A Twitter thread by Yorick de Mombynes.
Here are my favorite quotes from this amazing book. #THREAD
1. "Bitcoin can be best understood as distributed software that allows for transfer of value using a currency protected from unexpected inflation without relying on trusted third parties"
2. "While Bitcoin is a new invention of the digital age, the problems it purports to solve - namely, providing a form of money that is under the full command of its owner and likely to hold its value in the long run - are as old as human society itself"
3. "People’s choices are subjective, and so there is no “right” and “wrong” choice of money. There are, however, consequences to choices"
4. "I like to call this the easy money trap: anything used as a store of value will have its supply increased, and anything whose supply can be easily increased will destroy the wealth of those who used it as a store of value"
5. "For something to assume a monetary role, it has to be costly to produce, otherwise the temptation to make money on the cheap will destroy the wealth of the savers, and destroy the incentive anyone has to save in this medium"
6. "The monetary media that survived for longest are the ones that had very reliable mechanisms for restricting their supply growth - in other words, hard money"
7. "The choice of what makes the best money has always been determined by the technological realities of societies shaping the salability of different goods"
8. "Human civilization flourished in times and places where sound money was widely adopted, while unsound money all too frequently coincided with civilizational decline and societal collapse"
9. "Whether in Rome, Constantinople, Florence, or Venice, history shows that a sound monetary standard is a necessary prerequisite for human flourishing, without which society stands on the precipice of barbarism and destruction"
10. "History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours"
11. "Some of the most important technological, medical, economic, and artistic human achievements were invented during the era of the gold standard, which partly explains why it was known as la Belle Epoque, or the beautiful era, across Europe"
12. "World War I saw the end of the era of monetary media being the choice decided by the free market, and the beginning of the era of government money"
13. "Government money is similar to primitive forms of money and commodities other than gold: it is liable to having its supply increased quickly compared to its stock, leading to a quick loss of salability, destruction of purchasing power, and impoverishment of its holders"
14. "With the simple suspension of gold redeemability, governments’ war efforts were no longer limited to the money that they had in their own treasuries, but extended virtually to the entire wealth of the population"
15. "Had European nations remained on the gold standard, or had the people of Europe held their own gold in their own hands […], history might have been different. It is likely that WorldWar I would have been settled militarily within a few months of conflict"
16. "The cause of the Great Crash of 1929 was the diversion away from the gold standard in the post-WWI years, and the deepening of the Depression was caused by government control and socialization of the economy in the Hoover and FDR years"
17. "All spending is spending, in the naive economics of Keynesians, and so it matters not if that spending comes from individuals feeding their families or governments murdering foreigners: it all counts in aggregate demand and it all reduces unemployment!"
18. "In essence, Bretton Woods attempted to achieve through central planning what the international gold standard of the nineteenth century had achieved spontaneously"
19. "Hyperinflation is a form of economic disaster unique to government money. There was never an example of hyperinflation with economies that operated a gold or silver standard"
20. "With government money, whose cost of production tends to zero, it has become quite possible for an entire society to witness all of its savings in the form of money disappear in the space of a few months or even weeks"
21. "Hyperinflation is a far more pernicious phenomenon than just the loss of a lot of economic value by a lot of people; it constitutes a complete breakdown of the structure of economic production of a society built up over centuries and millennia"
22. "Even if the textbooks were correct about the benefits of government management of the money supply, the damage from one episode of hyperinflation anywhere in the world far outweighs them"
23. "Hanke and Bushnell have been able to verify 57 episodes of hyperinflation in history, only one of which occurred before the era of monetary nationalism, and that was the inflation in France in 1795, in the wake of the Mississippi Bubble"
24. “The constantly increasing supply means a continuous devaluation of the
currency, expropriating the wealth of the holders to benefit those who print
the currency, and those who receive it earliest. This is termed the Cantillon
25. “Whether it’s because of downright graft, “national emergency,” or an infestation of inflationist schools of economics, government will always find a reason and a way to print more money, expanding government power while reducing the wealth of the currency holders”
26. “It is ironic, and very telling, that in the era of government money, governments themselves own far more gold in their official reserves than they did under the international gold standard of 1871–1914”
27. “A sound money makes service valuable to others the only avenue open for prosperity to anyone, thus concentrating society’s efforts on production, cooperation, capital accumulation, and trade”
28. “The twentieth century was the century of unsound money and the omnipotent state, as a market choice in money was denied by government diktat, and government-issued paper money was forced on people with the threat of violence”
