/bookshelf-notes

Quick summaries on the books i've read, mental hooks, and takeaways, usually 5 bullets long.

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Bookshelf Notes

Distilled summaries on the books i've read, what they are about, mental hooks, and takeaways.

  • Curiosities: How do you just print money? Has this happened before? What is the history of money? Does bitcoin make sense? Will it succeed, what are it's weaknesses?
  • Interests: Austrian Economics, Bitcoin, Cryptocurrencies, History with a money focus, The US Constitution, Nation State Dynamics, How Emipres and Nation rise and fall, and some coding.

2022

The Fiat Standard

The Debt Slavery Alternative to Human Civilization, by Saifedean Ammous, Finished Jan 2022

  • Introduction: People don't seem to grasp since it is a generation removed, that the US Dollar, and all currencies, are in a great fiat (paper) money experiment, not tied to hard money. It is relatively new, only 50 years old! Bitcoin, as of writing, is 13 years old now!

    "This year marks the fiftieth anniversary of the U.S. government closing the gold exchange window and putting the world on a fiat monetary system. [pg.3]"

  • With Fiat Money, you have to save twice, once when you earn it, and second to keep it working to accrue interest against devaluation.
  • Fiat Mining: Taking on a loan or debt is the fiat way of creating new money, and economic stimulation. A mortgage loan creates future money from thin air.

    "Since lending is effectively the minig of new fiat tokens, there is a strong economic incentive to issue debt. Financial institutions stand to profit from creating new money, and a lending license is highly sought after. [pg.44]"

  • Fiat Debt: With fiat, saving money is impossible because of the devaluation from debasement (money printing). This raises your time preference from long term thinking, valuing the future and building for the future, to short term thinking, spending your money now.

    "When money is hard and can appreciate, individuals are likely to be very discerning about what they spend it on, as the opportunity cost appreciates over time. Why buy a shoddy table, shirt, or home when you can wait a little while and watch your savings appreciate to allow you to buy a better one. But with cash burning a hole in their pockets, consumers are less picky about the quality of what they buy. The shoddy table, home, or shirt becomes a reasonable proposition when the alternative is to hold money that depreciates over time, allowing you to aquire an even lower quality product. Even shoddy tables will hold their value better than a depreciating fiat currency. [pg. 103]"

  • What is Fiat Good For?: Salability Accross Space (gold is hard to transport, and thus ledger keeping and final settlement time is slower)

    "Carl Menger defines salability as the degree to which a good can be brought to market without significant loss in market price. A highly salable good is one with significant market depth and liquidity, making it possible for the holder to obtain the prevailing market price whenever they want to sell it [pg.74-75]." "...if gold had high salability across space, it would not need government to ensure its monetary rules. [pg.80]"

  • Fiat Life: The terms are now part of my daily vocabulary, and change the way you think
    • Fiat Food, Fiat Science, Fiat Anything
  • Fiat Cost-Benefit Analysis: Fiat's main benefit is savings on moving physical gold around. Also, fiat's killer app is unlimited government finance. [pg.226]
  • Bitcoin is the separation of money and state.
  • Bitcoin enables savings, and does not incentivize indebtedness.
  • Bitcion is salable across space and time, whereas fiat is just space, and gold is just time.

2021

The Blocksize War By Jonathan Bier

Finished: Nov 2021

  • History of the bitcoin blocksize wars from 2015 to 2017, which was way more intense and significant than I appreciated. It also covers signficant history and details about hardforks, miners, and nodes voting. A must read for any bitcoiner. Glad that software battle is behind us.

The Anatomy of the State

By Murray N. Rothbard, Finished: 2021 Aug

"The greatest danger to the State is independent intellectual criticism" - Murray N. Rothbard

A History of Money and Banking in the United States

The Colonial Era to World War II, By Murray N. Rothbard, Finished 2021 Sept

About:

  • Money in the America from metal coins to paper fiat and the economic and political impacts. From Colonial Times up to WWII. A must read for anyone to understand fiat paper debt/inflation patterns throughout American history, and there are some good ones!

