The IMF Versus Your Freedoms

Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today, Sam Callahan of Swan Bitcoin is rejoining me on the show now. Many of you enjoyed the previous episode with Sam, that was three three six, and basically for this one, we're talking about the IMF, one of these Supranational or international financial organizations that seems to have been making all kinds of anti-bitcoin and anti-freedom statements in their research and proclamations. So Sam joins me to talk about who they are, how they started, and what they think and what they have been saying about various topics, and of course, we react with our own thoughts on how to respond or at least how to think about some of these different issues, whether they are proof of work, financial crime, transitioning to a low carbon economy, financial stability. and global corruption. This show is brought to you by Swan Bitcoin, and Swan Bitcoin can help you if you have friends or family who have a life event coming up and you wanna give them a gift. Give them the gift of Bitcoin alongside Swan Bitcoin's world-class education and customer service. With swan dot com slash gift, you can gift them a certain amount of money. Your recipient will then sign up and they can then purchase Bitcoin with the amount that you gifted them, but at the same time, they're receiving education about Bitcoin from Some of the best in the game. So to create a Bitcoin gift with a custom message, go to swan dot com slash gift. Now, in Bitcoin, as we say, not your keys, not your coins. It's important to learn how to self-custody our coins, and using the Coldcard by CoinKite dot com, this is an easy way to achieve this goal. So with the Coldcard, you can use it in various configurations. You can use it as a beginner by directly plugging it to your computer, and with the new MK4 coming out, which is shipping now, So I really like this feature and this pathway to make it easy for Bitcoin beginners. Now, for those of you who are paranoid, of course, you can use the micro SD card and do the airgapping, and you can use multisig, and you can use all kinds of features like the BIP 85 child seed feature also. But you can start the journey by getting your cold card over at coinkite dot com. Unchained Capital can help you with multisig security for your Bitcoin. No matter how careful we are, sometimes things can go wrong, and with multisig You can still make an error without necessarily losing your coins and losing your savings, so don't leave your coins with an exchange or a custodian, and you might want to also reconsider single signature hardware wallets and signing devices. With Unchained, you can create a two of three multi-signature vault. They've even got a program that will help you do this. You can pay upfront, they'll ship you the hardware wallets, you'll do a call to teach you how to hold your own keys, and you will also have a thousand dollars of Bitcoin deposited in your vault. Vault. So this is a great way to upgrade your security and give yourself that additional peace of mind. That website is unchained dot com. Select the Concierge onboarding program and use code Livera for a discount. And now onto the show with Sam. Sam, welcome back to the show. Stefan. Thanks for having me, man.

Good to see you.

Yeah, it's great to chat with you, and we had a great response on the first episode that you did, and so, really keen to get into it. These big organizations, are they gov- Governments are they supranational? Are they-- what kind of these entities? And today, we're gonna focus on the IMF. I know you did a thread recently about them. so, yeah, do you wanna just tell us a little bit about, you know, what got you into researching the IMF and maybe a little bit around their background?

Yeah, so, you know, the International Monetary Fund, I looked into them because, I just think they're one of these organizations that, once again, act above sovereign nations and kind of infringe on the rights of A complicated history, and I wanted to just raise some awareness about some of the things, some of the criticisms that I think are really warranted towards the IMF, and then kind of how Bitcoin perhaps shrinks the IMF or potentially removes their need entirely. So, yeah, that's kind of why I started to look into them. I think it's important to understand the problems, that exist in the global financial system. And, you know, I have to say before we get into it that the IMF is a very- Complicated organization, it's both organizationally as well as, with the very complex relationships with each of their borrowing nations. And so what we'll probably get into today is a more superficial level and hopefully just kind of provide listeners with a background of, of where they came from and what their plans are right now with central bank digital currencies and how, like, Bitcoin kind of plays into that.

Yeah, for sure. I think it would be great to start-- well, let's start at the beginning. How did they even start? And what kind of entity are they?

