Peter St Onge, Austrian economist and fellow at Mises Institute joins me on the show to talk about his thoughts on Bitcoin Energy use, and what Deflationary growth will look like. We chat: 

• Bitcoin energy costs
• Fiat standard costs
• Costs of recession
• Deflationary growth
• Keynesian ‘sticky wages’
• UBI and MMT
• Will robots take our jobs?

Peter St Onge links:

• Twitter: @profstonge
• Article: Critics Claim Bitcoin Is a Threat to the Environment. They’re Wrong.
• Substack: CryptoEconomy

Sponsors: 

• Swan Bitcoin
• Hodl Hodl Lend
• Compass Mining
• Unchained Capital (code LIVERA)
• CypherSafe (code LIVERA)
• CoinKite.com (code LIVERA)

Stephan Livera links:

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

Podcast Transcript:

Stephan Livera:

Peter welcome to the show.

Peter St Onge:

Thanks for having me, Stephan.

Stephan Livera:

Peter, I’ve been following your work for a while and think we’ve been connected for a while, but we just never actually got around to actually speaking. So I mean here and there, a little bit of internet interaction, but not actually speaking. It’s a pleasure to speak with you. And I know you’ve recently started writing about more about Bitcoin. I think you were even talking about it a bit earlier as well, but you sort of went in and out of it for a little while. What’s your — I guess your story with Bitcoin?

Peter St Onge:

Yeah. so I started writing about it in late 2014. I was one of the first articles over at Mises right. So one of the issues for Mises as an organization is that the Austrian community has traditionally been kind of Goldbug right. And there was a lot of hostility towards Bitcoin. And so Jeff Deist president over there, he wanted us to put out a little bit more content sort of dealing with theory behind Bitcoin and sort of easing gold bugs into the concept that a currency can be legitimate, even if it’s not backed by some physical asset. So I got into it back then and sort of dabbled here and there. What changed for me was really COVID right. So COVID was shocking. I think on two fronts that are related to crypto, right?

Peter St Onge:

One of them is monetary obviously. I mean, it’s just gone completely wild. The last time we saw anything close to this of course was 2008 when, you know, the moment that inspired Satoshi Nakamoto. So one of them is monetary. The other one is really sort of the gatekeeper question. I’ve been, I think many of us have been shocked the degree to which gatekeepers have been aggressive on commerce, on speech in a number of areas. And so that really got me sort of existentially interested in the question of decentralization and thinking that is probably a heck of a lot more important than I’d been assuming.

Stephan Livera:

Yeah. That’s an interesting way to put it. And I think it’s like the typical arguments about how gold is easily centralized and held into vaults. And it can’t be — obviously yes, you can send it internationally, but it’s far more costly and you generally are trusting somebody, whereas that’s the whole thing that Bitcoin is changing. You’re not having to trust and maybe people can make arguments about, okay, fine. Maybe not everybody can read C++ and code Python and know the Bitcoin core code and so on, but there’s levels to this thing, right? And so for the most part, you know, anyone can spin up a phone wallet and have Bitcoin on their phone and send it anywhere in the world. So I think that’s really the important part. And I think 2020 really raised that importance in people’s minds. And I think that’s really what we’ve seen. And that’s where we’ve seen, you know, big name advocates like Michael Saylor who sort of, activated in 2020 and other people like that. And I know you recently wrote a piece for Mises as well, talking about Bitcoin and energy use. So Peter, are we just people who like to boil the oceans?

Peter St Onge:

That’s right. That’s — not to steal Nic Carter’s thunder. That’s apparently what he’s known for at this point — boiling oceans. Right. So what I wanted to do with this piece is that it’s common, you know, digiconomist and you know, other critics they compare Bitcoin to fiat on the basis of like a Visa transaction. And of course the cost per transaction of Visa, you are not even scraping the surface, right. You know, finance as an industry in the US that accounts for over 8% of GDP, that’s just a hair under manufacturing. Every single city on earth is completely dominated by banks, skyscrapers. Right? All of these things have enormous carbon costs. And then of course, beyond that, you’ve got the secondary effects, right? And I mean, we know this on our side, right? We know the the business cycle, the boom bust the inflationary boom that, you know, could be followed by either a bust or even potentially by stagflation.

Peter St Onge:

So we know about these things. You’ve also got — being able to print their own money, makes it easier for governments to start wars. It makes them easier to grow their bureaucracy. And then those bureaucracies can sort of become a cancer that sustain and grow themselves. So anyway, there are all these sort of second order effects to not so much fiat, but the current fiat system that we have, right? One where you have central banks that create boom bust cycles ones where those central banks cooperate with governments to print up whatever paper they need. And so what I tried to do in this article is to sort of take a stab at estimating one of those secondary effects, which is specifically recessions.

Stephan Livera:

Yeah. I like that idea. And I think first, let’s also cover this idea that, and this is a common one. I’m sure listeners of this show will very much know it, but I think it’s just to express that point as well, the energy cost per transaction, what we will see sometimes with these, when the critics come out and say, Oh, you’re boiling the ocean. They will naively extrapolate the amount of energy per transaction as though the system just scales that way. But that’s really not what it is. It’s actually more like that hash power that miners are contributing to the Bitcoin network. The SHA256 hashing power is — we can think of it. Like that’s the hash power that’s just keeping the overall network running. It’s not scaling just naively by the number of transactions. And people are sort of forgetting that the way Bitcoin works is, you know, let’s say every block is 10 minutes, right. On average, and each block might fit, call it two or 3000 transactions inside a block. Right? That’s really what we’re talking about. It’s not that it can like scale to millions of transactions or whatever. Right. I think that’s the first part to understand. And then it’s also comparative right. Think you compare to, okay, well look, how big is the financial sector? What are the costs? What are the energy costs associated with that?

Peter St Onge:

Right. Absolutely. And, you know, that’s something that Saifedean for example, has emphasized quite a bit that, you know, you can essentially account for the entire world economy on a settlement layer with roughly the same Bitcoin energy consumption that we use today. Yes. It might go up because the Bitcoin price would probably go up, but sort of on a structural architectural level, you know, in order to cover all the transactions in the world, you don’t need a million Bitcoins. Most of that energy use is coming from the block rewards. The block rewards are independent of how large each transaction is. So those individual transactions can be large enough that you could cover on a settlement basis. Right, in other words money being exchanged between banks or between central banks, you could cover substantially the entire world economy.

