Godfrey Bloom, Austrian economist, former politician, and libertarian author joins me to talk. Godfrey is a self proclaimed goldbug, and in this conversation we explore Bitcoin and his recent discussion on it.

We chat about: 

• Bitcoin’s use as reserve asset
• Some similarities and differences between Bitcoin and Gold
• Central Banking
• Welfare Statism

Links:

• Twitter: @Goddersbloom
• Website: godfreybloom.uk

Sponsors:

• Swan Bitcoin
• Unchained Capital (code LIVERA)
• Knox Custody

Stephan Livera links:

• Show notes and website
• Follow me on twitter @stephanlivera
• Subscribe to the podcast
• Patreon @stephanlivera

Podcast Transcript:

Stephan Livera:

Godfrey welcome to the show.

Godfrey Bloom:

Thank you very much for inviting me Stephan. thank you very much, indeed.

Stephan Livera:

So Godfrey, I’ve been following some of your work for a while, and obviously you are a noted, a long time skeptic and critic of central banking and of the modern day banking system. And I’d love to you know, get into some of that and understand a little bit around where and I guess I should preface this. I’m obviously also a fan of Austrian economics, so I’m in a very similar position to yourself. I’d love to hear a little bit about how you came to become a skeptic of central banking.

Godfrey Bloom:

Well it’s interesting really. I started my career in the city in 1967 quite a long time ago as part of the pension fund management industry in the city of London which is I’ve been involved in some way all my life. So you can imagine I’ve had a very traditional background in investment management because pensions are all based on yield. They’re based on wealth preservation, they’ve been based on safety, so on and so forth. So that’s my background and that’s in some form for over 40 years, I was 21 when Nixon took the dollar off the gold standard. And of course at 21 years old. I wasn’t quite sure where that would going to take us. And I don’t think I worried too much with it.

Godfrey Bloom:

I was playing rugby and drinking beer, so I didn’t fret too much about it. It was some years later, probably 10 years later when I came, this was, this was a very significant moment in investment management because obviously as we all know, it led to the degradation of the dollar, which of course is the reserve currency. And I think the purchasing power today of the 1971 dollar is in and around sort of 6% or 7%. So we’ve seen a massive degradation of currency. Obviously all currencies, even the Swiss Franc has degraded very significantly, but not as much as the dollar, but every other single global count has degraded even more so in my investment lifetime I have seen the degradation of fiat currency and I’ve also seen the unhealthy link between politicians, retail banks and central banks which is the – all Western democracies are the same, excuse me, laughing.

Godfrey Bloom:

But they’ve all based their whole policies on the degradation of money and the degradation of money is what they do. And it’s all to do short term government spending over budget permanently. And of course, as a fellow Austrian school economist you’ll know. And anybody else watching this who is also of the Austrian persuasion knows that, although we have been told Keynesians has been telling us that government economies don’t work the same as a family or a small business that you can’t, in fact infinitum spend more money than you actually bring in, but we know that not to be the case. And the only way you can go on spending more money than you bring in constantly, year after year or over budget is by degrading degrading money. And that penny took a little bit of time to drop with me. I have to say, to be honest, I think it was not really until the early 1990s, I realized that we were heading for a massive catastrophe. And of course that is just around the corner.

Stephan Livera:

This is something that I think many Austrian economists have faced as well. They’ve been saying, look, this is unsustainable, this is unsustainable. And yet it’s taken some time for this to play out. Right. And so that’s, I guess that’s a little bit of a difficult thing to explain. So how do you normally explain that when somebody expresses that sort of criticism to you?

Godfrey Bloom:

It is difficult because people say, you know, you’ve been you’ve been a doomsday scenario merchant now for many years. And of course it hasn’t arrived yet. As far as the public perception is, they don’t think the ordinary person, it doesn’t think like Austrian school economists think. They know, they know that. For example, when the government says inflation is only running at 1.9% or 2%, they vaguely know that that isn’t true. So when I left school, you could buy you know, you could buy a pint of beer for 11 Pence, in a bar it’s four pounds, fifty. They, they know this, but they don’t really associate it with a potential degradation. So what has already happened? It’s been so slow. It’s like the boiled frog, you know, the slowly boiled frog, which doesn’t know that it’s being boiled to debt because it’s happening so slowly, it just goes to sleep.

Godfrey Bloom:

And that’s what happened with, as happened with the Western democracies, they’ve gone to sleep, but the reckoning is due to come. And of course we do hear Oh there hasn’t been inflation. They say, Oh, well, Mr. Bloom, you had said that we’d see inflation with the constant quantitative easing and printing of money. Well of course we have what we have yet is inflation on the high street. We’ve seen inflation basically on wall street. So we’ve seen inflation of asset prices. It is impossible for anybody now to buy a house in London, for example, a young man, young professional man to buy a house in London. It’s just too expensive. I bought my house in London at 21 years old. I put my 500 pound deposit down I got a mortgage. And I bought my first house, even professional people in their early thirties can’t do that. Now. It sounds inaudible, I’ve got young friends who are surgeons in their mid thirties. Who’ve just about managed to buy some pretty ordinary properties in bits of, I wouldn’t be standing dead in, saying but they this is what’s happening, but people, people don’t really understand that because, and of course the government cheats.If you’ve got white goods or computer gizmos that haven’t gone up very much in cost they don’t notice those things. And that’s what the government uses in their basket of CPI and so on and so forth. But everybody knows, or are beginning to realize that if you have a man round to actually fix the cooker or if you’ve got a man around to actually unplugged the drains. He’s now charging twice as much as he did a couple of years ago. So people are beginning to realize this, but it has been a slow process.

Stephan Livera:

Yeah. And so obviously my show is very much focused on Bitcoin. And I know you’ve been speaking about Bitcoin a little bit and you’ve been starting your own journey of learning a little bit more about Bitcoin. What was it for you that sparked that desire to go and learn a little bit more?

Godfrey Bloom:

Well my I used to run money big money in the city. And of course it’s impossible now to manage money Stephan, you can’t manage money sensibly. It isn’t possible because you never know what act of lunacy the government’s going to come up with next and you can’t manage money. We’ve got zero interest rates on bonds or close to zero and sometimes negative. Well, of course I was a fixed interest manager in the city. I won international prizes for money managing fixed interest, but fixed interest. Now you can’t, you can’t do it because the government keep interfering. Central banks keep interfering. They’re printing money all the time. So you can’t manage money. Now, this penny dropped for me, a roundabout, the mid 1990s, where I was very heavily overweight from the 1990s in my personal portfolios and mainly financial service equity.

Godfrey Bloom:

And if you were heavy into financial service equities in the 1990s, you did jolly well. And I did pretty well on that. But then I began to realize that this equity bubble couldn’t continue because stocks were coming over priced. And then of course, you get to you’re either managing money for wealth preservation, which I was up until 2004 when I went into politics. So my role as it were professionally has been wealth preservation, not to make money. You see, I didn’t, you get to a stage where it with your clients and your own portfolio. You don’t want to make any more money. You’ve made your money. We’ve made enough money. I’m not a rich man, but my tastes are humble. I like to go to the rugby club for a few beers and stuff. You know, I am not particularly ambitious.

Godfrey Bloom:

I just need enough money for my wife and I have to jog a long. The wealth preservation is very important. So I started adding gold. I’m a gold bug and unashamed goldbug. And I was adding gold to my portfolios. Gold in specie, of course, as an Austrian school economist. You’d know that if you don’t have gold in your pocket, you don’t have gold. So I’d been building that portfolio for a long time and incidentally anybody watching this, I don’t keep it at home. Don’t come down here, it’s in a lockup it’s in safe deposit boxes you know elsewhere. So, but I have it and I have the key and that’s an important thing. And I was buying gold when our Chancellor of the Exchequer Gordon Brown was selling gold and he was sending gold at something like $250 an ounce. Now, why was he doing that? Well, there’s two possible scenarios. Is he a moron? Well, yes, that’s true. Oh, was he trying to bail out the bullion banks who didn’t have any, otherwise, why didn’t he go walk to, why did he telegraph it? Who’s going to sell it next week? You know, he did everything that was wrong. And of course I came into politics in 2004 for completely different reasons. You know, that was Brexit. That’s why I came into politics. I’ve never been involved in politics in my life before.

