Imagine you're a teenager, saving up for a new phone, but inflation eats away and your money's
gone before you can buy it. Or picture a government endlessly printing cash, causing booms that always
create busts. These are just two examples of real world chaos that the economics of today creates.
Keynesianism, the topic that I was taught at university.
Trust the experts.
But there's another school of economics that is unheard of.
Austrian School of Economics, something that only came to me through actually researching Bitcoin.
What is the Austrian School of Economics?
How can it empower you to see through the myths?
How can you build real wealth?
Well, over the next 45 minutes, I'm going to unpack why personal choices drive the economy.
how sound money protects your future, why free markets create prosperity without top-down control.
If you've ever felt economics class was boring, irrelevant, like you just didn't get it.
I personally, I sat in a bunch of statistics modules. I'm like, what the hell is going on here?
Or some kind of microeconomics class, like this doesn't make sense.
This episode is designed to be completely beginner-friendly.
These insights, in my view, change my life, and they'll change how you view money, how
you will want to do business in the future, and just generally the idea of what freedom
is.
So, if this sparks your curiosity, hit subscribe.
I'd really appreciate that.
If you're on Fountain, give us a boost.
Head on to Noster, throw some zaps.
And why care?
Well, I'm a huge fan of Austrian economics, and it's something that wasn't clear to me,
even though I've spent a vast portion of my adult life studying how to make money.
I've thought about this before.
I'm someone who is highly coached in how to make money,
but never asked the question, what is money?
Now, perhaps there's a nefarious angle to this.
I'll touch on it later.
But this is a form of economics that actually helps.
And when I started researching this, I'm like, oh my God, that makes sense.
And I've sat through hours of economics classes.
Okay.
Now, I'm not an academic.
in fact I'll never be one but this lens on the world and this way of thinking transformed my life
and it will for you too so keep listening and let me know what you think so reach out throw me a dm
email me hi at jakewoodhouse.io what is the biggest aha moment of you today from this episode
and equally and finally if you know someone who you think is clueless about money send them this
episode. So what is the history of the Austrian School of Economics? I'm going to run through a
timeline and teach you about where it came from and why. So late 1800s, the Austrian School emerged
unsurprisingly in Austria, in Vienna, and it was a rebellion against the rigid, math-heavy economics
of the time. And it focuses instead on human behavior and individual choices. There's a bunch
of key thinkers that really built the school of economics. And I'm going to run through who they
are now. It's in my view, it's a real underdog story. And it's interesting because why is it not
taught in university? Like everything that was thrown at me as an undergraduate doing a business
school degree was Keynesian philosophy. Central banks, printing money, controlling interest rates,
stimulating demand, improving disposable income. It was this very convenient set of different
tools and levers that could be used to create a happy medium of 2% inflation and a well-employed
economy. And I just, I gobbled this stuff down. I regurgitated it in a bunch of exams and I got
the grade I needed to then get to the next stage of life, which was working as a broker.
But there was this whole area of economics that I never even heard about.
That's the Austrian School of Economics.
So when did it start?
There was a guy called Karl Menger.
So in 1871, he started philosophizing about these different ways of looking at the world.
He publishes a book called Principles of Economics.
And he introduced the idea of subjective value.
Now, I'll get into more detail what that means later.
But he is considered the father of the Austrian School of Economics.
And ultimately what he wants to do is he wants to shift the focus of economics away from labor and cost to personal preferences driving prices.
Now, I've gone and read his book, The Origins of Money.
It doesn't take long.
It's a really short read.
And for me, what hit home so much about it was like people have been thinking about money in a very deep and very accurate way for a long time.
Like, what is money?
and this concept of the double coincidence of wants.
I don't want to jump into too much detail at this point.
We'll get onto it later in terms of some of the key driving concepts
of what the Austrian school is.
So from the 1880s through the 1890s, von Baumbarbock,
I've said that name incorrectly, I'm sure,
but he was an Austrian finance minister
and a disciple of Karl Menger's thoughts.
And he builds out on this,
and he really looks into the idea of capital interest
and time preference, these three key areas of economics.
And his book was called Capital and Interest.