29. “Sound money is an essential requirement for individual freedom from despotism and repression, as the ability of a coercive state to create money can give it undue power over its subjects, power which by its very nature will attract the least worthy, and most immoral”
30. “Sound money is a prime factor in determining individual time preference, an enormously important and widely neglected aspect of individual decision making. Time preference refers to the ratio at which individuals value the
present compared to the future”
31. “Economist Hans-Hermann Hoppe explains that once time preference drops enough to allow for any savings and capital or durable consumer-goods
formation at all, the tendency is for time preference to drop even further as a
“process of civilization” is initiated”
32. “Microeconomics has focused on transactions between individuals, and macroeconomics on the role of government in the economy ; [...] the most important economic decisions to any individual’s well-being are the ones they conduct in their trade-offs with their future self”
33. “The better the money is at holding its value, the more it incentivizes people to delay consumption and instead dedicate resources for production in the future, leading to capital accumulation and improvement of living standards”
34. “The move from money that holds its value or appreciates to money that loses its value is very significant in the long run: society saves less, accumulates less capital, and possibly begins to consume its capital”
35. “Civilizations prosper under a sound monetary system, but disintegrate when their monetary systems are debased, as was the case with the Romans, the Byzantines, and modern European societies”
36. “What matters in money is its purchasing power, not its quantity, and as such, any quantity of money is enough to fulfil the monetary functions, as long as it is divisible and groupable enough to satisfy holders’ transaction and storage needs”
37. “The best form of money in history was the one that would cause the new supply of money to be the least significant compared to the existing stockpiles, and thus make its creation not a good source of profit”
38. “Had government money been a superior unit of account and store of value, it would not need government legal tender laws to enforce it, nor would governments worldwide have had to confiscate large quantities of gold and continue to hold them in their central bank reserves”
39. “The fact that central banks continue to hold onto their gold, and have even started increasing their reserves, testifies to the confidence they have in their own currencies in the long term”
40. “Sound money is money that gains in value slightly over time, meaning that holding onto it is likely to offer an increase in purchasing power”
41. “Unsound money, being controlled by central banks whose express mission is to keep inflation positive, will offer little incentive for holders to keep it”
42. “With unsound money, only returns that are higher than the rate of depreciation of the currency will be positive in real terms, creating incentives for high-return but high-risk investment and spending”
43. “Savings rates have been declining across the developed countries, dropping to very low levels, while personal, municipal, and national debts have increased to levels which would have seemed unimaginable in the past”
44. “One of the most mendacious fantasies that pervades Keynesian economic thought is the idea that the national debt “does not matter, since we owe it to ourselves”
45. “Only a high-time-preference disciple of Keynes could fail to understand that this “ourselves” is not one homogeneous blob but is differentiated into several generations -namely, the current ones which consume recklessly at the expense of future ones”
46. “The twentieth century’s binge on conspicuous consumption cannot be understood separately from the destruction of sound money and the outbreak of Keynesian high-time-preference thinking, in vilifying savings and deifying consumption as the key to economic prosperity”
47. “It is an ironic sign of the depth of modern-day economic ignorance fomented by Keynesian economics that capitalism - an economic system based on capital accumulation from saving - is blamed for unleashing conspicuous consumption - the
exact opposite of capital accumulation”
48. “Capitalism is what happens when people drop their time preference, defer immediate gratification, and invest in the future. Debt-fueled mass consumption is as much a normal part of capitalism as asphyxiation is a normal part of respiration”
49. “The only cause of economic growth in the first place is delayed gratification, saving, and investment, which extend the length of the production cycle and increase the productivity of the methods of production, leading to better standards of living”
50. “This move from sound money to depreciating money has led to several generations of accumulated wealth being squandered on conspicuous consumption within a generation or two, making indebtedness the new method for funding major expenses”
51. “As H. L. Mencken put it: “Every election is an advanced auction on stolen goods””
52. “As politicians sell people the lie that eternal welfare and retirement benefits are possible through the magic of the monetary printing press, the investment in a family becomes less and less valuable”
53.“The majority of the technology we use in our modern life was invented in the 19th century, under the gold standard, financed with the ever-growing stock of capital accumulated by savers storing their wealth in a sound money and store of value which did not depreciate quickly”
54. “The contributions of sound money to human flourishing are not restricted to scientific and technological advance; they can also be vividly seen in the art world”
55. “In times of sound money and low time preference, artists worked on perfecting their craft so they could produce valuable works in the long run”