Do you have debt? Are you wondering about the case for why you shouldn’t? Check out this episode with my friend and Bitcoin developer and advocate, Jimmy Song. We talk about his newest book, Fiat Ruins Everything:
- Why he wrote this book
- Why you should have zero debt
- Cultural issues
- Fiat morality
Links:
Sponsors:
- Pacific Bitcoin Festival (code LIVERA)
- CoinKite.com (code LIVERA)
- Mempool.space
Stephan Livera links:
- Follow me on X @stephanlivera
- Subscribe to the podcast
Podcast Transcript:
Stephan (00:00.63)
Jimmy, welcome back to the show, man.
Jimmy Song (00:03.087)
Well, thanks for having me again, Stephan. It’s always a pleasure to be on your show and talking about the interesting stuff that we tend to get into.
Stephan (00:11.722)
Yeah, fantastic. And of course, we’re going to talk today about your book, Fiat Ruins Everything. So let’s just firstly, give us a bit of a, I like to start with why. Why did you write this book?
Jimmy Song (00:24.619)
Yeah, so I wrote this book for a different audience than all my other books. All my other books are trying to get people outside of Bitcoin into Bitcoin. So it might be programmers with programming Bitcoin. It might be, you know, people that are into human rights with the little Bitcoin book or Christians with Thank God for Bitcoin or regulators and politicians with Bitcoin and the American dream. This one was different because I was aiming it squarely at Bitcoiners. I wanted
Bitcoiners to understand just how bad the fiat system is and all the horrible things, all the horrible incentives that it creates and things like that. And give them sort of, I guess, weapons for the bear market that I knew we were going to be in the middle of and we still are in the middle of. And give them some hope, I guess, and some moral…
backing for the convictions that they have. And that was the point. That’s why I wrote.
Stephan (01:25.994)
Yeah, yeah, I think it’s very valid as an approach because as you said, you’ve already written books for non Bitcoiners. And of course, there are so many people even as Bitcoiners, maybe sometimes they need some guidance in understanding, right? Because okay, many of us are Bitcoiners and we understand that the fiat currency is flawed, obviously, and central banking and the Fed, all of that pretty much every Bitcoiner, you know.
Jimmy Song (01:47.548)
Mm-hmm.
Jimmy Song (01:51.879)
Mm.
Stephan (01:52.326)
understands that but they may not understand the sheer extent to which Fiat has sort of touched all aspects of our lives and I think that’s something that you know, obviously I read the book because I gave a little just a short blurb for the front of the book and That was definitely something that came out to me in my reading of the book. And of course, I you know
Jimmy Song (02:03.815)
Mm-hmm.
Stephan (02:11.33)
Obviously we are sort of thinking along similar lines, so I kind of already agree with a lot of things. But for people who maybe are newer in their journey or maybe they’ve not studied the deleterious impacts of fiat money, do you wanna just touch on a few of the, hit a few of the highlights there.
Jimmy Song (02:14.479)
Mm-hmm.
Jimmy Song (02:28.627)
Yeah, so I organized the book to make sure that we hit sort of all the levels. So at the individual level, you know, we don’t have a good savings vehicle. So that has a lot of different consequences. If you don’t have a savings vehicle, then they have to provide you some sort of debt facility so that you can you can get into you. You can still acquire a lot of stuff, even if you’re not able to save long term.
or something like that. At the company level, at the group level, a lot of these corporations just get enormous as a result of feeding on free debt, essentially, free money. And at the nation state level, you get a surveillance state, you get a warfare state, you get all kinds of social safety nets and things like that as a result of this access to free money. And of course, at the global level,
You have the US dominating everything because it has the global reserve currency and they are able to put more of it at will. So, you know, those are just sort of like the rough highlights. And we and I get into a lot more detail about specific things within each of these layers. And I don’t think it’s a coincidence that we’ve had all kinds of degeneration.
I argue in the book that technologically speaking, we probably peaked around 1969 when man landed on the moon. Notice that we haven’t been back since like 1972 or something like that. Airline technology has more or less been stagnant since the late sixties. A lot of technologies actually haven’t improved very much and things have gotten worse.
And we’re on the decline for a lot of things as a result of the infection of fiat money, which essentially ossifies any economy and makes it more fragile and vulnerable to going backwards, which we’ve been for quite some time now.
Stephan (04:30.35)
Yeah, exactly. And I think something that really sticks out to me is this notion that people are talking about now of a so-called competence crisis, right? And then some, and I’m sure you’ve seen this as well, is that statism ruins a lot of things. And of course, fiat currency has this centralizing effect. It makes the government bigger. When obviously libertarians are, you know, cheering at this point, because yeah, that’s, that’s exactly the problem is that government has got involved and it’s almost
Jimmy Song (04:37.703)
Ha ha. Mm-hmm.
Jimmy Song (04:50.102)
No
Stephan (04:54.918)
frozen some of these industries because of it could be because of regulation, it could be because of other things as you said, because it’s corrupted all of us in some ways and now we’re trying to you know obviously adopt bitcoin and try to undo some of this damage that’s been done. So I’m curious if you have anything you want to add on this competence crisis.
Jimmy Song (04:57.075)
Hmm. Hmm-hmm.
Jimmy Song (05:03.953)
Mm.
Jimmy Song (05:13.455)
Yeah, I mean, there’s a story that I read a while back about the original 747 by Boeing. And from conception to actually having a physical Boeing plane, 747 plane that was operational, took something like 18 months. It was ridiculously fast compared to now because the 747 MAX, which is I think the latest version, took 10 years of development.
