YouSaid · the spoken record

Saifedean Ammous

lines on the record: 287
first: 2022-05-11
most recent: 2022-05-11
sittings or episodes: 1
sources: podcast

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“Is bad in the first place is because it is a government monopoly, is because of government intervention. But the second thing is that this notion that we could just pass a law and fix what's wrong and make it better ignores the fundamental underlying reality, which is that what you're doing is you're offering only one way for this problem to be solved and making all other solutions practically illegal. You're taking taxpayer money. You're putting guns to people's heads to take their money, to use it to build, say, this one solution for a power plant, but you're preventing the free market process from providing us with other alternatives.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. And if we do end up in a situation where there's one power plant for an area, then if the market ends up centralizing all of it into one power plant, I don't see that as a problem. There are places, you know, there's a small town with only one barber shop. Is that a catastrophe? No, because they don't need two barbershops. Now, if that barbershop started to take advantage of people, started to charge higher price, well, then that's just an opportunity for others to step in and put them in their place. And that's the same thing with power plants. It's the same thing with everything. Ultimately, I think the key thing is this. From the central planning perspective, they'll present you the problem as it is and they'll tell you, well, this is bad. So the fix, you know, and what we can do is better. So let's stop what's bad and do what is better. Two problems here. Usually the reason that the thing is.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“There's also inefficiencies in centralization because the more centralized and the bigger the plant is, the further away a lot of the population is going to be. So you're going to be losing a lot of the electricity and transmission.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“At all. I used to believe in it. I was pretty much a Keynesian when I first started my graduate studies at Columbia. And no, I don't find that compelling at all because I think all these examples that they mention of natural monopolies or economies of scale that can only fit at a scale of government. It's always, you know, government bans people from opening power plants. And then there's only one power plant and they need to be in charge of it. But in reality No, in reality, power plants can exist at all kinds of manners of scales of operation. And yes, of course, there are benefits to centralization in power plants in particular because there's efficiency in generation. One big power plant is more efficient than 10 equivalent smaller power plants.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess perhaps you could say that the economies of scale argument that some things must exist at a very hard, a very large scale, and therefore you would want political accountability of the people who manage them. This is kind of the argument that's given for infrastructure monopolies. For instance, roads or electricity, that let's say we live in a country, we need one power plant. The bigger the power plant, the better off we will all be. And there's a natural monopoly in the power plant business. So we're going to have to have one power plant. And since it's only one power plant, then we can't just let anybody own it because then they're going to make it too expensive. So we need to have the government own it. So it can make it too expensive.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“I can repeat many other cases, but I don't find any of them compelling for the reason that I mentioned, which is that ultimately they all rely on putting a gun to somebody's head and using the threat of force. So that's for me can never be justifiable. Whatever the ends are, if the means are violence and the threat of violence, then the ends aren't justified. Everything that's good governments will use as an excuse to justify coercion. So, you know, what do you like? You like motherhood and apple pie? Well, government needs to ensure that motherhood works well and we need government central planning of birth. We need regulations on birth, for instance, we need regulations on how people give birth. We need to ban people from giving birth in traditional ways that have been tried for thousands of years. We need to force people to do things in the modern scientific way.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Economics, you're forcing people to do things. Let's stop these people from doing this job because it's bad for the economy and let's get them to do that job. Let's force them to pay this price. Let's tax them this much. Let's prevent them from using gold as money and force them to use our credit as money. So it has to rely on coercion. There's no central planning without coercion. And coercion is a crime, in my opinion. There's no way that it is justifiable morally or effort.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Is simply the notion of individuals as having their own inalienable right to decide what they want to do with themselves. The only way that you can give yourself the idea that you get to be planner is ultimately you think you're better than other people. You think your choice, your judgment, overrides mine. And I don't think that's a defensible position. I think I'm in no position to want to force anybody ever. I will never want to force anybody to do anything they don't want. The Keynesian perspective, the central planning perspective is unlike physics, you know, which is let's force a bunch of particles to sit and unlap so that we can study them.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Much is going to fly. Human beings are much more complex. They have a will inside them. And this is really the humility to understand that you are a human being and other people are also human beings, just like you, and that every person wakes up every morning and they have a million things in their mind, a million things they care about, a million things they want to do. you will never be able to make the decisions for somebody else, let alone for millions of other people. So this is one path by which you arrive at the conclusion that free markets are better because you realize that all the people that think that they can centrally plan markets can't actually do that and that there's really nothing scientific about them except essentially the rituals they ape of the scientific process. And the other path I think that makes you arrive at the Austrian perspective or the libertarian perspective, I should say.