The Thing About Economics and Culture ...

On bitcoin culture, intellectual fraudulence and social responsibility.

Photo by Margarita Cisneros on Unsplash

There’s this thing that sound money theorists talk about all the time. They use these words—market distortion.

Now, this is, after all, a philosophy blog. So I should inform you that this is a normative term. What does that mean, you ask? Well, it means it’s an ethical or moral concept. It’s a conceptual category that encodes the idea that people should or should not do a thing.

So when someone says market distortion they encode the implication, what I sometimes call when I’m writing in a more analytical register, a normative embedding. It’s kind of a subtle thing when you think about it, isn’t it?

Well, it just goes without saying that market distortions ought not happen! Everyone agrees, so let’s get on with it!

Wait a minute. I want to go down this rabbit hole.

In their usage, a market distortion is anything that prevents prices from reflecting “true” underlying supply and demand—interest rates held too low, money supply expanded, risk mispriced by government intervention. Sounds neutral, doesn’t it? Like an objective description of economic mechanics going wrong.

It isn’t.

Because calling something a distortion presupposes there’s a morally correct, undistorted state—and that state is defined by their preferred metaphysical story about markets, time, and virtue. I want to suggest that you should be distrustful of this term, used by libertarian market commentators. Because the commitments they call distortionary are tied to certain other normative claims about what they happen to think is virtuous. And here’s what matters about that: these embedded normative commitments don’t just shape their economic analysis. They shape what they’re willing to see, what they’re willing to ignore, and ultimately what suffering they’re willing to tolerate—or enable—in service of their purified vision of the market.

The Moral Emergency of Sound Money

For instance, libertarians—and especially Austrian economics nerds—operate on the basis that there is a moral emergency that we are currently living in the midst of. And it goes like this:

Ordinary people have bank accounts. They are just trying to get by. They work really hard for their money. But there’s these really bad men who live in New York City, Chicago, Charlotte and other centers of higher finance who are robbing these people blind. Because you see, they are part of this cartel conspiracy known as the Federal Reserve System. And here’s what they do: if you want a full-throated moral screed about the demonic nature of this conspiracy from someone who actually believes it, I recommend you look up Caitlin Long of Custodia Bank.

The Federal Reserve creates money. They, in fact, create a lot of it. They create a whole lot of it after the Financial Crisis of 2008. Ben Bernanke famously joked about printing money by saying he would “drop money from helicopters.” And he meant it. To the Ron Paul fans of the world, this went through an internal moral-translator that said “I, Ben Bernanke, am making a public admission that I am literally Lucifer himself, and I’m making a joke about intentionally debasing the purchasing power of you poor American consumers. And I am so joyful in the pain I am causing you, to my personal benefit, that I am laughing in your face about it.”

No, seriously. That’s literally how young libertarians interpreted this cultural moment. Just go back and listen to Ron Paul speeches from the time. Hell, you should have heard me.

Confessions of a Reformed Austrian

Because I was one of these morons. Seriously. I was. I was writing about this shit as a libertarian author at the Canadian publication, The Western Standard. So guys, my gentle, foolish bitcoin superfans, who think you know the arguments better than me, and somehow think I am less versed in the finer points of the “seen and unseen” in the market. That you think the name Frederic Bastiat doesn’t ring a bell, and that I haven’t read Henry Hazlitt—my friends, you have some work at the Internet Archives to do, to find out that twenty years ago, I was intellectually jerking off to the devastating own that Mises landed against communist central planning by framing the economic calculation problem. Boom, socialists! Your entire economic framework is scientifically invalid!

Peter Schiff, who got famous during the Financial Crisis for being “the guy who called the mortgage bubble”—who has now become sort of a cult-enemy of the bitcoin crowd, which we’ll get to in a minute—became a cult hero of the school of Austrian economics. He was the Saifedean Ammous of gold during the first years of the Obama Administration—someone who has become a cult-leader of sorts within the bitcoin world, having written a book known as The Bitcoin Standard, which many of my friends have credited for “teaching [them] economics”. This was a notion that I bristled at constantly. Not the least of which was because the last half of the book is a naked display of Ammous’ strange cultural traumas from his Palestinian origin story.