So what the heck happened? Why did it take 18 months back then and 10 years now? And the simple fact is we don’t have the talented engineers that we did back when the original 747 was created. Now, it’s not because we’ve gotten stupider, although there’s certainly some level of that as the education system emphasizes stuff like diversity, equity and inclusion instead of learning how to…
you know, get the correct derivative for a function or something like that. And of course that’s going to affect it. But a lot of the very smart people have been going into the wrong industries. You know, the last 50 years, they’ve been going into investment banking or real estate or something else that’s very financialized where they can make a lot of profit for doing relatively little work. And so we don’t get a lot of good aerospace engineers because they’re doing…
a Web3 startup or going to Wall Street or, you know, becoming a real estate mobile or something like that, because that’s where the incentives point. And that’s a large part of this competence crisis is that the incentives just aren’t there to create these wonderful things that we think should exist in society. Like, think about nuclear, right? Like that technology has not advanced an iota since
pretty much the 50s, we had nuclear submarines back in the 50s and the big innovation around nuclear submarines is that you didn’t need to refuel them, right? That you put it in a nuclear reactor into a submarine, next thing you know, you don’t have to refuel for 18 months, you just run off the fuel that’s there and this is obviously very important for submarines because every time…
Jimmy Song (07:36.303)
you refuel, you sort of like expose your position and you can’t get to very many places if you had to refuel on something like gasoline or something like that. So this was important technology and we were advancing and the actual mechanics of the nuclear technology on a nuclear submarine eventually became nuclear power plants, the same dual water.
You know, heating up steam and turning a turbine. That basic concept was the only thing that we’ve developed with nuclear, despite the fact that it has incredible energy density. It has enormous potential for all kinds of applications. We should have cars now that run on nuclear energy. And we wouldn’t have to refuel them for 18 months at least. Like, think about how much that would change the global economy.
No, instead we’ve ossified on gasoline, I mean, maybe electric vehicles a little bit, but they’re objectively worse than what we could get with something like nuclear, but we haven’t advanced that at all. Because again, those nuclear engineers of yesteryear have become investment bankers and JavaScript developers and…
you know, all kinds of rent-seeky jobs instead of the things that are actually useful.
Stephan (09:05.334)
Fascinating and of course there is you know some talk now about Smr’s these small modular reactors and maybe it seems like the tide is slowly turning back in favor of nuclear just a touch Not massively, but I you know I’m seeing a little bit of that trend I had an episode with a guy nuclear Bitcoin recently where we talked a little bit about that But certainly your point is there. I think maybe the
Jimmy Song (09:11.048)
Hmm.
Stephan (09:26.73)
Obviously I’m devil’s advocating here, but let’s say the argument is, oh Jimmy, but you know, that JavaScript developer can make a lot more money in his Web3 startup. Why shouldn’t he go work in Web3 and not become a nuclear engineer?
Jimmy Song (09:29.02)
Hehehehe
Jimmy Song (09:39.227)
Hehehehe
Jimmy Song (09:43.575)
Yeah, and that’s a perfectly rational thing to say. It’s just that the system itself incentivizes going towards wherever there is money. And there hasn’t been very much money going into nuclear, particularly because of the regulations around it, which honestly, a lot of fossil fuel companies have encouraged, you know, big oil and stuff like that. Now, I love oil and all that, but.
In a sense that these companies have become static instead of progressing and trying to develop new stuff They’re much more concerned with protecting their turf and that that’s kind of what what’s happened with that industry The the new money is coming into stuff like venture capital and you know all these You know hedge funds and things like that and the stuff that they favor are things that
Stephan (10:22.58)
Right.
Jimmy Song (10:36.859)
appreciate and price very quickly. They’re more concerned with getting a return very, very quickly. And certainly with a Web3 startup, you’re going to get a return on the tokens you bought very quickly, even if you don’t really have a product. So in a sense, the JavaScript developer working for a Web3 startup, they’re being rent seekers. And…
You know, it makes financial sense and this is where we can talk about the incentives of a fiat system, but they’re all off is what I’m saying. It should be going towards actual innovations like thorium reactors and, you know, stuff like that, that would advance the technology of nuclear significantly. But instead we’re getting useless web three startups that are
creating monkey JPEGs or something. And that’s not advancing anything at all. It is defrauding people, it’s playing financial games, it’s pushing paper around, and it doesn’t add anything to civilization. And that’s how civilization collapses.
Stephan (11:42.986)
Yeah, gotcha. And so some of this ties and some of it is like more Bitcoin arguments against the fiat system specifically, and some of it is maybe more broader libertarian arguments, right? So it’s this idea that because this state, the government exists, that big businesses have to lobby that state because they want favorable regulation. And then what that ends up doing is making an industry stagnate because these people are protecting themselves against future competition, right? So that’s kind of a broader libertarian argument, although of course, certainly this kind of Bitcoin argument against
Jimmy Song (11:47.587)
Mm.
Jimmy Song (11:59.091)
Mm-hmm.
Stephan (12:13.667)
centralizing nature also applies, right? So I guess, again, the devil’s advocate would be something like, oh, you know, look how much money is being spent on Web3 stuff, and are you just denying, are you a free market denier, Jimmy? Are we free market deniers?
Jimmy Song (12:30.587)
If it were a free market, then yeah, that argument would make sense, except it’s definitely not a free market, not when you have a money printer that can spend money on whatever. And we have to realize that it’s not just the government that gets to print the money. It’s a lot of banks of all types, the commercial bond market, the investment banking industry has all kinds of facilities to…
Stephan (12:33.378)
Ha ha.
Stephan (12:38.305)
Yeah.