Godfrey Bloom:

It was Brexit, but I came into politics and of course I was under the impression as a lot of people are in this, but politicians know something we don’t know. And that if we understood what they had and what they knew, what they knew, we would understand the decisions that they make. But of course, that isn’t true. I became a politician because I met a lot of senior politicians. Had lunch with all the senior politicians and ministers and civil servants. And they’re all in fact retarded. They don’t know anything at all about anything. So consequently, they don’t know anything. They don’t have any clever ideas. They’re actually stupid. And the most stupid people you will ever meet are politicians, senior civil servants, who went to Oxford university, they’re all incredibly stupid. Your common sense, your values, your understanding of life. You’ll find in an English pub in the artisan classes, the Butcher, the Baker, the Sparky, the Hairdresser are the people who actually understand how things work in real life. A lot of people don’t.

Godfrey Bloom:

So that was an eye opener buying gold when the inaudible there was getting rid of it. So I’ve been buying gold as a gold bug for, well, whatever that is, that’s 20 years. And that’s done me very well. And I started to diversify last year into Silver. I made one very bad call on silver, and then I made a very good call on the Silver. So I’m even money on silver at the moment in my portfolio, but of course it’s extremely volatile. It doesn’t have the history silver, of money. You see again teaching to suck eggs here is you’re a fellow Austrian school economist, but of course, gold isn’t an investment, gold is money. JP Morgan said in the 1920s, only gold is money. It isn’t an investment, it’s money. So consequently, that is how one has to view it.

Godfrey Bloom:

So I have, but you get restage. If you’ve got your portfolio, your defensive wealth protecting portfolio of 85% gold in specie, you really can’t. It goes against the grain to not diversify. You have to diversify. And I diversified into silver and I’m a strategic investor, which your listeners might find amusing about my old age being strategic, but my wife is much younger. So I have to be strategic. So I look to the long term, even if it’s not my long term, it’s my wife’s long time. And I have to leave her enough money and believe me, she’s capable of spending it. Make no mistake about that. So I’m going to have to leave quite a lotof money, she’s a horsey girl. She’s got, we’ve got horses. And of course she likes to drink. So what doesn’t go to the horses she’ll probably drink, but leaving that aside I have to be a strategic investor.

Godfrey Bloom:

So gold and silver long term. Now that brings me to Bitcoin. And of course, I’d be pressured by fellow Austrians to look into Bitcoin. And I have, I’m not suddenly a Damascene conversion to Bitcoin and this and Oh my goodness, me I’m so spotted this. I’ve known about Bitcoin for some time. But I’ve always taken the view like Warren Buffet as an interesting case on gold, but that’s another story. I’ve really taken the view that if I don’t understand something, I won’t invest in it. So I’ve always been very wary about something I don’t understand. And Bitcoin is only the logistics of Bitcoin are complicated.

Godfrey Bloom:

Somebody at my age, we already have digital currency. We’ve got digital currency now, but of course it’s run by governments and central banks. So the advantage of Bitcoin as I see it as a new boy on the block the advantage of Bitcoin is that it’s a digital currency which is something of the future. And it has to be, you know, we have to settle our bills. I can’t go into town. And buy a pint of milk, a few pints of milk and a tin of beans with the gold sovereign over here is already worth 400 pounds daily. So we have to actually get through our day by buying and selling at the store and I’m putting petrol in the car. So we came to have to have some form of digital currency, or certainly a currency in specie, which is small enough to transact.

Godfrey Bloom:

But of course my old friend, Alistair MacLeod things that could be silver again, but we could go back to silver money, but that’s another interesting story in it’s own right. So we have to have some form of digital currency at cost we are being told, or the rumor on the block is that there’s going to be this reset which makes me this, this word reset. When governments use words like reset, it means they’re going to steal your money, the good to do something else. Cause what they’re doing is resetting their own mistakes. I’m very happy with my life, please. I don’t want to be reset. Don’t reset me. I’m fine. Or I think they probably know that there going to be a collapse of fiat currency, or there’s going to be a collapse of banking as we know today, which is why they’re talking about recession, which is why they want to get into a whole new global digital currency if they possibly can.

Godfrey Bloom:

But controlled by them. Now the attraction for me for Bitcoin is that it’s not controlled by government. There is no point in getting into a digital currency, which is run by that, which is already run by the banks, the central banks and politicians it’ll go the same way. It will be degraded. Of course it will. How could it not be, that’s what they do. They say, it’s their policy, inflation at 2%. They want to do. In fact, the economy inflate money at 2% or prices at 2%. Well, a man of my age, if you go back if you go back when I was doing my professional exams, the economic side, so on and so forth. Inflation was the bogey. The one thing that governments didn’t want was inflation. Now we’ve got governments wanting inflation.

Godfrey Bloom:

Although of course they think inflation is good a thing so they can inflate away their mistakes, but if you’re a saver or a pensioner inflation is bad for you. Inflation is only good for debtors to inflate away their debt. And so we have now Western society is run for the benefit of debtors, not creditors and investors and savers. You couldn’t think of a more disastrous scenario than this. This is crazy. This is madness. So the only way the ordinary individual can get away with it is by holding gold in specie, silver in specie, if he can. And when I say gold in specie, of course we have gold coins, which carry no VAT in this country and no capital gains tax. Cause it’s coin of the realm. So mine is in coinage which is important. And then Bitcoin becomes almost if you’re going to diversify, it’s the only game in town.

Godfrey Bloom:

Stephan, it’s the only game in town. Now I don’t accept this gold versus Bitcoin. That’s, that’s a false argument that, Oh, you can either have gold or you can have Bitcoin. And I know one thing I’ve learned as I’ve been getting into this now and it’s been fun, fascinating. And what strikes me as interesting is that Bitcoin people seem to be very nice people. They seem to be nice people. It’s quite an interesting phenomenon. Very friendly very helpful. And that’s been interesting. But they of course are. And I understand this. They are evangelical about Bitcoin. And so they are like the early Evangelical Christians their heart’s in the right place and they believe in the right things. But one has to be careful about how much one diversifies in my view, a portfolio to something which is volatile and silver is volatile.

Godfrey Bloom:

Gold. If you take gold over the long period, gold, isn’t that volatile trade has gold traders, metal traders see it as a volatile thing. But if you go back as a strategic investor, you have to go back decades. You know, you can’t sort of go back, Oh, last month or the month before that you have to take a strategic view. And of course, to be money, it needs to be relatively stable. And at the moment of course, Bitcoin is volatile. It’s volatile. That’s not a problem with me. That’s not a problem with me. As long as you understand it, as long as you understand it can be volatile and you can lose money in the short term. And if you’re okay with that, if your portfolio is structured for that, that’s not a problem. So I feel that Bitcoin has a place in every portfolio.

Godfrey Bloom:

And funnily enough, my conversation with Claudio Grass of course you might know, who’s a great Swiss Austrian economist, and quite well known in America and Europe. I would say maybe for short term, for tactical diversification, maybe I should look at the Swiss Franc again, which is a fiat currency, but I’m talking when I’m talking about that kind of tactics, I’m talking 18 months or something like that. And it was, it was he that actually as a huge Goldbug, well known European Goldbug said, if you’re going to diverse, I think it’s more dangerous. Now these are his words, not mine. It might be more dangerous not to be in Bitcoin than to be in it, which is interesting cause. And that just swayed me, but get my toe in the water. So here I am, but I wouldn’t say I was a Damascene conversion because I was never against Bitcoin. I’ve always been sympathetic. So anyway, here I am dabbling, dabbling, and rather enjoying the experience I have to say,

Stephan Livera:

Oh, that’s great to hear. And I think for many of us in the Bitcoin world, I think absolutely I can see that tension there between the kind of Bitcoin versus gold aspects. And I think it’s probably fair to say that both have a lot of upside over the coming years. I think the Bitcoin story, I think to understand it correctly, I think we have to sort of think about what happened with gold in terms of its storage and it, the way that it tends to be stored in more centralized vaults and custodians. And so one of the messages in Bitcoin is, as I’m sure you might’ve heard is this kind of idea of not your keys, not your coins, meaning you can self custody, this digital, it’s like a digital bearer asset if you will. So I’m happy Godfrey, if you have any questions about Bitcoin, I’m happy for you to ask me also.

