John Haar from Swan Private joins me on the show to chat about his journey working inside the TradFi machine and coming to see Bitcoin as the answer:

  • Being a goldbug
  • Reading and learning at
  • Methodological differences with mainstream economics
  • Full Reserve and Fractional Reserve thoughts
  • Will we see Bitcoin decorrelation?
  • Inflation


Stephan Livera links:

Podcast Transcript:

Stephan Livera – 00:00:08:

Hi, you’re listening to Stephan Livera podcast, a show about Bitcoin and Austrian Economics brought to you by Swan Bitcoin. My guest today is Stephan Livera and he joins me from Swan Private. Now, he came with over 13 years of experience over in traditional finance. Now, what was it that got him to learn about Austrian Economics and go from advocating for a gold standard to advocating for a Bitcoin standard? John and I chat about various ideas such as his journey, learning about Austrian Economics, some of the methodological differences, some thoughts on the full reserve and fractional reserve debate, as well as thoughts on Bitcoin decorrelation and where we’re going with inflation. This show is brought to you by Swan Bitcoin. And Swan is organizing a fantastic conference coming up. It’s called Pacific Bitcoin Conference. It’s on November 10th and 11th in LA, California. There’s an awesome lineup of Bitcoin is coming, whether that is the speakers or just the people who are attending. There’ll be workshops, there will be various tracks in terms of multiple stages going. There’ll be side events, so make sure you turn up to town early because there’ll be all kinds of events that you don’t want to miss and for premium ticket holders, there will be a VIP party. So go and get your tickets over at Use code Livera to get a discount on your tickets. Are you interested in Bitcoin mining? Check out They’ve got Braiins OS plus. This is autotuning mining firmware that you can install on a range of Bitcoin mining ASIC machines. Now, you can increase hash rate on your Bitcoin asics, improve efficiency by as much as 25%, and you can point your hash rate towards any pool or get 0% pool fees if you point your hash rate towards Braiins Pool. Braiins Pool is the new name for Slush pool. Braiins Pool offers a range of features such as frequent and customizable payout timing. You can also set up access management so that you can use APIs to share access to your pull account without fully compromising your security. They also offer VIP support for large scale mining operations. So go and get in touch. The website is that’s Now, for an awesome range of Bitcoin hardware and goodies, you’ve got to check out This includes a range of hardware such as the Cold Card MK4, which is a great hardware signing device to secure your Bitcoin private keys and also interact more easily with the Bitcoin network using things like NFC support and having more Ram and a faster CPU. It’s very reliable and it’s a very versatile performer because you can use it in all kinds of different setups. Also, as I spoke about recently with NVK, there’s the Tap signer. This is a cheaper device with lesser security than the Cold Card, but more accessibility and being cheaper. So, there’s all kinds of options. Go and check it out over at and use the code Livera for a discount. And now onto the show with John. John, welcome to the show.

John Haar – 00:03:02:

Hey, Stephan, it’s great to be here. Thanks for having me. And I’ve got to say that you are one of the major influences on my orange full journey, so I thank you for that.

Stephan Livera – 00:03:11:

Hey, you’re welcome, you’re welcome. At any time. We can help get people on board on Bitcoin and Austrian Economics. I’m all about it. So, I know you’re interested in Austrian Economics yourself, and you obviously came from, let’s say, the traditional finance background. I’m curious to get into some of that and understand a little bit about what was life like for you pre the orange pill. And as I understand, maybe you were also going and reading a bit of the Austrian Economist at the same time.

John Haar – 00:03:42:

Yeah, that’s exactly right. And for me, it all goes back to the financial crisis, which I think a lot of Bitcoiners can tie their roots back to the financial crisis in some way. So I was a student when the financial crisis was happening ’08, ‘09. I was graduating that year with a degree in finance, so you can imagine it probably had a pretty big impact on me, everything that was going on in the world at the time. But for me, the takeaway was it was just very hard to trust the existing mainstream powers that be in the world of Economics and central banking. As I was seeing, the financial crisis happened unfolding right before my eyes. So as it was all happening, you saw the supposed experts at the time not really able to understand what was happening, not able to forecast what was happening. My teachers in school were not really able to explain what was happening. So that led me to look elsewhere. And as you know, most of the teachers in school are it’s kind of a mainstream Keynesian academic focus, so there wasn’t really an explanation of what could have been happening from an Austrian perspective. So at some point along the way, I had a friend, and thank God for this friend, he recommended the Mises Institute online. And finding is how I found all of these Austrian economists who I had never heard of, from my teachers or from people you saw on CNBC or Bloomberg. And that’s kind of how I got into the Austrian school. And obviously, the Austrians are big into sound money and the gold standard. So I became a proponent of the gold standard going back to, like, 2009. I did not hear of Bitcoin until 2013, but ironically, when I heard a Bitcoin, I thought, oh, that’s an awesome idea. They’re trying to do sound money. But unfortunately, my next thought was, that will never, ever catch on. And my thinking there was I have spent a bunch of years in legacy finance talking to people about the gold standard, and they literally look at me like I’m a crazy person when I say it so I figured, if they’re never going to get on board with gold, they’re not going to get on board with the magic internet version of gold. That was my first reaction to Bitcoin. Thankfully, I did not follow the footsteps of Peter Schiff and I eventually changed my views. But then it was a few years later when I came around to Bitcoin. But for a while it was Austrian Economics and gold standard and sound money, even years before I came around to Bitcoin.

Stephan Livera – 00:06:25:

And so what was it like living the double life then? Because I presume at one level you were interested in sound money and the gold standard at that time, but you were probably interacting with all kinds of people who are used to the fiat debt based fractional reserve system. So what was that like for you?

