well, they've produced this, this reggae song, kind of about, about the benefits of, the benefits of low and stable inflation How def- and how deflation, you know, an-an economy can't grow in deflation, which we know is demonstrably false because the economies grew rapidly in the eighteen hundreds under a deflationary, regime of sound money. So, but the point is, and this is the lesson, again, drawing a lesson from Zimbabwe is a tremendous ramping up in propaganda, in double speak, full took great inspiration from George Orwell's writings from nineteen eighty four as he was analyzing Zimbabwe because you just- Get this incredible ramping up of propaganda, monetary propaganda, financial propaganda, and it, and it's all in service of trying to keep the population, distracted from what's really going on in the underlying financial system.

Yes, what's interesting is that, that the, the head of the, the Reserve Bank at the time of the money printing wrote a book afterwards trying to justify, the, the, the, the reasons for printing the money. And he maintained, as did the, the, the entire political, system at the time, maintained that the reason for the hyperinflation, was squarely in, in the corner of, of foreign powers. It was foreign powers that caused the hyperinflation And, and we, we, saw in, in, in Venezuela with some humor, they say the exact, exact same thing. Hyperinflation in Venezuela is caused by, by United States, by, by, by the, United Nations, IMF, et cetera. It's always blaming foreign powers, but never taking responsibility for their own money printing.

Well, I think there's a lot of lessons in there for listeners in terms of, what might happen during, an in- Inflationary episode and some of the things that typically occur as well, and, you know, some of the controls and the things that governments will try to do, so I suppose it's probably a good spot to end it, but, obviously before we let you go, where can listeners, find the book and where can they find you online?

you can, you can get a copy of the book on Amazon. we have both a print, version and, an e-version. The book is called When Money Destroys Nations, and, you can find us on, on, on Twitter, and you can see us on our website when money destroys dot com.

Yeah, thanks Stefan, it's been, it's been really great chatting to you. I, I'm on Twitter at at Russ Lamberti. we, we're tweeting excerpts from the book, I think the Twitter handle is at w m d n book, when money destroys nations book. so you can go check that out on Twitter, we just tweet some, some pithy kind of excerpts from the book. And, yeah, you can, you can find, find me on Twitter, and, Phil's doing some interesting stuff as well. You can, you can follow him on Twitter, and he, he's got some, some, some great little insights as well. it's been really fun talking to you, Stefan. We really appreciate it. Excellent,

well, thank you. Thanks so much, Stefan. I hope you found that interesting, I certainly did. I think there are certainly some very important lessons for us as Bitcoiners, whether that is looking at the obfuscation carried out by central banks and governments all around the world, or whether that is looking at the adaptations and actions that companies were taking to try and get away from it, for example, denominating into things other than the local fiat money. So if you're interested, make sure you check out the book. I've got the links in the show notes. You can find that at stephanalivera dot com. Make sure you share this episode with your friends and family so they can also learn about the problems of inflation. And that's it from me, I'll see you in the citadels.