Yeah, so, they started in Bretton Woods, so everyone knows Bretton Woods for the creation of the dollar reserve system, but the IMF and the World Bank were both created in that, meeting as well. And the reason the IMF was created was in the Great Depression of the 1930s, there was a lot of competitive currency devaluations where countries were, devaluing their currencies at the expense of their trading partners, and it was thought at the time that this really deepened the Great Depression. And it prolonged it, and so they wanted to stop this from happening in the new system with where the dollar was pegged to the gold at thirty five dollars an ounce at a fixed peg, but then all the other currencies were adjustable pegs to the dollar, but they wanted to prevent countries from being able to competitively devalue it. So the primary, role of the IMF was to supervise the Bretton Woods system of fixed and adjustable exchange rates, so they, were established to supervise and stabilize exchange rates As well as, surveil kind of the global regime of international payments. And so they provided liquidity via short-term learn-loans and lent money to some countries, going through balance of payments problems. So that's like when a nation's unable to pay, you know, essential imports or service their debt payments, the IMF acted like a credit union almost that permits membership access to a pool of resources and provides short-term loans for these countries. And so that's kind of what they started as. In the, Bretton Woods system from nineteen forty four to nineteen seventy one. Right. So when

it comes to the IMF, as you said, starting around the Bretton Woods era, nineteen forty four, how would you say they have shifted or morphed over time as an organization?

Yeah. So the, the Bretton Woods system, it, it kind of started falling apart pretty quickly. I mean, it only lasted about fifteen years before things started to really break. And, and this was when the Triffin dilemma, where during the nineteen sixties, the gold peg to the US dollar It jumped to forty dollars, and it was supposed to remain pegged at thirty five. And so what happened was when the US started running these large deficits to pay for the Vietnam War, as well as run large deficits to provide dollars for the whole system, countries around the world started to question if there was enough gold reserves to back that amount of dollars. And so what they started doing was they started redeeming gold, and that wasn't good for the whole system, and so it just started falling apart, and then that led to Richard Nixon's, you know, nineteen seventy-one Nixon shock. Where he, he stopped the gold standard essentially. And so that really just killed the IMF's entire purpose, right? So they no longer had to, maintain exchange rates anymore, so they really asked the question, you know, what's our purpose anymore, right? And so there was a shift in the IMF's purpose. In 1976, at the Jamaica Accord, they actually gave back the rights to sovereign nations to manage their own exchange rates, so no longer was the IMF even legally, allowed to tell countries what to do. Now, there's a- Another thing that happened in nineteen seventy-six, and that was the UK Sterling Pound absolutely crashed. And, really coming out of nineteen forty-four, the UK was in a position where it really had a unsustainable initial exchange rate combined with a ton of debt from World War II, and so they were actually the biggest borrower of the IMF from nineteen forty-four to nineteen seventy-six, and in nineteen seventy-six, it just all fell apart. And so what happened was the IMF actually made the biggest loan it has ever made Up to that time of three point nine billion dollars to the UK, and it actually worked. You know, there's a lot of factors, but the optics were that the IMF helped prevent, that UK sterling pound from crashing further, and it improved economic activity. So in that moment, the IMF really shifted to this lender of last resort, and they're like, "Okay, we can be this financial firefighter when things-- or when countries are going through currency crisis or an economic crisis, we can be that person." And- And then that continued into the 1980s where there was a lot of, of issues going on, right? There was, spiking oil prices, there was, Volcker jacking up interest rates, and this really caused problems in Latin America in the 1980s. And there was a lot of Latin American countries that were hurt very badly when Volcker spiked interest rates and the oil prices go up. A lot of them were importers of oil, and their economies crashed, and they needed help, and the World Bank couldn't- Can't do that by themselves, and so they asked the IMF to come in. And so the IMF, that really cemented its status from saving the UK sterling pound in 1976, to in 1985, the US Treasury Secretary called for a new role for the IMF as a more interventionist role in coordinating loans and ensuring policy changes in these developing countries. And that's really since 1985 that has been the IMF's role.

Yeah. So then the other question would be, where do they see- Sourced their funds to actually give the loans from.

Yeah, so in 1944, basically, I think around forty or fifty countries, I think forty four, joined the IMF, and they submitted money to it. So they, they gave money to the fund, and when they, when they gave money, they get a certain amount of voting power within the fund. Okay? So now there's like a hundred and ninety countries as part of the fund. They all give a certain amount of money, with the US being the greatest donor up to the IMF, and so they have the most Most voting rights. And so right now, the, the US vote share is about sixteen point five percent, and they, they give the most money to the IMF, so they have the most power to dictate policies. And so, that's kind of how it started, and it's kind of grown from there to become a much larger organization from its more humble beginnings, I guess you could say.

Yeah. And I think the other interesting point to be made here is that the IMF can sometimes push Other kinds of non-monetary agendas or forms of control in exchange for a loan. There's a little bit of an, an angle there, isn't there?