Stephan Livera:

Yeah. And so I think you also touch on a little bit of the, well, actually, let’s go back to that point around boom bust cycles. Right. So I think what you’re trying to outline in this piece is also talking about, Hey, what is the actual energy cost that society is paying for all of this malinvestment that has been induced by government, monetary intervention, like central banks and legal tender laws and blah, blah, blah, all the rest of it. Can you go into that? How do we estimate that cost?

Peter St Onge:

Right. So what I did here just to go through the numbers. So I took the amount of wealth that was destroyed during the 2008 financial crisis. Those numbers, you know, they’re easily available. It’s the most recent crisis. It was a pretty big crisis. So it’s representative not as big as the current crisis, but at the time we thought it was pretty big. So I took the amount destroyed which the federal reserve estimates that about $11 trillion from peak to trough in the US and then, you know, I made some estimates. So for example, Credit Suisse is one of the most cited estimates of world wealth and globally there’s about three times more wealth. So just kind of as a ball, just to get kind of a sense of what kind of numbers we’re talking about. We might multiply that by about three.

Peter St Onge:

So we’re talking something like 11 trillion in the US maybe 30 trillion worldwide. Now step two, is that there exists pretty good estimates of what the carbon footprint is of a dollar of GDP. Okay. And what that’s asking is in order to create a given amount of wealth on average, how much energy does that consume? Okay. And that’s actually a surprisingly constant number around the world. It’s about the same in the US as it is in India, for example which I wouldn’t have expected, but any rate, and that comes out to about 1.5 kilowatt hours per dollar of GDP. And these are from a variety of estimates. The estimates are fairly tightly clustered. That might be because they’re making the same assumptions, but at any rate, that’s kind of the closest that we have to like an official figure of what the energy cost is of a dollar of wealth.

Peter St Onge:

And so I multiply those two together and you come out to, what is it, 16,500 terawatt hours destroyed during the financial crisis? So we can take that number and we can then go back and we can look at, I actually took the most negative numbers for Bitcoin. And I went to Digiconomist who’s got controversial numbers, but anyway, because it’s such a massive difference. I wanted to go ahead and take the worst case scenario. Right. So let me accept Bitcoin’s worst critics numbers. Good. And he’s got 86 terawatt hours worldwide of which he ascribes 16 to the US — No, I’m sorry. He doesn’t ascribe it to the US, he doesn’t try to break it down. I go back and look at the location of nodes. And then based on that, it’s about 19% of notes are located in the US so in the absence of, you know, some better estimator I roughly took 19% of that 86.

Peter St Onge:

So either way you cut it, whether it’s on a US basis or on a worldwide basis, you’re looking at something like 500 to a 1000 years of Bitcoin mining being destroyed in the 2008 crisis. Now, of course, that’s not the only crisis we’ve had, right. Central banks do this for a living, right? So the federal reserve, there has been 17 recessions in the US since the fed was founded about a hundred years ago — that’s typical for other countries with central banks often, you know, they sort of catch a cold when the US has a recession and then other countries catch it as well. Sometimes they make up their own but at any rate, so we can take that 500 to 1000 and we can divide it by the historical fact that there has been about a recession every five years. And that gives you about a 100 to 200 times greater energy use from fiat than Bitcoin and when that energy is being destroyed, right, the form of its destruction is that we have to rebuild these massive hunks of our economy essentially every five years.

Stephan Livera:

That’s a really interesting implication because as we talk about in the Austrian school, we’re fans of this or we are — guess proponents of this idea that essentially that over time as monetary interventions occur, malinvestments occur, and these are essentially investments into industries or into projects that are literally, they cannot be sustainable because the resources of society, if you will, the configuration of the resources is not appropriate to see the successful completion of all these projects. So we know that some of these must fail. These are malinvestments. And in some sense, when the big crash comes, it’s like the tide goes out and we see who’s swimming naked. Right. We see, look, those projects were unsustainable. They’re not gonna work. Now, one thing that I guess is interesting, and maybe this is another area where it might be sort of, we have to think carefully about how we thread this needle, because I know as Austrians, there’s also a critique of the very notion of GDP of Gross Domestic Product, because GDP only counts final goods, right? the final stage in the process, it does not include account for any of the intermediate processes. And I know that others such as Mark Skousen and has spoken about this idea of gross output to try to capture that if you will, the full-time structure or capital structure. So I’m wondering what you think on that idea. Do you agree with that? Or do you have a slightly different take there, or what’s your view?

Peter St Onge:

Yeah, it’s always tricky. This comes up a lot with inflation statistics, for example, right? So you’ve got shadow stats. Some of those make more sense than what the standard number it is. Some of them might be debatable and the problem, this is just common in advocacy in general. If you’re talking to the choir, then you can get really fancy on which statistics you use. But if you’re trying to appeal to a general audience, unless there’s a darn good reason, you know, so, I mean, that’s why, like for the carbon numbers here, I’m using World Bank. Okay. I mean, I’m going as mainstream as possible because otherwise your critics are always going to accuse you of cherry picking, of using sympathetic sources. So, right. I mean, for sure the idea here is more just to get kind of a sense and to make the point right.

Peter St Onge:

Because many Bitcoiners before me have made the point that, you know, secondary effects like recessions have to be included in the cost of fiat. It’s not an original point at all. And so what I wanted to do here was sort of to start to get a handle on it. Like, what kind of magnitudes are we talking here? Right. Is fiat once we add the recession thing you know, is it 50% worse than it looks? And it turns out it’s, you know, a hundred it’s massively worse, so, right. For sure. You know, you could look at GDP differently. You could tease out different forms of wealth or economic activity. You could try to differentiate financial wealth from real wealth, you know, so for instance, malinvestments typically involve destruction of you know, something physical. We saw this during the 2008 crisis where in some areas like Las Vegas, they were actually knocking down newly built houses. Right? So, you know, the vast majority of the wealth that evaporated in 2008 was financial wealth. Right. So, you know, you can make a sort of philosophical debate, you know, how you count that…

Stephan Livera:

Of course. Yeah. That’s an interesting way to put it.

Peter St Onge:

Yeah. So, right. You know, I mean, for sure, this isn’t intended to be like the final word on the cost of a fiat recession. It’s more kind of to get a sense of it. And for me, I mean, when I sort of went through the numbers, I was, I was actually shocked. I didn’t think it would be that much of a difference. But it’s tremendous.