Jimmy Song (12:59.643)
create money out of nothing, often in ways that are absolutely shocking, where you can get like a hundred X leverage on something. That’s a lot of money being printed, even if it’s temporary for the sake of these, these bankers. But going, going back to this idea that, that we’re, you know, the more money there is in something means that, you know, it’s the market choosing it. It definitely isn’t because it’s not coming from anyone’s savings.
It’s money being printed into existence. And that is very political. It’s very dependent on who’s doing the printing, first of all. So you had prime trust that basically could, you know, create money out of nothing. And they ended up using it for bonds, which seems safe, but ended up crushing them as interest rates went up and they were…
Jimmy Song (13:57.487)
they had to hold the bag or something like that. And they lost at least on paper significant amounts of money from the money that they created out of nothing. And this dynamic happens at a larger scale with VC money and so on, where money that is printed in other areas go to these rich people who then invest in these VC funds as a limited partner. And that…
in turn goes to these favored industries, which, you know, I honestly aren’t moving anything, the VC incentives are very off where, you know, they want to make money quickly. And because of sort of the, the postmodern investing mentality that we’ve gotten into, you know, it’s about the price appreciation of an equity rather than the dividends that it’s paying, which it used to be on their sound money. So.
As a result, what you get are things that can be hyped quickly, have a lot of retail mindshare. So something like a monkey JPEG actually gets more mindshare than a thorium reactor because, you know, very few retail people are going to touch a thorium reactor, even if it were fully operational. That’s, that’s not something people are too concerned about unless it happens to be in your backyard or something. So you, you get incentives that go towards.
just pumping and dumping, which is essentially what a lot of these investors do. So a lot of money being there just proves that there’s a lot of retail mind share around a particular thing and not necessarily that there’s actual innovation.
Stephan (15:38.106)
Yeah, let me summarize a few points there. So I think you made a lot of, you touched on a lot of interesting points there. Firstly, it’s this notion that we were up until recently in a very low rates environment, all kinds of crazy things are happening there because of this so-called chase for yield. And so what people who normally would have just been in the stocks and bonds and typical investments now, I don’t endorse bonds, obviously that’s funding the government, but you know, just in general, that’s what people did.
Jimmy Song (15:58.972)
I’m sorry.
Stephan (16:02.422)
Because they were chasing for yield, they look for more risky things. One of those more risky things is VC money, right? Is VC investing because it can have very high returns. And then it’s sort of, because we’re living in this overall fiat casino, it drives this kind of crazy incentive. Now on the other side, think about it like this. It’s that if somebody wanted to invest in actual energy projects,
Jimmy Song (16:05.603)
Mm-hmm. Mm-hmm, mm-hmm.
Stephan (16:23.51)
that we’re not wind and solar, they were not getting privilege from the government, right? So the government would say, oh, we’re gonna privilege wind and solar because again, this kind of woke ESG ideology is prioritizing the non-profitable, non-viable, non-reliable forms of energy like wind and solar, and they get a massive privilege from a regulatory standpoint and potentially even from a funding and credit standpoint. So if you are just trying to build coal, natural gas or nuclear, you’re at a massive disadvantage. And you’re worried that the investment that you make
Jimmy Song (16:23.745)
Mm-hmm.
Jimmy Song (16:30.722)
Mm-hmm.
Jimmy Song (16:51.068)
Mm.
Stephan (16:53.464)
to these things, whether it’s coal, natural gas, you know, etc, nuclear, you’re worried that 10 years down the line, they’re going to bet that the government is going to drop a ban hammer on you. And so that is just kind of, it just shows the sad state of the world that we are in today. And obviously, there’s a lot of work being done that we need to fix this. But that’s the that’s the state we’re in today, isn’t it?
Jimmy Song (17:11.303)
Hmm. Yeah, it’s an ossification of various things and it’s incentivized by Fiat money because as you alluded to earlier, most industries are basically five big companies and you get this centralizing force where you have the ability to use newly printed money for a massive advantage in your particular industry. So.
If you are a certain size, you’re going to have access to all kinds of loans, the commercial bond market and things like that where money comes into existence for your benefit. And you can use this massive, massive advantage in so many ways. So for example, you can hire the best people in a particular industry and pay them more than any other startup is willing to pay. So Google and Facebook have used this strategy to keep out competitors.
You can also use scale to under price absolutely everybody else. And Amazon and Walmart have used this strategy. You can use the regulatory state to go lobby. If you’re a small mom in a pop shop, you have no budget to go and lobby Congress. But if you’re a large player, then you can spread it over many more units. So you can afford lobbying, which makes a lot more sense.
worse comes to worse, you could just go and straight up acquire smaller competitors. And these are all ways in which the big get bigger and the small get crushed. So you get four or five big players in every single industry. You can look at accounting. It’s four major firms in the United States. You can look at food. It’s five major companies in the United States. You can look at airlines. It’s three major companies in the United States. You could look at health care. It’s six major insurers in the United States.