Yeah. So each, each IMF loan comes with terms and conditions, I mean, just like other loans, and that's kind of where there's a lot of criticism because, who are they to tell a sovereign nation how to run their economic policies? And they say it's voluntary, their advice that comes with these loans, but the borrowing countries get IMF loans in times of crises. And so their, bargaining power, they don't really have any in those moments. And so the IMF's like, "This is voluntary, you don't have to do these policy changes, but if you don't do them, we're not gonna give you the money." And it's in a time when the, the borrowing nation desperately needs it. And so the policies that are usually associated with these loans are really, come from the 1980s, this neoliberalism economic thought of free markets that were pushed by Ronald Reagan and Margaret Thatcher at the time, and it's basically The, you know, deregulation of these, third world countries, so essentially it opens up their banking markets, open up their economy to foreign investors. They usually promote, fiscal austerity, so they cut spending, they open up the-- they allow the interest rates and the currencies to be dictated by the free market, and, and they privatize state-owned enterprises, so they basically take any kind of public resource and, and they give it to the private sector, and usually that's- foreign investors who end up owning those assets. And so, the policies that are associated with these loans in the terms and conditions, are really controversial, and they're, they don't really have a good track record in these developing nations. But you're absolutely right that these, these loans aren't just, you know, money. They're not just like monetary to help these countries. They come with, kind of influence of the policies of these, of these countries.

Strings attached, let's say. Strings attached. So, so I, I think some components of that might sound good, right? Like as those of us who are, who like free markets and liberty and private property rights, deregulation sounds like a great idea and cutting, let's say, if it's a government that's overspending, cutting the spending sounds like a good idea. But I think the other aspect here is that because of the shifting political winds, there are times where the IMF may be driving a particular agenda that isn't really aligned with the rights of the individual, and in many cases- Places is driving against that, wouldn't you say?

Yeah, and I, I think, one of the biggest critiques of the IMF is that how they implement their policies, because it's not this like gradual, you know, in stages where they say, "All right, we're gonna, you know, open up your financial system." They, they do something called shock therapy, where they literally just do this all overnight, they just throw it all overnight, everything changes. They cut subsidies, they cut food subsidies, they cut spending to healthcare, they cut spending to education And then usually the interest rates jack up, which cause a recession, they devalue their currency, which causes inflation, and this leads to riots because of the way it's implemented. And I think that's a really key point. you know, you can agree with like free markets and stuff like that, but just imagine a country, if you're a person there who had depended on food subsidies from the government, and then overnight it's just gone. And that's, so it's really not surprising that, some of these IMF policies have caused, like hundreds of riots, Decades because of how they're implemented. And if you think about like privatization, like the argument for that is that it, it improves efficiency, output, and profitability of the industry, and it's more competitive and all those great things. But that's, it's usually not that way because there's a lot of corruption usually involved with these public enterprises that are privatized, and usually it leads to monopolies and oligarchies of foreign investors that control the majority of the industry, jack up prices, they usually cause a lot of labor reforms and freeze wages And either, lead to high unemployment, and, and it's mostly these local, residents whose jobs are lost. So, and then you talk about like currency devaluations, well, usually they devalue the currency to kind of improve their exports, but then that usually, allows foreign investors to come in and import the inflation, because, they'll come in and just buy things very cheaply. I mean, this is like all the way back from the island of Yap, the story that Bitcoiners are really familiar with, when these foreign investors come in And they have better money, they can just buy, you know, resources and assets very cheaply. And so, yes, the free market's good, but I think there's not enough individual analysis from the IMF on each borrowing country and how to implement these, policies responsibly.

Of course, yeah. And I mean, like even as a quick example, things can be called or termed as a privatization, but in actual fact, it's more like a public-private partnership where, let's say, there's some nepotism or cronyism going on and the deal goes- to a particular individual and it's not actually a genuine free market, or capitalist system, and in fact, it's kind of called capitalist, but actually it's more like this kind of unholy alliance of, you know, big business, and the state, which libertarians also do criticize also. So I think those are a few interesting points, and I think it would be good now to chat a little bit about Some of these reports that you've been analyzing from the IMF. So, do you wanna maybe hit some of the highlights before we go into a bit of detail? What are some of the highlights that you've been seeing in the IMF's reporting recently?