John Haar – 00:06:44:

Yeah, it was difficult to really have a conversation with anyone who I worked with about these topics because, one, I think they were just not interested in it. Two, they kind of bought the narrative of, oh, it doesn’t work. My Economics textbook in college taught me that the gold standard caused the Great Depression or it causes hoarding or something like that. And then most people just thought, this is probably the majority of people in legacy finance, they just thought, why are we even having this conversation? The Feds not going to go away, it just doesn’t matter. So, yeah, at work it was hard to have these conversations. So very thankful that things like the Mises Institute existed as a way to consume content and interact with other people to a certain degree. But, yeah, it was difficult being a gold standard proponent, and I think maybe we can get into the gold and Bitcoin dynamics, but on the gold standard, when I was a gold standard proponent, it felt like you needed to convince everyone to go back on the gold standard. And as I look back on it, convincing legacy finance and politicians and central bankers to go back on a gold standard, which they had clearly left, just seems like a pretty hopeless strategy. Whereas with Bitcoin, it’s kind of being built in reality before our very eyes. And yes, there’s some convincing that can be done, but it’s much more of a realistic exercise. Whereas the gold standard seemed like you were just talking to people and trying to convince them that it was better, but they were going to have to accept it and move towards that standard. And looking back on it, I just feel like there’s a very low likelihood of that ever happening.

Stephan Livera – 00:08:30:

In some ways, it requires selling the message of personal responsibility and I think that’s something that libertarians struggle with in general, because it’s so much easier to show the idea of, oh, you don’t have to work hard, you should just get things for free. You should just get them in a very cost less way or reduced cost way. So I think that’s probably one of the main barriers that a lot of libertarian and Austrian minded people run into. And so they either end up living the double life or they sort of strategically go silent at that point in the meeting. When it comes up, they just sort of live the life of pretending like, oh yeah, I’m like one of you guys, let’s all just get cheap credit and use that. And I suppose that can also hinder your progression as well in the organization, because to sort of move up, you have to play the game, as it were.

John Haar – 00:09:24:

Yeah, and that brings up an interesting point which is related to the specialization that you see in legacy finance. So what I mean by that is you’re absolutely right that the dogma and the prevailing beliefs in lexi finance are these Keynesian central banking is good for society type use, for sure, but it’s actually just not a topic that comes up that much. Bitcoiners are so hyper focused on central banking, the history of money, the nature of money. But in legacy finance, these topics actually don’t come up that much. And I think the reason is because if you look at a typical Wall Street financial services firm, the reality is that the level of specialization you see, people are working on their little corner of investing or trading or capital free markets or advisory, whatever it is. And their job is so specialized that they don’t have much of a need to consider the history or the nature of money. So I saw that to be the case firsthand in the world of finance. So yeah, you’re absolutely right that if you were to ask them, hey, what do you think about central banking, what do you think about Keynesian Economics, they would generally be on board with the current system. But it was not something that came up every week by any means. It was kind of just like this side topic that they thought was settled, but not something that they needed to focus on in their day job.

Stephan Livera – 00:10:52:

That’s interesting as well. And I think there’s a pro and a con here. Or there’s one angle that maybe in some sense you could argue that some people within the financial, traditional financial services community and investment world, to some extent, they accept an Austrian story in certain ways where they understand this idea that if the central bank were to lower the interest rates or raise or to. You know, If this if the party has been proverbially going on for a long time. And now the central bank starts to raise the rates very quickly. As arguably some central banks have been doing recently. That that would stop the party. And so there’s some element to which they I think they accept an Austrian story in that sense. What do you think?

John Haar – 00:11:34:

Yeah, I think I think what you said is fair, and I would elaborate on it that in some ways they accept an Austrian framework of things, and maybe they don’t even realize it. And I know Bitcoin and have pointed this out in the past, but it’s definitely something good to keep in mind. If you’re ever talking to someone in legacy finance, one of the key things you can say to them, it’s unlikely you’re going to get anyone to change their mind on the spot. That doesn’t really happen. But one of the things you can say to them to get them to just think a little more deeply about their position, I think, would be you’d ask them the question, why do you believe that government directed supply and price controls are a failure when they occur within a particular industry of the economy? So, for example, no one in legacy finance would accept government price controls on the automobile industry, for example. They would not accept that as an intellectually defensible policy. Yet those same people don’t apply that exact same logic to the monetary system. So, yeah, like you said, they accept these free markets are better frameworks. They accept that government central planning does not work in some ways, but then they seem to forget to apply that logic in other ways.

Stephan Livera – 00:12:52:

Right? And so what we end up having the conversation about, it ends up being how much intervention should the government do? And so they end up playing this game and perhaps they accept, let’s say, the Phillips Curve sort of reasoning. Now, of course, Austrians disagree with that. They would not say, there’s this kind of this you either have more inflation or more interest rates, right? And you could arguably say that the 1970s and the stagflationary era are a rebuttal of that kind of thinking. But perhaps that is also an underlying frame of mind that a lot of people in legacy finance are taking. They just kind of implicitly accept, oh, there should be some level of government intervention. The right question is how much in their mind. Right?

John Haar – 00:13:34:

Yeah, it is. And like you said, as an Austrian, as a Bitcoiner, I do generally reject that framework. I would go back to the example of the real economy versus the monetary system if I were having a conversation with someone and I would just try to have them think, let’s say today, for example, you see economists write articles all the time about is the Fed tightening too quickly, too slowly? QT happening too much too fast, et cetera. And it would be kind of funny if you saw the same papers written if someone said the price of cars are too high or too low, or there’s too many automobiles being manufactured this year. Most of us would read that article and say, who cares what this guy or girl thinks about what the price of cars or supply should be? The only reason you care is if that person is going to go work for an automobile company and actually do something in the market or if they’re going to be some large consumer, then maybe you care what they think. So it’s just funny to me that we accept this idea that people can just debate what is, quote unquote, the right amount of government intervention in the monetary system, whereas we wouldn’t accept that as a defensible policy in any other part of the real economy, right?