It becomes giant companies that take control of everything. And it’s not exactly a monopoly, but it’s maybe a duopoly or a triopoly or a quintopoly or something like that. And they’re able to collude and use the regulatory state to put all sorts of barriers against competition. And you essentially get ossification across the board, across everything, because of this advantage of fiat money that these companies have. And it’s unfortunate, but that means that
Jimmy Song (19:27.719)
we get poor because the products aren’t getting better fast enough. And the bureaucratic state is growing much faster than the rate of everything else. So we’re getting stolen from. And the evidence is in stuff that you in the way that life has changed over the last 30 years. When I was growing up, my mom stayed home. How many people can say that now? Both parents work in a.
a very large number of families. When I was growing up, you know, my parents were able to buy a house, you know, fairly easily without too much debt. You know, like how many people can say that around the world? Real estate is just absolutely insane. So it’s no wonder people can’t have large families because both parents are working. That puts a hard cap on the number of kids you’re gonna be able to have. And…
the real estate that you’d need in order to raise a large family is just not there. It costs too much. So we’re getting poorer as a result of all of this ossification of all of the fiat money printing, all of the rent seeking that’s happening. And, you know, we’re paying for it as a society in so many ways that are very obvious once you think about it, but it is not really generally recognized.
Stephan (20:48.466)
Right, there’s so much regulation, so much bureaucracy, as you’ve pointed out, and I think in one of your talks you pointed out how there’s been this massive growth in, for example, in universities. There’s so many more administrators now than there are actually teaching staff, right? And I’m probably, I’m sure if you looked in other industries, you’d see the similar kinds of things, where you just have all these people who are just colloquially sucking at the teat and not really producing a lot of value. Now, one challenge that…
Jimmy Song (21:01.574)
Oh.
Jimmy Song (21:09.284)
Mm-hmm.
Stephan (21:13.29)
we are all faced with as Bitcoiners, and I think you were just tweeting this out on Twitter recently, it’s this idea that you should just have zero debt. Now, I’m with you, like I personally have zero debt also, but let’s talk about that. Like, what should a Bitcoiner or, you know, just a person who’s trying to think about this do because they may be facing a world of competition and, you know, it may be certain difficulty. So can you just make the high level case? Why should you have zero debt? And, you know, why is that a good…
Jimmy Song (21:21.29)
Mm.
Jimmy Song (21:31.471)
Mm.
Jimmy Song (21:41.049)
Mm-hmm.
Stephan (21:42.31)
idea to go for.
Jimmy Song (21:43.775)
Yeah, so I’ll give you one, a practical argument and two, a moral argument. The practical argument is this. If you’re in debt, you are essentially on leverage. So if you take out a mortgage, for example, and you put 20% down, you are getting 5x leverage. So you are five times more sensitive to the price of a house.
And this is no different than an investment bank doing a 100x FX trade or something like that. It’s just different scales, obviously. You’re not taking out $30 billion in a leveraged trade or something like that. You’re doing $500,000 or something to that effect. But it’s the same concept. And the thing about leveraged trading is that you can blow up real quick. Right?
Say there’s a real estate crash and your home is underwater. Well, now you’re in a lot of trouble. You’ve put a lot of equity into something that’s not worth nothing. So there’s, from a practical perspective, a risk thing that happens with any kind of leverage.
All debt, if you think about it, is leverage in one direction or another. Now, it might be, you know, maybe you can do, you know, a lot less than 5X. Maybe you do 0.5X or something like that. And there’s maybe an argument to be made, especially if the money that you’re getting is
not is coming from somebody’s savings instead of printed into existence. But, you know, it’s still leverage. And I think it’s taking on undue risk that you don’t need to be taking. If you’re if you can get out of that, if you know, it’s basically gambling is what I’m saying with that. And gambling always has risk. And if you don’t have to take that risk and if there’s all kinds of.
Jimmy Song (23:39.495)
future events that might cause you to get completely destroyed, you try not to do that, right? Like this is like a rule of trading is that, just don’t blow up, like survive. That’s like kind of rule number one. So that’s one aspect of it. The other aspect would be more moral, which is that every time money is printed into existence, it dilutes every silver.
And unfortunately, most of the debt that you have access to, including credit card debt, mortgage debt, car loans or student loans or whatever, all of that money is printed on your behalf. It’s created when you take out a loan. So in a sense, every time you take out a loan where money is printed from nothing, you are diluting every holder of the currency. Now,
You might not think that so bad because, you know, the people that own it are, what, like banks or something and, you know, oh, it’s okay to see a phone banks or whatever. Actually, like most rich people, like they, they hold enormous amounts of that. The everyone is up to their eyeballs in that every major company is up to their eyeballs in that and stuff. They might have a cash balance, but they also probably have a significant amount of that because.
It is so freaking cheap. You had a zero interest rate environment for a long time and they took advantage of it, right? They are stealing just as much as everybody else. So when you are actually getting a loan for $500,000 for your mortgage, who are you actually stealing from?
Well, the people that are actually holding on to the currency. This obviously includes a lot of people in the US and so on. But it’s also people in a lot of developing countries and the places where you have hyperinflation and so on. This is the place where they want to cash the most. And those are those are the people that are being diluted every time the money expands. So the orphan in North Korea that’s buying, you know,
Jimmy Song (25:49.511)
goods in the black market because the U.S. dollar is the most desirable currency, they’re getting diluted. And just to give you an idea of how real this can be, during the pandemic, the black market prices in North Korea doubled. So, you know, same bowl of rice. It could it went from, you know, some amount to double the amount. And if you think about it, that is the that was from all of the money.
printing that happened during COVID. And it’s happening on a constant basis. This is the monetary expansion that’s happening in the real world. So morally speaking, you’re kind of stealing from everybody when you get these giant loans. So that would be the moral argument for why you shouldn’t be taking out that.
Stephan (26:40.658)
Yeah, okay. So as I said, I have zero debt, but let me steal man for a few different arguments and let’s see what you think and how you would respond because there may be listeners who are in that position. So, okay, so the let’s say the lowest level of this argument, what about having to compete with the Joneses, right? What about the people who, you know, they’ve got this nice car or that guy, the guy living next to you, maybe he’s got a nice suit and he goes to work in a nice suit or he’s got a nice house, nice car, whatever. He wants to keep up with the Joneses. What about that?