Stephan Livera:

But I think probably the key point I would say is, I think people in the Bitcoin world are viewing this more like this is the world adopting a superior money in some ways that it’s got certain characteristics that right now, yes, it’s volatile. But in the longer term, we sort of can more easily anticipate based on knowing what the cap, the 21 million cap is. And I think that’s probably one of the key differentiators there. And then just the other key one is just being able to send it internationally without trusting somebody. So I think these are probably the key points of like comparison between gold and Bitcoin. So I think yeah, I’m curious what your view is on some of those ideas?

Godfrey Bloom:

Certainly I accept that and that’s why I’m interested in it. And of course, as we all know that money is only money if it’s accepted as money on trust. And of course there’s a big step now to come. It’s a big step forward when people, when it becomes accepted, you know, when you can go into your local store and pay in Bitcoin you know, when they can trust and it’s accepted money. And I think then certainly now is the time, you know, because if you believe there’s going to be a collapse of central banking bank and fiat currency you’d be mad not to have some exposure to Bitcoin. It wouldn’t make any sense because if you believed that you would have to have that, the one thing you wouldn’t have is money in a traditional bank, or fiat currency, you wouldn’t have that.

Godfrey Bloom:

So you then got to say, where do I go next? And you’re quite right. Gold is gold as a strategic investment. It’s cumbersome you know, you can store it and that’s fine. And you can cash it in bit by bit to get you through, or you can leave it from an inheritance perspective, all sorts of things you can do, which is why I’m a gold bug. But certainly on a day to day basis, one has to look elsewhere. Because then if you want to sell gold, if you want to sell gold in order to say, get through the next year as, as an individual what do you do? You sell the gold, you sell it for fiat currency, so you’re back where you started. So I understand these things. One of the problems is understanding Bitcoin from a sort of a logistical perspective.

Godfrey Bloom:

And I have a colleague. My colleague Patrick is a young, very switched on guy. Who’s already investing in Bitcoin. He’s already there, I would, although I’ve had lots of help from Bitcoiners across the globe on email and stuff. And I thank them here for it. Thank you for that. I think if he hadn’t been at my elbow to actually guide me through the logistics and somebody who I trust is a colleague of mine who I can discuss it with one to one at this stage of my development, which is very new to this. Not new to the idea, but new to the actual logistics of doing it as many people, of course ask Stephan for example, when they ask me about gold, you’ll be quite amazed. The number of people that say, where do I get my gold? How do I buy it?

Godfrey Bloom:

How do I store it? What do I do with it? They don’t know. And of course, because I’ve been in the game for a long time, it’s strikes me as extremely easy, but if you’re new, and don’t understand, it’s that easy when you know the answer. It’s easy when you know the answer. Now if you’re a quizmaster and you’ve got the answer book really Jeremy Paxman, you know, university challenge. What a clever man. He is the answers in front of him. It’s very easy to look clever. Okay. So digital independence, to get slightly away from the concept of Bitcoin, not the concept, but Bitcoin let’s call it an internationally independent digital currency. That’s really what we’re talking about. It seems to me that that must be the future because I can’t see how it could be anything else, but that does beg the question and the questions that, how do we deal?

Godfrey Bloom:

How do we deal with government? As a fellow Austrian school economist you’ll know who is most likely to steal your money. You’re not going to get my gold, would you mind? But that’s relatively unlikely if you’re in a civilized community even Australia, excuse that just a little dig. But the most likely people to steal your money are the government, and they’ve already have the the revenue in England, as you will know, I’ve already told Coinbase that they’ve got to tell them who’s buying Bitcoin. Now, incidentally, that isn’t just Bitcoin. Because if you buy over 10,000 pounds worth of gold coins from (inaudible) or the mint, or wherever you buy it from, as I have done over the years, if you over 10,000, they register that as well. They have to hold that long.

Godfrey Bloom:

So if we see a situation where the under Roosevelt, where the or did back into 1720, when the inaudible police were digging out, people’s gardens off the Mississippi bubble collapsed, and they were digging up people’s gardens. So I know that the government one day will come for my gold and they will, they will suggest a minute. We know you bought this five years ago or was six years ago. And it can be under lock and key in a safe deposit box, which has nothing to do with banks. I wouldn’t dream of having that in a bank, a retail bank deposit box, but I know they can’t get at it. They can’t get at it, but what they can do. So we’re just going to lock you up until you hand over the key and tell us where the safe deposit box is. And of course, if they know that you bought Bitcoin, but they can’t get at your Bitcoin, but what they can do is look at the problem we’ve had with your fellow countrymen, Julian Assange, he’s locked up.

Godfrey Bloom:

I mean, disgraceful, poor thing. This can happen in a so-called free society, under the principles of English law and our constitution that this can happen, but it can we are under house arrest over here. We have been, and we could only have six people to our dinner parties. I’m 71 years old in November. I’ve never seen anything like this. My father was a fighter pilots in the world. It was nothing like this in the wall. We didn’t close the pubs in the war when you could be bombed or there would be B-1’s or B-2’s we invaded on the 6th of June, Dday. We didn’t the army, didn’t say, cool. This looks a bit dangerous. I don’t think we’ll go today. It looks a bit dangerous to stay at home. I mean, the whole, thing’s fine. We have seen the biggest power grab in the United Kingdom in the history, probably I would say since the Commonwealth under Oliver Cromwell, I would argue we haven’t seen anything like this for 400 years, but talking about stopping Christmas. So if anybody thinks that then the government is going to come for you and your money, they’re living in (inaudible) and the government will come, they government will come and steal your money and they’re going to do it sooner rather than later. So the more you diversify the more difficult you make it for them to come for it, the better it is. And Bitcoin obviously has a role to play how big that role is with me, I don’t know.

Stephan Livera:

Certainly I think you made some good points. I, you know, I agree. I’ve been frustrated with certainly the authoritarian turn that the governments around the world have taken in terms of lockdowns and in terms of taxation and the levels of the climbing taxation rates that we are saying. I think with Bitcoin, there are a few different answers here. So I think some within the Bitcoin world actually go more private and they actually acquire their Bitcoins in a more private way all to begin with. Right. And they do it, they treat it more like almost like a peer to peer, you know, almost like doing a drug deal sort of thing. Like they’re buying a small amount and they’re keeping it. And that’s one angle that some Bitcoin people do. The other angle I would suggest is that it’s like a it’s almost like an Uber story, right?

Stephan Livera:

So if, you know, Uber came in and initially in some of the cities that Uber was operating in, they were not technically legal, but they managed to get enough on side, whether that was passengers or drivers who wanted Uber to exist, such that they were able to get enough of the population that it just became infeasible to totally just ban Uber. And so I think there may be a similar story playing out with Bitcoin in that if there are enough people who demand to be able to store their own value free from inflation free from that those kinds of government interference, then it may be somewhat of a similar story there. And I think another angle also now this may not be palatable for everyone, but people who are willing to move overseas for better treatment. So we may see this kind of jurisdictional competition element around a certain, maybe a smaller nation might say, Hey, we will give you lower tax rates you know, to try and spur that.

Stephan Livera:

I think so. I think there’s a few different answers there. And I think also it just comes down to, I think, longer term, we will actually see governments also try to get Bitcoin for themselves. And so I think that may also kind of change the game too, in that it’s sort of like, there’s this tendency towards, so a good book in this space is The Bitcoin Standard by my friend Saifedean Ammous, so I’m not sure if you’ve had the opportunity to read that one yet, but if you haven’t, I highly recommend it. And one of the key concepts he spells out in that book is this idea of stock to flow ratio, which I’m sure you’re also familiar with in the gold world. And so one of the ideas that he’s getting at there is that this is one of the important characteristics of a good money, and we could almost argue it’s makes it an even better money because it’s just got it’s a perfectly inelastic supply.

