The podcast explores the concepts of money, gold, and the central bank. It discusses debunking myths about Bitcoin, the loss of global reserve status of the Pound Sterling, manipulation and mythologies surrounding money and gold, the challenges of debt and the potential of Bitcoin as an independent form of currency, the impact of returning to the gold standard during the Great Depression, England's dilemma regarding devaluing currency, the evolution of Britain's gold standard and its impact on the free market.
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Quick takeaways
Devaluing a currency leads to unpayable debts and challenges in repayment
Being a global reserve currency can erode the domestic industrial economy
Metrics like CPI and unemployment can be manipulated to perpetuate central banks' narratives
Deep dives
The devaluation of currency and its impact on debts
Devaluing a currency would have made it harder for Britain to pay off their debts, as the debts were primarily denominated in dollars. This echoes the problem faced by countries today, as devaluing their currencies leads to unpayable debts. However, devaluing the currency would have relieved the burden of credits owed to allied countries, as it would have made repayment easier for the debtors.
The struggle of returning to the gold standard
The return to gold at the pre-war value in 1925 became a mythological solution that was believed to have caused high unemployment throughout the rest of the 1920s and the subsequent downfall of the gold standard. However, the real cause of economic disturbance in Britain was the tremendous growth of the money supply from 1914 to 1919 and the rise of the money supply during the second half of the 1920s. Devaluation of the currency was not a viable solution for alleviating financial distress, as it would have made it harder to pay off debts denominated in dollars.
The impact of global reserve currency status
Being a global reserve currency allows a country to export inflation, but it also erodes the industrial economy. Just as England relied on its position as an international center of finance to balance trade, the US faces similar challenges today. While being a global reserve currency may seem advantageous, it can undermine the domestic industry and create a reliance on financialization.
The arbitrary nature of economic metrics
Focusing on metrics like CPI and unemployment can be misleading, as they can be manipulated and changed to suit a specific narrative. The central bank's goal is not to decrease prices, but rather to slow the rate of increase, while unemployment targets are used as a means to manage inflation. These metrics can obfuscate the truth and perpetuate narratives that benefit central banks' monetary policies.
The myth of the gold standard and the deception of hard money
The podcast episode discusses the myth surrounding the gold standard and the deception of hard money. It highlights how the gold standard, which was meant to be an apolitical and stable monetary system, was portrayed as a tool of political tyranny. The episode emphasizes the narrative created by proponents of credit expansion and deficit financing, led by figures like John Maynard Keynes. These narratives, which prioritize nominal values and seek to avoid painful industrial readjustments, have shaped economic ideologies and policies to this day. The episode also explores how vested interests and political pressure intervened in attempts to return to the gold standard, leading to the adoption of narratives that undermined the stability and effectiveness of the monetary system.
The impact of flawed monetary ideologies and the role of narratives
This part of the podcast episode delves into the impact of flawed monetary ideologies and the role of narratives in shaping economic policies. It highlights how the flawed belief in deficit financing and the prioritization of nominal wages over real wages have influenced economic decision-making. The episode discusses how these ideologies have led to the devaluation of hard money and the reliance on credit expansion. It also examines the deceptive narratives surrounding social justice and the manipulation of public sentiment to support policies that may not be in the long-term interest of economic stability. Overall, the episode emphasizes the importance of understanding the consequences of flawed monetary ideologies and the power of narratives in shaping economic systems and policies.
My friend and fellow student of money codenamed "Lester" joins me for a multi-episode conversation exploring the excellent book "The Twilight of Gold" by Melchior Palyi.
// OUTLINE // 00:00:00 - Coming up 00:00:43 - Intro 00:02:16 - Helping Lightning Startups with In Wolf's Clothing 00:03:02 - Planting Seeds of Knowledge about Bitcoin 00:05:45 - How to Approach People about Bitcoin 00:07:48 - Value of Money and Productive Investment 00:10:50 - The Central Myth of the Central Bank 0 0:12:08 - The List of Myths 00:15:17 - Non-Monetary Events Cause Credit Inflation 00:20:38 - Monetary Events on a Bitcoin Standard 00:24:24 - What If the Government Possessed Bitcoin Savings 00:26:52 - Secure Your Bitcoin Stash with the iCoin Hardware Wallet 00:27:48 - How the British Pound Lost the Status of Global Reserve 00:32:48 - Using the Gold Standard for Human Politics 00:37:15 - The Correlation between Unemployment and Inflation 00:39:13 - Numbers Lead to Myths, Myths Lead to Power 00:41:13 - The Key Man Risk 00:42:33 - Using Numbers to Control the Narrative 00:46:09 - The Current Narrative 00:49:56 - Global Reserve Currency Status Dilemma 00:54:39 - Trading Different Currencies Against One Another 00:57:24 - A Bitcoin Wallet with Privacy Built-In: Wasabi Wallet 00:58:12 - First Myth: Britain's Shift to Gold Standard in 1925 01:04:25 - Social Justice vs. Gold: The Value of Myth 01:22:04 - Using the Gold Standard for Political Tyranny 01:24:05 - Applying Popular Narrative for Deceptive Ideology 01:26:31 - Inflation Creates Allies of Inflation 01:29:04 - Breaking the Deception of Nominal Values 01:31:12 - Where to Find "Lester" on the Internet