Key Takeaways for Today's Economic State:

  • This American and World History taught me the US Dollar is not as bullet proof and stable as current society takes it to be, in fact it is a relatively recent experiment. Bitcoin is like digital gold, altcoins are like colonial town local fiat (see Rhode Island) and Westward wildcat banks (the good backs 100% fractional reserve backed by gold). COVID 2020 money printing up until 2021 seems eerily similar to the roaring 20s of easy-money cheap credit, money printing, asset inflation, artificially low rates, propped up market, souring fundamentals, inflation across the board, populous skepticism, that facilitated runs on the markets and banks, ultimately begetting the great crash of 1929 and The Great Depression Era that followed. Also, politics are driven by the elite family Houses of Money (Morgan's, Rockefeller's, Rothschild's) who play the populous, formulate politics and experts, and use government to their advantage.

Key 5 Book Takeaways:

  1. Sound hard money (gold, bitcoin) and free markets are essential for a healthy economy that is self-healing (comes back to equilibrium). Separating from Banking and State is a must, private banking is best. Fiat (paper) money always leads to over printing, banks’ fractional reserves decreasing, inflation, booms and busts. History has proven this is true from the time of the American Colonies up to WWII.
  2. Gresham's Law: "bad money drives out good money". This is proven thru history and human behavior. In a bimetallic standard of gold and silver, if the ratio is fixed by law (not free market), and the silver is diluted from the circulating supply, people will hold gold and spend silver (You will hold bitcoin but spend USD or dogecoin first because bitcoin is more valuable).
  3. The American Colonies leading currency was the Spanish Silver Dollar, although gold, tobacco, and English coins were also in circulation. In fact, there were many different gold and silver coins in circulation, much like cryptocurrency altcoins are today. However, each town Bank started to issue fiat paper money to pay for things it did not have.
  4. The Birth of the Paper Dollar: Alexander Hamilton movement established the First Bank of the United States in 1790s. "The United States promptly fulfilled its inflationary potential by issuing million of dollars in paper money...pyramiding on top of $2 million in specie. [pg. 68-69]."
  5. Inflation -> Easy money/credit -> inflation of asset prices go up -> inflation of good and services prices go up-> artificial intervention of more money printing -> closed loop feedback cycle cannot be broke, perpetual trap no one wants to break -> public Loss of Confidence -> Public demands cash and gold -> banks and markets liquidated -> margin calls on leverged borrowing -> Crash. Booms and busts are natural, like a forest fire, you need small burns to take place, if you don't, there will be a large forest fire.
  • Colonial America Late 1600s to 1700s: Bimetalics standard, private banking, natural booms and bust of local fiat bank fractional reserve lending, natural equilibrium back to Silver or Gold exchange rate state happens fast
    • "The establishment of the Bank of the United States precipitated a grave constitutional argument, the Jeffersonians arguing that the Constitution gave the federal government no power to establish a bank."
    • This is generally how it always starts and is a recurring theme: "Massachusetts was accustomed to launching plunder expeditions against the prosperous French colony in Quebec. Generally, the expeditions were successful, and would return to Boston, sell their booty, and pay off the soldiers with the proceeds. This time, however, the expedition was beaten back decisively, and the soldiers returned to Boston in ill humor, grumbling for their pay. Discontented solider are ripe for mutiny, so the Massachusetts government looked around in concern for a way to pay the soldiers. It tried to borrow 3,000-4,000 pounds from Boston merchants, but evidently the Massachusetts credit rating was not the best. Finally, Massachusetts decided in December 1690 to print 7,000 lbs in paper notes and to use them to pay the soldiers. Suspecting that the public would not accept the irredeemable paper, the government made a twofold pledge when it issued the notes: that it would redeem them in gold or silver out of tax revenue in a few years and that absolutely no further paper notes would be issued. Characteristically, however, both parts of the pledge went quickly by the board. The issue limit disappeared in a few months, and all the bills continued unredeemed for nearly 40 years. As early as February 1691, the Massachusetts government proclaimed that its issue had fallen "far short" and so it proceeded to emit 40,000 pounds of new money to repay all of its outstanding debt, again pledging falsely that this would be the absolute final note issue. [Pg 54-55]" Right...