Stephan Livera – 00:14:52:

And I think there’s also a sense in which statistical analysis is seen like that’s Economics, right? So for example, and I’m sure you’re familiar with this, where many of the different large banks will have an Economics team and really that Economics team is almost like a statistical team. They’ll kind of say, oh look, this is what we’re seeing in the market for, let’s say, cars or energy. And they’ll come out and they’ll write some report or they’ll come out with a view and say, oh well, this is what we and in a way that’s partly marketing, right? Like these large banks will have these divisions who write these big research pieces and put them out there and obviously they send them to their high net worth clients or to institutional clients as a way of sort of saying, oh look, here’s some statistical work we did. What do you think? And oh, by the way, here’s our product that we’re selling you. Whether that’s a fixed interest product or some kind of equity product, that seems to be the model, right?

John Haar – 00:15:47:

Yeah, absolutely. And I don’t think it’s entirely worthless. Like you said, there’s probably some industry participants who subscribe to it. They get some value from it. I think there is value there, but I think the industry participants themselves have so much more insight as to what’s really going on in the industry. And the decisions of those players are what really matter, not the people who are sitting behind a keyboard all day long and just writing research and taking in data. Like I said, there’s some value to it, but I think it’s really the players who have skin in the game and are actually buying and selling whatever product it is. We’re talking about those people. Their views matter far more than the people who are taking in data and trying to come up with some sort of conclusion. And lastly, on that topic, I would say there are tons of smart people on Wall Street doing those types of data analysis. Not to knock them, but the reality is that the conclusions they come to, they could easily be wrong. It’s not as if they’re batting 900 and they’re right most of the time. A lot of time they take in the data they need to come to a conclusion and it turns out that the opposite is true. I’m not saying it’s easy for them to do those things, but again, I would just put more weight on the actions of people who are actually participants in whatever industry we’re talking about and the people who have skin in the game rather than just analyzing data and writing about it.

Stephan Livera – 00:17:18:

Of course. And I think another interesting theme and topic that comes through from some of the content I’ve seen you put out either on Twitter or the article you wrote with the Swan website as well. With, this idea of the Yuppie elites, right? So it’s kind of related to, let’s say, the creases Bitcoin argument, right? This idea that now summarizing just for listeners who haven’t seen that part of the argument is it’s not that Bitcoin is more intelligent per se than people in the normal financial world. It’s actually perhaps it’s more about whether they have high trust in the system versus those individuals who have low trust in the system, which tends to be libertarians, Austrian economists and cypherpunks and other people of that mindset. And maybe that’s really the distinguishing factor whether somebody sees the point of Bitcoin gets Bitcoin or not.

John Haar – 00:18:07:

Yeah, absolutely. I think that is a critical point for a few reasons. One, like you said, it’s not that people who see these things or seek them out are necessarily more intelligent or more intellectually savvy. I think it’s part of just the nature or maybe the things they’ve been exposed to in the past. So for me personally, it was the financial crisis of 809. I just looked around and I probably would have considered myself to be what I call an article, a high performing consensus follower. Maybe it doesn’t sound so modest there, but I always did well in school, always got good grades, but I was a consensus follower as well. But then ’08 ‘09 happened and I looked at this and whether, like I said, it was my teachers or it was Ben Bernanke on TV saying something and then literally being proven wrong, like days or weeks later, I just looked at that scenario and said, how could I possibly trust these experts to be managing the system? And that is what they’re tasked with. They’re tasked with managing the economy, that they treat the economy like it’s a car, that they can push the gas when they need to, they push the brake when they need to. And unfortunately, I just don’t think it works that way. So I think for people who are these high performing consensus followers, maybe they have a well paying job at a big corporation, they don’t have much incentive to look for any other narratives than what their company and the mainstream is telling them. But then for other people, I think there’s going to be a sort of light bulb moment that causes them to look elsewhere for explanations. And I think as you go down that path, you find that the alleged experts oftentimes get pretty critical things wrong. And just lastly, I’ll say I think it’s important to keep in mind that you don’t want to use any sort of blind rule like, oh, the experts are always wrong on a given topic. That would just be silly. You’re just taking the other side of them all the time. And the experts might be right in some cases, but after seeing the financial crisis, to me, that was just as clear evidence as I could find of, okay, the experts and their forecasts can be wrong in a very big way. And I think once you see that, you start getting led down this path of looking for information beyond what the mainstream is talking about.

Stephan Livera – 00:20:32:

And especially in the world of macroeconomics, I think it’s one of those things where there are so many different variables that anybody who gets something wrong, per se, can just point to. The reason I was wrong is because this other variable changed. And so then people end up playing this very slippery game, and it almost seems like the way the media, at least the mainstream media or the corporate press, will herald certain individuals despite them being continually wrong. And at the end of the day, it’s almost like they just get invited to keep going on because they’re saying something entertaining or something controversial as opposed to something that’s correct.

John Haar – 00:21:11:

Yeah. And there’s certainly one name that comes to mind for me. I have to be honest when you’re saying all that. I think of Paul Krugman. I’ve been following him for many years. Even before I heard of Bitcoin, he was kind of a focal point of the Austrian world, Austrian Economics world. And maybe that would be a good place to we could start chatting about Austrian Economics a little bit, if you’d like. But I find it amazing I tweeted this out recently. So, firstly, like you said, I think it’s spot on that these people have a history of not having correct forecasts about pretty critical things for years on end. Yet somehow they go on mainstream media, they get constant appearances, they have columns that everybody reads. It’s almost like they forget that this person was wrong several times about critical issues. But one thing that I thought was hilarious is that if you look and go to buy a Paul Krugman textbook online, I mean, the prices are just out of this world. They’re like 100 or $200 for one Paul Krugman textbook. Whereas you look on and there’s amazing content that is just available for free in PDF format. So you can get the theory of money and credit, buy music for free, you can get raw books for free. But if you want to rent this is renting an ebook by Paul Krugman. It costs like $55 is the last price I saw. So, yeah, there seems to be something off about the focus of real, meaningful economic content. So maybe I’ll be a good segue into chatting about some of the Austrians.