Yeah, so I basically just dug into, pretty much every publication that they wrote for the last two years, and I was just kind of- Poking around to see what they were thinking about Bitcoin essentially, and what I found was that there's just an incredibly negative tone towards proof of work and Bitcoin in general, and that they're trying to, highlight the benefits of other consensus mechanisms like proof of stake, and then they also are very supportive of the developments of central bank digital currencies, unsurprisingly. So they think that proof of work is too energy intensive, you know, it's, it's kind of the classic playbook that we're seeing seen from all kinds of organizations basically saying the exact same thing, where they basically chastise proof of work for its energy usage, typically citing very flawed studies, and then they also catastrophize the criminal activity that is being done through Bitcoin. and that's kind of their two big critiques that they just hammer home. And then they, they think that proof of stake has the same assurances as proof of work, which we both know that's not true, but they say that it can be more decentralized, you know? We- Can remove all the energy, and from my readings, it seems to be more about control rather than an actual problem with the energy. I, I don't think the IMF is very concerned about the environment or the criminal activity because the facts don't show that. The truth's kind of on our side there. And then they, they can't control proof of work, and I don't think they really like that.

Right. And we're seeing some of this attack happen in various parts of the industry right now. We're seeing, shitcoiners like Chris Larson sponsor To the tune of five million dollars, Greenpeace and EWG anti-proof-of-work narratives, and, I mean, we're seeing it in the IMF as well, and looking at one of the reports, they really buy into this whole- "Quote unquote DLT, distributed ledger technology." Whereas those of us in the Bitcoin camp, we tend to see it more like, "No, blockchain isn't the thing that makes it more efficient, it's the thing that makes it socially scalable, and it's like a cost, and that there are very few things that are worth such a high cost, and generally money being the only one, and maybe debatable about whether identity, some kind of decentralized identity could also work in that sort of use case or in that circumstance, but really money being the only one." Whereas on the other end of Managers who think that somehow blockchain is making it more efficient and more effective in some way, and that's why we should study this blockchain technology, which obviously we disagree with, but that seems to be the guiding idea, isn't it?

Yeah, that's kind of, maybe that's just where they are, man, in their, in their learning. Maybe they'll turn around, you know? Everyone has to go through that. It's like

a two thousand and fourteen or two

thousand and fifteen narrative, yeah. Yeah. I mean, central banks move, really slow, and these, You know, eight years behind or something like that, but that seems to be where they're at right now. Like I said, they love kind of exploring all the different ways that blockchains can add to efficiencies and payments and financial inclusion. They, they just think that all of these things are really great, and where they're really concerned is the energy as well as regulation. So they're concerned about not being able to stop illicit activity and money laundering, kind of, it's, it's what they always use to justify their regulatory overreach. Reach, well, we have to stop money laundering, and, and it really bugs me because if you know anything about AML KYC, it's very, very ineffective, right? It's impacted about point zero five percent of criminal activity, and so nobody's saying, "Well, you guys are saying that we need to stop money laundering, but you guys haven't been able to stop it at all up to this point for the last twenty years," and that's from research from Dr. Ron Paul, which I think everyone should check him out. He's done all the numbers, and

I've Perfect. But Sam, I think that's a good point, and I think there's one other highlight from one of these reports, I, I think it's interesting, right? So just quoting here, it says, "Consensus mechanisms shouldn't harm or interfere with the global aim to transition to a low carbon economy." Alright? And so that's, that's the end quote, right? And so that's the, they've just instantly bought into this frame that as though everyone agrees that, "Ah, you must be-- everyone must be bought into the goal of lowering the carbon." They haven't actually may not disagree with that, may not agree with that, and actually would see that as very counter or anti-human ideology. What do you think?

Well, I agree. I think, you know, the whole ESG movement kind of misses a lot in terms of, you know, the S and the G in terms-- and, and they focus on the E, right? And also, like, you could say, like, the argument is that, you know, life is all carbon, right? We're all made of carbon. So I'm not sure if I agree with their take at all. And That Bitcoin is worth every single watt to have a sound money and for people to be able to save that in a money that can't be inflated and can't be censored in a world where we live in multi-decade high inflation, as well as I think one point two billion people live in double-digit inflation today, and we are also seeing the financial system continually be weaponized against innocent civilians, whether that be sanctions or in Canada with the trucker protest. And so we need a money that Can't be censored and can't be inflated today, like it's a problem, and so it's worth every single watt, and the energy use of Bitcoin is completely necessary. It's how it becomes decentralized as well as censorship resistant, so it's incredibly necessary for Bitcoin. You can't separate Bitcoin and its energy usage, you can't change it to proof of stake. Once you do that, it won't be Bitcoin anymore. So, I think it's just a kind of a silly argument to make, and it really becomes a, do you- Do you think that Bitcoin is worth it? And I think if you look at the world today, it's very, very hard to argue that we don't need this right now. We don't need this desperately, in my opinion.