Stephan Livera:

Like it doesn’t matter how many more people demand more Bitcoins to be created. There’ll never be more than 21 million. And so from that perspective, it may also be that certain countries will compete on that basis or, you know, people will want you know, people inside the government will want it for themselves. Right. And so, and I guess here’s the other point. It may even be the case that even if everyone pays a punitive capital gains tax rate, that it will still be an overall win in terms of everyone’s liberty, because it means the government can’t inflate anymore. It means even in that world, we would still be stuck with 21 million. So I guess these are a few different ideas around that concept. And I think the other part also is just maybe this is like a bit more of an out there idea, but with Bitcoin it’s possible to do this special technology called multisignature meaning you can split it up into multiple pieces and say, I need two of the three pieces, or I need three of these five pieces in order to spend that Bitcoin.

Stephan Livera:

Now this is a technique used by some large Bitcoin custodians, even today, and even individuals are able to this technology. And this is another way in which people can put the pieces in different countries as an example. So these are just a few of the different ideas that are possible within the Bitcoin world. Although obviously I think the broader point that must be accepted here is that yes, it’s likely that some governments around the world will try to become punitive. They will try to, you know, tax at a high rate. They may even do this. But I think at the end of the day there’s still competition amongst the different countries. And so hopefully we’ll see some jurisdictional competition there and that may be somewhat of a savior of people’s liberties, but I’m curious what your thoughts are.

Godfrey Bloom:

That’s very interesting. I’ve learned a lot from that and I thank you for it. It’s interesting because obviously the central banks now are buying gold again. The Western banks of course got rid of gold the Russians and Chinese were acquiring gold. So that’s been interesting. Central banks are acquiring gold. There’s still the interesting phenomenon from that, that perspective that of course gold is still a suppressed price. Because as we know that there’s with each, there are about five, roughly five or 600 pieces of paper to every piece of gold. And of course it’s been people who have been able to allow to trade in paper gold, but they don’t have and of course that’s been complicit governments and central banks to be complicit in that because they don’t want people to go to gold as money. And so the SEC in America is that, that one, right, which is interesting because just recently we’ve seen that we’ve seen JP Morgan lost or fined, a billion dollars or just under a billion dollars or something for actually manipulating.

Godfrey Bloom:

the gold price, the you know, on a trading platform basis, because the elephant in the room is of course, is people trading under ETFs gold that they don’t have now. So yes, we know that phenomenon has happened with gold. So it makes sense that that could happen with Bitcoin. It makes sense that central banks would acquire if it’s accepted as money it’s seen as money. And it’s the central banks would make that available to them as they have done gold. That’s very interesting, indeed. You make another very interesting point, which I’ve considered as an old man. Now I’ve considered carefully over the years. Where do you run to? And of course, I’m now beginning. What do you believe? I’m beginning to understand at 70 old years of age, why the pilgrims sought out the new world. I’m beginning now to understand that it’s now no longer something you see in a history book that they risked an Atlantic crossing, which is enormously dangerous, and to go to a place which was enormously dangerous because they just couldn’t continue the way things were.

Godfrey Bloom:

They wanted a new world. And that’s now made more understandably to me now, where do we go physically? There isn’t really anywhere to go physically. Now, if you look at, if you look at the globe, where would you actually move yourself and your family to? It used to be down with you lot. You used to be down in Australia, which is a brave new world, but you seem to have caught the politically correct idiot disease from the English. And Melbourne, we look the scenes in Melbourne and we’re stunned because we tend to look here both America, which is a look now that view of land of the free and Cowboys and Indians and stuff a little bit outdated now. But we’ve always regarded our cousins in Australia, which is how we view Australia as, as any Australian comes to London or this country, what, regardless of our sporting challenges and the aggression that we have between us, I would say tell an anecdote to let it go to here. I was in a bar when I was in the army years ago, I was in a bar in Hawaii and there was, there was me and there was some Australian Marines and, and my lot, and it was just getting a little bit tasty between us until the American Marines came in, and the Australian Marines said to me, we’ll sort this out later mate in the meantime, we’ve got this to deal with.

Godfrey Bloom:

Yeah.So we are, whether we like it… . And certainly it’s just, it’s disappointing to see Australia pick up all the stupidities of Europe. The stupidities now, North America, and Canada’s just the same. Canada’s just as bad. And yet I know that in the same in England, if you go into the pubs in England, you’ll find ordinary straightforward, common sense of people who are all wondering what this government is doing. And of course it will be, I’m quite sure my trip to Australia was curtailed. Obviously we were coming out this year early in 2021 and to see my Australian friends and get some serious drinking done. And of course we can’t go. But I know I wouldn’t mind betting anything you like if I went into an Australian pub, they’d feel the same as every Englishman in an English Pub, what are these people doing? are they all mad?

Stephan Livera:

Certainly feels like our countries have been taken over from within, in some ways. And so I think you’re right that it can, it can look a little bit, it can look like there’s not that many options, but I think, you know, it depends on which countries around the world. There are some that have no capital gains tax as well. So that’s, that’s a nice little

Godfrey Bloom:

Interesting Stephan. And when we got to, you’ve got these differentials in the United States, so inheritance tax in Florida, there’s no income tax in Texas and if you move to in other States, know, they take every penny that you’ve got. Generally the blue States, of course, which are socialists. But again, like this country, now we have a conservative government, which is socialist. It’s a socialist government in all but name it’s socialism in all but name. And we just saw our Chancellor just make a speech just a couple of days ago where he referred, we’ll get through all these troubles. The might of the United Kingdom state is behind you. That’s a very dodgy phrase for a conservative the might of the United Kingdom state. Oh, we saw some of that in Japan, in the 1930s, the might of the state and Italy in the 1920’s. I don’t want to hear that. I don’t wanna hear any of that.

Stephan Livera:

It’s like a mask off moment, right?

Godfrey Bloom:

Yeah, yeah, absolutely. Stephan. Yeah.

Stephan Livera:

So yeah, I think it’s an interesting story and people often leave for better opportunities overseas, and I think maybe people will do that. And it’s partly, also this is a digital revolution in some ways that people can actually start transacting in a way that they’re not being inflated like their money is not being inflated or stopped even where they are. So in some sense, people are able to set up and do a Bitcoin business online. But I think, but to the point about at what stage and phase Bitcoin is in the way we view it is more like people are going to view this more it’s like a reserve asset, or it’s you know, it’s a collateral or it’s a store of value and it’s not necessarily a, there’s not going to be large numbers of people doing day to day trades until other people also have savings in Bitcoin.

Stephan Livera:

And so it’s kind of, we’re sort of, we’re seeing this network effect grow over time. So that’s kind of how we’re thinking about it. But an interesting point as well, to the point about moving overseas with your money. I mean, I’m sure you’re probably familiar. There are stories of people trying to move overseas and trying to take gold overseas. And obviously, you know, it’s difficult to do that, or you’re trying to move your even fiat dollars out of fiat money out of the current out of the country. And then obviously the banking system can block that off. But in the Bitcoin world that can literally be as simple as creating a wallet and memorizing 12 words or doing some other way to send it overseas. So I think there’s a natural advantage there. And also one other point I think is interesting as well.

Stephan Livera:

I’d love to get your thoughts on this is so around this idea of, you know, rehypothecation and trying to keep to try to suppress the price of an asset. I think an interesting part with Bitcoin is when you run the software correctly, when you run, what’s called a Bitcoin full node, right? So we don’t need to get too much into the technical aspects of that. That’s, part of the journey for you as well. But when you run this software, it allows you to see the entire ledger in terms of the, in terms of the amount that has been issued. And so that already is like a is a really big win in that. You can know that it’s not, if you store your Bitcoins in the correct way, you can know that you haven’t been, you know, your Bitcoins have not been rehypothecated. And so I think that might also be a nice comparative in that way, because Bitcoin is a technology that allows people to resist fractional reserve banking. And so I think that’s an interesting idea as well, but I’m wondering, what do you think?