Stephan Livera – 00:22:49:

Yeah, for sure. And so, as you said,, I think for those of us in the Austrian world, or at least fans of Austrian Economics. We’re very familiar with that website because we’re going on there looking at articles, reading different books, or maybe watching some of the talks given by the Mises Institute fellows, senior fellows. And so if you have any favorites, who are some of your favorites from the Mises Institute?

John Haar – 00:23:14:

Yeah, so definitely the classics. Obviously, Carl Menger, Bastiat, Mises, Hayek, Hazlitt, and Rothbard, I would say, are the ones that I’ve read repeatedly. But then you have the modern Austrians, too, who I think are pretty great. Tom Woods, Robert Murphy; Ron Paul has put out some good content. I would even throw Peter Schiff in there. I think he’s kind of an entertaining character for Bitcoin Is Now, but he put out some great work that I think really helped me. Even the book, how an Economy Grows and Why It Crashes, very, very simple book, but I think a lot of people could benefit from reading that. Hanse Herman Hopa, Walter Block, Blue Rockwell, obviously founded or co founded at the Meas Institute, and there’s probably others that I’m forgetting there. But, yeah, those are some of my favorites. And as a broader comment, I would say this, that I think it’s important for us to restate and rewrite Austrian Economic ideas as time goes on, because I think if we’re serious about wanting sound money and rational economic thinking to prevail, you know, Mises and Menger obviously did incredible work, and oftentimes it was original work. But I think we have to be honest that many people today are relatively not just going to crack open the theory of money and credit a book from 1912 and just start reading it page by page. So I think there is good value for people today to put these concepts into a format and a language that is more digestible, more accessible to large numbers of people. Obviously, I think you do a great job with that, with your show and your writing, and it’s a big focus of Swans as well, to help get these ideas out there in as effective a way as possible.

Stephan Livera – 00:25:10:

Well, thank you. Yeah, and I think this is one of those areas where especially if you are younger or maybe you don’t have the time. I remember for me, when I was first learning some of this Austrian economic stuff, when I was 14 or 15, I didn’t have the patience to go and read Human Action, but I would read some articles and I would get kind of a broken down version of that key insight. And that really helps me. And so that’s something that I try to pay forward right when I’m writing an article and trying to condense down, something like that. And I think that’s something we could be doing, all of us could be doing all Bitcoin and Austrian Economics fans can be doing this to help make it easier and more accessible for people. And maybe the next level of that is to make video form even like TikTok or whatever, to try and reach people where they are as well. So that’s something perhaps we should be doing, and even updating things as well in terms of taking an Austrian lens to the modern day events. And I think that’s also an interesting and important aspect that I’m wondering if you have any ideas or thoughts on that.

John Haar – 00:26:15:

No, I absolutely agree. I think there’s just a need to restate and rewrite these concepts over time. I think putting them in more digestible segments, like you said, is a very important thing. I would say if someone does want to read an Austrian Economics book, they do want to dive in. I would say this is just my own personal opinion, but I found Rothbard to be easier to read than Mises. Maybe it was just Rothbard came several decades after Mises, so his language was a little bit easier to understand. But I found the books The Mystery of Banking, and What Has Government Done to Our Money? both by Rothbard. I found those to be very accessible, whereas something like The Theory of Money and Credit, I look at that more as like a reference. Let’s say there’s a topic you’re focused on and you say to yourself, OK, what did Mises think about whatever it is the role of money substitutes in an economy? You can go into that book, look at the table of contents and find what you said. But yeah, that book or Human Action are very difficult books to just read page by page. So, yeah, I think there’s tremendous value in putting things in a shorter, more digestible format and then overlaying current events, I think just make it more realistic for people, because it can be hard for people to read about The Mystery of Banking, which goes into banking crises that happened in, I don’t know, the late 1800s or early 1900s. It’s just not as tangible for people who are reading a book like that in 2022. And then the last thing I would just say is there’s another book that I’m looking forward to checking out more on the basics. I know you had forbidden on the show recently, and I think his book is called How to Think About the Economy. So that sounds like a very good overview. I liked the way he framed it. That a book like Economics In One Lesson, which is a fantastic book, and I think people could read that that is very digestible, if it’s not overwhelming. But her, as you mentioned on your show, is looking to go a little bit more broad than Economics in One Lesson, but still make it a digestible language and a digestible format. So that’s definitely another book that I’m looking forward to checking out for you soon.

Stephan Livera – 00:28:34:

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Stephan Livera – 00:30:15:

Yeah, and I totally agree with you. I think for new listeners or readers, Rothbard is actually very accessible and arguably more accessible than Mises. I think people should read both, of course, but I think it’s kind of a good way to get started with Rothbard. And I think he’s easier to read because he was a natively English speaking, as opposed to Mises, who had to learn English and then write in that. And I think perhaps that’s one of the reasons why for New People, I think Rothbard is perhaps more accessible. And the mystery of banking and what has the government done to our money? Are both excellent books for any new Bitcoin who wants to dive a little more into the Austrian school and see how do Austrians think. So I think perhaps a common pathway for some people is maybe they come in and somebody recommended the Bitcoin standard to them and now they’re trying to understand a little bit more about actually, how do Austrians think about these things. And that’s where the Rothbard books come in, or even \Guido Hülsmann book, The Ethics of Money Production, I think, is a phenomenal one also. And so those are a few ones that can help people and I think it comes down to understanding things from a step by step basis, and I think that’s what the Austrians do really well because that’s just part of the methodology. So I’m curious if you have any thoughts on that crucial distinction there between Austrian methodology being distinct from some of the other economic methodologies out there.