And he showed why saving for the future actually creates wealth.
And from the early 1900s, the 1910s, the 1940s,
the Austrian school was driven by a guy called Ludwig von Meissens.
He escaped from Nazi Europe, and he wrote a book called Human Action in 1949.
Now, this is an absolute beast of a book.
It's the kind of thing you buy.
It's this wide.
I haven't yet read it, and it's on the to read list and has been for a number of years.
So I will get around to that, I'm sure.
But through that beast of a book, he really emphasizes this idea of purposeful human choices
as an improvement or a superior way of looking at the economy over central planning.
And he predicts the failure of socialism and explains it very, very well.
One of his books that I have read is called Economic Policy.
It was published in 1959.
It's brilliant.
You just read this stuff and he's just absolutely just churning through daily life,
but synthesizing in such an accurate way.
You're like, oh my God, this actually makes sense.
Having, as I mentioned before, been in economics class,
you're like, what are we even talking about here?
This doesn't make much sense, but it didn't matter
because it's actually just regurgitating an exam and then it'll be fine.
How stupid that is.
1930s through to 1970s, there was a guy called Friedrich Hayek.
who really starts to globalize some of these ideas.
He actually won a Nobel Prize in 1974.
He wrote a book most famously called The Road to Serfdom in 1944.
And his major warnings were against government overreach.
He coined the concept of spontaneous order,
which is in relation to how markets self-organize without bosses.
Moving through to the 1960s to 1990s, there's a guy called Murray Rothbard.
Rothbard. And he modernizes, slash also, in a sense, radicalizes the Austrian School of Economics.
He wrote Man, Economy and State in 1962. He wrote another book called Anatomy of the State in 1974,
which I've also read. It's not that long a read. You know, you can, I guess this is part of the
interesting thing with research is what crops up, when, why. Okay, that's interesting. What was that
guy reading? Oh, and then you can go and find their reading this and go and read what they were
reading, right? And you down the rabbit hole you go. I will, of course, put in the show notes,
the resources that I touch on today, because there's a lot of them, right? And the concept
of this episode is really just a very, very lightly touch on the most important people,
why it even exists, and the main insights that the Austrian school delivers. So,
Murray Rothbard, just to finish off with him, he really applies the ideas of the Austrian school
of economics to libertarianism. And he critiques fiat money and very strongly explains why fiat's
a problem and advocates for pure free markets. Now, to bring it to today, there is an amazing
thinker called Hans Herman Hopper. And there's also the Institute, the Mises Institute, which
keeps this tradition alive. There are other players that I'm a fan of myself that have been
important to me specifically through the Bitcoin space. So Seyfriedina Moose, the author of the
Bitcoin Standard, a legendary book in the Bitcoin space, but also read his other books,
The Fiat Standard and The Principles of Economics. I've heard him talk about before. That was the
economics book he wished he'd read. And it's brilliant. And it is absolutely an Austrian
School of Economics 101 beginner book. And I would highly recommend that. Shout out to Knut Svanholm,
who wrote a book called Praxeology, The Invisible Hand That Feeds You. Knut's great because he really
brings into daily real life. This is how it affects him and why it works.
Larry Lippard author of a recent book called The Big Print he been studying the Austrian School for a long time I read a great book shout out to Nathan Smith who recommended this for me The Dow of Capital by Mark Spitznagel how you can include Austrian school concept into the idea of managing investment
funds. Not so obvious, but also brilliant book, Bitcoin is Venice by Alan Farrington
and his co-author, I forget his name right now, Sesha Myers, I think.
a lot of what they're talking about in that is the genuine fostering of capital and that's what
the austrian school uh iterates on and and vocalizes so well aussie friend konza he's been
down the bitcoin rabbit hole but before that he's been down the the austrian school of economics
even before coming to bitcoin so shout out to konza and some of his some of his stuff online's
classic i've heard him described as the kind of the austrian attack dog you can like go you know
tag him Konza red flag and he'll explain to whatever's going on how they're not thinking
correctly about how markets work. Finally yes shout out to Robert Breedlove. I've learned so much from
Robert and his podcast and he is someone who's gone and read things like human action and is able to
then at least from my perspective when I listen to some of the things he talks through he reiterates
what he's learned so eloquently and that's just an excellent way of learning. But long story short
the Austrian School of Economics has had some amazing people carry the baton as a form of
thinking through thick and thin over the last 150 years. And you're like, okay, well, this is a whole
area of economics that I literally didn't even get told about until it became relevant to me.