Absolutely. And the other common confusion here is this idea that, "Oh, see, proof of stake is just cheaper," and they, they might argue, "Oh, see, it's more accessible because lots of people can just, you know, be a validator." But here's the other problem, it's that what do you do when the system breaks down? Because in way of you figuring out what is the correct state of the chain, what is the correct state of the ledger, whereas in proof of stake, we don't have that. Like under some kind of adversarial environment, the system devolves and breaks down into trust somebody else, ask them if, if there's been a breakdown. So as an example, if you're running your node, like your Bitcoin node, if you went offline and then all of a sudden you were offline for a month and then you came back online, how would you know which was the correct chain? Well, in Bitcoin, there's an It gives you an objective truth, and it, it makes it costly for somebody to bluff you or feed you false history. But in a proof of stake context, you can't do that. So I think that's an important point that a lot of people don't understand because they just equivocate. They just think, "Oh, look, this one blockchain and this other company are doing this, and these other people have this deposit delegated, you know, proof of stake with delegates." And it all sort of boils down to understanding what is the innovation here and why is proof of work essential to Bitcoin?

That's a great point. It's like the, the coma. Like if somebody was in a coma from twenty twelve, they would still be able to verify on, on Bitcoin and run the software. Whereas proof of stake, like you said, there's a-- it gets a little complicated. There's validators, you almost have to have technical expertise because it changes so much. And so, and the-- and there's a lot more forks that happen in proof of stake, and forks are bad for decentralization. They let-- they lead to centralization. And I would recommend people read a blog post by Paul to the cost to run a node. And with Bitcoin, that's the big thing, right? And that was the whole big-blocker, small-blocker, block size war. But like, check out that article by Paul, because he makes a really good point about proof of stake versus proof of work and how in proof of stake, it leads to like your grandma not being able to do it, because she would need to have like technical expertise and understand how to validate and do all these things, and it leads to centralization. And that's even what the IMF says in some of these papers. They kind

Alleged proof of stake. There's a trend towards centralization and it can lead to an environment where the rich get richer. That's, that's verbatim what they say in the IMF papers. but they speak very positively of it still, because they're so focused on the energy, of, of proof of work. And you could just, in the sections of that one paper, the tone in the proof of work section is just so negative. I mean, they just, they just take shots at it, and then the tone in the proof of stake ones are so, they'll overcome it with designs, but look at all these great things that it does. And so, just anecdotally, it's just very obvious to me that they're pushing these, consensus mechanisms that are inherently more insecure and prone to centralization, and whether they realize that or not, that's another argument, but, or debate, but, yeah, it's, it's a bit concerning, I'd say.

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Yeah, well, you know, Dr. Definitely understands this stuff more than me, I love learning from him. but, you know, FATF is just another example of one of these non governmental organizations that make these guidelines, that they act like they're voluntary and they're just guidelines, but they're not really, because they can just gray list or blacklist any country and basically excommunicate them from the entire financial system if they don't adopt the guidelines. And so, you know, the FATF guidelines call virtual asset service providers, that's just any kind of exchange or, you know- You know, provider in the industry, and they basically want them to do due diligence on customers and non-customers for transactions of anything greater than a thousand dollars. And this is greater than what's required in the traditional financial system, which is a three thousand dollar minimum. But they say that because of the particular risks of virtual assets, that the stricter standards are justified. And not only that, but they, they admit that there aren't, sufficient tech solutions to even comply for Vests to comply Because it gets really complicated, like how do you know the information of a wallet that you're sending Bitcoin to or something? Like it just doesn't really make sense. It doesn't mold well with the, the current regulatory framework and just the technology of, of Bitcoin. But still, the IMF is advising policymakers to demand this travel rule anyway, and so it's almost impossible. Like what are VAS supposed to do? Like they literally can't comply with that travel rule, but the IMF is still advising policymakers To go along with it anyway, and then I really get bugged with the stricter standards because, you know, not to go like to the fiat system and talk about all the fraud and illicit activity there, 'cause that's been said many, many times, but just like the crypto crime report put out by Chainalysis, you know, it did find that only zero point one five percent of total crypto volume is used for illicit activities, and so what are they really talking about, like why the stricter standards? And I think they just really catastrophize, the criminal activity that's going on They bring up weapons of mass destruction, multiple times in these papers and that how virtual assets are being used to finance them, and I dug into that and didn't really see any connection, direct connection between virtual assets and, weapons of mass destruction, so I can't really fathom why that's even included in these papers except to be shocking, to justify the stricter standards that they're trying to advise policymakers to do.