John Haar – 00:31:44:

Yeah, I think for me, I can say personally, I was a finance major, so I took all the finance and Economics classes that you would expect I would have taken, and the ones that talked about Economics never really clicked for me in a way that I felt satisfied coming out of those classes, like coming out of a corporate finance or an accounting class. That’s one thing that’s more just kind of the numbers are the numbers. But I can remember going into these Economics classes and just not really feeling satisfied as to understanding what messages they were trying to get across. And for me, it wasn’t until I read so the funny anecdote is that I can recall reading Ben Franklin’s autobiography when I was in college, and all the kids had to read it when I was in college, and he made some comment about how he thought that some part of the colonies needed more money. And I remember thinking, well, that’s interesting. What would cause the colonies to need more money? Because my first thought was like, yeah, everyone wants more money. Who doesn’t want more money? But what would actually be an intellectually defensible view as to why an economy or society needed more money and at what point? It would just be ridiculous that they say money doesn’t grow on trees. So at what point are you just trying to make money grow on trees? It wasn’t until I read Rothbard’s books. What Has Government Done to Our Money? And Mystery of Banking that things started to click for me. And I think it all comes down to what you just said, which is that the Austrians start from very basic first principles, and they say, let’s imagine a society that operates in these ways, and people are going to make decisions based on these pros and cons that they perceive. And that, to me, just seems like a totally different way of approaching the problem than what I learned in school. In school, it was almost like they skipped over the basics, and they started to try to tell you about things that were far more complex about how does the Central Bank operate. I was in school in, let’s say, 2007, and they’re saying, how does the central bank operate in 2007? But it’s so hard to place that in your mind anywhere and give it context if you’ve never really thought about the history of money or the nature of money. So I think most people end up just going through the motions in those classes, and they maybe know enough to get a good grade on a test but they don’t actually know the fundamentals. So I’m much more partial to the Austrian way of approaching it. And it’s fair enough for me because when I read something by an Austrian Economics author, it just clicks for me, whereas some of the other Keynesian stuff, it really doesn’t.

Stephan Livera – 00:34:37:

And I think part of that, as you’re saying, it comes down to that methodological difference in how these different schools of thought are operating, because some of the more positivist schools of thought are not operating from that same logical, deduction premise. And so when Austrians start, they say, okay, man acts purposefully. And so from this, we can deduce certain ideas and notions, and then we can construct them together in a way that’s cohesive. And that’s where Austrians build up some of these different ideas, culminating arguably in what’s known as Austrian business cycle theory. And so that’s something that someone like Peter Schiff will talk about in a very popularized way on TV, and others will talk about it. People like Tom Woods and Bob Murphy will talk about it. And I think that really helps explain a lot of what’s going on in the modern day world where we live in this fiat world with fiat consequences, as our friend’s Safety would say, that we’re living in a world of fiat food and fiat well, from his perspective, art or Fiat architecture and all of these other aspects that have been corrupted by the money. And that also is relevant for Bitcoiners, is because that is where we can sort of point out, look, this is why we’re trying to solve that problem. And if you don’t understand that problem, it will just look like, oh, you Bitcoin people are just this weird Internet coin widows living in mum’s basement. But actually, no, there’s a real point to this. It’s that fear currency and fractional reserve banking has really brought such a big problem to society culturally, economically, sociologically, that it’s part of the answer. That Bitcoin is part of the answer. So, yeah, I guess while we’re there on this whole fractional reserve and full reserve, I know this is something you made a few comments about this also. So I’m curious, how are you seeing that? And do you have any reflections for listeners in terms of your own thinking about fractional reserve, full reserve, what kind of system we’re in?

John Haar – 00:36:38:

Yeah, I think there’s two very interesting questions on the topic of fractional reserve banking. I think the first one is, is it possible to engage in fractional reserve banking without committing fraud or counterfeit? And I know you could probably have an hour long show with someone just debating that. I know people have written about it pretty extensively, but I think it’s an interesting question. And then I think the second interesting question is what’s the best way to define the current system we have today? Is it fractional reserve? Is it zero reserve after COVID? Is it full reserve or is it something else on this first one? I’ll be brief on the first one because, like I said, I could go on for a while. But I think if you look at how things took place historically, it was absolutely fraud or counterfeit. If I could steal man the argument for a possible way that fractional reserve banking would not be fraud or counterfeit to me. It would require that banks made it entirely clear to their customers that when they deposit, “money” to the bank, that money immediately takes another form, which is now it’s a bank token or a bank note, and the bank is going to create more tokens than the base layer of money. And the whole thing is subject to blowing up because it’s credit based. And when defaults eventually happened, it’s a painful process. And all the customers and other entities that are associated with this bank, you might lose all the money you have. Now, if it was done that way, then perhaps you could say, okay, maybe it’s not fraud. But when you again, you start looking at things historically, one, that’s definitely not how it took place historically. And then I would say, even if all that disclosure happened, I believe a very low number of people would be willing to risk their money in a venture like that. And if they did, they would have to be paid something to take that amount of risk. And then, lastly, there would have to be no government bailout when the defaults eventually happened, which they will, because once there’s a government bailout, you just socialize the losses of people who are engaging in a risky activity. So that’s generally my thoughts on whether I think fractional reserve is fraud or counterfeit. But we would love to hear your take on that.