Schiff, as I’ve said has become a figure of derision from within the bitcoin world because he, an avid believer in Ludwig von Mises’ Theory of Money and Credit, insists that for something to be sound money—according to Mises’ principles—the substance of money must be made of something with industrial utility. This is among several other necessary properties of money which include things like fungibility, divisibility, etc.

Bitcoin does not have industrial utility.

Why Mises Would Have Hated Bitcoin

Schiff correctly understands—at least I’m giving him credit for understanding—that Mises had faint worries about supply explosions for commodity-backed money, because he had born witness to the Gold Rushes of the era, where the supply of gold would expand rapidly. This is a risk of all commodity-backed monies.

So Mises recognized that requiring a non-monetary demand property for a money, would have a stabilizing effect. For gold, it is wanted for jewelry and other industrial uses, and this smooths out the inflationary pressure to the money supply when these things happened. So this is why Mises insisted on the money having industrial utility. Makes sense. Mises was a smart guy.

Bitcoin advocates argue they have elided this problem with the protocol design by creating a predictable supply schedule, with a periodic decrease in issuance—decreasing to zero new bitcoin being issued after many years. This algorithm running its course will result in there being exactly 21,000,000 bitcoins in existence when all is said and done. And that will be it forever.

In truth, the circulation will be far less than that. A fairly large percentage of the supply has been lost forever to the ether, with no way to recover, because the keys (think of them as passwords-of-a-kind) were lost or forgotten by the owners. And when that happens, you’re screwed.

Mises would—like Schiff—almost certainly have seen this proposition as ludicrous. Because Mises would recognize that a declining supply over time would create perverse hoarding effects for the money. He understood, like John Maynard Keynes later explained as the Paradox of Thrift, that if there isn’t constant positive-elasticity in the supply (Mises assumed we’d keep finding more gold deposits for a long time) that this will make credit unnaturally expensive and market participants will defer purchasing decisions to take advantage of the appreciating power of money—wait until next year to buy a car, my money will be worth more.

This makes sense until you realize—as Keynes would later describe in lucid detail—that when a lot of people start doing this, businesses sell less things, less things being sold means less need for workers, less need for workers means even less demand for goods. This is the demand destruction spiral. It is a pathology—mixed with other things—that most economists and market historians understand to have accelerated the collapse in the Great Depression.

This was why Ben Bernanke said he would drop money from helicopters. Because he was one of the world’s most studied experts on this phenomenon.

The Federal Reserve at the time did the opposite thing in the lead up to the Great Depression—they sharply shrunk the money supply in order to protect price levels. And this had all kinds of gnarly effects, which led to bank runs and bank failures all across the country. Bernanke, correctly understood these dynamics in 2008, and knew he needed to do the opposite thing. Even as Ron Paul—and I—accused him of literally eating babies as 3am snacks.

I now fully understand that the 27-year old me had an undiagnosed case of Dunning-Kruger syndrome.

Because you see, Bernanke literally saved the world by doing that. He really did. We basically would have had 30% unemployment and Central Park would again, like during the Great Depression, have fallen into the site of being a shanty town in the middle of Manhattan. That was pretty much a guaranteed-fate, and just the tough medicine that Ron Paul, Peter Schiff and others believed the American public needed to take in order to learn their lessons about the importance of sound money. To alleviate Americans of this necessary pain—this Austrian moral cleansing—we needed to make Americans see the truth of the market distortions that were lurking beneath the surface. The investment decisions that never should have been made, if not for risk-lowering effects of lower interest rates. None of these dot-com businesses with vaporware would ever have existed!

To do anything else, introduced a moral hazard to market participants, that the government and the Federal Reserve will bail people out—at the cost of savers in non-interest-bearing accounts—people from learning the lessons of their mistakes. This lesson will lead them to be less-discerning in the future than they otherwise would have been, and this will create ripples of bad investment decisions throughout the economy.

See Austrian nerds—I literally know your arguments better than you do. But you continue to write social media posts implying I can’t see past the supply-demand dynamics aggregate money supply to availability of goods in the market. You don’t have access to some higher understanding of economic truth! You are in a cult. Consider this part of your cult-deprogramming.