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, and you could arrive at it through two paths. The more practical path which most scientific-minded people arrive at. I came from an engineering background. So I initially had this idea that what is lacking in economics is mathematicization. We need to have better math models. We need to get all of those tools from engineering, apply them to economics, and we'll be able to plan the world economy and make it work better. And then you start actually trying to solve problems, trying to actually calculate them. And you realize nobody can have that ability because the difference ultimately comes down to the fact we can't have experiments. And the reason we can't have experiments is that you can experiment on particles of a gas. You can't experiment on human beings and entire economies. And because particles of a gas are just dumb matter. And so, you know, you kick matter in a certain way. You can calculate exactly how...”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but I don't make quantitatively certain statements. That's the thing. In economics, we don't make quantitative predictions. We cannot do that because we don't have experiments. But we can understand how the world actually works with humility. This is really the key difference, that the Keynesians think they just want to copy the methods of physics, and then that's just going to give them the certainty of the results of physics, which is like me saying I'm just going to put a red blanket on my back and jump from the fourth floor because I'm Superman. Well, it's not the red blanket that's going to make me Superman. There's a lot more to it.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Human nature, and that's why economics cannot make the claims that physics can make. So with physics, you can predict that if you get this gas at this pressure, at this volume, the temperature will be that much. And you can make that prediction and test it a million times, and you'll always get the precisely correct answer. With economics, we can't make quantitative predictions.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“To actual scientific scrutiny if it were, they would all be rejected in 15 minutes because the world is full of examples that contradict them.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“have the n constants. So there's a clear relationship that has been demonstrated in a laboratory and that can do it right now. We can measure it and we can see it and it continues to hold. And all it takes is one scientist to show that this relationship does not hold, to do an experiment that shows that this does not hold, and it stops being a law of chemistry and it's broken. Whereas in economics what they've done is they've copied the superficial shape of this without any of the scientific rigor that was used to build it. There's no experiments. You can't experiment on economies. We don't have the ability to establish laws and all the laws that we establish are just models that get people published and get them on the media to say my model says we need to print more money, but it's never subject.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“It's physics envy. They look at the market economy that it could individuals in the market economy, and they think that they can understand the market economy by looking at aggregates. This is really the key point of what I think makes the certain branch of economics pseudoscientific, is the introduction of aggregates. When you introduce those aggregates, how much production takes place, how many people are unemployed, the percentage of the inflation rate, and then you think that you can establish scientific relationship between those aggregates, it's purely physics envy. In physics, for instance, or in chemistry, you put, let's say, a container with contains a gas, and you have the ideal gas law PV equals to NRT calculate the pressure, calculate the volume, and then the temperature, if you have the pressure and the volume, you can calculate the temperature because”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“It's that theory has to inform data. And in fact, if you think about it, as the example of the stagflation of the 1970s shows, if you have stagflation, that just completely refutes the Keynesian model. The Austrian way of thinking, which is think from first principles, understand how the world actually works, think about how humans act, and understand that economics is really all about human action. So it's not about aggregates of goods. This is really the key distinction in terms of methodology. For the Keynesians,”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Economics is the study, the way the Austrians define it is the study of how humans make choices under the condition of scarcity. We begin with the starting point of economics as the fact that scarcity exists. And why does scarcity exist? Well, because it's easier to want things than it is to make them. It's much easier to want a Ferrari than it is to make one. And so because we have wants and we have limited means to meet those wants, we need to economize. It's a permanent marker of the human condition. We are always economizing at all times. And so how people make those decisions under the conditions of scarcity is what economists study. To go back to your point on empiricism in Austrian school, so it isn't that the Austrians don't believe in data. On the contrary,”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. You're correct. Because if you have any kind of shred of scientific thinking, you see that this is all motivated reasoning. Like the answer is government needs to print money. And here's a whole bunch of models brought up by people for why government printing money is good. And the reason they're coming up to this conclusion is that you only get funded if you come up with this conclusion. If you come up with a conclusion that we need to shut down the central bank, you don't get funded by the central bank. You don't get published in the journals. You don't get a job at the prestigious universities. You don't get quoted by fiat publications like the New York Times and CNN. They don't invite you on as an expert.