  • Andrew Jackson and the Bank Wars 1819: A return to hard, sound money, and economic prosperity
    • The Jacksonians were largely misunderstood from history, they were Libertarians, plain and simple. The pioneered Currency School analysis of boom-bust cycles on fiat paper printing and bank credit expansion/deflation. They favored minimal government, and the separation of government from the banking system and a shift from inflationary paper money and fractional reserve banking to pure specie and banks confined to 100 percent reserves [pg. 90-91]. Their movement of hard money, small government, private property, free markets, led to a period of economic prosperity and stability up until the Civil War (1860s), although there were bumps in the road.
  • The American Civil War & Greenbacks: Classic printing money and issuing debt to pay for war...and not paying it back
    • The Civil war ended the separation of the federal government from banking, and brought the two institutions together in an increasingly close and permanent symbiosis [pg.122].
    • "The Civil War led to an enormous ballooning of federal expenditures, which skyrocketed from $66 million in 1861 to $1.30 billion four years later [pg. 123]."
    • "The U.S. government quickly took advantage of being on an inconvertible fiat standard. In the Legal Tender Act of February 1862, Congress authorized the printing of $150 million in new "United States notes" (soon to be known as "greenbacks") to pay for the growing war deficits [pg. 123]"
    • "Greenbacks began to depreciate in terms of specie almost as soon as they were issued...[the Treasury and government] conveniently placed blame on anonymous "gold speculators" [instead of acknowledging the root cause] [pg. 124]."
  • Federal Reserve Founding, up to 1913: A US banking cartel formed, that is not Federal and not a Reserve
    • Led by J.P. Morgan and Company, a highly coordinated political and social manipulation to orchestrate a "mid west grass roots movement" against monopolies, to gain public opinion, ultimately for a central banking monopoly to use the powers of the government to establish and maintain cartels by coercion [pg. 184].
    • "The financial elites of this country, notable the Morgan, Rockefeller, and Kuhn, Loeb interests, were responsible for putting through the Federal Reserve System, as a governmentally created and sanctioned cartel device to enable the nation's banks to inflate the money supply in a coordinated fashion, without suffering quick retribution from depositors or noteholders demanding cash. Recent researchers, however, have also highlighted the vital supporting role of the growing number of technocratic experts and academics, who were happy to lend the patina of their allegedly scientific expertise to the elites' drive for a central bank. [pg.258-259]."
  • The Great Depression, Federal Reserve, and Hoover Administration 1931: easy-money and cheap credit lead to a booming 20s and a bust in '29 leading to a decade of depression to follow.
    • After WWI, the 1920s were an era of restoring Europe to a "classical" gold standard, which really meant restore England/Morgan's English associates and allies to her old position of financial dominance with a phony gold standard [pg.270]. Britain insisted on returning to an overvalued par. To support this, the United States inlfated its money and creit in order to prevent inflationary Britain from losing gold to the United States thru export. The result, however, was eventual collapse of money and credit in the U.S. leading to the Great Depression [pg.271]
    • Herbet Hoover, President circa 1929, with Cabinent full of Morgan Stanely people, was in favor of "easy money and cheap credit" and then using "moral suasion" to exhort banks and other lenders not to lend money for the purchase of stock [pg.271].
    • "...By June 1929, it was clear the the absurd policy of moral suasion had failed. [pg.272]"
    • "Despite this attempt to keep the boom going, however, the money supply in the United States leveled off by the end of the 1928, and remained more or less constant from then on. [pg.272]"
    • "Feverish attempts to keep the stock market boom going, however, managed to boost stock prices while economic fundamentals were turning sour, leading to the famous stock market crash of October 24. [pg.272]"
    • "In late 1928, after he was elected president, Hoover presented a public works scheme, the "Hoover Plan" for "permanent prosperity"...President Hoover was ready for massive intervention to attempt to raise wage rates, expand credit, and embark on public works. [pg.273]"
    • "By mid-November, the great stock break was over, and the market, artificially bouyed and stimulated by expanding credit, began to move upward again. With the stock market emergency seemingly over, bank reserves were allowed to decline...[pg.273]"