Jimmy Song (26:43.849)
Mm-hmm. Ha ha ha.
Jimmy Song (26:49.064)
Mm.
Jimmy Song (26:57.241)
Mm.
Mm-hmm.
Jimmy Song (27:03.737)
Mm-hmm.
Jimmy Song (27:10.852)
Yeah, and you certainly can do that through debt, but that’s a very high time preference mentality and that’s not going to get you very far in any sort of sound money economy. Those are the people that get wrecked first. And even in fiat money, those are the people that end up declaring bankruptcy because they’re trying to keep up with the Joneses instead of thinking about what’s actually valuable to them.
So, you know, debt as a way to fuel a lifestyle is going to not end very well for most people, unless you happen to hit the lottery or something like that, which, honestly, some people that’s their out is, okay, maybe I can win the lottery or something. That’s it’s not going to end well, because if you’re spending more than you earn, you know, bankruptcy is kind of inevitable.
Jimmy Song (28:08.087)
leveling up your skills. Maybe you’re a doctor, maybe you can make an argument there or something like that. And you’re in med school and you haven’t hit the big jackpot of your salary yet. I mean, but, you know, by and large, most people are not going to increase their salary that much and the debt is going to continue to accumulate as you as you do that. And again, that’s very risky. And it prevents.
you’re being able to save among other things.
Stephan (28:41.642)
Yeah, and so, and it is also true that actually many high earning professionals, even doctors and lawyers, many of them, even once they are earning high levels, they are still living beyond their means, right? And this is, you know, a common story, right? If you’re a listener, talk to your doctor or lawyer friends, they’ll probably tell you they’ve got colleagues who are doing that, right? But okay, so that would be another steel man. What about student debt and university debt? Should that be, you know, should we consider that as a bad thing? Should people be shunning university or how, where are you on that?
Jimmy Song (28:51.22)
Mm-hmm.
Jimmy Song (29:01.167)
Mm.
Jimmy Song (29:10.751)
Yeah, I mean, again, that’s debt that’s created out of nothing. It just comes into existence for your for your education, I guess. I don’t think you should, because it it’s not just debt that’s, you know, expanding the money supply. It’s that that’s not.
dischargeable and bankruptcy. So it’s a particularly pernicious form of debt. And this is the other thing about that I forgot to mention in the practical side. When you have debt, you’re pretty much tied down. You’re enslaved. And this is, I think, what’s triggering the discussion is the tweet that I made about the level of debt that you have is the level of monetary enslavement that you’re under. When you have debt, you really can’t…
do anything else because you have to pay that off. And certainly with student debt, that becomes sort of like the top of mind thing. You know, I made the analogy that it’s kind of like being a monetary zombie, because when you’re in debt, then the only thing that you care about is not being a zombie, right? Not having to pay this debt off. And in a sense, the entire, you know,
population of people with like enormous amounts of student debt. That’s all their care about almost in politics and so on. So they will vote for anything that will give them relief on that front rather than continue to try to pay this enormous debt off. And that’s a very unfortunate situation because you get politicians that will
offer you free money and expanding the monetary supply is not a problem for them because it’s basically a cost that they’re not bearing. But that would be the main thing is that you don’t really wanna tie yourself down to anything. Unfortunately, a lot of people get into that and then they can’t get out of the situation that they’re in no matter how unsatisfactory it may be.
Jimmy Song (31:25.623)
And they can’t live out their dreams, the actual things that they want. I mean, one of the things that I got to do and, you know, I got to visit you, Stephan, in Dubai, was travel the world with my family. And I was able to do that because I didn’t have debt, because I wasn’t tied down to anything. I wasn’t forced to work for a corporation and so on. But if you have debt, that is not an option. And
the choices that you have, the freedom that you have, get severely limited. And unfortunately, student debt is probably one of the most pernicious forms of debt because it’s not dischargeable. And that means that ironically, they tell you that you can fulfill your dreams by going to college. Really, you’re restricting your dreams by going to college and taking on student loans.
Stephan (32:16.478)
Right, and I think in practice there are many cheaper ways to…
learn some of those same skills, whether that’s working for somebody else and learning from them in the master apprentice model or maybe online learning, there’s courses and all kinds of things. So another one people are probably thinking is, well, hang on, Jimmy, what about mortgages? Like, is it important that you own the house that you raised your family in? Or is it okay to just rent instead if you can’t afford that? Because that’s also another area where we’re starting to see this question of cost of living around the world. So for example, I know there are stories in Sydney, back in Sydney, Australia.
Jimmy Song (32:32.251)
Hmm.
Stephan (32:49.648)
I’m hearing stories about people who just simply cannot afford a place anywhere even near to where they work. And so it’s just becoming extremely unaffordable. What do you say to that? How should people deal with mortgages and the housing situation if they can’t have debt?
Jimmy Song (32:55.409)
Mm-hmm.
Jimmy Song (33:04.983)
Yeah, the unfortunate thing about housing right now is that it’s conflated with the store of value premium that it already represents. So most people don’t have very many ways to save money. And as you know, there’s only really two other forms of saving besides something like Bitcoin and it’s stocks and real estate. So real estate has this giant store of value premium.
because so many people see it as a good way to save. And that also means that houses are way more expensive because of that premium. Just looking at the prices from maybe even 30 years ago, it’s absolutely ridiculous how much higher real estate has gotten. And if you compare it to pre…
1971, then the difference is even starker. It’s just absolutely insane what houses cost versus your income compared to then and now. Used to be about four times your annual income. Now it’s like eight times something like that. So it’s gotten much, much worse. So, you know, having to taking on debt to afford it.