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“So, yeah, so a whole bunch of other models came up. But basically, it's, I mean, it's such an example of motivated reasoning. Anybody who's got a familiarity with the scientific method or who's got an engineering background, who comes into economics, immediately has a lot of red flags. And I remember when I used to teach macroeconomics, I used to teach introductory macroeconomics. And it's a course that would be taken by econ majors as well as engineers. A lot of engineers would take it as an elective. And every time I'd explain the, and I teach, you know, the Keynesian basic stuff. And every time I'd explain it, there's always that smart engineering kid who just looks at me and says, sir, this doesn't make any sense because this and this and that. I'm always like, you get it.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, since the 1970s, since this has happened, yeah, this is what Basically, most Fiat economists, as I like to call them, essentially anybody at a university financed by governments, which is financed by central banks, which is financed by the talk.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Economies. So historically, before then, you had all these Keynesian central bankers talking about this model and saying, you know, well, aggregate expenditure is too low now, and that's why we have unemployment. So we need to print more money. And then they print more money, inflation goes up, but also unemployment goes up. Because this model is broken. That's not how the world works. That's not the level of aggregate spending in the economy is not a lever with which you can control inflation and unemployment. So what would a scientist do? What would a non-huckster do in this case? Admit the theory's wrong and find another way to reformulate it. Have the Keynesians done that? No. Still the same garbage in the textbook that is being taught until today.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Recessions. Okay. So is there any universe in this model? Is there any potential universe in which you can have both inflation and a recession? According to the Keynesian model, you can't, right? Because aggregate expenditure cannot be both higher and lower than output. So therefore, if you were truly being an empirical person, if you were looking at evidence and trying to analyze data, you'd look at this and say one example, you just need one example of high inflation and high unemployment to refute this entire model, right? And of course, the world is full of examples of high inflation and high unemployment. And that's what happened in the 19, and of course, you know, they ignored it. And when it happens in poor countries, because, you know, poor countries don't really matter. But then in the 1970s, that happened in the US and in the Western economies, in the most advanced industries.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, they're not correct about what they say about empirical data. So then, what this means is that there's a level of output and there's a level of aggregate expenditure. The aggregate expenditure can either be higher or lower than the output or equal to it. If it's higher, we get inflation. If it's lower, we get”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“To go back to the idea, then on the other hand, you have the level of, if the other situation is when the level of spending is higher than the amount of aggregate output. In that situation, you have too much spending, so therefore, what ends up happening is inflation. So according to the Keynesian worldview, this is really important because this is a way that I'm going to get to your point about empirical data and to show you why”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't have enough spending to buy all the goods, and then that causes a recession. The factories start laying off workers, and then the laid-off workers start spending less, and then that leads to aggregate expenditure dropping even further. And so it's a vicious cycle where the economy gets into recession. And the only way out is for Keynes' bankster buddies and government buddies to print a lot of money to give to themselves. And then that will...”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“So there's like the factories on the one side that are churning out goods, and those goods have a certain quantity and value, market value. And it's completely nonsensical, of course, because how can the value of the goods produced be different from the value of the spending? But let's put that aside for a second. So, the amount of spending that happens in the economy determines the state of the economy. If the value of the production, which they call Y is higher than the aggregate expenses,”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's a sign of just how little self awareness they have that they think that they're just being led by the data when they're being led by Keynes' moronic theories. And they use the data to justify those theories and to stick by them. And in fact, they are the ones whose theories cannot be refuted because it's just government-mandated religion. So according to Keynes' nonsense, so the way that the whole thing is this, and I'm just using this to give an example of what you're talking about in terms of theory, the way they justify the inflationism, to tie it back to the original point, they justify the, all right, we need money to spend. And then the level of spending in the economy is what determines the state of the economy. And I've taught macroeconomics at university level for a while. So I know this, I know Keynesian nonsense better than most Keynesians know Austrians, if not all of them. I guarantee you. So the way they see it is the level of spending in the economy is what determines the state of the economy. There's a level of output and there's a level of spending.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Another inaccurate way in which they present the economics. They present as if it's just theory and that the data doesn't matter, but that's not the case. What the Austrians say is that without guiding theory, data is mute. Data is dumb. Data can't say anything.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“But I mean, you know, it's not like somebody like Krugman doesn't use this kind of language when discussing Austrians. It's just that when actors like him use it, it's presented as if it is legitimate because he's part of the major shows”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Justification for what governments were already doing for 20 years. They'd already gone off the gold standard and they'd gone through 20 years in which they were lying to their population, telling their population we're still on a gold standard, but there are problems caused by various random things. But don't worry, we're going to be going back on the gold standard. 