Godfrey Bloom:

I accept all that, everything you say there is actually spot on. I don’t, I don’t take issue with any of that. You’re quite right. Which makes it very exciting, but what I think is already happening and I’m very new, I’m the new guy, but I think what is already happening, what will happen, the natural progression is to mutualize Bitcoin. So you will find that the easy way to retail Bitcoin and work Bitcoin for the punters you know, so you can sell it in the newspaper adverts clips and your financial advisor can deal with it. is to mutualize it. So you can say, I want to buy some Bitcoin. I don’t want to go through all this performance, cause it’s a bit complicated, but what I can do, my financial advisor can buy me the Bitcoin fund, which is regulated in Britain or Luxembourg or whatever, I’ll have the Bitcoin fund and I’m exposed to Bitcoin.

Godfrey Bloom:

And then of course it will be another system where of course they don’t buy the Bitcoin. They just monitor the price of the Bitcoin and they will pay you back, but they don’t hold it in specie. And then of course they can actually trade against it by not having it and suppress it. When you find you’ve got, you thought you had a Bitcoin, but you haven’t, you have a promissory mutual funds, institution, or somebody like Blackrock or, or worse still Goldman Sachs, goodness me what, a bunch of crooks they are. So yeah, I would see perhaps that developing for people, buying Bitcoin for different reasons, not the reason that you and I, my advisor buy it because we’re old and canny and like gold, I buy in specie, but I think you could find, then the price could be manipulated by people who don’t need, who say manipulate the price of gold and have done for years.

Godfrey Bloom:

But we speculate. We speculate who knows what I mean? We are now I think we are about to see things, which I would argue are unprecedented in history when, when, when we sold the collapse of the Deutschmark in the 1920s in the Weimar Republic which of cause it’s still possibly the definitive example. You can talk about Zimbabwe, Venezuela, but who can see Germany that Germany, in the 1920’s with a major power, with a major sophisticated Western path and their consequences, but you could go to the dollar Sterling. And at that time, many don’t know this, the Franc was gold backed so that the French Franc so there was an alternative to go to isn’t the case now. There’s no paper currency to fly to. And I mentioned it in the clip here that talking about the Swiss Franc, which of course used to be backed at least by 25%.

Godfrey Bloom:

And they’re up to it’s back now, they’ve got a huge equity holdings and stuff like that. It’s at the Swiss Franc. Isn’t what it was it’s least disastrous. It’s less hopeless than other fiat currencies, so interesting how that’s going to develop we haven’t seen anything like this before the world has never seen anything like an international collapse of banking and fiat currencies that, you know this is and indeed in America, I know, and I don’t want to over blow this. But I have done a few videos on this and said maybe you know, nevermind about Bitcoin, what you might need is lots of corned beef and some ammunition

Stephan Livera:

Potentially. I think so certainly I think you raised some really great points that potentially there is this kind of, there is some risk that Bitcoin gets co-opted and so on. I think, I guess we’d have to say it’s possible. I just think it’s, I would say it’s probably it’s towards the end of unlikely and the reason being enough people will be holding it in their own self custody, as opposed to just leaving it, to somebody else to kind of custody it for them. Then it just makes it more like very, very difficult for anybody to execute that. But certainly to the point around you know things degenerating quickly into, let’s say a mad max style society or things like that, where, you know, guns and having guns matters more than having Bitcoins, let’s say I, we don’t know the future. It could be possible.

Stephan Livera:

But I think for me, I am actually seeing it more like Bitcoin is like a parallel system and it’s a parallel system that allows people to stop the worst of those kinds of ravages of society. And that people can have this alternative now, instead of being stuck in Fiat money, that’s constantly going down in value. They will naturally switch over to better alternatives. Right. And so I think we will see this particularly where people are already feeling the pain, right? So people like yourself and me, and probably many of my listeners who are already more thinking about money, like actually thinking about what is money, what makes good money, what’s the problem with central banking, but there’ll be a lot of people that don’t even think about any of that. They will just kind of run to whatever they can. And so I think we’ll see this in countries, in South America, some of them are already looking for ways to try to move money internationally and use it to you know, for example, the diaspora affects where people are, you know, people from Venezuela or going to other countries to send money home using Bitcoin.

Stephan Livera:

So that’s kind of an example, but I guess the point I’m trying to get to is I think it may just be that if things get bad enough in a given country, enough people will sort of figure out why Bitcoin and how to use Bitcoin, such that they can still keep some semblance of trade going and hopefully, hopefully stave off the mad max future.

Godfrey Bloom:

Well, humankind is nothing if not adaptable. So yes, I take your point and I have already bought some Bitcoin. So I am already satisfied that it is another way of diversifying and I shall continue to do so. So I won’t be buying unless of course I get a, I don’t know where any more money is gonna come from. Actually I can’t see down the road, it’d be getting any more money now at my age and I don’t care anyway. But the fees I get in bits and pieces of enough to start now building a diverse case. My future diversification will be a bit kind. Another question for you if I may, and I know my Goldbug followers will ask, want me to ask this, of course there are other Bitcoins. If I may use that dreadful expression to your experts, your fellow experts, you know is there any merit in other stuff, you know, other cryptocurrencies, but what’s your view on that?

Stephan Livera:

Short answer is no, but let me explain. So I think it comes down to seeing Bitcoin is a network. And so ultimately it’s about which of these have the strongest networks in terms of holders, in terms of people developing in terms of exchanges that allow you to buy and sell Bitcoin in terms of merchants that allow you to trade products and services for Bitcoin and in terms of the kind of financialization. And so I think there’s this kind of tendency for people to think all, you know, what if Bitcoin is the MySpace and there’s a Facebook coming and so on. But I think the important point is to really understand that Bitcoin is actually the successor in something like three or four decades worth of people working at this idea of trying to create digital money. And so I think the key point for me in terms of Altcoins, the other currencies is that, well, there’s a few things here.

Stephan Livera:

So some of them are not even trying to be money first off. Some of them are just not are simply not as decentralized as they claim to be. And so fundamentally there’s somebody somewhere who could be pressured to pull a lever to change the supply, to change some characteristic of the system, whereas with Bitcoin, because it was designed by an anonymous founder, Satoshi Nakamoto, or a group that we don’t know that it would just be too difficult to sort of recreate that again. And so now it’s sort of, it’s like an open source money it’s just out there and nobody really, there;s no kind of one group who control it. And so that is part of its strength in a way that there’s nobody there to kind of stop. There’s no central company or companies who are running most of the infrastructure for Bitcoin.

Stephan Livera:

And so I think those are probably some of the key points. It takes a little bit of research and reading, just come to that. But I think the other key point as well is, I mean, if we look at someone like Mises right here, he speaks about this idea of if even if you have this world of competing monies, they would be one by one rejected until you’re left with the most saleable one. And I think he mentioned that in theory of money and credit, right? And so I think we have to be very cognizant of that point, that it’s going to be very much like a winner takes all sort of market. And so I think that is why for me personally, I’m in the Bitcoin only camp, but I can understand when people are coming into the space and they’re trying to understand, Oh, what about, what about these other coins?

Stephan Livera:

Should I have those? And I think fundamentally, that’s why I try to, because here’s the problem, right? Whenever whoever can print money will and what happened in the space. And so what’s happened in the space is that essentially people would invent these very paper thin rationalizations for creating a new coin because they want it to be the King of the new coin. Right. And they want to be the one printing the money. And so that’s been a very strong tendency and in fact, many past Bitcoin people have then turned around and started their own Altcoin to try and know. And so for me, as somebody trying to teach people in the space, I have to be very careful to try and educate them about why they have to take a very skeptical eye to Altcoins basically. So I guess hopefully that helps. Did you have any more questions I’m happy to answer if you do?

Godfrey Bloom:

You’ve answered that very well. I’ve done enough. I’m revising because two years ago I looked quite carefully. And then now I’m sort of revising rather than coming to you and that’s pretty much the conclusion I’d come to myself a little bit in the same way. Not, not quite the same way as the reason I went for gold and other precious metals, platinum and other stuff, because if you’re going to diversify anyway, I think the need by versify mainstream in what, in what you’re going to go mainstream in that asset class, I used to run, to do stuff like that on asset classes, because it’s interesting just on another subject here, when he comes to equities. People always say, you’re equity gurus will always say, Oh yes, your equities, but you’ve got to get the right equities or to get this equities.