It's hugely influential in, of course, the Bitcoin space, but just generally tech entrepreneurship
and anyone who's really worried about inflation. And one of the main reasons it's so different to
Keynesianism is it doesn't vouch for increased government control and it doesn't push for
government spending as a tool for happiness or a tool for the benefit of everyone.
And so the Keynesian philosophies that the monetary scientists and the political scientists,
they really kind of dovetail each other in terms of like, yeah, what we're going to do
is we're going to print all this money and that's going to help you write policies.
It's going to help everyone.
But look at the mess we're in today, right?
all-time highs in gold, all-time highs in Bitcoin, all-time highs in the stock market,
at the same time as the inequality of wealth is bigger than ever before. People's real income
is going backwards. What the fuck happened in 1971? Excellent website. Go and look at it.
But it clearly shows you how the price of everything has been moving up. But the real
inflation rate has been so high that it was a better standard of living 50 years ago than it
is today. And ask yourself simple questions like, why is it that it's getting more and more difficult
to afford to go on holiday every year? Why is it that every couple that you know in their 30s,
both the husband and the wife are working? Why is it that no one can afford to get onto the
property ladder? Why is it that the average income, instead of it being two and a half times your
income to purchase of real estate to move into as a young family, it's now seven, eight, nine,
10, 12 times the average salary, right? This is the problem with inflationary monetary policy
driven by the Keynesian school. And John Maynard Keynes, not that this episode is about that, but
he's a fruity fella, and I can perhaps do an episode in the future about who he was and
why he was important. But let's get into it. So what are the core insights of the Austrian school
now that we've covered a bit of the history and who the major players are? I'll try and keep this
as simple as possible. And thankfully, a lot of the content is very simple. So it's not hard to
understand. But these are the kind of concepts that I wish I'd been introduced to at university,
or even earlier as a teenager, right, sitting in business studies classes, like trying to
understand, like, how does the economy work? Well, how can I fit into the economy? What's an
opportunity? What's a dead end? And some of that's just trial and error. But equally, had I had this
lens on the world, I would have made superior decisions back then that would have saved me time.
and I encourage you if any of this is interesting then just hit pause wherever you might be listening
to me jot it down like how does this apply to your life so the first area I want to mention
is time preference and you can have something called high time preference and low time preference
and really what it is is why tomorrow matters today and basically the value that we put on
something in the present is different to what we put on it in the future so if you were to give me
$100 now versus $100 in a year, I value those two things differently. And so a low time preference
person is patiently saving, builds capital and wealth. A high time preference person wants to
spend now and consume in the moment. And that long term leads to poverty. Now, why does this matter?
Well, it explains where an interest rate comes from. And it's essentially the compensation for
waiting. So if you were to get $100 today or $100 in the future, what is the differential in price
between those two moments that you receive the capital? And the differential is an interest rate.
And so when you doctor or manipulate interest rates via central banking, you know, there's a
handful of men that sit down and go, oh, do you know what? I think the economy is a bit overcooked
at the moment. We're going to take off the interest rate by 0.25%. Oh, no, we're going to take it off
by half a percent. We're going to put it up. But they're manually changing the cost of capital.
And when you massage the interest rate to become too cheap, this increases malinvestments and
actually, through the Austrian lens, causes the boom bust recessionary process that we go through.
Let's just think about this in the real world. What does this mean? Going back to this idea of
me as a teenager and I'm thinking about saving for something. I'm like, OK, I'm going to save up
for this big goal. But then an impulse buyer comes along and I'm like, oh, I'm going to buy that now.
And I never get to the bigger goal. And it's that concept that it teaches delayed gratification.