Stephan Livera:

It’s astonishing, isn’t it? How much of a waste is caused, and I think the other kind of common arguments that come up here to assess and I’m sure you’ve probably seen this as well. I think Roger Garrison did a piece maybe three or four decades ago. Now it was, basically the proxy debate, but in the gold world, right. It was like gold, versus fiat. And he was trying to say, look, the true cost of a monetary, you know, this is the cost of the overall monetary standard. And when we think about the existence of fiat money, cause people ever, all the business managers, people in general are trying to control the government because they want to turn the guns of the government in their favor. Right? They want to have favorable regulation or they want to stop out their competitor. They want to entrench themselves. And so the real cost is actually looking at that one standard — monetary standard, the Bitcoin standard versus the fiat standard and what kinds of things the fiat standard enables. And I think of course, there’s all these little pieces to it and the work you’ve done, I think it’s certainly very interesting to just get some high level numbers. What is the cost of all these recessions that are brought about by the fiat standard, but that’s only just one thing like people can say, look how big the military of the US is, what is the cost of that from a carbon perspective, right?

Peter St Onge:

Yeah. Right. Absolutely. And you know, I mean, I’m not even making a first attempt to estimate the human misery. There was a study, I can’t remember the details at the moment. But there were, I don’t know, tens of thousands of incremental cancer deaths during the 2008 crisis. Now the 2008 crisis didn’t cause cancer. But of course, what was happening was, you know, people were having their, their, you know, they were losing their life savings or they were losing their jobs that tends to correlate with bad health. So, I mean, you could keep going for quite a while, right. The financial costs of recession are only the start. And, you know, you had Bob Murphy on a couple of weeks ago and you made a great point on there here and quoting it, it’s not that entrepreneurs become idiots, it’s that idiots become entrepreneurs.

Peter St Onge:

I mean, that’s a fantastic way to put it. Absolutely. You know, the availability of easy money means the good entrepreneurs, the entrepreneurs with good ideas that customers need — well, want, they have to compete now. Right? So some idiot also got financing because they’re handing it out like candy and that guy’s money spends just as well. Right? So he’s hiring away top engineers to work on, you know, yet another pets.com Or, you know, whatever the malinvestment is. And people forget this misallocation of resources and governments tend to have a point of view. I mean, you see it often from fiat economists who say that the fiat system is wonderful because it subsidizes investment. And then, you know, they like to point to all the things invented during booms. And you know, what they’re forgetting here is that first of all, technology tends to improve, not because of booms, it improves because of the free market system, right?

Peter St Onge:

You can make a lot of money making customers happy. And so, because that mechanism exists entrepreneurs chase it. But, you know, beyond that sort of the part that they’re forgetting is how many resources were destroyed during that sort of orgy of, throw everything to the wall and see what sticks and then all the ones that got wiped out were sort of misusing these resources. And you know, this sort of goes back to an idea and economics, which is that, you know, it’s the seen versus the unseen, right? So you can’t just focus on the good things you see during the boom. You have to also ask what would have happened, right? So what might’ve happened is that all of these malinvestments, might’ve not gotten funding that would have left these resources for the legitimate companies. There may have even been legitimate companies who were unable to get financing because they had to compete with all of these flashy ideas. So, right. We would want to — and, again, that kind of comes back to these secondary effects you want to not just look at what’s sort of right in front of you, but, you know, you also want to look at what’s harder to see.

Stephan Livera:

Yeah, that’s really the challenge, isn’t it? Because as people who are trying to think clearly about economics, we have to really try to think clearly through and trace out the implications of all kinds of actions and when the government comes in and in many cases, right, monetary intervention, intellectual property laws, regulations whether it’s AML and KYC laws or other banking regulations and licensing, all of these factors, we have to think through not just Oh, see, it just made us safer because we’ve got all this regulation. Now look how good the world is and how safe we are, thanks to the government. But the reality is we have to also think about the unseen, which is the costs we paying as a society for that, the reduced economic prosperity and growth, the businesses that could have been set up the fact that now in this fiat economy with super cheap credit, that we’ve created this environment, whereas as we’ve established, idiots become entrepreneurs. And then what’s funny is that these idiots will then become a very famous and popular — very wealthy in some cases. And they believe that it is a factor of their skill, say I’m so rich because I’m such a skilled investor or whatever, but they don’t understand that they are, if you will, they’re the one profiting out of this house of cards that has been created by fiat money, isn’t it?

Peter St Onge:

For sure. And you get this funny effect along the way there, where the people who are controlling the finance, that they have more leeway to choose who they fund, right. So, you know, they can behave more discriminatorily, right? They can give money to people they like, you know, so, I mean, if you look at funding that goes to women or minorities, for example it’s strikingly different. You know, if you look at businesses that are bootstrapped, that are self-funded, in other words, that’s kind of a neutral market test. Those kinds of businesses tend to be far more diverse, which is implying that whomever, these gatekeepers are, who are doling out the easy money. They give it to people who, for whatever reason they personally choose them, as opposed to the market necessarily choosing them based on the quality of the product.

Stephan Livera:

That’s very interesting. I hadn’t thought — I wasn’t aware of that, but in some ways, you could see how maybe you could tell that to a progressive and they might be interested in the idea and it was more free market and less fiat money, because fiat money is driving this from their perspective, right. If they’re really caring a lot about, you know, the the gender breakdown of entrepreneurs or the gender breakdown of who gets funded or the racial breakdown or whatever, if they’re really interested in that, well, then maybe that’s an argument that you could present to that kind of person. I mean, obviously I’m kinda more on the right wing, libertarian side, obviously, but certainly I think there’s different aspects to consider there. I think another one and you were touching on this as well in your article is the whole renewable energy thing, right? So this is another thing that comes up in the Bitcoin world where people will say, look, actually, Bitcoin, in some sense, enables all of this renewable energy because energy can be in further off places. So how should we think about the whole question around renewable energy in Bitcoin?

Peter St Onge:

Right. So that’s kind of similar in the sense that it’s an opportunity to build bridges with people who may have a different point of view on renewable. I think you and I probably agree that, you know, there’s nothing wrong with renewable energy, but, we shouldn’t be killing ourselves for it. But right. I mean, these statistics do say that Bitcoin has substantially greater percent of its energy coming from renewables. A big reason for that is because Bitcoin rigs can locate anywhere renewables — partly just because of where the energy is, but partly because of how they get money from governments. They’re often located in very strange places where you don’t have any customers. So the North of Canada, for example has more hydro than it can sell. Quebec dumps, hydro power.

Peter St Onge:

And this is perfectly usable hydro, we’re allegedly in a climate crisis. So that’s pretty bizarre. You know, there’s a huge amount of the power in China is located in the Himalayas. China’s been on a dam building binge out there. And again, there aren’t many energy users in the Himalayan mountains. So right, the fact that Bitcoin rigs are so flexible in where they can be located means that a lot of this energy can be put to use. So in raw numbers let’s see, economy-wide, it’s something like 10 or 11% of energy, which is coming from renewable sources, almost all of that is hydro, which I don’t think anybody opposes. Anyway, people on our side don’t tend to oppose hydro. I’m sure somebody out there doesn’t like hydro almost none of it comes from solar and these other things, but right.

