For a preview of what to expect from my new book, The Gold Standard, here is the introduction:
The invention of bitcoin has kindled interest in monetary history, offering people a historically unparalleled opportunity to experience firsthand the transformative potential of upgrading monetary technology. In 2018, I published The Bitcoin Standard, a book that focused on monetary history and monetary economics, explaining the problem of money over millennia in order to illustrate bitcoin’s true potential and historical significance. In 2021, I published The Fiat Standard, which also focused on monetary history and economics to explain the functioning of fiat money and its far-reaching implications. In 2023, I published Principles of Economics, a book that explained the economics of human action and detailed how civilization emerges from the cooperation of individuals. All three books offered readers a departure from the usual approach of modern economics books, in that they challenged the inevitability and desirability of government-controlled money and illustrated its many devastating impacts on individuals and society.
A central theme through all three books is that human civilizational progress is inextricably linked with the hardness of our money: the harder the money is to make, the less its supply will increase over time, the better it will hold its value, and the more it will allow its holder to provide for the future more effectively, decreasing the uncertainty surrounding the future, and causing us to discount the future less. In other words, hard money makes us more future-oriented, lowering our time preference, which is what initiates the process of civilization. As we increasingly value the future more, we defer immediate gratification in favor of long-term rewards. We save our resources for the future and invest them to increase our productivity. We control our base instincts and passions, subduing them to our reason, which calculates what is in our long-term interest. We cooperate and resolve differences peacefully because we recognize that the long-term benefits of peaceful cooperation far outweigh the short-term advantages of aggression. We engage in trade and build a highly sophisticated division of labor. If practiced over generations, this process of civilization manifests as a continuous increase in the material well-being of a society, with each generation living better than the previous generation.
The obverse is also true, unfortunately. The easier money is to produce, the more its supply increases and its value declines over time, the less it will allow us to provide for our future selves, increasing the uncertainty surrounding the future, and causing us to discount the future more. In other words, easy money makes us more present-oriented, raising our time preference, which is what destroys the process of civilization. As we discount the future more, we consume our resources with little regard for the future. Saving and capital investment decline. We are more likely to act to satisfy our present urges at the expense of our future well-being, since it matters increasingly less. We are less likely to cooperate and resolve differences peacefully, which compromises our division of labor and, in turn, our productivity. Much of the history of the past century has reflected this civilizational decline. The collapse of society witnessed under hyperinflation is just a faster and more noticeable version of the same process that slow fiat inflation brings about.
A contentious thesis for many, yet one that has found support among a growing worldwide readership with more than a million copies sold across 39 languages. I believe much of the books’ success is due to their ability to explain to readers many of the phenomena they experience as they use different forms of money. The more I wrote and spoke about the impacts of money on time preference, the more stories I would hear from readers and listeners about their own personal experiences with inflation and how moving to bitcoin helped them become more future-oriented, as well as their countries’ experiences with inflation and hyperinflation through the century of fiat money. Everywhere, there are countless stories to tell of how the destruction of money leads to the destruction of economic security and the destruction of civilization.
Pervading all three of my books is a deep sense of historical regret over a world that could have been—a world where money escaped the grip of the state, was chosen freely on the market, and constantly increased in market value, allowing savings, protecting from government and central bank debasement, and limiting government power by restricting its funding to transparent taxation. Countless times when examining one particular aspect of fiat’s devastation of humanity, I would find myself wondering how different things could have been, how much prosperity was lost, and how much human suffering could have been averted. For years, I have found myself drifting off into lengthy thought experiments around the question: What would the twentieth century have looked like on a hard money standard? We can see how consequential the reduction in the value of money is in episodes of hyperinflation, high inflation, and even low inflation. We can see the impact upgrading from easy money to harder money has on individuals, as the stories of bitcoiners attest. And we can see how hard money is already showing signs of transforming President Nayib Bukele’s El Salvador. Every time I observe one of these phenomena, I wonder how different the world would have been in the past century had it used hard money. In many interviews, I would be asked such questions and I would find myself overflowing with ideas for answers, my mouth unable to articulate them at the rate at which my mind produces them. That feeling is what puts fire in my fingers and gets them itching to pound them into my keyboard, systematically exploring and elaborating on them, culminating in the production of a book.
It would have been a natural continuation of my first two books on bitcoin and fiat to complete the series by writing a new book stretching back further in time to study the gold standard, its workings, and the implications for society. However, that book was already written in 2001 by the late Swiss banker Ferdinand Lips, under the title Gold Wars: The Battle Against Sound Money As Seen From A Swiss Perspective. That book was one of my inspirations for writing The Bitcoin Standard, and I learned a lot from it; most of its important ideas have already been reflected in my three books. A more interesting question was to examine the failings of the gold standard and why it was replaced by fiat money.
There were many imperfections in the gold standard during the nineteenth century. Even at its best, it fell short of the ideal form of a gold standard in which all monetary instruments are backed by 100% of their face value in gold in the vaults of the issuer. The classical gold standard still allowed for the creation of money and credit far in excess of the amount of gold held in reserve. What would happen if we had a perfect gold standard? What would the world look like if no entity were capable of creating money without opportunity cost? This question, along with the question of what the twentieth century would have looked like on hard money, inspired the writing of The Gold Standard.