20 years later, after they went off the gold standard, they come up with this justification for why, oh, actually, the gold standard was bad, and this is a really pernicious thing about it, is the problems that were caused by us going off the gold standard were caused by the gold standard. And we're going to fix them by going off the gold standard even more.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“This is very sane and very good, and it's the way to recovery. But essentially, the Keynesians have used this as a justification for more inflation. Because inflation is an addiction. Once the government gets down the path of spending money to solve its problems, then every problem looks like it can be solved by more inflation. And so this is where Keynesian economics comes in. And of course, the Keynesian economics is based on the work of Keynes, which came in the 1930s. And this is the key point. It's portrayed in the textbook as if it's just the scientific breakthrough that somebody in the 1930s, this genius, came about and realized that, oh, we don't actually need gold. We don't need hard money. We can actually just print all the money. And in reality, of course, it was just the very thin, flimsy, idiotic.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“The problem is always caused by the inflation. And what the Keynesian hucksters do is that they look at the inflation, at the consequences of inflation, and blame it on people not spending enough. When people are doing the rational thing, you know, the money is, so there was inflation, caused an unsustainable boom, it caused the recession. And now a lot of people lost their jobs and they don't have enough money to go out and spend frivolously. So they save for the future. The future is uncertain. That's a good thing. That's how you fix things. You begin the recovery by, well, you know, you lost some wealth, so you spend less. If your business goes bust, if you lose your job, it's natural and smart that you stop spending money on the frivolous things that you used to spend and you save it for the future. You invest in something else, you get a new job. And then once you've recovered, you start spending more.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“The future. And so humans consume that we don't need more motivation to consume. We have to deal with the economic reality of the things that limit us from consuming more. So what Keynesians present is that when there is a problem in the economy, like there was after World War I,”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Here's the thing. What I was saying is, I was making the point that we don't need to be motivated to consume. We have the insatiable desire to consume. Everybody would like to have more of all kinds of things. Everybody would like to have a bigger house. Well, not everybody, some people have a big enough house, but everybody would like a house. Everybody would like car, jet, all kinds of things, you know, electronics machines. So we don't need a desire to consume. But of course, the limit on how much we consume is opportunity cost. Why don't you buy a Ferrari? Well, because that's really expensive and it would mean that maybe you do have a Ferrari, but I mean, most people don't buy a Ferrari because it's too expensive. They can't afford it. They'd have to work too hard to get it. And if they do get it, it might mean that they can't afford their house anymore. So we have to economize. That's a good thing. And we have to also think.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm going to focus for this on the money idea, the idea that a little bit of inflation is good. The idea here, I mean, the criticism is that without inflation, people wouldn't spend and then the economy would come to a grinding halt. And that's nonsensical because people spend not because they want to keep this magical monster called the economy going. People spend because they need to consume because, you know, that's how we live. That's how we survive. You need to eat. You need shelter. You need clothes to keep you warm. And as technology advances, the capabilities of the things that we can do with our time increases. And so we want to buy more things. So people buy things because people want to consume. There's a limitless desire to consume. There's no shortage of reasons for people to consume, whether it's food or Ferraris or...”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Figured out this thing, and it happens to be good for banks and governments. And just because it's good for them doesn't mean.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“This is basically the whole point of Keynesian economics is to try and find an endless array of explanations to explain why inflation is a good thing.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“A problem in the economy. The way to fix it is that the government prints money. The government lowers the interest rate. And then that leads to more economic production, which is completely nonsensical.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Government can just print money whenever it wants. And now gold money is not an issue anymore, which is extremely idiotic because the whole point of money is that it's not easy to make. If it's easy to make, it's not money anymore. It's just destroying the entire function of money. And we've seen that happen extensively in the 20th century after countries went off the gold standard. So essentially, Keynesian economics is just inflation apologia. It's just propaganda to justify inflationism. And it's profoundly nonsensical. It's built on the idea that if you just make more money, you can stimulate economic production. And of course, this is very self-serving to the central banks and to the banks and to the governments who promote this nonsense. And this is also very pervasive. If you've had the misfortune of studying at a university over the last century, you were taught Keynesian garbage economics. You were taught that if there's”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“And then in the 40s, he wrote Human Action, which is a big treatise on economics. And I think this is the correct tradition of economics. And before World War I, this was just known as economics. And then after what happened in World War I, and I discussed this in detail in the fiat standard, is that the Bank of England essentially went off gold and tried to pass off their own credit as being as good as gold in order to finance the war. And incidentally here, this is part of the history that is not discussed often. This is presented as an innovation. Later on, they needed essentially a propaganda school that would justify what they did. And later on it's presented as, oh, yay, we realized that gold was not good. And now look, we've built this thing that is better than gold where the government...”