Stephan Livera – 00:39:04:

Yeah, I think that’s interesting, and I think obviously there’s a lot of debate back and forth, and I think some of it goes into historical jurisprudence, arguments about, okay, what was the way the law went? And I think to some extent, the full reserve Austrians are arguing here that maybe in some sense, the law went the wrong way, that it should not have been that way, that they should not have given bankers this ability to suspend redemption of coins. So I guess let me back up a SEC. I think what we’re getting at here is this idea that bankers should be able to take in deposits, but then not pay out the people who are trying to withdraw, in a sense, because they should be allowed to engage in this system of fractional reserve. And now here’s where there’ll be arguments here back and forth, right, the likes of the free bankers will argue that I see, but the system evolved in a certain way that allowed this. So, for example, let’s say there was this bagging rule that you should. If the bag was open or closed. That determines the distinction in how the banker should treat this. Whether the coins being held like in those days. Let’s say it’s gold coins. That the banker should be treating it either as a bailment or it should be considered you’re getting the token right in that example. Like you were saying. So, I mean, there’s so much kind of there’s so many different, like, rabbit holes and warrens that we could go down. But I think the key idea to me. I think it’s that fiat money and fractional reserve fiat money didn’t just come into its own like generally speaking it didn’t sort of just come about without government intervention and that what allowed these things to go on was where governments permitted or they had various rules. Things like legal tender laws that forced people to exchange with a certain kind of coin or certain kind of money. So, yeah, I probably can’t articulate it as well as, like, some of the authors and people who we’re talking about, people like Guido Hülsmann, Joseph Salerno, people like that. But nevertheless, I think for me, at least on my reading of the arguments, and I genuinely did try to read both sides, and I believe that the full reserve side is correct. I just believe that they have the correct economic analysis of what’s going on. And I think a really good debate for anyone who hasn’t seen it, is there was an infamous debate maybe three or four years ago, and it was Bob Murphy versus George Selgin. And the argument Bob Murphy was making is that if you accept this idea of Austrian business cycle theory, part of what he’s getting out there is this idea that if commercial banks can extend out credit, and if those credit tokens are assessed as being at par with all the money right, we treat all the claims the same. That is Australian business cycle theory. And so if you allow that, then you are going to allow these kind of economic unsustainable or artificial booms and busts. And so he was saying, even if you disregard the fraud question, that we’re going to see these economic impacts, economic instability, because society is allowing fractional reserve banking. So, even if we set the fraud question aside, that was his argument. So, I’m curious as well if you have any thoughts on that whole idea.

John Haar – 00:42:33:

Yeah, I love these topics. I can talk about this all day long. I think where you made my mind go there was something I was thinking about recently. This is another question that you could ask people in legacy finance to help them question their views. It’s commonly accepted in legacy finance that if an entity issues new shares of stock, that you are diluting the ownership of all the other shareholders 100% of people on legacy finance would agree with that statement, and for some reason, they don’t agree with the statement that when more money is created, that you dilute the existing holders of money.

Stephan Livera – 00:43:14:


John Haar – 00:43:15:

Again, I think it’s just an inconsistency on their part. But I think there’s a few fascinating takeaways when you start thinking about that more deeply and you think about what happens in the process when new shares of stock are created. So it happens, right? So you have to ask yourself, well, why does anyone let new shares of stock be created if it just dilutes the existing owners? Well, it happens but it’s highly scrutinized because if you do it and you don’t create more value for the company and all you’ve done is dilute the existing shareholders. So the existing shareholders have to say, okay, I’ll allow this. But the only reason I’ll allow it is if you have a plan to make the shares more valuable for each holder and then okay, we can take in more capital, execute on our business strategy and everyone will have a more valuable share. But what’s fascinating to me is the takeaway there that works because the entity, the company in this case is sectioned off from the rest of society. Meaning we’re not using that company’s stock as money. Like you said, the claims are not equal everywhere else. It’s just that company’s stock kind of operating in this segmented part of the economy. And of course if that company fails we would say, okay, only those shareholders should lose. If the rest of society starts to lose when that company fails, then you get into a very, very questionable situation where you have these people who are trying to benefit themselves by creating more shares. Which is fine as long as it stays within that entity. But then when you start to look at the banking system, you start to see a bank create new banknotes or bank tokens, whatever you want to call them. And it’s fine if those bank tokens are known to be those banks tokens. But when they circulate on par with every other claim and every other form of money, that’s problem number one. And then problem number two, when that entity gets into trouble and the government bails them out, you just socialize the losses with everyone else in society. So yeah, I think it’s a pretty unworkable system and I think there’s an inconsistency where if you talk to legacy finance people about how stock issuance works, they get it. But then you talk to them about money creation and then they seem to not apply the same logic.

Stephan Livera – 00:45:41:

Right? And I think that’s part of that is it’s that same idea that if you talk to the fish, that fish doesn’t understand he’s swimming in water, right? Because that’s the only world they’ve ever known. Now, in fairness to the, let’s call them the free market, free bankers, let’s say the fractional reserve crew, they probably would argue, hey, look, in history there were times where people were circulating different kinds of coins with different kinds of values and people would have to look which bank was the issuer of this dollar and that bank issued that dollar. And I mean, they too would also criticize government intervention and central banks, but just from a different angle. Or they would say it’s feasible that you could have a free market fractional reserve system. Whereas kind of the full reserve side. Which I’m part of that would say. Nah. Part of that is there were governments helping in certain cases by allowing some of these entities to suspend withdrawal. As in suspend redemptions. So that these banks would still be allowed to keep holding their goals or in some cases continue operating as a business while not letting customers take money back. But still keep operating. And it’s like, no, that’s just not so. That’s where I think some of the full reserve people are coming back and saying, no, that’s actually wrong. We should just be anyway, putting that, I guess, aside a little bit, kind of going forward to the Bitcoin world and what would it take for us to have a full reserve Bitcoin system? And I think in some sense, as my friend Pierre Rochard spoke about on a recent episode as well, on a related topic, he was saying, look, currently nobody is treating, let’s say, a Kraken IOU the same as, let’s say Prime Trust with Swan. We partner with prime Trust. It’s not like we treat Prime Trust IOUs like the same as, like Coinbase IOUs, the same as Finance IOUs. I mean, what is crucial is that they are all treated differently. And of course, not your keys, not your coins, but they are treated or we believe they would be treated differently. But I’m curious how you’re thinking about that question.