This book builds upon the ideas from my three previous books on the importance of monetary soundness and applies them to a series of elaborate questions: What would the world look like if we had a gold standard in the twentieth century? What if, instead of downgrading from an imperfect gold standard to the catastrophic fiat standard at the beginning of the twentieth century, the world had upgraded to a better gold standard? Given everything we know about the impact of hard money, just how different would a hard money twentieth century have been? What would life be like with constantly appreciating money and declining prices? What would have happened if governments had not financed themselves through inflation in the last century without accountability? How much less blood would have been shed had governments had to fight their wars with their own treasuries without having recourse to inflation to rob all their citizens? How would living standards and wages change? How would the state and banking have evolved? What would have happened to education, technology, politics, and our production of energy?
The Gold Standard attempts to answer these questions with a fictional economic history of an alternative twentieth century in which the fiat money experiment fails in 1915. Since money is pervasive in all aspects of life, I endeavoured to make this as realistic as possible. Rather than simply assuming the monetary system I want and shaping the world around it, I chose to construct a history that could have conceivably led to this monetary transition taking place, thereby producing realistic historical developments throughout the century. When considering scenarios for an alternative history, there are many historical junctures where an author could take the liberty of choosing a different outcome from reality, thereby changing history. Franz Ferdinand’s assassin’s gun could have jammed, and the conflict between Serbia and Austria would have been averted, preventing the snowball of war that was to consume the planet. Austria’s old Emperor Franz Joseph could have easily died a week before his crown prince nephew, Franz Ferdinand, traveled to Bosnia, making him emperor and potentially preventing his modernizing influence from causing conflict with Serbia and Russia altogether. However, such simple changes do not address the underlying historical and economic factors that led to the war, and thus would not offer a convincing rationale for the fundamental historical change. The same governments and central banks that went to war in 1914 could have gone to war a few years later with similar consequences. It was essential for me to alter a fundamental aspect of the monetary technology of the time to make this story engaging and realistic. Economists of the Austrian school have long emphasized the pivotal role entrepreneurship plays in changing history, and since this is an Austrian economist’s book, I chose to make it a work of entrepreneurial fiction. It is an entrepreneur who creates a business that causes the world to undergo significant change, and the business idea draws inspiration from the creation of bitcoin, exactly 100 years later. In essence, this book asks: What would have happened if something like bitcoin had existed in 1911?
The fork in reality from which this book originates begins in February 1910, with an imaginary letter that was to advance the development of the aviation industry in the following years. A few entrepreneurs established an airplane-based international gold clearance service in 1911, and it would have a drastic impact on the world in 1915, during the war. Outside of the aviation industry, all of the world’s major events remain the same in this story until September 1915, when the fiat money experiment fails and our alternative history begins in earnest. The years 1914–15 were of extraordinary historical importance, as they gave birth to the monetary system and world order in which we live today. By introducing developments that are not entirely outlandish to the aviation industry, this book derails the fiat money experiment in its infancy and strangles the fiat century in its crib, inviting you, dear reader, to teleport yourself via the power of imagination to this alternative world and think deeply about what it would have looked like.
When considering how best to write this thought experiment, I had considered writing a fictional novel, a history book that’s partly factual and partly imaginary, and a fictional economics textbook. Each of these three forms of writing would have been ideal for some part of the thought experiment but would have been too cumbersome and unworkable for all of it. The history book can explain the political and economic realities of the world in the early twentieth century, which is essential for playing out the thought experiment for the century. The novel is a good tool to introduce and explore the technological and entrepreneurial story that changes the course of history by focusing on the pivotal individuals involved. The economics textbook can provide an overview of the economic history of the alternative twentieth century. But each of these tools has its limitations. It would not have been very engaging to study the economics of the twentieth century through a fake history book that takes the reader through fake historical events with anything close to the level of detail needed to explain real historical events, and I even think it would have been disrespectful to the reader’s time to spend too much time dwelling on fake history, when the point is to get to the economics. Nor could the economics of the twentieth century have been fruitfully explained through a novel playing out over a century. An economic history book would not have been able to construct an elaborate and realistic story for why history changed in 1915, without getting into the personal stories of the pivotal individuals in the same way a novel can.
After much thought and consideration, my independent publisher self granted my author self the permission to do something strange, which, to my knowledge, has never been tried before: write a book that’s a mix of a novel, a history book, and an economics textbook. I hope the reader appreciates the variety!
The book is divided into five Parts. They are constructed as follows:
Part I: The Old World
Based on real-world history, covering events up to September 1915. All the facts presented here are historically accurate in our real world, to the best of my knowledge. Some of these facts may appear made-up and outlandish, but they are real.
Part II: Capital Flight
The story transitions to an alternative history of aviation, which begins in February 1910, and leads to a different outcome for World War I and the rise of a new world order. Events in this section are almost entirely fictional.
Part III: The Modern World
Examines how a modern gold standard would work and how states and banks might have evolved in this alternative timeline. This part contains a mix of real historical events, which are things that happened before September 1915, and fictional events, which happened after that date.
Part IV: The Century of Affluence
Explores changes in living standards, energy, technology, society, and education over the twentieth century under the gold standard.
Part V: Postscript from Fiat World
This final section overviews the story and timeline of the previous chapters, providing commentary from the perspective of our real world, comparing the economic outcomes of this thought experiment to our fiat world.
Important notes:
All historical events happening before September 1915 are real, and all events happening from September 1915 onwards are fictional. Events in the history of the aviation industry are an exception, as these are real up to January 1910 but fictional from February 1910 onward.
All referenced quotes are genuine quotes by the quoted person. All quotes without references are fictional.
Get your copy from:
Saifedean.com (hardcover, audiobook, ebook, and exclusive signed editions) or Amazon (hardcover, paperback, audiobook, ebook)
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@Saifedean Ammous