Now, one of the problems with an inflationary monetary policy is that $100 that you receive
today, where you know that what that buys today is a pair of trainers. If you keep that $100 and
you save it for 12 months, well, it's not going to buy you a pair of trainers because the money
itself is eroding in power, purchasing power. So, and we'll come on to that later, governments
distort the price signal with easy credit. And it creates bubbles, like the 2008 housing
crisis, the housing crash, the overvalued mortgage market, and the global financial
crisis it was called at the time. So ask yourself, how might this affect your daily choices?
do you choose to eat that cake right now or not do you choose to walk or do you choose to take a taxi
do you choose to spend today or save for tomorrow these are all time preference concepts and what I
have learned is that and we'll come on to what sound money is now the ability to save with sound
money helps lower my time preference such that I have a better understanding of my future because
I can rely on a pot of capital to be there for me as and when I need it.
And so that brings me on nicely to the idea, which is the second main concept of Austrian
School of Economics, sound money.
And another way of thinking about it is an anchor against chaos.
So what is the core concept here?
Money should be sound.
Now, traditionally, the Austrian School would be gold bugs.
They'd be talking about gold as a store of value, as a way to...
issue credit against if you needed to, but it has a limited supply.
So you can rely on it as a store of value.
Sound money is not fiat by decree.
The paper money that governments had today that they can inflate at will.
Now, another way of thinking about this is hard money versus soft.
And hard money and sound money are the same thing.
Now, from the Austrian perspective, inflation is theft.
what?
imagine that
theft
all of these people
the experts
they get up and they say
oh we've done so well
we've kept the CPI
within
you know
three and a half percent
this year
or from an Austrian perspective
that means
everyone's agreeing
to having three and a half percent
of their stuff
stolen
right
so inflation is theft
it devalues savings
punishes savers
and benefits debtors
now who are the biggest debtors
in these economies
the credit based system
that's grown up
over the last 50 years
governments. And what a surprise. They don't allow, no, that's not the right word. They choose
to have Keynesian economic theory in their university degrees that they've fund the academic
world rather than having the Austrian school. What a surprise that is. So sound money, it forces
fiscal discipline. So what's an example? Imagine your piggy bank is shrinking every single year in
purchasing power due to the money printing Well if your piggy bank was gold or Bitcoin as sour money well there are alternatives that preserve your purchasing power Now it very very core insight as well It this idea of the business cycle
the boom-bust periods, the Great Depression or the roaring 20s or the global financial crisis
or whatever it is that comes up. The Austrian school is very clear about this. It's like
cheap fiat credit create booms. It pushes the economy artificially up, which then bursts into
a massive downturn and a bust. Why? Why would you purposely do that to an economy? Wouldn't it be
much easier if we had a sound money upon which to do all the transactions that we want to?
So how has inflation hit your wallet? When you think about that, how much more is your beef this
year? How much higher is the house you want to buy? Is the car you want to get at the same price
as the previous year? And think through, why would, if you had an Austrian School of Economics
background, why would you love Bitcoin? Have a think about that. So core value number three
to the Austrian School of Economics, value is subjective. What? What do you mean? So no one size
fits all prices. Okay. Well, so this is Carl Menger's revolution, essentially. It's like value
isn't in the labor or the costs, but it's in individual minds. The classic example of this
is a bottle of water is worthless in a lake, but priceless in a desert. So what's the implication?
Well, markets set prices via supply and demand from personal valuations. There's no fair price
dictated by an expert. One of the things I wish I'd learned at school is instead of looking at
like, oh, here's a supply and demand curve, we're going to hit equilibrium. No. Explain to me why
the price is moving and how someone might choose to pay more for something than someone else would.
So look at what happened with NFTs in recent times.
Like complete misallocation of capital.
People are highly speculative in hyperinflationary environments.
But at the end of the day, someone somewhere was willing to pay for something because they valued it.
Now, they may or may not have been right, but it's still that's why people chose to do it.