Peter St Onge:

So 11%-ish for the economy as a whole in Bitcoin its closer to 39%, something like that. So there’s definitely a bias towards renewables. But having said, you know, what I wanted to do in this is sort of refocus, right? Because the problem with saying that about renewables is that the other side can then come right back and say, either it should be a hundred percent or they might say yes, but it’s using up renewables that all of these other customers could use. So I kind of feel like even getting into the renewables. Yes, it’s good for bridge building. But it kind of grants too much of the argument, right. It sort of grants ahead of time that, you know, this is you know, it’s just a bunch of boys playing around with something it ignores what Bitcoin is trying to replace, right. Because if you look at it in isolation, right. Any activity in isolation, every time humans breathe, there’s a carbon footprint. So any activity in isolation can be labeled a waste, but you always want to ask, okay, well, if you didn’t breathe, what would be the alternative? Right. And sort of focusing on the renewable energy, my concern about that strategy is that it sort of grants that. Yeah. Okay. Maybe this isn’t really worth anything, but look, we’re extremely green.

Stephan Livera:

Yeah. Right. Interesting. Yeah. I mean, and for me as well, I mean, I’d probably take more of a Alex Epstein position on the whole thing anyway That’s I think a lot of renewables are essentially being operated because of government subsidies. Now that’s one of those things where a lot of people will fight back and say, Oh, but see fossil fuels get subsidies too and to that, I would rejoinder — no, actually what’s happening there at least — now, obviously the debate rages all around the world here in Australia, the debate is often “Oh, see, look how much subsidy the fossil fuel people are getting.” And it’s like, no, this is like a deduction, right? Like a normal businessman gets that deduction. This is not a subsidy specifically for the fossil fuel industry, but like the green sort of lefty people will come out and say, “see, look, how much of a subsidy you guys are getting to?”

Stephan Livera:

And it’s like, “Oh, not quite.” But I mean, broadly speaking. Yeah. As you said, very few people actually have a problem with hydro, right. Hydro is totally fine. The issue really is more like the wind and solar. And from my perspective, or similar to the kind of Alex Epstein position is they’re unreliable, right. They’re just not reliable and they’re not scalable. And that will continue to be the case until we get better battery technology and maybe better, I don’t know, transmission or whatever. Again, I’m not an energy expert, but just the problem is fundamentally this. And if it was so great, why would it need subsidies? Right. Just let the market operate. And obviously if it’s such a massive profit opportunity, entrepreneurs will be running out there to go and install the wind and solar and do all of this. But nevertheless, it’s like people who want to set up wind and solar farms and those facilities, I guess they can. Now Bitcoin does allow them to not have to deal with the transmission and distribution aspects because now they can go out to some super remote area and set up whatever facility they want and plug in their Bitcoin miners and boom, off you go.

Stephan Livera:

But it becomes a bit more of — maybe it’s becoming more like a political game where it’s like, it’s all about what, what is being subsidized. But also, that could also be an argument there where in some sense, Bitcoin is the incentive is for people to go and suck up whatever subsidy the government is giving on these renewables.

Peter St Onge:

Right. Without a doubt. And, you know, as the government gets bigger, it becomes a more attractive honeypot. And you get, you know, you were mentioning earlier companies who get distracted from serving the customer and instead go, you know, have gladiator duels over government subsidies often in a way that can end up harming consumers. Right. So for example, subsidies that go to solar and wind as part of that process they often install mandates for local utilities to use the stuff they put out. And you know, in Germany, for example, right. They’ve had just soaring electricity costs. So it’d be one thing if it was simply picking the pockets of taxpayers, but it’s often much worse than that. Right?

Stephan Livera:

Yeah. And that’s the other thing as well that I’ve seen. And I think, again, this is a point I’ve seen people like Alex Epstein make, which is that the introduction of more solar and wind into the grid can actually screw up the economics for the actually reliable energy, like, you know, coal, natural gas and so on, where essentially it’s like, you know, it’s similar to your car that you’re having to stop and start all the time driving in the city is way less efficient than just driving on the highway at steady speed. And unfortunately what happens is people confuse the numbers and they look at things like LCOE, a levelized cost of electricity and say, Oh, look, see solar and wind have a lower LCOE, but the problem is the unreliability aspect. And that’s because you introducing and forcing this into the grid, you’re kind of forcing a cross subsidy right onto, and you’re pushing the cost onto the coal and the natural gas people. Meanwhile, the rich people can sort of drive around in their Tesla, acting like they’re so high and mighty and green, and look at you filthy masses using the unclean energy, but really it’s because that’s the cheap and effective one, isn’t it?

Peter St Onge:

Right. Metaphorically. It might be cheaper to live in an RV than it is to live in your house. But with renewables, it tends to be that you have to live in your house and have the RV.

Stephan Livera:

I like that!

Peter St Onge:

There is no way that’s cheaper. I guarantee you, it has to be an economist to know that is not cheaper. Now on top of that, right there, there’s an entire industry that shakes and bakes LCOE numbers you know, similar with the tax subsidies, you know, they redefine things, they play games. So I doubt that the RV is even cheaper. But even so, the point you made about the batteries, right? Because the battery technology is not there. Maybe it will be in 10 years, 20, 30 years. Maybe it will be someday. It’s not there now. And that means that aside from hydro, you are buying an RV, parking it in your driveway and imagining that that makes your living costs cheaper. It doesn’t,

Stephan Livera:

It’s a shame, isn’t it? But we’re in this world now and I say it like, well, you just got to keep going. And over time I think it will prove out over time that, okay. Yeah, we need reliable and cost-effective energy. And ultimately, and we have to — I guess, change the narrative a little bit because we have to get people to think more about what’s good for human prosperity rather than this whole narrative oh all the earth is this perfect pristine thing. And I need to reduce my impacts on the earth. It’s like, it’s a very weird way of thinking, isn’t it?

Peter St Onge:

For sure. And you know, that kept it gets back to the carbon footprint of breathing. There’s this common tactic on the green side to ignore the benefits of the actual activity, right. So, you know, is it environmentally destructive? Does it you know, destroy trees, if you have a bonfire in the backyard with your kids and you sing songs and you have hot chocolate — Yeah. If that’s the only thing that matters to you is, you know, the raw number of trees in existence in tree form on earth. Yes. That would be destructive. You know, but it’s sort of aside from that, Mrs. Lincoln, how was the play? I mean, the main story here is the benefit that we’re deriving from the activity itself and what tends to happen is that any activity that leftists — well, not leftists — greens don’t like has to go through the gauntlet.