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that's really revolutionized economics, so 1870. And that's Menger's work. And then he had a student, Eugen Bomberg, who developed capital theory. And then he had a student, Ludwig von Mises, who is arguably the most important economist ever. And he developed a theory of money. He wrote a book in 1912 called The Theory of Money and Credit.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“So they restrict the production of artificial diamond and they try and insist that, you know, you shouldn't take artificial diamonds, but they're indistinguishable from real diamonds. So it's an artificial scarcity, and I think there's going to come a point at some point that this monopoly is going to break and a lot of people are going to be left with essentially highly devalued jewelry.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's when the diamond industry stepped in and marketed diamonds as the thing that you need to give. But the problem with it is, of course, that diamonds aren't like gold. They're not very hard to make more of. And the reason we have scarcity in diamonds is really artificial. There's effectively a monopoly of diamond producers. They restrict the supply. And it's a pretty dirty business. And the way that they do it is all of those talk about blood diamonds is a way for them to ensure their monopoly. So if you're part of the monopoly of diamond producers, then it doesn't matter how many people get killed producing your diamonds. If you're out of the monopoly, then human rights organizations descend on you and call for shutting you down, for selling blood diamonds. And they're also restricting the production of artificial diamonds. This is the other thing. You can make artificial diamond, you can't make artificial gold.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a great question. Arguably, Diamond Czar scam. Because they became popular as a thing in marriage After gold was banned, after gold ownership was banned in the US in the 1930s and in many places around the world. So before that, you'd give gold. And the reason you'd give gold in a dowry, in a wedding is because it wasn't just that it's pretty and shiny. It's because it's money. And so if you die, your wife can take the gold and she can live off of it. It's a demonstration that you're giving her something valuable. And that's because nobody can make a lot more gold that has the high stock to flow ratio. But then they banned gold ownership or they...”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Smart move. You should definitely give her Bitcoin instead of diamonds. I tell my wife, I occasionally remind her how many Bitcoin we could have had if I bought her Bitcoin with the price of the diamond ring.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“When you're going to get married, you give it to your wife. And it's going to be the first few grams of diamond that she's ever going to own.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“And so water is extremely abundant, and you're choosing about whether to spend the next unit of money on water. The valuation that you give to water, given that you have a lot of water at home and that you live in a place that has abundant water, is pretty low to the marginal unit. But it's very high for water overall. So if I asked you, how much would you spend for water in general? How much would you pay for water for all of your life? It would be a lot higher than diamonds. If I told you you can only have water or diamonds for the rest of your life, you choose water, obviously. But nobody's ever had to make that choice. You only make your choices at the margin. So at the margin, where we are, modern civilization, we have an abundance of water. That's why we have civilization. And diamonds are very rare and scarce. And people are only buying, you buy your first diamond.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Whereas if you don't apply marginal analysis, things don't make sense. The key thing that marginal analysis helps us solve is what is called the water diamond paradox. So you will die without water. We all need water, and yet water is dirt cheap, whereas diamonds are extremely superfluous. Nobody needs them. Nobody's going to live or die because they have a diamond. And yet they're extremely expensive. So why is it that as human beings we pay maybe say a dollar a liter for water, whereas we pay thousands of dollars for a few grams of diamonds? Why is this the case? Do we value water less than diamond? The answer is no. But at the margin, where we are right now, you live in a place where water is very abundant because cities are only built in places where water is abundant. And you're only making a choice about the next unit of water.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Rest of my life, you're choosing about the next unit right now at this point, at this stage. And if you analyze economic decision making at the margin, it makes a lot more sense and you can understand why people decide and make the decisions that they do.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I mean, Austrian economics really is the continuation of tradition that it goes back to the ancient Greeks of studying economics. Historically, it's really just economics that has evolved over time. the establishment of the Austrian school per se came in 1871, 150 years ago, when Karl Menger, the father of the school, wrote a book called Principles of Economics, and essentially invented marginal analysis, which is a big deal in economics. Marginal analysis is the idea that in economics, individuals carry out decisions at the margin, that when you make choice, you're not making it, for instance, if you're making a choice between what should I spend my money on, you're not making a choice whether it is this thing is object A or B, which one is more valuable for me in general, which one is more valuable for me for the rest.”
2022-05-11 · Lex Fridman Podcast · #284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics · IDENTIFIED FROM THE TRANSCRIPT · source