Right, and they essentially seize on one tiny, you know, small fraction of what's going on Going on. I mean, it would be like saying, "When I sell you this car, Sam, there's a chance, there's a chance you might just go maliciously go out there and run all over all these people. Therefore, I'm not gonna sell you this car unless, you know, I am allowed to install an autopilot on it and to stop you because, you know, it's for your own safety and the safety of the pedestrians that you might go around." You know, it's kind of a similar kind of thing. There's no acceptance of the benefit that, "Oh,

Focus and zero in on this like tiny little case and then say, "Ah, look, see, therefore we've found it, we've proved it, this thing is bad and w- it has to be stopped."

Yeah, they, they do a cost like benefit analysis, but they don't do any of the benefit analysis part. They just focus on the costs and, and, and kind of talk badly about it. You know, that's kind of the general theme throughout all these publications.

Right.

And

I, I think it's, it's challenging because, those of us working in the Both working at Swan, we don't want these regulations or rules, but that's the, if, if you don't comply with these things, then your license will be shut down or you'll be shut down as a business. And so it's, it's a very awkward thing that the government is basically putting that obligation out there and essentially driving a, a certain fear and hysteria in the people to make these entities or just to let these entities just keep going with FATF and these AML rules that are just getting pushed out onto everybody. So that's a bit of- Shame. So, let's chat about, one of the other ones. So there's a report where they mention crypto corruption and capital control. So what's going on in this report?

I mean, that, in that report, they're basically, it's kind of the same thing, right? They're, they're trying to make Bitcoin how it could be used to evade sanctions and how it could be used to evade any kind of capital controls, and again, just like painting Bitcoin and cryptocurrencies, I guess more broadly, negatively. And I think they talk about, cryptoization in that paper. So they, they kind of do a term I came across, which is the risk of currency substitution, in emerging markets through- Not just Bitcoin, but also stable coins, where they're really concerned, because if all the citizens start to flee their local currencies, it makes it really difficult for the central banks of that jurisdiction to implement their policy, because nobody's using their currency if everyone opts out. And this has been happening in dollarization in a lot of emerging markets for years. So Turkey is a prime example of this, where the central bank has been going through a really hard time lately, the lira's been crashing. And they've been trying to implement policy, but, dollarization is so widespread in Turkey for a variety of reasons, that makes it really hard to effectively implement their central bank policies. And so this is happening now with digital assets, across the world. And so the IMF is concerned because it, it weakens central bank credibility, kind of highlights the unsound policies of the currencies because people are trying to flee them because of the inflation, and then it makes them harder to implement that policy. And so the IMS really concerned about this rising cryptoization that's occurring in emerging markets because it makes the jobs of central banks a lot harder and kind of shines a spotlight on how ineffective they are.

Yeah. And I think in a similar vein as well to the past one we were just talking about, they, they again say, "Oh, look, see, people are really corrupt, and the corrupt people are hiding their money in Bitcoin," and they, they again focus on this like small percentage of maybe these all- Like oligarchs and like, you know, tiny people, tiny percentage of the overall population of people who might be using Bitcoin to theoretically run away with all this money. And we saw similar arguments even with this whole, Russia and Ukraine thing, right? So there were arguments that, oh, see, the Russian oligarchs are using Bitcoin to run away with the money, therefore Bitcoin is bad for humanity. And I think there was an interesting argument I saw that essentially the large oligarchs wouldn't be able to actually move around that kind of money through the, as in, if they wanted to sell that Bitcoin They wouldn't be able to do that in the Fiat system, they just didn't have that kind of liquidity. And so this whole argument that like they were gonna use Bitcoin to get around sanctions, especially for the oligarchs at that kind of size of wealth, it just wasn't really that feasible. I mean, yes, of course, nobody's denying like this idea that, yeah, you theoretically you could use Bitcoin to get around sanctions, but the question of were they able to do it in practice at this time, given the liquidity and given the market, it was very, very unlikely. But nevertheless, it

Bitcoin is so bad, it's helping these bad people.

Yeah, and even the, the White House even said that, like, they agreed, they said well, it's probably too small to even handle the necessary amount of monies that would need to be evaded via the sanctions because of how small Bitcoin still is as an industry and crypto as an industry. So even the White House admitted that, but that didn't stop like mainstream publications from spreading that fud and getting clicks on their articles. So I think that's exactly right, just from a technical- perspective, it would have been extremely difficult for Russia to do anything meaningfully to evade sanctions, given the size of the market today. I mean, they would basically had to have some kind of whole program already in place and, and been really smart about splitting the funds up between a ton of different, like, I don't even know how they would go about doing it, to be honest with you, it'd be very, very challenging. So, yeah, even the White House said it. So, again, this is just FUD being spread by people who are against- Bitcoin for whatever reason or are threatened by its continued adoption.