Peter St Onge:

Right. And, you know, there’s sort of a presumption that that’s a complete waste of time. You know, I found an article a while back criticizing tailgate parties. I don’t know if you have those in Australia.

Stephan Livera:

What’s that?

Peter St Onge:

So a tailgate is when football fans, they set up in the parking lot and they have barbecue…

Stephan Livera:

Oh. Like after the game and stuff?

Peter St Onge:

Yeah, exactly. And this is a sort of a stereotypically right thing to do — leftists don’t really enjoy that. And indeed, there’s a whole — you know, if you go over on Google, you can find all kinds of articles saying how, you know, tailgate parties are so bad for the environment. And then on the flip side, you know, if it’s a naked drum circle nobody ever thinks to ask whether, you know, whether this is environmentally harmful, why, because it’s on the approved list of activities. So, you know, there’s a very deep political undercurrent to a lot of this carbon footprint conversation to begin with where anything they don’t like is ipso facto, wasteful. And, you know, again, because every single human activity you can possibly imagine uses some sort of carbon footprint, right? Breathing, consumes calories, calories, consumed cow. You can put anything in the dot, you know, you can put anything on trial but you want to kind of stand back and understand what’s the goal here.

Stephan Livera:

Yeah. That’s a really clever, and I think it just comes down to trying to police other people’s energy use. They’ll say your energy use is not okay, but mine is. That’s like, if you boil it down, that’s essentially what’s going on here. Right? Like, you’ll, you’ll get these people who’ll come out, you know? And just on Twitter recently, there’s been some of the back and forth. There’s that DHH guy who is apparently, he literally flies around the world and races these cars around on like the 24 hour racing. Like how much emissions is that doing? Now of course, you know, we might sort of not even have that much of an issue with that, but the fact it’s more the hypocrisy, right. He’s saying, see, you’re not to do this for your thing, but I’m allowed to do it for my thing. That’s ultimately what is going on.

Peter St Onge:

Absolutely. And we saw that dramatically during COVID right? So one type of protest was a super spreader event. Another type of protest could literally save the world. So yes, the double standard is alive and well.

Stephan Livera:

The Bitcoin energy double standard.

Peter St Onge:

For sure, without a doubt, anything they don’t like is… And that brings us back to, yes, tactically, it may be smart to emphasize the green angle for that reason, but right. I mean, you know, I think it’s still important to kind of zoom out and say, okay, fine. On a green basis, Bitcoin loves green energy. But beyond that, it is, you know, the main reason it’s green is because of all of these secondary effects.

Stephan Livera:

Yeah. That’s a good way to put it like that. We have to zoom out and look at what’s the big cost, right? Like, don’t get lost in the detail, look at what are the big costs that we are paying because of the fiat standard. And then that’s the other thing as well, because as you know, if we’re bullish on Bitcoin, we are anticipating that the energy will rise. Bitcoin’s energy use will rise, and we have to make our peace with that. We have to be okay with that because — we can’t play this game of like, Oh, look, see, it’s only using this much energy. It’s not that much. Please, please society. Just let me do it — No, it’s going up and let’s, deal with that. And let’s be open with that. I’m curious as well. Do you have any idea what that might look like in terms of the energy usage rising?

Peter St Onge:

Yeah. Well, I had an article coincidentally today just sort of playing around with the numbers on hyperbitcoinization and asking, you know, if Bitcoin at its current supply were to replace all of the fiat currency in the world. And you know, just as a back of the envelope estimate, you’d come out to something like $5 million. But what that would imply is roughly a hundred times greater energy use because the rewards would be.

Stephan Livera:

A hundred times what they are now, yeah.

Peter St Onge:

Right. And, you know, currently the fees are so low, it’s really the rewards driving everything. And certainly in, in that kind of a world that rewards will be driving everything which is horrifying I think to critics, but again, that’s where this kind of analysis comes in, is that, what that would imply is that Bitcoin would be temporarily as polluting as fiat, but of course Bitcoin’s block reward drops by half every four years.

Peter St Onge:

So that’s roughly 20% decline annualized. So yes, absolute worst case scenario, worst from critic’s standpoint, absolute worst case scenario. If the world went hyperbitcoin tomorrow then yes, Bitcoin would be temporarily as bad as fiat on the recession camp. Right? Because, you know, we didn’t, we haven’t even gotten into Wars and all these other things. We also haven’t estimated the human cost of recessions. Okay. So, just on this narrow, one of the many secondary sort of collateral damage of fiat yes temporarily Bitcoin would be as bad. However, Bitcoin is also because of the block reward, improving, it’s halving its energy use every four years after that, which fiat does not seem to be doing.

Stephan Livera:

Yeah. That’s a really interesting to think about. And so, yeah, I think it’s just such an interesting world to think about, like, if we were to move into that whole deflationary environment like I was talking about in the episode with Bob where, you know, imagining what it would be like in what Joseph Salerno would call growth deflation, right. This whole idea that — and that’s really fascinating to me because it’s like, you literally might have your salary might be falling, but your actual purchasing value might be rising, which is like really crazy to think about in some ways, isn’t it?

Peter St Onge:

Yeah, absolutely. And, you know, that’s happened for long periods of human history. It happened in the US anyway during the Victorian era which is in the US it’s taught as the gilded age, which is kind of a socialist pejorative claiming that it was all fake, but really it was the golden age. I mean, you know, almost anything that makes the modern world modern was invented in that period. It’s just an astounding era of invention. You know, you had cars, electricity, the telephone television, all of it — telegraph. But during that period, right, you had endemic deflation, you also had astounding economic growth. Right? You know, the modern world was built in that period. And so there’s this modern assumption. And this often comes from Bitcoin critics as well, right.

Peter St Onge:

They say “no, no Bitcoin can never be a sort of standard money because it’s deflationary”. And if you look back through history, the golden ages of history have been deflationary, typically the inflation when it pitches over to inflation, which is typically because the government wants more money when it pitches over to inflation is when it inflects and starts going down. So if we could return to a deflationary period, then absolutely, and, people will get used to it pretty quickly. You know, people once lived in deflation and then they had to get used to inflation. I’m sure that was disappointing. Everything seemed to be getting more and more expensive. And so if we lived in a world where everything is cheaper and cheaper every year, that would feel fantastic.