The Bitcoin Standard and Its Intellectual Heritage

The thing about this Saifedean guy, who acts as bitcoin’s economic prophet—from outside the shadowy fiat conspiracy that infuses mainstream economics—Ammous has appeared on various major podcasts, such as the Lex Fridman Podcast, where he proudly proclaimed that the only real economics is Austrian economics, and everything else is a lie.

Peter Schiff’s book, How an Economy Grows and Why It Crashes, is actually a pretty good book! It genuinely teaches some solid microeconomic theory at a level that even a sixteen-year old can follow along, and it’s filled with fun little cartoon images which make a fun and witty little read. It’s not quite Economics 101 in college, but you won’t be a stupider person after you finish reading it.

Ammous’ book on the other hand is a whole other matter. It speaks at a higher register of intellectual seriousness, and tries to lay out the basics of Austrian economic theory, which he almost certainly all learned from reading polemical economic essays off the Mises Institute website—which is tragically named by the way, and we’ll come back to that.

The book is an intellectual crime. It has very good Amazon reviews, and everyone I know who has read it, has reported having their minds blown after reading it.

The problem is that the book is a work of pure intellectual sophistry, which brings me to the Mises Institute, eponymously named for Ludwig von Mises who we mentioned earlier.

If Mises were alive today, he would almost certainly have brought a lawsuit against the institute for defaming his name. Not the least of which is because the institute has become a cesspool of post-libertarian crypto-fascism. The normative thought that is expressed there, descended from a tradition I have been greatly critical of over the years that was started by Murray Rothbard.

Other influential figures in this intellectual lineage include individuals like Lew Rockwell and Walter Block, who were among the first of the so-called libertarian-right to embrace Donald Trump. They even started a whole Libertarians for Trump thing. Unlike say, the big-hearted libertarian iconoclast, Nick Gillespie—who I adore—of Reason Magazine fame—these men were sexually aroused by Donald Trump’s flirtations with the prospect of mass deportations.

This is the character of the Mises Institute, that produces the vast bulk of pseudo-intellectual literature that forms the basis of Saifedean’s economic theories that he turns around and regurgitates in the Bitcoin Standard.

From Economic Theory to Cultural Pathology

And he adds more than just economic theory. He adds a dose of what can only be described as fascist cultural aesthetics. His book descends into a strange rant against the cultural pathologies supposedly driven by fiat currencies, which includes the proliferation of “degenerate” art and architecture.

Now, let me be precise about why this matters: when you start attributing aesthetic and cultural decline to monetary policy—when you begin constructing narratives about how the wrong kind of money produces the wrong kind of art, the wrong kind of people, the wrong kind of culture—you’re not doing economics anymore. You’re doing something else. Something with a very specific historical pedigree.

Avid readers of history may remember that Adolph Hitler made remarkably similar complaints in Mein Kampf. This is not a casual comparison. My German friend from the bitcoin world, Anita Posch, has assured me that the German translation of the Bitcoin Standard is even more deeply alarming when read from inside German historical cultural memory. The language resonates in ways that activate very specific traumas about how aesthetic purity arguments function as gateways to broader authoritarian projects.

This is what I mean about normative embeddings having consequences. The supposedly neutral economic analysis—the concern about “market distortions”—isn’t actually separable from a whole constellation of political and moral commitments. When you accept the framing that central bank intervention is the original sin that corrupts everything else, you’ve already bought into a moral framework that makes certain forms of suffering legible and urgent (savers losing purchasing power) while rendering other forms of suffering invisible or justified (mass unemployment, authoritarian violence). The economic theory isn’t doing neutral analysis. It’s teaching you what to see and what to ignore.

The Structural Case

When I said “bitcoin is for fascists” and a bunch of people lost their minds at me, I was really thinking about structural incentives. Let me spell them out:

Monetary purity over pluralism. The entire framework depends on there being one true form of money, and everything else is corruption. This isn’t a pragmatic claim about efficiency—it’s a metaphysical claim about order.