I mean, I understand why people do it because real estate has been a decent store of value. But again, there’s a lot of risk because there can be real estate crashes. And if you don’t survive it, then you’re back to zero. You’re going to get absolutely creamed on whatever equity that you’ve earned. It might just disappear one day because the market crashes.
Stephan (34:50.954)
You might be under water, yeah.
Jimmy Song (34:53.243)
So I don’t think mortgages are necessarily that great. I mean, in special circumstances and assuming that the market reacts the same way it has with regard to real estate during the monetary expansion phase, maybe it’s a good investment in that regard. Maybe you can win and maybe even a large number of times you can win. But
there are enough times where you lose, where this has to be a consideration. And thinking about just how it works, at least in the United States, the government essentially subsidizes all these mortgages. They’re not at the natural rate of interest or whatever. And they’re unnaturally low for the amount of risk that the bank is taking or the actual creditors are taking. I mean, think about it, that’s…
30 years, the term is enormous. You know, you might change many careers in that time and you might have very different credit ratings during that time. The amount is also enormous. It’s like many times your income. So, I mean, it’s very difficult. The market is very volatile. The, you know, the interest rate isn’t very high. So it’s definitely subsidized to a large degree.
But if the government keeps subsidizing high real estate prices, that’s one of the triggers of hyperinflation. When you get things that are way too expensive, people can’t afford it. Well, then wages have to keep up and they subsidize wages somehow or put like, you know, a higher minimum wage or whatever. Like these are these are the ways that you get the collapse of the currency. Now, you might want that, but.
In a sense, every time you’re doing that, you’re still stealing from everybody else. And I think it’s just more honest to, you know, be in a sound money system and not have to worry about all of these moral conjurys.
Stephan (36:52.49)
Yeah, of course. I mean, certainly I think most of them would agree it’s better to be in a sound mining system, but maybe the question would be what about people today? Right? Like obviously they may want to live in that world, but we’d still live in the Fiat system today. So what would you say people should be doing today? Like would you say basically if you can’t afford it outright, just rent it? Would that be basically?
Jimmy Song (36:59.466)
Mmm.
Mm.
Jimmy Song (37:09.763)
Yeah, I would say so. Or like, go buy something you can’t afford. I mean, there’s, yeah, further out or in a different city. I mean, there are lots of really interesting cities all over the world. It’s just that, you know, people tend to congregate around the places where a lot of people are hiring and those.
Stephan (37:14.334)
or buy further out kind of thing.
Jimmy Song (37:30.575)
Those places tend to be where the giant corporations are. And those giant corporations are obviously subsidized by fiat money as well. So it’s all kind of a weird shell game. I would encourage people to have a different lifestyle change. I think be more of an entrepreneur wherever you’re at. And it doesn’t have to be like the typical VC startup where you’re fattening yourself as far as fast as you can.
as a company to reach the billion dollar mark so you can get the advantages of being a large company. Instead, just like provide value somewhere in the economy. Doesn’t have to be very big. You can have a coin laundry mat or something, you know? But something that provides value and has a reasonable chance of success rather than going and doing this other stuff because
In a sense, you’re feeding into the fiat system by trying to get these properties in these very expensive places and there’s significantly more risk involved in them.
Stephan (38:38.23)
Gotcha. And so one other area related to this topic of debt and so on, that there may be people who consider themselves very fiscally savvy, that maybe they think they know how to play the leverage casino, or maybe to steal man it a little bit, they may say, well, I believe Fiat currencies on the way down, I’m helping advance the end of the Fiat system by essentially going short Fiat by having a loan.
Jimmy Song (38:44.239)
Hmm.
Jimmy Song (38:58.844)
Mm-hmm.
Stephan (39:05.738)
Denominated in fiat which they believe fiat is going to devalue faster than bitcoin is going to like they believe bitcoin is going to go up faster and Obviously the fiat value is going to go down meaning in real terms the amount of the amount they’re paying back is going down So what would you say to that people to those people? Let’s call the more fiscally savvy people who believe that you know They’re going to win out of this and they’re sort of in some sense helping end the fiat system
Jimmy Song (39:05.924)
Hmm.
Jimmy Song (39:13.115)
Mm-hmm.
Jimmy Song (39:18.021)
Mm-hmm.
Jimmy Song (39:29.947)
Yeah, I mean, just ask anyone at BitMEX. I mean, what you’re actually doing by doing that is leveraging long on Bitcoin. Now, there’s nothing wrong with that. I like in like conceptually speaking. But the but this is what happens to people that leverage is that you get wrecked in situations where you wouldn’t otherwise get wrecked if you didn’t take out leverage. And that happened like Bitcoin might be going up over the long term, but
It only takes one event to get you to zero. At that point, you’re not benefiting at all. So again, this is a major risk. And there’s a lot of people that leverage long and then you see a weird movement from the market and then bam, you’re at zero. This is the thing about gambling is that even if you have a positive expectation on a particular trade, it only takes one.
move to zero for you to be completely out. And there’s a reason why a lot of traders don’t last that long. Even if you’re a pretty good trader, it only takes you getting wrecked once for you to completely get destroyed. And that’s kind of how this whole thing works. So if you’re taking out loans, maybe you’re not doing a 100X leverage on BitMax or whatever.