Stephan Livera:

Yeah. That’s a really interesting to think about it now. The common rejoinder, I guess people would think about, Oh, but hang on Peter. If my salary is falling or maybe staying flat or falling, we don’t know for sure. How would I just hypothetically let’s say, I’m the employee, you’re the employer. How does that conversation go down? Where you come to me and say, Hey, Stephan, I’m actually to give you a 2% pay cut this year, but you should still be fine with it because your prices fell by 5%. And Johnny over there, he took a pay cut. His pay cut is 5% and yours is only 2%.

Peter St Onge:

Right. Right. And for sure employees don’t like this, you know everybody would like to get a raise every year especially because we’ve lived so long in an inflationary world that, you know, it seems strange to not get a raise every year. So without a doubt employees don’t like this. But again, you know, throughout history, we have lived through a period where there’s been widespread deflation wages would fall substantially you know, so in the 1870 to 1880 period wages fell by 20%. 1812 to 1818, these are all for the US they fell by a quarter. People kept going to work. They didn’t all quit their jobs. I can’t remember who said it on Twitter, but somebody was saying that, you know it would be completely unsustainable because everybody would quit and, you know, people who have jobs — you know, I mean, they might not be happy, but really, if everybody’s just going to quit? How are they going to pay their rent?

Peter St Onge:

So it’s silly, you know, the idea that everybody would just be so angry that like every single person in the economy would put their job. No people wouldn’t like it, but of course, you know, many of them, you know, the way that the company would explain it, as they would say, well, look, you know, we can’t charge a hundred dollars for our product. We can only charge 90. So, you know, we have to cut costs. So I mean, the employee is not necessarily, you know, gonna pour sugar in his boss’ gas tank. I mean, you know, companies can explain this now in the modern era, you know, part of the reason why there’s so much resistance to wages falling is because of unions. And I don’t know, you know about the laws outside of the US in the US specifically union activity is protected against prosecution for violence.

Peter St Onge:

So I mean, there are explicitly, there’s a case in 1973 that went before the Supreme court and ever since then the FBI prosecutes, nothing that is even vaguely related to union violence. My wife’s grandfather was a Constable in West Virginia during the coal riots there. He got shot at. The union guys know exactly who did it, nothing. So, I mean, yes, unions resist falling wages, for sure. But I mean, first of all, unions resist any wage that’s not what they want. I mean, there’s no magic number around zero, you know, and I mean, to be fair, that’s, union’s job in life. Their job is to drive up the wages of their members and to shut out non-members and render them unemployable. That’s what they’re paid to do. Fair enough. But the idea that globally people react, that they have widespread riots or something when wages are going down none of it is that silly, but that’s historically not true when there’s widespread deflation wages must fall, companies find a way to explain it to their employees and employees cope.

Stephan Livera:

Yeah. And ultimately it’s competition, right. Because they can — there might be some other industry that’s expanding. And if you go there, you might actually get a pay increase because the growth in that and the demand for that industry is so high that even in a deflationary world, you can still get a pay rise or, you know, you might get promoted and still get pay rises from that. But, you know, just, I guess the idea is just to kind of talk it out and think out what would the implications of that be now the other, I guess, on the counter side, the Keynesians have this whole sticky wages argument. Right. So what’s the sticky wages argument. Why do they believe that?

Peter St Onge:

Right. The sticky wages argument is the idea that prices change, right? So deflation or inflation, change faster than wages. Wages tend to be negotiated year by year. And then on top of that, there might be this reluctance, you know, where companies try to postpone wage cuts because they’re afraid that it will be discouraging to the employees. And yes, that’s true if you don’t have system-wide deflation. So if every other company in the economy is giving raises and your company is not, then yes, if you cut wages, people will start looking for the exits, they’ll start sending out their CVs. In fact, your best employees will send out their CVs. Your worst employees will stick around until the bitter end because they’ve got nowhere better to go. So yes, it can be terminal for an individual company if they start cutting wages when nobody else is.

Peter St Onge:

However, and empirically, you know, if we look back to the 1870s, for example, we have solid numbers on that, right? When the wages are going down yet you have, there were periods around then when you had 6% growth, which, you know, it’s been a long time since America had sustainable growth at that level. That’s more like Singapore today. In that kind of environment it’s different, right? All wages will be coming down, but not all. There’ll be a tendency for wages across the economy to come down because of the generalized deflation. But then at the same time, you know, jobs are plentiful. Employers are competing with each other. And so, you know, some of that mitigates the fall in wages, and then, you know, some of that also just gives employees sort of more hope, right. You know, they have a lot of different options that they didn’t have before.

Stephan Livera:

Yeah. And a statistic that got me thinking as well, because I wonder, you know, so we are currently in a world where normally economists and so on will say Oh, look, if you’ve got 2 or maybe 3% economic growth, that’s good in the develop in the large developed nations, I wonder what kinds of rates we might see in a fully Bitcoin deflationary world. Do you think 5%, 10% is reasonable? Do you think we could see that kind of thing?

Peter St Onge:

Yeah. it’s a really interesting question. I mean, empirically last time around, we did have 5%, 6%. So, you know, I think as a sort of starting bid, I think that’s absolutely possible. It may be a good deal higher because the internet fundamentally makes a whole lot of processes a lot more efficient. It’s easier to find talent. You can collaborate. It’s sort of a much more fluid use of particularly human resources, right? Where people can be repurposed to some more useful activity just on a technology basis. Right. It’s just easier to do, you know, you also have access to worldwide pools of human capital. You know, so if you have an excellent engineer in India, Germany, right, that person can then be brought into a project in San Francisco or something.

Peter St Onge:

So, right. I think, you know, just pure speculation. I would imagine that it’s probably something higher than it was last time around you know, 7-8% somewhere around there, certainly much higher than our politicians are, you know, nowadays in the West. It’s typically impressive if you clear two and a half percent, which is pathetic, you know, and I think part of the reason that voters put up with this is because they just don’t know history. They don’t know how things used to be when, I think we didn’t have the technologies that like the internet that should be making growth faster today. Right. But instead effectively, you know, whether it’s regulations, taxes, redistribution of assets through fiat money, right. All of these things I think have sort of half killed the golden goose. And most of what’s left is just sort of running to stay in place. Right. It’s, you know, covering, wear and tear of infrastructure and so on. So I mean, most of what we do continue to produce, most of it is simply absorbed in staying in place.

Stephan Livera:

And I’m also curious your thoughts on this whole question of the debt to equity ratio. Like, are we going to see a world where maybe more people use equity to fund a business or to start their business? And maybe there’s more of a tendency where you just save up and you start your business as opposed to going to the bank asking for credit and the kind of typical cycle right now, being more about whoever can get cheap credit is the one who’s going to win because they can scale up faster and do all of those things. But I wonder whether there would just be this fundamental readjustment to the world that were under a hard money. What’s your view on that idea?