Right. And so, I, I guess bringing that to, I guess solutions then, where do you see things going and in what ways can this be pushed back against, right, this IMF and their continual advancement of the, the so-called correct, again, quotes, social, correct social agendas.

Yeah. So when you look at the IMF, and one of the reasons why I look into the IMF is 'cause I really consider it a- International human rights issue when it comes down to it, because their austerity policies that they put on these developing nations, they deepen the crises, and this isn't the first time. And I, I feel like, one really important thing that we should probably go into is the Asian debt crisis of nineteen ninety-seven, because it really highlights the IMF and what they do. And with the Asian debt crisis, they basically, the IMF opened up the entire Thailand, South Korea, in- Indonesia and Malaysia opened up their entire markets to foreign investors in the early nineties. A bunch of capital flowed in, a bunch of speculation flowed in. Long-term capital man-management was a hedge fund that blew up, and it caused all kinds of contagion, and then all of that foreign speculation money flowed out of those nations, and it caused crisis, a huge debt crisis, right? And so the IMF's policies to deregulate kind of allowed the crisis to happen 'cause it built up all this debt in these, Foreign markets from foreign investors. And that was like the wholesale uncritical adoption of financial deregulation that I kind of talked about earlier. Now, after the crisis happened, the IMF implemented their policies or told them to do that in order to get loans, which is they cut fiscal spending, they allowed the interest rates to spike, which caused the recession to get deeper. And, and there was a whole report that showed how that actually deepened the recession. Now, there was one country that stood up against this, and that was Malaysia. Malaysia said, "No, we're not gonna do your policies." And this was a whole thing in the late nineties where Malaysia stood up against the IMF and said, "Your policies aren't working, we aren't gonna do this." And if you look at how Malaysia did compared to the other nations of the Asian debt crisis, they had a faster recovery, they had a more inclusive recovery, so in terms of wealth inequality, and they had lower unemployment. And so to me, that is a clear Your case that these nations don't necessarily have to give up their sovereignty and listen to the IMF and take on debt because they can do their own things and say no, right? And Malaysia proved that. And so to me, what nations can do now is they have an alternative, because back then, if you're in an Asian debt crisis, those nations didn't have another lender of last resort to go to. They could have done Malaysia and said, "No, I'm not gonna take on debt," but they didn't, and they didn't have anyone else to go to, and they had- Had to take on the terms and conditions associated with those IMF loans and do those harmful policies. And, now with Bitcoin, there is a-- there's an open network where it has financial products being built today, El Salvador being the first one with the volcano bond, that allows them to raise debt without any kinds of terms and conditions, and they can maintain their, you know, sovereign rights and use the funds as they see fit as a nation, and they don't have-- they can kinda get off From the IMF's boot on their neck, they can kinda take it off and, and they can say, "Alright, we're gonna use this the way we want to." And so that's why I get really excited about Bitcoin specifically, is because they could potentially shrink, the power of the IMF that they have over these, low-income developing nations. Right.

And I think it reminds me very much of our, our previous chat about, the BIS, where it's like this theme of this international organization is taking away the rights from those countries, and arguably- Really cutting against the rights of the people in those countries. And I think while generally speaking, if a country's been spending too much, yeah, it's a good thing they do need to tighten their belt, and maybe there does need to be some initial pain. But at the same time, I think the governance of different countries and regions and for people is gonna be better if it's closer to the people who are being impacted. So generally speaking, right, it's better that, you know, the states control something than the federal, and it's better that the local mayor controls things. And the state, because at least he's closer to what's happening and can face some social pressure if he's making bad decisions. Whereas what happens is things get pushed up to that supranational level, then governments don't even-- like, national governments don't even have much say in what goes on, and maybe they're getting also screwed in the terms on the deal too.