But if you are taking out loans, it is a form of leverage, right? Like if Bitcoin goes down sufficiently and you can’t weather that storm, if you’re not surviving, then you’re going to get wrecked. And that’s from a very practical point of view, a real existential risk. Now, maybe you’re an amazing trader and there are sort of like the 1% that are extremely good at it and know how to do it. I would still say that you’re essentially stealing from other people.
Not the people on the other side of the trade, although in some sense, you know, at least they’re voluntary So, you know, you’re not stealing from them But the leverage that you are able to get dilutes the currency and you are once again stealing from the North Korean orphan or the Guy in Nigeria that’s just trying to get by right like and have enough money to buy food for next week or whatever
Jimmy Song (41:48.515)
I don’t think that’s moral and there are better ways to make money that actually provide value. And I think that’s the direction that Bitcoin incentivizes us to. And not coincidentally, it’s also very moral because you provide value. It’s a voluntary trade.
Stephan (42:06.934)
Gotcha. And so I guess a few other areas that people could, I mean, there’s kind of little disagreements people could have. They could say, well, okay, BitMEX, you can get liquidated. If I go and take out a loan in a fiat bank, they’re not going to liquidate me. However, I may be underwater on my loan. That’s the risk that they could potentially take. Right. But I think the broad, you’ve made the broad point though. So one other, I guess one other thing on this topic, what if somebody agrees, but they’ve already made the mistake? They’re already in debt now. What should they do?
Jimmy Song (42:20.858)
Hmm.
Jimmy Song (42:30.567)
Hmm. You know, I’ll try to work to get out of debt as soon as possible. And this requires a lot more discipline and living, you know, within your means and so on and trying to save and doing that. It’s very hard because essentially what debt did in the past was bring consumption forward. Maybe you wanted that house, maybe you wanted that car, maybe you wanted something. But I would submit to you that is…
a character flaw in trying to bring consumption forward. If you think about your children, for example, if you just gave them a toy and told them, okay, well, you can pay me back over the next year by doing chores or something, they’re going to feel like a slave. They’re going to build up resentment and so on. But whereas if you tell them, okay, well, I’ll pay you this much for doing X, Y, or Z, and when you save up enough money, then you can get that.
It’s much better for their character. And I think that’s what we have to realize is that we’ve had this very high time preference mentality of bringing consumption forward through debt. And it’s been bad for our character. And this is the price we have to pay to get rid of that, those sort of monetary sins, essentially, that we’ve committed in the past. And in a sense, it’ll make you a better person. I really do believe that.
out of that. You know, there’s a lot of programs to help you in that regard. I know Dave Ramsey, even though he’s very anti Bitcoin, he helps a lot of people get out of that. I will point out that once they’re out of that, that he’s not really made anyone really rich because he doesn’t know about the other side of the equation saving, which is where Bitcoin can come in. But the debt side, he’s very good at. And I would encourage people that are in debt
some of these programs where they help you get out of debt and to change your mentality so that you’re much more into saving and stuff and instead of saving in the stupid stuff that he recommends, save in Bitcoin. For the long term it’s going to be a lot better.
Stephan (44:47.682)
When it comes to fiat currency, part of what you talked about in the book also was around cultural impacts and things like how we interact with our family or how people even do dating today and the way marriage works nowadays. So do you wanna expand a little bit on the cultural impacts? And I think this is an area where a lot of people almost.
Jimmy Song (44:54.504)
Mm.
Jimmy Song (45:01.023)
Mm.
Stephan (45:09.638)
neglect or deny that aspect. Of course, people like myself and Safedean and yourself and others have been very vocal about this, but do you want to just spell out a little bit of the cultural impacts of fiat currency? What does it mean for us?
Jimmy Song (45:13.915)
Mm-hmm.
Mm-hmm.
Jimmy Song (45:21.294)
Yeah, the ability to bring consumption forward honestly has meant that we are…
less dependent on the societal bonds that we used to have. So you can now sort of borrow from a faceless entity, right? And be indebted to them in monetary terms by taking out loans of various kinds. So you can get the sweet card that you wanted and just, you know, pay it over a long period of time. Now, what’s really pernicious about that is that it enslaves you to that.
lender and you now have to pay this off or else you lose the car or you lose the house or whatever. And so you’re under constant pressure and this is what I call monetary enslavement. And that’s unfortunately the mentality that most people are in instead of thinking about new goods and services that you can bring to the market and making interesting things. They’re thinking about paying off debt and that’s the mentality that most people are in rather than…
doing this other stuff. And that consumption, immediate consumption also means that you’re not as disciplined. And traditionally, if you wanted to bring consumption forward, you went to your family and you said, hey, can you lend me something so I can afford a house? And that relationship was what, you know, sort of enforced that payback and stuff like that. And you were…
way more grateful for the loan rather than sort of thinking it as a right or an entitlement. And that those bonds would get stronger, you know, as you paid it off and stuff, unless you completely squelched on the loan, in which case you’d be cut off from your family and all that other stuff, which was honestly a very good determent. It made you…
Jimmy Song (47:15.455)
want to satisfy your family, made you more connected to your family, made you want to make sure that they were happy and so on. So family bonds were a lot closer because that’s who you depended on. Now, because of Fiat Money.
you’re now dependent on banks and government and all these social services that they provide quote unquote for free. Really they’re stealing from everybody else. And that’s meant that you know you don’t have as close a bond with other people and therefore you’re not going to be dependent on your family. You’re not.
going to have more children, children were an asset under sound money for obvious reasons because they, you know, whatever skills that they bring to the table, now it’s useful for everybody else in the family. So like, I don’t know how many of your podcast listeners have like a doctor in your family, right? But if you have a medical problem, you’re calling that doctor, right? That’s saying, hey, like I have this pain here, do I need to worry? Stuff like that, or, you know, I’m getting treatment for this, is this normal or whatever.