Peter St Onge:

Yeah, for sure. I heard that conversation you were talking about that with Bob and I agree a hundred percent. We know that the ratios of equity to debt, right. We know that that’s off because debt is subsidised, if that were priced at a free market rate, then, you know, as a humble economist, we would just observe what the market did. And we would say, okay, good. That’s how much debt people want. That’s that’s how much equity they want. But because debt is financed, we can be certain that there’s too much debt use. That that is an inefficient number. Now how much higher that would be if that were not subsidized is an interesting question. I mean, personally I really like equity because it’s so much more flexible. People can choose their level of risk, you know, as long as you have liquid secondary markets, people can, you know, scale up and down their risk as they get older as the kids graduate, you know, all of these sort of life events. I mean, it’s just very elegant how you can adjust all these things using equity. So, you know, personally you know, I think equity is one of the greatest inventions of human history. You know, many innovations would not have occurred without equity in the first place. So, right. I would assume that first off, under a Bitcoin standard, you would probably have quite a bit more equity. And secondly, I would think that, you know, this, would align the incentives of the creators much better than today’s debt system does

Stephan Livera:

Interesting stuff. And I think a typical rejoinder might also be something like, Oh, but you know, like, okay, so a typical rejoinder might be something like, Oh, but debt is senior to equity in the — when something goes wrong, right. If you have a debt claim, you’re much more secure on that. And people have this conception that oh, but with that debt, we wouldn’t have all the investment, but I think all of this has kind of come up because of the subsidies for debt and because of fiat money, right. Because fiat money induced the creation of that structure that way. So then the institutions of society have gone that way as well.

Peter St Onge:

Right. Exactly, exactly. If you subsidize debt, then there’ll be more of it. And then debt will take on a bigger role and it will appear to be important, but, you know, if people only chose that debt because it was subsidized, then, you know, it’s not necessarily the efficient level. And, you know, because equity is so flexible you know, in terms of seniority of debt and things like this, you can diversify that, right. I mean, people can put smaller shares, they can buy equity and things that are counter cyclical. It’s just much more elegant how you can hedge and risk manage on equity I think than it is on debt.

Stephan Livera:

Yeah. Yeah. And I think another topic that is — I guess, becoming more prevalent now is this whole UBI, MMT style thinking. And I know you’ve written on this years ago, and the thing is this debate came up in a more intellectual or academic sense where it was kind of like, Oh, look, see robots are gonna take all of our jobs. And there’ll be all people who are unable to adjust and therefore we need UBI. That is the just thing to do. And then the MMT people sort of enable some of that. And then now it’s almost like we’re seeing it, COVID induced because “Oh see, you need, we need to lock you down and we’ll just pay you checks” and so on. So it’s an interesting kind of a way that that debate has come out now. And it’s almost like we’re having a quasi UBI in some countries around the world, but I know you’ve got thoughts on this. What’s your view on sort of how that conversation is happening and is it really true that robots are going to take all of our jobs or is it more that there will just be new jobs, but we just can’t predict what they’re going to be?

Peter St Onge:

Right. And that’s a really good point. What COVID did. COVID really refocused the argument — we can get to that in a second, but — just sort of the big picture robots is up there with global warming for, sort of invented crises to justify the government getting involved and sort of zoom out on the robots question or automation, the countries that have lots of robots that have lots of automation you know, Japan or Germany, there are many, many more jobs than there are in Burundi or Cambodia. Okay. There are not many robots in Burundi, and there are no jobs in Burundi. Right so that’s sort of the starting point is that empirically, it doesn’t work that way. And, you know, the question is the seen versus the unseen, right? So as an economy automates, it gets much richer. Automation, partly causes the society to become richer, but they interact.

Peter St Onge:

And so right. Empirically automation creates more jobs. And my favorite metaphor for this is an escalator. Okay. So you are, you are walking down an escalator, or rather you’re riding up an escalator, but every so often you have to step down one step. Okay. Compared to standing still on the stairs. Okay? So if — right, so automation is making us richer and yes, every so often a computer card punchers aren’t needed anymore. Secretaries used to be a huge employment sector and, you know, most business people are their own secretary. They have outlook, they have email programs, they have calendars they don’t have a dedicated secretary, so right. Every so often your specific job function gets automated and you have to step down one step, okay. You have to take the next job down. But in the meantime, because society is getting richer specifically because of that automation, that’s the escalator moving you up, right?

Peter St Onge:

So the end result is, for example, an electrician in India makes much less than an electrician in Australia. Not because Australian electricians are good at their job, maybe they are, maybe that, you know, I have no idea. I, my, my guess would be, you know, even a well-respected electrician in either country is probably comparable. No what’s happening is one of them is on an escalator, right? So that automation makes all of the other jobs pay better. Right. So, if we sort of carry that through to its logical conclusion, as automation continues, you get increasingly you know, jobs that may not get respect today by something like taking care of children, being a bartender, being a good listener. Okay. If you’re a good listener and you can sit with seniors and, you know, listen to them, talk about, you know, how life was in the fifties, and you’re a real good listener and they enjoy talking to you.

Peter St Onge:

That’s worth nothing today. Okay? Pretty close to nothing. Cause you can’t monetize it, right? It’s very human. It’s essentially impossible to automate, right. Because the value comes from the fact that it’s being done by a human, okay. There’s a bunch of activities like that. And as society — as our economy gets more automated, as it gets wealthier, the money sort of trickles down to all of those things, right. They’re all increasing in salaries, such that those previously low respect jobs now pay a lot more. Right. So if we sort of, take it out to the end point most people in the economy would be doing things that, you know, are very human-y, right? They’re either creative or they involve, you know, some, some way of interacting with people. So like a coach, a teacher, a counselor, keeping elderly people company, right?

Peter St Onge:

All of these things, these would be the kinds of jobs we would do. And today those jobs may pay very little because we live in a poor society, but in the future, right, if we let automation continue, those jobs will pay quite a bit better. And by the way, many people find those kinds of jobs, much more satisfying. My favorite job in my whole life was being a bartender. I loved it and you know, I got a family, so I can’t support them on a bartender wage, but as a job, there’s nothing wrong with it. If it paid a lot better, I’d love to go back.