Godfrey Bloom:

And you’ve got to buy this and you’ve got to buy that because what they always overlook or conveniently overlook is that when stock market crashes as this one is going to do make no mistake, there are going to be says that haven’t crashed, they’ll crash some crash. But when you see a stock market crash, I mean, for example, do hold. The only equities I think I hold now are left gold mining stocks. Well, I would wouldn’t die because sometimes holding Goldie species, certain trust funds is just too complicated technically. So I hold gold funds and they’ve done reasonably well. But when we have a stock market crash, a crash, they will crash. They will bounce quicker than anything else, but they will crash too, because you need to cover your position. So thinking that you can be, you can outsmart the market by buying, you know, very clever equity selection. You can’t, nobody ever has. Some guys are cleverer than others. And and I remember one that’s in the eighties when I was representing a big equity house in London giving a lecture there. They’re saying that the great thing about my bank is that we will lose your less money and than anybody else.

Stephan Livera:

Well, that’s unfortunately become the game now because people don’t believe they don’t sense that there’s any way to keep their cash balance. And that is why we’ve seen companies now look at Bitcoin as a cash balance assets

Godfrey Bloom:

As well. Exactly. I mean, that’s a very, very important point. And I was holding cash when I was holding cash. I’m going back maybe 15 years and I was holding cash with major institutions you know, taking the cash box. Now I want out of the market here only to find out that regulation was so Slack. It wasn’t cash at all. It wasn’t cash. It was all sorts of weird options here and options there. And so cash, my cash funds fell by 6%. And, I didn’t get caught in 2007 by then, you know, I was very wise. I dug right down. What is it that they hold? Is it a doctor’s house in Arlington or is it trailer trash in South Chicago? I never made that mistake again. And it was a small mistake, but it was a well learned mistake.

Godfrey Bloom:

But of course you’ve got lots of farm managers who run council civil servants who run their council on their farms and bits and pieces. But these people aren’t experts. You know, they don’t know if standard and poor give us the three star rating. They think it’s a three star rating. I can’t believe that Moody’s and standard and pool and these people are still around after 2007, these children that rate bonds, they should have all been hanging from a lamppost and they still they’re running their big bucks. Some of them haven’t even started shaving.

Stephan Livera:

Yeah. And that’s the problem that we’re faced with, right? I mean, negative rates, bonds that are ridiculously low yields what is a company treasurer to do and what are individuals to do and what are fund managers to do?

Godfrey Bloom:

I think you might have put your finger on something which might be much more important, which the reason for this this discussion is for me to learn, and for my followers to learn as well. Hopefully that triggered in my head that’s triggered in my head is this a corporate cash alternative. And that is, yes, it actually is, or certainly could be in a much bigger way than I might previously imagined. Very interesting that, yeah.

Stephan Livera:

Yeah. And I think, look, the other thing is some well think of it this way. Some people are forced into holding government bonds because of regulation, or because there might be some kind of treatment in terms of the banking system that it kind of works a little bit better for them, but if you have the choice you know and if you don’t want to play the greater fool game, the greater fool theory of I buy this bond and I’m gonna offload it to somebody else for a greater price. And you’ll think you’re really thinking for the longer term then what else, how else, what else would you, you know, what else would make sense then an asset that you can self custody and you know, the eventual supply of it, and you know, what fraction of the total supply that you have. So I think that’s really a very powerful message and we are starting to see more. And I guess even, you know, you’ve recently left the EU, but there’s been a lot of chatter about in the EU about negative rates coming as well.

Godfrey Bloom:

It was interesting, the ECB and it’s on my website, I’ve cross examined Draghi. Who was the president then, I’m going back to 2014, but interesting exchange. It got quite a few hits. I don’t know whether you’ve seen it. And he said, well, I said, you know, you’ll talk about rescuing the Spanish economy and you’re doing this, that and the other. And I said, you’ve rescued it for about six weeks. When I considered these numbers. And he looked at me and he said, well, Mr Bloom you’ll just have to trust me. And I said, you’re a central banker. I wouldn’t trust you as far as I can throw you. In the European Union you can’t talk like that to these big people? But it’s interesting to see the ECB. If you drill down, they say, let’s say, I mean thereby they’re the people who are buying sovereign debt, they’re buying Italian sovereign debt, for example, really gosh.

Godfrey Bloom:

And the other thing they’ve done is they’re buying corporate bonds. So they’re buying things like Volkswagen finance or something, and they’re claiming that that’s asset backed. So yes, we’re buying this stuff, but this, the asset backed bonds, which fits in with the the story of, you know, what we’redoing, the ECB are doing. And, you know, we’ll do whatever it takes. If I may quote Monsier Draghi, who instead is a very nice guy. He’s a nice guy, is a typical, charming Italian doesn’t understand money at all, but a very charming guy. And of course, asset backed I think I put this in my book in a, I’ve done a little book, magic of banking. It’s more of an aide memoir than a book so that an intelligent layman spend 40 minutes.

Godfrey Bloom:

I think I’m beginning to understand how the economy me, but of course, Oh, it’s asset backed. Well, what have you bought a BMW or Volkswagen is you bought next doors, teenage son, second hand BMW, which is worthless and the ECB are claiming, that it’s asset backed. But the trouble is, of course, if I have to get onto mainstream media now, mainstream media don’t understand money or banking either. I’ve lectured at banking conferences where the bankers don’t understand banking and money. There are people in the BBC, the times newspaper, the financial times as well, who are their economic correspondence who I’ve had lunch with? I know these people, they have no understanding of banking at all. They’re Absolutely clueless. And of course the people who protecting society protecting the ordinary punter is it should be your your correspondent, your economics, correspondent of public service broadcasting.

Godfrey Bloom:

The BBC should be cross examining the chancellor who actually every year presents his budget illegally. He doesn’t put in his budget, any liabilities for public sector pensions or public funding initiatives. If you did that as a company, as Shell or BP, if you did that, you’d go to prison. It’s illegal. And every day, every year he stands up the Exchequer telling you that our debt ratios are only 89% of GDP. There 200% of GDP, the man’s a liar and a cheat. And if he’s watching this Rikki Tikki Tavi, who’s another really nice guy. Actually I’ve met. He’s a nice guy, pleasant guy. Two things. He either doesn’t understand banking and money, which I suspect is the case, or he is another ex Goldman Sachs screw up. I don’t know. You tell me.

Stephan Livera:

Godfrey on this topic of EU bureaucrats. I’m curious as well, there’s been some discussion coming out of EU around central bank digital currencies, and this kind of story of all we’re going to compete. And we’re going to put this central bank digital currency out. I’m wondering, do you have any views on the central bank digital currency and whether they will be what’s your view on the prospects for success on that?

Godfrey Bloom:

Well, the goal, this is something that is not generally understood. Certainly in my own country, we all talk about trade here. We’re always talking about trade now. Trade arrangements. Trade has got nothing whatsoever to do with the European union. Nothing whatsoever to do with it. It’s a nice deal. It’s great political ideal. It’s a dream that is hold fervently with religious fervor. I worked out there for 10 years. We’re not talking about trade. Yeah, we’re talking about one entity, with its own anthem, own leader. So system, so certainly the gold or the, the goal will be a digital inaudible which the ECB could control. They will have things like national wages, minimum wages for everybody and they will bring the, this is the goal for them to bring all, so they have complete and total control of everything because it’s a control system.

Godfrey Bloom:

The European Union is a controlled system. There is no democratic ethos in it. The rules and regulations, of course, are made by the by the European commission, the parliament, (inaudible) where staff attending chamber have nothing to do with making the law at all. They call it a parliament, it’s not a parliament at all. It’s a talking shop, the deal’s already been done by the commission, unelected bureaucrats. Most of them are French. So consequently the answer is yes, that is where they’re heading. That is the goal. That is their dream. The only other flip side of that argument of course is the European union is one of the most competent and corrupt organizations since Byzantine Empire, these people are appallingly stupid and incompetent. So that may be the goal of a national or a pan European digital currency. The question is when it, I mean I don’t know how they find their way to the lavatory. Some of these people, I really don’t. So whether it’s actually going to happen, I don’t think it will happen in my lifetime, but then of course I’m an old geezer, so that might not be very long.