John Haar – 00:47:46:

Yeah, I think also some of your comments made me think of the article you wrote recently on full versus fractional reserve. And I think the point that kind of drives it all home is when you look at historically, you have these long periods and I forget exactly how long, but it was measured in years of how long the government said, okay, you this banking entity can suspend redemption into precious metal. And I think once that happens, that kind of the cats out of the bag that this was a system that was not going to work. So without that preferential government treatment, I think those entities would have failed. I think just by definition, they would have not had enough species to redeem and they would have failed. And I think that would have been a wake up call to everyone. And then society would have just chosen full reserve after that. Maybe. Could there have been a small contingent of free banks where people got paid and take on additional risk? Maybe. Fine. But if those entities were allowed to fail as they would have, I just think most of society would have chosen full reserve after that. I think it’s the preferential government treatment that allowed it to continue existing. And he brought up Pierre Rochard. I think it was interesting because he was on your show in August. I think that was a fantastic episode. He also made the case that our current system can be thought of as full reserve, which I thought was fascinating. And he ultimately said this because governments and central banks would realistically not allow widespread defaults to happen, whether that be through deposit, insurance or other programs they come up with the bank credit which exists in the system today would ultimately not be allowed to just disappear in a way that potentially it could happen in a truly fractional reserve system. So I generally agree with that. But I think in addition to the fractional versus full topic, we also have to specify what the reserves are in the system. So reserves are, of course, meant to be the real base form of money. And historically, that was gold. You have JPMorgan who famously said gold is money, everything else is credit. So historically, you have the real base money of gold, and then there are forms of bank credit created on top of it. But everyone views themselves as owning the real base form of money, even if their money is in the bank account. Right? They don’t view themselves as having a $1,000 worth of Wells Fargo bank notes. They view themselves as having a thousand actual dollars. So fast forwarding a little bit. I guess what I’m saying is, well, I think it might be accurate to describe the current system as effectively full reserve. I think we need to clarify the nature of those reserves and who controls them, because I think a lot of times people hear full reserve and they think, oh, that’s good, that means stable, that means sound money. But you can actually have a full reserve system where there’s an entity that controls the reserves and they can expand and contract them when they please. So I think maybe we call the current system full reserve fiat monetary standard versus a full reserve sound monetary standard. Maybe that’s a small point, but I think it’s worth discussing because fractional reserve gets thrown around a lot and there’s a lot of nuance here, I think.

Stephan Livera – 00:51:13:

Absolutely, I think you’re right. And I think the sound money point, it reminds me this is the point that means, I think, going back to theory of money and credit, he says sound money, it’s two components. One is chosen by the market, and two, free of coercion by the government. And if we’ve all been coerced into this system, it’s clearly not a full reserve sound money system, it’s a full reserve fiat money system. And we want to obviously, as Bitcoin as we’re trying to promote and advocate and educate about this idea of actual sound money, actual market chosen money. And so that comes into Bitcoin. And obviously, I think the conversation as well around inflation. And I understand every few years Bitcoin has this huge ball and then bear cycles. And so, then people are led to think, oh well, Bitcoin is dead or it’s not an inflation hedge anymore, or it’s too volatile to be used. I think there’s also this narrative that inflation, that Bitcoin hasn’t kept up with inflation. How would you answer that kind of question? So, let’s say somebody’s coming to you and they are either a precoiner or they’re a relatively new coiner and they’re saying, well, John, Bitcoin hasn’t kept up with inflation recently, what should we do about that? How should I think about that?

John Haar – 00:52:26:

I think it all comes down to defining the word inflation or deflation. And originally, if you go back decades, inflation always meant monetary expansion. It meant the creation of more banknotes on top of base money. That was inflation. Deflation would have been the contraction of the money supply. Somewhere along the way, and I’m not exactly sure where, but inflation started to get used as CPI synonymously and inflation started to mean consumer prices are going up. I personally don’t think that is a good definition for inflation. I think it just ends up leading to a lot of confusion. And shout out to Steven Luca of Swan private. He wrote a great article on this as well, talking about definitions of inflation and what is Bitcoin really protect against. And for the record, I think the Bitcoin community probably could have done a better job a year or two ago communicating this, but I think we’ve got it correct now. And the point is that Bitcoin being a scarce, sound money asset, protects against monetary expansion. So we’re going to call that inflation. It protects against monetary expansion, it does not protect against CPI rising because CPI rising could happen for a whole host of different reasons, one of which is maybe monetary expansion. CPI usually rises on a lag basis after that, but Bitcoin is most correlated to monetary expansion and monetary contraction. And I think that’s been proven to be true over the last few years. Obviously March of 2020 until December of this past year, one of the greatest and fastest periods of monetary inflation we’ve ever seen. And now we’re seeing the reverse of that. Starting in roughly January of this year, we’ve seen monetary contraction and Bitcoin has reacted to that. So I would say CPI, and I would usually encourage people to speak a little bit more clearly about these topics. If you mean prices, call it CPI inflation. It’s tricky because so many people out there just say inflation and they mean CPI, so it can be easy to just go along with that. But I would try to say CPI inflation and maybe say monetary expansion or monetary inflation too. Yeah, I think it comes down to the definitions of inflation.

Stephan Livera – 00:55:02:

Yeah, that’s a fair point. I think so. I think this is one thing that let’s say for listeners who are following the discussion on Bitcoin Twitter and things like this and I understand that in some cases it seems like Twitter has become fed watched Twitter and II understand that can be frustrating in some ways because let’s say in another way, you could say, well, actually Bitcoin is marching to the beat of its own drum. I think this conversation also comes in around is Bitcoin correlated with the overall market? Or if it is, when is decorrelation going to happen? Like, when do we sort of break off? And potentially that comes, we don’t know whether that’s sooner or later I believe it will come. Obviously, I believe at some point we will start to see that decoration moment where, let’s say people understand that Bitcoin is something different and it’s rightly in a different category to, let’s say, the stocks and the bonds and the property and all these other things that people are putting their money into. And of course, crypto, “crypto”. So, I’m curious, from your perspective, how are you seeing this whole question of correlation, decorrelation and Bitcoin compared to everything else?