It was their individual choice. And that's what sets the price.
so you know you'll have a favorite gadget think about it why do you value that one more than
others or equally like this concept of um you know exploitation in a trade it's like well oh yeah
we've got to step in and regulate this market because we don't want so-and-so being exploited
so well no that person out of their free will is choosing to either sell their time
to do something or they're choosing to buy a product it's not an exploitation that's going on
that's like some kind of nefarious thing that has to be controlled by someone you know our centrally
planned regulation let's get involved like no no no let the free market figure itself out if people
choose to sell their time for that figure then let them do it and there's this really interesting
process of going through like why the minimum wage is actually net negative for people who are
trying to work in those spaces and for business owners that operate companies that require
characters to fulfill certain roles.
And that's not what this episode is about, but take some inspiration from it.
You know, why?
Ask yourself, why is a minimum wage rule actually good?
And through the Austrian lens, it really, it really puts it into question.
So the other core area of Austrian economy, like we've touched on slightly before, so
free market principles, spontaneous order and individualism.
What's this kind of founded on?
It's like, well, basically, the economy self-organizes via voluntary exchanges.
There's no need for central planners.
Now, Hayek described this as the knowledge problem.
Like, no one knows everything, but they use the market to figure things out.
So it's a methodological individualism.
That's quite a statement, that, isn't it?
But people study the economy through their individual actions, not aggregates like GDP.
GDP makes no difference.
It's like, who cares?
The real question is that,
why is everyone behaving the way that they are?
Now, the Austrian School fosters innovation.
It focuses on efficiency.
And it quite clearly shows how price signals
guide resources better than bureaucrats.
A good example of this one that always gets me
is think about mining.
So, okay, right now,
the iron ore price will be trading
at whatever it's trading at.
And there'll be certain areas of the world
that you could remove iron ore from,
but the iron ore price is not high enough.
So when the iron ore price goes up,
because supply somewhere has been squeezed,
maybe there was a dam that flooded a particular port
and the Brazilians suddenly can't sell any iron ore.
So the price will go from $200 to $250 a ton of iron ore,
at which point there's a certain section of mining opportunities
that make sense.
And the pricing signal of the increased commodity price
reaches the primary means of production
that goes out and finds more iron ore
because it's now profitable to mine it at those levels.
And guess what happens?
It hits the market and slowly but surely,
that price change,
it actually rounds back to where the market
fairly wants to trade because the supply increased.
This is classic Austrian school thinking.
You don't need someone to come in and say,
oh, we've got to get the government
to help people avoid price gouging,
whatever they talk about.
So as soon as you see government
talking about price controls,
big red flag from an Austrian school perspective.
And to me, I've adopted some of these thinking.
It doesn't make sense to regulate prices.
It completely destroys the market.
If it destroys the market, no one can tell what's going on.
And therefore, what people actually want doesn't get supplied.
I think you could probably summarize this.
It's a great point.
It's basically free market.
The free market is a thing of absolute magic.
And it needs to be let to do its thing.
and if it is, it's the most efficient way of running an economy.
That doesn't mean, however, that you can't study it, right?
So price signals guide resources better than bureaucrats.
Now, this is like, you know, okay, you go to school
and I'm thinking back to me as a teenager.
It's like, all right, you've got to do whatever it was,
11 subjects or nine subjects for your GCSEs
as a 16-year-old in the UK at the time.
And it's like, okay, well, you're going to do these 10 classes
and you don't have a choice.
Like you're being forced into the curriculum versus,
oh, actually, I'm going to choose the 10 subjects that I'm going to do.
So a free market lets talents flourish without coercion.
Now, an obvious take that comes to mind is
the truly centrally planned economies that I've ever seen
or have been attempted, like the USSR was the major one,
it completely failed.
It absolutely shockingly failed people.
I can't remember what the statistics are. Sorry, forgive me. I'll have to look this up. But a lot of people starve due to the inability to supply food because of centrally planned economies.
How horrendous is that? When you consider how much abundance is out there and the ability for farmers to go and create and supply food to the marketplace.
And when a central planner thinks they're smarter than nature, kills people because they're not. But that's crazy, right?