Hierarchical insider knowledge. There’s a sharp distinction between those who “get it” and the NPCs still trapped in the fiat matrix. You either see the truth or you’re a victim of propaganda. No middle ground, no legitimate disagreement.

Comfort with authoritarian strongmen as long as they’re anti-fiat. Notice how quickly bitcoin advocates make peace with dictators who adopt bitcoin. The democratic deficit doesn’t register as a problem when the monetary policy is “correct.”

Aesthetic obsessions with order, strength, and narratives of decadence. It’s not enough to have a currency with predictable supply—you need to explain how fiat money caused modern art, and feminism, and whatever else offends your sense of proper civilizational order.

These aren’t incidental features. They’re structural properties of the worldview.

Even the non-fascist bitcoin advocates whose feelings I hurt by pointing this out, recognize this. They’re trying really valiantly to create a separate intellectual culture to justify bitcoin on liberal grounds. But it’s a losing battle for the structural reasons. And the increasing insularity and toxicity in the discourse—which I have observed with a gentle eye for the past year—indicates that it’s a losing battle.

The sad thing is, it’s hard to take the counter-culture within bitcoin seriously when they continue to be Austrian economics-curious and still recommend the Bitcoin Standard to friends. Because if they truly understood this stuff—as I’ve shown you that I do—they would have been acting with the same sense of moral disapprobation toward that little culture of bitcoin thought leaders, who include philosophers, economists, market and political pundits, dietary experts—you just eat red meat by the way, that’s the advice—spiritual health gurus, etc. It’s a whole self-contained intellectual world. Many people I know get their entire sense of the world from inside this bubble.

The El Salvador Test Case

When I talk to them, they often aren’t even aware of major world events. In one conversation where I reached out to someone still in the world, they confessed that they didn’t have the faintest clue as to anything that Donald Trump had done as president over recent months. When I gave a few examples of some scandalous events, he admitted they were shocking to hear. But he had no idea any of this had happened. He is only on Nostr and only listens to bitcoin podcasts. Nobody is talking about Kilmar Abrego-Garcia being renditioned to a foreign gulag in El Salvador.

Said person actually spends quite a bit of time in El Salvador. Where he hangs around El Zonte Beach. Also known in bitcoin-world as Bitcoin Beach. It is one of the places where bitcoin is said in-universe to have established a “circular economy.” The concept elicits the idea that this small community has put down a seed, where bitcoin has taken root in the very soil and can sprout and grow further and further into the surrounding countryside on its way to become the only currency used in the entire world.

That he had just spent time there, in and around the time that the entire Abrego-Garcia affair had gone down, and he didn’t have the faintest clue that anything like this had even happened, gave me a sense of vertigo. This guy was living in another reality. Completely detached and indifferent to the world around him. Completely care-free. He described it to me as a life of “touching grass.”

Here’s the thing: I don’t think living a life completely detached from the suffering around you is a virtuous life. It is selfish. It’s not enough to say to yourself you’re tuning out the world, “stacking sats” and assuring everyone that in-so-doing you’re planting the seeds of global financial liberation, while sipping margaritas on a beach in El Salvador, while the president of that country colludes with organized crime and removes all constitutional obstacles to continue to rule-by-exception as dictator, de facto.

Why Real Philosophy Matters

You’re not innocent. And this connects directly back to where we started. When you accept the normative embedding that market distortions are the ultimate evil—that central bank intervention is the source of all economic pathology—you’ve already committed yourself to a moral framework that makes certain kinds of violence invisible. The person on Bitcoin Beach isn’t making a separate decision to ignore authoritarian violence. He’s following the logic of the normative commitment he’s already made. If the real crime is monetary intervention, then what’s happening to Abrego-Garcia isn’t a crime at all. It’s just noise. It’s a distraction from the real work of achieving monetary purity.

This is why philosophy matters. This is why it matters to interrogate the normative embeddings in supposedly technical economic terms. Because those embeddings don’t just shape how we analyze markets. They shape what we’re willing to tolerate. What we’re willing to enable. What we’re willing to become complicit in.

The language does the work before you even notice.

May I crown a new moral category? How about, moral distortion?

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Go Deeper into the Circus