Stephan Livera:

Yeah. That’s a really cool way to put it because I guess to put it simply because we’re going to be living in this growth, deflationary world, more things can be automated. We can produce more for less. Right. And just at a fundamental level, we can make more out of less out of, less of our time or less resources, physical resources in the world. And so we’re getting more productive now, I guess the common rejoinder here might be now, again, I’m on your side here, but just the common rejoinder would be something like, Oh, but hang on. You know, some of those new jobs being created, they are only for the high skilled people or high intellect people only if you’re a computer programmer. And I guess the rejoinder, it would be something like, you know, because if you’re all kind of on the, you know, you’re not one of your, one of the poorer people or maybe less skilled people, maybe they will, they might make an argument that oh see. You’re not going to get the benefit out of all of this amazing new things. All the wealth is going to go to that top 1%, you know, the Jeff Bezos, Elon Musk’s of the world and so on. And I guess that’s probably the argument that has to be prosecuted here.

Peter St Onge:

Right, for sure. And they actually make both arguments. Sometimes the same person makes both arguments. They’ll claim that all the new jobs are McJobs. They’re crappy jobs. They don’t pay anything, you know, you can’t support a family on them. And then at the same time, they’ll say, and the new jobs are, you know, this is only going to be a tiny elite who like program AI programs or something like that. And in both cases, I mean, we can go logically and just say, you know, that, why would you think that’s the case? You know, if we look at jobs growth, the new jobs over say the past 50 or 70 years in developed economies that are increasingly automating, those jobs are higher paid than the jobs that were previous to them. So I mean empirically, neither of those things is happening.

Peter St Onge:

The, you know, the new jobs that are coming in are disproportionately middle-class now they’re often jobs that used to be working class or used to, you know, not pay that much, but because society in general is going up in income, they become middle-class jobs. So, right. So the answer is, you know, sort of the first critique that it’s only going to be rich people doing it. I mean, that’s not what we see in the economies today. You know, just to give an example. So let’s see in the US, Europe, Australia, about 75 to 80% of jobs are services today. It’s 85% in Canada. It’s 95% in Hong Kong, right? Almost all jobs in Hong Kong are service jobs. You know, they’re not manufacturing, it’s none of that stuff. So all of those jobs vanished. Hong Kong is not poor, you know, during that entire process of shedding those jobs, it got very, very rich, right.

Peter St Onge:

I believe at this point it’s richer than Australia is for sure than the US I believe on a per capita basis. So, right. I mean, empirically, you know, again, this was the new global warming. This is you know, there’s an entire industry that produces statistics that are cherry picked or sort of shaped in a way to make people concerned. They go at it from every angle, right? They claim No no the new jobs are only for the elites. They claim the new jobs are only McJobs. And so the best we can do is say, well, we have proof, we have history and many, many countries have gone from, you know, Burundi levels of poverty to Hong Kong levels of prosperity. And none of them protected you know, the manufacturing jobs. And guess what you know, the working class in Hong Kong does fantastic.

Peter St Onge:

The working class in Japan — does fantastic. Right? There was a time when Japan was overwhelmingly a manufacturing economy, they all hollowed out is the term that Japanese use The jobs all went to China. Japan lost them, almost no industries can you be competitive making stuff in Japan? So our Japanese starving in the street, no, they, you know, as part of that Halloween out process, because they largely let it happen, the economy got richer. And so, you know, Japanese have different jobs now, and many of those are quite fun, you know, for example, there’s a revitalization of traditional arts in Japan, you know, people who make swords for living or make bows who do flower arranging, there’s a revitalization of this because of wealthier society means that now you have people who are willing to pay. And quite often they’ll pay a lot.

Peter St Onge:

I saw a story a couple of years ago, there was a guy he was interested in making steam punk keyboards, right. So there’s a keyboard for your computer, and it’s got, you know, the brushed copper and it’s got the little lights and, you know, the whole steam punk aesthetic. So he made one and somebody offered him like $2,000 for it. And so he said, okay yeah, sure. For $2000, yeah. And then he made more and he kept raising the price because people kept offering him money and he quit his day job and he makes steam punk keyboards. And I don’t know what he charges now, but he charges a lot on an hourly basis. He’s easily making more than a corporate lawyer and he loves it. So this, this is the picture of what happens in a wealthy society. You know, people they go back to a tradition you know, they support the arts, they support excellence, craftsmanship. It’s a beautiful thing.

Stephan Livera:

I love that. It’s a really great explanation. And I guess to summarize it’s that living in a growth, deflationary world, everything is going to get cheaper. We’re all going to get richer. And because of that new found wealth, there’ll be all these new jobs created or current jobs that exist today that are not well compensated will become well compensated. And because, you know, we’re humans and we like to interact with other humans. Often times it will be in jobs that involve some kind of human to human interaction or maybe entertainment, right? Like maybe standup comics become really popular because we love to go out and see a show and be entertained. And, you know, maybe that they will do really well. And, you know, you might say, Oh, fine. But you know, in the age of the internet, only the top few can do well, but the reality is now it’s like, people love to see it in person.

Stephan Livera:

And now, there’ll be a huge premium to go out and do that kind of thing. And so it’s sort of, I think we just have to be able to make the argument. Well, I think obviously Bitcoin will be a big part of driving this shift that like, it will sort of, I think it will effectively defang a lot of the government or take away a lot of their power. Like the governments might still exist, but I think they will play more of a role like they’ll become more stripped back and more like an actual, genuine service provider than an actual of authoritative kind of overlord that controls where you go, where you can travel and all of this.

Peter St Onge:

Absolutely. And, you know, a government that has to live within its means, you know, where it can’t just print the money. That also gives us a government that has a natural symbiosis with society. Okay. In other words, it is healthy for a government to need tax revenue. Why? Because if it needs tax revenue, it needs us to be prosperous. It’s very important to reestablish that link. And that’s something we’ve seen through COVID right. You know, you have governments in Canada where I spent most of the pandemic the government really doesn’t care. Look, they got enough money. You know, and you want there to be this, you know, you want to recover that natural symbiosis so that the government goes back to being a partner in helping us all grow rather than what it increasingly is because of you know, fiat money which is kind of a cancer is a strong word, but it’s not as helpful as it could be.

Stephan Livera:

Yeah. Yeah. Fascinating stuff. Peter, I’ve really enjoyed chatting with you really. A really interesting conversation. And so for listeners who want to find you online, what’s the best place for them to follow you and find out more about your work?

Peter St Onge:

Nowadays I’m usually on a Twitter @profstonge which is just my name. And then I’ve also got a newsletter on Austrian economics and crypto called CryptoEconomy.substack.com. The substack guys, by the way, are very good on free speech. So that’s why I work with that platform.

Stephan Livera:

Awesome man. I’ll put the links in the show notes there. Thank you, Peter, for joining me.

Peter St Onge:

Thank you, Stephan.