Or if you have a lawyer in your family, call them up whenever you have anything legal. If you have a real estate agent in your family, call them up when you’re thinking about buying a house. Is this a good house? Is this not? Do I need to know about something?
That’s how it was, but like multiplied by 10 in any sort of like sound money economy because you are first of all, a lot closer, but each person was an asset to everybody else and you get the network effects where, the connections are the square of the number of actual people.
Jimmy Song (48:56.647)
that were very natural. Like, think about hiring, you know, how hard that is if you have a business. But, you know, if you have a family, well, you can hire relatives. That’s so much easier. You have this trust relationship. You know that they’re not going to go steal from you and they’re going to try to protect your business because there’s a connection other than employer-employee.
Stephan (49:10.774)
Hmm.
Jimmy Song (49:18.963)
So all of those things used to be very normal where you had these tight bonds within families and you had clans and tribes and you had groups that were much more intimately connected through trade, through relationships and things like that.
But all of that has more or less weakened and been debased through fiat money because you have this alternate system where you can borrow essentially infinitely from the government or from banks and things like that in a variety of different ways. That caused the disintegration of all of these wonderful relationships that made a large part of our human existence.
Stephan (49:48.941)
Yeah.
Jimmy Song (50:03.907)
It’s almost unrecognizable in the West.
Stephan (50:07.166)
Yeah, it’s not uncontroversial to me that the state and fiat currency have undermined the role for family and community and even, yeah, just like religion as well. That these used to be alternate methods and ways by people by which people did things. And it was a social tie that they had in their community or with their family.
Jimmy Song (50:14.035)
Mm-hmm.
Stephan (50:27.082)
And the state undermines that and it replaces, because in a way there’s a very insidious incentive to make you dependent on the state version of something instead of the family or the social version of something. And that is also a very, obviously a bad trend. One other area I wanna touch on before we finish up is around Fiat’s morality. And you made a few, let’s say, predictions about crazy outcomes that are coming. And of course, people could make the same things about what conservatives were saying maybe 20, 30 years ago about, let’s say, gay marriage as an example, right? Like that there would be kind of
Jimmy Song (50:28.956)
Hmm.
Jimmy Song (50:43.475)
Mm-hmm. Mm. Mm-hmm.
Jimmy Song (50:53.907)
Mm-hmm.
Stephan (50:57.016)
stepping stones or you know things happening. So as an example you said you know hate speech quote-unquote hate speech will be silenced or children will be seen as property of the state or that you know we must all inject Pfizer’s latest project you know or that inflation is caused by anything other than corporate greed and you get in trouble if you say that. So where do some of these quote-unquote big predictions come from and how long do you think until they come true?
Jimmy Song (51:10.271)
Heheheheh Mm-hmm
Jimmy Song (51:24.991)
Yeah, I mean, if you look at the incentives, their incentive is to always hide the money printing, always hide the fact that you’re being stolen from and so on. So the corporate green one is something that was obvious from the beginning. We’re seeing that with Trudeau. He’s blaming the grocery stores for charging too much money. He’s sort of pulling the wool over the eyes of anyone that’s actually seeing what’s happening, right? They printed a whole…
crap ton of money. And confusion is the friend of every fiat politician because it gives them plausible deniability over the implicit taxation of inflation. And in any explicit tax, people just protest because you’re literally taking my money. But with inflation, you’re not literally taking my money. You are…
diluting my money by creating more money. And so there’s some level of plausible deniability given that people don’t have enough economics education. And we certainly don’t under this sort of indoctrinated K to 12 educational industrial complex. And as a result, they’re able to get away with things like that. We’re seeing chance like, you know, we’re coming for your children from the transgender movement.
There are various officials already saying like, you know, your children belong to us or something like that or You know weird laws getting passed in California where you know If you don’t affirm the gender choices of your six-year-old they can get taken away from you and things like that it’s been trending in this direction because in many ways the state views the family bonds as
as an enemy of the state bonds that they want you to have, the dependency that they want you to have, as you alluded to earlier. So, a lot of this is unfortunately coming true, and we are getting blamed for a lot of stuff that’s really the state’s fault, that’s fiat money’s fault. And it’s unfortunate, but utterly, utterly predictable because…
Jimmy Song (53:45.848)
These have been tried over and over again in various societies where the government wanted more control over your life.
Stephan (53:56.498)
Excellent. Well, as I said, I had a great time reading the book. I obviously wrote a small little blurb for it because obviously, you know, I think it’s a great book. So Jimmy, tell people where they can get it.
Jimmy Song (54:07.943)
Yeah, so you can get it at Amazon. You can just search Fiat Ruins, everything, at least in the United States and Australia and several other English speaking places. The audio book and the ebook are still in the works, so they will be published in the next month or so. If you want to pay Bitcoin for it, you can go to bitcoinmagazine.com and…
click shop and they have this book available for Bitcoin. I’m also selling signed copies on fiatruinseverything.com so you can go there and click to get a signed copy from me. Once I get hardcovers, I’ll also have that available there. I’m using Zap private, by the way. So those are some of the places that you can get it. I’m trying to make it.
more available in different places. I’ll certainly have it at Bitcoin Amsterdam if you’re going to be at that conference because Bitcoin Magazine is my publisher. So, you know, those are the many different ways.
Stephan (55:18.754)
Fantastic. Well Jimmy, it’s been great to chat with you and I hope to see you soon.
Jimmy Song (55:22.16)
Yeah.