Stephan Livera:

You seem very hearty. So I think you’ve got a good amount of time. I’m also wanted to bring up, so your book, the magic of banking, I had a read of it. And there was really an interesting point that you’re making is, which is that there seems to be this perception, that major countries cannot go bankrupt, right? Why do people believe this? Why are they so quick to forget the lessons of history?

Godfrey Bloom:

This is a very deeply and widely held view because, and the response you’ll get is, well, the government prints money. So how can they go bankrupt if they could just print money? Of course, what they don’t understand is yes, of course they can go and printing money, but if it’s completely worthless, they’re bankrupt in all but name. And so consequently, that is the projection. And people don’t understand it because if you talk for example, to a retired school teacher in England, who’s on an index linked pension to die for that you couldn’t possibly get in any other ordinary civil servants. They retired maybe at 55 or 56, they retire ready, which in the commercial world is almost impossible. And the cost of a pension these days with life expectancy, it’s almost impossible to do that. They an increase every year of 2% or whatever the CPI rate is.

Godfrey Bloom:

They deeply, deeply believe that that will continue forever because there’s some kind of magic money tree that it comes from. They have no concept of where the money comes from. They know that it’s a government pension and therefore it must be sacrosanct. The idea that one day that check won’t come, which is the total situation you see in second or third world countries, or even parts of Europe like Greece, for example, the pension just doesn’t arrive, doesn’t arrive until they, until the Greeks managed to screw the Germans out of another loan. And the German punter doesn’t understand it. Your Aldi worker, your BMW worker doesn’t understand any of these matters, bless his cotton socks. He’s working hard, he’s producing good vehicles and they’re being bought. But of course, with the shadow banking system and Deutsche bank is classic example of that with something like 900 billion euros of shadow banking debt, they’ve sent all these cars to these countries, all these cars, and it goes, they’ve been paid under a shadow banking system.

Godfrey Bloom:

As far as Germany is concerned, they might as well have dumped all those cars in the North sea. They’re never really going to be painful. It’s all magic. Head’s been titled by book magic, it’s all magic. And it’s part of the magic, that they have persuaded people that our country can’t go broke like the local factory. And this is another huge awakening that is coming and it’s coming much sooner than people imagine. These checks will just stop coming or they’ll have to cap, people in the, in the sector, in our public sector who are on unbelievable salaries, you know, the town that we used to call him the chief clerk, and then we had all this new sort of stuff coming. And they now call the chief executive at the town hall. And they’re on 200,000 pounds a year. Most of them are failed solicitors and the Lord only what they make under the counter because this country is a very sophisticated Nigeria.

Godfrey Bloom:

The corruption here is absolutely deep, but we’re far too clever to let the punteres know how it works. So their pensions were enormous. So they were retiring early on pension. So in the region of 150,000 pounds a year index linked, my village alone, my village, I live in a tiny, tiny village. There’s only 120 souls all told in my little village in Yorkshire. We have six, no, we have eight retired, civil servants, charming people, very nice people. I’ve got nothing against them, but I worked out what the value of that pension was. If you had to buy it from an insurance company today, they all retired on 60.. And they were all quite senior rich people. So they would have been on salaries at 50 or 60,000. The cost of those pensions on the open market would be 9 million, 9 million pounds.

Godfrey Bloom:

And that’s in my tiny little Yorkshire village alone, nationwide. We’re talking billions and trillions of pounds for these characters, all on their index link pension, who then go back to the civil service or the school to work pin money to top up. The whole system’s crazy. And when history looks at this, when economic historians look at this, they will scratch their heads and wonder what were they, what were they thinking? Did they think they could do this forever? Did they think they could do this forever? And they won’t believe it. And her majesty when the 2007, you might’ve got the quote down there in in Australia. I’m sure you did. When she was at a dinner or something and it was 2008, I think it was two economists and bankers. You know, it was a senior dinner and her speech after dinner. She said, “how is it? You didn’t see any of this coming.” And that’s her majesty. And of course I wrote a letter to the palace because I hold the Queen’s commission. I said, your majesty I did. I’ll come for tea and I’ll explain it to you.

Stephan Livera:

That’s the great irony. Isn’t it? I mean, it seems like, you know, looking back, people were seeing, how did they, how did they let it get this bad? Why did they do this incredibly unsustainable government spending and projects? And the reality is that it just wasn’t convenient to listen to the people who were saying it was unsustainable, right?

Godfrey Bloom:

Just extraordinary, our prime minister yesterday morning has said, we’re going to go to a hundred percent wind power. He wants to visit South Australia. Germany is, they’re building emergency power stations because Germany tried to go back the Iberian peninsula, but you can’t tell Boris, in fact, I have come to the conclusion. You can’t tell anybody who’ve graduated from Oxford university. Anything. I think they have a secret lobotomy as soon as they get there. That’s my theory.

Stephan Livera:

And I just, I mean, to me, it just seems like such a great injustice also because essentially younger taxpayers, younger generations are the ones who will foot the bill for all of this craziness. And so it becomes almost like a generational conflict because it’s kind of like older generations might spend and spend away. And then that, you know, the younger generations are being left to pick up the tab for that. And so that seems like a very strong injustice there to me. And I think that is also a big part of why people, at least in my experience are now open more open to the idea of alternatives like Bitcoin.

Godfrey Bloom:

You’re absolutely right. I mean, it’s disgraceful. My generation has let down the country we’re baby boomers I’m a the baby boomer. I’ve had 70 years of basically peace in Europe, a prosperous broadly prosperous economy. And we’re leaving, we’re leaving youngsters when I die, the next generation will have the biggest debt in our history. But of course, as an Austrian school economist, you will also understand that it’s all about welfarism. But if you go to an English university, they’re all in favor of it. The average university student group is Neo socialist almost to a man. And the ones that aren’t in the lecture hall, of course are playing rugby. They’re not there at parties going out with girls. They’re not in the debating hall, that’s for geeks, isn’t it. But I mean, it’s not absolutely, it’s absolutely disgraceful that we could have handed over a country after 70 years of prosperity and a mess.

Godfrey Bloom:

And it’s not just us. It’s France, it’s Spain, it’s Italy, it’s United States, we’ve all done it. We all talk about money. We talk about gold standards, but the cancer in the soul of a nation is Welfare Statism the concept that you can get money for not working, which is what Welfarism is and was not the original idea under beverage in 1942, 1943, when the beverage report put out the template for it was to put a safety net under people who were suffering unfortunate circumstances through no fault of their own. It is now a lifestyle choice. And that is the root of the problem for the Western democracies, the liabilities they have under Welfarism, which they don’t have in the far East. I worked in Hong Kong for a while. The concept of paying somebody when I was in Hong Kong for not working was beyond the Cantonese mind, the Chinese simply couldn’t understand why you would pay for someone not working. If they look after their own old, of course, the Chinese have a respect for their elders. And if grandma’s poorly, she stays over, they look after her, they couldn’t understand this concept of state welfare. And that is you can’t talk about so many things, gold standards, money Bitcoin, without addressing the elephant in the room that we’re not allowed to talk about. We’re not allowed to talk about welfarism.

Stephan Livera:

You should say this. And in some sense, it, it also makes people as entrepreneurs perhaps less likely to even try to be innovative. And so it sort of stifles the soul of the people in that country. And perhaps it’s, I think it’s fair to argue that it kind of acts as a drag on that country’s long term economic growth and prosperity.

Godfrey Bloom:

Yes, it does. And you’ve got to be, it should be made really easy to start a business and perpetuate a business. And that’s of course, this desire of regulation, and we were in the European union. I sat through, I was there for 10 years and I saw 2000 new regulations passed a year, 2000 new regulations yet quite extraordinary speed. You vote electronically out there. It was quite most extraordinary phenomenon at the speed at which these regulations came. And of course they have a system of Corpus Juris and Napoleonic code and their legal system, which we don’t have. We have common law. And so we saw more, we saw more law passed in a period of membership of the European union than we had in its entirety since 1688 bill of rights. Right the way through to his joining the European union.