Another area is then something like regulations. So just recently here in Australia, there's crypto regulations coming in. And what's it going to do? Well, it's probably going to benefit the incumbent banks. It's probably going to benefit people that are pumping their own shitcoin. But for people that are offering Bitcoin only services, it makes business more expensive to do. And what if that kills a startup business?
oh well done you've just regulated out of the market a perfectly good business that is helping
people save and sell money like it just backwards oh but don't worry the government's got your back
now some of the other kind of major insights that i really like talking about we and we have covered
slightly already but the the idea of a business cycle like why is it that roughly every decade
we have a recession and it's the recession to kill all recessions.
And then we have a boom to kill all booms.
And when you look at that through the Austrian School of Economics,
and that's why in my previous episode we were talking a lot about liquidity,
it's all about credit expansion.
And the credit-based economy that we live in since 1971
is constantly trying to expand so that it can pay back the interest
that it's already created.
And it makes a handful of extraordinarily powerful fiat bankers a lot of money.
But is it actually good for the everyday person?
And it makes it incredibly difficult to plan.
Oh, next year we're going into a recession.
What does that mean?
Are people going to have disposable income to buy my products?
What's the price going to be?
If $1 buys this today, but I can't tell you how much $1 is going to buy in a year's time
because the purchasing power is going to be eroded due to an unknown inflation target it makes it just incredibly difficult to do any business It actually quite extraordinary how much innovation and how much business is being done in spite of how bad the business cycle is due
to credit expansion. Conveniently, the Keynesians, of course, are still very much driving the
discussion in central bank circles. The chancellor of different countries is often very well schooled
in that area of thought.
And it's like, yeah, convenience.
Basically, guys, we're going to make everything better
by printing more money and doing more regulation.
But is that actually right?
So my series, I touched on the socialist calculation problem,
that without prices from markets,
planners can't allocate resources efficiently.
And so ultimately, socialism is just doomed to waste.
Now, that's highly triggering for people that lean to the left.
But basically, you can't trade.
Like if you're not allowed to have a price on something, how do I know?
How do I know anything?
And what I do like about the Austrian school is, of course, the emphasis on the entrepreneur.
And it's like, OK, right now you're in a position to see an opportunity.
And what do you do about that?
You go out and and you take a risk.
Right.
But the point is, is the market gives the individual the opportunity to supply something to people that need it.
And that's what drives progress.
So I mentioned Knut before in his book, Praxeology, but Mises talks about this a lot.
It's a deductive form of logic for economics, and it's based on human action axioms.
Again, this is an episode for 101 beginner type stuff.
So you might hear these phrases and be like, what the hell is Jake talking about?
That's the point.
You know, dive further into these subjects.
You know, as a beginner, I wish I had learned some of these things many, many years ago,
because it would have saved me so much time and I wouldn't have made lots of bad decisions.
But what I find with the Austrian School of Economics that I like so much is it really just helps you look at the world in a way that starts to make sense.
It's like, ah, OK, so people make decisions for their own self-interest and their value for something they might buy from you is going to change based on their circumstances.
Cool. And so the net benefit or disbenefit of central planning can be very, very well articulated as being extremely net negative and that the free market is a superior way of organizing ourselves.
Basically, it's a case of get the fuck out of the way and let everyone do what they want and we'll organize ourselves.
Now, that, of course, scares the hell out of any politician who's supposedly offering safety, quote unquote, to the masses,
who want to be told that they're going to be looked after and we're going to save you and all this kind of stuff.
It's like, no, no, no one's going to come and save you.
You be productive, spot opportunities, follow them, and you'll get paid for it.
And then life is better.
It's like, oh, well, that actually works.
How much more sense does that make?
I thought it'd be cool just to pull out some quotes from some of these leading thinkers.
A little bit of on my sees.
Human action is purposeful behavior.
Hmm.
Okay.
So basically, economics isn't numbers.
It's actually understanding goal-driven choices.
Hmm.
Think about this.
How does that flip, this concept of the rational actor?
to me at least it's it's so fun because it's actually it's just it's a process of reasoning
it's not a process of like let's try and use as many statistical models to prove this hypothesis
to be true so no mate humans are completely inconsistent one minute they'll be happy the
next they'll be angry they're going to make different economic decisions in those two different
mindsets don't even try and guess what they're going to do from a kind of scientific perspective
It's like, think about what they want,
understand the incentive, and then you'll get there.