    • "The answer to the mystery is that the inflation policies of Hoover and Meyer proved to be counterproductive. American citizens lost confidence in the banks and demanded cash--Federal Reserve Notes--for their deposits (currency in circulation rising by $122 million by end of July), while foreigners lost confidence in the dollar and demanded gold (the gold stock in the United States falling by $380 million in this period). In addition, the banks, for the first time, did not fully lend out their new reserves, and accumulated excess reserves--these excess reserves rising to 10 percent of total reserves by mid-year. [pg.294]"
    • "...since the depression struck, 17,000 banks had been failing per year, with a total of $1.08 billion in deposits. This increase in bank failures could give any bank pause, especially since all the banks knew in their hearts that, as fractional reserve banks, none of them could withstand determined and massive runs upon them by their depositors. Second...the cheap-money policy of the Fed had driven down interest returns from bank loans, thus weakening banks' incentive to bear risk. Hence piling up of excess reserves. [pg. 294-295]"
    • "Herbert Hoover, of course, reacted quite differently to the abject failure of his inflationist program. Instead of blaming himself, he blamed the banks and the public. The banks were to blame by piling up excess reserves instead of making dangerous loans. [pg. 295]"
    • "Not content with denouncing the banks, President Hoover also railed against the public for cashing in bank deposits for cash or gold. Stung by the public's redeeming $800 million of bank deposits for cash during 1931, Hoover organized a hue and cry against "traitorous hoarding"......hoarding is unpatriotic because he restricts and destroys credit. (That is, by trying to redeem their own property and by trying to get the banks to redeem their false promises, the hoarders were exposing the unsound nature of the bank credit system. [pg 296]"
    • "A month later, Hoover delivered a public address on the evils of hoarding: "the battle front today is against the hoarding of currency," which prevents money from going into active circulation and thereby lifiting us out of the depression. [pg 296]."
  • The New Deal: Going Off Gold, Roosevelt confiscated gold from the People, gold now illegal to hold and "unpatriotic"
    • The House of Morgan achieved political dominance with the Republican Party during the 1920s. The Rockefeller and Harriman forces, and new anti-Morgan Wall Street forces such as Kuhn, Loeb, Goldman, Sachs, and Lehman Brothers. These financial parties were swinging leftward for government intervention, labor unions, etc. [pg 299]
    • The Democratic Party "were happy to form a coalition with left-wing intellectuals, technocrats, economists, and social workers who wished to staff the planning agencies, all to advance their common New Deal and ultra-sound agenda. [pg 300]."
    • "Two fateful monetary steps were taken in 1933 by the incoming Roosevelt administration. The first and most revolutionary deed, accomplished in April, was to go off the gold standard, to confiscate almost all the gold of American citizens and place it under the ownership of the Federal Reserve, to embargo the export of gold and to devalue the dollar to $35 a gold ounce. [pg. 303]"
  • WWII: The Bretton Woods Agreement, US Dollar (USD) now the global reserve currency, "back" by gold.
    • "The resolution of the problem came after lengthy negotiations throughout WWII, culminating in the Bretton Woods Agreement in July 1944. Basically, the agreement was a compromise in which the United States won the main point: a new multilateral world of fixed exchange rates of currencies based on the dollar, while the Americans accepted British [pg. 346]"
    • This made US Dollar the global reserve currency, backed by "gold", and the USA now the global financial capital.
  • US Dollar off Gold: 1971 Nixon took the USD off the gold standard
    • Not covered in the book, but in 1971 Nixon would remove the USD backed by gold, because of currency wars, and foreign countries (noteably France) demanding gold for their USD, draining USA gold supplies from Gresham's Law of bad money chasing out good (gold exported out due to deposit demands).

Unscripted

Life, Liberty, and the Pursuit of Entrepreneurship, By MJ DeMarco, Finished 2021 August

The Price of Tomorrow

Why Deflation is the Key to an Abundant Future, By Jeff Booth, Finished 2021 July

Layered Money

From Gold and Dollars to Bitcoin and Central Bank Digital Currencies, By Nik Bhatia, Finished 2021 June

The Sovereign Individual

Mastering the Transition to the Information Age, By James Dale Davidson and Lord William Rees-Mogg, Finished 2021 July

Collusion

How Central Bankers Rigged the World, By Nomi Prins, Finished 2021 May

Reminiscences of a Stock Operator

By Edwin Lefevre, Finished 2021 April

Fed Up

An Insider's Take on Why the Federal Reserve is Bad for America, By Danielle DiMartino Booth, Finished 2021 March