Yeah, and that's another criticism, is that the IMF doesn't take any, they have very low communication with the borrowing countries, the people on the ground, like what's actually going on, and they have not that much empathy towards what their policies do because they don't live there. Like, who cares? Like, they don't know the culture, they don't know anything about them. they just see numbers on a spreadsheet, and, and that's all they see, they just see their models. And so you're exactly right. And back to the human rights issue, like, These end up reducing access to healthcare, reducing access to education, food subsidies and cause famine or cause so, kind of the breakdown of social cohesion in the industry, which leads to riots and instability, which leads to lower employment. Who is responsible? You know, who is complicit in that? Is it the, is it the advisor who, who said, "We're gonna do these policies which cause the riots and which cause the political instability"? Should they have respons- And I'm not a lawyer, and complicity is tricky, but if an international organization is responsible for a wrongful act and they know they do it, and it's against their, policies or their mission, you know, I think that it deserves criticism, and I don't hear any criticism in mainstream media about the IMF. In fact, I saw for the first time in a long time a critical article against the IMF last week in The Guardian, and it was the first time I've seen it, and it was really good to see. Because I just don't hear anything about the IMF that has this power to make or break sovereign nations by deciding whether or not they get loans and if based on their policy recommendations or not, if they enforce them. So it's a problem, and this is why I dig into this, because to me, the IMF's policies don't contribute to economic recovery, but instead have negative consequences in terms of economic growth, debt ratios, equality, and all kinds of serious human rights issues. Right. Yeah, I think that's,

and so- So if we look at El Salvador, they're, they're taking a different pathway, and famously, it seems President Becerra has basically told the IMF, "No," and so it'll be really interesting to see where that goes. We're starting to see El Salvador obviously adopt Bitcoin, we're seeing, this small nation in Africa, Central African, Republic, I think they've got a population of about five million, poor country, GDP per capita, I think, when I was doing some research, is quite a bit poorer than El Salvador on a per capita basis, but it is going to be interesting to see what happens if more and more countries try to go this way and try to go the Bitcoin direction and see what kind of opportunities they could get, whether that's tourism and, increased economic investment and development from that angle. So, I think those are some interesting pathways. What kinds of things are you looking out to see for the countries who are trying to take the Bitcoin alternative?

Yeah, I think there's a little bit of impatience going on with El Salvador. People are like, "Where's the volcano bond? Like, it's delayed." And they just started this whole experiment less than a year ago. And, I think we need to be patient about them implementing this, and there's their nation, that is trying to better themselves, and there's other problems in that country that they're trying to address right now. But the volcano bond is, is happening, I believe that. And if you look at their growth in the last year, it's been Amazing, it's been one of the highest growing nations in the world in terms of GDP and, the tourism that it's brought in, it's, it's been incredible, it's put El Salvador on the map. And again, they're going a different route, and, and the IMF hasn't worked for them, for the last couple of decades, if you know anything about the history of El Salvador and the IMF. And so it's very encouraging to see the hope that I see in El Salvador, you know, from all these, stories on the ground You have to be a little bit, I guess, critical of, of that. Like, you, you gotta understand it could be like, only a portion of the picture, but at the same time, the data shows it as well in terms of, like I said, the GDP growth and things like that. And so, with the African country, again, I read the announcement and it was very encouraging because they said exactly what I said, where, you know, it can give us hope, we can build for a better future for future generations. And It can, while we maintain our sovereignty, and so that's really important, right? So they don't have to give away their sovereignty to foreign companies or organizations or in that African country's case, the CFA. so it's, it's really exciting to see, it's exciting to see, these countries adopt sound digital money, that people can own, people can spend it, fixed supply that's enforced by math and code, regardless of geopolitical, politics or- For an agenda. and so we're gonna see more and more of these financial products built on digital sound money, and we're gonna see all the effects that that will have in these countries, and I think we're gonna continue to see it spread ac-across the globe as people see this as a better option.

Fantastic. Well, I think that's a great spot to finish up here, Sam. Where can people find you online?

I'm usually on Twitter, so you can find me at, at Sam Callahan, s a m c a l l a h. I'm also posting on the Swan blog, so you can come at swan dot com. And, yeah, so I work at Swan as an analyst, so check us out. I think we're a great place to, to buy Bitcoin and to learn about Bitcoin. So people like you and, and me write about it and talk about it, and, I think it's a great group of people, but that's just

Well, I, I'm sure, a-everyone learned a lot about the IMF for this episode, and, hopefully everyone will be taking a more critical eye to some of these supranational organizations. So thank you, Sam, for joining me.

Yeah, thanks, Stefan. Appreciate it, man. Have a good

day. I really think these large international supranational organizations do need more scrutiny, especially organizations like the IMF. Get the show notes for this episode at stephanlivera dot com slash three seven three, and you can see the earlier episode with Sam there, as well as the earlier episode with Ron Paul also talking about some of the AML FATF stuff. Thanks for listening, and I will see you in the citadels.