I love that.
Human action is purposeful behavior.
So Friedrich Hayek,
the curious task of economics is to demonstrate to men
how little they really know about what they imagine they can design.
How cool is that?
Basically, warning against hubris.
Who thinks that, oh yeah, we're going to organize this stimulus package
and it's going to be perfect for everyone.
That's bullshit.
You have absolutely no idea what that's going to actually do
to the real economic choices of people on the street.
So don't even try and claim to say that you can.
And my spin on that is basically,
humility beats top-down control every single time.
Quote number three, so Murray Rothbard.
It is no crime to be ignorant of economics,
which is, after all, a specialized discipline.
but it is totally irresponsible to have a loud and vociferous opinion on economic subjects whilst
remaining in this state of ignorance kind of amusing right it's essentially challenging the
blind faith we have in politics and politicians the latest chancellor will be appointed his position
or her position but what do they know oh don't worry guys trust the experts and almost always
it leads to more money printing and more trust the experts.
So where does that really ultimately help me reflect?
What economic opinions do you hold?
And perhaps it's time to question them.
Now, quote number four, finally, Carl Menger,
value does not exist outside the consciousness of man.
Wow.
It's quite powerful that, isn't it?
It really ties back to this idea of subjectivity.
Now, in my case, I'm investing my own money. It's like, where am I wrong? Where am I right? And how do I want to show up in the world every day? And what are the values that I hold and the ethics that I have and the self-image of the future me? How does this all blend together to make decisions? And how do I make superior decisions?
and even time energetics and universal law.
And so much of this all comes through
because it's like a horse doesn't understand prices.
I don't know why I even thought of a horse,
but like other mammals, they don't get it.
Other reptiles, they don't get it.
Other plants, they don't get it.
Like the mycelium world, mushrooms, they don't get it.
Value does not exist outside the consciousness of man.
And, you know, just really, it's time to seriously question things.
Why is it that inequality is at an all-time high in terms of wealth gap?
Why is it that the gold price is running like it is?
Why is it that Bitcoin is bashing through all-time highs?
Why is it that the stock market is at all-time highs?
Why is it that they're cutting interest rates?
Why is it that debt-to-GDP ratios are so unbelievably high?
This is the back end of half a century of extraordinary credit expansion based on no real value tied to that.
And so what we see in the economy today, it's not where I see things going.
Why leverage on Bitcoin is so interesting is it's commodity based credit.
And it will always tie back to Bitcoin as the underlying asset.
And this is what used to happen with gold.
But they removed the peg to gold and we went pure fiat.
So what that became is just circulating credit.
It's as good as they claim it to be until it's not.
And the way that a bank can leverage itself.
I read yesterday that Bear Stearns was leveraged something like 30, 35 to 1 when it went bankrupt.
And supposedly the regulation is that a bank can do 10 to 1.
So these banks are out there behaving poorly.
and they know that the moral hazard
they've regulated into their system
is that they get bailout, right?
That's what the global financial crisis taught all of us.
The banks got saved
and the average person on the street got screwed.
And that's how the system functions.
So the more we can learn about alternatives
to the system that we were given, the better.
That's what sound money is.
That's what Bitcoin is.
But equally, the more we learn about the fiat system itself,
the more that we can go and exploit it.
No, I'm not talking about doing illegal things, but you can make better choices.
And without Austrian School of Economics as a lens on the world, I wouldn't be able to do what I'm doing.
I wouldn't see value in Bitcoin if I didn't understand what sound money is.
And the day that that penny dropped, my life completely changed.
I hope you've enjoyed the episode.
It was always designed to be a bit of a flavor for Austrian economics.
It's massively helped my life.
So I encourage you to dig deeper.
I will list a whole bunch of resources in the show notes.
If you want to help me out, then hit subscribe, send us some zaps on NOSTA, hit us with a boost
on Fountain.
If you want to reach out, like, how's Austrian economics changed your life?
Could any of these concepts improve your decision making?
I'd love to hear from you.
Email me, hi, at jakewoodhouse.io.
Until next time.
Thank you.