John Haar – 00:56:12:

I think the first thing I would say is I’ll take even a bigger step back real quick, just to point out. I think it’s fascinating that if you look at the narratives in legacy finance, what they were in 2017 around Bitcoin is that they said it was a scam, it was a ponzi scheme, and it was only used for illicit activities. And if you fast forward five years later, one of the biggest knocks is that they say it’s volatile, speculative asset, and it’s correlated with tech stocks. So I always find that fascinating because I think if you just step back and look at that bigger picture, they clearly have changed their main criticism. And I think that speaks volumes about the Bitcoin adoption we’ve seen in the last five years. But addressing your question on correlation today, yes, Bitcoin is pretty highly correlated with tech stocks and the nasdaq and other speculative investments. I think that’s because it still is treated as a speculative investment by many people. And I think there are certain entities out there who have a good amount of money, who treat it as such. And when they’re treating it that way, when most of the world views it that way, they will trade that way. And again, I think this also comes back to Bitcoin being correlated to monetary contraction. So I think really any financial asset when we’re going through this period of monetary contraction, I don’t know if there’s a way around the high correlation in times like this. Until you get to a world where people are much more on a Bitcoin standard and Bitcoin is being used as a unit of account, then maybe you get kind of a separation. So I think there will be a decent amount of correlation for the near term. But one thing I think Bitcoin has going for it that certainly stocks don’t is that they’re adoption events that could happen. In Bitcoin at any particular point in time, whether that’s a government, a central bank and oil producing nation, a corporation putting it on their balance sheet, those can happen at any time. And that those are kind of step functions higher in Bitcoin adoption. That doesn’t happen in stocks, right? If anything, every valuation metric and adoption metric you look at in stocks is that too many people have bought stocks and they’ve been a bit up too high over the past 10, 15 years. So, I think those are some ways that you could see Bitcoin decoupled from more traditional assets.

Stephan Livera – 00:58:42:

Yeah, I think that’s a very fair answer. And you know what? It’s also fair to say that in recent, let’s say weeks or months, we have seen Bitcoin pretty much hold around that same level, around kind of 18 to 20,000 ish where other things have been dropping harder than Bitcoin. So in a way, at least in recent times, it’s kind of decorating. Although, of course, we don’t know whether that is going to remain the case. But I think we’ll just have to wait and see. And I think it’s an education process for people to understand the difference between Bitcoin and other things and to understand why Bitcoin is superior. So, I guess looking out to that, let’s say more of the medium or longer term future, what kind of future can we expect to see in a bitcoinized world?

John Haar – 00:59:32:

I think you will see adoption continue to increase over time. I don’t think it will be linear. I think there’s always going to be building happening. And like I said earlier. I think one of the great things about Bitcoin versus gold. And this is coming from someone who was a gold standard proponent for many years. Is that with Bitcoin, things are being built in reality and people have the opportunity to use Bitcoin. Have a real experience with it. To use it as a store of value. Use it as a meeting exchange, engage in self custody. So I think those things will continue to get built over time, and then I think there will be events that happen which are kind of the step function higher. Most a lot of the world will wake up to the reasons as to why we need Bitcoin. And I think that probably will happen outside of the developed world first, because this is one of the things I put in the article, was someone in Venezuela or Nigeria or turkey or several other countries, argentina, it’s pretty easy to explain to them the benefits of Bitcoin, whereas someone in a developing nation might not be as readily apparent as why we need Bitcoin. But I think more people are waking up to it over time and then just more broadly about why we need sound money. And of course, I think Bitcoin is the best option to bring us to a world of sound money. I tend to be in the camp of our friend Safety, who talks about how fiat money leads to fiat food, leads to fiat architecture, leads to fiat lifestyle, leads to fiat time preference. And I don’t think it’s actually that radical of an idea. I think when you look back and you see that well, first let me say that because money is so critical as a tool that coordinates human behavior and coordinates human action and it records it, if you mess with that, I don’t think it’s that far fetched to say that the effects could be felt in every part of society. And then lastly, I would say to anyone who has the view that people who want to go on a sound money Bitcoin standard, that those people have some sort of radical view. What I usually try to remind them is that we’re not actually proposing some brand new system that hasn’t existed before. We’re actually proposing going back to something that existed for quite a long time. And you could much more easily argue that the current system is more of an experiment as opposed to a sound money system which again, existed for a very long time. So, I think Bitcoin has a bit of an uphill battle because a lot of the mainstream portrays it as this radical thesis. I think we could probably do a better job of explaining to people that, no, we’re actually suggesting we go back to something that already existed.

Stephan Livera – 01:02:32:

And something that works, right?. We are living in the fiat aberration. That’s really what we’re living in. And what we’re trying to do is go back to something that actually works really well. And that’s the irony of so obviously I agree with you and certainly the cultural point as well. That’s something I think we really are seen at it. I’ve written articles, I’ve done podcasts about that also. But look, I think it’s probably a good spot to finish up here. So just before we finish up, John, where can people find you online?

John Haar – 01:03:03:

Yeah, you can find me on Twitter. Now that I’m not finance, I have enacted Twitter, so it’s @john_at_swan, @john_at_swan and yeah, check out that article if you’d like. Like you said, Stephan, It’s on Swan’s website. It’s called How Legacy Finance Receives Bitcoin.

Stephan Livera – 01:03:21:

Fantastic. Well, all the links will be in the show notes. John, thank you for joining me today.

John Haar – 01:03:25:

Thanks Stephan, it’s great to be here.

Stephan Livera – 01:03:27:

I hope you enjoyed the show. And if you haven’t already, make sure you check out Per Bylund’s book which we spoke about in a recent episode. You can get all the show notes over at Thanks for listening and I’ll see you in the Citadels.

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