Godfrey Bloom:

You can’t do anything, the regulation for everything and that stifles entrepreneurship the now and small businesses, entrepreneurial, everything starts as a small business and the government here. I’m sure it’s the same in Australia. The government will tell you what you can pay, what the holidays are, maternity leave, paternity leave, bereavement, leave. You can’t sack anybody. If they’re useless, you’ve got to go through an unbelievable procedure. It’s worse in France and Stephanie I’m Belgium, but then not the sort of benchmarks. We want you to build an entrepreneurial society, a rich society. You want low tax and low regulation. And under the principles of law and English law, a contract between if you wanted to employ me, or I wanted to employ you under common law to sign the contract. And we’re both happy when you get it today, I’ll get mine. I don’t want a politician sitting at the table.

Godfrey Bloom:

I don’t want a politician saying cutting across of contract law telling me that, no, I can’t pay you that, or I can’t do this. Give you that amount. Or I’ve got to do this for your pension scheme as an employer and then people say you know, when it comes to pensions, Oh, the old people be, I’ve got my vagina. You think of a state. I don’t need a state pension scheme. And I’ve paid. I worked it out once, but a calculator on a bold West afternoon, I paid 2 million pounds in taxes. I left school in 1967. If you give me that back, I don’t want any pensions. And I don’t want any national health. I don’t want anything from the state. I didn’t want anything from the state. Just get off my back. And I’ve done a few lectures to universities on this on the basis of how you could.

Godfrey Bloom:

The Bitcoin street is let’s all have a little card, which absolves us from any responsibility to the state or the state to us. So you fill up your car, you can fill your car for 20 pounds, not 50 pounds. You’re pint doesn’t cost three pounds. It costs you one pound. Your salary is all yours, where do go, no deductions, the database. You don’t want everything from the state. You keep all right money. So you can have your own private health insurance. You can have your own pension scheme. You don’t want anything from the state who wouldn’t go for that. Unless of course, you’re sucking at the teat of the state. If you’re one of the millions of people who (inaudible) the state, I knew it all very comfortable with that idea. I said another thing that might amuse a people watching.

Godfrey Bloom:

I was actually at York university when I was in office. So there I was a little old politician. And I said to the kids in the classroom do you think you could make decisions, feel self better than the state can make you think I could make decisions for you and your family’s better than you could make them from yourself, hands up. You would be horrified at the number of hands that went up so I could make better decisions. So they could for themselves, we have a whole generation now of young people who believe that the state is their savior. The state is their support, not the people, most likely to rob you.

Stephan Livera:

It all ties in with this idea of Bitcoin. And this is a well, a very popular book within Bitcoin circles. And I’m sure you’ve heard of it as well, the sovereign individual, and that one really spells out some of this thesis that it’s almost like a digital way of exiting in some sense, right? Not a hundred percent, but it’s part of that. It’s part of the answer. And so we might also, it’s an interesting point there is all that you make about the people who are producers and the people who are, let’s say sucking at the teat that what the situation we’re getting into now is that governments are basically making it so that there’s less people producing as a ratio versus the number of people sucking at the teat. And so what happens when those productive people want to opt out when they want to leave, and they’re leaving even less productive people behind to kind of foot the bill for all the people sucking at the teat.

Godfrey Bloom:

You make a very interesting point, which I’ve made a many times myself, wait there are either wealth creators or wealth consumers. There’s only two types of people. Those that create wealth and those down. Now here’s a horrifying thing. There’s a guy at the Adam Smith Institute who I was at co-speaking. I was a co-speaker, at Durham University who didn’t understand what a wealth creates a walls. He didn’t understand it. This is a man from the Adam Smith Institute. I was trying to explain to the students that walk away from this idea that you have to be a captain of industry to be a wealth creator, your local hairdresser as a wealth creator. What my man your little guy the green grocers is a wealth creator, because he’s a guy that’s putting into the state with his taxes. Now, your chief executive of the town hall earning 200,000 pounds a year is a wealth consumer.

Godfrey Bloom:

You might have what you consider worthy wealth consumers like a top surgeon earning 250,000 pounds a year for the national health. He’s a consumer of wealth not a creator of wealth, no matter how noble or nice he may be. We’ve got to, are we on now at the situation, we’re getting very close, you’re quite right. And pointed out Stephan, you’re right on the ball here. We’re getting the stage where there are so many people consuming wealth and too few actually creating it. It’s not just those that are working. It’s politicized charities. It’s, quangos the number of people who work in some way directly for the state. And then of course, you’ve got to look at people, work indirectly for the state, you know, state ontracts, so permanent state contracts. So for example, the guy coming I have a small holding in Yorkshire, the guy coming to cut our hedges he wanted in for 200 yards worth of hedge or something, he wanted 2000 pounds and it was outrageous and totally ridiculous.

Godfrey Bloom:

And everything he does is for the local council. So he charges something like a hundred pounds a yard, but whatever it is, two hedges, I can’t remember what it is. Unchallenged. So he does all the work for the local council. It’s unchallenged because they don’t have to negotiate a deal. They just pay him. Cause it’s not their money. I got 600 pounds and he did a very good job. So it isn’t even what we see. It isn’t even the guy at the town hall or who we know is a lemon. It’s all the guys that work directly for the town hall and only for the town hall charging phenomenal amounts of money. They’re also sucking at the teat and nobody in government has a serious background in commerce, of both labor party or conservative party on the front benches, there’s nobody there who actually Stephan ran a (inaudible) store.

Godfrey Bloom:

These people have no idea of commerce whatsoever and all through the civil service. Bear in mind, somebody at the people that negotiate our trade agreements are civil servants who at university, usually Oxford decided at Oxford, they were not go to go into commerce. They made that decision as very young men not to go into commerce. They’re now negotiating international trade agreements. You couldn’t think of anybody less suited to go and negotiate with the European union, which is why we’ve made a mess of it for 40 years. And we’re still making a mess of it. I mean, you don’t need trade agreement. You and I don’t need to attract them. I want to buy something for you down there. And Australia, you send me the bill. I send you the money. You might not need politicians there. What’s that got to do with anything? And of course the students would get a trade agreement.

Godfrey Bloom:

It comes with baggage. We talking here, we’re here at the moment about a trade agreement with United States. All that means is we have a tarriff free game for some goods. So big business will win out of it. But the other thing is, of course, we will have to accept whatever the CIA give us. If the CIA, tell us we’re going to do this, this and this. That’s what we’ll do, because that will be part of the unseen baggage of a trade agreement. I don’t make trade agreements. I wouldn’t have trade agreements with anybody. I would just have no tariffs. Let’s have an international free tariff. I can’t see that one flying because too many people have got their hand in the till.

Stephan Livera:

It’s unfortunate. And yeah. So I think at the end of the day, it’s, it’s just, it’s all just going to drive people to look for alternatives. And I think that for me is really where this is at.

Godfrey Bloom:

You’re absolutely right.

Stephan Livera:

I’ve really enjoyed chatting with you Godfrey. It’s probably a good time to finish off here, but if you had any closing thoughts for the listeners and of course, let listeners know where they can find you online also.

Godfrey Bloom:

Well, I look forward to continuing the discussion. It’s been an enormous response I’ve had on Twitter and stuff. I have a, I have a website obviously, which is so easily found just GodfreyBloom.uk Cause I’ve been writing articles on that in various, not just money and economics, other things and so on and so forth. And if I can just be a little bit arrogant on this, if you read it on my website, it will be common knowledge in about two years time, everything I’ve written has come true. I’m always right. And this is the reason my wife said you’ve got no friends.

Stephan Livera:

Fantastic. Well, I’ll leave some of the links in the show notes for listeners who want to find you online.

Godfrey Bloom:

Let’s keep this thing rolling. It’s fascinating.

Stephan Livera:

Well, thank you for joining me.

Stephan Livera:

Thank you so much for inviting me.